E.ON Roadshow Delivering step by step H1 2017
E.ON Roadshow Delivering step by step
H1 2017
Delivering step by step …
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 completed: transfer of ~€10 bn to government fund finalizes KFK solution
Strong Q2 2017 results
FY 2017 guidance confirmed
Highlights
2 1. Based on Adjusted Net Income, from FY 2018 (payable in 2019) onwards
Potential over-achievement of deleveraging could create balance sheet head room
Economic net debt € bn
21.5
Debt Reduction
mid term target
~5.3x EBITDA
26.3
H1 2017 post deleveraging FY 2016 potential balance sheet head room
~4.5x EBITDA
~4.0x EBITDA
3
NFT3 ~€2.85bn ABB4 ~€1.35bn
Debt reduction measures + Monetization of Uniper shares
+ Transfer of NS12 into CTA
+ Nuc. decommissioning cost savings
+ Additional measures (mainly non-core disposals excl. Urenco)
No hybrid issuance necessary
~3.1
~1.0
~1.0
~1.0
1
1. Based on share price of €18.20 (as of August 7, 2017), 2. Nordstream 1 stake, 3. Nuclear Fuel Tax, 4. Accelerated Book Build
Raising payout and striving for dividend growth
Payout ratios by E.ON and peers
Dividend policy:
• Raising payout ratio to a minimum of 65%2
• Striving for payout ratio in line with peers
• Specification of exact range with full year 2017 results
• Targeting absolute dividend growth (base year 2017)
• Strong alignment of management and investors through E.ON Focus
4
80%
60%
50%
Peer group1
Previous payout E.ON 50% - 60%
E.ON target
1. Peer group: Centrica, Enel, EDP, Iberdrola, innogy, SSE, 2. Based on Adjusted Net Income, from FY 2018 (payable in 2019) onwards
65%
RAB growth: potential for higher replacement capex on top of continuing network extensions
Energy Networks: multi-decade growth
5
2011 2016 >2020
7.1
+2-3% p.a.
+3-4% p.a.
8.0
€ bn
Example: Power RAB in Germany
€100-200m p.a. add. capex
potential on back of improved regulation
Regulations and mega trends support multi decade growth
Renewables build out
Smart meter roll-out
E-mobility
Sector coupling
Additional replacement and reinforcement investments
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 Stable and resilient earnings profile often based on network assets New €250m capex project in Högbytorp close to Stockholm to be finalized
in 2019; 100 MW CHP plus district heating network extension
Energy Solutions B2B
Focus on industrial generation (6-120 MW CHPs), on-site generation solutions (small/medium CHPs, PV), energy and CO2 efficiency and flexibility
Order intake1 YTD of ~€0.4bn on track to double order intake to >€1bn yoy in 2017
E-Mobility
Leading E-Mobility player in Denmark (>50% market share) Established strong partnerships (e.g. Clever and Sixt) Roll-out of service offerings to other E.ON markets Aim for leading role in developing role in developing Europe’s charging infrastructure
6
€130m
Heat contributes ~20% of Customer Solutions EBIT
ROCE: >10%
Order intake to pick up significantly
2016 2015 2017
>€1bn
1. TCV: Total contract value
Renewables: risk & return focus
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 on Morcone in Italy (57 MW, FiT of 66 €/MWh
for 20 years) Several hundred MW potential (e.g. in Scotland and Sweden)
Offshore Stringent risk & return discipline ~800MW on schedule to be operational in 2018/19
Focus on PPA and FiT secured pipeline
7
Embedding operational excellence
Phoenix ahead of schedule
8
Beyond Phoenix
H1 2017
~€30m
Total
€400m
2018
~€300m
H2 2017
~€70m
• Phoenix targets predominantly central overhead & support functions
• Earlier achievement of Phoenix targets currently expected
Performance Culture to be sustainably embedded across all functions
• Focus on operational excellence
• Improve customer centricity
• Digitization to improve processes and customer experiences
H1 results & FY 2017guidance
Strong Q2 2017 but H1 2017 EBIT still below prior year
154
-205
H1 2017
1.767
Preussen Elektra
-12
Corp. Functions & Other,
Consolidation
-88
Renewables
-49
Customer Solutions
-210
Energy Networks H1 2016 w/o div. operations
1.972
Divested Operations
-29
H1 2016
2.001
EBIT1 H1 2017 vs. H1 2016 € m
1. Adjusted for non operating effects 10
Adjusted Net Income supported by lower accretion and taxes
EPS (€ per share)
H1 2017 € m
0.42 881Adjusted Net Income1
Minorities -156
Income Taxes -347
Profit before Taxes1 1.384
Other interest expenses
Interest on fin. assets/
liabilities2 -349
Group EBIT1
-34
1.767
~€ 40m deterioration YoY due to lower interest income
~€450m improvement mainly due to significant lower accretion of nuclear provisions and other interest expenses
Tax rate of 25% (vs. 38% in H1 2016)
Adjusted net income up 46% over prior year
1. Adjusted for non operating effects, 2. Without accretion of nuclear provisions 11
END improves significantly due to high cash flow and capital increase
END H1 2017
-21.5
3.7
-3.7
-21.5
Others
0.2
AROs
-0.1
Pensions
0.3
Divest incl. B&S
0.1
Dividend
+4.8
ABB2
1.35
Investments
-1.3
OCF
-0.5
END FY 2016
-26.3 -0.9
-4.0
-21.4
4.9
€ bn
END1 H1 2017 vs. FY 2016
1. Economic net debt definition takes into account the decommissioning provisions calculated with a real discount rate of 0.0% as opposed to IFRS ARO’s. 2. Accelerated Book Build
Pension provisions
AROs
Net financial position
12
Nuclear decommissioning is no limitation for dividends or capex
€ bn
OCF bIT Utilization of nuclear provisions
~0.4-0.6
EBITDA1
1. Adjusted for non operating effects 13
• Nuclear decommissioning provisions are part of E.ON’s economic net debt (END)
• Utilization of nuclear provisions is currently part of operating cash flow and thus implies a burden for the financial leeway
Current
Economic view
OCF bIT EBITDA1
Current approach
Economic view • However, economically the utilization is comparable to a redemption of debt and
thus has features of financing cash flow
• Nuclear decommissioning could therefore be paid and replaced with financial debt (END neutral) and is thus no limitation for dividend or capex
Outlook 2017 confirmed
EBIT1
Adj. Net Income1
Outlook 2017
1. Adjusted for non operating effects
€2.8-3.1 bn
€1.2-1.45 bn
+ Regulatory effects (e.g. pensions), lower maintenance costs
+ Tariff increase in Sweden + Positive development in CZ, HU
Effects for H2 2017
+ Omission of nuclear fuel tax payments + Operational improvements – Lower hedging prices – Asset retirement cost (ARC) effect
Energy Networks
Customer Solutions
+ Price increases in Germany & UK, focus on efficiency
Renewables + Normalizing wind yields
14
E.ON Focus – Our basis for steering the company
E.ON KPIs without Uniper contribution, 1. Adjusted for extraordinary effects and divested operations, FY 2017 guidance range as basis for medium-term outlook, 2. OCFbIT divided by EBITDA, 3. Based on EBIT (= pre-tax), 4. Based on Adjusted Net Income, from FY 2018 (payable in 2019) onwards, 5. Total Shareholder Return
15
• 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 alignment of management and investors
Appendix: H1 results &
FY 2017guidance
Segments: Energy Networks
• Germany:
+ Regulatory effects + Lower maintenance costs
• Sweden: + Tariff increases
• CEE & Turkey: + Positive effects in Czech Republic, Hungary
Energy Networks Highlights
181
197 239
492606
183
+18%
CEE & Turkey
Sweden
Germany
H1 2017
1,026
H1 2016
872
1. Adjusted for non operating effects
EBIT1 € m
€m H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY
Revenue 7,002 7,208 +3 509 563 +11 811 856 +6 8,322 8,627 +4
EBITDA 1 793 896 +13 279 320 +15 286 292 +2 1,358 1,508 +11
EBIT 1 492 606 +23 197 239 +21 183 181 -1 872 1,026 +18 thereof Equity-method earnings 32 41 +28 0 0 - 46 -18 -139 78 23 -71 OCFbIT 929 1,114 +20 278 305 +10 302 319 +6 1,509 1,738 +15 Investments 303 231 -24 114 147 +29 117 167 +43 534 545 +2
TotalGermany Sweden CEE & Turkey
17
Segments: Customer Solutions
Customer Solutions Highlights
• Germany: – Lower power margins due to increased TSO fees – Lower gas margin due to price decrease in Nov 2016 + Price increases in Q2 2017
• UK: + Stabilizing customer numbers & price increases in Q2 2017 – FX weakening after Brexit decision & price cap on PPM customers
• Other: – Energy procurement crisis in Romania in Q1 2017 – Higher gas procurement costs in Eastern Europe
204 130
291233
164
86
-32%
Other
UK
Germany
H1 2017
449
H1 2016
659
EBIT1 € m
1. Adjusted for non operating effects
€m H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY
Revenue 4,150 3,917 -6 4,356 3,723 -15 3,491 3,555 +2 11,997 11,195 -7
EBITDA 1 196 122 -38 338 282 -17 269 200 -26 803 604 -25
EBIT 1 164 86 -48 291 233 -20 204 130 -36 659 449 -32 thereof Equity-method earnings 0 0 - 0 0 - 5 7 +40 5 7 +40 OCFbIT -68 -129 -90 136 285 +110 481 275 -43 549 431 -21 Investments 27 25 -7 108 97 -10 115 87 -24 250 209 -16
TotalUKGermany Other
18
• Offshore: – Arkona book gain in Q2 2016 – Low wind conditions in UK
• Onshore: + COD of Colbeck’s Corner in May 2016 + Higher production of US wind farms & better wind conditions in
Europe
Segments: Renewables
Renewables Highlights
77
201 128
53
-19%
Offshore/Other
Onshore/Solar
H1 2017
254 205
H1 2016
EBIT1 € m
1. Adjusted for non operating effects
€m H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY
Revenue 347 389 +12 333 321 -4 680 710 +4
EBITDA 1 172 182 +6 274 204 -26 446 386 -13
EBIT 1 53 77 +45 201 128 -36 254 205 -19 thereof Equity-method earnings 11 16 +45 OCFbit 407 237 -42 Investments 473 528 +12
Onshore Wind / Solar Offshore Wind / Others Total
19
Segments: PreussenElektra
PreussenElektra Highlights
271283
-4%
H1 2017 H1 2016
+ Non-reoccurrence of nuclear fuel tax payments in Q2 2016 + One-off effect from court case – Lower volumes due to outages – Lower achieved power prices – ARC Depreciation
Hedged Prices Germany (€/MWh) as of 30 June 2017
EBIT1 € m
1. Adjusted for non operating effects
€m H1 2016 H1 2017 % YoY
Revenue 751 891 +19
EBITDA 1 327 364 +11
EBIT 1 283 271 -4 thereof Equity-method earnings 41 39 -5 OCFbIT 361 3,073 +751 Investments 11 7 -36
PreussenElektra
20
27
27
32
37
2017
2016
2019
2018
100%
94%
42%
100%
Adjusted Net Income
€m H1 2016 H1 2017 % YoY
EBITDA 1 2,901 2,715 -6
Depreciation/amortization -900 -948 -5
EBIT 1 2,001 1,767 -12
Economic interest expense (net) -810 -383 +53
EBT 1 1,191 1,384 +16
Income Taxes on EBT 1 -456 -347 +24
% of EBT 1 -38% -25% -
Non-controlling interests -131 -156 -19
Adjusted net income 1 604 881 +46
1. Adjusted for non operating effects 21
From EBITDA to Net Income
€m H1 2016 H1 2017 % YoY
EBITDA 1 2,901 2,715 -6
Depreciation/Amortization/Impairments -900 -948 -5
EBIT 1 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 -311 -156
Impairments (net) -44 5 +111
Other non-operating earnings -23 3,409 +14,922
Income/Loss from continuing operations before income taxes 1,522 4,583 +201
Income taxes -567 -549 +3
Income/loss from discontinued operations, net -3,884 0 +100
Non-controlling interests 105 162 +54
Net income/loss attributable to shareholders of E.ON SE -3,034 3,872 +228
1. Adjusted for non operating effects 22
Cash effective investments by unit
1. Adjusted for non operating effects
€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
23
Economic Net Debt1
1. Economic net debt definition takes into account the decommissioning provisions calculated with a real discount rate of 0.0% as opposed to IFRS ARO’s, 2. Net figure; does not include transactions relating to our operating business or asset management
€m 31 Dec 2016 30 June 2017
Liquid funds 8,573 14,252
Non-current securities 4,327 3,850
Financial liabilities -14,227 -14,691
Adjustment FX hedging ² 390 311
Net financial position -937 3,722
Provisions for pensions -4,009 -3,748
Asset retirement obligations -21,374 -21,459
Economic net debt -26,320 -21,485
24
Schematic END split after KFK payments • Amount of END unchanged • Nuclear ARO’s and NFP are decreased by KFK
payment • Pension provisions and non nuclear AROs
unchanged
after KFK Payment
Lower by KFK payment
Lower by KFK payment
30 June 2017
-21.5 bn Nuclear ARO’s
Pension provisions
Financial Assets
Non Nuclear ARO’s
Financial Liabilities
Economic interest expense (net)
€m H1 2016 H1 2017 Difference
(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
Construction period interests¹ 19 18 -1
Other² -33 19 +52
net interest result -810 -383 +427
1. Borrowing cost that are directly attributable to the acquisition, construction or production of a qualified asset. Borrowing cost are (virtual) interest costs incurred by an entity in connection with the borrowing of funds. (interest rate: 5.6%), 2. Includes mainly effects from tax related interest (in 2016) and interest rate changes of other long term provisions 25
Cash conversion rate2 at 89% due to strong operational quarter
H1 2017 € bn
-0.1
Interest Payments
-0.3
OCF bIT
5.3
3.6
Capex
-1.3
OCF
4.9
Tax Payments
CCR2: 89%
FCF NFT refund
2.85
OCF bIT adj. NFT refund
Changes in WC
-0.4
Cash Adjustments3
0.0
EBITDA1
2.7 2.4
1. Adjusted for non operating effects, 2. Cash Conversion Rate: OCF bIT / EBITDA, adjusted for NFT refund, 3. Net non cash effective EBITDA items 26
≥2025
4.8
2024
0.6
2023
0.4
2022
0.1
2021
0.8
2019
1.1
2018
2.1
2017
1.8 1.4
2020
Other
YEN
USD
GBP
EUR
Financial Liabilities
Split Financial Liabilities Maturity profile (as of end H1 2017)1
€ bn € bn
1. Bonds and promissory notes issued by E.ON SE, E.ON International Finance B.V. and E.ON Beteiligungen GmbH (fully guaranteed by E.ON SE) 27
30 June 2017
Bonds -12.6
in EUR -5.7
in GBP -3.9
in USD -2.6
in JPY -0.2
in other denominations -0.2
Promissory notes -0.4 Commercial papers 0.0 Other liabilities -1.7
Total -14.7
Overview: Group & Segments
Three core businesses
29
Adjusted EBITDA €bn
Adjusted EBIT €bn
Adjusted Net Income €bn
Adjusted EBIT1 2016 of €3.1 bn
4.9
3.1
0.9
2016
Corporate Functions/ Other2
- €0.4 bn
Non-core Business (PreussenElektra)
€ 0.6 bn
€ 1.7 bn € 0.4 bn € 0.8 bn
Key financials 20161
1. Adjusted for non-operating effects, 2. Including group consolidation effects
Energy Networks Customer Solutions Renewables
Attractive combination of businesses
1. In general, RABs from different regulatory regimes are not directly comparable due to significant methodical differences. These include for example different regulatory asset lifetimes, asset valuation methods, or treatment of customer contributions for network connections., 2. Adjusted for non-operating effects, 3. Renewables, 4. Commercial operation date
Energy Networks Renewables Customer Solutions
~ €19 bn Regulated Asset Base1 Germany €10.7 bn Sweden €3.9 bn CEE €4.4 bn
Efficiency Efficiency leader in Germany and Sweden
>99 %
Adj. EBIT2 from additional earnings pools Based on efficiency, investments and non-regulated activities
>10%
>22 m Customers across Europe Germany 6.1 m UK 7.0 m Other EU 9.2 m
Customers purchasing value added services
400,000
of Adj. EBIT2 from Heat & New Solutions Resilience from long-term customer relations built on satisfaction and trust
~15%
>6 GW Renewables capacities delivered 10 year track record of renewables development, construction & operations
Wind projects under construction Offshore: Rampion (400 MW, COD4 2018), Arkona (385 MW, COD 2019) Onshore : Radford’s Run (278 MW, COD Dec 2017), Bruenning’s Breeze (228 MW, COD Dec 2017)
Four
Green electricity produced in 2016
11.6 TWh
RES3 connections 390,000 Investments in renewables
>€10 bn 30
E.ON continues to benefit from a very stable business profile
Business profile post spin…
High share of regulated earnings
Predominantly quasi-regulated or contracted earnings in Renewables
Remaining merchant exposure in Renewables and PreussenElektra largely hedged
Operations in Energy Networks under stable, well established frameworks in low risk markets with strong regulatory track record
Long-term contracted earnings from heat operations
EBITDA 20161
~2/3 from regulated/long-term contracted businesses2
1. Adjusted for non operating effects, representation in pie charts excluding Corporate Functions/ Other; total figures including Corporate Functions/ Other, 2. Including Energy Networks and a portion of Renewables and Heat
53%
13%
13%
21%
Energy Networks
Customer Solutions
PreussenElektra
Renewables
€4.9bn
31
KFK solution with positive impact on adjusted net income
• Payment amount has been transferred to government fund on July 3rd 2017
• Accretion of interest (4.4% p.a.) on €7.8 bn stops as of 1 Jan 2017
• Increases net income by ~€200-250 m2 p.a.
1. Nuclear fund (KFK) 2. Discount rates 3. Additional asset retirement cost (ARC)
Payment Amount1
~10
7.8
Provisions
0.2
Premium1
2.0
Provision interest cost
1. Excluding €0.2 bn for minority shareholders, 2. Net effect, depending on refinancing costs, 3. Current cost value used for FY 2016 END definition, 4. Depending on discount rate to be applied, 5. Risk-free discount rate of ~0.5%
11.29.79.4
1.50.3
9M 2016 FY 2015 Net accr. charge
FY 2016 Increase of provisions
Storage related provisions, € bn
• Remaining provisions with shorter duration • Real discount rate of -0.9% (2015: +0.9%)
increases provisions to €11.2 bn (new END definition: €10.1 bn3 with real discount rate of 0.0%)
• Reduces accretion charges by ~€350 m4 p.a. • Accretion charges based on risk free rate5
• Quarterly fluctuations of provisions
1.0
2021 2022 2020 2016 2018 2017 2019
ARC € bn
• Duration effect increases Asset Retirement Costs (ARC)
• Additional ARC are capitalized as of Q4 2016 • Annual depreciation over remaining lifetime of
nuclear plants
• Reduces non-core EBIT by ~€185 m p.a.
Decommissioning provisions, € bn
32
Capex budget significantly reduced
Medium-term – Gross capex
• 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
2017 – Gross capex
2018 2017 2016
-20%
2019 2018 2017
Group
3.6
Renewables
1.5
Customer Solutions
0.7
Energy Networks
1.4
€ bn
€ bn • Energy Networks investments of 1.6x regulatory depreciation driven by new renewables connections, grid maintenance and digitization
• Customer Solutions investments in heat and new solutions (i.e. contracted onsite generation) and IT upgrades in UK/Germany
• Renewables investments : European offshore (~800 MW) and US onshore (~500 MW)
∑ ~10.0 ∑ ~8.0
33
Efficiency program Phoenix: Securing sustainable competitiveness
Principles Scope Targets, status, and next steps
Competitive services 4
Business empowerment 1
Lean management holding 2
Divisional steering 3
1.2
Costs in scope of Phoenix
4.1
Total E.ON
5.3
Controllable cost1 baseline
€ bn
• Phoenix target: €400 m EBIT contribution p.a. from 2018 onwards
• About €300 m from central overhead & support functions
• Restructuring of pension plans & other measures deliver ~€100 m
• Status/ Next steps
• 100% of target measures identified
• First measures being implemented
34 1. Controllable Costs include operational costs that management can meaningfully influence, such as material expenses, consultancy and personnel expenses. Margin-effective components such as fuel costs as well as cost item that are largely uncontrollable by the management are not included.
Stringent incentive plan for the Management Board
KPI
Relative TSR1
EPS & individual performance
Cap
200% of target value
200% of target value
Calculation
TSR development relative to STOXX Europe 600 Utilities over 4 years
EPS × individual performance multiplier
Long-Term Incentive
Short-Term Incentive
Share Ownership Guidelines
Board members obliged to acquire E.ON shares equaling 150 – 200% of annual base salary
1. Total Shareholder Return 35
Energy Networks: E.ON has a strong European regulated asset base
0.9 0.4 0.4
GER SWE CEE Total
IG4
E.ON operates 858,000 networks km
Presence in countries with AAA rating/ catch-up potential
CEE (CZE, SVK, HUN, ROM)
€4.4 bn3
Sweden €3.9 bn2
Germany €10.7 bn
~€19 bn1
EBIT 2016 (€ bn)
1.7 ~ 54% ~ 24%
~ 23%
% of Total Energy Networks EBIT
AAA
Well diversified footprint
5
Regulated asset base (€ bn)
68
107
349
58
Power
Gas
Power
Gas
37
5
136
2
269
44
45
44
GER SWE
Distributed volumes (TWh)6
Grid length (‘000 km)
CEE3
1. Current total 2016 RAB of country/region - In general, RABs from different regulatory regimes are not directly comparable due to significant methodical differences. These include for example different regulatory asset lifetimes, asset valuation methods, or treatment of customer contributions for network connections. 2. Converted at SEK/EUR rate of 9.46, 3. Hungary converted at EUR/HUF of 311.4, Czech Republic converted at EUR/CZK of 27.0, and Romania converted at EUR/RON of 4.5; Including 100% of Slovakia, not including Turkey , 4. IG = Investment Grade; Except of Hungary and Turkey, 5. Including at equity income from Slovakia and Turkey, 6. Volumes including grid losses
36
AAA
Predictable earnings generated from RAB-based returns
Start of next regulatory period (Power)
2017
2019
2018
2020
Germany 5.9%2
Sweden 4.56%3
CEE 4.7% - 8.0%4
% of Total EBIT 2016
Pro-forma allowed WACC as solid base1 Regulatory stability in the near term
~90%
1. Power WACC for latest regulatory period. In general, allowed WACCs from different regulatory regimes are not directly comparable (even if they are adjusted for pre-tax/post-tax of real/nominal) because they are applied on RABs that are derived from different regulatory accounting rules, 2. Pro-forma calculated, nominal WACC, pre corporate tax and pre commercial tax. Instead of using a WACC-approach the German regulator publishes allowed equity returns. WACC figures for existing (Return on equity: 7.14% pre corporate tax and after commercial tax) and new investments (Return on equity: 9.05% pre corporate tax and after commercial tax) are assuming c. 4% cost of debt and a 60/40 debt/equity capital structure. The pro-forma WACC figure of 5.9% is then derived by weighting the share of existing assets (WACC: 5.7%) and new assets (WACC: 6.5%), 3. Pre-tax real WACC for Sweden of 4.56%; Current WACC challenged in court by network operators, 4. Hungary: pre-tax real WACC 4.69%, Czech Republic: pre-tax nominal WACC 7.951%, Romania: pre-tax real WACC 7.7%, Slovakia: pre-tax nominal WACC 6.47%
37
Enerjisa: Financial highlights
1. Enerjisa net income consolidated at 50% in E.ON Adjusted EBITDA/EBIT/Net Income, FX rates (average) : 2015 TL/EUR 2.79; 2016 TL/EUR 3.40, Adjusted for non-operating effects
Turkey 2015 2016
Revenues (TL m)1 11,827 12,635
EBITDA (TL m)1 1,886 2,474 Distribution 877 1,178 Retail 246 247 Generation 777 1,054
Net Income (TL m)1 285 296 E.ON share of 50% (TL m) 143 148
E.ON share of 50% (€m)2 51 44 Divestment related impairments (one offs) -30 0 Acquisition related depreciation charges (run gate) -24 -24 FX hedges and other -19 3
Contribution to E.ON Adjusted EBITDA/Net Income3 (€m) -22 23
38
Customer Solutions: Introducing new solutions
E.ON Aura: PV & storage B2B Large: continuously gaining traction
All-in-one solution including PV, battery, energy management app, service & guarantee package and green electricity tariffs
Successful launch and scaling up across Germany
Introduction of virtual storage product E.ON SolarCloud
10x increase in unit sales in 2016 Target 2017: 10-15% market share
E-mobility: gearing up
Significant sales growth with tailor-made energy solutions (on-site generation, energy efficiency, flexibility, storage,…)
Diversified portfolio of customers (auto suppliers, tires, chemical, retail,…)
Innovative solutions like e.g. fuel cells & battery storage
2017 ambition: new contracts with several hundred million in total revenues
Established dedicated unit to take leading role in developing Europe’s charging infrastructure
E.ON has extensive experience in e-mobility market leader in Denmark (2,500 charging points)
Data-based development of services for further markets
Partnerships with car rental company Sixt and e-mobility specialists 39
Customer Solutions addresses customer needs across different segments
Energy Sales Power & Gas
Heat District Heating,
Local Heating
Foundation New Solutions
B2B Large & B2M
B2C & B2B SME
40
Customer Solutions: Financial highlights
Energy sales
Adjusted EBIT1 by business pillars
Heat
0.3
0.8
0.3
0.1
2016
2016
2016 ~0.71
Total Adj. EBIT
Energy sales financials
1.2 1.3 2016
Gross Margin
0.8 1.02016
OPEX2
Continental Europe UK
€bn
€bn
1. Adjusted for non-operating earnings; Slight differences may occur due to rounding, 2. Costs to serve, costs to acquire and all other cost related to running the energy sales business including D&A 41
E.ONs capabilities in most attractive technologies and markets
Technology Geography Business model
• Focus on Onshore wind, off-shore wind & utility-scale PV
• Strong E.ON capabilities and experience
• Capture trends in line with E.ON’s capabilities / markets
Wind Onshore
PV
Wind Offshore
• Focus on Europe & North America
• Stable countries / low-risk
• Still attractive returns achieved
• Integrated renewables player
• Portfolio optimization strategy, bringing:
- Scale advantages - Maintain capabilities - Value creation - Reduce cluster risk
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Highlights 5.3 GW Operated capacity1
4.6 GW Owned capacity2
1.1 GW Offshore capacity 3.5 GW Onshore + PV capacity
Renewables portfolio of E.ON
1. Operated sites, where E.ON is the operator, regardless the ownership share, 2. Pro rata
2.1 GW
3.2 GW
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PreussenElektra: Asset overview
Decommissioning Shut down
Active and operated by PreussenElektra
Active and minority share PreussenElektra
Brunsbüttel Brokdorf
Stade Unterweser
Krümmel
Hannover Emsland
Grohnde
Würgassen
Grafenrheinfeld
Isar 1/2
Gundremmingen A/B/C
Geographic presence in Germany Overview nuclear plants
1. Atomgesetz, 2. Start-up year 1971, transfer to Preußische Elektrizitäts-Aktiengesellschaft in 1975 44
Discount rates for nuclear provisions
Build up of provisions status quo
t+3 t+100 t+2 t+1 Storage Accretion Decommissioning
Real discount rate: +0.9%
Build up of provisions post KFK1
t+2 t+1 t+n t0
Accretion Decommissioning
Real discount rate: -0.9%
• Remaining provisions with shorter duration
• Real discount rate of -0.9% (2015: +0.9%) increases provisions to €11.2 bn (new END definition: €10.1 bn2 with real discount rate of 0.0%)
Duration effect
Total costs in t0 Total costs
in t0
t 0
t 0
1. Utilization not taken into account, 2. Current cost value used for FY 2016 END definition 45
E.ON Investor Relations contacts
T +49 (201) 184 2806 [email protected]
Alexander Karnick T+49 (201) 184 28 38 Head of Investor Relations [email protected]
Dr. Stephan Schönefuß T +49 (201) 184 28 22 Manager 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]
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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 2018
Important links
Presentations https://www.eon.com/en/investor-relations/presentations.html
Annual Reports https://www.eon.com/en/investor-relations/financial-publications/annual-report.html
Interim Reports https://www.eon.com/en/investor-relations/financial-publications/interim-report.html
Shareholders Meeting https://www.eon.com/en/investor-relations/shareholders-meeting.html
Bonds / Creditor Relations https://www.eon.com/en/investor-relations/bonds.html
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Disclaimer
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