ANNUAL REPORT 2011 - DONG Energy

notes
22 Equity
share capital
DKK million 2011 2010
Share capital at 1 January 2,937 2,937
share capital at 31 December 2,937 2,937
The company’s share capital is DKK 2,937,099,000, divided
into shares of DKK 10. All shares rank equally. There are no
restrictions on voting rights. The shares are fully paid up. The
shares may only be assigned or otherwise transferred with the
written consent of the Danish Finance Minister.
Resolutions concerning amendments to the Articles of
Association or DONG Energy A/S’s dissolution require at least
two thirds of the votes cast and of the voting share capital to
be represented at the general meeting in order to be carried.
Dividends
The Board of Directors recommends that dividend of DKK 1,457
million be paid for the 2011 fi nancial year, equivalent to 60% of the
business performance result determined as the share of the business
performance result after tax (i.e. excluding coupon to hybrid
capital holders and non-controlling interests) that is attributable
to the company’s shareholders, equivalent to DKK 4.96 per share
(2010: DKK 7.50 per share). It is the Board of Directors’ intention
to distribute DKK 7.75 per share in 2012, and, in the years after the
2012 fi nancial year and until a decision, if any, on an IPO is made,
to generally increase distributions by DKK 0.25 per share per year,
although in such a way that the payout ratio does not fall below
40% or exceed 60% of the business performance result for the
year determined as the shareholders’ share of the business performance
result after tax (i.e. excluding coupon to hybrid capital
holders and non-controlling interests).
Dividend distributions to shareholders have no tax implications
for DONG Energy A/S. Dividend paid per share (DPS) of DKK 10
amounted to DKK 7.50 (2010: DKK 1.64).
Cash management and capital structure
Management continuously evaluates the Group’s capital
structure to ensure that it is aligned with the Group’s and the
shareholders’ interests and supports the Group’s strategy.
DONG Energy’s liquidity and fi nancing risks are managed centrally
in accordance with principles and delegated authorities
laid down by the Board of Directors. One of the most important
fi nancial management tasks in DONG Energy is to secure
suffi cient and fl exible fi nancial resources in relation to the dayto-day
operations and the Group’s investment programme.
To this end, internal management targets have been set for
the required level of fi nancial resources, taking into account
primarily factors such as the investment programme, cash
fl ows from operating activities and debt maturity profi le.
Equity, hybrid capital and bond and mortgage loans are considered
to be capital.
It is DONG Energy’s fi nancing policy to concentrate loans in
the parent company in order to optimise the loan portfolio on a
consolidated basis. Non-current assets are primarily fi nanced
by cash fl ows from operating activities, supplemented by the
raising of debt.
DONG Energy manages its debt profi le and cash resources via
various policies aimed at minimising refi nancing risks. This is
achieved partly via a spread of sources of funding and maturities,
and partly by ensuring that cash resources are sound, either
in the form of committed borrowing facilities or cash and cash
equivalents. At the end of 2011, cash resources stood at DKK 23.1
billion, including undrawn committed borrowing facilities of DKK
13.4 billion and cash and securities of DKK 9.7 billion.
To secure fi nancing on attractive terms at all times, DONG
Energy has set targets for its credit rating and capital structure.
The credit rating target is to maintain ratings of at least
BBB+ and Baa1 respectively with the rating agencies Standard
& Poor’s and Moody’s. DONG Energy considers that poorer
ratings would restrict its scope for effective implementation of
the investment programme that is part of its strategy. DONG
Energy has been rated A- by Standard & Poor’s and Baa1 by
Moody’s, both with a stable outlook.
Up to and including 2011, the capital structure target was for
adjusted net debt not to exceed three times cash fl ows from
operating activities. From and including 2012, the target has
been changed so that adjusted net debt must not exceed 2.5
times EBITDA.
Hybrid capital
96 100 COnsOliDatED finanCial statEmEnts – DONG ENERGY GROUP ANNUAL ANNUAL REPORT REPORT 2011
2011
The hybrid capital totalling DKK 9,538 million (EUR 1.3 billion
nominal value) comprises the EUR hybrid bonds issued
in the European capital markets to which a series of special
terms are attached. The hybrid capital is subordinate to the
Group’s other creditors. The purpose of issuing hybrid capital
was to strengthen the Group’s capital base and to fund
the Group’s CAPEx and acquisitions.
The total hybrid capital consists of hybrid bonds due in 3005
and hybrid bonds due in 3010. Further details of the two hybrid
capital issues are given in the table below.
Coupon on the hybrid capital is settled annually. Coupon payments
and their tax effect are recognised directly in equity.