Good morning and welcome to Vattenfall's Q2 Audiocast. It's been a while since we did the reporting as an audiocast, but here we are. My name is Andreas Regnell, Chief Strategy Officer, your host for the day, and joined by our CEO, Anna Borg. Good morning. It's nice to be here. Vattenfall's CFO, Kerstin Ahlfont. Good morning, everyone. Today we will discuss the financial performance and business highlights of Vattenfall's first half year of 2024. But first, let's hear about some of the main events from this quarter. Hello and welcome to the Q2 report from Vattenfall. The highlights this quarter include an important contract win, exciting nuclear news, and some fruitful collaborations. Vattenfall and Copenhagen Infrastructure Partners won the tender for IJmuiden Ver Beta offshore wind farm off the Dutch coast. The wind farm will have a capacity of 2 GW. In addition, there'll be a floating solar farm between the wind turbines with a capacity of 50 MW, plus an electrolyzer that will be built in the port of Rotterdam to convert half of the wind farm's electricity into green hydrogen. More offshore wind news. Vattenfall and BASF celebrate their partnership for the two Nordlicht wind farms in the German North Sea, where Vattenfall and BASF have agreed the sale of 49% of the project to BASF. This is the two companies' second project together, which this time includes teaming up with Vestas for wind turbines in low-emission steel. In practice, this means that half of the 112 turbines will be made with low-emission steel, cutting the carbon footprint significantly. The construction of Nordlicht 1 and 2 is planned to begin in 2026, and the wind farms are expected to be fully operational in 2028. Another cooperation was announced with Cemvision to supply near-zero-emission cement, which could reduce CO2 emissions by 95% by 2030 compared to traditional cement. The partnership is a result of Vattenfall's commitment to the First Movers Coalition. Nuclear power will play an important role in Swedish fossil-free electricity production for the foreseeable future. Vattenfall is tending to its existing nuclear power plants with the aim to modernize the plant's Forsmark and Ringhals, extending the operating lifetime of the reactors from 60 to 80 years. But there are also some developments connected to new nuclear. Vattenfall shortlisted two potential suppliers of small modular reactors, namely British Rolls-Royce SMR and American GE Hitachi Nuclear Energy, for ongoing evaluation. In parallel, investigations of the conditions for building large-scale reactors on the site continue. Lastly, early May, Vattenfall transferred all shares in its German heat business, Vattenfall Wärme Berlin AG, including the heat and combined heat and power plants, grids, subsidiaries, employees, and shareholdings to the State of Berlin. The purchase price amounts to approximately EUR 1.4 billion. That concludes the highlights of Q2. Quite some important milestones. Indeed, Anna. With the business highlights in mind, we can jump straight into the financials. Kerstin, could you please share the financial performance for the first half of 2024? Of course, Andreas. Overall, we can be satisfied with the result. In comparison to the same period last year, we have improved both our underlying EBIT as well as the profit for the period. And if we look at our underlying EBIT, this has increased by SEK 3.3 billion- SEK 17.9 billion due to our achieved prices in the Nordics, despite the lowest spot prices, and thanks to our Nordic hedges. The comparison is also affected by a higher result from the heating business in Berlin, which is consolidated until May the 2nd, although the effective date of the transaction is December 1st last year. The increased underlying EBIT contributed to our increased profit for the period, which has increased from SEK 19.3 billion- SEK 26.2 billion. The majority of the increase is, however, attributable to the one-off effects from the sale of the Norfolk zone in the United Kingdom, which affects the comparison numbers quite a lot. As you surely remember, we recorded an impairment of SEK 5.5 billion in the second quarter last year, and this was later reversed due to the sale of the Norfolk offshore wind zone in Q4 last year. And then when that deal was closed in Q1 this year, we reported a capital gain of SEK 4.6 billion. But the increase was also related to the capital gain we have this quarter of SEK 5.1 billion related to the sale of 49% of Nordlicht 1 and 2 offshore wind farms to BASF. Kerstin, you mentioned the lower electricity prices during the first six months of 2024. Anna, could you elaborate on how the energy markets have progressed during this period? Yes, sure. The decline in energy prices we talked about also during Q1, and that trend continues. All in all, the energy prices are on average down by some 35% on all Vattenfall markets year to date. On the continent, the price decrease this quarter is largely driven by the lower fuel prices, mainly the lower gas prices. And this has also put downward pressure on the energy price in southern Sweden, as this price area is closely linked to the continental one. Thank you, Anna. Kerstin, how has the development in the energy markets affected our wind and power generation segments? Well, it's primarily here that we see the effect of the lower energy prices, so it has had an impact, of course. If you start with the wind business segment, the lower energy prices were somewhat counteracted by increased volumes of 2.1 TWh, and that is mainly accounted for by Hollandse Kust Zuid in the Netherlands and Vesterhav in Denmark. So the development overall is actually fairly flat, with the underlying EBIT decreasing by SEK 0.2 billion- SEK 3.3 billion for the first half of the year of this 2024. If we move on to the power generation segment, here we report an increased underlying EBIT by SEK 3.3 billion- SEK 7.2 billion. And this is primarily due to the positive price effects from our Nordic hedges, which more than compensate for the lower electricity prices that affected both the hydro and nuclear business. Higher production volumes from both hydro and nuclear also had a positive contribution. Before we discuss the other segments, the key dimension is, of course, availability. How has that been, Anna? Well, the availability of our assets has improved in our nuclear power plants, mainly in Ringhals 4, where we had an outage in the first quarter of 2023. We have also seen good availability in our onshore wind assets. Offshore wind's availability has been lower, on the other hand, and that has been affected by bad weather conditions, some unplanned standstills, but also extended service work. We continuously work towards improving the availability in all our assets. If we instead look at distribution and customer and solutions, Kerstin, how have they developed during this quarter? Well, if we start with customers and solutions, here we have experienced a mixed performance overall, with the underlying EBIT decreasing by SEK 1.3 billion- SEK 4.2 billion. We have a reduced margin for our gas-fired power production, also called clean spark spread, but also lower heat prices. So this resulted in a decreased result in Heat Netherlands. And this decline more than offsets the positive developments in the customer business, which continues to contribute with stable performance. And if we look beyond the impact from the wind divestment that we did during the first quarter of this year, we have actually a very solid development with the customer business, which is underscored by the fact that we are increasing our customer sales in all our markets. Moving on to distribution then, here we report a decrease in underlying EBIT, which fell by SEK 0.4 billion- SEK 1.4 billion compared to the same period last year. And despite higher sales, particularly in Sweden, the primary reasons for this decrease are higher costs from the transmission grid, repairs, but also growth-related costs. So overall, while these higher costs, of course, impact our results, we are satisfied with our efforts to address and remedy these issues to enable growth and maintain the grid. Thank you for that, Kerstin. But if we summarize by looking at our financial targets, how have they progressed? Well, the increased EBIT has improved our profitability metric, which is measured by the rolling 12 months return on capital employed. This actually increased to 11.5% from 6.6% in the first quarter this year. This is also largely attributable to a capital gain related to the sale of 49% of the Nordlicht offshore wind projects. This means that we are now above our target of 8%, which we are, of course, very happy about. We have also continued solid capital structure, as demonstrated by our other financial target, FFO over adjusted net debt, which increased from 26.8% in the first quarter to 40.9% in the second quarter. The increase that is driven by the finalization of the divestment of Wärme Berlin and the sale of 49% of Nordlicht 1 and 2 to BASF, because these transactions, they significantly reduced our adjusted net debt, causing our FFO over adjusted net debt to now be above our target range of 22%-27%. However, our goal remains to be at the upper end of that target range. If I understand you correctly, we have a better bottom line, we have improved performance of our targets, meanwhile the business is facing some challenges. Are we happy with the progression overall? I think both yes and no. We are happy with the improved bottom line and that the financial targets are improving, of course. But we need also to reflect on the reason for these improvements. FFO over adjusted net debt is improving due to the divestment of Heat Berlin and the 49% sale of the Nordlicht projects. And ROCE is mainly improving due to the capital gain in Nordlicht and higher achieved prices. So if we look at the underlying ROCE, however, this is still below 8% at 7.5%. So I mean, yes, we are improving, which we are very happy about, but at the same time, further efforts are needed in order to ensure that we deliver on our targets also in the future. Thank you for that, Kerstin. Let's move on to discuss some business highlights this quarter. We heard a couple of milestones in the beginning here, Anna, but I would like to ask you for some more color on a few of them. If we start with nuclear, that is a hot topic in the Swedish context, what is the latest here? Yeah, sure. We have progressed both when it comes to our existing nuclear plants and also when it comes to planning for new nuclear. The current discussions regarding lifetime extension, they are very positive, and we have actually taken a directional decision to extend the operating lifetime of all of our nuclear reactors. This would further enable fossil-free electricity well into the 2060s, and that will support the industry transition and also strengthen the supply to Swedish consumers in the time period that will be quite critical in this transformation. So happy about that. We've also taken additional steps in planning for potential new nuclear on the Ringhals Peninsula. We have by now shortlisted two out of six potential suppliers of small modular reactors. The two are British Rolls-Royce SMR and American GE Hitachi Nuclear Energy. We will, of course, continue to evaluate which is the best option for us. In parallel, Vattenfall is continuing to investigate the conditions for building large-scale reactors on the site. We've not made a final decision for reactor technology yet, but regardless of the choice, what is clear is that any future investment decision will, among other things, of course, require a risk-sharing model with the state. Why is this so important? Well, when building and investing in new nuclear, you are looking at an 80-year investment horizon, and a lot can happen in that time period. The risk for such a project is high, and it needs to be shared. I think it's worth pointing out that no country in the world has built nuclear on fully commercial terms without some engagement from the state. The risk-sharing model needs to address project risk, merchant risk, but also back-end risk. It also needs to be clear, predictable, and designed to last over time. That is necessary in order to be able to finance the projects and also to lower the costs in the end and secure a competitive price for consumers and customers who will pay for this in the end. We are very happy that the Swedish government is now working on establishing such a risk-sharing model. Thank you, Anna. And we have also achieved some milestones in wind, and we were, together with Copenhagen Infrastructure, awarded the IJmuiden Ver Beta offshore wind farm, which is a unique project, isn't it? It is, and it's also very innovative because it combines wind, solar, and hydrogen into a state-of-the-art energy system. This will further decarbonize society and industries in the Netherlands. The offshore wind capacity alone is 2 GW, and the on-site floating offshore solar farm provides an additional 50 MW of capacity. What is the benefit of combining solar, wind, and hydrogen like this? Well, by combining solar and wind, we use the available space more efficiently. Another benefit is that solar and wind complement each other and are able to share the same grid connection. That results in a more efficient use of the power grid. The electrolyzer, by constructing that one at the port of Rotterdam, we will be able to convert a large part of the produced electricity from the wind farm into green hydrogen close to the potential off-takers. That's also a very important and interesting part of the project. Very exciting. Even if we see signs that the current hydrogen market is developing slower than anticipated just a few years ago, hydrogen will play a key role in the decarbonization, and particularly the hard-to-abate sectors. Isn't that right, Anna? Indeed, it is. We believe the market will grow in the coming years due to higher demand from industries. We see that a lot when we talk to our industrial clients. We also see opportunities to connect this demand with fossil-free electricity, especially from wind power like IJmuiden Ver Beta. We are also sometimes faced with a slower pace of development, like you mentioned, Andreas. We see that some projects don't materialize at the speed anticipated. I think it's important, however, to say that that is not uncommon with emerging technologies and a total transformation of the market, the economy, and these very big trend shifts we now see. I think it would be more surprising if everything was just a straight road ahead. It will go a bit up and down, but the direction is clear. It is important that the direction is also clear on EU level going forward to keep a pace that secures a successful transformation of European industry. I'm glad to see that there is a lot of progress when it comes to industry decarbonization partnerships, and that plays a crucial role here. Vattenfall has quite a lot of experience of doing that. Yes. And on that partnership topic, we deepened our relationship with BASF this quarter, didn't we? Yes, we did, by selling 49% of Nordlicht 1 and 2 projects in Germany to BASF. This is the second major offshore wind project that we partner on. The Nordlicht park will have a capacity of 1.6 GW. With our 51% of the wind park, we will provide fossil-free electricity to our customers. BASF will use their share to provide fossil-free electricity to their chemical production in Europe. So you can say that together, we aim to speed up the transition towards fossil freedom. In this project, we've also teamed up with Vestas for low-emission steel wind turbines for these projects. That means in practice that more than half of the 112 turbines will be made with low-emission steel, cutting the carbon footprint significantly. Yes, I think we learned that partnerships are great for both the industries involved and for Vattenfall, because we know we can't do the energy transition alone, but by working together with the industry, we can cooperate with our partners in their decarbonization efforts, but we can also reduce our risks significantly. That is absolutely true. Our partnerships with BASF, but also with the Copenhagen Infrastructure Partners, are just two examples of many fruitful collaborations. In late June, we announced a new cooperation with Cemvision to supply near-zero-emission cement. Cemvision develops cement from residual materials, and as a result, they can potentially reduce carbon dioxide emissions by 95% by 2030 compared to traditional cement. This new cement has actually several potential applications. We could use it for foundations for wind power turbines, for power distribution, and prefabricated concrete elements. The partnership is a result of our commitment to the First Movers Coalition, where we have pledged that at least 10% of our cement or concrete purchases will be near-zero emissions by 2030. We are, of course, very pleased with this development as well. Yes. And this really shows that energy and industry go hand in hand. Microsoft's new investment plans in Sweden are another great example of this. It's for sure. They recently announced their plan to invest $3.2 billion in Sweden, and the access to renewable energy and the cooperation with Vattenfall were contributing factors to why they chose to invest here. Yes. And I think this really shows that by enabling the transition from fossil fuels, we create opportunities for both society and industries. And as investments from the industry increase, so will, of course, the demand for fossil-free energy. Yeah, that's why it continues to be so important to increase our generation of fossil-free energy, and we focus a lot on that. Yeah. If we have taken important steps this quarter, a lot is still left to be done. We heard Kerstin earlier highlight the good bottom line results while also emphasizing the importance of further actions in order to ensure that we deliver on our targets also in the future. So, Anna, what will be the most important steps ahead? Well, I very much agree with Kerstin that in order to look ahead, we need to look at where we are right now and where we want to be in the future. When we look at the here and now and also our historical performance, we need to make sure that we perform even better in the future because it has been a challenge to perform after about an 8% Return on Capital Employed in the recent years. The market environment is not getting any easier, actually. It is clear that we today see more volatile power markets overall, and at the same time, we consciously reduced our hedge ratio as the Nordic system price is not as good of a proxy for price area prices as it used to be. On top of this, we are now growing significantly in fossil-free generation, which is great and important. We can deliver a lot of value, but it also comes with a high merchant exposure, which needs to be managed prudently. We still see an impact from geopolitical uncertainty, of course, increased cost, value chain disruptions, which has caused some instability in the energy market. Therefore, where we are today is simply not good enough for tomorrow. We need to improve continuously, and it is crucial to future-proof the business in order to level up even more in the years to come. Kerstin, what are we then doing in order to safeguard profitability going forward? Well, I mean, we are already accelerating our efforts to increase our performance, and we aim to further improve these initiatives. One such action is continuing to be very strict with our investments by only investing in line with our strategic priorities and when it really gives us a competitive advantage. Operational excellence will also continue to be key and top priority for Vattenfall, and we are continuously making strides in this area. I think maybe the most evident one is that we identify ways of working towards both increased operational efficiency, but also effectiveness in each individual business area and staff function. But it also means reviewing our common processes and having a thorough look at our shared interfaces to see where can we improve synergies even further within Vattenfall. By delivering on the actions that Kerstin and are mentioning, we will continue to make the energy transition happen, for example, by investing in fossil-free generation and increasing capacity and flexibility in our electricity networks and assets. That's going to be crucial. Thank you both. And with that, we are wrapping up the audiocast. Before opening up to the Q&A, I would like to mention for all of you that appreciate our financial reporting material, this is, as always, available on our website. Now, let's open up the Q&A, and please remember to state your name and your organization. So let's go to the first question. Philipp Akoto, Energate. How does Vattenfall view the latest offshore wind bidding process in Germany? Will this market remain interesting for Vattenfall? There are two questions, but let's take this and I'll read the second one as well. In February 2024, you announced your intention to invest in the construction of new pumped storage facilities in Germany. What is the current status? So if we start with the wind and the German market. Yeah, and I'm not quite sure if the question is referring to the auctions near term or the news released the other day that the subsidy scheme will change a few years down the road. But regardless, we have said that we will not pay a lot of upfront premium for new projects. We will secure and safeguard that the projects are sound from a financial perspective and also doable from a sort of construction perspective within the set timeline. So we will only bid when we see that we can meet those two criteria. And if the question is related to the news the other day from the German government, I think that that is probably not very strange. They had an exception on EU level, and now that needs to be reviewed, and there we will simply have to wait and see what the new framework looks like. The second question, what is the current status of our pumped storage facilities project in Germany? Yeah, we are still working with the project, but we have not made any final investment decisions yet. Work in progress. Thank you. Then we go to Andrew Moulder, and he has two questions about nuclear. And I'll start with the first one. Have you had any discussions with the Swedish government over what the nuclear risk sharing would look like? One. Two, EDF spoke of a technological roadblock in its development of SMRs. Are you confident that your two chosen suppliers, Rolls-Royce and GE, have no such technological issues? So if we start with, have you discussed discussions with the Swedish government over what this nuclear risk sharing would look like? Well, I mean, there is this investigation going on now on what some of the main parameters could be. I know that there's been a lot of information collected both from us and from other actors in the market, which is really good, of course. We don't have sort of a separate track somewhere. We are sort of in the loop here as every other energy company. We, of course, have an active dialogue with our owner on all sort of Vattenfall topics continuously, although we mainly have that dialogue with our board of directors. When it comes to SMR, yes, there are some challenges for some companies. I think there are challenges for basically everyone building new nuclear, regardless if it's small or big. So it's a matter of what kind of risks are you willing to take in the end, and how comfortable are you that the suppliers will actually be able to solve the challenges that they have together with us. So one of the things that we are looking into quite a lot when evaluating both small modular reactors and large-scale reactors is what does the delivery model look like, and how can we sort of tap into that in a good way to make sure we have all the competencies needed jointly from the supplier, from us, and from any construction partner. So yes, there are challenges for everyone, I would say, but we are having a good discussion around how to mitigate those. Thank you. We have no further questions. Before we conclude this Q2 report, any final comments from Kerstin or Anna that you would like to share with the audience? I think that overall, we see that Vattenfall is developing positively, and I think that we show a good result for the first half year of 2024. The energy transition is not the only solution to the climate issue, but it's one very important piece of the puzzle. It's even more important when it comes to securing European industry's competitiveness going forward. That is our main focus now. Thank you, Anna. And with those words, I thank you, Anna, Kerstin and the audience for listening in, and see you for the Q3 report. Thank you very much. Bye-bye.