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Letter to shareholders

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Dr. Frank Mastiaux, Chairman of the Board of Management
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Dear Readers,

Eight years ago, we developed the EnBW 2020 strategy and we were fully aware that we had a long and busy road ahead of us. We have now arrived at this target point: We have finished fundamentally transforming our portfolio, implemented our efficiency agenda and further developed our corporate culture. We have achieved or exceeded almost all of our financial, strategic and non-financial targets that we set ourselves back in early 2013. This makes 2020 a very special year for EnBW. I would like to take this opportunity to personally thank everyone involved, our employees and associates, our shareholders, employee representatives and investors, for their tremendous support over the past few years. The EnBW we see today – with its new, forward-looking structure and the business results we are able to present for 2020 – is a collective success.

A successful 2020 financial year

In the 2020 financial year, we achieved an operating result of €2.8 billion, which meant we were able to increase the adjusted EBITDA for the fourth year in a row. The main drivers of this success were the grids, gas business and our two new wind farms EnBW Hohe See and Albatros. In the Sales segment, we are making huge strides in the expansion of our quick-charging network for e-mobility. Currently, we already operate the largest quick-charging network in Germany. In the telecommunications and broadband business, our subsidiaries responsible for the expansion of these networks laid more than 45,000 km of cable in 2020. In the ULTRANET project, our transmission system operator TransnetBW laid the foundation stone for the converter in Philippsburg in September. The converter marks the end point of the direct current line from northern Germany, from which green electricity will be distributed across the local region. In our “EnBW connects” participation model, 132 local authorities have now invested in our distribution grid subsidiary Netze BW, shaping the future of the electricity and gas grids together with us. In the area of renewable energies, solar energy has become the third pillar of our expansion strategy alongside onshore and offshore wind power. We placed the largest solar park in Germany without state funding into operation in 2020 and also started construction of two other parks in Brandenburg. The EnBW Hohe See and Albatros offshore wind farms have been connected to the grid and the EnBW He Dreiht wind farm is due to follow in 2025. In addition, we had our joint bid with bp for two large sites in the Irish Sea accepted in February 2021, where we aim to build two offshore wind farms with a total capacity of 3 GW. In the Generation and Trading segment, we are investigating the possibility of switching over from coal to climate-friendlier gases. As you can see, 2020 was not just a year in which we achieved our targets, it also marks the dawn of a new era.

A clear focus on health protection and supply reliability during the coronavirus pandemic

EnBW has so far been able to successfully overcome the challenges posed by the coronavirus pandemic. We formed a task force at an early stage with representatives from the most important areas of the company. Naturally, our main focus was and is to protect our employees against infection, while at the same time guaranteeing the smooth operation of the grids and power plants. Meanwhile, we supported the health care authorities, for example, by providing them with protective equipment. The economic impact of the coronavirus pandemic on EnBW has been limited. However, it certainly required us to be more flexible – 90% of employees who were able to work from home have been doing so for many months. This has placed a personal strain on people, especially families with children. In a campaign initiated by employees, more than 4,500 unused vacation days were donated to colleagues who found themselves in a particularly difficult situation due to the closure of nurseries or schools – a perfect example of the team spirit at EnBW. On the other hand, it was very impressive how relatively smooth and efficient many of the work processes have been on a digital basis. This will allow us to draw inspiration for new ways to organize our work. The pandemic has also made it abundantly clear how important infrastructure is for the economy and society. And it has underscored the importance of supply reliability. There cannot be any compromises made when it comes to the generation of energy or its transmission and distribution. That is what we stand for!

Growth and climate neutrality

The year 2020 is also extremely significant for us because it is the starting point for the new strategy period up to 2025. Since the beginning of 2021, EnBW has been divided into three new segments that focus on infrastructure: “Smart infrastructure for customers” is dedicated, for example, to the expansion of quick-charging infrastructure, the telecommunications and broadband business and other areas dealing with urban infrastructure. The main focus of the “System critical infrastructure” segment is the transmission and distribution grids for electricity and gas. And “Sustainable generation infrastructure” is pushing forward with, above all, the utilization of wind and solar energy. The EnBW 2025 strategy also comprises new, digital business models and selective internationalization in the area of renewable energies. The aim is to make EnBW even more profitable and stable by 2025 than it is today, while being more agile and sustainable at the same time.

There is also something else that makes 2020 a milestone in the development of our company: In order to take the sustainability measures that we have been following for many years another step forward, we set ourselves the target in 2020 of making the company climate neutral with respect to our own emissions by 2035. In the process, we want to halve our CO₂ emissions by 2030, based on the reference year of 2018, and also reduce our coal-based generation capacity by around 2.5 GW. Coal-based energy generation will be fully phased out by the end of 2035. Our path to climate neutrality will be accompanied by a comprehensive sustainability program and an HR strategy that is designed to take our employees with us on this journey. It is no longer conceivable for us to pursue business success without making a credible contribution to safeguarding the livelihoods of future generations.

Next planning horizon: 2025

EnBW is now setting course for 2025. We want to increase the operating result of our company to €3.2 billion by then. In the process, we will keep on diversifying our business portfolio, using renewable energies and the grids as a stable basis. We believe that there are opportunities to be found, for example, in the development of CO₂-efficient energy solutions, e-mobility, telecommunications and security infrastructure. EnBW has a robust business model that is viable for the future.

Yours sincerely,

Dr. Frank Mastiaux
Chairman of the Board of Management