E.on Se · XETR:EOAN
E.on — Non-Deal Roadshow (March 2002)
38 slides from E.on's roadshow presentation, Mar 27, 2002
Slide 1: E.ON AG UK-Roadshow March 27, 2002
E.ON AG UK-Roadshow March 27, 2002 Page 1
Slide 2: E.ON's vision: A global powerhouse
E.ON’s vision: A global powerhouse Pure-Play Utility Global Leadership Position • Electricity and gas as core activities • Leading consolidator in Pan-European • Water and services as supplementary markets businesses • Focused growth outside Europe Best-in-Class Aspiration Successful Integrated Mode
Slide 3: E.ON Group - Strategy
E.ON Group - Strategy Expand to become a top global integrated energy service provider via focus and growth: • Concentrate exclusively on core energy services business • Pursue accretive acquisitions to cement leading position in Europe and to establish solid position worldwide • Dispose of non-util
Slide 4: Group – Focus on core business
E.ON Group – Focus on core business E.ON AG Energy Non-core activities E.ON Energie 100% Chemicals Degussa 64.6% – Electricity Real Estate • Generation Viterra 100% • Trading Oil • Transmission/ VEBA Oel* 49% distribution Telecommunications • Supply Connect Austria 50.1% – Gas Bouygues Telecom 17.5%
Slide 5: Group – Divestment of non-core assets ahead of plan
E.ON Group – Divestment of non-core assets ahead of plan € in millions Stake Sales Proceeds Comments % (equity value) Listed companies Degussa 64.6 17,3301) - Stinnes 65.4 12,3041) - MEMC 71.8 9442) - Divested Schmalbach-Lubeca 49 1,8912) - Divestment initiated Gerresheimer Glas 71 8363) 215 Diveste
Slide 6: Implementing E.ON's global growth strategy
E.ON Group – Implementing E.ON‘s global growth strategy • Acquire integrated utilities in North America (eg. LG&E) Growth outside Europe • Participate in organic growth markets in the Midwest of the USA Broad expansion in • Expand around Germany Europe • Establish European-wide wholesale presence •
Slide 7: A strong German position serves as a platform for European growth
A strong German position serves as a platform for European growth Electricity1 Gas² SCHLESWAG Heingas SCHLESWAG EWE e.dis e.dis EWE EMR Avacon Avacon PESAG AVACON EWE EAM3 TEAG TEAG Thüga E.ON E.ON Bayern Gelsenwasser Thüga Bayern ESB EGS Badenova Majority shareholdings Minority shareholdings Majori
Slide 8: In Germany's gas market, E.ON needs to make up ground
In Germany‘s gas market, E.ON needs to make up ground in the import and long-distance delivery segments GAS IMPORT LONG-DISTANCE LOCAL SUPPLY ELECTRICITY GENERATION TRANSMISSION DISTRIBUTION SUPPLY Market position* Excellent Good Weak * Includes shareholdings exceeding 20% Page 8
Slide 9: E.ON strives to obtain a substantial interest in Ruhrgas
E.ON strives to obtain a substantial interest in Ruhrgas through Gelsenberg and Bergemann E.ON 0.2% 100.0% 0.1% Gelsenberg 23.6% Vodafone 10.1% RWE 49.2% ExxonMobil 13.5% ThyssenKrupp 50.0% ExxonMobil 17.7% Preussag 52.5% RAG 50.0% Shell 3.1% Gelsenberg 30.0% Bergemann Gelsenberg Brigitta 58.2% 41.8
Slide 10: Ruhrgas activities outside Germany fit E.ON's strategy
Geographically, Ruhrgas activities outside Germany fit E.ON‘s strategy very well E.ON‘s gas interests Ruhrgas shareholdings Page 10
Slide 11: E.ON Energie - Acquisitions of municipalities (Examples)
E.ON Energie - Acquisitions of municipalities (Examples) Participation Sales Number of customers % mill € Municipal utilities Stadtwerke Germersheim 25 50 10,000 Stadtwerke Stade 20 64 23,000 Stadtwerke Chemnitz 15 400 176,000 Gemeindewerke Ansbach 40 82 25,000 Gemeindewerke Haßloch 25 40 10,000 Sta
Slide 12: Largest privately-owned water operator in Germany
E.ON Energie - Largest privately-owned water operator in Germany as of 2001 Turnover Sales volume (mill €) (mill m3) 245 235.5 swb T T • 15% market share in Germany* T • Broad experience in drinking N-ERGIE T and sewage water T REWAG • German water market: € 25 bn T European water market: € 80 bn T
Slide 13: E.ON Energie – Strong international expansion
E.ON Energie – Strong international expansion Hafslund Espoon Sähkö Graninge Lenenergo E.ON Latvijas Eesti Energia RAO RAO "EES "EES Rossii" Rossii" Scandinavia Gaze EV3 I/S Latvenergo Sydkraft RAO RAO "Gazprom" "Gazprom" Baltic Lietuvos Energija E.ON Benelux Cable Jantarenergo E.ON Polska Poland (9
Slide 14: Scandinavia – Attractive opportunities in a deregulated environment
Scandinavia – Attractive opportunities in a deregulated environment Value creation • Consolidation in a fragmented industry • Sustainable margins with increasing demand in a short market Hafslund Knowledge gain • Significant experience with deregulation in a similar industry structure Graninge • Mos
Slide 15: Eastern Europe – Right mix of value creation potential and cultural fit
Eastern Europe – Right mix of value creation potential and cultural fit Czech Market shares Republic Aussig • Electricity 45% Value creation potential SCE • Gas 36% • Relatively low acquisition premia ZCE PRE Hradec for early movers Prague Pilsen STE VCE SME • Opportunity to reduce cost and ZCP Ostr
Slide 16: The UK - A key European market
The UK - A key European market • Third largest European electricity market (~ 300 TWh sales) • Leading country in energy liberalization • Value creating opportunities exist for – flexible portfolio generators – experienced asset backed traders – efficient operators of distribution assets – innovativ
Slide 17: Powergen: UK excellence
Powergen: UK excellence • World-class, flexible and diversified generation portfolio Assets • Efficient distribution assets Trading • Integrated trading strategy • Leading market player Retail • Targeted marketing strategy with strong brand • More than 3 million customer accounts - and growing Page
Slide 18: US – Right mix of growth potential, value creation and cultural fit
US – Right mix of growth potential, value creation and cultural fit Growth potential • Higher organic growth than in Europe • Backlog of investments attracting fresh capital • Fragmented market with low barriers to consolidation Value creation • Opportunities to reduce costs and retain the benefits
Slide 19: Midwest an attractive region within the US power market
Midwest an attractive region within the US power market North American Electricity Pools1) • Midwest2) with around 30% of US electricity demand • Crossroads of major energy flows, MAIN well interconnected and with Detroit good fuel supply options New York Chicago MAAC Philadelphia • Heavily industri
Slide 20: LG&E: US excellence
LG&E: US excellence • Reliable, low cost generation assets Generation • Opportunities for off-system sales at attractive rates • Top quartile regional efficiency ranking in distribution - and improving Distribution • High service levels and customer satisfaction • (#1 JD Power survey*) • Favourable
Slide 21: Chemicals – Systematic focus on specialty chemicals
Chemicals – Systematic focus on specialty chemicals € im billions Divestment of non-core activities Sales 2000 Divested Enterprise Comments value ASTA Medica-Group 0.8 AWD Pharma 0.1 þ 0.05 Sold to Pliva Group (Croatia) Oncology 0.2 þ 0.53 Sold to Baxter International Group (USA Viatris 0.5 Zentaris
Slide 22: Growth is subject to rigorous acquisition criteria
Growth is subject to rigorous acquisition criteria STRATEGIC CRITERIA FINANCIAL CRITERIA Acquisition must be: • Market attractiveness (returns, growth, regulation) • Earnings enhancing in the first full year after acquisition • Target attractiveness (asset quality, market position, management qualit
Slide 23: E.ON Group – Cost management
E.ON Group – Cost management € in millions realized realized realized planned 1993 - 2000 2001 1993 - 2001 2002 - 2004 Energy 1,490 633 2,123 385* Oil 340 25 365 - Chemicals 876 50 926 450 Holding - 50 50 - Total 2,706 758 3,464 835 * Only 2002 Page 23
Slide 24: E.ON Energie - Reduction of installed generation capacity
E.ON Energie - Reduction of installed generation capacity (2001-2003) Planned Realized Shutdowns 2,279 MW 714 MW Cold reserve 1,333 MW 1,081 MW Staudinger 1 (winter only) 249 MW 249 MW Total reduction of installed capacity 3,861 MW 2,044 MW Shutdown of assets currently in cold reserve 293 MW 293 MW
Slide 25: E.ON Group – Consolidated Financial Statements
E.ON Group – Consolidated Financial Statements € in millions (2000 pro forma) 2001 2000 +/- % Sales 79,664 88,858 -10 Group internal operating profit 3,553 2,445 +45 Consolidated net income 2,048 3,678 -44 Earnings per share 1) (€) 3.87 4.74 -18 Dividend 1.60 1.35 +19 Equity ratio (%) 24.7 26.4 -1.7
Slide 26: E.ON Group – ROCE by segment
E.ON Group – ROCE by segment € in millions (2000 pro forma) EBITA Capital Employed ROCE % Cost of 2001 2000 2001 2000 2001 2000 Capital % Energy 2,276 1,850 19,013 17,151 12.0 10.8 10.5 Chemicals 1,120 1,201 12,192 11,727 9.2 10.2 12.0 Oil 671 541 4,808 3,612 14.0 15.0 10.6 Real Estate 341 298 2,899
Slide 27: E.ON Group - Outlook 2002
E.ON Group - Outlook 2002 Energy: Internal operating profit will surpass the figure of 2001 Other Activities: Chemicals: Internal operating profit will post a slight improvement Real Estate: Expected to post another increase in internal operating profit Telecommunications: Further operational improv
Slide 28: E.ON: A leading global powerhouse
E.ON: A leading global powerhouse • Focus on core business Energy – Electricity, Gas and Water • Divest all non-utility assets: Continue optimizing value • Invest proceeds into core business: Growth markets, especially in the United States, but not at any price • Optimize cost of capital: Lower port
Slide 29: Backup Charts
Backup Charts Page 29
Slide 30: E.ON Energie – New distribution structure
E.ON Energie – New distribution structure E.ON Energie • Marketing & Distribution E.ON Sales & Trading Regional Utilities/ Partnerships • Wholesale • Regional Markets Regional Distributors End Customers Industrial Customers Page 30
Slide 31: E.ON Energie – 2001 Procurement and sales volume
E.ON Energie – 2001 Procurement and sales volume kWh in billions Own generation Power Power supplied Regional and and procured 318 municipal utilities jointly operated 328 105 power stations 142 Special-rate customers 87 Standard-rate Other suppliers customers 186 34 Trading 92 Transmission losses 1
Slide 32: E.ON Energie - Leading player in European power trading
E.ON Energie - Leading player in European power trading kWh in billions* 359 • One of the largest European wholesale trader • Presence at all important European Exchanges 188 • Publishes GPI power price index together with Dow Jones • Trading secures favorable 46 procurement conditions for 27 distri
Slide 33: Grid usage fees for end customers in Germany (Examples)
Grid usage fees for end customers in Germany (Examples) as of January 2002 Standard-rate customers Medium-sized special rate Large industrial customers Largest customers (households) customers (manufacturing) (manufacturing) Grid access fee: This covers approx. 6.5 ct/kWh approx. 3.2 ct/kWh approx.
Slide 34: E.ON Energie – 2001 Key figures by business unit
E.ON Energie – 2001 Key figures by business unit € in millions Sales* EBITDA IOP Investments Employees In Germany Electricity 12,068 2,612 1,919 941 24,638 Gas 2,661 404 195 396 3,105 Water 245 87 47 196 1,119 Foreign 2,670 678 284 2,050 8,715 Other/Consolidation 111 247 -474 444 1,983 Total 17,755
Slide 35: Grid usage in Germany – Association Agreement (VV II+)
Grid usage in Germany – Association Agreement (VV II+) Old Association Agreement (VV II) New Association Agreement (VV II+) (until Dec. 31, 2001) (effective as of Jan. 01, 2002) 1. Provisions for customers 1. Improvements for customers • Separate contracts for grid usage and grid • All-inclusive-con
Slide 36: Grid usage fees comparison in Europe
3,760 hours/year 4,200 hours/year 8,760 hours/year as of December 2001 * Excluding regulatory charges 10 12 14 16 6 0 2 4 8 Au Source: Universidad Pontificia Comillas str De B €/MWh nm elg ia De ark ium nm De ark (Eas nm ( t) De ark East nm )* ark (We s (W t) e En st)* gla Fin nd lan Fra d Ge nce r
Slide 37: Natural gas exports and imports in Europe
Natural gas exports and imports in Europe FIN Exports 2000 (in billions m³) NOR 4 Exports Great Britain 4 Exports Netherlands 46.6 Exports Russia RUS Exports Algeria 2.3 IRL 2.2 12.1 5.4 5.1 18.8 0.7 Exports Norway 2.9 GB 80 15.1 NL Exports Germany 36,3 Exports Others 2.2 Imports 2000 (in billions m
Slide 38: Sales volumes of the large European natural gas wholesale suppliers
Sales volumes of the large European natural gas wholesale suppliers in billions m3 59 72 56 Centrica Gasunie 18 Distrigaz Ruhrgas Company Share of domestic Share of domestic 45 wholesale natural retail natural gas gas market market Distrigaz approx. 100% approx. 55% 68 Gas Natural approx. 98% approx