N.V. Nuon Energy
Annual Report 2012
Energy market
in change
About this report
The annual report of N.V. Nuon Energy is the integrated representation of
our company’s financial and non-financial performance for the calendar
year 2012. The scope of this report is N.V. Nuon Energy and its subsidiaries.
Nuon’s consolidated accounts have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by the European
Union. The last section of the annual report includes the auditor’s report
and the profit appropriation.
Our Corporate Social Responsibility (CSR) reporting covers activities in countries
where we have material operations. The subsidiaries in which Nuon held
a minimum share of 50% throughout the year are within the scope of the
CSR reporting. Nuon’s CSR reporting was prepared using Global Reporting
Initiative (GRI) 3.0 guidelines as well as the Electric Utilities Sector Supplement
of the GRI. The GRI table can be found at www.nuon.com/reporting.
Qualitative information about the Vattenfall group and its activities is included
insofar as these activities affect Nuon’s customers, employees or stakeholders.
The qualitative reports were provided by experts throughout the organisation.
‘We’, ‘Nuon’, ‘Nuon Energy’, ‘the company’, ‘the Nuon Energy Group’,
‘the Nuon Group’, ‘the group’ or similar expressions are used in this report
as a synonym for N.V. Nuon Energy and its subsidiaries. The name ‘Vattenfall’
or similar expressions refer to Vattenfall AB, the parent company of Nuon.
Contents
About Nuon
Message from the CEO 2
Important events 2012
4
Report of the Management Board
6
Market developments
6
Strategy for changed market conditions
8
Operational performance 9
Financial performance
13
Corporate governance report 20
Report of the Supervisory Board
28
Remuneration report 2012
33
Corporate Social Responsibility
37
Security of supply
38
Sustainability of energy
43
Affordability of energy 50
Health & safety
52
Joined forces
55
Assurance report
61
GRI statement
63
Financial statements65
Consolidated accounts 66
Notes to the consolidated accounts
72
Company accounts
116
Notes to the company accounts
118
Other124
Independent auditor’s report
124
Profit appropriation
125
Ratios and definitions
126
Nuon at a glance
Nuon is part of Vattenfall
Vattenfall is one of Europe’s largest generators of electricity and
the largest producer of heat. Its main products are electricity, heat
and gas. In electricity and heat, Vattenfall operates in all parts
of the value chain: production, distribution and sales. In gas,
Vattenfall is active in sales. Vattenfall also conducts energy trading.
The Vattenfall group has approximately 33,000 employees and the
parent company, Vattenfall AB, is wholly owned by the Swedish State.
In 2012, operations were conducted in the Nordic countries, Germany,
the Netherlands, France and the United Kingdom. The core markets
are Sweden, Germany and the Netherlands.
The Netherlands is one of the three
core markets of the Vattenfall group
Vattenfall’s operations in the Netherlands are carried out by
N.V. Nuon Energy and its subsidiaries (‘Nuon’). Nuon also has limited
operations in Germany and the United Kingdom. It produces and
supplies electricity, gas, heat and cooling and offers its customers
a wide range of energy-saving products and services. Nuon has
approximately 5,200 employees (FTEs) and serves 2.2 million customers,
businesses and public and other organisations. With net sales of
EUR 3,905 million in 2012, Nuon holds a top-three position in the
Dutch energy market.
Core country, the Netherlands
Other core countries
Work areas
Vattenfall and Nuon operate
in the following structure:
Generation
Distribution and Sales
The Generation operating segment is Vattenfall’s interface
with the wholesale market and includes the development and
construction of production assets, the generation of electricity
and heat, and sales of electricity on the wholesale market.
The Generation operating segment comprises the following:
■■ Business
■
Division ‘Sustainable Energy Projects’ is responsible
for project development and execution of new-build generation
projects in electricity and large modification projects in thermal
power, heat, infrastructure and hydro power;
■■ Business
■
Division ‘Production’ is responsible for renewable
and thermal electricity generation;
■■ Business
■
Division ‘Asset Optimisation and Trading’ is responsible
for optimising the use of Vattenfall’s production assets and trades
electricity, gas, oil, coal and emission allowances;
■■ Business
■
Division ‘Nuclear Power’ is responsible for the operation
of all nuclear power assets. Since Nuon does not have any
nuclear power activities, this Business Division is not represented
within Nuon.
The Distribution and Sales operating segment and Business Division
is responsible for Vattenfall’s electricity sales and heat businesses,
electricity distribution and other downstream businesses.
■■■ Business
■
Division ‘Distribution and Sales’ is responsible for
the sale and delivery of energy and energy-related products
to the end-customer.
More information about the Vattenfall structure can be found in the
2012 annual report of Vattenfall AB at www.vattenfall.com/investors
Key facts
Nuon operational
Vattenfall operational
■■
Employees, full-time equivalents
■■
Fossil-based electricity production ■■
Renewable electricity production ■■
Nuclear electricity production 5,200
13.3 TWh
1.5 TWh
0.0 TWh
Nuon financial
■■
Investments ■■
Net sales ■■
Loss for the year ■■
Employees, full-time equivalents ■■
Fossil-based electricity production ■■
Renewable electricity production ■■
Nuclear electricity production 32,794
81.7 TWh
48.3 TWh
48.9 TWh
Vattenfall financial
EUR 778 million
■■
Investments EUR 3,905 million
■■
Net sales
716 million
■■
Profit for the year EUR
EUR 3,447 million (SEK 29,581 million)
EUR
19,496 million (SEK 167,313 million)
17,224 million)
EUR 2,007 million (SEK
Nuon key facts
2012
2011
change, %
Financial (EUR million)
Net sales
Earnings before interest, taxation, depreciation and amortisation (EBITDA)
Underlying earnings before interest, taxation, depreciation and amortisation (EBITDA)1
Operating result
Underlying operating result1
Net result
Underlying net result1
Investments
Cash flow from operating activities
Free cash flow
Net debt
3,905
321
515
-938
333
-716
280
778
32
-743
1,028
4,522
-13.6%
804
-60.1%
519
-0.8%
573
-263.7%
325
2.5%
438
-263.5%
267
4.9%
1,098
-29.1%
448
-92.9%
-348
113.5%
150
585.3%
16.3%
-252.8%
10.9%
-274.8%
Ratios
Return on capital employed
Return on equity
-24.9%
-19.0%
Employees (as at 31 December)
Number of own employees (FTE)
Lost time injury frequency (LTIF2) for own personnel
5,200
1.2
5,490
-5.3%
1.6
-25.0%
Electricity production and emissions
Fossil-based electricity production (TWh)
Renewable production (GWh)3
CO2 emissions per generated unit of electricity4 (g/kWh)
13.3
1,464
467
13.2
0.8%
1,508
-2.9%
463
13.8%
27.1
-1.8%
3.9
2.6%
56.0
2.0%
Sales volumes
Sales of electricity, TWh
Sales of heat, TWh
Sales of gas, TWh
26.6
4.0
57.1
For items affecting comparability and the impact from divestments, which are excluded in the underlying results, refer to the financial overview on page 13.
Number of accidents leading to absenteeism divided by the total number of hours worked, multiplied by one million.
Electricity production with regard to joint ventures is fully included.
4
This relates to the CO2 emission rate of the fuel mix energy production.
1
2
3
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A b o u t N uon
Content s
N.V. N uon Energ y A nn ua l Re p o r t 2 0 1 2
Mes sage from th e C EO
Message from the CEO
The year 2012 was a difficult one for the energy sector. Market conditions deteriorated
further, particularly in relation to electricity generation. Margins are under pressure
from falling demand, on the one hand, and increased production capacity and higher
imports on the other. By focusing more on reducing costs and improving the commercial
deployment of power plants, we have managed to partially compensate for the negative
effect. On the basis of the gloomy forecast we recognised an impairment loss amounting
to EUR 1.1 billion, specifically on the value of the gas-fired power plants.
Competition for selling electricity and gas – especially in the consumer
market – has also become fiercer. Our market share fell slightly in the
consumer segment, but increased in the business segment.
The underlying net turnover from continued operations in 2012
amounted to EUR 3,905 million (2011: EUR 3,572 million). In 2012,
Nuon realised a net loss of EUR 716 million, compared to a profit of
EUR 438 million in 2011. However, the underlying net profit increased
by 5% to EUR 280 million (2011: EUR 267 million).
Beveiliging – into a more stand-alone business and intend to find
a new owner for these services. This will allow these subsidiaries
to achieve further growth and broaden their service offering. Nuon
will continue to offer these services as part of the product and service
portfolio. Unfortunately, the deteriorating market conditions meant
that the Willem-Alexander power plant in Buggenum was no longer
profitable. In December 2012, we therefore announced our intention
to close this plant.
Smart energy enabler
Retaining and strengthening market position
The energy market is in a major state of flux, both at European level
as well as in the Netherlands. The need to reduce the emission of
greenhouse gasses makes it necessary to invest in an increased share
of energy from renewable sources. At the same time, there is a need
to keep the energy supply affordable and to ensure that reliability
is not at risk.
Nuon, as part of Vattenfall, aims to supply affordable, reliable
and sustainable energy. We aspire to meet the wishes of the many
stakeholders in the energy sector, from customer to shareholder.
This requires a strong focus on efficiency, so that we can supply at
the lowest costs, while offsetting additional costs imposed on the sector,
such as the coal tax that is levied from the beginning of 2013.
We will continue to focus on our core activities and divest those that do
not fit this profile. Last year, the solar cell developer Helianthos was sold
to HyET Solar B.V. We will also convert the Energy Related Services (ERS)
– consisting of Feenstra Verwarming, Ebatech, Nuon Isolatie and Nuon
Nuon is focussing on acquiring and retaining customers by setting
itself apart in the field of service excellence. The positive developments
in the field of customer satisfaction are therefore something to be proud
of. The fact that our Customer Service managed to retain its Customer
Operations Performance Centre (COPC) certificate in 2012 – the first
energy company in the Netherlands to do so – proves that we are the
leaders when it comes to ensuring service excellence.
Nuon is also investing in the development of new energy products
and services for its customers. Examples are the E-manager and the
home charger for electric cars. We aim to be the ‘smart energy enabler’
who makes it easy for our customers to manage and, where possible,
save energy in a responsible manner. That is ‘good for the planet and
good for the wallet’, to quote Ed and Eduard who feature in our TV
campaigns. In the large business market we are working closely with
our customers so that alongside the supply of electricity and gas, we
can provide additional services relating to energy-saving and green
energy supply. One example is our collaboration with the Amsterdam
ArenA, which aims to become CO2-neutral by 2015. Our advice and
our services are greatly valued by our customers.
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A bout N u on
Contents
A b o u t N uon
Mes sage from th e C E O
N .V. N u on Energ y A n n u a l Re p o r t 2 0 1 2
3
Sustainability
Safety
Our efforts to reduce the relative CO2 emissions and to grow in
renewable energy continue unabated. To this end, Nuon invested
EUR 100 million in sustainable energy production in 2012. A good
example of this was the construction of the Zuidlob wind farm in
Zeewolde, one of the largest onshore wind farms in the Netherlands,
where a total of 36 wind turbines will power around 88,000 homes.
Projects such as Zuidlob have increased the installed wind energy
capacity in 2012 by a total of 13.2%.
Nuon has been able to continue the positive trend in reducing the number
of safety incidents. In 2012, the absolute number of incidents that
resulted in lost time fell from 33 to 24 and the number of incidents per
one million hours worked also dropped, from 1.6 to 1.2. Unfortunately,
there has been an explosion in the high voltage installation of the Velsen
24 power plant during maintenance work and, regrettably seven people
were injured. Fortunately, all seven colleagues have recovered completely.
Immediately after the accident, Nuon commissioned an investigation
to prevent such accidents from recurring in the future. Improvements
to the safety protocol have been implemented.
The year 2012 also saw the final stages of completion of three new
and efficient gas-fired power plants Nuon is building in Diemen,
Amsterdam and Eemshaven. In total, Nuon invested EUR 503 million
in these projects in 2012. The power plants replace older, less efficient
stations, resulting in reduced CO2 emissions and fuel savings. Furthermore,
these flexible power plants also enable us to complement the continuous
fluctuation in the supply of sustainable energy. They therefore make
a major contribution to maintaining the reliability of energy supply
in the Netherlands.
Besides power, the plant in Diemen also supplies district heating
to homes in the city of Almere thanks to the new, unique 8.5-kilometre
transport pipeline that has been laid below the IJmeer. By using this
residual heat, the combined efficiency of this power plant is estimated
to exceed 85%. The new power plant at Hemweg 9 replaces the old
Hemweg 7 power plant, which was taken out of operation at the end
of 2012. Together with the new Magnum power plant in Eemshaven,
which is expected to be fully operational in 2013, these plants will
be able to supply electricity to approximately 3.5 million homes.
Investing in the future also means that Nuon is improving the
sustainability of mobility in the Netherlands. Vattenfall is the first
energy company in the world that is actively helping to develop a
‘plug-in’ hybrid car for the mass market. In 2012, a breakthrough in
the field of E-mobility was realised in the Netherlands. The number
of electric-powered cars on the road increased during the year by more
than 500%. Nuon is also working with the municipality of Amsterdam
to install more and more charging stations. And in fact, the city already
has one of the most intensively used charging networks in Europe.
In many areas, our strengths are combined with those of other
stakeholders. Within the framework of Amsterdam’s ambition to
build CO2-neutral homes, it was decided in 2012 to connect the new
Houthaven district to the combined heat and cold network of Westpoort
Warmte, a joint venture between Nuon Warmte and the municipality of
Amsterdam. In October, on the Day of Sustainability, Westpoort Warmte
received the ‘Best Practice Award’ from the Stichting Warmtenetwerk
(Heating Network Association) for its diversity in green heat sources
and the strong development of district heating in Amsterdam.
Joined forces
Together with our people we will continue working to constantly improve
ourselves and find the best responses to the challenges we face. I would
like to particularly thank all the Nuon employees for their contribution
in 2012.
Amsterdam, 15 April 2013
Huib Morelisse (CEO)
N.V. Nuon Energy
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A b o u t N uon
Contents
N .V. N u on Energ y A n n u a l Re p o r t 2 0 1 2
I m p o r ta nt event s 2 0 1 2
4
Important events 2012
April
February
March
Nuon/Vattenfall invests
in Olympic talent
New headquarters for Nuon
As part of the collaboration with NOC-NSF,
a ‘Team Vattenfall/Nuon’ is formed, consisting
of athletes who participated in the London
2012 Olympic Games. Even more important
is the Olympic Talent Support Team Nuon/
Vattenfall, which comprises rising stars aiming
for the next Olympic Games in 2014 and 2016.
In the run-up to the Games, several events are
organised. On 9 July, nearly 1,000 children
participate in a range of Olympic Sports at the
Nuon energy games held in the Amsterdam’s
Olympic Stadium.
Nuon signs a lease for an office building
in South-East Amsterdam. The 26,000 m²
building, located near the Bijlmer ArenA
metro and train station, will be the new Nuon
headquarters in the Netherlands. Nuon will
relocate to the new building from the existing
sites at Spaklerweg and Schiphol Rijk at the
end of 2013. The building will have an energy
label A and a BREEAM score of ‘very good’.
The newly built 8.5-kilometre pipeline
under the IJmeer delivers the first heat
to Almere. 11,000 Homes in Almere
Poort are heated with residual heat
from the electricity production at the
Nuon power plant in Diemen. The heat
transport line lies 1.5 metres below the
bottom of the IJmeer and has a heat
capacity of 180 MWth.
Photo: Sky Pictures Fotografie
Photo: CBRE Global Investors
Photo: Jorrit Lousberg Light@work
Heat pipeline to
Almere completed
May
Hemweg 9 plant delivers
first electricity
The gas-fired Hemweg 9 power plant
(440 MW) delivers its first electricity in May.
Since November, the plant is fully operational,
as the subsequent period of final commissioning,
testing and optimisation was successfully
completed by then.
A bout N u on
Contents
A b o u t N uon
I m p o r ta nt event s 2 0 1 2
N .V. N u on Energ y A n n u a l Re p o r t 2 0 1 2
5
September
E-mobility: investing
in electric mobility
Photo: Jorrit Lousberg Light@work
To emphasise our belief in the future
of electric transport, Nuon/Vattenfall
is one of the main sponsors of the
Professional Passionates Electric Rally
in Amsterdam. Nuon joins the rally
with three brand new Volvo V60 Plug-in
Hybrids - a car developed in a unique
cooperation between Volvo and
Vattenfall.
June
December
Photo: Rico Ploeg
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Participation in Nijmegen
heating network
Together with the municipality of Nijmegen,
the province of Gelderland, grid company
Alliander and ARN, the region’s waste disposal
handler, Nuon participates in a large-scale
heating network in the city of Nijmegen.
ARN’s residual heat will be used to heat
14,000 existing and new homes and
businesses in Waalfront and Waalsprong.
Nuon will construct the distribution network
and all connecting lines to the homes and
businesses in these areas.
September
Diemen 34 plant delivers
first electricity
In September, the Diemen 34 plant
(435 MWe and 260 MWth) delivers its first
electricity to the grid, which marked the start
of final commissioning, testing and optimisation
of the plant.
Zuidlob wind farm starts
generating electricity
The construction of the Zuidlob wind farm
(122 MW) in Zeewolde takes a major step
towards completion. The first six turbines
are connected to the grid at the end of 2012,
the rest of the wind turbines will be connected
in 2013. The wind farm will then consist of
36 turbines, which is enough to power
88,000 homes.
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A b o u t N uon
Content s
N.V. N uon Energ y A nn ua l Re p o r t 2 0 1 2
Re p o r t o f th e Ma nagem ent Board
6
Report of
the Management Board
The business environment where Nuon operates continues to be challenging.
The energy sector is under pressure from increased competition, low prices,
low demand for electricity as a result of the economic recession and a surplus
of electricity production. The sharply rising share of renewable energy,
especially in the German market, is also putting greater demands on the
flexibility of the conventional electricity generation.
Market developments
Lower electricity prices in 2012
Increased competition
As a result of the detoriated energy market conditions, the Dutch
electricity spot prices in 2012 were on average 8% lower compared
to 2011. While the electricity spot prices are typically guided by weather
and the near-term supply of electricity generation, future prices provide
an indication of the price trend in the longer term. These prices also
decreased over the last year.
Competition has further intensified in the consumer market. Customers
have become more mobile, which was accelerated by the increased number
of large-scale consumer auctions in 2012. This has resulted in a slight
decrease in the number of customers in the consumer market and an
increased workload at the customer services department.
Despite the increased competition, in the business market Nuon realised
a growth in connections of 4%.
Surplus of production capacity
The Dutch electricity market is under pressure from low demand due
to the economic recession as well as a surplus of production capacity.
The capacity of fossil fuel electricity production in conventional thermal
power plants, as well as the capacity of renewable electricity production,
have increased in 2012. Furthermore, electricity imports from Germany
increased. In Germany, the capacity of renewable energy has increased
sharply in recent years, mainly in wind and solar power, due to relative
high subsidy schemes. During favourable weather conditions for
renewable energy, Germany has an excess in electricity generation,
which is sold in the market at low prices. In the near future, the
oversupply of electricity generation will worsen as new conventional
power plants in the Netherlands become operational.
The lower industrial output and energy demand also contributed
to a sharp decrease in CO2 emissions. This, combined with an increase
in renewable energy, and a high level of carbon credits from climate
projects in developing countries (CDM projects), has resulted in a
substantial surplus of emission allowances in the European market
and thus historically low CO2 prices. Without government intervention,
the accumulated surplus of CO2 emission allowances is expected to
continue growing, and will reach nearly 2 billion tonnes in 2014.
This corresponds to the total annual volume of CO2 emission
allowances in the EU ETS system. As a consequence, the average
price of CO2 emission allowances decreased in 2012.
The low electricity prices and the relatively high gas price prompted
gross margins for gas-fired electricity generation (the clean spark
spread) to fall sharply in 2012, to around zero. These market conditions
are not expected to improve in the foreseeable future. Given this
outlook, Nuon recognised impairment losses, mainly on the book
value of gas-fired production assets, amounting to EUR 1.1 billion.
Meanwhile, coal-fired power plants had higher profit margins than
gas-fired plants, since the comparative market price of coal was lower
than the gas price, despite the extra cost for CO2 emission allowances.
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Abou t N uon
Content s
N.V. N uon Energ y A nn ua l Re p o r t 2 0 1 2
Demands for higher investments
in renewable energy
The energy sector is facing a substantial investment need in the
years ahead as a result of the goals to increase the share of renewable
energy. The ambitions of the EU’s Energy Roadmap 2050, to achieve
a competitive low-carbon economy in which electricity production
is CO2 neutral, have been fully adopted by the Dutch government.
It has set a target of 16% renewable energy by 2020 and is aiming
for a fully sustainable energy supply in 2050. These targets will
require major investments, that depend on stable support schemes.
Even relatively small-scale investments in more sustainable energy
production, for example, co-combustion of biomass in coal-fired
plants, are costly and still depend on subsidies and support schemes.
Integration of intermittent electricity generation
Renewable energy, such as wind power and solar energy, are strongly
dependent on the weather, which means that the electricity they
generate is intermittent. It is therefore important that other energy
sources can cover the need for electricity during periods of weak winds,
for example. Integration of intermittent electricity generation can be
facilitated by strengthening the distribution grids and expanding cable
links to balance generation over larger geographic areas, as well as
by steering demand and changing consumer behaviour (such as by
encouraging lower electricity use during periods of peak demand).
Furthermore, the production flexibility can be increased by the use
of gas-fired power plants. As these plants have the ability to quickly
ramp up or lower their production, they can complement the
continuous fluctuation in the supply of sustainable energy.
A b o u t N uon
Re p o r t o f th e Ma nagem ent Board
7
Market regulations with the greatest impact
Nuon’s operations are also affected by various market regulations
and legislative proposals. The trend points to greater regulation of
the energy markets. Below are a few of these regulations that will
significantly impact Nuon in the near future:
■■ Coal tax
Dutch political negotiations of the ‘Lentecoalitie’ resulted in
a budget agreement, which included a reintroduction of the coal
tax in the Netherlands in 2013. The existing tax exemption for coal
power production has been abolished.
■■ New supplier model
The new regulatory framework for the supplier’s model of the
Dutch retail market, which will be implemented in 2013, affects
all metering and billing processes for retail customers and small
and medium-sized enterprises. This will mean significant changes
for our systems and processes and of course these need to be
implemented without affecting our reliability and customer
satisfaction levels. In the new model, the supplier will also be
responsible for invoicing and collecting the grid fee, bearing
the credit risk.
■■ Support schemes
The structure and stability of national support systems is an
important condition for investments, especially considering
the increased ambitions of the Dutch government with regard
to sustainable energy production. All energy production from
renewable sources is currently dependent on support systems
in order to compete with conventional technologies.
■■ EU Emission Trading Schemes (ETS)
Discussions are currently being held within the EU on a possible
reduction of emission allowances on the market in order to raise
the price and the economic incentives to curb carbon emissions.
The future price of CO2 has a large impact on electricity prices and
thus on Nuon. Currently, the incentives for reducing CO2 emissions
are very small, which is a disadvantage from a climate perspective.
In summary, it can be said that the market conditions for the energy
sector continue to be highly challenging. Previous market forecasts
have been brushed aside, and what used to be considered ‘normal’
no longer applies. “This is the new normal”, to quote Øystein Løseth,
President and CEO of Vattenfall AB.
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Content s
N.V. N uon Energ y A nn ua l Re p o r t 2 0 1 2
Strategy for changed market conditions
To address the continuing challenging market conditions in the energy
sector, Vattenfall adapted its strategy in 2012. The heart of the strategy
that was decided on in 2010 remains in place. However, various aspects
of the conditions that applied then have changed and certain assumptions
that made up the foundation of the strategy are no longer valid. The
market outlook has continued to worsen as a result of an even higher
level of overcapacity, lower demand, lower expectations for future
electricity prices and power margins.
In 2010, Vattenfall’s strategy was broken down into two phases:
a consolidation phase through 2013, followed by a growth phase.
This breakdown is no longer relevant due to the changed market
conditions. Instead of planning for growth in general terms, in the
foreseeable future Vattenfall must focus on optimising its existing
assets aside from growth in renewable energy. Vattenfall has therefore
modified and adapted its strategy, focusing on four points for the
years immediately ahead: Operational Excellence, a continued strong
and profitable position in the Nordic countries, additional measures
for reducing Vattenfall’s CO2 emissions, and continued growth in
renewable energy.
As part of Vattenfall, Nuon translates Vattenfall’s strategic pillars in
such a way that it contributes to overall value creation while fulfilling
the needs of its shareholders and local stakeholders.
Stronger focus on Operational Excellence
and cost-cutting
Today’s rapid pace of change puts high demands on organisations’
near-term ability to adapt their operations to new conditions.
Operational Excellence aims to improve efficiency throughout Vattenfall
– in the operative businesses as well as in Staff Functions. It is a matter
of measuring and evaluating ways of working and processes, and of
creating a company culture that is dedicated to continuous
improvement.
The Vattenfall SEK 6 billion (approximately EUR 700 million) costcutting programme that was announced in 2010 has been successful.
The savings target was reached in 2012, one year ahead of schedule.
Savings have mainly been achieved through lower purchasing costs,
standardisation of processes and routines, greater process efficiency
and a sharper focus on personnel costs. For 2013, Vattenfall has decided
to cut costs further by setting a new savings target of SEK 3 billion
(approximately EUR 350 million) compared to 2012. The savings targets
range from 15% to 30% for Staff Functions and shared services, and from
3% to 5% for the Business Divisions. Several cost-saving initiatives are
now under way. These measures are expected to reduce the overall
headcount by approximately 500 employees in the Netherlands by
the end of 2014 compared to 2012.
A b o u t N uon
Re p o r t o f th e Ma nagem ent Board
8
A new Staff Function for operational excellence has been established
in 2013 to promote knowledge-sharing between Vattenfall’s various
operations and contribute to a culture dedicated to continous
improvement in the day-to-day business.
Continued strong and profitable position
in the Nordic countries
The Nordic countries are a natural focus area for Vattenfall given
the company’s strong market position. Today Vattenfall has a leading
position in the Nordic market throughout the value chain and intends
to further strenghten this position. As such, this focus area of the
Vattenfall strategy is not directly applicable to Nuon since Nuon
does not have any operations in Nordic countries. The Netherlands
is, however, identified as a core market in the Vattenfall Group.
Nuon therefore intends to consolidate and, where possible,
further strengthen its position in the Dutch market.
Additional measures to reduce the CO2 emissions
Vattenfall’s stated purpose is to be among leaders in developing
environmentally sustainable energy production. The goal of lowering
CO2 emissions is a key part of achieving this vision, and Vattenfall is
continuing its work with methods to reach the goal of 65 million tonnes
by 2020. To date, Vattenfall has implemented measures that have cut
its CO2 emissions to 85 million tonnes in 2012, compared to 94 million
tonnes in 2010. Further measures will be needed to ensure that the
goal is indeed achieved by 2020. Examples of such measures include
co-combustion of biomass in coal-fired plants and changing the fuel type
when older plants are phased out (e.g., replacing coal-fired plants with
gas-fired or biomass-fired plants). Vattenfall also expects lower hours of
operation for existing coal-fired plants (and thus lower CO2 emissions)
in connection with the rising share of renewable energy in the system.
Continued growth in renewable energy production
Nuon, as a part of Vattenfall, continues to have a growth strategy
in renewable energy production. At the same time, however, the
scope for new investments is limited by the poorer market conditions
for the entire energy industry. Where suitable, projects may be carried
out in partnership with other companies. The company may also
consider inviting external financiers as part-owners in completed
investments in wind power. It is important to take advantage of
economies of scale – Vattenfall has an organisation and documented
ability to carry out many large investments in renewable production.
Vattenfall’s goal is to achieve a higher growth rate in renewable energy
production than average for the markets in which it works.
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Operational performance
Operating structure of the Vattenfall Group
Board of Directors
CEO
Staff Functions
Chief Financial Officer
Operating segment
Generation
Operating segment
Distribution and Sales
Business Division
Asset Optimisation
and Trading
Business Division
Lignite Mining
and Generation
Asset Optimisation
Nordic
Projects and Services
Business Sales
Engineering
Generation Wind
Asset Optimisation
Continental
Nuclear Fuel
Consumer Sales
Thermal Projects
Hydro Power
Trading
Forsmark
Products and
Solutions
Project Governance
& Improvement
Thermal Power
and Heat
Operations
Ringhals
Heat
Onshore Wind
Projects
Nuclear Germany
Energy Related
Services
Offshore Wind
Projects
Decommissioning and
Waste Management
Distribution
Business Division
Sustainable
Energy Projects
Business Division
R&D Projects
Production
Biomass
A number of changes were made to Vattenfall’s organisation
from 1 November 2012. The new Business Division, Nuclear Power,
was formed, while at the same time the wind power production
unit was integrated into the Business Division Production. To clarify
the structure and avoid unnecessary overlap, projects and new-build
Nuclear Power
Business Division
Distribution
and Sales
Customer Service
activities in Business Divisions Renewables and Business Division
Asset Development were brought together in a new Business Division,
called Sustainable Energy Projects. Three operating segments were
thus reorganised into two: Generation and Distribution and Sales.
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Generation operating segment
The Generation operating segment covers the development and
construction of production plants, production of electricity and heat,
and sales of energy commodities on the wholesale market. It includes
four Business Divisions – Production, Nuclear Power, Asset Optimisation
and Trading and Sustainable Energy Projects. Earnings are mainly
affected by wholesale prices and demand for electricity, market prices
of fuel and CO2 emission allowances, availability at power plants,
and the production cost levels.
Optimising generation activities
Nuon’s operations are primarily concentrated on three sources of
energy: wind, natural gas and coal, with approximately 5,043 MWe
and 3,462 MWth production capacity installed. The majority of
electricity is produced by gas-fired power plants. During 2012,
14.7 TWh of electricity and 4.4 TWh (15.8 PJ) of heat were produced.
The Generation operating segment is also responsible for central
optimisation (dispatch) of all generation assets. Operation of the plants
is optimised on the basis of the forecast electricity price and the power
plants’ variable production costs. Production costs, in turn, are affected
mainly by the type of fuel that is used and the cost of any CO2 emission
allowances. The electricity produced is sold on the wholesale market to
electricity exchanges and bilateral counterparties. To reduce the impact
of the volatility of market prices on Nuon’s earnings, Nuon hedges a large
share of its future electricity generation in the electricity futures market.
Nuon also hedges purchases of CO2 emission allowances and fuel prices.
Further, Nuon conducts proprietary trading in energy commodities.
Risk mandates are set for both hedging and proprietary trading.
Fossil-based energy generation
The gross margin for gas-fired electricity generation (the clean spark
spread) has decreased and was around or even below zero for most of
the year. This has reduced profitability and the number of operational
hours of our gas-fired plants. These market conditions are not expected
to improve in the foreseeable future. In addition, future costs will
increase due to the reintroduction of the coal tax on coal-fired electricity
generation in the Netherlands. As a consequence of this outlook, Nuon
recognised total impairment losses on production assets of EUR 1.1 billion.
In December, Nuon announced its intention to close the Dutch
Willem-Alexander power plant in Buggenum. The 253 MW power plant
was taken into operation in 1993 as a coal gasification demonstration
plant. Due to the rapidly deteriorating market conditions and the cost
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10
structure of the plant, its operation is no longer profitable. Plans to
co-fire biomass on a large scale (using attribution of grants/support
schemes) proved inadequate to change this situation.
During the year, two new power plants came online, the Diemen 34
and Hemweg 9 plants. In Diemen, a new combined gas-fired power and
heat plant with installed capacity of 435 MW electricity and 260 MW
heat delivered electricity to the grid for the first time in September
2012. In addition, the new district heating pipeline that connects the
production location in Diemen to the city of Almere became operational
in April 2012 after one year of construction. The heat transfer station
has a capacity of 180 MWth and is the biggest in the Netherlands.
At the Hemweg location, a new and efficient 440 MWe combined cycle
gas-fired power plant, Hemweg 9, replaced the older 600 MW gas-fired
Hemweg 7 plant. This new plant became fully operational from
November 2012.
The Magnum combined cycle gas power plant in Eemshaven
(1,311 MW) is expected to be commissioned in the summer of 2013.
Since 1988, Nuon has been producing district heating for Stadsverwarming
Purmerend B.V. (SVP) using a gas-fired cogeneration unit and an auxiliary
heat plant. In December 2012, Nuon signed a contract with SVP and
the municipality of Purmerend, extending the current heat agreement
until1 July 2014. At that time, SVP will take over the auxiliary heat
plant and thus produce its own heat, for delivering to approximately
25,000 households and small businesses in the municipality.
Renewable energy generation
Wind power is the fastest growing source of renewable energy in
Europe. In line with Vattenfall’s strategic objective to continue growth
in renewable energy production, and despite the difficult economic
circumstances affecting the energy industry as a whole, Nuon invested
in developing new wind farms at various locations. During 2012, the
total installed wind power capacity increased from 333 MW to 377 MW,
producing a total of 1,274 GWh electricity over the last year.
Nuon’s onshore wind farm in the UK, Swinford, was fully commissioned
in September 2012. Construction started in November 2011. The wind
farm has 11 turbines and a capacity of 22 MW. In the Netherlands,
the Zuidlob onshore wind farm, west of Zeewolde, will be fully
commissioned in 2013. The wind farm comprises 36 wind turbines
with a total capacity of 122 MW.
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Nuon fuel mix energy production
The new gas-fired power plants, Diemen 34 and Hemweg 9, have resulted
in a higher share of natural gas capacity compared to prior years. However,
the total share of gas-fired energy production decreased as a result of the
low spark spread and therefore the share of coal-fired energy production
has increased compared to 2011. Despite the increase in the installed
capacity of wind power, total wind power produces fell slightly compared
to the previous year due to less favourable weather conditions.
Nuon fuel mix energy production in the Netherlands
%
34.9%
Coal
24.5%
Natural gas CHP
20.7%
Blast furnace gas1
9.6%
Natural gas power stations
9.1%
Wind2
0.8%
Biomass
0.4%
Hydro
0.0%
Solar
Fossil-based energy
Renewable energy
CO2 emission rate
Radioactive waste rate
1
2
89.7%
10.3%
467.0 g/kWh
0.00000 g/kWh
At our power plants in Velsen and IJmond, the residual gas released during Tata Steel’s
production activities is used as a fuel to produce electricity. In this way, this blast furnace
gas is put to good use by Nuon. The gas contains a high percentage of CO2. It has been
agreed with the Office of Energy Regulation of the Dutch Competition Authority that
Nuon is to adjust the CO2 emissions in the production fuel mix to avoid double counting.
The CO2 emission factor of blast furnace gas is calculated in this mix on the basis of the
use of natural gas.
The wind energy production means all electricity that Nuon, as producer and beneficial
owner, feeds into the electricity grid via grid connection points.
Operating segment Distribution and Sales
The Distribution and Sales operating segment is responsible for all
relationships with end-customers, including sales of electricity, heat
and gas, the distribution of heat as well as the sale of energy-related
services. Satisfied customers are a prerequisite for the success of the
business. Earnings are mainly affected by customer satisfaction and
loyalty, cost efficiency and profit margins.
Smart energy solutions
The energy landscape in the Distribution and Sales operating segment
is ever-changing, which is requiring a continuous adaptation of products
and offerings to accommodate customers’ needs. Demand for smart
solutions to meet energy needs is on the rise, regardless of whether
the customer is a large industrial corporation or a private customer.
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Nuon aspires to be a ‘Smart Energy Enabler’, which entails offering
customers smart energy solutions and opportunities to be more
environmentally conscious. In addition to sales of electricity, gas
and heat, Nuon offers energy efficiency improvement solutions
for homeowners, and provides energy advice.
Fierce competition in consumer market
The end-customer market is fiercely competitive. The number
of customer switches between suppliers was accelerated due to a
growing number of large-scale customer auctions in 2012. This makes
the competition even tougher. In 2012, the number of Nuon’s electricity
and gas supply contracts decreased slightly to 2.2 million and 1.9 million
respectively. Including wholesale, Dutch electricity sales decreased
from 27.1 TWh in 2011 to 26.6 TWh in 2012 and gas sales increased
by 1.1 TWh to 57.1 TWh.
Customised business solutions
In the B2B (Business to Business) segment, Nuon intensified its co-operation
with many industrial customers in 2012. This was mainly achieved
through customised, broad-based offerings that go beyond the physical
deliveries of electricity and gas. For example, Nuon offers various tools
for controlling and monitoring energy use and for risk management
and market information. In the B2B segment, the number of connections
increased by 3,000 to 89,000 in 2012.
District heating
Nuon is one of the largest providers of district heating. Including
wholesale, Nuon delivered 4.0 TWh of district heating, of which 1.6 TWh
to households in 2012 and signed three new concession agreements.
One agreement concerns Waalsprong-Waalfront (for 117 MW heat
and 4,711 GWh electricity for 30 years), and two cover locations in
the Amsterdam area (Zeeburgereiland and Houthaven, for 25 MW of
district heating each as well as 7 MW of comfort cooling in Houthaven).
The latter two agreements are part of a joint venture between Nuon
Warmte and the municipality of Amsterdam.
Energy Related Services
Sales of other energy-related products in 2012 were impacted by
the economic situation in the Netherlands. The B2B activities suffered
from the worsened developments in the new-build market. Sales
volumes in the consumer market also decreased compared to 2011,
which was one of the most succesful years in Nuon’s history. We will
convert the Energy Related Services, consisting of Feenstra Verwarming,
Ebatech, Nuon Isolatie and Nuon Beveiliging, into a more stand-alone
business and intend to find a new owner for these services. This will
allow these subsidiaries to achieve further growth and broaden their
service offering. Nuon will continue to offer these services as part of
the product and service portfolio.
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12 N.V. N uon Energ y A nn ua l Re p o r t 2 0 1 2
New products and services
During the year, Nuon further developed products and customer
offerings, adapting to changes in the energy market. For example,
the Nuon E-manager offers customers the ability to obtain real-time
information about their electricity and gas consumption via a website
or directly on their mobile devices. Customers can also control their
energy use by turning appliances on or off with their smart phones.
Nuon continually watches developments in the market and offers
products for the sale of small-scale generation of renewable energy,
both for consumer and business customers.
Charging stations for electric cars
In response to the rapid increase in sales of electric cars, Nuon
offers home charging services. Individual consumers can purchase
a package that includes installation of a wall-mounted charging box.
In addition to Nuon’s solutions for home charging of electric cars,
the company is also developing charging solutions for public use
and has installed a significant number of public charging stations.
In Amsterdam, Nuon has been offering commercial subscriptions
for access to public charging stations since April 2012. A total of
250 charging stations have been installed throughout the city and
with a charging subscription, customers receive a smart card that
gives them access to the stations.
Collaborations with cities
There is an increasing number of major cities that are setting their
own ambitious climate targets that go beyond the EU’s targets and
national legislation. Nuon is providing support to cities like Amsterdam
to help them achieve their goals in the transition to sustainable energy
use. For Nuon, this means producing and storing energy in an
intelligent and sustainable way, providing advice on smart energy
use and developing new products and services that help customers use
the energy from both electricity and heat production more efficiently.
Several product offerings in solar energy
In 2012, Nuon launched a number of attractive products based
on solar energy. In Amsterdam, for example, Nuon – in co-operation
with Amsterdam municipality and the grid operator Alliander – started
a pilot project with three tenant-owner co-operatives. The project
involves installing solar panels on rooftops of jointly-owned buildings.
Web shop offering electric products
For some time, Nuon has had a web shop that markets and sells energyrelated products such as LED lights, energy meters and weather strips.
Nuon electricity retail customers receive a discount on purchases.
Branding
In 2011, the Vattenfall brand name and logo were used in the Dutch
market for the first time, under the header of ‘Nuon, part of Vattenfall’.
This new branding was used more widely in 2012 and will be further
intensified during 2013.
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Human Resources
At year-end 2012, Nuon’s workforce totalled 5,200 FTEs (2011:
5,490 FTEs). This decrease is a result of the increased efficiency
of our operations as well as divestments. Of Nuon’s total workforce
of 5,555 people, a total of 1,492 were female and 4,063 male. At
the end of 2012, a total of 5,035 employees had a permanent contract,
compared to 5,447 at year-end 2011. The number of employees with
a temporary employment contract increased from 415 in 2011 to
520 in 2012, thereby breaking the trend of recent years.
Safety
Safety is one of Nuon’s core values and Nuon believes that all injuries
and occupational illnesses are preventable. The goal is that every
employee should work in a safe, healthy and motivating environment.
To improve overall safety and reduce the number of safety incidents,
all incidents and near-incidents involving Nuon employees, contractors
and other parties, are documented and integrated into a single
registration system. This provides a solid foundation for continous
safety control and improvement. The lost time injury frequency (LTIF),
which shows the number of injuries per million hours worked that result
in lost time due to absence, decreased from 4.5 in 2010 to 1.6 in 2011
and even further to 1.2 in 2012. Despite these positive developments,
on 12 September 2012 a serious incident occurred in the high-voltage
installation of the Velsen 24 power plant at the Nuon site in VelsenNoord. Regrettably, seven people sustained injuries, two of whom were
admitted to hospital. All have since recovered completely and were able
to resume work within two weeks. Immediately after the accident,
Nuon commissioned an independent investigation and has taken
measures to prevent such accidents from recurring in the future.
Employment terms and conditions
The Collective Labour Agreement for the energy production and
supply sector, which took effect on 1 May 2011, will be valid until
30 April 2013. To optimally facilitate its employees, Nuon offers a
flexible compensation and benefit arrangement platform called ‘my
budget, my choice’. Using this arrangement, employees can make their
own personal choices with respect to their flexible employment benefits.
They can opt to have those benefits paid out, purchase extra flexible
benefits, or reserve the benefits for payment later in the year. As part
of Vattenfall, we review our compensation and salary policy to ensure
it is aligned with the Vattenfall group.
Employee representation
A number of matters arose during the year in which the employee
representatives were closely involved. Amongst other things, we
discussed the ongoing optimisation of the organisation and related
topics such as the intention to close the Buggenum plant and the plan
to make Energy Related Services a more stand-alone business.
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Financial performance
Income statement
The table below shows the results for 2012 compared to 2011.
Financial overview
For the year ended 31 December
Amounts in EUR million
Net sales
Items affecting
Reported
comparability
2012
3,905
-
Underlying
Items affecting
comparability
and divestments
Reported
Underlying
2011
3,905
4,522
-950
3,572
1,299
997
67
-127
1,366
870
1,603
-252
1,351
928
-76
852
321
194
515
804
-285
519
1,21,2 1,259
-1,076
1,271
1,21,2 183
2 229
-35
194
-938
333
573
-248
325
Net result
-716
996
280
438
-171
267
Electricity production (TWh)
14.7
26.6
57.1
56.0
- Electricity
2.2 million
2.3 million
- Gas
1.9 million
1.9 million
Gross margin
Operating expenses
Earnings before interest, taxation,
depreciation and amortisation (EBITDA)
Depreciation, amortisation
and impairments
Operating result (EBIT)
Electricity sales (TWh)
Gas sales (TWh)
14.7
27.1
Number of contracts
Dutch consumer market
Net sales
Net sales decreased by 13.6% to EUR 3,905 million. This decrease
stems mainly from the divestments of Nuon Exploration & Production
and our Belgian activities in the year 2011.
Net sales by product
Amounts in EUR million
5,000
4,522
4,000
The underlying net sales, i.e. excluding items affecting comparability
and divested operations, increased by 9.3% to EUR 3,905 million.
This increase was largely driven by higher sales prices and higher
proprietary trading results. The result was partly offset by the lower
number of customers, due to increased competition, and lower
average electricity consumption per customer.
823
3,905
677
127
554
1,853
1,535
1,375
1,483
3,000
2,000
1,000
0
201 2
Electricity
Gas
Heat and other products
2 011
Items affecting comparability
Divestments
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Gross margin
Operating expenses by category
EBIT
Amounts in EUR million
Amounts in EUR million
Amounts in EUR million
1,000
2,000
997
127
1,603
1,500
1,299
149
103
928 60
16
750
417
1,366
1,000
500
411
1,351
500
250
400
375
-500
0
0
100
-47
113
-47
-1,000
-67
2012
Underlying
Items affecting comparability
2011
Divestments
333
44
204
325
-1,271
-1,500
-250
-500
573
-938
0
500
1,000
14
201 2
Sub-contracted work
Other operating expenses
Personnel expenses
Gross margin
Gross margin decreased by 19.0% to EUR 1,299 million. Underlying gross
margin increased slightly by 1.1% to EUR 1,366 million. This increase
was mainly driven by higher gas sourcing results from optimised usage
of storage and increased gas volumes sold to consumers as a result of
a relatively cold first half year in 2012. These effects were mostly offset
by lower spark spreads.
Operating expenses
Operating expenses increased by 7.4% to EUR 997 million in 2012,
mainly as a result of one-off costs. Underlying operating expenses
increased slightly by 2.0% to EUR 870 million. The activities in
prior years with a focus on structural cost savings and increased
cost awareness continued to have positive effects in 2012 and kept
underlying operational costs relatively stable. The slight increase
resulted mainly from the intensified marketing and sales efforts
in response to the increased competition.
2 011
Items affecting comparability
Divestments
Own work capitalised
201 2
Underlying
Items affecting comparability
2 011
Divestments
The number of own staff decreased by 5%, from 5,490 FTEs at
the end of 2011 to 5,200 FTEs at the end of 2012. The decline was
due to the focus on efficiencies and the divestment of activities.
Depreciation, amortisation and impairment charges
Depreciation, amortisation and impairment charges increased
from EUR 229 million in 2011 to EUR 1,259 million in 2012 due
to the impairment of the thermal asset portfolio of EUR 1.1 billion.
Underlying depreciation, amortisation and impairment charges
decreased slightly by 5.7%, to EUR 183 million.
EBIT (earnings before interest and taxes) decreased from EUR 573 million
in 2011 to EUR -938 million in 2012. The decrease was mainly driven
by the impairment charges in 2012. Underlying EBIT increased slightly,
by 2.5%, to EUR 333 million.
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Items affecting comparability included in the results
Overview of items affecting comparability included in the results
For the year ended 31 December
Amounts in EUR million
Gain on divestment of subsidiaries
Fair value movements on derivative contracts for own use
Costs associated with the unbundling
Impairments
Other items
2012
-67
-1,074
-130
Total impact on operating result (EBIT)
Tax included in items affecting comparability
Total impact on net result
Items affecting comparability in 2012 amounted to EUR -996 million,
net. These consisted mainly of the impairment of the thermal asset
portfolio of EUR 1.1 billion. The item ‘Gain on divestment of subsidiaries’
relates to the divestments of Nuon Exploration & Production and Nuon
Belgium in 2011.
The item ‘Fair value movements on derivative contracts for own use’
relates to the fair value movements on derivative commodity contracts
which are held for the company’s own use. Nuon uses these contracts
2011
156
56
-6
9
-11
-1,271
204
275
-65
-996
139
for the physical sale and purchase of fuels for the generation of
electricity and supply to customers. The majority of these contracts
are, in accordance with IFRS, measured at fair value. As these fair
value changes are recognised through the income statement (where
cash flow hedging cannot be applied) and do not reflect the underlying
purpose of these commodity contracts, the analysis of the results is
distorted. These fair value movements are therefore included in the
‘items affecting comparability’. For 2012, these fair value movements
amounted to EUR -67 million (2011: EUR 56 million).
Balance sheet
Condensed balance sheet
As at 31 December
Amounts in EUR million
Non-current assets
Current assets
Cash and cash equivalents
2012
4,185
2,462
187
Total assets
Equity
Non-current liabilities
Current liabilities
Total equity and liabilities
2011
4,408
2,141
299
6,834
3,333
723
2,778
6,848
4,101
864
1,883
6,834
6,848
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Non-current assets
Non-current assets decreased by 5% to EUR 4,185 million at the end
of 2012. The increase from the investments in new gas-fired power
plants and the Zuidlob wind farm was more than offset by the
impairment charges in 2012. In addition, the derivatives balances
had a positive effect on the total non-current assets.
Current assets
Current assets increased by 15% to EUR 2,462 million. This increase
is mainly due to a higher inventory balance and higher debtor balances
following the colder weather at year-end 2012 compared to the
previous year.
Cash and cash equivalents
Cash and cash equivalents decreased by EUR 112 million to
EUR 187 million at the end of 2012. This decrease resulted mainly
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from the high level of investments and dividend payments. Part of the
cash outflows for investments and dividend payments were financed
by Vattenfall by the overdraft facility.
Equity
Equity decreased by 19% to EUR 3,333 million at the end of 2012.
This decrease was mainly driven by the net loss of EUR 716 million
and dividends paid to B shareholders of EUR 75 million.
Non-current and current liabilities
Non-current liabilities decreased by 16% to EUR 723 million at the end
of 2012. The decrease mainly resulted from the payment of the preferred
dividend on A shares and lower deferred tax liabilities. The increase in
the current liabilities by 48% to EUR 2,778 million mainly relates to
short-term interest-bearing debt with Vattenfall. This increased due
to the level of investments and the dividends paid to shareholders.
Net debt position
Reconciliation net debt position
As at 31 December
Amounts in EUR million
Cash and cash equivalents
Less: Restricted cash and cash equivalents¹
2012
187
-147
Total cash and cash equivalents
Long-term interest-bearing liabilities
Short-term interest-bearing liabilities
Finance lease payables
-83
40
150
910
8
Gross debt position
Net debt position
1Including
2011
299
216
257
98
11
1,068
366
-1,028
-150
clearing bank margin balances and collateral for certain bank guarantees issued but excluding bilateral margining cash balances.
Restricted cash is excluded from the cash and cash equivalents as this
relates to funds that are not at the free disposal of Nuon. In the ordinary
course of trading and in relation to the mitigation of credit risks, Nuon
receives and pays cash collateral to and from its counterparties. In
addition, Nuon holds cash balances on own bank accounts as collateral
for counterparties. This collateral impacts both Nuon’s cash balances
(restricted and freely available) and accounts receivable and payable.
The movements in accounts receivable and payable from collateral paid
or received are presented in the cash flow from operating activities
under movements in working capital.
The net debt position at the end of 2012 amounted to EUR 1,028 million,
compared to EUR 150 million at the end of 2011. The increase of the net
debt position is mainly due to the high level of investments made.
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Cash flow statement
Condensed cash flow statement
Amounts in EUR million
2012
427
Operational cash flow
2011
609
-395
Movements in receivables and liabilities positions
Cash flow from operating activities
-161
32
448
-796
Cash flow for the year
-775
631
-112
Cash and cash equivalents as at 1 January
299
1,022
Cash and cash equivalents as at 31 December
187
299
187
299
Cash flow from investing activities
Cash flow from financing activities
-375
-723
Consists of:
Debt to credit institutions
Cash and cash equivalents as at 31 December
-
Cash flow from operating activities
Cash flow from operating activities in 2012 decreased to EUR 32 million
(2011: EUR 448 million) due to the lower operational cash flow and
increases in working capital and derivatives balances.
Cash flow from financing activities
Cash flow from financing activities in 2012 amounted to EUR 631 million
(2011: EUR -375 million) and is primarily related to the amounts drawn
on the Vattenfall overdraft facilities.
Cash flow from investing activities
Cash flow from investing activities decreased from EUR 796 million
in 2011 to EUR 775 million in 2012. This is the result of lower
investments in fixed assets amounting to EUR 778 million, a decrease
of 29% compared to EUR 1,098 million in 2011. The investments
were significantly lower compared to 2011 as the Hemweg 9 and the
Diemen 34 plants came online in 2012 and the Magnum power plant
is currently close to completion. In 2011 the cash flow used in investing
activities also included the proceeds from divestments of EUR 298 million.
Dividend
Based on Nuon’s dividend policy, the Management Board, in
consultation with the Supervisory Board, proposes to pay out a
dividend of EUR 65 million on class A shares outstanding as at
31 December 2012. The Management Board proposes to charge
the loss of EUR 716 million to the Other reserves.
Adoption of the dividend proposal for 2012 is scheduled to take place
during the General Meeting of Shareholders on Monday, 13 May 2013
in Amsterdam.
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18 N.V. N uon Energ y A nn ua l Re p o r t 2 0 1 2
Outlook and challenges
We expect that the coming years will also be challenging, in the
European market in general and the Dutch market in particular.
Depressed demand, combined with increasing production capacity,
both from renewable sources as well as fossil-fuel power plants in
the Netherlands, will likely keep margins low. The energy supply
will remain very competitive, especially in an environment where
retail and industrial customers have less to spend.
We aim to adjust to these market circumstances through increased
efficiency and product innovation. Our task now is to swiftly and
successfully carry out the necessary changes. Availability of production
will be further improved, customer focus will be strengthened, and
costs will be further reduced.
Re p o r t o f th e Ma nagem ent Board
18
We plan to grow further in renewable energy production, which will
contribute to our strategic objective to reduce CO2 emissions. However,
the scope for new investments depends on the market conditions and
regulations relating to support schemes and permits.
Any prediction regarding the future is highly uncertain, especially
given the current market circumstances. It is the Management Board’s
policy to refrain from making any statements regarding expected future
results. In our view, the long-term strategy remains firm, and we are
confident we will be able to carry out the necessary changes to tackle
the current challenges. We believe Nuon will contribute to the
realisation of Vattenfall’s strategic ambitions without losing sight
of the interests of our Dutch stakeholders.
A final word
We will leverage our international position as part of Vattenfall
to benefit our customers. We will increase our efforts to reduce
our CO2 emissions, both through investment in renewable energy
as well by enabling the smart use of energy by our customers.
Nuon’s investment plan for the coming five years decreased compared
to the preceding planning periods, due to the completion of our three
new gas-fired power plants. In 2013, we expect to fully commission
the Diemen 34 plant and complete the last of these plants, Magnum
in Eemshaven (Groningen), as well as the onshore wind farm Zuidlob.
As the Management Board, we realise that without the commitment
and hard work of our staff, we could not have achieved all that we have,
nor hope to overcome the challenges we face. We would therefore like
to take this opportunity to express our gratitude for their contribution
in 2012.
Amsterdam, 15 April 2013
The Management Board
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Repor t of the Management Board
19
Details of the Management Board
Huib Morelisse (1964)
As of 1 July 2010, Huib Morelisse (Dutch nationality) was appointed Chief Executive Officer
of the Management Board of N.V. Nuon Energy. As of the same date, Huib Morelisse also became
a member of Vattenfall’s Executive Group Management (EGM) as Head of Business Group Benelux.
Due to the introduction of a business-led structure, Huib Morelisse became Head of the Business Division
(BD) Asset Development, from 1 January 2011 to 1 November 2012. In November 2012, a new organisational
structure was introduced resulting in the integration of BD Asset Development and BD Renewables into
BD Sustainable Energy Projects, among other changes. Due to this revised organisational structure,
the position of Huib Morelisse as Head of BD Asset Development ceased to exist. Huib Morelisse will
continue in his role as Chief Executive Officer of the Management Board of N.V. Nuon Energy, Country
Chair for Vattenfall in the Netherlands and has been appointed Head of Health & Safety within Vattenfall.
Career
Before joining Nuon, Huib Morelisse held several management positions at Essent, RWE,
Goldman Sachs and Booz, Allen & Hamilton.
Peter Smink (1965)
Peter Smink (Dutch nationality) has been a member of the Management Board and Chief Financial Officer
of N.V. Nuon Energy since 1 January 2010. He is responsible for managing the company’s financial affairs
and was appointed Head of Group Finance Vattenfall as of 1 August 2011. From 28 October 2011 until 11 May 2012
Peter took on the role of acting Chief Financial Officer of Vattenfall AB and became a member of Vattenfall’s
EGM. On 1 November 2012, Peter Smink was appointed as Head of Business Division Sustainable Energy Projects
and member of Vattenfall’s EGM.
Career
Peter Smink joined N.V. Nuon in 2001 and held several management positions, mainly in
the area of finance. Prior to joining Nuon, Peter Smink held various management positions
at KPN and PricewaterhouseCoopers (PwC).
Supervisory Board memberships/other positions
■
Foundation Rural Energy Services (FRES): Member of the Supervisory Board;
■
Yellow & Blue Clean Energy Investments B.V.: Member of the Supervisory Board.
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Co rp o ra te governa n ce re p or t
Corporate governance report
Nuon has taken notice of the revised Dutch Corporate Governance Code
published by the Corporate Governance Code Monitoring Committee on
10 December 2008 and effective from 1 January 2009.
Dutch Corporate Governance Code
The Dutch Corporate Governance Code (the Code) is specifically
applicable to Dutch listed companies and is designed to promote more
efficient supervision of the Management Board (the ‘checks’) and a
more balanced distribution of influence between the Management
Board, Supervisory Board and shareholders (the ‘balances’).
In view of the company’s size, the social role that Nuon plays in the
performance of its tasks in the field of energy supply, and because
of its strong commitment to openness and transparency, Nuon
voluntarily applies the principles and best practices of the Code.
The company’s articles of association, by-laws and regulations
are fully in line with the applicable provisions of the Code.
In the table below, Nuon reports the departures from the best practice
provisions in the Code, stating the motivation for said departures from
the Code (the ‘comply or explain’ principle).
Departures from the Code
Code
III Supervisory Board
Departures from the code and motivation
Principle III.4.2: The Chairman of the Supervisory Board may not be a former
member of the Management Board of the company.
Øystein Løseth was appointed in April 2010 as member of the Supervisory
Board by the shareholders following nomination by the Supervisory Board.
Subsequently, the Supervisory Board appointed Øystein Løseth as Chairman
of the Supervisory Board in line with the articles of association of the company
and Vattenfall’s grandfather principle.
Principle III.2.2: A Supervisory Board member shall be deemed to be
independent if the following criterium of dependence does not apply to him/her. This criterium is that the Supervisory Board member concerned
has been a member of the Management Board of the company (including
associated companies as referred to in Section 5:48 of the Financial
Supervision Act (Wet op het financieel toezicht/Wft) in the five years
prior to the Appointment.
The company strives to have a composition of the Supervisory Board which is
a good reflection of the different Business Divisions, representing commercial
activities within the company.
As of 1 November 2012 Mr Anders Dahl has been appointed Head of Business
Division Distribution and Sales. To ensure that the composition of the
Supervisory Board is a good reflection of the different Business Divisions,
representing commercial activities within Nuon, Mr Anders Dahl has been
appointed as a Supervisory Director with effect from 6 December 2012 and
Mr Torbjörn Wahlborg resigned with effect from the same date. In addition to
his position as Head of Business Division Distribution and Sales, Mr Anders Dahl
has been appointed as, amongst others, Managing Director of N.V. Nuon Sales,
a subsidiary of N.V. Nuon representing the sales activities and for Nuon UK Ltd.
With the appointment of Mr Anders Dahl the Company deviates from article 1.4
(a) of the by-laws of the Supervisory Board.
Principle III.5: If the Supervisory Board consists of more than four members,
it appoints from among its members an Audit Committee, a Remuneration
Committee and a Selection and Appointment Committee.
The Supervisory Board has appointed a separate Audit Committee, whereas
the tasks of the Remuneration Committee and Selection and Appointment
Committee have been combined in a Remuneration Committee, since these
are closely linked.
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Departures from the Code (continued)
Code
Departures from the code and motivation
IV General Meeting of Shareholders
Principle IV.1: To the extent that the company is able to do so, it provides all
shareholders with distance voting facilities and the means to communicate
with each other.
Written powers of attorney are sent together with the notice to convene
shareholders’ meetings. In addition, all shares are registered. Because of
and with due regard to the above, distance voting contributes little to the
realisation of this provision.
Best practice provisions IV.3.1 to IV.3.4: About analysts’ meetings and reports.
These do not apply as Nuon’s shares are not listed, are not freely marketable
and/or are not prone to price-sensitive information. Despite the fact that
Nuon is not a listed company, meetings are held with shareholders following
the publication of financial reports. Nuon endorses the principle of simultaneous
dissemination of information to all shareholders, but deems it too costly to
put in place facilities that would enable all shareholders to simultaneously
follow all the meetings and presentations as envisaged in the Code. Nuon does
ensure, however, that following the meetings concerned, the documentation
is made available.
Corporate Governance structure
Management Board
General
The Management Board is in charge of the company’s management.
The Management Board members are jointly responsible for the
management of Nuon.
On 1 July 2009, Vattenfall AB acquired 49% of the shares in the capital
of N.V. Nuon Energy and obtained managerial control of Nuon. As a
consequence, Nuon was consolidated in the Vattenfall figures as of
1 July 2009. On 1 July 2011, Vattenfall AB acquired an additional 15%
of the shares and consequently held 64% of the shares in the capital
of N.V. Nuon Energy at that date. Vattenfall AB acquired an additional
3.04% of the shares on 29 June 2012, bringing the total percentage
of Nuon shares held by Vattenfall AB to 67.04%. The remaining 32.96%
of the shares, which are currently still owned by Dutch provinces and
municipalities, will be acquired by Vattenfall AB over the coming three
years under fixed terms.
N.V. Nuon Energy complies with the rules for large companies
(‘structuurvennootschap’) referred to in articles 2:158 to 2:164
of the Dutch Civil Code. As such, Nuon has a two-tier management
structure, comprising a Management Board and an independent
Supervisory Board. The Management Board is in charge of the ­day-today management of the company, while an independent Supervisory
Board supervises the Management Board. Both the Supervisory Board
and the Management Board are accountable to the General Meeting
of Shareholders for the performance of their duties.
Vattenfall AB is a public limited liability company with its registered
office in Stockholm, and is subject to the Swedish Company Act.
Since 2011 Vattenfall’s steering model has been based on a pan-European
business-led structure, meaning that each of Nuon’s activities has been
allocated to one of the five Business Divisions and managerially form
part of the respective Business Divisions. As a consequence, Nuon’s legal
and business governance structures are not fully aligned. To enable the
Management Board within the business-led structure to perform its
obligations towards the Supervisory Board and its stakeholders, the
Vattenfall management will ensure that all necessary tools and assistance
are made available to the Management Board in order to perform its
fiduciary duties in this respect.
Nuon’s Supervisory Board appoints the members of the Management
Board. The Management Board consists of at least two members.
The Supervisory Board determines the remuneration and other
conditions of employment for each member of the Management Board
in accordance with the remuneration policy adopted by the General
Meeting of Shareholders. The information on the remuneration of
individual members of the Management Board can be found in the
Remuneration report of this annual report (page 33).
The company’s articles of association and the by-laws of the
Management Board which set out, for example, the procedures
governing the composition, tasks and powers, meetings and
decision-making, can be viewed on Nuon’s corporate website,
www.nuon.com/corporate-governance
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Supervisory Board
The Supervisory Board supervises the policy of the Management
Board and Nuon’s operations in general, including the realisation of
the company’s objectives, the strategy and risks related to the business
activities, the design and operation of the internal risk management
and control systems, the financial reporting process, and compliance
with laws and regulations. In addition, the Supervisory Board functions
as the Management Board’s advisory body.
Pursuant to its articles of association, Nuon shall have a Supervisory
Board consisting of eight Supervisory Board members. On 29 June
2012, Vattenfall AB acquired an additional 3.04% of the shares in Nuon.
As a result, the total percentage of Nuon shares held by Vattenfall AB
exceeds 67%. Consequently, article 48 of the articles of association of
N.V. Nuon Energy became applicable, which led to a change in the
composition of the Supervisory Board to three Supervisory Directors
A and five Supervisory Directors B. Please refer to the table Composition
of the Supervisory Board on page 28. The Supervisory Directors A are
to be appointed by the General Meeting of Shareholders upon their
nomination by the Supervisory Board following the recommendation
of the class A shareholders. They shall include two persons
recommended by the Central Works Council. The Supervisory Directors
B are to be appointed by the General Meeting upon their nomination
by the Supervisory Board following the recommendation by the class
B shareholders. The Chairman of the Supervisory Board shall be
nominated by the class B shareholders. At least five members of
the Supervisory Board will reside in the Netherlands.
A Supervisory Board member must resign no later than 12 years
after his/her first appointment. Members of the Supervisory Board
are appointed for a maximum of three terms of four years each. The
Supervisory Board is made up in such a way that it has at its disposal
all the expertise required to ensure the proper performance of its tasks,
and that the members are able to operate independently and critically
in relation to each other, the Management Board and any partial interest
whatsoever. Within the Nuon Governance structure, two members and
the Chairman of Vattenfall’s Executive Group Management (EGM)
are members of the Nuon Supervisory Board. Vattenfall’s rationale to
appoint EGM members is to ensure a good reflection of the business
and therefore to bring knowledge to the Supervisory Board and to
facilitate the exchange of information. To avoid any potential conflict
of interest for these Supervisory Board members, with reference to
the principles III.6 of the Code, the Supervisory Board member whose
responsible business area is influenced by a decision, is excluded from
the decision-making in accordance with principle III.6.2 of the Code.
The by-laws of the Supervisory Board have been amended to reflect the
changes resulting from the additional share acquisition by Vattenfall AB
on 24 September 2012 and can be viewed on Nuon’s corporate website,
www.nuon.com/corporate-governance
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22
Committees of the Supervisory Board
The Supervisory Board can appoint standing or ad hoc committees
consisting of its own members and charge these committees with
tasks defined by the Supervisory Board. The Supervisory Board has
two standing committees: an Audit Committee and a Remuneration
Committee. The task of these committees is to prepare the decisionmaking of the Supervisory Board. In general, each committee meeting
is reported on in the Supervisory Board meeting to serve as a basis for
its decision-making.
Regulations have been drawn up for both standing committees.
These regulations indicate, for example, the tasks, the composition
and the manner in which each of these committees performs its tasks.
The terms of reference for both the Audit Committee and the
Remuneration Committee can be viewed on Nuon’s corporate website,
www.nuon.com/corporate-governance
Audit Committee
The Audit Committee prepares, within its designated area of duties,
the decision-making of the Supervisory Board and advises the
Supervisory Board on the understanding that the entire Supervisory
Board remains collectively responsible for the fulfilment of its duties.
The Audit Committee is charged with such tasks as monitoring, among
other things, the integrity of Nuon’s financial statements, the operation
of the internal risk management and control systems, compliance with
recommendations and actions taken in response to comments of the
Internal Audit Department and the external auditor, the company’s
policy in relation to tax planning and the financing of the company.
The Audit Committee consists of at least three members, all of whom
must be members of the Supervisory Board. All members of the Audit
Committee should be independent within the meaning referred to in
the by-laws of the Supervisory Board, with the exception of no more
than one member. At least one member of the Audit Committee must be
a financial expert, which means that this person has acquired relevant
knowledge and experience in the fields of finance, administration and/
or accounting at listed companies or other large legal entities.
Remuneration Committee
The Remuneration Committee prepares, within its designated area
of duties, the decision-making of the Supervisory Board and advises
the Supervisory Board on the understanding that the entire Supervisory
Board remains collectively responsible for the fulfilment of its duties.
The Remuneration Committee is charged with such tasks as drawing up
selection criteria and appointment procedures relating to the members
of the Management Board, periodically reviewing the functioning of the
Supervisory Board and the individual Management Board members,
submitting proposals for appointments or reappointments, submitting
proposals on the remuneration policy to be pursued regarding members
of the Management Board (this remuneration policy and any material
change to it is to be presented at the General Meeting of Shareholders
for adoption) and submitting proposals on the remuneration of individual
Management Board members.
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The Remuneration Committee consists of three members, all of
whom should be Supervisory Board members. The Committee may
not be chaired by the Chairman of the Supervisory Board, a former
member of the Management Board or a member of the Management
Board of another listed company.
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Nuon Energy Public Assurances Foundation
As part of the transaction whereby Vattenfall initially acquired 49%
of the outstanding share capital from Nuon shareholders on 1 July 2009,
it was agreed that a foundation would be set up for a period of at least
eight years. This foundation is called ‘Nuon Energy Public Assurances
Foundation’ (‘the Foundation’).
Shareholders
The annual meeting is held each year no later than six months after
the end of the financial year. Other Meetings of Shareholders can,
if necessary, be held at the request of the Supervisory Board or the
Management Board. Shareholders who jointly represent at least 10% of
the issued capital have the right to request that the Management Board
or the Supervisory Board convene a Meeting of Shareholders, stating
specifically the business to be discussed. Nuon’s Meetings of Shareholders
are generally not open to the public.
The agenda for the General Meeting of Shareholders is determined
by the Management Board and the Supervisory Board. The Annual
General Meeting of Shareholders is held to discuss the items laid down
in the articles of association, the annual report, the adoption of the
annual accounts, the release from liability of the members of the
Management Board and the Supervisory Board, the allocation of results
and other business presented for discussion by the Management Board,
the Supervisory Board or the Shareholders, the latter representing at
least one-hundredth of the issued capital.
All shareholders have the right to attend the General Meeting
of Shareholders, to speak at the meeting and to exercise their voting
rights, either in person or by written proxy. At the General Meeting
of Shareholders, each share entitles the holder to cast one vote. All
decisions are taken by absolute majority of votes cast, unless the law
or the articles of association require a larger majority.
The General Meeting of Shareholders receives all information that it
requests, unless the Management Board and the Supervisory Board are
of the opinion that this is against the overriding interests of the company.
Nuon has two classes of shares, class A shares and class B shares as
held by the class A shareholders and class B shareholders, respectively.
The class A shareholders and class B shareholders agreed on a
shareholders’ agreement (the Shareholders Agreement) that sets out,
for example, the terms and conditions of the sale of the shares in the
capital of the company and the course Vattenfall will take to acquire
full ownership of the company. One of the items agreed upon is a
six-year lock-up period for the class A shareholders, which started
as of 1 July 2009. During this period, conditions on offering, selling
and contracting to sell any shares apply.
Following a proposal of Vattenfall AB to accelerate the transfer of
the third package of shares, 56 shareholders, representing about 99.37%
of the issued A shares, approved an amendment of the Shareholders
Agreement for one-off dispensation of the lock-up period. Consequently,
Vattenfall AB acquired an additional 3.04% of shares in Nuon on
29 June 2012.
The objective of the Foundation is to safeguard the so-called
Nuon Public Assurances as envisaged by the agreement governing
the acquisition and to render binding advice on the interpretation
of the Nuon Public Assurances.
The management of Nuon will inform the shareholders and the
Foundation of any intended management decision or action that
deviates or causes a deviation from the Nuon Public Assurances.
An intended decision, action or omission of Nuon that could contravene
the Nuon Public Assurances can be submitted to the Nuon Public
Assurances Foundation for review, by:
■■ The shareholders (at least two shareholders collectively representing
5% or more of the outstanding and issued share capital);
■■ Nuon (represented by a majority of the Supervisory Board members); or
■■ One director of the Foundation within four weeks of becoming
aware of the (intent to take the) decision or action.
The Foundation can then decide whether or not to issue advice
to the management of Nuon. The Foundation can only advise to:
■■ Take the decision or action; or
■■ Reverse the decision or action, or, if not yet taken, not to take such
action or decision and correct any non-compliance.
The advice is binding for Nuon’s management except, if in doing so,
the management would violate its fiduciary duties. If management
refuses to comply with the advice, the question of whether the
management was allowed to deviate from the advice can be submitted
for review to the Netherlands Arbitrage Institute.
The Foundation consists of three members. One member is nominated
by the class A shareholders and a second by the class B shareholders.
A third member, to be the Chairman, shall be nominated by the other
two members.
The articles of association of the Foundation can be viewed on Nuon’s
corporate website, www.nuon.com/corporate-governance
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The role of auditors
External auditor
The external auditor, Ernst & Young Accountants LLP, was appointed
by the General Meeting of Shareholders on 25 April 2012, based on a
motion drawn up by the Supervisory Board following advice received
from the Audit Committee and the Management Board. Ernst & Young
was appointed as the external auditor for the entire Vattenfall group
in 2012, replacing PwC as external auditor in the Netherlands. The
appointment is for a period of one year, with the possibility of extension.
Co rp o ra te governa n ce re p or t
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Nuon Internal Audit is an integrated part of the Vattenfall Group
Internal Audit that operates under the responsibility of the Chairman
of the Board of Vattenfall and the Audit Committee of Vattenfall. Twice
a year, Internal Audit presents the Management Board with an overview
of the Internal Audit activities related to Nuon. This overview is also
discussed with the Nuon Audit Committee. In this context, and for the
purpose of the planning and execution of the audit of the financial
statements, the Internal Audit department works in close collaboration
with the external auditor.
The Management Board and the Audit Committee report to the
Supervisory Board annually on the developments in the relationship
with the external auditor, in particular with regard to the external
auditor’s independence. Based on this and other factors, the
Supervisory Board prepares its motion to the General Meeting
of Shareholders on the appointment of an external auditor.
Measuring Corporate Social Responsibility
At least once every four years, the external auditor’s performance
is thoroughly evaluated and reviewed by the Management Board
and the Audit Committee. The principal conclusions of this review
are communicated in the General Meeting of Shareholders in order
to assist in its review of the motion to appoint the external auditor.
Management scorecards contain the key performance indicators
(KPIs) that are important for Vattenfall and Nuon as a whole. These
KPIs are then cascaded down through the organisation. There are
scorecards applicable to all Staff Functions, Business Divisions and
their units in which the Management Board members and employees are
included. The scorecards incorporate financial and non-financial KPIs,
such as reputation, climate and safety targets, which are all necessary
to ensure the company operates and develops in line with the strategic
and business plans.
Generally, the external auditor attends the meetings of the Audit
Committee. In compliance with current legislation, the external auditor
reports on its audit activities to the Management Board and the
Supervisory Board and sets out the matters it wishes to bring to
the attention of these boards. These matters could include issues
with respect to the audit, the financial figures and the operation of the
internal risk management and control system (including the reliability
and continuity of the electronic data processing) and the quality of
the internal information systems.
The external auditor also attends the Supervisory Board meeting
when discussing the financial statements. In addition, the external
auditor attends the General Meeting of Shareholders and may, on
that occasion, be asked to elaborate on its audit activities and its
auditor’s report on the reliability of the financial statements.
Internal auditor
Internal Audit is an independent function that provides additional
assurance to management, and the Management Board in particular,
concerning the control, effectiveness, efficiency and compliance of
the business processes. In this context, Internal Audit systematically
evaluates the processes in relation to control, risk management
and governance.
Corporate Social Responsibility targets are an integral part
of management and business unit targets. Performance is
measured periodically and remunerated as part of regular performance
management measures which are organised through the Vattenfall
Human Resources organisation.
Risk management and risk factors
Risk management
Nuon is exposed to a number of risks that could have an adverse impact
on operations. A better understanding of and control over these risks
potentially generate better results from the business activities. The Nuon
Management Board is responsible for the company’s risk management
and control system. Nuon strives for transparency when it comes to risks
and recognises all risks that may affect the company.
Nuon, as part of Vattenfall, applies the ‘three lines of defence’ model
for management and control of risks. The first line of defence consists
of the Business Units, which own and manage risks. The risk organisation
makes up the second line of defence and is responsible for monitoring
and controlling risks. The internal and external audit make up the third
line of defence.
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Three lines of defence
Business
Units
Risk organisation and
other control functions
Internal audit
and external audit
First line of defence
Ownership and
management of risk
Second line of defence
Risk management
and risk control
Third line of defence
Independent review
and oversight
Risks
The following paragraphs describe some of the main risks that Nuon
faces, as well as risk management efforts undertaken.
■■
The Nuon Risk Management Framework
The objective of the Nuon Risk Management Framework is to provide
reasonable assurance that the achievement of strategic and operational
objectives is effectively monitored, that the financial reporting is
reliable, and that current laws and regulations are complied with.
The framework is part of Nuon’s Governance and designed to ensure
an acceptable risk exposure, based on a thorough and transparent
analysis of Nuon’s risks, thus facilitating the in-control situation and
risk exposure based on an appropriate assessment of the risk-reward
balance. The framework facilitates the monitoring of risks with a
potential impact on the organisation and is based on a set of best
practice policies, procedures and internal control mechanisms.
The Nuon Risk Management Framework focuses on ensuring that
the most important risks are identified and that appropriate control
measures are taken to manage these risks. The Nuon Risk Management
Framework is executed as an element of the Vattenfall Risk Management
Framework. The Framework is based on the COSO Enterprise Risk
Management (ERM) Framework.
The ERM is executed as a continuous process for identifying, assessing,
managing and following up risks at all levels of the business at an early
stage. Every quarter, an overall report is prepared for discussion at
Board level.
■■
■■
■■
■■
■■
Important components of the Nuon Risk Management Framework are: ■■ The Vattenfall Management System (VMS) that Nuon, as part
of Vattenfall, implemented, which contains regulations, guidelines
and procedures that are relevant for the relationship between
N.V. Nuon Energy and its subsidiaries, Business Units, Staff Functions
and other Vattenfall companies. VMS includes the Vattenfall Code
of Conduct and the Whistleblower Policy, which are publicly accessible
at www.nuon.com. VMS also comprises the IFRS accounting manual
and the reporting manual;
■■
■■
The Vattenfall Code of Conduct, which sets the behavioural rules for
all employees. The Code of Conduct fosters an honourable business
culture in which the rules applicable to employees are clear. Breaches
of the Code of Conduct are not tolerated, but are investigated and
lead to sanctioning;
The Risk Management organisation, headed by the Chief Risk Officer
of Vattenfall, supports Nuon, applying Vattenfall’s risk framework.
The Risk Management organisation monitors market risk on a daily
basis, manages credit risk, oversees compliance with policies and risk
limits, and guides the group-wide reporting of significant business
risks. Together with other specialist risk stakeholders (for example
health and safety, information security), the Risk Management
organisation supports the Business Units in the identification,
quantification, mitigation, monitoring and reporting of risk;
The Nuon Internal Control department is responsible for reporting
on internal control aspects, such as the authorisation matrices,
the key controls (including authorisations for key systems) and
progress of the follow-up on audit findings;
The Ethics and Legal Compliance department within Vattenfall is
responsible for creating awareness of compliance issues and internal
regulations, including the Code of Conduct, advising the line
management on measures to enhance compliance and monitoring
compliance risks, and the Compliance report, which contains a
summary of compliance items and investigations;
The Nuon Business Control Framework, containing the key controls
for the different business areas;
The planning & control cycle, in which annual budgets are assigned
for each organisational unit and the outcome is subsequently
discussed between the Management Board and the Business Units;
The periodic reporting on Business Units’ financial and operational
performance, partly based on the system of Key Performance
Indicators (KPIs);
The Nuon governance reporting cycle, in which all aspects of
governance, such as risk, compliance, claims & litigation, internal
control and tax are reported based on a COSO self-assessment of
risk management and internal control and the Nuon Business Units’
‘Statements on Business Control’. The Management Board discusses
these statements annually with the responsible management and
the Audit Committee;
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26 N.V. N uon Energ y A nn ua l Re p o r t 2 0 1 2
■■
■■
■■
■■
The risk reports, highlighting the risks identified as having a
potentially significant impact on the business. These reports are
challenged by Risk Management and further reviewed in quarterly
sessions with members of the Management Board. These Business
Unit risk reports are used as the basis for Risk Managements’
formulation of the quarterly Enterprise Risk Report, which
summarises the most significant risks facing the organisation.
This report is reviewed by the Management Board prior to being
presented to the Audit Committee of the Supervisory Board;
The responsible management’s confirmation at the corporate
and unit level of the reliability of the financial reporting through
signed Letters of Representation;
The execution of audits by the Internal Audit department in conformity
with the annual plan, which is approved by the Management Board
and the Audit Committee. Their reports and findings are discussed
with the Management Board and the Audit Committee;
The follow-up of findings from internal and external audits
by the Business Units, which are periodically reported to
the Management Board.
The Nuon Risk Management Framework is regularly evaluated
and further developed.
Important aspects in the further development and alignment
of the Risk Management Framework in 2012 were:
■■ The continued implementation of the Tax Control Framework
and the testing of the main key controls to ensure the effectiveness
of this framework;
■■ Enhancing the design and implementation of authorisation matrices
for all key systems, including regular reporting on actual assigned
authorisations;
■■ The further improvement of the processes and organisation within
Nuon’s energy-related services subsidiaries.
Co rp o ra te governa n ce re p or t
26
such valuation models is strictly regulated, and approval is required
from the risk organisation before they are allowed to be used.
Electricity price risk
Electricity prices are affected by fundamental factors, such as supply
(water levels, and available generation and transmission capacity),
demand (electricity use, which in turn is affected by weather and
the economy, among other things), fuel prices and the price of
CO2 emission allowances. Nuon hedges its electricity generation
and electricity sales through the use of physical and financial forward
contracts and long-term customer contracts. The amount of future
electricity generation that is to be hedged, within the mandates
prescribed by the Vattenfall’s Board, is decided by Vattenfall’s risk
committee. To measure electricity price risk, Vattenfall uses methods
such as Value at Risk (VaR) and Gross Margin at Risk along with
various stress tests.
Fuel price risk
Fuel price risk is the short-term volatility and the long-term fundamental
change in primary fuel prices. It is minimised through analysis of
the various commodity markets and diversification of contracts with
respect to price model and terms. With regard to hard coal-fired and
gas-fired electricity generation, hedges on electricity and fuel prices
are co-ordinated to ensure a set fuel cost and thus the gross margin
on the electricity generation.
Volume risk
Volume risk mainly arises in the sales activities as deviations between
anticipated and actual volumes delivered to customers. This risk is
contained by quantitative analysis as part of the forecasting process.
This section describes the most important risks within Nuon.
The defined risk categories according to the ERM model are: market
& financial, technology, infrastructure, laws & regulations, personnel
& organisation and politics & society. Selected examples of risks
to which Nuon is exposed are described below.
Credit risk
Credit risk arises if a counterparty or contractor cannot or is not willing
to fulfil its obligations. Credit risk exists in Nuon’s commodity trading,
sales activities, treasury activities and investments. A consistent approach
to credit analysis and management is applied throughout the organisation,
with the degree of review undertaken varying depending on the magnitude
of credit risk in a transaction. Credit risk is managed through established
credit policies, regular monitoring of credit exposures and application
of appropriate mitigation measures (such as by obtaining collateral).
Note [32] to the financial statements provides further qualitative
Liquidity risk
and quantitative information on financial instruments and financial
riskmanagement.
Liquidity risk refers to, for example, the risk of not being able to pursue
the price hedging strategy due to insufficient liquidity in the electricity
and fuel markets, This risk is managed through hedging and by securing
an optimal number of trading counterparties.
Principal risks - main risks and mitigation
Financial risk
Nuon’s financial risks arise in both the commodities and financial
markets. Vattenfall’s Board of Directors has given the CEO a mandate
for the Vattenfall Group, which is delegated onwards to the Business
Divisions and therefore to Nuon. During the year, the mandate
structure was reviewed and changed to improve risk governance
in the operations.
The majority of the exposures in the proprietary trading portfolio are
valued based on market prices (mark-to-market). If market prices cannot
be observed, modelled prices are used (mark-to-model). Handling of
Liquidity risk also pertains to the risk of not being able to finance the
required capital needs. Liquidity risk is mitigated through sufficient
funding, which ensures access to capital and flexibility.
Interest rate risk
Interest rate risk is the risk that the market value of a fixed-income
security or a fixed-rate loan will change due to a change in interest rates.
Furthermore, changes in short-term interest rates can impact the rate
of return on short-term cash investments.
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Currency risk
Nuon is exposed to currency risk through exchange rate movements
attributable to future cash flows (transaction exposure) and in the
revaluation of net assets in foreign subsidiaries (translation or balance
sheet exposure).
Nuon has limited transaction exposure, since most electricity generation
and sales activities of electricity take place in the local Dutch market.
Sensitivity to currency movements is thus also relatively low. The
Business Units are required to hedge all contracted transaction exposure
in another currency when it exceeds the equivalent of a maximum of
EUR 1 million. Upon identifying a currency risk above the limit, the risk
is hedged with external counterparties through average rate options
and spot and forward exchange contracts.
Operational risk
In the course of its operations, Nuon is exposed to numerous operational
risks, such as in plants, infrastructure, personnel and organisation.
These risks are described below.
Operational asset risk
Nuon’s largest operational asset risks are associated with the operation
of power generation and heat production plants. An important part
of the company’s continuous risk management efforts involve a rolling
inspection programme and continuous control of plant conditions
to ensure effective maintenance.
Nuon protects itself against economic loss to the greatest extent possible
through insurance.
Security risk
Nuon works with loss prevention and mitigating security measures
to protect its assets, IT systems, data, personnel and continuity
of its operations. Nuon ensures that assets and data are protected
from improprieties and fraud through, among other things, adherence
to the so-called four eyes principle, entailing that decisions must be
approved by at least two persons unless there are exceptions.
Personnel risk
Nuon works with preventive measures and adopts best practices in its
health and safety work. Nuon’s production sites maintain a high level
of process safety to ensure the safety of both employees and society
in general.
In addition, Nuon takes a structured approach to succession
and competence planning, both in the near and long term.
Legal risk
Nuon mitigates legal risks by engaging Staff Function Legal Affairs
in the ongoing business activities and decision-making processes.
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27
Political risk
To protect itself from political risks, Nuon conducts active business
intelligence activities and maintains contacts with decision-makers.
In addition, its parent company, Vattenfall, belongs to various national
and international trade organisations with a view to safeguard and
promote the company’s interests.
Investment risk
Nuon is a highly capital-intensive company with an extensive investment
programme.
Nuon applies a thorough project governance process of which risk
assessment is an integrated part. Before each investment decision,
the risk unit performs an independent review of obligations and
transactions. In addition to a strategic investment approach, a detailed
five-year plan of investment projects is updated yearly to provide
guidance in the investment decision process.
Sustainability risk
Vattenfall has structured its work with sustainability issues in seven
areas: the environment, human rights, working conditions, gender
equality, diversity, business ethics and anti-corruption. During the
year, integration of these sustainability aspects with the continuing
operations was intensified. Both governance and content have been
escalated to the level of the parent company and a new advisory and
co-ordinating function has been established to ensure that Vattenfall
and Nuon manage sustainability issues in the best possible manner.
Responsibility
Nuon’s Management Board is responsible for the design and operation
of our internal risk management and control system. During 2012
the design and operation of this system was evaluated, mainly based
on the business control information, the Internal Audit reports and
the management letter from the external auditor.
The Nuon Enterprise Risk Management Framework does not provide
absolute assurance as to the achievement of the corporate objectives,
nor does it guarantee that material errors, losses, fraud or violations
of laws and regulations will not occur in the operational processes
and/or the financial reporting.
With due regard to the above, the Management Board is of the
opinion that the internal risk management and control systems provide
a reasonable assurance that the financial reporting does not contain any
errors of material importance and that the risk management and control
systems worked properly as regards the financial reporting risks in
the year under review.
Based on the above, Nuon is of the opinion that the company thus
satisfies the best practice provisions II.1.3, II.1.4 and II.1.5 of the Dutch
Corporate Governance Code.
Strategic risk
Nuon is exposed to a range of external influences that are often difficult
to manage. To manage strategic risk, Nuon, as part of Vattenfall, not
only works with scenario analyses and business intelligence activities,
but diversifies risk in its generation and distribution portfolios with
respect to markets as well as sources of energy.
The above was also discussed with the Audit Committee of the
Supervisory Board in the presence of the internal and external auditors.
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28 N.V. N uon Energ y A nn ua l Re p o r t 2 0 1 2
Re p o r t o f th e Su p er vi s o r y Board
Report of
the Supervisory Board
During 2012, the Supervisory Board (‘the Board’) carried out its tasks in
accordance with the statutory provisions and the articles of association
of N.V. Nuon Energy and supervised and advised the Management Board.
Composition of the Supervisory Board as at 31 December 2012
Composition
Director A or B Committees
Øystein Løseth, Chairman
B
Member of the Remuneration
and Audit Committee
First appointment
Reappointment
Current term until
2010
–
2014
Anders Dahl
B
-
2012
–
2016
Tuomo Hatakka
B
-
2009
–
2013
Tom de Waard
B
Chairman of the
Remuneration Committee
2010
–
2014
Leni Boeren
A
Member of the
Remuneration Committee
2009
–
2013
Pieter Bouw
A
Chairman of the Audit Committee
2009
–
2013
Derk Haank
B
Member of the Audit Committee
2009
–
2013
Jacques Schraven
A
-
2009
–
2013
On 29 June 2012, Vattenfall AB acquired an additional 3.04%
of the shares in Nuon. As a result, the total percentage of shares
of Nuon held by Vattenfall AB exceeds 67%. Consequently, article 48
of the articles of association of N.V. Nuon Energy became applicable,
which led to a change in the composition of the Supervisory Board to
three Supervisory Directors A and five Supervisory Directors B. With
effect from the above date Derk Haank became a Supervisory Director B.
On 6 December 2012, Anders Dahl was appointed as a member of
the Supervisory Board, succeeding Torbjörn Wahlborg, who resigned
with effect from that date.
The Board has drawn up a profile indicating the desired criteria and
competences of the composition of the Board. This profile can be found
on our corporate website www.nuon.com. Appointments and
reappointments are assessed in the light of the profile. In the case
of reappointments, the performance of the person involved is also
taken into consideration.
In the opinion of the Board, all its members can be considered to
be independent in the sense of best practice provision III.2.2 of the
Dutch Corporate Governance Code (‘the Code’), except as disclosed
in the Corporate Governance report on page 20.
The current members of the Board comply with best practice provision
III.3.4 of the Code, which stipulates that the number of supervisory
directorships of Dutch listed companies may not exceed five (per
person), on the understanding that a chairmanship is equivalent to
two memberships.
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Meetings and activities of the Supervisory Board
Meetings of the Supervisory Board
The Board met nine times in the reporting year. All members were
frequently present at the meetings of the Supervisory Board. At almost
every meeting, agenda items included business and market developments,
financial results, cost control and risk items, progress of major capex
projects and safety performance. In addition, the Board discussed
a broad range of subjects.
In February, the Board discussed the financial performance of
Nuon in 2011, the business plan for the company, the developments
in the relocation project of Nuon’s headquarters and the progress of
the construction of the power plant Diemen 34. The meeting took place
at the building site of the power plant Diemen 34, after which the
Board conducted a site visit.
In March, following an update by the Remuneration Committee
on remuneration topics, the Board approved the target-setting for
the Management Board members for 2012 and also approved the target
realisation for 2011. Furthermore, the dividend proposal was discussed
and approved, as part of the company’s annual report, and the report
of the Supervisory Board, including the remuneration report.
In April, following an update by the Audit Committee, the Board
approved the Annual Report 2011 and discussed the report of the
external auditor. Furthermore, the agenda for the 2012 General Meeting
of Shareholders was discussed. The Board moreover received an update
on M&A activities, which was discussed along with the development
of certain large capex projects.
In May, following an update by the Audit Committee, the Board
discussed the first quarter 2012 financial results and was informed
about the progress of certain large capex projects.
In June, the renewed Code of Conduct as applicable to Vattenfall as
a whole was discussed and approval was requested for investments
in certain strategic projects. Furthermore, the progress of a M&A project
was discussed.
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29
In November, the Board discussed the company’s third quarter results
and the effects of the impairment test conducted at Vattenfall AB level.
The Board discussed the intended closure of the power plant in Buggenum.
Furthermore, the overall strategy of Vattenfall, market developments
and the main risks in the sector were discussed.
In December, following an update by the Remuneration Committee,
the Board approved the revised remuneration package for the CFO.
The company’s 2013 budget and business plan for 2013-2017 were
presented. Developments in M&A activities and other major projects
were discussed, and also a self-assessment was made.
Shareholder meetings
Five members of the Board attended the Annual General Shareholders’
meeting on 15 May 2012. During this meeting, the annual accounts
and the dividend distribution for 2011 were approved. The members
of the Management Board and the Board were discharged for their
management and supervisory activities, respectively, during the 2011
financial year. Furthermore, Ernst & Young was appointed as the
external auditor for 2012.
On 11 June 2012 and 6 December 2012, several members of the Board
attended the Extraordinary General Meetings of Shareholders. During
the meeting on 11 June 2012, the proposal to accelerate the transfer
of the third tranche of A shares to Vattenfall AB was discussed. Fifty-six
shareholders, representing about 99.37% of the issued A shares, approved
an amendment of the Shareholders Agreement for one-off dispensation
from the lock-up period. Consequently, Vattenfall AB acquired an
additional 3.04% of shares in Nuon on 29 June 2012.
During the meeting on 6 December 2012, the proposal to appoint
Anders Dahl as a member of the Supervisory Board was approved.
Contacts with the Central Works Council
In accordance with the covenant agreed with the Central Works Council,
consultations were held prior to meetings of the Board between the
members of the Board appointed on the recommendation of the Central
Works Council – namely Pieter Bouw and Leni Boeren – and the
Executive Committee (Dagelijks Bestuur) of the Central Works Council.
In September, the Board discussed the company’s second quarter results
and the outcome of the employee satisfaction survey. A revised business
and operational structure for Vattenfall was presented. Furthermore,
Meetings of the Audit Committee
an update on the company’s brand migration project was provided.
In addition, the progress of certain major capex projects was discussed
and amendments to the By Laws of the Supervisory Board were approved.
Øystein Løseth. The composition of the Audit Committee meets
the requirement of best practice provision III.5.7 of the Code.
The Audit Committee of Nuon met six times in 2012.
In October, the Board held a special session to discuss the effects
on the company’s balance sheet resulting from the impairment test
as conducted at a Vattenfall AB level.
The Audit Committee reviewed and discussed in particular all
financially relevant matters that were presented to the Supervisory
Board. The Audit Committee also monitored the internal risk framework
and risk management systems. Among others, the topics discussed
included the quarterly results, the annual report, internal audit plans,
reports of the internal and external auditor, the budget and projections,
risk reports and the introduction of the mandatory supplier model in
the Dutch energy market.
The Audit Committee consists of the following three members of
the Supervisory Board: Pieter Bouw (Chairman), Derk Haank and
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Meetings of the Remuneration Committee
The Remuneration Committee consists of the following three members
of the Supervisory Board: Tom de Waard (Chairman), Øystein Løseth
and Leni Boeren.
In 2012, the Remuneration Committee met three times. The committee
reviewed and approved the target realisation for 2011 and discussed
the target-setting for 2012. Furthermore, the Remuneration Committee
evaluated the performance of the members of the Management Board,
discussed the change in roles and responsibilities of Huib Morelisse and
Peter Smink following the revised organisational structure of Vattenfall
and decided on the amended remuneration package of Peter Smink.
Corporate governance
The Board endorses virtually all the principles and best practice
provisions of the Corporate Governance Code. Nuon departs from
the Code in a limited number of cases. The manner in which Nuon
applies the Code remained unchanged in the reporting year. A separate
chapter of this annual report describes the corporate governance
structure in general terms and indicates how Nuon has applied the
principles and best practice provisions of the Code. This chapter
also explains the cases where Nuon departs from the Code.
General terms of the remuneration policy
The remuneration policy is designed to enable Nuon to recruit,
motivate and retain qualified and expert directors in order to achieve
its strategic objectives. The total remuneration package of the members
of the Management Board consists of an annual gross base salary,
pension benefits and other emoluments. In addition, the CFO is entitled
to a short-term variable salary for the period during which he was not
a member of Vattenfall’s EGM.
The Remuneration Report in this annual report (page 33) provides
a full and detailed overview of the remuneration policy for the
Management Board, as well as a description of the execution of the
remuneration policy for the Management Board in 2012. An overview
of the remuneration of the Supervisory Board members is also provided.
Annual Report and Dividend Proposal
This annual report contains, among other things, the financial
statements for the 2012 financial year as signed by the Management
Board and the Supervisory Board. The financial statements for 2012,
as prepared by the Management Board, were audited by the external
auditor, Ernst & Young Accountants LLP, which issued an unqualified
audit opinion on these financial statements. The independent auditor’s
report on the consolidated and company financial statements are included
in the section Other on page 124.
Re p o r t o f th e Su p er vi s o r y Board
30
The 2012 financial statements were discussed by the Audit Committee
and the external auditor, in the presence of the Chief Executive Officer
and the Chief Financial Officer. In addition, the Supervisory Board also
discussed the 2012 financial statements with the Management Board
in the presence of the external auditor. On the basis of these discussions,
the Supervisory Board is of the opinion that these 2012 financial
statements meet the requirements and also provide a good basis
of accountability for the conducted supervision.
It is recommended that the General Meeting of Shareholders:
■■ Adopts the financial statements 2012;
■■ Adopts the dividend proposal as included in the section Other
in this annual report for the financial year 2012;
■■ Endorses the conduct of the company’s affairs by the members
of the Management Board during the financial year 2012 and
the supervision by the members of the Board during the 2012
financial year.
Developments in 2013
On 1 January 2013 the Act on Management and Supervision (‘Wet
Bestuur en Toezicht’) took effect. This legislation introduces a limitation
on the number of supervisory positions, as well as management board
positions held by an individual and target figures for a more even
distribution of board seats between men and women.
The Supervisory Board discussed this new legislation and the possible
implications. It concluded that, at this time, no alterations regarding
the Supervisory Board are required based on the Act on Management
and Supervision. A possible implication for the Supervisory Board of
N.V. Nuon Energy is that the profile of the Supervisory Board may have
to be changed to bring it in line with the target figures for a more even
distribution of board seats under the new Act. These figures will be
one of the factors taken into account when looking for new candidates
for Supervisory Board members, therefore appointments and
reappointments will be considered carefully.
A word of thanks
The Board would like to take this opportunity to thank the members
of the Management Board and all Nuon employees for their contribution
to the results in 2012.
Amsterdam, 15 April 2013
The Supervisory Board
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31
Details of the Supervisory Board
(As at 31 December 2012)
Øystein Løseth
(male – 1958)
Anders Dahl
(male – 1957)
Tuomo Hatakka
(male – 1956)
Leni Boeren
(female – 1963)
Pieter Bouw
(male – 1941)
Chairman of the Supervisory Board and member of the Remuneration Committee and the Audit Committee
Øystein Løseth (Norwegian nationality) was appointed as a member of the Supervisory Board on 8 April 2010. On 1 April 2010,
Øystein Løseth resigned as member and Chief Executive Officer of the Management Board of N.V. Nuon Energy and was
appointed as the president and CEO of Vattenfall AB with effect from 12 April 2010. Øystein Løseth graduated in 1983 with
a Master’s degree in Engineering from the Technical University of Trondheim and then studied Economics in the period
1985-1986 at the Bedriftsøkonomisk Institutt, Bergen. From 2003 until 1 July 2009, Øystein Løseth fulfilled several
management positions at n.v. Nuon and after 1 July 2009 at N.V. Nuon Energy. He was a member of the Management Board
from January 2006 and was appointed as Chief Executive Officer with effect from April 2008. Before joining Nuon in 2003,
Øystein Løseth fulfilled several management positions at Statkraft in Norway. Prior to his career at Statkraft, he worked
at Naturkraft, Alliance Gas and Statoil.
Anders Dahl (Swedish nationality) was appointed as a member of the Supervisory Board on 6 December 2012. Anders Dahl
has been serving as Production Director CHP Vattenfall Poland since 2002 and as Head of Business Unit Wind since 2005.
He was acting Head of Business Group Pan Europe during 2010 and Head of Business Division Renewables from January 2011
to November 2012. On 1 November 2012, Anders Dahl became Head of Business Division Distribution and Sales. Anders Dahl
graduated in 1981 with a Master’s in Science from Kungliga Tekniska Högskolan, Mechanical.
Tuomo Hatakka (Finnish nationality) was appointed as a member of the Supervisory Board on 17 June 2009. Tuomo Hatakka
has been serving as Senior Executive Vice President of Vattenfall AB since 2005 and as Head of Business Division Production
since 1 January 2011. He was Head of Business Group Central Europe from January 2008 to December 2010 and previously
headed Vattenfall’s Polish activities. He studied Economics at the Helsinki School of Economics and Business Administration
and has an MBA from the Instituto de Estudios Superiores de la Empresa in Barcelona, Spain. His professional experience
includes work as a consultant at Bain & Company, London, Executive Vice President and partner at Enterprise Investors
in Warsaw, Poland, and President and CEO of Elektrim Kable SA, Warsaw, Poland.
Member of the Remuneration Committee
Leni Boeren (Dutch nationality) was appointed as a member of the Supervisory Board on 17 June 2009. Leni Boeren
has been a member of the Board of Management of Robeco Groep N.V. since 2005. She is a former member of the
Executive Committee of Euronext N.V. (2000-2005) where she held the position of Managing Director of Information
Services, among others. She was a member of the board of the Amsterdam Exchanges N.V. (1997-2000), and previously
worked for Robeco Groep, Rabobank and BNP Paribas. Other supervisory directorships and advisory functions held
by Leni Boeren include that of Vice Chairman of the Supervisory Board and Chairman of the Audit Committee of
the Tergooiziekenhuizen (hospitals in Blaricum and Hilversum), member of the board of the Stichting Kunsthal
Rotterdam (museum of art) and member of the board of Amsterdam Sinfonietta (string orchestra).
Chairman of the Audit Committee
Pieter Bouw (Dutch nationality) was appointed as a member of the Supervisory Board on 17 June 2009. Pieter Bouw is
a former CEO and President of KLM Royal Dutch Airlines N.V. and a former member of the Supervisory Board of n.v. Nuon.
Currently Pieter Bouw serves as a board member of the trust office of a number of Dutch companies.
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Derk Haank
(male – 1953)
Jacques Schraven
(male – 1942)
Tom de Waard
(male – 1946)
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32
Member of the Audit Committee
Derk Haank (Dutch nationality) was appointed as a member of the Supervisory Board on 17 June 2009. Derk Haank
is Chairman of the Corporate Executive Board of Springer Science + Business Media. He is a former member of the
Reed Elsevier N.V. Management Board and the Supervisory Board of n.v. Nuon. Other supervisory and advisory positions
held by Derk Haank include that of member of the Supervisory Board of MSD Nederland, KPN and member of the
Supervisory Council of the Dutch broadcasting association TROS.
Jacques Schraven (Dutch nationality) was appointed as a member of the Supervisory Board on 17 June 2009.
Jacques Schraven was formerly Chairman of the Confederation of Netherlands Industry and Employers VNO-NCW and,
prior to that, President-Director of Shell Nederland B.V. Jacques Schraven was also a member of the Supervisory Board
of n.v. Nuon. He is currently Chairman of the Supervisory Board of Tata Steel Nederland B.V. and a non-executive
director of Tata Steel Ltd (India). He is also a member of the Supervisory Board of Stork B.V. and BNP OBAM N.V.
In addition, he is the Chairman of the Foundation Trust Office Unilever N.V. Outside the business sector, Jacques Schraven
serves as Chairman of the Supervisory Board of the Netherlands Blood Institute Sanquin. His other directorships include
the Carnegie Foundation and the Rotterdam Philharmonic Orchestra.
Chairman of the Remuneration Committee
Tom de Waard (Dutch nationality) was appointed as member of the Supervisory Board on 8 April 2010. Tom de Waard
graduated from Leiden University in 1971 and joined Stibbe in Amsterdam as a lawyer in the same year, where he
became a partner in 1979. He was the resident partner of Stibbe in New York (1985-1990). In 2000 he joined Clifford
Chance, where he was Managing Partner of the Amsterdam office (2002-2005) and a Member of the Global Management
Committee representing Continental Europe (2005-2007). In 2012 he started his own law firm Tom de Waard CS advocaten.
His expertise includes mediation, corporate litigation and privatisations, especially in the energy and health sectors.
Tom de Waard is a member of the Supervisory Board of STMicroelectronics N.V. (STM). In that capacity he is Chairman
of the Audit Committee and of the Nominating and Corporate Governance Committee and a member of the Remuneration
Committee. Tom de Waard is also Chairman of the Supervisory Board of BE Semiconductor Industries N.V. (BESI) and
a member of the BESI’s Audit Committee and Remuneration Committee.
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33
Remuneration report 2012
This remuneration report has been drawn up on behalf of the Remuneration Committee.
The composition and activities of this committee in 2012 are described in the Report of
the Supervisory Board.
Introduction
Remuneration policy
Pursuant to the articles of association of Nuon, the Supervisory Board,
acting on the advice of the Remuneration Committee, formulates the
remuneration policy for the members of the Management Board of Nuon.
The General Meeting of Shareholders of Nuon adopts the remuneration
policy. Within that remuneration policy, the Supervisory Board,
again acting on the advice of the Remuneration Committee, adopts
the remuneration and other employment conditions of the individual
members of the Management Board.
Remuneration
The remuneration policy for N.V. Nuon Energy was adopted by
the General Meeting of Shareholders on 7 December 2011, with
retrospective effect from 1 January 2011. This policy was put to the
General Meeting of Shareholders by the Supervisory Board while being
simultaneously submitted for information purposes to the Central Works
Council. The remuneration policy does not include a long-term variable
salary. Furthermore, the policy includes a mandate for the Supervisory
Board to amend or increase the total remuneration package temporarily
to reflect additional responsibilities and workload.
The policy facilitates compliance with the Dutch Corporate Governance
Code as well as with Vattenfall’s interpretation of the guidelines of the
Swedish State; ‘Terms of Employment for Senior Executives in Stateowned Companies’. These guidelines of the Swedish State stipulate
that the remuneration package for leading employees should follow
a specific design. Members of the Executive Group Management (EGM)
of Vattenfall AB are considered to be leading employees in the context
of the Swedish State guidelines. For detailed information, please see
Vattenfall AB’s annual report (www.vattenfall.com).
Nuon’s remuneration policy and remuneration report comply with
the Dutch Corporate Governance Code. Where this is not the case,
the departures are highlighted and explained.
Nuon’s remuneration policy is aimed at creating conditions conducive to
recruiting, motivating and retaining qualified and talented management
in order to enable the company to achieve its strategic and operational
objectives. Nuon’s specific remuneration policy is geared to the median
of the relevant remuneration market and includes the fixed and, to
the extent applicable, variable components associated with that market.
The relevant remuneration market is defined as the Dutch employment
market for the Management Boards of companies with comparable
turnover, staff levels and complexity.
The total remuneration shall be reasonable and well-considered.
Overall, the remuneration principles shall be characterised by
moderation. The following will apply:
■■ The full remuneration package shall be competitive but not marketleading in the relevant employment market;
■■ Variable pay is not applicable to a member of the Management Board
who is simultaneously a member of the EGM of Vattenfall AB;
■■ Pension is defined as contribution capped at 30% of fixed salary,
unless a group pension scheme or equivalent exists.
The total remuneration package for the members of the Management
Board may consist of the following components:
a) Annual base salary;
b) Short-term variable salary;
c) Pension benefits;
d) Other emoluments.
(a) Annual base salary
The objective for the annual base salary is based on the median level
of the aforementioned reference group of comparable companies.
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(b) Short-term variable salary
The short-term variable salary may be applicable to individual members
of the Management Board. The maximum of this variable salary is 50%
of the annual base salary.
The short-term variable part of the salary is aimed at achieving
challenging objectives which are set in advance by the Supervisory
Board for every accounting year.
The specific objectives are laid down annually in a scorecard.
The targets for short-term variable salary shall be objectively
measurable, i.e. verifiable by audit procedures as clearly defined
and the objectives shall be set at a level that is sufficiently ambitious
and, at the same time, sufficiently realistic.
However, given the Swedish guidelines, the short-term variable salary
is not applicable to a board member who is simultaneously a member
of the EGM of Vattenfall AB.
(c) Pension benefits
Members of the Management Board participate in the pension scheme
that applies to Nuon’s staff. This mandatory scheme, which is arranged
through the ABP pension fund, consists entirely of an average pay
scheme, with a retirement age of 65. An early retirement option is
included in the ABP pension fund. In accordance with current industry
practice, pension entitlement is built up on the basis of the annual base
salary, and the members of the Management Board pay an individual
contribution for membership in the pension scheme.
(d) Other emoluments
Besides the emoluments described above, members of the Management
Board are also entitled to an allowance as well as the use of a company
car. In cases where a Management Board member takes on temporary
additional responsibilities, the Supervisory Board will have the option
to amend or increase the total remuneration package temporarily to
reflect additional responsibilities and workload.
Employment
Every member of the Management Board has an employment contract
with Nuon. As a matter of company policy, employment contracts with
members of the Management Board are entered into for a fixed term
(generally four years), after which they can be renewed. It is company
policy that members of the Management Board receive a severance
payment equal to his or her annual base salary in the case of intermediate
termination of the employment contract by the company. Conditions for
individual members of the Management Board may differ.
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Execution of the remuneration policy
This remuneration report has been drawn up on the basis of the IFRS
principles and Title 9, Book 2 of the Dutch Civil Code, which are also
used for the preparation of the financial statements. This means that the
report on the variable elements of the remuneration relates to the year
in which the elements were earned, regardless of the time of payment.
The following overview summarises the developments during the year
2012 and states the remuneration elements of the members of the
Management Board of Nuon based on their employment contract
with Nuon.
During the period 28 October 2011 to 31 May 2012, Peter Smink
fulfilled the role of acting CFO of Vattenfall, in addition to his role
as CFO of Nuon. During this period, Peter Smink was part of Vattenfall’s
Executive Group Management, and was considered to be a leading
employee. Consequently, his remuneration package did not include
a variable salary component during that period. The activities and the
duties associated with the role of acting CFO of Vattenfall were governed
by a separate labour contract between Peter Smink and Vattenfall AB.
The remuneration in respect of this contract amounted to a fixed
amount of EUR 23,583 per month.
In November 2012, a revised organisational structure was introduced
which led, amongst other changes, to the integration of BD Asset
Development and BD Renewables. Peter Smink was appointed as
Head of this integrated BD Sustainable Energy Production. Since
the date of his appointment, 1 November 2012, Peter Smink has formed
part of Vattenfall’s Executive Group Management and is considered
to be a leading employee. Consequently, his remuneration package
may not include a variable salary component.
Due to the revised organisational structure, the position of Huib
Morelisse as Head of BD Asset Development ceased to exist.
Huib Morelisse will continue in his role as Country Manager in
the Netherlands and has been appointed Head of Health & Safety.
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Overview of total remuneration of the Management Board from N.V. Nuon Energy
Amounts in EUR thousand
Huib Morelisse
Peter Smink
Total
Base salary1
2011
2012
773
750
366
317
1,139
Short-term
variable salary2
2012
2011
43
118
1,067
43
118
Accrued
long-term
variable salary3
2012
2011
33
50
33
Incidental
remuneration4
2012
2011
27
169
27
50
169
Total
2012
2011
800
919
442
485
1,242
1,404
The base salary for Peter Smink as included is for his role as CFO of N.V. Nuon Energy for 2012, and his role as Head of BD SEP as of 1 November 2012.
The STI2012 of Peter Smink is based on 50% of base salary over the period of five months and a realisation of 65%.
The amount for the accrued long-term incentive of Peter Smink comprises pro-rata accrued amounts, including interest, for the LTI 2010-2012. With effect from 1 January 2011 Peter Smink
is no longer entitled to a long-term incentive.
4
The incidental remuneration for Huib Morelisse includes compensation for missed option schemes with his former employer payable in 2010, 2011 and 2012.
1
2
3
Annual base salary
Long-term variable salary
The employment contract with Huib Morelisse was entered into
on 1 July 2010 for a period of four years. His annual base salary
is EUR 772,500.
The amount for the long-term variable salary (LTI) of Peter Smink,
amounting to EUR 33,000, comprises the pro rata accrued amounts
including interest for the earlier awarded LTI of 2010-2012. Following
the current remuneration policy, the long-term variable salary
component is no longer applicable with effect from 1 January 2011.
During the period 1 January 2012 until 31 October 2012, the annual
base salary of Peter Smink was EUR 317,000. A new employment
contract with Peter Smink was entered into from 1 November 2012
for a period of four years. His annual base salary is EUR 617,000.
Incidental remuneration
Short-term variable salary
In 2012, incidental remuneration for Huib Morelisse consisted of paid
and accrued compensation for missed option schemes with his former
employer amounting to EUR 27,000.
Due to the termination of the long-term incentive with effect
from 1 January 2011, the short-term incentive increased from 30%
to a maximum of 50% of the annual base salary.
Pension benefits, social security contributions
and other emoluments
The granted short-term variable salary for Peter Smink under the 2012
performance contract has been determined at 65% of the variable salary
for the applicable period. This percentage is based on the goals achieved
in relation to the scorecard as determined by the Supervisory Board
and resulted to a payment for the period 1 June to 31 October 2012
of EUR 43,000.
The members of the Management Board participate in the ABP pension
scheme that is applicable to the company. Nuon has not provided any
loans, advances or guarantees to members of the Management Board
or Supervisory Board. The impact of the crisis tax (‘crisisheffing’) as
imposed by the Dutch government in 2012 (EUR 162,000) is not included
in the table below.
The remuneration package of Huib Morelisse does not include a
variable component. From 1 January until 31 May 2012, and as
from 1 November 2012, the remuneration package of Peter Smink
does not include a variable salary.
Overview pensions, social charges and other
Amounts in EUR thousand
Huib Morelisse
Peter Smink
Pensions
2011
2012
136
125
57
50
Social charges
and other
2012
2011
15
14
11
9
Total
2012
2011
151
139
68
59
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Remuneration of the Supervisory Board 2012
The remuneration of the Supervisory Board is determined by the
General Meeting of Shareholders. With effect from 1 July 2009, the
members of the Supervisory Board receive EUR 35,000 per annum.
The Chairman of the Supervisory Board receives remuneration of
EUR 45,000 per annum. Members of the Supervisory Board, who
Rem un era ti on re p o r t 2 01 2
36
are also a member of the Audit Committee, or Remuneration Committee
receive an extra payment of EUR 10,000 based on full year membership.
Remuneration is only paid to those members of the Supervisory Board
who are not employed by Vattenfall AB or one of its subsidiaries.
The remuneration is in line with remuneration packages of companies
comparable to Nuon and Vattenfall.
Remuneration of the Supervisory Board
Amounts in EUR thousand
1 January 31 December 2012
Director A/B
Øystein Løseth, Chairman
Torbjörn Wahlborg1
Dag Andresen2
Anders Dahl3
Leni Boeren
Pieter Bouw
Derk Haank
Tuomo Hatakka
Jacques Schraven
Tom de Waard
Total
Until 6 December 2012
Until 31 January 2011
As at 6 December 2012
1
2
3
Amsterdam, 15 April 2013
The Remuneration Committee
B
B
B
B
A
A
B
B
A
B
1 January 31 December 2011
-
-
-
-
45
45
45
35
45
45
215
215
45
45
35
45
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Corporate Social Responsibility
A secure, affordable and reliable energy supply is a fundamental prerequisite for
a functioning society. However, all energy production has an environmental impact.
Nuon, as part of Vattenfall, therefore has a responsibility to address sustainability
in all areas of its operations – from the sourcing of fuels for production to the
distribution and sales of electricity, heat and gas.
This Corporate Social Responsibility chapter is divided into the following five sections:
Security of supply
Sustainability of energy
Affordability of energy
Energy supply to customers should
be reliable, now and in the future.
Nuon therefore maintains a diversified
asset portfolio for production in order
to supply electricity and heating as
securely, affordably and sustainably
as possible. In the transition towards
a sustainable energy supply, Nuon
invests in a diverse production portfolio.
All energy production has an environ­
mental impact. Reducing CO2 exposure
and increasing the share of renewable
energy are core issues for both Vattenfall
and Nuon, with the clear objective
of lowering the group’s overall CO2
emissions to 65 million tonnes per
year by 2020. While conducting an
efficiency improvement programme
aimed at lowering the CO2 footprint
of its existing power production assets,
Nuon continuously aims to expand
its renewable production portfolio.
Energy is a basic necessity for all.
Customers therefore rightly expect
their energy to remain affordable.
However, a significant share of
customers’ disposable, income
is allocated to energy costs. Nuon
aims to keep customers’ costs low
by strategically sourcing the energy
supplied, carefully managing the
portfolio of assets and joining
forces with customers with a view
to saving energy and money.
Health & safety
Joined forces
To Vattenfall and Nuon, safety
is an unconditional objective.
This means that the company takes
responsibility for the health and
safety of its operations, offering
a healthy working environment
with minimal accidents.
Understanding and balancing
stakeholders’ varying demands,
requests and interests is of utmost
importance for enabling Nuon to
conduct its operations in the best
possible manner. Nuon is convinced
that employees, customers and
stakeholders benefit by joining forces.
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Sec u ri ty o f s u p p ly
38
Security of supply
Nuon wants to maintain a supply of electricity and heating that is secure,
by using several energy sources for Nuon’s production portfolio. In addition,
the growth of renewable energy production calls for a more flexible electricity
production portfolio.
Supply chain responsibility
As a purchaser of coal and biomass, Vattenfall feels a strong
responsibility to continuously improve the supply chain as a whole.
Coal supply chain
Together with other electricity producers and a number of NGOs,
Nuon participates in the Dutch Coal Dialogue. The aim is to strengthen
assurance processes with a view to improving the local conditions
of communities, the workforce and the environment in places where
coal for Dutch markets originates, while respecting human rights,
labour rights, the environment and conflict-sensitive business practices.
The second purpose of this dialogue is to improve transparency in the
coal supply chain for Dutch end consumers.
Efforts made in the Netherlands have also contributed to the establishment
of an international initiative, named Bettercoal, aimed at continuous
improvement of corporate responsibility in the coal supply chain.
Vattenfall is a founding member of Bettercoal, together with other
major European energy companies. This business-led initiative aims
to improve international coal mining practices through a set of common
standards that will help mining companies to improve mining practices
in order to protect workers, the environment and local communities
from the impact of coal mining.
Bettercoal is now a duly registered legal entity and a global consultation
process on the draft Bettercoal Code has been initiated. In 2013,
Bettercoal will finalise the Code and coal mining companies will be
invited to complete self-assessments that will be used as the basis of site
assessments. Vattenfall has completed three audits in five years, with
the primary focus on working conditions, and more audits are planned.
Further information regarding the activities of Bettercoal is available
on www.bettercoal.org
The table below shows an overview of the countries from which
Vattenfall sourced hard coal for use in its own power plants in 2012
compared to 2011.
Physical coal purchased for Vattenfall power plants
2012
Colombia
Poland
Russia
South Africa
USA
Venezuela
Biomass sustainability
Nuon, as part as Vattenfall, believes that only sustainable biomass will
make a meaningful contribution to renewable energy production and
climate change mitigation. Therefore, Nuon is a proponent of legally
binding EU sustainability criteria for biomass. Until such legislation
is in place, Vattenfall, is taking several voluntary measures to enhance
2011
44.5%
13.6%
21.4%
24.9%
4.6%
15.9%
0.0%
9.8%
37.9%
20.7%
6.2%
0.5%
the sustainability of biomass. For example, Vattenfall – together
with other large European Utilities – is involved in the development
of a biomass sustainability scheme for the Initiative Wood Pellet Buyers
(IWPB). This initiative covers the full supply chain from the original
biomass source, via processing and transport, to final energy conversion.
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Sec u ri ty o f s u p p ly
Total net production of electricity and heat
Investments in district heating and cooling networks1
TWh/PJ
Amounts in EUR million
60
20
16
17.0
14.4
14.8
13.7
13.7
12.3
12
16.0
13.2
15.8
48
39
58.1
44.5
44.1
13.3
36
29.9
24
8
12
4
1.4
1.4
1.3
1.5
1.5
0
0
2008
Electricity renewable1
Electricity power stations
1
2
23.3
2 009
2010
2011
20 12
Heat power stations2
2 008
1
2 009
2 010
2 011
2012
Relates to gross investments and also includes cooling projects.
Renewable production comprises all renewable electricity that Nuon, acting as producer
and beneficial owner, feeds into the electricity grid via grid connection points. The Annual
Report includes wind energy production from minority interests and third parties which
Nuon, as beneficial owner, feeds into the electricity grid, but excludes foreign wind energy
production (which Nuon does not feed into the electricity grid).
Due to a correction of the actual net produced heat at the Purmerend CHP plant and the
Emmtec, De Kleef and Düren Industry Parks, the historical data for production of heat
differs from that reported in the 2011 Nuon CSR Report.
Gas
To ensure a flexible response to fluctuations in gas supply and demand,
Vattenfall is involved in gas storage activities. When the price is low,
gas is stored below ground in a number of large caverns (cavities created
after salt extraction), including in the area surrounding Epe, just across
the German border, and in the gas storage area in Bergermeer. In the event
of high demand, the gas is extracted from the caverns. These gas storage
activities increase the security of supply and affordability of energy
for customers.
General market conditions for storage have become difficult, due to high
gas prices and a depressed summer-winter spread. While the market
conditions pose a threat to investments in storage, they create opportunities
from a sourcing perspective. In 2012, Vattenfall continued to diversify
its gas sourcing portfolio.
Energy production in a changing landscape
Vattenfall is one of Europe’s largest electricity companies and Europe’s
largest supplier of heat. Nuon, as part as Vattenfall, produces electricity,
gas, heating and cooling.
Electricity
Nuon’s total installed electricity production capacity was 4,632 MW
and the company’s construction activities included three new and
efficient gas-fired power plants in Eemshaven, Amsterdam and Diemen
in 2012. Gas-fired power plants offer the flexibility to absorb the
intermittent availability of renewable energy. The newly built power
plants in Amsterdam and Diemen, supplied their first electricity in 2012.
The Almere 1 power station has been withdrawn from the grid.
The new 1,311 MW Magnum gas-fired plant in Eemshaven underwent
its ‘first fire’ at the end of February 2013 and has now supplied its first
electricity to the national electricity grid. The Magnum plant is expected
to be fully operational by mid-2013.
Heat
There has been continued growth in district heating and cooling
distribution and supply activities. In 2012, 5,841 TJ was supplied,
compared to 5,353 TJ in 2011. In 2012, Nuon welcomed 7,000 new
district heating customers, bringing the total number to 177,000.
The number of customers Nuon supplied with district cooling grew
from 3,391 in 2011 to 4,819 in 2012. The total supply of district cooling
grew significantly to 253.2 TJ in 2012, compared to 164.7 TJ in 2011.
In June 2012, Nuon decided to participate in the large-scale heating
grid for 14,000 homes for the Municipality of Nijmegen, with a view to
achieving a 70% CO2 reduction in comparison with gas-heated boilers.
This equals 31.5 ktonnes of CO2. In July 2012, it was agreed that the
district of Zeeburgereiland would be supplied with district heating
from Westpoort Warmte, a joint venture between Nuon Warmte and
the Municipality of Amsterdam. In December 2012, it was announced
that Westpoort Warmte would supply the new zero carbon Houthaven
district with sustainable heating and cooling, resulting in a CO2 emission
reduction of 80%.
Nuon produces heat in Utrecht at the Lage Weide and Merwedekanaal
combined heat and power plants to the heat network in Utrecht. Diemen 34
will take over the supply of heat to Almere from the Diemen 33 plant,
as a result of which Almere 2 will also be withdrawn from the grid.
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Supply of district heating to customers
Sec u ri ty o f s u p p ly
10,000
8,000
6,000
500
200
169
162
156
170
5,841
2,000
2010
2011
106.3
118.2
2 008
2 009
2,000
164.7
142.1
1,000
0
0
2 0 09
253.2
200
100
3,000
3,391
3,116
40
0
3,596
300
120
80
2008
4,000
4,111
5,353
5,332
5,000
4,819
400
160
6,452
5,241
Customers x 1,000 (HE)1
TJ
177
4,000
1
Supply of district cooling to customers
Customers x 1,000 (HE)1
TJ
40
20 12
1
HE = Housing Equivalent (see List of Definitions).
0
2 010
201 2
2 011
HE = Housing Equivalent (see List of Definitions).
Installed capacity and production of energy production plants | RA-verified
Installed capacity1
2012
Electricity
Heat
MWe
Buggenum
Diemen
IJmond
Velsen
Hemweg (Amsterdam)
Lage Weide & Merwedekanaal (Utrecht)
BMC Lelystad
AHP Purmerend
AHP Kanaleneiland (Utrecht)
AHP Nic. Beetsstraat (Utrecht)
AHP Nieuwegein
AHP Overvecht (Utrecht)
AHP Almere
CHP Purmerend3
CHP Almere
CHP Industry Park Emmtec3
CHP Industry Park De Kleef3
CHP Industry Park Sittard4
CHP Industry Park Düren3
CHP Industry Park Heinsberg
Small-scale CHPs (various locations)
Total
1Electricity
Production2
2012
MWth
2011
Electricity
Heat
Electricity
Heat
GWh
TJ
GWh
TJ
253
749
144
834
1,709
567
0
69
118
67
45
7
15
55
614
105
575
7
90
81
58
128
145
116
99
259
367
210
0
82
103
424
1,027
1,426
843
2,803
4,609
1,729
0
178
108
229
139
14
0
161
3,036
288
3,967
151
256
68
21
298
3
144
1,045
1,329
1,895
838
0
663
135
1,688
4,632
3,462
13,266
15,824
1,153
-
1,232
1,494
832
292
2,900
-
3,421
-
2,163
3,859
-
140
-
136
-
2
-
8
-
26
-
4
0
65
196
1,076
500
2,505
239
2,028
243
1,082
-
0
13
593
0
134
359
2,588
13,250
16,031
capacity decreases with a higher heat supply capacity. The amount depends on factors such as the temperature of the outside air, cooling water and heating pipelines.
CHP Industry Park Heerlen was sold in 2011 and is therefore not included.
Production of electricity means all electricity that Nuon, as producer and beneficial owner, feeds into the electricity grid via grid connection points.
3Due to a correction of the actual net produced heat at the Purmerend CHP plant and the Emmtec, De Kleef and Düren Industry Parks, the historical data for production of heat
differs from that reported in the 2011 Nuon CSR Report.
4 CHP Industry Park Sittard was not operational in 2011 and 2012.
2
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Electricity from renewable energy portfolio
Nuon’s totally installed renewable electricity production capacity in 2012
was 411 MW, compared to 366 MW in 2011, an increase of 12%. The
company’s development activities focused mainly on wind and biomass.
Sec u ri ty o f s u p p ly
Investments in renewable energy capacity1
41
| RA-verified
Amounts in EUR million
100.3
100
0.2
80
Wind energy
Wind production in the Netherlands, including direct purchasing from
third parties, decreased from 1,357 GWh in 2011 to 1,274 GWh in 2012,
mainly as a result of unfavourable wind conditions. Due to preventive
maintenance and good relationships with its contractors, Nuon’s onshore
and offshore wind turbines achieved an availability of 96% in 2012,
compared to 95.5% in 2011.
0.3
56.0 0.2
1.6
60
40
32.0
20
19.1
2 008
Wind
Solar
1
2
53.9
22.0
20.6
1.4
12.1
0
Onshore
In the Netherlands, prospects for expanding onshore wind power
production activities are affected by the limited availability of new
production sites. Nuon is therefore looking to invest in the repowering
of existing projects. This means that older wind energy sites are
being redeveloped by using new turbines, which increases the level
of production. Permit applications for various wind farms are at an
advanced stage and Nuon is aiming for an increase in operating
capacity in the future. By May 2013, all 36 turbines of Zuidlob,
an onshore wind farm under construction, will have been installed
and will be able to supply 88,000 households with energy. Zuidlob
is the first wind farm in the Netherlands with Vattenfall branding.
0.8
100.1
2 009
6.7
2 010
0.4
0.1
5.8
0.4
2 011
2012
Hydro
Biomass2
Relates to gross investments.
Biomass investment data has been added, including 2011 data.
Biomass
As in recent years, wood chips and forest residues from Staatsbosbeheer
(the Dutch Forestry Commission) continued to be the source of biomass
for the Lelystad plant, Nuon’s first dedicated biomass facility.
Solar and hydropower
Offshore
Offshore wind power remains capital intensive. However, it is only
through a large-scale roll-out that the necessary innovation can take
place and costs can be reduced. In 2012, Vattenfall joined a consortium
of nine players that has decided to spend the next four years investigating
the possibility of a reduction in the cost price of offshore wind power
by developing an innovative electricity infrastructure in the North Sea.
The Dutch government has granted a EUR 2 million subsidy to this
innovative project, which is known as the Interconnector.
This Interconnector should allow the energy to be transported flexibly
across Europe.
The Dutch Ministry of Infrastructure and Environment agreed –
together with the port of Amsterdam and Rotterdam and the wind
licensees (SSE Renewables, Eneco and RWE/Essent and Nuon) –
to extend the permits for the wind farms in the North Sea, including
Nuon’s permits for the Beaufort wind farm.
In October 2012, three ‘Homeowners’ Associations’ (VvEs) in
Amsterdam launched a project, together with the Municipality, Liander
and Nuon, whereby the solar power produced is distributed ‘virtually’
across homes. Nuon is pleased to be part of this pilot because it sees
a growing demand among its customers for self-produced electricity.
This pilot can also help map out how a future-proof national scheme
could be designed.
At various locations in the Dutch Nederrijn and Maas rivers,
weirs are used to produce electricity in hydroelectric plants.
The hydroelectric station in Maurik, for example, consists of four
identical installations that produce approximately 25 GWh per year,
which is sufficient to power more than 8,000 households. Options
to expand Nuon’s hydropower capacity are being explored.
One possibility involves the use of standard caissons to achieve
reliable and affordable small-scale hydropower units.
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Sec u ri ty o f s u p p ly
42
Renewable production capacity and production by source | RA-verified
Production capacity
Production1
2012
2012 pro rata of
Nuon ownership
2011
2012
2011
MW
MW
MW
GWh
GWh
Wind2
The Netherlands
Abroad
Subtotal
347
30
377
237
30
267
24
24
24
24
24
7
7
7
7
8
2
2
2
2
-
411
301
320
13
333
1,274
1,274
1,357
75
75
42
4
4
5
1,357
-
Hydro
Small scale the Netherlands
Subtotal
24
42
Solar
Photo Voltaic
Subtotal
8
5
Biomass
Stand-alone
Co-/auxiliary firing Buggenum station
Subtotal
Total
1Renewable
2
2
6
104
110
104
366
1,464
1,508
2
8
97
production comprises all renewable electricity that Nuon, acting as producer and beneficial owner, feeds into the electricity grid via grid connection points. The Annual
Report includes wind energy production of non-controlling interests and third parties which Nuon, as beneficial owner, feeds into the electricity grid, but excludes foreign wind energy
production (which Nuon does not feed into the electricity grid).
Relates to the total wind energy production capacity from both majority and minority interests.
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43
Sustainability of energy
Efforts to reduce the environmental impact of our operations are focussed
on increasing energy efficiency and reducing emissions from energy production
assets, as well as increasing the size of the renewable asset portfolio.
On the road to 2050
A balanced energy production fuel mix
The Dutch government has fully adopted the ambitions presented
in the EU’s Energy Roadmap 2050 – the political guidance to achieve
a competitive low-carbon economy in which electricity production
is CO2 neutral. It has set a target of 16% renewable energy by 2020
and is aiming for a fully sustainable energy supply in 2050. As a European
energy company, our strategy and ambitions are aligned with the
EU’s climate objectives.
In the transition towards a fully sustainable energy supply, the current
production mix still relies on fossil fuels, which result in environmental
emissions. Nuon aims to increase efficiency in the use of fossil fuels,
for example, through the use of residual heat.
Vattenfall presented new sustainability targets in 2012. One example
is that renewable energy growth rates should be higher than the average
growth rates for those markets in Northern Europe in which the company
is operating. CO2 emissions should be reduced to 65 million tonnes of
absolute emissions by 2020. In 2011, emissions totalled 94 million tonnes
and in 2012, 85 million tonnes.
Fossil fuel based production in the Netherlands comes from coal,
natural gas and blast furnace gas. The latter involves residual process
gasses from steel production at Tata Steel, which Nuon processes to
produce electricity. A total of 98.28% of the furnace gas offered by Tata
has been used for the production of electricity. Nuon processed slightly
less blast furnace gas in 2012, namely 20.7%, compared to 21% in 2011.
The annual production fuel mix is influenced by several factors,
including market conditions, portfolio optimisation and maintenance
of the asset portfolio. Nuon’s electricity production in 2012 consisted
of 10.31% from renewable sources, of which 88% from wind power.
In most cases, coal (34.9%) and natural gas (34.1%) are used for ­
fossil-fuel produced electricity. In 2012, the share of biomass co-firing
at the coal-fired Willem-Alexander plant in Buggenum increased to 9.6%
from 8.3% in 2011. Wind power production decreased by 6.1% due to
less favourable wind conditions. This is despite greater availability due
to expanded wind energy capacity. In total, production remained stable.
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44 N.V. N uon Energ y A nn ua l Re p o r t 2 0 1 2
Su s ta ina b i l i ty o f en erg y
Fuel mix supply Nuon Group | RA-verified
Fuel mix supply Retail | RA-verified
%
%
50.3%
Natural gas
52.4%
Natural gas
23.9%
Coal
24.9%
Coal
11.4%
Hydro
6.4%
Wind
5.0%
Miscellaneous
5.8%
Hydro
4.8%
Nuclear
5.2%
Miscellaneous
4.1%
Wind
5.0%
Nuclear
0.5%
Biomass
0.2%
Biomass
0.0%
Solar
0.0%
Solar
Fossil-based energy
84.1%
Fossil-based energy
Renewable energy
15.9%
Renewable energy
CO2 emission rate
Radioactive waste rate
392.2 g/kWh
0.00014 g/kWh
Energy supply fuel mix
All electricity suppliers in the EU are legally required to publish the fuel
mix of their electricity supply to customers. Nuon’s supply mix is shown
in the figure below. This illustrates that the majority of supply in the
Netherlands is sourced from natural gas. The share of renewable electricity
represents the number of Guarantees of Origin (GOO) purchased for
green electricity supplies to end customers. This share showed an increase
to 15.9% for Nuon retail and business customers in the Netherlands.
The share of green electricity purchased by retail customers remained
at the same level; the share for business customers decreased slightly.
87.6%
12.4%
408.4 g/kWh
CO2 emission rate
0.00015 g/kWh
Radioactive waste rate
Fuel mix supply Business | RA-verified
%
47.9%
Natural gas
22.8%
Coal
17.8%
Hydro
4.8%
Miscellaneous
4.6%
Nuclear
1.3%
Wind
0.8%
Biomass
0.0%
Solar
80.0%
Fossil-based energy
Reducing environmental impact
Energy production from fossil fuels results in emissions of carbon dioxide
(CO2), nitrogen oxides (NOx) and sulphur dioxide (SO2), among other
pollutants. Nuon, as part of Vattenfall closely monitors the environmental
impact of heat and electricity production and continuously improves
the plants’ environmental performances to lower emissions.
CO2 emissions from energy production
Investments in new generation, primarily in wind and natural gas, are
required to meet Vattenfall’s CO2 reduction target. In the Netherlands,
investments in new gas-fired power will result in more efficient
generation capacity.
Nuon’s absolute CO2 emissions from electricity and heat production
in energy production plants increased from 8,124 ktonnes in 2011 to
8,427 ktonnes in 2012. This increase is largely explained by a relative
increase in electricity production, mainly at the coal-powered Hemweg
production plant. As in 2011 Hemweg 8 underwent maintenance and
had therefore produced no electricity for nine weeks. Subsequently,
in 2012, the total production hours at Hemweg 8 were 16.7% higher
44
20.0%
Renewable energy
CO2 emission rate
Radioactive waste rate
373.2 g/kWh
0.00014 g/kWh
compared to 2011. Yet Nuon was able to reduce the CO2 emissions
per MW produced at the Hemweg 8 plant, by optimising control of the
boiler and the coal grinding process. This has improved the combustion
process, which in turn improves the efficiency of the plant. Details
of emissions per production site are included in the following table.
The CO2 emissions per unit of electricity (kWh) produced by
Nuon increased from 463 g/kWh in 2011 to 467 g/kWh in 2012.
This was also the result of the increased availability of Hemweg 8
in 2012 in comparison to 2011.
In terms of production and environmental performance, the Hemweg 9
plant is best in class. Like Nuon’s other plants, this newly built plant
meets all environmental requirements.
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CO2, NOx and SO2 emission ratios per unit of electricity production1
G/kWh
Annual CO2, NOx and SO2 emissions1
G/kWh
503,000
499,000
462,500
467,031
462,800
10
0.8
8
0.6
6
8,964
9,200
0.4
0.328
0.329
0.344
0.302
0.082
0.094
3
1.421
0.101
1.333
1.417
1.415
1.490
0
2008
2
4.222
0.287
0.0
1
5.167
4.449
2
0.096
8,427
8,124
4
0.2
0.090
8,196
5.337
5.192
CO2 2
45
NOx
2 009
2010
2011
20 12
2 008
SO2 3
The electricity production comprises the total production of energy production plants using
renewable sources and fossil fuels.
Relates to the CO2 emissions factor on the basis of the production fuel mix. At our power
plants in Velsen and IJmond, the residual gas released during Tata Steel's steel production
activities is used as a fuel to produce electricity. In this way, Nuon puts the blast furnace
gas to good use. The gas contains a high percentage of CO2. With effect from 2006, it has
been agreed with the Office of Energy Regulation of the Netherlands Competition Authority
that Nuon will adjust the CO2 emissions in the production fuel mix to avoid double
counting. The CO2 emission factor of blast furnace gas in this mix is calculated on the basis
of the use of natural gas.
Due to a correction of the actual SO2 emission ratio per unit of electricity production at
the plants in IJmond and Velsen, the 2011 data differs from what was reported in the 2011
Nuon CSR Report.
CO2
1
2
NOx
2 009
SO2
2 010
2 011
2012
2
From energy production. At our power plants in Velsen and IJmond, the residual gas
released during Tata Steel's production activities is used as a fuel to produce electricity.
In this way, Nuon puts the blast furnace gas to good use. The gas contains a high
percentage of CO2. With effect from 2006, it has been agreed with the Office of Energy
Regulation of the Netherlands Competition Authority that Nuon will adjust the CO2 emissions
in the production fuel mix to avoid double counting. The CO2 emission factor of blast furnace
gas is calculated in this mix on the basis of the use of natural gas. Due to the sale of CHP
Industry Park Heerlen in 2011, the CO2 emissions are not reported. This results in a change
in the total for 2009 and 2010 compared to the 2011 Nuon CSR Report.
Due to a correction of the actual SO2 emissions at the plants in IJmond and Velsen,
the data of 2011 differs from those reported in the 2011 Nuon CSR Report.
NOx emissions from energy production
SO2 emissions from energy production
Together with sulphur dioxide (SO2), the emission of nitrogen oxides (NOx)
is the main cause of acidification, which results in damage to vegetation
in forests and lakes. Nitrogen oxides also cause eutrophication in forest
soils and on sea beds. These emissions therefore need to be reduced
and are subject to stringent regulations.
The combustion of coal and blast furnace gas causes sulphur dioxide
(SO2) emissions. Nuon emits SO2 from coal-fired power plants and
from plants where blast furnace gas from Tata Steel is processed as fuel.
(The overleaf table shows emissions per site.) These emissions can be
lowered in several ways, for example by using coal with a low sulphur
content, by replacing coal with biomass, by cleaning flue gases and by
using more efficient technologies for electricity production using coal.
To clean flue gases and lower the amount of SO2 emissions, all of Nuon’s
SO2 emitting plants are equipped with scrubbers. In the Hemweg 8 plant,
scrubbers capture a certain amount of the SO2 emissions. The SO2 is then
sprayed with limestone in order to produce gypsum, which serves as
a raw material for other industries. As illustrated by the chart, total
SO2 emissions in 2012 increased slightly to 1,490 tonnes, compared to
1,415 tonnes in 2011. The main reason for this is the higher availability
and production at the Hemweg site (at equal sulphur levels per MW).
As in 2011, Nuon stayed within the permitted limits of NOx emissions
in grams per GJ of fuel used in 2012. The company’s total NOx emissions
decreased from 4.45 ktonnes in 2011 to 4.22 ktonnes in 2012. The WKC
Almere plant (-232 tonnes) had the highest decrease in NOx emissions,
while the Hemweg production site showed the highest emissions growth
(+205 tonnes), due to higher production levels in 2012 compared
to 2011.
Total average NOx emissions per kWh were well below the permitted
level. Nuon’s average level of NOx produced per kWh decreased from
0.302 g/kWh in 2011 to 0.287 g/kWh in 2012. Details on NOx emissions
per production site are included in the table. Nuon is in dialogue with
the government authorities in order to jointly examine how Nuon can
keep emissions as low as possible. One of the ways Nuon has been doing
this is by installing De-NOx units.
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46
CO2, NOx and SO2 emissions per production site1 | RA-verified2
Buggenum
Diemen
IJmond3/4
Velsen3/4
Hemweg (Amsterdam)
Lage Weide & Merwedekanaal (Utrecht)
BMC Lelystad
AHP Purmerend
AHP Kanaleneiland (Utrecht)
AHP Nic. Beetsstraat (Utrecht)
AHP Nieuwegein
AHP Overvecht (Utrecht)
AHP Almere
CHP Purmerend
CHP Almere
CHP Industry Park Emmtec
CHP Industry Park De Kleef
CHP Industry Park Sittard
CHP Industry Park Düren
CHP Industry Park Heinsberg
Small-scale CHPs (various locations)
CO2 emissions (ktonnes)
2012
2011
783
896
651
521
433
419
1,451
1,517
3,575
2,792
789
951
0
0
15
8
6
0
1
1
28
2
0
0
9
4
115
122
115
294
170
179
93
133
0
0
32
31
10
9
149
246
8,427
NOx emissions (tonnes)
2012
2011
188
182
450
416
391
334
1,002
1,088
701
496
783
803
25
24
5
4
5
0
1
0
23
1
0
0
2
1
79
96
68
299
218
204
105
131
12
12
3
3
159
355
4,222
8,124
SO2 emissions (tonnes)
2012
2011
195
285
222
152
392
441
657
534
7
0
16
0
1
1
0
0
1,490
4,449
1,415
1
Due to the sale of the CHP Industry Park Heerlen in 2011, the emissions are not reported.
The RA-verified relates to the data on CO2 emissions.
our power plants in IJmond and Velsen, the residual gas released during Tata Steel’s steel production activities is used as a fuel to produce electricity. In this way, Nuon puts the blast
furnace gas to good use. The gas contains a high percentage of CO2. With effect from 2006, it has been agreed with the Office of Energy Regulation of the Netherlands Competition
Authority that Nuon will adjust the CO2 emissions in the production fuel mix to avoid double counting. The CO2 emission factor of blast furnace gas in this mix is calculated on the basis
of the use of natural gas.
4Due to a correction of the actual SO emissions at the plants in IJmond and Velsen, the data for 2011 in this table differs from the data reported in the 2011 Nuon CSR Report.
2
2
3At
Discharge of heat
Intake and discharge of heat with cooling water1
Power production plants require cooling water to absorb the heat
produced in the production processes. At most of Nuon’s plants,
surface water is used for cooling purposes.
Million m3/year
3,500
48.7
50.0
45.4
2,800
Heated water is discharged, which has an impact on the aquatic
environment as this water has a higher temperature than surface
water. Nuon is able to reduce this impact by using the heat for industrial
processes or for district heating. In addition to reducing water discharge,
the re-use of this water can also realise an estimated overall fuel saving
of up to 40%.
As shown in the chart, the relative emissions of heat in cooling water were
4.6% higher than in the previous year, increasing to 2,159 million m³. This
increase is mainly due to higher electricity production levels, for example,
at the Hemweg plant, which is not connected to a district heating network.
PJ
2,592
37.1
37.7
2,036
2,065
2,356
2,100
40.1
2,159
30.0
1,400
20.0
700
10.0
0
0.0
2 008
Cooling water intake
1
40.0
2 009
2 010
2 011
201 2
Heat discharge in cooling water
Exclusively relates to production of energy production plants that discharge heat.
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Industrial and office waste
The table below shows that the construction of new production plants
has had a strong impact on the amount of hazardous and non-hazardous
47
waste, including waste water from the sceptic tanks used for toilets
and showers on the construction sites. In 2012, the total amount of
both hazardous and non-hazardous waste declined compared to 2011.
Waste flow
tonnes
Non-Hazardous waste
Hazardous waste2/3
Energy production locations1
2012
2011
2010
12,118
15,784
2,354
873
2,201
479
Total
12,991
17,985
Other locations
2012
7,409
32
2011
7,441
2,833
2010
8,846
4,093
60
61
8,906
4,154
1At
power plants, office waste is processed with industrial waste.
historical data for 2011 in this table differs from that reported in the 2011 Nuon CSR Report since the data concerning the ‘energy production locations’ and ‘other locations’
was incorrectly transposed. This has been corrected in the 2012 Nuon CSR Report.
3 In 2012, the number of items of equipment containing PCB was zero.
2The
Re-using waste from energy production
Residues from power stations for re-use
An important way to lower SO2 emissions in the coal-fired power
stations involves capturing SO2 for raw material production, such as
gypsum and fly ash. The production of gypsum and fly ash increased
by 17% and 29% respectively, due to longer operating hours.
ktonnes
250
221
200
230
3
59
Reducing carbon footprint of our company
and our clients
150
Nuon is taking steps to reduce the carbon footprint of its production and
business activities and is helping its customers to do the same. Yet Nuon’s
CO2 footprint increased in 2012, mainly due to higher production levels
compared to 2011, following the higher availability of the coal-fired
Hemweg plant as mentioned above.
100
In 2012, the company’s travel activities remained stable at a CO2 emission
equivalent of 23 ktonnes. To offset these emissions, Nuon voluntarily
retires certified emission reduction units.
Fly ash
Gypsum
3
212
183
61
153
43
38
2
39
2
2
45
45
35
41
26
50
116
128
80
130
101
0
2 008
2 009
2 010
2012
2 011
Bottom ash/slag
Sulphur
CO2 footprint Nuon1
ktonnes CO2
CO2 emission equivalent
2012
Electricity and heat production
Office buildings Nuon sites2
Travel and transportation3/4
Total
1Composition
2011
8,427
9
23
8,124
8,459
8,158
based on the Greenhouse Gas Protocol (a Corporate Accounting and Reporting Standard (2004)); excluding emissions as a result of supply to end users.
consumptions, as far as can be determined are based on meter readings, invoices, annual statement of landlords and service charges.
commuter travel by private car.
4Nuon changed passenger mileages to kilometres in the 2012 Nuon CSR Report. Therefore, the historical data for 2011 differs from that presented in the 2011 Nuon CSR Report.
This has been corrected in the 2012 Nuon CSR Report and all data is now presented in kilometres.
2Energy
3Excluding
11
23
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48 N.V. N uon Energ y A nn ua l Re p o r t 2 0 1 2
Green energy products
The electricity on the Dutch grid consists of both green (renewable) and
grey (coal, gas and nuclear-based) electricity. Consequently, the electricity
used is literally a mix of different types of energy.
Nuon wants to be clear about the authenticity of green energy products.
Nuon guarantees the origin of its green electricity via Guarantees of
Origin (GOO). These guarantees of origin are the evidence of an energy
company that they have produced a certain amount of electricity from
renewable sources. An energy company can either produce and/or trade
guarantees of origin. Additionally, to offset the CO2 emissions produced
by gas, Nuon invests in renewable energy products through voluntary
emissions reduction certificates (VERs).
Four kinds of green electricity products are generally distinguished
for consumers and businesses:
Su s ta ina b i l i ty o f en erg y
48
Secondly, for retail and business customers, Nuon provides ‘GroenStroom’
(green power), which is produced sustainably in Europe and guaranteed via
Guarantees of Origin as well.
Thirdly, Nuon offers ‘NatuurStroom’ (nature power) to our retail
and business customers. The electricity for retail customers has
been sustainably produced through solar, wind or hydro within
the Netherlands. The electricity for our business customers is entirely
produced through wind energy in the Netherlands.
And lastly, Nuon provides ‘KlimaatNeutraal Gas’ (climate-neutral gas)
to our business customers. To be able to offer a gas product that is
climate neutral, Nuon provides CO2 certificates equal to the gas
consumed to offset the resulting CO2 emissions.
Retail and small business customers
For retail customers, Nuon provides ‘CO2 OK’ electricity and gas.
The electricity is produced in the Netherlands through solar, hydro
and wind, and is CO2-free. The renewable energy has been guaranteed
via Guarantees of Origin. This means that, if customers opt for green
power, Nuon provides Guarantees of Origin equal to the electricity
consumed by these customers to guarantee the origin of this
green electricity. The CO2 emissions from gas supplied through ‘CO2 OK’
energy are offset by investing in renewable energy projects through the
purchase of voluntary emission reduction certificates from those projects.
Retail and small business customers can choose from these four green
products. The ‘CO2 OK’ product grew in 2012, mainly in the VastePrijs
(Fixed Price) variant. Of the CO2 OK product for gas, 83.7% consists
of voluntary emission reduction certificates coming from wind projects.
Of the CO2 OK product for electricity, 88.2% consists Guarantees of
Origin originating from wind. For retail and small business customers
the majority of the ‘GroenStroom’ product (77.1%) consists of Guarantees
of Origin originating from hydro-powered plants. The electricity for the
NatuurStroom product for consumer and small business customers has
been sustainably produced largely through wind (88.2%), in addition
to hydro (11.2%) and solar (0.6%).
Product Information CO2 OK Retail - Gas
Product Information GroenStroom Retail - Electricity
%
%
83.7%
VER Wind
7.3%
Wind NL
16.3%
VER Other
2.4%
Biomass NL
Product Information CO2 OK Retail - Electricity
%
13.1%
Wind EU
77.1%
Hydro EU
Product Information NatuurStroom Retail - Electricity
%
88.2%
GOO Wind NL
88.2%
Wind NL
11.2%
GOO Hydro NL
11.2%
Hydro NL
0.6%
GOO Solar NL
0.6%
Solar NL
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Large business customers
Annual supply of green electricity1
Large business customers can choose from three green products.
The ‘Klimaatneutraal’ (climate neutral) product for gas consists entirely
of voluntary emission reduction certificates coming from wind projects.
The GroenGarant product for electricity is mainly supplied from
guarantees from hydro-powered electricity (95.7%). The NatuurStroom
product for electricity consist entirely of guarantees originating
from wind projects. In 2012, Nuon saw an increasing trend among
business customers asking for specific guarantees of origin assigned
to them, for example, guarantees from a specific wind farm. Nuon helps
business customers show their respective customers the type of green
power they have received and helps them meet their own climate and
CO2 reduction targets.
As shown in the chart on the right, the largest proportion of all green
electricity supplied consists of GroenStroom. Of all consumer and small
business customers, 14.8% requested green electricity in 2012.
GWh
%
100.0% Wind
Product Information GroenGarant Business - Electricity
%
4.3%
Biomass NL
95.7%
Hydro EU
Customers x 1,000
5,000
4,000
400
2,000
507
490
1,473
1,636
324
300
2,779 29
559
2,126
1,980
336
316
311
307
3,000
2,567
2,788
200
157
459
268
377
1,951
2,143
1,000
100
0
2,192
0
2 008
2 009
2 010
Total supply Nuon GroenStroom
Total supply Nuon NatuurStroom
1
Product Information Klimaatneutraal Business - Gas
49
2012
2 011
Total supply Nuon CO2 OK
Total number of Nuon customers
Relates to products for consumers/small businesses and large business customers.
Environmental subsidies
A number of Nuon’s renewable energy production facilities and
innovations qualify for environmental subsidies. The chart below
shows the subsidies received in 2012. New (SDE) subsidies for
renewable energy have been granted for the Zuidlob wind farm,
which was visited by representatives of the Ministry of Economic
Affairs in 2012. During the year, Nuon was also formally granted
a EUR 780,000 subsidy for the West Orange project. This is a pilot
launched by Nuon, IBM and Cisco, in which 500 households in
Amsterdam are testing an innovative energy management system.
It is anticipated that this will generate an energy saving of at least
14% (and therefore also a CO2 reduction).
Subsidies1
| RA-verified
Amounts in EUR million
40
32
33
1
33
2
26
24
4
11
26
26
16
Product Information NatuurStroom Business - Electricity
24
13
%
20
8
100.0% Wind NL
3
3
0
2008
Education/Employment
Innovation/R&D
1
3
2
2 0 09
2010
10
11
1
1
2
2011
1
2
2 012
Exploitation Renewable Energy
EIA
Relates to the subsidies and fiscal facilities granted: the subsidies under the MEP
(Environmental Quality of Electricity Production) scheme were actually received and the
conditions of the subsidy have been met. Subsidies under the other schemes have been
granted, but the conditions of the subsidy have not yet all been fully met. The EIA amounts
are gross numbers and are eligible for Energy Investment Allowance. Along with the
implementation of the subsidised project, the actual receipts depend on the prescribed
allocation table. For 2012, the maximum amount of subsidy received was approximately
13% of the total amount invested in renewable energy capacity.
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Affordability of energy
Electricity, fuels and emission allowances are bought, sold and traded
by Vattenfall on international markets. This provides Nuon with the
opportunity to largely mitigate the wholesale market price fluctuations
for all of its customers.
Enabling customers to save energy
An important incentive for energy awareness is the provision of insight
into the customer’s own energy consumption. After all, this is one of
the more important means for gaining control of costs. Nuon advises
customers on energy efficiency solutions by, among other things,
offering various resources such as information and advice on the
www.nuonenergiebesparen.nl website and the Nuon E-manager.
The Nuon E-manager provides immediate insight by remote control,
via a smart phone, tablet or personal computer. Customers are therefore
able to adapt their behaviour and, for example, switch appliances on
and off remotely.
Through ‘MyNuon’, customers receive additional information with
the annual invoice, showing their energy consumption compared
to the previous years as well as compared to other households in
their neighbourhood.
The Nuon ‘Ed and Eduard’ ad campaign, which also included
TV commercials, draws the consumer’s attention to these saving
methods and their environmentally friendly effects. The Nuon
quarterly ‘Seizoengids’ (Seasonal Guide) also contains tips on how
to save energy. Nuon offers the ‘VerspillingsCheck’ (Waste Check),
which allows customers to see directly online how much energy
they might be wasting and how much they can save.
For younger energy consumers, Nuon has an educational website:
www.energiegenie.nl, through which children are encouraged to learn
about energy and present energy savings information to their school
classes and families. In 2012, almost 3,000 educational packages
were requested via the website, which demonstrates the pro-active
participation of children on this platform.
Nuon has signed contracts to partner up with several new business
customers, with the objective of reducing energy costs for individual
tenants. In 2012, projects and partnerships included:
■■ Ymere – Within our energy partnership, Nuon agreed a contract
to improve the entire rental stock of this housing association by
one energy label class;
■■ Evoswitch – Nuon signed an energy partnership for three years.
In addition to the electricity supply, Nuon supports customers with
their sustainability objectives by providing green certificates and
three charging stations for e-mobility. The purchase department
issupported by Nuon’s ‘Portfolio desk’ in order to build and execute
the relevant strategy. Furthermore, customers will be provided
with solar panels;
■■ Landal GreenParks – Nuon reached agreement for the supply
of electricity and gas, but also for the installation of charging
stations for electric cars at their parks in order to further encourage
e-mobility; Nuon is in discussions to see how Landal GreenParks
can be supported with e-efficiency services, together with Ebatech
which is Nuon’s in-house energy management expertise centre;
■■ Waalsprong district of Nijmegen – Nuon has signed a deal with
the waste processing firm, ARN, which produces the heat for our
customers; Nuon additionally supplies energy;
■■ Swimming pool in Nijmegen – Nuon supplies the Sportfondsen
(Sport Funds) swimming pool with CO2-neutral biogas.
Smart meters are gradually being introduced by the Distribution
System Operator (DSO) and offer customers an opportunity to monitor
and understand the internal drivers and patterns of their energy
consumption. In 2012, Nuon complied with the rules and obligations as
set out in the Code of Conduct for Suppliers and Metering Companies.
Following a successful pilot project undertaken together with
the Municipality of Almere to provide households with a monthly
overview of their energy costs, Nuon rolled out its bi-monthly
costoverviews in 2012 for all customers with a smart meter.
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For many homeowners, the initial investment in energy-saving measures
forms a barrier to their implementation. Nuon signed a Green Deal
with the Ministry of Economic Affairs and the financial, construction
and energy sectors to remove these financial obstacles. This broad joint
venture aims to establish a National Energy Saving Fund (NFEB).
The objective of this Fund is to ensure that Dutch households are
offered a complete package, consisting of a combination of technical,
energy-saving measures and an easy-access, commercially attractive
and reliable financing structure via the energy bill.
Further information about NFEB can be found at
www.rijksoverheid.nl/greendeal
Assistance to vulnerable customers
In 2012, many customers experienced the consequences of
the deteriorating economic climate. One of the unfortunate effects
of the economic situation was that some customers were no longer
able to pay their energy bills. Energy costs place more pressure on
low-income customers. To prevent payment difficulties and debts,
Nuon continued to advise customers in 2012 about how they could
manage and reduce their energy costs.
Within the boundaries of the Dutch Personal Data Protection Act,
Nuon cooperates with Municipal Health Services (GGDs), credit
institutions and debt assistance bodies, such as the Dutch sector
organisation for debt relief and social banking, NVVK (Vereniging
voor Schuldhulpverlening en Sociaal Bankieren). As a result of this,
the termination of energy supply by the grid operators for those
customers requiring assistance can often be prevented. Together
with the NVVK, Nuon aims to intervene at an early stage in the event
of payment arrears so as to prevent deterioration of a customer’s
debt position. Nuon offers three possible solutions: payment deferral,
a tailored payment plan or debt management.
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Health & safety
Creating and maintaining safe working conditions is emphasised
in the business culture of Vattenfall. At the same time, employees are
obviously jointly responsible for their own health as well as for the safety
of their colleagues. This applies to all business activities, but is particularly
applicable to work that involves a relatively high health and safety risk,
such as development, production and installation.
Vattenfall has updated its code of conduct to create a clearer set of rules
for appropriate behaviour at work, since safety also includes promoting
a comfortable working environment for Vattenfall employees. If the
atmosphere is such that safety-related incidents cannot be shared
or discussed, employees, consultants and suppliers can turn to
the ‘whistleblower’ policy, whereby complaints can be submitted
to an externally appointed ombudsman.
Nuon’s safety policy includes the implementation of relevant management
systems and an employee and leadership improvement programme.
As part of the Health, Safety and Environment management system,
Vattenfall is in the process of obtaining OHSAS 18001 certification for
its locations. OHSAS 18001 is the international assessment specification
for occupational health and safety management systems. For example,
Nuon’s business unit, Wind Generation, achieved international OHSAS
standards in 2012 by investing in safety awareness. Incidents are now
reported in a single management system for the entire organisation.
A close working relationship with emergency services on site has been
created to increase safety as well.
Near-incident information provides a solid foundation for continuous
control and improvement. Therefore, all near-incidents involving
employees, contractors and other parties are integrated into a single
registration system. Vattenfall monitors and registers these indicators
as a means of reducing the Lost Time Injury Frequency (LTIF) key
indicator, which gives a perspective on the number of injuries per
million hours worked by Nuon employees. The total LTIF for Nuon
has declined in recent years, as shown in the graph. In 2012, the LTIF
was 1.2, compared to 1.6 in 2011 and 4.5 in 2010. At the Magnum
plant, for example, six million consecutive man hours have now
been worked without LTI, which is an outstanding performance when
compared with the benchmark in the oil and gas industry. The LTIF
figure contains both Nuon and contracted personnel. Another example,
at the Egmond aan Zee (OWEZ) offshore wind farm, there have been
no LTIs recorded since the construction process.
Lost Time Injury Frequency (LTIF)1
Number of incidents/million worked hours
5
4.4
4
4.0
3
3.8
2.8
2
1.6
1
0.8
0
0.0 0.0
BU Energy
Related
Services
2011
1
1.2
1.1
BD
Production
BU
Heat
BD
SEP
0.2
0.0
Nuon
other
Nuon
total
2012
LTIF = Lost Time Injury Frequency; relates to the number of accidents leading to absenteeism
divided by the number of worked man-hours x 1 million. LTIF relates to Nuon employees,
excluding contracted staff. Business Unit (BU) Energy Related Services relates to the activities
of Feenstra, Nuon Beveiliging, Nuon Isolatie and Helianthos. BU Heat (including industry
parks) is reported separately for 2011. BD SEP is reported separately for 2011. Nuon Total is
the LTIF of all Nuon employees’ activities.
Since 2011, each registration has included more information about the
circumstances of a near-incident or actual incident, as well as the speed,
nature and efficiency of the intervention.
The ‘Hearts and Minds Programme’ was continued in 2012, with
the aim of improving the safety culture throughout the organisation.
This programme ensures that safety is embedded even more securely
in the company and its culture, and offers a series of workshops
conducted by the operational teams and management.
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Learning from complaints and incidents
On 20 March 2012, there was a small fire in the Diemen 34 power
station, which was quickly brought under control. At the time, the plant
was not yet in operation. After the incident, Nuon immediately started
an investigation to prevent similar incidents in the future.
On 12 September 2012, a serious accident occurred in the high-voltage
installation of the Velsen 24 power station at the Nuon site in North
Velsen. The two employees who were admitted to hospital were able
to resume work within two weeks. After the incident, Nuon immediately
started an independent investigation. It appeared that fitting an earth
to a live circuit set off a chain reaction, which resulted in the explosion.
Nuon has taken measures to prevent a repetition of such an accident
and is investigating whether these changes are also required at other
power stations.
On 9 November 2012, another incident occurred on the site of the
power plant in Velsen, where a so-called demineralisation plant leaked
hydrochloric acid vapours. A leakage caused a ruptured membrane
in a valve. Eight people inhaled the fumes and were therefore closely
monitored. When it became clear that their health was not compromised,
they resumed work the same day.
In 2012, rust was emitted from a plant in Velsen. Nuon received 547
complaints concerning the rust.
In 2012, the Dutch media focused attention on Nuon customers with
complaints concerning PUR insulation. Some customers indicated that
they suffered from persistent symptoms after Nuon applied PUR floor
insulation. Until now, no scientific link has been found between properly
applied PUR floor insulation and health problems.
Complaints received from local residents of company sites
Total registered safety incidents and near-incidents1
Number
TWh/PJ
551
2,346 1
5
53
1,500
1,381
1,200
100
1,082
900
75
2,338
50
28
25
11
0
2008
Noise
Rust
1
600
47
Odour
Light
17
1
1
2
7
10
9
2 009
2
2010
2011
300
1
6
4
6
5471
4
0
20 1 2
93
28
2 008
1
2
3
4
5
648
269
6283
2 009
Near-incidents2
Incidents without lost-time3/4
Other
Rust was emitted from a plant in Velsen.
549
99 71
2 010
158
33
2 011
66
24
2012
Lost-time incidents5
Total near-incidents, incidents without lost time and lost-time incidents for all
Nuon employees, including contractors and third parties of Nuon in the Netherlands
and Germany.
Definition of near-incident: dangerous probability of risk of injury, damage or loss
resulting in negative consequences, which could lead to an incident.
Definition of incidents without lost time: an unintended and sudden event affecting
an employee in connection with the performance of work and causing an interruption
of activities.
The figure for incidents without lost-time in 2012 excludes the data from contractors.
Definition of lost-time incident: any occupational incident involving injury which
temporarily prevents the person involved from carrying out his or her work.
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Health Management
In 2012, Nuon introduced a structured approach to health issues
and set up a new quality management system for health management,
which has the same structure as OHSAS. This approach includes three
processes: medical examinations, targeted health promotion and
reintegration.
Within the framework of the statutory obligation to offer preventive
medical examinations, the offices of Nuon were visited by the so-called
Gezondheidsbus (Health Bus). Staff were able to receive a medical
examination, which consisted of a questionnaire and a physical check-up.
The mental and physical vitality of the Nuon staff were then plotted
against the benchmark. The physical vitality of staff was found to
be average.
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Vattenfall looks at the best practices in each country, including,
for example, what has already been implemented or proven successful
and what can be adopted by other countries. Conversely, Nuon receives
questions from Vattenfall’s Swedish and German operations about how
the system of sick leave operates in the Netherlands. Health & Safety
has also become a permanent element in training courses for new
managers within Vattenfall.
Quick reintegration is important, following a period of sick leave.
In the Netherlands, Nuon uses the ‘Poortwachter’ Act for this purpose.
Under the Act, Nuon and the employee draw up an activity plan and
a reintegration file is created and kept up-to-date. Reintegration
activities might result in adaptation of the tasks and/or the workplace.
In any case, reintegration is always an individual, customised process,
so the goals and outcome can differ widely.
Moving average absenteeism
%
5
4.4
4
4.2
3.9
4.0
4.0
3
In the Netherlands, the rolling average sick leave rate for Nuon decreased
slightly from 4.0% in 2011 to 3.93% in 2012. Nuon’s total sick leave in
the Netherlands has been declining since 2008 (with the exception of 2011).
As shown in the graph to the left, the moving average absenteeism rate,
which includes sick leave as well as other types of absence, remained
stable at 4.0% in 2012.
2
New Office
1
0
2008
1
2
2 0 09
2010
2011
20 12
Value for the Netherlands, excluding the subsidiaries Feenstra, Nuon Beveiliging and
Nuon Isolatie, which are not included because not all comparative figures are available.
Due to a correction in the scope of the moving average absenteeism data, the historical
data for 2008 and 2009 differs from data reported in the 2011 Nuon CSR Report.
In 2012, Nuon began preparations for the relocation to the new head
office, where smart working (Het Nieuwe Werken) will be introduced
and sustainability, mobility and flexibility (of working) are key factors.
An important aspect of the new office is that it is easily accessible by
public transport and mobility is being reviewed to further encourage
its use. In addition, the fact that the new building only has 533 parking
places, in contrast to the current 1,230, is expected to give a boost to
the use of public transport.
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Joined forces
Nuon is in active collaboration and dialogue with stakeholders. These joined
forces lead to improvements for both. As part of Vattenfall, Nuon wishes
to develop further by reflecting on and learning from experiences gained
in other key countries and markets.
Being part of Vattenfall
Joined forces with Dutch shareholders
Vattenfall aims to achieve operational excellence, which means
that a culture must be created in which employees work better and
more efficiently to continuously improve operations. In 2012, Nuon
continued taking major steps towards full integration with Vattenfall.
The new organisational structure is now being continuously fine-tuned.
Vattenfall is the majority shareholder of Nuon and will acquire
the remaining shares over the coming years under pre-determined
conditions. The remaining 33% of the shares are still held by
the Dutch provinces and municipalities.
The new structure ensures short international communication lines.
The ultimate aim of the integration for all three core markets of
Vattenfall is the same: transferring knowledge by linking experts
and encouraging mutual learning experiences to excel in all areas
in which Vattenfall is active. This collaboration allows us to take
advantage of each other’s ‘best practices’ in the fields of customer
service and production, among other fields, but also in respect of safety.
This integrated approach provides benefits in various areas.
With regard to purchasing, for example, bargaining power improves
due to increased volume. All divisions are organised on a cross-border
basis, which includes the recruitment of personnel. In the technical field,
knowledge and experience can also be exchanged among countries and
tailored support can be obtained in order to improve work processes.
Nuon has joined forces with its Dutch shareholders in different ways
over a long period of time. The Municipality of Amsterdam, for example,
is working towards achieving energy efficiency such that energy is
clean and affordable and residents themselves can produce energy.
Nuon and the Municipality of Amsterdam have joined forces in an
effort to achieve the city’s climate and energy objectives, in addition
to Vattenfall’s sustainability targets. This ‘City Partnership’ between
Nuon and Amsterdam aims to record their shared strategy and, where
possible, join in implementing this strategy. Nuon has experience in
supporting the energy transition of cities through the development
of unique business solutions.
In 2012, Nuon joined forces with the Municipality of Nijmegen
and the province of Gelderland. Together with grid company, Alliander
and the waste processor, Afvalverwerking Regio Nijmegen (ARN),
Nuon is creating a heating grid for 12,000 homes in the Waalsprong
district of Nijmegen.
Our ultimate shareholders
%
67%
Vattenfall AB
16%
Gelderland
5%
Friesland
3%
Noord-Holland
2%
Amsterdam
7%
Other
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Joined forces in E-mobility
Customer satisfaction the Netherlands1
Nuon E-mobility achieved massive growth in 2012.Together with the
Municipality of Amsterdam and partner, Heijmans, Nuon is operating
a charging point network and supplying electric vehicle drivers with
green electricity and services. The number of charging points has
increased by more than 100%. In December 2012, these points were
used by 800 unique customers and 9,000 charging sessions were
recorded. The amount of green electricity supplied by the charging
points has increased by 500% compared to 2011. Within the current
contract, which runs from 2011 to 2014, Nuon expects that a total of
500 charging points (at 250 locations in Amsterdam) will be installed.
In 2013, Nuon expects to expand the network further to include other
cities in the Netherlands.
%
Apart from supplying charging solutions in large cities, Nuon is also
providing such solutions to private homes and businesses. In mid-2012,
Nuon introduced the home starter package, which allows electric vehicle
drivers to charge their electric cars safely and conveniently at home.
Within Vattenfall, E-mobility propositions have been developed
internationally. Together with Volvo Cars and Renault/Nissan, charging
solutions have been offered to these automobile companies’ electric
vehicle customers in Vattenfall’s core markets of Sweden, Germany
and the Netherlands. In 2012, the Volvo V60 Plug-in Hybrid – the result
of a joint venture between Volvo Cars and Vattenfall – was introduced
in the Dutch market. In 2013, this is expected to be one of the top
sellers among ‘cars with a plug’.
Joined forces with customers
In 2012, Nuon entered into a number of partnerships with large
customers as mentioned previously. Examples are Landal GreenParks,
Connexxion, Superunie, Givaudan and Evoswitch. Connexxion’s
contract was explicitly linked to a mutual commitment to reduce
the use of energy. Superunie and Evoswitch specifically valued Nuon’s
offer in the field of solar panels and charging points for electric vehicles.
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100
80
62
60
72
71
71
64
40
20
0
0
2 010
Customer satisfaction in general
1
2 011
201 2
Customer service satisfaction
Due to alignment with Vattenfall, a new method of calculating customer satisfaction was
introduced in 2012. Therefore, data in the graph above differs from the data as reported
in Nuon's previous Annual Reports.
Vattenfall provided multidisciplinary training for 30% of customer
service staff in 2012, with 100% completion planned for 2013.
Individual members of staff are now able to answer all of the questions
from customers on their own. Vattenfall believes it is important that
staff get energy from their work and that they enjoy helping customers.
Nuon’s Customer Service organisation provides service to both business
customers and consumers. In March 2012, Nuon was the first energy
supplier in the Netherlands to receive the COPC certificate. COPC is
an international standard for contact centre quality and performance.
The certificate applies to all services: both front office and back office,
and business as well as consumer markets.
Customer satisfaction and complaints
A key driver for Nuon’s sales operations is customer service satisfaction.
Overall customer satisfaction increased slightly to 72 in 2012, up from
71 in 2011. Customer service satisfaction increased by two points in
2012 to 64.
Every Customer Matters
In 2012, Vattenfall implemented the new European vision ‘Every
Customer Matters’. With excellent service provided by a customerfocussed organisation, Vattenfall is constantly endeavouring to
discover the ‘question behind the question’. The management team
of the Vattenfall Customer Service Business Unit has developed this
joint vision for the three countries with customer activities: Sweden,
Germany and the Netherlands.
If customers feel that a complaint has not been adequately addressed,
they have the option of either taking it up with the appointed internal
ombudsman or referring their complaint to the Dispute Committee.
The ombudsman assesses the responses to complaints independently
of the Customer Service Centre. The Dispute Committee is an independent
unaffiliated organisation. Contrary to the verdict of the ombudsman,
the verdict of the Dispute Committee is binding for both Nuon and
the customer. In 2012, 89 complaints were handled by the ombudsman
while 89 were dealt with by the Dispute Committee.
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Workforce by employment contract1
Age structure
Number
%
100%
57
35
1,621
80%
1,069
1,066
973
937
565
864
932
415
520
28 27
28
27 28
24
25
21
60%
18 18
14
40%
5,498
5,541
5,640
5,035
5,447
7
20%
3 3
0%
0
2008
2 009
Nuon staff permanent contract
Nuon staff temporary contract
1
2010
2011
20 12
Contracted staff
<25
2011
25-35
35-45
45-55
>55
years
2012
Relates to total number of employees in the Netherlands and Germany.
In two cases, the ruling was in favour of the customer, in 11 cases
the customers were deemed partly right and eight cases involved
settlements. Where applicable, Nuon uses this feedback to structurally
improve its processes. Customer satisfaction with the company’s
approach to resolving their complaints has continued to improve
and between 2011 and 2012, the number of complaints decreased
further by more than 10% to 575.
On June 27, 2012, competition authority NMa imposed a fine
of EUR 208,000 to Nuon Customer Care Centre for violation of the
Electricity and Gas Act as the ‘Chinese Wall’ to Liander functioned
insufficiently. The necessary adjustments were made immediately
and the NMa concluded that no abuse had taken place.
Joined forces with stakeholders
Maintaining relationships at various levels is a continuous process
that is structured around three axes: stakeholder engagement in
projects focusing on joint interests, continually improving day-to-day
communication and transparency, and the dialogue with policymakers
and influencers.
‘Samen werken aan oplossingen’ (Creating solutions together) is a Nuon
publication in the form of an e-magazine (www.nuonemagazine.com)
that demonstrates how Nuon is dealing with themes such as sustainability
and the reliability and affordability of energy supplies. Political and
social discussions are covered in this magazine. A principal role is
reserved for Nuon’s stakeholders, because their questions form the
basis of the magazine. Important issues concerning stakeholders are:
What is Nuon doing about the targets for achieving CO2 reduction
and how will Nuon keep energy affordable for everyone?
Joined forces with employees
It is important that the company’s workforce reflects the societies
in which it operates with respect to gender, age and ethnic/cultural
background. Increasing the number of female managers to achieve
amore balanced ratio within the organisation is one of Vattenfall’s aims.
Also, to ensure the continuity of Vattenfall’s operations, the company
encourages young employees with potential to develop technical and
leadership expertise.
The graphs on this page show the number of Nuon employees and the
number of contracted staff as at year-end 2012. The corresponding FTE
numbers are 5,200 for Nuon employees and 741 for contracted staff.
Compared to 2011, there was slightly more outflow (6%) than inflow
(5%) of personnel during 2012.
In 2012, the average age of Nuon employees in the Netherlands was
42.5. The average age is impacted by an increase in the age of Nuon’s
technical and engineering workforce within our production and
installation divisions. To counterbalance this effect and ensure
continuity of operations when our employees retire, Nuon has put
various initiatives in place to attract new talent to technical work,
starting with assisting education orientation choices.
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Diversity by gender1
Change in personnel in the Netherlands1
Number
%
100%
58
18
15%
1,784
80%
1,785
1,629
1,492
1,504
13%
12
8%
60%
6
40%
0
4,783
4,576
4,063
4,358
20%
-6
0%
-12
2008
Male
1
4,693
2 0 09
2010
20 12
2011
Inflow
Relates to total number of employees, excluding contracted staff.
1
Diversity by age¹
% employees
100
13
15
18
18
16
23
24
24
25
26
26
26
27
27
25
32
30
28
27
22
80
60
20
6
0
2 0 09
<25 year
26-35 year
1
2
5
2010
36-45 year
46-55 year
3
3
2011
20 12
11
Dutch working
population 20122
>56 year
Relates to the total number of employees, excluding contacted staff.
Relates to the Dutch working population in Q4 2012, as reported
by the Centraal Bureau voor de Statistiek (Statistics Netherlands).
5%
-6%
-8%
-11%
2 008
Female
40
7%
-12%
2 009
-10%
2 010
2 011
201 2
Outflow
Relates to employees, excluding contracted staff.
At the Hemweg site in Amsterdam, Nuon has set up a technical training
centre where new people receive training in order to become familiar
with the ever changing production technology. Because of the current
and expected shortage of engineers, Nuon has organised initiatives for
schools in order to encourage the number of work placement take-ups
and thus the intake of engineers. Nuon is also working on ‘Imotiv’, an
effective work-related learning programme for people aged between
30 and 45 who wish to be part of the mechanical engineer intake.
Vattenfall welcomed new trainees in 2012. They completed a one-year
programme in which they either worked as management trainees or
participated in one of the specialist traineeship programmes in the fields
of energy markets, engineering, finance and IT. The number of trainees
hired remained consistent. From the start of 2012, the traineeship
programme was expanded on an international basis.
The Employability Centre is playing an important role within the
framework of reorganisations. The centre guides unplaced and
redundant employees in finding new work within or outside Nuon.
Negotiations have started on a new Social Plan. It is expected that
these will be completed in 2013.
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Socially engaged
Nuon Foundation
Joined forces with Social Projects
The company established the Nuon Foundation as a platform where
employees can invite colleagues to participate in their social projects.
Via this platform, employees can also apply to Nuon for financial
sponsorship for their activities. The Foundation has three pillars:
individual applications, team applications and events. One example
of an individual activity is a project in Ghana where a member of staff
is trying to reduce the use of disposable batteries. An example of a team
effort is an activity day at a retirement home organised by the Nuon
Foundation together with the ‘Zonnebloem Foundation’ and Step2Work.
In 2012, the Nuon Foundation also organised a number of events,
such as the Family Day for the Olympic Games and the ‘Opkikkerdag’
(Special Day) with 120 active volunteers. The number of participants
and the monetary contribution made by Nuon via the Noun Foundation
remained approximately the same in 2012. The number of participants
amounted to 533 in 2011 and 537 in 2012.
Via Step2work, Nuon is training people who have lost ground in
the labour market to help them obtain new working opportunities.
To this end, Nuon facilitates 40 work experience places within the
various business units. In addition, Nuon was active in a number of
North Holland municipalities where people were trained to provide
energy advice in Nuon’s Step2Save programme. Nuon has decided not
to continue with the Step2Save programme and will instead focus more
on people with a labour disability. To underline this, Nuon concluded
a contract at the end of 2012 with the re-training institute, Heliomare,
which provides training for young people with a disability.
Promoting diversity and equality
Diversity is incorporated in the Vattenfall culture and policies
and is being actively promoted through Nuon’s own employees and
underpinned by three organisations: Jinc, Giving Back and Opportunity
in Business. These three organisations focus on the three Vattenfall
spearheads for HR policy: youth, immigrants and women. Jinc focuses
on the relationship between education and the business community,
while Giving Back concentrates on promising immigrants. Opportunity
in Business focuses on women in the business community who can
either coach or be coached by other women.
Joined Olympic forces
At the end of 2012, Vattenfall expanded its collaboration with the
Swedish Olympic Committee by joining up with the Dutch and German
Olympic Committees. The new sponsoring agreement runs through
to 2016. London 2012 formed part of this agreement, with the
Olympic Games in Sochi 2014 and Rio de Janeiro 2016 to follow.
Nuon, as part of Vattenfall is sponsoring a group of athletes under
the NOC*NSF (The Netherlands Olympic Committee * Netherlands
Sports Confederations). These top athletes and potential medal winners
attended London 2012 and/or will be participating in the Sochi 2014
Olympic Games.
Children’s Advisory Board
This innovative initiative was devised by the Missing Chapter
Foundation (MCF). The basic concept of the Children’s Advisory Board
is a series of dialogue sessions between children and Board Members
of ten different Dutch companies. The Children’s Advisory Board
addresses a range of topics that are relevant in the interaction between
the company in question and society as a whole. These sessions inspire,
advise and confront top management and the rest of the organisation.
Nuon is a founding partner of the Missing Chapter Foundation.
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Nuon in interaction with stakeholders 2012
Stakeholder
Form
Highlights 2012
General
Annual Stakeholder Round Table event
This yearly Stakeholder Round Table event enables a proactive dialogue
with stakeholders.
www.nuonemagazine.com
This online magazine 'Working together on solutions' demonstrates
how Nuon is dealing with the challenges in the energy sector.
Stakeholder magazine Samen Werken (Working Together)
This magazine 'Working Together' demonstrates how Nuon interacts in society
at large.
Stakeholder engagement approach
Nuon has implemented a structured stakeholder engagement approach to
support employees in proactive stakeholder dialogue. See CSR – Joined forces
with stakeholders.
Vattenfall Reputation Monitor
Vattenfall's annual Reputation Monitor consists of an issue and reputation
survey among parliamentarians, civil servants and NGOs and helps us focus
on what's needed to improve our relations with our stakeholders.
Dutch Coal Dialogue and Bettercoal
See CSR – Security of supply for supply chain responsibility.
Nuonenergiebesparen.nl
This website enables customers to save energy by giving an insight into their
energy consumption and advice and tools such as the ‘WasteCheck’ on how
to save energy.
Seasonal customer magazine
Published four times during the year.
New Way Of Working
Aligning with 'Every Customer Matters', the 'New Way of Working' (WOW)
was launched, stating one rule for staff: do what you can to help the customer
first time right.
Olympic Day
As an official supplier of NOC*NSF, Nuon organised an Olympic Day at the
Olympic Stadium in Amsterdam for its customers. During the Energy Games
children and their parents participated in several sports clinics under the
guidance of athletes and former athletes. Especially for employees, a Family
Day edition of the Olympic Day was organised by the Nuon Foundation.
City Partnership Amsterdam
Within the partnership, forces are joined to reach sustainability targets
of both the municipality of Amsterdam and Vattenfall.
Partnership Nijmegen and Gelderland
Together with Alliander and waste processor, ARN, a heat grid in
the Waalsprong district is developed and operated.
Industrial Parks
The Emmtec and Heinsbrug/Oberbruch industry parks offer on-site facilities
and access to research institutes to present opportunities for partnerships
with customers.
Stichting Spaar Het Klimaat (Save the Climate foundation)
Nuon is founding partner of the foundation to encourage energy saving
among customers.
Customers
Business partners
Employees
Shareholders
Market reports
See CSR – Affordability of energy.
Consultative meeting with Central Works Council
See Corporate governance structure.
Employees networks: MegaWatt (Young People’s Network),
Winergy (Women’s Network), Nuon employees association
and the Trainee Network (KNEC)
Nuon supports these networks with the aim of encouraging an active
participation of employees in the company.
Jinc, Giving Back and Opportunity in Business
Diversity is promoted by three organisations focusing on youth (education),
immigrants and women.
Nuon Foundation
See CSR – Joined forces.
General Meeting of Shareholders (1x a year)
See Corporate governance.
Sounding board group
Nuon consults and updates representatives of our major shareholders year
round on issues and decisions in the form of a focus group, newsletters and
meetings. As we do each year, in 2012 we organised visits to engage our
shareholders in our operations.
Operational experiences
Digital newsletter (Nuon Issues)
Politicians
NGOs
Local community
Working visits
In 2012, several Members of Parliament visited Nuon, especially in the run-up
towards the elections for the House of Representatives.
Regular (bilateral) meetings
In 2012, Nuon had several regular, bilateral meetings with Members of
Parliament, especially in the run-up towards the elections for the House
of Representatives.
Regular meetings
Nuon has regular contact with NGOs active in the energy market to discuss
current developments and energy transition measures.
Missing Chapter Foundation (MCF)
As founding partner of MCF, Nuon’s board members participated in dialogue
sessions on sustainability with the Children’s Advisory Board.
Complaints handling
See CSR – Joined forces and Health & Safety.
Newsletters and community meetings
See CSR – Joined forces.
Step2Save & Step2Work
See CSR – Joined forces.
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Assurance report
Independent Assurance Report on Corporate Social Responsibility information
To the Management Board of N.V. Nuon Energy
Engagement
We have performed an assurance engagement on the Corporate Social
Responsibility information in the accompanying Integrated Annual
Report 2012 of N.V. Nuon Energy (hereinafter Nuon). The Corporate
Social Responsibility information comprises the following sections:
‘Nuon at a glance’, ‘Profile’, ‘About Nuon’ (Pages 1 until 8 and 10
until 12), ‘Corporate Social Responsibility’ (pages 37 to 60) and the
GRI content table, (hereinafter ‘the Corporate Social Responsibility
information‘), as included in the Integrated Annual Report 2012.
Our assurance engagement is aimed:
■■ to provide reasonable assurance that the information is correctly
presented in accordance with the criteria applied for the following
indicators (as labelled as ‘RA-verified’ in the text):
■■ t he fuel mix of electricity supplied/produced;
■■ t he renewable production capacity and production by source;
■■ t he CO2 emission per production site;
■■ t he installed capacity and production of energy production plants;
■■ t he investments in renewable energy capacity;
■■ t he subsidies.
■■ to provide limited assurance that the other Corporate Social
Responsibility information is correctly presented in accordance
with the criteria applied.
The Global Reporting Initiative (GRI) Content table (GRI index
annual report 2012.pdf) as published on the website of nuon.nl is part
of the annual report 2012 and therefore of our assurance engagement.
The other references in the report (e.g to the website of Nuon or
to other external websites and documents) are not part of our
assurance engagement.
Limitations in the scope of our assurance engagement
The Corporate Social Responsibility Information contains forwardlooking information in the form of ambitions, strategy, plans, forecasts
and estimates. The fulfilment of such information is inherently uncertain.
For that reason, we do not provide any assurance relating to that
forward-looking information.
Criteria applied
Nuon applies the G3 guidelines of the Global Reporting Initiative
supported with the internal reporting guidelines as described in the
section ‘About this report’. It is important to view the corporate social
responsibility information in the context of these criteria. We believe
that these criteria are suitable in the view of the purpose of our
assurance engagement.
Responsibilities
The Managing Board of Nuon is responsible for the preparation
of the Corporate Social Responsibility Information, stakeholder
engagement and the selection of material topics in accordance
with the criteria applied. This responsibility includes designing,
implementing and maintaining internal control relevant to the
preparation of the Corporate Social Responsibility information that
is free of material misstatements, selecting and applying appropriate
reporting policies that include the GRI reporting principles and using
measurement methods and estimates that are reasonable in the
circumstances. The decisions made by management in respect of the
scope of the Integrated Report and the internal reporting guidelines,
including any inherent limitations that could affect the reliability of
information, are set forth in the section entitled ‘About this report’
in the Integrated report.
It is our responsibility to express a conclusion on the Corporate Social
Responsibility Information based on the procedures we have performed
and the evidence we have obtained.
Procedures performed
We conducted our engagement in accordance with Dutch law, including
the Dutch Standards 3410N, ‘Assurance Engagements with respect
to Sustainability Reports’. This requires that we comply with ethical
requirements and plan and perform procedures to obtain sufficient
and appropriate evidence to substantiate our conclusion.
Procedures to obtain limited level of assurance are less extensive
in relation to both the risk assessment procedures, including an
understanding of internal control, and the procedures performed
in response to the assessed risks, than those for a reasonable level
of assurance and therefore less assurance is provided.
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62 N.V. N uon Energ y A nn ua l Re p o r t 2 0 1 2
We have performed the procedures deemed necessary to provide a basis
for our conclusions. Our main procedures with regard to the information
for which limited assurance was provided, were:
■■ Assessing the acceptability of the reporting policies used and their
consistent application, as well as reviewing significant estimates and
calculations made in preparing the Corporate Social Responsibility
information 2012;
■■ Obtaining an understanding of the sector, organisation and its most
relevant corporate social responsibility issues;
■■ Obtaining an understanding of the design and operation of the Data
TOOL and underlying and/or related systems and method used to
collect and process the Corporate Social Responsibility reported
information, including the consolidation process;
■■ Reviewing based on a risk analysis the plausibility of the information
contained in the Corporate Social Responsibility information 2012
by performing analytical procedures, conducting interviews with
responsible company officers, and checking the substations of this
information on a test basis, as well as retrieving the relevant corporate
documents and consulting external sources;
■■ Evaluating the sufficiency of the Corporate Social Responsibility
information 2012 and its overall presentation against the criteria
mentioned above.
In order to obtain a reasonable assurance on the indicators ‘fuel mix
of electricity supplied/produced’, ‘the renewable production capacity
and production by source’, ‘the CO2 emission per production site’,
‘the installed capacity and production of energy production plants’,
‘the investments in renewable energy capacity’ and ‘the subsidies’,
we additionally performed the following procedures:
■■ Identifying inherent risks relating to the reliability of the information
and investigating the extent to which these risks are covered by
internal controls;
■■ Performing tests of controls to review the existence and effectiveness
of internal controls aimed at reviewing the adequacy and reliability
of the information;
■■ Following the audit trail on a test basis, from the source data to
the information contained in the Corporate Social Responsibility
information 2012;
■■ Performing tests of detail on a test basis aimed at reviewing
the reliability of the primary information.
A s s u ra n ce re p or t
62
We believe that the assurance evidence we have obtained is sufficient
and appropriate to provide a basis for our conclusion.
Conclusion
Based on our assurance procedures performed to obtain reasonable
assurance we conclude that:
■■ The indicators ‘fuel mix of electricity supplied/produced’,
‘the renewable production capacity and production by source’,
‘the CO2 emission per production site’, ‘the installed capacity
and production of energy production plants’, ‘the investments in
renewable energy capacity’ and ‘the subsidies’ are in all material
respects correctly presented in accordance with the Sustainability
Reporting Guidelines (G3) of the Global Reporting Initiative,
and the internal reporting criteria as described in the paragraph
‘About this report’.
Based on our assurance procedures performed to obtain limited
assurance we conclude that:
■■ Nothing came to our attention that causes us to believe that the other
information reported in the Corporate Social Responsibility report is
not, in all material respects, correctly presented in accordance with
the Sustainability Reporting Guidelines (G3) of the Global Reporting
Initiative and the internal reporting criteria as in the paragraph
‘About this report’.
Rotterdam, 15 April 2013
Ernst & Young Accountants LLP
Signed by
H. Hollander
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GRI statement
The ‘GRI Standard Disclosure and Indicators Table’ references
disclosures by report sections and also provides additional information
on specific GRI indicators. The Nuon GRI table of contents 2012 is
provided as an independent download to the Annual Report 2012
on the corporate website: www.nuon.com/reporting. For further
information on GRI G3 guidelines and indicators please refer to
the GRI website (www.globalreporting.org).
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Financial statements 2012
Consolidated accounts 66
Company accounts
116
Consolidated income statement Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of cash flows
Consolidated statement of changes in equity
66
67
68
70
71
Company balance sheet
Company income statement
116
117
Notes to the consolidated accounts
72
Notes to the company accounts
118
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Consolidated accounts
Consolidated income statement
Amounts in EUR million, 1 January - 31 December
2012
Net sales
Other operating income
Cost of energy
Cost of goods and materials
Employee compensation and benefit expenses
Amortisation and impairments of intangible assets
Depreciation and impairments of property, plant and equipment
Other operating expenses
Note
2011
3,905
1
2,606
123
456
1
1,258
465
4,522
5
107
6
7
2,919
112
425
8
2
13
227
14
9
440
Gross operating expenses
4,909
4,125
Own work capitalised
-47
4,862
4,087
18
22
-938
573
10
-13
13
10
Financial expenses
-17
11
Result before tax
-941
569
Income tax expense
225
-131
Result for the year
-716
438
-716
–
438
Operating expenses
Participations in the results of associated companies and joint ventures
Operating result (EBIT)
Financial income
-47
Attributable to:
- Nuon shareholders
- Non-controlling interests
–
15
12
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Consolidated statement of comprehensive income
Amounts in EUR million, 1 January - 31 December
2012
Result for the year
Note
2011
-716
438
Other comprehensive income
Items that may be reclassified subsequently to the profit and loss:
Changes in fair value of cash flow hedges
Cash flow hedges dissolved against the income statement
Tax attributable to cash flow hedges
Total other comprehensive income
Total comprehensive income for the year
14
17
-8
-250
32
-151
32
101
23
-300
-693
138
-693
-
138
Total comprehensive income for the year attributable to:
- Nuon shareholders
- Non-controlling interests
-
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Consolidated balance sheet
Amounts in EUR million
Assets
2012
Note
2011
Non-current assets
Intangible assets
Property, plant and equipment
Participations in associated companies and joint ventures
Other shares and participations
Other non-current receivables
Derivative assets
Deferred tax assets
156
3,315
92
19
37
453
113
Total non-current assets
158
13
3,840
14
97
15
14
15
37
16
262
17
-
26
4,185
4,408
Current assets
Inventories
Trade receivables and other receivables
Derivative assets
Current tax assets
Cash and cash equivalents
307
1,584
537
34
187
186
18
1,350
19
583
17
22
19
20
299
Total current assets
2,649
2,440
Total assets
6,834
6,848
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Consolidated balance sheet
Amounts in EUR million
Equity and liabilities
2012
Note
2011
Equity attributable to Nuon shareholders
Share capital
Share premium
Reserve for cash flow hedges
Currency translation reserve
Other reserves
Unappropriated result for the year
684
2,797
-44
1
609
-716
684
2,797
-67
1
246
438
Total equity attributable to Nuon shareholders
3,331
4,099
Equity attributable to non-controlling interests
2
3,333
4,101
Total equity
2
21
Liabilities
Non-current liabilities
Interest-bearing liabilities
Derivative liabilities
Finance lease payables
Deferred income
Deferred tax liabilities
Provisions for employee benefits
Other provisions
150
271
8
163
5
50
76
Total non-current liabilities
22
257
265
17
11
28
170
23
79
26
22
24
25
60
723
864
Current liabilities
Trade payables and other liabilities
Interest-bearing liabilities
Derivative liabilities
Provisions for employee benefits
1,483
915
347
33
1,267
27
98
22
496
17
22
24
Total current liabilities
2,778
1,883
Total equity and liabilities
6,834
6,848
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Consolidated statement of cash flows
Amounts in EUR million, 1 January - 31 December
2012
Operating activities
Result before tax
Note
2011
-941
569
Adjustments for:
3
-18
1,259
97
-257
Financial income and expenses
Participations in the results of associated companies and joint ventures
Divestments of shares and participations
Depreciation, amortisation and impairments
Changes in provisions and other
Fair value movements derivatives
4
-22
10 11
15
-115
229
13 14
-67
75
Changes in working capital
Inventories
Trade receivables and other receivables
Trade payables and other liabilities
-121
-229
212
Total changes in working capital
Cash flow from operations
Financial expenses paid
Financial income received
Dividends received from associates and joint ventures
Income tax paid/received
33
18
-56
19
27
-213
-138
-236
5
437
-13
3
19
18
-17
13
15
20
-5
Total
27
11
Cash flow from operating activities
32
448
Investing activities
Acquisitions in group companies
Investments in property, plant and equipment
Government grants received
Investments in intangible assets
Investments in other shares and participations
Repayment of capital joint ventures and associates
Proceeds from sales of (assets 0f) subsidiaries
-778
-6
4
5
Cash flow from investing activities
-34
14
-1,053
4
-11
13
-
15
-
15
298
-775
-796
Financing activities
New interest-bearing debt
Repaid interest-bearing debt
Payment dividend liability class A shares
Dividends paid to class B shareholders
Cash flow from financing activities
834
-54
-74
-75
49
-138
-115
-171
631
-375
Cash flow for the year
-112
-723
Cash and cash equivalents at start of year
299
-112
1,022
187
299
Cash flow for the year
Cash and cash equivalents at end of year
-723
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Consolidated statement of changes in equity
Amounts in EUR million
Equity attributable to shareholders1
Reserve for Currency
Share
cash flow translation
premium
hedges²
reserve
Share
capital
As at 1 January 2011
Unappropriated
profit for
the year³
Other
reserves
Noncontrolling
interest
Subtotal
Total
684
2,797
233
1
-146
563
4,132
2
4,134
Profit appropriation 2010:
dividend
-
-
-
-
-
-171
-171
-
-171
Profit appropriation 2010:
added to other reserves
-
-
-
-
392
-392
-
-
-
Result for the year
-
-
-
-
-
438
438
-
438
Other comprehensive income
-
-
-300
-
-
-
-300
-
-300
Comprehensive income 2011
-
-
-300
-
-
438
138
-
138
As at 31 December 2011
684
2,797
-67
1
246
438
4,099
2
4,101
Profit appropriation 2011:
dividend
-
-
-
-
-
-75
-75
-
-75
Profit appropriation 2011:
added to other reserves
-
-
-
-
363
-363
-
-
-
-
-
23
23
-
-
-716
-716
-716
23
-693
-
-716
23
-693
684
2,797
-44
1
609
-716
3,331
2
3,333
Result for the year
Other comprehensive income
Comprehensive income 2012
As at 31 December 2012
1For
2The
further information in regard to equity attributable to shareholders, please refer to note 21.
negative reserve for cash flow hedges lowers the distributable reserves accordingly.
the year 2012, dividends amounting to EUR 75 million were distributed to class B shareholders. The dividends per share amounted to EUR 0.86.
3During
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Notes to the consolidated accounts
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Company information Accounting policies
Important estimations and assessments in
the preparation of the consolidated accounts
Acquired and divested operations
Net sales
Other operating income
Cost of energy
Employee compensation and benefit expenses
Other operating expenses
Financial income
Financial expenses
Income tax expense
Intangible assets
Property, plant and equipment
Participations in associated companies and
joint ventures and other shares and participations
72
73
82
83
83
83
84
84
85
85
85
86
87
88
90
Note 1 Company information
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
Other non-current receivables
Derivatives
Inventories
Trade receivables and other receivables
Cash and cash equivalents
Equity
Interest-bearing liabilities
Deferred income
Provisions for employee benefits
Other provisions
Deferred tax assets and liabilities
Trade payables and other liabilities
Leasing
Contingent assets and liabilities
Licences
Related party disclosures
Information on risks and financial instruments
91
92
92
93
94
94
95
96
97
99
100
101
101
103
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N.V. Nuon Energy is a public limited liability company, registered in
Amsterdam, the Netherlands. The most significant activities of Nuon
and its subsidiaries comprise the production and supply of electricity,
gas, heat and cooling to customers in the Netherlands, as well as a
broad portfolio of energy-saving products and services.
1 July 2012 Vattenfall acquired an additional 3%. The remaining 33%
of the shares will be acquired by Vattenfall AB in two tranches. The first
remaining tranche of 12% will be acquired by Vattenfall on or around
1 July 2013 and the last tranche on or around 1 July 2015. As Vattenfall
effectively gained operational control over Nuon on 1 July 2009, the
financial data of Nuon have been included in the consolidated accounts
of Vattenfall since then.
‘We’, ‘Nuon’, ‘the company’, ‘Nuon Energy group’, ‘the group’ or similar
expressions are used in these consolidated accounts as a synonym for
N.V. Nuon Energy and its subsidiaries. N.V. Nuon Energy originated
in 2009 from the unbundling of former parent company N.V. Nuon
into a production and supply company, N.V. Nuon Energy, and a grid
company, Alliander N.V.
These consolidated accounts for the financial year 2012 are authorised
for publication by the Management Board and Supervisory Board on
15 April 2013. Subsequently, these consolidated accounts are scheduled
to be adopted by the general meeting of shareholders on 13 May 2013.
On 1 July 2009 Vattenfall AB acquired 49% of the shares of N.V. Nuon
Energy. On 1 July 2011 a tranche of 15% was acquired by Vattenfall
in accordance with the ‘share sale and purchase agreement’ and on
Since the company income statement for 2012 of N.V. Nuon Energy is
included in the consolidated accounts, a condensed income statement
has been disclosed in the company accounts in accordance with Section
402, Book 2, of the Dutch Civil Code.
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Note 2 Accounting policies
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Conformity with standards and regulations
The consolidated accounts of Nuon have been prepared in accordance
with the International Financial Reporting Standards (IFRS) issued
by the International Accounting Standards Board (IASB) as well as the
interpretations issued by the IFRS Interpretations Committee (IFRIC)
as endorsed by the European Commission for application within the EU.
■■
Basis of measurement
Assets and liabilities are reported at cost or amortised cost, with the
exception of certain financial assets and liabilities and inventories held for
trading, which are measured at fair value. Financial assets and liabilities
measured at fair value consist of holdings in the categories financial
assets and liabilities recognised at fair value through profit or loss,
and all derivatives.
Functional and presentation currencies
The items in the accounts of the entities forming part of the Nuon group
are recorded in the currency of the primary economic environment in
which the entity operates (the functional currency). The consolidated
and company accounts are prepared in euros, Nuon’s functional and
presentation currency.
Unless stated otherwise, all amounts reported in these consolidated
accounts are in millions of euros.
Estimations and assessments
Preparation of the consolidated accounts in accordance with IFRS
requires the company’s Management Board to make estimations and
assessments as well as to make assumptions that affect the application
of the accounting policies and the reported amounts of assets, liabilities,
income and expenses. Assessments made by the company’s Management
Board, when applying IFRS, that have a material effect on the consolidated
accounts, and estimations that may result in substantial adjustments
to the following year’s consolidated accounts, are described in greater
detail in note [3] to the consolidated accounts.
Accounting policies
The accounting policies of Nuon have been applied consistently for
all periods presented in the consolidated accounts. For comparative
purposes, minor adjustments have been made to the presentation of
the 2011 figures.
New IFRSs and interpretations effective as of 2012
The new standards and amendments to standards and interpretations
described below, and endorsed by the EU, are effective as of the
2012 financial year:
■■ Amendments to IFRS 1 – First-time Adoption of IFRS have been
omitted as these are not relevant for Nuon;
Amendments to IFRS 7 – Financial Instruments: Disclosures.
The amendments require additional quantitative and qualitative
disclosures when derecognising financial instruments from the
balance sheet. If transferred assets are not derecognised in their
entirety, this fact shall be disclosed. In the same way, if the entity
has a continuing involvement in the derecognised asset, this shall
also be disclosed. Nuon is not affected by this amendment;
Amendments to IAS 12 – Income Taxes pertaining to Deferred tax:
Recovery of Underlying Assets. Deferred taxes on property that is
measured at fair value are to be calculated based on the property’s
sales value if there are no indications that the carrying amount
will be recovered in another manner. Nuon is not affected by
this amendment, as its properties are not measured at fair value.
New IFRSs and interpretations not yet adopted
New standards, amendments to standards and interpretations endorsed
by the EU at 31 December 2012, which are effective as of the 2013
financial year and which have not been early adopted:
■■ Amendments to IFRS 7 – Financial Instruments: Disclosures.
The amendment entails that further disclosures are to be provided
about financial instruments that are recognised net in accordance
with the rules of IAS 32 as well as about financial assets and liabilities
covered by master netting agreements and similar, regardless of
whether these have been offset or not. Nuon has identified which
financial instruments are covered by the new disclosure requirements
which will be applied in future reports;
■■ IFRS 13 – Fair Value Measurement. The standard includes uniform
rules for measuring fair value where another IFRS requires fair value
measurements or disclosures about fair value measurements. New
types of disclosures are to be made in order to clarify which valuation
techniques are used and which inputs are used. The new standard is
not expected to affect Nuon’s consolidated accounts to any significant
degree, but may lead to more detailed disclosures;
■■ Amendments to IAS 1 – Presentation of Financial Statements.
The amendment entails a change in the categories of transactions
that are reported in other comprehensive income. Items that are
to be reclassified (or ‘recycled’) to profit or loss are to be reported
separately. The proposal does not affect the actual content of
other comprehensive income, but only the presentation format;
■■ Amendments to IAS 19 – The IASB has issued numerous amendments
to IAS 19. These range from fundamental changes such as removing
the corridor mechanism and the concept of expected returns on plan
assets to simple clarifications and re-wording. The impact on the
financial performance and operations of the group will be limited
as the group has no significant pension schemes that are accounted
for as a defined benefit scheme;
■■ IFRIC 20 – Stripping Costs in the Production Phase of a Surface Mine.
The group does not have any activities in surface mines and therefore
this interpretation has no impact.
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New standards, amendments to standards and interpretations endorsed
by the EU at 31 December 2012, which become effective as of the 2014
financial year and which have not been early adopted:
■■ IFRS 10 – Consolidated Financial Statements. The standard contains
uniform rules for determining which units are to be consolidated
and will supersede major parts of IAS 27 – Consolidated and Separate
Financial Statements and SIC 12, which addresses Special Purpose
Entities. The rules in IAS 27 on consolidation and on when consolidated
financial statements are to be prepared have been transferred unchanged
from IAS 27. The new standard is not expected to have any significant
effect on Nuon’s consolidated accounts;
■■ IFRS 11 – Joint Arrangements. The standard addresses the reporting
of joint arrangements, i.e., arrangements in which two or more parties
have joint control, and will supersede IAS 31 – Interests in Joint Ventures.
The new standard is not expected to have any significant effect on
Nuon’s consolidated accounts;
■■ IFRS 12 – Disclosures of Interests in Other Entities. Expanded disclosure
requirements regarding subsidiaries, joint arrangements and associates
have been gathered in a single standard. The disclosures address the
effects of holdings on the financial statements and risks associated
with the current holdings;
■■ Amendment and change of name for IAS 27 – Separate Financial
Statements where the requirements concerning separate financial
statements are unchanged, while other parts of IAS 27 are superseded
by IFRS 10.
■■ Amendment of IAS 28 – Investments in Associates and Joint Ventures,
which has been adapted to IFRS 10, IFRS 11 and IFRS 12;
■■ Amendments to IAS 32 – Financial Instruments: Presentation and
amendments in IFRS 7 – Financial Instruments: Disclosures clarifying
some of the requirements for offsetting financial assets and financial
liabilities on the balance sheet. Nuon is currently analysing the effects
that application of the amendments will entail.
New standards, amendments of standards and interpretations issued
by IASB/IFRIC which at 31 December 2012 had not yet been endorsed
by the EU:
■■ IFRS 9 – Financial Instruments is a new standard that is currently
being developed to supersede IAS 39 Financial Instruments:
Recognition and Measurement. The first part of the revision of
the standard has been published and pertains to recognition and
measurement of financial assets and liabilities. IFRS 9 prescribes
that financial assets are to be divided into two classifications –
those measured at fair value and those measured at amortised cost.
Classification is made at the time the financial asset is initially
recognised based on the characteristics of the asset and the company’s
business model. For financial liabilities, no major changes have been
made compared with IAS 39. The biggest change pertains to liabilities
identified at fair value. For these, the portion of the change in fair
value that is attributable to own credit risk is to be reported in other
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comprehensive income instead of through profit or loss, insofar
as this does not cause an inconsistency in the reporting.
The standard will be complemented with rules on impairment and
hedge accounting. At present the standard is expected to take effect
on 1 January 2015 at the earliest. Pending the completion of all parts
of the standard, the group has not yet evaluated the effects of the
new standard;
‘Improvements to IFRSs’ (issued in May 2012) aim to streamline and
clarify the accounting standards concerning presentation, recognition
and measurement including changes in terminology or amendments
of an editorial nature. The changes are to be applied for the 2013
financial year, but are not expected to have any significant effect
on Nuon’s consolidated accounts;
Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27)
provides an exception to the consolidation requirements for companies
that meet the definition of an investment entity. The changes are to
be applied for the 2014 financial year, however, Nuon is not affected
by them.
Principles for consolidation
Subsidiaries
The consolidated accounts comprise the financial data of Nuon and
its subsidiaries. Subsidiaries are companies over which Nuon, either
directly or indirectly, has the power to control both operational and
financial policies in order to benefit from them. In order to ascertain
whether or not Nuon has control, actual and potential voting rights
that are currently exercisable or convertible are taken into account,
as well as the existence of other agreements enabling Nuon to control
the operations and financial policies.
The assets, liabilities and results of subsidiaries are fully consolidated.
The results of consolidated subsidiaries that have been acquired during
the year are consolidated as of the date Nuon effectively acquired
control over these subsidiaries. Consolidation of these subsidiaries
ceases as of the moment Nuon no longer controls the subsidiary.
The interests of third parties in Equity and the Total comprehensive
income are presented separately under the items Equity attributable
to Non-controlling interests and Total comprehensive income for the year
attributable to Non-controlling interests. The item Non-controlling
interests on the balance sheet consists of the share of non-controlling
interests in the fair value of the identified assets and liabilities of
subsidiaries on the date of acquisition and the share of non-controlling
interests in the movements in Equity as of that date.
The acquisition method is applied in the case of an acquisition of a
subsidiary by the group. The purchase price of an acquisition consists
of the fair value of the assets transferred, the equity instruments that
were issued and the assumed or acquired liabilities. The identifiable
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assets and liabilities and contingent liabilities that are acquired are
initially recognised at fair value at the date of acquisition, irrespective
of the amount that is attributable to non-controlling interests (see also
the accounting policies for goodwill).
Intercompany transactions, balance sheet items and unrealised
gains on transactions with and between subsidiaries are eliminated.
Unrealised losses are also eliminated, unless the transaction gives
rise to the recognition of impairment charges.
Where applicable, the accounting policies of subsidiaries have been
adjusted in order to ensure the consistent application of accounting
policies across the group.
Associates and joint ventures
Associates are entities over which Nuon, directly or indirectly, exercises
significant influence on the financial and operational policies, but over
which Nuon has no control. Significant influence is assumed when Nuon
can exercise between 20% and 50% of the voting rights.
Joint ventures are agreements by which Nuon, together with one or more
parties, conducts activities that are controlled jointly by all parties involved.
Investments in associates and interests in joint ventures are measured
in accordance with the equity method. Initial measurement is at cost.
The carrying amount of the associate or the joint venture includes
the goodwill (adjusted for the accumulated impairments that may
have been recognised) paid at the date of acquisition of the associate
or conclusion of the joint venture and Nuon’s share in the movements
in the equity of the associate or joint venture after the date of the
transaction. In the case that the (accumulated) losses exceed the
carrying amount, these losses are no longer recognised unless Nuon
has the obligation or has made payments to make up these losses.
In this case, a provision is recognised.
Unrealised gains on transactions between the group and its associates
or joint ventures are eliminated on a pro rata share of the interest of
the group in the associate or joint venture. Unrealised losses are also
eliminated, unless the transaction gives rise to the recognition of
impairment charges. If appropriate, the accounting policies of associates
and joint ventures are adjusted in order to assure a consistent
application of accounting policies.
Scope of consolidation
The significant subsidiaries, associates and joint ventures are listed
in note [31]. The information on the equity interests as referred to
in sections 379 and 414, Book 2, Part 9 of the Dutch Civil Code has
been filed separately with the Amsterdam Trade Register.
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Foreign currency translation
Translation of transactions and balance sheet items
denominated in foreign currency
Transactions denominated in foreign currency are translated into
the functional currency at the exchange rates prevailing at that time.
Monetary assets and liabilities in foreign currency are translated at
the exchange rates as at the reporting date. Foreign currency exchange
differences resulting from the settlement of transactions denominated
in foreign currency or the translation at the reporting date are recognised
in the income statement unless these exchange gains or losses are
accounted for as cash flow hedges or net investment hedges in a foreign
entity. Foreign currency exchange differences on non-monetary items,
such as investments that are valued at fair value through the profit
or loss, are accounted for as part of the movement in the fair value
of the item involved.
Translation differences regarding the balance sheet positions
and results of foreign subsidiaries
The assets and liabilities of subsidiaries of which the functional currency
differs from the euro are translated at the exchange rate at the reporting
date, whereas the results are translated at the average exchange rate
for the period. The resulting exchange rate differences are recognised
in Other comprehensive income and included in the Currency translation
reserve within Equity.
Foreign currency exchange differences resulting from the translation of
net investments in foreign entities, loans and other currency instruments
that are used as hedges of net investments are recognised in Other
comprehensive income and included in Equity. If a foreign entity is sold,
the corresponding exchange rate differences are recognised in the income
statement as part of the result on the sale.
Assets held for sale
Non-current assets (or disposal groups) are classified as held for sale
if their carrying amount will be recovered principally through a sale
transaction rather than through continuing use. The assets are valued
at the lower of their carrying amount and fair value less costs to sell
and are not subject to amortisation or depreciation.
Assets (and liabilities) held for sale are classified as current assets
(current liabilities) since the sale transaction is expected to be settled
within twelve months after the reporting date.
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Net sales
Other operating income
Net sales comprises the following components:
■■ Supply of goods – electricity, gas, heating and cooling: net sales from
electricity, gas, heating, cooling and other energy-related products
are recognised at the moment of supply to the customer, when the
sales price has been agreed and the receipt of the sales proceeds
can be reasonably assumed. Value-added taxes (VAT) and regulating
energy taxes (RET) are not included in net sales;
■■ Supply of goods – heating equipment and other equipment: net sales
from the supply of heating and other equipment are recognised at
the moment of supply or installation, when practically all risks and
rewards with regard to the ownership have been transferred, the
sales price has been agreed and the receipt of the sales proceeds
can be reasonably assumed;
■■ Work in progress: this encompasses the proceeds from construction
activities on behalf of third parties. Sales are determined based on
the percentage of completion method;
■■ Income from operating leases: these proceeds are recognised
on a straight-line basis over the term of the lease;
■■ Delivery of service/maintenance contracts: the amounts received
for maintenance contracts are allocated to the periods to which
they relate;
■■ Amortisation of construction contributions: please refer to the
specific accounting policies for this item;
■■ Services to external parties such as activities of the Customer
Service Center.
Other operating income includes the result from the disposal of assets
(including subsidiaries, joint ventures and associates): this relates to the 
net proceeds from the disposal and the carrying amount of the disposed
asset. Gains and losses from the disposal of assets are presented as a
net amount.
Fair value movements of energy commodity contracts and net results
of hedging instruments are included both in net sales and cost of energy.
This item consists of the following categories:
■■ Trading activities: Nuon actively trades in oil, gas, coal and energy
commodity contracts and in options and swaps within set boundaries
and risk limits. The trading portfolio is valued at fair value and fair
value movements on the open energy commodity positions are
recognised in the income statement;
■■ Fair value movements of commodity contracts designated for own
use: Nuon uses energy commodity contracts for the physical sale and
purchase of raw materials and energy. Optimisation takes place due
to uncertainties with regard to future production and consequently
the expected and contracted purchases, sales and production deviate
from the actual purchases, sales and production. These contracts
are recognised at fair value and hedge accounting is applied where
this is possible;
■■ Nuon uses derivatives, such as energy commodity contracts, swaps
and options, in order to hedge financial risks (mainly price risks)
of sales contracts. The net results of these hedging instruments
are also reported in net sales or cost of energy;
■■ The non-effective part of hedges: Nuon uses commodity contracts
in order to hedge price and other risks that arise from the future
expected sales of electricity and gas and from the purchases necessary
for covering the generation of power or the sourcing of sales.
These contracts are designated as cash flow hedges. The effectiveness
tests may demonstrate that the hedges, or part of the hedges, are
not effective. The non-effective part of the fair value movements
of the hedges is recognised in the income statement.
Cost of energy
Cost of energy represents the direct and indirect expenses attributable
to the supply of power to Nuon’s customers, including the cost of
electricity purchased from third parties and the raw materials used
for the generation of power and heat.
Financial income and expenses
These items consist of the following:
■■ Interest income: this includes the interest income on financial
interest-bearing assets being loans, receivables and cash and
cash equivalents, determined using the effective interest method;
■■ Interest expense: this includes the interest expense on interestbearing liabilities, determined using the effective interest method.
In addition, expenses related to the time value of provisions are
included. The costs of financing, such as costs of letters of credit,
commitment fees, etc., are also reported under this item;
■■ Foreign exchange results: foreign exchange results arising from
the translation of transactions denominated in foreign currencies
and the translation of financial assets and liabilities and derivatives
in foreign currencies are reported under this item. The exchange
rate differences arising on cash flow hedges are initially recognised
in Equity;
■■ Fair value movements of interest derivatives (including those that
are used as fair value hedges) and the corresponding adjustment
of the amortised cost value of hedged financial assets and liabilities
for the movement in the value of the hedged risk.
Intangible assets
Goodwill
Goodwill is the amount by which the purchase price exceeds the fair
value of the identifiable assets and liabilities and contingent liabilities
of the subsidiaries, joint ventures or associates acquired. Goodwill paid
on the acquisition of subsidiaries is classified under intangible assets.
Goodwill paid on the acquisition of joint ventures and associates is part
of the value of the joint venture or associate involved. If the purchase
price is lower than the fair value of the identifiable assets and liabilities
and contingent liabilities (negative goodwill), this difference is recognised
in the income statement.
The carrying amount of goodwill consists of historical cost less accumulated
impairments. Impairment tests are performed annually in order to
determine whether the value of the goodwill has to be impaired.
The goodwill is taken into account in the determination of the results
on the disposal of entities or cash-generating units.
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Concessions, permits and licences
Concessions, permits and licences are valued at historical cost less
accumulated amortisation and accumulated impairments. These assets
are amortised over their estimated useful life, using the straight-line
method. The term of the concessions, permits and licences is used as
the useful life.
Historical cost also includes the net present value of the estimated
costs of dismantling, site restoration and returning land to its original
condition as far as there is a legal or constructive obligation to do so.
These costs are capitalised at the moment of acquisition or at a later
date when the obligation arises. In both cases, the capitalised costs are
depreciated over the expected remaining useful life of the asset involved.
Research and development
Investments in research activities, undertaken with the prospect of
gaining new scientific or technical knowledge and understanding,
are recognised in the income statement as incurred. Development
activities involve a plan or design for the production of new or substantially
improved products and processes. Development investments are capitalised
only if these costs can be measured reliably, the product or process is
technically and economically feasible, future economic benefits are
probable and Nuon intends to, and has sufficient resources to, complete
development and to use or sell the asset. Capitalised investments are
measured at cost less accumulated amortisation and accumulated
impairment losses. Cost includes the cost of materials, direct labour,
overhead costs that are directly attributable to the preparation of the asset
for its intended use and, if applicable, borrowing costs. Other development
investments are recognised in the income statement as incurred.
Property, plant and equipment are depreciated over the expected useful
lives of the various components of the asset involved, taking account of
the expected residual value, using the straight-line method.
Property, plant and equipment
The item Property, plant and equipment is subdivided into the
following categories:
■■ Land and buildings;
■■ Plants and other technical installations;
■■ Gas fields and platforms;
■■ Equipment, tools and fixtures and fittings;
■■ Construction in progress.
Property, plant and equipment are measured at historical cost less
accumulated depreciation and impairments. Historical cost includes
all expenditure directly attributable to the purchase of property, plant
and equipment or the production of property, plant and equipment for
own use. The cost of assets produced for the company’s own use includes
the direct costs of materials used, labour and other direct production
costs attributable to the production of the item of property, plant and
equipment and the costs required to bring the assets into their current
operational condition. The costs of loans associated with the purchase
and/or construction of property, plant and equipment are capitalised
if the asset is identified as a qualifying asset in accordance with IAS 23.
Costs incurred after the date on which the asset has been taken into
use are only capitalised as property, plant and equipment if it can
be assumed that these costs will generate future economic benefits
and when these costs can be measured reliably. Depending on the
circumstances, these costs form part of the carrying amount of the
asset involved or are capitalised separately. Maintenance expenditure
is charged directly to the income statement in the year these costs
are incurred.
The useful lives of the asset categories are as follows:
■■ Land is not depreciated;
■■ Buildings: 25-50 years;
■■ Plants and other technical installations: 5-40 years for combined
heat and power installations, 5-40 years for hydro power installations,
10-20 years for wind power installations;
■■ Equipment, tools and fixtures and fittings: 5-10 years;
■■ Construction in progress is not depreciated.
The expected useful lives, residual values and depreciation methods
are reviewed annually and adjusted when deemed necessary. Gains
or losses on disposals are determined based on the sales proceeds
and the carrying amount on the date of the disposal.
Impairments
Assessments are made throughout the year for any indication that an
asset may have decreased in value. If there is an indication of this kind,
the asset’s recoverable amount is estimated. For goodwill and other
intangible assets with an indefinite useful life and for intangible assets
that are still not ready for use, the recoverable amount is calculated at
least annually or as soon as there is an indication present that an asset
has decreased in value. If the essentially independent cash flow for an
individual asset cannot be established for the assessment of any need
for impairment, the assets must be grouped at the lowest level where it
is possible to identify the essentially independent cash flow (a so-called
cash-generating unit). An impairment loss is reported when an asset or
cash-generating unit’s reported value exceeds the recoverable amount.
Any impairment loss is recognised in the income statement.
Impairment of assets attributable to a cash-generating unit is allocated
primarily to goodwill. Thereafter, a proportional impairment loss is
conducted of other assets that are part of the unit.
The recoverable amount is the higher of fair value less costs to sell
and value in use. When calculating value in use, the future cash flow
is discounted by a discounting factor that takes into consideration
risk-free interest and the risk associated with the specific asset.
For an asset that does not generate cash flow independently of other
assets, the recoverable amount is calculated for the cash-generating
unit to which the asset belongs.
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Impairment losses on goodwill are never reversed. Impairment losses
on other assets are reversed if a change has occurred in the assumptions
that formed the basis for the calculation of the recoverable amount.
An impairment loss is reversed only if the asset’s carrying amount after
reversal does not exceed the carrying amount that the asset would have
had if the impairment loss had not been recognised.
Loans and receivables are initially recognised at fair value adjusted
for transaction costs. Loans and receivables are subsequently carried
at amortised cost using the effective interest method. If the fair value
of these financial assets has been hedged, the amortised cost is adjusted
for the profit or loss attributable to the hedged risk. These adjustments
are recognised in the income statement.
Financial instruments
Available-for-sale financial assets
Financial assets that are available for sale are carried at fair value
on the balance sheet, with changes in value recognised in Other
comprehensive income. On the date that the assets are derecognised
from the balance sheet, any previously recognised accumulated gain
or loss in Other comprehensive income is transferred to the income
statement. Holdings in listed companies are measured based on the
share price on the balance sheet date. Other shares and participations
(note [15]) for which there are no balance sheet date quotations and
for which a fair value cannot be established are valued at cost, after
taking accumulated impairment losses into account.
General
IFRS requires that financial assets, which include derivative commodity
contracts for trading purposes, are classified in one of the following
categories: at fair value through profit or loss, held-to-maturity,
loans and receivables and available-for-sale. Financial liabilities, which
include derivative commodity contracts for trading purposes, have to
be classified in one of the following categories: at fair value through
profit or loss, or other financial liabilities. The classification depends on
the purpose for which the financial assets and liabilities were acquired.
Management determines the classification of financial assets and
liabilities at initial recognition.
Financial assets are derecognised when the rights to receive cash
flows from the asset have expired or have been transferred and
Nuon has transferred substantially all risks and rewards of ownership.
Financial assets and liabilities are offset and the net amount is reported
in the balance sheet when there is a current legally enforceable right
to offset the recognised amounts and there is an intention to settle on
a net basis or realise the asset and settle the liability simultaneously.
Financial assets
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets
held for trading and are recognised on the trade date. A financial asset
is classified in this category if acquired principally for the purpose of
selling in the short term. Derivatives are categorised as held for trading
unless they are designated as effective hedging instruments as defined
by IAS 39. Financial assets carried at fair value through profit or loss
are initially recognised at fair value and are subsequently carried at
fair value. Transaction costs are expensed in the income statement.
Gains or losses arising from changes in the fair value of the financial
assets at fair value through profit or loss category are presented in the
income statement within Net sales, Cost of Energy or Financial income
or expenses in the period in which they arise. Classification depends
on the nature of the derivative contract (e.g. commodity contract
or interest swap contract or foreign exchange contract).
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed
or floating receipts that are not quoted in an active market. They are
included in current assets, except for instruments with maturities of
more than 12 months after the end of the reporting period, which are
classified as non-current assets. Nuon’s loans and receivables comprise
Other non-current receivables, Trade receivables and other receivables and
Cash and cash equivalents in the balance sheet (notes [16], [19] and [20]).
Impairment of financial assets carried at amortised cost
Nuon assesses at the end of each reporting period whether there is
objective evidence that a financial asset or group of financial assets
requires impairment. A financial asset is impaired if there is objective
evidence of impairment as a result of one or more events impacting
the estimated future cash flows of the financial asset that can be reliably
estimated. Nuon uses criteria indicating the creditworthiness of
the borrower to determine whether there is objective evidence of an
impairment loss. The amount of the loss is measured as the difference
between the asset’s carrying amount and the present value of estimated
future cash flows (excluding future credit losses that have not been
incurred) discounted at the financial asset’s original effective interest
rate. The loss is recognised in the income statement. Previously recognised
impairments may be reversed following changed conditions and/or
changed estimates.
Financial liabilities
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss are financial
liabilities held for trading and are recognised on the trade date.
A financial liability is classified in this category if acquired principally
for the purpose of selling in the short term. Derivatives are categorised
as held for trading unless they are designated as effective hedging
instruments in accordance with IAS 39. Financial liabilties carried at fair
value through profit or loss are initially recognised at fair value and are
subsequently carried at fair value. Transaction costs are expensed in
the income statement.
Gains or losses arising from changes in the fair value of the financial
liabilities at fair value through profit or loss category are presented in
the income statement within Net sales, Cost of Energy or Financial income
or expenses in the period in which they arise. Classification depends on
the nature of the derivative contract (e.g. commodity contract or interest
swap contract or foreign exchange contract).
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Other financial liabilities
This category includes interest-bearing and non-interest-bearing
financial liabilities that are not held for trading. They are included
in current liabilities, except for liabilities with maturities greater than
12 months after the end of the reporting period, which are classified
as non-current liabilities. Nuon’s other financial liabilities comprise
Interest-bearing liabilities and Trade payables and other liabilities in the
balance sheet (notes [22] and [27]). Other financial liabilities are initially
recognised at fair value adjusted for transaction costs and are subsequently
carried at amortised cost using the effective interest method.
Derivatives and hedge accounting
General
Nuon uses different types of derivative instruments (forwards, futures
and swaps) to hedge various financial risks, currency risks, electricity
and fuel price risks and interest rate risks.
Derivatives are initially recognised at fair value on the date a derivative
contract is entered into and are subsequently remeasured at their fair
value. The fair values are derived from market prices that are listed
in active markets or by using comparable recent market transactions
or valuation methods, e.g. discounted cash flow models and option
pricing models in the case that there is no active market.
A derivative contract is classified as either current or non-current in the
balance sheet based on the last delivery month of the derivative contract.
Accounting for the movements in fair value of derivatives
The accounting treatment for the movements in fair value of derivatives
depends on whether the derivative is designated as held for trading
purposes or as a hedging instrument and, if the latter is the case,
the risk that is being hedged.
In principle, all fair value movements of derivatives are recognised in
the income statement. The exception to the general principle that fair
value movements are recognised in the income statement is applicable
for derivatives for which cash flow hedge accounting is applied.
Commodity contracts
Nuon uses energy commodity contracts for oil, gas, coal and electricity for
the purpose of the production, sale and purchase of energy. The majority
of these contracts, which can be settled as derivatives, are valued at fair
value through profit or loss. Hedge accounting is applied for these contracts
if possible. For further information, please refer to note [3]: Estimations
and assessments.
Derivatives used for hedging
Nuon uses derivatives to hedge foreign exchange risks on assets
and liabilities, and fair value and cash flow risks arising from energy
commodity contracts. Nuon only applies cash flow hedge accounting.
These hedge transactions hedge the risk of movements in (future) cash
flows that may affect profit or loss. The hedges are attributable to a
specific risk that is related to a balance sheet item or a future transaction
that is highly probable. The effective part of the changes in the fair value
of the hedge is recognised in other comprehensive income (‘OCI’) in the
Fina n c ia l s ta tem ent s
79
hedge reserve. The non-effective part is taken to the income statement.
The accumulated amounts that are taken to OCI are recycled to the
income statement in the same period in which the hedged transaction
is recognised in the income statement. However, if an anticipated future
transaction that is hedged leads to the recognition of a non-financial
asset or liability, the accumulated value movements of the hedges are
included in the initial measurement of the asset or liability involved.
If a hedge ceases to exist, or is sold, or if the criteria for hedge
accounting are no longer being met, the accumulated fair value
movements are held in equity until the anticipated future transaction
is recognised in the income statement. If an anticipated future transaction
is no longer expected to take place, the accumulated fair value movements
that were recognised in OCI are recycled to the income statement.
Leasing
Leases where Nuon acts as lessor
Finance leases
Nuon has concluded a number of leases for energy-related installations.
Where all risks and rewards with regard to the ownership of the assets
have effectively been transferred to the lessee, the lease is accounted
for as a finance lease. The net present value of the lease payments,
together with the residual value if appropriate, is recognised as the
carrying amount on the balance sheet. The estimated residual values
used in the determination of Nuon’s gross investment that are not
guaranteed by parties other than the lessee are reviewed periodically.
If the residual value is expected to be lower, the decrease of the finance
lease receivables is charged directly to the income statement. The lease
payments received are treated as repayments of, and interest payments
on, the investment of Nuon in the lease. The interest income reflects
the effective interest on Nuon’s net investment.
Operating leases
In addition to finance leases, Nuon has concluded a number of operating
leases for energy-related installations. Operating leases are leases that are
not designated as finance leases and where the risks and rewards with
regard to the ownership of the assets have not been effectively transferred,
or not completely transferred, to the lessee.
The assets that are leased to third parties under operating leases are
classified under the item Property, plant and equipment. The proceeds
from operating leases are recognised in the income statement on a
straight-line basis over the lease term.
Leases where Nuon acts as lessee
Finance leases
If all risks and rewards with regard to the ownership have effectively
been transferred to Nuon, the contract is accounted for as a finance
lease. In this case an asset and a liability are recognised on the balance
sheet at the lower of the fair value and the net present value of the
future lease payments. The asset is depreciated over the shorter of the
useful life of the asset and the term of the lease contract. Consequently,
the lease payments are regarded as repayment of principal amounts
and interest expenses for the counterparty (lessor). The interest expenses
reflect the effective interest on the investment made by the lessor.
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The assets that Nuon holds under finance leases are recognised as
Property, plant and equipment. The corresponding lease obligations
are recognised as non-current liabilities.
Operating leases
Operating leases are leases that are not classified as finance leases
and where the risks and rewards with regard to the ownership of
these assets have effectively not been transferred, or not completely
transferred, to the lessee. The cost of operating leases is charged to
the income statement.
Inventories
General
Inventories, except for coal, oil, gas and emission allowances inventories,
are valued at the lower of cost and net realisable value. These inventories
consist of raw materials and consumables, inventories in process of
production, finished goods and spare parts. The cost of inventories is
determined by using the FIFO (first-in, first-out) method. Net realisable
value is determined using the estimated sales price under normal operating
circumstances, less the estimated selling costs. In contrast to the above,
coal, oil and gas inventories are valued at fair value less costs-to-sell, as
these inventories form part of the trade position in this type of commodity.
Movements in the fair value of coal, oil and gas inventories are recognised
in the income statement in the period in which the movement takes place.
Emission allowances
With regard to the accounting for emission allowances a distinction is
made between emission allowances designated for own use, necessary
to cover the number of rights required for the actual emissions, and
emission allowances that are held for trading purposes.
Emission allowances designated for own use are recognised at cost. When
actual emissions exceed the volume of emission allowances available, a
liability is recognised for the deficit and charged to the income statement,
measured at market prices. These liabilities are subsequently carried at
fair value (market price) until additional emission allowances are purchased
to offset the deficit. Gains or losses arising from changes in the fair value
of these deficits are presented in the income statement within Operating
expenses in the period in which they arise.
The trading position in emission allowances is accounted for at market
prices at the reporting date and changes are recognised directly in the
income statement. The possibility of converting Certified Emissions
Reductions (CERs) or Emissions Reduction Units (ERUs), into (European)
emission allowances is taken into account for the trading positions in
CERs and ERUs.
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Cash and cash equivalents
The item Cash and cash equivalents comprises all liquid financial
instruments with a maturity date at inception of less than three months.
Cash and cash equivalents include cash at hand, cash held on bank
accounts, cash held at banks through the cash pool of Vattenfall,
short-term deposits held at Vattenfall, call money and other short-term
deposits. Amounts owed to banks are only classified as cash and cash
equivalents when Nuon has the right to offset amounts owed and due
held on bank accounts with the same banks and Nuon has the intention
to use this right.
Amounts owed to credit institutions are reported under the item
Interest-bearing liabilities.
Construction contributions, government grants,
investment premiums and operating subsidies
Construction contributions
Contributions to construction and payments received from customers,
property developers and local and regional governmental bodies for
the costs incurred for heating infrastructure of new housing projects
and industrial estates are measured at their fair value and subsequently
recognised as Deferred income on the balance sheet. Deferred income
is amortised over the expected useful lives of the assets involved.
Government grants, investment premiums and operating subsidies
Government grants, investment premiums and operating subsidies are
recognised at fair value if there is reasonable certainty that the criteria
for receiving the grant or premium are or will be met, and that the grant
or premium will be received. Grants and premiums received relating
to a non-current asset are recorded as a reduction of the asset.
Government grants and operating subsidies that do not relate to
non-current assets are taken to income at the moment the associated
costs are incurred.
Income taxes and deferred taxes
Deferred tax assets and liabilities that arise from temporary differences
between the carrying amount in the consolidated accounts and the
carrying amount for tax purposes are determined based on the corporate
income tax rates that are currently applicable or will be applicable, based
on current legislation, at the time of settlement of the deferred tax asset
or liability. Deferred tax assets, are only recognised if it can be reasonably
assumed that sufficient future taxable income will be available. Deferred
tax assets and liabilities are only offset if Nuon has a legal right to offset
current tax assets and liabilities and the assets and liabilities relate to
taxes that are levied by the same tax authority or governmental body.
Deferred tax assets and liabilities are measured at nominal value.
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The corporate income tax charge is determined based on the applicable
rates for corporate income taxes and is measured at nominal (i.e.
undiscounted) value. The effective tax rate is affected by permanent
differences between the results for tax purposes and financial reporting
purposes as well as the possibilities of the utilisation of tax losses carried
forward, to the extent that no deferred tax assets can be recognised for
these tax losses.
Provisions for employee benefits
Multi-employer plans
Nuon has a number of defined benefit plans and defined contribution
plans for which contributions are generally paid to pension funds or
insurance companies. The most significant pension plans have been
transferred to the ABP pension fund and the ‘Metaal en Techniek’
pension fund. These plans can be characterised as multi-employer plans.
The pension plans offered by these funds are, in fact, defined benefit
plans; however, as Nuon does not have access to the required information,
both pension plans are treated as defined contribution plans. The pension
contributions paid during the financial year are accounted for as pension
costs in the consolidated accounts. If there is a contractual agreement
with a multi-employer plan determining how a surplus is distributed to
the participants or a deficit is to be financed, and the plan is accounted
for as a defined contribution plan, a receivable or liability following
from the agreement is recognised in the balance sheet. The resulting
gains or losses are recognised in the income statement. The pensions
of the majority of Nuon’s workforce, which have been transferred to
the ABP pension fund and the ‘Metaal en Techniek’ pension fund, do
not contain the aforementioned contractual agreements. As a result,
no receivable or liability has been recognised in the balance sheet.
Other long-term employee benefits
Other long-term employee benefits include plans, other than pension
plans, in which payment does not occur within 12 months after the
end of the annual reporting period in which the employees render
the related service. These plans consist of long-term sickness benefits,
jubilee benefits, disability benefits for former employees, conditional
bonuses and additional annual leave for older employees. These obligations
have not been transferred to pension funds or insurance companies.
The obligation for other long-term employee benefits recognised in
the balance sheet consists of the net present value of the vested benefits.
If appropriate, estimates are used for example for future salary raises,
employee turnover and similar factors. These factors are incorporated
in the calculation of the provision. Changes in the provision resulting
from changes in actuarial assumptions used and changes in the benefits
are taken directly to the income statement.
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81
The service costs attributable to the year of service and the accretion
of interest to the provision are reported under the item Employee
compensation and benefit expenses in the income statement.
Termination benefits
Termination benefits are benefits resulting from the decision of Nuon
to terminate the employment contract before the retirement date, or
resulting from the voluntary decision of an employee to agree to the
termination of the employment contract. The nature and amount of
the termination benefits are laid down in the Social Plan. The Social Plan
is renegotiated periodically.
A provision is only recognised when Nuon has drawn up a detailed plan
for the restructuring, the plan has been approved and communicated,
and it is not probable that the plan will be withdrawn at a later date.
The provision is measured at the present value of the expenditures
expected to be required to settle the termination benefit obligation.
Other provisions
Provisions are recognised when:
■■ There is a legal or constructive obligation as at the reporting date,
arising from events that occurred before the reporting date;
■■ It can be reasonably assumed that there will be an outflow of economic
resources in order to settle the obligation;
■■ The obligation can be reliably estimated.
Provisions are measured at the present value of the expenditures expected
to be required to settle the obligation using a pre-tax rate that reflects
current market assessments of the time value of money and the risks
specific to the obligation. The increase in the provision due to passage
of time is recognised as interest expense.
Policies for the consolidated statement of cash flows
The consolidated statement of cash flows is prepared in accordance
with the indirect method. The movement in Cash and cash equivalents
is derived from Result before tax according to the income statement.
Exchange rate differences are eliminated as far as they did not lead to
cash flows. In addition, non-cash transactions (such as finance leases) are
excluded from the Cash flows from investing and/or financing activities.
The financial consequences of the acquisition or sale of subsidiaries,
joint ventures and associates are shown separately in the Cash flow
from investing activities. As a result, the cash flows presented do not
necessarily reconcile with the movements in the items in the consolidated
balance sheet.
The definition of cash and cash equivalents used in the consolidated
statement of cash flows and balance sheet includes bank overdraft,
if applicable, which are recognised under interest-bearing liabilities.
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Note 3 Important estimations and assessments
in the preparation of the consolidated accounts
Preparation of the consolidated accounts in accordance with IFRS
requires the company’s Management Board to make estimations and
assessments as well as to make assumptions that affect application of
the accounting policies and the reported amounts of assets, liabilities,
income and expenses. The estimations and assessments are based on
historic experience and other factors that seem reasonable under current
conditions. The results of these estimations and assessments are then
used to establish the reported values of assets and liabilities that are
not otherwise clearly documented from other sources. The final outcome
may deviate from the results of these estimations and assessments.
The estimations and assessments are revised on a regular basis. The
effects of changes in estimations are reported in the period in which
the changes were made if the changes affected this period only, or in
the period the changes were made and future periods if the changes
affect both the current period and future periods. Important estimations
and assessments are described below.
Impairment testing for intangible assets
and property, plant and equipment
Nuon has reported substantial values in the balance sheet regarding
intangible assets and property, plant and equipment. These are tested
for impairment in accordance with the accounting policies described
in note [2] to the consolidated accounts, Accounting policies.
The recoverable amount for cash-generating units is determined by
calculating the value in use or fair value less costs-to-sell. These calculations
require certain estimates to be made regarding future cash flows and
other assumptions for example, on the required rate of return.
For 2012 Nuon has reported impairment losses including reversed
impairment losses to the amount of EUR 1,076 million negative
(2011: EUR 9 million positive). These impairment losses are further
described in notes [13] and [14] to the consolidated accounts.
Employee benefits and other provisions
For provisions, such as environmental restoration provisions, provisions for
onerous contracts, personnel-related provisions for non-pension purposes,
provisions for tax and legal disputes or other provisions, a discount rate
of 2.0% was used (2011: 2.5% or 3.0%). For further information on
these provisions, see notes [24] and [25] to the consolidated accounts.
82
Income taxes and deferred taxes
Nuon reports deferred tax assets and liabilities that are expected
to be realised in future periods. In calculating these deferred taxes,
certain assumptions and estimates must be made regarding future
tax consequences pertaining to the difference between assets and
liabilities reported on the balance sheet and their corresponding tax
values. The deferred tax assets and liabilities are measured based on
the assumptions that future earnings for Nuon’s units will correspond
to previously reported earnings, that applicable tax laws and tax rates
will be unchanged in the countries in which Nuon is active, and that
applicable rules for exercising tax loss carryforwards will not be changed.
Nuon also reports future expenses arising from ongoing tax audits under
Provisions. The outcome of these may deviate from the estimates made
by Nuon.
For further information on taxes, see note [26] to the consolidated accounts.
Held for sale
According to IFRS 5 Non-current Assets Held for Sale and Discontinued
Operations, an entity shall classify a non-current asset (or disposal group)
as held for sale if its carrying amount will be recovered principally
through a sale transaction rather than through continuing use. For that
to be the case, certain criteria need to be fulfilled. The assets need to
be available for immediate sale in its present condition subject only to
usual and customary terms. Further, the sale must be highly probable,
meaning that a plan for the disposal must have been prepared and
approved at the appropriate level of management, an active program
for the disposal must have been initiated and the asset must be marketed
for sale at a price that is reasonable in relation to its current fair value.
In addition, the sale should be expected to be completed within one year
from the date of classification.
At 31 December 2012, management was of the opinion that there are
no assets that comply with the requirements in IFRS 5 to be recognised
as Assets held for sale.
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Note 4 Acquired and divested operations
The following changes in consolidation are applicable for these
consolidated accounts:
■■ In May 2012 Nuon sold all the assets of Helianthos;
■■ In December 2011 the sale of N.V. Nuon Belgium, including Nuon Power
Generation Walloon N.V. and Nuon Wind Belgium N.V., was completed.
The results of Nuon Belgium were consolidated until 31 December 2011.
The assets and liabilities were not included in the consolidated balance
sheet at 31 December 2011. The shares were transferred on
10 January 2012;
83
■■
■■
In October 2011 Nuon increased its share in Zuidlob Wind B.V.
from 5% to 100%. The assets, liabilities and results have been
included in these consolidated accounts from 3 October 2011;
In June 2011 the sale of Nuon E&P to Tullow Oil plc was completed.
The results of Nuon E&P were no longer included as from
30 June 2011. The shares were transferred on 30 June 2011.
Note 5 Net sales
Net sales
2012
Electricity
Gas
Heating and other products
Total
Net sales and cost of energy include the fair value movements of
commodity derivatives. The total impact of these fair value movements
was EUR 25 million negative in 2012 (2011: EUR 39 million negative).
2011
1,375
1,853
677
2,081
3,905
4,522
1,797
644
This EUR 25 million represents the net effect of accounting for derivatives
at fair value through profit or loss. It consists of the fair value changes
on settled and unsettled derivatives contracts.
Note 6 Other operating income
Other operating income
2012
2011
Other
1
107
Total
1
107
The item Other operating income in 2011 consisted mainly of
the gain on the divestment of Nuon Belgium and Nuon E&P.
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Note 7 Cost of energy
Cost of energy
2012
Electricity
Gas
Heating and other products
Total
2011
-458
-1,852
-296
-1,688
-2,606
-2,919
-1,152
-79
Note 8 Employee compensation and benefit expenses
Employee compensation and benefit expenses
2012
Wages and salaries
Social security contributions
Pension expenses
Termination benefit expenses
Other long-term employee benefit expenses
Other personnel expenses
Total
2011
-314
-32
-38
-39
-18
-15
-333
-456
-425
-33
-36
-10
-2
-11
The number of employees is shown in the following table.
Number of employees (FTEs)
2012
2011
Average
Employed FTEs
5,325
5,641
5,200
5,490
76
99
As at 31 December
Employed FTEs
Number of employees abroad
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Note 9 Other operating expenses
Other operating expenses
2012
2011
Other expenses
-105
-73
-117
-142
-24
-4
Total
-465
External hires and consultants
Marketing and sales expenses
Operating and maintenance expenses
Office and ICT expenses
Costs charged by Vattenfall and its subsidiaries
-101
-94
-80
-139
-23
-3
-440
Note 10 Financial income
Financial income
2012
2011
Interest income deposits and call money
–
3
Financial income current account with Vattenfall
2
Currency translation differences
–
10
–
Total
10
13
Other financial income
7
1
Note 11 Financial expenses
Financial expenses
2012
2011
Other financial expenses
-11
-2
-
-6
Total
-13
-17
Interest on loans and liabilities
Interest added to provisions
-7
-4
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Note 12 Income tax expense
Income tax expense
2012
2011
Movement in deferred taxes
30
195
-98
Total
225
-131
Current tax expense
-33
The following table provides a reconciliation between the corporate
income tax rate in the Netherlands and the effective tax rate.
Reconciliation of effective corporate income tax rate
%
2012
Enacted corporate income tax rate in the Netherlands
2011
25.0
25.0
-2.0
- Other
0.0
-1.2
0.4
-0.1
-0.1
0.0
-0.1
-0.9
Effective corporate income tax rate
23.9
22.9
Impact of:
- Valuation of temporary differences
- Prior-year adjustments
- Non-deductible cost
- Tax-exempt income
- Unrecognised tax losses
- (Foreign) tax rate difference
The statutory tax rate is 25.0% (2011: 25.0%). The effect of
the difference between the statutory tax rate and other (foreign)
tax rates is disclosed in the corresponding line.
5.0
0.5
-5.4
0.3
0.4
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Note 13 Intangible assets
Intangible assets
Exploration and
evaluation assets
Goodwill
Other
intangible assets
Total
As at 1 January 2011
Historical costs
211
98
39
348
Accumulated amortisation and impairments
-43
-2
-8
-53
Carrying amounts as at 1 January 2011
168
96
31
295
Movements 2011
Investments and new consolidations
3
-
42
45
-105
-96
-
-201
Impairments
-
-
-1
-1
Amortisations
-
-
-1
-1
Transfers and other movements
-
-
21
21
-102
-96
61
-137
Disposals
Total
As at 31 December 2011
Historical cost
93
-
102
195
Accumulated amortisation and impairments
-27
-
-10
-37
Carrying amount as at 31 December 2011
66
-
92
158
-
-
-1
-1
-2
-1
-1
-2
Accumulated amortisation and impairments
93
-27
-
96
-6
189
-33
Carrying amount as at 31 December 2012
66
–
90
156
Movements 2012
Amortisation
Transfers and other movements
Total
As at 31 December 2012
Historical cost
The Other intangible assets item mainly comprises concessions, permits
and licences. Concessions, permits and licences are amortised over their
term. Transfers and other movements mainly relates to reclassifications
from or to Property, plant and equipment.
Investments and new consolidations
The investments and new consolidations in 2011 related partly
to the acquisition of Zuidlob Wind B.V.
Disposals
The disposals in 2011 related to the sale of Nuon E&P.
Impairment
The goodwill as at 31 December 2012 related to subsidiaries acquired in
former years (mainly in the Energy Related Services business). Goodwill
is not subject to amortisation, but is tested annually for impairment.
Impairment testing has been conducted through calculation of the value
in use of the assets to which the goodwill is allocated. Impairment
testing on goodwill has been conducted in the third quarter of 2012.
The main assumptions management used in calculating the projected
future cash flows, were based on the business plan for the coming five
years and the residual values. In the business plan period, the estimated
annual growth of revenue varies from 4% till 10%. The projected future
cash flows in the residual value are based on a growth factor of 1.0%
(2011: 1.5%). A change of the annual growth factor by +/- 0.5% would
affect the estimated value in use of the Energy Related Services business
by approximately +/- EUR 55 million. Future cash flows have been
discounted to value in use using a discount rate of 5.1% (2011: 5.3%)
after tax. A change of discount rate by +/- 0.5% would affect the estimated
value in use of the Energy Related Services business by approximately
-/+ EUR 66 million. In the year’s impairment testing, the calculated
value in use exceeds the carrying amount. Based on the current calculation
the assets’ value in use exceeds the carrying value by an amount of
EUR 0.2 billion. Consequently, no impairment has been recognised.
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88
Note 14 Property, plant and equipment
Property, plant and equipment
Plants and
other technical
installations
Land and
buildings
Equipment,
tools, and
fixtures and
fittings
Gas fields
and
platforms
Construction
in progress
Total
As at 1 January 2011
Historical cost
120
2,093
647
991
1,504
5,355
Accumulated depreciation and impairments
-63
-1,011
-319
-555
-
-1,948
57
1,082
328
436
1,504
3,407
Reclassification of historical cost
-
109
-
-104
-5
-
Reclassification of depreciation and
impairments
-
-26
-
26
-
-
Total
-
83
-
-78
-5
-
1,053
Carrying amount as at 1 January 2011
Reclassifications 2011
Movements 2011
Investments
2
7
-
38
1,006
Disposals
-3
-30
-298
-31
-10
-372
Depreciation
-3
-120
-38
-75
-
-236
Impairments
-33
-4
-1
-
-13
-15
Reversal of impairments
-
39
-
3
-
42
Transfers and other movements
7
168
8
78
-282
-21
-1
63
-328
-
699
433
Total
As at 31 December 2011
Historical cost
125
2,233
-
839
2,228
5,425
Accumulated depreciation and impairments
-69
-1,005
-
-481
-30
-1,585
Carrying amount as at 31 December 2011
56
1,228
-
358
2,198
3,840
2
-3
-2
-1
-1
-5
3
-5
-123
-362
497
10
-
42
-4
-57
33
14
731
-32
-713
-530
-544
778
-44
-182
-1,076
-1
-525
Movements 2012
Investments
Disposals
Depreciation
Impairments
Transfers and other movements
Total
As at 31 December 2012
Historical cost
109
2,893
-
789
2,302
6,093
Accumulated depreciation and impairments
-58
-1,655
-
-417
-648
-2,778
Carrying amount as at 31 December 2012
51
1,238
-
372
1,654
3,315
<
Contents financia l sta tem ents
N.V. N uon Energ y A nn ua l Re p o r t 2 0 1 2
Borrowing costs
The borrowing costs of Nuon that can be attributed to the acquisition,
production or construction of qualifying assets amounted to EUR 8 million
(2011: EUR 13 million) and are included in the investment. The average
interest rate for borrowing amounted to 1.5% (2011 3.4%).
Operating leases
Property, plant and equipment includes EUR 94 million
(2011: EUR 84 million) relating to assets for which operating lease
contracts have been agreed upon with third parties and for which
Nuon is the lessor.
Reclassification 2011
As a result of the alignment of the asset classification with Vattenfall
asset categories, a reclassification was made between different categories
of EUR 109 million of historical costs and EUR 26 million of related
accumulated depreciation.
Investments
Investments in 2012 and 2011 mainly relate to the construction of
the Nuon Magnum power plant in Eemshaven, two gas-fired power
plants in Amsterdam and Diemen and the Zuidlob wind farm.
Government grants
Property, plant and equipment included government grants for an amount
of EUR 17 million (2011: EUR 27 million). There are no unfulfilled
conditions or contingencies attached to these grants.
Disposals
The disposals in 2011 mainly related to the sale of Nuon E&P and
Nuon Belgium.
Impairments and reversal of impairments
As part of the Vattenfall group, impairment testing has been conducted
through calculation of the value in use for the Business Units, which
is the basis for the cash-generating units. The organisational changes
within Vattenfall in 2012 have not changed the structure of the CGUs.
During the year an impairment loss of EUR 1,076 million
(2011: EUR 9 million gain) was recognised, of which EUR 1,059 million
related to CGU Thermal Power in the Generation segment. This impairment
was caused by further deterioration of market conditions, particularly
in relation to electricity generation. Margins are under pressure by, on
the one hand falling demand and on the other hand increased production
capacity and more imports. By focusing more on reducing costs and
improving the commercial deployment of power plants we have managed
Fina n c ia l s ta tem ent s
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89
to compensate the negative effect in part. On the basis of the forecast
we concluded that the book value of our Thermal assets exceeded
the estimated value in use, specifically for the gas-fired power plants,
resulting in this impairment.
The main assumptions used in calculating projections of future cash
flows for CGU Thermal Power within the Generation segment are – for
the power generating assets – based on forecasts of the useful life of the
respective assets. In other respects, they are based on the business plan
for the coming five years, after which their residual value is taken into
account, based on a long-term market outlook. The calculated revenues
in these forecasts are based on Vattenfall’s long-term pricing projections,
which are the result of a large number of simulations of the prices of oil,
gas, electricity and CO2 emission allowances in the relevant commodity
markets. In general it can be stated that a further decrease of projected
spark spreads in the future is likely to result in additional impairments
for the Thermal asset portfolio. In calculations of the value of powergenerating assets in the Generation segment, a so-called flexibility
value is taken into account. Most of the power-generating assets have
a technical degree of flexibility that gives the owner the opportunity
to adapt generation to current prices in the market. If spot prices are
low, a production plant can reduce its generation or even go off line
during the time in which generation would be unprofitable. On the other
hand, a production plant can be brought back on line or be ramped up
in cases where spot prices allow for positive production margins. In option
valuation theory, this asymmetry in potentially earned margins results
in an additional value component. This flexibility value is mainly dependent
on two key elements: the volatility of energy prices, and the technical
flexibility of the power plants, which affects decisions in the daily
production optimisation.
The main driving force behind the estimated flexibility value for the
power generating assets in the Generation segment is the effect of
production optimisation; however, calculation of the flexibility value
is also affected by a multitude of simulation scenarios for future prices
of electricity, fuel and CO2 emission allowances. The calculation of these
scenarios takes into account fundamental market dynamics, including
the historical as well as the anticipated future level of volatility.
Future cash flows have been discounted to value in use using a discount
rate of 5.1% (2011: 5.3%) after tax. A change of the discount rate by
+/- 0.5% would affect the estimated value in use of the CGU Thermal
Power in the Generation segment by approximately EUR -/+ 217 million.
An increase in the discount rate by 0.5% would give rise to a need to
recognise an additional impairment of book value of fixed assets of
approximately EUR 217 million in CGU Thermal Power.
<
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90 N.V. N uon Energ y A nn ua l Re p o r t 2 0 1 2
Value of assets held under finance leases
The value of assets held under finance leases totalled EUR 8 million
as at year-end 2012 (2011: EUR 15 million) and are classified under
Equipment, tools, and fixtures and fittings. These finance leases relate
to property, plant and equipment for the production of renewable
energy, such as wind farms, solar and biomass generation assets.
The heating networks belonging to Alliander N.V. which had been
placed within a cross-border lease, were subleased to N.V. Nuon Warmte
as of mid 2008, now part of Nuon. This was done in connection with
90
the implementation of the Independent Network Operation Act (WON)
and the preparations for the unbundling of our former shareholder
N.V. Nuon. The strip risk (the part of the termination value – i.e. the
possible compensation payable by Nuon to Alliander N.V. in the event
of premature termination of the transaction – that cannot be settled
from the deposits and investments held for this purpose) related to these
subleased assets is borne by Nuon and amounted to USD 35 million as
at year-end 2012 (2011: USD 47 million). As these subleases are still
operational, no liability for this strip risk is included in the balance sheet.
Note 15 Participations in associated companies and joint ventures and other shares
and participations
Participations in associated companies and joint ventures and other shares and participations
Carrying amount as at 1 January
Associates
2012
2011
14
14
Joint ventures
2012
2011
83
81
Other shares and
participations
2012
2011
14
16
Movements
Investments
-
–
-
-
6
4
Capital repayment
-
–
-4
-
-8
-2
-
18
-19
22
-
-
Disposals
Share in results
Dividends received
Impairments
Currency translation adjustments and other movements
Total
Carrying amount as at 31 December
Other shares and participations mainly include development-stage
clean energy investments.
-
–
–
–
-
–
14
-12
-
–
-5
14
78
–
-6
2
1
5
83
19
14
-
-2
<
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91
Financial information of investments in associates
Assets
Liabilities Revenue
Profit/
(Loss)
% Interest Carrying
held
amount
2012
64
B.V. NEA, the Netherlands
–
–
1
23
Total
14
14
2011
B.V. NEA, the Netherlands
64
–
–
–
23
Total
14
14
Financial information of investments in joint ventures
Noncurrent
assets
Current
assets
Provisions
Longterm
liabilities
Shortterm
liabilities
7
-
17
55
2
10
Revenue
Expenses
Profit/
(Loss)
% Interest
held
Carrying
amount
2012
NoordzeeWind C.V.,
the Netherlands
Other
71
1
6
Total
78
Westpoort Warmte B.V.
149
61
19
7
50
11
19
8
31
2
50
50
2011
NoordzeeWind C.V.,
the Netherlands
Westpoort Warmte B.V.
160
19
7
20
1
55
15
39
50
61
8
-
55
12
8
6
2
50
75
-
Other
10
Total
83
Note 16 Other non-current receivables
Other non-current receivables consist mainly of loans and receivables
(including incremental costs) with related parties of which EUR 5 million
is current.
<
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92
Note 17 Derivatives
Derivatives
Current
assets
2012
Non-current
assets
2012
2011
2011
Current
liabilities
2012
2011
Non-current
liabilities
2012
2011
Trading derivatives
Commodity contracts
1,742
2,207
911
620
1,399
2,003
795
637
Treasury contracts
37
1,779
72
20
931
36
43
1,442
66
42
837
652
Total
2,279
656
2,069
15
Cash flow hedges
115
89
89
-1,302
-1,811
537
583
Commodity contracts
Treasury contracts
Total
Effect from netting agreements
Total
60
60
107
The commodity contracts mainly relate to forward contracts for oil,
gas, coal, power and emission allowances. The derivatives increased
mainly due to the purchase of a CO2 portfolio (EUR 284 million)
8
207
28
99
99
-567
-422
453
262
28
-
213
109
109
60
-1,194
-1,786
-675
-447
347
496
271
265
6
60
-
from Vattenfall Energy Trading Germany (‘VET Germany’) in mid-2012,
of which a significant part has been settled during the year.
Note 18 Inventories
Inventories
2012
2011
Inventories at fair value
33
1
273
153
Total
307
186
Raw materials and consumables
Finished goods
Inventories at fair value include coal, gas, emission allowances
and oil inventories.
32
1
Inventories measured at the lower of cost and net realisable value
were written down in 2012 by EUR 1 million (2011: EUR 1 million).
<
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Note 19 Trade receivables and other receivables
Trade receivables and other receivables
Trade receivables - regular sales
Trade receivables - trade activities
Provisions for impairments on trade receivables
2012
414
398
-43
2011
461
438
-51
Trade receivables (net)
769
Taxes and social security premiums
13
421
238
143
Receivables from related parties
Other receivables
Accrued income and prepayments
Total
The net balance of trade receivables from regular sales relate mainly
to energy receivables in the business and consumer markets.
Receivables from trading activities have a maximum credit term of
one month as they are normally settled in the month after invoicing.
848
17
54
390
41
1,584
1,350
At the end of 2012, the impairments on trade receivables totalled
EUR 43 million (2011: EUR 51 million). An impairment charge on
trade receivables of EUR 28 million (2011: EUR 25 million) was
recorded in other operating expenses in the income statement in 2012.
Current tax assets
2012
2011
Corporate income tax
34
22
Total
34
22
<
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Note 20 Cash and cash equivalents
Cash and cash equivalents
2012
2011
181
Deposits
184
2
1
Total
187
299
Cash held at banks
Vattenfall group cash pool
The effective interest rate on credit balances available on demand and
short-term deposits was 0.37% (2011: 0.63%). Cash and cash equivalents
are denominated almost entirely in euros. Cash and cash equivalents include
cash and deposits of EUR 147 million (2011: EUR 83 million) to which
Nuon does not have free access. This amount relates to cash held at
banks which is provided as collateral and for margin call payments
to cover exchange-based commodity trades.
Note 21 Equity
115
3
The class A shareholders are entitled to an annual fixed preferred
dividend on the remaining class A shares, amounting to 2% of the
outstanding predetermined purchase price for the outstanding class A
shares. As these payments qualify as a liability rather than equity in
accordance with IAS 32, a liability of EUR 430 million was recognised
as at 1 July 2009 as a charge to Other reserves. This represented the net
present value of the fixed preferred dividend payable until 1 July 2015.
As at 31 December 2012 this liability was EUR 171 million. Interest is
accreted to the dividend liability.
Authorised, issued and paid-up share capital
Share premium
The authorised share capital of Nuon amounts to EUR 1,500,000,000
consisting of 150,000,000 class A shares and 150,000,000 class B shares,
each with a nominal value of EUR 5 per share. The total number of
issued and paid-up shares amounts to 45,086,116 class A shares and
91,708,848 class B shares totalling EUR 683,974,820. The class B shares,
equal to 67% of the total number of outstanding shares, are held
by Vattenfall.
Share premium consists of the additional paid-up or contributed value
to Nuon.
The class A shareholders sold 3% of the class A shares to Vattenfall AB
on 1 July 2012 at EUR 72.10 per share. These shares have subsequently
been converted into B shares. The remaining class A shares, representing
a 33% stake in Nuon, will be sold to Vattenfall AB at EUR 72.10 per share
in the coming years. The last tranche will be sold as per 1 July 2015.
After each subsequent sale, the sold class A shares will also be converted
into class B shares.
Rights and obligations related to class A and B shares
The ‘one share, one vote’ principle applies to the issued shares.
Further information is provided in the Corporate Governance section
of the annual report on page 20.
Reserve for cash flow hedges and
currency translation reserve
The changes in the fair value of derivatives, net of taxes, which effectively
hedge the risk of changes in future cash flows, are included in the Reserve
for cash flow hedges. The exchange rate differences resulting from the
assets and liabilities of subsidiaries with a different functional currency
being translated at closing rate while their results are translated at an
average rate are recognised in Other comprehensive income and included
in the Currency translation reserve within Equity. Neither the Reserve for
cash flow hedges nor the Currency translation reserve is freely distributable.
Other reserves
Other reserves consist mainly of retained earnings. Results which are
not distributed as dividend to class B shareholders are in principle added
to the Other reserves. The Other reserves are not freely distributable until
all class A shares have been sold to Vattenfall AB.
<
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95
Note 22 Interest-bearing liabilities
Interest-bearing liabilities
2012
2011
Carrying amount as at 1 January
355
736
Movements
834
-54
-74
4
710
Additions and loans received
Loans repaid
Payment dividend liability class A shares
Other movements
Total
Carrying amount as at 31 December
49
-320
-115
5
-381
1,065
Loans repaid included EUR 26 million (2011: EUR 103 million)
relating to the transfer of external green loans to Vattenfall AB.
This transfer was settled in cash.
355
The maturity of the interest-bearing liabilities was as follows:
Maturities of interest-bearing liabilities
Effective
interest rate
Variable/
Fixed
Carrying amounts
Less than
1 year
Between
1 and 5 years
Over
5 years
Total
2012
Interest-bearing liabilities
Green loans
3.0%
Green loans
Current account Vattenfall
Dividend liability class A shares
Other
Other
Total interest-bearing liabilities
0.2%
3.6%
7.7%
Fixed
Variable
Variable
Fixed
Fixed
Variable
3
6
825
77
4
29
94
2
1
24
-
32
6
825
171
26
5
915
126
24
1,065
<
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96 N.V. N uon Energ y A nn ua l Re p o r t 2 0 1 2
96
Maturities of interest-bearing liabilities
Effective
interest rate
Variable/
Fixed
Carrying amounts
Less than
1 year
Between
1 and 5 years
Over
5 years
Total
2011
Interest-bearing liabilities
Green loans
3.2%
Green loans
Dividend liability class A shares
3.4%
Other
7.4%
Other
Total interest-bearing liabilities
The green loans are subject to covenant clauses, under which
the company is required to meet debt and interest coverage ratios.
Nuon fulfilled all indicators as required in these contracts.
Fixed
23
40
11
Variable
7
-
-
74
7
Fixed
71
173
-
244
Fixed
-
1
25
26
Variable
4
-
-
4
105
214
36
355
At year-end 2012 and 2011, the carrying amount of the interest-bearing
liabilities was denominated in euros.
Note 23 Deferred income
Deferred income
2012
Carrying amount as at 1 January
Repayments
Contributions received
Amortisation recognised as income
Transfers and other
Carrying amount as at 31 December
Deferred income relates to construction contributions received.
These amounts were mainly attributable to heat networks.
2011
170
166
-8
11
-8
-2
–
163
4
-8
8
170
The amortisation periods of these amounts are equal to the depreciation
periods of the underlying assets and range from 10 to 50 years.
<
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97
Note 24 Provisions for employee benefits
Provisions for employee benefits
Termination benefits
Jubilee benefits
Long-term sickness leave and disability benefits
Unemployment benefits
Reduction in working hours older employees
Other
Current position
2012
2011
25
1
4
1
1
1
9
1
5
2
4
1
Non-current position
2012
2011
16
1
16
9
4
4
9
4
3
3
2
1
Total
33
Pensions
In 2012 a net amount of EUR 39 million (2011: EUR 10 million)
was added to the provision for new restructuring programmes.
The provision for termination benefits totalled EUR 41 million
at the end of 2012 (2011: EUR 10 million).
Nuon has various pension and similar plans for its current and former
employees. The majority of the pension obligations have been transferred
to the ABP pension fund and the ‘Metaal en Techniek’ pension fund.
In addition to these two main pension plans, Nuon has a number of
other defined benefit plans that are not material. The ABP and ‘Metaal
en Techniek’ plans can be characterised as multi-employer plans. The
pension benefits offered by these funds are in fact defined benefit plans.
In principle, a pro rata share of the defined benefit obligation, the plan
assets and the costs associated with the plan should be included in
Nuon’s consolidated accounts. However, as Nuon does not have access
to the required information, both pension plans are treated as defined
contribution plans. If there is a contractual agreement with a multiemployer plan determining how a surplus is distributed to the participants
or a deficit is to be financed, and the plan is accounted for as a defined
contribution plan, a receivable or liability following from the agreement
should be recognised in the balance sheet. The resulting gains or losses
are recognised in the income statement. The pension plans that are
transferred to the ABP pension fund and the ‘Metaal en Techniek’ pension
fund do not contain the aforementioned contractual agreements. As a
result, no receivable or liability has been recognised in the balance sheet.
Termination benefits
The provision covers payments and/or supplements to benefits granted
to employees whose employment contract has been terminated. These
benefits and supplements are based on the Social Plan operated by Nuon
and individual arrangements. The Social Plan is periodically renegotiated
and established during the Collective Labour Agreement negotiations.
22
50
22
Other provisions for employee benefits
Nuon operates a number of other employee benefit schemes,
including the following:
■■ Jubilee benefits: this benefit covers the jubilee benefits paid
to employees after 10, 20, 30 and 40 years of service and after
retiring upon reaching the retirement age;
■■ Long-term sickness benefits: this benefit covers the obligation
to continue paying all or part of an employee’s salary during
the first two years of sick leave;
■■ Disability benefits: Nuon is the risk-bearer within the meaning
of the Income and Employment Act (WIA); this benefit covers
the obligation in respect of Nuon employees who have become
partly or fully incapacitated for work;
■■ Unemployment benefits: Nuon is the risk-bearer within the meaning
of the Unemployment Act (WW); if a Nuon employee becomes
unemployed, the unemployment benefit they receive is borne
by Nuon for a period of between three and thirty-eight months,
depending on the employment history of the employee concerned;
■■ Reduction of working hours of older employees: in the light of
the legal measures in relation to early retirement, it was agreed
in the 2005 Collective Labour Agreement to create a transitional
scheme in which older employees would work less in the future.
<
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98 N.V. N uon Energ y A nn ua l Re p o r t 2 0 1 2
98
Movements in provisions for employee benefits
The following table shows the movements in the provisions
for termination benefits and other employee benefits.
Movements in provisions for employee benefits
Termination
benefits
As at 1 January 2011
Other
employee benefits
7
Total
38
45
Releases to income
-1
-
-1
Additions
11
6
17
Interest accretion
-
1
1
-7
-11
-18
3
-4
-1
10
34
44
Total
39
-8
31
18
1
-11
8
57
1
-19
39
As at 31 December 2012
41
42
83
Benefits paid
Total
As at 31 December 2011
Releases to income
Additions
Interest accretion
Benefits paid
The main assumptions used in determining the provisions
are given below.
Assumptions
As at 31 December
2012
Mortality table
Discount rate
Expected future salary increases
Expected increase in disability benefits
Generation table
2010-2060
2.0%
2.5%
2.5%
2011
Generation table
2010-2060
3.0%
2.5%
2.5%
<
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Note 25 Other provisions
Other provisions
Environment
and dismantling
Carrying amount as at 1 January 2011
Onerous
contracts
Other
Total
85
18
32
135
Additions
1
-
9
10
New consolidations
-
-
-
-
-1
-3
-3
-7
Release to other expenses
-
-
-13
-13
Interest accretion
3
-
-
3
Other movements
-
-
-
-
Movements 2011
Withdrawals
Companies sold
-68
-
-
-68
Total
-65
-3
-7
-75
20
15
25
60
Total
23
-1
1
23
3
-5
-2
2
-8
1
-5
28
-14
1
1
16
Carrying amount as at 31 December 2012
43
13
20
76
Carrying amount as at 31 December 2011
Movements 2012
Additions
New consolidations
Withdrawals
Release to other expenses
Interest accretion
Other movements
The environmental restoration provision, as included in Environment
and dismantling, covers legal and constructive obligations related to
soil pollution.
The provision for onerous contracts relates mainly to obligations in
relation to the purchase of green certificates from a Norwegian wind
farm and heat contracts.
The provision for dismantling costs, as included in Environment and
dismantling, is formed for legal and constructive obligations related
to dismantling and removal of assets, including expenses to be incurred
to restore certain sites to their original condition.
The item Other includes provisions for various claims and litigation.
An amount of EUR 11 million (2011: EUR 9 million) of
the Other provisions is expected to lead to a cash outflow in
2013 and an amount of EUR 21 million (2011: EUR 17 million)
of the Other provisions is expected to lead to a cash flow after 2017.
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Note 26 Deferred tax assets and liabilities
The balances and gross movements of the deferred tax assets
and deferred tax liabilities were as follows:
Gross movement in deferred tax assets/(liabilities)
Property,
plant and
equipment
Carrying amount
as at 1 January 2011
Intangible
assets
Non-settled
Settled
derivatives derivatives
-2
Tax
losses
Provisions
8
Other
16
Total
-140
-48
-115
8
-273
Disposals
153
48
-
-
-4
3
-
200
Charged to income
-78
-
3
-
-4
-10
-9
-98
-
-
101
-
-
-
-
101
Reclassifications and
other movements
-3
-9
-
-
-
-
3
-9
Total
72
39
104
-
-8
-7
-6
194
-68
-9
-11
-2
-
9
2
-79
Movements 2011
Charged to other
comprehensive income
Carrying amount
as at 31 December 2011
Of which:
- Deferred tax asset
- Deferred tax liability
-
-
-
-
-
-
-
-
-68
-9
-11
-2
-
9
2
-79
179
2
12
-
7
1
-6
195
-
-
-12
4
-
-
-
-8
179
2
-
4
7
1
-6
187
111
-7
-11
2
7
10
-4
108
116
-7
-11
2
7
10
-4
113
5
-
-
-
-
-
-
5
Movements 2012
Charged to income
Charged to other
comprehensive income
Reclassifications and
other movements
Total
Carrying amount
as at 31 December 2012
Of which:
- Deferred tax asset
- Deferred tax liability
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The deferred tax positions for property, plant and equipment and
intangible assets mainly represent the difference between the carrying
value and the value for tax purposes of the assets of the power-generating
facilities and are recorded at 25.0% (2011: 25.0%). A deferred tax asset
is recognised for the difference to the extent that the realisation of the
related tax benefit through future taxable profits is probable.
The deferred tax positions in respect of derivatives reflect the temporary
differences – measured at the prevailing tax rate – between the valuation
of derivatives for tax purposes and the valuation in the consolidated
accounts. The settled derivatives refer to cash-settled derivatives of which
101
the fair value movements are not yet recognised in the income statement
as cash flow hedge accounting is applied.
Unrecognised deferred tax assets
Unrecognised deferred tax assets relate to the temporary differences
in the valuation of tax losses carried forward and amounted to
EUR 10 million (2011: EUR 12 million). These tax losses carried
forward relate mainly to losses in foreign operations, where insufficient
taxable profit is considered to be available in the foreseeable future
to recognise the losses carried forward. These tax losses on the foreign
operations do not have an expiration date.
Note 27 Trade payables and other liabilities
Trade payables and other liabilities
2012
Trade payables
Invoices to be received from energy supplies and trading activities
Deposits received
Payables to related parties
Other payables
Other taxes and social securities
Total
Other payables included short-term employee benefit accruals of
EUR 66 million at the end of 2012 (2011: EUR 65 million) relating
to salaries to be paid, holiday allowances, bonuses payables and
other personnel expenses to be paid.
2011
172
637
34
173
162
305
198
1,483
1,267
515
49
40
224
241
Note 28 Leasing
Leasing receivables
The total future minimum lease receipts from non-cancellable operating
leases on property, plant and equipment were as follows:
Operating lease receivables
2012
2011
30
Over 5 years
27
101
22
Total
150
140
Less than 1 year
Between 1 and 5 years
These operating lease receivables relate mainly to leases
of equipment to consumers.
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Leasing payables
Finance lease payables
Less than 1 year
Between 1 to 5 years
Over 5 years
Total
2011
Future minimum lease obligations
4
5
2
11
Future finance charges on finance leases
–
–
–
–
Present value of finance lease obligations
4
5
2
11
Future finance charges on finance leases
4
–
4
–
–
–
8
–
Present value of finance lease obligations
4
4
–
8
2012
Future minimum lease obligations
Finance lease payables relate to property, plant and equipment mainly
for the generation of renewable energy, such as wind farms and solar
and biomass generation assets.
The total future minimum lease payments in respect of non-cancellable
operating leases were as follows.
Operating lease payables
2012
Less than 1 year
Between 1 and 5 years
Over 5 years
Total
Nuon has off-balance operating lease payables in respect of
district heating networks, buildings, company cars, IT assets
and gas storage assets.
2011
86
151
29
187
266
307
81
39
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Note 29 Contingent assets and liabilities
Rights and obligations arising from operating leases
Please refer to note [28] Leasing for a breakdown of the rights
and obligations with regard to operating leases.
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Capital expenditure and purchasing commitments
The outstanding capital expenditure commitments, which relate
mainly to construction in progress, and other purchasing commitments
at the end of the year are listed below:
Capital expenditure and purchasing commitments
2012
2011
Capital expenditure commitments regarding property, plant and equipment and intangible assets
204
526
Total
204
526
Sales and purchase commitments
Nuon has concluded a number of long-term purchase contracts with
terms varying from 2013 to 2016. In addition, Nuon has concluded
long-term sales contracts on varying terms and conditions. Nuon enters
into energy commodity contracts for the sale and purchase of electricity,
oil, gas, coal and emission allowances. The energy commodity contracts
that are held for trading purposes and the energy commodity contracts
that are designated as hedging instruments are recognised on the
balance sheet at fair value. These contracts are not generally settled
by means of physical delivery but by concluding opposite transactions
in which only the net cash flows are settled. The energy commodity
contracts that are designated for own use are generally settled by
physical delivery. The majority of these contracts are also valued
at fair value. Hedge accounting is applied if possible. Please refer
to note [32] for the liquidity overview, which shows the contractual
terms of all financial obligations recognised.
Contingent liabilities
At the reporting date, Nuon (including its subsidiaries, associates and
joint ventures) was involved in a number of legal proceedings and regular
investigations by tax and other authorities. Provisions have been made
as far as deemed required in accordance with the accounting principles.
At 31 December 2012, Nuon had issued bank guarantees amounting to
EUR 25 million (2011: EUR 23 million) and letters of credit amounting
to EUR 22 million (2011: EUR 9 million).
Nuon has provided EUR 344 million (2011: EUR 340 million) parent
guarantees for its subsidiaries.
N.V. Nuon Energy has issued declarations of joint and several liability
pursuant to article 403, Part 9, Book 2 of the Dutch Civil code for
a number of its subsidiaries. The significant group companies for
which such a declaration has been issued are included in the list
of subsidiaries, joint ventures and associates included in note [31]
Related party disclosures of the consolidated accounts. As partners
in a number of general partnerships, subsidiaries of Nuon are liable
for the obligations of these partnerships. The exposure under these
obligations is not considered to be significant.
N.V. Nuon Energy and the majority of its subsidiaries form a fiscal unity
for both corporate income tax and VAT purposes. Consequently, every
legal entity forming part of the fiscal unity is jointly and severally liable
for the tax liabilities of the legal entities forming part of the fiscal unity.
Contingent assets
At the end of 2005, Nuon and Statkraft reached agreement on the
settlement of the obligation to purchase green energy certificates
from the Norwegian Smøla 1 and 2 and Hitra wind farms. Nuon retains
the right to 50% of the gain on any future sale of green certificates
from these wind farms.
Note 30 Licences
Nuon has a licence for the supply of electricity and gas and holds
licenses for constructing certain power and heat facilities.
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Note 31 Related party disclosures
As of 1 July 2012, 67% of Nuon’s shares are owned by Vattenfall AB
(class B shares). Vattenfall AB has a casting vote in the Supervisory
Board and qualifies as a related party. The remaining 33% (class A shares)
are held by various municipalities and provinces in the Netherlands
(a total of 58 shareholders), none of which has significant influence
(>20%) and they therefore do not qualify as related parties. Nuon also
conducts transactions with subsidiaries within the Nuon group and
with other entities in the Vattenfall group.
104
Furthermore, the Nuon group has interests in various associates
and joint ventures over which it exercises significant influence, but
no control or only joint control of the operations and financial policy.
Transactions with the parties classified as related parties, some of
which are significant, are conducted at market conditions and prices
that are not more favourable than the conditions and prices offered
to independent third parties. The following list includes the significant
subsidiaries, associates and joint ventures and the share that Nuon
holds in these entities.
Significant subsidiaries, associates and joint ventures
As at 31 December 2012
Registered office
%
Subsidiaries
N.V. Nuon Energy Sourcing1
Amsterdam
Nuon Power Generation B.V.1
Utrecht
Nuon Power Buggenum B.V.1
Amsterdam
Nuon Storage B.V.
Amsterdam
N.V. Duurzame Energie1
Arnhem
Nuon Wind Development B.V.1
Rhenen
Nuon UK Ltd.
Long Rock, Penzance (United Kingdom)
ENW Duurzame Energie B.V.1
Amsterdam
Nuon Power Projects I B.V.1
Amsterdam
Vattenfall Energy Trading Netherlands N.V.1
Amsterdam
N.V. Nuon Warmte1
Arnhem
De Kleef B.V.1
Arnhem
Emmtec Services B.V.1
Emmen
N.V. Nuon Sales Nederland1
Amsterdam
Ingenieursbureau Ebatech B.V.1
Amsterdam
Yellow & Blue Clean Energy Investments B.V.
Amsterdam
n.v. Nuon Customer Care Center1
Arnhem
Nuon Energie und Service GmbH
Heinsberg (Germany)
Energy Related Services Nederland N.V.1
Amsterdam
Nuon Retail Beveiliging Service B.V.1
Didam
Feenstra Verwarming B.V.
Lelystad
Nuon Isolatie B.V.
Veendam
Nuon Energie Advies B.V.1
Amsterdam
Zuidlob Wind B.V.
Ede
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
82.2
100
100
100
100
100
100
100
100
Amsterdam
22.5
Associates
B.V. Nederlands Elektriciteit Administratiekantoor
Joint Ventures
1
NoordzeeWind C.V.
The Hague
Westpoort Warmte B.V.
Amsterdam
N.V. Nuon Energy has issued a declaration of liability for these subsidiaries.
A complete list of subsidiaries, other associates and joint ventures, as required by sections 379 and 414 of Book 2 Title 9 of the Netherlands Civil Code, is filed with the Chamber
of Commerce in Amsterdam.
50
50
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The following transactions have taken place with related parties with
regard to sales and purchases of goods and services, including leases.
Related parties transactions
For the year ended 31 December
2012
Sales of goods and services to Vattenfall and its subsidiaries
Sales of goods and services to associates and joint ventures
Costs charged by Vattenfall and its subsidiaries
Costs charged by associates and joint ventures
Various goods and services are bought or provided on normal commercial
terms and conditions within Vattenfall. A cost-sharing programme is in
place, which entails that certain costs within the group are recharged
to the users within the Vattenfall group based on actual usage. Nuon,
in the ordinary course of business, trades commodities with and via
VET Germany. The results of these trading activities with VET Germany
are reported net in net sales or cost of energy. In addition to the trading
activities, Nuon purchased a CO2 portfolio at market value from
VET Germany in mid-2012.
2011
26
14
-24
-26
9
13
-23
-27
In the ordinary course of business, Nuon has outstanding payables and
receivables with Vattenfall companies (note [19], note [22] and note [27])
as well as with its associated companies and joint ventures (note [15]).
Nuon has also granted a limited number of loans to related parties.
Where relevant, this has been disclosed in these consolidated accounts.
The members of the board of Nuon have been identified as individuals
who qualify as related parties. The employee benefits related to these
individuals have been disclosed in the Remuneration Report set out
on page 33 of the Annual Report.
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Note 32 Information on risks
and financial instruments
General
The following risks can be identified with respect to financial instruments:
market risk, credit risk and liquidity risk. Market risk is defined as the
risk of loss due to an adverse change in market prices. Credit risk is the
risk resulting from counterparty default, including suppliers, investments
and trading counterparties. Liquidity risk is the risk that the company
will not be able to meet its obligations associated with financial liabilities.
This note provides information on the above-mentioned financial
risks to which Nuon is exposed, the objectives and the policy for
the management of risks arising from financial instruments as well
as the management of capital.
Market risk
Nuon is exposed to the following market risks:
■■ Electricity and fuel price risk: the risk that the value of a financial
instrument will fluctuate due to changes in commodity prices;
■■ Currency risk: the risk that the value of a financial instrument
will fluctuate due to changes in exchange rates;
■■ Interest rate risk: the risk that the value of a financial instrument
will fluctuate due to changes in interest rates.
Nuon hedges market risks through the purchase and sale of derivatives.
Nuon applies hedge accounting as far as possible in its consolidated
accounts. All transactions are carried out within set boundaries and
risk limits set.
Electricity and fuel price risk
Nuon is exposed to the impact of market fluctuations in the prices of
a range of energy commodities including, but not limited to, electricity,
coal, natural gas, oil and emission allowances. These risks are a result
106
of ownership of physical assets (primarily gas- and coal-fired power
plants in the Netherlands), sales positions in electricity and gas to both
retail and business customers in the Netherlands and the proprietary
positions taken in the energy commodity markets.
It is Vattenfall’s policy to centralise its exposures on group level and
to hedge via different Market Access Points. Vattenfall Energy Trading
Netherlands (‘VET NL’), which is legally part of Nuon, is designated
as Market Access Point for a number of commodities for Vattenfall
and is also active in proprietary trading. Hedge contracts between
VET Germany and VET NL as well as hedge contracts between VET NL
and the market are treated as derivatives and recognised at fair value
in the balance sheet.
All market risks associated with electricity and fuel price risk are
measured using the Value at Risk (VaR) method on a total Vattenfall
level. VaR calculation quantifies potential changes in the value of
commodity positions as a result of market price movements. Nuon takes
the view that all electricity and fuel price risks should be monitored in
the same way, irrespective of their origin – whether as a consequence
of asset ownership, customer sales, hedging or proprietary trading.
The inputs to the VaR calculation are positions (open volumes), current
market prices and the variability of prices (volatilities and correlations),
all of which are updated daily. The VaR levels are managed to not
exceed EUR 50 million, which is based on a max loss of SEK 4 billion
(approximately EUR 466 million) and are based on a 99% confidence
level and a 1-day VaR holding period. Thus, the VaR measures the
marked-to-market movement arising from a 1-day change in market
prices, under normal market conditions, which should only be
exceeded by 1% of the time (1 day in 100 days).
The VaR level for trading is:
Trading VaR levels
Amounts in EUR million
2012
As at 31 December
Average for the year
Vattenfall’s risk management strategy is managed based on the actual
operational structure instead of the legal structure. Commodity
exposures arising from assets and the customer book are hedged via
VET Germany and as such do not result in direct positions for Nuon.
2011
9.3
9.4
Nuon treats the aforementioned contracts with VET Germany
as derivatives which are valued at fair value on the balance sheet.
If possible, hedge accounting is applied.
7.8
10.4
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Currency risk
General
Nuon is exposed to currency risks on purchases, trading activities,
cash and cash equivalents and other positions denominated in a
currency other than the euro. Currency risks mainly arise in respect
of positions in US dollars and, to a more limited extent, in respect
of positions in Japanese yen, Swiss francs and British pounds.
■■
Nuon has an exposure-based currency policy. Nuon recognises three
types of risk in relation to foreign currency:
■■ Transaction risk concerns the risk in respect of future cash flows
in foreign currency and in relation to positions in foreign currency
in the balance sheet. This risk is hedged. Subsidiaries report current
positions and risks to the Treasury Department within Nuon.
These positions and risks are principally hedged ‘back-to-back’ with
external counterparties through average rate options, cross-currency
interest rate swaps and spot and forward exchange contracts.
■■ Translation risk concerns the risk in respect of the translation of
foreign subsidiaries with a functional currency other than the euro.
The risk arising from this is only hedged if Nuon expects to terminate
the business activities in question in due course. The net asset value
of the subsidiary can be hedged in this case. If no decision has been
taken to sell or close the subsidiary, the translation differences are
accounted for via Other comprehensive income and included in the
currency translation reserve in Equity;
Economic risk is related to a possible deterioration of the competitive
position as a result of a change in the value of foreign currencies. This
risk is generally not hedged but is considered on a case-by-case basis.
Exposure to currency risks and sensitivity analysis
Nuon’s exposure to significant currency risks based on nominal values
is included in the tables below. These tables indicate the pre-tax effect
that a possible increase or decrease in the value of foreign currencies
relative to the euro would have, assuming all other circumstances
remain unchanged, on Nuon’s financial income and expenses and
equity. In this connection, account was taken of derivatives concluded
to hedge the currency risk. The effects on equity and income are
calculated using the closing rate at the reporting date.
Sensitivity analysis currency risk
Position
Profit or loss
Decrease by
10% relative
to the euro
Equity
Increase by
10% relative
to the euro
Decrease by
10% relative
to the euro
Increase by
10% relative
to the euro
2012
Total exposure in foreign currencies
Total hedged position in foreign currencies
Sensitivity cash flow in foreign currencies (net)
-1,097
1,097
-
90
-88
2
-110
109
-1
4
-10
-6
-4
10
6
-6
2011
Total exposure in foreign currencies
-308
-10
12
5
Total hedged position in foreign currencies
287
-4
7
-25
26
Sensitivity cash flow in foreign currencies (net)
-21
-14
19
-20
20
The tables include risk positions from any exposure in foreign currencies,
whether arising from financial instruments or not, while the effects on
income and equity have been presented taking into account financial
instruments only.
The most important effects in the table in respect of the income
statement exposure to currency risks are related to the Average Rate
Options (AROs) concluded to hedge the currency risk on purchased
commodities in US dollars. Compared to 2011 more gas contracts
with US dollars exposures have been entered and followed up with
an increase in the volume of US dollar hedges.
The most important effects in the table in respect of the equity exposure
to currency risk are related to foreign currency forwards concluded
to hedge the currency risk on the purchase of parts and spare parts
in Japanese yen for the construction and maintenance of the planned
Nuon Magnum power station.
The effects of the sensitivity analysis for AROs and foreign currency
forwards affecting either the income statement or equity are presented
in the table. The offsetting effects at the time of the physical delivery
of the commodities or parts, if applicable, are not presented in the table.
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The price risks arising from these purchases of commodities for the
company are hedged by means of swaps. These swaps are usually
expressed in US dollars. The additional currency risk is hedged by
means of AROs. The fair value movements of these swaps and AROs
that are recognised in the reserve for cash flow hedges in equity will
be released from the reserve for cash flow hedges when the cash flows
of the underlying item take place. For the contracts that were hedged
as at 31 December 2012, all cash flows will take place and will have
an effect on income within the subsequent five years.
Interest rate risk
General
Nuon is exposed to interest rate risk on its interest-bearing liabilities
(note [22]).
Nuon makes limited use of derivatives such as interest rate swaps to
mitigate the interest rate risk. Nuon had no interest rate derivatives
outstanding at 31 December 2012 (2011: EUR 10 million).
Sensitivity analysis in relation to cash flows for variable interest
assets and liabilities
A change of 100 basis points in the interest rates as at 31 December 2012
would, assuming all other circumstances remain unchanged, have a
pre-tax effect on Nuon’s equity and financial income and expenses
of EUR 6 million (2011: EUR 4 million) on an annual basis.
In addition to the above cash flow hedges, Nuon has used currency
forward contracts to hedge, among other things, the investment in
and maintenance of the new Nuon Magnum power station, which
will be settled in Japanese yen.
Hedging transactions
The following table presents the movement of the cash flow hedge
reserve in the financial year before tax. As at 31 December 2012,
the hedge reserve amounted to EUR 60 million negative (after tax:
EUR 44 million negative) (2011: EUR 91 million negative (after tax:
EUR 67 million negative)).
Cash flow hedging
Nuon hedges the price risks relating to the purchase of commodities
for the company’s production as well as the purchase of electricity and
gas for direct supply to our customers. The prices for these commodities
contracts are variable as they are indexed to the average price of the
commodities over a preceding period.
Movement schedule cash flow hedge reserve
Hedge
ineffectiveness
Hedge reserve
as at 1 January
Changes in
fair value
Hedge reserve
as at 31 December
-
-131
3
-128
43
-5
38
31
2
33
-57
-57
Forward contracts
-
37
-24
-16
-3
Total
-
-91
14
17
-60
-131
Released
2012
Fuels
Commodity contracts
Currency contracts
Total hedges on fuels purchased
Currency
2011
Fuels
Commodity contracts
1
271
-244
-158
-1
-4
1
6
3
-
267
-243
-152
-128
Forward contracts
-
43
-7
1
37
Total
-
310
-250
-151
-91
Currency contracts
Total hedges on fuels purchased
Currency
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Credit risk
Credit risk can arise if a counterparty or contractor cannot or is not
willing to fulfil its obligations and exists in Nuon’s commodity trading,
sales activities, treasury activities and investments. A consistent
approach to credit analysis and management is applied throughout
the organisation, with the degree of review undertaken varying
depending on the magnitude of credit risk in a transaction.
In the trading segment, credit risk is calculated as a settlement plus
replacement cost. The credit risk calculations are based on the markedto-market value calculated by the Risk Analysis & Reporting Group
within Risk Management and aggregated on a counterparty level. In
cases where legally enforceable netting agreements have been reached,
the exposure is monitored on a net basis. In some cases, credit protection
has been purchased in the credit default swap market. These instruments
are measured on a monthly basis, but are not actively traded.
Credit risk is managed through established credit policies, regular
monitoring of credit exposures and application of appropriate mitigation
tools. While credit exposure is also managed at portfolio level, there
are limitations to the extent to which diversification is possible as
Nuon is exposed to concentration risk in the energy markets as well
as to energy-intensive industries.
Credit quality
Treasury
Cash and cash equivalents surpluses are to a large extent held
within Vattenfall, by using both a cash pool and deposits.
Trading
As a result of the application of high credit risk standards, the trading
portfolio has remained at an acceptable credit quality throughout the
last years. No write-offs linked to credit risk were made for the trading
portfolio in 2012 or 2011.
Sales
The sales segment is exposed to credit risk in the case of non-payment
by customers for energy delivered as well as the loss from the resale
of energy previously committed to a customer at a fixed price.
In the business segment, most of the small and medium-sized trade
debtors are rated by Dun & Bradstreet and Moody’s KMV Riskcalc®.
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Nuon considers the credit quality of this portfolio as satisfactory.
Credit risk mitigation tools in this segment include parent company
guarantees, bank guarantees, letters of credit and prepayments.
Our debtors in the retail market are not rated. Nuon considers this
portfolio to be comparable to the average credit quality of this
segment for the Netherlands as a whole.
Maximum credit risk
The maximum credit risk is the value in the balance sheet of each
financial asset, with the exception of the following instruments:
trade receivables - trade activities, commodity derivatives, interest
rate derivatives and currency derivatives. The credit risk for these
trade debtors and derivatives are lower than their carrying amounts
for several reasons. Firstly, there is a difference between the use of
netting agreements by Nuon and the netting rules in accordance
with IFRS. For example, Nuon uses Master Netting Agreements (MNAs)
where legally enforceable. These MNAs allow netting over multiple
classes and categories of financial assets and liabilities as well as
non-financial assets and liabilities that are excluded under IFRS.
Also, Nuon nets positions when calculating credit risk (close-out
netting) even though in its daily operations Nuon does not intend
to settle on a net basis or if it is practically not possible to settle on
a net basis, for example due to timing differences. Secondly, there
is a difference between the way Nuon calculates credit risk (the net
settlement per counterpart plus replacement value) and the carrying
amount of the derivatives in the balance sheet (fair value). Furthermore
the credit risk is mitigated through the use of collateral such as bank
guarantees, letters of credit and cash. Nuon also uses bilateral margining
agreements with many of the major trading counterparties. As a result
of these agreements, but also due to other credit support received,
as at 31 December 2012 Nuon held EUR 30 million in cash and
EUR 1,360 million as collateral (including parent company guarantees)
(2011: EUR 49 million and EUR 1,447 million respectively). Included
in collateral are credit default swaps purchased for a nominal amount
of EUR 80 million (2011: EUR 80 million).
Overall the group evaluates the concentration of credit risk, with respect
to trade receivables, as low due to the use of bank guarantees and letters
of credit and also as its customers are located in several industries and
operate in largely independent markets.
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110
receivables, concerning trade receivables from regular sales and trade
receivables from trade activities, was as follows on the reporting date
(gross amounts).
Past due instalments
The provision for bad debts and uncollectible receivables exclusively
concerns trade receivables from regular sales. The ageing of trade
Age analysis trade debtors
As at 31 December
2012
gross
2011
impaired
net
gross
impaired
net
-3
-3
-2
-35
644
55
21
49
725
-2
723
53
-3
50
28
-3
25
>90 days
647
58
23
84
93
-43
50
Total
812
-43
769
899
-51
848
Not past due
0 to 30 days
30 to 90 days
The movement of the provision for bad debt in relation
to the trade debtors can be presented as follows.
Movement schedule provision for bad debt
2012
Balance as per 1 January
Use of allowance account (impairment trade receivables)
Addition to allowance account charged to income
Reversed impairment losses
Disposals
Balance as per 31 December
2011
51
68
-33
28
-3
-
-19
43
51
25
-23
Liquidity risk
For the latter, Nuon makes use of a Margin-VaR as well as a Margin Stress
Test tool. These tools allow Nuon to assess potential future margin calls
under various scenarios based upon historic market price developments,
stress tests and contractual agreements including rating thresholds
on Nuon and its counterparties. The overall aim is to have sufficient
funding at all times in order to secure the required liquidity in the
coming year. Capital requirement planning is performed by Vattenfall
for the Vattenfall group over a horizon of five years.
Liquidity risk comprises the risk that Nuon is not able to obtain the
required financial resources for the timely fulfilment of its financial
commitments. In this connection, Nuon regularly assesses the expected
cash flows over a period of one year. These cash flows include operational
cash flows, dividends, payments of interest and repayments of debts,
(replacement) investments, the consequences of changes in the
creditworthiness of Nuon and ‘margin calls’ for trading activities.
To provide insight into the liquidity risk, the following table shows
the contractual terms of the financial obligations (translated at
reporting date rate), including interest payments. The contractual
cash flows of non-current assets as well as current assets combined
with the credit facilities available at Vattenfall cover the current
need for liquidity as included in the table.
The major part of the provision for bad debt is formed based on
graduated calculations (EUR 31 million; 2011: EUR 23 million).
The remainder is formed based on an individual assessment of
debtors (EUR 12 million; 2011: EUR 28 million).
No collateral relating to past due and impaired debtors has been obtained.
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Liquidity risk
Carrying amount
Contractual cash flows
Less than
1 year
Between
1 and 5 years
Over
5 years
Total
2012
Interest-bearing liabilities
-38
-202
-10
-83
-31
-113
-37
-41
-233
-8
-4
-4
-
-8
Trade payables
-172
-172
-
-
-172
Other liabilities
-1,311
-1,311
-
-
-1,311
-86
-151
-29
-266
-
-
-
-
-33
-23
-
-56
-537
555
-201
211
-3
3
-741
769
-617
601
2
-148
144
6
-
-765
745
8
800
-844
-44
1,090
-1,118
-28
-
1,890
-1,962
-72
-2,483
11,440
-1,240
5,394
-6
49
-3,729
16,883
-11,641
2,032
-652
-4,420
974
708
-30
24
37
-16,091
3,030
93
-2,393
364
-29
-2,058
Green loans
Other interest-bearing debt
Finance lease payables
Off-balance sheet commitments
Operating lease payables
Interest rate swaps
AROs
-60
Treasury contracts1
Forward receivables
28
Buy
Sell
Forward obligations
-20
Buy
Sell
Total forwards
Commodity derivatives1
Swap receivables
Swap obligations
451
-541
Total swaps
Forward receivables
1,933
Buy
Sell
Forward obligations
-1,450
Buy
Sell
Total forwards
Total
1Forward
-1,390
contracts are settled on a gross basis with our counterparties. Payments and receipts coincide. To best present the actual liquidity risk, both outgoing and incoming cash flows
are presented for each contract. Also for commodity derivatives, both outgoing and incoming cash flows are presented.
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Liquidity risk (continued)
Carrying amount
Contractual cash flows
Less than
1 year
Between
1 and 5 years
Over
5 years
Total
2011
Interest-bearing liabilities
Green loans - notional amounts
-81
-34
-45
-12
-91
-274
-76
-198
-39
-313
-11
-4
-8
-
-12
-198
-198
-
-
-198
-1,069
-1,069
-
-
-1,069
-81
-187
-39
-307
-
1
-
1
-53
-11
-
-64
Buy
-738
-161
-7
-906
Sell
785
178
9
972
Buy
-618
-92
-
-710
Sell
588
86
-
674
17
11
2
30
Other interest-bearing debt - notional amounts
Finance lease payables
Trade payables
Other liabilities
Off-balance sheet commitments
Operating lease payables
Interest rate swaps
AROs
-67
Treasury contracts1
Forward receivables
Forward obligations
69
-37
Total forwards
Commodity derivatives1
Swap receivables
450
788
614
-
1,402
Swap obligations
-504
-769
-686
-
-1,455
19
-72
-
-53
Buy
-2,322
-1,529
-3
-3,854
Sell
11,332
3,522
-
14,854
Buy
-11,795
-3,213
-10
-15,018
Sell
1,887
972
-
2,859
Total forwards
-898
-248
-13
-1,159
-2,377
-757
-101
-3,235
Total swaps
Forward receivables
Forward obligations
Total
1Forward
1,962
-1,860
-1,620
contracts are settled on a gross basis with our counterparties. Payments and receipts coincide. To best present the actual liquidity risk, both outgoing and incoming cash flows
are presented for each contract. Also for commodity derivatives, both outgoing and incoming cash flows are presented.
<
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Fair values
General
Nuon’s financial assets and liabilities are valued at either amortised
cost or fair value. The following table provides insight into the different
IAS 39 categories, that Nuon presents its financial assets and liabilities
in, the measurement principle used and the fair value of the financial
assets and liabilities.
Fair value of financial assets and liabilities
As at 31 December
Carrying amount IAS 39 categories
Other
Fair value
Loans and
financial
through profit receivables liabilities at
or loss/hedge at amortised amortised
accounting
cost
cost
Level
Total
Fair value
I
II
Note
III
2012
37
Other non-current receivables
Derivative assets
37
40
990
990
1,584
1,584
1,584
19
187
187
187
20
-1065
-1,065
-1079
22
-8
-1,483
-618
-8
-1,483
-618
-8
-1,483
37
39
845
845
1,350
1,350
1,350
19
299
299
299
20
-355
-365
22
990
Trade receivables
and other receivables
Cash and cash equivalents
Interest-bearing liabilities
Derivative liabilities
-618
Finance lease payables
Trade payables and other liabilities
16
795
-356
195
-262
17
17
28
27
2011
Other non-current receivables
Derivative assets
37
845
Trade receivables
and other receivables
Cash and cash equivalents
Interest-bearing liabilities
Derivative liabilities
Finance lease payables
Trade payables and other liabilities
-355
-761
16
616
-434
229
-327
17
17
-761
-761
-11
-11
-11
28
-1,267
-1,267
-1,267
27
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Financial instruments valued at fair value
through profit or loss/hedge accounting
IFRS 7 requires disclosure of fair value measurements of financial
instruments that are valued in the balance sheet at fair value,
per level of the following fair value measurement hierarchy:
■■ Quoted prices (unadjusted) in active markets for identical assets
or liabilities (level I);
■■ Inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly (that is, as prices)
or indirectly (that is, derived from prices) (level II);
■■ Inputs for the asset or liability that are not based on observable
market data (that is, unobservable inputs) (level III).
114
■■
■■
The fair value of financial instruments traded in active markets is
based on quoted market prices at the reporting date. A market is
regarded as active if quoted prices are readily and regularly available
from an exchange, dealer, broker, industry group, pricing service or
regulatory agency, and those prices represent actual and regularly
occurring market transactions on an arm’s length basis. The quoted
market price used for financial assets held by the group is the current
bid price. These instruments are included in level I.
The fair value of financial instruments that are not traded in an
active market (for example, over-the-counter derivatives) is determined
by using valuation techniques. These valuation techniques maximise
the use of observable market data where it is available and rely as little
as possible on entity-specific estimates. If all significant inputs required
to fair value an instrument are observable, the instrument is included
in level II. If one or more of the significant inputs is not based on
observable market data, the instrument is included in level III.
The fair value of financial instruments is determined as follows:
■■ Derivatives. Reference is made to the summary of significant
accounting policies and note [17] Derivatives;
■■ Currency and interest rate derivatives are recognised on the
basis of the present value of the future cash flows, making use of
the interbank rate (such as Euribor, or Euroswap for cash flows
longer than one year) applicable on the reporting date for the
remaining term of the contracts. The present value in foreign
currency is translated at the spot rate applicable on the reporting
date. These financial instruments are included in level II;
■■
Futures, for which quoted prices can be obtained:
the marked-to-market valuation is applied (Level II);
For certain commodities, delivery tenors and market instruments
no reliable market quotes are available for fair value calculation.
In these cases, positions are marked-to-model. For some positions
(e.g. illiquid commodities, long-dated tenors) the price of the
commodity is modelled and positions are marked against this price.
For certain structured derivatives where a similar instrument is not
regularly traded in the market, the value of the derivative is modelled
based on market prices together with the specific terms of the
agreement. This also relates to the valuation of CERs from CDM
projects, which is derived from so-called risk adjustment factors.
These factors are calculated using the carbon valuation tool
developed by Point Carbon to quantify the risk and calculate the fair
value of CER projects or contracts. The tool is based on Point Carbon’s
valuation methodology, which was developed by several experienced
market players. The valuation methodology is strictly empirical, and
all risk parameters are extracted from Point Carbon’s proprietary
databases of CER project data, which entails a correct valuation of
the contracts even where market prices are not listed (Level III).
As at 31 December 2012 the total risk adjusted volume of CERs
amounting to 4.8 million (2011: 1.0 million) is valued at a market
price of EUR 0.18 per CER (2011: EUR 4.19 per CER);
The most significant exposure that is marked against modelled prices
is the long-term portion of a large gas supply contract. This contract
extends further ahead in time than liquid trading in the gas market.
The agreement is valued at the market price, as long as a market
price can be observed. For commodity deliveries beyond the market
horizon, long-term price forecasts (modelled prices) are used for
the relevant commodities. The large gas supply contract is hedged
with OTC forward trades of underlying products. These trades
are also marked against the same market and modelled prices.
The long-term price forecasts are benchmarked against reliable
financial information obtained from the company Markit; this
information is well-known and is used by many energy companies,
offering a fair valuation of the portion of the large gas supply contract
that cannot be valued against market prices (Level III). The fair value
movements of the large gas contract and the hedged position together
are limited with respect to market price movements.
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1 15
The movement of the financial instruments categorised in Level III
is as follows:
Level III Fair value of financial assets and liabilities
2012
Balance as at 1 January
Included in income statement
Balance as at 31 December
Fair value of other financial instruments valued at amortised cost
The fair value of all short-term financial instruments equals the
carrying amount.
The fair value of financial instruments valued at amortised cost
is determined as follows:
■■ Other non-current receivables are discounted at the appropriate
market rate;
■■ The fair value of financial liabilities is determined by making use
of market quotes. As no market quotes are available for the majority
of the loans, the fair value of the current and non-current loans is
determined by calculating their present value at the yield curve
applicable to Nuon as at 31 December. This yield curve is derived
from the zero coupon rate plus the credit spread applicable to Nuon;
At year-end 2012 the following yield curve was applied:
■■ 1-year
0.43% (2011: 1.86%)
■■ 5-year
1.30% (2011: 2.49%)
■■ 10-year 2.64% (2011: 3.53%)
■■ 20-year 3.71% (2011: 4.32%);
■■ Finance lease payables: the fair value is estimated at the present
value of the future cash flows, discounted at the interest rate
applicable to comparable contracts on reporting date;
■■ The fair value of the Cash and cash equivalents, trade receivables
and other receivables and current payable liabilities is, in view
of their short-term nature, identical to the carrying amount.
2011
-98
19
31
-117
-67
-98
Capital management
The group’s objectives when managing capital are to safeguard
its ability to continue as a going concern in order to provide returns
for shareholders and benefits for other stakeholders and to maintain
an optimal capital structure to reduce the cost of capital. In order to
maintain or adjust the capital structure, which is based on Vattenfall
group policies, the group may adjust the amount of dividends paid to
shareholders, return capital to shareholders or sell assets to reduce debt.
Nuon’s financial policy, which is part of its general policy and strategy,
is to obtain an adequate return for shareholders and lenders, while
maintaining the flexibility to grow and invest in the business.
For information on the dividend policy, see page 125.
Nuon’s major shareholder is Vattenfall AB, holding the B shares
representing 67% of the paid-up share capital of Nuon as at
31 December 2012. The largest other shareholders in Nuon per year
end are the provinces of Gelderland, Noord-Holland and Friesland
and the Municipality of Amsterdam. These parties jointly hold
approximately 79% of Nuon’s class A shares. The remainder is
in the hands of 54 other shareholders.
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116
Company accounts
Company balance sheet
Amounts in EUR million, before appropriation of result
Assets
2012
Note
2011
Non-current assets
Property, plant and equipment
Investments in subsidiaries
Derivative assets
Deferred tax assets
Receivables from group companies
Other non-current receivables
47
2,086
5
69
2,013
31
Total non-current assets
48
34
2,994
35
19
37
7
36
1,247
36
32
4,251
4,347
Current assets
Trade receivables and other receivables
Derivative assets
Receivables from group companies
Cash and cash equivalents
Total current assets
Total assets
60
131
1,593
10
34
37
225
2,010
38
24
1,794
2,293
6,045
6,640
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Company balance sheet
Amounts in EUR million, before appropriation of result
Equity and liabilities
2012
Note
2011
Equity
Share capital
Share premium
Reserve for cash flow hedges
Currency translation reserve
Legal reserves
Other reserves
Unappropriated result for the year
684
2,797
-44
1
450
159
-716
Total equity attributable to Nuon shareholders
Provisions
684
2,797
-67
1
177
69
438
3,331
4,099
39
81
40
40
Non-current liabilities
Interest-bearing liabilities
Derivative liabilities
124
1
Total non-current liabilities
231
41
42
37
125
273
Current liabilities
Trade payables and other liabilities
Interest-bearing liabilities
Payables to group companies
Derivative liabilities
176
86
2,109
137
121
41
97
1,810
37
200
Total current liabilities
2,508
2,228
Total equity and liabilities
6,045
6,640
Company income statement
Amounts in EUR million, 1 January - 31 December
2012
Note
2011
457
Other income less expenses after taxation
-744
28
Result after taxation
-716
438
Result after taxation from subsidiaries
-19
43
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118
Notes to the company accounts
33
34
35
36
37
38
Accounting policies
Property, plant and equipment
Investments in subsidiaries
Deferred tax assets and other non-current receivables
Derivatives
Cash and cash equivalents
118
119
120
121
121
121
Note 33 Accounting policies
The company accounts have been prepared in accordance with the
provisions of Part 9, Book 2 of the Dutch Civil Code. In the company
accounts, Nuon uses the option provided for in Part 9, Book 2 of the
Dutch Civil Code to prepare the company accounts in accordance
with the IFRS accounting policies that are used in the preparation
of the consolidated accounts. The company income statement is
presented in abridged form, as allowed by section 402, Part 9, Book 2
of the Dutch Civil Code. In addition to the accounting policies for the
consolidated accounts, specific accounting policies for the company
accounts are included below.
Investments in subsidiaries
Investments in subsidiaries are valued at net asset value, which
is determined on the basis of IFRS accounting policies as used
in the consolidated accounts.
39
40
41
42
43
44
Equity
Provisions
Interest-bearing liabilities
Contingent assets and liabilities
Other income less expenses after taxation
Average number of employees
121
122
122
123
123
123
Legal reserve for unrealised fair value gains
of financial instruments
A legal reserve, in the form of a revaluation reserve, is recognised
for unrealised fair value gains of financial instruments that are
recognised in income, and for which no frequent market quotations
are available (Level II and Level III financial instruments). With regard
to Nuon, this issue relates to energy commodity contracts for oil, gas,
coal, electricity and emission allowances, that are not traded through
recognised exchanges (e.g. Amsterdam Power Exchange, Endex), known
as over-the-counter or OTC contracts. A legal reserve of EUR 450 million
in total is held for the unrealised fair value movements of these contracts
(2011: EUR 177 million), which is calculated on a collective basis.
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Note 34 Property, plant and equipment
Property, plant and equipment
Equipment
tools, and
fixtures and
fittings
Land and
buildings
Construction
in progress
Total
As at 1 January 2011
Historical cost
1
148
7
156
Accumulated depreciation and impairments
-
-100
-
-100
Carrying amount as at 1 January 2011
1
48
7
56
Investments
-
8
8
16
Disposals
-
-
-
-
Depreciation
-
-24
-
-24
Transfers and other movements
-
4
-4
-
Total
-
-12
4
-8
Movements 2011
As at 31 December 2011
Historical cost
1
160
11
172
Accumulated depreciation and impairments
-
-124
-
-124
Carrying amount as at 31 December 2011
1
36
11
48
1
-1
-
9
-19
8
-2
9
-8
1
19
-20
-1
Accumulated depreciation and impairments
2
-1
172
-138
12
-
186
-139
Carrying amount as at 31 December 2012
1
34
12
47
Movements 2012
Investments
Disposals
Depreciation
Transfers and other movements
Total
As at 31 December 2012
Historical cost
For further disclosure, reference is made to note [14]
Property, plant and equipment in the consolidated accounts.
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Note 35 Investments in subsidiaries
Investments in subsidiaries
Carrying amount as at 1 January 2011
3,246
Movements 2011
Capital contributions
Disposals
Share premium repaid
73
-37
-374
Dividends received
-71
Result of the year
457
Movement reserve for cash flow hedges
-300
Total
-252
Carrying amount as at 31 December 2011
2,994
Movements 2012
Capital contributions
Disposals
Share premium repaid
Dividends received
Result of the year
9
304
-500
-744
Total
23
-908
Carrying amount as at 31 December 2012
2,086
Movement reserve for cash flow hedges
A list of directly and indirectly held participations in subsidiaries is included
in note [31] Related party disclosures in the consolidated accounts.
The disposals in 2012 relate to liquidation of Nuon Energy & Water
Investments. The disposals in 2011 relate to the sale of Nuon E&P.
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Note 36 Deferred tax assets and other non-current receivables
Deferred tax assets and other non-current receivables
Deferred tax assets
Carrying amount as at 1 January 2011
Other non-current
receivables
4
Total
32
36
Movements 2011
Loans granted
-
22
22
Loans and interest repaid
-
-22
-22
Temporary differences charged to profit or loss
3
-
3
Total
3
-
3
Carrying amount as at 31 December 2011
7
32
39
Total
62
62
-1
-1
-1
62
61
Carrying amount as at 31 December 2012
69
31
100
Non-current
assets
2012
2011
5
19
Current
liabilities
2012
2011
137
200
Non-current
liabilities
2012
2011
1
42
Movements 2012
Loans granted
Loans and interest repaid
Temporary differences charged to profit or loss
Other non-current receivables consist of loans and receivables (including
incremental costs) with related parties of which EUR 5 million is current.
Note 37 Derivatives
Derivatives
Current
assets
2012
2011
Treasury derivatives
131
225
Total
131
225
5
19
137
200
1
42
Note 38 Cash and cash equivalents
Note 39 Equity
The cash and cash equivalents at the end of 2012 included
EUR 5 million restricted cash (2011: EUR 5 million). This amount
relates to cash held at banks which is provided as collateral and
for margin call payments.
The Consolidated statement of changes in equity and disclosure to that
statement are included in the Consolidated accounts. In addition to the
Consolidated statement of changes in equity, a legal reserve was formed
within equity for the unrealised gains on OTC contracts for an amount
of EUR 450 million (2011: EUR 177 million). This reserve was charged
against the Other reserves. The reserve for cash flow hedges, legal
reserve and the currency translation reserve are not freely distributable.
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Note 40 Provisions
Movements in provisions
Termination
benefits
As at 1 January 2011
Other
employee
benefits
Other
Total
1
24
1
26
Releases to income
-1
-1
-
-2
Additions
11
4
-
15
Interest accretion
-
1
-
1
-7
-8
-1
-16
Reclassifications and other movements
6
10
-
16
Total
9
6
-1
14
10
30
-
40
Total
39
-8
31
18
1
-9
10
-
57
1
-17
41
As at 31 December 2012
41
40
-
81
Movements 2011
Withdrawals
As at 31 December 2011
Movements 2012
Releases to income
Additions
Interest accretion
Withdrawals
An amount of EUR 33 million (2011: EUR 22 million) of the Termination
Benefits and Other employee benefits is expected to lead to a cash outflow
in 2013 and an amount of EUR 14 million (2011: EUR 5 million) of the
Termination Benefits and Other employee benefits is expected to lead
to a cash flow after 2017.
Note 41 Interest-bearing liabilities
Interest-bearing liabilities
2012
Carrying amount as at 1 January
2011
328
728
Movements
New loans
Payment dividend liability class A shares
Loans repaid
Other movements
Total
Carrying amount as at 31 December
–
-74
-46
2
-118
-400
210
328
25
-115
-324
14
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Fina n c ia l s ta tem ent s
Fina n c ia l s ta tem ent s
N.V. N uon Energ y A nn ua l Re p o r t 2 0 1 2
123
Both the interest rates and carrying amounts of interest-bearing
liabilities can be analysed as follows:
Short- and long-term interest-bearing liabilities
Green loans
Dividend liability class A shares
Other
Effective interest rate
2012
2011
3.0%
3.2%
3.6%
3.4%
2.5%
Short-term part
2012
2011
9
23
77
71
3
Total
Note 42 Contingent assets and liabilities
Reference is made to note [29] Contingent assets and liabilities.
Note 43 Other income less expenses
after taxation
Other income less expenses after taxation was EUR 28 million positive
(2011: EUR 19 million negative) and consists mainly of income
and expenses of company-wide activities at holding company level.
Note 44 Average number of employees
The average number of employees in 2012 was 706 FTE
(2011: 669 FTE).
86
97
Long-term part
2012
2011
29
58
95
173
124
The employee benefits related to the members of the Management
Board have been disclosed in the Remuneration Report as included
on page 33 of the Annual Report.
Amsterdam, 15 April 2013
Supervisory Board
Øystein Løseth, Chairman
Anders Dahl
Tuomo Hatakka
Tom de Waard
Leni Boeren
Pieter Bouw
Derk Haank
Jacques Schraven
Management Board
Huib Morelisse
Peter Smink
231
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124 N.V. N uon Energ y A nn ua l Re p o r t 2 0 1 2
124
Other
Independent auditor’s report
To: the General meeting of Shareholders of N.V. Nuon Energy.
Report on the financial statements
We have audited the accompanying financial statements 2012 of
N.V. Nuon Energy, Amsterdam. The financial statements include the
consolidated accounts and the company accounts. The consolidated
accounts comprise the consolidated balance sheet as at 31 December 2012,
the consolidated income statement, the consolidated statement of
comprehensive income, the consolidated statement of changes in equity
and the consolidated statement of cash flows for the year then ended,
and notes, comprising a summary of the significant accounting policies
and other explanatory information. The company accounts comprise
the company balance sheet as at 31 December 2012, the company income
statement for the year then ended and the notes, comprising a summary
of the accounting policies and other explanatory information.
Management’s responsibility
Management is responsible for the preparation and fair presentation
of these financial statements in accordance with International Financial
Reporting Standards as adopted by the European Union and with Part 9
of Book 2 of the Dutch Civil Code, and for the preparation of the report
of the Management Board in accordance with Part 9 of Book 2 of the
Dutch Civil Code. Furthermore management is responsible for such
internal control as it determines is necessary to enable the preparation
of the financial statements that are free from material misstatement,
whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to express an opinion on these financial statements
based on our audit. We conducted our audit in accordance with Dutch
law, including the Dutch Standards on Auditing. This requires that we
comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the financial statements
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor’s judgement, including the assessment of
the risks of material misstatement of the financial statements, whether
due to fraud or error.
In making those risk assessments, the auditor considers internal control
relevant to the entity’s preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the entity’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by management, as
well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
Opinion with respect to the consolidated accounts
In our opinion, the consolidated accounts give a true and fair view
of the financial position of N.V. Nuon Energy as at 31 December 2012,
its result and its cash flows for the year then ended in accordance with
International Financial Reporting Standards as adopted by the European
Union and with Part 9 of Book 2 of the Dutch Civil Code.
Opinion with respect to the company accounts
In our opinion, the company accounts give a true and fair view of
the financial position of N.V. Nuon Energy as at 31 December 2012 and
of its result for the year then ended in accordance with Part 9 of Book 2
of the Dutch Civil Code.
Report on other legal and regulatory requirements
Pursuant to the legal requirement under Section 2:393 sub 5 at e and f
of the Dutch Civil Code, we have no deficiencies to report as a result
of our examination whether the Report of the Management Board, to
the extent we can assess, has been prepared in accordance with Part 9
of Book 2 of this Code, and whether the information as required under
Section 2:392 sub 1 at b-h has been annexed. Further we report that
the report of the Management Board, to the extent we can assess, is
consistent with the financial statements as required by Section 2:391
sub 4 of the Dutch Civil Code.
Rotterdam, 15 April 2013
Ernst & Young Accountants LLP
Signed by
G.A.M. Aarnink
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N.V. N uon Energ y A nn ua l Re p o r t 2 0 1 2
Profit appropriation
125
■■
Profit appropriation is governed by Article 34 of the Articles of
Association of N.V. Nuon Energy, which reads as follows:
■■
Article 34: Profits and distributions
■■
■■
■■
■■
■■
Subject to the approval of the Supervisory Board, the Management
Board shall decide annually what portion of the distributable profit
– the positive balance of the profit and loss account – shall be retained
with due observation of a dividend policy, to be discussed with the
General Meeting;
Any unretained profit shall be available to the General Meeting.
In the case that the General Meeting decides for a distribution of
profits, a dividend shall be distributed as far as possible on the class A
shares, the percentage of which, to be computed on the computation
basis set out below, shall be two percent (2%). The basis for the
computation of the dividend on the class A shares amounts to
EUR 72.1042626 per class A share;
If, for any financial year, the distribution on the class A shares
cannot be effected or cannot be fully effected because the profit
after reservation does not suffice, the deficit shall be distributed to
the debit of the following financial years, without prejudice to the
provisions of Article 34.6. In that case, each time as much as possible,
the overdue dividend, augmented by the dividend for the last expired
financial year, shall be distributed on the class A shares according to
Article 34.2;
The remaining profit shall be put at the disposal of the General
Meeting provided that no further dividend shall be distributed
on the class A shares;
Distributions of profit shall be made after the adoption of the
annual accounts if permissible under the law, given the contents
of the annual accounts.
Dividend policy
In Nuon’s General Meeting of Shareholders held on 15 May 2012,
the following dividend policy was discussed:
■■
The basis for dividend distribution is the net profit, adjusted for
significant non-cash fair value movements on financial instruments
other than fair value movements on trade positions;
In accordance with the Shareholders’ Agreement, class A shareholders
– the provinces and municipalities that will sell their respective
interests to Vattenfall in tranches until 2015 – will receive a
predetermined annual dividend yield, irrespective of the net profit
achieved in a financial year. A separate liability for the dividend
payments to class A shareholders had been recognised in Nuon’s
balance sheet on 30th June 2009, which is reduced every year by
the dividend payments;
The remaining profit after taking into account the adjustments/
payout in points 1 and 2 above is available for distribution to class B
shareholder (Vattenfall AB), subject to:
■■ A gearing ratio (Interest-bearing liabilities/(Interest-bearing
liabilities + Total equity) of no more than 50%. This ratio is based
on the guidance of S&P and Moody’s as the maximum for investment
grade companies;
■■ Fulfilment of financial restrictions in Nuon’s financial
documentation (i.e. covenants);
■■ Sufficient sustainable cash position over the next 12 months
as proven by the long-term cash forecast of Nuon;
■■ Adequate liquidity lines available to Nuon.
Proposed result appropriation
In accordance with the Articles of Association and the shareholders
agreement, the Management Board, after consulting the Supervisory
Board, proposes to distribute the preferred dividend payable amounting
to EUR 65.0 million to class A shareholders (EUR 1.44 per class A share)
as per 1 July 2013. As this amount is already included as a liability in
the balance sheet, this part of the result for the year will not affect
the appropriation of the net result to the other reserves.
Furthermore, the Management Board proposes to charge the loss
of EUR 716.4 million to the other reserves.
Dividend proposal
Amounts in EUR million
2012
Dividend
Dividend class B shareholders
65.0
0.0
Total dividend to be distributed
65.0
Preferred dividend shareholders
Loss after taxation
Dividend proposal: Dividend to be distributed
Dividend paid from dividend liability
Loss to be deducted from the other reserves
-716.4
-65.0
65.0
-716.4
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126 N.V. N uon Energ y A nn ua l Re p o r t 2 0 1 2
126
Ratios and definitions
Ratios
Combined Heat and Power (CHP)
Return on Invested Capital (ROCE)
An alternative to the classical supply of electricity and heating is the local
Operating profit (EBIT) as a percentage of capital employed. Calculation of
co-generation of heating and electricity: an engine powers a generator for
capital employed is: total assets – financial assets – non-interest bearing debt.
the production of electricity and the released heat is used for heating purposes.
This is referred to as combined heat and power generation (CHP). If properly
Return on Equity
implemented, CHP can lead to energy savings.
Result for the period as a percentage of the average equity for the period
attributable to Nuon shareholders excluding the Reserve for cash flow hedges.
Credit spread
Credit spread is the difference between the rate of return on a bond and that on
Definitions
a benchmark (mid swap) used by the market. This difference can be attributed
to the risk profile of the company issuing the bond.
ARO
Average rate option is an option contract used to hedge against fluctuations
Cross-border lease
in exchange rates by averaging the spot rates over the life of the option and
A cross-border lease is a structured financial transaction by virtue of which a
comparing that to the strike price of the option.
business sells the user rights of certain non-current assets to a foreign company,
only to lease these user rights back.
BREEAM
BREEAM is the sustainable building certification scheme that is the most
Dark spread
widely used throughout the world, providing a benchmark for performance
The difference between the market price of raw materials for the production
used by clients, investors, developers and design teams.
of energy in our coal-fired power plants and the market price of electricity.
See also spark spread.
Carbon footprint
The total CO2 emissions.
Degree days
The unit of measurement that indicates the number of fictitious days that the
CCS
average 24-hour temperature (T) lies below the reference temperature of 18 °C.
Carbon Capture and Storage; capture, transport and storage of CO2 released
T is derived from 24-hour observations (UT) of the Netherlands Meteorological
during, for example, industrial activities or the production of electricity.
Office (KNMI). Each degree of average 24-hour temperature below the reference
temperature is counted as one degree day. If T is higher than 18 °C, then no
CDM
degree day has occurred.
Clean Development Mechanism refers to projects aimed at reducing greenhouse
gases registered by the CDM Executive Board in countries that are not signatories
District heating
of the Kyoto Protocol.
An environmentally friendly supply of energy that makes use of residual heat.
The generation of electricity or the burning of waste or biomass releases heat.
CERs
Nuon uses this heat for the district heating network. The central generation of heat
Certified Emissions Reductions, certificates originated from CDM projects.
means that the emission of harmful gases, such as CO2, is significantly reduced.
CO2
Emission allowances
Carbon dioxide mainly released during the burning of fossil fuels such as
A right to emit a predetermined quantity of carbon dioxide (CO2) during a
natural gas and coal.
certain period. Any organisation operating one or more installations that emit CO2
is required to apply for an emission permit. This permit is granted by the Dutch
CO2-equivalent
Emission Authority (Nederlandse Emissieautoriteit or NEa).
The effect of greenhouse gases other than CO2 converted into CO2 values.
Energy Tax
Coal gasification
This is a tax on the use of energy. The energy tax (or ecotax) is levied on
A process for converting coal into synthesis gas (a mixture of mainly carbon
environmentally harmful sources of energy: nuclear energy and energy generated
monoxide and hydrogen).
by means of fossil fuels. Green energy does not pollute and is therefore exempt
from ecotax.
Co-combustion
Co-combustion or co-firing is the combustion of two types of materials
Energy and Water Disputes Committee
at the same time.
The Energy and Water Disputes Committee is an independent body to which
customers can submit disputes with energy companies.
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N.V. N uon Energ y A nn ua l Re p o r t 2 0 1 2
1 27
ERUs
kWh
Emissions reduction units, certificates for Greenhouse Gas reduction originating
Kilowatt hour, unit of electricity.
from Joint Implementation (JI) projects.
LTIF
Fair value
Lost Time Injury Frequency (number of accidents leading to absenteeism
Fair value is the amount for which an asset could be exchanged, or a liability
divided by the total number of hours worked, in millions).
settled, between knowledgeable, willing parties in an arm’s length transaction.
Methane
Footprint
Type of gas, chief component of natural gas.
See Carbon Footprint.
Mid swap
Fossil-based power
The mid swap rate can be defined as the rate (or rates) equivalent to a series
Fossil-based power is understood as energy generated from coal, natural gas
of current, observable and objective euro interest rate swap mid (in between
and other non-renewable resources.
bid/offer) rates (derived from the relevant zero coupon curve) that relates
to the term of the future liability cash flows. When determining the mid swap
FTE (Full Time Equivalent)
rate, separate zero coupon discount rates should apply to cash flows of different
Equivalent of the number of employees working a full week of 38 hours.
outstanding terms. To the extent that such an approach is not feasible in practice,
a single rate may be used such that, when applied to all cash flows, the resulting
Gasification
present value is expected to be materially the same as the sum of the present
See coal gasification.
values of the separate cash flows discounted at an appropriate zero coupon rate.
GJ
MJ
Gigajoule, 1,000,000,000 joules. One GJ is equal to about 32 m3 gas or 278 kWh.
Megajoule, 1,000,000 joules.
GRI
MW
Global Reporting Initiative, global organisation that issues guidelines
Megawatt, 1,000 kW.
for CSR reporting.
MWh
Guarantees of origin
Megawatt hour, 1,000 kWh.
Guarantees of origin (GOO) are certificates that give the customer guarantees
on the way in which the power was generated. Guarantees of origin are tradable.
NEa Dutch Emission Authority
(Nederlandse Emissieautoriteit)
GW
The competent authority that enforces the law on trade in NOx and CO2 emission
Gigawatt, 1,000,000 kW.
allowances. The activities of the NEa are made up of issuing permits, keeping
records of the balance of emission allowances and supervising. NEa supervises
GWh
the trade in emission allowances and manages the CO2 and NOx Emission Trade
Gigawatt hour, 1,000,000 kWh.
Registers, which contain all the Dutch account balances of emission allowances.
Trading via the NEa is therefore not possible. Instead, companies trade among
HE
themselves or via trade platforms.
Housing Equivalent, a household or a 10 kWh connection capacity of a large user.
NGO
IFRS
Non-governmental organisation.
International Financial Reporting Standards.
Nm3
J
Standard measurement conditions for gas production and gas reserves estimates,
Joule, unit of energy.
based on a temperature of 0 °C and 1 atmosphere of absolute pressure.
kW
NOx
Kilowatt, 1,000 watts (kWe is a unit of electric power, kWth is a unit
Nitrogen oxides, gases that arise during the burning of fuels.
of thermal power).
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128 N.V. N uon Energ y A nn ua l Re p o r t 2 0 1 2
1 28
Office of Energy Regulation
SO2
The Office of Energy Regulation is a department within the Netherlands
Sulphur dioxide, a gas produced by burning sulphur or substances containing
Competition Authority (NMa) charged with the implementation and supervision
sulphur (such as coal).
of compliance with the Electricity Act 1998 and the Gas Act.
Spark spread
OHSAS
The difference between the purchase price of raw materials for the production
Operational Health and Safety Standard, international accreditation for
of energy in our gas-fired power plants and the market price of electricity.
safe working practices.
See also dark spread.
OTC
Syngas
Over-the-counter (OTC) or off-exchange trading involves the trade of financial
Synthesis gas, a mixture of mainly carbon monoxide (CO) and hydrogen (H2).
instruments such as commodities or derivatives directly between two parties.
TJ
PCB
Terajoule, 1 billion kJ.
Polychlorinated biphenyl, chemical name for chloride compound with strong
heat-resistant properties.
TWh
Terawatt hour, 1 billion kWh.
SDE
The Sustainable Energy Production Incentive (Stimulering Duurzame
VER
Energieproductie, SDE) subsidy scheme compensates parties that deliver
Verified Emission Reductions, certificate used to offset CO2 emissions.
energy produced by renewable sources (or CHP) to the grid by paying
The certificate originates from CDM projects (see above) that are not
the difference between the production costs from conventional sources
registered by the CDM Executive Board.
and the higher production costs from renewables (or CHP).
W
RA-verified
Watt, unit of power.
Items included in the Corporate Social Responsiblity reporting on which reasonable
assurance is provided by Ernst & Young Accountants LLP as explained in the
Whistleblower facility
Assurance report of Ernst & Young Accountants LLP.
This is the procedure for dealing with suspected abuses, including those relating,
for instance, to a serious offence, defeating the ends of justice or endangering
public health. Whistleblowers who report an instance of abuse are not subject
to any kind of retaliatory action.
Colophon
Disclaimer
N.V. Nuon Energy
Spaklerweg 20
1096 BA Amsterdam
Telephone: +31 (0)88 098 00 00
‘We’, ‘Nuon’, ‘Nuon Energy’, ‘the company’, ‘Nuon Energy group’,
‘the Nuon group’, ‘the group’ or similar expressions are used in
this report as a synonym for N.V. Nuon Energy and its subsidiaries.
N.V. Nuon Energy originated from the unbundling of former parent
company n.v. Nuon, currently Alliander N.V. In order to avoid
misunderstanding, the names ‘our former shareholder n.v. Nuon’,
‘Alliander’ or ‘the Alliander group’ are used in this annual report
to refer to n.v. Nuon, Alliander N.V. and/or Liander N.V. with their
P.O. Box 41920
1009 DC Amsterdam
The Netherlands
Email: [email protected]
The annual report is available in PDF on our website www.nuon.com
Contact information
Media relations
Spaklerweg 20, P.O. Box 41920, 1009 DC Amsterdam, the Netherlands
Telephone: +31 (0)88 098 88 88
Email: [email protected]
Publication
© N.V. Nuon Energy, 2013
Concept and realisation
DartGroup, Amsterdam, the Netherlands
Photography
CBRE Global Investors
Jorrit Lousberg Light@work
Rico Ploeg
Sky Pictures Fotografie
Editing
Bosch & Bosch Translations and Copy, Amsterdam, the Netherlands
Scripta Media, Amsterdam, the Netherlands
Printing
Stadsdrukkerij Amsterdam N.V., the Netherlands
Paper
Cover: Fastprint Gold 250 gm
Inside pages: Fastprint Gold 120 gm
respective subsidiaries, which jointly form the network company.
Where the name Nuon is used in terms, project names or other
titles, such as Nuon Magnum, this relates to activities that fall under
the Nuon group. The name ‘Vattenfall’ or similar expressions refer
to Vattenfall AB and its subsidiaries. Vattenfall acquired 49% of
the shares of N.V. Nuon Energy on 1 July 2009, an additional 15%
on 1 July 2011 and 3% on 1 July 2012 and consequently holds 67%
of the shares in Nuon. The financial data of Nuon are consolidated
in the financial statements of Vattenfall.
Parts of this report contain forward-looking statements that are based
on Nuon’s current expectations. Even if Nuon’s management believes
that these expectations are reasonable, no guarantee can be made
that these expectations will prove to be correct. The forward-looking
statements herein pertain to risks and uncertainties that could have
a material impact on future earnings. The statements are based on
certain assumptions, including such that pertain to financial conditions
in general in the company’s markets and the level of demand for the
company’s products. The outcome may vary significantly compared
with what is presented in the forward-looking statements, depending
on, among other things, changed conditions regarding the economy,
markets and competition, legal requirements, and other political
actions and variations in exchange rates, as well as other factors
referred to in the report.
AR2012/N.V. Nuon Energy
www.nuon.com