E ON SE : .ON rorganization nars finish lin

'We intend to undertake the largest transaction of Europe's recent industrial history. It would create nothing less than a new E.ON, a company fully dedicated to the energy future. And at the same time we're setting Uniper on a good course of its own.' These are the words E.ON CEO Johannes Teyssen used at the company's Annual Shareholders Meeting today in Essen to describe the idea behind E.ON's reorganization.

Goal: approval by at least 75 percent of shareholders

Teyssen asked shareholders to approve the spinoff of Uniper, which operates the Group's conventional energy business, as an independent company. This requires a majority of at least 75 percent of the share capital represented at the time of the vote, which will take place later today after a comprehensive discussion. If the necessary majority is reached, E.ON intends to spin off a 53.35-percent stake in Uniper to its shareholders.

More options for shareholders

The spinoff of Uniper will give shareholders additional options: when it takes effect, each E.ON shareholder will remain a co-owner of E.ON but will also receive one Uniper share for each ten E.ON shares. Shareholders can then decide whether they wish to retain their E.ON and Uniper shares or modify their portfolio. With greater flexibility to manage their assets, they can opt to place their faith in the future performance of E.ON, Uniper, or both companies. E.ON and Uniper will also gain greater room for maneuver: they can focus entirely on their respective very different markets.

Two companies for two energy worlds

The new E.ON focuses on the new energy world and has three core businesses: energy networks, customer solutions, and renewables. These three businesses create an optimal opportunity-and-risk profile, combining the stable earnings of the network business with growth opportunities in customer solutions and renewables. 'This setup has a clear business logic and also ensures an optimal opportunity-and-risk profile, since it combines the stable earnings of the network business with growth opportunities in customer solutions and renewables. Together, these three businesses form a balanced and solid foundation from which we intend to tap the many opportunities for creating lasting value and successful growth,' Teyssen said.

Focus on customer orientation

Teyssen spoke primarily about the company's new focus on the new world of distributed-energy solutions: 'I'm firmly convinced that E.ON has every chance to play a key role in shaping this other, new future of energy in Germany, in Europe, and beyond. With local energy networks that serve as a smart platform for the new energy world. With more and increasingly affordable electricity from renewable sources. And with customer solutions that make it possible for households, companies, and communities to have an individually tailored, digitally controlled energy supply. E.ON adopts a radically customer-centric perspective and is committed to partnering with customers to design an affordable, efficient, and sustainable energy world. Our ambition is to improve people's lives.'

Dividend promise kept

Teyssen also spoke about the company's financial situation. E.ON's 2015 results-EBITDA of €7.6 billion and underlying net income of €1.6 billion-were in line with expectations. The company recorded impairment charges totaling €8.8 billion on power plants and upstream operations, resulting in a substantial net loss of €7 billion. The impairment charges reflect the fundamental structural changes in E.ON's business environment and therefore highlight the need to fundamentally reorganize the company. E.ON reduced its economic net debt by 17 percent to about €27.7 billion at year-end 2015 and by another €1.1 billion to €26.6 billion at the end of the first quarter of 2016. Despite the significant adverse factors and the correspondingly significant impairment charges, the Management Board and Supervisory Board propose paying out a dividend of 50 euro cents per share, which corresponds to a payout ratio of 60 percent of underlying net income and a dividend ratio of more than 6 percent. 'We can pay this dividend from the free cash flow we generated in 2015,' Teyssen said. 'Despite the net loss we reported, we therefore consider the dividend reasonable. We keep our word and stand by the dividend we promised.'

First quarter of 2016 characterized by one-off effects

E.ON's business environment has deteriorated further in 2016. Nevertheless, the company's first-quarter results were in line with expectations owing to one-off effects. EBITDA increased from €2.8 billion to €3.1 billion; underlying net income rose to €1.3 billion. The earnings improvement was predominantly attributable to a nonrecurring positive effect: in late March Uniper and Gazprom agreed to new terms for long-term gas supply contracts. This enabled E.ON to release provisions, which it recorded in income in the first quarter. Without this effect, E.ON's earnings would have been slightly below the figure from the first quarter of the prior year. Factoring in this effect, E.ON expects its full-year 2016 EBITDA to be between €6.4 and €6.9 billion and its underlying net income to be between €1.5 and €1.9 billion.

Both companies with good creditworthiness

The new E.ON will enter the future with a solid financial foundation and balance sheet. Just a few weeks ago, rating agencies affirmed that their existing ratings of BBB+ and Baa1 would apply to the new E.ON as well. The hallmarks of the company's new medium-term financial plan are to achieve a high degree of capital efficiency and strengthen its balance sheet. Uniper will set off into the future with a stable foundation as well: it has a stable investment-grade rating of BBB- and is aiming for a comfortable investment-grade rating in the years ahead.

This press release may contain forward-looking statements based on current assumptions and forecasts made by E.ON Group 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 SE 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.