Slide 1: Investor presentation Q2 2018
Investor presentation Q2 2018
Slide 2: Disclaimer
DISCLAIMER. This presentation contains certain forward-looking statements, including but no limited to, the statements and expectations contained in the “Financial Outlook” section of this presentation. Statements herein, other than statements of historical fact, regarding our future results of oper
Slide 3: Ørsted to acquire Lincoln Clean Energy and enter US onshore wind
Ørsted to acquire Lincoln Clean Energy and enter the US onshore wind development market Acquisition • Investment case with healthy economics based on prudent assumptions about key value drivers and market developments • Transaction in line with strategy to pursue value creating growth opportunities
Slide 4: Ørsted's strategic rationale & value creation
Ørsted’s strategic rationale & value creation Scale • Balance sheet and procurement Synergies & • Execution capabilities and complex engineering transfer of knowhow • Partnership capabilities and offtake solutions Critical mass in • Access to new customers, partners, talent and market insight can ne
Slide 5: LCE has a 813MW portfolio with secured long-term offtake
LCE has a 813MW portfolio with secured long-term offtake and more than 1.5GW of pipeline in the US wind-belt region Portfolio overview1 Geographic footprint Capacity in MW % split by MW2 ERCOT SPP ~1,000 ~2,500 MISO ~30% 714 1,527 300 ~2,500 MW 513 ~60% ~10% Operational3 Construction Near-term Total
Slide 6: Lincoln Clean Energy has a strong management team
Lincoln Clean Energy has a strong management team and an impressive development track record Lincoln Clean Energy • Experienced management team with substantial development track record • Utility-scale onshore wind platform with long-term contracted portfolio, best-in-class assets and strong operati
Slide 7: Continued strong strategic progress and underlying performance
Continued strong strategic progress and underlying performance Highlights – Q2 2018 • EBITDA of DKK 3.1bn, decline of DKK 1.4bn in line with expectation • EBITDA from offshore wind farms in operation increased by 8%, despite low wind speeds in Q2 • Green share of generation in Q2 increased from 64%
Slide 8: Initiated process to divest Danish power distribution and residential customer businesses
Initiated process to divest Danish power distribution and residential customer businesses Divestment Facts on the three business • Decision is outcome of strategic review of our downstream • The power distribution business, under the subsidiary Radius, has business approximately one million electric
Slide 9: Germany - Awarded the right to build another 552MW
Germany - Awarded the right to build another 552MW 1,142MW awarded in the two transitional auctions German North Sea projects • Awarded the right to build another 552MW in second auction: ̵ Borkum Riffgrund West 1 with 420MW at a price of EUR 0 per MWh. Cluster 1 now reached the maximum size of 900M
Slide 10: Taiwan - Awarded a total of 1,820MW capacity
Taiwan - Awarded a total of 1,820MW capacity Greater Changhua projects – 1,820MW awarded Greater Changhua projects • 900MW awarded in grid allocation in April. Projects expected to be completed in 2021, subject to FID in 2019 • 920MW awarded in price-based auction in June. Projects expected to be co
Slide 11: Wind Power market development – Taiwan & US
Wind Power market development – Taiwan & US • Taiwan has now met its target of awarding 5.5GW to be developed by 2025 Taiwan • Future auctions are being planned for projects post 2025 • Expected to solicit 800MW in 2019 Massachusetts • Passed bill which could increase offshore wind capacity to 3.2GW
Slide 12: Wind Power market development – Europe
Wind Power market development – Europe • Next UK CfD auction to be initiated May 2019, subsequent auctions every two years • Target annual build-out of 1-2GW towards 2030. Target 30GW capacity by 2030 United Kingdom • Hornsea 3 consent process moving forward as planned • Process for new leasing roun
Slide 13: Construction program well in progress
Construction program well in progress Borkum Virginia Asnæs Renescience Smart meter Project Hornsea 1 Borssele 1&2 Hornsea 2 Riffgrund 2 (EPC) CHP plant Northwich roll-out Country Asset type 129MW Heat, 120,000 tonnes 1 million Capacity 450MW 1,218MW 752MW 12MW 1,386MW 25MW Power waste installations
Slide 14: Continued solid, underlying performance in Q2 2018
Continued solid, underlying performance in Q2 2018 EBITDA Net profit Free cash flow DKKm DKKm DKKm 4,442 2,506 170 82 50 3,079 1,101 394 876 -5,975 Q2 2017 WP BTP DCS Other Q2 2018 Q2 2017 Q2 2018 Q2 2017 Q2 2018 EBITDA decreased by DKK 1.4bn Net profit down DKK 1.6bn FCF up DKK 6.1bn • Deferred far
Slide 15: Solid financial ratios
Solid financial ratios Net interest-bearing debt development FFO / Adj. net debt ROCE DKKm % % 44 23 4,331 440 4,603 3,109 14 2 18 32 -3,293 31 Mar CFO CAPEX Divest- Disc. Hybrid 30 Jun 2018 ments operations coupon 2018 30 Jun 30 Jun 30 Jun 30 Jun & other 2017 2018 2017 2018 Net interest-bearing deb
Slide 16: Wind Power – Solid results despite low wind
Wind Power – Solid results despite low wind Denmark Sites, O&Ms & PPA United Kingdom Partnership agreements Power generation Germany EBITDA Other Free cash flow ROCE TWh DKKm DKKm % 1.8 1.8 4,191 27 0.5 0.5 1,637 3,090 17 1,767 -1,475 0.9 0.9 2,819 1,619 0.4 0.4 -265 -296 -3,886 30 Jun 30 Jun Q2 201
Slide 17: Bioenergy & Thermal Power – Continued improvements
Bioenergy & Thermal Power – Continued improvements Heat Ancillary services EBITDA Power Free cash flow DKKm DKKm 133 119 56 90 -280 -304 -342 -71 -153 -575 Q2 2017 Q2 2018 Q2 2017 Q2 2018 EBITDA up DKK 0.1bn FCF up DKK 0.3bn • Improved spreads in Q2 2018 • Higher EBITDA • Lower receivables 17
Slide 18: Distribution & Customer Solutions – Expected decrease in Markets
Distribution & Customer Solutions – Expected decrease in Markets EBITDA Free cash flow DKKm DKKm 516 1,966 122 -1,954 Q2 2017 Q2 2018 Q2 2017 Q2 2018 EBITDA down DKK 0.4bn FCF increased DKK 3.9bn • Extraordinarily high earnings • Negative effect in Q2 2017 from the trading of financial from settleme
Slide 19: 2018 EBITDA guidance maintained
2018 EBITDA guidance maintained EBITDA Financial targets Target Year • We now see full-year EBITDA excluding new partnerships Return on capital employed (ROCE) skewing towards the upper end of the guidance range of DKK Group 12-14% Avg. 2018-2023 12.5-13.5 billion Wind Power 13-15% Avg. 2018-2023 •
Slide 20: Q&A
Q&A Conference call DK: +45 35 44 55 83 UK: +44 203 194 0544 US: +1 855 269 2604 For questions, please press 01
Slide 21: Appendix
Appendix
Slide 22: Structural transformation of European power generation
Structural transformation of European power generation Offshore wind CAGR 2017-2030 European power mix 3.7 PWh 3.4 PWh 3.3 PWh Biomass Offshore wind 1% 1% 2% 2% Wind¹ Solar PV 3% Offshore wind 7% New Renewables 17% Biomass 9% 23% Solar PV 8% Hydro Onshore wind 9% Biomass 9% 38% Fossil Nuclear 16% On
Slide 23: Global onshore wind capacity growth and LCE footprint
Global onshore wind capacity growth and LCE footprint Global onshore wind capacity growth LCE footprint in US 2017-2027, GW Of which US accounts for ̴ 70GW Plum Creek Wind 230MW Chicago, IL Oak Solar 10MW Sage Draw Wind 300MW Tahoka Wind Willow Springs Dermott 300MW Wind Wind 253MW 250MW Lockett 184
Slide 24: Wind Power build-out plan
Wind Power build-out plan Installed capacity 920 11,876 MW 1,142 900 1,386 8,914 752 1,218 6,776 5,108 450 Q2 2018 Borkum Hornsea 1 2020 Borssele Hornsea 2 Decided (FID) Greater German Greater Decided & Riffgrund 2 1&2 capacity Changhua Development Changhua Awarded (2022) 1&2a Portfolio 2b&3 capacit
Slide 25: SPA/CA split and timing of CA gains on farm-downs
SPA/CA split and timing of CA gains on farm-downs Wind farm MW capacity Commissioning SPA/CA split 2015 2016 2017 2018e 2019e SPA All Gode Wind 1 330 Q4 2016 CA: 75-100% 0-10% 65-75% 20-30% SPA Gode Wind 2 252 Q4 2016 CA: 75-100% 55-65% 30-40% 0-10% SPA DKK 0.6bn Burbo Bank Ext. 258 Q1 2017 CA: 75-1
Slide 26: Group – Financial highlights Q2
Group – Financial highlights Q2 FINANCIAL HIGHLIGHTS Q2 2018 Q2 2017 D EBITDA DKKm 3,079 4,442 (31%) • Wind Power 3,090 4,191 (26%) • Bioenergy & Thermal Power (71) (153) (54%) • Distribution & Customer Solutions 122 516 (76%) Net profit – continuing operations 876 2,506 (65%) Net profit – discontin
Slide 27: WP – Financial highlights Q2
WP – Financial highlights Q2 FINANCIAL HIGHLIGHTS Q2 2018 Q2 2017 D EBITDA DKKm 3,090 4,191 (26%) • Sites incl. O&Ms and PPAs 1,767 1,637 8% • Partnership agreements and farm-down gains 1,619 2,819 (43%) • Other incl. A2SEA and project development (296) (265) 12% ROCE1 % 26.5 17.0 9.5%p KEY BUSINESS
Slide 28: Wind measurement
Wind measurement Change from wind energy content to wind speed Wind speed (m/s) 2017 2018 • Wind speed is more intuitively understandable and transparent Normal wind year (meters per second vs. an index) 10.4 • Wind speed is based directly on external data sources and can 10.2 be compared with a his
Slide 29: BTP – Financial highlights Q2
BTP – Financial highlights Q2 FINANCIAL HIGHLIGHTS Q2 2018 Q2 2017 D EBITDA DKKm (71) (153) (54)% • Heat 119 133 (11%) • Ancillary services 90 56 61% • Power (280) (342) (18%) Free cash flow (304) (575) (47%) KEY BUSINESS DRIVERS Heat generation TWh 0.9 1.3 (31%) Power generation TWh 0.9 1.5 (40%) D
Slide 30: DCS – Financial highlights Q2
DCS – Financial highlights Q2 FINANCIAL HIGHLIGHTS Q2 2018 Q2 2017 D EBITDA DKKm 122 516 (76%) • Distribution 251 265 (5%) • Sales (14) (26) (46%) • Markets (8) 311 n.a. • LNG (107) (34) 215% ROCE1 % 8.8 41.0 (32.2%p) KEY BUSINESS DRIVERS RAB Power DKKm 10,957 10,623 3% Gas sales TWh 34.1 28.3 21% P
Slide 31: Differences in Business Performance EBITDA and IFRS EBITDA
Differences in Business Performance EBITDA and IFRS EBITDA DKKm Q2 2018 Q2 2017 EBITDA – BUSINESS PERFORMANCE (BP) 3,079 4,442 BP adjustment in respect of revenue for the year (1,734) 385 BP adjustment in respect of COGS for the year 380 (50) EBITDA – IFRS 1,725 4,777 Total BP adjustments for the ye
Slide 32: Investments
Investments GROSS AND NET INVESTMENTS (DKKm) Q2 2018 Q2 2017 Gross investments per Capital employed per business unit business unit Cash flow from investing activities (4,499) 10 Q2 2018 30 June 2018 Dividends received and capital reduction, reversed - (13) Purchase and sale of securities, reversed
Slide 33: FFO/Adjusted net debt calculation
FFO/Adjusted net debt calculation FUNDS FROM OPERATIONS / ADJUSTED NET DEBT (DKKm) Q2 20181 FY 2017 Q2 20171 FY 2016 EBITDA – Business Performance 23,387 22,519 17,138 19,109 Interest expenses, net (946) (629) (443) (402) Reversal of interest expenses transferred to assets (595) (754) (667) (574) In
Slide 34: Debt overview
Debt overview Gross debt and hybrids Net debt Long term gross debt maturity Q2 2018 DKKbn schedule Q2 2018, DKKbn 16 14 12 5% 10 8 31% 43.2 6 DKKbn 10.3 4 64% 2 4.6 0 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027+ Bonds Hybrids Bank loans Q2 2017 Q2 2018 Bonds1 Bank loans 1. 4.875% hybrid due 30
Slide 35: Interest rate risk and funding costs
Interest rate risk and funding costs Effective funding costs – gross debt Key risk figures Q2 2018 (excl. hybrid) (excl. hybrid) Bond and bank debt (excl. hybrid), LHS DKKbn Gross annual expected interest expense (excl. hybrid), LHS Cost of Modified Avg. time to % Average effective interest rate (ex
Slide 36: Hybrid capital in short
Hybrid capital in short Hybrid capital can broadly be defined as funding • Deeply subordinated and only senior to Ørsted has made use of hybrid capital to maintain instruments that combine features of debt and common equity our ratings at target level in connection with the equity in a cost efficien
Slide 37: Ørsted has issued Green Bonds
Ørsted has issued Green Bonds In November 2017 Ørsted issued a Green senior bond with maturity 2029 and a Green hybrid bond with maturity 3017. Ørsted's Green Bonds Framework follows the four pillars of the ICMA Green Bond Principles 2017 Use of Proceeds Project Evaluation and Selection Process • Ac
Slide 38: Financing strategy
Financing strategy We have a centralised financing strategy All cash flow generated by our as customary for vertically and subsidiaries supports the horizontally integrated European energy creditworthiness and rating of and thus utilities. the debt taken up by the Group parent. The strategy supports
Slide 39: Currency hedging principles
Currency hedging principles • The purpose of our currency risk management is to reduce the Group’s currency risks over a 5-year horizon • The main principle is to hedge FX exposure once it is deemed relatively certain that the underlying cash flows in foreign currency will materialise • Thus, FX ris
Slide 40: Hedging of FX and power risk in Wind Power
Hedging of FX and power risk in Wind Power Construction and farm-downs – Hedging of FX Commercial Operations – Hedging of FX and power Decision gates 100 Pre-FID • Early hedging of large DEVEX items on a 100% basis 80 100% share 75 60 Final Investment 50 • Build up of hedges of transmission asset 40
Slide 41: New income cap on power distribution RAB as expected
New income cap on power distribution RAB as expected Revenue expectations are maintained at same level after Still some uncertainties regarding the future income caps the new income cap order is enacted 06/2018 12/2018 Main elements in new regulation DERA: determination DERA: benchmark • 5-year inco
Slide 42: Investor Relations contacts
Daniel Lerup Rasmus Hærvig Head of Investor Relations Senior Investor Relations Officer DANIL@orsted.com RAKOL@orsted.com Amir Mahdavian Dennis Callesen Lead Financial Analyst Lead Investor Relations Officer AMIHM@orsted.com DECAL@orsted.com