Orsted · OMXCOP:ORSTED

Orsted — DONG Energy — H1 2011 Earnings Presentation

29 slides from Orsted's earnings presentation, Aug 16, 2011

  1. Slide 1: Financials 2011: First half-year results

    FINANCIALS 2011 First half-year results 16 August 2011

  2. Slide 2: Disclaimer

    Disclaimer Certain statements in this presentation are based on the beliefs of our management as well as assumptions made by and information currently available to the management. Forward-looking statements (other than statements of historical fact) regarding our future results of operations, financ

  3. Slide 3: Agenda

    Agenda  DONG Energy highlights  Financials  Outlook  Appendix 3

  4. Slide 4: Highlights first half-year 2011

    Highlights first half-year 2011 Highlights1 Key figures DKKbn  EBITDA of DKK 9.1bn (up 8% y/y) 16 14.1 14.2  CFO of DKK 6.8bn (up 7% y/y) 14 13.4 12  Net debt of DKK 23.6bn (up 7% vs. year end 2010) 9.3 10.4 9.3 9.5 10 8.8 9.1  Adjusted net debt to CFO at 1.8x (1.8x at year end 8 8.4 6.8 6.4 201

  5. Slide 5: Q2 key events: Divestment of Oil Terminals

    Q2 11 key events: Divestment of Oil Terminals  Continued focus on core activities underlined by divestment of Oil Terminals  Transaction expected to close later in 2011 Key terms of the divestment Buyer Inter Pipeline Fund Sales price DKK 2.6bn Multiple 10.1x EBITDA in 2010 Net gain before tax DKK

  6. Slide 6: Q2 key events: Decision to construct West of Duddon Sands

    Q2 11 key events: Decision to construct West of Duddon Sands  Decision to construct West of Duddon Sands (WoDS) offshore wind farm in Q2 2011  Strong strategic rationale Total revenue split  Builds upon DONG Energy's unique competences and know-how about conditions in the Irish Sea  Benefits fro

  7. Slide 7: Key event after Q2 11: Acquiring full ownership of Siri field

    Key event after Q2 11: Acquiring full ownership of Siri field  Agreement to acquire license partner Noreco's 50% share in the Siri field Key terms Acquisition price DKK 70m (USD 13m)  DONG Energy will be sole owner of the Siri field Effective date 1 July 2011 Repair costs Total approx. DKK 2bn (OP

  8. Slide 8: Exploration & Production

    Exploration & Production 34% Higher oil and gas prices Share of group EBITDA Operational figures mboe 25 20 65% 63% 15 46% 10 19% 63% 62% 5 81% 54% 35% 37% 37% 38% 0 2007 2008 2009 2010 H1 10 H1 11 Oil Gas Financial development Highlights DKKbn  EBITDA increased 29% to DKK 3.1bn 6  Positive effect

  9. Slide 9: Renewables

    9% Renewables Contribution from new assets Share of group EBITDA Operational figures Construction projects and pipeline TWh 5 25% Under construction MW (1) Start (2) Pipeline MW (1) 4 20% Walney 2 92 2011 Various ~2,500 projects 3 15% Lincs 67.5 2012 2 10% London Array 315 2012 1 5% Anholt 200 2013

  10. Slide 10: Generation

    19% Generation Solid earnings, roughly in line with H1 10 Share of group EBITDA Operational figures TWh TJ 20 60 50 15 40 10 30 20 5 10 0 0 2007 2008 2009 2010 H1 10 H1 11 Thermal power production Thermal heat production (rhs) Financial development Highlights DKKbn 6.6  EBITDA decreased 6% to DKK 1

  11. Slide 11: Energy Markets

    26% Energy Markets Positive impact from reduced oil and gas spread Share of group EBITDA Operational figures Gas sourcing – contracts from DUC partners TWh TWh 140 14  Historically, DONG Energy has sourced the majority of its 120 12 external gas from DUC partners (APM, Shell and Chevron) – e.g. 85%

  12. Slide 12: Sales & Distribution

    12% Sales & Distribution Stable earnings Share of group EBITDA Operational figures H1 11 H1 10 Gas sales TWh 11.4 13.8 Distribution of gas TWh 5.9 6.3 Power sales TWh 3.9 4.2 Distribution of power TWh 4.5 4.6 Transport of oil Mbbl 36 40 Financial development Highlights DKKbn  EBITDA of DKK 1.1bn in

  13. Slide 13: Agenda

    Agenda  DONG Energy highlights  Financials  Outlook  Appendix 13

  14. Slide 14: Market prices

    Market prices Power prices (monthly average) Green Dark Spread (monthly average) EUR/MWh EUR/MWh 100 50 Forward 90 40 prices Forward 80 prices 30 70 20 60 10 50 0 40 -10 30 20 -20 10 -30 0 -40 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 DK avg. Nord Pool (system) EEX UK DK avg. Nord Pool (syst

  15. Slide 15: Selected Financial Figures

    Selected Financial Figures Business Performance DKK million H1 11 H1 10 FY 2010  EBITDA increased to DKK 9.1bn (up 8% y/y): Revenue 29,342 28,439 54,616  Higher energy prices EBITDA 9,073 8,405 14,136  Renegotiation of gas contracts Profit after tax 2,771 3,540 4,498  Lower spread between oil an

  16. Slide 16: Debt overview

    Debt overview Gross interest-bearing debt (incl. hybrid capital) Key ratios gross loan portfolio DKKbn (incl. hybrid capital) H1 11 Q4 10 60 Share of fixed rate1 83% 90% 0.5 Duration (years) 6.5 5.5 50 1.5 0.5 Average time to maturity (years) 2 9.8 9.1 9.5 1.5 40 8.1 Other gross debt Average interes

  17. Slide 17: Continued diversification and stability of the power production

    Continued diversification and stability of the power production Increasing geographic diversification Power production 2007 Expected power production 2011 Expected power production 2015 (volume) (volume) (volume) 4% 3% 2% 1% 8% 1% Denmark Denmark Denmark Sweden Sweden 35% UK UK 49% Sweden 59% 39% 93

  18. Slide 18: Actively addressing challenges on the gas market continues

    Actively addressing challenges on the gas market continues Indexation of gas contracts De-link between oil and gas prices Expected volumes 2011-2012  Poses challenges for wholesalers of gas 100%  Also impacting DONG Energy, though significantly 10% 9% mitigated through: 90% 80% 27%  Own gas produ

  19. Slide 19: Agenda

    Agenda  DONG Energy highlights  Financials  Outlook  Appendix 19

  20. Slide 20: Outlook and Targets

    Outlook and Targets Outlook: EBITDA in 2011 is expected to be in line with 2010  Expected lower EBITDA in H2 11 than H1 11 explained by: - H1 11 positively affected by renegotiation of gas contracts - H1 11 positively affected by cold and dry winter EBITDA - H2 11 negatively affected by repair of S

  21. Slide 21: Q&A

    Q&A FOR FURTHER INFORMATION PLEASE VISIT OUR WEBSITE dongenergy.com/EN/Investor/ 21

  22. Slide 22: Outlook Market Prices

    Outlook Market Prices Current Assumption Realised H1 Selected market prices assumption 2011 2011, Annual 2011 (rest of year) Report 2010 Oil, Brent (USD/bbl) 114 95 111 Gas, TTF (EUR/MWh) 25 24 23 Commodity Power, Nord Pool system (EUR/MWh) 56 55 59 prices Power, Nord Pool DK (avg.) (EUR/MWh) 59 53

  23. Slide 23: Business Performance – three column Income Statement

    Business Performance – three column Income Statement Purpose: Increase transparency and better reflect the underlying actual performance MtM movements from hedges and A three column Income some physical deliveries will be Statement is introduced splitting Cease to apply accounted for directly in P/L

  24. Slide 24: Business Performance – the methodology

    Business Performance – the methodology  The Business Performance result shows the result related to the current reporting period excluding effects from MtM movements not attributable to the period's result Realised valuein period + Market valueend of period - Market valuestart of period = IFRS Valu

  25. Slide 25: Business Performance – H1 2011

    Business Performance – H1 2011  In H1 2011, the difference between Business Performance and IFRS amounted to DKK 2.8bn  The difference was primarily related to two effects: Criteria for the own use Initial recognition of certain physical fixed-price electricity and gas contracts exemption in IFRS

  26. Slide 26: Dividend, Funding and Rating

    Dividend, Funding and Rating Long term capital structure target Funding strategy and Debt Programmes  Maintain a minimum rating of BBB+ / Baa1  External funding primarily to be carried out  Adjusted net interest-bearing debt (1) not to through parent company – to avoid structural exceed three tim

  27. Slide 27: Net debt calculation end H1 2011

    Net debt calculation end H1 2011 DKKbn 45 40.7 40 2.7 35 1.5 30 8.0 2.2 25.8 25 0.8 23.6 4.0 20 15 10 5 0 27

  28. Slide 28: Investments

    Investments Investments in H1 2011 Main gross investments in H1 2011 Cash flow from investing activities -10.9bn Wind activities: DKK 4.2bn Purchase of securities (add back) 3.1bn  London Array: DKK 1.8bn Transactions with non-controlling interests 0.3bn  Walney: DKK 1.5bn Loans to jointly control

  29. Slide 29: Larger decided construction projects

    Larger decided construction projects Larger projects with commercial production start in 2011-2014 Country MW (1) Commercial Own share Announced Project Type of project Spent capex(2) start of project capex(2) Trym Oil/gas field NO n.a. 2011 50% DKK 1.2bn DKK 1.2bn Walney 1+2(3) Offshore wind farm U

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