E.ON Roadshow Presentation - Delivering step by step · PDF filePotential overachievement of...

E.ON Delivering step by step

Key investment highlights

Highly stable business profile with ~2/3 of EBITDA from regulated, long-term contracted businesses1

Well positioned to profit from megatrends digitization, decentralization, e-mobility, renewables

Deleveraging: from 5.3x Net Debt/EBITDA (FY 2016) to ~4.0x Net Debt/EBITDA (mid-term target)

Potential overachievement of deleveraging targets offers potential room for profitable growth and dividends

Attractive dividend payout ratio (minimum of 65%2)

Rigid focus on capital return and discipline

2 1. Including Energy Networks and a portion of Renewables and Heat 2. Based on Adjusted Net Income, from FY 2018 (payable in 2019) onwards

Highly stable business profile

Business profile

High share of regulated and long-term contracted earnings (~2/3 of EBITDA )

Predominantly quasi-regulated or contracted earnings in Renewables and heat operations 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

FY 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

51%

15%

12%

21%

Energy Networks

Customer Solutions

PreussenElektra (non-core)

Renewables

€3.7bn

3

E.ON at a glance

4

Key financials FY ‘16

Adjusted EBIT €bn

Adjusted net income €bn

0.9

3.1

4

Renewables Customer Solutions

Energy Networks

€1.7bn EBIT (FY 2016) €0.8bn EBIT (FY2016) €0.4bn EBIT (FY2016)

~€19bn Regulated asset base mainly in Germany and

Sweden

>22m Customers across Europe with strong cash

flow generation

New solutions: operator of largest e-mobility charging

network in Denmark

>6GW Renewable capacities delivered across Europe and

the US

3 GW onshore pipeline to drive “growth” in the US

57%1 28%1

15%1

1. FY2016 EBIT adjusted for non operating effects, representation in pie charts excluding Corporate Functions/ Other

Delivering step by step…

Potential over-achievement of deleveraging could create balance sheet head room

Economic net debt € bn

~5.3x EBITDA

FY 2016

19.7

> 4.0x EBITDA

26.3

mid term target

~4.0x EBITDA

potential balance sheet head room

post deleveraging

9M 2017

Debt Reduction

6

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

~3.8

~1.0

~1.0

~1.0

1

1. Based on share price of €22 (Fortum’s bid for E.ON’s Uniper Shares), 2. Nordstream 1 stake, 3. Nuclear Fuel Tax, 4. Accelerated Book Build

Raising payout and striving for dividend growth

Payout ratios by E.ON and peers

Dividend policy:

• Raising payout ratio to a minimum of 65%2

• Striving for payout ratio in line with peers

• Specification of exact range with FY2017

results

• Targeting absolute dividend growth (base year

2017)

• Strong alignment of management and investors

through E.ON Focus

7

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%

Capex budget under review

Medium-term – Gross capex

Strict focus on capital discipline across all business units

CAPEX budget for the mid-term under review

Update with FY17 results

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

8

RAB growth: potential for higher replacement capex on top of continuing network extensions

Energy Networks: Multi-decade growth

9

>2020 2011 2016

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

Mega trends support multi decade growth

Mega trends driving multi decade growth

Emergence of bi-directional flows as opposed to the purely one-directional flows in the past

Higher complexity of asset management, asset operations and asset optimization

Renewables build out

Majority of renewables connected to the distribution networks (instead of the transmission networks)

Increasing role of distribution system operators (DSOs) vs. the transmission system operators (TSOs) for overall system optimization

Smart meter roll-out

Sector coupling

Electrification of e.g. heating, cooling and transport via heat pumps and electric cars

DSO is in a preferred role enabling a system-optimal use since all this equipment is connected to the DSO networks

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 10

€130m

Heat contributes ~20% of Customer Solutions EBIT

ROCE: >10%

Order intake to pick up significantly

2016 2015 2017

>€1bn

1. TCV: Total contract value

Renewables: Risk & return focus

Highlights

5.3 GW Operated capacity1

4.6 GW Owned capacity2

1.1 GW Offshore capacity

3.5 GW Onshore + PV capacity 1. Operated sites, where E.ON is the operator, regardless the ownership share, 2. Pro rata

2.1 GW

3.2 GW

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

11

Embedding operational excellence and establishing a strong performance culture: the Phoenix project

Scope Targets

4.1

Costs in scope of Phoenix

1.2

Total E.ON

5.3

Controllable cost1 baseline

€ bn • Phoenix target: €400 m EBIT contribution p.a. from 2018 onwards

• About €300 m predominantly from central overhead & support functions

• Restructuring of pension plans & other measures deliver ~€100 m

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.

Performance Culture to be sustainably embedded across all functions

• Focus on operational excellence • Improve customer centricity • Digitization to improve processes and customer

experiences

Phoenix well on track

H1 2017

~€30m ~€30m

€400m

Total Q3 2017 Q4 2017

~€40m

2018

~€300m

Beyond Phoenix

12

Outlook 2017 confirmed

EBIT1

Adj. Net Income1

Outlook 2017

1. Adjusted for non operating effects

€1.2-1.45 bn

Effects for the remainder of 2017

13

– Lower hedging prices

– Additional depreciation of asset retirement costs

Energy Networks

Customer Solutions

Renewables

+ Regulatory effects (e.g. pensions), lower maintenance costs

+ Tariff increase in Sweden

+ Positive development in CEE

+ Price increases in Germany & UK, focus on efficiency

– Competitive dynamics in UK

+ Normalizing wind yields

€2.8-3.1 bn

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

14

• 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

Segments

Energy Networks at a glance

16

Highlights EBIT1 in m€

Further key financials1 in m€

70%

866

2.601

1.923

864

2.973

2.135

Economic Investments

OCFbit3 EBITDA

9M 2017 9M 2016

Germany

+ Regulatory benefits

+ Lower maintenance cost

Sweden + Tariff increases

CEE & Turkey

+ Positive effects in Czech Republic, Hungary

– One-off effect (book loss on hydro power plant divestment), low hydro flows and FX in Turkey

288 345

638788

284270

+18%

CEE & Turkey

Sweden

Germany

9M 2017

1.417

9M 2016

1.196

1. Adjusted for non operating effects 2. Does only cover the three core businesses, Energy Networks, Customer Solutions and Renewables 3. Operating cash flow before interest and taxes.

EBIT 9M 20171,2

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

AAA

17

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%

18

Customer Solutions at a glance



17%

392

1.140

763

350

732584

EBITDA Economic Investments

OCFbit3

9M 2016 9M 2017

177

227

144

116

144

93

9M 2017

Germany

UK

Other

353

-36%

548

9M 2016


Germany

+ Price increase in Q2 2017

– Lower power margins due to increased TSO fees

– Lower gas margin due to price decrease in Nov 2016

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

EBIT 9M 20171, 2

19

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 20

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

21

Customer Solutions: Financial highlights

Energy sales

Adjusted EBIT1 by business pillars

Heat 2016

2016

2016

~0.71

0.8

0.3 0.3

0.1

Total Adj. EBIT

Energy sales financials

1.3 1.2 2016

Gross Margin

1.0 2016 0.8

OPEX2

UK Continental Europe

€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 22

Renewables at a glance

23



12%

637525584

961

540508


OCFbit3 EBITDA

9M 2017 9M 2016

243186

66

62

-20%

Offshore/Other

Onshore/Solar

9M 2017

248

9M 2016

309 Offshore

– Arkona book gain in Q2 2016

– Low wind conditions in the UK

Onshore

+ COD of Colbeck’s Corner in May 2016

+ Higher production of US wind farms & better wind conditions in Europe


EBIT 9M 20171, 2

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

2.1 GW

3.2 GW

24

Segments: PreussenElektra

Highlights

– Lower volumes due to Brokdorf outage – Lower achieved power prices

– Additional depreciation of asset retirement costs (ARC)

+ End of nuclear fuel tax payments in 2016 + One-off effects in relation to court case & KFK

solution

Hedged Prices Germany (€/MWh) as of 30 Sept 2017

1. Adjusted for non operating effects 2.Operating cash flow before interest and taxes.

25

E.ON 9M 2017 results

32

28

27

37

2019

2018

2017

2016

94%

62%

100%

100%

EBIT1 in m€ 357345

+3%

Germany

9M 2017 9M 2016


12

259

410

10

497


OCFbit2

-7.069

EBITDA

9M 2017 9M 2016

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 26

Nuclear decommissioning is no limitation for dividends or capex

€ bn

EBITDA1

~0.4-0.6

Utilization of nuclear provisions

OCF bIT

1. Adjusted for non operating effects 27

• 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

EBITDA1 OCF bIT

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

Discount rates for nuclear provisions

Build up of provisions status quo

t+100 t+1 t+2 t+3

Accretion Storage Decommissioning

Real discount rate: +0.9%

Build up of provisions post KFK1

t+n t0 t+1 t+2

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 28

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)

7.8

Premium1 Provisions Provision interest cost

Payment Amount1

~10

2.0 0.2

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%

FY 2016 FY 2015 Net accr. charge

9M 2016

9.7

Increase of provisions

9.4

0.3 1.5

11.2 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

2018 2016 2021 2019

1.0

2017 2020 2022

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

29

Financials

9M 2017 Results

9M 2017 Results

8th November 2017

Solid 9M 2017: well on track to achieve FY 2017 target E.ON 9M 2017 results

Solid EBIT development: + 13% Q3 2017 vs Q3 2016

Adj. Net Income up ~50% YoY

Economic Net Debt reduced to €19.7 bn (vs. €21.5 bn in H1 2017)

FY 17 guidance confirmed: EBIT €2.8-3.1 bn, Adj. Net Income €1.2-1.45 bn

Highlights

32

641

965

Adj. Net Income EBITDA EBIT

3,540

2,117 2,311

3,640

9M 2017 9M 2016

Key Financials1

€ m


– Lower prices & volumes, additional depreciation of asset retirement costs (ARC)

+ End of nuclear fuel tax, one-off effects in relation to court case & KFK solution

+ Higher regulated revenues in Germany and CEE

+ Tariff increases in Sweden

+ Price increases in Germany and UK – Higher costs (e.g. ECO2), PPM3 cap,

competitive dynamics in UK, Energy procurement crisis in Romania (Q1 2017)

– Arkona book gain in Q2 2016 (offshore)

Catch-up continues in Q3 2017

12

221

2.282 9M 2016 w/o div. operations

-195

Energy Networks

-61

Customer Solutions

-142

Renewables

2.117

Corp. Functions & Other,

Consolidation

9M 2017

165

EBIT1 9M 2017 vs. 9M 2016 € m

1. Adjusted for non operating effects, 2. Energy Company Obligation (ECO) 3. Prepayment Meter (PPM)

33


Energy Networks

Customer Solutions

Renewables

Preussen Elektra

Key 9M Effects

Adjusted Net Income supported by lower interest accretion and taxes

9M 2017 € m

~€ 55m decline yoy mainly due to lower interest income

1. Adjusted for non operating effects, 2. Without interest accretion of nuclear provisions 34


EPS (€ per share)

965

Minorities -191

Income Taxes -386

Adjusted Net Income1

Profit before Taxes1 1.542

Other interest expenses -53

Interest on fin. assets/

liabilities2

-522

Group EBIT1 2.117

Tax rate of 25% (vs. 32% in 9M 2016)

~€600m improvement yoy mainly due to significant lower interest accretion of nuclear provisions and other interest expenses

Adjusted net income up 51% over prior year

€0.46

END improves significantly due to high cash flow and refund of nuclear fuel tax

+6.6

END 9M 2017

-19.7

-4.9

-3.6

-11.2

Others

0.6

AROs6

10.2

Pensions

0.4

Divestments

0.2

Dividend

-0.5

ABB5

1.35

Investments

-2.2

KFK payment to government

fund4

-10.3

Cash impact of NFT refund3

3.4

OCF2

3.5

END FY 2016

-26.3 -0.9

-4.0

-21.4

€ bn

END1 9M 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. OCF adjusted for KFK and NFT effects, 3. Nuclear Fuel Tax (NFT) including positive interest income effect, before taxes and payment to minorities 4. Kommission zur Überprüfung der Finanzierung des Kernenergieausstiegs (KFK), 5. Accelerated Book Build (ABB), 6. Includes transfer of nuclear storage liabilities to government fund

AROs Pension provisions Net financial position

35


Operating Cash Flow: -3.3

Appendix Financial Details

37

E.ON 9M 2017 results Appendix: Table of Contents

40 Energy Networks 41

Customer Solution

42 Renewables 43 Preussen Elektra

38 Financial Highlights 39

Cash Conversion

44 Financial Appendix

Financial Highlights

€m 9M 2016 9M 2017 % YoY

Sales 28,198 27,937 -1

EBITDA 1 3,640 3,540 -3

EBIT 1 2,311 2,117 -8

Adjusted net income 1 641 965 +51

OCF bIT 3,827 -3,091 -181

Investments 1,981 2,222 +12

Economic net debt ² 26,320 19,699 -25

38


EBIT • Energy Networks: +18% YoY.

Higher regulated revenues in Germany and CEE and tariff increases in Sweden

• Customer Solutions: -36% YoY. Lower margins and increased competitors dynamic

• Renewables: -20% YoY. Arkona book gain in Q2 2016 and lower wind conditions

OCF bIT • Cash provided by operating

activities €6.3 bn below prior-year level

• Key drivers: €10.3 bn payment to nuclear fund (KFK3) (-) and €3.4 bn4 nuclear fuel tax (NFT) refund (+)

Adj. Net Income • €324 m above last years

9M result • Improvement YoY mainly

driven by significant lower interest accretion of nuclear provisions, other interest expenses and a tax rate of 25% (vs. 32% in 9M 2016)

1. Adjusted for non operating effects, 2. Economic net debt as per 31 Dec 2016 and 30 Sept 2017; 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 3. Kommission zur Überprüfung der Finanzierung des Kernenergieausstiegs (KFK) 4. Nuclear Fuel Tax (NFT) including positive interest income effect, before taxes and payment to minorities

Investments • Energy Networks: €864 m

(vs. €866 m YoY) • Customer Solutions: €350

m (vs. €392 m YoY) • Renewables: €961 m

(vs. €637 m YoY )

Capex

-2.2

OCF

3.5

Tax Payments

-0.3

Interest Payments

-0.3

OCF bIT4

4.2

Changes in WC

0.9

Cash Adjustments3

-0.2

EBITDA1

3.5

+120%

FCF

1.3

High cash conversion rate2 of 120% supported by strong operating cash flow

9M 2017 € bn

1. Adjusted for non operating effects, 2. Cash Conversion Rate: OCF bIT / EBITDA, adjusted for NFT and KFK effects, 3. Net non cash effective EBITDA items incl. provision utilizations, 4. Adjusted for KFK and NFT effects

39


Highlights

Segments: Energy Networks

• Germany:

+ Regulatory effects

+ Lower maintenance costs

• Sweden:

+ Tariff increases

• CEE & Turkey:

+ Tariff increases in Hungary

+ Higher allowed revenues in Czech Republic & Romania

Energy Networks

284

288 345

270

788

+18%

CEE & Turkey

Sweden

Germany

9M 2017

1,417

9M 2016

1,196

638


EBIT1 € m

€m

9M 2016 9M 2017 % YoY 9M 2016 9M 2017 % YoY 9M 2016 9M 2017 % YoY 9M 2016 9M 2017 % YoY

Revenue 10,288 10,797 +5 736 831 +13 1,183 1,239 +5 12,207 12,867 +5

EBITDA 1 1,084 1,217 +12 411 467 +14 428 451 +5 1,923 2,135 +11

EBIT 1 638 788 +24 288 345 +20 270 284 +5 1,196 1,417 +18

thereof Equity-method earnings 54 60 +11 0 0 - 47 -7 -115 101 53 -48

OCFbIT 1,809 2,106 +16 398 443 +11 394 424 +8 2,601 2,973 +14

Investments 517 396 -23 180 228 +27 169 240 +42 866 864 -0

TotalGermany Sweden CEE & Turkey

40

E.ON 9M 2017 results D

etai

ls

Segments: Customer Solutions

Customer Solutions Highlights

• Germany:

– Lower power margins due to increased TSO2 fees (Q1 2017)

– Lower gas margin due to price decrease in Nov 2016

+ Price increases as per Q2 2017

• UK:

– Higher ECO3 costs & FX weakening

– Price cap on PPM4 customers

– Competitive dynamics

• Other:

– Energy procurement crisis in Romania in Q1 2017

177

227

144

144

93

116

-36%

Other

UK

Germany

9M 2017

353

9M 2016

548

EBIT1 € m

1. Adjusted for non operating effects 2. Transmission system operator (TSO) 3. Energy Company Obligation (ECO) 4. Prepayment meter (PPM)

€m

9M 2016 9M 2017 % YoY 9M 2016 9M 2017 % YoY 9M 2016 9M 2017 % YoY 9M 2016 9M 2017 % YoY

Revenue 5,526 5,424 -2 5,676 5,083 -10 4,877 4,972 +2 16,079 15,479 -4

EBITDA 1 192 147 -23 297 218 -27 274 219 -20 763 584 -23

EBIT 1 144 93 -35 227 144 -37 177 116 -34 548 353 -36

thereof Equity-method earnings 0 0 - 0 0 - 8 11 +38 8 11 +38

OCFbIT 352 226 -36 283 229 -19 505 277 -45 1,140 732 -36

Investments 47 42 -11 158 142 -10 187 166 -11 392 350 -11

TotalUKGermany Other

41


etai

ls

• Offshore:

– Arkona book gain in Q2 2016

– Lower wind conditions in UK, FX (GBP) weakening

• Onshore:

+ COD of Colbeck’s Corner in May 2016

+ Higher production of US wind farms

– Lower wind conditions in Europe (esp. Italy & UK)

Segments: Renewables

Renewables Highlights

243186

6266

-20%

Offshore/Other

Onshore/Solar

9M 2017

248

9M 2016

309

EBIT1 € m


€m

9M 2016 9M 2017 % YoY 9M 2016 9M 2017 % YoY 9M 2016 9M 2017 % YoY

Revenue 567 691 +22 455 439 -4 1,022 1,130 +11

EBITDA 1 229 209 -9 355 299 -16 584 508 -13

EBIT 1 66 62 -6 243 186 -23 309 248 -20

thereof Equity-method earnings 11 18 +64

OCFbit 525 540 +3

Investments 637 961 +51

Onshore Wind / Solar Offshore Wind / Others Total

42


etai

ls

Segments: PreussenElektra

PreussenElektra Highlights

357345

+3%

9M 2017 9M 2016

– Lower volumes due to Brokdorf outage

– Lower achieved power prices

– Additional depreciation of asset retirement costs (ARC)

+ End of nuclear fuel tax payments in 2016

+ One-off effects in relation to court case & KFK solution

Hedged Prices Germany (€/MWh) as of 30 Sept 2017

EBIT1 € m


€m

9M 2016 9M 2017 % YoY

Revenue 1,068 1,230 +15

EBITDA 1 410 497 +21

EBIT 1 345 357 +3

thereof Equity-method earnings 50 44 -12

OCFbIT 259 -7,069 -2,829

Investments 12 10 -17

PreussenElektra

43


32

28

27

37

2019

2018

2017

2016

94%

62%

100%

Det

ails

100%

Adjusted Net Income

€m 9M 2016 9M 2017 % YoY

EBITDA 1 3,640 3,540 -3

Depreciation/amortization -1,329 -1,423 -7

EBIT 1 2,311 2,117 -8

Economic interest expense (net) -1,118 -575 +49

EBT 1 1,193 1,542 +29

Income Taxes on EBT 1 -387 -386 +0

% of EBT 1 -32% -25% -

Non-controlling interests -165 -191 -16

Adjusted net income 1 641 965 +51


44


Economic interest expense (net) • Improvement mainly driven

by significant lower interest accretion of nuclear provisions and other interest expenses

Tax rate • Tax rate of 25% (vs. 32%

in 9M 2016)

Reconciliation of Adj. EBIT to IFRS Net Income

€m 9M 2016 9M 2017 % YoY

EBITDA 1 3,640 3,540 -3

Depreciation/Amortization/Impairments -1,329 -1,423 -7

EBIT 1 2,311 2,117 -8

Economic interest expense (net) -1,118 -575 +49

Net book gains 1 288 n/a

Restructuring -221 -173 +22

Mark-to-market valuation of derivatives 768 -453 -159

Impairments (net) -44 5 +111

Other non-operating earnings -79 3,298 n/a

Income/Loss from continuing operations before income taxes 1,618 4,507 +179

Income taxes -624 -604 +3

Income/loss from discontinued operations, net -10,293 0 +100

Non-controlling interests -5,351 197 +104

Net income/loss attributable to shareholders of E.ON SE -3,948 3,706 +194



45

Cash effective investments by unit


€m 9M 2016 9M 2017 % YoY

Energy Networks 866 864 -0

Customer Solutions 392 350 -11

Renewables 637 961 +51

Corporate Functions & Other 78 42 -46

Consolidation -4 -5 -25

PreussenElektra 12 10 -17

Investments 1,981 2,222 +12


46

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


47

€m 31 Dec 2016 30 June 2017 30 Sept 2017

Liquid funds 8,573 14,252 5,450

Non-current securities 4,327 3,850 3,801

Financial liabilities -14,227 -14,691 -14,304

Adjustment FX hedging ² 390 311 158

Net financial position -937 3,722 -4,895

Provisions for pensions -4,009 -3,748 -3,586

Asset retirement obligations -21,374 -21,459 -11,218

Economic net debt -26,320 -21,485 -19,699

Economic interest expense (net)

€m 9M 2016 9M 2017 Difference

(in € m)

Interest from financial assets/liabilities -467 -522 -55

Interest cost from provisions for pensions and similar provisions -64 -61 +2

Accretion of provisions for retirement obligation and similar provisions -647 -49 +597

Construction period interests¹ 29 29 +0

Others 31 29 -2

net interest result -1,118 -575 +543

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%)

48


Financial Liabilities

Split Financial Liabilities

€ bn

30 Sept

2017

Bonds -12.5

in EUR -5.7

in GBP -3.9

in USD -2.5

in JPY -0.2

in other denominations -0.2

Promissory notes -0.4

Commercial papers 0.0

Other liabilities -1.4

Total -14.3

49


2018

1.1 1.4

2019

1.8

≥2025

4.8

0.6

2024

0.4

2023 2022

0.8

2020

0.1

2021 2017

2.1

GBP EUR USD Other YEN

Maturity profile (as of end 9M 2017)1

€ 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)

Appendix Contacts, Calendar & Disclaimer

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]

Martina Burger T +49 (201) 184 28 07

Manager Investor Relations [email protected]

Dr. Stephan Schönefuß T +49 (201) 184 28 22


51

Andreas Thielen T +49 (201) 184 28 15


mailto:[email protected]




Financial calendar & important links

Financial calendar

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

November 14, 2018 Interim Report III: January – September 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

52

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, hold or dispose of 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

53

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