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German Investment Seminar Dr. Erhard Schipporeit, E.ON AG January 15, 2002

German Investment Seminar Dr. Erhard Schipporeit, E.ON AG January 15, 2002. E.ON Group - Strategy. Expand to become a top global integrated energy service provider via focus and growth: Concentrate exclusively on core energy services business

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German Investment Seminar Dr. Erhard Schipporeit, E.ON AG January 15, 2002

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  1. German Investment Seminar Dr. Erhard Schipporeit, E.ON AG January 15, 2002

  2. E.ON Group - Strategy • Expand to become a top global integrated energy service provider via focus and growth: • Concentrate exclusively on core energy services business • Pursue accretive acquisitions to cement leading position in Europe and to establish solid position worldwide • Dispose of non-utility activities • Continually cut costs and restructure throughout the Group

  3. E.ON AG E.ON Group – Focus on core business Energy Non-core activities Oil E.ON Energie100% • Electricity • Generation • Trading • Transmission/ distribution • Supply • Gas • Water VEBA Oel* 100% Chemicals Degussa 64.6% Real Estate Viterra 100% Other Activities VIAG Telecom 100% E.ON Telecom 100% Stinnes 65.5% VAW aluminium* 100% *Divestment initiated

  4. Divested 7,250 - E.ON Group - Divestment of non-core assets ahead of plan€ in millions Stake % Sales 2000 Proceeds (equityvalue) Comments Listed companies Degussa 64.6 20,139 - - Stinnes 65.5 11,981 MEMC 71.8 944 - Divested Divestment initiated Schmalbach-Lubeca 49 1,891 - Divested Gerresheimer Glas 71 8361 215 Other companies VEBA Oel 100 28,062 2,800 Put option with BP - Viterra 100 1,300 VEBA Electronics 100 3,9262 Divested 1,000 VAW aluminium 3,438 100 1,900 Divested 300 100 Klöckner & Co. 5,355 Divested 3,800 Divested 31 - E-Plus Divested 870 - Cablecom 32 45 VIAG Interkom 42.5 Orange Communications SA Divested 1,320 - - 17.5 - Bouygues Telecom - - 50.1 Connect Austria ONE 77,872 19,455 1 Sales 1999 2 At E.ON consolidated sales

  5. E.ON Group - Implementing E.ON‘s global growth strategy • Acquire integrated utilities in North America (eg. LG&E) • Selectively engage in South America Growth outside Europe Broad expansion in Europe • Expand around Germany (eg. majority in Sydkraft) • Establish European-wide wholesale presence • Enter into non-contiguous markets (eg. UK through Powergen) Strengthen core business in Germany • Establish premier supply business in Germany (eg. #1 - brand) • Participate in further privatization of municipalities • Increase stakes from minority to majority interests

  6. E.ON Energie - Second-largest utility in Germany SCHLESWAG SCHLESWAG SCHLESWAG SCHLESWAG EWE EWE e.dis e.dis Avacon Avacon EMR EMR PESAG PESAG EAM EAM TEAG TEAG E.ON Bayern Majority participations E.ON Bayern Minority participations Includes only participations > 25% =

  7. E.ON Energie - Acquisitions of Municipalities (Examples) Participation % Sales mill € Number of customers Municipal utilities Stadtwerke Germersheim Stadtwerke Stade Stadtwerke Chemnitz Gemeindewerke Ansbach Gemeindewerke Haßloch Stadtwerke Homburg Stadtwerke Villingen Schwenningen Stadtwerke Pforzheim Energieversorgung Hildesheim Wasser- und Energieversorgung Salzgitter Stadtwerke Ennigerloh Stadtwerke Grünstadt Stadtwerke Kirchheimbolanden Stadtwerke Braunlage 25 20 15 40 25 25 25 35 13 24 40 21 20 20 50 64 400 82 40 125 85 50 160 90 24 30 17 7 10,000 23,000 176,000 25,000 10,000 25,000 33,000 75,000 64,000 29,000 13,500 25,500 8,300 4,300

  8. Turnover (mill €) Sales volume (bn kWh) 1,594 72.5 > *Including minority participations = 20% E.ON Energie - Strong market share in gas distribution in Germany2000 (pro forma) SCHLESWAG SCHLESWAG EWE Heingas EWE EWE AVACON AVACON • The leading local distribution company in Germany* • Further participations in Italy, Austria, Czech, Hungary, Latvia,Sweden, Netherlands and Poland (co-operation) • German gas market: € 20 bnEuropean gas market: € 60 bn Gelsenwasser Gelsenwasser Thüga Thüga E.ON Bayern E.ON Bayern Thüga Thüga

  9. In Germany‘s gas market, E.ON needs to make up ground in the import and long-distance delivery segments IMPORT LONG-DISTANCE LOCAL SUPPLY GAS GENERATION TRANSMISSION DISTRIBUTION SUPPLY ELECTRICTY Market position* Excellent Good Weak * Includes shareholdings greater than 20 % Source: E.ON

  10. Through Gelsenberg (total stake: 25.5%) E.ON can obtain a substantial interest in Ruhrgas E.ON 0.2% 100.0% 0.1% Gelsenberg 23.6% Mannesmann 10.1% RWE ExxonMobil 49.2% 13.5% ExxonMobil ThyssenKrupp 50.0% Preussag 17.7% 52.5% Shell RAG 50.0% Gelsenberg 3.1% Bergemann Gelsenberg 30.0% Brigitta 58.2% 41.8% Schubert Other Pooling agreement 59.8% 25.0% 15.0% 0.2% Ruhrgas

  11. Geographically, Ruhrgas activities outside Germany fit E.ON‘s strategy very well E.ON‘s gas interests Ruhrgas shareholdings

  12. Turnover (mill €) Sales volume (mill m3) 217 259 swb T T T N-ERGIE T T REWAG T T Thüga participations T > *Including minority participations = 20% E.ON Energie - Largest privately-owned water operator in Germany2000 (pro forma) • 15% market share in Germany* • Broad experience in drinking and sewage water • German water market: € 25 bnEuropean water market: € 80 bn

  13. Graninge Lenenergo Lenenergo Viking Cable Viking Cable Eesti Energia Eesti Energia E.ON Latvijas Eesti Energia E.ON Latvijas RAO "EES Rossii" RAO "EES Rossii" RAO "EES Rossii" Scandinavia Scandinavia Gaze Gaze Latvenergo Latvenergo Latvenergo RAO "Gazprom" RAO "Gazprom" EV3 I/S RAO "Gazprom" EV3 I/S Sydkraft Sydkraft Lietuvos Energija Lietuvos Energija Baltic Baltic Cable Jantarenergo Cable Jantarenergo Jantarenergo E.ON Benelux E.ON Benelux Poland (9 Distribution Comp., PSE and PGNiG) Poland (9 Distribution Comp., PSE and PGNiG) Poland (9 Distribution Comp., PSE and PGNiG) E.ON Polska E.ON Polska Polenergia Polenergia E.ON Bohemia E.ON Bohemia BKW BKW RAG RAG Watt Watt E.ON Hungária E.ON Hungária Electra Electra E.ON Italia E.ON Italia Italia Italia shareholding shareholding subsidiary subsidiary co-operation co-operation co-operation E.ON Energie - Strong international expansion

  14. The UK - A key European market • Third largest European electricity market (~ 300 TWh sales) • Leading country in energy liberalization • Value creating opportunities exist for • flexible portfolio generators • experienced asset backed traders • efficient operators of distribution assets • innovative retailers with strong nationwide brand • Scope for further synergistic consolidation

  15. Powergen: UK excellence Assets • World-class, flexible and diversified generation portfolio • Efficient distribution assets Trading • Integrated trading strategy • Leading market player Retail • Targeted marketing strategy with strong brand • More than 3 million customer accounts - and growing

  16. The US - World‘s largest power market • Larger than total European electricity market • Offers higher growth and return potential than Europe • Integrated utility as the accepted business model • Value creation opportunities from introducing European best practices • Further opportunities arising from • fragmented nature of the market • market liberalization • convergence of gas and electricity

  17. Midwest an attractive region within the US power market North American Electricity Pools(1) • Midwest(2) with around 30% of US electricity demand • Crossroads of major energy flows, well interconnected and with good fuel supply options • Heavily industrialized region • Consolidation opportunities in a fragmented market • Positive regulatory environment MAIN Detroit New York Chicago MAAC Philadelphia ECAR LG&E Frankfort (1) MAIN = Mid-America Interconnected Network; ECAR = East Central Area Reliability Coordination Agreement; MAAC = Mid-Atlantic Area Council (2) Including Illinois, Indiana, Kentucky, Maryland, Michigan, Missouri, New Jersey, Ohio, Pennsylvania, West Virginia and Wisconsin

  18. LG&E: US excellence Generation • Reliable, low cost generation assets • Opportunities for off-system sales at attractive rates Distribution • Top quartile regional efficiency ranking in distribution - and improving • High service levels and customer satisfaction • (#1 JD Power survey1)) • Favourable regulatory environment • incentive based rate plan • pass-through of fuel costs • recovery of environmental costs Regulation (1) USA, 1999 National and Midwest, 2000 Midwest.

  19. Chemicals - Systematic focus on specialty chemicals€ in billions Divested Enterprise value 0.05 0.53 1.20 0.42 0.58 n.a. n.a. n.a. n.a. n.a. approx. 2.8 Comments Sales 2000 0.8 0.1 0.2 0.5 --- --- 2.5 1.2 0.5 0.2 0.3 0.2 0.2 --- --- --- 0.5 --- approx. 6.5 Divestment of non-core activities ASTA Medica-Group AWD Pharma Onkologie Healthcare/RX Zentaris German Remedies (27.7%) dmc2 Phenolchemie Degussa Dental Agro Chemicals Metallurgical Chemicals Gelatin Salt TFL (50% JV with Ciba SC) KWH (51% Degussa) Textile Additives Other (Zeolites, DMT, Oxo-C3) Degussa Bank Total  Sold to Pliva Group (Croatia)  Sold to Baxter International Group (USA)  Sold to Calida (India)  Sold to OM Group Inc. (USA)  Sold to Ineos Plc. (GB)  Sold to Dentsply International Inc. (USA) 1st step: Joint venture with Pechiney  1st step: Reduction in share from 64% to 49%  Sold to Schroder Ventures  Sold to Allied Resource Corporation (USA) Zeolites partly sold to FMC (USA)

  20. E.ON Group - Cost Management€ in millions realized 1993 - 1999 realized 2000 realized 1993 - 2000 planned 2001 - 2003 Electricity Oil Chemicals Holding Total 1,060 308 796* - 2,164 430 32 80 - 542 1,490 340 876 - 2,706 1,020 60 380 50 1,510 *Only Degussa-Hüls,without SKW Trostberg and Goldschmidt

  21. E.ON Group - Internal Operating ProfitNine Months€ in millions 2001 Pro forma 2000 +/- % Energy Chemicals Oil Real Estate Telecommunications Distribution/Logistics Stinnes Klöckner VEBA Electronics Aluminum E.ON AG/Other/Consolidation Total 1,335 431 294 109 -100 236 180 56 0 229 324 2,858 1,255 516 226 53 -670 400 153 89 158 180 -117 1,843 +6 -16 +30 +106 +85 -41 +18 -37 - +27 - +55

  22. E.ON Group - ResultsNine Months€ in millions 2001 Pro forma 2000 +/- % • Group internal operating profit • Net book gains • Cost management and restructuring expenses • Other non-operating earnings • Foreign E&P taxes • Results from ordinary business activities • Income taxes • Minority interests • Results from ongoing operations • Results from discontinued operations • Earnings from first-time application of SFAS 133 • Group net income • Earnings per share (in €) • - from ongoing operations • from discontinued operations 2,858 193 -174 -188 337 3,026 -926 -245 1,855 -827 -2 1,026 2.74 -1.22 1,843 4,570 -116 264 365 6,926 -2,994 -338 3,594 -5 0 3,589 4.94 -0.01 +55 -96 -50 - -8 -56 +69 +28 -48 - - -71 -45 -

  23. E.ON Group - Outlook 2001 • Full year Group internal operating profit to markedly surpass previous year‘s number - Energy: Slightly above prior-year figure • Chemicals: Distinctly below previous year‘s number • Oil: On par with prior year‘s solid results • Real Estate, Telecommunications, Stinnes, VAW aluminium: Earnings improvements • Results from ordinary business activities significantly below the 2000 figure.

  24. E.ON AG Back up charts

  25. New agreement for electricity transmission – Examples for point of connection fees for customers, January 2001

  26. E.ON Energie - Reduction of installed generation capacity (1) (2001-2003) Shutdowns 2,279 MW Realized - Offleben C 280 MW - Rauxel 2 164 MW - Westerholt 1 138 MW - Westerholt 2 138 MW - Stade 630 MW - Arzberg 5 104 MW - Arzberg 7 121 MW - Schwandorf D 292 MW - Franken II B1 206 MW 206 MW - Franken II B2 206 MW 206 MWCold reserve 1,333 MW- Staudinger 2 249 MW 249 MW - Pleinting 2 402 MW 402 MW - Emden 4 430 MW 430 MW - Arzberg 6 252 MWReduction 3,612 MW - Staudinger 1 (winter only) 249 MWTotal reduction of installed capacity 3,861 MW 1,493MW

  27. E.ON Energie - Reduction of installed generation capacity (2) (2001-2003) Realized Total reduction of installed capacity 3,861 MW 1,493 MW Shutdown of assets currently in cold reserve 293 MW- Aschaffenburg 21 150 MW 150 MW - Aschaffenburg 31 143 MW 143 MW Continuation of cold reserve 755 MW- Irsching 1 151 MW - Irsching 2 312 MW - Pleinting 1 292 MW Total reduction 4,909 MW 1,786 MW

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