Investor presentation. innogy SE August 2018

Transcription

1 Investor presentation innogy SE August 2018

2 Notice This document contains forward-looking statements. These statements are based on the current views, expectations, assumptions and information of the management, and are based on information currently available to the management. Forward-looking statements shall not be construed as a promise for the materialisation of future results and developments and involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those described in such statements due to, among other things, changes in the general economic and competitive environment, risks associated with capital markets, currency exchange rate fluctuations, changes in international and national laws and regulations, in particular with respect to tax laws and regulations, affecting the Company, and other factors. Neither the Company nor any of its affiliates assumes any obligations to update any forward-looking statements. innogy SE August

3 GROUP innogy is a stable business with a platform for growth innogy is active along the energy value chain in three divisions Sustainable generation of electricity Efficient distribution of energy Customer products and services Renewables Grid & Infrastructure Retail Wind Hydro Solar 3.9 GW installed capacity 1 Grid Assets Grid+ Broadband 13.5bn regulated asset base Commodity Energy+ E-mobility 22m customers Targeted leverage factor of ~4.0x Targeted payout ratio of 70-80% of adjusted net income Market cap at around 21bn (as of 10 Aug 2018) 43,040 employees (as of 30 Jun 2018) 1 Accounting view. innogy SE August

4 GROUP Financials at a glance stable dividend for 2017 Adjusted EBIT million Adjusted net income (ANI) million Dividend (payout in % of ANI) 2,735 2,816 ~2,700 1,123 1,224 >1, (79%) (73%) 70-80% FY 2016 FY 2017 FY 2018E FY 2016 FY 2017 FY 2018E FY 2016 FY 2017 FY 2018E 1 Dividend proposal for innogy SE s 2017 fiscal year, subject to the passing of a resolution by the 24 April 2018 Annual General Meeting. innogy SE August

5 GROUP Net investments in line with innogy s financial targets leverage factor of around 4.0x innogy Group, ( billion) Additional net growth: up to 4.5 up to 10.0 Leverage: ~4.0x ~4.6 ~0.9 ~5.5 up to (3.0) G&I ~4.0 Retail ~0.4 Renewables ~0.1 Corporate ~0.1 Day-to day capex Growth capex (committed) Commited capex Additional growth opportunities Total growth investment opportunities Equity sell-down/ disposal gains Total expected net investments 1 1 Capital expenditure on property, plant and equipment and on intangible assets, financial assets./. proceeds from disposal of assets/divestitures and net changes in equity (including non-controlling interest). innogy SE August

6 GROUP Cost reductions of around 400m (~10%) by 2020 managing costs dependent on nature of business Controllable costs, innogy Group, billion ~0.2 ~4.2 ~(0.4) ~0.1 ~4.1 Competitive core business Retail, existing business in Renewables and Corporate/Cross-functions Rigorous cost focus to become top performer Regulated grid business Optimising costs along regulatory frameworks, focus on overhead costs 2017 Inflation Cost reductions 1 Incremental growth Outlook 2020 Growth Renewables and new business areas Additional costs only for valuable growth opportunities, backed by positive business case 1 Cost base 2017 inflated by 2% p.a. innogy SE August

7 GROUP Key events 2018 envisaged timeline Q1 Q2 Q3 Q4 Renewables AUS Solar Purchase of solar projects Overland [Feb] NL Offshore Wind auction results [Mar] GER Offshore Successful bid Kaskasi [Apr] US Solar secures rights for solar projects [Jun] UK Offshore Triton Knoll FID [May] US Onshore Closing EverPower acquisition [Jun] UK Offshore Triton Knoll Financial Close AUS Solar Closing Overland acquisition NL Offshore Wind new auction round G&I GER Determination Xgen gas [Feb] GER Court decision RoE calculation [Mar] GER Final revenue caps gas 1 [starting end of May] GER Determination of Xgen electricity [end of Nov] Eastern Europe Determination of allowed revenues for t+1 [end Q4] Retail GB npower & SSE merger submission of merger notice to CMA [Feb] GB npower & SSE merger End of phase 1 investigation by CMA [May] GB npower & SSE merger SSE AGM approved transaction [Jul] UK price cap Publication of policy decision by OFGEM [23 Aug] UK price cap Publication of final cap level by OFGEM [end of Oct] GB npower & SEE merger End of phase 2 investigation by CMA [22 Oct] and completion of transaction [exp. end of Q4/Q1 2019] 1 Can vary from DSO to DSO. Remark: all dates preliminary. Next CfD auctions in UK for wind are scheduled for spring 2019; mentioning of auctions does not imply innogy participation. innogy SE August

8 RENEWABLES We continue to develop value-accretive growth options Capacity in operation, under construction and under development 1 GW, pro-rata Onshore Offshore Hydro Solar/other thereof depending on successful auction results: June 2018 COD Post 2023 Total pipeline in operation currently under construction currently under development 2 1 As of 30 June Ramp-up only includes Renewables division. 2 Based on planned commissioning dates, excluding M&A activities and project-specific auctions. innogy SE August

9 RENEWABLES Triton Knoll offshore wind Financial close Q Country UK Technology Offshore wind Location Area of c. 118 km 2, 32 km off the coast of Lincolnshire Planned capacity ~860MW (90 MHI Vestas V MW turbines) Investment ~ 2 billion (incl. up to 0.5 billion for grid connection) Ownership 100% innogy 1 Mean wind speed 9.83 m/s (at 107 m height) Water depths 15 to 24 m (avg. 18 m) Status/consents Fully developed, all required consents in place construction onshore works to begin in 2018, offshore works from 2020 Commissioning Start of commissioning scheduled for 2021 Support scheme UK CfD 2, 74.75/MWh 3 for a total period of 15 years Next steps Equity & banking process ongoing, FID taken in Q2 2018, Financial Close planned for Q Triton Knoll offshore array Offshore cable corridor Onshore cable corridor Landfall 10 km Proposed Triton Knoll substation Bicker Fen substation 1 innogy to review all options regarding the future ownership structure 2 Contract for Difference scheme 3 CfD strike price on 2012 prices innogy SE August

10 RENEWABLES Kaskasi Offshore Wind FID planned for Q Country Technology Location Planned capacity Germany Offshore Wind Area of c km 2, 33 km off the coast of Helgoland ~325 MW (turbine type not defined yet) Amrumbank West Kaskasi Ownership 100% innogy 1 Mean wind speed 10.1 m/s (at 103 m LAT) Water depths 18 to 25 m (avg. 22 m) Status/consents Allocated grid connection; converter station existing; BSH application fully submitted, updated in Q FID/construction onshore manufacturing works to begin in 2020, offshore works from 2021 Commissioning Start of commissioning scheduled for 2022 Nordsee Ost North Sea Operation Base Helgoland Support scheme Guaranteed minimum tariff for 20 years after first feed in (successful bid price provides a floor) Next steps FID/FC planned for Q Country Germany Netherlands Germany 1 innogy to review all options regarding the future ownership structure. innogy SE August

11 RENEWABLES Acquisition of valuable project opportunities across technologies New York Technology Onshore Wind Large-scale solar Project name Cassadaga Limondale Sun Farm / Hillston Sun Farm 2 Country/Location United States, New York Australia, New South Wales Planned capacity 126 MW 347 MWp / 115 MWp Construction Capex ~ USD 200 m ~ EUR 400 m (incl. project rights) Average load factor 37% 23% Status/consents Major state permit secured (NY Article X certificate) Late stage Planned FID/construction 2019 Q / Q Planned Commissioning H End of 2019 Support scheme 20-yr utility PPAs, project captures 100% PTCs Merchant Project IRR above hurdle rate of 5% post tax 1 above hurdle rate of 5% post tax 1 New South Wales Project Cassadaga is part of the Onshore Wind development pipeline (> 20 projects, >2 GW) that innogy acquired in December innogy benefits from BELECTRIC s global experience in constructing and operating utilityscale solar power plants 1 Hurdle rates are subject to frequent review and differ depending on project structure/risks. 2 Closing of transaction and FIRB (Foreign Investment Review Board) approval outstanding. innogy SE August

12 GRID & INFRASTRUCTURE G&I Germany recent regulatory developments and concession overview Recent regulatory developments innogy concessions up for renewal within respective time period 2 > Court case on return on equity rate (RoE) for 3 rd regulatory period ruled in favour of grid operators. Next steps: Appeal against the ruling to the Federal Court by BNetzA 75% 50% 25% 9-11 years weighted average concession duration 3 ~30% ~70% > Productivity factor Xgen gas confirmed at 0.49% in Germany for 3 rd regulatory period ( ) 1 0% > 2022 > Around 2/3 of RAB in Germany based on concessions > Strong portfolio of ~3,800 concessions long-lasting average expiry profile providing stability 1 Xgen for electricity and gas was at 1.5% in the 2nd regulatory period. 2 Concession renewals based on inhabitants supplied, taking into account exercise of early cancellation options, excluding water consessions. 3 Based on inhabitants supplied. 9-year weighted average takes early cancellation options into account. 11-year weighted average excl. early cancellation options. innogy SE August

13 GRID & INFRASTRUCTURE Eastern Europe stable regulatory environment providing visibility on earnings Region RAB ( bn) WACC (%) 1 Regulatory Period Expected Allowed Revenues 2 Czech Republic Hungary Poland Slovakia Total 3.8 Ø 6.89 Overall regulatory development Capex spending recognized in RAB on a yearly basis Yearly GDP growth between % 4 in all our Eastern European markets expected until 2022: less pressure on allowed energy prices and therefore expected revenues 1-2% y-o-y RAB growth expected beyond regulatory period 1 CZ,PL: nominal; HU,SL: real. 2 Reference: 2017 Revenues. 3 Indicative WACC as of 2016, as within new regulatory period no explicit WACC is published. 4 Source: IMF World Economic Outlook Database. innogy SE August

14 RETAIL innogy proactively addressing market dynamics 4 main market dynamics in European retail business innogy s action Customer Competition 01 Increasing churn rates Increasing service expectations Energy efficiency needs Aggressive price players with lean operations New players with different value propositions Price comparison websites Agile technology players & service innovators Optimise customer journey Increased customer satisfaction resulting in 10-15% less churn Churn prevention Already saved 40k contracts in 2017 via bill shock calls and win-back campaigns Regulation Disruption Transparency interventions Smart meter roll-out Tendency towards deregulation of prices not fully in line with short-term actions Potential market entry of online giants Consumption shift out of home New sharing models (e.g. blockchain) Data driven business models Business expansion in core markets e.g. Smart Home, PV, heating, flexibility solutions Explore growth opportunities e.g. e-mobility innogy SE August

15 RETAIL SSE and innogy to combine their domestic energy supply businesses in Great Britain Contribution of SSE B2C/Energy+ and npower to a combined retail entity of 11.5m customers SSE shareholders SSE Retail (B2C & Energy+) 65.6% % innogy shareholders innogy npower Step 1: Contribution of SSE Retail (B2C and energy services businesses) to Combined Retail Entity and subsequent de-merger Step 2: Contribution of npower to Combined Retail Entity for a 34.4% participation 1 Step 3: Listing of Combined Retail Entity in premium segment of the London Stock Exchange SSE Retail npower 3 Combined retail entity After closing of the deal innogy will hold a minority stake of 34.4% in the equity value of the new company and will treat it as a financial investment 1 On equity value basis innogy SE August

16 E-MOBILITY A leading market position - More than 20,000 charging points in 20 countries Global distribution of smart innogy charging points innogy emobility UK FR NL BE LU DK DE CH S PL CZ SK AT HU HR IT BG TR US 65,000 7,250 13,500 Charging sessions per month Networked charging points Full-scope e-mobility service E-mobility consulting Hardware Installation & maintenance Operation Private charging points Smart services > MT <15 innogy electrifies 100 % of its business fleet (1,000 vehicles) innogy SE August

17 GROUP Outlook for 2018 confirmed million unless stated otherwise FY 2018 FY 2017 guidance 1 reported Renewables ~ Grid & Infrastructure ~1,850 1,944 Retail 2 ~ Adjusted EBIT 3 ~2,700 2,816 Adjusted financial result ~(750) (689) Tax rate for adjusted net income 25-30% 25% Adjusted net income >1,100 1,224 Dividend 70-80% of ANI 1.60 Net Capex 4 ~2.5 bn 1,949 Leverage factor target of around 4.0x 3.6x 1 Excluding Retail UK. Any earlier forward-looking statements on Retail UK should be disregarded. 2 Retail no longer includes emobility. 3 Including Corporate/New Businesses 4 Capital expenditure on property, plant and equipment and on intangible assets, financial assets./. proceeds from disposal of assets/divestitures and net changes in equity (including non-controlling interests). In H we changed our capex definition: the figure now includes solely items with an effect on cash (see H report p. 10). Outlook 5 confirmed Prior-year figures have been adjusted accordingly. 5 As per 14 May innogy SE August

18 GROUP Refinancing needs between 1bn and 2bn per annum in the coming years Maturity profile of bonds and loans as of 31 July 2018 ( billion) Cumulative maturities Maturities of loans from RWE AG (lhs) Maturities of loans from EIB (lhs) Maturities of senior bonds (lhs) Total outstanding bonds and loans (rhs) As of 31 July Total bonds and loans of ~ 16bn: t/o senior bonds of innogy SE/ Finance B.V. of ~ 13bn t/o loans from RWE AG of ~ 2bn t/o EIB loans of ~ 1bn innogy s issuances since the IPO: First senior bond in April 2017 ( 750m, 1%, maturity 2025) First green bond in October 2017 ( 850m, 1.25%, maturity 2027) Senior bond in January 2018 ( 1,000m, 1.50%, maturity 2029) Senior bond in May tapped in July ( 750m, 0.75%, maturity 2022) Senior bonds and RWE + EIB loans ( bn) Senior bond in May 2018 % of total debt 25% 24% 13% 38% ( 500m, 1.625%, maturity 2026) innogy SE August

19 GROUP innogy s credit rating innogy's investment grade ratings (last updated as of 18 May 2018) Fitch Moody s S&P Long-term issuer default rating BBB+ Baa2 BBB Outlook Watch negative Stable Stable Senior unsecured rating A- Baa2 BBB Short-term issuer rating F2 P2 A-2 innogy SE August

20 APPENDIX

21 APPENDIX Key sensitivities to our planning assumptions Driver Affected area Type Sensitivity Group impact 3 Wind/water levels Renewables P&L 3 +/- 10% from normal +/- ~ 50m Power prices 1 Renewables P&L 3 +/- 10 /MWh +/- ~ 10m Interest rates Pension provisions 2 B/S +/- 50 bps -/+ ~ 800m 1 A corresponding power price change across all countries for the part of the generation with market price exposure which is unhedged for H Net impact after corresponding effect on plan assets. 3 Impact on adjusted EBIT for P&L figures for H innogy SE August

22 APPENDIX Strict investment criteria to focus on value creation Investment framework hurdle rate build up Base WACC (post-tax) Current hurdle rate ranges 1 Core business 1 New markets/ technologies 2 Minimum value contribution for new projects Renewables 5% 8% 5% 14% Risk premium Technology risk Construction risk Regulatory risk G&I 5% 7% 5% 7% Country risk premium Project specific hurdle rate Project WACC (unlevered, post-tax) 1 Hurdle rates under regular review in order to reflect latest market conditions. 2 The core business encompasses the conventional retail electricity and gas business as well as the activities in the Grid & Infrastructure division and the construction of renewable energy assets (wind farms and hydro power stations) in our core markets in Europe. We have different return criteria for new energy service products (referred to as the Energy+ business) in the retail business and for new technologies and/or markets. Retail 6% 9% 5% 10% (Energy+) innogy SE August

23 APPENDIX Renewables projects under construction 1 Project Country Technology Installed capacity (MW) innogy share Pro rata capacity (MW) Planned COD Dromadda Beg IRL Onshore % 10 Q FiT Mynydd Y Gwair UK Onshore % 33 Q CfD Clocaenog Forest UK Onshore % 96 Q CfD Bad á Cheò UK Onshore % 27 Q CfD Total Support scheme 1 Construction pipeline as of 30 June 2018 Figures may not add up due to rounding differences. innogy SE August

24 APPENDIX Renewables capacity overview (accounting view) As of 30 June 2018 Megawatt (MW) Onshore Offshore Hydro Biomass Biogas Solar PV Total Germany ,316 United Kingdom ,110 Spain Netherlands Poland Italy France Portugal Belgium Total 2, ,571 Note: Rounding differences may occur. innogy SE August

25 APPENDIX Renewables capacity overview (pro-rata view) As of 30 June 2018 Megawatt (MW) Onshore Offshore Hydro Biomass Biogas Solar PV Total Germany ,252 United Kingdom ,000 Spain Netherlands Poland Italy France Portugal Belgium Total 1,900 1, ,438 Note: Rounding differences may occur. 1 Does not include 88.2 MW capacity of Galloper as COD of full capacity is expected for August 2018 innogy SE August

26 APPENDIX Renewables average revenues 2017 Average revenues in /MWh 1 Megawatt (MW) Onshore Offshore Hydro Total Germany United Kingdom Spain Netherlands Poland Italy France Portugal Accounting view. Data as of innogy SE August

27 APPENDIX Renewables other operational KPIs Accounting view Wind Onshore Germany 17% 18% United Kingdom 25% 26% Spain 25% 26% Netherlands 18% 27% Poland 25% 28% Italy 22% 21% Portugal - - Average load factor 22% 23% Load factor Wind Offshore Germany 35% 37% United Kingdom 38% 41% Belgium - Average load factor 37% 39% Hydro Germany 50% 44% United Kingdom 24% 26% Spain 20% 10% France 33% 28% Portugal 39% 15% Average load factor 44% 38% Production volumes (GWh) Wind Onshore Wind Offshore Hydro Germany 851 1,013 Germany Germany 1,659 1,454 United Kingdom United Kingdom 2,098 2,242 United Kingdom Spain 980 1,017 Belgium - - Spain Netherlands France Poland Portugal Italy Portugal - - Total production volume 3,607 4,214 Total production volume 3,015 3,187 Total production volume 2,040 1,796 innogy SE August 2018 Note: excluding Zephyr portfolio. 26

28 APPENDIX Grid & Infrastructure Germany Breakdown of earnings billion FY 2017 Regulated asset base Pro-forma WACC 2 6.1% Return on RAB 0.6 Other grid earnings (regulated / non-regulated) D&A (IFRS) RAB of fully consolidated businesses Pro-forma WACC based on 2010/2011 regulatory cost of equity and debt and blended capital structure Gain on grid sales, non-regulated grid services, operational efficiencies, additional regulatory compensation Regulatory acknowledged depreciation vs. IFRS Grid Germany EBITDA 1.6 Participations Mainly participations and JVs with municipal utilities Non-grid business / other 0.2 Gas storage, water business, TelCo and other Total G&I Germany EBITDA 2.1 Note: numbers may not add up due to rounding differences. 1 Numbers based on latest notification by regulator. RAB stated excluding pro-rata share of RAB from participations that are not fully consolidated. 2 Pre-tax WACC (before corporate and trade tax) calculated based on several assumptions, including 60/40% debt/equity ratio of regulatory assets and 50/50% split new/old assets. Return on regulatory equity for new/old assets of 9.05% nominal/7.14% real (before corporate tax, after trade tax). Cost of debt of ~4% pre-tax. 3 Operating income from investments, to a large extent comprising of at-equity income from investments, included within EBITDA. innogy SE August

29 APPENDIX Grid & Infrastructure Eastern Europe Breakdown of earnings billion FY 2017 Regulated asset base Pro-forma WACC 2 6.9% Return on RAB 0.3 Other grid earnings (regulated / non-regulated) D&A (IFRS) RAB of fully consolidated grid businesses in CZ, HU, PL & SK Pro-forma WACC based on weighted average implied WACCs for all 4 countries Non-regulated grid services, operational efficiencies, volume corrections Regulatory acknowledged depreciation vs. IFRS Grid East EBITDA 0.7 Participations Participations: ZOV (Zagreb waste water business) Non-grid business / other 0.1 Gas storage business in CZ Total G&I East EBITDA 0.8 Note: numbers may not add up due to rounding differences. 1 Generally, RABs from different regulatory regimes are not directly comparable due to significant methodological differences (e.g. regulatory periods, regulatory depreciation periods). Also, throughout this presentation, RABs are always stated excluding pro-rata share of RAB from participations that are not fully consolidated. Numbers based on latest notification by regulator or based on calculations in latest filings with regulators. RAB values reflect RABs relevant for the tariff in the respective year. 2 Pro-forma RAB-weighted average WACC of CZ, HU, PL and SK. 3 Income from participations, to a large extent comprising of at-equity income from investments, included within G&I EBITDA. innogy SE August

30 APPENDIX Retail B2C customer number development Total B2C customers ( 000) Germany Eastern Europe NL/BE UK 22,387 (1.1)% (1.4)% 22,155 21,850 4,727 4,612 4,376 4,349 4,277 4,221 thereof: electricity customers ( 000) 15,789 (1.0)% 15,631 (0.9)% 15,496 2,799 2,737 2,605 2,336 2,297 2,269 4,091 4,105 4,128 6,563 6,492 6, Dec Mar Jun 18 5,502 5,522 5,516 thereof: gas customers ( 000) 6,608 (1.3)% 6,525 (2.6)% 6,354 1,929 1,876 1,770 7,819 7,744 7, Dec Mar Jun 18 2,012 1,980 1,952 1,411 1,418 1,388 1,256 1,251 1, Dec Mar Jun 18 innogy SE August

31 APPENDIX Overview of senior bonds and loans As of 30 June 2018, by maturity Senior bonds Loans from RWE 5 Issuer innogy SE August 2018 Notional amount (LCY 1, million) Carrying amount (in EUR million) Coupon Maturity innogy Finance B.V. EUR % Jul 18 innogy Finance B.V. EUR 1,000 1, % Jan 19 innogy Finance B.V. EUR % Jan 20 innogy Finance B.V. GBP % Apr 21 innogy Finance B.V. EUR 1,000 1, % Aug 21 innogy Finance B.V. GBP % Jul 22 innogy Finance B.V. EUR % Nov 22 innogy Finance B.V. GBP % Dec 23 innogy Finance B.V. EUR % Jan 24 innogy Finance B.V. EUR % Apr 25 innogy Finance B.V. EUR % May 26 innogy Finance B.V. EUR % Oct 27 innogy Finance B.V. EUR 1, % Jul 29 innogy Finance B.V. GBP % Jun 30 innogy Finance B.V. EUR % Feb 33 innogy SE USD % Apr 33 innogy Finance B.V. GBP % Jan 34 innogy SE EUR % Oct 37 innogy Finance B.V. GBP 1,000 1, % Jul 39 innogy SE JPY 20, % 3 Feb 40 innogy SE EUR % Dec 42 innogy SE EUR % Feb 43 Total 14, % 4 thereof: step-up effect 708 Instrument Notional amount (LCY 1, million) Carrying amount (in EUR million) Note: Rounding differences may occur. 1 Local currency. 2 Swapped in Euro: JPY20,000m in EUR159m. 3 Interest rate after swap in Euro. 4 Notional-weighted average coupon. 5 One additional loan of 18m not included. 6 Related to hybrids issued by RWE. 30 Coupon Maturity Intercompany loan6 EUR % Mar 19 Intercompany loan6 EUR % Oct 20 Total 1, % 4 Loans from EIB Instrument Notional amount (LCY 1, million) Carrying amount (in EUR million) Coupon Maturity EIB loan EUR % Oct 20 EIB loan GBP % Feb 23 Total 1, % 4 thereof: step-up effect 55

32 APPENDIX IR contacts Tobias Harburg T tobias.harburg@innogy.com Verena Nicolaus-Kronenberg T verena.nicolaus-kronenberg@innogy.com Holger Perlwitz Fixed Income T holger.perlwitz@innogy.com Britta Wöhner T britta.woehner@innogy.com Martin Jäger T martin.jaeger@innogy.com innogy SE August 2018 Sandra Schuck T sandra.schuck@innogy.com 31

33 APPENDIX Financial calendar 13/11/2018 9M results /03/2019 Annual report /04/2019 Annual General Meeting /05/2019 Q1 results /08/2019 H1 results 2019 innogy SE August