Oslo, 23. March 2006
Press release 03/06
"We are well satisfied with the result. In addition to relatively high power prices and good reservoir levels, successful hedging and efficient operation at every level of the organisation have engendered significant added value", maintains President and CEO Hans Erik Horn.
E-CO Energi earned an operating profit of MNOK 1 503 in 2005, up MNOK 9 from the year before. This is the best consolidated
result the Group has ever posted. The net profit after tax came to MNOK 647 in 2005, down MNOK 23 from 2004. Earnings before
tax came to MNOK 1 098, up MNOK 7 from the preceding year. The tax burden was also somewhat higher than the year before. This
was inter alia because the acquisition of Statkraft's 20 per cent stake in
E-CO Vannkraft in December 2004 made it possible to make a Group contribution. This meant the Group could apply the formidable
deficit carried forward by the parent company in 2004. Despite the purchase price of some NOK 2.5 billion largely being financed
by loans, financial expenses increased by only MNOK 14 from the year before as a result of lower interest rates on the Group's
debt.
The Board of Directors proposes dividends of MNOK 450 for 2005. Dividends amounted to MNOK 400 in 2004.
The 2005 power year was special, featuring a combination of exceptionally high hydropower production and relatively high power prices. The introduction of the CO2 quota scheme in the EU, and higher coal, gas and oil prices were the main explanations for this. Early in the year, the reservoir situation in the Nordic power system normalised for the first time since the very dry period from August to December 2002. In 2005, the available annual water supply in the Nordic power system was considerably above normal. Despite very high hydropower production, the spot price remained high. This was because the cost of thermal power production was high. The price was substantially higher at year end than at the beginning of the year. The system price for 2005 was 0.235 NOK/kWh compared with 0.242 NOK/kWh in 2004. E-CO Energi's average selling price for 2005 was 0.247 NOK/kWh (0.257), which is equivalent to 105 per cent of the spot price (system price).
The Group's production for the year aggregated 9 108 GWh (including the Group's share of the production in Oppland Energi), up 390 GWh from 2004. Including the Group's interests in associated companies, annual production aggregated 9 847 GWh. Including the Group's interests in associated companies, normal annual production is 9 700 GWh.
Completed in 2005, the power plants at Øyberget and Framruste in Øvre (Upper) Otta represent the Group's largest investment project. Øvre Otta accounted for total average production of 525 GWh. E-CO's owns about 30 percent of the development project. Work on the Breidal Tunnel, a transmission tunnel that will increase the water supply to the Upper Øvre plants, commenced in 2005. Scheduled for completion in 2008, the project will increase mean production by a total of 130 GWh.
The cash flow from operating activities came to MNOK 908, compared with MNOK 1 066 in 2004. Net debt was reduced by MNOK 309 in 2005.
The equity ratio was 31 per cent at year end. Had the subordinated loan been counted as equity, the equity ratio would increase to 50 percent.
New renewable energy
"In 2005, we helped Norway gain new renewable energy, not least through the development of Øvre Otta and by upgrading existing
power plants in Aurland and Hallingdal without making any new encroachments on nature. We will continue these efforts in 2006.
However, the right framework conditions must be in place to if we are to move in this direction. If there is to be a subsidy
scheme for new renewable energy, it must be neutral in terms of technology. That will result in the most pure power for the
money", states Horn.
The tax burden is expected to become significantly heavier in the years ahead. Resource rent tax is calculated on the basis of spot prices on Nord Pool and not on the Group's actual earnings. In 2005, the actual earnings were higher than the calculated resource rent income. Moreover, market expectations of higher future power prices made it prudent to capitalise as a tax asset a larger percentage of the negative resource rent income that was carried forward.
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KEY FIGURES (in NOK million) |
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|
2005 |
2004 |
2003 |
|
|
Income statement |
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|
Operating income |
2 310 |
2 321 |
1 954 |
|
Operating profit |
1 503 |
1 494 |
1 138 |
|
Earnings before tax (EBT) |
1 098 |
1 091 |
650 |
|
Net profit |
647 |
670 |
111 |
|
Capital structure |
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|
Total assets |
17 798 |
17 536 |
17 312 |
|
Subordinated loan, Oslo Municipality |
3 347 |
3 347 |
3 347 |
|
Equity |
5 582 |
5 335 |
7 615 |
|
Cash and cash equivalents |
661 |
525 |
170 |
|
Equity ratio |
31 % |
30 % |
44 % |
|
Equity ratio incl. subord. loan |
50 % |
50 % |
63 % |
|
Net interest-bearing debt |
6 375 |
6 684 |
4 915 |
|
Return on equity* |
11.9 % |
10.3 % |
1.5 % |
|
Return on total assets ** |
8.9 % |
8.9 % |
6.9 % |
|
Cash flow |
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|
Cash flow from operations |
908 |
1 066 |
709 |
|
EBITDA |
1 788 |
1 776 |
1 419 |
|
EBITDA margin |
77 % |
77 % |
73 % |
|
Other Items |
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|
Number of employees |
209 |
218 |
239 |
|
Power production (GWh) *** |
9 108 |
8 718 |
7 416 |
|
* Net profit/average equity |
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|
** Ordinary profit before taxes + financial expenses/average total assets |
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|
*** Production, excl. percentage of production in associated companies (approx. 600 GWh) |
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