Welcome to
the conference call of Ian. At our customers' request, this conference will be recorded. As a reminder, all participants will be in a listen only mode. After the presentation, there will be an opportunity to ask questions.
May I now hand
you over to Doctor. Stephan Schonefus, who will lead you through its conference. Please go ahead, sir.
Operator, thank you very much. Dear analysts and investors, welcome to E. ON's 9 month 2019 results call, the very first results including innogy's financials. I'm Sjeban Schonefort. I'm the Interim Head of Investor Relations.
I'm here together with E. ON's CEO, Johannes Zaizen and E. ON's CFO, Marc Spieker. They will present the results, and afterwards, we will have the usual quick Q and A session. With this, I'm handing over to Marc.
Thank you, Stefan. Dear analysts and investors, welcome also from my side. Before we dive into the presentation, I would like to inform you about a change in the leadership of our IR team. I'm happy to announce that Stephan Schonebus will take over a new responsibility outside of the IR team. Effective as of January 2020, Stefan will be heading the business controlling team for all our network businesses outside of Germany.
As you know, Stefan has a strong background, a successful regulation manager. I'm convinced that together with his capital market perspective, he will now make a great contribution to further drive the performance of and ensure an efficient capital allocation for our international network businesses. I would like to thank Stefan wholeheartedly for his great work as IR Manager. I'm especially grateful that he took over the leadership of E. ON's IR team on an interim basis when the team was in crisis mode after the sudden and all too early death of Alexander Kurnig in autumn last year.
For many years, Stefan was one of E. ON's most important faces and voices in the capital market, especially in London. He navigated E. ON safely through countless reporting events, roadshows and investor meetings. Stephan, thank you for that effort, and I wish you very selfishly a lot of success in your new role.
At the same point in time, I'm pleased to announce that Verena Nicolas Cronenberg will take over as Head of Investor Relations at E. ON. Verena has a strong background in Equity Capital Markets with several leading investment banks. She joined Innogy in October 2017. She did not only lead the Innogy IR team in rough waters, but also assumed leadership of the Innogy Group Controlling and Risk team during the last 16 months.
With this, she has demonstrated great stamina and resilience. I'm really looking forward to working together with Verena to continuously improve E. ON's dialogue with analysts and investors. I ask you as well to welcome Verena as the new Head of E. ON IR, and equally selfishly, I wish you, Verena, a lot of success in your new role.
That said, I'm handing over to Johannes.
Thank you, Marc. And Stefan, also thanks from my side. I owe a lot to your great contribution on the journey throughout the last years. And Verena, obviously, welcome on board. We're looking forward to working with you in the markets.
The analysts and investors, let's turn to our presentation to the first page, Page 12. With the Q3 numbers, we present you the combined view on our new E. ON for the first time. During the last weeks months, we worked extremely hard to put together consolidated financials and to fully align on the sometimes different accounting and reporting earning contribution from innogy in this quarter is limited to only 13 days. On the balance sheet, we, however, see the full impact.
Marc is going to elaborate more on this. I'm also very pleased to tell you that the underlying operations are performing completely in line with our expectations. The well fledged inter year earning recovery is in full swing. EBIT in the isolated 3rd quarter is up 20% year on year. Thus, we are firmly on track to achieve our former standalone full year 2019 guidance.
As we informed you with the H1 reporting, we have not technically adjusted our full year outlook to include also innogy. Marc will explain more in a minute. As we have promised, we presented today a concrete proposal that we have developed together with innogy to solve the dire situation at Npower. I will elaborate on this important topic on the following slides. In a nutshell, we continue to deliver what we have promised in terms of decision making and execution.
Now I'm very happy to share the latest update on the transaction on the next page. Turning to Page 3. As you all know, we have started the integration of innogy following the European Commission's clearance of the takeover and the closing in mid September. This page gives you an overview of our accomplishments since we have announced the transaction. Let me just remind you what we have achieved so far.
We started in 2018 with a successful takeover to innogy minority shareholders. At the same time, we have been able to agree with RWE and especially innogy to work closely, constructively and supportively on the transaction. This was a very important milestone to safeguard a swift integration process. In 2019 then, we started with all legally relevant steps by filing of the transaction with the commission at the end of January. And after a long time of discussions, we paved the way to the antitrust approval in September.
Just after announcing the intention to conduct a merger squeeze out of the residual innuity shareholders in early September, we celebrated then the first closing on September 18. This came along with the transfer of the innogy shares to E. ON that have been helped by RWE. As you can see, we have delivered what we promised. And we are proud of what we have only jointly achieved in the past year.
But yet, it's not time to pause since we are facing the next important milestones to successfully finalize the integration process and to achieve the targeted net synergies €600,000,000 to €800,000,000 in 2022. With more visibility on the financials for the new E. ON, we can reiterate this figure. And I would like to stress that these figures do not include any impact from the U. K.
We're now working towards the extraordinary shareholder meeting of innogy to conduct the merger squeeze out. You're aware that the closing of the transaction is linked to various commitments by E. ON to exit certain businesses on which we already have informed you in our H1 reporting. The process for those remedies are underway and discussions with potential buyers have been initiated. Furthermore, we have made additional important steps in the integration of innogy.
All senior management roles of the first two layers have been nominated in early November. We had the 1st leadership meeting with an extremely positive and encouraging mood. All in all, we are very satisfied with the progress of the integration, and we are very confident that the upcoming milestones will be delivered according to our expectations. With that, I'm turning to Page 4 and coming to UK Customer Solutions. Today, we're delivering on our promise to announce a concrete and specific plan for the Empire situation shortly after closing.
The U. K. Market is facing unprecedented challenges. E. ON and Innogy will continue to keep cost efficiency as a key focus and will, in the best interest of both companies, look to immediately address Empower's critical regulatory climate.
We have developed clear proposals that will allow us to address the current challenging situation and enable us to achieve a turnaround in the operating performance of the business as early as 2021 with a positive EBIT contribution as well as a positive cash flow from 2022 onwards. Based on the proposals, we expect for the combined E. ON UK business to achieve an EBIT of at least GBP 100,000,000 from 2022 onwards and generate a positive free cash flow after smart meter CapEx. These proposals take into account restructuring costs up to GBP 500,000,000,000 as well as contingencies for thoroughly evaluated implementation risks. The majority of restructuring costs will be booked as non op expenses.
Our proposals for Npower are: 1st, the migration of Enpower's B2C and SME customers to an E. ON platform second, the carve out of the I and C and Group business of Enpower to secure this profitable activity and third, the then following restructuring of the remaining Enpower operations. Our aim is to drive the cost per business B2C account down. This will be achieved by the benefits of scale that a combined customer base brings as well as a continuous IT improvement on a single platform. We will now continue to consult and work with trade unions and employee representatives on these proposals and are committed to mitigating the impact on colleagues.
We believe these proposals create the opportunity for both companies involved to build a sustainable business in the UK. To lead the migration effort, Michael Lewis, currently CEO of Aon UCal, will take over joint leadership as CEO for both Aon U. K. And Npower. Innogy has further strengthened the restructuring expertise with Mike Hawthorne, an experienced restructuring executive joining the Empower Board as Chief Restructuring Officer.
The expected EBIT contribution of at least GBP 100,000,000 for the combined UK business from 2022 onwards does not assume a meaningful improvement in the market environment. On that note, I would like to take the opportunity to send a crystal clear message. We need to see a paradigm shift in the regulatory and political approach to the market in the UK. We strongly support the UK government targets to transform the energy system to a fundamentally sustainable and low carbon level. High investments will, however, be needed in order to achieve this target.
The UK as a country can, however, not expect to attract any meaningful investments in the energy market going forward if the regulators are not able to ensure a reliable framework for long term oriented operators. Historically, lax controls over companies entering the market by Ofgem have led to a situation where larger, more prudent companies have had to pay for the mess left behind by numerous newer entrants that have subsequently crashed out of the market, leaving debts such as a renewable obligation unpaid and simply putting customers down. Across the industry, the various sums owing have been already amounted to an estimated nearly GBP 200,000,000 Ofgem has been lately put in place provisions to make entry more difficult they recently put forward some proposals to tighten up in life controls over suppliers. However, this is too little, too light and this situation should never have been allowed to arise. Ofgem and the Department for Business Energy and Industrial Strategy need to get on and fix these distortions that have themselves had recognized to exist as quickly as possible.
There needs to be a rebalancing of the market. Let's now turn to our other B2C markets and take a look at customer numbers in our market outside U. K. On the following slide. Especially in our main market, Germany, we continue to see very strong operational performance.
This holds true for E. ON stand alone as well as for innogy. Taking both B2C portfolios together, we have net customer gains in Germany of around 380,000 in total this year and around 150,000 in the other markets, excluding UK. These figures reconfirm our often made statement that the UK situation is unique and continues to show no signs of spilling over to other markets. We will not relax upon these achievements, but continuously work on improving our customers' experience with us the basis of lean and increasingly digital processes.
Let me turn to Page 6 to our network businesses, where I briefly jump into the latest regulatory developments. As you know, there have been legal challenges by the German network operators against the level of so called general efficiency factors, both for gas and power, which have been set by the regulator at a level of €0.49 for gas and €0.9 for power. Recently, the industry received a very positive decision from the Higher Regional Court in Dusseldorf. The so called X factor for gas has been repealed in favor of the network operators. As expected, the regulator, however, now filed an appeal with the Federal Court of Justice.
We do not expect a decision before 2020. We think though that the decision from the District of Court should have opposed the read across on the ongoing court case for the general X Factor for Power. Looking at operations in Sweden now, we have achieved an important derisking. We can now utilize the so called carryover of allowed returns or retroactively have allowed returns from the 1st regulatory period in the 3rd and 4th period. This carryover is subject to a proper investment level to improve security of supply for customers, which is fully in line with our own strategy and anyhow planned capital allocation.
The industry achieved this very positive result after a very constructive discussions with the Swedish Energy Ministry. Regarding the topic of the allowed real back of 2 0.16%, however, there is less progress yet. Thus, we were forced to file a respective legal complaint at the end of October. After this overview of important recent developments for our company, I would like to highlight that we will have the 1st Capital Market Day for our new E. ON in March next year.
On that occasion, we'll provide you with a more detailed dividend policy as well as an earnings guidance for 2020 beyond. With that, I'm handing over to Marc, who will explain our financial results in more detail. Marc, over to you.
Before I focus on the financial performance of the 1st 9 months of 2019, let me briefly lay out what our reported figures are now composed of. We have closed the acquisition of innogy as of September 2018. Accordingly, in our 9 months EBIT, we have accounted for 13 days of innogy's results. Innogy's contribution is reported in a new segment that is surprisingly called Innogy for the remainder of 2019. This segment represents the operating result from the Innogy segment's grids and Infrastructure, Retail and their Corporatenew Businesses segment.
Please note that energy businesses still to be transferred to RWE are not part of our reporting. Please also note that the innogy figures reported by E. ON are adjusted to E. ON's reporting and accounting practices. This is why our numbers on Innogy may differ from the numbers Innogy is still reporting on its own.
This situation will last until the merger squeeze out will be I strongly suggest that you concentrate on the numbers we report as these will be the only relevant basis for the future. While we have included innogy as described, we have at the same point in time excluded the E. ON Renewables contribution, I. E. For the same last 13 days of Q3.
I would also like to highlight that our EBIT and adjusted net income figures do not and will not include charges from the purchase price allocation. I will elaborate on the purchase price allocation charge and how we treat it later on. So much for the instruction leaflet. Keep all of this in mind, and let me now take a look against that background at the true operating result of the new E. ON.
EBIT in the 1st 9 months of 2019 came in at EUR 2,200,000,000 which is a decline of roughly 6% compared to the same period last year. The isolated third quarter was up by 20%, thus confirming our expectation of continuous recovery during the remainder of this year. Key driver of the year to date decline was the EBIT in Customer Solution, which is down by more than €130,000,000 compared to the same period last year. Most of the decline in our Customer Solutions segment comes from the UK. EBIT dropped by almost €100,000,000 compared to the same period last year, mainly as a result of the introduction of the SCT price cap.
EBIT in Customer Solutions Germany declined by roughly €30,000,000 year on year, mainly due to higher network charges since the beginning of the year. In Q3, we have seen further positive effects of the implemented price increases. We are fully on track to recover the rest of the decline in the last quarter of the year. Earnings in Energy Networks are down by 3% compared to 9 months 2018. In our German network operations, the positive effects from a higher regulated asset base and the excellent efficiency scores could only partly compensate for the lower return on equity in the new regulatory period and the non reoccurrence of positive one off effects, which we recorded in the previous year.
In Sweden, we continue to benefit from already implemented tariff increases, overcompensating for the negative effects that impacted the start of the year. EBIT in renewables is up 16% in 9 months 2019. The positive contributions from new additions were partly compensated by the end of support schemes as well as the end of the inclusion of earnings from mid September onwards. The accounting for 13 days of innogy's 3rd quarter earnings results in €4,000,000 additional operating results in E. ON's accounts.
Earnings of our non core business increased by 4% year over year. In Horst Eletre, higher depreciation charges and the non reoccurrence of positive one off effects in 2018 overcompensated for higher achieved prices. On the other hand, the result of our Turkish generation business increased by more than €100,000,000 on the back of operational improvements that are a continuation of the developments that we have already seen in the first half. Let us now have a look what all this means for our bottom line and with that on to the next page. Our adjusted net income came in at €1,200,000,000 for the 1st 9 months 2019, down 3% compared to previous year.
The financial line is roughly unchanged compared to the same period last year. Improvements in financial expenses resulting from maturing of high coupon debt instruments are compensated by higher financial charges as a result of the first time application of IFRS 16. We use a 21% tax rate for 9 months numbers as a result of the deconsolidation of renewables, so a purely technical effect. The tax rate for full year is expected to be back in line with our initial guidance of 25%. Let me now turn to the development of our economic net debt.
Economic net debt after the first time consolidation of innogy increases to €39,600,000,000 During the Q3, we have seen a significant improvement in terms of operating cash flow. The negative change in working capital at the end of the first half has, as expected, improved considerably. As a result, the cash conversion rate now stands at 73% for the 1st 9 months. Combined pension provisions increased by another €700,000,000 in the isolated Q3 on the back of again lower discount rates. As of September 30, discount rates for pensions amounted to just 1% for Germany and 1.9% for UK, a further decrease of 30 40 basis points, respectively, compared to the first half.
The innogy transaction itself had an overall net positive effect of roughly SEK 1,600,000,000 on our combined economic net debt. The acquisition of shares via the tender offer and market purchases increased our net debt by approximately EUR 2,800,000,000. The transfer of renewables and the minority participations of the 2 nuclear power plants resulted in the transfer of economic net debt in the amount of roughly EUR 3,000,000,000 The harmonization of reporting standards between E. ON and Innogy has also affected the balance sheet and economic net debt. This resulted in an increase of the debt figure of roughly SEK 200,000,000.
Let me now elaborate on the level, the nature and the development of economic net debt going forward. €18,000,000,000 I. E. Close to 50 percent of the total debt are provisions that have to be regarded differently compared to outright financial debt, for example, in the form of bonds. Pension provisions make up approximately €9,000,000,000 As you are well aware, the reported liabilities are very sensitive to discount rate changes.
As of today, discount rates for Germany stand at slightly above 1.2% versus the 1.0% in our Q3 numbers. If we use today's higher discount rates, pension provisions would be lower by more than €500,000,000 I would also like to stress that almost the entire amount of pension provision stems from Germany, where we have absolutely no requirement to fund. The other SEK 9,000,000,000 are provisions for the dismantling of our nuclear power plants. These provisions are included in net debt with a real discount rate floor of 0%. Additionally, as we have proven in the past, there is the potential that these provisions could be lowered by further operational efficiency gains.
The remaining EUR 22,000,000,000 is net financial debt, of which €2,700,000,000 are finance leases that have increased the economic net debt with the first time application of the IFRS 16 standard as of the beginning of the year. For the remainder, we are benefiting over time from significantly better refinancing conditions of our net financial debt. Since August, we have issued EUR 3,500,000,000 bonds with maturities between 3 12 years at yields that range from negative 0.15 percent to positive 0.74%. This compares to the average interest cost of our legacy bond portfolio of 5.4%. The combined financial debt after the innogy transaction increases the annual refinancing needs to EUR 2,000,000,000 to EUR 4,000,000,000 going forward per year.
Contrary to the past, we will now be able to tangibly benefit from the low interest rate environment and with it constantly reduce the negative cash impact from interest payments. With our much more regulated business mix going forward, rating agencies have already signaled last year that they will assign a higher debt bearing capacity to us. Against that background, let me now provide you with an outlook for our economic net debt. At year end, the debt level should be roughly in line with the level which we show at the 9 month stage. As you know, the transfer of the Nord Stream 1 stake into our CTA is planned for year end 2019.
Now the debt relief of roughly EUR 1,000,000,000 will be accounted for in the first logical seconds of 2020. Thus, the economic net debt reduction will not be visible in the financial close of 2019, but only in the Q1 of 2020. In 2020 then, there will be a range of additional effects on the economic net debt as the final elements of closing of the transaction are being implemented. The acquisition of the shares of the remaining 10% minorities in Innogy following the merger squeeze out and the integration costs to achieve our synergy target will increase our debt level. With proceeds from remedy disposals, the final resolution of the LogVox mechanism with RWE as well as the Hungarian restructuring are expected to improve our economic net debt.
Going forward, we will also see significant improvements in our cash conversion. We expect the new E. ON to operate at around 95% operational cash conversion. Be reminded again that cash conversion is defined by us as the degree to which EBITDA will be translating into operating cash flow before interest and taxes. In conjunction with further guidance and measures to be announced at our Capital Markets Day in 2020, we confidently reconfirm our strong BBB rating target.
As we have said before, this holds without any extraordinary measures like, for example, material disposals. We are actually very happy with our new portfolio setup and are looking forward to focus on driving its performance. Let me now move to the adjustment of the full year 2019 guidance as a result of the inclusion of innogy into our financials. For the new guidance, we first of all exclude the Q4 earnings contribution from the E. ON transfer assets, I.
E. Renewables and nuclear participations. Their EBIT contribution will no longer be accounted for and hence is not part of the new guidance. Next, innogy's EBIT for the remainder of the year becomes part of E. ON's full year guidance.
Be reminded that innogy's EBIT contribution excludes any contribution from its Renewables business, the KLAG participation, Czech retail or the gas storage assets. Finally, we also reminded that when including innogy's earnings, different reporting practices between innogy and E. ON have to be aligned. Please note again that we will exclude the PPA charge from our adjusted EBIT and adjusted net income, not only for 2019, but obviously also for the years beyond. Preliminary PPR charges are expected to amount to roughly €700,000,000 on average during the course of the next years and will be booked in 2019 proportionally for Q4.
The charge will be thus will thus affect our reported net income under IFRS, but again, not our EBIT or adjusted net income. Taking into account these adjustments, the new full year guidance for E. ON increases to EUR 3,100,000,000 to EUR 3,300,000,000 for 2019. Please keep in mind that this adjustment of the guidance is of a technical nature only and reflects the innogy transaction closure. You should not compare this guidance to the old guidance and you should not use this guidance as a starting point for your estimates for 2020 beyond as innogy is only included for 1 quarter.
With the transaction now being closed, we also technically withdraw the E. ON 2020 stand alone guidance. We will not report any E. ON stand alone earnings going forward. We will provide you with the full set of short- and midterm outlook for the new E.
ON at our Capital Markets Day in March 2020. Let us now take a look at the remainder of the year for the individual segments. Basically, the operational outlook for the E. ON segment remains broadly unchanged. Starting with Energy Networks, we continue to expect full year EBIT to be slightly above prior year with the well known effects being slightly back end loaded.
In Customer Solutions, the full year EBIT development is mainly impacted by the SCT price cap in the UK. In order to prepare for the migration of Npower customers and to further streamline also our E. ON operations during the course of this transformation, we will record additional restructuring charges in the UK in the amount of around €50,000,000 This means that our UK EBIT will stay positive, but at a lower level than initially guided for at the beginning of this year. In Germany, we see we will see further positive effects from the price increases that we have successfully implemented with full year EBIT expected to reach prior year's level, the remainder of our Customer Solutions businesses are expected to operate largely on prior year's levels as well. Let me stress here that despite of the additional restructuring charges in the UK, we, as E.
ON stand alone, would be fully on course to stay in line with our previous stand alone guidance. Let me then turn to our Renewables segment. Earnings in the Renewables segment will only contain EBIT from a 20% stake in the UK offshore wind farm, Rampion, as well as some other onshore wind assets we keep. Overall, this translates into a low double digit €1,000,000 contribution
for the Q4. For the
new segment, innogy, we expect a contribution for the last quarter of around €400,000,000 Be reminded that due to the harmonization of reporting practices, innogy's reported result cannot be directly compared to the earnings at E. ON. The non core segment, including our German nuclear operations and our Turkish generation, is expected to generate full year earnings above prior year level. In Poisson Electra, higher achieved power prices will not be able to compensate for the increase in the annual depreciation charges as a result of the low interest rate environment. Additional costs from the purchase of production rights will also decrease earnings.
In Turkey Generation, we expect the earnings contribution to remain at a similar level to 9 month earnings, which is a significant improvement versus full year 2018. Starting from the higher EBIT level, let us now move to the adjustment of the items that affect the full year 2019 adjusted net income guidance. With the debt that has been transferred to RWE due to the transaction, the financial expenses associated to this debt will be excluded from our P and L. At the same time, the interest cost of Innogy's financial debt will increase our financial charges. The net increase for the 3 point 5 months amounts to roughly €150,000,000 A similar development will also affect minorities.
We will exclude minorities that relate to Renewables earnings. At the same time, minorities in innogy's businesses will be included for the last 3.5 months. This net increase of minorities amounts to a low to mid double digit €1,000,000 amount. The tax rate for the full year is expected to remain unchanged at 25%, in line with our previous guidance. All in all, the adjustments due to the inclusion of innogy lead to a slight increase of the adjusted net income guidance range to €1,450,000,000 to €1,650,000,000 for the financial year 2019.
Again, please keep in mind that this adjustment of the guidance is of technical nature only, reflecting the transaction closure and should not be used for comparison or extrapolation. More importantly, today, we also reiterate our dividend proposal for 2019 of €0.46 per share. Before I conclude today's presentation, let me elaborate on the so called pro form a guidance for 2019. The pro form a guidance provides you with a picture on how New E. ON's earnings would have looked like in 2019 based on our guidance, if the transaction had already closed as of 1st January.
For this guidance, the full year contribution of our Renewables business and the Poisson Electra minority participations are excluded completely and the innogy full year 2019 guidance is included completely. Innogy's updated full year 2019 guidance excludes the earnings of the so called divestment businesses, I. E. Renewables, Shaquita, Kellogg and Gas Storage. In addition, the innogy contribution has been adjusted the harmonization of reporting standards between innogy and E.
ON and other relevant effects. As you may already have assumed by now, we exclude PPA charges from adjusted EBIT. On a pro form a basis, E. ON's EBITDA would amount between €6,800,000,000 and €7,000,000,000 and an EBIT between €4,000,000,000 €4,200,000,000 for the fiscal year of 2019. On the back of these solid operational results, we also reiterate our dividend guidance beyond 2029, I.
E, our commitment to annually increase the dividend per share. With that said, I would like to thank you very much for your attention and hand over to Stefan for Q and A.
Marc, thank you very much. Operator, please start the Q and A session and remind, as always, every participant to not ask more than 2 questions.
The first question is from Vande Srivienovska, Credit Suisse. Your line is now open.
So the I mean, the first part of the first question will be on the dis synergies that Innogy mentioned yesterday in the press release. They said they see an increased cost. Is it something that you can comment on? And the second part, the accounting adjustment at the EBIT level, what should we assume going forward on the annual basis? And the second question would be on retail business in Germany and other regions excluding you please comment on that one?
Where do you see your margins going forward? Thank you very much.
On the first one, it's Johannes here. On the first one, quite obviously, innogy is transferring renewable assets to RWE, but remains with a full overhead as before pretty much. Therefore, they claim and report that as a dis synergy. In our case, obviously, we knew which overhead they would have. We know our overhead, so the effect is basically in line with our own synergy outlook.
So no surprises from that side.
On the point of accounting adjustments going forward, I would say don't care because I said there will be no going forward. So rely upon our for stand alone innogy results. So rely upon our guidance that for this year, you will see innogy contributing during the Q4 around €400,000,000 If you take innogy's stand alone guidance, that sits for the Q4 at around €500,000,000 That may give you an indication for the remainder of this year. Otherwise, as I said, there will be no going forward. On Retail Business UK, I understand you're asking for margin outlook.
I would answer that question the following way as we are making a commitment with the restructuring of Npower to a long term earnings level, which Johannes mentioned of at least GBP 100,000,000 per year. This number, be reminded again, it is in fact leased number. And secondly, this number does not assume that the margin environment or market environment actually significantly improved compared to today. Otherwise, we have seen the UK margins being at rock bottom level. And as Johannes laid out, we believe that the regulatory environment is not sustainable and requires immediate change in order to create a sustainable market environment for operators who want to be there for the long term.
I think that covers your questions.
If I may, I mean, I was asking about the retail outlook for the region excluding the UK. So what do you see in Germany and other regions? Because you are gaining customers there, so it's clearly a better bit of your retail business comparing to the U. K. And on the accounting adjustments, I think most of us, we model innogy EBIT and your EBIT by division and we just sum it up.
So given that we don't have any I mean, we don't have any restated numbers, there would be some adjustment going forward for 2020, 2021? Or am I getting you wrong?
Well, for the retail customers outlook beyond the UK, all the customers we are gaining are profitable customers. So we're not going for, let's say, marginal customers. We pursue a policy of value attractive customers. So you can assume that all those additional customers will deliver additional EBIT obviously in the next year predominantly. And one obviously office has acquisition costs to be accounted for.
But it's a profitable growth story.
And with regard to your question on Energia EBIT, I would simply refer you to the statements which are made on the pro form a guidance for the combined group in 2019.
Thank you.
I think
that should give you sufficient reference.
Thank you very much.
The next question is from Deepa Venkateshwaran, Bernstein. Your line is open.
Thank you. So my two questions. One is Npower. I just wanted to understand the logic on carving out the I and C division rather than merging it with your own I and C? Is it that you don't have that many I and C customers or something else?
And I believe that this business made a profit of around maybe €38,000,000 from the segmental statement. So just wanted to understand the logic. And the second question is on the working capital. So I gather that in the 1st 9 months, you've had a working capital outflow of 600,000,000 dollars Energy said yesterday that it was around $1,100,000,000 So the combined entity probably still has a working capital blockage of around $1,700,000,000 And then just reading with your 95% guidance for next year, I'm guessing that on an ongoing basis, you're not expecting such litigious. So I was just wondering if you can state something on what you expect on this working capital buildup that's there year to date?
And do you expect it to fully or partially unwind and maybe to what extent? Thank you.
I think you are right in the analysis that the INC customers or B2B customers, however you call them, are not exactly of the same nature as of E. ON. And therefore, just a normal combination didn't look to us as the most advantageous decision. We see it as profitable business, roughly in line with the numbers you indicated. We want to, at this point, keep all options open.
There is no restructuring need in that business, and therefore, we rather carve it out, keep it separate and then decide what to do with it after looking forward for the outlook next spring. But it's not a problem for the analysts and investors. It just keeps optionality open for us.
Yes, Deepa. Hi from my side. And to your second question on working capital. Indeed, as we've seen already at the half year stage compared to last year, we see a negative development in working capital, which is mostly driven on the E. ON side by very positive working capital developments during last year.
Be reminded that cash conversion last year was 95%. But on the old portfolio where our guidance was that we see equal to or more than 80% for the old portfolio, secondly, on the innogy side, we have also seen this year some meaningful one off effects kicking in. We do not expect any meaningful one off effects going forward. Of course, we'll always have calendar year switches around working capital and so on and so forth. But on a sustainable basis, you should rely on a 95% cash conversion ratio over time.
And we will always see from 1 year to another, to regulatory reasons, swings, but which will swing to one direction and then swing back in the subsequent calendar year. Therefore, sustainably looking through over several years 95%. Also finally, for this year, we will bring back our cash conversion to more than 80% as well. So we also expect during the Q4 a further improvement for the cash conversion.
So just a follow-up. So out of
the SEK 1.7 billion, what sort of unwind should we assume? And then the remaining, I gather, is not probably coming back. So could you give some guidance on the 2019? I
don't know. You should expect that for with 2019, it's done and that in 2020, there will be kind of no unwind
So for the last quarter, do you expect any more unwind of the working capital? Or should things stay exactly the same in Q4?
Yes, you should expect a slight improvement, as I said, as the cash conversion will improve to more than 80 percent, again, in line with our guidance.
The next question is from Alberto Gandolfi, Goldman Sachs. Your line is now open.
Yes, thanks for taking my question and thanks for all the explanation and all the help by the IR team this morning was needed. It's done and congratulations for getting there. So my two questions are, first one on m mPower. Can you please talk about the execution risks? This is a 24 month plan, so it's pretty long dated.
The £500,000,000 can you maybe within that explain if this has more to do with labor? I understand there's about 5,000 employees or also you're accounting for extra costs perhaps to early terminate leases on headquarters, cut suppliers, providers contracts, could be IT, could be telco or will this naturally amount in 24 months? I'm trying to see basically what could go wrong or perhaps you can do faster here. The second question is just a little bit of a detail, but not quite sure I got it based on the question earlier, but you've been very clear in explaining what's not and what is in the €4,000,000,000 to 4,200,000,000 EBIT. Could you maybe just clarify if also the remedies have been excluded, the one you explained in H1?
And can you maybe tell us the D and A for 2019 pro form a? Just looking at my model, it will be €2,600,000,000 I'm just trying to figure out if your pro form a EBITDA is 6 700,000,000, EUR 6,900,000,000 just to understand what net debt EBITDA is going? Thank you.
We believe the timing, Alberto, of the process and Npower side is ambitious because lifting, let's say, roughly lifting and shifting 3,000,000 customers between IT platforms in the Copelix regulatory environment is not easy. So the process will start around early Q2 next year and will be in various stages and take roughly a year until all customers that should remain on the platform will be lifted and shifted. And that leaves us then with, let's say, 3 quarter of a year to perform the restructuring later on. And that I think is not a lazy undertaking. As far as the costs go, I can only name, let's say, the cost classes, but we are not ready to break it down because it's also subject to the base with unions and co condemnation.
It includes people costs, severance and pension payments, infrastructure costs, IT decommissioning because obviously you remain with just one platform, and as you indicated, location closures and simple migration costs, interim increased customer operation support and a team migration readiness. So these are the 3 main, let's say, cost items to which we will allocate the EUR 500,000,000 to have a sustainable permanent solution. 2nd question, Mark?
Yes. On the remedies, the bulk part, which is the Czech retail business, is actually excluded. And then the minor parts, which are the German heat customers, electricity heat customers. And yes, the 22 ultrafast charging stations, which we haven't built, and the Hungarian business, they are included. But again, financially, it's not really a big amount.
And then you asked for the depreciation charge. If you look at the EBITDA and EBIT numbers, which we have stated, you end up with a depreciation charge of around €2,800,000,000 Now if that rounding wise ends up at €2,900,000,000 or a lower, I don't commit to right now, take around €2,800,000,000
Thank you so much.
You're welcome.
The next question is from Luedagh Schumacher, SocGen. Your line is open.
Good morning. Good afternoon. I've got only one topic, but unfortunately, three questions.
I hope that's acceptable. They're all very
short. The first one is on Slide 9, where you have the various elements for the net debt. The last bit there, the EUR 1,000,000,000 which you just have as other, of which €3,000,000,000 is CTA funding. Can you just elaborate on the elements there? That would be helpful.
The second is just curiosity. Nord Stream 2 into the CTA, I think we always expect it to happen at the end of December. So why is it not happening in December and slipping into Q1? And the last one, if you already comment on this. So what kind of net debt EBITDA range do you see as adequate for the new business?
Dan, welcome and thanks for your question. And exceptionally, I will accept your reasoning, one topic with 3 questions. So let's take a look at them 1 by 1. With regard to the minus €1,000,000,000 other effect on Chart 9, as included in the footnote, euros 300,000,000 and that relates to funding of pensions. The remaining €700,000,000 are a mixture of various things to give you kind of the 2 biggest and then with it that you understand what it relates to and what to derive that from that also for the future E.
ON. The other big element there is that we concluded tax equity transactions for our E. ON Renewables business during the Q3. And the and this is being reflected as part of the financing cash flow and pop out under the other category. So it's just additional tax equity during the Q3, which will not be a category of effect going forward.
And thirdly, we have included here or we see here the financing cash flow effects from innogy, essentially from the discontinued operations. And there, again, it's also mostly then the Renewables business. And therefore, a large part of the other categories actually related to businesses, which will not be part of our parent going forward. I'm hearing now some strange noise in the lines. Do the others hear this as well?
Okay. Let's go on. I hope we are the only ones here.
It's gone now.
Now it's back. Okay. Maybe, Lula, it's your line. I'd rather finish now, pass with the question. So Nord Stream, just to put into context, we talk about one second slippage.
So slipping into Q1 means by one second. So we can exchange text messages in New Year on the first, second, and I will then reassure you at that moment that Nordstrom will have been transferred. But we would rather may not do that and just deliver it with our families. And finally, on net debt EBITDA, we will at this stage not give a guidance how we translate now our rating or capital structure targets into metrics and whether it will be debt to EBITDA or another metric going forward. But I would just like to reiterate our commitment to safeguarding a strong typically rating without any material disposals or other, let's say, extraordinary measures.
Very clear. Thank you.
The next question is from Chris Lever, JPMorgan. Your line is now open.
Good morning. Two questions, both on the Networks division, please, for me. Just in terms of Sweden, can you tell us the level of carryover utilized this year? And now that you have certainty, the expected level that you might be carrying over into the next regulatory period to offset the drag associated with the lower cost of capital? That would be very useful.
And just in terms of timing on the legal cases in networks, can you give us a sense for when they might conclude just to give us an idea of when took out for the news flow? Thank you.
Chris, we have deliberately always said that we will not break down the carryover question into single items. We always said it's a meaningful number, it remains so. And the recovery will continue to be a very attractive undertaking. So we see it as an extremely positive development and we're very happy about that. Marc?
Yes. On the timing of the legal court cases, is that we wouldn't expect a decision anytime soon, so during 2020, but most probably rather towards the end. But as it goes with these court cases, it may even slip into 2021. Let me add to the Swedish networks question that just for your modeling and view on our Swedish Networks business, you should assume that EBIT in 2020 relative to 2019 will develop in line with the guidance which we have given around allowed return, where we previously said that this would impact earnings by €150,000,000 to €200,000,000 And that is what you should expect in this segment financially to happen.
Fantastic. And so in terms of that year on year impact, we should just assume that the carryover is flat for the sake of argument. Is that the message?
I think the message is you shouldn't worry about the carryover and as demonstrated now by the conclusion, which we reached with the Swedish Energy Minister.
The next question is from Sam Arie, UBS. Your line is now open.
Hello. Good morning, good afternoon. Thank you for your presentation as always. I've got a couple of questions on the UK. And then I admit I also have one on energy, but I'll let you advise whether you can take that now or if I should jump back in the queue with the energy question.
So let me just give you my UK ones now, an easy one and a hard one. The easy one, I think, is relating to the judicial review and the Ofgem implementation of the tariff cap, could you just remind us how much is now at stake for you across E. ON and Empower assuming that the sort of negative impact of this year is unwound somehow in the cap for next year, just trying to work out how much that's worth? And then the second one, a bit harder question maybe for the Empower migration that you're setting out today. Kind of interested to understand if you're planning to move the customers onto your existing E.
ON UK platform, which I believe is a SAP to SAP migration or in the past you have talked about the new E. ON Lite platform, which is kind of your view of how IT should be working in competitive markets in the future, you plan to move the Empower customers onto that new platform? And if so, how many customers are on it at the minute and how much of a stretch would it be to put the Empower customers on there? Thank you.
For the judicial review that Centrica initiated and ended positively, I think it's too early to do calls. It's in the end of the regulator to now answer the calls or the assumptions of the court. Therefore, we don't have a number on that yet. And we need to wait for the next setting of the tariff. You're wrong that we move from an SAP to an SAP platform.
E. ON pursues a bespoke on platform. And you should assume that the customers will be moved to that existing bespoke on IT platform. Obviously, we always look onto opportunities to improve the IT platform. If they would arise in due time, then obviously, we would take advantage of better opportunities.
But the modeling is based on existing ITs. Systems.
And if I may complement that, as we highlighted already at the half year stage, as we have developed under the label of Digital Edeka, a new IT architecture for our sales business in Germany and UK that initially was, of course, done for a stand alone basis and positioned to take on our German and UK customer accounts. From a sheer capacity point of view, we are 1st now focusing the role of a digital attacker to Germany. With Innogy, we will have to assume close to 15,000,000 customers on that account. So the digital attacker will be fully used but basically concentrated on Germany in the first phase. And for the UK, we are in the process then to learn on what platform we start and how to develop then this during the next 2 years in order to make sure that at the end of that period, we also then have a robust and sustainable IT stack in the UK.
Okay. So my understanding is essentially, the Empower is going on to the existing E. ON platform, not on to the digital attack platform that you spoke about in the past.
That's the basic idea. And as I support what Mark just said for the digital attack platform, we already have almost 500,000 of customers in Germany on the new platform. So that's far away now from, let's say, early stage. It's making huge progress, and we continue to do so.
Okay. Very clear. And should I come back later with the energy question? Or time to squeeze that in now?
If it's 1, do 1.
It's 1. I'm just expecting that, I mean, we will have to make an assumption for next year on the price at which the minorities might be squeezed out. I think you're probably working on the IDW valuation at the minute. I doubt you're going to tell us what it is. But is it safe to assume that that's going to come at a lower level than the 3 months VWAP before the intention to squeeze?
And so should we assume that effectively the energy minorities get squeezed at the VWAP, which I think was just under $43 per share? Is that a safe assumption at this point?
Sam, I can fully understand that you asked the question, but I guess you will equally fully understand that we will not answer that question. And I don't want to take out all optimism from you, but I guess you will receive the same answer from innogy.
But you did publish your IDW valuation, is that right, before the EGM?
The invitation to the EGM, of course, you will then also see the valuation numbers. You need that as a basis for taking the decision in the EGM.
Okay, very good. Thank you. Thanks for squeezing in the third question.
You're welcome.
The next question is from James Brandt, Deutsche Bank. Your line is now open.
Hi. Two questions for me. The first is just looking at the pro form a EBIT for 2019 and thinking about how the different parts might evolve into next year. And I appreciate you're not going to kind of go through all of that now. But I was wondering whether you could comment on what the evolution might be for Innogy's Networks business because that's been a business where there's been quite a lot of one offs, which is it's included and it's adjusted EBIT this year.
And it's also one of the areas where there are some differences in accounting approach between yourselves and them. And it would be useful to understand exactly what in terms of gains from provision reversals is included in the 4 to 4.2 to get a bit of an idea as to how that might evolve next year. So I don't know whether there's anything you're willing to comment around that, but it would be useful if there's any comments you're willing to give. And then secondly, you mentioned on retail, you mentioned that you wanted very strongly to see the UK system change and pretty kind of strong words around that. So wondering whether you could set out how you would like it change.
Obviously, I presume that the abandonment of the price cap would be on your list. But assuming that, that doesn't happen, what other ways you would like it to change?
I think I try to be explicit on that, James. Presently, Ofgem and the system allows that some people do a free ride on the system. They charge customers and what's left back then is being relocated And what's left back then is being relocated to the, let's say, honest market participants and they need to pay for these broken models. That is ridiculous that you allow a continuous failure of markets of market participant, new entrants to just pretend they're on the market, collect money from customers and run away and the prudent ones pay for them. That's something that is just nothing to do with the fundamentals.
It's just utterly wrong and Optimum is far too slow in reacting to those things. But yes, also the price setting and the formula behind it and the time interval of 6 months is creating total confusion on the market. It's always you still will have free riders when markets move up or down. It has nothing to do with underlying, just needs to turn and doesn't create value for customers or market participants. So there are so many things you need to do, and we expect Ofgem and politics past the election to wake up.
Otherwise, the system can go into a total failure. And letting small people or small companies go down as they did now in far beyond 10s is one thing. But if something material happens, then it's an issue for customers and politics alike that should be avoided.
On the pro form a EBIT 2019, James, I hope you understand that you will now get the dry version of the answer to that. We will only release guidance beyond 2019 in March 2020, and that also includes obviously then the Energy business. What you should simply assume and actually more rely upon is that, A, E. ON going forward will not as in the past, will not include material book gains as part of their operating EBIT. And equally, yes, one off effects can always happen, but we will not include one off effects as a permanent contribution to our operating earnings power.
And on those two elements, our shareholders should rely upon, The rest then in March next year.
Thank you.
The next question is from Tania Makloff, Commerzbank.
It's also on the pro form a full year 2019 EBITDA for EUR 4,200,000,000. I'd be interested, will you mention, at least for your own business, to what extent this number was impacted by 1 offs like provision releases?
That's a short one, Tanja. In 2019, on the E. ON side, we have no material one offs in our earnings.
Okay. Thank you.
The next question is from Luiz Bojard, ODDO BHF. Your line is now open.
Yes, hi, good morning. Thank you
for taking my question. I have 2 in fact. The first one is following your comment on the financing and to the presentation, I was wondering if you could give us an idea on the reason at which you could eventually refinance your debt going forward. Indeed, there is potential a material impact to be expected and the cost of financing in the future. Are we talking about refinancing possibility of €2,000,000,000 to €3,000,000,000 per year?
Or could it be eventually higher than this reason going forward? My second question is regarding the retail business. I was wondering if you could give us an idea on considering the fact that the poor market prices are now stabilizing at the current level. Do you see also a stabilization into the earnings excluding synergies or excluding cost savings measures? So does the market on itself, is it going stable or is it slightly improving, excluding synergies, on this topic?
If I look on the retail side, I would say, obviously, we don't. If the wholesale price level in several market appears to be more stable, but there's still additional charges coming into the price curve from special fees, from network charges. So I don't think we can assume a total stable price environment. And therefore, I would say, yes, margins are fundamentally stabilizing based on wholesale prices, but other effects then on special regulation can influence margins. But I don't see a fundamental change of margins.
I would also point out in that respect that if you look at our retail operations outside of the UK in 2019, already we are running largely on stable profitability compared to prior year. And all of that, while significantly or meaningfully increasing our customer base and that having implemented a price increase in the Q1, for example, in our main market in Germany. So the point is, I think, I see Austria is well positioned to also run on stable profitability even in a rising price environment over time. On the financing side, I mentioned in my speech an annual refinancing volume of €2,000,000,000 to €4,000,000,000 This can fluctuate from 1 year to another, but that's the range. And I don't want to actually be I don't want to be more specific.
And you need to compare that against the interest average interest rate in our legacy bond portfolio of almost 5.5% and compare that to current market rates. I think more information or guidance I can give in that respect.
Okay. Thank you.
The next question is from Piotr Giorowski, Citibank. Your line is now open.
Good afternoon. Thank you for letting me ask the question. I have two questions, please. One is technical regarding the 2019 guidance. So is the contribution from the Czech network and Slovakian network, the product contribution included in this number?
And if yes, how much would you have to take it off to kind of normalize for the full year? And the second question I have on cash flow, you mentioned that your EBITDA cash conversion is going to grow to 95% or above. So can you the way I try to look at it that you have this $500,000,000 charges related restructuring charges related to Enpower then another charges related to synergies plus nuclear provisions utilization. Can you kind of maybe quantify how much are these charges because they don't affect EBITDA? And what would be the other effect that really allow you to reach the kind of such a high cash conversion ratio?
Yes. Peter, on the technical guidance question, the answer is no. That means Check Networks or Retail are not included in those numbers. On the cash conversion question, the guidance is around 95%, as you said now 95% or more. I said around 95%.
And with regard to the one offs, this is a sustainable cash conversion ratio, at least in the 1st years. And you need to treat separately the one off cost for integration, which we guided for at around €1,000,000,000 And in addition to that, of course, the charges with regard to the UK Npower restructuring. With regard to the nuclear decommissioning costs, which you mentioned, it is not included in the cash conversion. It's also from an economic and debt point of view irrelevant for us as it is a provision which is then just constantly churned into a financial liability. We guided for a run rate of roughly €400,000,000 per year in the past.
That is unchanged for the midterm. But this, as I said, has no impact for us in terms of cash conversion. It is just exchanging a provision into a financial liability, but immediately over many years to come.
Okay. And can I squeeze in one question on that because I've seen this you have a little bit different treatment of the net debt regarding the innogy bonds? Can you please tell us how that will be accounted for given there's a €2,600,000,000 difference? So and the statement here is probably like adjusted 1 night, so for the face value of the bonds. But how will they work through the true accounts?
The bonds on the balance sheet, they will be valued at fair market value. This is why we will see a step up on the balance sheet and a magnitude of €2,500,000,000 for our economic net debt calculation. We, of course, only include the nominal value, either replacement value of that. So kind of going from the balance sheet into our economic net debt, you then need to deduct again that step up, which just comes from the transaction and does not reflect any cash out needs going forward.
Thank you very much.
You're welcome.
The next question is from Ingo Becker, Kepler Cheuvreux. Your line is now open.
Yes, thank you. Two questions. Hopefully not I mean not precisely on 2019 or 2020 or your guidance, so that's just more conceptually. You paid a dividend, which equates to a payout ratio of just over 60% in the last 2 years. And before that, it was over 40% for 2 years.
Are you going to apply a payout ratio in future? Or how conceptually, if you can tell already, will you set the dividend? Or maybe I don't know if this is premature, starting with
the $0.46
today, what should we expect going forward? The second one should be on your networks. I think you said that you see 3% to 4% rep growth from decentralization for your networks. Does that figure at least tentatively change with the inclusion of innogy? Does it go up or down?
And maybe, if you can, an indication of about the total CapEx that you see for the group going forward? Thank you.
Ingo, this is Marc here. Very relevant questions, but I have to refer you to our disclosure in March. I talked about the dividend commitment to grow the dividend per share annually. How we translate that into a dividend policy, we will lay out then in March next year. And the same is also for CapEx plans and growth in regulated asset base.
Okay. Thank you.
I see now 2 more questions, which we will take and also with a view to the time. We should then close the call. Next one, please.
The next questioner is John Musk. Please go ahead. Your line is now open.
Yes. Hi, everyone. Really just one follow-up on Npower in the UK. Don't expect you to give precise guidance, but versus the I think it was about EUR 170,000,000 loss that Energia reported in the 9 months. How quickly should we expect that to turn around to your EUR 100,000,000 plus of profit in 2022?
I mean, are things going to get worse before they get better? Or is it a sort of steady increase to that level over the next couple of years? And then maybe just a very quick follow-up on something you mentioned earlier. The B2B business that's remaining from energy, yes, it seems like you'll be a bit of an orphan. Is that something that you might look to sell moving forward?
As I said, we keep all option opens on the B2B, I and C. So I'm not intend to speculate with you there. All options.
And with regard to the Encore UK business, we will now not kind of give an updated guidance at this stage for the Encore businesses standalone, stick to our commitment that we gave upfront and reconfirmed today. And by 2022, we will deliver at least GBP 100,000,000 in the UK, not assuming any meaningful improvement in the market environment.
The last question is from Amit Fuhrman, Jefferies. Your line is now open.
Yes, hi everyone. I'll start with Maestro's first two questions and I'll see if you allow me a third one, given I'm the last on the line. So the first one is just on Slide 3. I was hoping if you could give us a little bit more granular breakdown of how you see the process moving forward with the squeeze out of the minorities in energy. So obviously, you've sort of listed these boxes, but I'm just sort of wondering if you could be a bit more specific.
When can we hear about sort of the details on the value IDWS valuation? Is the EGM energy yellow box, is that sort of in Q1? And where is sort of the 2nd closing box fitting? Is it sort of Q3 or early first half? So that's my first question.
My second question, I wanted to have another try on the net debt side, probably more focusing on the financial debt. And I just wanted to ask, you've listed quite a few big moving parts on there, The disposals, you're talking about the through the remedy disposals, CTA from Nord Stream benefit, higher cash conversion. So is there a bit sort of you can give us a little bit more sense of the profile you see for the financial position, not the pensions or the ERS, just the financial position? How do you think about it over sort of the next couple of years? Thank you.
I think for the first one, you're right to assume that we should expect the AGM of innogy in Q1, probably late in Q1. And then obviously, the follow-up would be a legal process that is partially beyond control. It will not take longer than 2 quarters, I would say, but when precisely it will land is in the end of courts and therefore beyond. So your assumption Q3 is likely the best estimate that we also would share with you.
And on the economic net debt side, I think the only guidance which I can give you on top of what I said is that, of course, you should expect that the net financial liabilities over time should increase simply due to the fact that we will be converting asset retirement obligations into financial debt over time. So simply from that effect over time, the share everything has been equal. The share of our financial liabilities would every year go up.
Okay. And am I, I guess, allowed to ask a quick
No, Harmit, you are not allowed. We had 2 questions, Ruz. It's over now. The call has always been very long. And nevertheless, after 10 years of IR, we cannot before we conclude the call, I would like to
take the opportunity to say a few words.
Thank you, Johannes, and especially Marc for your kind words, your support and the excellent working together over the last years. Furthermore, I would like to deeply thank the EON IR team, Martina, Connie, Sebastian, Andreas and Cam. This team has been by far the best team I ever had the honor to work with during my long E. ON career. The power, the commitment, the loyalty, the intellectual brilliance of this team is just breathtaking.
I will miss you quite a lot. Verena is lucky, very lucky to get such an outstanding team. I wish you Verena and the team together with the new colleagues from innogy all the best on continuous success. Last but not least, I would like to thank you, dear analysts and investors. As you know, being an R Manager has been for me much more than just a job or a role.
I truly enjoyed all our interactions without any exception. Discussing with you about E. ON, our industry and the market has been permanently energizing and inspiring for me. Thank you very much. I will also miss you a lot.
On the other hand, I'm very happy and positively excited to return to my roots and get the opportunity to use what I learned from the countless interaction with you to contribute to the value optimizing management of our network business. Together with the team, I will be on the road in the coming weeks and do the handover to Verena. Thus, the analysts and investors, we will still get the opportunity to say farewell to each other in a proper way. I'm very much looking forward to that. See you soon on the road.
Thank you very much for everything and enjoy the rest of the day. Bye bye.
Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.