Second-quarter 2007 report. Christian Berg, President and CEO Hafslund ASA 20 July 2007

Transcription

1 Second-quarter 2007 report Christian Berg, President and CEO Hafslund ASA 20 July 2007

2 Key events second quarter 2007 After-tax profit of NOK 6,727 million (NOK 7,439 million), of which NOK 6,513 million (NOK 7,211 million) is attributable to the Group s investment in Renewable Energy Corporation (REC). Operating profit excluding REC: NOK 398 million (NOK 488 million) down 18 percent. Lower power prices, compared with 2Q Return on equity, excluding REC: 15.7 percent for the 12-month period ending 30 June. Return on equity for the financial year 2006: 16.3 percent. Dividend payments of NOK 3,457 million paid in the quarter. The renewable energy drive continues: investment planned for a 30 MW energy recovery plant that will generate heat and some electricity. 2

3 Operating profit (excl. REC) Second-quarter 2007 NOK million Heat and Infrastructure Technical Services Markets Venture Other Activities Total operating profit 3

4 Earnings per share By quarter NOK Accumulated pershare profit for the period Note: - Blue column sections represent per-share profit, excluding the profit contribution from the Group s REC investment. Orange columns represent the profit contribution from the Group s REC investment.

5 Rates of return (excl. REC) Equity (ROE) Invested capital (ROCE) 16.3 % 15.7 % 14.2 % 12.5 % 13.7 % 10.7 % * * 5 * Rolling rate of return over the past 12 months, excluding REC.

6 Power Generation Production volume: 7.5 percent above normal for the quarter. Sales price: about 40 percent below 2Q Projection for 3Q 2007: exceeds roughly 50 GWh above mean and 23 percent above 3Q 2006 s generation. Reversion right ruling in the EFTA court. 6

7 Power Generation NOK million 2Q 07 2Q 06 YTD 07 YTD 06 Operating revenue Operating profit before depreciation Operating profit and sales price, excluding power trading Margin excl. power trading 75% 86% 72% 72% Operating profit of which power trading 1 (6) Margin excl. power trading 68% 83% 66% 69% Sales price (in øre per kwh) Q 05 4Q 05 2Q 06 4Q 06 2Q 07 Operating profit Sales price (øre/kwh) Operating profit: NOK 110 million, down NOK 126 million from 2Q Power sold at NOK per kwh; price component contributed NOK 116 million less to profit than in 2Q Sales price corresponds to 109 percent of spot price (2Q 2006: 96 percent). 933 GWh generated (2Q 2006: 861 GWh), which is 35 GWh above normal. Increased volume provided NOK 15 million profit contribution. Unrealized losses of NOK 23 million on forward power contracts maturing July through December

8 Power generation profile GWh Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Mean Year 3,067 3,029-2,949 8 Note: Mean production = 10-year average of power generation,

9 Power prices at Nord Pool øre/kwh Spot prices Forwards prices 9 Source: Nord Pool 6 July 2007

10 Heat NOK million 2Q 07 2Q 06* YTD 07 YTD 06* Operating revenue Operating profit before depreciation Operating profit and sales price (1) Margin -1% 38% 31% 40% Operating profit (23) Margin -33% 21% 17% 30% Salesprice (in øre per kwh) Operating revenues down 36 percent due to lower power prices and somewhat lower volumes. Sales price of energy: NOK per kwh, down 29 percent from 2Q Volume sold: 151 GWh, 11 percent below 2Q 2006 volume Non-recurring costs: NOK 7 million (1 4 ) (2 3 ) 1Q 06 2Q 06 3Q 06 4Q 06 1Q 07 2Q 07 Operating profit before depreciation: NOK -1 million, which is NOK 41 million less than in 2Q Operating profit Salesprice (in øre per kwh) 10 * Compiled using Viken Fjernvarme pro forma 2006 figures, adjusted for new energy pricing agreement with the City of Oslo and the cessation of the company s power sales department.

11 Investment in energy recovery plant Energy recovery plant to generate industrial heat and electric power Build and own 30 MW energy recovery plant Production: Heat and electric power, under a 15-year delivery agreement with Borregaard for industrial process heat Fuel: Residual manufacturing waste Location: Sarpsborg, 100 km south of Oslo Go-ahead pending funding from Enova. Planned completion: first half of Investment framework: NOK 450 million. Synergies with Hafslund s BioEl Fredrikstad and Viken Fjernvarme. Continued growth in renewable energy 11

12 Network Profit somewhat higher than normal for the reporting period. Continued professionalization of network activities: Hafslund Nett s role as a distribution grid operator is reorganized into a new company, Hafslund Operatør AS, as of 1 July Spin-off of certain Network real estate holdings into independent companies, with effect as of 1 January Stable operations in the quarter and service interruption penalties (KILE costs) on a par with 2Q

13 Network NOK million 2Q 07 2Q 06 YTD 07 YTD 06 Operating revenue ,654 1,739 Operating profit before depreciation Margin 34% 41% 32% 39% Operating profit Margin 19% 25% 17% 24% Operating revenues: NOK 831 million on a par with 2Q 2006, considering non-recurring items. Operating profit: NOK 155 million, positively affected by NOK 38 million in non-recurring items. Operating profit development New regulatory model and a change in regulations as to grid companies duty to deliver power reduced profit by NOK 13 million, compared with 2Q Somewhat higher maintenance and investment activity levels due to relatively mild temperatures in the first six months of Q 05 4Q 05 2Q 06 4Q 06 2Q 07 13

14 Telekom NOK million 2Q 07 2Q 06 YTD 07 YTD 06 Operating revenues Operating profit before depreciation Margin 17% 36% 16% 37% Operating profit Margin 4% 16% 4% 15% Operating revenues and operating profit before depreciation Operating revenues: NOK 87 million, up NOK 48 million from 2Q Revenue growth stems from acquired business activities and modest organic growth. Operating profit before depreciation: NOK 15 million, up 7 percent from 2Q Owns and leases about 1,980 km of fiber optic network, as of 30 June 2007 up 120 km in 2Q Q 05 4Q 05 2Q 06 4Q 06 2Q 07 Operating revenue Operating profit before depreciation 14

15 Technical Services NOK million 2Q 07 2Q 06 YTD 07 YTD 06 Operating revenues Operating profit before depreciation Margin 7% 7% 6% 7% Operating profit Margin 6% 6% 5% 5% Operating revenues and operating margin Operating revenues: NOK 304 million, up 21 percent compared with 2Q Operating profit: NOK 17 million, up 21 percent from 2Q Operating margin: 6 percent, on a par with 2Q Q 2007 characterized by high activity levels and a tight labor market. Solid order situation in all units. 13% 11% 6% 11% 6% 13% 8% 4% 6% 2Q 05 4Q 05 2Q 06 4Q 06 2Q 07 Operating revenue Margin 15

16 Power Sales Satisfactory 2Q 2007 profit performance in a seasonally weak quarter for the Power Sales business. Lower power prices resulted in 38 percent revenue decline compared with 2Q Favorable customer-base development in 2Q

17 Power Sales NOK million 2Q 07 2Q 06 YTD 07 YTD 06 Operating revenues ,782 2,475 Operating profit before depreciation Margin 11% 4% 11% 4% Operating profit Margin 11% 4% 10% 3% Operating profit: NOK 66 million, up NOK 30 million from 2Q NOK 40 million profit contribution due to changes in the accounting treatment of fixed-price end-user contracts. Operating profit 120 Sold volume: 2,543 GWh up 10 percent from 2Q Volume sold to private-market segment: 1,575 GWh (2Q 2006: 1,641 GWh) Implemented a unified customer management system for Power Sales and Security customers. 2Q 05 4Q 05 2Q 06 4Q 06 2Q 07 17

18 Residential Security (Sikkerhet Privat) NOK million 2Q 07 2Q 06 YTD 07 YTD 06 Operating revenue Operating profit before depreciation Margin 31% 22% 23% 24% Operating profit 5 4 (0) 15 Margin 8% 7% 0% 12% Operating revenues and operating margin 87 Operating revenues: NOK 66 million, up 6 percent from 2Q Operating profit before depreciation: NOK 20 million, up NOK 7 million from 2Q ,800 customers on a par with 2Q Efforts to enhance customer experience and cut costs continue. Goals: Annual NOK 50 million cost-base reduction by year-end % 14% 7% 16% 7% 21% -23% -9% 8% Annual customer-base departure rate below 10 percent by year-end Q 05 4Q 05 2Q 06 4Q 06 2Q 07 Operating revenue Margin 18

19 Venture NOK million 2Q 07 2Q 06 YTD 07 YTD 06 Operating revenue Operating profit 6,519 7,187 9,043 7,971 - of which REC 6,513 7,211 8,960 7,984 Venture portfolio (excluding REC) as of 30 June 2007: 100% = NOK 600 million Miscellaneous 29% Automatic meter reading 4% Renewable energy 53% Operating profit: NOK 6,519 million, of which REC investment contributed NOK 6,513 million. REC investment recorded in balance sheet at NOK 16.2 billion or NOK 230 per share, up 67 percent in 2Q Sales free up NOK 32 million in capital in 2Q Sales process for Scudder Latin Power Fund is proceeding according to schedule. Mobile telephone service provider OneCall has 57,000 customers. Software 3% Telecom 11% 19

20 Group profit and loss account NOK million 2Q 07 2Q 06 YTD 07 YTD 06 Operating revenue 2,041 2,386 4,860 5,383 Gain/loss financial items 6,601 7,215 9,177 8,053 Operating expenses (1,533) (1,728) (3,718) (4,080) Operating profit before depreciation 7,109 7,873 10,319 9,356 Margin 348% 330% 212% 174% Depreciation (198) (175) (398) (344) Operating profit 6,911 7,698 9,921 9,011 Margin 339% 323% 204% 167% Financial expenses (56) (89) (176) (174) Pre-tax profit and divasted activities 6,855 7,610 9,745 8,838 Tax (128) (170) (268) (328) Profit, discontinued operations Profit after tax 6,727 7,439 9,477 8,510 Majority's share of profit 6,722 7,442 9,470 8,513 Earnings per share (EPS) in NOK

21 Group balance sheet NOK million 30/06/ /03/ /12/ /06/2006 Intangible assets 2,662 2,660 2,098 2,059 Fixed assets 17,436 17,264 14,362 14,288 Financial assets 16,913 10,406 12,966 10,306 Accounts receivables and inventory 1,580 2,243 2,423 1,800 Cash and cash equivalents 288 4,684 1, Assets 38,880 37,259 32,969 28,843 Equity (incl. Min. int.) 23,997 20,675 17,575 14,435 Allocation for liabilities 2,730 2,672 2,082 1,900 Other long-term debt 7,625 6,715 7,023 6,199 Short-term liabilities 4,527 7,197 6,289 6,309 Equity and liabilities 38,880 37,259 32,969 28,843 Net interest-bearing debt 9,724 6,214 9,379 10,029 Equity ratio 62% 55% 53% 50% 21

22 Group cash flow analysis NOK million 2Q 07 2Q 06 YTD 07 YTD 06 Pretax profit 6,855 7,610 9,745 8,838 Items without cashflow effect (6,562) (7,263) (9,118) (8,188) Change in net working capital (106) Cash flow from operations (A) , Investments (operations and expansion) (345) (305) (2,628) (425) Sale of assets incl. Business segments Venture investments etc , Cash flow to investments activities (B) (252) (243) 2,209 (345) Cash flow for dividend and debt payment (A+B) (65) 639 3,

23 23 - We make everyday life safer and better

24 24 Additional information

25 Cash flow analysis NOK million 2Q 07 2Q 06 YTD 07 YTD 06 pretax profit 6,855 7,610 9,745 8,838 Profit and loss items without liquidity effects (6,562) (7,263) (9,118) (8,188) Change in working capital, etc. (106) Cash flow from operations (A) , Operational and expansion investments (345) (305) (2,628) (425) Sale of operating assets and activities Portfolio changes venture, etc , Cash flow to investments activities (B) (252) (243) 2,209 (345) Change in gross interest-bearing debt (874) (143) (683) 144 Dividend and other capital transactions (3,457) (487) (3,457) (487) Cash flow to financing activities (4,331) (630) (4,140) (343) Cash flow in the period (A+B+C) (4,396) 9 (831) 149 Cash and cash equivalents at beginning of period 4, , Cash and cash equivalents at end of period

26 Capital structure development Interest-bearing debt and equity ratio NOK billion % 50% 53% 53% 56% % 31% 31% 33% 2Q 05 4Q 05 2Q 06 4Q 06 2Q 07 Net interest-bearing debt Equity ratio 26

27 Loans Debt maturity profile NOK million 2,500 2,000 1,500 1, Debt maturity next 12 months NOK million 1,500 1, Certificate loans Bond loans Bank loans Portfolio details Interest 30/06/07 31/03/07 Change Syndicated and bank loans 19% 18% 1% Bond loans 68% 65% 3% Certificate loans 13% 17% -4% Nominal value - market value of loans 30/06/07 31/03/07 Change Market value derivatives Average interest incl. derivatives Proportion of loan portfolio with fixed interest Loans at maturity next quarter (NOK million) Unused drawing facilities (NOK million) 5.4 % 5.2 % 0.2 % 33% 44% -11% 991 2,489 (1,498) 4,605 4, Jul Sep Nov Jan Mar Mai Certificate loans Bond loans Bank loans 27

28 Power prices: Hafslund Generation vs. Nord Pool NOK/MWh Hafslund 07 Hafslund 06 Year contract Source: Nord Pool 6 July 2007 Note: The charted quarterly price of power sold by Hafslund s Power Generation business is volume-weighted

29 Network number of grid outages Number of service interruptions, rolling 12-month average 1,400 1,194 1,200 1,028 1, Q 04 4Q 04 2Q 05 4Q 05 2Q 06 4Q 06 2Q 07 29

30 Hafslund Power Sales in 2Q 2007: 2,543 GWh = 14.0% of total Norwegian consumption Hafslund Power Sales GWh Norway s gross general consumption of electricity* GWh 30,000 5,000 25,000 4,000 20,000 3,000 15,000 2,000 10,000 1,000 5, Q 2Q 3Q 4Q Q 2Q 3Q 4Q Note: * Gross general consumption encompasses gross consumption (excl. Electro-boilers and pumped storage), which includes households and agriculture, services, wood processing, mining and other industries (excl. Power-intensive), construction, transportation, and grid losses. Source: NVE

31 Shareholders (as of 30 June 2007) # Stockholder Class A shares held Class B shares held Total Ownership Share of voting rights Shareholding in thousands 1 City of Oslo 67,525 37, , % 58.5 % 2 Forum Forvatning AS 37,853 28,706 66, % 32.8 % 3 Østfold Energi AS 5, , % 4.5 % 4 MP Pensjon - 1,564 1, % 0.0 % 5 State Street Bank and Trust Co - 1,352 1, % 0.0 % 6 JP Morgan Chase Bank % 0.0 % 7 Fidelity Funds % 0.0 % 8 Goldman Sachs International % 0.0 % 9 BNP Paribas Sec.Services Paris % 0.0 % 10 JP Morgan Chase Bank % 0.0 % Total, 10 largest shareholders 110,596 71, , % 95.8 % Other shareholders 4,869 7,837 12, % 4.2 % Total 115,465 79, , % 100% 31

32 Key figures Group YTD 07 YTD 06 Capital matters Total assets Captial employed Equity Market capitalization Equity ratio 62 % 50 % Net interest- bearing debt Profitability Profit after tax Equityreturn (last 12 month) 66 % 90 % Earnings per share (EPS) 48,55 43,60 Cash flow per share 5,6 4,3 Power Generation YTD 07 YTD 06 Sales price (øre/kwh) Production volume (GWh) 1,656 1,400 Production as a % of normal 119% 101% Capital employed 2,093 2,398 Heat YTD 07 YTD 06 Capital employed 3, Sales pric e (øre/kwh) 52.0 Sales volume (GWh) 569 Network YTD 07 YTD 06 Capital employed 8,550 8,668 NVE-capital (regulatory) 5,617 5,630 Power Sales YTD 07 YTD 06 Capital employed 1,263 1,497 Total volume (GWh) 6,686 6,395 Residential Security YTD 07 YTD 06 Employed capital Net customer growth (1,847) (744) No. Of customer 77,800 78,200 32

33 Definitions Items Definition Group Captial employed Equity + Net interest-bearing debt Equity ratio (in%) (Equity incl. Minority interests / Total assets) X 100 Earnings per share Profit after tax / Average no. of shares outstanding Cash flow per share Net cash from operations / Average no. of shares Return on equity Result after tax / Average equity (incl. Minority interests) Return on invested capital Operating profit / (Average equity + Net interest-bearing debt) Power generation Mean production Average power generation over the past 10 years. 33

34 Investor information Additional information is available from Hafslund s website: You can subscribe to Hafslund press releases Group SVP Treasury (CFO), Gunnar Gjørtz gunnar.gjørtz@hafslund.no Tel: VP Investor Relations, Heidi Ulmo heidi.ulmo@hafslund.no Tel: SVP Communication, Karen Onsager karen.onsager@hafslund.no Tel: