STOCKHOLM, Sweden, Feb. 19, 2002 (PRIMEZONE) -- Graninge AB:
-- Sales were down 10 per cent to MSEK 2,538 (2,808), a decrease
attributable to the sale of the Group's forest land, forestry
operations and sawmills at mid-year 2000.
-- Profit before tax, excluding non-recurring items, rose 67
per cent to MSEK 716.
-- Profit after tax corresponds to earnings per share of SEK 10.80
(9.15).
-- The year's acquisitions included an additional 18 per cent of
the shares in Gulsele Kraft and the transmission network in
Upplands Vasby.
-- The Board proposes that the shareholders be paid a dividend of
SEK 5.50 (4.30) per share, of which SEK 2.00 (1.00) per share
Comprises a bonus.
Changed Group structure
In 2000, Graninge AB (publ) -- Graninge -- formed Scaninge Holding AB together with Svenska Cellulosa AB SCA. The company acquired the Graninge Group's forest holdings, forestry operations and sawmills and purchased sold 150,000 hectares of productive forest and one sawmill from SCA.
In order to improve profitability, Scaninge's forestry operations and sawmills were coordinated with corresponding operations in SCA during the year. At the same time, Graninge was given the opportunity to sell its shares in Scaninge for MSEK 70. As part of the agreement, Graninge has subscribed for new shares for a small price. The new shares entitle Graninge to around 40 per cent of the share capital and 50 per cent of the votes in the company. SCA has the right, but not the obligation, to redeem Graninge's shares at par value by the end of 2008.
The sale of the shares in Scaninge did not affect the Group's profit, but gave rise to a loss of MSEK 720 in the Parent Company. However, because the loss is tax deductible, profit for 2001 will be essentially free from taxation. One consequence of the agreement is that Scaninge is no longer reported as an associated company in the Graninge Group. All in all, Graninge has obtained close to MSEK 2,400 after tax for its forest properties, forestry operations and sawmills.
Consolidated income and profit
The Group's net sales after power tax amounted to MSEK 2,538 (2,808), down 10 per cent on the preceding year. The decrease is a result of the Scaninge transaction. Sales in the Group's power and energy operations rose by 16 per cent due to acquisitions and leased facilities.
Profit after net financial items is reported at MSEK 721 (750), which is 4 per cent lower than in 2000. However, the year-earlier figure included non-recurring items of MSEK 317. Excluding these, profit increased by MSEK 288 or 67 per cent.
The Group's reported post-tax profit corresponds to earnings per share of SEK 10.80 (9.15). The year's profit is virtually free from taxation. The tax expense in 2000 was also lower than normal, since the non-recurring items were largely tax-exempt.
The Group's fourth quarter income totaled MSEK 913 (596), an increase of 53 per cent. Profit before non-recurring items and tax was MSEK 200 (132), up 51 per cent on the preceding year.
Electricity operations - record production and high prices
Net sales in electricity operation amounted to MSEK 1,371 (1,242), an improvement of 10 per cent compared with 2000. Profit after depreciation is reported at MSEK 570 (282), 101 per cent better than in 2000. Production in the Group's hydropower plants reached an all-time high of 3,901 (3,549) GWh, which is 30 per cent more than in a normal year seen over the period 1950-90. The Group has thus set a new record for the second consecutive year. Of this production, the Finnish plants accounted for 348 (345) GWh.
The Group's participation in wholly and partly owned CHP plants, primarily Alholmens Kraft, provided 113 (11) GWh. This brings total production in the Group's wholly and partly owned power plants to 4,014 (3,560) GWh, an increase of 454 GWh or 13 per cent, of which recently added production capacity accounted for 190 (64) GWh.
This unprecedented hydropower production was attributable to unusually high run-off, particularly during the summer and autumn, whereas the spring flood was largely normal.
The production has been sold at high prices compared to the previous year 2000. Prices in both the spot and forward markets were raised at the beginning of the year as a meagre supply of snow in the Norwegian mountains compelled Norway to become a net importer of power.
Deliveries of electricity amounted to 6,085 (6,082) GWh, on a level with 2000. Contract and non-contract customers accounted for 4,587 (4,620) GWh, also on par with the preceding year.
Prices in the end-user segment were raised due to higher spot and future prices.
Aside from a higher price for raw power, margins have also improved. However, margins in the end-user segment still barely cover the risks faced by electricity sellers in the deregulated market.
Return on capital employed in electricity operations amounted to 14 (7) per cent.
Operating profit in electricity operations during the fourth quarter was MSEK 162 (84), an increase of nearly 100 per cent.
Network operations - rising volumes
Net sales in network operations amounted to MSEK 792 (699) with an operating profit after depreciation of MSEK 247 (215), which is 15 per cent better than in 2000.
Power transmission on the Group's local networks amounted to 3,452 (3,033) GWh, up 14 per cent on the year before. The increase is mainly explained by the addition of the transmission network in Upplands Vasby to the Group at mid-year. For comparable units, the volume grew by 6 per cent as a result of colder weather.
During the year, all network tariffs remained unchanged compared with 2000.
Profit in network operations after depreciation corresponded to a return of 12 (11) per cent on total capital employed. In the fourth quarter network operations showed an operating profit of MSEK 65 (62).
District heating - increased deliveries to customers in existing networks
Net sales in heating operations amounted to MSEK 520 (356). The increase is mainly attributable to the Group's leasing of a large-scale heating plant. The plant gives Graninge Jarfalla Varme access to biofuel-fired electricity, which is exempt from taxation when used for production of heating.
Operating profit after depreciation is reported at MSEK 56 (43), an increase of 30 per cent on the preceding year.
Deliveries of district heating and so-called ready heating amounted to 940 (819) GWh, an increase of 14 per cent compared with the previous year. This includes deliveries of heating to Birka Energi within the framework of a long-term production collaboration aimed at optimizing utilization of the jointly-owned plants. Excluding these deliveries, sales rose by 12 per cent to 795 (708) GWh through the connection of new customers to Graninge's various networks.
Tariffs have been raised to cover the rising cost of oil, which is now used only during periods of severe cold.
Profit after depreciation in heating operations corresponded to a return of 7 (6) per cent on total capital employed.
In the fourth quarter of 2001, heating operations reported an operating profit of MSEK 24 (16).
More hydropower, more customers
The Group increased its production capacity during the year. At mid-year an additional 18.3 per cent of the shares in Gulsele AB were acquired for a total of MSEK 318. After the transaction Graninge owns 50 per cent of the company, with annual production of 700 GWh in the Gulsele and Hallby hydropower plants on the Angerman River.
An agreement was also signed with the Municipality of Upplands Vasby to acquire the transmission network for a price of MSEK 191. The acquisition, which was carried out mid-year, gave Graninge 18,000 new network customers.
After year-end 2001, Graninge acquired all of the shares in Avesta Energi AB for MSEK 18. The company sells electricity to 13,000 households and small businesses primarily in the Municipality of Avesta.
Furthermore, Graninge increased its ownership in the Finland-based distribution company Kainuun Sahko Oyj. The Group has held 25.6 per cent of the shares since 1997 but has now attained a 50.6 per cent holding after acquiring an additional 24.9 per cent for MEUR 21 from three small municipalities in Kajanaland. The company sells and distributes electricity to over 55,000 customers in central and eastern Finland, as well as supplying district heating in the City of Kajana. Electricity and heating are produced in plants that have been leased on a 40-year contract. The company also has access to hydropower corresponding to nearly 50 GWh.
In December 2001 Oy Alholmens Kraft Ab, in which Graninge owns 19.9 per cent, inaugurated the world's largest biofuel-fired CHP plant in Pietarsaari, Finland. The plant, which has cost a total of MEUR 200, has a generating capacity of 250 MW. Graninge's share in the plant's production corresponds to just under 300 GWh per year.
Lower investment in plant and equipment
The Group's investments in new plant and equipment during 2001 totaled MSEK 155 (228), of which MSEK 17 (12) was attributable to electricity operations, MSEK 96 (117) to network operations and MSEK 42 (61) to heating operations. In addition, a total of MSEK 560 (724) MSEK was invested in plant and equipment through acquisitions during the year.
Strong financial position
Despite substantial investments, the Group's total net debt decreased to MSEK 2,135 (2,191) at year-end 2001. The visible equity ratio was 53 (52) per cent.
Dividends
The Board proposes that the shareholders will be paid a dividend of SEK share 5.50 (4.30) per share. Of this dividend SEK 2.00 (1.00) per share comprises a special bonus.
The Annual Report will be published during week 14 and will be sent to the shareholders who have informed VPC that they wish to receive the Annual Report. It will also be available at the Graninge offices in Danderyd and Solleftea.
The Annual General Meeting will be held on April 29, 2002 at 3 p.m. in Nordbankssalen, Smalandsgatan 24, Stockholm.
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