First-quarter 2010 presentation to analysts...• Operating profit from operational businesses: NOK...

First-quarter 2010 presentation to analysts

Hafslund ASA

7 May 2010

Christian Berg, CEO

s.2

1. Powermarket and prices

2. First-quarter 2010 results

3. Additional information

s.3




Extreme spot prices during some winter 2009/2010

periods

* North of Møre og

Romsdal and Sør-

Trøndelag (price areas NO3 and NO4) had the

same spot price as

Sweden during highest-

price delivery hours.

s.4

EUR

Cold, dry weather and high power consumption

These weather and hydrologic factors lead to higher power prices but do not fully explain

the price peaks in winter 2009/2010.

s.5

2

2,4

2,8

3,2

3,6

4

49 51 1 3 5 7 9 11 13

Vinter 2010 Vinter 2009

Vinter 2008 Vinter 2007

Vinter 2006

-45

-40

-35

-30

-25

-20

-15

-10

-5

0

16. des. 15. jan. 14. feb. 16. mar. 15. apr.

Hydrologisk ressurs mot normalt

-12

-10

-8

-6

-4

-2

0

2

4

1. des. 31. des. 30. jan. 1. mar. 31. mar.

Temp mot normalt i Norden

(1 uke glidende snitt)

Nordic temperatures vs. normal

(1 week rolling average)

Hydrologic resources vs. normal Winter 2010

Winter 2008

Winter 2006

Winter 2007

Winter 2009

Statnett reports on price peak causes

• Very limited access to Sweden’s nuclear power.

• Some production facilities in Denmark and mid-

Norway were not in operation.

• Extremely cold weather drove high consumption

despite economic downturn.

• Limited transmission capacity in Nordic grid.

• Little price sensitivity among consumers (demand

curve) at prevailing power prices.

s.6

Record winter power consumption in Norway despite general economic downturn

Record winter power consumption in Norway despite general economic downturn

:

Limited Swedish nuclear power availability

Availability

17 December 2010

s.7

MWh

50%

100%

II

0%

Availability

8 January 2010

MWh

50%

100%

II

0%

Corresponds to a loss of 4550 MW (on 17 Dec.) and 3100 MW (on 8 Jan.) of

power that would normally be available.

Source: Econ Pöyry

Examples:

Year

# units

reporting

Unit

capability

factor (%)

1990 373 77,2

1995 410 81,5

2000 420 85,9

2004 430 87,1

2005 429 86,8

2006 435 87,4

2007 433 85,7

2008 437 86,3

Output capability at nuclear

power plants worldwide (as a

percent of total capacity):

Source: WANOWorld Association of Nuclear Operators

Limited transmission capacity in Nordic grid

NO3

NO1

NO4

DK1

SE

FI

DK2

NO2

NO5

• Good transmission capacity

between Sweden and mid- and

northern Norway resulted in NO3

and NO4 having the same price

peaks as Sweden.

• Transmission capacity restrictions

resulted in significantly lower NO1

spot prices.

s.9




s.10

Highlights — first quarter 2010 (excluding REC profit effect)

• Operating profit from operational businesses: NOK 511 million (excl. REC), up 12 percent from 1Q

2009.

• Record-high demand by Hafslund’s Power Sales and District Heating customers in 1Q 2010.

• Challenging market conditions for Power Sales.

• Power Generation sales price: NOK 0.457 per kWh, up 47 percent from 1Q 2009.

• Network business: profit growth continues.

• REC investment: value decline results in NOK 1 244 million charge against Hafslund Group

operating profit.

• Cash flow from operations before change in working capital: NOK 532 million (1Q 2009: NOK 310

million).

s.11

Operating profit — first quarter 2010 (excl. REC)

51192549

137

123

167

0

100

200

300

400

500

600

NOK million

Total Operating

Profit

Other ActivitiesVenturePower SalesNetworkDistrict HeatingPower

Generation

s.12

Operating profit — comparison with 1Q 2009 (excl. REC)

1924

7942

12

75

OtherActivities

VenturePower SalesNetworkDistrictHeating

Power Generation

Q1 09

455

Q1 10

511

• Higher power prices result in Power Generation profit growth.

• Record-high demand for district heating due to low temperatures.

• Continued progress for Network business.

• Strained Power Sales market.

NOK million

s.13

Earnings per share (excluding REC)

3.26 1.71

By quarterNOK

1.34

2008 2009 2010

1.34

0.22

-0.38

0.861.01

-1.68

0.53

2.60

1.81

s.14

Capital employed and return on capital employed

(ROCE) as of 31 March 2010 (excluding REC)

*Rolling average, last 12 months.

2010*

6.3%

2009

6.1%

2008

6.2%

3%

40%

18%

Power Sales

13%

Network

District Heating

Power Generation

19%7%

VentureOther Activities

s.15

Power and CO2 price development

EUR/MWh

EUR/tCO2

0

10

20

30

40

50

60

70

80

90

100

110

120

130

140

EUR

Mar-10

Apr-10

Feb-10

Jan-10

Dec-09

Nov-09

Oct-09

Sep-09

Aug-09

Jul-09

Jun-09

May-09

Apr-09

Mar-09

Feb-09

Jan-09

Dec-08

Nov-08

Oct-08

Sep-08

Aug-08

Jul-08

Jun-08

May-08

Apr-08

Nordic spot marketCO2 2011FWD 2011FWD 2014

s.16

Power Generation

• Profit and revenue figures reflect higher power prices compared with 1Q 2009.

• Power generation: 9 percent below normal for the reporting period.

• Operating expenses: NOK 60 million (NOK 51 million) reflect high maintenance activity levels.

• Expansion and upgrade program on schedule.

• Projected 2Q 2010 generation: approximately 860 GWh.

0

100

200

300

0

10

20

30

40

50

270

92

214

163

102

175140

207

167

Q1 10Q4 09Q3 09Q2 09Q1 09Q3 08 Q4 08

øre/kWhNOK million

Q2 08Q1 08

Power priceOperating profit

NOK million Q1 10 Q1 09 2009 2008

Operating revenue 238 153 856 1 001

Operating profit before

depreciation178 102 657 794

Operating profit 167 92 614 748

Sales price (øre/kWh) 45,7 31,0 27,5 31,5

Production (GWh) 520 471 3018 3248

Investments 40 61 165 110

s.17

Power Generation profile

*Normal production = 3,000 GWh based on 10-year average of production, adjusted for capacity improvements.

150 146

260

347

295

329 340

292

220 217

247

175

0

50

100

150

200

250

300

350

GWh

157142

Jan Feb Mar

221

May Jun Jul AugApr DecNovOctSep

20102009 Normal

s.18

District Heating

• High power prices and higher demand resulted in 1Q 2010 revenue growth compared with 1Q 2009.

• Delivered volume: 720 GWh.

• Volume growth: 24 percent due to high consumption and customer-base growth.

• Lower contribution margin per kWh due to high proportion of peak load.

• New delivery contracts signed in 1Q 2010: 75 GWh annual energy outtake.

- 50

0

50

100

150

0

20

40

60

80

-40

111

61

97

-22-43

31

-8

123

Q1 10Q4 09Q3 09Q2 09Q1 09Q3 08 Q4 08

øre/kWhNOK million

Q2 08Q1 08

District Heating priceOperating profit

NOK million 1Q 10 Q1 09 2009 2008

Operating revenue 467 349 747 691




Salesprice (in øre per kWh) 73,0 67,2 60,8 64,9

Production cost (in øre per kWh) 38,4 29,3 27,8 26,1

Gross margin (øre/kWh) 34,6 37,9 33,0 38,9

Production (GWh) 720 582 1 382 1 192


s.19

District Heating — quarterly production mix

ElectricityOile & natural gas Waste & bioHeat pumps

0

100

200

300

400

500

600

700

800

GWh

Q1 10

720

Q4 09

512

Q3 09

98

Q2 09

188

Q1 09

582

s.20

Network

• 2010 income ceiling: NOK 2 759 million, up NOK 298 million from previous year.

• Continued profit growth.

• Stable operations with few service interruptions in a quarter with high grid loads.

• Operating profit includes under income of NOK 45 million (NOK 57 million).

• Quarterly profit: NOK 120 – 140 million throughout 2010.

Operating profit development

137

179

108112

9595

707384

0

50

100

150

200

Q1 08

NOK million

Q1 10Q4 09Q3 09Q2 09Q1 09Q4 08Q3 08Q2 08

NOK million Q1 10 Q1 09 2009 2008

Operating revenue 1 396 906 3 385 3 352


depreciation274 231 1 035 868



Hafslund Network — Norway’s most reliable

power grid

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

2006 2007 2008 2009

Number of service interruptions

Norway excl. HafslundNorwayHafslund

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

2006 2007 2008 2009

Duration of power outages (in hours)

Norway excl. HafslundNorwayHafslund

Average number of service interruptions per customer

•Source: NVE 2006 – 2008 annual service interruption statistics

•NB: 2009 data not currently available

Average duration of power outages per customer (in hours)

•Source: NVE 2006 – 2008 annual service interruption statistics

•NB: 2009 data not currently available

s.22

Power Sales

Operating profit development

4949

20

43

128

108

-50

41

117

- 100

- 50

0

50

100

150

Q4 09Q3 09Q2 09Q1 09 Q1 10Q4 08

NOK million

Q3 08Q2 08Q1 08

• Revenue growth reflects higher wholesale prices for power contracts traded via Nord Pool and high demand.

• Challenging market conditions.

• A working-capital intensive quarter.

• 683 000 customers including 28 000 new customers in 1Q 2010.

• After-tax profit per customer: NOK 52 (1Q 2009: NOK 145).

NOK million Q1 10 Q1 09 2009 2008

Operating revenues 2 621 1 809 4 787 5 121




Sold volume (GWh) 5 001 4 369 13 238 12 936

s.23

Venture

• Profit reflects improved operations and portfolio development.

• Hafslund Telekom EBITDA: NOK 31 million (1Q 2009: NOK 18 million).

• Capital employed excl. REC: NOK 1.6 billion as of 31 March 2010.

• NOK 52 million agreement to sell Elis shares. Transaction to be completed in May 2010.

• REC value impairment recognized in profit and loss due to significant share-price decline from established cost price.

• REC shareholding: 76.7 million shares or 11.5% stake. Market value: NOK 2.1 billion per 31 March 2010 closing price of NOK 27.80.

• Hafslund will take stand to REC share issue with pre-emptive rights for existing shareholders within the period.

15%

21%

Renewable energi

10%

AMS

Energy efficiency and other investments

Telecom54%

Portfolio composition (excl. REC)

NOK million Q1 10 Q1 09 2009 2008

Operating revenue 130 255 779 889

Operating profit (excl REC) 25 1 (162) 258

REC (1 244) 0 (137) (15 912)

s.24

Other Activities

• Other Renewable Energy

• Start-up of energy recovery plant at Borregaard.

• Total 1Q 2010 production: 66 GWh (28 GWh)

• Challenging bulk waste market and regulatory framework conditions.

• Wood pellets production begins pilot operation in April/May.

• Value growth on interest and currency derivatives boosts financial income by NOK 22 million (NOK 40 million).

NOK million Q1 10 Q1 09 2009 2008

Support (31) (42) (152) (158)

Power trading (3) (24) (10) (15)

Other renewable energy (3) (4) (27) (44)

Real estate 5 3 (0) 16

Billing and customer service 24 19 101 82

Financial derivatives, ass.

comp.17 86 182 (63)

Other 0 (10) (40) (85)

Operating profit other 9 28 54 (267)

s.25

Group cash flow statement

NOK million 1Q 10 Q1 09 ∆∆∆∆ 2009

Pretax profit 405 302 103 670

Depreciation 213 206 7 882

Profit and loss items without liquidity effects (86) (198) 112 (387)

Cash flow from operations 532 310 222 1 165

Change in working capital, etc. (532) 938 (1 470) 717

Total cash flow from operations - 1 248 (1 248) 1 882

Cash flow per share from operations - 6,4 (6,4) 9,6

Net operations and expansion investments (258) (365) 107 (1 617)

Portfolio changes Venture, etc. (22) (14) (8) (21)

Cash flow before financing activities and dividends (280) 869 (1 149) 244

s.26

Group profit and loss account (excluding REC)

NOK million Q1 10 Q1 09 ∆∆∆∆ 2009

Operating revenue 4 895 3 498 1 397 10 670

Gain/loss financial items 25 64 (39) 97

Operating expenses (4 196) (2 901) (1 295) (8 554)

Operating profit before depreciation 724 660 63 2 213

Depreciation (213) (206) (8) (882)

Operating profit 511 455 56 1 331

Interest expences (104) (131) 27 (526)

Market value change loan portfolio (1) (21) 20 (135)

Financial expenses (105) (153) 47 (661)

Pre-tax profit 405 302 103 670

Tax (143) (104) (38) (336)

Results discontinued operations - - - -

Profit after tax 262 198 65 335

-

Majority's share of profit (971) 197 (1 169) 202

Earnings per share (EPS) in NOK 1,34 1,01 0,33 1,71

s.27

Group balance sheet

NOK millioner 31.03.2010 31.12.2009 ∆∆∆∆ 31.03.2009

Intangible assets 2 299 2 288 11 2 330

Fixed assets 18 880 18 809 72 18 148

Financial assets 3 481 4 737 (1 256) 5 514

Accounts receivables and inventory 3 996 2 773 1 223 3 082

Cash and cash equivalents 828 311 517 989

Assets 29 484 28 918 566 30 063

Equity (incl. Min. int.) 10 126 11 154 (1 028) 12 134

Allocation for liabilities 3 362 3 287 74 3 157

Long-therm debt 10 908 9 805 1 104 8 562

Other currently liabilities 2 413 2 741 (328) 3 384

Short-term debt 2 675 1 931 744 2 827

Equity and liabilities 29 484 28 918 566 30 063

Net interest-bearing debt 11 873 11 601 273 10 548

Equity ratio 34 % 39 % -4 % 40 %

s.28

Hafslund: helping meet tomorrow’s energy demand

• 20% of energy derived from renewable energy sources

• 20% reduction in climate gas emissions

– (30% if international agreements are reached)

• 20% cut in energy consumption via measures that enhance energy efficiency

We need an energy revolution in Europe now, through 2020 – and beyond

We need an energy revolution in Europe now, through 2020 – and beyond

20

20

20

s.29




s.30

Capital structure development

50,7

53,854,4

0

2

4

6

8

10

12

0

10

20

30

40

50

60

Equity ratio in %NOK billion

Q1 10

34,3

11,9

Q4 09

38,1

11,6

Q3 09

40,0

11,2

Q2 09

40,0

10,7

Q1 09

40,0

10,6

Q4 08

40,3

11,4

Q3 08

10,3

Q2 08

9,9

Q1 08

9,4

Equity ratioNet interest-bearing debt

s.31

Loans — portfolio data

Debt maturity profileNOK million

Loans at maturity, next 12 monthsNOK million

500

3.000

2.500

2.000

1.500

1.000

0

2019201820172016201520142013201220112010

Other loansBondsCertificate loans

500

1.500

1.000

0

MarFebJanDecNovOctSepAugJulJunMayApr

Other loansBondsCertificate loans

Portfolio data

Q1 10 Q4 09 ∆∆∆∆

Bonds 45 % 50 % -5,0 %

Certificate loans 18 % 18 % 0,0 %

Other loans 36 % 32 % 4,0 %

Q1 10 Q4 09 ∆∆∆∆

Nominal value - market value

of loans(164) (163) (1)

Market value interest rate

swaps(33) (55) 22

Average interest incl.

derivatives4,0 % 4,0 % 0,0 %

Proportion of loan portfolio

with fixed interest39 % 42 % -3,0 %

Loans at maturity next quarter

(NOK million)1 489 1 541 (52)

Unused drawing facilities (NOK

million)3 612 4 558 (946)

s.32

Hafslund Power Sales in Q1 2010: 4,984 GWh =

13.3% of total Norwegian consumption

Hafslund Power Sales

GWh

Norway’s gross general consumption of electricity*

GWh

* Gross general consumption encompasses gross consumption (excl. electro-boilers and pumped storage), which includes households and agriculture, services, wood processing, mining and other industries (excl. Power-intensive). Source: NVE

0

1 000

2 000

3 000

4 000

5 000

6 000

Q4 09Q3 09Q2 09Q1 09

201020092008

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

Q4 09Q3 09Q2 09Q1 09

201020092008

s.33

Power Generation – Glomma waterway flow

• Q1 2010 production: 9% below normal for the reporting period.• Maximum capacity utilization: 940 m³/second.

• Projected 2Q 2010 production: about 900 GWh, providing normal reservoir levels and precipitation.

0

500

1 000

1 500

2 000

m3/sec.

DecNovOctSepAugJulJunMayAprMarFebJan

Slukeevne2010 2009

s.34

Shareholders (as of 31 March 2010)

Merk: Antall 1.000 aksjer

# ShareholderClass A shares

held

Class B shares

heldTotal Ownership

Share of

voting rights

Shareholding in thousands

1 City of Oslo 67 525 37 343 104 868 53,7 % 58,5 %

2 Fortum Forvaltning AS 37 853 28 706 66 559 34,1 % 32,8 %

3 Østfold Energi AS 5 201 4 5 205 2,7 % 4,5 %

4 Odin Norden 55 2 358 2 413 1,2 % 0,0 %

5 MP Pensjon 1 564 1 564 0,8 % 0,0 %

6 Odin Norge 1 244 1 244 0,6 % 0,0 %

7 Hafslund ASA 451 451 0,2 % 0,0 %

8 AS Herdebred 107 271 378 0,2 % 0,1 %

9 Folketrygdfondet 352 352 0,2 % 0,0 %

10 Danish Invest, Norwegian shares 311 311 0,2 % 0,0 %

Total, 10 largest shareholders 110 741 72 604 183 345 93,9 % 95,9 %

Other shareholders 4 687 7 154 11 841 6,1 % 4,1 %

Total 115 428 79 758 195 186 100 % 100 %

s.35

Key figures

Group YTD 10 YTD 09

Capital matters

Total assets 29 484 30 063

Captial employed 25 257 25 812

Equity 10 126 12 134

Market capitalization 13 428 10 926

Equity ratio 34 % 40 %

Net interest-bearing debt 11 873 10 548

Profitability excl. REC

Profit after tax 262 198

Earnings per share (EPS) 1,34 1,01

Cash flow per share - 6,4

Power Generation YTD 10 YTD 09

Capital employed 4 342 4 172

Sales price (øre/kWh) 45,7 31,0

Production volume (GWh) 520 471

District Heating YTD 10 YTD 09


Sales price (øre/kWh) 73,00 67,2

Sales volume (GWh) 720 582

Network YTD 10 YTD 09


Annual Income ceiling 2 759 2 461

NVE-capital (regulatory) 6 256 6 024

Power Sales YTD 10 YTD 09


Total volume (GWh) 501 4 369

Venture YTD 10 YTD 09

Capital employed exl REC 1 557 1 700Market value REC 2 132 4 104

Definitions

Items 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 Profit after tax / Average no. of shares outstanding

Cash flow per share Net cash from operations / Average no. of shares

Return on equity Result after tax / Average equity (incl. Minority interests)

Return on capital employed Operating profit / (Average equity + Net interest-bearing debt + Net tax positions)

Power generation

Mean production Average power generation over the past 10 years.

Investor information

• Additional information is available from Hafslund’s website:– www.hafslund.no

– You can subscribe to Hafslund press releases

• Group SVP Treasury and CFO, Gunnar Gjørtz

– [email protected]

– Tel: +47 922 17 200

• SVP Communications, Karen Onsager


– Tel: +47 920 87 007

• Financial Director, Morten J. Hansen


– Tel: +47 908 28 577

www.hafslund.no

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First-quarter 2010 presentation to analysts...• Operating profit from operational businesses: NOK...

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