Results for the Hafslund Group (HNA) -Second quarter 2003

Thu, Aug 21, 2003 15:48 CET Report this content

 

Operating profit before depreciation (EBITDA) was NOK 431 million (NOK 345 million), an improvement of NOK 86 million from the second quarter of 2002. The operating profit of NOK 201 million showed an increase of NOK 72 million compared with last year.

 

Network activities showed a result that is almost identical to that of last year's quarter in spite of a downward adjustment of income ceiling due to the fall in interest rate and non-recurring costs connected to clearing lines. Profit improvement within Power Generation of 45% is due to higher attained sales prices which more than offset a decline of 9% in generated volume. The reduction in profit in Power Sales is associated with a fall of 21% in sold volume. The growth within Hafslund Security continues. The number of new domestic alarm customers increased by 23% this quarter. In total, Hafslund Contracting, Hafslund Services and corporate staff units show a profit improvement of NOK 86 million.

 

Earnings from share investments and associated companies were NOK 33 million (NOK -154 million). The current assets investment portfolio has now almost been wound up.

 

Group profit before financing costs was NOK 234 million (NOK -25 million). Profit before tax this quarter was NOK 11 million (NOK -199 million). Profit after tax was NOK 10 million (NOK -167 million). This corresponds to earnings per share of NOK 0.03 (NOK -0.80). Diluted earnings per share correspond to earnings per share.

 

The development in main financial key figures such as operating profit before depreciation, equity ratio and net interest-bearing debt are chiefly in keeping with previously expressed goals for the period 2003 / 2004.

 

 

Distributable cash flow from operational activities in the second quarter was NOK 562 million, an improvement of NOK 996 million from the same period last year. The increase in the cash flow is due to improved operations (EBITDA) and reduced working capital after outstanding accounts receivable from the winter's high power prices have largely been paid. Last year's cash flow also reflects the purchase of the remaining ownership interests in Gjermå Energi and Tindra.  The group had a cash flow for payment of interest and instalments of NOK 614 million this quarter, an increase of NOK 711 million from the same period last year.  

 

Net interest-bearing debt at the end of the first six months of the year was NOK 11.7 billion including interest-bearing assets of NOK 0.6 billion, a reduction of NOK 0.1 billion this quarter and NOK 0.5 billion from the turn of the year respectively.

 

Average interest on loans at the end of this quarter was 6.8% and the portion of interest-bearing debt with a flowing rate of interest amounted to 43%. At the end of the quarter Hafslund has a total capital of approximately NOK 19.9 billion, a decline of NOK 1.4 billion this quarter. The equity ratio is 30.1%. This quarter Hafslund sold 2,647,916 of its own Class B-shares with settlement in shares in Scanwafer ASA. After this the group has a holding of 1,429,281 of its own B-shares.

 

The unaudited interim report has been prepared in compliance with Norwegian accounting principles and has been compiled according to the same principles as those applied in the annual report for 2002. The interim report complies with Norwegian accounting standards for such reporting.

 

 

 

 

 

 

Operating profit before depreciation (EBITDA) for Network was NOK 266 million (NOK 274 million) in the second quarter. Mjøskraft accounted for NOK 18 million of this. The operating profit was NOK 93 million (NOK 101 million). Total investments were NOK 80 million (NOK 90 million), of which NOK 16 million concerned Mjøskraft. Of the year's income ceiling of NOK 2,476 million, 55.4% has been taken to accounts in the first six months of the year, 21.0% in the second quarter. The accounting is based on historical power consumption.

 

The main focus this quarter has been on the reorganisation of Viken Nett and changes in the management, and on voluntary downsizing and the competitive outsourcing of large service procurements such as emergency preparedness and indicating the location of cables. Through a continued increase in the efficiency of operating processes and better coordinated investment and maintenance activities, the business area has been able to maintain a result that is almost on the same level as last year's, in spite of a reduction in income ceiling of NOK 22 million resulting from the fall in the interest rate, increased network-loss costs due to higher power prices and great activity linked to clearing lines on the order of the Directorate for Fire and Electrical Safety.

 

Profit from associated companies was NOK 1 million (NOK 2 million) and concerns the investments in Viken Fjernvarme and Oppdal Elektrisitetsverk.

 

Total operating profit before depreciation (EBITDA) for Power Generation this quarter was NOK 147 million (NOK 108 million), while operating profit was NOK 136 million (NOK 94 million). Attained power prices in Norway increased by 52% this quarter, while power generation was 9% lower. Profit from power trading operations was NOK 1 million (NOK 4 million). Total investments this quarter were NOK 9 million (NOK 12 million).

 

Operating profit before depreciation (EBITDA) for the Norwegian power generation activities was NOK 139 million (NOK 93 million). The operating profit was NOK 131 million (NOK 83 million). Achieved sales price according to volume was 20.7 øre/kWh (13.6 øre/kWh), while average spot price was 22.2 øre/kWh (11.9 øre/kWh). Power generation was 879 GWh (964 GWh), 2% over the normal level. As a result of a period with a considerable flow of precipitation into the Mjøsa, the reservoir level is now normal. If usual amounts of precipitation are used as a basis for calculation, it is expected that the volume generated will be at the customary level (1.5 TWh) in the second six months of the year.

 

The sales process for the hydropower plants in the USA has proved to be more time-consuming that first envisaged. Any sale is conditional on a satisfactory price being reached, and will take place at the earliest during the second six months of 2003. Book value associated with these plants in the USA is approximately USD 30 million.

 

Operating profit before depreciation (EBITDA) for Power Sales was NOK 9 million (NOK 30 million) this quarter. The operating profit was NOK -11 million (NOK 11 million), the decline mainly being due to a reduction in volume of 21% corresponding to 648 GWh after a mild quarter and energy saving resulting from persistently high power prices. Total volume sold this quarter was 2.4 TWh.

 

Further provisions of NOK 13 million have been made for bad debts due to high electricity prices through the winter. Several large-scale marketing campaigns have been conducted during this quarter in connection with launching Hafslund Power Sales, in addition to fixed-price campaigns.

 

Result from associated companies amounted to NOK

-8 million (NOK 2 million), primarily from Gøta Energi Holding in Sweden (50%). Due to the poor results in Gøta Energi during the last half of 2002 and so far in 2003, the business area has been reorganised, and measures to increase efficiency have been implemented. These will give their full effect from 2004.

 

Operating profit before depreciation (EBITDA) for Security in the second quarter was NOK -17 million (NOK -10 million), while the operating profit was NOK -34 million (NOK -16 million). The number of customers increased by 23% this quarter, and at the end of the first six months there are 41,200 domestic alarm customers. Hafslund Security is now Norway's second largest player in the field of domestic alarms. Total investments were NOK 46 million, including acquisition costs for new domestic alarm customers. In the field of transporting valuables, several large assignments have been implemented in the banking and finance sectors.

 

The company is now in a phase of strong growth, and the support functions are of a size to handle up to 100,000 customers within the private and business markets. The business area is expected to attain a positive operating profit before depreciation (EBITDA) in the second half of the year.

 

Operating profit before depreciation (EBITDA) for Contracting in the second quarter was NOK 25 million (NOK 1 million), and the operating profit was NOK 21 million (NOK 0). The work of increasing the efficiency of the operations and adapting the business to the market continues. A further reduction in the workforce of 15 man-years has been made, and severance pay of NOK 8 million has been recorded in the profit and loss account as reorganisation costs under other business areas. At the end of the first six months a downsizing of a total of 140 man-years has taken place compared with the same time last year.

 

Operating profit before depreciation (EBITDA) for Services this quarter was NOK 0 million (NOK -13 million). The improvement is due to more efficient work processes and to cuts in the workforce of approximately 90 man-years.

 

Other business areas, which include corporate staff, the Job and Service centre, property management, Agriculture and Hafslund Manor, had an operating profit before depreciation (EBITDA) this quarter of NOK 9 million (NOK -24 million) including earnings of NOK 15 million from the sale of leasehold sites and reorganisation costs of NOK 8 million associated with workforce cuts in Contracting.

 

Earnings from share investments & associated companies

Total earnings from share investments this quarter were NOK 33 million (NOK -154 million). Of this, the result from associated companies amounts to NOK -7 million (NOK 4 million). Other results primarily consist of returns of NOK 18 million from the current assets investment portfolio and dividends from Arendal Fossekompagni and Scudder Latin America Fund amounting to NOK 21 million. This portfolio has been reduced in cost price by a further NOK 101 million, and at the end of the first six months it has a cost price of NOK 99 million and an unrealised loss of NOK 50 million that has been recorded in the profit and loss account.

 

 

 

 

The process of selling Hafslund shares concluded

On 23 June Hafslund was informed by the City of Oslo that it had concluded its sales process.

 

Offer to acquire Hafslund's Norwegian power stations

At the beginning of June Hafslund received an offer from the companies Akershus Energi, Energiselskapet Buskerud and Østfold Energi to take over all the Norwegian power stations in Hafslund. The bid was NOK 4.5 billion. At a Board meeting on 20 June, the Board of Hafslund ASA decided not to accept the offer. This conclusion was based on a total evaluation where strategic, financial and other aspects were emphasised. As of 30 June the power stations in Norway have a book value of NOK 2.1 billion.

 

 

At the beginning of July Hafslund entered into an agreement concerning a drawing facility of EUR 340 million. The facility was over-subscribed. The drawing facility has a term of five years, will be used as extra liquidity reserve and back-up for certificate issues, and replaces the short-term facility of NOK 2,800 million taken out in January this year.

 

 

Oslo, 21 August 2003

 HAFSLUND ASA