AGDER ENERGI INVESTOR PRESENTATION May 13, 2014 Agenda Company - PowerPoint PPT Presentation

Annual Report 2013 AGDER ENERGI INVESTOR PRESENTATION May 13, 2014

Agenda Company overview Strategy and investments Financial info Funding and liquidity 2

A leading Norwegian renewable energy group 3

Facts about Agder Energi Vertically integrated energy group, • 1,550 employees, sales ca. 10 bn. kr. Fourth largest energy producer, mean • production 7.7 TWh, 47 power stations. Fourth largest network company, • 188,000 customers. Ca 10 TWh enduser sales, largest in • corporate segment, 147,000 household customers. 45.5% owned by Statkraft and 54.5% • Agder municipalities. 4

Organization focused on value creation 5

High production flexibility Water Mean production Reservoir course TWh/year capacity TWh Otra 3.3 2.6 Mandal 1.7 0.5 Arendal 1.3 0.7 Sira-Kvina 0.8 0.7 Ulla-Førre 0.3 0.5 Other 0.4 0.1 Total 7.8 5.1 67% of annual mean inflow may be stored in reservoirs. Precipitation Areas 6

Network consolidated in Agder AE Nett owns and • operates the local and regional distribution network in Aust- and Vest-Agder. Stable and considerable • cashflow. Network capital 3,523 • mill. kr. 7

Key credit factors Strong market position • Competitive low cost and flexible producer of hydro power. • Monopoly on regional and local distribution network in the Agder • counties. Strong cash flow • High level of el-price hedge next 3-5 years. • Stable and considerable cash flow contribution from monopoly • activity. Investment flexibility • Considerable optionality in existing project portfolio. • Strong and stable ownership structure • 30 coordinated municipalities and Statkraft, which is 100% state • owned (AAA). 8

Company overview Strategy and investments Financial info Funding and liquidity 9 9

Core business activities Hydro Power Network Build and operate hydro power stations Build and operate distribution network Energy Management Market LOS – enduser sales Energy management and trading Value creation of the portfolio Otera – infrastructure contractor Varme – district heating and cooling 10

Investments 2014-2018 85%-90% hydro power • Hydro Power and network. 8% 8% Network Options on Wind and • Hydro Power. Wind 32% 51% Other Comitted and gvt imposed • 750 mill. kr on annual 5 largest projects average. Network AMS Hydro Power Skjerka dam and generator Ongoing process on group • Hydro Power Iveland II strategy. Hydro Power Tunnel Langevann-Nåvann AE AS Bjerkreim wind park 11

Potential 600 GWh new production Main projects: Brokke North and South, Skarg power station 175 GWh. Completion Q2 2014. Åseral projects, potential of ca 200 GWh. 2014-2018. Iveland II 150 GWh. Initiated, completion Q2 2016. Power station Pump station New power station 12

Focus on profit improvement Changed organization – a more transparent group structure. • Focus on core business activities, several companies sold. • Efficiency, reduction of staff. • Challenge the entire organization – continuously. • Ensure progress and realization of benefits and gains. • Extention of improvement program to 2020: • Further simplification and improvement. • Ensure increased pace of restructuring. • Further adjustment of shared services activities and profit centers. • 13

Company overview Strategy and investments Financial info Funding and liquidity 14

Highlights 2013 • Solid profit from operations. 2,289 mill. kr underlying EBITDA. • • Positive development in operational cost. • High investment activity 1,364 mill. kr. Hydro Power 778 mill. kr (new investments 535 mill. kr). • Network 429 mill. kr. • • Historic low sickness absence 3.6%. 15

Key figures (mill. kr) 2009 2010 2011 2012 2013 Sales 8,287 9,345 10,684 8,946 9,890 Underlying EBITDA 2,642 2,260 1,924 1,957 2,289 Net income after taxes 1,604 751 1,161 1,045 846 Equity ratio 25.5% 20.9% 21.9% 25.6% 26.1% Interest bearing debt 5,944 7,621 7,028 7,223 7,668 FFO/Net debt* 27.8% 23.4% 19.8% 20.0% 21.6% 16 * FFO unadjusted, adjustments are made in rating process. Interest bearing debt on 4 quarter rolling basis.

Development in production 10 000 8 134 7 831 7 738 8 000 6 586 6 550 6 000 GWh 4 000 2 000 - 2009 2010 2011 2012 2013 17

Reservoir levels Norway 100 80 60 2014 % 2013 40 2012 20 Mean 0 1 11 21 31 41 51 Week • AE’s reservoir levels were considerably higher than average at the end of 2013. 18

Price development Nord Pool 80 60 EUR/MWh 40 20 0 1 11 21 31 41 51 Week Spot/forward 2014 Spot 2013 Spot 2012 • Average spot price (NO2) 29.0 øre/KWh in 2013, up 33% from 2012. • Forward prices point to lower prices in 2014 than average spot price in 2013. 19

Cash flow 3 000 2 000 1 486 Mill. kr 1 000 0 -626 -1 000 -1 355 -2 000 2009 2010 2011 2012 2013 Operations Net investments Dividend • Strong cash flow and underlying EBITDA. • Gross investments 1,378 mill. kr. • 95% of investments in durable assets in Hydro Power and Network. 20

Development underlying EBITDA 1 3 000 2 642 2 500 2 289 2 260 1 957 1 924 2 000 Mill. kr 1 500 EBITDA 1 000 500 - 2009 2010 2011 2012 2013 21 1 Adjusted for unrealized value changes in power derivatives and significant non-recurring items.

Change in underlying EBITDA 1 2 500 12 72 2 000 155 92 1 500 Mill. kr 2 289 1 000 1 957 500 - EBITDA Hydro Network Market Other EBITDA 2012 Power 2013 22 1 Adjusted for unrealized value changes in power derivatives and significant non-recurring items.

EBITDA pr. profit center 2 Distribution 2013 (mill. kr) Development 3 000 131 2 500 2 000 684 Mill. kr 1 500 1 000 500 1 675 - Hydro Power Network Hydro Power Network Market 23 2 Profit centers are reported according til NGAAP.

Investment pr. profit center Distribution 2013 (mill. kr) Development 1 400 1 200 52 1 000 Mill. kr 429 800 600 400 778 200 - Hydro Power Network Hydro Power Network Market 24

Current dividend policy • 500 mill. kr plus 60% of excess profit. • Based on group income to majority according to NGAAP. • Policy is rule of thumb, qualitative assessment annually. 25

Company overview Strategy and investments Financial info Funding and liquidity 26

Robust funding structure Diversified funding sources Balanced maturity structure Bank 1 500 Bank US PP loans loans CPs 8 % NOK EUR 9 % 1 000 8 % Mill. kr 19 % 500 Bonds 0 56 % Bank loans NOK Bank loans EUR Bonds CPs Backstop 2 x 500 mill. kr ununtilized. US PP 27

Financial strenght and rating FFO 3 /Net debt Long term objective 27,8% 30% 23,4% 19,8% 20,0% 21,6% shadow rating: 20% Minimum BBB+ 10% 0% Net interest bearing debt 7,390 mill. kr (7,207 mill. kr in 2012) FFO 1,596 mill. kr (1,438 mill. kr in 2012) 28 3 Unadjusted, adjustments are made in shadow rating. Interest bearing debt on 4 quarter rolling basis.

Funding overview Funding is done at parent company level. • Flexibility by diversified funding sources and sufficient • back stop facilities. Funding need is decided by cash flow from operations • and investment activities and dividend. Maturity 1.2 bn. kr rest 2014. • Funding sources: Domestic bond and CP market, • banks, private placement markets, etc. 29