(Comparable pro forma results for 2001 in brackets.)

 

Results in the third quarter 2002

The group's operating profit in the third quarter excluding depreciation (EBITDA) was NOK 226 million (NOK 320 million). After depreciation the operating profit was NOK 9 million (NOK 103 million). The decline in profit is mainly due to the amount of NOK 100 million being included in the profit and loss account as restructuring costs. These costs are primarily associated with an implemented cut in the workforce which reduced the number of man-labour years by 210. Underlying operations in this quarter are characterised by a continued positive development related to streamlining operating processes. The downsizing is a result of this work. Lower power generation and sold power volumes weaken the result compared with last year. In the security sector, substantial expansion has contributed to higher growth costs compared with the same quarter last year.

 

The group's result from share investments has had a negative development in this quarter. The result from share investments and associated companies was NOK -114 million (NOK -221 million). The result before financing costs was NOK -105 million (NOK -118 million).

 

The result before taxes in the third quarter was NOK -330 million (NOK -332 million), while the result after taxes was NOK -191 million (NOK -293 million). This corresponds to earnings per share of  NOK -0.99 (NOK -1.48). Diluted earnings per share correspond to earnings per share.

 

Hafslund Power Generation

EBITDA for Hafslund Power Generation in the third quarter was NOK 91 million (NOK 116 million), while the operating profit was NOK 77 million (NOK 102 million). Total investments in this period were NOK 4 million (NOK 3 million). Underlying operations at the power stations in Glomma have been good, and production availability high. There was very little rain in September, resulting in low power generation at the end of the quarter and a subsequent decline in the result. The business in the USA had a hydropower generation in this quarter which approached normal level and which was 16 per cent better than last year.

 

EBITDA for the Norwegian power generation activities in the third quarter was NOK 78 million (NOK 101 million). The operating profit was NOK 69 million (NOK 92 million). The achieved sales price in this quarter was 14.3 øre/kWh (13.3 øre/kWh), while the average spot price was 14.0 øre/kWh (17.5 øre/kWh). Power output this quarter was 783 GWh (948 GWh), which is 5 per cent lower than the normal level. The positive development in the controllable costs continues, and these have been reduced by 20 per cent compared with the same period last year.

 

As a result of an extremely dry autumn in the Glomma river system, the reservoir level in Mjøsa is considerably lower than is normal at the beginning of the year's winter period. Based on the normal annual precipitation and snow melting for the winter period, this points to lower power output in the two quarters to come.

 

EBITDA for the power generation business in the USA in the third quarter was NOK 13 million (NOK 15 million). The operating profit was NOK 8 million (NOK 10 million). Hydropower output in this quarter was 18.7 GWh, which is almost at the normal level (18.9 GWh). The improvement projects in the biomass plant in Greenville have begun to show positive effects.

 

EBITDA for Hafslund Infrastructure in the third quarter was  NOK 246 million (NOK 236 million). The operating result in this quarter was NOK 75 million (NOK 55 million). Total investments in this period were NOK 74 million (NOK 113 million).

 

The positive development in the underlying operations has continued in the third quarter, with constant focus on  increasing the efficiency of operating processes and on improving the coordination of investment and maintenance activities. The stated pro forma operating profit for last year's quarter includes non-recurring revenues of NOK 34 million. Total investments have been reduced by 35 per cent compared with last year's quarter. The annual income ceiling of NOK 2,150 million has been credited to the profit and loss account this quarter at a rate of 21.0 per cent and at a rate of 73.0 per cent as at the third quarter. The inclusion is based on historic power consumption.

 

NOK -3 million (NOK -5 million) has been incorporated  in the result from the group's minority investments, mainly from Viken Fjernvarme (33 per cent) and Mjøskraft (49 per cent).

 

EBITDA for Hafslund End-User Sales in the third quarter was NOK 5 million (NOK 35 million). The operating result in this quarter was NOK -15 million (NOK 18 million).

 

This decrease is due to lower sold volumes, resulting mainly from the mild weather this quarter, and also to lower achieved margins. Total sales of power to the end-user market was 2.3 TWh (2.6 TWh), a reduction of 12 per cent compared with last year. At the end of the quarter the business area has approximately 608,000 customers in the mass market. The figure does not include customers in companies where Hafslund owns less than 50 per cent.

 

The wholly-owned company Hafslund Tele was sold with effect from 15 October. The profit from the divested business has been currently consolidated in the business area End-User Sales. EBITDA from the divested business has been incorporated with NOK -6 million and NOK -39 million respectively for the third quarter and at the third quarter. Further details can be found in "Important transactions" later in this report.

 

In addition, NOK -2 million (NOK -7 million) has been incorporated into the result from minority investments.

EBITDA for Hafslund Contracting and Security in the third quarter was NOK -17 million (NOK 2 million) and the operating result was NOK -27 million (NOK 0 million). Total investments this quarter were NOK 21 million. The third quarter result cannot be compared with the corresponding quarter last year as the pro forma result for 2001 only included Hafslund Security which was gradually purchased during last year.

 

EBITDA within Hafslund Contracting was NOK -2 million and the operating result was NOK -5 million. Great efforts are being made to increase the efficiency of operating processes and to adapt the business to market conditions. This quarter's result reflects non-recurring revenues of NOK 15 million.

 

EBITDA within Hafslund Security was NOK -15 million and the operating result was NOK -22 million. The number of new customers in the private market is still large, with an increase of 24 per cent in new domestic alarm customers. The result thus reflects the costs of adapting the business to this growth.

 

EBITDA for Hafslund Services in the third quarter was NOK -18 million and the result was NOK -19 million. The business area was established on 1 January, and corresponding figures for 2001 have not been compiled as these have been integrated into the results for the individual business areas.

 

Hafslund Investments

EBITDA for Hafslund Investments in the third quarter (including the result from share investments) was NOK -98 million (NOK -257 million). The operating profit in this quarter was NOK 11 million (NOK -48 million). The increase is mainly due to better results from the power trading activities.

 

The total result from share investments in the third quarter was NOK -109 million (NOK -209 million). Of this, the result from the financial marketable securities portfolio was NOK -113 million (NOK -217 mill). At the end of the quarter, marketable securities have a cost price of NOK 442 million and an unrealised, but allocated, loss of NOK 169 million. NOK 4 million has been taken to income from long-term investments (NOK 8 million).

 

Other business areas

Other business areas include corporate staff, Hafslund Manor and Agriculture. The operating profit for the third quarter was NOK 6 million (NOK -24 million). This positive result is due to non-recurring circumstances related to the allocation of direct attributable costs to the business areas.

 

 Important transactions

Hafslund has carried out large-scale restructuring in 2002. The activities have been coordinated and new business units have been established. This has formed the basis for rationalisation and optimisation of the group's total resources and has resulted in a need for downsizing. The staff has been reduced by 210 man-labour years, 57 of which are hired temporary staff. The downsizing has been carried out using severance agreements, severance pay and offers of other positions in the group. The costs are estimated at NOK 100 million and have been credited to the profit and loss account as restructuring costs in the third quarter. In addition to the cuts in staff resulting from downsizing, reductions will also take place during the year through natural wastage. A total of around 260 persons will terminate their employment in Hafslund during 2002.

 

With effect from 15 October 2002 Hafslund sold its wholly-owned company Hafslund Tele AS to Vollvik Gruppen AS. As settlement Hafslund acquired shares in Vollvik Gruppen corresponding to an ownership interest of 14.7% of a total value of NOK 19.5 million. Hafslund Tele offers telephony services to the private market and has approximately 19,000 land line and mobile customers. Hafslund receives 17,000,000 shares in Vollvik Gruppen as settlement.

 

Vollvik Gruppen already owns the subsidiaries Chess Communication AS, GSM Distribusjon, GSM Sentrene and Improbus. After the share transfer, telephony activities in Hafslund Tele and Chess Communication will be coordinated.

 

On 30 October, Hafslund's wholly-owned subsidiary Tindra AS entered into an agreement with Lofotkraft Produksjon AS to allow them to take over Tindra's ownership interest of 49% in the end-user company Kraftinor AS. The sales price is NOK 53.9 million, and the profit on the sale is NOK 22.4 million which will be credited to the profit and loss account in the fourth quarter. In addition Hafslund will be repaid a loan of NOK 17.4 million.

 

The completion of the transaction is conditional on approval by the companies' Boards by 25 November 2002.

 

The sale of the shares in Hafslund Tele and Kraftinor is part of the group's efforts to release capital and to promote core activities.

The quarterly report has been compiled according to the same accounting principles as were used for the annual report for 2001 with the exception of the changes described below.

 

As Hafslund's operations have changed considerably compared with 2001, the pro forma balance sheet and cash flow analysis for the corresponding period of the year for 2001 will not provide a relevant basis for comparison. Balance sheet and cash flow analysis for the comparable period for 2001 have therefore not been presented.

 

Net deferred taxes linked to transitional differences which arose in connection with the merger with Viken Energinett in 2001 have been revised from an average tax rate of 12.4% to a tax rate of 28%.  The revision has been implemented in the third quarter and has resulted in an increase in deferred tax and goodwill of NOK 338 million compared with the balance sheet as at  30 June 2002.  The group's deferred tax positions have also now been taken to the balance as a net amount on the condition that relevant reporting units are included in the group tax. A similar classification in the balance sheet as at 31 December 2001 and 30 June 2002 would have led to a net reduction in the balance of  NOK 288 million and NOK 400 million respectively.

 

 

 

In addition to the above restructuring costs, reorganisation expenses of NOK 37 million have been credited to the profit and loss account at the third quarter. The ongoing restructuring of the group, with the merging of activities and the establishment of new business units, forms the basis for achieving synergies. At the third quarter, synergies of NOK 32 million have been realised compared with pro forma results at the third quarter 2001. At the same time, measures have been implemented at the end of the third quarter which will generate annual synergies of NOK 160 million.  

 

Balance sheet as at 30 September 2002

At the end of the third quarter Hafslund has a total capital of approximately NOK 19.7 billion and an equity ratio of 26.7 per cent.

 

Net interest-bearing debt as at  30 September 2002 was NOK 11.4 billion. This is in line with the beginning of the year.

 

Hafslund ASA's share capital is NOK 195,223,448, divided into 115,464,944 class A shares and 79,758,504 B shares of NOK 1. The price on the Oslo Stock Exchange as at 30 September 2002 was NOK 23.50 for A shares and NOK 18.50 for B shares. The price as at  31 December 2001 was NOK 33.50 for A shares and NOK 30.50 for B shares.

At the end of the third quarter the group has 4,077,197 of its own B shares, the total cost price of these being NOK 111.7 million.

               

 Oslo, 6 November 2002

The Board of Directors

 

 

 

 

MAIN FIGURES - THIRD QUARTER 2002 (The accounts are unaudited)

NOK mill.	3rd Qtr 02	3rd Qtr 01*	Per 3rd Qtr 02	Per 3rd Qtr 01*	2001*
Operating revenues	1,212	1,401	4,728	5,154	7,080
Operating expenses	887	1,080	3,586	4,221	5,797
Restructuring costs	100	-	100	-	-
EBITDA	226	320	1,043	932	1,283
Depreciation	217	217	648	658	880
Operating profit	9	103	395	274	403
Income from share investments and associated companies	-114	-221	-172	-154	-97
Income before financing costs	-105	-118	223	120	306
Net financing costs	-225	-214	-607	-631	-835
Income before taxes	-330	-332	-384	-511	-529
Taxes	139	39	94	-61	-93
Period's income after taxes	-191	-293	-290	-572	-622
Profit/loss attributable maj.  interests	-194	-288	-286	-569	-619
Profit/loss attributable min. interests	3	-5	-4	-3	-3
Earnings per share (NOK)	-0.99	-1.48	-1.46	-2.92	-3,17
No. of shares (in 1,000) used in compute of EPS	195,223	195,223	195,223	195,223	195,223

NOK mill.	3rd Qtr 02	3rd Qtr 01	Per 3rd Qtr 02	Per 3rd Qtr 01*	2001*
Hafslund Kraftproduksjon (Gen.)	126	159	388	453	596
Hafslund Infrastruktur (Infrastructure)	630	695	2,172	2,352	3,210
Hafslund Kraftomsetning (End-User)	398	595	2,037	2,530	3,429
Hafslund Entreprenør og sikkerhet (Contracting & Security)	188	33	368	33	84
Hafslund Investeringer (Investments)	26	-19	58	-33	37
Hafslund Tjenester (Services)	100	-	243	-	-
Other /elimination	-255	-62	-536	-181	-276
Total operating revenues	1,212	1,401	4,729	5,154	7,080
Hafslund Kraftproduksjon (Gen.)	77	102	234	270	340
Hafslund Infrastruktur (Infrastructure)	75	55	404	330	441
Hafslund Kraftomsetning (End-User)	-15	18	20	-130	-146
Hafslund Entreprenør og sikkerhet (Contracting & Security)	-27	-	-54	-	-2
Hafslund Investeringer (Investments)	11	-48	4	-103	-100
Hafslund Tjenester (Services)	-19	-	-59	-	-
Other business areas	6	-24	-54	-93	-130
Restructuring costs	-100	-	-100	-	-
Total operating profit	9	103	395	274	403

*Pro forma figures

 

NOK mill.	30.09.2002	30.06.2002	31.12.2001
Intangible assets	3,198	3,253	3,114
Fixed assets	12,038	12,054	11,905
Financial assets	2,189	2,208	2,484
Debtors/Receivables and stocks	1,312	1,909	2,287
Investments	375	470	908
Cash at bank etc.	570	361	1,094
Total assets	19,682	20,255	21,791
Called-up and fully paid share capital	4,302	4,302	4,302
Retained earnings/profits	964	1,100	1,418
Provisions for liabilities and charges	273	600	825
Long-term liabilities	8,401	6,826	8,055
Short-term liabilities	5,742	7,427	7,191
Total liabs. & shareholder equity	19,682	20,255	21,791

 

NOK mill	3rd Qtr 02	Per 3rd Qtr 02
Cash flow from operational activities
Operating profit	9	395
Depreciation and write-downs	214	641
Change in net working capital	228	-60
Cash flow from operational activities	451	976
Operating investments	-67	-302
Acquired companies - expansion activities	0	-491
Distributable cash flow from operational activities	384	183
Cash flow share investments prior to purchase/sale of shares	-17	37
Net purchase/sale shares	79	516
Cash flow after share investments	446	736
Change in net interest-bearing debt	-89	-585
Paid financial items	-148	-446
Dividend	0	-229
Cash flow after financing activities	209	-524
Cash and cash equivalents at beginning of period	361	1.094
Cash and cash equivalents at end of period	570	570

 

 

Internet address: http://www.hafslund.no