RWE Credit Day London, 9 October 2012 Forward Looking Statement - PowerPoint PPT Presentation

RWE Credit Day London, 9 October 2012

Forward Looking Statement This presentation contains certain forward-looking statements within the meaning of the US federal securities laws. Especially all of the following statements:  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 judgement of RWE’s management based on factors currently 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 amortisation 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. RWE Credit Day I 9 October 2012 2

Today’s Agenda A Prudent financial policy Rolf Pohlig, Chief Financial Officer, RWE AG B Value in uncertain times Bernhard Günther, Member of the Executive Board, RWE AG C Securing flexible financing Markus Coenen, Head of Finance, RWE AG D Perspective for the energy system of the future Frank-Detlef Drake, Head of Research & Development, RWE AG RWE Credit Day I 9 October 2012 3 3

Prudent financial policy Rolf Pohlig Chief Financial Officer, RWE AG RWE Credit Day London, 9 October 2012

Value in uncertain times Bernhard Günther Member of the Executive Board, RWE AG RWE Credit Day London, 9 October 2012

RWE’s strategic cornerstones > Reduce specific CO 2 emissions by more than 20% by 2020 compared to 2005 > Increase renewable generation capacity to at least 20% by 2020 > Conservation of resources through higher energy efficiency > Focus on core > Active along the entire markets in Northwest value chain and Central Europe > Minimise regulatory and > Regional growth political risks through markets mainly geographic diversification CEE/SEE > Balanced asset portfolio > More than 60% of across the Group and capex spent in within each business international businesses RWE Credit Day I 9 October 2012 6 5 6

Continued execution of measures to support financial strength Expected development of leverage factor (Net debt 1 /EBITDA) Target of ≤ 3.0 2.8 3.5 2010 2011 2012e … Measures to improve financial headroom Capital Divestments Focused long-term Efficiency measures capex programme programme up to €7bn by 2013 €4 – 5bn/a €1bn by 2014    completed progressing from 2013 identified 1 Net debt = net financial debt + pension, mining and nuclear provisions + 50% of hybrid capital; (at year end). RWE Credit Day I 9 October 2012 7 7

Strict investment discipline provides platform for sustainable dividends Mid-term target to cover investments and dividends by cash flows from operating activities € billion 9.4 > Capex level will normalise 8.8 beyond 2013 > Pay-out ratio of 5.5 5.5 50% - 60% of recurrent net income > Flexibility to adjust ≤ investments to meet cash flow, if necessary 2010 2011 2014/2015e Capex in property, plant & equipment and financial assets Cash flows from operating activities Dividends (incl. minority payments; year of payment) RWE Credit Day I 9 October 2012 8 8

RWE 2015 - four action fields to align RWE with changing market environment > Identify opportunities > Eliminate structural and of energy market operational duplications transformation and clarify interfaces > Align execution to > Establish European changing market generation company environment Structures/ Strategy roles RWE 2015 Functional Cultural excellence change > Drive efficiency > Align management and enhancements and employees across all operational excellence parts of RWE > Realise efficiencies of > Foster high performance € 1bn by 2014 compared culture to 2012 RWE Credit Day I 9 October 2012 9 9

High renewables feed-in reduces profitability of peaking plants in Germany GW €/MWh The current challenge in the German generation market 20 100 18 90 1. The rise in renewable 16 80 capacity… 2. … increases the pressure on 14 70 load factors, particularly of gas- 12 60 fired power plants as peak prices decline considerably; 10 50 and… 8 40 3. … so minimises the price signals required for new-build 6 30 fossil-fuelled generation… 4 20 4. …resulting in increasing risk of 2 10 tightness of the market during unfavourable weather 0 0 conditions. 0 2 4 6 8 10 12 14 16 18 20 22 24 h Wind feed-in GW PV feed-in GW EPEX Spot €/MWh 17 th April, 2012 RWE Credit Day I 9 October 2012 10 10

German electricity system at its limit Capacity situation on 8 February 2012 Sufficient electricity supply was only guaranteed on the basis of very few outages in the thermal generation fleet 12 GW 150 Solar 8 Wind 100 Hydro 4 Thermal 50 capacity 0 0 Installed Capacity Required German domestic Net export Remaining spare capacity not available balancing power 1 consumption balance capacity (<2 GW) No relief through electricity imports during peak hours due to similiar high electricity demand in neighbouring countries: Demand for electricity exports was higher than available imports GW EXPORT (from Germany) IMPORT (into Germany) 6 5 4 3 2 1 0 France Austria Switzerland Netherlands Denmark Poland Czech Net export Republic (~2 GW) 1 German TSOs have contracted approx. 5 GW of balancing power to cover short-term grid imbalances. Source: ENTSO-E, EEX, BDEW; German electricity import/export on 8 February 2012, 6:00 – 7:00 p.m. RWE Credit Day I 9 October 2012 11 11

RWE: most diversified generation mix in Europe Share in power plant capacity of own generation by fuel type 2011 (installed capacity) 100% 80% 60% Hydro/ other 40% Gas Hard Coal 20% Lignite Nuclear 0% Centrica CEZ EDF Enel E.ON Fortum GDF Iberdrola RWE SSE Source: Annual reports, company presentations, RWE. RWE Credit Day I 9 October 2012 12 12