Investor Presentation Our Vision: a Leading Norwegian Renewable Energy Group Agder Energi in Brief
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August 31, 2020 Investor Presentation Our vision: A leading Norwegian renewable energy group Agder Energi in brief Vertically integrated utility company Fourth largest supplier of hydro power – mean production of 8.1 TWh Fourth largest network company – 205 000 customers Leading market share in retail power sales – appox. 14 TWh in end user sales Underlying operating revenues approximately NOK 13 bn Government owned – 54.5 % by Agder municipalities and 45.5 % by Statkraft Headquarter in Kristiansand, Norway, 1 020 employees Key credit strengths Strong market position Low cost profile and flexible producer of hydro power Monopoly position through operation of distribution grids in the Agder Counties Strong cash flow High share of price hedging next 3-5 years, robust hedge the following 10 years due to long term power sales contracts Stable and considerable cash flow from monopoly business Investment flexibility Optionality in existing project portfolio Strong and stable ownership structure 25 coordinated municipalities and Statkraft (A-), which is 100 % owned by the Norwegian state (AAA) Group structure CEO Steffen Syvertsen HR & FINANCE & RISK COMMUNICATION MANAGEMENT Kristin A. Dale Pernille Kring Gulowsen TECHNOLOGY *) Ingvill Heskestad Mykland ENERGY PRODUCTION MANAGEMENT DISTRIBUTION CUSTOMER & TRADING Jan Tønnessen Anders Gaudestad Jan Erik Eldor Atle Knudsen INNOVATION *) Agder Energi Nett AS has its own Board of Directors in accordance with the requirements for legal and functional separation. Svein Are Folgerø A strong focus on the value chain PRODUCTION EMT *) DISTRIBUTION CUSTOMER INNOVATION Actively manages our Responsible for one of Encourages intelligent Develops and maintains own and other the most profitable, use of electricity based good customer enterprises’ portfolios of Promotes innovation and efficient and modern on renewable energy relationships with electricity contracts, the development of our portfolios of renewable sources through stable, business and domestic helping to add value in value chain. Develops energy production efficient energy customers in Norway the Nordic and the company through plants distribution and the Nordic region European markets new profitable business models and strategic activities Revitalizing the value chain *) Energy Management & Trading Hydro power with high flexibility River system Mean production Reservoir capacity 9 000 8 900 8 800 8 700 (TWh/year) (TWh) Otra 3.6 2.7 7 300 Mandal 1.7 0.5 Arendal 1.3 0.7 Sira-Kvina 0.8 0.7 ProductionGWh Ulla-Førre 0.3 0.5 Other 0.4 0.1 Total 8.1 5.3 2015 2016 2017 2018 2019 Sole network owner in Agder • Agder Energi Nett owns and operates the regulated transmission and distribution networks in Agder • Stable and considerable cash flow • Smart metering (AMS) in full operation • Network capital NOK 5 275 mill Innovation Agder Energi Venture Invests in energy-related businesses from start-up through to maturity, and adds value by proactively contributing to their development. One of its important roles is developing industrial options for the Group. The NorFlex project Electricity customers should be able to pay lower network tariff in return for being flexible about when they use their electricity. The NorFlex project is helping to make this a reality. Enfo Enfo is developing new business models and advanced energy management and smart grid solutions for the Nordic and European energy markets. NODES NODES is an independent exchange for trading distributed flexibility in the energy market. Strategic goals toward 2020 Results and value creation best in industry 20% improved profitability in existing business Develop business models and positions related to digitalization and new energy markets Management is in process of reviewing the strategy Focus areas Optimizing existing business activities Positioning to offer scalable hydro power capacity Market operations posisitioning for future energy markets with flexibility and effect Posistioning for future network business Energy solutions to private consumers Investments 4% Planned investments cirka NOK 1 040 mill per year on average in the 2020-2024 period. 40% Relatively high expected investment activity in the 56% network business area to facilitate customer initiated projects Investment flexibility within the hydro power Hydro Network Other project portfolio Largest projects Cost (ca, NOK mill) Completion Hydro power Åseral Nord 870 2020 Hydro power Fennefoss 350 2023 Dividend policy Indicative dividend ratio 70% based on the Group’s net income to majority according to underlying IFRS previous year Significant nonrecurring sales gains or losses may be considered to be excluded from the dividend calculation. No dividend floor The dividend policy applies for the years 2018-2020 Financial update Highlights H1 2020 Profit from operations NOK 873 mill (NOK 1 140 mill) in underlying EBITDA Investments NOK 593 mill (NOK 630 mill), of which NOK 85 mill (NOK 47 mill) of investments within network paid by customers Hydro power station Fennefoss adopted, production increase 59 GWh Agder Energi instrumental in establishment of Morrow Batteries Financial flexibility increased Lifting backstop facilities from NOK 2,5 mrd to NOK 4,0 mrd Reservoir levels NO2 top high last 20 yrs 100% 80% 60% % of normal 40% 20% 0% 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 2020 2019 10 yrs average High snow levels, mild winter, korona caused activity shutdown Hard competition to produce to avoid reservoir overflow Record low power prices NO2 70 60 50 40 Øre/KWh 30 20 10 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 Forward price 2020 Spot price 2020 Spot price 2019 Prices down 80% from last year. Average EUR 8,5/MVh H1-20 vs EUR 42,5/MWh H1-19 Low transmission capacity in Southern Norway this summer 33 % av maks. kap. 43 % av av 43 % maks. kap. maks. Revenues and EBITDA per segment Revenues (NOK mill) EBITDA (NOK mill) 18 000 3 500 2 520 16 000 3 000 2 194 14 000 2 500 2 440 2 679 12 000 2 000 10 000 1 500 8 000 1 000 1 588 6 000 4 000 500 2 000 0 2016 2017 2018 2019 H1-20 0 -500 2016 2017 2018 2019 H1-20 Hydro Network LOS Ent Nordic Ent CWE Other Hydro Network LOS Ent Nordic Ent CWE Other Cash flow providing financial strength Cash Flow (NOK mill) FFO*/Net Debt 2 500 25% 2 049 22,4 % 22,9 % 2 000 1 779 1 500 1 358 20% 1 189 18,4 % 15,7 % 1 000 502 500 15% 0 10% -500 -1 000 5% -1 500 -2 000 0% 2016 2017 2018 2019 H1-20 2016 2017 2018 2019 Operational CF Net investments Dividends FFO*/Net Debt *Unadjusted, adjustments are made in rating. Interest bearing debt on 4 quarters rolling basis Robust funding structure and diverse maturity profile Funding sources Maturity profile (NOK mill) 1 800 6% 1 600 9% 1 400 5% 1 200 1 000 7% 49% 800 600 400 25% 200 - 2020 2022 2024 2026 2028 2029+ Bonds Bank loans EUR Green Bonds Bonds Bank loans EUR Green Bonds CP Schuldschein EUR Bank loans NOK CP Schuldschein EUR Bank loans NOK Unutilized credit facilities NOK 4 000 mill to support short term funding and refinancing risk, overdraft facility NOK 1 000 mill for operational liquidity and Nasdaq cash requirement Scope affirm issuer rating BBB+, outlook changed to negative The outlook change reflects the risk of further pressure on leverage and free operating cash flow generation in the event that low power prices persist. Vertically integrated business model with monopolistic power distribution, strong position of hydro power generation in the The Agder Energi merit system and leading retail sales business Administration and the Board of Directors are Profitable and environmentally-friendly hydro power committed to evaluate and production (ESG-factor) with substantial hedging agreements implement appropriate and sizeable reservoir capacity measures to uphold the long term objective of Long-term, committed majority owners that are jointly BBB+ issuer rating organized and have the capacity and willingness for potential parent support.