Calculation and Development
To manage E.ON's capital structure we use a steering metric called debt factor. The debt factor is defined as economic net debt divided by EBITDA1).
The debt factor is calculated as follows:
|EUR in millions||Dec 31, 2016||Dec 31, 2015|
|FX hedging adjustment||390||218|
|Net financial position||-937||-4,610|
|Provisions for pensions||-4,009||-4,210|
|Economic net debt||-26,320||-27,714|
|Debt Factors||5.3|| 3.7 3)
1) adjusted for non-operating effects
2) his figure is not the same as the asset-retirement obligations shown in our Consolidated Balance Sheet (€22,515 million). This is because we calculate our economic net debt in part based on the actual amount of our obligations
3) not adjusted for Uniper; figure as reported in the 2015 Annual Report
In addition to liquid funds also our non-current securities are taken into account when calculating economic net debt, as these are liquid investments predominantly used to fund our provisions.
The net financial position includes effects from foreign-currency hedging of financial transactions, which is analogous to the hedged underlying transaction.
Other items that are debt-like are also considered. These are mainly provisions for pensions and asset retirement obligations (less pre-payments).
The interest-rate environment at the balance-sheet date led in some cases to negative real interest rates on asset-retirement obligations. As a result, these provisions exceed the actual amount of the obligations as they stood at year-end 2016 excluding the effects of discounting and cost increases. This limits the relevance of our economic net debt as a key figure. E.ON wants economic net debt to continue to serve as a useful key figure that aptly depicts the debt situation. In the case of material provisions affected by negative real interest rates, E.ON henceforth uses the aforementioned actual amount of the obligation instead of the balance-sheet figure to calculate economic net debt.
E.ON International Finance B.V. is our Dutch finance entity.
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