- Management of financial transactions within the Group finance department in order to minimise risk, optimise costs and increase transparency
- Deployment of derivates in the operating business generally for hedging purposes only: for example, for forward contracts for electricity and primary energy source trading
- Interest rate risk management for managing and monitoring interest-sensitive assets and liabilities / Interest rate risk strategy to limit the risk of interest rate changes for the Group
- Currency management system to monitor foreign exchange risks
Objectives
- Payment obligations can be fulfilled without restriction at any time
- Balanced financing structure
- Solid balance sheet ratios
- Solid investment-grade ratings
- Strategic integration of financial discipline to maintain a good creditworthiness
Key Performance Indicators that we use to manage our credit standing
The ongoing strategic development of our company is designed to continuously increase the earnings performance (adjusted EBITDA). To maintain a good creditworthiness at the same time, we stick to a high level of financial.
Until end of 2020: Internal financing capability
Financing capability of the Group from its own funds during the portfolio transformation
¹ Retained Cashflow after covering ongoing costs and dividend payments
2021 to 2025: Debt repayment potential
Controlled growth during the further development into an infrastructure partner
² To ensure achievement of rating target, the target value will be examined annually based on the requirements of the rating agencies
Ratings
To maintain the future viability of the company, EnBW aims to hold solid investment-grade ratings, in order to
- ensure unrestricted access to capital markets
- offer reliable opportunities for financing partners
- be regarded as a dependable business partner in our trading activities
- achieve the lowest possible capital costs
- implement an appropriate number of investment projects
Management of financing needs of our operating activities separately from the Group’s pension and nuclear obligations
- To manage operating financing needs constant assessment of capital market trends with regard to
- the current interest rate environment
- any potentially favourable refinancing costs
- Coverage of pension and nuclear obligations using our asset liability management model
Covering operating financing needs
Alongside the internal financing capability and our own funds, we have various financing instruments at our disposal:
Financing instruments as of 30 June 2020
|
Programme
|
Wert
|
|---|---|
|
Programme
|
Wert
€ 7 billion thereof € 3.7 billion utilised¹,²
|
|
Programme
Subordinated bonds
|
Wert
€ 3.5 billion¹,²
|
|
Programme
|
Wert
€ 2 billion thereof € 0.1 billion utilised¹,²
|
|
Programme
Syndicated credit line
|
Wert
€ 1.5 billion, undrawn; Maturity date: 2025¹,³
|
|
Programme
Bilateral free credit lines
|
Wert
€ 1.2 billion thereof € 0.4 billion drawn¹,²
|
¹Rounded figures
²as of 19 October 2020
³as of 30 September 2020
Maturities of EnBW’s bonds
Coverage of pension and nuclear obligations
- Ensuring timely coverage of the pension and nuclear obligations
- Coverage of long-term provisions by corresponding financial assets within an economically reasonable period
- Cash flow based model
- Determining the effects on the cash flow statement, income statement and balance sheet over the next 30 years taking into account
- Anticipated return on financial assets
- Actuarial reports on pension provisions
- Sector-specific appraisals by external experts on costs for nuclear decommissioning and disposal
- Limiting the impact of payments for the pension and nuclear obligations on the operating business to €300 million a year (plus an inflation supplement) by taking funds from the financial assets
- If the provisions are fully covered by the financial assets, no further funds will be taken from the cash flow from operating activities
- Risk-optimised performance in line with market trends
- Consideration of the effects on the balance sheet and income statement
- Broad diversification of the asset classes
- Reduction of costs and simplification of administrative processes
Alongside the internal financing capability and our own funds, we have various financing instruments at our disposal:
Financing instruments as of 30 June 2020
|
Programme
|
Wert
|
|---|---|
|
Programme
|
Wert
€ 7 billion thereof € 3.7 billion utilised¹,²
|
|
Programme
Subordinated bonds
|
Wert
€ 3.5 billion¹,²
|
|
Programme
|
Wert
€ 2 billion thereof € 0.1 billion utilised¹,²
|
|
Programme
Syndicated credit line
|
Wert
€ 1.5 billion, undrawn; Maturity date: 2025¹,³
|
|
Programme
Bilateral free credit lines
|
Wert
€ 1.2 billion thereof € 0.4 billion drawn¹,²
|
¹Rounded figures
²as of 19 October 2020
³as of 30 September 2020
Maturities of EnBW’s bonds
- Ensuring timely coverage of the pension and nuclear obligations
- Coverage of long-term provisions by corresponding financial assets within an economically reasonable period
- Cash flow based model
- Determining the effects on the cash flow statement, income statement and balance sheet over the next 30 years taking into account
- Anticipated return on financial assets
- Actuarial reports on pension provisions
- Sector-specific appraisals by external experts on costs for nuclear decommissioning and disposal
- Limiting the impact of payments for the pension and nuclear obligations on the operating business to €300 million a year (plus an inflation supplement) by taking funds from the financial assets
- If the provisions are fully covered by the financial assets, no further funds will be taken from the cash flow from operating activities
- Risk-optimised performance in line with market trends
- Consideration of the effects on the balance sheet and income statement
- Broad diversification of the asset classes
- Reduction of costs and simplification of administrative processes
Group strategy
Following the successful portfolio transformation, EnBW is now on the way to becoming a key infrastructure partner
Starting in 2013, we transformed the EnBW business portfolio under our EnBW 2020 Strategy. We raised the regulated grid business and renewables share of adjusted EBITDA from around 40% in 2012 to 70% in 2019.
In the logical continuation of our strategy, we are combining our business portfolio from 2021 into three strategic segments:
- System-critical infrastructure
- Sustainable generation infrastructure
- Smart infrastructure for customers
This reflects our transformation into a sustainable and innovative infrastructure partner. The central target under the EnBW 2025 Strategy is an increase in adjusted EBITDA to €3.2 billion.
We plan total capital expenditure of some €12 billion. 80% of this will be on growth projects. The expenditure is to be financed out of retained cash flow and also, if necessary, by borrowing. We continue to aim for a balanced financing structure, a solid financial profile and therefore solid investment grade rating.
- Grid expansion
Key projects include the SuedLink and ULTRANET transport networks that are critical for Germany’s future energy supply, and investment in electricity distribution grids to upgrade them and prepare them for the needs of electric mobility. - Expansion of renewables
Including completion of the EnBW He Dreiht offshore wind farm by 2025 - Further evolution of smart infrastructure for customers
Including broadband, telecommunications and electric mobility
Click here for further information on our Group strategy.
Climate neutrality by 2035
By 2035, we will reduce the company's CO₂ emissions to net zero. In doing so, EnBW will stick to the requirements and targets of the Paris Climate Agreement.
