Statkraft Investor Update March 2014
Disclaimer This presentation has been prepared by, and the information contained herein (unless otherwise indicated) has been provided by Statkraft AS (the "Company"). By attending the meeting or otherwise viewing this presentation you agree to be bound by the following conditions. This document and the information therein are being furnished to you solely for your information and may not be reproduced, redistributed or passed on, in whole or in part, to any other person. This document does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of the Company or any of its subsidiaries in any jurisdiction or an inducement to enter into investment activity. No part of this document, nor the fact of its distribution or reception, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. This document is not a prospectus and does not comply with rules or regulations regarding investor information, and has not been approved by or filed with any stock exchange or regulatory authority. Amongst others, this document does not disclose risks and other significant issues related to an investment in any securities. Investors should only subscribe for any transferable securities on the basis of information in a relevant prospectus and term sheet, and not on the basis of any information provided herein. The information contained in this document has not been independently verified and no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. None of the Company, or any of its affiliates, advisers or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this document. The information contained in this document is provided as at the date of this document and is subject to change without notice. This document may not be distributed or delivered to any person or in any jurisdiction where such distribution is unlawful or restricted. This document may not be delivered in the United States or to any person or entity in the United States. 2
Agenda 1. 2. 3. 4. 5. Statkraft overview Strategy and market dynamics Financial update Funding and liquidity Summary Appendix 3
Statkraft at a glance NOK 47.5 bn UNDERLYING GROSS REVENUES 2013 NOK 12.4 bn UNDERLYING EBITDA 2013 55.9 TWh POWER GENERATION 2013 16.0 GW INSTALLED CAPACITY 2013 100% OWNED BY THE KINGDOM OF NORWAY A-/Baa1 (stable outlooks) S&P / MOODY S CREDIT RATINGS NO No. 1 power generator (~35%) UK Wind power initiatives EUROPE Trading activities Growth outside Europe through SN Power (60% ownership) SWE No. 4 power generator (~5%) GER Flexible power generation SE EUROPE Hydropower development 4 Hydropower Gas power District heating Wind power Distribution grid
Europe s leader in renewable energy Top 10 renewable electricity producers in Europe 2012 (adjusted 1 ) Electricity production (TWh) Statkraft EDF 49 64 Statkraft s total power generation 2013 (55.9 TWh) Vattenfall Enel 40 46 Gas 2% Wind 2.5% Bio 0.5% Fortum 30 Verbund 28 Iberdrola 27 E.ON GDF SUEZ Hidroelectrica 18 19 21 Hydro 95% Source: PwC 5 1 Main assumptions: full consolidation of subsidiaries, proportional consolidation of associated companies, energy consumption for pumped hydropower deducted, electricity from long-term purchasing contracts deducted, production outside Europe deducted
Flexible low-cost power producer Low-cost power production dominated by renewable energy - Average hydropower production cost of 10.2 EUR/MWh 1 in 2013 Peak supplier with high degree of flexibility - 80% of installed capacity within highly flexible hydropower - Production optimised relative to power prices and water inflows Substantial reservoir capacity - Europe s largest reservoir capacity (~40 TWh) Unique information base and power market modelling Blåsjø, one of Europe s largest hydropower reservoirs, with multi-year energy storage capacity (7.8 TWh) 6 1 Annual Report 2013: 80 NOK/MWh. Incl. property tax and depreciations, excl. sales costs, overhead, net financial items and tax. Based on normal production from power plants under own management in Norway, Sweden, Germany and the UK.
Long-term contracts stabilize earnings ~ 20 TWh sold on long-term contracts with power-intensive Nordic industry Corresponding to ~ 40% of Statkraft s annual mean power production for Nordic hydropower GWh 30 000 25 000 20 000 15 000 10 000 5 000 0 2014 2016 2018 2020 2022 2024 Statutory priced lease agreements Long-term market contracts Statkraft's share of leasing agreements 7
Key credit strengths Strong market position - a competitive, low-cost and flexible generator of electricity Stable cash flow - a substantial share of long-term industrial supply contracts Capex flexibility - several options within current investment program Solidly owned by the state in one of the most creditworthy countries in the world - the Norwegian state as the sole shareholder (AAA/Aaa) 8
Agenda 1. 2. 3. 4. 5. Statkraft overview Strategy and market dynamics Financial update Funding and liquidity Summary Appendix 9
A changing energy landscape Market challenges Flat energy demand in Europe and more production from new renewables Growing concerns in Europe about security of supply and affordability Traditional utility business model challenged by a transformed value chain Market opportunities Attractive support schemes driven by European transformation to renewable energy New business opportunities closer to end users and through integration of intermittent renewable capacity Strong growth in emerging markets 10
Strategic focus areas and ambitions European Flexible Generation First priority to maintain & develop Nordic hydropower assets Maximize long term value of Statkraft s asset base Market operations Hydropower in Emerging Markets Develop Trading and Origination business in selected global markets and exploit customer oriented activities Build integrated operations in South East Europe, South America and South Asia Wind Power Onshore wind in Norway, Sweden and UK Become lead operator in offshore wind power District Heating Become amongst the most profitable district heating companies in Norway and Sweden 11
Strengthening International Hydropower Statkraft SN Power Agreement between Norfund and Statkraft to restructure and prolong partnership Statkraft to integrate South America and South Asia (in effect April 1 st 2014) New SN Power to focus on South East Asia, Africa and Central America One common project execution unit in Statkraft 12
Allocation of investments 2014-2018 Geographical allocation Technology allocation Emerging markets 38 % Onshore WP 18 % District heating Trading & 3 % origination 3 % Innovation 3 % Europe ex Norway 19 % Norway 43 % Offshore WP 9 % Hydropower 64 % Investment ambition 2014-2018: NOK 61 billion, but subject to financial capacity and maintaining current ratings 13
Solid base in the Nordic region Estimated annual contribution after committed capex (2018) EBITDA Power generation (72 TWh) Europe outside Nordic 11 % Outside Europe 8 % Europe outside Nordic 13 % Outside Europe 5 % Nordic outside Norway 14 % Norway 67 % Nordic outside Norway 10 % Norway 72 % Increased diversification, but still dominated by Norwegian hydropower 14
Nordic-European power market integration Current transmission capacity between Nordic and Europe of 4000 MW Planned capacity increase of ~5500 MW ahead of 2020 Increased value opportunities for Statkraft s flexible Nordic hydropower plants Power transmission cables (MW) Planned expansions 15 Source: Statnett
Agenda 1. 2. 3. 4. 5. Statkraft overview Strategy and market dynamics Financial update Funding and liquidity Summary Appendix 16
Highlights 2013 Solid result from operations - Higher Nordic power prices and increased production capacity Currency effects impact net profit - Negative impact offset by currency translation effects in equity Investment activity according to plan - Gross investment of NOK 9.3 billion - Important projects completed: Three onshore wind farms, one hydropower and one gas-fired power plant and two district heating plants - Investment decision to construct two hydropower plants in Albania Sale of all shares in E.ON Transfer of hydropower plants and asset swap in Norway to optimize operations 17
Solid underlying results NOK million FY 2013 FY 2012 2 FY 2011 Net revenues 1 20 545 19 207 18 120 EBITDA 1 12 444 11 347 10 851 Net profit/loss 208 4 551 40 Compared with 2012 improved revenues are mainly due to higher prices EBITDA increased by 10% Weakened NOK against EUR brings net profit down - Currency impacts are mainly unrealised with limited cash flow effect - The effects are more than offset by currency translation effects in equity 18 1 Adjusted for unrealised changes in value on energy contracts and significant non-recurring items 2 All 2012 figures converted after implementation of IFRS 11 as of 2013
2013 prices up in the Nordic Electricity, average monthly price EUR/MWh 80 60 40 20 0 2010 2011 2012 2013 2014 Nord Pool, system price EEX, base Nord Pool, system forward EEX, base forward Increase in Nordic power prices compared with 2012 mainly due to variations in hydrological balance - System price: 38.1 EUR/MWh + 22% Increasing share of renewables and relatively low coal prices drive electricity prices down in Germany - Spot price (base): 37.8 EUR/MWh - 12% 19
Nordic reservoirs levels back to normal Nordic reservoir water levels 100 2012 80 2013 60 % 40 2014 20 0 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 Week Median 1 Below normal precipitation and inflow through large parts of 2013 Above normal inflow and recovering reservoir levels during Q4 At year-end Nordic reservoirs were 82.1 TWh corresponding to 97.1% of median 20 1 Median 1990-2012
Statkraft production Monthly power generation TWh 6 4 Change from 2012: FY production - 7% Hydropower production - 8% Wind power production + 77% Gas-fired power production - 28% 2 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2012 2013 (TWh) Hydro Wind Gas/bio Total FY 2013 53.2 1.4 1.3 55.9 FY 2012 57.6 0.8 1.6 60.0 FY 2011 46.0 0.8 4.7 51.5 21
2013 net profit breakdown Underlying 1 EBITDA 2012 > 2013 Underlying 1 EBITDA 2013 > Net Profit 2013 NOK million 3 288 11 347 1 338-241 12 444-2 855 125 1 101-2 189 Net interest and other financial items -9 403 Currency impact -11 592-2 303 208 2012 Adj. EBITDA Revenues Operating expenses ex. dep. 2013 Adj. EBITDA Unrealised changes in energy contracts Depreciation Impairments/ nonrecurring items Share of profit from associates and JVs Net financial items Tax 2013 Net profit Underlying EBITDA +10% vs. 2012 Booked net profit effected by negative unrealised currency effects amounting to NOK -9 934 million. In 2012 positive currency effects were NOK 3 815 million. 22 1 Adjusted for unrealised changes in value on energy contracts and significant non-recurring items
Solid cash flow Cash flow 2013 NOK million 16 000 +9 135 +1 051 +9 670 12 000-2 080 8 000-3 849 +535 7 685 5 440-3 094 4 000-9 123 0 Cash reserves 01.01 From operations Dividend from associates Change in short and long term items Investment activities Sale of noncurrent financial assets Changes in debt Dividend/ group contribution paid Share issue to minorities, currency effects Cash reserves 31.12 Sale of non-current assets mainly regards E.ON SE shares (NOK 8.515 million) and Sheringham Shoal transmission grid (NOK 957 million) 23
Agenda 1. 2. 3. 4. 5. Statkraft overview Strategy and market dynamics Financial update Funding and liquidity Summary Appendix 24
Balance sheet and debt overview Balance sheet per 31.12.2013 Debt currency distribution Current assets Other noncurrent assets NOK 154bn 17% 5% 10% NOK 154bn 28% Interest-free liabilities Associates and JVs 26% Interest-bearing liabilities Property, plant and equipment 68% 46% Equity Assets Equity and liabilities 25
Balanced debt maturity and mixed funding sources Debt maturity profile 31.12.2013 Distribution of funding sources NOK million 8 000 6 000 4 000 NIB loans 1 % External loans subsidiaries 12 % NOK Bond Issues 35 % 2 000 0 2014 2016 2018 2020 2022 >2024 EUR Bond Issues 52 % 26
Financial strength and rating Current ratings FFO/NET DEBT 2 (UNADJUSTED 3 ) A-/Stable Baa1/Stable Rating target Maintain current ratings with S&P and Moody s FFO/Net Debt thresholds as main KPI 1 4 4 FFO of NOK 9 653 million (8 580 in 2012) Net interest bearing debt of NOK 32 240 million (34 960 in 2012) 27 1 Please see rating publications on Statkraft s web page, under Financial information, for full assessments 2 Calculated 12 months rolling 3 Rating agencies apply own adjustments 4 2012 recalculated after implementation of IFRS 11 in 2013
Liquidity position Available liquidity and target Liquidity and market access NOK million 30 000 25 000 20 000 15 000 10 000 Cash and Cash equivalents Credit Line NOK 12bn Revolving Credit Facility (5+1+1 year) signed 19 January 2011 - Second extension agreed in 2013-14 counterparties NOK 1bn in committed credit line renewed on a yearly basis 5 000 0 2010 2011 2012 2013 Revolving Credit Facility EMTN Programme EUR 6bn - EUR 2.6bn available under current Programme No commercial papers outstanding Liquidity capacity target 1 : >1.5x projected payments over next six months 28 1 Liquidity capacity defined as cash and cash equivalents, plus committed revolving credit facilities, plus projected receipts for the next six months
Funding overview FUNDING STRATEGY Funding centralized on group level Flexibility through diversification of funding sources and maintaining sufficient back-stop facilities Funding need Funding sources Funding need going forward determined by cash flow from operations and capex NOK 3.6 bn debt maturities in H2 2014 Zero dividend in 2014 Norwegian bond and Commercial Paper market Euro bond market Swedish bond market Sterling and Swiss Franc bond markets considered 29
Agenda 1. 2. 3. 4. 5. Statkraft overview Strategy and market dynamics Financial update Funding and liquidity Summary Appendix 30
Providing pure energy A flexible and competitive generator of low-cost electricity - Dominated by renewable energy Flexible plans for growth - European renewable energy production - Hydropower outside Europe Balanced investment plan to maintain credit strength Proven support from Norwegian government through its 100% ownership 31
Agenda 1. 2. 3. 4. 5. Statkraft overview Strategy and market dynamics Financial update Funding and liquidity Summary Appendix 32
Statement of Comprehensive Income Fourth quarter The year NOK million 2013 2012 2013 2012 COMPREHENSIVE INCOME PROFIT AND LOSS Sales revenues 15 636 11 397 48 148 36 447 Other operating revenues 298 466 1 415 1 103 Gross operating revenues 15 934 11 863 49 564 37 550 Energy purchase -8 196-5 471-24 327-18 172 Transmission costs -274-262 -991-1 026 Net operating revenues 7 464 6 130 24 246 18 352 Salaries and payroll costs -848-820 -3 136-3 046 Depreciation, amortisation and impairments -780-3 057-3 045-4 933 Property tax and licence fees -394-301 -1 640-1 345 Other operating expenses -994-1 116-3 422-3 469 Operating expenses -3 016-5 294-11 243-12 793 Operating profit/loss 4 448 835 13 002 5 559 Share of profit/loss from associates and joint ventures 701-199 1 101 871 Financial income 58 153 237 996 Financial expenses -379-317 -1 351-1 301 Net currency effects -2 524 8-9 403 4 468 Other financial items 79-1 572-1 076-1 822 Net financial items -2 765-1 728-11 592 2 341 Profit/loss before tax 2 384-1 091 2 511 8 771 Tax expense -30-868 -2 303-4 220 Net profit/loss 2 354-1 960 208 4 551 Of which non-controlling interest 213-139 482 230 Of which majority interest 2 141-1 821-274 4 321 OTHER COMPREHENSIVE INCOME Changes in fair value of financial instruments -229-625 -828 337 Estimate deviation pensions -310 1 060-124 1 045 Items recorded in other comprehensive income in associates and joint arrangements 18 561 163 320 Currency translation effects 2 022-729 9 940-4 536 Other comprehensive income 1 504 268 9 154-2 833 33 Comprehensive income 3 858-1 692 9 361 1 718 Of which non-controlling interest 223-108 881-156 Of which majority interest 3 635-1 584 8 480 1 874
Statement of Financial Position NOK million 31.12.2013 31.12.2012 31.12.2011 STATEMENT OF FINANCIAL POSITION ASSETS Intangible assets 3 510 3 242 3 136 Property, plant and equipment 101 269 88 546 85 195 Investments in associates and joint ventures 16 002 15 924 15 080 Other non-current financial assets 2 540 10 714 12 163 Derivatives 5 295 5 397 4 687 Non-current assets 128 615 123 823 120 261 Inventories 1 796 1 588 977 Receivables 10 229 9 604 9 272 Short-term financial investments 464 457 455 Derivatives 5 559 4 996 5 356 Cash and cash equivalents (included restricted cash) 7 685 5 440 8 605 Current assets 25 733 22 084 24 664 Assets 154 348 145 907 144 925 EQUITY AND LIABILITIES Paid-in capital 49 011 45 569 45 569 Retained earnings 14 328 9 847 12 840 Non-controlling interest 7 769 6 934 7 241 Equity 71 107 62 350 65 651 Provisions 19 416 20 035 21 350 Long-term interest-bearing liabilities 33 364 33 517 31 820 Derivatives 5 713 6 038 4 673 Long-term liabilities 58 494 59 591 57 842 Short-term interest-bearing liabilities 7 013 7 108 5 467 Taxes payable 3 503 3 246 3 411 Other interest-free liabilities 9 842 9 309 6 960 Derivatives 4 389 4 303 5 596 Current liabilities 24 747 23 966 21 433 Equity and liabilities 154 348 145 907 144 925 34
Statement of Cash Flow The year NOK million 2013 2012 STATEMENT OF CASH FLOW CASH FLOW FROM OPERATING ACTIVITIES Profit before tax 2 511 8 771 Profit/loss on sale of non current assets -89-28 Depreciation, amortisation and impairments 3 045 4 933 Profit/loss from the sale of business 121 - Profit/loss from the sale of shares, and associates and joint ventures -153-81 Share of profit/loss from associates and joint ventures -1 101-871 Unrealised changes in value 7 795-1 452 Taxes -2 993-4 426 Cash flow from operating activities 9 135 6 846 Changes in long term items -533-225 Changes in short term items -1 547 1 710 Dividend from associates 1 051 1 958 Net cash flow operating activities A 8 106 10 290 CASH FLOW FROM INVESTING ACTIVITIES Investments in property, plant and equipment -9 248-9 461 Proceeds from sale of non-current assets 9 670 126 Business divestments, net liquidity inflow to the Group 327 - Business combinations, net liquidity outflow from the Group 59-54 Loans to third parties -298-670 Repayment of loans 94 8 Considerations regarding investments in other companies -59-2 433 Net cash flow from investing activities B 547-12 484 CASH FLOW FROM FINANCING ACTIVITIES New debt 865 7 919 Repayment of debt -4 714-4 573 Dividend and group contribution paid -3 094-4 293 Share issue in subsidiary to non-controlling interests 135 167 Net cash flow from financing activities C -6 807-780 Net change in cash and cash equivalents A+B+C 1 846-2 974 Currency exchange rate effects on cash and cash equivalents 400-191 Cash and cash equivalents 01.01 5 440 8 605 Cash and cash equivalents 31.12 7 685 5 440 35 Unused commited credit lines 12 000 12 000 Unused overdraft facilities 2 200 2 205 Restricted Cash -12-232
page 36 36