Value and Cost Management

Value Management and Cost Management

Topic: Company Valuation “E.ON”

By: Manal Osman

Date: 13 March 2013

Table of Contents

1. Company Background 3

1.1. E.ON Business Financials History. 3

2. E.ON Valuation: Discounted Cash Flow Approach 4

3. E.ON Share Value Calculation for the year 2011 8

4. E.ON Economic Value Added (EVA) for the year 2011 9

5. Conclusion 10

6. References 11

7. Appendix 12

1. Company Background

E.ON is a major listed energy company, its headquarter is located in Düsseldorf, Germany. The company has five global units which are responsible for Renewable, Generation, New Build & Technology, and Trading. There are 12 regional units which manage E.ON’s operation in Europe.

E.ON Strategy is cleaner and better energy which they want to implement in and outside Europe. E.ON target competitive advantage against its competitors (Electricité de France, GDF Suez, Scottish and Southern Energy, and RWE AG) is providing cleaner products and services to improve energy quality in terms of efficiency and environmental protection. (elaborate about the strategy)

2.1. E.ON Business Financials History.

The below table shows the key financial figures for E.ON over the last 7 years (E.ON (2012)a)

Key Financial (€ million) | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | +/- % Change 2010-2011 |

Sales | 56,399 | 67,759 | 68,731 | 86,753 | 81,817 | 92,863 | 112,954 | 21.64 |

Total Assets | 126,562 | 127,232 | 132,294 | 156,824 | 152,636 | 152,881 | 152,872 | -0.01 |

Net Income | 7,407 | 5,057 | 7,224 | 1,621 | 8,645 | 4,882 | 2,501 | -48.77 |

EBIT | 7,132 | 5,133 | 10,455 | 4,934 | 14,266 | 9,454 | 5,438 | -42.48 |

Earnings/Share | 6.61 | 7.48 | 3.52 | 0.75 | 4.41 | 3.07 | -1.16 | -137.79 |

We can see from the table above that E.ON performance was stable and performing well until the year 2011 where...