Statnett SF Half-year Report (0710K)

TIDM93RX

RNS Number : 0710K

Statnett SF

27 August 2021

(27 .08.2021 )

Statnett - Results first half of 2021

On 27 August 2021, Statnett's Board of Directors approved the Group's Interim Report for the first half of 2021. The Interim Report is enclosed and available on www.statnett.no .

The Statnett Group's underlying profit after tax amounted to NOK 862 million in the first half of 2021 (NOK 1 209 million in the corresponding period of 2020). The reduction in the underlying profit is mainly attributable to increased costs for system services as a result of high power prices, and other operating costs.

The underlying result is based on the regulated permitted revenue, whereas the recorded result will depend on stipulated tariffs and congestion revenues. The difference, referred to as higher or lower revenue, will level out over time through adjustment of tariffs, ensuring that Statnett's accumulated revenue corresponds with the regulated permitted revenue. The recorded profit after tax for the Group was NOK 590 million in the first half of 2021 (NOK 1 121 million).

The Group's operating revenues for the first half of 2021 amounted to NOK 5 279 million (NOK 4 776 million). Tariff revenues from the energy component were up by NOK 419 million against the comparable prior-year period, mainly due to a higher power price. Congestion revenues were NOK 446 million higher than in the same period in 2020 due to major differences in power prices between Norway and Sweden, Denmark, Netherlands and Germany. The planned decrease in tariff revenue from the fixed tariff component to alleviate the effects of the coronavirus pandemic reduced total tariff revenue by NOK 567 million. Statnett has reduced the grid rental for 2021 to its direct customers by 24 per cent compared with 2020 to help alleviate the financial consequences of the Covid-19 pandemic on Norwegian consumers and industry.

The Group's operating costs totaled NOK 4 240 million in the first half of 2021 ( NOK 3 173 million). The main reasons were higher costs for system services, transmission losses, increase in other operating costs as well as increased depreciation as a result of an increased asset base. Higher costs for system services amounted to NOK 314 million and are primarily due to an increase in reserve power following a long period of cold winter weather and occasionally historically high prices in the capacity market. Transmission losses rose by NOK 494 million on the back of higher power prices and a higher volume.

The Statnett Group invested NOK 3 231 million in the first half of 2021, compared to NOK 3 351 million in the first half of 2020. The Statnett Group expects to invest a total of NOK 6.8 billion in 2021.

Statnett's higher/lower revenue

Statnett's operating revenues predominantly derive from grid operations regulated by The Norwegian Regulatory Authority (NVE-RME), which stipulates a cap (permitted revenue) for Statnett's revenues. Permitted revenue increased from NOK 4 741 million for the first half of 2020 to NOK 5 492 million for the first half of 2021. In the first half of 2021, revenues from grid operations were lower than the permitted revenue, resulting in a lower revenue for the period. Statnett's lower revenue amounted to NOK 349 million for the first half of 2021 (lower revenue of NOK 113 million for the first half of 2020). Accumulated lower revenue including interest was NOK 290 million at the end of the first half of 2021. Higher/lower revenues are not recognized in the balance sheet.

Covid-19

The operating situation, duty rosters, staffing levels and shifts continued predominantly as normal during the first half of 2021, despite the coronavirus situation. The coronavirus pandemic is however placing an increasing strain on work schedules and finances in several of our projects due to reduced efficiency of work operations. Much of this is attributable to travel restrictions for foreign workers.

Outlook

Extensive electrification and more renewable power production to achieve adopted climate goals are the most important drivers of the development of the power system in Norway and its neighboring countries. Our shared ambition to reach the climate goals, is facilitated through increased power exchange capacity and shared regulations and market solutions.

In June, Statnett's board decided the company's new strategy: Going green faster. Statnett's new strategy addresses how the company will adapt to the quickening pace of the energy transition, become a driving force for zero-emissions and maintain efficiency and Norwegian competitiveness.

This means that Statnett will have to maintain a consistently high investment level. At the same time, market and system solutions must be developed to manage larger fluctuations in the flow of power, more complex operations, new market instruments and European regulations. Statnett will intensify its efforts to develop system and market solutions at the national, Nordic and European levels in the years ahead.

Automated system operations will be essential for maintaining security of supply in a power system characterised by higher fluctuations and finer time resolution. Digital solutions and increased data exchange will also facilitate quicker processing of connection requests and open the way for new markets and new business models.

Contact :

Knut Hundhammer

Chief Financial Officer

Mobile: [phone]

www.statnett.no

http://www.rns-pdf.londonstockexchange.com/rns/0710K_1-2021-8-27.pdf

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August 27, 2021 10:38 ET (14:38 GMT)