EnBW achieves rapid and successful turnaround and posts an increase of 1.8 billion euros in pre-tax earnings

All earnings ratios well above target/free cash flow improves by 2.7 billion euros/net debt almost halved/renewed planning leeway for future activities/dividend proposal the best ever in the history of the EnBW Group/Claassen: "Great success and a major compliment for our entire workforce" Karlsruhe. In financial 2004, Energie Baden-Württemberg AG (EnBW) posted major improvements in all key earnings figures and achieved financial turnaround rapidly and successfully. All earnings ratios were well above the targets set for 2004. Substantial improvement in earnings strength on the operating front/EBT increases by 1.8 billion euros During the year under review, consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) rose by 119 percent to over 2.2 billion euros compared to 2003. Earnings before interest and tax (EBIT) improved from 190 million euros in 2003 to over 1.2 billion euros in 2004; while earnings before tax (EBT) increased by 1.8 billion euros to 707 million euros (previous year: -1.1 billion euros). EnBW CEO Prof. Dr. Utz Claassen had the following to say on the 2004 results: "With these figures, the EnBW Group has, in the first full financial year of its restructuring process, achieved the best overall operating result it has ever posted in a fully deregulated market." If the above figures are adjusted for "inherited debts" and one-off burdens from financial 2003, the resulting adjusted figures for 2004 are still a major improvement on the 2003 earnings ratios. Adjusted EBITDA is 49.3 percent or 734 million euros and EBIT 76.9 percent or 529 million euros up on 2003, while adjusted EBT shows a massive increase of 198.3 percent or 470 million euros. CEO Claassen: "These growth rates mean that in 2004 the EnBW Group achieved the goal originally only targeted for 2008 ? namely to be the company with the highest rate and intensity of change in its competitive environment. This is a great success and a major compliment for our entire workforce." Various improvements on the operating front made a key contribution to the extremely satisfactory development of earnings figures and the renewed vitality of earnings strength. Actual performance far exceeded the ambitious TOP FIT targets in 2004 in terms of both volume and timeframe. "Last year, we achieved cost reduction in the order of 495 million euros, outperforming our original target by a full 24 percent. We want to continue to write this success story: We have already implemented measures for 2005 with a cumulative sustained volume of 634 million euros", says CFO Dr. Christian Holzherr, who is also project leader of the Top Fit team. The key elements of the Group restructuring and divestment programme have also been successfully implemented. Of the total 395 companies at the start of the restructuring process, 154 companies and holdings had already been sold, merged, incorporated in partnerships, closed down or deconsolidated by other means by the beginning of February. Yello was also restructured far earlier than planned in 2004 through internal Group measures. Moreover, personnel costs have been substantially reduced based on consensis agreements. CEO Claassen: "As a result of all measures taken during the year under review, sales per employee in the Group have more than doubled compared to 2002." Net indebtedness nearly halved/Free cash flow increases by 2.7 billion euros The extremely positive business trend is reflected not only in the earnings figures but also in the improved liquidity and the balance sheet structure. In financial 2004, for example, net indebtedness was almost halved from just under 7 billion euros to around 3.7 billion euros, meeting the target that was originally only planned for the beginning of 2007. As of December 31, 2004, the equity ratio had increased to 9.7 percent after having steadily fallen to as low as 6.1 percent during the period from 2000 to 2003. "This trend was underpinned in particular by the sale of our own shares, the excellent post-tax earnings, the encouraging development of price reserves in the securities and the increase in the holdings of other shareholders in our equity capital", says CFO Holzherr. The Group also made major progress on the financing front. Operating cash flow increased by 700 million euros to 1.6 billion euros, equivalent to growth of 79 percent. And the 2.7 billion euro improvement in free cash flow to 2.35 billion euros confirmed the forecast made at last year's balance sheet press conference that EnBW would once again post a healthy positive free cash flow in 2004. "This means that the Group proactively regained its freedom of action and planning leeway rapidly and impressively ? in keeping with the targeted process chain of "liquidity ? earnings ? potential", says EnBW CEO Claassen. Core business sales up by 11 percent to 9 billion euros EnBW posted improved sales revenues in all three core business areas of electricity, gas and near-energy services. Revenues in the electricity segment increased from 6.2 billion euros in 2003 to 7 billion euros in 2004, gas sales were up from 1.4 billion euros in 2003 to 1.5 billion euros in 2004, and energy and environmental services showed an increase from 483 million euros in 2003 to 495 million euros in 2004. This means that, overall, sales revenues in the core business fields improved by a total 10.9 percent to 9 billion euros. Due to the successful divestment programme and the resulting reduction in the number of consolidated companies, Group sales fell by 1.1% compared to the previous year to 9.8 billion euros. Dividend In view of the fact that the Group has achieved a "respectable" result one year earlier than projected, Energie Baden-Württemberg AG will propose a dividend of 0.70 euros per share for 2004 at the AGM scheduled for April 29, 2005. "This is the highest dividend ever paid out by the EnBW Group", says CFO Holzherr. In the coming years, EnBW expects to post ongoing earnings growth and hence a steady increase in the dividend payout. Overview of key figures: