company presentation - innogy€¦ · 01-08-2016 · innogy · company presentation · 1 august...

company presentation 1 August 2016

Introduction

innogy · company presentation · 1 August 2016

innogy’s management board

Note: the term ‘innogy’ throughout this presentation refers to the future name of RWE International SE which will trade under ‘innogy SE’ from autumn 2016.

Chief Executive Officer

Peter Terium

Chief Financial Officer

Bernhard Günther

COO Grid & Infrastructure

Hildegard Müller

COO Retail

Martin Herrmann

COO Renewables

Hans Bünting

CHO & Labour Director

Uwe Tigges


Formation of a leading European utility

1 As of 23 November 2016. 2 Post money. 3 Including Greenshoe.

RWE AG shareholders

Other innogy shareholders

RWE AG Conventional

Power Generation

Supply & Trading

innogy

Grid & Infrastructure Retail Renewables

76.8%

23.2%

100%

Current shareholding structure1 Rationale for transformation and IPO of innogy

> Increasing divergence of development and prospects of individual business units

> Hence creation of homogenous business portfolios with clear strategic focus

> Ability to invest in growing businesses, supporting the energy transition

> Unlock value through enhanced transparency via separate listing of innogy

> Increased flexibility to cope with future funding needs; innogy shareholding as liquid asset for RWE AG

Transaction structure

> On 7 October 2016, ~10%2 of innogy has been listed on the Frankfurt Stock Exchange via primary offering

> On the same day, a further 13.2%3 stake in innogy has been placed by RWE AG via secondary offer

This slide has been updated post IPO (23 Nov 2016) to reflect the final transaction structure

innogy · company presentation · 1 August 2016 (structure updated on 23 November 2016)


IPO of innogy as catalyst for corporate development

CAPITAL Financial constraints

Solid balance sheet

Integrated utility

Clean play

MANAGEMENT FOCUS

Volume focus

Strict value focus VALUE CREATION

Creation of innogy

Capital Market Day · 30 June 2016

Key investment highlights Financials Grid & Infrastructure Retail Renewables Wrap-up

Content

Key investment highlights


innogy as blueprint for the utility of the future in an ongoing transformation of the sector

Retail Renewables

Grid & Infrastructure

Decarbonisation Decentralisation

Digitalisation



1 Based on distributed volume; as of 2015. 2 Regulated asset base. Numbers based on latest notification by regulator or based on calculations in latest filings with regulators. Expected increase in German regulated asset base calculated as RAB 2010/2011 plus net investments (post concession gains/losses) in regulated assets in the years 2010/2011 to 2015/2016E, assuming full recognition by the regulator. Generally, RABs from different regulatory regimes are not directly comparable due to significant methodological differences (e.g. regulatory periods, regulatory depreciation periods). Also, throughout this presentation, RABs are always stated excluding pro-rata share of RAB from participations that are not fully consolidated. 3 Based on volume sold; as of 2014. 4 With respect to the Retail segment, the term customers refers to customer contracts (electricity and gas contracts counted separately) throughout the presentation. 5 Source: Bloomberg New Energy Finance; asset owner database; as of March 2016. 6 As of 31 December 2015; pro-rata view, excluding Zephyr portfolio. Excluding 0.3GW renewables capacity from fully consolidated participations related to the Grid & Infrastructure segment.

Introducing innogy – three strong segments… Key investment highlights

€13.3bn total RAB2

+9% increase expected for German RAB2

largest electricity DSO in

Germany1

#1

23m customers4

largest electricity retailer in Germany3

3.1GW installed capacity6

worldwide in offshore wind

by installed capacity5

Netherlands/Belgium Germany

East United Kingdom

Germany East

Renewables


Retail #1

#3


…combining a strong regulated profile with a solid platform for growth

1 Total includes €(0.2)bn presented as ‘Other, consolidation’ in the combined financial statements. 2 Includes regulated and quasi-regulated share of EBITDA. 3 The term ‘capex’ throughout the presentation refers to capital expenditures on intangible assets, property, plant and equipment. 4 Includes capex from ‘Other, consolidation’.


Share of regulated business Capex breakdown EBITDA breakdown

Renewables €0.8bn


€2.9bn

€4.5bn EBITDA 2015¹

Retail €1.0bn

€4.5bn EBITDA 20151

Regulated2 ~60%

Renewables €2.1bn


€3.6bn

€6.4bn capex 2013-153,4

Retail €0.7bn


Platform for growth

Focus on value creation

innogy offers a compelling value proposition Key investment highlights

Resilient financial profile

Stable business Unique European asset base

1 2

3

4 5

Capitalise on evolving energy system



1 Market positions based on volumes, or, in the case of Czech Republic, Poland, Netherlands and Belgium, based on customer numbers, as per latest available data, electricity and gas markets counted separately. 2 By installed capacity. Source: Company estimate based on competitors’ disclosure, regulatory reports and research reports.

Focus on Europe – anchored in Germany

Largely CO2 free

Limited exposure to commodity prices

No nuclear liabilities

Enabler of energy transition

Unique asset mix and diversified European footprint


Retail

Renewables

Strategic partnership

Leading market positions across countries in Europe... …with a distinct asset profile

Market presence

574,000 km

total grid

4x #1

positions1

#3 worldwide in offshore

wind2

1


Nuclear provisions fully covered by RWE AG’s asset base – no nuclear related liabilities with innogy


1 Does not represent RWE AG‘s balance sheet accounts. 2 Post money.

innogy not liable for nuclear liabilities > When pooling the three business segments –

Grid & Infrastructure, Retail and Renewables – the relevant legal entities have either been merged into, or transferred by way of a share transfer to innogy

> For none of the carve-out transactions did we use the instrument of a split-off from RWE AG

> In this way, we sought to ensure that we will not be held liable for RWE AG's historic liabilities (in particular nuclear liabilities) under existing German law

> From a commercial perspective, RWE AG’s asset base remains unchanged in light of the envisaged transaction

1

RWE AG’s asset base1 remains unchanged in light of the envisaged transaction

Today Capital increase/innogy IPO

Sell-downby RWE AG

GenCo + Trading

RWE AG’s asset base 100%

stake in Grid, Supply & Renewables

~90% RWE stake in innogy

~10%2

stake new investors

Capital increase via ~10%2

IPO

illustrative/simplified

GenCo+ Trading

GenCo+ Trading

51%-90% RWE stake in innogy

Cash proceeds from sell- down

10%-49% stake new investors


Grid & Infrastructure Retail

Stable business profile across segments reflected in ~60% of group EBITDA from regulated activities1


1 Includes regulated and quasi-regulated business activities. 2 Increase predominantly due to first-time full consolidation of VSE. 3 Includes long-term contracts.

Renewables

Largely regulated and predictable earnings

Stable and diversified business in Continental Europe

Quasi-regulated3 earnings – platform for further growth

2015 EBITDA €0.8bn



Customer base development (m)

23.3 22.9 23.22

2013 2014 2015

Quasi- regulated3

share ~60% Regulated

share >80%

2


Resilient EBITDA supporting strong capex spend... …additionally backed by solid capital structure

Solid capital structure as foundation for stringent business development


Attractive mix of cash generative

and growth assets

~4.0x target leverage

(net debt1/EBITDA)

Credit ratios commensurate with

strong rating profile

Balance sheet strength to enable

growth investments

4.2 4.3 4.5

2.3 2.1 2.0

2013 2014 2015

EBITDA (€bn) Capex (€bn)

. 1 For composition of net debt see slide 41.

3


Solid platform for future growth

Turnaround of UK retail business well on track

Efficiency programme: integral part of management agenda

Strict investment criteria to ensure profitable growth Stringent segment-specific set of hurdle rates

Capital increase as enabler for future growth

~€6.5bn of capex1 2016-18E

Platform for growth

Well-defined investment

strategy

Operational excellence


1 Including financial investments.

4


Create options for the future > Develop new business models > Enable innovation


Lever core competencies • Expand and upgrade existing asset base • Focus on efficiencies and operational improvements

Lever core competencies > Expand and upgrade existing asset base > Focus on efficiencies and operational improvements

Capture new business opportunities > Enter new markets and new technologies > Grow in adjacent business areas

Our investment plan builds on measured steps 4


Germany East

Renewables


Retail

Green investments Support the integration of renewable energy sources

Smart investments Manage the costs of the energy transition

Growth in selected markets

Execute current pipeline

Market opportunities Benefit from continued support for renewable energy sources

Expansion opportunities Growth in new markets and new technologies

UK turnaround

Customer focus Capture the increased strategic value of customers

Energy+ Proactively manage emerging customer needs

Market entry in adjacent markets


Building on our core competencies creates compelling mid-term prospects

market development innogy focus

Ope

ratio

nal e

xcel

lenc

e

Effic

ienc

y im

prov

emen

ts

4

Netherlands/Belgium Germany

East United Kingdom

innogy · company presentation · 1 August 2016 1 Proof of concept.


Decision point 1 Decision point 2

Insights Ideation Build and pilot Handover

POC1

POC1

innogy Innovation Hub

Defin

ing

focu

s top

ics

Operational business/ corporate start-up

Stra

tegi

c par

tner

ing

Berlin/Essen Israel

USA

How innogy drives innovation of the future energy system within its Innovation Hub

4

innogy · company presentation · 1 August 2016 1 Small and medium-sized enterprises.


Sect

or

chal

leng

e SMEs1 in the production sector have a lack of transparency in their production units and no knowledge how to increase performance

inno

gy‘s

ap

proa

ch Retrofit sensors in combination with an

analysis web tool generate real time information about production processes and energy usage on machine level

Cust

omer

va

lue

SMEs are able to minimise energy costs and identify breakdown risks as well as increase machine utilisation. consenze enables customers to improve decision making

Idea

Phase: pilot

Retail customers expect ever more assistance from their energy supplier in helping to understand, control and reduce their energy usage

Real-time and appliance level energy insights, provided to retail customers through their innogy company’s app, powered by a common data and analytics platform

Reduced energy expenditure and greater sense of control. Higher customer engagement and trust, more willingness to stay, buy and recommend its supplier

PERSONAL ENERGY ADVICE

Phase: pilot

Two innovative business models – optimising production processes and energy management application

4

https://www.consenze.com/


Our key investment principles to safeguard shareholder value


Prudent capital

allocation and

investment profile

Focus on growth opportunities in core markets

Flexible capital allocation approach: competing projects across segments

Management highly incentivised for value creation

Majority of capex into regulated business

Strict investment framework with conservative hurdle rates

5


1 Adjusted net income generally excludes one-off effects, including the entire non-operating result as well as associated tax effects. 2 Based on adjusted net income.

Attractive dividend policy based on pay-out ratio of 70-80% of adjusted net income1

Pay-out ratio supported by strong operating cash flows and backed by solid financial structure

Dividend policy compatible with innogy‘s target of an investment grade rating

Anticipated payment of full dividend for fiscal year 2016

Management incentive scheme with clear focus on total shareholder return

Focus on attractive shareholder returns


70-80% dividend pay-out

ratio2

5


Management incentives build on proven RWE scheme – adaption to new business environment


1 Further details subject to supervisory board approval of RWE International SE (in future: innogy SE).

innogy management incentive scheme well balanced with a clear focus on total shareholder return1

Individual annual

bonus scheme

Long-term incentive

plan

> Based on the economic development of the company, individual and collective performance as well as performance with regards to corporate responsibility and employee motivation

> Aims to reward the achievement of long-term strategic objectives while facilitating the capital market orientation

> Conditional right to receive a pay-out in cash following a period of four years > Pay-out dependent on achievement of performance targets derived from the

strategic planning and set before the first tranche start (‘3-year IPO business plan’) and based on the share price development as well as the accumulated dividends paid to shareholders (total shareholder return)

5


Corporate governance – innogy with high degree of independence reflected in its supervisory board structure


> Target composition

• RWE AG represented by one management board

member, designated CFO Markus Krebber

• Werner Brandt and Frank Bsirske in personal union as

supervisory board chairman and supervisory board

deputy chairman for RWE AG and innogy

> Audit committee to be formed mainly from independent

board members

> Envisaged three-step approach for filling and confirming

supervisory board seats

• 1 July 2016: three headed supervisory board in place

• 1 September 2016: 20 members supervisory board

• Spring 2017: confirmation of 10 shareholder

representatives by annual general meeting

Envisaged composition and staffing process Envisaged supervisory board structure

> Two-tier board structure – 20 members, thereof

10 shareholder and 10 employee representatives


Corporate governance – ‘agreement on basic principles’ sets clear and stable rules going forward


Key principles governing innogy/RWE relationship

Selected features on ‘agreement on basic principles’ between innogy and RWE

> Both parties – RWE AG and innogy – shall be in the

position to pursue their strategic, operational and

financial targets individually and independent from

each other

> Shortly prior to the IPO the domination agreement

between innogy and RWE will be terminated

> All intercompany relations and agreements to be

carried out at arm’s length

> Non-compete clause states that RWE is largely

restrained from competing in innogy’s core

businesses until 31 December 2019

> RWE will manage innogy as a financial investment

• RWE AG will not impose strategic and financial

targets and is not involved in planning and

management incentive discussions

• Investment decisions at innogy will not be

subject to approval by RWE AG


4

1 2 3

5

Unique European asset base anchored in Germany, leading positions across many countries

Stable business well invested to yield largely regulated and predictable returns

Resilient financial profile backed by strong cash generation and solid capital structure

Solid platform for growth driven by operational excellence supported by IPO proceeds


innogy’s key characteristics – large and stable business with attractive growth prospects

~60% share of regulated3 EBITDA


3.6GW

renewables capacity2

23m

customers


>[95]%

Efficiency factor in Germany

Strong Development of SAIDI / SAIFI rates

Among DSOs in Eastern Markets3

~70% CFOA4/EBITDA

(average 2013-15)


net debt/EBITDA

Strict capital discipline 70-80%

dividend pay-out ratio based on adjusted net income

Focus on further

efficiencies ~€6.5bn capex5

(2016-18E)

1 Numbers based on latest notification by regulator or based on calculations in latest filings with regulators. Expected increase in German regulated asset base calculated as RAB 2010/2011 plus net investments (post concession gains/losses) in regulated assets in the years 2010/2011 to 2015/2016E, assuming full recognition by the regulator. Generally, RABs from different regulatory regimes are not directly comparable due to significant methodological differences (e.g. regulatory periods, regulatory depreciation periods). Also, throughout this presentation, RABs are always stated excluding pro-rata share of RAB from participations that are not fully consolidated. 2 As of 31 December 2015; accounting view; includes 3.3GW from Renewables segment (excluding Zephyr portfolio) and 0.3GW renewables capacity from participations related to the Grid & Infrastructure segment. 3 Includes regulated and quasi-regulated business activities. 4 Cash flow from operating activities after interest and tax. 5 Including financial investments.


Set for

mid-term growth

Financials


…creating shareholder value

…translates into strong cash generation and a solid capital structure…

By division1

By regulated share

CFOA/EBITDA

Target leverage

Creating value for innogy shareholders – based on stable earnings and a strong financial profile

Financials

Attractive dividend policy

Prudent growth

A stable and attractive earnings profile…

~70% avg. 2013-15

~4.0x net debt/

EBITDA

70-80% of adjusted net income payout ratio

Strict investment

criteria

Renewables 17%

Retail 21%

Grid & Infrastructure 61%


Regulated share2 ~60%

1 Segment breakdown based on sum of operating segment results (€4.7bn). Total includes €(0.2)bn presented as ‘Other, consolidation’ in the combined financial statements. Numbers might not add up due to rounding differences. 2 Includes regulated and quasi-regulated business activities.


Historical financials reflective of the current scope of innogy, set-up of target capitalisation ongoing

1 An exception applies to companies that are part of the business of innogy, e.g. shares in windfarms that were sold by RWE Innogy, or the sale of certain entities with the simultaneous signing of a long-term supply contract that just resulted in a change of the sales channel during the reporting periods of the combined financial statements. These entities are included in the combined financial statements until their respective sale. 2 Post money.

Financials

General structure

> Audited IFRS combined financial statements for the years 2013, 2014 and 2015

> Consolidated financials as of H1 2016 for innogy Group currently being prepared

Scope of companies

> 2013-15 innogy Group effectively presented as sum of RWE’s three segments Grids/Participations/Other, Supply and Renewables

• Only few carve-out transactions where assets remained with RWE (e.g. Mátra and Markinch)

• Businesses sold during 2013-15 (e.g. NET4GAS)1 not included in scope

Capital structure

> 2015 balance sheet not representative of innogy’s capitalisation going forward

> Capitalisation as per H1 2016 will be reflective of all relevant intercompany transactions (purchase price payments related to formation of innogy)

> Further changes to capitalisation resulting from

• Cash capital contribution of €0.9bn and debt/equity swap of €1.0bn executed in July 2016

• ~10%2 primary capital increase at IPO

Other > One-offs and non-recurring effects in innogy financials affecting comparability of historic

performance


0.3 0.4 0.6 0.3 0.2 0.2 0.2 0.2 0.2 0.4 0.3

(0.1)

1.1 1.1 1.0

2013 2014 2015

innogy is infrastructure-like with roughly 60% regulated1 earnings driven by stable grid business

Note: numbers may not add up due to rounding differences. 1 Includes regulated and quasi-regulated business activities. 2 Capex intensity defined as capex/EBITDA. Capex excluding financial investments. 3 Includes long-term contracts.

Financials

Grid & Infrastructure EBITDA (€bn) Renewables EBITDA (€bn) Retail EBITDA (€bn)

>80% Share of quasi-regulated EBITDA 20153

~60% Share of regulated EBITDA 2015¹ ~20% Capex intensity Ø 2013-152

Germany NL/BE East UK

0.8 0.6 0.9

2.0 2.2 2.0

2.8 2.9 2.9

2013 2014 2015

G&I East G&I Germany

0.4 0.5 0.8

2013 2014 2015

0.7 0.8 1.1 Retail EBITDA excl. UK

2013 2014 2015 2013 2014 2015 2013 2014 2015


Grid & Infrastructure Germany – stable regulatory returns and operational excellence

1 Income from not fully consolidated participations. 2 Excluding financial investments.

Financials

Comments

EBITDA development

> Decrease in 2015 primarily driven by lower earnings from disposal of grid assets (€187m in 2014 to €153m in 2015), the sale of LEW high voltage grid to Amprion resulting in book gains during 2014 and higher grid maintenance costs as well as restructuring costs related to early retirement scheme

> Increase in 2014 due to grid disposals (from €63m in 2013 to €187m in 2014), above mentioned sale and effects from the efficiency enhancements launched in 2012

> D&A includes impairment charges on gas storage assets of €101m in 2014 and further impairments in 2015

Capex

> Strong increase in 2015 driven by higher grid infrastructure optimisation investments

> Capex continuously above D&A in all years supporting RAB growth

€ million 2013 2014 2015

EBITDA 1,999 2,222 2,016

t/o operating income from investments1 254 251 233

Operating D&A (668) (769) (734)

Operating result 1,331 1,453 1,282

Capex2 841 856 968

Capex/operating D&A 1.3 x 1.1 x 1.3 x

EBITDA – capex 1,158 1,366 1,048

Grid & Infrastructure Germany


Grid & Infrastructure East – continuous efficiency enhancement reflected in operating results

1 Income from not fully consolidated participations. 2 Excluding financial investments.

Financials

Grid & Infrastructure East Comments

EBITDA development

> Increase in 2015 mainly driven by the revaluation gain of €143m from the first-time consolidation of VSE in Slovakia, improved regulatory conditions for the Czech gas distribution grid leading to increased WACC, higher gas volumes from favorable weather conditions – partly offset by decreased gas storage margins

> Decrease in 2014 mainly driven by reduction in gas volumes as a consequence of milder weather, which also impacted gas storage margins due to decreased seasonal spread

> D&A increased in 2015 as a result of the first-time consolidation of VSE

Capex

> Increase in 2015 primarily resulting from the first-time full consolidation of VSE and increased investments in Hungarian grid to meet the minimum regulatory requirements following capex cuts in previous years

> Capex significantly above D&A in all years supporting RAB growth

€ million 2013 2014 2015

EBITDA 791 639 862


Operating D&A (184) (188) (214)

Operating result 607 451 648

Capex2 276 275 337

Capex/operating D&A 1.5 x 1.5 x 1.6 x

EBITDA – capex 515 364 525


Retail Germany – innogy’s largest retail segment profiting from leading market position

1 Excluding financial investments.

Financials

Retail Germany Comments

EBITDA development

> Strong increase in 2015 driven by release of provisions, mainly related to legal risks in connection with customer supply contracts which were mitigated in 2015 (€81m). In addition, positive effects from efficiency enhancement programme, a larger customer base and higher gas sales

> 2013 negatively affected by €142m realised losses in our hedge book due to unfavourable wholesale price developments

> Adjusted for those effects, results were stable in 2013 and 2014

> D&A increase in 2014 and 2015 due to depreciation of biomass activities transferred from Renewables to Retail in 2014

Capex

> Low capex intensity

> Capex in 2014 and 2015 impacted by energy+ business, mainly higher investments in CHP generation units

€ million 2013 2014 2015

EBITDA 279 394 583

Operating D&A (24) (36) (38)


Capex¹ 29 46 53

Capex intensity (Capex/EBITDA) 10% 12% 9%

EBITDA – Capex 250 348 530


Retail NL/BE – strong position in stable Dutch and Belgian market


Financials

Retail NL/BE Comments

EBITDA development

> Increase in 2015 mainly due to recovery from weather-affected results in 2014 and marketing of new supply offerings

> Decrease in 2014 due to mild weather and competitive price pressures. Negative effects partly offset by new supply offerings and efficiency improvements

> From 2015, weather induced effects largely hedged

> D&A decrease in 2015 due to phasing-out of allocated acquisition costs for our subsidiary in NL and decreased depreciation related to IT systems

Capex


€ million 2013 2014 2015

EBITDA 257 191 236

Operating D&A (59) (53) (42)


Capex¹ 14 9 25




Retail East – stable earnings contribution in growing Eastern European markets


Financials

Retail East Comments

EBITDA development

> Increase in 2015 mainly driven by revaluation gain of €42m from first-time full consolidation of VSE

> Slight decrease in 2014 driven by milder weather and increased competition

> D&A decreased in 2014 due to several smaller impairments in Czech Republic in 2013

Capex


€ million 2013 2014 2015

EBITDA 211 190 234

Operating D&A (23) (6) (6)


Capex¹ 9 9 20




Retail UK – burdened by operational issues; recovery well on track

1 Excluding financial investments. 2 Includes (i) net effects of EUR 60 million related to charges concerning erroneous and late invoicing, the build-up of provisions for regulatory charges and reviews and the release of provisions for customer paybacks and (ii) net effects of EUR 59 million related to billing issues due to changes in revenue estimation.

Financials

Retail UK Comments

EBITDA development

> Decrease in 2015 mainly driven by severe process- and system-related issues in the billing of household customers. In addition, we were facing regulatory investigations. Overall negative one-off effects from the billing and regulatory issues amounted to €119m2. Additionally, increasing competitive pressure leading to higher churn rates and margin pressure

> Decrease in 2014 mainly driven by initial repair and workaround measures in relation to our IT system, but also mild weather, customer losses and the sale of Telecom Plus portfolio partly offset by release of provisions

> 2013 was affected by one-off gain from sale of Telecom Plus

Capex

> Structurally different capex profile from other countries due to the requirement for investments in IT infrastructure

> Increase in 2014 and 2015 due to non-recurring investments in the IT and smart meter infrastructure in the UK

€ million 2013 2014 2015

EBITDA 366 294 (65)

Operating D&A (76) (67) (72)

Operating result 290 227 (137)

Capex¹ 106 148 189

Capex intensity (Capex/EBITDA) 29% 50% nm

EBITDA – capex 260 146 (254)


Renewables – strong recent growth track record


Financials

Renewables Comments

EBITDA development

> 2015 increase driven by the commissioning of offshore wind farms Nordsee Ost and Gwynt y Môr as well as higher volumes and increased utilisation levels of existing capacities

> 2015 result also affected by one-off effects from gains from the sale of a 75% stake in Galloper (€93m), the Gwynt y Môr network infrastructure (€30m) and other assets (€9m)

> Increase in 2014 due to positive effects from compensation payments for delays to the completion of Nordsee Ost. This was offset by drastic cuts made by the Spanish government to renewable energy subsidies granted, decreasing power prices and lower volumes from existing assets

> Higher D&A in 2015 resulting from increase in overall asset base due to the commissioning of Nordsee Ost and Gwynt y Môr

Capex

> Significant decrease from 2013 to 2015 mainly driven by the completion of Nordsee Ost and Gwynt y Môr

€ million 2013 2014 2015

EBITDA 448 524 818

t/o operating income from investments (44) (3) 102

Operating D&A (248) (271) (330)


Capex¹ 975 677 404

Capex/operating D&A 3.9x 2.5x 1.2x

EBITDA – capex (527) (153) 414


P&L summary (1/2) – strong and steadily increasing EBITDA

Financials

innogy Group Comments

EBITDA development

> 2015 EBITDA affected by strong increase in Renewables, Retail Germany and G&I East, partly offset by a decline in Retail UK and G&I Germany

> Stable net income contribution to EBITDA from investments accounted for using the equity method as well as other income from investments

> Non-operating result, amongst other things, includes book gains or losses from the disposal of investments or non-current assets not required for operations, impairments as well as effects of the fair valuation of certain derivatives

• 2013: largely affected by impairments related to Spanish wind farms, primarily due to the government decision to retrospectively cut renewable energy subsidies

• 2015: largely affected by impairments related to the IT infrastructure in Retail UK

€ million 2013 2014 2015

EBITDA 4,194 4,297 4,521

t/o operating income from investments 263 306 415

Operating depreciation, amortisation and impairment losses

(1,350) (1,438) (1,471)


Non-operating result (832) (83) 50

t/o impairments (799) - (167)

t/o restructuring (315) (103) 15

t/o disposals 211 33 65

t/o mtm derivatives 24 (14) 135

t/o other 47 1 2


P&L summary (2/2) – historical financial result and tax not representative of innogy’s future set-up

Financials

innogy Group Comments

> Financial result not representative of future capital structure given assumptions behind combined financial statements (CFS)

• In addition, 2016E financial result will be affected by amortisation of fair value 'step-up'1

> Financial income in 2015 includes €279m gains from disposal of marketable securities held by regional majority participations

> Effective tax rate not representative for going concern given CFS did not take into account tax groups, e.g. for offsetting purposes. Other effects:

• 2013 taxes includes €(144)m effects from the non-usability of certain tax loss carry-forwards

• 2015 taxes includes €(258)m effects from non-deductible expenses, e.g. transfer of loans, and €95m effects from non-taxable income, e.g. tax-free gains from disposal of marketable securities

> 2015 increase in non-controlling interest driven by both structural and one-off effects:

• Macquarie increasing stake in RWE GasNet by 15%

• One-off income from disposal of marketable securities by non-100% owned German regional utilities (>€50m vs. 2014; pre-tax)

> Given limitation above, net income is not representative of going concern net earnings level of the innogy Group

€ million 2013 2014 2015

Financial result (567) (555) (302)

t/o financial income 406 445 578

t/o financial costs (973) (1,000) (880)

Income from continuing operations 1,445 2,221 2,798

Taxes on income (551) (523) (860)

Effective tax rate 38.1 % 23.5 % 30.7 %

Income 894 1,698 1,938

t/o non-controlling interest 230 231 325

t/o one-off effects in non- controlling interest >502

Net income 664 1,467 1,613

1 Refers to bonds transferred from Finance BV and Finance BV II. 2 Pre tax.

innogy · company presentation · 1 August 2016 1 Relevant for adjusted net income.

Financials

> Historic tax rate not representative

> 2016 tax rate will be significantly impacted by one-offs due to the ongoing restructuring – to be adjusted in the adjusted net income

> Going forward, innogy expects a normalised tax rate within the range of 25%-30%

> Expected cash tax rate of 20%-25% due to use of deferred tax assets related to the foundation of innogy

€ million 2013 2014 2015

Taxes on income (551) (523) (860)

Effective tax rate 38.1 % 23.5 % 30.7 %

Statutory tax rate for innogy tax group 31% 31% 31%

Germany 31% 31% 31%

UK 23% 21% 20%

NL 25% 25% 25%

East ~23% ~24% ~24% ~25%-30% normalised

tax rate1

Comments innogy Group

innogy’s normalised tax rate in the order of 25-30%


innogy’s capital structure – next steps to reach leverage target

Note: further effects may have an impact on net debt. 1 Refers to bonds transferred from Finance BV and Finance BV II. 2 Post money.

Financials

~4.0x net debt/

EBITDA

Net debt H1 2016 Cash contribution and D/E swap in

July 2016 IPO proceeds

> H1 capitalisation reflective of all relevant intercompany transactions related to formation of innogy incl. purchase price payments for transferred assets

> €0.9bn cash capital contribution used for intercompany debt repayment

> Debt/equity swap of ~€1.0bn

> ~10%2 primary capital increase at IPO

2 3

Leverage target

Net debt 2015

4 1

> External senior bonds transferred to innogy from RWE AG (€11.3bn)¹

> Intercompany receivables and payables not reflective of innogy‘s capital structure


innogy net debt composition and impact of the envisaged IPO

Financials

1 Excluding effects from operating cash flow as well as FX-related changes. 2 Post money. 3 Also includes non-current securities (€26m). 4 Financial receivables adjusted for €0.2bn of loans against associates and unconsolidated subsidiaries. 5 Netting effects may occur. 6 Corresponding effects reflected in other financial assets. 7 Includes hedge transactions related to bonds.

Net debt item 31 Dec 2015 (€ bn) Changes in H1 20161 Changes in Jul 20161 Impact from IPO

Cash & cash equivalents 0.6 No significant changes No significant changes + ~10%2 primary capital increase at IPO

Marketable securities 1.93 Potential valuation changes Potential valuation changes -

Other financial assets 12.44 Transaction driven changes No major changes expected5 -

Financial assets 14.94

Bonds and bank debt 12.9 ./. €850m bond repayment in April 20166 No changes expected -

Adjustment for 'step-up' of bonds

to market values (1.2) Amortisation of 'step-up' over

maturity of bonds Amortisation of 'step-up' over maturity of bonds -

Other financial liabilities incl. intercompany loans7 6.1 Transaction driven changes ./. ~€1bn debt/equity swap

./. €0.9bn IC debt repayment -

Financial liabilities7 17.7

Provisions for pensions and similar obligations 3.5 Change in discount rate Change in discount rate -

Provisions for wind farm decommissioning

0.3 No significant changes No significant changes -

Net debt (B - A + C + D) Increase in net debt Reduction in net debt Reduction in net debt

2 3 4 1

A

B

C

D

5


€11.3bn

€1.2bn

2015¹ 2016 2017 …

Fair value 'step-up' of bonds leads to lower book interest expenses – yet no change on cash interest level

1 As of 31 Dec 2015. 2 Respective dates of initial recognition in innogy’s balance sheet.

Financials

IFRS B/S value of bonds P&L interest costs of bonds

> Book interest expense reduced by positive book effect from amortisation of 'step-up' over time (to be shown within 'interest and similar expenses')

> Positive effect on net interest expense reversed in adjusted net income

Fair value 'step-up' of bonds transferred to innogy with impact on…

> 'Step-up' resulting from debt transfer transaction > Book (as per RWE IFRS B/S) to market value as per

18 Dec 2015/28 Dec 20152

> No impact on repayment value

Seni

or b

onds

'st

ep-u

p'

2016(gross)

Amortisation of'step-up'

2016(net)

Amortisation of 'step-up'

~5% avg.

interest

~3% avg. P&L

interest

Cash interest costs of bonds

> innogy‘s cash interest equivalent to contractual coupons identical to RWE AG in the past

2016

~5% avg. cash

interest

Amortisation over maturity of bonds


Strong cash generation with a CFOA/EBITDA of around 70% post tax on average

Financials

Note: rounding differences may occur. 1 Capex on intangible assets, property, plant and equipment, excluding financial investments.

€ billion 2013 2014 2015

EBITDA 4.2 4.3 4.5

Funds from operations (FFO)

3.3

2.9

2.5

Changes in working capital 0.3 0.1 0.2

Cash flows from operating activities (CFOA) 3.7 3.0 2.8

Capex1 (2.3) (2.1) (2.0)

Free cash flow 1.4 0.9 0.7

Comments

> Delta EBITDA vs. FFO mainly related to book gains in EBITDA related to sale of assets and delta between use and build-up of provisions in 2015 (€0.4bn), 2014 (€0.4bn) and 2013 (€0.0bn)

> Funds from operations (FFO) declines among others due to

• Higher temporary use vs. build-up of provisions in particular pension and personnel provisions in 2015 (€0.4bn), and 2014 (€0.2bn), in 2013 balanced use and build-up of pensions and personnel provisions

• Temporary increase in cash tax in particular in 2015 vs. 2014 (€0.3bn), partly driven by one-offs related to debt transfer from RWE to innogy

> Working capital with low volatility in absolute terms

• Some one-off effects between 2014 and 2013, mainly related to a y-o-y tax related shift in NL/BE (€0.2bn)

> Lower capex mainly in Renewables after finalisation of major investment projects (Nordsee Ost and Gwynt y Môr)

innogy Group


Financial discipline and strict investment criteria – foundation for growing shareholder value

Note: rounding differences may occur. 1 Including financial investments. Pie charts do not include ~€0.2bn of centrally accounted capex mainly for innovation projects. 2 Hurdle rates = after-tax WACC + project risk adjustment + country risk adjustment.

Financials

5%-7% 7%-8% 5%-8% core business

5%-15% new markets/new technologies

Grid & Infrastructure Retail Renewables > ‘Green’ investments in grid

infrastructure driven by energy transition in Germany

> ‘Smart’ maintenance driven by digitalisation

> Growth in selected markets

> Market entry in adjacent markets

> ‘Smart’ investments in technologies partly backed by public grants

> ‘New products’ driven by changing role of consumers

> Execute current pipeline mainly in wind

> Existing technologies in new markets

> New technology: utility-scale solar

Inve

stm

ent f

ocus

RO

I hur

dle

ra

tes2

~€6.5bn planned capex1 2016-2018E

~€4.1bn

~€1.3bn

~€0.8bn

Indi

cativ

e ca

pex

split

20

16-2

018E


Financial year EBITDA Comments

2015A €4.5bn

2016F €4.1bn – €4.4bn

2017F €4.3bn – €4.7bn

Financial outlook 2016 and 2017 Financials

Higher operating and maintenance costs in German distribution network business

Absence of positive effects, e.g. gain on disposals and release of provisions

Operational improvement in UK Retail operations

Lower cost base for G&I Germany

Slight EBITDA improvement from new efficiency programme

Gross cost savings in UK Retail in line with targets of recovery programme

Gains from disposals of offshore wind parks and grid assets

Effects related to regulatory and billing issues in the UK retail business

Gains from first-time consolidation effects and release of provisions

Higher utilisation of installed renewables capacity and addition of capacity, partly offset by lower average revenue per MWh


> Higher operating and maintenance costs in German distribution network business

> Lower income from grid sales

> Stable allowed returns on RAB due to largely unchanged regulatory regimes

> Stable income from investments in Germany

> Stable contribution from other business, mainly gas storage and quasi-regulated water business

Financial outlook: key assumptions for G&I Financials

EBITDA 2015

Actual €2,878m

EBITDA 2016

Forecast €2.5bn – €2.7bn

> Slight increase in WACC in CZ

> Book gain from revaluation after first-time consolidation of VSE Slovakia (€143m)

> High income from grid sales (€153m)


Financial outlook: key assumptions for Retail Financials

EBITDA 2015

Actual €988m

> Slight decrease in operational expenditures, also due to continued efficiency efforts

> Operational improvement in UK from organisational measures, cost reduction and customer retention measures

> Release of provisions for legal risks in Germany (€81m)

> Book gain from revaluation in relation to first-time consolidation of VSE Slovakia in East (€42m)

> Impacts from billing and regulatory issues in UK (-€119m1)

> Customer losses in UK and NL, to a large extent offset by customer growth initiatives in other markets

1 Includes (i) net effects of €60m related to charges concerning erroneous and late invoicing, the build-up of provisions for regulatory charges and reviews and the release of provisions for customer paybacks and (ii) net effects of €59m related to billing issues due to changes in revenue estimation.

EBITDA 2016



Financial outlook: key assumptions for Renewables Financials

EBITDA 2015

Actual €818m

EBITDA 2016


> Slight increase in generation volumes: Nordsee Ost and Gwynt y Môr contributing for full year 2016

> Better hydrological conditions

> Gain on disposals of stakes in Galloper, Gwynt y Môr and Triton Knoll (€132m)

> Income from Nordsee Ost claims (€12m)

> Losses from UK development projects (-€27m)

> Lower wind conditions > Lower wholesale prices, expected end of subsidies (NL), lower values

of LECs (UK), lower prices for green certificates (POL) > Negative effects from GBP/EUR FX > Slight increase in operational expenditures driven by higher installed

capacity


Financial outlook: summary Financials

Segment 2015 EBITDA actual (€bn)

2016 EBITDA forecast (€bn)

2017 EBITDA forecast (€bn)

Grid & Infrastructure 2.9 2.5 – 2.7 –

Retail 1.0 1.0 – 1.2 –

Renewables 0.8 0.6 – 0.8 –

innogy Group1 4.5 4.1 – 4.4 4.3 – 4.7

1 Including ‘Other, consolidation’.


innogy – definition of adjusted net income as basis for dividend payout ratio

Financials

Reported EBITDA1

- Operational D&A

- Adjusted net interest

- Taxes

Adjusted net income

Dividends

€4.1bn – €4.4bn 2016F EBITDA and €4.3bn – €4.7bn 2017F EBITDA

Operational D&A as % EBITDA in line with historical levels

P&L interest costs adjusted for effect from amortisation of 'step-up' of bonds

25%-30% normalised tax rate

Net income adjusted for innogy IPO one-off costs and delta between P&L and cash gross financial debt interest costs

70%-80% based on adjusted net income

1 EBITDA before one-off costs related to the IPO of innogy which are included in non-operating result only and are added back for the purposes of adjusted net income calculation..


1

2

3

EBITDA forecast

Stable and highly regulated earnings

Strong cash generation and solid capital structure

Shareholder value creation

innogy’s financial profile – four takeaways

1 Includes regulated and quasi-regulated business activities.

Financials


~70% CFOA/EBITDA

(average 2013-15)


net debt/EBITDA

>[95]%




70-80% dividend pay-out ratio

based on adjusted net income Strict capital discipline 4

€4.1bn – €4.4bn 2016F EBITDA

€4.3bn – €4.7bn 2017F EBITDA

Q&A Session Lunchbreak

Grid & Infrastructure Overview


Grid & Infrastructure at a glance Grid & Infrastructure

Grid & Infra-

structure

Highly predictable, regulated earnings contribution

Attractive growth opportunities

A leading European distribution grid operator1

Strong development of €13.3bn RAB2 with 9% RAB increase2 expected for Germany and

9% historic RAB growth in Eastern Europe3

1 Based on distributed volume. 2 Regulated asset base. Numbers based on latest notification by regulator or based on calculations in latest filings with regulators. Expected increase in German regulated asset base calculated as RAB 2010/2011 plus net investments (post concession gains/losses) in regulated assets in the years 2010/2011 to 2015/2016E, assuming full recognition by the regulator. Generally, RABs from different regulatory regimes are not directly comparable due to significant methodological differences (e.g. regulatory periods, regulatory depreciation periods). Throughout this presentation, the RAB relevant for the 2015 tariff figure is used. Also, throughout this presentation, RABs are always stated excluding pro-rata share of RAB from participations that are not fully consolidated. 3 Historic increase in regulated asset base for Eastern European countries calculated as RAB relevant for tariff in 2015 vs. RAB relevant for tariff in 2011 (in € at constant 2011 year-end exchange rates) for Czech Republic, Hungary and Poland. Growth rate excludes Slovakia as RAB was introduced in 2012 only and RAB will only be adjusted in next regulatory period starting 2017. Including FX effects, RAB would have increased by ~7%.


Distributed volume (GWh) 142,000 73,000 66,500 16,800 7,200 3,700 Grid customers (m)4 9.3 1.0 2.3 2.3 1.0 0.6 Grid area (‘000 km²) 92 35 46 20 0.5 16 Grid length (‘000 km)5 356 47 65 67 17 22 RAB1 €9.7bn €1.6bn €0.9bn €0.7bn €0.5bn Country rating6 AAA A1 Ba1 A2 A2

A leading European distribution grid operator anchored in Germany


GER

#1 gas DSO

Czech Republic3

Gas Electricity

GER CZ HU PL SK

GER

PL

HU

SK CZ

+9% increase

expected for RAB1 Germany

€13.3bn regulated asset base1

#1 electricity DSO in Germany3

+9% increase

2011-’15 for RAB2 East

Note: all figures (except for RAB) as per 2015. Rounding differences may occur. 1 Regulated asset base. Numbers based on latest notification by regulator or based on calculations in latest filings with regulators. Expected increase in German regulated asset base calculated as RAB 2010/2011 plus net investments (post concession gains/losses) in regulated assets in the years 2010/2011 to 2015/2016E, assuming full recognition by the regulator. Generally, RABs from different regulatory regimes are not directly comparable due to significant methodological differences (e.g. regulatory periods, regulatory depreciation periods). Throughout this presentation, the RAB relevant for the 2015 tariff figure is used. Also, throughout this presentation, RABs are always stated excluding pro-rata share of RAB from participations that are not fully consolidated. 2 Historic increase in regulated asset base for Eastern countries calculated as RAB relevant for tariff in 2015 vs. RAB relevant for tariff in 2011 (in € at constant 2011 year-end exchange rates) for Czech Republic, Hungary and Poland. Growth rate excludes Slovakia as RAB was introduced in 2012 only and RAB will only be adjusted in next regulatory period starting 2017. Including FX effects, RAB would have increased by ~7%. 3 Based on distributed volume. 4 Grid customers are defined as supplied delivery points. 5 Based on operated grid. 6 Source: Moody’s.


1 Segment breakdown based on sum of operating segment (€4.7bn). Total includes €(0.2)bn presented as ‘Other, consolidation’ in the combined financial statements. Numbers might not add up due to rounding differences. 2 In terms of distributed volume. As of 2015.

G&I with largely regulated and predictable earnings accounting for over 60% of innogy Group EBITDA


G&I within innogy By regulated business

Share of regulated business >80%

By area By geography

East ~30%

Germany ~70%

Fully consolidated

Partici- pations

Other

Grid

No. 1 electricity DSO in Germany²

Strong track record of profitable growth in Eastern Europe

High share of regulated business


61%

21%

17%

innogy EBITDA 2015

RenewablesRetailGrid & Infrastructure

€4.5bn

1


Capex above depreciation resulting in RAB growth Grid & Infrastructure

1 Capex including financial investments. Includes non-grid capex. 2 Regulated asset base. Expected increase in German regulated asset base calculated as RAB 2010/2011 plus net investments (post concession gains/losses) in regulated assets in the years 2010/2011 to 2015/2016E, assuming full recognition by the regulator. 3 Historic increase in regulated asset base for Eastern European countries calculated as RAB relevant for tariff in 2015 vs. RAB relevant for tariff in 2011 (in € at constant 2011 year-end exchange rates) for Czech Republic, Hungary and Poland. Growth rate excludes Slovakia as RAB was introduced in 2012 only and RAB will only be adjusted in next regulatory period starting 2017. Including FX effects, RAB would have increased by ~7%.

Development of regulatory asset base (€bn) Capex breakdown 2016-18E¹

> Majority of capex will be invested in Germany, increasingly for ‘Energiewende’ investments

> Eastern European capex used mainly for ‘conventional’ grid expansion and new customer connections

> Capex continuously above regulatory depreciation over 2011-2015

> Resulting RAB growth to support regulated profits

25% East

75% Germany

RAB2010/11

Cumulatedregulatory

depreciation

Cumulatedcapex

RAB2015/16

+9% expected

increase for 2010/11-2015/16

RAB Germany2

+9% historic

increase for 2011-2015

RAB East3

Total ~€4.1bn


1 Numbers based on latest notification by regulator or based on calculations in latest filings with regulators. Expected increase in German regulated asset base calculated as RAB 2010/2011 plus net investments (post concession gains/losses) in regulated assets in the years 2010/2011 to 2015/2016E, assuming full recognition by the regulator. Throughout this presentation, RABs are always stated excluding pro-rata share of RAB from participations that are not fully consolidated. 2 Based on distributed volume. Source: RWE, E.ON, EnBW, EWE. Data as of 2015 (except for some EnBW-DSOs which are based on 2014). 3 Based on distributed volume. 4 Not fully consolidated municipal utilities. 5 Based on operated grid. 6 Grid customers are defined as supplied delivery points. 7 BNetzA, Monitoring report 2015. 8 Federal Ministry for Economic Affairs and Energy, website, as of 8 Jun 2016.

Germany – #1 electricity DSO with strong market position in industrial centres

Grid & Infrastructure – Germany

Grid & participations overview innogy key statistics

Electricity Gas

Grid length (‘000 km)5 356 47

Grid customers6 9.3m 1.0m

Distribution network; area: electricity, natural gas and water activities of innogy in Germany

Ranking of German electricity and gas DSOs2

Electricity Gas

#1

#2

#3

Total DSOs (#) ~9007 ~7008

>100 municipal

participations4

#1 electricity

DSO in Germany2

+9% increase expected for

German RAB¹

A leading gas DSO3

€9.7bn regulated asset base1

>10m grid

customers

Frankfurt

Stuttgart Munich

Saarbruecken

Dortmund

Chemnitz

Essen

Wiesbaden

Cologne

Mainz

Augsburg

Hanover

Hamburg

Berlin

Dresden


State-of-the-art asset base with #1 positions by volume & load in Germany

Source: RWE, E.ON, EnBW, EWE. 1 Data as of 2015 (except for some EnBW-DSOs, which are based on 2014).


Grid length (‘000 km)

Electricity distribution grid1

Grid length (‘000 km)

Gas distribution grid1

Volumes (TWh)

Volumes (TWh)

Network load (GW)

Network load (GW)

142 116

60

innogy E.ON EnBW

22

16

10

innogy E.ON EnBW

356 347

137

innogy E.ON EnBW

22 20

11

innogy E.ON EWE

47 56 55

E.ON EWE innogy

73 73

41

E.ON innogy EWE

#1 #1 #1

#3 #1 #2


> Exploit operational synergies from scale of business and best-practice transfer

> Drive efficiency via further digitalisation and process optimisation

Clear strategic imperatives – efficiency and capitalising on regulatory expertise to drive earnings growth


> Stable regulatory framework leads to predictable earnings

> Close interaction with regulators as proven way to prepare for regulatory change

> Optimised capex strategy for sustained earnings growth across markets

> Anticipate changing role of DSO and benefit from new business models

> Small-scale acquisitions

Business development C

Regulatory management A

Operational excellence B


High level of experience through long-term involvement in German regulation


A

> Timeline for electricity to be read as follows: in 2017, assessment of costs of year 2016 (base year) for benchmarking in 2018, beginning of 3rd regulatory period in 2019

> Gas and electricity with different timelines to relieve the process of cost assessment

Efficiency benchmarking for 2nd period

'06 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18

Incentive regulation – 1st period

Cost assessment for 2nd period

Incentive regulation – 2nd period

Cost assessment for 3rd period

Efficiency benchmarking for 3rd period

Incentive regulation – 3rd period

'21 '22 '23 '24 '19 '20

Gas base year for the

3rd regulation period

Electricity base year for the 3rd regulation period

Begi

nnin

g of

ince

ntiv

e re

gula

tion

Base

yea

r for

the

1st re

gula

tion

perio

d


German incentive regulation – a mature and stable system


Cornerstones of German network regulation Current discussion on regulatory review for 3rd regulatory period

Elimination of time-lag for investments

Bonus for most efficient DSOs

Setting of new imputed return on equity

Adjustment of productivity development

Ex-ante revenue cap regulation

Cost recognition based on actual DSO’s cost base

RAB remuneration determined for entire regulatory period

Remuneration mechanism for grid expansion

A


Recent ‘wave’ of concession renewals successfully accomplished – more certainty


1 Concession renewals based on inhabitants supplied, taking into account exercise of early cancellation options. Chart indicates concessions up for renewal within respective time period, excluding water concessions. 2 Based on inhabitants supplied. 9-year weighted average takes early cancellation options into account. 12-year weighted average excl. early cancellation options. 3 Applies to high voltage, certain regional-based medium voltage grids as well as to high pressure gas grids. Based on 2010/11 RAB in Germany. 4 Including electricity, gas and water concessions. As of 30 June 2016. 5 Refers to grid participations for which an innogy entity is the grid operator.

> During the last 5 years (2011-2015), innogy has experienced a ‘wave’ of

concession renewal processes

> innogy has successfully renewed or transferred to grid participations approx. 90% of its expiring concessions over the last 5 years

> In case of lost concessions, forced grid sale still offers potential for attractive remuneration of current asset base and investments

> Fewer upcoming concession renewals in the mid-term

> Tender proceedings are based on quality factors

> innogy’s advantages are, among others, relationship management in existing concession contracts and fast technical solutions

A

innogy’s existing concessions

Concession- based RAB

~2/3

Non- concession-based RAB3 ~1/3

Strong portfolio of ~3,800 concessions4

Fully consolidated entities account for 94%, participations5 for further 6% of total concessions

~1/3 of German RAB not based on concessions3, thus providing further earnings stability

Overview of concession renewals¹ 9-12

years weighted average

concession duration2

~65%

0%

25%

50%

75%

2011 - 2015 2016E-2020E 2021E-2025E 2026E-2030E >2031E


0

20

40

60

G&I with superior operational performance and high quality assets supporting sustainable performance

Source: Polynomics AG, 2013. Note: representative subset of 130 major grid operators (out of 196). Grid operators not participating in benchmarking mostly small grid operators. 1 Costs used in regulatory benchmarking process. Outliers graphically cropped. Average excluding outliers. 2 High voltage benchmarking relates to 110kV grids only. 3 Based on 2016E forecast data.


B

Typical costs of a grid operator

Cost benchmarking illustrates innogy‘s industry-leading position

Transparent maintenance and renewal strategy based on technically feasible lifetimes and relevant risk aspects

Efficient and effective processes, e.g. automated workforce management

Combined investment strategy addressing technical and regulatory perspectives

Exemplary split for innogy‘s Westnetz3

Distribution lines

Substations

Connecting points

0200400600800

1.0001.200

0

1.000

2.000

3.000

4.00040,000

3,000

2,000

1,000

Costs per high voltage grid length (€’000s/km)1,2

Costs per connecting points (€)¹

Costs per substation (€’000s)¹

innogy grids, benchmarking of 130 grid operators median costs

innogy entities

innogy entities

innogy entities

Other

1,000

600

800

400

200

0

1,200


Before After

Before After

Before After

Smart replacement investments – further enhancing operational performance and RAB development

1 Optimisation example of a medium voltage distribution grid. 2 Degree of cabling = underground cables/total grid length.


Optimisation of distribution grids1… …leading to increased operational efficiency and reduced O&M costs

Constantly improving operational performance through smart replacement capex

Grid length (km)

Switchgears (#)

Degree of cabling2 (%)

Improvement of operating metrics

Befo

re

Afte

r

investments O&M costs Optimisation of

B


German ‘Energiewende’ opens up significant growth opportunities for distribution grids

1 Source: AGEE/BMWi. 2 Source: BMUB, BMWI. 3 Source: European Commission. Excluding pump storage hydro generation.


Renewables have transformed the German energy landscape…

…driven by a strong political will to decarbonise the economy…2

…which will continue to drive the expansion of renewables

Thermal electricity generation from CHP in 2020

25%

1.5%

40%

80%

Annual decrease in total energy consumption from 2014 to 2020

Reduction of greenhouse gas emissions until 2020 (compared to 1990)

Share of electricity demand to be covered by renewables until 2050

C

0

20

40

60

80

100

2000 2005 2010 2015

Hydro Wind onshore

Wind offshore Solar PV

Biomass Other

Inst

alle

d ca

paci

ty fr

om re

new

able

s (GW

)¹

11

180

2000 2050Total RES capacity installed (GW)³

CAGR 5.7%


0%

20%

40%

60%

80%

100%

0123456789

Wes

tnet

z

Peer

1

Mitn

etz

Peer

2

Peer

3

Peer

4

Peer

5

Peer

6

Peer

7

Peer

8

LEW

Peer

9

Peer

10

Peer

11

Peer

12

Peer

13

Peer

14

Peer

15

Peer

16

Peer

17

Peer

18

Syna

Peer

19

Peer

20

Peer

21

Cumulated share

Inst

alle

d ca

paci

ty (G

W)

innogy companies Other Cumulated share

25 largest network operators in terms of integrated decentral RES capacity¹

1 Source: EnergyMap.info; largest German network operators in terms of integrated decentral RES capacity as of August 2015.


> In total, 90%1 of RES capacity is connected to the distribution grid in Germany

> With continued growth in RES capacities, DSOs will play a central role in integrating and coordinating the transition towards renewables

> innogy is well positioned and at the forefront of this development – already among the leading integrators of installed decentral RES capacity

C ‘Energiewende’ mainly takes place at DSO level…


Elec

tric

ity c

ost

brea

kdow

n¹

Expe

cted

Ø

inve

stm

ents

/cos

ts

and

tech

nica

l op

tions

2

Deve

lopm

ent o

f el

ectr

icity

pric

es

(ct/

kWh)

3

1.3 1.1 1.0

Conventionalgrid

expansion

Advanced energy

curtailment⁴

Controllable grid

devices⁵

(15)% (20)%

…requiring DSOs to develop intelligent solutions Grid & Infrastructure – Germany

> Network costs form a substantial part of electricity prices

> Investment needs in distribution grids of €23-49bn until 20322 further opportunity for RAB growth

> Political focus to maintain affordable level of power prices

> Tackling ‘Energiewende’-related investments requires efficient and innovative grid solutions

> Development of innovative solutions reduces overall investment needs by up to 20%

> As a trusted partner with industry-leading know-how and innovation power, innogy is well positioned to manage the ‘Energiewende’

€bn p.a.

C

Taxes, levies and fees

54% Supply

21%

Grid fees 25%

28.7

2016 ‘Energiewende’ - grid expansion

Conventional expansion Innovative

expansion

1 Source: German Energy and Water Association, May 2016; Cost breakdown of electricity for household customers – annual consumption of ca. 3,500 kWh. 2 Source: ‘Moderne Verteilernetze für Deutschland’ (Verteilernetzstudie) – study for the German Ministry of Economics and Energy (BMWi). Investment needs from 2014-2032 assuming conventional grid expansion. 3 Source: German Energy and Water Association, May 2016; Development of electricity prices for household customers (ct/kWh) incl. taxes, levies and fees; annual consumption of ca. 3,500kWh. 4 Curtailment occurs when power output must be shut down in order to balance the grid. Advanced energy curtailment seeks to minimise the resulting economic losses. 5 Controllable grid devices seek to actively address and manage changes in electric frequency due to changes in supply or demand, resulting in less system interruptions as well as adjustments of load depending on current electricity prices.


Real life examples – innogy enables the ‘Energiewende’ by expanding grid architecture and integrating RES

1 Example refers to area of Büren, Germany. 2 Currently under construction.


C

€20m of grid expansion projects (110kV) implemented/being implemented in local area since 2011

€13m of additional grid expansion projects in pipeline (110kV)

innogy’s grid business with its continuous investments is the enabler of ‘Energiewende’

Investments increase regulated asset base and will remain of high operational value to avoid grid flow bottlenecks

innogy’s network service business is very successful at integrating third-party RES sources to distribution grid:

Example: windfarm Heidenrod

> Building and connection of 12 wind power stations within ~½ year

> Supplied households: 26,000

Example: solar park Pferdsfeld2

> innogy to connect 28MW of generation capacity

> Supplied households: 7,000

Bestwig Ludwigstr.

An der Bremecke

Brilon Brilon

Accu

Messinghausen

Bredelar Nehden

WEPA

Giershagen

WP Kohlgrund 1

WP Kohlgrund 2

Marsberg

Marsberg WP Neudorf

Erwitte

Geseke

Dyckerhoff SA Milke

WP Oberfeld WP Weiberg

Büren Büren

Rüthen

Rüthen

Anneliese

WP Madfeld

WP Empertal

WP Vierlinden

WP Hohenroden WP Wewelsburg

Wünnenberg

WP Meerhof

Husen

Lichtenau

WP Hakenberg

Bad Wünnenberg

WP Altenautal

WP Adorf

WP Radlinghausen

WP Hölter Berg

WP Wehlühgel

Müscheder Weg

Substation Wind park

Investments 2011-2015 Project pipeline 2016ff

Existing before ‘Energiewende’

Grid

exp

ansi

on1

Third

-par

ty R

ES in

tegr

atio

n


> ‘Energiewende’ - increasing RES feed-in leading to volatile grid flows

> Intelligent solution in the low voltage grid – alternative to conventional expansion

> Smart Operator communicates with feed-in sources and consumers and collects data

> Improves forecast of grid load and capacity can then be used to balance supply/demand, i.e. by using household appliances at RES peak feed-in times

> Improved grid planning, transparency and cost effectiveness

> Smart country ensures supply of rural areas in times of increasingly decentralised energy

> Voltage stability mechanism reducing need for grid expansion with mechanisms such as storage for feed-in balancing, supply/demand analysis technology and more resilient voltage controllers

> Roll-out mostly in small rural municipalities, where energy supply is forecasted to exceed demand by 2030

> Received top award and funding by the German Ministry of Economics and Energy

Tangible innovative solutions Constantly lifting controllable cost efficiencies

Leveraging ‘Energiewende’ know-how

Intelligent meter

Photovoltaic Appliances

Hot water Home energy

controller

Smart operator

Biogas

Biogas storage CHP

Photovoltaic systems

Voltage controller

Windfarm

innogy is a clear innovation leader in its field

C


Exam

ple

proj

ect

‘Sm

art O

pera

tor’

Ex

ampl

e pr

ojec

t ‘S

mar

t Cou

ntry

’


Repl

acem

ent

> Optimisation of existing distribution grid through smart replacement capex

> Increases operational efficiency and reduces O&M costs

‘Ene

rgie

wen

de’

inve

stm

ents

> Integration of renewables capacity

> Smart technology driven by digitalisation

> Innovative solutions for grid expansion

Cust

omer

co

nnec

tions

> New customer connections

Increased focus on ‘Energiewende’ investments reflected in capex spend

1 Capex including financial investments. 2 Other grid capex includes investment for non-regulated grid assets such as street lighting, broadband, water or telco activities. 3 Non-grid capex comprises of capex for innogy’s German storage facilities, shares of investment spend related to participations as well as capex for other activities, such as innogy’s water business.


Capex breakdown¹

C

~€3.1bn of investments 2016-18E will continue to support growth in

Germany

Replacement 34%

‘Energiewende’ investments

16%

Customer connections

19%

Other grid capex 13%2

Non-grid capex 18%3

2016-18E total capex G&I Germany ~€3.1bn1


Participations – strategic partnerships with municipal utilities as key competitive advantage

Note: largest participations by contribution to G&I income from investments (adjusting for income/losses from loans to other group entities, gains/losses from sale of investments and other components). 1 Not fully consolidated regional or municipal utilities. 2 As per innogy’s combined financial statements. Top municipal 5 participations based on at-equity income contributions shown. Does not include Austrian Kelag with income from investments of €32m. 3 In FY2015.


> Partnerships mainly with municipal utilities extend innogy’s regional coverage across Germany

> Participations provide regional identification and customer proximity

> Strategic advantage for innogy also in minority participations through its frequent role as service provider

> Synergies in the area of testing, developing and rolling out new business models

> Best practices and economies of scale in areas such as procurement, risk management and other

> >100 municipal participations1

Participations as integral component of G&I Selected municipal participations2

Participation innogy share2

Income from investments3

20% 27

40% 15

50% 12

43% 7

27% 7


‘Other’ business – supplemental utility businesses strengthening local footprint

1 As of 30 Jun 2016. 2 RWE Gasspeicher benchmarking, estimates based on publicly available data and market intelligence. Excluding storage facility for which closure has been initiated. 3 innogy has other minor water supply business activities beside RWW. 4 Source: Umwelterklärung RWW 2015. 5 Source: company information, as per Annual Report 2015. 6 Source: company information. For fiscal year 2015; incl. pumped storage and waste.

Grid & Infrastructure – Germany/East

Generation Water supply

Indicative split of €0.3bn G&I EBITDA 2015A from Other

~75m m³ water

supplied in 2015

(RWW)3

~3,000km grid length4

TelCo, service and other activities

TelCo service provider

Some subsidiaries providing wide range of B2B/B2C TelCo

products and services

Other services

Energy data management and services facility management, street lighting

~600 MW installed capacity

Conventional Generation and

Other6

Hydro, incl. pump storage, run-of-river, as well as small lignite and coal

~800GWh LEW electricity

production from renewables5

Gas storage

4.3bcm working gas

volume1

Robust cash

margins2

11 facilities in Germany and Czech Republic

Modern, cost-efficient storage facilities


Gas storage – despite poor summer-winter spreads, innogy’s gas storages with robust cash margin position

Source: innogy estimates based on publicly available data and market intelligence. 1 As of 30 Jun 2016. 2 Excluding storage facility for which closure has been initiated. 3 Cash margin defined as (revenue ./. opex); revenues are simulated at current market prices and do not take into account possible long-term contracts; opex is estimated on basis of available technical and other parameters such as type, size, depth of storage, etc. 4 Includes one facility which will be closed; another facility is represented by two bars representing the original facility and its extension, bringing innogy’s total number of storages to 7 in the ranking for North-Western Europe.

Grid & Infrastructure – Germany/East

innogy’s gas storage portfolio in Germany and the Czech Republic

Indu

stry

cas

h m

argi

ns3

innogy facilities4

Closure initiated

6 storage facilities 2.71

Working gas volume (bcm)1

5 storage facilities2 1.63

> innogy’s gas storage portfolio mainly comprising of cavern storages in Germany and depleted gas fields in the Czech Republic

> Comparably high cash margins

> Industry-leading feed-in times – well-positioned to benefit from German ‘Energiewende’

Storage system operator in Germany Storage system operator in the Czech Republic

North-Western Europe

Czech Republic, Slovakia and Austria

innogy’s gas storage portfolio exclusively comprising of cash-generative assets – strategic measures taken in the past for best positioning to capture future upsides


RWW – innogy‘s water competence is one of the largest in Germany

> RWW is one of the largest privately owned water utilities in Germany

> Provides drinking water to 135k connections and 900k citizens

> Industrial customer base and hydroelectric power plant diversify business profile

> Stable, concession-based business models providing long-term earnings visibility (important current concessions until 2027)

> Awarded as top water utility 2016 in several categories such as quality, service and transparency

RWW at a glance

RWW overview

Direct supply Supply to third-party distributors Emergency water supply Water protection area

Burlo Weseke Velen

Gescher-Hochmoor

Reken Borken

Raesfeld-Erle

Schermbeck

Dorsten

Gladbeck

Bottrop


Wesel

Dinslaken

Essen (innogy headquarter)

Ratingen

Wülfrath

Velbert Heiligenhaus

Duisburg

Gelsenkirchen Oberhausen

Service point Water treatment plant Water reservoir Distribution grid

Note: all figures based on RWW Rheinisch-Westfälische Wasserwerksgesellschaft mbH (2016) - RWW Umwelterklärung 2015, unless otherwise stated. 1 Company information.

Mülheim an der Ruhr (RWW headquarter)

~3,000 km grid length

850 km² area served

~75m m³ drinking water

supplied in 2015

€33m1 2015A EBITDA

63,000 m³ capacity1 of

RWW’s 13 reservoirs

Monopolistic, quasi-regulated

industry structure


Grid & Infrastructure Germany – key takeaways

1 Regulated asset base. Numbers based on latest notification by regulator or based on calculations in latest filings with regulators. Expected increase in German regulated asset base calculated as RAB 2010/2011 plus net investments (post concession gains/losses) in regulated assets in the years 2010/2011 to 2015/2016E, assuming full recognition by the regulator. Throughout this presentation, RABs are always stated excluding pro-rata share of RAB from participations that are not fully consolidated. 2 Nominal return on equity on existing RAB until 2017/18 according to German ARegV for new assets (post 2005); 7.14% real for old assets (pre 2006); stated returns pre corporate tax, after trade tax. Based on current initial proposal from BNetzA, return on equity to change to 6.91% for new assets and 5.12% for old assets in the next regulatory period.


9.05%² until 2017/18 return on equity for

current regulatory period in Germany

€9.7bn RAB¹

Among the leading RES-integrators in Germany

~97%

efficiency factor in Germany

€9.7bn

RAB¹ 9% RAB increase

expected for German RAB¹

GER


Grid & Infrastructure – East

Distributed volume (GWh) 66,500 16,800 7,200 3,700 Grid customers (m)4 2.3 2.3 1.0 0.6 Grid area (‘000 km²) 46 20 0.5 16 Grid length (‘000 km)5 65 67 17 22 RAB¹ €1.6bn €0.9bn €0.7bn €0.5bn

Country rating6 A1 Ba1 A2 A2

Gas Electricity

Leading positions in Eastern markets based on diverse electricity and gas portfolio in four different countries

CZ HU PL SK

PL

HU

SK CZ

#2 electricity DSO

Hungary3

+9% increase 2011-’15

for Eastern countries’

RAB2

€3.6bn regulated asset base

(RAB)1

#1 gas DSO

Czech Republic3

Note: all figures as of 2015. 1 Generally, RABs from different regulatory regimes are not directly comparable due to significant methodological differences (e.g. regulatory periods, regulatory depreciation periods). Also, throughout this presentation, RABs are always stated excluding pro-rata share of RAB from participations that are not fully consolidated. Numbers based on latest notification by regulator or based on calculations in latest filings with regulators. RAB values reflect RABs relevant for the tariff in 2015. 2 Historic increase in regulated asset base for Eastern countries calculated as RAB relevant for tariff in 2015 vs. RAB relevant for tariff in 2011 (in € at constant 2011 year-end exchange rates) for Czech Republic, Hungary and Poland. Growth rate excludes Slovakia as RAB was introduced in 2012 only and RAB will only be adjusted in next regulatory period starting 2017. Including FX effects, RAB would have increased by ~7%. 3 Based on distributed volume. 4 Grid customers are defined as supplied delivery points. 5 Based on operated grid. 6 Source: Moody’s.



innogy’s Eastern Europe operations – a success story

Restructuring > Restructuring of acquired incumbents

> Process improvement and best practice transfer

Experience > Successfully managed several regulatory periods in different

regulatory environments

> Systematically optimising businesses within regulatory frameworks

Strong partnerships

> Good working partnerships with governments, municipalities and financial investors

> Support governments in energy market transition and play active and important role in DSO landscape

Operational excellence

> Increased efficiency with continuous process optimisation and best practices

> Exchange of DSO knowledge with Germany

Innovation > Development of innovative pilot projects

> Grid automation contributing to and benefitting from German ‘Energiewende’ know-how

Key pillars of value creation in Eastern European countries

Successfully entered markets via privatisation between 1995 and 2003 at attractive valuations

Diverse portfolio of grid businesses/infrastructure across different markets and commodities

Further growth potential in Eastern Europe through further demand growth and additional RES integration


Czech Republic – track record of continuous optimisation and investments

1 Source: Energy Regulatory Office (2016): yearly report on the operation of the Czech gas system in 2015. Based on distributed volume in 2015. 2 As of 2015. 3 Nominal WACC value. 4 Only DSO.


Long-standing experience in regulatory management and established relationship with regulator. Successfully managed the business through 3 regulatory periods since entry in 2002

Continuously optimised processes/increased efficiency (# of employees decreased by ~10% since 2007)2

Significant simplification of governance structures and realisation of operative synergies (regional integrated companies transformed to nation-wide functional business)

Successful financial partnership with a consortium of funds managed by Macquarie Infrastructure and Real Assets, the 49.96% shareholder (increased from 35% in 2015)

Continuous increase of RAB to €1.6bn

€1.6bn RAB2 RAB increase

vs. last period

7.94% WACC3 (RP 2016-18)

Significant simplification of structures

Gas

dis

trib

utio

n m

arke

t sha

re1

Regu

latio

n G

eogr

aphi

cal

pres

ence

Coun

try

high

light

s 2002

6 regional integrated gas companies

2013

1 company

RWE Gasnet4

JMP

SČP VČP

SMP STP

JMP JČP ZČP

innogy 83% Other DSOs 17%


Hungary – leading distributor in Budapest and North-East – setting the pace of innovation in Hungary

1 Based on innogy estimation of distributed volumes. 2 As of 2015. 3 Real WACC value. 4 innogy subsidiaries: ~54% and ~55% share in ÉMÁSZ and ELMÚ, respectively.



Successful integration of two operating companies (ELMÚ/ÉMÁSZ) through steering by one management team

Future strategic focus on exploitation of digital grid solutions to increase network quality and increase operational efficiency

Decrease in RAB vs. previous regulatory period driven mainly by negative fluctuations in the exchange rate between EUR and HUF

Re-increased investment volume and improved operational efficiency to compensate for remuneration decrease caused by politically driven energy price cuts and sector specific taxes

Development of innovative pilot projects in cooperation with local authorities, e.g. urban solutions

€0.9bn RAB2 RAB decrease

vs. last period

6.23% WACC3 (RP 2013-16)

Elec

tric

ity d

istr

ib.

mar

ket s

hare

1 Re

gula

tion

Geo

grap

hica

l pr

esen

ce

Coun

try

high

light

s ÉMÁSZ4

TITÁS

DÉMÁSZ DÉDÁSZ

ÉDÁSZ ELMÚ4

innogy ~40% Other DSOs ~60%


Poland – distributor for dynamically growing Warsaw – actively involved in innovating Polish distribution sector

1 Based on distributed volume. Data as of 2015. 2 As of 2015. 3 RAB adjusted each year. 4 Nominal WACC value confirmed for 2016; following years to be adjusted according to risk free rate development. 5 System average interruption duration index. 6 System average interruption frequency index. 7 Source: company information about the largest Polish DSOs as per FYE 2014.



Our DSO plays an active important role in the DSO landscape and chairs the TSO and DSO association

Leveraging position in capital city of Warsaw to extend innovation leadership, e.g. AmpaCity and a unique prototype of a demand response tool

Front runner role in Poland with smart metering pilot project for 100,000 meters in Warsaw leading to additional remuneration

Very good SAIDI5 and SAIFI6 rates among Polish incumbent DSOs7

Continuously increased RAB; regulatory step-up reached in 2014 Warsaw

€0.7bn RAB2 RAB increase

vs. last period3

5.675% WACC4 (RP 2016-20)

DSO for dynamically growing capital Warsaw

Elec

tric

ity d

istr

ib.

mar

ket s

hare

1 Re

gula

tion

Geo

grap

hica

l pr

esen

ce

Coun

try

high

light

s



Slovakia – No. 3 position – successful cooperation with Slovakian government, full consolidation since 2015

1 Source: Energy Analytics – Energeticky TRH SR 2015. 2 RAB introduced in 2012. 3 Real WACC in 2016. 4 Subsidiary of VSE Holding. 5 Refers to 2010-2015.



Strong partner to the Slovakian government with full management rights

Constant RAB within last regulatory period

49% shareholding, however, full consolidation under IFRS since 2015 driven by management rights assigned to innogy

Ongoing smart metering roll-out >4MWh p.a. until 2020 and clear focus to increase grid automation

Constant investment of ~€40m p.a.5 – continuous asset renewal, increase quality of supply and safety of operations

€0.5bn RAB2 Constant RAB

vs. last period2

6.12% WACC3 (RP 2012-16)

Elec

tric

ity d

istr

ib.

mar

ket s

hare

1 Re

gula

tion

Geo

grap

hica

l pr

esen

ce

Coun

try

high

light

s

VSD4 (innogy)

SSE-D

ZSD



East – regulation across countries with near-term stability of regulatory parameters

Regulatory model overview Regulatory period overview

CZ

HU

PL

SK

Electricity distribution Gas distribution

> Transparent regulatory framework

> Close interaction with regulators based on years of trust and reliability

> Similar formulae for regulated revenues/prices in all four countries

> Stable returns from RAB

• For 2/3 of East RAB (CZ and PL) expected until 2018 and 2020 respectively due to both regulatory periods beginning in 2016

• For 1/3 of East RAB (SK/HU) trustful consultations ongoing on new regulatory period starting 2017

A


2015 2017 2019 2021

2016 - 2020

2017 - 2020

2016 - 2018

2017 - 2021

Largest RABs in stable countries

Broadly similar regulation systems

Overlapping regulatory periods provide stability


Operational excellence – reflected in continuous improvement of quality of distribution


Source: innogy company information. 1 Note: quality parameters among countries not directly comparable due to different grid structures and technical conditions. 2 System average interruption duration index is a reliability indicator of average outage duration for each customer served, measured in minutes per annum. 3 System average interruption frequency index is a reliability indicator of average numbers of interruptions per year. 4 Comparable methodology starting from 2012. As per innogy company information. 5 Metrics presented related to ELMÚ.

Improving grid performance1…

Slovakia: significantly improved quality of supply

> Result of considerable increase in investment volume

> Replacement of critical assets and grid renewal

> After roll-out of high voltage grid automation, ongoing roll-out in medium voltage space

> Shorter response times in case of outages by introduction of modern workforce management system

> Regulator is monitoring various quality standards, customers are automatically compensated by DSO if not keeping a quality standard

Hungary: DSO improvement measures

> Intelligent medium voltage/low voltage stations

> Grid automation solutions

> Upgrade of IT solutions: mobile workforce management, supervisory control and data acquisition system, condition-based maintenance strategy and advanced geographical information systems

> Investment strategy incentivised by bonus/malus system

SAID

I (m

in)2

SAIF

I3

…driven by focus on modernisation investments

B

157

73

126

63

2012 2015 2010 2015

2.15

1.19 1.72

1.02

2012 2015 2010 2015

SK4 HU5

SK4 HU5


Future investments in East mainly driven by replacement and customer connections

1 Capex including financial investments. 2 Non-grid capex contains investments in storage, overhead (e.g. renewal of buildings, IT investments) and other. 3 Other grid capex primarily includes IT investments or third party capex. 4 Mainly relates to smart meter investments.


Repl

acem

ent

> Optimisation of existing grid > Modernisation of stations and gas

pipelines; construction of cables and overhead lines on all voltage levels

> Increases operational efficiency and reduces O&M costs

Cust

omer

Con

nect

ions

> Growth in connection numbers driven by underlying macro factors (population, energy demand)

> Mostly customers from existing grid; new lines where load demand exceeds current capacity

> Connections of renewables so far less pronounced, but growth foreseeable in the future

Oth

er

> Primarily IT hardware and software > Third party driven investments

rebuilding existing grid routes or cabling overhead lines to free the ground

Capex breakdown¹

C

~€1.0bn of investments 2016-18E will continue to drive growth in innogy’s Eastern markets

Replacement 70%

Other grid capex3 5%

Customer connections

17%

‘Energiewende’ investments4

1%

Non-grid capex 6%2

2016-18E total capex G&I East ~€1.0bn1


Value creation through market entry capabilities and continuous optimisation

€9.7bn RAB¹

Operational excellence (SAIDI/SAIFI)

#1 gas DSO in Czech Republic3

Electricity Gas

€3.6bn RAB¹

9% RAB increase

2011-2015 for East RAB2

Grid & Infrastructure East – key takeaways Grid & Infrastructure – East

CZ

HU

PL

SK

1 Generally, RABs from different regulatory regimes are not directly comparable due to significant methodological differences (e.g. regulatory periods, regulatory depreciation periods). Also, throughout this presentation, RABs are always stated excluding pro-rata share of RAB from participations that are not fully consolidated. Numbers based on latest notification by regulator or based on calculations in latest filings with regulators. RAB values reflect RABs relevant for the tariff in 2015. 2 Historic increase in regulated asset base for Eastern countries calculated as RAB relevant for tariff in 2015 vs. RAB relevant for tariff in 2011 (in € at constant 2011 year-end exchange rates) for Czech Republic, Hungary and Poland. Growth rate excludes Slovakia as RAB was introduced in 2012 only and RAB will only be adjusted in next regulatory period starting 2017. Including FX effects, RAB would have increased by ~7%. 3 Based on distributed volume.


Grid & Infrastructure – key takeaways Grid & Infrastructure

4

1 2 3

5

A leading European distribution grid operator

Predictable, regulated earnings contribution – secured by stable regulatory frameworks

Highly efficient operations with excellent network reliability

Investment opportunities from renewables expansion

Further growth through dedicated investments as key driver for regulated profit growth

9.05%3 until 2017/18 return on equity for

current regulatory period in Germany

€13.3bn

RAB¹

Among the leading RES-integrators in Germany

~€4.1bn

2016-18E G&I capex5

~97%

efficiency factor in Germany

9% RAB increase2

for East 2011-15 9% RAB increase¹ expected for Germany

~6.5%4

pro-forma WACC Eastern European countries

Continuous

optimisation

1 Regulated asset base. Numbers based on latest notification by regulator or based on calculations in latest filings with regulators. Expected increase in German regulated asset base calculated as RAB 2010/2011 plus net investments (post concession gains/losses) in regulated assets in the years 2010/2011 to 2015/2016E, assuming full recognition by the regulator. Generally, RABs from different regulatory regimes are not directly comparable due to significant methodological differences (e.g. regulatory periods, regulatory depreciation periods). Throughout this presentation, the RAB relevant for the 2015 tariff figure is used. Also, throughout this presentation, RABs are always stated excluding pro-rata share of RAB from participations that are not fully consolidated. 2 Historic increase in regulated asset base for Eastern countries calculated as RAB relevant for tariff in 2015 vs. RAB relevant for tariff in 2011 (in € at constant 2011 year-end exchange rates) for Czech Republic, Hungary and Poland. Growth rate excludes Slovakia as RAB was introduced in 2012 only and RAB will only be adjusted in next regulatory period starting 2017. Including FX effects, RAB would have increased by ~7%. 3 Nominal return on equity on existing RAB until 2017/18 according to German ARegV for new assets (post 2005); 7.14% real for old assets (pre 2006); stated returns pre corporate tax. Based on current ‘initial’ proposal from BNetzA, return on equity to change to 6.91% for new assets and 5.12% for old assets in the next regulatory period. 4 Pro-forma RAB-weighted average WACC of CZ, HU, PL and SK. SK RAB only included for 4 months due to first-time consolidation of VSE in 2015. 5 Including financials investments.

Grid & Infrastructure Regulatory deep dive


Note: numbers may not add up due to rounding. 1 Numbers based on latest notification by regulator. RAB stated excluding pro-rata share of RAB from participations that are not fully consolidated. 2 Pre-tax WACC (before corporate and trade tax) calculated based on several assumptions, including 60/40% debt/equity ratio of regulatory assets and 50/50% split new/old assets. Return on regulatory equity for new/old assets of 9.05% nominal/7.14% real (before corporate tax, after trade tax). Cost of debt of ~4% pre-tax. 3 Operating income from investments, to a large extent comprising of at-equity income from investments, included within EBITDA.

G&I Germany EBITDA driven by significant asset base and income from participations and complementary activities

Grid & Infrastructure – Regulatory deep dive

Breakdown of 2015 EBITDA (€bn) Earnings composition

> RAB of fully consolidated grid businesses > Pro-forma WACC based on 2010/2011 regulatory

cost of equity and debt and blended capital structure of our regulated businesses

> Grid sales > Non-regulated grid business (e.g. grid services) > Regulatory acknowledged depreciation vs. IFRS > Additional regulatory compensation (e.g.

investment measures in 110kV grid) > Operational efficiencies

> Gas storage business in Germany > Quasi-regulated water business > Other

> Mainly participations and JVs with municipal utilities

Grid

Pa

rt.

Oth

er

Regulated asset base1 9.7

Pro-forma WACC2 6.1%

Return on RAB 0.6

Other grid earnings (regulated/ unregulated)

0.4

D&A (IFRS) 0.5

Grid EBITDA 1.5

Income from participations³ 0.2

Non-grid business/other 0.3

EBITDA 2.0

Grid

Pa

rt.

Oth

er


German incentive regulation provides for a predictable and stable remuneration framework


Note: figures based on current parameters – may be subject to change. 1 Maximum value. 2 Returns before corporate tax, after trade tax.

Ex-ante revenue cap regulation

> No volume risk – DSOs not impacted by fluctuations in demand

> Stable ex-ante framework codified by law, as opposed to ex-post supervision by regulator

> Revenue cap mechanically updated year by year – mainly without regulatory discretion

Cost recognition based on DSO’s actual cost base

> Cost recognition stable for 5-year regulatory periods

> Non controllable costs treated as pass-through in regulatory formula

> Inflation factor as effective macro hedge

RAB remuneration determined for entire regulatory period

> RAB split into 40% equity1 and 60% debt by regulatory definition

> Return on regulatory equity fixed at nominal 9.05% (7.14% real for old assets)2 for entire regulatory period until 2017/18

> Cost of debt treated as pass-through and therefore allows for natural hedge against changes in interest rate environment

Remuneration mechanisms for grid expansion

> Expansion factor included in revenue cap formula with 1-year time lag

> Investment measure mechanism recognised without time lag, established to support expansion of 110kV investments


German incentive regulation – a mature and stable system


Regulatory timeline

1 Return on equity. 2 BNetzA’s current initial proposal for return on equity as per current consultation process. 3 Nominal. New assets subject to historic cost accounting. 4 Real. Old assets subject to current cost accounting. 5 Returns before corporate tax, after trade tax.

Electricity

Gas

RoE1 Elec./Gas

1st regulatory period (5 years)

3rd regulatory period (5 years)

2nd regulatory period (5 years)

Cost base in 2011 relevant for revenue cap in 2nd regulatory

period

Cost base in 2016 relevant for revenue cap in 3rd regulatory

period

Cost base in 2010 relevant for revenue cap in 2nd regulatory

period

Cost base in 2015 relevant for revenue cap in 3rd regulatory

period

1st regulatory period (4 years)

3rd regulatory period (5 years)

2nd regulatory period (5 years)

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

9.29% 7.56% 9.05% 7.14% 6.91%2 5.12%2

New assets3

Old assets4

Return on imputed equity (RoE)5 Base year

Initial proposal BNetzA


Max

. 40%

Returns on RAB

Revenue cap is determined based on returns on RAB + imputed depreciation + base year cost base Composition of revenue cap pre-efficiency, expansion and inflation factor


Return on Equity

Controllable Costs

RAB Regulatorycapital structure

Asset value

Financial debt

Excess equity

60%

Actual cost of debt in base year compensated as pass-through

Compensated with ~4%¹

Compensated with 9.05% (nominal)/ 7.14% (real) for new/old assets2

Note: figures based on current parameters – may be subject to change. Discussion of (i) revenue cap (leaving out other components such as (a) quality element (§19 ARegV), (b) volatile costs (§11 ARegV), or (c) regulatory accounts (§5 ARegV)) and of (ii) asset base (leaving out other components such as (a) financial assets or (b) deduction capital) for illustrative purpose only. 1 3.98% for electricity and 4.19% for gas as per second regulatory period. 2 Returns before corporate tax, after trade tax.

Imputed depreciation and trade tax Acknowledged opex

Imputed depreciation equivalent to linear depreciation of regulatory

asset values

Regulatory asset life differs from IFRS and German GAAP

and Imputed trade tax equivalent to

trade tax on the regulatory return on equity, calculated before

corporate tax (~15%) but after trade tax (~15%)

Derived from P&L under German GAAP for regulated grid business

As acknowledged by regulator, subject to regulatory cuts

and

Revenue cap

Equity


> Regulatory return on equity and excess equity

> Imputed trade tax > Imputed depreciation

> Directly derived from P&L statement under German GAAP

> Actual cost of debt as pass-through


Note: illustrative discussion of revenue cap leaving out other components such as (i) quality element (§19 ARegV), (ii) volatile costs (§11 ARegV), or (iii) regulatory accounts (§5 ARegV). 1 Additional components include, e.g. advances and construction grants, pension costs or non-wage labour costs.

Actual/imputed

Regulatorperspective

Efficient controllable

costs

Trade tax

Return on equity

Benc

hmar

king

pro

cess

Depreciation

Opex Expense equivalent costs

Imputed costs

Controllable costs subject to efficiency adjustment

> Productivity targets mandated by the regulator and inflation

> The relevant efficiency parameters of each DSO are benchmarked

> Revenue targets are set taking into account targeted efficiency gains on controllable costs over the regulatory period

Non-controllable costs

> Costs incurred outside of influence of DSO like payment for use of higher voltage levels of other grid operators and subsidies for decentralised generation1

> Partially annually adjusted

Non-controllable

costs

2011 base year During regulatory period

Cost

of C

apita

l

Inefficient controllable costs

Revenue cap is adjusted for efficiency, productivity and inflation to mirror developments between base years Current regulatory period – before adjustments for investments

Non-controllable costs

Controllable costs Revenue cap Inflation Productivity Efficiency

Cost of debt


Revenue cap ‘mechanics’ – two levers to adjust for investments completed between base years


Annual adjustment of controllable costs via expansion factor

> Applies to medium- and low voltage levels1

> Measured by relative growth of area supplied (low voltage) and relative growth of number of connections

Annual adjustment of non-controllable costs

> Investment measures treated as non-controllable costs (110kV networks)

1

2

1

2

2nd regulatory period - exemplary for electricity regulation Inflation, productivity, efficiency and expansion factors and adjustments to non controllable costs

Non- controllable Controllable Expansion Inflation Productivity Adjustment

2 1 Efficiency

-

Non con - trollable

costs

Non con - trollable

costs

Controll - able costs

Controll - able costs

2014 2015 2016 2017 2018 Source: innogy; BNetzA. Note: illustrative discussion of revenue cap leaving out other components such as (i) quality element (§19 ARegV), (ii) volatile costs (§11 ARegV), or (iii) regulatory accounts (§5 ARegV). 1 Independent of pressure ratings for gas.

Revenue Cap


3rd regulatory period – changes to both existing framework and to key parameters – need for combined assessment


Proposed amendments for next regulatory period need to be assessed as a ‘single package’ since individual changes can, to some extent, be compensated/mitigated by other measures

Changes to regulatory framework Changes to parameters within given framework

> German government decides on draft regulation proposal

> Key changes • Capital cost true-up • Special bonus for efficiency • Increased transparency

Chan

ges t

o re

gula

tory

fram

ewor

k

> Upper House of Parliament (Bundesrat) decides on draft proposal

> Most changes will apply only with start of the 3rd reg. period

> Government to give consent to Bundesrat decision

1 Jun 2016

8 Jul 2016

Early August

2018/19

> BNetzA releases initial proposal for return on equity and starts consultation process

> Final decision expected

> End of consultation process

6 Jul 2016/ 13 Jul 2016

10 Aug 2016

Sep/Oct 2016

Current RP Next RP

Retu

rn o

n eq

uity

> New assets 9.05%

> Old assets 7.14%

> New assets 6.91%

> Old assets 5.12%

Prod

uctiv

ity

fact

or > 1.5% > Not yet

specified

> Changes will apply only with start of the 3rd reg. period

2018/19 Chan

ges t

o pa

ram

eter

s with

in g

iven

fram

ewor

k


Potential changes in 3rd regulatory period proposed by German government1


Source: Verordnungsentwurf Bundesregierung, Bundesrat as per 8 July 2016. 1 Updated for amendments made by the Bundesrat as per 08 Jul 2016. Decision by federal cabinet expected in early August. 2 Previously time lag of up to 7 years.

Elimination of time-lag for investment budgets

> Update of remuneration on regulatory asset base during regulatory periods

• Recognition of new investments in RAB² on yearly basis

• RAB remuneration to be reduced annually in line with depreciating asset base

• Investments from 2007 to 2016 exempt from changes in remuneration

Bonus for most efficient DSOs

> Introduction of new bonus for most efficient DSOs

> Available to DSOs with 100% efficiency to encourage innovative investments in grid technology and expansion

Increased transparency

> Regulator to publish additional information on the regulatory parameters and targets

Draft proposal for 3rd regulatory period…

Significant investments planned in the future

Superior operational performance

Innovative solutions for ‘Energiewende’ challenges

Change will only impact G&I’s financial performance from 2019 (electricity)/2018 (gas) onwards

…provides further opportunities


G&I East EBITDA driven by significant asset base and other grid earnings


Breakdown of 2015 EBITDA (€bn) Earnings composition

> RAB of fully consolidated grid businesses in CZ, HU, PL and SK

> Pro-forma WACC based on weighted average implied WACCs for all 4 countries

> Regulatory acknowledged depreciation vs. IFRS > Others (non-regulated services, volume

corrections) > Operational efficiency

> Participations: ZOV (Zagreb waste water business) > Gas storage business in CZ

Grid

Pa

rt./

Oth

er

Regulated asset base1,2 3.6

Pro-forma WACC 6.5%³

Return on RAB 0.2

Other grid earnings (regulated/unregulated)

0.2

D&A (IFRS) 0.2

Grid EBITDA 0.6

Income from participations2,4 0.1

Non-grid business/other 0.1

VSE consolidation effect 0.1

EBITDA 0.9

Grid

Pa

rt./

Oth

er

Note: numbers may not add up due to rounding. 1 Generally, RABs from different regulatory regimes are not directly comparable due to significant methodological differences (e.g. regulatory periods, regulatory depreciation periods). Also, throughout this presentation, RABs are always stated excluding pro-rata share of RAB from participations that are not fully consolidated. Numbers based on latest notification by regulator or based on calculations in latest filings with regulators. RAB values reflect RABs relevant for the tariff in 2015. 2 First-time full consolidation of VSE during 2015. Pro-forma RAB value shown assuming full-consolidation of VSE during 2015. For calculation purposes, RAB only included for 4 months in 2015. Income from participations for VSE included for 8 months in 2015. 3 Pro-forma RAB-weighted average WACC of CZ, HU, PL and SK. SK RAB only included for 4 months due to first-time full consolidation of VSE in 2015. 4 Income from participations, to a large extent comprising of at-equity income from investments, included within G&I EBITDA.


East regulation – similar key elements with country specific characteristics

1 Nominal WACC value. 2 Real WACC value. 3 Nominal WACC numbers confirmed for 2016; following years to be adjusted according to risk free rate development. Nominal WACC value. 4 Efficiency factor reflects elements of individual as well as industry/macro-related productivity components. 5 Bonus/malus system for stability. 6 Inflation effects considered in regulatory revenues.


Regulatory model overview

Czech Republic Hungary Poland Slovakia

General

Current regulatory period 2016-2018 2013-2016 2016-2020 2012-2016

Type of regulation Revenue cap Price cap Price cap Price cap

Incentive elements in regulatory framework

RAB/WACC Regulated asset base (RAB) €1.6bn €0.9bn €0.7bn €0.5bn

Regulatory WACC (pre-tax) 7.94%1 6.23%2 5.675%3 6.12%2

Regulatory opex treatment

Efficiency factor4 Pass-through of financing costs

Other

Regulation of quality of supply5 Exposure to volume risk Inflation6 Compensation for investments


Regulatory deep dive – key takeaways Grid & Infrastructure – Regulatory deep dive

Key

take

away

s

4

1 2 3

5

Mature regulatory frameworks with predictable and stable remuneration

Strong experience in managing regulatory frameworks across countries

3rd regulatory period in Germany – changes under discussion with differentiated effects – no fundamental change to overall framework

High operational efficiency and innovative solutions leading to outperformance

Strong post-tax earnings contribution from participations (included in EBITDA)

Q&A session Coffee break

Retail


Retail at a glance

1 With respect to the Retail segment, the term customers refers to customer contracts (electricity and gas counted separately) throughout the presentation. 2 In terms of electricity and gas supply. Active in more than 20 countries with energy+ and electric vehicle infrastructure. 3 Market positions based on volumes, or, in the case of Czech Republic, Poland, Netherlands and Belgium, based on customer numbers, as per latest available data, electricity and gas markets counted separately.

Retail

Retail

Leading energy retailer serving 23m customers1 in 11 European countries2

Turnaround of UK retail business well on track and £200m cost savings programme launched

Market leading positions with four #1 and six further top 3 positions3

Resilient financials with stable overall customer base and significant cash generation

Significant and growing energy+ business and growth optionality from front runner positions in new solutions


European leader serving 23m customers with energy and energy+ products

1 With respect to the Retail segment, the term customers refers to customer contracts (electricity and gas counted separately) throughout the presentation. 2 In terms of electricity and gas supply. Active in more than 20 countries with energy+ and electric vehicle infrastructure. 3 Market positions based on volumes, or, in the case of Czech Republic, Poland, Netherlands and Belgium, based on customer numbers, as per latest available data, electricity and gas markets counted separately. Source: Company estimate based on competitors’ disclosure, regulatory reports and research reports.

Retail

Diversified electricity and gas customer base # contracts 2015

Germany 8.1m 35%

East 5.4m 23%

UK 5.0m 22%

Netherlands/Belgium 4.7m 20%

Electricity 16.2m 70%

Gas 7.0m 30%

Total 23m customers1

Electricity Gas

2 5

2

3

5

5

5 3 2

4 4

2

23m customers1

Active in

11 countries2

16x top 5 positions3

~€110m/ ~€70m

EBITDA/ OR from energy+

€1bn EBITDA

2015

4x #1

positions3

1

1

1

1


~ 110

> 150

~ 70

> 100

2015 2018E

(€m

)

EBITDA OR

Stable and diversified business with growing share of energy+ products

1 Segment breakdown based on sum of operating segment results (€4.7bn). Total includes €(0.2)bn presented as ‘Other, consolidation’ in the combined financial statements. Numbers might not add up due to rounding differences.

Retail

61%

21%

17%

innogy EBITDA 2015


€4.5bn

> Solid and diversified business in continental Europe with stable margins and customer numbers

> Negative OR development in UK due to operational difficulties

> UK turnaround offering substantial rebound potential

> Significant momentum in non-commodity energy+ business

> Heat business currently largest earnings contributor

> Other energy+ activities expected to gain significant share in medium term

> innogy well positioned to capture future growth

Retail within innogy... ...with stable earnings contribution...

…and a growing energy+ business

1

1,113 1,069 988 747 775

1,053

2013 2014 2015EB

ITDA

(€m

)

Total Total excl. UK

Margin 2.8% 3.0% 2.8%

Margin ex UK 2.5% 2.9% 4.1%


52 64 98

106 148

189 158

212

287

2013 2014 2015

Total excl. UK UK

> Capital light business with investments representing only up to 14% of total innogy capex2

• Limited investments; mostly into IT • Growing share of energy+ related capex • Capex intensity <30% (excl. UK <10%)

> Increase driven by IT investments into UK smart meter infrastructure, to be largely completed by 2017

> Energy+ investments related to • Investments into energy+ asset base (mainly heating business/

CHP projects in Germany) • Product development

> IT investments driven by digitalisation and UK smart meter roll-out > Selected small-scale acquisitions to facilitate/strengthen market

entries and add further energy+ skills

Significant cash generation

Capital light business with significant cash generation Retail

energy+ 40-50%

IT incl. smart meter

25-35%

Bolt-on acquisitions

10-20%

Other 10-15%

Total ~€800m

Cape

x (€

m)

Capex intensity1 14% 20% 29%

2016E – 2018E breakdown of capex3

1 Capex intensity defined as capex/EBITDA. Figures excl. UK exclude UK contribution for both capex and EBITDA. 2 2013 to 2015. 3 Capex including financial investments.

Future investments mostly energy+ and IT related

Capex intensity excl. UK1

7% 8% 9%


> Extend CHP solutions and heating products and services

> Flexible roll-out of energy+ product range

> Grow in ‘prosumer’/ home energy solutions

Focus on sustainable increase of customer value in existing business by growing energy+ and by creating optionality

Retail

> Optimise along value drivers and across markets

> Achieve turnaround in UK > Cross-selling of second

commodity and expansion into new markets

> Build on front runner positions to capture future growth (e.g. electric vehicle charging stations)

> Become active innovator in the new energy world

> Identify and commercialise emerging opportunities early on

Create options for new business C

Maximise value of commodity business A

Grow energy+ business B


Large customer portfolio across 11 connected markets

Note: B2B including industrial customers as well as resellers, B2C including residential and commercial customers. Depending on national regulations and market specifics, the individual attribution of customers to our B2C or B2B business may vary to a certain extent across our markets. 1 Customer numbers are rounded to the nearest 10,000 customers. Numbers may not add up due to rounding differences.

Retail

Well diversified portfolio across Europe in gas and electricity…

# contracts in m as of 2015

6.8

1.3

2.5

2.2

3.0 2.0

0.9

0.5 0.1

UK

GER NL/ BE

2.1

0.3 1.3

PL

CZ

SK

RO SL

0.1

CR

HU

Electricity Gas

Customers (‘000)1 B2B B2C

GER 60 8,060

NL/BE 10 4,700

East 10 5,400

UK 20 4,980

Total 110 23,130

…and private and business clients

Total 243TWh

Total 212TWh

Volume gas Volume electricity

B2C 25%

B2B 75%

A

B2C 42%

B2B 58%


Improved steering of Retail segment enables further operational efficiencies

1 Coordination within RWE East segment since 2011, retail board since 2014.

Retail

Further push best practice sharing across the organisation by functional steering

Allow for consistent strategy and agile product launches, particularly for energy+

Enhance operational controls

Preserve customer proximity and local responsibilities

Key benefits

Retail managed at country level

> Countries acting relatively independently

> Only informal exchanges between countries

Increasing coordination of activities across RWE East region and by RWE retail board1

> Institutionalisation of functional coordination

> Mainly advisory nature; ultimate decision making still with countries/regions

> Case-by-case cooperation

Consistent retail steering with clear functional leadership across regions

> COO overall responsible for retail, Executive Committee members for individual functions/ segments

> Specific KPI-tracking, concepts and initiatives

> Regions retain process and profit responsibility

Increasing exchange and functionalisation and focus on operational improvements

Pre 2011 2011-2015 2016 onwards

A


Expertise in managing diverse regulatory and competitive environments provides significant benefits

Note: regulation of SME business in some countries is equivalent to regulation of residential consumer business (e.g. UK , BE); not reflected in respective B2B position; Romania and Slovenia not shown. Source: company estimates. 1 # of competitors shown referring to # of competitors jointly representing at least 80% of market volume. 2 Regulatory context taking into account degree of liberalisation (# of segments open for competition, # of segments where end customer price is regulated) and regulatory interventions (special levies and taxes, existence or effort to establish state-owned player).

Retail

Olig

opol

y [~

5]

Fully deregulated

Regulatory context2

Com

petit

ive

cont

ext1

B2C

B2B B2C

B2B

Fully regulated

> Certain markets with fast changing regulatory environment

> innogy with in-depth experience in various markets in terms of regulation and competition

> Enables innogy to react quickly and effectively when markets are further liberalised or when regulation changes

> Facilitates entry into new markets and businesses

• Expansion from CEE to SEE

• Build and scale up of second commodity business

> Sharing of best practises and experiences with regard to customer needs and new products between countries

> Diversification effect from broad portfolio

Medium regulation

Continuum of different regulatory and competitive environments in our markets... …is leveraged to create competitive advantages

Mon

opol

y [1

] Po

lypo

ly [>

10]

A


Largely stable customer base… Consistent action to limit churn

Actively managed stable and loyal customer portfolio Retail

1 Rounding differences may occur. 2 Increase predominantly due to first-time full consolidation of VSE with 0.5m customers. 3 Customer satisfaction index, measuring % of customers being ‘very satisfied’ or ‘satisfied’ with the service provided; data collected by multiple external service providers. Underlying methodologies may differ by country and results are mapped into percentage scale to facilitate comparability. Exception: Germany where the score is defined as index value where 0 is the lowest and 100 is the highest score. 4 Change 2014 to 2015 (B2B, B2C equally weighted) in percentage points, except for Germany (see footnote 3). 5 CSAT for East including Czech Republic, Hungary, Poland and Slovakia.

…with high customer satisfaction

Area Measure

Customer care

> Customers receive a ‘bill shock-call’ in case of increased annual bills

> Proactive up-/cross-selling based on price sensitivity and switching risk scoring (which is based on customer data and behavior, e.g. interaction with the call center)

> Keeping the contract and supporting the customer when they move

> Automatically adjusting advance payments > Save desk (specifically trained employees)

Product offering

> Directly re-acquiring customers in the switching process by fixed-term contracts

> Offering products targeted on specific/niche segments (e.g. green energy)

> Bundling of commodity deliveries with longer-term services

> Retention offers for loyal customers

CSAT3

2015 Change4

4 78 +1

78% +4%

69% +4%

East5 83% +6%

Retail awards achieved

8.0 8.0 8.1

4.7 4.7 4.7 4.8 4.9 5.4 5.7 5.4 5.0

23.3 22.9 23.2

2013 2014 2015

# cu

stom

ers (

m)

Germany NL/BE East UK

2

1 A


50

235

2013 2015

# ne

w c

usto

mer

s (‘

000)

139 268 340 122 242 321 261 510 661

2007 2011 2015Electricity Gas

755 1,006 224

269

151

979 1,275

2007 2011 2015Electricity Gas

B2C portfolio supported by customer acquisition via second brands and other effective channels

Retail

> Scale up to leading and cost-effective internet-based suppliers (separate brand limiting cannibalisation)

> Significant potential to roll out e-channels in other countries

> Enabling ‘multi-brand’ play in markets with e.g. tactical pricing of different brands

Rapid customer growth

Channel partnerships provide closer access to customers Partnership in NL

Variety of channels

Own channels > Sales offices, call centres, website

> Used as backbone of channel management, focused on providing high quality in an efficient way

3rd parties > Price comparison websites, intermediaries

> Targets either specific customer segments or customers in specific regions/countries

Partnerships

> Partnerships with direct marketing companies such as impeak and Energie-für-dich

> Provide closer access to customers and new acquisition opportunities; used when unique skills of the partner is needed (e.g. Greenergetic platform for PV sales)

4.7x

# cu

stom

ers

(‘000

) #

cust

omer

s (‘0

00)

A


0 210

590

2001 2010 2015

# cu

stom

ers

(‘000

)

470

1 130

2015 2010 2015

# cu

stom

ers

(‘000

)

1,350

10 300

2015 2010 2015

# cu

stom

ers

(‘000

)

> Broaden focus by adding second commodity

> #2 position achieved within 3 years in gas in Slovakia

> Transfer experience to other markets with second commodity potential (e.g. Poland and Croatia)

> Capital-light approach to new markets by leveraging existing resources in core countries

> Entered Croatia in 2013 by acquiring a boutique player via an earn-out scheme and scaled position up significantly

> Further leverage know-how by entering neighbouring markets (e.g. Slovenia and Romania)

Significant track record in second commodity cross-selling… …and in entering new markets

Strong growth track record in second commodity and new markets

Retail

Note: customer numbers are rounded to the nearest 10,000 customers 1 RWE acquired Essent in 2009, Essent entered Belgian market in 2002. 2 Last year pre-market entry.

Electricity

Belgium1 Czech Republic

Croatia Slovakia

Gas

Gas Electricity

0 30

110

2012 2013 2015

# cu

stom

ers

(‘000

)

2

2

A


2013 2014 2015 EBITDA (€m) 279 394 583 t/o realised losses in our hedge book (142) – – includes non-materialisation of legal risks – – 81

EBITDA margin 1.4% 2.1% 3.3% Customers (m) 8.0 8.0 8.1 Volume electricity (TWh) 133 130 128 Volume gas (TWh) 90 88 94 B2C share of volume1 24% 20% 20% Churn rate B2C2 12% 13% 12% Customer satisfaction3 n/a 77 78

Up to 3 years 35%

3-10 years 27%

More than 10 years

38%

> Fully liberalised with mature and stable regulation

> Highly fragmented market

> No need to pre-approve tariffs, no limit on number of tariffs

> innogy acting as base supplier in its core regions

Germany – home market with strong market positions, loyal customer base and mature regulation

1 B2C share of volume based on total gas and electricity volume. 2 Total customer losses in year divided by the average customer number across the year calculated on the basis of the numbers at the end of each quarter. 3 Customer satisfaction index, measuring % of customers being ‘very satisfied’ or ‘satisfied’ with the service provided; data collected by multiple external service providers. Score is defined as index value where 0 is the lowest and 100 is the highest score. 4 Based on volumes. Source: Company estimates based on public disclosure of peers. 5 Based on electricity customers at RWE brand level as an example. Consolidated data not available. Numbers may not add up due to rounding differences. 6 Areas in which innogy is base supplier are highlighted in the map. 7 Includes marginal areas where only gas is provided as base supply. 8 Rebranding to innogy underway.

Retail

Well established regional and national brands with strong customer loyalty

Time with innogy

Loyal customer base supported by strong brands KPIs

Market set-up and innogy position

Customer loyalty5

#1 electricity4

#3 gas4

8

Regional and national brands

Base supplier6

Electricity base supply7

Both electricity and gas base supply

A


NL and BE – strong position in NL using multi-channel approach and successful expansion into BE

Retail

2013 2015

Total opex

Efficiency measures

> Multi-brand strategy implementation, incl. the integration of back-offices and IT platforms

> Procurement optimisation reducing external spend

> Several restructuring initiatives to reduce personnel costs (e.g. near-shoring services to Poland)

Key business development initiatives KPIs

> Fully liberalised

> 10 significant players ranging from price-challengers to service focused incumbents

> High churn rates in Dutch and Belgian markets

Service partners

Successful roll-out and growth of

second brand

Roll-out of partnership

as additional

sales channel

Market access and

energy optimisation

for B2B customers

Acquisition of service

partners5 to get access to energy+ customers

Market entry and scale up in

Belgium

#1 Dutch gas and

electricity4

#4 Belgian gas and

electricity4

~€40m

2013 2014 2015 EBITDA (€m) 257 191 236 EBITDA margin 4.0% 4.3% 5.6% Customers (m) 4.7 4.7 4.7 Volume electricity (TWh) 23 20 19 Volume gas (TWh) 84 61 62 B2C share of volume1 50% 53% 54% Churn rate B2C2 20% 21% 21% Customer satisfaction3 n/a 74% 78%


1 B2C share of volume based on total gas and electricity volume. 2 Total customer losses in one year divided by the average customer number across the year calculated on the basis of the numbers at the end of each quarter. 3 Customer satisfaction index, measuring % of customers being ‘very satisfied’ or ‘satisfied’ with the service provided; data collected by multiple external service providers. Results are mapped into percentage scale to facilitate comparability. 4 Based on customer numbers. Netherlands as of 2014; source: company estimate based on GfK market research, Belgium as of 2015: VREG. 5 Energiewacht NV, Geas Energiewacht BV, Volta Limburg BV.

A


526 549 583

2015 2020E 2030E

368 393 426

2015 2020E 2030E

> 3-5 major and (some) smaller players per market

> Some markets are fully liberalised (e.g. CZ), most still in liberalisation process or partly regulated

> Lower average revenues than in Western Europe due to generally lower grid charge levels

> innogy with very high customer satisfaction

East – high increase in demand and further opportunities especially from cross-selling of second commodity

1 Increase predominantly due to effect of first-time full consolidation of VSE company with 0.5m customers. 2 B2C share of volume based on total gas and electricity volume. 3 Total customer losses in one year divided by the average customer number across the year calculated on the basis of the numbers at the end of each quarter. 4 Customer satisfaction index, measuring % of customers being ‘very satisfied’ or ‘satisfied’ with the service provided; data collected by multiple external service providers. Results are mapped into percentage scale to facilitate comparability. Customer satisfaction index East relates to CZ, HU, PL and SK only. 5 Market position as of 2015; Source: OTE, Czech Energy Regulatory Office. 6 #2 in electricity in Croatia (as of 2015; source: company estimates) and Hungary (as of 2014; source: company estimates) and in gas in Slovakia (as of 2014; source: URSO, regulatory body). 7 East including Croatia, Czech Republic, Hungary, Poland, Romania, Slovakia, Slovenia. 8 Mid-point of minimum and maximum ENTSOG scenario forecasts. 9 Numbers are rounded to the nearest 10,000 customers.

Retail

Commodity growth opportunities in existing markets

Countries Customers (‘000, 2015)9

Focus Electricity Gas

Poland 930 <1 > Cross-selling of gas following gas market opening

Czech Republic 300 1,350 > Further intensification of cross-selling of

electricity

Hungary 2,120 <1 > Cross-selling of gas supported by acquisition of customer portfolio(s)

Slovakia 470 130 > Further intensification of cross-selling esp. in B2C

Croatia 110 <1 > Cross-selling of gas following gas market opening

Slovenia <5 – > Growing electricity mainly in B2C

Romania <1 <1 > Growing electricity also in B2C, intensification of cross-selling of gas in B2B

Source: ENTSOE as of 2015

Structurally attractive growth market Electricity demand East7 in TWh Gas demand East7 in TWh (without

gas used for electricity generation)

15.8%

KPIs

#1 Gas CZ5

#2 in Hungary,

Slovakia and Croatia6

Source: ENTSOG (gas demand without gas used for electricity generation)8.

10.8%

2013 2014 2015 EBITDA (€m) 211 190 234

t/o book gain from revaluation after first-time full consolidation of VSE – – 42

EBITDA margin 5.3% 5.6% 6.5% Customers (m) 4.8 4.9 5.41

Volume electricity (TWh) 18 19 20 Volume gas (TWh) 53 46 47 B2C share of volume2 38% 35% 36% Churn rate B2C3 7% 4% 4% Customer satisfaction4 n/a 77% 83%


A


UK – recovery plan to address operational difficulties already showing first results

1 Includes (i) net effects of €60m related to charges concerning erroneous and late invoicing, the build-up of provisions for regulatory charges and reviews and the release of provisions for customer paybacks and (ii) net effects of €59m related to billing issues due to changes in revenue estimation. 2 B2C share of volume based on total gas and electricity volume. 3 Total customer losses in year divided by the average customer number across one year calculated on the basis of the numbers at the end of each quarter. 4 Customer satisfaction index, measuring % of customers being ‘very satisfied’ or ‘satisfied’ with the service provided; data collected by multiple external service providers. Results are mapped into percentage scale to facilitate comparability. 5 Market position as of 2015; Source: Cornwall Energy. 6 Source: Ofgem - Supplier performance on consumer complaints (May 2016).

Retail

KPIs

#2 electricity5

#5 gas5

> Fully liberalised

> Fragmented, 6 large players and numerous mid-sized and smaller players

> Regulatory scrutiny (e.g. recently finalised CMA investigation resulting in restrictions on charges to prepayment customers, measures to increase customer engagement, and increased price transparency)

Incoming complaints (‘000s per 100,000 accounts)6

Customer satisfaction improved to best-in-class…

1

3

5

7

9

Q1 13 Q1 14 Q1 15 Q1 16

British Gas(Centrica)

EDF E.ON npower(innogy)

Scottish Power(Iberdrola)

SSE

…with stabilising trend in customer numbers

2013 2014 2015 EBITDA (€m) 366 294 (65)

t/o impacts from billing and regulatory issues 8 15 (119)1

EBITDA margin 3.9% 3.1% (0.7)% Customers (m) 5.7 5.4 5.0 Volume electricity (TWh) 48 46 45 Volume gas (TWh) 46 39 40 B2C share of volume2 64% 53% 50% Churn rate B2C3 13% 14% 14% Customer satisfaction4 n/a 65% 69%


> Strong first quarter with net customer losses almost coming to a halt

> Q2 2016 impacted by expiry of extraordinarily high number of fixed term contracts; positive trend in July 2016

A


453

175

H1-15 H1-16

Area Operational controls and management information IT Management of outsource

partners and suppliers Customer satisfaction

Challenge > Insufficient controls and lack of

information > Unsuccessful integration of

IT systems and excessive external spend

> Inadequate approach > Customer losses due to poor customer satisfaction

Key measures taken

> New management team and strengthened key departments

> Enhanced operational and financial controls

> Sharpened commercial focus

> Resolution of defects in ERP platform

> Enhanced IT capabilities and set-up

> Introduction of new system integrator to increase competition and reduce spend

> Review of outsourcing partner management and model

> Optimisation of relationships with supply chain partners

> Customer service process deficiencies addressed

> Agile and competitive pricing strategy introduced

> Complaints handling enhanced

Leading indicators

H1-15 H1-16

97

71

Jun-15 Jun-16

Positive development of leading indicators evidence UK Retail recovery

Retail

While further consistent action is required, measures have started to show meaningful impact

Well on track with meeting commitments with our regulators

(27)%

68

31

H1-15 H1-16

(61)%

Incoming complaints (‘000) Major IT incidents Late bills (‘000s)

(54)% (15)%

Spend on outsource partner services

A


Fully realised 11%

Initiatives completed with impact accruing

25% Approved for

implementation 64%

UK Retail – bankable plan and determined actions

1 As of July 2016.

Retail

Implementation status of targeted gross cost savings1

Key targets for 2018

> Targeted gross cost savings of £200m until 2018 approved for implementation • Based on more than 220 separate initiatives

• Initiatives accounting for more than one third of targeted opex savings already realised or implemented

> Additional opex saving initiatives identified and being evaluated

> Besides opex savings, meaningful gross margin initiatives targeted based on improved operational performance and customer/stakeholder satisfaction

£200m targeted gross cost savings

Cornerstones of recovery programme targets

Cost base in-line with competitors

New commercial offerings and routes to market

Consistently high customer satisfaction

Positioned for growth: sustainably improved competitiveness

Key opex savings measures > Reduce customer service spend and bad debt expense

> Rationalise project portfolio and renegotiate vendor contracts

> Renegotiate and reduce consultancy services

> Rationalise support functions

> Implement budget cuts and stricter travel policy

>⅓ of initiatives already implemented

Return to profitability consistent with market potential

A


innogy adapts to customer needs shifting to more automation and decentralised electricity production

Retail

Customer type Product needs Targeted innogy product offering

Classic consumer

> Commodities > Fix, flexible

> Electricity > Gas

Advanced consumer

> Targeted tariffs > Energy related tools

and services (smart, energy efficient)

> Insurance/assistance services > Energy audits and savings

solutions > Security solutions > Home automation

Prosumer

> Own, decentral production (CHPs, solar, wind) and storage

> Customised offers

> PV > CHP/Micro CHP > Batteries > O&M services

Energy manager

> ‘Trading’ energy > Optimising energy

usage (demand-response)

More customers to produce self-

generated power and enabled to manage their consumption,

generation and electricity feed-in

A


~ 110

> 150

~ 70

> 100

2015 2018E

€m

EBITDA OR

Significant energy+ momentum expected to continue

Heating business and services to contribute a considerable share of the growth

innogy energy+ offering today... ...with strong expected profit growth

Energy+ already constitutes an important part of Retail profitability

Retail

Profitability/positive OR Today Mid-term

Heating businesses and services

Heating CHP

O&M services n/a

Basic energy+

Insulation Loyalty cards

Energy audits and savings solutions

Lighting (LED) Insurance services

Security solutions

Prosumer and home energy solutions

Powerhouse

Lemonbeat SmartHome Micro CHP

PV Batteries

Stable and profitable

business based on long-term

customer relationships

Flexible and opportunistic addressing of

changing customer needs

Addressing upcoming

energy-related needs of our customers

B


> Contracting, maintenance and repair services of mainly B2C heating installations

> 246,000 lease contracts

> 975,000 service contracts

> Contracts range from a minimum of six years for warm water appliances to 12-15 years minimum for boiler rental or leasing

> Frequent visits to customers used as channel to promote commodity products and energy+

German heating business¹ Service partner business in the Netherlands

Heating businesses and services – stable business based on long-term customer relationships

Retail

1 Further assets in regional companies.

District heating

> Operation of small to medium-scale systems for public supply and subject to regulated prices

> More than 110,000 customers

> 2,800 MWth installed capacity

CHP

> Contracting of small to medium-scale installations based on 5-10 years for B2B customers contracts

> ~150 installations

> 150 MWel installed capacity

> Strong pipeline of new projects

Recurring service revenues

Intimate customer access with ability to cross-sell

Asset-intensive business with attractive returns

Stable regulated or quasi-regulated earnings

B


Increased retention and new margins by addressing customer needs in convenient way

Leverage on functioning billing processes, strong brand recognition and partnerships

Retail

> Rental of LED bulbs to customers, addressing customer interest in efficient lighting without own investment

> Monthly fee of ~ct30-60 charged via energy bill (retention effect)1

> Started in Slovakia in 2014 as a B2C offer, since launch 270,000 LED bulbs rented out

> Roll-out to other East countries ongoing. In CZ further 90k bulbs rented out until end of June 2016, in PL 11k bulbs rented out within 4 months since launch

> Basic concept now transferred to B2B business

> Provision of loyalty card (customer gets discounts at various shops) and additional services, currently including appliance breakage assistance, extended guarantee for electric and gas appliances, and arrangement of medical assistance

> Monthly fee of €1.0/month per card and €1.5-6.0/month per additional service, depending on the type of service, charged via energy bill (retention effect)

> Started in Slovakia in 2013, more than 160,000 cards and more than 55,000 additional services sold

> Extension of additional service offering with new partners ongoing

LED bulbs Loyalty card

1 Depending on the type of bulb. Based on pricelist in the Czech Republic.

Basic energy+ offers – flexible and opportunistic addressing of changing customer needs

B


Prosumer and home energy solutions – addressing upcoming energy-related needs of our customers

Retail

> Sale of energy management/IT solution for B2B customers with decentral energy generation

> Allowing customers to directly access the market and streamline own production and consumption with energy market opportunities

> Powerhouse is a market leader in Dutch horticulture segment…

> …and is now making inroads to the segment of large B2Bs, as well as to Spain and USA

> Powerhouse contributed €11m/€14m to operating result/EBITDA in 2015

> Sale of central units and devices to B2C customers (product line: SmartHome)

> Addressing customer need in optimising production and use of energy and steering other devices

> innogy with substantial footprint in market for connected homes: nearly 800,000 SmartHome1 devices and units sold up to 2015

> Roll-out to further countries in preparation

> Recently signed a deal with Nest; already more than 30,000 Nest units sold in UK and Netherlands2

Powerhouse Connected Home

> Installations mainly for B2C customers based on sale or lease contracts

> One-stop-shop service (incl. design, installation, subsidy application, integration with battery, etc.)

> 1,950 installations already in 2015 sold

> Acceleration with partners (e.g. Greenergetic) and roll-out to further countries (CZ, PL) ongoing

Strong footprint in energy management

Leadership in attractive market pockets (e.g. horticulture)

Platform for additional revenue streams (e.g. energy market access and financing solutions)

Recurring service revenue

Strong footprint in new market area

Customer retention and brand benefits as innovative company

PV

1 SmartHome devices and units are also sold to end customers through regional companies. Total number also includes devices and units sold to those regional companies. 2 As of 30 June 2016.

B


innogy is in a front runner position for electric vehicles through leading charging infrastructure

Retail

Trusted solution provider for growing network of large corporates

> 1,760 charging systems sold

> Overall > 4,900 charging points in > 20 countries1

> More than 100 (municipal) utility and 50 B2B partners

> 430,000 charging processes

> 4.1GWh electricity charged

Broad coverage of charging points throughout Europe with a focus on Germany # innogy charging points as of 31 December 2015

NL

CH

AT

PL

DN

LU

UK

MT

SK

HU FR

NO

RO

IT

SL HR

SR BG

TR

CZ

BE DE

3,115

<15

50-150

15-50

>150

Key statistics (2015)

Current business model

Provision of state-of-the-art

hardware

Operation of own and partner-owned

infrastructure

Full back-end solution including

access, billing, utilisation

monitoring etc.

1 As of 31 Dec 15.

C


In order to reach ambitious national targets in Germany... ...significant policy support is under way

Ambitious policy targets will propel development of electric vehicles

Retail

1 Government support programme targeting an increase in EVs to 500,000 vehicles (maximum programme duration is 2019). 2 Subsidy for battery electric vehicles with price of less than €60,000; €3,000 for hybrid cars; total subsidy of €1.2bn paid for by government and OEMs in equal parts.

Expansion of charging

infrastructure

> Investment of €300m in 15,000 new charging stations until 2020

R&D support

> Drive technology

> Energy systems and storage

> Loading infrastructure and mobility concepts

Incentives for EV purchase

> Motor vehicle tax exemption extended to 10 years

> Subsidy of €4,000 when buying an EV <€60,000 starting in May 20162

> Granting EVs use of special traffic and bus lanes

> Special parking for EVs

Reduce CO2 emissions by 40% by 2020

Ambition of 6m EVs

by 2030

Increase battery density

to 300Wh/l

22,698 24,419 50,000

500,000

2013 2014 2015 Target -Gov supportprogramme

Source: International Energy Agency, Bain (Dec 2015).

Source: GTAI (2015).

EV stock Germany

1

Source: KraftStG (tax law for motor vehicles) and EmoG (law for electric vehicles)

C


1 Well established European player

2 Resilient financials with UK rebound potential

3 Capitalise on development in energy+

4 Grow in heat, prosumer and home energy solutions

5 Build front runner positions to capture future growth

Retail – key takeaways Retail

Stable customer base

with strong local brands

€1bn EBITDA 2015

A leading position in offering charging solutions for electric vehicles

~€110m energy+

EBITDA 2015

23m customers in 11 countries1

~2,800MWth installed

heat capacity

~800k connected home

devices sold

4x #1

positions2

£200m UK cost programme

> €150m energy+

EBITDA 2018E

1 In terms of electricity and gas retail (electricity and gas contracts counted separately). 2 Market positions based on volumes, or, in the case of Czech Republic, Poland, Netherlands and Belgium, based on customer numbers, as per latest available data, electricity and gas markets counted separately.

Q&A session

Renewables


Renewables at a glance Renewables

1 As of 31 December 2015; pro-rata view, excluding Zephyr portfolio. innogy has further renewable capacity of 0.3GW in consolidated participations related to the Grid & Infrastructure segment. 2 By capacity. Source: Bloomberg New energy finance; asset owner database, as of March 2016. 3 Pro-rata view. 4 Capacity-weighted company estimate for offshore and onshore wind farms subject to an unexpired support tariff for ~1.5GW for onshore and ~1.0GW for offshore; pro-rata view as of 2015, excluding Zephyr portfolio.

Renewables

Significant and diversified renewable portfolio of 3.1GW1 across Europe

Stable financial profile with ~60% quasi-regulated income (2015) and ~12 years average wind support tenor4

Experienced developer and operator; #3 worldwide in offshore wind2

Significant pipeline of 0.3GW3 under construction and 4.1GW3 in development


1 As of 31 December 2015; pro-rata view, excluding Zephyr portfolio. innogy has further renewable capacity of 0.3GW in consolidated participations related to the Grid & Infrastructure segment. 2 Pro-rata view. 3 By capacity. Source: Bloomberg New energy finance; asset owner database, as of March 2016. 4 Capacity-weighted company estimate for offshore and onshore wind farms subject to an unexpired support tariff for ~1.5GW for onshore and ~1.0GW for offshore; pro-rata view as of 2015, excluding Zephyr portfolio.

Well diversified European 3.1GW renewables portfolio with a focus on competitive technologies

Renewables

3.1GW portfolio1

in operation

~12 years avg. wind support tenor4

4.1GW development

pipeline2

Installed capacity (MW)1

1,160

901 226 197

459

44

19

34

87

Diversified portfolio with large asset base in Germany and UK…

…and a focus on wind and hydro

Germany 37%

UK 29%

Spain 15%

Poland 7%

NL 6%

Other 6%

By capacity1

By capacity1

0.3GW under

construction2

#3 worldwide

offshore wind3

Wind Onshore

53%

Wind Offshore

31%

Hydro 16%

Other <1%

Successful

partnership management


1 Segment breakdown based on sum of operating segment results (€4.7bn). Total includes €(0.2)bn presented as ‘Other, consolidation’ in the combined financial statements. Numbers might not add up due to rounding differences. 2 Capacity-weighted company estimate for offshore and onshore wind farms subject to an unexpired support tariff for ~1.5GW for onshore and ~1.0GW for offshore; pro-rata view excluding Zephyr as of 2015. For total wind, average remaining regulatory support tenor is ~12 years, for hydro ~12 years based on ~0.1GW assets with unexpired support tariff. Germany offshore based on initial support period of eight years only. 3 Feed-in tariff. 4 Contract for Difference. 5 As of 2015; based on onshore and offshore wind; pro-rata view.

Strong and resilient financial profile through support schemes

Renewables

...with high and increasing quasi-regulated earnings Renewables within innogy…

Quasi-regulated/long-term contracted EBITDA share (2015)

Remaining wind regulatory support tenor (2015)

Young asset fleet, only limited wind capacity with expiring support by 20202

Expected increase of quasi-regulated share to 65% from full contribution of newly commissioned assets in 2016

Trend towards FiTs3 and CfDs4 will further increase stability

Average weighted age of wind fleet of ~6 years5

~60% EBITDA from

quasi-regulated earnings

~14 years average remaining offshore wind

regulatory support tenor2

~10 years average remaining onshore wind

regulatory support tenor2

Offshore

6-10 years

11-20 years

1-2 years 3-5

years

6 - 10 years

11-20 years

Onshore

61%

21%

17%

innogy EBITDA 2015


€4.5bn

1


2,633 2,805 3,280

2013 2014 2015

916 825

1,158

2013 2014 2015

448 524

818

2013 2014 2015

Strong revenue and profit growth from significant investments in the past

Renewables

975

677

404

2013 2014 2015

Capacity

MW, accounting view1

EBITDA €m

Capex €m

Total revenues

€m

2,550 2,691 3,129

1 Additionally, in 2013-15 innogy managed a PPA for the UK Zephyr portfolio with a capacity of 256MW, for which innogy earned a management fee; ultimate counterparty of the PPA is the RWE Group. 2 Excluding Zephyr portfolio.

MW pro-rata view2


0.3

0.9

3.1

Under construction Developmentclose to FID

Early development

Solar

Hydro

WindOffshore

WindOnshore

UK 57%

Germany 16%

NL 11%

Other 16%

1 Not probability weighted. 2 Commissioning date. 3 Capex including financial investments.

Growing asset base through near-term project pipeline Renewables

> Key projects under construction include Nordsee One (2017 CoD2), Zuidwester (2017 CoD) and Galloper (2018 CoD)

> Current construction pipeline to be fully commissioned by early 2018

> €1.3bn 16E–18E for gross investments into specific projects under construction or close to FID

> Additional potential for investments depending on success in auctions

> Other including financial investments and day-to-day capex

Construction and development pipeline Significant near-term investments mainly in wind

GW

, pro

-rat

a vi

ew

2016E-18E capex breakdown3 by generation assets

Wind onshore 45-55% Wind

offshore 20-30%

Solar 10-15%

Hydro <10%

Other <10%

Total ~€1.3bn

1

1

Total: 4.4GW

By country, pro-rata view


> Attractive project pipeline and significant development expertise

> innogy with flexible capital approach

> Partnership strategy to optimise risk-return allocation

> Maximise energy yield and availability

> Continue to reduce O&M costs

> Execute existing construction projects on time, budget and quality

> Selective growth by leveraging core competencies and using partnership models

> Increase scope for new investment opportunities

> Develop skills for solar to enter new technology

Enter new regions and technologies C

Optimisation of existing business A

Leverage growth opportunities in existing markets B

Renewables to focus on three key strategic areas Renewables


Note: Figures may not add up due to rounding differences 1 Pro-rata view, excluding Zephyr, as of 31 December 2015.

Highlights > Well diversified portfolio in attractive European markets

• Onshore wind portfolio of more than 1.6GW1 in six countries • Top 3 player in offshore wind • Highly cash generative hydro business with long remaining lifetime

> Exposure to different support frameworks across Europe > Over 1.3GW commissioned in the last 5 years > Technological and project management expertise > Geographical spread reduces meteorological volatility of earnings

Total 8.3TWh (2015)

Focus on wind and hydro…

Germany 36%

UK 34%

Spain 12%

Netherlands 6%

Poland 6%

Other 7%

Onshore wind 42%

Offshore wind 35%

Hydro 23%

Other 1%

By production volume (TWh)1 By production volume (TWh)1

Diversified European portfolio1

Hydro Wind Onshore Wind Offshore

Size of bubbles indicates installed capacity Solar

…especially in UK and Germany

MW

Significant and diversified renewables portfolio and advanced development skills and capabilities

A

Renewables


Operation Construction

Business model leverages core competencies at all stages of the value chain

1 Only logos of partners shown.

> Market intelligence, engineering, procurement, financial structuring

> Identification and development of promising sites

> Profitable sale of projects

> Management and delivery of complex projects

> Management of project partners and suppliers

> Experienced operator > Innovative O&M concepts fit

for purpose > Trusted service partner for JVs

> Delivery of MW to consent/FID

> Hurdle rates per technology and country

> IRR > hurdle rate @FID

> Delivery on time > Delivery on budget > Delivery on quality

> O&M cost per MWh > Availability

Development

innogy capabilities

KPIs

Partner and stakeholder management1

Renewables

A


Support scheme ~72%

Wholesale price ~28%

Offshore wind – #3 player with significant expertise in delivering projects

> Industry with high barriers to entry due to development and engineering challenges

> Significant technological and project management expertise and strong learning track record from completed projects

> Well positioned to win auctions with partnership approach optimising risk and return allocation

Highlights

295

585

87

1 By gross profit; gross profit defined as revenues – sales cost. 2 Pro-rata view, excluding Zephyr portfolio, as of 31 December 2015. 3 Excluding Zephyr portfolio. 4 Accounting view excluding Zephyr PPA. Load factor defined as production volume divided by maximum possible volume based on average of capacities at beginning and end of year. 5 Accounting view excluding Zephyr PPA. 6 Net revenues after deduction of transaction costs. Accounting view excluding Zephyr PPA. Zephyr PPA management fee is included in OR/EBITDA.

Key figures 2013 2014 2015

Capacity (MW), pro-rata view3 384 553 967 Capacity (MW), accounting view3 342 511 925 Average load factor4 39% 39% 44% Production volume (GWh)5 1,170 1,469 2,749 Avg. revenue (€/MWh)6 163 160 185

Share of quasi-regulated income1

Renewables

A

Installed capacity2

MW

~14 years avg. remaining support

life2

1.0GW capacity2

Avg. asset age of

~2 years2


Benefits

Offshore wind – steep learning curve with significantly improved risk-reward proposition

Note: years refer to commissioning date. 1 innogy operatorship or main service provider to JV.

> Multi-contracting approach > Own vessels used

> Single lot with few key contracts > Vessels supplier responsibility

Reduces interfaces and complexity

> Predominantly corporate level financing

> Non-recourse project level financing Limits capital requirement per project

> Ambition and preference to do most projects independently

> JVs with experienced financial and strategic players

Provides higher capital diversification, risk sharing and de-biasing

Contracting

Approach in the past Current approach

Financing

Partnering

North Hoyle1 (2004)

Rhyl Flats1 (2010)

Greater Gabbard (2012)

Thornton Bank 1–3 (2009–2013)

Gwynt y Môr1 (2015)

Nordsee Ost1 (2015)

Galloper1 (2018)

Nordsee One1 (2017)

Renewables

A


~13%

At FIDEquity IRR at FID

> 336MW (100%)

> 25% each

> Commissioning expected by Q1 2018

> ~£1.5bn external facilities > Project financing 30:70 gearing

Galloper – successful value creation through development activities

Capacity

Shareholder structure

Timing

Financing

Facts UK offshore Significant development success

Initial development Internal re- evaluation by innogy

> Original partner decides to refrain from investment

> Project development put on hold

> Project re-evaluated by innogy

> Reconfiguration of central characteristics by innogy, e.g. introduction of larger turbines

> Siemens, Macquarie and GIB as new joint equity partners

> Significant development gain at financial close achieved

Project goes ahead with new partners

Internal re-evaluation by innogy Initial development

Further €93m gain from sale

at financial close

European Power Deal of the Year

Renewables

A


Note: WS = Wholesale 1 Part of Zephyr portfolio. 2 Including Thornton Bank 1–3: Thornton Bank 1: 6x5MW (gravity foundation), Thornton Bank 2: 30x6.15MW (jacket foundation), Thornton Bank 3: 18x6.15MW (jacket foundation). 3 Minimum price for offshore wind certificates are €107 per MWh for the first 216 MW of generating capacity, and €90 per MWh for capacity exceeding 216 MW. 4 The level of support is granted for 20 years (subject to a backstop date in 31 Mar 2037). 5 EEG compression model: €194/MWh; €154/MWh; €39/MWh.

Track record of installing bigger turbines, farther from shore and in deeper waters

Nordsee One 2017 332MW 54 x 6.15MW 26-29m depth 45km

EEG 20145

Nordsee Ost 2015 295MW 48 x 6.15MW 22-26m depth 60km

EEG 20145

North Hoyle1

2004 60MW 30 x 2.0MW 7-11m depth 7 km 1.0 ROC + WS

Rhyl Flats 2010 90MW 25 x 3.6MW 10-15m depth 8km 1.5 ROC + WS

Gwynt y Môr 2015 576MW 160 x 3.6MW 12-28m depth 13km 2.0 ROC + WS

Greater Gabbard 2012 504MW 140 x 3.6MW 24-34m depth 23km 2.0 ROC + WS

Thornton Bank 2009-2013 325MW 54 x 5-6.15MW2 12-30m depth 28km WS + Certificate3

Galloper 2018 336MW 56 x 6MW 27-36m depth 30km 1.8 ROC + WS4

Project

(Expected) CoD Capacity Turbines Water depth Distance to shore Support scheme

Under construction In operation

Renewables

A

Monopile

Jacket


Offshore industry has significantly matured

Source: Company estimates.

> Built first ever commercial UK offshore wind project in 2003 (North Hoyle), built the second largest fully operational offshore wind farm to date (Gwynt y Môr)3

> Currently constructing 10th project of which innogy has led over half

> Experience, scale and long-standing relationships with the supply chain ensure successful delivery

> Robust lessons learnt and sharing of experiences ensure that each project builds on the success of previous ones

Foundation installation Improvement in installation vessels Significant innogy learning curve # of foundations completed over time (in days)

~8.2

~2.3

Nordsee Ost Nordsee One

Average # days for installation per foundation

(CoD 2017E) (CoD 2015)

Excalibur Project North Hoyle Year1 2003 Purpose built Water depth 20m Crane 250t Length 60m

Jumbo Javelin Project Greater Gabbard Year1 2010 Purpose built 2 Water depth n/a Crane 900t Length 144m

Innovation Project Galloper (planned) Year1 2016 Purpose built Water depth 65m Crane 1,500t Length 150m

1 Deployment period. 2 Heavy load carrier deflected from its normal purpose; built for transporting heavy loads. Therefore, lack of stability in comparison with jack-up barge. 3 As of July 2016.

0

20

40

60

0 100 200 300 400

Nordsee Ost(CoD 2015)

Nordsee One(CoD 2017E)

Renewables

A


239

443

34

3

226 506

197

Support scheme ~55%


1 By gross profit; gross profit defined as revenues – sales cost. 2 Pro-rata view, excluding Zephyr portfolio, as of 31 December 2015. 3 Excluding Zephyr portfolio. 4 Accounting view excluding Zephyr PPA. Load factor defined as production volume divided by maximum possible volume based on average of capacities at beginning and end of year. 5 Accounting view excluding Zephyr PPA. 6 Net revenues after deduction of transaction costs. Accounting view excluding Zephyr PPA. Zephyr PPA management fee is included in OR/EBITDA.

Onshore wind – well experienced operator with >1.6GW portfolio across 7 countries

> Outstanding development and construction skills combined with • comprehensive market intelligence • value engineering through technological expertise • operational excellence by in-house O&M strategies

> Continuous improvement measures to ensure value adding growth within increasingly competitive markets

> Best positioned for further international growth

Technological expertise and operational excellence in well-proven technology

Installed capacity2

1.6GW capacity2

Avg. remaining support of ~10 years2

Avg. asset age of

~9 years2


Key figures 2013 2014 2015

Total capacity (MW), pro-rata view3 1,537 1,601 1,648 Total capacity (MW), accounting view3 1,667 1,763 1,823 Average load factor4 24% 23% 25% Total production volume (GWh)5 3,375 3,463 3,887 Avg. revenue (€/MWh)6 100 87 91

MW

Renewables

A


Source: Company estimates. 1 Numbers do not include operational costs like lease, tax etc. 2 Numbers do not include unavailability caused by external impacts like grid curtailment, weather, etc.

Delivering onshore wind projects on time and on budget and achieving cost savings

Track record of delivering construction projects

(15)%

(5)%

5%

15%

2011 2012 2014 2015

Over budget

Below budget

(6)(4)(2)02468

101214

2011 2012 2014 2015

Delta

in ti

me

(mon

ths)

Behind schedule

Ahead of schedule

95.2

96.9

25.2

22.3

> Maintenance optimisation; e.g. maintenance timing based on weather prediction maximises energy yield

> Centralisation of engineering team making expertise accessible for complete fleet

> Active ownership; in-sourcing of expensive O&M service contracts

Significant reduction in O&M costs while increasing availability

O&M costs1(€/MWh) Time-based availability2(%)

2013 2015 2013 2015

Delivering projects on/below budget…

…and on/ahead of schedule

Renewables

A



Support scheme ~25%

Hydro – highly cash generative and stable business with low investment needs

1 By gross profit; gross profit defined as revenues – sales cost. 2 Pro-rata view, as of 31 Dec 2015. 3 As of 2015. 4 Accounting view. Load factor defined as production volume divided by maximum possible volume based on average of capacities at beginning and end of year. 5 Accounting view. 6 Net revenues after deduction of transaction costs. Accounting view.

> Well established asset base > Long remaining lifetime and very limited capex

requirements > Diversified hydrology exposure > Upside potential if wholesale prices materially

rebound

High cash generation and operational excellence

353 77

44

10 16


Key figures 2013 2014 2015

Total capacity (MW), pro-rata view 521 523 500 Total capacity (MW), accounting view 522 525 525 Average load factor4 50% 46% 42% Total production volume (GWh)5 2,289 2,117 1,944 Avg. revenue (€/MWh)6 58 67 65

Renewables

A

Installed capacity2

MW

500MW capacity2

~10% EBITDA

contribution to segment3

Long remaining

asset lifetime


EU 2020 target

Key national targets

> Target of 18% renewable energy share by 20201

> Target of 40%–45% renewable energy share in total electricity consumption until 2025, 55%–60% until 2035

> Exit from nuclear energy until end of 2022

> Source 15% of UK energy from renewable sources by 2020

> RES-E2 target of 30% by 2020 > End of hard coal fired

generation by 2025 > Unclear what targets will

apply to the UK following the implementation of the Brexit

> Target of 14% renewable energy share by 2020 and 16% by 20234

> RES-E target of 37% by 2020 > Discussion to exit coal fired

generation

> Target of 15% renewable energy share by 20205

> Target of 19% renewables share in electricity production by 2020

Transi-tion to auction regimes

> Switch to auctioning starting from 2017

> Pay-as-bid remuneration

> From 20173 onwards

> CfD auctions only for low carbon projects >5MW

> No future auctions currently announced for mature technologies like onshore wind

> Individual support levels determined per technology

> First come, first serve basis as well as pay-as-bid basis

> Separate budget and process based on centralised tender model for offshore wind

> New support scheme based on auctions effective since July 2016

> Separate auctions for seven defined RES categories and for capacity below 1 MW

innogy well positioned in increasingly competitive markets with ambitious national RES growth targets

Source: Eurostat May 2015. 1 IEA Energy Policies of IEA Countries, 2013 Review. 2 Electricity from renewable sources; source: DECC, Third Progress Report on the Promotion and Use of Energy from Renewable Sources for the United Kingdom, January 2016. 3 2018 if the project has secured an RO grace period. 4 IEA, Executive Summary Netherlands, 2014. 5 PwC, Raport: Potencjalna luka w realizacji celu OZE 2020, March 2016.

14% 7% 6%

11%

18% by 2020 15% by 2020 14% by 2020 15% by 2020

RES share in gross final energy consumption (2014) Gap to target achievement for 2020 %

of r

enew

able

s in

tota

l ene

rgy

cons

umpt

ion

Renewables

B

Germany UK Netherlands Poland


UK 54%

Germany 14%

Poland 12%

Netherlands 11%

Other 9%

UK 70%

Germany 18%

Netherlands 6%

Poland 5%

159 ~500

~1,100

~1,750 134

~450

~1,750 ~2,300

5

~250 ~250

298

~950

~3,100 ~4,350

Under construction Development close to FID Early development Total

Onshore Offshore Hydro Solar

Strong construction pipeline and promising development projects

Note: capacities in Close to FID and Early development categories rounded to nearest 50MW. Numbers may not add up due to rounding differences. 1 Pro-rata capacity. 2 EEG compression model: €194/MWh; €154/MWh; €39/MWh. 3 Includes <25MW Hydro.

Key projects under construction

Nordsee 1 Goole 2 Zuidwester Galloper

GER UK NL UK

332 35 90 336

15% 100% 100% 25%

Q4-17 Q1-17 Q2-17 Q1-18

Feed-in tariff (EEG 20142) 0.9 ROC SDE+

€80/MWh 1.8 ROC

Country

Technology

Full capacity (MW)

innogy stake

Expected CoD

Support scheme

Development projects country split Capacity, pro-rata (MW)

Offshore Onshore

MW

1

1

2

1

Close to FID Early development 3

2 3

Onshore Offshore

Renewables

B

3

~50


Kaskasi Grimmen- Papenhagen

innogy actively positions itself for upcoming auctions

1 As of July 2016. 2 Statkraft announced in Dec 2015 that they will continue with the development of Triton Knoll, but not invest any further into offshore wind projects.

> Onshore > Onshore > Onshore > Offshore > Offshore

> 96MW > 33.6MW > 26MW > 900MW > 210-280MW

> Q1 2015

> Successful participation

> Q1 2015

> Successful participation

> Q3 2017 > 20172 > 2017

> UK CfD auction > UK CfD auction > FiT (EEG 2017) > UK CfD auction > Wind offshore act/ EEG 2017

Technology

Size (100%)

Auctioning process

Only utility so far to have won onshore CfD auction in UK1

Strict observance of investment criteria

Partnering helping to de-bias assumptions

Clocaenog Mynydd y Gwair Triton Knoll

(Expected) Auction timing

Operational synergies from scale Regional and technological

diversification Patience and perseverance

Factors to succeed in upcoming auctions

B

Renewables


Source: company estimates. 1 Post-tax project IRRs at FID. Note: Projects since 2011. Wind Offshore UK including Greater Gabbard and Gwynt y Môr; Galloper not included as only equity IRR available; Wind Offshore Germany including Nordsee Ost. Wind Onshore including four projects in UK, eight projects in Germany, four projects in NL and five projects in Poland. Simple average of project returns.

Strict investment criteria to focus on value creation

Investment framework – hurdle rate build-up

Base renewables WACC 4.50%

Minimum value contribution for new projects 0.75%

Risk premia Technology risk

Construction risk Regulatory risk

0.50% – 3.50%

Country risk premium 0.00% – 7.00%

Project specific hurdle rate (Project WACC) 5.75%+

Strict investment framework with conservative hurdle rates

Project specific IRRs at FID generally well above prevailing hurdle rates

Project specific hurdle rates determined by adjusting renewables base WACC for risk premia and minimum value contribution

Attractive returns from recent projects (average project IRRs¹)

Wind Offshore

Wind Onshore

~9%

~9%

~7%

~8%

~11%

~11%

GER

UK

GER

PL

UK

NL

Investment criteria

B

Renewables


> Technology expected to become highly cost competitive

> Business model comparable to onshore wind with similar required skill set

> Short construction period and limited risks > Low technological complexity

> Leverage existing capabilities > Cooperation with local and financial partners > Brownfield approach to accelerate market entry

> Build-up of skills and capabilities > Utility-driven approach to asset

management and commercialisation (e.g. system integration/storage)

Very large market with strong growth potential, resource availability and government support

Growth potential, excellent meteorological conditions and demand for capacity

Natural expansion of existing UK market

Development of growth optionality through selective and prudent new market entry

Note: US = United States, TR = Turkey, IE = Ireland.

innogy priorities for new market entry

Rationale

Approach

Wind Onshore in new markets Solar

TR

US

IE

C

Renewables


Spotlight onshore wind in the US – leverage capabilities in familiar conditions and profit from growth potential

Source: US EIA, Annual Energy Outlook 2016. Reference case. 1 Production tax credit. 2 Levelised cost of electricity

...with considerable wind energy potential… Attractive market framework in the US...

> Focus on Northeastern US where environmental conditions, risk profile and process set-up is very similar to Europe

> innogy’s sophisticated engineering is capable to maximise output of small parks with high environmental requirements

> Existing experience in cooperations with local partners is valuable to source initial projects

> Medium-term build-up of own development capabilities

> Leverage innogy's onshore expertise and centralised operational functions, such as engineering and O&M

…and significant expected growth innogy approach in the US

> Attractive support framework

> Renewable portfolio standards in several states

> PTC1 framework extended until 2020

> Availability of long-term PPAs for wholesale price components

> Strong legal protection

Significant wind potential due to requirements in

space and elevated level of wind speed

Wind capacity growth US (GW)

74

142

2015 2030E> Very low LCOEs2 in international comparison, also compared to

conventional power generation

> Ageing coal plants need to be replaced

Wind speed (m/s)

>10.010.09.59.08.58.07.57.06.56.05.55.04.5

<4.0

C

Renewables

4% CAGR


~130

~55

Solar PV LCOE2015 2025E

Solar – competitive technology becoming a utility game with significant growth potential

1 Source: IRENA – The Power to Change: Solar and Wind Cost Reduction Potential to 2025 (June 2016). 2 Global average utility-scale LCOE of solar PV. 3 Source: Fraunhofer ISE – Photovoltaics Report, updated: 6 June 2016. 4 Source: REN21, Global Renewables Status Report 2016. 5 Engineering, procurement, construction, installation.

Onshore skills can be leveraged LCOE reductions1

Significant growth is expected PV global capacity3 GW

PV share of global renewable capacity additions (2015)4

242

540

2015 2019E

PV 34%

> Significant innogy experience in setting up large projects

> Experience in site selection, gaining consents and managing stakeholders

> EPCI5 approach for project delivery

> Significant project management to be leveraged

> Extensive procurement and claim management expertise

> Solar PV generally with limited overall technological complexity

> Active asset management to maximise value

• Central control room and remote operations supervision

• Centralised engineering and performance management

> Limited and relatively straight forward maintenance requirements

Development

Construction O

peration

Global solar LCOE2, 2015 vs 2025E USD/MWh

147GW

Bid as low as USD 30/MWh

in solar PV auction in

Dubai in May 2016

C

Renewables

(58)%


1 Well diversified European renewables portfolio

2 Resilient quasi-regulated earnings set to grow further

3 Business model generating value throughout the value chain

4 High quality assets under construction and strong pipeline

5 New growth optionality through selective new market entry

Renewables – key takeaways

1 As of 31 Dec 2015; pro-rata view, excluding Zephyr portfolio. innogy has further renewable capacity of 0.3GW in consolidated participations related to the Grid & Infrastructure segment. 2 By capacity. Source: Bloomberg New energy finance; asset owner database, as of March 2016. 3 Capacity-weighted company estimate for offshore and onshore wind farms subject to an unexpired support tariff for ~1.5GW for onshore and ~1.0GW for offshore; pro-rata view as of 2015. 4 2015 includes capital gains of sale of Gwynt y Môr network infrastructure and of stakes in Galloper. 5 Includes long-term contracts. 6 Onshore wind 2013-2015. 7 Pro-rata view. 8 Pro-rata view, includes projects close to FID.

0.3GW7

under construction

4.1GW8

total pipeline

~12yrs avg. wind

support tenor3

#3

worldwide in offshore wind2

3.1GW1

~1.8x EBITDA growth

2013-20154

~60% quasi-regulated5 EBITDA

share in FY15A

83% of projects on time

and on budget6

Strong track record in offshore wind

Leverage existing

capabilities

High growth potential

Renewables

Q&A session

Wrap-up


innogy offers a compelling value proposition Wrap-up

Platform for growth


Resilient financial profile

Stable business Unique European asset base

1 2

3

4 5

Capitalise on evolving energy system


innogy’s key characteristics – large and stable business with attractive growth prospects

Wrap-up

4

1 2 3

5

Unique European asset base anchored in Germany, leading positions across many countries

Stable business well invested to yield largely regulated and predictable returns

Resilient financial profile backed by strong cash generation and solid capital structure

Solid platform for growth driven by operational excellence supported by IPO proceeds




3.6GW

renewables capacity2

23m

customers


>[95]%




~70% CFOA4/EBITDA

(average 2013-15)


net debt/EBITDA

Strict capital discipline 70-80%

dividend pay-out ratio based on adjusted net income

Focus on further

efficiencies ~€6.5bn capex5

(2016-18E)

1 Numbers based on latest notification by regulator or based on calculations in latest filings with regulators. Expected increase in German regulated asset base calculated as RAB 2010/2011 plus net investments (post concession gains/losses) in regulated assets in the years 2010/2011 to 2015/2016E, assuming full recognition by the regulator. Generally, RABs from different regulatory regimes are not directly comparable due to significant methodological differences (e.g. regulatory periods, regulatory depreciation periods). Also, throughout this presentation, RABs are always stated excluding pro-rata share of RAB from participations that are not fully consolidated. 2 As of 31 December 2015; accounting view; includes 3.3GW from Renewables segment (excluding Zephyr portfolio) and 0.3GW renewables capacity from participations related to the Grid & Infrastructure segment. 3 Includes regulated and quasi-regulated business activities. 4 Cash flow from operating activities after interest and tax. 5 Including financial investments.

Set for

mid-term growth

Appendix


Senior bond maturity profile (€bn)1 Intercompany loans from RWE AG

Solid, long-term capital structure with limited short-term maturities

1 Refers to senior bonds issued by RWE Finance B.V. and RWE Finance II B.V. 2 Based on weighted average coupon on senior bonds.

Balanced profile with a total outstanding amount of senior bonds of ~€11bn (as per 31 Dec 2015),

and average coupon of ~5%

> Senior intercompany loans from RWE AG to innogy

> Established in June 2016

> Update to be provided upon release of innogy H1 financials

Cumulated maturities of senior bonds

as of 31 Dec 2015 2016-2018 2019-2021 2022-2024 Post 2024

Senior bonds¹ 1.8 3.5 2.1 3.8

% of total senior bonds² 16% 31% 19% 34%

~5% weighted

avg. interest on senior

bonds2

0,0

2,0

4,0

6,0

8,0

10,0

12,0

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

2016 2017 2018 2019 2020 2021 2022 2023 2024 Post2024

Repayment of senior bonds Total senior bonds

Appendix – Financials


Overview of senior bonds of innogy as of 18 Dec 2015

1 Notional-weighted coupon average. Conversion of GBP bonds as per 31 Dec 2015 FX rate. 2 Market-value weighted YTM average. 3 Note that €600m senior bond was transferred into innogy scope as per 28 Dec 2015 only.

Issuer Notional amount (million)

Carrying amount pre-transfer (€m)

(18 Dec 2015)

Market value (€m) (18 Dec 2015)

Coupon (%) Yield-to-maturity (18 Dec 2015)

Maturity Fair value ‘step-up’

(€m)

RWE Finance B.V. EUR 850 850 867 6.25% 0.14% Apr 16 16

RWE Finance B.V. EUR 980 980 1,098 5.125% 0.43% Jul 18 119

RWE Finance B.V. EUR 1,000 996 1,174 6.625% 0.92% Jan 19 178

RWE Finance B.V. EUR 750 746 772 1.875% 1.14% Jan 20 26

RWE Finance B.V. GBP 570 778 888 6.50% 3.53% Apr 21 110

RWE Finance B.V. EUR 1,000 998 1,262 6.50% 1.60% Aug 21 264

RWE Finance B.V. GBP 500 677 752 5.50% 3.71% Jul 22 75

RWE Finance B.V. GBP 488 663 732 5.625% 4.11% Dec 23 69

RWE Finance B.V. EUR 800 800 853 3.00% 2.10% Jan 24 52

RWE Finance B.V. GBP 760 1,038 1,152 6.25% 5.14% Jun 30 114

RWE Finance II B.V.3 EUR 600 595 741 5.75% 3.79% Feb 33 145

RWE Finance B.V. GBP 600 813 761 4.75% 5.35% Jan 34 (52)

RWE Finance B.V. GBP 1,000 1,342 1,471 6.125% 5.51% Jul 39 129

Total 11,276 12,522 ~5%1 ~3%2 1,245

€12,513m as per combined financial statements (as of 31 Dec 2015)



Grid & Infrastructure – stable regulatory returns and operational excellence

1 Income from not fully consolidated participations. 2 Capex excluding financial investments.

Grid & Infrastructure Comments

EBITDA Development

> Slight increase in 2015 with increase in G&I East over-compensating decrease in G&I Germany

• Decrease in Germany mainly driven by lower earnings from disposal of grid assets, one-off book gains in 2014 from sale of LEW to Amprion, higher grid maintenance costs and restructuring costs related to early retirement scheme

• Increase in East 2015 mainly driven by revaluation gain from the first-time full consolidation of VSE, improved weather and regulatory conditions for Czech gas distribution

> Increase in 2014 driven by an increase in G&I Germany partially offset by a decrease in G&I East

> Increase of D&A in 2014 and 2015 mainly driven by impairment charges on gas storage assets in Germany and first-time full consolidation of VSE in East

Capex

> Strong increase in 2015 driven by grid infrastructure optimisation investments and first-time full consolidation of VSE

> Capex continuously and significantly above D&A in all years supporting RAB growth

€ million 2013 2014 2015

EBITDA 2,790 2,861 2,878


Operating D&A (852) (957) (948)


Capex2 1,117 1,131 1,305

Capex/operating D&A 1.3x 1.2x 1.4x

EBITDA – capex 1,673 1,730 1,573



Retail – overall favourable development burdened by UK operational issues


Retail

EBITDA Development

> Decrease in EBITDA from 2013 to 2015 mainly driven by a €431m decline of our UK EBITDA, primarily as a result of process- and system-related billing issues – recovery now well on track

> Increasing EBITDA excluding UK

• Germany with strong increase in 2015 mainly due to release of provisions. 2013 EBITDA adversely affected by realised losses in our hedge book

• NL/BE EBITDA affected by adverse weather conditions in 2014

• East EBITDA with increase in 2015 primarily due to re-valuation effect from first-time full consolidation of VSE. 2014 EBITDA affected by adverse weather conditions and stronger competition

Capex


> Capex mainly related to UK due to structurally different requirements for investments in IT and infrastructure

€ million 2013 2014 2015

EBITDA 1,113 1,069 988

Operating D&A (182) (162) (158)


Capex¹ 158 212 287

Capex Intensity (Capex/EBITDA) 14 % 20 % 29 %


Comments



Overview of special EBITDA items Appendix – Financials

€ million 2013 2014 2015

Grid & Infrastructure Germany

Book gains from grid disposals 63 187 153

Grid & Infrastructure East

Book gain from revaluation after first-time full consolidation of VSE 143

Retail Germany1

Realised losses in our hedge book under IFRS accounting (142)

Retail East

Book gain from revaluation after first-time full consolidation of VSE 42

Retail UK

Impacts from billing and regulatory issues 8 15 (119)2

Renewables

Gain on Galloper disposal 93

Gain on Gwynt y Môr OFTO assets disposal 30

Triton Knoll disposal (deconsolidation profit/premium) 9

Income from Nordsee Ost claims 103 12

Losses from development projects UK (20) (4) (27)

1 Retail Germany in 2015 includes provision releases, mainly in the amount of €81 million for legal risks in connection with customer supply contracts. 2 Includes (i) net effects of €60 million related to charges concerning erroneous and late invoicing, the build-up of provisions for regulatory charges and reviews and the release of provisions for customer paybacks and (ii) net effects of €59 million related to billing issues due to changes in revenue estimation.


Regulation Czech Republic Appendix – Grid & Infrastructure - East


Element Key feature Comments

General Current regulatory period 2016-2018 Next regulatory period: 2019-2024 (expected)

Type of regulation Revenue cap Revenue cap with certain limitation in max. tariff increase y/y


Opex outperformance on behalf of distribution company

RAB/WACC Regulated asset base (RAB) €1.6bn RABt = RABt-1 + capext – k * allowed depreciationt where k = RABt-1/(revaluated) net book valuet-1 (RAB partially revaluated. Depreciation for assets procured <2007 revaluated, depreciation for assets >2006 not revaluated. Working capital, assets under construction not included in RAB)

Regulatory WACC (pre-tax) 7.94% Nominal, fixed for the entire fourth regulatory period


Efficiency factor1 Allowed opex based on 2012/2013 average, efficiency factor 1,01%

Pass-through of financing costs

Debt financing costs considered in WACC

Other Regulation of quality of supply

No SAIDI or SAIFI applied

Exposure to volume risk

Deviations between allowed revenues and actual revenues which are caused by deviations between actual and planned consumption volumes are reimbursed in year +2

Inflation2 Opex indexation = 70% market service index + 30% CPI with 1% bonus

Compensation for investments

Capex is considered in RAB as planned value in the relevant year, deviations to Actuals are corrected via k-factor in year + 2

1 Efficiency factor reflects elements of individual as well as industry/macro-related productivity components. 2 Inflation effects considered in regulatory revenues.


Regulation Hungary Appendix – Grid & Infrastructure - East



Type of regulation Price cap Regulated revenue is the sum of the acknowledged values of capital costs (RAB times WACC) plus opex plus depreciation plus grid losses, adjusted by additional factors


When determining the value of acknowledged costs the regulator lowers the level of cost reduction for DSOs that perform better, DSOs not performing up to standard have to give a specified discount on distribution tariffs

RAB/WACC Regulated asset base (RAB) €0.9bn RAB = gross re-evaluated value * aging – (net value of foreign sources) The value of RAB is adjusted separately each year by inflation and efficiency factor

Regulatory WACC (pre-tax) 6.23%¹ WACC is real value. The (theoretical) nominal WACC value would be 7.3% for 2015 and 8.53% for 2016


Efficiency factor2 CPI-X method, X: required efficiency improvement factor



Taken into account during the benchmarking by the regulator


Inflation3 CPI-X (customer price index decreased by the required efficiency improvement factor). In the current regulatory period this adjustment was not applied regularly due to low level of inflation


Depreciation + bonus/malus system

1 Corresponds to real WACC, RAB for Hungary includes annual inflation adjustment. 2 Efficiency factor reflects elements of individual as well as industry/macro-related productivity components. 3 Inflation effects considered in regulatory revenues.



Regulation Poland Appendix – Grid & Infrastructure - East



Type of regulation Price cap Each year the regulator sets distribution charges via setting up the regulated revenues and dividing it into fixed prices


Efficiency increase of opex and network losses set up for entire regulatory period. Quality parameters without any bonus, tariff effective from 2018

RAB/WACC Regulated asset base (RAB) €0.7bn RAB is calculated based on starting value agreed with regulator and adjusted yearly (current value) RABt = RABt-1 +investmentst-1– depreciationt-1 – connection feest-1 – non refundable sourcest-1 - ∆ (I, C, N)t-2

Regulatory WACC (pre-tax) 5.675%1 WACC is nominal value. Tendency: slightly decreasing risk free rate


Efficiency factor2 Individual (based on benchmark), sector (set up by the regulator)




Inflation3 Only opex and some minor additional revenues


Before investments become part of RAB: compensation via depreciation (2% of current annual investment value), after 1 year capex = RAB

1 Nominal WACC numbers confirmed for 2016; following years to be adjusted according to risk free rate development. 2 Efficiency factor reflects elements of individual as well as industry/macro-related productivity components . 3 Inflation effects considered in regulatory revenues.



Regulation Slovakia

1 WACC for 2016. 2 Efficiency factor reflects elements of individual as well as industry/macro-related productivity components. 3 Inflation effects considered in regulatory revenues.

Appendix – Grid & Infrastructure - East



Type of regulation Price cap Main: opex, reg. depreciation, allowed profit (RABxWACC), distribution volumes Secondary: core inflation, efficiency factor, coefficient of disposable funds utilisation, other revenues


No revenue correction. Outperformance on individual elements can be retained. Incentive scheme on losses

RAB/WACC Regulated asset base (RAB) €0.5bn Assets from revaluation done by Regulator as per 2005, later updated as per 2010. Currently undergoing revaluation for next regulatory period

Regulatory WACC (pre-tax) 6.12%¹ WACC is real value. Proposal for next regulatory period: 6.47%


Efficiency factor2 Efficiency factor – 3.5%



Quality factor – not applicable, but automatic compensations in place

Exposure to volume risk Actual revenues depend on actual volumes, while price cap on planned

Inflation3 Opex escalated by core inflation minus efficiency factor. If negative, then no reduction occurs


One-off increase of regulated depreciation for the year following the completion of investments. Lag for introduction into RAB until next reg. period.



KPIs by region (1/2)

1 B2C share of volume based on total gas and electricity volume. 2 Total customer losses in year divided by the average customer number across one year calculated on the basis of the numbers at the end of each quarter. 3 Customer satisfaction index, measuring % of customers being ‘very satisfied’ or ‘satisfied’ with the service provided; data collected by multiple external service providers. Underlying methodologies may differ by country and results are mapped into percentage scale to facilitate comparability. Exception: Germany where the score is defined as index value where 0 is the lowest and 100 is the highest score.

Appendix – Retail

Germany Key financials 2013 2014 2015

Total revenue (€m) 19,390 18,472 17,653

External revenue (€m) 18,873 18,079 17,301

EBITDA (€m) 279 394 583

t/o realised losses in our hedge book (142) – –

includes non-materialisation of legal risks – – 81

EBITDA margin 1.4% 2.1% 3.3%

OR (€m) 255 358 545

OR margin 1.3% 1.9% 3.1%

Capex (€m) 29 46 53

Key financials 2013 2014 2015

Total revenue (€m) 6,342 4,498 4,241


EBITDA (€m) 257 191 236


OR (€m) 198 138 194

OR margin 3.1% 3.1% 4.6%

Capex (€m) 14 9 25

Netherlands and Belgium

Operational KPIs 2013 2014 2015

Customers (m) 4.7 4.7 4.7

Volume electricity (TWh) 23 20 19

Volume gas (TWh) 84 61 62

B2C share of volume1 50% 53% 54%

Churn rate B2C2 20% 21% 21%

Customer satisfaction3 n/a 74% 78%





B2C share of volume1 24% 20% 20%


Customer satisfaction3 n/a 77 78


KPIs by region (2/2)

1 Increase due to effect of full first-time consolidation of VSE company with 0.5m customers. 2 B2C share of volume based on total gas and electricity volume. 3 Total customer losses in year divided by the average customer number across one year calculated on the basis of the numbers at the end of each quarter. 4 Customer satisfaction index, measuring % of customers being ‘very satisfied’ or ‘satisfied’ with the service provided; data collected by multiple external service providers. Underlying methodologies may differ by country and results are mapped into percentage scale to facilitate comparability. 5 Includes (i) net effects of €60m related to charges concerning erroneous and late invoicing, the build-up of provisions for regulatory charges and reviews and the release of provisions for customer paybacks and (ii) net effects of €59m related to billing issues due to changes in revenue estimation.

East Key financials 2013 2014 2015

Total revenue (€m) 9,396 9,454 9,561


EBITDA (€m) 366 294 (65)

t/o impacts from billing and regulatory issues 8 15 (119)5

EBITDA margin 3.9% 3.1% (0.7)%

OR (€m) 290 227 (137)

OR margin 3.1% 2.4% (1.4)%

Capex (€m) 106 148 189

UK





Volume – B2C share2 64% 53% 50%







Volume – B2C share2 38% 35% 36%



Key financials 2013 2014 2015

Total revenue (€m) 4,007 3,394 3,612


EBITDA (€m) 211 190 2341

t/o book gain from revaluation after first-time full consolidation of VSE – – 42


OR (€m) 188 184 228

OR margin 4.7% 5.4% 6.3%

Capex (€m) 9 9 20

Appendix – Retail


Projects under construction1 Appendix – Renewables

Project Country Technology Installed capacity

(MW)

innogy stake

Pro rata capacity

(MW)

Assumed COD

Support scheme

Batsworthy UK Onshore 18 100%2 182 Q2 2016 n/a2

Kattenberg NL Onshore 10 100% 10 Q2 2016 FiT/FiP/CfD (SDE+, €80/MWh)

Cia Aig UK Hydro 3 100% 3 Q2 2016 FiT/Wholesale3

Goole 2 UK Onshore 35 100% 35 Q1 2017 WS+Certificate (0.9 ROC)

Sommerland 2 GER Onshore 6 100% 6 Q1 2017 FiT/FiP/CfD (EEG €84.5/MWh)

Grudie UK Hydro 2 100% 2 Q1 2017 FiT/Wholesale4

Zuidwester NL Onshore 90 100% 90 Q2 2017 FiT/FiP/CfD (SDE+, €80/MWh)

Nordsee One GER Offshore 332 15% 50 Q4 2017 FiT/FiP/CfD (EEG 2014)5

Galloper UK Offshore 336 25% 84 Q1 2018 WS + Certificate (1.8 ROC)

Total 832 298

Note: WS = Wholesale, FiT = Feed-in tariff, FiP = Feed-in premium, CfD = Contract for Difference. Figures may not add up due to rounding differences. A biogas plant in Bergheim-Paffendorf producing 7.4 MWth (corresponding to 3 MWel) is also under construction with expected completion in Q3-16 and a 100% innogy stake. As a thermal power plant it has not been included in the overall figure for the construction pipeline. 1 Construction pipeline as of year-end 2015. 2 Build to sell. 3 GenSet I (2MW): £125/MWh until 2036, increases annually with RPI (Retail Price Index), plus wholesale power sold in the market , Genset 2 (1MW): wholesale. 4 £100/MWh until 2037, increases annually with RPI , plus wholesale power sold in the market. 5 EEG compression model: €194/MWh; €154/MWh; €39/MWh.


Regulatory regimes and frameworks in innogy core markets

Appendix – Renewables

Germany United Kingdom

Onshore

> Support mechanism: statutory feed-in tariff/feed-in premium system in transition to feed-in premium system based on auctioning

> Remuneration: wholesale price plus premium to reach fixed tariff level. Increased starting tariff (8.90 ct/kWh1) for a period depending on asset energy yield, then base tariff (4.95 ct/kWh1) – both depending on commissioning date (tariff degression)

> Auctions: switch to auctioning from 2017, pay as bid remuneration with correction factor based on energy yield

> Support mechanism: Renewable obligation/green certificate (RO) system in transition to feed-in premium system based on auctioned contracts for difference (CfD). Statutory feed-in tariff for small-scale generation (<5MW)

> Remuneration: RO: wholesale price plus 0.9-1.0 ROC/MWh, CfD: wholesale price plus premium to reach individual ‘strike price’, feed-in tariff incl. export tariff (9.24-13.30 p/kWh, July 2016) for small scale (<5 MW)

> Auctions: from 20172, only CfD auctions for low carbon projects >5MW, but no future auctions currently announced for mature technologies like onshore wind

Offshore

> Support mechanism: statutory feed-in tariff/feed-in premium system in transition to feed-in premium system based on auctioning

> Remuneration: whole sale price plus premium to reach fixed tariff level. Increased starting tariff (15.40 ct/kWh1 / 19.40 ct/kWh1) for a period depending on distance to shore / water depth, then base tariff (3.90 ct/kWh1) – both depending on commissioning date (tariff degression)

> Auctions: switch to auctioning from 2017, interim auction model for installations 2021-2024, then centralised tender model, pay as bid remuneration

> Support mechanism: Renewable obligation/green certificate (RO) system in transition to feed-in premium system based on auctioned contracts for difference (CfD). Feed-in tariff not applicable

> Remuneration: RO: wholesale price plus 1.8 – 2.0 ROC/MWh, CfD: wholesale price plus premium to reach individual ‘strike price’

> Auctions: from 20172 only CfD auctions for for low carbon projects >5 MW

1 For assets commissioned in 2014. Operators can opt for a so called compressed tariff model with higher starting tariff for a shorter period. 2 2018 if the project has secured an RO grace period.




Netherlands Poland

Onshore

> Support mechanism: feed-in premium system based on auctioned contract for difference

> Remuneration: wholesale price plus premium to reach fixed support level1 (max .70-114 €/MWh in spring 20162)

> Auctions: individual support levels are determined per technology in different rounds on a first come, first serve basis as well as on a pay-as-bid basis

> Support mechanism: green certificates system in transition to feed-in premium based on auctioned contract for difference

> Remuneration: Wholesale price plus one certificate per MWh (2015: average certificate price €29.42, substitution fee €71.78), auction: wholesale price plus premium to reach individual bid level

> Auctions: New support scheme based on auctions effective since July 2016, separate auctions for seven defined RES categories and for capacity below 1 MW, wind onshore in residual category 7 ‘other RES sources’

Offshore

> Support mechanism: feed-in premium system based on auctioned contract for difference

> Remuneration: wholesale price plus premium to reach fixed support level determined by auction1

> Auctions: separate budget and process based on a centralised tender model, first auction accomplished in 2016 (max. bid 124 €/MWh, winning bid 72.7 €/MWh)

> Support mechanism: only new feed-in premium based on auctioned contract for difference relevant

> Remuneration: wholesale price plus premium to reach individual bid level

> Auctions: new support scheme based on auctions effective since July 2016, separate auctions for seven defined RES categories and for capacity below 1 MW, wind offshore in category 3 ‘sources guaranteeing CO2 emission below 100 kg/MWh and production above 3504 MWh/MW/a’

1 Premium (SDE- contribution) calculated as the individual ‘base amount’ (auction outcome) minus conventional electricity price (‘correction amount’); however, premium is capped if the wholesale price falls below a defined floor price. The maximum support level per technology (‘cost price’) is determined per technology on an annual basis. 2 The cost price ranges for wind onshore refer to different site qualities (wind speed categories) with own categories for wind installations on dykes and in lakes.




Italy Spain

Onshore

> Support mechanism: combination of feed-in tariffs (FiT) and tender schemes; tax regulation mechanisms for investment in RES-E plants; previous system based on green certificates

> Remuneration: feed-in tariff based on register or determined in bidding process; bids based on a per cent reduction from base tariff1 of 127€/MWh with a floor at -30%; in previous system producers received market price + value of green certificate2

> Auctions: since 2013, individual feed-in determined in auctions for onshore assets >5MW capacity (pay-as-bid); plants <5MW are eligible for direct feed-in tariff though a specific register

> Support mechanism: FiT and FiP until mid 2013. Pool price + fix investment compensation + opex compensation (not for wind and hydro) since mid 2013, aimed to achieve a ‘reasonable return’ based on the 10-year government bond plus a spread3

> Remuneration: sum of pool price and the yearly Investment Compensation (fix amount per MW installed)

> Auctions: auctions used to provide support for new installations; first RES auction conducted in January 2016; no pre-qualification requirements apply4

Offshore

> Support mechanism: combination of feed-in tariffs and tender schemes; tax regulation mechanisms for investment in RES-E plants; previous system based on green certificates

> Remuneration: feed-in tariff determined in bidding process; bids based on a per cent reduction from base tariff1 of 165€/MWh; in previous system distributor received market price + value of green certificate2

> Auctions: Individual feed-in determined in auctions for any offshore plant due to high capacity

> Support mechanism: FiT and FiP until mid 2013. Pool price + fix investment compensation + opex compensation (not for wind and hydro) since mid 2013, aimed to achieve a ‘reasonable return’ based on the 10-year government bond plus a spread3

> Remuneration: sum of pool price and the yearly investment compensation (fix amount per MW installed)

> Auctions: auctions used to provide support for new installations; first RES auction conducted in January 2016; no pre-qualification requirements apply4

1 Value 2013, constantly reduced since then. Base tariff at 110 €/MWh for auction 2016, with the floor set to -40%. 2 innogy assets in Italy started operation under the former green certificate scheme. They will now receive a feed-in tariff equal to the corresponding value of the former certificates for the residual period of the incentive. 3 Incentives are based on a standardised asset maintained by a well-managed company including investment costs, wholesale market income and operational costs during the regulatory lifetime. 4 Conditions may be different for future auctions.


Note: figures may not add up due to rounding differences. 1 As of 31 Dec 2015; excluding Zephyr portfolio.

Operational capacity overview Renewables segment1 Appendix – Renewables

Accounting view ( MW) Onshore Offshore Hydro Biomass Biogas Solar PV Total

Germany 567 295 375 5 1 1 1,244

United Kingdom 304 630 77 - - - 1,011

Spain 447 - 12 - - - 459

Netherlands 197 - - - - - 197

Poland 242 - - - - - 242

Italy 67 - - - - - 67

France - - 44 - - - 44

Portugal - - 16 - - - 16

Belgium - - - - - - 0

Total 1,823 925 525 5 1 1 3,280

Pro-rata view (MW) Onshore Offshore Hydro Biomass Biogas Solar PV Total

Germany 506 295 353 5 1 1 1,160

United Kingdom 239 585 77 - - - 901

Spain 443 - 10 - - 7 459

Netherlands 197 - - - - - 197

Poland 226 - - - - - 226

Italy 34 - - - - - 34

France - - 44 - - - 44

Portugal 3 - 16 - - - 19

Belgium - 87 - - - - 87

Total 1,648 967 500 5 1 8 3,129


Onshore wind – KPIs Appendix – Renewables

Pro-rata view 2013 2014 2015

Capa

city

(MW

)

Germany 461 491 506

United Kingdom 200 239 239

Spain 443 443 443

Netherlands 214 210 197

Poland 181 181 226

Italy 34 34 34

Portugal 3 3 3

Total capacity 1,537 1,601 1,648

Zephyr 33.3% share (UK) 110 110 110

Total incl Zephyr portfolio 1,647 1,712 1,758

Accounting view 2013 2014 2015

Capa

city

(MW

)

Germany 477 539 567


Spain 447 447 447

Netherlands 214 210 197

Poland 197 197 242

Italy 67 67 67

Portugal – – –

Total capacity2 1,667 1,763 1,823


Load

fact

or1

Germany 17% 17% 21% United Kingdom 27% 27% 30% Spain 29% 26% 25% Netherlands 25% 25% 27% Poland 26% 25% 26% Italy 22% 21% 19% Portugal – – – Average load factor 24% 23% 25%

Prod

uctio

n vo

l. (G

Wh)

Germany 726 764 997 United Kingdom 536 669 806 Spain 1,125 1,023 997 Netherlands 462 456 478 Poland 396 429 499 Italy 129 122 111 Portugal – – – Total production volume 3,375 3,463 3,887

Avg.

reve

nue3 (

€/M

Wh)

Germany 95 98 95 United Kingdom 140 124 135 Spain 73 33 48 Netherlands 123 122 110 Poland 87 82 70 Italy 142 142 145 Portugal – – – Total avg. revenue 100 87 91

1 Load factor defined as production volume divided by maximum possible volume based on average of capacities at beginning and end of year. 2 Additionally, in 2013-15 innogy managed a PPA for the onshore assets of the UK Zephyr portfolio with a capacity of 196MW, for which innogy earned a management fee; ultimate counterparty of the PPA is the RWE Group. Management fee for handling of PPA only included on OR/EBITDA level, not on revenue level. 3 Net revenues after deduction of transaction costs.


Offshore wind – KPIs Appendix – Renewables

Pro rata view 2013 2014 2015

Capa

city

(MW

)

Germany – – 295


Belgium 87 87 87

Total capacity 384 553 967

Zephyr 33.3% share (UK) 20 20 20

Total incl Zephyr portfolio 404 573 987


Capa

city

(MW

)

Germany – – 295


Belgium – – –

Total capacity2 342 511 925


Load

fact

or1

Germany – – 48%

United Kingdom 39% 39% 43%

Belgium – – –

Average load factor 39% 39% 44%

Prod

uctio

n vo

l. (G

Wh)

Germany – – 625

United Kingdom 1,170 1,469 2,124

Belgium – – –

Total production volume 1,170 1,469 2,749

Avg.

reve

nue3 (

€/M

Wh)

Germany – – 192


Belgium – – –

Total avg. revenue 163 160 185

1 Load factor defined as production volume divided by maximum possible volume based on average of capacities at beginning and end of year. 2 Additionally, in 2013-15 innogy managed a PPA for the offshore assets of the UK Zephyr portfolio with a capacity of 60MW, for which innogy earned a management fee; ultimate counterparty of the PPA is the RWE Group. Management fee for handling of PPA only included on OR/EBITDA level, not on revenue level. 3 Net revenues after deduction of transaction costs.


Hydro power – KPIs Appendix – Renewables

Pro-rata view 2013 2014 2015

Capa

city

(MW

)

Germany 355 353 353


Spain 10 10 10

France 44 44 44

Portugal 16 16 16

Switzerland 23 23 0



Capa

city

(MW

)

Germany 377 375 375


Spain 12 12 12

France 44 44 44

Portugal 16 16 16

Switzerland 0 0 0



Load

fact

or1

Germany 59% 52% 48%

United Kingdom 21% 27% 31%

Spain 29% 37% 21%

France 30% 34% 32%

Portugal 36% 40% 17%

Average load factor 50% 46% 42%

Prod

uctio

n vo

l.

(GW

h)

Germany 1,958 1,711 1,564


Spain 30 39 22

France 119 133 125

Portugal 51 57 24

Total production volume 2,289 2,117 1,944

Avg.

reve

nue2 (

€/M

Wh)

Germany 53 61 56


Spain 91 65 69

France 43 44 44

Portugal 95 95 91

Total avg. revenue 58 67 65

1 Load factor defined as production volume divided by maximum possible volume based on average of capacities at beginning and end of year. 2 Net revenues after deduction of transaction costs.


Asset Country Installed capacity (MW)

innogy stake Capacity accounting view (MW)

Capacity pro-rata view (MW)

Year commissioned

Support scheme end (year)

Support type

Win

d of

fsho

re

Rhyl Flats UK 90 50% 90 45 2010 2029 WS+certificate (1.5 ROC)

Gwynt y Môr UK 576 50%2 288 288 2015 2033 WS+certificate (2.0 ROC)

Greater Gabbard UK 504 50%2 252 252 2012 2032 WS+certificate (2.0 ROC)

Thornton Bank 1-3 Belgium 325 27% 0 87 2009 - 2013 2029 - 2036 Wholesale+ certificate3

Nordsee Ost Germany 295 100% 295 295 2015 2023 FiT/FiP/CfD (EEG 20144)

Total Wind Offshore 1,791 925 967

Win

d on

shor

e

Westereems Netherlands 156 100% 156 156 2009 2016 FiT/FiP/CfD

Putlitz Germany 62 100% 62 62 2004 2024 FiT/FiP/CfD

Luna + Tetis Spain 50 99% 50 49 2004 2024 WS+fixed premium5

Juno + Hiperion Spain 50 99% 50 49 2004 2024 WS+fixed premium5

Nowy Staw 1 Poland 45 100% 45 45 2014 2028 Wholesale+ Certificate

Aldehuelas Spain 47 95% 47 45 2005 2025 WS+fixed premium5

Suwalki Poland 41 100% 41 41 2009 2024 PPA

Rio Gallego Spain 39 100% 39 39 2003 2023 WS+fixed premium5

Operational capacity overview (1/6)1 Appendix – Renewables

Note: WS = Wholesale, FiT = Feed-in tariff, FiP = Feed-in premium, CfD = Contract for Difference. Figures may not add up due to rounding differences. 1 As of 31 December 2015; excluding Zephyr portfolio. 2 Consolidated with 50%. 3 Minimum price for offshore wind certificates are €107 per MWh for the first 216 MW of generating capacity, and €90 per MWh for capacity exceeding 216 MW. 4 EEG compression model: €194/MWh; €154/MWh; €39/MWh. 5 Fixed investment compensation.





Capacity pro- rata view (MW)

Year commissioned


Support type

Win

d on

shor

e (c

ont’d

)

Novar 2 UK 37 100% 37 37 2013 2032 Wholesale+ certificate

Little Cheyne Court UK 60 59% 60 35 2010 2027 Wholesale+ certificate

Tychowo Poland 35 100% 35 35 2011 2025 Wholesale+ certificate

Goole Fields 1 UK 33 100% 33 33 2014 2034 Wholesale+ certificate

Bartelsdorf Germany 32 100% 32 32 2009 2029 FiT/FIP/CfD

Taciewo Poland 30 100% 30 30 2012 2026 Wholesale+ certificate

Urano Spain 30 99% 30 30 2004 2024 WS+fixed premium2

Nowy Staw 1 Poland 28 100% 28 28 2015 2030 Wholesale+ certificate

Middlemoor UK 54 51% 54 28 2013 2033 Wholesale+ certificate

Los Labrados Spain 24 100% 24 24 2002 no limitation Wholesale

Plana de la Balsa Spain 24 100% 24 24 2002 no limitation Wholesale

Plana de Zaragoza Spain 24 100% 24 24 2002 no limitation Wholesale

Plana Maria Spain 24 100% 24 24 2002 no limitation Wholesale

Lanternoso Spain 24 100% 24 24 2005 2025 WS+fixed premium2

Bosque Alto Spain 22 100% 22 22 2002 no limitation Wholesale

Note: WS = Wholesale, FiT = Feed-in tariff, FiP = Feed-in premium, CfD = Contract for Difference. Figures may not add up due to rounding differences. 1 As of 31 December 2015; excluding Zephyr portfolio. 2 Fixed investment compensation.





Capacity pro-rata view (MW)

Year commissioned


Support type

Win

d on

shor

e (c

ont’d

)

Malterhausen Germany 22 100% 22 22 2002 2022 FiT/FIP/CfD

Bancal Spain 21 100% 21 21 2007 2027 WS+fixed premium2

Bradwell UK 21 100% 21 21 2014 2033 Wholesale+ certificate

Bedburg-Königshovener Höhe A1 Germany 38 51% 38 19 2015 2034 FiT /FIP/CfD

Siglos Spain 18 100% 18 18 2007 2027 WS+fixed premium2

Acampo Armijo Spain 18 100% 18 18 2002 no limitation Wholesale

Opalenica Poland 17 100% 17 17 2015 2030 Wholesale+ certificate

Piecki Poland 32 51% 32 16 2011 2025 Wholesale+ certificate

EE de Muel Spain 16 100% 16 16 1998 no limitation Wholesale

Schmarloh Germany 16 100% 16 16 2008 2028 FiT/FIP/CfD

Knabs Ridge UK 16 100% 16 16 2008 2027 Wholesale+ Certificate

Bedburg-Königshovener Höhe A2 Germany 29 51% 29 15 2015 2035 FiT/FIP/CfD

Lesse A Germany 14 100% 14 14 2003 2023 FiT/FIP/CfD

Krzęcin Poland 14 100% 14 14 2013 2027 Wholesale+ certificate

Kiln Pit Hill UK 14 100% 14 14 2013 2032 Wholesale+ certificate

Note: WS = Wholesale, FiT = Feed-in tariff, FiP = Feed-in premium, CfD = Contract for Difference. Figures may not add up due to rounding differences. 1 As of 31 December 2015; excluding Zephyr portfolio. 2 Fixed investment compensation.






Year commissioned


Support type

Win

d on

shor

e (c

ont’d

)

Grisel Spain 14 100% 14 14 2001 2021 WS+fixed Premium2

Düshorner Heide Germany 26 51% 26 13 2014 2034 FiT/FIP/CfD

Ururi Italy 26 51% 26 13 2011 2026 FiT/FIP/CfD3

San Basilio Italy 25 51% 25 13 2010 2025 FiT/FIP/CfD3

Westereems Netherlands 12 100% 12 12 2012 2027 FiT/FIP/CfD

Barbecke Germany 11 100% 11 11 2002 2022 FiT/FIP/CfD

Lasbek Germany 11 100% 11 11 2004 2024 FiT/FIP/CfD

Titz-Nord Germany 21 51% 21 11 2015 2022 FiT/FIP/CfD

Lesse B Germany 10 100% 10 10 2010 2030 FiT/FIP/CfD

Aggregated sites GER <10MW4 Germany 281 Site specific 275 271 Site specific Site specific Site specific5

Aggregated sites UK <10MW4 UK 71 Site specific 71 57 Site specific Site specific Site specific5

Aggregated sites NL <10MW4 Netherlands 29 Site specific 29 29 Site specific Site specific Site specific5

Aggregated sites IT <10MW4 Italy 16 Site specific 16 8 Site specific Site specific Site specific5

Aggregated sites ES <10MW4 Spain 3 Site specific 3 3 Site specific Site specific Site specific5

Aggregated sites PT <10MW4 Portugal 8 Site specific 0 3 Site specific Site specific Site specific5

Total wind onshore 1,838 1,823 1,648

Note: WS = Wholesale, FiT = Feed-in tariff, FiP = Feed-in premium, CfD = Contract for Difference. Figures may not add up due to rounding differences. 1 As of 31 December 2015; excluding Zephyr portfolio. 2 Fixed investment compensation. 3 Formerly wholesale + certificate. 4 Based on pro rata capacity. 5 Support type Wholesale + Certificate or FiT/FIP/CfD or Wholesale + fixed premium depending on asset.



Note: WS = Wholesale, FiT = Feed-in tariff, FiP = Feed-in premium, CfD = Contract for Difference. Figures may not add up due to rounding differences. 1 As of 31 December 2015; excluding Zephyr portfolio. 2 Guarantee of Origin. 3 78% of the output is marketed by innogy; 46% fall under German EEG (FiT)




Year commissioned


Support type

Hyd

ro

RADAG Germany 77 78% 77 60 1933 no limitation Wholesale+ GoO2

Detzem Germany 24 100% 24 24 1962 no limitation Wholesale+ GoO2

Lehmen Germany 20 100% 20 20 1962 no limitation Wholesale+ GoO2

Wintrich Germany 20 100% 20 20 1965 no limitation Wholesale+ GoO2

Trier Germany 19 100% 19 19 1961 no limitation Wholesale+ GoO2

RADAG WKW Germany 24 78% 24 18 2009 2030 Wholesale; feed-in3

Enkirch Germany 18 100% 18 18 1966 no limitation Wholesale+ GoO2

Dolgarrog HH UK 17 100% 17 17 1907 2027 Wholesale+ certificate

Fankel Germany 16 100% 16 16 1963 no limitation Wholesale+ GoO2

Müden Germany 16 100% 16 16 1965 no limitation Wholesale+ GoO2

Neef Germany 16 100% 16 16 1966 no limitation Wholesale+ GoO2

Heimbach Germany 16 100% 16 16 1905 no limitation Wholesale+ GoO2

Koblenz Germany 16 100% 16 16 1951 no limitation Wholesale+ GoO2

Dolgarrog LH UK 15 100% 15 15 1907 2027 Wholesale+ certificate

Schwammenauel Germany 14 100% 14 14 1938 no limitation Wholesale+ GoO2



Note: WS = Wholesale, FiT = Feed-in tariff, FiP = Feed-in premium, CfD = Contract for Difference. Figures may not add up due to rounding differences. 1 As of 31 December 2015; excluding Zephyr portfolio. 2 Guarantee of Origin. 3 Based on pro rata capacities. 4 Support type Wholesale + Certificate or FiT/FIP/CfD or Wholesale + fixed premium depending on asset.



Capacity pro rata view (MW)

Year commissioned


Support type

Hyd

ro

Zeltingen Germany 14 100% 14 14 1964 no limitation Wholesale+ GoO2

Serrig Germany 12 100% 12 12 1985 no limitation Wholesale+ GoO2

Aggregated sites GER <10MW3 Germany 53 100% 53 53 Site specific Site specific Site specific4

Aggregated sites UK <10MW3 UK 45 100% 45 45 Site specific Site specific Site specific4

Aggregated sites ES <10MW3 Spain 12 Site specific 12 10 Site specific Site specific Site specific4

Aggregated sites FR <10MW3 France 44 Site specific 44 44 Site specific Site specific Site specific4

Aggregated sites PT <10MW3 Portugal 24 Site specific 16 16 Site specific Site specific Site specific4

Hydro 533 525 500

Biom

ass

and

biog

as

Biomass site Germany 5 100% 5 5 2009 2029 FiT/FiP/CfD

Biogas site Germany 1 100% 1 1 2007 2029 FiT/FiP/CfD

Biomass and biogas 6 6 6

Sola

r and

PV Andasol 3 Spain 50 12.8% 0 6 2012 2036 WS+Fixed and

Ops premium

Aggregated sites <1MW GER/ES 2 Site specific 1 1 Site specific Site specific FiT/FiP/CfD

Solar and PV 52 1 8

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