Ørsted — Investor Presentation 2019

Jan 31, 2019

31 January 2019

DISCLAIMER

This presentation contains certain forward-looking statements, including but not limited to, the statements and expectations contained in the "Financial Outlook" section of this presentation. Statements herein, other than statements of historical fact, regarding our future results of operations, financial condition, cash flows, business strategy, plans and future objectives are forward-looking statements. Words such as "targets", "believe", "expect", "aim", "intend", "plan", "seek", "will", "may", "should" "anticipate", "continue", "predict" or variations of these words, as well as other statements regarding matters that are not historical fact or regarding future events or prospects, constitute forward-looking statements.

Ørsted have based these forward-looking statements on its current views with respect to future events and financial performance. These views involve a number of risks and uncertainties, which could cause actual results to differ materially from those predicted in the forward-looking statements and from the past performance of Ørsted. Although, Ørsted believes that the estimates and projections reflected in the forwardlooking statements are reasonable, they may prove materially incorrect and actual results may materially differ due to a variety of factors, including, but not limited to market risks, development of construction and production assets, regulatory risks, operation of offshore and onshore wind farms, cost of electricity for offshore and onshore wind power. As a result you should not rely on these forward-looking statements. Please also refer to the overview of risk factors in "Risk and Management" on p. 66 of the 2018 annual report, available at www.orsted.com.

Unless required by law, Ørsted is under no duty and undertakes no obligation to update or revise any forward-looking statement after the distribution of this presentation, whether as a result of new information future events or otherwise.

Strong operational and financial results in 2018

Outperformance vs. original guidance of DKK 12-13bn

Better than expected performance from existing activities DKK 2-3bn:

• Strong progress on offshore construction projects, incl. higher partnership earnings and faster ramp-up
• Higher ROC recycle value
• Higher earnings in our gas portfolio business from increasing gas prices in 2018
• Positive outcome of an arbitration related to a gas purchase contract
• Better than expected performance in LNG business
• Lower costs across the Group

Offshore new partnerships DKK 15.1bn:

• Farm-down of 50% of Hornsea 1 in 2018

Significant investment growth in 2018

Investment growth vs. original guidance of DKK 16-18bn

Acquisitions of DKK 9.6bn:

• Lincoln Clean Energy and Deepwater Wind acquired in 2018

Lower spend on construction projects:

• Lower capex spend related to construction of offshore wind farms
• Shift in spending across 2018 and 2019
• Early investment in the US offshore and onshore portfolio to qualify for future tax credits

Proposed dividend of DKK 9.75 per share - An 8.3% increase

Dividend

DKK per share

Dividend

• The Board of Directors recommend a dividend of DKK 9.75 per share to be paid for 2018
• Increase of 8.3% and a total of DKK 4.1 billion
• Dividend expected to be paid out on 8 March 2019

Total shareholder return

• Ørsted share yielded a total return of 32% in 2018
• Increase in share price of 29% and dividend of DKK 9.00 per share paid for 2017

Strategic and operational progress in Q4 2018

Highlights – Q4 2018

• EBITDA from offshore wind farms in operation up by 26% vs. Q4 2017
• Ørsted selected as preferred bidder for an additional 104MW offshore wind capacity in Connecticut
• Submitted bids in the Rhode Island and New Jersey auctions
• Signed MoU to work jointly with TEPCO on Choshi offshore wind project near Tokyo
• 300MW Tahoka onshore wind farm in Texas commissioned in December
• FID on 184MW Lockett onshore wind project in Texas
• First stand-alone battery storage facility now commercially active
• Establishment permit and power purchase agreement delayed on first 900MW of Taiwanese offshore wind projects
• Exit of Danish power distribution and residential customer businesses continues in a new track

Taiwan announces 2019 feed-in-tariff

900MW Changhua 1 and 2a projects

• Taiwan's Bureau of Energy announced on 30 January the feed-in-tariff for projects which sign a power purchase agreement with Taipower in 2019
• Developers can choose between:
• − 20-year flat tariff of TWD 5,516 (approx. EUR 156) per MWh
• − Tiered tariff of TWD 6,279.5 (approx. EUR 178) for first 10 years and TWD 4,142.2 (approx. EUR 118) for subsequent 10 years
• 2019 feed-in-tariff introduce tiered production cap:
• − 100% of FIT for production up to 4,200 annual full-load hours (48% load factor)
• − 75% of FIT for production from 4,200 to 4,500 annual full-load hours (from 48% to 51% load factor)
• − 50% of FIT for production above 4,500 annual full-load hours (above 51% load factor)
• We will now collaborate closely with the supply chain to mitigate the adverse impacts from the production cap and the reduced feed-in-tariff to make the projects investable
• Projects are facing very high costs of developing a local supply chain from scratch, and building a fullscope, large-scale wind farm at a site with demanding characteristics
• We will work with the Taiwanese authorities and local stakeholders to obtain establishment permit, complete supply chain plan and sign 2019 PPA
• Our Board of Directors will review and decide on final investment case once we have clarity on outcome of supply contract renegotiations and relevant milestones being achieved

Greater Changhua projects

Exit of Danish power distribution and residential customer businesses continues in a new track

• Announced the plan to divest our Danish power distribution and residential customer businesses in June 2018
• On 13 January 2019, the Danish Ministry of Finance informed that there was no longer the required political support for continuing the ongoing structured divestment process
• Consequently Ørsted decided to discontinue the process
• It is still our assessment that Ørsted is not the best long-term owner
• Continue to investigate different options to exit the power distribution and residential customer businesses
• Ongoing work of separating the businesses continues
• Assets classified as held for sale
• Will seek to exit all three businesses during 2019

Construction programme – Offshore

Construction programme – Onshore, Bioenergy and Customer Solutions

Project	Tahoka	Lockett	Asnæs CHP plant	Renescience Northwich	Smart meter roll-out
Country
Asset type
Capacity	300MW	184MW	129MW Heat, 25MW Power	120,000 tonnes waste	1 million installations
Expected completion	Completed Q4 2018	Q3 2019	Q4 2019	H1 2019	2020
Status		On track	On track	Follow revised time schedule	On track
Comments		Construction commenced November 2018	Conversion from coal to sustainable	Mechanical challenges with sorting process	679,000 smart meters in use end of
		10 year PPA signed with Allianz	wood chips		2018

Offshore market development – US

Massachusetts	Timing of solicitation of 800MW to be announced • • Passed bill which could increase offshore wind capacity to 3.2GW by 2035 Three new offshore lease areas awarded through auction on 13-14 December 2018 •
New York	• 800MW offshore wind solicitation with deadline 14 February 2019 Target of 9GW of offshore wind capacity by 2035 announced by Governor Cuomo • • Federal agency BOEM calling for developer interest in four new offshore lease areas
New Jersey	• Bid submitted in the 1.1GW offshore wind solicitation with the Ocean Wind project Outcome expected in June 2019 • • Subsequent auctions of 1.2GW each expected in 2020 and 2022, respectively • Target of 3.5GW of offshore wind capacity by 2030
Connecticut	• Connecticut Public Utilities Regulatory Authority approved 200MW PPA for Revolution Wind Revolution Wind awarded 104MW additional capacity in Zero-Carbon solicitation 28 • December 2018
Rhode Island	• 400MW PPA in process of being filed for regulatory approval for Revolution Wind • Bid submitted in the up to 400MW auction in October 2018 Outcome expected in Q2 2019 •

Offshore market development – Europe

United Kingdom	• Next UK CfD auction to be initiated in May 2019, subsequent auctions every two years • Target annual build-out of 1-2GW to reach 30GW capacity by 2030 • Hornsea 3 consent process moving forward as planned • Race Bank Extension agreement for lease expected mid-2019 Tender for new leasing rounds expected in 2019 •
Germany	First centralised tender expected in 2021, approx. 800MW to be built annually • from 2026 • Target of 15GW of offshore wind capacity by 2030
Netherlands	• Government target of 11.5GW offshore wind by 2030 • Next beauty contest tender, Holland Coast South 3 & 4, expected 14 March 2019
Denmark	• Three offshore wind tenders of at least 2.4GW in total towards 2030 • Tenders proposed to include the transmission assets Next tender of 800MW expected in 2020 or 2021 •
Other EU markets	• France: Target 3GW by 2023 and 5.2GW by 2028 • Belgium: Target 2.2GW by 2020 and 4GW by 2030 Poland: Target 8GW by 2035 •

Offshore market development – APAC

Taiwan	• Taiwan has met its target of awarding 5.5GW to be developed by 2025 Auctions of additional 4.5 GW are being planned for post 2025 • • Greater Changhua 3 – 600MW ready for future auctions
Japan	Target of 10GW offshore and onshore wind power to be developed by 2030 • • General sea law passed in November 2018, enabling large scale offshore wind development outside harbour areas Signed MoU to work jointly with TEPCO on Choshi offshore wind project near Tokyo • • Auction design and regulatory framework pending
South Korea	• 18GW wind build-out target towards 2030 of which 13GW is offshore Strong need for offshore wind based on onshore limitations and large energy imports • • Feasibility study of offshore wind sites ongoing - conducted by the government and local players

Onshore pipeline development

Projects with offtake contracted

Sage Draw Wind 300MW, ERCOT West	Executed 12 year 250MW PPA with ExxonMobil • • Executed Interconnection Agreement Expected FID in H1 2019 and COD in 2020 •
Plum Creek Wind 230MW, SPP	12 year PPA with Smucker Co, Avery Dennison and Vail Resort for >70% capacity • • Turbine Supply Agreement and Interconnection Agreement executed Expected FID in H2 2019 and COD in 2020 •
Permian Solar 350MW, ERCOT West	• Executed 12 year 250MW PPA with ExxonMobil Expected FID in H1 2020 and COD in 2021 •

Q4 – Significant impact from Hornsea 1 transaction

EBITDA increased by DKK 6.2bn

• Farm-down of Hornsea 1 in Q4 2018, and farm-down of Walney Extension and Borkum Riffgrund 2 in Q4 2017
• Earnings from operating wind farms up 26% compared to Q4 2017 driven by ramp-up of Walney Extension and Race Bank in the UK and Borkum Riffgrund 2 in Germany
• Contribution from Lincoln Clean Energy, acquired in October 2018
• Bioenergy and Customer Solutions in line with Q4 2017

Net profit up DKK 5.8bn

• Higher EBITDA

FCF down DKK 0.8bn

• Acquisition of Deepwater Wind and Lincoln Clean Energy
• ~60% of proceeds from Hornsea 1 farm-down received
• Tax equity contribution received from partner at Tahoka onshore wind farm
• Lower paid taxes

Full-year – All time high EBITDA and Net profit

EBITDA increased by DKK 7.5bn

• Farm-down of Hornsea 1 in 2018, and farm-down of Walney Extension and Borkum Riffgrund 2 in 2017
• Earnings from operating wind farms up 29% compared to 2017 driven by ramp-up of Walney Extension and Race Bank in the UK and Borkum Riffgrund 2 in Germany
• Contribution from Lincoln Clean Energy, acquired in October 2018
• Bioenergy up DKK 0.2bn from higher spreads and full-year impact from bioconversion of Skærbæk Power Station
• Customer Solutions slightly below the very strong 2017

Net profit up DKK 6.2bn

• Higher EBITDA
• Negative effect from higher taxes and net financial expenses

• Higher EBITDA

261

• Tax equity contribution related to Tahoka

FY 2017 FY 2018

• Lower receivables and less funds tied up in working capital
• Higher gross investments in 2018 relating to US acquisitions

5,812

Net working capital development

Development in work-in-progress

• Significant funds temporarily tied up in construction of transmission assets in the UK - part of operating cash flow
• Funds tied up in work-in-progress of DKK 9.7bn end of 2018
• Expect to divest Race Bank and Walney Extension transmission assets in 2019
• Still expect high level of funds tied up in work-in-progress from construction of transmission assets at Hornsea 1 and 2
• Construction of Hornsea 1 for our partner expected to be operating cash flow neutral, as we receive milestone payments during construction phase

Development in other items

• At the end of 2018 we have classified power distribution and residential customer businesses as assets held for sale
• DKK 2.5bn of net working capital related to these businesses has been moved to assets held for sale. Amount mainly related to connection charges in power distribution

Tax equity

• Tax equity partners' upfront payments (and Pay gos) related to PTCs and tax incentives included for FY 2018

Capital employed – Net working capital DKKbn

Net cash position and solid financial ratios

Net interest-bearing debt development DKKm -1,517 -2,219 -10,343 -209 31 Dec CFO 2017 CAPEX Divestments 24,481 Disc. operations Hybrid coupon & other 31 Dec 2018 -19,950 5,319

Net interest-bearing debt at all time low

• Positive cash flow from operation as EBITDA and tax equity contribution related to Tahoka only partly offset by funds tied in working capital
• CAPEX included the acquisition of Lincoln Clean Energy and Deepwater Wind
• Farm-down of Hornsea 1
• Distribution of dividends to shareholders of DKK 3.8bn, noncontrolling interests of DKK 0.4bn and interest on hybrid capital of DKK 0.5bn

FFO / Adj. net debt of 69%

• Credit metric above our target of around 30%

ROCE of 32%

• Significant positive effect from farm-downs in both years

Offshore – Q4 financial performance

Power generation up 14%

• Ramp-up of generation from Race Bank, Walney Ext. and Borkum Riffgrund 2
• Lower wind speeds than Q4 2017 (10.3m/s vs. 11.0m/s in 2017. Norm 10.4m/s)

EBITDA up DKK 6.2bn

• Partnerships increased due to farm-down of Hornsea 1 in Q4 2018. 2017 was impacted by farm-down of Walney Ext. and Borkum Riffgrund 2
• Earnings from offshore wind farms in operation increased by 26% due to ramp-up

FCF increased DKK 1.8bn

• Increase primarily related to higher proceeds from farmdowns in 2018

Offshore – Full-year financial performance

Power generation up 18%

• Ramp-up of generation from Race Bank, Walney Ext. and Borkum Riffgrund 2
• Lower wind speed (9.1m/s vs. 9.3m/s in 2017. Norm 9.1m/s)

EBITDA up DKK 7.2bn

• Earnings from operating wind farms up 29%
• Earnings from partnerships up by DKK 5.1bn from farm-down of Hornsea 1 in 2018
• Partly offset by increased project development costs

FCF increased DKK 5.8bn

• High proceeds from farm-down of Hornsea 1
• Increase in funds tied up in construction of transmission assets and offshore wind farms for partners lower in 2018 than in 2017
• Partly offset by higher paid taxes

ROCE up 9%-points

• Increase significantly impacted by farm-down of Hornsea 1

Onshore – Full-year financial performance

552 FY 2018

Power generation

GWh

Power generation of 552GWh

• Primarily generation from Amazon and Willow Springs

EBITDA of DKK 44m

• EBITDA from Sites and PTCs offset by project development and other costs

FCF of DKK -4.9bn

• Acquisition price amounted to DKK 5.6bn, incl. acquired debt
• Investments in Tahoka and Lockett
• Tax equity contribution related to Tahoka

Bioenergy – Q4 and full-year financial performance

EBITDA in line

• EBITDA marginally lower than Q4 2017

DKKm 147 579 Q4 2017 Q4 2018

FCF up DKK 0.4bn

• Higher inventories in Q4 2017
• First bioconversion subsidy received on Asnæs Power Station

EBITDA up DKK 0.2bn

• Bioconversion of Skærbæk Power Station (Q4 2017)
• Higher spreads, partly offset by higher project development costs

FCF up DKK 1.3bn

• Higher EBITDA
• Received prepayments related to the bioconversion of Asnæs Power Station
• Divestment of Enecogen

Customer Solutions – Q4 and full-year financial performance

179 156 Q4 2017 Q4 2018

EBITDA at DKK 0.2bn

EBITDA – Q4

DKKm

• Lower value of gas at storage in Q4 2018 vs. a positive effect in Q4 2017
• Higher costs in Sales

• LNG increased as 2017 impacted by provisions (DKK 0.4bn)

• Lower receivables

• Lower paid taxes

EBITDA – FY

• Strong trading results in 2017
• 2018 significantly outperformed expectations
• Increasing gas prices gave positive storage effects and gains on time spread hedges which will come back negatively in 2019
• 2018 impacted by arbitration gain
• LNG increased from higher margins in 2018 and provision in 2017

FCF increased DKK 2.3bn

• Negative effect from intra-group settlement of hedges relating to O&G divestment in 2017
• Lower receivables and less funds tied up in clearing accounts
• Higher ROC inventory due to higher offshore wind generation

Outlook – Guidance for 2019

2019 EBITDA expected to be DKK 15.5-16.5 billion

• Positive impact of DKK 0.6bn from implementation of IFRS 16 (majority in Offshore)
• Offshore site EBITDA positively impacted by ramp-up
• No new partnerships expected in 2019
• Earnings from construction agreements expected to decrease
• Expensed Offshore project development costs to increase due to global expansion
• Significant positive impact in Onshore from full-year contribution and Tahoka ramp-up
• Bioenergy up due to higher spreads
• Significant decline in Markets due to gains from increasing gas prices in 2018, reverting with negative impact in 2019
• Power distribution and residential customer businesses included for the full year

2019 gross investments guidance

• Gross investments expected to be DKK 21-23 bn

Guidance on EBITDA excl. new partnerships DKKbn

Outlook – Business unit EBITDA FY 2019 vs. FY 2018

Offshore – Higher

• Earnings from offshore wind farms in operation expected to increase relative to 2018. Full commissioning of Hornsea 1 in H2 2019, as well as higher earnings from Borkum Riffgrund 2 and Walney Extension, which were fully commissioned during 2018
• Earnings from existing partnership agreements expected to decline relative to 2018. 2018 earnings primarily related to Walney Ext. and Borkum Riffgrund 2 (DKK 3.7bn). In 2019, earnings will come from Hornsea 1 and contribute with approx. DKK 2.6-2.7bn
• Expensed project development costs expected to increase as a result of global expansion

Onshore – Significantly higher

• Acquired Lincoln Clean Energy on 1 October 2018
• 2019 will be the first full year of operation from this business unit
• Earnings from onshore wind farms in operation expected to increase as new wind farms come on line
• In December 2018, we commissioned Tahoka, and we expect to commission Lockett in Q3 2019

Outlook – Business unit EBITDA FY 2019 vs. FY 2018

Bioenergy – Higher

• Total EBITDA from heat and power generation activities expected to increase, primarily from expected increased generation on biomass and expected increase in Danish wood pellet spreads and green dark spreads
• Earnings from ancillary services are expected to be lower than 2018, and in line with 2017

Customer Solutions – Significantly lower

• Significant decline in Markets expected, due to gains from increasing gas prices in 2018, reverting with negative impact in 2019
• LNG business positively affected by strong market fundamentals in 2018. We expect lower earnings in 2019
• Positive outcome of an arbitration case in 2018, which will not be repeated in 2019
• We plan to exit power distribution and residential customer businesses during 2019. Included with full-year impact in our outlook. We do not expect any significant changes in earnings from these activities compared to 2018

Financial estimates and policies

Financial estimates	Target	Financial policies Target
Total capex spend, 2019-2025	DKK 200bn	Rating (Moody's/S&P/Fitch) Baa1/BBB+/BBB+
Capex allocation split, 2019-2025:		FFO/Adjusted net debt Around 30%
- Offshore	75-85%	Dividend policy:
- Onshore	15-20%	Ambition to increase the dividend paid by a high single-digit rate compared to the dividends for the previous year up until 2025
- Bioenergy + Customer Solutions	0-5%	Dividend for 2018:
Average ROCE, 2019-2025	~10%	The Board of Directors recommends to the annual general meeting that dividends of DKK 9.75 per share be paid for 2018,
Average share of EBITDA from regulated and contracted activities, 2019-2025	~90%	equating to an increase of 8.3% and a total of DKK 4.1bn
Average yearly increase in EBITDA from offshore and onshore wind farms in operation, 2017-2023	~20%

Conference call

DK: +45 35 44 55 83 UK: +44 203 194 0544 US: +1 855 269 2604

For questions, please press 01

Offshore wind build-out plan

Onshore wind build-out plan

Group – Financial highlights

FINANCIAL HIGHLIGHTS		Q4 2018	Q4 2017	D	FY 2018	FY 2017	D
EBITDA	DKKm	19,206	13,032	47%	30,029	22,519	33%
• Offshore		18,791	12,591	49%	27,809	20,595	35%
• Onshore		44	-	n.a.	44	-	n.a.
• Bioenergy		203	240	(15%)	367	152	141%
• Customer Solutions		156	179	(13%)	1,970	2,082	(5%)
Net profit – continuing operations		15,160	9,350	65%	19,486	13,279	47%
Net profit – discontinued operations		34	79	(57%)	10	6,920	(692%)
Total net profit		15,194	9,429	61%	19,496	20,199	(3%)
Operating cash flow		7,565	3,078	146%	10,343	1,023	911%
Gross investments		(14,916)	(5,805)	(157%)	(24,481)	(17,744)	(38%)
Divestments		18,749	14,875	26%	19,950	16,982	17%
Free cash flow – continuing operations		11,398	12,148	(6%)	5,812	261	2127%
Net interest-bearing debt		(2,219)	(1,517)	(46%)	(2,219)	(1,517)	(3%)
FFO/Adjusted net debt1	%	69	50	19%p	69	50	19%p
ROCE1	%	32.1	25.2	6.9%p	32.1	25.2	6.9%p

Offshore – Financial highlights

FINANCIAL HIGHLIGHTS		Q4 2018	Q4 2017	D
EBITDA	DKKm	18,791	12,591	49%
• Sites incl. O&Ms and PPAs		4,053	3,226	26%
• Partnership agreements and farm-down gains		15,413	10,033	54%
• Other incl. A2SEA and project development		(675)	(688)	1%
ROCE1	%	37.2	28.4	8.8%p
KEY BUSINESS DRIVERS
Power generation	TWh	3.3	2.9	14%
Wind speed	m/s	10.3	11.0	(6%)
Availability	%	93	92	1%p
Load factor	%	53	54	(1%p)
Installed capacity	GW	5.6	3.9	44%
Production capacity	GW	3.0	2.5	20%

Onshore – Financial highlights

FINANCIAL HIGHLIGHTS		Q4 2018
EBITDA	DKKm	44
• Sites		40
• Production tax credits and tax incentives		85
• Other incl. project development		(81)
ROCE1	%	(0.3)
KEY BUSINESS DRIVERS
Power generation	TWh	0.6
Wind speed	m/s	7.3
Availability	%	92
Load factor	%	41
Installed capacity	MW	813
Production capacity	GWh	552

Bioenergy – Financial highlights

FINANCIAL HIGHLIGHTS		Q4 2018	Q4 2017	D
EBITDA	DKKm	203	240	(15%)
• Heat		245	235	4%
• Ancillary services		133	122	9%
• Power		(175)	(117)	50%
Free cash flow		579	147	294%
KEY BUSINESS DRIVERS
Heat generation	TWh	2.8	2.8	(0%)
Power generation	TWh	1.8	2.3	(22%)
Degree days	#	884	895	(10%)
Power price, DK	EUR/MWh	50.5	30.6	65%
Green dark spread, DK	EUR/MWh	3.0	(5.1)	n.a.

Customer Solutions – Financial highlights

FINANCIAL HIGHLIGHTS		Q4 2018	Q4 2017	D
EBITDA	DKKm	156	179	(13%)
• Distribution		299	172	74%
• Sales		(72)	21	n.a.
• Markets		57	575	(90%)
• LNG		(128)	(589)	(78%)
ROCE1	%	17.6	13.1	4.5%p
KEY BUSINESS DRIVERS
RAB Power	DKKm	10,957	10,623	3%
Gas sales	TWh	26.0	36.9	(30%)
Power sales	TWh	10.4	10.6	(2%)
Distribution of power	TWh	2.3	2.2	5%

Currency and energy exposure

* The GBP exchange rate for hedges impacting EBITDA in 2019 and 2020 is hedged at an average exchange rate of DKK/GBP 8.4 and 8.4, respectively.

Spread: 1.6 sales position +0.2 -0.2

Capital employed

CAPITAL EMPLOYED, DKKm	FY 2018	FY 2017	Capital employed by segment
Intangible assets and property and equipment	84,832	76,534	%, FY 2018
Equity Investments and non-current receivables	1,445	1,187
Net working capital, work in progress	9,654	7,526	Offshore Bioenergy
Net working capital, tax equity	(3,719)	-	Onshore Customer Solutions
Net working capital, capital expenditures	(2,978)	(3,039)
Net working capital, other items	1,489	(2,581)
Derivatives, net	(2,626)	496	13%
Assets classified as held for sale, net	10,372	2,012	2%
Decommissioning obligations	(5,472)	(4,751)	6%
Other provisions	(7,982)	(6,769)
Tax, net	(2,629)	(464)	82.9
Other receivables and other payables, net	510	169
Total capital employed	82,896	70,320	DKKbn
OF WHICH CONTINUING OPERATIONS	83,039	70,556
OF WHICH DISCONTINUED OPERATIONS	(143)	(236)	79%

Capital employed by segment %, FY 2018

FFO/Adjusted net debt calculation

FUNDS FROM OPERATIONS / ADJUSTED NET DEBT (DKKm)	FY 2018	FY 2017
EBITDA – Business Performance	30,029	22,519
Interest expenses, net	(877)	(629)
Reversal of interest expenses transferred to assets	(506)	(754)
Interest element of decommission obligations	(192)	(194)
50% of coupon payments on hybrid capital	(272)	(320)
Operating lease obligations, interest element	(196)	(234)
Adjusted net interest expenses	(2,043)	(2,131)
Reversal of gain (loss) on divestment of assets	(14,995)	(10,835)
Reversal of recognised lease payment	778	885
Current tax	(3,068)	(2,447)
FUNDS FROM OPERATION (FFO)	10,701	7,991
Total interest-bearing net debt	(2,219)	(1,517)
50% of hybrid capital	6,619	6,619
Cash and securities, not available for distribution	1,583	749
Present value of operating lease payments	4,819	6,095
Decommission obligations	5,471	4,751
Deferred tax on decommissioning obligations	(757)	(797)
ADJUSTED INTEREST-BEARING NET DEBT	15,516	15,900
FFO / ADJUSTED INTEREST-BEARING NET DEBT	69%	50%

Debt overview

Gross debt and hybrids Q4 2018

Long term gross debt maturity schedule Q4 2018, DKKbn

	Cost of debt (%)	Modified duration (%)	Avg. time to maturity (years)
Bond loans	4.0	8.2	10.5
Bank loans	2.3	0.5	6.1
Total	3.8	7.3	9.9

Hybrid capital in short

Hybrid capital can broadly be defined as funding instruments that combine features of debt and equity in a cost-efficient manner:

• Hybrid capital encompasses the creditsupportive features of equity and improves rating ratios
• Perpetual or long-dated final maturity (1,000 years for Ørsted)

• Absolute discretion to defer coupon payments and such deferrals do not constitute default nor trigger crossdefault

• Deeply subordinated and only senior to common equity

• Without being dilutive to equity holders (no ownership and voting rights, no right to dividend)

Due to hybrid's equity-like features, rating agencies assign equity content to the hybrids when calculating central rating ratios (e.g. FFO/NIBD).

The hybrid capital has increased Ørsted's investment capacity and supports the growth strategy and rating target.

Ørsted has made use of hybrid capital to maintain our ratings at target level in connection with the merger with Danish power distribution and production companies back in 2006 and in recent years to support our growth in the offshore wind sector.

Currently, Ørsted has fully utilised it's capacity to issue hybrids (S&P has the strictest limit of 15% of total capitalisation).

HYBRIDS ISSUED BY ØRSTED A/S1	PRINCIPAL AMOUNT	TYPE	FIRST PAR CALL	COUPON	ACCOUNTING TREATMENT2	TAX TREATMENT	RATING TREATMENT
6.25% hybrid due 3013	EUR 700m	Hybrid capital (subordinated)	June 2023	Fixed for the first 10 years, first 25bp step-up in June 2023	100% equity	Debt – tax-deductible coupon payments	50% equity, 50% debt
3.0% hybrid due 3015	EUR 600m	Hybrid capital (subordinated)	Nov. 2020	Fixed during the first 5.5 years, first 25bp step-up in Nov. 2025	100% equity	Debt – tax-deductible coupon payments	50% equity, 50% debt
2.25% Green hybrid due 3017	EUR 500m	Hybrid capital (subordinated)	Nov. 2024	Fixed during the first 7 years, first 25bp step-up in Nov. 2029	100% equity	Debt – tax-deductible coupon payments	50% equity, 50% debt

1. All listed on Luxembourg Stock Exchange and rated Baa3 (Moody's), BB+ (S&P) and BBB- (Fitch). ´The Green hybrid is furthermore listed on the Luxembourg Green Exchange (LGX)

2. Due to the 1,000-year structure 41

Ørsted Green Bonds

Bond type	Green Senior Bond	Green Hybrid Bond	Projects	Allocated amount: Green Senior Bond		Allocated amount: Green Hybrid Bond
Face Value (EURm)	750	500	Offshore Wind	2018	2017	2018	2017	Total DKKm
Green Bond net proceeds (DKKm)	5,499	3,674	Borkum Riffgrund 2	2,149		500	500	2,649
Settlement date	24 November 2017	24 November 2017	Borssele 1&2			500		500
ISIN	XS1721760541	XS1720192696	Hornsea 1	2,200		400	200	2,800
Maturity	26 November 2029	24 November 3017	Hornsea 2	100				100
			Race Bank		400			400
Allocated proceeds to new Eligible Projects in 2017 (DKKm)	1,300	900	Walney Extension		500	750		1,250
Roll back from smart meter rollout	-250	0	Total	4,449	900	1,650	700	7,699
Allocated proceeds to new Eligible Projects in 2018 (DKKm)	4,449	1,650	Bioenergy	2018	2017	2018	2017	Total DKKm
Refinancing (DKKm)	0	0	Asnæs Power Station biomass conversion		150			150
Unallocated Amount (DKKm)	0	1,124	Skærbæk Power Station biomass conversion				200	200
Avoided emissions (t CO2/year) attributable to the bonds:	590,000	278,000	Total	4,449	1,050	1,650	900	350

Financing strategy

We have a centralised financing strategy as customary for vertically and horizontally integrated European energy utilities.

The strategy supports:

• A capital structure supportive of our BBB+ rating ambition
• Concentration of and scale in financing activities
• Cost efficient financing based on a strong parent rating
• Optimal terms and conditions and uniform documentation
• Transparent debt structure and simplicity
• No financial covenants and restrictions on operating arrangements
• Corporate market more stable and predictable than project finance market
• Avoidance of structural subordination

All cash flow generated by our subsidiaries supports the creditworthiness and rating of and thus the debt taken up by the parent company, Ørsted A/S.

The financing strategy optimizes the effect of a fully integrated cash pool where cash at practically all of the company's more than 150 subsidiaries is made available for the company's financing and liquidity purposes.

Financing of activities at subsidiary level is provided by Ørsted A/S in a standardised and cost-efficient setup involving very few resources at Business Unit and Corporate Treasury.

Widespread use of project financing is not considered cost-efficient and dilutes the creditworthiness of the company.

Interest rate and inflation risk management

Four risk categories of assets and debt allocation Illustrative

Objectives of interest rate and inflation risk management

• 1. Protect long-term real value of equity by offsetting interest and inflation risk exposure embedded in assets by allocating debt with similar, but opposite risk exposure
• 1. Cost of funding optimized by actively managing debt portfolio
• 1. Cost of hedging minimised by using natural portfolio synergies between assets, allowing matching of up to 100% of asset value with appropriate debt

Framework for risk management

• Assets divided into four different risk categories, based on nature of inflation and interest risk exposure
• Simple risk metrics are used to match assets with appropriate debt within each category
• Fixed nominal-category has first priority for debt allocation, to protect shareholders against inflation eroding the real value from fixed nominal cash flows
• Inflation-indexed revenues reserved to service equity return for shareholders thereby to a large extent protecting the real value of equity against fluctuations in inflation rates

Daniel Lerup Head of Investor Relations DANIL@orsted.com

Rasmus Hærvig

Senior Investor Relations Officer RAKOL@orsted.com

Dennis Callesen Lead Investor Relations Officer DECAL@orsted.com