Q-Q3 207 Results Presentation Investor and Analyst Conference Call 4 November 207 Markus Krebber Chief Financial Officer Gunhild Grieve Head of Investor Relations
Disclaimer This document contains forward-looking statements. These statements are based on the current views, expectations, assumptions and information of the management, and are based on information currently available to the management. Forward-looking statements shall not be construed as a promise for the materialisation of future results and developments and involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those described in such statements due to, among other things, changes in the general economic and competitive environment, risks associated with capital markets, currency exchange rate fluctuations, changes in international and national laws and regulations, in particular with respect to tax laws and regulations, affecting the Company, and other factors. Neither the Company nor any of its affiliates assumes any obligations to update any forward-looking statements. 2
Key messages First nine months with significant earnings improvement, in line with expectations RWE consolidated group: adj. EBITDA 4,75 m (+ 354 m); adj. net income 876 m (+ 649 m) RWE stand alone: adj. net income 930 m; distributable cash flow 493 m Outlook for 207 confirmed. Expectation to reach the upper end of guidance Strong operational performance Reduction of operational cost base well on track Restored profitability of Supply & Trading Excellent cooperation between technical and commercial asset management Significant reduction in net debt and optimisation of capital structure and financing Hybrid capital reduced by 50% due to call of hybrid bonds with first call date in 207 and hybrid bonds buy back Amended syndicated credit facility for RWE stand alone 3
Development of adjusted EBITDA dominated by recovery of earnings at Supply & Trading Group RWE stand-alone ( million) 3,82 Q-Q3 206,63 > Lignite & Nuclear: Declining generation margins -83-89 Lignite & Nuclear -83 European Power -89 > European Power: Less positive one-offs than in 206 ( -3million) Strong contribution from commercial asset optimisation +298 +56 +72 4,75 Supply & Trading innogy Other, consolidation Q-Q3 207 +298-47 +47,739 > Supply & Trading: Return to normalised earnings after losses in 206 > innogy as part of RWE stand-alone: dividend inflow of 683 million in Q2 207. Previous year pro forma appropriation of profits of innogy subsidiaries of 730 million 4
Lignite & Nuclear Driven by lower realised generation margins Key financials Q-Q3 207 versus Q-Q3 206: million Adj. EBITDA t/o non-recurring items Q-Q3 207 55 - Q-Q3 206 change 634-9 -83 8 Lower realised generation margins Lower income at Mátra and classification as asset held for sale as of Q2 207; i.e. earnings contribution from Q2 207 onwards in non-operating result Phase out of nuclear fuel tax in 206 (+ 0.5 bn) Operating cost improvements Depreciation 202 294-92 Adj. EBIT 349 340 9 t/o non-recurring items Capex 2 Cash contribution 2-63 388-9 73 46 Non-recurring items (not included in non-operating result) 2 Cash contribution = adj. EBITDA minus capex with effect on cash (before changes in provisions), excl. investments from assets held for sale 8-0 -73 EBITDA outlook for 207: significantly below previous year Lower realised generation margins (hedged outright price: ~ 3/MWh vs. 35/MWh in 206) Absence of non-recurring items (- 0.5 bn) Unplanned outage at Neurath lignite plant and reclassification of Mátra as asset held for sale Absence of nuclear fuel tax ( 0.5 bn) Operating cost improvements 5
European Power Lower earnings due to absence of non-recurring items Key financials Q-Q3 207 versus Q-Q3 206: million Q-Q3 207 Q-Q3 206 change Absence of positive non-recurring items in 206 Lower realised hard coal generation margins UK Continental Europe 98 9 28 20-20 -82 Higher realised gas generation margins Significantly higher income from commercial asset optimisation Adj. EBITDA 324 43-89 Operating cost improvements t/o non-recurring items 86 99-3 Depreciation Adj. EBIT t/o non-recurring items Capex 2 228 96 86 86 38 95 99 32-90 -3 54 EBITDA outlook for 207: significantly above previous year Significantly higher income from commercial asset optimisation Operating cost improvements Higher realised gas generation margins Cash contribution 2 238 38-43 Lower realised hard coal generation margins Non-recurring items (not included in non-operating result) 2 Cash contribution = adj. EBITDA minus capex with effect on cash (before changes in provisions) 6
Hedging Improved average hedge prices as a result of our implicit fuel hedge strategy Expected positions and hedge status as of 30 September 207 Outright (Lignite & Nuclear) ~3 ~27 ~27 ~30 ~00 TWh 85 90 TWh 80 85 TWh 80 85 TWh >90% >90% >90% >70% 207E 208E 209E 2020E Open position Fully hedged position Implicit fuel hedge Average hedge price ( /MWh) Change to reported average hedge price as of 30 June 207 Spread (European Power) ~70 TWh 50 70 TWh 50 70 TWh 50 70 TWh >90% >90% <0% >30% 207E 208E 209E 2020E Total in-the-money spread Open position Hedged position (%) 7
/MWh Significant improvement of fuel spreads since March 207 Development of German fuel spreads 6 5 4 3 2 0 - -2-3 35 34 33 32 3 30 29 28 27 26 25 24 23 22 2 20 9 8 7 6 5 4 3 2 0 9 8 7 6 5 4 3 2 Months to Delivery Cal6 Cal7 Cal8 Cal9 Cal20 Fuel spread defined as: Power price (pass-through-factor carbon EUA price + pass-through-factor coal coal price + pass-through-factor gas gas price) Source: Bloomberg; data until 30 September 207 8
Supply & Trading Positive earnings development due to a return to normalised trading result Key financials Q-Q3 207 versus Q-Q3 206: million Adj. EBITDA t/o non-recurring items Q-Q3 207 20 - Q-Q3 206 change -97-5 298 5 Normalised trading result after losses in 206 Adjustment of long-term gas storage contracts to market prices in Q2 206 (non-recurring items) Absence of income from disposal of Lynemouth power plant in Q 206 Depreciation 4 3 Adj. EBIT t/o non-recurring items Capex 2 97-3 -00-5 297 5 2 EBITDA outlook for 207: significantly above previous year Normalisation of trading performance Cash contribution 2 98-98 296 Non-recurring items (not included in non-operating result) 2 Cash contribution = adj. EBITDA minus capex with effect on cash (before changes in provisions) 9
Adjusted net income Q-Q3 207 reaches 930 million Group RWE stand-alone ( million) > RWE stand-alone adj. EBITDA 4,75 Adj. EBITDA,739 includes operating income from Lignite & Nuclear, European Power and Supply & Trading and dividend -,508 Adj. depreciation -435 from innogy > All effects related to the reimbursement 2,667 Adj. EBIT,304 of the nuclear fuel tax are adjusted -84-476 -50 Adj. financial result Adj. tax Adj. minorities & hybrids -29-4 -42 > Financial result adjusted for effects from changes in discount rates for nuclear and other long-term provisions, interest on nuclear fuel tax and interest income from tax audit for former years > Limited taxable earnings at RWE AG tax unit 876 Adjusted net income 930 > Hybrid bond partly classified as equity pursuant to IFRS 0
High Q-Q3 207 distributable cash flow due to full amount of innogy dividend in Q2 207 RWE stand-alone ( million) Adj. EBITDA Change in provisions & other non-cash items Capex Cash contribution Change in operating working capital Cash interests/taxes Minorities + hybrids Distributable cash flow,739-652 -252 835-82 -88-72 493 > innogy dividend of 683 million fully reflected in Adj. EBITDA > Changes in provisions Utilisation of CO 2 provisions completed for 207, whereas additions only partly Full year s expectation of approx. 650 million confirmed > Change in operating working capital: Phase out of working capital optimisation measures Typical seasonal pattern of working capital
Strong decline of net debt due to positive DiCF, nuclear fuel tax refund and reduction of provisions Development of net debt (RWE stand-alone) ( million) 6,858-493 5-26 -2,430-557 259 3,38 Net debt 3 Dec 206 Distributable cash flow Dividend RWE AG Financial investments/ Other changes in Change in provisions Change in hybrid capital Net debt 30 Sept 207 (DiCF) divestments net financial (net debt debt, 2 relevant) 2 Includes.7 bn of nuclear fuel tax refund. Furthermore it includes variation margins, historic tax account receivables/payable and tax provisions. 2 Net of contribution to nuclear energy fund ( 7.0 billion). 2
RWE stand-alone Outlook for 207 confirmed FY 206 FY 207e.9 bn Adjusted EBITDA.6 bn.9 bn - 0.9 bn -.0 bn 0.0 bn Adj. depreciation Adj. net financial result Adj. taxes > Reduction by ~ 0.3 bn from impairments > Reduction in interest accretion to provisions ( 0.4 0.5 bn) > Lower losses from sale of securities and impact from lower discount rates on non-current provisions ( 0.2 bn) > Principally 95% tax exemption for innogy dividend > Utilisation of deferred tax assets in German tax unit - 0. bn Adj. minorities & hybrid > Stable development expected - 0.0 bn Adjusted Net Income 0.7 bn.0 bn Dividend (per share) 0.50 + Management target for ordinary and preferred shares; > further goal to maintain at least this level in the years thereafter.00 > Special dividend from reimbursement of nuclear fuel tax 3
Appendix 4
Reconciliation to Q-Q3 207 adjusted net income ( million) RWE stand-alone RWE Group Reported Adjustments Adjusted Reported Adjustments Adjusted Adjusted EBITDA,739 -,739 4,75-4,75 Depreciation -435 - -435 -,508 - -,508 Adjusted EBIT,304 -,304 2,667-2,667 Non-operating result,355 -,355-883 -883 - Financial result 69-360 -29-425 -389-84 Taxes on income (Tax rate) -228 (8%) 87-4 (4%) -670 (2%) 94-476 (26%) Income 2,500 -,528 972 2,455 -,078,377 - Non-controlling interests 53-59 -6-200 -265-465 - Hybrid investors interest -36 - -36-36 - -36 Net income 2,67 -,687 930 2,29 -,343 876 Mathematical prefix. 5
RWE Group: Outlook for 207 confirmed Actuals 206 207 forecast Change to previous outlook ( million) Adjusted EBITDA 5,403 5,400 5,700,079 Lignite & Nuclear Significantly below 206 377 European Power Significantly above 206-39 Supply & Trading Significantly above 206 4,203 innogy Moderately above 206 Adjusted net income 777,000,300 Qualifiers such as moderately, and significantly indicate percentage deviations from the previous year s figures. 6
Income statement Q-Q3 207 ( million) RWE stand-alone RWE Group Revenue (including natural gas tax/electricity tax),49 32,385 Natural gas tax/electricity tax -0 -,450 Revenue,390 30,935 Other operating result,654 678 Cost of materials -9,60-22,623 Staff costs -,290-3,497 Depreciation, amortisation and impairment losses -760-2,34 Income from investments accounted for using the equity method 74 227 Other income from investments 75 44 Financial result 69-425 Income before tax 2,728 3,25 Taxes on income -228-670 Income 2,500 2,455 of which: non-controlling interest -53 200 of which: RWE AG hybrid capital investors interest 36 36 of which: net income/income attributable to RWE AG shareholders 2,67 2,29 Includes innogy dividend of 683 million. 7
Balance sheet as at 30 September 207 ( million) RWE stand-alone RWE Group Assets Intangible assets,039 2,250 Property, plant and equipment 6,326 24,70 Investment property 40 54 Investments accounted for using the equity method 624 2,907 Other financial assets 6,46,8 Inventories,739 2,247 Financial receivables 3,723,836 Trade accounts receivable,944 4,373 Other receivables and other assets 3,980 5,442 Income tax assets 72 493 Deferred taxes 479 2,656 Marketable securities 2,629 4,628 Cash and cash equivalents 3,879 5,43 Assets held for sale 23 23 43,58 67,728 Equity and liabilities RWE AG shareholders interest 4,987 6,243 RWE AG hybrid capital investors interest 925 925 Non-controlling interests 28 4,24 6,040,292 Provisions 6,937 24,24 Financial liabilities 4,223 8,59 Other liabilities 5,683 3,260 Income tax liabilities 23 89 Deferred tax liabilities 24 676 Liabilities held for sale 28 28 27,8 56,436 Includes innogy stake at market value of 6. billion as at 30 Sept 207 43,58 67,728 8
Net debt as at 30 September 207 ( million) RWE stand-alone RWE Group Cash and cash equivalents 3,879 5,43 Marketable securities 2,747 4,854 Other financial assets 3,697,560 t/o financial receivables against innogy 2,43 - Financial assets 0,323,845 Bonds, other notes payable, bank debt, commercial paper 3,233 6, Hedge transactions related to bonds -43-55 Other financial liabilities 989 2,048 Financial liabilities 4,79 8,04 Net financial debt -6,44 6,259 Provisions for pensions and similar obligations 2,37 5,740 Surplus of plan assets over benefit obligations - -6 Provisions for nuclear waste management 5,579 5,579 Mining provisions 2,394 2,394 Provisions for dismantling wind farms - 366 Adjustments for hybrid capital (portion of relevance to the rating) -89-89 Plus 50% of the hybrid capital stated as equity 463 463 Minus 50% of the hybrid capital stated as debt -,282 -,282 Net debt 3,38 9,458 9
RWE Group net debt improved due to change in provisions and refund of nuclear fuel tax Development of net debt (RWE Group) ( billion) 22.7 +2.9 +.0 +0.6-7.0-0.9 +0.2 9.5 Net debt 3 Dec 206 Cash flows from opera- Capex on property, plant Dividends incl. Contribution to Changes in provisions Others including Net debt 30 Sept 207 ting activities and equipment, dividends to nuclear f/x effects intangible non-controlling energy fund assets and interests financial assets/ divestments Includes.7 bn of nuclear fuel tax refund and 7.0 bn contribution to nuclear energy fund. 20
Power prices and commodities Base load power prices Germany, NL ( year forward) /MWh 45 40 35 30 25 20 5 Jan'5 Sep'5 Mai'6 Jan'7 Sep'7 NL Germany Base load power prices UK ( year forward) /MWh 00 90 80 70 60 50 40 Jan'5 Sep'5 Mai'6 Jan'7 Sep'7 UK Coal prices API2 Cal-ahead $/t 90 80 70 60 50 40 30 Jan'5 Sep'5 Mai'6 Jan'7 Sep'7 Gas prices TTF Cal-ahead /MWh 25 20 5 0 5 Jan'5 Sep'5 Mai'6 Jan'7 Sep'7 Carbon prices - EU ETS /t 0 8 6 4 2 Jan'5 Sep'5 Mai'6 Jan'7 Sep'7 Source: Bloomberg Data through to November 2
Clean Dark (CDS) and Spark Spreads (CSS) 205-208 forwards for Germany, UK and NL Germany UK 2 Netherlands Cal5 /MWh Cal6 Cal7 Cal8 Cal5 Cal6 Cal7 Cal8 Cal5 Cal6 Cal7 Cal8 /MWh 20 20 5 Ø6.97 5 0 5 0-5 -0 Ø6.63 Ø-6.84 Ø4.83 Ø-4.33 Ø3.0 Ø0.56 Ø3.77 Ø2.42 Ø3.65 Ø0.52 Ø5.80 Ø7.3 Ø5.59 Ø5.3 Ø.2 Ø9.8 Ø.2 Ø-5.43 Ø-7.52 Ø7.02 Ø-.86 Ø5.28 Ø-0.38 0 5 0-5 -0 CDS Cal 8 base load (assumed thermal efficiency: 37%) CDS Cal 8 base load (assumed thermal efficiency: 35%) CDS Cal 8 base load (assumed thermal efficiency: 37%) CSS Cal 8 peak load (assumed thermal efficiency: 50%) CSS Cal 8 base load (assumed thermal efficiency: 49%) CSS Cal 8 base load (assumed thermal efficiency: 50%) Settlement one year ahead (Cal+) 2 Including UK carbon tax Source: RWE Supply & Trading, prices through to November 207 22
RWE Investor Relations contacts Important Links Contacts for Institutional Investors & Financial Analysts Annual and Interim Reports http://www.rwe.com/ir/reports/ Investor and Analyst Conferences http://www.rwe.com/ir/investor-and-analyst-conferences/ IR presentations & further factbooks http://www.rwe.com/ir/presentations/ IR videos http://www.rwe.com/ir/videos/ Consensus of analysts estimates http://www.rwe.com/ir/consensus-estimates Financial Calendar Gunhild Grieve Head of Investor Relations Tel. +49 20 579-30 gunhild.grieve@rwe.com Martin Vahlbrock Tel.: +49 20 579-37 martin.vahlbrock@rwe.com Dr. Burkhard Pahnke Tel.: +49 20 579-38 burkhard.pahnke@rwe.com Lenka Zikmundova Tel.: +49 20 579-36 lenka.zikmundova@rwe.com Jérôme Hördemann Tel.: +49 20 579-39 jerome.hoerdemann@rwe.com 3 March 208 Annual Report 207 26 April 208 Annual General Meeting 2 May 208 Dividend payment Contact for Private Shareholders Sabine Gathmann Tel.: +49 20 579-35 sabine.gathmann@rwe.com 5 May 208 Interim statement on the first quarter of 208 23