Slide 1: Financial Report Full Year 2013
FINANCIAL REPORT FULL YEAR 2013 Moving Energy Forward 5 February 2014
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: 2013 Highlights and Financial Action Plan
2013 Highlights and Financial Action Plan Strategy 2020 Financials 2013 FULL-YEAR RESULTS 3
Slide 4: Strong earnings improvement
Strong earnings improvement Highlights 2013 Group EBITDA (DKKbn) EBITDA of DKK 15bn (up 74% y/y) +74% Net investments of DKK 5.9bn (down 56% y/y) 15.0 13.4 14.1 13.7 Net debt of DKK 25.8bn (down 19% vs. 2012) 9.3 8.6 ROCE of 0.5% (6.8% excl. writedowns) Negative net profit – no dividend pr
Slide 5: 2013-14 Financial Action Plan
2013-14 Financial Action Plan Update 1 Divest DKK 10bn of non-core assets Divestments of DKK 14.4bn (EV) in 2013 2 Selective farm-down of core assets Divestment of London Array – sales price DKK 5.8bn 3 Reduce costs by DKK 1.2bn Cost savings of DKK 1.4bn in 2013 Significant cost redu
Slide 6: Equity injection
Equity injection Binding agreement to inject DKK 13bn CURRENT OWNERSHIP DKK 11bn from new investors and DKK 2bn from existing Danish State (81.0%) minority shareholders SEAS-NVE (10.9%) SYD ENERGI (3.5%) Agreement approved by the Danish Parliament Insero Horsens (2.6%) Nyfors Entreprise (1.2%)
Slide 7: Restoring financial robustness
Restoring financial robustness Credit metrics – rating agencies Illustrative In 2012, credit metrics were significantly below rating agencies' requirements Rating agencies' current requirements Restoring financial robustness in 2013: Equity injection ‒ Strong operating performance ‒ New assets o
Slide 8: Strategy 2020
2013 Highlights and Financial Action Plan Strategy 2020 Financials 2013 FULL-YEAR RESULTS 8
Slide 9: Strategy 2020 – Group
Strategy 2020 – Group TRANSFORM BUSINESS TRANSFORM ENERGY SYSTEM CREATE FINANCIAL VALUE EBITDA Growth Legacy CO2 intensity ROCE excl. writedowns > 10% gCO2/kWh ROCE incl. writedowns DKK 20bn 6.8% 0.5% -0.9% DKK 9.6bn -7.9% 2012 2013 2016 2007 2016 2007 2020 2013 FULL-YEAR RESULTS 9
Slide 10: Strategy 2020 – Future investment focus
Strategy 2020 – Future investment focus Projected share of investments 2013-2020 INVESTMENT IN NEW ASSETS INVESTMENT IN EXISTING ASSETS NO FURTHER COMMITMENT Offshore wind Danish power stations LNG Oil & gas Distribution grid Gas storage Onshore wind* Hydro* Gas fired power station
Slide 11: Strategic 2020 – Business Units
Strategic 2020 – Business Units Offshore wind capacity1 Oil and gas production GW '000 BOE/day 10 4x 2x 6.5 150 150 130 5 3.5 1.7 2.1 100 78 87 0 50 2012 2013 2016 2020 2012 2013 2016 2020 Power station biomass share2 Energy solutions3 % Savings, TWh 2x 4x 60 50 5.9 40 6 3.7 30 21 18 3 2.0 1.6 0 0 2
Slide 12: Significant new assets coming on stream
Significant new assets coming on stream 2014 West of Duddon Sands Laggan-Tormore Laggan- • 389MW • UK gas field Tormore • DONG share: 50% • 2P reserves: 43.5m BOE* • 3.6MW turbines • DONG share: 20% 2015 Borkum Riffgrund 1 Hejre • 277MW • DONG share: 50% Westermost • 3.6MW turbines West of Rough Dud
Slide 13: Current key priorities for DONG Energy
Current key priorities for DONG Energy 2013 2014 2015/2016 Divest 10bn of non-core assets Divestment of London Array E&P: Hejre on time/budget Cost reductions E&P: Laggan-Tormore on WP: Westermost R. on time/budget time/budget Restructuring of midstream gas WP: Borkum R. 1 on time/budget WP:
Slide 14: Financials
2013 Highlights and Financial Action Plan Strategy 2020 Financials 2013 FULL-YEAR RESULTS 14
Slide 15: Market conditions and prices
Market conditions and prices HYDRO BALANCE (TWh) POWER, GAS, COAL & CO2 – INDEXED PRICES Coal price CO2 price Gas (TTF) Power price, DK 20 2012 Jan 2011=100 10 150 Forward prices 0 -10 -20 2013 100 -30 -40 50 -50 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 0 Range 2005-2012 Median 2005-2012 2011
Slide 16: Financial highlights 2013
Selected financials (DKKm) 2013 2012 Financial highlights 2013 Revenue 73,105 67,179 EBITDA 15,004 8,639 Net financial items -3,801 -1,356 EBITDA – DKK 15.0bn (up 74% y/y) Net profit -993 -4,021 New wind farms brought on stream and gain from Assets 145,672 157,489 construction agreements in Wind P
Slide 17: Exploration & Production
Exploration & Production Oil & Gas production (mboe) Oil Gas 31.7 26.4 28.5 Operational highlights 2013 24.0 24.4 8.2 10.0 Production up 11% y/y – strong contribution to gas production from Ormen Lange redetermination 23.5 18.5 Fields with temporary production disruptions brought back into produ
Slide 18: Wind Power
Wind Power Renewable production (TWh) 6 Operational highlights 2013 4 Increased production (up 16% y/y) from London Array and Anholt coming on stream 2 Production impacted by significant divestments 0 (Swedish hydro plant, Danish & Polish onshore wind) 2008 2009 2010 2011 2012 2013 Financials hi
Slide 19: Thermal Power
Thermal Power Thermal heat and power production (TJ, TWh) 60 20 Operational highlights 2013 15 40 Increased power production (up 20% y/y) due to 10 higher Green Dark Spread (GDS): 20 5 ‒ Higher power prices driven by cold weather and 0 0 lower hydro balance in Norway and Sweden 2008 2009 2010 2011
Slide 20: Customers & Markets
Customers & Markets Operational highlights 2013 Operational figures 2013 2012 Increased gas sales y/y due to acquisition of the UK Gas sales TWh 139.3 133.7 sales company Shell Gas Direct in May 2012 Power sales TWh 16.8 12.6 Higher power sales y/y from increased wind power Distribution of gas T
Slide 21: Debt overview
Debt overview Gross debt incl. hybrid capital (DKKbn) Key ratios loan portfolio1 EoY 2013 EoY 2012 59.7 62.3 Duration 5.9 6.8 9.5 Hybrid 13.2 Average time to maturity (years) 10.2 10.5 0.3 16.9 Other debt 13.3 Average interest rate 3.7% 3.9% Bank loans Note (1): The key ratios refer to the end of ye
Slide 22: New capital structure target
New capital structure target Change of capital structure target FFO/ Adjusted net debt (%) New: FFO/Adjusted Net debt of around 30% Target: 30% 31 33 Old: Adjusted Net debt/EBITDA of max 2.5x ~30 (only debt adjustment for hybrids) Equity ~25 injection Rationale for change 15 Rating agencies have l
Slide 23: Outlook
Outlook EBITDA Around DKK 15-17bn in 2014 Net investments Around DKK 30bn in 2014-2015 FFO/Adjusted net debt Around 25% in 2014 Around 30% from 2015 and onwards 2013 FULL-YEAR RESULTS 23
Slide 24: Q&A
Q&A 2013 FULL-YEAR RESULTS 24
Slide 25: Appendix
APPENDIX 2013 FULL-YEAR RESULTS 25
Slide 26: Financial targets
Financial targets EBITDA ROCE 2013 Target 2016 Target 2020 DKKbn 20 15 0.5% (6.8% Group >10% >12% excl. writedown) 2013 2016 E&P -3.1% (15%) 20% 20% Adjusted FFO/Net debt WP 4.6% (5.4%) 6-8% 12-14% % Around 30% 23% C&M 4.8% (4.8%) 8% 10% Target: Yearly operating CF of DKK 600-800m 2013 Target TP for
Slide 27: Outlook Market Prices 2014
Outlook Market Prices 2014 Expectation Realised 2014 2013 (average) Oil, Brent USD/bbl 105 109 Gas, TTF EUR/MWh 27 27 Gas, NBP EUR/MWh 27 27 Electricity, Nord Pool system EUR/MWh 32 38 Electricity, Nord Pool, DK1 EUR/MWh 36 39 Electricity, EEX EUR/MWh 37 38 Electricity, UK EUR/MWh 61 59 Coal, API 2
Slide 28: Significant divestments
Significant divestments Divestments – Enterprise Value DKKbn Farm down in core asset 20.2 Non-core assets 5.8 0.3 14.4 3.1 1.8 0.3 1.9 4.5 1.8 0.7 Polish Danish Share in Mongstad - Share in Gentofte Severn - gas Other 2013 London Array Total onshore wind onshore wind Swedish gas fired Stadtwerke off
Slide 29: Cost reductions ahead of expectations
Cost reductions ahead of expectations Assumptions for like-for-like comparison Group OPEX Target of DKK 1.2bn cost savings measured on a DKKbn like-for-like basis 0.2 Adjustments for OPEX growth driven by new 0.5 offshore wind farms, more conservative capitalising 11.8 0.4 and timing effect of c
Slide 30: Details on impairment charges
Details on impairment charges Impairment charges 2013 DKKbn Reason for impairment charge E&P total 3.7 - Norwegian fields Oselvar and Ula 1.8 Lower reserves' expectations and poor performance on two Oselvar wells - Danish oil fields Siri area 0.9 Discovery of a crack in July 2013 and subsequent prod
Slide 31: New capital structure target – details on adjustments
New capital structure target – details on adjustments Calculation FFO/Adjusted net debt 2013 EBITDA (Business Performance) 15.0 Operating lease cost, add back 0.4 Interest (rating) -2.8 Net interest expenses -1.7 Capitalised interest -0.3 Interest element of decommission obligations -0.4 50% of hybr
Slide 32: Investments
Investments Investments in 2013 Gross investments on Business Units in 2013 Cash flow from investing activities 6.5bn E&P DKK 9.6bn Purchase and sale of securities -1.2bn Wind Power DKK 9.5bn Loans to jointly controlled entities 0.8bn Thermal Power DKK 0.7bn Other -0.1bn Customers & Markets