In October, Statkraft and E.ON AG signed a letter of intent to exchange Statkraft's holding in E.ON Sverige AB (44.6%) for flexible production assets and shares in E.ON AG. The total value of the swap deal is EUR 4.4 billion. A final agreement is expected to be formally signed during the first quarter of 2008 and will make Statkraft Europe's largest producer of renewable energy.
During the year, work was completed on the construction of three gas-fired power plants - Knapsack (100% holding) and Herdecke (50% holding) in Germany, and Kårstø (50% holding) in Norway. The three power plants have an installed capacity of slightly more than 1600 MW, of which Statkraft's share is slightly more than 1200 MW.
In September, Statkraft and Swedish hygiene and paper company SCA signed a ten-year industrial power agreement to deliver annual power of 500 GWh to SCA's Swedish forestry business. The two companies also established a joint venture that will focus on initiatives within renewable energy in Sweden. The companies plan to construct seven wind farms with a combined potential annual production of around 2.8 TWh. In addition, they also hope to explore the possibility of constructing hydropower plants on four watercourses, generating around 630 GWh.
Pålsbu Hydropower Plant, which is expected to produce 22 GWh annually, was opened in October. Statkraft's subsidiary Trondheim Energi, is currently in the process of constructing a new hydropower plant at Leirfossene on the Nidelven river with an expected annual production level of 43 GWh. Statkraft was also granted a licence to build and operate Kjensvatn Hydropower Plant (generating 75 GWh per year) in Nordland. During 2007, eight new small-scale hydropower plants were built by Statkraft subsidiary Småkraft AS (generating a total of 115 GWh per year). In addition, the company was also granted licences for a further 11 power plants.
The year also saw Statkraft awarded its first wind power licence in the United Kingdom. Blaengwen Wind Farm will have a total capacity of 20-30 GWh.
The new incineration plant at Heimdal heating centre and the new district heating pipeline running to Midtbyen in Trondheim were opened in September, generating 200 GWh of heat per year.
SN Power (in which Statkraft has a 50 % stake) purchased Peruvian company Electroandes SA, making SN Power one of the five largest electricity producers in Peru. In the Philippines, SN Power, working in conjunction with local partners, took over the operation of a hydropower plant and is in the final stages of negotiation to acquire two others. In Chile, the company decided to build a 156 MW capacity hydropower plant, as well as a wind farm that will have a capacity of around 50 MW.
In order to achieve the Group's district heating objectives, the decision was taken to focus Group activities using Trondheim Energi Fjernvarme as a starting point. Efforts are also being made to merge power sales operations into a single company.
During the year, Statkraft opened new offices in Serbia and Romania.
The year also saw Statkraft take the decision to build the world's first prototype osmotic power plant. The facility at Hurum will have an installed capacity of 2-4 kW, and represents an important step towards the construction of commercial plants at some point in the future. During the autumn, the company also positioned itself to expand solar energy activities in Italy and Spain.
Svartisen Hydropower Plant was offline until the beginning of March due to a damaged aggregate. For the rest of the year, the 350 MW capacity plant was operated with a technical restriction of 300 MW.
Statkraft SF's business
Statkraft SF's objective is to own all the shares in Statkraft AS and provide that company with loans. Statkraft SF also owns certain assets that may not be formally owned by Statkraft AS. This applies to power plants that have reverted to state ownership and are leased to third parties or power plants that will belong to Statkraft on reversion to state ownership, and certain foreign commitments (Asian Power Invest AB and Nordic Hydropower AB).
Statkraft SF's consolidated financial statements will, with the exception of the retained assets and individual items on the liabilities side, be identical with the consolidated financial statements for the Statkraft AS subgroup.
Total assets in Statkraft SF Group's closing balance sheet for the fourth quarter of 2007 were NOK 334 million higher than the corresponding figure in the Statkraft AS Group balance sheet. NOK 930 million of this difference is attributable to the book value of power plants leased to third parties and international investments.
The Statkraft SF Group had almost NOK 2.8 billion more in long-term interest-bearing liabilities than the Statkraft AS Group, due to the fact that Statkraft SF borrowed NOK 3 billion under an established line of credit in order to finance the dividend payment for the 2004 financial year. At the end of the fourth quarter, interest-bearing liabilities totalled NOK 40.0 billion, compared with NOK 34.8 billion at the end of the corresponding prior-year period. The interest-bearing debt ratio was 49.0%, compared with 45.1% at the end of 2006. Current assets, excluding cash and cash equivalents, totalled NOK 14.0 billion, while short-term interest-free liabilities amounted to NOK 18.9 billion.
Differences between Statkraft SF's and Statkraft AS's respective income statements largely relate to revenues and expenses linked to the ongoing operation of the retained assets. These differences are relatively modest.
EVP/CFO Eli Skrøvset, tel: +47 24 06 79 14/+47 909 86 495
VP Investor Relations Yngve Frøshaug, tel: +47 24 06 78 76/+47 900 23 021
This information is subject to the disclosure requirements acc. to §5-12 vphl (Norwegian Securities Trading Act).