EWE AG › ~ › media › ewe_com › 20200121_credit opinion_ewe-ag.pdfJan 21, 2020 · Profile Headquartered in Oldenburg, Germany, EWE AG is one of Germany's largest regional

INFRASTRUCTURE AND PROJECT FINANCE

CREDIT OPINION21 January 2020

Update

RATINGS

EWE AGDomicile Germany

Long Term Rating Baa1

Type LT Issuer Rating - FgnCurr

Outlook Positive

Please see the ratings section at the end of this reportfor more information. The ratings and outlook shownreflect information as of the publication date.

Contacts

Charles Berckmann [email protected]

David Sprenger +33.1.5330.3368Associate [email protected]

Neil Griffiths-Lambeth

+44.20.7772.5543

Associate Managing [email protected]

EWE AGUpdate following outlook revision to positive

SummaryThe credit quality of EWE AG (EWE, Baa1 positive) is supported by (1) the relatively stableand predictable cash flows generated by its monopoly-regulated energy distributionactivities; (2) an expected improvement in financial metrics following the equity stake saleto Ardian Infrastructure (Ardian)(anticipated close in Q1 2020); (3) long-term contractsthat stabilise the competitive businesses of power generation, gas storage and waste-to-energy; (4) a fairly strong market position in its core region, which somewhat reduces the riskinherent in its competitive supply activities; (5) its growing expertise in renewable generation,focused on on-shore wind, and intelligent network developments, both supportive in carryingout German energy policy; and (6) the company's interest in international markets andrespective contribution to consolidated cash flows will remain below 5% of group profits.

Exhibit 1

EWE's operating EBIT dominated by regulated and long-term contracted activities

-200

-100

0

100

200

300

400

500

600

700

2015 2016 2017 2018 2019-E 2020-E

€ m

illio

ns

Renewables, Grid & Storage Sales & Trading International swb Holding operating EBIT

Sources: EWE, Moody's calculations and forecast

EWE's credit quality is constrained to a degree by execution risk around EWE's ability to rampup and execute its strategic focus for growth initiated in 2018 and in incorporating its newequity partner, Ardian. EWE's credit profile is also constrained to a degree by its financialprofile, which has been somewhat volatile due to its gas activities, adverse weather patternsand contract terms. Market fundamentals, however, are improving.

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MOODY'S INVESTORS SERVICE INFRASTRUCTURE AND PROJECT FINANCE

Credit Strengths

» Multi-utility focused on energy distribution and supply activities as well as telecommunication and information technology services

» Stable network operations and limited generation create some buffer against negative wholesale price developments affecting othergenerators

» Entrenched customer base and renewed focus on domestic and regional markets

Credit Challenges

» Fall in allowed equity returns from 2019 will constrain regulated network earnings and reduce financial flexibility

» Some exposure to wholesale energy and commodity prices related to conventional thermal generation although partially mitigatedby long-term contracts with certain industrial customers

» Integration of a new strategic investor

Rating OutlookThe rating outlook is positive, reflecting the anticipated cash boost following approval of the equity stake sale announced on 6December 2019. Financial metrics are expected to improve to levels firmly above the minimum ratio guidance for Baa1 ratings. Thecompany's core focus on regulated network activities and renewable generation, and limited exposure to power price developmentscompared with larger German peers are also contributing factors to the current outlook.

Moody's could revise the outlook back to stable should financial performance deteriorate over the course of the next year such thatFFO/net debt and RCF/net debt fall below the low twenties and the high teens, both in percentage terms, respectively.

Factors that Could Lead to an UpgradeThe ratings could be upgraded following clear visibility on long-term investment plans, following input from EWE's new equity owner.An upgrade would also need to show continuation of FFO/net debt at least in the low twenties and RCF/net debt comfortably in thehigh teens, both in percentage terms. This ratio guidance could be amended as EWE's strategy is updated and the risk profile of itsinvestment programme evolves.

Factors that Could Lead to a DowngradeWhile a downgrade is unlikely given the positive outlook, deterioration in FFO/net debt to below the high teens and deteriorationin RCF/net debt to below the mid-teens, both in percentage terms, would exert downward pressure. A change in EWE's business riskprofile that would increase exposure to higher risk countries or result in increasing volatility of cash flows would also warrant downwardpressure.

Key Indicators

Exhibit 2

Improving financial metrics

Dec-14 Dec-15 Dec-16 Dec-17 Dec-18

(CFO Pre-W/C + Interest) / Interest Expense 3.3x 4.3x 3.8x 6.0x 4.8x

(CFO Pre-W/C) / Net Debt 13.6% 18.9% 22.8% 25.2% 22.9%

RCF / Net Debt 10.9% 16.2% 13.0% 21.3% 18.9%

Note: All ratios are based on 'Adjusted' financial data and incorporate Moody's Global Standard Adjustments for Non-Financial CorporationsSource: Moody's Financial Metrics™

This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page onwww.moodys.com for the most updated credit rating action information and rating history.

2 21 January 2020 EWE AG: Update following outlook revision to positive


ProfileHeadquartered in Oldenburg, Germany, EWE AG is one of Germany's largest regional utilities and provides energy distribution andsupply as well as telecommunications and IT services to customers in the federal state of Lower Saxony and parts of eastern Germany.EWE is currently owned 90% by three holding companies which altogether represent 21 local cities and municipalities/counties locatedin the state of Lower Saxony. The remaining 10% are held by EWE itself.

On 6 December 2019, EWE announced that Ardian Infrastructure (Ardian) will acquire a 26% stake in the company. The Federal CartellOffice (Bundeskartellamt) approved the transaction on 20 December 2019 with expected close in February 2020.

Detailed Credit ConsiderationsStable low-risk cash flows from regulated network activities to be squeezed over the medium termApproximately 50-60% of EWE's operating profits are derived from regulated network infrastructure businesses, which generate stableand predictable cash flows. This percentage would increase towards 70-80% if contracted storage and renewables activities wereincluded.

We consider the German regulatory regime to be well defined, with key aspects of the revenue building block enshrined in law, anddesigned to provide adequate and fair remuneration for operating expenditure and investments. Introduced in 2009, the Germanincentive-based regime has a shorter track record than other Western European jurisdictions, which mostly date back to the late 1990sand mid-2000s, and regulatory principles are still evolving.

There is also limited transparency in the public domain prior to key regulatory determinations. In recent years, most national regulatoryauthorities (NRAs) have adopted increasingly consultative approaches prior to taking key regulatory decisions. By contrast, in Germany,the energy regulator (the Bundesnetzagentur, BNetzA), continues to initially consult mostly on a private level with the energynetworks, although major changes and amendments are still being consulted on publicly. Not all key regulatory parameters are publiclydisclosed such as the regulated asset base or a detailed financial model. Unlike most other NRAs in Western Europe, the BNetzA tendsto publish decisions on specific aspects in a piecemeal manner. For example, the decision on allowed equity returns was published insummer 2016, while the decision on cost efficiency parameters was published in late 2018.

Nevertheless, the BNetzA's past decisions have been pragmatic and supportive of the sector's investment requirements. As theframework continues to evolve, we perceive a shift in focus towards limiting increases in network fees for the consumer (e.g., ongoingimprovement for more timely investment recovery coupled with more frequent assessment of expenditure requirements and tighterefficiency targets for individual companies and the sector as a whole). Amendments to the legislation, underpinning the incentive-based regulation in 2016 also included a more transparent cost assessment and more timely recovery of investment expenditurefor distribution network operators. Related decisions on the determination of the transfer value in the event of a change in theconcessionaire and timely adjustment of associated network tariffs will also enhance the predictability of cash flows.

Cut in allowed equity returns will reduce financial flexibilityThe BNetzA's decision on allowed returns in the third regulatory period was formally confirmed on 9 July 2019 (initial determinationset in October 2016) by Germany's highest court (Bundesgerichtshof, or BGH), which ruled that the regulator followed an appropriatemethodological approach in setting the allowance. The court's judgement concludes legal proceedings initiated by the vast majorityof network companies, which argued that the allowed returns did not adequately reflect all market evidence, and reversed a previousdecision by the higher regional court in Düsseldorf from March 2018 (see 'High court backing for regulator's view of equity returns iscredit neutral', 10 July 2019 for more information).

The third regulatory period runs from 2018-2022 for gas and 2019-2023 for electricity distribution networks, providing relativecertainty of cash flows over that period. Based on the BNetzA's determination allowed equity returns are 6.91%, a decline from 9.05%(nominal, pre-corporate tax, after trade tax) for assets built or acquired after 2006. This cut reflects the currently low interest rateenvironment and will reduce financial flexibility across network companies.


https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1184951



Exhibit 3

Evolution of allowed equity returns since introduction of incentive-based regime in 20093rd regulatory period confirmed July 2019

1st regulatory period

(2009/10-2012/13)

2nd regulatory period

(2013/14-2017/18)

3rd regulatory period

(2018/19-2022/23)Gearing 60% 60% 60%

Tax rate 18% 18% 18%

Risk free rate (nominal) 4.23% 3.80% 2.49%

Market risk premium 4.55% 5.44% 3.80%

Equity beta 0.79 0.66 0.83

Iliquidity premium

Equity risk premium 3.59% 3.59% 3.15%

Cost of equity (post-tax) - new assets 7.82% 7.39% 5.64%

Cost of equity (pre-tax) - new assets 9.29% 9.05% 6.91%

Inflation factor 1.45% 1.66% 1.46%

Cost of equity (pre-tax) - old assets 7.56% 7.14% 5.12%

Germany (BNetzA)

Note: Under the German regime, the cost of equity allowance differs for assets acquired or built before 2006 ('old' assets) and after 2006 ('new' assets). Old assets receive a real equityreturn adjusted for inflation, new assets receive a nominal return.Sources: BNetzA, Moody's calculation

In late 2018, the BNetzA also published its assessment of the annual cost productivity improvement factor (sector wide or genericefficiency factor or x-gen) at 0.9% for electricity networks. While this is lower than in previous periods (1.25% in the first and 1.5%in the second regulatory period), it remains above the sector-wide efficiency assumption for gas networks of 0.49%. The industryappealed both of these assessments and in a decision from 10 July 2019, the regional court directed the BNetzA to re-evaluate itsproductivity factor for X-gen gas. A decision on X-gen electricity is still pending. EWE's networks are some of the most cost efficientdistribution networks as assessed by the regulator.

Financial profile to improve following equity stake sale, help mitigate lower regulatory returnsThe Federal Cartel Office's approval of the equity stake is positive as proceeds from the sale of EWE's 10% treasury shares to Ardian willboost financial metrics, help offset the impact of lower allowed returns, and increase liquidity. The benefit may, however, reduce overtime as we expect that EWE will reinvest at least some of the proceeds to deliver on its strategic plan.

Exhibit 4

Key projected financial metricsPositioning against minimum ratio guidance for Baa1 credit

10%

15%

20%

25%

30%

2012 2013 2014 2015 2016 2017 2018 2019-E 2020-E 2021-E

FFO/Net Debt minimum guidance for Baa1 RCF/Net Debt minimum guidance for Baa1

Note: (1) All ratios are based on 'Adjusted' financial data and incorporate Moody's Global Standard Adjustments for Non-Financial Corporations. (2) Projections represent Moody's forwardview, not the view of the issuer, and unless noted in the text, does not incorporate significant acquisitions and divestituresSource: Moody's Investors Service



Renewed focus on domestic and regional markets as well as digital and business services following strategic reviewApproximately 15-20% of EWE's operating profits come from renewable generation, which we view as lower risk than conventionalgeneration, given the feed-in tariffs set under the renewable energy law (Enerneuerbare-Energien-Gesetz, EEG). The EEG regime limitsEWE's risks essentially to the output of the wind farms, which are subject to weather conditions and technical losses. While existinggeneration capacity will start to come off feed-in tariffs from 2021, the earliest plants are comparably small, and we expect the impacton cash flows to be limited.

The cash flow volatility of some of EWE's other activities is reduced through long-term contracts. This is particularly the case for thegas storage business (around 15% of group operating profits), with roughly two-thirds of capacity being contracted over a period of atleast three to five years (50% is for own use). We observe a trend towards shorter term contracts, which will become a considerationonce the original contracts expire; however, given remaining contract life times, negative implications are limited over the next years.

Riskier international operations are also declining as EWE reduces its overseas footprint. On 17 June 2019, EWE finally completed thetransfer of 100% of its shares in EWE Turkey Holdings following the approval of the Turkish Competition Authority and the TurkishRegulatory Authority for Energy Markets and Information Technologies (please also see Moody's comment 'EWE AG: Announced sale ofTurkish activities is a modest credit positive', published in January 2019).

As EWE exits activities further afield, they will have greater capacity to focus on local markets. Management's approved strategysince summer 2018 focuses on perceived core strengths by combining customer service with electro-mobility, digitalisation andindividual solutions on a B2B as well as B2C basis. As part of this strategy, EWE entered into a joint venture with Deutsche Telekom toinvest up to €2 billion into the build-out of fibre optic broadband within EWE's core service area over the next ten years. The FederalCartel Office (Bundeskartellamt) approved the joint venture on 30 December 2019, but includes some additional works as part of theapproval, but should not result in additional cash expenditure.

As part of its drive to facilitate innovative solutions, EWE is, among other things, researching and developing lithium-ion and sodiumsulphur battery storage technologies to loosen grid bottlenecks, particularly in the context of the very high renewable penetration inEWE's grid.1

Reduced exposure to generation and gas supply...EWE owns and operates a conventional thermal generation fleet of approximately 1,000 mega watts (MW) installed capacity, andrenewable generation, primarily on- and off-shore wind, of around 400MW. In recent years, the profitability of conventional plants inGermany has suffered as a result of weak fuel prices (coal and natural gas), low carbon prices as well as compressed generation margins(both clean dark and spark spreads). Against this unfavourable backdrop, EWE successfully de-risked more than half of its generationportfolio by entering into or amending existing bilateral supply contracts with several industrial consumers. We understand that theseindividual contracts transfer market risks to customers, while, at the same time, EWE will safeguard a small level of profitability for theunderlying generation capacities.

Following a strong rally in 2018, power prices have stabilised, with current one-year forwards around €45-50/MWh, mainly supportedby higher commodity and carbon prices. Both, clean dark and clean spark spreads remain weak, however, meaning most conventionalthermal generation assets (excluding lignite) will struggle to make a profit in the current price environment. Longer term, post 2022,we anticipate power prices will tighten as some conventional plants (nuclear and coal assuming the Coal Commission's proposals aretransposed into law) leave the market.





Exhibit 5

German power prices increased on the back of rising EU CO2 pricesExhibit 6

German clean dark and spark spreads remain weak

0

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60

German Power 1-Y Fwd (€/MWh) EU CO2 1-Y-Fwd (€/tonne)

0

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German Power 1-Y Fwd (€/MWh) EU CO2 1-Y-Fwd (€/tonne)

Source: Factset

-20

-15

-10

-5

0

5

10

5/18/2015 5/18/2016 5/18/2017 5/18/2018 5/18/2019

German Clean Spark 1-Y-Fwd (€/MWh)

German Clean Dark 1-Y-Fwd (€/MWh)

-14

-12

-10

-8

-6

-4

-2

0

2

4

6

German Clean Spark 1-Y-Fwd (€/MWh)

German Clean Dark 1-Y-Fwd (€/MWh)

Source: Factset

Taking into account the contracted capacity and generally small generation portfolio, which is primarily coal-fired, we have estimatedthat a decline in clean dark spreads by €3/MWh would result in around a 1% reduction in operating profits based on current sparkspread projections.

On the gas side, EWE has a number of long-term take-or-pay arrangements. In common with the major German gas importersand integrated utilities, EWE's profitability has been affected negatively by the movement of the gas/oil spread, which meant thatthe oil-price linked contracts were more expensive than buying gas on the spot market. We understand that EWE has managed torenegotiate more than 95% of its supply portfolio to market-based pricing going forward. As a result, gas/oil spread risks have declinedconsiderably.

The required switch to high-calorific gas (H-gas) from low-calorific gas (L-gas), owing principally to reductions in production fromnatural gas fields in Groningen, which serves a large swath of northern Germany, will compel EWE to let existing long-term gas supplyarrangements expire in the coming years. We anticipate future gas needs will be re-contracted under standard commodity supplyarrangements and H-gas specifications as needed.

… resulting in low exposure to decarbonisation risksEWE faces low risk compared with peers, given its very small generation exposure as well as focus on renewables and networkactivities despite the European Union's commitment to reduce greenhouse gas emissions by 40% from 1990 levels and to increase thecontribution of renewables to energy demand to 27% by 2030.

These targets, agreed to in 2014, formed the basis of the EU’s Nationally Determined Contributions incorporated into the ParisAgreement, and are designed to significantly decarbonise the region’s economies. We believe that unregulated utilities, which accountfor 40% of EU carbon emissions, will need to deliver a significant share of the reductions, and that this will create a variety of risks andopportunities for individual utilities.

Moody’s framework for assessing the risk associated with decarbonisation in this industry is set out in Carbon transition brings risks andopportunities, published in June 2018.

Domestic supply activities are subject to strong competition, but local roots enhance customer 'stickiness'EWE's domestic sales and trading activities are subject to intensifying competition and could suffer pressure on supply margins.Domestically, the company has greater exposure to electricity sales than gas, which generally face more intense competition. However,like its smaller municipal peers, the so-called Stadtwerke, EWE benefits from its regional roots and strong brand recognition, typicallyresulting in better customer retention, although churn rates across gas and electricity for private households have been fairly low overthe past several years.





ESG considerationsResurfacing of past management missteps highlight how governance weakspots can be a drag on reputationIn January 2020 the Oldenburg public prosecutor filed charges for breach of trust against EWE’s former CEO and a current and activemember of the executive office relating to donations to Vladimir Klitschko's philanthropic organisation in October 2016. The donationamount of €253,000 exceeded internal guidelines, resulting in the dismissal of the CEO in early 2017.

We understand the charges to be of a personal nature and are not expected to result in penalties for EWE. Nevertheless, the publicprosecutor’s decision to bring charges highlights EWE’s past governance practices and controls, and may raise questions about thesteps taken by the company following the 2016 donation. The commercial criminal court has not yet decided on whether to allow thecharges to go forward but the matter illustrates how mis-steps may weigh on a company’s reputation for some time.

Liquidity AnalysisEWE's liquidity position is sound. As of June 2019, the company reported cash and cash equivalents of around €445 million. In addition,EWE has €750 million in committed funds available under a syndicated revolving credit facility maturing in November 2023 (one yearextension option exercised in 2018). The company also has available short-term bilateral facilities of around €459 million, of whichapproximately €98 million was drawn at June 2019. All credit facilities are reported to be free of restrictive covenants and MAC clauses,and represent reliable sources of liquidity.

EWE's main uses of cash in the next 12-18 months include capital expenditure, an annual dividend payment of typically around €90million and manageable refinancing requirements. The next major debt repayments include the €365 million outstanding on originally€500 million bonds due in November 2020 and €460 million in outstanding bonds due 2021.

Exhibit 7

EWE's bond maturities

0

50

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250

300

350

400

450

500

2019 2020 2021 2022 thereafter

0

50

100

150

200

250

300

350

400

450

500

2020 2021 2022 thereafter

€ m

illion

s

Note: EWE repaid €372 million in bonds in November 2019 through operating cash and proceeds from the sale of Turkish activitiesSource: Company's annual reports, Moody's Investors Service



Rating Methodology and Scorecard FactorsEWE is rated under Moody's rating methodology for Unregulated Utilities and Power Companies, published in May 2017. As shownbelow, the assigned rating is one notch higher than the scorecard-indicated outcome. This differential can be explained by: (1) EWE'smuch lower direct exposure to merchant power prices in the challenging German power market; (2) an entrenched and stable customerbase in its core markets; and (3) a materially higher proportion of earnings from low-risk, monopoly-regulated network activities.

Exhibit 8

EWE AG - Rating Methodology Scorecard

Unregulated Utilities and Unregulated Power Companies Industry Grid [1][2]

Factor 1 : Scale (10%) Measure Score Measure Score

a) Scale (USD Billion) A A A A

Factor 2 : Business Profile (40%)

a) Market Diversification Ba Ba Ba Ba

b) Hedging and Integration Impact on Cash Flow Predictability Baa Baa Baa Baa

c) Market Framework & Positioning Ba Ba Ba Ba

d) Capital Requirements and Operational Performance Baa Baa Baa Baa

e) Business Mix Impact on Cash Flow Predictability Aaa Aaa Aaa Aaa

Factor 3 : Financial Policy (10%)

a) Financial Policy Baa Baa Baa Baa

Factor 4 : Leverage and Coverage (40%)

a) (CFO Pre-W/C + Interest) / Interest (3 Year Avg) 4.7x Baa 4x - 7x Baa

b) (CFO Pre-W/C) / Net Debt (3 Year Avg) 23.6% Baa 20% - 25% Baa

c) RCF / Net Debt (3 Year Avg) 17.8% Baa 15% - 20% Baa

Rating:

a) Scorecard-indicated Outcome Baa2 Baa2

b) Actual Rating Assigned Baa1

Current

FY 12/31/2018

Moody's 12-18 Month Forward

View

As of June 2019 [3]

Note: (1) All ratios are based on 'Adjusted' financial data and incorporate Moody's Global Standard Adjustments for Non-Financial Corporations. (2) As of 12/31/2018. (3) This representsMoody's forward view, not the view of the issuer, and unless noted in the text, does not incorporate significant acquisitions and divestitures.Source: Moody's Financial Metrics™

Given its ownership structure, EWE's final rating also takes into account the joint default analysis under our rating methodology forgovernment-related issuers (GRI) published in June 2018. We attribute low probability of (1) extraordinary support by the municipalitiesthat own EWE, due to the fragmented nature of EWE's municipal ownership; and (2) moderate dependence, given that a large part ofEWE's revenues are generated within the regions and cities that also comprise EWE's municipal owners, but recognizing a portion ofEWE's earnings are generated outside of Lower Saxony.

Given the low support assumption under a generally fragmented municipal ownership structure, EWE's Baa1 rating is in line with thecompany's stand-alone credit quality and potential rating uplift from the baseline credit assessment (BCA) remains limited.

Ratings

Exhibit 9

Category Moody's RatingEWE AG

Outlook PositiveIssuer Rating Baa1Senior Unsecured -Dom Curr Baa1

Source: Moody's Investors Service






Appendix

Exhibit 10

Peer comparison table

FYE FYE LTM FYE FYE LTM FYE FYE LTM FYE FYE LTM

Dec-17 Dec-18 Jun-19 Dec-17 Dec-18 Sep-19 Sep-17 Sep-18 Jun-19 Dec-17 Dec-18 Jun-19

Revenue 7,668.9 5,703.9 5,918.0 21,974.0 20,617.5 21,348.5 2,215.6 2,072.6 2,130.3 37,320.0 29,851.0 30,512.0

EBITDA 997.4 831.1 759.0 4,092.4 2,171.7 2,156.9 596.7 455.6 448.0 8,026.0 3,675.0 3,466.5

Total Assets 9,288.5 9,526.2 9,556.8 39,207.3 39,950.4 39,757.6 6,495.1 7,874.8 7,740.2 55,488.0 55,090.0 53,616.0

Total Debt 3,383.0 3,165.3 3,187.8 18,553.6 18,504.0 21,032.3 1,535.2 1,484.4 1,408.1 26,922.0 25,634.0 13,721.0

Cash & Cash Equivalents 761.0 515.3 548.0 9,056.4 7,994.6 7,355.1 281.5 489.0 452.0 6,127.0 6,993.0 4,373.0

Net Debt 2,622.0 2,650.0 2,639.8 9,497.2 10,509.4 13,677.2 1,253.7 995.4 956.1 20,795.0 18,641.0 9,348.0

(CFO Pre-W/C) / Net Debt 25.2% 22.9% 26.0% 33.1% 17.7% 14.8% 48.8% 56.1% 51.9% 30.6% 17.7% 30.9%

RCF / Net Debt 21.3% 18.9% 22.0% 31.7% 14.4% 12.3% 41.1% 45.4% 38.6% 27.9% 12.9% 18.3%

(CFO Pre-W/C + Interest) / Interest Expense 6.0x 4.8x 5.7x 5.4x 3.7x 4.1x 9.8x 10.6x 9.7x 4.3x 2.9x 2.6x

Baa1 Positive A3 Negative A1 Stable Baa2 Stable

(in EUR million)

EWE AG EnBW AG EVN AG E.ON SE

All figures & ratios calculated using Moody’s estimates & standard adjustments. FYE = Financial Year-End. LTM = Last Twelve Months. RUR* = Ratings under Review, where UPG = forupgrade and DNG = for downgrade.Source: Moody’s Financial Metrics™

Exhibit 11

EWE's adjusted debt breakdownFYE FYE FYE FYE FYE LTM

(in EUR million) Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Jun-19

As Reported Total Debt 2,432.2 2,412.0 1,612.7 1,823.2 1,731.1 1,943.8

Pensions 1,011.8 928.0 919.4 1,162.3 1,038.0 1,038.0

Leases 178.2 184.8 195.0 191.4 190.2 0.0

Non-Standard Public Adjustments 201.8 204.0 206.7 206.1 206.0 206.0

Moody's Adjusted Total Debt 3,824.0 3,728.8 2,933.8 3,383.0 3,165.3 3,187.8

Cash & Cash Equivalents (364.4) (356.8) (454.7) (761.0) (515.3) (548.0)

Moody's Adjusted Net Debt 3,459.6 3,372.0 2,479.1 2,622.0 2,650.0 2,639.8

Note: All figures & ratios calculated using Moody’s estimates & standard adjustments.Source: Moody’s Financial Metrics™.

Exhibit 12

EWE's adjusted EBITDA breakdown

FYE FYE FYE FYE FYE LTM


As Reported EBITDA 857.5 808.6 1,268.0 1,017.9 825.3 792.2

Unusual Items - Income Statement 2.1 5.7 (240.2) (48.1) (17.5) (39.2)

Pensions 1.8 0.0 (92.1) (0.8) 0.7 0.7

Leases 29.7 30.8 32.5 31.9 31.7 15.9

Non-Standard Public Adjustments (113.6) 20.4 0.7 8.5 (4.7) (6.2)

Interest Expense - Discounting (11.2) (6.3) (10.7) (12.0) (4.4) (4.4)

Moody's Adjusted EBITDA 766.3 859.2 958.2 997.4 831.1 759.0

Note: All figures & ratios calculated using Moody’s estimates & standard adjustmentsSource: Moody’s Financial Metrics™.



Exhibit 13

EWE AGSelected historical adjusted financials

FYE FYE FYE FYE FYE LTM


INCOME STATEMENT

Revenue 8,134.2 7,819.3 7,566.3 7,668.9 5,703.9 5,918.0

% Change in Sales (YoY) -8.2% -3.9% -3.2% 1.4% -25.6% -4.5%

EBITDA 766.3 859.2 958.2 997.4 831.1 759.0

EBITDA margin % 9.4% 11.0% 12.7% 13.0% 14.6% 12.8%

EBIT 314.1 399.1 497.4 537.6 374.5 301.7

EBIT margin % 3.9% 5.1% 6.6% 7.0% 6.6% 5.1%

Interest Expense 203.2 194.4 205.3 131.0 160.2 146.2

Net income 186.9 110.8 218.9 267.9 150.3 103.2

BALANCE SHEET

Cash & Cash Equivalents 364.4 356.8 454.7 761.0 515.3 548.0

Current Assets 2,019.8 1,833.1 1,940.4 2,444.7 2,493.6 2,675.6

Net Property Plant and Equipment 5,356.8 5,304.9 5,121.6 5,120.5 5,051.1 4,871.5

Non-Current Assets 7,959.3 6,844.4 6,689.8 6,843.8 6,656.9 6,881.2

Total Assets 9,979.1 9,929.1 8,630.2 9,288.5 9,526.2 9,556.8

Current Liabilities 2,052.5 2,728.1 1,791.8 1,952.2 2,057.5 2,288.8

Total Debt 3,824.0 3,728.8 2,933.8 3,383.0 3,165.3 3,187.8

Non-Current Liabilities 4,763.4 4,668.9 4,028.8 4,644.7 4,238.1 4,514.5

Total Liabilities 6,815.9 7,397.0 5,820.6 6,596.9 6,628.6 6,803.3

Total Equity 3,163.3 2,532.1 2,809.6 2,691.6 2,897.6 2,753.5

Total Liabilities and Equity 9,979.1 9,929.1 8,630.2 9,288.5 9,526.2 9,556.8

CASH FLOW

Funds from Operations (FFO) 466.7 635.3 547.8 645.5 588.4 669.4

Cash Flow From Operations (CFO) 797.1 735.7 514.6 696.4 346.5 453.7

Capital Expenditures (365.0) (398.0) (392.4) (345.6) (445.2) (467.2)

Retained Cash Flow (RCF) 378.1 546.7 322.3 557.5 500.4 581.3

Free Cash Flow (FCF) 343.5 249.1 (103.3) 262.8 (186.7) (101.6)

INTEREST COVERAGE

(CFO Pre-W/C + Interest) / Interest Expense 3.3x 4.3x 3.8x 6.0x 4.8x 5.7x

LEVERAGE

(CFO Pre-W/C) / Net Debt 13.6% 18.9% 22.8% 25.2% 22.9% 26.0%

RCF / Net Debt 10.9% 16.2% 13.0% 21.3% 18.9% 22.0%

Note: All figures & ratios calculated using Moody’s estimates & standard adjustmentsSource: Moody’s Financial Metrics™

Endnotes1 Lithium functions equivalent to a peaker plant as it can absorb power quickly and dispense the power quickly back to the grid whereas the sodium-sulphur

takes longer to store but has base-load power plant features in that it can run longer given its higher power density



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