Interim / Quarterly Report • Jul 30, 2009
Interim / Quarterly Report
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EnBW Energie Baden-Württemberg AG
| EnBW group | 1/1– 30/6/2009 |
1/1– 30/6/2008 |
Variance % |
1/1– 31/12/2008 |
|
|---|---|---|---|---|---|
| Revenue | |||||
| Electricity upstream | € millions | 1,208.3 | 1,164.8 | 3.7 | 2,541.7 |
| Electricity downstream | € millions | 5,050.9 | 5,216.0 | -3.2 | 10,194.7 |
| Gas | € millions | 1,572.9 | 1,350.9 | 16.4 | 2,881.2 |
| Energy and environmental services |
€ millions | 342.4 | 339.7 | 0.8 | 687.8 |
| External revenue, total | € millions | 8,174.5 | 8,071.4 | 1.3 | 16,305.4 |
| Adjusted EBITDA | € millions | 1,466.9 | 1,403.8 | 4.5 | 2,595.6 |
| EBITDA | € millions | 1,479.8 | 1,423.9 | 3.9 | 2,540.1 |
| Adjusted EBIT | € millions | 1,066.8 | 1,017.0 | 4.9 | 1,793.9 |
| EBIT | € millions | 1,069.2 | 975.3 | 9.6 | 1,468.2 |
| Adjusted group net profit1, 2 | € millions | 637.0 | 638.8 | -0.3 | 1,098.8 |
| Group net profit1, 2 | € millions | 611.3 | 633.6 | -3.5 | 879.3 |
| Earnings per share from group net profit1, 2 |
€ | 2.50 | 2.59 | -3.5 | 3.60 |
| Cash flow from operating activities |
€ millions | 980.5 | 901.5 | 8.8 | 1,523.9 |
| Free cash flow1 | € millions | 554.1 | 528.1 | 4.9 | 404.5 |
| Capital expenditure1 | € millions | 1,437.1 | 439.3 | - | 1,404.2 |
| Energy sales of the EnBW group |
1/1– 30/6/2009 |
1/1– 30/6/2008 |
Variance % |
1/1– 31/12/2008 |
|
|---|---|---|---|---|---|
| Electricity | billions of kWh |
57.9 | 63.9 | -9.4 | 130.5 |
| Gas | billions of kWh |
37.0 | 37.8 | -2.1 | 69.8 |
| Employees of the EnBW group3 |
30/6/2009 | 30/6/2008 | Variance % |
31/12/2008 | |
|---|---|---|---|---|---|
| Employees | Number | 20,809 | 20,298 | 2.5 | 20,501 |
The figures of the comparative periods have been restated.
2 In relation to the profit shares attributable to the equity holders of EnBW AG. 3
Number of employees without apprentices/trainees and without inactive employees.
This report has been prepared for information purposes only. It does not constitute an offer, an invitation or a recommendation to purchase or sell securities issued by EnBW Energie Baden-Württemberg AG (EnBW), a company of the EnBW group or any other company. This report does not constitute a request, instruction or recommendation to vote or give consent. All descriptions, examples and calculations are included in this report for illustration purposes only.
This report contains future-oriented statements that are based on current assumptions, plans, estimates and forecasts of the management of EnBW. Such future-oriented statements are therefore only valid at the time at which they are published for the first time. Future-oriented statements are indicated by the context, but may also be identified by the use of the words "may", "will", "should", "plans", "intends", "expects", "believes", "assumes", "forecasts", "potentially" or "continued" and similar expressions.
By nature, future-oriented statements are subject to risks and uncertainties that cannot be controlled or accurately predicted by EnBW. Actual events, future results, the financial position, development or performance of EnBW and the companies of the EnBW group may therefore diverge considerably from the future-oriented statements made in this report. Therefore it cannot be guaranteed nor can any liability be assumed otherwise that these futureoriented statements will prove complete, correct or precise or that expected and forecast results will actually occur in the future.
EnBW assumes no obligation of any kind to update the information contained in this report or to adjust or update future-oriented statements to future events or developments. This quarterly financial report can also be downloaded from the internet in German or English. In case of doubt, the German version shall prevail.
With some six million customers and more than 20,000 employees, EnBW Energie Baden-Württemberg AG generated annual revenue in excess of € 16 billion in 2008. As the third-largest energy company in Germany, we focus on the segments of electricity upstream, electricity downstream and gas as well as energy and environmental services.
We are committed to Baden-Württemberg and Germany as locations and these are the focal points of our activities. We also operate in other European markets.
Overall, the group's business situation was stable throughout the first half of the year.
Adjusted EBIT rose by 4.9% to € 1,066.8 million due to the earnings from the electricity upstream segment.
Total investment came to € 1,437.1 million in the first half of the year – three times the prior-year figure.
Net debt increased by 15.1% to € 7,862.9 million as a result of the growth in capital expenditure.
Strategic partnership in Turkey
EnBW and the Turkish conglomerate Borusan Holding form a joint venture for cooperation in Turkey regarding the development and construction of power stations, primarily in the field of renewable energies; anti-trust proceedings are still pending.
The collective bargaining partners for the private energy industry in Baden-Württemberg reach an agreement, valid for 21 months, following protracted negotiations. It provides for a two-step pay rise – 3.6% as of April 2009 and 2.0% as of April 2010 – and a one-off payment of € 1,200.
EnBW acquires E.ON's 50% share in Unit S of Lippendorf brown coal power station and its 8.3% share in Bexbach hard coal power station. These shares are equivalent to total output of 525 MW. EnBW already has a share in both sites. At Lippendorf EnBW now has installed capacity of 880 MW.
EnBW is one of Germany's most attractive employers for the fifth time in succession. The study "Germany's Top Employers 2009" is performed by the "Junge Karriere" journal in cooperation with the Corporate Research Foundation, an independent institute. 3rd place in the category "work-life balance" is particularly pleasing.
The four German transmission system operators, which include EnBW Transportnetze AG, join up with European Exchange AG (EEX) to create a platform to publish generation and consumption data relevant to the market to further increase transparency on the wholesale market.
Celebrations are held to mark the commissioning of the run-of-the-river power station in Kehl, a joint venture between EnBW and EDF. With an annual production of around 8,200 MWh, the plant will make a contribution to local electricity supplies from renewable sources.
The Federal Anti-Trust Office approves EnBW's takeover of a 26% shareholding in the Oldenburg-based energy group. The acquisition takes the form of a share purchase and a capital increase. The two companies plan to cooperate as strategic partners to further develop core fields of business.
Together with Prime Minister Oettinger and EDF's management board member Gadonneix, EnBW lays the foundation stone for the extension of the Rhine power station, one of the largest run-of-the-river power stations in Europe. An additional 122 million kWh of electricity will be generated each year from 2012. More than 540,000 people will then be supplied with CO2-free electricity from Iffezheim.
Hans-Peter Villis, Chief Executive Officer
Dear shareholders, investors and friends of EnBW,
Overall, the group's business situation was stable throughout the first half of 2009. Despite the current difficult economic environment we succeeded in generating an operating result in excess of that of the prior-year period. Adjusted earnings before interest and taxes (adjusted EBIT) increased by 4.9 per cent, reaching € 1,066.8 million.
The decline in overall economic output in Germany caused the unit sales of energy in the EnBW group to decline in the first half of the year. These effects were especially notable with regard to unit sales to industrial customers in the electricity downstream segment, which saw a decline of 22.3 per cent. At 57.9 billion kilowatt-hours across all customer groups, unit sales of electricity were down 9.4 per cent on the comparable prior-year period. Unit sales of gas dropped by 2.1 per cent to 37.0 billion kilowatt-hours. In contrast, EnBW succeeded in increasing its revenue in the first half of the year by 1.3 per cent to € 8,174.5 million.
The group net profit in terms of the profit shares attributable to the equity holders of EnBW AG came to € 611.3 million and was therefore 3.5 per cent below the result for the first six months of the prior year. The main reasons for this were a negative non-operating result caused by impairment losses on securities and higher interest expenses.
With a total investment of € 1,437.1 million, we have consistently pursued our course for growth and have laid the necessary financial foundations by issuing two bonds with a total volume of € 1.35 billion. Total net investment budgeted until 2011 remains at € 7.7 billion.
These investments ensure EnBW's sustainability. For example, the acquisition of further shares in Lippendorf and Bexbach power stations will reinforce its generation position. We are also consistently pursuing our policy of expanding our commitment to renewable energies with investment projects such as Baltic 1 and the installation of a fifth turbine at Iffezheim power station on the river Rhine. Baltic 1 is scheduled to go into operation at the end of 2010 which will make it Germany's first commercial offshore wind farm with its total output of 48.3 megawatts. The addition of a fifth turbine with an output of 38 megawatts at Iffezheim run-of-the-river power station will boost the average annual electricity production from currently 740 million kilowatt-hours to 862 million kilowatthours.
We have taken further decisive measures in the current fiscal year setting the course for sustainable expansion of our earnings power. These include, for example, entering the Turkish market. To this end, we have formed a joint venture with a Turkish industrial partner. Our plans together with this partner are to build up around 2,000 megawatts of generation capacity over the next twelve years, primarily in the area of renewable energies.
In July, the Federal Anti-Trust Office approved the acquisition of a 26 per cent shareholding in EWE AG, on condition that certain requirements are met. This lays the foundation stone for a strategic alliance between EnBW and EWE. Over the next few months, the two companies will specify the areas in which they will cooperate to open up potential for development. I envisage cooperation in the fields of power generation, joint acquisitions abroad, in the gas segment and renewable energies.
Yours sincerely,
Hans-Peter Villis Chief Executive Officer
Karlsruhe, July 2009
In addition to the group's internal financing power, EnBW has adequate headroom with regard to external financing. Since May 2009 Fitch is the third major rating agency to rate EnBW's credit standing on an ongoing basis. Its assessment is an A rating for the group, outlook "stable". The success of the bond issues totalling € 1.35 billion at the beginning of July 2009 are proof of the interest and trust on the part of investors.
At the beginning of 2009, the price of the EnBW share stood at just under € 38 and generally remained stable while the leading share index in Germany, the DAX, slid from around 5,000 points at the start of the year to 3,700 points by mid-March. In the second quarter, the price of the EnBW share hovered just over the € 35 mark. Trading closed on 30 June with a price of exactly € 35. Over this period, the DAX regained its losses reaching 4,808 points, the level seen at the beginning of the year, by the end of the first half of the year.
1 Performance of DAX and DJ EURO STOXX UTILITY indexed to the EnBW share.
The shareholder composition has not changed materially since the beginning of the year and breaks down as follows as of 30 June 2009:
| EDF International SA (EDFI) | 45.01% |
|---|---|
| Zweckverband Oberschwäbische Elektrizitätswerke (OEW) | 45.01% |
| Badische Energieaktionärs-Vereinigung | 2.55% |
| EnBW Energie Baden-Württemberg AG | 2.30% |
| Gemeindeelektrizitätsverband Schwarzwald-Donau | 1.28% |
| Neckarelektrizitäts-Verband | 0.69% |
| Landeselektrizitätsverband Württemberg | 0.54% |
| Other municipal shareholders | 0.78% |
| Free float | 1.84% |
› EnBW on the capital market
ENBW SHARE MANAGEMENT REPORT FINANCIAL STATEMENTS SERVICE
Formatiert: Nummerierung und Aufzählungszeichen
Yield on the bond market from January to June 2009 in %
Over the first half of 2009, the markets were characterised by a high volume of new issues of government and corporate bonds. The volume of new bonds issued by investment grade companies is heading towards the record levels seen in 2001, when bonds totalling some € 200 billion were issued. At the beginning of the year, the great uncertainty lead to government bonds profiting from a strong inflow of capital due to their being deemed a safe form of investment. Later, however, investors' willingness to take risk is reflected in the development of the iBoxx € Eurozone, an index tracking the returns of the government bonds of a number of European countries. Against this backdrop, the returns on corporate bonds decreased with increasing prices. Consequently, the iBoxx € Utilities, an index reflecting the bonds of European energy companies, reveals a continual decline in returns over the first six months of 2009. A sign of investor confidence in EnBW was the fact that the majority of the company's bonds saw a significant rise in price over the first half of 2009. In this context, there was a particular focus on medium-term bonds with high coupons.
None of EnBW's capital market securities will be due for repayment in the current fiscal year. The repayment of bonds totalling € 217 million will become due in 2010. The financing from the group's own cash flow from operating activities is augmented by short to long-term debt instruments. On 1 July 2009, EnBW successfully issued two bonds totalling € 1.35 billion with terms of 6 years (€ 750 million) and 30 years (€ 600 million), respectively. The bonds met with great interest on the part of investors and were significantly oversubscribed.
With a view to EnBW's increasing significance as a European energy supplier and as an issuer on the capital market, the rating agency Fitch began issuing a credit rating for the company on an ongoing basis in May 2009. Fitch's rating matches that of Moody's (A2) and is one category above the rating issued by Standard & Poor's (A-). Following the announcement of the planned acquisition of shares in VNG – Verbundnetz Gas AG, Standard & Poor's and Moody's put the outlook for their rating under observation for a potential downgrade. In contrast, Fitch retained the outlook "stable". EnBW continues to make every effort in pursuit of its goal of maintaining an A rating in the medium term and will correspondingly adapt its investment programme.
Notwithstanding the situation on the capital market and the company's current financing needs, it is the responsibility of the board of management together with Investor Relations (IR) to maintain and boost the trust of investors, analysts and rating agencies in EnBW. Following participation in an investor conference in January 2009 and a road show throughout Europe in March, the onus of IR activities in the second quarter was on close personal dialogue with market participants. The current development of the company was at the centre of numerous talks. The focus was on the purchase of shares in Lippendorf and Bexbach power stations, the intended acquisition of shares in EWE AG and VNG AG and termination of the joint power station project with DOW Chemical.
Due to the negative economic development, the prices of electricity, coal, oil, gas and CO2 allowances in the first half of 2009 were far below those seen in the prior-year period, but they stabilised in the course of the second quarter. With regard to the regulation of network user charges, the Federal Network Agency announced its intention to raise the revenue caps.
The global economic crisis continues unabated. The comparison with the prior-year period demonstrates the extent of collapse in the total economic output. At the same time, the relevant statistics reveal that the downswing has slowed, which is an indication that the economy may well be stabilising.
The extent of the economic slump in the euro area becomes apparent from Eurostat's estimates issued in June 2009. For example, economic output – measured against gross domestic product – declined in the first quarter of 2009 by 4.8% in comparison to the prior-year quarter. According to the calculations of Deutsche Bundesbank, the drop in Germany just about reached 7% over this period. Estimates by the German Institute for Economic Research (DIW) work on the assumption that economic performance will drop by more than 7% in the second quarter of the current year in comparison to the second quarter of 2008.
A comparison of key economic data with those of the immediately preceding period reveals that the decline is slowing. While, according to estimates by the DIW, the decline in the manufacturing industry in Germany in the first quarter of 2009 totalled 13% in comparison to the fourth quarter of 2008, the decline in the second quarter of 2009 only came to 2.0% in comparison to the first quarter of this year.
The overall economic development in Germany similarly has an impact on energy consumption. Although the final data are not available yet, one may assume that total electricity and gas consumption declined severely in the first half of 2009.
Primary energy sources: The significant decline in hard coal prices (ARA import price) from the beginning of January to mid-March 2009 caused by the dramatic economic downturn did not continue in the second quarter; towards the end of the second quarter both spot prices (prices for delivery in the immediate future) and prices for delivery in 2010 had returned to the level seen at the beginning of the second quarter. All in all, coal prices towards the end of the first half-year were below the level seen at the beginning of 2009. Delays in the signing of coal supply agreements within China are seen as being the reason behind the price development in the second quarter of 2009, which meant that China's exports were comparatively low while imports were relatively high. The coal prices were supported by rising prices on the oil market.
In the first half of 2009, the price of oil (Brent crude oil) increased significantly above the price level prevailing at the beginning of the year. Brent prices moved significantly upwards as of mid-March after previously fluctuating between US\$ 40 and 50 per barrel. The primary trigger for this price rise was the positive development of certain early indicators that supported the hope expressed by some market participants that the world economy, and therefore demand for oil, could recover earlier than generally expected. In contrast, the fall in demand for oil to below the prior-year level due to the global economic crisis taking place at the same time as a rise in global production capacity and above-average oil and oil-product stock levels put a damper on the rise in prices.
› Economic and political environment
| Price development on the coal and oil markets | Average H1 2009 | Average H1 2008 | Average 2008 |
|---|---|---|---|
| Coal – weekly index for short-term delivery (API#2 Y2010) | 68.23 | 149.61 | 147.74 |
| Coal – API#2 Y2010 | 83.70 | 130.67 | 136.44 |
| Crude oil (Brent) front month (daily quotes in US\$/bbl) | 52.87 | 109.75 | 98.52 |
| Crude oil (Brent) annual price 2010 (daily quotes in US\$/bbl) | 63.12 | 106.12 | 102.17 |
Wholesale electricity market: The sharp decline in the price level on the wholesale market for electricity in Germany was largely caused by the much lower prices for primary energy sources and the drop in the purchase price of CO2 allowances. The recessionary decline in industrial production in the first half of 2009 and the related decline in load, which became particularly apparent in the second quarter of 2009, also exerted pressure on prices. At € 39.83/MWh, prices on the spot market (immediate delivery, base load product) in the first half of 2009 averaged far below the price level seen in the comparative period of the prior year (€ 60.88/MWh). The average spot market price of € 32.38/MWh recorded in the second quarter of the current year was even down to roughly half the price level seen in the second quarter of 2008. Even the prices for forward delivery over the next few years moved at levels below the prior-year prices in the first half of 2009. The price of forward contracts for 2010 averaged at € 50.71/MWh in the reporting period. This corresponds to a drop of around 23% in comparison to the average price of the prior-year period. This means a decline of 27% in comparison to the average price seen in 2008 as a whole.
Prices for retail and industrial customers: In 2008, the electricity costs of a typical three-person household averaged € 63 per month. The German Federal Statistics Office has established an increase in prices for private households for the months January to May 2009, the period for which the data was already available, in comparison to the prior-year period in 2008. Since the quantities of electricity for retail customers and commercial businesses are purchased in advance on the foreword wholesale market, they reflect the high level of forward market prices seen in the past. The Bundesverband der Energie- und Wasserwirtschaft e. V. (German Energy and Water Association – BDEW) already established a drop in the prices for industrial customers in February this year, as the prices in this segment are, as a rule, more closely linked to the current price level on the wholesale market.
Price developments: Long-term gas import contracts form the basis of gas supplies in Germany. The price level of gas tracks the development of the price of oil with a time lapse of around six months.
Due to the preceding marked increase in the price of oil until mid-2008, the border price index compiled by the Federal Office of Economics and Export Control (BAFA) for gas peaked at the end of 2008. As a consequence of the drop in the price of oil in the second half of 2008, the border price index fell over the first few months of 2009 as expected. It stood at € 30.03/MWh in January and at € 22.29/MWh in April, dropping by 26%. This means that the price in April was 9% below the price seen in April 2008 (€ 24.50/MWh) and 17% below the average import price seen in 2008 (€ 26.82/MWh).
In the first quarter of 2009, the spot prices on the Dutch wholesale market TTF fluctuated at an unusually low level for the time of year. Brief price upswings in the price can be attributed to the gas dispute between Russia and Ukraine. In the second quarter, spot prices weakened for seasonal reasons. In the first half of 2009, spot prices averaged significantly below the average in the first half of 2008.
The prices of forward contracts for 2010 remained virtually unchanged at around € 20/MWh over the first half of 2009, i.e. likewise below the prior-year level.
| Development of prices for natural gas on the TTF (Dutch wholesale market) in €/MWh |
Average H1 2009 |
Average H1 2008 |
Average 2008 |
|---|---|---|---|
| Spot | 14.48 | 24.71 | 24.98 |
| Delivery 2010 | 20.36 | 29.38 | 30.81 |
EnBW's electricity generation portfolio includes CO2-emitting power stations. Under the European emissions trading system, the requisite number of emissions allowances have to be evidenced for these CO2 emissions.
The price of emission allowances (EU Allowances – EUA) for delivery in 2010 (EUA-10) virtually halved in the last six months of 2008 following the onset of the recession. This development can be traced back to the emissions savings on account of the lower level of industrial production and the fuel switching costs that have similarly dropped. This trend continued until mid-February 2009 with regard to EUA-10 prices. After a moderate rise, EUA-10 prices did not return to the level seen at the beginning of the year until mid-May. There followed another slight downwards movement until the end of the reporting period.
Allowances from projects to reduce emissions in emerging and developing countries (Certified Emission Reductions – CER) are a further means by which companies can cover at least part of their emissions. The price of CER-10 allowances generally followed the development of the price of EUA-10 allowances over the first half of 2009.
| Development of prices for emission allowances/daily quotes in €/t |
Average H1 2009 |
Average H1 2008 |
Average 2008 |
|---|---|---|---|
| EUA–10 | 13.17 | 24.82 | 23.88 |
| CER–10 | 10.99 | 16.57 | 17.58 |
Both the climate package (April) and the third energy liberalisation package (June) were passed before the elections to the European Parliament. The "Green Package" contains regulations on reductions in greenhouse emissions, on emissions trading, renewable energies and carbon dioxide capture and storage – CCS. The new emissions trading regime provides for all CO2 allowances for the energy industry to be auctioned for the third trading period from 2013. Depending on the share of CO2-based energy generation this will mean additional costs for energy suppliers and put a burden on the viability of fossil-fuelled generation. One particularly relevant aspect of the energy liberalisation package is that plans are to retain the options of an independent system operator (ISO) or an independent transmission operator (ITO) ("third way") as alternatives to ownership unbundling. This means that disposal of transmission networks will not be mandatory.
Directive on industrial emissions: A directive is being prepared at EU level aimed at reducing the pollution burden to the air, water and soil from industrial plant by lowering the maximum emissions limits for these facilities. This may mean that such facilities will need retrofitting. Before it is transposed into national law, the directive will first have to be accepted by the European Council and the European Parliament.
At a national level, the agenda in the first half of 2009 was dominated by the passing of the Energy Efficiency Act (EnEfG) and the Act on the Capture, Transportation and Storage of CO2 (KSpG). Both bills were rejected. As both cases relate to the mandatory transposition of EU directives, the wording of the acts will have to be revised once again after the elections to the German parliament.
While the failure of the Energy Efficiency Act had become apparent at an early stage, the end of the draft CCS bill came as a surprise. Under pressure of reservations expressed by the federal states that have potential CO2 storage facilities within their territories, the government coalition failed to come to an agreement at the end of June. This constitutes a disadvantage first and foremost with regard to the legal certainty of CCS pilot projects and similarly with regard to the possibility of the grants for CCS facilities being awarded as provided for in the EU's climate package.
In the second quarter of 2009, the lower house of the German parliament passed an ordinance considerably reducing the effort required to implement the cost allocation mechanism under the German Renewable Energies Act (EEG). This means that the electricity fed in under the EEG is not collected at the grid operators and physically distributed in equal amounts among suppliers but sold directly on the exchange via the transmission system operators. This simplifies the handling and reduces the risks inherent in suppliers' forecasts. The Water Resources Act (WHG) was also passed. The act did not contain the originally planned prohibition of lateral structures. This means that there is no ban on the construction of new hydro-electric power stations.
Network user charges: As of 1 January 2009 an individually set cap on the revenue from network user charges was imposed on all electricity and gas network operators in Germany over four and five years for gas and electricity grids, respectively. As the revenue caps specified by the Federal Network Agency for EnBW are generally above the 2008 network user charges, the ones most recently approved, we are anticipating a positive effect on revenue for the current fiscal year. Following the rulings by the Federal Court of Justice (BGH) of August 2008, it is not expected that the absorption of surplus revenues will cause a burden on revenue until 2010. This relates to surplus revenue generated by network operators over the previous few years by maintaining the original charges until approval of the network user charges.
Merger of gas market territories: It is expected that the reduction in market territories from twelve to ten as of 1 April 2009 will be followed by a further reduction to six. The merger of gas market territories simplifies grid access for gas transmission and permits more intense competition. Gasunie Germany, Ontras – VNG Gastransport, WINGAS TRANSPORT, DONG Energy and Statoil Hydro Germany are merging their market territories under the name of GASPOOL. The grid operators bayernets, Eni Gas Transport Germany, E.ON Gastransport, GRTgaz Germany and GVS Netz are working towards market territory cooperation within the scope of NetConnect Germany. This merger is still subject to merger approval of the Federal Anti-Trust Office.
Despite the difficult economic environment, EnBW achieved a 4.9% increase in adjusted EBIT in comparison to the prior year. The electricity upstream segment made a major contribution to this. Due to a negative non-operating result caused by impairment losses on securities and higher interest expenses, group net profit fell by 3.5%. The financial position of the company continues to be very sound.
International Financial Reporting Standard IFRS 8, which is effective for the first time in fiscal 2009, leads to a change in the segment reporting of the EnBW group. What was previously the electricity segment has now been subdivided into electricity upstream and electricity downstream. The electricity upstream segment comprises the areas of generation and trading. Sales activities, distribution and transmission have been bundled in the electricity downstream segment.
| Electricity sales of the EnBW group in billions of kWh |
Upstream | Downstream | Total | |||
|---|---|---|---|---|---|---|
| 1/1– 30/6/2009 |
1/1– 30/6/2008 |
1/1– 30/6/2009 |
1/1– 30/6/2008 |
1/1– 30/6/2009 |
1/1– 30/6/2008 |
|
| Retail customers (B2C) |
0.0 | 0.0 | 11.9 | 11.8 | 11.9 | 11.8 |
| Industry and redistributors (B2B) |
1.4 | 1.3 | 23.3 | 30.0 | 24.7 | 31.3 |
| Trade | 15.7 | 15.4 | 5.6 | 5.4 | 21.3 | 20.8 |
| Total | 17.1 | 16.7 | 40.8 | 47.2 | 57.9 | 63.9 |
The negative overall economic development had a palpable impact on electricity sales in the electricity downstream segment. Business with B2B customers saw a drop in sales of 22.3% in the first half of 2009 in comparison to the prior-year period. In addition to the sharp drop in demand, this decline is the result of the ongoing implementation of a consistent focus on margins in EnBW's sales function. In contrast, unit sales of electricity to retail customers, an area that is hardly influenced at all by cyclical fluctuation, stood at 0.1 billion kWh in the reporting period, which is slightly above the volume in the first six months of 2008. Overall, unit sales of electricity within the EnBW group were down 9.4% compared to the prior-year level.
| Gas sales of the EnBW group in billions of kWh |
1/1– 30/6/2009 |
1/1– 30/6/2008 |
Variance % |
1/1– 31/12/2008 |
|---|---|---|---|---|
| Retail customers (B2C) | 7.4 | 7.2 | 2.8 | 12.5 |
| Industry and redistributors (B2B) | 29.6 | 30.6 | –3.3 | 57.3 |
| Total | 37.0 | 37.8 | –2.1 | 69.8 |
› The EnBW group
While EnBW's unit sales of gas in the first quarter of the current fiscal year increased due to the cold and protracted winter despite the economic downturn, sales cooled in the second quarter particularly due to the higher temperatures in April. Nevertheless, unit sales in the retail customer segment increased slightly by 2.8% from a half-year perspective. On the other hand, the decline in demand caused by the economic situation was predominant in the B2B sector in the second quarter of the current fiscal year. The consequence of this was a 1.0 billion kWh drop in unit sales over the first six months of 2009, after a minor increase in unit sales of 0.6 billion kWh had been achieved in the first quarter of 2009. In addition, diversification of gas procurement on the part of major customers made itself felt; these customers had made use of opportunities to procure a larger portion of their gas needs directly on the spot market. Seen as a whole, the EnBW group's unit sales of gas in the first half of 2009 was 2.1% below unit sales in the first half of 2008.
| External revenues of the EnBW group by business segment in € millions1 |
1/1– 30/6/2009 |
1/1– 30/6/2008 |
Variance % |
1/1– 31/12/2008 |
|---|---|---|---|---|
| Electricity upstream | 1,208.3 | 1,164.8 | 3.7 | 2,541.7 |
| Electricity downstream | 5,050.9 | 5,216.0 | –3.2 | 10,194.7 |
| Gas | 1,572.9 | 1,350.9 | 16.4 | 2,881.2 |
| Energy and environmental services | 342.4 | 339.7 | 0.8 | 687.8 |
| Total | 8,174.5 | 8,071.4 | 1.3 | 16,305.4 |
After deducting electricity and natural gas tax.
In the first six months of 2009, the EnBW group generated external revenue before deducting electricity and natural gas tax of € 8,684.7 million. After deducting electricity and natural gas tax, external revenue of the group amounted to € 8,174.5 million. Despite the continuing significant decline in unit sales to B2B customers in the electricity downstream and gas segments in the second quarter, the group revenue slightly exceeded the prior-year figure of € 8,071.4 million.
Electricity upstream: Most of all, the increase in unit sales led to an increase in revenue of 3.7%. This segment's share of total group revenue increased by 0.4 percentage points in comparison to the prior year to 14.8%.
Electricity downstream: Revenue in the electricity downstream segment totalled € 5,050.9 million, i.e. 3.2% below the prior-year level. The share of this segment in total revenue dropped to 61.8% (prior year: 64.6%).
Gas: The development of gas procurement prices, which were passed on to customers, led to higher revenue than in the prior year. Revenue of € 1,572.9 million (prior year: € 1,350.9 million) is equivalent to a share of 19.2% of total group revenue. In the first half of 2008, this share had come to 16.7%.
Energy and environmental services: With a rise of € 2.7 million, revenue in this segment slightly exceeded the prior-year level in the first six months of 2009. In relation to total group revenue, the share of revenue from this segment remains unchanged at 4.2%.
The drop in other operating income of € 71.2 million to € 348.8 million and the fall in other operating expenses of € 80.8 million to € 474.6 million can essentially be attributed to a lower level of income and expenses relating to derivatives. In this respect, expenses relating to derivatives dropped further than the corresponding income. The derivatives were primarily entered into to hedge commodity-related risks. Personnel expenses increased by € 48.7 million to € 784.4 million in the reporting period. This was caused by an increase in headcount in comparison to the prior year and a collective wage increase effective as of April 2009. The group's amortisation, depreciation and write-downs were € 38.0 million below the prior-year level. In this context, an impairment loss had to be charged on the gas grid in the first half of 2008. The significant fall of € 125.6 million in the negative financial result to € -337.0 million was caused primarily by impairment losses on our financial assets incurred in the first quarter of the current fiscal year following the capital market decline and by higher interest expenses.
The group net profit in terms of the profit shares attributable to the equity holders of EnBW AG in the first half of 2009 totalled € 611.3 million (prior year: € 633.6 million). While the adjusted group net profit of € 637.0 million remains virtually at the prior-year level, non-operating group net profit fell by € 20.5 million to € -25.7 million and is consequently responsible for the lower group net profit.
One key performance indicator within the EnBW group is adjusted EBIT. Adjusted EBIT is an earnings ratio adjusted for non-operating effects to accurately reflect the development of results of operations. Non-operating results include extraordinary effects such as gains or losses on the disposal of non-current assets, extraordinary effects relating to the nuclear power provisions, income from the reversal of other provisions, expenses relating to restructuring, material effects on earnings resulting from changes in the law as well as impairment losses.
| Adjusted EBIT of the EnBW group by business segment in € millions1 |
1/1– 30/6/2009 |
1/1– 30/6/2008 |
Variance % |
1/1– 31/12/2008 |
|---|---|---|---|---|
| Electricity upstream | 921.0 | 849.1 | 8.5 | 1,461.2 |
| Electricity downstream | 59.8 | 99.9 | -40.1 | 177.8 |
| Gas | 113.4 | 99.3 | 14.2 | 192.7 |
| Energy and environmental services | 47.5 | 34.0 | 39.7 | 100.1 |
| Holding/consolidation | -74.9 | -65.3 | -14.7 | -137.9 |
| Total | 1,066.8 | 1,017.0 | 4.9 | 1,793.9 |
The figures of the comparative period have been restated.
The EnBW group increased its adjusted EBIT in the first half of 2009 by 4.9% on the prior year; it now totals € 1,066.8 million. In this context, operations in the second quarter of the current reporting period were more severely impacted by the consequences of the economic crisis than in the first quarter, which placed a burden on earnings.
In comparison to the prior year, the electricity upstream segment generated an increase in adjusted EBIT of 8.5% resulting from an improved generation margin. Increases in the gains from marketing derivatives to market and from improved terms for the forward agreements for the fiscal year 2009 had a positive effect on electricity generation in this segment. This was offset to a small extent by increased costs, mainly attributable to the procurement of electricity. The decrease in unit sales of electricity, primarily resulting from the sharp drop in total economic output, imposed a notable burden.
Adjusted EBIT in the electricity downstream segment was burdened by lower earnings from network operations. In the regulatory area, the feed-in of wind energy and increased costs for energy for the compensation of losses had a negative impact. On the other hand, relief was achieved in the area of balancing energy. The reduction in the quantities of electricity transmitted reduced the positive effect of the increase in network user charges by the Federal Network Agency at the beginning of the second quarter. Earnings from sales and distribution remained virtually unchanged at the prior-year level.
The gas segment boosted adjusted EBIT by 14.2% in the first six months of 2009 in comparison to the prior year. The main reasons for this are an increase in earnings in the network sector and higher unit sales in the B2C area as a consequence of the colder winter in comparison to the prior year.
An improvement in earnings from disposal and other services in particular enabled the energy and environmental services segment to report an increase in adjusted EBIT of 39.7%.
A net loss of € -74.9 million was incurred in the holding/consolidation segment. This represents a decrease of € 9.6 million compared to the first half of 2008 (€ -65.3 million).
| Earnings indicators of the EnBW group (adjusted) in € millions |
1/1– 30/6/2009 |
1/1– 30/6/2008 |
Variance % |
1/1– 31/12/2008 |
|---|---|---|---|---|
| Adjusted investment result | 163.3 | 145.4 | 12.3 | 217.3 |
| Adjusted financial result1 | -305.0 | -216.2 | -41.1 | -394.7 |
| Adjusted income taxes1 | -261.5 | -262.2 | 0.3 | -420.7 |
| Adjusted group net profit1 | 663.6 | 684.0 | -3.0 | 1,195.8 |
| of which profit shares attributable to minority interests |
(26.6) | (45.2) | -41.2 | (97.0) |
| of which profit shares attributable to equity holders of EnBW AG |
(637.0) | (638.8) | -0.3 | (1,098.8) |
The figures of the comparative periods have been restated.
The improvement in results of operations of the entities accounted for using the equity method meant a rise in adjusted investment result of € 17.9 million in comparison to the prior year. A significant negative impact on the adjusted financial result was exerted compared to the prior-year period by the higher interest expenses in connection with the increase in debt and lower gains from the sale of securities. All in all, this results in an adjusted group net profit in terms of the profit shares attributable to the equity holders of EnBW AG of € 637.0 million, which is virtually at the same level as the prior year despite the negative effects of the unfavourable state of the economy as a whole.
| Non-operating result of the EnBW group in € millions | 1/1– 30/6/2009 |
1/1– 30/6/2008 |
1/1– 31/12/2008 |
|---|---|---|---|
| Income from the reversal of other provisions | 45.5 | 8.9 | 48.4 |
| Income/expenses from changes in nuclear power provisions | -34.6 | 28.2 | -24.1 |
| Other effects, nuclear power | 0.0 | 0.0 | -28.5 |
| Expenses from restructuring | -1.9 | -12.7 | -11.8 |
| Other non-operating result | 3.9 | -4.3 | -39.5 |
| Non-operating EBITDA | 12.9 | 20.1 | -55.5 |
| Impairment losses | -10.5 | -61.8 | -270.2 |
| Non-operating EBIT | 2.4 | -41.7 | -325.7 |
| Non-operating investment result | 9.4 | 28.0 | 34.0 |
| Non-operating financial result | -32.0 | 4.8 | -78.4 |
| Non-operating income taxes | -3.6 | 4.4 | 82.4 |
| Non-operating group net profit | -23.8 | -4.5 | -287.7 |
| of which profit shares attributable to minority interests | (1.9) | (0.7) | (-68.2) |
| of which profit shares attributable to equity holders of EnBW AG |
(-25.7) | (-5.2) | (-219.5) |
Non-operating EBIT improved to € 2.4 million in comparison to the prior-year level of € -41.7 million. This was mainly due to higher income from the reversal of other provisions and a lower level of impairment losses than in the first half of 2008. Expenses from changes in nuclear power provisions in the first half of 2009 had the opposite effect. The higher non-operating investment result in the prior year contained a gain on disposal. The negative non-operating financial result amounting to € -32.0 million is primarily due to impairment losses recognised on securities totalling € 39.5 million. The impairment losses were necessitated by a further decline in prices on the capital markets, in the first quarter of 2009 in particular. The non-operating group net profit in terms of the profit shares attributable to the equity holders of EnBW AG came to € -25.7 million (prior year: € -5.2 million).
1 In relation to the profit shares attributable to the equity holders of EnBW AG.
The figures of the comparative period have been restated.
Alongside financing from the company's own cash flow from operating activities, which totalled € 980.5 million in the first half of 2009, EnBW has various debt instruments, unutilised in many cases: a commercial paper programme for a total of € 2.0 billion (undrawn as of 30 June 2009), a syndicated line of credit of € 2.5 billion (of which € 1.0 billion revolving on an annual basis and successfully extended in May 2009 until 21 May 2010; undrawn as of 30 June 2009) and a debt issuance programme with a line of € 7.0 billion, making it possible to issue medium- to long-term bonds as required (some € 3.8 billion utilised as of 30 June 2009). The company increased this € 5.0 billion debt issuance programme by € 2.0 billion as of 24 April 2009 in light of the announced investment programme. With a view to financing capital expenditure and acquisitions, EnBW successfully placed two medium- and long-term bonds on 1 July 2009 with a volume totalling € 1.35 billion. This means that, as of this date, around € 5.2 billion of the debt issuance programme had been utilised. A long-term bilateral credit facility for € 0.5 billion had been fully drawn as of 30 June 2009 for the construction of the RDK 8 hard coal power station in Karlsruhe. Throughout the group, EnBW has additionally issued bonds totalling CHF 500 million. The wide range of means of financing provides EnBW with a great degree of flexibility in its project financing. In 2009, there will be no need to refinance bonds already issued; there will be refinancing needs of € 217 million in 2010.
Term 6 years 30 years Maturity 2015 2039 Tranche € 750 million € 600 million Coupon 4.125% 6.125% Issue price 99.94% 98.51% ISIN code XS0438843871 XS0438844093
Details of the new EnBW bonds placed (issue date: 7 July 2009)
› The EnBW group
With a view to EnBW's increasing significance as a player in the European energy supply industry and as a capital market issuer, the credit ratings issued by Standard & Poor's and Moody's have been supplemented since the second quarter of 2009 by a rating by Fitch. Fitch also awards EnBW an investment grade (A) credit rating (Standard & Poor's: A-; Moody's: A2). In May 2009, Standard & Poor's and Moody's put the outlook for EnBW's rating under observation for a potential downgrade. The justification for this decision is potential deterioration of EnBW's financial profile due to the announced acquisition – still subject to approval by the anti-trust authorities – of a shareholding of just under 48% in VNG AG. However, both rating agencies have emphasised the positive effects of the potential acquisition on the gas segment. Fitch retains its "stable" outlook.
In the second quarter of the current fiscal year, EnBW continued to expand its growth-oriented investment programme. Total capital expenditure came to € 1,437.1 million in the first half of the year. This corresponds to an increase of € 997.8 million or more than three times the prior-year figure. Of this amount, € 494.3 million or 34.4% relates to capital expenditure on intangible assets and property, plant and equipment. The electricity upstream segment accounted for 47.5% of capital expenditure; the focus was on expansion of power plants. This increase can be primarily attributed the construction of the RDK 8 hard coal power station in Karlsruhe and the hydro-electric power station in Rheinfelden. In the energy and environmental services segment, we invested in the construction of a substitute fuel power plant in Eisenhüttenstadt.
EnBW's financial acquisitions in the first half of 2009 reached a total volume of € 942.8 million; this corresponds to an increase of € 920.6 million in comparison to the first half of 2008. This figure includes the purchase of shares in Lippendorf and Bexbach power stations which make up a large portion of the total, and pro rata payments for the acquisition of onshore wind farms in Lower Saxony and Brandenburg from Plambeck Neue Energien AG.
In the first half year of 2009 we made divestitures of € 67.9 million. These are mainly attributable to network disposals and construction cost and investment subsidies. Total net investments thus came to € 1,369.2 million.
| Net cash investments of the EnBW group in € millions |
1/1– 30/6/2009 |
1/1– 30/6/2008 |
Variance % |
1/1– 31/12/2008 |
|---|---|---|---|---|
| Electricity upstream | 234.8 | 156.5 | 50.0 | 538.1 |
| Electricity downstream | 145.1 | 141.0 | 2.9 | 400.1 |
| Gas | 19.3 | 20.9 | -7.7 | 65.3 |
| Energy and environmental services | 95.1 | 98.7 | -3.6 | 253.1 |
| Capital expenditures on intangible assets and property, plant and equipment1 |
494.3 | 417.1 | 18.5 | 1,256.6 |
| Cash paid for the acquisition of fully and proportionately consolidated entities and entities accounted for using the equity method2 |
941.0 | 21.6 | - | 107.6 |
| Cash paid for the acquisition of equity investments3 |
1.8 | 0.6 | - | 40.0 |
| Total investments | 1,437.1 | 439.3 | - | 1,404.2 |
| Cash received from disposals of intangible assets and property, plant and equipment |
-44.0 | -7.0 | - | -58.2 |
| Cash received from construction cost and investment subsidies |
-23.9 | -36.7 | -34.9 | -79.0 |
| Cash received from the sale of fully and proportionately consolidated entities and entities accounted for using the equity method4 |
0.0 | -5.4 | - | -62.4 |
| Cash received from the sale of equity investments3 |
0.0 | -70.4 | - | -70.5 |
| Total divestitures | -67.9 | -119.5 | -43.2 | -270.1 |
| Net investment (effect on cash) | 1,369.2 | 319.8 | - | 1,134.1 |
The figures of the comparative periods have been restated.
2 This does not include cash and cash equivalents acquired. In the reporting period, these amount to € 2.0 million
(1/1–30/6/2008: € 1.2 million; 1/1–31/12/2008: € 3.6 million). 3
Without investments held as financial assets.
4 This does not include cash and cash equivalents disposed of upon sale. In the reporting period, these amount to € 0.0 million
(1/1 –30/6/2008: € 2.2 million; 1/1 – 31/12/2008: € 2.2 million).
| Free cash flow in € millions1 | 1/1– 30/6/2009 |
1/1– 30/6/2008 |
Variance % |
1/1– 31/12/2008 |
|---|---|---|---|---|
| FFO electricity upstream | 935.8 | 1,174.7 | -20.3 | 1,692.8 |
| FFO electricity downstream | 150.1 | 154.1 | –2.6 | 237.9 |
| FFO gas | 151.1 | 146.6 | 3.1 | 278.0 |
| FFO energy and environmental services | 93.4 | 85.8 | 8.9 | 208.3 |
| FFO holding/consolidation | -69.2 | –65.9 | -5.0 | -91.4 |
| Funds from operations (FFO) before taxes and financing, total |
1,261.2 | 1,495.3 | -15.7 | 2,325.6 |
| Change in assets and liabilities from operating activities |
-171.0 | -377.8 | 54.7 | -536.1 |
| Income tax paid | -109.7 | -216.0 | 49.2 | -265.6 |
| Cash flow from operating activities | 980.5 | 901.5 | 8.8 | 1,523.9 |
| Capital expenditures on intangible assets and property, plant and equipment |
-494.3 | -417.1 | 18.5 | -1,256.6 |
| Cash received from disposals of intangible assets and property, plant and equipment |
44.0 | 7.0 | - | 58.2 |
| Cash received from construction cost and investment subsidies |
23.9 | 36.7 | -34.9 | 79.0 |
| Free cash flow | 554.1 | 528.1 | 4.9 | 404.5 |
The figures of the comparative periods have been restated.
Despite a 3.9% increase in EBITDA, the funds from operations (FFO) before taxes and financing of € 1,261.2 million fell short of the prior year by € 234.1 million. This decrease primarily stems from the electricity upstream segment, as the increase in the market values of derivatives in the reporting period is treated as non-cash income. In contrast, cash flow from operating activities improved by € 79.0 million to € 980.5 million. The reason for this was a much smaller increase in the balance of assets and liabilities from operating activities in comparison to the prior year. Furthermore, income taxes paid in the current period are lower than in the prior year. The reporting period includes tax refunds relating to withholding tax payments made in prior years and the payment of the corporate income tax credit. The income taxes paid for the prior year additionally included back payments. Despite higher investments, free cash flow grew in the first half of 2009 by € 26.0 million to € 554.1 million.
| Cash flow statement in € millions1 | 1/1– 30/6/2009 |
1/1– 30/6/2008 |
Variance % |
1/1– 31/12/2008 |
|---|---|---|---|---|
| Cash flow from operating activities | 980.5 | 901.5 | 8.8 | 1,523.9 |
| Cash flow from investing activities | -1,601.8 | 0.3 | - | -366.4 |
| Cash flow from financing activities | -313.9 | -841.4 | 62.7 | 598.6 |
| Net change in cash and cash equivalents | -935.2 | 60.4 | - | 1,756.1 |
| Net foreign exchange difference | 1.3 | 3.0 | - | 10.6 |
| Change in cash and cash equivalents | -933.9 | 63.4 | - | 1,766.7 |
The figures of the comparative periods have been restated.
Cash flow from investing activities amounted to € -1,601.8 million in the reporting period, after € 0.3 million in the prior year. This cash outflow is mainly the result of a significant increase in cash paid for the acquisition of fully and proportionately consolidated entities and entities accounted for using the equity method and a lower level of cash received from the sale of financial instruments. Due to the increase in financial liabilities, cash outflow from financing activities decreased by € 527.5 million to € -313.9 million in comparison to the prior-year period.
Taking exchange rate differences into account, this led to the cash and cash equivalents of the EnBW group falling by € 933.9 million to € 2,150.6 million. The closing balance of cash and cash equivalents includes € 42.3 million of cash and cash equivalents recognised under assets held for sale.
Recognition of GESO Beteiligungs- und Beratungs-AG and its subsidiaries as a disposal group led to various reclassifications in the balance sheet. The acquisition of the shares in the Lippendorf and Bexbach power stations led to an increase in intangible assets, property, plant and equipment and financial liabilities and to a drop in cash and cash equivalents. The decline in trade receivables and payables was caused by a lower level of receivables and liabilities in connection with CO2 allowances. The increase in the market values of derivative financial instruments led to an increase in other current assets and liabilities.
Compared with 31 December 2008, the total net assets of the group saw a rise of 2.1% to € 33,620.1 million. The equity ratio remained unchanged at around 17.0%.
Primarily the decrease in cash and cash equivalents and the increase in financial liabilities within the group brought about an increase in net financial liabilities of 35.0%. This development was the result of increased investments. Net debt increased by 15.1% to € 7,862.9 million due to the growth in net financial liabilities.
| Net debt in € millions | 30/6/2009 | 31/12/2008 | Variance % |
|---|---|---|---|
| Cash1 | -1,624.6 | -2,216.3 | -26.7 |
| Short-term investments1 | -160.5 | -152.4 | 5.3 |
| Cash and cash equivalents1 | -1,785.1 | -2,368.7 | -24.6 |
| Bonds2 | 4,108.4 | 4,110.3 | 0.0 |
| Liabilities to banks | 1,033.9 | 556.4 | 85.8 |
| Other financial liabilities | 582.7 | 620.5 | -6.1 |
| Financial liabilities2 | 5,725.0 | 5,287.2 | 8.3 |
| Net financial liabilities1, 2 | 3,939.9 | 2,918.5 | 35.0 |
| Pension and nuclear power provisions | 9,171.0 | 9,013.1 | 1.8 |
| Long-term investments and loans | -4,662.9 | -4,231.4 | 10.2 |
| Cash and cash equivalents of the special funds and short term investments to cover the pension and nuclear power |
|||
| provisions | -732.1 | -1,218.7 | -39.9 |
| Liabilities from put options | 303.8 | 514.4 | -40.9 |
| Other | -156.8 | -162.4 | -3.4 |
| Net debt2 | 7,862.9 | 6,833.5 | 15.1 |
Without cash and cash equivalents of the special funds and short-term investments to cover the pension and nuclear power provisions. 2 Adjusted for valuation effects from interest-induced hedging transactions.
Transactions with related parties are disclosed in the notes and explanations to the interim consolidated financial statements.
| Employees of the EnBW group1 | 30/6/2009 | 31/12/2008 | Variance % |
|---|---|---|---|
| Electricity upstream | 4,619 | 4,546 | 1.6 |
| Electricity downstream | 6,451 | 7,130 | -9.5 |
| Gas | 722 | 923 | -21.8 |
| Energy and environmental services | 8,431 | 7,282 | 15.8 |
| Holding | 586 | 620 | -5.5 |
| Total | 20,809 | 20,501 | 1.5 |
| Full-time equivalents2 | 19,859 | 19,610 | 1.3 |
Number of employees without apprentices/trainees and without inactive employees.
Number of employees translated into full-time equivalents.
The number of employees in the EnBW group increased by 308 as of 30 June 2009 in comparison to 31 December 2008 bringing the headcount to 20,809. This increase is primarily due to developments in the first quarter. For example, EnBW hired some 180 trainees on permanent contracts within the group at the beginning of 2009. A change in the allocation of a number of employees from the electricity downstream, gas and holding segments in the first quarter of the fiscal year was the main reason for the growth in headcount in the energy and environmental services segment, which also assumed part of the operations of ENSO Energie Sachsen Ost AG.
The collective agreement reached between the employers and employee representatives of the private energy industry in Baden-Württemberg in April provides for a two-step wage increase and a one-off payment of € 1,200. Wages increased by 3.6% with retroactive effect as of 1 April 2009; there will be a further increase of 2.0% effective as of 1 April 2010. The collective agreement is effective until 31 December 2010.
The issues of age and disability were the focus of the Diversity Day held in Karlsruhe on 19 May 2009, which was inspired by an initiative of the EDF group relating to (staff) diversity. This event was taken as an opportunity to present a touring exhibition on the consequences of demographic change for companies at the Karlsruhe, Stuttgart and Biberach locations. The age structure of workforces poses major human resources challenges to companies in the light of an ageing society. For this reason, EnBW is currently performing a group-wide demography analysis. The results are intended to support suitable personnel development measures.
Older employees going into retirement and employee turnover brings the danger of valuable knowledge being lost. In order to counter this development, EnBW already started applying the "knowledge relay" in 2007. This programme ensures that experience, specialist, management and project know-how is passed on systematically. ENBW SHARE MANAGEMENT REPORT FINANCIAL STATEMENTS SERVICE › Research and development
MEREGIO mobile: A consortium under the leadership of EnBW is one of the five winners of the technology competition "Information and Communication Technology for Electromobility" sponsored by the Federal Ministry of Economics. The aim of the MEREGIO mobile project is to develop and build up extensive infrastructure in Baden-Württemberg for the use of electric vehicles and to carry out testing in a regional field test by the end of 2011. In addition to public charging points, the project intends for intelligent household energy management systems to be linked to electric vehicles within the household networks (smart home). This includes intelligent chargers that use electricity to charge batteries when it is less expensive, at night for example. At the same time the batteries can be used as a dynamic buffer storage units to optimise the energy system by making electricity available for use in the network in the event of bottlenecks, for example.
This interlinked energy system can help to balance out fluctuations in generation and consumption. Such fluctuations are caused by the feeding-in of wind energy, for example, and give rise to additional costs for balancing energy. Intelligent systems allow consumers to draw electricity when it is less expensive. This ultimately brings about potential savings for both parties. Complex scenarios for the linking of electric vehicles to the energy systems are being simulated in a specially designed demonstration laboratory.
MEREGIO mobile is closely linked to the "MEREGIO" project aimed at implementing "model regions with a high level of energy efficiency and minimum CO2 emissions". Under this project, the plans are for final customers to be given access through EnBW's intelligent electricity meter to new energy efficiency products and services including dynamic charging rates.
Geothermal heating system: EnBW used a new sealing material for geothermal ground probes developed in conjunction with Karlsruhe University for the first time this May. This material consists of clay pellets whose swelling properties are especially suited to permanently sealing ground probes and automatically sealing any leaks that may occur. The new material is intended to further boost the safety of geothermal heating systems and make a contribution to simplifying the approval procedure for climate-friendly geothermal heating in sensitive water supply areas.
Via its subsidiary EnBW International Finance B.V., EnBW issued two bonds on 1 July 2009 with a total volume of € 1.35 billion with terms of 6 years and 30 years, respectively, with a view to financing EnBW's capital expenditures and acquisitions.
On 6 July 2009, the Federal Anti-Trust Office approved EnBW's acquisition of shares in EWE AG, Oldenburg, on condition that certain requirements are met. This means that EnBW will take over 26% of the capital stock of EWE AG in the form of a share purchase and a capital increase. The shares were transferred on 21 July 2009.
EnBW Erneuerbare Energien GmbH, Stuttgart, and Altus AG, Karlsruhe, signed a syndicate agreement on 14 July 2009 with the aim of forming a joint venture. This joint venture will initially be furnished with the project rights to a total of six wind energy projects in Baden-Württemberg, Rhineland-Palatinate and Brandenburg with a total output of 150 MW and is intended to prepare these projects for the beginning of construction work.
For the EnBW group the dramatic impact of the economic crisis made certain risk factors more prominent. As a whole, the company's risk situation has deteriorated; there are no risks to the group's ability to continue as a going concern, however.
The risk management of the EnBW group covers the identification, analysis and assessment of risks. This process facilitates the early detection of risks in an appropriate manner. Risk management is divided into central and local units. Group-wide methods and processes are specified by the group's risk management at the level of the holding company; risk reporting to the Board of Management is carried out at least once a month. The risks for the EnBW group can be subdivided into systemic and industry risks, strategic risks, operating risks, IT risks, personnel risks, financial risks and other risks. In the following we report on the risks that have gained in importance or have come about as a consequence of developments in the first half of 2009.
Development of the economy: All in all, the clear economic downturn in the first half of 2009 resulted in lower electricity and gas demand, in particular on the part of industry. Some of EnBW's customers also lowered production. The reduction in consumption increases sales risks in EnBW's distribution function and may cause part of the sales margin to break away. The extent of the fall in unit sales varies greatly from one industry to another. This risk item grew at EnBW in the course of the second quarter of 2009 due to the marked decline in overall economic output. For the quantities of electricity already contracted but not sold as budgeted following the drop in electricity demand there is a remarketing risk as a consequence of the decline in the price level on the wholesale market.
Directive on industrial emissions: The tightening of the maximum limits for nitrogen oxides and sulphur dioxide emissions for industrial plants is under discussion at EU level. This may mean that EnBW's existing plants will need retrofitting. The volume of investments necessary will depend on the number of plants affected and the technical details in each individual case.
Strategy implementation: As part of its corporate strategy, EnBW is aiming to implement an extensive investment programme. Construction projects intended to safeguard and expand EnBW's generation capacities give rise to three general risk items. On the one hand, large-scale projects are particularly dependent on approval by authorities which may be delayed in certain cases or cause projects to be cancelled if such approval is not granted, potentially resulting in advance investments being written off. On the other hand, the current market environment gives rise to financing risks that may impact the overall costs of a project. Furthermore, the implementation phase of each project generally involves quality, scheduling and cost risks. EnBW makes efforts to counter these risks by means of suitable contractual terms and conditions and comprehensive claims management.
Loss of franchises: In the reporting period we observed fiercer competition for the franchises we hold. At the same time, there is a trend emerging of towns and municipalities showing interest in bringing their gas and water networks back under public control. These moves towards regaining municipal control add to the risk of franchises being lost. EnBW counteracts potential losses in this respect through an active franchise and relationship management with towns and municipalities.
Counterparty risk: With a view to the ongoing economic crisis, it will be necessary to assume that the number of businesses becoming insolvent will increase. This means an increased risk of bad debts. In addition to an increase in the number of insolvencies, it is expected for there to be increased delays in the payment of receivables. EnBW's risk management actively manages credit risks with customers and trading partners with a view to fencing in potential negative effects.
Asset management: In the allocation of its funds, EnBW pursues a conservative strategy and pays attention to credit standing, a high level of liquidity and broad diversification of the investments. The developments on the capital markets and the increased level of volatility mean that there is a higher measurement risk, mainly for the share portfolio. This risk has abated somewhat due to the positive market developments in the second quarter of 2009. Nevertheless, there naturally remains the risk of annual target returns not being reached.
The risk situation of the EnBW group deteriorated mainly due to the consequences of the financial and economic crisis. In the operating area, it is most of all remarketing and sales risks that have already become reality with an effect on profit or loss. Extraordinary burdens on earnings may arise from the movements on the capital markets due to the need to recognise impairment losses on investments. Such impairment losses have already been recognised in the current fiscal year, primarily in the first quarter.
In our opinion, there are no risks to the ability of the company to continue as a going concern, either from individual risks or from the overall risk position of the EnBW group.
Although the effects of the economic crisis have already become perceptible, EnBW assumes that it will be possible to increase adjusted EBIT slightly compared to the prior year. The decisive factor is positive developments in the electricity sector which also include the acquisition of power station capacities. Burdens on the financial results – among other reasons, as a consequence of the economic and financial crisis – will, however, cause adjusted group net profit to fall below the prior-year level.
In the following forecast, we take an in-depth look at the expected future development of EnBW and the business environment for the current fiscal year. It can be seen that the present economic environment increases the uncertainty with regard to predictions of future development, as the premises on which they were based can quickly become outdated. The framework conditions give rise to opportunities and risks for the business development of EnBW. Current risks are summarised in the section on risk management. An exhaustive presentation of business development up to 2010 can be found in our 2008 annual report.
Overall economic developments: The economic situation is not expected to improve before the end of the year. The downswing is merely expected to start slowing. A World Bank study published at the end of June forecasts a decline in global economic output of 2.9%. A drop of 4.5% is anticipated for the euro area. In its monthly report for June, Deutsche Bundesbank reckons with Germany's gross domestic product shrinking by 6.2%.
Electricity market: Large fluctuations in economic output are reflected above all in industrial demand for electricity. The significant drop in industrial production in the first half of the year and the overall economic situation anticipated for 2009 as a whole led to a considerable decline in electricity consumption until mid-year, which will probably continue in the second half of the year. Electricity demand will continue to be largely dependent on overall economic development and will have a noticeable effect on electricity prices in addition to the prices of fuel and CO2 on the forward markets. The forward market for coal and oil lists higher prices for deliveries further in the future than for the next year (2010). For this reason, the forward market price of electricity for delivery in later years is also higher than for those in the next year. Generally speaking, however, it may be assumed that the high level of price volatility will continue, due to the prevailing great uncertainties.
CO2 market: The significance of economic development for the price of emissions allowances has increased with the current recession. A great degree of volatility on the CO2 markets can be expected due to the high level of uncertainty about future energy demand and the volume of emissions.
Gas market: Weakening demand and a robust supply situation have led to the current low prices for deliveries in the immediate future (spot market). Due to the upward trend of the forward curve for oil and as a consequence of gas prices being indexed to oil prices, the average price of imported gas (border price) will increase again over the next few months.
Acquisitions and strategy: In cooperation with the Turkish industrial company Borusan Holding, we founded a joint venture in April; anti-trust proceedings are still pending. The common goal is future cooperation in Turkey on the development and construction of power stations, primarily in the field of renewable energies.
The Federal Anti-Trust Office approved EnBW's plans to acquire a 26% interest in EWE AG on 6 July but imposed conditions. These conditions require either the sale of EWE's shares in VNG or the sale of EnBW's subsidiary GESO Beteiligungs- und Beratungs AG to a third party. The Federal Anti-Trust Office has announced that it plans to pass its decision on EnBW's acquisition of the shares in VNG held by EWE by 15 September.
The power station capacities transferred from E.ON at the end of May will have a positive effect on revenue and earnings in the second half of 2009.
Financing and capital expenditure: Following the successful placement of two bonds in July with a total volume of € 1.35 billion and utilisation of a credit facility of € 0.5 billion, there will probably be no further financing requirements in connection with EnBW's investment and acquisition projects in 2009. We continue to work on the assumption of total net investment volume coming to € 7.7 billion for the period from 2009 to 2011. In addition to the planned disposal of GESO, this includes further divestitures amounting to € 1.5 billion. Net debt will increase by around € 2.0 billion by 2011.
Anticipated development of earnings: In contrast to the forecast in the 2008 annual report, the drop in unit sales in the course of the economic crisis means that our budget provides for only slight earnings growth in comparison to the prior year in the electricity upstream segment (generation and trading). We anticipate only a slight rise in earnings for the electricity downstream segment (distribution and regulatory area) in the current fiscal year. The reasons for this are the increase in network user charges implemented at the beginning of April and a distribution result anticipated to be better than the prior year. We expect a minor increase in adjusted EBIT at group level due to purchased power station capacities; in the annual report 2008 we had forecast stable earnings.
| Development of earnings 2009 (adjusted EBIT) compared to the prior year |
Annual Report 2008 | H1 2009 |
|---|---|---|
| Electricity upstream segment | rising (4% to 6%) | rising slightly (0% to 3%) |
| Electricity downstream segment | stable | rising slightly (0% to 3%) |
| Gas segment | falling (-5% to -10%) | falling (-5% to -10%) |
| Energy and environmental services segment | stable | stable |
| Consolidation | positive | |
| Adjusted EBIT, group | stable | rising slightly (0 to 3%) |
With regard to adjusted group net profit, we anticipate a result below the prior-year level. The reasons for this are delays in the acquisition of the shares in EWE AG, higher interest expenses and the negative effects of the economic and financial crisis on minority interests and in the area of asset management.
| € millions1 | 1/4– 30/6/2009 |
1/4– 30/6/2008 |
1/1– 30/6/2009 |
1/1– 30/6/2008 |
|---|---|---|---|---|
| Revenue including electricity and | ||||
| natural gas tax | 3,582.2 | 3,914.2 | 8,684.7 | 8,633.6 |
| Electricity and natural gas tax | -200.0 | -253.9 | -510.2 | -562.2 |
| Revenue | 3,382.2 | 3,660.3 | 8,174.5 | 8,071.4 |
| Changes in inventories | 3.7 | 1.8 | 8.9 | 12.7 |
| Own work capitalised | 12.8 | 11.5 | 19.7 | 20.0 |
| Other operating income | 139.6 | 312.5 | 348.8 | 420.0 |
| Cost of materials | -2,339.4 | -2,681.8 | -5,813.1 | -5,809.1 |
| Personnel expenses | -414.9 | -385.1 | -784.4 | -735.7 |
| Other operating expenses | -219.7 | -337.3 | -474.6 | -555.4 |
| EBITDA | 564.3 | 581.9 | 1,479.8 | 1,423.9 |
| Amortisation and depreciation | -203.7 | -255.3 | -410.6 | -448.6 |
| Earnings before interest and taxes (EBIT) | 360.6 | 326.6 | 1,069.2 | 975.3 |
| Investment result | 116.6 | 86.0 | 172.7 | 173.4 |
| of which share of profit from entities accounted for using the equity method |
(95.8) | (59.3) | (139.0) | (110.7) |
| of which other investment income | (20.8) | (26.7) | (33.7) | (62.7) |
| Financial result | -149.8 | -97.0 | -337.0 | -211.4 |
| of which finance revenue | (73.2) | (115.5) | (198.9) | (206.7) |
| of which finance costs | (-223.0) | (-212.5) | (-535.9) | (-418.1) |
| Earnings before tax (EBT) | 327.4 | 315.6 | 904.9 | 937.3 |
| Income taxes | -104.3 | -84.7 | -265.1 | -257.8 |
| Group net profit | 223.1 | 230.9 | 639.8 | 679.5 |
| of which profit shares attributable to minority interests |
(9.4) | (19.1) | (28.5) | (45.9) |
| of which profit shares attributable to equity holders of EnBW AG |
(213.7) | (211.8) | (611.3) | (633.6) |
| Shares outstanding (millions), weighted average |
244.257 | 244.257 | 244.257 | 244.257 |
| Earnings per share from continuing operations (€)2 |
0.87 | 0.87 | 2.50 | 2.59 |
| Earnings per share from group net profit (€)2 | 0.87 | 0.87 | 2.50 | 2.59 |
The figures of the comparative period have been restated.
Basic and diluted; in relation to the profit shares attributable to the equity holders of EnBW AG.
ENBW SHARE MANAGEMENT REPORT FINANCIAL STATEMENTS SERVICE › Statement of comprehensive
income
| € millions1 | 1/4– 30/6/2009 |
1/4– 30/6/2008 |
1/1– 30/6/2009 |
1/1– 30/6/2008 |
|---|---|---|---|---|
| Group net profit | 223.1 | 230.9 | 639.8 | 679.5 |
| Difference from currency translation | 27.9 | 17.8 | -12.3 | 39.4 |
| Cash flow hedge | 172.9 | 60.5 | 149.6 | 77.3 |
| Available-for-sale financial assets | 142.5 | -18.6 | 52.4 | -207.1 |
| Entities accounted for using the equity method |
-42.1 | -31.3 | -178.6 | 49.9 |
| Income taxes on income and expenses recognised directly in equity |
-27.1 | -10.2 | -4.5 | -15.1 |
| Other comprehensive income | 274.1 | 18.2 | 6.6 | -55.6 |
| Total comprehensive income | 497.2 | 249.1 | 646.4 | 623.9 |
| of which profit shares attributable to minority interests |
(14.8) | (14.5) | (34.7) | (41.3) |
| of which profit shares attributable to equity holders of EnBW AG |
(482.4) | (234.6) | (611.7) | (582.6) |
The figures of the comparative periods have been restated.
| € millions1 | 30/6/2009 | 31/12/2008 | 1/1/2008 |
|---|---|---|---|
| Assets | |||
| Non-current assets | |||
| Intangible assets | 2,019.3 | 1,687.8 | 1,657.9 |
| Property, plant and equipment | 11,440.3 | 11,585.3 | 11,417.2 |
| Investment properties | 68.8 | 86.6 | 87.7 |
| Entities accounted for using the equity method | 1,635.8 | 1,932.2 | 1,856.5 |
| Other financial assets | 5,355.0 | 4,960.3 | 5,734.4 |
| Trade receivables | 421.6 | 400.7 | 372.6 |
| Income tax refund claims | 203.9 | 228.2 | 253.8 |
| Other non-current assets | 203.6 | 204.1 | 179.8 |
| Deferred taxes | 24.0 | 28.7 | 6.0 |
| 21,372.3 | 21,113.9 | 21,565.9 | |
| Current assets | |||
| Inventories | 793.7 | 862.9 | 732.7 |
| Financial assets | 489.6 | 584.7 | 727.6 |
| Trade receivables | 2,441.4 | 3,181.5 | 2,108.7 |
| Income tax refund claims | 298.9 | 305.0 | 255.1 |
| Other current assets | 4,563.9 | 3,800.2 | 1,725.6 |
| Cash and cash equivalents | 2,108.3 | 3,084.5 | 1,317.8 |
| 10,695.8 | 11,818.8 | 6,867.5 | |
| Assets held for sale | 1,552.0 | 4.0 | 3.4 |
| 12,247.8 | 11,822.8 | 6,870.9 | |
| 33,620.1 | 32,936.7 | 28,436.8 | |
| Equity and liabilities | |||
| Equity | |||
| Group shares | |||
| Subscribed capital | 640.0 | 640.0 | 640.0 |
| Capital reserve | 22.2 | 22.2 | 22.2 |
| Revenue reserves | 4,440.0 | 4,319.7 | 3,788.4 |
| Revaluation reserve in accordance with IFRS 3 | 49.6 | 49.6 | 49.6 |
| Treasury shares | -204.1 | -204.1 | -204.1 |
| Total net income recognised in equity | -38.9 | -39.3 | 756.0 |
| 4,908.8 | 4,788.1 | 5,052.1 | |
| Minority interests | 809.5 | 803.4 | 950.3 |
| 5,718.3 | 5,591.5 | 6,002.4 | |
| Non-current liabilities | |||
| Provisions | 9,481.6 | 9,307.8 | 8,989.1 |
| Deferred taxes | 1,614.7 | 1,634.8 | 1,617.1 |
| Financial liabilities | 5,369.4 | 4,925.1 | 3,364.2 |
| Other liabilities and subsidies | 1,958.7 | 2,091.9 | 2,127.0 |
| 18,424.4 | 17,959.6 | 16,097.4 | |
| Current liabilities | |||
| Provisions | 905.7 | 1,109.1 | 1,131.3 |
| Financial liabilities Trade payables |
375.6 2,363.1 |
394.7 3,400.5 |
588.3 2,323.3 |
| Income tax liabilities | 42.5 | 12.3 | 6.3 |
| Other liabilities and subsidies | 5,010.2 8,697.1 |
4,469.0 9,385.6 |
2,279.9 6,329.1 |
| Liabilities directly associated with the assets classified as | |||
| held for sale | 780.3 | 0.0 | 7.9 |
| 9,477.4 | 9,385.6 | 6,337.0 | |
| 33,620.1 | 32,936.7 | 28,436.8 |
The figures of the comparative periods have been restated.
| € millions1 | 1/1– 30/6/2009 |
1/1– 30/6/2008 |
|---|---|---|
| 1. Operating activities | ||
| EBITDA | 1,479.8 | 1,423.9 |
| Change in non-current provisions | -68.4 | -115.5 |
| Gain/loss on disposal of non-current assets | -8.3 | -2.7 |
| Other non-cash expenses/income | -141.9 | 189.6 |
| Funds from operations (FFO) before tax and financing | 1,261.2 | 1,495.3 |
| Change in assets and liabilities from operating activities | -171.0 | -377.8 |
| Inventories | (11.2) | (-68.4) |
| Net balance of trade receivables and payables | (-382.4) | (-316.9) |
| Net balance of other assets and liabilities | (263.8) | (75.9) |
| Current provisions | (-63.6) | (-68.4) |
| Income tax paid | -109.7 | -216.0 |
| Cash flow from operating activities | 980.5 | 901.5 |
| 2. Investing activities | ||
| Capital expenditures on intangible assets and property, plant and equipment | -494.3 | -417.1 |
| Cash received from disposals of intangible assets and property, plant and equipment |
44.0 | 7.0 |
| Cash received from construction cost and investment subsidies | 23.9 | 36.7 |
| Cash paid for the acquisition of fully and proportionately consolidated entities and entities accounted for using the equity method |
-939.0 | -20.4 |
| Cash received from the sale of fully and proportionately consolidated entities and entities accounted for using the equity method |
0.0 | 3.2 |
| Change in securities and investments | -486.1 | 153.3 |
| Interest received | 141.8 | 130.4 |
| Dividends received | 107.9 | 107.2 |
| Cash flow from investing activities | -1,601.8 | 0.3 |
The figures of the comparative period have been restated.
_29
| € millions1 | 1/1– 30/6/2009 |
1/1– 30/6/2008 |
|---|---|---|
| 3. Financing activities | ||
| Interest paid for investing activities | -169.2 | -164.4 |
| Dividends paid | -539.0 | -415.7 |
| Proceeds from borrowings | 570.3 | 255.0 |
| Repayment of financial liabilities | -176.0 | -508.5 |
| Capital reduction for minority interests | 0.0 | -7.8 |
| Cash flow from financing activities | -313.9 | -841.4 |
| Net change in cash and cash equivalents | -935.2 | 60.4 |
| Net foreign exchange difference | 1.3 | 3.0 |
| Change in cash and cash equivalents | -933.9 | 63.4 |
| Cash and cash equivalents at the beginning of the period | 3,084.5 | 1,317.8 |
| Cash and cash equivalents at the end of the period | 2,150.6 | 1,381.2 |
| of which cash and cash equivalents recognised as current assets | (2,108.3) | (1,381.2) |
| of which cash and cash equivalents of assets held for sale | (42.3) | (0.0) |
The figures of the comparative period have been restated.
| € millions1 | 1/1– 30/6/2009 |
1/1– 30/6/2008 |
|---|---|---|
| Interest paid for investing activities (capitalised borrowing costs) | -12.8 | -2.7 |
| Interest paid for investing activities | -169.2 | -164.4 |
| Total interest paid in the period | -182.0 | -167.1 |
The figures of the comparative period have been restated.
ENBW SHARE MANGEMENT REPORT FINANCIAL STATEMENTS SERVICE
› Statement of changes in equity
| € millions1 | Group shares | Minority interests |
Total |
|---|---|---|---|
| As of 31 December 2007 | 5,051.4 | 950.3 | 6,001.7 |
| Changes in accounting policy | 0.7 | 0.0 | 0.7 |
| As of 31 December 2007 after changes in accounting policy | 5,052.1 | 950.3 | 6,002.4 |
| Total net income recognised in equity | -51.0 | -4.6 | -55.6 |
| Group net profit | 633.6 | 45.9 | 679.5 |
| Total comprehensive income | 582.6 | 41.3 | 623.9 |
| Dividends paid | -368.8 | -46.9 | -415.7 |
| Other changes | 0.0 | -82.4 | -82.4 |
| As of 30 June 2008 | 5,265.9 | 862.3 | 6,128.2 |
| As of 31 December 2008 | 4,779.9 | 803.4 | 5,583.3 |
| Changes in accounting policy | 8.2 | 0.0 | 8.2 |
| As of 31 December 2008 after changes in accounting policy | 4,788.1 | 803.4 | 5,591.5 |
| Total net income recognised in equity | 0.4 | 6.2 | 6.6 |
| Group net profit | 611.3 | 28.5 | 639.8 |
| Total comprehensive income | 611.7 | 34.7 | 646.4 |
| Dividends paid | -491.0 | -48.0 | -539.0 |
| Other changes | 0.0 | 19.4 | 19.4 |
| As of 30 June 2009 | 4,908.8 | 809.5 | 5,718.3 |
The figures of the comparative period have been restated.
The interim financial statements of the EnBW group are prepared according to the International Financial Reporting Standards (IFRS) the adoption of which is mandatory in the EU at the balance sheet date. In addition, the related interpretations (IFRIC/SIC) are observed. Standards and interpretations that have not yet come into force have not been adopted.
The accounting policies applied for the interim consolidated financial statements as of 30 June 2009 are the same as those for the consolidated financial statements as of 31 December 2008 with the exception of the following new policies.
In compliance with IAS 34, the reporting scope selected for the presentation of the consolidated financial statements of EnBW AG as of 30 June 2009 was condensed compared to that of the consolidated financial statements as of 31 December 2008.
Besides the income statement, the financial statements include a condensed statement of comprehensive income, a balance sheet, a condensed cash flow statement and a condensed statement of changes in equity.
All significant transactions and events in the reporting period are explained in the interim group management report.
The International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) have issued the following new standards and interpretations, the adoption of which is mandatory as of the fiscal year 2009:
› Notes and explanations
| Income statement in € millions | 1/1– 30/6/2008 |
1/1– 31/12/2008 |
|---|---|---|
| Finance costs | 2.7 | 10.6 |
| Earnings before tax (EBT) | 2.7 | 10.6 |
| Income taxes | -0.8 | -3.1 |
| Group net profit | 1.9 | 7.5 |
| of which profit shares attributable to equity holders of EnBW AG | (1.9) | (7.5) |
| Balance sheet in € millions | 31/12/2008 | 1/1/2008 |
|---|---|---|
| Property, plant and equipment | 11.6 | 1.0 |
| Revenue reserves | 8.2 | 0.7 |
| Deferred taxes | 3.4 | 0.3 |
| Cash flow statement in € millions | 1/1– 30/6/2008 |
1/1– 31/12/2008 |
| Capital expenditures on intangible assets and property, plant and equipment | -2.7 | -10.6 |
| Interest paid for financing activities | 2.7 | 10.6 |
› IAS 32 "Financial Instruments: Presentation": The main changes relate to the disclosure of certain puttable financial instruments and of obligations which only arise on liquidation. Some financial instruments which currently qualify as financial liabilities will therefore be classified as equity. The amendments are effective for the first time for fiscal years beginning on or after 1 January 2009. First-time adoption did not have any effect on EnBW's consolidated financial statements.
› IFRIC 14 "The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction": This interpretation provides guidance on how to determine the limit of IAS 19 "Employee Benefits" for a surplus that can be carried as an asset. In addition, it explains the effects on the measurement of assets and provisions for defined benefit plans on account of a legal obligation to make minimum contributions, e.g. in accordance with statutory requirements or the terms and conditions of the plan. This is to ensure that entities consistently recognise any surplus plan assets as an asset. However, IFRIC 14 does not require the employer to recognise any further obligation as long as the minimum funding contribution is repaid to the entity. This interpretation is effective for fiscal years beginning on or after 31 December 2008. First-time adoption of IFRIC 14 had no material effect on EnBW's consolidated financial statements.
The financial statements of the domestic and foreign subsidiaries and joint ventures included in consolidation were prepared in accordance with the accounting policies of EnBW.
Capital consolidation is performed according to the purchase method by offsetting the cost of acquisition against the proportionate revalued equity of the subsidiaries at the date of acquisition. Assets, liabilities and contingent liabilities are carried at fair value. Any remaining positive differences are recognised as goodwill. Negative differences are immediately recognised in profit or loss following a review of their calculation.
When consolidating minority interests acquired in entities that are already fully consolidated, the net assets are not revalued. Any positive difference between the consideration and the carrying amount of the additional share of the net assets acquired is recognised in goodwill. Any negative difference is recognised in profit or loss.
Receivables, liabilities and provisions between the consolidated entities are netted. Intercompany income is offset against the corresponding expenses. Intercompany profits are eliminated, unless they are immaterial. Deferred taxes are recorded.
Joint ventures are consolidated according to the same principles as subsidiaries.
The same accounting policies apply to entities accounted for using the equity method. Goodwill is included in the carrying amount of the investment. Negative differences are recognised in profit or loss via investment result.
Effective as of 31 March 2009 and 21 April 2009, respectively, EnBW acquired 100% of the shares in Plambeck Neue Energien Windpark Fonds LX GmbH & Co. KG, Cuxhaven, Plambeck Neue Energien Windpark Fonds CI GmbH & Co. KG, Cuxhaven and Plambeck Neue Energien Windpark Fonds CIV GmbH & Co. KG, Cuxhaven for a consideration of € 33.1 million. The entities' wind power plants were completed at the end of March and mid-April, respectively. The contribution by these entities to earnings after tax in the six-monthly financial statements 2009 is immaterial. The following assets were acquired and the following liabilities were assumed as part of the acquisition.
› Notes and explanations
| € millions | Carrying amount under IFRS |
Recognised on acquisition |
|---|---|---|
| Property, plant and equipment | 81.4 | 91.7 |
| Current assets | 13.2 | 13.2 |
| Total assets | 94.6 | 104.9 |
| Non-current liabilities | 49.2 | 52.2 |
| Current liabilities | 19.6 | 19.6 |
| Total liabilities | 68.8 | 71.8 |
| Net assets1 | 25.8 | 33.1 |
| Cost | 33.1 | |
| Goodwill | 0.0 |
The calculation of the fair value of the assets and liabilities has not been finalised yet.
As a result, provisional values were recognised pursuant to IFRS 3.62.
Effective as of 29 May 2009, EnBW acquired all the shares in the company holding the equity investment in Kraftwerk Lippendorf mbH, Hanover. The company holds a 50% shareholding in Unit S of Lippendorf coal power station. At the same time, EnBW acquired all the shares in Kraftwerk Bexbach mbH, Hanover, which holds 8.3% of the shares in Bexbach coal power station. The purchase price totalled € 915.2 million. In the six-monthly financial statements 2009, the newly acquired shares in the power stations contributed € 2.6 million to earnings after income taxes. If the new shares in the power stations had already been consolidated since the beginning of the year, group revenue would have increased by € 57.7 million to € 8,232.2 million and earnings after income tax would have increased by € 13.2 million to € 653.0 million.
| € millions | Carrying amount under IFRS |
Recognised on acquisition |
|---|---|---|
| Property, plant and equipment | 108.8 | 426.4 |
| Current assets | 17.7 | 17.7 |
| Total assets | 126.5 | 444.1 |
| Non-current liabilities | 2.1 | 2.1 |
| Current liabilities | 11.8 | 11.8 |
| Total liabilities | 13.9 | 13.9 |
| Net assets1 | 112.6 | 430.2 |
| Cost | 915.2 | |
| Goodwill | 485.0 |
The calculation of the fair value of the assets and liabilities has not been finalised yet. As a result, provisional values were recognised pursuant to IFRS 3.62.
Under the full consolidation method, all subsidiaries are included on whose financial and business policy control can be exercised as defined by the control concept. In this case, the assets and liabilities of a subsidiary are included in full in the consolidated financial statements.
Jointly controlled entities are included in the consolidated financial statements by way of proportionate consolidation. In the case of proportionate consolidation, the assets and liabilities of the subsidiary are only considered in the consolidated financial statements in proportion to the shareholding of the parent company.
The equity method is used when a significant influence may be exercised on the business policy of the associate, but the entity does not qualify as a subsidiary or a joint venture. When measuring shares this means that only the pro rata equity of the entity is included in consolidated financial statements, and not its assets and liabilities.
| Consolidated companies | 30/6/2009 | 31/12/2008 | 30/6/2008 |
|---|---|---|---|
| Full consolidation | 99 | 90 | 87 |
| Proportionate consolidation (joint ventures) | 11 | 10 | 10 |
| Associates | 17 | 17 | 17 |
| € millions | 1/1– 30/6/2009 |
1/1– 30/6/2008 |
|---|---|---|
| Share of profit of entities accounted for using the equity method | 139.4 | 110.7 |
| Write-downs of entities accounted for using the equity method | -7.1 | 0.0 |
| Write-ups of entities accounted for using the equity method | 6.7 | 0.0 |
| Net profit from entities accounted for using the equity method | 139.0 | 110.7 |
| Investment income | 33.7 | 34.5 |
| Income from the sale of investments | 0.0 | 28.2 |
| Other income from investments | 33.7 | 62.7 |
| Investment result | 172.7 | 173.4 |
| € millions1 | 1/1– 30/6/2009 |
1/1– 30/6/2008 |
|---|---|---|
| Interest and similar income | 133.1 | 146.3 |
| Other finance revenue | 65.8 | 60.4 |
| Finance revenue | 198.9 | 206.7 |
| Borrowing costs | -142.0 | -110.6 |
| Other interest and similar expenses | -20.7 | -16.3 |
| Interest portion of increases in provisions | -256.1 | -239.9 |
| Personnel provisions | (-114.8) | (-107.6) |
| Provisions relating to nuclear power | (-134.1) | (-124.9) |
| Other non-current provisions | (-7.2) | (-7.4) |
| Other finance costs | -117.1 | -51.3 |
| Finance costs | -535.9 | -418.1 |
| Financial result | -337.0 | -211.4 |
The figures of the comparative period have been restated.
ENBW SHARE MANAGEMENT REPORT FINANCIAL STATEMENTS SERVICE › Notes and explanations
Due to conditions imposed by the Federal Anti-Trust Office in connection with the acquisition of the shares in EWE AG, EnBW plans to sell its equity investment in GESO Beteiligungs- und Beratungs-AG (GESO). Accordingly, the assets and liabilities of GESO and its subsidiaries are disclosed as held for sale. It was not necessary to perform any write-downs to lower fair values.
The assets and liabilities of the disposal group of GESO break down as follows:
| € millions | 30/6/2009 |
|---|---|
| Non-current assets held for sale | 1,291.6 |
| Current assets held for sale | 256.5 |
| Assets held for sale | 1,548.1 |
| Non-current liabilities directly associated with the assets classified as held for sale | 322.5 |
| Current liabilities directly associated with the assets classified as held for sale | 457.8 |
| Liabilities directly associated with the assets classified as held for sale | 780.3 |
The remaining assets held for sale of € 3.9 million primarily relate to land and buildings.
| Funds from operations (FFO) in € millions1 | 1/1– 30/6/2009 |
1/1– 30/6/2008 |
|---|---|---|
| Funds from operations before tax and financing | 1,261.2 | 1,495.3 |
| Income tax paid | -109.7 | -216.0 |
| Interest and dividends received | 249.7 | 237.6 |
| Interest paid for investing activities | -169.2 | -164.4 |
| Funds from operations after tax and financing | 1,232.0 | 1,352.5 |
The figures of the comparative period have been restated.
Compared to 31 December 2008, contingent liabilities and financial commitments have decreased by € 1,618.9 million to € 26,881.8 million. The decrease is attributable to a drop in long-term purchase commitments for natural gas on account of lower prices.
Related parties include Electricité de France (EDF) and Zweckverband Oberschwäbische Elektrizitätswerke (OEW). The financial statements of EnBW AG are included in the consolidated financial statements of EDF on a proportionate basis.
The business transacted with EDF during the first half of the year had the following impact on the consolidated financial statements of EnBW:
| Income statement in € millions | 1/1– 30/6/2009 |
1/1– 30/6/2008 |
|---|---|---|
| Revenue | 523.2 | 412.1 |
| Cost of materials | -532.6 | -472.3 |
| Balance sheet in € millions | 30/6/2009 | 31/12/2008 |
|---|---|---|
| Receivables | 76.7 | 120.7 |
| Payments on account | 50.1 | 44.6 |
| Liabilities | 164.1 | 43.3 |
| Payments on account received | 35.9 | 38.7 |
The revenue and cost of materials mainly result from electricity supply and electricity procurement agreements. All business relations with EDF are at arm's length.
The transactions with joint ventures conducted at market conditions were as follows:
| Income statement in € millions | 1/1– 30/6/2009 |
1/1– 30/6/2008 |
|---|---|---|
| Revenue | 22.8 | 33.5 |
| Cost of materials | -11.5 | -25.2 |
| Balance sheet in € millions | 30/6/2009 | 31/12/2008 |
|---|---|---|
| Other loans | 5.6 | 6.1 |
| Receivables | 5.9 | 3.5 |
| Liabilities | 0.5 | 2.7 |
In the course of ordinary business activities, relationships also exist with associates, including among others municipal entities (public utilities, in particular) that are accounted for using the equity method. Goods and service transactions with these entities took place at arm's length and had the following impact on the balance sheet and income statement of the EnBW group:
| Income statement in € millions | 1/1– 30/6/2009 |
1/1– 30/6/2008 |
|---|---|---|
| Revenue | 97.7 | 102.0 |
| Cost of materials | -41.1 | -30.8 |
| Balance sheet in € millions | 30/6/2009 | 31/12/2008 |
|---|---|---|
| Receivables | 19.6 | 12.8 |
| Liabilities | 7.2 | 9.8 |
The EnBW group has not entered into any significant transactions with related persons.
On 23 April 2009, the annual general meeting of EnBW approved the proposal put forward by the Board of Management and Supervisory Board to pay a dividend of € 2.01 per share for the fiscal year 2008. This corresponds to a dividend payment of € 491.0 million.
As of 30 June 2009, EnBW AG holds 5,749,677 treasury shares that are valued at € 35.25 in the separate financial statements of EnBW AG. They account for 2.3% of the share capital. In accordance with German commercial law, the treasury shares of EnBW AG were written down by € 3.1 million in the fiscal year.
| 1/1–30/6/2008 in € millions |
Electricity upstream |
Electricity downstream |
Gas | Energy and environmental services |
Holding/ consolidation |
Total |
|---|---|---|---|---|---|---|
| External revenue | 1,208.3 | 5,050.9 | 1,572.9 | 342.4 | 0.0 | 8,174.5 |
| Internal revenue | 2,226.0 | 197.2 | 40.6 | 209.5 | -2,673.3 | 0.0 |
| Total revenue | 3,434.3 | 5,248.1 | 1,613.5 | 551.9 | -2,673.3 | 8,174.5 |
| Adjusted EBIT | 921.0 | 59.8 | 113.4 | 47.5 | -74.9 | 1,066.8 |
| EBIT | 887.6 | 88.2 | 114.4 | 41.2 | -62.2 | 1,069.2 |
| Amortisation and depreciation |
-165.1 | -120.4 | -45.1 | -69.5 | 0.0 | -400.1 |
| Impairment losses |
-2.9 | 0.0 | 0.0 | -7.6 | 0.0 | -10.5 |
| Capital employed as of 30/6/2009 |
5,061.0 | 4,863.7 | 1,796.7 | 1,368.8 | 491.0 | 13,581.2 |
| 1/1–30/6/2008 in € millions1 |
Electricity upstream |
Electricity downstream |
Gas | Energy and environmental services |
Holding/ consolidation |
Total |
|---|---|---|---|---|---|---|
| External revenue | 1,164.8 | 5,216.0 | 1,350.9 | 339.7 | 0.0 | 8,071.4 |
| Internal revenue | 2,412.4 | 209.3 | 74.2 | 280.4 | -2,976.3 | 0.0 |
| Total revenue | 3,577.2 | 5,425.3 | 1,425.1 | 620.1 | -2,976.3 | 8,071.4 |
| Adjusted EBIT | 849.1 | 99.9 | 99.3 | 34.0 | -65.3 | 1,017.0 |
| EBIT | 861.8 | 101.2 | 39.0 | 32.2 | -58.9 | 975.3 |
| Amortisation and depreciation |
-155.6 | -117.6 | -49.3 | -63.5 | -0.8 | -386.8 |
| Impairment losses |
-0.7 | -0.1 | -61.0 | 0.0 | 0.0 | -61.8 |
| Capital employed as of 31/12/2008 |
4,185.8 | 4,891.6 | 1,815.1 | 1,272.0 | 260.5 | 12,425.0 |
The figures of the comparative period have been restated.
One of the key performance indicators within the EnBW group is adjusted EBIT. Total adjusted EBIT of the reportable segments can be reconciled to earnings before income tax (EBT) as follows:
| € millions | 1/1– 30/6/2009 |
1/1– 30/6/2008 |
|---|---|---|
| Adjusted EBIT1 | 1,141.7 | 1,082.3 |
| Non-operating EBIT1 | -10.3 | -48.1 |
| Holding/consolidation | -62.2 | -58.9 |
| Earnings before interest and taxes (EBIT) | 1,069.2 | 975.3 |
| Investment result | 172.7 | 173.4 |
| Financial result | -337.0 | -211.4 |
| Earnings before tax (EBT) | 904.9 | 937.3 |
Comprises the reportable segments of electricity upstream, electricity downstream, gas and energy and environmental services.
The segment reporting comprises the reportable segments of electricity upstream, electricity downstream, gas and energy and environmental services. The electricity upstream segment comprises the generation and trading/procurement stages of the value added chain. The electricity downstream segment comprises the value added stages of transmission, distribution and sales. The gas segment comprises the midstream area including import agreements and infrastructure, storage, trading/portfolio management as well as the downstream area including transmission, distribution and sales. The energy and environmental services segment includes the areas of thermal disposal, non-thermal disposal, water and other services.
Assets, liabilities, revenue and expenses allocable to EnBW AG and to other activities not allocable to the segments presented separately are disclosed in the holding/consolidation column together with eliminations. The direct costs of EnBW AG are allocated between the individual segments using allocation keys.
We have reviewed the interim condensed consolidated financial statements, comprising the income statement, the condensed statement of comprehensive income, the balance sheet, the condensed cash flow statement, the condensed statement of changes in equity and selected explanatory notes, together with the interim group management report of EnBW Energie Baden-Württemberg AG, Karlsruhe, for the period from 1 January to 30 June 2009, which are part of the six-monthly financial report pursuant to Sec. 37w WpHG ["Wertpapierhandelsgesetz": German Securities Trading Act]. The preparation of the interim condensed consolidated financial statements in accordance with IFRSs on interim financial reporting as adopted by the EU and of the interim group management report in accordance with the requirements of the WpHG applicable to interim group management reports is the responsibility of the company's management. Our responsibility is to issue a review report on the interim condensed consolidated financial statements and the interim group management report based on our review.
We conducted our review of the interim condensed consolidated financial statements and the interim group management report in accordance with German generally accepted standards for the review of financial statements promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW). Those standards require that we plan and perform the review to obtain a certain level of assurance in our critical appraisal to preclude that the interim condensed consolidated financial statements have not been prepared, in all material respects, in accordance with IFRSs on interim financial reporting as adopted by the EU and that the interim group management report has not been prepared, in all material respects, in accordance with the applicable provisions of the WpHG. A review is limited primarily to making inquiries of company personnel and applying analytical procedures and thus does not provide the assurance obtainable from an audit of financial statements. In accordance with our engagement, we have not performed an audit and, accordingly, we do not express an audit opinion.
Based on our review nothing has come to our attention that causes us to believe that the interim condensed consolidated financial statements have not been prepared, in all material respects, in accordance with IFRSs on interim financial reporting as adopted by the EU and that the interim group management report has not been prepared, in all material respects, in accordance with the provisions of the WpHG applicable to interim group management reports.
Stuttgart, 29 July 2009
Ernst & Young GmbH
Wirtschaftsprüfungsgesellschaft
Prof. Dr. Wollmert Günnewig Wirtschaftsprüfer Wirtschaftsprüfer
[German Public Auditor] [German Public Auditor]
We assure to the best of our knowledge that in accordance with the accounting principles applicable for the interim financial reporting the interim consolidated financial statements give a true and fair view of the net assets, financial position and results of operations of the group and that the interim group management report gives a true and fair view of the business development including the result and situation of the group and also describes the significant opportunities and risks relating to the anticipated development of the group for the remaining fiscal year.
Karlsruhe, 28 July 2009
EnBW Energie Baden-Württemberg AG
Villis Dr. Beck
Buchel Dr. Schulten
Dr. Zimmer
› Board of Management and Supervisory Board
Hans-Peter Villis, Castrop-Rauxel/Karlsruhe Chief Executive Officer since 1 October 2007 Appointed until 30 September 2012
Dr. Bernhard Beck LL.M., Leonberg Chief Personnel Officer since 1 October 2002 Appointed until 30 September 2012
Christian Buchel, Karlsruhe Chief Operating Officer since 1 February 2009 Appointed until 31 January 2012
Dr. Rudolf Schulten, Mühlhausen Chief Financial Officer since 1 January 2009 Appointed until 31 December 2013
Dr. Hans-Josef Zimmer, Steinfeld (Rhineland-Palatinate) Chief Technical Officer since 1 October 2007 Appointed until 30 September 2010
Dr. Claus Dieter Hoffmann, Stuttgart Managing partner of H + H Senior Advisors GmbH
Dietrich Herd, Philippsburg Chairman of the central works council of EnBW Kraftwerke AG Deputy chairman
Marc Boudier, Sèvres Directeur Europe at Electricité de France SA
Chairman
Dr. Daniel Camus, Croissy-sur-Seine Directeur Général Délégué Finances at Electricité de France SA
Dirk Gaerte, Sigmaringendorf District administrator of the Sigmaringen district
Josef Götz, Stuttgart Chairman of the central works council of EnBW Regional AG
Reiner Koch, Glienicke/Nordbahn Responsible for supply and waste at ver.di head office
Marianne Kugler-Wendt, Heilbronn Regional director at ver.di, Heilbronn–Neckar-Franconia district
Wolfgang Lang, Karlsruhe Chairman of the central works council of EnBW Systeme Infrastruktur Support GmbH
Gérard Roth, Bois d'Arcy Directeur Allemagne at Electricité de France SA
Klaus Schörnich, Düsseldorf Chairman of the works council of Stadtwerke Düsseldorf AG
Heinz Seiffert, Ehingen District administrator of the Alb-Donau district
Gerhard Stratthaus MdL, Brühl Former finance minister of the state of Baden-Württemberg
Laurent Stricker, Paris Advisor to the president at Electricité de France SA
Werner Vorderwülbecke, Stuttgart Regional department head at ver.di, Baden-Württemberg
Christoph Walther, Langebrück Deputy chairman of the works council of ENSO Energie Sachsen Ost AG
Dietmar Weber, Esslingen Chairman of the central works council of EnBW Vertriebs- und Servicegesellschaft mbH
Kurt Widmaier, Ravensburg District administrator of the Ravensburg district
Dr.-Ing. Gérard Wolf, Paris Directeur Général Adjoint Filiales et Développement à l'International at Electricité de France SA
Dr. Bernd-Michael Zinow, Pfinztal Senior vice president public affairs at EnBW Energie Baden-Württemberg AG
As of 30 June 2009
EnBW Energie Baden-Württemberg AG Durlacher Allee 93 76131 Karlsruhe www.enbw.com
Coordination and editor Corporate Communication, Karlsruhe
3st kommunikation GmbH, Mainz
Typesetting In-house using FIRE.sys
Printed by Sommer Corporate Media GmbH & Co. KG, Waiblingen
ISBA: R.2294.0907
Publication of the Six-Monthly Financial Report January to June 2009: 30 July 2009
Title/cover Getty Images
April: EnBW Energie Baden-Württemberg AG May: Vattenfall Europe AG June: Wolfgang List, Ludwigsburg July: Uli Deck, Karlsruhe
Photo CEO Michael Dannenmann, Düsseldorf
Phone: 0800 1020030 or 0800 AKTIEENBW (only in Germany) Fax: 0800 3629111 (only in Germany) E-mail: [email protected] Internet: www.enbw.com
Kommentar: Wir haben hier in Großschreib ung geändert in Anlehnung an den Titel – ebenso im Finanzkalen der
Publication of the Six-Monthly Financial Report January to June 2009
Publication of the Nine-Monthly Financial Report January to September 2009
Press briefing | Preliminary annual results for the fiscal year 2009
Planned date 10 | 3 | 2010
Publication of the Annual Report 2009
Annual general meeting of EnBW Energie Baden-Württemberg AG
Publication of the Quarterly Financial Report January to March 2010
Publication of the Six-Monthly Financial Report January to June 2010
Publication of the Nine-Monthly Financial Report January to September 2010
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