E.on Se · XETR:EOAN
E.on — Investor Day (September 2004)
19 slides from E.on's investor day presentation, Sep 6, 2004
Slide 1: Capital Market Day
Capital Market Day Munich, September 6, 2004
Slide 2: Risk Management
Risk Management Bernd Romeike Member of the Board of E.ON Energie AG
Slide 3: Agenda
Agenda Our business model results in a natural hedge E.ON Energie's risk management structure combines operational strength and central guidance Credit risk management as an example of cross-Group risk controlling Our key factors for successful risk management Page 3
Slide 4: Optimizing an integrated value chain in Central Europe
Optimizing an integrated value chain in Central Europe Market Shared service Trading & Retail & distribution, Generation management companies optimization transmission nuclear IT hydro Engineering fossil & waste ZSE incineration Facility management Page 4
Slide 5: Agenda
Agenda Our business model results in a natural hedge E.ON Energie's risk management structure combines operational strength and central guidance Credit risk management as an example of cross-Group risk controlling Our key factors for successful risk management Page 5
Slide 6: E.ON Energie manages the energy value chain in Central Europe
E.ON Energie manages the energy value chain in Central Europe Fuel Market Wholesale Market Retail Market E.ON regional E.ON Generation E.ON Sales & Trading distributors Generation Sales portfolio portfolio Trading portfolio Core of the business model is the Group-internal portfolio management by E.O
Slide 7: The integrated business model in Germany results in a natural hedge
The integrated business model in Germany results in a natural hedge Only a small volume of the generation portfolio is exposed to price risks of the wholesale market Long Short Within the business model set by E.ON Energie, the remaining Own generation Sales by E.ON long position is actively regiona
Slide 8: Agenda
Agenda Our business model results in a natural hedge E.ON Energie's risk management structure combines operational strength and central guidance Credit risk management as an example of cross-Group risk controlling Our key factors for successful risk management Page 8
Slide 9: Residual risks are systematically allocated to the steps of the value chain
Residual risks are systematically allocated to the steps of the value chain Generation y Operational availability risk To ensure overall Group y Fuel price risk optimization, risks are Trading / Optimization allocated where the most y Price risk from long positions effective risk management y Volume
Slide 10: In addition to market risks, there are further Group-wide risks requiring central risk management
In addition to market risks, there are further Group-wide risks requiring central risk management Cross-Group risks IT- Risk Reporting y Require a central risk Risks y Identification management Political risks Credit y Analysis y Optimization of business risks processes and intra-Group y Evaluation
Slide 11: A systematic process ensures transparency of the risk situation and optimal risk management
A systematic process ensures transparency of the risk situation and optimal risk management within the E.ON Energie Group Business Unit 1 Risk identification Periodical and Identification of Directive for and evaluation ad-hoc risk significant risk implementation reporting of measures Monitoring of
Slide 12: E.ON Energie's risk management structure combines central guidance and operational strength
E.ON Energie's risk management structure combines central guidance and operational strength Risk Committee Risk Controlling y Definition of risk policy y Monitoring of Group-wide risk position y Risk management spanning the entire value chain Generation Trading/Optimization E.ON regional utilities y
Slide 13: Agenda
Agenda Our business model results in a natural hedge E.ON Energie's risk management structure combines operational strength and central guidance Credit risk management as an example of cross-Group risk controlling Our key factors for successful risk management Page 13
Slide 14: Significant credit risks are controlled centrally by E.ON Energie
In accordance with the risk management structure, significant credit risks are controlled centrally by E.ON Energie in close cooperation with E.ON y Controlling of credit risks spanning different E.ON Market Units y Determination of guidelines for Business Units of the E.ON Energie Group E.ON y Cont
Slide 15: Consistent Group-wide standards ensure effective credit risk management
Consistent Group-wide standards ensure effective credit risk management y Continuous analysis of creditworthiness based on unified procedures for internal rating of counterparts y Group-wide approach for deriving credit limits, restricts default risks y Systematic minimization of contractual risks b
Slide 16: Several business relations along the value chain can lead to credit limit bottlenecks
Several business relations along the value chain can lead to credit limit bottlenecks Credit standing E.ON Energie sufficient ? Counterpart X Generation E.ON Kraftwerke Generation Value Chain Transmission E.ON Netz Grid operator Trading/ E.ON Sales & Optimization Trading Trading company Distribution
Slide 17: Group-wide allocation of tight limits is carried out centrally by E.ON Energie (example)
Group-wide allocation of tight limits is carried out centrally by E.ON Energie (example) Quantitative Criteria Limit Calculation of risk-adjusted performance in million € 9 8 of Business Units 1 E.ON Sales & Trading 5 Qualitative Criteria 8 Evaluation of effectiveness of local credit E.ON Kraftwerke
Slide 18: Agenda
Agenda Our business model results in a natural hedge E.ON Energie's risk management structure combines operational strength and central guidance Credit risk management as an example of cross-Group risk controlling Our key factors for successful risk management Page 18
Slide 19: Key factors for successful risk management in the E.ON Energie Group
Key factors for successful risk management in the E.ON Energie Group y Natural hedge as the result of the integrated business model and internal portfolio management y Systematic allocation of risks to Business Units for the use of specific market know-how y Central management of cross-Group risks y