Statkraft Investor Update March 2014
Disclaimer This presentation has been prepared by, and the information contained herein (unless otherwise indicated) has been provided by Statkraft AS (the "Company"). By attending the meeting or otherwise viewing this presentation you agree to be bound by the following conditions. This document and the information therein are being furnished to you solely for your information and may not be reproduced, redistributed or passed on, in whole or in part, to any other person. This document does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of the Company or any of its subsidiaries in any jurisdiction or an inducement to enter into investment activity. No part of this document, nor the fact of its distribution or reception, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. This document is not a prospectus and does not comply with rules or regulations regarding investor information, and has not been approved by or filed with any stock exchange or regulatory authority. Amongst others, this document does not disclose risks and other significant issues related to an investment in any securities. Investors should only subscribe for any transferable securities on the basis of information in a relevant prospectus and term sheet, and not on the basis of any information provided herein. The information contained in this document has not been independently verified and no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. None of the Company, or any of its affiliates, advisers or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this document. The information contained in this document is provided as at the date of this document and is subject to change without notice. This document may not be distributed or delivered to any person or in any jurisdiction where such distribution is unlawful or restricted. This document may not be delivered in the United States or to any person or entity in the United States. 2
Agenda Statkraft overview 1. Strategy and market dynamics 2. Financial update 3. Funding and liquidity 4. Summary 5. Appendix 3
Statkraft at a glance NO NO No. 1 power generator NOK 47.5 47.5 bn UNDERLYING GROSS REVENUES 2013 (~35%) NOK 12.4 bn UNDERLYING EBITDA 2013 UK UK SWE 55.9 TWh Wind power initiatives POWER GENERATION 2013 No. 4 power generator (~5%) 16.0 GW INSTALLED CAPACITY 2013 GER Flexible power generation 100% EU EUROPE PE OWNED BY THE KINGDOM OF NORWAY Trading activities A-/Baa1 SE EUROPE Growth outside Europe through S&P / MOODY’S CREDIT RATINGS Hydropower development SN Power (60% ownership ) (stable outlooks) Hydropower Gas power District heating 4 Distribution grid Wind power
Europe’s leader in renewable energy Top 10 renewable electricity producers in Europe 2012 (adjusted 1 ) Electricity production (TWh) 64 Statkraft Statkraft’s total power generation 2013 (55.9 TWh) EDF 49 Vattenfall 46 Wind 2.5% Bio Gas Enel 40 0.5% 2% Fortum 30 28 Verbund Iberdrola 27 E.ON 21 19 GDF SUEZ Hydro 95% Hidroelectrica 18 Source: PwC 1 Main assumptions: full consolidation of subsidiaries, proportional consolidation of associated companies, energy consumption for 5 pumped hydropower deducted, electricity from long-term purchasing contracts deducted, production outside Europe deducted
Flexible low-cost power producer Low-cost power production dominated by renewable energy - Average hydropower production cost of 10.2 EUR/MWh 1 in 2013 Peak supplier with high degree of flexibility - 80% of installed capacity within highly flexible hydropower - Production optimised relative to power prices and water inflows Blåsjø , one of Europe’s largest hydropower reservoirs, with multi-year energy storage capacity (7.8 TWh) Substantial reservoir capacity - Europe’s largest reservoir capacity (~40 TWh) Unique information base and power market modelling 1 Annual Report 2013: 80 NOK/MWh. Incl. property tax and depreciations, excl. sales costs, overhead, net financial items and tax. Based on normal production from power plants under own management in Norway, Sweden, Germany and the UK. 6
Long-term contracts stabilize earnings GWh ~ 20 TWh sold on long-term contracts 30 000 with power-intensive Nordic industry 25 000 Corresponding to ~ 40% of Statkraft’s 20 000 annual mean power production for 15 000 Nordic hydropower 10 000 5 000 0 2014 2016 2018 2020 2022 2024 Statutory priced lease agreements Statkraft's share of leasing agreements Long-term market contracts 7
Key credit strengths Strong market position - a competitive, low-cost and flexible generator of electricity Stable cash flow - a substantial share of long-term industrial supply contracts Capex flexibility - several options within current investment program Solidly owned by the state in one of the most creditworthy countries in the world - the Norwegian state as the sole shareholder (AAA/Aaa) 8
Agenda Statkraft overview 1. Strategy and market dynamics 2. Financial update 3. Funding and liquidity 4. Summary 5. Appendix 9
A changing energy landscape Market challenges Market opportunities Attractive support schemes driven by Flat energy demand in Europe and European transformation to renewable more production from new renewables energy Growing concerns in Europe about New business opportunities closer to security of supply and affordability end users and through integration of Traditional “utility business model” intermittent renewable capacity challenged by a transformed value chain Strong growth in emerging markets 10
Strategic focus areas and ambitions European Flexible • First priority to maintain & develop Nordic hydropower assets • Maximize long term value of Statkraft’s asset base Generation • Develop Trading and Origination business in selected global markets Market operations and exploit customer oriented activities Hydropower in • Build integrated operations in South East Europe, South America and Emerging Markets South Asia • Onshore wind in Norway, Sweden and UK Wind Power • Become lead operator in offshore wind power • Become amongst the most profitable district heating companies in District Heating Norway and Sweden 11
Strengthening International Hydropower Statkraft SN Power Agreement between Norfund and Statkraft to restructure and prolong partnership Statkraft to integrate South America and South Asia (in effect April 1 st 2014) New SN Power to focus on South East Asia, Africa and Central America One common project execution unit in Statkraft 12
Allocation of investments 2014-2018 Geographical allocation Technology allocation District Innovation heating 3 % 3 % Trading & origination Emerging 3 % markets Onshore 38 % WP 18 % Hydropower 64 % Norway 43 % Europe ex Offshore Norway WP 19 % 9 % Investment ambition 2014-2018: NOK 61 billion, but subject to financial capacity and maintaining current ratings 13
Solid base in the Nordic region Estimated annual contribution after committed capex (2018) EBITDA Power generation (72 TWh) Outside Outside Europe Europe 5 % 8 % Europe Europe outside Nordic outside Nordic 13 % 11 % Nordic outside Nordic outside Norway Norway 10 % 14 % Norway Norway 67 % 72 % Increased diversification, but still dominated by Norwegian hydropower 14
Nordic-European power market integration Current transmission capacity between Nordic and Europe of 4000 MW Planned capacity increase of ~5500 MW ahead of 2020 Increased value opportunities for Statkraft’s flexible Nordic hydropower plants Power transmission cables (MW) Planned expansions Source: Statnett 15
Agenda Statkraft overview 1. Strategy and market dynamics 2. Financial update 3. Funding and liquidity 4. Summary 5. Appendix 16
Highlights 2013 Solid result from operations - Higher Nordic power prices and increased production capacity Currency effects impact net profit - Negative impact offset by currency translation effects in equity Investment activity according to plan - Gross investment of NOK 9.3 billion - Important projects completed: Three onshore wind farms, one hydropower and one gas-fired power plant and two district heating plants - Investment decision to construct two hydropower plants in Albania Sale of all shares in E.ON Transfer of hydropower plants and asset swap in Norway to optimize operations 17
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