E.on Se · XETR:EOAN
E.on — Non-Deal Roadshow (August 2017)
48 slides from E.on's roadshow presentation, Aug 10, 2017
Slide 1: E.ON Roadshow: Delivering step by step
E.ON Roadshow Delivering step by step H1 2017
Slide 2: Delivering step by step: Highlights
Delivering step by step … Highlights Raising payout ratio to a minimum of 65%1 (specification of exact range with FY 2017 results) Striving for payout ratio in line with peers and absolute dividend growth Nuclear fuel tax refund paves way to potential over-achievement of leverage target De-risking c
Slide 3: Potential over-achievement of deleveraging could create balance sheet head room
Potential over-achievement of deleveraging could create balance sheet head room Economic net debt € bn 26.3 Debt Reduction 21.5 Debt reduction measures 1 + Monetization of Uniper shares ~3.1 NFT3 ~€2.85bn ~5.3x ABB4 ~€1.35bn + Transfer of NS12 into CTA ~1.0 EBITDA ~4.5x + Nuc. decommissioning cost ~
Slide 4: Raising payout and striving for dividend growth
Raising payout and striving for dividend growth Payout ratios by E.ON and peers Dividend policy: 80% • Raising payout ratio to a minimum of 65%2 Peer group1 • Striving for payout ratio in line with peers • Specification of exact range with full year 2017 65% results E.ON target 60% • Targeting absol
Slide 5: Energy Networks: multi-decade growth
Energy Networks: multi-decade growth Regulations and mega trends support multi decade growth RAB growth: potential for higher replacement capex on top of continuing network extensions Additional replacement and reinforcement investments Example: Power RAB in Germany Renewables build out € bn +3-4% p
Slide 6: CS: very good progress and growth also from asset-backed solutions
CS: very good progress and growth also from asset-backed solutions District Heating / B2M Strong district heating business in Sweden, Germany, UK with yearly EBIT of ~€130m Heat contributes ~20% of Customer Solutions EBIT Stable and resilient earnings profile often based on network assets €130m
Slide 7: Renewables: risk & return focus
Renewables: risk & return focus Focus on PPA and FiT secured pipeline US onshore Safe-harbored pipeline of > 3,000MW with 100% PTC support New project Stella (201MW) with FID expected in Q3-17 ~500 MW on track for completion in 2017 Europe onshore Opportunistic approach Recent example: FID
Slide 8: Embedding operational excellence
Embedding operational excellence Phoenix ahead of schedule €400m Beyond Phoenix ~€300m Performance Culture to be sustainably embedded across all functions ~€70m • Focus on operational excellence ~€30m • Improve customer centricity H1 2017 H2 2017 2018 Total • Digitization to improve processes and cu
Slide 9: H1 results & FY 2017 guidance
H1 results & FY 2017guidance
Slide 10: Strong Q2 2017 but H1 2017 EBIT still below prior year
Strong Q2 2017 but H1 2017 EBIT still below prior year EBIT1 H1 2017 vs. H1 2016 €m -205 2.001 154 1.972 -210 -29 -49 -88 -12 1.767 H1 2016 Divested H1 2016 w/o Energy Networks Customer Renewables Corp. Functions Preussen H1 2017 Operations div. operations Solutions & Other, Elektra Consolidation 1.
Slide 11: Adjusted Net Income supported by lower accretion and taxes
Adjusted Net Income supported by lower accretion and taxes H1 2017 Group EBIT1 1.767 €m Interest on fin. assets/ -349 ~€ 40m deterioration YoY due to lower interest income liabilities2 Other interest ~€450m improvement mainly due to significant lower accretion of -34 nuclear provisions and other int
Slide 12: END improves significantly due to high cash flow and capital increase
END improves significantly due to high cash flow and capital increase END1 H1 2017 vs. FY 2016 € bn +4.8 3.7 AROs Pension -21.4 provisions Net financial 0.3 0.2 -21.5 position 0.1 -1.3 1.35 -0.1 -0.5 -4.0 -3.7 4.9 -0.9 -21.5 -26.3 END FY 2016 OCF Investments ABB2 Dividend Divest Pensions AROs Others
Slide 13: Nuclear decommissioning is no limitation for dividends or capex
Nuclear decommissioning is no limitation for dividends or capex € bn Current approach • Nuclear decommissioning provisions are part of E.ON’s economic net debt (END) Current ~0.4-0.6 • Utilization of nuclear provisions is currently part of operating cash flow and thus implies a burden for the financ
Slide 14: Outlook 2017 confirmed
Outlook 2017 confirmed Outlook 2017 Effects for H2 2017 Energy + Regulatory effects (e.g. pensions), lower €2.8-3.1 bn Networks maintenance costs + Tariff increase in Sweden + Positive development in CZ, HU EBIT1 Customer + Price increases in Germany & UK, focus on Solutions efficiency €1.2-1.45 bn
Slide 15: E.ON Focus – Our basis for steering the company
E.ON Focus – Our basis for steering the company • Update of E.ON Focus with FY 2017 results • Increased payout ratio to minimum of 65%4 • Striving for payout ratio in line with peers (specification of exact range with FY 2017 results) • Target of absolute dividend growth (base year 2017) • Strong al
Slide 16: Appendix: H1 results & FY 2017 guidance
Appendix: H1 results & FY 2017guidance
Slide 17: Segments: Energy Networks
Segments: Energy Networks Energy Networks Highlights EBIT1 € m +18% • Germany: 1,026 + Regulatory effects 872 + Lower maintenance costs 606 • Sweden: Germany 492 + Tariff increases Sweden • CEE & Turkey: 197 239 CEE & Turkey + Positive effects in Czech Republic, Hungary 183 181 H1 2016 H1 2017 €m Ge
Slide 18: Segments: Customer Solutions
Segments: Customer Solutions Customer Solutions Highlights EBIT1 € m • Germany: -32% – Lower power margins due to increased TSO fees 659 – Lower gas margin due to price decrease in Nov 2016 Germany 164 + Price increases in Q2 2017 449 86 • UK: UK 291 + Stabilizing customer numbers & price increases
Slide 19: Segments: Renewables
Segments: Renewables Renewables Highlights EBIT1 € m • Offshore: -19% – Arkona book gain in Q2 2016 254 – Low wind conditions in UK 205 • Onshore: Offshore/Other 201 + COD of Colbeck’s Corner in May 2016 128 + Higher production of US wind farms & better wind conditions in Europe Onshore/Solar 53 77
Slide 20: Segments: PreussenElektra
Segments: PreussenElektra PreussenElektra Highlights EBIT1 € m + Non-reoccurrence of nuclear fuel tax payments in Q2 2016 -4% + One-off effect from court case 283 271 – Lower volumes due to outages – Lower achieved power prices – ARC Depreciation Hedged Prices Germany (€/MWh) as of 30 June 2017 H1 2
Slide 21: Adjusted Net Income
Adjusted Net Income €m H1 2016 H1 2017 % YoY 1 EBITDA 2,901 2,715 -6 Depreciation/amortization -900 -948 -5 1 EBIT 2,001 1,767 -12 Economic interest expense (net) -810 -383 +53 1 EBT 1,191 1,384 +16 Income Taxes on EBT 1 -456 -347 +24 % of EBT 1 -38% -25% - Non-controlling interests -131 -156 -19 1
Slide 22: From EBITDA to Net Income
From EBITDA to Net Income €m H1 2016 H1 2017 % YoY 1 EBITDA 2,901 2,715 -6 Depreciation/Amortization/Impairments -900 -948 -5 1 EBIT 2,001 1,767 -12 Economic interest expense (net) -810 -383 +53 Net book gains -25 273 +1,192 Restructuring -129 -177 -37 Mark-to-market valuation of derivatives 552 -31
Slide 23: Cash effective investments by unit
Cash effective investments by unit €m H1 2016 H1 2017 % YoY Energy Networks 534 545 +2 Customer Solutions 250 209 -16 Renewables 473 528 +12 Corporate Functions & Other 60 27 -55 Consolidation -5 -2 +60 PreussenElektra 11 7 -36 Investments 1,323 1,314 -1 1. Adjusted for non operating effects 23
Slide 24: Economic Net Debt
Economic Net Debt1 Schematic END split after KFK payments • Amount of END unchanged €m 31 Dec 2016 30 June 2017 • Nuclear ARO’s and NFP are decreased by KFK Liquid funds 8,573 14,252 payment • Pension provisions and non nuclear AROs Non-current securities 4,327 3,850 unchanged Financial liabilities
Slide 25: Economic interest expense (net)
Economic interest expense (net) Difference €m H1 2016 H1 2017 (in € m) Interest from financial assets/liabilities -311 -349 -38 Interest cost from provisions for pensions and similar provisions -43 -41 +2 Accretion of provisions for retirement obligation and similar provisions -442 -30 +412 Construc
Slide 26: Cash conversion rate at 89% due to strong operational quarter
Cash conversion rate2 at 89% due to strong operational quarter H1 2017 € bn 5.3 4.9 -0.3 -0.1 -1.3 2.85 3.6 CCR2: 89% 2.7 2.4 0.0 -0.4 EBITDA1 Cash Changes OCF bIT adj. NFT refund OCF bIT Interest Tax Payments OCF Capex FCF Adjustments3 in WC NFT refund Payments 1. Adjusted for non operating effects
Slide 27: Financial Liabilities
Financial Liabilities Split Financial Liabilities Maturity profile (as of end H1 2017)1 € bn € bn 4.8 30 June 2017 Bonds -12.6 in EUR -5.7 EUR in GBP -3.9 GBP in USD -2.6 2.1 USD in JPY -0.2 1.8 YEN 1.4 in other denominations -0.2 1.1 Other Promissory notes -0.4 0.8 0.6 0.4 Commercial papers 0.0 0.1
Slide 28: Overview: Group & Segments
Overview: Group & Segments
Slide 29: Three core businesses
Three core businesses Adjusted EBIT1 2016 of €3.1 bn Key financials 20161 Adjusted EBITDA €bn Energy Networks Customer Solutions Renewables 4.9 Adjusted EBIT €bn 3.1 € 1.7 bn € 0.8 bn € 0.4 bn Non-core Business Corporate Functions/ Adjusted Net Income €bn (PreussenElektra) Other2 0.9 € 0.6 bn - €0.4
Slide 30: Attractive combination of businesses
Attractive combination of businesses Energy Networks Customer Solutions Renewables ~ €19 bn Regulated Asset Base1 >22 m Customers across Europe >6 GW Renewables capacities Germany €10.7 bn Germany 6.1 m delivered Sweden €3.9 bn UK 7.0 m 10 year track record of CEE €4.4 bn Other EU 9.2 m renewables d
Slide 31: E.ON continues to benefit from a very stable business profile
E.ON continues to benefit from a very stable business profile Business profile post spin… EBITDA 20161 High share of regulated earnings Operations in Energy Networks under stable, well 13% Energy Networks Customer Solutions 13% established frameworks in low risk markets with €4.9bn 53% PreussenE
Slide 32: KFK solution with positive impact on adjusted net income
KFK solution with positive impact on adjusted net income 1. Nuclear fund (KFK) 2. Discount rates 3. Additional asset retirement cost (ARC) Storage related provisions, € bn ~10 Decommissioning provisions, € bn ARC € bn 11.2 1.0 7.8 2.0 0.2 9.4 9.7 0.3 1.5 Provisions Premium1 Provision Payment FY 2015
Slide 33: Capex budget significantly reduced
Capex budget significantly reduced Medium-term – Gross capex € bn ∑ ~10.0 -20% ∑ ~8.0 • Strict focus on capital discipline across all business units • Three year capex budget decreased by ~20% • Reduced investments in renewables projects, notably starting in 2018 given committed project pipeline 201
Slide 34: Efficiency program Phoenix: Securing sustainable competitiveness
Efficiency program Phoenix: Securing sustainable competitiveness Principles Scope Targets, status, and next steps Controllable cost1 baseline • Phoenix target: €400 m EBIT contribution € bn p.a. from 2018 onwards 1 Business empowerment 5.3 • About €300 m from central overhead & support functions 4.1
Slide 35: Stringent incentive plan for the Management Board
Stringent incentive plan for the Management Board KPI Calculation Cap Long-Term Relative TSR1 TSR development relative to STOXX 200% Incentive Europe 600 Utilities over 4 years of target value Short-Term EPS & individual EPS × 200% Incentive performance individual performance multiplier of target va
Slide 36: Energy Networks: E.ON has a strong European regulated asset base
Energy Networks: E.ON has a strong European regulated asset base Well diversified footprint Presence in countries with AAA rating/ catch-up potential Regulated asset base (€ bn) EBIT 2016 (€ bn) ~ 23% ~ 24% ~ 54% 0.4 1.7 Sweden Germany 0.9 0.4 IG4 AAA €3.9 bn2 €10.7 bn AAA GER SWE CEE 5 Total % of T
Slide 37: Predictable earnings generated from RAB-based returns
Predictable earnings generated from RAB- based returns Pro-forma allowed WACC as solid base1 Regulatory stability in the near term Start of next regulatory period (Power) 2017 Germany 5.9%2 % of Total EBIT 2016 2018 Sweden 4.56%3 2019 CEE 4.7% - 8.0%4 ~90% 2020 1. Power WACC for latest regulatory pe
Slide 38: Enerjisa: Financial highlights
Enerjisa: Financial highlights Turkey 2015 2016 1 Revenues (TL m) 11,827 12,635 EBITDA (TL m) 1 1,886 2,474 Distribution 877 1,178 Retail 246 247 Generation 777 1,054 1 Net Income (TL m) 285 296 E.ON share of 50% (TL m) 143 148 2 E.ON share of 50% (€m) 51 44 Divestment related impairments (one offs)
Slide 39: Customer Solutions: Introducing new solutions
Customer Solutions: Introducing new solutions E.ON Aura: PV & storage B2B Large: continuously gaining traction E-mobility: gearing up All-in-one solution including PV, battery, Significant sales growth with tailor- Established dedicated unit to take energy management app, service & made energy
Slide 40: Customer Solutions addresses customer needs across different segments
Customer Solutions addresses customer needs across different segments B2C & B2B SME Energy Sales Power & Gas Heat District Heating, B2B Large Local Heating & B2M Foundation New Solutions 40
Slide 41: Customer Solutions: Financial highlights
Customer Solutions: Financial highlights Adjusted EBIT1 by business pillars €bn Energy sales 2016 0.3 0.3 ~0.71 Energy sales financials €bn Gross Margin Heat 2016 0.1 2016 1.2 1.3 OPEX2 Total Adj. EBIT 2016 0.8 2016 0.8 1.0 UK Continental Europe 1. Adjusted for non-operating earnings; Slight differe
Slide 42: E.ON's capabilities in most attractive technologies and markets
E.ONs capabilities in most attractive technologies and markets 1 Geography Technology Business model Wind Onshore Wind Offshore PV • Focus on Europe & North America • Focus on Onshore wind, off-shore wind & • Integrated renewables player utility-scale PV • Stable countries / low-risk • Portfolio opt
Slide 43: Renewables portfolio of E.ON
Renewables portfolio of E.ON 3.2 GW Highlights 5.3 GW Operated capacity1 2.1 GW 4.6 GW Owned capacity2 1.1 GW Offshore capacity 3.5 GW Onshore + PV capacity 1. Operated sites, where E.ON is the operator, regardless the ownership share, 2. Pro rata 43
Slide 44: PreussenElektra: Asset overview
PreussenElektra: Asset overview Geographic presence in Germany Overview nuclear plants Brunsbüttel Brokdorf Stade Krümmel Unterweser Hannover Emsland Grohnde Würgassen Grafenrheinfeld Isar 1/2 Gundremmingen A/B/C Active and operated by Active and minority share PreussenElektra PreussenElektra Shut d
Slide 45: Discount rates for nuclear provisions
Discount rates for nuclear provisions Build up of provisions status quo Build up of provisions post KFK1 Real discount rate: Real discount rate: +0.9% -0.9% Total costs in t0 Total costs in t0 t0 t0 t+1 t+2 t+3 t+100 t0 t+1 t+2 t+n Accretion Storage Decommissioning Accretion Decommissioning Duration
Slide 46: E.ON Investor Relations contacts
E.ON Investor Relations contacts Alexander Karnick T+49 (201) 184 28 38 Head of Investor Relations [email protected] Martina Burger T +49 (201) 184 28 07 Manager Investor Relations [email protected] Conny Ripphahn T +49 (201) 184 28 34 Manager Investor Relations [email protected] D
Slide 47: Financial calendar & important links
Financial calendar & important links Financial calendar November 8, 2017 Interim Report III: January – September 2017 March 14, 2018 Annual Report 2017 May 8, 2018 Interim Report I: January – March 2018 May 9, 2018 2018 Annual Shareholders Meeting August 8, 2018 Interim Report II: January – June 201
Slide 48: 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