Hafslund – Q2 2017: Investment forecast for AMS project reduced from NOK 2.4 bn to NOK 2.1 bn
Hafslund achieved an EBITDA of NOK 654 million (NOK 695 million). Construction of new generator at Vamma is on schedule and on budget. Roll-out of new automated metering systems (AMS) making good progress, with investment forecast reduced from NOK 2.4 billion to NOK 2.1 billion.
The second quarter saw colder weather and higher energy deliveries to power grid and district heating customers, lower hydropower production due to the delayed onset of the spring flood, and slightly higher electricity prices than last year. Profits were reduced by higher costs to the overhead power transmission grid for the Networks business and slightly lower results from the Markets business area as a result of reduced earnings contribution from support functions.
“At the same time, efforts were being made in the quarter to facilitate the City of Oslo and Fortum’s transactions with respect to Hafslund. I am proud that the organisation has managed to accomplish this without major disruptions to day-to-day operations,” says Hafslund’s CEO Finn Bjørn Ruyter.
Reduced investment forecast for the AMS project
The roll-out of 700,000 new automatic electricity meters is on schedule, and will be completed before the governments deadline of 1 January 2019. At the close of the quarter, around 240,000 meters had been installed. New IT infrastructure has been put in place and is continually being adapted to the growing number of meters delivering data to the operational and invoicing systems.
“The investment forecast for the project has now been reduced by NOK 300 million, from an original NOK 2.4 billion to NOK 2.1 billion,” says CEO Finn Bjørn Ruyter.
The downward adjustments results from strong competition between suppliers and lower expenses than originally anticipated. At the same time, the remaining risk has been reduced as all major contracts have been signed, the central IT infrastructure has been established and tested, and over a third of the meters have been installed.
Construction of a new generator at Vamma is on schedule and on budget
Construction of a new electricity generator at Vamma got underway in the autumn of 2015. The new generator will produce 1,000 gigawatt hours (GWh) per year and will modernise the Vamma power plant. With effect from the spring flood of 2019, it will increase the plant’s power output by around 230 GWh per year.
Installation work is currently underway in the water channel, and the concrete work on the upper parts of the construction are being completed.
“The Vamma project is both on schedule for completion in time for the 2019 spring flood, and within the original cost estimate of NOK 920 million,” says Hafslund’s CEO Finn Bjørn Ruyter.
The City of Oslo’s bid for Hafslund
On 3 July, through the company Oslo Energi Holding AS, the City of Oslo made a voluntary offer to purchase all the shares in Hafslund ASA at an offer price of NOK 96.75 per share. On 10 July, the Board of directors issued its final statement on the offer. In the Board’s view, there is a substantial discrepancy between the independent valuation that SpareBank 1 Markets has carried out on behalf of the Board and the company’s own assessments on the one hand, and the offer price on the other. The Board also stated that the chance of a higher purchase price per share being awarded via judicial assessment is likely to clearly outweigh the risk attached to the outcome of any legal process.
“In the Board’s overall assessment, therefore, it is in the shareholders’ financial interest not to accept the offer, but to allow the price to be determined by judicial assessment,” said Board Chair Birger Magnus in a stock exchange notice.
Read the full report at www.hafslund.no/reports
Oslo, 11 May 2017
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