Statkraft SF Third Quarter 2005

10.11.2005 08.27 | stock exchange information

The Statkraft SF Group made a profit before tax of NOK 1,333 million in the third quarter 2005, while the group's net profit totalled NOK 1,000 million. This is an increase of NOK 1,025 million and NOK 564 million respectively compared with the third quarter 2004.

The Group made a profit before tax of NOK 5,432 million in the first nine months of the year, and a net profit of NOK 3,921 million, an improvement of NOK 2,374 million and NOK 1,563 million respectively compared with the same period last year. There have been good efforts from all parts of the organisation.
The improvement in financial performance during the first nine months of the year is largely due to a substantial increase in the group's total power output compared with last year. This more than compensated for lower price levels. Revenues from hedging remained strong. A reduction in financial expenses contributed to the rise in profits, and revenues from the sale of assets were also taken to income. The underlying cost-increase is moderate. The company's financial results were also affected by repair costs incurred by the associated company E.ON Sverige (formerly Sydkraft) following a hurricane in January, which inflicted severe damage on the company's distribution grid in southern Sweden.
Tax, property tax, licence-related charges and compensation payments totalled NOK 2,131 million in the first nine months of the year, NOK 877 million more than in the same period last year.
The proposed state budget for 2006 stipulates that Statkraft must pay a dividend of NOK 4,720 million for 2005, which corresponds to over 90 per cent of the group's forecasted net profit. The proposed dividend must therefore be considered extremely high in relation to the group's current earnings, and will weaken its ability to undertake new environment-friendly investments and reach its long-term objectives.
Statkraft's board of directors has established a dialogue with the Ministry of Trade and Industry with respect to this matter.
Statkraft opened Phase 2 of the Smøla Wind Farm in September. With a total of 68 wind turbines and an annual output of approx. 450 GWh, the facility is Europe's largest land-based wind farm. The board of directors has given the go-ahead for the construction of the Kjøllefjord Wind Farm in Lebesby, Finnmark. Construction work will commence immediately.
On 3 October Statkraft took over 24 hydropower facilities in Sweden and Finland, with an annual mean output of approx. 1.6 TWh. The transaction, which is priced at approx. NOK 4 billion, is based on an agreement signed on 1 July this year between E.ON Sverige and Statkraft.
Construction of the three gas-fired power plants in which Statkraft has decided to participate has already started. Two gas-fired power plants are being built in Germany and one in Norway.
The Norwegian competition authorities have considered that the measures initiated by Statkraft to comply with the directives issued when Trondheim Energiverk (TEV) was acquired in 2002 are inadequate. The competition authorities have therefore not deemed the leasing out of 65 per cent of the production capacity of the Rana Power Plant to be a sufficiently compensatory measure. As a result, Statkraft will proceed with its preparations for the sale of TEV.
Statkraft SF's business
In connection with the reorganisation of Statkraft SF into a limited company with effect from 1 October 2004, most of Statkraft SF's business activities were transferred to the subsidiary Statkraft AS and its underlying companies. The transfer covered over 96 per cent of the assets held by Statkraft SF. However, certain assets, which may not formally be transferred, have been retained by Statkraft SF. This applies to power plants which have reverted to state ownership and which have been leased out to third parties (Sauda I, II, III, IV, Tysso II, Svelgen I, II and Mågeli) 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, Nordic Hydropower AB and Empresa de Generación Eléctrica Cheves SA).
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 financial impact, which is relatively modest, is described below.
The value of the Statkraft SF Group's assets as recorded on its consolidated balance sheet at 30 September is NOK 1.9 billion 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 certain short-term items and cash reserves.
During the third quarter Statkraft SF raised NOK 3 billion in new debt under previously established credit lines to help finance the NOK 3.4 billion dividend payable to the Norwegian state for 2004. As a result Statkraft SF's total long-term interest-bearing debt at the end of the third quarter was NOK 3.4 billion higher than that of Statkraft AS.
Statkraft AS has not paid any dividend for 2004. There is a difference in equity between Statkraft SF and Statkraft AS as a result of the difference in dividends paid.
Statkraft SF has bought back or redeemed a substantial amount of its bond loans, particularly during the second quarter. For the group as a whole, NOK 8.9 billion in long-term debt has been repaid. Statkraft AS repaid internal loans to Statkraft SF corresponding to the redemption and buybacks of external loans held by Statkraft SF.
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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