Hafslund – Preliminary result for the year and result for 4Q16: Fourth consecutive year-on-year results improvement

'2016 was a year of solid operations and results improvements in all four business areas. Growth, streamlining of the business and continuous improvement work have generated stable and improving results,' comments Hafslund's CEO Finn Bjørn Ruyter.

'The number of Network and power sales customers is increasing, and we have some growth in the district heating deliveries. At the same time, efforts are on to further improve efficiency in all areas, and particularly the opportunities for efficiency improvements which lies in digitalization,' comments the CEO.

After very low power prices in 2015, the average annual spot price in the Oslo area increased by 0.07 NOK/kWh to 0.24 NOK/kWh in 2016.

Hafslund posted EBITDA of NOK 818 million in the fourth quarter, which were somewhat up on the corresponding prior-year period (NOK 796 million). All four business areas posted improved results in the quarter. The quarter was characterised by higher demand for energy and higher power prices than in the same quarter the previous year.

Networks' EBITDA for the year came in at NOK 1,654 million (NOK 1,388 million.) The improvement was attributable to higher network tariffs and lower operating expenses. EBITDA for the fourth quarter totalled NOK 459 million, which were up 14 percent on the fourth quarter of 2015.

'Higher profitability in the networks business is driven by relative efficiency compared to other network operators. Networks is currently implementing extensive improvement initiatives. The integration of the Networks business in Østfold purchased in 2014 shows that we can also successfully leverage significant synergies from the purchase and merging of networks businesses,' confirms CEO Ruyter.

The roll-out of new automatic meters is progressing well, and we installed our 100,000th meter in January. Hafslund is due to install a total of 700,000 new meters at its networks customers by 2019.

Heat posted EBITDA of NOK 437 million (NOK 383 million) in 2016, the business area's best-ever annual result. New customers with an annual heating requirement of 44 GWh were connected in 2016. Higher power prices and grid tariffs pushed up the district heating price. However, fuel costs also rose, primarily due to the higher power prices.

'In December Hafslund Heat entered into an agreement to deliver heat and cooling to Oslo Public Library (Deichmanske hovedbibliotek) and the new Munch Museum, both built with high environmental standards. Agreements were also signed to supply district-heating-based cooling to a number of commercial buildings in the centre of Oslo. District-heating-based cooling is a new technology in Norway. Consequently, Hafslund Heat is establishing itself as an end-to-end supplier of heating and cooling in Oslo,' remarks CEO Ruyter.

Production posted EBITDA of NOK 462 million in 2016, which were up from NOK 391 million in the previous year. The results improvement is due to higher power prices, which more than offset the lower production volume. The construction of a new power plant generator at Vamma is on schedule for completion before the spring flood in 2019. The project involves significant modernisation of the Vamma power plant, and will generate around 230 GWh of new renewable energy.

Markets returned EBITDA of NOK 122 million (NOK 92 million) for the fourth quarter and NOK 585 million (NOK 560 million) for 2016. The customer base expanded by 43,000 to 1,093,000 during the year. At the end of the year Hafslund Marked had 375,000 customers outside Norway.

The Board proposes a dividend of NOK 3.25 (NOK 3.00) per share for the 2016 financial year.

You can read the report atwww.hafslund.no/reports

Hafslund ASA
Oslo, 9 February 2017

For further information please contact:

Chief Financial Officer (CFO), Heidi Ulmo, Tel.: +47 909 19 325, E-mail: heidi.ulmo@hafslund.no

Senior Vice President Corporate Communications and Public Affairs, Johan Chr. Hovland: Tel.: +47 917 63 491, E-mail: johan.hovland@hafslund.no

Head of Finance and Investor Relations, Martin S. Lundby: Tel.: +47 416 84 448, E-mail: martin.lundby@hafslund.no