Fourth-quarter presentation to analysts and preliminary results Finn-Bjørn Ruyter, CEO Oslo, 4 February 2015

Transcription

1 Fourth-quarter presentation to analysts and preliminary results 2014 Finn-Bjørn Ruyter, CEO Oslo, 4 February 2015

2 Agenda 1) Summary of the year ) Fourth-quarter 2014 results 3) Theme: Strategy 4) Appendix

3 Highlights from the year 2014 Profit after tax of NOK 1,003 million is an increase of NOK 256 million from previous year a return on equity of 12.8 percent (10.2 percent). Heat and Production affected by lower power prices and low energy demand, partly compensated by record high hydropower production of 3.4 TWh. Network and Markets with profit increase due to an increase in income surplus and a satisfactory margin, and sales of benefit products. Profit after tax includes net one-time effects of NOK 182 million (NOK 131 million) waived tax claim and extraordinary write-down. In 2014, Hafslund fortified its strong positition as Norway s largest grid company through the acquisition of network activities in the county of Østfold, southern Norway. The Board proposes a dividend of NOK 2.50 per share for 2014.

4 Oslo price (NO1) historical and future NOK/kWh NOK/kWh * Power price - Oslo Period average Source for price data: and 30 January * Period average is based on forward prices as of

5 EBITDA 2014 and change from 2013 EBITDA 2014 Change in EBITDA from Production Heat Network Markets Other EBITDA EBITDA 2013 Production Heat Network Markets Other EBITDA Q4 14

6 Agenda 1) Summary of the year ) Fourth-quarter 2014 results 3) Theme: Strategy 4) Appendix

7 Fourth-quarter 2014 highlights EBITDA of NOK 760 million up 25 percent against Mild and wet weather results in high hydropower production, but low energy demand. Achieved power price of 0.26 NOK/kWh down 0.04 NOK/kWh year-on-year. Networks results up on previous year due to higher income surplus. Redemption of vendor loan note issued on sale of fibre-optics networks business in 2010 results in gain of NOK 52 million and capital release of NOK 312 million during the quarter.

8 EBITDA fourth-quarter 2014 and change from 2013 EBITDA Q Change in EBITDA from Q Production Heat Network Markets Other EBITDA EBITDA Q4 13 Production Heat Network Markets Other EBITDA Q4 14

9 Interest-bearing debt unchanged in the quarter Change in net interest-bearing debt Working capital up NOK 459 NOK million million in the quarter due to higher energy demand. Net refunded tax in the quarter due to waived tax claims. 0 Nto ib debt (NOK billion) Equity ratio (%) Net debt % Q EBITDA % Q Interest paid Tax paid % Q Change in working capital etc % Q Net investments Development net interest-bearing debt and equity ratio % Q Net debt Stable equity ratio in 2014 despite acquired Network operations and increased pension obligation. Interest-bearing debt increased by NOK 0.6 billion due to purchased Network operations.

10 Production NOK million Q4 14 Q4 13 Year 2014 Year 2013 Operating revenue Gross margin EBITDA Operating profit Power price (NOK/kWh) Production volume (GWh) Investments EBITDA Per quarter Q Q Q2 13 EBITDA Q3 13 Q4 13 Q1 14 EBITDA rolling 12 months Q2 14 Q3 14 EBITDA Rolling 12 months 159 Q Mild and wet weather gave production 24 percent above normal. Achieved power price of NOK 0.26 per kwh is 0.04 NOK/kWh lower than last year. Achieved power price is NOK per kwh above Oslo price (NO1) due to hedging. Preliminary design new aggregate and increased central grid tariffs gave NOK 14 million in increased operating costs. Expected normal production levels for first-quarter 2015.

11 Hydropower Glomma waterway flow m3/sec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Normal * Max. capacity utilization * Normal = Median waterflow last 10 years

12 Production and power prices 400 GWh NOK/kWh Jan Feb Mar Apr May Normal* Jun Jul 2014 Aug Sep Oslo price (NO1) Oct Nov Dec 0.00 Source for price data: 29 December * Normal = 3100 GWh based on 10 years data adjusted for efficiency improvements.

13 Heat NOK million Q4 14 Q4 13 Year 2014 Year 2013 Operating revenue Gross margin EBITDA Operating profit Production volume (GWh) Gross margin (NOK/kWh) Investments EBITDA Per quarter EBITDA Rolling 12 months Very mild weather gave low energy demand in both this and last year s quarter. Operational improvements gives underlying results in line with last year even with reduction in power prices. Last year s result charged with NOK 21 million in liquidation costs related to operations at Jessheim. Increased production against last year due to organic growth. New customer tie-ins with an annual outtake of 46 GWh in Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 EBITDA EBITDA rolling 12 months

14 District heating production and power prices 300 GWh NOK/kWh Jan Feb Mar Apr Mai Jun Jul Aug Sep Okt Nov Des Normal * 2014 Oslo price (NO1) Source for price data: 29 December * Normal = expected production in 2014 given normal temperature (average last 10 years) and existing and planned customer tie-ins.

15 Network NOK million Q4 14 Q4 13 Year 2014 Year 2013 Operating revenue Gross margin EBITDA Operating profit Result effect income surpluses/(shortfalls) EBITDA Per quarter (120) Investments EBITDA Rolling 12 months A good result compared to previous quarters and expectation for Increased income surplus and lower maintenance activity against last year, while integration costs reduces profitability. Disruptions at average customer halved KILE costs NOK 8 million lower than last year. Operating profit for 2015 expected to be somewhat lower than Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q EBITDA EBITDA rolling 12 months

16 Merger Hafslund Nett and Hafslund Nett Øst completed 2014 Agreed purchase April Acquired shares May Joint AMS June Decided one operations centre August Localization, new operation model September Placement of all employees November Merger December 2015: Further integration

17 Organic growth through population growth and AMS* Hafslund Network in Oslo, Akershus and Østfold RAB-value 2013**, NOK billion SSB forecast: The population of Oslo and Akershus will rise from 1.1 million to 2 million in 2050 Hafslund will replace meters Hafslund 100 % owner Hafslund partial owner Combined including Distribution and Regional network Hafslund no ownership Source: NVE Revenue Calculation 2015 per * AMS Automatic power meters ** NVE-value includes the entire Energi 1 Follo Røyken and it is not adjusted for parts of the net assets belonging to the portion of the network in Buskerud.

18 Markets NOK million Q4 14 Q4 13 Year 2014 Year 2013 Operating revenues Gross margin EBITDA Operating profit Sold volume (GWh) EBITDA Per quarter Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 EBITDA 140 EBITDA rolling 12 months EBITDA Rolling 12 months Low energy demand demand due to mild weather in both this and last year s quarter. Reduced margins contributes to a weak result in a quarter with normally high energy demand. Last year s quarter includes one-time effect of NOK 18 million. Profit after tax of NOK 33 per customer (NOK 50). A total of 1,073,000 customers at the end of 2014, of which 330,000 in Sweden and Finland.

19 Summary of fourth-quarter 2014 profit Change in EBITDA from Q4 13 Profit after tax Q4 14 NOK million Earnings per share NOK EBITDA Q4 13 Gross margin Gain/loss financial items Operating expenses EBITDA Q4 14 EBITDA Depreciation Financial Tax Profit after expenses tax Q4 2014

20 Summary of 2014 Profit after tax of NOK million gives a return on equity of 12.8 percent. The result includes NOK 182 million (NOK 131 million) in net one-time effects. Mild and wet weather gave record high hydropower production, but low energy demand. Network with profit improvement due to high income surplus. Emphasizes stable grid tariffs over time. Markets with profit improvement due to improved margins and growth in the sales of benefit products. Power price for Oslo area was NOK 0.23 per kwh in 2014, down 22 percent from Profit from hedging activities partly compensates for lower power price. The position as a pure-play energy company within Production, District heating, Network and power sales to be continued. The Board proposes a dividend of NOK 2.50 per share for 2014.

21 Agenda 1) Summary of the year ) Fourth-quarter 2014 results 3) Theme: Strategy 4) Appendix

22 Hafslund a pure-play energy and infrastructure company Norway s largest network company customers ~ 23% share* Norway s largest district heating supplier 1,8 TWh ~ 36% share* Norway s largest power sales company 5th largest in the Nordics customers ~ 27% share* A medium sized power producer 3,1 TWh ~ 2% share* Source: company information *Norwegian market

23 More than 100 years of history 1898 Hafslund established 1986 Nycomed part of Hafslund 1996 De-merger Hafslund Nycomed Restructuring Integration Value creation 2008 Focus on renewable energy Spin off: Infratek Established power sales in the Nordics Spin off: Security, REC, venture, fiber, etc An integrated and focues energy company Acquisition of Fortum s network business in Norway Strengthened focus on powersales Sweden and Finland Further organic and structural growth Operational optimization

24 Strategic priorities Strategic focus Vision Consolidation 2010 Energy solutions for the future -for you and the enviroment Renewable energy 2013 Continuous improvement Production Network Markets 2014 Organic and structural growth District heating

25 Continue organic and structural growth PRODUCTION NETWORK Uptime and possible new aggregate Capital employed 100 % = NOK 21.9 billion as of Markets 7% 20% Production Organic growth and operational improvement HEAT Network 48% 24% 1% Heat MARKETS Other Organic growth and operational improvement Nordic growth strategy

26 Renewable in all business areas PRODUCTION Renewable energy HEAT Renewable heat NETWORK Electrification MARKETS Efficient energy use

27 Focus on Continuous Improvement Continuous Improvement= FLYT (FLOW) in Hafslund Process in Control Stability and Standardisation Innovation Enhanced competitivness and better solutions for our customers

28 Prepare for regulatory change NETWORK POWER SALES Build Operate Customer Power purchase Sales and marketing Customer Competence regulation Statnett s Elhub 1 invoice AMS* * AMS Automatic power meters

29 Maintain stable dividends Dividend NOK per share Extraordinary Ordinary * * Proposal 2014 * Extraordinary dividend in 2006 associated with freeing up capital from divestment of REC and extraordinary dividend in 2010 associated with freeing up capital from the sale of fiber business.

30 Values to be created through Hafslund shall be a leading energy company through innovation give the customers energy solutions for the future Vision Framtidens energiløsninger for deg og miljøet Energy solutions for the future -for you and the enviroment optimize the organization with regards to change in regulatory conditions Production Network Markets seek growth within Production, Heat, Network and Markets maintain stable dividends District heating

31 Agenda 1) Summary of the year ) Fourth-quarter 2014 results 3) Theme: Strategy 4) Appendix

32 Group profit and loss account NOK million Q4 14 Q4 13 Year 2014 Year 2013 Operating revenue (34) Cost of energy (2 052) (2 208) 155 (6 866) (7 867) Gross margin Gain/loss financial items Operating expenses (836) (839) 2 (2 851) (2 648) EBITDA Depreciation and write-downs (246) (198) (48) (1 045) (794) Operating profit Interest expences (165) (116) (50) (480) (494) Market value change loan portfolio (28) (17) (11) (73) (9) Financial expenses (194) (133) (61) (553) (503) Pre-tax profit Tax (113) (66) (46) (194) (402) Profit after tax (1) Earnings per share (EPS) in NOK 1,06 1,07 (0,01) 5,14 3,83

33 Group balance sheet NOK million Q Intangible assets Fixed assets (34) Financial assets Accounts receivables and inventory Cash and cash equivalents Assets Equity (incl. min. int.) Allocation for liabilities (323) Long-term debt (368) Other current liabilities Short-term debt Equity and liabilities Net interest-bearing debt Equity ratio 30 % 30 % 0 % 30 %

34 Group cash flow NOK million Q4 14 Q4 13 Year 2014 EBITDA Paid interests (110) (100) (10) (452) Paid tax 74 (85) 159 (58) Marketvalue changes and other liquidity adjustments (34) (31) (3) (67) Change in working capital, etc. (459) (205) (254) (64) Total cash flow from operations Net operations and expansion investments (322) (383) 61 (1 896) Net purchase/sale of shares etc. (20) 67 (87) (379) Cash flow from investments activities (342) (316) (26) (2 275) Cash flow to down payments and interests (111) (131) 20 (121)

35 Earnings per share Per quarter NOK 2.85 ** *** * * Profit after tax Q negatively affected NOK 551 million relating to extraordinary write-downs and provisions. ** Profit after tax Q was positively impacted by NOK 288 million related to tax waived claims regarding Hatros. *** Profit after tax Q negatively affected by NOK 93 million relating to write-downs Bio-el and secondary networks Søndre Nordstrand

36 Capital employed and return on capital employed Capital employed NOK 21.9 billion per Return capital employed Markets 7% Production 8.0% 8.3% 20% Network 48% 4.6% 24% 1% Heat Other 2012 * 2013 ** 2014 *** * ** *** Includes impairments and provisions BioWood and Bio-El Fredrikstad at NOK -548 million Includes the sale of shares in Infratek with gain of NOK 90 million Includes write-downs of Bio-El and secondary networks Søndre Nordstrand of NOK -127 million.

37 Loans portfolio data Debt maturity profile NOK million Commercial paper Bond Other loans Loans at maturity, next 12 months NOK million Portfolio data Q4 14 Q3 14 Bonds 73 % 73 % 0 % Commercial paper 5 % 5 % 0 % Other loans 22 % 22 % 0 % NOK million Q4 14 Q3 14 Nominal value - market value of loans (354) (326) (28) Market value interest rate and fx derivatives (64) (17) (47) Average interest incl. derivatives (%) 3.8 % 3.9 % -0.1 % Proportion of loan portfolio with fixed interest (%) 48 % 46 % 2 % Loans at maturity next quarter Unused drawdown facilities Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Commercial paper Bonds Other loans

38 Key figures Group Capital matters Total assets Capital employed Equity Market capitalization Equity ratio 30 % 30 % Net interest-bearing debt Profitability EBITDA Earnings per share (EPS) 5,14 3,83 Cash flow per share 11,04 8,32 Heat Capital employed Sales price District heating (NOK/kWh) Sales price Industrial energy (NOK/kWh) Gross margin (NOK/kWh) Sales volume (GWh) Network Capital employed Regulated gross margin for the year Excess/(under) income ytd 206 (120) NVE-capital (regulatory) Power Generation Capital employed Sales price (NOK/kWh) Production volume (GWh) Markets Capital employed of this working capital Volume power sales (GWh)

39 Shareholders as of # Shareholder Class A shares held Class B share held Total Ownership Share of voting rights 1 City of Oslo ,7 % 58,5 % 2 Fortum Forvaltning AS ,1 % 32,8 % 3 Kommunal Landspensjonskasse ,1 % 4,5 % 4 MP Pensjon PK ,0 % 0,0 % 5 Gjensidige Forsikring ,5 % 0,0 % 6 Folketrygdfondet ,4 % 0,1 % 7 Skandinaviska Enskilda Banken ,2 % 0,0 % 8 Hafslund ASA ,2 % 0,0 % 9 New Alternatives Fund, Inc ,2 % 0,3 % 10 Nordea ,2 % 0,0 % Total, 10 largest shareholders ,7 % 96,2 % Other shareholders ,3 % 3,8 % Total % 100 %

40 Definitions Name Definition Group Capital employed Equity + Net Interest-bearing debt + Net tax positions Equity ratio (in %) (Equity incl. Minority interests / Total assets) X 100 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

41 Investor information Additional information is available from Hafslund s website: You can subscribe to Hafslund press releases Group CFO, Heidi Ulmo heidi.ulmo@hafslund.no Tel: Financial Director and Investor Relations contact, Morten J. Hansen mjh@hafslund.no Tel:

42