Facts Figures Securing energy supply. Now and in the future.

Transcription

1 Facts Figures 2017

2 Facts Figures 2017 Securing energy supply. Now and in the future.

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4 Facts Figures 2017 STEAG exceeds forecast earnings STEAG 2022 transformation program systematically implemented EBIT rises by 60 percent to 197 million euros Group result clearly in the black at 59 million euros 45 million euros in dividends for local authority shareholder KSBG Investments in new growth fields pay off

5 05 The STEAG Group achieved sales of 3.6 billion euros in the 2017 business year. In the 2017 business year, the STEAG Group generated sales of 3.6 billion euros. In a still challenging market environment, the Essen-based energy company achieved an increase of almost eight percent on a comparable basis* over 2016, mainly as a result of STEAG s expanded electricity trading activities and higher electricity prices. After the historic low in 2016, the average spot price on the Leipzig electricity exchange recovered by around 17 percent in However, this positive effect did not fully impact the generation margins of STEAG s thermal power plant portfolio, as hard coal gradually became more expensive on the international procurement markets during the same period. In addition, the price of carbon credits rose slightly over the course of the year. Increasing power generation from renewable energy sources in Germany meant that STEAG s power plant units in the Ruhr area and Saarland were also operating at a lower capacity overall. Despite the difficult market conditions, STEAG succeeded in significantly increasing its operating profit. This was due to higher electricity sales at STEAG s largest overseas power plant in Iskenderun, Turkey, and lower maintenance costs, particularly at the foreign power plants. The sale of STEAG s stake in Fernwärme Niederrhein also generated a book profit in the mid tens of millions range. The new Waste to Energy division performed significantly better than expected. Group earnings before interest and taxes (EBIT) of million euros exceeded the previous year s figure of million euros by more than 60 percent. * Since the 2017 business year, sales revenues and the cost of materials for certain types of energy-related trading transactions have been netted. The corresponding figures for the previous year have been adjusted for better comparability. The previous year s adjustment for sales amounts to EUR million.

6 Facts Figures 2017 The consolidated financial statements for 2017 show that STEAG 2022 will make our company more profitable and fit for the future. Joachim Rumstadt, Chairman of the Board of Management, STEAG GmbH STEAG also more than met the forecast issued a year ago, which was based on an EBIT of 145 million euros for the full 2017 business year. Group earnings after taxes improved by almost 280 million euros. STEAG is reporting a net profit of EUR 58.6 million for 2017 after a consolidated loss of EUR million in the previous year. Thanks to the great commitment and the great expertise of the around 6,500 employees in Germany and in the Group s foreign subsidiaries, STEAG can successfully compete on a national and international level. In 2017, we implemented what we had planned and announced to our shareholder, KSBG, said Joachim Rumstadt, Chairman of the Board of Management of STEAG GmbH, at the presentation of the consolidated financial statements at the company s headquarters in Essen. In Germany in particular, we have consistently adapted to the politically driven changes in the energy market. With our STEAG 2022 transformation program, we are making the company more efficient at all stages of the value chain and optimizing our portfolio. This will give us the financial freedom we need to continue investing in attractive new growth areas in the coming years. The consolidated financial statements for 2017 show that STEAG 2022 will make our company more profitable and fit for the future. The various measures from the STEAG 2022 project launched in 2016 resulted in a total improvement in earnings of around 100 million euros in the past business year. Half of this is attributable to income generated by active portfolio management. In this context, the sale of the minority shareholding in Fernwärme Niederrhein and the sale of STEAG Netz GmbH in the Saarland should in particular be mentioned. However, the book profit from the sale of

7 07 a minority stake of 49% in STEAG Fernwärme GmbH to MEAG, the central asset manager of the insurers Munich Re and ERGO, was recognized directly in equity. In the form of MEAG we have found a reliable and prestigious partner who is familiar with the challenges in the grid-based infrastructure sector, is how Joachim Rumstadt assesses this important transaction. The growth investments made in the 2017 business year particularly include the expansion of district heating activities in Poland and the strategic market entry into the waste-to-energy market through the complete takeover of two heat-recovery waste incineration plants from the Vattenfall Group. The post-merger integration process has now been successfully completed and both plants are making a stable contribution to earnings. Another growth project realized in 2017 was the acquisition of Krantz, a specialist for highquality solutions in ventilation technology, by STEAG Energy Services (SES). With the traditional Krantz brand, SES is further expanding its market position as an engineering service provider and supplier in the nuclear dismantling segment. In that field, SES already has a broad customer base in Germany and Switzerland and is now gaining access to additional markets in countries such as Japan and the UK. Another focus of investment was the equipping of the Turkish power plant at Iskenderun with a flue gas treatment system (DeNOx system). This is an important milestone on the way to the free marketing of the plant output, which will begin at the end of 2019 when the current power purchase agreement expires. The planned Baturraden geothermal power plant in Indonesia is also of great importance to STEAG. The infrastructure measures for the development of the second well site are progressing and the necessary environmental permit has been granted. The requested extension of the exploration phase was approved by the Ministry of Energy a few weeks ago. With around 260 million inhabitants, fast-growing Indonesia is the fourth most populous country in the world. STEAG invested a total of million euros in the past fiscal year, almost 40 million euros more than in 2016.

8 Facts Figures 2017 SALES + 8 % 3.6 billion euros EBITDA % million euros EBIT % million euros

9 09 Total investments + 18 % million euros Growth investments 2017 Expansion of district heating activities in Poland Market entry into the waste-to-energy market Acquisition of Krantz by STEAG Energy Services Group net income in million euros Dividends paid to the shareholder 45 million euros

10 Facts Figures 2017 The STEAG business units performed in 2017 as follows: Power Generation Production and marketing The high feed-in of wind energy in Germany last year led to an overall reduction in the operating times of the domestic STEAG power plants. The Generation business unit posted an operating loss, although this was lower than expected. Earnings were boosted in particular by lower personnel and maintenance costs resulting from power plant shutdowns and the implementation of measures under the STEAG 2022 transformation program. The EBIT of the Power Generation Investments division, which includes the foreign power plants, amounts to an amount in the mid double-digit million range. The improvements resulted mainly from the implementation of measures from the STEAG 2022 transformation program, as well as from higher coal prices which contractually led to higher electricity prices and significantly im - proved earnings at the Turkish power plant in Iskenderun, whereas they had a negative impact on earnings at the STEAG power plant on the Philippine island of Mindanao. The Trading & Optimization (T&O) division has extensive know-how in the management and optimization of all types of energy technology assets. T&O markets the energy generated by STEAG s own power plants as well as tradable energy products for the STEAG Group and for third parties both in Germany and abroad. T&O achieved a clearly positive operating result in the mid tens of millions range in STEAG Fernwärme STEAG Fernwärme supplies its customers in the Ruhr area with heat, which is mainly generated using the environmentally friendly cogeneration process. The division achieved an operating result in the double-digit million range in the past fiscal year. This was also due to book profits from the sale of the shares in Fernwärmeversorgung Niederrhein.

11 11 STEAG Energy Services STEAG Energy Services GmbH (SES) combines the know-how of an engineering company with the experience of a power plant operator and the expertise of a software company specializing in IT solutions for power plants. SES offers the entire range of power plant related energy services from project planning to implementation and operation. In India, southern Africa and Brazil, SES operates and optimizes power generation plants based on thermal and renewable energies with a total output of around 7,000 megawatts for customers; for plants with a total capacity of 3,000 megawatts, SES offers operation and maintenance (O&M) services, making it one of the world s leading providers. SES generated a positive operating result in the low doubledigit million range in STEAG Power Minerals STEAG Power Minerals GmbH (SPM) is a service provider at the interface between the energy and construction industries. It successfully markets power plant by-products such as fly ash and bottom ash. SPM also produces and supplies building materials, blasting abrasives and industrial minerals. With the innovative concrete additive Photoment, SPM is making an important contribution to reducing nitrogen oxide pollution in busy inner cities. Thanks to its photocatalytic activity, surfaces with Photoment can decompose harmful nitrogen oxides from the air. SPM s EBIT reached just under ten million euros in The systematic initiatives to market the special expertise of STEAG Technischer Service externally are increasingly paying off.

12 Facts Figures 2017 STEAG Technischer Service The planning and implementation of all technical services in the areas of maintenance, inspection, servicing and improvement is the core business of STEAG Technischer Service GmbH (STS). This division almost broke even in Four years after its foundation, STS generated more than half of its turnover with customers outside the STEAG Group for the first time. The targeted initiatives to market the special STS competencies more externally are increasingly paying off. In particular, the number of enquiries from potential customers in the e-mobility and electrical storage sectors is increasing. Distributed generation and renewables With an installed power plant capacity of 5,500 megawatts, STEAG is one of the largest electricity and heat producers in Germany. In addition, STEAG operates over 200 other plants for power generation from renewable and conventional sources and for distributed energy supply. The total output of these plants is 800 megawatts. STEAG New Energies STEAG New Energies (SNE) plans, constructs and operates distributed power generation plants using renewable energy sources such as bio and geothermal energy or wind power. SNE achieved an EBIT in the mid tens of millions range in the past business year. The main positive factors were lower wood procurement prices, book profits from the sale of shares in three German wind farms and lower personnel expenses. STEAG Waste to Energy In STEAG Waste to Energy (WTE), the Group bundles its activities in the field of thermal waste treatment. WTE operates STEAG s two plants in Rüdersdorf and Lauta in eastern Germany. The newly founded STEAG Waste to Energy GmbH performed well in 2017 and exceeded the planned result. This is also due to the revaluation of the 25.1 percent stake in T. A. Lauta, which was already owned by STEAG, as part of the initial accounting consolidation. Higher waste and electricity revenues also had a positive impact on earnings.

13 13 The shareholders have great confidence in the management and the corporate strategy. Guntram Pehlke, Chairman of the Supervisory Board, STEAG GmbH 45 million euros profit transfer to KSBG STEAG will pay a dividend (profit transfer including taxes) of 45 million euros to its shareholder, KSBG Kommunale Beteiligungsgesellschaft GmbH & Co. KG, for the 2017 business year. This is ten million euros less than in the previous year. However, this means that the dividend will this year again achieve the agreed objective that the municipal shareholders will be able to pay their debt servicing (interest and repayment) arising from the purchase of STEAG. We know that STEAG is still facing three tough years. The shareholders in KSBG therefore agreed a year ago to waive for a period of three years a dividend in excess of the amount necessary for servicing their debt. That is KSBG s contribution to the STEAG 2022 transformation project, said Guntram Pehlke, Chairman of the Supervisory Board of STEAG GmbH. Pehlke is also Chairman of the Management Board of Dortmunder Stadtwerke AG (DSW21), which via KSBG holds 36 percent of STEAG. The shareholders have great confidence in the management and the corporate strategy. With its clear and early focus on power generation and related services, STEAG has gained a head start. The highly motivated workforce will successfully use this lead and push ahead with the Group s future-oriented program.

14 Facts Figures 2017 Prospects for 2018 STEAG anticipates a decline in sales for the 2018 business year. The main reasons are lower revenues from the operation and marketing of the domestic power plant portfolio as a result of lower volumes and prices, as well as contractually and balance sheet-related declines in revenues at the foreign power plants. The STEAG Group s EBIT in 2018 is expected to be one third below the result of the past business year. A few weeks ago, STEAG registered the power plant units at the Fenne model power plant in Völklingen in the Saarland and Lünen 7 in the Ruhr area with the Federal Network Agency for seasonal operation. As a result, they will not generate electricity and will not be connected to the grid between the beginning of April and the end of September In addition, STEAG registered the Lünen 6 and 7 power plant units for final decommissioning on March 2, The reason for the closure of Unit 6 is that Deutsche Bahn has not extended the electricity supply contract beyond 31 December As a result, there are no longer any viable commercial prospects for the Lünen location where STEAG was founded 81 years ago as Steinkohlen-Elektrizität AG. This year, the joint Asia platform APDP established by STEAG and the Australian investment bank Macquarie is to focus on the acquisition and further development of projects in Indonesia and Vietnam. STEAG assumes that its strategic orientation will strengthen its good position on the national and international energy markets. New opportunities arise above all from the planned investments in the growth areas described above. I am confident that the various measures of the STEAG 2022 transformation program will take effect. We will achieve our goal of lastingly improving annual EBIT by 120 million euros, said Joachim Rumstadt.

15 15 I am confident that the various measures of the STEAG 2022 transformation program will take effect. We will achieve our goal of lastingly improving annual EBIT by 120 million euros. Joachim Rumstadt, Chairman of the Board of Management, STEAG GmbH At a glance The STEAG Group is a nationally and internationally operating company that has been offering its customers integrated solutions in the field of power and heat generation as well as technical services for more than 80 years. Its core competencies include the planning, implementation and operation of largescale power plants and distributed power generation plants, power plant-based electricity marketing and technical services associated with the power industry. As one of the largest electricity producers in Germany, STEAG has an installed capacity totaling 7,600 megawatts of electricity (MW), around 5,500 MW of which is located in Germany. In Germany, STEAG operates its own large-scale power plants at eight locations as well as over 200 distributed plants for energy generation from renewables and distributed plants for industry and for heat supply. Abroad, STEAG operates its own power plants in Colombia, the Philippines and Turkey, working closely with local partners. The STEAG Group employs around 6,500 people in Germany and at its foreign locations.

16 Facts Figures ,600 MW installed capacity 5,500 MW of which is located in Germany 6,493 employees worldwide

17 plants for power generation from Over renewable energy sources and for distributed energy supply As a service provider, STEAG is responsible for the operation of around 6,500 MW STEAG provides O&M support for 3,500 MW

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19 We are STEAG. 19

20 STEAG makes an important contribution to climate protection 18.2m t m t 2017 = % CO 2 emissions halved in only one year Germany will fall short of its climate protection target for 2020, with CO 2 emissions expected to fall by only about 30 percent compared to 1990 levels by that date, instead of 40 percent as planned. It is not the fault of the energy industry that Germany is not meeting its own targets. In particular, the operators of hard coal fired power plants have delivered on their promises. CO 2 emissions from hard coal fired power generation fell again by more than 16 percent in STEAG has made a significant contribution to this on its own economic responsibility, without any subsidies for decommissioning. In 2017, the Essen-based energy company took one large power plant and one power plant unit off line and transferred two power plants to the grid reserve. STEAG reduced its CO 2 emissions by more than half, to 8.9 million metric tons. This means that STEAG accounts for more than half of the total CO 2 savings in the electricity sector. The contribution of lignite, in contrast, is modest. Its CO 2 emissions fell by only 1.3 percent to 151 million metric tons in 2017 and were more than twice as high as those from hard coal (73 million metric tons). Lignite is cheaper than hard coal, but around 30 percent more CO 2 is produced for each kilowatt hour of electricity generated.* Hard coal does too, while CO 2 emissions from lignite remain high. 87m t m t m t m t % % CO 2 emissions from hard coal ** CO 2 emissions from lignite ** * Source: German Federal Environment Agency (Umweltbundesamt UBA) ** The figures for 2016 are estimates by the German Federal Environment Agency. The figures for 2017 are provisional data based on calculations by Agora Energiewende.

21 At a glance Founded Headquarters Core competencies Management Power generation in Germany Power generation around the world Major subsidiaries Employees Sales EBITDA EBIT Group net income Installed capacity Capacity operated under O&M contracts O&M support 1937 Essen Planning, construction and operation of high-efficiency power plants using fossil fuels (hard coal, natural gas and refinery by-products) and renewable energy sources (biomass, biogas, mine gas, geothermal energy and wind) Joachim Rumstadt (Chairman) Michael Baumgärtner Dr.-Ing. Wolfgang Cieslik Alfred Geißler Seven hard coal fired power plants, one refinery power plant and over 200 additional plants for generating power from renewable and conventional energy sources and for distributed energy supply Hard coal fired power plants in Colombia, Turkey and the Philippines (each in a joint venture with local partners); distributed generation plants in Poland; wind farms in France, Romania and Turkey; subsidiaries and representatives in European countries and in Brazil, the USA, India, South Africa and Singapore. STEAG Energy Services GmbH STEAG Fernwärme GmbH STEAG Power Minerals GmbH STEAG Technischer Service GmbH STEAG New Energies GmbH STEAG Waste to Energy GmbH 6, billion Eur million Eur million Eur 58.6 million Eur 7,600 MW (thereof in Germany: 5,500 MW) 6,500 MW 3,500 MW The above information is correct as at December 31, 2017.

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