Interim Report January-June 2005 Öresundskraft

Transcription

1 Interim Report January-June 2005 Öresundskraft

2 Letter from the CEO During the first six months of 2005, Öresundskraft's operations were largely dominated by deals which are of great significance to regional collaboration in the energy area, particularly in the north-west region of the province of Skåne. For some considerable time now, we have promoted the importance of and the need for a sufficiently large delivery and retransmission volume to generate long-term competitiveness and affordability. The primary aim of this is to ensure that customers and industrial operations in the region will be able to benefit from an attractive range of affordable energy products, and feel comfortable with and involved in this aim. Projects in the Region During April, it was decided that Öresundskraft and the Municipality of Höganäs will participate in a joint project to build and develop district heating in the Municipality of Höganäs. The project involves investment of more than SEK 100 million, and will result in many of the residents and businesses in Höganäs benefiting from an environmentally-friendly, reliable supply of district heating at a price which is lower than the existing cost of heating. Höganäs Fjärrvärme AB is expected to provide 50 GWh and the construction period will be about three years. During the first six months, the construction of the district heating pipeline which will connect Landskrona to the Helsingborg district heating system continued. The expected date for the first delivery is late autumn The project is progressing according to plan, and the 16 km long pipelines with a capacity of 50 MW will be able to provide 12,000 households with heating and hot water. The investment will also reduce the environmental impact on the region. On 4 July, the municipal council in Ängelholm approved Öresundskraft's acquisition of 49% of the shares of Ängelholms Energi AB, and this will further strengthen regional collaboration. Increased delivery volumes During the first six months of 2005, the existing business operation and our delivery volume in the energy market grew somewhat in comparison with the same period in Öresundskraft s total energy volumes amounted to 3.6 TWh (3.5). The volume of electricity rose to 2.6 TWh (2.5) during the first half-year. The portfolio management service is gaining more ground than those of the company's competitors, and Öresundskraft now has 43 portfolio customers. These customers are provided with expert advice on prices with the aim of minimising their energy bills. During the spring, Öresundskraft obtained its staff fitness diploma, which is yet another step in the company's efforts to improve and strengthen the overall situation for employees. The number of employees at the end of June was 369 (374), a slight reduction on the end-of-year figure. Business Area Electricity Business Area Electricity includes, as well as the subsidiary Öresundskraft Marknad AB, the subsidiaries Helia A/S, Öresundskraft Energy Trading AB and the associated company Göta Energi AB. The business area focuses on business logistics for Öresundskraft's whole electricity trading operation. During the first half-year, the operation made significant progress in the areas of profitability management and cost reduction. The profits for the first six months confirm this, and it was one of the best half-years we have achieved since the deregulation of the market. Efforts are

3 now being made by all companies to strengthen organically their positions in the market through customer recruitment activities. During the spring, a special group was set up to carry out telemarketing operations as a natural part of the sales operations of Öresundskraft Marknad AB. Electricity market prices have fallen somewhat compared with 2004, primarily as a result of an increase in water levels. By the end of June, the water reserve was 92 TWh, which is more than 25% higher than during the corresponding period in the previous year. Prices have, however, remained relatively high during spring and summer as a result of the increasing costs of fossil energy due to the emission rights requirements. As a result of the marginal price system, this has had the effect of increasing prices on the Nordic NordPool electricity exchange. Business Area Infra Services Business Area Infra Services is responsible for operations linked to gas, heating, cooling, energy advisory services and communications technology. The first six months of the business area's operation have been dominated by preparations for the deregulation of the natural gas market for corporate customers which represents a threat, but even more a new opportunity for Öresundskraft to win market share. From the point of view of income, the price trend for crude oil has resulted in an increase in prices for our existing sales of natural gas due to the correlation between gas and oil prices. In the area of communication technology, we have noticed a rise in the popularity of the metropolitan communications network during the spring. In properties linked to the network, usage has now increased to more than 50% of possible connections. As of this year, Skanska and JM Bygg will connect all newly-built properties in the Helsingborg area to the metropolitan network, which creates new opportunities for an expansion of the services provided. We now have more than 20 service suppliers for the network, including Internet, broadband television, hosting, telephone services and IT operations.

4 Business Area Customer Services During the first six months of the year, our customer service operation has continued to grow in the new organisation, and the work of developing the operation on the basis of quality indicators such as response times, number of calls answered and customer satisfaction continues. The new telemarketing unit forms part of the customer services organisation, and this generates coordination benefits with other telephone-based operations. Bussiness Area Production During the first half-year, Business Area Production experienced delivery problems from the principal supplier of waste heat, resulting in an increase in the amount of heating produced in-house. In total, production volumes have increased by a few percent on the previous year. Revenue from electricity certificates has been lower during the year, and this is one of the reasons behind the fall in profits of the production operation. During the first six months of the year, more than MSEK 20 was invested in, for example, equipment for the pulverised fuel burner at the Västhamnsverket plant, which is expected to increase the opportunity for bio-based heat production. Business Area Network Operation Within the network operation, the construction of the district heating pipeline to Landskrona has been the principal activity. For the operation in general, retransmission volumes are at the same level as last year, i.e. 1.7 TWh for six months. The level of investment continues to be high, and totalled MSEK 60.4 at the end of June. Most of this has been spent on district heating pipelines. There has been an increased level of concentration in the natural gas network, and by end of June 2005, we had invested MSEK 13 in the expansion of the metropolitan network.total investment in the Group during the first six months of the year amounted to SEK million. Sales, profits and profitability Öresundskraft's operating income increased somewhat during the first six months of 2005, amounting to MSEK (1 330), a rise of six percent. The increase is primarily due to the expansion in volumes in the electricity operation, where both Helia AS and Öresundskrafts Marknad AB have increased their market share compared with the same period in The volume delivered amounted to 3,578 GWh (3,426), an increase of four percent. The volume of electricity was 2,656 GWh (2,477), with the growth taking place in the corporate segment. The volume of district heating supplied remained largely unchanged and amounted to 525 GWh (535), as did the volume of gas supplied which totalled 392 GWh (409). The amount of district cooling supplied remained unchanged, despite some increase in the number of connections, and totalled 5 GWh (5). Operating profit rose slightly to MSEK (107.6), with an increased contribution margin from electricity trading operations strengthening profits, but this was slightly offset by the increase in the cost of fuel for production. The profits from financial trading have exceeded those of the preceding year, with both trading margin and trading volume being higher than in Net financial income/expense remained stable at MSEK -7.7 (-6.2), largely as a result of lower interest rates in the loan portfolio. The consolidated profit after net financial items was MSEK (101.4), which is a three-percent improvement on the corresponding period of the preceding year. The rolling 12-month profit amounted to MSEK 179. Cash flow was positive, amounting before financing activities to MSEK 73.9 (27.0). The improvement is mainly attributable to better underlying profitability in electricity trading, but the reduction in capital tied up in customer credit was also a factor. The return on capital was 11.1 percent, which is close to the long-term goal of 12 percent. For the full-year 2005, profit after net financial items is expected to be on a par with the results for Helsingborg, 16 August 2005 Magnus Grill Group Manager

5 Interim Report Januari-Juni months 6 months Latest Full-year Income Statement (MSEK) months 2004 Operating income Operating expense Depreciation according to plan Result from participations in associated companies Operating profit Net financial items Profit after financial items Appropriations Tax Net profit for the period Balance Sheet (MSEK) Fixed assets Current assets Cash and bank balances Total assets Equity Minority interests Provisions Interest-bearing liabilities Non interest-bearing liabilities Total liabilities and equity months 6 months Full-year Cash flow statement (MSEK) Cash flow from operating activities Cash flow from investing activities Cash flow before financing activities Cash flow from fi nancing activities Cash flow for the period Cash and cash equivalents, opening balance Cash and cash equivalents, closing balance months 6 months Latest Full-year Sales (GWh) months 2004 Electricity District heating Natural gas District cooling months 6 months Latest Full-year Key ratios months 2004 Return on assets, % Return on equity, % Return on capital employed, % Profit margin, % Equity/assets ratio, % Cash fl ow before financing activities, MSEK This interim report applies the same accounting and valuation principles as applied the most recent Annual Report. This interim report was not subject to special review by the auditors.

6 About Öresundskraft For over 100 years, Öresundskraft has supplied Helsingborg with electricity. Today, we have customers in both Sweden and Denmark. In the Helsingborg area, Öresundskraft supplies district heating, natural gas, district cooling and communication services via a metropolitan broadband network. We assist companies with price hedging their future electricity deliveries on the Nord Pool power exchange. Öresundskraft also provides practical and effective advice on how to save energy. In recent years, Öresundskraft has undergone a dramatic expansion, primarily through acquisitions. Öresundskraft's vision is to be a leading service provider in the energy industry, with a regional distribution and communications network. We currently have around 370 staff and about 230,000 customers, making us one of the largest energy companies in Sweden. For a considerable period of time, Öresundskraft has promoted the value of regional collaboration. A new district heating pipeline is currently being built between Landskrona and Helsingborg, and we are developing a district heating network in Höganäs. Excellent relations with both corporate and domestic customers are absolutely central to our operation, now and in the future. Öresundskraft provides the right guidance and advice, and in combination with the right agreement terms, this means that our customers will always pay the right price.

7 Driving force......a force which is not obvious on the outside but which,even so, may be one of the company's most important resources. Driving force cannot be produced by a power station, yet it can provide lighting, water for district heating, natural gas for greenhouses and working broadband TV. Sometimes, the driving force goes completely unnoticed, because this is the intention. One of the most important aims of an energy company is, after all, that everything should work without interruption. Driving force is a human force based on a desire to use one's expertise and skill to achieve something good, and a desire to be involved and make a difference. This makes the driving force one of the strongest forms of energy we have at Öresundskraft.

8 Öresundskraft AB Box Helsingborg