Post on 30-Jul-2020
Creating the future of energy
http://www.energyfortomorrow.eu/ March 2019
DisciplineFocusGrowth
Disclaimer
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This presentation may contain forward-looking statements based on current assumptions and forecasts made by E.ON management and other information currentlyavailable to E.ON. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financialsituation, development or performance of the company and the estimates given here. E.ON does not intend, and does not assume any liability whatsoever, to updatethese forward-looking statements or to conform them to future events or developments.
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Certain numerical data, financial information and market data (including percentages) in this presentation have been rounded according to established commercialstandards. As a result, the aggregate amounts (sum totals or interim totals or differences or if numbers are put in relation) in this presentation may not correspond in allcases to the amounts contained in the underlying (unrounded) figures appearing in the consolidated financial statements. Furthermore, in tables and charts, theserounded figures may not add up exactly to the totals contained in the respective tables and charts.
Strong delivery of FY 2018 results
Top end of 2018 guidance range achieved
Dividend 2018 increases >40% to €0.43/share
Preparation of takeover of innogy fully on track
Upgrading network capex to fuel accelerated RAB growth
Predictability — Outlook 2018-2020 confirmed, commitment to annual DPS growth
Visibility — Fixed dividend of €0.46/share to be proposed for 2019
Highlights
3,074
1,427
2,989
1,505
Adj. Net IncomeEBIT
FY 2017 FY 2018
Key Financials1
€ m
1. Adjusted for non operating effects
Economic Net Debt
19.2
16.6
€ bn
!
!
!
€2.8-€3.0bn
€1.3-€1.5bn
Guidance Range
3
Continuous track record of delivery
1. Adjusted for non operating effects.
2016 2017 2016 2018
5.3x
3.9x3.4x
€26.3bn
€19.2bn€16.6bn
~€10bn
2016 2018
€2.7-€3.1bn
€2.8-€3.1bn
€0.6-€1.0bn
€1.2-€1.45bn
€3.1bn €3.1bn
€0.9bn
€1.4bn
EBIT1 vs. guidance Adj. Net Income1 vs. guidanceDeleveraging achieved –
Significant reduction of END
2018
€2.8-€3.0bn
€3.0bn
2017
€1.3-€1.5bn
€1.5bn
Guidance Range
2017
4
Accelerating power RAB growth
Germany
~€8bn
Power RAB (€ m) Power RAB1
1. Based on constant FX rates (SEK/EUR 2018: 10.26; CZK/EUR 2018: 25.65)2. Growth includes revaluation of RAB from 2020 onwards according to new methodology (due to change in depreciation times). Effect ca. ~€0.5bn in 2020
~8.0
2017
~8.3
2018 2020
+ 8-10%
+6%
Targeting upper end of growth range
+10%
Czech RepublicSwedenPower RAB (€ m) 1
~3.5
20202017
~3.7
2018
~1.4
2017
~1.5
2018 2020
Power RAB (€ m) 1,2
New growth range
+16%
+12%
New growth range
+11%
+15%
+8%
+20%+25-30%
+20-25%+15%
+11%
+30%
+25%
+25%
New New
New
OldOld Old
E.ON standalone
5
Capex split 2019 & 2020
Capex1 2019
1.7
0.81.1
Energy Networks Renewables Customer Solutions
~€3.6bn ~€3.7bn
Increase in capex drives long-term EBIT growth
Capex focused on Energy Networks and infrastructure-like Customer Solutions
Strict adherence to capital return targets (e.g. Group ROCE target 8-10%)
Growth
Focus
Discipline
Capex1 2020
1.8
1.10.8
1. Gross capex, not including divestments
E.ON standalone
6
€413m
2017 2018
€479m
CS ex UK
CS UK
2017 2018
Germany
UK
Other
~22m~22m
Customer Solutions with profitable customer growth outside UK
EBIT
Improving EBIT outside UK
• UK decline mainly caused by regulatory interventions and restructuring costs
Pro-actively working on next wave of performance measures• Programs in Germany and UK with target
to offset margin pressure• UK program already expanded during
2018 to mitigate SVT price cap impact
2018 2019 2020 >2020
Cost
Impact
Performance programs (upgraded)
~€120m impact
~£150m impact
Growing customer base outside UK
• More than 100,000 additional customers in Germany
• In the UK, best performance among the Big Six in terms of customer numbers1
Customer numbers
1. Source: Q4 2018 Cornwall report
+2%
+1%+17%
E.ON standalone
7
Group guidance for FY 2019
Actuals FY 2018 (€ bn) Actuals FY 2018 (€ bn)
Guidance FY 2019 (€ bn) Guidance FY 2019 (€ bn)
3.01.5
EB
IT1
Ad
just
ed N
et In
com
e1
Dividend2 2019 (€/share)
0.462.9 – 3.11.4 – 1.6
Pro
pos
ed d
ivid
end
s2
Dividend2 2018 (€/share)
0.43
1. Adjusted for non operating effects 2. Fixed dividend proposals to AGM to be paid in following year
E.ON standalone
8
ReturnROCE1
8 – 10 %
E.ON FOCUS – Framework for 2018-2020Our basis for steering the company
1. Based on EBIT (= pre-tax), 2. OCF bIT divided by EBITDA, 3. Adjusted for non operating effects, FY 2018 guidance range as basis for medium-term outlook 2018-2020 (CAGR), 4. Total Shareholder Return, 5. Fixed for FY 2019 (paid in 2020).
CashCash conversion rate2
≥ 80 %
Executive CompensationClosely linked to EPS target achievement and relative TSR4 (in addition: share ownership obligations)
EPS3
Group+ 5-10% (CAGR)
AnnualDPS growth
Dividend
Fixed dividend 2019:
€0.465
EBIT3
Group+ 3-4% (CAGR)
Capital StructureStrong BBB/Baa
E.ON standalone
9
Top end of guidance
Top end of guidance (+5% YoY)
Leverage target of 3.4x achieved
Committed to annual DPS growth:€0.43 for 2018 €0.46 for 2019
3-4% EBIT CAGR3
5-10% EPS CAGR3
Transacting from a position of strength
EBIT€3.0bn1
ANI€1.5bn1
END€16.6bn1
Dividend
2018-20 Growth
✓
✓
✓
✓
Group EBITDA
~€8bn2
Customer Solutions
>31mCustomers1
~53mCustomers2
Energy Networks
~€20bn RAB1, 4
~€34bn RAB2, 4
€5bn1
1. E.ON standalone 2018 reported, 2. Future E.ON pro-forma 2018 (innogy data based on public information), 3. 2018-2020 based on existing portfolio (E.ON standalone), 4. RABs from different regulatory regimes are not directly comparable due to significant methodical differences.
Regulated Non-regulated
E.ON today Future E.ON (’18)E.ON today (’18)
E.ON standalone
✓
10
Takeover of innogy progressing well
Antitrust approval process
• E.ON filed official notification with EU Commission end of January
• EU Commission initiated Phase II investigations on 8th March
• Approvals for RWE part of transaction already received after Phase I
• Fully on track for closing during second half of 2019
Preparation of integration of innogy
into E.ON
Synergies
• Joint preparation work intensifying
• Work on future operating model nearly completed
• Target of €600-800m net synergies by 2022 confirmed
11
Schematic merger control proceedings
Pre-notification
Simplified overview of process steps of EU merger control proceedings(possible (partial) referrals to national authorities not taken into account1)
PreparationsPhase I
(25 working days)Phase II
(90 working days + extensions)
• Draftingnotificationdocuments
• Discussing draft notification, responding to information requests
• Finalizing notification
• Assessing notification
• Obtaining additional information requests
• Analyzing market segments in detail
• Negotiating potential conditions
≈ May 2018Not before mid-2019
Expected EU Commission clearance decision
Presentation of potential concerns regarding market segments
1. Federal Cartel Office Germany, CMA, CEE 12
Official filing of transaction with EU Commission on 31st January 2019
≥202620232019 2020 20222021 2024 2025
1.41.1
0.8
0.10.4
0.6
0.0
4.8
USDEUR GBP JPY Other
Financial Liabilities
Maturity profile (as of end FY 2018)1
€ bn
1. Bonds and promissory notes issued by E.ON SE and E.ON International Finance B.V. (fully guaranteed by E.ON SE)
Liquidity Sources (as of FY 2018)€ bn
Liquid funds 5.432
Non-current securities 2.295
Syndicated loan (undrawn) 2.75
€ / $ Commercial Paper programs (undrawn)
10 / 10
Acquisition facility (undrawn)
1.75
E.ON standalone
13
Indicative funding needs
Funding plan
Funding public takeover offer and purchase of RWE’s loan to innogy is covered by existing cash and RWE’s payment
2019 funding needs: expected to be €2-3 billion
€1.75 billion undrawn acquisition facility available
Regular funding volumes determined by
- refinancing of upcoming maturities
- utilization of asset retirement obligations
Future annual funding needs estimated: €2-4 billion
Financing considerations
Maturities (€ bn) 2019 2020 2021
E.ON ~1.1 ~1.4 ~0.8
innogy2 ~2.0 ~0.8 ~1.7
1. Asset retirement obligations (‘AROs‘) : Indicative utilization of €0.5 billion p.a.2. Incl. senior bonds and 2019 RWE intercompany loan based on innogy‘s Fixed Income Investor Update 1st June 2018
0
2
4
2019 2020 2021
E.ON maturities AROs innogy maturities
€ bn
1 2
14
Structural subordination
E.ON SE
E.ON Int. Finance B.V.
innogy SE
innogy Finance B.V.
Bonds
Bonds
Guaranteed by E.ON SE
Bonds
Bonds
Guaranteed by innogy SE
• Structural subordination may become a topic post closing
• To the extent necessary, E.ON has the choice among several mitigants for structural subordination:
moving innogy bonds to E.ON leveland replacing innogy guarantee with E.ON guarantee
upstream guarantee from innogy to E.ON
liability management at market
E.ON will address structural subordination post closing of the innogy acquisition
15
Appendix
• Germany: price increases in Q2 2017, restruc-turing charges
• UK: price increases in Q2 2017, competitive dynamics, regulatory effects, restruct. charges
• Preussen Elektra: one-off effects, lower achieved prices, higher volumes due to plant outages in 2017
• Turkey: op. improvem., omission of book loss
• Germany: positive one-off effects in Q2 & Q3 2018, reversal of regulatory effects, disposal gas network HH, new regulatory period gas
• Sweden: power tariff increase, adverse FX dev.
• Onshore: capacity additions in the US, support scheme expiries
• Offshore: capacity additions (Rampion), adverse wind conditions (esp. Q4)
EBIT development solid despite operational challenges
+67
+115Corp. Functions
& Other, Consolidation
-190
3,074
Customer Solutions
FY 2017
Energy Networks
-66
Renewables
-11Non-Core
FY 2018 2,989
-85
EBIT1 FY 2018 vs. FY 2017€ m
1. Adjusted for non operating effects
Energy Networks
Customer Solutions
Renewables
Key FY Effects
Non-Core
+/–
+/–
+
–
+/–
+
+/–
+/–
+/–
+/–
17
1. Adjusted for non operating effects 2. Preussen Elektra
Segment EBIT1 guidance FY 2019
2019Energy Networks Customer Solutions
Renewables Non-Core
2018
€1.8bn €0.4bn
€0.5bn €0.4bn
• Germany: Further increase in RAB, efficiency scores
• Sweden: Power tariff increases (already implemented)
++
• Germany & UK: Restructuring charges in 2018
• UK: Regulatory interventions (i.e. SVT price cap)–+
• Onshore: Capacity additions, support scheme expiries
• Offshore: Capacity additions (Arkona, Rampion)
+/–+
• PEL2: Increased wholesale prices, higher D&A, one-offs
• Turkey: Operational improvements
+/–+
20192018
20192018 20192018
E.ON standalone
18
END decreases mainly due to sale of Uniper stake
-10.6 -10.3
-3.6
-3.5
-0.9
-0.9-0.6
-3.3
-5.0
-3.0
3.8
Investments
0.9
Pensions
4.3
Other END FY 2018AROs
0.6
DividendOCF
2.9
-19.2
END FY 2017
0.3
CTA2 Funding
-16.6
Divestments
+2.7€ bn
END1 FY 2018 vs. FY 2017
1. Economic net debt definition takes into account the decommissioning provisions calculated with a real discount rate of 0.0% as opposed to IFRS AROs2. Contractual Trust Arrangement
AROs
Net financial position
Pension provisions
Liquidation of pension scheme in Q1 2018 results in reduction of pension provisions –limited effect on END
Sale of Uniper stake
19
• Nuclear provisions: ~€0.9bn
• AROs (Renewables): ~€0.9bn
• Tax equity liabilities (Renewables): ~€0.6bn
• Pension provisions (Renewables): ~€0.4bn
Pro forma Economic Net Debt 2018
~10.3
~3.0
Economic Net Debt 2018
~3.3
~16.6
E.ON today1 (€ bn)
Economic Net Debt 2018
~32
Net financial position Provisions for pensions Asset-retirement obligations
1. E.ON 2018 reported, 2. Future E.ON pro-forma 2018 (innogy data based on public information), 3. E.ON will address structural subordination post closing, 4. Nord Stream I stake
~1+ Transfer of NS14 into CTA
Further deleveraging measures to be realized in ‘19 (€ bn)
Includes:• Acquisition of 23.2% minority shares • €1.5bn cash payment from RWE
Future E.ON2, 3 (€ bn)
~€2.8bn debt transferred to RWE
20
Includes successful monetization of Uniper shares
Integration of innogy provides for strong synergy potential
2019 2020 2021 2022
Estimated net synergies (€ m)2 Synergy focus1, 2
€600-800m
~55%
~25%
~5% •Strong synergy potential of €600-800m
•~5,000 FTEs affected (~7% of employee base)
Corporate Functions & IT
Energy Networks
Energy Sales & Customer Solutions
~100%
1. Synergy split (€ million), 2. Future E.ON pro-forma 2018 (innogy data based on public information). 21