E.on Se · XETR:EOAN
E.on — Investor Day (June 2005)
14 slides from E.on's investor day presentation, Jun 29, 2005
Slide 1: Minimizing Costs, Maximizing Value
Minimizing Costs, Maximizing Value Nick Horler, Retail Managing Director, E.ON UK E.ON Capital Market Day UK June 29, 2005
Slide 2: Introduction and Topics for today
Introduction and Topics for today E.ON UK operates in all end-customer 1 Retail’s strategy and role within energy markets in the UK the integrated business Accounts Electricity Gas At end Mar-05 2 Residential 5,347k 2,708k Reducing operating costs SME 402k 140k I&C 72k 31k 3 Responding to the challe
Slide 3: E.ON UK's Retail strategy: Fully focussed on value
E.ON UK’s Retail strategy: Fully focussed on value 1 2 3 2002 – 2003 1998 – 2001 2004 – Operational excellence, Organic Growth Managing for Value retention and scale • Pricing to win customers • Reducing operating costs • Ongoing commitment to and churn operational excellence • Gained c.750k additio
Slide 4: Integration of process improvement and systems development has been key to reducing operational expenditure
Integration of process improvement and systems development has been key to reducing operational expenditure Ÿ Multiple IS systems with gas Ÿ All our customers on a single and electricity separate IS platform Ÿ Users needed access to and Ÿ Single customer view understanding of all systems Expansion o
Slide 5: Our cost to serve is 43% lower than in 2001 with further improvements expected
Our cost to serve is 43% lower than in 2001 with further improvements expected to come … Cost To Serve - Powergen Residential 2005 Savings Highlights 26 23.7 Re-platforming 24 of ex-TXU £20m p.a.1) 22 customer base 20 £/account 18 Restructuring of 16 Vertex contract 17.0 and in-sourcing £9m p.a.2) 1
Slide 6: …and our overall operating costs are now 23% lower than in 2001
…and our overall operating costs are now 23% lower than in 2001 Total operating cost per account (Residential and SME) 60 • Integration of TXU 55 52.9 • Investing in customer value • Maintaining cost performance £/account 50 49.0 45 43.8 Reducing 42.0 operating costs 40 40.66 35 2001 2002 2003 2004
Slide 7: More than just a means of reducing opex …
More than just a means of reducing opex … Sales & Reg’n & Data Billing & Credit Mgmt post-sale metering translation Cash & Call centres 2 ½ year segmentation and ICE insight project ICE BSMART Geneva ICE (CGP) ICE Ability to interrogate Enterprise Data profitability of every Warehouse MI Reports cus
Slide 8: We can assess customer profitability at account and customer level
We can assess customer profitability at account and customer level Customer profitability curve Segmented customer value 120 Size of bubble indicates number of 100 customers Customer Net Profit Percentage of All Contribution (£/Year) 80 Average Customer 60 40 20 0 0 10 20 30 40 50 60 70 80 90 100 Pe
Slide 9: Our sales and marketing strategy is designed for the challenges that we and our customers face
Our sales and marketing strategy is designed for the challenges that we and our customers face Electricity and gas with a unique energy Brand position of energy expertise … efficiency pack Capped electricity and gas prices … illustrated by products … Earn Tesco points for buying energy from Powergen
Slide 10: Our approach helps us manage our customer base despite price increases
Our approach helps us manage our customer base despite price increases Powergen Residential and SME energy churn rates 30% Ÿ Cumulative 2004 residential 25% price rises of 16.4% electricity and 18.5% gas 20% Ÿ Net account growth of c.170k active residential customers 15% in 2004 Ÿ Wholesale cost pre
Slide 11: E.ON UK's I&C portfolio is part of an integrated business
E.ON UK’s I&C portfolio is part of an integrated business Ÿ The I&C business is run for profit Ÿ I&C provides a volume hedge, risk management benefits, and load management options to Energy Wholesale Ÿ Successfully rebranded I&C business to E.ON Energy in July 2004 Ÿ UK I&C is integral to Pan-Europe
Slide 12: Our focus is on profitability per customer
Our focus is on profitability per customer Residential business – Key financial measures 2004 5.3 74.9 41.8 2.6 Ave customer accounts Profitability per (millions) customer (£) Electricity Gross margin Gas Opex Optimizing both the performance of the integrated business … … and the performance of the
Slide 13: In Summary: Our focus is on maximizing value to E.ON UK
In Summary: Our focus is on maximizing value to E.ON UK Ÿ Continued commitment to operational Cost management excellence Focusing on profitability per Ÿ Working to maintain earnings growth in customer an environment of rising wholesale costs Integrated business Ÿ Optimize both the returns of Retail
Slide 14: Forward-looking statements disclaimer
This presentation may contain forward-looking statements based on current assumptions and forecasts made by E.ON Group management. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development o