2nd Quarter 2001 Presentation to analysists

Transcription

1 2nd Quarter 2001 Presentation to analysists Oslo, 23 August 2001

2 Main points! Weak 2nd Quarter result Income from operations NOK 76 mill (NOK 100 mill) Pretax income NOK 33 mill (NOK 218 mill)! Poor development in investment portfolio! Power prices achieved remain high and own production within Norway is also high! Well positioned to achieve better power prices in the second six-month period! Lower staff and support costs! Breakthrough for investment in downstream activities Framework agreement for merger with Viken Energinett (grid business) Letter of Intent concluded to purchase Oslo Energi (power trading)

3 Hafslund Produksjon Norway 1st half year 2001! Signficant improvement in income from operations +90%! Higher power prices achieved! High output volume +11% compared with normal output! Well positioned for increased contribution in 2nd half of 2001! Termination of power agreement with Østfold Energi effective from 1 July st hlf 01 1st hlf 00 Change Net income from operations % Income from operations % Own output (GWh) % Sales prices (øre/kwh) 14,5 10, %

4 Hafslund Produksjon USA 1st half year 2001! Poor income from operations 62%! Historically hot spring/summer low hydropower output! Greenville - chip production new power supply agreement at reduced energy prices (- 30%)! Increased chip costs 1st hlf 01 1st hlf 00 Change Net income from operations % Income from operations % Own output, total (GWh) % Own output (hydro plant) (GWh) % Sales prices - total (øre/kwh) %

5 Hafslund Krafthandel 1st half of ! Income from operations NOK -22 mill (NOK 59 mill) Norway: 5! Income from operations NOK 0 mill (NOK 9 mill)! Volatile market US: Income from operations NOK 22 mill (NOK 50 mill)! Power trading commenced in 2nd half of June! Market remains volatile st hlf st hlf

6 Hafslund downstream business Associated companies! Breakthrough for investment in downstream activities! Framework agreement on merger with Viken Energinett! Letter of Intent to purchase Oslo Energi! Increased ownership stake in Økokraft from 57% to 75%! Provides the basis for considerable synergy effects! Incorporated results characterized by investment in new business areas Capital employed NOK 2,600 mill - of which Viken Energinett NOK 1,865 mill Pretax income (100%) NOK 104 mill Goodwill depreciation (Hafslund) NOK 13 mill Incorporated result 1st half 01 NOK 19 mill - of which Viken Energinett 19 mill (estimate)

7 Financial investment portfolio NOK mill. Return (%) Result 1 January 30 June 2001 Hafslund's portfolio Oslo Stock Exchange 22, , ,3-5,7-5,6-3, Unrealized loss Realized result/dividend Total result

8 Income Statement for 2 nd Quarter 2001 NOK mill. 2nd Qtr 01 2nd Qtr 00* 1st half 01 1st half 00* 2000* Net sales Operating costs Income from operations Income from operations Income from associates Financial items Income sale regional grid Pretax income Tax Net profit Minority share of income Income per share (NOK) 0,26 1,15 2,00 2,50 3,21 Number of shares in 1000s * Effects of sale of grid business are incorporated

9 Major synergy potential in the industry - industry characterized by numerous small units Production/Wholesale Grid Energy sales - 100% competition - 100% regulation - 100% competition - the major players have - no competition - strong downward pressure considerable power in the market - pressure from the authorities on margins - acceptable return in recent years to reduce costs - poor return - concentration of ownership - approx. 200 companies - approx. 150 companies Synergy Synergy potential potential Limited Great Great Challenge Challenge Market power? Lower grid hire/higher return with efficiency improvement and mergers Higher return with efficiency improvement and mergers

10 2 examples of structures the UK and Norway! 14 grid companies following consolidation! Population of 60 million! On average 4,300,000 customers/company! Lower grid hire after consolidation! Approx. 200 grid companies! Population of 4.5 million! On average 22,500 customers/company! Development in grid hire? United Utilities Mid American AEP & Public Service Corporation Scottish Power Power Gen National G Power (Supply) P U British Energy Hyder TXU Electricité de France Electricité de France (supply) Southern Company Hydro Electric - Electric CSW

11 Status of ownership structure in Eastern Norway yesterday Røyken Energiverk 100% 20% Vattenfall Fredrikstad Energiverk Oslo Energi Holding 37%/29% Statkraft Østfold Energi 51% ØE Kraftsalg ØE Nett 49% Sydkraft 100% 49% 51% 20% Røyken Kraft Nesodden Energi 49% 49% 80% 7,5% ØE Kraft Trøgstad Energi Oslo Energi Oslo Energi Prod. 32% 51% 21% 49% Oppland Energi 42% Mjøskraft 51% Gjermå Kraft 33% HAFSLUND 49% Økokraft 49% Gjermå Energi Viken Energinett 34% Søndre Follo Energi Østkraft Rygge Elverk 49% 100% 37% 33% Rakkestad Energiverk KOS Østnett 27% Follo Energiverk 37% 38% 25% 100% Din Hafslund Energi Energi 51% Akershus Energi 66% Akershus Kraft Buskerud Kraftnett Buskerud Kraftprod. 70% 100% Energiselsk. Buskerud Akershus Kraft

12 Status of ownership structure in Eastern Norway today coordination has started Energi 1Follo / Røyken AS Askøy Energi 100% Fredrikstad Energi Sydkraft 35% 49% Statkraft 65% 35% 49% 49% 49% Trøgstad Energi Røyken Kraft FEV Nett Østfold Energi ØE Kraftsalg ØE Nett 20% 51% 15,7% 51% 100% Nesodden 2,7% 100% Oslo Energi FEV Kraftoms Gjermå Kraft ØE Kraft 60% Oppland Energi 100% 100% HAFSLUND VIKEN 18,6% E-CO Energi 80% E-CO Vannkraft 5,8% 67% Vinstra Krafseselskap Vattenfall 49% 49% 75% 74% Søndre Follo Energi Rygge Elverk Romerike Energi Nittedal Everk EEV Nett Mjøskraft Økokraft 37% 26% Østnett 100% 49% 50% Tindra Akershus Energi Gjermå Energi 50% Gardermoen Fjernvarme 38% 25% 33% 100% Akershus Kraft Rakkestad Energiverk Energiselsk. Buskerud 70% Buskerud Kraftprod. 30%

13 Mergers in the energy industry - beneficial in financial, industrial and economic terms! Basis for lower grid hire! Dedicated and diverse owners! Improvement in efficiency of operations! Focus on core business! A wider range of products! Interesting assignments! Efficient operations provide a healthy economy and safe jobs Added value for for customers Added value for for owners Added value for for employees Economic benefits! Capital return that can be used for new investments in and development of other industries! A better capital structure Better use of of capitall

14 Added value and increased flexibility for all shareholders Value Coordinated commercial. new bus. areas Attractiveness towards new partners Increased strategic value (size price) Trans.value Operational synergies Rate of return value (market cap) H V H + V Added value will be visible and realisable within a short time (0-3 years) after the merger

15 Operarional synergies specific examples Example: Merger Hafslund-Viken! Coordinated marketing! Coordinated risk management! Coordinated business development! Coordinated use of consultency services! Improvement in efficiency of operations! Coordination of systems! Better financial conditions! Better cash management! Slimming down of staff functions Realized from day 1 Realized during the period 0 36 months

16 New Business Areas Supply of products/services Broadband/PLC Multi-utility Settlement/ Invoicing Contractor/ Installation! Develop customer gateways, new products/services! Building infrastructure and sale of services! Public services! Development of a service-provider company! Services (private/business)! Installation of new products and services! Considerable potential! Doubled customer base! Potential for sale of services! Seek partners! Competence and systems for handling other services! Coordinated focus! Utilising joint competence! Considerable potential! Joint focus! Good synergies! Considerable potential Coordinated development increases value

17 New area of business Hafslund Security! 3 May 2001 Hafslund acquires 67% of the shares of Vekterselskapet AS! 13 June 2001 Hafslund acquires 67% of the shares of Varslingssystemer AS Hafslund founds the holding company Hafslund Security AS - Hafslund owns 67% of Hafslund Security AS - Hafslund Security owns 100% of Varslingssystemer AS - Hafslund Security owns 67% of Vekterselskapet AS! 16 August 2001 Hafslund Security AS acquires 67% of the stock of SES (Sikkerhet og Etterforskningssentralen AS)

18 Vekterselskapet AS! Founded in 1993, main area of focus: Domestic alarm systems! Almost 10,000 customers, 100 employees and high profitability! Activities in Oslo, Bærum, Drammen, Hamar, Romerike, Hadeland and elsewhere! Central alarm office at Hadeland! Budgeted turnover 2001: NOK 36 million! Budgeted income from operations 2001: NOK 6.8 million

19 Varslingssystemer AS! Founded in 1979, the main area of focus is the planning, sale, installation and maintenance of large integrated security systems for the private and public sectors.! Extensive deliveries to the high security market in Norway and some to Sweden. Customers include: Statoil - Directorate of Customs and Excise DnO - Orkla Civil Aviation Administration - Sparebank 1-Group Coca-Cola - Hospitals (Aker, Aust-Agder, Tromsø, Inherad and Bærum) NSB Eiendom - Oslo and Trondheim municipalities Others! 28 employees. High profitability! Budgeted turnover 2001: NOK 55 million! Budgeted income from operations 2001: NOK 10.5 million

20 SES (Sikkerhet og Etterforskningssentralen AS)! Founded in 1995, primary focus on manual services: Stationary and mobile security and the transportation of valuables! A key player on the Norwegian market. Customers include: Den norske Bank - Esso Fokus Bank - Hydro Texaco Zürich Forsikring - Narvesen Hakon Gruppen - Steen & Strøm NSB - Olav Thon Telenor - Ringnes Rema Gruppen - Tusenfryd! 200 employees, significant growth (67% in 2000) and high profitabililty in a market characterised by low margins! Budgeted turnover 2001: NOK 65 millon! Budgeted income from operations 2001: NOK 4 million Transportation Guard Expertise

21 The security and alarm market in Norway Turnover by area of business Transportation 15 % Mobil 21 % Control 4 % Alarm 8 % Forecast installations of domestic alarms in Norway Stationary 52 %! Sales of NOK 2.8 billion (1999)! Extensive growth in 1999 (20%)! The market is dominated by two major players: Securitas: Turnover NOK 1.35 billion in 1999 (48%) Falken: Turnover NOK 0.87 billion in 1999 (31%)! The alarm sector (domestic alarms) represents only a small portion of total turnover, but shows: the greatest growth high margins high value per customer! At present approx. 120,000 domestic alarms are in place! 28% growth in 2000 (number of customers)! Falken dominates the market with a market share of approx. 50% Falken Securitas Others Forecast

22 Hafslund Produksjon - Norway Income Statement for 2nd quarter 2001 NOK mill. 2nd Qtr.01 2nd Qtr 00 1st half 01 1st half Power contribution Operating costs Depreciation Income from operations Own output (GWh) Spot prices (øre/kwh) 20,3 9,0 20,2 9,8 10,3 Retail price achieved (øre/kwh) 13,2 9,8 14,5 10,7 11,

23 Actual output compared with average output Output in Norway month by month GWh Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec Average Total

24 Future one year power prices øre/kwh 23,0 21,0 19,0 17,0 15,0 13,0 11,0 9, At ,8 15,7 16,5 17,8 18,3 18,8 19,2 19,6 20,0 20,4 20,8 At ,2 13,3 14,1 14,9 15,6 16,2 16,9 17,5 18,2 18,8 19,5 At ,7 13,81 14,49 15,19 15,7 16,34 16,94 17,53 18,31 18,94 At ,3 17,7 18,1 18,45 18,8 19,15 19,5 19,9 20,

25 Hafslund Produksjon - USA Income Statement for 2nd Quarter 2001 NOK million 2nd Qtr.01 2nd Qtr.00 1st half 00 1st half Power contribution Operating costs Depreciation Income from operations Own output (GWh) Retail price achieved (øre/kwh) 54,5 96,0 62,1 89,2 107,

26 Hafslund Krafthandel Income statement for 2nd Quarter 2001 NOK mill. 2nd Qtr 0 2nd Qtr 0 1st half 01 1st half 00* 2000 Trading contribution Operating costs Depreciation Income from operations

27 Other areas of business Income statement as at 2nd Quarter 2001 NOK mill. 2nd Qtr 01 2nd Qtr 00 1st half 01 1st half * Income from operations Comprising: ØkoKraft AS (1) Corporate Staff Investment/Venture Other (1) Consolidated effective from 1 January 2001 * Effects of sale of grid business are incorporated

28 Balance sheet as at 30 June June % * % NOK mill of total 2000 av total Intangible fixed assets % % Tangible fixed assets % % Financial fixed assets % % Current assets % % Total assets % % Shareholders' equity % % Provisions % % Long term liabilities % % Current liabilities % % Total equity and liabilities % % Net interest bearing debt Average interest expense 7,2 % 7,1 % * Proforma figures where the effects of the sale of the grid business have been incorporated

29 Financial Investment Portfolio NOK mill. 30 June Dec. 01 Change Market value Unrealized result Share of portfolio outside Norway 12% 5 % + 7% IT 25 % Short term shareholdings sector by sector Offshore 13 % Misc. companies 4 % Shipping 28 % Finance 11 % Trading 4 % Industry 15 % Misc. companies 13 % IT 16 % Finance 15 % Industry 20 % Offshore 16 % Shipping 18 % Trading 2 % Portfolio as at Shipping 28% Portfolio as at

30 Portfolio of short term shareholdings 30 June 2001 Original cost Market value Frontline Norsk Hydro Golar LNG Gjensidige NOR Aker Maritime Narvesen Privatbanken Swan Reefer Inc Nera Song Networks (Tele 1 Europe) Intellinet Ericsson B Enitel Tandberg Data Halliburton Miscellaneous Unrealized loss NOK

31 Hafslund Invest Other energy investments NOK mill. 30 June 01 Book value Ownership stake Arendal Fossekompani % Scudder Latin Amerika Fond % Rygge Power Station % Natsource 17 5 % Energieunion % Pemco Group % Fauske Lysverk % Pelican 6 10 %