Finance

EWE BONDS AND THE CREDIT MARKET

In spite of several periods of volatility the credit markets fared consistently well in 2016, driven primarily by the European Central Bank’s (ECB) bond-buying scheme. At the start of the year, concerns about Chinese and global growth temporarily slowed the issuance of bonds. However, the corporate bond-buying scheme announced by the ECB represented a clear turning point on the credit market, improving the conditions on the aftermarket as well as the conditions of new bond issuances in the long term. Political developments such as the British EU referendum, the US presidential election and the Italian referendum were unable to stifle the mood on the credit market. A total of 300 billion euros was issued in the investment grade corporate bond market in 2016, which is a new record. Driven by the ECB’s bond-buying scheme, EWE was even able to surpass the positive performance of the supplier sector.

Performance of EWE bonds in 2016
Spread vs. mid-swaps (bp)

FINANCING INSTRUMENTS

EWE AG has been represented on the capital market since 2004. As a market-oriented yet unlisted company, EWE finances itself primarily by means of long-term debt instruments such as public bonds, private placements and bonded loans. Bilateral bank loans are another source of long-term finance.

The Debt Issuance Programme launched in 2014, a standardised documentation platform for capital market finance, enables EWE to obtain debt more quickly and efficiently. The programme has been inactive since 1 August 2016 and is expected to remain inactive for the foreseeable future.
www.ewe.com/debt-issuance-programm

Short-term financing instruments are primarily used to ensure EWE’s ongoing solvency and as a liquidity reserve. As at 31 December 2016 EWE had a syndicated credit facility of 750 million euros as well as other bilateral credit facilities totalling around 250 million euros.

FINANCIAL LIABILITIES

Maturity profile of the bonds and private
placements of EWE

Significance

We use our financial strength and finance management to finance our operative business and our growth. The energy sector is on the precipice of an unprecedented transition. Traditional business models featuring large fossil and nuclear power plants will die out. The focus will shift to decentralised, renewable energy, investments in grid infrastructure and new digital customer solutions. EWE’s strategy aims to build the leading energy company in northern Germany by 2026. To do so we need a solid financial basis

SELECTED MEASURES IN 2016

  • Renewal of the syndicated credit facility of 750 million euros
  • The bond buy-back totalling around 300 million euros will significantly reduce future interest expenses
  • Moody’s confirms EWE’s rating with a stable outlook (Baa1)

Value creation

Cash flow from operating activities                                                471.7 million euros
Cash Flowrom investing activities                                                   570.8 million euros
Cash payments to shareholders of the parent company
and minority shareholders (dividends)                                               -225.5 million euros
Incoming payments from the acquisition of financial liabilities             7.5 million euos
Payments from the repayment of financial liabilities                       -815.2 million euros
Cash flow from financing activities                                            -1,033.2 million euros
Change in cash and cash equivalents related to
currency translation                                                                                    -9.4 million euros
Cash and cash equivalents at the beginning of the period               352.3 million euros
Cash and cash equivalents at the end of the period                  352.2 million euros

All of these statistics are based on the 2016 business year.