Third-quarter 2015 presentation to analysts - Microsoft · PDF fileThird-quarter 2015...
Transcript of Third-quarter 2015 presentation to analysts - Microsoft · PDF fileThird-quarter 2015...
Third-quarter 2015 highlights
• A good EBITDA of 663 million, which is on par with last year, driven by solid operations in all
business segments.
• Profit after tax of NOK 237 million (NOK 71 mill) is a significant improvement on the previous
year as a result of lower financial expenses and negative non-recurring effects in 2014.
• Integration of Networks business completed. Operating profit Network for 2015 expected 10
percent higher than 2014.
• 60 percent lower power prices offset in part by higher production volumes and hedging
activities.
• Equity ratio of 33 percent is an increase of 3 percentage points from last year.
• Adopted investment new generator at Vamma with annual output of 1.0 TWh, of which about
220 GWh in increased renewable production. Scheduled for completion in spring 2019.
3
Development EBITDA** and power price
* Spot prices are quarterly averages of NO1. Source. www.nordpoolspot.com
** EBITDA for business areas Production, Heat, Network and Markets. (Excluding Other business)4
620618
538
0
150
300
450
600
750
900
0.1
0.2
0.4
0.3
0.0
Q3 2014
0.25
Q3 2012
0.27
Q3 2013 Q3 2015
NOK/kWh
0.10
EBITDA**
NOK million
453
0.13
EBITDA
+16 %
Spot
price
-53 %
Average EBITDA
Average spot priceSpot prices *
EBITDA
3Q15
compared to
average Q3
last 3 years:
EBITDA third-quarter 2015 and change from 2014
5
EBITDA Q3 2015 Change in EBITDA from Q3 2014
121
350
143
43
663
6
HeatProduction Network Markets Other EBITDA
15
5
3
4
21
NetworkEBITDA
Q3 2014
MarketsProduction EBITDA
Q3 2015
Heat Other
656
663NOK million NOK million
Power prices against last year
Source for price data: www.nordpoolspot.com og www.nasdaqomx.com/commodities 16 October 20156
0,00
0,05
0,10
0,15
0,20
0,25
0,30
NOK/kWh
JunMay Jul OctAug Sep Nov DecAprMarFebJan
Oslo price (NO1) 2015Oslo price (NO1) 2014
Production
• The result is characterized by high
production, low power prices and high
hedging result.
• Production 14 percent above normal.
• Electricity prices on the Nord Pool
spot (NO1) NOK 0.10 per kWh in the
quarter - down 60 percent from last
year.
• Result from hedging NOK 69 million
(NOK -1 million).
• Hedging ratio next six months 37
percent - hedging price 0.064
NOK/kWh higher than market price.
7
163 163 155 143 142 159
70
121 121
0
40
80
120
160
200
0
150
300
450
600
750
Q3 13 Q4 13 Q1 15Q4 14Q3 14Q2 14Q1 14 Q3 15
Quarter
NOK mill
Last 12 months
NOK mill
Q2 15
Development EBITDA
NOK million Q3 2015 Q3 2014 YTD 2015 YTD 2014
Operating revenue 179 207 538 647
Gross margin 185 213 533 647
EBITDA 121 142 312 440
Operating profit 111 130 276 404
Revenue (NOK/kWh) 0.17 0.23 0.19 0.23
Production volume (GWh) 1 050 814 2 609 2 598
Investments 4 7 21 11
Expected completed in spring 2019
Building of new generator at Vamma decided
8
Facts:
Investment 920 NOK mill.
Installed effect 128 MW
Production Vamma 12 1 000 GWh
Increased renewable
production220 GWh
Increased renewable energy production, increased flexibility and reduced risk in Hafslund's power generation
Rationale new generator
9
• Less vulnerable to failures and loss in production
• Postponing necessary upgrading of the current main
generator
• The oldest generators becomes flood aggregates
• Increased flexibility for future maintenance
Reduce risks
Profitable growth
• Increases total production in Vamma with about 16%
• Increased production electricity certificates entitled from
2019 through 2035
Hydropower – Waterway flow and capacity
utilization
* Normal = Median waterflow last 10 years10
0
500
1 000
1 500
2 000
2 500
3 000
m3/sec.
DecNovOctSepAugJulJunMayAprMarFebJan
Max. capacity utilization2015 Normal *2014
Production volume
* Normal = 3.100 GWh based on 10 years data adjusted for efficiency improvements.11
0
100
200
300
400
GWh
FebJan Nov DecSepAugMar OctApr May Jun Jul
2015Normal* 2014
Heat
12
112161
116
201
-50
0
50
100
150
200
250
0
50
100
150
200
250
300
350
9
Q2 14
-919
Q1 15Q3 14 Q4 14
Quarter
NOK mill
Q2 15 Q3 15Q1 14Q4 13Q3 13
6
Last 12 months
NOK mill
6
• Satisfactory performance in a quarter
with normally low energy demand and
low energy prices.
• New customers with an annual heating
requirement of 12 GWh connected in
the quarter.
• Low production costs due to a high
proportion of baseload (waste).
• Result from hedging of NOK 9 million
(NOK -2 million).
• Hedging ratio next six months 50
percent - hedging price 0.091
NOK/kWh higher than the market price.
Development EBITDA
NOK million Q3 2015 Q3 2014 YTD 2015 YTD 2014
Operating revenue 76 82 646 615
Gross margin 61 44 397 337
EBITDA 6 (9) 226 161
Operating profit (30) (109) 119 (13)
Production volume (GWh) 151 143 1 056 1 009
Gross margin (NOK/kWh) 0.43 0.38 0.39 0.33
Investments 52 31 82 51
Network
14
286 266 279 312 345 378304 332 350
0
100
200
300
400
0
200
400
600
800
1 000
1 200
1 400
Q2 15
Quarter
NOK mill
Last 12 months
NOK mill
Q1 15Q4 14Q3 14Q2 14Q1 14Q4 13Q3 13 Q3 15
• Integration of acquired distribution
activities completed.
• Stable operations and profit in line
with last year.
• Low transmission losses and few
malfunctions provides increased
margin compared to last year.
• With normal energy demand in Q4,
expected operating profit for 2015 is
about 10 percent higher than 2014.
• Progressively higher level of
investment as a result of increased
activity in the AMS project.
Development EBITDA
NOK million Q3 2015 Q3 2014 YTD 2015 YTD 2014
Operating revenue 1 019 1 029 3 143 2 960
Gross margin 729 701 2 113 1 979
EBITDA 350 345 985 935
Operating profit 201 201 599 539
Delivered volume (TWh) 3.2 3.0 13.4 11.9
Investments 222 198 595 431
Markets
15
83 96
140 126 140
78
181
133 143
0
50
100
150
200
0
100
200
300
400
500
600
Quarter
NOK mill
Q2 15Q1 15Q4 14Q3 14Q2 14Q1 14Q4 13Q3 13 Q3 15
Last 12 months
NOK mill
• A good result in a quarter with low
energy demand.
• Good margins and increased number
of benefit products from electricity
sales in Norway.
• Weak earnings from electricity sales
Sweden and Finland due to the
establishment of a new operating
platform to facilitate further growth.
• Power sales with a result of NOK 82
per customer after tax (NOK 56).
• 1,045,000 customers at the end of the
third quarter, of which 319,000 outside
Norway.
Development EBITDA
NOK million Q3 2015 Q3 2014 YTD 2015 YTD 2014
Operating revenues 888 1 187 4 209 4 518
Gross margin 383 308 1 144 1 029
EBITDA 143 140 456 406
Operating profit 122 109 396 349
Sold volume (GWh) 3 017 2 974 12 687 12 487
Change in net debt during the quarter
16
663
Paid interest
-53
EBITDANet debt Q2 2015
9 887
9 728
Net debt Q3 2015Net investments
-284
Change in working
capital etc
-138
Paid taxes
-29
NOK million
Solidity development last years
* EBITDA for core business (Production, Heat, Network and Markets) last 12 months..17
Debt / EBITDA *Equity ratio (percent)
Q3 2015
3.6
Q3 2014
4.1
Q3 2013
4.0
Q3 2012
4.8
30%
Q3 2013 Q3 2015
31%
Q3 2012
28%
33%
Q3 2014
Summary of third-quarter 2015 profit
18
76 64 663656
EBITDA Q3 15Operating
expenses
Gain/loss
financial items
5
Gross marginEBITDA Q3 14
236
79
111
237
663
Profit after
tax Q3 15
Financial
expenses
DepreciationEBITDA Tax
Change in EBITDA from Q3 2014 Profit after tax Q3 2015
Earnings per
share NOK 1.21
Of which NOK 44
million value
change on loans
Outlook
19
• Operating profit Network 2015 expected about 10 percent higher than 2014.
• Forward system price as of Q3 for delivery of power in 2015 at 0.19 NOK/kWh (0.20 NOK/kWh for Q4) and for delivery in 2016 at 0.20 NOK/kWh.
• Q4 and Q1 with seasonally high energy demand for Heat and Markets.
• Power generation with expected production in Q4 around normal (760 GWh).
• New generator at Vamma will produce about 220 GWh electricity certificates eligible new production in 2019.
• AMS project conducting pilot tests and start-up deployment in 2016.
Integration acquired network business in Østfold
completed
• In line with the Group's strategy of organic and structural growth in the network business
• Optimal geographic match
• Synergies and improved relative efficiency
• Stable returns and enhanced dividend capacity
* Regulatory asset base21
Facts acquired network business(As of May 2014)
• Network business in Østfold
acquired 1 May 2014
• Large parts of the distribution
network in Østfold
• About 103,000 customers
• Transferred volume '13: 2.5 TWh
• 96 employees
• RAB* '13: NOK 953 million
• Investment: NOK 1.36 billion. incl.
• 49% in Trøgstad Elverk
• 49 % in Fredrikstad Energi (FEAS)
• 35 % in Fredrikstad Nett (FEN)
Rationale
Hafslund 100 %
owner
Hafslund partial
owner / none
Group profitability and balance sheet strengthened during the integration period
Hafslund a stronger infrastructure company
* The increase includes only Fortum Distribution and not indirect ownership of FEAS and FEN; figures for Hafslund Nett and Fortum Distribution
per 31.12.2013
Source: NVE; E-rapp 2012, Inntektsramme 201422
Acquired network business in Østfold
Group’s profit and balance
• Debt financed
• Stable cash flow from operations and increased investment requirements due to increased activity and AMS
• Group with solid financial strength - strengthened from before acquisition
Profit Equity ratio
2 8842 795
2 446
1 0811 003747
last 12
months
20142013
EBITDA Profit after taxes
30.09.15
33%
31.12.14
30%
31.12.13
30%
Equity ratio
Number of customers* and geography
185
Hafslund
Nett
674
571
103
Skagerak
Nett
183184
BKK Nett Agder
Energi
Nett
+ 18 %
No. customers (in thousands)
NOK ~45 million in synergies for 2016 - increasing to NOK ~60 million in annual effect
after deploying AMS
Synergies and regulatory effect
23
Synergies
Harmony effect
• Onetime compensation for loss of income by the acquisition as a result of reduced efficiency
measurement (DEA) compensated by harmony effect
• Allowed revenue for 2016 is expected to include a harmony effect that will reduce overall surplus
revenue
Staffing
IT
AMS
Co-location
Administration
Other
Customer/operations
Workforce reduction taken out through natural turnover
Integration IT Hafslund Network’s IT platform
Lower investments and future operating costs AMS
Majority of employees and operations center co-located in Oslo
Economies of scale on staff and support services
Stronger expertise and new operating model provides a foundation for
efficient operations
Economies of scale in customer service
2. Took over shares
3. Decided one operation center
and joint AMS
1.Agreed purchase
Apr.
Jun.
5.Placement of all employees
6.Merger
Dec.
8.Co-localization
9.IT conversion
7. New organization, joint finance and HR systems
10. Transfer ofcustomer services
4.Decided localization and new operating model
12. Termination deliveryagreement with Fortum
11.Joint operationscenter
...rapid integration important for realizing synergies and startup AMS deployment
14 months from acquisition to integration
completed
24
2014 2015
Integration
completed →
Ready for
AMS
deployment
Sep.
New electricity meters to 700,000 Hafslund
customers
*AMS – Automatic Metering Infrastructure
25
AMI mandatory by 2019 AMS mandatory by 2019
AMS AMS
AMS a comprehensive logistics and customer project with an investment of about NOK
2.4 billion
Rollout AMS
26
2015 2016 2017 2018
1 Jan
2019
AMS
rolled
out
Contracts, preparation, testing and piloting Rollout
Pilot 1
500
customers
Pilot 2
10,000
customers
Hafslund Network’s 700,000 meters shall be replaced with the assistance of subcontractors
Meter change - effective and purposeful
27
DialogueMeter
replacementNew meter1 2 3
• Letters and booking
• Advertising
• Media and Social Media
• www.hafslundnett.no
Group profit and loss
30
NOK million Q3 2015 Q3 2014 YTD 2015 YTD 2014
Operating revenue 2 158 2 507 (349) 8 545 8 791
Cost of energy (836) (1 261) 425 (4 441) (4 813)
Gross margin 1 322 1 246 76 4 104 3 978
Gain/loss financial items 19 24 (5) 78 72
Operating expenses (678) (614) (64) (2 058) (2 015)
EBITDA 663 656 7 2 124 2 035
Depreciation and write-downs (236) (382) 146 (672) (799)
Operating profit 427 275 152 1 452 1 236
Interest expences (123) (126) 2 (300) (315)
Market value change loan portfolio 44 (11) 55 105 (44)
Financial expenses (79) (136) 57 (195) (359)
Pre-tax profit 348 138 209 1 256 877
Tax (111) (67) (44) (383) (81)
Profit after tax 237 71 166 873 796
Earnings per share (EPS) in NOK 1.21 0.36 0.85 4.47 4.08
Group balance sheet
31
NOK million 2015-09-31 2015-06-30 Q2 15 2014-12-31
Intangible assets 2 966 2 956 10 2 970
Fixed assets 19 133 19 074 59 19 011
Financial assets 1 164 1 046 119 786
Accounts receivables and inventory 1 727 1 866 (139) 2 703
Cash and cash equivalents 337 265 72 742
Assets 25 328 25 207 121 26 212
Equity (incl. min. int.) 8 388 8 154 233 7 877
Allocation for liabilities 4 043 4 018 25 3 858
Long-term debt 8 136 8 485 (349) 8 692
Other current liabilities 1 989 1 723 266 2 668
Short-term debt 2 772 2 827 (54) 3 117
Equity and liabilities 25 328 25 207 121 26 212
Net interest-bearing debt 9 728 9 887 (159) 10 577
Equity ratio 33 % 32 % 1 % 30 %
Cash flow
32
NOK million Q3 2015 Q3 2014 Year 2014
EBITDA 663 656 7 2 795
Paid interests (53) (54) 1 (452)
Paid tax (29) 142 (171) (58)
Marketvalue changes and other liquidity adjustments (13) (8) (5) (67)
Change in working capital, etc. (166) (368) 202 (64)
Total cash flow from operations 402 368 34 2 154
Net operations and expansion investments (296) (253) (43) (1 896)
Net purchase/sale of shares etc. 12 (11) 23 (379)
Cash flow from investments activities (284) (264) (20) (2 275)
Cash flow to down payments and interests 118 104 14 (121)
Earnings per share
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 Nordstrand33
-0.06 3.83
Per quarterNOK
2012 2013 2014
0.36 ***
0.86
2.85 **
1.50
1.071.081.21
1.43
1.83
1.060.77
0.911.05
-2.97 *
0.72
1.15
5.14
*
**
***
2015
4.47
Capital employed and return on capital employed
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 .
2015 – Last 12 months34
Capital employed NOK 21.5 billion as of
30.09.2015Return on capital employed
4%
Network
8%
48%
Markets
Heat
Other
21%
Production
19%
8.3%
2013 * 2015 ***
8.0%
2014 **
9.2%
*
**
***
Loans – portfolio data
35
Debt maturity profileNOK million
Loans at maturity next 12 monthsNOK million
743
300400
0
1 000
2 000
3 000
2021
420
2020
701
2019
1 706
2018
1 460
2017
1 410
2016
2 143
2015
700
2022 20242023
Other loansBondsCommercial paper
400350
500
300300
0
200
400
600
SepAugJulJunMayAprMarFebJanDecNovOct
Other loansCommercial paper Bonds
Q3 15 Q2 15
Bonds 77 % 77 % 0 %
Commercial paper 6 % 6 % 0 %
Other loans 17 % 17 % 0 %
NOK million Q3 15 Q2 15
Nominal value - market value of loans (250) (294) 44
Market value interest rate and fx derivatives (83) (47) (36)
Average interest incl. derivatives (%) 3.8 % 3.8 % 0.0 %
Proportion of loan portfolio with fixed
interest (%)57 % 55 % 2 %
Loans at maturity next quarter 700 0 700
Unused drawdown facilities 3 670 3 800 (130)
Key figures
36
Group YTD 2015 YTD 2014
Capital matters
Total assets 25 328 25 609
Capital employed 21 688 21 456
Equity 8 388 7 675
Market capitalization 11 241 9 751
Equity ratio 33 % 30 %
Net interest-bearing debt 9 728 10 459
Profitability
EBITDA 2 124 2 035
Earnings per share (EPS) 4.47 4.08
Cash flow per share 10.65 9.85
Power Generation YTD 2015 YTD 2014
Capital employed 4 215 4 313
Sales price (NOK/kWh) 0.19 0.23
Production volume (GWh) 2 609 2 598
Heat YTD 2015 YTD 2014
Capital employed 4 567 4 273
Sales price District heating (NOK/kWh) 0.63 0.60
Gross margin (NOK/kWh) 0.39 0.33
Sales volume (GWh) 1 056 1 009
Network YTD 2015 YTD 2014
Capital employed 10 463 10 321
Regulated gross margin for the year 2 652 2 432
NVE-capital (regulatory) 7 526 7 217
Markets YTD 2015 YTD 2014
Capital employed 1 630 1 811
- of this working capital 34 235
Volume power sales (GWh) 12 687 12 487
Stockholders as of 30.09.2015
37
# 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 0 1 979 1 979 1.0 % 0.0 %
5 Gjensidige Forsikring 0 1 000 1 000 0.5 % 0.0 %
6 Folketrygdfondet 85 784 869 0.4 % 0.1 %
7 Skandinaviska Enskilda Banken 17 405 418 0.2 % 0.0 %
8 Greenwich Land Securities AS 83 317 400 0.2 % 0.1 %
9 New Alternatives Fund, Inc 328 0 328 0.2 % 0.3 %
10 JP Morgan Chase Bank 14 309 323 0.2 % 0.0 %
Total, 10 largest shareholders 111 107 73 691 184 798 94.7 % 96.3 %
Other shareholders 4 321 6 067 10 388 5.3 % 3.7 %
Total 115 428 79 758 195 186 100 % 100 %
Definitions
38
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 months Result after tax last 12 months / Average equity (incl. Minority interests) last 12 months
Return on capital employed last 12 months Operating 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
Investor information
• Additional information is available from Hafslund’s website:
– www.hafslund.no
– You can subscribe to Hafslund press releases
• Group CFO, Heidi Ulmo
– Tel: + 47 909 19 325
• Financial Director and Investor Relations contact, Morten J. Hansen
– Tel: +47 908 28 577
39