E.on Se · XETR:EOAN
E.on — Non-Deal Roadshow (December 2019)
68 slides from E.on's roadshow presentation, December 2019
Slide 1: Creating the future of energy
Growth Focus Discipline Creating the future of energy http://www.energyfortomorrow.eu/ December 2019
Slide 2: Creating the future of energy
Creating the future of energy • Focus: Europe’s first energy player with exclusive downstream focus • Unique downstream footprint: RAB and customer numbers rise >60% • Earnings quality: network EBIT share rises significantly • Strong synergies: fading nuclear earnings overcompensated by €600
Slide 3: Creating two focused energy companies
Creating two focused energy companies Previous structure ~77% E.ON innogy RWE Target structure Future E.ON 16.67% RWE 3
Slide 4: Unique downstream position across Europe
Unique downstream position across Europe Energy Networks (RAB4) Sweden1 UK3 Customer Solutions (number of customers) ~€4bn ~1m - ~11m NL/BE2 CEE3,5 - ~4m ~€6bn ~11m Germany3,5 Turkey1 1. E.ON 2018 reported, 2. innogy ~€20bn ~14m 2018 reported, 3. New E.ON ~€1bn ~10m combined 2018, 4. RABs from diffe
Slide 5: Focus, scale and efficiency pre-requisite for success
Focus, scale and efficiency pre-requisite for success Mega trends accelerate and reinforce each other Empowered • Future E.ON’s unique downstream positioning fully customers captures benefits of energy mega trends Focus, scale and efficiency needed Digitization in New Energy World New culture & Elec
Slide 6: On track to successfully conclude strategic transformation journey
On track to successfully conclude strategic transformation journey E.ON’s guiding principles Unique strategic position Customer-led Digitization Operational Capital excellence discipline • Focus on regulated Position of strength networks and infrastructure-like & pace- setting customer solutions • P
Slide 7: Value creation for shareholders
Value creation for shareholders Realization of valuation premium Potential for 12 premium 11 valuation Renewables innogy acquisition at ~10x 1011x EV/EBITDA EV/EBITDA 9 8 Instant Platform Shareholder 7 redeployment of for high value capital net synergies 6 creation (€600-800m) 5 4 3 Renewables1 1. E
Slide 8: Integration of innogy provides for strong synergy potential
Integration of innogy provides for strong synergy potential Estimated net synergies (€ m) Synergy focus1 Corporate Functions & IT €600-800m Energy Sales & Customer Solutions ~100% Energy Networks ~55% ~25% ~5% •Strong synergy potential of €600-800m •~5,000 FTEs affected (~7% of employee base) 2019 2
Slide 9: Investor agreement with RWE ensures equal treatment of shareholders
Investor agreement with RWE ensures equal treatment of shareholders Preamble • RWE to act purely as financial investor Corporate • Right to nominate one Supervisory Board member Governance Shareholder • Not allowed to increase stake above 16.67%1 structure and rights • Not allowed to sell to an E.ON
Slide 10: Transaction progressing as planned
Transaction progressing as planned 2018 2019 2020 Voluntary public takeover offer (PTO) 1st Closing2 18th September New Supervisory and Executive Board at innogy level FY 2019 reporting and CMD ended 25th July October 25 March th Start of integration Announcement of merger squeeze out 2n
Slide 11: Proposed solution for npower
Proposed solution for npower Detailed plan proposed for UK Customer Solutions: 1 • Migration of npower’s B2C and SME customers 1 onto E.ON UK platform B2C/SME B2C/SME B2B B2B • Carve-out of Industrial & Commercial (B2B) 2 customers to secure profitable business 2 3• Restructuring of remaining npower
Slide 12: Investment highlights
Investment highlights Starting from position of strength: Creating the future of energy Growth Commitment to deliver annual dividend per share growth Focus Unique downstream position with high share of regulated earnings Renewables value crystallization and €600-800m net synergies Discipline High co
Slide 13: 9M 2019 Results November 29th, 2019
Growth Focus Discipline Creating the future of energy 9M 2019 Results November 29th, 2019
Slide 14: Operations fully in line with expectations
Operations fully in line with expectations Highlights Key Financials1 €m € bn • Intra-year EBIT recovery fully on track to reach prior 2.352 year level (3rd quarter up 20% YoY) 2.208 39,6 • First time inclusion of innogy financials (13 days of earnings, full balance sheet impact) • Economic Net Debt
Slide 15: Customer Solutions – Solid customer growth outside UK
Customer Solutions – Solid customer growth outside UK B2C customer numbers Growing customer base outside UK B2C customer numbers • Since FY 2018 more than ~380k ~20m ~20m ~19m additional B2C customer ~19m accounts in Germany Germany ~150k • ~150k additional customer Germany ~230k accounts in other m
Slide 16: Energy Networks – Regulatory update
Energy Networks – Regulatory update Germany Sweden • General efficiency factors for 3rd regulatory • Carry-over de-risked after constructive period (gas at 0.49% and electricity at 0.9%) discussions with government have been legally challenged • Full amount of retro-actively allowed revenues • Highe
Slide 17: EBIT development in line with expectations
EBIT development in line with expectations EBIT1 9M 2019 vs. 9M 2018 Key 9M Effects €m Energy 9M 2018 2,352 Networks +/– • Germany: new regulatory period power, one-off effects 2018 Energy -47 •+ Sweden: power tariff increase Networks Customer Customer -136 Solutions Solutions •– UK: regulatory effe
Slide 18: Adj. Net Income reflecting EBIT development
Adj. Net Income reflecting EBIT development 9M 2019 €m Group EBIT1 2.208 Interest on fin. assets/ -430 Stable YoY liabilities2 Other interest -77 expenses Profit before 1.700 Taxes1 Income Taxes -349 Tax rate for 9M 2019 at ~21% Minorities -175 Adjusted 1.176 Net Income1 0.54 EPS3 (€ per share) 1. A
Slide 19: Q3 2019 Economic Net Debt (END) reconciliation
Q3 2019 Economic Net Debt (END) reconciliation € bn Net financial position Pension provisions Asset Retirement Obligations (AROs) innogy1 -21.7 -19.8 Transaction effects: + 1.6 bn E.ON -8.8 -20.2 +1.9 +1.5 +3.0 -9.1 -0,1 -0,2 -1,2 -1,0 -39.6 -40.0 -0,7 -2,8 END OCF Q3 20192 Net Pensions4 IGY minorit
Slide 20: Economic Net Debt outlook 2019 and beyond
Economic Net Debt outlook 2019 and beyond Economic Net Debt 9M 2019 FY 2019 Economic Net Debt effects AROs1 Pensions Net financial position – Restructuring Hungary (temporary effect of ~-€0.4 bn) – Free Cash Flow (FCF) effects +/– -9,1 Reduction potential through operational Broader excellence portf
Slide 21: Adjustment of full year EBIT 2019 guidance
Adjustment of full year EBIT 2019 guidance EBIT €3.1-3.3 bn Exclusion of PPA3 charge4 from EBIT & €2.9-3.1 bn Adj. Net Income Technical adjustments2 Old guidance EBIT of E.ON RES Proportional EBIT of Alignment of New guidance FY 2019 & PEL minorities1 innogy (excl. RES, reporting practices2 FY 2019
Slide 22: FY 2019 segment guidance
FY 2019 segment guidance Effects for the remainder of 2019 Energy Networks Renewables •+ 4Q at-equity contribution of Rampion +• Germany: new regulatory period power (20% stake) +• Sweden: power tariff increases (already implemented) innogy •+ Full quarter of innogy earnings contribution Customer So
Slide 23: Adjustment of Adj. Net Income 2019 guidance
Adjustment of Adj. Net Income 2019 guidance Adj. Net Income Dividend1 proposal of €0.46/share confirmed €1.45-1.65 bn €1.4-1.6 bn Technical adjustments2 Old EBIT delta, Financial Additional Tax impact Minorities Additional New guidance mainly expenses innogy on higher relating to innogy guidance FY
Slide 24: Pro-forma full year 2019 EBIT guidance
Pro-forma full year 2019 EBIT guidance ~€1.6 bn €4.0-4.2 bn Exclusion of PPA charge3 from EBIT & Adj. Net Income €2.9-3.1 bn Old guidance EBIT of E.ON RES innogy FY Adjustments2 Pro-forma FY FY 2019 & PEL minorities1 2019 guidance 2019 guidance 1. PreussenElektra assets include participations in pow
Slide 25: Appendix
Appendix
Slide 26: E.ON Group
Growth Focus Discipline E.ON Group E.ON standalone
Slide 27: Continuous track record of delivery
E.ON standalone Continuous track record of delivery Deleveraging achieved – EBIT1 vs. guidance Adj. Net Income1 vs. guidance Significant reduction of END €3.1bn ~€10bn €3.1bn €3.0bn €1.5bn €26.3bn €1.4bn €2.8- €1.3- €2.8- €1.2- €3.0bn €1.5bn €2.7- €3.1bn €1.45bn €19.2bn €3.1bn €0.9bn €16.6bn €0.6- 5
Slide 28: Dividend continues to grow
E.ON standalone Dividend continues to grow Dividend per share growth 2018 & 2019: Fixed Dividend Commitment to annual DPS growth €0.462,3 €0.431,3 €0.30 €0.21 FY 2016 FY 2017 FY 2018 FY 2019 Future Dividend Dividend Dividend Dividend Dividends 1. Fixed for FY 2018 (paid in 2019) 2. Fixed for FY 2019
Slide 29: Energy Networks – Proven efficiency leadership
E.ON standalone Energy Networks – Proven efficiency leadership Regulatory review in German power networks – Performance culture in practice All four E.ON DSOs with efficiency Individual 50% of E.ON DSOs even receive an score of 100% vs. 94% industry efficiency factor additional efficiency bonus vs.
Slide 30: Upgrading long-term network capex growth
E.ON standalone Upgrading long-term network capex growth Energy networks capex (€ bn) 1.9 Additional ~€100m p.a. Cautious planning for long-term capex run-rate 1.8 • Main driver is additional replacement investments 1.7 • Conservative assumptions on Renewables and E-mobility roll-out 1.6 1.4 Discipl
Slide 31: Accelerating power RAB growth
E.ON standalone Accelerating power RAB growth Germany Sweden Czech Republic Power RABRAB 1 +30% Power RAB (€ bn) 1 Power RAB (€ bn) Power (€ bn) 1,2 +15% +25% Targeting upper end of growth range New growth range New New growth range New +25% +20% +10% +25-30% +11% +20-25% New +15% +16% + 8-10% +8% O
Slide 32: Investment highlights
E.ON standalone Investment highlights From deleveraging to focused and disciplined growth Deliver sustainable EPS growth and Growth committed to annual dividend per share growth Focus Management team with strong shareholder focus Discipline Strict capital discipline and high-performance culture 32
Slide 33: Energy Networks
Growth Focus Discipline Energy Networks E.ON standalone
Slide 34: Energy Networks
E.ON standalone Energy Networks Regulated asset base 20181 Grid length (‘000 km) 1 Sweden Germany ∑ Grid length: 980 €3.7bn €10.5bn ∑ Grid length: 96 493 350 ~€20.0bn2 51 45 138 0 CEE & Turkey Germany Sweden CEE & Turkey €5.8bn EBIT3 2018 Market share (%) Sweden ~71% of €0.5bn group core 32 24 27 ~€
Slide 35: German business with roughly 5,400 concessions
E.ON standalone German business with roughly 5,400 concessions Good track record in the past Existing concessions • The German networks business is based on long-term concessions granted by municipalities in the network area Non-concession based RAB1 • Maximum period of concession contract is 20 yea
Slide 36: Turkey with extraordinary high RAB growth
E.ON standalone Turkey with extraordinary high RAB growth Downstream Business Market & Regulation RAB development Established in 3 high-growth regions Constructive regulatory environment: in bn TL, nominal >2x Leading electricity network operator: − Allowed WACC for 2016-2020 − 10.5 m connecti
Slide 37: Major transformation in Energy Networks
E.ON standalone Major transformation in Energy Networks Future energy network system will need to combine Energy Network player different layers of infrastructure From To Data center Energy network operator Holistic system provider EMS Platforms Digital layer VPP Smart Home Network control center Lo
Slide 38: E.ON leading in smart grid projects
E.ON standalone E.ON leading in smart grid projects Project Acon (Again connected networks) Project Simris – Part of Integrating Czech and Slovak electricity markets Achieving energy autarky for small local Purpose Purpose & improving quality of supply communities Project Modernizing grid in border
Slide 39: E.ON supports customers to improve their energy situation
E.ON standalone E.ON supports customers to improve their energy situation Energie Monitor Smart Grid Hub – part of Create transparency for municipalities of their Create customer value by increasing energy Purpose Purpose local energy situation as basis for improvements efficiency Smart Grid Hub E.O
Slide 40: Operational excellence – digitization in practice
E.ON standalone Operational excellence – digitization in practice Advanced Asset Management Digital Workforce Management Introduce a new digital scalable work Conventional approach Predictive maintenance environment for every field technician and back office Tool Effective investment decision Co
Slide 41: Opportunities in adjacent businesses - Broadband
E.ON standalone Opportunities in adjacent businesses - Broadband A Growing from existing assets B Entering Fiber-to-the-Home (FttH) market E.ON's existing fiber-optic infrastructure E.ON's new fiber-optic infrastructure Fiber-optic cables in every street Telco X's and to every backbone household Mob
Slide 42: Customer Solutions
Growth Focus Discipline Customer Solutions E.ON standalone
Slide 43: Customer Solutions
E.ON standalone Customer Solutions Customer Focused Portfolio E.ON’s market position Energy Sales is the anchor business EBIT4 2018 (€ 413m) Top 3 CES Top 3 Energy Sales: 22 m1 Top 2 Top 3 Energy customers in 8 countries Top 3 Top 2 Sales City Energy Solutions (CES)2: Top 3 10% market share in Swede
Slide 44: B2C - Re-inventing our customer business with the digital attacker
E.ON standalone B2C - Re-inventing our customer business with the digital attacker <€ 10 Market Cost-to-Serve Cost Synergies ambition efficiency Market Leading across regions leading Cost to Serve cost of change €/customer account 1-click Single Innovative Fast platform for Customer proposition jour
Slide 45: New Solutions B2B
E.ON standalone New Solutions B2B On-site supply of heat, steam, power, cooling and pressurized air On-site • Bespoke onsite power and heat supply ~5-200MW Generation • Digitization of the entire value chain with IQ-CHP (intelligent, digital CHP) • AI-based solutions for remote O&M Manage energy con
Slide 46: New Solutions CES (City Energy Solutions)
E.ON standalone New Solutions CES (City Energy Solutions) • Large-scale city heating & cooling solutions (e.g. • Typical duration 20-40 years in Malmö, Stockholm, Hamburg) • Typical TCV1 € 0.1–1bn • Growth opportunities through new connections City Supply to established district heating networks & n
Slide 47: New Solutions B2C
E.ON standalone New Solutions B2C Future Energy Home eMobility Home Energy PV & Storage Home Heating Solutions Infrastructure Mgmt. Solution Additional growth in key Revenue growth of heating Development of home Developing Ultra-Fast- regions like Italy, UK, devices – boiler, heat energy man
Slide 48: The nature of the business within Customer Solutions shows great diversity
E.ON standalone The nature of the business within Customer Solutions shows great diversity Energy sales B2C solutions E-mobility B2B solutions CES Asset intensity Scalability (e.g. digital) Sales cycle Example Public charging City quarter Energy contracts PV & Storage Onsite CHP station solution 48
Slide 49: Disciplined investment plan to support growth opportunities
E.ON standalone Disciplined investment plan to support growth opportunities Temporary high investments for smart meter & IT Capex1 2019-2020 €1.8bn Other Infrastructure-like E-mob investments IT & City Energy efficiency Solutions & B2B projects Smart Partially meter temporary 1. Capex net of divestm
Slide 50: PreussenElektra
Growth Focus Discipline PreussenElektra E.ON standalone
Slide 51: First tranche of production rights for PreussenElektra secured
E.ON standalone First tranche of production rights for PreussenElektra secured – terms preliminary and already challenged E.ON Vattenfall Nuclear power plant 10 TWh Krümmel1 88 TWh of ~€27.8/MWh PreussenElektra remaining production rights Preliminary price 10 TWh Remaining October ’19 April ’20 June
Slide 52: 9M 2019 – Financial Appendix
Growth Focus Discipline 9M 2019 – Financial Appendix
Slide 53: Financial Highlights
Financial Highlights €m 9M 2018 9M 2019 % YoY Sales 21,646 23,580 +9 1 EBITDA 3,675 3,742 +2 EBIT1 2,352 2,208 -6 Adjusted Net Income1 1,208 1,176 -3 OCF bIT 3,494 2,736 -22 Investments 2,279 4,018 +76 Economic Net Debt² -16,580 -39,620 -139 1. Adjusted for non operating effects, 2. Economic Net Deb
Slide 54: Cash Conversion Rate in Q3 recovering as expected
Cash Conversion Rate in Q3 recovering as expected1 9M 2019 € bn 73% 3.7 -0.4 2.7 -0.6 -0.4 1.6 -0.7 -4.0 -2.4 EBITDA2 Cash Change in WC OCF bIT Interest Tax Payments OCF Capex FCF Adjustments3 Payments 1. Cash Conversion Rate: OCF bIT ÷ EBITDA 2. Adjusted for non operating effects 54 3. Net non cash
Slide 55: Segments: Energy Networks
Segments: Energy Networks Energy Networks Highlights EBIT1 € m • Germany -3% +/– + New regulatory period for power 1,472 1,425 + Regulatory effects in 2018 – One-off effects in 9M 2018 Germany 755 693 • Sweden + Power tariff increase Sweden 363 394 CEE & Turkey 354 338 9M 2018 9M 2019 €m Germany Swe
Slide 56: Segments: Customer Solutions
Segments: Customer Solutions Customer Solutions Highlights EBIT1 € m • Germany Sales -38% – Timing effect from delayed pass-on of higher grid fees 360 • UK – Regulatory effects, mainly SVT2 price cap Germany Sales 124 224 – Competitive dynamics UK 143 90 + Lower restructuring expenses 51 + Effects f
Slide 57: Non-Core business
Non-Core business Non-Core Highlights EBIT1 € m • PreussenElektra +4% + Higher achieved power prices – Higher depreciation 314 326 – One-off effects in 2018 • Generation Turkey Preussen 256 + Operational improvements, mainly higher hydro volumes in H1 354 Elektra 70 Generation -40 Turkey 9M 2018 9M
Slide 58: Adjusted Net Income
Adjusted Net Income €m 9M 2018 9M 2019 % YoY EBITDA1 3,675 3,742 +2 Depreciation/amortization -1,323 -1,534 -16 EBIT1 2,352 2,208 -6 Economic interest expense (net) -500 -508 -2 EBT1 1,852 1,700 -8 Income Taxes on EBT1 -457 -349 +24 % of EBT 1 -25% -21% - Non-controlling interests -187 -175 +7 Adjus
Slide 59: Reconciliation of EBIT to IFRS Net Income
Reconciliation of EBIT to IFRS Net Income €m 9M 2018 9M 2019 % YoY 1 EBITDA 3,675 3,742 +2 Depreciation/Amortization/Impairments -1,323 -1,534 -16 1 EBIT 2,352 2,208 -6 Reclassified businesses of Renewables -278 -300 -8 Interest result -522 -583 -12 Net book gains 859 -32 -104 Restructuring -52 -179
Slide 60: Cash effective investments
Cash effective investments1 €m 9M 2018 9M 2019 % YoY Energy Networks 954 1,057 +11 Customer Solutions 407 557 +37 Renewables 698 583 -16 innogy businesses 0 53 - Corporate Functions & Other 56 1,561 - Consolidation 0 0 - Non-Core 164 207 +26 Investments 2,279 4,018 +76 1. Investments from innogy tra
Slide 61: Economic Net Debt
Economic Net Debt1 €m 31 Dec 2018 30 Sep 2019 Liquid funds 5,423 5,547 Non-current securities 2,295 1,206 Financial liabilities -10,721 -28,537 Adjustment FX hedging² -28 77 Net financial position -3,031 -21,707 Provisions for pensions -3,261 -8,818 Asset retirement obligations -10,288 -9,095 Econom
Slide 62: Economic interest expense (net)
Economic interest expense (net) Difference €m 9M 2018 9M 2019 (in € m) Interest from financial assets/liabilities -436 -430 +5 Interest cost from provisions for pensions and similar provisions -48 -47 +1 Accretion of provisions for retirement obligation and similar provisions -59 -45 +15 Constructio
Slide 63: Financial Liabilities
Financial Liabilities Liquidity Sources (as of 9M 2019) Maturity profile (as of end 9M 2019)1 € bn € bn 12.1 Liquid funds ~5.5 Non-current securities ~1.2 Total ~6.7 Syndicated loan (undrawn) 3.50 2.8 2.4 2.2 € / $ Commercial Paper 1.4 10 / 10 1.0 1.3 programs 0.8 Acquisition facility 1.75 2019 2020
Slide 64: Successful financing 2019
Successful financing 2019 2019 Q3 Q4 August 21 (Green Bond) October 17 October 31 1 • Size: €1.5bn 2 • Size: €1.5bn 3 • Size: €500mn Bonds • Term: 5Y & 10.5Y • Term: 3Y & 7Y • Term: 12Y • Yield: -0.149% p.a. • Yield : -0.019% p.a. • Yield: 0.741% p.a. & 0.373% p.a. & 0.375% p.a. October 24 Syndicate
Slide 65: Adoption of IFRS 16: Impact on E.ON financials & KPIs
Adoption of IFRS 16: Impact on E.ON financials & KPIs Changes for the lessee (illustrative) IFRS 16 in short Balance Sheet Profit & Loss • Objective: Ensuring that lessees and lessors provide relevant information that faithfully Equity Sales Sales (Equity ratio ) Oper. expenses Oper. expenses repres
Slide 66: E.ON Investor Relations contacts
E.ON Investor Relations contacts Verena Nicolaus-Kronenberg T +49 (201) 184 28 06 Head of Investor Relations verena.nicolaus-kronenberg@eon.com Martina Burger T +49 (201) 184 28 07 Manager Investor Relations martina.burger@eon.com Sebastian Gaßner T +49 (201) 184 28 05 Manager Investor Relations seb
Slide 67: Financial calendar & important links
Financial calendar & important links Financial calendar March 25, 2020 Annual Report 2019 & Capital Markets Day (London) May 12, 2020 Quarterly Statement: January – March 2020 May 13, 2020 2020 Annual Shareholders Meeting August 12, 2020 Half-Year Financial Report: January – June 2020 November 11, 2
Slide 68: Disclaimer
Disclaimer This presentation contains information relating to E.ON Group ("E.ON") that must not be relied upon for any purpose and may not be redistributed, reproduced, published, or passed on to any other person or used in whole or in part for any other purpose. By accessing this document you agree