Statkraft SF - Third Quarter 2006
09.11.2006 08:09 | stock exchange information
The Statkraft SF Group made a profit in the third quarter of NOK 1.2 bn before tax, a reduction of NOK 0.1 bn compared with the third quarter last year. Net profit amounted to NOK 0.4 bn, a reduction of NOK 0.6 bn. For the first three quarters as a whole, profit before tax totalled NOK 7.4 bn, while profit after tax came to NOK 4.6 bn, an increase of NOK 2.0 bn and NOK 0.7 bn respectively compared with last year.
Statkraft posted strong results for the first nine months of the year combined. The financial results of its operating activities were also strong in the third quarter alone, with operating profits up by NOK 723 million (58 %) on the third quarter last year. However, weaker results from associated companies and an increase in net financial expenses resulted in a profit before tax for the quarter of NOK 1.2 billion, marginally below that achieved in 2005. Furthermore, taxes were higher, such that net profit for the quarter was NOK 0.4 billion, a drop of NOK 0.6 billion. The increase in taxes may be ascribed primarily to a rise in resource rent tax as a result of higher spot prices.
For the first nine months of the year combined, profit before tax totalled NOK 7.4 billion, while net profit totalled NOK 4.6 billion, an improvement of NOK 2.0 billion and NOK 0.7 billion respectively compared with last year. Net profit rose by 18 %.
Both output and prices were high in the third quarter, as they had been in the first half of the year. The high prices were largely due to a poor hydrological balance, with low reservoir water levels, and a substantial cut in Swedish nuclear power output. Consumption in the third quarter was lower than normal as a result of the good weather.
The average spot price during the first nine months of the year was NOK 399/MWh, which is 75 % higher than in the same period in 2005. This can largely be ascribed to higher consumption in the Nordic region, as well as lower than normal snow reserves and precipitation. Statkraft's output so far this year totals 36.3 TWh, an increase of 6 % compared with last year. The rise in spot prices and output is reflected in revenues from net physical spot sales, which rose by 118 % in the third quarter and by 81 % in the year to date. The increased spot sale revenues are, however, offset by a substantial reduction in earnings from hedging activities.
At the start of November it became clear that the Svartisen power plant would be out of operation for four to five months. The power plant has an installed capacity of 350 MW, and a mean annual output of 2.2 TWh.
In the government's proposed national budget for 2007, which was announced in October, Statkraft's dividend for 2006 was set at 98 % of the Group's profit for the year after tax and minority interests. The high dividend rate could lead to an income correction, which in turn could lead to the imposition of a tax correction.
Construction of two gas-fired power plants in Germany and one in Norway is going according to plan. Kjøllefjord Wind Farm was opened in October. Construction of the Heimdal district heating plant in Trondheim and the Leirfossene power plant in Nidelva are also underway. Licence applications for additional wind and hydropower plants in Norway are currently being evaluated by the authorities.
Naturkraft, which is jointly owned by Statkraft and Norsk Hydro, is currently building a gas-fired power plant in Kårstø, western Norway, with an expected start-up date in the autumn of 2007. The Norwegian national budget proposal includes a grant of NOK 720 million for further work on a carbon capture facility at Kårstø, the enabling of CO2 value chains and necessary clarifications with respect to government involvement in this area. An estimated NOK 680 million of this proposed sum is linked to the realisation of the carbon capture facility. Naturkraft already has all the necessary licences for the construction of the power plant.
To achieve a closer level of coordination between Trondheim Energiverk (TEV) and Statkraft, and to realise economies of scale within the Group, it has been decided that energy optimisation and hedging trading associated with TEV's hydropower portfolio shall be undertaken by Statkraft's Generation & Markets business unit. TEV shall remain as a regional company and shall continue to own, operate and maintain its generating facilities. Furthermore, a coordination of administrative functions is also being implemented. This coordination of effort is not expected to lead to any loss of jobs.
Statkraft SF's business
Statkraft SF's object is to own all the shares in Statkraft AS and provide that company with loans. In addition, Statkraft SF owns certain assets which may not formally be transferred to Statkraft AS. This applies to power plants which have reverted to state ownership and which have been leased out to third parties, and plants which will become the property of Statkraft SF upon their reversion to state ownership. It also applies to certain international investments (Asian Power Invest AB and Nordic Hydropower AB).
Statkraft SF's consolidated financial statements will, with the exception of the retained assets, be identical to the consolidated financial statements for its subsidiary the Statkraft AS Group.
The closing balance for the third quarter 2006 showed that the total assets of the Statkraft SF Group were worth NOK 732 million more than those of the Statkraft AS Group. Around NOK 600 million of this sum corresponds to the book value of the power plants that have been leased to third parties and the above-mentioned international investments, while the remainder is made up of current items, cash and cash equivalents.
The Statkraft SF Group had NOK 3 billion more in long-term interest-bearing debt than the Statkraft AS Group, since Statkraft SF has borrowed NOK 3 billion from an established line of credit in order to finance the payment of dividend for the 2004 financial year. Interest-bearing debt totalled NOK 33.4 billion at the end of the third quarter, compared with NOK 35.2 billion at the same point last year and NOK 34.6 billion at the start of the year. The interest-bearing debt ratio was 43.6 %, compared with 46.3 and 47.7 % respectively. Current assets excluding cash and cash equivalents totalled NOK 4.6 billion, while short-term interest-free liabilities totalled NOK 8.1 billion.
In the Income Statement, the difference between Statkraft SF and Statkraft AS is largely composed of revenues and expenses linked to the ongoing operation of the retained assets. These differences are relatively modest.
Eli Skrøvset, Executive Vice President/CFO, tel.: +47-24067914 /+47-909 86 495
Lisbeth Lindberg, S.V.P., Finance and IR, tel.: +47-24067286/ +47-995 23 150
The full report with tables can be downloaded from the following link:
|Report 3rd quarter 2006|