Energie AG's value management strategy is an instrument for measuring the economic success of the Group's business activities. It serves to assess the attractiveness of investing activities and secures the company value while generating a capital market-oriented return for the owners. The weighted average cost of capital (WACC) is of essential importance. The WACC serves as the basis for determining the minimum yield requirements for Group management and is therefore used as a yardstick for value generation in the Company.

Energie AG calculates the cost of capital as the weighted average of equity and borrowing costs. The parameters specified by the regulatory authority are used for the regulated business units. The capital costs of the business units with activities on non-regulated markets are determined using the reporting-date principle and based on market conditions. In a further step, the bottom-up method is used to weigh these costs up unto the Segment and Group capital costs.

This WACC method is subjected to on-going evaluation taking current publications and expert opinions into consideration. Adaptations are made as needed. The costs of capital are continuously monitored, especially against the background of a volatile financial market environment. The consolidated WACC for the fiscal year 2019/2020 was 4.2% (previous year: 4.3%).

One of the most important key indicators for operational Group management during the fiscal year is the ROCE (Return on Capital Employed), which indicates how efficiently and profitably the available capital is utilized. The ROCE is calculated as the quotient of Net Operating Profit After Tax (NOPAT) and average Capital Employed. The ROCE minus the WACC results in the relative value contribution. The absolute value added is calculated by multiplying it by the capital employed. The higher this value is, the more economically successful the respective activity has been.

The value contribution is influenced by various variables. In addition to the development of operating earnings, the level of ROCE and value added specifically depends on the capital employed. NOPAT corresponds to EBIT less related taxes in the amount of EUR -33.2 million and other items of EUR -12.7 million. For information on Capital Employed, please refer to the Notes to the Consolidated Financial Statements.

In the Energie AG Group, in addition to strategic considerations, resources for future capital investments and acquisitions are allocated by prioritising projects exclusively on the basis of the presented value-oriented criteria and methods.

In the 2019/2020 fiscal year, the ROCE of the Energie AG Group was 5.9%, 3.1 percentage points above the previous year (2.8%). The increase in the 2019/2020 ROCE is attributable to a higher NOPAT. The low ROCE in the 2018/2019 fiscal year was mainly attributable to various exceptional accounting measures.