Minority interest was NOK 707 million as of 31 December 2006, compared with NOK 981 million at the end of 2005. The decrease is due entirely to the acquisition of an ad- ditional 35 percent share ownership in Slovalco, which reduced the minority interest in Slovalco from 80 percent to 45 percent.
Shareholders’ equity was NOK 96,496 million at the end of 2006, compared with NOK 95,495 million at the end of 2005. In addition to net income, the main items impacting shareholders’ equity included dividends, recognition of the funded status of defined- benefit pension plans, net purchases of treasury stock, purchase of shares from the Norwegian State and foreign currency translation gains. See note 3 – Consolidated shareholders’ equity to Hydro’s consolidated financial statements for a detailed recon- ciliation of shareholders’ equity.
Investments
Investments in 2006 amounted to NOK 26,713 million, compared with NOK 41.1 billion in 2005. Investments in 2005 included NOK 21.9 billion relating to the Spinnaker acqui- sition. Investments in 2004 amounted to NOK 19,464 million.
Contractual obligations
Payments due by period
NOK million Total Less than 1 year 1 - 3 years 3 - 5 years Thereafter
Long-term debt 19,699 422 2,027 2,692 14,557
Interest related to long-term debt 18,719 1,409 2,705 2,343 12,262
Finance lease obligations 361 19 111 80 152
Operating lease obligations 15,242 2,415 5,893 3,530 3,404
Unconditional purchase obligations 87,401 18,176 33,912 12,113 23,200
Contractual commitments for:
– PP&E 18,608 6,749 7,245 1,810 2,804
– Other future investments 117 69 48 - -
Benefit payments unfunded defined benefit plans - 385 882 1,057
Termination benefits - 179 464 575
Other long-term liabilities 4,976 1,359 1,165 377 2,074
Total contractual cash obligations 31,183 54,452 24,577
1) Annual payments are expected to continue to increase gradually into the foreseeable future starting in the range of NOK 800 to 900 million. Hydro also has other obligations connected with pension plans that are not contractually fixed to timing and amount.
Investment amounts contain certain items that have no cash effect in the near term. In 2006, investments included NOK 3.6 billion of such items relating to future assets retirement obligations. In 2005, investments included NOK 5.5 billion of such items relating to the Spinnaker acquisition and NOK 1.1 billion related to future assets retire- ment obligations.
In 2004, the most significant of such items included NOK 1.3 billion relating to the consolidation of the aluminium producer Slovalco and NOK 0.9 billion relating to future assets retirement obligations for oil and gas installations.
Oil & Energy
The largest investment for Hydro’s exploration and production operations in 2006 was the acquisition of 50 percent share in the Peregrino field (formerly known as Chinook) offshore Brazil. Important development projects were Rosa field in Angola and Ormen Lange. For Hydro’s energy and oil marketing operations, the most important investment in 2006 was related to the Langeled project.
The largest investments for Hydro’s exploration and production operations in 2005, apart from the acquisition of Spinnaker, related to development projects, of which Or- men Lange, Dalia and Kristin were the most important. For Hydro’s energy and oil mar- keting operations, the most important investment in 2005 was related to the Langeled project.
The largest investments for Hydro’s exploration and production operations in 2004 re- lated to development projects, of which Snøhvit (Hydro’s share in Snøhvit was sold to Statoil and the sale was settled in December 2004), Kristin, Ormen Lange and Dalia were the most important. For Hydro’s energy and oil marketing operations, the most important investment in 2004 was related to the Langeled project.
Aluminium Metal
The major investments for Hydro’s aluminium metal business in 2006 included the pro- ceeding expansion of the alumina plant Alunorte in Brazil and the upgrade and expan- sion of the cast houses at the Sunndal plant in Norway.
The major investments for Hydro’s aluminium metal business in 2005 included the final- ization of the primary metal plant expansion in Alouette in Canada and the upgrade of the cast house at the Kurri Kurri plant in Australia.
The major investments for Hydro’s aluminium metal business in 2004 included the ex- pansion activities in Sunndal, Norway, where the third and final phase was completed, and in Alouette in Canada.
Investments1)
NOK million 2006 % 2005 % 2004 %
Exploration and Production 20,742 78 33,846 82 10,606 54
Energy and Oil Marketing 2,062 8 2,333 6 1,460 8
Oil & Energy 22,804 85 36,179 88 12,067 62
Aluminium Metal 2) 1,979 7 1,7923) 4 4,2444) 22
Aluminium Products 2) 1,250 5 1,9703) 5 1,951 10
Other activities 647 2 1,097 3 1,058 5
Corporate and eliminations 35 - 72 - 145 1
Total 26,713 100 41,110 100 19,464 100
1) Additions to property, plant and equipment (capital expenditures) plus long-term securities, intangible assets, long-term advances and investments in non- consolidated investees.
2) Effective 1 February 2006, Hydro decided to split Aluminium into two business areas, Aluminium Metal and Aluminium Products. Aluminium Metal consists of the previous Metals sub-segment. Aluminium Products consists of the previous Rolled Products and Extrusion and Automotive sub-segments. Prior periods have been restated to be comparable.
3) Includes effect of change in accounting principles (FIN 47). Non-cash increase in investment of NOK 186 million for Aluminium Metal and NOK 9 million for Aluminium Products.
Aluminium Products
Investments for Aluminium Products in 2006 related primarily to a revamp of the rolled products plant in Slim, Italy and the completion of the precision tubing plant in Reynosa, Mexico. The main investments in 2005 related to the plant in Slim and a new automotive casting line in Dillingen, Germany. In 2004, the main investments related to the automo- tive casting line in Dillingen, and the construction of a lithographic line in Germany. Material commitments
Contractual commitments for investments in property, plant and equipment relating to land-based activities and oil and gas field activities, including transport systems at the end of 2006 were NOK 3,028 million and NOK 15,581 million, respectively. The total amount of NOK 18,609 million is included in the contractual obligations table above in Contractual commitments for PP&E. Additional authorized future investments repre- senting projects formally approved by the Board of Directors or management were NOK 1,871 million relating to land-based activities and NOK 1,924 million relating to oil and gas field activities and transport systems.
Hydro’s long-term committed stand-by facilities of approximately USD 2 billion, the EUR 300 million loan facility with EIB in connection with the Ormen Lange and Langeled developments, as well as cash holdings and expected cash flow from operations, are expected to provide sufficient reserves to fund these expenditures. In addition, the com- pany’s A/A1 rating (investment grade) ensures adequate access to the global capital markets for raising additional liquidity, if needed.