Powering Up : From Consolidation to Delivery

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Justina Dorsey
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1 Powering Up : From Consolidation to Delivery Dresdner Kleinwort Wasserstein New York, January 10, 2005 Ingo Alphéus Vice President Investor Relations of RWE AG

2 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 forwardlooking 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 or SWX Swiss Exchange and to the material furnished to the US Securities and Exchange Commission by RWE.

3 PERFORMANCE Development of net debt position billion (debt with positive prefix, cash with negative prefix) Capex Dividends +0.9 Currency translation effect +0.5 acquisitions/ disposals -2.6 Cash flow from operating activities others Fair value of net debt related financial derivatives Net debt Net debt Exchange rates of 1 = $1.26; Exchange rates of 1 = $1.24;

4 PORTFOLIO Focus on focus: More than 5 bn asset sales within 2 years Company closing RWE relevant EV in million STE (Czech Republic) Q2/ Stadtwerke Leipzig Q3/ CONSOL 2003/ Stadtwerke Düsseldorf 1 H2/2004 n.a. HOCHTIEF 2 Q1/ Motor-Columbus and 1.23% of Atel Q3/ Heidelberger Druckmaschinen Q2/ Turbogas (Portuguese IPP) Q4/2004 ca. 660 IPPs Iskenderun (Turkey) and Elettra (Italy) Q4/2004 n.a. Various activities of RWE Umwelt 2003/ /3 of waste management activities to RETHMANN Q ca. 2/3 of 0.8 bn Total > Not yet closed. 2 Deconsolidated already as of January 1st, Until Q at equity consolidated. 4

5 POLITICS / REGULATION Update: Status of German energy market regulation German government agreed on the key items of the new energy act (EnWG) on October 27th - ex-ante regulation for tariff increases - incentive based regulation to be implemented by the regulator at the latest 2 years after official start of regulation - retroactive scrutiny of price increases announced since August maintenance of net asset value calculation model confirmed with 6.5% post-tax real return on equity (to be reviewed by the regulator as of the 2nd year of regulation) - balancing power market subject to regulator s ruling Approval of both houses of parliament (Bundestag and Bundesrat) required Several regulations planned to set out details (energy law only provides framework) Start of regulation not likely before Q

6 POLITICS / REGULATION Update on emissions trading Oct. 25, 2004 German Energy Exchange (EEX) established a CO 2 index which will contribute to greater transparency. Oct. 28, 2004 UK government announces changes to the National Allocation Plan: Provisional allocation levels for the pre-compliance trading period will be lifted: Power generators will receive additional free-ofcharge allowances. Final clarification subject to approval of EU commission. Allocations to installations expected by DEFRA in Q Dec Allocation of allowances in Germany by the DEHSt (Deutsche Emissionshandelsstelle). Jan Launch of emissions trading 6

7 DELIVERY Outlook for 2004 External revenue EBITDA Operating result Net income 2) ROCE 10.4% Capex on fixed assets ) Based on exchange rates of ( 1 = ) USD 1.20; GBP ) Excluding goodwill amortization. 953 million including goodwill amortization million expectation 1) 7

8 DELIVERY RWE is set to deliver more: ambitious medium term targets Dividend Debt reduction Operating result ROCE Cost cutting CAGR +15% max. 17 bn by year end 2005* at least 5% CAGR from organic growth 11% by m by year end m by year end 2006 * Based on exchange rates of ( 1 =): USD 1.20 and GBP

Sweating the Assets Analyst and Investor Conference Report on First Six Months of Fiscal 2003

Sweating the Assets Analyst and Investor Conference Report on First Six Months of Fiscal 2003 London, August 12, 2003 Klaus Sturany Chief Financial Officer RWE AG 1 Forward Looking Statement This presentation