Fourth-quarter 2010 presentation to analysts Hafslund ASA 2 February 2011

Christian Berg, CEO

Highlights ─ fourth quarter 2010 (excluding REC profit effect) • Challenging power market conditions. • EBITDA: NOK 850 million before gain on the sale of the Group’s fiber optic network business, up NOK 286 million from 4Q 2009. • Hafslund Fibernett sold — sales price: NOK 1 477 million. Gain on sale: NOK 875 million. Settlement received in January 2011. • Weak European market for wood pellets fuel leads to NOK 300 million facility write-down. • Working capital: up NOK 1 822 million (4Q 2009: NOK 784 million) due to high power consumption and electric power prices. • Board of Directors will propose payment of a per-share dividend of NOK 2.50 for the 2010 accounting year (2009 dividend: NOK 2.25). • The Board will assess further dividend capacity ahead of Hafslund’s 2011 annual shareholders’ meeting.

s.2

EBITDA ─ fourth quarter 2010 (excluding REC) NOK million 1 800 119

1 725

Other Activities

EBITDA

1 700 930 86 246

600 500 400 300

93 252

200 100 0 Hydropower

s.3

District Heating

Network

Power Sales

Venture

EBITDA: change from Q4 2009 (excluding REC) NOK million

101

1 725

Other Activities

Q4 10

961

35

69 35

97

564

Q4 09

s.4

Hydropower

District Heating

Network

Power Sales

Venture

Greater cash flow from operations EBITDA development 12-month rolling EBITDA vs. wholesale power prices

MNOK

øre/kWh

3 000

• Cash flow from operations up 38 percent over the past two years due to factors such as:

50 2 806

+38% 2 468

2 500

40 2 218 2 116 2 033

2 000

2 130

39

2 116

2 000

31

32

30

30

30 27

1 500

20 1 000 10

500

0

Higher cash flow at Network: NOK 209 million.

•

Power Sales earnings growth: NOK 130 million.

• Gradual profit improvement at Network (power distribution grid) business.

Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10

s.5

•

• EBITDA sensitivity: a NOK 0.10 per kWh change in wholesale power prices results in an approximately NOK 340 million change in EBITDA.

0

EBITDA*

Increased power prices: NOK 240 million.

35

34 30

•

2 625

Power prices – rolling 12-month average**

* EBITDA = rolling 12-month EBITDA excluding financial asset value changes (in NOK million). ** Power prices for Hafslund Hydropower – rolling 12 month

Interest-bearing debt: up NOK 2.0 billion in Q4 2010 Net interest-bearing debt and equity ratio

Change in interest-bearing debt in 4Q 10 Amounts in NOK million

NOK billion

Equity ratio

60

14 13.1

13 12

11.6

11.9

50 11.3

11

11.1

EBITDA

38

10

34

33

Net interest-bearing debt 30 September 2010

35

35

40

9 30

-11 074 1 725

Interest paid

-125

Tax paid

-142

Change in market value of financial instruments

-1 000

Change in working capital

-2 054

8 7

20

Investments

-468

6 Net loan portfolio adjustments

5

10

4 3

0 Q4 09

Q1 10

Q2 10

Net interest-bearing debt

s.6

Q3 10

Q4 10

Equity ratio

Net interest-bearing debt 31 December 2010

71

-13 067

Working capital requirements- seasonal variation Working capital and power prices

NOK million

Euro/MWh

2 200

10 0

2 000

90

1 800

80

1 600 70

1 400 1 200

60

1 000

50

800

40

600

20

200

10

0 - 200

0

aug.09

oct.09

dec.09

feb.10

Working capital

apr.10

jun.10

aug.10

oct.10

dec.10

Average power prices

Power sales - sold volume

GWh 6 000

4 500

3 000

5 001

4 369 1 500

4 746

4 105 2 602

2 947 2 162

2 292

0

Q1 09

•s.7

• A normal peak in Q1 and Q4 due to level of sold volume.

30

400

jun.09

• Seasonal variations in working capital depending on sold volume and power prices.

Q2 09

Q3 09

Q4 09

Q1 10

Q2 10

Q3 10

Q4 10

• Working capital variations within a range of NOK 2,1 billion last 12 months.

Capital employed and return on capital employed (ROCE) as of 31 December 2010 (excluding REC) Capital employed

Return on capital employed (ROCE) 11.5%

Hydropower

2.5 %

18%

Other activities Venture 4% 1%

Power sales

19%

District heating

14%

6.0%

6.0%

9.0 %* 4%

Heat and bioenergy

40%

Network

s.8

2008

* 12-month return on capital employed (ROCE) excluding sale of Fibernett and the BioWood Norway write-down.

2009

2010

Hydropower NOK million

Q4 10

Q4 09

2010

2009

Operating revenue

315

202

1 196

856

EBITDA

252

154

972

661

Operating profit

241

144

929

618

43.6

28.1

39.1

27.5

Sales price (øre/kWh) Production volume (GWh)

702

683

3041

3018

Investments

36

37

161

165

kvartal

12 måneder

400

1 200 972

300

791

800

200

600 303

100

231

219

252

240 186

154

178

400 200

102

0

0 Q4 08

s.9

1 000

Q1 09

Q2 09

Q3 09

EBITDA per quarter

Q4 09

Q1 10

Q2 10

Q3 10

Q4 10

EBITDA rolling 12-month

• Profit and operating revenue growth reflect higher power prices than in 4Q 2009. • Production on a par with the average for the fourth quarter despite 58 GWh lower production in December 2010. • Nord Pool Spot (NO1) wholesale/spot price: NOK 0.5 per kWh vs. 4Q 2009: NOK 0.296 per kWh. • New FKF 4 generator scheduled for completion in spring 2011 will increase Hydropower capacity by 100 GWh. • Projected 1Q 2011 generation: Approximately 410 GWh; about 160 GWh, or 28 percent below normal for 1Q.

Hydropower production profile GWh

350 300 250 200 347

150

333 286

329 335

340 342

295

292

314

313

260

100

221

247 220

210

217 214

175

174

150 156

146 142

Feb

Mar

50 0 Jan

Apr

May

2009

s.10

Jun

Jul

2010

Aug

Sep

Normal

*Normal annual production = 3,000 GWh based on 10-year average of production adjusted for capacity improvements.

oct

Nov

Dec

District Heating NOK million

Q4 10

Q4 09

2010

2009

462

245

1 144

747

EBITDA

93

58

283

213

Operating profit

62

31

165

91

26.7

30.2

33.6

33.0

Production volume (GWh)

694

512

1 782

1 382

Investments

210

91

432

397

Operating revenue

Gross margin (øre/kWh)

EBITDA per quarter

EBITDA rolling 12-month

283

200 150

300 250

226

200 100 50

150

152

140

93

92 58

0

6

-11

50

- 50

0 Q4 08

s.11

100

32

25

Q1 09

Q2 09

Q3 09

EBITDA per quarter

Q4 09

Q1 10

Q2 10

Q3 10

Q4 10

EBITDA rolling 12-month

• Revenue growth reflects higher power prices and increased demand. • 4Q is a seasonally strong quarter: deliveries are about 35 percent of annual production. • Lower per kWh contribution margin due to high production costs, despite higher power prices. • New delivery contracts signed in 2010: 128 GWh annual energy outtake.

District Heating — energy sources and unit cost Energy prices (øre/kWh)

Q4 09

Q1 10

Q2 10

Q3 10

Q4 10

Oil/natural gas

49.0

45.5

43.0

57.5

53.0

Electricity

36.6

52.7

48.4

57.9

60.7

0.0

0.0

0.0

0.0

77.0

Heat pumps

13.1

20.7

15.0

11.5

21.5

Waste & biofuel

17.4

17.1

17.5

18.9

18.2

Total production cost

28.2

38.4

25.5

25.0

48.4

District Heating incl. Distribution

58.4

73.0

64.8

65.9

75.1

Gross contribution margin

30.2

34.6

39.3

40.9

26.7

Biooil and biodiesel

GWh

• Production costs depend on energy input source and price. • Electricity and renewable energy source usage: 74 % in 2010 and 79 % in 4Q 2010. • Production costs rose NOK 0.202 per kWh from 4Q 2009.

%

800

90 720

694

700

80 70

600 512

60

500

50 400 40 300

30

234

200

20

134

100

10

0

0 Q4 09

s.12

Q1 10

Q2 10

Q3 10

Q4 10

Biooil and biodiesel

Heatpumps

Oil and naturalgas

Waste and biomasse

Electricity

Ratio Electricity and renewable energy sources rolling 12

• Bio-oil and bio-diesel fuels: significant use in 4Q 2010.

District Heating ─ production profile GWh

350 300 250 200 336

150

280 250

100

204

228

210 167

236

190

50

96

134 130

116

61

73

30

45

144

67

29 30

32

37

37

0 Jan

Feb

Mar

Apr

Mai

2009

s.13

Jun

2010

Jul

Aug

Sep

Okt

Normal*

* Normal = projected 2010 production, given normal temperatures (10-year average) and current and planned customer tie-ins to the grid.

Nov

Des

Network NOK million

Q4 10

Q4 09

1 344

1 008

4 804

3 385

EBITDA

246

314

1 077

1 035

Operating profit

109

179

532

493

Investments

164

200

485

521

Operating revenue

2010

2009

• Regulatory income ceiling after grid losses for 2010: NOK 2 287 million, up NOK 181 million from 2009. • Profit for the year charged with “under income” of NOK 203 million (NOK 16 million). • Profit for the year: up 8 percent.

EBITDA per quarter

EBITDA rolling 12 months

350

1 077

300

1 000

868

250

800

200

100

600

314

150 231

231

247

274

243

275

282

246

0

0 Q4 08

Q1 09

Q2 09

Q3 09

EBITDA

s.14

400 200

50

Q4 09

Q1 10

Q2 10

Q3 10

EBITDA rolling 12 months

Q4 10

• Stable operations despite high loads.

1 200

• Profit projection for 2011 on a par with 2010, based on income framework notification from regulatory body NVE, planned maintenance, and anticipated interest rate.

Power Sales NOK million

Q4 10

Q4 09

2 888

1 378

8 021

4 787

EBITDA

86

51

360

248

Operating profit

83

49

348

240

4 744

4 105

14 984

13 238

Operating revenues

Sold volume (GWh)

EBITDA per quarter

2010

2009

EBITDA rolling 12 months

200

360

150

400

300 224

100

50

109

130 86 45

51

52

Q4 08

Q1 09

Q2 09

Q3 09

Q4 09

Q1 10

EBITDA

100

34

22

0

s.15

200

187

0 Q2 10

Q3 10

EBITDA rolling 12 months

Q4 10

• Revenue growth reflects increased prices for wholesale (spot) power contracts traded via Nord Pool Spot and strong demand. • Challenging market conditions. • Satisfactory profit performance in a seasonally strong quarter. • Customer-base: some 951 000 customers in wholly or partly owned power sales companies. • Steep increase in working capital in 4Q 2010: up NOK 1.6 billion. • Profit after tax per cutomer on NOK 360 in 2010.

Heat and Bioenergy NOK million

Q4 10

Q4 09

2010

2009

Operating revenue

33

12

115

49

EBITDA

-7

-6

-51

-11

-310

-7

-386

-27

Energy production (GWh)

77

29

246

93

Used waste (thousand tonns)

32

12

114

57

1

116

189

342

Operating profit

Investments

Bioenergy: • Challenging market conditions. • Low margins responsible for NOK 300 million write-down of Hafslund’s wood pellets plant. • Pilot operation start-up further delayed.

Heat: • High energy production in 4Q 2010. • Pilot operation of the Borregaard energy recovery facility is expected to be completed in 1Q 2011. • Challenging bulk waste market.

s.16

Venture NOK million

Q4 10

Q4 09

2010

Operating revenue

169

176

EBITDA (excl REC)

930

(31)

1 077

(61)

Operating profit (excl REC)

832

(54)

887

(162)

0

(137)

REC

549

2009

(1 991)

779

• Sale of Hafslund Fibernett at a sales price of NOK 1.5 billion yielded NOK 875 million gain. Settlement received 20 January 2011. • Portfolio value decline: NOK 47 million

(137)

• NOK 60 million in capital freed up in 4Q 2010 upon settlement of EUR 66 million sale by Fesil of its SiMetall production Capital employed: NOK 892 million (excluding REC investment) unit. Energy efficiency and other investments

44%

Telecom 36%

7% Renewable energi s.17

14% AMS (metering system)

• REC investment: 89.0 million shares or 8.93 percent of stock — market value: NOK 1.6 billion (at NOK 17.79 per share).

Group profit and loss account (excluding REC) NOK million

Q4 09

2010

∆

Operating revenue

5 189

3 032

2 156

15 829

Gain/loss financial items

1 013

34

979

1 108

Operating expenses EBITDA Depreciation Operating profit Interest expences Market value change loan portfolio Financial expenses Pre-tax profit

(4 477) 1 725 (590) 1 135 (153) 94 (59) 1 076

(2 502) 564

(1 975) 1 160

(13 023) 3 914

(222)

(368)

(1 270)

342

793

2 644

(144)

(9)

(82)

176

(225)

166

117

959

(74)

(23)

(498) 27 (471) 2 173

Tax

(97)

Profit after tax

979

43

936

1 584

5.02

0.22

4.80

8.12

Earnings per share (EPS) in NOK

s.18

Q4 10

(589)

Group balance sheet NOK million Intangible assets

30.09.2010

31.12.2009

∆

2 389

2 440

(52)

2 288

18 557

19 168

(611)

18 809

Financial assets

2 831

3 012

(181)

4 737

Accounts receivables and inventory

5 625

2 330

211

392

Assets

29 613

27 343

2 270

28 918

Equity (incl. Min. int.)

10 464

9 671

794

11 154

2 832

3 502

(670)

3 287

11 321

11 080

242

9 805

Other currently liabilities

2 338

815

1 523

2 741

Short-term debt

2 658

2 275

382

1 931

Equity and liabilities

29 613

27 343

2 270

28 918

Net interest-bearing debt

13 067

11 074

1 993

11 601

Fixed assets

Cash and cash equivalents

Allocation for liabilities Long-therm debt

Equity ratio

s.19

31.12.2010

35 %

35 %

3 295 (181)

0%

2 773 311

39 %

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Additional analytic information

Earnings per share (excluding REC) By quarter NOK 5.02

2.60 1.81 1.01 0.53

1.34 0.86

1.00

0.76

0.22 -0.38 -1.68

s.22

2008

2009

2010

3.26

1.71

8.12

Group cash flow statement (excluding REC profit effect) NOK million EBITDA exclisuv REC

Q4 10

Q4 09

Paid intrests

(125)

(134)

Paid tax

(142)

(94)

1 435 9

3 914 (536)

(48)

(148)

Marketvalue changes and other liquidity adjustments

(1 000)

107

(1 107)

(1 009)

Change in working capital, etc.

(2 054)

(889)

(1 165)

(1 656)

Total cash flow from operations

(1 596)

(720)

(876)

(468)

(499)

Net operations and expansion investments Sold operations Portfolio changes Venture, etc. Cash flow from investments activities Cash flow to down payments and interests

s.23

290

1 725

2010

∆

59 (408) (2 004)

31

565 (1 647)

6

(6)

5

631

(572)

109

138

(546)

(1 532)

(1 422)

(967)

(582)

Capital structure development NOK billion

Equity ratio

50

14 12

40.3

40.0

40.0

40.0

40

38.1

10

35.0

34.3

35.0

33.1

30

8 6

%

11.4

10.5

10.7

11.2

11.6

13.1

11.9

11.3

20

11.1

4 10 2 0

0

Q4 08

Q1 09

Q2 09

Q3 09

Q4 09

Net interest-bearing debt

s.24

Q1 10

Q2 10

Equity ratio

Q3 10

Q4 10

Loans — portfolio data Debt maturity profile

Portfolio data

NOK million 4 000

Q4 10

Q3 10

∆

Bonds

40 %

46 %

-6 %

Certificate loans

12 %

7%

5%

Other loans

48 %

47 %

1%

Q4 10

Q3 10

∆

(135)

(229)

94

(17)

(19)

2

4.0 %

4.3 %

-0.3 %

33 %

42 %

-9 %

1 593

795

798

3 692

4 781

(1 089)

3 333

3 000 2 000

1 815

1 909

1 909

1 056

1 000

1 059 860

700 500 319

0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Certificate loans

Bonds

Other loans

Loans at maturity, next 12 months NOK million

Average interest incl. derivatives

1 600

Proportion of loan portfolio with fixed interest Loans at maturity next quarter (NOK million) Unused drawing facilities (NOK million)

1 293

1 200

300

815

800

381

400

993 384 300

0 Feb

Mar

Apr

Certificate loans

s.25

300

300

May

Jun

326

50

Jan

Nominal value - market value of loans Market value interest rate swaps

Bonds

Jul

Aug

Other loans

Sep

Oct

Nov

Dec

Power and CO2 price development EUR

135

135 120 105

88

90 75 60

EUR/MWh 45 30

EUR/tCO2

15 0

nov.08

jan.09

mar.09 may.09

jul.09

FWD 2014 s.26

sep.09

nov.09

FWD 2011

Source: www.nasdaqomxcommodities.com (as of 6 January 2011)

jan.10

mar.10

CO2 2011

may.10

jul.10

Nordic spotmarket

sep.10

nov.10

jan.11

Hydropower — Glomma waterway flow m3/sek. 2 000

1 500

1 000

500

0

jan

feb

mar

apr

may 2010

jun 2009

jul

aug

sep

oct

nov

dec

Max. capacity utilization

• 4Q 2010 production: On a par with normal for the reporting period. • Maximum capacity utilization: 940 m³/second. • Projected 1Q 2011 production: about 410 GWh (approx. 160 GWh below normal for the reporting period), providing normal reservoir levels and precipitation. s.27

Other Activities NOK million Support Power trading Real estate

Q4 09

2010

(40)

(31)

23

14

29

(10)

(41)

24

(0)

4

(129)

2009 (152)

Billing and customer service

18

23

95

101

Financial derivatives, ass. comp.

64

39

102

191

Other

49

(4)

Operating profit other

s.28

Q4 10

118

0

49 170

(53) 77

Shareholders as of 31 December 2010 # Shareholder

Class A shares Class B shares held held

Total

Ownership

Share of voting rights

Shareholding in thousands 1

City of Oslo

67 525

37 343

104 868

53.7 %

58.5 %

2

Fortum Forvaltning AS

37 853

28 706

66 559

34.1 %

32.8 %

3

Østfold Energi AS

5 201

4

5 205

2.7 %

4.5 %

4

Odin Norden

2 452

2 452

1.3 %

0.0 %

5

MP Pensjon

1 579

1 579

0.8 %

0.0 %

6

Odin Norge

1 219

1 219

0.6 %

0.0 %

7

Hafslund ASA

451

451

0.2 %

0.0 %

8

Folketrygdfonet

419

419

0.2 %

0.0 %

9

AS Herdebred

271

378

0.2 %

0.1 %

333

333

0.2 %

0.0 %

110 686

72 777

183 463

94.0 %

95.9 %

4 742

6 981

11 723

6.0 %

4.1 %

115 428

79 758

195 186

100 %

100 %

107

10 Danske Invest Norwegian stocks Total, 10 largest shareholders Other shareholders Total

s.29

Note: Shareholdings in thousand shares.

Key figures Group

2009

Total assets

29 613

28 918

Sales price (øre/kWh)

Captial employed

27 028

25 870

Production volume (GWh)

Equity

10 464

11 154

Market capitalization

13 603

13 534

Capital matters

Equity ratio Net interest-bearing debt

Capital employed

35 % 13 067

39 % 11 601

Profitability excl. REC Profit after tax

1 584

335

Earnings per share (EPS)

8.11

1.71

Cash flow per share

2.89

9.61

District Heating Capital employed

2010

2009

4 550

4 080

Sales price (øre/kWh)

72.2

60.8

Gross margin (øre/kWh)

33.6

33.0

1 782

1 382

Sales volume (GWh)

s.30

Power Generation

2010

Network

2010 4 377

2009 4 277

39.1

27.5

3 041

3 018

2010

2009

Capital employed

9 668

9 396

Annual Income ceiling

2 891

2 461

NVE-capital (regulatory)

6 163

6 045

Power Sales

2010

2009

Capital employed

3 427

1 980

- of this working capital

2 148

1 350

Total volume (GWh)

14 984

13 238

Venture

2010

2009

Capital employed exl REC Market value REC

892 1 584

1 505 3 432

Definitions Items

Definition

Group Capital employed

Equity + Net interest-bearing debt + Net tax positions

Equity ratio (in%)

(Equity incl. Minority interests / Total assets) X 100

Earnings per share

Profit after tax / Average no. of shares outstanding

Cash flow per share

Net cash from operations / Average no. of shares

Return on equity

Result after tax / Average equity (incl. Minority interests)

Return on capital employed

Operating profit / (Average equity + Net interest-bearing debt + Net tax positions)

Power generation Mean production

Average power generation over the past 10 years.

Investor information • Additional information is available from Hafslund’s website: – www.hafslund.no – You can subscribe to Hafslund press releases

• Group SVP & CFO, Finn Bjørn Ruyter – [email protected] – tel: +47 911 38 199

• SVP Communications and Corporate Social Responsibility, Karen Onsager – [email protected] – tel: +47 920 87 007

• Financial Director and Investor Relations contact, Morten J. Hansen – [email protected] – tel: +47 908 28 577

w w w . h a f s l u n d . n o

www.hafslund.no