Growth Focus - Creating the future of energy
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Growth Focus Discipline Creating the future of energy http://www.energyfortomorrow.eu/ January 2020
Creating the future of energy • Focus: Europe’s first energy player with exclusive downstream focus • Unique downstream footprint: RAB and customer numbers rise >60% • Earnings quality: network EBIT share rises significantly • Strong synergies: fading nuclear earnings overcompensated by €600-800m net synergies • Attractive dividends: commitment to deliver annual dividend per share growth • Solid capital structure: high commitment to strong BBB rating • Limited cash impact: acquisition of RWE‘s 76.8% in innogy via asset exchange 1. Bloomberg/company data 2. RABs from different regulatory regimes are not directly comparable due to significant methodical differences. 2
Creating two focused energy companies
Previous structure
~77%
E.ON innogy RWE
Target structure
Future E.ON 16.67% RWE
3
Unique downstream position across Europe
Energy Networks (RAB4)
Sweden1
UK3 Customer Solutions (number of customers)
~€4bn ~1m
- ~11m
NL/BE2
CEE3,5
- ~4m
~€6bn ~11m
Germany3,5
Turkey1
1. E.ON 2018 reported, 2. innogy ~€20bn ~14m
2018 reported, 3. New E.ON ~€1bn ~10m
combined 2018, 4. RABs from
different regulatory regimes are not
directly comparable due to significant
methodical differences,
5. excluding remedies and innogy
Southern Europe1
divestments (Czech grid and retail,
Slovakia)
- ~1m 4
Focus, scale and efficiency pre-requisite for success
Mega trends accelerate and reinforce each other
Empowered
• Future E.ON’s unique downstream positioning fully
customers
captures benefits of energy mega trends
Focus, scale and efficiency needed
Digitization in New Energy World
New culture & Electrification
capabilities • Creating markets for customers through our
products, services, technologies
• “Go to” partner for politicians and regulators in
designing the energy transition
De-
• Combining innovation power to enhance
carbonization
development of state-of-the-art products
• Synergies improve cost position and roll-out speed
• Innovative services levered on significantly higher
customer number
5
On track to successfully conclude strategic transformation journey
E.ON’s guiding principles
Unique strategic position
Customer-led Digitization Operational Capital
excellence discipline
• Focus on regulated
Position of strength networks and
infrastructure-like & pace-
setting customer solutions
• Portfolio simplification
• Enhanced earnings quality:
Transition year • Strong financial & operational delivery high EBIT share is regulated
Spin-off Uniper
• Proven performance culture • Committed to annual
& reset of E.ON
• Balance sheet headroom dividend per share growth
2016 2018 2020 and beyond
6
Value creation for shareholders
Realization of valuation premium Potential for
12
premium
11 valuation
Renewables innogy acquisition at ~10x
1011x EV/EBITDA EV/EBITDA
9
8
Instant Platform Shareholder
7 redeployment of for high value
capital net synergies
6 creation
(€600-800m)
5
4
3
Renewables1
1. Enterprise value (schematic) 7
Integration of innogy provides for strong synergy potential
Estimated net synergies (€ m) Synergy focus1
Corporate Functions & IT
€600-800m Energy Sales & Customer
Solutions
~100%
Energy Networks
~55%
~25%
~5% •Strong synergy potential of €600-800m
•~5,000 FTEs affected (~7% of employee base)
2019 2020 2021 2022
1. Synergy split (€ million) 8
Investor agreement with RWE ensures equal treatment of
shareholders
Preamble • RWE to act purely as financial investor
Corporate
• Right to nominate one Supervisory Board member
Governance
Shareholder • Not allowed to increase stake above 16.67%1
structure and rights • Not allowed to sell to an E.ON competitor
9
Transaction progressing as planned
2018 2019 2020
Voluntary
public takeover
offer (PTO)
1st Closing2
18th September
New Supervisory
and Executive Board
at innogy level
FY 2019
reporting and
CMD
ended 25th July October 25 March
th
Start of
integration Announcement of
merger squeeze out
2nd Closing2 – (a)
EGM1 innogy 2nd Closing2 – (b)
project intention 30th September
September 4 September
th
Antitrust approvals
Full legal integration
Official filing of transaction with EU EU Antitrust approval
Integration & synergies
Commission on 31st January 17th September
1. Extraordinary General Meeting 2. Closing 1: E.ON becomes ≥90% shareholder in innogy, RWE becomes 16.67% shareholder in E.ON (20% capital increase); Closing 2a: Legal 10
transfer of E.ON’s renewables assets and nuclear minority participations; Closing 2b: Legal transfer of innogy’s renewables assets, Kelag participation and gas storage assetsProposed solution for npower
Detailed plan proposed for UK Customer Solutions: 1
• Migration of npower’s B2C and SME customers
1 onto E.ON UK platform B2C/SME B2C/SME
B2B B2B
• Carve-out of Industrial & Commercial (B2B)
2
customers to secure profitable business
2
3• Restructuring of remaining npower operations
B2C/SME
• Turnaround of operating performance by 2021 B2B B2B
• Combined E.ON UK business to achieve EBIT
of GBP at least 100m and positive free cash flow after 3
smart meter investments from 2022 onwards
B2C/SME
• Restructuring charges of up to GBP 500m
(majority to be shown in non operating result) B2B B2B
11Investment highlights
Starting from position of strength:
Creating the future of energy
Growth Commitment to deliver annual dividend per share growth
Focus Unique downstream position with high share of regulated earnings
Renewables value crystallization and €600-800m net synergies
Discipline High commitment to strong BBB rating
12Growth Focus Discipline Creating the future of energy 9M 2019 Results November 29th, 2019
Operations fully in line with expectations
Highlights Key Financials1
€m € bn
• Intra-year EBIT recovery fully on track to reach prior 2,352
year level (3rd quarter up 20% YoY) 2,208
39.6
• First time inclusion of innogy financials
(13 days of earnings, full balance sheet impact)
• Economic Net Debt at €39.6 bn 1,208 1,176
(including innogy net debt)
16.6
• Full year 2019 outlook adjusted for innogy
• Solution proposal for npower
• Dividend proposal of €0.46/share confirmed
EBIT Adj. Net Income Economic Net Debt2
9M 2018 9M 2019
1. Adjusted for non operating effects 2. Economic Net Debt as per 30 Sep 2019 and 31 Dec 2018 14Customer Solutions – Solid customer growth outside UK
B2C customer numbers Growing customer base outside UK B2C customer numbers
• Since FY 2018 more than ~380k
~20m ~20m ~19m
additional B2C customer ~19m
accounts in Germany
Germany ~150k
• ~150k additional customer Germany ~230k
accounts in other markets
outside UK
Other1 ~120k
~30k
Other2
UK ~430k
UK ~450k
FY 2018 9M 2019 FY 2018 9M 2019
1. Incl. Sweden, Italy, Hungary, Czech Republic, Romania, Slovakia 2. Incl. Netherlands, Belgium, Poland, Hungary, Croatia, Slovenia 15Energy Networks – Regulatory update
Germany Sweden
• General efficiency factors for 3rd regulatory • Carry-over de-risked after constructive
period (gas at 0.49% and electricity at 0.9%) discussions with government
have been legally challenged
• Full amount of retro-actively allowed revenues
• Higher regional court (OLG Düsseldorf) decided can now be collected subject to proper
in favor of network operators investment level to improve security of supply
• BNetzA has filed an appeal with the Federal • New allowed WACC of 2.16% (real) legally
Court of Justice challenged
• No final clarity whether 0.49%-level of general
efficiency factor will be reduced
• Direct implications for electricity expected
16EBIT development in line with expectations
EBIT1 9M 2019 vs. 9M 2018 Key 9M Effects
€m
Energy
9M 2018 2,352 Networks +/–
• Germany: new regulatory period power,
one-off effects 2018
Energy
-47 •+ Sweden: power tariff increase
Networks
Customer Customer
-136
Solutions Solutions •– UK: regulatory effects (i.e. SVT price cap),
competitive dynamics
Renewables +45
-144
innogy Renewables
businesses2
+4 •+ Capacity additions in Germany, UK and the US
Corp. Functions •– Support scheme expiries
& Other, -22 •– Deconsolidation effects
Consolidation
Non-Core +12 Non-Core
+/–
• Preussen Elektra: higher achieved prices,
higher depreciation, absence of 2018 one-offs
9M 2019 2,208 •+ Turkey: oper. improvements (mainly hydro)
1. Adjusted for non operating effects 2. 13 days of innogy EBIT included 17Adj. Net Income reflecting EBIT development
9M 2019
€m
Group EBIT1 2,208
Interest on
fin. assets/ -430 Stable YoY
liabilities2
Other interest
-77
expenses
Profit before
1,700
Taxes1
Income Taxes -349 Tax rate for 9M 2019 at ~21%
Minorities -175
Adjusted
1,176
Net Income1
0.54 EPS3 (€ per share)
1. Adjusted for non operating effects 2. Without interest accretion of nuclear provisions 3. EPS based on weighted average number of shares outstanding 18Q3 2019 Economic Net Debt (END) reconciliation
€ bn
Net financial position
Pension provisions
Asset Retirement Obligations (AROs)
innogy1 -21.7
-19.8
Transaction effects:
+ 1.6 bn
E.ON -8.8
-20.2 +1.9 +1.5
+3.0 -9.1
-0.1 -0.2
-1.2 -1.0 -39.6
-40.0 -0.7
-2.8
END OCF Q3 20192 Net Pensions4 IGY minority Deconsolidation Payment Other Alignment Other8 END
H1 2019 Investments buyout RES & nuclear from RWE transaction innogy END 9M 2019
Q3 20192,3 minorities5 effects6 with E.ON END
definition7
1. innogy reported economic net debt H1 2019 2. OCF/ICF including full 3rd quarter of innogy cash flows incl. divestment business 3. Net of divestments 4. Actuarial interest
rates for German pensions at 1.0%, for UK pensions at 1.9% 5. Including €0.7 bn Nuclear Business (incl. “locked box”), €1.0 bn AROs (Renewables), €0.8 bn Tax Equity Liabilities
(Renewables), €0.5 bn finance leases, €0.04 bn Pension Provisions 6. Payment to RWE compensating for lower than anticipated innogy dividend 7. END of innogy aligned to 19
E.ON END definition (excl. pension provision harmonization) 8. Including -€0.3 bn CTA fundingEconomic Net Debt outlook 2019 and beyond
Economic Net Debt 9M 2019 FY 2019 Economic Net Debt effects
AROs1 Pensions Net financial position – Restructuring Hungary (temporary effect of ~-€0.4 bn)
– Free Cash Flow (FCF) effects
+/–
-9.1 Reduction potential
through operational Broader
excellence portfolio Economic Net Debt effects 2020 and beyond
-8.8
– Merger squeeze-out
Sensitivity to
discount rate – Integration costs
changes
Highly regulated + Transfer of Nordstream 1 into CTA
-21.7 business mix + Transaction effects (e.g. remedy proceeds, locked-box
Refinancing benefits: settlement, restructuring Hungary)
€3.5 bn bonds issued
@Adjustment of full year EBIT 2019 guidance
EBIT
€3.1-3.3 bn
Exclusion of
PPA3 charge4
from EBIT &
€2.9-3.1 bn Adj. Net
Income
Technical
adjustments2
Old guidance EBIT of E.ON RES Proportional EBIT of Alignment of New guidance
FY 2019 & PEL minorities1 innogy (excl. RES, reporting practices2 FY 2019
Czech retail, Kelag &
gas storage)
1. PreussenElektra assets include participations in power plants Gundremmingen C and Emsland 2. Includes alignment of E.ON and innogy reporting and accounting guidelines 21
3. Purchase Price Allocation 4. Preliminary PPA charge: 2019: ~€0.2bn, thereafter roughly €0.7bn on averageFY 2019 segment guidance
Effects for the remainder of 2019
Energy Networks Renewables
•+ 4Q at-equity contribution of Rampion
+• Germany: new regulatory period power
(20% stake)
+• Sweden: power tariff increases
(already implemented)
innogy
•+ Full quarter of innogy earnings contribution
Customer Solutions •– Adjustments to E.ON reporting policies
•+ Germany: impact of price adjustments
•– UK: regulatory interventions (i.e. SVT cap), Non-Core
higher restructuring ambitions
+/–
• PEL1: increased wholesale prices, higher
depreciation, one-offs in 2018, purchase of
production volumes
1. PreussenElektra 22Adjustment of Adj. Net Income 2019 guidance
Adj. Net Income
Dividend1
proposal of
€0.46/share
confirmed
€1.45-1.65 bn
€1.4-1.6 bn Technical
adjustments2
Old EBIT delta, Financial Additional Tax impact Minorities Additional New
guidance mainly expenses innogy on higher relating to innogy guidance
FY 2019 Renewables relating to interest PBT RES minorities FY 2019
vs. IGY debt expenses
transferred
to RWE 1. Fixed dividend per share proposal to AGM to be paid in 2020 23Pro-forma full year 2019 EBIT guidance
~€1.6 bn €4.0-4.2 bn
Exclusion of
PPA charge3
from EBIT &
Adj. Net
Income
€2.9-3.1 bn
Old guidance EBIT of E.ON RES innogy FY Adjustments2 Pro-forma FY
FY 2019 & PEL minorities1 2019 guidance 2019 guidance
1. PreussenElektra assets include participations in power plants Gundremmingen C and Emsland 2. Includes alignment of E.ON and innogy reporting and accounting guidelines 24
3. Preliminary PPA charge roughly €0.7bn on averageAppendix
Growth Focus Discipline
E.ON Group
E.ON standaloneE.ON standalone
Continuous track record of delivery
Deleveraging achieved –
EBIT1 vs. guidance Adj. Net Income1 vs. guidance
Significant reduction of END
€3.1bn ~€10bn
€3.1bn
€3.0bn €1.5bn €26.3bn
€1.4bn
€2.8- €1.3-
€2.8- €1.2-
€3.0bn €1.5bn
€2.7- €3.1bn €1.45bn €19.2bn
€3.1bn €0.9bn €16.6bn
€0.6- 5.3x
€1.0bn 3.9x
3.4x
2016 2017 2018 2016 2017 2018 2016 2017 2018
Guidance Range
1. Adjusted for non operating effects. 27E.ON standalone
Dividend continues to grow
Dividend per share growth
2018 & 2019: Fixed Dividend
Commitment to
annual DPS
growth
€0.462,3
€0.431,3
€0.30
€0.21
FY 2016 FY 2017 FY 2018 FY 2019 Future
Dividend Dividend Dividend Dividend Dividends
1. Fixed for FY 2018 (paid in 2019) 2. Fixed for FY 2019 (paid in 2020) 3. Dividend proposals in line with existing dividend policy 28E.ON standalone
Energy Networks – Proven efficiency leadership
Regulatory review in German power networks – Performance culture in practice
All four E.ON DSOs with efficiency Individual 50% of E.ON DSOs even receive an
score of 100% vs. 94% industry efficiency factor additional efficiency bonus vs. 13%
average2 for industry average2
E.ON excels in efficiency benchmarking
All DSOs 100% efficient1
Proof of E.ON‘s leading
operational excellence
General
efficiency factor Cost audit
Reduction of general efficiency factor Cost audit successfully completed
From 1.5% 0.9%
1. Two DSOs exceed 100% efficiency and will receive a bonus of 1% of controllable costs p.a. as additional allowed revenue
2. 204 DSOs have been included in the benchmarking process; 27 are entitled to additional super efficiency bonus 29E.ON standalone
Upgrading long-term network capex growth
Energy networks capex (€ bn)
1.9
Additional ~€100m p.a. Cautious planning
for long-term capex run-rate 1.8
• Main driver is additional replacement
investments
1.7
• Conservative assumptions on Renewables and
E-mobility roll-out
1.6
1.4
Disciplined & Potential upsides to “new normal” level
0.8 gradual ramp-up 1.0
0.7 • Acceleration of Renewables build-out
• Digital layer & fully digital equipment
0.3 • E-mobility
0.3 • Electrical heating
0.5 • Smart meter
0.4
2017 2018 beyond 2020
Germany Sweden CEE "new normal"
30E.ON standalone
Accelerating power RAB growth
Germany Sweden Czech Republic
Power RABRAB
1 +30% Power RAB (€ bn) 1
Power RAB (€ bn) Power (€ bn) 1,2 +15%
+25%
Targeting upper end of growth range New growth range New New growth range New
+25% +20%
+10% +25-30%
+11% +20-25%
New +15% +16%
+ 8-10% +8%
Old Old
+6% Old +11% +12%
~€8bn
~3.7
~8.3 ~1.5
~8.0
~3.5
~1.4
2017 2018 2020 2017 2018 2020 2017 2018 2020
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 31E.ON standalone
Investment highlights
From deleveraging to focused and disciplined growth
Deliver sustainable EPS growth and
Growth committed to annual dividend per share growth
Focus Management team with strong shareholder focus
Discipline Strict capital discipline and high-performance culture
32Growth Focus Discipline
Energy Networks
E.ON standaloneE.ON standalone
Energy Networks
Regulated asset base 20181 Grid length (‘000 km) 1
Sweden Germany ∑ Grid length: 980
€3.7bn €10.5bn ∑ Grid length: 96
493
350
~€20.0bn2 51 45
138 0
CEE &
Turkey Germany Sweden CEE & Turkey
€5.8bn
EBIT3 2018 Market share (%)
Sweden ~71% of
€0.5bn group
core 32
24 27
~€1.8bn 19
CEE & 12
Turkey Germany Power and gas business Germany Sweden CEE & Turkey4
€0.4bn €0.9bn Power business only
Power Gas
1. 100% view for Slovakia and Turkey
2. Differences may occur due to rounding
3. Adjusted for non operating effects.
4. Arithmetic average 34E.ON standalone
German business with roughly 5,400 concessions
Good track record in the past Existing concessions
• The German networks business is based on long-term concessions
granted by municipalities in the network area Non-concession
based RAB1
• Maximum period of concession contract is 20 years ~ 30%
~ 70%
Concession
based RAB
Expiring
concessions in %
of revenue cap
40%
30%
20%
5% 5%
currently 15 years
open years years
TODAY 2038
1. Includes for example 110 kV grid
35E.ON standalone
Turkey with extraordinary high RAB growth
Downstream Business Market & Regulation RAB development
Established in 3 high-growth regions Constructive regulatory environment:
in bn TL, nominal >2x
Leading electricity network operator: − Allowed WACC for 2016-2020
− 10.5 m connections regulatory period has been
6.9
increased to 13.6% from 11.9%
− 223,000 km network length 5.3
(pre-tax, real)
(20% of market)
− Incentives to outperform capex, 3.9
Regions opex, and theft & loss allowances
High network investment due to:
Istanbul Ankara
− Strong power demand growth of 2016 2017 2018 2020
>3% p.a.
Target to more than double
− Need for significant network 2016 RAB by 2020
Adana
modernization
Strongly growing market with highly attractive returns
36E.ON standalone
Major transformation in Energy Networks
Future energy network system will need to combine Energy Network player
different layers of infrastructure From To
Data center Energy network operator Holistic system provider
EMS Platforms
Digital layer
VPP Smart Home
Network
control
center
Local grid
Asset control control
systems
Wifi Antenna
cation layer
Communi-
Smart Meter
Single layer
Integrated energy system
infrastructure (energy)
Cloud Block chain
Decentral, connected
Physical linear network
multi-layer infrastructure
Physical
layer
More (semi-) autonomous
Centralized system
local energy systems
37E.ON standalone
E.ON leading in smart grid projects
Project Acon (Again connected networks) Project Simris – Part of
Integrating Czech and Slovak electricity markets Achieving energy autarky for small local
Purpose Purpose
& improving quality of supply communities
Project Modernizing grid in border region between Project Swedish village Simris; micro grid successfully
facts Slovakia and Czech Republic facts implemented in 2018
• Modernizing substations and 200km of power lines • Islanding capable smart micro grid solution
• Large-scale rollout of smart technology for higher • 100% renewable and locally produced electricity
deployment of renewable sources (e.g. PV) Battery storage and demand side response e.g. heat
• Improve failure rate, maintenance-related outages pumps/water heaters
Means and power losses
Means • Visualization of energy flows; frequency response;
• Improve effectiveness of girds and prepare for peer-to-peer market platform; Machine learning
future connections, like electric vehicles and algorithms to use flexibilities
batteries • Won the “Skånes vindkraftspris 2018”
38E.ON standalone
E.ON supports customers to improve their energy situation
Energie Monitor Smart Grid Hub – part of
Create transparency for municipalities of their Create customer value by increasing energy
Purpose Purpose
local energy situation as basis for improvements efficiency
Smart Grid Hub
E.ON DSO
Customer
Project Co-developed with municipalities in Bavaria; Project Development of an interface to enable customer
facts product launch in summer 2018 facts flexibilities; EU-funded
• Live dashboard of local energy situation e.g.
renewable production, consumption, CO2 emission • Development of an interface towards small scale
and autarky level customer assets e.g. charging electric heating
Means • Pilot municipalities Altdorf, Furth and Means • Enabling customers to benefit from efficiency
Schrobenhausen measures and optimized energy procurement costs
• Increase energy awareness and understanding • Generate energy and cost savings for customers
• Tracking of energy saving measures
39E.ON standalone
Operational excellence – digitization in practice
Advanced Asset Management Digital Workforce Management
Introduce a new digital scalable work
Conventional approach Predictive maintenance
environment for every field technician and back office
Tool
Effective investment decision Combining a smooth user experience with
Higher grid quality and customer efficient scheduling of works
satisfaction Optimization of routes and outage remedy
Impact
Higher chances to win/retain concessions Flexibility for field technicians
Direct-value add based on improved SAIDI
~ 6 % productivity gains
performance and lower Opex
40E.ON standalone
Opportunities in adjacent businesses - Broadband
A Growing from existing assets B Entering Fiber-to-the-Home (FttH) market
E.ON's existing fiber-optic infrastructure
E.ON's new fiber-optic infrastructure
Fiber-optic
cables
in every street
Telco X's and to every
backbone household
Mobile cell tower Business
building
Point of Presence Local
Enterprise (Switch between Network transformer
customer's data backbone and operations station
center access network) center
Extension of existing business New business concept in development
41Growth Focus Discipline
Customer Solutions
E.ON standaloneE.ON standalone
Customer Solutions
Customer Focused Portfolio E.ON’s market position Energy Sales is the anchor business
EBIT4 2018 (€ 413m)
Top 3
CES
Top 3
Energy Sales: 22 m1 Top 2
Top 3 Energy
customers in 8 countries Top 3
Top 2 Sales
City Energy Solutions (CES)2: Top 3
10% market share in Sweden Top 10
B2B Solutions: ~€2.1 bn TCV3 in
2018
1. Excluding Turkey 2. Former segment ´Heat´ 3. Total Contract Value 4. Adjusted for non operating effects 5. B2C customers in Germany and UK
43E.ON standalone B2C - Re-inventing our customer business with the digital attacker
E.ON standalone
New Solutions B2B
On-site supply of heat, steam, power, cooling and pressurized air
On-site • Bespoke onsite power and heat supply ~5-200MW
Generation • Digitization of the entire value chain with IQ-CHP (intelligent, digital CHP)
• AI-based solutions for remote O&M
Manage energy consumption
Energy • Optimization of energy and core manufacturing processes with AI, e.g. predictive maintenance
Efficiency • Cost reduction via digital platform, e.g. steering energy consumption data-based
• Remote optimization to enable energy savings and asset reliability
Optimizing and monetizing central and decentral flexibility
Flexibility & • Bundling flexibilities in a Virtual Power Plant platform and offering to the TSO
Storage • Forecasting annual maximum load for ensuring feed-in at the correct time
• Load profile analysis, forecasting and peak shaving with grid fee savings up to 80%
Designing and delivering integrated energy solutions
Energy • Optimizing of a business' energy usage by designing highly individual integrated energy solutions
Consulting • Running an energy audit to identify savings potential
• Designing detailed action plan based on insights from energy audit
45E.ON standalone
New Solutions CES (City Energy Solutions)
• Large-scale city heating & cooling solutions (e.g. • Typical duration 20-40 years
in Malmö, Stockholm, Hamburg) • Typical TCV1 € 0.1–1bn
• Growth opportunities through new connections
City Supply to established district heating networks & new
grids (e.g. Berlin Schönefeld)
• Sustainable city districts with integrated heating • Typical duration 20-40 years
& cooling solutions based on maximum of • Typical TCV1 € 10-100m
City Quarter renewables (e.g. Tegel, Berlin; Elephant & Castle,
London)
Solutions
• Growth opportunities through new-build &
retrofit of large areas or districts in cities
• Decentralized, sustainable local energy solutions • Typical duration 10-20 years
(shopping malls – e.g. Westfield, London; • Typical TCV1 € 1-20m
Single Site Koppenstraße, Berlin, office buildings or
hospitals)
Solutions
• Growth opportunities through new-build &
retrofit of large single sites in cities
46
1. Total Contract ValueE.ON standalone
New Solutions B2C
Future Energy Home eMobility
Home Energy
PV & Storage Home Heating Solutions Infrastructure
Mgmt. Solution
Additional growth in key Revenue growth of heating Development of home Developing Ultra-Fast-
regions like Italy, UK, devices – boiler, heat energy management Charging network across
Sweden pump, fuel cell, air- solution with Microsoft Europe
conditioning – across E.ON Pilot project to offer Future Cooperation with Nissan to
Continuous improvement
regions Energy Home to customers develop for de-centralized
of integrated PV &
eMobility propositions and Continuous development with the Berkeley Group energy generation and
attractive financing to provide comfort at (UK) storage
offerings home, e.g. cooling solution, Green Mortgages pilot with Launch of intelligent EV
smart-thermostat offering BNP Paribas to support charging network with Virta
Roll-out of E.ON
SolarCloud in additional financing for energy New market entry in
markets efficient homes Norway and Italy
47E.ON standalone
The nature of the business within Customer Solutions shows great
diversity
Energy sales B2C solutions E-mobility B2B solutions CES
Asset
intensity
Scalability
(e.g. digital)
Sales cycle
Example Public charging City quarter
Energy contracts PV & Storage Onsite CHP
station solution
48E.ON standalone
Disciplined investment plan to support growth opportunities
Temporary high investments for smart meter & IT
Capex1 2019-2020 €1.8bn
Other
Infrastructure-like
E-mob
investments
IT & City Energy
efficiency Solutions &
B2B projects
Smart
Partially meter
temporary
1. Capex net of divestments 49Growth Focus Discipline
PreussenElektra
E.ON standaloneE.ON standalone
First tranche of production rights for PreussenElektra
secured – terms preliminary and already challenged
E.ON Vattenfall
Nuclear power plant 10 TWh
Krümmel1
88 TWh of ~€27.8/MWh PreussenElektra
remaining production
rights Preliminary
price
10 TWh
Remaining October ’19 April ’20 June ’20
production rights until2
Plant Grohnde Isar II Brokdorf
∑
Required
production rights2 15-20 TWh 20-25 TWh 10-15 TWh 45-60 TWh
1. Krümmel is a joint venture between E.ON and Vattenfall, each party owning 50% equity share 51
2. Volumes shown before any transfers/purchases and excluding minority stakes (16.7% minorities in Grohnde, 20% in Brokdorf and 25% in Isar II)Growth Focus Discipline 9M 2019 – Financial Appendix
Financial Highlights
€m 9M 2018 9M 2019 % YoY
Sales 21,646 23,580 +9
1
EBITDA 3,675 3,742 +2
EBIT1 2,352 2,208 -6
Adjusted Net Income1 1,208 1,176 -3
OCF bIT 3,494 2,736 -22
Investments 2,279 4,018 +76
Economic Net Debt² -16,580 -39,620 -139
1. Adjusted for non operating effects, 2. Economic Net Debt as per 30 Sep 2019 and
31 Dec 2018; Economic Net Debt definition takes into account the decommissioning
provisions calculated with a real discount rate of 0.0% as opposed to IFRS AROs;
bonds issued by innogy are recorded at their nominal value: the amount in the conso-
53
lidated balance sheets is €2.6 bn higherCash Conversion Rate in Q3 recovering as expected1
9M 2019
€ bn
73%
3.7
-0.4 2.7
-0.6
-0.4 1.6
-0.7
-4.0
-2.4
EBITDA2 Cash Change in WC OCF bIT Interest Tax Payments OCF Capex FCF
Adjustments3 Payments
1. Cash Conversion Rate: OCF bIT ÷ EBITDA 2. Adjusted for non operating effects 54
3. Net non cash effective EBITDA items incl. provision utilizations, payments related to non operating earnings and innogy consolidation effectSegments: Energy Networks
Energy Networks Highlights
EBIT1 € m • Germany
-3%
+/–
+ New regulatory period for power
1,472 1,425 + Regulatory effects in 2018
– One-off effects in 9M 2018
Germany 755 693 • Sweden
+ Power tariff increase
Sweden 363 394
CEE & Turkey 354 338
9M 2018 9M 2019
€m Germany Sweden CEE & Turkey Total
9M 2018 9M 2019 % YoY 9M 2018 9M 2019 % YoY 9M 2018 9M 2019 % YoY 9M 2018 9M 2019 % YoY
Revenue 4,560 4,646 +2 729 748 +3 1,125 1,162 +3 6,414 6,556 +2
Details
EBITDA1 1,182 1,151 -3 476 509 +7 529 514 -3 2,187 2,174 -1
EBIT1 755 693 -8 363 394 +9 354 338 -5 1,472 1,425 -3
thereof equity-method earnings 51 48 -6 0 0 - 88 87 -1 139 135 -3
OCFbIT 1,372 898 -35 535 460 -14 523 565 +8 2,430 1,923 -21
Investments 448 597 +33 223 197 -12 283 263 -7 954 1,057 +11
1. Adjusted for non operating effects 55Segments: Customer Solutions
Customer Solutions Highlights
EBIT1 € m • Germany Sales
-38% – Timing effect from delayed pass-on of higher grid fees
360 • UK
– Regulatory effects, mainly SVT2 price cap
Germany Sales 124
224 – Competitive dynamics
UK 143 90 + Lower restructuring expenses
51 + Effects from restructuring program
Other 93 83
9M 2018 9M 2019
€m Germany Sales UK Other Total
9M 2018 9M 2019 % YoY 9M 2018 9M 2019 % YoY 9M 2018 9M 2019 % YoY 9M 2018 9M 2019 % YoY
Revenue 4,892 5,321 +9 5,432 5,329 -2 5,483 6,072 +11 15,807 16,722 +6
Details
EBITDA1 148 120 -19 211 136 -36 231 229 -1 590 485 -18
EBIT1 124 90 -27 143 51 -64 93 83 -11 360 224 -38
thereof equity-method earnings 0 0 - 0 0 - 7 8 +14 7 8 +14
OCFbIT 236 179 -24 125 63 -50 253 194 -23 614 436 -29
Investments 10 38 +280 157 132 -16 240 387 +61 407 557 +37
1. Adjusted for non operating effects, 2. Standard Variable Tariff 56Non-Core business
Non-Core Highlights
EBIT1 € m • PreussenElektra
+4%
+ Higher achieved power prices
– Higher depreciation
314 326 – One-off effects in 2018
• Generation Turkey
Preussen
354 256 + Operational improvements, mainly higher hydro volumes in H1
Elektra
70
Generation -40
Turkey 9M 2018 9M 2019 PreussenElektra: Hedged Prices
(€/MWh) as of 30 September 2019
€m PreussenElektra Generation Turkey Total
9M 2018 9M 2019 % YoY 9M 2018 9M 2019 % YoY 9M 2018 9M 2019 % YoY 2018 100% 26
Revenue 983 878 -11 0 0 - 983 878 -11
Details
EBITDA1 436 423 -3 -40 70 - 396 493 +24 2019 96% 32
EBIT1 354 256 -28 -40 70 - 314 326 +4
thereof equity-method earnings 42 40 -5 -40 70 - 2 110 - 2020 73% 46
OCFbIT 122 80 -34 0 0 - 122 80 -34
Investments 10 207 +1,970 154 0 -100 164 207 +26 2021 45% 47
1. Adjusted for non operating effects 57Adjusted Net Income €m 9M 2018 9M 2019 % YoY EBITDA1 3,675 3,742 +2 Depreciation/amortization -1,323 -1,534 -16 EBIT1 2,352 2,208 -6 Economic interest expense (net) -500 -508 -2 EBT1 1,852 1,700 -8 Income Taxes on EBT1 -457 -349 +24 % of EBT 1 -25% -21% - Non-controlling interests -187 -175 +7 Adjusted Net Income1 1,208 1,176 -3 1. Adjusted for non operating effects 58
Reconciliation of EBIT
to IFRS Net Income
€m 9M 2018 9M 2019 % YoY
1
EBITDA 3,675 3,742 +2
Depreciation/Amortization/Impairments -1,323 -1,534 -16
1
EBIT 2,352 2,208 -6
Reclassified businesses of Renewables -278 -300 -8
Interest result -522 -583 -12
Net book gains 859 -32 -104
Restructuring -52 -179 -244
Mark-to-market valuation of derivatives 905 -73 -108
Impairments (net) 0 -2 -
Other non-operating earnings -81 -124 -53
Income/Loss from continuing operations before income taxes 3,183 915 -71
Income taxes -198 -359 -81
Income/loss from continuing operations 2,985 556 -81
Income/loss from discontinued operations, net 170 1,759 +935
Net income/loss 3,155 2,315 -27
1. Adjusted for non operating effects 59Cash effective investments1 €m 9M 2018 9M 2019 % YoY Energy Networks 954 1,057 +11 Customer Solutions 407 557 +37 Renewables 698 583 -16 innogy businesses 0 53 - Corporate Functions & Other 56 1,561 - Consolidation 0 0 - Non-Core 164 207 +26 Investments 2,279 4,018 +76 1. Investments from innogy transaction included in Corporate Functions & Other 60
Economic Net Debt1 €m 31 Dec 2018 30 Sep 2019 Liquid funds 5,423 5,547 Non-current securities 2,295 1,206 Financial liabilities -10,721 -28,537 Adjustment FX hedging² -28 77 Net financial position -3,031 -21,707 Provisions for pensions -3,261 -8,818 Asset retirement obligations -10,288 -9,095 Economic Net Debt -16,580 -39,620 1. Economic Net Debt definition takes into account the decommissioning provisions calculated with a real discount rate of 0.0% as opposed to IFRS AROs; bonds issued by innogy are recorded at their nominal value: the amount in the consolidated balance sheets is €2.6 bn higher 2. Net figure; does not include transactions relating to our operating business or asset management 61
Economic interest expense (net)
Difference
€m 9M 2018 9M 2019
(in € m)
Interest from financial assets/liabilities -436 -430 +5
Interest cost from provisions for pensions and similar provisions -48 -47 +1
Accretion of provisions for retirement obligation and similar provisions -59 -45 +15
Construction period interests¹ 14 13 -2
Others 28 18 -11
Net interest result from innogy businesses 0 -17 -17
Net interest result -500 -508 -8
1. Borrowing cost that are directly attributable to the acquisition, construction or production of a qualified asset. 62
Borrowing cost are interest costs incurred by an entity in connection with the borrowing of funds (interest rate: 5.37%).Financial Liabilities
Liquidity Sources (as of 9M 2019) Maturity profile (as of end 9M 2019)1
€ bn € bn
12.1
Liquid funds ~5.5
Non-current securities ~1.2
Total ~6.7
Syndicated loan (undrawn) 3.50
2.8
2.4 2.2
€ / $ Commercial Paper 1.4
10 / 10 1.0 1.3
programs 0.8
Acquisition facility
1.75 2019 2020 2021 2022 2023 2024 2025 ≥2026
(undrawn)
E.ON innogy
1. Bonds issued by E.ON SE and E.ON International Finance B.V. (fully guaranteed by E.ON SE); bonds issued by innogy SE and innogy Finance B.V. (fully guaranteed by innogy SE) 63
and innogy EIB loansSuccessful financing 2019
2019
Q3 Q4
August 21 (Green Bond) October 17 October 31
1 • Size: €1.5bn 2 • Size: €1.5bn 3 • Size: €500mn
Bonds
• Term: 5Y & 10.5Y • Term: 3Y & 7Y • Term: 12Y
• Yield: -0.149% p.a. • Yield : -0.019% p.a. • Yield: 0.741% p.a.
& 0.373% p.a. & 0.375% p.a.
October 24
Syndicated ESG-linked
Loan
Revolving Credit Facility
• Size: €3.5bn
Integrated financing of new E.ON • Term: 5+1+1Y
EUR 3.5bn bond issuances in 2019 securing favorable financing conditions
Bond financing well diversified across maturities
Successful refinancing of RCF1 with ESG-element, replacing E.ON’s and innogy’s previous RCFs
1. Revolving Credit Facility 64Adoption of IFRS 16: Impact on E.ON financials & KPIs
Changes for the lessee (illustrative) IFRS 16 in short
Balance Sheet Profit & Loss • Objective: Ensuring that lessees and lessors
provide relevant information that faithfully
Equity Sales Sales
(Equity ratio ) Oper. expenses Oper. expenses
represent leasing transactions.
EBITDA
Assets EBITDA
Depreciation • Adoption obligatory starting 2019.
Liabilities Depreciations
EBIT EBIT • No significant changes for lessors, lessees
Right-of-use Interest result Interest result may apply certain exemptions for shorter-
Lease liabilities
assets
EBT
term leases (E.ON Investor Relations contacts
Verena Nicolaus-Kronenberg T +49 (201) 184 28 06
Head of Investor Relations verena.nicolaus-kronenberg@eon.com
Martina Burger T +49 (201) 184 28 07
Manager Investor Relations martina.burger@eon.com
Sebastian Gaßner T +49 (201) 184 28 05
Manager Investor Relations sebastian.gassner@eon.com
Andreas Thielen T +49 (201) 184 28 15
Manager Investor Relations andreas.thielen@eon.com T +49 (201) 184 2806
investorrelations@eon.com
66Financial calendar & important links
Financial calendar
March 25, 2020 Annual Report 2019 & Capital Markets Day (London)
May 12, 2020 Quarterly Statement: January – March 2020
May 13, 2020 2020 Annual Shareholders Meeting
August 12, 2020 Half-Year Financial Report: January – June 2020
November 11, 2020 Quarterly Statement: January – September 2020
Important links
Presentations https://www.eon.com/en/investor-relations/presentations.html
Facts & Figures 2019 https://www.eon.com/content/.../presentations/facts-and-figures-2019.pdf
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
Shareholder Meeting https://www.eon.com/en/investor-relations/shareholders-meeting.html
Green Bond Framework https://www.eon.com/en/investor-relations/bonds/green-bonds.html
Transaction Website: http://www.energyfortomorrow.eu/
67Disclaimer
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evaluation or any securities and should not be considered as a recommendation that any person should purchase, hold or dispose of any shares or other securities.
The information contained in this presentation may comprise financial and similar information which is neither audited nor reviewed and should be considered
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Some of the information presented herein is based on statements by third parties. No representation or warranty, express or implied, is made as to, and no reliance
should be placed on, the fairness, accuracy, completeness or correctness of this information or any other information or opinions contained herein, for any purpose
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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 currently
available to E.ON. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial
situation, development or performance of the company and the estimates given here. E.ON does not intend, and does not assume any liability whatsoever, to update
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Neither E.ON nor any respective agents of E.ON undertake any obligation to provide the recipient with access to any additional information or to update this
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