Focus on financial strength (as of March 2014) Forward Looking - PowerPoint PPT Presentation

Focus on financial strength (as of March 2014)

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. 1

RWE – an attractive value proposition Stable financials Attractive portfolio > Leading market position and > Progress in strengthening balance regionally focused strategy sheet > Pure utility play – exit of upstream > Streamlined and disciplined activities investment approach > Balanced asset portfolio > Cash flows from operating activities to cover investments and dividends > Highly cost-efficient and modernised by 2015 power plant portfolio by 2014 > Further efficiency enhancements > CO 2 neutral position and operational excellence > Successful structural changes to all long-term gas supply contracts Earnings outlook for 2014 confirmed: EBITDA c. € 7.6 – 8.1 bn; operating result c. € 4.5 – 4.9 bn; recurrent net income c. € 1.3 – 1.5 bn 2

Milestones in 2013 Performance in line with expectations: EBITDA in the order of € 9 bn; operating result in the order of € 5.9 bn; recurrent net income in the order of € 2.4 bn Impairment charge of € 4.8 bn taken mainly in the conventional power generation business due to deteriorating market environment which leads to net income loss of € 2.8 bn Successful conclusion of gas price arbitration with Gazprom; award as expected; impact on operating result approx. € 1 billion Disposal of NET4GAS closed Efficiency enhancements ahead of schedule Rating downgrade by Moody’s from A3/negative outlook to Baa1 with stable outlook; S&P confirmed its BBB+/stable outlook Outlook for 2014 confirmed 3 3

From commodity driven earnings development to attractive regulated profile RWE develops towards an attractive stable downstream business profile with additional focus on renewables and upside potential from conventional power generation Operating result in € bn 6.4 Upstream Gas & Oil 5.9 Renewables 4.5 – 4.9e Distribution and 48% Supply 10% – 15% 55% Of which >60% circa >70% Conventional 40%-50% 51% 24% power generation regulated <20% 5% – 10% Trading Gas Midstream Mid-term 2012 2013 2014e 4 4

RWE’s mid -term business profile drivers GENERATION TRADING DISTRIBUTION SUPPLY > Selective growth in > Ongoing focus on value > GER: Stable regulatory > Focus on efficiency renewable energy extraction in commercial environment for the next enhancements asset optimisation regulatory period > Increasing pressure on > RWE Innogy aims to earn Electricity: 2014 – 18 sales margins its cost of capital in 2016 > Develop growth 2013 – 17 Gas: opportunities in new > Margin upside via new > Restructure conven- – Potential for revenue trading markets products and cross selling tional power generation growth from integration (“no profit or cash > Value oriented > Additional value of renewables burning”) customer service contribution from principal – Focus on performance investment projects > Smart markets: > Upside potential from > CEE/SEE: Aim to stabilise – market recovery of > Commercial settlement Decentralised regulated earnings conventional power with Gazprom; no further CHP/services – CZ: Discussion on next markets (e.g. new market losses until May 2016 – Energy efficiency regulatory period design or recovery of > Ongoing losses from long- > Growth by leveraging (2015) commodities) term contracted gas sales know-how across – HU: Political pressure storage capacities mature and new markets on returns High portion of earnings from stable regulated businesses (German and CEE/SEE networks; renewables) Integrated utility along the value chain with focus on core markets within Europe 5 5

Conventional Power Generation: mark-to-market earnings perspective € bn 3.3 3.5 3.0 2.5 Mark-to-market (m-t-m) 1 2.0 1.4 1.5 1.0 OR m-t-m 0.5 before efficiencies 0.0 2012 2013 -0.5 Efficiencies Operating result (OR) EBITDA Depreciation 2012-2016 1 Mark-to-market as of November 2013 at market prices of around € 37/MWh for German base load forwards 6 6

RWE Generation assets under review Profitability of RWE’s conven- Capacity measures tional generation portfolio 1 > Additional measures for ~3.2 GW decided OR 2 > c. > 50% – 60% > Mothballing of Claus C (gas, 1,300 MW) WACC > Summer mothballing of CCGT Lingen (gas, 880 MW) > Contract termination (hard coal, 1,025 MW) c. > 60% – 70% OR > 0 > Measures for total capacity of ~7.5 GW > Regular assessment of economic situation of entire generation portfolio > Old hard coal and specific 300 MW lignite blocks remain under evaluation c. > 70% – 80% FCF 2 > 0 > Outstanding contracted hard coal also under review 1 Rough profitability analysis for 2014 to 2016 in % of installed capacity of RWE’s conventional generation portfolio (economic stake) in Germany, UK and NL (average c. 41 GW) based on market parameters as of October 2013 2 OR = operating result; WACC = weighted average cost of capital pre tax; FCF = free cash flow = revenue – cash costs 7 7

RWE Innogy will provide mid-term earnings growth despite reduced capex volume Steady increase of operating result by 2016 expected Commissioning: Commissioning: First generation: NSO (295 MW), Onshore and hydro Gwynt y Môr (576 MW), Onshore and hydro projects ~70 MW Commissioning: projects ~160 MW Düshorner Heide (26 MW), Goole Fields (33 MW) € 183 million € 196 million    2012 2013 2014e 2015e 2016e Planned investment decisions in 2014 Offshore wind farm Approx. Onshore wind farm Approx. Small Hydro power Approx. Nordsee One 330 MW Zuidwester 90 MW plants 5 MW Offshore wind farm Approx. Onshore wind farm More than Galloper 340 MW Bedburg 60 MW Small Onshore Approx. wind farms 70 MW 8