EWE AG. Update following publication of 2017 results. CREDIT OPINION 1 June Update. Summary

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1 CREDIT OPINION EWE AG Update following publication of 2017 results Update Summary RATINGS EWE AG Domicile Germany Long Term Rating 1 Type LT Issuer Rating - Fgn Curr Outlook Stable Please see the ratings section at the end of this report for more information. The ratings and outlook shown reflect information as of the publication date. Contacts Stefanie Voelz Senior Credit Officer stefanie.voelz@moodys.com Neil Griffiths Lambeth Associate Managing Director neil.griffiths-lambeth@moodys.com The credit quality of EWE AG (EWE, 1 stable) is supported by (1) the relatively stable and predictable cash flows generated by its monopoly-regulated energy distribution activities; (2) long-term contracts that stabilise the competitive businesses of power generation, gas storage and waste-to-energy; (3) the company's fairly strong market position in its core region, which somewhat reduces the risk inherent in its competitive supply activities; (4) its growing expertise in renewable generation, particularly on- and offshore wind, and intelligent network developments, both of which are key factors in the current German energy policy; and (5) our assumption that the company's interest in international markets, particularly in Turkey, and their contribution to consolidated cash flows will remain small. German utilities continue to face a difficult operational environment with relatively low market prices for conventional power generation, largely a reflection of a revised national energy policy. EWE is less exposed to these developments than larger German peers, given the focus on monopoly-regulated network activities (see EBIT split in Exhibit 1), and its increased financial flexibility following the April 2016 sale of the company's stake in German natural gas company Verbundnetz Gas Aktiengesellschaft (VNG). Exhibit 1 EWE's operating EBIT dominated by regulated and long-term contracted activities in millions Renewables, Grid & Storage swb Sales & Trading Holding International operating EBIT E Note: For 2018, the company expects additional challenges from competitive and regulatory pressures, such that its operating results may be similar to 2015 results. We have assumed that the challenges apply primarily to the generation (largely incorporated within the swb segment) and supply activities. Source: EWE, Moody's calculations and forecast EWE's credit quality is constrained by the company's financial profile, which has been volatile in the past due to its gas activities, adverse weather patterns and contract terms. However,

2 following the 2016 VNG sale, financial metrics have improved and we expect the company to remain well positioned within the current guidance of funds from operations (FFO) to net debt above the high teens and retained cash flow (RCF) to net debt above the midteens, both in percentage terms. The company is currently undertaking a strategic review, driven by the recently newly appointed members of the executive management team, which may result in a refocus of the strategic objectives in relation to key growth opportunities in the national and international markets. Credit Strengths» Multi-utility focused on energy distribution and supply activities as well as telecommunication and information technology services» Stable network operations and limited generation create some buffer against negative wholesale price developments affecting other generators» Financial headroom after sale of VNG, but potentially diminishing subject to strategic investment decisions Credit Challenges» Low power prices reduce margins for conventional thermal generation but EWE's exposure is largely mitigated by its limited conventional generation capacity compared with German peers and generally long-term capacity contracts to sell power or generation capacity benefiting from renewable subsidies» Regulated network tariffs to reduce with the start of the next regulatory period in 2018/19 due to lower allowed equity returns Rating Outlook The rating outlook is stable, reflecting the company's core focus on regulated network activities and renewable generation, and limited exposure to negative power price developments compared with its larger German peers. It also considers the successful conclusion of the VNG sale in April 2016 with proceeds being largely used to repay a portion of existing debt, leading to a commensurate improvement in financial flexibility, which we expect the company to maintain. Factors that Could Lead to an Upgrade While a rating upgrade is unlikely over the short-term, upward pressure could result from a sustainable improvement in financial metrics, with FFO to net debt at least in the low twenties and RCF to net debt comfortably in the high teens, for example due to deleveraging of the EWE group, or further savings from ongoing efficiency initiatives. Any potential upgrade would also have to consider the probability that EWE may choose to support its shareholders in acquiring the remaining EWE shares from its minority shareholder EnBW Energie den-württemberg AG (EnBW, 1 stable) by 2019, or the possibility of additional capital from a new strategic investor. Factors that Could Lead to a Downgrade EWE's 1 ratings could come under downward pressure if the company were to exhibit financial metrics consistently below the minimum parameters outlined for the current rating, in particular, FFO to net debt falling below the high teens and RCF to net debt below the mid-teens, in percentage terms. Furthermore, we could consider a downgrade in case of a change in EWE's business risk profile that would increase exposure to higher risk countries, such as Turkey, and/or result in increasing volatility of cash flows. This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on for the most updated credit rating action information and rating history. 2

3 Key Indicators Exhibit 2 Improved metrics following VNG sale in /31/ /31/ /31/ /31/ x 3.8x 4.3x 3.3x 4.0x (CFO Pre-W/C) / Net Debt 25.1% 22.8% 18.9% 13.6% 18.4% RCF / Net Debt 21.1% 13.0% 16.2% 10.9% 15.6% (CFO Pre-W/C + Interest) / Interest 12/31/2013 Note: All ratios are based on 'Adjusted' financial data and incorporate Moody's Global Standard Adjustments for Non-Financial Corporations Source: Moody's Financial Metrics Profile Headquartered in Oldenburg, Germany, EWE AG is one of Germany's largest regional utilities and provides energy distribution and supply as well as telecommunications and IT services to customers in the federal state of Lower Saxony and parts of eastern Germany. EWE is currently owned 6% by EnBW and 84% by two holding companies which altogether represent 21 local cities and municipalities/ counties located in the state of Lower Saxony. The remaining 10% are held by EWE itself. Exhibit 3 EWE owned 84% by local cities and municipalities Source: EWE AG Detailed Credit Considerations Focus on low-risk activities but these cash flows will be squeezed over the medium term Approximately 50-60% of EWE's operating profits are derived from regulated network infrastructure businesses, which generate stable and predictable cash flows. We consider the German regulatory regime well-defined, with key aspects of the revenue building blocks enshrined in law, and designed to provide adequate and fair remuneration for operating expenditure and investments. However, introduced in 2009, the German incentive-based regime has a shorter track record than other Western European jurisdictions and regulatory principles are still evolving. The current regulatory period runs from for gas distribution and for electricity distribution networks, providing some certainty of cash flows over that period. Allowed equity returns are set at 9.05% p.a. (nominal pre-corporate tax and post-trade tax) or 7.14% for asset built before 2006, which is higher than seen in most other jurisdiction. However, the regulator is recognising that the persistently low interest rate environment is resulting in lower funding costs for network companies, and the allowed equity returns will reduce to 6.91% (or 5.12% for pre-2006 assets) for the third regulatory period. 3

4 Exhibit 4 Fall in allowed equity return from st Period Germany (2009/10-12/13) 2nd Period Germany (2013/14-17/18) BNetzA decision rd Period Germany (2018/19-22/23) Risk-free rate 4.23% 3.80% 2.49% Market risk premium 4.55% 5.44% 3.80% Equity risk premium 3.59% 3.59% 3.15% Cost of Equity (post-tax) - new assets 7.82% 7.39% 5.64% 9.29% 9.05% 6.91% 1.45% 1.56% 1.46% 7.56% 7.14% 5.12% Equity Beta Cost of Equity (pre-tax) - new assets Inflation factor Cost of Equity (pre-tax) - old assets Note: Under the German regime, the cost of equity allowance differs for assets acquired or built before 2006 ('old' assets) and after 2006 ('new' assets). Old assets receive a real equity return adjusted for inflation, new assets receive a nominal return. Source: BNetzA, Moody's calculations While the proposed cut follows a trend seen across many European jurisdictions and is broadly in line with our expectations, given the methodological approach of calculation, it will result in reduced financial flexibility across network companies. We note that, on 22 March 2018, the higher regional court in Düsseldorf concluded that the allowed equity return determined by the BNetzA for the next regulatory period may have been set too low because in the court s opinion the regulator did not adequately reflect all available evidence when taking the decision to cut the return. The BNetzA has appealed to the highest national court, and we do not expect a conclusion before Even if there ultimately was a reset, which resulted in a higher equity return allowance, the regulator has yet to determine company-specific and sector-wide efficiency assumptions for the electricity networks, expected later this year, which could reduce any benefit of higher returns. We note, however, that EWE's electricity and gas networks are considered to be among the most efficient by national comparison. The BNetzA has set the sector-wide efficiency factor for gas networks at 0.49% p.a. for the third regulatory period, down from 1.5% p.a. during the second (and 1.25% p.a. in the first regulatory period), but it remains unclear whether a similar reduction will apply to the electricity networks. We understand that there is also a court appeal pending on the sector-wide productivity factor, which the industry deems too high still. Approximately 15-20% of EWE's operating profits come from renewable generation, which we view as lower risk than conventional generation, given the feed-in tariffs guaranteed by the German government. This regime limits EWE's risks essentially to the output of the plants, which is subject to weather conditions and technical losses. However, existing installations are not exposed to market price risks. While existing generation capacity may start to come off feed-in tariffs from 2021, the earliest plants are comparably small, and we expect the impact on cash flows to be limited. The cash flow volatility of some of EWE's other activities is reduced due to existing long-term contracts. This is particularly the case in the gas storage business (around 15% of group operating profits), with ca. two-thirds of capacity being contracted over a period in excess of five years (50% is for own use). This protects divisional profits from adverse effects of low gas storage prices in the context of a generally oversupplied German gas market and compressed winter-summer spreads. We note the current market trend towards shorter term contracts, which will become a consideration once the original contracts expire; however, given remaining contract life times, we expect no negative implications over the coming three to five years. Reduced exposure to generation and gas supply... EWE owns and operates a conventional thermal generation fleet of approximately 957 mega watts (MW) installed capacity, and renewable generation, primarily on- and off-shore wind, of around 425 MW. Over the past three years, but particularly in the beginning of 2016, the profitability of conventional plants in Germany has suffered from weak fuel prices (coal and natural gas), low carbon prices as well as compressed generation margins (both clean dark and spark spreads). In this unfavourable environment, however, EWE has managed to de-risk more than half of its generation portfolio by entering into or amending existing bilateral supply contracts with 4

5 several industrial consumers. We understand that these individual contracts transfer market risks to customers, while, at the same time, EWE will safeguard a small level of profitability for the underlying generation capacities. Overall, EWE is much less exposed than its larger German peers, E.ON SE (2 stable) and RWE AG (3 stable), to the low wholesale power prices. While prices have now recovered to around 35-40/MWh from a significant fall in early 2016, this has been largely on the back of rising carbon costs, and both clean dark and clean spark spreads remain weak. This means that most conventional thermal generation assets (excluding lignite) will struggle to make a profit in the current environment. More modern, flexible plant may benefit from periods of high demand and spikes in power prices. Longer term, post 2020, we may see power prices tightening as some conventional plant (nuclear, old thermal) leave the market. Exhibit 5 Exhibit 6 German power prices increased on the back of rising EU CO2 prices German Power 1-Y Fwd (/MWh) German clean dark and spark spreads remain weak German Clean Spark 1-Y-Fwd (/MWh) German Clean Dark 1-Y-Fwd (/MWh) EU CO2 1-Y-Fwd (/tonne) Source: Factset Source: Factset Taking into account the contracted capacity and generally small generation portfolio, which is primarily coal-fired, we have estimated that a decline in clean dark spreads by 3/MWh would result in around 1% reduction in operating profits. On the gas side, EWE has a number of long-term take-or-pay arrangements. In common with the major German gas importers and integrated utilities, EWE's profitability has been affected negatively by the movement of the gas/oil spread, which meant that the oil-price linked contracts were more expensive than buying gas on the spot market. We understand that EWE has managed to renegotiate more than 95% of its supply portfolio to market-based pricing going forward. As a result, gas/oil spread risks have declined considerably. resulting in low exposure to decarbonisation risks The European Union has committed to reduce greenhouse gas emissions by 40% from 1990 levels and to increase the contribution of renewables to energy demand to 27% by These targets, agreed in 2014, formed the basis of the EU s Nationally Determined Contributions incorporated into the Paris Agreement, and are designed to significantly decarbonise the region s economies. We believe that unregulated utilities, which account for 40% of EU carbon emissions, will need to deliver a significant share of the reductions, and that this will create a variety of risks and opportunities for individual utilities. EWE faces low risk compared with peers, given its very small generation exposure as well as focus on renewables and network activities. Moody s framework for assessing the risk associated with decarbonisation in this industry is set out in Carbon Transition Brings Risks and Opportunities for Unregulated Utilities, published in October Domestic supply activities are subject to strong competition, but local roots enhance customer 'stickiness' EWE's domestic sales & trading activities are subject to intensifying competition and could suffer pressure on supply margins. Domestically, the company has greater exposure to electricity sales than gas, which generally face more intense competition. However, 5

6 like its smaller municipal peers, the so-called Stadtwerke, EWE benefits from its regional roots and strong brand recognition, typically resulting in better customer retention. Risk of international activities remains manageable at their small size International operations are focused on Turkey and Poland and largely related to gas distribution and sales activities. While we consider these activities to be of higher risk than the core domestic business, particularly considering ongoing political and economical developments in Turkey, their contribution to operating profit remains small (accounting for around 5% of consolidated operating EBIT). Following recent management changes, EWE is undergoing a strategic review, intended to conclude in summer 2018, which will also consider the international operations, and we currently expect that an increase in the international exposure is very unlikely. Financial profile significantly improved as proceeds from VNG sale create financial flexibility in the medium term To counteract a challenging market environment, and in common with its peers, EWE has focused on increasing its efficiency and achieved material cost savings over the past five years. Management targets further efficiencies in the coming years. The significant improvement in financial metrics since 2016 was also a result of lower debt post the sale of VNG. EWE owned a 47.9% minority stake in the German natural gas company VNG from 2004, but became the majority shareholder in 2014 when it increased its stake to 63.7%. In July 2015, EWE acquired a further 10.52% of the shares from Gazprom Germania GmbH, taking its stake to 74.2%. In October 2015, EWE announced that it would sell its stake in VNG to EnBW, which itself would divest of its 26% shareholding in EWE. EWE bought 10% of its own shares for a consideration of million. Its then 74% owner, the Ems-Weser-Elbe Versorgungsund Entsorgungsverband (EWE Verband), an association of municipalities and provinces in the area of EWE's core operations, also purchased 10% in EWE's shares and will acquire the remaining 6% by The sale concluded in April 2016, with EWE receiving the differential between the value of the agreed price for VNG's shares and the million the company spent on acquiring its own shares. Overall proceeds amounted to around 1.5 billion and the company applied these, in part, to repay a portion of its existing debt. While EWE will also consider additional investments to further ongoing business opportunities in its core focus areas, including renewables and smart grid developments, the company will be much more comfortably positioned within its current rating category, providing financial flexibility in a challenging market environment. Exhibit 7 Moody's projected metrics and positioning against minimum guidance for 1 rating FFO/Net Debt minimum guidance for 1 RCF/Net Debt minimum guidance for 1 30% 25% 20% 15% 10% E 2019-E 2020-E Note: (1) All ratios are based on 'Adjusted' financial data and incorporate Moody's Global Standard Adjustments for Non-Financial Corporations. (2) Projections represent Moody's forward view, not the view of the issuer, and unless noted in the text, does not incorporate significant acquisitions and divestitures. Source: Moody's While EWE's credit metrics improved following disposal of the VNG stake, the company also paid out a portion of the proceeds as a special dividend. Management may also decide to support the EWE Verband in funding acquisition by 2019 of the remaining 6% of 6

7 shares in EWE still held by EnBW. However, upon completion of the new management's strategic review later this year, EWE and the EWE Verband aim to find a new strategic partner to invest in up to 26% of EWE's shares, providing some mitigation against this risk. Liquidity Analysis EWE's liquidity position is strong. As of December 2017, the company reported cash and cash equivalents of 608 million. In addition to that, EWE has 750 million committed funds available under a syndicated revolving credit facility which matures in November 2022 (with a one-year extension option). The company also has available short-term bilateral facilities of around 457 million, of which 187 million were drawn at December All credit facilities are reported to be free of restrictive covenants and MAC clauses, and represent reliable sources of liquidity. EWE's main uses of cash in the next months include capital expenditure, an annual dividend payment of typically around 90 million, though higher in 2016 to reflect the book gain achieved from the VNG sale, and debt refinancing requirements. The next major repayment include the 372 million bond due in October 2019 and the 365 million bond due November Exhibit 8 EWE's bond maturities in millions thereafter Source: EWE annual report

8 Rating Methodology and Scorecard Factors EWE is rated under Moody's rating methodology for Unregulated Utilities and Power Companies, published in May Compared with most of its German peers, EWE benefits from (1) a much lower direct exposure to merchant generation power prices in the challenging German power market (nevertheless, it must continue to manage its procurement strategy and margins in respect of its downstream customer base); (2) an entrenched and rather stable customer base in its core markets; and (3) a materially higher proportion of earnings from low risk monopoly-regulated network activities. These comparative strengths support a final rating that is higher than the grid-indicated rating. Exhibit 9 EWE AG - Rating Factors Grid Unregulated Utilities and Unregulated Power Companies Industry Grid [1][2] Factor 1 : Scale (10%) a) Scale (USD Billion) Moody's Month Forward View As of May 2018 [3] Current FY 12/31/2017 Measure Score Measure Score A A A A Factor 2 : Business Profile (40%) a) Market Diversification b) Hedging and Integration Impact on Cash Flow Predictability c) Market Framework & Positioning d) Capital Requirements and Operational Performance e) Business Mix Impact on Cash Flow Predictability Aaa Aaa Aaa Aaa Factor 3 : Financial Policy (10%) a) Financial Policy Factor 4 : Leverage and Coverage (40%) a) (CFO Pre-W/C + Interest) / Interest (3 Year Avg) 4.3x 4x - 7x b) (CFO Pre-W/C) / Net Debt (3 Year Avg) 22.0% 20% - 25% c) RCF / Net Debt (3 Year Avg) 16.8% 15% - 20% Rating: a) Indicated Rating from Grid b) Actual Rating Assigned Note: (1) All ratios are based on 'Adjusted' financial data and incorporate Moody's Global Standard Adjustments for Non-Financial Corporations. (2) As of 21/31/2017. (3) This represents Moody's forward view, not the view of the issuer, and unless noted in the text, does not incorporate significant acquisitions and divestitures. Source: Moody's Financial Metrics Given its ownership structure, EWE's final rating also takes into account the joint default analysis under our rating methodology for government-related issuers, published in August 2017, inter alia reflecting (1) our assessment of low probability of extraordinary support by the municipalities that own EWE, due to the fragmented nature of EWE's municipal ownership; and (2) our assessment of moderate dependence, which takes into account that a large part of EWE's revenues are generated within the regions and cities that also comprise EWE's municipal owners, but part of EWE's earnings are generated outside of Lower Saxony. Given the low support assumption under a generally fragmented municipal ownership structure, EWE's 1 rating is in line with the company's stand-alone credit quality absent any extraordinary assumed support, the so-called baseline credit assessment (BCA). While EWE's ratings may be impacted by changes in the GRI input factors, e.g. the credit quality of the supporting municipalities, or our assessment of default dependence and support, we note that given the assumed low probability of support from EWE's ultimate municipal shareholders, the potential for rating uplift from the BCA remains generally limited. 8

9 Appendix Exhibit 10 Peer comparison table EWE AG EVN AG EnBW AG E.ON SE innogy SE 1 Sta A2 Pos (P)1 Sta (P)2 Sta (P)2 Sta Revenue 7,819 7,566 8,251 2,136 2,047 2,216 EBITDA , Total Assets 9,929 8,630 9,302 6,597 6,590 6, ,167 2,616 38,441 19,368 21,974 42,656 38,173 37,965 2,648 6,163 2,714 9,179 38,835 39, ,575 63,081 55, ,549 4,192 3,995 58,763 47,617 47,480 25,046 23,737 22,806 4,067 3,324 22,602 19,670 19,482 Debt 3,729 2,834 3,387 2,037 1,901 1,477 19,621 23,122 18,556 35,966 39,526 27,065 Cash & Cash Equivalents ,736 12,554 9,430 10,933 11,029 6,127 Net Debt 3,372 2,379 2,626 1,702 1,589 6,884 10,567 9,126 25,033 28,497 20,938 1,254 43,456 4,713 2,444 41,119 (CFO Pre-W/C) / Net Debt 18.9% 22.8% 25.1% 29.0% 33.7% 48.8% 38.6% 16.3% 18.5% 23.8% 13.1% 31.8% 10.4% 16.4% 17.3% RCF / Net Debt 16.2% 13.0% 21.1% 23.4% 27.7% 41.1% 33.9% 13.6% 17.2% 20.6% 9.3% 29.2% 5.9% 11.4% 10.4% 4.3x 3.8x 5.2x 6.6x 8.2x 10.1x 4.9x 3.3x 3.3x 4.3x 3.3x 4.4x 4.0x 5.2x 6.0x (CFO Pre-W/C) + Interest Note: All figures & ratios calculated using Moody s estimates & standard adjustments. = Financial Year-End. LTM = Last Twelve Months. RUR* = Ratings under Review, where UPG = for upgrade and DNG = for downgrade. Source: Moody s Financial Metrics. Exhibit 11 EWE's adjusted debt breakdown (in EUR Millions) Dec-12 Dec-13 As Reported Debt Dec-14 Dec-15 Dec-16 Dec-17 3, , , , , ,823.2 Pensions , ,153.4 Operating Leases Non-Standard Adjustments Moody's-Adjusted Debt , , , , , ,387.1 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 1,079.1 Note: All figures & ratios calculated using Moody s estimates & standard adjustments. Source: Moody s Financial Metrics. Exhibit 12 EWE's adjusted EBITDA breakdown (in EUR Millions) As Reported EBITDA ,268.0 Pensions Operating Leases Interest Expense Discounting Unusual ,049.7 Non-Standard Adjustments Moody's-Adjusted EBITDA Note: All figures & ratios calculated using Moody s estimates & standard adjustments. Source: Moody s Financial Metrics. 9

10 Exhibit 13 EWE AG Selected historical adjusted financials (in EUR Millions) Dec-2013 Dec ,251 Income Statement Revenue 8,863 8,134 7,819 7,566 % Change In Sales (Yoy) 3.2% -8.2% -3.9% -3.2% 9.0% , % 9.4% 11.0% 12.7% 12.7% % 3.9% 5.1% 6.6% 7.1% Interest Expense Net Income EBITDA EBITDA Margin % EBIT EBIT Margin % lance Sheet Cash & Cash Equivalents Current Assets ,940 2,020 1,833 1,940 2,445 Net Property Plant And Equipment 5,406 5,357 5,305 5,122 5,134 Non-Current Assets 7,572 7,959 6,844 6,690 6,857 Total Assets 10,543 9,979 9,929 8,630 9,302 Current Liabilities 2,674 2,053 2,728 1,792 1,952 Debt 4,277 3,824 3,729 2,934 3,387 Non-Current Liabilities 4,888 4,763 4,669 4,029 4,649 Total Liabilities 7,581 6,816 7,397 5,821 6,601 Total Equity 2,961 3,163 2,532 2,810 2,700 10,543 9,979 9,929 8,630 9,302 Funds From Operations Cash Flow From Operations RCF FCF Total Liabilities & Equity Cash Flow Capital Expenditures Ratios (CFO Pre-W/C) / Interest Expense 4.0x 3.3x 4.3x 3.8x 5.2x (CFO Pre-W/C) / Net Debt 18.4% 13.6% 18.9% 22.8% 25.1% RCF / Net Debt 15.6% 10.9% 16.2% 13.0% 21.1% Note: All figures & ratios calculated using Moody s estimates & standard adjustments. Source: Moody s Financial Metrics. Ratings Exhibit 14 Category EWE AG Outlook Issuer Rating Senior Unsecured -Dom Curr Moody's Rating Stable 1 1 Source: Moody's Investors Service 10

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It would be reckless and inappropriate for retail investors to use MOODY S credit ratings or publications when making an investment decision. If in doubt you should contact your financial or other professional adviser. Additional terms for Japan only: Moody's Japan K.K. ( MJKK ) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody s SF Japan K.K. ( MSFJ ) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization ( NRSRO ). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively. MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for appraisal and rating services rendered by it fees ranging from JPY200,000 to approximately JPY350,000,000. MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements. REPORT NUMBER