Rwe Ag · XETR:RWE
Rwe — Non-Deal Roadshow (October 2003)
31 slides from Rwe's roadshow presentation, October 2003
Slide 1: Sweating the Assets
“Sweating the Assets” Roadshow Autumn 2003
Slide 2: Forward Looking Statement
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
Slide 3: H1 2003: Portfolio Streamlining and Group Reorganization
H1 2003: Portfolio Streamlining and Group Reorganization H1 PROFIT STRONGLY UP Group operating result up by 35% Core business operating result up by 46% Electricity operating result up by 47% GROUP REORGANIZATION Regional integration of German electricity, gas and water. FURTHER CORE BUSINESSE
Slide 4: Group H1 2003 at a Glance
Group H1 2003 at a Glance Key figures 2003 2002 ∆ PY January - June € million € million in % External net sales 22,434 25,161 -10.8 EBITDA 4,376 3,329 31.5 Operating Result 2,935 2,169 35.3 Operating cash flow 2,712 2,408 12.6 Capex incl. acquisitions 6,822 12,576 -45.8 Net profit 621 818 -24.1 EPS
Slide 5: Outlook for 2003
Outlook for 2003 January - December 2002 forecast for 2003 € million External net sales core business 34,449 double digit growth non-core business 11,997 2/3 down EBITDA core business 7,123 double digit growth non-core business 466 lower Operating result core business 4,706 double digit growth non-c
Slide 6: New Group Structure as of Oct. 1, 2003
New Group Structure as of Oct. 1, 2003 RWE AG („Group Center“) GENERATION GENERATION Regions Regions Regional Distributors Upstream Gas Sales Transmission (Electricity/Gas) RWE Dea npower Services Renewables Renewables RWE Nat‘l Windpwr Harpen Solutions Hard Coal USA Consol 5 6
Slide 7: RWE Energy: Integrated and Regional
RWE Energy: Integrated and Regional Revenue and cost synergies by leveraging off regional overlaps RWE serves in Germany*) – 12.9 m electricity customers – 3.8 m gas customers – 13.2 m people with water today only 20% of electricity customers are also served with gas ... and just 25% of electric
Slide 8: RWE Innogy & RWE Thames Water: Shared Services Synergies Increased
RWE Innogy & RWE Thames Water: Shared Services Synergies Increased RWE Innogy RWE Thames Water Information Systems Procurement/Facility Mgmt. HR 1st phase Finance Property Internal Audit/Legal Health, Safety & Environment 2nd phase Corporate Communications Synergies increased from € 80 m to € 100 m
Slide 9: Focused Portfolio at RWE Innogy and RWE Thames Water
Focused Portfolio at RWE Innogy and RWE Thames Water RWE Innogy to concentrate on generation and supply Transfer of all Trading activities to RWE Trading Thereby room for further streamlining the business structures International Portfolio of RWE Thames Water will be focused German and main Ce
Slide 10: Future Outlook for Water Value Contribution Track 2002 – 2005
Future Outlook for Water Value Contribution Track 2002 – 2005 50 2006 onwards 0 -50 -100 -150 €m -200 -250 2005 -300 2004 -350 2003 -400 -450 VC 2002 AW VC 2002 AW Goodwill Americas rate case Americas UK tariff Water Division New business, backlog other increase 2005 + Innogy organic growth improvem
Slide 11: RWE Power & RWE Trading: Managing Generation Assets More Efficiently
RWE Power & RWE Trading: Managing Generation Assets More Efficiently Spot Markets Forward Markets STPM takes STPM takes residual position net open positions Short Term RWE Power Position Asset Management RWE Trading Management Function (STPM) Short Term Position Management Function established compr
Slide 12: Reorganization Adds € 300 Million to Existing Cost Cutting Program
Reorganization Adds € 300 Million to Existing Cost Cutting Program 130 2,855 100 370 € million p.a. 70 300 300 1,955 160 achieved in H1 achieved 2003 2004 2005 2006 ∑ 2006 (7/00 - 31.12.2002) target new target new target new target new target New cost cutting program Already achieved To come due to
Slide 13: New Management Teams Reflect Further Integration
New Management Teams Reflect Further Integration First management level below holding board nearly completed: CEO Berthold Bonekamp CFO Antonius Voss CEO N.N. CFO H.-W. Ufer CEO Andy Duff CFO Volker Beckers CEO Brian Count CFO Christoph Köther CEO Bill Alexander CFO Tim Weller 12 13
Slide 14: Management: Streamlined Structures, Improved Quality
Management: Streamlined Structures, Improved Quality Total number of level 1 management functions: 29 ≈30% reduction Total number of level 2 management functions: 125 ≈36% reduction Level 1 & 2 managers in new functions/companies: 67 Upgrades of younger, talented managers: > 20 In the releva
Slide 15: Portfolio Streamlining
Portfolio Streamlining Company closing proceeds in H1 2003 3.5 % of Ruhrgas Q1/2003 € 224 m √ 34.9% of STE (Czech Republic) Q2/2003 € 73 m √ various activities of RWE Umwelt H1/2003 none √ non operational real estate (2003) H1/2003 € 56 m √ 40% of Stadtwerke Leipzig Q3/2003 € 199 m √ 75% of Tapada p
Slide 16: Development of Net Debt Position
Development of Net Debt Position € billion (debt with positive prefix, cash with negative prefix) Net debt Net cash American Smaller Capex Dividends/ Currency Net debt Market 31.12.2002 from Water acquisitions/ Others translation 30.06.2003 value of operating effect disposals effect net debt related
Slide 17: Strong Net Interest Coverage
Strong Net Interest Coverage Outlook 2003 improved EBITDA / net interest consolidation of Czech Gas and Innogy for 8 resp. 16 7 months full inclusion of American Water, Czech Gas and Innogy 12 11.2x 8.4* 8 > 6.5 x 4 31.12.02 30.06.03 31.12.03e 16 25 17 *) Including realised gains/losses from sale of
Slide 18: RWE Cash Flow Statement
RWE Cash Flow Statement January - June 2003 2002 change € million in % Operating cash flow 2,712 2,408 +12.6 Net cash used in investing activities (incl. divest.) -5,056 -12,545 +59.7 Net cash provided by financing activities 2,090 8,873 -76.4 Exchange rate changes / others / consolidation 39 -858 -
Slide 19: Further Optimization of Financial Structure
Further Optimization of Financial Structure Exchange offer for Innogy bonds highly accepted - Supportive to RWE’s rating as structural subordination is reduced - Lower interest cost for RWE - Underlining RWE’s policy to use RWE AG / RWE Finance B.V. as principal capital markets issuer Successful
Slide 20: Electricity Price Development
Electricity Price Development Forward 2003 Forward 2004 RWE- prices 4.5 in cent/kWh*) Wholesale Peak Distributing utilities 4.0 reduced by grid fees Industrial customers: 3.5 Chemicals reduced by grid fees Wholesale Base 3.0 2.5 2.0 1.5 1.0 Dec. Apr. Aug. Dec. Apr. Aug. Dec. 19 20 01 02 02 02 03 03
Slide 21: RWE Net has Competitive Grid Fees
RWE Net has Competitive Grid Fees Low-voltage Medium-voltage High-voltage ct/kWh ct/kWh ct/kWh 9,0 4,5 1,6 8,0 4,0 1,4 1,22 7,0 3,5 1,2 6,0 3,0 5,00 2,37 1,0 5,0 2,5 0,8 RWE Net 4,0 2,0 0,6 RWE Net RWE Net 3,0 1,5 2,0 1,0 0,4 1,0 0,5 0,2 0,0 0,0 0,0 > 500 network operators < 50 network operators < 5
Slide 22: German Monitoring Report: Future Market Regulation for Electricity and Gas
German Monitoring Report: Future Market Regulation for Electricity and Gas RegTP to become regulatory authority for electricity and gas Regulatory intensity higher in gas Electricity Gas Calculation methodology of Grid access based on an association agreement VVII entry-exit-model plus gener
Slide 23: Emissions Trading: Timetable
Emissions Trading: Timetable July 2003 Emissions Trading Directive passed by EU parliament Dec 2003 Draft National Allocation Plan (NAP) for Germany March 2004 EU Commission to receive NAP’s for approval Mid 2004 EU to approve German NAP Jan 2005 European Emissions Trading to start First P
Slide 24: Back-up-Charts
Back-up-Charts I
Slide 25: Currency Effects in H1 2003
Currency Effects in H1 2003 January - June H1 2003 ∆ to thereof ∆ € million H1 2002 currency EBITDA1) 3) 4,376 1,047 -123 Operating result1) 3) 2,935 766 -73 Net profit after goodwill1) 3) 621 -197 -5 Net debt2) 22,300 6,800 -1,200 1) Average H1 2) Compared with year end 2002 3) Consol and Thames Wa
Slide 26: Financial Assets and Liabilities H1 2003
Financial Assets and Liabilities H1 2003 € 33.9 bn 1.9 other 3.9 commercial paper 7.4 bank loans € 11.6 bn 0.9 other financial assets 0.7 other loans 20.7 bonds 1.9 cash & cash equivalents 7.6 securities held as current assets 0.5 securities held as fixed assets financial financial assets liabilitie
Slide 27: RWE AG: Flexible Funding Structure
RWE AG: Flexible Funding Structure Fully committed syndicated Loan € 5 bn for liquidity back-up and refinancing ( € 2.5 bn 364 days € 2.5 bn 5 years) € 0.0 bn Commercial Paper (up to 1 year) $ 5.0 bn $ 3.2 bn € 18.5 bn MTN-program (up to 30 years) € 15 bn € 5 bn € 20 bn extended in March 2003 amount
Slide 28: Gross Financial Debt Currency Exposure
Gross Financial Debt Currency Exposure* Total debt as of 30.06.2003: € 33.9 bn €/others $ 16% 32% 52% £ With debt in foreign currencies we hedge the translation risk of our international activities. 27 V * including cross-currency swaps
Slide 29: RWE’s Indebtedness is Based on Solid Grounds
RWE’s Indebtedness is Based on Solid Grounds 5.3% average cost of gross debt (vs. 5.5% previous year) More than 80% of debt at fixed interest rates, no rating triggers, no financial covenants Central funding policy for the RWE-Group; RWE AG has domination and profit and loss pooling agreements
Slide 30: Maturity Profile of Capital Market Debt
Maturity Profile of Capital Market Debt* 3,0 22,00 Total: € 20,56 bn** 2,5 17,00 EUR bn (Capital Market Debt Total) 2,0 12,00 EUR bn 1,5 7,00 1,0 2,00 0,5 0,0 -3,00 03 04 05 06 07 08 09 10 11 13 14 15 16 18 19 20 21 23 24 25 26 27 28 30 32 33 12 17 22 29 31 20 20 20 20 20 20 20 20 20 20 20 20 20 20
Slide 31: Structural Subordination in the RWE Group
Structural Subordination in the RWE Group RWE AG (A+ / A 1) / RWE Finance B.V. / Consolidated German Subsidiaries* 75% Innogy Holdings Plc Thames Water Aqua Holdings GmbH Thames Water Plc (A+ / A2) 11% Innogy Plc Thames Water Thames Water Thames Water American Water E‘town Corp. (A- / Baa1) Finance