ANNUAL REPORT 2011 - DONG Energy
ANNUAL REPORT 2011 - DONG Energy
ANNUAL REPORT 2011 - DONG Energy
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Further information on <strong>DONG</strong> <strong>Energy</strong>’s market risks and<br />
risk-mitigating initiatives are set out in the section on market<br />
and credit risks in the Risk and risk management chapter<br />
on page 44. This section also explains the expected effect<br />
on the business performance results of financial and<br />
physical hedging transactions where the effects on the results<br />
are deferred to subsequent periods.<br />
New activities and other assumptions<br />
Compared with <strong>2011</strong>, EBITDA in 2012 is expected to benefit<br />
from new or significantly expanded activities. This will be<br />
offset by increased costs for the repair work on the Siri<br />
platform, lower income in Thermal Power and the fact that,<br />
in 2012, there will not be a positive effect from renegotiation<br />
of gas contracts.<br />
EBITDA outlook for 2012<br />
Based on the market price outlook referred to above and<br />
price hedging and the described expectations concerning<br />
new activities and other assumptions, business performance<br />
EBITDA is expected to be in line with <strong>2011</strong>.<br />
EBITDA target<br />
Based on planned investments, the target is still a<br />
doubling of EBITDA in the period up to 2015 compared<br />
with 2009, when EBITDA was DKK 8.8 billion.<br />
EBITDA in 2013 is expected to be significantly ahead of<br />
2012 due to the start-up of production of new assets. To<br />
this should be added the full-year effect of new assets that<br />
become operational in 2012.<br />
Outlook for net investments<br />
Net investments in the period <strong>2011</strong>-13 are still expected to<br />
be around DKK 40 billion, remaining unchanged from the<br />
outlook in the 2010 annual report.<br />
Target for capital structure<br />
From and including 2012, the long-term target for capital<br />
structure has been changed so that adjusted net debt must<br />
not exceed 2.5 times EBITDA. The change of the denominator<br />
from cash flows from operating activities to EBITDA<br />
is being made to link the capital structure objective to<br />
EBITDA, which is <strong>DONG</strong> <strong>Energy</strong>’s overall performance<br />
measure, and which, following the introduction of business<br />
performance income statement, better represents the<br />
Group’s underlying financial performance.<br />
Capital structure<br />
4<br />
3<br />
2<br />
1<br />
0<br />
Adjusted net debt/Cash flows<br />
from operating activities<br />
Adjusted net debt/<br />
EBITDA<br />
2007<br />
2008<br />
2009<br />
Capital structure<br />
target <strong>2011</strong><br />
Capital structure<br />
target from 2012<br />
2010<br />
<strong>2011</strong><br />
Adjusted net debt is defi ned as net debt for accounting purposes plus<br />
50% of hybrid capital maturing in 3005.<br />
<strong>DONG</strong> ENERGY <strong>DONG</strong> ENERGY GROUP <strong>ANNUAL</strong> <strong>REPORT</strong> <strong>2011</strong> – manaGEmEnt’s rEviEw 41