2011 Annual Report - OTCIQ.com

24 Earnings Situation
Business Performance
At the end of the 2011 financial year, the E.ON Group’s business
performance was in line with our expectations. Sales rose by
22 percent year on year to roughly €113 billion. But our EBITDA
declined by 30 percent to roughly €9.3 billion. The adverse
factors include the early shutdown of a number of nuclear
power stations in Germany, Germany’s nuclear-fuel tax, and
continued margin pressure in our gas wholesale business. By
contrast, a number of our growth businesses—renewables,
upstream gas, and power generation in Russia—increased their
earnings. These results are in line with our adjusted forecast
for 2011. Our EBITDA was between €9.1 and €9.3 billion and our
underlying net income was between €2.3 and €2.5 billion.
We adjusted our forecast at the time of our half-year earnings
release because—in addition to the adverse impact of the
shutdown of several of our nuclear power stations and the
nuclear-fuel tax—the economic environment remained difficult
in most of the European markets where we operate.
Furthermore, it was nearly impossible to quantify the risks
of international economic and financial developments.
We executed the following significant transactions in 2011.
Acquisitions, Disposals, and Discontinued Operations
in 2011
Note 4 to the Consolidated Financial Statements contains
detailed information about these transactions.
Disposal Groups and Assets Held for Sale
In line with our strategy, which includes divesting €15 billion
of assets by the end of 2013, we sold our U.K. power distribution
system to PPL Corporation of the United States effective
April 1, 2011.
In mid-December 2010, contractual agreements were concluded
to sell 100 percent of the shares of E.ON Rete, which
operates a gas distribution network in Italy, to a consortium.
We reclassified these operations as a disposal group effective
December 31, 2010. The transaction closed in early April 2011.
After the disposal of the Thüga Group, our stakes in Stadtwerke
Karlsruhe and Stadtwerke Duisburg were reclassified as
assets held for sale effective December 31, 2010. The transactions
closed in early 2011 and in July 2011, respectively.
Furthermore, in the third quarter of 2010 a concrete stage
was reached in the negotiations to sell our 40-percent stake
in HEAG Südhessische Energie AG. The sales agreement
for the disposal of this stake was signed in February 2012. The
closing of the transaction, which is subject to approval by
various municipal entities of the city of Darmstadt and by the
Supervisory Board of E.ON Ruhrgas AG, is expected to take
place in the first half of 2012.
In a portfolio-streamlining measure, E.ON sold most of its
stake in Gazprom. The remaining stake was reclassified as an
asset held for sale. It was sold in the first quarter of 2011.
In December 2011, E.ON signed a contract to sell its wholly
owned subsidiary E.ON Bulgaria to Energo-Pro of the Czech
Republic.
These disposals resulted in cash-effective items totaling
€5,987 million in 2011 (prior year: €9,601 million).