RWE AG Fiscal 2013 Press Conference. Essen, 4 March 2014

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Jerome Nichols
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1 Essen, 4 March 2014

2 RWE working hard to successfully master the crisis» RWE is in a difficult economic situation conventional power generation in particular is declining fast» RWE wants to regain its financial strength, as net debt bears no sensible relation to earnings capacity» RWE as a partner in the transformation of the energy system in networks, sales and power stations Page 2

3 First net loss in 60 years» Massive decline in earnings in conventional power generation» Impairment losses of 4.8 billion» Operating result down by 8% to 5.9 billion» Recurrent net income down by 6% to 2.3 billion Positive effects:» One-off effect from Gazprom payment» Efficiency-enhancement programme progressing faster than expected Page 3

4 Renewable energy pushing conventional power stations out of the market Measures Power station MW 1 Fuel Location Date Decommissioning Amer Hard coal NL Q Long-term conservation Conservation in summer months Contract terminations Claus C 1,300 Gas NL Q Moerdijk Gas NL Q Gersteinwerk F 355 Gas/steamturbine DE Q Gersteinwerk G 355 Gas/steamturbine DE Q Weisweiler H 270 Gas 2 DE Q Weisweiler G 270 Gas 2 DE Q medium-sized generation units 85 3 Gas NL Q Emsland B 360 Gas/steamturbine DE Q Emsland C 360 Gas/steamturbine DE Q STEAG, among others Total 6,590 2,195 Hard coal DE Q Q Measures taken since 2011 MW 1 Westfalen A, B 304 Biblis 2, MW stations, lignite 1,954 Ensdorf 282 Gersteinwerk I 355 Donge 120 Claus A 591 Fawley 1,000 Didcot A 2,025 Tilbury 772 Littlebrook 1,370 Contract terminations 1,800 12,967 Comparison: new-build 12,482 1) Net capacity 2) At lignite-fired power station 3) Depending on the final decisions on the Dutch Energieakkoord Page 4

Efficiency measures of 2 bn implemented by end of 2016 - saving targets met faster than planned Efficiency enhancements by division ~ 10% RWE AG, other divisions and cross-divisional effects ~ 10%

5 Efficiency measures of 2 bn implemented by end of saving targets met faster than planned Efficiency enhancements by division ~ 10% RWE AG, other divisions and cross-divisional effects ~ 10% Trading/Gas Midstream ~ 10% Supply UK ~ 20% Supply/Distribution Networks Germany ~ 50% Conventional Power Generation Measures of 2 bn = 1.5 bn (net) by 2016 Difference between measures and net figures = cost inflation; % figures indicate net benefit to operating result Conventional Power Generation» ~40% reduction in overhead costs» Reduction in operating and maintenance costs» Improvement in availability and flexibility of power station portfolio Supply/Distribution Networks Germany» Reduction in overhead functions in the grid and sales business» Leaner sales processes and development of new products» Optimisation of grid operations Supply UK» Operating cost reductions due to outsourcing and services, among other things Trading/Gas Midstream» Focus on optimisation of locations, IT and support functions RWE AG and cross-divisional effects» Implementation of a new steering model» Harmonisation of IT equipment Page 5

6 Everyone contributes RWE Shareholders Halving of dividend to 1 per share Board 500,000 voluntary reduction in compensation Workforce No salary increase for managers and salaried staff in 2014 Page 6

Our contribution to the transformation of the energy system RWE operates modern and efficient power stations whose output (MW) can be decreased or increased within minutes. In 2013 RWE was the No.

7 Our contribution to the transformation of the energy system RWE operates modern and efficient power stations whose output (MW) can be decreased or increased within minutes. In 2013 RWE was the No. 1 in Germany in terms of gas capacity In 2015, Innogy will be one of the three largest off-shore operators in Europe, with an output of 1,000 Megawatts RWE is one of the leading energy service providers in Germany RWE s power distribution network is 344,000 kilometres long and we have connected 300,000 renewables systems up to it so far In Europe we supply power to more than 23 million customers. Four-fifths of our German clients are very satisfied with us Page 7

8 RWE is No. 3 in the E.U. in gas-fired power stations and No. 1 in Germany in 2013 RWE and large European competitors 1 : Gas capacity in the EU and Germany (GW) GDF Suez 25.3 RWE 5.2 E.ON Eon 19.5 E.ON Eon 4.7 RWE 15.6 Vattenfall 1.7 Enel 14.3 EnBW 1.2 EDF 13.0 GDF Suez 0.2 Iberdorla 8.3 Gas capacity (partially dual-fuel) Vattenfall EdP Centrica EnBW including customer power stations as well as shareholdings, at RWE for example including enviam, also including temporarily mothballed capacity The main sources (to mark off gas capacity, further sources were required in some cases) RWE: Facts & Figures and Annual Report 2012 E.ON: Annual Report 2012, Facts & Figures March 2013 GDF Suez: Asset Table 2012 EDF: Facts & Figures 2012, Analyst Fact Pack 2012, Platts Kraftwerksdatenbank 2010 ENEL: Presentation of results 2012, Plan , Website Endesa, ENEL List of thermal power stations in Italy EnBW: Annual Report 2012 Vattenfall: Infopack 2012, Website Kraftwerksliste, Federal Network Agency (BNetzA) Kraftwerksliste (DE) Iberdrola: Annual Report 2012, Website Iberdrola (Interactive analysis) Page 8

9 In 2015, RWE will be one of the leading offshore operators in Europe, with around 1,000 MW of installed capacity Strong competitive position (capacity in MW) DONG Vattenfall E.ON SSE RWE Centrica Statoil Statkraft EnBW SWM* Iberdrola EDF 5 DONG E.ON RWE Vattenfall SWM* SSE EnBW Centrica Iberdrola Statkraft Statoil EDF 3 Already in operation Under construction (scheduled for commissioning in 2015) Source: RWE Innogy internal analysis - Offshore competitor database. * Stadtwerke München Page 9

RWE is largest German energy service provider, with over 500 million in revenues Energy

in Kelsterbach with CHPs, PV systems, storage systems and intelligent control» Refitting of

1,300 CHP solutions for SMEs and industry with installed capacity of 3,000 MW th and 500 MW el»

station with 1,000 MW» Energy control systems for industry» Home automation for residential

10 RWE is largest German energy service provider, with over 500 million in revenues Energy transition in practice Local and remote district heating» Energy concept for 180 terraced houses in Kelsterbach with CHPs, PV systems, storage systems and intelligent control» Refitting of existing systems to environmentally friendly biogas CHPs Decentralised solutions Innovations» 1,300 CHP solutions for SMEs and industry with installed capacity of 3,000 MW th and 500 MW el» PV storage solutions and heating services for residential and commercial customers» Virtual power station with 1,000 MW» Energy control systems for industry» Home automation for residential customers with RWE SmartHome» Telephone hotline on how to save energy A new CHP system is set up every working day Page 10

11 RWE has the most efficient grids, with the highest feed-in of energy Annual peak load (GW) Annual output (TWh) RWE E.ON EnBW Vattenfall RWE E.ON EnBW Vattenfall Source: internal research, status: 2012 Page 11

RWE Vertrieb positioned strongly on the market: No.

Segment Market position Customer satisfaction B2C residential

1 in residential customer segment with over 8 m customers»

position in business customer segment» 13% electricity market

utilities segment» 12% electricity market share» 6% gas

90% of customers appreciate the speed of reaction to their

Highest points for friendliness and courtesy» Highest points

12 RWE Vertrieb positioned strongly on the market: No.1 in residential customer supply, leader in B2B supply Segment Market position Customer satisfaction B2C residential customers B2B business customers B2B energy utilities No. 1 in residential customer segment with over 8 m customers» 16% electricity market share» 10% gas market share Leading position in business customer segment» 13% electricity market share» 10% gas market share Leading position in energy utilities segment» 12% electricity market share» 6% gas market share» Over 500,000 customers in online customer care» 90% of customers appreciate the speed of reaction to their queries» Over four-fifths of all customers say we are very satisfied!» Best performance in terms of advice and courteous service» Highest points for friendliness and courtesy» Highest points for dealing successfully with customer queries RWE is the No. 1 in energy supply in Germany and delivers high levels of customer satisfaction Page 12

13 RWE is the customers energy manager We offer a modern, efficient system for automated home control SmartHome. At the moment, it can only control lights, windows and heaters. In future you will be able to control your entire heating system, even from your smart phone. RWE Smart Company is designed for medium-sized companies that want to capture their consumption data and reduce their consumption at different locations. With RWE WebMarket, large customers, regional energy utilities and municipal utilities can participate in energy trading. With our partners, we are driving forward the expansion of electric vehicle infrastructure, so that in future these cars will not simply be the modern method of transport, but also part of the system of storing renewable energy. RWE Windheizung is also a solution for storing excess green energy, which is designed to help households to use their self-generated electricity efficiently. RWE is applying its expertise to enable customers to efficiently control their energy requirements Page 13

14 Reconciliation of (recurrent) net income Fiscal 2013 (+/-) million EBITDA Depreciation Operating result Non-operating result 8,762-2,881 5,881-5, ,381» Non-operating result shows the impairments, mainly in our Conventional Power Generation Division and significant restructuring charges» Financial result improved due to better net interest and interest accretion to provisions» Tax rate for determining recurrent net income at 34% (previous year 34%) Financial result Tax Minorities/hybrids -1, » Adjustments for recurrent net income comprise non-operating result including tax effects and one-off items from taxes Net income -2,757-4,063 Adjustments +5,071 +3,920 Recurrent net income 2, Page 14

15 Access to debt capital market at all times is key Leverage target mid-term: 3.0x; more flexibility short-term billion x 3.5x 3.5x In the order of 2013 Net debt Significantly >3.5x 1 Leverage factor e Net financial debt Pension, mining and nuclear provisions 1 Leverage factor ((Net financial debt (incl. 50% of hybrids) + pension, mining and nuclear provisions)/ebitda) Page 15

16 Political reforms for a successful transformation of the energy system We need a redesigned energy market, which assigns value to retaining conventional power station capacity. This is a matter of security of supply. We need a reformed Renewable Energy Sources Act to ensure that energy for industry and households remains affordable. Energy must not become a luxury good for the privileged few. We need ambitious climate protection measures, including a strong European emissions trading law with a CO 2 -reduction target to be implemented by Page 16

17 Outlook for 2014 we have a difficult path ahead of us We are expecting our performance to decline significantly again in 2014 We are working to achieve the objectives of our RWE 2015 programme Page 17

Jointly towards a long term sustainable energy supply

Jointly towards a long term sustainable energy supply Lars G. Josefsson, CEO Vattenfall, CEO Nuon 23 February 2009 Agenda Nuon & Vattenfall: a great partnership Rationale for Nuon Rationale for Vattenfall