Investor presentation Annual report 2014 April 30, 2015 Agenda - PowerPoint PPT Presentation

Investor presentation Annual report 2014 April 30, 2015

Agenda • Company overview • Strategy and investments • Financial info • Funding and liquidity

Our vision A leading Norwegian renewable energy group

Facts about Agder Energi Vertically integrated energy group, 1 200 employees, • sales ca. 8 bn. kr. Fourth largest energy producer, mean production 7.9 • TWh, 48 power stations. Fourth largest network company, 190 000 • customers. Ca. 9 TWh enduser sales, largest in corporate • segment. 45.5 % owned by Statkraft and 54.5 % Agder • municipalities.

Organization Group CEO Finance and risk HR and shared management services Public affairs Market/business Energy management Hydro electric power Network development LOS Otera AE Varme AE Venture

High production flexibility Water Mean production Reservoir course TWh/år capacity TWh Otra 3.3 2.7 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 7.9 5.3 63 % of annual mean inflow may be stored in reservoirs. Precipitation Areas

Network consolidated in Agder Agder Energi Nett owns and • operates the local and regional distribution networks in Aust- and Vest-Agder. Stable and considerable cash • flow. Network capital 3 691 mill. kr. •

Key credit factors 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 business. Investment flexibility • • Optionality in existing project portfolio. Strong and stable ownership structure • • 30 coordinated municipalities and Statkraft, which is 100% state owned (AAA).

Agenda • Company overview • Strategy and investments • Financial info • Funding and liquidity

Core business activities Hydro Power Network Build and operate hydro power stations Build and operate distribution network Energy Management Market LOS – enduser sales Energy management and trading Otera – infrastructure contractor Value creation of the portfolio Varme – district heating and cooling

Investments 2015-2019 • More than 95 % hydro power 3 % and network. 41 % • Network investments include AMS and transformer Honna, 56 % which will be transfered to Statnett in 2018. Hydro power Network Other • Options on wind and hydro Largest prosjects power. Network AMS Hydro power Skjerka dam and generator • Comitted and gvt. imposed 650 Hydro power Iveland II mill. kr on annual average in Hydro power Tunnel Langevann-Nåvann the 5 year period.

Expansion phase 600 GWh toward 2020 Main projects: Brokke North and South, Skarg power station 175 GWh. Completed Q2 2014. Åseral-projects, potential of ca. 200 GWh. 2014-2018. Skjerka dam initiated Q3 2014. Iveland II 150 GWh. Initiated, completion Q2 2016.

Focus on profit improvement Organization – a more transparent group structure. • Focus on core business, several companies sold. • Efficiency, reduction of staff. • Ever improving work processes. • Focus on realization of benefits and gains. • Ensure increased pace and ability to continuing • restructuring.

Agenda • Company overview • Strategy and investments • Financial info • Funding and liquidity

Highlights 2014 • Robust profit from operations. 2 467 mill. kr (2 289 mill. kr) underlying EBITDA. • • New hydro power contracts – 1.5 TWh pr. year 2021-2030. • Otera Elektro sold to Bravida. • High investment activity 1 200 mill.kr (1 364 mill. kr). • Low sickness absence and historic low number on accidents.

Key figures (mill. kr) 2014 2013 2012 2011 2010 Sales 8 267 9 391 8 946 10 684 9 345 Underlying EBITDA 2 467 2 304 1 957 1 924 2 260 Net income after taxes 492 846 1 045 1 161 751 Equity ratio 22.9 % 26.1 % 25.6 % 21.9 % 20.9 % Interest bearing debt 8 299 7 668 7 223 7 028 7 621 FFO/Net debt* 25.1 % 21.8 % 20.0 % 19.8 % 23.4 % * FFO unadjusted, adjustments are made in rating process. Interest bearing debt on 4 quarter rolling basis.

Development in production 10 000 9 060 8 134 7 738 8 000 6 586 6 550 6 000 GWh 4 000 2 000 0 2010 2011 2012 2013 2014

Reservoir levels NO2 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% jan. feb. mar. apr. mai jun. jul. aug. sep. okt. nov. des. 10 Y average 2013 2014 2015 Gjennomsnitt siste 10 år Agder Energis reservoir levels were considerably higher than average at the and of 2014. •

Price development Nord Pool 45 40 35 30 NOK/KWh 25 20 15 10 5 0 jan. feb. mar. apr. mai jun. jul. aug. sep. okt. nov. des. Spot/forwardpris 2015 Spotpris 2014 Spotpris 2013 • Average spot price (NO2) 22.8 øre/KWh in 2014, down 22 % from 2013. • Forward prices point to lower prices in 2015 than average spot price in 2014.

Cash flow 2 500 2 000 1 512 1 500 1 000 Mill. kr 500 0 -713 -500 -1 000 -1 156 -1 500 -2 000 2010 2011 2012 2013 2014 Operations Net investments Dividend • Strong cash flow and underlying EBITDA. • Gross investments 1 200 mill. kr. • 90% of investments in durable assets in hydro power and network.

Development underlying EBITDA 1 3 000 2 467 2 500 2 304 2 260 1 957 1 924 2 000 Mill. kr 1 500 EBITDA 1 000 500 0 2010 2011 2012 2013 2014 1 Adjusted for unrealized value changes in power derivatives and significant non-recurring items.

Change in underlying EBITDA 1 2 500 15 -12 -70 228 2 000 1 500 Mill. kr 2 467 2 304 1 000 500 - EBITDA Hydro Network Market Other EBITDA 2013 power 2014 1 Adjusted for unrealized value changes in power derivatives and significant non-recurring items.

EBITDA pr. profit center 2 Development Distribution 2014 (mill. kr) 3 000 203 2 500 359 2 000 Mill. kr 1 500 1 000 500 0 1 920 Hydro power Network Hydro power Network Market Market 2 Profit centers are reported according to NGAAP.

Investment pr. profit center 2 Distribution 2014 (mill. kr) Development 1 400 1 200 133 1 000 Mill. kr 800 600 538 400 366 200 - Hydro power Network Hydro power Network Market Market 2 Profit centers are reported according to NGAAP.

Current dividend policy • Revised down to 400 mill. kr plus 60 % of excess profit. • Based on group income to majority according to NGAAP. • Policy is rule of thumb, qualitative assessment annually.

Agenda • Company overview • Strategy and investments • Financial info • Funding and liquidity

Robust funding structure Funding sources Maturity structure 2 000 8 % 1 500 19 % Mill. kr 1 000 500 73 % - Bonds Bankloan EUR US PP Bonds Bankloan EUR US PP Backstop 2 x 500 mill. kr unutilized.

Financial strength and rating FFO 3 /Net debt Long term objective shadow rating: 30% 25,1 % 23,4 % 19,8 % 20,0 %21,8 % 20% Minimum BBB+ 10% 0% Net interest bearing debt 7 935 mill. kr (7 390 mill. kr in 2013) FFO 1 992 mill. kr (1 611 mill. kr in 2013) 3 Unadjusted, adjustments are made in shadow rating. Interest bearing debt on 4 quarter rolling basis.

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 activites and dividend. • Maturity 500 mill. kr rest 2015. • Possible funding sources: Domestic bond and CP market, banks, private placement markets, etc.