STOCKHOLM, Sweden, Aug. 22, 2002 (PRIMEZONE) -- Graninge:
Mid-year report January-June 2002
-- Net sales for the first quarter totalled MSEK 1,632, up 35 per cent on the same period of last year. -- Profit before tax is reported at MSEK 389, an increase of 7 per cent. -- The spring flood, which was abundant but brief, has been followed by a period of low run-off resulting from warm and dry weather. Profit in electricity operations amounted to MSEK 251, on par with the preceding year. -- The Finnish distribution company Kainuun Sahko Oyj, in which Graninge has a 25.7 per cent holding, is consolidated as a subsidiary since year-end 2001 after Graninge acquired an additional 24.9 per cent of the share capital. -- As of 1 February, the Group's electricity trading operations gained 13,000 new customers through the acquisition of AB Avesta Energi.
Graninge AB (publ)
Income and profit
The Graninge Group's net sales for the first six months of the year amounted to MSEK 1,632 (1,213), up 35 per cent on the corresponding period of 2001. The increase is mainly attributable to acquisitions.
For comparable units, net sales rose 18 per cent. Among other things, electricity sales in Finland have increased after the addition of new production capacity.
Profit before tax is reported at MSEK 389 (365), an increase of 7 per cent. This improvement in earnings is a result of the enlarged operations. This profit should bee seen in light of the fact that production in the Group's hydropower plants has been higher than normal for the second consecutive year. This figure includes non-recurring items of MSEK 25 (29).
Profit for the period corresponds to earnings per share of SEK 4.20 (5.50), a decrease of SEK 1.30 per share compared with the preceding year. The sale of the shares in Scaninge Holding in May 2001 gave rise to a loss carryforward in the Parent Company which meant that the preceding year's profit was exempt from taxation.
For the first six months of the year, return on capital employed was 12 (13) per cent and return on shareholders' equity was 11 (15) per cent.
Net sales in the second quarter amounted to MSEK 629 (514). Profit before tax is reported at MSEK 129 (157), a decrease of 18 per cent. The year-earlier figure included non-recurring items of MSEK 29.
Electricity operations - abundant but brief spring flood
The Group's electricity operations consist of power production in Sweden and Finland, sales of electricity, other energy and energy services to end-users in both of these countries, as well as management and trading of electricity derivatives, the latter of which is subject to regulation by the Swedish Financial Supervisory Authority.
Net sales during the first half of the year reached MSEK 810 (643) with an operating profit after depreciation of MSEK 251 (251), unchanged compared with the preceding year.
Electricity sales are reported at 3,744 (3,016) GWh, an increase of 24 per cent owing to both acquisitions and the addition of new production capacity.
The Group's own power plants produced a total of 2,127 (1,801) GWh, of which 1,749 (1,801) GWh in the form of hydropower. Alholmens Kraft, in which Graninge has a 19.9 per cent holding, opened a new biofuel-fired back-pressure and CHP plant in Pietarsaari, Finland, at the end of last year.
After an initial period of cold weather, we had a very mild winter with unseasonably high run-off for the second consecutive year. Consequently, production of hydropower for the period January-June was 5 (9) per cent higher than normal.
The mild winter was followed by a warm and dry spring. The year's spring flood, which started two weeks earlier than normal as an effect of the warm weather, was relatively abundant to start out with but peaked after only two weeks and then decreased sharply. Unlike the previous year, when the spring flood was followed by heavy rainfall in the mountains and high run-off, production of hydropower in June was only 60 (124) per cent of the normal volume. Due to the continued warm and dry weather in northern Sweden, run-off has decreased further during the summer to very low levels for the season. The reservoirs are now around 80 per cent full, which is 10 percentage units lower than normal.
The average spot price for electricity during the first half of the year was NOK 144 (207)/MWh. This price is normally lower during the summer season and was quoted at around NOK 120/MWh at the end of June. However, the dry conditions have caused the price to rise dramatically over the past few weeks. In addition, during the summer the price in the Swedish price area has exceeded the system price for the power exchange. These price area differences have been caused by shortcomings in transmission capacity between Norway and Sweden under conditions when the Norwegians have had good opportunities to export power thanks to well-filled reservoirs and low domestic consumtion.
The forward price has also crept upwards, albeit from a very low level. The current price is still low compared with prices one year ago. In 2001, Norway had a shortage of snowfall and prices surged when it became clear in the spring of 2001 that the reservoirs would not be filled to normal levels.
Deliveries of electricity to end-users amounted to 3,497 (2,846) GWh, while sales of electricity to the spot market reached 247 (170) GWh. Competition has let up somewhat, which has generated an increase in sales to end-users.
Return on capital employed was 12 (13) per cent.
For the second quarter, net sales in electricity operations amounted to MSEK 286 (270) with a profit after depreciation of MSEK 105 (110).
Network operations - acquisitions behind volume growth
The Group's network operations include management, operation and maintenance of local power transmission networks in central Norrland, the northern greater Stockholm area, parts of Smaland and the Kajanaland region of Finland. The profit centre also includes a few smaller regional networks in Sweden and Finland.
Net sales during the first half of the year amounted to MSEK 504 (392) with an operating profit after depreciation of MSEK 170 (133), an improvement of 28 per cent on the corresponding period of last year. The improvement is attributable to the fact that Kainuun Sahko, which is responsible for distribution in Finland, is now consolidated in the Group and included in profit.
Transmission on the Group's local networks amounted to 2,222 (1,988) GWh, up 12 per cent on the preceding year. The increase was attributable to the addition of Kainuun Sahko and Upplands Vasby, the latter of which was acquired on 1 July 2001. For comparable units, net sales were down 6 per cent. A large proportion of transmission on the networks consists of electricity for heating purposes and one effect of the mild winter was a lower than normal heating requirement.
Transmission on the regional networks declined by 23 per cent to 1,208 (1,553) GWh. The decrease is explained by the sale of an older regional network in the Skelleftea area to Skelleftea Kraft.
Return on capital employed was 13 (12) per cent.
For the second quarter, net sales in network operations amounted to MSEK 207 (167) with an operating profit of MSEK 52 (50).
District heating operations - warm winter leads to lower sales
The Group's district heating operations consist primarily of production and distribution of district heating. The major units include Jarfalla, Kalmar and Kajaanin Lampo in Kajana, Finland, which is 50%-owned by Kainuun Sahko. Small-scale district heating operations are found in Solleftea, Nordmaling and Stromsund, as well as Bro and Kungsangen outside Stockholm. Since 1 July 2001, these operations include a leased CHP plant that produces steam and back-pressure power.
Net sales in district heating operations during the first half of the year amounted to MSEK 375 (238), an increase of close to 60 per cent compared with the corresponding period of last year. Profit after depreciation is reported at MSEK 51 (49), of which Kajaanin Lampo accounts for MSEK 9 (-). In addition, profit includes a non-recurring item of MSEK 15 (29). For comparable units, profit was largely unchanged.
Energy sales amounted to 1,657 (508) GWh, of which 1,065 (-) GWh referred to deliveries of steam. For comparable units, sales were down 6 per cent as a result of the mild winter.
Return on capital employed was 8 (13) per cent.
For the second quarter, district heating operations reported net sales of MSEK 150 (97) with a profit after depreciation of MSEK 9 (35). The year-earlier figure included a non-recurring item of MSEK 29.
Acquisitions and restructuring
The Graninge Group has increased its presence in Finland through the consolidation of Kainuun Sahko Oyj as a subsidiary since year-end. This was possible after Graninge's acquisition of an additional 24.9 per cent holding in the company for MEUR 21, corresponding to MSEK 190. Graninge thus owns 50.6 per cent of the shares in Kainuun Sahko, which is primarily a distribution company with 57,000 customers.
Graninge acquired AB Avesta Energi at the beginning of the year. The company, which sells electricity to 13,000 customers in the Dalarna region, is consolidated in the Group since 1 February. The purchase price amounted to MSEK 18 and the seller was Birka Energi AB.
The sale of Graninge Roslags Energi Varme was completed at the beginning of the year. The purchase price was MSEK 53. The buyer was an owner alliance which included US Energy Corporation.
Investments and net financial items
The Group's investments in new plant and property during the first half of the year amounted to MSEK 129 (62). The increase of over 100% is mainly due to the addition of Kainuun Sahko and a significant increase in other investments in network operations.
Net financial items are reported at MSEK -61 (-48). The Group's net debt has increased by close to MSEK 200 since 30 June 2001.
Parent Company
Net sales in the Parent Company during the first half of the year totalled MSEK 38 (47) MSEK and profit is reported at MSEK -33 (-751).
At the Annual General Meeting in May, Gerald Wingrove, CFO of London Electricity PLC, was elected as a new regular board member. He will replace Marc Boudier, head of EDF's Central European division.
Solleftea, 22 August 2002
Lars Enslof Managing Director
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