Paving the way for growth with continued focus on financial - - PowerPoint PPT Presentation

Paving the way for growth with continued focus on financial discipline

(as of September 2015)

2

Forward Looking Statement

> Projections of revenues, income, earnings per share, capital expenditures, dividends, capital structure or other financial items > Statements of plans or objectives for future operations or of future competitive position > Expectations of future economic performance; and > Statements of assumptions underlying several of the foregoing types of statements are forward-looking statements. Also words such as “anticipate”, “believe”, “estimate”, “intend”, “may”, “will”, “expect”, “plan”, “project”, “should” and similar expressions are intended to identify forward-looking statements. The forward-looking statements reflect the judgment of RWE’s management based on factors curren- tly known to it. No assurances can be given that these forward-looking statements will prove accurate and correct, or that anticipated, projected future results will be achieved. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Such risks and uncertainties include, but are not limited to, changes in general economic and social environment, business, political and legal conditions, fluctuating currency exchange rates and interest rates, price and sales risks associated with a market environment in the throes of deregulation and subject to intense competition, changes in the price and availability of raw materials, risks associated with energy trading (e.g. risks of loss in the case of unexpected, extreme market price fluctuations and credit risks resulting in the event that trading partners do not meet their contractual obligations), actions by competitors, application of new or changed accounting standards or other government agency regulations, changes in, or the failure to comply with, laws or regulations, particularly those affecting the environment and water quality (e.g. introduction of a price regulation system for the use of power grid, creating a regulation agency for electricity and gas or introduction of trading in greenhouse gas emissions), changing governmental policies and regulatory actions with respect to the acquisition, disposal, depreciation and amorti- sation of assets and facilities, operation and construction of plant facilities, production disruption or interruption due to accidents or other unforeseen events, delays in the construction of facilities, the inability to obtain or to obtain on acceptable terms necessary regulatory approvals regarding future transactions, the inability to integrate successfully new companies within the RWE Group to realise synergies from such integration and finally potential liability for remedial actions under existing or future environmental regulations and potential liability resulting from pending or future litigation. Any forward-looking statement speaks only as of the date on which it is made. RWE neither intends to nor assumes any obligation to update these forward-looking statements. For additional information regarding risks, investors are referred to RWE’s latest annual report and to other most recent reports filed with Frankfurt Stock Exchange and to all additional information published on RWE’s Internet web site. This presentation contains certain forward-looking statements within the meaning

• f the US federal securities laws. Especially all of the following statements

3

RWE – an attractive value proposition

> Progress in strengthening balance sheet > Streamlined and disciplined investment approach > Cash flows from operating activities to cover investments and dividends > Further efficiency enhancements and operational excellence > New dividend policy: Focus

• n sustainability and continuity

> Pure utility play with leading market position and regionally focused strategy > Balanced asset portfolio with strong downstream presence > Highly cost-efficient and modernised power plant portfolio > CO2 neutral position > Focused growth initiatives in new energy market opportunities

Attractive portfolio Stable financials

Earnings outlook for 2015: EBITDA €6.1 – 6.4 bn; operating result €3.6 – 3.9 bn; adjusted net income €1.1 – 1.3 bn

4

Main messages

Successful divestment of RWE Dea for an EV of €5.1bn; net debt improved significantly to €25.6 bn German government publishes details on the contribution to climate protection by the energy industry; electricity market design white book released Adoption of new dividend policy: from 2015 onwards, the dividend proposal will be

• riented towards RWE’s operating cash flows, indebtedness and earnings position

RWE AG to transform into an operating company and pool a large number of German RWE subsidiaries Outlook 2015: EBITDA €6.1 – 6.4 bn; operating result €3.6 – 3.9 bn; adjusted net income €1.1 – 1.3 bn Financial performance first half of 2015: EBITDA -7%, operating result -11%, adjusted net income -28% Successful refinancing of 2010 €1.75 bn hybrid bond

5

On our way to financial robustness as base for long- term growth

Review of set-up of conventional power generation portfolio Third wave of efficiency programme Financial discipline with regards to investments Identification and fostering

• f growth areas

> Establishment of European generation business to drive cost efficiencies and portfolio measures > First two waves of efficiency programme delivered ahead of time > Positive cash balance achieved ahead of time > Successful disposal of RWE Dea for an EV of €5.1 bn > Improvement of net debt position > Reduction of capex level on plan What we have achieved so far What we are focusing on

1 2 3 4

6

Changing energy market offers growth potential

Areas of growth 1

> Focus on on- and off- shore wind > ~ €1 bn in growth capex (2015-2017) > Partnering solutions will diversify risks and leverage project pipeline > Double digit compound annual earnings growth rate over the next three years secured > Best in class grid management > Investments of > €3 bn between 2015 and 2017 > Additional growth potential from smart technologies > Single digit earnings growth possible longer term > Strong Pan European Retail organisation with 23m customers > Decentralised energy market models as

• pportunity

> Innovation: growth catalyst for new products and services > Single digit earnings growth rate mid term envisaged

Renewables Grids Retail

7

Increased earnings pressure on conventional power generation

Generation review 2

1 Rough profitability analysis for 2014 to 2016 in % of installed capacity of RWE’s conventional power generation portfolio in Germany, UK and NL (average c. 41 GW) based on market parameters as of October 2013. 2 Rough profitability analysis for 2015 to 2019 in % of installed capacity of RWE’s conventional power generation portfolio in Germany, UK and NL (average c. 41 GW) based on market parameters as of November 2014. ROCE = return on capital employed WACC = weighted average cost of capital (pre tax) OR = operating result FCF = free cash flow = revenue minus cash costs

As of March 20141 As of January 20152

ROCE > WACC

• c. > 50% – 60%
• c. > 25% – 35%

OR > 0

• c. > 60% – 70%
• c. > 40% – 50%

FCF > 0

• c. > 70% – 80%

>

• c. > 55% – 65%

Market decline

Optimi- sation

8

Generation review 2

Conventional Power Generation: mark-to-market free cash flow neutral

2012 € billion 3.3 Efficiencies 2012-2017 Mark-to-market (m-t-m)1 2014 Operating result (OR) Depreciation EBITDA 1.0 OR m-t-m before efficiencies Other cash flow effects2 Day-to-day capex Free cash flow 3.0 2.0 1.0 0.0

• 1.0

1 Mark-to-market as of January 2015 at market prices of around €32/MWh for German base load forwards and anticipating the expiry

• f the nuclear fuel tax.

2 Changes in provisions, funds from operations financial income and tax, changes in working capital.

9

Overview of capacity measures

Generation review 2

Measure Plant MW1 Fuel Location Date Decom- missioning Amer 8 610 Hard coal NL Q1-2016 Goldenbergwerk 110 Lignite DE Q3-2015 Westfalen C2 285 Hard coal DE Q1-2016 Gersteinwerk K2 610 Hard coal DE Q1-2017 Long-term mothballing3 Claus C 1,300 Gas NL Q3-2014 Moerdijk 2 430 Gas NL Q4-2013 Gersteinwerk F 355 Gas – steam turbine DE Q3-2013 Gersteinwerk G 355 Gas – steam turbine DE Q2-2014 Weisweiler H 270 Topping gas turbine DE Q3-2013 Weisweiler G 270 Topping gas turbine DE Q3-2013 Mid-size units 35 Gas NL Q1-2013 Summer mothballing Emsland B4 360 Gas – steam turbine DE Q2-2014 Emsland C4 360 Gas – steam turbine DE Q2-2014 Termination

• f contracts

Confidential 2,960 Hard coal DE Q4-2013 – Q2-2015 Total 8,310 MW

1 Net nominal capacity, rounded. 2 Summer mothballing between April and September 2015. 3 In times of market tightness mothballed plants might return temporarily to the system. 4 Continuous operation decided for 2015.

10

Efficiency programme ahead of schedule, additional measures contribute another €500 million

Efficiency programme 3

Net benefit to operating result Net benefit by division

~ 30% Supply/Distribution ~ 10% Trading/ Gas Midstream ~ 50% Generation ~ 10% Holding and cross divisional effects ~ €2 bn by 2017 200 800 400 100

100 400

€ million 2012 2013 2014 2015e 2016e

 

2017e



11

Next wave of efficiencies entails a wide range of performance measures

Efficiency programme 3

Additional measures focus on cost reduction and cash flow optimisation Costs Cash > Implementation of lean programme and improved end-to-end processes > Consolidation of IT landscape > Reduction of costs of external service providers > Streamlining of organisational and legal structures: reduction

• f management levels and number of legal entities

> Reduction of personnel costs through internal job market, lower travel costs, improved performance management > Optimisation of working capital should contribute c. €1.5 bn to debt reduction by 2016, of which c. 50% already achieved by 2014 > Special focus on cash-optimising procurement process > Further integration of working capital measures in target setting and incentive process Costs

12

Development of total controllable costs (TCC)

Efficiency programme 3

Continuous reduction of TCC (nominal values)

€10.1 bn

2013

€10.8 bn

2012

€8.7 bn

Personnel costs Other TCC Operational cost improvement Portfolio and other effects

2014

~ €8.5 bn

2017e

5.3 5.2 4.8 4.6 5.5 4.9 3.9 3.9 0.5 0.2 0.4 1.0 0.1 0.1

13

Capex programme reduced to maintenance level

Financial discipline 4 > Approx. €6.5 – 7.0 bn capex programme for 2015 – 2017: ~ €1.5 – 2.0 bn for major projects ~ €5.0 bn for day-to-day incl. grids > Completion of new-build power plant programme > Completion of large offshore wind farm projects in 2015

2012 2013 2014 2015e 2016e 2017e RWE Dea ~ 6.5 – 7.0 € billion ~ 3.3 Distribution networks ~ 1.0 Renewables ~ 1.5 – 2.0 Conventional power generation 4.5 5.1 ~ 2.5 – 3.0 ~ 2.0 ~ 2.0 ~ 0.7 Retail 0.7 0.7 3.8 4.4 3.2

Further growth projects have to be financed debt-neutral, e.g. by the disposal

• f other assets or partnering solutions

14

Positive cash balance reached 1 year ahead of plan

Cash flows from operating activities to cover investments and dividends 2015e < 2012 7.1 4.4

Dividends (incl. minority payments; year of payment) Capex in property, plant & equipment and financial assets (according to cash flow statement) Cash flows from operating activities

€ billion

20131 20141 5.5 4.8 Cash balance

• 2.7
• 0.7

<0 +1.1 Beyond 2015 ≥ 4.5 5.6

1 From continuing operations (excluding RWE Dea).

Financial discipline 4 Target: ≥0

15

Excellent access to the capital market is key to us

1 Leverage factor (Net financial debt (incl. 50% of hybrids) + pension, mining and nuclear provisions)/EBITDA. 2 Pro-forma leverage factor including the EBITDA of RWE Dea, as reported net debt still includes RWE Dea. 3 Including €1.1 bn net debt from discontinued operations (= RWE Dea).

Achievements > Strong decrease of net financial debt > Net financial debt/ EBITDA <1x (2015e) > Ample liquidity after Dea sale Financial policy > Access to the capital market at all times through… − keeping solid investment grade rating − first funding of provisions − targeting ongoing positive cash balance

Significant reduction of net financial debt

Pension, mining and nuclear provisions Net financial debt incl. 50% of hybrids

2011 13.0 16.9 29.9 3.5x 2012 13.1 19.9 33.0 3.5x 2013 11.1 19.6 30.7 3.5x2 2014 9.3 20.6 31.03 3.8x2 2015e < 2014 > 2014

Dea sale

Financial assets earmarked to cover already >10% of provisions

Net debt Leverage factor1 € billion

Financial discipline 4

16

Net debt mainly driven by provisions with ultra-long duration

Average duration of provisions 4 8 12 16 10 15 20 25 30 35 Amount of provision years

Nuclear Mining

As of 30 June 2015

Net debt as of 30 June 2015 comprises €6.6 bn net financial debt (incl. 50% of hybrids) and €18.9 bn provisions. Provisions not subject to financial covenants, undertakings, cross default clauses, or rating triggers

Pension Germany Pension UK

€ bn Financial discipline 4

17

Outlook for 2015

€ million Dividend €1.00/share 7,131 4,017 1,282 EBITDA Operating result Adjusted net income1 2014 reported 6,100 – 6,400 1,100 – 1,300 3,600 – 3,900

1 New term: formerly ‘recurrent net income‘; see H1 Interim Report page 20. 2 The outlook considers the current status of the nuclear fuel tax law. In case nuclear fuel tax is declared finally illegal and fully in our favour, we expect a positive earnings contribution of c. €1.6 bn to EBITDA, operating result and adjusted net income. RWE Dea: In 2014 and 2015 RWE Dea is not included in EBITDA and operating result. The adjusted net income includes the pro rata interest

• n the sale price.

2015e2

Oriented towards growth opportunities, indebtedness and earnings situation. The dividend for 2014 serves as a reference point.

18

Dividend policy reflects whole economic situation

Dividend of the preceding year serves as a reference point for the dividend proposal

Dividend Earnings situation Leverage and cash flow situation Growth

• pportunities

Back-up charts

20

Political environment in Germany I Climate protection plan via strategic capacity reserve

Government climate protection plan proposal > Transfer of 2.7 GW lignite capacity into a strategic reserve > Plants will be shut after four years in the reserve > Operators shall be granted cost based compensation > Potential further measures to save 1.5mt CO2 by lignite sector to achieve targeted 12.5mt > CHP generation target

• f 25% of total thermal

power generation > Increase of CHP support from currently €0.75 bn to €1.5 bn per annum > Efficiency improvements in buildings, municipalities, industry and rail transport CO2 savings1: ~12.5 CO2 savings1: ~4.0 CO2 savings1: ~5.5

1 million tons.

21

Political environment in Germany II White book for a new market design

New market design: “Energy Only Market 2.0” with capacity reserve Further development of existing competitive, market-based energy market (“Energy Only Market 2.0”); no introduction of wide ranging capacity mechanism Introduction of capacity reserve for times of insufficient supply Guarantee of market-based price formation on the wholesale market; i.e. acceptance of higher volatility and (potentially very) high prices in tight markets Increased obligation for “balancing group” responsible utilities and traders to secure required capacity Opening of the balancing market to further participants Incentives for demand side management Improvement of market transparency

22

Political environment in Germany III Treatment and management of nuclear liabilities

> Assessment of completeness and correctness

• f nuclear

provisions by Government appointed auditor > Review of assets and cash flows available to fund nuclear provisions > Evaluation of stress tests and further steps to secure the long term funding of nuclear liabilities by Government commission > Assessment of different models for handling nuclear liabilities > Determination of obligation to make further contributions in case costs for nuclear decommissioning and final storage outstrip provisions > Secure operators’ legal responsibility for nuclear assets and liabilities > Safeguard asset base liable for nuclear liabilities Stress testing of nuclear provisions Review of nuclear liability management Responsibility for nuclear liabilities

23

Political environment in the UK CMA Energy Market investigation

Absence of locational pricing for losses CMA1 findings of Adverse Effect on Competition

1

Mechanisms for allocating CFDs Weak customer response and unilateral market power in power/ gas retail market Features of regulatory framework Combination of features in SME market lead to weak customer response from microbusinesses Lack of robustness and transparency in regulatory decision making for wholesale and retail markets Combination of features in GB market related to code governance

2 3 4 5 6 7

RWE assessment

1 Competition and Markets Authority.

      

24

Becoming faster and getting closer to customers

RWE AG Board RWE Supply & Trading GmbH RWE Innogy GmbH RWE Generation AG Westnetz GmbH > Transformation of RWE AG from a holding into an operating company > Merger of most 100% German subsidiaries into RWE AG > Future divisional steering through Chief Operating Officers > Full implementation by 1 January 2017 New organisational and management structure as of 1 January 2017 Main steps Key achievements > Faster decision making processes through alignment of steering model and legal governance > Reduction of intercompany interfaces > Reduction of management boards and supervisory boards > Elimination of individual company accounts, tax returns and their independent audits COO Generation COO Retail COO Grid COO Renewables CEO CFO CHO New RWE AG includes former1 RWE IT GmbH RWE Energiedienstleistungen GmbH RWE Effizienz GmbH RWE Consulting GmbH RWE Vertrieb AG RWE Deutschland AG (only employees) RWE GBS GmbH RWE Netzservice GmbH RWE Service GmbH (only employees)

1 RWE companies to be merged as well as largest companies under the RWE AG umbrella.

25

RWE’s mid-term business profile drivers

GENERATION Integrated utility along the value chain with focus on core markets within Europe TRADING DISTRIBUTION SUPPLY High portion of earnings from stable regulated businesses (German and CEE/SEE networks; renewables)

> GER: Stable regulatory environment for the next regulatory period Electricity: 2014 – 18 Gas: 2013 – 17 – Growth potential from integration of decentral- ised generation units & smart technologies – Focus on performance > CEE/SEE: Aim to stabilise regulated earnings – CZ: Discussion on next regulatory period (2015) – HU: Political pressure

• n returns

> Focus on value enhancing products and services > Innovation as growth catalyst > Increasing pressure on sales margins > Value oriented customer service > Smart markets: – Decentralised CHP/services – Energy efficiency > Growth by leveraging sales know-how across mature and new markets > Selective growth in renewable energy > Partnership solutions to reduce development risks > Restructure conven- tional power generation (“no profit or cash burning”) > Upside potential from market recovery of conventional power markets (e.g. new market design or recovery of commodities) > Ongoing focus on value extraction in commercial asset optimisation > Develop growth

• pportunities in new

trading markets > Additional value contribution from principal investment projects > Commercial settlement with Gazprom; no further losses until May 2016 > Ongoing losses from long- term contracted gas storage capacities

26

More customers will produce self-generated power and will be enabled to manage their consumption

Changing energy landscape

Virtual power plants

» Increase in decentral energy

production from household customers

» Higher incentivisation of

“prosumers” to maximise own consumption

» Rising penetration of home

automation systems enables households to manage their energy needs

» Electricity production on-site

becomes increasingly attractive for business customers which leads to higher volumes of own production of power, gas or heat Trends in retail markets

Surplus marketing Heat production Gas production Electricity production

Household customer Business customer

27

RWE in European downstream markets

Σ = 15,958 Σ = 7,155 Gas market share 2014 Sales to end-customers and redistributors Electricity market share 2014 Sales to end-customers and redistributors RWE’s gas customers3 by country [‘000] RWE’s electricity customers3 by country [‘000] 34% 11% 11% Germany Netherlands/ Belgium UK Central and Eastern Europe1 5% 24% 10% 14% 23% Germany Central and Eastern Europe2 UK Netherlands/ Belgium

1 Central and Eastern Europe: Czech Republic and Slovakia. 2 Central and Eastern Europe: Czech Republic, Hungary, Poland and Croatia. 3 Residential and commercial customers.

119 211 Germany UK 1,290 1,397 1,969 2,169 Nether- lands Belgium Slovakia Czech Republic 98 265 895 328 Czech Republic Croatia 6,693 Nether- lands 2,176 Germany 3,387 Poland Hungary Belgium UK 2,116

28

2015 divisional outlook for the operating result

€ million 2014 2015 forecast versus 2014 Conventional Power Generation1 979 Significantly below 2014 Supply/Distribution Networks Germany 1,871 Moderately below 2014 Supply NL/B 146 Significantly above 2014 Supply UK 227 Significantly below 2014 Central Eastern and South Eastern Europe 690 Moderately below 2014 Renewables 186 Significantly above 2014 Trading/Gas Midstream 274 Moderately below 2014

1 The outlook considers the current status of the nuclear fuel tax law.

29

RWE’s forward hedging of conventional electricity production (German, Dutch and UK portfolio)

As of 30 June 2015

2016 forward

>30% >20%

• 24
• 21
• 18
• 15
• 12
• 9
• 6
• 3

Months before delivery of forward contract

>40% >10%

2015 forward

>30% >10% >40% >10% >40% >20% >50% >30% >60% >40% >60% >50% >80% >60% >40% >10% >90% >70% >60% >10%

2017 forward

>30% <10% >90% >70% >60% >20%

31 Dec. 2012 31 Dec. 2013 31 March 2014 31 March 2013 30 June 2013 30 Sep. 2013 30 June 2014 30 Sep. 2014 31 Dec. 2013 31 Dec. 2014 31 March 2014 30 June 2014 30 Sep. 2014 31 Dec. 2014 31 Dec 2014

Outright, electricity hedged incl. CO2 (GER nuclear and lignite based power generation) Spread, electricity and underlying commodity hedged incl. CO2 (GER, UK and NL/B hard coal and gas based power generation) >80% >40%

31 March 2015

>50% <10%

31 March 2015

>90% >60%

30 June 2015

>70% <10%

30 June 2015

30

RWE successfully qualified approx. 8 GW for the UK capacity market

Plant MW1 Plant type Aberthaw 1,486 Coal/OCGT Didcot B 1,364 CCGT Great Yarmouth 361 CCGT Little Barford 683 CCGT Pembroke 2,090 CCGT Staythorpe 1,633 CCGT Miscellaneous smaller units 395 CHP/OCGT/CCGT 8,012

1 De-rated power plant capacity, i.e. capacity which effectively can participate in the auction process. Different from net generation capacity.

> First UK capacity auction for winter 2018/19 settled at £19.40/kW (2012 money). > The result was broadly in line with

• ur expectations.

> Capacity Market will provide the necessary support for plants required for system security and prices in future will need to remunerate the marginal MW on the system. > RWE has a total of 8,012 MW of capacity that will receive the capacity payments, equivalent to £155 million in 2012 money.

31

Clean Dark (CDS) and Spark Spreads (CSS) – 2016 forward for Germany, UK and Netherlands

Trading year 2015

CDS Cal 16 base load (assumed thermal efficiency: 37%) 1 Including UK carbon tax. Source: RWE Supply & Trading, prices through to 1 August 2015.

Germany Ø -4.90 Ø 5.25 UK1 Netherlands Ø 5.32 Ø 11.88 Ø -6.64 Ø 11.48

18 14 10 6 2

• 2
• 6
• 10

18 14 10 6 2

• 2
• 6
• 10

CSS Cal 16 peak load (assumed thermal efficiency: 50%) CDS Cal 16 base load (assumed thermal efficiency: 35%) CSS Cal 16 base load (assumed thermal efficiency: 49%) CDS Cal 16 base load (assumed thermal efficiency: 37%) CSS Cal 16 base load (assumed thermal efficiency: 50%) €/MWh €/MWh

32

Strong improvement of net debt after successful disposal of RWE Dea

€ billion 1 From continuing operations. Net debt 31st Dec 2014 Others including f/x effects Cash flows from operat- ing activities1 Change in pension, nuclear, mining provisions1 Net debt 30th June 2015 Dividends1 Capex on property, plant and equipment and intangible assets and financial assets1 Divestments1

• 0.7

31.0 +1.0

• 6.2

25.6 +1.1

• 0.7

Negative cash balance: 1.4 Of which €1.1 bn from discon- tinued

• perations

(DCO) Of which

• 5.3

from disposal

• f

RWE Dea +0.7 Of which impact from change of pension provisions: Interest/discount rates related changes in provisions

• 0.8

Other changes in pension provisions +0.2 Change in net debt

• 0.6

Funding CTA (not debt relevant)

• 1.3

Change of pension provisions in balance sheet

• 1.9

Change in hybrid capital

• 0.6

No DCO after disposal

• f

RWE Dea

33

Standard & Poor's (BBB, “negative outlook") Moody's (Baa1, “negative outlook")

Key statements on RWE by the rating agencies

> On 23 June 2015 Moody’s revised its rating view for RWE to „Baa1/negative outlook“ from „Baa1/stable outlook“. > The change in outlook to negative reflects a number of political uncertainties and operating challenges facing

• RWE. These include German government reforms to

address energy market design and reduce greenhouse gas emissions, ongoing government debate as to the creation of a public fund for nuclear decommissioning and persistently low wholesale power prices in Germany, which have weakened since 2014. > The affirmation of the Baa1 rating considers the fact that RWE continues to take measures to defend its financial profile, including a significant reduction in net financial debt as a result of the successful divestment of Dea in early 2015, significant cost cutting measures and divestments, and a reduction of capex spending in the

• future. Business profile: RWE will increasingly derive a

higher proportion of earnings from lower risk regulated networks and renewable assets as the group focuses growth capex in those areas. > RWE’s financial risk profile reflects Moody’s view that RWE’s credit metrics have weakened over the last couple

• f years, notwithstanding remedial measures taken.

> On 27 August 2015 S&P revised its rating view for RWE to „BBB/negative outlook“ from „BBB+/negative outlook“. > The downgrade reflects the persistent pressure on power prices in Central Europe linked to the low commodity price

• environment. In addition the political environment in

Germany remains adverse for RWE. Although the threat of a climate levy has abated, RWE's lignite operations remain exposed to political risk in Germany, in light of national elections scheduled in 2017and national CO2 reduction targets. > Nevertheless RWE’s business profile is seen as “strong”, supported by the good diversification of its overall business mix, by the growing weight of power and gas distribution in Germany, by the stability of low capital expenditure-intensive supply operations in Germany, and by the targeted growth in renewable generation. > RWE’s financial risk profile is continuously viewed as “significant” as one-third of cash flows derive from stable regulated activities and the unregulated activities having at least a "satisfactory" competitive assessment. This would be reviewed if RWE's share of regulated activities were to decline or if profitability in the unregulated part of the business were to weaken further.

34

RWE’s flexible funding tools

1 RWE AG and RWE Finance B.V. as of 31 July 2015

Capital market maturities1 Sources of funding1

Syndicated loan facility (until Nov 2020) Commercial papers (up to 1 year) 0 out of 4.6 bn € ($ 5.0 bn) 0 out of 4 bn € (Back up liquidity) Senior bonds (up to 30 years) 12.6 out of 30 bn € Hybrid bonds (more than 60 years) 5.8 bn € EIB loans 1.1 bn € out of 1.1 bn €

Balanced profile with limited maturities up to end of 2017 (~€ 4.0 billion), incl. hybrid

Cash and cash equivalents 2.8 bn € Maturities senior bonds First call dates hybrids Cumulated maturities incl. hybrids EIB loan

0,0 2,0 4,0 6,0 8,0 10,0 12,0 14,0 16,0 18,0 20,0 0,0 0,2 0,4 0,6 0,8 1,0 1,2 1,4 1,6 1,8 2,0

'15 '16 '17 '18 '19 '20 '21 '22 '23 '24 '25 '26 '27 '28 '29 '30 '31 '32 '33 '34 '35 '36 '37 '38 '39 '40 '41 '42 '43 '44 '45

• Mrd. EUR

19,5

35

EUR Hybrid Bond NC 5.5 (April 2015) EUR Hybrid Bond NC 10 (April 2015)

Main characteristics of the three RWE hybrid bonds issued in 2015

Volume 700.000.000 EUR 550.000.000 EUR 500.000.000 USD Tenor April 2075 April 2075 July 2075 Right of early termination by RWE Yes, first call date in October 2020 Yes, first call date in April 2025 Yes, first call date in March 2026 Extraordinary right of early termination by RWE Yes, on occurrence of special events Yes, on occurrence of special events Yes, on occurrence of special events Coupon 2.750% 3.500% 6.625% Issue price 99.382% 100% 99.117% Yield 2.875% 3.500% 6.75% Ranking Deeply subordinated, unsecured Deeply subordinated, unsecured Deeply subordinated, unsecured Coupon step-up +0.25% from October 2025

• nwards

+1.00% from October 2040

• nwards

+0.25% from April 2025

• nwards

+1.00% from April 2045

• nwards

+0.25% from March 2026

• nwards

+1.00% from March 2046

• nwards

Coupon deferral Possible, cumulative, non compounding Possible, cumulative, non compounding Possible, cumulative, non compounding Equity credit by rating agencies 50% 50% 50%

Key features USD Hybrid Bond NC 10.7 (July 2015)

36

Financial liabilities and assets

(Excluding hybrid capital as of 30 June 2015)

Financial liabilities € billion

5 10 15 20 Short term (≤ 12 months) Long term (> 12 months) Total

Bonds, incl.

• ther notes

payable1 Collateral, margin payments received2 Loans with banks Other: including CP of €0.0 bn, finance leases, financial liabili- ties with non-consolidated com- panies, other financial liabilities

Split of securities

Interest-bearing instruments Equities

2,1 16.7 18.8

0.8 1.4 1.3 2.2 0.3 0.3 0.2 6.5 6.7

5 10 15 20

1 Including currency rate hedges of bonds 2 Excluding variation margins which are netted against the fair values of the respective derivatives.

22% 78%

1.5

Financial assets € billion

Securities Cash/cash equivalents

Short term (≤ 12 months) Long term (> 12 months)

12.2

Total

11.7 0.5

4.0 4.0 0.3 0.2

Collateral, margin payments1 Other: other financial receiv- ables, financial receivables from non-consolidated compa- nies, other loans receivable

14.0 14.8 0.7 0.5 1.0 0.5 0.8

37

Consensus of analysts’ estimates http://www.rwe.com/ir/consensus-estimates

Keep up with RWE …

Follow us on twitter.com/RWE_IR and have a look at www.rwe.com/ir Annual and Interim Reports http://www.rwe.com/ir/reports/ Investor and Analyst Conferences http://www.rwe.com/ir/investor-and-analyst-conferences/ Facts & Figures – the Guide to RWE and the Utility Sector http://www.rwe.com/ir/facts-figures/ IR presentations & further factbooks http://www.rwe.com/ir/presentations/ IR videos http://www.rwe.com/ir/videos/ Financial Calendar 12 November 2015 Interim Report on Q1-Q3 2015 08 March 2016 Annual Report on fiscal 2015 20 April 2016 Annual General Meeting Important links

38

RWE Investor Relations – contacts

• Dr. Stephan Lowis

Vice President Investor Relations

• Tel. +49 201 12-15031

stephan.lowis@rwe.com

Contacts for Institutional Investors & Financial Analysts Martin Vahlbrock

Tel.: +49 201 12-15055 martin.vahlbrock@rwe.com

• Dr. Burkhard Pahnke

Tel.: +49 201 12-15182 burkhard.pahnke@rwe.com

Marcel Rohrbach

Tel.: +49 201 12-15043 marcel.rohrbach@rwe.com

Gunhild Grieve

Tel.: +44 207 015-5459 gunhild.grieve@rwe.com

• Dr. Holger Perlwitz

Tel.: +49 201 12-15141 holger.perlwitz@rwe.com

Martin Jäger

Tel.: +49 201 12 -15106 martin.jaeger@rwe.com

Contact for Private Shareholders Marisa Weiskirch

Tel.: +49 201 12-44915 marisa.weiskirch@rwe.com