ANNUAL REPORT 2011 - DONG Energy

Net finance costs amounted to DKK 0.3 billion compared
with DKK 1.6 billion in 2010. Net interest expense was cut
by half to DKK 0.6 billion in 2011, reflecting partly the
falling interest rate level, which led to lower interest expense
as a large proportion of the loan portfolio was converted
to floating-rate loans through 2011, and partly
higher interest income from business partners and a finance
lease. The conversion of the loan portfolio has now
been terminated against the background of the falling interest
rate level, and the loan portfolio now again consists
primarily of fixed-interest rate loans.
Other finance costs amounted to income of DKK 0.5 billion
net and related partly to positive capital gains on the
bond portfolio due to the falling interest rate level, and
partly to foreign exchange adjustments related to rising
USD and GBP exchange rates in the second half. This had a
positive net effect on cash and cash equivalents, margin accounts,
receivables and trade payables.
Income tax
Tax on profit for the year was an expense of DKK 3.2 billion
versus DKK 3.0 billion in 2010. The tax rate was 53%
against 40% in 2010. The increase mainly reflected the fact
that earnings in Norway, where hydrocarbon income is
taxed at 78%, represented a larger portion of total earnings
than in 2010.
Total tax contribution
DONG Energy’s contribution to society in the form of direct
and indirect taxes relating to its activities has been determined
Total taxes using (TTC-model)
the TCC (Total Tax Contribution) model.
10%
1%
8%
22%
17.6
DKK billion
59%
Energy taxes, etc.
VAT, etc.
PAYE tax, etc.
Property taxes, etc.
Income tax
The total contribution to society for 2011 was DKK 17.6 billion,
of which 94% (DKK 16.6 billion) accrued to the Danish
State in the form of direct taxes, energy taxes, value
added tax, PAYE tax, etc.
Profit for the year and dividends
DKK million 2011 2010 ∆
Profi t for the year 2,882 4,499 (1,617)
Profit for the year was DKK 2.9 billion, down DKK 1.6 billion
on 2010, primarily reflecting a lower gain on disposal of enterprises
and an increase in tax paid in Norway.
The Board of Directors will recommend at the AGM that
a dividend of DKK 4.96 per share be paid for 2011 (2010:
DKK 7.50 per share). This provides dividend of DKK 1.5 billion
(2010: DKK 2.2 billion), equivalent to 60% of profit for
the year, less coupon after tax to hybrid capital holders and
non-controlling interests’ share of profit for the year.
Cash flows from operating activities
DKK million 2011 2010 ∆
Cash fl ows from
operating activities 12,624 14,214 (1,590)
Cash inflow from operating activities decreased by DKK 1.6
billion to DKK 12.6 billion in 2011, principally due to an increase
in tax paid in Norway. Having the opposite effect
were lower paid net finance costs and realised gains on
hedging of net investments in foreign subsidiaries compared
with a realised loss in 2010.
Investments
DKK million 2011 2010 ∆
Gross investments
Disposals of
assets and
(18,451) (15,692) (2,759)
enterprises 1,981 3,217 (1,236)
Transactions with
non-controlling
interests 3,410 3,945 (535)
net investments (13,060) (8,530) (4,530)
For a more detailed breakdown of investments, reference is made to the
statement of cash fl ows on page 67.
Net investments were DKK 13.1 billion against DKK 8.5 billion
in 2010 and consisted of gross investments of DKK 18.5
billion Selskabsskat and sale of assets and companies and transactions
with non-controlling Ejendomsskatter mv. interests amounting to DKK 5.4 billion.
The Indeholdt main a-skat mv. gross investments in new activities, expansion
of Moms existing mv. areas of activity and efficiency improvement
and renewal of existing facilities in 2011 were:
Energi afgifter mv.
• expansion of wind activities (DKK 10.9 billion), including
the UK offshore wind farms Walney (DKK 4.8 billion),
London Array (DKK 3.6 billion) and Lincs (DKK 0.9 billion),
the Danish offshore wind farm Anholt (DKK 0.2 billion)
and the German offshore wind farm Borkum
Riffgrund 1 (DKK 0.2 billion)
• development of oil and gas fields and infrastructure (DKK
5.6 billion), including the Norwegian gas fields Oselvar
(DKK 1.0 billion), Marulk (DKK 0.5 billion), Ormen Lange
(DKK 0.5 billion) and Trym (DKK 0.4 billion), UK Laggan-
Tormore (DKK 0.9 billion) and the Syd Arne field in Denmark,
primarily from phase three (DKK 0.7 billion)
• thermal activities (DKK 0.7 billion), including the construction
of the gas-fired Enecogen power station in the
Netherlands (DKK 0.4 billion)
• underground installation of power cables in North Zealand
and other capital expenditure in the electricity
distribution network in Denmark (DKK 0.5 billion)
Disposals represented mainly transmission assets related
to the Barrow, Walney 1 and Gunfleet Sands wind farms
and transactions with non-controlling interests, including
the disposal of 49.9% of Gunfleet Sands, capital contributions
in respect of Walney and an adjustment to the selling
price for accounting purposes of Walney.
DONG ENERGY DONG ENERGY GROUP ANNUAL REPORT 2011 – manaGEmEnt’s rEviEw 31