Statkraft SF First Quarter 2006

11.05.2006 08:04 | stock exchange information

The Statkraft SF Group made a profit in the first quarter of NOK 4.1 billion before tax, an improvement of NOK 1.5 billion compared with the first quarter last year. Net profit amounted to NOK 2.9 billion, an improvement of NOK 1.1 billion (or 62 per cent).

In the first quarter 2006, turnover in the Statkraft SF group increased by NOK 1.3 billion from the first quarter 2005, ending at NOK 5.3 billion. The profit before tax amounted to NOK 4.1 billion, an improvement of NOK 1.5 billion compared with the first quarter last year. Net profit amounted to NOK 2.9 billion, an improvement of NOK 1.1 billion (or 62 per cent).
This strong improvement was due in part to the high price of power and also to the fact that the company maintained high production levels. Furthermore, net financial expenses were reduced, and profit contributions from associated companies increased markedly.
Little precipitation, low snow reservoirs and cold weather in Norway and Sweden have contributed towards the average spot price over the quarter increasing by 71 per cent compared with last year, amounting to NOK 364/MWh. In addition, high fuel prices in thermal power generation and high carbon prices have increased prices. Despite weaker access to resources, Statkraft maintained a high production level of 16.1 TWh over the first quarter, an increase of 13 per cent from last year.
The construction of three gas-fired power plants is well under way: two gas-fired power plants in Germany and one in Kårstø, Norway. The construction of Kjøllefjord Wind Farm and several small hydropower projects is continuing. A decision has been made to construct the Leirfossene power plant in Nidelven. These projects will in total add between 7 and 8 TWh in new production capacity to Statkraft.
Statkraft is continuing its business development work outside Norway. A subsidiary has been set up in the United Kingdom for the development of wind power in Great Britain, and the company has opened a trading office in Sofia in Bulgaria for the purposes of developing trading opportunities in South-Eastern Europe. The company has entered into an agreement of intent with Montenegrin company Elektroprivreda Crne Gore (EPCG) regarding the implementation of a study of business opportunities in the field of hydropower in Montenegro. In addition, a letter of intent has been signed with the Russian company Hydro OGK in order to chart business opportunities in the field of hydropower in Russia.
Statkraft SF's business
On 1 October 2004, most of Statkraft SF's business activities were transferred to the subsidiary Statkraft AS and its underlying subsidiaries. This transfer covered some 96 per cent of the assets held by Statkraft SF. However, certain assets, which may not be formally transferred, have been retained by Statkraft SF. This applies to power plants which have reverted to state ownership and which have been leased out or which will come into Statkraft SF's possession upon reversion. Furthermore, certain investments in foreign enterprises have been retained (Himal Power Limited, Asian Power Invest AB and Nordic Hydropower AB). Following the reorganisation, Statkraft SF's purpose is to own all shares in and provide loans to Statkraft AS and to own the retained assets.
Following the reorganisation, the Statkraft SF Group'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 differences between Statkraft SF and Statkraft AS as recorded in their respective income statements are primarily related to the revenues and costs associated with the ongoing operation of the retained assets.The financial impact is relatively modest.
Taking effect in the accounts as of 1 March, ownership interests in Himal Power Limited were transferred as a contribution in kind to Statkraft Norfund Power Invest (SN Power). Himal Power Limited has been deconsolidated in the Statkraft SF accounts as of the same time. This transaction will result in a profit in the accounts of NOK 100 million in the company accounts for Statkraft SF and NOK 9 million in the consolidated accounts. This transfer is part of the shareholders' agreement which was entered into in connection with the establishment of SN Power. Statkraft will receive shares in SN Power as recompense for the contribution in kind. The shares will later be transferred to Statkraft AS. The other owner, Norfund, will inject equivalent assets in cash so that the ownership interests in SN Power remain unchanged.
The value of the Statkraft SF Group's total assets as recorded on its consolidated balance sheet for the first quarter 2006 is NOK 941 million higher than the value of the Statkraft AS Group's assets. This largely corresponds with the book value of the power plants that have been leased to third parties and the foreign investments which have not been transferred, in addition to smaller, short-term items and cash reserves.
Interest-bearing long-term liabilities in the Statkraft SF Group amounted to NOK 3 billion more than in the Statkraft AS Group as a consequence of Statkraft SF raising NOK 3 billion in new debt in 2005 under the established credit line. This was done to help to finance the dividend to the State of NOK 3.4 billion for the 2004 financial year. The interest-bearing liabilities in the Statkraft SF Group amounted to NOK 33.6 billion at the end of the first quarter.
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:


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1st Quarter 2006 .PDF