Growth Focus Discipline
Creating the future of energy
http://www.energyfortomorrow.eu/ December 2019 Creating the future of energy
• Focus: Europe’s first energy player with exclusive downstream focus • Unique downstream footprint: RAB and customer numbers rise >60% • Earnings quality: network EBIT share rises significantly • Strong synergies: fading nuclear earnings overcompensated by €600-800m net synergies • Attractive dividends: commitment to deliver annual dividend per share growth • Solid capital structure: high commitment to strong BBB rating • Limited cash impact: acquisition of RWE‘s 76.8% in innogy via asset exchange
1. Bloomberg/company data 2. RABs from different regulatory regimes are not directly comparable due to significant methodical differences. 2 Creating two focused energy companies
Previous structure ~77% E.ON innogy RWE
Target structure
Future E.ON 16.67% RWE
3 Unique downstream position across Europe
4 Sweden1 Energy Networks (RAB ) 3 Customer Solutions (number of customers) UK ~€4bn ~1m - ~11m
NL/BE2 CEE3,5 - ~4m ~€6bn ~11m Germany3,5 Turkey 1 1. E.ON 2018 reported, 2. innogy ~€20bn ~14m 2018 reported, 3. New E.ON ~€1bn ~10m combined 2018, 4. RABs from different regulatory regimes are not directly comparable due to significant methodical differences, 1 5. excluding remedies and innogy Southern Europe divestments (Czech grid and retail, 4 Slovakia) - ~1m Focus, scale and efficiency pre-requisite for success
Mega trends accelerate and reinforce each other Empowered customers • Future E.ON’s unique downstream positioning fully captures benefits of energy mega trends
Focus, scale and efficiency needed Digitization in New Energy World New culture & Electrification capabilities • Creating markets for customers through our products, services, technologies • “Go to” partner for politicians and regulators in designing the energy transition De- carbonization • Combining innovation power to enhance development of state-of-the-art products • Synergies improve cost position and roll-out speed • Innovative services levered on significantly higher customer number 5 On track to successfully conclude strategic transformation journey
E.ON’s guiding principles Unique strategic position Customer-led Digitization Operational Capital excellence discipline
• Focus on regulated Position of strength networks and infrastructure-like & pace- setting customer solutions • Portfolio simplification • Enhanced earnings quality: • Strong financial & operational delivery high EBIT share is regulated Transition year • Proven performance culture • Committed to annual Spin-off Uniper dividend per share growth & reset of E.ON • Balance sheet headroom 2016 2018 2020 and beyond 6 Value creation for shareholders
Potential for 12Realization of valuation premium premium 11 Renewables innogy acquisition at ~10x valuation 1011x EV/EBITDA EV/EBITDA 9 8 Instant Platform Shareholder 7 redeployment of for high value capital net synergies 6 creation (€600-800m) 5 4 3 Renewables1
1. Enterprise value (schematic) 7 Integration of innogy provides for strong synergy potential
Estimated net synergies (€ m) Synergy focus1
Corporate Functions & IT €600-800m Energy Sales & Customer Solutions ~100% Energy Networks
~55%
~25%
~5% •Strong synergy potential of €600-800m •~5,000 FTEs affected (~7% of employee base)
2019 2020 2021 2022
1. Synergy split (€ million) 8 Investor agreement with RWE ensures equal treatment of shareholders
Preamble • RWE to act purely as financial investor
Corporate • Right to nominate one Supervisory Board member Governance
Shareholder • Not allowed to increase stake above 16.67%1 structure and rights • Not allowed to sell to an E.ON competitor
9 Transaction progressing as planned
2018 2019 2020
Voluntary New Supervisory FY 2019 public takeover 1st Closing2 and Executive Board reporting and offer (PTO) 18th September at innogy level CMD ended 25th July October 25th March
Start of Announcement of integration merger squeeze out 2nd Closing2 –(a) EGM1 innogy 2nd Closing2 –(b) project intention 30th September September 4th September
Antitrust approvals Full legal integration Official filing of transaction with EU EU Antitrust approval Integration & synergies Commission on 31st January 17th September
1. Extraordinary General Meeting 2. Closing 1: E.ON becomes ≥90% shareholder in innogy, RWE becomes 16.67% shareholder in E.ON (20% capital increase); Closing 2a: Legal 10 transfer of E.ON’s renewables assets and nuclear minority participations; Closing 2b: Legal transfer of innogy’s renewables assets, Kelag participation and gas storage assets Proposed solution for npower
Detailed plan proposed for UK Customer Solutions: 1
• Migration of npower’s B2C and SME customers 1 B2C/SME B2C/SME onto E.ON UK platform B2B B2B 2• Carve-out of Industrial & Commercial (B2B) customers to secure profitable business 2 3• Restructuring of remaining npower operations B2C/SME
• Turnaround of operating performance by 2021 B2B B2B • Combined E.ON UK business to achieve EBIT of GBP at least 100m and positive free cash flow after 3 smart meter investments from 2022 onwards B2C/SME • Restructuring charges of up to GBP 500m (majority to be shown in non operating result) B2B B2B
11 Investment highlights
Starting from position of strength: Creating the future of energy
Growth Commitment to deliver annual dividend per share growth
Focus Unique downstream position with high share of regulated earnings
Renewables value crystallization and €600-800m net synergies Discipline High commitment to strong BBB rating
12 Growth Focus Discipline
Creating the future of energy
9M 2019 Results November 29th, 2019 Operations fully in line with expectations
Highlights Key Financials1
€ m € bn • Intra-year EBIT recovery fully on track to reach prior 2.352 year level (3rd quarter up 20% YoY) 2.208 39,6 • First time inclusion of innogy financials (13 days of earnings, full balance sheet impact) • Economic Net Debt at €39.6 bn 1.208 1.176 (including innogy net debt) 16,6 • Full year 2019 outlook adjusted for innogy • Solution proposal for npower • Dividend proposal of €0.46/share confirmed EBIT Adj. Net Income Economic Net Debt2
9M 2018 9M 2019 1. Adjusted for non operating effects 2. Economic Net Debt as per 30 Sep 2019 and 31 Dec 2018 14 Customer Solutions – Solid customer growth outside UK
B2C customer numbersGrowing customer base outside UK B2C customer numbers • Since FY 2018 more than ~380k ~20m ~20m additional B2C customer ~19m ~19m accounts in Germany Germany ~150k • ~150k additional customer Germany ~230k accounts in other markets outside UK Other1 ~120k Other2 ~30k
UK ~430k UK ~450k
FY 2018 9M 2019 FY 2018 9M 2019
1. Incl. Sweden, Italy, Hungary, Czech Republic, Romania, Slovakia 2. Incl. Netherlands, Belgium, Poland, Hungary, Croatia, Slovenia 15 Energy Networks – Regulatory update
Germany Sweden
• General efficiency factors for 3rd regulatory • Carry-over de-risked after constructive period (gas at 0.49% and electricity at 0.9%) discussions with government have been legally challenged • Full amount of retro-actively allowed revenues • Higher regional court (OLG Düsseldorf) decided can now be collected subject to proper in favor of network operators investment level to improve security of supply • BNetzA has filed an appeal with the Federal • New allowed WACC of 2.16% (real) legally Court of Justice challenged • No final clarity whether 0.49%-level of general efficiency factor will be reduced • Direct implications for electricity expected
16 EBIT development in line with expectations
EBIT1 9M 2019 vs. 9M 2018 Key 9M Effects € m Energy • 9M 2018 2,352 Networks +/– Germany: new regulatory period power, one-off effects 2018 Energy -47 •+ Sweden: power tariff increase Networks Customer Customer -136 Solutions Solutions •– UK: regulatory effects (i.e. SVT price cap), competitive dynamics Renewables +45 -144 innogy +4 Renewables businesses2 •+ Capacity additions in Germany, UK and the US Corp. Functions •– Support scheme expiries & Other, -22 •– Deconsolidation effects Consolidation Non-Core Non-Core +12 +/•– Preussen Elektra: higher achieved prices, higher depreciation, absence of 2018 one-offs 9M 2019 2,208 •+ Turkey: oper. improvements (mainly hydro)
1. Adjusted for non operating effects 2. 13 days of innogy EBIT included 17 Adj. Net Income reflecting EBIT development
9M 2019 € m
Group EBIT1 2.208
Interest on fin. assets/ -430 Stable YoY liabilities2 Other interest -77 expenses
Profit before 1.700 Taxes1
Income Taxes -349 Tax rate for 9M 2019 at ~21%
Minorities -175
Adjusted 1.176 Net Income1 0.54 EPS3 (€ per share)
1. Adjusted for non operating effects 2. Without interest accretion of nuclear provisions 3. EPS based on weighted average number of shares outstanding 18 Q3 2019 Economic Net Debt (END) reconciliation
€ bn
Net financial position Pension provisions Asset Retirement Obligations (AROs) innogy1 -21.7 -19.8 Transaction effects: + 1.6 bn E.ON -8.8 -20.2 +1.9 +1.5 -9.1 +3.0 -0,1 -0,2 -1,2 -40.0 -0,7 -1,0 -39.6
-2,8 END OCF Q3 20192 Net Pensions4 IGY minority Deconsolidation Payment Other Alignment Other8 END H1 2019 Investments buyout RES & nuclear from RWE transaction innogy END 9M 2019 Q3 20192,3 minorities5 effects6 with E.ON END definition7 1. innogy reported economic net debt H1 2019 2. OCF/ICF including full 3rd quarter of innogy cash flows incl. divestment business 3. Net of divestments 4. Actuarial interest rates for German pensions at 1.0%, for UK pensions at 1.9% 5. Including €0.7 bn Nuclear Business (incl. “locked box”), €1.0 bn AROs (Renewables), €0.8 bn Tax Equity Liabilities (Renewables), €0.5 bn finance leases, €0.04 bn Pension Provisions 6. Payment to RWE compensating for lower than anticipated innogy dividend 7. END of innogy aligned to 19 E.ON END definition (excl. pension provision harmonization) 8. Including -€0.3 bn CTA funding Economic Net Debt outlook 2019 and beyond
Economic Net Debt 9M 2019 FY 2019 Economic Net Debt effects
AROs1 Pensions Net financial position – Restructuring Hungary (temporary effect of ~-€0.4 bn) +/–– Free Cash Flow (FCF) effects
-9,1 Reduction potential through operational Broader excellence portfolio Economic Net Debt effects 2020 and beyond -8,8 – Merger squeeze-out Sensitivity to discount rate – Integration costs changes Highly regulated + Transfer of Nordstream 1 into CTA -21,7 business mix + Transaction effects (e.g. remedy proceeds, locked-box Refinancing benefits: settlement, restructuring Hungary) €3.5 bn bonds issued @ <0.4% on average + Significant improvement of cash conversion €-39.6 bn Commitment to strong BBB rating 20 1. Asset Retirement Obligations 20 Adjustment of full year EBIT 2019 guidance
EBIT Exclusion of €3.1-3.3 bn PPA3 charge4 from EBIT & €2.9-3.1 bn Adj. Net Income
Technical adjustments2
Old guidance EBIT of E.ON RES Proportional EBIT of Alignment of New guidance FY 2019 & PEL minorities1 innogy (excl. RES, reporting practices2 FY 2019 Czech retail, Kelag & gas storage)
1. PreussenElektra assets include participations in power plants Gundremmingen C and Emsland 2. Includes alignment of E.ON and innogy reporting and accounting guidelines 21 3. Purchase Price Allocation 4. Preliminary PPA charge: 2019: ~€0.2bn, thereafter roughly €0.7bn on average FY 2019 segment guidance
Effects for the remainder of 2019 Energy Networks Renewables •+ 4Q at-equity contribution of Rampion +• Germany: new regulatory period power (20% stake) +• Sweden: power tariff increases (already implemented) innogy •+ Full quarter of innogy earnings contribution Customer Solutions •– Adjustments to E.ON reporting policies •+ Germany: impact of price adjustments •– UK: regulatory interventions (i.e. SVT cap), Non-Core higher restructuring ambitions +/–• PEL1: increased wholesale prices, higher depreciation, one-offs in 2018, purchase of production volumes
1. PreussenElektra 22 Adjustment of Adj. Net Income 2019 guidance
Adj. Net Income Dividend1 proposal of €0.46/share confirmed
€1.45-1.65 bn €1.4-1.6 bn Technical adjustments2
Old EBIT delta, Financial Additional Tax impact Minorities Additional New guidance mainly expenses innogy on higher relating to innogy guidance FY 2019 Renewables relating to interest PBT RES minorities FY 2019 vs. IGY debt expenses transferred to RWE 1. Fixed dividend per share proposal to AGM to be paid in 2020 23 Pro-forma full year 2019 EBIT guidance
~€1.6 bn €4.0-4.2 bn Exclusion of PPA charge3 from EBIT & Adj. Net Income
€2.9-3.1 bn
Old guidance EBIT of E.ON RES innogy FY Adjustments2 Pro-forma FY FY 2019 & PEL minorities1 2019 guidance 2019 guidance
1. PreussenElektra assets include participations in power plants Gundremmingen C and Emsland 2. Includes alignment of E.ON and innogy reporting and accounting guidelines 24 3. Preliminary PPA charge roughly €0.7bn on average Appendix Growth Focus Discipline
E.ON Group E.ON standalone E.ON standalone Continuous track record of delivery
Deleveraging achieved – EBIT1 vs. guidance Adj. Net Income1 vs. guidance Significant reduction of END
~€10bn €3.1bn €3.1bn €1.5bn €3.0bn €1.4bn €26.3bn €1.3- €2.8- €2.8- €1.2- €1.5bn €2.7- €3.1bn €3.0bn €1.45bn €19.2bn €3.1bn €0.9bn €16.6bn
€0.6- 5.3x €1.0bn 3.9x 3.4x
2016 20172018 20162017 2018 20162017 2018
Guidance Range
1. Adjusted for non operating effects. 27 E.ON standalone Dividend continues to grow
Dividend per share growth 2018 & 2019: Fixed Dividend Commitment to annual DPS growth
€0.462,3 €0.431,3
€0.30
€0.21 FY 2016 FY 2017 FY 2018 FY 2019 Future Dividend Dividend Dividend Dividend Dividends
1. Fixed for FY 2018 (paid in 2019) 2. Fixed for FY 2019 (paid in 2020) 3. Dividend proposals in line with existing dividend policy 28 E.ON standalone Energy Networks – Proven efficiency leadership
Regulatory review in German power networks – Performance culture in practice
All four E.ON DSOs with efficiency Individual 50% of E.ON DSOs even receive an score of 100% vs. 94% industry efficiency factor additional efficiency bonus vs. 13% average2 for industry average2
E.ON excels in efficiency benchmarking All DSOs 100% efficient1
Proof of E.ON‘s leading operational excellence General efficiency factor Cost audit
Reduction of general efficiency factor Cost audit successfully completed From 1.5% 0.9%
1. Two DSOs exceed 100% efficiency and will receive a bonus of 1% of controllable costs p.a. as additional allowed revenue 2. 204 DSOs have been included in the benchmarking process; 27 are entitled to additional super efficiency bonus 29 E.ON standalone Upgrading long-term network capex growth
Energy networks capex (€ bn)
1.9 Additional ~€100m p.a. Cautious planning for long-term capex run-rate 1.8 • Main driver is additional replacement investments 1.7 • Conservative assumptions on Renewables and E-mobility roll-out 1.6 1.4 Disciplined & Potential upsides to “new normal” level 0,8 gradual ramp-up 1,0 0,7 • Acceleration of Renewables build-out • Digital layer & fully digital equipment 0,3 • E-mobility 0,3 • Electrical heating • Smart meter 0,4 0,5
2017 2018 beyond 2020 Germany Sweden CEE "new normal"
30 E.ON standalone Accelerating power RAB growth
Germany Sweden Czech Republic
1 +30% 1 PowerPower RAB RAB (€ bn) 1,2 Power RAB (€ bn) +25% Power RAB (€ bn) +15% New growth range Targeting upper end of growth range New growth range New New +25% +20% +10% +25-30% +11% +20-25% New +15% +16% + 8-10% +8% Old Old +11% +6% Old +12%
~€8bn ~3.7 ~1.5 ~8.0 ~8.3 ~3.5 ~1.4 2017 2018 2020 2017 2018 2020 2017 2018 2020
1. Based on constant FX rates (SEK/EUR 2018: 10.26; CZK/EUR 2018: 25.65) 2. Growth includes revaluation of RAB from 2020 onwards according to new methodology (due to change in depreciation times). Effect ca. ~€0.5bn in 2020 31 E.ON standalone Investment highlights
From deleveraging to focused and disciplined growth
Deliver sustainable EPS growth and Growth committed to annual dividend per share growth
Focus Management team with strong shareholder focus
Discipline Strict capital discipline and high-performance culture
32 Growth Focus Discipline
Energy Networks E.ON standalone E.ON standalone Energy Networks
Regulated asset base 20181 Grid length (‘000 km) 1
Sweden Germany ∑ Grid length: 980 €3.7bn €10.5bn ∑ Grid length: 96 493 2 350 ~€20.0bn 51 45 138 0 CEE & Turkey Germany Sweden CEE & Turkey €5.8bn EBIT3 2018 Market share (%) Sweden ~71% of €0.5bn group core 32 27 ~€1.8bn 19 24 CEE & 12 Germany Turkey Power and gas business GermanySweden CEE & Turkey4 €0.4bn €0.9bn Power business only Power Gas
1. 100% view for Slovakia and Turkey 2. Differences may occur due to rounding 3. Adjusted for non operating effects. 4. Arithmetic average 34 E.ON standalone German business with roughly 5,400 concessions
Good track record in the past Existing concessions • The German networks business is based on long-term concessions granted by municipalities in the network area Non-concession based RAB1 • Maximum period of concession contract is 20 years ~ 30%
~ 70% Concession based RAB Expiring concessions in % of revenue cap 40% 20% 30%
5% 5%
currently <5 years 5 - 10 10 - 15 >15 years open years years TODAY 2038
1. Includes for example 110 kV grid 35 E.ON standalone Turkey with extraordinary high RAB growth
Downstream Business Market & Regulation RAB development
Established in 3 high-growth regions Constructive regulatory environment: in bn TL, nominal >2x Leading electricity network operator: − Allowed WACC for 2016-2020 regulatory period has been − 10.5 m connections 6.9 increased to 13.6% from 11.9% − 223,000 km network length 5.3 (pre-tax, real) (20% of market) − Incentives to outperform capex, 3.9 Regions opex, and theft & loss allowances High network investment due to: Istanbul Ankara − Strong power demand growth of 2016 2017 2018 2020 >3% p.a. Target to more than double − Need for significant network Adana 2016 RAB by 2020 modernization
Strongly growing market with highly attractive returns
36 E.ON standalone Major transformation in Energy Networks
Future energy network system will need to combine Energy Network player different layers of infrastructure From To Data center Energy network operator Holistic system provider EMS Platforms
VPP Smart Home Network control center
Digital layer Local grid Asset control control systems
Wifi Antenna Smart Meter Single layer Integrated energy system infrastructure (energy) Communi- cation layer Cloud Block chain Decentral, connected Physical linear network multi-layer infrastructure
More (semi-) autonomous layer Centralized system
Physical Physical local energy systems
37 E.ON standalone E.ON leading in smart grid projects
Project Acon (Again connected networks) Project Simris – Part of
Integrating Czech and Slovak electricity markets Achieving energy autarky for small local Purpose Purpose & improving quality of supply communities
Project Modernizing grid in border region between Project Swedish village Simris; micro grid successfully facts Slovakia and Czech Republic facts implemented in 2018
• Modernizing substations and 200km of power lines • Islanding capable smart micro grid solution • Large-scale rollout of smart technology for higher • 100% renewable and locally produced electricity deployment of renewable sources (e.g. PV) Battery storage and demand side response e.g. heat • Improve failure rate, maintenance-related outages pumps/water heaters Means and power losses Means • Visualization of energy flows; frequency response; • Improve effectiveness of girds and prepare for peer-to-peer market platform; Machine learning future connections, like electric vehicles and algorithms to use flexibilities batteries • Won the “Skånes vindkraftspris 2018”
38 E.ON standalone E.ON supports customers to improve their energy situation
Energie Monitor Smart Grid Hub – part of
Create transparency for municipalities of their Create customer value by increasing energy Purpose Purpose local energy situation as basis for improvements efficiency
Smart Grid Hub E.ON DSO Customer Project Co-developed with municipalities in Bavaria; Project Development of an interface to enable customer facts product launch in summer 2018 facts flexibilities; EU-funded
• Live dashboard of local energy situation e.g. renewable production, consumption, CO2 emission • Development of an interface towards small scale and autarky level customer assets e.g. charging electric heating Means • Pilot municipalities Altdorf, Furth and Means • Enabling customers to benefit from efficiency Schrobenhausen measures and optimized energy procurement costs • Increase energy awareness and understanding • Generate energy and cost savings for customers • Tracking of energy saving measures
39 E.ON standalone Operational excellence – digitization in practice
Advanced Asset Management Digital Workforce Management
Introduce a new digital scalable work Conventional approach Predictive maintenance environment for every field technician and back office Tool Tool
Effective investment decision Combining a smooth user experience with Higher grid quality and customer efficient scheduling of works satisfaction Optimization of routes and outage remedy Higher chances to win/retain concessions Flexibility for field technicians Impact Impact Direct-value add based on improved SAIDI ~ 6 % productivity gains performance and lower Opex
40 E.ON standalone Opportunities in adjacent businesses - Broadband
A Growing from existing assets B Entering Fiber-to-the-Home (FttH) market
E.ON's existing fiber-optic infrastructure E.ON's new fiber-optic infrastructure Fiber-optic cables in every street Telco X's and to every backbone household
Mobile cell tower Business building
Point of Presence Local Enterprise (Switch between Network transformer customer's data backbone and operations station center access network) center
Extension of existing business New business concept in development
41 Growth Focus Discipline
Customer Solutions E.ON standalone E.ON standalone Customer Solutions
Customer Focused Portfolio E.ON’s market position Energy Sales is the anchor business
EBIT4 2018 (€ 413m)
Top 3 CES
Top 3 1 Energy Sales: 22 m Top 2 Top 3 Energy customers in 8 countries Top 3 Top 2 Sales City Energy Solutions (CES)2: Top 3 10% market share in Sweden Top 10 B2B Solutions: ~€2.1 bn TCV3 in 2018
1. Excluding Turkey 2. Former segment ´Heat´ 3. Total Contract Value 4. Adjusted for non operating effects 5. B2C customers in Germany and UK 43 E.ON standalone B2C - Re-inventing our customer business with the digital attacker
Market Cost-to-Serve Cost <€ 10 Synergies Market Leading leading ambition efficiency across regions Cost to Serve cost of change €/customer account
1-click Single Innovative Fast platform for Customer time to market tariff proposition journey innovations
1 Data +50 NPS Self Superior Quick response driven learning & services propositions functionality E.ON E.ON accurate billing ambition
Gradual replacement of legacy systems – customer focused with proven stability
1. Net Promoter Score 44 E.ON standalone New Solutions B2B
On-site supply of heat, steam, power, cooling and pressurized air On-site • Bespoke onsite power and heat supply ~5-200MW Generation • Digitization of the entire value chain with IQ-CHP (intelligent, digital CHP) • AI-based solutions for remote O&M
Manage energy consumption Energy • Optimization of energy and core manufacturing processes with AI, e.g. predictive maintenance Efficiency • Cost reduction via digital platform, e.g. steering energy consumption data-based • Remote optimization to enable energy savings and asset reliability
Optimizing and monetizing central and decentral flexibility Flexibility & • Bundling flexibilities in a Virtual Power Plant platform and offering to the TSO Storage • Forecasting annual maximum load for ensuring feed-in at the correct time • Load profile analysis, forecasting and peak shaving with grid fee savings up to 80%
Designing and delivering integrated energy solutions Energy • Optimizing of a business' energy usage by designing highly individual integrated energy solutions Consulting • Running an energy audit to identify savings potential • Designing detailed action plan based on insights from energy audit 45 E.ON standalone New Solutions CES (City Energy Solutions)
• Large-scale city heating & cooling solutions (e.g. • Typical duration 20-40 years in Malmö, Stockholm, Hamburg) • Typical TCV1 € 0.1–1bn • Growth opportunities through new connections City Supply to established district heating networks & new grids (e.g. Berlin Schönefeld)
• Sustainable city districts with integrated heating • Typical duration 20-40 years & cooling solutions based on maximum of • Typical TCV1 € 10-100m City Quarter renewables (e.g. Tegel, Berlin; Elephant & Castle, Solutions London) • Growth opportunities through new-build & retrofit of large areas or districts in cities
• Decentralized, sustainable local energy solutions • Typical duration 10-20 years (shopping malls – e.g. Westfield, London; • Typical TCV1 € 1-20m Single Site Koppenstraße, Berlin, office buildings or Solutions hospitals) • Growth opportunities through new-build & retrofit of large single sites in cities 46 1. Total Contract Value E.ON standalone New Solutions B2C
Future Energy Home eMobility
Home Energy PV & Storage Home Heating Solutions Infrastructure Mgmt. Solution
Additional growth in key Revenue growth of heating Development of home Developing Ultra-Fast- regions like Italy, UK, devices – boiler, heat energy management Charging network across Sweden pump, fuel cell, air- solution with Microsoft Europe conditioning – across E.ON Continuous improvement Pilot project to offer Future Cooperation with Nissan to regions of integrated PV & Energy Home to customers develop for de-centralized eMobility propositions and Continuous development with the Berkeley Group energy generation and attractive financing to provide comfort at (UK) storage offerings home, e.g. cooling solution, Green Mortgages pilot with Launch of intelligent EV smart-thermostat offering Roll-out of E.ON BNP Paribas to support charging network with Virta financing for energy SolarCloud in additional New market entry in efficient homes markets Norway and Italy
47 E.ON standalone The nature of the business within Customer Solutions shows great diversity Energy sales B2C solutions E-mobility B2B solutions CES
Asset intensity
Scalability (e.g. digital)
Sales cycle
Example Public charging City quarter Energy contracts PV & Storage Onsite CHP station solution 48 E.ON standalone Disciplined investment plan to support growth opportunities
Temporary high investments for smart meter & IT
Capex1 2019-2020 €1.8bn
Other Infrastructure-like E-mob investments
IT & City Energy efficiency Solutions & B2B projects
Smart Partially meter temporary
1. Capex net of divestments 49 Growth Focus Discipline
PreussenElektra E.ON standalone E.ON standalone First tranche of production rights for PreussenElektra secured – terms preliminary and already challenged
E.ON Vattenfall
Nuclear power plant 10 TWh Krümmel1 88 TWh of ~€27.8/MWh PreussenElektra remaining production rights Preliminary price
10 TWh
Remaining October ’19 April ’20 June ’20 production rights until2
Plant Grohnde Isar II Brokdorf ∑ Required production rights2 15-20 TWh 20-25 TWh 10-15 TWh 45-60 TWh
1. Krümmel is a joint venture between E.ON and Vattenfall, each party owning 50% equity share 51 2. Volumes shown before any transfers/purchases and excluding minority stakes (16.7% minorities in Grohnde, 20% in Brokdorf and 25% in Isar II) Growth Focus Discipline
9M 2019 – Financial Appendix Financial Highlights
€m 9M 2018 9M 2019 % YoY
Sales 21,646 23,580 +9
EBITDA1 3,675 3,742 +2 EBIT1 2,352 2,208 -6 Adjusted Net Income1 1,208 1,176 -3 OCF bIT 3,494 2,736 -22 Investments 2,279 4,018 +76 Economic Net Debt² -16,580 -39,620 -139
1. Adjusted for non operating effects, 2. Economic Net Debt as per 30 Sep 2019 and 31 Dec 2018; Economic Net Debt definition takes into account the decommissioning provisions calculated with a real discount rate of 0.0% as opposed to IFRS AROs; bonds issued by innogy are recorded at their nominal value: the amount in the conso- 53 lidated balance sheets is €2.6 bn higher Cash Conversion Rate in Q3 recovering as expected1
9M 2019 € bn 73% 3.7
-0.4 2.7 -0.6 -0.4 1.6 -0.7
-4.0
-2.4 EBITDA2 Cash Change in WC OCF bITInterest Tax Payments OCF Capex FCF Adjustments3 Payments
1. Cash Conversion Rate: OCF bIT ÷ EBITDA 2. Adjusted for non operating effects 54 3. Net non cash effective EBITDA items incl. provision utilizations, payments related to non operating earnings and innogy consolidation effect Segments: Energy Networks
Energy Networks Highlights
EBIT1 € m • Germany -3% +/–+ New regulatory period for power 1,472 1,425 + Regulatory effects in 2018 – One-off effects in 9M 2018 Germany 755 693 • Sweden + Power tariff increase Sweden 363 394 CEE & Turkey 354 338 9M 2018 9M 2019
€m Germany Sweden CEE & Turkey Total 9M 2018 9M 2019 % YoY 9M 2018 9M 2019 % YoY 9M 2018 9M 2019 % YoY 9M 2018 9M 2019 % YoY Revenue 4,560 4,646 +2 729 748 +3 1,125 1,162 +3 6,414 6,556 +2 EBITDA1 1,182 1,151 -3 476 509 +7 529 514 -3 2,187 2,174 -1 EBIT1 755 693 -8 363 394 +9 354 338 -5 1,472 1,425 -3
Details thereof equity-method earnings 51 48 -6 0 0 - 88 87 -1 139 135 -3 OCFbIT 1,372 898 -35 535 460 -14 523 565 +8 2,430 1,923 -21 Investments 448 597 +33 223 197 -12 283 263 -7 954 1,057 +11
1. Adjusted for non operating effects 55 Segments: Customer Solutions
Customer Solutions Highlights
EBIT1 € m • Germany Sales -38% – Timing effect from delayed pass-on of higher grid fees 360 • UK – Regulatory effects, mainly SVT2 price cap Germany Sales 124 224 – Competitive dynamics UK 143 90 + Lower restructuring expenses 51 + Effects from restructuring program Other 93 83 9M 2018 9M 2019
€m Germany Sales UK Other Total 9M 2018 9M 2019 % YoY 9M 2018 9M 2019 % YoY 9M 2018 9M 2019 % YoY 9M 2018 9M 2019 % YoY Revenue 4,892 5,321 +9 5,432 5,329 -2 5,483 6,072 +11 15,807 16,722 +6 EBITDA1 148 120 -19 211 136 -36 231 229 -1 590 485 -18 EBIT1 124 90 -27 143 51 -64 93 83 -11 360 224 -38
Details thereof equity-method earnings 0 0 - 0 0 - 7 8 +14 7 8 +14 OCFbIT 236 179 -24 125 63 -50 253 194 -23 614 436 -29 Investments 10 38 +280 157 132 -16 240 387 +61 407 557 +37
1. Adjusted for non operating effects, 2. Standard Variable Tariff 56 Non-Core business
Non-Core Highlights
EBIT1 € m • PreussenElektra + Higher achieved power prices +4% – Higher depreciation 314 326 – One-off effects in 2018 • Generation Turkey Preussen 354 256 + Operational improvements, mainly higher hydro volumes in H1 Elektra 70 Generation -40 Turkey 9M 2018 9M 2019 PreussenElektra: Hedged Prices (€/MWh) as of 30 September 2019
€m PreussenElektra Generation Turkey Total 9M 2018 9M 2019 % YoY 9M 2018 9M 2019 % YoY 9M 2018 9M 2019 % YoY 2018 100% 26 Revenue 983 878 -11 0 0 - 983 878 -11 EBITDA1 436 423 -3 -40 70 - 396 493 +24 2019 96% 32 EBIT1 354 256 -28 -40 70 - 314 326 +4
Details thereof equity-method earnings 42 40 -5 -40 70 - 2 110 - 2020 73% 46 OCFbIT 122 80 -34 0 0 - 122 80 -34 Investments 10 207 +1,970 154 0 -100 164 207 +26 2021 45% 47
1. Adjusted for non operating effects 57 Adjusted Net Income
€m 9M 2018 9M 2019 % YoY
EBITDA1 3,675 3,742 +2 Depreciation/amortization -1,323 -1,534 -16
EBIT1 2,352 2,208 -6 Economic interest expense (net) -500 -508 -2
EBT1 1,852 1,700 -8 Income Taxes on EBT1 -457 -349 +24 % of EBT 1 -25% -21% - Non-controlling interests -187 -175 +7
Adjusted Net Income1 1,208 1,176 -3
1. Adjusted for non operating effects 58 Reconciliation of EBIT to IFRS Net Income
€m 9M 2018 9M 2019 % YoY
EBITDA1 3,675 3,742 +2 Depreciation/Amortization/Impairments -1,323 -1,534 -16
EBIT1 2,352 2,208 -6 Reclassified businesses of Renewables -278 -300 -8 Interest result -522 -583 -12 Net book gains 859 -32 -104 Restructuring -52 -179 -244 Mark-to-market valuation of derivatives 905 -73 -108 Impairments (net) 0 -2 - Other non-operating earnings -81 -124 -53 Income/Loss from continuing operations before income taxes 3,183 915 -71 Income taxes -198 -359 -81 Income/loss from continuing operations 2,985 556 -81 Income/loss from discontinued operations, net 170 1,759 +935 Net income/loss 3,155 2,315 -27
1. Adjusted for non operating effects 59 Cash effective investments1
€m 9M 2018 9M 2019 % YoY
Energy Networks 954 1,057 +11 Customer Solutions 407 557 +37 Renewables 698 583 -16 innogy businesses 0 53 - Corporate Functions & Other 56 1,561 - Consolidation 0 0 - Non-Core 164 207 +26 Investments 2,279 4,018 +76
1. Investments from innogy transaction included in Corporate Functions & Other 60 Economic Net Debt1
€m 31 Dec 2018 30 Sep 2019
Liquid funds 5,423 5,547 Non-current securities 2,295 1,206 Financial liabilities -10,721 -28,537 Adjustment FX hedging² -28 77 Net financial position -3,031 -21,707
Provisions for pensions -3,261 -8,818 Asset retirement obligations -10,288 -9,095 Economic Net Debt -16,580 -39,620
1. Economic Net Debt definition takes into account the decommissioning provisions calculated with a real discount rate of 0.0% as opposed to IFRS AROs; bonds issued by innogy are recorded at their nominal value: the amount in the consolidated balance sheets is €2.6 bn higher 2. Net figure; does not include transactions relating to our operating business or asset management 61 Economic interest expense (net)
Difference €m 9M 2018 9M 2019 (in € m) Interest from financial assets/liabilities -436 -430 +5 Interest cost from provisions for pensions and similar provisions -48 -47 +1 Accretion of provisions for retirement obligation and similar provisions -59 -45 +15
Construction period interests¹ 14 13 -2 Others 28 18 -11 Net interest result from innogy businesses 0 -17 -17 Net interest result -500 -508 -8
1. Borrowing cost that are directly attributable to the acquisition, construction or production of a qualified asset. 62 Borrowing cost are interest costs incurred by an entity in connection with the borrowing of funds (interest rate: 5.37%). Financial Liabilities
Liquidity Sources (as of 9M 2019) Maturity profile (as of end 9M 2019)1 € bn € bn 12.1 Liquid funds ~5.5 Non-current securities ~1.2 Total ~6.7
Syndicated loan (undrawn) 3.50 2.8 2.4 2.2 € / $ Commercial Paper 10 / 10 1.4 1.3 programs 1.0 0.8 Acquisition facility 1.75 (undrawn) 201920202021 2022 2023 2024 2025 ≥2026 E.ON innogy
1. Bonds issued by E.ON SE and E.ON International Finance B.V. (fully guaranteed by E.ON SE); bonds issued by innogy SE and innogy Finance B.V. (fully guaranteed by innogy SE) 63 and innogy EIB loans Successful financing 2019
2019 Q3 Q4 August 21 (Green Bond) October 17 October 31
1 • Size: €1.5bn 2 • Size: €1.5bn 3 • Size: €500mn • Term: 5Y & 10.5Y • Term: 3Y & 7Y • Term: 12Y
Bonds • Yield: -0.149% p.a. • Yield : -0.019% p.a. • Yield: 0.741% p.a. & 0.373% p.a. & 0.375% p.a. October 24 Syndicated ESG-linked Revolving Credit Facility
Loan • Size: €3.5bn Integrated financing of new E.ON • Term: 5+1+1Y EUR 3.5bn bond issuances in 2019 securing favorable financing conditions Bond financing well diversified across maturities Successful refinancing of RCF1 with ESG-element, replacing E.ON’s and innogy’s previous RCFs
1. Revolving Credit Facility 64 Adoption of IFRS 16: Impact on E.ON financials & KPIs
Changes for the lessee (illustrative) IFRS 16 in short
Balance Sheet Profit & Loss • Objective: Ensuring that lessees and lessors provide relevant information that faithfully Sales Sales Equity represent leasing transactions. (Equity ratio ) Oper. expenses Oper. expenses EBITDA Assets EBITDA Depreciation • Adoption obligatory starting 2019. Liabilities Depreciations EBIT EBIT • No significant changes for lessors, lessees Right-of-use Interest result Interest result may apply certain exemptions for shorter- Lease liabilities assets term leases (<12 months) and/or leases for EBT EBT low value assets. ante IFRS 16 post IFRS 16 adoption adoption
• P&L: EBIT(DA) to improve, interest expense to increase; no effect on Adj. Net Income level. IFRS 16 • Balance Sheet: Economic Net Debt (END) to increase, following increase in lease liabilities.
65 E.ON Investor Relations contacts
Verena Nicolaus-Kronenberg T +49 (201) 184 28 06 Head of Investor Relations [email protected]
Martina Burger T +49 (201) 184 28 07 Manager Investor Relations [email protected]
Sebastian Gaßner T +49 (201) 184 28 05 Manager Investor Relations [email protected]
Andreas Thielen T +49 (201) 184 28 15 Manager Investor Relations [email protected] T +49 (201) 184 2806 [email protected]
66 Financial calendar & important links
Financial calendar
March 25, 2020 Annual Report 2019 & Capital Markets Day (London)
May 12, 2020 Quarterly Statement: January – March 2020
May 13, 2020 2020 Annual Shareholders Meeting
August 12, 2020 Half-Year Financial Report: January – June 2020
November 11, 2020 Quarterly Statement: January – September 2020 Important links
Presentations https://www.eon.com/en/investor-relations/presentations.html
Facts & Figures 2019 https://www.eon.com/content/.../presentations/facts-and-figures-2019.pdf
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
Shareholder Meeting https://www.eon.com/en/investor-relations/shareholders-meeting.html
Green Bond Framework https://www.eon.com/en/investor-relations/bonds/green-bonds.html
Transaction Website: http://www.energyfortomorrow.eu/
67 Disclaimer
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. The information contained in this presentation may comprise financial and similar information which is neither audited nor reviewed and should be considered preliminary and subject to change. Some of the information presented herein is based on statements by third parties. 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. 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 updatethis 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 andcharts,these rounded figures may not add up exactly to the totals contained in the respective tables and charts.