Hafslund - Result for Q1 2016: Efficient operations and solid results improvement

Hafslund posted EBITDA of NOK 971 million in the first quarter of 2015, an increase of NOK 194 million on the previous year.All the business areas returned improved results due to efficient operations, lower operating expenses, high demand for energy and growth in the number of electricity customers.

'Adjusted for extraordinary items, this is the best first-quarter result in Hafslund's history. While high demand for energy due to lower temperatures was a major contributor, more than anything we are now reaping the rewards of the continuous improvement measures that have been implemented across the business for a number of years,' explains CEO Finn Bjørn Ruyter.

Hafslund Network's year-on-year EBITDA rose by 26 per cent to NOK 384 million. Revenues increased as a result of an increase in network tariffs from 1 January 2016, together with cold weather and higher energy deliveries. Hafslund endeavours to maintain stable network tariffs, and the above increase was the first since December 2010. Operating expenses fell by around 15 per cent against the first quarter of 2015.

- Cost improvements at Hafslund Network are boosting our efficiency and competitiveness, and helping to maintain a low network rental for customers and provide a good return for the shareholders. We will also face significant modernisation and digitisation challenges with regard to the network over the next few years, comments CEO Ruyter.

The Heat business area posted EBITDA of NOK 285 million, up 42 per cent against the same quarter the previous year. District heating revenues rose as a result of high power and energy consumption due to cold weather in January. Despite the detrimental effect of higher maintenance expenses and the lowest power prices since 2007, which naturally reduce income, the quarterly result is the best since Hafslund assumed ownership of the district heating business in 2007.

- Maintenance costs have increased. It is primarily due to increased efforts to secure the heat pipe system, where we unfortunately have experienced several errors in recent years, and now in April one serious accident, says CEO Finn Bjørn Ruyter.

EBITDA for Production came in at NOK 95 million, an improvement of NOK 30 million against the first quarter of 2015. The spot price for power on Nord Pool Spot for price area NO1 was NOK 0.23/kWh in the quarter, which was NOK 0.01 lower than in the comparable prior-year period. Despite this, price-hedging resulted in an achieved power price of NOK 0.25/kWh for the quarter. Operating expenses were significantly lower than in the first quarter of the previous year, which included front-end engineering expenses for the new power plant unit Vamma 12, and higher network costs.

The Market business area posted EBITDA of NOK 208 million, an increase of 12 per cent against the first quarter of 2015. The results improvement was achieved on the back of good power margins, higher sales of benefit products and slightly lower operating expenses.

The Board of Hafslund ASA has, to accommodate the expressed desire of the majority shareholder the City of Oslo, decided to terminate the work towards an initial public offering of the Power Sales business in 2016. Oslo City Council requested this change in Hafslund's activities in connection with the City of Oslo's overall ownership strategy, that also includes the energy sector.

- Many employees have devoted significant time to preparing for a spin-off of Hafslund Markets. Much of this work would have been performed regardless of the above, as part of the initiatives to comply with future framework conditions. We will also continue to pursue the Power Sales business' Nordic growth strategy going forward, concludes Hafslund CEO Finn Bjørn Ruyter.

You can read the report athttps://www.hafslund.no/reports

Hafslund ASA
Oslo, 3 May 2016

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.: 416 14 448, E-mail: martin.lundby@hafslund.no

Hafslund ASA issued this content on 03 May 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 03 May 2016 06:03:01 UTC. Original document available at http://feed.ne.cision.com/client/HafslundASA/Commands/Release.aspx?js=0&releaseID=1143227