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Investor presentation innogy SE · Investor presentation · August 2017
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.
We are delivering on our IPO promises
IPO promises Achievements since IPO
1
Unique
European
asset base
1 Clean play, no legacy liabilities,
truly independent
Focus on
2 2016 financial guidance achieved,
Key Stable 2017 guidance confirmed
5 value investment business 2
creation highlights
3 2016 leverage factor of 3.7, Fitch Rating of BBB+,
Moody‘s rating of Baa2, first innogy bond issued
Platform Resilient
for financial 4 ~100 MW renewable capacity added in 2016,
growth profile >130 MW expected in 2017 - Belectric acquisition
4 3
5 Dividend of €1.60 (~80% payout ratio) for
fiscal 2016
innogy SE · Investor presentation · August 2017 2Unique asset mix and diversified European footprint
Leading positions across countries in Europe ... … with a distinct asset profile
3.7 GW ✓ Focus on Europe –
renewable capacity1 anchored in Germany
574,000 km ✓ Largely CO2 free
grid length2
✓ Limited exposure to
commodity prices
5x #1
positions3 ✓ No nuclear liabilities
Market presence ✓ Enabler of energy transition
Renewables
Grid & Infrastructure
Retail
Strategic partnership
Source: Group data as well as company estimates based on competitor publications, regulatory reports and analyst reports. 1 Capacity in the Renewables division as of 31 December 2016. Includes 0.4
GW of renewable generation capacity in the Grid & Infrastructure and Retail divisions. 2 Positions in the Grid & Infrastructure division are based on distributed volumes in 2015. 3 Market positions based
on volumes sold; for Belgium, Poland and the Czech Republic, based on customer numbers and for the Netherlands, based on market research – all based on the latest information available as of 31
December 2016.
innogy SE · Investor presentation · August 2017 3Our key priorities and long-term growth fields
Renewables Grid & Infrastructure Retail
Deliver robust results and Operational excellence &
Execute construction
optimise capex/opex growth in Energy+
pipeline and leverage
strategy within regulatory
value in core markets
frameworks Deliver UK turnaround
KEY
PRIORITIES Scalable capex allocation to most value-accretive projects across segments
Leverage our excellent Foster growth
Enter new markets and
operational infrastructure in electric vehicle
new technologies
FUTURE skills and relationships infrastructure solutions
GROWTH
Innovation
innogy SE · Investor presentation · August 2017 4Key priorities
Renewables – leverage value in core markets
Capacity ramp-up1 Short-term growth drivers
MW, pro-rata
Operational excellence –
3,530 3,557 3,660 3,660 Operations
3,356 reduce costs, increase yield
3,220
Complete Galloper
2017-19: ~440 MW addition expected and Nordsee One
Execute onshore
Construction hitting scheduling,
construction pipeline
budget and quality
targets
Offshore Take FID for
Further
auctions: onshore
2016 2017 2018 2019 Secured Total growth
Triton Knoll projects with
remu- Development opport-
and Kaskasi secured
Under construction unities/
neration (2nd round in remuneration
pipeline
2018) of ~100 MW
Onshore Offshore Hydro Solar/other
1 As of March 2017. Excluding any growth potential in new technologies/markets. Ramp-up only includes Renewables division.
innogy SE · Investor presentation · August 2017 5Key priorities
G&I – deliver robust results and optimise capex/opex
strategy within regulatory frameworks
Key pillars of value creation for core Regulatory frameworks are mostly confirmed, providing stability
business
Hungary
Germany
Allowed revenues agreed for new
Operational excellence Important parameters set for
regulatory period from 2017.
new regulatory periods from
2018/2019. In total, positive outcome of
cost review.
Clarity on outstanding items
expected in 2017/2018.
Poland
Regulatory management Czech Republic Our DSO in Warsaw gains
‘best in class’ recognition.
Most parameters for gas distribution
stable. Slovakia
Regulatory council took over
regulatory office in Aug 2017. Regulatory environment for 2017
Capex/opex strategy with no major changes.
innogy SE · Investor presentation · August 2017 6Key priorities
Retail – operational excellence and growth in Energy+
Defending our excellent position in B2C and staying competitive in B2B
B2C B2B
Digital customer journey
Churn prevention
Operational end-to-end
excellence Cost excellence
Improve
Cost excellence
customer satisfaction
Accelerate growth in Energy+ to support retention and create viable stand-alone products
B2C B2B
Target 2018
Diversification of existing business
Growth in (stand-alone Energy+) Build up the Energy+
business by pushing
Energy+ ~€100m1
existing and launching
Build customer loyalty and support retention new offerings
(commodity-linked Energy+)
innogy SE · Investor presentation · August 2017 1 Adjusted EBIT (B2B+B2C). 7Key priorities
Retail UK – around £200m of cost savings will be
delivered by year-end 2018
npower opex savings (cumulative, on annual cost base) Key messages
Realised so far
Planned delivery
The Recovery Programme is Further £80m will
delivering results according to be delivered by
£m
Dec 18:
plan: ~£120m by June 2017 year-end 2018
250
~200
200 Dec 17: These savings primarily offset additional
~150
opex arising from regulatory costs
150 Jun 17: (incl. smart meters)
~120
100
We are examining further efficiency opportunities
in excess of the envisaged £200m cost savings within
50 Mar 16:
~20 the context of a sustainable operating model and to
reach our goal of a market-average cost base
0
Jan 16 Jul 16 Jan 17 Jul 17 Jan 18 Jul 18
innogy SE · Investor presentation · August 2017 8Future growth
Renewables – enter new markets and new
technologies
Onshore wind Offshore wind Solar
• Build on core capabilities to • Expand business beyond core • Setup utility-scale business
MID-TERM foster growth markets as opportunities arise – • Integrate Belectric and leverage
STRATEGY • Successfully enter new markets also outside of Europe business capabilities in EPC and
• Target role of lead developer O&M
and operator
• US office opened and support for • In-depth discussions with • Successful closing of Belectric
onshore secured potential partners for promising transaction in Jan 2017
SHORT-TERM
1
(PTC /’safe harbour investment’) growth projects • Multiple opportunities under
ACTIONS TAKEN • Successful market entry in Ireland review – mainly in Europe and
(Dromadda Beg, 10MW) North America
• Brownfield project development in • Successful acquisition of project
progress rights ~1 GW2 in Canada
1 Production tax credit.
2 Anticipated full project capacity.
innogy SE · Investor presentation · August 2017 9Future growth
G&I – leverage our excellent operational infrastructure
skills and relationships
Growth through broadband investments by
capitalising on operational synergies.
Supported by partnership between innogy and
Deutsche Telekom.
Additional upscale
opportunity of
retail offerings.
Push the development of non-regulated services. Bolt-on M&A in markets we understand.
Identify ‘white spots’ and develop
viable products and Croatian small-scale acquisition.
business solutions.
Further consolidation possible.
GRID+
innogy SE · Investor presentation · August 2017 10Future growth
Retail – well positioned for EV market growth
EV growth through Utility value chain in EV market Our competitive edge
One of the European leaders:
EV prices Hardware supply more than 5,800 charging points
in operation
Electricity
Driving range sales Installation Excellent grid management
capabilities
Charging point availability Various B2C and B2B product
IT
offerings already, with over 30
services O&M
products
Pipeline of new EV models
Excellent IT backend already in
Energy services place (innogy is the only provider
Strict CO2-regulation in Germany able to bill on a kWh
basis)
Competitive disadvantages
Potential areas where innogy already well
in EV industry mainly
utilities can benefit positioned
abolished
innogy SE · Investor presentation · August 2017 11Scalable capex programme from 2017-19 with bulk
of discretionary capex in renewables
Planned capex programme 2017-19
€bn
1
6.5 – 7.0 3.8 – 3.9
Renewables
Renewables
1.5 – 1.7
Grid & 0.2 – 0.3
Infrastructure 0.7 – 0.8
4.1 – 4.4 ~0.5 1.8 – 2.0
~1.1
Retail 0.7 – 0.8
Total capex Grid & Infrastructure Renewables + Retail Other Discretionary
non-discretionary
1 Includes ‘Corporate/other’.
day-to-day capex
innogy SE · Investor presentation · August 2017 12Financial discipline and strict investment criteria –
foundation for growing shareholder value
Indicative capex
Renewables Grid & Infrastructure Retail
split 2017-2019E
‘Energiewende’
Solar
Offshore wind Customer investments1 IT/smart meter/day-to-day
10-15%
20-25% connections 14% 35-40%
Hydro Other grid
RenewablesKey messages H1 2017
2017 outlook confirmed on group H1 2017 financials
and segment level for adjusted Adjusted EBITDA: €2,439m (+2% y-o-y)
EBITDA, adjusted EBIT and Adjusted EBIT: €1,725m (+4%)
adjusted net income Adjusted net income: €857m (+16%)
Debt push down completed –
Moody’s assigns stand-alone EIB loans transferred from RWE
rating of Baa2 to innogy to innogy in July
(investment grade)
innogy SE · Investor presentation · August 2017 14H1 2017 adjusted EBIT up 4% y-o-y mainly driven by
lower costs in the German G&I business
Adjusted EBIT development, in €m Key drivers
Renewables
178
• Lower wind and precipitation levels, a negative FX effect
and absence of prior-year one-off gains only partially offset
by higher yield, higher realised prices and the contribution
(52) 1,725 of new assets
(27) Grid & Infrastructure
1,666 • Germany: lower costs to operate and maintain the grid; Q1
2016 included provision accruals for partial retirement
(40) measures
• Eastern Europe: positive impact of cold weather
Retail
• Solid performance in Germany and Eastern Europe
H1 2016 Renewables G&I Retail Corp./ H1 2017
• Lower customer numbers and volumes in NL/BE
other • UK: still down y-o-y, but Q2 2017 quarterly result on 2016
level; benefits from recovery plan mitigating ongoing
market pressure
innogy SE · Investor presentation · August 2017 15H1 2017 adjusted net income up 16% to €857m driven
by operational performance and lower financial result
Reconciliation of adjusted net income Key drivers
H1 2017 adjust- H1 2017 H1 2016 • Non-operating result mainly driven by the valuation of
€ million
reported ment adjusted adjusted derivatives to hedge price risks
Adjusted EBITDA 2,439 - 2,439 2,385 • Financial result includes a positive effect of €114m from the
Operating D&A1 (714) - (714) (719) amortisation of the step-up on bonds2 and a €6m one-off
Adjusted EBIT 1,725 - 1,725 1,666
gain from the transfer of further debt from RWE to innogy –
both effects are adjusted
Non-operating result (87) 87 0 0
• Effective tax rate still driven by a higher pre-tax contribution
Financial result (178) (120) (298) (443) from German entities; this effect will diminish over the
Income before taxes 1,460 (33) 1,427 1,223 remainder of the year
Taxes on income (430) 73 (357) (306) • Normalised tax rate set at 25% to derive adjusted net
Tax rate 29% - 25% 25% income
Income 1,030 40 1,070 917 • Non-controlling interests above prior-year level mainly due
to improved earnings of German regional entities
Non-controlling
(213) - (213) (177)
interests
Net income 817 40 857 740
1 By definition, operating D&A includes operating impairment losses. 2 Including FX effect.
innogy SE · Investor presentation · August 2017 16Increase in net debt driven by seasonal free cash flow
pattern and dividend payments
Cash flow statement (extract)1 Net debt composition (extract)
€ million H1 2017 H1 2016 +/- € billion 30 Jun 2017 31 Dec 2016 +/-
Adjusted EBITDA 2,439 2,385 54 Financials assets 3.7 4.6 (0.9)
Funds from operations (FFO) 2,116 2,329 (213) Financial liabilities 17.0 16.2 0.8
Changes in working capital (1,877) (1,922) 45 t/o senior bonds3 11.3 10.3 1.0
Cash flow from operating t/o loans towards RWE4 3.6 4.3 (0.7)
239 407 (168)
activities (CFOA)
Net financial liabilities 13.3 11.6 1.7
Capex2 (660) (593) (67)
Provisions for pensions and
3.5 3.9 0.4
Divestments 152 194 (42) similar obligations
Free cash flow (269) 8 (277) Provisions for wind farm
0.4 0.3 0.1
Dividend payments decommissioning
(1,305) (883) (422)
Net debt 17.1 15.7 1.4
Leverage factor - 3.7 -
1 The definition of free cash flow has changed: it now includes financial investments and divestments of property, plant and equipment plus intangible and financial assets.
2 Including financial investments.
3 Adjusted for ‘step-up‘ effect of €920m.
4 Does not yet reflect transfer of EIB loans completed in July 2017.
innogy SE · Investor presentation · August 2017 17Outlook for 2017 confirmed
€ million H1 2017 H1 2016 FY 2017 FY 2016
unless stated otherwise reported reported guidance reported
Adjusted EBITDA1 2,439 2,385 ~4,400 4,203
Renewables 179 219 ~350 359
Grid & Infrastructure 1,094 916 ~1,900 1,708
Retail 588 640 ~850 844
Adjusted EBIT1 1,725 1,666 ~2,900 2,735
Adjusted financial result (298) (443) (750) - (800) (874)
at the lower
Tax rate for adjusted net income 25% 25% 25%
end of 25-30%
Adjusted net income 857 740 >1,200 1,123
Capex2 713 656 €2.0 - 2.5bn 2,123
Outlook3 confirmed
1 Includes Corporate/other. 2 Including financial investments.
3 As per interim report January to March 2017 (published on 12 May).
innogy SE · Investor presentation · August 2017 182017 payout ratio of 70-80% based on expected
adjusted net income above €1.2bn
Adjusted net income, € million Dividend
>1,200
At least +7%
1,123 €1.60
~80%1 70-80%1
2016 2017 2016 2017
actuals outlook actuals outlook
1 Payout ratio based on adjusted net income.
innogy SE · Investor presentation · August 2017 19APPENDIX
Retail – total customer number development
Electricity accounts (‘000) Gas accounts (‘000)
16,126 16,136 15,914 15,919
2,910 2,917 6,885 6,833 6,702 6,676
2,791 2,818
2,437 2,407 2,367 2,346 1,981 2,004 1,919 1,939
3,973 4,006 4,023 4,042
2,111 2,073 2,036 2,017
1,455 1,443 1,444 1,428
6,806 6,806 6,733 6,713
1,338 1,313 1,303 1,292
30 Jun 16 31 Dec 16 31 Mar 17 30 Jun 17 30 Jun 16 31 Dec 16 31 Mar 17 30 Jun 17
Germany Eastern Europe NL/BE UK Germany Eastern Europe NL/BE UK
innogy SE · Investor presentation · August 2017 21Retail UK - Overview of customer accounts mix Domestic B2C (million) Standard (SVT1) % of total Non standard % of total Total Customer accounts 2.3 52 2.2 48 4.5 % of dual fuel 54 74 64 Accounts excl. prepay 1.9 47 2.1 53 4.0 % of total accounts 80 99 89 Customers2 1.5 55 1.3 45 2.8 Customers excl. prepay 1.2 49 1.3 51 2.5 % of total customers 79 98 87 1 SVT = Standard variable tariff. 2 Number of households with an electricity and/or a gas account innogy SE · Investor presentation · August 2017 22
Offshore wind: strong competition with first subsidy-
free auction bids in Germany
Technological levers to reduce costs Beyond the obvious – further levers
Wind farm development • O&M concepts: in-house & portfolio-based
Offshore installation
(standardisation in design)
& logistics • EPC: high-quality partner with competitive margin
• Economies of scale from project portfolio
Innovative • De-risking via asset rotation
Next-generation turbines
foundation
concepts
(higher annual energy • Analysis of future market price assumptions
production - AEP)
Critical success factor
More efficient O&M Electrical Derive valuable bid price propositions to
interconnectivity secure remuneration levels for viable
growth projects
innogy SE · Investor presentation · August 2017 23Renewables – projects under construction
Brechfa Mynydd y Bad a Eschweiler Eschweiler Wiedenfelder Dromadda Clocaenog
Nordsee 1 Galloper
West Gwair Cheo Nord Fronhoven Höhe Beg Forest
Country GER UK UK UK UK GER GER GER IRL UK
Technology Offshore Offshore Onshore Onshore Onshore Onshore Onshore Onshore Onshore Onshore
Full capacity (MW) 332 336 57 33 27 13 29 13 10 96
innogy stake 15% 25% 100% 100% 100% 51% 51% 100% 100% 100%
Expected
Q4 ‘17 Q1 ‘18 Q2 ‘18 Q1 ‘19 Q1 ‘19 Q4 ‘17 Q1 ‘18 Q1 ‘18 Q3 ‘18 Q3 ‘19
CoD
Support scheme EEG ‘14 ROC ROC CfD CfD EEG ‘14 EEG ’14 EEG ‘14 Refit II CfD
innogy
€43m2 £95m2 £102m £58m £39m €10m €21m €20m €13m £94m
capex share1
IRR3 ranges Offshore: ∼13% Onshore: 6-11%
1 Excluding historical investments at FID.
2 innogy equity share.
3 For onshore: project (asset) IRR post tax excluding historical costs; for offshore equity IRR post tax excl. historical costs.
innogy SE · Investor presentation · August 2017 24Overview of senior bonds and loans payable to RWE
As of 30 June 2017, by maturity
Senior bonds Loans payable to RWE
Notional Carrying amount Notional
Carrying amount
Issuer amount (in EUR million) Coupon Maturity Instrument amount Coupon Maturity
(in EUR million)
(LCY1, million) (LCY1, million)
innogy SE EUR 100 100 6M Euribor + 0.67% Nov 17 Intercompany loan6 EUR 125 125 0.19% Jul 17
innogy Finance B.V. EUR 980 1,030 5.13% Jul 18 EUR 771 771 0.22% Oct 17
Intercompany loan6
innogy Finance B.V. EUR 1,000 1,090 6.63% Jan 19
Intercompany loan6 EUR 956 956 0.56% Mar 19
innogy Finance B.V. EUR 750 764 1.88% Jan 20
GBP 570 Apr 21 Intercompany loan6 EUR 700 700 0.86% Oct 20
innogy Finance B.V. 716 6.50%
innogy Finance B.V. EUR 1,000 1,195 6.50% Aug 21 Intercompany loan7 EUR 645 695 3.23% Oct 20
innogy Finance B.V. GBP 500 614 5.50% Jul 22 Intercompany loan7 GBP 350 362 2.14% Feb 23
innogy Finance B.V. GBP 488 601 5.63% Dec 23 Total - - 3,609 1.18%4 -
innogy Finance B.V. EUR 800 844 3.00% Jan 24
innogy Finance B.V. EUR 750 744 1.00% Apr 25
innogy Finance B.V. GBP 760 953 6.25% Jun 30 Maturity profile as of 31 July 2017
innogy Finance B.V. EUR 600 731 5.75% Feb 33 € billion
innogy SE USD 502 44 3.17%3 Apr 33
5
innogy Finance B.V. GBP 600 638 4.75% Jan 34 RWE loans EIB loans Senior bonds
innogy SE EUR 468 513 3.50% Oct 37 4
innogy Finance B.V. GBP 1,000 1,224 6.13% Jul 39
3
innogy SE JPY 20,0002 185 4.76%3 Feb 40
innogy SE EUR 100 100 3.50% Dec 42 2
innogy SE EUR 150 150 3.55% Feb 43
1
Total - - 12,236 4.90%4 -
0
thereof: step-up effect 920
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026+
1 Local currency. 2 Swapped in Euro: USD50m in EUR39m; JPY20,000m in EUR159m. 3 Interest rate after swap in Euro. 4 Notional-weighted average coupon. 5 Three additional loans with a total volume of €28m not included.
6 Related to hybrids issued by RWE. 7 In July 2017 the transfer of the EIB loans from RWE to innogy was concluded and the corresponding intragroup loans canceled. Note: Rounding differences may occur.
innogy SE · Investor presentation · August 2017 25innogy’s credit rating
innogy's investment grade ratings1 (as of 30 June 2017)
Fitch Moody’s S&P2
Long-term issuer default rating BBB+ Baa2 BBB-
Outlook Stable Stable Positive
Senior unsecured rating A- Baa2 BBB-
Short-term issuer rating F2 P2 A-3
Note: All ratings still linked to RWE AG ratings.
1 Solicited ratings.
2 S&P assigns innogy a stand-alone credit profile of bbb.
innogy SE · Investor presentation · August 2017 26innogy’s funding programmes to establish
stand-alone capital market access
Debt issuance • Independent innogy debt issuance programme launched in first half of 2017
programme • Nominal volume: €20bn
Commercial paper • Stand-alone programme up and running (since year-end 2016)
programme • Nominal volume: €3bn
Revolving credit facility • innogy SE has access to RWE AG’s €4bn syndicated credit line (up to €1.5bn)
• Stand-alone RCF to be established in Q4 2017
(based on full-year 2016 figures)
innogy is establishing its own capital market access to be able to finance its operations going forward
innogy SE · Investor presentation · August 2017 27Management incentives – adaptation to new business
environment
innogy management incentive scheme well balanced with
clear focus on total shareholder return
Individual annual bonus • Based on the economic development of the company, individual
scheme and collective performance as well as performance with regards
to corporate responsibility and employee motivation
Long-term • Aims to reward the achievement of long-term strategic
incentive plan objectives while facilitating capital market orientation
• Conditional right to receive a pay-out in cash following a period of four years
• Pay-out dependent on achievement of performance targets derived from the
strategic planning and set before the first tranche start (‘3-year IPO business plan’)
and based on the share price development as well as the accumulated dividends paid
to shareholders (total shareholder return)
innogy SE · Investor presentation · August 2017 28Corporate governance – high degree of independence
reflected in innogy’s supervisory board structure
Board structure
• Two-tier board structure:
Executive Board (6 members)
Supervisory Board (20 members, thereof 10
shareholder and 10 employee representatives)
Supervisory Board composition
• RWE AG represented by one management
board member (CFO Markus Krebber)
• Werner Brandt and Frank Bsirske double as Supervisory
Board Chairman and Supervisory Board Deputy
Chairman of RWE AG and innogy SE
• Audit Committee mainly composed of independent
Supervisory Board Members
innogy SE · Investor presentation · August 2017 29Corporate governance – ‘agreement on basic principles’
sets clear and stable rules going forward
Key principles governing Selected features on ‘agreement on basic
innogy/RWE relationship principles’ between innogy and RWE
• Both parties – RWE and innogy – shall be in a • Non-compete clause states that RWE is largely
position to pursue their strategic, operational and restrained from competing in innogy’s core businesses
financial targets individually and independent of each until 31 December 2019
other • RWE manages innogy as a financial investment
• The domination agreement between innogy and RWE RWE will not impose strategic or financial targets
was terminated just prior to the IPO and is not involved in planning and management
• All intercompany relations and agreements are incentive discussions
carried out at arm’s length Investment decisions at innogy are not subject to
approval by RWE
innogy SE · Investor presentation · August 2017 30IR contacts
Lars Korinth Marcel Rohrbach
T +49 201 12-48329 T +49 201 12-15043
lars.korinth@innogy.com marcel.rohrbach@innogy.com
Holger Perlwitz
Britta Wöhner Fixed Income
T +49 201 12-44794 T +49 201 12-15141
britta.woehner@innogy.com holger.perlwitz@innogy.com
Lydia Beck
Martin Jäger Private shareholders
T +49 201 12-15106 T +49 201 12-48236
martin.jaeger@innogy.com lydia.beck@innogy.com
innogy SE · Investor presentation · August 2017 31Financial calendar
13/11/2017 Interim report 9M 2017
12/03/2018 Annual report 2017
24/04/2018 Annual General Meeting
€ 27/04/2018 Dividend payment
innogy SE · Investor presentation · August 2017 32You can also read
