Stephan Lowis - VP, IR Bernhard Günther - CFO

Vincent Gilles - Credit Suisse Lueder Schumacher - Societe Generale Alberto Gandolfi - Goldman Sachs Michel Debs - Citi Ahmed Farman - Jefferies Deepa Venkateswaran - Bernstein Mark Lewis - Barclays Tanja Markloff - Commerzbank

Welcome to the RWE H1 Conference Call. Bernhard Günther, CFO of RWE AG will inform you about the developments in the first half of fiscal 2016. I will now hand over to Stephan Lowis.

Yes, good morning to everyone on the phone and to those who are joining us via webcast. I’m joined here by Bernhard Günther, who will now lead you through the H1 number. And with that, Bernhard please. Bernhard Günther: Thank you Stephan and good morning from me as well. Against the difficult market environment in which we are operating, the figures for H1 2016 still show a good start of fiscal 2016. EBITDA and operating results show a moderate decline, and adjusted net income is at plus 10%, still significantly above H1 2015. One reason is the turnaround in the UK supply business, where we are reaping the first benefits of our restructuring program. I will come to the details of the operational performance, our debt and cash flow situation and our outlook for fiscal 2016 in a minute. Let me first emphasize that we are well on track with our preparations for the planned IPO of Innogy. The new company began operation on the first of April and executive management as well as operational management is in place. Depending on the market conditions, we are optimistic that we will be ready for the IPO at the end of the year. Such a move in less than 12 months after the announcement is a huge challenge, and we are proud of what we have achieved so far. One of the reasons for the difficult environment I mentioned is the political uncertainty around financing the nuclear exit. In this respect, the nuclear commission which was formed by the German government presented its recommendations at the end of April. What is decisive now is the manner in which the legislator implements the proposals. It is expected that the German government initiate the necessary legal changes after the summer break, closely aligned with the proposals of the Commission. On a positive note, we were able to come to an agreement with Gazprom on our long-term gas procurement contract. At the end of May, we agreed upon amendment of the conditions for the contract. As a result, there is no price risk from this contract in the coming years. Against the backdrop of the difficult economic and political market environment, both rating agencies Moody’s and Standard & Poor's have lowered their long-term rating for senior bonds by one notch to BAA3 and BBB minus respectively. The outlook was changed to stable from negative with Moody’s and stayed negative with S&P. We want to maintain the investment grade category through our strict investment discipline, efficiency measures, a sustainable dividend policy and the reorganization of the group. But let me remind you, our highest priority is to have access to debt capital markets at any time, even in times of a financial crisis. Now on slide number four to the development of key performance indicators in the first half of 2016. Let me start by showing the development of the operating result by division. We have a mixed picture in the different divisions. Conventional Power Generation particular shows a different picture compared to our full year outlook. We have an increase of €100 million in H1 2016, which is partly driven by positive one-offs from the sale of real estate in the UK. We still expect earnings to come down significantly for the full year. One reason is that higher maintenance cost would especially hit the second half of the year. And other is that the positive effect from the lower nuclear fuel tax has already had nearly its full impact in H1. In contrast, Trading/Gas Midstream showed a very weak development in the second quarter. Once again, this shows the natural volatility of the business. While Q4, 2015 and Q1 2016 had in total significant positive earnings, they have a similar negative amount in Q2 2016. On average, we still expect to be able to achieve an underlying annual earnings contribution of approximately €200 million to €250 million. This year will be of course significantly below this level. Slide five shows the earnings development from EBITDA down to adjusted net income. The major value drivers are mentioned on the slide. Much lower tax on income is a one-off benefit in 2016 from the reorganization of the Group is more than compensating the worsened financial result. Hence adjusted net income is moderately above the previous year. For the year as a whole, we confirm our guidance of €0.5 billion to €0.7 billion for adjusted net income. This is a significant decline compared to the €1.1 billion achieved in 2015, more on this in a minute. Slide six shows the development of our cash flows from operating activities. It comes down by €1.7 billion to minus €1 billion. The strong decline is mainly a result of higher variation margins. This is mainly a timing effect as with the realization of the underlying contracts, the cash flow situation will reverse again, although, the majority will not reverse in the rest of this fiscal year, but thereafter. Furthermore, we have a negative effect from the phasing out of working capital optimization measures. In the last three years, we had implemented a bundle of measures to optimize our working capital. As current conditions have become too unfavorable, we have decided not to renew some of them, hence working capital is increasing again to a level before those optimization measures. On slide seven, you can see the details of the development of our net debt. It increased by €2.8 billion to €28.3 billion, mainly for two reasons. First, the negative cash balance including the negative cash flows from operating activities. Second, lower interest and discount rates and corresponding higher pension provisions increased net debt by €2.1 billion. Discount rates for pension provisions and Germany have come down to 1.5% from 2.4% at the end of last year. The corresponding figures for our UK pension provisions are 2.7% and 3.6% respectively. For the year as a whole, we still expect a moderate increase in our net debt compared to the end of the last year. Let me conclude my remarks with the outlook for 2016. First on slide eight for the key earning figures of the Group, we confirm the earnings guidance from our Q1 2016 publication in May. Still the current performance is relative strong compared to a full year outlook. But this will not sustain for the rest of the year. There were positive one-off effects in the second half of last year such as the VSE revaluation and the profit from the sale of a stake in the Galloper project. Moreover H1 2016 had positive one-offs as the relative earnings impact is higher on the Group’s H1 operating result rather than on the higher full year figure. These are the sale of real estate in conventional power generation and the sale of grid assets, and the division Grids/Participations/Other. In addition we expect higher costs for example due to more maintenance activities for our power plants and for maintaining operating grid infrastructure, which will impact our earnings mainly in the rest of fiscal 2016. On slide nine, you will find our divisional outlook. Since our last outlook update in May we are now adjusting the outlook for two divisions. First, for Trading/Gas Midstream down to significantly below 2015 from significantly above. We don't expect to fully offset the weak trading performance of Q2 in the rest of the year. Second for supply we are revising our outlook up to in the order of 2015 from moderately below. As the performance of the first half year has already shown, our recovery in the UK is well on track. This is the main reason for the revised outlook. Before we now come to your questions let me conclude my remarks with a brief overview of Innogy’s earnings outlook that was published at the beginning of August. Although for fiscal year 2015 the figures for Innogy’s divisions are not in all cases exactly the same as the respective figures for the divisions of RWE, the differences due to valuation or classification differences are negligible. As is usual in the preparation of an IPO the focus is more on EBITDA than on operating result. Hence, Innogy’s has given an outlook for this KPI different to our proceeding for RWE. The details can be found on slide number 10. With this let me hand over to Stephan to start the Q&A session.

Thank you, Bernard and you all know the rule two-questions only. With this I would like to handover to the operator.

The first question comes from Vincent Gilles Credit Suisse.

Yes, good morning everyone. First question is slide six please. You went very briefly through these two big issues higher variation margins and phasing out of working capital measures, if you could give us more explanation please of what these items precisely are particularly when you talk with the phasing out working capital measures it's important to understand the second quarter that we these big swings, that's point number one. Point number two is the size if you can quantify the size of the one-off on real estate disposal in the UK in conventional regeneration would help us understand by how much the rest of the business has outperform? Thank you very much. Bernhard Günther: Hi, Vincent. On cash flow your questions around variation margin and the phasing out of working capital optimization measures. First variation margins I mean this is basically the effect of positions which we have in the wholesale market which are offset by activities either on retail or on generation which do not cash wise fall into the same time bucket. So this is obviously a result of the strong price movements we've seen in the first half of this year. But this is as said in my speech something which is going to be economically caught up later when the basically underlying business realizes. So no reason for concern in terms of economic value there. It's on the working capital optimization measures there is a variety of optimization measures that we have launched over the last two to three years some of them are market price driven, for example interest rates driven as thus armed like for example optimizations are very simple example here. If you try to shorten your days sales outstanding on your accounts receivable this is something where to a certain degree you might be willing to pass on some of the interest benefit to your customers in order to make them pay earlier. In the current interest rate environment there is not much to pass on anymore to those customers and therefore the economic rationale of such working capital optimization measures has become weaker and because we adhere to a strict value conservation philosophy there as well, we don't pay customers for advantages we don't have ourselves. The other working capital optimization measures like what we did in previous years on carbon certificates where we moved the actual payment date for those certificates, which are independent of interest rate developments and therefore some of these working capital optimizations also continue into the future. The one-off from generation on real estate sales is a medium double-digit million euro number.

Okay, Vincent.

Slightly more precise maybe. Bernhard Günther: Yeah medium is very medium it's fairly medium .

I love this company. Thank you very much. Bernhard Günther: Okay, then the next one please.

Thank you. The next question is from Lueder Schumacher, Soc Gen.

Hi, good morning. First question again on the operating cash flow, which is of course a bit all over the place with the variation margin of working capital et cetera. Could you give us any idea what we should be looking for, for the full year on the operating cash flow? That's the first question. The second one is on the nuclear talks various statements on Bloomberg I guess from your press conference, which describes the talks as constructive and that is looking quite good that a deal might be reached. Could you give us an update there? Bernhard Günther: Yeah on operating cash flow we would expect that it improves throughout the second half of the year. One reason is that the variation margin effect that we mentioned as I said will at least partly reverse this is one driver. On the nuc and you know we don't give more precise guidance on full year cash flows and don't change this now. On the nuclear talks, yes we are indeed engaged in constructive discussions with Berlin and it's - it doesn't look unlikely that ultimately some solution can be found which is acceptable to all parties. But we all know it ant over until it's over. So we still need to see what the legislators actually make out of it.

So didn't get an answer on the first one maybe can I ask another question, on the trading. Bernhard Günther: That was as good as it get also. Go ahead.

Who do you look in for number there or at least range. On trading I mean you say the vision is of course volatile yes we can expect some losses, but for just look back over the last three four years the loss you show in Q2 is quite spectacular especially as previous losses were mainly related to the renegotiation of what to your gas contracts. What exactly went on there and why should we not expect this - something like this to happen again? Bernhard Günther: Yeah so it's a maybe just one final remark on cash flow, I mean, if you look at cash flow and whatever you assume how much of the higher variation margins will reverse in the second half, the rest will reverse later. So at the longer term - for the longer term cash position of the group this number this movement you see here is economically irrelevant. Yeah so I think for most modeling purposes this should give you a bit food for thought I hope Lueder. On the trading side yeah there are a few additional remarks I can offer you there. First of all what happened in trading is this is not a kind of incident it's not a rock trader it's not some right that gone wrong. Nothing like what we saw for example at your employer with, I think [indiscernible], a few years ago or at UBS couple of quarters later back in the end of the last decade. So it was I mean, I think we have been very successful or others might say lucky that we haven’t seen a loss in our prop trading business on a quarterly basis as far as I can remember since 2006, when we had the carbon price collapse in spring. If you look at some other players, who reveal their prop trading results regularly, you will spot that there is a different pattern with some of these esteemed colleagues of ours. So another aspect to bear in mind is that, we had a few positive one-offs in Q1, ‘16 in trading like the sale of the line with power station, which is trading but not prop trading, but principal investment business, which and we had some negative one-offs of similar size in Q2, which as abates or adulate the profit swing between the two quarters. Overall, the development in the trading business was on positions that were fully known not only to our trading management, but also to us in the AG Board, it’s ultimately a bet on the development of certain commodity price relations, which went wrong you know that we had very strong movements of commodity prices in the first half of this year, also in the second quarter of this year. And it was always in the risk limits, and always in the risk management procedures of RWE. So nothing of a systemic failure.

Okay, Lueder?

Yes, thank you. Bernhard Günther: Thank you. Next question please?

The next question is from Alberto Gandolfi, Goldman Sachs.

Yes. Good morning. Hi, it’s Alberto Gandolfi, Goldman Sachs. Two questions complying with the rule. The first one is on pensions, did I get you right that Bernhard, so you said the right use was 2.7% and perhaps could you share with us other assumptions regarding for instance inflation or if you can give us a sensitivity to raise and maybe talk a little bit about the rules going forward. Just trying to ascertain here future write-offs of the pension items? The second question is - apologize again, on slide number six, it seems like we are dissecting it under any singly angle we have. But assuming the higher variation margins goes away. What would be a normalized level of working capital we should adopting going forward annualized for the business? Because even with the variation margin gone away, the fact with or some normalization in the working capital there wouldn’t be much cash flow really left, consider that you still need to pay for CapEx and potentially at some stage in the future dividend. So can you try to really square the circle on this formula for me please? Thank you. Bernhard Günther: Yes. First on pensions. The 2.7% is the discount rate for UK pensions. It’s 1.5% for the German pensions, which are the bigger part of the pot in pensions. The sensitivity is roughly €1.6 billion in pensions for a 0.5% decrease in the discount rate. You can find it page 131 in our annual report on an increase in the discount rate of 0.5% i.e. 50 basis points, the decrease in pension provisions is roughly €1.3 billion. So of course as symmetrical as corporate finance theory would suggest. On working capital or a normalized working capital, I think overall our basic assumptions which we also use internally for our own planning is that going into the future, we assume in the long run a plus minus nil change in working capital, which is the number that affects the cash flow statement. The balance sheet position on working capital, you find it in our balance sheet and obviously now it has moved EBITDA. So on a like-for-like basis you would not expect the working capital optimization measures that we have seen with their effect on cash flow in this quarter to be reversed unless for example the interest rate environment changes.

Thank you. Just to be clear you were talking about nominal rate on pensions, right? Not real one? Bernhard Günther: Nominal, yeah. And on inflation for pension there are implicit inflation assumptions on the wage inflation, which we do not publish it’s assumptions about wage inflation going forward, which you also consider under IFRS when you account for the provisions.

But it would be reasonable to assume that the inflation you are assuming are also higher than the current prevailing inflation rate in the countries we were talking about. So if rates go down inflation will also go down, that's what I'm trying to understand. Bernhard Günther: There is of course a certain macroeconomic logic behind your argument. Yes, at least as a simple economist I would struggle to see an the environment where there is high inflation and negative interest rates over a very long time at least I'm not sure if that’s the world I want to live. But that's a different discussion probably.

All clear, thank you.

Okay. Then the next question please.

Thank you. The next question is from Michel Debs, Citi.

Good morning. I have two questions please. The first one is about your strategy around credit rating. So you have reiterated that you have the ambition to retain an investment grade credit rating. My question is the following, is that a line you would not cross or is it realistic that if maintaining a credit rating at investment grade is too costly or too complicated, you let it slide provided that the depth market that we are in is extremely relax in accommodating. My second question is also related to debt. If I understand you correctly you are telling us that net debt will go back down over H2. Is that decrease in net debt going to be driven by the reversal in operating cash flow or by the proceeds from the innogy IPO and if it's a combination could you give us a sense of which of the two items is the main driver? Thank you very much. Bernhard Günther: Hi, Michel. On our credit ratings, yes we have the ambition to maintain investment grade, but as we always said the ultimate goal is to have access to debt capital markets even in difficult times. So it's very clear that the investment grade rating is not an end in itself and it's nothing we would defend or adhere to at all cost. And so ultimately it would be a financial or trade off we would make, exactly depending on those considerations which you mentioned i.e. for example how relaxed or tight are debt capital markets. Net debt, yes you are right, we forecast a decline towards the end of the year compared to our levels as of end of June and this is driven by operating cash flow. It does not include any assumption about IPO proceeds or from the innogy transaction.

Thank you very much.

Okay. Then the next question please.

Thank you. The next question is from Ahmed Farman, Jefferies.

Hi, everyone. So two questions from my side. First on the adjusted net income, you've reported a number today which is in line with your full year guidance. So I'm just sort of wondering whether it is that you are expecting an exceptionally weak H2 relative to last year even when we adjust for exceptional items or is there some sort of caution here in the guidance. And I think the second is just on the timing of the IPO, I think there was a comment earlier in the press conference that the timing itself would depend on the prevailing market conditions. I was just wondering if there was any specific conditions or circumstances that you see, which could impact or delay the timing of the IPO? Thank you. Bernhard Günther: Hi, Ahmed. On the adjusted net income, I think it’s important to bear in mind that compared to last year there were significant positive one-offs in the second half of last year like the VSE revaluation and the Galloper sale, which distort the comparison between last year and this year if you dissect the year into its two halves. And also as I said before, we expect higher costs for maintaining our power plants, we also mentioned - and also on our grid infrastructure and this is on the power plant it's simply driven by the revision cycles yeah these are not spread out evenly a lot across the year. But there is a higher revision activity scheduled for the second half of this year than it was in the second half of last year. And the operating and maintaining of our grid infrastructure you know that we are in the base year of the regulation - the run up for the next regulatory period in electricity in Germany. And typically the spending OpEx profile you see in the grid business is skewed towards the second quarter, because this is much building activity, which is always just for reasons of whether more difficult in the first quarter and therefore in the second half, which is warmer you have more of this activity. On the timing of the IPO, we just - I think we just stated or reiterated the obvious. And there is no neutrality whatever, which we want to add there we just said as far as we can judge now we will be ready by Q4 and we hope that the markets will be ready as well.

Okay, thank you very much.

Okay. Then next question please?

The next question is from Deepa Venkateswaran, Bernstein.

Thank you. So I have two questions, the first one is about your liquidity position and how that ties in into any settlement that you might make with the German government. You're sitting on around $12 billion of liquidity given your aspiration for innogy it seems like you don't really need to substantially transfer any liquid assets to them. So that would leave AG with sort of $12 billion. So what I wanted to understand is that why paying the $6.7 million now as oppose to asking for a staggered basis is so important. Surely the working capital need for trading and generation is not that high. And the second question I had is time and again there are discussions coming up in the papers about the German government looking at the lignite phase out maybe the next government. So just wanted to understand if there would be an early lignite phase out say by 2040 or 2050. Does that have any implication on your mining reserves or any kind of cash outflows on the lignite business, which makes you kind of cautious about your cash situation now. Thank you. Bernhard Günther: Yeah, hi Deepa. On the liquidity position and it's relation to the potential cost of the externalization of the nuclear provision. I think you're right to observe that we are not in a distressed seller position. We as RWE for the remaining shareholding of RWE in innogy. And so the second sub question on this I think what around paying now versus paying later to some degree this was also be driven by financial or commercial considerations. Yeah we - it's still too early and we don't comment on it to judge what the payment terms that the government will ultimately legislate will look like if and what interest would be charged for delayed payments. And this is then a trade-off which we will then make once we have this information available. But it's too early to speculate now, but I think it's maybe just important to know that we are not in a short-term in a distressed seller position from a pure liquidity point of view. On the lignite phase out there has been one of the - as you can see in our H1 report one of the progresses we have seen on lignite recently was that we agreed with the state government of North Rhine-Westphalia, which is responsible for our lignite mines and their licenses on to one third master plan for the overall mining operations. As already expected since a while ago there is a slight curtailment of one of the three mines at the very end of its technical and economic lifetime in the 2040s. This was already - I think already known at least as an idea on behalf of the politicians for more than a year. It does not have any short-term impact neither on our cash nor on our earnings position. So this is the stuff, which will happen or not happen in the 2040s very far out.

Okay. Deepa. I guess yes. So next question please.

Thank you. The next question is from Mark Lewis, Barclays.

Good morning everybody. Thank you. Two questions which I guess a follow up on two of the previous questions lines of inquiry. The first one is coming back to the credit rating with the increasing net debt that you have seen in the first half of the year and obviously we understand that the larger proportion of that increase is driven by the non-cash item, the increase in the pension liabilities. But nonetheless it's there on the balance sheet. Is that something that you have discussed with the rating agencies, is that something that they are alive to and sensitive two and is there a risk now with this increase in net debt notwithstanding the fact that you've said you expect it to decline over the second half of the year somewhat? Is there not heighten risk now that maybe a rating action on the back of this? That's the first question. And the second one is following up on the last question of the previous pick with regard to the lignite operations. I mean you've reached this agreement with the government of North Rhine-Westphalia. But the German government is - we are all waiting for the publication of their climate action plan at some point in the autumn. We are aware from press report that that has been voted down somewhat. But nonetheless the government has a target in place for a very significant reduction in emission already by 2030 never mind 2040 and 2050, 55% by 2030, notwithstanding agreement you’ve stuck with North Rhine-Westphalia is it not incompatible with the broader federal government’s plan to reduce emissions by 55% for lignite to remain in operation at least at the level we are currently seeing by 2030 never mind 2040 and 2050. Thanks. Those are the two questions. Bernhard Günther: Okay. So first one credit rating, first we won't comment in detail on the interactions we have with the rating agencies and generally if you want to get an impression of the pinpoints from the rating agency’s point of view on what might trigger for example further rating actions on behalf of S&P and their negative outlook, I would refer you to their statement they published back then when they came out in the second quarter of this year. And as far as I remember pensions so non-cash items non-financial debt items like pension movements due to just interest rate movements. We are on their list. It was more about power prices if they would decline even further or especially on the nuclear funding discussions that we had.

So could I clarify then was that something you would already discuss with them when they took their last public action were you already aware there was a risk that you would have to increase the level of your pension liabilities when you last discussed this with them?

I think Mark they all - like you know how the pension let's say increase functions as interest rate go down pension liabilities will increase. I think that's not surprisingly for them for us. So therefore I would say that's not a hot topic.

Okay. Bernhard Günther: This issue is normally not on the top 10 list when we have discussions with rating agencies. It's a bit like the weather it comes and it goes and with the focus of rating agencies as far as I judge it especially on the next coming years and the bond holders interest there pension issue with a duration of 12 or 15 years is a different kind of animal. On lignite you are right with your question. But I can hopefully assure you that there is nothing wrong with our announcements so far. So if we were to continue our lignite operations in the same dimensional or magnitude as it is today into the 2030s this would indeed be incompatible with the federal plans for greenhouse gas reduction. But I think we already mentioned before that there is a - what I call a kind of soft landing plan for lignite anyway stretched out over several decades, and this for example means that we will take one of our three lignite mines in the lignite mine out of operation around 2030 anyway. So this brings significant reduction of carbon emissions and there will also be without giving you further detail of course over the course of the next one or two decades further decommissioning of old lignite fire power plants with lower efficiencies. And this all contributes. So our lignite plants including what was now - which was North Rhine-Westphalia on the third master plan are fully compatible with the federal emission reduction targets.

Okay thank you that's very clear.

Okay thanks and the next question please?

Thank you. The next question is from [indiscernible], Barclays.

Yes, hi there. I have two questions please on hybrid. Can you confirm that hybrids with stay at the RWAG level? And as well if you could give your thinking in terms of the equity treatment from the rating agencies? And second of all the hybrids are callable next year if you were to refinance them, can you give us some thinking in terms of the capital that you would finance that be hybrids or senior debt? Thank you. Bernhard Günther: Yeah so Hybrid that's one of our all-time favorites. So I can't confirm that they will stay at RWAG, with regard to the equity treatment of the hybrid we have no indication that the rating agencies are intent on changing it. On refinancing, this is an issue where we have been traditionally very tied lipped. We will see or we across the bridge when we get there. Now it's too early to make any announcements or predictions on it.

Thank you.

Thank you. Then the next question please?

Thank you the next question is from Alex Hogan, PGM [ph].

Hi there. So you've previously indicated that you'd expect to sale off further stakes in innogy post the IPO. I was just wondering over what time table will you would expect these sales take place and what size? Bernhard Günther: Yeah there are - hello, there are no details we are giving what we have said is that there might be in conjunction with the IPO as a primary. There might be a secondary offering out of existing RWE shares in innogy. We have not quantified this in any means and there are no plans on any further placements and neither timing wise nor size wise.

Okay, thank you.

Thank you. Then the next question please?

Thank you the last question is from Tanja Markloff, Commerzbank.

Yeah good afternoon. I would be interested in your procurement strategy and the supply business and whether you expect some margin pressure medium term related to the increase in wholesale prices? And the second question would be on the decommissioning provisions, whether you see the need for revaluation of those after the waste treatments provisions will be externalized? Bernhard Günther: Yes hello. First on the procurement for supply. I think on a like-for-like basis all other things being equal. Retailers traditionally benefit from a situation of falling prices at least if retail prices come down slower than wholesale prices. On the other hand we’ve seen that in very competitive markets like the UK it also gives a cheap entry option for a new entrance, which probably eat away a significant part of this benefit. On the other side as we - when we see now increasing wholesale prices as we see in the UK. There is a certain risk that on a like-for-like basis retail margins would come under pressure depending on the behavior of competitors and their sourcing strategy. On the decommissioning provisions so those provisions for decommissioning and dismantling, which will mostly likely remain on our balance sheet. Yes there is a risk that towards the end of the year once the provisions for interim and finance storage have been taken out. We would need to apply different discount rate to those provisions because the duration of those provisions is shorter than the storage provisions, and we move into the liquid tenure of the corporate bonds with that. On the other hand you should - I would refer to one of the earlier questions there is always a kind of at least for discount rates and the corresponding cost escalation rate, which you also apply to your provision estimates. There is a macroeconomic cause link. So if you assume a low interest rate environment for discounting you would certainly also adopt your cost escalation rates. Currently the real interest rates that we imply to our provisions between cost escalation of 3.6% and discount rate of 4.5% is 0.9% as you see and you can see that yes of course 4.5% discount rate might seem high today, but I think the cost inflation rate of 3.6% would also seem high today. So if we are going to adapt to what we're going to be that both factors.

Thank you.

Okay, alright that was the last question. So operator is there anyone queuing up again?

There are no further questions.

Okay then thanks to all of you to dial in and hope to speak and see you later on the year. Thank you, bye-bye. Bernhard Günther: Bye.