41
Statkraft Investor Update November 2014
Statkraft Investor Update November 2014
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2
1.
Agenda
2.
3.
4.
5.
Statkraft overview
Strategy and market dynamics
Financial update
Funding and liquidity
Summary
Appendix
3
Statkraft overview
Peru
163 MW
(+ project)
Chile
94 MW
Turkey
20 MW
(+ projects)
Nepal 23 MW
Philippines
149 MW
Brazil
86 MW
Panama
(project)
Zambia
6 MW
Norway
12 518 MW Sweden
1 315 MW
UK
273 MW
Laos 100 MW
Germany
2 692 MW
India
91 MW
100 %
owned by the
Norwegian state
A- / Baa1 from S&P and
Moody’s
Installed capacity
17 600 MW
Power production
56 TWh
97% renewable
energy
SN POWER/
AGUA IMARA
STATKRAFT
Albania
(project)
2013 figures includes Statkraft’s share of installed capacity in associates
Key credit strengths
Strong market position
- A low-cost and flexible generator of renewable electricity
Stable cash flow
- Long-term industrial contracts stabilize cash flow
Capex flexibility
- Adjust investment program to financial capacity
Owned by the Norwegian state (AAA/Aaa)
- Historically strong support from owner
- No substantial changes in the State’s owner strategy in White paper published in June
2014
5
2.
Agenda
1.
3.
4.
5.
6
Statkraft overview
Strategy and market dynamics
Financial update
Funding and liquidity
Summary
Appendix
A changing energy landscape
Flat energy demand in Europe and
more production from new renewables
Growing concerns in Europe about
affordability and security of supply
Traditional “utility business model”
challenged by a transformed value chain
7
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
District Heating
Strategic focus areas
European Flexible Generation
Wind Power
Hydropower in Emerging Markets
Market Operations
• Maintain and develop low cost, flexible hydropower
• 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 in UK
• Stabilize cash flow through power contracts
• Develop Trading and Origination in selected global markets
• Become amongst the most profitable district heating companies in
Norway and Sweden
8
European Flexible Generation
Low-cost European hydropower production
- Total cash cost in 2013: 7.2 EUR/MWh
- Full cost incl. depreciation: 10.2 EUR/MWh1
Peak supplier with high degree of flexibility
- 80% of installed capacity within highly flexible
hydropower
- Europe’s largest reservoir capacity (~40 TWh)
Unique information base and power market
modelling
- Production optimised relative to power prices and
water inflows
- Water can be stored for up to three years in some
reservoirs
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)
9
Current transmission capacity between Nordic
and Europe of 4000 MW
Planned capacity increase of 3870 MW before
2020 and another 3450 MW before 2025
Nordic-European power market integration
10
Power transmission cables (MW)
Planned expansions
Source: Statnett
Price effect NO2-DE + NO2-UK: 3-5 EUR/MWh*
Increased possibility to utilize our flexible assets
* Statnett estimate with the two cables, compared to a scenario with no new cables from Norway.
A major player on Europe’s power
exchanges
Special expertise within physical and
financial power trading
Active in all energy-related commodities
Market access for small renewable
producers
Expanding power trading activities in
Europe, as well as in Brazil and India
Strategy for long-term contracts
11
Market Operations
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
12
0
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
International Hydropower has been reorganized and strengthened
13
Statkraft SN Power
Statkraft has increased
ownership and fully
integrated activities in South
America and South Asia
(from 60 % to 67 %)
Statkraft has reduced
ownership to activities in less
developed markets in South
East Asia, Africa and Central
America (from 60 % to 50 %)
Alltwalis
Stamåsen
Mörttjärnberget
Björkhöjden
Ögonfägnaden
Hitra Smøla
Onshore and offshore wind power in the Nordics and UK
In operation/under construction
- Norway: 244 MW
- Sweden: 525 MW
- UK: 460 MW
Licensed/under development
- Onshore: Norway 1000 MW
Sweden 290 MW
UK ~ 50 MW
- Offshore: Dudgeon 402 MW
(Statkraft 30%)
Dogger Bank 4800 MW
(Statkraft 25%)
Em
Tollarpabjär
Dudgeon
Sheringham Shoal
Dogger Bank
Berry Burn
Baillie
Kjøllefjord
14
Norway 43 % Europe ex
Norway 19 %
Emerging markets
38 %
Allocation of investments 2014-2018
Hydropower 64 %
Offshore WP 9 %
Onshore WP
18 %
Trading & origination
3 %
District heating
3 %
Innovation 3 %
15
Investment ambition 2014-2018: NOK 61 billion, of which 59% is committed
Subject to financial capacity and maintaining current ratings
Technology allocation Geographical allocation
Increased diversification, but still dominated by Norwegian hydropower
Solid base in the Nordic region
Estimated annual contribution after committed capex (2018)
Norway 67 %
Nordic outside Norway 14 %
Europe outside Nordic
11 %
Outside Europe
8 %
EBITDA
Norway 72 %
Nordic outside Norway 10 %
Europe outside Nordic
13 %
Outside Europe
5 %
Power generation (72 TWh)
16
High construction activity Completed in 2013/2014 (~1000 MW) On-going projects (~2100 MW)
European
Flexible
Generation
6 small-scale hydro, Norway (44 MW)
Knapsack II, Germany (430 MW)
Kjensvatn, Norway (12 MW)
Brokke Nord/Sør, Norway (24 MW)
Eiriksdal/Makkoren, Norway (56 MW)
Nedre Røssåga 1 and 2, Norway (+100 MW)
10 small-scale hydro, Norway (79 MW)
Wind Power
Baillie, UK (53 MW)
Berry Burn, UK (67 MW)
Stamåsen, Sweden (60 MW)
Tollarpabjär, Sweden (3 MW)
Mörttjärnberget, Sweden (85 MW)
Dudgeon, UK (402 MW)
Ögonfägnaden, Sweden (99 MW)
Björkhöjden, Sweden (270 MW)
International
Hydropower
Binga, Philippines (126 MW) Kargi, Turkey (102 MW)
Cetin, Turkey (517 MW)
Devoll, Albania (243 MW)
Cheves, Peru (168 MW)
Bajo Frio, Panama (58 MW)
District
Heating
Ås, Norway (24 MW)
Kungsbacka, Sweden (12 MW)
Sandefjord, Norway (23 MW)
Moss, Norway (21 MW)
17
Capacity for total project, incl. partners’ share
Strengthening of financial solidity
Measures in 2014
- Divested Finnish hydropower
- Reduced ownership in UK onshore wind
- No dividend payment for 2013
Ongoing:
- Discussions with owner about investment possibilities and financing
- Reduce ownership in UK offshore wind
18
NOK ~3,5 bn
3.
Agenda
2.
1.
4.
5.
19
Statkraft overview
Strategy and market dynamics
Financial update
Funding and liquidity
Summary
Appendix
Highlights 9m 2014
20
Solid result from operations - Lower Nordic prices offset by increased production and
contribution from market activities and long-term contracts
Currency effects and non-recurring items impact net profit positively
Transactions - Divestment of 66 MW power production in Finland
- Reduced ownership to 51% in onshore wind power assets in UK
- Increased ownership from 50% to 100% in UK onshore wind farm project
- Asset swap regarding hydropower plants in Norway
Investments - New hydropower plant in Norway completed
- Two wind power plants completed (UK and Sweden)
- Investment decision in Dudgeon Offshore Wind Farm in UK
Restructuring of International Hydro completed
9m 2014 in line with 9m 2013 for both net revenues and EBITDA
Currency effects on financial items positive in 2014 but negative in 2013
- Currency effects mainly related to NOK vs. EUR
- Currency impacts are mostly unrealised with limited cash flow effect
- The effects are offset by currency translation effects in equity
Solid underlying results
NOK million 9m 2014 9m 2013 FY 2013
Net revenues1 14 868 14 467 20 545
EBITDA1 8 646 8 602 12 444
Net profit/loss 6 989 -2 147 208
21
1Adjusted for unrealised changes in value on energy contracts and significant non-recurring items
9m production 40.6 TWh + 3%
Hydropower production + 3%
Wind power production + 29%
Gas-fired power production - 50%
Statkraft production
22
TWh
Change from 2013:
0
2
4
6
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Monthly power generation
2013 2014
(TWh) Hydro Wind Gas/bio Total
9m 2014 38.9 1.2 0.5 40.6
9m 2013 37.9 0.9 0.8 39.6
FY 2013 53.2 1.4 1.3 55.9
FY 2012 57.6 0.8 1.6 60.0
Price development
Higher temperatures, lower demand
and stronger hydrological balance
drives Nordic prices down in 9m 2014
compared with 9m 2013
- System price: 29.2 EUR/MWh - 25%
Falling fuel prices and increased
renewables capacity drive prices down
in Germany
- Spot price (base): 32.1 EUR/MWh - 15%
23
EUR/MWh
0
20
40
60
80
2011 2012 2013 2014 2015
Electricity, average monthly price
Nord Pool, system price EEX, base
Nord Pool, system forward EEX, base forward
Nordic reservoir levels
Nordic reservoirs close to
median through 1H 2014
Inflow below normal
through the third quarter but
recovering in October
At the end of October
reservoirs were 96 TWh
corresponding to 98% of
median
Reservoirs filled to 80% of
maximum capacity of
121.4 TWh
24
1 Median 1990-2012
Median1
Week
2013
2014
0
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
10 880 11347
12444
8602 8646
0
8 000
16 000
FY2011 FY2012 FY2013 9m2013 9m2014
Solid underlying EBITDA development
∆ YTD 14/YTD 13
+ 1%
1Adjusted for unrealised changes in value on energy contracts and significant non-recurring items
25
NOK million
9m 2014 in line with 9m 2013
Higher production partly offsetting
price reduction
Strong result from market operations
Increase in long-term contracts
Underlying operating costs relatively
stable
9m 2014 net profit breakdown
26
2131 770
402
6 989
8 6468 602
-182
2 879
9m 2014
Net profit
Tax
-3 944
Net financial
items
+3 061
Share of
profit from
associates
and JVs
Impairments/
non-
recurring
items
Depre-
ciation
-2 258
Unrealised
changes in
energy
contracts
-317
9m 2014
Adj.
EBITDA
Operating
expenses
ex. dep.
-358
Revenues 9m 2013
Adj.
EBITDA
Underlying EBITDA ∆ +1% vs. 9m13
Booked net profit affected by non-recurring items totalling NOK +1770 million and
positive currency effects amounting to NOK +3061 million.
Underlying1 EBITDA 9m 2013 => 9m 2014 Underlying1 EBITDA 9m 2014 => Net Profit 9m 2014
1Adjusted for unrealised changes in value on energy contracts and significant non-recurring items
NOK million
Net currency effects
Other financial items
Capital expenditure1 in 9m 2014
NOK
8 259
million
A large number of projects under
construction in current investment
program
9m CAPEX distribution
- 65% expansion
- 13% shareholdings
- 7% Asset swap
- 15% maintenance
27
Nordic
Hydro-
power
20% Internat.
Hydro-
Power
38% Ind. Owner-
ship 7%
Wind
Power
29%
Other2 6%
Norwegian
share
approx. 1/3
1 Exclusive loans to associates 2 Including District heating, Small-scale hydropower and Continental energy and trading
Solid cash flow
28
7 685
12 317 +5 731
+724
+1 287
-7 867
+3 533 +1 080
-74
+218
0
4 000
8 000
12 000
16 000
Cashreserves
01.01
Fromoperations
Dividend fromassociates
Change inshort andlong term
items
Investmentactivities
Sale of non-currentassets
Changes indebt
Dividend/group
contributionpaid
Share issueto minorities,
currencyeffects
Cashreserves
30.09
NOK million
Cash flow 9m 2014
Sale of non-current assets mainly regards hydro assets in Finland and wind assets in UK
4.
Agenda
2.
1.
3.
5.
29
Statkraft overview
Strategy and market dynamics
Financial update
Funding and liquidity
Summary
Appendix
Strong credit ratings
Rating target: maintain current ratings
Flexible CAPEX-plans
Divestments completed and further divestments considered
Rating impact assessment completed prior to new investment decisions
Historically strong support from owner
30
A- / Stable Baa1 / Stable
50%
25%
25%
Equity and liabilities
Interest-freeliabilities
Interest-bearingliabilities
Equity
67%
10%
5%
18%
Assets
Current assets
Other non-current assets
Associatesand JVs
Property, plantand equipment
Balance sheet and debt overview
Balance sheet per 30.09.2014 Debt currency distribution
NOK 153bn NOK 153bn
31
NOK 45 %
EUR 32 %
SEK 1 %
GBP 16 %
USD 6 %
Interest-bearing debt NOK 36.2bn
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
2014 2016 2018 2020 2022 >2024
NOK million
Balanced debt maturity and mixed funding sources
Debt maturity profile 30.09.2014 Distribution of funding sources
32
NOK Bond Issues 33 %
EUR Bond Issues 54 %
NIB loans 1 %
External loans
subsidiaries 12 %
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 paper 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
0
5 000
10 000
15 000
20 000
25 000
30 000
2010 2011 2012 2013 Q32014
NOK million
Cash and Cashequivalents
Credit Line
RevolvingCredit Facility
Liquidity capacity target1: >1.5x projected
payments over next six months
33
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 3.2 bn debt maturities in Q4 2014
Zero dividend in 2014
34
5.
Agenda
2.
1.
3.
4.
35
Statkraft overview
Strategy and market dynamics
Financial update
Funding and liquidity
Summary
Appendix
Summary
A competitive generator of low-cost electricity
- Dominated by flexible hydro power with large reservoir capacity
Strong position in the Nordics
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
36
Agenda
2.
1.
3.
4.
Statkraft overview
Strategy and market dynamics
Financial update
Funding and liquidity
Summary
Appendix
5.
37
Statement of Comprehensive Income
38
The year
NOK million 2014 2013 2014 2013 2013
COMPREHENSIVE INCOME
PROFIT AND LOSS
Sales revenues 9 431 9 560 30 968 32 513 48 148
Other operating revenues 2 507 415 3 329 1 117 1 415
Gross operating revenues 11 937 9 975 34 297 33 630 49 564
Energy purchase -5 242 -5 377 -16 347 -16 131 -24 327
Transmission costs -283 -227 -874 -717 -991
Net operating revenues 6 412 4 371 17 076 16 782 24 246
Salaries and payroll costs -595 -814 -2 199 -2 288 -3 136
Depreciation, amortisation and impairments -1 801 -918 -3 308 -2 265 -3 045
Property tax and licence fees -409 -420 -1 226 -1 246 -1 640
Other operating expenses -732 -976 -2 502 -2 428 -3 422
Operating expenses -3 537 -3 128 -9 234 -8 227 -11 243
Operating profit/loss 2 875 1 243 7 842 8 554 13 002
Share of profit/loss from associates and joint ventures 134 -59 213 400 1 101
Financial income 141 75 722 179 237
Financial expenses -340 -357 -987 -972 -1 351
Net currency effects 3 185 -1 954 3 061 -6 878 -9 403
Other financial items 63 -298 83 -1 156 -1 076
Net financial items 3 049 -2 504 2 879 -8 827 -11 592
Profit/loss before tax 6 058 -1 320 10 934 127 2 511
Tax expense -1 907 -361 -3 944 -2 273 -2 303
Net profit/loss 4 151 -1 681 6 989 -2 147 208
Of which non-controlling interest 794 58 437 269 482
Of which majority interest 4 071 -1 738 6 552 -2 415 -274
OTHER COMPREHENSIVE INCOME
Items in other comprehensive income that recycle over profit/loss:
Changes in fair value of financial instruments 287 -307 137 -856 -1 167
Income tax related to changes in fair value of financial instruments -77 109 -41 257 339
Items recorded in other comprehensive income in associates and joint
arrangements -120 - -248 145 163
Currency translation effects -2 791 2 119 -2 347 7 918 9 940
Reclassification currency transalton effects related to foreign operations
disposed of in the year -74 - -19 - -
Items in other comprehensive income that will not recycle over profit/loss:
Estimate deviation pensions -462 -71 -967 276 -174
Income tax related to changes in fair value of financial instruments 109 8 308 -90 49
Other comprehensive income -3 127 1 858 -3 176 7 650 9 154
Comprehensive income 1 024 177 3 813 5 503 9 361
Of which non-controlling interest -164 4 607 658 881
Of which majority interest 1 189 172 3 207 4 845 8 480
Third quarter Year to date
Statement of Financial Position
39
NOK million 30.09.2014 30.09.2013 31.12.2013
STATEMENT OF FINANCIAL POSITION
ASSETS
Intangible assets 2 853 3 812 3 510
Property, plant and equipment 99 080 98 491 101 269
Investments in associates and joint ventures 16 031 15 545 16 002
Other non-current financial assets 3 288 2 791 2 540
Derivatives 4 281 4 994 5 295
Non-current assets 125 534 125 634 128 615
Inventories 1 040 1 310 1 796
Receivables 6 873 8 617 9 568
Short-term financial investments 432 453 464
Derivatives 7 150 4 457 5 559
Cash and cash equivalents (included restricted cash) 12 317 9 316 7 685
Current assets 27 812 24 153 25 072
Assets 153 345 149 787 153 687
EQUITY AND LIABILITIES
Paid-in capital 51 361 49 104 49 011
Retained earnings 18 119 10 779 14 328
Non-controlling interest 7 084 7 487 7 769
Equity 76 564 67 370 71 107
Provisions 18 077 20 481 19 416
Long-term interest-bearing liabilities 28 154 35 993 33 364
Derivatives 3 716 4 918 5 713
Long-term liabilities 49 947 61 391 58 494
Short-term interest-bearing liabilities 10 314 2 183 7 013
Taxes payable 3 581 3 494 3 503
Other interest-free liabilities 6 274 11 239 9 181
Derivatives 6 666 4 110 4 389
Current liabilities 26 835 21 026 24 086
Equity and liabilities 153 345 149 787 153 687
Statement of Cash Flow
40
The year
NOK million 2014 2013 2013
STATEMENT OF CASH FLOW
CASH FLOW FROM OPERATING ACTIVITIES
Profit before tax 10 934 127 2 511
Profit/loss on sale of non current assets -155 -92 -89
Depreciation, amortisation and impairments 3 308 2 265 3 045
Profit/loss from the sale of business -2 276 117 121
Profit/loss from the sale of shares, and associates and joint ventures -69 -153 -153
Profit from restructuring of SN Power -564 - -
Share of profit/loss from associates and joint ventures -213 -400 -1 101
Unrealised changes in value -1 889 6 191 7 795
Taxes -3 345 -2 471 -2 629
Cash flow from operating activities 5 731 5 585 9 499
Changes in long term items 106 -459 -533
Changes in short term items 1 181 919 -1 911
Dividend from associates 724 817 1 051
Net cash flow operating activities A 7 743 6 862 8 106
CASH FLOW FROM INVESTING ACTIVITIES
Investments in property, plant and equipment* -6 736 -6 519 -9 248
Proceeds from sale of non-current assets 42 9 578 9 670
Business divestments, net liquidity inflow to the Group** 3 491 327 327
Business combinations, net liquidity outflow from the Group*** -74 69 59
Restructuring of SN Power, net liquidity outflow from the Group -770 - -
Loans to third parties -90 -439 -298
Repayment of loans 392 62 94
Considerations regarding investments in other companies**** -589 -23 -59
Net cash flow from investing activities B -4 334 3 057 547
CASH FLOW FROM FINANCING ACTIVITIES
New debt 1 773 389 865
Repayment of debt -693 -3 840 -4 714
Dividend and group contribution paid -74 -3 015 -3 094
Share issue in subsidiary to non-controlling interests 206 108 135
Net cash flow from financing activities C 1 212 -6 358 -6 807
Net change in cash and cash equivalents A+B+C 4 621 3 561 1 846
Currency exchange rate effects on cash and cash equivalents 11 315 400
Cash and cash equivalents 01.01 7 685 5 440 5 440
Cash and cash equivalents 30.09***** 12 317 9 316 7 685
Unused commited credit lines 12 000 12 000 12 000
Unused overdraft facilities 2 200 2 214 2 200
Restricted Cash - -261 -12
Year to date
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