Investor Presentation Our Vision: a Leading Norwegian Renewable Energy Group Agder Energi in Brief
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April 3, 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 energy production efficient energy customers in Norway value chain. Develops the Nordic and plants distribution and the Nordic region the company through 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 will review strategy during 2020 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 Planned projects 390 2022/23 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 2019 Management Steffen Syvertsen succeeded Tom Nysted as CEO Profit from operations NOK 2 234 mill (NOK 2 957 mill) in underlying EBITDA Investments NOK 1 497 mill (NOK 1 583 mill), of which NOK 104 mill (NOK 92 mill) of investments within network paid by customers A second turbine at Skjerka in operation, increasing production by 18 GWh. The 47% stake in Grønn Kontakt was divested HMS Lowest sickness absence in years of 2,6% Reservoir levels NO2 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 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 Revenues and EBITDA per segment Revenues (NOK mill) EBITDA (NOK mill) 16 000 3 500 14 000 2 679 3 000 2 520 2 194 12 000 2 500 1 588 2 440 10 000 2 000 8 000 1 500 6 000 1 000 4 000 500 2 000 0 2015 2016* 2017* 2018* 2019* 0 -500 2015 2016* 2017* 2018* 2019* Hydro Network Market Energy Mgt Hydro Network Market Energy Mgt * Reorganization, Energy Management from 2016 Solid 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 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 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) 2 000 6% 1 800 9% 1 600 2% 1 400 7% 1 200 1 000 52% 800 600 24% 400 200 - 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 2 500 mill (will be increased in Q2) to support short term funding and refinancing risk, overdraft facility NOK 1 000 mill for operational liquidity and Nasdaq cash requirement Scope credit rating affirmed Aug-19 Vertically integrated business model with monopolistic power distribution, strong position of hydro power generation in the merit system and leading retail sales business Profitable and environmentally-friendly hydro power production with substantial hedging agreements and sizeable reservoir capacity Long-term, committed majority owners that are jointly organized and show ability and willingness for potential parent support.