Transforming RWE and securing a sound financial base (as of April 2016)
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 judgment 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. 2
Three steps to securing a sound financial base NewCo Efficiencies Dividend > Listing of a unique and > Step up of efficiency > Dividend policy reflects the leading European utility programme by another general business situation comprising grid, retail and €500 million and market conditions renewables businesses > Additional measures > Fiscal 2015: suspension of > ~10% capital increase at largely stemming from payment for common NewCo envisaged to fund conventional power shares and €0.13 per preferred share future growth investments generation 3
Formation of a unique and leading European utility > RWE to establish a new leading European utility comprising the grid, retail and renewables businesses > Conventional power generation and trading businesses retained as separate functional units RWE AG NewCo with RWE AG shareholders shareholders > Key milestones: 100% – December 2015: Supervisory Board approval RWE AG – March 2016: Nomination of management team ~10% Conventional Supply & – 1 April 2016: Operational start planned power Trading generation – 30 June 2016: Full implementation of new structure planned ~90% – Listing of ~10% of NewCo via primary offering envisaged for late 2016 > IPO proceeds mainly used to finance growth NewCo investments in NewCo Grid Retail Renewables > Placing of further stakes of NewCo by RWE AG via secondary offer possible at the same or later point in time > RWE AG plans to remain majority shareholder in NewCo 4
Designated management team for NewCo with long- standing experience and extensive industry knowledge Peter Terium Bernhard Günther Uwe Tigges > Chief Executive Officer > Chief Financial Officer > Chief HR Officer > 13 years sector experience > 18 years sector experience > 32 years sector experience Hildegard Müller Martin Herrmann Hans Bünting > COO – Grid > COO – Retail > COO – Renewables > 7 years sector experience > 14 years sector experience > 20 years sector experience 5
NewCo: Strong downstream business with attractive renewables footprint Grid Supply Renewables > RWE operates 550,000 km of > Strong retail organisation with > Renewables portfolio of more grid assets in five European 23m customers in 12 European than 3.5 GW capacity mainly in markets (GER, PL, CZ, HU, SK) markets six European markets (GER, UK, SPA, NL, PL, ITA) > Leading positions in core > RWE is No. 3 in terms of markets (e.g., largest electricity electricity sales and No. 4 in > RWE belongs to the top 5 in DSO in GER 1 , largest gas DSO terms of gas sales in Europe offshore wind globally with in CZ 1 ) ~1 GW of capacity > Well positioned in various B2C > Excellent distribution grid markets in terms of profitability, > Focus on operational excellence management for electricity customer growth and and value-adding growth across and gas supply satisfaction (e.g., GER, NL) entire fleet > Operating result of ~€2.0bn > Operating result of ~€0.8bn > Operating profit of ~€0.5bn (2015 Division Grids/Participa- (2015) (2015) tions/Other) 1 Measured by transported volumes in Germany and by grid length in CZ. Assumption: NewCo based on current RWE AG divisions Renewables, Grids/Participations/Others and Supply. 6
NewCo: Unique opportunity to invest in one of the leading European utilities of tomorrow’s energy world Unique new utility stock Attractive financial profile > Unique new utility stock with exposure mainly > Strong and stable cash flow generation to stable European markets > Currently ~65% EBITDA derived from > A leading distribution grid company in Europe regulated activities > Amongst top 5 retailers by sales in 8 markets > Strong balance sheet with prominent smart product offerings > Profitable organic growth potential > Attractive renewables platform with >3.5 GW capacity installed > Commitment to shareholder returns and attractive dividend > Strong on- and offshore wind project pipeline Assumption: NewCo based on current RWE AG divisions Renewables, Grids/Participations/Others and Supply. 7
RWE AG: Focused business portfolio with clear management mandate Conventional Power Generation Supply & Trading > Highly efficient and modernised power > Commercial asset optimisation of plant portfolio generation fleet – full exploitation of optionality > Financially manageable phase-out of nuclear > Expansion of trading and origination business into new markets and > Reduction of lignite generation in line with commodities national CO 2 targets > Growth of Principal Investments activities > Extraction of option value from spread assets > Commodity solutions for industrial customers > Maintain positive free cash flow > Management of long term gas supply, > Benefit from potential wholesale price storage and transport contracts recovery or new market design 8
Persistent pressure on conventional power generation met by continued efficiency efforts €/MWh € million €60 1200 60 €51 €48 50 €41 800 40 30 400 20 10 0 0 2012 2013 2014 2015 German 1 year base load forward (lhs) RWE average realised power price (lhs) Net benefit to operating result from efficiency measures at GenCo (rhs) > Accumulated cost savings and efficiency improvements of approximately €1 billion realised between 2012 and 2015 > In total decisions taken for approx. 9 GW capacity measures: 3.7 GW of capacity (partially) mothballed; 2.5 GW of capacity shut or to be shut / 3 GW of contracts cancelled > Headcount reduction of 3,600 FTEs since 2012 9
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