E.ON SE

Good morning, dear analysts and investors. Welcome to our first quarter results presentation. Thanks for taking the time today to join us. I'm here with Marc and he will guide you through our Q1 results. Of course, we will leave enough room for questions after the presentation. And with that, over to you, Marc.

Thank you, Verena, and welcome everyone to our Q1. results call before i start with the actual presentation about our quarterly results let me dedicate some words of solidarity to the ukraine we continue to condemn the war which russia has brought about ukraine we see extraordinary moments of braveness and strength this is an example to all of us Our thoughts are with the people in the Ukraine and with those people who had to leave their homes. We hope that the war will end soon and that peace and freedom will return to Europe soon. Millions of refugees have crossed the borders of Slovakia, Poland, Hungary, Romania. All these regions are our supply areas. Many of our colleagues work there. E.ON thus assumes direct responsibility for this situation. We provide on-site assistance with energy, accommodation, sleeping bags, hospital beds, and so on and forth. We also support financially, standing today at over 3 million euros of donations from our employees and the company. It still feels difficult, but I now move to a normal financial results call. Looking at our first quarter results, let me highlight five messages. First, we are extremely confident on our 2022 guidance. We are fully hedged and will gradually pass on higher prices to our customers. Over the full year, our retail margins will prove to be stable. Second, visibility on potential political interventions in all our markets has significantly increased over the past weeks. We have seen very sensible adjustments in both regulated as well as fully liberalized markets. any risk of detrimental intervention has in fact diminished. This underscores my high conviction when it comes to our 2022 guidance. Third, our energy networks earnings are not only economically fully protected against rising energy prices, They are also protected against inflation in a more general sense. This is a key benefit in the current macroeconomic environment. Fourth, our implicit interest rate hedge works. If interest rates remain at current levels, we will finish the year at the bottom end of our guided range of 4.8 to 5.2 times net debt to EBITDA. On top, we have secured most of our funding needs for 2022 already during the first quarter. In a nutshell, we are in a financially strong position and rightfully are so. This brings me to my final message. It is time to invest into sustainable energy infrastructure now more than ever before. Accelerated plans for the energy transition in Europe will trigger more growth of distribution grids. They will trigger even more demand for sustainable decarbonization solutions. And this is exactly our business mix. with which we are best positioned to benefit from this extremely positive momentum in Europe. Moving now to our Q1 actual results. Looking at our year-over-year bridge on page 3, our Group EBITDA decreased by €360 million to €2.1 billion. Energy networks came in slightly below prior year. The anticipated significant earnings increase in Germany was overcompensated by energy prices temporarily impacting costs for network losses in Sweden and several Eastern European countries. This was well-flagged. We had indicated that in our annual results call. Just to remind you, Price-driven costs for network losses are part of the regulatory formula in each of our markets and will automatically and fully be recovered in the future. EBITDA of our customer solutions business is temporarily compressed by higher energy procurement costs within our energy retail business. These cost increases will be passed on to our customers during the remaining year. The important news here is that we observed almost no impact on Schoen for those price adjustments that we have already implemented by now. Our energy infrastructure solutions business grew its EBITDA by 14% year-on-year to around €200 million. This was driven by good availability of our decentral generation assets. Our performance in customer solutions was also supported by our retail solutions business. Future energy home revenues grew by 30% 3-0 year on year to now 250 million euros for the first quarter. E-mobility solution revenues grew by even 150%. And I'm particularly positive about this because we deliver these high revenue growth rates at positive, high single-digit EBIT margins. Q1 EBITDA of our non-core business is flat year-on-year, despite the shutdown of Gronde and Brockdorf at the year-end 2021. Our nuclear generation business benefits from higher realized market prices. The same is true for our Turkish upstream joint venture. Moving on to page four, our total economic net debt is largely unchanged. Three points that I want to highlight. First, we continue to benefit from increasing interest rates leading to additional financial leeway. For Q1, this significantly overcompensated for plan asset performance. Planned asset performance also includes a fair value adjustment of our Nord Stream 1 asset in the magnitude of about €250 million. Second, as I told you in previous calls, the impact of margining payments for sourcing energy via exchanges has diminished. Received variation margins fully compensated for initial margin payments. Third, we continue to expect a cash conversion of significantly above 100% for 2022. The negative operating cash flow in Q1 should not come as a surprise. It reflects the usual seasonal pattern in our business model. Everything else is fully on track. To summarize, The solidity of our financing paves the way for increasing investments and dividends in the future with ensuring a strong BBBAA rating. Sometimes people ask me about the catalyst for investing in our stock right now. Effective inflation protection is a very important one. I don't get tired of repeating that message. Our regulated energy networks business is extremely well protected against inflation. So how exactly does that protection work? In our biggest market, Germany, it is quite straightforward. Here, the total allowed cost base, including allowed OPEX and the RAP-driven return on capital, will be increased every year by the CPI of the current year at the beginning of the year T plus 2. full inflation protection with T plus two. So there is a certain time lag, but ultimately the complete allowed revenues are indexed with the CPI. For other markets, we must distinguish between the respective mechanisms for allowed OPEX and for the rub-driven allowed revenues. Regarding allowed OPEX, it's super simple. In all markets, OPEX allowances are inflated on a yearly basis, either with a CPI or sometimes even with an industry-specific index, like for example in Sweden. The time lag here is either T plus 1 or T plus 2. Regarding the RAP-driven allowed revenues for all markets outside Germany, the protection mechanisms vary from country to country. In Sweden, Hungary, Romania and Turkey, which all have regulatory systems based on real terms, the inflation protection works automatically by an indexation of the regulated asset base, either by a CPI or an industry-specific index. The applied time legs here are also either T plus one or T plus two. In Poland and Slovakia, which have regulatory systems based on nominal terms, The nominal allowed WECs are being adjusted every year. So also here, we have full inflation protection for the return allowances. Bottom line, in all our regulated networks businesses, we are protected against inflation with around 90% of energy networks EBITDA automatically being protected. On the customer solutions side as well, we see our earnings largely protected against rising procurement costs. This conviction is reflected along three dimensions. In the first dimension, our main markets are not restricted by any price cap mechanism that does not allow us to pass through higher costs. Current discussions in the political arena are not indicating that this picture will change. That allows us to reflect increasing procurement costs in the customer bill. For our regulated retail markets, such as the UK or selected Central Eastern European markets, regulators have acknowledged and constructively reacted to the current situation. Ofgem in the UK, for example, recognizes some key risks faced by suppliers. Ofgem intends to address these within the next SVT period from October. As always, Ofgem still needs to act faster on some topics, like the ongoing delay to introducing stricter rules around customer credit balances. But we are on it. In Romania, the historical price cap led to a higher double-digit million euro EBITDA burden in Q1. Quite constructively, a new support scheme was initiated on April 1st already. This scheme provides us with full visibility for the rest of the year and ensures a positive margin going forward. In addition, Fioren talks with the government about the recovery of any uncovered procurement costs from the first quarter or any quarter before. In Hungary as well, we found a constructive solution. We signed an agreement to transfer the roughly 2.5 million regulated customers to the state-owned utility MVM with effect of March 31st. So from April 1st also here, full visibility moving back to positive margins and positive results for the full year. Let me come to a second dimension. In all our markets, governments have decided to provide direct transfer payments to customers and especially to vulnerable customer groups. In a third dimension, there is on top a clear willingness of politicians to reduce taxes that still have a significant impact on the energy bill. Take the abolishment of the renewable surcharge in Germany or reduced VAT and energy taxes in the Netherlands as examples. I could add many more. For us, this is reassuring. We do see that the obvious challenge of energy affordability is being actively addressed and not avoided like a hot potato. This allows us in turn to do what we are best at, acting as a reliable energy partner for our customers. When other companies fail to perform, we step in also as a supplier of last resort. Finally, let me remind you of the structure of our operations with a clear focus on B2C and SME customers, segments that proved to be resilient during economic crises of the past and will prove to be resilient also in this crisis. All in all, The developments over the last weeks have significantly increased our visibility for 2022 earnings development in customer solutions. Let me close today's presentation reiterating our high confidence on the Group Outlook for 2022, which today we fully reconfirm. We also reconfirmed to invest around 5.3 billion euros in 2022 to deliver on our ambitious growth plans. Beyond 2022, we are very confident that E.ON's strategy will successfully unfold. The opportunity from increasingly decarbonizing our electricity, the heating, as well as the transport sectors will crystallize faster than anyone would have believed before. The elimination of Europe's dependency on energy imports is a huge effort and will only be successful if we have the right energy infrastructure in place. That's why we will continue to invest into our distribution grids and into sustainable, decentralized energy infrastructure solutions alongside with our customers. Thank you very much. And with that, back to you, Irina.

Thank you very much, Mark, for your presentation. And we'll now start the Q&A session. Just a little reminder, two questions per person so that everybody has a chance to ask a question. First question comes from Vincent. Please go ahead.