48
E.ON Roadshow Delivering step by step H1 2017

E.ON Road Show - Delivering step by step - H1/2017 · 2017-08-08 · H1 2016 . 872 . 1. Adjusted for non operating effects . 1 € m €m H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY

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Page 1: E.ON Road Show - Delivering step by step - H1/2017 · 2017-08-08 · H1 2016 . 872 . 1. Adjusted for non operating effects . 1 € m €m H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY

E.ON Roadshow Delivering step by step

H1 2017

Page 2: E.ON Road Show - Delivering step by step - H1/2017 · 2017-08-08 · H1 2016 . 872 . 1. Adjusted for non operating effects . 1 € m €m H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY

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

Page 3: E.ON Road Show - Delivering step by step - H1/2017 · 2017-08-08 · H1 2016 . 872 . 1. Adjusted for non operating effects . 1 € m €m H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY

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

Page 4: E.ON Road Show - Delivering step by step - H1/2017 · 2017-08-08 · H1 2016 . 872 . 1. Adjusted for non operating effects . 1 € m €m H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY

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%

Page 5: E.ON Road Show - Delivering step by step - H1/2017 · 2017-08-08 · H1 2016 . 872 . 1. Adjusted for non operating effects . 1 € m €m H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY

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

Page 6: E.ON Road Show - Delivering step by step - H1/2017 · 2017-08-08 · H1 2016 . 872 . 1. Adjusted for non operating effects . 1 € m €m H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY

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

Page 7: E.ON Road Show - Delivering step by step - H1/2017 · 2017-08-08 · H1 2016 . 872 . 1. Adjusted for non operating effects . 1 € m €m H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY

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

Page 8: E.ON Road Show - Delivering step by step - H1/2017 · 2017-08-08 · H1 2016 . 872 . 1. Adjusted for non operating effects . 1 € m €m H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY

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

Page 9: E.ON Road Show - Delivering step by step - H1/2017 · 2017-08-08 · H1 2016 . 872 . 1. Adjusted for non operating effects . 1 € m €m H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY

H1 results & FY 2017guidance

Page 10: E.ON Road Show - Delivering step by step - H1/2017 · 2017-08-08 · H1 2016 . 872 . 1. Adjusted for non operating effects . 1 € m €m H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY

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

Page 11: E.ON Road Show - Delivering step by step - H1/2017 · 2017-08-08 · H1 2016 . 872 . 1. Adjusted for non operating effects . 1 € m €m H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY

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

Page 12: E.ON Road Show - Delivering step by step - H1/2017 · 2017-08-08 · H1 2016 . 872 . 1. Adjusted for non operating effects . 1 € m €m H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY

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

Page 13: E.ON Road Show - Delivering step by step - H1/2017 · 2017-08-08 · H1 2016 . 872 . 1. Adjusted for non operating effects . 1 € m €m H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY

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

Page 14: E.ON Road Show - Delivering step by step - H1/2017 · 2017-08-08 · H1 2016 . 872 . 1. Adjusted for non operating effects . 1 € m €m H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY

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

Page 15: E.ON Road Show - Delivering step by step - H1/2017 · 2017-08-08 · H1 2016 . 872 . 1. Adjusted for non operating effects . 1 € m €m H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY

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

Page 16: E.ON Road Show - Delivering step by step - H1/2017 · 2017-08-08 · H1 2016 . 872 . 1. Adjusted for non operating effects . 1 € m €m H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY

Appendix: H1 results &

FY 2017guidance

Page 17: E.ON Road Show - Delivering step by step - H1/2017 · 2017-08-08 · H1 2016 . 872 . 1. Adjusted for non operating effects . 1 € m €m H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY

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

Page 18: E.ON Road Show - Delivering step by step - H1/2017 · 2017-08-08 · H1 2016 . 872 . 1. Adjusted for non operating effects . 1 € m €m H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY

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

Page 19: E.ON Road Show - Delivering step by step - H1/2017 · 2017-08-08 · H1 2016 . 872 . 1. Adjusted for non operating effects . 1 € m €m H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY

• 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

Page 20: E.ON Road Show - Delivering step by step - H1/2017 · 2017-08-08 · H1 2016 . 872 . 1. Adjusted for non operating effects . 1 € m €m H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY

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%

Page 21: E.ON Road Show - Delivering step by step - H1/2017 · 2017-08-08 · H1 2016 . 872 . 1. Adjusted for non operating effects . 1 € m €m H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY

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

Page 22: E.ON Road Show - Delivering step by step - H1/2017 · 2017-08-08 · H1 2016 . 872 . 1. Adjusted for non operating effects . 1 € m €m H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY

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

Page 23: E.ON Road Show - Delivering step by step - H1/2017 · 2017-08-08 · H1 2016 . 872 . 1. Adjusted for non operating effects . 1 € m €m H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY

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

Page 24: E.ON Road Show - Delivering step by step - H1/2017 · 2017-08-08 · H1 2016 . 872 . 1. Adjusted for non operating effects . 1 € m €m H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY

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

Page 25: E.ON Road Show - Delivering step by step - H1/2017 · 2017-08-08 · H1 2016 . 872 . 1. Adjusted for non operating effects . 1 € m €m H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY

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

Page 26: E.ON Road Show - Delivering step by step - H1/2017 · 2017-08-08 · H1 2016 . 872 . 1. Adjusted for non operating effects . 1 € m €m H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY

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

Page 27: E.ON Road Show - Delivering step by step - H1/2017 · 2017-08-08 · H1 2016 . 872 . 1. Adjusted for non operating effects . 1 € m €m H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY

≥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

Page 28: E.ON Road Show - Delivering step by step - H1/2017 · 2017-08-08 · H1 2016 . 872 . 1. Adjusted for non operating effects . 1 € m €m H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY

Overview: Group & Segments

Page 29: E.ON Road Show - Delivering step by step - H1/2017 · 2017-08-08 · H1 2016 . 872 . 1. Adjusted for non operating effects . 1 € m €m H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY

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

Page 30: E.ON Road Show - Delivering step by step - H1/2017 · 2017-08-08 · H1 2016 . 872 . 1. Adjusted for non operating effects . 1 € m €m H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY

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

Page 31: E.ON Road Show - Delivering step by step - H1/2017 · 2017-08-08 · H1 2016 . 872 . 1. Adjusted for non operating effects . 1 € m €m H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY

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

Page 32: E.ON Road Show - Delivering step by step - H1/2017 · 2017-08-08 · H1 2016 . 872 . 1. Adjusted for non operating effects . 1 € m €m H1 2016 H1 2017 % YoY H1 2016 H1 2017 % YoY

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

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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

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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.

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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

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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

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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%

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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

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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

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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

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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

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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

42

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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

43

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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

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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

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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]

46

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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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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 to abide by the limitations set out in this document as well as any limitations set out on the webpage of E.ON SE on which this presentation has been made available. This document is being presented solely for informational purposes. It should not be treated as giving investment advice, nor is it intended to provide the basis for any evaluation or any securities and should not be considered as a recommendation that any person should purchase any shares or other securities. 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 these forward-looking statements or to conform them to future events or developments. 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 presentation or any information or to correct any inaccuracies in any such information. Certain numerical data, financial information and market data (including percentages) in this presentation have been rounded according to established commercial standards. As a result, the aggregate amounts (sum totals or interim totals or differences or if numbers are put in relation) in this presentation may not correspond in all cases to the amounts contained in the underlying (unrounded) figures appearing in the consolidated financial statements. Furthermore, in tables and charts, these rounded figures may not add up exactly to the totals contained in the respective tables and charts.

Disclaimer

48