Hafslund ASA 1 July 214 Finn Bjørn Ruyter, CEO
Second-quarter highlights 214 EBITDA of NOK 624 million up 1 percent on the previous year due to improvements in results within network and power sales. Customer growth and improved margins boosted power sales profits by 82 percent against the previous year. Hydropower production of 97 GWh 18 percent above the previous year and slightly above normal. Achieved power price of NOK.2 per kwh down 29 percent on the previous year. Takeover of Fortum s Networks business in Norway completed, and integration measures to coordinate and optimally organise the overall Networks business started. Equity ratio maintained at 31 percent despite the acquisition of Fortum s Networks business and the payment of NOK 488 million in dividends in the quarter. s.2
EBITDA second-quarter 214 and change from 213 EBITDA Q2 214 Change in EBITDA from Q2 213 NOK mill 126 35 624 34 54 29 28 35 624 312 569 8 143 Production Heat Network Markets Other EBITDA EBITDA Production Q2 13 Heat Network Markets Other EBITDA Q2 14 s.3
Interest-bearing debt increased by NOK 1.8 billion in the quarter Change net interest-bearing debt in the quarter NOK million 11 1 9 8 681 Net debt 31.3.214 624 EBITDA 115 Interest paid 124 Net ibd (billion) Equity ratio % 26 1 56 488 Tax paid Change in Net Paid Net debt working investments dividends 3.6.214 capital Development net interest-bearing debt and equity ratio 1 548 Purchase of Fortum's Networks business in Norway contributes to total investment of NOK 1.6 billion in the quarter. Dividend payments on NOK 488 million NOK 2.5 per share. Net interest-bearing debt of NOK 1.5 billion at 3 June. Equity ratio at 31 per cent despite the acquisition of Fortum's Network business and payment of dividends. 12 1 8 6 1, 29% 9,8 31% 9,9 3% 8,7 31% 1,5 31% 6 5 4 3 4 2 2 1 s.4 Q2 213 Q3 213 Q4 213 Q1 214 Q2 214
Production NOK million Q2 14 Q2 13 YTD 14 YTD 13 Operating revenue 23 234 44 425 Gross margin 29 236 434 415 EBITDA 143 177 298 288 Operating profit 131 165 274 264 Power price (NOK/kWh).2.28.22.3 Production volume (GWh) 97 823 1 787 1 343 Investments 1 7 4 12 EBITDA per quarter EBITDA rolling 12 months 2 1.2 1. 15 8 1 185 6 177 163 163 155 133 143 4 5 111 83 2 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Operating profit reflects low power prices, despite increased production against last year. Limited transmission capacity gave significantly lower NO1 price than system price. Hedging partly compensates for low power prices. Production slightly above normal levels, and 18 percent higher than last year. Expected production 4 percent under normal levels for the third quarter. 4 percent hedging ratio next six months. s.5 EBITDA EBITDA rolling 12 months
Oslo price significantly lower than system price in second quarter NOK/kWh,3,28,26 Large price difference between system price and the price at Hafslund s area due to temporary limited transmission capacity,24,22,2 Average in the quarter.21 NOK/kWh,18,16,14 Average in the quarter.17nok/kwh,12,1 Jan Feb Mar Apr May Jun Oslo price (NO1) System price s.6 Source for price data: www.nordpoolspot.com 3 June 214.
Hydropower Glomma waterway flow 3 m3/sec. 2 5 2 1 5 1 5 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 214 213 Normal * Max.capacity utilization s.7 * Normal = Median flow last 1 years.
Production and power prices GWh NOK/kWh 4.3 35 3 25.25.2 2 15 1 5 211 276 174 236 16 35 225 281 363 354 353 335 35 328 247 238 22 232.15.1.5 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec. Normal* 214 System price s.8 Source for price data: www.nordpoolspot.com and www.nasdaqomx.com/commodities as of 3 June 214. *Normal = 31 GWh based on 1-year average production adjusted for efficiency improvements.
Heat NOK million Q2 14 Q2 13 YTD 14 YTD 13 Operating revenue 16 194 593 698 Gross margin 92 11 337 348 EBITDA 8 37 18 211 Operating profit (35) (5) 94 128 Production volume (GWh) 326 355 1 45 1 228 Gross margin (NOK/kWh).3.33.35.31 Investments 18 3 23 37 A seasonally weak quarter with 17 percent of normal annual production. Warm weather and low power prices gave decline in profit against last year. 8 percent lower production due to reduced energy demand. New customer tie-ins with a yearly outtake of 12 GWh connected the first six months. EBITDA per quarter 18 16 14 12 1 8 6 4 2 2 42 122 174 37 6 112 172 EBITDA rolling 12 months 8 4 35 3 25 2 15 1 5 46 percent hedging ratio next six months. Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 EBITDA EBITDA rolling 12 months s.9
Production in GWh District heating production costs and gross margin GWh GWh 7 642 8 6 7 529 6 5 4 3 5 291 4 255 3 2 1 157 2 1 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Bio-oil, oil, and natural gas Pellets Waste and biomass Electricity Heat pumps Warm weather led to 8 percent lower production than normal levels, and 12 percent lower than last year. A quarter with high share of base load. District heating price down NOK.7 per kwh due to low power prices also reduced production cost. Production of 255 GWh is down 55 GWh despite organic growth. Energy prices (NOK/kWh) Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Waste.22.22.22.22.22 Heat pumps.16.14.16.12.1 Biooil.59.63.6.55.56 Pellets.29.3.3.3.3 Electricity.44.38.42.32.27 Total fuel cost.26.24.26.28.24 District heating incl. Distribution.63.58.65.64.56 Reduced contribution margin due to grid losses.3.3.3.3.3 Gross contribution margin.34.3.35.33.29 Result from hedging NOK 5 million. Gross margin of NOK.29 per kwh is down NOK.4 per kwh. s.1
District heating production and power prices 3 GWh NOK/kWh.3 25.25 2.2 15 1 278275 249 192 22 175 195 268.15.1 5 Jan Feb Mar 139 126 Apr 9 86 May 49 43 Jun 4 41 Jul Aug 68 Sep 14 Oct Nov Dec.5. Normal * 214 System price s.11 Source for price data: www.nordpoolspot.com and www.nasdaqomx.com/commodities as of 3 June 214. * Normal = Expected production in 214 given normal temperature (1-year average) and existing and planned customer tie-ins.
Network NOK million Q2 14 Q2 13 YTD 14 YTD 13 Operating revenue 95 966 1 932 2 36 Gross margin 678 65 1 278 1 168 EBITDA 312 283 591 555 Operating profit 182 162 338 312 Investments 131 132 233 199 EBITDA per quarter EBITDA rolling 12 months 35 1 2 3 1 25 8 2 6 15 311 312 272 283 286 245 244 266 279 4 1 5 2 Fortum s Network business in Norway (Hafslund Nett Øst) acquired from 3 May. Good operational stability and low KILE cost in the quarter. Reduced grid losses combined with stable network tariffs contribute to an increased profit against 213. With the current network tariffs and normal energy demand in the second half of 214, a 2 percent increase in operating profit is expected. Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 EBITDA EBITDA rolling 12 months s.12
Markets NOK million Q2 14 Q2 13 YTD 14 YTD 13 Operating revenues 1 246 1 443 3 331 3 699 Gross margin 332 261 721 548 EBITDA 126 71 266 163 Operating profit 113 62 24 144 Sold volume (GWh) 3 814 3 528 9 513 9 292 Customer growth and improved margins gave profit growth of 82 percent against last year. 8 percent higher sold volume due to 148. more customers warm weather in the quarter affects negatively. EBITDA per quarter 15 EBITDA rolling 12 months 5 New customer service and invoicing system gives lower system costs against last year. 12 9 6 3 19 84 54 91 71 83 96 14 126 4 3 2 1 Profit after tax from power sales of NOK 63 per customer (NOK 41). 1.75. customers at the end of the first half of 214. Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 EBITDA EBITDA rolling 12 months s.13
Summary of second-quarter 214 profit Change in EBITDA Q2 213 to Q2 214 Profit after tax Q2 214 MNOK 569 117 31 93 624 624 216 114 Earnings per share.86 126 168 EBITDA Q2 13 Gross margin Gain/loss financial items Operating expenses EBITDA Q2 14 EBITDA Q2 14 Depreciation Financial expenses Tax Profit after tax Q2 214 s.14
Summary Operating profit before depreciation (EBITDA) for the quarter of NOK 624 million up 1 percent from last year due to improvements in results within network and power sales. Customer growth and improved margins boosted power sales profits. The quarter is as normal characterized by high hydropower production and low energy demand. Achieved power price of nok.2 per kwh down NOK.8 per kwh from last year. Fortum s network business acquired and integration work has started. At the end of the first half of 214, forward prices for power delivery in the third and fourth quarter was NOK.23 and.27 per kwh respectively (system price). Hafslund s position as a leading energy company will be continued through efficient and stable operations, further focus on renewable energy, the electricity market and infrastructure for energy. s.15
Appendix
Nordic spot and forward prices NOK/kWh.45.4.35.3.25.26 NOK/kWh *.2.15.1.5. 1996 1998 2 22 24 26 28 21 212 214 216 218 Nordic power price - System s.17 * Period average 215-218 is based on the average of forward price for SYS as of 3.6.214. Source: www.nordpoolspot.com and www.nasdaqomxcommodities.com
Group profit and loss account NOK million Q2 14 Q2 13 YTD 14 YTD 13 Operating revenue 2 55 2 81 (26) 6 284 6 817 Cost of energy (1 263) (1 64) 377 (3 552) (4 46) Gross margin 1 287 1 17 117 2 731 2 411 Gain/loss financial items 37 6 31 48 (7) Operating expenses (7) (67) (93) (1 41) (1 197) EBITDA 624 569 55 1 379 1 27 Depreciation and write-downs (216) (195) (21) (418) (393) Operating profit 48 374 34 961 814 Interest expences (96) (115) 19 (189) (245) Market value change loan portfolio (17) 7 (24) (33) (21) Financial expenses (114) (18) (5) (223) (266) Pre-tax profit 294 266 28 739 549 Tax (126) (115) (11) (14) (22) Profit after tax 168 151 17 725 329 Earnings per share (EPS) in NOK.86.77.9 3.71 1.69 s.18
Group balance sheet NOK million 214-6-3 214-3-31 Q1 14 213-6-3 Intangible assets 2 937 2 63 37 2 478 Fixed assets 19 142 18 149 992 18 281 Financial assets 833 484 349 589 Accounts receivables and inventory 1 991 2 636 (645) 2 179 Cash and cash equivalents 418 2 328 (1 91) 1 67 Assets 25 321 26 227 (96) 24 593 Equity (incl. min. int.) 7 814 8 167 (353) 7 163 Allocation for liabilities 3 67 3 42 187 3 44 Long-term debt 8 927 9 499 (572) 8 63 Other current liabilities 2 783 2 22 563 3 179 Short-term debt 2 19 2 921 (731) 2 28 Equity and liabilities 25 321 26 227 (96) 24 593 Net interest-bearing debt 1 548 8 681 1 868 1 2 Equity ratio 31 % 31 % % 29 % s.19
Cash flow NOK million Q2 14 Q2 13 YTD 14 EBITDA 624 569 55 1 379 Paid interests (115) (17) (8) (288) Paid tax (124) (125) 1 (274) Marketvalue changes and other liquidity adjustments (28) 55 (83) (24) Change in working capital, etc. (26) 214 (42) 749 Total cash flow from operations 151 66 (455) 1 542 Net operations and expansion investments (1 191) (199) (992) (1 688) Net purchase/sale of shares etc. (347) 2 (349) 14 Cash flow from investments activities (1 538) (197) (1 341) (1 674) Cash flow to down payments and interests (1 387) 49 (1 796) (132) s.2
Earnings per share Per quarter NOK 2.85 ** 1.15.72 1.5.91.77 1.8 1.7 1.37.86-2.97 * 212 213 214 -.6 3.83 3.71 s.21 * Profit after tax Q3 212 impacted negatively by NOK 551 million related to extraordinary write-downs and provisions. ** Profit after tax Q1 214 impacted positively by NOK 288 million related to waived tax claims regarding Hatros.
Capital employed and return on capital employed Capital employed NOK 21.5 billion per 3.6.14 Markets 9% Return on capital employed 8.% 9.1% Production 2% Network 46% 4.6% 24% 1% Heat Other 212 * 213 ** 214 *** s.22 * 212 includes write-downs and provisions regarding BioWood Norway and Bio-El Fredrikstad of NOK -548 million. ** 213 includes the sale of shares in Infratek with a profit of NOK 9 million. *** 214 return last 12 months including the sale of shares in Infratek with a profit of NOK 9 million in Q3 213.
Loans portfolio data Debt maturity profile NOK million 3 2 1 79 2 386 1 85 1 41 1 46 1 231 41 42 4 3 214 215 216 217 218 219 22 221 222 223 224 Commercial paper Bonds Other loans Loans at maturity, next 12 months NOK million 8 6 743 667 167 Portfolio data Q2 14 Q1 14 Bonds 7 % 67 % 4 % Commercial paper 8 % 11 % -3 % Other loans 22 % 22 % % NOK million Q2 14 Q1 14 Nominal value - market value of loans (315) (298) (17) Market value interest rate and fx derivatives (16) (8) (8) Average interest incl. derivatives (%) 3.9 % 3.9 %. % Proportion of loan portfolio with fixed interest (%) 47 % 48 % -1 % Loans at maturity next quarter 31 34 (3) Unused drawdown facilities 3 7 3 7 4 2 31 3 18 3 4 3 319 5 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun s.23 Commercial paper Bonds Other loans
Key figures Group YTD 214 YTD 213 Capital matters Total assets 25 321 24 593 Capital employed 21 528 2 483 Equity 7 814 7 163 Market capitalization 1 121 9 174 Equity ratio 31 % 29 % Net interest-bearing debt 1 548 1 2 Profitability EBITDA 1 379 1 27 Earnings per share (EPS) 3.71 1.69 Cash flow per share 7.9 7.29 Heat YTD 214 YTD 213 Capital employed 5 196 5 359 Sales price District heating (NOK/kWh).61.65 Sales price Industrial energy (NOK/kWh).27.25 Gross margin (NOK/kWh).35.31 Sales volume (GWh) 1 45 1 228 Network YTD 214 YTD 213 Capital employed 9 914 8 625 Regulated gross margin for the year 2 485 2 382 Excess/(under) income ytd 12 (12) NVE-capital (regulatory) 7 233 6 66 Power Generation YTD 214 YTD 213 Capital employed 4 27 4 368 Sales price (NOK/kWh).22.3 Production volume (GWh) 1 787 1 343 Markets YTD 214 YTD 213 Capital employed 1 88 1 92 - of this working capital 294 42 Volume power sales (GWh) 9 513 9 292 s.24
Shareholders as of 3.6.214 # Shareholder Class A shares held Class B share held Total Ownership Share of voting rights 1 City of Oslo 67 525 37 343 14 868 53.7 % 58.5 % 2 Fortum Forvaltning AS 37 853 28 76 66 559 34.1 % 32.8 % 3 Østfold Energi AS 5 21 4 5 25 2.7 % 4.5 % 4 Odin Norge 3 86 3 86 1.9 %. % 5 MP Pensjon PK 5 1 579 1 584.8 %. % 6 Folketrygdfondet 85 885 97.5 %.1 % 7 Danske Invest 584 584.3 %. % 8 Skandinaviska Enskilda Banken 14 431 445.2 %. % 9 AS Herdebred 17 321 428.2 %.1 % 1 New Alternatives Fund Inc 328 4 332.2 %.3 % Total, 1 largest shareholders 111 118 73 663 184 781 94.7 % 96.3 % Other shareholders 4 31 6 95 1 45 5.3 % 3.7 % Total 115 428 79 758 195 186 1 % 1 % s.25
Definitions Name Definition Group Capital employed Equity + Net Interest-bearing debt + Net tax positions Equity ratio (in %) (Equity incl. Minority interests / Total assets) X 1 Earnings per share Cash flow per share Return on equity last 12 months Return on capital employed last 12 months Hedge ratio Hydro power Hedge ratio District heating Profit after tax / Average no. of shares outstanding Net cash from operations / Average no. of shares Result after tax last 12 months / Average equity (incl. Minority interests) last 12 months Operating profit last 12 months / Average capital employed last 12 months Ratio of the estimated production portfolio hedged in the period (excluding fixed-price contracts) Ratio of the estimated net power price exposure hedged, by: Sales reduced with electricity use and 1/3 heat pumps s.26
Investor information Additional information is available from Hafslund s website: www.hafslund.no You can subscribe to Hafslund press releases Group CFO, Heidi Ulmo heidi.ulmo@hafslund.no Tel: + 47 99 19 325 Financial Director and Investor Relations contact, Morten J. Hansen mjh@hafslund.no Tel: +47 98 28 577 s.27
www.hafslund.no