HAFSLUND GROUP'S (HNA) RESULT 1 QUARTER 2000
Results for the first quarter 2001
Income before taxes for the Hafslund group in the first quarter was NOK 418 million (NOK 210 million). Income after taxes for this period was NOK 198 million (NOK 161 million), corresponding to earnings per share of NOK 1.74 (NOK 1.39). The result is affected by a significant income of NOK 413 million from the sale of the regional grid, and good results from the group's core activities in Norway - power generation of NOK 67 million (NOK 36 million). The result from power generation in the USA and from associated companies is lower compared with the same quarter in 2000, and considerable tax costs (NOK 220 million) have caused a reduction in the total result. The yield on the financial marketable securities portfolio is better than the total index of the Oslo Stock Exchange.
Operating profit for the first quarter amounted to NOK 26 million (NOK 52 million). Basic operations in the first quarter have been affected by higher achieved power prices and a high volume of generation activities in Norway, along with a negative contribution from the group's power trading and end-user activities. Comparison with the first quarter of 2000 must be corrected to allow for the inclusion of the operating profit from the sold grid activities in the first quarter of 2000 (NOK 19 million).
Hafslund Generation
Operating profit at Hafslund Generation in the first quarter was NOK 77 million (NOK 58 million). Total power generation in the first quarter was 680 GWh (630 GWh).
Operating profit in the first quarter for Hafslund's Norwegian power plants was NOK 67 million (NOK 36 million). Achieved sales price for this period was NOK 16.4 øre/kWh (NOK 12.0 øre/kWh), giving an additional income of NOK 25 million compared with the same period in 2000. Power generation in the first quarter was 629 GWh (583 GWh), providing a positive contribution of NOK 8 million compared with the first quarter of 2000. Average spot price in the first quarter of 2001 was 20.1 øre/kWh (11.1 øre/kWh). In advance of the relatively high price increase for power which has occurred in the forward market, Hafslund changed its time horizon linked to the price hedging of its own power generation. The results from the generation activities will therefore reflect the general price level on the power market to a greater extent than previously.
Operating profit in the USA in the first quarter was NOK 10 million (NOK 22 million) The contribution margin reflects lower achieved sales prices in the chip-fired plant, Greenville, resulting from a new power agreement and higher chip costs due to scarcity of chips. Power generation in this quarter was 51 GWh (47 GWh).
Hafslund Power Trading
Operating result for Hafslund Power Trading in the first quarter was NOK -20 million (NOK 4 million).
Operating result for Power Trading Norway was NOK -13 million (NOK 6 million) in the first quarter, and reflects faulty positioning at the beginning of the year when there was a substantial upturn in prices. This trend was interrupted in the middle of February, and as of 7 May the company can present a accumulated positive trading contribution in 2001.
Operating result for power trading in the USA was NOK -7 million (NOK -2 million). Due to unrest on the market and in politics associated with the power market in California, the company has had no power trading activities in the first quarter. It is presumed that a decision on the future activity level will be taken before the end of the first six months of 2001.
Hafslund Invest
The business area Hafslund Invest had an accounting result from investments of NOK 41 million (NOK 217 million) in the first quarter.
Hafslund's financial marketable securities portfolio had a return of -4.0% in the first quarter compared with the Oslo Stock Exchange total index of -4.5%. The accounting result in this period for the financial marketable securities portfolio is though NOK 40 million (NOK 112 mill), due to a not accounted unrealised profit at year end 2000 of NOK 75 million, which is realised in first quarter 2001.
Book value of the financial marketable securities portfolio at the end of the first quarter 2001 was NOK 714 million. This includes an unrealised loss of NOK 9 million.
Other business areas
Other business areas, which include Øko Kraft, corporate staff, investment activities, NodeNet and Orion System, had an operating result in the first quarter of NOK -31 million (NOK -10 million). Compared with the first quarter of 2000, this reduction is partly due to the sale of the grid activities which had an operating profit of NOK 19 million in the first quarter of 2000, and to Øko Kraft's operating result of NOK -12 million in the first quarter of 2001.
Minority investments in the power sector
Hafslund has total investments of NOK 2,841 million in companies in the field of downstream activities. An operating result from associated companies of NOK 5 mill has been included in the first quarter of 2001.
Transactions so far in 2001
- Significant upturn in power prices
During the first quarter, the prices in the power market have risen considerably. An increase in achieved power prices of 1 øre/kWh will on an annual basis increase the operating profit by NOK 28 million. Hafslund is in a good position to attain a further price increase, and expects a considerably higher income associated with power production in the year 2001 compared with the year 2000.
- Substantial profit on the sale of the regional grid
Hafslund has sold its regional grid activities and ownership interests in Rygge Elverk and Rakkestad Everk to Østnett. The accounting gains before tax resulting from the transfer are NOK 413 million. As part of the settlement, Hafslund has increased its ownership interest in Viken from 25% to 33%.
- New business areas
Hafslund would like a position as a leading player within the rapidly-growing security market - alarms, guard duty etc. In this connection, Hafslund has acquired an ownership share of 67% in Vekterselskap, a company focusing mainly on the sale of alarms for private houses linked to the company's alarm centre in Hadeland. We see considerable synergy effects between the security industry and the core activities in the Hafslund system, grid and power trading business.
It is expected that the number of house alarms installed and linked to the alarm centre will increase from the current number of around 120,000 to almost 500,000 in the next five years. Substantial growth is also expected in the segment's top security and guard duty activities.
The group's results report for first quarter 2001 is available at the company's head office in Karenslyst Alle 11, at the Oslo Stock Exchange and on the Internet address: http://www.huginonline.com/Norway/HNA/