Slide 1: Financial Report Full Year 2014
FINANCIAL R EPORT FU LL YEAR 2014 5 February 2015 FY 2014 RESULTS 1
Slide 2: Disclaimer
Disclaimer Certain statements in this presentation are based on the beliefs of our We urge you to read our annual report available on our website at management as well as assumptions made by and information currently www.dongenergy.com for a discussion of some of the factors that could available to
Slide 3: 2014 highlights
2014 highlights Financials FY 2014 RESULTS 3
Slide 4: Strong operating performance
Strong operating performance Highlights 2014 Group EBITDA EBITDA of DKK 16.4bn (up 9% y/y) (DKKbn) +9% 16.4 Strong earnings growth within Wind Power 15.0 14.1 13.7 Significant debt reduction 8.6 FFO/Adjusted net debt of 36% (23% in 2013) Impairment charges of DKK 8.1bn in Q4 14 driven prim
Slide 5: Strong financial foundation
Strong financial foundation Net debt development (DKKbn) 32.0 -85% 25.8 Significant improvement in credit metrics following 21.9 23.2 successful execution of Financial Action Plan ‒ Equity injection of DKK 13bn 4.0 ‒ Divestments of DKK 23bn1 ‒ Cost reductions in excess of DKK 1.4bn 2010 2011 2012
Slide 6: Investment split and Group financial targets towards 2020
Investment split and Group financial targets towards 2020 ROCE (%) ROCE excl. impairments ROCE >10 >12 4.1 Utility business (TP and C&M) -8.0 10% 2014 Target 2016 Target 2020 EBITDA (DKKbn) 16.4 20 Accumulated E&P 30% net capex 2015-2020 60% 2014 Target 2016 WP Adjusted FFO/Net debt (%) 36% Around 3
Slide 7: Strategy 2020 by Business Unit
Strategy 2020 by Business Unit OFFSHORE WIND OIL AND GAS POWER STATIONS CUSTOMERS & MARKETS DONG Energy capacity1 Reserve/Production Ratio DONG Energy biomass share2 Customer satisfaction GW x times % Index 0-100 6.5 >10 >10 >50 76 >75 >75 9 67 >40 3.5 28 2.5 2014 2016 2020 2014 2016 2020 2014 2016
Slide 8: Pipeline towards 2020 largely secured
Pipeline towards 2020 largely secured Strong pipeline towards 2020 – named projects almost securing 6.5 GW Important breakthrough in 2014 with the award of CfD certificates for Burbo Bank Extension, Walney Extension and Hornsea The awards are a testimony of DONG Energy's competence and commitm
Slide 9: Current key priorities for DONG Energy
Current key priorities for DONG Energy 2014 2015 2016/2017 Financial Action Plan E&P: Laggan-Tormore on stream E&P: Hejre on stream Siri repair completed WP: Westermost R. on stream WP: Gode Wind 1+2 on stream WP: West of Duddon Sands on WP: Borkum R. 1 on stream WP: Burbo Bank Extension on st
Slide 10: Financials
2014 highlights Financials FY 2014 RESULTS 10
Slide 11: Market conditions and prices
Market conditions and prices OIL AND GAS PRICE UK POWER PRICE USD/bbl EUR/MWh EUR/MWh Oil price Gas TTF (rhs) 140 35 80 Forward prices Forward price 120 30 70 100 25 60 80 20 50 60 40 15 40 2012 2013 2014 2015 2012 2013 2014 2015 Source: Platts, Argus Source: LEBA WIND ENERGY CONTENT GREEN DARK SPRE
Slide 12: Financial highlights 2014
Selected financials (DKKm) 2013 2014 Financial highlights 2014 Revenue 73,105 67,048 EBITDA 15,004 16,389 Net finance costs -3,801 -1,710 EBITDA – DKK 16.4bn (up 9% y/y) Net profit -993 -5,284 Higher oil & gas production (primarily due to Ormen Lange redetermination) Assets 145,672 149,914 Equity
Slide 13: Oil & Gas exposure and hedging
Oil & Gas exposure and hedging Group oil exposure, DKKbn Oil price exposure: 4.6 4.5 • Natural hedge: Long position from oil 2.4 3.0 3.0 3.3 3.4 3.2 3.2 production offset by short oil position from 1.6 1.4 0.0 0.4 oil-indexed gas sourcing contracts -0.2 -0.4 -1.4 -1.3 -1.3 • Extensive financial hedg
Slide 14: Hedging to secure after tax result
Hedging to secure after tax result ILLUSTRATIVE EXAMPLE DONG Energy conducts its financial hedging to Assumptions: achieve the desired cash flow impact after tax Norwegian gas exposure of DKK 1,000 million Gas price fully hedged This as tax costs reduce the actual price exposure Gas price
Slide 15: Exploration & Production
Exploration & Production Oil & Gas production (mboe) Oil Gas 41.8 Operational highlights 2014 31.7 10.6 26.4 28.5 Production up 32% – due to the redetermination of 24.4 8.2 9.3 10.0 9.0 the Ormen Lange field and increased field uptime 31.2 23.5 18.5 Siri platform: 15.4 17.1 ‒ Regular production
Slide 16: Wind Power
Wind Power Renewable production (TWh) 5.3 5.0 4.4 4.6 4.0 Operational highlights 2014 2.8 2.9 4.3 2.3 Lost production from divestments1 4.9 Positive impact from full-year effect from Anholt and 0.7 0.8 0.8 1.0 0.6 start-up of West of Duddon Sands 0.8 0.9 0.5 0.1 Continued high availability (93
Slide 17: Thermal Power
Thermal Power Thermal heat and power generation (PJ, TWh) 60 20 Operational highlights 2014 15 40 Declining power and heat generation 10 20 ‒ Declining power generation (-37% y/y) due to 5 warm weather and divestment of Severn power 0 0 station (Dec. 2013) 2010 2011 2012 2013 2014 ‒ Heat generatio
Slide 18: Customers & Markets
Customers & Markets Operational highlights 2014 Operational figures 2013 2014 Milder weather negatively impacting gas sales and Gas sales TWh 139.3 124.9 gas distribution Power sales TWh 16.8 30.9 Higher power sales y/y from increased wind power Distribution of gas TWh 8.8 8.2 generation in the
Slide 19: Debt overview
Debt overview Net debt development 2014 Gross debt and hybrids 2014 -85% 1% 15% 25.8 Bonds Bank loans 10.7 15.0 15.4 57% Hybrids Other debt 26% 13.0 1.4 4.0 Net debt Operating Capex Divestments Equity Other 1 Net debt EoY 2013 cash flow injection EoY 2014 Key ratios loan portfolio2 2013 2014 Duratio
Slide 20: Outlook
Outlook EBITDA DKK 15.5-17.5bn in 2015 Comments to guidance : - Hedging securing after tax result, not EBITDA - EBITDA for Q1 and Q2 in 2015 expected to be below corresponding quarters in 2014 where gains on divestments in Wind Power were recognised Net investments DKK 35-40bn for 2015-2016 FFO/Ad
Slide 21: Q&A
DONG FY 2014RESULTS 21 energy
Slide 22: Appendix
APPENDIX FY 2014 RESULTS 22
Slide 23: Comparison Q4 14 vs. Q4 13
Comparison Q4 14 vs. Q4 13 Group selected financial figures (DKKm) Q4 13 Q4 14 EBITDA comparison by Business Units Revenue 19,915 17,127 EBITDA 3,789 3,364 E&P y/y Net finance costs -1,345 -71 Falling oil and gas prices partly counterbalanced by higher Net profit -1,045 -6,141 oil production (down
Slide 24: Market prices
Market prices Forwards as of Actual, Actual, 30 Jan. 2015 2014 2013 (rest of year) (average) Oil, Brent USD/bbl 99 109 53 Gas, TTF EUR/MWh 21 27 20 Gas, NBP EUR/MWh 21 27 20 Electricity, Nord Pool system EUR/MWh 30 38 28 Electricity, Nord Pool, DK1 EUR/MWh 31 39 31 Electricity, EEX EUR/MWh 33 38 32
Slide 25: Investments
Investments Investments in 2014 Gross investments on Business Units in 2014 DKKm Cash flow from investing activities -14,796 11% E&P Thermal Power Wind Power Customers & Markets Purchase and sale of securities (reversal) 10,330 5% 33% Sale of assets and companies (reversal) -10,628 Other - 265 DKK 1
Slide 26: Calculation of FFO/Adjusted net debt
Calculation of FFO/Adjusted net debt 2014 2013 EBITDA (Business Performance) 16.4 15.0 Reversal of recognised lease payment 0.5 0.4 Adjusted net interest expenses -2.5 -2.8 Net interest expenses -1.1 -1.7 Capitalised interest -0.3 -0.3 Interest element of decommission obligations -0.4 -0.4 50% of hy
Slide 27: Financial targets by Business Units
Financial targets by Business Units 2014 Target 2016 Target 2020 -8.0% (4.1% Group >10% >12% excl. writedowns) E&P -37.9% (3.9%) ~12% on average for 2015-2020 WP 8.6% (8.6%) 6-8% 12-14% C&M -6.2% (-0.8%) >8% >10% TP Negative FCF1 Target 2018: Positive FCF1 Note (1): Free Cash Flow (FCF) defined as O
Slide 28: Power exposure and hedging
Power exposure and hedging Outright power exposure Group outright power exposure, DKKbn • The Group's outright power price exposure stems 1.5 1.6 1.6 1.4 1.6 1.7 1.7 1.6 1.7 1.7 from offshore wind generation, which to a large 1.1 0.9 extent is regulated 0.3 0.1 0.1 0.2 • Around 80% of the revenue wi