Statkraft Investor Update March 2014 Disclaimer This presentation - - PowerPoint PPT Presentation

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Statkraft

Investor Update

March 2014

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Disclaimer

This presentation has been prepared by, and the information contained herein (unless otherwise indicated) has been provided by Statkraft AS (the "Company"). By attending the meeting or otherwise viewing this presentation you agree to be bound by the following conditions. This document and the information therein are being furnished to you solely for your information and may not be reproduced, redistributed or passed on, in whole or in part, to any other person. This document does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of the Company or any of its subsidiaries in any jurisdiction or an inducement to enter into investment activity. No part of this document, nor the fact of its distribution or reception, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. This document is not a prospectus and does not comply with rules or regulations regarding investor information, and has not been approved by or filed with any stock exchange or regulatory authority. Amongst others, this document does not disclose risks and other significant issues related to an investment in any securities. Investors should only subscribe for any transferable securities on the basis of information in a relevant prospectus and term sheet, and not on the basis of any information provided herein. The information contained in this document has not been independently verified and no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. None of the Company, or any of its affiliates, advisers or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this document. The information contained in this document is provided as at the date of this document and is subject to change without notice. This document may not be distributed or delivered to any person or in any jurisdiction where such distribution is unlawful or restricted. This document may not be delivered in the United States or to any person or entity in the United States. 2

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1.

Agenda

2. 3. 4. 5.

Statkraft overview Strategy and market dynamics Financial update Funding and liquidity Summary Appendix

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Statkraft at a glance

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NOK 47.5 47.5 bn UNDERLYING GROSS REVENUES 2013 NOK 12.4 bn UNDERLYING EBITDA 2013 55.9 TWh

POWER GENERATION 2013

16.0 GW

INSTALLED CAPACITY 2013

100%

OWNED BY THE KINGDOM OF NORWAY

A-/Baa1

(stable outlooks)

S&P / MOODY’S CREDIT RATINGS

Gas power Wind power Distribution grid District heating Hydropower

NO NO

• No. 1 power generator

(~35%)

SWE

• No. 4 power generator

(~5%)

UK UK

Wind power initiatives

GER

Growth outside Europe through SN Power (60% ownership) Flexible power generation

SE EUROPE

Hydropower development EU EUROPE PE Trading activities

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Europe’s leader in renewable energy

Source: PwC

1 Main assumptions: full consolidation of subsidiaries, proportional consolidation of associated companies, energy consumption for

pumped hydropower deducted, electricity from long-term purchasing contracts deducted, production outside Europe deducted

Statkraft’s total power generation 2013 (55.9 TWh)

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18 19 21 27 28 30 40 46 49 64 Hidroelectrica GDF SUEZ E.ON Iberdrola Verbund Fortum Enel Vattenfall EDF Statkraft

Top 10 renewable electricity producers in Europe 2012 (adjusted1)

Electricity production (TWh) Hydro 95% Gas 2% Wind 2.5% Bio 0.5%

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Flexible low-cost power producer

 Low-cost power production dominated by

renewable energy

• Average hydropower production cost of

10.2 EUR/MWh1 in 2013

 Peak supplier with high degree of flexibility

• 80% of installed capacity within highly flexible

hydropower

• Production optimised relative to power prices and

water inflows

 Substantial reservoir capacity

• Europe’s largest reservoir capacity (~40 TWh)

 Unique information base and power market

modelling

1 Annual Report 2013: 80 NOK/MWh. Incl. property tax and depreciations, excl. sales costs, overhead, net financial items and tax.

Based on normal production from power plants under own management in Norway, Sweden, Germany and the UK.

Blåsjø, one of Europe’s largest hydropower reservoirs, with multi-year energy storage capacity (7.8 TWh)

6

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Long-term contracts stabilize earnings

 ~ 20 TWh sold on long-term contracts

with power-intensive Nordic industry

 Corresponding to ~ 40% of Statkraft’s

annual mean power production for Nordic hydropower

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5 000 10 000 15 000 20 000 25 000 30 000 2014 2016 2018 2020 2022 2024

GWh Statutory priced lease agreements Statkraft's share of leasing agreements Long-term market contracts

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Key credit strengths

 Strong market position

• a competitive, low-cost and flexible generator of electricity

 Stable cash flow

• a substantial share of long-term industrial supply contracts

 Capex flexibility

• several options within current investment program

 Solidly owned by the state in one of the most creditworthy countries in the world

• the Norwegian state as the sole shareholder (AAA/Aaa)

8

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2.

Agenda

1. 3. 4. 5.

9

Statkraft overview Strategy and market dynamics Financial update Funding and liquidity Summary Appendix

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A changing energy landscape

 Flat energy demand in Europe and

more production from new renewables

 Growing concerns in Europe about

security of supply and affordability

 Traditional “utility business model”

challenged by a transformed value chain

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 Attractive support schemes driven by

European transformation to renewable energy

 New business opportunities closer to

end users and through integration of intermittent renewable capacity

 Strong growth in emerging markets

Market challenges Market opportunities

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District Heating

Strategic focus areas and ambitions

European Flexible Generation Wind Power Hydropower in Emerging Markets Market operations

• First priority to maintain & develop Nordic hydropower assets
• Maximize long term value of Statkraft’s asset base
• Build integrated operations in South East Europe, South America and

South Asia

• Onshore wind in Norway, Sweden and UK
• Become lead operator in offshore wind power
• Develop Trading and Origination business in selected global markets

and exploit customer oriented activities

• Become amongst the most profitable district heating companies in

Norway and Sweden

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Strengthening International Hydropower

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 Agreement between Norfund and Statkraft to restructure and prolong partnership  Statkraft to integrate South America and South Asia (in effect April 1st 2014)  New SN Power to focus on South East Asia, Africa and Central America  One common project execution unit in Statkraft

Statkraft SN Power

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Norway 43 % Europe ex Norway 19 % Emerging markets 38 %

Allocation of investments 2014-2018

Hydropower 64 % Offshore WP 9 % Onshore WP 18 % Trading &

• rigination

3 % District heating 3 % Innovation 3 %

Geographical allocation Technology allocation

13

 Investment ambition 2014-2018: NOK 61 billion, but subject to financial

capacity and maintaining current ratings

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Solid base in the Nordic region

Increased diversification, but still dominated by Norwegian hydropower

Estimated annual contribution after committed capex (2018)

Norway 67 % Nordic outside Norway 14 % Europe

• utside Nordic

11 % Outside Europe 8 %

EBITDA

Norway 72 % Nordic outside Norway 10 % Europe

• utside Nordic

13 % Outside Europe 5 %

Power generation (72 TWh)

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 Current transmission capacity between Nordic

and Europe of 4000 MW

 Planned capacity increase of ~5500 MW

ahead of 2020

Nordic-European power market integration

15

Power transmission cables (MW) Planned expansions Source: Statnett

 Increased value opportunities for Statkraft’s

flexible Nordic hydropower plants

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3.

Agenda

2. 1. 4. 5.

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Statkraft overview Strategy and market dynamics Financial update Funding and liquidity Summary Appendix

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Highlights 2013

 Solid result from operations

• Higher Nordic power prices and increased production capacity

 Currency effects impact net profit

• Negative impact offset by currency translation effects in equity

 Investment activity according to plan

• Gross investment of NOK 9.3 billion
• Important projects completed: Three onshore wind farms, one hydropower

and one gas-fired power plant and two district heating plants

• Investment decision to construct two hydropower plants in Albania

 Sale of all shares in E.ON  Transfer of hydropower plants and asset swap in Norway to

• ptimize operations

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 Compared with 2012 improved revenues are mainly due to higher prices  EBITDA increased by 10%  Weakened NOK against EUR brings net profit down

• Currency impacts are mainly unrealised with limited cash flow effect
• The effects are more than offset by currency translation effects in equity

Solid underlying results

NOK million FY 2013 FY 20122 FY 2011 Net revenues1

20 545 19 207 18 120

EBITDA1

12 444 11 347 10 851

Net profit/loss

208 4 551 40

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1Adjusted for unrealised changes in value on energy contracts and significant non-recurring items 2All 2012 figures converted after implementation of IFRS 11 as of 2013

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20 40 60 80 2010 2011 2012 2013 2014

Electricity, average monthly price

Nord Pool, system price EEX, base Nord Pool, system forward EEX, base forward

2013 prices up in the Nordic

 Increase in Nordic power prices

compared with 2012 mainly due to variations in hydrological balance

• System price: 38.1 EUR/MWh + 22%

 Increasing share of renewables and

relatively low coal prices drive electricity prices down in Germany

• Spot price (base): 37.8 EUR/MWh - 12%

19 EUR/MWh

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20 40 60 80 100 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52

%

Nordic reservoir water levels

Nordic reservoirs levels back to normal

 Below normal precipitation

and inflow through large parts

• f 2013

 Above normal inflow and

recovering reservoir levels during Q4

 At year-end Nordic reservoirs

were 82.1 TWh corresponding to 97.1% of median

20

1 Median 1990-2012

Median1

Week

2012 2013 2014

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2 4 6 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Monthly power generation

2012 2013

FY production

• 7%

 Hydropower production

• 8%

 Wind power production + 77%  Gas-fired power production - 28%

Statkraft production

21

TWh

Change from 2012:

(TWh) Hydro Wind Gas/bio Total

FY 2013 53.2 1.4 1.3 55.9 FY 2012 57.6 0.8 1.6 60.0 FY 2011 46.0 0.8 4.7 51.5

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2013 net profit breakdown

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1 101 125 3 288 1 338 208 12 444 11 347

• 2 303

Net financial items

• 9 403
• 2 189

Revenues 2012 Adj. EBITDA Unrealised changes in energy contracts 2013 Adj. EBITDA Operating expenses

• ex. dep.
• 241

2013 Net profit Tax Share of profit from associates and JVs Impairments/ non- recurring items Depre- ciation

• 2 855

Underlying EBITDA ∆ +10% vs. 2012 Booked net profit effected by negative unrealised currency effects amounting to NOK -9 934 million. In 2012 positive currency effects were NOK 3 815 million. Underlying1 EBITDA 2012 –> 2013 Underlying1 EBITDA 2013 –> Net Profit 2013

1Adjusted for unrealised changes in value on energy contracts and significant non-recurring items

NOK million

• 11 592

Net interest and

• ther financial items

Currency impact

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Solid cash flow

23

5 440 7 685

+9 135 +1 051

• 2 080
• 9 123

+9 670

• 3 849
• 3 094

+535 4 000 8 000 12 000 16 000 Cash reserves 01.01 From

• perations

Dividend from associates Change in short and long term items Investment activities Sale of non- current financial assets Changes in debt Dividend/ group contribution paid Share issue to minorities, currency effects Cash reserves 31.12 NOK million

Cash flow 2013

 Sale of non-current assets mainly regards E.ON SE shares (NOK 8.515 million) and Sheringham Shoal transmission

grid (NOK 957 million)

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4.

Agenda

2. 1. 3. 5.

24

Statkraft overview Strategy and market dynamics Financial update Funding and liquidity Summary Appendix

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46% 26% 28%

Equity and liabilities

Interest-free liabilities Interest-bearing liabilities Equity 68% 10% 5% 17%

Assets

Current assets Other non- current assets Associates and JVs Property, plant and equipment

Balance sheet and debt overview

Balance sheet per 31.12.2013 Debt currency distribution

NOK 154bn NOK 154bn

25

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2 000 4 000 6 000 8 000 2014 2016 2018 2020 2022 >2024 NOK million

Balanced debt maturity and mixed funding sources

Debt maturity profile 31.12.2013 Distribution of funding sources

26

NOK Bond Issues 35 % EUR Bond Issues 52 % NIB loans 1 % External loans subsidiaries 12 %

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Financial strength and rating

27

FFO/NET DEBT2 (UNADJUSTED3)

2 Calculated 12 months rolling 3 Rating agencies apply own adjustments 4 2012 recalculated after implementation of IFRS 11 in 2013 1 Please see rating publications on Statkraft’s web page,

under Financial information, for full assessments

Rating target A-/Stable Baa1/Stable Current ratings

 Maintain current ratings with S&P and Moody’s  FFO/Net Debt thresholds as main KPI1

4

FFO of NOK 9 653 million (8 580 in 2012) Net interest bearing debt of NOK 32 240 million (34 960 in 2012)

4

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Liquidity position

 NOK 12bn Revolving Credit Facility (5+1+1 year)

signed 19 January 2011

• Second extension agreed in 2013
• 14 counterparties

 NOK 1bn in committed credit line renewed on a

yearly basis

 EMTN Programme EUR 6bn

• EUR 2.6bn available under current Programme

 No commercial papers outstanding

Available liquidity and target

1 Liquidity capacity defined as cash and cash equivalents, plus committed

revolving credit facilities, plus projected receipts for the next six months

Liquidity and market access

5 000 10 000 15 000 20 000 25 000 30 000 2010 2011 2012 2013 NOK million

Cash and Cash equivalents Credit Line Revolving Credit Facility

 Liquidity capacity target1: >1.5x projected

payments over next six months

28

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FUNDING STRATEGY

Funding overview

 Norwegian bond and Commercial Paper market  Euro bond market  Swedish bond market  Sterling and Swiss Franc bond markets

considered

Funding need Funding sources

 Funding centralized on group level  Flexibility through diversification of funding sources and maintaining sufficient back-stop facilities  Funding need going forward determined by cash flow

from operations and capex

 NOK 3.6 bn debt maturities in H2 2014  Zero dividend in 2014

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5.

Agenda

2. 1. 3. 4.

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Statkraft overview Strategy and market dynamics Financial update Funding and liquidity Summary Appendix

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Providing pure energy

 A flexible and competitive generator of low-cost electricity

• Dominated by renewable energy

 Flexible plans for growth

• European renewable energy production
• Hydropower outside Europe

 Balanced investment plan to maintain credit strength  Proven support from Norwegian government through its

100% ownership

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Agenda

2. 1. 3. 4.

Statkraft overview Strategy and market dynamics Financial update Funding and liquidity Summary Appendix

5.

32

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Statement of Comprehensive Income

33

NOK million 2013 2012 2013 2012 COMPREHENSIVE INCOME PROFIT AND LOSS Sales revenues 15 636 11 397 48 148 36 447 Other operating revenues 298 466 1 415 1 103 Gross operating revenues 15 934 11 863 49 564 37 550 Energy purchase

• 8 196
• 5 471
• 24 327
• 18 172

Transmission costs

• 274
• 262
• 991
• 1 026

Net operating revenues 7 464 6 130 24 246 18 352 Salaries and payroll costs

• 848
• 820
• 3 136
• 3 046

Depreciation, amortisation and impairments

• 780
• 3 057
• 3 045
• 4 933

Property tax and licence fees

• 394
• 301
• 1 640
• 1 345

Other operating expenses

• 994
• 1 116
• 3 422
• 3 469

Operating expenses

• 3 016
• 5 294
• 11 243
• 12 793

Operating profit/loss 4 448 835 13 002 5 559 Share of profit/loss from associates and joint ventures 701

• 199

1 101 871 Financial income 58 153 237 996 Financial expenses

• 379
• 317
• 1 351
• 1 301

Net currency effects

• 2 524

8

• 9 403

4 468 Other financial items 79

• 1 572
• 1 076
• 1 822

Net financial items

• 2 765
• 1 728
• 11 592

2 341 Profit/loss before tax 2 384

• 1 091

2 511 8 771 Tax expense

• 30
• 868
• 2 303
• 4 220

Net profit/loss 2 354

• 1 960

208 4 551 Of which non-controlling interest 213

• 139

482 230 Of which majority interest 2 141

• 1 821
• 274

4 321 OTHER COMPREHENSIVE INCOME Changes in fair value of financial instruments

• 229
• 625
• 828

337 Estimate deviation pensions

• 310

1 060

• 124

1 045 Items recorded in other comprehensive income in associates and joint arrangements 18 561 163 320 Currency translation effects 2 022

• 729

9 940

• 4 536

Other comprehensive income 1 504 268 9 154

• 2 833

Comprehensive income 3 858

• 1 692

9 361 1 718 Of which non-controlling interest 223

• 108

881

• 156

Of which majority interest 3 635

• 1 584

8 480 1 874 The year Fourth quarter

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Statement of Financial Position

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NOK million 31.12.2013 31.12.2012 31.12.2011 STATEMENT OF FINANCIAL POSITION ASSETS Intangible assets 3 510 3 242 3 136 Property, plant and equipment 101 269 88 546 85 195 Investments in associates and joint ventures 16 002 15 924 15 080 Other non-current financial assets 2 540 10 714 12 163 Derivatives 5 295 5 397 4 687 Non-current assets 128 615 123 823 120 261 Inventories 1 796 1 588 977 Receivables 10 229 9 604 9 272 Short-term financial investments 464 457 455 Derivatives 5 559 4 996 5 356 Cash and cash equivalents (included restricted cash) 7 685 5 440 8 605 Current assets 25 733 22 084 24 664 Assets 154 348 145 907 144 925 EQUITY AND LIABILITIES Paid-in capital 49 011 45 569 45 569 Retained earnings 14 328 9 847 12 840 Non-controlling interest 7 769 6 934 7 241 Equity 71 107 62 350 65 651 Provisions 19 416 20 035 21 350 Long-term interest-bearing liabilities 33 364 33 517 31 820 Derivatives 5 713 6 038 4 673 Long-term liabilities 58 494 59 591 57 842 Short-term interest-bearing liabilities 7 013 7 108 5 467 Taxes payable 3 503 3 246 3 411 Other interest-free liabilities 9 842 9 309 6 960 Derivatives 4 389 4 303 5 596 Current liabilities 24 747 23 966 21 433 Equity and liabilities 154 348 145 907 144 925

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Statement of Cash Flow

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NOK million 2013 2012 STATEMENT OF CASH FLOW CASH FLOW FROM OPERATING ACTIVITIES Profit before tax 2 511 8 771 Profit/loss on sale of non current assets

• 89
• 28

Depreciation, amortisation and impairments 3 045 4 933 Profit/loss from the sale of business 121

• Profit/loss from the sale of shares, and associates and joint ventures
• 153
• 81

Share of profit/loss from associates and joint ventures

• 1 101
• 871

Unrealised changes in value 7 795

• 1 452

Taxes

• 2 993
• 4 426

Cash flow from operating activities 9 135 6 846 Changes in long term items

• 533
• 225

Changes in short term items

• 1 547

1 710 Dividend from associates 1 051 1 958 Net cash flow operating activities A 8 106 10 290 CASH FLOW FROM INVESTING ACTIVITIES Investments in property, plant and equipment

• 9 248
• 9 461

Proceeds from sale of non-current assets 9 670 126 Business divestments, net liquidity inflow to the Group 327

• Business combinations, net liquidity outflow from the Group

59

• 54

Loans to third parties

• 298
• 670

Repayment of loans 94 8 Considerations regarding investments in other companies

• 59
• 2 433

Net cash flow from investing activities B 547

• 12 484

CASH FLOW FROM FINANCING ACTIVITIES New debt 865 7 919 Repayment of debt

• 4 714
• 4 573

Dividend and group contribution paid

• 3 094
• 4 293

Share issue in subsidiary to non-controlling interests 135 167 Net cash flow from financing activities C

• 6 807
• 780

Net change in cash and cash equivalents A+B+C 1 846

• 2 974

Currency exchange rate effects on cash and cash equivalents 400

• 191

Cash and cash equivalents 01.01 5 440 8 605 Cash and cash equivalents 31.12 7 685 5 440 Unused commited credit lines 12 000 12 000 Unused overdraft facilities 2 200 2 205 Restricted Cash

• 12
• 232

The year

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