Orsted · OMXCOP:ORSTED
Orsted — DONG Energy — H1 2016 Earnings Presentation
22 slides from Orsted's earnings presentation, Aug 4, 2016
Slide 1: Financial Report H1 2016 Investor Presentation
FINANCIAL REPORT H1 2016 I N V E S T O R P R E S E N TAT I O N 4 August 2016 H1 2016 RESULTS 1
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
Slide 3: Continued strong earnings growth
Continued strong earnings growth Financial highlights H1 16 Group EBITDA (DKKbn) Continued strong earnings driven by Wind Power and settlement of gas sourcing contracts 18.5 +19% 16.4 15.0 Reported EBITDA up 19% y/y 12.4 10.4 8.6 -2% Underlying EBITDA increased 34% in H1 and 31% in Q2 y/y 4.4
Slide 4: Strategic highlights
Strategic highlights H1 MILESTONES POTENTIAL H2 MILESTONES Landmark IPO Wind Power FID Borkum Riffgrund 2 in Germany Commissioning of Gode Wind 1 and 2 FID Borssele in the Netherlands One further farm down (50%) Massachusetts energy bill Bioenergy & Thermal Power FID of first commercia
Slide 5: Decision to build Borssele 1 & 2
Decision to build Borssele 1 & 2 DONG Energy has been awarded the concession to build the Borssele 1 & 2 facts wind farms Borssele 1 & 2 offshore in the Netherlands. Capacity of 2 x 350MW A value creating investment in line with assumptions in long- Fixed price of 72.7 EUR/MWh over 15 years
Slide 6: Market conditions and prices
Market conditions and prices WIND ENERGY CONTENT UK POWER PRICE Wind Energy Content for DONG Energy's offshore wind farms EUR/MWh WEC (%) Normal year 2015 Actual 2016 Actual 80 Avg. H1 16: €45.3 Forward 140 Avg. H1 15: €56.6 price 121 121 123 117 70 120 111 101105 100 89 93 60 81 81 79 80 75 50 60 4
Slide 7: Financial results H1 16
Financial results H1 16 Selected financials (DKKm) H1 15 H1 16 Q2 15 Q2 16 EBITDA – Strong increase to DKK 12.4bn (up 19% y/y) Revenue 37,856 35,253 18,589 16,420 Strong underlying growth in WP with contribution from new EBITDA 10,406 12,409 4,405 4,320 wind farms and higher activity on partnershi
Slide 8: Wind Power
Wind Power Operational highlights Key business drivers H1 15 H1 16 Q2 15 Q2 16 Power generation down 3% in H1 16 y/y Power generation GWh 3.0 2.9 1.4 1.2 Wind energy content Index 105 93 89 75 Lower wind energy content Load factor % 48 40 42 34 Full contribution from new wind farms Westermost
Slide 9: Bioenergy & Thermal Power
Bioenergy & Thermal Power Operational highlights Key business drivers H1 15 H1 16 Q2 15 Q2 16 Heat generation TWh 6.0 5.7 1.6 1.4 Heat generation down 5% in H1 16 y/y due to sale of Power generation TWh 4.2 4.1 1.2 1.1 Måbjerg CHP plant in May 2015 and slightly warmer Degree days, number No. 1,731
Slide 10: Distribution & Customer Solutions
Distribution & Customer Solutions Operational highlights Key business drivers H1 15 H1 16 Q2 15 Q2 16 Divestment of gas distribution (DKK 2.3bn) – transaction RAB Power DKKm 10,778 10,648 10,778 10,648 expected to close end-September 2016 and generate a RAB Gas DKKm 3,231 3,016 3,231 3,016 gain of
Slide 11: Oil & Gas
Oil & Gas Operational highlights Key business drivers H1 15 H1 16 Q2 15 Q2 16 Oil and gas production up 7% in H1 16 y/y Oil production BOEm 5.2 4.9 2.6 2.5 Gas production BOEm 12.3 13.8 5.0 6.2 Ramp-up of production from Laggan-Tormore in H1 16 Lifting costs USD/boe 8.1 6.4 9.3 6.6 (production o
Slide 12: Hedging of energy prices and FX
Hedging of energy prices and FX Accumulated energy exposures H2 16 – H1 20211 Accumulated currency exposures H2 16 – H1 20211 DKKbn1 DKKbn Before hedging Before hedging 10.9 53.5 10.0 After hedging After hedging 9.1 6.7 6.1 4.5 16.0 1.0 0.9 5.5 0.0 1.0 0.0 Oil Gas Outright power Spread (power) GBP U
Slide 13: Expected transfer of value of hedges to EBITDA
Expected transfer of value of hedges to EBITDA Expected transfer value of hedges to EBITDA DKKbn 2.6 2.3 0.4 1.0 1.7 0.2 0.1 0.7 1.1 1.0 0.4 0.8 1.2 1.0 0.7 0.7 -0.3 -0.2 Group H2 16 O&G Group O&G H2 16 2017 2017 FX Coal Power Gas Oil H1 2016 RESULTS 13
Slide 14: Financial outlook, medium-term targets and policies are unchanged
Financial outlook, medium-term targets and policies are unchanged since the financial report for Q1 2016 and the offering circular published on 26 May 2016 EBITDA outlook 2016 Return on capital employed (ROCE) Group DKK 20-23bn Group 12-14% Avg. 2017-2020 The outlook is particularly sensitive to t
Slide 15: Q&A
Q&A Conference call tel: +45 3544 5583 / +44 203 194 0544 H1 2016 RESULTS 15
Slide 16: Appendix
APPENDIX H1 2016 RESULTS 16
Slide 17: Debt overview
Debt overview Net debt development H1 16 (DKKbn) Gross debt and hybrids H1 16 7.4 11% Bonds 9.2 10.7 2% Hybrids Bank loans 2.0 3.8 31% 56% 0.0 Other debt Net debt Capex Operating Divestments Other1 Net debt EoY 2015 cash flow H1 16 Note (1): Other include FX adjustments, hybrid coupons, dividend to
Slide 18: Differences in Business Performance EBITDA and IFRS EBITDA
Differences in Business Performance EBITDA and IFRS EBITDA DKKm H1 15 H1 16 EBITDA – Business Performance (BP) 10,406 12,409 BP adjustment in respect of revenue for the year -2,879 -3,673 BP adjustment in respect of COGS for the year 331 1,056 EBITDA – IFRS 7,858 9,792 Total BP adjustments for the y
Slide 19: Investments
Investments Investments in H1 16 (DKKm) Gross investments per Business Units in H1 16 DKKm Cash flow from investing activities -5,305 Wind Power Dividens received and capital reduction, reversal -12 24% Bioenergy & Thermal Power Purchase and sale of securities (reversed) 135 Distribution & Customer
Slide 20: Currency hedging principles
Currency hedging principles The purpose of DONG Energy’s 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 Th
Slide 21: Hedging of FX risk in Wind Power
Hedging of FX risk in Wind Power Construction and Farm downs – Hedging of FX Commercial Operations – Hedging of FX Percentage 100 Decision gates Steps 100 ROC/CfD 80 Early hedging of potential large Devex 80 75 Power minimum requirement Pre-FID items on a 100% basis 60 Hedging of transmission as
Slide 22: FFO/Adjusted net debt calculation
FFO/Adjusted net debt calculation FFO/Adjusted net debt H1 161 Q4 151 H1 151 EBITDA 20,488 18,484 16,981 Adjusted net interest expenses -2,641 -2,280 -2,092 Net interest expenses -936 -767 -668 Capitalised interest -547 -389 -374 Interest element of decommission obligations -520 -494 -462 50% of hyb