Welcome to the RWE Conference Call. Rolf Martin Schmitz, CEO of RWE AG; and Markus Krebber, CFO of RWE AG will inform you about the developments in fiscal year 2020. I will now hand over to Thomas Denny.

Good afternoon, everyone, and thank you for joining us today to discuss RWE's results for fiscal 2020 and to what lies ahead of us for the current year. We hope you all had a good start to 2021 and let's keep our fingers crossed that this year is from a pandemic point of view much better than 2020.

Yes. Thank you, Thomas, and a warm welcome to everyone. It's a little bit of a special day for me. It's the last time I'm doing the full year call with you before I step down from the Board. So you can imagine it's a real pleasure to speak to you today. And I'm really pleased that I can hand over a great company and all we have achieved into the safe hands of Markus and the new entire board. With that, let's have a look to 2020. And 2020 was another very good year for RWE. We continued our transformation into a leading renewable player, took important operation with strategic -- and strategical steps and exceeded the earnings expectation for the year. After completion of the transaction with E.ON, the business is now fully integrated and operating in the target structure since summer last year. We have set the course for additional growth in our renewables business. As such, we completed the acquisition of the 2.7-gigawatt Nordex development pipeline and we successfully raised €2 billion in new equity back in August last year. For 2020, we have exceeded the Group's guided KPIs. Adjusted EBITDA of the core business amounted to €2.7 billion. Adjusted EBITDA for RWE group amounted to €3.2 billion and adjusted net income went beyond €1.2 billion. With this, we confirm our dividend target of €0.85 per share for fiscal year 2020 and we'll propose this to the AGM in April. Net debt declined significantly to €4.4 billion. And with the leverage factor was -- and that the leverage factor was 1.7 times net debt to core adjusted EBITDA, well below our target of 3 times. As evidenced by these numbers, we experienced only relatively minor issues related to the pandemic last year, such as negative one-off in the financial results stemming from Q1 and delays in the commissioning of new onshore and solar assets primarily in the U.S. There's a farm-down announcement in December. We also demonstrated very good results from our asset rotation program. The farm-down of the Humber U.K. offshore wind farm as well as the farm-downs of the four onshore wind farms in our Texas portfolio created value from the development and construction of assets. When it comes to total investments, we can now report that 84% of our CapEx is eligible as green investments under the proposed EU taxonomy.

Yes. Thank you, Rolf and hello to everyone also from my side. I hope you are all well. So let's continue with an update on our development activities. You can see on page 6, the development pipeline has increased significantly since our last update back in March 2020. Our development pipeline has grown to around 34 gigawatts. The 34 gigawatt excludes all central tenders and lease auctions. With regard to offshore, we have a reasonable amount of development projects coming online by the end of this decade. And of course, we are pleased that with the latest addition of three gigawatts as a result of the UK Round 4 CfD Auction. In Onshore Wind/Solar our origination efforts and the acquisition of the Nordex pipeline paid off. Given the continued attractiveness of the ITC regime, we have significantly extended our solar pipeline in the US. But we also continued to see the US as an attractive market for onshore wind. Now moving on to the progress of our construction program. Ladies and gentlemen, installed capacity stood at 9.4 gigawatts at year end, another three gigawatts are currently under construction and we are well on track to reach our target of at least 13 gigawatt by the end of 2022. In Q4, we have taken final investment decisions for some 100 megawatts of onshore projects mainly in France and Poland stemming from the Nordex pipeline. From our transaction with E.ON we will integrate the acquired 20% stake in the UK Rampion offshore wind farm. This will add another 18 megawatts to our capacity. The transaction is expected to close in the next couple of years. If we also take into consideration the farm-outs at the four onshore wind farms in Texas, which we have already announced capacity will be reduced by 0.6 gigawatts on a net basis from asset rotation during the course of this year. Let's now take a closer look at the offshore business on page 8. 2021 is an important year for offshore wind and we have started well by already reaching a couple of important milestones, on construction slightly ahead of schedule driving non-stop generating power. The wind farm is expected to be fully commissioned at the beginning of next year. Our German Kaskasi project in preconstruction is well on track. Offshore construction work will start later this year. For our 1.4 gigawatt Sofia project located from Dogger Bank, we will take FID during the course of H1.

Thank you Markus for all the kind words to all of us here in the room. Operator, please start the Q&A session. Thank you. Molly, over to you.

Thank you. The first question today comes from the line of Alberto Gandolfi calling from Goldman Sachs. Please go ahead. Your line is unmated.

Thank you, operator, and thanks management for taking my questions. And Rolf, thank you so much. I wish you all the best on your future endeavors. And thanks a lot for making this, yes, hard work but very exciting in the past few years. And the best wishes to Markus and Michael. So, okay, now to the questions, two. The first one is actually quite rare, but about power prices. We haven't talked about power prices in RWE for a while. And I guess my question is, can you maybe remind us what power prices have you been using in your 2022 guidance? I know you're hedging on the legacy. I wonder on some of the renewable assets as well that may no longer be on subsidies. And, am I right in thinking that, when you were guiding to the €350 million €400 million, negative impact beyond 2022 to 2024, 2025, maybe can you give us an update of that roll-off of subsidies. I suppose that with power prices going higher that impact is getting smaller. So, was just trying to reconcile a little bit if that earnings cliff post 2022 is getting smaller. The second question is on the UK leasing auction, seabed auction. Now, I mean, I wanted to ask you if you can give us maybe your mindset, why did you bid this, I think it was £82 per kilowatt? What makes you comfortable that this is going to be a pass-through costs? When do you think is going to be the first capacity CfD auction you can be participating into? Is it 2025 later? And how are you thinking about the gain theory, because now there's a negative incentive right? So, you keep paying that until FID. So if you Total BP or whoever else is going to win the Scottish seabed, if you miss out on a capacity auction, you automatically have two more years of a negative liability to pay for. So, what do you think this is going to do to the returns? I know there's like eight questions in one. But perhaps if you can tell us how you're thinking about the seabed, how you think about returns, why did you pay what you paid? Anything you can -- any color you can give us would be fantastic. Thank you.

So, Alberto, thank you very much. It was a very creative way to package. I don't know how many questions into two. You have two themes in those two questions. The first one on power prices, I mean, it's not that we have set power prices at a certain level. So, we continuously update the forecast of 2022 and also beyond based on the open position and the current forward curves. So, we can fully confirm 2022 guidance. There are lots of moving effect. I mean the minor one to be honest is power prices. Actually FX is for us, when you look at our US dollar and British pound exposure maybe even more relevant. And especially on the US dollar part, we have seen a negative development by around 10% from when we have given guidance originally for 2022 and today. I mean the earnings cliff is a bit smaller for the compression model. But I mean look where power prices are coming from in the hundreds, whether you move from in the 100 to 40 or 45, that doesn't actually make a huge difference. So, the number is still around the same which we have communicated 2020, so a year ago. Now on the UK lease auction, I think that's a very interesting topic overall. So we look at it from two angles. One is of course, and that's the most relevant one is an absolute level. Do we see that with this lease payment, we have a very high confidence that we can deliver valuable projects in the second half of the 2020s? And here the clear answer is yes. How are we exactly going to do that? I mean which year and so on? That is also part of the assessment, and of course, sensitive information, because there are potentially also different routes to market. And it depends on when we bid our extension projects, when others might bid and so on. So, the question is what is our – well, it's a scenario analysis, because you're absolutely right. When you take a linear view and say, let’s develop as fast as possible bid into the next CfD auction that of course means that what you have paid until then is some costs. It's irrelevant for decision-making. But when you take a decision how much you are willing to pay as a lease auction today, you need to factor it in. So the question is how competitive are the markets? I think two things are important. And here it comes to the relative part of the answer. One is, do you have high conviction that the renewable build-out targets are valid for the UK, because the next lease auction is due only in five years. So you are actually securing something, which is very scarce. And the other thing is, how do you – how do you actually act relatively to your peers? And there when you look at our auction results, I mean, first of all, the sites the adjacent sites feeling good in our portfolio, and we are paying the lowest average lease auction. We also feel very comfortable. Is it significantly more competitive than previously? Yes. But I think, we also need to make the point that – and the expectation that you can earn excess returns significantly above your cost of capital for decades to come is totally unreasonable. I mean, competition is the basis of a market-based economy. So we need to get used to competition also in our business here.

Thank you, Markus. Thank you.

Next question, please.

Thank you. The next question comes from the line of Lueder Schumacher calling from Societe Generale. Please go ahead. Your line is un-muted.

Good afternoon. Everybody knows from my side all the best for the future, Rolf. It certainly is an interesting time. First question is – this is really a question and a request and it's on things that aren't in your presentation anymore. You no longer show the outright hedges, or the implicit fuel hedge, or the variation margin. Is there any chance you could restore the old level of disclosure? And adding to this bearing in mind, your net debt improved significantly in Q4, how much of this is due to the variation margin given that carbon prices rose 22% also in Q4? And how much is due to operational improvements? And the second question is on your renewable growth capacity. You say, on slide 9 that, just in onshore wind NPV you expect growth of two gigawatts in 2021. Where do you now see your annual execution capacity? In March last year, if memory serves right it was 1.5. Of course, we have the capital increase. You had the Nordex pipeline. How much renewable capacity, can you now put in the ground per annum on average?

Yeah, Lueder. Thanks for the questions. I mean, on outright power prices and the implicit fuel action, we have decided to not disclose that information in the future because we think it is not relevant to assess the profitability of the business. We will guide you also, I mean, with an outlook not only of one and two years, where we see then the lignite business profitability. I mean, the significant part was of course the nuclear part is a big open position. Lignite was already given that we have to the CO2 hedges in place a much smaller position. But in future, you have two elements. You have the hedged margin and the margin is already hedged for years to come and the efficiency program, because we need to reduce costs significantly. So, by just looking at the margin, you need a lot of information on the cost side as well to guide. And we will make it easy for you, so we will guide straight the net amount. And we said, we are comfortable with the guidance of zero to €200 million EBITDA for the years to come from 2023. So we definitely talk about more than three years into the future of the zero to €200 million. And there is more information than you would actually get in guidance performance for that segment with more disclosure on the hedge prices for the next two to three years. On variation margin, yes, there was a significant effect in Q4. I mean, you know, that a significant part of our position is gas and CO2 driven, and especially CO2, but also to a minor extent the gas position gained significantly in value. Your request to disclose more I propose that you pick them up with my successor. And because he needs to deliver on that for the years to come, and not myself, so I shouldn't make any promises at this point in time. On the renewable growth, I'm a bit reluctant to give you the answer now. But of course, you are addressing a very significant topic. What is possible in terms of absolute growth? We are definitely more bullish than we have been 2020 a year ago, when we presented the first plan. But let me also tell you what has recently changed in the mindset of management. When we first said, maybe financing is not the limiting factor, but it is delivering capability. And we are a bit cautious when we first guided because we still have the integration of the renewables team and the full review of the pipeline and so on in front of us. I think financing also after the capital raise is definitely not the problem. Also, our pipeline looks very rich. But steering today, we would probably focus more on what is our net invested capital, and what is the return of that capital. Because I think also, now and we all realize that competition is of course increasing. I think by steering gross additions maybe that looks sexy on the surface. But I mean, I don't want to put the teams under too much pressure to deliver every individual project from the pipeline. So the ratio between gross pipeline and what you commit to deliver is important. If that is an overstretch you risk that you need to do every project which is possible. And on the other hand, if you have big gross targets everybody and especially you will ask us immediately what is the disposal and what is the asset rotation. And if you throw out big promises on disposal gains, you are also under pressure to sell. And probably the best projects first when there is more competition. And I think that's the wrong steering. So we will clearly focus on what capital do we net employ, if we do gross a bit more and do a bit asset rotation that the icing of the cake. But I mean throwing out the gross figures is not the right thing to do in this environment.

Very clear. Thank you. A – Thomas Denny: Thank you, everyone. Next question, please?

Your next question comes from the line of Sam Arie calling from UBS. Please go ahead.

Thank you very much. Good afternoon, everybody. And yes, let me add my congratulations, Mr. Schmitz. It's been a pleasure being part of the coverage during your tenure and you've done a massive amount. And I think we've all enjoyed watching that. I wanted to just use my questions to ask one kind of detailed point and then one kind of handover-related question for Markus. The detailed one is on the total accounting change that you mentioned very briefly in the presentation, which is at the back of the appendix today. Could you spend a minute just to explain how that works? Because it does look like it gives you a bit of a benefit on the bottom line. And then also I suppose whether that rolls forward in future years. And I suppose how it relates to guidance. Because I guess the guidance stays the same, but now the accounting benefit gives you a little bit of a boost towards that. So it would be helpful if you could talk us through that in a bit more detail. And then Markus my kind of bigger-picture question for you as you take over. You made some comments about how you see things now in the sort of CEO view. But my experience is every CEO has got their three big things they want to do and there are three big problems that they worry about. And I just would love to hear what's on your -- what are on your list of three right now? Thank you.

So Sam, thanks for the question. I mean in the beginning, I have thought one question is for Rolf, one is for me. Since the accounting one is not for Rolf, I have to answer that one. So I have to delay the answer to the second question maybe to the Capital Markets Day. And I think it's not the right point to discuss it here now. On the accounting side, yes, I mean, you always learn. So we also learned to be quite frank. And what we realize is our tax income was slightly better than expected. And that was because part of the tax incentives not all, but I mean according to the old tax treatment we inherited from the businesses we took over a part of the tax advantage was in the tax line item. And then we looked into it and we also looked into how our peers presented in their adjusted figures. And we found that it's better to reflect it fully in the EBITDA because it will also be used to pay down tax equity debt. When you look at it in the long run, it doesn't make a difference to adjusted net income because you either take these advantages directly strengthen the EBITDA line as we do it in the future or you need to put them -- you need to reflect them in the calculated average tax rate. So I mean, you can now discuss whether it gives us an upside of a couple of €10 million for our original guidance in 2022 because we didn't know about the effect, but I think the right -- the guidance range is still €200 million. So don't name me now whether we are more optimistic to be at the mid -- above the midpoint in 2022. Now or not as I said, FX is actually potentially the major driver for where we come out if everything operational runs as expected. And the other question, I'm happy to answer when I have the full reflection of the -- with my Board and the operating management teams at the CMD later this year.

Okay. Thank you. We look forward to that. A – Thomas Denny: Thank you, Sam. Next question, please?

The next question comes from the line of Peter Bisztyga calling from Bank of America. Please go ahead.

Yes. Good afternoon. It's Peter Bisztyga here. And I'd also like to wish Rolf for the very best for the future. Two questions from me please. Firstly, on Texas you sort of mentioned the €400 million exposure could change. I was wondering if you could elaborate a little bit on that. I think the Senate this week approved a bill to correct 32 hours of emergency prices. That seems to me like that should benefit you potentially. So I was wondering if you could comment on that and also do you face any potential future claims or liabilities that could actually increase the €400 million figure? So that's my first question. Then the second one is regarding your coal exit contracts with the government, which actually have clauses that stipulate that you could spin-off or transfer your coal business with the permission from either federal or regional government. So I was just wondering whether you've had any further thoughts about the prospects of an earlier exit from your lignite activities?

Yes Peter on Texas. There are a couple of things ongoing. I mean, you already mentioned the political discussions to partly roll back the US$9,000 per megawatt hour. And clearly if that happens that would benefit us. That is now a minor detail, but there are also discussions to roll back partly the price for ancillary services, which were set at $25,000. If that would be rolled back that would partly harm us, but to a lesser extent than the first benefit. The second big topic is mutualization, because we can expect a lot of -- if nothing changes, if nothing is rolled back further bankruptcies. But we think that effect on us will be very, very minor given the overall size of our business compared to the conventional colleagues, and of course, claims going in both direction. We also have legal proceedings ongoing. If I look at everything, I would say, the definitely biggest effect will come from rolling back the $9,000. All others on legal proceeding, but also mutualization what I expect there is definitely smaller and maybe not relevant for our guided earnings here, but the potential rollback would be positive for us. But it's too -- I mean, it's unprecedented. So we don't know how the proceedings will go on, who will take the decision now. And of course if something will be changed that's not to the benefit of everybody they will claim again. So, I think, it's too early to tell and I expect actually maybe a year-long proceeding on these issues. So nothing, which will be resolved over the next couple of weeks, that's why we have also decided to put in it already into our guidance. On the other topic, the potential spin-off or divestiture of our non-core business. There is nothing new to report. I mean, our focus is now on the efficiency program on the -- to support the state aid approval where the German government is in and also to implement the closures and the efficiency program.

Okay. Thanks very much.

Thank you. Next question.

The next question comes from the line of Ahmed Farman calling from Jefferies. Please go ahead.

Yes. Good afternoon everyone. And best wishes from my side to Rolf as well. Two questions from my side. Firstly, just on net debt where you had a sort of a big beat versus consensus. And I obviously see your sort of the leverage target, but there is quite a big gap between where FY 2020 net debt was and what sort of probably the upper end of your sort of leverage target implies. So I was hoping if you could give us a bit more granularity there around the sort of the big moving parts. And given current commodity prices what part of the variation margins might be worse or there might be some further inflow. So that would be helpful. And my second question is actually on slide 6, where you show a significant pipeline. And I appreciate sort of your point earlier that you may not want to sort of talk too much about at this stage about the specific growth targets. But maybe, I mean, I'm just trying to better understand what does that sort of gigawatt of pipeline tells us about the potential ability to sort of per annum -- drive per annum additions in gigawatt terms? And what are the parameters around that? So how has your thinking changed around probability of success on the pipeline and CapEx inflation since your Capital Market Day? Thank you.

Yes, Ahmed. Thanks for the question. Let me start with the latter. So our probability of project success has not changed on the pipeline to be very clear on that. More the steering that we will focus more on where do we want to spend our own money and keep the project. If we can do things on top, but we can either build and sell, build and farm now, but we can also of course sell developed projects. I think the clear positive is that the pipeline has developed quite substantially into the right direction not only by Nordex and the 3 gigawatt of the UK Round 4, but especially -- and I think I have been explicit about that that I would like to see more solar especially the solar pipeline has gained significant depth. So we are actually very happy with the development here and success profitability has not changed so the gross potential to deliver gross has significantly increased. But we are reluctant to give you gross build-out targets, because we think it's not the right steering metrics. But let us give -- we need to take some more time to tell you how we think we're going to present the future long-term strategy of the business for the years to come and we do that then later this year. But I mean for me, it's clearly a very, very positive development. Of course, it comes at a bit more development expenditures. But of course, this pipeline is highly valued. And as I have said before, the higher competition has two effects. One is at your existing business and your development pipeline gains in value. And that pipeline is now significantly broader and deeper. And the second one is of course, in some central tenders and auctions; you see more competition than before. On the debt side, yes, I think net debt clearly developed positive. But given power price and CO2 price development also this year, we currently do not expect that it significantly reverse in the year 2021. I mean you know our group EBITDA target. Operating cash flow will be around the same because we expect a negative -- a positive working capital effect which will offset the utilization of provisions. But what we have is a significant investment program also on the gross side. I mean currently, we have the two big offshore wind farms under construction and we will start also significantly spending on Sofia, which we still have not farmed out. We keep 100%. So, we expect a significant ramp-up in gross investments this year significant more than in 2020. And then we have, of course, still a positive effect which is the compensation from the government on the nuclear exit. So, even with the lower EBIT -- significant lower EBITDA from the taxes given we are very optimistic to stay below -- maybe significantly below the three times net debt to EBITDA.

Does that answer your question, Ahmed?

Yes.

Thank you. Next question please.

The next question comes from the line of Vincent Ayral calling from JPMorgan. Please go ahead.

Hi yes. Good afternoon everyone. So, a number of questions have been asked here. I will come back on the thematic looks in there since the beginning of the year. A number of client asking questions regarding return on capital employed. I heard you talking about exactly it's problematic. We had a number of questions for example Ørsted not really understanding the UK Offshore Wind leasing. So, I would like to come back on this question and understanding exactly what was referred to by Alberto. As the game to a year ago you put the finger. So, how does that work? I'm not sure I really understood the answer on this specific point. And as we have a CMD talking about return on capital employed, it will become a metric and something on which we'll have a target and be able to monitor going forward. So, that's on the -- I would say returns the size of returns. And the second is on Texas. You've been talking about €400 million. Yes, there is 400 megawatts which was exposed. Still this number since I would say fairly conservative. Could you confirm or give us a bit of color on how this is calculated? When I do the numbers, it would mean you have been short 400 megawatt hours -- per megawatt for quite a long time. The cold snap did not last that long. So, that's where I'm not totally clear. Thank you very much.

So, I'm not sure whether I got the first question. Can you maybe specify the question on UK Round 4?

Yes, UK Round 4. Once you basically bid and you got your leasing. I think it's Alberto. We're not going talk about it. You said the games area had something similar. Once you spend this money, this can force you to be below acceptable returns. There is significant costs which are taking by the year basically. So, that's really an element which is not clear to us. So, how can you be sure you're going to be there on the first round and develop the project on time at acceptable returns? How can you be sure that the UK electricity area will indeed handle all these extra costs and you'll be basically getting your proper return on this reserve -- on this project?

I'm not sure whether this is question or just what we discussed before. I'll give it a try. I mean you need to have scenario analysis of future outcomes of CfD auctions or general power prices. And of coursem you know that a lot of projects will bid into CfD auctions which are not as competitive as your new technology, I mean extension projects and others. If the UK reduces the offshore build-out targets and do less CfD auctions, of course, you're going to see higher merchant power prices and can become a merchant case. But actually what we are discussing here now the concept of water under the bridge is to a smaller extent well, I mean it's the same for every development spend you have for every individual project and also the lease payments you have to pay for the US projects. Or if you do acquisitions and buy a pipeline, it's actually the moment you go into a CfD auction or into the PPA. It's the same. I mean conceptually I don't see why UK Round 4 has changed anything. It's the same debate on any M&A. It's the same debate on any US lease. It's the same debate on every development expenditure. And when you look at it at least for what we're going to pay, compared to the investment amount, it is not I mean significantly more than you also pay for other projects. So maybe, as I said before, maybe there is now coming back more reasonable assumptions of what you can earn, but we are very confident. And some of you have done the calculation what are potentially expected returns and they are fully in line with our own thinking and fully in line with our IRR expectations and hurdle rates. Of course, you can always come up with scenarios, where the lease auction payment is not justifiable. I mean, new technology, lower power demand. I mean lower offshore build-out target and reverting the energy transition and going back to gas and cheaper gas price. I mean lots of scenarios and -- but this is exactly the uncertainty which you have and where you need to build your potential future outcome. And as I said, there are some very relevant and experienced market players around which are even significantly more aggressive than we have been. On Texas, it's a simple calculation. I mean, the shortfall was for around five days. And if you calculate a gap of 400-megawatt for five days times $9,000 you were even above €400 million.

Does it answer your question, Vincent?

Yes. On the point number one, yes people -- some people paid more like BP, quite a high level. But it's difficult for me, I would say here in front of a number of people in the market to really get the scenario clear in our head in order to get the return on that or share there's always quite a leading name cannot find a scenario. And they told us they did not understand either. So here I don't get it. And then so -- which helps me understand. I'm sorry about that. For the Texas, yes I've done these numbers that our thought we may not have a 400 meg short every day for the five days. But that's fine. That's fine. I understood on the second one. Thank you. Thank you very much.

Okay. Thank you.

Thank you, Vincent. Next question please.

The next question comes from the line of Elchin Mammadov calling from Bloomberg Intelligence. Please go ahead.

Hi, there. I have two questions please. The first one is again a follow-up on Alberto's question. Is it possible for some reason if you lose the next CfD auction for the seabed that you just won, can you build it and have it running as a merchant until the next day of the auction where you can bid them and secure the CfD payments, or once the construction started building you're not allowed to bid at the CfD auction? So this is a bit of a more clarification question. And the second one is on DevEx. I mean, your presentation mentioned an increase in development expenses. Can you maybe talk a bit more about it an increase compared to 2020, or is it more a long-term increase in DevEx? So that will be useful. Thank you.

Yeah. Elchin, thanks for the question. I mean on the second one DevEx that is higher compared to 2020 slightly higher than 2020. We are talking about a low double-digit million amount for offshore and for onshore PVs or both. And that is due to the -- I mean as we have said with the capital raise, we're going to increase our CapEx targets with more financial headroom. And of course, we also need some more upfront development expenditures to go to a higher running level of renewal build-out. That was the second one. And the first one on the CfD auction, I mean, the easy answer is I mean, it will depend on what is the CfD auction design in a couple of years' time when we bid. I mean under the current CfD auction, if it stays unchanged, my understanding is, you cannot start building the project and then bidding an existing or under construction projects into a CfD. You need -- can take -- of course you can take a decision to go into a CfD auction. If you are not successful you build merchant. But the moment you have building and are under construction, you cannot build it once more into the CfD. But it remains to be seen how things will change.

Thank you.

Thank you, Elchin. Next question please.

Your next question comes from the line of Rob Pulleyn calling from Morgan Stanley. Please go ahead.

Hi. Thank you, and good afternoon everyone. Let me join by saying thank you again to Rolf and congratulations. And of course, we wish you all the best for the future, and likewise Markus in his new role. And now to the questions. So firstly, just -- do you believe the shifting or potentially shifting political landscape in Germany could change the coal phaseout plan for the country? And what would this mean for RWE's position and the auction value you have around the coal exit law? And I suppose a related question, if I may sneak a half question in is, to what extent does the anti-coal announcement by companies such as AXA feature in RWE's sort of discussion and perception around continued coal exposure? And the second one, I hate to return to the UK seabed. There's many other things going on. But could I just ask specifically, whether the IRR range you gave last year for mature offshore markets of 5.5% to 8.5% unlevered is still valid for the UK seabed project? And if I can stretch that to you – you talked about the costs with Sofia. Would you be willing sort of directionally to give us an idea of how much cheaper this could come than Sofia? Thank you very much, guys.

Yes, Rob. I mean, the easy one is yes, we can confirm the range of 5.5% to 8.5%. I mean to speculate now, what our assumption is how cheap are we're going to build at the end of the 2020 and first of year, where we have already signed the turbine supply agreement. I think that's not good and also sensitive information what we think, where prices will go. Because when you look at the bidding processes, of course you have – can have lots of assumptions. But the three relevant ones are your own cost of capital and potential financing capacity in years to come because you take a decision for an FID in a couple of years' time. The other one is power price expectation. And the third one is costs, LCOE of the technology. So I mean, I'm not willing to comment on all three, since we have more upcoming auctions. On the political side, I mean it's quite easy. Politicians can wish whatever they want. But I mean, we need to physically balance the system every day. And given where we are, I think the agreement we have with the government on the coal exit is clearly, one which goes hand in hand with the current renewable build-out plan. And we all know that Germany struggles to build out renewables as planned. So I think, regardless who is in the next government, they will all know, it's not the question that you can easily decide on earlier co closure dates. The relevant question is how do we accelerate renewable build-out and then the coal phaseout, be it by market prices by administration or by merit order will be I mean a consequence of that. So it needs to be turned around. First, renewable build-out then what happens on the coal side. And to be clear, I mean, I'm not commenting on the individual business relationships. But what I don't accept is that some market participants just think one thing and say I mean I don't want you to – I don't know mine more than x million tons of coal, if that is totally inconsistent with everything else because that means you need to administer who is allowed to use how much power in Germany. And I mean that cannot be accepted not by us as a company. But I can tell you, if this is a trend, we're going to have not only a political debate but also a debate about who is a trusted partner not only for us but the entire business community.

Maybe just to add, you have seen it now for the hard coal auction which we have that some of the hard coal power bands which want to go out and have got their auction premium, they can't go out because they are needed for the stability of the system and therefore, there's not too much overcapacity in the market. And if you are not now coming into a capacity market with new government to build new capacity gas-fired for example into the market, that it will be much more difficult coming up for the coming years to take out coal-fired power plants because they are needed. They have not to produce a lot of kilowatt hours, but they are needed in the market. Therefore, we will see what's coming up with the discussion. But what Markus said, I can only confirm the build-out of renewables. That's what is still the coal phaseout nothing else.

That’s super interesting and thank you for the comments on offshore IRRs. I had to try. I’ll now hand it over. Thank you.

Thank you, Rob. Next question, please.

The next question comes from the line of Deepa Venkateswaran calling from Bernstein. Please go ahead.

Thank you. So congratulation – sorry my best wishes to both of you for your new roles. So my two questions. So the first one is on the Onshore Wind outlook. I mean, obviously, you've made this accounting change to realign with peers. But I suspect you have downgraded the 2022 earnings to the lower end. So can you help us understand if there's anything else going on other than the US dollar depreciation, which Markus, I think you highlighted have fallen 10%. I think that has around a €50 million impact. So is it really just FX, or is there anything else? I mean are you now targeting slightly lower additions or lower returns or anything? So that's my first question. And the second one I apologize for this, sitting here in the UK and this being the number one question from all clients, UK seabed. I suppose my hypothesis is that, obviously these – your site will probably compete with the BP site and other newer sites because the existing sites will probably get over in the next few CfD auctions. So in the end, all of you are bound to include your seabed leases in the auction process, you would obviously have an advantage over a BP. Could you kind of confirm whether that is the line of thinking you have? I mean obviously, technology costs and all of these things are going to be common for everyone. So if there is a larger turbine, obviously everyone will factor that in. So is that the kind of mean scenario that is embedding your auction building strategy? Thank you.

Yes, Deepa, we still have years to go. So I mean, focus is currently on development to speed up development and get the project ready. What is behind our different scenarios? And there I can tell you, we have different scenarios for route to market, time-wise but also conceptually. But I mean, I'm not going there because, we still have years to go. And then yes, let's see how it evolves. And I think we're going to see very interesting developments around UK offshore. And then, I can also tell you that we are very confident that we have very little projects. But also, we never had expectations that we can sell projects with ongoing significant disposal gains for the years to come because that means and I think the government has realized that they have given some very well project for very little money. I mean in the oil and gas business, it was common for years that you have to pay royalties. Maybe the seabed leases are something, which are comparable to that one. In onshore NPV, yes, you are right. It's FX. It's also slightly higher development expenditures. But please understand, that I mean when we gave the guidance for the two segments a year ago, I mean we had a rough understanding where we potentially farm-down and where we keep and -- the upper guidance for offshore and the lower guidance for onshore is maybe now a specification since we also know, how our program looks like because we have actually sold down more on the US project that we have anticipated years ago. But we also now have more offshore capacity with Rampion being available for us faster than expected. So I mean please read that. Also, that we fully confirm the renewables guidance. And the split in the business is now specification since we are now smarter since the year has passed where we actually see the portfolio developing. And I would not read too much into that. So, we are very happy with the development of both segments. And yes, we see an FX effect, but I'm also when I look at the screen maybe see that going in the right direction for us on the pound and dollar side again and it partly reversed.

Deepa, maybe and more generally, if you look to all the targets which are given in Europe and in other countries to become climate neutral, every project which is developed will come into the business that might really be a clear opinion because they need more and more. And if you think about H2, then they need more and more and more green electricity. And therefore, in the moment to speak up to a pipeline is the best thing you can do because, I'm really confirmed that all these projects will come into the business because otherwise, they would have no chance to fulfill the expectations and targets which they have given themselves. It's more general. It's not so complete. It's not -- we cannot put in the numbers directly. But looking to the market and which amount of green electricity is needed in the next 10 years, it's really so much. Everyone can invest.

Excellent. Thank you.

Thank you, Deepa. Next question please?

The next question comes from the line of Piotr Dzieciolowski calling from Citi. Please go ahead.

Hi. Good afternoon everybody. Two questions from my side please. So firstly, I wanted to ask you about the €800 million nuclear compensation. Can you please tell us, what is the justification of it? Why did you agree on €800 million? Because I understand that was a mutual agreement. And what's the process that is needed? And when do you expect to get the money on your account? And when the payment will come through? And second question, I'd like to ask on the renewable pipeline build-out. So you currently have a 34 gigawatt versus 22 last year. We can easily locate the Nordex pipeline, plus the U.K. But what is the six gigawatt extra? Can you please tell us, which assets you kind of added into the pipeline? And are they better or worse than the rest of the pipeline, or you are the same positive about these prospects?

Yes. Your first -- on the first question, the nuclear compensation. So it dates back years, where when the government took the decision for the fast exit of nuclear and orders the operators to close or close some of the units immediately and also reduced the remaining production volumes. There was I mean legal proceeding is ongoing. And I think, we finally, as an industry won the first court case, I think in 2017. And based on that the German government then came out with a compensation law which then was disputed by Bundestag. And the constitutional court ruled that the compensation is not sufficient. So they need to find a solution again. The German government then decided to close the file and also close the file on the arbitration proceeding of Bundestag in Washington, because as a foreign investor, they could also claim under the foreign investment act. And this was simply then negotiation.

But the reason was coming from 2001, there was consensus in nuclear where you get the right to produce a special amount of electricity in your nuclear power plant. Then they gave more life to this in 2009 or '10 then they stopped it again in 2011 after Fukushima. And now it was not possible to produce all this electricity in the power plants which have the right to produce. And now they pay for these rights which we have to produce electricity and that's the reason why we get this money €880 million. There are only €20 million of frustrated investments in this €860 million coming up from this amount of electricity which was given to us to produce and we are not able to produce because of the lifetime shortages.

And the process is we are currently as an industry in negotiations with the government about the detailed contract that will be signed within weeks. Then it will be part of the parliamentary process. And it needs EU approval potentially not state approval, but generally EU approval but it's a compensation payment. So it should be easier. The expectation is that, we get the money around end of this year latest early next year. Your second question on the pipeline, I mean look the pipeline is a living animal so to say. I mean from the old pipeline of 22 gigawatts we have taken 2 gigawatts of FID since then so that brings it down to 20. And you have 3 gigawatt of the UK lease around 4. You have the 3, 2.7 from Nordex. So there is a gap of 8 and that has been developed because as you take FID, you constantly do development activity. And if you split that that's around 2 in onshore, 3 in solar and 3 in storage.

Can you repeat the figures? 2 in onshore?

So it's 22. It's 2-gigawatt FID since early last year. Then we have the three gigawatt in UK Round 4. We have around 2.7 from Nordex from the pipeline. And then we have ongoing development activity which added around 2 in onshore, 3 in solar and 3 in storage.

Okay. Thank you so much.

And you can -- if you compare the chart the pipeline chart that we gave in this year and you compare the total per technology to what we gave last year so they can also kind of do own calculations. But let us know if we can help you.

Okay. Thank you very much.

Thank you, Piotr. Next question please.

The next question comes from the line of Olly Jeffery calling from Deutsche Bank. Please go ahead.

Thank you. Good morning everybody. And two questions from me please. The first one is coming back to 2022 guidance. Can you confirm then if you are now above the midpoint of adjusted EBIT for 2022? Because if not with the higher minority that implies you're closer to the €1.1 billion adjusted net income particularly if you factor in the tax equity benefit that you now include that wouldn't have been there when you came up with the guidance in CMD? That's the first question. And the second question is coming back to the UK seabed lease auctions. You mentioned the route to market. Could you please give a comment on the route to market in terms of where we have a preference between CFD corporate PPA? And if on a worst-case scenario would you be willing to run the product on a merchant basis?

Yes. Olly I can confirm for '22, the midpoint of the adjusted net income because that is I mean where everything is baked in: the consolidation effect of Rampion, the tax effects and also the minorities. So that is where we target on and then plus/minus a bit. I mean it's not made it down to €25 mil0lion up and down. The other question is, I mean we have a clear preference especially for offshore to ensure secured earnings. So of course either a government contract for the PPA. But not -- I mean the project.

Okay. Thank you.

Thank you, Olly. Next question please.

The next question comes from the line of Tancrède Fulop calling from Morningstar. Please go ahead. Tancrède Fulop: Hello. Good afternoon. Thank you for taking my question. I have two. The first one is a follow-up on the IIR question for Offshore Wind. Ørsted already announced that at their next Capital Market Day, they will shift from a firm IRR target to sort of watch plus spread return target. Will you maintain a firm IRR target for offshore, or could you also shift to a watch spread-type of guidance? This is my first question. And my second question coming to the end of the first quarter, could you tell us about the Offshore Wind conditions year-to-date for? So last year was very favorable for Offshore Wind in Q1. Year-to-date, is it below normalized conditions or normalized conditions? Thank you.

Yeah. So I mean, the first one, I mean, the moment we decide to change our return expectations or the framework, how we guide our return expectations, we will let you know. But now, speculating, whether we can also consider, changing it or not, I think, that's leading nowhere. So if we decide to steer and guide it differently, we will let you know. And for the first quarter, wind conditions in January were slightly below average. January was on expectation. And March so far also on expectation. Tancrède Fulop: Very clear. Thanks very much.

Yes. Thank you. Next question please.

The final question comes from the line of Ahmed Farman calling from Jefferies. Please go ahead.

Yes. Thank you. And thanks for taking question from my side. Just on, your solar and Onshore Wind business, when you, I guess, think about, sort of, I guess, the sort of the medium-term outlook, are there any sort of regional markets that fit your investment criteria in terms of growth rate and underlying project IRRs, that you see as sort of a missing from the portfolio or where you can benefit from building some further scales? Just interested in some thoughts on that. Thank you.

So Ahmed, definitely, when I look at the current market coverage which we have there is no strategic gap. I mean, we had that gap in France which we closed with the Nordex acquisition. And then, when you have a team on the ground, you can if you decide to ramp-up development activities as we have also shown from the development of our pipeline you can do it with the team. So currently, I think in the core markets, where we are active, we don't lack any relevant coverage. And the detailed tiering which markets, we see more promising than others can be done within the resources we currently have.

Okay. Thanks.

Thank you, Ahmed.

We have no further questions in the queue. So I'd like to hand the call back over to Thomas Denny. Thank you.

Thank you, Molly. Thank you, Markus. Thank you, Rolf. Thank you, Michael. And thank you all for dialing in today. All stay safe and healthy. And talk to you again, latest at Q1. Thank you. Bye-bye.

Thank you for joining today's call. You may now disconnect your lines. Hosts please stay connected.