2016 10.19 Future EON Equity Story Backup
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Backup 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. 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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. Agenda 1. Group overview Strategic partnership Enerjisa PreussenElektra 2. Financials 3. Core activities Energy Networks Customer Solutions Renewables 4. IR Calendar and contacts New segment reporting starting Q2 Reporting structure until Q1 2016 Reporting structure as of Q2 2016 Germany Generation Energy Sweden Networks Renewables CEE & Turkey Germany Global Commodities Customer Solutions UK Exploration & Production Other Renewables Germany Corp. Functions/ Other EU Countries Other Preussen Discontinued operations Non-EU Countries as of AGM approval Elektra At equity post registration of spin-off & execution of GM / Consolidation Uniper deconsolidation agreement 5 Agenda 1. Group overview 50% 50% Strategic partnership Enerjisa PreussenElektra 2. Financials 3. Core activities Energy Networks Customer Solutions Renewables 4. IR Calendar and contacts Enerjisa – Market environment Favorable growth environment Strong macro-economic indicators 2006-2014 2015-2035 Annual Real GDP Growth 3,4% 3,5% 1,7% 0,5% CAGR CAGR Population 17,0% growth 10,5% 2,4% 2,3% Growth Growth Electricity 4,7% 4,1% consumption 0,5% growth -0,6% CAGR CAGR Turkey EU28 Source: IHS, EIA 7 Enerjisa – Market environment Supportive regulatory environment Energy Networks Renewables Customer Solutions Regulatory WACC (Pre-tax, local Feed-in-tariffs 2015 Evolution of market liberalization currency)1 USD denominated (USD/ MWh) Eligibility threshold (MWh p.a.) 11,9% 73 73 25,0 6.1-8.0% 5,9% 4,5% Turkey CEE Germany 2 Sweden 3 5,0 4,5 4,0 3,6 Wind Hydro 4 2012 2013 2014 2015 2016 Country risk premia vs. Germany Eligible Non-eligible • Stable cash flows from Regulatory incentive framework USD-denominated feed-in-tariffs • Eligibility limit for regulated tariff • Return on RAB: (10years) consistently reduced, but, ~90% of • Opex outperformance: residential customer accounts still • Theft & loss allowance • Yearly flexibility to opt for either within threshold outperformance: feed-in-tariffs or market tariffs • Financing outperformance: • Full liberalization expected, • Higher feed-in-tariff if power plant opening up new market and profit Improvement through recent parts were manufactured in Turkey pools regulatory review • WACC: 9.97% to 11.91% • Increased allowed Capex and T&L performance Source : Euromonitor, EMRA, E&Y, IHS Source: EMRA Source: EMRA 1. Turkey and Sweden: Real return; CEE, Germany: Nominal return 2. Pro-forma calculated. 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. 8 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 4.5%; Current WACC of 4.5% challenged in court by network operators; Average inflation expectation for Sweden amount to 1.6% 4. Applicable to ~95% of the hydro installed capacity Enerjisa Recognized market leader with diversified portfolio Energy Customer Generation/ Networks Solutions Renewables4 Assets and Operating 207,000 km 9 m customer accounts, activities grid within three core mainly in Istanbul, Ankara regions of Turkey: and Adana regions Under construction1 • Istanbul: Urban Hydro 1.1 GW growth engine, mega 1.3 GW city, financial hub • Ankara: Capital, the Wind political heart 0.2 GW • Adana: high-growth Gas industrial center, young 1.1 GW and booming population Distribution Energy Supplier Market Generator #1 Network Operator #1 by supplied energy #1 position by installed capacity2 by grid length (TWh) EBITDA 0.9 TL bn (47% of total) 0.2 TL bn (13% of total) 0.8 TL bn (40% of total)4 5 20153 1. Capacity under construction includes CCGT, lignite and hydro plants 2. Excluding state-owned EUAS 3. Unadjusted as per Enerjisa financial statements 4. Including trading result 9 5. Including optimization Enerjisa Enerjisa has been developed into a state-of-the-art company Enerjisa – track record Performance improvements of privatized EBITDA – 2011A-2015A1 distribution assets TL bn • New leadership and more efficient management structure • Streamlined organization 1.9 • Stakeholder management focus CAGR: 39% Capability transfer • Technical support for project development and execution 0.8 • Support for commercial and financial processes 0.5 0.5 0.5 Operational improvements • SAP