Annual performance for 2011: Good 2011 profit for the E-CO Energi Group

"We are very well satisfied with the results for 2011. E-CO's employees and power stations passed the test posed by extreme variations in the hydrological situation with flying colours. Successful price hedging and the high availability of our power plants ensured that the result was good despite substantially lower prices than in 2010", reports Tore Olaf Rimmereid, president and CEO of E-CO Energi.

Hydrological factors dominated the power market in 2011. January started with record-high prices and record-low reservoir levels, while December ended with low prices, full reservoirs and mild weather. The price trend was characterised by a strong probability of a power shortage in the spring. In May-June, this turned around abruptly, and the rest of the year brought heavy precipitation, mild weather and weak financial prospects for Europe's economy. At year end, the filling ratio in Norwegian reservoirs was 80.3 per cent, i.e. the highest recorded level from 1990 to 2011, compared with the lowest recorded level at year-end 2010.

The year 2011 was the wettest ever recorded in Norway. Precipitation added up to some 33 TWh, or 127 per cent, more than normal. The largest absolute deviation, accounting for nearly half the surplus, was in eastern Norway. The summer was the second wettest ever recorded, and November was the only month that was drier than normal.

The average area price for power for Oslo (NO1) was 0.36 NOK/kWh, down 0.07 NOK/kWh from the average price last year. The Group's average selling price for 2011 was 0.37 NOK/kWh, compared with 0.45 NOK/kWh in 2010.

The Group's annual production aggregated 9 789 GWh in 2011, which is about 600 GWh lower than 2010.

E-CO Energi's operating revenues came to MNOK 3 514 in 2011, down MNOK 562 from the year before. The decline is due to lower power prices. Higher production compensated for part of the price reduction.

EBT (earnings before tax) totalled MNOK 2 171, down MNOK 640 from last year. Taxes added up to MNOK 1 228, and the tax rate stayed at the same level as for 2010 (57 per cent).

The net profit for the year was MNOK 943 in 2011, compared with MNOK 1 200 in 2010. The profit was thus MNOK 257 less than in 2010.

The Group invested MNOK 296 in fixed assets. The investments resulted in somewhat higher production, but were primarily investments in maintenance.

The most important ongoing projects are the new power plant at Embretsfoss (E-CO: 50 per cent) scheduled for completion in 2013, renovation of the Rendalen Power Plant (E-CO: 40 per cent) scheduled for completion in Q1 2013, and the upgrading of a total of four generators in the Hol I Power Station, where the last generator is scheduled for completion in 2012.

The Mork Power Plant in Lærdal and the Rosten Power Plant in Sel Municipality are the new construction projects potentially closest to start up. The Norwegian Water Resources and Energy Directorate (NVE) made a positive recommendation to the Ministry of Petroleum and Energy for the Mork Power Plant in Lærdal in 2011. It is assumed that the Ministry of Petroleum and Energy will take a decision on the case in 2012, and that project construction can commence in 2013. For Rosten, NVE's final site inspection was in June 2011, and it is expected that the Directorate will submit its recommendation to the Ministry of Petroleum and Energy in 2012. The two power plants will provide 275 GWh of new power, of which E-CO's share is 150 GWh.

Notification of a possible new power plant in the Hemsil watercourse (Hemsil 3) was filed with NVE in September 2011. During the early half of 2012, NVE will draw up a programme for an environmental impact assessment for the development project, which is expected to provide 150 GWh of new power. Further, in November, notification was filed with NVE for the development of the Hol 1 Stolsvatn Power Plant, which is expected to add 85 GWh of annual production.

The cash flow from operating activities came to MNOK 734, compared with MNOK 2 198 in 2010. Interest-bearing liabilities increased by MNOK 666, of which new long-term loans accounted for MNOK 1 310. The equity ratio was 36 per cent at year end, compared with 32 per cent at the outset of the year.

The Group's liquid reserves were reduced by MNOK 1 663 during the year, which can be seen in the context of the payment of dividends for 2010 of MNOK 2 800 (of which MNOK 2 000 in extraordinary dividends). For the 2011 fiscal year, E-CO Energi's Board of Directors proposes paying a dividend of MNOK 800 to its owner, Oslo Municipality.

KEY FIGURES
(Amounts in MNOK)	2011	2010	2009
Profit
Operating revenues	3 514	4 076	3 365
EBIT	2 450	3 103	2,392
Earnings before taxes	2 171	2 811	2 909
Net profit for the year	943	1 200	1 762
Capital structure
Total assets	16 088	17 859	17 720
Subord. loan, Oslo Municipality	3 347	3 347	3 347
Equity	5 804	5 661	7 261
Cash and cash equivalents	539	2 202	2 483
Equity ratio	36%	32%	41%
Net interest-bearing liabilities (excl. subord. loan)	3 454	1 071	1 902
Dividend	800	2 800	800
Return on equity 1	16%	19%	26%
Return on total assets 2	15%	18%	19%
Cash flow
Cash flow from operating activities	734	2 198	1 264
EBITDA	2 735	3 384	2 664
EBITDA margin 3	78%	83%	79%
Other
Number of employees	170	159	155
Power production (GWh) 4	9 789	9 183	9 751
1    Net profit/average equity
2    Ordinary earnings before taxes + financial expenses/average total assets
3     EBIT + amortisation/Operating revenues
4     Production less share of production by associates

• Detailed economic figures for 2011
  
  

Contacts:

Tore Olaf Rimmereid	Managing Director	+47 241 16910 / +47 909 92515
Stine Rolstad Brenna	CFO	+47 241 16915 / +47 928 03456
Torill Berdal	Vice President, HR and Communications	+47 241 16590 / +47 952 24373