Statkraft Investor Update July 2014

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2

1.

Agenda

2.

3.

4.

5.

Statkraft overview

Strategy and market dynamics

Financial update

Funding and liquidity

Summary

Appendix

3

Statkraft at a glance

4

NOK 47.5 bn UNDERLYING GROSS REVENUES 2013

NOK 12.4 bn UNDERLYING EBITDA 2013

55.9 TWh POWER GENERATION 2013

95 % HYDRO POWER

16.0 GW INSTALLED CAPACITY 2013

100% OWNED BY THE KINGDOM OF NORWAY

A-/Baa1

(stable outlooks) S&P / MOODY’S CREDIT RATINGS

Gas power

Wind power Distribution grid

District heating Hydropower

NO

No. 1 power generator

(~35%)

SWE

No. 4 power generator

(~5%)

UK

Wind power initiatives

GER

OUTSIDE EUROPE

Integration of hydropower

Flexible power generation

SE EUROPE

Hydropower development

EUROPE

Trading activities

Key credit strengths

Strong market position

- A low-cost and flexible generator of renewable electricity

Stable cash flow

- Long-term industrial contracts stabilize cash flow

Capex flexibility

- Adjust investment program to financial capacity

Owned by the Norwegian state (AAA/Aaa)

- Historically strong support from owner

- No substantial changes in the State’s owner strategy in White paper published in June

2014

5

2.

Agenda

1.

3.

4.

5.

6

Statkraft overview

Strategy and market dynamics

Financial update

Funding and liquidity

Summary

Appendix

A changing energy landscape

Flat energy demand in Europe and

more production from new renewables

Growing concerns in Europe about

affordability and security of supply

Traditional “utility business model”

challenged by a transformed value chain

7

Attractive support schemes driven by

European transformation to renewable

energy

New business opportunities closer to

end users and through integration of

intermittent renewable capacity

Strong growth in emerging markets

Market challenges Market opportunities

District Heating

Strategic focus areas

European Flexible Generation

Wind Power

Hydropower in Emerging Markets

Market Operations

• Maintain and develop low cost, flexible hydropower

• Build integrated operations in South East Europe, South America and

South Asia

• Onshore wind in Norway, Sweden and UK

• Become lead operator in offshore wind power in UK

• Stabilize cash flow through power contracts

• Develop Trading and Origination in selected global markets

• Become amongst the most profitable district heating companies in

Norway and Sweden

8

European Flexible Generation

Low-cost European hydropower production

- Total cash cost in 2013: 7.2 EUR/MWh

- Full cost incl. depreciation: 10.2 EUR/MWh1

Peak supplier with high degree of flexibility

- 80% of installed capacity within highly flexible

hydropower

- Europe’s largest reservoir capacity (~40 TWh)

Unique information base and power market

modelling

- Production optimised relative to power prices and

water inflows

- Water can be stored for up to three years in some

reservoirs

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.

Blåsjø, one of Europe’s largest hydropower reservoirs,

with multi-year energy storage capacity (7.8 TWh)

9

Current transmission capacity between Nordic

and Europe of 4000 MW

Planned capacity increase of 3870 MW before

2020 and another 3450 MW before 2025

Nordic-European power market integration

10

Power transmission cables (MW)

Planned expansions

Source: Statnett

Price effect NO2-DE + NO2-UK: 3-5 EUR/MWh*

Increased possibility to utilize our flexible assets

* Statnett estimate with the two cables, compared to a scenario with no new cables from Norway.

A major player on Europe’s power

exchanges

Special expertise within physical and

financial power trading

Active in all energy-related commodities

Market access for small renewable

producers

Expanding power trading activities in

Europe, as well as in Brazil and India

Strategy for long-term contracts

11

Market Operations

Long-term contracts stabilize earnings

~ 20 TWh sold on long-term contracts

with power-intensive Nordic industry

Corresponding to ~ 40% of Statkraft’s

annual mean power production for

Nordic hydropower

12

0

10 000

20 000

30 000

2014 2016 2018 2020 2022 2024

GWh

Statutory priced lease agreements Statkraft's share of leasing agreements

Long-term market contracts

International Hydropower has been reorganized and strengthened

13

Statkraft SN Power

Statkraft has increased

ownership and fully

integrated activities in South

America and South Asia

(from 60 % to 67 %)

Statkraft has reduced

ownership to activities in less

developed markets in South

East Asia, Africa and Central

America (from 60 % to 50 %)

Alltwalis

Stamåsen

Mörttjärnberget

Björkhöjden

Ögonfägnaden

Hitra Smøla

Onshore and offshore wind power in the Nordics and UK

In operation/under construction

- Norway: 244 MW

- Sweden: 525 MW

- UK: 460 MW

Licensed/under development

- Onshore: Norway 735 MW

Sweden 290 MW

UK ~ 50 MW

- Offshore: Dudgeon 402 MW

(Statkraft 30%)

Dogger Bank 4800 MW

(Statkraft 25%)

Em

Tollarpabjär

Dudgeon

Sheringham Shoal

Dogger Bank

Berry Burn

Baillie

Kjøllefjord

14

Norway 43 % Europe ex

Norway 19 %

Emerging markets

38 %

Allocation of investments 2014-2018

Hydropower 64 %

Offshore WP 9 %

Onshore WP

18 %

Trading & origination

3 %

District heating

3 %

Innovation 3 %

15

Investment ambition 2014-2018: NOK 61 billion, of which 51% is committed

Subject to financial capacity and maintaining current ratings

Technology allocation Geographical allocation

Increased diversification, but still dominated by Norwegian hydropower

Solid base in the Nordic region

Estimated annual contribution after committed capex (2018)

Norway 67 %

Nordic outside Norway 14 %

Europe outside Nordic

11 %

Outside Europe

8 %

EBITDA

Norway 72 %

Nordic outside Norway 10 %

Europe outside Nordic

13 %

Outside Europe

5 %

Power generation (72 TWh)

16

Construction activities

Completed in 2013 On-going projects in 2014

European

Flexible

Generation

4 small-scale hydro, Norway (12 MW)

Knapsack II, Germany (430 MW)

Nedre Røssåga 1 and 2, Norway (+100 MW)

Kjensvatn, Norway (11 MW)

Brokke Nord/Sør, Norway (24 MW)

Eiriksdal/Makkoren, Norway (56 MW)

10 small-scale hydro, Norway (25 MW)

Wind Power

Baillie, UK (53 MW)

Stamåsen, Sweden (60 MW)

Tollarpabjär, Sweden (3 MW)

Mörttjärnberget, Sweden (85 MW) Compl. Q2

Ögonfägnaden, Sweden (99 MW)

Björkhöjden, Sweden (270 MW)

Berry Burn, UK (67 MW) Compl. Q2

International

Hydropower

Binga, Philippines (126 MW) Kargi, Turkey (102 MW)

Cetin, Turkey (517 MW)

Devoll, Albania (243 MW)

Cheves, Peru (171 MW)

Bajo Frio, Panama (58 MW)

District

Heating

Ås, Norway (24 MW)

Kungsbacka, Sweden (12 MW)

Sandefjord, Norway (23 MW)

17

Capacity for total project, incl. partners’ share

Strengthening of financial solidity

Measures in 2013

- Divested all E.ON shares (NOK 8.5 bn)

- Other asset divestment (NOK 1.2 bn)

- Transferred leased hydropower plants from Statkraft SF to Statkraft AS (NOK 3.4 bn)

Planned measures in 2014

- Divestment of Finnish hydropower

- Reduce ownership in UK onshore wind NOK ~5 billion

- Reduce ownership in UK offshore wind

- No dividend payment for 2013

Discussions with owner about investment possibilities and financing

18

3.

Agenda

2.

1.

4.

5.

19

Statkraft overview

Strategy and market dynamics

Financial update

Funding and liquidity

Summary

Appendix

Compared with 2012 improved revenues are mainly due to higher prices (Nordic +22%)

EBITDA increased by 10%

Weakened NOK against EUR brings net profit down

- Currency impacts are mainly unrealised with limited cash flow effect

- The effects are more than offset by currency translation effects in equity

Solid underlying results in 2013

NOK million FY 2013 FY 20122 FY 2011

Net revenues1 20 545 19 207 18 120

EBITDA1 12 444 11 347 10 851

Net profit/loss 208 4 551 40

20

1Adjusted for unrealised changes in value on energy contracts and significant non-recurring items 2All 2012 figures converted after implementation of IFRS 11 as of 2013

10 851 11 347

12 444

-

2 000

4 000

6 000

8 000

10 000

12 000

14 000

FY 2011 FY 2012 FY 2013

Steady increase in EBITDA

1Adjusted for unrealised changes in value on energy contracts and significant non-recurring items 2Not recalculated after implementation of IFRS 11 in 2013 21

∆ 2013/2012

+ 10%

Underlying EBITDA1

Nordic system price

EUR/MWh 47.2 31.3 38.1

Total production

TWh 51.5 60.0 55.9

2

Increase 2012-2013 primarily due to price

effects - Nordic system price: 38.1 EUR/MWh + 22%

- German spot price: 37.8 EUR/MWh - 12%

Total power production down 7% - Hydropower production - 8%

- Wind power production + 77%

- Gas-fired power production - 28%

New wind farms and transferred leased

power plants improves production

capacity

Slight increase in long-term contracts

Moderate increase in operating costs

Net profit breakdown 2013

22

1 101

125

3 288

1 338

208

12 444

11 347

-2 303

Net financial

items

-9 403

-2 189

Revenues 2012

Adj.

EBITDA

Unrealised

changes in

energy

contracts

2013

Adj.

EBITDA

Operating

expenses

ex. dep.

-241

2013

Net profit

Tax Share of

profit from

associates

and JVs

Impairments/

non-

recurring

items

Depre-

ciation

-2 855

Underlying EBITDA ∆ +10% vs. 2012

Booked net profit effected by negative unrealised currency effects amounting to

NOK -9 934 million. In 2012 positive currency effects were NOK 3 815 million.

Underlying1 EBITDA 2012 –> 2013 Underlying1 EBITDA 2013 –> Net Profit 2013

1Adjusted for unrealised changes in value on energy contracts and significant non-recurring items

NOK million

-11 592

Net interest and

other financial items

Currency impact

Capital expenditure1 in 2013

NOK

9 324

million

A large number of projects under

construction in current investment

program

78% of FY capex was expansion

NOK 2 670 million invested in Q4

- 81% expansion

In addition leased power plants at a

value of NOK 4 billion were transferred

from Statkraft SF as contribution in kind

(no cash effect)

23

Nordic

Hydro-

power

20%

Internat.

Hydro-

Power

30% Ind.

Owner-

ship

10%

Wind

Power

27%

Other2

13%

Norwegian share

approx. 42%

1 Exclusive loans to associates 2 Including District heating, Small-scale hydropower and Continental energy and trading

Cash flow 2013

24

5 440

7 685

+9 135

+1 051

-2 080

-9 123

+9 670

-3 849

-3 094

+535

0

4 000

8 000

12 000

16 000

Cashreserves

01.01

Fromoperations

Dividend fromassociates

Change inshort andlong term

items

Investmentactivities

Sale of non-current

financialassets

Changes indebt

Dividend/group

contributionpaid

Share issueto minorities,

currencyeffects

Cashreserves

31.12

NOK million

Cash flow 2013

Sale of non-current assets mainly regards E.ON SE shares (NOK 8.515 million) and Sheringham Shoal transmission

grid (NOK 957 million)

Production 2 TWh below Q1 2013

Nordic prices down 28% measured in EUR/MWh

Strong contribution from market activities and wind power

Positive currency effects counterbalanced in equity – negative effects in 2013

Solid Q1 results in a challenging market

NOK million Q1 2014 Q1 2013 FY 2013

Net revenues1 5 954 6 112 20 545

EBITDA1 3 836 4 180 12 444

Net profit/loss 2 800 443 208

25

1Adjusted for unrealised changes in value on energy contracts and significant non-recurring items

Net profit breakdown Q1

26

563

56

2 800

3 836

4 180657

-1 525

Net financial

items

Tax Share of

profit from

associates

and JVs

Impairments/

non-

recurring

items

Depre-

ciation

-740

Unrealised

changes in

energy

contracts

-47

Q1 2014

Adj.

EBITDA

Operating

expenses

ex. dep.

-186

Revenues

-158

Q1 2013

Adj.

EBITDA

Q1 2014

Net profit

Underlying EBITDA ∆ -8% vs. Q1/13

Booked net profit affected by positive currency effects amounting to NOK 1 043

million. In Q1 2013 negative currency effects were NOK -1 006 million.

Underlying1 EBITDA Q1 2013 –> Q1 2014 Underlying1 EBITDA Q1 2014 –> Net Profit Q1 2014

1Adjusted for unrealised changes in value on energy contracts and significant non-recurring items

NOK million

Cash flow Q1

27

7 685

9 596 +2 335 +121

+924

-1 842

+387 +17

-31

0

4 000

8 000

12 000

Cash reserves01.01

Fromoperations

Dividend fromassociates

Change inshort and long

term items

Investmentactivities

Changes indebt

Dividend/group

contributionpaid

Share issueto minorities,

currencyeffects

Cash reserves31.03

NOK million

Cash flow year-to-date

4.

Agenda

2.

1.

3.

5.

28

Statkraft overview

Strategy and market dynamics

Financial update

Funding and liquidity

Summary

Appendix

Strong credit ratings

Rating target: maintain current ratings

Flexible CAPEX-plans

Divestments completed and further divestments considered

Rating impact assessment completed prior to new investment decisions

Historically strong support from owner

Discussions with owner about investment possibilities and financing

29

A- / Stable Baa1 / Stable

46%

26%

28%

Equity and liabilities

Interest-freeliabilities

Interest-bearingliabilities

Equity66%

10%

5%

19%

Assets

Current assets

Other non-current assets

Associatesand JVs

Property, plantand equipment

Balance sheet and debt overview

Balance sheet per 31.03.2014 Debt currency distribution

NOK 158bn NOK 158bn

30

0

2 000

4 000

6 000

8 000

2014 2016 2018 2020 2022 >2024

NOK million

Balanced debt maturity and mixed funding sources

Debt maturity profile 31.03.2014 Distribution of funding sources

31

Liquidity position

NOK 12bn Revolving Credit Facility (5+1+1 year)

signed 19 January 2011

- Second extension agreed in 2013

- 14 counterparties

NOK 1bn in committed credit line renewed on a

yearly basis

EMTN Programme EUR 6bn

- EUR 2.6bn available under current Programme

No commercial paper outstanding

Available liquidity and target

1 Liquidity capacity defined as cash and cash equivalents, plus committed

revolving credit facilities, plus projected receipts for the next six months

Liquidity and market access

0

5 000

10 000

15 000

20 000

25 000

30 000

2010 2011 2012 2013 Q12014

NOK million

Cash and Cashequivalents

Credit Line

RevolvingCredit Facility

Liquidity capacity target1: >1.5x projected

payments over next six months

32

FUNDING STRATEGY

Funding overview

Norwegian bond and Commercial Paper market

Euro bond market

Swedish bond market

Sterling and Swiss Franc bond markets

considered

Funding need Funding sources

Funding centralized on group level

Flexibility through diversification of funding sources and maintaining sufficient back-stop facilities

Funding need going forward determined by cash flow

from operations and capex

NOK 3.5 bn debt maturities in H2 2014

Zero dividend in 2014

33

5.

Agenda

2.

1.

3.

4.

34

Statkraft overview

Strategy and market dynamics

Financial update

Funding and liquidity

Summary

Appendix

Summary

A competitive generator of low-cost electricity

- Dominated by flexible hydro power with large reservoir capacity

Strong position in the Nordics

Flexible plans for growth

- European renewable energy production

- Hydropower outside Europe

Balanced investment plan to maintain credit strength

Proven support from Norwegian government through its

100% ownership

35

Agenda

2.

1.

3.

4.

Statkraft overview

Strategy and market dynamics

Financial update

Funding and liquidity

Summary

Appendix

5.

36

Statement of Comprehensive Income

37

Statement of Financial Position

38

Statement of Cash Flow

39

page 40 40