Fourth-quarter presentation to analysts and preliminary results 2014 · 2015. 2. 4. ·...

Fourth-quarter presentation

to analysts and preliminary

results 2014

Finn-Bjørn Ruyter, CEO

Oslo, 4 February 2015

Agenda

1) Summary of the year 2014

2) Fourth-quarter 2014 results

3) Theme: Strategy

4) Appendix

• 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.

Highlights from the year 2014

Oslo price (NO1) historical and future

0.00

0.50

0.45

0.40

0.35

0.30

0.25

0.20

0.15

0.10

0.05

20192018201720162015201420132012

NOK/kWh

2011201020092008200720062005200420032002200120001999

Period averagePower price - Oslo

0.25 NOK/kWh *

Source for price data: www.nordpoolspot.com and www.nasdaqomx.com/commodities 30 January 2015.

* Period average 2015-2019 is based on forward prices as of 30.01.2015.

EBITDA 2014 and change from 2013

599

308

484

2.795

Other

91

MarketsNetwork

1.314

HeatProduction EBITDA

21

207

142

37

2.795

EBITDA Q4 14

OtherMarketsNetworkHeatProduction

15

EBITDA 2013

2.446

Change in EBITDA from 2013EBITDA 2014

Agenda



3) Theme: Strategy

4) Appendix

• EBITDA of NOK 760 million – up 25 percent against 2013.

• 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.

Fourth-quarter 2014 highlights

EBITDA fourth-quarter 2014 and change

from 2013

159

127

378

78

760

Production EBITDAOther

17

MarketsNetworkHeat

15

112

17

48

Production

760

EBITDA Q4 14

OtherMarketsNetworkHeat

4

EBITDA Q4 13

606

Change in EBITDA from Q4 2013EBITDA Q4 2014

Interest-bearing debt unchanged in the

quarter

0

2

4

6

8

10

12

0

20

40

60

Nto ib

debt (NOK billion) Equity ratio (%)

Q4 2014

10.5

30%

Q3 2014

10.5

30%

Q2 2014

10.5

31%

Q1 2014

8.7

31%

Q4 2013

9.9

30%

459

352

76010 000

0

10 500

11 000

NOK million

10 546

Net investments

Change in working

capital etc

Tax paid

74

Interest paid

110

EBITDANet debt 30.09.2014

10 459

Net debt 31.12.2014

Change in net interest-bearing debt • Working capital up NOK 459

million in the quarter due to

higher energy demand.

• Net refunded tax in the quarter

due to waived tax claims.

• 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.

Development net interest-bearing debt and equity ratio

• 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 0.006

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.

Production

185

111

163 163 155 143 142 159

0

50

100

150

200 1.200

1.000

800

600

400

200

0

EBITDARolling 12 months

EBITDAPer quarter

Q4 14Q3 14Q2 14Q1 14Q4 13Q3 13Q2 13

177

Q1 13Q4 12

EBITDA rolling 12 monthsEBITDA

NOK million Q4 14 Q4 13 Year 2014 Year 2013

Operating revenue 224 205 871 859

Gross margin 236 225 882 868

EBITDA 159 163 599 614

Operating profit 148 152 552 568

Power price (NOK/kWh) 0.26 0.30 0.24 0.28

Production volume (GWh) 854 677 3 452 2 845

Investments 15 7 26 26

Hydropower – Glomma waterway flow

0

500

1 000

1 500

2 000

2 500

3 000

FebJan DecNov

m3/sec

OctSepAugJulJunMayAprMar

2013 Max. capacity utilization2014 Normal *

* Normal = Median waterflow last 10 years

Production and power prices

Source for price data: www.nordpoolspot.com 29 December 2014.

* Normal = 3100 GWh based on 10 years data adjusted for efficiency improvements.

211174 160

225

363 353 350328

247 238220 232

276236

305281

354332

305 289

221

272

319

263

0

100

200

300

400

0.00

0.05

0.15

0.20

0.10

0.25

0.30

DecNovOctSepAugJulJunMayApr

NOK/kWhGWh

MarFebJan

Normal* Oslo price (NO1)2014

• 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 2014.

Heat

122

174

37

112

172

127

0

25

50

75

100

125

150

175

0

50

100

150

200

250

300

350

400

Q3 14

1

Q2 14

8

Q1 14Q4 13Q3 13

6

Q2 13

EBITDA Per quarter

EBITDARolling 12 months

Q4 14Q1 13Q4 12



Operating revenue 371 349 1 080 1 153

Gross margin 218 201 623 608

EBITDA 127 112 308 329


Production volume (GWh) 638 614 1 907 2 072

Gross margin (NOK/kWh) 0.33 0.33 0.32 0.31


District heating – production and power

prices

278249

220

139

90

49 40 4168

140

195

268275

192175

126

86

43 38 4565

121

176

259

0

60

120

180

240

300

0.00

0.05

0.10

0.15

0.20

0.25

0.30

GWh NOK/kWh

DesNovOktSepAugJulJunMaiAprMarFebJan

2014Normal * Oslo price (NO1)

Source for price data: www.nordpoolspot.com 29 December 2014.

* Normal = expected production in 2014 given normal temperature (average last 10 years) and existing and planned customer tie-ins.

• A good result compared to previous

quarters and expectation for 2015.

• 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 2014.

Network

311 272 283 286 266 279 312 345 378

0

100

200

300

400

0

500

1 000

1 500

Q1 14Q4 13Q3 13Q2 13Q1 13Q4 12

EBITDAPer quarter

EBITDA Rolling 12 months

Q4 14Q3 14Q2 14



Operating revenue 1 187 1 090 4 147 4 052

Gross margin 851 709 2 829 2 498

EBITDA 378 266 1 314 1 107


Result effect income

surpluses/(shortfalls)136 43 206 (120)


Merger Hafslund Nett and Hafslund Nett

Øst completed

May

Acquiredshares

June

Joint AMS

August

Decided oneoperations centre

September

Localization, newoperation model

November

Placement ofall employees

December

Merger

2015: Furtherintegration

April

Agreedpurchase

2014

Organic growth through population

growth and AMS*

Hafslund 100 % owner

Hafslund partialowner

Hafslund noownership

RAB-value 2013**, NOK billion

Combined including Distribution and Regional network

Hafslund Network in Oslo, Akershus and Østfold

Source: NVE Revenue Calculation 2015 per 27.11.14* 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.

SSB forecast: The population of Oslo and Akershuswill rise from 1.1

million to 2 million in 2050

Hafslund will replace700 000

meters

• 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.

Markets

54

9171 83 96

140126

140

78

0

30

60

90

120

150

0

100

200

300

400

500

600

EBITDAPer quarter

EBITDA Rolling 12 months

Q3 14Q2 14Q1 14Q4 13Q3 13Q2 13Q1 13Q4 12 Q4 14



Operating revenues 1 898 2 021 6 416 6 868

Gross margin 357 352 1 386 1 170

EBITDA 78 96 484 342


Sold volume (GWh) 5 277 5 203 17 764 17 388

Summary of fourth-quarter 2014 profit

760

31

121606

EBITDA Q4 14Operating expenses

2

Gain/loss financial items

Gross marginEBITDA Q4 13

NOK million

Earnings per share NOK 1.06

246

194

113207

760

Financial expenses

DepreciationEBITDA Tax Profit after tax Q4 2014

Profit after tax Q4’14Change in EBITDA from Q4’13

Summary of 2014

• Profit after tax of NOK 1.003 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

2013. 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.

Agenda



3) Theme: Strategy

4) Appendix

Hafslund – a pure-play energy and

infrastructure company

Norway’s largest network company

Norway’s largest district heating supplier

Norway’s largest power sales company – 5th largest in the Nordics

A medium sized power producer

676 000 customers

1,8 TWh

1 073 000 customers

3,1 TWh

Source: company information

*Norwegian market

~ 23% share*

~ 36% share*

~ 27% share*

~ 2% share*

More than 100 years of history

1986Nycomed part of Hafslund

1898Hafslundestablished

1996De-mergerHafslundNycomed

2002-2005• Restructuring• Integration• Value creation

2008• Focus on

renewable energy

• Spin off: Infratek

2008-2012• Established

power sales in the Nordics

• Spin off:Security, REC, venture, fiber, etc.

2013 -• An integrated

and focuesenergy company

2014 -• Acquisition of Fortum’snetwork business in Norway

• Strengthened focus on powersalesSweden and Finland

2015 -• Further organic

and structural growth

• Operational optimization

Strategic priorities

Network

District heating

Markets

Production

Energy solutions for the future

-for you and the enviroment

Strategic focus Vision

Consolidation

2008 2013

Continuous improvement

Renewable energy

2010

2013

2014

Organic and structural growth

Continue organic and structural growth

1%

Production

Network48% 24%

7%

Other

Heat

Markets

20%

Capital employed100 % = NOK 21.9 billion as of 31.12.14

PRODUCTION

HEAT

NETWORK

MARKETS

Nordic growth strategy

Uptime and possible new aggregate

Organic growth and operational improvement

Organic growth and operational improvement

Renewable in all business areasPRODUCTION

HEAT

NETWORK

MARKETS

Renewableenergy

Renewable heat

Electrification

Efficient energyuse

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

Prepare for regulatory change

NETWORK POWER SALES

Power purchase

Sales and marketing

CustomerBuild Operate Customer

Competenceregulation

Statnett’s Elhub 1 invoice AMS*

* AMS – Automatic power meters

Maintain stable dividends

Dividend

0

18

7

6

5

4

3

2

1

Proposal 2014

NOK per share

2.50

2013

2.50

2012

2.50

2011

2.50

2010*

7.50

2.50

5.00

2009

2.25

2008

2.25

2007

3.00

2006*

17.75

2.75

15.00

2005

2.25

Ordinary

Extraordinary

* 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.

Hafslund shall…

• …be a leading energy company

• …through innovation give the

customers energy solutions for the

future

• …optimize the organization with

regards to change in regulatory

conditions

• …seek growth within Production,

Heat, Network and Markets

• …maintain stable dividends

Values to be created through

Framtidens energiløsninger

– for deg og miljøet

Network

District heating

Markets

Production

Energy solutions for the future

-for you and the enviroment

Vision

Agenda



3) Theme: Strategy

4) Appendix

Group profit and loss accountNOK million Q4 14 Q4 13 Year 2014 Year 2013

Operating revenue 3 605 3 639 (34) 12 396 12 836

Cost of energy (2 052) (2 208) 155 (6 866) (7 867)

Gross margin 1 552 1 431 121 5 530 4 970

Gain/loss financial items 44 13 31 116 125

Operating expenses (836) (839) 2 (2 851) (2 648)

EBITDA 760 606 154 2 795 2 446

Depreciation and write-downs (246) (198) (48) (1 045) (794)

Operating profit 514 407 106 1 750 1 653

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 320 275 45 1 197 1 150

Tax (113) (66) (46) (194) (402)

Profit after tax 207 208 (1) 1 003 747

Earnings per share (EPS) in NOK 1,06 1,07 (0,01) 5,14 3,83

Group balance sheetNOK million 2014-12-31 2014-09-30 Q3 14 2013-12-30

Intangible assets 2 973 2 892 80 2 606

Fixed assets 19 009 19 042 (34) 18 251

Financial assets 786 735 51 407

Accounts receivables and inventory 2 734 2 338 364 2 979

Cash and cash equivalents 742 601 142 1 143

Assets 26 243 25 609 635 25 384

Equity (incl. min. int.) 7 877 7 675 202 7 583

Allocation for liabilities 3 390 3 713 (323) 3 363

Long-term debt 9 047 9 415 (368) 9 432

Other current liabilities 2 668 2 396 272 2 332

Short-term debt 3 262 2 410 852 2 674

Equity and liabilities 26 243 25 609 635 25 384

Net interest-bearing debt 10 546 10 459 87 9 931

Equity ratio 30 % 30 % 0 % 30 %

Group cash flow

NOK million Q4 14 Q4 13 Year 2014

EBITDA 760 606 154 2 795

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 231 185 45 2 154

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)

Earnings per share

-0.06 3.83

Per quarterNOK

2012 2013 2014

0.36 ***

1.060.86

2.85 **

1.07

1.37

1.080.770.911.05

-2.97 *

0.72

1.15

Profit after tax Q3 2012 negatively affected NOK 551 million relating to extraordinary write-downs and provisions.Profit after tax Q1 2014 was positively impacted by NOK 288 million related to tax waived claims regarding Hatros.Profit after tax Q3 2014 negatively affected by NOK 93 million relating to write-downs Bio-el and secondary networks Søndre Nordstrand

5.14

* **

***

Capital employed and return on capital

employed

Production

20%

Markets

7%

Network 48%

Other

1%Heat

24%

8.3%8.0%

2012 *

4.6%

2014 ***2013 **

2012 - Includes impairments and provisions BioWood and Bio-El Fredrikstad at NOK -548 million

2013 - Includes the sale of shares in Infratek with gain of NOK 90 million

2014 - Includes write-downs of Bio-El and secondary networks Søndre Nordstrand of NOK -127 million .

*

**

***

Capital employed NOK 21.9 billion per 31.12.14

Return capital employed

Loans – portfolio data

Debt maturity profileNOK million

Loans at maturity, next 12 monthsNOK million

743

300400

1 850

0

1 000

2 000

3 000

2021

420

2020

401

2019

1 706

2018

1 460

2017

1 410

20162015

2 666

202420232022

Other loansBondCommercial paper

400319300

380300300

0

200

400

600

800

DecNovOctSep

167

AugJulJun

667

MayApr

500

MarFebJan

Other loansBondsCommercial paper

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 980 405 575

Unused drawdown facilities 3 800 3 800 0

Key figures

Power Generation 2014 2013

Capital employed 4 383 4 270

Sales price (NOK/kWh) 0.24 0.28

Production volume (GWh) 3 452 2 845

Heat 2014 2013


Sales price District heating (NOK/kWh) 0.61 0.63

Sales price Industrial energy (NOK/kWh) 0.27 0.25

Gross margin (NOK/kWh) 0.32 0.31

Sales volume (GWh) 1 907 2 072

Markets 2014 2013


- of this working capital 66 549

Volume power sales (GWh) 17 764 17 388

Group 2014 2013

Capital matters

Total assets 26 243 25 384


Equity 7 877 7 583

Market capitalization 9 897 9 042

Equity ratio 30 % 30 %

Net interest-bearing debt 10 546 9 931

Profitability

EBITDA 2 795 2 446

Earnings per share (EPS) 5,14 3,83

Cash flow per share 11,04 8,32

Network 2014 2013


Regulated gross margin for the year 2 432 2 382

Excess/(under) income ytd 206 (120)

NVE-capital (regulatory) 7 567 6 324

Shareholders as of 31.12.2014

# ShareholderClass A shares

held

Class B share

heldTotal Ownership

Share of

voting rights

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 Kommunal Landspensjonskasse 5 201 2 848 8 049 4,1 % 4,5 %

4 MP Pensjon PK 5 1 979 1 984 1,0 % 0,0 %

5 Gjensidige Forsikring 0 1 000 1 000 0,5 % 0,0 %

6 Folketrygdfondet 60 772 832 0,4 % 0,1 %

7 Skandinaviska Enskilda Banken 18 444 462 0,2 % 0,0 %

8 Hafslund ASA 0 420 420 0,2 % 0,0 %

9 New Alternatives Fund, Inc 328 0 328 0,2 % 0,3 %

10 Nordea 12 310 322 0,2 % 0,0 %

Total, 10 largest shareholders 111 002 73 822 184 824 94,7 % 96,2 %

Other shareholders 4 426 5 936 10 362 5,3 % 3,8 %

Total 115 428 79 758 195 186 100 % 100 %

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 Profit after tax / Average no. of shares outstanding

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

Return on equity last 12 monthsResult after tax last 12 months / Average equity (incl. Minority

interests) last 12 months

Return on capital employed last 12 monthsOperating profit last 12 months / Average capital employed last

12 months

Hedge ratio Hydro powerRatio of the estimated production portfolio hedged in the period

(excluding fixed-price contracts)

Hedge ratio District heatingRatio of the estimated net power price exposure hedged, by: Sales

reduced with electricity use and 1/3 heat pumps

• Additional information is available from Hafslund’s website:

– www.hafslund.no

– You can subscribe to Hafslund press releases

• Group CFO, Heidi Ulmo

– [email protected]

– Tel: + 47 909 19 325

• Financial Director and Investor Relations contact, Morten J. Hansen

– [email protected]

– Tel: +47 908 28 577

Investor information

Fourth-quarter presentation to analysts and preliminary results 2014 · 2015. 2. 4. ·...

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