Focused Disciplined Striving. European Energy & Utilities Credit Conference 2016

Transcription

1 Focused Disciplined Striving European Energy & Utilities Credit Conference 2016 Henryk Wuppermann, Head of Corporate Finance, E.ON SE London, 24 November 2016

2 Disclaimer (I/II) This document and the presentation to which it relates contains information relating to E.ON SE ("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. This document is being presented solely for informational purposes and should not be treated as giving investment advice. The information contained in this presentation comprise financial and similar information (e.g. pro-forma financial results). This information is neither audited nor reviewed and should be considered preliminary and subject to change. In particular the presentation of pro-forma financial results may be different compared to the final presentation within the E.ON consolidated financial statements. Certain information in this presentation is based on management estimates. Such estimates have been made in good faith and represent the current beliefs of applicable members of management. Estimates may not be correct or complete. Accordingly, no representation or warranty (express or implied) is given that such estimates are correct or complete. We advise you that some of the information presented herein is based on statements by third parties, and that 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 whatsoever. Certain statements contained herein may be statements of future expectations and other forward-looking statements that are based on the E.ON s current views and assumptions and involve known and unknown risks and uncertainties that may cause actual results, performance or events to differ materially from those expressed or implied in such statements. No one undertakes to publicly update or revise any such forward-looking statement. Neither E.ON or any of their respective officers, employees or affiliates nor any other person shall assume or accept any responsibility, obligation or liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or the statements contained herein as to third person statements, any statements of future expectations and other forward-looking statements, or the fairness, accuracy, completeness or correctness of statements contained herein. In giving this presentation, none of E.ON or their respective agents 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. 1

3 Disclaimer (II/II) This presentation is not 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 contains certain financial measures (including forward-looking measures) that are not calculated in accordance with IFRS and are therefore considered as "Non-IFRS financial measures". The Management of E.ON believes that the Non-IFRS financial measures used by E.ON, when considered in conjunction with (but not in lieu of) other measures that are computed in accordance with IFRS, enhance an understanding of EON's results of operations, financial position or cash flows. A number of these Non-IFRS financial measures are also commonly used by securities analysts, credit rating agencies and investors to evaluate and compare the periodic and future operating performance and value of E.ON and other companies with which E.ON competes. These Non-IFRS financial measures should not be considered in isolation as a measure of E.ON's profitability or liquidity, and should be considered in addition to, rather than as a substitute for, net income and the other income or cash flow data prepared in accordance with IFRS. In particular, there are material limitations associated with our use of Non- IFRS financial measures, including the limitations inherent in our determination of each of the relevant adjustments. The Non- IFRS financial measures used by E.ON may differ from, and not be comparable to, similarly-titled measures used by other companies. 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. 2

4 Agenda New E.ON and strategic update Financial and operating update 3

5 Uniper spin-off successfully completed 1 Jan 2016 E.ON and Uniper organizational separate Carve-out effective Employees allocated to both companies Binding tax rulings obtained 26 Apr 2016 Capital market day Equity story, incl. strategy, KPIs, dividend policy, capital structure AGM invitation Spin-off report: detailed financial & legal documentation 8 Jun 2016 AGM decision 99.7% approval rate BaFin approval of Uniper prospectus Publication of Uniper prospectus (incl. H figures) September 2016 Listing of 4

6 E.ON is committed to exit Uniper fully Spin-off Shareholding structure Other shareholders 46.65% 53.35% Minority participation to be consolidated at equity after execution of deconsolidation agreement 2 Dividends received from Uniper will contribute to E.ON s free cashflow As of deconsolidation only one current E.ON board member in supervisory board of Uniper Uniper shares listed on 12 th September 2016 Existing E.ON shareholders 1 have received Uniper shares (allotment ratio 10:1) Staggered sale of E.ON s participation in medium term driven by compliance with minimum holding periods for tax reasons and market conditions 1. Excluding treasury shares 2. Until execution of deconsolidation agreement, Uniper will be reported under discontinued operations

7 New E.ON with a higher share of regulated / long-term contracted earnings following Uniper spin-off Business profile post spin-off E.ON s attractions + Substantially increased earnings stability EBITDA 2015 ~ 5.0 bn 1 ~65% from regulated / long-term contracted businesses 2 High share of regulated / longterm contracted earnings Diversified portfolio Energy Networks Customer Solutions Renewables PreussenElektra and others + Operations mainly under stable, well established regulatory frameworks in low risk markets + Sharply reduced commodity & FX risk exposure - Reduction of overall size and diversification High cash conversion Attractive return on capital 6 1. Pro-forma figures without Uniper contribution and excluding results from divested operations 2. Including Energy Networks, ~40% of Heat and ~60% of Renewables

8 Energy Networks E.ON s network presence Overview Leading European operator of electricity and gas networks supplying several million customers E.ON ensuring efficient grid expansion using ultramodern technologies Well diversified footprint Regulated asset base ( bn) Sweden 3.9 bn 2 ~ 18 bn 1 EBIT breakdown CEE & Turkey 5 6 SWE 20% 18% 62% GER CEE (CZE, SVK, HUN, ROM) 4.1 bn 3 Germany 10.0 bn Gas ~70% Power 7 1. Current total RAB of country/region, relevant for 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. For example in Sweden, the calculation of the asset base takes into account standard costs instead of actual costs. 2. Converted at SEK/EUR rate of Hungary converted at EUR/HUF of 318.5, Czech converted at EUR/CZK of 27.2, and Romania converted at EUR/RON of 4.6; Including 100% of Slovakia, not including Turkey 4. Pro-forma figures 5. Including at-equity result from Slovakia and Turkey 6. Differences might occur due to rounding

9 Renewables E.ON Renewables footprint (2015) Operated Capacity (GW) EBIT development bn % GW GW Revenue mix Onshore/PV US Onshore EU Offshore EU Operated capacity countries Project pipeline only 52% 48% 60% 40% 63% 37% Regulated / long-term contracted Merchant 8 1. Hedging strategy substantially mitigating risk of merchant exposure in the near- to mid-term 2. Revenue mix includes subsidies/incentives (e.g. Production Tax Credit (PTC), Renewable Obligation Certificates (ROCs) etc.). E.ON reported financials classifies some of these components as other income

10 Customer Solutions E.ON s Customer Solutions presence Overview Covers energy sales (power & gas), heat as well as new solutions Serving B2C/ B2B SME customers with asset-light and mass market solutions Serving B2B large/ B2M customers with asset-intensive / tailored solutions Energy sales EBIT breakdown EBIT District heating New solutions Power/ gas volume sold 2015 Customer accounts 23 m 1 ~ 0.8 bn / 167 TWh 2 Other 16% 35% UK 49% Germany Average EBIT margin ~3% Excluding Turkey, including 49% stake in ZSE (Slovakia) 2. Excluding power/ gas volumes for heating 3. Pro-forma figures

11 PreussenElektra Geographic presence in Germany Three active power plants 1 Brunsbüttel Brokdorf Stade Unterweser Emsland Grafenrheinfeld Krümmel Hannover Grohnde Würgassen Active and operated by PreussenElektra Active and minority share PreussenElektra Shut down Decommissioning Shut-down dates 2021 Grohnde (1,360 MW) 2021 Brokdorf (1,410 MW) 2022 Isar II (1,410 MW) Isar 1/2 Gundremmingen A/B/C Excellent fleet track record On average >90% availability over the last 5 years Earnings with near term visibility through forward hedging (>2 years) % Controllable costs, indexed to 2011 = Efficient management of controllable operational costs (incl. capex) 2 : Nuclear plants which have been shut down and are in majority owned by E.ON include Grafenrheinfeld, Unterweser, Isar 1, Stade, Würgassen. Active joint nuclear plants are Gundremmingen B & C and Emsland 2. Including Brokdorf, Grohne and Isar 2. Controllable costs only include cost components that can directly be influenced and are not mainly driven by external factors (e.g. no nuclear fuel tax and nuclear fuel costs are included) 3. Average across German nuclear power plants operated by E.ON

12 Agenda New E.ON and strategic update Financial and operating update 11

13 2016 Outlook confirmed bn EBITDA bn EBIT 2 Underlying Net Income bn In transition year 2016 including at-equity contribution of Uniper on an underlying basis after spin-off & deconsolidation; as of 2017 without Uniper contribution 2. Adjusted for non operating effects

14 E.ON transformation progressing Q Highlights Solid Q3 YTD performance & FY16 guidance confirmed 200m additional proceeds from M&A earn-out agreement 1 Successful listing of Uniper- market valuation leads to impairment charge Cabinet approval of draft KFK law Efficiency program initiated- securing sustainable competitiveness Focus on disciplined capital allocation- CAPEX budget under review Alternatives to finance KFK premium & strengthen balance sheet under evaluation Booked in Q4 2016

15 The Spin-off significantly impacted our IFRS equity IFRS equity bn ,1 1,0 10,3 16,4 Excluding KFK effects 3, ,6 5.0 FY15 Dividends Income from cont. ops Loss from discont. ops Pensions 9M 2016 Shareholders equity Minorities 14

16 KFK implementation shaping up Payment amounts 1 for E.ON Next steps bn Legislative process started Risk premium Base amount 9.8 2,6 7,2 7,8 According to draft law ,0 Lower accretion leads to UNI uplift m p.a. E.ON provisions & premium 3 Additional premium Current provisions Cabinet decision on 19 Oct Decision by Bundestag (Nov/Dec) Consent by Bundesrat (Dec) Government targets that law enters into force at the beginning of 2017 E.ON deems it necessary to have a direct agreement between the government and the nuclear operators UNI before provision transfer Accretion benefit (net) UNI post provision transfer Assessment of overall balance sheet impacts finalized with Q4 results on basis of final law Excluding any interest payments in 2017 or provision utilization 2. Base amount & risk premium for E.ON s plants as in KFK draft law. Values have been normalized across all operators. 3. E.ON s current provisions for interim & final storage for KFK scope and additional premium.

17 Strong cash flow improves net financial position Net Financial Position 9M 2016 vs. FY 2015 bn NFP FY 2015 OCF Investments Dividend Build & Sell / Divestment Others NFP 9M Provisions for pensions Asset retirement obligations = Economic net debt 1 = Pro-forma END of Future E.ON

18 Financial Liabilities & Liquidity Split Financial Liabilities (as of end 9M 2016) Maturity profile (as of end 9M 2016) 1 bn Bonds 11.8 bn 4.3 in EUR 4.7 in GBP 4.0 in USD 2.7 in other denom. 0.4 Promissory notes 0.4 Commercial papers 0.0 Other liabilities 1.7 Total EUR GBP USD Liquidity Sources (as of end 9M 2016) 1.4 YEN Other bn Liquid funds Non-current securities 4.5 Total 13.8 Syndicated loan (undrawn) 3.5 / $ CP programs (undrawn) 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)

19 Backup Financials Economic net debt Operations Spin-off Reporting calendar & Important links 18

20 E.ON Focus our basis for steering the company Financials E.ON FOCUS medium-term framework Capital structure BBB+ / Baa1 Profit Group EBIT 1 Cash Cash conversion rate 2 Return ROCE 3 Growth EPS 4 80 % 8 10 % 5-10 % p.a. Dividend payout % of Underlying Net Income Executive compensation closely linked to EPS and relative TSR 5 (in addition: Share ownership obligations) Adjusted for non operating effects and divested operations in 2015 without Uniper contribution 2. OCFbIT (Operating cash flow before interest and tax) divided by EBITDA without Uniper contribution 3. Based on EBIT (= pre tax) without Uniper contribution 4. Based on Underlying Net Income, compound annual growth rate, adjusted for divested operations in 2015 without Uniper contribution 5. Total Shareholder Return

21 Solid EBIT despite lower Networks contribution EBIT 1 9M 2016 vs. 9M 2015 Financials m 2, ,282 2, M 2015 Divested Operations 9M 2015 w/o div. operations Energy Networks Customer Solutions Renewables Corp. Functions & Other, Consolidation, Div Ops Preussen Elektra 9M 2016 w/o div. operations Adjusted for non operating effects

22 Financial Highlights bn 9M M 2016 % YoY Financials Sales EBITDA EBIT Underlying net income OCF bit Investments Economic net debt ² Adjusted for non operating effects 2. Pro-forma END of Future E.ON

23 From EBITDA to Net Income m 9M M 2016 % YoY Financials EBITDA 1 4,182 3, Depreciation/Amortization/Impairments -1,764-1, EBIT 1 2,418 2,311-4 Economic interest expense (net) -1,099-1, Net book gains Restructuring Mark-to-market valuation of derivatives Impairments (net) -3, Other non-operating earnings Income/Loss from continuing operations before income taxes -1,946 1, Income taxes Income/loss from discontinued operations, net -3,941-10, Non-controlling interests 431-5,351-1,342 Net income/loss attributable to shareholders of E.ON SE -6,101-3, Adjusted for non operating effects

24 High CCR due to seasonal effects 9M 2016 Financials bn CCR 2 : 104% EBITDA 1 Non-cash effective EBITDA items Provision utilization Changes in NOWC Payments related to non-op earnings OCF bit Interest Tax Payments Payments OCF Divest CAPEX FCF Adjusted for non operating effects 2. Cash Conversion Rate: OCFbIT / EBITDA

25 Segments: Energy Networks Operations Energy Networks Highlights EBIT 1 m CEE & Turkey Sweden Germany 1, M % 1, M 2016 Germany: - Positive one-off effects in 9M 2015 Sweden: - Start of the new regulatory period - 9M 2015 burdened by storm costs CEE: - Positive effects in Czech Republic, Turkey (higher returns following new regulatory periods) and Slovakia (lower network losses) - Negative effects from milder winter in Romania m Germany Sweden CEE & Turkey Total 9M M 2016 % YoY 9M M 2016 % YoY 9M M 2016 % YoY 9M M 2016 % YoY Revenue 9,536 10, ,223 1, ,484 12, EBITDA 1 1,159 1, ,945 1,923-1 EBIT ,259 1,196-5 thereof Equitymethod earnings OCFbIT 883 1, ,599 2, Investments Adjusted for non operating effects

26 Segments: Customer Solutions Operations Customer Solutions Highlights EBIT 1 m Other UK Germany M % M 2016 Germany: - Margin decrease and positive one-off effects in 9M 2015 UK: - Lower ECO² spending offset by FX weakening in Q following Brexit decision Other: - Normalized winter in Sweden - Lower gas procurement costs in Hungary & Romania m Germany UK Other Total 9M M 2016 % YoY 9M M 2016 % YoY 9M M 2016 % YoY 9M M 2016 % YoY Revenue 6,093 5, ,107 5, ,430 4, ,630 16, EBITDA EBIT thereof Equitymethod earnings OCFbIT ,051 1, Investments Adjusted for non operating effects 2. Energy Company Obligation

27 Segments: Renewables Operations Renewables EBIT 1 m Offshore/Other Onshore/Solar +38% M M 2016 Highlights Offshore: - Positive contribution from Humber & Amrumbank, book gain from Arkona stake sale (Q2 2016) - Negative FX effects in Q following Brexit decision Onshore: - Positive one-off effects in 9M 2015 (incl. book gains & hedges) - Lower prices in 9M 2016, phase-out of UK LEC scheme m Onshore Wind / Solar Offshore Wind / Others Total 9M M 2016 % YoY 9M M 2016 % YoY 9M M 2016 % YoY Revenue ,033 1,022-1 EBITDA EBIT thereof Equitymethod earnings OCFbit Investments Adjusted for non operating effects

28 Segments: PreussenElektra Operations PreussenElektra Highlights EBIT 1 m % 345 Lower volumes due to Grafenrheinfeld shut-down Lower achieved power prices compensated by lower nuclear fuel tax 9M M 2016 Hedged Prices Germany ( /MWh) m PreussenElektra 9M M 2016 % YoY Revenue 1,860 1, EBITDA EBIT % 98% thereof Equitymethod earnings % 27 OCFbIT Investments Adjusted for non operating effects

29 Cash effective investments by unit m 9M M 2016 % YoY Operations Energy Networks Customer Solutions Renewables Corporate Functions & Other Consolidation PreussenElektra Investments 1,956 1, Adjusted for non operating effects

30 Economic Net Debt 1 m 31 Dec Sept 2016 Liquid funds 7,829 9,308 Non-current securities 4,536 4,540 Financial liabilities -15,790-13,878 Economic net debt Adjustment FX hedging ² Net Uniper Loan ³ 3,079 0 Net financial position Provisions for pensions -3,281-5,921 Asset retirement obligations -17,930-18,124 Economic net debt -21,340-23, Pro-forma END of Future E.ON 2. Net figure; does not include transactions relating to our operating business or asset management 3. Net of profit and loss sharing agreements with Uniper

31 Future E.ON at a glance: Attractive portfolio and sound earnings foundation Spin-off Key Financials Energy Networks New EBIT Customer Solutions Renewables EBITDA bn E.ON Group Deconsolidation Uniper New E.ON 1 EBIT bn bn 0.8 bn 0.4 bn -0.9 E.ON Group Deconsolidation Uniper New E.ON 1 PreussenElektra 0.6 bn Corporate Functions/Other bn Divested Operations 0.4 bn 4 Underlying Net Income bn bn E.ON Group Deconsolidation Uniper New E.ON Pro-forma figures without Uniper contribution 2. Pro-forma figures 3. Including group consolidation effects 4. Contribution from E&P, Hydro, Generation Italy and Spain

32 Spin-off with significant impact on E.ON reporting in 2016 Spin-off Reporting structure and Uniper consolidation during spin-off process "At equity" simulated in Spin-off Report Q4 '15 Q1 '16 AGM Old reporting structure Fully consolidated E.ON pro forma consolidated balance sheet in the Spin-off Report has a simulation of the at-equity consolidation of Uniper Simulation is based on derived book values as of Q2 '16 Listing: 12 th September Execution of deconsolidation agreement New E.ON segment reporting Fully consolidated as "discontinued operations" Not considered are any other effects of the business year 2016 (e.g earnings contribution, Nord Stream I transfer, repayment of E.ON loan) Potential differences in Uniper valuation at the respective valuation dates New E.ON segment reporting "At equity" consolidation 31

33 Financial calendar & important links Financial calendar March 15, 2017 Annual Report 2016 May 10, 2017 Interim Report I: January March 2017 May 10, Annual Shareholders Meeting August 9, 2017 Interim Report II: January June 2017 November 8, 2017 Interim Report III: January September 2017 Important links Capital Market Story Other Presentations Annual Reports Interim Reports Shareholders Meeting Facts & Figures Creditor Relations