04109 Leipzig, de
+49 (341) 2156-202
EEX generates Continuous Growth in 2008
Revenue and profit situation improved once again
- Equity capital strengthened further
- Corporate structures largely implemented
- Cooperation model for power spot and derivatives trading implemented as scheduled
- Conversion to IFRS takes international alignment into account
- Cautious optimism for 2009
During the financial year 2008 European Energy Exchange AG (EEX) managed to continue its European growth strategy as planned. Based on a higher number of trading participants and increased transaction volumes as well as on a satisfactory overall clearing business of its subsidiary European Commodity Clearing AG (ECC) the Leipzig-based company managed to improve both revenue and results once again during the year under review. In order to take the international alignment of EEX Group into account the consolidated financial statement for the financial year 2008 was prepared in accordance with the International Financial Reporting Standards (IFRS) for the first time.
During the year under review, the EEX sales revenue increased by approx. 8 percent to a total of EUR 43.2 million as against EUR 39.8 million during the previous year. At the same time, the operating result (EBITDA) rose to EUR 29.5 million compared with EUR 16.7 million during the previous year. The group reported pre-tax earnings of EUR 26.9 million as against EUR 15.5 million for the previous year. The annual profits as per IFRS increased to EUR 21.8 million - up from EUR 7.1 million during the previous year. The positive earnings situation is partly due to special effects since undisclosed reserves in connection with the contribution of the subsidiary EEX Power Spot GmbH to the joint venture company EPEX Spot SE in return for 50 percent of the shares in said company had to be disclosed in accordance with the applicable IFRS provisions. In the financial year 2008 this transaction resulted in revenue to the amount of EUR 12.9 million. As a result of this, equity capital increased from EUR 53.1 million to EUR 81.6 million in the financial year 2008.
Positive development of trading
EEX lives on transaction revenue. The transaction fees on the Spot Market amounted to EUR 10.3 million, the transaction fees on the Derivatives Market amounted to EUR 28.1 million, while annual fees totalled EUR 3.4 million and training courses and information products accounted for EUR 1.4 million in revenue. During the period under review, the number of trading participants increased by about 14 percent to 217 from a total of 19 countries as against 191 trading participants as of the cut-off date for the previous year.
Moreover, the product "power" once again proved to be the mainstay of revenue. At 154 TWh 25 percent more were traded on the Power Spot Market than during the previous year at 124 TWh. In this context, 148 TWh were traded in auction trading for the market area of Germany and Austria as against 119 TWh during the previous year. During the year under review, an increase by 63 percent to 2.3 TWh as against 1.4 TWh was recorded in the field of intraday trading. At 6.1 TWh the volume traded in auction trading for the Swiss market area once again considerably exceeded the volumes generated during the previous year at 4.3 TWh. Overall, the sales revenue from the Power Spot Market totalled EUR 10.2 million and, hence, exceeded the revenue of EUR 8.3 million generated during the previous year by 23 percent.
At the same time, the trading volume on the Power Derivatives Market increased slightly by 15 TWh or 1 percent to 1,165 TWh compared with 1,150 TWh in the year 2007. In this context, the measures taken to strengthen exchange trading proved to be successful. However, this positive effect was achieved, at least in part, at the expense of the field of OTC clearing where volumes declined by 9 percent to 838 TWh as against 923 TWh in the previous year. During the financial year 2008 the total revenue on the Power Derivatives Market amounted to EUR 25.6 million as against EUR 26.2 million during the previous year. This decline was essentially due to the adjustments of the transaction fees for exchange trading.
A further considerable increase in trading in emission allowances on the Derivatives Market was achieved in 2008. The trade volume rose to 80.1 million tonnes compared with 17.7 million tonnes during the previous year. Trading on the Spot Market for the first commitment period ended on 20th March 2008 and trading for the second commitment period was launched on 16th January 2009.
The trade volumes for natural gas were increased satisfactorily both on the Spot and on the Derivatives Market. This shows that the development of the new markets for natural gas established in the previous year proceeds stably - even if slowly in line with the overall market. The trade volume on the Spot Market rose to 1.2 TWh as against 0.4 TWh one year ago, while the trade volume on the Derivatives Market climbed to 16.3 TWh compared with 3.7 TWh during the previous year.
Partnership model and co-operations implemented as planned
During the financial year 2008 European Energy Exchange AG consistently continued its Europeanisation strategy. This strategy aims at accelerating growth and market coverage and expanding the company's leading role in the consolidation process within the European energy exchange landscape through the establishment of partnerships and co-operations in essential parts of the value chain. "We have made good progress towards this aim", Dr. Hans-Bernd Menzel, Chief Executive Officer of European Energy Exchange AG underlines. During the year under review, the main focus was on the implementation of the co-operation with the French energy exchange Powernext S.A. Once the partnership agreements had been signed in March of last year, both sides worked full speed in order to develop the various required structures and promote the integration of the respective partial markets. The implementation of the partial projects so far has been effected on time and on budget. Moreover, the preconditions for the implementation of the co-operation steps which still need to be completed have been created.
The establishment of the Paris-based EPEX Spot SE constituted one of the milestones for the project. As of 31st December 2008 all shares in EEX Power Spot GmbH held by EEX as well as the French Power Spot Market were contributed to this joint venture. In addition to that, the Power Derivatives Market was spun off into an independent subsidiary, EEX Power Derivatives GmbH, retroactively as of 1st January 2008. By now, Powernext has contributed its French power derivatives market business to this company in line with the agreements.
In the framework of the product co-operation established on the European Derivatives Market for EU emission allowances with Eurex Frankfurt AG in 2007, the new emission products of options on EUA futures and CER futures were introduced among others in the financial year 2008.
Open interest increased considerably - Risk management processes effective
The open interest on the Power Derivatives Market constitutes an essential indicator of the lasting trust which the trading participants place in EEX and its clearing subsidiary ECC AG. On the last day of trading in the past year the open interest amounted to 324 TWh, which corresponds to an increase of more than 25 percent as against the total of 271 TWh for the previous year. In the course of the year peak values of more than 400 TWh were reached.
In the context of the crisis on the financial markets, the EEX clearing house, ECC, experienced the first default of a clearing member with the bankruptcy of Lehman Brothers Holdings Inc. The established processes for risk management and the provision of margins proved to be adequately dimensioned. As a result, EEX Group and its participants have not sustained any financial losses on account of the default of the clearing member Lehman Brothers International (Europe).
2009 - Focus on partnerships and clearing
In spite of an increasingly tough competitive situation, EEX Group sees itself as well positioned for the current financial year. With the consistent alignment towards further growth through co-operations and the required adjustment of the positioning of the group which has already taken place essential preconditions for the further development of the energy exchange and clearing landscape have been created. All cooperations are based on the openness for further partners and the central role of ECC. "Subject to this premise a stable growth of turnover and a continued positive earnings situation are planned for EEX Group for the duration of the medium-term plan", Dr. Menzel, Chief Executive Officer of EEX comments. However, at the same time, he also points out that, at the moment, a reliable forecast regarding the effects of the global financial and economic crisis is not possible and that a clear trend is not discernible yet. Under consideration of possible risks and opportunities, the group, at least, expects a steady development in an environment which is difficult overall. Against this backdrop, pre-tax earnings which will roughly correspond to the level of the earnings for the financial year 2008 adjusted for special effects are expected for the business year 2009.
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