RWE : publishes pro-forma figures for 2016

RWE achieves earnings goals for 2016 with substantial burdens on net income and provides dividend outlook

• Earnings curtailed significantly through impairments of €4.3 Billion
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• About €6.8 billion including risk premium transferred to nuclear energy fund as of 1 July 2017
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• Operating result at the upper end of the forecast range
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• Net debt reduced considerably
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• Dividend proposal for 2016: Executive Board proposes suspension of payment for common shares and €0.13 cents dividend per preferred share
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• Dividend of €0.50 envisaged for 2017; payment to be floor for subsequent years

Dr. Rolf Martin Schmitz, CEO of RWE AG: 'The difficult market environment made impairments necessary. In addition, the nuclear energy fund imposed a substantial one-off burden on us. Due to these effects, the Executive Board proposes a suspension of the dividend for common shares for 2016 and a dividend of 13 euro cents per preferred share. Nevertheless, we look to the future with optimism. Our operating performance and innogy's successful IPO make us financially robust and enable us to continue to reduce debt. This makes us confident and gives our shareholders a clear outlook for the dividend for 2017 and subsequent years.'

Changed expectations regarding the future development of wholesale electricity prices force RWE to recognise impairments of €4.3 billion, which reduce the company's non-operating result. About €3.7 billion of this sum is largely attributable to the German power plant portfolio with further impairments of assets in the United Kingdom, the Netherlands and Turkey.
An additional extraordinary burden on earnings results from the German law on the reorganisation of the responsibility for nuclear waste disposal in Germany that was passed at the end of 2016. According to the new legislation, companies must pay their provisions for interim and final radioactive waste storage plus a 35 percent risk premium into a state fund.
RWE will pay the total of about €6.8 billion for which the company is responsible as soon as 1 July 2017, in order to indemnify itself from largely politically induced disposal risks and avoid a high, disadvantageous interest burden. The risk premium of about €1.8 billion included in the payment will be considered in the 2016 consolidated financial statements through an increase in nuclear energy provisions. The increased provisions and impairment losses as well as -€0.8 billion in additional effects from the fair valuation of derivatives lead to a net income of -€5.7 billion for 2016.

Operating earnings goals achieved
At the same time, RWE reached its operating targets for 2016 despite the persistently difficult framework conditions in the energy sector. Based on pro-forma figures from the consolidated financial statements, which have not yet been audited, the company posted an adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation) of €5.4 billion, an adjusted EBIT of €3.1 billion and adjusted net income of €0.8 billion. Although earnings deteriorated compared to 2015 as expected, the figures are clearly at the upper end of the ranges that were forecast by the company in March 2016. The accelerated implementation of efficiency-improving measures in conventional electricity generation played a key role, above all to offset the negative performance of the trading business. The figures of the fully consolidated RWE subsidiary innogy SE are included in the pro-forma figures.

Restructuring of the RWE Group with innogy IPO pays off
The restructuring of the RWE Group has paid off. In particular the successful IPO of innogy and the additional sale of shares enable the company to pay the substantial sum into the nuclear energy fund immediately. RWE also recorded a positive development in terms of net debt, which was reduced by €2.8 billion year on year to €22.7 billion.

Dividend proposal for 2016
The Executive Board of RWE AG will propose to the Annual General Meeting a suspension of the dividend for owners of common shares for fiscal 2016. The dividend proposed for holders of preferred shares is €0.13 per share, which corresponds to the preferred share of profits stipulated by the Articles of Incorporation. This is primarily due to the aforementioned financial burdens, which result from the contribution to the nuclear energy fund.
Markus Krebber, CFO of RWE AG explains: 'The new regulations governing nuclear waste disposal are sensible, but require a great financial effort from RWE. Although the decision did not come easily to us, against the backdrop of the forward-looking orientation of our business, we do not see any room for paying a dividend on common shares for fiscal 2016. However, through the successful reorganisation and enormous cost savings, we have set the stage for returning to paying a dividend reliably in the next and subsequent years.'

Dividend outlook for 2017 and subsequent fiscal years
The Executive Board will discuss the dividend outlook based on the expectations for 2017 with the Supervisory Board. To give shareholders a prospect for the future dividend trend, the Executive Board envisages paying a dividend of €0.50 per common and preferred share for 2017. Based on the current price of RWE common stock of €13.50 (closing quotation on 21 February 2017) this corresponds to a dividend yield of 3.7 percent. The Executive Board aims to at least maintain the level of the dividend for 2017 in subsequent years. In this context, RWE is orienting itself towards operating cash flows that are freely available on a sustainable level.

RWE will present the audited consolidated financial statements for fiscal year 2016 at a press conference on 14 March 2017.

Forward-looking statements
This press release contains forward-looking statements. These statements reflect the current views, expectations and assumptions of the management and are based on information currently available to the management. Forward-looking statements do not guarantee the occurrence of future results and developments and are subject to known and unknown risks and uncertainties. Actual future results and developments may deviate materially from the expectations and assumptions expressed in this document due to various factors. These factors primarily include changes in the general economic and competitive environment. Furthermore, developments on financial markets and changes in currency exchange rates as well as changes in national and international laws, in particular in respect of fiscal regulation, and other factors influence the company's future results and developments. Neither the company nor any of its affiliates undertakes to update the statements contained in this press release.