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SOGN OG FJORDANE ENERGI Martin Holvik, Chief Financial Officer
Ragna Flatla Haugland, Environmental Specialist in SFE Produksjon AS
Green Bond Investor Presentation,
9 May 2018
Agenda
• Sogn og Fjordane Energi
• Financial overview
• Green Bonds Framework
2
100% public ownership
Sogn og Fjordane Holding AS (Sogn og Fjordane county municipality) 49,56%
Askvoll municipality 1,48%
Flora municipality 4,64%
Gloppen municipality 3,46%
Bremanger municipality 2,47%
Selje municipality 1,34%
Eid municipality 0,15%
Naustdal municipality 0,07%
BKK 36,83%
3
Company overview
Sogn og Fjordane Energi
Production Power Grid Services Revenues NOK 1,186m
EBITDA NOK 378m
Revenues NOK 425m
EBITDA NOK 163m
Revenues NOK 71m
EBITDA NOK 6.5m
(NOK mill) 2017 2016 2015
Operating Revenues 1,287 1,229 1,035
EBITDA 533 546 412
Profit before tax 365 359 212
Net Profit 193 189 113
Equity 2,747 2,503 2,334
Net Interest Bearing Debt 1,803 1,895 1,885
Total Assets 6,551 6,327 6,002
Power Production (TWh) 2.0 2.1 2.1
• Sogn og Fjordane Energi was established more than 100 years ago
• Top 10 largest utility company in Norway
– 22 wholly- and partially owned plus 5 leased hydro power plants with mean production of 1.9 TWh
– 4,000km of regulated grid network with 24,000 customers
• Revenues of NOK 1,287m with 250 employees
4
SFE’s hydro power plants
5
Skorge
Svelgen I,II,III&IV,
Fossekallen og Straumane
Evebøfoss, Eidsfoss og Trysilfoss
Innvik
Fossheim
Mel
Øvre- og Nedre Markevatn, Leknesvatn og Grunnevatn
Stongfjorden og Oslandsbotten
Åskåra I&II, Øksenelvane, Dauremål og Bjørndalen
Skogheim og Sagefossen
Sværen
• SFE operates 27 wholly- and
partially owned renewable
hydro power plants
• Mean production of 1.9 TWH
– Power plants are located in
the Sogn and Fjordane County
– Reservoir capacity of 0.9 TWh
Approx. 500 GWh identified hydro power potential
6
Gjengedal (Gloppen), 143 GWh Norddalsfjord (Flora), 20 GWh
Østerbø (Høyanger) 165 GWh (SFE-share 96 GWh)
Øksenelvane (Bremanger), 35 GWh
Under construction
Concession applied for
Hauge (Hellesylt), 15 GWh
Nausta (Naustdal/Førde) Ca. 30 GWh (several mini power plants)
Svelgen (Bremanger), 30 GWh
Concession not applied for
Concession received
Ommedal (Gloppen), 18 GWh
Bredvatn (Bremanger), 67 GWh
Wind power concessions of almost 200 MW
7
Okla (Stad, Selje), 21 MW
Hennøy (Bremanger), 50 MW
Lutelandet (Fjaler), 45MW
Bremangerlandet, 78 MW
Close to development. Falck Renewables SpA 80% ownership, Svelgen Kraft Holding 20%
Wholly owned by Svelgen Kraft Holding
Power grid – Regulated business
• SFE owns and operates 4,257km of
regulated grid with 24,324 customers
• NOK 1bn in investments past 5 years
– NVE capital of NOK 1,339m 2017YE
• Average return of 8.1% (2013-2017)
8
Reduction in grid losses (GWh)
SFE regional network
SFE distribution network
69 62
55 58 56
0
20
40
60
80
2013 2014 2015 2016 2017
Structural considerations
• Agreement on merger of the county
municipalities Hordaland and Sogn og
Fjordane
– Sogn og Fjordane aim to keep SFE-values in today’s
region by passing them the ownership on to local
municipalities
– Preemptive rights to purchase shares is a central topic
of discussion – now pending legal process
– Vestlandskraft (BKK, Hydro and SFE)
• SFE and Sunnfjord Energi is currently
negotiating models for full structural
integration
9
Agenda
• Sogn og Fjordane Energi
• Financial overview
• Green Bonds Framework
10
Income statement
Revenues (NOKm) Net profit (NOKm) EBITDA (NOKm)
1,160
1,315
1,629
1,042
1,229 1,287
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2012 2013 2014 2015 2016 2017
81 92
404
113
189 193
0
50
100
150
200
250
300
350
400
450
2012 2013 2014 2015 2016 2017
450
494
948
412
546 533
0
200
400
600
800
1,000
1,200
2012 2013 2014 2015 2016 2017
11
Balance sheet
Total Assets (NOKm) Equity Ratio (%) NIBD / EBITDA (x)
4.8x
3.7x
1.8x
4.6x
3.5x 3.4x
0.0x
1.0x
2.0x
3.0x
4.0x
5.0x
6.0x
2012 2013 2014 2015 2016 2017
29.3
34
37.5 38.9 39.6
41.9
0
5
10
15
20
25
30
35
40
45
2012 2013 2014 2015 2016 2017
4,410
5,274
5,837 6,002
6,327 6,551
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2012 2013 2014 2015 2016 2017
12
Investment program 2018-2020
• Production:
– 500 GWh potential identified
– Will only be materialized if profitable and
not jeopardizes investment grade status
• Power Grid:
– AMS project capex ~NOK 100m to be
completed by 2019
– Annual capex ~NOK 100-200m, a large
share related to connecting new
renewable energy onto the grid
13
Power plant Prod. Capex
(NOKm) Status
Østerbø 96 GWh 406 Project started – completion 2020
Hennøy Vindpark 30 GWH 90 Project started, SFE share 20%
Total 696
Shareholders are contributing
• Raised NOK 211m through share
issue in 2017 to fund investments
• Less dividend to the shareholders the
past two years
58
101
77
60
77
63
2012 2013 2014 2015 2016 2017
70% dividend of parent company results (current dividend policy)
50% dividend of net profits
14
Funding overview and financial policy
Debt maturity profile (NOKm)
0
100
200
300
400
500
600
2018 2019 2020 2021 2022 2023 2024 2025 2026
Bonds CP Bank
• Funding policy
– Maintain a well diversified
maturity profile where
maximum 40% of outstanding
debt mature within a 12
months period
– Liquidity reserves shall cover
minimum 50% of total
maturities the next 6 months
• Sogn og Fjordane Energi has
NOK 400m in unused credit
lines
15
SFE shall maintain an investment grade company profile
Agenda
• Sogn og Fjordane Energi
• Financial overview
• Green Bonds Framework
16
Green Bonds Framework
• Eligible projects
– Renewable Energy (Hydro, wind power with related
infrastructure)
– Energy Efficiency (Connection of renewable energy to
distribution networks, upgrading of distribution
networks and smart grids)
• Use of Green Bond Proceeds
– The green bond proceeds may be used to purchase or
develop new eligible projects as well as to renovate,
upgrade and refinance existing eligible projects
17
CICERO second opinion
• Strengths
– Focuses on a clean, efficient, cost effective grid.
With 98% renewable energy in the Norwegian
grid, these investments are not expected to
promote the use of fossils fuels for power
generation
– Strong governance procedures for advanced
environmental management
– Strong monitoring, management and reporting of
waste
• Weaknesses
– No significant weaknesses perceived in Sogn og
Fjordane’s Green Bonds Framework”
18
“
Environmental strategy (1/2)
• Sogn og Fjordane Energi focuses on:
– Environmental friendly hydro power productions and operation,
achieved by water course knowledge and local contributions
– A proactive approach towards environmental friendly solutions
– Accommodating regulations given by authorities
• Examples
– 80% vs. 60% recycling towards contractors in larger projects
– Bio-gradable liquid on all transformers in distribution grid
– Preparing for potential use of bio-gradable liquids in new power
plants and substitution in older plants
– Fish surveys and habitat measures
– Flood controls
– Voluntary cleaning up materials from old building sites
19
Environmental strategy (2/2)
20
• We also set high standards towards ourselves when it
comes to the environment
– Performing supervisory program for environmental objects
based on best practice
– Environmental heating through extracting heat from local
fjords for main offices in Sandane and Florø
• Awarded Miljøfyrtårn certificate for our strict policies
on work environment, procurement, transportation
and waste management
• SFE is also a coordinator for the utility industry in
Song og Fjordane with respect to administrating water
management regulations (EU framework)
SFE is also active in other areas
• Co-operation with Høgskulen på Vestlandet
– Partner in research project RELEASE (local
environment initiatives and sustainable energy)
• Partner in Norsk Vannkraftsenter
– Industry research within renewable energy
organized through Energi Norge and REN
• Partner in “Green School” project
– SFE has been an important partner in the “Grøn
Skule” project in Gloppen kommune. The project
highlights environmental friendly initiatives and
sustainable energy solutions in local schools
• Long term partners with Ungt Entreprenørskap
• Partner in establishing two Newton-rooms
21
Østerbø Hydro Power Plant
22
• New capacity of 165 GWh, 96 GWh SFE
share, combined with a new 132 kV 20km
grid cable
– Total investment of ~NOK 700m – to be
completed 2020
• SFE pro-actively works together with NVE on
finding environmental friendly solutions by
detailed planning on landscape/environment
• Health, environment and safety on the
agenda in each building meeting with
contractors/entrepreneurs
• Waste management during construction
Other renewable investments
23
Svelgen I Hennøy Vindpark
• Built in 1921
• Rehabilitation of NOK 100m in 2017
– Building of new tunnel and machinery
to maintain production capacity
• Under construction
• Will generate 150GWh when completed
• Total capex of ~NOK 450m
– SFE ownership 20%
Green bond reporting
• To enable investors to follow the development and
provide insight to prioritized areas, SFE will
provide an annual investor letter to investors
including
– A list of projects financed and CO2 reductions
– A summary of SFE’s Green Bond Development
• Selection of Eligible Projects and use of proceeds
will be verified by an internal committee
24
Green Bond Investor Report Sogn og Fjordane Energi AS
