E.ON SE

After the presentation, there will be an opportunity to ask questions. If any participant has difficulty seeing the conference, please press the key followed by zero on your telephone for greater assistance. May I now hand you over to Dr. Johannes Theissen, who will lead you through this conference. Please go ahead.

Yeah, I just wanted to do a brief introduction here. This is Verena. Hello, everybody. A warm welcome from my side before I hand over to Johannes. Many thanks for joining our HRON results call today. I'm here with actually Johannes and Marc who will guide you through our business development and outlook and with that over to you Johannes.

Thank you Verena. Good morning and a very warm welcome from my side. We are happy and I repeat that we are happy to provide a detailed and positive view about yet another successful quarter and outlook of Aon. My extremely positive stance comes from very concrete and specific reasons. First, in Q1, we had informed you that we have adjusted our procurement book for our commodity sales business in order to reflect the risks from lower volumes in the retail business due to COVID-19. Now, after the second quarter, we have gained enough evidence that this adjustment that we already took will take us well through the entire year. Hence, we do not expect major further downsides from this beyond what we had already guided for us at Q1. Second, with regard to payment behavior, we are gaining increasing confidence that our concentration on highly stable countries clearly pays off, also in times of unprecedented crisis. From a group point of view, we have not seen a material increase in our working capital due to COVID-19. And with payment moratoria across our markets now largely being withdrawn, we are confident to manage the risks from bad debt without any significant economic implications for the group. Third, as flagged to you with our Q1 reporting, wheeling volumes in our network business have obviously been negatively affected by the pandemic. The financial implications are fully in line with the sensitives that we provided to you with Q1. We therefore can confirm that the majority of those technical lower earnings for this year will be fully recovered in future year. Hence, E.ON is economically fully protected in this respect and no material economic downside is visible. Fourth, consequently, we see E.ON's non-recoverable financial exposure to the pandemic being limited to only about 2% of our 2020 EBITDA. That's it, nothing more, 2%. In addition, let me highlight that we experienced strong underlying operational performance during the first half of this year. All our businesses run smoothly, are actively managed, and thus we can fully deliver on our promises, even in times of remote work and all other implications. Mark will elaborate later on our actuals and demonstrate how solid the underlying performance was. Let me just stress that as in past years, Aon's financials do not do not include material one-offs from provisional releases or similar unsustainable effects. During the second quarter, we have also continued to tick off numerous boxes relating to the integration of energy beyond our own expectations. And with that, we have further strengthened the financial and strategic profile of our group. Our investment proposition that we presented to you in March remains fully intact. Fully intact. We regard the update of our guidance for 2020 as a pure technical adjustment because it's all realizing just a bit later. The material proportion of pandemic effect has now been processed for you. We are highly confident to be able to manage the remaining uncertainty for the second half of the year within the guidance range. And with that, I also reconfirm both our midterm targets and our dividend guidance. And for your reference, our midterm 2022 EBIT target remains in a range of 4.6 to 4.8 billion if the adjusted growth rates are applied to the new guidance midpoint. 4.6 to 4.8 billion in 2022 when there is no pandemic effect, all synergies are being realized and we are normal state of business. This translates into a very strong growth trajectory that Mark will later talk about. The strong operational performance continues to underpin our commitment to grow the dividend by up to 5% per year. With the strategic repositioning of E.ON that we have now completed this year, we continue to see a high resilience of our portfolio, also in the current COVID-19 crisis, also in the second warmest year in history, On top of that, Germany and the EU are committed to a carbon neutral continent in 2050. COVID even accelerated the path, which comes along with huge opportunities for E.ON. We are convinced that the cause for the future energy world is set now, and E.ON is committed to contribute, drive this change and create value for our investors. Turning to page two, the economic stimulus programs and packages approved by the EU and the German federal government. fully confirms E.ON's new strategic positioning. Both will provide substantial additional investment opportunities in our core business, particularly in the area of customer-centric energy infrastructure and networks. Our strong market position in Europe and our local reach will support this. From the 310 billion Eurograms of the EU Recovery and Resilience Fund, More than 160 billion euros, that's more than half, will be allocated to the countries in which E.ON is active. And a third of these investments are earmarked and are helpful for energy infrastructure. They allow a tremendous amount of new investments that create a historic opportunity to transform Europe into a carbon-neutral, sustainable continent and to support our cause at E.ON. This potential directly translates into further growth opportunities for energy network business. Already in May, with the Q1, we indicated additional into energy infrastructure investments of 500 million euros for climate protection, economic recovery. This is now even more certain and it allows us to upgrade our targeted power up growth now to an annual rate of four to 5% until 2022. And with that, increase our CapEx guidance for energy networks by 200 million euros already in this year compared to the plan that we presented to you at the Capital Market Day in March. We are committed to this investment plan, and we are ready to participate in the EU recovery process. Let me highlight just some specific opportunities. First, the conversion of our cities into sustainable carbon-neutral neighborhoods. This includes urban mobility, housing, heating, and cooling. Our most recent project in this field is the Milan Innovation District, a project which aims to equip an entire urban district with innovative sustainable energy solutions. E.ON, a German-based company, was selected as the energy partner for this outstanding project and will develop tailor-made innovative energy solutions to operate this area in a climate-neutral way. Second opportunity is a full exploitation of hydrogen as an energy carrier of the future. Hydrogen has the potential to be a game changer in the complete decarbonization of industry transport and housing. E.ON will support the market ramp up at all stages of the value chain. From production, storage, distribution to end usage by our customers for decarbonization of the various sectors by 2050. Today, we at E.ON already have 50 hydrogen projects in different stages of development, focusing on industrial application, decarbonization of heavy transportation, grid injection, and hydrogen transport. Let me here highlight some examples. Here in North Rhine-Westphalia, we make our gas distribution networks H2 ready. Our aim is to mix natural gas with green gas. In our distribution network, we have decentralized power-to-gas plants by connecting them to the planned hydrogen transport network. In our smart quartz project, we are building a supply system in a small municipality of Kaisers Esch in Rhineland-Palatinate. Here, electricity from renewable sources is first converted into hydrogen using power-to-gas technology, and this hydrogen is fed into a microgrid and can be used to supply local buses or to generate heat. In another town, Metzelen, we develop a neighborhood solution comprising of a PV system for electricity generation. Electricity that cannot be used immediately will be stored long-term in a lithium-ion and short-term battery and a hydrogen-based infrastructure. Those examples are only a few out of our huge pipeline of hydrogen-related projects that we are currently focusing on. And thirdly, We have a tremendous wave of new expectations of customers to our networks that call for new connections and that allow us further growth. Turning to page three, next to growth and energy infrastructure, performance, a core element of our capital market story and our company's ambition. We have made specific promises at our Capital Market Day and we are delivering now. One of the promises is the delivery of the 740 million euros energies by 2022. Despite COVID, we are fully on track to deliver this plan for 2020 and beyond. We have now successfully completed the first wave of many of so-called sprinter phases with around 1000 FTEs already signing voluntary leave agreements. And this is completely in line with our pre-COVID expectations, even despite a potential impact from Corona. We are confident to achieve similar acceptance rates for the upcoming program waves. During the last quarter, we have also successfully managed to conclude all remaining steps of the energy transaction. This achievement was not a given in these particular times of remote working, travel restrictions, and social distancing. We have completed the full legal integration with a squeeze out of the remaining 10% minority shareholders in energy. and we have transferred energy renewable assets to RWE. In addition, during the initial step of this organizational integration that we are now fully focusing on, we discovered even more working capital optimization potential as originally planned for, with the corresponding positive impact on economic net debt. Mark will elaborate in detail on those potential on additional working capital optimization. Furthermore, all remaining remedies that we had received from the EU Commission have now been signed and are just awaiting regulatory clearance, which we expect during the next weeks and months for the latest. The economic impact of those disposals is even better than we originally had planned for, with disposal proceeds approaching 1 billion euro and, again, corresponding positive effects on our economic net debt. And another, I would say, rather positive surprise is that effects of change of control clauses, a change of control clauses feared by some market observers, did not occur. On the contrary, with the exception of three rather small cases, which are not significant in material terms, we did not experience any meaningful effect from change of control. And in some cases, we were even able to extend partnerships considerably. And in this context, we are also extremely happy to say that in late July, we successfully concluded a memorandum of understanding with the Slovakian government to acquire RWE's 49% stake in VSE business in Slovakia, and thus now will become a market leader in Slovakia with one and a half million customers. Just to remind you, the corresponding RUB of this business amounts to roughly half a billion Euro. And with this, we strengthen our footprint in Central Eastern Europe, especially in Slovakia, with its role as a strong economy. I turn to page four. Performance also goes along with efficiency and customer satisfaction. In this context, we are pushing E.ON's digitization in all business, to make our company faster, leaner, and ready for the new energy world. Recently, we entered an agreement with SAP to build a new process and technology platform for network operations. This cooperation will define the industry standard for the future. It means fully redesigned and standardized customer processes in the network businesses, for example, regarding billing, fast exchange and consistency of data. This process will be fully digitized and will allow a cheaper, more agile handling of business across all jurisdictions. And quite obvious, by the way, it's fully cloud-based. On the supply side, combining costs and service leadership is essential for a competitive position. In our main markets, we are thus addressing this by the introduction of new, fully digitized and cloud-based platforms. in germany this platform is fully done we have already started to migrate now all customers onto on it as of today we have successfully migrated one million of our customer accounts on this platform already fully in line with the plan to have four million customers on the platform by end of year and the majority of all german accounts within the next two years in the uk We are continuing our cooperation with Kraken Technologies, the leading cloud-based platform in the UK, to migrate all NPower and Aeon's B2C and SME customers onto this new Aeon Next platform. As planned, we have even now started migrating the first NPower customers in July and target to finalize the completion by mid of 2022, including all Aeon UK customers. We are at a migration rate of more than 10,000 customers per day, smoothly and quickly. With these examples, let me convey a clear message. Everything under our control is progressing according to plan, and yes, we deliver against our pledges. Our operations and our strategy have proven full resilience. The second quarter brought, as expected, clarity on all levels and gives us now high confidence for the second half of this year. We do not observe, and that is a clear message, we do not observe any fundamental impact, sustainable impact from COVID. Assuming that we will not face a severe hard new lockdown across the continent in our main markets, we believe that the largest part of pandemic effects have been processed by E.ON in the second quarter and is fully included in our outlook. Despite the historic COVID-19 pandemic, and which is sometimes forgotten, Despite a historically warm winter extending into Q2, the second warmest since 1870, E.ON proved its resilience and the resilience of its new strategy and delivered a robust, strong first half result in the midst of the deepest recession since World War II. The acquisition of energy is fully on track and proceeding rapidly, and we will achieve and deliver the planned synergies. We fully confirm our mid-term targets and our dividend promise. And our long-term strategy is underpinned by European economic stimulus packages, which offer us additional growth opportunities in core markets beyond our expectation. Marc will now guide you through the corresponding numbers in more detail. Marc, over to you.