AGDER ENERGI INVESTOR PRESENTATION May 13, 2014 Agenda Company - - PowerPoint PPT Presentation

AGDER ENERGI INVESTOR PRESENTATION

Annual Report 2013

May 13, 2014

Agenda

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Company overview Strategy and investments Financial info Funding and liquidity

A leading Norwegian renewable energy group

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Facts about Agder Energi

• Vertically integrated energy group,

1,550 employees, sales ca. 10 bn. kr.

• Fourth largest energy producer, mean

production 7.7 TWh, 47 power stations.

• Fourth largest network company,

188,000 customers.

• Ca 10 TWh enduser sales, largest in

corporate segment, 147,000 household customers.

• 45.5% owned by Statkraft and 54.5%

Agder municipalities.

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Organization focused on value creation

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High production flexibility

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Water course Mean production TWh/year Reservoir capacity TWh Otra 3.3 2.6 Mandal 1.7 0.5 Arendal 1.3 0.7 Sira-Kvina 0.8 0.7 Ulla-Førre 0.3 0.5 Other 0.4 0.1 Total 7.8 5.1

67% of annual mean inflow may be stored in reservoirs.

Precipitation Areas

Network consolidated in Agder

• AE Nett owns and
• perates the local and

regional distribution network in Aust- and Vest-Agder.

• Stable and considerable

cashflow.

• Network capital 3,523
• mill. kr.

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Key credit factors

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• Strong market position
• Competitive low cost and flexible producer of hydro power.
• Monopoly on regional and local distribution network in the Agder

counties.

• Strong cash flow
• High level of el-price hedge next 3-5 years.
• Stable and considerable cash flow contribution from monopoly

activity.

• Investment flexibility
• Considerable optionality in existing project portfolio.
• Strong and stable ownership structure
• 30 coordinated municipalities and Statkraft, which is 100% state
• wned (AAA).

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Company overview Strategy and investments Financial info Funding and liquidity

Core business activities

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Hydro Power Network Energy Management Market

LOS – enduser sales Otera – infrastructure contractor Varme – district heating and cooling Build and operate hydro power stations Build and operate distribution network Energy management and trading Value creation of the portfolio

Investments 2014-2018

• 85%-90% hydro power

and network.

• Options on Wind and

Hydro Power.

• Comitted and gvt imposed

750 mill. kr on annual average.

• Ongoing process on group

strategy.

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5 largest projects Network AMS Hydro Power Skjerka dam and generator Hydro Power Iveland II Hydro Power Tunnel Langevann-Nåvann AE AS Bjerkreim wind park

51% 32% 8% 8% Hydro Power Network Wind Other

Potential 600 GWh new production

Main projects: Brokke North and South, Skarg power station 175 GWh. Completion Q2 2014. Åseral projects, potential of ca 200 GWh. 2014-2018. Iveland II 150 GWh. Initiated, completion Q2 2016.

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Power station Pump station New power station

Focus on profit improvement

• Changed organization – a more transparent group structure.
• Focus on core business activities, several companies sold.
• Efficiency, reduction of staff.
• Challenge the entire organization – continuously.
• Ensure progress and realization of benefits and gains.
• Extention of improvement program to 2020:
• Further simplification and improvement.
• Ensure increased pace of restructuring.
• Further adjustment of shared services activities and profit centers.

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Company overview Strategy and investments Financial info Funding and liquidity

Highlights 2013

• Solid profit from operations.
• 2,289 mill. kr underlying EBITDA.
• Positive development in operational cost.
• High investment activity 1,364 mill. kr.
• Hydro Power 778 mill. kr (new investments 535 mill. kr).
• Network 429 mill. kr.
• Historic low sickness absence 3.6%.

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Key figures

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(mill. kr) 2009 2010 2011 2012 2013 Sales 8,287 9,345 10,684 8,946 9,890 Underlying EBITDA 2,642 2,260 1,924 1,957 2,289 Net income after taxes 1,604 751 1,161 1,045 846 Equity ratio 25.5% 20.9% 21.9% 25.6% 26.1% Interest bearing debt 5,944 7,621 7,028 7,223 7,668 FFO/Net debt* 27.8% 23.4% 19.8% 20.0% 21.6%

* FFO unadjusted, adjustments are made in rating process. Interest bearing debt on 4 quarter rolling basis.

Development in production

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7 831 6 586 6 550 8 134 7 738

• 2 000

4 000 6 000 8 000 10 000 2009 2010 2011 2012 2013 GWh

Reservoir levels Norway

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20 40 60 80 100 1 11 21 31 41 51 % Week 2014 2013 2012 Mean

• AE’s reservoir levels were considerably higher than average at the end of 2013.

Price development Nord Pool

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20 40 60 80 1 11 21 31 41 51 EUR/MWh Week Spot/forward 2014 Spot 2013 Spot 2012

• Average spot price (NO2) 29.0 øre/KWh in 2013, up 33% from 2012.
• Forward prices point to lower prices in 2014 than average spot price in 2013.

Cash flow

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1 486

• 1 355
• 626
• 2 000
• 1 000

1 000 2 000 3 000 2009 2010 2011 2012 2013

• Mill. kr

Operations Net investments Dividend

• Strong cash flow and underlying EBITDA.
• Gross investments 1,378 mill. kr.
• 95% of investments in durable assets in Hydro Power and Network.

Development underlying EBITDA1

2 642 2 260 1 924 1 957 2 289

• 500

1 000 1 500 2 000 2 500 3 000 2009 2010 2011 2012 2013

• Mill. kr

EBITDA

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1Adjusted for unrealized value changes in power derivatives and significant non-recurring items.

Change in underlying EBITDA1

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1Adjusted for unrealized value changes in power derivatives and significant non-recurring items.

1 957 2 289 92 155 72 12

• 500

1 000 1 500 2 000 2 500 EBITDA 2012 Hydro Power Network Market Other EBITDA 2013

• Mill. kr

EBITDA pr. profit center2

Distribution 2013 (mill. kr) Development

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1 675 684 131 Hydro Power Network

• 500

1 000 1 500 2 000 2 500 3 000

• Mill. kr

Hydro Power Network Market

2Profit centers are reported according til NGAAP.

Investment pr. profit center

Distribution 2013 (mill. kr)

778 429 52 Hydro Power Network

Development

• 200

400 600 800 1 000 1 200 1 400

• Mill. kr

Hydro Power Network Market

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Current dividend policy

• 500 mill. kr plus 60% of excess profit.
• Based on group income to majority according to

NGAAP.

• Policy is rule of thumb, qualitative assessment

annually.

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Company overview Strategy and investments Financial info Funding and liquidity

Robust funding structure

Diversified funding sources

Bank loans NOK 8 % Bank loans EUR 19 % Bonds 56 % CPs 9 % US PP 8 %

Balanced maturity structure

500 1 000 1 500

• Mill. kr

Bank loans NOK Bank loans EUR Bonds CPs US PP

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Backstop 2 x 500 mill. kr ununtilized.

Financial strenght and rating

27,8% 23,4% 19,8% 20,0% 21,6% 0% 10% 20% 30%

FFO3/Net debt

Long term objective shadow rating: Minimum BBB+

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3Unadjusted, adjustments are made in shadow rating. Interest bearing debt on 4 quarter rolling basis.

Net interest bearing debt 7,390 mill. kr (7,207 mill. kr in 2012) FFO 1,596 mill. kr (1,438 mill. kr in 2012)

Funding overview

• Funding is done at parent company level.
• Flexibility by diversified funding sources and sufficient

back stop facilities.

• Funding need is decided by cash flow from operations

and investment activities and dividend.

• Maturity 1.2 bn. kr rest 2014.
• Funding sources: Domestic bond and CP market,

banks, private placement markets, etc.

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