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Capital expenditure on property, plant and equipment markedly up year on year.
We will clearly step up capital expenditure on property, plant and equipment in 2009. The greatest rise is planned for RWE Power. Construction of the twin-unit hard coal power plant in Hamm, Germany, started in 2008. This year, we intend to begin building another power station of this type in Eemshaven, Netherlands. Work on the gas-fired power station in Lingen, Germany, and on the dual-block lignite power plant in Neurath, Germany, is already progressing well. The commissioning of these two plants is scheduled for 2009 and 2011, respectively. Power station component costs recorded a substantial rise before the beginning of the worldwide recession. By securing components at an early stage, we were able to limit the rise in prices associated with our large-scale projects. Our upstream subsidiary, RWE Dea, will invest more in gas production–above all in Algeria and Egypt. RWE Energy has increased its capex budget as well. We will spend some 80 % of these funds on the grid business. Other funds have been earmarked for gas storage projects. RWE npower plans to record the highest percentage increase in capital expenditure. Our main projects in the UK are two new gas-fired power stations. We launched the new build project in Staythorpe in 2007. One of the total of four units is scheduled to go online this year. We will begin building a large-scale power station in Pembroke shortly. The last pending approval was obtained in February. RWE Innogy’s capital spending will post a disproportionately high rise as well. The focus will be on the construction of wind farms. The biggest projects are offshore wind farms off the coast of the UK. All in all, excluding American Water, the RWE Group’s capital expenditure on property, plant and equipment will reach an order of magnitude of €6.5 billion in 2009. This would represent an increase of almost 50 % compared to 2008.
Net debt up year on year.
Even setting aside the planned acquisition of Essent, we expect net debt to increase further in the current financial year. The drivers will be the strong rise in capital expenditure and the planned dividend increase in April. This will be contrasted by a continued high level of cash flows provided by operating activities. In addition, we aim to sell the majority of the shares in American Water by the end of the year, which would allow us to deconsolidate the US company’s net debt of €4.2 billion. Thanks to the good reputation we have as bond issuer, we always have access to short- and long-term financing sources. Only €0.2 billion in bonds will mature in 2009.
