E.ON AG Annual Report 2014

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FY2014 Annual Report · E.ON AG

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2014 Annual Report

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Financial Calendar

May 7, 2015 2015 Annual Shareholders Meeting
May 7, 2015
August 12, 2015
November 11, 2015

Interim Report: January – March 2015
Interim Report: January – June 2015
Interim Report: January – September 2015

March 9, 2016 Release of the 2015 Annual Report

Interim Report: January – March 2016

May 11, 2016
June 8, 2016 2016 Annual Shareholders Meeting
Interim Report: January – June 2016
Interim Report: January – September 2016

August 10, 2016
November 9, 2016

E.ON Group Financial Highlights1
€ in millions

Attributable generating capacity (MW)

– thereof renewables (MW)

Fully consolidated generating capacity (MW)

– thereof renewables (MW)

Owned generation (billion kWh)

– thereof renewables (billion kWh)

Carbon emissions from power and heat production (million metric tons)

Specific carbon emissions (million metric tons/MWh)

Electricity sales (billion kWh)

Gas sales (billion kWh)

Sales
EBITDA2
EBIT2

Net loss/Net income

Net loss/Net income attributable to shareholders of E.ON SE
Underlying net income2

Investments

Expenditures on technology and innovation (including software)

Cash provided by operating activities of continuing operations

Economic net debt (at year-end)
Debt factor4

Equity

Total assets

ROACE (%)

Pretax cost of capital (%)

After-tax cost of capital (%)

Value added

Employees (at year-end)

– Percentage of female employees

– Percentage of female executives and senior managers

– Average turnover rate (%)

– Average age

– TRIF (E.ON employees)
Earnings per share6, 7 (€)
Equity per share6, 7 (€)
Dividend per share8 (€)

Dividend payout
Market capitalization7 (€ in billions)

1Adjusted for discontinued operations.
2Adjusted for extraordinary effects (see Glossary).
3Change in absolute terms.
4Ratio of economic net debt and EBITDA.
5Change in percentage points.
6Attributable to shareholders of E.ON SE.
7Based on shares outstanding.
8For the respective financial year; the 2014 figure represents management’s dividend proposal.

2014

58,871

10,472

60,151

9,768

215.2

29.3

95.7

0.43

735.9

1,161.0

111,556

8,337

4,664

-3,130

-3,160

1,612

4,633

6,253

33,394

4.0

26,713

125,690

8.5

7.4

5.4

609

58,503

28.8

15.8

3.3

2.0

-1.64

12.72

0.50

966

27.4

2013

61,090

10,885

62,809

10,414

245.2

30.8

114.3

0.45

696.9

1,219.3

119,688

9,191

5,624

2,459

2,091

2,126

7,992

6,260

32,218

3.5

36,638

132,330

9.2

7.5

5.5

1,031

61,327

28.6

14.0

3.5

2.6

1.10

17.68

0.60

1,145

25.6

+/- %

-4

-6

-12

-5

-16

-4

-5

-7

-9

-17

–

-24

-42

-29

–

+4
+0.53

-27

-5
-0.85
-0.15
-0.15

-41

-5
+0.25
+1.85
-0.25

–
-0.65

–

-28

-17

-16

CEO Letter
Report of the Supervisory Board
E.ON Stock
Strategy and Objectives
Combined Group Management Report
Consolidated Financial Statements
Supervisory Board and Board of Management
Tables and Explanations

Contents

2 CEO Letter

4 Report of the Supervisory Board

E.ON Stock

Strategy and Objectives

Corporate Profile

Technology and Innovation

Business Model
Management System

Business Report
Macroeconomic and Industry Environment

16 Combined Group Management Report
16
16
18
19
22
22
Business Performance
28
Earnings Situation
33
Financial Situation
41
Asset Situation
45
E.ON SE’s Earnings, Financial, and Asset Situation
46
Financial and Non-financial Performance Indicators
47
– ROACE and Value Added
47
– Corporate Sustainability
48
51
– Employees
56 Subsequent Events Report
56
60
69
70
72 Disclosures Regarding Takeovers
75 Corporate Governance Report
75
81

Forecast Report
Risk Report
Opportunity Report
Internal Control System for the Accounting Process

Corporate Governance Declaration
Compensation Report

96
96
98
99
100
102
104
106
202
203

Consolidated Financial Statements
Independent Auditor’s Report
Consolidated Statements of Income
Consolidated Statements of Recognized Income and Expenses
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Statement of Changes in Equity
Notes

Declaration of the Board of Management
List of Shareholdings

216
216
218

Supervisory Board and Board of Management
Members of the Supervisory Board
Members of the Board of Management

Tables and Explanations

219
219 Explanatory Report of the Board of Management
220
224 Glossary of Financial Terms
229

Financial Calendar

Summary of Financial Highlights/Installed Capacity/Sales Volume

CEO Letter

Last November 30 the E.ON Supervisory Board approved the Board of Management’s proposal for a new corporate strategy.
This strategy is founded on our assessment that over the past few years two energy worlds have emerged: a conventional and
a new energy world. They’re not separate. On the contrary, they depend on one another. But they place completely different
demands on energy companies. The new energy world is about customer orientation, efficient and increasingly smart grids,
renewables, distributed generation, and technical innovations. The conventional energy world, by contrast, requires expertise
and cost efficiency in conventional power stations and global energy trading.

We’re determined to do our best in both energy worlds by creating two companies that will focus on meeting their respective
challenges. The future E.ON will strive to be a leading provider of innovative energy solutions for customers. Alongside it
we’ll spin off a New Company that will play a leading role in shaping the conventional power and gas businesses. Our company
has—to an outstanding degree—the capabilities and market access needed in both worlds.

The new energy world is characterized by speed, agility, digitalization, technical innovations, and increasingly individual cus-
tomer expectations. This world is just beginning to emerge. It will become more dynamic and diverse than we can imagine
today. It will ask a lot of companies and their employees and it will grow rapidly. Going forward, E.ON wants to offer the kind
of superior energy products and services that will make us the partner of choice for municipal, public, industrial, commercial,
and residential customers. We also intend to operate technologically advanced smart distribution networks that will support
grid-enabled energy products that make customers’ lives easier. And our success at developing and delivering renewables
projects has already given us an advantage over many competitors, an advantage we intend to systematically extend in our
target regions in Europe and elsewhere.

But tomorrow’s energy world will still need a stable and secure supply as well as access to global markets for commodities and
energy products. The New Company will play a key role in ensuring supply security and in providing backup for the transfor-
mation of energy systems in Europe. With more than 50 GW of installed capacity, the New Company will be a leading power
producer in Europe and Russia and also one of the largest operators of technologically advanced gas-fired power plants. A strong
natural gas portfolio—which encompasses the exploration and production business, gas transport pipelines to Europe, long-
term gas procurement contracts, and substantial storage capacity in Germany and other countries—will make the New Company
one of the biggest players in the natural gas business as well. It’s a matter of self-interest for European countries whose
economies are based on value-adding industries to ensure that these kinds of structures and assets will continue to be able
to serve as a reliable foundation for a modern energy supply system.

Two energy worlds, two companies. What’s obvious on closer examination actually surprised a lot of people when we announced
it at the end of last year. But it also met with a generally positive response. We were praised for our “bold action” and our
“revolutionary new business model.” Some see us as pioneers. We intend to live up to this praise. This year we’ll make the prepa-
rations to spin off the New Company, which, just like the future E.ON, will be publicly listed. The new E.ON will focus entirely
on the building blocks of the new energy world: renewables, energy networks, and customer solutions. We’ll spin off our con-
ventional generation, global energy trading, and exploration and production businesses to form an independent company
with a new name.

This means that starting next year you, our shareholders, will own stock in both the new E.ON and the New Company.
We’re firmly convinced that each of these two sharply focused companies will have excellent prospects for the future in their
respective businesses.

The E.ON Board of Management and Supervisory Board didn’t take this decision lightly. Over the course of several months, we
held extensive discussions with people inside and outside our company. This resulted in a systematic strategy-design process
that drew on experience and suggestions from within E.ON and from outside. In the end, we were convinced that we need to
take early, decisive action and that creating one company to focus on the new world of individualized customer solutions and
another company to focus on the conventional world of big energy systems is the only way to have prospects of a strong position
in both. This new setup will enable both companies to seize their respective strategic opportunities, win over investors, grow,
secure jobs, and create value. It will also open up new opportunities for your investment.

While plotting our course for the future we didn’t lose sight of our operating business. Despite a difficult environment in many
of our markets and despite the sharp drop in oil prices in the second half of the year, we posted generally solid results and
were able to achieve our earnings targets. Our EBITDA of roughly €8.3 billion and underlying net income of €1.6 billion were in
line with our expectations. In 2014 we made progress in a number of areas from an operational perspective as well, enabling
us to lay a good foundation for the future. For example, we continued our positive trend by further increasing our customer
base in Germany, where we now have about 60,000 more residential customers than we did a year ago. Moreover, our systematic
surveys show that over that past two years our customer satisfaction rate has risen by an average of 22 percent across our
markets in Europe. These are important achievements. Because we know that satisfied customers who recommend us to their
friends and acquaintances are the foundation of our business.

Our Renewables business continues to grow as well. The first turbines of our two new wind farms in the North Sea, Humber
Gateway and Amrumbank West, will start producing electricity in the weeks ahead; by the end of the year, all 500 megawatts
will be operational. Two months ago our distributed-energy subsidiary entered the machine-to-machine business by acquiring
25 percent of U.K.-based Intelligent Maintenance Systems Ltd. This gives us exclusive access to a technology that enables
primarily business customers to remotely control terminal devices such as air conditioning and lighting units, thereby trimming
their energy costs. Data-based energy management will be an important topic for the future E.ON.

The current economic and policy environment presents a challenge we’re not ignoring. Significant movements in the rates of
some currencies, declining oil prices, and continued low interest rates in Europe are having an adverse impact on some com-
ponents of our earnings. And no one can say with certainty how long these trends will last. We’re also aware that transforming
E.ON this year and next year presents us with an enormous task and a lot of work. We’re not waiting for better times. We’re
meeting our challenges head-on. Our clear objective is to ensure that both companies—as well as their employees and you,
our shareholders—have good prospects for the future and can take advantage of new opportunities.

Best wishes,

Dr. Johannes Teyssen

Report of the Supervisory Board

2014 was a groundbreaking year for E.ON. In late November the
Supervisory Board unanimously approved E.ON’s new corpo-
rate strategy. A significant share of the Supervisory Board’s
work last year revolved around this decision.

E.ON intends to spin off some of its current businesses into
a new company. Going forward, E.ON SE will focus on renew-
ables, energy networks, and customer solutions. It intends
to combine its conventional generation, global energy trading,
and exploration and production businesses into a new, inde-
pendent company and spin off a majority stake in it to you,
our shareholders.

This new setup is part of the new corporate strategy, which
was the subject of thorough discussions between the E.ON SE
Supervisory Board and the Board of Management. The new
strategy is the necessary response to the massive changes
taking place in the energy world and dividing it into two worlds:
a conventional and a new energy world, to which the Company
intends to respond in two separate entities.

In 2014 the energy industry again faced a generally difficult
situation in energy markets in Germany and Europe. The
causes are structural and regulatory in nature, at the European
level and particularly in Germany. Urgently necessary policy
measures failed to materialize or were implemented in a way
that was insufficient to bring about a direct and lasting
improvement of the conditions on the energy market. This once
again had a particularly adverse impact on conventional gen-
eration, which is vital for ensuring Germany’s supply security.

In the 2014 financial year the Supervisory Board again care-
fully performed all its duties and obligations under law, the
Company’s Articles of Association, and its own policies and
procedures. It thoroughly examined the Company’s situation
and discussed in depth the consequences of its continually
changing energy-policy and economic environment.

We advised the Board of Management regularly about the
Company’s management and continually monitored the Board
of Management’s activities, assuring ourselves that the
Company’s management was legal, purposeful, and orderly.
We were closely involved in all business transactions of key
importance to the Company and discussed these transactions
thoroughly based on the Board of Management’s reports.
At the Supervisory Board’s four regular meetings in the 2014
financial year, we addressed in depth all issues relevant to
the Company, including in conjunction with the new corporate
strategy. All Supervisory Board members attended all meetings
with the exception of one member who was unable to attend
one meeting. A table showing attendance by member is on
page 78 of this report.

The Board of Management regularly provided us with timely
and comprehensive information in both written and oral form.
At the meetings of the full Supervisory Board and its commit-
tees, we had sufficient opportunity to actively discuss the
Board of Management’s reports, motions, and proposed reso-
lutions. We voted on such matters when it was required by
law, the Company’s Articles of Association, or the Supervisory
Board’s policies and procedures. The Supervisory Board
approved the resolutions proposed by the Board of Manage-
ment after thoroughly examining and discussing them.

Furthermore, there was a regular exchange of information
between the Chairman of the Supervisory Board and the
Chairman of the Board of Management throughout the entire
financial year. In the case of particularly important issues,
the Chairman of the Supervisory Board was kept informed at
all times. The Chairman of the Supervisory Board likewise

E.ON SE will focus on the new energy world centering around
customers. It will have three core businesses: renewables,
energy networks, and customer solutions. These businesses
fit together and reinforce each other, creating a business
portfolio with stable earnings and strong growth potential.

With a portfolio that is to consist of conventional power
generation, global energy trading, and exploration and pro-
duction, the New Company will focus on ensuring supply
security, which will be necessary for a long time to come, and
access to global markets for energy products. This will put
it in an excellent position to lead the necessary restructuring
of power generation in Europe and to offer attractive services
for the system needs of the future.

In the months ahead, the Board of Management will lay
the foundation for the New Company’s independence and,
subsequently, its public listing. Both E.ON SE and the New
Company will have solid financing, offer secure jobs, and have
prospects for creating new jobs in the future.

In keeping with E.ON’s long tradition of social partnership,
management will work closely with employee representatives
to work out the details of the new setup and its implemen-
tation. The purpose of the new setup is to continue E.ON’s
current businesses in two companies that are viable for the
future, thereby improving the conditions for securing jobs.
The spinoff will not be accompanied by a job-cutting program.
E.ON’s proven tradition of codetermination will continue,
including for employees outside Germany.

maintained contact with the members of the Supervisory
Board outside of board meetings. The Supervisory Board was
therefore continually informed about the current operating
performance of the major Group companies, significant busi-
ness transactions, the development of key financial figures,
and relevant decisions under consideration.

New Corporate Strategy

Throughout 2014, the Supervisory Board and the Board of
Management held outcome-neutral discussions about E.ON SE’s
new corporate strategy. During these discussions, the Board
of Management described, in a coherent and convincing
manner, the fundamental ways in which energy markets have
changed. These changes include the collapse of legacy energy
business areas and the rapid emergence of new technologies
and increasingly individual customer expectations. The future
energy world and its success factors will be considerably dif-
ferent from the energy world as we have known it until now.

The conventional energy world meets the need for a stable,
reliable energy supply. Only conventional assets can secure
this energy supply, which is true for both the power and gas
supply and presupposes access to international energy markets.
Alongside it a new energy world is emerging, one that is
characterized by the growth of renewables and distributed-
generation technologies and by customers’ increasing desire
for innovative, individually tailored energy solutions. It also
requires smart grids that keep pace with the digitalization of
the energy supply.

Both energy worlds will coexist for decades to come. But they
call for very different business approaches. Their respective
success drivers differ as well. We believe that E.ON’s current
broad-based business model will no longer be able to address
these new challenges. We therefore intend for E.ON’s busi-
nesses to be divided according to whether they fit with the
new or the conventional energy world.

Report of the Supervisory Board

At this time we anticipate that the spinoff, after being
approved by the E.ON Shareholders Meeting, will be imple-
mented in 2016.

Key Topics of the Supervisory Board’s Discussions

Besides the above-described discussion of E.ON’s new corpo-
rate strategy, we addressed the following key topics. We dis-
cussed in detail the business situation of E.ON Group companies
in relation to developments in national and international
energy markets, about which we were continually informed by
the Board of Management. The Supervisory Board discussed
E.ON SE’s and the E.ON Group’s current asset, financial, and
earnings situation, workforce developments, and earnings
opportunities and risks. In addition, we and the Board of Man-
agement thoroughly discussed the E.ON Group’s medium-term
plan for 2015–2017.

Overarching topics of our discussions were:
•

current developments in European and German energy
policy in the context of the upheavals on global energy
markets
the political situation in Russia and Ukraine and its
implications for supply security, as well as macroeconomic
developments in Europe
the development of commodity prices and currencies
relevant for E.ON
the global economy and, in particular, Europe’s continued
sluggish economy in the wake of the sovereign debt crisis

•

along with their respective consequences for E.ON’s various
business areas, including the impairment charges that were
necessary in this regard.

The Supervisory Board was provided information on a regular
basis about the Company’s health, (occupational) safety, and
environmental performance, in particular the development of
key accident indicators. We thoroughly discussed current
developments in the business activities of the global and
regional units as well as in Russia and Turkey. At all meetings,

the Supervisory Board—as well as the relevant committees—
addressed the difficult business situation of ENEVA, E.ON’s
joint venture in Brazil, and its related activities. In addition, the
Board of Management provided us with detailed information
about the status of construction projects, including the
upgrading of Oskarshamn 2 nuclear power station in Sweden
and the progress of several new-build projects, most notably
Datteln 4 in Germany, Maasvlakte 3 in the Netherlands, and
Berezovskaya 3 in Russia. The Board of Management also
reported on a number of legal matters, such as the proceedings
relating to the provisions of Germany’s Site Selection Act,
the damage suit filed against the nuclear energy moratorium
imposed in March 2011, and the legal proceedings relating
to the nuclear-fuel tax. In addition, the Supervisory Board dis-
cussed the current status of the constitutional complaint
against the thirteenth amendment of Germany’s Atomic Energy
Act of 2011 (“Nuclear Phaseout Law”). It also discussed and,
where required, approved the divestments in Italy and Spain
and transactions under the Company’s build-and-sell strategy
for renewable assets. In addition, the Board of Management
reported on necessary impairment charges. We thoroughly
reviewed the status of the E.ON 2.0 program including the
establishment of Business Service Centers and the Working
Capital Excellence project whose purpose is to reduce working
capital. In conjunction with proposed resolutions for the 2014
Annual Shareholders Meeting, the Supervisory Board approved,
among other things, the offer of a scrip dividend. Finally, the
Board of Management provided information about the scope
of E.ON’s use of derivative financial instruments and how the
regulation of these instruments affects E.ON’s business. We
also discussed E.ON’s rating situation with the Board of Man-
agement on a regular basis.

We thoroughly discussed the activity reports submitted by
the Supervisory Board’s committees.

Corporate Governance

Committee Work

In the 2014 financial year we again had intensive discussions
about the implementation of the recommendations of the
German Corporate Governance Code.

In the annual declaration of compliance issued at the end of
the year, we and the Board of Management declared that
E.ON is in full compliance with the recommendations of the
“Government Commission German Corporate Governance
Code” dated June 24, 2014, published by the Federal Ministry
of Justice in the official section of the Federal Gazette
(Bundesanzeiger). Furthermore, we declared that E.ON was
in full compliance with the recommendations of the “Govern-
ment Commission German Corporate Governance Code” dated
May 13, 2013, published by the Federal Ministry of Justice in
the official section of the Federal Gazette (Bundesanzeiger),
since the last annual declaration on December 16, 2013. The
current version of the declaration of compliance is in the
Corporate Governance Report on page 75; the current as well
as earlier versions are continuously available to the public on
the Company’s webpage at www.eon.com.

The Supervisory Board is aware of no indications of conflicts
of interest involving members of the Board of Management
or the Supervisory Board.

Furthermore, education and training sessions on selected
issues were conducted for Supervisory Board members in 2014.

The targets for the Supervisory Board’s composition with
regard to Item 5.4.1 of the German Corporate Governance
Code and the status of their achievement are described in
the Corporate Governance Report on pages 78 and 79.

An overview of Supervisory Board members’ attendance at
meetings of the Supervisory Board and its committees is on
page 78.

To fulfill its duties carefully and efficiently, the Supervisory
Board has created the committees described in detail below.
Information about the committees’ composition and respon-
sibilities is in the Corporate Governance Report on pages 79
and 80. Within the scope permissible by law, the Supervisory
Board has transferred to the committees the authority to
pass resolutions on certain matters. Committee chairpersons
reported the agenda and results of their respective commit-
tee’s meetings to the full Supervisory Board on a regular
basis, typically at the Supervisory Board meeting subsequent
to their committee meeting.

The Executive Committee met five times. Attendance was
complete at all meetings. In particular, this committee prepared
the meetings of the full Supervisory Board. Furthermore, it
discussed significant matters relating to Board of Management
compensation and did comprehensive preparatory work for the
Supervisory Board’s resolutions on these matters. In addition, it
prepared the Supervisory Board’s resolutions to determine
that the Board of Management met its targets for 2013 and to
set the targets for 2014. It also conducted an interim evaluation
of target implementation during the course of the year.

The Finance and Investment Committee met five times.
Attendance was complete at all meetings except one, which
one member was unable to attend. The matters addressed
by the committee included the Board of Management’s report
on the completion of Skarv E&P project in the North Sea,
current developments at E.ON’s joint ventures in Turkey and
in particular in Brazil, the sale of stakes in two wind farms
built by E.ON in the United States, the planned sale of activities

Report of the Supervisory Board

audit plan and audit priorities for 2015. Furthermore, the
committee discussed the compliance report and E.ON’s com-
pliance system, as well as other issues related to auditing. The
Board of Management also reported on ongoing proceedings
and on legal and regulatory risks for the E.ON Group’s business.
These included the status of the constitutional complaint
filed against Germany’s Nuclear Phaseout Law as well as the
lawsuits filed against the nuclear-fuel tax and the nuclear
moratorium imposed in March 2011, legal proceedings relating
to the Site Selection Act, the status of the Federal Court of
Justice’s review of price-adjustment clauses, and the delays in
the upgrading of Oskarshamn 2 nuclear power station in
Sweden. The committee regularly dealt with the development
of the Company’s rating and its current status. Other topics
included current developments at E.ON’s joint ventures in Turkey
and Brazil (in the case of the latter, in conjunction with impair-
ment charges), the Company’s tax situation, reportable inci-
dents at the E.ON Group, and insurance issues.

The Nomination Committee did not meet in 2014 because
no elections of shareholder representatives to the E.ON SE
Supervisory Board were pending.

Examination and Approval of the Financial State-
ments, Approval of the Consolidated Financial
Statements, Proposal for Profit Appropriation for
the Year Ended December 31, 2014

PricewaterhouseCoopers Aktiengesellschaft, Wirtschafts-
prüfungsgesellschaft, Düsseldorf, the independent auditor
chosen by the Annual Shareholders Meeting and appointed
by the Supervisory Board, audited and submitted an unquali-
fied opinion on the Financial Statements of E.ON SE and
the Combined Group Management Report for the year ended
December 31, 2014. The Consolidated Financial Statements
prepared in accordance with IFRS exempt E.ON SE from the
requirement to publish Consolidated Financial Statements in
accordance with German law.

in Spain and Italy, and the continuation of the Datteln 4 new-
build project. In particular, at its meetings the committee pre-
pared the Supervisory Board’s resolutions or, for matters on
which it had the authority, made the decision itself. Further-
more, it discussed the medium-term plan for 2015–2017 and
prepared the Supervisory Board’s resolutions on this matter.

The Audit and Risk Committee met seven times. Attendance
was complete at all meetings except one, which one member
was unable to attend. With due attention to the Independent
Auditor’s Report and in discussions with the independent
auditor, the committee devoted particular attention to the 2013
Financial Statements of E.ON SE (prepared in accordance with
the German Commercial Code) and the E.ON Group’s 2013
Consolidated Financial Statements and the 2014 Interim Reports
of E.ON SE (prepared in accordance with International Financial
Reporting Standards, or “IFRS”). The committee discussed
the recommendation for selecting an independent auditor for
the 2014 financial year and assigned the tasks for the auditing
services, established the audit priorities, determined the
independent auditor’s compensation, and verified the auditor’s
qualifications and independence in line with the recommen-
dations of the German Corporate Governance Code. The com-
mittee assured itself that the independent auditor has no
conflicts of interest. Topics of particularly detailed discussions
included issues relating to accounting, the internal control
system, and risk management. In addition, the committee
thoroughly discussed the Combined Group Management
Report and the proposal for profit appropriation and prepared
the relevant recommendations for the Supervisory Board and
reported to the Supervisory Board. Furthermore, on a regular
basis the committee discussed in detail the progress of sig-
nificant investment projects. The Audit and Risk Committee
also discussed in detail market conditions, the long-term
changes in markets, and the resulting consequences for the
underlying value of E.ON’s activities. It also reviewed the
results of impairment tests and the necessary impairment
charges. Other focus areas included an examination of E.ON’s
risk situation, its risk-bearing capacity, and the quality control
of its risk-management system. This examination was based
on consultations with the independent auditor and, among
other things, reports from the Company’s risk committee. On
the basis of the quarterly regular risk reports, the Audit and
Risk Committee noted that no risks were identified that might
jeopardize the existence of the Company or individual seg-
ments. The committee also discussed the work done by internal
audit including the audits conducted in 2014 as well as the

In addition, Klaus-Dieter Raschke, long-serving member of
the E.ON SE Supervisory Board, stepped down effective
December 31, 2014. We would like to thank Mr. Raschke, who
had been a member of the E.ON SE Supervisory Board since
2002, for his many years of outstanding work on the Super-
visory Board and its committees and wish him all the best for
the future. He was exemplary in his tireless efforts to align
the interests of the Company and its employees. Mr. Raschke’s
successor on the Supervisory Board is Thies Hansen. Fred
Schulz was elected to succeed Mr. Raschke on the Audit and
Risk Committee. Due to Mr. Raschke’s departure, the members
of the Audit and Risk Committee elected Eberhard Schomburg
to serve as Deputy Chairman of the committee effective Jan-
uary 1, 2015. Mr. Schulz stepped down from the Finance and
Investment Committee; the Supervisory Board elected Thies
Hansen to succeed him effective January 1, 2015. In March 2014
this committee had elected Mr. Schulz to serve as its Deputy
Chairman; Mr. Hansen succeeded him in this position as well.

The Supervisory Board wishes to thank the Board of Manage-
ment, the Works Councils, and all the employees of the E.ON
Group for their dedication and hard work in the 2014 financial
year.

Düsseldorf, March 10, 2015
The Supervisory Board

Best wishes,

Werner Wenning
Chairman

Furthermore, the auditor examined E.ON SE’s early-warning
system regarding risks. This examination revealed that the
Board of Management has taken appropriate measures to
meet the requirements of risk monitoring and that the early-
warning system regarding risks is fulfilling its tasks.

At the Supervisory Board’s meeting on March 10, 2015, we
thoroughly discussed—in the presence of the independent
auditor and with knowledge of, and reference to, the Inde-
pendent Auditor’s Report and the results of the preliminary
review by the Audit and Risk Committee—E.ON SE’s Financial
Statements, Consolidated Financial Statements, Combined
Group Management Report, and the Board of Management’s
proposal for profit appropriation. The independent auditor
was available for supplementary questions and answers. After
concluding our own examination we determined that there
are no objections to the findings. We therefore acknowledged
and approved the Independent Auditor’s Report.

We approved the Financial Statements of E.ON SE prepared
by the Board of Management and the Consolidated Financial
Statements. The Financial Statements are thus adopted. We
agree with the Combined Group Management Report and, in
particular, with its statements concerning the Company’s
future development.

We examined the Board of Management’s proposal for profit
appropriation, which includes a cash dividend of €0.50 per
ordinary share, also taking into consideration the Company’s
liquidity and its finance and investment plans. The proposal
is in the Company’s interest with due consideration for the
shareholders’ interests. After examining and weighing all
arguments, we agree with the Board of Management’s pro-
posal for profit appropriation.

Personnel Changes on the Supervisory Board and
Its Committees

Willem Vis ended his service on the E.ON SE Supervisory Board
on June 30, 2014. We would like to thank Mr. Vis for his stead-
fast dedication to the interests of the Company as well as its
employees and wish him all the best for the future. Mr. Vis’s
successor is Clive Broutta. The Supervisory Board elected
Eugen-Gheorghe Luha to succeed Mr. Vis on the Finance and
Investment Committee.

E.ON Stock

E.ON Stock in 2014

At the end of 2014 E.ON stock (including reinvested dividends)
was 10 percent above its year-end closing price for 2013,

thereby underperforming the STOXX Utilities (+18 percent over
the same time period) but outperforming the EURO STOXX 50
index (+4 percent).

E.ON Stock Performance (Factoring in Reinvested Dividends)

Percentages

E.ON

EURO STOXX1

STOXX Utilities1

120

110

100

12/31/13

1/31/14

2/28/14

3/31/14

4/30/14

5/30/14

6/30/14

7/31/14

8/29/14

9/30/14

10/31/14 11/28/14 12/31/14

1Based on the performance index.

E.ON Stock Key Figures

Per share (€)

Net income attributable to the
shareholders of E.ON SE

Earnings from underlying net
income1

Dividend2

Dividend payout (€ in millions)

Twelve-month high3

Twelve-month low3

Year-end closing price3

Number of shares outstanding
(in millions)

Market capitalization4 (€ in billions)

E.ON stock trading volume5
(€ in billions)

2014

-1.64

0.84

0.50

966

15.46

12.56

14.20

1,933

27.4

31.4

2013

1.10

1.11

0.60

1,145

14.71

11.94

13.42

1,907

25.6

36.8

1Adjusted for discontinued operations.
2For the respective financial year; the 2014 figure is management’s proposed dividend.
3Xetra.
4Based on ordinary shares outstanding.
5On all German stock exchanges, including Xetra.

Dividend

At the 2015 Annual Shareholders Meeting, management will
propose a cash dividend of €0.50 per share for the 2014 finan-
cial year (prior year: €0.60). Furthermore, shareholders will
be offered the option to exchange the cash dividend partially
into E.ON SE shares (currently held as treasury shares). The
payout ratio (as a percentage of underlying net income) would
be 60 percent compared with a ratio of 51 percent in the
prior year. Based on E.ON stock’s year-end 2014 closing price,
the dividend yield is 3.5 percent.

Dividend per Share

€ per share

Dividend

Payout ratio1 (%)

1.50

1.00

0.50

1.00

1.10

0.60

0.50

2009

2010

2011

2012

2013

2014

1Payout ratio not adjusted for discontinued operations.

Shareholder Structure

Investor Relations

Our most recent survey shows that we have roughly 76 percent
institutional investors and 24 percent retail investors. Investors
in Germany hold about 36 percent of our stock, those outside
Germany about 64 percent.

Our investor relations continue to be founded on four princi-
ples: openness, continuity, credibility, and equal treatment
of all investors. Our mission is to provide prompt, precise, and
relevant information at our periodic conferences, at road shows,
at eon.com, and when we meet personally with investors.

Shareholder Structure by Group1

Retail
investors 24%

Institutional

investors 76%

1Percentages based on total investors identified (excluding treasury shares).
Sources: share register and Ipreo (as of December 31, 2014).

Shareholder Structure by Country/Region1

Rest of world

36% Germany

Switzerland

France

10%

United Kingdom

16%

Rest of Europe

USA and Canada

19%

1Percentages based on total investors identified (excluding treasury shares).
Sources: share register and Ipreo (as of December 31, 2014).

Overall, we therefore further expanded the dialog with our
analysts and investors in 2014. Continually communicating
with them and strengthening our relationships with them
are essential for good investor relations.

We used the forum of E.ON’s quarterly reporting to provide
the greatest-possible transparency on the developments at
our business units. We also held special information events
focusing on specific businesses. In January senior managers
from Sweden and Germany provided the capital market with
detailed information about our distribution network business.
In March several members of the E.ON Board of Management
gave presentations and answered investors’ and analysts’
questions about operational, strategic, and policy developments
at a number of our businesses.

In December we held a teleconference and a number of road
shows to present E.ON’s new corporate strategy to analysts
and investors. The response has generally been very positive,
suggesting that our new strategy is seen as the right response
to the changing energy landscape.

Want to find out more?
eon.com/investors
You can contact us at:
investorrelations@eon.com

Strategy and Objectives

Our Strategy: “Empowering customers. Shaping
markets.“
At the end of 2014 E.ON adopted a new strategy called
“Empowering customers. Shaping markets.” It represents E.ON’s
systematic response to the far-reaching changes in energy
markets. By seizing the initiative, E.ON can—for the benefit
of our customers, employees, business partners, shareholders,
and society in general—take advantage of the significant
opportunities created by the emergence of new energy worlds.

Two Energy Worlds, Each with a Variety of
Opportunities
Renewables like wind and solar have achieved a cost level that
is competitive relative to that of conventional generation
technologies. In conjunction with batteries and other energy
storage systems, renewables represent a viable alternative
energy supply for more and more customers. At the same time,
customers’ expectations and roles are evolving in substantial
ways. Customers no longer see themselves exclusively as the
recipients of power, gas, and heat service. They are taking
greater interest in the source and sustainability of their energy
supply. And many are already active as self-generators and
energy-efficiency managers. Alongside changing customer
needs, policy and regulatory decisions of recent years have
also placed an increasing emphasis on renewables, distributed
generation, and energy efficiency. As a result of these devel-
opments, the traditional energy value chain is fragmenting
into an increasing number of discrete market segments. This
creates opportunities for new specialized market entrants
and makes competition even keener. The new energy world—
encompassing sustainable solutions, autonomous and pro-
active customers, renewables, distributed energy, energy effi-
ciency, and local energy systems—offers considerable growth
potential. It will experience more dynamic growth and will play
an increasingly significant role in many countries. Neverthe-
less, the conventional energy world will continue to exist and

to offer well-positioned companies attractive opportunities.
For example, because conventional generating capacity will
remain indispensible for ensuring a reliable power supply,
European markets will need to establish mech anisms that pro-
vide appropriate compensation for maintaining this capacity.
Companies capable of actively shaping the inevitable consoli-
dation of Europe’s generation market will be able to strengthen
their market position and gain clear competitive advantages.
Globally, energy demand continues to rise, creating opportu-
nities for energy trading and possibly fueling a recovery of
wholesale energy prices. Both energy worlds offer abundant
market and growth opportunities. But they differ considerably
in terms of value drivers, processes, risks, capital costs, inves-
tor expectations, and success factors.

Two Specialized Companies, Each Starting from
a Very Good Position
In response to a fundamentally altered market environment,
we intend to divide E.ON into two distinctly focused and
financially strong publicly listed companies. The future E.ON
will focus on the new energy world and become an energy-
solutions provider. We intend to transfer our conventional
upstream and midstream businesses to a New Company, which
will focus on the conventional energy world. Initially, E.ON
will retain a minority stake in the New Company.

We are convinced that separating in two smaller, more dynamic
companies will strengthen the competitive position of all
current E.ON businesses. Both companies will be able to take
a more focused approach to managing their businesses, which
will pave the way to greater profitability and more dynamic
growth and create attractive opportunities for employees and
external stakeholders. They will be better able to differentiate

•

Energy networks: Energy networks link our customers
together and are the hub for grid digitalization. E.ON is
developing smart solutions that make customers’ daily
lives simpler and more convenient. A large majority of
renewable-source electricity is fed into the distribution
network. In Germany, one third of distributed generating
capacity subsidized by the Renewable Energy Law is
connected to our networks. Distribution networks are
what makes the transformation of the energy system
possible. E.ON is already a leader in network efficiency
and will continue to set new standards in the future.

Customer solutions: E.ON will develop superior offerings
for the physical and digital new energy world and market
them to municipal, public, commercial, and residential
customers. We aim to become customers’ partner of choice
by delivering high-quality service and by continually
improving or redefining our portfolio of products and ser-
vices in response to customers’ demand for energy effi-
ciency and distributed generation.

Although each of these core businesses is independent and
has its own business logic, combining them in a single com-
pany offers significant advantages. It will enable E.ON to
acquire and leverage a comprehensive understanding of the
transformation of the energy system and the interplay

their business operations according to customers, technologies,
risks, and markets and to take a more focused approach to
developing the necessary capabilities and processes. Each of
the two companies will be able to develop a consistent corpo-
rate culture and establish a clear brand positioning. In addition,
we expect that both companies will have more specific capital
costs and an adequate valuation and thus improved access
to capital markets.

The Future E.ON’s Strategy
The future E.ON’s strategy is a response to three fundamental
market trends and corresponding growth businesses: the
global demand for renewables (particularly wind and solar),
the evolution of distribution networks into a platform for
distributed-energy solutions, and customers’ changing needs.
The future E.ON will aim to add value in all of these businesses
by delivering an outstanding performance in key areas such
as continual innovation, an unambiguous commitment to
sustainability, and a strong brand. It will also deepen its rela-
tionships with customers, business partners, and other key
stakeholders.

Objectives and Core Businesses
E.ON aims to become the partner of choice for energy and cus-
tomer solutions. It intends to deliver on this commitment by
meeting ambitious targets for sustainability, customer loyalty,
and innovative solutions. E.ON’s clear focus on three strong
core businesses will enable it to offer energy solutions on the
generation and demand side:

•

Renewables: E.ON has a growing international renewables
business in attractive target regions (Europe, the United
States, other markets) based on customer- relevant tech-
nologies (onshore and offshore wind, PV) for network
companies, energy suppliers, large customers, and whole-
sale markets. E.ON’s industry-leading capabilities in
project development and execution and in operational
excellence already give it a tangible competitive advantage
in this business.

Strategy and Objectives

between the individual submarkets in regional and local energy
supply systems. These businesses will be able to work together
to design customer-oriented offerings and package solutions
for the new energy world (such as sustainable solutions for
cities), to conduct stakeholder management, and to position
the brand more effectively.

Resources and Capabilities
A focused setup and systematic approach will enable E.ON to
retain its existing strengths and advantages and build on
them. Examples include our success story at developing and
building an international renewables portfolio consisting of
4.5 GW of operational capacity and an attractive development
pipeline, our outstanding record of managing a total of roughly
1 million kilometers of distribution networks, and our direct
access to 33 million customers in key European markets and
in Turkey.

Alongside its existing capabilities and resources, E.ON will
develop and refine the necessary expertise for the key success
factors in its businesses. In particular, it will cultivate a strong
customer orientation, develop and implement new down-
stream business models and products, and leverage the digi-
tal transformation. The successful implementation of the
future strategy will also depend on partnerships with pro-
viders of technology and business models.

Significance for Employees and Stakeholders
The future E.ON will offer attractive opportunities to current
and future employees by creating jobs and career opportuni-
ties in growth markets and by setting clear objectives. It will
offer investors attractive dividends with good growth pros-
pects, highly predictable earnings, and a solid balance sheet.

The New Company’s Strategy
The conventional energy world is based on proven, centralized,
commodity-oriented technologies that ensure supply security,
on cost competition, and on global trading. Value is created
through the strategic positioning of generation assets, through
a technology and fuel strategy that delivers cost leadership,
through superior capabilities in operations, engineering, opti-
mization, and trading, and through efficient capital allocation.

Spinning off the current E.ON’s conventional upstream and
midstream businesses into a new, independent company
will enable these businesses to realize their full potential.
The New Company has proven strengths and a team of
highly qualified employees. It will be able to leverage existing,
proven synergies between generation, trading, and the mid-
stream gas business and serve as a unique platform for the
consolidation of Europe’s generation market. It will ensure
the safe decommissioning of nuclear power stations and pro-
vide competitive services to third parties.

Objectives and Core Businesses
The New Company’s main strategic objective is to success-
fully position itself in the changing conventional energy
world and to help shape this change:

•

Conventional power generation: The New Company will
be a leading owner and operator of conventional power
plants that make an important contribution to supply
security in Europe, Russia, and elsewhere. It will have
proven capabilities and serve as a unique platform for
the consolidation of Europe’s generation market.

• Global energy trading: This business will conduct optimi-

zation and risk management for the New Company’s
assets and serve as a global coal, freight, and LNG trading
platform. It also has long-term gas procurement contracts
and a gas trading business.

•

Exploration and production: The New Company has
valuable stakes in oil and gas fields. We are conducting
a strategic review of our E&P business in the North Sea.

Resources and Capabilities
Current changes in Europe’s generation market are creating
opportunities to help shape the market’s future and benefit
from the transformation. The New Company is well positioned
to make a very important contribution to supply security and
to drive the consolidation process:

• Geographic presence: positions in key European generation

markets and in Russia

•

Technological breadth: operations and experience across
all relevant technologies

• Market access: proven trading and optimization platform
in the main EU trading centers and global commodity
markets as well as a significant position in the midstream
gas business

•

Capabilities: demonstrated skills in operating and man-
aging generation assets and coordinating generation fleets

System knowledge and experience with regulators: deep
knowledge of regulatory regimes and market designs in
Europe.

Significance for Employees and Stakeholders
The New Company will aim to be a cost and capability leader,
to shape the transformation of Europe’s conventional genera-
tion market, and to be attractive to its customers and investors.
From today’s perspective, its solid financing ought to ensure
that it has an investment-grade rating. Its positive cash flow
ought to enable it to pay attractive dividends. The New Com-
pany will be attractive to employees because it will offer jobs
and career opportunities in a company that will lead the
restructuring of its markets.

Transformation Process
We expect to put the future setup in place in 2015 and 2016 in
two phases. The groundwork for the transaction will be laid
in 2015 through legal restructuring, the selection of the two
companies’ leadership teams, financial and operational prep-
arations, and consultations with employee representatives
and other key stakeholders. We expect that the Shareholders
Meeting will decide on the spinoff in 2016. Shareholders,
employees, and other stakeholders will receive timely informa-
tion about important milestones in the transformation process.
M&A processes currently under way will continue during
the transformation. In addition, we are conducting a strategic
review of our E&P business in the North Sea.

Finance Strategy
The section of the Combined Group Management Report
entitled Financial Situation contains explanatory information
about our finance strategy.

People Strategy
The section of the Combined Group Management Report
entitled Employees contains explanatory information about
our people strategy.

16 Combined Group Management Report

EBITDA and underlying net income in line with expectations
Operating cash flow at prior-year level
Management to propose dividend of €0.50 per share
2015 EBITDA expected to be between €7 and €7.6 billion

Corporate Profile in 2014

Business Model

E.ON is a major investor-owned energy company. Our organi-
zational setup clearly delineates the roles and responsibilities
of all Group companies. Our operations are segmented into
global units and regional units.

E.ON SE in Düsseldorf serves as Group Management. It over-
sees and coordinates the operations of the entire Group.
We see ourselves as a global specialized provider of energy
solutions. Four global units are responsible for Generation,
Renewables, Global Commodities, and Exploration & Production.
Nine regional units manage our operating business in Europe.
Russia is another unit, and we also have operations in Brazil
and Turkey. Support functions like IT, procurement, and busi-
ness processes are organized functionally.

Group Management
The main task of Group Management in Düsseldorf is to
lead the entire E.ON Group by overseeing and coordinating
its operating business. This includes charting E.ON’s strategic
course, defining its financial policy and initiatives, managing
business issues that transcend individual markets, managing
risk, continually optimizing E.ON’s business portfolio, and
conducting stakeholder management.

IT, procurement, human resources, insurance, consulting,
and business processes provide valuable support for our core
businesses wherever we operate around the world. These
entities and/or departments are organized by function so
that we pool professional expertise across our organization
and leverage synergies.

Changes in Our Reporting
Effective January 1, 2014, the Generation global unit includes
our biomass operations, which were formerly part of the
Renewables unit. We also transferred some operations that had
been part of the Germany regional unit to E.ON Connecting
Energies. Furthermore, the initial application of IFRS 10 and 11
resulted in effects which are described in Note 2 to the Con-
solidated Financial Statements. We adjusted the prior-year
figures accordingly.

In view of the negotiations to sell our Italy and Spain regional
units, we applied IFRS 5 and reclassified these units as assets
held for sale from the fourth quarter of 2014 until their derecog-
nition. We therefore adjusted our 2014 and 2013 numbers,
including energy-related numbers, to exclude these two units
and no longer provide commentary on their business perfor-
mance. By contrast, our generation operations in Italy and Spain
are still included in our 2014 reporting.

Renewables
Our Renewables global unit is helping to drive renewables
growth in many countries across Europe and the world. Renew-
ables are good for the environment and have great potential
as a business, which is why we are steadily increasing renew-
ables’ share of our generation portfolio and aim to play a
leading role in this growing market. We continually seek out
new solutions and technologies that will make the energy
supply more environmentally friendly. We therefore make sig-
nificant investments in renewables.

Global Commodities
As the link between E.ON and the world’s wholesale energy
markets, our Global Commodities unit buys and sells electric-
ity, natural gas, liquefied natural gas, oil, coal, freight, and
carbon allowances. It also manages and develops assets and
contracts at several phases of the gas value chain, such as
pipelines, long-term supply contracts, and storage facilities.

Global Units
Four of our global units are reportable segments: Generation,
Renewables, Global Commodities, and Exploration & Production.

Exploration & Production
Our Exploration & Production segment is active in the following
focus regions: the U.K. and Norwegian North Sea and Russia.

Another global unit called Technology, which is based at
Group Management, brings together comprehensive project-
development, project-delivery, and engineering expertise to
support the construction of new assets and the operation of
existing assets across the Group. This unit also coordinates
our Group-wide research and development projects for the
E.ON Innovation Centers.

Generation
Our generation fleet is one of the biggest and most efficient in
Europe. We have major asset positions in Germany, the United
Kingdom, Sweden, Italy, Spain, France, and the Benelux coun-
tries, giving us one of the broadest geographic footprints
among European power producers. We also have one of the
most balanced fuel mixes in our industry.

The Generation global unit consists of all our conventional
(fossil, biomass, and nuclear) generation assets in Europe. It
manages and optimizes these assets across national boundaries.

Regional Units
Nine regional units manage our operating business in Europe.
They are responsible for sales, regional energy networks, and
distributed generation. They are also close partners of the
global units operating in their respective region, for which they
provide a broad range of important functions, such as HR
management and accounting. In addition, they are the sole
point of contact for all stakeholders, including policymakers,
government agencies, trade associations, and the media.

We operate in the following regions: Germany, the United
Kingdom, Sweden, France, Benelux, Hungary, Czechia, Slovakia,
and Romania.

Corporate Profile

In addition, we intend to selectively expand our distributed-
energy business. The E.ON Connecting Energies business unit
focuses on providing customers with comprehensive distrib-
uted-energy solutions. We report this unit under Other EU
Countries.

Russia is a special-focus country, where our business centers
on power generation. This business is not integrated into the
Generation global unit because of its geographic location
and because Russia’s power system is not part of Europe’s
integrated grid.

Through a subsidiary called E.ON International Energy, we
work with local partners to operate renewable and conven-
tional generating capacity and distribution network and
sales businesses outside Europe. We report our power gener-
ation business in Russia and our activities in Brazil and Tur-
key under Non-EU Countries.

restructuring expenditures, impairment charges, and non-
operating earnings (which include, among other items, the
marking to market of derivatives). Consequently, EBITDA is
unaffected by investment and depreciation cycles and also
provides an indication of our cash-effective earnings (see the
commentary on pages 35 to 38 of the Combined Group Man-
agement Report and in Note 33 of the Consolidated Financial
Statements).

E.ON presents its financial condition using, among other key
figures, debt factor. A key objective of our finance strategy is
for E.ON to have an efficient capital structure. Our debt factor
is equal to our economic net debt divided by our EBITDA (for
more information, see the section entitled Finance Strategy
on page 41). We actively manage our capital structure. If our
debt factor is significantly above our target, we need to main-
tain strict investment discipline. We might also take additional
countermeasures.

Alongside our main financial management key figures, this
Combined Group Management Report includes other financial
and non-financial key performance indicators (“KPIs”) to high-
light aspects of our business performance and our sustainability
performance vis-à-vis all our stakeholders: our employees,
customers, shareholders, bond investors, and the countries in
which we operate. Operating cash flow, return on average
capital employed (“ROACE”), and value added are examples of
our other financial KPIs. Among the KPIs of our sustainability
performance are our carbon emissions, carbon intensity, and
TRIF (which measures work-related injuries and illnesses).
The sections entitled Corporate Sustainability and Employees
contain explanatory information about these KPIs. However,
these KPIs are not the focus of the ongoing management of
our businesses.

Management System

Our corporate strategy aims to deliver sustainable growth in
shareholder value. We have put in place a Group-wide planning
and controlling system to assist us in planning and managing
E.ON as a whole and our individual businesses with an eye to
increasing their value. This system ensures that our financial
resources are allocated efficiently. We strive to enhance our
sustainability performance efficiently and effectively as well.
We have high expectations for our sustainability performance.
We embed these expectations progressively more deeply into
our organization—across all of our businesses, entities, and pro-
cesses and along the entire value chain—by means of binding
company policies and minimum standards.

Our key figures for managing our operating business and
assessing our financial situation are EBITDA, underlying net
income, cash-effective investments, and debt factor.

Our key figure for purposes of internal management control
and as an indicator of our business units’ long-term earnings
power is earnings before interest, taxes, depreciation, and
amortization (“EBITDA”), which we adjust to exclude certain
extraordinary items. These items include net book gains,

Strategic Co-Investments
We support our effort to develop customer-centric and inno-
vative technologies and business models by forging strategic
partnerships with venture-capital funds. Our aim is to identify
promising energy technologies of the future that will enhance
our palette of offerings for our millions of customers around
Europe and will make us a pacesetter in the operation of smart
energy systems.

We select new businesses that offer the best opportunities for
partnerships, commercialization, and equity investments. Our
investments focus on strategic technologies and business
models that enhance our ability to lead the move to distributed,
sustainable, and innovative energy offerings. These arrange-
ments benefit new technology companies and E.ON, since we
gain access to their innovations and have a share in the value
growth. Cleantech Group—developer of a market intelligence
platform for environmentally friendly technologies, products,
and services—conferred two awards on us in 2014: European
Cleantech Corporation of the Year and Corporate Investor of
the Year.

In addition, E.ON opened an office in San Francisco in Septem-
ber 2014. The purpose is to be an active investor in Silicon
Valley and to make the innovative potential of American start-
ups available to E.ON customers. Our presence will enhance
our ability to identify interesting business models early and
to forge promising partnerships.

E.ON made the following venture-capital investments in 2014:

• AutoGrid brings the power of big data, predictive analytics,

and internet-scale computational techniques to the pro-
duction and consumption of electricity. Serving power
producers of all sizes, grid operators, energy service com-
panies, and end-users, AutoGrid develops and markets
services that both help lower costs and improve the reli-
ability of the electricity supply chain. AutoGrid is based
in Redwood Shores, California.

Technology and Innovation

Despite a difficult business environment, we maintained our
technology and innovation (“T&I”) activities at a high level of
intensity in 2014, while focusing increasingly on new offerings
for end-customers and on innovative partnerships. About
250 E.ON employees were directly involved in research and
development projects in 2014.

The megatrend of digitalization along with dynamically
changing energy markets are fundamentally transforming the
energy supply landscape. E.ON customers and other stake-
holders increasingly expect digital communications, products,
and services. Each step of this transformation creates new
challenges but also new opportunities. For E.ON to help the
transformation succeed, we need innovative technologies
and solutions. In 2014 E.ON Innovation Centers and one Incu-
bator, which were embedded in our existing businesses and
steered by the T&I department at Group Management, coor-
dinated activities in their respective technology area across
our company:
•

Retail and end-customer solutions: develop new business
models for distributed-energy supply, energy efficiency,
and mobility
Renewables generation: increase the cost-effectiveness
of existing wind, solar, and hydro assets and study new
renewables technologies
Infrastructure and distribution: develop energy-storage
and energy-distribution solutions for an increasingly
decentralized and volatile generation system
Energy intelligence and energy systems: study potentially
fundamental changes to energy systems and the role of
data in the new energy world
Conventional generation: improve our existing generation
fleet and optimize future investments
Incubator: conduct trials of cutting-edge, typically pre-
market products under real-life conditions with a small
group of customers.

•

Corporate Profile

•

Sungevity, a global provider of solar-energy solutions,
focuses on making solar power easy and affordable for
homeowners. As more customer-centric residential solar
solutions come on market, we want to provide our custom-
ers with the best solutions available. We are first deploying
Sungevity’s proprietary remote solar design technology
in the Netherlands, where homeowners can use it to sig-
nificantly reduce their electricity bills. Sungevity is based
in Oakland, California.

• QBotix builds intelligent, mobile robots for solar arrays

with dual-axis tracking. QBotix’s system could deliver cost
savings up to 20 percent on solar projects, significantly
improving the economics of our solar development pipe-
line. QBotix is based in Menlo Park, California.

•

Thermondo is a Berlin-based start-up that helps residen-
tial customers purchase an efficient and environmentally
friendly heating unit. Customers can use Thermondo’s
innovative online platform and proprietary IT infrastruc-
ture to compare a variety of heating-unit manufacturers
and technologies quickly, easily, and cost-effectively. They
can then choose and purchase the one that best fits their
needs. The selected unit is installed by certified technicians
from Thermondo. The company combines the speed and
wide product range of an internet company with the out-
standing workmanship of experienced HVAC technicians.

Leeo develops and provides smart home solutions con-
sisting of simple and intelligent plug-and-play devices
and related data services. The company, which is based in
San Francisco, develops products and services for itself
as well as select enterprise partners.

Sample Projects from 2014
Customer Solutions
E.ON conducted its biggest-ever product launch in Sweden, giving
away 120,000 smart meters and E.ON-developed smart tools
to customers. The smart tool, which can be operated using a
mobile phone app, empowers customers to reduce their energy
consumption. It is a step into the future, providing us with a
digital platform for completely new ways of doing business.

We continued to test energy management systems and grid
technologies of the future in Hyllie, a sustainable district of
Malmö, Sweden, that is gaining international attention as a
model for how communities can generate, control, and make
the best use of their energy. E.ON is playing a key role in Hyllie’s
development and is committed to supplying 100 percent
renewable or recycled energy to the district by 2020, by which
time there will be 12,000 people living and working there.

Renewables
A new large-scale experiment got under way at the National
Renewable Energy Center near Newcastle upon Tyne in the
United Kingdom. It will study how underwater noise from wind-
farm construction affects different marine animals. World-class
experts in acoustics and marine biology are using a simulated
seabed to help E.ON to improve the underwater noise models
used to predict how marine animals react to the noise made
by pile-driving, a common method of installing the foundations
of turbine towers in offshore wind farms.

E.ON entered into a partnership with other developers and
operators to validate a new technique for installing large
monopiles in an effort to reduce costs, risks, and noise in future
offshore wind farms. The demonstration project, which is
being conducted off Germany’s North Sea coast near Cuxhaven,

is overseen by the U.K. Carbon Trust’s Offshore Wind Accelerator,
a leading research and development program of which E.ON
is a member. The new installation technique uses vibration
instead of conventional pile-driving.

Distribution Networks
We tested radio-controlled drones equipped with a high-defi-
nition camera or other sensing devices to inspect power lines,
power plants, and wind turbines. Drones offer a less time-
consuming and safer method for inspecting grid components
that cannot be seen clearly from the ground. They also can be
used to inspect specific points on overhead lines, reducing the
need for helicopter surveys and making surveys more flexible.

Digitalization
After previously outsourcing data analysis projects, in 2014 we
established a Data Analytics Laboratory. It will enable trained
experts across E.ON to explore the power of analytics and to
combine different sets of data in a dedicated environment.

Energy Storage
Since entering service in August 2013, E.ON’s power-to-gas
demonstration plant at Falkenhagen, Germany, has injected
more than 2 million kWh of regenerative hydrogen into the
regional gas transmission system, enough to meet the gas
needs of about 150 households.

In 2014 we started a project with several partners (RWTH
Aachen University, E.ON Energy Research Center, IAEW, EXIDE,
and SMA) to plan and build a large-scale modular battery
storage system called M5BAT in Aachen. M5BAT will be the first
system of its kind in the world. E.ON is also responsible for
developing and testing marketing strategies for future energy
storage products.

Power Generation
We continually develop and refine advanced condition moni-
toring (“ACM”) to preserve the production capacity of our
combined-cycle gas turbines and to improve their reliability,
operational flexibility, and efficiency. In 2014 we identified
new ACM techniques to do things like detect cracks in gas
turbine blades. We also tested new hardware; one example is
a device that enables us to use current and voltage analysis
to monitor the vibration of inaccessible components. Another
focus of our ACM effort is to optimize maintenance strategies.
For example, in 2014 we tested software to determine when
it makes the most financial sense to conduct maintenance
based on plant lifespan.

University Support
Our T&I activities include partnering with universities and
research institutes to conduct research projects in a variety
of areas. Our flagship partnership is with the E.ON Energy
Research Center at RWTH Aachen University in Germany.

E.ON received three awards for the first smart power grid in
northern Germany, operated on Pellworm island:
•

the coveted innovation award of the “Germany—land of
ideas” initiative
the environmental award presented by Studien- und
Fördergesellschaft der Schleswig-Holsteinischen Wirt-
schaft e.V., a Schleswig-Holstein business association
an audience award called “Excellent places in the land
of ideas.”

•

Business Report

Macroeconomic and Industry Environment

Macroeconomic Environment
In 2014 the global economy continued to grow at a moderate
pace. According to figures from the OECD, global gross domestic
product (“GDP”) grew in real terms by 3.3 percent, slightly
above the figure for 2013. However, growth in recent years has
lagged 1 percentage point behind the long-term average
growth rate for the period 2000–2007 that led up to the finan-
cial crisis. Global trade expanded by 3 percent in 2014, which
was also below the long-term average of years past. The OECD
attributes the global economy’s persistent sluggishness in part
to continued uncertainty in many parts of the world. Despite
this broader trend, economic growth varied by country.

weak macroeconomic environment. After two years of reces-
sion the Czech economy began to grow again; after two
years of weak growth the Polish economy nearly doubled its
growth rate.

Dampened by a decline in investment activity and high infla-
tion, Brazil’s economy was not able to repeat the sometimes
high growth rates of years past. Although Russia faced a
number of adverse factors—including a reduction in oil prices,
capital flight, and a decline in investment activity—it managed
to avoid sliding into recession in 2014. Generally weak domestic
demand and above all a decline in investment activity pre-
vented Turkey’s economy from repeating the high growth rates
of the past.

Loose monetary policy fueled robust consumer demand in the
United States and the United Kingdom, resulting in additional
demand for investment goods.

2014 GDP Growth in Real Terms

Annual change in percent

The euro zone’s economy was almost stagnant, held back by
investor uncertainty, high unemployment, and deflationary
tendencies. Some support was provided by continued expansive
monetary policy and less pressure to consolidate fiscal policy.

Germany’s moderate economic growth was driven primarily by
stable consumption. Domestic demand was supported in
particular by a stable labor market. Italy had its third straight
year of recession in 2014, although the rate of economic con-
traction was significantly slower. The other countries of South-
ern Europe emerged from recession and returned to growth.
Economic performance varied among EU member states in
Northern Europe in 2014. Finland experienced its third year of
recession, although here too the rate of contraction slowed.
Sweden’s GDP expanded owing to consumption and exports.
The economic performance of Eastern European member
states was generally much better than in the rest of the EU, in
part because domestic demand remained robust despite a

Germany

France

Italy

Spain

Euro zone

Sweden

United
Kingdom

USA

OECD

Brazil

Russian
Federation

Turkey

-0.4

1.5

0.4

1.3

0.8

2.1

2.2

1.8

3.0

0.3

-2.0

-1.0

1.0

2.0

3.0

4.0

Source: OECD, 2014.

Energy Policy and Regulatory Environment
International
The 20th United Nations climate change conference took place
in Lima, Peru, in December 2014. Progress was made on some
of the details of an international climate treaty. Agreement on
a new treaty had not been expected. However, this time there
was greater optimism that a treaty will be signed at the next
conference, which will be held in Paris at the end of 2015. An
important step in that direction would be the announcement,
at the beginning of 2015, of national targets for reducing green-
house gas (“GHG”) emissions. Prior to the Lima conference,
the International Energy Agency published its World Energy
Outlook 2014. Among its predictions is that global energy
consumption will continue to rise.

Benelux
The Netherlands’ National Energy Agreement, which was signed
in 2013, could not be put in place because of issues raised by
the country’s regulatory agency. Belgian energy policy focused
on aspects of supply security in view of a looming shortage
of generating capacity. Belgium has in place a strategic reserve
mechanism, in which E.ON participates.

Brazil
In 2014 Brazil continued to use the tender process for award-
ing power purchase agreements for new hydro, coal, gas,
biomass, solar, and wind capacity. In part due to the drought-
induced fragility of Brazil’s power supply, the main focus of
its energy policy continues to be on achieving a reasonable
balance between price stability and an attractive investment
environment for new generating capacity in order to ensure
a high degree of supply reliability.

Central Eastern Europe
Although in most of the countries of this region there was
little change in the regulatory environment in 2014, there
were examples of regulatory intervention such as price mora-
toriums and, in Hungary, of legislatively mandated reductions
in end-customer tariffs.

Europe
Two key subjects of Europe’s energy-policy debate in 2014 were
the reform of the EU Emissions Trading Scheme and the future
direction of European energy and climate policy. In 2014 it was
decided to temporarily withhold a certain number of emission
allowances, thereby beginning the process of reducing the

auction volume. In January the European Commission put for-
ward a legislative proposal for establishing a market stability
reserve designed to rebalance supply and demand in the
carbon market over the medium term; this proposal is being
debated by the newly elected European Parliament and by
the member states. In January the Commission also put forward
the Framework for Climate and Energy Policies up to 2030,
which was approved in late October by the European Council,
which consists of the heads of state and government. The
framework sets a binding target of reducing GHG emissions
by at least 40 percent by 2030 compared with 1990. It also sets
non-binding targets of at least 27 percent for renewables’
share of energy used and for the increase in energy efficiency.
The Commission’s task for 2015 is to transform these proposals
into draft legislation.

It is anticipated that in 2015 this Commission will devote more
attention than previous commissions to issues such as capacity
market designs and the reliability of the electricity supply.

A number of significant financial market regulations were dis-
cussed in 2014. Particularly noteworthy were the consultations
on different aspects of the Market in Financial Instruments
Directive (“MiFID II”). Nevertheless, a not inconsiderable degree
of uncertainty remains regarding several definitions and
technical criteria. MiFID II is supposed to take effect in 2017.

France
France’s capacity market is taking more precise shape. Start-
ing in 2016/2017, utilities will be required to ensure that they
have sufficient capacity certificates to meet their peakload
obligations. As part of this process, all power plants in France
will be certified by their network operator and all will partici-
pate in the capacity market, which will be technology-neutral.
Existing and new capacity will receive the same compensation,
which will be set by a market-based mechanism, not by regu-
lated tariffs. Consumers with flexible load can also participate
in the capacity market, which gives it a demand-side com-
ponent. However, the process of establishing the capacity
market is behind schedule.

Business Report

Germany
The energy-policy debate in Germany in 2014 again focused
primarily on the implementation of the energy strategy known
as the Energiewende: the transformation of the country’s
energy system. Key topics of discussion included renewables
subsidies, renewables’ ability to assume market and system
responsibility, possible solutions for stabilizing the reliability
of the power supply, particularly with regard to conventional
generating capacity. The government aims to enhance supply
security through more regulatory intervention: over the medium
term, it intends to design capacity-market mechanisms that
will create sufficient incentives to keep existing generating
capacity in the market and to build new capacity. As part of
this effort, the German Federal Minister for Economic Affairs
published a number of studies and, in the autumn, an Elec-
tricity Market Green Paper, which initiated a broad-based dis-
cussion of the future design of Germany’s electricity market.

The energy-policy debate in Germany in the first half of 2014
centered around the reform of renewables support schemes.
These changes will affect numerous E.ON operations. The new
rules will likely have a generally positive effect on our offshore
wind and hydro operations and could create new business
opportunities for energy services. We anticipate adverse con-
sequences for new business relating to biomethane.

In the autumn the German government adopted a Climate
Action Program. Its purpose is to enable Germany to reach its
climate-protection targets for 2020. It includes additional
measures (beyond those already in place) to achieve further
reductions in carbon emissions in power generation. These
measures will be announced in 2015.

Russia
There were several noteworthy regulatory developments
in Russia. The government issued new ordinances for power
stations aimed at further enhancing the security of the
country’s power and heat supply. The Federal Tariff Service
approved prices for power and generating capacity for 2015.
It also established price caps for 2015 for two zones of the
country’s power system. There were also procedural changes
to capacity auctions; these included adjustments to the
treatment of unavailable capacity. The political crisis between
Ukraine and Russia and the EU sanctions against Russia
did not lead to any adverse developments in Russia’s energy-
policy environment.

Sweden
Sweden’s minority government reached an agreement with
certain opposition parties, avoiding the need for new elections,
which had been scheduled for March. The government is
expected to pass a new budget in May 2015. This budget could
raise the taxes on nuclear power stations. Sweden and other
member states must transpose the EU water framework
directive into national law by 2015, which could limit the out-
put of Sweden’s hydroelectric stations.

Turkey
In 2014 Turkey continued liberalizing its energy market. The
privatization of Turkey’s 21 regional power distributors and
energy retailers is completed. Its generation market continues
to be privatized.

Turkey took more steps to set up EPIAŞ, its new energy
exchange, which will replace and integrate PMUM, the coun-
try’s previous energy marketplace. The purpose of EPIAŞ is
to help Turkey expand its role as an energy hub between the
EU and energy-rich countries of the Middle East and the
Caspian Sea region.

United Kingdom
The U.K. government is currently reforming the country’s
wholesale power market with the aim of improving the invest-
ment climate for low-carbon technologies and ensuring supply
security. The introduction of feed-in tariffs is intended to pro-
vide greater certainty of revenues for new nuclear capacity,
new renewables capacity, and carbon capture and storage.
The introduction of a capacity market is intended to ensure
supply security. The first capacity auction, for the 2018/2019
delivery year, was held in December 2014. Contracts for a total
of about 49.2 GW of capacity at a clearing price of £19.40
per kW per year were awarded. The contracts have different
durations depending on whether they are for new plants,
existing plants, refurbished plants, or demand-side response.

The U.K. Competition Market Authority is conducting an
investigation of the state of competition in the power and gas
retail market. It is expected to issue its recommendations in
the fourth quarter of 2015 at the earliest.

USA
There was more discussion in the United States about legis-
lation that takes a long-term approach to climate protection.
This legislation could include new regulations aimed at reduc-
ing specific GHG emissions of power stations by 30 percent
by 2030. Existing federal policies to support renewables have
made the United States a global leader in wind power. These
policies include production tax credits, which were extended
for another year to support wind farms whose construction
began in 2014. Investment tax credits for solar energy are in
place through 2016, after which they will be substantially
reduced. In addition, many states have established programs
that set mandatory targets for renewables in their power
markets, which has resulted in trading in green-power certifi-
cates at a regional level.

Energy Industry
According to preliminary figures from AGEB, an energy-industry
working group, Germany consumed 446.5 million metric tons
of coal equivalent (“MTCE”) in 2014, 4.8 percent less than in
2013. Mild weather was the main factor. Consumption of all
fossil fuels declined, whereas renewables production increased.
AGEB therefore expects Germany’s energy-related carbon emis-
sions for 2014 to decline by just over 5 percent year on year.
About half of this reduction is attributable to power generation.

Germany’s petroleum consumption declined by 1.3 percent to
156.2 MTCE, its natural gas consumption by about 14 percent
to 91.2 MTCE. Less natural gas was used for both space heating
and power generation. Consumption of hard coal fell by
7.9 percent to 56.2 MTCE, in part because of the increase in
renewables output. Consumption of hard coal at cogeneration
plants declined by 11.7 percent to 36.9 MTCE. Consumption of
lignite, which is used almost exclusively for power generation,
decreased by 2.3 percent to 54 MTCE. Nuclear production
declined by 0.4 percent to 36.1 MTCE.

Renewables output in Germany rose by 1.4 percent to 49.4 MTCE.
Renewables’ share of primary energy consumption increased
from 10.4 percent to 11.1 percent. Hydro generation (excluding

pumped storage) declined by 9 percent, whereas wind gener-
ation rose by just over 1 percent. Solar generation increased
by just under 14 percent. Together, wind and solar generation
rose by 3.3 percent.

Primary Energy Consumption in
Germany by Energy Source

Percentages

Petroleum

Natural gas

Hard coal

Lignite

Nuclear

Renewables

Other (including net power imports/exports)

Total

Source: AGEB.

2014

35.0

20.4

12.6

12.2

8.1

11.1

0.6

2013

33.7

22.6

13.0

11.9

7.7

10.4

0.7

100.0

Electricity consumption in England, Scotland, and Wales
declined by 5 percent, from 305 to 290 billion kWh. Gas con-
sumption (excluding power stations) declined from 588 to
506 billion kWh owing to higher temperatures in 2014 relative
to 2013. Ongoing energy-efficiency measures and more cost-
conscious energy use also served to reduce consumption.

Northern Europe consumed 375 billion kWh of electricity, a
year-on-year decline of 7 billion kWh, because of higher average
temperatures and stagnating industrial demand. It recorded
net electricity exports to surrounding countries of about
10 billion kWh compared with net imports of about 2 billion kWh
in 2013 reflecting the increase in hydro output in 2014.

Hungary’s electricity consumption rose by 4 percent to 35 bil-
lion kWh owing to higher industrial demand. Driven by higher
average temperatures, a reduction in gas-fired generation, and
energy-saving measures, Hungary’s gas consumption declined
by 13 percent to 11,641 million cubic meters.

France’s electricity consumption fell by 6 percent to 465.3 bil-
lion kWh because of weather factors along with weak economic
growth and energy-efficiency measures.

The Russian Federation generated 1,046.3 billion kWh of elec-
tricity, a slight increase year-on-year. It generated 1,024.9 bil-
lion kWh in its integrated power system (which does not include
isolated systems), which also represents a slight increase.
Power consumption in the Russian Federation as a whole rose
by 0.4 percent to 1,035.2 billion kWh.

Business Report

Energy Prices
Five main factors drove Europe’s electricity and natural gas
markets and Russia’s electricity market in 2014:
•

international commodity prices (especially oil, gas, coal,
and carbon-allowance prices)

• macroeconomic and political developments
• weather
•
•

the availability of hydroelectricity in Scandinavia
the expansion of renewables capacity.

The two main factors that influenced commodity markets
throughout the year were Europe’s mild weather and the
resulting decline in prices for nearly all types of fuels. The sharp
decline in energy prices also affected the rate of inflation,
which in December 2014 was negative for the first time since
October 2009. The U.S. dollar continued to appreciate against
the euro, and the value of the Russian ruble fell dramatically.
Concerns about the potential geopolitical risks of the spread
of the Ukraine crisis did not have a lasting impact on prices.

Oil prices in particular displayed a varied pattern in 2014. Prices
were relatively stable in the first half of the year because the
downward pressure from production increases in non-OPEC
countries was more than offset by uncertainty regarding the
crisis in the Middle East. In the second half of the year, prices
then fell by 40 percent to a five-year low in response to weaker
global demand, further production increases, and the resump-
tion of production in Libya. The situation was exacerbated
by the fact that OPEC, or more precisely Saudi Arabia, refused
to play its historic role of price-stabilizer and because Russia
and Iraq ratcheted up their production despite lower prices.

Wholesale Electricity Price Movements
in E.ON’s Core Markets

€/MWh

U.K. baseload1
Russia (Europe)2
Russia (Siberia)2

Nord Pool baseload1
EEX baseload1

1/1/13 4/1/13 7/1/13 10/1/13 1/1/14 4/1/14 7/1/14 10/1/14

1For next-year delivery.
2Spot delivery (30-day average).

Coal prices also continued to decline almost unchecked. As in
2013, the market suffered from oversupply and weak demand,
which put downward pressure on prices, primarily in the first
quarter. Uncertainty regarding Columbia’s production was
a brief stabilizing factor at the beginning of the year. Above-
average temperatures reduced import demand in the Atlantic
basin throughout the winter. After a mostly uneventful summer,
coal prices began to move again in the fourth quarter, sliding
to a new four-year low in response to the collapse of oil prices
and the strengthening of the U.S. dollar against the currencies
of all major coal-exporting countries.

Europe’s gas market saw a relatively high degree of price vol-
atility and generally declining price levels in 2014. The latter
trend resulted from mild weather in the first quarter and
declining oil prices in the second half of the year. In addition,
in the fourth quarter the LNG spot market displayed the first
signs of oversupply, which were brought on by high inventory
levels at gas storage facilities in East Asia and weak industrial
demand worldwide. Prior to that, prices had stabilized tem-
porarily in the summer months as the anticipated oversupply
had not yet materialized despite the abundant storage sit-
uation. Prices for next-year delivery fluctuated dramatically
at times in response to news about developments in the
Ukraine crisis.

Prices for EU carbon allowances (“EUAs”) under the European
Emissions Trading Scheme fluctuated substantially at the start
of the year amid speculative trading. The two main factors
were the agreement reached by policymakers on a directive
to reduce the number of EUAs in circulation through a mech-
anism known as backloading and the implementation of this
directive in March. Starting in May, backloading began to
have the desired effect, resulting in a steady increase in EUA
prices through December. The policy debate about a proposed
market stability reserve (a long-term solution for addressing
the oversupply of EUAs) became an important price driver
in the fourth quarter.

Carbon Allowance Price Movements
in Europe

€/metric ton

Phase-two allowances

7.50

5.00

2.50

1/1/13 4/1/13 7/1/13 10/1/13 1/1/14 4/1/14 7/1/14 10/1/14

The prvious year’s downward price trend for German baseload
power for next-year delivery continued in 2014. The ongoing
increase in installed renewables capacity and a weak forecast
for coal prices remained the key factors. After declining
steadily in the first half of the year, prices were very volatile
in the second half, mainly because of the development of
underlying fuel prices and increasing uncertainty about poten-
tial regulatory changes.

Clean Dark and Spark Spreads in
Germany

€/MWh

Clean spark spread (front year)
Clean dark spread (front year)

-5

1/1/13 4/1/13 7/1/13 10/1/13 1/1/14 4/1/14 7/1/14 10/1/14

Throughout the year, U.K. power prices reflected their signifi-
cant dependence on gas prices. Consequently, prices for
next-year delivery tracked the downward trend in gas prices

in the first half of the year, the stabilization of gas prices in
the third quarter, and their renewed decline in the fourth
quarter, which resulted from mild winter weather.

The average spot price on the Nordic power market was at its
lowest level in seven years, primarily because of low fuel
prices, the development of German power prices, and above-
average temperatures. As a result, the region remained a net
exporter of power to adjacent markets. Reservoir levels barely
deviated from their historic average. As with spot prices, prices
for next-year delivery displayed a marked downward trend.

Prices in the European zone of the Russian power market rose
significantly in the first three quarters of the year. This trend
was reversed in the fourth quarter as the seasonal increase in
demand and a decline in hydro output were more than offset
by an increase in nuclear and CHP output. Prices in the Siberian
zone increased substantially in the second half of the year,
particularly in the fourth quarter, owing to very low hydro out-
put and higher exports to the European zone made possible by
improvements in the interconnection between the two zones.

Crude Oil, Coal, and Natural Gas Price Movements in E.ON‘s Core Markets

Brent crude oil front month ($/bbl)
NBP gas front month (€/MWh)

API#2 coal index front month ($/metric ton)
TTF gas front month (€/MWh)

Monthly German gas import prices (€/MWh)
NCG gas front month (EEX) (€/MWh)

€/
MWh

$/bbl
$/t

120

110

100

1/1/13

4/1/13

7/1/13

10/1/13

1/1/14

4/1/14

7/1/14

10/1/14

Business Report

Business Performance

Generating Capacity
The E.ON Group’s attributable generating capacity (that is, the
capacity that reflects the percentage of E.ON’s ownership
stake in an asset) declined by 4 percent, from 61,090 MW at
year-end 2013 to 58,871 MW at year-end 2014. The E.ON Group’s
fully consolidated generating capacity also declined by 4 per-
cent, from 62,809 to 60,151 MW.

Attributable Generating Capacity
(Ownership Perspective)

Germany 2014
Germany 2013

Outside Germany 2014
Outside Germany 2013

one each in Germany, Slovakia, and the Netherlands. Our build-
and-sell strategy reduced our attributable wind capacity by
330 MW.

Our fully consolidated generating capacity declined by 2,658 MW,
largely for the reasons just described. Unlike our attributable
capacity, our consolidated gas capacity was just 734 MW lower
due to the consolidation of a gas-fired generating unit in Italy.
Our fully consolidated oil capacity declined by 313 MW owing to
the closure of two oil-fired units in Italy. Our fully consolidated
hydro capacity declined by 72 MW, primarily because of the
divestment of small hydroelectric plants in Germany. The sale
of stakes in wind farms in the United States and Denmark
decreased our fully consolidated wind capacity by 559 MW.

Fully Consolidated Generating Capacity

Germany 2014
Germany 2013

Outside Germany 2014
Outside Germany 2013

8,202
8,202

1,793
1,792

11,249

12,272

Nuclear

Lignite

Hard coal

Natural gas

Oil

Hydro

Wind

Other

2,819
2,831

4,974
4,970

4,397
4,727

1,226
1,182

5,000

10,000 15,000 20,000 25,000

Additional information in Tables and Explanations on page 220 et seq.

Several categories of our attributable generating capacity—
nuclear, lignite, oil, hydro, biomass, and other—were essentially
unchanged. The decline of 1,023 MW in hard coal reflects, in
particular, the scheduled decommissioning of three generating
units at Datteln power station in Germany and the closure
of three units in France. Our attributable gas-fired capacity
declined by 903 MW owing to the closure of three gas turbines,

24,211

25,114

Nuclear

Lignite

Hard coal

Natural gas

8,257
8,257

2,429
2,428

11,189

12,212

25,632

26,366

Oil

Hydro

Wind

Other

2,819
3,132

4,849
4,921

3,823
4,382

1,154
1,110

5,000

10,000 15,000 20,000 25,000

Additional information in Tables and Explanations on page 220 et seq.

situation. In Sweden we conducted overhaul work to extend
the operating life of unit 2 at Oskarshamn nuclear power
station. Lower demand due to the relatively warmer weather
was another adverse factor.

Owned Generation by Energy Source

Billion kWh

Germany 2014
Germany 2013

Outside Germany 2014
Outside Germany 2013

55.4
56.1

47.4

62.7

71.1

81.1

Nuclear

Lignite

Hard coal

Natural gas,
oil

Hydro

Wind

Other

2.7
2.5

12.1

14.5

14.3
15.9

12.2
12.4

Additional information in Tables and Explanations on page 220 et seq.

Power Procurement
The E.ON Group’s owned generation declined by 30 billion kWh,
or 12 percent, year on year. The Generation unit accounted for
most—21.2 billion kWh—of the reduction. Owned generation at
our other units declined by 8.8 billion kWh. Power procured
increased by 67.6 billion kWh.

Power Procurement

Billion kWh

Total

752.1

Owned generation

215.2

Jointly owned
power plants

14.2

Global Commodities/
outside sources

522.7

714.5

245.2

14.0

455.3

Additional information in Tables and Explanations on page 220 et seq.

2014

2013

Generation’s owned generation decreased by 21.2 billion kWh,
from 146.7 to 125.5 billion kWh. In Germany the decline resulted
in particular from the reduced dispatch of coal-fired and gas-
fired assets due to the current market situation, the scheduled
decommissioning of three generating units at Datteln power
station, unplanned outages of hard-coal-fired generating units
at Staudinger and Heyden power stations, extended down-
times at Grohnde and Isar 2 nuclear power stations, and the
sale of Buschhaus, a lignite-fired power plant. In France less
power was generated at gas-fired assets because of the market
situation, the shutdown of two generating units, and the
limited availability of two units. In Italy we generated less
power in gas-fired plants because of the deteriorated market

Business Report

Power Sales
The E.ON Group’s consolidated power sales were 39 billion kWh
above the prior-year level due to an increase in trading activity.

Power Sales

Billion kWh

Total

735.9

696.9

Residential and SME

62.0

I&C

Sales partners

90.2

91.3

Wholesale market/
Global Commodities

492.4

69.1
93.1

112.5

422.2

Additional information in Tables and Explanations on page 220 et seq.

2014

2013

The 7.1 billion kWh decline in power sales to residential and
small and medium enterprise (“SME”) customers reflects, in par-
ticular, lower sales volume at the Germany regional unit and
at Other EU Countries due to mild weather. Lower customer
numbers and ongoing energy-efficiency measures were addi-
tional adverse factors in the United Kingdom. Power sales in
Germany were adversely affected by the divestment of E.ON
Thüringer Energie and E.ON Mitte and by lower average con-
sumption due both to mild weather and enhanced energy-
efficiency measures. However, we continued the positive trend
of recent quarters by achieving further improvements in cus-
tomer acquisition and satisfaction. On a net basis, this resulted
in the addition of 40,000 new customers.

Power sales to industrial and commercial (“I&C”) customers
declined by 2.9 billion kWh. The Germany regional unit’s
I&C power sales declined by 4.1 billion kWh, from 25.1 to
21 billion kWh owing to the above-mentioned divestments as
well as the loss of customers due to competition. By contrast,
Other EU Countries’ I&C power sales rose by 0.9 billion kWh,
from 64.9 to 65.8 billion kWh.

Power sales to sales partners declined by 21.2 billion kWh.
The Germany regional unit’s power sales to this customer
group declined by 14.2 billion kWh, from 75.5 to 61.3 billion kWh,
owing to the above-mentioned reasons and to the divestment
of E.ON Westfalen Weser and E.ON Energy from Waste. Gener-
ation’s power sales declined by 4.4 billion kWh, from 32.8 to
28.4 billion kWh, mainly because of lower production at fossil-
fueled assets and unplanned outages in Germany. Lower
demand resulting from comparatively mild weather was an
additional adverse factor here as well. Renewables’ power
sales of 5.6 billion kWh were 2.4 billion kWh below the prior-
year figure of 8 billion kWh, principally because of the reduction
in installed capacity following the sale of certain hydroelectric
assets in 2013 in Germany in conjunction with our market
entry in Turkey.

An increase in Global Commodities’ trading activities to opti-
mize E.ON’s generation portfolio was primarily responsible for
the increase in power sales in the trading business.

Gas Procurement, Wholesale Sales, and Production
The Global Commodities unit procured about 1,211 billion kWh
of natural gas from producers in and outside Germany in 2014.

To execute its procurement and sales mission for the E.ON
Group, Global Commodities traded the following financial
and physical quantities with non-Group entities:

Trading Volume

Power (billion kWh)

Gas (billion kWh)

Carbon allowances (million metric tons)

Oil (million metric tons)

Coal (million metric tons)

2014

1,695

1,794

458

188

2013

1,286

1,961

469

211

The table above shows our entire trading volume from 2014,
including volume for delivery in future periods.

Gas sales to residential and SME customers declined by
24.9 billion kWh. Comparatively mild weather was the main
factor in the United Kingdom, Germany, Romania, and the
Netherlands. Competition-driven losses constituted another
negative factor in the United Kingdom. The derecognition of
a majority-held equity interest in the first quarter of 2014 was
the principal reason for the decline in Czechia.

Gas sales to I&C customers declined by 33.6 billion kWh. Owing
to the above-described reason, the Germany regional unit’s
gas sales to I&C customers fell by 26.5 billion kWh, from 109
to 82.5 billion kWh. Other EU Countries’ gas sales fell at all of
its units except Hungary by a total of 7.1 billion kWh, mainly
because of weather factors. The above-mentioned derecogni-
tion was an additional adverse factor in Czechia.

Gas sales to sales partners declined by 98.2 billion kWh. The
decline at the Germany regional unit mainly reflects the
transfer of its business with energy traders and banks to our
Global Commodities unit (where this business is classified as
wholesale market sales) and the development of commodity
prices. Mild weather and, in particular, keen competition were
adverse factors as well.

Gas sales in the trading business rose by 98.4 billion kWh,
primarily because of an increase in the proportion of sales
on the wholesale market.

Upstream Production

Oil/condensates (million
barrels)

Gas (million standard
cubic meters)

Total (million barrels of
oil equivalent)

2014

2013

+/- %

10.6

7.5

1,885.4

1,464.7

22.4

16.5

+41

+29

+36

The main reason for the increase in Exploration & Production’s
production in the North Sea was higher production at Skarv
field resulting from improved production efficiency. It also
reflected higher production at Babbage, Rita, Huntington,
and Njord/Hyme fields. In addition to its North Sea production,
in 2014 Exploration & Production had 5,923 million cubic
meters of output from Siberia’s Yuzhno Russkoye gas field,
which is accounted for using the equity method.

Gas Sales
The E.ON Group’s gas sales declined by 58.3 billion kWh, or
5 percent.

Gas Sales

Billion kWh

Total

1,161.0

1,219.3

Residential and SME

93.3

I&C

Sales partners

117.9

235.2

Wholesale market/
Global Commodities

714.6

118.2
151.5

333.4

616.2

Additional information in Tables and Explanations on page 220 et seq.

2014

2013

Business Report

Business Performance in 2014
Our business performance in 2014 continued to reflect the
difficult situation on energy markets in Germany and Europe
but also the many operational, financial, and strategic mea-
sures we initiated.

Our sales of €111.6 billion were 7 percent below the prior-year
figure of €119.7 billion. Our EBITDA declined by 9 percent year
on year to €8.3 billion, underlying net income by 24 percent
to €1.6 billion. Both results are in line with our expectations.
The declines primarily reflect currency-translation and port-
folio effects.

Consequently, our 2014 EBITDA and underlying net income
were both within the forecast ranges—€8 to €8.6 billion and
€1.5 to €1.9 billion, respectively—of our earnings guidance.

Our investments of approximately €4.6 billion were significantly
below the high prior-year figure of €8 billion but also below
the figure of €4.9 billion foreseen for 2014 in our medium-
term plan, mainly because of currency-translation effects and
scheduling changes at some projects.

Despite the earnings decline, our operating cash flow of
€6.3 billion was at the prior-year level.

Relative to year-end 2013, at year-end 2014 our economic net
debt increased slightly to €33.4 billion, in particular because
of higher provisions for pensions. Our debt factor rose to
4 (prior year: 3.5). As part of implementing our new strategy,
we will review our medium-term debt factor target to reflect
our new business profile after the spinoff of the New Company.

E.ON 2.0
To enhance our performance, in the summer of 2011 we
launched a Group-wide restructuring and cost-cutting program
called E.ON 2.0. Its objective is to reduce E.ON’s controllable
costs from roughly €11 billion in 2011 to €9 billion by 2015 at the
latest (adjusted for divestments, this figure is now €7.5 billion).
By year-end 2014 we had already achieved about 90 percent
of the targeted savings, resulting in a lasting reduction in our
cost basis. We plan for E.ON 2.0 to deliver further cost reduc-
tions in 2015.

Building on our cost-cutting successes, in the second half of
2013 we launched an E.ON 2.0 project called Working Capital
Excellence. Its aim is to make lasting improvements in our
processes that reduce our working capital by €1 billion by the
end of 2016 on a cash-effective basis relative to 2012. To get
there, we set out to reduce receivables cycles (Order-to-Cash),
expand our use of non-interest-bearing liabilities (Procure-to-
Pay), and optimize our inventories (Forecast-to-Fulfill). By
year-end 2014 we already achieved working capital reductions
of about €0.4 billion and designed measures to achieve the
remainder of the 2016 target.

Acquisitions, Disposals, and Discontinued Operations
in 2014
We executed the following significant transactions in 2014.
Note 4 to the Consolidated Financial Statements contains
detailed information about them.

our generation operations in Italy
our generation operations in Spain

Disposal Groups, Assets Held for Sale and Discon-
tinued Operations
To implement our divestment strategy, through year-end 2014
we classified as disposal groups, classified as assets held for
sale, or sold the following activities:
•
•
• Global Commodities’ operations in Lithuania
•
certain micro heating plants in Sweden
•
a minority stake in Pražská plynárenská
•
an 80-percent stake in Rødsand 2, a 207 MW offshore
wind farm
stakes in two wind farms in the United States
our stake in Erdgasversorgungsgesellschaft Thüringen-
Sachsen, a gas utility.

•
•

We classified the following activities as discontinued opera-
tions:
•
•

the Spain regional unit
the Italy regional unit.

Disposals resulted in cash-effective items totaling €2,551 million
in 2014 (prior year: €7,120 million).

Particularly significant declines in sales were recorded at our
Germany, Other EU Countries, and Global Commodities units,
although the decline at the latter is entirely attributable to
lower intragroup sales.

The Germany regional unit’s sales declined by about €8 billion.
Most of this—around €6 billion—reflects the divestment of
E.ON Energy from Waste, intragroup offsets in the gas business,
and a weather-driven decline in sales volume. Another
€1.7 billion of the decline is entirely attributable to the divest-
ment of the network operations of E.ON Mitte, E.ON Thüringer
Energie, and E.ON Westfalen Weser.

Sales at Other EU Countries were €1.6 billion below the prior-
year figure. The following were the main negative factors: a
reduction in connection fees for wind farms, lower sales in the
distribution network business, and the divestment of opera-
tions in Finland and Poland at the Sweden regional unit; the
derecognition of a majority-held share investment in the first
quarter of 2014 and a regulation-driven decline in sales in the
power business in Czechia; and lower sales prices in the reg-
ulated power and gas business in Hungary. In addition, cur-
rency-translation effects had an additional adverse impact on
sales recorded in Sweden, Czechia, and Hungary. Furthermore,
warmer temperatures relative to 2013 were responsible for
a significant decline in sales in all countries. By contrast, the
acquisition of new customers and increases in power and gas
sales in France had a positive impact on sales.

Global Commodities’ sales declined on the power side owing
to a lower price level relative to the prior year and on the gas
side owing to a weather-driven reduction in sales volume in
the midstream gas business, declining prices, and the sale of
the Hungarian gas business in September 2013.

The following table shows the sales, EBITDA, investments, and
employee numbers of the Italy and Spain regional units. In
view of the negotiations to sell these units, we reclassified
them as discontinued operations. Their results are therefore
included in net income as income from discontinued operations
(see the table on page 39):

Discontinued Operations

€ in millions

Sales

EBITDA

Investments

Employees

Italy

Spain

2014

1,592

308

2013

1,808

324

2014

1,166

146

572

2013

1,179

132

588

Earnings Situation

Transfer Price System
Deliveries from our generation units to Global Commodities
are settled according to a market-based transfer price system.
Generally, our internal transfer prices are derived from the
forward prices that are current in the marketplace up to three
years prior to delivery. The resulting transfer prices for power
deliveries in 2014 reflect the development of market prices
and were therefore lower than the prices for deliveries in 2013.

Sales
Our 2014 sales of €111.6 billion were about €8.1 billion below
the prior-year level.

Sales

€ in millions

Generation

Renewables

Global Commodities

Exploration & Production

Germany

Other EU Countries

Non-EU Countries

Group Management/
Consolidation

Total

2014

10,285

2,397

83,106

2,118

28,584

18,995

1,518

2013

11,068

2,423

90,034

2,051

36,521

20,615

1,865

-35,447

-44,889

111,556

119,688

+/- %

-7

-1

-8

-22

-8

-19

–

-7

Business Report

Other Line Items from the Consolidated Statements
of Income
Own work capitalized of €345 million was 5 percent below the
prior-year figure of €364 million. One reason was the divest-
ment of shareholdings at the Germany regional unit in 2014.
Another reason was that fewer engineering services for gen-
eration new-build projects were performed in 2014 than in 2013.

Other operating income of €10,966 million was 3 percent
above the prior-year figure of €10,681 million. One reason was
that income from derivative financial instruments rose by
€3,855 million to €6,210 million (prior year: €2,355 million),
mainly because of the marking to market of commodity and
currency derivatives. By contrast, income from currency-trans-
lation effects of €2,437 million was below the prior-year fig-
ure of €3,765 million. Corresponding amounts resulting from
currency-translation effects and from derivative financial
instruments are recorded under other operating expenses. In
addition, income on the sale of securities, property, plant,
and equipment (“PP&E”), intangible assets, and share invest-
ments declined by €1,521 million to €1,028 million (prior year:
€2,549 million); as in the prior year, this income was recorded
mainly on the sale of share investments. Reversals of provi-
sions and impairment charges were also lower, declining by
€428 million to €54 million (prior year: €482 million).

Costs of materials declined by 7 percent, from €105,719 million to
€98,496 million. The primary causes were a reduced expense for
gas purchases and the divestitures at the Germany regional unit.

Personnel costs declined by about 10 percent to €4,121 million
(prior year: €4,604 million), mainly because of divestments
made in 2013 and effects relating to our E.ON 2.0 restructuring
program.

Depreciation charges rose by €3,462 million, from €5,205 million
to €8,667 million, in particular because of impairment charges
on PP&E.

Other operating expenses increased by 20 percent to €11,834 mil-
lion (prior year: €9,902 million). The reason for the increase
was higher expenditures relating to derivative financial instru-
ments, which rose by €3,685 million to €5,305 million (prior
year: €1,620 million), mainly because of the development
of commodity derivatives. This was partially offset by a reduc-
tion in expenditures relating to exchange-rate differences,
which declined by €818 million to €2,937 million (prior year:
€3,755 million). In addition, our €86 million in losses on the
sale of securities, PP&E, and share investments was €423 mil-
lion lower than the prior-year figure of €509 million. We also
recorded lower concession fees and IT expenditures.

Income from companies accounted for under the equity
method declined by €63 million, from -€210 million to
-€273 million, mainly because of impairment charges on a
share investment at Non-EU Countries in both 2014 and 2013.

EBITDA
Our 2014 EBITDA was down by about €0.9 billion year on year.
The positive factors were:
•
•
•

cost savings delivered by our E.ON 2.0 program
higher earnings at Generation and Renewables
higher production at Exploration & Production.

These factors were more than offset by:
•
•
•
•
•

the absence of earnings streams from divested companies
lower earnings in our trading business
adverse currency-translation effects
adverse regulatory effects at the Germany unit
lower earnings at Other EU Countries and Russia.

E.ON generates a significant portion of its EBITDA in very
stable business areas. The overall share of regulated as well
as quasi-regulated and long-term contracted operations
amounted to 53 percent of EBITDA in 2014.

EBITDA1
€ in millions

Regulated business

Quasi-regulated and long-term
contracted business

Merchant business

Total

1Adjusted for extraordinary effects.

2014

2,858

1,596

3,883

8,337

2013

3,482

1,429

4,280

9,191

+/- %

-18

+12

-9

EBITDA1
€ in millions

Generation

Renewables

Global Commodities

Exploration & Production

Germany

Other EU Countries

Non-EU Countries

Group Management/
Consolidation

Total

1Adjusted for extraordinary effects.

2014

2,215

1,500

1,136

1,846

1,732

439

-552

8,337

2013

1,936

1,464

311

1,070

2,387

2,012

533

-522

9,191

+/- %

+14

-93

-23

-14

-18

–

-9

In view of the negotiations to sell our Italy and Spain regional
units, we applied IFRS 5 and reclassified these units as assets
held for sale from the fourth quarter of 2014 until their derecog-
nition. Furthermore, the initial application of IFRS 10 and 11
resulted in effects which are described in Note 2 to the Consoli-
dated Financial Statements. We adjusted the prior-year figures
accordingly.

Our regulated business consists of operations in which reve-
nues are largely set by law and based on costs. The earnings
on these revenues are therefore extremely stable and pre-
dictable. The €624 million decline mainly reflects divestments
at the Germany regional unit.

Our quasi-regulated and long-term contracted business con-
sists of operations in which earnings have a high degree of
predictability because key determinants (price and/or volume)
are largely set by law or by individual contractual arrange-
ments for the medium to long term. Examples of such legal or
contractual arrangements include incentive mechanisms for
renewables and the sale of contracted generating capacity.

Our merchant activities are all those that cannot be subsumed
under either of the other two categories.

Business Report

Group Management/Consolidation
The figures shown here are from E.ON SE, the equity interests
it manages directly, and the offsetting of transactions between
segments. The change in EBITDA relative to the prior year
principally reflects the equity interests E.ON SE manages and,
in particular, the continued centralization of support functions.

Generation
Generation’s EBITDA increased by €279 million, or 14 percent.

owing to improved market conditions for coal-fired generation.
Unplanned outages at three power stations had an adverse
impact on earnings in Germany.

Renewables
Renewables’ EBITDA rose by €36 million, or 2 percent.

Renewables

€ in millions

Hydro

EBITDA1

EBIT1

2014

2013

2014

2013

677

823

780

684

551

493

657

357

1,500

1,464

1,044

1,014

Generation

€ in millions

Nuclear

Fossil

Other/Consolidation

EBITDA1

EBIT1

Wind/Solar/Other

2014

1,411

814

-10

2013

1,240

709

-13

2014

1,085

129

-13

2013

967

-15

Total

1Adjusted for extraordinary effects.

Total

2,215

1,936

1,201

1,017

1Adjusted for extraordinary effects.

Nuclear’s EBITDA increased by about €171 million, owing mainly
to lower expenditures for the nuclear-fuel tax in Germany.
One factor was the planned early decommissioning of Grafen-
rheinfeld nuclear power station in May 2015, which resulted
in no new fuel elements being loaded. Consequently, no nuclear-
fuel tax was levied for Grafenrheinfeld in 2014.

Fossil’s EBITDA rose by €105 million, primarily because of the
reversal of provisions in conjunction with water-usage fees
for gas-fired power plants in Italy and the delivery of planned
cost-cutting measures. EBITDA rose in the United Kingdom

EBITDA at Hydro declined by 13 percent to €677 million. Earn-
ings were lower in Italy due to lower prices and slightly lower
sales volume, in Germany due to the reduction in generating
capacity and lower water flow, in Spain due to regulatory
effects, and in Sweden due to adverse price and currency-
translation effects, despite a slight increase in sales volume.

Wind/Solar/Other’s EBITDA rose by 20 percent owing to our
build-and-sell strategy.

Global Commodities
Global Commodities’ EBITDA was €290 million below the
prior-year figure. This segment’s reporting units in the prior
year were Proprietary Trading, Optimization, and Gas Trans-
port/Shareholdings/Other. The new reporting structure better
reflects Global Commodities’ business activities, in particular
its global coal, oil, freight, and LNG activities and its regional
power and gas business.

was higher at our North Sea fields, primarily at Skarv, Babbage,
Rita, Huntington, and Njord/Hyme. By contrast, EBIT declined
from €560 million to €498 million because depreciation
charges are based on units of production.

Germany
EBITDA at the Germany regional unit declined by €541 million
to €1,846 million.

Global Commodities

€ in millions

Coal/Oil/Freight/LNG

Power and Gas

Infrastructure/Other

Total

1Adjusted for extraordinary effects.

EBITDA1

EBIT1

2014

-145

137

2013

176

311

2014

-236

132

-75

2013

192

Germany

€ in millions

Distribution Networks

Non-regulated/Other

Total

1Adjusted for extraordinary effects.

EBITDA1

EBIT1

2014

1,525

321

1,846

2013

1,985

402

2,387

2014

953

231

1,184

2013

1,343

324

1,667

Coal/Oil/Freight/LNG’s EBITDA was €19 million below the
prior-year figure, in particular because of lower earnings in
the coal and freight portfolios, where a deteriorated market
environment led to narrower margins.

Power and Gas’s EBITDA declined by €321 million, mainly
because of positive earnings effects recorded in the prior-year
period on the exercise of option rights in carbon-allowance
trading and the absence of earnings streams from the gas
business in Hungary sold in September 2013. Lower achieved
power prices constituted another adverse factor.

Infrastructure/Other’s EBITDA was €50 million above the
prior-year level, primarily because of higher equity earnings
from our stake in Nord Stream.

Exploration & Production
EBITDA at Exploration & Production increased by 6 percent,
from €1,070 million to €1,136 million. The principal reason was
that—despite lower average achieved prices—production

Most of the €460 million decline in EBITDA at Distribution
Networks is attributable to the divestment of three regional
distribution companies in 2013. The new regulation period
for power started in 2014, which also had an adverse impact
on earnings, since efficiency enhancements achieved during
the previous period were passed through to our customers in
the form of lower network fees. In addition, the earnings com-
ponent for grid expansion in accordance with the Renewable
Energy Law was lower than in the prior year.

EBITDA at Non-regulated/Other was €81 million below the
prior-year figure. Negative factors included the loss of earnings
streams due to the divestment of a majority stake in E.ON
Energy from Waste and mild weather (including relative to the
cold winter of the prior year), which had a particularly adverse
impact on the sales and heat business.

Business Report

Other EU Countries
Other EU Countries’ EBITDA was €280 million, or 14 percent,
below the prior-year figure.

Other EU Countries

€ in millions

UK
(£ in millions)

Sweden
(SEK in millions)

Czechia
(CZK in millions)

Hungary
(HUF in millions)

Remaining regional units

Total

EBITDA1

EBIT1

2014

384
(310)

622
(5,663)

290
(7,972)

200
(61,692)

236

1,732

2013

378
(321)

733
(6,342)

494
(12,843)

195
(57,854)

212

2,012

2014

299
(241)

377
(3,429)

197
(5,431)

101
(31,125)

157

1,131

2013

319
(271)

474
(4,104)

389
(10,105)

95
(28,206)

159

1,436

1Adjusted for extraordinary effects.

EBITDA at the remaining regional units rose by €24 million, in
particular because of higher earnings in France, in Romania,
and at E.ON Connecting Energies. EBITDA rose in France owing
to a reduction in controllable costs and a wider gross margin
and in Romania owing to a wider gross margin in the distri-
bution network business (which was partially mitigated by a
narrower margin in the sales business) and to cost-cutting
measures. E.ON Connecting Energies recorded higher earnings
because of the consolidation of a service provider in the
United Kingdom and a company that generates power and
heat for a business park in Russia.

Non-EU Countries
Non-EU Countries’ EBITDA declined by 18 percent, or €94 million.

Non-EU Countries

€ in millions

Russia
(RUB in millions)

EBITDA1

EBIT1

2014

2013

2014

2013

517
(26,361)

687
(29,021)

371
(18,936)

492
(20,756)

EBITDA at the UK regional unit rose by €6 million because of
positive currency-translation effects.

Other Non-EU Countries

Total

-78

439

-154

533

-78

293

-154

338

The Sweden regional unit’s EBITDA declined by €111 million,
which includes adverse currency-translation effects of €33 mil-
lion. Milder temperatures compared with 2013, lower network
connection fees due to delays in wind-power projects, and
the absence of earnings from operations divested in Finland
and Poland were the other main negative factors.

1Adjusted for extraordinary effects.

The Russia unit’s EBITDA was 25 percent below the prior-year
level. The principal reasons were adverse currency-translation
effects and a narrower gross margin resulting from higher
fuel costs. In local currency EBITDA was 9 percent lower.

EBITDA in Czechia declined by €204 million owing primarily
to lower compensation payments for the preferential dispatch
of renewable-source electricity in the distribution network, the
book gain recorded on the sale of an equity interest in 2013,
the derecognition of a majority-held share investment in the
first quarter of 2014, and adverse currency-translation effects.

EBITDA at Other Non-EU Countries consists of our activities
in Brazil and Turkey, which are accounted for under the equity
method. The negative figure recorded for Turkey is primarily
attributable to high financing costs, low hydro output, and high
power procurement costs. Earnings in Brazil mainly reflect
negative finance earnings.

The Hungary regional unit’s EBITDA was €5 million above the
prior-year level. Improved receivables management and
lower personnel costs were the main positive factors. Currency-
translation effects constituted a negative factor.

Net Income
Owing mainly to significantly higher impairment charges and
lower proceeds from disposals, in 2014 we recorded a net loss
attributable to shareholders of E.ON SE of -€3.2 billion and corre-
sponding earnings per share of -€1.64. The respective prior-year
figures of €2.1 billion and €1.10 reflect substantial book gains.

Our economic interest expense improved mainly because of
the positive development of our net financial position along
with the reversal of provisions. Our interest expense not
affecting net income deteriorated, in particular because of
expenditures in conjunction with the early repurchase of
bonds above their nominal value.

Net Income

€ in millions

EBITDA 1

Depreciation and amortization

Impairments (-)/Reversals (+) 2

EBIT 1

Economic interest income (net)

Net book gains/losses

Restructuring/cost-management
expenses

E.ON 2.0 restructuring expenses

Impairments (-)/Reversals (+) 2, 3

Other non-operating earnings

Income/Loss (-) from continuing
operations before taxes

Income taxes

Income/Loss (-) from continuing
operations

Income from discontinued operations, net

Net loss/income

Attributable to shareholders of E.ON SE
Attributable to non-controlling interests

2014

8,337

-3,553

-120

4,664

-1,612

589

-133

-363

-5,409

-115

2013

9,191

-3,467

-100

5,624

-1,874

2,004

-182

-368

-1,643

-482

-2,379

3,079

-576

-718

-2,955

2,361

-175

-3,130
-3,160
30

2,459
2,091
368

1Adjusted for extraordinary effects.
2Impairments differ from the amounts reported in accordance with IFRS due to
impairments on companies accounted for under the equity method and impair-
ments on other financial assets.
3Recorded under non-operating earnings.

Economic Interest Expense

€ in millions

Interest expense shown in the Consoli-
dated Statements of Income

Interest income (-)/expense (+) not
affecting net income

Total

2014

2013

-1,810

-1,992

198

-1,612

118

-1,874

Net book gains were €1.4 billion below the high prior-year
figure. In 2014 they were recorded primarily on the sale of
securities and a gas utility in Germany, a majority stake in a
gas company in Czechia, a stake in a gas company in Finland,
certain micro heat production plants in Sweden, and network
segments in Germany. The prior-year figure consists in partic-
ular of book gains on the sale of certain hydroelectric assets
in Bavaria to Austria’s Verbund AG in conjunction with our
market entry in Turkey as well as on the sale of E.ON Thüringer
Energie, a stake in Slovakian energy company SPP, a minority
stake in JMP in Czechia, operations in Finland, and securities,
network segments, and a gas subsidiary in Germany.

Restructuring and cost-management expenditures including
expenditures in conjunction with E.ON 2.0 declined by €54 mil-
lion and, as in the prior year, resulted mainly from cost-cutting
programs.

Business Report

In 2014 and 2013 our global and regional units were adversely
affected by a generally deteriorated business environment,
altered market assessments, and regulatory intervention. We
therefore had to record impairment charges totaling approx-
imately €5.5 billion at Generation (€4.3 billion, mainly in
the United Kingdom, Sweden, and Italy), Non-EU Countries
(€0.5 billion), Exploration & Production (€0.4 billion), Renew-
ables (€0.2 billion), and Global Commodities (€0.1 billion) in
2014. These charges were partially offset by reversals of impair-
ment charges of €0.1 billion at Generation, Renewables, and
Global Commodities. In 2013 we recorded impairment charges
in particular at Generation, Renewables, Global Commodities,
Exploration & Production, and Non-EU Countries.

Underlying Net Income
Net income reflects not only our operating performance but
also special effects, such as the marking to market of deriva-
tives. Underlying net income is an earnings figure after interest
income, income taxes, and non-controlling interests that has
been adjusted to exclude certain special effects. In addition to
the marking to market of derivatives, the adjustments include
book gains and book losses on disposals, restructuring expenses,
other non-operating income and expenses (after taxes and
non-controlling interests) of a special or rare nature. Under-
lying net income also excludes income/loss from discontinued
operations (after taxes and non-controlling interests), as well
as special tax effects.

Underlying Net Income

€ in millions

Net income attributable to shareholders
of E.ON SE

Net book gains/losses

Restructuring/cost-management
expenses

Impairments/reversals of impairments

Other non-operating earnings

Taxes and non-controlling interests
on non-operating earnings

Special tax effects

Income/Loss from discontinued
operations, net

Underlying net income

2014

2013

-3,160

-589

2,091

-2,004

496

5,409

115

-953

113

181

1,612

550

1,643

482

-466

-78

-92

2,126

Other non-operating earnings include the marking to market
of derivatives. We use derivatives to shield our operating busi-
ness from price fluctuations. Marking to market at year-end
2014 resulted in a positive effect of €540 million compared with
€777 million at the year-end 2013. In addition, non-operating
earnings were adversely affected in 2014 by impairment
charges on gas inventories, securities, and operations at Non-
EU Countries and by expenditures in conjunction with bond
buybacks. In 2013 other non-operating earnings were adversely
affected by provisions recorded at our gas business in con-
junction with disposals and long-term supply contracts and
by impairment charges on securities.

Our tax expense was €0.6 billion compared with €0.7 billion in
the prior year. Despite our pretax net loss, we did record a tax
expense in 2014 and thus had a negative tax rate of 24 percent
(prior year: 23 percent). Impairment charges are not tax-
deductible and therefore did not reduce our tax expense in
2014. In addition, our tax expense mainly reflects changes
in the value of deferred tax assets and tax revenue for prior
years. Significant tax-free net book gains served to reduce
our tax rate in 2013.

Income/Loss from discontinued operations, net, includes the
earnings of the Italy and Spain regional units and the earnings
from contractual obligations of operations that have already
been sold. Pursuant to IFRS, these earnings are reported sep-
arately in the Consolidated Statements of Income.

Financial Situation

E.ON presents its financial condition using, among other finan-
cial measures, economic net debt and operating cash flow.

Finance Strategy
The central components of E.ON’s finance strategy are capital-
structure management and our dividend policy.

We manage E.ON’s capital structure using our debt factor in
order to ensure that E.ON’s access to capital markets is com-
mensurate with its current debt level. Debt factor is equal
to our economic net debt divided by EBITDA; it is therefore a
dynamic debt metric. Economic net debt includes not only
our financial liabilities but also our provisions for pensions
and asset-retirement obligations. As part of implementing
our new strategy, we will review our medium-term debt factor
target to reflect our new business profile after the spinoff of
the New Company. We aim for any potential change in E.ON’s
rating due to the new setup in two companies to be limited
to one notch.

The second key component of our finance strategy is a con-
sistent dividend policy. In view of E.ON’s new strategy and
the related foreseeable uncertainties, management will rec-
ommend paying shareholders a fixed dividend of €0.50 per
share for both the 2014 and 2015 financial years. For the 2014
financial year this corresponds to a payout ratio of 60 percent
of underlying net income, which is within our original target
range of 50 to 60 percent. Furthermore, shareholders will again
be offered the option to exchange the cash dividend partially
into E.ON SE shares (currently held as treasury shares).

Financial Position
At the end of 2014 E.ON’s financial liabilities declined by
€3.1 billion to €19.7 billion relative to year-end 2013, mainly
because of the early repurchase of certain bonds with a total
nominal value of €1.2 billion and the on-schedule repayment
of bonds, which were not refinanced owing to E.ON’s liquidity
situation.

Compared with the figure recorded at December 31, 2013
(€32.2 billion), our economic net debt increased by €1.2 billion
to €33.4 billion. Although our high positive operating cash
flow and the proceeds from divestments exceeded investment
expenditures and E.ON SE’s dividend payout and led to an
improvement in our net financial position, our economic net
debt deteriorated, in particular because of an increase in pro-
visions for pensions, which rose by €2.2 billion to €5.6 billion,
mainly owing to declining discount rates.

Economic Net Debt

€ in millions

Liquid funds

Non-current securities

Financial liabilities

FX hedging adjustment

Net financial position

Provisions for pensions

Asset-retirement obligations1

Economic net debt

EBITDA2

Debt factor

1Less prepayments to Swedish nuclear fund.
2Adjusted for extraordinary effects.

December 31

2014

6,067

4,781

2013

7,814

4,444

-19,667

-22,724

-46

-8,785

-10,512

-5,574

-19,035

-33,394

8,337

4.0

-3,418

-18,288

-32,218

9,191

3.5

Our debt factor at year-end 2014 increased to 4 (year-end
2013: 3.5) owing to our lower EBITDA and higher economic
net debt.

Funding Policy and Initiatives
Our funding policy is designed to give E.ON access to a variety
of financing sources at any time. We achieve this objective by
basing our funding policy on the following principles. First, we
use a variety of markets and debt instruments to maximize
the diversity of our investor base. Second, we issue bonds with
terms that give our debt portfolio a balanced maturity profile.

Business Report

Third, we combine large-volume benchmark issues with smaller
issues that take advantage of market opportunities as they
arise. As a rule, external funding is carried out by our Dutch
finance subsidiary, E.ON International Finance B.V., under
guarantee of E.ON SE or by E.ON SE itself, and the funds are
subsequently on-lent in the Group. As part of liquidity man-
agement, in July 2014 E.ON repurchased certain bonds with a
total nominal value of €1 billion ahead of schedule. In 2014
E.ON also repurchased a privately placed bond in the amount
of €0.2 billion. In October 2014 E.ON issued, through E.ON
Beteiligungen GmbH, a €113 million exchangeable bond for
shares of Swiss energy company BKW Energie AG; the bond
has a coupon rate of 0 percent per year and a negative inter-
est yield. Beyond this, E.ON issued no new bonds in 2014.

Financial Liabilities

€ in billions

Bonds1
EUR
GBP
USD
CHF
SEK
JPY
Other currencies

Promissory notes

Commercial paper

Other liabilities

Total

1Includes private placements.

Dec. 31, 2014 Dec. 31, 2013

14.3
7.1
4.4
2.5
–
–
0.2
0.1

0.6

0.4

4.4

19.7

18.1
10.4
4.4
2.2
0.6
0.1
0.3
0.1

0.7

0.2

3.7

22.7

With the exception of a U.S.-dollar-denominated bond issued
in 2008, all of E.ON SE and E.ON International Finance B.V.’s
currently outstanding bonds were issued under our Debt
Issuance Program (“DIP”). The DIP enables us to issue debt to
investors in public and private placements. In April 2014 it
was extended, as planned, for one year. The DIP has a total
volume of €35 billion, of which about €12 billion was utilized
at year-end 2014.

In addition to our DIP, we have a €10 billion European Com-
mercial Paper (“CP”) program and a $10 billion U.S. CP pro-
gram under which we can issue short-term liabilities. We had
€401 million in CP outstanding at year-end 2014 (prior year:
€180 million).

E.ON also has access to an originally five-year, €5 billion syn-
dicated revolving credit facility, which was concluded with
24 banks on November 6, 2013, and which includes two options
to extend the facility, in each case for one year. In 2014 E.ON
exercised the first option and extended the facility for one
year to 2019. This facility has not been drawn on and instead
serves as a reliable, ongoing general liquidity reserve for the
E.ON Group. Participation in the credit facility indicates that
a bank belongs to E.ON’s core group of banks.

Alongside financial liabilities, E.ON has, in the course of its
business operations, entered into contingencies and other
financial obligations. These include, in particular, guarantees,
obligations from legal disputes and damage claims, current
and non-current contractual, legal, and other obligations.
Notes 26, 27, and 31 to the Consolidated Financial Statements
contain more information about E.ON’s bonds as well as lia-
bilities, contingencies, and other commitments.

Standard & Poor’s (“S&P”) long-term rating for E.ON is A-,
Moody’s is A3. The short-term ratings are A-2 (S&P) and P-2
(Moody’s). After E.ON announced that it intends to spin off a
majority stake in a New Company consisting of its conventional
upstream and midstream businesses, in December 2014 both
rating agencies placed E.ON under review for a downgrade.

E.ON SE Ratings

Moody’s

S&P

Long
term

Short
term

A-

P-2

A-2

Outlook

review for
downgrade

creditwatch
negative

Providing rating agencies and bond investors with timely,
comprehensive information is an important component of our
creditor relations. The purpose of our creditor relations is
to earn and maintain our investors’ trust by communicating
a clear strategy with the highest degree of transparency. To
achieve this purpose, we regularly hold debt investor updates
in major European financial centers, conference calls for debt
analysts and investors, and informational meetings for our
core group of banks.

Maturity Profile of Bonds and Promissory Notes Issued by E.ON SE,
E.ON International Finance B.V., and E.ON Beteiligungen GmbH

€ in billions

December 31, 2014

4.0

3.0

2.0

1.0

2015

2016

2017

2018

2019

2020

2021

2022

2023+

Investments at Renewables rose by €361 million. Hydro’s invest-
ments increased by 7 percent to €107 million. Wind/Solar/
Other’s investments increased substantially, from €861 million
to €1,222 million. The higher figure for 2014 principally reflects
investments for the construction of three large wind farms in
Germany, the United Kingdom, and the United States.

Global Commodities invested €36 million less than in the
prior year. The decline mainly reflects lower investments in
the gas storage business (because a number of projects
were completed) and in gas infrastructure.

Exploration & Production invested €340 million less than in
the prior year, primarily because of lower investments in
Skarv, Babbage, Njord, Tolmount, Johnston, and Rita fields.

The Germany regional unit’s investments declined by
€268 million owing to extraordinary effects in 2013: on the
one hand, the prior-year acquisition of a 49-percent stake in
the joint venture that owns 100 percent of the equity in E.ON
Energy from Waste; on the other, the above-mentioned
disposals. Investments in PP&E and intangible assets totaled
€727 million in 2014. Of these investments, €648 million went
toward the network business, €56 million toward the district-
heating business, and €23 million toward other activities.
Share investments totaled €17 million.

Investments
Our investments of €4.6 billion were €3.4 billion below the
prior-year level. We invested about €4 billion in property,
plant, and equipment (“PP&E”) and intangible assets (prior
year: €4.5 billion). Share investments totaled €0.6 billion ver-
sus €3.5 billion in the prior year. Our investments outside
Germany declined by 48 percent to €3.4 billion (prior year:
€6.5 billion).

Investments

€ in millions

Generation

Renewables

Global Commodities

Exploration & Production

Germany

Other EU Countries

Non-EU Countries

Group Management/
Consolidation

Total

Maintenance investments
Growth and replacement
investments

2014

862

1,222

115

745

879

703

4,633
811

2013

1,067

861

151

404

1,013

969

3,530

-3

7,992
774

3,822

7,218

+/- %

-19

+42

-24

-84

-26

-9

-80

–

-42
+5

-47

Generation invested €205 million less than in the prior year.
Investments in PP&E and intangible assets declined by
€198 million, from €1,059 million to €861 million. Overhaul work
to extend the operating life of unit 2 at Oskarshamn nuclear
power station in Sweden, environmental-protection measures
at Ratcliffe power station in the United Kingdom, the new
generating unit being built at Maasvlakte power station in the
Netherlands, and the conversion of unit 4 at Provence power
station to burn biomass were among the major projects.

Business Report

Cash provided by investing activities of continuing operations
amounted to approximately -€3.3 billion compared with
-€0.6 billion in the prior year. In executing our divestment pro-
gram we recorded substantial cash inflows—€6.5 billion—on
the sale of share investments in the prior year. These were not
matched in the current year by the €2.2 billion in cash inflows
on the sale of share investments at Renewables, Global Com-
modities, Germany, and Czechia, resulting in a roughly 66-per-
cent year-on-year decline. Cash inflows on the sale of intangi-
ble assets and property, plant, and equipment were also lower,
declining by €0.3 billion. This significant decline in cash
inflows from divestments was accompanied by a reduction of
€3.4 billion in our investments relative to the prior-year level,
which mainly reflected share investments to acquire and/or
expand new operations in Turkey and Brazil. Altogether, cash
outflows for intangible assets, property, plant, and equipment,
and share investments declined by 42 percent year on year.
Cash outflows from changes in securities and fixed-term
deposits and changes in restricted cash were €1.5 billion
higher than in the prior year.

Cash provided by financing activities of continuing operations
amounted to -€4.6 billion (prior year: -€4 billion). The €1.9 billion
increase in the net repayment of financial liabilities was par-
tially offset by the roughly €1.3 billion decline in the dividend
payout relative to the prior year.

Liquid funds at December 31, 2014, were €6,067 million (prior
year: €7,814 million). In 2014 E.ON had €1,064 million of cash
and cash equivalents subject to a restraint risk (prior year:
€639 million). In addition, the current securities of Versorgungs-
kasse Energie contained €265 million (€81 million) earmarked
for fulfilling insurance obligations (see Notes 18 and 31 to the
Consolidated Financial Statements).

Investments at Other EU Countries were €90 million below
the prior-year level. By implementing municipal and smart-
meter projects, the UK regional unit invested €121 million, up
from the prior-year figure of €106 million. The Sweden unit’s
investments of €331 million were €73 million below the
prior-year figure of €404 million; investments served to main-
tain and expand distributed generation and to expand and
upgrade the distribution network, including adding new con-
nections. Investments in Czechia declined from €163 million
to €141 million owing to the derecognition of a majority-held
equity interest in the first quarter of 2014. The Hungary
regional unit invested €102 million (prior year: €117 million)
in power and gas infrastructure. Investments in the remaining
EU countries increased from €179 million to €184 million.
The change mainly reflects higher network investments in
Romania and a large heating project in the Netherlands.

The Russia unit accounted for €347 million (prior year:
€360 million) of the investments at Non-EU Countries. These
were primarily for Russia’s new-build program. We invested
€356 million (€3,170 million) in our operations in Brazil and
Turkey, of which €135 million is attributable to the acquisition
of a 50-percent stake in Pecém II, a coal-fired power plant in
Brazil. The high prior-year figure is mainly attributable to the
acquisition of a share investment in Turkey. This investment
was largely covered by the proceeds on the sale of certain hydro-
electric assets in Bavaria to Austria’s Verbund AG in exchange
for the stake in the operations in Turkey.

We plan to invest €4.3 billion in 2015. This includes investments
in distribution networks in Germany and Sweden, in renew-
ables (mainly wind power), and in ongoing generation new-
build projects such as at Berezovskaya GRES, a power station
in Russia. The investment plan in the Forecast Report presents
our principal investment obligations.

Cash Flow
Our operating cash flow of €6.3 billion was at the prior-year
level, as were cash-effective earnings and working capital;
the latter benefited from the successful implementation of
our Working Capital Excellence project.

Asset Situation

Non-current assets at year-end 2014 were 13 percent below the
figure at year-end 2013, mainly because of the reclassification
of assets at operations in Italy and Spain as assets held for
sale. In addition, we recorded impairment charges, in particular
on property, plant, and equipment (“PP&E”). Scheduled depre-
ciation charges were more than offset by investments in PP&E
and share investments.

Current assets increased by 16 percent. Alongside the reclassifi-
cation of assets at operations in Italy and Spain as assets held
for sale, the change mainly reflects an increase in receivables
on derivative financial instruments. These factors were offset
to a slight degree by a reduction in operating receivables.

Our equity ratio at year-end 2014 was below the level at year-
end 2013. The decline resulted mainly from the net loss, the
revaluation of performance-based benefit plans, a reduction
in assets and liabilities resulting from currency-translation
effects in the amount of €2.2 billion, and the dividend payout.

Consolidated Assets, Liabilities, and Equity

Non-current liabilities rose slightly from the figure at year-end
2013, owing mainly to higher provisions for pensions and other
obligations (see Note 11 to the Consolidated Financial State-
ments) and higher liabilities on derivative financial instruments.
The reclassification of certain non-current liabilities as liabil-
ities of assets held for sale had a countervailing effect.

Current liabilities increased by 10 percent relative to year-end
2013, mainly because of an increase in liabilities on derivative
financial instruments as well as the reclassification of debt in
conjunction with assets held for sale. These effects were par-
tially offset by the on-schedule repayment of bonds. Liabilities
from operating receivables were lower as well.

The following key figures indicate E.ON’s asset and capital
structure:
• Non-current assets are covered by equity at 32 percent

(December 31, 2013: 38 percent).

• Non-current assets are covered by long-term capital at

108 percent (December 31, 2013: 104 percent).

€ in millions

Non-current assets

Current assets

Total assets

Equity

Non-current liabilities

Current liabilities

Total equity and liabilities

Dec. 31, 2014

% Dec. 31, 2013

83,065

42,625

125,690

26,713

63,335

35,642

125,690

100

95,580

36,750

132,330

36,638

63,179

32,513

132,330

100

Additional information about our asset situation (including
information on the above-mentioned impairment charges) is
contained in Notes 4 to 26 to the Consolidated Financial
Statements.

Business Report

E.ON SE’s Earnings, Financial, and Asset Situation

E.ON SE prepares its Financial Statements in accordance with
the German Commercial Code, the SE Ordinance (in conjunc-
tion with the German Stock Corporation Act), and the German
Energy Act.

The decline in interest income is mainly attributable to the
€3,561 million portion of the capital-reserve payout from
E.ON Finanzanlagen GmbH that does not affect net income and
to the above-mentioned impairment charges of €2,056 million
on our stake in E.ON Italia S.p.A..

Income Statement of E.ON SE (Summary)

Balance Sheet of E.ON SE (Summary)

€ in millions

2014

2013

Interest income

December 31

Income from equity interests

Intangible assets and property, plant,
and equipment

Financial assets

Non-current assets

39,661

39,758

116

45,673

45,789

Receivables from affiliated companies

19,979

16,969

Other receivables and assets

Liquid funds

Current assets

Total assets

Equity

Provisions

Liabilities to affiliated companies

Other liabilities

Total equity and liabilities

2,265

2,330

1,688

3,020

24,574

21,677

64,332

67,466

15,307

3,359

43,178

2,488

64,332

14,696

4,270

46,762

1,738

67,466

E.ON SE is the parent company of the E.ON Group. As such, its
earnings, financial, and asset situation is affected by income
from equity interests. In 2014 income from equity interests in
particular reflected a profit transfer of €3,811 million from
E.ON Beteiligungen GmbH and the €2,539 million portion of
the capital reserve paid from E.ON Finanzanlagen GmbH that
affects net income. The main countervailing factors were loss
transfers of €735 million from E.ON Iberia Holding GmbH and
of €372 million from E.ON Russia Holding GmbH.

The negative figure recorded under other expenditures and
income mainly reflects impairment charges of €2,056 million
on our stake in E.ON Italia S.p.A.

Other expenditures and income

Income from continuing operations

Extraordinary expenses

Taxes

Net income

Net income transferred to retained
earnings

Net income available for distribution

2014

4,646

-742

-2,952

952

-13

500

1,439

-473

966

2013

3,145

-1,020

334

2,459

-22

-645

1,792

-647

1,145

The income taxes shown for 2014 yielded a positive figure
and consist of tax income for previous years. Due to our loss
situation from a tax perspective we incurred no income taxes
for the 2014 financial year.

On February 18, 2015, E.ON SE paid €522 million into the capital
reserve of E.ON Energie AG.

At the Annual Shareholders Meeting on May 7, 2015, manage-
ment will propose that net income available for distribution
be used to pay a cash dividend of €0.50 per ordinary share.
Furthermore, shareholders will again be offered the option to
exchange the cash dividend partially into E.ON SE shares
(currently held as treasury shares).

The complete Financial Statements of E.ON SE, with the
unqualified opinion issued by the auditor, Pricewaterhouse-
Coopers Aktiengesellschaft, Wirtschaftsprüfungsgesellschaft,
Düsseldorf, will be announced in the Bundesanzeiger. Copies
are available on request from E.ON SE and at www.eon.com.

Analyzing Value Creation by Means of ROACE and
Value Added
Alongside EBITDA, our most important earnings figure for pur-
poses of internal management control, we use ROACE and
value added to monitor the value performance of our operating
business. ROACE is a pretax total return on capital. It measures
the sustainable return on invested capital generated by oper-
ating a business. ROACE is defined as the ratio of our EBIT to
average capital employed.

Average capital employed represents interest-bearing invested
capital. Capital employed is equal to a segment’s operating
assets less the amount of non-interest-bearing available cap-
ital. Depreciable assets are recorded at half of their original
acquisition or production cost. ROACE is therefore not affected
by an asset’s depreciation period. Goodwill from acquisitions
is included at acquisition cost, as long as this reflects its fair
value. Changes to E.ON’s portfolio during the course of the year
are factored into average capital employed.

Average capital employed does not include the marking to
market of other share investments. The purpose of excluding
this item is to provide us with a more consistent picture of
our ROACE performance.

Value added measures the return that exceeds the cost of
capital employed. It is calculated as follows:

Value added = (ROACE – cost of capital) x average capital
employed

Financial and Non-financial Performance Indicators

ROACE and Value Added
Cost of Capital
The cost of capital is determined by calculating the weighted-
average cost of equity and debt. This average represents the
market-rate returns expected by stockholders and creditors.
The cost of equity is the return expected by an investor in
E.ON stock. The cost of debt equals the long-term financing
terms that apply in the E.ON Group. The parameters of the cost-
of-capital determination are reviewed on an annual basis.

Our review of the parameters in 2014 led us to make minor
adjustments to our cost of capital. The E.ON Group’s after-tax
cost of capital declined from 5.5 to 5.4 percent. The table below
shows the derivation of cost of capital before and after taxes.

Cost of Capital

Risk-free interest rate

Market premium1

Debt-free beta factor

Indebted beta factor2

Cost of equity after taxes

Average tax rate

Cost of equity before taxes

Cost of debt before taxes

Marginal tax rate

Cost of debt after taxes

Share of equity

Share of debt

Cost of capital after taxes

2014

2.5%

5.5%

0.57

0.99

7.9%

27%

10.8%

3.9%

27%

2.8%

50.0%

5.4%

2013

2.5%

5.5%

0.59

1.02

8.1%

27%

11.1%

3.9%

27%

2.8%

50.0%

5.5%

Cost of capital before taxes

7.4%

7.5%

1The market premium reflects the higher long-term returns of the stock market
compared with German treasury notes.
2The beta factor is used as an indicator of a stock’s relative risk. A beta of more
than one signals a higher risk than the risk level of the overall market; a beta
factor of less than one signals a lower risk.

Business Report

ROACE and Value Added Performance in 2014
The significant decline in our ROACE, from 9.2 to 8.5 percent, is
primarily attributable to the decline in our EBIT. Our average
capital employed declined significantly as well owing to dis-
posals and shutdowns that were not offset by ongoing invest-
ments. At 8.5 percent, however, our ROACE still surpassed our

pretax cost of capital, which declined relative to the prior year.
As a result, value added amounted to €0.6 billion.

The table below shows the E.ON Group’s ROACE, value added,
and their derivation.

E.ON Group ROACE and Value Added

€ in millions

EBIT1

Goodwill, intangible assets, and property, plant, and equipment2

+ Shares in affiliated and associated companies and other share investments

+ Inventories

+ Other non-interest-bearing assets, including deferred income and deferred tax assets

- Non-interest-bearing provisions3

- Adjustments4

Capital employed in continuing operations (at year-end)

Capital employed in continuing operations (annual average)5

ROACE

Cost of capital before taxes

Value added

2014

4,664

2013

5,624

56,555

62,298

6,582

3,356

-1,724

6,381

7,887

7,618

4,147

-6,673

6,451

1,859

50,501

59,080

54,791

61,244

8.5%

7.4%

9.2%

7.5%

609

1,031

1 Adjusted for extraordinary effects.
2 Depreciable assets are included at half their acquisition or production costs. Goodwill represents final figures following the completion of the purchase-price allocation
(see Note 4 to the Consolidated Financial Statements).
3 Non-interest-bearing provisions mainly include current provisions, such as those relating to sales and procurement market obligations. They do not include provisions for
pensions or for nuclear-waste management.
4 Capital employed is adjusted to exclude the mark-to-market valuation of other share investments, receivables and liabilities from derivatives, and operating liabilities for certain
purchase obligations to minority shareholdings pursuant to IAS 32.
5 In order to better depict intraperiod fluctuations in average capital employed, annual average capital employed is calculated as the arithmetic average of the amounts at
the beginning of the year and the end of the year.

Corporate Sustainability
Our many stakeholders—customers and suppliers, policymakers
and government agencies, the general public and the media,
environmental groups and charitable organizations, employees
and trade unions, business partners and competitors, and of
course our investors—have high expectations for us and our
industry. E.ON is expected to achieve three energy objectives
simultaneously: to make sure that the energy we supply is
1) secure and reliable, 2) friendly to the environment and the
earth’s climate, and 3) affordable for both our industrial and
residential customers. We are expected to treat our employees,
customers, and neighbors responsibly and to demand that
our supply chain meets high standards for environmental and
social performance.

Our new strategy—“Empowering customers. Shaping
markets.”—will enable us to address these challenges even
more effectively. It will create two sharply focused companies,
each of which will be better able to meet its stakeholders’

expectations. We believe that this will, over the long term,
have a positive impact on the business performance of both
companies. As in the past, the new strategy will ensure that
both companies conduct sound corporate governance and
embed environmental and social performance in their business
processes. In dialog with our stakeholders we have defined
the main challenges we face and set targets for addressing
them. The challenges and targets are cataloged in our sustain-
ability work program. Our online Sustainability Report provides
periodic updates on the status of our work program. In light
of our new strategy, the Sustainability Governance Council is
developing a new work program that reflects the respective
focus areas of the future E.ON and the New Company.

We publish an annual online Sustainability Report, which is
prepared in accordance with the guidelines of the Global
Reporting Initiative. It provides comprehensive information
about those aspects of our sustainability performance that
are most important to our company and our stakeholders. It
describes the various impacts of our business operations,
articulates our position on these impacts, and explains the
actions we take to manage them. It presents quantifiable
results and generally makes our sustainability efforts as trans-
parent as possible.

Our commitment to transparency includes subjecting our
sustainability performance to independent, detailed assess-
ments by specialized agencies and investment-bank analysts.
The results of these assessments provide important guidance
to investors and to us. They indicate our strengths and weak-
nesses, which helps us prioritize our efforts. Although E.ON
missed being listed in the 2014 Dow Jones Sustainability Indi-
ces Europe and World by a small margin, we improved our
ranking in the Carbon Disclosure Project, which evaluates com-
panies’ climate-protection efforts. E.ON continues to be listed
in the Euronext Vigeo-120 sustainability index and is included
in Energy Intelligence’s Top 100 Green Utilities ranking. In an
assessment of the transparency of the corporate reporting of
the world’s 124 largest companies, Transparency International
ranked E.ON in the top ten in the overall evaluation.

In 2013 E.ON began the process of conducting systematic
water management. Our goal is to establish, by the end of 2015,
minimum standards that comply with the UN CEO Water
Mandate. The standards would apply to approvals processes,
costs, water availability, water intake, water discharge, and
our supply chain. The UN CEO Water Mandate is an internation-
ally recognized voluntary agreement as well as a network
of organizations dedicated to improving water management
worldwide. In this regard, it is similar to the UN Global Com-
pact, whose ten principles E.ON has endorsed for many years.

E.ON takes very seriously the obligations on states and com-
panies contained in the UN Guiding Principles on Business
and Human Rights, which set global standards and contain
measures to prevent and remedy human rights violations.
After carefully familiarizing ourselves with the UN Guiding
Principles and their implementation, we are now in the
process of identifying and analyzing potential risks that our
business activities may pose in this area. The next step will be
to revise our corporate guidelines and, if necessary, to adjust
our management processes. In addition, we are participating

in a multi-stakeholder initiative to design a German national
action plan for business and human rights. The two-year ini-
tiative is being conducted by the German federal government
under the direction of the Federal Foreign Office.

In late 2014 the International Hydropower Association (“IHA”)
conducted an assessment of Selma, an E.ON hydroelectric
station in Sweden where the old plant is being replaced by a
new one. In accordance with the IHA’s Hydropower Sustain-
ability Assessment Protocol, the assessment included an on-
site visit to Selma and extensive discussions with stakeholders.
The assessment will help us identify where our procedures
deviate from leading practice and improve our planning pro-
cesses. The results of the assessment will be made public,
which will enable anyone interested in these issues to learn
about our sustainability performance at Selma.

More information about our sustainability strategy and our
performance is available at www.eon.com, where you will also
find our new Sustainability Report, which will be released in
early May 2015. It is not part of the Combined Group Manage-
ment Report.

Carbon Emissions and Intensity
Emissions data for our power and heat generation are seg-
mented by country in accordance with the EU Emissions
Trading Scheme. This differs from the segmentation for the
rest of our reporting.

Carbon Emissions from Power
and Heat Generation

2014
Million metric tons

Germany

United Kingdom

Spain

France

Italy

Other EU countries

E.ON Group (Europe only)

Russia1

E.ON Group

1Russia is not covered by the EU Emissions Trading Scheme.

CO2 emissions
27.5

12.9

3.8

2.8

5.4

10.2

62.6

33.1

95.7

Business Report

E.ON Group Carbon Intensity1
Metric tons of CO2 per MWh
Germany

United Kingdom

Spain

France

Italy

Other EU countries

E.ON Group (Europe only)2

Russia

E.ON Group3

2014

2013

0.38

0.53

0.62

0.71

0.47

0.28

0.41

0.55

0.43

0.40

0.58

0.57

0.83

0.45

0.29

0.44

0.55

0.45

1 Specific carbon emissions are defined as the amount of CO2 emitted for each
MWh of electricity generated.
2Includes renewables generation in Europe.
3 Includes renewables generation outside Europe (wind power in the United States).

E.ON emitted 96 million metric tons of carbon dioxide from
power and heat generation in 2014, of which 63 million
metric tons were in Europe. This represents a significant
decline—16 percent—relative to 2013. It results from the fact
that in 2014 we produced less power and had a lower-carbon
generation mix , thanks to a slightly higher proportion of
renewables and nuclear and a decline in coal-fired generation.
Starting in 2013, energy suppliers are no longer allocated EU
emission allowances at no cost to cover their power genera-
tion operations. They are only allocated allowances for a por-
tion of the heat they cogenerate. They must buy allowances
to cover their remaining carbon emissions in the EU. Overall,
our carbon intensity declined to 0.43 metric tons per MWh
owing to the above-described factors. It remains our objective
to halve our carbon intensity in Europe, which we will achieve
by 2025 by continuing to adjust our generation mix.

Use of Net Value Added
E.ON is not only a reliable energy supplier. We are also a
mainstay of economic development and individual prosperity
in the regions and communities where we operate. Our
company’s overall financial contribution is significant. We
measure it by means of net value added. This figure is the
sum of the value we add to our employees (wages, salaries,
benefits), government entities (taxes), lenders (interest pay-
ments), and minority shareholders (minority interests’ share
of our earnings). In addition, we pay out a portion of our
total earnings as a dividend to our shareholders.

Our personnel expenses of €4.1 billion, which represented the
largest component of net value added, declined by 10 percent
relative to 2013 owing to disposals and our E.ON 2.0 efficiency-
enhancement program. E.ON shows €0.3 billion in taxes for
2014, substantially less than the €1.8 billion shown for 2013.
Beyond tax payments, many communities received concession
fees from E.ON companies.

Net Value Added

€ in millions

Use

2014

2013

Employees

Wages, salaries, benefits

4,121

4,604

Government
entities

Lenders

Income taxes, other
taxes1

304

1,760

Interest payments2

1,683

1,705

Minority interests

Minority interests’ share
of income from continu-
ing operations

Shareholders

Dividends3

966

368

1,145

1Adjusted for deferred taxes; this item does not include additional government
levies, such as concession fees.
2Does not include the accretion of non-current provisions; includes capitalized
interest.
3Dividends are paid out of the value added from both continuing and discontinued
operations.

Employees
People Strategy
An organization’s business strategy and its products and
services can be copied. What cannot be easily copied are an
organization’s people, its culture, and its competencies. The
successful delivery of any business strategy depends on
an organization having available appropriately qualified and
motivated employees as well as a strong and diverse talent
pipeline.

Great companies execute their People Strategy with the
same energy and determination they apply to their business
strategy. A key success factor is for HR functions to be busi-
ness-integrated.

In developing our People Strategy, we therefore placed great
emphasis on obtaining and incorporating input and feedback
from board members and senior management of all E.ON
units. Our People Strategy was designed by E.ON HR’s leader-
ship team as well as by employee representatives. It is the
result of an extensive development process and enjoys broad
support across our organization.

We have adopted an 80/20 approach to ensure that People
Strategy adequately reflects the particularities of individual
E.ON units. Under this approach the E.ON Group People Strategy
addresses issues that are relevant to all of our employees.
This accounts for about 20 percent of activities.

Eighty percent of all activities are derived from the respective
local People Strategies that were developed by each unit in
light of its particular situation and regional trends.

The goal of our People Strategy is to enhance our people’s
performance and leadership to power business success.

Our People Strategy, which sets the frame for our HR work
programs of the next three to five years, has three key suc-
cess factors. Preparing our People for the Future, Providing
Opportunities, and Recognizing Performance. Open Thinking,
Engagement, and Never Complacent were identified as HR
focus areas that will support the success factors.

Our People Strategy is delivered by HR staff at all our units
and in all our regions. To support it through their interactions
with all employees, HR staff are committed to being
customer- oriented, continually improving HR services, working
in partnership with employee representatives, and keeping
things simple.

E.ON 2.0 and Restructuring
In 2014 we continued to implement the measures of E.ON 2.0,
our Group-wide efficiency-enhancement program, on the
basis of the respective codetermination processes agreed on
with the employee representatives of each country where
E.ON operates.

Other organizational changes at our company were planned
and initiated in close consultation with employee represen-
tatives. The employee-related aspects of these measures are
subject to existing E.ON 2.0 mechanisms.

Business Report

Our HR work in 2015 will focus on preparing to implement
the measures related to E.ON’s new strategy, “Empowering
customers. Shaping markets.” Management has already con-
cluded a framework agreement with the E.ON SE Works Coun-
cil and the Group Works Council. In particular, the agreement
lays down the principles for the employee-related aspects
of the strategy’s implementation and for the involvement of
employee representatives at the Group and country level.

Collaborative Partnership with Employee
Representatives
E.ON places a strong emphasis on working with employee
representatives as partners. This collaborative partnership is
integral to our corporate culture. At a European level, E.ON
management works closely with the E.ON SE Works Council,
whose members come from all European countries in which
E.ON operates. Under the SE Agreement, which was concluded
in 2012, the E.ON SE Works Council is informed and consulted
about all issues that transcend national borders.

Alongside the forms of codetermination required by law in
European countries outside Germany, the involvement of
employee representatives in these countries is fostered by
the SE Agreement, by collaboration at the Group level, and
by the Agreement on Minimum Standards for Restructuring
Measures, which was concluded between management and
the European Works Council (the forerunner of the SE Works
Council) in 2010.

E.ON 2.0 included the adoption of a functionally oriented
management model. In 2014 E.ON management and the Group
Works Council concluded the Agreement on Future Social
Partnership in the Context of the Functionally Oriented Man-
agement Model. The agreement, which stipulates the prin-
ciples of the future social partnership at E.ON’s operations in
Germany, was the result of an unprecedented collaborative
effort involving employee representatives and management
from all levels of the company. It manifests a shared respon-
sibility for the company and its employees and represents a
special milestone in the history of codetermination at E.ON.

Talent Management
The purpose of our talent management is to hire highly
qualified people and to continually foster our employee’s per-
sonal and professional development. In 2014 E.ON’s status
as a top employer was again confirmed by prestigious rankings,
such as “The Times Top 100 Graduate Employers,” and by
kununu, an employer-ranking platform.

The international E.ON Graduate Program remained one of
the most coveted ways of joining our company. Participants
are assigned a mentor, receive special training, and gain
experience during rotations at different E.ON units in Germany
and other countries. Eighty graduates entered the program
in 2014. Their backgrounds and interests reflect the emphasis
E.ON places on diversity:
•

they will work in a wide range of job families (including
engineering, IT, sales, finance, business development,
and HR)
they come from around the world (including the United
Kingdom, Germany, India, Egypt, Tunisia, Costa Rica, Italy,
Romania, Spain, and the Czech Republic)
38 percent are women.

•

The foundation of our strategic, needs-oriented talent manage-
ment is the Management Review Process, which we conducted
again in 2014. It helps ensure the continued professional
development of individual managers and executives, our
various units and job families, and the entire organization.
It also creates transparency about our current talent situation
and our needs for the future. In addition, we combined exec-
utive HR and our talent team into a Center of Competence
for Talent, Executive, and Organizational Design so that we can
take a holistic approach to talent management and identify
top talents earlier in their career.

In 2014 we made noteworthy progress in internationalizing our
talent pool. We added more job families to our High Potential
Programs, which already have an international focus. We also
improved our placement processes, which enabled us to fill
more top management positions with talent drawn from other
countries and other units.

Diversity
E.ON brings together a diverse team of people who differ by
nationality, age, gender, religion, and/or cultural and social
background. Diversity is a key success factor. Numerous studies
have shown that heterogeneous teams outperform homo-
genous ones. Diversity is equally crucial in view of demographic
trends. Going forward, only those companies that embrace
diversity will be able to remain attractive employers and be
less affected by the shortage of skilled workers. In June 2008
we publicly affirmed our long-standing commitment to fair-
ness and respect by signing the Charta der Vielfalt (German
Diversity Charter), which now has almost 2,000 signatories.
E.ON therefore belongs to a large network of companies com-
mitted to diversity, tolerance, fairness, and respect.

Alongside age and internationality, gender is a special focus
of our diversity management. Our ambitious objective for our
organization as a whole is to more than double the percentage
of women in executive positions and to raise it to 14 percent
in Germany by the end of 2016.

We support the achievement of this objective through a variety
of measures. Each unit has specific targets, and progress
towards these targets is monitored at regular intervals. We
have also revised our Group-wide guidelines for filling man-
agement positions. At least one male and one female must

be considered as potential successors for each vacant manage-
ment position. Many units also have support mechanisms in
place, including mentoring programs for female managers and
next-generation managers, the provision of daycare, flexible
work schedules, and home-office arrangements. Significantly
increasing the percentage of women in our internal talent
pool is a further prerequisite for raising, over the long term,
their percentage in management and top executive positions.

Many of these measures are already having an impact. Our
progress is receiving recognition outside our company as
well. For example, E.ON received the Total E-Quality Seal for
exemplary HR policies based on equal opportunity. In 2014
we achieved a further increase in the percentage of female
executives, which rose to 15.8 percent across E.ON and
12.6 percent in Germany. This means that we reached our
targets for 2015 and 2014, respectively.

Workforce Figures
At year-end 2014 the E.ON Group had 58,503 employees world-
wide, a decline of 5 percent from year-end 2013. E.ON also had
1,400 apprentices in Germany and 181 board members and
managing directors worldwide.

Employees1

Generation

Renewables

Global Commodities

Exploration & Production

Germany

Other EU Countries

Non-EU Countries

Group Management/Other2

Total

December 31

2014

8,016

1,723

1,249

236

11,749

24,740

5,300

5,490

58,503

2013

8,757

1,675

1,449

219

12,345

26,484

5,019

5,379

61,327

+/- %

-8

-14

-5

-7

-5

1Does not include board members, managing directors, or apprentices.
2Includes E.ON Business Services.

Business Report

Generation’s headcount was lower due mainly to E.ON 2.0
staff reductions and power plant closures. These effects were
partially counteracted by the hiring of apprentices as full-time
employees.

The decline in the number of employees at Other EU Countries
is attributable to disposals in Czechia, business transfers in
Romania, E.ON 2.0 staff reductions, and normal turnover.

Hiring in North America led to a slight increase in the number
of employees at Renewables.

Non-EU Countries consists only of our employees at our Russia
unit, where the workforce increased because of hiring for a
new-build project.

The main reason for the reduction in Global Commodities’
headcount was the transfer of IT staff to support functions
recorded under Group Management/Other. E.ON 2.0 staff
reductions constituted another factor.

Exploration & Production added employees in Norway and the
United Kingdom.

The headcount at the Germany regional unit was lower
mainly because of E.ON 2.0 staff reductions. This was partially
offset by the hiring of apprentices as full-time employees.

The number of employees at Group Management/Other rose
owing to the centralization of support functions and the
integration of IT functions formerly at Global Commodities
despite the fact that E.ON 2.0 staff reductions, particularly in
facility management functions, continued.

Geographic Profile
At year-end 2014, 36,213 employees, or 62 percent of all staff,
were working outside Germany, slightly more than at year-
end 2013.

Employees by Country1

Germany

United Kingdom

Romania

Russia

Hungary

Sweden

Czechia

France

Other2

Dec. 31, 2014

Dec. 31, 2013

Dec. 31, 2014

Dec. 31, 2013

FTE

22,290

10,708

6,523

5,343

4,704

3,229

2,460

703

2,543

23,629

11,053

6,903

5,028

4,842

3,248

3,066

797

2,761

21,640

10,210

6,064

5,331

4,701

3,195

2,443

702

2,512

22,924

10,548

6,400

5,021

4,838

3,213

3,027

796

2,730

1Figures do not include board members, managing directors, or apprentices.
2Includes Italy, Spain, the Netherlands, Poland, and other countries.

Gender and Age Profile, Part-Time Staff
At the end of 2014, 28.8 percent of our employees were women,
slightly more than the figure of 28.6 percent at the end of 2013.
The average E.ON Group employee was about 43 years old and
had worked for us for about 14 years.

Employees by Age

Percentages at year-end

30 and younger

31 to 50

51 and older

2014

2013

A total of 4,413 E.ON Group employees were on a part-time
schedule, of whom 3,202, or 73 percent, were women. The
turnover rate resulting from voluntary terminations averaged
3.3 percent across the organization, lower than in the prior year.

Turnover Rate

Percentages

Generation

Renewables

Global Commodities

Exploration & Production

Germany

Other EU countries

Non-EU Countries

Group Management/Other1

E.ON Group

1Includes E.ON Business Services.

2014

2013

2.2

4.9

3.3

5.9

1.5

3.9

5.6

3.9

3.3

1.8

4.5

4.6

8.9

1.5

4.3

6.4

4.8

3.5

Occupational Health and Safety
Occupational health and safety have the highest priority at
E.ON. A key performance indicator (“KPI”) for our safety is
total recordable injury frequency (“TRIF”), which measures
the number of fatalities, lost-time injuries, restricted-work
injuries, and medical-treatment injuries per million hours of
work. Our TRIF figures also include E.ON companies that are
not fully consolidated but over which E.ON has operational
control. E.ON employees’ TRIF in 2014 was 2, a clear improve-
ment from the 2.6 recorded in the prior year. Our units’ safety
performance is a component of the annual personal perfor-
mance agreements of the Board of Management members
and executives responsible for these units.

We use TRIF and other KPIs to monitor and continually improve
our safety performance. To ensure continuous improvement,
our units design health, safety, and environment (“HSE”)
improvement plans based on a management review of their
performance in the prior year. The results of the implemen-
tation of these plans are also used as preventive performance
indicators. Despite all our successes in occupational health
and safety, it remains our objective to prevent accidents or
other harmful effects on the health of our employees and
contractors by consistently implementing uniform HSE man-
agement systems.

Compensation, Pension Plans, Employee Participation
Attractive compensation and appealing fringe benefits are
essential to a competitive work environment. Company con-
tributions to employee pension plans represent an important
component of an employee’s compensation package and
have long had a prominent place in the E.ON Group. They are
an important foundation of employees’ future financial secu-
rity and also foster employee retention. E.ON companies
supplement their company pension plans with attractive pro-
grams to help their employees save for the future.

Another factor in employee retention is enabling them to
participate in their company’s success. Our employee stock
purchase program in Germany includes a partially tax-free
contribution from E.ON to encourage employees to purchase
stock. In 2014, 11,621 employees in Germany purchased a
total of 919,064 shares of E.ON stock. Although the participa-
tion rate declined slightly from 51 to 47 percent, the program
remained popular. We have similar stock-purchase programs
in a number of other countries.

Apprenticeships
E.ON continues to place great emphasis on vocational training
for young people. The E.ON Group had 1,400 apprentices and
work-study students in Germany at year-end 2014. This repre-
sented 5.9 percent of E.ON’s total workforce in Germany,
compared with 6.1 percent at the end of the prior year. Estab-
lished in 2003 as part of a pact between industry and the
German federal government, the E.ON training initiative to
combat youth unemployment was extended for three more
years and will now continue through 2017. In 2014 it helped
more than 800 young people in Germany get a start on their
careers through internships to prepare them for an apprentice-
ship as well as school projects and other programs.

Apprentices in Germany

Percentage of workforce

Germany

Generation

Global Commodities

Group Management/Other

Renewables

E.ON Group

December 31

2014

2013

7.2

7.1

1.4

2.2

6.6

5.9

7.3

2.0

2.2

6.9

6.1

Subsequent Events Report

The sharp drop in the ruble’s value is one of the factors that
will erode economic confidence and exacerbate inflationary
trends in Russia. Driven by domestic demand, Turkey’s econ-
omy is expected to grow at a rate above the OECD average.
Growth in Brazil will be dampened by infrastructure bottlenecks
and high inflation.

The OECD considers the volatility of the financial system to
be the main near-term risk and the debt crisis and monetary
expansion to be the main medium-term risks. Looking further
into the future, the OECD is concerned about the low growth
of production potential, which indicates generally weak
investment activity.

Energy Markets
We expect power and fuel markets to continue to be very sen-
sitive to macroeconomic developments and policy decisions
and therefore to be generally more volatile in 2015 and 2016.

In 2014 the oil market evolved from the backwardation typical
of recent years to a contango pattern, with prices for nearby
months lower than prices for forward months. The recent
period of low prices is expected to reduce investments in new
projects and to reduce output, since it may render some pro-
duction unprofitable. In addition, the economic benefits of low
oil prices are expected to spur demand, particularly in the
transportation sector. However, this will be accompanied by
the continued significant increase in production in non-OPEC
countries (including unconventional production—tight oil
and oil sands—in North America), which could actually more
than offset the increase in demand in 2015 and 2016.

Subsequent Events

In February 2015 the Italian Constitutional Court issued a ruling
declaring that the energy tax surcharge, also known as the
Robin Hood tax, is unconstitutional. The tax was introduced
in 2008 to limit the corporate profits of energy companies.
In its ruling the court stated explicitly that the repeal is not
retroactive.

On February 19, 2015, E.ON sold its solar business in Italy to
F2i SGR, a private infrastructure investment fund. The business
consists of seven solar farms built between 2010 and 2013
with a total installed capacity of 49 MW. About 70 percent of
the capacity is installed on Sardinia. E.ON and F2i SGR agreed
not to disclose the purchase price.

Forecast Report

Business Environment

Macroeconomic Situation
The OECD considers it very likely that the global economy will
grow at a moderate rate in 2015 and 2016. Growth will likely
remain slower than prior to the financial crisis. Although the
trend will generally be positive, the nuances will differ among
the world’s largest economies. The OECD sees more risks than
opportunities in the next two years. Threats to the stability of
the financial system and a lack of confidence in future growth
represent key risks, particularly in the euro zone.

Growth prospects in the United States and the United Kingdom
are good. Supportive monetary policy, less pressure to shrink
government budgets, and rising confidence will help stabilize
the U.S. economy. The euro zone will suffer from high unem-
ployment but be supported by expansive monetary policy
and less pressure on government budgets. It will also benefit
from an improvement in its foreign trade position driven by
a weaker euro and lower oil prices. No inflationary danger is
seen for OECD countries. With growth continuing to stagnate,
deflationary tendencies cannot be ruled out for the euro zone.

Coal producers, who suffered from declining prices in recent
years, have benefited somewhat from the recent collapse of
oil prices and the weakening of the currencies of key coal
export countries, particularly the Russian ruble. But current
price movements suggest that this situation will be of short
duration and that soon the coal market will again face over-
supply. In the near and medium term, coal prices will depend
primarily on a possible recovery of oil prices and exchange
rates. From a fundamental perspective, however, the market
will likely continue to be oversupplied and only improve
gradually in response to adjustments on the supply side.

In 2015 inventories at natural gas storage facilities are
expected to be relatively high at the end of winter (as they
were in 2014), unless there is a period of severely cold
weather across Europe in what remains of the first quarter.
The dramatic drop in oil prices is expected to cause a down-
ward trend in the price of gas bought under oil-indexed pro-
curement contracts. In view of these fundamentals, the gas
market is expected to be particularly weak in the summer of
2015, and a further decline in prices appears possible.

During the next two years, the backloading process will prob-
ably remain the principal influence on prices for EU carbon
allowances (“EUAs”) under the European Emissions Trading
Scheme. Backloading will continue to significantly reduce
the number of EUAs that can be acquired through auctions,
although the reduction will be smaller in 2015 than in 2014
and smaller still in 2016. Nevertheless, greater scarcity will
put more pressure on the EUA market and will probably lead
to further price increases. The policy debate about a market
stability reserve will be another important price driver in the
first half of 2015.

Near-term and medium-term power prices in Germany will
continue to be determined largely by the price of hard coal
and EUAs. However, the addition of more renewables capacity
and numerous new, technologically advanced coal-fired power
plants, which are scheduled to enter service in 2015, could
put further downward pressure on prices. This trend will be
resisted to some degree by the rise in Germany’s exports of
inexpensive renewables power, which supports domestic power
prices, and by speculation about the possible closure of some
coal-fired power plants due to environmental regulations.

Power prices for 2015 and 2016 in the United Kingdom will
depend increasingly on developments in the gas market and
on the increase in the carbon tax. The anticipated effects of
the tax are that power imports from continental Europe will
continue to rise and that domestic power production will come
under increasing pressure.

In the near term, prices on the Nordic power market will
continue to depend primarily on the weather and therefore on
water reservoir levels. In the long term, the ongoing expansion
of renewables will be a decisive factor. The expectation remains
that it will put significant downward pressure on prices. The
commissioning of the NordBalt cable between Sweden and
Lithuania in 2016 is expected to result in closer price coupling
between the Nordic and Baltic markets and higher net exports
from the former to the latter.

Our power production for 2015 and 2016 is already almost
completely hedged. Our hedging practices will, over time,
serve to increase the hedge rate of subsequent years. As an
example, the graph below shows the hedge rate for our Cen-
tral and North European outright portfolio, which essentially
consists of our non-fossil power production from nuclear and
hydro assets.

European Outright Portfolio

Percentages

Range of hedged generation

Central Europe

Nordic

2015

2016

2017

100

Employees

The number of employees in the E.ON Group (excluding
apprentices and board members/managing directors) will
decline by year-end 2015 due to the continued implemen-
tation of E.ON 2.0.

Forecast Report

Anticipated Earnings Situation

Forecast Earnings Performance
Our forecast for full-year 2015 earnings continues to be sig-
nificantly influenced by the difficult business environment in
the energy industry.

We expect our 2015 EBITDA to be between €7 and €7.6 billion.

We expect our 2015 underlying net income to be between
€1.4 and €1.8 billion.

Our forecast by segment:

EBITDA1

€ in billions

Generation

Renewables

Global Commodities

Exploration & Production

Germany

Other EU Countries

Non-EU Countries

Total

1Adjusted for extraordinary effects.

2015 (forecast relative
to prior year)

2014

significantly below

slightly below

significantly above

significantly below

significantly above

on par

significantly below

7.0 – 7.6

2.2

1.5

–

1.1

1.8

1.7

0.4

8.3

We expect Generation’s 2015 EBITDA to be significantly below
the prior-year figure. Price developments on the wholesale
market will continue to be a negative factor. The early decom-
missioning of Grafenrheinfeld nuclear power station and the
disposal of generating capacity in Italy and Spain will also
have a negative impact on earnings.

We anticipate that Renewables’ 2015 EBITDA will be slightly
below the prior-year level. Wind/Solar/Other will benefit from
an increase in installed generating capacity, whereas Hydro
will be adversely affected by declining prices and divestments.

We expect Global Commodities’ 2015 EBITDA to be significantly
above the prior-year figure due to anticipated improvements
in the power and gas business.

We expect Exploration & Production’s 2015 EBITDA to be sig-
nificantly below the prior-year figure due to lower commodity
prices and adverse currency-translation effects along with
normal production declines at our gas fields in the North Sea.

We expect the Germany regional unit’s 2015 EBITDA to be
significantly above the prior-year level. We anticipate improve-
ments across the business based on more seasonally typical
weather patterns and further efficiency enhancements and a
continuation of the positive trend in customer acquisition
and loyalty.

Other EU Countries’ 2015 EBITDA is expected to be at the prior-
year level. Further positive effects from efficiency enhance-
ments will be offset by adverse currency-translation effects.

We expect Non-EU Countries’ 2015 EBITDA to be significantly
below the prior-year level, mainly because of adverse currency-
translation effects at our Russia unit.

Anticipated Dividend Development
E.ON aims to pay a fixed dividend of €0.50 per share for both
the 2014 and 2015 financial years. In addition, shareholders
will again be offered the option to exchange the cash dividend
for the 2014 financial year partially into E.ON SE shares
(currently held as treasury shares).

Anticipated Financial Situation

Planned Funding Measures
We expect to have no funding needs in 2015 at the Group level.
We expect to be able to fund our investment expenditures
planned for 2015 and the dividend payout by means of oper-
ating cash flow and proceeds from disposals. Any peaks in
the Group’s funding needs during the course of the year can
be dealt with by issuing commercial paper.

As part of implementing our new strategy, we will review our
medium-term debt factor target in light of the change to our
organizational setup after the spinoff of the New Company.
We aim for any potential change in E.ON’s rating due to the
new setup in two companies to be limited to one notch.

Planned Investments
Our medium-term plan calls for investments of €4.3 billion in
2015. The main geographic focus of our investments will con-
tinue to be Germany, where they will go primarily toward the
maintenance and expansion of our power and gas infrastructure
and toward renewable and conventional power generation.

Non-EU Countries’ investments will serve mainly to continue
ongoing generation new-build projects, particularly at
Berezovskaya GRES in Russia.

We want to support our new strategy with targeted growth
investments. For this purpose, we intend to increase our
investment budget for 2015 by up to €500 million.

€ in billions

Percentages

General Statement on E.ON’s Future Development

Investments: 2015 Plan

Generation

Renewables

Global Commodities

Exploration & Production

Germany

Other EU Countries

Non-EU Countries

Group Management/Consolidation

Total

0.6

1.2

0.1

0.2

0.8

1.1

0.2

0.1

4.3

100

Generation’s investments will serve to maintain and expand
its portfolio of power generation assets.

The main focus of Renewables’ investments will be on offshore
wind farms (such as Amrumbank West and Humber) and
onshore farms in Europe.

Global Commodities will invest mainly in its gas-storage
infrastructure.

Most of Exploration & Production’s investments will go toward
developing gas and oil fields.

Investments at the Germany regional unit consist in particular
of numerous individual investments to expand our inter-
mediate- and low-voltage networks, switching equipment, and
metering and control technology as well as other investments
to ensure the reliable and uninterrupted transmission and
distribution of electricity.

Investments at Other EU Countries will consist primarily of
investments to maintain and expand our regional energy
networks in Sweden, Czechia, and Hungary.

New Strategy
Toward the end of 2014, the Board of Management and the
Supervisory Board adopted a new strategy for E.ON. Its aim
is to set up our businesses in a new way that makes them
viable for the future. We made the decision in response to
dramatically altered global energy markets, technical innova-
tion, and more diverse customer expectations. E.ON will
therefore reorganize itself so that it can tap the growth
potential created by the transformation of the energy world.
Alongside the new E.ON we intend to create a new, indepen-
dent company that will support the transformation of the
energy system by providing a secure energy supply; we intend
to spin off a majority stake in the New Company to E.ON SE
shareholders in 2016. Both E.ON and the New Company will
have solid financing, be positioned to secure jobs, and have
prospects for creating new jobs in the future.

E.ON SE will focus on the new energy world and customer
businesses. It will have three core businesses: renewables,
energy networks, and customer solutions. We intend for the
New Company to focus on conventional power generation,
global energy trading, and exploration and production.

In 2015 we will take necessary preparatory steps for the New
Company’s public listing. In view of these strategic develop-
ments, the company’s restructuring, and the related foreseeable
uncertainties, the Supervisory Board agreed to our proposal
that the company should aim to pay a fixed dividend of €0.50
per share for both the 2014 and 2015 financial years. To ensure
reporting continuity, E.ON’s current reporting units will, for the
time being, remain unchanged.

This Combined Group Management Report contains certain forward-looking statements based on E.ON management’s current assumptions and forecasts and other currently available
information. Various known and unknown risks, uncertainties, and other factors could lead to material differences between E.ON’s actual future results, financial situation, development
or performance and the estimates given here. E.ON assumes no liability whatsoever to update these forward-looking statements or to conform them to future events or developments.

Risk Report

Risk Management System

Risk Committee

E.ON SE
Board of Management

E.ON SE Supervisory Board

Audit and Risk Committee

Audit Report

Internal Audit

Quarterly KonTraG Risk
Reporting

Audits

Planning and Controlling
Process

Earnings Report/
Medium-Term Planning

Additional Reports on
E.ON Group Financial
Management (including
Liquidity)

Additional Separate
Reports on E.ON Group
Commodity and Credit
Risks

Market Risks

Operational Risks

External Risks

Strategic Risks

Technological Risks

Counterparty Risks

Risk Management, Monitoring, and Reporting

Generation

Renewables

Global
Commodities

Exploration
& Production

Germany

Other EU
Countries

Non-EU
Countries

Group
Management/
Consolidation

Our risk management system consists of a number of com-
ponents that are embedded into E.ON’s entire organizational
structure and processes. As a result, our risk management
system is an integral part of our business and decision-making
processes. The key components of our risk management sys-
tem include our Group-wide guidelines and reporting systems;
our standardized Group-wide strategy, planning, and controlling
processes; Internal Audit activities; the separate Group-wide
risk reporting conducted pursuant to the Corporate Sector
Control and Transparency Act (“KonTraG”); and the establishment
of risk committees. Our risk management system reflects
industry best practice and is designed to enable management

to recognize risks early and to take the necessary counter-
measures in a timely manner. We continually review our
Group-wide planning, controlling, and reporting processes to
ensure that they remain effective and efficient. As required
by law, the effectiveness of our risk management system is
reviewed regularly by Internal Audit. Our risk management
system encompasses all fully consolidated E.ON Group com-
panies and all companies accounted for using the equity
method whose book value exceeds €50 million.

have factored the operational and financial effects of envi-
ronmental risks into our emergency plan. They are part of
a catalog of crisis and system-failure scenarios prepared for
the Group by our incident and crisis management team.

Furthermore, the following are among the comprehensive
measures we take to address technological risks:
•

systematic employee training, advanced training, and
qualification programs
further refinement of our production procedures, pro-
cesses, and technologies
regular facility and network maintenance and inspection
company guidelines as well as work and process instruc-
tions
quality management, control, and assurance
project, environmental, and deterioration management
crisis-prevention measures and emergency planning.

•

•
•

•
•
•

Should an accident occur despite the measures we take, we
have a reasonable level of insurance coverage.

Managing Operational Risks
Our IT systems are maintained and optimized by qualified
E.ON Group experts, outside experts, and a wide range of tech-
nological security measures. In addition, the E.ON Group has
in place a range of technological and organizational measures
to counter the risk of unauthorized access to data, the misuse
of data, and data loss.

Managing Market Risks
We use a comprehensive sales management system and
intensive customer management to manage margin risks.

In order to limit our exposure to commodity price risks, we
conduct systematic risk management. The key elements of
our risk management are, in addition to binding Group-wide
policies and a Group-wide reporting system, the use of quan-
titative key figures, the limitation of risks, and the strict sepa-
ration of functions between departments. Furthermore, we
utilize derivative financial instruments that are commonly
used in the marketplace. These instruments are transacted
with financial institutions, brokers, power exchanges, and
third parties whose creditworthiness we monitor on an ongoing
basis. The Global Commodities unit aggregates and con-
sistently manages the price risks we face on Europe’s liquid
commodity markets.

Risk Management and Insurance

E.ON Risk Consulting GmbH, a wholly owned subsidiary of
E.ON SE, is responsible for insurance-risk management in the
E.ON Group. It develops and optimizes solutions for E.ON’s
operating risks by using insurance and insurance-related instru-
ments and secures the necessary coverage in international
insurance markets. To this end, E.ON Risk Consulting GmbH is,
among other things, responsible for management of client data
and insurance contracts, claims management, the accounting
of risk covering and claims, and all associated reporting.

Risk Committee

In compliance with the provisions of Section 91, Paragraph 2,
of the German Stock Corporation Act relating to the establish-
ment of a risk-monitoring and early warning system, the E.ON
Group has a Risk Committee. The Risk Committee, with sup-
port from relevant divisions and departments of E.ON SE and
E.ON Global Commodities SE, ensures that the risk strategy
defined by the Board of Management, principally the commodity
and credit risk strategy, is implemented, complied with, and
further developed.

Further Risk-Limitation Measures

In addition to the above-described components of our risk
management, we take the following measures to limit risk.

Managing External Risks
We engage in intensive and constructive dialog with govern-
ment agencies and policymakers in order to manage the risks
resulting from the E.ON Group’s policy, legal, and regulatory
environment. Furthermore, we strive to conduct proper project
management so as to identify early and minimize the risks
attending our new-build projects.

We attempt to minimize the operational risks of legal proceed-
ings and ongoing planning processes by managing them appro-
priately and by designing appropriate contracts beforehand.

Managing Technological Risks
To limit technological risks, we will continue to improve our
network management and the optimal dispatch of our gener-
ation assets. At the same time, we are implementing opera-
tional and infrastructure improvements that will enhance the
reliability of our generation assets and distribution networks,
even under extraordinarily adverse conditions. In addition, we

Risk Report

We use systematic risk management to monitor and control
our interest-rate and currency risks and manage these risks
using derivative and non-derivative financial instruments.
Here, E.ON SE plays a central role by aggregating risk positions
through intragroup transactions and hedging these risks in
the market. Due to its intermediary role, E.ON SE’s risk position
is largely closed.

Managing Strategic Risks
We have comprehensive preventive measures in place to
manage potential risks relating to acquisitions and investments.
To the degree possible, these measures include, in addition
to the relevant company guidelines and manuals, comprehen-
sive due diligence, legally binding contracts, a multi-stage
approvals process, and shareholding and project controlling.
Comprehensive post-acquisition projects also contribute to
successful integration.

Managing Counterparty Risks
We use a Group-wide credit risk management system to
systematically measure and monitor the creditworthiness of
our business partners on the basis of Group-wide minimum
standards. We manage our credit risk by taking appropriate
measures, which include obtaining collateral and setting
limits. The E.ON Group’s Risk Committee is regularly informed
about all material credit risks. A further component of our
risk management is a conservative investment strategy and
a broadly diversified portfolio.

Note 30 to the Consolidated Financial Statements contains
detailed information about the use of derivative financial
instruments and hedging transactions. Note 31 describes the
general principles of our risk management and applicable risk
metrics for quantifying risks relating to commodities, credit,
liquidity, interest rates, and currency translation.

Risk Situation

Our IT-based system for reporting risks and opportunities has
the following risk categories: market risks (commodity-price,
margin, market-liquidity, foreign-exchange, and interest-rate
risks), operational risks (IT, process, and personnel risks), exter-
nal risks (policy and legal risks, regulatory risks, risks from
public consents processes, risks from long-term market devel-
opments, and reputation risks), strategic risks (risks resulting

from investments and disposals), technological risks (risks
relating to the operation of power plants, networks, and other
facilities; environmental and new-build risks), and counter-
party risks (credit and country risks). E.ON SE departments and
the major Group companies report quantifiable and unquan-
tifiable risks into the reporting system according to these
categories. We categorize the earnings impact of risks as low
(under €0.5 billion), intermediate (€0.5 to €1 billion), high
(€1 to €5 billion), and very high (over €5 billion). These are risks
that have been quantified by means of, for example, statistical
methods, simulations, and expert opinion, presupposing the
worst case for each risk. The graphic below shows the number
of risks in each category; risks of the same type are aggregated
into a risk group.

Number of Risks per Risk Category

Very high

High

Intermediate

Low

External risks

Technological
risks

Operational
risks

222

Market risks

Strategic risks

Counterparty
risks

1 1

In the normal course of business, we are subject to a number
of risks that are inseparably linked to the operation of our
businesses.

The StandAG establishes a new levy that imposes the cost
burden on entities with a disposal obligation. It estimates that
the industry as a whole will face additional costs of more
than €2 billion. We contend that such a passthrough of costs
is unconstitutional as long as Gorleben has not been deemed
unsuitable. E.ON is taking legal action against it. The StandAG
also calls for an addendum to the Atomic Energy Act that
establishes a new obligation for nuclear operators to store
reprocessing waste at intermediate storage facilities in close
proximity to their nuclear power stations. In October 2014
E.ON filed declaratory actions against this new storage obli-
gation in the states of Bavaria, Lower Saxony, and Schleswig-
Holstein and also filed an appeal on constitutional grounds.

Germany’s Energy Act (which was amended at the end of 2012)
and the Ordinance on Reserve Power Plants (Reservekraft-
werksverordnung, which was passed in 2013) contain new
regulatory restrictions for several areas, including power
generation (in particular: restrictions on the decommissioning,
mothballing, or shutdown of generating units and rules for
the mandatory operation of generating units that are deemed
essential for maintaining power-system stability). These
restrictions could affect the profitability of E.ON’s generation
assets in Germany.

Capacity markets will play an important role for E.ON in a
number of the electricity markets where it operates. Russia,
Spain, Sweden, and Belgium already have capacity markets
(the latter two are strategic reserves). France, Italy, and the
United Kingdom have made political decisions to introduce
capacity markets. The United Kingdom held its first capacity
auction, for the 2018/2019 delivery year, in December 2014.
Germany is debating whether to introduce a capacity market
as part of the discussions surrounding the government’s
Green Paper on the future design of the country’s electricity
market. These reforms could affect E.ON’s generation and
retail operations. They could create market-design risks for
E.ON, which could face a competitive disadvantage, particularly
if there is a focus on specific generation technologies or if some
existing assets are not included.

Material risks are events or circumstances that could have a
significant impact on the asset, financial, or earnings situation
of E.ON Group companies or segments. The E.ON Group, and
thus E.ON SE, is exposed to the following main risks:

External Risks
The political, legal, and regulatory environment in which the
E.ON Group does business is also a source of external risks.
Changes to this environment can lead to considerable uncer-
tainty with regard to planning.

Generation
E.ON is building a hard-coal-fired power plant in Datteln,
Germany (“Datteln 4”). The plant is designed to have a net
electric capacity of about 1,055 MW. E.ON has invested more
than €1 billion in the project so far. The Münster Superior
Administrative Court issued a ruling declaring void the City of
Datteln’s land-use plan. This ruling was subsequently upheld
by the Federal Administrative Court in Leipzig. Consequently,
a new planning process was conducted to reestablish a reli-
able planning basis for Datteln 4. The new construction plan
and the amended land-use plan took effect on September 1,
2014. In view of the upcoming consents process, the current
policy environment, and pending and anticipated lawsuits,
we currently anticipate additional delays relative to Datteln
4’s originally planned date of commissioning. We continue to
anticipate that Datteln 4 will become operational. In principle,
these types of risks also attend our other power and gas new-
build and conversion projects.

In response to requests from three federal states (Schleswig-
Holstein, Hesse, and Rhineland-Palatinate), the Bundestag,
the upper house of Germany’s parliament, again thoroughly
debated issues relating to the financial security of the provi-
sions for the asset-retirement obligations for the dismantling
of nuclear power stations and the final storage of radioactive
waste. The result was to instruct the German federal govern-
ment to increase the transparency requirements for the
allocation of provisions to individual nuclear power stations
and their use and to subject the amount of the provisions to
an independent audit.

The Site Selection Act (Standortauswahlgesetz, or “StandAG”)
took effect in its entirety on January 1, 2014. Along with the
search for an alternative site, it calls for the study of Gorleben
to be suspended. Effective the date the StandAG entered
effect, Gorleben is to remain open but be frozen in its current
state as of the most recent study and/or partially dismantled.

Risk Report

Exploration & Production
The amendments to Russia’s mineral extraction tax for gas
condensate and natural fuel gas took effect on July 1, 2014.
Their earnings impact in 2015 will not be material.

Global Commodities
E.ON Global Commodities obtains most of the natural gas it
delivers to customers in and outside Germany pursuant to
long-term supply contracts with producers in Russia, Germany,
the Netherlands, and Norway. In addition to procuring gas
on a long-term, contractually secured basis, E.ON Global Com-
modities is active at various gas trading markets in Europe.
Because liquidity at these markets has increased considerably,
they represent a significant additional procurement source.
E.ON Global Commodities therefore has a highly diversified
gas procurement portfolio. Nevertheless, it faces a risk of
supply interruptions from individual procurement sources
resulting, for example, from technical problems at production
facilities or in the transmission system or other restrictions
that may affect transit. Such events are outside E.ON Global
Commodities’ control.

Germany
The E.ON Group’s operations subject it to certain risks relating
to legal proceedings, ongoing planning processes, and regu-
latory changes. These risks relate mainly to legal actions and
proceedings concerning contract and price adjustments to
reflect market dislocations or (including as a consequence of
the transformation of Germany’s energy system) an altered
business climate in the power and gas business, price increases,
alleged market-sharing agreements, and anticompetitive
practices. The legal proceedings concerning price increases
include legal actions to demand repayment of the increase
differential in conjunction with court rulings that certain
price-adjustment clauses used in the special-customer seg-
ment in years past are invalid. Rulings by Germany’s Federal
Court of Justice (“FCJ”) have increased these risks industry-
wide. To reduce future risks E.ON uses amended price-adjust-
ment clauses. Additional risks result from a ruling issued by
the European Court of Justice (“ECJ”) on October 23, 2014,
that Germany’s Basic Supply Ordinances for Power and Gas
(Grundversorgungsverordnungen) are in violation of EU law.
The FCJ must now rule on the violation’s consequences for
German law. It is expected to issue this ruling in 2015. E.ON is
not a party to these submissions, although it will be affected
by the FCJ’s ruling, as will all companies in the industry.
Amended Basic Supply Ordinances for Power and Gas took

effect on October 30, 2014. This increases the risk that price
changes will result in tariff customers switching suppliers.
E.ON is involved in arbitration and legal proceedings with
a number of large customers concerning contract and price
adjustments to reflect a business environment altered by
market dislocations. In some of these proceedings the custom-
ers are contesting the validity of price-adjustment clauses
and the validity of the contracts as a whole. The FCJ ruled on
May 14, 2014, that oil-indexed gas price clauses are a valid
business practice, thereby resolving an important point of
contention with large customers.

The awarding of network concessions for power and gas is
extremely competitive in Germany. This creates a risk of losing
concessions, particularly in urban areas with good infrastruc-
tures. There are strong indications that Germany may pass
legislation this year to change the modalities of how a network
is relinquished after a network concession has been lost. This
could make competition even keener.

As part of its review of E.ON network operators’ equality
reports, in 2014 the German Federal Network Agency (known
by its German acronym, “BNetzA”) indicated that it views the
companies’ setup (network operators having stakes in gener-
ation companies and municipal utilities) as incompatible
with unbundling requirements. The network operators dis-
agreed with this viewpoint in writing. The discussions with
the BNetzA continue.

The second incentive-regulation period began in 2013 for E.ON
gas network operators and in 2014 for E.ON power network
operators in Germany. The BNetzA has released the results of
the cost review and efficiency benchmarks. The administrative
process for setting the revenue caps for E.ON gas network
operators is formally completed. The BNetzA has set the rev-
enue caps for all E.ON power network operators except one,
and these caps have already taken legal effect.

On January 21, 2015, the BNetzA submitted to the Federal
Ministry for Economic Affairs and made public its report eval-
uating the Incentive Regulation Ordinance. The report will
serve as one of the bases for amendments to the ordinance,
which the Federal Ministry for Economic Affairs announced

it intends to undertake in 2015. The BNetzA’s report proposes
a number of different models for modifying the regulatory
framework. Depending on their specifics, these models could
pose risks and create opportunities.

Insolvency proceedings were initiated in 2011 for the assets
of TelDaFax Energy GmbH, a power and gas supplier. Until
TelDaFax Energy GmbH filed for insolvency, it supplied its end-
customers by using the networks of E.ON power and gas
network operators in Germany on the basis of supplier frame-
work contracts. In 2014 the insolvency administrator contested
network-fee payments TelDaFax Energy GmbH made to E.ON
power and gas network operators starting in 2009 and demands
their repayment. At this time it is uncertain whether this will
lead to court proceedings or whether an out-of-court settle-
ment can be reached.

Other EU Countries
In view of the current economic and financial crisis in many
EU member states, policy and regulatory intervention (such as
additional taxes, price moratoriums, and changes to support
schemes for renewables) is becoming increasingly apparent.
Such intervention could pose a risk to E.ON’s operations in
these countries. In particular, the refinancing situation of many
European countries could have a direct impact on the E.ON
Group’s cost of capital. So-called Robin Hood taxes in Hungary
are an example of such intervention.

Non-EU Countries
ENEVA S.A., our joint venture in Brazil, filed for creditor pro-
tection in early December 2014. Going forward, the successful
financial restructuring of its holding company and the stable
operation of its power stations are its primary objectives. Our
operations in Turkey could face risks resulting from the country’s
general macroeconomic development and regulatory environ-
ment, including the liberalization process.

Currently, the crisis in Ukraine has not yet affected our ability
to supply our customers with gas. At this time our activities
in Russia continue to operate according to plan. However, we
cannot entirely rule out the possibility that they could be
adversely affected by a further deterioration of the political
and macroeconomic situation. Currently, though, there are
no specific policy decisions that would have measurable neg-
ative consequences.

E.ON Group
The new EU energy efficiency directive took effect in Decem-
ber 2012. Among other provisions, it obliges all energy dis-
tributors and energy retailers to achieve, between 2014 and
2020, annual savings of 1.5 percent on the amount of energy
they sell to their customers. However, member states have the
option of replacing this provision with alternative measures
that achieve a comparable effect. The other provisions afford
member states a similar degree of flexibility. Consequently,
how the directive is transposed into national law is of partic-
ular significance and could pose risks for our regional units.
All companies that are not small or medium-sized enterprises
face a financial risk because they are obligated to conduct
energy audits by the end of 2015. Not all member states have
finalized the standards and rules for such audits. Moreover,
the capacity for conducting such audits or certifying alterna-
tive management systems is limited. Most member states
transposed the directive into national law in 2014. Although
the increasing efforts to enhance energy efficiency in all
European energy markets create sales-volume risks for E.ON,
they also create new sales opportunities by enlarging the
market for energy-service businesses.

In the context of discussions about Europe’s ability to meet
its long-term climate-protection targets for 2050, adjustments
to European emissions-trading legislation are under consider-
ation. A first step was taken when it was agreed to reduce
the number of carbon allowances available during the current
phase of the EU Emissions Trading Scheme (“ETS”), which ends
in 2020. Policymakers are also discussing whether to introduce
a market stability reserve, whose purpose would likewise be
to reduce the number of carbon allowances available during
the current phase. They hope that reducing the number of
allowances will lead to higher carbon prices, which would
create additional incentives for investments in climate-friendly
generating capacity. The risks of potentially higher carbon
prices for E.ON’s current fossil-fueled generation portfolio in
the EU can only be assessed when greater clarity exists about
what ETS reform measures will be taken.

In mid-June the European Network of Transmission System
Operators for Electricity (“ENTSO-E”) finalized draft EU-wide
network codes that set minimum technical requirements
for connecting generating facilities to distribution and trans-
mission systems. The codes could increase requirements for

Risk Report

new and, following the completion of a cost-benefit analysis,
for existing generating facilities. The codes are currently going
through the comitology process. The completion of this pro-
cess would make the codes legally binding. This is expected
to take place in 2015.

Further risks may result from the EU’s European Market Infra-
structure Regulation (“EMIR”) for derivatives traded over the
counter (“OTC”), the updated Markets in Financial Instruments
Directive (“MiFID2”), and the planned introduction of a finan-
cial transaction tax. With regard to EMIR and OTC derivatives,
the European Commission intends to introduce mandatory
central clearing of all OTC trades. Non-financial firms are
exempted from the clearing obligation as long as transactions
are demonstrably risk-reducing or remain below certain mon-
etary thresholds. E.ON monitors its compliance with these
thresholds on a daily basis in order to avoid additional liquidity
risks resulting from the margin requirements of mandatory
clearing. Possible changes to existing EU regulations could lead
to a substantial increase in administrative expenses, additional
liquidity risks, and, if a financial transaction tax is imposed, a
higher tax expense.

Reputation Risks
Events and discussions regarding nuclear power and energy
prices affect the reputation of all large energy suppliers. This is
particularly the case in Germany. As a large corporation whose
stock is part of the DAX 30 blue-chip index, E.ON is especially
prominent in Germany and is almost always mentioned during
public discussions of controversial energy-policy issues.

That is why communicating clearly, seeking out opportunities
for dialog, and engaging with our key stakeholders are so
important. They are the foundation for earning credibility and
an open ear for our viewpoints. Revised stakeholder-manage-
ment processes we implemented in 2013 will help us achieve
these aims. It is important that we act responsibly along our
entire value chain and that we communicate consistently,
enhance the dialog, and maintain good relationships with our
key stakeholders. We actively consider environmental, social,
and corporate-governance issues. These efforts support our
business decisions and our public relations. Our objective is to
minimize our reputation risks and garner public support so
that we can continue to operate our business successfully.

Technological Risks
Technologically complex production facilities are used in the
production and distribution of energy. Germany’s Renewable
Energy Law is resulting in an increase in decentralized feed-in,
which creates the need for additional expansion of the dis-
tribution network. On a regional level, the increase in decen-
tralized feed-in (primarily from renewables) has led to a shift
in load flows. Our operations in and outside Germany could
experience unanticipated operational or other problems lead-
ing to a power failure or shutdown. Operational failures or
extended production stoppages of facilities or components of
facilities (including new-build projects) as well as environmen-
tal damage could negatively impact our earnings, affect our
cost situation, and/or result in the imposition of fines. In addi-
tion, problems with the development of new gas fields could
lead to lower-than-expected earnings.

We could also be subject to environmental liabilities associated
with our power generation operations that could materially
and adversely affect our business. In addition, new or amended
environmental laws and regulations may result in material
increases in our costs.

Climate change has become a central risk factor. For example,
E.ON’s operations could be adversely affected by the absence
of precipitation or above-average temperatures that reduce
the cooling efficiency of our generation assets and may make
it necessary to shut them down. Extreme weather or long-
term climatic change could also affect wind power generation.
Alongside risks to our energy production, there are also risks
that could lead to the disruption of offsite activities, such as
transportation, communications, water supply, waste removal,
and so forth. Increasingly, our investors and customers expect
us to play an active leadership role in environmental issues
like climate change and water conservation. Our failure to meet
these expectations could increase the risk to our business
by reducing the capital market’s willingness to invest in our
company and the public’s trust in our brand.

Operational Risiks
The operational and strategic management of the E.ON Group
relies heavily on complex information technology. We out-
sourced our IT infrastructure to an external service provider
in 2011. Among our IT risks are the unauthorized access to
data, the misuse of data, and data loss.

In addition, our operating business potentially faces risks
resulting from human error and employee turnover.

Market Risks
Our units operate in an international market environment
that is characterized by general risks relating to the business
cycle. In addition, the entry of new suppliers into the market-
place along with more aggressive tactics by existing market
participants has created a keener competitive environment
for our electricity business in and outside Germany which
could reduce our margins. Our Global Commodities unit con-
tinues to face considerable competitive pressure in its gas
business. Competition in the gas market and increasing trading
volumes at virtual trading points and gas exchanges could
result in considerable volume risks for natural gas purchased
under long-term take-or-pay contracts. In addition, the far-
reaching dislocations on Germany’s wholesale gas markets in
recent years have led to considerable price risks between the
purchase and sales side. Generally, long-term gas procurement
contracts between producers and importers include the pos-
sibility of adjusting them to reflect continually changing mar-
ket conditions. On this basis, we conduct ongoing, intensive
negotiations with our producers.

In addition, our Global Commodities unit has booked LNG
regasification capacity in the Netherlands and the United
Kingdom well into the future, resulting in payment obligations
through 2031 and 2029, respectively. A deterioration of the
economic situation, a decline in LNG available for the North-
west European market, and/or a decline in demand could
result in a lower utilization of regasification capacity than
originally planned.

The demand for electric power and natural gas is seasonal,
with our operations generally experiencing higher demand
during the cold-weather months of October through March
and lower demand during the warm-weather months of April
through September. As a result of these seasonal patterns,

our sales and results of operations are higher in the first and
fourth quarters and lower in the second and third quarters.
Sales and results of operations for all of our energy operations
can be negatively affected by periods of unseasonably warm
weather during the autumn and winter months. Our units in
Scandinavia could be negatively affected by a lack of precipita-
tion, which could lead to a decline in hydroelectric generation.
We expect seasonal and weather-related fluctuations in sales
and results of operations to continue.

The E.ON Group’s business operations are exposed to com-
modity price risks. We mainly use electricity, gas, coal, carbon-
allowance, and oil price hedging transactions to limit our
exposure to risks resulting from price fluctuations, to optimize
systems, to conduct load balancing, and to lock in margins.

E.ON’s international business operations expose it to risks
from currency fluctuation. One form of this risk is transaction
risk, which occurs when payments are made in a currency
other than E.ON’s functional currency. Another form of risk is
translation risk, which occurs when currency fluctuations
lead to accounting effects when assets/liabilities and income/
expenses of E.ON companies outside the euro zone are trans-
lated into euros and entered into our Consolidated Financial
Statements. Currency-translation risk results mainly from
transactions denominated in U.S. dollars, pounds sterling,
Swedish kronor, Russian rubles, Norwegian kroner, Hungarian
forints, Brazilian reals, and Turkish lira.

E.ON faces earnings risks from financial liabilities and interest
derivatives that are based on variable interest rates.

In addition, E.ON also faces risks from price changes and losses
on the current and non-current investments it makes to
cover its non-current obligations, particularly pension and
asset-retirement obligations.

Declining discount rates could lead to increased provisions
for pensions and asset-retirement obligations. This poses an
earnings risk for E.ON.

Risk Report

Strategic Risks
As part of the new strategic course we set in November 2014,
E.ON SE will focus on renewables, energy networks, and cus-
tomer solutions and will transfer its conventional generation,
global energy trading, exploration and production businesses
to a new, independent company and spin off a majority stake
in the New Company to E.ON shareholders. In 2015 we will take
the preparatory steps for the New Company’s public listing.
These include making organizational changes to form two
companies that are independent of each other. In particular, the
following potential risks attend this process: delays in the
preparations for, or the implementation of, the organizational
separation and/or the public listing; higher-than-anticipated
implementation costs; an adverse impact on ongoing business
operations.

Our business strategy involves acquisitions and investments
in our core business as well as disposals. This strategy depends
in part on our ability to successfully identify, acquire, and
integrate companies that enhance, on acceptable terms, our
energy business. In order to obtain the necessary approvals
for acquisitions, we may be required to divest other parts of
our business or to make concessions or undertakings that
materially affect our business. In addition, there can be no
assurance that we will be able to achieve the returns we
expect from any acquisition or investment. For example, we
may fail to retain key employees; may be unable to success-
fully integrate new businesses with our existing businesses;
may incorrectly judge expected cost savings, operating profits,
or future market trends and regulatory changes; or may spend
more on the acquisition, integration, and operation of new
businesses than anticipated. Furthermore, investments and
acquisitions in new geographic areas or lines of business
require us to become familiar with new sales markets and
competitors and to address the attending business risks.

In the case of planned disposals, E.ON faces the risk of dis-
posals not taking place or being delayed and the risk that E.ON
receives lower-than-anticipated disposal proceeds. In such

projects, it is not possible to determine the likelihood of these
risks. In addition, after transactions close we could face liability
risks resulting from contractual obligations.

Counterparty Risks
E.ON is exposed to credit risk in its operating activities and
through the use of financial instruments. Credit risk results
from non-delivery or partial delivery by a counterparty of the
agreed consideration for services rendered, from total or
partial failure to make payments owing on existing accounts
receivable, and from replacement risks in open transactions.

Board of Management’s Evaluation of the Risk
Situation

We determine the E.ON Group’s overall risk by means of a
Monte Carlo simulation technique that also factors in the
interdependencies between individual risks. This simulation
factors in the major Group company’s individual risks as well
as possible deviations from the assumptions on which our
planning is based. It calculates the maximum loss after counter-
measures (net worst case) and the anticipated loss. Changes
to these figures over time indicate changes in the E.ON Group’s
risk situation.

The risk situation of the E.ON Group’s operating business at
year-end 2014 had not changed significantly relative to the
risk situation at year-end 2013. Nevertheless, in the future policy
and regulatory intervention, increasing gas-market competi-
tion and its effect on sales volumes and prices, and possible
delays in power and gas new-build projects could adversely
affect our earnings situation. From today’s perspective, how-
ever, we do not perceive any risks that could threaten the
existence of the E.ON Group or individual segments.

Changes in our regulatory environment could create opportu-
nities. Market developments could also have a positive impact
on our business. Such factors include wholesale and retail price
developments and higher customer churn rates.

The EU internal energy market was supposed to be completed
in 2014 and serve as the first step towards a long-term Euro-
pean energy strategy. Nevertheless, many member states are
pursuing their own agenda, aspects of which are not compat-
ible with EU policy objectives. An example of this is the dif-
ferent approaches member states are taking with regard to
capacity markets. We believe that European market integra-
tion is currently being accompanied by the development of
markets that have strong national orientation. This could lead
to a situation in which E.ON, which operates across Europe,
can look for new opportunities in a fragmented regulatory
environment.

Positive developments in foreign-currency rates and market
prices for commodities (electricity, natural gas, coal, oil, and
carbon) can create opportunities for our operating business.
Periods of exceptionally cold weather—very low average tem-
peratures or extreme daily lows—in the fall and winter months
can create opportunities for us to meet higher demand for
electricity and natural gas.

We combined our European trading operations at the start
of 2008. This enables us to seize opportunities created by the
increasing integration of European power and gas markets
and of commodity markets, which are already global in scope.
For example, in view of market developments in the United
Kingdom and Continental Europe, trading at European gas hubs
can create additional sales and procurement opportunities.

In addition, the ongoing optimization of gas transport and
storage rights and of the availability and utilization of our
power and gas facilities (shorter project timelines or shorter
facility outages) could yield opportunities.

Opportunity Report

We conduct a bottom-up process at half-yearly intervals (at
the end of the second and fourth quarters) in which the lead
companies of our units in and outside Germany as well as
certain E.ON SE departments follow Group-wide guidelines to
identify and report opportunities that they deem sufficiently
concrete and substantial. An opportunity is substantial within
the meaning of our guidelines if it could have a significant
positive effect on the asset, financial, or earnings situation of
E.ON companies and/or segments.

The reactor accident in Fukushima led the political parties
in Germany’s coalition government to reverse their policy
regarding nuclear energy. After extending the operating lives of
nuclear power plants (“NPPs”) in the fall of 2010 in line with
the stipulations of that government’s coalition agreement, the
federal government rescinded the extensions in the thirteenth
amended version of Germany’s Atomic Energy Act (“the Act”)
and established a number of stricter rules. E.ON considers the
nuclear phaseout, under the current legislation, to be irrecon-
cilable with our constitutionally protected right to property
and right to operate a business. It is our view that such an
intervention is unconstitutional unless compensation is granted
for the rights so deprived and for the resulting stranded assets.
Consequently, in mid-November 2011 E.ON filed a constitutional
complaint against the thirteenth amendment of the Act to
Germany’s Federal Constitutional Court in Karlsruhe. We believe
that the nuclear-fuel tax contravenes Germany’s constitution
and European law. E.ON is therefore instituting administrative
proceedings and taking legal action against the tax as well.
Our view was affirmed by the Hamburg Fiscal Court and the
Munich Fiscal Court. After the Federal Fiscal Court overturned
the suspension of the tax, the matter now awaits conclusive
adjudication by the Federal Constitutional Court and the Euro-
pean Court of Justice.

E.ON has filed a suit for damages against the states of Lower
Saxony and Bavaria and against the Federal Republic of
G ermany for the nuclear-energy moratorium that was ordered
following the reactor accident in Fukushima. The suit, which
was filed with the Hanover State Court, seeks approximately
€380 million in damages which E.ON incurred when, in March
2011, Unterweser and Isar 1 NPPs were required to temporarily
suspend operations for several months until the thirteenth
amended version of the Atomic Energy Act, which specifies the
modalities for Germany’s accelerated phaseout of nuclear
energy, took effect.

Internal Control System for the Accounting Process

Disclosures Pursuant to Section 289, Paragraph 5
and Section 315, Paragraph 2, Item 5 of the German
Commercial Code on the Internal Control System
for the Accounting Process

General Principles
We apply Section 315a (1) of the German Commercial Code and
prepare our Consolidated Financial Statements in accordance
with International Financial Reporting Standards (“IFRS”) and
the interpretations of the International Financial Reporting
Interpretations Committee that were adopted by the European
Commission for use in the EU as of the end of the fiscal year
and whose application was mandatory as of the balance-sheet
date (see Note 1 to the Consolidated Financial Statements).
Our global units and certain of our regional units are our IFRS
reportable segments.

E.ON SE prepares its Financial Statements in accordance with
the German Commercial Code, the SE Ordinance (in conjunction
with the German Stock Corporation Act), and the German
Energy Act.

In conjunction with the year-end closing process, additional
qualitative and quantitative information is compiled. Further-
more, dedicated quality-control processes are in place for all
relevant departments to discuss and ensure the completeness
of relevant information on a regular basis.

E.ON SE’s Financial Statements are also prepared with SAP
software. The accounting and preparation processes are divided
into discrete functional steps. We transferred bookkeeping
processes to our Business Service Centers: processes relating
to subsidiary ledgers and bank activities were transferred to
Cluj, those relating to the general ledgers to Regensburg.
Automated or manual controls are integrated into each step.
Defined procedures ensure that all transactions and the
preparation of E.ON SE’s Financial Statements are recorded,
processed, assigned on an accrual basis, and documented in
a complete, timely, and accurate manner. Relevant data from
E.ON SE’s Financial Statements are, if necessary, adjusted to
conform with IFRS and then transferred to the consolidation
software system using SAP-supported transfer technology.

We prepare a Combined Group Management Report which
applies to both the E.ON Group and E.ON SE.

The following explanations about our Internal Control System
and our general IT controls apply to the Consolidated Financial
Statements and E.ON SE’s Financial Statements.

Accounting Process
All companies included in the Consolidated Financial Statements
must comply with our uniform Accounting and Reporting
Guidelines for the Annual Consolidated Financial Statements
and the Interim Consolidated Financial Statements. These
guidelines describe applicable IFRS accounting and valuation
principles. They also explain accounting principles typical in
the E.ON Group, such as those for provisions for nuclear-waste
management and the treatment of regulatory obligations.
We continually analyze amendments to laws, new or amended
accounting standards, and other pronouncements for their
relevance to and consequences for our Consolidated Financial
Statements and, if necessary, update our guidelines and sys-
tems accordingly.

Internal Control and Risk Management System
Internal controls are an integral part of our accounting pro-
cesses. Guidelines, called Internal_Controls@E.ON, define
uniform financial-reporting requirements and procedures for
the entire E.ON Group. These guidelines encompass a defi-
nition of the guidelines’ scope of application; a Risk Catalog
(ICS Model); standards for establishing, documenting, and
evaluating internal controls; a Catalog of ICS Principles; a
description of the test activities of our Internal Audit division;
and a description of the final Sign-Off process. We believe
that compliance with these rules provides sufficient certainty
to prevent error or fraud from resulting in material misre-
presentations in the Consolidated Financial Statements, the
Combined Group Management Report, and the Interim Reports.

E.ON Group companies are responsible for preparing their
financial statements in a proper and timely manner. They
receive substantial support from Business Service Centers in
Regensburg, Germany, and Cluj, Romania. The financial state-
ments of subsidiaries belonging to E.ON’s scope of consolida-
tion are audited by the subsidiaries’ respective independent
auditor. E.ON SE then combines these statements into its Con-
solidated Financial Statements using uniform SAP consolidation
software. The E.ON Center of Competence for Consolidation
is responsible for conducting the consolidation and for moni-
toring adherence to guidelines for scheduling, processes, and
contents. Monitoring of system-based automated controls is
supplemented by manual checks.

Internal Audit tests the E.ON Group’s internal control system
and identifies potential deficiencies (issues). On the basis
of its own evaluation and the results of tests performed by
Internal Audit, an E.ON unit’s management carries out the
final Sign-Off.

Sign-Off Process
The final step of the internal evaluation process is the sub-
mission of a formal written declaration called a Sign-Off
confirming the effectiveness of the internal control system.
The Sign-Off process is conducted at all levels of the Group
before it is conducted by the global and regional units and,
finally, for the Group as a whole, by E.ON SE. The Chairman
of the E.ON SE Board of Management and the Chief Financial
Officer make the final Sign-Off for the E.ON Group.

Internal Audit regularly informs the E.ON SE Supervisory
Board’s Audit and Risk Committee about the internal control
system for financial reporting and any significant issue areas
it identifies in the E.ON Group’s various processes.

General IT Controls
An E.ON unit called E.ON Business Services and external ser-
vice providers provide IT services for the majority of the units
at the E.ON Group. The effectiveness of the automated controls
in the standard accounting software systems and in key addi-
tional applications depends to a considerable degree on the
proper functioning of IT systems. Consequently, IT controls
are embedded in our documentation system. These controls
primarily involve ensuring the proper functioning of access-
control mechanisms of systems and applications, of daily IT
operations (such as emergency measures), of the program
change process, and of E.ON SE’s central consolidation system.

COSO Framework
Our internal control system is based on the globally recog-
nized COSO framework, in the version published in May 2013
(COSO: The Committee of Sponsoring Organizations of the
Treadway Commission). The Central Risk Catalog (ICS Model),
which encompasses company- and industry-specific aspects,
defines possible risks for accounting (financial reporting) in
the functional areas of our units and thus serves as a check
list and provides guidance for the establishment and documen-
tation of internal controls.

The Catalog of ICS Principles is a key component of our internal
control system, defining the minimum requirements for the
system to function. It encompasses overarching principles for
matters such as authorization, segregation of duties, and
master data management as well as specific requirements for
managing risks in a range of issue areas and processes, such
as accounting, financial reporting, communications, planning
and controlling, and risk management.

Scope
Each year, we conduct a process using qualitative criteria and
quantitative materiality metrics to define which E.ON units
must document and evaluate their financial-reporting-related
processes and controls in a central documentation system.

Central Documentation System
The E.ON units to which the internal control system applies
use a central documentation system to document key controls.
The system defines the scope, detailed documentation require-
ments, the assessment requirements for process owners, and
the final Sign-Off process.

Assessment
After E.ON units have documented their processes and controls,
the individual process owners conduct an annual assessment
of the design and the operational effectiveness of the pro-
cesses as well as the controls embedded in these processes.

Tests Performed by Internal Audit
The management of E.ON units relies on the assessment per-
formed by the process owners and on testing of the internal
control system performed by Internal Audit. These tests are a
key part of the process. Using a risk-oriented audit plan,

Disclosures Regarding Takeovers

Disclosures Pursuant to Section 289, Paragraph 4,
and Section 315, Paragraph 4, of the German Com-
mercial Code

Composition of Share Capital
The share capital totals €2,001,000,000.00 and consists of
2,001,000,000 registered shares without nominal value. Each
share of stock grants the same rights and one vote at a
Shareholders Meeting.

Restrictions on Voting Rights or the Transfer of
Shares
Shares acquired by an employee under the Company-sponsored
employee stock purchase program are subject to a blackout
period that begins the day ownership of such shares is trans-
ferred to the employee and that ends on December 31 of the
next calendar year plus one. As a rule, an employee may not
sell such shares until the blackout period has expired.

Pursuant to Section 71b of the German Stock Corporation Act
(known by its German abbreviation, “AktG”), the Company’s
own shares give it no rights, including no voting rights.

Legal Provisions and Rules of the Company’s Articles
of Association Regarding the Appointment and
Removal of Board of Management Members and
Amendments to the Articles of Association
Pursuant to the Company’s Articles of Association, the Board
of Management consists of at least two members. The Super-
visory Board decides on the number of members as well as
on their appointment and dismissal.

The Supervisory Board appoints members to the Board of
Management for a term not exceeding five years; reappoint-
ment is permissible. If more than one person is appointed
as a member of the Board of Management, the Supervisory
Board may appoint one of the members as Chairperson of
the Board of Management. If a Board of Management member
is absent, in the event of an urgent matter, the court makes
the necessary appointment upon petition by a concerned
party. The Supervisory Board may revoke the appointment of
a member of the Board of Management and the Chairperson
of the Board of Management for serious cause (for further
details, see Sections 84 and 85 of the AktG).

Resolutions of the Shareholders Meeting require a majority of
the valid votes cast unless the law or the Articles of Asso-
ciation explicitly prescribe otherwise. An amendment to the
Articles of Association requires a two-thirds majority of the
votes cast or, in cases where at least half of the share capital
is represented, a simple majority of the votes cast unless the
law explicitly prescribes another type of majority.

The Supervisory Board is authorized to decide by resolution
on amendments to the Articles of Association that affect only
their wording (Section 10, Paragraph 7, of the Articles of Asso-
ciation). Furthermore, the Supervisory Board is authorized to
revise the wording of Section 3 of the Articles of Association
upon utilization of authorized or conditional capital.

Board of Management’s Power to Issue or Buy Back
Shares
Pursuant to a resolution of the Shareholders Meeting of May 3,
2012, the Company is authorized, until May 2, 2017, to acquire
own shares. The shares acquired and other own shares that
are in possession of or to be attributed to the Company pur-
suant to Sections 71a et seq. of the AktG must altogether at
no point account for more than 10 percent of the Company’s
share capital.

At the Board of Management’s discretion, the acquisition may
be conducted:

•

through a stock exchange

by means of a public offer directed at all shareholders or
a public solicitation to submit offers

by means of a public offer or a public solicitation to
submit offers for the exchange of liquid shares that are
admitted to trading on an organized market, within the
meaning of the German Securities Purchase and Take-
over Law, for Company shares

•

by use of derivatives (put or call options or a combination
of both).

These authorizations may be utilized on one or several occa-
sions, in whole or in partial amounts, in pursuit of one or
more objectives by the Company and also by affiliated com-
panies or by third parties for the Company’s account or its
affiliates’ account.

With regard to treasury shares that will be or have been
acquired based on the above-mentioned authorization and/or
prior authorizations by the Shareholders Meeting, the Board
of Management is authorized, subject to the Supervisory
Board’s consent and excluding shareholder subscription rights,
to use these shares—in addition to a disposal through a stock
exchange or an offer granting a subscription right to all
shareholders—as follows:

•

to be sold and transferred against cash consideration

to be sold and transferred against contribution in kind

to be used in order to satisfy the rights of creditors of
bonds with conversion or option rights or, respectively,
conversion obligations issued by the Company or its
Group companies

to be offered for purchase and transferred to individuals
who are employed by the Company or one of its affiliates.

These authorizations may be utilized on one or several occa-
sions, in whole or in partial amounts, separately or collectively
by the Company and also by Group companies or by third
parties for the Company’s account or its affiliates’ account.

In addition, the Board of Management is authorized to cancel
treasury shares, without such cancellation or its implemen-
tation requiring an additional resolution by the Shareholders
Meeting.

Disclosures Regarding Takeovers

In each case, the Board of Management will inform the Share-
holders Meeting about the reasons for and the purpose of
the acquisition of treasury shares, the number of treasury
shares acquired, the amount of the registered share capital
attributable to them, the portion of the registered share capi-
tal represented by them, and their equivalent value.

the conditional capital pursuant to Section 3 of the Articles
of Association of E.ON AG has not yet been implemented at
the point in time when the conversion of E.ON AG into a Euro-
pean Company (“SE”) becomes effective in accordance with
the conversion plan dated March 6, 2012. The conditional capital
increase was not utilized.

Significant Agreements to Which the Company Is a
Party That Take Effect on a Change of Control of the
Company Following a Takeover Bid
Debt issued since 2007 contains change-of-control clauses that
give the creditor the right of cancellation. This applies, inter
alia, to bonds issued by E.ON International Finance B.V. and
guaranteed by E.ON SE, promissory notes issued by E.ON SE,
and other instruments such as credit contracts. Granting
change-of-control rights to creditors is considered good corpo-
rate governance and has become standard market practice.
Further information about financial liabilities is contained in
the section of the Combined Group Management Report
entitled Financial Situation and in Note 26 to the Consolidated
Financial Statements.

Settlement Agreements between the Company and
Board of Management Members or Employees in
the Case of a Change-of-Control Event
In the event of a premature loss of a Board of Management
position due to a change-of-control event, the service agree-
ments of Board of Management members entitle them to
severance and settlement payments (see the detailed presen-
tation in the Compensation Report).

A change-of-control event would also result in the early payout
of performance rights under the E.ON Share Performance Plan.

By shareholder resolution adopted at the Annual Shareholders
Meeting of May 3, 2012, the Board of Management was
authorized, subject to the Supervisory Board’s approval, to
increase until May 2, 2017, the Company’s capital stock by
a total of up to €460 million through one or more issuances
of new registered no-par-value shares against contributions in
cash and/or in kind (with the option to restrict shareholders’
subscription rights); such increase shall not, however, exceed
the amount and number of shares in which the authorized
capital pursuant to Section 3 of the Articles of Association of
E.ON AG still exists at the point in time when the conversion
of E.ON AG into a European Company (“SE”) becomes effective
pursuant to the conversion plan dated March 6, 2012 (autho-
rized capital pursuant to Sections 202 et seq. AktG). Subject to
the Supervisory Board’s approval, the Board of Management
is authorized to exclude shareholders’ subscription rights. The
authorized capital increase was not utilized.

At the Annual Shareholders Meeting of May 3, 2012, share-
holders approved a conditional increase of the capital stock
(with the option to exclude shareholders’ subscription rights) in
the amount of €175 million, which is authorized until May 2,
2017. The conditional capital increase will be implemented
only to the extent required to fulfill the obligations arising on
the exercise by holders of option or conversion rights, and
those arising from compliance with the mandatory conversion
of bonds with conversion or option rights, profit participation
rights and income bonds that have been issued or guaranteed
by E.ON SE or a Group company of E.ON SE as defined by
Section 18 AktG, and to the extent that no cash settlement has
been granted in lieu of conversion and no E.ON SE treasury
shares or shares of another listed company have been used
to service the rights. However, this conditional capital increase
only applies up to the amount and number of shares in which

In 2014 the Board of Management and Supervisory Board paid
close attention to E.ON’s compliance with the German Corpo-
rate Governance Code’s recommendations and suggestions.
They determined that E.ON fully complies with all of the Code’s
recommendations and with nearly all of its suggestions.

Transparent Management
Transparency is a high priority of E.ON SE’s Board of Manage-
ment and Supervisory Board. Our shareholders, all capital
market participants, financial analysts, shareholder associations,
and the media regularly receive up-to-date information about
the situation of, and any material changes to, the Company.
We primarily use the Internet to help ensure that all investors
have equal access to comprehensive and timely information
about the Company.

E.ON SE issues reports about its situation and earnings by
the following means:
•
Interim Reports
• Annual Report
• Annual press conference
•
•

Press releases
Telephone conferences held on release of the quarterly
Interim Reports and the Annual Report

• Numerous events for financial analysts in and outside

Germany.

A financial calendar lists the dates on which the Company’s
financial reports are released.

In addition to the Company’s periodic financial reports, the
Company issues ad hoc statements when events or changes
occur at E.ON SE that could have a significant impact on the
price of E.ON stock.

The financial calendar and ad hoc statements are available
on the Internet at www.eon.com.

Corporate Governance Declaration in Accordance
with Section 289a of the German Commercial Code

Declaration Made in Accordance with Section 161 of
the German Stock Corporation Act by the Board of
Management and the Supervisory Board of E.ON SE
The Board of Management and the Supervisory Board hereby
declare that E.ON SE will comply in full with the recommen-
dations of the “Government Commission German Corporate
Governance Code,” dated June 24, 2014, published by the Fed-
eral Ministry of Justice in the official section of the Federal
Gazette (Bundesanzeiger).

The Board of Management and the Supervisory Board further-
more declare that E.ON SE has been in compliance in full with
the recommendations of the “Government Commission German
Corporate Governance Code,” dated May 13, 2013, published
by the Federal Ministry of Justice in the official section of the
Federal Gazette (Bundesanzeiger) since the last declaration
on December 16, 2013.

Düsseldorf, December 15, 2014

For the Supervisory Board of E.ON SE
Werner Wenning
(Chairman of the Supervisory Board of E.ON SE)

For the Board of Management of E.ON SE
Dr. Johannes Teyssen
(Chairman of the Board of Management of E.ON SE)

The declaration is continuously available to the public on the
Company’s Internet page at www.eon.com.

Relevant Information about Management Practices
Corporate Governance
E.ON views good corporate governance as a central founda-
tion of responsible and value-oriented management, efficient
collaboration between the Board of Management and the
Supervisory Board, transparent disclosures, and appropriate
risk management.

Corporate Governance Report

Directors’ Dealings
Persons with executive responsibilities, in particular members
of E.ON SE’s Board of Management and Supervisory Board, and
persons closely related to them, must disclose their dealings
in E.ON stock or in related financial instruments pursuant to
Section 15a of the German Securities Trading Act. Such dealings
that took place in 2014 have been disclosed on the Internet at
www.eon.com. As of December 31, 2014, there was no owner-
ship interest subject to disclosure pursuant to Item 6.3 of the
German Corporate Governance Code.

Integrity
Our actions are grounded in integrity and a respect for the law.
The basis for this is the Code of Conduct established by the
Board of Management and confirmed in 2013. It emphasizes
that all employees must comply with laws and regulations and
with Company policies. These relate to dealing with business
partners, third parties, and government institutions, particularly
with regard to antitrust law, the granting and accepting of
benefits, the involvement of intermediaries, and the selection
of suppliers and service providers. Other rules address issues
such as the avoidance of conflicts of interest (such as the pro-
hibition to compete, secondary employment, material financial
investments) and handling company information, property,
and resources. The policies and procedures of our compliance
organization ensure the investigation, evaluation, cessation, and
punishment of reported violations by the appropriate Com-
pliance Officers and the E.ON Group’s Chief Compliance Officer.
Violations of the Code of Conduct can also be reported
anonymously (for example, by means of a whistleblower report).
The Code of Conduct is published on www.eon.com.

Description of the Functioning of the Board of
Management and Supervisory Board and of the
Composition and Functioning of Their Committees
Board of Management
The E.ON SE Board of Management manages the Company’s
businesses, with all its members bearing joint responsibility
for its decisions. It establishes the Company’s objectives, sets
its fundamental strategic direction, and is responsible for
corporate policy and Group organization.

The Board of Management consists of six members and has one
Chairperson. Someone who has reached the general retirement
age should not be a member of the Board of Management.
The Board of Management has in place policies and procedures
for the business it conducts and, in consultation with the
Supervisory Board, has assigned task areas to its members.

The Board of Management regularly reports to the Supervisory
Board on a timely and comprehensive basis on all relevant
issues of strategy, planning, business development, risk situa-
tion, risk management, and compliance. It also submits the
Group’s investment, finance, and personnel plan for the coming
financial year as well as the medium-term plan to the Super-
visory Board for its approval, generally at the last meeting of
each financial year.

The Chairperson of the Board of Management informs, with-
out undue delay, the Chairperson of the Supervisory Board of
important events that are of fundamental significance in
assessing the Company’s situation, development, and manage-
ment and of any defects that have arisen in the Company’s
monitoring systems. Transactions and measures requiring the
Supervisory Board’s approval are also submitted to the
Supervisory Board in a timely manner.

Members of the Board of Management are also required to
promptly report conflicts of interest to the Executive Committee
of the Supervisory Board and to inform the other members
of the Board of Management. Members of the Board of Manage-
ment may only assume other corporate positions, partic ularly
appointments to the supervisory boards of non-Group com-
panies, with the consent of the Executive Committee of the
Supervisory Board. There were no conflicts of interest involving
members of the E.ON SE Board of Management in 2014. Any
material transactions between the Company and members
of the Board of Management, their relatives, or entities with
which they have close personal ties require the consent of
the Executive Committee of the Supervisory Board. No such
transactions took place in 2014.

In addition, the Board of Management has established a number
of committees that support it in the fulfillment of its tasks.
The members of these committees are senior representatives
of various departments of E.ON SE whose experience, responsi-
bilities, and expertise make them particularly suited for their
committee’s tasks. Among these committees are the following:

A Disclosure Committee supports the Board of Management
on issues relating to financial disclosures and ensures that
such information is disclosed in a correct and timely fashion.

A Risk Committee ensures the correct application and imple-
mentation of the legal requirements of Section 91 of the
German Stock Corporation Act (“AktG”). This committee monitors
the E.ON Group’s risk situation and its risk-bearing capacity
and devotes particular attention to the early-warning system
to ensure the early identification of going-concern risks to
avoid developments that could potentially threaten the Group’s
continued existence. In collaboration with relevant departments,
the committee ensures and refines the implementation of,
and compliance with, the reporting policies enacted by the
Board of Management with regard to commodity risks, credit
risks, and opportunities and risks pursuant to Germany’s
Corporate Sector Control and Transparency Act (“KonTraG”).

A Market Committee ensures that E.ON, across all its entities
and in a timely manner, adopts clear and unequivocal policies
and assigns clear mandates for monitoring market develop-
ments and managing its commodity portfolio (power, gas, coal,
and so forth). The committee thus manages the portfolio’s
risk-reward profile in pursuance of the E.ON Group’s strategic
and financial objectives.

Supervisory Board
The E.ON SE Supervisory Board has twelve members and, in
accordance with the Company’s Articles of Association, is
composed of an equal number of shareholder and employee
representatives. The shareholder representatives are elected
by the shareholders at the Annual Shareholders Meeting; the
Supervisory Board nominates candidates for this purpose.
Pursuant to the agreement regarding employees’ involvement
in E.ON SE, the other six members of the Supervisory Board
are appointed by the SE Works Council, with the proviso that
at least three different countries are represented and one

member is selected by a German trade union that is repre-
sented at E.ON SE or one of its subsidiaries in Germany. Per-
sons are not eligible as Supervisory Board members if they:

•

are already supervisory board members in ten commercial
companies that are required by law to form a supervisory
board

are legal representatives of an enterprise controlled by
the Company

are legal representatives of another corporation whose
supervisory board includes a member of the Company’s
Board of Management

• were a member of the Company’s Board of Management
in the past two years, unless the person concerned is
nominated by shareholders who hold more than 25 percent
of the Company’s voting rights.

At least one independent member of the Supervisory Board
must have expertise in preparing or auditing financial state-
ments. The Supervisory Board believes that Werner Wenning
and Dr. Theo Siegert meet this requirement.

The Supervisory Board oversees the Company’s management
and advises the Board of Management on an ongoing basis.
The Board of Management requires the Supervisory Board’s
prior approval for significant transactions or measures, such
as the Group’s investment, finance, and personnel plans; the
acquisition or sale of companies, equity interests, or parts of
companies whose value exceeds €500 million or 2.5 percent of
stockholders’ equity as shown in the most recent Consolidated
Balance Sheets; financing measures that exceed 5 percent of
stockholders’ equity as shown in the most recent Consolidated
Balance Sheets and have not been covered by Supervisory
Board resolutions regarding finance plans; and the conclusion,
amendment, or termination of affiliation agreements. The
Supervisory Board examines the Financial Statements of
E.ON SE, the Management Report, and the proposal for profit
appropriation and, on the basis of the Audit and Risk Com-
mittee’s preliminary review, the Consolidated Financial State-
ments and the Combined Group Management Report. The
Supervisory Board provides to the Annual Shareholders
Meeting a written report on the results of this examination.

Corporate Governance Report

The Supervisory Board has established policies and procedures
for itself. It holds four regular meetings in each financial year.
Its policies and procedures include mechanisms by which, if
necessary, a meeting of the Supervisory Board or one of its

committees can be called at any time by a member or by the
Board of Management. In the event of a tie vote on the
Supervisory Board, the Chairperson has the tie-breaking vote.

Overview of the Attendance of Supervisory Board Members at Meetings
of the Supervisory Board and Its Committees

Supervisory Board member

Supervisory Board

Executive Committee

Audit and Risk
Committee

Finance and Investment
Committee

Werner Wenning

Prof. Dr. Ulrich Lehner

Erhard Ott

Clive Broutta (since July 1, 2014)

Baroness Denise Kingsmill CBE

Eugen-Gheorghe Luha1

René Obermann

Klaus Dieter Raschke

Eberhard Schomburg

Fred Schulz

Dr. Karen de Segundo

Dr. Theo Siegert

Willem Vis (until June 30, 2014)

4/4

2/2

4/4

3/4

4/4

2/2

5/5

–

5/5

–

7/7

–

6/7

7/7

–

7/7

–

5/5

–

3/3

–

5/5

–

2/2

1Member of the Finance and Investment Committee from July 2, 2014.

In view of Item 5.4.1 of the German Corporate Governance
Code, in December 2012 the Supervisory Board defined tar-
gets for its composition that go beyond the applicable legal
requirements. These targets are as follows:

“The Supervisory Board’s composition should ensure that, on
balance, its members have the necessary expertise, skills,
and professional experience to discharge their duties properly.
Each Supervisory Board member should have or acquire the
minimum expertise and skills needed to be able to understand
and assess on his or her own all the business events and
transactions that generally occur. The Supervisory Board should
include a sufficient number of independent candidates;
members are deemed independent if they do not have any
personal or business relationship with the Company, its Board
of Management, a shareholder with a controlling interest in
the Company or with a company affiliated with such a share-
holder, and such a relationship could constitute a material,
and not merely temporary, conflict of interest. The Supervisory
Board has a sufficient number of independent members if ten
of its twelve members are independent. Employee representa-
tives are, as a rule, deemed independent. The Supervisory
Board should not include more than two former members of
the Board of Management, and members of the Supervisory
Board must not sit on the boards of, or act as consultants for,
any of the Company’s major competitors.

Each Supervisory Board member must have sufficient time
available to perform his or her duties on the boards of various
E.ON companies. Persons who are members of the board of
management of a listed company shall therefore only be eligible
as members of E.ON’s Supervisory Board if they do not sit on
more than three supervisory boards of listed non-Group com-
panies or in comparable supervisory bodies of non-Group
companies.

As a general rule, Supervisory Board members should not be
older than 70 at the time of their election.

The key role of the Supervisory Board is to oversee and advise
the Board of Management. Consequently, a majority of the
shareholder representatives on the Supervisory Board should
have experience as members of the board of management of
a stock corporation or of a comparable company or association
in order to discharge their duties in a qualified manner.

In addition, the Supervisory Board as a whole should have
particular expertise in the energy sector and the E.ON Group’s
business operations. Such expertise includes knowledge
about the key markets in which the E.ON Group operates.

If the qualifications of several candidates for the Supervisory
Board meet, to an equal degree, the general and company-
related requirements, the Supervisory Board intends to consider
other criteria in its nomination of candidates in order to
increase the Supervisory Board’s diversity.

In view of the E.ON Group’s international orientation, the Super-
visory Board should include a sufficient number of members
who have spent a significant part of their professional career
abroad.

On December 13, 2010, the E.ON AG Supervisory Board first set
targets for its composition. These included the target of con-
tinually increasing the number of women on the Supervisory
Board, which at that time had two women: one shareholder
representative and one employee representative. Following
the election of another female shareholder representative in
2011 and the Company’s transformation into a Societas Euro-
paea (“SE”) (which reduced the Supervisory Board to twelve
members), we have already achieved the target of doubling the
number of woman members, a target originally set for the
Supervisory Board’s next regular election in May 2013, because
at this time 25 percent of the Supervisory Board’s members
are women. We stand by our original target of increasing
women’s representation on the Supervisory Board to 30 percent
as of the regular election in 2018.”

In its current composition the Supervisory Board already meets
the targets it set for a sufficient number of independent
members, company-specific qualification requirements, and
diversity. The Supervisory Board has two female members,
both of whom are shareholder representatives. As of the
balance sheet date, women therefore accounted for 33 percent
of shareholder representatives and about 17 percent of the
Supervisory Board as a whole.

In addition, under the Supervisory Board’s policies and proce-
dures, Supervisory Board members are required to disclose
to the Supervisory Board any conflicts of interest, particularly
if a conflict arises from their advising, or exercising a board
function with, one of E.ON’s customers, suppliers, creditors, or
other third parties. The Supervisory Board reports any conflicts
of interest to the Annual Shareholders Meeting and describes
how the conflicts have been dealt with. Any material conflict
of interest of a non-temporary nature should result in the ter-
mination of a member’s appointment to the Supervisory Board.
There were no conflicts of interest involving members of the
Supervisory Board in 2014. Any consulting or other service
agreements between the Company and a Supervisory Board
member require the Supervisory Board’s consent. No such
agreements existed in 2014.

The Supervisory Board has established the following committees
and defined policies and procedures for them:

The Executive Committee consists of four members: the
Supervisory Board Chairperson, his or her two Deputies, and
a further employee representative. It prepares the meetings
of the Supervisory Board and advises the Board of Manage-
ment on matters of general policy relating to the Company’s
strategic development. In urgent cases (in other words, if
waiting for the Supervisory Board’s prior approval would mate-
rially prejudice the Company), the Executive Committee acts
on the full Supervisory Board’s behalf. In addition, a key task
of the Executive Committee is to prepare the Supervisory
Board’s personnel decisions and resolutions for setting the
respective total compensation of individual Board of Manage-
ment members within the meaning of Section 87, AktG.
Furthermore, it is responsible for the conclusion, alteration, and
termination of the service agreements of Board of Manage-
ment members and for presenting the Supervisory Board with
a proposal for a resolution on the Board of Management’s
compensation plan and its periodic review. It also deals with
corporate-governance matters and reports to the Supervisory
Board, generally once a year, on the status and effectiveness
of, and possible ways of improving, the Company’s corporate
governance and on new requirements and developments in
this area.

The Audit and Risk Committee consists of four members who
should have special knowledge in the field of accounting or
business administration. In line with Section 100, Paragraph 5,
AktG, and the German Corporate Governance Code, the Chair-
person has special knowledge and experience in the appli-
cation of accounting principles and internal control processes.
In particular, the Audit and Risk Committee monitors the
Company’s accounting and the accounting process; the effec-
tiveness of internal control systems, internal risk management,
and the internal audit system; compliance; and the indepen-
dent audit. With regard to the independent audit, the com-
mittee also deals with the definition of the audit priorities and
the agreement regarding the independent auditor’s fees.
The Audit and Risk Committee also prepares the Supervisory
Board’s decision on the approval of the Financial Statements
of E.ON SE and the Consolidated Financial Statements. It also
examines the Company’s quarterly Interim Reports and
discusses the audit review of the Interim Reports with the
independent auditor and regularly reviews the Company’s

Corporate Governance Report

risk situation, risk-bearing capacity, and risk management.
The effectiveness of the internal control mechanisms for the
accounting process used at E.ON SE and the global and regional
units is tested on a regular basis by our Internal Audit division;
the Audit and Risk Committee regularly monitors the work
done by the Internal Audit division and the definition of audit
priorities. In addition, the Audit and Risk Committee prepares
the proposal on the selection of the Company’s independent
auditor for the Annual Shareholders Meeting. In order to ensure
the auditor’s independence, the Audit and Risk Committee
secures a statement from the proposed auditors detailing any
facts that could lead to the audit firm being excluded for inde-
pendence reasons or otherwise conflicted.

In being assigned the audit task, the independent auditor
agrees to:

the approval of financing measures whose value exceeds
5 percent, but not 10 percent, of the equity listed in the Com-
pany’s most recent Consolidated Balance Sheet if such mea-
sures are not covered by the Supervisory Board’s resolutions
regarding finance plans. If the value of any such transactions
or measures exceeds the above-mentioned thresholds, the
Finance and Investment Committee prepares the Supervisory
Board’s decision.

The Nomination Committee consists of three shareholder-
representative members. Its Chairperson is the Chairperson
of the Supervisory Board. Its task is to recommend to the
Supervisory Board, taking into consideration the Supervisory
Board’s targets for its composition, suitable candidates for
election to the Supervisory Board by the Annual Shareholders
Meeting.

•

promptly inform the Chairperson of the Audit and Risk
Committee should any such facts arise during the course
of the audit unless such facts are promptly resolved in
satisfactory manner

promptly inform the Supervisory Board of anything arising
during the course of the audit that is of relevance to the
Supervisory Board’s duties

inform the Chairperson of the Audit and Risk Committee of,
or to note in the audit report, any facts that arise during
the audit that contradict the statements submitted by
the Board of Management or Supervisory Board in connec-
tion with the German Corporate Governance Code.

All committees meet at regular intervals and when specific
circumstances require it under their policies and procedures.
The Report of the Supervisory Board (on pages 4 to 9) contains
information about the activities of the Supervisory Board
and its committees in 2013. Pages 216 and 217 show the com-
position of the Supervisory Board and its committees.

Shareholders and Annual Shareholders Meeting
E.ON SE shareholders exercise their rights and vote their
shares at the Annual Shareholders Meeting. The Company’s
financial calendar, which is published in the Annual Report,
in the quarterly Interim Reports, and on the Internet at
www.eon.com, regularly informs shareholders about important
Company dates.

The Finance and Investment Committee consists of four
members. It advises the Board of Management on all issues
of Group financing and investment planning. It decides on
behalf of the Supervisory Board on the approval of the acqui-
sition and disposition of companies, equity interests, and
parts of companies whose value exceeds €500 million, or
2.5 percent of the equity listed in the Company’s most recent
Consolidated Balance Sheet, but does not exceed €1 billion.
In addition, it decides on behalf of the Supervisory Board on

At the Annual Shareholders Meeting, shareholders may vote
their shares themselves, through a proxy of their choice,
or through a Company proxy who is required to follow the
shareholder’s voting instructions.

As stipulated by German law, the Annual Shareholders Meeting
votes to select the Company’s independent auditor.

At the Annual Shareholders Meeting on April 30, 2014 Price-
waterhouseCoopers Aktiengesellschaft, Wirtschaftsprüfungs-
gesellschaft, was selected to be E.ON SE’s independent auditor
for the 2014 financial year. Under German law, the shareholders
meeting selects the company’s independent auditor for one
financial year. The independent auditors with signing authority
for the Annual Financial Statements of E.ON SE and the Con-
solidated Financial Statements are Markus Dittmann (for the
first time) and Michael Preiß (since the 2013 financial year).
E.ON therefore complies with the legal requirements and
rotation obligations contained in Sections 319 and 319a of
the German Commercial Code.

Compensation Report pursuant to Section 289,
Paragraph 2, Item 5 and Section 315, Paragraph 2,
Item 4 of the German Commercial Code

This compensation report describes the basic features of the
compensation plans for members of the E.ON SE Board of
Management and Supervisory Board and provides information
about the compensation granted and paid in 2014. It applies
the provisions of accounting standards for capital-market-
oriented companies (the German Commercial Code, German
Accounting Standards, and International Financial Reporting
Standards) and the recommendations of the German Corpo-
rate Governance Code dated June 24, 2014.

Basic Features of the Board of Management
Compensation Plan
The purpose of the Board of Management compensation plan,
which was last revised in 2013, is to create an incentive for
successful and sustainable corporate governance and to link
the compensation of Board of Management members’ with
the Company’s actual (short-term and long-term) performance
while also factoring in their individual performance. Under
the plan, Board of Management members’ compensation is
therefore transparent, performance-based, closely aligned
with the Company’s business success, and, in particular, based
on long-term targets. At the same time, the compensation
plan serves to align management’s and shareholders’ interests
and objectives by basing long-term variable compensation
on E.ON’s stock price.

The Supervisory Board approves the Executive Committee’s
proposal for the Board of Management’s compensation plan.
It reviews the plan and the appropriateness of the Board of
Management’s total compensation as well as the individual
components on a regular basis and, if necessary, makes adjust-
ments. It considers the provisions of the German Stock Cor-
poration Act and follows the German Corporate Governance
Code’s recommendations and suggestions.

The compensation of Board of Management members consists
of a fixed base salary, an annual bonus, and long-term variable
remuneration. These components account for approximately
the following percentages of total compensation:

Compensation Structure1

Base salary

30%

Bonus
(annual)

27%

Bonus
(multi-year)

13%

Long-term incentive
(Share Matching Plan)

30%

1Not including non-cash compensation, other benefits, and pension benefits.

The following graphic provides an overview of the compen-
sation plan for Board of Management members:

Granting of virtual
shares based on
return on capital

Granting of
virtual shares

Transferred into
virtual shares

Paid out

Share
Matching
Plan

Bonus

Performance
Matching

Base Matching

1/3:
LTI component

2/3:
STI component

Base salary

Corporate Governance Report

In addition, there is a graphic on page 94 that provides a
summary overview of the individual components of the Board
of Management’s compensation described below as well as
their respective metrics and parameters.

Fixed Compensation
Board of Management members receive their fixed compen-
sation in twelve monthly payments.

Board of Management members receive a number of contrac-
tual fringe benefits, including the use of a chauffeur-driven
company car. The Company also provides them with the nec-
essary telecommunications equipment, covers costs that
include those for an annual medical examination, and pays
the premium for an accident insurance policy.

Performance-Based Compensation
Since 2010 more than 60 percent of Board of Management
members’ long-term variable compensation depends on the
achievement of long-term targets, ensuring that the variable

Bonus Mechanism

compensation is sustainable under the criteria of Section 87
of the German Stock Corporation Act.

Annual Bonus
The annual bonus mechanism consists of two components:
a short-term incentive component (“STI component”) and a
long-term incentive component (“LTI component”). The STI com-
ponent generally accounts for two-thirds of the annual bonus.
The LTI component accounts for one-third of the annual bonus
to a maximum of 50 percent of the target bonus. The LTI com-
ponent is not paid out at the conclusion of the financial year
but is instead transferred into virtual shares, which have a
four-year vesting period, based on E.ON’s stock price.

The amount of the bonus is determined by the degree to which
certain performance targets are attained. The target-setting
mechanism consists of company performance targets and
individual performance targets:

Company performance (0–200%)

Individual Performance (70–130%)

Bonus
(target
bonus)

• Actual EBITDA vs. budget

Target attainment

200%

150%

100%

50%

-30% budget
• If necessary, adjusted by the Supervisory Board

+30% EBITDA

Evaluation of a Board of Management member’s
performance based on:

• Team targets
• Individual targets

Bonus (maximum of
200% of target bonus)

1/3:
LTI
compo-
nent

2/3:
STI component

The metric used for the company target is our EBITDA. The
EBITDA target for a particular financial year is the plan figure
approved by the Supervisory Board. If E.ON’s actual EBITDA is
equal to the EBITDA target, this constitutes 100 percent attain-
ment. If it is 30 percentage points or more below the target,
this constitutes zero percent attainment. If it is 30 percentage
points or more above the target, this constitutes 200 percent
attainment. Linear interpolation is used to translate interme-
diate EBITDA figures into percentages. The Supervisory Board
then evaluates this arithmetically derived figure on the basis
of certain qualitative criteria and, if necessary, adjusts it within
a range of ±20 percentage points. The criteria for this quali-
tative evaluation are the ratio between cost of capital and
EBITDA, a comparison with prior-year EBITDA, and general
market developments. Extraordinary events are not factored
into the determination of target attainment.

In assigning Board of Management members their individual
performance factors, the Supervisory Board evaluates their
individual contribution to the attainment of collective targets
as well as their attainment of their individual targets.

The Supervisory Board, at its discretion, determines the
degree to which Board of Management members have met
the targets of the individual-performance portion of their
annual bonus. In making this determination, the Supervisory
Board pays particular attention to the criteria of Section 87
of the German Stock Corporation Act and of the German Corpo-
rate Governance Code.

their LTI component. In addition, Board of Management mem-
bers may, depending on the company’s performance during
the vesting period, receive performance matching of up to
two additional non-vested virtual shares per share resulting
from base matching. The arithmetical total target value allo-
cated at the start of the vesting period, which begins on
April 1 of the year in which a tranche is allocated, is therefore
the sum of the value of the LTI component, base matching, and
performance matching (depending on the degree of attain-
ment of a predefined company performance target).

For the purpose of performance matching, the company per-
formance metric is E.ON’s average ROACE during the four-year
vesting period compared with a target ROACE set in advance
by the Supervisory Board for the entire four-year period at
the time it allocates a new tranche. Extraordinary events are
not factored into the determination of target attainment for
company performance. Depending on the degree of target
attainment for the company performance metric, each virtual
share resulting from base matching may be matched by up
to two additional virtual shares at the end of the vesting
period. If the predetermined company performance target is
fully attained, Board of Management members receive one
additional virtual share for each virtual share resulting from
base matching. Linear interpolation is used to translate inter-
mediate figures.

At the end of the vesting period, the virtual shares held by
Board of Management members are assigned a cash value
based on E.ON’s average stock price during the final 60 days
of the vesting period. To each virtual share is then added the
aggregate per-share dividend paid out during the vesting
period. This total—cash value plus dividends—is then paid out.
Payouts are capped at 200 percent of the arithmetical total
target value. In order to introduce the new plan as swiftly as
possible, Board of Management members received virtual
shares in 2013 as part of an interim solution; allocations under
the old Share Performance Plan were not granted.

In addition, the Supervisory Board has the discretionary power
to make a final, overall assessment on the basis of which it may
adjust the size of the bonus. This overall assessment does not
refer to above-described targets or comparative parameters,
which are not, under the Code’s recommendations, supposed
to be changed retroactively. In addition, the Supervisory Board
may, as part of the annual bonus, grant Board of Management
members special compensation for outstanding achievements.

The maximum bonus that can be attained (including any
special compensation) is 200 percent of the target bonus.

Long-Term Variable Compensation: E.ON Share
Matching Plan
The long-term variable compensation that Board of Manage-
ment members receive is a stock-based compensation under
the E.ON Share Matching Plan. At the beginning of each finan-
cial year, the Supervisory Board decides, based on the Execu-
tive Committee’s recommendation, on the allocation of a new
tranche, including the respective targets and the number of
virtual shares granted to individual members of the Board
of Management. To serve as a long-term incentive for sustain-
able business performance, each tranche has a vesting period
of four years. The tranche starts on April 1 of each year.

Performance
matching

ROACE
4-year
average
in %

Base
matching

1/3: LTI
component

Stock price
+
Dividends

Vesting period: 4 years

Following the Supervisory Board’s decision to allocate a new
tranche, Board of Management members initially receive vested
virtual shares equivalent to the amount of the LTI component
of their bonus. The determination of the LTI component takes
into consideration the overall target attainment of the bonus
for the preceding financial year. The number of virtual shares
is calculated on the basis of the amount of their LTI compo-
nent and E.ON’s average stock price during the first 60 days
of the four-year vesting period. Furthermore, Board of Manage-
ment members may receive, on the basis of annual Supervisory
Board decisions, a base matching of additional non-vested
virtual shares in addition to the virtual shares resulting from

Corporate Governance Report

Overall Cap
In line with the German Corporate Governance Code’s recom-
mendation, Board of Management members’ cash compen-
sation has an overall cap. This means that the sum of the indi-
vidual compensation components in one year may not exceed
200 percent of the total agreed target compensation, which
consists of base salary, target bonus, and the target allocation
value of long-term variable compensation.

Pension Entitlements
The Company has agreed to a pension plan based on final salary
for the Board of Management members who were appointed
to the Board of Management before 2010: Dr. Teyssen and
Dr. Reutersberg. Following the end of their service for the Com-
pany, these Board of Management members are entitled
to receive lifelong monthly pension payments in three cases:
reaching the age of 60, permanent incapacitation, and a so-
called third pension situation. The provisions of the third pension
situation only apply to Dr. Teyssen. The criteria for this situation
are met if the termination or non-extension of Dr. Teyssen’s
service agreement is not due to his misconduct or rejection of
an offer of extension that is at least on a par with his existing
service agreement. In the third pension situation, Dr. Teyssen
would receive an early pension as a transitional arrangement
until he reaches the age of 60.

Annual pension payments are initially equal to 60 percent of
a Board of Management member’s respective last annual
base salary. In the case of additional years of service on the
Board of Management, the payment can increase to a maxi-
mum of 70 percent or, in Dr. Teyssen’s case, 75 percent. The full
amount of any pension entitlements from earlier employment
is offset against these payments. In addition, the pension
plan includes benefits for widows and widowers and for sur-
viving children that are equal to 60 percent and 15 percent,
respectively, of the deceased Board of Management member’s
pension entitlement. Together, pension payments to a widow
or widower and children may not exceed 100 percent of the
deceased Board of Management member’s pension.

Members appointed to the Board of Management since 2010
(Dr.-Ing. Birnbaum, Mr. Kildahl, Mr. Schäfer, and Mr. Winkel) are
enrolled in the contribution plan “E.ON Management Board,”
a contribution-based pension plan.

Contribution-Based Plan

C a pital c o ntrib utio n s

Pension
account

Term in years

The Company makes virtual contributions to Board of Manage-
ment members’ pension accounts. The maximum amount of
the annual contributions is a equal to 18 percent of pension-
able income (base salary and annual bonus). The annual con-
tribution consists of a fixed base percentage (14 percent) and
a matching contribution (4 percent). The requirement for the
matching contribution to be granted is that the Board of
Management member contributes, at a minimum, the same
amount by having it withheld from his compensation. The
company-funded matching contribution is suspended if and
as long as the E.ON Group’s ROACE is less than its cost of
capital for three years in a row. The contributions are capital-
ized using actuarial principles (based on a standard retirement
age of 62) and placed in Board of Management members’
pension accounts. The interest rate used for each year is based
on the return of long-term German treasury notes. At the age
of 62 at the earliest, a Board of Management member (or his
survivors) may choose to have the pension account balance
paid out as a lifelong pension, in installments, or in a lump sum.
Individual Board of Management members’ actual resulting
pension entitlement cannot be calculated precisely in advance.
It depends on a number of uncertain parameters, in particular
the changes in their individual salary, their total years of
service, the attainment of company targets, and interest rates.
For a Board of Management member enrolled in the plan
at the age of 50, the company-financed, contribution-based

pension payment is currently estimated to be between 30 and
35 percent of his or her base salary (without factoring in pen-
sion benefits accrued prior to being appointed to the Board
of Management).

Mr. Schäfer and Mr. Winkel’s previous pensions were transferred
into the contribution-based plan. Their benefit entitlements
acquired prior to joining the Board of Management (which
were based on their final salary) were translated into capital
contributions. The Supervisory Board agreed to a transitional
arrangement with Mr. Schäfer and Mr. Winkel. If their service
agreement is not extended they will receive transitional com-
pensation based on their employment contracts but linked to
their base pay prior to joining the Board of Management. In
addition, in the case of pension benefits being due, Mr. Schäfer
or his survivors may, for a limited time, choose between the
above-described contribution-based pension plan and the
pension plan based on final salary prior to joining the Board
of Management. In the case of reappointment to the E.ON
Board of Management, these interim arrangements are void.

Pursuant to the provisions of the German Occupational Pen-
sions Improvement Act, Board of Management members’
pension entitlements are not vested until they have been in
effect for five years. This applies to both contribution-based
and final-salary-based pension plans.

In line with the German Corporate Governance Code’s recom-
mendation, the Supervisory Board reviews, on a regular basis,
the benefits level of Board of Management members and
the resulting annual and long-term expense and, if necessary,
adjusts the payments.

Settlement Payments for Termination of Board of
Management Duties
In line with the German Corporate Governance Code’s recom-
mendation, the service agreements of Board of Management
members include a settlement cap. Under the cap, settlement
payments in conjunction with a termination of Board of Man-
agement duties may not exceed the value of two years’ total
compensation or the total compensation for the remainder
of the member’s service agreement.

In the event of a premature loss of a Board of Management
position due to a change-of-control event, Board of Management
members are entitled to settlement payments. The change-
in-control agreements stipulate that a change of control exists
in three cases: a third party acquires at least 30 percent of
the Company’s voting rights, thus triggering the automatic
requirement to make an offer for the Company pursuant to
Germany’s Stock Corporation Takeover Law; the Company, as
a dependent entity, concludes a corporate agreement; the
Company is merged with another company. Board of Manage-
ment members are entitled to a settlement payment if, within
12 months of the change in control, their service agreement is
terminated by mutual consent, expires, or is terminated by
them (in the latter case, however, only if their position on the
Board of Management is materially affected by the change
of control). Board of Management members’ settlement pay-
ment consists of their base salary and target bonus plus fringe
benefits for two or three years. To reflect discounting and
setting off of payment for services rendered to other companies
or organizations, payments will be reduced by 20 percent. If a
Board of Management member is above the age of 53, this
20-percent reduction is diminished incrementally. In accordance
with the German Corporate Governance Code, the settlement
payments for Board of Management members would be equal
to 150 percent of the above-described settlement cap.

The service agreements of Board of Management members
include a non-compete clause. For a period of six months after
the termination of their service agreement, Board of Manage-
ment members are contractually prohibited from working
directly or indirectly for a company that competes directly or
indirectly with the Company or its affiliates. Board of Manage-
ment members receive a compensation payment for the period
of the non-compete restriction. The prorated payment is based
on 100 percent of their contractually stipulated annual target
compensation (without long-term variable compensation) but
is, at a minimum, 60 percent of their most recently received
compensation.

Corporate Governance Report

Board of Management Compensation in 2014
The Supervisory Board reviewed the Board of Management’s
compensation plan and the components of individual members’
compensation. It determined that the Board of Management’s
compensation is appropriate from both a horizontal and
vertical perspective and passed a resolution on the perfor-
mance-based compensation described below. It made its
determination of customariness from a horizontal perspective
by comparing the compensation with that of companies of a
similar size. Its review of appropriateness included a vertical
comparison of the Board of Management’s compensation with
that of the Company’s top management and the rest of its
workforce. In the Supervisory Board’s view, in 2014 there was
no reason to adjust the Board of Management’s compensation.

Performance-Based Compensation in 2014
The annual bonuses of Board of Management members for
2014 totaled €4.9 million, which is about 20 percent below
the prior-year figure of €6.1 million. The decline is primarily
attributable to a reduction resulting from the final setting of

the long-term portion of the bonus for the 2012 financial year
(see footnote 1 to the table entitled Total Compensation of
the Board of Management) and to changes in the Board of
Management’s composition in 2013.

The Supervisory Board issued a new tranche of the E.ON Share
Matching Plan (2014–2018) for the 2014 financial year and
granted Board of Management members virtual shares of E.ON
stock. The present value assigned to the virtual shares of
E.ON stock at the time of granting—€13.65 per virtual share—is
shown in the following tables entitled “Stock-Based Compen-
sation” and “Total Compensation.” The value performance of
this tranche will be determined by the performance of E.ON
stock, the per-share dividends, and ROACE of the next four
years. The actual payments made to Board of Management
members in 2018 may deviate, under certain circumstances
considerably, from the calculated figures disclosed here.

The long-term variable compensation of Board of Management
members resulted in the following expenses in 2014 and 2013:

Stock-based Compensation

€

Dr. Johannes Teyssen

Dr.-Ing. Leonhard Birnbaum (since July 1, 2013)

Jørgen Kildahl

Prof. Dr. Klaus-Dieter Maubach (until March 31, 2013)

Dr. Bernhard Reutersberg

Klaus Schäfer (since September 1, 2013)

Dr. Marcus Schenck (until September 30, 2013)

Regine Stachelhaus (until June 30, 2013)

Mike Winkel (since April 1, 2013)

Total

Value of virtual shares
at time of granting1, 2

Number of virtual
shares granted

Expense3

2014

2013

2014

2013

2014

2013

1,790,082

2,490,000

1,048,667

550,000

871,950

1,200,000

–

852,420

858,000

–

1,200,000

216,667

–

84,988

49,964

41,902

–

40,472

40,880

–

858,000

737,500

6,279,119

6,394,167

40,880

299,086

139,745

2,112,189

1,686,631

27,548

67,620

–

67,620

8,766

–

735,355

991,915

–

988,427

544,499

–

38,504

671,531

246,532

823,973

-95,773

833,862

117,194

-569,363

-52,255

357,188

349,803

6,043,916

3,347,989

1Consists of the LTI component (based on the target bonus) for the respective financial year for which at the time of granting no amount can be determined.
2We adjusted the figures for stock-based compensation for the 2013 financial year in line with the current version of the German Corporate Governance Code, which, unlike
previously, now calls for the target value of the LTI component to be disclosed.
3Expenses in accordance with IFRS 2 for performance rights and virtual shares existing in the 2014 financial year.

Long-term variable compensation granted for the 2014 financial
year totaled €6.3 million, on par with the prior-year figure of
€6.4 million. Note 11 to the Consolidated Financial Statements
contains additional details about stock-based compensation.

Board of Management Pensions in 2014
The following table provides an overview of the current pension
obligations to Board of Management members, the additions
to provisions for pensions, and the cash value of pension obli-
gations. The cash value of pension obligations is calculated
pursuant to IFRS. An actuarial interest rate of 2.0 percent (prior
year: 3.9 percent) was used for discounting.

Pensions of the Members of the Board of Management

Current pension entitlement at December 31

Additions to provisions for pensions

Cash value at
December 31

As a percentage of
annual base
compensation

(€)

Thereof interest cost
(€)

(€)

2014

–

2013

2014

2013

2014

2013

2014

2013

2014

2013

930,000

1,249,640

1,261,272

606,883

557,940

22,991,882

15,561,093

–

490,000

–

286,783

346,559

163,494

351,268

6,376

43,747

–

768,503

163,494

29,555

1,702,035

1,121,712

420,000

490,000

–

198,794

–

55,574

–

7,326,862

410,247

1,156,390

410,247

356,556

13,188,286

10,519,155

–

253,183

89,020

100,307

31,242

4,072,393

2,571,968

–

703,465

164,690

–

120,729

–

3,114,834

14,043

–

837,048

207,066

165,895

81,144

57,523

3,756,844

2,080,619

Dr. Johannes Teyssen

Dr.-Ing. Leonhard Birnbaum1
(since July 1, 2013)

Jørgen Kildahl1

Prof. Dr. Klaus-Dieter Maubach
(until March 31, 2013)

Dr. Bernhard Reutersberg

Klaus Schäfer1, 2
(since September 1, 2013)

Dr. Marcus Schenck
(until September 30, 2013)

Regine Stachelhaus1
(until June 30, 2013)

Mike Winkel1, 2
(since April 1, 2013)

1Contribution Plan E.ON Management Board.
2Cash value includes benefit entitlements accrued in the E.ON Group prior to joining the Board of Management.

The cash value of Board of Management pensions for which
provisions are required increased significantly relative to year-
end 2013. The reason for the increase is that the most impor-
tant valuation parameter—the actuarial interest rate used
for discounting—was significantly below the prior-year figure
due to the general development of interest rates in 2014.

Corporate Governance Report

Total Compensation in 2014
The total compensation of the members of the Board of Man-
agement in the 2014 financial year amounted to €16.2 million,
approximately 10 percent below the prior-year figure of
€18.1 million. Individual members of the Board of Management
received the following total compensation:

Total Compensation of the Board of Management

Fixed annual
compen sation

Bonus

Other compen sation

Value of stock-based
compensation
granted2, 3

Total

€

2014

2013

2014

2013

Dr. Johannes Teyssen1

1,240,000

1,221,202

1,759,739

Dr.-Ing. Leonhard Birnbaum
(since July 1, 2013)

Jørgen Kildahl1

800,000

700,000

400,000

700,000

964,000

572,151

341,000

851,951

2014

58,542

19,211

19,426

2013

2014

2013

2014

2013

21,458

1,790,082

2,490,000

4,309,826

5,511,197

449,082

1,048,667

550,000

2,831,878

1,740,082

32,650

871,950

1,200,000

2,163,527

2,784,601

Prof. Dr. Klaus-Dieter Maubach
(until March 31, 2013)

–

Dr. Bernhard Reutersberg1

700,000

175,000

700,000

–

80,000

–

3,095

–

258,095

572,151

865,754

29,529

26,563

852,420

1,200,000

2,154,100

2,792,317

Klaus Schäfer
(since September 1, 2013)

Dr. Marcus Schenck
(until September 30, 2013)

Regine Stachelhaus
(until June 30, 2013)

Mike Winkel
(since April 1, 2013)

Total

700,000

233,333

789,333

186,000

20,800

6,321

858,000

216,667

2,368,133

642,321

–

675,000

350,000

–

1,224,528

305,000

–

16,863

13,397

–

1,916,391

–

668,397

700,000

525,000

789,333

501,833

25,196

18,516

858,000

737,500

2,372,529

1,782,849

4,840,000

4,998,333

4,908,170

6,115,805

172,704

587,945

6,279,119

6,394,167

16,199,993

18,096,250

1The bonus for the 2014 financial year includes the final setting of the long-term portion of the bonus for the 2012 financial year. Pursuant to the previous bonus system (see page 86 of
the 2012 Annual Report), this resulted in reductions of €434,398 for Dr. Teyssen, €217,182 for Mr. Kildahl, and €217,182 for Dr. Reutersberg.
2The target value of stock-based compensation of the second tranche of the E.ON Share Matching Plan was €13.65 per virtual share of E.ON stock.
3The 2013 figure stock-based compensation has been corrected pursuant to the latest version of the Code. Contrary to previous practice, the LTI component is disclosed on the basis of
target value.

The following table shows the compensation granted and
allocated in 2014 in the format recommended by the German
Corporate Governance Code:

Table of Compensation Granted and Allocated1

€

Fixed compensation

Fringe benefits

Total

One-year variable compensation

Multi-year variable compensation

– Final calculation and payment of multi-year component

of 2011 bonus

– Final calculation and payment of multi-year component

of 2012 bonus

– Share Matching Plan, first tranche (2013–2017)
– Share Matching Plan, second tranche (2014–2018)
– Share Matching Plan, third tranche (2015–2019)

Total

Service cost

Total

Dr. Johannes Teyssen (Chairman of the Board of Management)

Compensation granted

Compensation allocated

2013

2014

2014
(min.)

2014
(max.)2, 3

2013

2014

1,240,000

21,458

58,542

21,458

58,542

1,261,458

1,298,542

1,261,458

1,298,542

1,260,000

2,490,000

1,790,082

–

–
1,860,000
630,000
–

–
–
1,160,082
630,000

–

–
–
–
–

2,835,000

1,610,082

1,655,600

3,580,164

149,657

-434,398

–

149,657

–

–
–
2,320,164
1,260,000

–
–
–
–

-434,398
–
–
–

5,011,458

4,348,624

1,298,542

7,713,706

3,021,197

2,519,744

703,332

642,757

703,332

642,757

5,714,790

4,991,381

1,941,299

8,356,463

3,724,529

3,162,501

1All the figures previously disclosed in the table entitled “Effective Compensation” are now disclosed in this table in the format recommended by the Code.
2 The maximum amount disclosed under benefits granted represents the sum of the contractual (individual) caps for the various elements of the compensation of Board of Management members.
3The overall cap on Board of Management compensation, which was introduced in the 2013 financial year and is described on page 84, applies as well.

Corporate Governance Report

Table of Compensation Granted and Allocated

€

Fixed compensation

Fringe benefits

Total

One-year variable compensation

Multi-year variable compensation

– Final calculation and payment of multi-year component

of 2011 bonus

– Final calculation and payment of multi-year component

of 2012 bonus

– Share Matching Plan, first tranche (2013–2017)
– Share Matching Plan, second tranche (2014–2018)
– Share Matching Plan, third tranche (2015–2019)

Total

Service cost

Total

See footnotes on page 89.

Table of Compensation Granted and Allocated

€

Fixed compensation

Fringe benefits

Total

One-year variable compensation

Multi-year variable compensation

– Final calculation and payment of multi-year component

of 2011 bonus

– Final calculation and payment of multi-year component

of 2012 bonus

– Share Matching Plan, first tranche (2013–2017)
– Share Matching Plan, second tranche (2014–2018)
– Share Matching Plan, third tranche (2015–2019)

Total

Service cost

Total

See footnotes on page 89.

Dr.-Ing. Leonhard Birnbaum (Member of the Board of Management since July 1, 2013)

Compensation granted

Compensation allocated

2013

400,000

449,082

849,082

2014

2014 (min.)

2014 (max.)

800,000

19,211

819,211

800,000

19,211

819,211

800,000

19,211

819,211

2013

400,000

449,082

849,082

2014

800,000

19,211

819,211

366,667

733,333

550,000

1,048,667

–

–
366,667
183,333
–

–
–
682,000
366,667

–

–
–
–
–

1,650,000

341,000

964,000

2,097,334

–

–
–
1,364,000
733,334

–

–
–
–
–

–

–
–
–
–

1,765,749

2,601,211

819,211

4,566,545

1,190,082

1,783,211

163,494

280,407

163,494

280,407

1,929,243

2,881,618

1,099,618

4,846,952

1,353,576

2,063,618

Jørgen Kildahl (Member of the Board of Management)

Compensation granted

Compensation allocated

2013

700,000

32,650

732,650

2014

2014 (min.)

2014 (max.)

700,000

19,426

719,426

700,000

700,000€

19,426

19,426€

719,426

719,426€

2013

700,000

32,650

732,650

2014

700,000

19,426

719,426

600,000

1,200,000

871,950

–

–
900,000
300,000
–

–
–
571,950
300,000

–

–
–
–
–

1,350,000

771,950

789,333

1,743,900

80,001

-217,182

–

80,001

–

–
–
1,143,900
600,000

–
–
–
–

-217,182
–
–
–

2,532,650

2,191,376

719,426

3,813,326

1,584,601

1,291,577

321,713

302,812

321,713

302,812

2,854,363

2,494,188

1,022,238

4,116,138

1,906,314

1,594,389

Dr. Bernhard Reutersberg (Member of the Board of Management)

Compensation granted

Compensation allocated

2013

700,000

26,563

726,563

2014

2014 (min.)

2014 (max.)

700,000

29,529

729,529

700,000

29,529

729,529

700,000

29,529

729,529

2013

700,000

26,563

726,563

2014

700,000

29,529

729,529

600,000

1,200,000

852,420

–

–
900,000
300,000
–

–
–
552,420
300,000

–

–
–
–
–

1,350,000

785,753

789,333

1,704,840

80,001

-217,182

–

80,001

–

–
–
1,104,840
600,000

–
–
–
–

-217,182
–
–
–

2,526,563

2,181,949

729,529

3,784,369

1,592,317

1,301,680

799,834

–

799,834

–

3,326,397

2,181,949

729,529

3,784,369

2,392,151

1,301,680

Klaus Schäfer (Member of the Board of Management since September 1, 2013)

Compensation granted

Compensation allocated

2013

233,333

6,321

239,654

2014

2014 (min.)

2014 (max.)

700,000

20,800

720,800

700,000

20,800

720,800

700,000

20,800

720,800

2013

233,333

6,321

239,654

2014

700,000

20,800

720,800

200,000

600,000

216,667

858,000

–

–
116,667
100,000
–

–
–
558,000
300,000

–

–
–
–
–

1,350,000

186,000

789,333

1,716,000

–

–
–
1,116,000
600,000

–

–
–
–
–

–

–
–
–
–

656,321

2,178,800

720,800

3,786,800

425,654

1,510,133

57,778

152,876

714,099

2,331,676

152,876

873,676

152,876

57,778

152,876

3,939,676

483,432

1,663,009

Table of Compensation Granted and Allocated

€

Fixed compensation

Fringe benefits

Total

One-year variable compensation

Multi-year variable compensation

– Final calculation and payment of multi-year component

of 2011 bonus

– Final calculation and payment of multi-year component

of 2012 bonus

– Share Matching Plan, first tranche (2013–2017)
– Share Matching Plan, second tranche (2014–2018)
– Share Matching Plan, third tranche (2015–2019)

Total

Service cost

Total

See footnotes on page 89.

Table of Compensation Granted and Allocated

€

Fixed compensation

Fringe benefits

Total

One-year variable compensation

Multi-year variable compensation

– Final calculation and payment of multi-year component

of 2011 bonus

– Final calculation and payment of multi-year component

of 2012 bonus

– Share Matching Plan, first tranche (2013–2017)
– Share Matching Plan, second tranche (2014–2018)
– Share Matching Plan, third tranche (2015–2019)

Total

Service cost

Total

See footnotes on page 89.

Corporate Governance Report

Table of Compensation Granted and Allocated

€

Fixed compensation

Fringe benefits

Total

One-year variable compensation

Multi-year variable compensation

– Final calculation and payment of multi-year component

of 2011 bonus

– Final calculation and payment of multi-year component

of 2012 bonus

– Share Matching Plan, first tranche (2013–2017)
– Share Matching Plan, second tranche (2014–2018)
– Share Matching Plan, third tranche (2015–2019)

Total

Service cost

Total

See footnotes on page 89.

Table of Compensation Granted and Allocated

€

Fixed compensation

Fringe benefits

Total

One-year variable compensation

Multi-year variable compensation

– Final calculation and payment of multi-year component

of 2011 and 2012 bonus

Total

Service cost

Total

See footnotes on page 89.

Mike Winkel (Member of the Board of Management since April 1, 2013)

Compensation granted

Compensation allocated

2013

525,000

18,516

543,516

2014

2014 (min.)

2014 (max.)

700,000

25,196

725,196

700,000

25,196

725,196

700,000

25,196

725,196

2013

525,000

18,516

543,516

2014

700,000

25,196

725,196

450,000

600,000

737,500

858,000

–

–
512,500
225,000
–

–
–
558,000
300,000

–

–
–
–
–

1,350,000

501,833

789,333

1,716,000

–

–
–
1,116,000
600,000

–

–
–
–
–

–

–
–
–
–

1,731,016

2,183,196

725,196

3,791,196

1,045,349

1,514,529

108,372

125,922

1,839,388

2,309,118

125,922

851,118

125,922

108,372

125,922

3,917,118

1,153,721

1,640,451

Prof. Dr. Klaus-Dieter Maubach (Member of the Board of Management
until March 31, 2013)

Compensation granted

Compensation allocated

2013

175,000

3,095

178,095

225,000

–

403,095

143,220

546,315

2014

2014 (min.)

2014 (max.)

–

2013

175,000

3,095

178,095

225,000

-145,000

258,095

143,220

401,315

2014

–

Dr. Marcus Schenck (Member of the Board of Management until September 30, 2013)

Compensation granted

Compensation allocated

2013

675,000

16,863

691,863

975,000

–

1,666,863

582,736

2,249,599

2014

2014 (min.)

2014 (max.)

–

2013

675,000

16,863

691,863

1,462,500

-237,972

1,916,391

582,736

2,499,127

2014

–

Regine Stachelhaus (Member of the Board of Management until June 30, 2013)

Compensation granted

Compensation allocated

2013

350,000

13,397

363,397

450,000

–

813,397

150,647

964,044

2014

2014 (min.)

2014 (max.)

–

2013

350,000

13,397

363,397

450,000

-145,000

668,397

150,647

819,044

2014

–

Table of Compensation Granted and Allocated

€

Fixed compensation

Fringe benefits

Total

One-year variable compensation

Multi-year variable compensation

– Final calculation and payment of multi-year component

of 2011 and 2012 bonus

Total

Service cost

Total

See footnotes on page 89.

Table of Compensation Granted and Allocated

€

Fixed compensation

Fringe benefits

Total

One-year variable compensation

Multi-year variable compensation

– Final calculation and payment of multi-year component

of 2011 and 2012 bonus

Total

Service cost

Total

See footnotes on page 89.

As in the prior year, E.ON SE and its subsidiaries granted no
loans to, made no advance payments to, nor entered into
any contingencies of behalf of the members of the Board of
Management in the 2014 financial year. Page 218 contains
additional information about the members of the Board of
Management.

Corporate Governance Report

The following table provides a summary overview of the
above-described components of the Board of Management’s
compensation as well as their metrics and parameters:

Summary Overview of Compensation Components

Compensation component

Metric/Parameter

Fixed compensation

Base salary

• Board of Management Chairman: €1,240,000
• Board of Management members: €700,000 – €800,000

Fringe benefits

Chauffer-driven company car, telecommunications equipment, insurance premiums, medical examination

Performance-based compensation

Annual bonus

Possibility of special
compensation

Long-term variable
compensation:
Share Matching Plan

Pension benefits

Final-salary-based benefits1

Contribution-based benefits

Other compensation provisions

Settlement cap

• Target bonus at 100 percent target attainment:
– Target bonus for Board of Management Chairman: €1,890,000
– Target bonus for Board of Management members: €900,000 – €1,100,000
• Cap: 200 percent of target bonus
• Amount of bonus depends on
– Company performance: actual EBITDA vs. budget; if necessary, adjusted
– Individual performance factor
• Divided into STI component (2/3) and LTI component (1/3)

May be awarded, at the Supervisory Board’s discretion, for outstanding achievements as part of the
annual bonus as long as the total bonus remains under the cap.

• Granting of virtual shares of E.ON stock with a four-year vesting period
– Target value for Board of Management Chairman: €1,260,000
– Target value for Board of Management members: €600,000 – €733,333
• Cap: 200 percent of the target value
• Number of virtual shares: 1/3 from the annual bonus (LTI component) + base matching (1:1)
+ performance matching (1:0 to 1:2) depending on ROACE during vesting period
• Value development depends on the 60-day average price of E.ON stock price at the end of the vesting

period and on the dividend payments during the four-year vesting period

• Lifelong pension payment equaling a maximum of 75 percent of fixed compensation from age of 60
• Pension payments for widows and children equaling 60 percent and 15 percent, respectively, of

pension entitlement

• Virtual contributions equaling a maximum of 18 percent of fixed compensation and target bonus
• Virtual contributions capitalized using interest rate based on long-term German treasury notes
• Payment of pension account balance from age 62 as a lifelong pension, in installments, or in a lump sum

Maximum of two years’ total compensation or the total compensation for the remainder of the
service agreement

Settlement for change-of-control Settlement equal to two or three target salaries (base salary, target bonus, and fringe benefits),

reduced by 20 percent

Non-compete clause

For six months after termination of service agreement, prorated compensation equal to fixed compensation
and target bonus, at a minimum 60 percent of most recently received compensation

1For Board of Management members appointed before 2010.

Payments Made to Former Members of the Board
of Management
Total payments made to former Board of Management members
and to their beneficiaries amounted to €10.2 million in 2014
(prior year: €14.5 million). Provisions of €175 million (prior year:
€158 million) have been provided for pension obligations to
former Board of Management members and their beneficiaries.

Compensation Plan for the Supervisory Board
The compensation of Supervisory Board members is deter-
mined by the Annual Shareholders Meeting and governed by
Section 15 of the Company’s Articles of Association. The pur-
pose of the compensation plan is to enhance the Supervisory
Board’s independence for its oversight role. Furthermore, there
are a number of duties that Supervisory Board members must
perform irrespective of the Company’s financial performance.
Supervisory Board members—in addition to being reimbursed
for their expenses—therefore receive fixed compensation and
compensation for committee duties.

The Chairman of the Supervisory Board receives fixed compen-
sation of €440,000; the Deputy Chairmen, €320,000. The other

Supervisory Board Compensation

members of the Supervisory Board receive compensation of
€140,000. The Chairman of the Audit and Risk Committee
receives an additional €180,000; the members of the Audit and
Risk Committee, an additional €110,000. Other committee
chairmen receive an additional €140,000; committee members,
an additional €70,000. Members serving on more than one
committee receive the highest applicable committee compen-
sation only. In contradistinction to the compensation just
described, the Chairman and the Deputy Chairmen of the
Supervisory Board receive no additional compensation for their
committee duties. In addition, Supervisory Board members
are paid an attendance fee of €1,000 per day for meetings of
the Supervisory Board or its committees. Individuals who were
members of the Supervisory Board or any of its committees for
less than an entire financial year receive pro rata compensation.

Supervisory Board Compensation in 2014
The total compensation of the members of the Supervisory
Board amounted to €3.1 million (prior year: €3.2 million). As
in the prior year, no loans were outstanding or granted to
Supervisory Board members in the 2014 financial year.

Supervisory Board
compensation

Compensation for
committee duties

Supervisory Board
compensation from
affiliated companies

Total

2014

2013

2014

2013

2014

2013

2014

2013

€

Werner Wenning

Prof. Dr. Ulrich Lehner

Erhard Ott

Clive Broutta (since July 1, 2014)

440,000

320,000

70,000

–

Gabriele Gratz (until December 31, 2013)

–

140,000

Baroness Denise Kingsmill CBE

Eugen-Gheorghe Luha

René Obermann

140,000

–

140,000

35,000

140,000

–

Klaus Dieter Raschke (until December 31, 2014)

140,000

110,000

Eberhard Schomburg

Fred Schulz

Dr. Karen de Segundo

Dr. Theo Siegert

140,000

110,000

6,730

140,000

–

70,000

–

18,567

140,000

70,000

140,000

180,000

–

70,000

–

440,000

320,000

70,000

–

18,904

–

228,904

–

20,070

15,631

–

140,000

175,000

140,000

250,000

270,070

256,730

265,631

228,567

–

210,000

320,000

105,000

210,000

Willem Vis (until June 30, 2014)

70,000

140,000

35,000

70,000

Subtotal

2,340,000

610,000

25,297

54,605

2,975,297

3,004,605

Attendance fees and meeting-related
reimbursements

Total

158,985

168,738

3,134,282

3,173,343

An expense-based approach was used for Supervisory Board compensation and attendance fees shown for 2013 and 2014.

Other
The Company has taken out D&O insurance for Board of
Management and Supervisory Board members. In accordance
with the German Stock Corporation Act and the German
Corporate Governance Code’s recommendation, this insurance

includes a deductible of 10 percent of the respective damage
claim for Board of Management and Supervisory Board
members. The deductible has a maximum cumulative annual
cap of 150 percent of a member’s annual fixed compensation.

Consolidated Financial Statements

the International Standards on Auditing (ISA). Accordingly,
we are required to comply with ethical requirements and
plan and perform the audit to obtain reasonable assurance
about whether the consolidated financial statements are
free from material misstatement.

An audit involves performing audit procedures to obtain audit
evidence about the amounts and disclosures in the consoli-
dated financial statements. The selection of audit procedures
depends on the auditor’s professional judgment. This includes
the assessment of the risks of material misstatement of the
consolidated financial statements, whether due to fraud or
error. In assessing those risks, the auditor considers the inter-
nal control system relevant to the entity’s preparation of con-
solidated financial statements that give a true and fair view.
The aim of this is to plan and perform audit procedures that
are appropriate in the given circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the
Group’s internal control system. An audit also includes evalu-
ating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the Board
of Managing Directors, as well as evaluating the overall presen-
tation of the consolidated financial statements.

We believe that the audit evidence we have obtained is suffi-
cient and appropriate to provide a basis for our audit opinion.

Independent Auditors’ Report

To E.ON SE, Düsseldorf

Report on the Consolidated Financial Statements

We have audited the accompanying consolidated financial
statements of E.ON SE, Düsseldorf, and its subsidiaries, which
comprise the consolidated balance sheet, the consolidated
statement of income, the consolidated statement of recognized
income and expenses, the consolidated statement of cash
flows, the statement of changes in equity and the notes to the
consolidated financial statements for the business year from
January 1, 2014 to December 31, 2014.

Board of Managing Directors’ Responsibility for the
Consolidated Financial Statements
The Board of Managing Directors of E.ON SE, Düsseldorf, is
responsible for the preparation of these consolidated financial
statements. This responsibility includes that these consolidated
financial statements are prepared in accordance with Inter-
national Financial Reporting Standards, as adopted by the EU,
and the additional requirements of German commercial law
pursuant to § (Article) 315a Abs. (paragraph) 1 HGB (“Handels-
gesetzbuch”: German Commercial Code) and that these con-
solidated financial statements give a true and fair view of the
net assets, financial position and results of operations of
the Group in accordance with these requirements. The Board
of Managing Directors is also responsible for the internal
controls as the Board of Managing Directors determines are
necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether
due to fraud or error.

Auditor’s Responsibility
Our responsibility is to express an opinion on these consoli-
dated financial statements based on our audit. We conducted
our audit in accordance with § 317 HGB and German generally
accepted standards for the audit of financial statements pro-
mulgated by the Institut der Wirtschaftsprüfer (Institute of
Public Auditors in Germany) (IDW) and additionally observed

Audit Opinion
According to § 322 Abs. 3 Satz (sentence) 1 HGB, we state that
our audit of the consolidated financial statements has not led
to any reservations.

According to § 322 Abs. 3 Satz 1 HGB we state, that our
audit of the combined management report has not led to
any reservations.

In our opinion based on the findings of our audit of the con-
solidated financial statements and combined management
report, the combined management report is consistent with
the consolidated financial statements, as a whole provides
a suitable view of the Group’s position and suitably presents
the opportunities and risks of future development.

Düsseldorf, March 2, 2015

PricewaterhouseCoopers
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft

Markus Dittmann
Wirtschaftsprüfer
(German Public Auditor)

Michael Preiß
Wirtschaftsprüfer
(German Public Auditor)

In our opinion based on the findings of our audit, the consoli-
dated financial statements comply, in all material respects,
with IFRSs, as adopted by the EU, and the additional require-
ments of German commercial law pursuant to § 315a Abs. 1 HGB
and give a true and fair view of the net assets and financial
position of the Group as at December 31, 2014 as well as the
results of operations for the business year then ended, in
accordance with these requirements.

Report on the Group Management Report

We have audited the accompanying group management report
of E.ON SE, Düsseldorf, which is combined with the manage-
ment report of the company, for the business year from Janu-
ary 1, 2014 to December 31, 2014. The Board of Managing
Directors of E.ON SE, Düsseldorf, is responsible for the prepa-
ration of the combined management report in accordance
with the requirements of German commercial law applicable
pursuant to § 315a Abs. 1 HGB. We conducted our audit in
accordance with § 317 Abs. 2 HGB and German generally
accepted standards for the audit of the combined management
report promulgated by the Institut der Wirtschaftsprüfer
(Institute of Public Auditors in Germany) (IDW). Accordingly,
we are required to plan and perform the audit of the com-
bined management report to obtain reasonable assurance
about whether the combined management report is consis-
tent with the consolidated financial statements and the audit
findings, as a whole provides a suitable view of the Group’s
position and suitably presents the opportunities and risks of
future development.

E.ON SE and Subsidiaries Consolidated Statements of Income

€ in millions

Sales including electricity and energy taxes

Electricity and energy taxes

Sales

Changes in inventories (finished goods and work in progress)

Own work capitalized

Other operating income

Cost of materials

Personnel costs

Depreciation, amortization and impairment charges

Other operating expenses

Income from companies accounted for under the equity method

Income/Loss from continuing operations before financial results and income taxes

Financial results

Income/Loss from equity investments
Income from other securities, interest and similar income
Interest and similar expenses

Income taxes

Income/Loss from continuing operations

Income from discontinued operations, net

Net loss/income

Attributable to shareholders of E.ON SE
Attributable to non-controlling interests

in €

Earnings per share (attributable to shareholders of E.ON SE)—basic and diluted

from continuing operations

from discontinued operations

from net loss/income

Note

(5)

(6)

(7)

(8)

(11)

(14)

(7)

(9)

(10)

(4)

(13)

2014

113,053

-1,497

111,556

-61

345

10,966

-98,496

-4,121

-8,667

-11,834

-273

-585

-1,794
16
882
-2,692

-576

-2,955

-175

-3,130
-3,160
30

-1.55

-0.09

-1.64

2013 1

121,452

-1,764

119,688

-22

364

10,681

-105,719

-4,604

-5,205

-9,902

-210

5,071

-1,992
–
580
-2,572

-718

2,361

2,459
2,091
368

1.05

0.05

1.10

E.ON SE and Subsidiaries Consolidated Statements of Recognized Income and Expenses

€ in millions

Net loss/income

Remeasurements of defined benefit plans

Remeasurements of defined benefit plans of companies accounted for under the equity method

Income taxes

Items that will not be reclassified subsequently to the income statement 2

Cash flow hedges

Unrealized changes
Reclassification adjustments recognized in income

Available-for-sale securities

Unrealized changes
Reclassification adjustments recognized in income

Currency translation adjustments

Unrealized changes
Reclassification adjustments recognized in income

Companies accounted for under the equity method

Unrealized changes
Reclassification adjustments recognized in income

Income taxes

Items that might be reclassified subsequently to the income statement

Total income and expenses recognized directly in equity

Total recognized income and expenses (total comprehensive income)

Attributable to shareholders of E.ON SE
Attributable to non-controlling interests

1Because of the initial application of IFRS 10 and IFRS 11, the comparative prior-year figures have been adjusted (see also Note 2).
2Expenses totaling €52 million are attributable to discontinued operations (see also Note 4).

2014

-3,130

-3,299

-26

943

-2,382

-718
-55
-663

-262
-26
-236

-2,530
-2,557
27

-27
-27
–

242

2013 1

2,459

504

-12

-260

232

112
124
-12

368
531
-163

-1,296
-1,347
51

-972
-628
-344

-21

-3,295

-1,809

-5,677

-1,577

-8,807
-8,358
-449

882
604
278

100

E.ON SE and Subsidiaries Consolidated Balance Sheets—Assets

€ in millions

Goodwill

Intangible assets

Property, plant and equipment

Companies accounted for under the equity method

Other financial assets
Equity investments
Non-current securities

Financial receivables and other financial assets

Operating receivables and other operating assets

Income tax assets

Deferred tax assets

Non-current assets

Inventories

Financial receivables and other financial assets

Trade receivables and other operating assets

Income tax assets

Liquid funds

Securities and fixed-term deposits
Restricted cash and cash equivalents
Cash and cash equivalents

Assets held for sale

Current assets

Total assets

December 31

January 1,

Note

(14)

(15)

(17)

(10)

(16)

(17)

(10)

(18)

(4)

2014

11,812

4,882

41,273

5,009

6,354
1,573
4,781

3,533

3,947

6,172

83,065

3,356

1,376

24,311

1,745

6,067
1,812
1,064
3,191

5,770

2013 1

12,666

6,648

50,083

5,652

6,410
1,966
4,444

3,550

3,074

172

7,325

2013 1

13,309

6,931

53,940

4,139

6,358
1,612
4,746

3,692

3,391

123

5,482

95,580

97,365

4,147

1,654

21,074

1,030

7,814
2,648
639
4,527

1,031

4,735

2,125

24,835

918

7,046
3,781
449
2,816

5,261

42,625

36,750

44,920

125,690

132,330

142,285

1Because of the initial application of IFRS 10, IFRS 11 and IAS 32, the comparative prior-year figures have been adjusted (see also Note 2).

101

Note

(19)

(20)

(21)

(22)

(19)

(23)

(26)

(10)

(24)

(25)

(10)

(26)

(10)

(25)

(4)

December 31

January 1,

2014

2,001

13,077

16,842

-4,833

-2,502

24,585

2,723

-595

2,128

2013 1

2,001

13,733

23,306

-1,833

-3,484

33,723

3,574

-659

2,915

2013 1

2,001

13,740

23,173

-147

-3,505

35,262

4,445

-583

3,862

26,713

36,638

39,124

15,784

18,051

21,766

7,804

2,651

5,574

25,802

5,720

63,335

3,883

24,615

797

4,120

2,227

6,754

2,317

3,418

24,735

7,904

63,179

4,673

21,457

1,723

4,353

307

6,616

2,053

4,945

24,935

6,781

67,096

3,620

25,835

1,393

4,020

1,197

35,642

32,513

36,065

125,690

132,330

142,285

E.ON SE and Subsidiaries Consolidated Balance Sheets—Equity and Liabilities

€ in millions

Capital stock

Additional paid-in capital

Retained earnings

Accumulated other comprehensive income

Treasury shares

Equity attributable to shareholders of E.ON SE

Non-controlling interests (before reclassification)

Reclassification related to put options

Non-controlling interests

Equity

Financial liabilities

Operating liabilities

Income taxes

Provisions for pensions and similar obligations

Miscellaneous provisions

Deferred tax liabilities

Non-current liabilities

Financial liabilities

Trade payables and other operating liabilities

Income taxes

Miscellaneous provisions

Liabilities associated with assets held for sale

Current liabilities

Total equity and liabilities

1Because of the initial application of IFRS 10, IFRS 11 and IAS 32, the comparative prior-year figures have been adjusted (see also Note 2).

102

E.ON SE and Subsidiaries Consolidated Statements of Cash Flows

€ in millions

Net loss/income

Income/Loss from discontinued operations, net

Depreciation, amortization and impairment of intangible assets and of property, plant and equipment

Changes in provisions

Changes in deferred taxes

Other non-cash income and expenses

Gain/Loss on disposal of

Intangible assets and property, plant and equipment
Equity investments
Securities (> 3 months)

Changes in operating assets and liabilities and in income taxes

Inventories and carbon allowances
Trade receivables
Other operating receivables and income tax assets
Trade payables
Other operating liabilities and income taxes

Cash provided by operating activities of continuing operations (operating cash flow) 2

Cash provided by operating activities of discontinued operations

Cash provided by operating activities

Proceeds from disposal of

Intangible assets and property, plant and equipment
Equity investments

Purchases of investments in

Intangible assets and property, plant and equipment
Equity investments

Proceeds from disposal of securities (> 3 months) and of financial receivables and fixed-term deposits

Purchases of securities (> 3 months) and of financial receivables and fixed-term deposits

Changes in restricted cash and cash equivalents

Cash used for investing activities of continuing operations

Cash provided by (used for) investing activities of discontinued operations

Cash used for investing activities

Payments received/made from changes in capital 3

Cash dividends paid to shareholders of E.ON SE

Cash dividends paid to non-controlling interests

Proceeds from financial liabilities

Repayments of financial liabilities

Cash used for financing activities of continuing operations

Cash provided by (used for) financing activities of discontinued operations

Cash used for financing activities

2014

-3,130

175

8,667

1,266

623

1,089

-941
-104
-663
-174

-1,496
878
1,488
-8,183
-124
4,445

6,253

225

6,478

2,551
318
2,233

-4,633
-3,994
-639

4,506

-5,251

-421

-3,248

-3,235

-28

-840

-199

2,282

-5,798

-4,583

-28

-4,611

2013 1

2,459

-98

5,205

1,312

-679

820

-2,050
-66
-1,821
-163

-709
-207
1,332
1,304
-2,292
-846

6,260

189

6,449

7,120
574
6,546

-7,992
-4,480
-3,512

5,268

-4,773

-195

-572

-110

-682

-4

-2,097

-233

1,346

-3,008

-3,996

-3,992

1Because of the initial application of IFRS 10 and IFRS 11, and to account for the reporting of discontinued operations, the comparative prior-year figures have been adjusted
(see also Notes 2 and 4).
2Additional information on operating cash flow is provided in Notes 29 and 33.
3No material netting has taken place in either of the years presented here. The non-cash financing activity resulting from the scrip dividend is discussed in Notes 19 and 21.

103

E.ON SE and Subsidiaries Consolidated Statements of Cash Flows

€ in millions

Net decrease/increase in cash and cash equivalents

Effect of foreign exchange rates on cash and cash equivalents

Cash and cash equivalents at the beginning of the year 4

Cash and cash equivalents at the end of the year

Less: Cash and cash equivalents of discontinued operations at the end of the year

2014

-1,368

4,539

3,216

2013 1

1,775

-59

2,823

4,539

Cash and cash equivalents of continuing operations at the end of the year 5

3,197

4,514

Supplementary Information on Cash Flows from Operating Activities

Income taxes paid (less refunds)

Interest paid

Interest received

Dividends received

-949

-1,484

437

292

-966

-1,297

543

623

1Because of the initial application of IFRS 10 and IFRS 11, and to account for the reporting of discontinued operations, the comparative prior-year figures have been adjusted
(see also Notes 2 and 4).
4Cash and cash equivalents of continuing operations at the beginning of 2014 also include an amount of €12 million at the Pražská plynárenská group, which was disposed of
in the first quarter of 2014. The figure for 2013 includes a combined total of €7 million at E.ON Thüringer Energie and at E.ON Energy from Waste, both of which had been
presented as disposal groups.
5Cash and cash equivalents of continuing operations at the end of 2014 also included a combined total of €6 million from the generation activities in Spain and Italy, which
are presented as disposal groups. In 2013, this line included an amount of €12 million at the Pražská plynárenská group, which had been presented as a disposal group.

Additional information on the Statements of Cash Flows is provided in Note 29.

104

Statement of Changes in Equity

€ in millions

Capital stock

Additional
paid-in capital

Balance as of January 1, 2013

2,001

13,740

IFRS 10, IFRS 11 adjustment

Balance as of January 1, 2013

2,001

13,740

Change in scope of consolidation

Treasury shares repurchased/sold

-7

Changes in accumulated
other comprehensive income

Currency
translation
adjustments

Available-for-
sale securities

-614

810

Cash flow
hedges

-343

Retained
earnings

22,869

304

23,173

Capital increase

Capital decrease

Dividends

Share additions

Net additions/disposals from
reclassification related to
put options

Total comprehensive income

Net income
Other comprehensive income
Remeasurements of defined
benefit plans
Changes in accumulated
other comprehensive income

Balance as of December 31, 2013 1

Balance as of January 1, 2014 1

Change in scope of consolidation

Treasury shares repurchased/sold

Capital increase

Capital decrease

Dividends

Share additions

Net additions/disposals from
reclassification related to
put options

Total comprehensive income

Net loss
Other comprehensive income
Remeasurements of defined
benefit plans
Changes in accumulated
other comprehensive income

-2,097

-60

2,290
2,091
199

199

23,306

2,001

13,733

-656

-9

-1,145

-5,358
-3,160
-2,198

-2,198

Balance as of December 31, 2014

2,001

13,077

16,842

-2,128

-2,742

-2,175

-4,917

391

1,201

-314

887

-292

-511

-803

1Because of the initial application of IFRS 10 and IFRS 11, the comparative prior-year figures have been adjusted (see also Note 2).

105

Equity
attributable
to shareholders
of E.ON SE

Non-controlling
interests (before
reclassification)

Reclassification
related to
put options

Non-controlling
interests

34,958

304

35,262

-2,097

-60

604
2,091
-1,487

199

-1,686

33,723

317

-1,145

-8,358
-3,160
-5,198

-2,198

-3,000

24,585

4,410

4,445

-944

-31

-243

278
368
-90

-123

3,574

-115

-15

-207

-71

-449
30
-479

-184

-295

2,723

-548

-35

-583

-76

-659

-595

3,862

-944

-31

-243

-76

278
368
-90

-123

2,915

-115

-15

-207

-71

-449
30
-479

-184

-295

2,128

Treasury shares

-3,505

-3,484

982

-2,502

Total

38,820

304

39,124

-944

-31

-2,340

-35

-76

882
2,459
-1,577

232

-1,809

36,638

-115

317

-15

-1,352

-23

-8,807
-3,130
-5,677

-2,382

-3,295

26,713

106 Notes

(1) Summary of Significant Accounting Policies

Basis of Presentation

These Consolidated Financial Statements have been prepared
in accordance with Section 315a (1) of the German Commercial
Code (“HGB”) and with those International Financial Reporting
Standards (“IFRS”) and IFRS Interpretations Committee inter-
pretations (“IFRIC”) that were adopted by the European Com-
mission for use in the EU as of the end of the fiscal year, and
whose application was mandatory as of December 31, 2014.

Principles

The Consolidated Financial Statements of the E.ON Group
(“E.ON” or the “Group”) are generally prepared based on histor-
ical cost, with the exception of available-for-sale financial
assets that are measured at fair value and of financial assets
and liabilities (including derivative financial instruments)
that are recognized in income and measured at fair value.

Scope of Consolidation
The Consolidated Financial Statements incorporate the finan-
cial statements of E.ON SE and entities controlled by E.ON
(“subsidiaries”). Control exists when E.ON as the investor has
the current ability to direct the relevant activities of the
investee entity. Relevant activities are those activities that most
significantly affect the performance of a business. In addition,
E.ON must participate in this business performance in the form
of variable returns and be able to influence those returns to
its benefit through existing opportunities and rights. Control
is normally deemed established if E. ON directly or indirectly
holds a majority of the voting rights in the investee. In struc-
tured entities, control can be established be means of contrac-
tual arrangements.

The results of the subsidiaries acquired or disposed of during
the year are included in the Consolidated Statement of Income
from the date of acquisition or until the date of their disposal,
respectively.

Where necessary, adjustments are made to the subsidiaries’
financial statements to bring their accounting policies into
line with those of the Group. Intercompany receivables, liabil-
ities and results between Group companies are eliminated
in the consolidation process.

Associated Companies
An associate is an entity over whose relevant activities E. ON
has significant influence, but which is neither a subsidiary nor
an interest in a joint venture. Significant influence exists when
E.ON has the power to participate in the financial and oper-
ating policy decisions of the investee but does not control or
jointly control these decisions. Significant influence is gener-
ally presumed if E.ON directly or indirectly holds at least 20 per-
cent, but not more than 50 percent, of an entity’s voting rights.

Interests in associated companies are accounted for using
the equity method. In addition, majority-owned companies
in which E.ON does not exercise control due to restrictions
concerning the control of assets or management are also
generally accounted for using the equity method.

Interests in associated companies accounted for using the
equity method are reported on the balance sheet at cost,
adjusted for changes in the Group’s share of the net assets
after the date of acquisition and for any impairment charges.
Losses that might potentially exceed the Group’s interest in
an associated company when attributable long-term loans
are taken into consideration are generally not recognized. Any
difference between the cost of the investment and the
remeasured value of its net assets is recognized in the Consol-
idated Financial Statements as part of the carrying amount.

Unrealized gains and losses arising from transactions with
associated companies accounted for using the equity method
are eliminated within the consolidation process on a pro-rata
basis if and insofar as these are material.

Companies accounted for using the equity method are tested
for impairment by comparing the carrying amount with its
recoverable amount. If the carrying amount exceeds the recov-
erable amount, the carrying amount is adjusted for this
difference. If the reasons for previously recognized impairment
losses no longer exist, such impairment losses are reversed
accordingly.

The financial statements of equity interests accounted for
using the equity method are generally prepared using account-
ing that is uniform within the Group.

107

Joint Ventures
Joint ventures are also accounted for using the equity method.
Unrealized gains and losses arising from transactions with
joint-venture companies are eliminated within the consolidation
process on a pro-rata basis if and insofar as these are material.

Non-controlling interests can be measured either at cost
(partial goodwill method) or at fair value (full goodwill
method). The choice of method can be made on a case-by-
case basis. The partial goodwill method is generally used
within the E. ON Group.

Joint Operations
A joint operation exists when E.ON and the other parties to
a joint arrangement have direct rights to the assets, and obli-
gations for the liabilities, attributable to the operation. In a
joint operation, assets and liabilities, as well as revenues and
expenses, are recognized pro rata according to the rights and
obligations attributable to E.ON.

Business Combinations
Business combinations are accounted for by applying the
purchase method, whereby the purchase price is offset against
the proportional share in the acquired company’s net assets.
In doing so, the values at the acquisition date that corresponds
to the date at which control of the acquired company was
attained are used as a basis. The acquiree’s identifiable assets,
liabilities and contingent liabilities are generally recognized
at their fair values irrespective of the extent attributable to
non-controlling interests. The fair values of individual assets
are determined using published exchange or market prices at
the time of acquisition in the case of marketable securities,
for example, and in the case of land, buildings and major tech-
nical equipment, generally using independent expert reports
that have been prepared by third parties. If exchange or mar-
ket prices are unavailable for consideration, fair values are
determined using the most reliable information available that
is based on market prices for comparable assets or on suit-
able valuation techniques. In such cases, E.ON determines fair
value using the discounted cash flow method by discounting
estimated future cash flows by a weighted-average cost of
capital. Estimated cash flows are consistent with the internal
mid-term planning data for the next three years, followed by
two additional years of cash flow projections, which are extrapo-
lated until the end of an asset’s useful life using a growth rate
based on industry and internal projections. The discount rate
reflects the specific risks inherent in the acquired activities.

Transactions with holders of non-controlling interests are
treated in the same way as transactions with investors. Should
the acquisition of additional shares in a subsidiary result in
a difference between the cost of purchasing the shares and
the carrying amounts of the non-controlling interests acquired,
that difference must be fully recognized in equity.

Gains and losses from disposals of shares to subsidiaries are
also recognized in equity, provided that such disposals do
not coincide with a loss of control.

Intangible assets must be recognized separately from goodwill
if they are clearly separable or if their recognition arises from
a contractual or other legal right. Provisions for restructuring
measures may not be recorded in a purchase price allocation.
If the purchase price paid exceeds the proportional share in the
net assets at the time of acquisition, the positive difference
is recognized as goodwill. No goodwill is recognized for positive
differences attributable to non-controlling interests. A nega-
tive difference is immediately recognized in income.

Foreign Currency Translation
The Company’s transactions denominated in foreign currency
are translated at the current exchange rate at the date of
the transaction. Monetary foreign currency items are adjusted
to the current exchange rate at each balance sheet date; any
gains and losses resulting from fluctuations in the relevant
currencies, and the effects upon realization, are recognized
in income and reported as other operating income and other
operating expenses, respectively. Gains and losses from the
translation of non-derivative financial instruments used in
hedges of net investments in foreign operations are recognized
in equity as a component of other comprehensive income. The
ineffective portion of the hedging instrument is immediately
recognized in income.

108 Notes

The functional currency as well as the reporting currency of
E.ON SE is the euro. The assets and liabilities of the Company’s
foreign subsidiaries with a functional currency other than
the euro are translated using the exchange rates applicable
on the balance sheet date, while items of the statements
of income are translated using annual average exchange rates.
Material transactions of foreign subsidiaries occurring during
the fiscal year are translated in the financial statements using
the exchange rate at the date of the transaction. Differences
arising from the translation of assets and liabilities compared
with the corresponding translation of the prior year, as well
as exchange rate differences between the income statement
and the balance sheet, are reported separately in equity as
a component of other comprehensive income.

Recognition of Income
a) Revenues
The Company generally recognizes revenue upon delivery
of goods to customers or purchasers, or upon completion of
services rendered. Delivery is deemed complete when the
risks and rewards associated with ownership have been trans-
ferred to the buyer as contractually agreed, compensation
has been contractually established and collection of the result-
ing receivable is probable. Revenues from the sale of goods
and services are measured at the fair value of the consideration
received or receivable. They reflect the value of the volume
supplied, including an estimated value of the volume supplied
to customers between the date of the last invoice and the end
of the period.

Foreign currency translation effects that are attributable to
the cost of monetary financial instruments classified as avail-
able for sale are recognized in income. In the case of fair-
value adjustments of monetary financial instruments and for
non-monetary financial instruments classified as available
for sale, the foreign currency translation effects are recognized
in equity as a component of other comprehensive income.

Foreign-exchange transactions out of the Russian Federation
may be restricted in certain cases. The Brazilian real is not
freely convertible.

The following table depicts the movements in exchange rates
for the periods indicated for major currencies of countries
outside the European Monetary Union:

Currencies

British pound

Brazilian real

Norwegian krone

Russian ruble

Swedish krona

Turkish lira

Hungarian forint

U.S. dollar

€1, rate at
year-end

€1, annual
average rate

2014

2013

2014

2013

0.78

3.22

9.04

0.83

3.26

8.36

0.81

3.12

8.35

0.85

2.87

7.81

72.34

45.32

50.95

42.23

9.39

2.83

8.86

2.96

9.10

2.91

8.65

2.53

315.54

297.04

308.71

296.87

1.21

1.38

1.33

ISO
Code

GBP

BRL

NOK

RUB

SEK

TRY

HUF

USD

Revenues include the surcharge mandated by the German
Renewable Energy Sources Act and are presented net of
sales taxes, returns, rebates and discounts, and after elimina-
tion of intragroup sales.

Revenues are generated primarily from the sale of electricity
and gas to industrial and commercial customers, to retail
customers and to wholesale markets. Also shown in this line
item are revenues earned from the distribution of electricity
and gas and from deliveries of steam, heat and water.

b) Interest Income
Interest income is recognized pro rata using the effective
interest method.

c) Dividend Income
Dividend income is recognized when the right to receive the
distribution payment arises.

Electricity and Energy Taxes
The electricity tax is levied on electricity delivered to retail
customers and is calculated on the basis of a fixed tax rate
per kilowatt-hour (“kWh”). This rate varies between different
classes of customers. Electricity and energy taxes paid are
deducted from sales revenues on the face of the income state-
ment if those taxes are levied upon delivery of energy to the
retail customer.

109

Accounting for Reductions of Shareholdings in Sub-
sidiaries or Associated Companies
If a subsidiary or associated company sells shares to a third
party, leading to a reduction in E.ON’s ownership interest in the
relevant company (“dilution”), and consequently to a loss of
control, joint control or significant influence, gains and losses
from these dilutive transactions are included in the income
statement under other operating income or expenses.

Earnings per Share
Basic (undiluted) earnings per share is computed by dividing
the consolidated net income attributable to the shareholders
of the parent company by the weighted-average number of
ordinary shares outstanding during the relevant period. At E.ON,
the computation of diluted earnings per share is identical to
that of basic earnings per share because E.ON SE has issued
no potentially dilutive ordinary shares.

Goodwill and Intangible Assets
Goodwill
According to IFRS 3, “Business Combinations,” (“IFRS 3”) good-
will is not amortized, but rather tested for impairment at
the cash-generating unit level on at least an annual basis.
Impairment tests must also be performed between these
annual tests if events or changes in circumstances indicate
that the carrying amount of the respective cash-generating
unit might not be recoverable.

Newly created goodwill is allocated to those cash-generating
units expected to benefit from the respective business combi-
nation. The cash-generating units to which goodwill is allo-
cated are generally equivalent to the operating segments, since
goodwill is reported, and considered in performance metrics for
controlling, only at that level. With some exceptions, goodwill
impairment testing is performed in euro, while the underlying
goodwill is always carried in the functional currency.

In a goodwill impairment test, the recoverable amount of a
cash-generating unit is compared with its carrying amount,
including goodwill. The recoverable amount is the higher of
the cash-generating unit’s fair value less costs to sell and its

value in use. In a first step, E.ON determines the recoverable
amount of a cash-generating unit on the basis of the fair value
(less costs to sell) using generally accepted valuation proce-
dures. This is based on the medium-term planning data of the
respective cash-generating unit. Valuation is performed using
the discounted cash flow method, and accuracy is verified
through the use of appropriate multiples, to the extent avail-
able. In addition, market transactions or valuations prepared
by third parties for comparable assets are used to the extent
available. If needed, a calculation of value in use is also per-
formed. Unlike fair value, the value in use is calculated from
the viewpoint of management. In accordance with IAS 36,
“Impairment of Assets,” (“IAS 36”) it is further ensured that
restructuring expenses, as well as initial and subsequent capital
investments (where those have not yet commenced), in par-
ticular, are not included in the valuation.

If the carrying amount exceeds the recoverable amount, the
goodwill allocated to that cash-generating unit is adjusted in
the amount of this difference.

If the impairment thus identified exceeds the goodwill allo-
cated to the affected cash-generating unit, the remaining
assets of the unit must be written down in proportion to their
carrying amounts. Individual assets may be written down
only if their respective carrying amounts do not fall below the
highest of the following values as a result:
•
•
•

Fair value less costs to sell
Value in use, or
Zero.

Any additional impairment loss that would otherwise have
been allocated to the asset concerned must instead be allo-
cated pro rata to the remaining assets of the unit.

E.ON has elected to perform the annual testing of goodwill
for impairment at the cash-generating unit level in the fourth
quarter of each fiscal year.

Impairment charges on the goodwill of a cash-generating unit
and reported in the income statement under “Depreciation,
amortization and impairment charges” may not be reversed
in subsequent reporting periods.

110 Notes

Intangible Assets
IAS 38, “Intangible Assets,” (“IAS 38”) requires that intangible
assets be amortized over their expected useful lives unless
their lives are considered to be indefinite. Factors such as typ-
ical product life cycles and legal or similar limits on use are
taken into account in the classification.

Acquired intangible assets subject to amortization are classi-
fied as marketing-related, customer-related, contract-based,
and technology-based. Internally generated intangible assets
subject to amortization are related to software. Intangible
assets subject to amortization are measured at cost and use-
ful lives. The useful lives of marketing-related, customer-
related and contract-based intangible assets generally range
between 5 and 25 years. Technology-based intangible assets
are generally amortized over a useful life of between 3 and
5 years. This category includes software in particular. Con-
tract-based intangible assets are amortized in accordance
with the provisions specified in the contracts. Useful lives
and amortization methods are subject to annual verification.
Intangible assets subject to amortization are tested for
impairment whenever events or changes in circumstances
indicate that such assets may be impaired.

Intangible assets not subject to amortization are measured
at cost and tested for impairment annually or more frequently
if events or changes in circumstances indicate that such
assets may be impaired. Moreover, such assets are reviewed
annually to determine whether an assessment of indefinite
useful life remains applicable.

In accordance with IAS 36, the carrying amount of an intangible
asset, whether subject to amortization or not, is tested for
impairment by comparing the carrying value with the asset’s
recoverable amount, which is the higher of its value in use and
its fair value less costs to sell. Should the carrying amount
exceed the corresponding recoverable amount, an impairment
charge equal to the difference between the carrying amount
and the recoverable amount is recognized and reported in
income under “Depreciation, amortization and impairment
charges.”

If the reasons for previously recognized impairment losses no
longer exist, such impairment losses are reversed. A reversal
shall not cause the carrying amount of an intangible asset
subject to amortization to exceed the amount that would
have been determined, net of amortization, had no impairment
loss been recognized during the period.

If a recoverable amount cannot be determined for an individual
intangible asset, the recoverable amount for the smallest
identifiable group of assets (cash-generating unit) that the
intangible asset may be assigned to is determined. See Note 14
for additional information about goodwill and intangible assets.

Research and Development Costs
Under IFRS, research and development costs must be allocated
to a research phase and a development phase. While expen-
diture on research is expensed as incurred, recognized devel-
opment costs must be capitalized as an intangible asset if
all of the general criteria for recognition specified in IAS 38,
as well as certain other specific prerequisites, have been ful-
filled. In the 2014 and 2013 fiscal years, these criteria were not
fulfilled, except in the case of internally generated software.

111

might also be subject to adjustment, where applicable. If the
reasons for previously recognized impairment losses no longer
exist, such impairment losses are reversed and recognized in
income. Such reversal shall not cause the carrying amount to
exceed the amount that would have resulted had no impair-
ment taken place during the preceding periods.

Investment subsidies do not reduce the acquisition and
production costs of the respective assets; they are instead
reported on the balance sheet as deferred income.

Subsequent costs arising, for example, from additional or
replacement capital expenditure are only recognized as part
of the acquisition or production cost of the asset, or else—if
relevant—recognized as a separate asset if it is probable that
the Group will receive a future economic benefit and the cost
can be determined reliably.

Repair and maintenance costs that do not constitute significant
replacement capital expenditure are expensed as incurred.

Emission Rights
Under IFRS, emission rights held under national and interna-
tional emission-rights systems for the settlement of obligations
are reported as intangible assets. Because emission rights
are not depleted as part of the production process, they are
reported as intangible assets not subject to amortization.
Emission rights are capitalized at cost at the time of acquisition.

A provision is recognized for emissions produced. The provision
is measured at the carrying amount of the emission rights
held or, in the case of a shortfall, at the current fair value of the
emission rights needed. The expenses incurred for the recog-
nition of the provision are reported under cost of materials.

Property, Plant and Equipment
Property, plant and equipment are initially measured at acqui-
sition or production cost, including decommissioning or res-
toration cost that must be capitalized, and are depreciated
over the expected useful lives of the components, generally
using the straight-line method, unless a different method of
depreciation is deemed more suitable in certain exceptional
cases. The useful lives of the major components of property,
plant and equipment are presented below:

Useful Lives of Property, Plant and
Equipment

Buildings

Technical equipment, plant and machinery

Other equipment, fixtures, furniture and
office equipment

10 to 50 years

10 to 65 years

3 to 25 years

Property, plant and equipment are tested for impairment
whenever events or changes in circumstances indicate that an
asset may be impaired. In such a case, property, plant and
equipment are tested for impairment according to the prin-
ciples prescribed for intangible assets in IAS 36. If an impair-
ment loss is determined, the remaining useful life of the asset

112 Notes

Exploration for and Evaluation of Mineral Resources
The exploration and field development expenditures are
accounted for using the so-called “successful efforts method.”
In accordance with IFRS 6, “Exploration for and Evaluation of
Mineral Resources,” (“IFRS 6”) expenditures for exploratory
drilling for which the outcome is not yet certain are initially
capitalized as an intangible asset.

Upon discovery of oil and/or gas reserves and field develop-
ment approval, the relevant expenditures are reclassified as
property, plant and equipment. Such property, plant and
equipment is then depreciated in accordance with production
volumes. For uneconomical drilling, the previously capitalized
expenditures are immediately expensed. Other capitalized
expenditures are also written off once it is determined that
no viable reserves could be found. Other expenses for geo-
logical and geophysical work (seismology) and licensing fees
are immediately expensed.

Borrowing Costs
Borrowing costs that arise in connection with the acquisition,
construction or production of a qualifying asset from the
time of acquisition or from the beginning of construction or
production until its entry into service are capitalized and
subsequently amortized alongside the related asset. In the case
of a specific financing arrangement, the respective borrowing
costs incurred for that particular arrangement during the period
are used. For non-specific financing arrangements, a financing
rate uniform within the Group of 5.5 percent was applied for
2014 (2013: 5.25 percent). Other borrowing costs are expensed.

Government Grants
Government investment subsidies do not reduce the acquisi-
tion and production costs of the respective assets; they are
instead reported on the balance sheet as deferred income.
They are recognized in income on a straight-line basis over
the associated asset’s expected useful life.

Government grants are recognized at fair value if it is highly
probable that the grant will be issued and if the Group satis-
fies the necessary conditions for receipt of the grant.

Government grants for costs are posted as income over the
period in which the costs to be compensated through the
respective grants are incurred.

Leasing
Leasing transactions are classified according to the lease
agreements and to the underlying risks and rewards specified
therein in line with IAS 17, “Leases” (“IAS 17”). In addition,
IFRIC 4, “Determining Whether an Arrangement Contains a
Lease,” (“IFRIC 4”) further defines the criteria as to whether
an agreement that conveys a right to use an asset meets the
definition of a lease. Certain purchase and supply contracts
in the electricity and gas business as well as certain rights of
use may be classified as leases if the criteria are met. E.ON
is party to some agreements in which it is the lessor and to
others in which it is the lessee.

Leasing transactions in which E.ON is the lessee are classified
either as finance leases or operating leases. If the Company
bears substantially all of the risks and rewards incident to own-
ership of the leased property, the lease is classified as a finance
lease. Accordingly, the Company recognizes on its balance
sheet the asset and the associated liability in equal amounts.

Recognition takes place at the beginning of the lease term
at the lower of the fair value of the leased property or the
present value of the minimum lease payments.

The leased property is depreciated over its useful economic
life or, if it is shorter, the term of the lease. The liability is sub-
sequently measured using the effective interest method.

113

All other transactions in which E.ON is the lessee are classified
as operating leases. Payments made under operating leases
are generally expensed over the term of the lease.

Leasing transactions in which E.ON is the lessor and substan-
tially all the risks and rewards incident to ownership of the
leased property are transferred to the lessee are classified as
finance leases. In this type of lease, E.ON records the present
value of the minimum lease payments as a receivable. Payments
by the lessee are apportioned between a reduction of the
lease receivable and interest income. The income from such
arrangements is recognized over the term of the lease using
the effective interest method.

All other transactions in which E.ON is the lessor are treated
as operating leases. E.ON retains the leased property on its
balance sheet as an asset, and the lease payments are gener-
ally recorded on a straight-line basis as income over the term
of the lease.

Financial Instruments
Non-Derivative Financial Instruments
Non-derivative financial instruments are recognized at fair
value, including transaction costs, on the settlement date when
acquired. IFRS 13, “Fair Value Measurement,” (“IFRS 13”) defines
fair value as the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants on the measurement date (exit price).
The valuation techniques used are classified according to the
fair value hierarchy provided for by IFRS 13.

Securities categorized as available for sale are carried at fair
value on a continuing basis, with any resulting unrealized
gains and losses, net of related deferred taxes, reported as a
component of equity (other comprehensive income) until
realized. Realized gains and losses are determined by analyzing
each transaction individually. If there is objective evidence
of impairment, any losses previously recognized in other com-
prehensive income are instead recognized in financial results.
When estimating a possible impairment loss, E.ON takes into
consideration all available information, such as market con-
ditions and the length and extent of the impairment. If the
value on the balance sheet date of the equity instruments
classified as available for sale and of similar long-term invest-
ments is more than 20 percent below their cost, or if the value
has been below its cost for a period of more than twelve
months, this constitutes objective evidence of impairment.
For debt instruments, objective evidence of impairment is
generally deemed present if ratings have deteriorated from
investment-grade to non-investment-grade. Reversals of
impairment losses relating to equity instruments are recog-
nized exclusively in equity, while reversals relating to debt
instruments are recognized entirely in income.

Loans and receivables (including trade receivables) are non-
derivative financial assets with fixed or determinable payments
that are not traded in an active market. Loans and receivables
are reported on the balance sheet under “Receivables and
other assets.” They are subsequently measured at amortized
cost. Valuation allowances are provided for identifiable indi-
vidual risks.

Unconsolidated equity investments and securities are measured
in accordance with IAS 39, “Financial Instruments: Recognition
and Measurement” (“IAS 39”). E.ON categorizes financial assets
as held for trading, available for sale, or as loans and receiv-
ables. Management determines the categorization of the
financial assets at initial recognition.

Non-derivative financial liabilities (including trade payables)
within the scope of IAS 39 are measured at amortized cost,
using the effective interest method. Initial measurement takes
place at fair value, with transaction costs included in the mea-
surement. In subsequent periods, the amortization and accre-
tion of any premium or discount is included in financial results.

114 Notes

Derivative Financial Instruments and Hedging
Derivative financial instruments and separated embedded
derivatives are measured at fair value as of the trade date at
initial recognition and in subsequent periods. IAS 39 requires
that they be categorized as held for trading as long as they are
not a component of a hedge accounting relationship. Gains
and losses from changes in fair value are immediately recog-
nized in net income.

The instruments primarily used are foreign currency forwards
and cross-currency interest rate swaps, as well as interest rate
swaps and options. In commodities, the instruments used
include physically and financially settled forwards and options
related to electricity, gas, coal, oil and emission rights.

As part of fair value measurement in accordance with IFRS 13,
the counterparty risk is also taken into account for derivative
financial instruments. E.ON determines this risk based on a
portfolio valuation in a bilateral approach for both own credit
risk (debt value adjustment) and the credit risk of the corre-
sponding counterparty (credit value adjustment). The counter-
party risks thus determined are allocated to the individual
financial instruments by applying the relative fair value method
on a net basis.

IAS 39 sets requirements for the designation and documen-
tation of hedging relationships, the hedging strategy, as well
as ongoing retrospective and prospective measurement of
effectiveness in order to qualify for hedge accounting. The Com-
pany does not exclude any component of derivative gains
and losses from the measurement of hedge effectiveness. Hedge
accounting is considered to be appropriate if the assessment
of hedge effectiveness indicates that the change in fair value
of the designated hedging instrument is 80 to 125 percent
effective at offsetting the change in fair value due to the hedged
risk of the hedged item or transaction.

For qualifying fair value hedges, the change in the fair value of
the derivative and the change in the fair value of the hedged
item that is due to the hedged risk(s) are recognized in income.
If a derivative instrument qualifies as a cash flow hedge under
IAS 39, the effective portion of the hedging instrument’s change
in fair value is recognized in equity (as a component of other
comprehensive income) and reclassified into income in the
period or periods during which the cash flows of the transac-
tion being hedged affect income. The hedging result is reclassi-
fied into income imme diately if it becomes probable that the
hedged underlying transaction will no longer occur. For hedging
instruments used to establish cash flow hedges, the change
in fair value of the ineffective portion is recognized immediately
in the income statement to the extent required. To hedge
the foreign currency risk arising from the Company’s net invest-
ment in foreign operations, derivative as well as non-derivative
financial instruments are used. Gains or losses due to changes
in fair value and from foreign currency trans lation are recog-
nized separately within equity, as a component of other com-
prehensive income, under currency translation adjustments.

Changes in fair value of derivative instruments that must be
recognized in income are presented as other operating income
or expenses. Gains and losses from interest-rate derivatives
are netted for each contract and included in interest income.
Gains and losses from derivative financial instruments are
shown net as either revenues or cost of materials, provided
they meet the corresponding conditions for such accounting.
Certain realized amounts are, if related to the sale of products
or services, also included in sales or cost of materials.

115

Receivables and Other Assets
Receivables and other assets are initially measured at fair
value, which generally approximates nominal value. They are
subsequently measured at amortized cost, using the effective
interest method. Valuation allowances, included in the reported
net carrying amount, are provided for identifiable individual
risks. If the loss of a certain part of the receivables is probable,
valuation allowances are provided to cover the expected loss.

Liquid Funds
Liquid funds include current available-for-sale securities, checks,
cash on hand and bank balances. Bank balances and available-
for-sale securities with an original maturity of more than three
months are recognized under securities and fixed-term
deposits. Liquid funds with an original maturity of less than
three months are considered to be cash and cash equivalents,
unless they are restricted.

Restricted cash with a remaining maturity in excess of
twelve months is classified as financial receivables and other
financial assets.

Assets Held for Sale and Liabilities Associated
with Assets Held for Sale
Individual non-current assets or groups of assets held for
sale and any directly attributable liabilities (disposal groups)
are reported in these line items if they can be disposed of
in their current condition and if there is sufficient probability
of their disposal actually taking place. For a group of assets
and associated liabilities to be classified as a disposal group,
the assets and liabilities in it must be held for sale in a single
transaction or as part of a comprehensive plan.

Unrealized gains and losses resulting from the initial measure-
ment of derivative financial instruments at the inception of
the contract are not recognized in income. They are instead
deferred and recognized in income systematically over the
term of the derivative. An exception to the accrual principle
applies if unrealized gains and losses from the initial mea-
surement are verified by quoted market prices, observable prices
of other current market transactions or other observable data
supporting the valuation technique. In this case the gains and
losses are recognized in income.

Contracts that are entered into for purposes of receiving or
delivering non-financial items in accordance with E.ON’s
anticipated procurement, sale or use requirements, and held
as such, can be classified as own-use contracts. They are not
accounted for as derivative financial instruments at fair value
in accordance with IAS 39, but as open transactions subject
to the rules of IAS 37.

IFRS 7, “Financial Instruments: Disclosures,” (“IFRS 7”) and
IFRS 13 both require comprehensive quantitative and qualita-
tive disclosures about the extent of risks arising from financial
instruments. Additional information on financial instruments
is provided in Notes 30 and 31.

Primary and derivative financial instruments are netted on
the balance sheet if E.ON has both an unconditional right—
even in the event of the counterparty’s insolvency—and the
intention to settle offsetting positions simultaneously or on
a net basis.

Inventories
The Company measures inventories at the lower of acquisition
or production cost and net realizable value. The cost of raw
materials, finished products and goods purchased for resale is
determined based on the average cost method. In addition
to production materials and wages, production costs include
material and production overheads based on normal capacity.
The costs of general administration are not capitalized. Inven-
tory risks resulting from excess and obsolescence are provided
for using appropriate valuation allowances, whereby invento-
ries are written down to net realizable value.

116 Notes

Discontinued operations are components of an entity that
are either held for sale or have already been sold and can be
clearly distinguished from other corporate operations, both
operationally and for financial reporting purposes. Additionally,
the component classified as a discontinued operation must
represent a major business line or a specific geographic busi-
ness segment of the Group.

Non-current assets that are held for sale either individually
or collectively as part of a disposal group, or that belong to
a discontinued operation, are no longer depreciated. They are
instead accounted for at the lower of the carrying amount
and the fair value less any remaining costs to sell. If the fair
value is less than the carrying amount, an impairment loss
is recognized.

The income and losses resulting from the measurement of
components held for sale at fair value less any remaining
costs to sell, as well as the gains and losses arising from the
disposal of discontinued operations, are reported separately
on the face of the income statement under income/loss from
discontinued operations, net, as is the income from the ordi-
nary operating activities of these divisions. Prior-year income
statement figures are adjusted accordingly. The relevant assets
and liabilities are reported in a separate line on the balance
sheet. The cash flows of discontinued operations are reported
separately in the cash flow statement, with prior-year figures
adjusted accordingly. However, there is no reclassification
of prior-year balance sheet line items attributable to discon-
tinued operations.

Equity Instruments
IFRS defines equity as the residual interest in the Group’s
assets after deducting all liabilities. Therefore, equity is the
net amount of all recognized assets and liabilities.

E.ON has entered into purchase commitments to holders of
non-controlling interests in subsidiaries. By means of these
agreements, the non-controlling shareholders have the right
to require E.ON to purchase their shares on specified condi-
tions. None of the contractual obli gations has led to the trans-
fer of substantially all of the risk and rewards to E.ON at the
time of entering into the contract. In such a case, IAS 32,
“Financial Instruments: Presentation,” (“IAS 32”) requires that
a liability be recognized at the present value of the probable
future exercise price. This amount is reclassified from a sepa-
rate component within non-controlling interests and reported
separately as a liability. The reclassification occurs irrespective
of the probability of exercise. The accretion of the liability
is recognized as interest expense. If a purchase commitment
expires unexercised, the liability reverts to non-controlling
interests. Any difference between liabilities and non-controlling
interests is recognized directly in retained earnings.

Where shareholders of entities own statutory, non-excludable
rights of termination (as in the case of German partnerships,
for example), such termination rights require the reclassifica-
tion of non-controlling interests from equity into liabilities
under IAS 32. The liability is recognized at the present value
of the expected settlement amount irrespective of the prob-
ability of termination. Changes in the value of the liability are
reported within other oper ating income. Accretion of the
liability and the non-controlling shareholders’ share in net
income are shown as interest expense.

If an E.ON Group company buys treasury shares of E.ON SE,
the value of the consideration paid, including directly attrib-
utable additional costs (net after income taxes), is deducted
from E.ON SE’s equity until the shares are retired, distributed

117

or resold. If such treasury shares are subsequently distributed
or sold, the consideration received, net of any directly attribut-
able additional transaction costs and associated income taxes,
is added to E.ON SE’s equity.

Share-Based Payment
Share-based payment plans issued in the E.ON Group are
accounted for in accordance with IFRS 2, “Share-Based Payment”
(“IFRS 2”). The E.ON Share Performance Plan introduced in
fiscal 2006 involves share-based payment transactions that are
settled in cash and measured at fair value as of each balance
sheet date. From the sixth tranche forward, the 60-day average
of the E. ON share price as of the balance sheet date is used
as the fair value. In addition, the calculation of the provision
for the sixth tranche takes into account the financial measures
ROACE and WACC. The final allocations under the E.ON Share
Performance Plan took place in fiscal 2012. Beginning in the
2013 fiscal year, share-based payments have been based on the
E.ON Share Matching Plan. Under this plan, the number of
allocated rights is governed by the development of the finan-
cial measure ROACE. The compensation expense is recognized
in the income statement pro rata over the vesting period. The
E.ON Share Matching Plan also represents a cash-settled
share-based payment.

Provisions for Pensions and Similar Obligations
Measurement of defined benefit obligations in accordance
with IAS 19 (revised 2011), “Employee Benefits,” (“IAS 19R” or
“IAS 19,” used synonymously unless explicitly stated otherwise)
is based on actuarial computations using the projected unit
credit method, with actuarial valuations performed at year-end.
The valuation encompasses both pension obligations and
pension entitlements that are known on the reporting date and
economic trend assumptions such as assumptions on wage
and salary growth rates and pension increase rates, among
others, that are made in order to reflect realistic expectations,
as well as variables specific to reporting dates such as discount
rates, for example.

Included in gains and losses from the remeasurements of
the net defined benefit liability or asset are actuarial gains and
losses that may arise especially from differences between
estimated and actual variations in under lying assumptions
about demographic and financial variables. Additionally
included is the difference between the actual return on plan
assets and the interest income on plan assets included in
the net interest result. Remeasurements effects are recognized
in full in the period in which they occur and are not reported
within the Consolidated Statements of Income, but are instead
recognized within the Statements of Recognized Income and
Expenses as part of equity.

The employer service cost representing the additional benefits
that employees earned under the benefit plan during the fis-
cal year is reported under personnel costs; the net interest on
the net liability or asset from defined benefit pension plans
determined based on the discount rate applicable at the start
of the fiscal year is reported under financial results.

Past service cost, as well as gains and losses from settlements,
are fully recognized in the income statement in the period in
which the underlying plan amendment, curtailment or settle-
ment takes place. They are reported under personnel costs.

The amount reported on the balance sheet represents the
present value of the defined benefit obligations reduced by
the fair value of plan assets. If a net asset position arises
from this calculation, the amount is limited to the present
value of available refunds and the reduction in future con-
tributions and to the benefit from prepayments of minimum
funding requirements. Such an asset position is recognized
as an operating receivable.

118 Notes

Payments for defined contribution pension plans are expensed
as incurred and reported under personnel costs. Contributions
to state pension plans are treated like payments for defined
contribution pension plans to the extent that the obligations
under these pension plans generally correspond to those under
defined contribution pension plans.

Provisions for Asset Retirement Obligations and
Other Miscellaneous Provisions
In accordance with IAS 37, “Provisions, Contingent Liabilities
and Contingent Assets,” (“IAS 37”) provisions are recognized
when E.ON has a legal or constructive present obligation
towards third parties as a result of a past event, it is probable
that E.ON will be required to settle the obligation, and a reliable
estimate can be made of the amount of the obligation. The
provision is recognized at the expected settlement amount.
Long-term obligations are reported as liabilities at the present
value of their expected settlement amounts if the interest
rate effect (the difference between present value and repay-
ment amount) resulting from discounting is material; future
cost increases that are foreseeable and likely to occur on the
balance sheet date must also be included in the measurement.
Long-term obligations are generally discounted at the market
interest rate applicable as of the respective balance sheet
date. The accretion amounts and the effects of changes in inter-
est rates are generally presented as part of financial results.
A reimbursement related to the provision that is virtually cer-
tain to be collected is capitalized as a separate asset. No
offsetting within provisions is permitted. Advance payments
remitted are deducted from the provisions.

Obligations arising from the decommissioning or dismantling
of property, plant and equipment are recognized during the
period of their occurrence at their discounted settlement
amounts, provided that the obligation can be reliably estimated.
The carrying amounts of the respective property, plant and
equipment are increased by the same amounts. In subsequent
periods, capitalized asset retirement costs are amortized
over the expected remaining useful lives of the assets, and the
provision is accreted to its present value on an annual basis.

Changes in estimates arise in particular from deviations from
original cost estimates, from changes to the maturity or
the scope of the relevant obligation, and also as a result of the
regular adjustment of the discount rate to current market
interest rates. The adjustment of provisions for the decommis-
sioning and restoration of property, plant and equipment
for changes to estimates is generally recognized by way of
a corresponding adjustment to these assets, with no effect on
income. If the property, plant and equipment to be decom-
missioned have already been fully depreciated, changes to
estimates are recognized within the income statement.

The estimates for non-contractual nuclear decommissioning
provisions are based on external studies and are continuously
updated.

Under Swedish law, E.ON Sverige AB (“E.ON Sverige”) is
required to pay fees to the Swedish Nuclear Waste Fund. The
Swedish Radiation Safety Authority proposes the fees for
the disposal of high-level radioactive waste and nuclear power
plant decommissioning based on the amount of electricity
produced at that particular nuclear power plant. The proposed
fees are then submitted to government offices for approval.
Upon approval, E.ON Sverige makes the corresponding pay-
ments. In accordance with IFRIC 5, “Rights to Interests Arising
from Decommissioning, Restoration and Environmental
Rehabilitation Funds,” (“IFRIC 5”) payments into the Swedish
national fund for nuclear waste management are offset by a
right of reimbursement of asset retirement obligations, which
is recognized as an asset under “Other assets.” In accordance
with customary procedure in Sweden, the provisions are dis-
counted at the real interest rate.

No provisions are established for contingent asset retirement
obligations where the type, scope, timing and associated
probabilities can not be determined reliably.

If onerous contracts exist in which the unavoidable costs of
meeting a contractual obligation exceed the economic benefits
expected to be received under the contract, provisions are
established for losses from open transactions. Such provisions

119

which the deductible temporary differences and unused
tax losses can be utilized. Each of the corporate entities is
assessed individually with regard to the probability of a
positive tax result in future years. Any existing history of losses
is incorporated in this assessment. For those tax assets to
which these assumptions do not apply, the value of the deferred
tax assets is reduced.

Deferred tax liabilities caused by temporary differences asso-
ciated with investments in affiliated and associated compa-
nies are recognized unless the timing of the reversal of such
temporary differences can be controlled within the Group
and it is probable that, owing to this control, the differences
will in fact not be reversed in the foreseeable future.

Deferred tax assets and liabilities are measured using the
enacted or substantively enacted tax rates expected to be
applicable for taxable income in the years in which temporary
differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of changes in tax
rates and tax law is generally recognized in income. Equity
is adjusted for deferred taxes that had previously been recog-
nized directly in equity.

Deferred taxes for domestic companies are calculated using
a total tax rate of 30 percent (2013: 30 percent). This tax rate
includes, in addition to the 15 percent (2013: 15 percent)
corporate income tax, the solidarity surcharge of 5.5 percent
on the corporate tax (2013: 5.5 percent on the corporate tax),
and the average trade tax rate of 14 percent (2013: 14 percent)
applicable to the E.ON Group. Foreign subsidiaries use appli-
cable national tax rates.

Note 10 shows the major temporary differences so recorded.

are recognized at the lower of the excess obligation upon
performance under the contract and any potential penalties
or compensation arising in the event of non-performance.
Obligations under an open contractual relationship are deter-
mined from a customer perspective.

Contingent liabilities are possible obligations toward third
parties arising from past events that are not wholly within the
control of the entity, or else present obligations toward third
parties arising from past events in which an outflow of
resources embodying economic benefits is not probable or
where the amount of the obligation cannot be measured
with sufficient reliability. Contingent liabilities are generally
not recognized on the balance sheet.

Where necessary, provisions for restructuring costs are recog-
nized at the present value of the future outflows of resources.
Provisions are recognized once a detailed restructuring plan
has been decided on by management and publicly announced
or communicated to the employees or their representatives.
Only those expenses that are directly attributable to the restruc-
turing measures are used in measuring the amount of the
provision. Expenses associated with the future operation are
not taken into consideration.

Income Taxes
Under IAS 12, “Income Taxes,” (“IAS 12”) deferred taxes are recog-
nized on temporary differences arising between the carrying
amounts of assets and liabilities on the balance sheet and their
tax bases (balance sheet liability method). Deferred tax assets
and liabilities are recognized for temporary differences that
will result in taxable or deductible amounts when taxable
income is calculated for future periods, unless those differences
are the result of the initial recognition of an asset or liability
in a transaction other than a business combination that, at the
time of the transaction, affects neither accounting nor taxable
profit/loss. Uncertain tax positions are recognized at their most
likely value. IAS 12 further requires that deferred tax assets
be recognized for unused tax loss carry forwards and unused
tax credits. Deferred tax assets are recognized to the extent
that it is probable that taxable profit will be available against

120 Notes

Consolidated Statements of Cash Flows
In accordance with IAS 7, “Cash Flow Statements,” (“IAS 7”)
the Consolidated Statements of Cash Flows are classified
by operating, investing and financing activities. Cash flows
from discontinued operations are reported separately in
the Consolidated Statement of Cash Flows. Interest received
and paid, income taxes paid and refunded, as well as dividends
received are classified as operating cash flows, whereas divi-
dends paid are classified as financing cash flows. The purchase
and sale prices respectively paid (received) in acquisitions
and disposals of companies are reported net of any cash and
cash equivalents acquired (disposed of) under investing activ-
ities if the respective acquisition or disposal results in a gain
or loss of control. In the case of acquisitions and disposals that
do not, respectively, result in a gain or loss of control, the cor-
responding cash flows are reported under financing activities.
The impact on cash and cash equivalents of valuation changes
due to exchange rate fluctuations is disclosed separately.

Segment Information
In accordance with the so-called management approach
required by IFRS 8, “Operating Segments,” (“IFRS 8”) the inter-
nal reporting organization used by management for making
decisions on operating matters is used to identify the Com-
pany’s reportable segments. The internal performance mea-
sure used as the segment result is earnings before interest,
taxes, depreciation and amortization (“EBITDA”) adjusted to
exclude certain extraordinary effects (see Note 33).

Structure of the Consolidated Balance Sheets and
Statements of Income
In accordance with IAS 1, “Presentation of Financial Statements,”
(“IAS 1”) the Consolidated Balance Sheets have been prepared
using a classified balance sheet structure. Assets that will be
realized within twelve months of the reporting date, as well
as liabilities that are due to be settled within one year of the
reporting date are generally classified as current.

Capital Structure Management
E.ON uses the debt factor as the measure for the manage-
ment of its capital structure. The debt factor is defined as the
ratio of economic net debt to our EBITDA. Economic net debt
supplements net financial position with provisions for pen-
sions and asset retirement obligations.

Based on our EBITDA in 2014 of €8,337 million (2013: €9,191 mil-
lion) and economic net debt of €33,394 million as of the bal-
ance sheet date (2013: €32,218 million), the debt factor is 4.0
(2013: 3.5).

Critical Accounting Estimates and Assumptions;
Critical Judgments in the Application of Accounting
Policies
The preparation of the Consolidated Financial Statements
requires management to make estimates and assumptions
that may influence the application of accounting principles
within the Group and affect the measurement and presenta-
tion of reported figures. Estimates are based on past experience
and on additional knowledge obtained on transactions to
be reported. Actual amounts may differ from these estimates.

The estimates and underlying assumptions are reviewed on
an ongoing basis. Adjustments to accounting estimates are
recognized in the period in which the estimate is revised if the
change affects only that period, or in the period of the revision
and subsequent periods if both current and future periods
are affected.

Estimates are particularly necessary for the measurement of
the value of property, plant and equipment and of intangible
assets, especially in connection with purchase price allocations,
the recognition and measurement of deferred tax assets,
the accounting treatment of provisions for pensions and mis-
cellaneous provisions, for impairment testing in accordance
with IAS 36, as well as for the determination of the fair value
of certain financial instruments.

The Consolidated Statements of Income are classified using
the nature of expense method, which is also applied for
internal purposes.

The underlying principles used for estimates in each of the
relevant topics are outlined in the respective sections.

121

(2) New Standards and Interpretations

Standards and Interpretations Applicable in 2014

standard is mandatory for fiscal years beginning on or after
January 1, 2014. Because of the initial application of IFRS 11,
two companies are now accounted for as joint operations.

The International Accounting Standards Board (“IASB”) and
the IFRS Interpretations Committee (“IFRS IC”) have issued
the following standards and interpretations that have been
adopted by the EU into European law and whose application
is mandatory in the reporting period from January 1, 2014,
through December 31, 2014:

IFRS 10, “Consolidated Financial Statements”
In May 2011, the IASB published the new standard IFRS 10,
“Consolidated Financial Statements” (“IFRS 10”). This IFRS
replaces the existing guidance on control and consolidation
contained in IAS 27, “Consolidated and Separate Financial
Statements,” and in SIC-12, “Consolidation—Special Purpose
Entities” (“SIC-12”). IFRS 10 establishes a uniform definition
of the term “control,” with greater emphasis on the principle of
substance over form than in the past. The new standard can
thus give rise to an altered scope of consolidation. The stan-
dard has been adopted by the EU into European law. IFRS 10
shall in all cases be applied retrospectively for fiscal years
beginning on or after January 1, 2014. Because of the initial
application of IFRS 10, one company is no longer consolidated.

IFRS 11, “Joint Arrangements”
In May 2011, the IASB published the new standard IFRS 11. It
replaces IAS 31, “Interests in Joint Ventures,” (“IAS 31”) and SIC-13,
“Jointly Controlled Entities—Non-Monetary Contributions
by Venturers” (“SIC-13”). The standard will in future distinguish
between two types of joint arrangements: joint ventures
and joint operations. The provisions of IFRS 10 form the basis
for determining joint control. If after assessing the particular
facts a joint venture is determined to exist, it must be
accounted for using the equity method. In the case of a joint
operation, however, the attributable shares of assets and lia-
bilities, and of expenses and income, must be assigned directly
to the equity holder. The standard has been adopted by the
EU into European law. Consequently, application of the new

IFRS 12, “Disclosure of Interests in Other Entities”
IFRS 12 regulates the disclosure requirements for both IFRS 10
and IFRS 11, and was published by the IASB together with
these standards on May 12, 2011. The standard requires entities
to publish information on the nature of their holdings, the
associated risks and the effects on their net assets, financial
position and results of operations. This information is required
for subsidiaries, joint arrangements, associates and unconsoli-
dated structured units (special-purpose entities). Important
discretionary decisions and assumptions, including any changes
to them, that were made in determining control according to
IFRS 10 and for joint arrangements must also be disclosed. The
new standard has been adopted by the EU into European law
and its application is mandatory for fiscal years beginning on
or after January 1, 2014.

IAS 27, “Separate Financial Statements”
In May 2011, the IASB published a new version of IAS 27. The
new version now contains regulations for IFRS separate
financial statements only (previously consolidated and sepa-
rate financial statements). The standard has been adopted
by the EU into European law. Consequently, application of the
new standard is mandatory for fiscal years beginning on or
after January 1, 2014. The new standard will have no impact on
E.ON’s Consolidated Financial Statements.

IAS 28, “Investments in Associates and Joint Ventures”
In May 2011, the IASB published a new version of IAS 28. The
new version now stipulates that in planned partial disposals
of interests in associates and joint ventures, the portion to be
sold must, if it meets the criteria of IFRS 5, “Non-Current Assets

122 Notes

Held For Sale and Discontinued Operations,” (“IFRS 5”) be
classified as a non-current asset held for sale. The remaining
investment shall continue to be accounted for using the equity
method. If the sale results in the creation of an associate, that
associate will be accounted for using the equity method. Other-
wise, the rules of IFRS 9 must be followed. The new IAS 28
incorporates the provisions of SIC-13 and removes currently
existing exceptions from the scope of IAS 28. The new version
of the standard has been adopted by the EU into European
law. Its application shall thus be mandatory for fiscal years
beginning on or after January 1, 2014. It will not result in mate-
rial changes for E.ON affecting its Consolidated Financial
Statements.

If IFRS 10 and IFRS 11 were not being applied, and if instead
IAS 27 and IAS 28 were still being applied in the versions effec-
tive through December 31, 2013, assets and liabilities would
be €190 million higher and net income would be €8 million
lower as of December 31, 2014.

Amendments to IFRS 10, IFRS 11 and IFRS 12—
Consolidated Financial Statements, Joint Arrange-
ments and Disclosure of Interests in Other Entities:
Transition Guidance
In June 2012, the IASB published “Consolidated Financial
Statements, Joint Arrangements and Disclosure of Interests in
Other Entities: Transition Guidance (Amendments to IFRS 10,
IFRS 11 and IFRS 12).” The amendments clarify the transition
guidance contained in IFRS 10, and they also provide additional
relief for the first-time adoption of all three standards. Adjusted
comparative information need now be provided only for the
immediately preceding comparative period. For unconsolidated
structured entities, the requirement to present comparative
information for periods before IFRS 12 is first applied is removed
altogether. The amendments shall be applied for fiscal years
beginning on or after January 1, 2014, which coincides with the
effective date of IFRS 10, IFRS 11 and IFRS 12. The amendments
have been adopted by the EU into European law. There will
be no impact on E.ON’s Consolidated Financial Statements.

Amendments to IFRS 10, IFRS 12 and IAS 27—
Investment Entities
In October 2012, the IASB published “Investment Entities
(Amendments to IFRS 10, IFRS 12 and IAS 27).” The amendments
include a definition of an investment entity and remove them
from the scope of IFRS 10. Instead of consolidating their
investments in subsidiaries, parent investment entities shall
now be required to recognize and measure them at fair value
through profit or loss in accordance with IFRS 9 or IAS 39. In
this context, new disclosure requirements have also arisen
in IFRS 12, “Disclosure of Interests in Other Entities” and IAS 27,
“Separate Financial Statements.” In November 2013, the EU
adopted these amendments into European law. The amend-
ments shall be applied for fiscal years beginning on or after
January 1, 2014. Earlier application is permitted. They will
result in no material changes for E.ON affecting its Consoli-
dated Financial Statements.

Amendments to IAS 32, “Financial Instruments:
Presentation,” and to IFRS 7, “Financial Instruments:
Disclosures”
In December 2011, the IASB published amendments to IAS 32
and IFRS 7. Entities shall in future be required to disclose
gross and net amounts from offsetting, as well as amounts for
existing rights of set-off that do not meet the accounting
criteria for offsetting. In addition, inconsistencies in applying
the existing rules for offsetting financial assets and financial
liabilities have been eliminated. The amendments mentioned
have different first-time application dates. The amendments
to IAS 32 shall be applied for fiscal years beginning on or after
January 1, 2014. The amendments have been adopted by the EU
into European law. The initial application of the amendments
to IAS 32 resulted in a balance sheet expansion of about
€1.4 billion as an effect of the switch to gross presentation.

123

The effects of the initial application of IFRS 10, IFRS 11 and
IAS 32 on the Consolidated Balance Sheet and on the Consol-
idated Statement of Income are shown in the following tables:

Newly Adopted Standards—Consolidated Balance Sheet as of January 1, 2013

€ in millions

Total assets

Companies accounted for under the equity method

Non-current liabilities
Financial liabilities
Miscellaneous provisions

Current liabilities

Financial liabilities
Trade payables and other operating liabilities

Equity

Before
initial
application
of new
standards

140,426
4,067

65,027
21,937
23,656

36,579
4,007
25,935

38,820

IFRS 10
adjustment

IFRS 11
adjustment

-344
155

-332
-318
–

-174
-6
-164

162

746
-83

1,426
147
1,279

-822
-381
-418

142

After initial
application
of IFRS 10,
IFRS 11

140,828
4,139

After initial
application
of new
standards

IAS 32
adjustment

1,457
–

142,285
4,139

66,121
21,766
24,935

35,583
3,620
25,353

39,124

975
–
–

482
–
482

–

67,096
21,766
24,935

36,065
3,620
25,835

39,124

Newly Adopted Standards—Consolidated Balance Sheet as of December 31, 2013

€ in millions

Total assets

Companies accounted for under the equity method

Non-current liabilities
Financial liabilities
Miscellaneous provisions

Current liabilities

Financial liabilities
Trade payables and other operating liabilities

Equity

IFRS 10, IFRS 11—Consolidated Income Statement

€ in millions

Sales

Income from continuing operations

Net income

Before
initial
application
of new
standards

130,725
5,624

61,054
18,237
23,470

33,286
5,023
21,866

36,385

IFRS 10
adjustment

IFRS 11
adjustment

-323
114

-321
-318
–

-110
–
-103

108

710
-86

1,397
132
1,265

-832
-350
-475

145

After initial
application
of IFRS 10,
IFRS 11

131,112
5,652

62,130
18,051
24,735

32,344
4,673
21,288

36,638

IAS 32
adjustment

1,218
–

1,049
–
–

169
–
169

–

After initial
application
of new
standards

132,330
5,652

63,179
18,051
24,735

32,513
4,673
21,457

36,638

Before
IFRS 10, IFRS 11
adjustments

124,214

2,503

2,510

2013 1

IFRS 10
adjustment

IFRS 11
adjustment

-17

-54

After
IFRS 10, IFRS 11
adjustments

124,202

2,452

2,459

1The figures presented here do not include the reclassifications to discontinued operations (see also Note 4).

124 Notes

Amendments to IAS 36—
Recoverable Amount Disclosures
In May 2013, the IASB published “Recoverable Amount Dis-
closures for Non-Financial Assets (Amendments to IAS 36).”
IAS 36 was amended to clarify that disclosures are required
only for impaired assets or for cash-generating units. The new
standard has been adopted by the EU into European law and
its application is mandatory for fiscal years beginning on
or after January 1, 2014. E.ON had already elected to apply the
amendments early in the 2013 fiscal year.

Amendments to IAS 39—Novation of Derivatives
and Continuation of Hedge Accounting
In June 2013, the IASB published narrow-scope amendments to
IAS 39, “Financial Instruments: Recognition and Measurement.”
The amendments provide that the requirement to discontinue
hedge accounting shall not apply to the novation of a hedging
instrument to a central counterparty if such novation is required
by laws or regulations and if specific conditions are met. A
hedging relationship is not discontinued if the novation is
required by a new legal or regulatory requirement or by a newly
enacted law. In addition, the novation must result in the origi-
nal counterparty being replaced by a central counterparty or
by an entity acting as a counterparty (“clearing counterparty”).
The only contractual changes permitted are those necessary
to effect counterparty replacement. These include changes in
the contractual collateral requirements, changes in rights to
offset receivables and payables and changes in the charges
levied. The amendments have been adopted by the EU into
European law and their application is mandatory for fiscal years
beginning on or after January 1, 2014. The amendments have
no impact on E.ON’s Consolidated Financial Statements.

Changes in Accounting Policies
In line with developments in accounting practice, E.ON has
adjusted the presentation of cash contributions to plan assets.
Such cash deposits are now presented as investing cash flow.
Accordingly, outflows of €97 million were reclassified from the
previous year’s operating cash flow to investing cash flow.
The effects relate especially to the United Kingdom regional

unit. This accounting change leads to a consistent presentation
of the funding of plan assets with regard to cash funding and
other forms of funding.

An altered construal of IFRIC 12 led to the gross presentation
of certain specific issues. To improve comparability, the 2013
figures for sales and cost of materials were both adjusted by
€73 million.

Standards and Interpretations Not Yet Applicable
in 2014

The IASB and the IFRS IC have issued the following additional
standards and interpretations. These standards and inter-
pretations are not being applied by E.ON in the 2014 fiscal year
because adoption by the EU remains outstanding at this time
for some of them, or because their application is not yet
mandatory.

IFRS 9, “Financial Instruments”
In November 2009 and October 2010, respectively, the IASB
published phases of the new standard IFRS 9, “Financial Instru-
ments” (“IFRS 9”). Under IFRS 9, all financial instruments cur-
rently within the scope of IAS 39 will henceforth generally be
subdivided into only two classifications: financial instruments
measured at amortized cost and financial instruments mea-
sured at fair value. As part of the revisions of July 24, 2014, an
additional measurement category has been introduced for
debt instruments. These may in future be measured at fair
value through other comprehensive income as long as the
prerequisites for the corresponding business model and the
contractual cash flows are met. The application of IFRS 9 is
to be mandatory for fiscal years beginning on or after January 1,
2018. Earlier application is permitted. In that context, the
IASB also issued a discussion paper on further rules for macro
hedge accounting, separately from IFRS 9. The standard has
not yet been adopted by the EU into European law. E.ON is
currently evaluating the impact on its Consolidated Financial
Statements.

125

IFRS 14, “Regulatory Deferral Accounts”
In January 2014, the IASB published the new standard IFRS 14,
“Regulatory Deferral Accounts” (“IFRS 14”). IFRS 14 gives an
entity the option to apply this standard in its first IFRS finan-
cial statements if it conducts rate-regulated activities and
recognizes regulatory deferrals under the accounting policies
it had previously applied. The intention is to allow entities
that are subject to rate regulation to avoid having to make
changes to accounting policies relating to regulatory deferrals.
IFRS 14 shall be applied for fiscal years beginning on or after
January 1, 2016. The standard has not yet been adopted by
the EU into European law. The introduction of the standard has
no impact on the E.ON Consolidated Financial Statements as
they are already prepared in accordance with IFRS.

IFRS 15, “Revenue from Contracts with Customers”
In May 2014, the IASB published the new standard IFRS 15,
“Revenue from Contracts with Customers” (“IFRS 15”). IFRS 15
will replace IAS 11, “Construction Contracts,” IAS 18, “Revenue,”
IFRIC 13, “Customer Loyalty Programmes,” IFRIC 15, “Agreements
for the Construction of Real Estate,” IFRIC 18, “Transfers of
Assets from Customers,” and SIC-31, “Revenue—Barter Trans-
actions Involving Advertising Services.” The standard defines
when revenues should be recognized and in what amount.
According to IFRS 15, revenues should be recognized in the
amount that reflects the consideration expected for the per-
formance obligations being undertaken. The standard shall be
applied for fiscal years beginning on or after January 1, 2017.
Earlier application is permitted. The standard has not yet been
adopted by the EU into European law. E.ON is currently evalu-
ating the impact on its Consolidated Financial Statements.

Omnibus Standard to Amend Multiple International
Financial Reporting Standards (2010-2012 Cycle)
In the context of its Annual Improvements Process, the IASB
revises existing standards. In December 2013, the IASB pub-
lished a corresponding omnibus standard. It contains changes
to IFRS and their associated Bases for Conclusions. The revi-
sions affect the standards IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16,
IAS 24 and IAS 38. The EU has adopted these amendments
into European law. Consequently, they shall be applied for fiscal
years beginning on or after February 1, 2015. They will result
in no material changes for E.ON affecting its Consolidated
Financial Statements.

Omnibus Standard to Amend Multiple International
Financial Reporting Standards (2011-2013 Cycle)
In the context of its Annual Improvements Process, the IASB
revises existing standards. In December 2013, the IASB pub-
lished a corresponding omnibus standard. It contains changes
to IFRS and their associated Bases for Conclusions. The revi-
sions affect the standards IFRS 1, IFRS 3, IFRS 13 and IAS 40.
The EU has adopted these amendments into European law.
Consequently, they shall be applied for fiscal years beginning
on or after January 1, 2015. They will result in no material changes
for E.ON affecting its Consolidated Financial Statements.

Omnibus Standard to Amend Multiple International
Financial Reporting Standards (2012-2014 Cycle)
In the context of its Annual Improvements Process, the IASB
revises existing standards. In September 2014, the IASB pub-
lished a corresponding omnibus standard. It contains changes
to IFRS and their associated Bases for Conclusions. The revi-
sions affect the standards IFRS 5, IFRS 7, IAS 19 and IAS 34.
The amendments shall be applied for fiscal years beginning
on or after January 1, 2016. Earlier application is permitted.
They will result in no material changes for E.ON affecting its
Consolidated Financial Statements.

Amendments to IFRS 10, IFRS 12 and IAS 28—
Investment Entities: Applying the Consolidation
Exception
In December 2014, the IASB published amendments to IFRS 10,
IFRS 12 and IAS 28. The amendments are designed to clarify
that entities that are both investment entities and parent
entities are exempt from presenting consolidated financial
statements even if they are themselves subsidiaries. They
further clarify that subsidiaries providing investment-related
services that are themselves investment entities shall be
measured at fair value. For non-investment entities, they clarify
that such entities should account for an investment entity
using the equity method. The amendments shall be applied for
fiscal years beginning on or after January 1, 2016. Earlier appli-
cation is permitted. They have not yet been adopted by the
EU into European law. E.ON anticipates that the amendments
will have no impact on its Consolidated Financial Statements.

126 Notes

Amendments to IAS 1, “Presentation of Financial
Statements”
In December 2014, the IASB published amendments to IAS 1.
They are primarily intended to clarify disclosures of material
information, and of the aggregation and disaggregation of line
items on the balance sheet and in the statement of compre-
hensive income. The amendments further provide that an
entity’s share of the other comprehensive income of companies
accounted for using the equity method shall be presented
in its statement of comprehensive income. The amendments
shall be applied for fiscal years beginning on or after January 1,
2016. Earlier application is permitted. They have not yet been
adopted by the EU into European law. E.ON anticipates that
the amendments will have no impact on its Consolidated
Financial Statements.

Amendments to IFRS 10 and IAS 28—Sale or
Contribution of Assets between an Investor and
its Associate or Joint Venture
In September 2014, the IASB published amendments to IFRS 10
and IAS 28. The amendments provide that unrealized gains
from transactions between an investor and an associated com-
pany or a joint venture should be recognized in full by the
investor if the transaction involves a business. In transactions
where only assets are being sold, the recognition of gains
shall be partial. The amendments shall be applied for fiscal
years beginning on or after January 1, 2016. Earlier application
is permitted. They have not yet been adopted by the EU into
European law. E.ON anticipates that the amendments will have
no impact on its Consolidated Financial Statements.

Amendments to IFRS 11—Accounting for Acquisitions
of Interests in Joint Operations
In May 2014, the IASB published amendments to IFRS 11. The
standard thus amended requires the acquirer of an interest
in a joint operation in which the activity constitutes a business
as defined in IFRS 3 to apply all of the principles relating to
business combinations accounting in IFRS 3 and other stan-
dards, as long as those principles are not in conflict with the
guidance in IFRS 11. Accordingly, the relevant information
specified in those standards is to be disclosed. These amend-
ments necessitated consequential amendments to IFRS 1,
“First-time Adoption of International Financial Reporting

Standards,” to have the exemption extended to business
combinations. Accordingly, it now also includes past acquisi-
tions of interests in joint operations in which the activity of
the joint operation constitutes a business. The amendments
shall be applied for fiscal years beginning on or after January 1,
2016. Earlier application is permitted. They have not yet been
adopted by the EU into European law. E.ON anticipates that
the amendments will have no impact on its Consolidated Finan-
cial Statements.

Amendments to IAS 16 and IAS 38—Clarification
of Acceptable Methods of Depreciation and
Amortization
In May 2014, the IASB published amendments to IAS 16 and
IAS 38. The amendments contain further guidance on which
methods can be used to depreciate property, plant and equip-
ment, and to amortize intangible assets. In particular, they
clarify that the use of a revenue-based method arising from
an activity that includes the use of an asset does not provide
an appropriate representation of its consumption. Within the
context of IAS 38, however, this presumption can be rebutted
in certain limited circumstances. The amendments shall be
applied for fiscal years beginning on or after January 1, 2016.
Earlier application is permitted. They have not yet been
adopted by the EU into European law. E.ON anticipates that
the amendments will have no impact on its Consolidated
Financial Statements.

Amendments to IAS 16 and IAS 41—Agriculture:
Bearer Plants
In June 2014, the IASB published amendments to IAS 16 and
IAS 41. They provide that bearer plants shall be accounted for
in the same way as property, plant and equipment, in accor-
dance with IAS 16. IAS 41 shall continue to apply for the pro-
duce they bear. As a result of the amendments, bearer plants
will in future no longer be measured at fair value less esti-
mated costs to sell, but rather in accordance with IAS 16,
using either a cost model or a revaluation model. The amend-
ments shall be applied for fiscal years beginning on or after
January 1, 2016. Earlier application is permitted. They have not
yet been adopted by the EU into European law. The amend-
ments will have no impact on E.ON’s Consolidated Financial
Statements.

127

the separate financial statements of an investor. The amend-
ments shall be applied retrospectively in accordance with
IAS 8, “Accounting Policies, Changes in Accounting Estimates
and Errors,” for fiscal years beginning on or after January 1,
2016. Earlier application is permitted. They have not yet been
adopted by the EU into European law. The amendments will
have no impact on E.ON’s Consolidated Financial Statements.

IFRIC 21, “Levies”
In May 2013, the IASB published IFRIC 21, “Levies,” (“IFRIC 21”)
interpreting IAS 37, which sets out criteria for the recognition
of a liability for provisions, contingent liabilities and contin-
gent assets. IFRIC 21 addresses when and how a levy that is
not within the scope of another IFRS should be recognized
as a liability. The amendments shall be applied for fiscal years
beginning on or after January 1, 2014. They have been adopted
by the EU into European law. Consequently, application of the
new amendments will be mandatory for fiscal years beginning
on or after June 17, 2014. E.ON anticipates no material impact
on its Consolidated Financial Statements.

In 2014, a total of 19 domestic and 35 foreign associated com-
panies were accounted for under the equity method (2013:
22 domestic and 37 foreign). One domestic and one foreign
company, each reported as a joint operation, were presented
pro rata (2013: 1 domestic and 1 foreign). Reflected in the
figures presented here are the retrospective change to the
scope of consolidation and the retrospective joint-operation
accounting resulting from the initial application of IFRS 10
and IFRS 11. Significant acquisitions, disposals and discontinued
operations are discussed in Note 4.

Amendments to IAS 19—Defined Benefit Plans:
Employee Contributions
In November 2013, the IASB published amendments to
IAS 19. This pronouncement amends IAS 19 in respect of the
accounting for defined benefit plans involving contributions
from employees (or third parties). If the contributions made
by employees (or third parties) to a defined benefit plan are
independent of the number of years of service, their nominal
amount can still be deducted from the service cost. But if
employee contributions vary according to the number of years
of service, the benefits must be computed and attributed by
applying the projected unit credit method. The amendments
shall be applied for fiscal years beginning on or after July 1,
2014. Earlier application is permitted. They have been adopted
by the EU into European law. Consequently, application of the
new amendments will be mandatory for fiscal years beginning
on or after February 1, 2015. E.ON anticipates that the amend-
ments will have no material impact on its Consolidated
Financial Statements.

Amendments to IAS 27—
Equity Method in Separate Financial Statements
In August 2014, the IASB published amendments to IAS 27,
“Separate Financial Statements.” The amendments permit
the use of the equity method as an accounting option for
investments in subsidiaries, joint ventures and associates in

(3) Scope of Consolidation

The number of consolidated companies changed as follows:

Scope of Consolidation

Consolidated companies
as of January 1, 2013

Additions

Disposals/Mergers

Consolidated companies
as of December 31, 2013

Additions

Disposals/Mergers

Consolidated companies
as of December 31, 2014 1

Domestic

Foreign

Total

153

114

107

297

228

210

450

126

342

317

1This figures also includes the Spanish and Italian entities reported as discontinued
operations.

128 Notes

(4) Acquisitions, Disposals and Discontinued
Operations

Major Balance Sheet Line Items—
E.ON Spain (Summary)

Discontinued Operations and Assets Held for Sale
in 2014

E.ON in Spain
At the end of November 2014, E.ON entered into contracts with
a subsidiary of Macquarie European Infrastructure Fund IV LP
(the “Macquarie Fund”), London, United Kingdom, on the sale
of its Spanish and Portuguese activities.

The activities sold include all of E.ON’s Spanish and Portuguese
businesses, including 650,000 electricity and gas customers
and electricity distribution networks extending over a total
distance of 32,000 kilometers. In addition, the activities
include a total generation capacity of 4 GW from coal, gas,
and renewable sources in Spain and Portugal. While the
Spain regional unit is reported as a discontinued operation,
the Spanish generation businesses held in the Generation
and Renewables segments have been classified as disposal
groups as of November 31, 2014.

The agreed transaction volume for the equity and for the
assumption of liabilities and working capital positions was
€2.4 billion. The respective classification as discontinued
operations and disposal groups required that the Spanish and
Portuguese businesses be measured at the agreed purchase
price. This remeasurement produced a goodwill impairment
of approximately €0.3 billion.

The following tables show selected financial information,
including the goodwill impairment attributable to discontinued
operations, as well as major balance sheet data of the Spain
regional unit now being reported as discontinued operations:

Selected Financial Information—
E.ON Spain (Summary)

€ in millions

Sales

Other income/expenses, net

Income/Loss from continuing operations
before income taxes

Income taxes

Income/Loss from discontinued
operations, net

2014

1,085

-1,292

-207

-200

2013

1,078

-1,029

€ in millions

Intangible assets

Other assets

Total assets

Total liabilities

December 31, 2014

1,003

397

1,400

862

As of December 31, 2014, the major asset items of the activities
held as a disposal group were property, plant and equipment
(€1.1 billion), intangible assets and goodwill (€0.4 billion),
financial assets (€0.1 billion) and current assets (€0.4 billion).
The liability items consisted primarily of provisions and
liabilities of approximately €0.2 billion each. Approximately
€0.1 billion in OCI relating primarily to actuarial gains and
losses is attributable to the activities in Spain. The contracts
are expected to be finalized in the first quarter of 2015.

E.ON in Italy
As of December 31, 2014, against the backdrop of specifying
its divestment intentions, E.ON reported the Italy regional
unit as a discontinued operation, and the Italian businesses
held in its Generation and Renewables segments—except
for the wind-power activities—as disposal groups.

The non-controlling interest in Gestione Energetica Impianti
S.p.A. (“GEI”), Crema, Italy, was already sold in December 2014.
Also agreed in December 2014 was the disposal of the Italian
coal and gas generation assets to the Czech energy company
Energetický a Průmyslový Holding (“EPH”), Prague, Czech
Republic. A further contract on the sale of the solar activities
was signed with F2i SGR S.p.A., Milan, Italy, in February 2015.

As the disposal process took greater shape, it became
necessary to reexamine the measurement of the Italian busi-
nesses on the basis of the expected proceeds on disposal. This
remeasurement resulted in an impairment of approximately
€1.3 billion, of which roughly €0.1 billion was charged to
goodwill and roughly €1.2 billion to other non-current assets.

129

The following tables show selected financial information,
including the impairment of non-current assets attributable
to discontinued operations, as well as major balance sheet
data of the Italy regional unit now being reported as discon-
tinued operations:

Selected Financial Information—
E.ON Italy (Summary)

€ in millions

Sales

Other income/expenses, net

Income/Loss from continuing operations
before income taxes

Income taxes

Income/Loss from discontinued
operations, net

Major Balance Sheet Line Items—
E.ON Italy (Summary)

€ in millions

Intangible assets

Other assets

Total assets

Total liabilities

2014

1,537

-1,556

-19

-13

2013

1,745

-1,714

December 31, 2014

550

553

209

As of December 31, 2014, the major asset and liability items
of the activities held as a disposal group at the Generation
global unit were property, plant and equipment (€0.3 billion),
intangible assets (€0.1 billion) and current assets (€0.2 billion),
as well as provisions (€0.4 billion) and liabilities (€0.2 billion).

The major balance sheet items of the activities held as a dis-
posal group in the Renewables segment were property, plant
and equipment (€0.6 billion) and intangible assets (€0.5 billion).
There were no material liability items.

The disposal of the Italian coal and gas generation assets is
expected to be finalized in the second quarter of 2015.

Disposal Groups and Assets Held for Sale in 2014

Magic Valley 1 and Wildcat 1 Wind Farms
As part of its “build and sell” strategy, E.ON agreed to sell an
80-percent interest in a portfolio of two wind farms in the
United Sates, Magic Valley 1 and Wildcat 1, to Enbridge Inc.,
Toronto, Canada. The net purchase price after deduction of

liabilities was approximately €0.3 billion. The carrying amount
of the property, plant and equipment is approximately
€0.5 billion.

E.ON retains a 20-percent interest and remains the operator
of the wind farms. The transaction, which closed at the end
of December 2014, produced a €0.1 billion gain on disposal.

Erdgasversorgungsgesellschaft
Thüringen-Sachsen mbH
In late October 2014, E.ON signed a contract with First State
European Diversified Infrastructure Fund (“EDIF”), an invest-
ment fund managed by First State Investments, Luxembourg,
for the sale of its 50-percent stake in Erdgas versorgungs-
gesellschaft Thüringen-Sachsen mbH (“EVG”), Erfurt, Germany.

The equity investment was held in the Germany regional unit
with a carrying amount of approximately €0.1 billion. The
transaction, which also closed in the fourth quarter of 2014,
resulted in a gain on disposal of approximately €0.1 billion.

E.ON in Lithuania
In May 2014, E.ON signed contracts for and finalized the sale of
the activities in Lithuania. The shareholdings had a total carry-
ing amount of approximately €0.1 billion and were reported in
the Global Commodities global unit. The transaction resulted
in a minimal gain on disposal.

Swedish Thermal Power Plants
In the first quarter of 2014, E.ON signed contracts with Norway’s
Solør Bioenergi on the sale of various micro thermal power
plants at a purchase price of €0.1 billion. The plants had a total
carrying amount of approximately €0.1 billion and were
reported in the Sweden regional unit. The transaction closed
in the second quarter of 2014 with a minimal gain on disposal.

City of Prague Municipal Utility
In December 2013, E.ON signed contracts with the City of
Prague on the disposal of a majority stake in Pražská plyná-
renská. The purchase price is €0.2 billion. Held in the Czechia
regional unit, the major items on this entity’s balance sheet
as of December 31, 2013, were property, plant and equipment
(€0.2 billion), inventories and other assets (€0.2 billion) and
liabilities (€0.2 billion). The transaction closed in March 2014
with a gain of approximately €0.1 billion on disposal.

130 Notes

Rødsand Offshore Wind Farm
In November 2013, E.ON agreed to sell an 80-percent stake in
its 207-megawatt Rødsand 2 offshore wind farm to the Danish
utility SEAS-NVE. The transaction values 100 percent of the
wind farm at DKK 3.5 billion (€0.5 billion). At closing, the wind
farm company assumed a loan of DKK 2.1 billion (€0.3 billion).
SEAS-NVE will purchase 80 percent of the equity for DKK 1.1 bil-
lion (€0.2 billion). In total, E.ON will receive DKK 3.2 billion
(€0.4 billion) from this transaction. The entity was reported in
the Renewables global unit as of December 31, 2013, and its
balance sheet consisted primarily of property, plant and equip-
ment (€0.4 billion), other assets (€0.3 billion) and liabilities
(€0.4 billion). The transaction closed on January 10, 2014, with
a gain on disposal of approximately €0.1 billion.

Disposal Groups and Assets Held for Sale in 2013

Equity Investment in NAFTA
In December 2013, E.ON signed a contract on the disposal of
its minority stake in NAFTA a.s., Bratislava, Slovakia. The owner-
ship interest was reported within the Global Commodities
global unit with a carrying amount of approximately €0.1 bil-
lion. The transaction closed in the fourth quarter of 2013 with
minimal gain on disposal.

Ferngas Nordbayern
In December 2013, E.ON signed a contract for and finalized the
sale of its 100-percent stake in Ferngas Nordbayern GmbH
to the investment company First State, Luxembourg. As part
of the transaction, E.ON repurchased certain shareholdings
partly held by Ferngas Nordbayern GmbH. The major balance
sheet items of this unit, which was held by the Germany regional
unit, were property, plant and equipment (€0.1 billion) and
receivables (€0.1 billion), as well as provisions and liabilities
of €0.1 billion each. The disposal resulted in a minimal gain.

E.ON Mitte
In December 2013, E.ON signed a contract for and finalized the
sale of its 73.3-percent stake in E.ON Mitte AG to a consor-
tium of municipal co-owners. As part of the transaction, E.ON
repurchased E.ON Mitte Vertrieb GmbH and certain other
shareholdings held by E.ON Mitte AG. The major balance sheet
items of this unit, which was held by the Germany regional
unit, were property, plant and equipment (€0.6 billion) and
receivables (€0.1 billion), as well as provisions and liabilities
of €0.3 billion each. The disposal resulted in a minimal gain.

E.ON in Finland
In June 2013, E.ON signed a contract for the sale of its Finnish
electricity activities. The purchase price was €0.1 billion. The
transaction closed in the third quarter of 2013. The activities
were reported as a disposal group since the second quarter
of 2013. Held by the Sweden regional unit, the disposal group’s
major asset items were property, plant and equipment (€0.1 bil-
lion) and financial assets (€0.1 billion). The liabilities side of the
balance sheet consisted primarily of liabilities (€0.1 billion).

E.ON Westfalen Weser
At the end of June 2013, E.ON signed a contract for and finalized
the sale of its 62.8-percent stake in E.ON Westfalen Weser
to a consortium of municipal co-owners with cash proceeds
of approximately €0.2 billion. As part of the transaction,
E.ON bought back the retail subsidiary E.ON Westfalen Weser
Vertrieb GmbH and certain other shareholdings held by E.ON
Westfalen Weser AG. The major balance sheet items of this unit,
which was held by the Germany regional unit, were property,
plant and equipment (€0.8 billion) and receivables (€0.3 billion),
as well as provisions (€0.3 billion) and liabilities (€0.3 billion).
The disposal resulted in a loss of about €0.2 billion.

E.ON Földgáz Trade/E.ON Földgáz Storage
In March 2013, E.ON signed a contract with the Hungarian
energy company MVM Hungarian Electricity Ltd. for the sale of
its 100-percent stakes in E.ON Földgáz Trade and E.ON Földgáz
Storage. The purchase price for both companies, including the
assumption of approximately €0.5 billion in debt, is approxi-
mately €0.9 billion. Impairment charges totaling €0.2 billion
were recognized on certain assets within the units, and on
the attributable goodwill, in the first quarter of 2013. The trans-
action closed in the third quarter of 2013 with a loss on dis-
posal of €0.1 billion, including realization of foreign currency
translation effects (€0.1 billion). Held by the Global Commodi-
ties global unit, the major asset items of the two units were
intangible assets and property, plant and equipment (€0.7 billion),
as well as current assets (€0.5 billion). The liabilities side of
the balance sheet consisted primarily of liabilities (€0.2 billion)
and provisions (€0.1 billion).

E.ON Thüringer Energie
At the end of December 2012, E.ON signed a contract for the
sale of a 43-percent interest in E.ON Thüringer Energie to
a municipal consortium, Kommunaler Energiezweckverband
Thüringen (“KET”). The transaction involved a volume of approx-
imately €0.9 billion, which includes the assumption by KET
of shareholder loans totaling approximately €0.4 billion. This
transaction closed in March 2013. The sale of the 10-percent
stake in E.ON Thüringer Energie still held by E.ON after the
initial transaction became final in the second quarter of 2013.
In total, the disposal resulted in a €0.5 billion gain. The equity

131

investment was held by the Germany regional unit and had
been reported as a disposal group since the end of 2012.
The major carrying amounts related to property, plant and
equipment (€1.1 billion) and financial assets (€0.2 billion),
while provisions and liabilities amounted to €0.2 billion and
€0.4 billion, respectively.

Slovenský Plynárenský Priemysel (SPP)
In January 2013, E.ON signed a contract with the Czech energy
company Energetický a Průmyslový Holding, Prague, Czech
Republic, for the sale of its interest in the Slovakian energy
company Slovenský Plynárenský Priemysel a.s. (“SPP”), which
is held indirectly in E.ON’s Global Commodities global unit.
The purchase price for the 24.5-percent indirect holding is
€1.2 billion, including final purchase price adjustments. The
stake with a carrying amount of €1.2 billion had to be reported
as an asset held for sale as of December 31, 2012, because
commercial agreement on the sale had been substantially
reached by the end of 2012. The attributable goodwill of approx-
imately €0.2 billion was written down to zero in 2012. A total
of €0.5 billion in impairment charges was recognized on the
equity investment in the 2012 fiscal year. When the transac-
tion closed in January 2013, amounts in other comprehensive
income from foreign exchange translation differences were
realized as a gain of €0.3 billion.

E.ON Energy from Waste
In December 2012, E.ON signed agreements to form a joint
venture with EQT Infrastructure II, an infrastructure fund
belonging to EQT, a Sweden-based private equity group. The
joint venture, in which EQT Infrastructure II owns 51 percent
and E.ON 49 percent, acquired 100 percent of the equity of
E.ON Energy from Waste, Helmstedt, Germany. The Energy from
Waste group was held by the Germany regional unit, and had
been reported as a disposal group since the end of 2012. With
a carrying amount of approximately €0.9 billion, the major asset
item was property, plant and equipment. Additional signifi-
cant balance sheet items included current assets (€0.3 billion),
provisions (€0.2 billion), liabilities (€0.2 billion) and deferred
taxes (€0.1 billion). The transaction closed in March 2013 with
a minimal gain on disposal.

E.ON Wasserkraft
At the beginning of December 2012, E.ON and Austria’s Ver-
bund AG, Vienna, Austria, signed contracts on acquisitions and
disposals of equity investments. Under the agreement, E.ON
will acquire Verbund’s share of Enerjisa Enerji A.Ş. (“Enerjisa”),

Istanbul, Turkey, giving it stakes in Enerjisa’s power genera-
tion capacity and projects and in its power distribution business
in Turkey. The agreement also involved financing commit-
ments for investment projects amounting to approximately
€0.5 billion. In return, E.ON will transfer to Verbund its stakes
in certain hydroelectric power plants in Bavaria. Verbund will
become the sole owner of this hydro capacity, located pre-
dominantly on the Inn River in Bavaria, in which it is already
a joint owner. Verbund will acquire primarily E.ON’s stakes
in Österreichisch-Bayerische Wasserkraft AG, Donaukraftwerk
Jochenstein AG and Grenzkraftwerke GmbH, as well as the
Nussdorf, Ering-Frauenstein and Egglfing-Obernberg run-of-river
hydroelectric plants on the Inn, along with subscription rights
in the Zemm-Ziller Hydroelectric Group. Altogether, these
stakes and power plants represent 351 MW of attributable
generating capacity. Relevant balance sheet line items of the
disposal group, which is held in the Renewables global unit,
are property, plant and equipment and financial assets (€0.1 bil-
lion), as well as other assets (€0.2 billion). The disposal group
has been reported as such since the end of 2012. The transac-
tion closed at the end of April 2013 with a gain of approximately
€1.0 billion on disposal.

Equity Investment in Jihomoravská Plynárenská
E.ON has sold its minority stake in Jihomoravská plynárenská,
a.s. (“JMP”), Brno, Czech Republic. The purchase price is
approximately €0.2 billion. The ownership interest was reported
within the Czechia regional unit as an asset held for sale as
of December 31, 2012, with a carrying amount of approximately
€0.2 billion. The transaction closed in January 2013 with a
minor book gain on the disposal.

London Array Wind Farm
The operators of the U.K. wind farm London Array are required
by regulatory order to cede components of the wind farm’s
grid link to the U.K. regulator. 30 percent of this wind farm is
attributable to E.ON. The carrying amount of the property, plant
and equipment to be transferred is approximately €0.1 billion.
The transfer took place in the third quarter of 2013 with a minor
gain on disposal.

Wind Farm Disposals
E.ON signed contracts for the sale of a 50-percent stake in
each of three wind farms in North America in October 2012
for a total of $0.5 billion in proceeds. The wind farms were
held by the Renewables global unit. The transaction closed in
March 2013 with a small gain on disposal. The wind farms
were reported as disposal groups since the fourth quarter of
2012. Material balance sheet line items related to property,
plant and equipment (€0.4 billion); there were no significant
items on the liabilities side.

132 Notes

(5) Revenues

Revenues are generally recognized upon delivery of goods to
purchasers or customers, or upon completion of services ren-
dered. Delivery is considered to have occurred when the risks
and rewards associated with ownership have been transferred
to the buyer, compensation has been contractually established
and collection of the resulting receivable is probable.

Revenues are generated primarily from the sale of electricity and
gas to industrial and commercial customers, to retail custom-
ers and to wholesale markets. Additional revenue is earned
from the distribution of gas and electricity and from deliveries
of steam, heat and water.

Revenues from the sale of electricity and gas to industrial and
commercial customers, to retail customers and to wholesale
markets are recognized when earned on the basis of a contrac-
tual arrangement with the customer or purchaser; they reflect
the value of the volume supplied, including an estimated value
of the volume supplied to customers between the date of their
last meter reading and period-end.

At €112 billion, revenues in 2014 were 7 percent lower than
in the previous year. The decrease is primarily the result of
divestitures in the Germany regional unit.

The classification of revenues by segment is presented in
Note 33.

(6) Own Work Capitalized

Own work capitalized amounted to €345 million in 2014
(2013: €364 million) and resulted primarily from engineering
services in networks and from new construction projects.

(7) Other Operating Income and Expenses

The table below provides details of other operating income
for the periods indicated:

Other Operating Income

€ in millions

Income from exchange rate differences

Gain on derivative financial instruments

Gain on disposal of equity investments
and securities

Write-ups of non-current assets

Gain on disposal of property,
plant and equipment

Miscellaneous

Total

2014

2,437

6,210

867

111

1,287

2013

3,765

2,355

2,422

482

127

1,530

10,966

10,681

In general, E.ON employs derivatives to hedge commodity
risks as well as currency and interest risks.

Income from exchange rate differences consisted primarily of
realized gains from currency derivatives in the amount of
€1,746 million (2013: €2,531 million) and of effects from foreign
currency translation on the balance sheet date in the amount
of €331 million (2013: €516 million).

Gains and losses on derivative financial instruments relate to
gains from fair value measurement and to realized gains from
derivatives under IAS 39, with the exception of income effects
from interest rate derivatives. In this respect there was a signif-
icant impact from commodity derivatives in particular, which
in 2014 resulted predominantly from the marking to market
of electricity, emissions and gas derivatives. In 2013, there were
effects resulting especially from emissions, electricity, gas
and coal derivatives.

133

The gain on the disposal of equity investments and securities
consisted primarily of the following: €144 million on the dives-
titure of Erdgasversorgung Thüringen, €128 million on the
disposal of Rødsand 2, €69 million on the sale of the stake in
Gasum Oy and €90 million on the sale of the City of Prague
Municipal Utility. In 2013, there were gains of €996 million on
the disposal of the hydroelectric power plants in Bavaria
to Austria’s Verbund AG and €521 million on the sale of E.ON
Thüringer Energie AG. Gains were realized on the sale of
securities in the amount of €203 million (2013: €186 million).

In addition to reversals of provisions, miscellaneous other
operating income in 2014 included the proceeds of passing
on of charges for personnel and services, as well as govern-
ment grants.

The following table provides details of other operating
expenses for the periods indicated:

Other Operating Expenses

€ in millions

Loss from exchange rate differences

Loss on derivative financial instruments

Taxes other than income taxes

Loss on disposal of equity investments
and securities

Miscellaneous

Total

2014

2,937

5,305

351

3,211

11,834

2013

3,755

1,620

364

449

3,714

9,902

Losses from exchange rate differences consisted primarily of
realized losses from currency derivatives in the amount of
€1,620 million (2013: €2,240 million) and of effects from foreign
currency translation on the balance sheet date in the amount
of €741 million (2013: €218 million).

The loss on disposal of equity investments and securities
amounted to €30 million. In 2013, the loss totaled €449 million
and was in large part attributable to the disposal of E.ON
Westfalen Weser AG, which produced a loss of €230 million.

Miscellaneous other operating expenses included concession
payments in the amount of €243 million (2013: €473 million),
expenses for external consulting, audit and non-audit services
in the amount of €222 million (2013: €240 million), advertis-
ing and marketing expenses in the amount of €139 million
(2013: €169 million), and write-downs of trade receivables in
the amount of €313 million (2013: €411 million). Additionally
reported in this item are services rendered by third parties,
IT expenditures and insurance premiums.

Other operating expenses from exploration activity totaled
€49 million (2013: €71 million).

(8) Cost of Materials

The principal components of expenses for raw materials and
supplies and for purchased goods are the purchase of gas and
electricity and of fuels for electricity generation. Network usage
charges are also included in this line item. Expenses for pur-
chased services consist primarily of maintenance costs. The
cost of materials decreased by €8 billion to €98 billion (2013:
€106 billion). The primary causes were a reduced expense for
gas purchases and divestitures in the Germany regional unit.

Cost of Materials

€ in millions

Expenses for raw materials and supplies
and for purchased goods

Expenses for purchased services

Total

2014

2013

95,575

2,921

98,496

102,603

3,116

105,719

134 Notes

(9) Financial Results

The following table provides details of financial results for
the periods indicated:

Financial Results

€ in millions

Income from companies in which equity
investments are held

Impairment charges/reversals on other
financial assets

Income from equity investments

Income from securities, interest
and similar income 1
Available for sale
Loans and receivables
Held for trading
Other interest income

Interest and similar expenses 1

Amortized cost
Held for trading
Other interest expenses

Net interest income

2014

2013

107

-91

882
300
170
41
371

-2,692
-1,070
-46
-1,576

-1,810

-88

580
214
179
32
155

-2,572
-1,168
-30
-1,374

-1,992

Financial results

-1,794

-1,992

1The measurement categories are described in detail in Note 1.

The improvement in financial results is primarily attributable
to interest effects from the reversal of provisions.

(10) Income Taxes

The following table provides details of income taxes, including
deferred taxes, for the periods indicated:

Income Taxes

€ in millions

Domestic income taxes

Foreign income taxes

Other income taxes

Current taxes

Domestic

Foreign

Deferred taxes

Total income taxes

2014

-349

302

–

-47

654

-31

623

576

2013

884

513

–

1,397

-754

-679

718

Other interest income consists predominantly of income from
lease receivables (finance leases) and income from the rever-
sal of provisions for previous years. Other interest expenses
include the accretion of provisions for asset retirement obliga-
tions in the amount of €882 million (2013: €878 million). Also
contained in this item is the net interest cost from provisions
for pensions in the amount of €93 million (2013: €146 million).
A total of €136 million (2013: €0 million) in penalties was paid
in 2014 in connection with early bond repayments.

Other interest expenses further include the effects on financial
results of carryforwards of counterparty obligations to acquire
additional shares in already consolidated subsidiaries and
of non-controlling interests in fully consolidated partnerships
with legal structures that give their shareholders a statutory
right of withdrawal combined with a compensation claim,
which according to IAS 32 must be recognized as liabilities
and amounted to €22 million (2013: €120 million).

Interest expense was reduced by capitalized interest on debt
totaling €162 million (2013: €200 million).

Realized gains and losses from interest rate swaps are shown
net on the face of the income statement.

The tax expense in 2014 amounted to €0.6 billion, compared
with €0.7 billion in 2013. In spite of the pre-tax loss there is
still a tax expense, and hence a negative effective tax rate of
24 percent (2013: 23 percent). Certain impairment losses were
not deductible for tax purposes and consequently provided no
tax relief in 2014. The tax expense additionally includes major
non-recurring effects from changes in the value of deferred
tax assets and tax income for previous years. In 2013, higher
tax-exempt book gains reduced the effective tax rate.

Of the amount reported as current taxes, -€712 million is
attributable to previous years (2013: €636 million).

135

Deferred taxes reported for 2014 resulted from changes in tem-
porary differences, which totaled €259 million (2013: €222 mil-
lion), loss carryforwards of €310 million (2013: -€906 million)
and tax credits amounting to €54 million (2013: €5 million).

German legislation providing for fiscal measures to accompany
the introduction of the European Company and amending
other fiscal provisions (“SE-Steuergesetz” or “SEStEG”), which
came into effect on December 13, 2006, altered the regula-
tions on corporate tax credits arising from the corporate impu-
tation system (“Anrechnungs verfahren”), which had existed
until 2001. The change de-links the corporate tax credit from
distributions of dividends. Instead, after December 31, 2006,
an unconditional claim for payment of the credit in ten equal
annual installments from 2008 through 2017 has been estab-
lished. The resulting receivable is included in income tax assets
and amounted to €78 million in 2014 (2013: €89 million).

Deferred tax liabilities were not recognized for subsidiaries
and associated companies to the extent that the Company can
control the reversal effect and that it is therefore probable
that temporary differences will not be reversed in the fore-
seeable future. Accordingly, deferred tax liabilities were not
recognized for temporary differences of €261 million (2013:
€1,320 million) at subsidiaries and associated companies, as
E.ON is able to control the timing of their reversal and the
temporary difference will not reverse in the foreseeable future.

Changes in foreign tax rates resulted in a tax expense of
€5 million in total (2013: tax income of €71 million).

Income taxes relating to discontinued operations (see also
Note 4) are reported in the income statement under “Income
from discontinued operations, net.” They amounted to tax
income of €13 million (2013: €11 million).

Income tax liabilities consist primarily of income taxes for the
respective current year and for prior-year periods that have
not yet been definitively examined by the tax authorities.

The prior-year figures have been similarly adjusted to include
discontinued operations, and also to reflect the initial appli-
cation of IFRS 10 and IFRS 11 (see also Note 2).

As of December 31, 2014, €27 million (2013: €12 million) in
deferred tax liabilities were recognized for the differences
between net assets and the tax bases of subsidiaries and
associated companies (the so-called “outside basis differences”).

The differences between the 2014 base income tax rate of
30 percent (2013: 30 percent) applicable in Germany and the
effective tax rate are reconciled as follows:

Reconciliation to Effective Income Taxes/Tax Rate

Expected corporate income tax

Credit for dividend distributions

Foreign tax rate differentials

Changes in tax rate/tax law

Tax effects on tax-free income

Tax effects on equity accounting

Other 1

Effective income taxes/tax rate

2014

2013

€ in millions

in % € in millions

-714

-3

-86

-171

1,457

576

30.0

0.1

3.6

-0.2

7.2

-3.7

-61.2

-24.2

924

-137

-71

-711

636

718

in %

30.0

0.2

-4.4

-2.3

-23.1

2.3

20.6

23.3

1Including €1,234 million in changes in the value of deferred tax assets (2013: €189 million) and -€649 million in taxes for previous years (2013: €144 million).

136 Notes

Deferred tax assets and liabilities as of December 31, 2014, and
December 31, 2013, break down as shown in the following table:

Deferred Tax Assets and Liabilities

€ in millions

Intangible assets

Property, plant and equipment

Financial assets

Inventories

Receivables

Provisions

Liabilities

Net operating loss carryforwards

Tax credits

Other

Subtotal

Changes in value

Deferred tax assets

Intangible assets

Property, plant and equipment

Financial assets

Inventories

Receivables

Provisions

Liabilities

Other

Deferred tax liabilities

Net deferred tax assets/liabilities (-)

December 31

2014

2013

294

264

159

707

7,810

5,698

2,488

651

313

685

182

708

6,673

3,087

3,187

523

18,109

15,409

-1,688

16,421

-957

14,452

1,007

4,280

521

105

5,708

2,255

1,180

913

1,638

5,310

275

145

3,425

1,859

794

1,585

15,969

15,031

452

-579

Net deferred taxes break down as follows based on the timing
of their reversal:

Net Deferred Tax Assets and Liabilities

€ in millions

Deferred tax assets

Changes in value

Net deferred tax assets

Deferred tax liabilities

Net deferred tax assets/liabilities (-)

December 31, 2014

December 31, 2013

Current

Non-current

Current

Non-current

1,787

-11

1,776

-1,841

-65

6,379

-1,983

4,396

-3,879

517

2,790

-14

2,776

-2,328

448

5,492

-943

4,549

-5,576

-1,027

137

Of the deferred taxes reported, a total of -€1,789 million was
charged directly to equity in 2014 (2013: -€605 million charge).
A further €45 million in current taxes (2013: €43 million) was
also recognized directly in equity.

Income taxes recognized in other comprehensive income for
the years 2014 and 2013 break down as follows:

Income Taxes on Components of Other Comprehensive Income

€ in millions

Cash flow hedges

Available-for-sale securities

Currency translation adjustments

Remeasurements of defined benefit plans

Companies accounted for under the equity method

Total

Before
income
taxes

-718

-262

-2,530

-3,299

-53

-6,862

2014

Income
taxes

211

-48

942

1,185

After
income
taxes

-507

-310

-2,453

-2,357

-50

-5,677

Before
income
taxes

112

368

-1,296

504

-984

-1,296

2013

Income
taxes

-25

-22

-261

-281

After
income
taxes

394

-1,318

243

-983

-1,577

The declared tax loss carryforwards as of the dates indicated
are as follows:

Tax Loss Carryforwards

€ in millions

Domestic tax loss carryforwards

Foreign tax loss carryforwards

Total

December 31

2014

7,730

8,604

2013

4,178

7,642

16,334

11,820

Since January 1, 2004, domestic tax loss carryforwards can
only be offset against a maximum of 60 percent of taxable
income, subject to a full offset against the first €1 million.
This minimum corporate taxation also applies to trade tax
loss carry forwards. The domestic tax loss carryforwards result
from adding corporate tax loss carryforwards amounting to
€2,958 million (2013: €1,746 million) and trade tax loss carry-
forwards amounting to €4,772 million (2013: €2,432 million).

The foreign tax loss carryforwards consist of corporate tax loss
carryforwards amounting to €5,521 million (2013: €4,252 million)
and local income taxes amounting to €3,083 million (2013:
€3,390 million). Of the foreign tax loss carryforwards, a sig-
nificant portion relates to previous years. No deferred taxes
have been recognized on a total of €2,760 million (2013:
€1,853 million) in tax loss carryforwards that, for the most
part, do not expire.

As of December 31, 2014, and December 31, 2013, E.ON reported
deferred tax assets for companies that incurred losses in the
current or the prior-year period that exceed the deferred tax
liabilities by €3,050 million and €2,786 million, respectively.
The basis for recognizing deferred tax assets is an estimate
by management of the extent to which it is probable that
the respective companies will achieve taxable earnings in the
future against which the as yet unused tax losses, tax credits
and deductible temporary differences can be offset.

138 Notes

Information on the changes in the number of treasury shares
held by E.ON SE can be found in Note 19.

Since the 2003 fiscal year, employees in the United Kingdom
have the opportunity to purchase E.ON shares through an
employee stock purchase program and to acquire additional
bonus shares. The expense of issuing these matching shares
amounted to €1.9 million in 2014 (2013: €1.9 million) and is also
recorded under personnel costs as part of “Wages and salaries.”

Long-Term Variable Compensation

Members of the Board of Management of E.ON SE and certain
executives of the E.ON Group receive share-based payment
as part of their voluntary long-term variable compensation.
The purpose of such compensation is to reward their contri-
bution to E.ON’s growth and to further the long-term success
of the Company. This variable compensation component,
comprising a long-term incentive effect along with a certain
element of risk, provides for a sensible linking of the interests
of shareholders and management.

The following discussion includes reports on the E.ON Share
Performance Plan, which was introduced in 2006 and modified
in 2010 and 2011 for subsequent tranches, and on the E.ON
Share Matching Plan introduced in 2013.

E.ON Share Performance Plan

From 2006 through 2012, E.ON granted virtual shares (“Per-
formance Rights”) under the E.ON Share Performance Plan.

Beginning in 2011, grants of Performance Rights required
possession of a specified number of E.ON SE shares, which had
to be held through the end of the term or until the rights were
fully exercised. At the end of its term, each Performance Right
is entitled to a cash payout linked to the final E.ON share price
established at that time and—under the modified terms of
the plan, beginning with the sixth tranche—to the degree to
which specific cor porate financial measures are achieved over
the term. The benchmark is the return on capital, expressed as
the return on average capital employed (“ROACE”) compared
with the weighted-average cost of capital (“WACC”), averaged
over the unchanged four-year term of the new tranche. At the
same time, starting with the sixth tranche, the maximum payout
was further limited to 2.5 times the target value originally set.

(11) Personnel-Related Information

Personnel Costs

The following table provides details of personnel costs for
the periods indicated:

Personnel Costs

€ in millions

Wages and salaries

Social security contributions

Pension costs and other employee
benefits

Pension costs

Total

2014

3,212

506

403
397

4,121

2013

3,622

572

410
402

4,604

Personnel costs fell by €483 million to €4,121 million
(2013: €4,604 million). The decline was due primarily to the
effects that occurred in the context of the E.ON 2.0 restruc-
turing program and to the respective sales and disposals of
interests in E.ON Mitte, E.ON Thüringer Energie, E.ON Energy
from Waste and E.ON Westfalen Weser in 2013.

Share-Based Payment

The expenses for share-based payment in 2014 (employee stock
purchase programs in Germany and the United Kingdom, the
E. ON Share Performance Plan and the E.ON Share Matching
Plan) amounted to €50.8 million (2013: €18.1 million).

Employee Stock Purchase Program

In 2014, as in 2013, employees at German E.ON Group companies
had the opportunity to purchase E.ON shares at preferential
terms under a voluntary employee stock purchase program.
Employees receive a matching contribution from the Com-
pany of €400 at present on the shares they purchased by the
November 20, 2014, cut-off date. Based on the stock package
being bought, the employee contribution in 2014 ranged from
a minimum of €500 to a maximum of €2,000. On that date, the
relevant market price of E.ON stock was €12.80. Depending on
the number of shares purchased, the preferential prices paid
ranged between €7.09 and €10.66 (2013: between €6.83 and
€11.16). The lock-up period for the shares ends on December 31,
2016. The expense of €4.6 million (2013: €6.3 million) arising
from granting the preferential prices is recognized as personnel
costs and included in the “Wages and salaries” line item.

As part of the voluntary employee stock purchase program,
E.ON distributed a total of 919,064 treasury shares (0.05 percent
of the capital stock of E.ON SE) in Germany in 2014 (2013:
1,057,296 treasury shares, or 0.05 percent of the capital stock
of E. ON SE).

139

60-day average prices are used to determine both the target
value at issuance and the final price in order to mitigate the
effects of incidental, short-lived price movements. The plan
contains adjustment mechanisms to eliminate the effects of
interim corporate actions.

The following are the base parameters of the two tranches
active in 2014 under these plan terms:

E.ON Share Performance Rights

Date of issuance

Term

Target value at issuance

Maximum amount paid

7th tranche

6th tranche

Jan. 1, 2012

Jan. 1, 2011

4 years

€17.10

€42.75

4 years

€22.43

€56.08

The 60-day average of the E.ON share price as of the balance
sheet date is used to measure the fair value of the rights. The
provision for the plan as of the balance sheet date is €31.8 mil-
lion (2013: €19.7 million). The expense for the sixth and sev-
enth tranches in the 2014 fiscal year was €12.4 million (2013:
€1.1 million).

E.ON Share Matching Plan

Since 2013, E.ON has been granting virtual shares under the
E.ON Share Matching Plan. At the end of its four-year term,
each virtual share is entitled to a cash payout linked to the
final E.ON share price established at that time. The calculation
inputs for this long-term variable compensation package are
equity deferral, basis matching and performance matching.

The equity deferral is determined by multiplying an arithmetic
portion of the beneficiary’s contractually agreed target bonus
by the beneficiary’s total target achievement percentage from
the previous year. The equity deferral is converted into virtual
shares and vests immediately. In the United States, the grant-
ing of virtual shares in the amount of the equity deferral is
generally scheduled to begin by 2015. Beneficiaries are addi-
tionally granted virtual shares in the context of basis matching
and performance matching. For members of the Board of
Management of E.ON SE, the proportion of basis matching to
the equity deferral is determined at the discretion of the Super-
visory Board; for all other beneficiaries it is 2:1. The perfor-
mance-matching target value at allocation is equal to that for
basis matching in terms of amount. Performance matching will
result in a payout only on achievement of a minimum perfor-
mance, based on ROACE, as specified at the beginning of the
term by the Board of Management and the Supervisory Board.

The amount paid out under performance matching is equal
to the target value at issuance if the E.ON share price is main-
tained at the end of the term and if the average ROACE per-
formance matches a target value specified by the Board of
Management and the Supervisory Board. If the average ROACE
during the four-year term exceeded the target value, the
number of virtual shares granted under performance matching
increases up to a maximum of twice the target value. If the
average ROACE falls short of the target value, the number of
virtual shares, and thus also the amount paid out, decreases.
In the event of a defined underperformance, there is no pay-
out under performance matching.

A payout generally will not take place until after the end of
the four-year term. This applies even if the beneficiary retires
beforehand, or if the beneficiary’s contract is terminated on
operational grounds or expires during the term. A payout before
the end of the term will take place in the event of a change
of control or on the death of the beneficiary. If the service or
employment relationship ends before the end of the term for
reasons within the control of the beneficiary, all virtual shares—
except for those that resulted from the equity deferral—expire.

At the end of the term, the sum of the dividends paid to an
ordinary shareholder during the term is added to each virtual
share. The maximum amount to be paid out to a plan partici-
pant is limited to twice the sum of the equity deferral, the basis
matching and the target value under performance matching.

60-day average prices are used to determine both the target
value at issuance and the final price in order to mitigate the
effects of incidental, short-lived price movements.

The plan contains adjustment mechanisms to eliminate the
effect of events such as interim corporate actions.

The following are the base parameters of the tranches active
in 2014 under these plan terms:

E.ON Share Matching Virtual Shares

Date of issuance

Term

Target value at issuance

2nd tranche

1st tranche

Apr. 1, 2014

Apr. 1, 2013

4 years

€13.65

4 years

€13.31

140 Notes

The 60-day average of the E.ON share price as of the balance
sheet date is used to measure the fair value of the virtual
shares. In addition, the change in ROACE is simulated for per-
formance matching. The provision for the first and second
tranches of the E.ON Share Matching Plan as of the balance
sheet date is €40.6 million (2013: €8.8 million). The expense
for the first and second tranches amounted to €31.9 million
in the 2014 fiscal year (2013: €9.1 million).

Employees

During 2014, E.ON employed an average of 59,301 persons
(2013: 64,381), not including an average of 1,321 apprentices
(2013: 1,563).

The breakdown by segment is shown in the table below:

Employees 1

Generation

Renewables

Global Commodities

Exploration & Production

Germany

Other EU Countries 2

Non-EU Countries

Group Management/Other 3

Total

2014

8,262

1,699

1,264

234

12,000

25,108

5,232

5,502

59,301

2013

9,292

1,768

1,695

207

13,939

26,671

5,043

5,766

64,381

1Figures do not include board members, managing directors, or apprentices.
2Not including the Spanish and Italian entities reported as discontinued
operations.
3Includes E.ON Business Services.

(12) Other Information

German Corporate Governance Code

The fees for financial statement audits concern the audit of
the Consolidated Financial Statements and the legally man-
dated financial statements of E.ON SE and its affiliates.

On December 15, 2014, the Board of Management and the
Supervisory Board of E.ON SE made a declaration of compliance
pursuant to Section 161 of the German Stock Corporation Act
(“AktG”). The declaration has been made permanently and
publicly accessible to stockholders on the Company’s Web site
(www.eon.com).

Fees and Services of the Independent Auditor

Fees for other attestation services concern in particular the
review of the interim IFRS financial statements. Further
included in this item are project-related reviews performed
in the context of the introduction of IT and internal control
systems, due- diligence services rendered in connection with
acquisitions and divestitures, and other mandatory and vol-
untary audits. Advisory charges included in the fees for other
attestation services amounted to €2 million.

During 2014 and 2013, the following fees for services provided
by the independent auditor of the Consolidated Financial State-
ments, Pricewaterhouse Coopers (“PwC”) Aktien gesellschaft,
Wirtschafts prüfungs gesellschaft, (domestic) and by companies
in the international PwC network were recorded as expenses:

Independent Auditor Fees

€ in millions

Financial statement audits

Domestic

Other attestation services

Domestic

Tax advisory services

Domestic

Other services
Domestic

Total

Domestic

2014

2013

21
13

21
18

1
–

44
31

24
16

20
16

1
–

2
–

47
32

Fees for tax advisory services primarily include advisory
on a case-by-case basis with regard to the tax treatment of
M&A transactions, ongoing consulting related to the prepa-
ration of tax returns and the review of tax assessments, as
well as advisory on other tax-related issues, both in Germany
and abroad.

Fees for other services consist primarily of technical support
in IT and other projects.

List of Shareholdings

The list of shareholdings pursuant to Section 313 (2) HGB is
an integral part of these Notes to the Financial Statements
and is presented on pages 203 through 215.

141

(13) Earnings per Share

The computation of basic and diluted earnings per share for
the periods indicated is shown below:

Earnings per Share

€ in millions

Income/Loss from continuing operations

Less: Non-controlling interests

Income/Loss from continuing operations (attributable to shareholders of E.ON SE)

Income from discontinued operations, net

Less: Non-controlling interests

Income/Loss from discontinued operations, net (attributable to shareholders of E.ON SE)

2014

-2,955

-24

-2,979

-175

-6

-181

2013

2,361

-362

1,999

-6

Net loss/income attributable to shareholders of E.ON SE

-3,160

2,091

in €

Earnings per share (attributable to shareholders of E.ON SE)

from continuing operations

from discontinued operations

from net loss/income

Weighted-average number of shares outstanding (in millions)

-1.55

-0.09

-1.64

1.05

0.05

1.10

1,923

1,907

The initial application of IFRS 10 and IFRS 11 did not produce
a change in earnings per share.

The computation of diluted earnings per share is identical to
that of basic earnings per share because E.ON SE has issued
no potentially dilutive ordinary shares.

(14) Goodwill, Intangible Assets and
Property, Plant and Equipment

The changes in goodwill and intangible assets, and in property,
plant and equipment, are presented in the tables on the
following pages:

142 Notes

Goodwill, Intangible Assets and Property, Plant and Equipment

Acquisition and production costs

Exchange
rate
differences

Changes in
scope of
consolida-
tion

Additions

Disposals

Transfers

€ in millions

Goodwill

Marketing-related intangible assets

Customer-related intangible assets

Contract-based intangible assets

Technology-based intangible assets

Internally generated intangible assets

Intangible assets subject to amortization

Intangible assets not subject to amortization

Advance payments on intangible assets

Intangible assets

Real estate and leasehold rights

Buildings

Technical equipment, plant and machinery

Other equipment, fixtures, furniture and
office equipment

Advance payments and construction in progress

January 1,
2014

16,062

921

6,726

881

141

8,672

1,897

143

10,712

2,967

7,745

87,231

1,424

7,598

-276

–

-10

-859

-10

-876

-3

-871

-89

-502

-960

-16

-388

-3,462

–

-162

-1,330

-158

-1,649

-96

-13

-1,758

-189

-623

–

115

161

1,723

135

2,019

-11,113

2,072

-27

-139

2,412

4,660

–

-158

-19

-30

-28

-235

-2,070

-2

-2,307

-18

-87

-584

-65

-47

-801

Property, plant and equipment

106,965

-1,955

-12,091

Changes in Goodwill and in Other Reversals and Impairment Charges by Segment
from January 1, 2014

€ in millions

Net carrying amount of good-
will as of January 1, 2014

Changes resulting from acqui-
sitions and disposals

Impairment charges

Other changes 1

Net carrying amount of good-
will as of December 31, 2014

Growth rate (in %) 2

Cost of capital (in %) 2

Other non-current assets 3

Impairment

Reversals

Genera-
tion

Renew-
ables 5

Global
Commodi-
ties

Explora-
tion &
Production

Germany

Other EU
Countries

Russia 4

4,294

1,846

1,064

1,835

826

1,434

1,367

–

-37

–

-91

-57

–

-27

-10

–

-200

4,321

1,698

1,064

1,808

816

1,248

0.0

6.5

0.0–2.0

5.6–6.1

-4,249

-170

1.5

5.8

-93

205

1.5

7.4

-372

–

-24

–

-47

–

-510

857

3.5

15.0

-23

–

December
31,
2014

12,324

591

4,657

740

155

6,145

1,454

223

7,822

2,690

6,674

79,543

1,410

6,441

96,758

E.ON
Group

12,666

-128

-730

11,812

–

-4,978

257

-1

–

-48

2,897

-2,995

-20

Group
Manage-
ment/
Consolida-
tion

–

1Other changes include restructuring, transfers and exchange rate differences, as well as reclassifications to assets held for sale. Also included is the goodwill impairment of discontinued
operations.
2Presented here are growth rates and cost of capital for selected cash-generating units whose respective goodwill is material when compared with the carrying amount of all goodwill.
3Other non-current assets consist of intangible assets and of property, plant and equipment.
4Growth rate and cost of capital before taxes, in local currency.
5The Renewables segment consists of the two cash-generating units EC&R and Hydro. Their net carrying amounts of goodwill as of December 31, 2014, were €1,292 million and €406 million,
respectively.

143

Accumulated depreciation

Net carrying
amounts

Additions

Disposals

Transfers

Impairment

Reversals

December 31,
2014

–

157

213

–

279

231

338

–

-18

-6

-5

-128

–

-102

-1

–

-103

-62

-11

-176

-35

-133

-3,621

-5

-1,008

-4,802

–

203

–

226

–

-512

-2

-342

-1,615

-571

-81

-2,611

-307

-22

-2,940

-411

-4,082

-48,870

-1,037

-1,085

-55,485

11,812

249

3,042

169

3,534

1,147

201

4,882

2,279

2,592

30,673

373

5,356

41,273

Changes in
scope of
consolida-
tion

3,011

-1

147

687

118

952

–

954

519

January 1,
2014

Exchange
rate
differences

-3,396

-1

-614

-2,199

-652

-75

-3,541

-512

-11

-4,064

-386

-4,520

-50,832

-1,008

-136

-56,882

–

181

-2

195

-2

191

159

398

596

–

-39

-212

-74

-25

-350

–

-350

-7

-172

7,893

-2,944

8,469

-107

–

-3,230

Changes in Goodwill and in Other Reversals and Impairment Charges by Segment
from January 1, 2014—Presentation of Other EU Countries

€ in millions

Net carrying amount of good-
will as of January 1, 2014

Changes resulting from acquisitions
and disposals

Impairment charges

Other changes 1

Net carrying amount of good-
will as of December 31, 2014

Other non-current assets 2

Impairment

Reversals

899

–

962

-11

–

Sweden

Czechia

Hungary

Other regional
units

Other EU
Countries

132

-3

–

-8

121

–

-1

–

360

–

-254

115

-36

–

1,434

–

-200

1,248

-47

1Other changes include restructuring, transfers and exchange rate differences, as well as reclassifications to assets held for sale.
2Other non-current assets consist of intangible assets and of property, plant and equipment.

Additions

Disposals

Transfers

144 Notes

Goodwill, Intangible Assets and Property, Plant and Equipment

Acquisition and production costs

€ in millions

Goodwill

Marketing-related intangible assets

Customer-related intangible assets

Contract-based intangible assets

Technology-based intangible assets

Internally generated intangible assets

Intangible assets subject to amortization

Intangible assets not subject to amortization

Advance payments on intangible assets

Intangible assets

Real estate and leasehold rights

Buildings

Technical equipment, plant and machinery

Other equipment, fixtures, furniture and
office equipment

Advance payments and construction in progress

Property, plant and equipment

January 1,
2013

16,677

1,819

6,990

872

265

9,952

1,444

11,484

3,126

8,170

89,756

1,530

10,444

113,026

Exchange
rate
differences

-291

–

-39

-329

-14

-5

-387

-56

-2

-445

-60

-221

-1,538

-19

-331

-2,169

Changes in
scope of
consolida-
tion

-324

-3

-12

-20

-32

-9

-76

-21

-1

-98

-110

-349

-7,362

-222

-59

-8,102

–

183

2,339

131

2,653

2,048

125

2,723

4,956

–

-851

-51

-66

-121

-1,089

-1,829

–

-2,918

-10

-12

-509

-123

-167

-821

Changes in Goodwill and in Other Reversals and Impairment Charges by Segment
from January 1, 2013

€ in millions

Net carrying amount of good-
will as of January 1, 2013

Changes resulting from acqui-
sitions and disposals

Impairment charges

Other changes 1

Net carrying amount of good-
will as of December 31, 2013

Growth rate (in %) 2

Cost of capital (in %) 2

Other non-current assets 3

Impairment

Reversals

Genera-
tion

Renew-
ables

Global
Commodi-
ties

Explora-
tion &
Production

Germany

Other EU
Countries

Russia 4

4,343

1,977

1,177

1,857

955

1,463

1,537

–

-49

-177

–

-111

-2

–

-22

-63

–

-66

-27

-33

–

-170

4,294

1,846

1,064

1,835

826

1,434

1,367

1.5

6.7

-798

397

1.5–2.0

5.8–6.6

-149

–

1.5

5.7

-288

1.5

7.4

-221

–

-8

–

-44

3.5

13.9

-278

–

December
31,
2013

16,062

921

6,726

881

141

8,672

1,897

143

10,712

2,967

7,745

87,231

1,424

7,598

106,965

E.ON
Group

13,309

-209

-138

-296

12,666

–

-1,786

516

–

-73

111

4,836

133

-5,012

Group
Manage-
ment/
Consolida-
tion

–

1Other changes include restructuring, transfers and exchange rate differences, as well as reclassifications to assets held for sale.
2Presented here are growth rates and cost of capital for selected cash-generating units whose respective goodwill is material when compared with the carrying amount of all goodwill.
3Other non-current assets consist of intangible assets and of property, plant and equipment.
4Growth rate and cost of capital before taxes, in local currency.

145

January 1,
2013

Exchange
rate
differences

-3,368

-2

-1,507

-2,021

-655

-175

-4,360

-185

-8

-4,553

-420

-4,576

-52,822

-1,044

-224

-59,086

-1

–

114

–

125

556

649

Accumulated depreciation

Net carrying
amounts

Additions

Disposals

Transfers

Impairment

Reversals

December 31,
2013

–

-37

-231

-94

-26

-388

–

-388

-8

-191

-2,846

-128

–

-3,173

–

851

121

1,073

–

1,074

–

386

105

535

–

-1

-2

-4

-5

-22

–

-27

-44

-104

-80

-138

–

-1

-54

–

-3

-58

-352

-3

-413

-8

-172

-1,164

-1

-28

-1,373

–

389

481

-3,396

-1

-614

-2,199

-652

-75

-3,541

-512

-11

-4,064

-386

-4,520

-50,832

-1,008

-136

-56,882

12,666

307

4,527

229

5,131

1,385

132

6,648

2,581

3,225

36,399

416

7,462

50,083

Changes in
scope of
consolida-
tion

111

–

271

4,713

150

–

5,165

Changes in Goodwill and in Other Reversals and Impairment Charges by Segment
from January 1, 2013—Presentation of Other EU Countries

€ in millions

Net carrying amount of good-
will as of January 1, 2013

Changes resulting from acquisitions
and disposals

Impairment charges

Other changes 1

Net carrying amount of good-
will as of December 31, 2013

Other non-current assets 2

Impairment

Reversals

918

–

-19

899

-8

Sweden

Czechia

Hungary

Other regional
units

Other EU
Countries

140

-3

–

-5

132

-5

–

-1

–

-9

–

-27

–

352

-27

–

360

-4

1,463

-27

-33

1,434

-44

146 Notes

that are based on historical analysis and prospective fore-
casting. The growth rates used in 2014 generally correspond
to the inflation rates in each of the countries where the
cash-generating units operate. In 2014, the inflation rate used
for the euro area was 1.5 percent (2013: 1.5 percent). For the
Renewables reporting segment, the growth rate is also adjusted
for segment- specific forecasts of changes by the respective
business units (for example, regu latory framework, reinvest-
ment cycles or growth prospects). Given their deteriorated
growth prospects, the Generation and Hydro units are for the
first time using a growth rate of 0 percent. The interest rates
used for discounting cash flows are calculated using market
data for each cash-generating unit, and as of December 31, 2014,
ranged between 4.8 and 8.3 percent after taxes (2013: 4.9 and
8.6 percent).

The principal assumptions underlying the determination by
management of recoverable amount are the respective fore-
casts for commodity market prices, future electricity and gas
prices in the wholesale and retail markets, E.ON’s investment
activity, changes in the regulatory framework, as well as for
rates of growth and the cost of capital. These assumptions are
based on market data, where publicly available.

The above discussion applies accordingly to the testing for
impairment of intangible assets and of property, plant and
equipment, and of groups of these assets. In the Generation
segment, for example, the tests are based on the respective
remaining useful life and on other plant-specific valuation
parameters. If the goodwill of a cash-generating unit is com-
bined with assets or groups of assets for impairment testing,
the assets must be tested first.

Goodwill and Non-Current Assets

Since the beginning of 2014, the Group’s biomass activities
have been reported within the Generation global unit. The
corresponding comparative prior-year figures were adjusted.

The changes in goodwill within the segments, as well as the
allocation of impairments and their reversals to each reportable
segment, are presented in the tables on pages 142 and 143.

Impairments
IFRS 3 prohibits the amortization of goodwill. Instead, good-
will is tested for impairment at least annually at the level of
the cash-generating units. Goodwill must also be tested for
impairment at the level of individual cash-generating units
between these annual tests if events or changes in circum-
stances indicate that the recoverable amount of a par ticular
cash-generating unit might be impaired. Intangible assets
subject to amortization and property, plant and equipment
must generally be tested for impairment whenever there are
particular events or external circumstances indicating the
possibility of impairment.

To perform the impairment tests, the Company first determines
the fair values less costs to sell of its cash-generating units.
In the absence of binding sales transactions or market prices
for the respective cash-generating units, fair values are calcu-
lated based on discounted cash flow methods.

Valuations are based on the medium-term corporate planning
authorized by the Board of Management. The calculations
for impairment-testing purposes are generally based on the
three planning years of the medium-term plan plus two addi-
tional detailed planning years. In certain justified exceptional
cases, a longer detailed planning period of ten years is used
as the calculation basis, especially when that is required under
a regulatory framework or specific regulatory provisions. The
cash flow assumptions extending beyond the detailed planning
period are determined using segment-specific growth rates

147

The recoverable amount primarily used to test a business for
impairment is the fair value less costs to sell; at the Russia
focus region, however, the recoverable amount is based on the
value in use. The value in use for the Russia region is deter-
mined in local currency and according to the regulatory frame-
work over a detailed planning period of 16 years. The pre-tax
cost of capital of this cash-generating unit is 15 percent
(after-tax interest rate: 12 percent; 2013: 13.9 and 11.1 percent,
respectively).

The goodwill impairment testing performed in 2014 necessi-
tated no recognition of impairment charges (2013: €27 million).
However, impairments on goodwill were recognized in con-
nection with initiated disposals in the amount of €382 million
(2013: €111 million) (see Note 4 for additional details).

The goodwill of all cash-generating units whose goodwill is
material in relation to the total carrying amount of all goodwill
shows a surplus of recoverable amounts over the respective
carrying amounts and, therefore, based on current assessment
of the economic situation, only a significant change in the
material valuation parameters would necessitate the recogni-
tion of goodwill impairment.

In the 2014 fiscal year, impairments were recognized on prop-
erty, plant and equipment in the amount of €4,802 million.
The most substantial individual issue in terms of amount, at
€990 million, relates to two nuclear generation units in Sweden,
which were written down in the fourth quarter to a recoverable
amount of €22 million. The primary reasons for this charge
were lower expected power sales, the additional investment
needed to fulfill government-mandated safety specifications
for long-term operation and the associated review of the poten-
tial useful life of the units. Further material impairment charges
were recognized at the Generation global unit in the United
Kingdom, of which the largest in terms of amount related
to two conventional power plants. These were written down
by €441 million and €392 million, respectively, to recoverable
amounts of €651 million and €0 million. The main reason for
this impairment was the reduction of market spreads. In addi-
tion, a Swedish thermal power plant was fully written down
by an amount of €320 million because it is expected that the

facility will be rendered economically inoperable as a conse-
quence of environmental specifications. Moreover, conventional
generation capacity was written down by €1.2 billion in the
context of the divestment process in Italy (see also Note 4).

E.ON has made the general assumption in 2014 that the
market will not return to an equilibrium free from regulatory
elements. Appropriate compensation elements were taken
into account for the first time.

Impairments on intangible assets amounted to €176 million
in 2014. Of this amount, €102 million was attributable to the
Renewables segment.

Reversals of impairments recognized in previous years
amounted to €257 million in 2014, of which €203 million was
attributable to emission rights.

In the 2013 fiscal year, impairments were recognized on prop-
erty, plant and equipment in the amount of €1,373 million.
The most substantial individual issue in terms of amount, at
€176 million, related to a power plant in Russia, which was
written down to a recoverable amount of €250 million in the
third quarter of 2013 because of a changed regulatory frame-
work. The recoverable amount was the value in use. The other
impairment charges on property, plant and equipment related
to a variety of specific issues and were primarily attributable
to conventional power plants at the Generation global unit
(€798 million), Russia (a further €102 million), and the Renew-
ables global unit (€94 million).

Impairments on intangible assets totaled €413 million in 2013.
Of this amount, €206 million was attributable to emission
rights in the Global Commodities segment, which were written
down to fair values less costs to sell of €242 million in line
with the market price on the reporting date. Additional impair-
ment losses of €144 million had to be recognized in the
Exploration & Production segment.

148 Notes

Because impairments were recognized on a number of items
of property, plant and equipment in previous years, and
particularly on generation assets, the assets involved were
particularly sensitive in subsequent years to future changes
in the principal assumptions used to determine their recover-
able amounts.

Recoverable amounts were determined for virtually all gen-
eration assets as part of the impairment tests. In specific
cases in 2013, this also led to reversals of €397 million in total,
which were mainly attributable to power plants in Spain,
Italy, the Netherlands and Germany, and resulted primarily from
changes in forecasts for electricity prices and fuel costs.
Additional reversals totaling €85 million were attributable to
other segments.

Intangible Assets

In 2014, the Company recorded an amortization expense of
€350 million (2013: €388 million). Impairment charges on
intangible assets amounted to €176 million in 2014 (2013:
€413 million).

€30 million in research and development costs as defined by
IAS 38 were expensed in 2014 (2013: €42 million).

As of December 31, 2014, intangible assets from exploration
activity had carrying amounts of €299 million (2013: €352 mil-
lion). Impairment charges of €47 million (2013: €144 million)
were recognized on these intangible assets.

Property, Plant and Equipment

Borrowing costs in the amount of €162 million were capitalized
in 2014 (2013: €200 million) as part of the historical cost of
property, plant and equipment.

In 2014, the Company recorded depreciation of property,
plant and equipment in the amount of €3,230 million (2013:
€3,173 million). Impairment charges, including those relating
to the issues already mentioned, were recognized on property,
plant and equipment in the amount of €4,802 million (2013:
€1,373 million). A total of €31 million in reversals of impair-
ments on property, plant and equipment was recognized in
2014 (2013: €481 million).

Reversals of impairments on intangible assets totaled €226 mil-
lion in 2014 (2013: €35 million). Of this amount, €203 million is
attributable to price effects in carbon allowances.

In 2014 there were restrictions on disposals involving primarily
land and buildings, as well as technical equipment and
machinery, in the amount of €1,926 million (2013: €1,753 million).

Intangible assets include emission rights from different
trading systems with a carrying amount of €447 million
(2013: €626 million). The year-on-year decrease in emission
rights is primarily the result of the reclassification to discon-
tinued operations, which reduced the carrying amount by
€96 million.

Certain gas storage facilities, supply networks and power
plants are utilized under finance leases and capitalized in the
E.ON Consolidated Financial Statements because the eco-
nomic ownership of the assets leased is attributable to E.ON.

The property, plant and equipment thus capitalized had the
following carrying amounts as of December 31, 2014:

E.ON as Lessee—Carrying Amounts of Capitalized Lease Assets

€ in millions

Land

Buildings

Technical equipment, plant and machinery

Other equipment, fixtures, furniture and office equipment

Net carrying amount of capitalized lease assets

December 31

2014

–

725

103

840

2013

–

815

103

922

149

Some of the leases contain price-adjustment clauses, as well
as extension and purchase options. The corresponding pay-
ment obligations under finance leases are due as shown below:

E.ON as Lessee—Payment Obligations under Finance Leases

€ in millions

Due within 1 year

Due in 1 to 5 years

Due in more than 5 years

Total

Minimum lease payments

Covered interest share

Present values

2014

100

390

1,341

1,831

2013

108

422

1,720

2,250

2014

217

745

1,018

2013

259

1,013

1,337

2014

173

596

813

2013

163

707

913

The present value of the minimum lease obligations is
reported under liabilities from leases.

E.ON as Lessor—Operating Leases

€ in millions

2014

2013

Regarding future obligations under operating leases where
economic ownership is not transferred to E.ON as the lessee,
see Note 27.

E.ON also functions in the capacity of lessor. Contingent lease
payments received totaled €57 million (2013: €58 million).
Future lease installments receivable under operating leases
are due as shown in the table at right:

Nominal value of outstanding lease
installments

Due within 1 year

Due in 1 to 5 years

Due in more than 5 years

Total

See Note 17 for information on receivables from finance leases.

(15) Companies Accounted for under the Equity
Method and Other Financial Assets

The following table shows the structure of the companies
accounted for under the equity method and the other financial
assets as of the dates indicated:

Companies Accounted for under the Equity Method and Other Financial Assets

€ in millions

E.ON Group

Associates 1

Joint ventures

E.ON Group

Associates 1

Joint ventures

December 31, 2014

December 31, 2013

Companies accounted for under the equity
method

Equity investments

Non-current securities

Total

5,009

1,573

4,781

11,363

2,423

245

–

2,668

2,586

–

2,595

5,652

1,966

4,444

12,062

2,972

246

–

3,218

2,680

–

2,692

1The associates presented as equity investments are associated companies accounted for at cost on materiality grounds.

150 Notes

Companies accounted for under the equity method consist
solely of associates and joint ventures.

The amount shown for non-current securities relates primarily
to fixed-income securities.

In 2014, impairment charges on companies accounted for
under the equity method amounted to €491 million (2013:
€468 million). This amount includes €467 million relating to a
Brazilian equity investment in the Other Non-EU Countries
segment.

The principal causes of these impairments were the invest-
ee’s operational challenges and the development of its stock
price, as well as the company’s filing for legal protection
from creditors in order to facilitate the reorganization of its
capital structure and the elevated financing costs that are
associated with such restructuring.

The recoverable amount, which was determined during the
year in terms of both value in use and fair value, is of mini-
mal significance as of December 31, 2014, in light of the bank-
ruptcy filing.

In 2013, the same equity investment had been written down
by €342 million to a recoverable amount of €472 million due
to project delays and technical aspects. The recoverable
amount had been determined based on the value in use.

Impairments on other financial assets amounted to €72 million
(2013: €84 million). The carrying amount of other financial
assets with impairment losses was €337 million as of the
end of the fiscal year (2013: €312 million).

€729 million (2013: €666 million) in non-current securities is
restricted for the fulfillment of legal insurance obligations of
Versorgungskasse Energie (“VKE”) (see Note 31).

Shares in Companies Accounted for under the
Equity Method

The carrying amounts of the immaterial associates
accounted for under the equity method totaled €1,019 mil-
lion (2013: €1,389 million), and those of the joint ventures
totaled €384 million (2013: €682 million).

Investment income generated from companies accounted for
under the equity method amounted to €301 million in 2014
(2013: €659 million).

The following table summarizes significant line items of the
aggregated statements of comprehensive income of the
associates and joint ventures that are accounted for under
the equity method:

Summarized Financial Information for Individually Non-Material Associates
and Joint Ventures Accounted for under the Equity Method

€ in millions

Proportional share of net income from continuing operations

Proportional share of other comprehensive income

Proportional share of total comprehensive income

Associates

Joint ventures

Total

2014

136

-5

131

2013

195

-3

192

2014

-478

-468

2013

-489

-89

-578

2014

-342

-337

2013

-294

-92

-386

151

The tables below show significant line items of the aggregated
balance sheets and of the aggregated statements of compre-
hensive income of the material companies accounted for
under the equity method. The material associates in the E.ON
Group are Nord Stream AG, OAO Severneftegazprom, Gasag
Berliner Gaswerke AG, AS Latvijas Gāze, Esperanto Infrastruc-
ture II S.à r.l. and Západoslovenská energetika a.s.

Material Associates—Balance Sheet Data

The Group adjustments presented are primarily attributable
to the goodwill and hidden reserves created in the context of
acquisitions, and to adjustments made in line with the
accounting policies applicable throughout the E.ON Group.

Esperanto Infra-
structure II S.à r.l.

2014

1,204

481

2013

1,549

239

Nord Stream AG

2014

6,502

664

2013

6,786

947

2014

1,025

220

2013

1,588

423

2014

1,796

443

2013

1,782

522

OAO
Severneftegazprom

Gasag Berliner
Gaswerke AG

AS Latvijas Gāze

Západoslovenská
energetika a.s.

220

185

508

495

207

413

348

1,192

1,277

273

49.0

134

326

49.0

160

5,109

1,549

15.5

240

5,280

1,958

15.5

303

432

752

25.0

188

645

1,159

25.0

290

1,121

1,178

705

36.9

260

778

36.9

287

2014

2013

2014

2013

566

242

111

607

47.2

287

-88

569

299

169

608

47.2

287

-92

703

136

163

739

-63

49.0

-31

216

669

152

187

731

-97

49.0

-48

216

€ in millions

Non-current assets

Current assets

Current liabilities
(incl. provisions)

Non-current liabilities
(incl. provisions)

Equity

Ownership interest (in %)

Proportional share of equity

Consolidation adjustments

Carrying amount of equity
investment

171

197

335

361

197

325

316

337

199

195

185

168

Material Associates—Earnings Data

Esperanto Infra-
structure II S.à r.l.

Nord Stream AG

OAO
Severneftegazprom

Gasag Berliner
Gaswerke AG

AS Latvijas Gāze

Západoslovenská
energetika a.s.

2013

868

2014

1,074

€ in millions

Sales

Net income from continuing
operations

Dividend paid out

Other comprehensive income

Total comprehensive income

Ownership interest (in %)

Proportional share of total com-
prehensive income after taxes

Proportional share of net
income after taxes

Consolidation adjustments

Equity-method earnings

2014

546

-2

-43

-45

49.0

119

190

234

353

49.0

-22

173

-1

-4

-5

-50

2013

868

119

190

234

353

15.5

-8

2014

371

–

25.0

-8

2013

549

2014

1,099

2013

1,300

2014

496

2013

574

2014

1,013

2013

1,037

122

–

122

25.0

-39

-6

–

-1

36.9

47.2

49.0

-2

-5

-4

-1

102

697

103

49.0

-8

346

535

-219

127

15.5

The material associates and joint ventures are active in diverse
areas of the gas and electricity industries. Disclosures of com-
pany names, registered offices and equity interests as required
by IFRS 12 for material joint arrangements and associates
can be found in the list of shareholdings pursuant to Section
313 (2) HGB (see Note 36).

The carrying amounts of companies accounted for under the
equity method whose shares are marketable totaled €212 mil-
lion in 2014 (2013: €778 million). The fair value of E.ON’s share
in these companies was €227 million (2013: €545 million).

Investments in associates totaling €532 million (2013:
€685 million) were restricted because they were pledged as
collateral for financing as of the balance sheet date.

There are no further material restrictions apart from those
contained in standard legal and contractual provisions.

152 Notes

Presented in the tables below are significant line items of the
aggregated balance sheets and of the aggregated income
statements of the sole joint venture accounted for under the
equity method, Enerjisa Enerji A.Ş.:

Material Joint Ventures—Balance
Sheet Data

€ in millions

Non-current assets

Current assets

Current liabilities (incl. provisions)

Non-current liabilities (incl. provisions)

Cash and cash equivalents

Current financial liabilities

Non-current financial liabilities

Equity

Ownership interest (in %)

Proportional share of equity

Consolidation adjustments

Carrying amount of equity investment

Enerjisa Enerji A.Ş.

2014

7,441

1,138

1,678

3,923

979

3,146

2,978

50.0

1,489

713

2,202

2013

6,762

1,133

1,762

3,539

292

1,071

2,813

2,594

50.0

1,297

701

1,998

Material Joint Ventures—Earnings Data

Enerjisa Enerji A.Ş.

€ in millions

Sales

Net income from continuing operations

Write-downs (and reversals)

Interest income/expense

Income taxes

Dividend paid out

Other comprehensive income

Total comprehensive income

Ownership interest (in %)

Proportional share of total comprehensive
income after taxes

Proportional share of net income
after taxes

Consolidation adjustments

Equity-method earnings

2014

3,880

-57

-27

-272

-17

–

-54

50.0

-27

-29

-16

-45

2013

2,261

-158

-72

-106

-12

–

-147

50.0

-73

-79

-58

153

Raw materials, goods purchased for resale and finished
products are generally valued at average cost.

Write-downs totaled €101 million in 2014 (2013: €82 million).
Reversals of write-downs amounted to €11 million in 2014
(2013: €11 million).

No inventories have been pledged as collateral.

December 31, 2014

December 31, 2013

Current

Non-current

Current

Non-current

1,333

1,376

11,800

10,199

2,312

24,311

25,687

602

2,931

3,533

–

3,517

430

3,947

7,480

1,559

1,654

14,257

4,154

2,663

21,074

22,728

630

2,920

3,550

–

2,545

529

3,074

6,624

(16) Inventories

The following table provides a breakdown of inventories as
of the dates indicated:

Inventories

€ in millions

Raw materials and supplies

Goods purchased for resale

Work in progress and finished products

Total

December 31

2014

1,821

1,432

103

3,356

2013

2,134

1,848

165

4,147

(17) Receivables and Other Assets

The following table lists receivables and other assets by
remaining time to maturity as of the dates indicated:

Receivables and Other Assets

€ in millions

Receivables from finance leases

Other financial receivables and financial assets

Financial receivables and other financial assets

Trade receivables

Receivables from derivative financial instruments

Other operating assets

Trade receivables and other operating assets

Total

In 2014, there were unguaranteed residual values of €18 million
(2013: €18 million) due to E.ON as lessor under finance leases.
Some of the leases contain price-adjustment clauses, as well
as extension and purchase options. As of December 31, 2014,

other financial assets include receivables from owners of
non-controlling interests in jointly owned power plants of
€283 million (2013: €135 million) and margin account deposits
for futures trading of €301 million (2013: €445 million). In

154 Notes

addition, based on the provisions of IFRIC 5, other financial
assets include a claim for a refund from the Swedish Nuclear
Waste Fund in the amount of €1,879 million (2013: €1,768 mil-
lion) in connection with the decommissioning of nuclear power
plants and nuclear waste disposal. Since this asset is desig-
nated for a particular purpose, E.ON’s access to it is restricted.

The individual impaired receivables are due from a large
number of retail customers from whom it is unlikely that full
repayment will ever be received. Receivables are monitored
within the various units.

Valuation allowances for trade receivables have changed as
shown in the following table:

The aging schedule of trade receivables primarily reflects
a €670 million reduction in all receivables brought about by
the reclassification of discontinued operations, and is pre-
sented in the table below:

Aging Schedule of Trade Receivables

€ in millions

Not impaired and not past-due

Not impaired and past-due by

up to 60 days
61 to 90 days
91 to 180 days
181 to 360 days
more than 360 days

Net value of impaired receivables

2014

10,908

844
681
22
44
32
65

2013

11,949

1,362
934
44
96
86
202

946

Total trade receivables

11,800

14,257

Valuation Allowances for Trade Receivables

€ in millions

Balance as of January 1

Change in scope of consolidation

Write-downs

Reversals of write-downs

Disposals

Other 1

Balance as of December 31

2014

-1,065

134

-313

219

-952

2013

-881

-411

119

-1,065

1“Other” includes also currency translation adjustments.

Receivables from finance leases are primarily the result of
certain electricity delivery contracts that must be treated as
leases according to IFRIC 4. The nominal and present values of
the outstanding lease payments have the following due dates:

E.ON as Lessor—Finance Leases

€ in millions

Due within 1 year

Due in 1 to 5 years

Due in more than 5 years

Total

Gross investment in
finance lease
arrangements

2014

104

381

637

1,122

2013

161

379

713

1,253

Unrealized interest
income

Present value of minimum
lease payments

2014

198

219

477

2013

202

264

528

2014

183

418

645

2013

177

449

725

The present value of the outstanding lease payments is
reported under receivables from finance leases.

155

(18) Liquid Funds

The following table provides a breakdown of liquid funds by
original maturity as of the dates indicated:

Liquid Funds

€ in millions

Securities and fixed-term deposits

Current securities with an
original maturity greater than 3 months
Fixed-term deposits with an
original maturity greater than 3 months

Restricted cash and cash equivalents

Cash and cash equivalents

Total

December 31

2014

1,812

2013

2,648

1,749

2,316

1,064

3,191

6,067

332

639

4,527

7,814

In 2014, there was €1 million in restricted cash (2013: €3 million)
with a maturity greater than three months.

Current securities with an original maturity greater than three
months include €265 million (2013: €81 million) in secu rities
held by VKE that are restricted for the fulfillment of legal
insurance obligations (see Note 31).

Cash and cash equivalents include €2,434 million (2013:
€3,987 million) in checks, cash on hand and balances in
Bundesbank accounts and at other financial institutions with
an original maturity of less than three months, to the extent
that they are not restricted.

(19) Capital Stock

The capital stock is subdivided into 2,001,000,000 registered
shares with no par value (“no-par-value shares”) and amounts
to €2,001,000,000 (2013: €2,001,000,000). The capital stock of
the Company was provided by way of conversion of E.ON AG
into a European Company (“SE”).

Pursuant to a resolution by the Annual Shareholders Meeting
of May 3, 2012, the Company is authorized to purchase own
shares until May 2, 2017. The shares purchased, combined with
other treasury shares in the possession of the Company, or
attributable to the Company pursuant to Sections 71a et seq.
AktG, may at no time exceed 10 percent of its capital stock.
The Board of Management was authorized at the aforemen-
tioned Annual Shareholders Meeting to cancel any shares thus
acquired without requiring a separate shareholder resolution
for the cancellation or its implementation. The total number of
outstanding shares as of December 31, 2014, was 1,932,736,845
(December 31, 2013: 1,907,808,363). As of December 31, 2014,
E.ON SE and one of its subsidiaries held a total of 68.263.155
treasury shares (December 31, 2013: 93,191,637) having a book
value of €2,502 million (equivalent to 3.41 percent or €68,263,155
of the capital stock).

As part of the scrip dividend for the 2013 fiscal year, share-
holder cash dividend entitlements totaling €305 million were
settled through the issue and distribution of 24,008,788 treasury
shares. The issue of treasury shares reduced by €964 million
the valuation allowance for treasury shares, which is measured
at historical cost. Conversely, additional paid-in capital was
reduced by €649 million. This amount represents the difference
between the historical cost and the subscription price of the
shares. The discount of €9 million granted on the current share
price is charged to retained earnings.

A total of 919,064 additional treasury shares were used for
the employee stock purchase program and distributed to
employees in 2014 (2013: 1,057,296 treasury shares used). See
also Note 11 for information on the distribution of shares
under the employee stock purchase program. A further 630
treasury shares (2013: 672 shares) were also distributed.

The Company has further been authorized by the Annual
Shareholders Meeting to buy shares using put or call options,
or a combination of both. When derivatives in the form of
put or call options, or a combination of both, are used to acquire
shares, the option transactions must be conducted at market
terms with a financial institution or on the market. No shares
were acquired in 2014 using this purchase model.

156 Notes

Authorized Capital

By shareholder resolution adopted at the Annual Shareholders
Meeting of May 3, 2012, the Board of Management was autho-
rized, subject to the Supervisory Board’s approval, to increase
until May 2, 2017, the Company’s capital stock by a total of up
to €460 million through one or more issuances of new regis-
tered no-par-value shares against contributions in cash and/or
in kind (with the option to restrict shareholders’ subscription
rights); such increase shall not, however, exceed the amount
and number of shares in which the authorized capital pursu-
ant to Section 3 of the Articles of Association of E.ON AG still
exists at the point in time when the conversion of E.ON AG
into a European company (“SE”) becomes effective pursuant to
the conversion plan dated March 6, 2012 (authorized capital
pursuant to Sections 202 et seq. AktG). Subject to the Super-
visory Board’s approval, the Board of Management is autho-
rized to exclude shareholders’ subscription rights. The autho-
rized capital has not been used.

in the amount of €175 million, which is authorized until May 2,
2017. The conditional capital increase will be implemented
only to the extent required to fulfill the obligations arising on
the exercise by holders of option or conversion rights, and
those arising from compliance with the mandatory conversion
of bonds with conversion or option rights, profit participation
rights and income bonds that have been issued or guaranteed
by E.ON SE or a Group company of E.ON SE as defined by
Section 18 AktG, and to the extent that no cash settlement has
been granted in lieu of conversion and no E.ON SE treasury
shares or shares of another listed company have been used to
service the rights. However, this conditional capital increase
only applies up to the amount and number of shares in which
the conditional capital pursuant to Section 3 of the Articles
of Association of E.ON AG has not yet been implemented at
the point in time when the conversion of E.ON AG into a Euro-
pean company (“SE”) becomes effective in accordance with the
conversion plan dated March 6, 2012. The conditional capital
has not been used.

Conditional Capital

Voting Rights

At the Annual Shareholders Meeting of May 3, 2012, share-
holders approved a conditional increase of the capital stock
(with the option to exclude shareholders’ subscription rights)

The following notices pursuant to Section 21 (1) of the German
Securities Trading Act (“WpHG”) concerning changes in voting
rights have been received:

Information on Stockholders of E.ON SE

Stockholder

BlackRock Inc. New York, U.S.

Date of notice

Dec. 24, 2014

Threshold
exceeded

Gained voting
rights on

Allocation

Percentages

Absolute

Voting rights

Dec. 22, 2014

indirect

6.53

130,752,304

(20) Additional Paid-in Capital

Additional paid-in capital declined by €656 million during
2014, to €13,077 million (2013: €13,733 million). The reduction
of additional paid-in capital is primarily due to the issue of
treasury shares as part of the scrip dividend. Additional paid-
in capital was reduced by €649 million in this context. This

amount represents the difference between the historical cost
and the subscription price of the shares. The change further
includes the loss realized on the sale of shares distributed to
eligible employees of the E.ON Group under the employee
stock purchase program.

157

(21) Retained Earnings

The following table breaks down the E.ON Group’s retained
earnings as of the dates indicated:

v Retained Earnings

€ in millions

Legal reserves

Other retained earnings

Total

December 31

2014

16,797

16,842

2013

23,261

23,306

Under German securities law, E.ON SE shareholders may
receive distributions from the balance sheet profit of E. ON SE
reported as available for distribution in accordance with the
German Commercial Code.

As of December 31, 2014, these German-GAAP retained earnings
totaled €6,540 million (2013: €5,776 million). Of this amount,
legal reserves of €45 million (2013: €45 million) are restricted
pursuant to Section 150 (3) and (4) AktG.

In order to fulfill retirement benefit obligations, funds have
been invested as restricted, bankruptcy-remote assets in
fund units administered in trust by E. ON Pension Trust e.V.
and by Pensionsabwicklungstrust e.V., both registered in

(22) Changes in Other Comprehensive Income

The table at right illustrates the share of OCI attributable to
companies accounted for under the equity method:

Düsseldorf, Germany. In accordance with Section 253 (1) HGB,
these investments are measured at fair value, which stood at
€194 million as of the balance sheet date and exceeded by
€8 million their cost of €186 million. The €8 million difference
is fully attributable to increases in value. Taking into account
deferred tax assets and liabilities, the resulting overall differ-
ence was €8 million. This surplus is fully covered by a sufficient
amount of available reserves. Accordingly, there is no restric-
tion preventing payment of the proposed dividend distribution
of €966 million for 2015.

Accordingly, the amount of retained earnings available for
distribution in principle is €6,487 million (2013: €5,731 million).

A proposal to distribute a cash dividend for 2014 of €0.50 per
share will be submitted to the Annual Shareholders Meeting.
For 2013, shareholders at the April 30, 2014, Annual Shareholders
Meeting voted to distribute a dividend of €0.60 for each divi-
dend-paying ordinary share. Based on a €0.50 dividend, the
total profit distribution is €966 million (2013: €1,145 million).

In 2014, shareholders could for the first time choose between
having their cash dividend entitlement settled entirely in cash
and converting part of it into E.ON shares. Accounting for a
participation rate of roughly 37 percent, 24,008,788 treasury
shares were issued for distribution. This reduced the cash
distribution to €840 million.

Share of OCI Attributable to Companies
Accounted for under the Equity Method

€ in millions

Balance as of December 31 (before taxes)

Taxes

Balance as of December 31 (after taxes)

2014

-725

-721

2013

-672

-671

158 Notes

(23) Non-Controlling Interests

Non-controlling interests by segment as of the dates indicated
are shown in the following table.

Non-Controlling Interests

€ in millions

Generation

Renewables

Global Commodities

Exploration & Production

Germany

Other EU Countries

Russia

Group Management/Consolidation

Total

December 31

2014

-29

196

–

2013

308

194

–

1,096

1,176

427

220

217

505

542

189

2,128

2,915

The decrease in non-controlling interests in 2014 resulted
primarily from an impairment charge in Sweden in the Gen-
eration global unit, from disposals in the Czechia regional
unit (City of Prague Municipal Utility) and from changes in
exchange rates in the Russia region.

The table below illustrates the share of OCI that is attributable
to non-controlling interests.

Share of OCI Attributable to Non-Controlling Interests

€ in millions

Balance as of January 1, 2013

Changes

Balance as of December 31, 2013

Changes

Balance as of December 31, 2014

Cash flow hedges

Available-for-sale
securities

Currency translation
adjustments

Remeasurements of
defined benefit plans

–

-12

-178

-116

-294

-296

-590

-129

-52

-186

-238

159

Subsidiaries with material non-controlling interests are active
in diverse areas of the gas and electricity industries. Disclosures
of company names, registered offices and equity interests
as required by IFRS 12 for subsidiaries with material non-con-
trolling interests can be found in the list of shareholdings
pursuant to Section 313 (2) HGB (see Note 36).

The following tables provide a summary overview of cash
flow and significant line items of the aggregated income
statements and of the aggregated balance sheets of subsid-
iaries with material non-controlling interests.

Subsidiaries with Material Non-Controlling Interests—Balance Sheet Data

E.ON România Group

E.ON Russia Group

Avacon Group

€ in millions

Non-controlling interests in equity

Non-controlling interests in equity (in %) 1

Dividends paid out to non-controlling
interests

Operating cash flow

Non-current assets

Current assets

Non-current liabilities

Current liabilities

2014

359

9.8

–

118

888

562

209

348

2013

323

9.8

206

825

546

218

396

2014

220

16.3

477

3,191

324

271

2013

542

16.3

617

4,798

868

422

122

2014

604

36.9

340

2,822

658

1,495

831

1Non-controlling interests in the lead company of the respective group.

Subsidiaries with Material Non-Controlling Interests—Earnings Data

€ in millions

Share of earnings attributable to
non-controlling interests

Sales

Net income

Comprehensive income

E.ON România Group

E.ON Russia Group

Avacon Group

2014

1,168

121

126

2013

1,127

108

103

2014

1,518

355

-1,509

2013

1,865

232

-405

2014

120

3,144

306

302

2013

571

36.7

2,467

738

1,152

632

2013

3,110

190

188

There are no major restrictions beyond those under custom-
ary corporate or contractual provisions. Foreign-exchange
transactions out of the Russian Federation may be restricted
in certain cases.

160 Notes

(24) Provisions for Pensions and Similar
Obligations

The retirement benefit obligations toward the active and
former employees of the E.ON Group, which amounted to
€18.9 billion, were covered by plan assets having a fair value
of €13.4 billion as of December 31, 2014. This corresponds to
a funded status of 71 percent.

In addition to the reported plan assets, VKE, which is included
in the Consolidated Financial Statements, administers another
fund holding assets of €1.0 billion (2013: €0.8 billion) that do

Provisions for Pensions and Similar Obligations

€ in millions

Present value of all defined benefit obligations

Germany

United Kingdom

Other countries

Total

Fair value of plan assets

Germany

United Kingdom

Other countries

Total

Net defined benefit liability/asset (-)

Germany

United Kingdom

Other countries

Total

Presented as operating receivables
Presented as provisions for pensions and similar obligations

not constitute plan assets under IAS 19 but which are mostly
intended for the coverage of retirement benefit obligations
at E.ON Group companies in Germany (see Note 31).

The present value of the defined benefit obligations, the fair
value of plan assets and the net defined benefit liability
(funded status) are presented in the following table for the
dates indicated:

December 31

2014

2013

2012

12,799

5,920

230

18,949

8,033

5,296

9,574

4,926

679

15,179

6,789

4,596

376

11,192

4,903

729

16,824

6,769

4,702

410

13,375

11,761

11,881

4,766

624

184

5,574
–
5,574

2,785

330

303

3,418
–
3,418

4,423

201

319

4,943
-2
4,945

161

Description of the Benefit Plans

In addition to their entitlements under government retirement
systems and the income from private retirement planning,
most active and former E.ON Group employees are also covered
by occupational benefit plans. Both defined benefit plans and
defined contribution plans are in place at E.ON. Benefits under
defined benefit plans are generally paid upon reaching retire-
ment age, or in the event of disability or death.

E.ON regularly reviews the pension plans in place within the
Group for financial risks. Typical risk factors for defined benefit
plans are longevity and changes in nominal interest rates,
as well as inflation and rising wages and salaries. In order to
avoid exposure to future risks from occupational benefit plans,
newly designed pension plans were introduced at the major
German and foreign E.ON Group companies beginning in
1998. Virtually all employees hired at E.ON Group companies
after 1998 are now covered by benefit plans for which the
risk factors can be better calculated and controlled as pre-
sented below.

The existing entitlements under defined benefit plans as of
the balance sheet date cover about 54,000 retirees and their
beneficiaries (2013: 56,000), about 15,000 former employees
with vested entitlements (2013: 14,000) and about 42,000 active
employees (2013: 47,000. Aside from normal employee turn-
over, the changes from the previous year resulted especially
from restructuring programs and from the reclassification
of companies and their staff to discontinued operations (see
Note 4). The corresponding present value of the defined
benefit obligations is attributable to retirees and their bene-
ficiaries in the amount of €10.4 billion (2013: €9.1 billion), to
former employees with vested entitlements in the amount
of €2.6 billion (2013: €1.6 billion) and to active employees in
the amount of €5.9 billion (2013: €4.5 billion).

The features and risks of defined benefit plans are regularly
shaped by the general legal, tax and regulatory conditions
prevailing in the respective country. The configurations of the
major defined benefit and defined contribution plans within
the E.ON Group are described in the following discussion.

Germany
Active employees at the German Group companies are pre-
dominantly covered by cash balance plans. In addition, some
final-pay arrangements, and a small number of fixed-amount
arrangements, still exist under individual contracts.

The majority of the reported benefit obligation toward active
employees is centered on the “BAS Plan,” a pension unit system
launched in 2001, and on a “provision for the future” (“Zukunfts-
sicherung”) plan, a variant of the BAS Plan that emerged
from the harmonization in 2004 of numerous benefit plans
granted in the past. In the Zukunftssicherung benefit plan,
vested final-pay entitlements are considered in addition to
the defined contribution pension units when determining
the benefit. These plans are closed to new hires.

The plans described in the preceding paragraph generally
provide for ongoing pension benefits that generally are
payable upon reaching the age threshold, or in the event of
disability or death.

The only benefit plan open to new hires is the E.ON IQ contri-
bution plan (the “IQ Plan”). This plan is a “units of capital”
system that provides for the alternative payout options of a
prorated single payment and payments of installments in
addition to the payment of a regular pension.

162 Notes

The benefit expense for all the cash balance plans mentioned
above is dependent on compensation and is determined at
different percentage rates based on the ratio between compen-
sation and the contribution limit in the statutory retirement
pension system in Germany. Employees can additionally choose
to defer compensation. The cash balance plans contain dif-
ferent interest rate assumptions for the pension units. Whereas
fixed interest rate assumptions apply for both the BAS Plan
and the Zukunftssicherung plan, the units of capital for the
open IQ Plan earn interest at the average yield of long-term
government bonds of the Federal Republic of Germany
observed in the fiscal year. Future pension increases at a rate
of 1 percent are guaranteed for a large number of active
employees. For the remaining eligible individuals, pensions
are adjusted mostly in line with the rate of inflation, usually
in a three-year cycle.

To fund the pension plans for the German Group companies,
plan assets were established in the form of a Contractual
Trust Arrangement (“CTA”). The major part of these plan assets
is administered by E.ON Pension Trust e.V. as trustee in accor-
dance with specified investment principles. Additional domes-
tic plan assets are managed by smaller German pension funds.
The long-term investments and liquid funds administered by
VKE do not constitute plan assets under IAS 19, but are almost
exclusively intended for the coverage of benefit obligations
at German E.ON Group companies.

Only at the pension funds and at VKE do regulatory provisions
exist in relation to capital investment or funding requirements.

United Kingdom
In the United Kingdom, there are various pension plans. Until
2005 and 2008, respectively, employees were covered by defined
benefit plans, which for the most part were final-pay plans
and make up the majority of the pension obligations currently
reported for the United Kingdom. These plans were closed to

employees hired after these dates. Since then, new hires are
offered a defined contribution plan. Aside from the payment
of contributions, this plan entails no additional actuarial risks
for the employer.

Benefit payments to the beneficiaries of the currently existing
defined benefit pension plans are adjusted for inflation as
measured by the U.K. Retail Price Index (“RPI”).

Plan assets in the United Kingdom are administered in a pen-
sion trust. The trustees are selected by the members of the plan
or appointed by the entity. In that capacity, the trustees are
particularly responsible for the investment of the plan assets.

The Pensions Regulator in the United Kingdom requires that
a so-called “technical valuation” of the plan’s funding condi-
tions be performed every three years. The actuarial assumptions
underlying the valuation are agreed upon by the trustees
and E.ON UK plc. They include presumed life expectancy, wage
and salary growth rates, investment returns, inflationary
assumptions and interest rate levels. The most recent technical
valuation took place as of March 31, 2010, and resulted in a
technical funding deficit of £446 million. The agreed deficit
repair plan provides for annual payments of £34 million to
the pension trust. A revaluation of the technical funded status
was performed as of March 31, 2013; it is not yet complete as
of the balance sheet date.

Other Countries
The remaining pension obligations are spread across various
international activities of the E.ON Group.

However, these benefit plans in Belgium, France, Russia,
Sweden, Norway, Romania, the Czech Republic and the United
States are of minor significance from a Group perspective.

163

Description of the Benefit Obligation

The following table shows the changes in the present value
of the defined benefit obligations for the periods indicated:

Changes in the Defined Benefit Obligation

€ in millions

2014

2013

Total

Germany

United
Kingdom

Other
countries

Total

Germany

United
Kingdom

Other
countries

Defined benefit obligation as of January 1

15,179

9,574

4,926

679

16,824

11,192

4,903

729

Employer service cost

Past service cost

Gains (-) and losses (+) on settlements

Interest cost on the present value of the
defined benefit obligations

Remeasurements

Actuarial gains (-)/losses (+) arising from
changes in demographic assumptions
Actuarial gains (-)/losses (+) arising from
changes in financial assumptions
Actuarial gains (-)/losses (+) arising from
experience adjustments

Employee contributions

Benefit payments

Changes in scope of consolidation

Exchange rate differences

Other

253

-1

607

3,733

-14

182

–

365

3,099

–

3,794

3,143

-47

-708

360

-507

-44

–

-444

–

-2

–

231

567

-15

579

-244

–

368

–

Defined benefit obligation as of December 31

18,949

12,799

5,920

-5

-1

-6

–

-20

–

-8

-505

230

276

–

589

-665

-721

-753

-1,059

-107

-7

204

–

362

-702

–

-784

–

-463

-1,059

–

-4

–

204

-42

-252

–

-101

-3

–

-50

-27

-24

–

-38

–

-6

–

15,179

9,574

4,926

679

The benefit obligations in the other countries relate mostly
to the benefit plans at the E.ON Group companies in France
(2014: €134 million; 2013: €97 million).

increase rates used by the Group companies in the United
Kingdom as the basis for measuring the benefit obligation as
of December 31, 2014.

The net actuarial losses generated in 2014 are largely attribut-
able to a general decrease in the discount rates used within
the E.ON Group. This decrease was partly offset by the lowering
of the pension increase rate in Germany that applies to E.ON
in the absence of an agreed guarantee adjustment, and the
reduction of the wage and salary growth rates and pension

The change in the present value of the defined benefit obli-
gations in the other countries is primarily the result of the
reclassification of the present value of defined benefit obli-
gations of Spanish companies to the “Liabilities associated
with assets held for sale” line item on the balance sheet
(see Note 4).

164 Notes

The actuarial assumptions used to measure the defined benefit
obligations and to compute the net periodic pension cost
at E.ON’s German and U.K. subsidiaries as of the respective
balance sheet date are as follows:

The discount rate assumptions used by E.ON basically reflect
the currency-specific rates available at the end of the respective
fiscal year for high-quality corporate bonds with a duration
corresponding to the average period to maturity of the respec-
tive obligation.

Actuarial Assumptions

Percentages

Discount rate

Germany

United Kingdom

Wage and salary growth rate

Germany

United Kingdom

Pension increase rate

Germany 1

United Kingdom

December 31

2014

2013

2012

2.00

3.70

2.50

3.10

1.75

2.90

3.90

4.60

2.50

3.40

2.00

3.10

3.40

4.40

2.50

3.40

2.00

2.70

1The pension increase rate for Germany applies to eligible individuals not subject
to an agreed guarantee adjustment.

To measure the E.ON Group’s occupational pension obligations
for accounting purposes, the Company has employed the
current versions of the biometric tables recognized in each
respective country for the calculation of pension obligations:

Actuarial Assumptions (Mortality Tables)

Germany

United
Kingdom

2005 G versions of the Klaus Heubeck biometric
tables (2005)

CMI “00” and “S1” series base mortality tables 2014,
taking into account future changes in mortality

Changes in the actuarial assumptions described previously
would lead to the following changes in the present value of
the defined benefit obligations:

Sensitivities

Change in the discount rate by (basis points)

Change in percent

Change in the wage and salary growth rate by (basis points)

Change in percent

Change in the pension increase rate by (basis points)

Change in percent

Change in mortality by (percent)

Change in percent

Change in the present value of the defined benefit obligations

December 31, 2014

December 31, 2013

+50
-7.85

+25
0.47

+25
1.86

+10
-2.96

-50
8.96

-25
-0.46

-25
-1.79

-10
3.32

+50
-6.88

+25
0.47

+25
1.78

+10
-2.44

-50
7.66

-25
-0.46

-25
-1.70

-10
2.70

A 10-percent decrease in mortality would result in a higher
life expectancy of beneficiaries, depending on the age of each
individual beneficiary. As of December 31, 2014, the life
expectancy of a 63-year-old male E.ON retiree would increase
by approximately one year if mortality were to decrease by
10 percent.

The sensitivities indicated are computed based on the same
methods and assumptions used to determine the present
value of the defined benefit obligations. If one of the actuarial

assumptions is changed for the purpose of computing the
sensitivity of results to changes in that assumption, all other
actuarial assumptions are included in the computation
unchanged.

When considering sensitivities, it must be noted that the
change in the present value of the defined benefit obligations
resulting from changing multiple actuarial assumptions
simultaneously is not necessarily equivalent to the cumulative
effect of the individual sensitivities.

165

Description of Plan Assets and the
Investment Policy

The defined benefit plans are funded by plan assets held in
specially created pension vehicles that legally are distinct
from the Company. The fair value of these plan assets changed
as follows:

Changes in the Fair Value of Plan Assets

€ in millions

2014

2013

Total

Germany

United
Kingdom

Other
countries

Total

Germany

United
Kingdom

Other
countries

Fair value of plan assets as of January 1

11,761

6,789

4,596

376

11,881

6,769

4,702

Interest income on plan assets

Remeasurements

Return on plan assets recognized in
equity, not including amounts contained
in the interest income on plan assets

Employee contributions

Employer contributions

Benefit payments

Changes in scope of consolidation

Exchange rate differences

Other

Fair value of plan assets
as of December 31

514

480

1,296

-668

–

334

-343

294

185

–

1,182

-417

–

217

282

108

-244

–

336

–

-7

–

-2

-343

440

-161

1,083

-724

-655

-101

-3

230

-29

–

921

-447

-655

–

198

-108

157

-252

–

-99

-3

13,375

8,033

5,296

11,761

6,789

4,596

376

410

-24

–

-25

–

-2

–

The changes in the fair value of plan assets in the other
countries is primarily the result of the reclassification of the
fair value of the plan assets of Spanish companies to the
“Liabilities associated with assets held for sale” line item on
the balance sheet (see Note 4).

The actual return on plan assets was a gain of €994 million
in 2014 (2013: €279 million).

A small portion of the plan assets consists of financial instru-
ments of E.ON (2014: €0.4 billion; 2013: €0.4 billion). Because of
the contractual structure, however, these instruments do not
constitute an E.ON-specific risk to the CTA in Germany. The
plan assets further include virtually no owner-occupied real
estate and no equity or debt instruments issued by E.ON Group
companies. Each of the individual plan asset components
has been allocated to an asset class based on its substance.
The plan assets thus classified break down as shown in the
following table:

166 Notes

Classification of Plan Assets

Percentages

Plan assets listed in an active market

Equity securities (stocks)

Debt securities 1

Government bonds
Corporate bonds

Other investment funds

Total listed plan assets

Plan assets not listed in an active market

Equity securities not traded on an
exchange

Debt securities

Real estate

Qualifying insurance policies

Cash and cash equivalents

Other

Total unlisted plan assets

Total

December 31, 2014

December 31, 2013

Total

Germany

United
Kingdom

Other
countries

Total

Germany

United
Kingdom

Other
countries

55
37
13

–

100

46
24
15

–

100

67
58
9

–

48
2
46

–

100

51
32
14

100

49
21
18

–

58
50
8

–

3
–
3

–

100

1In Germany, 7 percent (2013: 10 percent) of plan assets are invested in other debt securities, in particular mortgage bonds (“Pfandbriefe”), in addition to government and
corporate bonds.

The fundamental investment objective for the plan assets is
to provide full coverage of benefit obligations at all times for
the payments due under the corresponding benefit plans. This
investment policy stems from the corresponding governance
guidelines of the Group. A deterioration of the net defined
benefit liability or the funded status following an unfavorable
development in plan assets or in the present value of the
defined benefit obligations is identified in these guidelines as
a risk that is controlled as part of a risk-budgeting concept.
E.ON therefore regularly reviews the development of the funded
status in order to monitor this risk.

To implement the investment objective, the E.ON Group primar-
ily pursues an investment approach that takes into account
the structure of the benefit obligations. This long-term invest-
ment strategy seeks to manage the funded status, with the
result that any changes in the defined benefit obli gation,
especially those caused by fluctuating inflation and interest
rates are, to a certain degree, offset by simultaneous corre-
sponding changes in the fair value of plan assets. The invest-
ment strategy may also involve the use of derivatives (for
example, interest rate swaps and inflation swaps, as well as

currency hedging instruments) to facilitate the control of
specific risk factors of pension liabilities. In the table above,
derivatives have been allocated, based on their substance,
to the respective asset classes in which they are used. In order
to improve the funded status of the E.ON Group as a whole, a
portion of the plan assets will also be invested in a diversified
portfolio of asset classes that are expected to provide for
long-term returns in excess of those of fixed-income invest-
ments and thus in excess of the discount rate.

The determination of the target portfolio structure for the
individual plan assets is based on regular asset-liability studies.
In these studies, the target portfolio structure is reviewed in
a comprehensive approach against the backdrop of existing
investment principles, the current funded status, the condition
of the capital markets and the structure of the bene fit obli-
gations, and is adjusted as necessary. The parameters used in
the studies are additionally reviewed regularly, at least once
each year. Asset managers are tasked with implementing the
target portfolio structure. They are monitored for target
achievement on a regular basis.

167

Description of the Pension Cost

The net periodic pension cost for defined benefit plans
included in the provisions for pensions and similar obligations
is shown in the table below:

Net Periodic Pension Cost

€ in millions

Employer service cost

Past service cost

Gains (-) and losses (+) on settlements

Net interest on the net
defined benefit liability/asset

Total

2014

2013

Total

Germany

United
Kingdom

Other
countries

Total

Germany

United
Kingdom

Other
countries

253

-1

375

182

–

276

–

-5

-1

273

–

146

499

204

–

132

380

–

Net periodic pension cost in the amount of €6 million was
reclassified to net income from discontinued operations for 2013.

Benefit payments to cover defined benefit obligations totaled
€708 million in 2014 (2013: €753 million); of this amount,
€40 million (2013: €29 million) was not paid out of plan assets.

The past service cost for 2014 and 2013 consists mostly of the
expenses incurred in the context of restructuring measures.

In addition to the total net periodic pension cost for defined
benefit plans, an amount of €79 million in fixed contributions
to external insurers or similar institutions was paid in 2014
(2013: €71 million) for pure defined contribution plans.

Prospective benefit payments under the defined benefit plans
existing as of December 31, 2014, for the next ten years are
shown in the following table:

Prospective Benefit Payments

€ in millions

Total Germany

United
Kingdom

Other
countries

Contributions to state plans totaled €0.3 billion (2013:
€0.3 billion).

Description of Contributions and Benefit Payments

In 2014, E.ON made employer contributions to plan assets
totaling €1,296 million (2013: €1,083 million) to fund existing
defined benefit obligations.

2015

2016

2017

2018

2019

2020–2024

Total

724

742

754

770

788

4,224

8,002

456

474

479

488

503

2,701

5,101

253

256

262

270

272

1,456

2,769

132

For 2014, it is expected that overall employer contributions
to plan assets will amount to a total of €475 million and
primarily involve the funding of new and existing benefit
obligations, with an amount of €180 million attributable to
foreign companies.

The weighted-average duration of the defined benefit obliga-
tions measured within the E.ON Group was 20.1 years as of
December 31, 2014 (2013: 19.2 years).

168 Notes

Description of the Net Defined Benefit Liability

The recognized net liability from the E.ON Group’s defined
benefit plans results from the difference between the present
value of the defined benefit obligations and the fair value of
plan assets:

Changes in the Net Defined Benefit Liability

2014

2013

€ in millions

Net liability as of January 1

Total

3,418

Germany

2,785

Net periodic pension cost

Changes from remeasurements

Employer contributions to plan assets

Net benefit payments

Changes in scope of consolidation

Exchange rate differences

Other

Net liability as of December 31

375

3,253

-1,296

-40

-164

5,574

276

2,914

-1,182

-27

–

-2

4,766

United
Kingdom

Other
countries

330

285

-108

–

624

303

-6

-13

–

-6

-162

184

Total

4,943

Germany

4,423

505

-504

-1,083

-29

-404

-6

-4

380

-673

-921

-16

-404

–

-4

201

195

-157

–

-2

–

3,418

2,785

330

319

-26

-5

-13

–

-4

–

303

United
Kingdom

Other
countries

(25) Miscellaneous Provisions

The following table lists the miscellaneous provisions as of
the dates indicated:

Miscellaneous Provisions

€ in millions

Non-contractual nuclear waste management obligations

Contractual nuclear waste management obligations

Personnel obligations

Other asset retirement obligations

Supplier-related obligations

Customer-related obligations

Environmental remediation and similar obligations

Other

Total

December 31, 2014

December 31, 2013

Current

Non-current

Current

Non-current

155

475

305

554

381

2,134

4,120

10,977

7,162

1,254

2,105

208

796

3,092

25,802

108

511

296

155

201

334

2,661

4,353

10,300

7,218

1,222

1,765

377

185

784

2,884

24,735

169

The changes in the miscellaneous provisions are shown in
the table below:

Changes in Miscellaneous Provisions

€ in millions

Non-contractual nuclear
waste management
obligations

Contractual nuclear waste
management obligations

Personnel obligations

Other asset retirement
obligations

Supplier-related
obligations

Customer-related
obligations

Environmental remedia-
tion and similar
obligations

Other

Total

Jan. 1,
2014

10,408

7,729

1,518

1,920

578

519

871

5,545

29,088

Exchange
rate
differ-
ences

Changes
in
scope of
consoli-
dation

Accretion

Additions

Utiliza-
tion

Reclassifi-
cations

Reversals

Changes
in
estimates

Dec. 31,
2014

-67

-64

–

-1

-71

–

-55

-257

–

-8

-1

-268

-589

477

351

396

170

499

188

-59

-480

-334

-42

-253

-55

1,087

2,021

3,431

-45

-1,495

-2,763

-16

-6

-8

-3

–

-66

-1

-92

-50

-51

-713

-973

374

11,132

–

7,637

1,559

280

2,146

–

762

589

871

5,226

680

29,922

The accretion expense resulting from the changes in provisions
is shown in the financial results (see Note 9).

fuel rods and low-level nuclear waste and to the retirement and
decommissioning of nuclear power plant components that are
determined on the basis of external studies and cost estimates.

As of December 31, 2014, the interest rates applied for the
nuclear power segment, calculated on a country-specific basis,
were 4.7 percent (2013: 4.8 percent) in Germany and 3.0 per-
cent (2013: 3.0 percent) in Sweden. The other provision items
relate almost entirely to issues in countries of the euro area,
as well as in the U.K. and Sweden. The interest rates used with
regard to these issues ranged from 0 percent to 2.6 percent,
depending on maturity (2013: 0.4 percent to 4.0 percent).

Provisions for Non-Contractual Nuclear Waste
Management Obligations

Of the total of €11.1 billion in provisions based on German and
Swedish nuclear power legislation, €10.0 billion is attributable
to the operations in Germany and €1.1 billion is attributable
to the Swedish operations. The provisions comprise all those
nuclear obligations relating to the disposal of spent nuclear

The provisions are classified primarily as non-current provisions
and measured at their settlement amounts, discounted to
the balance sheet date.

The asset retirement obligations recognized for non-contrac-
tual nuclear obligations include the anticipated costs of post-
and service operation of the facility, dismantling costs, and
the cost of removal and disposal of the nuclear components
of the nuclear power plant.

Additionally included in the disposal of spent nuclear fuel rods
are costs for transports to the final storage facility and the
cost of proper conditioning prior to final storage, including
the necessary containers.

170 Notes

The decommissioning costs and the cost of disposal of spent
nuclear fuel rods and low-level nuclear waste also include in
each case the actual final storage costs. Final storage costs
consist particularly of the expected investment, operating and
decommissioning costs for the final storage projects Gorleben
and Konrad and are based on data from the German Federal
Office for Radiation Protection and on Germany’s ordinance
on advance payments for the establishment of facilities for the
safe custody and final storage of radioactive wastes in the
country (“Endlager voraus leistungs verordnung”); additional costs
arise from the German legislation governing the selection of
a repository site for high-level radioactive waste (“Stand ort-
auswahl gesetz” or “StandAG”), which took effect in the third
quarter of 2013. Advance payments remitted to the Federal
Office for Radiation Protection and the Federal Office for the
Regulation of Nuclear Waste Management in the amount of
€1,125 million (2013: €1,066 million) have been deducted from
the provisions. These payments are made each year based on
the amount spent by the two aforementioned Federal Offices.

The cost estimates used to determine the provision amounts
are all based on studies performed by external specialists and
are updated annually. The amendments to the German Nuclear
Energy Act of August 6, 2011, were taken into account in the
measurement of the provisions in Germany.

Changes in estimates increased provisions in 2014 by
€374 million (2013: provisions reduced by €563 million) at the
German operations. Provisions were utilized in the amount
of €59 million (2013: €54 million), of which €24 million (2013:
€23 million) relates to nuclear power plants that are being
dismantled or are in shutdown mode, on the basis of issues
for which retirement and decommissioning costs had been
capitalized. As in 2013, there were no changes in estimates
affecting provisions at the Swedish operations in 2014, and
no provisions were utilized.

The following table lists the provisions by technical specifica-
tion as of the dates indicated:

Provisions for Non-Contractual Nuclear Waste Management Obligations

€ in millions

Decommissioning

Disposal of nuclear fuel rods and operational waste

Advance payments

Total

December 31, 2014

December 31, 2013

Germany

Sweden

Germany

Sweden

8,393

2,721

1,125

9,989

408

735

–

1,143

7,806

2,492

1,066

9,232

420

756

–

1,176

Provisions for Contractual Nuclear Waste Manage-
ment Obligations

Of the total of €7.6 billion in provisions based on German and
Swedish nuclear power legislation, €6.6 billion is attributable
to the operations in Germany and €1.0 billion is attributable
to the Swedish operations. The provisions comprise all those
contractual nuclear obligations relating to the disposal of
spent nuclear fuel rods and low-level nuclear waste and to the
retirement and decommissioning of nuclear power plant
components that are measured at amounts firmly specified
in legally binding civil agreements.

The provisions are classified primarily as non-current provisions
and measured at their settlement amounts, discounted to the
balance sheet date.

Advance payments made to other waste management com-
panies in the amount of €161 million (2013: €143 million) have
been deducted from the provisions attributed to Germany.
The advance payments relate to the delivery of interim storage
containers.

Concerning the disposal of spent nuclear fuel rods, the obli-
gations recognized in the provisions comprise the contractual
costs of finalizing reprocessing and the associated return
of waste with subsequent interim storage at Gorleben and
Ahaus, as well as costs incurred for interim on-site storage,
including the necessary interim storage containers, arising
from the “direct permanent storage” path. The provisions also
include the contractual costs of decommissioning and the
conditioning of low-level radioactive waste.

171

Changes in estimates increased provisions in 2014 by €6 million
(2013: €780 million) at the German operations. Provisions were
utilized in the amount of €419 million (2013: €331 million), of
which €287 million (2013: €137 million) relates to nuclear
power plants that are being dismantled or are in shutdown
mode, on the basis of issues for which retirement and decom-
missioning costs had been capitalized. The Swedish opera-
tions recorded an increase in pro visions of €20 million (2013:
€195 million) resulting from changes in estimates. Provisions

were utilized in the amount of €61 million (2013: €77 million),
of which €39 million (2013: €31 million) is attributable to
the Barsebäck nuclear power plant, which is in post-operation.
Retirement and decommissioning costs had already been
capitalized for the underlying issues.

The following table lists the provisions by technical specifica-
tion as of the dates indicated:

Provisions for Contractual Nuclear Waste Management Obligations

€ in millions

Decommissioning

Disposal of nuclear fuel rods and operational waste

Advance payments

Total

December 31, 2014

December 31, 2013

Germany

Sweden

Germany

Sweden

3,425

3,314

161

6,578

369

690

–

1,059

3,465

3,286

143

6,608

393

728

–

1,121

Personnel Obligations

Customer-Related Obligations

Provisions for personnel costs primarily cover provisions for
early retirement benefits, performance-based compensation
components, in-kind obligations, restructuring and other
deferred personnel costs.

Provisions for customer-related obligations consist primarily
of potential losses on rebates and on open sales contracts.

Environmental Remediation and Similar Obligations

Provisions for Other Asset Retirement Obligations

The provisions for other asset retirement obligations consist
of obligations for conventional and renewable-energy power
plants, including the conventional plant components in the
nuclear power segment, that are based on legally binding civil
agreements and public regulations. Also reported here are
provisions for environmental improvements at gas storage
facilities, for the dismantling of installed infrastructure and
for environmental-improvement obligations in the Explora-
tion & Production segment.

Supplier-Related Obligations

Provisions for supplier-related obligations consist of provisions
for potential losses on open purchase contracts, among others.

Provisions for environmental remediation refer primarily to
redevelopment and water protection measures and to the
rehabilitation of contaminated sites. Also included here are
provisions for other environmental improvement measures
and for land reclamation obligations at mining sites.

Other

The other miscellaneous provisions consist primarily of provi-
sions from the electricity and gas business. Further included
here are provisions for potential obligations arising from tax-
related interest expenses and from taxes other than income
taxes.

172 Notes

(26) Liabilities

The following table provides a breakdown of liabilities:

Liabilities

€ in millions

Financial liabilities

Trade payables

Capital expenditure grants

Construction grants from energy consumers

Liabilities from derivatives

Advance payments

Other operating liabilities

Trade payables and other operating liabilities

December 31, 2014

Current

Non-current

3,883

2,185

217

9,908

245

12,045

24,615

15,784

–

366

1,856

3,868

252

1,462

7,804

Total

19,667

2,185

381

2,073

13,776

497

13,507

32,419

December 31, 2013

Current

Non-current

4,673

2,485

218

4,337

296

14,082

21,457

18,051

–

412

2,116

2,445

290

1,491

6,754

Total

22,724

2,485

451

2,334

6,782

586

15,573

28,211

Total

28,498

23,588

52,086

26,130

24,805

50,935

Financial Liabilities

The following is a description of the E.ON Group’s significant
credit arrangements and debt issuance programs. Included
under “Bonds” are the bonds currently outstanding, including
those issued under the Debt Issuance Program.

Group Management
Covenants
The financing activities of E.ON SE, E.ON International Finance
B.V. (“EIF”), Rotterdam, The Netherlands, and E.ON Beteiligun-
gen GmbH involve the use of covenants consisting primarily
of change-of-control clauses, negative pledges, pari-passu

clauses and cross-default clauses, each referring to a restricted
set of significant circumstances. Financial covenants (that is,
covenants linked to financial ratios) are not employed.

€35 Billion Debt Issuance Program
E.ON SE and EIF have in place a Debt Issuance Program
enabling the issuance from time to time of debt instruments
through public and private placements to investors. The total
amount available under the program is €35 billion. The program
was extended in April 2014 for another year as planned.

173

At year-end 2014, the following EIF bonds were outstanding:

Major Bond Issues of E.ON International Finance B.V. 1

Volume in the
respective currency

EUR 1,118 million 2

EUR 1,238 million 3

EUR 900 million

EUR 1,769 million 4

USD 2,000 million 5

GBP 850 million 6

EUR 1,400 million 7

GBP 975 million 8

GBP 900 million

USD 1,000 million 5

GBP 700 million

Initial term

Repayment

7 years

15 years

10 years

12 years

30 years

Sep 2015

Jan 2016

May 2017

Oct 2017

Apr 2018

Oct 2019

May 2020

June 2032

Oct 2037

Apr 2038

Jan 2039

Coupon

5.250%

5.500%

6.375%

5.500%

5.800%

6.000%

5.750%

6.375%

5.875%

6.650%

6.750%

1Listing: All bonds are listed in Luxembourg with the exception of the two Rule 144A/Regulation S USD bonds, which are unlisted.
2After early redemption, the volume of this issue was lowered from originally EUR 1,250 million to approx. EUR 1,118 million.
3After early redemption, the volume of this issue was lowered from originally EUR 1,500 million to approx. EUR 1,238 million.
4After early redemption, the volume of this issue was lowered from originally EUR 2,375 million to approx. EUR 1,769 million.
5Rule 144A/Regulation S bond.
6The volume of this issue was raised from originally GBP 600 million to GBP 850 million.
7The volume of this issue was raised from originally EUR 1,000 million to EUR 1,400 million.
8The volume of this issue was raised from originally GBP 850 million to GBP 975 million.

€5 Billion Syndicated Revolving Credit Facility
Effective November 6, 2013, E.ON arranged a syndicated
revolving credit facility of €5 billion over an original term of
five years, with two renewal options for one year each. In
2014, E.ON exercised the first option and extended the term
of the credit facility by one year through 2019. The facility
has not been drawn on; rather, it serves as the Group’s long-
term liquidity reserve, one purpose of which is to function as
a backup facility for the commercial paper programs.

Additionally outstanding as of December 31, 2014, were private
placements with a total volume of approximately €0.9 billion
(2013: €1.2 billion), as well as promissory notes with a total
volume of approximately €0.6 billion (2013: €0.7 billion).

€10 Billion and $10 Billion Commercial Paper Programs
The euro commercial paper program in the amount of €10 bil-
lion allows E.ON SE and EIF (under the unconditional guaran-
tee of E.ON SE) to issue from time to time commercial paper
with maturities of up to two years less one day to investors.
The U.S. commercial paper program in the amount of $10 billion
allows E.ON SE to issue from time to time commercial paper
with matur ities of up to 366 days and extendible notes with
original maturities of up to 397 days (and a subsequent exten-
sion option for the investor) to investors. As of December 31,
2014, €401 million (2013: €180 million) was outstanding under
the euro commercial paper program. No commercial paper
was outstanding under the U.S. commercial paper program,
as in the previous year.

174 Notes

The bonds issued by E.ON SE and those issued by EIF and E.ON
Betei li gungen GmbH (respectively guaranteed by E.ON SE)
have the maturities presented in the table below. Liabilities
denominated in foreign currency include the effects of eco-
nomic hedges, and the amounts shown here may therefore
vary from the amounts presented on the balance sheet.

Bonds Issued by E.ON SE, E.ON International Finance B.V. and E.ON Beteiligungen GmbH

€ in millions

December 31, 2014

December 31, 2013

Total

14,704

18,463

Due
in 2014

–

3,166

Due
in 2015

1,118

1,250

Due
in 2016

1,238

1,650

Due
in 2017

2,669

3,275

Due
in 2018

1,796

1,486

Due
between
2019 and
2025

3,206

3,192

Due
after 2025

4,677

4,444

Financial Liabilities by Segment
The following table breaks down the financial liabilities by
segment:

Financial Liabilities by Segment as of December 31

€ in millions

Bonds

Commercial paper

Bank loans/Liabilities to banks

Liabilities from finance leases

Other financial liabilities

Financial liabilities

Generation

Renewables

Global Commodities

2014

2013

2014

2013

2014

2013

–

1,324

1,434

–

217

760

1,019

–

411

495

–

630

710

–

457

159

616

–

584

625

Among other things, financial liabilities to financial institu-
tions include collateral received, measured at a fair value of
€142 million (2013: €196 million). This collateral relates to
amounts pledged by banks to limit the utilization of credit lines
in connection with the fair value measurement of derivative
trans actions. The other financial liabilities include promissory
notes in the amount of €638 million (2013: €691 million) and
financial guarantees totaling €11 million (2013: €30 million).
Additionally included in this line item are margin deposits
received in connection with forward transactions on futures
exchanges in the amount of €153 million (2013: €7 million), as
well as collateral received in connection with goods and ser-
vices in the amount of €22 million (2013: €22 million). E.ON
can use this collateral without restriction.

Trade Payables and Other Operating Liabilities

Trade payables totaled €2,185 million as of December 31, 2014
(2013: €2,485 million).

Capital expenditure grants of €381 million (2013: €451 million)
were paid primarily by customers for capital expenditures
made on their behalf, while the E.ON Group retains owner-
ship of the assets. The grants are non-refundable and are
recognized in other operating income over the period of the
depreciable lives of the related assets.

175

Exploration & Production

Germany

Other EU Countries

2014

2013

2014

2013

2014

2013

–

220

306

–

188

343

–

137

191

–

194

330

Group Management/
Consolidation

E.ON Group

2014

14,280

401

937

905

16,621

2013

17,993

180

206

1,220

19,697

2014

14,280

401

1,263

813

2,910

19,667

2013

18,049

180

787

913

2,795

22,724

Construction grants of €2,073 million (2013: €2,334 million)
were paid by customers for the cost of new gas and electricity
connections in accordance with the generally binding terms
governing such new connections. These grants are customary
in the industry, generally non-refundable and recognized
as revenue according to the useful lives of the related assets.

of counterparty obligations to acquire additional shares in
already consolidated subsidiaries, in the amount of €311 million
(2013: €343 million), as well as non-controlling interests in
fully consolidated partnerships with legal structures that give
their shareholders a statutory right of withdrawal combined
with a compensation claim, in the amount of €452 million
(2013: €442 million).

Other operating liabilities consist primarily of accruals in the
amount of €9,661 million (2013: €11,637 million) and interest
payable in the amount of €594 million (2013: €782 million).
Also included in other operating liabilities are carryforwards

The trade payables and other operating liabilities reported
include no liabilities attributable to exploration activities (2013:
€8 million).

176 Notes

(27) Contingencies and Other Financial Obligations

As part of its business activities, E.ON is subject to contingen-
cies and other financial obligations involving a variety of
underlying matters. These primarily include guarantees, obli-
gations from litigation and claims (as discussed in more
detail in Note 28), short- and long-term contractual, legal and
other obligations and commitments.

Contingencies

The fair value of the E.ON Group’s contingent liabilities arising
from existing contingencies was €48 million as of Decem-
ber 31, 2014 (2013: €52 million). E.ON currently does not have
reimbursement rights relating to the contingent liabilities
disclosed.

E.ON has issued direct and indirect guarantees to third parties,
which require E.ON to make contingent payments based on
the occurrence of certain events. These consist primarily of
financial guarantees and warranties.

In addition, E.ON has also entered into indemnification agree-
ments. Along with other guarantees, these indemnification
agreements are incorporated in agreements entered into by
Group companies concerning the disposal of shareholdings
and, above all, cover the customary representations and war-
ranties, as well as environmental damage and tax contingen-
cies. In some cases, obligations are covered in the first instance
by provisions of the disposed companies before E.ON itself is
required to make any payments. Guarantees issued by compa-
nies that were later sold by E.ON SE (or VEBA AG and VIAG AG
before their merger) are usually included in the respective
final sales contracts in the form of indemnities.

Moreover, E.ON has commitments under which it assumes
joint and several liability arising from its interests in civil-law
companies (“GbR”), non-corporate commercial partnerships
and consortia in which it participates.

The guarantees of E.ON also include items related to the oper-
ation of nuclear power plants. With the entry into force of
the German Nuclear Energy Act (“Atomgesetz” or “AtG”), as
amended, and of the ordinance regulating the provision for
coverage under the Atomgesetz (“Atomrecht liche Deckungs-
vorsorge-Verordnung” or “AtDeckV”) of April 27, 2002, as
amended, German nuclear power plant operators are required
to provide nuclear accident liability coverage of up to €2.5 bil-
lion per incident.

The coverage requirement is satisfied in part by a standardized
insurance facility in the amount of €255.6 million. The insti-
tution Nuklear Haftpflicht Gesellschaft bürgerlichen Rechts
(“Nuklear Haftpflicht GbR”) now only covers costs between
€0.5 million and €15 million for claims related to officially
ordered evacuation measures. Group companies have agreed
to place their subsidiaries operating nuclear power plants
in a position to maintain a level of liquidity that will enable
them at all times to meet their obligations as members of
the Nuklear Haftpflicht GbR, in proportion to their sharehold-
ings in nuclear power plants.

To provide liability coverage for the additional €2,244.4 million
per incident required by the above-mentioned amendments,
E.ON Energie AG (“E.ON Energie”) and the other parent compa-
nies of German nuclear power plant operators reached a
Solidarity Agreement (“Solidarvereinbarung”) on July 11, July 27,
August 21, and August 28, 2001, extended by agreement dated
March 25, April 18, April 28, and June 1, 2011. If an accident
occurs, the Solidarity Agreement calls for the nuclear power
plant operator liable for the damages to receive—after the
operator’s own resources and those of its parent companies
are exhausted—financing sufficient for the operator to meet
its financial obligations. Under the Solidarity Agreement,
E. ON Energie’s share of the liability coverage on December 31,
2014, remained unchanged from 2013 at 42.0 percent plus
an additional 5.0 percent charge for the administrative costs
of processing damage claims. Sufficient liquidity has been
provided for within the liquidity plan.

In accordance with Swedish law, the companies of the Swedish
generation unit and their parent company have issued guar-
antees to governmental authorities. The guarantees were issued
to cover possible additional costs related to the disposal of
high-level radioactive waste and to the decommissioning of
nuclear power plants. These costs could arise if actual costs

177

exceed accumulated funds. In addition, the companies of the
Swedish generation unit and their parent company are also
responsible for any costs related to the disposal of low-level
radioactive waste.

In Sweden, owners of nuclear facilities are liable for damages
resulting from accidents occurring in those nuclear facilities
and for accidents involving any radioactive substances con-
nected to the operation of those facilities. The liability per
incident as of December 31, 2014, was limited to SEK 3,394 mil-
lion, or €361 million (2013: SEK 3,007 million, or €339 million).
This amount must be insured according to the Law Concerning
Nuclear Liability. The necessary insurance for the affected
nuclear power plants has been purchased. On July 1, 2010, the
Swedish Parliament passed a law that requires the operator
of a nuclear power plant in operation to have liability insurance
or other financial security in an amount equivalent to €1.2 bil-
lion per facility. As of December 31, 2014, the conditions enabling
this law to take effect were not yet in place.

The Generation global unit operates nuclear power plants
only in Germany and Sweden. Accordingly, there are no addi-
tional contingencies comparable to those mentioned above.

Other Financial Obligations

In addition to provisions and liabilities carried on the balance
sheet and to reported contingent liabilities, there also are
other mostly long-term financial obligations arising mainly
from contracts entered into with third parties, or on the basis
of legal requirements.

As of December 31, 2014, purchase commitments for invest-
ments in intangible assets and in property, plant and equip-
ment amounted to €1.7 billion (2013: €2.5 billion). Of these
commitments, €1.3 billion are due within one year. This total
mainly includes financial obligations for as yet outstanding
investments in connection with new power plant construction
pro jects and the expansion and modernization of existing
generation assets, as well as with gas infrastructure projects,

particularly at the Generation, Renewables, Global Commodi-
ties, Germany, Russia and Sweden units. On December 31, 2014,
the obligations for new power plant construction reported
under these purchase commitments totaled €0.9 billion. They
also include the obligations relating to the construction of
wind power plants.

Additional financial obligations arose from rental and tenancy
agreements and from operating leases. The corresponding
minimum lease payments are due as broken down in the
table below:

E.ON as Lessee—Operating Leases

€ in millions

Due within 1 year

Due in 1 to 5 years

Due in more than 5 years

Total

Minimum lease payments

2014

221

539

795

1,555

2013

209

481

579

1,269

The expenses reported in the income statement for such con-
tracts amounted to €210 million (2013: €254 million). They
include contingent rents that were expensed when they arose
in 2014.

Additional long-term contractual obligations in place at the
E.ON Group as of December 31, 2014, relate primarily to the
purchase of fossil fuels such as natural gas, lignite and hard
coal. Financial obligations under these purchase contracts
amounted to approximately €235.8 billion on December 31, 2014
(€10.8 billion due within one year).

Gas is usually procured on the basis of long-term purchase
contracts with large international producers of natural gas.
Such contracts are generally of a “take-or-pay” nature. The
prices paid for natural gas are tied to the prices of competing
energy sources or market reference prices, as dictated by
market conditions. The conditions of these long-term contracts
are reviewed at certain specific intervals (usually every three
years) as part of contract negotiations and may thus change

178 Notes

accordingly. In the absence of an agreement on a pricing
review, a neutral board of arbitration makes a final binding
decision. Financial obligations arising from these contracts are
calculated based on the same principles that govern internal
budgeting. Furthermore, the take-or-pay conditions in the indi-
vidual contracts are also considered in the calculations. The
decrease compared with December 31, 2013, in contractual
obligations for the purchase of fossil fuels, and gas procure-
ment in particular, is primarily attributable to a reduction in the
minimum purchase requirement and to an increase in contracts
measured at fair value. The latter have already been accounted
for at their market values.

As of December 31, 2014, €4.0 billion in contractual obligations
(€1.7 billion due within one year) are in place for the purchase
of electricity; these relate in part to purchases from jointly
operated power plants in the Generation and Renewables units.
The purchase price of electricity from jointly operated power

plants is generally based on the supplier’s production cost plus
a profit margin that is generally calculated on the basis of
an agreed return on capital.

Other purchase commitments as of December 31, 2014,
amounted to approximately €4.0 billion (€0.5 billion due within
one year). In addition to purchase commitments primarily
for heat and alternative fuels, there are long-term contractual
obligations in place at the Generation unit for the purchase
of nuclear fuel elements and of services relating to the interim
and final storage of nuclear fuel elements.

Aside from the preceding, further financial obligations in place
as of December 31, 2014, totaled approximately €3.3 billion
(€1.1 billion due within one year). They include, among other
things, financial obligations from services to be procured and
obligations concerning the acquisition of real estate funds held
as financial assets, as well as corporate actions.

(28) Litigation and Claims

A number of different court actions (including product liability
claims, price adjustments and allegations of price fixing),
governmental investi gations and proceedings, and other claims
are currently pending or may be instituted or asserted in
the future against companies of the E.ON Group. This in partic-
ular includes legal actions and proceedings on contract
amendments and price adjustments initiated in response to
market upheavals and the changed economic situation in
the gas and electricity sectors (also as a consequence of the
energy transition) concerning price increases, alleged price-
fixing agreements and anticompetitive practices. Legal action
is also pending in the nuclear power segment, centered on
the new Repository Site Selection Act and the nuclear-power
moratorium in Germany.

The entire sector is involved in a multitude of court proceed-
ings throughout Germany in the matter of price-adjustment
clauses in the retail electricity and gas supply business with
high-volume customers. These proceedings also include
actions for the restitution of amounts collected through price
increases imposed using price-adjustment clauses determined
to be invalid. In a judgment delivered in October 2014, the
European Court of Justice ruled that Germany’s Basic Supply
Ordinances for Power and Gas do not comply with the relevant
European directives. The German Federal Court of Justice
must now rule on the legal consequences of this violation
for German law. That ruling is expected to be delivered in
2015. Although no companies of the E.ON Group are directly

179

2011, E.ON filed a constitutional complaint against the thir-
teenth amendment of the Nuclear Energy Act with the Federal
Constitutional Court of Germany in Karls ruhe. The nuclear-fuel
tax remains at its original level after the reversal of the oper-
ating-life extensions. E.ON believes that this tax contravenes
Germany’s constitution and European law and is therefore
pursuing administrative proceedings and taking legal action
against it. This view was affirmed by both the Hamburg Fiscal
Court and the Munich Fiscal Court. The legal issues involved
have been presented to both the Federal Constitutional Court
and the European Court of Justice.

Because litigation and claims are subject to numerous uncertain-
ties, their outcome cannot be ascertained; however, in the opin-
ion of management, any potential obligations arising from these
matters will not have a material adverse effect on the financial
condition, results of operations or cash flows of the Company.

involved in these partic ular preliminary-ruling proceedings, a
finding that European law has been violated could still give
rise to claims against Group companies for the restitution of
amounts collected through such price increases. Furthermore,
there are several court proceedings with major customers
on contract amendments and price adjustments in long-term
electricity and gas supply contracts in response to the altered
situation brought about by market upheavals. In some of these
cases, customers are challenging the validity not only of the
price-adjustment clauses, but of the contracts in their entirety.

Competition in the gas market and rising trading volumes at
virtual trading points and on gas exchanges could result in
considerable risks for gas quantities purchased under long-
term take-or-pay contracts. In addition, given the extensive
upheavals in the German wholesale markets for natural gas
in the past years, substantial price risks have arisen between
purchase and sales volumes. Long-term gas-procurement
contracts generally include the option for producers and
importers to adjust the terms in line with constantly changing
market conditions. On this basis, E. ON Global Commodities
continuously conducts intensive negotiations with producers.
The possibility of further legal disputes cannot be excluded.

The reactor accident at Fukushima caused the political parties
in Germany’s coalition government to reverse their nuclear-
energy policy. Having initially extended the operating lives of
the country’s nuclear power plants in the fall of 2010 as pro-
vided for in the coalition agreement at the time, the German
federal government then rescinded the extensions in the thir-
teenth amended version of the Nuclear Energy Act, and added
further restrictive provisions. However, E.ON contends that
the nuclear phaseout as currently legislated is irreconcilable
with constitutionally-protected property rights and the free-
dom to choose an occupation and operate a business. Such an
intervention would, in E.ON’s view, be unconstitutional unless
compensation is granted for the rights thus taken, and for the
corresponding stranded assets. Accordingly, in mid-November

180 Notes

(29) Supplemental Cash Flow Disclosures

Supplemental Cash Flow Disclosures

€ in millions

2014

2013

Non-cash investing and financing
activities

Funding of external fund assets for
pension obligations through transfer of
fixed-term deposits and securities

623

975

The total consideration received by E.ON in 2014 on the disposal
of consolidated equity interests and activities generated cash
inflows of €939 million (2013: €3,599 million). Cash and cash
equivalents divested in connection with the disposals amounted
to €27 million (2013: €612 million). The sale of these activities
led to reductions of €1,625 million (2013: €7,165 million) in
assets and €572 million (2013: €3,112 million) in provisions and
liabilities.

The purchase prices paid for subsidiaries totaled €22 million
in 2014 (2013: €50 million). The acquisitions included cash and
cash equivalents in the amount of €1 million (2013: €6 million).

At €6.3 billion, the E.ON Group’s operating cash flow was at
the prior-year level, as were cash earnings and working capital;
the latter having benefited from the successful implementa-
tion of the “Working Capital Excellence” project.

Cash provided by investing activities of continuing operations
amounted to roughly -€3.3 billion (2013: -€0.6 billion). The
substantial cash inflows–€6.5 billion– generated in the previ-
ous year from the disposal of equity investments under the
divestment program were not matched in 2014. These inflows
were €4.3 billion (66 percent) lower than in 2013; they were
primarily generated in the Renewables, Global Commodities,
Germany and Czechia units, in the amount of €2.2 billion.
Inflows from the disposal of intangible assets and of property,
plant and equipment also fell, by €0.3 billion. This substantial
decline in divestment cash flows was partly offset by a reduc-
tion of €3.4 billion in investment spending, which in 2013
had primarily reflected the acquisition and expansion of new
activities in Turkey and Brazil. Accordingly, spending on intan-
gible assets, on property, plant and equipment and on equity
investments was approximately 42 percent lower in 2014
than in 2013. Changes in securities, fixed-term deposits and
restricted cash and cash equivalents produced a net outflow
of cash €1.5 billion higher than in the previous year.

In 2014, cash provided by financing activities of continuing
operations totaled -€4.6 billion (2013: -€4.0 billion). The
€1.9 billion increase in the net repayment of financial liabil-
ities was partly offset by the lowering of the dividend payout
by roughly €1.3 billion relative to the previous year.

Exploration activity resulted in operating cash flow of
-€49 million (2013: -€71 million) and in cash flow from invest-
ing activities of -€13 million (2012: -€95 million).

(30) Derivative Financial Instruments and Hedging
Transactions

Strategy and Objectives

The Company’s policy generally permits the use of derivatives
if they are associated with underlying assets or liabilities,
planned transactions, or legally binding rights or obligations.

Hedge accounting in accordance with IAS 39 is employed pri-
marily for interest rate derivatives used to hedge long-term
debts and bonds to be issued in the future, as well as for cur-
rency derivatives used to hedge net investments in foreign
operations, long-term receivables and debts denominated in
foreign currency, as well as planned capital investments.

In commodities, potentially volatile future cash flows resulting
primarily from planned purchases and sales of electricity
within and outside of the Group, as well as from anticipated
fuel purchases and purchases and sales of gas, are hedged.

181

Fair Value Hedges

Fair value hedges are used to protect against the risk from
changes in market values. Gains and losses on these hedges
are generally reported in that line item of the income state-
ment which also includes the respective hedged items.

Cash Flow Hedges

Cash flow hedges are used to protect against the risk arising
from variable cash flows. Interest rate swaps, cross-currency
interest rate swaps, swaptions and interest rate options are
the principal instruments used to limit interest rate and cur-
rency risks. The purpose of these swaps is to maintain the level
of payments arising from long-term interest-bearing receivables
and liabilities and from capital investments denominated in
foreign currency and euro by using cash flow hedge accounting
in the functional currency of the respective E.ON company.

In order to reduce future cash flow fluctuations arising from
electricity transactions effected at variable spot prices, futures
contracts are concluded and also accounted for using cash
flow hedge accounting.

As of December 31, 2014, the hedged transactions in place
included foreign currency cash flow hedges with maturities
of up to 23 years (2013: up to 25 years) and interest cash
flow hedges with maturities of up to twelve years (2013: up to
one year). Hedged commodity transactions expired regularly
in 2014; in 2013, commodity cash flow hedges had maturities
of up to one year.

The amount of ineffectiveness for cash flow hedges recorded
for the year ended December 31, 2014, produced a loss of
€25 million (2013: €20 million gain).

Pursuant to the information available as of the balance sheet
date, the following effects will accompany the reclassifications
from accumulated other comprehensive income to the income
statement in subsequent periods:

Timing of Reclassifications from OCI 1 to the Income Statement—2014

€ in millions

OCI—Currency cash flow hedges

OCI—Interest cash flow hedges

OCI—Commodity cash flow hedges

1OCI = Other comprehensive income. Figures are pre-tax.

Carrying
amount

1,031

-1

Expected gains/losses

2015

2016

2017–2019

–

-8

-9

–

-22

–

>2019

-1,072

-31

–

Timing of Reclassifications from OCI 1 to the Income Statement—2013

€ in millions

OCI—Currency cash flow hedges

OCI—Interest cash flow hedges

OCI—Commodity cash flow hedges

1OCI = Other comprehensive income. Figures are pre-tax.

Gains and losses from reclassification are generally reported in
that line item of the income statement which also includes
the respective hedged transaction. Gains and losses from the
ineffective portions of cash flow hedges are classified as
other operating income or other operating expenses. Interest
cash flow hedges are reported under “Interest and similar
expenses.” The fair values of the designated derivatives in cash
flow hedges totaled -€974 million (2013: -€546 million).

Carrying
amount

328

-12

Expected gains/losses

2014

2015

2016–2018

>2018

–

-6

-7

–

-15

–

-379

-33

–

A loss of €55 million (2013: €124 million gain) was posted to
other comprehensive income in 2014. In the same period,
a loss of €663 million (2013: €12 million loss) was reclassified
from OCI to the income statement.

182 Notes

Net Investment Hedges

The Company uses foreign currency loans, foreign currency
forwards and foreign currency swaps to protect the value of
its net investments in its foreign operations denominated
in foreign currency. For the year ended December 31, 2014, the
Company recorded an amount of €269 million (2013: -€23 mil-
lion) in accumulated other comprehensive income due to
changes in fair value of derivatives and to currency translation
results of non-derivative hedging instruments. As in 2013, no
ineffectiveness resulted from net investment hedges in 2014.

Valuation of Derivative Instruments

The fair value of derivative financial instruments is sensitive
to movements in underlying market rates and other relevant
variables. The Company assesses and monitors the fair value
of deri vative instruments on a periodic basis. The fair value
to be determined for each derivative instrument is the price
that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants
on the measurement date (exit price). E.ON also takes into
account the counterparty credit risk when determining fair
value (credit value adjustment). The fair values of derivative
instruments are calculated using common market valuation
methods with reference to available market data on the
measurement date.

The following is a summary of the methods and assumptions
for the valuation of utilized derivative financial instruments
in the Consolidated Financial Statements.

•

Currency, electricity, gas, oil and coal forward contracts,
swaps, and emissions-related derivatives are valued sep-
arately at their forward rates and prices as of the balance
sheet date. Whenever possible, forward rates and prices
are based on market quotations, with any applicable for-
ward premiums and discounts taken into consideration.

• Market prices for interest rate, electricity and gas options
are valued using standard option pricing models com-
monly used in the market. The fair values of caps, floors
and collars are determined on the basis of quoted market
prices or on calculations based on option pricing models.

•

The fair values of existing instruments to hedge interest
risk are determined by discounting future cash flows using
market interest rates over the remaining term of the
instrument. Discounted cash values are determined for
interest rate, cross-currency and cross-currency interest
rate swaps for each individual transaction as of the bal-
ance sheet date. Interest income is recognized in income
at the date of payment or accrual.

Equity forwards are valued on the basis of the stock prices
of the underlying equities, taking into consideration any
timing components.

Exchange-traded futures and option contracts are valued
individually at daily settlement prices determined on the
futures markets that are published by their respective
clearing houses. Paid initial margins are disclosed under
other assets. Variation margins received or paid during
the term of such contracts are stated under other liabilities
or other assets, respectively.

Certain long-term energy contracts are valued with the
aid of valuation models that use internal data if market
prices are not available. A hypothetical 10-percent increase
or decrease in these internal valuation parameters as of
the balance sheet date would lead to a theo retical
decrease in market values of €60 million or an increase
of €63 million, respectively.

At the beginning of 2014, a loss of €42 million from the initial
measurement of derivatives was deferred. After realization of
€6 million in gains, the remainder is a deferred loss of €48 mil-
lion at year-end, which will be recognized in income during
subsequent periods as the contracts are settled.

The following two tables include both derivatives that qualify
for IAS 39 hedge accounting treatment and those for which
it is not used:

183

Total Volume of Foreign Currency, Interest Rate and Equity-Based Derivatives

€ in millions

FX forward transactions

Subtotal

Cross-currency swaps

Cross-currency interest rate swaps

Subtotal

Interest rate swaps
Fixed-rate payer
Fixed-rate receiver

Interest rate options

Subtotal

Other derivatives

Subtotal

Total

December 31, 2014

December 31, 2013

Nominal
value

17,113.9

8,175.7

35.5

8,211.2

2,893.0
2,393.0
500.0

2,000.0

4,893.0

208.0

Fair value

42.9

-134.6

32.1

-102.5

-558.2
-607.5
49.3

-322.5

-880.7

9.8

Nominal
value

21,548.5

9,854.2

35.5

9,889.7

2,776.3
2,276.3
500.0

2,000.0

4,776.3

9.1

Fair value

-67.4

-211.4

32.6

-178.8

-195.2
-235.8
40.6

-29.8

-225.0

–

0.0

30,426.1

-930.5

36,223.6

-471.2

Total Volume of Electricity, Gas, Coal, Oil and Emissions-Related Derivatives

December 31, 2014

December 31, 2013

€ in millions

Electricity forwards

Exchange-traded electricity forwards

Electricity swaps

Electricity options

Gas forwards

Exchange-traded gas forwards

Gas swaps

Gas options

Coal forwards and swaps

Exchange-traded coal forwards

Oil derivatives

Exchange-traded oil derivatives

Emissions-related derivatives

Exchange-traded emissions-related derivatives

Other derivatives

Other exchange-traded derivatives

Total

Nominal
value

Fair value

50,440.2

15,408.3

2,462.8

256.1

37,619.7

9,723.6

5,888.7

68.3

1,807.0

12,004.3

9,431.7

4,711.2

–

808.0

38.8

103.9

519.1

175.9

49.1

-27.8

282.4

72.2

15.0

19.0

1.8

-296.4

-72.1

31.4

–

84.7

-2.8

18.2

Nominal
value

45,407.3

9,671.0

3,179.1

55.7

22,879.6

3,213.1

1,077.3

15.9

2,646.6

10,849.0

8,571.0

15,969.2

4.5

1,128.5

42.5

58.3

150,772.6

869.7

124,768.6

Fair value

172.9

260.5

12.5

2.7

328.3

-5.0

0.9

-1.4

-78.2

-172.5

53.4

-13.7

-5.5

-157.5

2.4

-6.2

393.6

184 Notes

(31) Additional Disclosures on Financial
Instruments

The carrying amounts of the financial instruments, their
grouping into IAS 39 measurement categories, their fair values
and their measurement sources by class are presented in the
following table:

Carrying Amounts, Fair Values and Measurement Categories by Class
within the Scope of IFRS 7 as of December 31, 2014

€ in millions

Equity investments

Financial receivables and other financial assets

Receivables from finance leases
Other financial receivables and financial assets

Trade receivables and other operating assets

Trade receivables
Derivatives with no hedging relationships
Derivatives with hedging relationships
Other operating assets

Securities and fixed-term deposits

Cash and cash equivalents

Restricted cash

Assets held for sale

Total assets

Financial liabilities

Bonds
Commercial paper
Bank loans/Liabilities to banks
Liabilities from finance leases
Other financial liabilities

Trade payables and other operating liabilities

Trade payables
Derivatives with no hedging relationships
Derivatives with hedging relationships
Put option liabilities under IAS 32 2
Other operating liabilities

Total liabilities

Total carry-
ing amounts
within the
scope of
IFRS 7

IAS 39
measure-
ment
category 1

Carrying
amounts

Determined
using mar-
ket prices

Derived
from active
market
prices

Fair value

1,573

4,909
645
4,264

28,258
11,800
13,346
370
2,742

6,593

3,191

1,064

5,770

1,573

3,739
645
3,094

26,984
11,800
13,346
370
1,468

6,593

3,191

1,064

125

AfS

n/a
LaR

LaR
HfT
n/a
LaR

AfS

1,573

4,032
645
3,387

26,984
11,800
13,346
370
1,468

6,593

3,191

1,064

125

120

99
99
–

6,157
–
6,157
–
–

5,761

3,143

1,064

51,358

43,269

43,562

16,365

19,667
14,280
401
1,263
813
2,910

32,419
2,185
12,332
1,444
764
15,694

52,086

19,222
14,280
401
1,263
813
2,465

27,151
2,185
12,332
1,444
764
10,426

46,373

AmC
AmC
AmC
n/a
AmC

AmC
HfT
n/a
AmC
AmC

23,213
17,997
401
1,263
1,296
2,256

27,151
2,185
12,332
1,444
764
10,426

50,364

18,824
17,997
–
–
–
827

6,187
–
6,187
–
–
–

25,011

320

546
546
–

7,115
–
6,745
370
–

832

–

104

8,965

1,664
–
401
1,263
–
–

7,541
–
6,097
1,444
–
–

9,205

1AfS: Available for sale; LaR: Loans and receivables; HfT: Held for trading; AmC: Amortized cost. The measurement categories are described in detail in Note 1. The amounts deter-
mined using valuation techniques with unobservable inputs (Level 3 of the fair value hierarchy) correspond to the difference between the total fair value and the fair values of the
two hierarchy levels listed.
2Liabilities from put options include counterparty obligations and non-controlling interests in fully consolidated partnerships (see Note 26).

The carrying amounts of cash and cash equivalents and of
trade receivables are considered reasonable estimates of their
fair values because of their short maturity.

Where the value of a financial instrument can be derived from
an active market without the need for an adjustment, that
value is used as the fair value. This applies in particular to
equities held and to bonds held and issued.

185

Carrying Amounts, Fair Values and Measurement Categories by Class
within the Scope of IFRS 7 as of December 31, 2013

€ in millions

Equity investments

Financial receivables and other financial assets

Receivables from finance leases
Other financial receivables and financial assets

Trade receivables and other operating assets

Trade receivables
Derivatives with no hedging relationships
Derivatives with hedging relationships
Other operating assets

Securities and fixed-term deposits

Cash and cash equivalents

Restricted cash

Assets held for sale

Total assets

Financial liabilities

Bonds
Commercial paper
Bank loans/Liabilities to banks
Liabilities from finance leases
Other financial liabilities

Trade payables and other operating liabilities

Trade payables
Derivatives with no hedging relationships
Derivatives with hedging relationships
Put option liabilities under IAS 32 2
Other operating liabilities

Total liabilities

Total carry-
ing amounts
within the
scope of
IFRS 7

IAS 39
measure-
ment
category 1

Carrying
amounts

Determined
using mar-
ket prices

Derived
from active
market
prices

Fair value

1,966

5,204
725
4,479

24,148
14,257
6,241
458
3,192

7,092

4,527

639

1,031

1,966

5,066
725
4,341

22,545
14,257
6,241
458
1,589

7,092

4,527

639

204

AfS

n/a
LaR

LaR
HfT
n/a
LaR

AfS

1,966

5,308
725
4,583

22,545
14,257
6,241
458
1,589

7,092

4,527

639

204

120

106
106
–

1,878
–
1,878
–
–

6,468

4,493

639

44,607

42,039

42,281

13,777

22,724
18,049
180
787
913
2,795

28,211
2,485
5,953
829
785
18,159

50,935

22,674
18,049
180
787
913
2,745

21,497
2,485
5,953
829
785
11,445

44,171

AmC
AmC
AmC
n/a
AmC

AmC
HfT
n/a
AmC
AmC

25,837
20,761
180
787
1,429
2,680

21,497
2,485
5,953
829
785
11,445

47,334

21,102
20,761
–
–
–
341

2,001
–
2,001
–
–
–

23,103

422

204
204
–

4,536
–
4,078
458
–

624

–

131

5,951

967
–
180
787
–
–

4,626
–
3,797
829
–
–

5,593

The fair value of shareholdings in unlisted companies and
of debt instruments that are not actively traded, such as
loans received, loans granted and financial liabilities, is deter-
mined by discounting future cash flows. Any necessary
discounting takes place using current market interest rates
over the remaining terms of the financial instruments. Fair

value measurement was not applied in the case of share-
holdings with a carrying amount of €49 million (2013: €19 mil-
lion) as cash flows could not be determined reliably for them.
Fair values could not be derived on the basis of comparable
transactions. The shareholdings are not material by comparison
with the overall position of the Group.

186 Notes

The carrying amount of commercial paper, borrowings under
revolving short-term credit facilities and trade payables is
used as the fair value due to the short maturities of these items.
The determination of the fair value of derivative financial
instruments is discussed in Note 30.

In the fourth quarter of 2014, there were no material reclassi-
fications between Levels 1 and 2 of the fair value hierarchy. At
the end of each reporting period, E. ON assesses whether there
might be grounds for reclassification between hierarchy levels.

The input parameters of Level 3 of the fair value hierarchy
for equity investments are specified taking into account eco-
nomic developments and available industry and corporate
data (see also Note 1). In 2014, equity investments were
reclassified into Level 3 in the amount of €67 million, and out
of Level 3 into Level 2 in the amount of €30 million. The fair
values determined using valuation techniques for financial
instruments carried at fair value are reconciled as shown in
the following table:

Fair Value Hierarchy Level 3 Reconciliation (Values Determined Using Valuation Techniques)

Purchases
(including
additions)

Sales
(including
disposals)

Settle-
ments

-5

-39

-15

-54

–

Jan. 1,
2014

1,424

130

1,554

Gains/
Losses in
income
state-
ment

–

287

Transfers

into
Level 3

out of
Level 3

-1

-30

–

-30

Gains/
Losses in
OCI

-324

–

-324

Dec. 31,
2014

1,133

396

1,529

€ in millions

Equity investments

Derivative financial
instruments

Total

The extent to which the offsetting of financial assets is covered
by netting agreements is presented in the following table:

Netting Agreements for Financial Assets and Liabilities as of December 31, 2014

€ in millions

Financial assets

Trade receivables

Interest-rate and currency derivatives

Commodity derivatives

Total

Financial liabilities

Interest-rate and currency derivatives

Commodity derivatives

Other operating liabilities

Total

Gross amount

Amount
offset

Carrying
amount

Conditional
netting
amount
(netting
agreements)

Financial
collateral
received/
pledged

11,800

1,447

12,269

25,516

2,375

11,401

15,694

29,470

–

11,800

1,447

12,269

25,516

2,375

11,401

15,694

29,470

4,300

–

4,205

8,505

–

4,195

–

4,195

–

143

121

264

981

328

–

1,309

Net value

7,500

1,304

7,943

16,747

1,394

6,878

15,694

23,966

187

Netting Agreements for Financial Assets and Liabilities as of December 31, 2013

€ in millions

Financial assets

Trade receivables

Interest-rate and currency derivatives

Commodity derivatives

Total

Financial liabilities

Interest-rate and currency derivatives

Commodity derivatives

Other operating liabilities

Total

Gross amount

Amount
offset

Carrying
amount

Conditional
netting
amount
(netting
agreements)

Financial
collateral
received/
pledged

14,257

1,859

6,058

22,174

1,343

6,657

18,159

26,159

–

1,218

–

1,218

–

1,218

14,257

641

6,058

20,956

125

6,657

18,159

24,941

3,664

–

1,920

5,584

–

1,920

3,664

5,584

–

196

203

103

468

–

571

Net value

10,593

445

4,131

15,169

4,269

14,495

18,786

The netting agreements as of December 31, 2013, included a
netted amount of €1,218 million, which must now be pre-
sented gross in line with the first-time application of IAS 32
as amended (see Note 2).

Transactions and business relationships resulting in the
derivative financial receivables and liabilities presented are
generally concluded on the basis of standard contracts that
permit the netting of open transactions in the event that a
counterparty becomes insolvent.

The netting agreements are derived from netting clauses
contained in master agreements including those of the Inter-
national Swaps and Derivatives Asso ciation (ISDA) and the
European Federation of Energy Traders (EFET), as well as the
German Master Agreement for Financial Derivatives Trans-
actions (“DRV”) and the Financial Energy Master Agreement
(“FEMA”). For currency and interest rate derivatives in the
financial sector, this netting option, if allowed, is reflected in
the accounting treatment and illustrated in the table above.
Collateral pledged to and received from financial institutions
in relation to these liabilities and assets limits the utilization
of credit lines in the fair value measurement of interest-rate
and currency derivatives, and is also shown in the table. For
commodity derivatives in the energy trading business, the
netting option is not presented in the accounting because the
legal enforceability of netting agreements varies by country.

188 Notes

The following two tables illustrate the contractually agreed
(undiscounted) cash outflows arising from the liabilities
included in the scope of IFRS 7:

Cash Flow Analysis as of December 31, 2014

€ in millions

Bonds

Commercial paper

Bank loans/Liabilities to banks

Liabilities from finance leases

Other financial liabilities

Financial guarantees

Cash outflows for financial liabilities

Trade payables

Derivatives (with/without hedging relationships)

Put option liabilities under IAS 32

Other operating liabilities

Cash outflows for trade payables and other operating liabilities

Cash outflows for liabilities within the scope of IFRS 7

Cash Flow Analysis as of December 31, 2013

€ in millions

Bonds

Commercial paper

Bank loans/Liabilities to banks

Liabilities from finance leases

Other financial liabilities

Financial guarantees

Cash outflows for financial liabilities

Trade payables

Derivatives (with/without hedging relationships)

Put option liabilities under IAS 32

Other operating liabilities

Cash outflows for trade payables and other operating liabilities

Cash outflows for liabilities within the scope of IFRS 7

Cash
outflows
2015

2,035

401

1,120

100

1,001

4,744

2,241

34,774

10,516

47,548

52,292

Cash
outflows
2016

1,943

Cash
outflows
2017–2019

Cash
outflows
from 2020

7,092

10,926

–

162

–

2,180

–

14,428

108

14,538

16,718

–

228

473

–

7,872

–

2,361

108

2,483

–

1,341

1,112

–

13,431

–

531

543

10,355

13,974

Cash
outflows
2014

4,217

Cash
outflows
2015

2,079

Cash
outflows
2016–2018

Cash
outflows
from 2019

8,455

11,719

180

654

108

552

457

6,168

3,810

22,177

11,445

37,504

43,672

–

160

326

–

2,606

–

4,919

4,950

7,556

–

262

642

–

9,411

–

1,424

135

1,564

–

1,720

1,213

–

14,716

–

562

153

715

10,975

15,431

189

Financial guarantees with a total nominal volume of €87 million
(2013: €457 million) were issued to companies outside of the
Group. This amount is the maximum amount that E.ON would
have to pay in the event of claims on the guarantees; a book
value of €11 million (2013: €30 million) has been recognized.

For financial liabilities that bear floating interest rates, the
rates that were fixed on the balance sheet date are used to
calculate future interest payments for subsequent periods
as well. Financial liabilities that can be terminated at any time
are assigned to the earliest maturity band in the same way
as put options that are exercisable at any time. All covenants
were complied with during 2014.

In gross-settled derivatives (usually currency derivatives and
commodity derivatives), outflows are accompanied by related
inflows of funds or commodities.

The net gains and losses from financial instruments by IAS 39
category are shown in the following table:

Net Gains and Losses by Category 1
€ in millions

Loans and receivables

Available for sale

Held for trading

Amortized cost

Total

1The categories are described in detail in Note 1.

2014

-96

722

1,166

-1,070

722

2013

-206

1,430

841

-1,188

877

In addition to interest income and expenses from financial
receivables, the net gains and losses in the loans and receiv-
ables category consist primarily of valuation allowances on
trade receivables. Gains and losses on the disposal of avail-
able-for-sale securities and equity investments are reported
under other operating income and other operating expenses,
respectively.

The net gains and losses in the amortized cost category are
due primarily to interest on financial liabilities, reduced by
capitalized construction-period interest.

The net gains and losses in the held-for-trading category
encompass both the changes in fair value of the derivative
financial instruments and the gains and losses on realiza tion.
The fair value measurement of commodity derivatives and
of realized gains on currency derivatives is the most important
factor in the net result for this category.

Risk Management

Principles
The prescribed processes, responsibilities and actions con-
cerning financial and risk management are described in detail
in internal risk management guidelines applicable throughout
the Group. The units have developed additional guidelines of
their own within the confines of the Group’s overall guidelines.
To ensure efficient risk management at the E. ON Group, the
Trading (Front Office), Financial Controlling (Middle Office) and
Financial Settlement (Back Office) departments are organized
as strictly separate units. Risk controlling and reporting in the
areas of interest rates, currencies, credit and liquidity manage-
ment is performed by the Financial Controlling department,
while risk controlling and reporting in the area of commodities
is performed at Group level by a separate department.

E.ON uses a Group-wide treasury, risk management and
reporting system. This system is a standard information tech-
nology solution that is fully integrated and is continuously
updated. The system is designed to provide for the analysis
and monitoring of the E.ON Group’s exposure to liquidity,
foreign exchange and interest risks. The units employ estab-
lished systems for commodities. Credit risks are monitored
and controlled on a Group-wide basis by Financial Controlling,
with the support of a standard software package. The com-
modity positions of most of the global and regional units are
transferred to the Global Commodities unit for risk manage-
ment and optimization purposes, based on a transfer-pricing
mechanism. Special risk management, coordinated with Group
Management, applies in a small number of exceptional cases.

190 Notes

Separate Risk Committees are responsible for the maintenance
and further development of the strategy set by the Board of
Management of E.ON SE with regard to commodity, treasury
and credit risk management policies.

1. Liquidity Management
The primary objectives of liquidity management at E.ON con-
sist of ensuring ability to pay at all times, the timely satisfac-
tion of contractual payment obligations and the optimization
of costs within the E.ON Group.

Cash pooling and external financing are largely centralized at
E.ON SE and certain financing companies. Funds are provided
to the other Group companies as needed on the basis of an
“in-house banking” solution.

E.ON SE determines the Group’s financing requirements on
the basis of short- and medium-term liquidity planning. The
financing of the Group is controlled and implemented on a
forward-looking basis in accordance with the planned liquidity
requirement or surplus. Relevant planning factors taken into
consideration include operating cash flow, capital expenditures,
divestments, margin payments and the maturity of bonds
and commercial paper.

2. Price Risks
In the normal course of business, the E.ON Group is exposed
to risks arising from price changes in foreign exchange, inter-
est rates, commodities and asset management. These risks
create volatility in earnings, equity, debt and cash flows from
period to period. E.ON has developed a variety of strategies
to limit or eliminate these risks, including the use of derivative
financial instruments, among others.

3. Credit Risks
E.ON is exposed to credit risk in its operating activities and
through the use of financial instruments. Uniform credit risk
management procedures are in place throughout the Group
to identify, measure and control credit risks.

The following discussion of E.ON’s risk management activities
and the estimated amounts generated from profit-at-risk (“PaR”),
value-at-risk (“VaR”) and sensitivity analyses are “forward-
looking statements” that involve risks and uncertainties. Actual
results could differ materially from those projected due to
actual, unforeseeable developments in the global financial
markets. The methods used by the Company to analyze risks
should not be considered forecasts of future events or losses.
For example, E.ON faces certain risks that are either non-
financial or non-quantifiable. Such risks principally include
country risk, oper ational risk, regulatory risk and legal risk,
which are not represented in the following analyses.

Foreign Exchange Risk Management
E.ON SE is responsible for controlling the currency risks to
which the E.ON Group is exposed.

Because it holds interests in businesses outside of the euro
area, currency translation risks arise within the E.ON Group.
Fluctuations in exchange rates produce accounting effects
attributable to the translation of the balance sheet and income
statement items of the foreign consolidated Group companies
included in the Consolidated Financial Statements. Translation
risks are hedged through borrowing in the corresponding
local currency, which may also includes shareholder loans in
foreign currency. In addition, derivative and primary financial
instruments are employed as needed. The hedges qualify for
hedge accounting under IFRS as hedges of net investments
in foreign operations. The Group’s translation risks are reviewed
at regular intervals and the level of hedging is adjusted when-
ever necessary. The respective debt factor and the enterprise
value denominated in the foreign currency are the principal
criteria governing the level of hedging.

191

The E.ON Group is also exposed to operating and financial
transaction risks attributable to foreign currency transactions.
These risks arise for the Group companies primarily from
physical and financial trading in commodities, from intragroup
relationships and from capital spending in foreign currency.
The subsidiaries are respon sible for controlling their operating
currency risks. E.ON SE coordinates hedging throughout the
Group and makes use of external derivatives as needed.

Financial transaction risks result from payments originating
from financial receivables and payables. They are generated
both by external financing in a variety of foreign currencies,
and by shareholder loans from within the Group denominated
in foreign currency. Financial transaction risks are generally
fully hedged.

The one-day value-at-risk (99 percent confidence) from the
translation of deposits and borrowings denominated in foreign
currency, plus foreign-exchange derivatives, was €143 million as
of December 31, 2014 (2013: €122 million) and resulted primarily
from the positions in British pounds and Swedish kronor.

Interest Risk Management
E.ON is exposed to profit risks arising from floating-rate finan-
cial liabilities and from interest rate derivatives. Positions
based on fixed interest rates, on the other hand, are subject
to changes in fair value resulting from the volatility of market
rates. E.ON seeks a specific mix of fixed- and floating-rate
debt over time. The long-term orientation of the business
model in principle means fulfilling a high proportion of financ-
ing requirements at fixed rates, especially within the medium-
term planning period. This also involves the use of interest
rate derivatives. With interest rate derivatives included, the
share of financial liabilities with fixed interest rates was
93 percent as of December 31, 2014 (2013: 93 percent). Under
otherwise unchanged circumstances, the volume of financial
liabilities with fixed interest rates, which amounted to €14.3 bil-
lion at year-end 2014, would decline to €13.1 billion in 2015
and to €10.4 billion in 2016. The effective interest rate duration
of the financial liabilities, including interest rate deriv atives,

was 7.4 years as of December 31, 2014 (2013: 7.1 years). The
volume-weighted average interest rate of the financial liabili-
ties, including interest rate deriv atives, was 5.6 percent as of
December 31, 2014 (2013: 5.5 percent).

As of December 31, 2014, the E.ON Group held interest rate
derivatives with a nominal value of €4,893 million (2013:
€4,776 million).

A sensitivity analysis was performed on the Group’s short-term
floating-rate borrowings, including hedges of both foreign
exchange risk and interest risk. This measure is used for inter-
nal risk controlling and reflects the economic position of
the E.ON Group. A one-percentage-point upward or downward
change in interest rates (across all currencies) would neither
raise nor lower interest charges in the subsequent fiscal year
(2013: €31 million increase or decrease).

Commodity Price Risk Management
The E.ON portfolio of physical assets, long-term contracts
and end-customer sales is exposed to substantial risks from
fluctuations in commodity prices. The principal commodity
prices to which E.ON is exposed relate to electricity, gas, hard
coal, iron ore, freight charters, petroleum products, LNG and
emission certificates.

The objective of commodity risk management is to transact
through physical and financial contracts to optimize the
value of the portfolio while reducing the potential negative
deviation from target EBITDA.

The maximum permissible risk is determined centrally by the
Board of Management and allocated over a three-year planning
horizon into a decentralized limit structure in coordination
with the units. Before limits are approved, investment plans
and all other known obligations and quantifiable risks are
taken into account. Ongoing risk controlling and reporting,
including portfolio optimization, is steered centrally by Group

192 Notes

Management and operationally managed within the units
independently from trading operations. There is a clear system
of internal controls in place that follows best-practice indus-
try standards of risk management.

From a forward-looking perspective, risks are assessed using
a profit-at-risk metric that quantifies the risk by taking into
account the size of the open position, price levels and price
volatilities, as well as the underlying market liquidity in each
market. Profit-at-risk reflects the potential negative change
in the market value of the open position if it is closed as
quickly as market liquidity allows with a 5-percent chance of
being exceeded.

The profit-at-risk for the financial and physical commodity
positions covering the planning horizon of up to three years
amounted to €1,412 million as of December 31, 2014 (2013:
€1,616 million).

As of December 31, 2014, the E.ON Group has entered into
electricity, gas, coal, oil and emissions-related derivatives with
a nominal value of €150,773 million (2013: €124,769 million).

A key foundation of the risk management system is the Group-
wide Commodity Risk Policy and the corresponding internal
policies of the units. These specify the control principles for
commodity risk management, minimum required standards
and clear management and operational responsibilities.

Commodity exposures and risks are aggregated across the
Group on a monthly basis and reported to both the Risk Com-
mittee and the Market Committee.

The commodity risk management as presented above reflects
the Group’s internal management reporting and also covers
the financial instruments within the scope of IFRS 7.

Credit Risk Management
In order to minimize credit risk arising from operating activi-
ties and from the use of financial instruments, the Company
enters into transactions only with counterparties that satisfy
the Company’s internally established minimum requirements.
Maximum credit risk limits are set on the basis of internal
and (where available) external credit ratings. The setting and
monitoring of credit limits is subject to certain minimum
requirements, which are based on Group-wide credit risk
management guidelines. Long-term operating contracts and
asset management transactions are not comprehensively
included in this process. They are monitored separately at the
level of the responsible units.

In principle, each Group company is responsible for managing
credit risk in its operating activities. Depending on the nature
of the operating activities and the credit risk, additional credit
risk monitoring and controls are performed both by the units
and by Group Management. Monthly reports on credit limits,
including their utilization, are submitted to the Risk Commit-
tee. Intensive, standardized monitoring of quantitative and
qualitative early-warning indicators, as well as close monitoring
of the credit quality of counterparties, enable E.ON to act early
in order to minimize risk.

To the extent possible, pledges of collateral are negotiated
with counterparties for the purpose of reducing credit risk.
Accepted as collateral are guarantees issued by the respective
parent companies or evidence of profit-and-loss-pooling
agreements in combination with letters of awareness. To a
lesser extent, the Company also requires bank guarantees
and deposits of cash and securities as collateral to reduce credit
risk. Risk-management collateral was accepted in the amount
of €7,157 million.

193

Management at E.ON SE, which is part of the Company’s
Finance Department, is responsible for continuous monitoring
of overall risks and those concerning individual fund managers.
Risk management is based on a risk budget whose usage is
monitored regularly. The three-month VaR with a 98-percent
confidence interval for these financial assets was €240 million
(2013: €88 million). The increase relative to the previous year
is primarily attributable to higher market volatility.

In addition, the mutual insurance fund Versorgungskasse
Energie VVaG (“VKE”) manages financial assets that are almost
exclusively dedicated to the coverage of benefit obligations
at E.ON Group companies in Germany; these assets totaled
€1.0 billion at year-end 2014 (2013: €0.8 billion). The assets
at VKE do not constitute plan assets under IAS 19 (see Note 24)
and are shown as non-current and current assets on the bal-
ance sheet. The majority of the diversified portfolio, consisting
of money market instruments, bonds, real estate and equities,
is held in investment funds managed by external fund man-
agers. VKE is subject to the provisions of the Insurance Super-
vision Act (“Versicherungs aufsichts gesetz” or “VAG”) and its
operations are supervised by the German Federal Financial
Supervisory Authority (“Bundes anstalt für Finanzdienstleis-
tungs aufsicht” or “BaFin”). Financial investments and contin-
uous risk management are conducted within the regulatory
confines set by BaFin. The three-month VaR with a 98-percent
confidence interval for these financial assets was €35.3 million
(2013: €35.8 million).

The levels and backgrounds of financial assets received as
collateral are described in more detail in Notes 18 and 26.

Derivative transactions are generally executed on the basis of
standard agreements that allow for the netting of all open
transactions with individual counterparties. To further reduce
credit risk, bilateral margining agreements are entered into
with selected counterparties. Limits are imposed on the credit
and liquidity risk resulting from bilateral margining agreements.

Exchange-traded forward and option contracts as well as
exchange-traded emissions-related derivatives having an aggre-
gate nominal value of €42,759 million as of December 31, 2014,
(2013: €40,889 million) bear no credit risk. For the remaining
financial instruments, the maximum risk of default is equal to
their carrying amounts.

At E.ON, liquid funds are normally invested at banks with good
credit ratings, in money market funds with first-class ratings
or in short-term securities (for example, commercial paper) of
issuers with strong credit ratings. Bonds of public and private
issuers are also selected for investment. Group companies that
for legal reasons are not included in the cash pool invest
money at leading local banks. Standardized credit assessment
and limit-setting is complemented by daily monitoring of CDS
levels at the banks and at other significant counterparties.

Asset Management

For the purpose of financing long-term payment obligations,
including those relating to asset retirement obligations (see
Note 25), financial investments totaling €5.4 billion (2013:
€5.9 billion) were held predominantly by German E.ON Group
companies as of December 31, 2014.

These financial assets are invested on the basis of an accumu-
lation strategy (total-return approach), with investments
broadly diversified across the money market, bond, real estate
and equity asset classes. Asset allocation studies are per-
formed at regular intervals to determine the target portfolio
structure. The majority of the assets is held in investment
funds managed by external fund managers. Corporate Asset

194 Notes

(32) Transactions with Related Parties

E.ON exchanges goods and services with a large number of
companies as part of its continuing operations. Some of these
companies are related parties, the most significant of which
are associated companies accounted for under the equity
method and their subsidiaries. Additionally reported as related
parties are joint ventures, as well as equity interests carried
at fair value and unconsolidated subsidiaries, which are of
lesser importance as regards the extent of the transactions
described in the following discussion. Transactions with related
parties are summarized as follows:

Related-Party Transactions

€ in millions

Income

Associated companies
Joint ventures
Other related parties

Expenses

Associated companies
Joint ventures
Other related parties

Receivables

Associated companies
Joint ventures
Other related parties

Liabilities

Associated companies
Joint ventures
Other related parties

2014

1,753
1,480
95
178

1,697
1,395
102
200

1,740
1,057
448
235

1,180
737
63
380

2013

2,082
1,825
124
133

1,603
1,184
57
362

1,624
1,074
395
155

994
697
34
263

Income from transactions with related companies is generated
mainly through the delivery of gas and electricity to distrib-
utors and municipal entities, especially municipal utilities. The
relationships with these entities do not generally differ from
those that exist with municipal entities in which E.ON does not
have an interest.

Liabilities of E.ON payable to related companies as of Decem-
ber 31, 2014, include €368 million (2013: €828 million) in trade
payables to operators of jointly-owned nuclear power plants.
These payables bear interest at 1.0 percent or at one-month
EURIBOR less 0.05 percent per annum (2013: 1.0 percent or
one-month EURIBOR less 0.05 percent per annum) and have
no fixed maturity. E.ON continues to have in place with these
power plants a cost-transfer agreement and a cost-plus-fee
agreement for the procurement of electricity. The settlement
of such liabilities occurs mainly through clearing accounts.

Under IAS 24, compensation paid to key management person-
nel (members of the Board of Management and of the Super-
visory Board of E.ON SE) must be disclosed.

The total expense for 2014 for members of the Board of Man-
agement amounted to €9.9 million (2013: €11.7 million) in
short-term benefits and €0 million (2013: €3.3 million) in termi-
nation benefits, as well as €2.8 million (2013: €4.3 million) in
post-employment benefits. Additionally taken into account in
2014 were actuarial losses of €11.7 million (2013: actuarial gains
of €4.9 million). The cost of post-employment benefits is equal
to the service and interest cost of the provisions for pensions.

The expense determined in accordance with IFRS 2 for the
tranches of the E.ON Share Performance Plan and the E.ON
Share Matching Plan in existence in 2014 was €6.0 million
(2013: €3.3 million).

Provisions for the E.ON Share Performance Plan and the E.ON
Share Matching Plan amounted to €10.4 million as of Decem-
ber 31, 2014 (2013: €5.9 million).

The members of the Supervisory Board received a total of
€3.1 million for their activity in 2014 (2013: €3.2 million).
Employee representatives on the Supervisory Board were paid
compensation under the existing employment contracts with
subsidiaries totaling €0.5 million (2013: €0.5 million).

Expenses from transactions with related companies are
generated mainly through the procurement of gas, coal and
electricity.

Detailed, individualized information on compensation can be
found in the Compensation Report on pages 81 through 95.

Receivables from related companies consist mainly of trade
receivables.

195

(33) Segment Information

Led by its Group Management in Düsseldorf, Germany, the
E. ON Group (“E.ON” or the “Group”) is segmented into global
and regional units, which are reported here in accordance with
IFRS 8, “Operating Segments” (“IFRS 8”).

Exploration & Production
E.ON’s exploration and production business is a segment
active in the focus regions North Sea (U.K., Norway) and Russia.

Regional Units

Global Units

E.ON’s distribution and sales operations in Europe are managed
by nine regional units in total.

The global units are reported separately in accordance with
IFRS 8.

For segment reporting purposes, the Germany, UK, Sweden,
Czechia and Hungary regional units are reported separately.

Generation
This global unit consists of the Group’s conventional (fossil
and nuclear) generation assets in Europe. It manages and
optimizes these assets across national boundaries. Since the
beginning of 2014, the Group’s biomass generation activities
are also reported here. The prior-year figures have been
adjusted accordingly.

Renewables
E.ON also takes a global approach to managing its carbon-
sourcing and renewables businesses. The objective at this
unit is to extend the Group’s leading position in the growing
renewables market.

Global Commodities
As the link between E.ON and the world’s wholesale energy
markets, the Global Commodities global unit buys and sells
electricity, natural gas, liquefied natural gas (LNG), oil, coal,
freight, biomass, and carbon allowances. It additionally man-
ages and develops facilities and contracts at different levels
in the gas market’s value chain.

Those units not reported separately are instead reported
collectively as “Other regional units.” They include the France,
Benelux, Slovakia and Romania units and, through December
2014, the Italy and Spain units (see Note 4 for further dis-
cussion of the Italy and Spain units). Additionally reported
here since the fourth quarter of 2013 are the activities of
E.ON Connecting Energies, which concentrates on providing
decentralized, complete solutions.

E.ON’s power generation business in Russia is presented
outside Europe, as a special-focus region.

Since the beginning of 2013, the businesses in Brazil and the
activities in Turkey acquired in the second quarter of 2013 are
reported in the “Other Non-EU Countries” operating segment.

Group Management/Consolidation

Group Management/Consolidation contains E.ON SE itself,
the interests held directly by E.ON SE, and the consolidation
effects that take place at Group level.

196 Notes

EBITDA is the key measure at E. ON for purposes of internal
management control and as an indicator of a business’s long-
term earnings power. EBITDA is derived from income/loss
before interest, taxes, depreciation and amortization (including
impairments and reversals) and adjusted to exclude extra-
ordinary effects. The adjustments include net book gains and
restructuring/cost-management expenses, as well as impair-
ments and other non-oper ating income and expenses. Income
from investment subsidies for which liabilities are recognized
is included in EBITDA.

Economic net interest income is calculated by taking the net
interest income shown in the income statement and adjusting
it using economic criteria and excluding extraordinary effects,
namely, the portions of interest expense that are non-operating.
Net book gains are equal to the sum of book gains and losses
from disposals, which are included in other operating income
and other operating expenses. Restructuring and cost-manage-
ment expenses are non-recurring in nature. Other non-oper-
ating earnings encompass other non-operating income and
expenses that are unique or rare in nature. Depending on the
particular case, such income and expenses may affect differ-
ent line items in the income statement. For example, effects
from the marking to market of derivatives are included in other
operating income and expenses, while impairment charges
on property, plant and equipment are included in depreciation,
amortization and impairments.

Due to the adjustments, the key figures by segment may
differ from the corresponding IFRS figures reported in the
Consolidated Financial Statements.

The following table shows the reconciliation of our EBITDA to
net income/loss as reported in the IFRS Consolidated Financial
Statements:

Net Income

€ in millions

EBITDA 1

Depreciation and amortization

Impairments (-)/Reversals (+) 2

EBIT 1

Economic interest income (net)

Net book gains/losses

Restructuring/cost-management
expenses

E.ON 2.0 restructuring expenses

Impairments (-)/Reversals (+) 2, 3

Other non-operating earnings

Income/Loss from continuing
operations before taxes

Income taxes

Income/Loss from continuing
operations

Income from discontinued operations, net

Net loss/income

Attributable to shareholders of E.ON SE
Attributable to non-controlling interests

2014

8,337

-3,553

-120

4,664

-1,612

589

-133

-363

-5,409

-115

2013

9,191

-3,467

-100

5,624

-1,874

2,004

-182

-368

-1,643

-482

-2,379

3,079

-576

-718

-2,955

2,361

-175

-3,130
-3,160
30

2,459
2,091
368

Net book gains in 2014 were approximately €1.4 billion below
the prior-year level. In 2014, E.ON recorded book gains pri-
marily on the sale of securities and on the disposals of an
equity interest in a natural-gas utility in Germany, a majority
stake in a gas company in the Czech Republic, an equity
interest in a Finnish gas company and various micro thermal
power plants in Sweden, as well as on the sale of network

197

segments. The 2013 figure reflects, in particular, gains on the
transfer of the hydroelectric power plants in Bavaria to Austria’s
Verbund AG in conjunction with the entry into the Turkish
market. In addition, the disposals of E.ON Thüringer Energie AG,
the equity interest in the Slovak energy company SPP, a
minority interest in the company JMP in the Czech Republic
and the Finnish activities, as well as the sale of securities,
network segments and an equity interest in the gas business
in Germany, all contributed to book gains.

Restructuring and cost-management expenses declined by
€54 million from the previous year. As in 2013, the expenses
were primarily attributable to the internally-initiated cost-
reduction programs.

In both 2014 and 2013, E.ON’s global and regional units were
adversely affected by a generally deteriorated market environ-
ment, altered market assessments and regulatory intervention.
As a consequence, impairment charges totaling €5.5 billion
were recognized on the activities in the Generation global unit
(€4.3 billion primarily in the United Kingdom, in Sweden and in
Italy), within the Non-EU Countries segment (€0.5 billion), in
Exploration & Production (€0.4 billion), in the Renewables unit
(€0.2 billion) and in Global Commodities (€0.1 billion). These
impairments were partially offset by reversals of impairments
of approximately €0.1 billion at the Generation, Renewables
and Global Commodities units. In 2013, impairment charges
were recognized particularly at the Generation, Renewables,
Global Commodities and Exploration & Production units and
within the activities in the Non-EU Countries segment.

Other non-operating earnings include, among other things, the
marking to market of deriv atives used to shield the operating
businesses from price fluctuations. As of December 31, 2014,
this marking to market produced a positive effect of €540 mil-
lion, compared with €777 million at year-end 2013. However,
non-operating earnings were adversely affected in 2014 by
write-downs on gas inventories and securities and within the
activities in the Non-EU Countries, and by expenses incurred
in connection with the bond buybacks. In 2013, other non-oper-
ating earnings were adversely affected by provisions in the
gas business relating to divestitures and long-term contracts
and to write-downs on securities.

An additional adjustment to the internal profit analysis relates
to net interest income, which is presented based on economic
considerations. Economic net interest income is calculated by
taking the net interest income from the income statement
and adjusting it using economic criteria and excluding certain
extraordinary (that is, non-operating) effects.

Economic Net Interest Income

€ in millions

2014

2013

Interest and similar expenses (net)
as shown in the Consolidated
Statements of Income

Non-operating interest expense (+)/
income (-)

Economic interest income (net)

-1,810

-1,992

198

-1,612

118

-1,874

Due in large part to the improved net financial position and
the reversal of provisions from previous years, economic net
interest income, at -€1,612 million, was above its 2013 level of
-€1,874 million.

Transactions within the E.ON Group are generally effected at
market prices.

198 Notes

Financial Information by Business Segment

€ in millions

External sales

Intersegment sales

Sales

EBITDA 1

Equity-method earnings 2

Generation

Renewables

Global Commodities

2014

2,561

7,724

2013

2,721

8,347

10,285

11,068

2,215
53

1,936
39

2014

682

1,715

2,397

1,500
-3

2013

675

1,748

2,423

1,464
12

2014

2013

58,716

24,390

83,106

21
128

57,211

32,823

90,034

311
157

Operating cash flow before interest and taxes 3

1,769

1,458

1,161

1,582

-113

-1,809

Investments

862

1,067

1,222

861

115

151

1Adjusted for extraordinary effects.
2Under IFRS, impairments on companies accounted for under the equity method and impairments on other financial assets (and any reversals of such charges) are included
in income/loss from companies accounted for under the equity method and financial results, respectively. These income effects are not part of EBITDA.
3The operating cash flow of the Global Commodities unit was diminished in 2013 by the legal transfer in that year of gas distribution to the distribution companies held in the
Germany regional unit. The operating cash flow of the Germany regional unit increased by a corresponding amount.

Financial Information by Business Segment—Presentation of Other EU Countries

€ in millions

External sales

Intersegment sales

Sales

EBITDA 1

Equity-method earnings 2

Operating cash flow before interest and taxes

Investments

Sweden

Czechia

2014

9,303

2013

9,649

2014

2,136

9,346

9,714

2,223

384
–

546

121

378
–

492

106

622
7

601

331

2013

2,569

126

2,695

733
11

691

404

2014

2,093

128

2,221

290
5

322

141

2013

2,772

136

2,908

494
5

533

163

Financial Information by Business Segment—Presentation of Non-EU Countries

€ in millions

External sales

Intersegment sales

Sales

EBITDA 1

Equity-method earnings 2

Operating cash flow before interest and taxes

Investments

Russia

Other Non-EU Countries

Non-EU Countries

2014

1,518

–

2013

1,865

–

1,518

1,865

517
–

502

347

687
–

670

360

2014

2013

–

-78
-77

-11

–

-154
-139

-27

356

3,170

2014

1,518

2013

1,865

1,518

1,865

439
-77

491

703

533
-139

643

3,530

199

Exploration &
Production

Germany

Other EU Countries

Non-EU Countries

Group Management/
Consolidation

E.ON Group

2014

2013

2014

2013

2014

2013

27,955

35,535

18,249

19,832

629

986

746

783

2014

1,518

–

2013

1,865

2014

236

2013

2014

2013

219

111,556

119,688

–

-35,683

-45,108

28,584

36,521

18,995

20,615

1,518

1,865

-35,447

-44,889

111,556

119,688

1,846
82

2,387
87

1,732
54

2,012
58

1,851

3,286

2,023

2,480

439
-77

491

533
-139

643

745

1,013

879

969

703

3,530

-552
1

-43

-522
1

8,337
247

9,191
254

-634

8,220

7,977

-3

4,633

7,992

1,639

479

2,118

1,136
9

1,081

1,630

421

2,051

1,070
39

971

404

Hungary

Other regional units

Other EU Countries

2014

1,637

2013

1,800

1,638

1,807

200
–

208

102

195
–

225

117

2014

3,080

487

3,567

236
42

346

184

2013

3,042

449

2014

2013

18,249

19,832

746

783

3,491

18,995

20,615

212
42

1,732
54

2,012
58

539

2,023

2,480

179

879

969

Financial Information by Business Segment—Presentation of Discontinued Operations

€ in millions

External sales

Intersegment sales

Sales

EBITDA 1

Equity-method earnings 2

Operating cash flow before interest and taxes

Investments

Italy

Spain

2014

1,537

1,592

43
9

2013

1,745

1,808

43
6

2014

1,085

1,166

146
–

190

2013

1,078

1,170

132
–

156

200 Notes

The following table shows the reconciliation of operating
cash flow before interest and taxes to operating cash flow:

Additional Entity-Level Disclosures

Operating Cash Flow

€ in millions

2014 1

2013 1

Operating cash flow before
interest and taxes

Interest payments

Tax payments

Operating cash flow

8,220

7,977

-1,049

-918

6,253

-756

-961

6,260

1Operating cash flow from continuing operations.

Differ-
ence

243

-293

-7

The investments presented in the financial information by
business segment tables are the purchases of investments
reported in the Consolidated Statements of Cash Flows.

External sales by product break down as follows:

Segment Information by Product

€ in millions

Electricity

Gas

Other

Total

2014

55,033

50,726

5,797

2013

56,918

57,216

5,554

111,556

119,688

The “Other” item consists in particular of revenues generated
from services and from other trading activities.

The following table breaks down external sales (by customer
and seller location), intangible assets and property, plant and
equipment, as well as companies accounted for under the
equity method, by geographic area:

Geographic Segment Information

€ in millions

2014

2013

2014

2013

2014

2013

2014

2013

2014

2013

2014

2013

Germany

United Kingdom

Sweden

Europe (other)

Other

Total

External sales by
location of customer

External sales by
location of seller

41,605

47,624

32,854

37,896

3,279

3,813

31,012

29,444

2,806

911

111,556

119,688

Intangible assets

1,556

1,606

426

362

86,867

93,626

9,700

10,006

2,357

184

2,748

10,780

13,091

182

2,499

4,201

1,852

217

297

111,556

119,688

4,882

6,648

Property, plant and
equipment

Companies
accounted for under
the equity method

15,319

15,145

5,650

6,314

7,681

9,391

10,423

16,734

2,200

2,499

41,273

50,083

1,615

2,092

–

259

245

2,865

3,205

270

110

5,009

5,652

E.ON’s customer structure did not result in any major concen-
tration in any given geographical region or business area. Due
to the large number of customers the Company serves and
the variety of its business activities, there are no indi vidual
customers whose business volume is material compared with
the Company’s total business volume.

201

(34) Compensation of Supervisory Board and
Board of Management

(35) Other Significant Issues

In February 2015, Italy’s Constitutional Court ruled that the
so-called “Robin Hood” tax was unconstitutional. This tax had
been introduced in 2008 in order to limit the profits of utilities.
In its decision, the Court expressly stated that its ruling would
apply only to future issues.

On February 19, 2015, E.ON sold its Italian solar business to
the private infrastructure investment fund manager F2i SGR.
The activities sold comprise a total generating capacity of
49 MW and consist of seven solar plants that were constructed
between 2010 and 2013. About 70 percent of the capacity is
installed on Sardinia. E.ON and F2i SGR agreed not to disclose
the purchase price.

Supervisory Board

Total remuneration to members of the Supervisory Board in
2014 amounted to €3.1 million (2013: €3.2 million).

As in 2013, there were no loans to members of the Supervisory
Board in 2014.

The Supervisory Board’s compensation structure and the
amounts for each member of the Supervisory Board are pre-
sented on page 95 in the Compensation Report.

Additional information about the members of the Supervisory
Board is provided on pages 216 and 217.

Board of Management

Total remuneration to members of the Board of Management
in 2014 amounted to €16.2 million (2013: €18.1 million). This
consisted of base salary, bonuses, other compensation elements
and share-based payments.

Total payments to former members of the Board of Manage-
ment and their beneficiaries amounted to €10.2 million (2013:
€14.5 million). Provisions of €175.0 million (2013: €158.0 million)
have been established for the pension obligations to former
members of the Board of Management and their beneficiaries.

As in 2013, there were no loans to members of the Board of
Management in 2014.

The Board of Management’s compensation structure and the
amounts for each member of the Board of Management are
presented on pages 81 through 95 in the Compensation Report.

Additional information about the members of the Board of
Management is provided on page 218.

202 Notes

Declaration of the Board of Management

To the best of our knowledge, we declare that, in accordance
with applicable financial reporting principles, the Consolidated
Financial Statements give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Group, and
that the Group Management Report, which is combined with
the management report of E.ON SE, provides a fair review of
the development and performance of the business and the
position of the E.ON Group, together with a description of the
principal opportunities and risks associated with the expected
development of the Group.

Düsseldorf, February 27, 2015

The Board of Management

Teyssen

Birnbaum

Kildahl

Reutersberg

Schäfer

Winkel

203

(36) List of Shareholdings Pursuant to
Section 313 (2) HGB

Disclosures Pursuant to Section 313 (2) HGB of Companies in Which Equity
Investments Are Held (as of December 31, 2014)

Name, location

Stake (%)

Name, location

Stake (%)

:agile accelerator GmbH, DE, Düsseldorf 2

AB Svafo, SE, Stockholm 6

Abfallwirtschaft Schleswig-Flensburg GmbH, DE, Schleswig 6

Abfallwirtschaft Südholstein GmbH (AWSH), DE,
Elmenhorst 6

Abfallwirtschaftsgesellschaft Dithmarschen mbH, DE, Heide 6

Abfallwirtschaftsgesellschaft Rendsburg-Eckernförde
mbH, DE, Borgstedt 6

Abwasser und Service Burg, Hochdonn GmbH, DE, Burg 6

Abwasser und Service Mittelangeln GmbH, DE, Satrup 6

Abwasserbeseitigung Nortorf-Land GmbH, DE, Nortorf 6

Abwasserentsorgung Albersdorf GmbH, DE, Albersdorf 6

Abwasserentsorgung Amt Achterwehr GmbH, DE,
Achterwehr 6

Abwasserentsorgung Bargteheide GmbH, DE, Bargteheide 6

Abwasserentsorgung Berkenthin GmbH, DE, Berkenthin 6

Abwasserentsorgung Bleckede GmbH, DE, Bleckede 6

Abwasserentsorgung Brunsbüttel GmbH (ABG), DE,
Brunsbüttel 6

Abwasserentsorgung Friedrichskoog GmbH, DE,
Friedrichskoog 6

Abwasserentsorgung Kappeln GmbH, DE, Kappeln 6

Abwasserentsorgung Kropp GmbH, DE, Kropp 6

Abwasserentsorgung Marne-Land GmbH, DE,
Diekhusen-Fahrstedt 6

Abwasserentsorgung Schladen GmbH, DE, Schladen 6

Abwasserentsorgung Schöppenstedt GmbH, DE,
Schöppenstedt 6

Abwasserentsorgung St. Michaelisdonn, Averlak, Dingen,
Eddelak GmbH, DE, St. Michaelisdonn 6

Abwasserentsorgung Tellingstedt GmbH, DE, Tellingstedt 6

Abwasserentsorgung Uetersen GmbH, DE, Uetersen 6

Abwassergesellschaft Bardowick mbH & Co. KG, DE,
Bardowick 6

Abwassergesellschaft Bardowick Verwaltungs-GmbH, DE,
Bardowick 6

Abwassergesellschaft Gehrden mbH, DE, Gehrden 6

Abwassergesellschaft Ilmenau mbH, DE, Melbeck 6

Abwasserwirtschaft Fichtelberg GmbH, DE, Fichtelberg 6

Abwasserwirtschaft Kunstadt GmbH, DE, Burgkunstadt 6

100.0

22.0

49.0

Aerodis, S.A., FR, Paris 1

Alamo Solar, LLC, US, Wilmington 2

Åliden Vind AB, SE, Malmö 2

49.0

44.0

33.3

49.0

27.0

44.0

49.0

25.1

25.0

49.0

25.0

30.0

Anacacho Wind Farm, LLC, US, Wilmington 1

ANCO Sp. z o.o., PL, Jarocin 2

Aquila Power Investments Limited, GB, Coventry 2

Aquila Sterling Limited, GB, Coventry 2

AS Latvijas Gāze, LV, Riga 5

Atrium 72. Europäische VV SE, DE, Düsseldorf 2

AV Packaging GmbH, DE, Munich 1

Avacon AG, DE, Helmstedt 1

Avacon Hochdrucknetz GmbH, DE, Helmstedt 1

Avacon Natur GmbH, DE, Sarstedt 1

Avon Energy Partners Holdings, GB, Coventry 2

AWE-Arkona-Windpark Entwicklungs-GmbH, DE, Hamburg 2

B.V. NEA, NL, Dodewaard 6

Badlantic Betriebsgesellschaft mbH, DE, Ahrensburg 6

Barras Eléctricas Galaico-Asturianas, S.A., ES, Lugo 1

BauMineral GmbH, DE, Herten 1, 8

Bayernwerk AG, DE, Regensburg 1

Bayernwerk Energiedienstleistungen Licht GmbH, DE,
Regensburg 2

Bayernwerk Natur 1. Beteiligungs-GmbH, DE, Regensburg 2

Bayernwerk Natur GmbH, DE, Unterschleißheim 1

BBL Company V.O.F., NL, Groningen 5

Beacon Solar PV, LLC, US, Wilmington 2

Bergeforsens Kraftaktiebolag, SE, Bispgården 5

Beteiligungsgesellschaft der Energieversorgungs-
unternehmen an der Kerntechnische Hilfsdienst GmbH
GbR, DE, Karlsruhe 6

Beteiligungsgesellschaft e.disnatur mbH, DE, Potsdam 2

BEW Bayreuther Energie- und Wasserversorgungs-GmbH,
DE, Bayreuth 5

BHL Biomasse Heizanlage Lichtenfels GmbH, DE,
Lichtenfels 6

BHO Biomasse Heizanlage Obernsees GmbH, DE, Hollfeld 6

BHP Biomasse Heizwerk Pegnitz GmbH, DE, Pegnitz 6

Bio-Wärme Gräfelfing GmbH, DE, Gräfelfing 6

Bioenergie Bad Füssing GmbH & Co. KG, DE, Bad Füssing 6

Acme Group Limited, GB, Bury 1

Acme Technical Services Limited, GB, Bury 1

Adria LNG d.o.o. za izradu studija, HR, Zagreb 6

100.0

39.2

Bioenergie Bad Füssing Verwaltungs-GmbH, DE,
Bad Füssing 6

Bioenergie Merzig GmbH, DE, Merzig 2

100.0

47.2

100.0

0.0

63.1

100.0

98.0

25.0

49.0

54.9

100.0

20.0

100.0

40.0

47.4

100.0

24.9

25.1

40.7

46.5

40.0

25.0

51.0

1Consolidated affiliated company. · 2Non-consolidated affiliated company for reasons of immateriality (valued at cost). · 3Joint operations pursuant to IFRS 11. · 4Joint ventures
pursuant to IFRS 11. · 5Associated company (valued using the equity method). · 6Associated company (valued at cost for reasons of immateriality). · 7Other companies in which
share investments are held. · 8This company exercised its exemption option under Section 264, Paragraph 3 of the German Commercial Code or under Section 264b. · 9IFRS figures.

204 Notes

Disclosures Pursuant to Section 313 (2) HGB of Companies in Which Equity
Investments Are Held (as of December 31, 2014)

Name, location

Stake (%)

Name, location

Stake (%)

Bioerdgas Hallertau GmbH, DE, Wolnzach 2

Bioerdgas Schwandorf GmbH, DE, Schwandorf 2

Biogas Ducherow GmbH, DE, Ducherow 2

Biogas Steyerberg GmbH, DE, Sarstedt 2

Bioheizwerk Rötz GmbH, DE, Rötz 6

BIOPLYN Třeboň spol. s r.o., CZ, Třeboň 6

Biunisi Solar S.r.l., IT, Sassari 2

BKW Biokraftwerke Fürstenwalde GmbH, DE,
Fürstenwalde/Spree 6

Blåsjön Kraft AB, SE, Arbrå 5

BMV Energie Beteiligungs GmbH, DE, Fürstenwalde/Spree 2

BMV Energie GmbH & Co. KG, DE, Fürstenwalde/Spree 6

Boiling Springs Wind Farm, LLC, US, Wilmington 2

Braila Power S.A., RO, Chiscani village 2

Brattmyrliden Vind AB, SE, Malmö 2

Breitbandnetz GmbH & Co. KG, DE, Breklum 6

Brunnshög Energi AB, SE, Malmö 2

BTB Bayreuther Thermalbad GmbH, DE, Bayreuth 6

Bursjöliden Vind AB, SE, Malmö 2

Bützower Wärme GmbH, DE, Bützow 6

Carbiogas b.v., NL, Nuenen 6

Cardinal Wind Farm LLC, US, Wilmington 2

Cattleman Wind Farm, LLC, US, Wilmington 2

Celle-Uelzen Netz GmbH, DE, Celle 1

Celsium Sp. z o.o., PL, Skarżysko-Kamienna 2

Centrale Solare di Fiumesanto S.r.l., IT, Sassari 1

Centro Energia Ferrara S.p.A, IT, Rome 5

Centro Energia Teverola S.p.A, IT, Rome 5

Českomoravská distribuce s.r.o., CZ, České Budějovice 6

Champion WF Holdco, LLC, US, Wilmington 1

Champion Wind Farm, LLC, US, Wilmington 1

CHN Contractors Limited, GB, Coventry 2

CHN Electrical Services Limited, GB, Coventry 2

CHN Group Ltd, GB, Coventry 2

CHN Special Projects Limited, GB, Coventry 2

Citigen (London) Limited, GB, Coventry 1

Colonia-Cluj-Napoca-Energie S.R.L., RO, Cluj 6

COMPAÑÍA EÓLICA ARAGONESA, S.A., ES, Zaragoza 4

Cordova Wind Farm, LLC, US, Wilmington 2

Cottam Development Centre Limited, GB, Coventry 1

CT Services Holdings Limited, GB, Coventry 2

Dampfversorgung Ostsee-Molkerei GmbH, DE, Wismar 6

DD Brazil Holdings S.à r.l., LU, Luxembourg 1

DD Turkey Holdings S.à r.l., LU, Luxembourg 1

64.9

100.0

80.0

100.0

25.0

24.7

100.0

48.8

50.0

100.0

41.8

100.0

69.8

100.0

20.0

100.0

33.3

100.0

20.0

33.3

100.0

97.5

87.8

100.0

58.4

50.0

100.0

33.3

50.0

100.0

50.0

100.0

Deutsche Flüssigerdgas Terminal oHG, DE, Essen 2

Deutsche Gesellschaft für Wiederaufarbeitung von
Kernbrennstoffen AG & Co. oHG, DE, Gorleben 6

DFTG - Deutsche Flüssigerdgas Terminal Gesellschaft mit
beschränkter Haftung, DE, Wilhelmshaven 2

Distribuidora de Gas Cuyana S.A., AR, Mendoza 6

Distribuidora de Gas del Centro S.A., AR, Córdoba 6

DKCE Debreceni Kombinált Ciklusú Erőmű Kft., HU,
Debrecen 2

Donau-Wasserkraft Aktiengesellschaft, DE, Munich 1

DOTI Deutsche-Offshore-Testfeld- und Infrastruktur-
GmbH & Co. KG, DE, Oldenburg 5

DOTI Management GmbH, DE, Oldenburg 6

DOTTO MORCONE S.r.l., IT, Milan 2

Dutchdelta Finance S.à r.l., LU, Luxembourg 1

E WIE EINFACH GmbH, DE, Cologne 1

E-Bio Kyjov s.r.o., CZ, Otrokovice 2

e.dialog GmbH, DE, Potsdam 2

E.DIS AG, DE, Fürstenwalde/Spree 1

e.discom Telekommunikation GmbH, DE, Rostock 2

e.disnatur Erneuerbare Energien GmbH, DE, Potsdam 1

e.distherm Wärmedienstleistungen GmbH, DE, Schönefeld 1

E.ON 10. Verwaltungs GmbH, DE, Düsseldorf 2

E.ON Achtzehnte Verwaltungs GmbH, DE, Düsseldorf 2

E.ON Anlagenservice GmbH, DE, Gelsenkirchen 1

E.ON Argentina S.A., AR, Buenos Aires 2

E.ON Asset Management GmbH & Co. EEA KG, DE,
Grünwald 1, 8

E.ON Austria GmbH, AT, Vienna 1

E.ON Bayern Verwaltungs AG, DE, Munich 2

E.ON Belgium N.V., BE, Brussels 1

E.ON Benelux CCS Project B.V., NL, Rotterdam 2

E.ON Benelux Geothermie B.V., NL, Rotterdam 2

E.ON Benelux Holding b.v., NL, Rotterdam 1

E.ON Benelux Levering b.v., NL, Eindhoven 1

E.ON Benelux N.V., NL, Rotterdam 1

E.ON Beteiligungen GmbH, DE, Düsseldorf 1, 8

E.ON Bioerdgas GmbH, DE, Essen 1

E.ON Biofor Sverige AB, SE, Malmö 1

E.ON Brasil Energia LTDA., BR, City of São Paulo 2

E.ON Business Services Benelux B.V., NL, Rotterdam 2

E.ON Business Services Berlin GmbH, DE, Berlin 2

E.ON Business Services Cluj S.R.L., RO, Cluj 2

E.ON Business Services Czech Republic s.r.o., CZ,
České Budějovice 2

90.0

42.5

90.0

53.2

58.7

100.0

26.3

100.0

67.0

100.0

75.1

100.0

205

Disclosures Pursuant to Section 313 (2) HGB of Companies in Which Equity
Investments Are Held (as of December 31, 2014)

Name, location

Stake (%)

Name, location

Stake (%)

E.ON Business Services GmbH, DE, Hanover 1

E.ON Business Services Hannover GmbH, DE, Hanover 2

E.ON Business Services Hungary Kft., HU, Budapest 2

E.ON Business Services Iași S.R.L., RO, Iași 2

E.ON Business Services Italia S.r.l., IT, Milan 2

E.ON Business Services Regensburg GmbH, DE, Regensburg 2

E.ON Business Services Slovakia spol. s.r.o., SK, Bratislava 2

E.ON Business Services Sverige AB, SE, Malmö 2

E.ON Carbon Sourcing North America LLC, US, Wilmington 2

E.ON Česká republika, s.r.o., CZ, České Budějovice 1

E.ON Citiri Contoare S.A., RO, Târgu Mureş 2

E.ON Climate & Renewables Canada Ltd., CA, Saint John 1

E.ON Climate & Renewables Carbon Sourcing Limited,
GB, Coventry 2

E.ON Climate & Renewables Carbon Sourcing Pte Ltd, SG,
Singapore 2

E.ON Climate & Renewables France Solar S.A.S., FR, Paris 1

E.ON Climate & Renewables GmbH, DE, Essen 1

E.ON Climate & Renewables Italia S.r.l., IT, Milan 1

E.ON Climate & Renewables Italia Solar S.r.l., IT, Milan 1

E.ON Climate & Renewables North America LLC, US,
Wilmington 1

E.ON Climate & Renewables UK Biomass Limited, GB,
Coventry 1

E.ON Climate & Renewables UK Blyth Limited, GB, Coventry 1

E.ON Climate & Renewables UK Developments Limited,
GB, Coventry 1

E.ON Climate & Renewables UK Humber Wind Limited,
GB, Coventry 1

E.ON Climate & Renewables UK Limited, GB, Coventry 1

E.ON Climate & Renewables UK London Array Limited,
GB, Coventry 1

E.ON Climate & Renewables UK Offshore Wind Limited,
GB, Coventry 1

E.ON Climate & Renewables UK Operations Limited, GB,
Coventry 1

E.ON Climate & Renewables UK Rampion Offshore Wind
Limited, GB, Coventry 1

E.ON Climate & Renewables UK Robin Rigg East Limited,
GB, Coventry 1

E.ON Climate & Renewables UK Robin Rigg West Limited,
GB, Coventry 1

E.ON Climate & Renewables UK Wind Limited, GB, Coventry 1

E.ON Climate & Renewables UK Zone Six Limited, GB,
Coventry 1

E.ON Comercializadora de Último Recurso S.L., ES,
Santander 1

100.0

51.0

100.0

E.ON Connecting Energies GmbH, DE, Essen 1, 8

E.ON Connecting Energies Italia S.r.l., IT, Milan 2

E.ON Connecting Energies Limited, GB, Coventry 1

E.ON (Cross-Border) Pension Trustees Limited, GB, Coventry 2

E.ON Czech Holding AG, DE, Munich 1, 8

E.ON Danmark A/S, DK, Frederiksberg 1

E.ON Dél-dunántúli Áramhálózati Zrt., HU, Pécs 1

E.ON Dél-dunántúli Gázhálózati Zrt., HU, Pécs 1

E.ON Distribuce, a.s., CZ, České Budějovice 1

E.ON Distribución, S.L., ES, Santander 1

E.ON Distributie România S.A., RO, Târgu Mureş 1

E.ON E&P Algeria GmbH, DE, Düsseldorf 1, 8

E.ON E&P Norge AS, NO, Stavanger 1

E.ON E&P UK Energy Trading Limited, GB, London 1

E.ON E&P UK EU Limited, GB, London 1

E.ON E&P UK Limited, GB, London 1

E.ON edis Contracting GmbH, DE, Fürstenwalde/Spree 2

E.ON edis energia Sp. z o.o., PL, Warsaw 1

E.ON Elektrárne s.r.o., SK, Trakovice 1

E.ON Elnät Kramfors AB, SE, Malmö 1

E.ON Elnät Stockholm AB, SE, Malmö 1

E.ON Elnät Sverige AB, SE, Malmö 1

E.ON Energia S.p.A., IT, Milan 1

E.ON Energía, S.L., ES, Santander 1

E.ON Energiakereskedelmi Kft, HU, Budapest 1

100.0

E.ON Energiaszolgáltató Kft., HU, Budapest 1

100.0

E.ON Energiatermelő Kft., HU, Debrecen 1

E.ON Energie 25. Beteiligungs-GmbH, DE, Munich 2

E.ON Energie 38. Beteiligungs-GmbH, DE, Munich 2

E.ON Energie 39. Beteiligungs-GmbH, DE, Munich 2

E.ON Energie AG, DE, Düsseldorf 1, 8

E.ON Energie Deutschland GmbH, DE, Munich 1

E.ON Energie Deutschland Holding GmbH, DE, Munich 1

E.ON Energie Dialog GmbH, DE, Potsdam 2

E.ON Energie Kundenservice GmbH, DE, Landshut 1

100.0

E.ON Energie Odnawialne Sp. z o.o., PL, Szczecin 1

E.ON Energie Real Estate Investment GmbH, DE, Munich 2

100.0

E.ON Energie România S.A., RO, Târgu Mureş 1

E.ON Energie, a.s., CZ, České Budějovice 1

E.ON Energies Renouvelables S.A.S., FR, Paris 1

E.ON Energihandel Nordic AB, SE, Malmö 1

E.ON Energy Gas (Eastern) Limited, GB, Coventry 2

E.ON Energy Gas (Northwest) Limited, GB, Coventry 2

E.ON Energy Projects GmbH, DE, Munich 1

100.0

61.8

100.0

99.8

100.0

53.4

100.0

206 Notes

Disclosures Pursuant to Section 313 (2) HGB of Companies in Which Equity
Investments Are Held (as of December 31, 2014)

Name, location

Stake (%)

Name, location

Stake (%)

E.ON Energy Sales GmbH, DE, Düsseldorf 1

E.ON Energy Sales Polska Sp. z o.o., PL, Warsaw 2

E.ON Energy Services, LLC, US, Wilmington 2

E.ON Energy Solutions GmbH, DE, Unterschleißheim 2

E.ON Energy Solutions Limited, GB, Coventry 1

E.ON Energy Southern Africa (Pty) Ltd., ZA, Sandton 2

E.ON Energy Storage GmbH, DE, Essen 2

E.ON Energy Trading NL Staff Company 2 B.V., NL,
Rotterdam 2

E.ON Energy Trading NL Staff Company B.V., NL, Rotterdam 2

E.ON Energy Trading S.p.A., IT, Milan 1

E.ON Energy Trading Srbija d.o.o., RS, Belgrade 2

E.ON Energy Trading UK Staff Company Limited, GB,
Coventry 1

E.ON Energy UK Limited, GB, Coventry 2

E.ON Erőművek Termelő és Üzemeltető Kft., HU, Budapest 1

E.ON España, S.L., ES, Santander 1

E.ON Észak-dunántúli Áramhálózati Zrt., HU, Győr 1

E.ON Europa, S.L., ES, Santander 2

E.ON Exploration & Production GmbH, DE, Düsseldorf 1, 8

E.ON Facility Management GmbH, DE, Munich 1, 8

E.ON Fastigheter Sverige AB, SE, Malmö 1

E.ON Fernwärme GmbH, DE, Gelsenkirchen 1

E.ON Finanzanlagen GmbH, DE, Düsseldorf 1, 8

E.ON First Future Energy Holding B.V., NL, Rotterdam 1

E.ON Försäkring Sverige AB, SE, Malmö 1

E.ON Försäljning Sverige AB, SE, Malmö 1

E.ON France Energy Solutions S.A.S, FR, Paris 1

E.ON France Power S.A.S, FR, Paris 1

E.ON France S.A.S, FR, Paris 1

E.ON Gas Mobil GmbH, DE, Essen 2

E.ON Gas Storage GmbH, DE, Essen 1

E.ON Gas Storage UK Limited, GB, Coventry 1

E.ON Gas Sverige AB, SE, Malmö 1

E.ON Gashandel Sverige AB, SE, Malmö 1

E.ON Gasification Development AB, SE, Malmö 1

E.ON Gazdasági Szolgáltató Kft., HU, Győr 1

E.ON Generación, S.L., ES, Santander 1

E.ON Generation Belgium N.V., BE, Vilvoorde 1

E.ON Generation GmbH, DE, Hanover 1

E.ON Global Commodities North America LLC, US,
Wilmington 1

E.ON Global Commodities SE, DE, Düsseldorf 1

E.ON Gruga Geschäftsführungsgesellschaft mbH, DE,
Düsseldorf 2

100.0

E.ON Gruga Objektgesellschaft mbH & Co. KG, DE,
Düsseldorf 1, 8

E.ON Hálózati Szolgáltató Kft.“v.a.”, HU, Pécs 2

E.ON Human Resources International GmbH, DE, Hanover 1, 8

E.ON Hungária Energetikai Zártkörűen Működő
Részvénytársaság, HU, Budapest 1

E.ON Iberia Holding GmbH, DE, Düsseldorf 1, 8

E.ON Iberia Services, S.L., ES, Málaga 1

E.ON Inhouse Consulting GmbH, DE, Essen 2

E.ON Innovation Co-Investments Inc., US, Wilmington 2

E.ON INTERNATIONAL FINANCE B.V., NL, Rotterdam 1

E.ON Invest GmbH, DE, Grünwald 2

E.ON IT UK Limited, GB, Coventry 2

E.ON Italia S.p.A, IT, Milan 1

E.ON Kärnkraft Finland AB, FI, Kajaani 2

E.ON Kärnkraft Sverige AB, SE, Malmö 1

E.ON Kernkraft GmbH, DE, Hanover 1

E.ON Közép-dunántúli Gázhálózati Zrt., HU, Nagykanizsa 1

E.ON Kraftwerke 6. Beteiligungs-GmbH, DE, Hanover 2

E.ON Kraftwerke GmbH, DE, Hanover 1

E.ON Kundenservice GmbH, DE, Landshut 1

E.ON Kundsupport Sverige AB, SE, Malmö 1

E.ON Limited, GB, Coventry 2

E.ON Mälarkraft Värme AB, SE, Örebro 1

E.ON Metering GmbH, DE, Unterschleißheim 2

E.ON NA Capital LLC, US, Wilmington 1

E.ON NA Investments LLC, US, Wilmington 1

E.ON New Build & Technology B.V., NL, Rotterdam 2

E.ON New Build & Technology BVBA, BE, Vilvoorde 2

E.ON Nord Sverige AB, SE, Stockholm 1

E.ON Nordic AB, SE, Malmö 1

E.ON Off Grid Solution GmbH, DE, Düsseldorf 2

E.ON Perspekt GmbH, DE, Düsseldorf 2

E.ON Portfolio Solution GmbH, DE, Düsseldorf 2

E.ON Power Innovation Pty Ltd, AU, Brisbane 2

E.ON Power Plants Belgium BVBA, BE, Brussels 2

E.ON Produktion Danmark A/S, DK, Frederiksberg 1

E.ON Produzione Centrale Livorno Ferraris S.p.A., IT, Milan 1

E.ON Produzione S.p.A., IT, Sassari 1

E.ON Project Earth Limited, GB, Coventry 1

E.ON Provence Biomasse S.A.R.L, FR, Paris 2

E.ON RAG Beteiligungsgesellschaft mbH, DE, Düsseldorf 1

E.ON RE Investments LLC, US, Wilmington 1

E.ON Real Estate GmbH, DE, Essen 2

100.0

99.8

100.0

99.8

100.0

75.0

100.0

207

Disclosures Pursuant to Section 313 (2) HGB of Companies in Which Equity
Investments Are Held (as of December 31, 2014)

Name, location

Stake (%)

Name, location

Stake (%)

E.ON Regenerabile România S.R.L., RO, Iași 2

E.ON Renovables Financiera, S.L., ES, Madrid 2

E.ON Renovables, S.L., ES, Madrid 1

E.ON Renovaveis Portugal, SGPS S.A., PT, Lisbon 1

E.ON Retail Limited, GB, Coventry 2

E.ON Rhein-Ruhr Ausbildungs-GmbH, DE, Essen 2

E.ON Risk Consulting GmbH, DE, Düsseldorf 1

E.ON România S.R.L., RO, Târgu Mureş 1

E.ON Ruhrgas Austria GmbH, AT, Vienna 1

E.ON Ruhrgas BBL B.V., NL, Rotterdam 1

E.ON Ruhrgas GPA GmbH, DE, Essen 1, 8

E.ON Ruhrgas International GmbH, DE, Essen 1, 8

E.ON Ruhrgas Nigeria Limited, NG, Abuja 2

E.ON Ruhrgas Portfolio GmbH, DE, Essen 1, 8

E.ON Russia Beteiligungs GmbH, DE, Düsseldorf 2

E.ON Russia Holding GmbH, DE, Düsseldorf 1, 8

E.ON Sechzehnte Verwaltungs GmbH, DE, Düsseldorf 1, 8

E.ON Service GmbH, DE, Essen 2

E.ON Servicii Clienti S.R.L., RO, Târgu Mureş 1

E.ON Servicii S.R.L., RO, Târgu Mureş 1

E.ON Servicii Tehnice S.R.L., RO, Târgu Mureş 1

E.ON Servisní, s.r.o., CZ, České Budějovice 1

E.ON Slovensko, a.s., SK, Bratislava 1

E.ON Smart Living AB, SE, Malmö 1

E.ON Sverige AB, SE, Malmö 1

E.ON Technologies (Ratcliffe) Limited, GB, Coventry 1

E.ON Technologies GmbH, DE, Gelsenkirchen 1

E.ON Tiszántúli Áramhálózati Zrt., HU, Debrecen 1

E.ON Trend s.r.o., CZ, České Budějovice 1

E.ON Turkey Enerji Anonim Şirketi, TR, Istanbul 2

E.ON Ügyfélszolgálati Kft., HU, Budapest 1

E.ON UK CHP Limited, GB, Coventry 1

E.ON UK CoGeneration Limited, GB, Coventry 1

E.ON UK Directors Limited, GB, Coventry 2

E.ON UK Energy Lincoln Limited, GB, Coventry 2

E.ON UK Energy Services Limited, GB, Coventry 2

E.ON UK Gas Limited, GB, Coventry 1

E.ON UK Holding Company Limited, GB, Coventry 1

E.ON UK Industrial Shipping Limited, GB, Coventry 2

E.ON UK Ironbridge Limited, GB, Coventry 2

E.ON UK Pension Trustees Limited, GB, Coventry 2

E.ON UK plc, GB, Coventry 1

E.ON UK Property Services Limited, GB, Coventry 2

E.ON UK PS Limited, GB, Coventry 2

100.0

90.2

100.0

E.ON UK Retail Limited, GB, Coventry 2

E.ON UK Secretaries Limited, GB, Coventry 2

E.ON UK Technical Services Limited, GB, Edinburgh 2

E.ON UK Trustees Limited, GB, Coventry 2

E.ON US Corporation, US, Wilmington 1

E.ON US Energy LLC, US, Wilmington 1

E.ON US Holding GmbH, DE, Düsseldorf 1, 8

E.ON Varme Danmark ApS, DK, Frederiksberg 1

E.ON Värme Sverige AB, SE, Malmö 1

E.ON Värme Timrå AB, SE, Sundsvall 1

E.ON Värmekraft Sverige AB, SE, Malmö 1

E.ON Vattenkraft Sverige AB, SE, Sundsvall 1

E.ON Verwaltungs AG Nr. 1, DE, Munich 2

E.ON Vierundzwanzigste Verwaltungs GmbH, DE, Düsseldorf 2

E.ON Wind Denmark AB, SE, Malmö 2

E.ON Wind Kårehamn AB, SE, Malmö 1

E.ON Wind Norway AB, SE, Malmö 2

E.ON Wind Resources AB, SE, Malmö 2

E.ON Wind Services A/S, DK, Rødby 1

E.ON Wind Sweden AB, SE, Malmö 1

E.ON Zweiundzwanzigste Verwaltungs GmbH, DE,
Düsseldorf 2

East Midlands Electricity Distribution Holdings, GB,
Coventry 2

East Midlands Electricity Distribution Limited, GB, Coventry 2

East Midlands Electricity Generation (Corby) Limited, GB,
Coventry 1

East Midlands Electricity Limited, GB, Coventry 1

East Midlands Electricity Share Scheme Trustees Limited,
GB, Coventry 2

EASYCHARGE.me GmbH, DE, Düsseldorf 2

EAV Beteiligungs-GmbH, DE, Helmstedt 1

EBY Immobilien GmbH & Co. KG, DE, Regensburg 2

EBY kaufmännische Energiedienstleistungen GmbH, DE,
Regensburg 2

EBY Port 1 GmbH, DE, Munich 1

EBY Port 3 GmbH, DE, Regensburg 1

EBY Port 5 GmbH, DE, Regensburg 2

EBY technische Energiedienstleistungen GmbH, DE,
Regensburg 2

EC&R Asset Management, LLC, US, Wilmington 1

EC&R Canada Ltd., CA, Saint John 1

EC&R Development, LLC, US, Wilmington 1

EC&R Energy Marketing, LLC, US, Wilmington 1

EC&R Ft. Huachuca Solar, LLC, US, Wilmington 2

100.0

90.9

100.0

208 Notes

Disclosures Pursuant to Section 313 (2) HGB of Companies in Which Equity
Investments Are Held (as of December 31, 2014)

Name, location

Stake (%)

Name, location

Stake (%)

EC&R Grandview Holdco LLC, US, Wilmington 2

EC&R Investco EPC Mgmt, LLC, US, Wilmington 2

EC&R Investco Mgmt II, LLC, US, Wilmington 1

EC&R Investco Mgmt, LLC, US, Wilmington 1

EC&R Magicat Holdco, LLC, US, Wilmington 1

EC&R NA Solar PV, LLC, US, Wilmington 2

EC&R O&M, LLC, US, Wilmington 1

EC&R Panther Creek Wind Farm III, LLC, US, Wilmington 1

EC&R QSE, LLC, US, Wilmington 1

EC&R Services, LLC, US, Wilmington 1

EC&R Sherman, LLC, US, Wilmington 2

EC&R Solar Development, LLC, US, Wilmington 2

Economy Power Limited, GB, Coventry 1

EEP 2. Beteiligungsgesellschaft mbH, DE, Munich 2

EEP Kraftwerksgesellschaft Obernburg mbH, DE, Munich 2

EFG Erdgas Forchheim GmbH, DE, Forchheim 6

EFR CEE Szolgáltató Kft., HU, Budapest 6

EFR Europäische Funk-Rundsteuerung GmbH, DE, Munich 6

EGC UAE SUPPLY & PROCESSING LTD FZE, AE,
Fujairah free zone 2

EH-SZER Energetikai és Távközlési Hálózatépítő és
Szerelő Kft., HU, Győr 1

Ekopur d.o.o., SI, Ljubljana 2

Elecdey CARCELÉN, S.A., ES, Albacete 5

Electricity ON XXI, S.L., ES, Albacete 2

Elektrizitätswerk Schwandorf GmbH, DE, Schwandorf 2

Elevate Wind Holdco, LLC, US, Wilmington 4

ELICA S.r.l., IT, Milan 2

Elmregia GmbH, DE, Schöningen 6

Első Magyar Szélerőmű Kft., HU, Kulcs 2

Elverket Vallentuna AB, SE, Vallentuna 5

EME Distribution No. 2 Limited, GB, Coventry 2

ENACO Energieanlagen- und Kommunikationstechnik
GmbH, DE, Maisach 6

Energest S.r.l., IT, Mira (VE) 2

Energetika Malenovice, a.s., CZ, Zlín-Malenovice 2

Energetyka Cieplna Opolszczyzny S.A., PL, Opole 6

Energia Eolica Sud S.r.l., IT, Milan 2

Energie und Wasser Potsdam GmbH, DE, Potsdam 5

Energie und Wasser Wahlstedt/Bad Segeberg GmbH &
Co. KG (ews), DE, Bad Segeberg 6

Energie-Agentur Weyhe GmbH, DE, Weyhe 6

Energie-Wende-Garching GmbH & Co. KG, DE, Garching 6

Energie-Wende-Garching Verwaltungs-GmbH, DE, Garching 6

100.0

24.9

25.0

39.9

100.0

23.0

100.0

50.0

100.0

49.0

74.7

43.4

100.0

26.0

100.0

45.7

100.0

35.0

50.1

50.0

Energieerzeugungswerke Geesthacht GmbH, DE,
Geesthacht 6

Energienetze Bayern GmbH, DE, Regensburg 1

Energienetze Schaafheim GmbH, DE, Regensburg 2

Energieversorgung Alzenau GmbH (EVA), DE, Alzenau 6

Energieversorgung Buching-Trauchgau (EBT) Gesell-
schaft mit beschränkter Haftung, DE, Halblech 6

Energieversorgung Putzbrunn GmbH & Co. KG, DE,
Putzbrunn 6

Energieversorgung Putzbrunn Verwaltungs GmbH, DE,
Putzbrunn 6

Energieversorgung Sehnde GmbH, DE, Sehnde 6

Energieversorgung Vechelde GmbH & Co KG, DE, Vechelde 6

Energiewerke Isernhagen GmbH, DE, Isernhagen 6

Energiewerke Osterburg GmbH, DE, Osterburg (Altmark) 6

Energy Collection Services Limited, GB, Coventry 2

Enerji Almanya GmbH, DE, Düsseldorf 2

Enerjisa Enerji A.Ş., TR, Istanbul 4

ENEVA Participações S.A., BR, Rio de Janeiro 4

ENEVA S.A., BR, Rio de Janeiro 4

Enfield Energy Centre Limited, GB, Coventry 2

Eólica de Levante, S.L., ES, Alicante 6

Eólica de São Julião, Lda, PT, Lisbon 5

Eoliser Serviços de Gestão para parques eólicos, Lda, PT,
Lisbon 1

EOS PAX IIA, S.L., ES, Santiago de Compostela 5

EPS Polska Holding Sp. z o.o., PL, Warsaw 1

Ergon Energia S.r.l. in liquidazione, IT, Brescia 6

Ergon Holding Company Limited, GB, Coventry 2

Ergon Holdings Ltd, MT, St. Julians 1

Ergon Insurance Ltd, MT, St. Julians 1

Ergon Nominees Limited, GB, Coventry 2

Ergon Overseas Holdings Limited, GB, Coventry 1

Ergosud S.p.A., IT, Rome 3

ESN EnergieSystemeNord GmbH, DE, Schwentinental 6

Esperanto Infrastructure II S.à r.l., LU, Luxembourg 5

etatherm GmbH, DE, Potsdam 6

Etzel Gas-Lager GmbH & Co. KG, DE, Friedeburg-Etzel 5

Etzel Gas-Lager Management GmbH, DE,
Friedeburg-Etzel 6

Evantec GmbH, DE, Munich 2

EVG Energieversorgung Gemünden GmbH, DE,
Gemünden am Main 6

EVU Services GmbH, DE, Neumünster 2

EWC Windpark Cuxhaven GmbH, DE, Munich 6

33.4

100.0

69.5

50.0

30.0

49.0

100.0

50.0

42.9

100.0

25.0

45.0

100.0

48.5

100.0

50.0

100.0

50.0

47.5

49.0

25.5

75.2

100.0

49.0

100.0

50.0

209

Disclosures Pursuant to Section 313 (2) HGB of Companies in Which Equity
Investments Are Held (as of December 31, 2014)

Name, location

Stake (%)

Name, location

ews Verwaltungsgesellschaft mbH, DE, Bad Segeberg 6

Exporting Commodities International LLC, US, Marlton 5

EZV Energie- und Service GmbH & Co. KG Untermain, DE,
Wörth am Main 6

EZV Energie- und Service Verwaltungsgesellschaft mbH,
DE, Wörth am Main 6

Falkenbergs Biogas AB, SE, Malmö 2

Farma Wiatrowa Barzowice Sp. z o.o., PL, Warsaw 1

Fernwärmeversorgung Freising Gesellschaft mit
beschränkter Haftung (FFG), DE, Freising 6

Fernwärmeversorgung Herne GmbH, DE, Herne 6

FIDELIA Holding LLC, US, Wilmington 1

Fitas Verwaltung GmbH & Co. Dritte Vermietungs-KG, DE,
Pullach i. Isartal 2

FITAS Verwaltung GmbH & Co. REGIUM-Objekte KG, DE,
Pullach i. Isartal 2

Flatlands Wind Farm, LLC, US, Wilmington 2

Forest Creek Investco, Inc., US, Wilmington 1

Forest Creek WF Holdco, LLC, US, Wilmington 1

Forest Creek Wind Farm, LLC, US, Wilmington 1

Fortuna Solar, LLC, US, Wilmington 2

Freya Bunde-Etzel GmbH & Co. KG, DE, Essen 4

Gas-Union GmbH, DE, Frankfurt/Main 5

Gasag Berliner Gaswerke Aktiengesellschaft, DE, Berlin 5

Gasnetzgesellschaft Laatzen-Süd mbH, DE, Laatzen 6

Gasspeicher Lehrte GmbH, DE, Helmstedt 2

Gasversorgung Bad Rodach GmbH, DE, Bad Rodach 6

Gasversorgung Ebermannstadt GmbH, DE, Ebermannstadt 6

Gasversorgung im Landkreis Gifhorn GmbH (GLG), DE,
Wolfsburg 1

Gasversorgung Unterfranken Gesellschaft mit
beschränkter Haftung, DE, Würzburg 5

Gasversorgung Vorpommern GmbH, DE, Trassenheide 6

Gasversorgung Wismar Land GmbH, DE, Lübow 6

Gasversorgung Wunsiedel GmbH, DE, Wunsiedel 6

Gelsenberg GmbH & Co. KG, DE, Düsseldorf 1, 8

Gelsenberg Verwaltungs GmbH, DE, Düsseldorf 2

Gelsenwasser Beteiligungs-GmbH, DE, Munich 2

Gem. Ges. zur Förderung des E.ON Energy Research
Center mbH, DE, Aachen 6

Gemeindewerke Gräfelfing GmbH & Co. KG, DE, Gräfelfing 6

Gemeindewerke Gräfelfing Verwaltungs GmbH, DE,
Gräfelfing 6

Gemeindewerke Leck GmbH, DE, Leck 6

Gemeindewerke Uetze GmbH, DE, Uetze 6

Gemeindewerke Wedemark GmbH, DE, Wedemark 6

50.2

49.0

28.9

28.8

65.0

100.0

50.0

100.0

90.0

100.0

60.0

23.6

36.9

49.0

100.0

50.0

95.0

49.0

50.0

100.0

50.0

49.0

49.9

49.0

Gemeindewerke Wietze GmbH, DE, Wietze 6

Gemeinschaftskernkraftwerk Grohnde GmbH & Co. oHG,
DE, Emmerthal 1

Gemeinschaftskernkraftwerk Grohnde Management
GmbH, DE, Emmerthal 2

Gemeinschaftskernkraftwerk Isar 2 GmbH, DE,
Essenbach 2

Gemeinschaftskraftwerk Irsching GmbH, DE, Vohburg 1

Gemeinschaftskraftwerk Kiel Gesellschaft mit
beschränkter Haftung, DE, Kiel 6

Gemeinschaftskraftwerk Veltheim Gesellschaft mit
beschränkter Haftung, DE, Porta Westfalica 1

Gemeinschaftskraftwerk Weser GmbH & Co. oHG, DE,
Emmerthal 1

Geólica Magallón, S.L, ES, Zaragoza 5

Geothermie-Wärmegesellschaft Braunau-Simbach mbH,
AT, Braunau am Inn 6

Gesellschaft für Energie und Klimaschutz Schleswig-
Holstein GmbH, DE, Kiel 6

GfS Gesellschaft für Simulatorschulung mbH, DE, Essen 6

GHD Bayernwerk Natur GmbH & Co. KG, DE, Dingolfing 2

GLG Netz GmbH, DE, Gifhorn 1

GNS Gesellschaft für Nuklear-Service mbH, DE, Essen 6

GOLLIPP Bioerdgas GmbH & Co KG, DE, Gollhofen 6

GOLLIPP Bioerdgas Verwaltungs GmbH, DE, Nuremberg 6

Gondoskodás-Egymásért Alapítvány, HU, Debrecen 2

Grandview Wind Farm II, LLC, US, Wilmington 2

Grandview Wind Farm III, LLC, US, Wilmington 2

Grandview Wind Farm, LLC, US, Wilmington 4

Green Sky Energy Limited, GB, Bury 1

GrönGas Partner A/S, DK, Hirtshals 6

Guyane Conhilac Energies sarl, FR, La Ciotat 2

Hamburg Netz GmbH, DE, Hamburg 1

Hamburger Hof Versicherungs-Aktiengesellschaft, DE,
Düsseldorf 2

Hams Hall Management Company Limited, GB, Coventry 6

HanseWerk AG, DE, Quickborn 1

HanseWerk Natur GmbH, DE, Hamburg 1

Harzwasserwerke GmbH, DE, Hildesheim 5

Havelstrom Zehdenick GmbH, DE, Zehdenick 6

Heizwerk Holzverwertungsgenossenschaft
Stiftland eG & Co. oHG, DE, Neualbenreuth 6

Helioenergy Electricidad Dos, S.A., ES, Sevilla 4

Helioenergy Electricidad Uno, S.A., ES, Sevilla 4

HEMAB Elförsäljning AB, SE, Malmö 1

Stake (%)

49.0

100.0

83.2

75.0

50.2

50.0

66.7

36.2

20.0

33.3

41.7

75.0

100.0

48.0

50.0

100.0

50.0

100.0

50.0

100.0

74.9

100.0

46.6

69.0

100.0

20.8

49.0

50.0

100.0

210 Notes

Disclosures Pursuant to Section 313 (2) HGB of Companies in Which Equity
Investments Are Held (as of December 31, 2014)

Name, location

Stake (%)

Name, location

Stake (%)

Hermann Seippel-Unterstützungseinrichtung GmbH i. L.,
DE, Essen 2

HEUREKA-Gamma AG, CH, Baden-Dättwil 2

HGC Hamburg Gas Consult GmbH, DE, Hamburg 2

Hochtemperatur-Kernkraftwerk GmbH (HKG),
Gemeinsames europäisches Unternehmen, DE, Hamm 6

Högbytorp Kraftvärme AB, SE, Malmö 2

Holford Gas Storage Limited, GB, Edinburgh 1

Holsteiner Wasser GmbH, DE, Neumünster 6

HSN Magdeburg GmbH, DE, Magdeburg 1

HUGE Kft., HU, Budapest 2

Hydropower Evolutions GmbH, DE, Düsseldorf 2

Inadale Wind Farm, LLC, US, Wilmington 1

Induboden GmbH, DE, Düsseldorf 2

Induboden GmbH & Co. Grundstücksgesellschaft OHG,
DE, Düsseldorf 1

Induboden GmbH & Co. Industriewerte OHG, DE, Düsseldorf 1

Industriekraftwerk Greifswald GmbH, DE, Kassel 6

Industry Development Services Limited, GB, Coventry 2

InfraServ-Bayernwerk Gendorf GmbH, DE, Burgkirchen/Alz 6

Infrastrukturgesellschaft Stadt Nienburg/Weser mbH, DE,
Nienburg/Weser 6

Intelligent Maintenance Systems Limited, GB,
Milton Keynes 6

Inversora de Gas Cuyana S.A., AR, Mendoza 6

Inversora de Gas del Centro S.A., AR, Buenos Aires 6

Inwestycyjna Spólka Energetyczna-IRB Sp. z o.o., PL, Warsaw 6

Isam-Immobilien-GmbH, DE, Munich 2

Jihočeská plynárenská, a.s., CZ, České Budějovice 2

Kalmar Energi Försäljning AB, SE, Kalmar 6

Kalmar Energi Holding AB, SE, Kalmar 5

Kärnkraftsäkerhet & Utbildning AB, SE, Nyköping 6

Kasson Manteca Solar LLC, US, Wilmington 2

Kernkraftwerk Brokdorf GmbH & Co. oHG, DE, Hamburg 1

Kernkraftwerk Brunsbüttel GmbH & Co. oHG, DE, Hamburg 5

Kernkraftwerk Gundremmingen GmbH, DE,
Gundremmingen 5

Kernkraftwerk Krümmel GmbH & Co. oHG, DE, Hamburg 3

Kernkraftwerk Stade GmbH & Co. oHG, DE, Hamburg 1

Kernkraftwerke Isar Verwaltungs GmbH, DE, Essenbach 1

KGW - Kraftwerk Grenzach-Wyhlen GmbH, DE, Munich 1

Klåvbens AB, SE, Olofström 6

Kokereigasnetz Ruhr GmbH, DE, Essen 2

Kolbäckens Kraft KB, SE, Sundsvall 1

Komáromi Kogenerációs Erőmű Kft., HU, Győr 2

100.0

26.0

100.0

50.0

74.9

100.0

49.0

100.0

50.0

49.9

25.0

24.0

75.0

50.0

100.0

40.0

50.0

25.0

100.0

80.0

33.3

25.0

50.0

66.7

100.0

69.8

50.0

100.0

KommEnergie Erzeugungs GmbH, DE, Eichenau 6

KommEnergie GmbH, DE, Eichenau 6

Kommunale Energieversorgung GmbH Eisenhüttenstadt,
DE, Eisenhüttenstadt 6

Kommunale Klimaschutzgesellschaft Landkreis Celle
gemeinnützige GmbH, DE, Celle 6

Kommunale Klimaschutzgesellschaft Landkreis Uelzen
gemeinnützige GmbH, DE, Celle 6

Kraftwerk Buer GbR, DE, Gelsenkirchen 6

Kraftwerk Burghausen GmbH, DE, Munich 1

Kraftwerk Hattorf GmbH, DE, Munich 1

Kraftwerk Plattling GmbH, DE, Munich 1

Kraftwerk Schkopau Betriebsgesellschaft mbH, DE,
Schkopau 1

Kraftwerk Schkopau GbR, DE, Schkopau 1

Kraftwerks-Simulator-Gesellschaft mbH, DE, Essen 6

Kurgan Grundstücks-Verwaltungsgesellschaft mbH & Co.
oHG, DE, Grünwald 1

LandE GmbH, DE, Wolfsburg 1

Landwehr Wassertechnik GmbH, DE, Schöppenstedt 2

Langerlo N.V., BE, Genk 2

Lighting for Staffordshire Holdings Limited, GB, Coventry 1

Lighting for Staffordshire Limited, GB, Coventry 1

Lillo Energy NV, BE, Beveren/Antwerp 6

Limfjordens Bioenergi ApS, DK, Frederiksberg 2

Limited Liability Company E.ON IT, RU, Moscow 2

London Array Limited, GB, Coventry 6

LSW Energie Verwaltungs-GmbH, DE, Wolfsburg 6

LSW Holding GmbH & Co. KG, DE, Wolfsburg 5

LSW Holding Verwaltungs-GmbH, DE, Wolfsburg 6

LSW Netz Verwaltungs-GmbH, DE, Wolfsburg 6

Lubmin-Brandov Gastransport GmbH, DE, Essen 1

LUMEN DISTRIBUČNÍ SOUSTAVY, s.r.o., CZ, České Budějovice 6

LUMEN SYNERGY s.r.o., CZ, České Budějovice 6

Luminar S.r.l., IT, Milan 1

Luna Lüneburg GmbH, DE, Lüneburg 6

Maasvlakte CCS Project B.V., NL, Rotterdam 6

Magic Valley Wind Farm II, LLC, US, Wilmington 2

Magicat Holdco, LLC, US, Wilmington 5

Mainkraftwerk Schweinfurt Gesellschaft mit
beschränkter Haftung, DE, Munich 2

Maricopa East Solar PV, LLC, US, Wilmington 2

Maricopa East Solar PV 2, LLC, US, Wilmington 2

Maricopa West Solar PV 2, LLC, US, Wilmington 2

Maricopa West Solar PV, LLC, US, Wilmington 2

100.0

67.0

49.0

25.0

50.0

100.0

55.6

58.1

41.7

90.0

69.6

100.0

60.0

100.0

50.0

78.0

100.0

30.0

57.0

100.0

34.0

100.0

49.0

50.0

100.0

20.0

75.0

100.0

211

Disclosures Pursuant to Section 313 (2) HGB of Companies in Which Equity
Investments Are Held (as of December 31, 2014)

Name, location

Stake (%)

Name, location

Matrix Control Solutions Limited, GB, Bury 1

MEON Pensions GmbH & Co. KG, DE, Grünwald 1, 8

MEON Verwaltungs GmbH, DE, Grünwald 2

Metegra GmbH, DE, Laatzen 6

Meter Services Limited, GB, Coventry 2

Metering Services Limited, GB, Coventry 2

METHA-Methanhandel GmbH, DE, Essen 1

MFG Flughafen-Grundstücksverwaltungsgesellschaft
mbH & Co. Gamma oHG i.L., DE, Grünwald 2

Midlands Electricity Limited, GB, Coventry 2

Midlands Gas Limited, GB, Coventry 2

Midlands Generation (Overseas) Limited, GB, Coventry 2

Midlands Power (UK) Limited, GB, Coventry 2

Midlands Power International Limited, GB, Coventry 2

Midlands Sales Limited, GB, Coventry 2

Mittlere Donau Kraftwerke Aktiengesellschaft, DE, Munich 2

Montan GmbH Assekuranz-Makler, DE, Düsseldorf 6

Monte Elva Solar S.r.l., IT, Sassari 1

Mosoni-Duna Menti Szélerőmű Kft., HU, Győr 2

Munnsville Investco, LLC, US, Wilmington 1

Munnsville WF Holdco, LLC, US, Wilmington 1

Munnsville Wind Farm, LLC, US, Wilmington 1

Netz Veltheim GmbH, DE, Porta Westfalica 1

Netz- und Windservice (NWS) GmbH, DE, Schwerin 2

Netzanschluss Mürow Oberdorf GbR, DE, Bremerhaven 6

Netzgesellschaft Bad Münder GmbH & Co. KG, DE,
Bad Münder 6

Netzgesellschaft Barsinghausen GmbH & Co. KG, DE,
Barsinghausen 6

Netzgesellschaft Gehrden mbH, DE, Gehrden 6

Netzgesellschaft Hemmingen mbH, DE, Hemmingen 6

Netzgesellschaft Hildesheimer Land GmbH & Co. KG, DE,
Giesen 6

Netzgesellschaft Hildesheimer Land Verwaltung GmbH,
DE, Giesen 6

Netzgesellschaft Hohen Neuendorf Strom GmbH & Co.
KG, DE, Hohen Neuendorf 6

Netzgesellschaft Ronnenberg GmbH & Co. KG, DE,
Ronnenberg 6

Netzgesellschaft Schwerin mbH (NGS), DE, Schwerin 6

Netzgesellschaft Stuhr/Weyhe mbH, DE, Weyhe 6

Netzgesellschaft Syke GmbH, DE, Syke 6

Neumünster Netz Beteiligungs-GmbH, DE, Neumünster 1

New Cogen Sp. z o.o., PL, Warsaw 2

Nord Stream AG, CH, Zug 5

100.0

25.0

100.0

90.0

100.0

60.0

44.3

100.0

66.7

100.0

34.8

49.0

40.0

49.0

50.1

96.0

15.5

NORD-direkt GmbH, DE, Neumünster 2

Nordzucker Bioerdgas GmbH & Co. KG, DE,
Braunschweig 2

Nordzucker Bioerdgas Verwaltung-GmbH, DE,
Braunschweig 2

Northeolic Montebuño, S.L., ES, Madrid 2

NYKCE Nyíregyházi Kombinált Ciklusú Erőmű Kft., HU,
Nyíregyháza 2

OAO E.ON Russia, RU, Surgut 1

OAO Severneftegazprom, RU, Krasnoselkup 5

OAO Shaturskaya Upravlyayushchaya Kompaniya, RU, Shatura 1

Obere Donau Kraftwerke Aktiengesellschaft, DE, Munich 2

Oebisfelder Wasser und Abwasser GmbH, DE, Oebisfelde 6

Offshore Trassenplanungs GmbH i. L., DE, Hanover 2

Offshore-Windpark Beta Baltic GmbH, DE, Hamburg 2

Offshore-Windpark Delta Nordsee GmbH, DE, Hamburg 2

OHA B.V., NL, Eindhoven 2

OKG AB, SE, Oskarshamn 1

OLT Offshore LNG Toscana S.p.A., IT, Milan 4

OOO E.ON Connecting Energies, RU, Moscow 1

OOO E.ON E&P Russia, RU, Moscow 2

OOO Noginskiy Teplovoy Zentr, RU, Moscow 1

OOO Teplosbyt, RU, Shatura 1

Oskarshamns Energi AB, SE, Oskarshamn 5

Östersjöfrakt AB, SE, Örebro 2

Östrand Energi AB, SE, Sundsvall 1

Panrusgáz Zrt., HU, Budapest 6

Panther Creek Solar, LLC, US, Wilmington 2

Panther Creek Wind Farm I&II, LLC, US, Wilmington 1

Parque Eólico Barlavento, S.A., PT, Lisbon 1

Patriot Wind Farm, LLC, US, Wilmington 2

Pecém II Participações S.A., BR, Rio de Janeiro 4

PEG Infrastruktur AG, CH, Zug 1

Peißenberger Kraftwerksgesellschaft mit beschränkter
Haftung, DE, Peißenberg 2

Peißenberger Wärmegesellschaft mbH, DE, Peißenberg 6

Perstorps Fjärrvärme AB, SE, Perstorp 6

Pioneer Trail Wind Farm, LLC, US, Wilmington 1

Powergen (East Midlands) Investments, GB, Coventry 2

Powergen (East Midlands) Loan Notes, GB, Coventry 2

Powergen Group Holdings Limited, GB, Coventry 2

Powergen Group Investments, GB, Coventry 2

Powergen Holdings B.V., NL, Amsterdam 1

Powergen Holdings S.à r.l., LU, Luxembourg 2

Powergen International Limited, GB, Coventry 1

Stake (%)

100.0

50.0

75.0

100.0

83.7

25.0

51.0

60.0

49.0

50.0

100.0

53.3

54.5

48.2

100.0

67.0

100.0

50.0

80.0

100.0

25.0

100.0

90.0

100.0

50.0

100.0

50.0

100.0

212 Notes

Disclosures Pursuant to Section 313 (2) HGB of Companies in Which Equity
Investments Are Held (as of December 31, 2014)

Name, location

Powergen Limited, GB, Coventry 1

Powergen LS SE, GB, Coventry 1

Powergen Luxembourg Holdings S.À R.L., LU, Luxembourg 1

Powergen Power No. 1 Limited, GB, Coventry 2

Powergen Power No. 2 Limited, GB, Coventry 2

Powergen Power No. 3 Limited, GB, Coventry 1

Powergen Retail Supply Limited, GB, Coventry 2

Powergen Serang Limited, GB, Coventry 2

Powergen UK Holding Company Limited, GB, Coventry 2

Powergen UK Investments, GB, Coventry 1

Powergen UK Limited, GB, Coventry 2

Powergen UK Securities, GB, Coventry 2

Powergen US Holdings Limited, GB, Coventry 1

Powergen US Investments, GB, Coventry 1

Powergen US Securities Limited, GB, Coventry 1

Powergen Weather Limited, GB, Coventry 2

Promec Sp. z o.o., PL, Skarżysko-Kamienna 2

PT Power Jawa Barat, ID, Jakarta 6

Purena Consult GmbH, DE, Wolfenbüttel 2

Purena GmbH, DE, Wolfenbüttel 1

Pyron Wind Farm, LLC, US, Wilmington 1

R-KOM Regensburger Telekommunikationsgesellschaft
mbH & Co. KG, DE, Regensburg 6

R-KOM Regensburger Telekommunikations-
verwaltungsgesellschaft mbH, DE, Regensburg 6

Raab Karcher Electronic Systems Limited, GB, Coventry 2

RAG-Beteiligungs-Aktiengesellschaft, AT, Maria Enzersdorf 5

Rauschbergbahn Gesellschaft mit beschränkter Haftung,
DE, Ruhpolding 2

RDE Regionale Dienstleistungen Energie GmbH & Co. KG,
DE, Würzburg 2

RDE Verwaltungs-GmbH, DE, Würzburg 2

REGAS GmbH & Co KG, DE, Regensburg 6

REGAS Verwaltungs-GmbH, DE, Regensburg 6

REGENSBURGER ENERGIE- UND WASSERVERSORGUNG
AG, DE, Regensburg 6

regiolicht GmbH, DE, Helmstedt 2

Regnitzstromverwertung Aktiengesellschaft, DE,
Erlangen 6

REWAG REGENSBURGER ENERGIE- UND WASSER-
VERSORGUNG AG & CO KG, DE, Regensburg 5

RGE Holding GmbH, DE, Essen 1, 8

Rhein-Main-Donau Aktiengesellschaft, DE, Munich 1

Ringhals AB, SE, Varberg 5

RMD Wasserstraßen GmbH, DE, Munich 2

Stake (%)

Name, location

Stake (%)

100.0

40.0

100.0

94.5

100.0

RMD-Consult GmbH Wasserbau und Energie, DE, Munich 2

Rødsand 2 Offshore Wind Farm AB, SE, Malmö 5

Roscoe WF Holdco, LLC, US, Wilmington 1

Roscoe Wind Farm, LLC, US, Wilmington 1

Rose Rock Wind Farm, LLC, US, Wilmington 2

Rosengård Invest AB, SE, Malmö 6

RuhrEnergie GmbH, EVR, DE, Gelsenkirchen 1

S.C. Salgaz S.A., RO, Salonta 2

Safetec Entsorgungs- und Sicherheitstechnik GmbH, DE,
Heidelberg 2

San Juan de Bargas Eólica, S.L., ES, Zaragoza 5

Sand Bluff WF Holdco, LLC, US, Wilmington 1

Sand Bluff Wind Farm, LLC, US, Wilmington 1

SBI Jordberga AB, SE, Linköping 6

Scarweather Sands Limited, GB, Coventry 6

SCF2 S.r.l., IT, Rome 2

Schleswig-Holstein Netz AG, DE, Quickborn 1

Schleswig-Holstein Netz GmbH, DE, Rendsburg 2

Schleswig-Holstein Netz Verwaltungs-GmbH, DE, Quickborn 1

Sea Power & Fuel S.r.l., IT, Genoa 6

SEC A Sp. z o.o., PL, Szczecin 2

SEC B Sp. z o.o., PL, Szczecin 2

20.0

SEC Barlinek Sp. z o.o., PL, Barlinek 2

20.0

100.0

30.0

77.4

93.0

100.0

50.0

35.5

100.0

SEC C Sp. z o.o., PL, Szczecin 2

SEC D Sp. z o.o., PL, Szczecin 2

SEC Dębno Sp. z o.o., PL, Debno 2

SEC Energia Sp. z o.o., PL, Szczecin 2

SEC F Sp. z o.o., PL, Szczecin 2

SEC G Sp. z o.o., PL, Szczecin 2

SEC HR Sp. z o.o., PL, Szczecin 2

SEC Łobez Sp. z o.o., PL, Łobez 2

SEC Myślibórz Sp. z o.o., PL, Myślibórz 2

SEC Połczyn-Zdrój Sp. z o.o., PL, Połczyn-Zdrój 2

SEC Słubice Sp. z o.o., PL, Słubice 2

SEC Strzelce Krajeńskie Sp. z o.o., PL, Strzelce Krajeńskie 2

SEE-Sul Energía Eólica, S.A., PT, Lisbon 1

SERVICE plus GmbH, DE, Neumünster 2

33.3

Service Plus Recycling GmbH, DE, Neumünster 2

35.5

100.0

77.5

29.6

100.0

Servicii Energetice pentru Acasa - SEA Complet S.A., RO,
Târgu Mureş 6

Settlers Trail Wind Farm, LLC, US, Wilmington 1

SINERGIA ARAGONESA, S.L., ES, Zaragoza 2

ŠKO ENERGO, s.r.o., CZ, Mladá Boleslav 6

ŠKO-ENERGO FIN, s.r.o., CZ, Mladá Boleslav 5

100.0

20.0

100.0

25.0

100.0

60.1

100.0

47.0

100.0

20.0

50.0

100.0

94.1

100.0

50.0

100.0

85.0

100.0

89.9

100.0

48.0

100.0

60.0

21.0

42.5

213

Disclosures Pursuant to Section 313 (2) HGB of Companies in Which Equity
Investments Are Held (as of December 31, 2014)

Name, location

Stake (%)

Name, location

Stake (%)

Snow Shoe Wind Farm, LLC, US, Wilmington 2

SO.MET. ENERGIA S.r.l., IT, Costigliole d’Asti (AT) 1

Société des Eaux de l’Est S.A., FR, Saint-Avold (Creutzwald) 6

Söderåsens Bioenergi AB, SE, Billesholm 2

Solar Energy s.r.o., CZ, Znojmo 6

Sollefteåforsens AB, SE, Sundsvall 5

Sønderjysk Biogasproduktion I/S, DK, Vojens 6

SPIE Energy Solutions Harburg GmbH, DE, Hamburg 6

SQC Kvalificeringscentrum AB, SE, Stockholm 6

Städtische Betriebswerke Luckenwalde GmbH, DE,
Luckenwalde 6

Städtische Werke Magdeburg GmbH & Co. KG, DE,
Magdeburg 5

Städtische Werke Magdeburg Verwaltungs-GmbH, DE,
Magdeburg 6

Stadtnetze Neustadt a. Rbge. GmbH & Co. KG, DE,
Neustadt a. Rbge. 6

Stadtnetze Neustadt a. Rbge. Verwaltungs-GmbH, DE,
Neustadt a. Rbge. 6

Stadtversorgung Pattensen GmbH & Co. KG, DE, Pattensen 6

Stadtversorgung Pattensen Verwaltung GmbH, DE,
Pattensen 6

Stadtwerke Bad Bramstedt GmbH, DE, Bad Bramstedt 6

Stadtwerke Barth GmbH, DE, Barth 6

Stadtwerke Bergen GmbH, DE, Bergen 6

Stadtwerke Blankenburg GmbH, DE, Blankenburg 6

Stadtwerke Bogen GmbH, DE, Bogen 6

Stadtwerke Brandenburg an der Havel GmbH, DE,
Brandenburg an der Havel 5

Stadtwerke Bredstedt GmbH, DE, Bredstedt 6

Stadtwerke Burgdorf GmbH, DE, Burgdorf 6

Stadtwerke Ebermannstadt Versorgungsbetriebe GmbH,
DE, Ebermannstadt 6

Stadtwerke Eggenfelden GmbH, DE, Eggenfelden 6

Stadtwerke Frankfurt (Oder) GmbH, DE, Frankfurt (Oder) 5

Stadtwerke Garbsen GmbH, DE, Garbsen 6

Stadtwerke Geesthacht GmbH, DE, Geesthacht 6

Stadtwerke Husum GmbH, DE, Husum 6

Stadtwerke Lübz GmbH, DE, Lübz 6

Stadtwerke Ludwigsfelde GmbH, DE, Ludwigsfelde 6

Stadtwerke Neunburg vorm Wald Strom GmbH, DE,
Neunburg vorm Wald 6

Stadtwerke Niebüll GmbH, DE, Niebüll 6

Stadtwerke Parchim GmbH, DE, Parchim 6

Stadtwerke Premnitz GmbH, DE, Premnitz 6

Stadtwerke Pritzwalk GmbH, DE, Pritzwalk 6

100.0

60.0

25.0

63.3

25.0

50.0

35.0

33.3

Stadtwerke Ribnitz-Damgarten GmbH, DE,
Ribnitz-Damgarten 6

Stadtwerke Schwedt GmbH, DE, Schwedt/Oder 6

Stadtwerke Tornesch GmbH, DE, Tornesch 6

Stadtwerke Vilshofen GmbH, DE, Vilshofen 6

Stadtwerke Wismar GmbH, DE, Wismar 5

Stadtwerke Wittenberge GmbH, DE, Wittenberge 6

Stadtwerke Wolfenbüttel GmbH, DE, Wolfenbüttel 6

Stadtwerke Wolmirstedt GmbH, DE, Wolmirstedt 6

Statco Six Limited, GB, London 2

29.0

Stella Wind Farm II, LLC, US, Wilmington 2

Stella Wind Farm, LLC, US, Wilmington 2

Stensjön Kraft AB, SE, Stockholm 5

store-x Storage Capacity Exchange GmbH, DE, Leipzig 6

Strom Germering GmbH, DE, Germering 2

Stromnetzgesellschaft Bad Salzdetfurth-Diekholzen mbH
& Co. KG, DE, Bad Salzdetfurth 6

Stromversorgung Angermünde GmbH, DE, Angermünde 6

Stromversorgung Ruhpolding Gesellschaft mit
beschränkter Haftung, DE, Ruhpolding 2

Stromversorgung Unterschleißheim GmbH & Co. KG, DE,
Unterschleißheim 6

Stromversorgung Unterschleißheim Verwaltungs GmbH,
DE, Unterschleißheim 6

strotög GmbH Strom für Töging, DE, Töging am Inn 6

SüdWasser GmbH, DE, Erlangen 2

Sunshine 1 S.r.l., IT, Milan 2

Surschiste, S.A., FR, Mazingarbe 2

SV Civitella S.r.l., IT, Milan 1

SV VII S.r.l., IT, Milan 1

Svensk Kärnbränslehantering AB, SE, Stockholm 6

Svenskt Gastekniskt Center AB, SE, Malmö 6

SVH Stromversorgung Haar GmbH, DE, Haar 6

SVI-Stromversorgung Ismaning GmbH, DE, Ismaning 6

SVO Holding GmbH, DE, Celle 1

SVO Vertrieb GmbH, DE, Celle 1

SWN Stadtwerke Neustadt GmbH, DE, Neustadt bei Coburg 6

SWS Energie GmbH, DE, Stralsund 5

Szczecińska Energetyka Cieplna Sp. z o.o., PL, Szczecin 1

Szombathelyi Erőmű Zrt., HU, Győr 2

Szombathelyi Távhőszolgáltató Kft., HU, Szombathely 6

Tapolcai Kogenerációs Erőmű Kft., HU, Győr 2

Tauerngasleitung GmbH in Liqu., AT, Wals-Siezenheim 6

Tech Park Solar, LLC, US, Wilmington 2

Teplárna Kyjov, a.s., CZ, Kyjov 2

26.7

24.9

49.0

36.0

49.0

30.0

41.0

36.8

49.9

49.0

25.0

49.0

39.0

24.9

49.9

25.0

29.0

24.9

49.9

25.2

35.0

49.0

39.0

37.8

49.0

41.0

49.0

22.7

26.0

49.4

100.0

50.0

32.0

90.0

49.0

100.0

49.0

50.0

100.0

34.0

30.0

50.0

25.1

50.1

100.0

25.1

49.0

66.5

55.0

25.0

100.0

46.7

100.0

67.2

214 Notes

Disclosures Pursuant to Section 313 (2) HGB of Companies in Which Equity
Investments Are Held (as of December 31, 2014)

Name, location

Teplárna Tábor, a.s., CZ, Tábor 1

Terminal Alpi Adriatico S.r.l., IT, Rome 1

The Power Generation Company Limited, GB, Coventry 2

Thermondo GmbH, DE, Berlin 6

Thor Cogeneration Limited, GB, Coventry 2

Thor Holdings Limited, GB, Coventry 2

Three Rocks Solar, LLC, US, Wilmington 2

Tierra Blanca Wind Farm, LLC, US, Wilmington 2

Tipton Wind, LLC, US, Wilmington 2

Tiszántúli Hőtermelő Kft., HU, Debrecen 2

TPG Wind Limited, GB, Coventry 6

Twin Forks Wind Farm, LLC, US, Wilmington 2

TXU Europe (AH Online) Limited, GB, Coventry 2

TXU Europe (AHG) Limited, GB, Coventry 2

TXU Europe (AHGD) Limited, GB, Coventry 2

TXU Europe (AHST) Limited, GB, Coventry 2

Überlandwerk Leinetal GmbH, DE, Gronau 6

Umspannwerk Miltzow-Mannhagen GbR, DE, Sundhagen 6

Umwelt- und Wärmeenergiegesellschaft Strasburg
GmbH, DE, Potsdam 2

Unión de Generadores de Energía, S.A., ES, Zaragoza 6

Union Grid s.r.o., CZ, Prague 6

Untere Iller AG, DE, Landshut 2

Uranit GmbH, DE, Jülich 4

Utilities Center Maasvlakte Leftbank b.v., NL, Rotterdam 1

Utility Debt Services Limited, GB, Coventry 2

Valencia Solar LLC, US, Tucson 2

Valley Center Solar LLC, US, Wilmington 2

VEBA Electronics LLC, US, Wilmington 1

VEBACOM Holdings LLC, US, Wilmington 2

Venado Wind Farm, LLC, US, Wilmington 2

Versorgungsbetrieb Waldbüttelbrunn GmbH, DE,
Waldbüttelbrunn 6

Versorgungsbetriebe Helgoland GmbH, DE, Helgoland 6

Versorgungskasse Energie (VVaG), DE, Hanover 1

Versuchsatomkraftwerk Kahl GmbH, DE, Karlstein 6

Veszprém-Kogeneráció Energiatermelő Zrt., HU, Győr 2

Vici Wind Farm, LLC, US, Wilmington 2

Visioncash, GB, Coventry 1

Volkswagen AG Preussen Elektra AG Offene Handels-
gesellschaft, DE, Wolfsburg 6

Stake (%)

Name, location

Stake (%)

Wärme- und Wasserversorgung Friedensstadt GmbH, DE,
Trebbin 6

Wärmeversorgung Schenefeld GmbH, DE, Schenefeld 6

Wärmeversorgungsgesellschaft Königs Wusterhausen
mbH, DE, Königs Wusterhausen 2

Warmtebedrijf Exploitatie N.V., NL, Rotterdam 6

Wasser- und Abwassergesellschaft Vienenburg mbH, DE,
Vienenburg 6

Wasserkraft Baierbrunn GmbH, DE, Unterschleißheim 2

Wasserkraftnutzung im Landkreis Gifhorn GmbH, DE,
Müden/Aller 6

Wasserversorgung Sarstedt GmbH, DE, Sarstedt 6

Wasserwerk Gifhorn Beteiligungs-GmbH, DE, Gifhorn 6

Wasserwerk Gifhorn GmbH & Co KG, DE, Gifhorn 6

Wasserwirtschafts- und Betriebsgesellschaft Grafenwöhr
GmbH, DE, Grafenwöhr 6

WEA Schönerlinde GbR mbH Kiepsch & Bosse &
Beteiligungsges. e.disnatur mbH, DE, Berlin 2

Weißmainkraftwerk Röhrenhof Aktiengesellschaft, DE,
Bad Berneck 2

West of the Pecos Solar LLC, US, Wilmington 2

Western Gas Limited, GB, Coventry 2

WEVG Salzgitter GmbH & Co. KG, DE, Salzgitter 1

WEVG Verwaltungs GmbH, DE, Salzgitter 2

Wildcat Wind Farm II, LLC, US, Wilmington 2

Wildcat Wind Farm III, LLC, US, Wilmington 2

Windenergie Leinetal GmbH & Co. KG, DE, Freden 6

Windenergie Leinetal Verwaltungs GmbH, DE, Freden 6

Windenergie Osterburg GmbH & Co. KG, DE,
Osterburg (Altmark) 2

Windenergie Osterburg Verwaltungs GmbH, DE,
Osterburg (Altmark) 2

WINDENERGIEPARK WESTKÜSTE GmbH, DE,
Kaiser-Wilhelm-Koog 2

Windpark Anhalt-Süd (Köthen) OHG, DE, Potsdam 2

Windpark Mutzschen OHG, DE, Potsdam 2

Windpark Naundorf OHG, DE, Potsdam 2

WVM Wärmeversorgung Maßbach GmbH, DE, Maßbach 6

Yorkshire Windpower Limited, GB, Coventry 6

ZAO Gazprom YRGM Development, RU, Salekhard 1

Západoslovenská energetika a.s. (ZSE), SK, Bratislava 5

50.0

40.0

50.1

50.0

49.0

100.0

50.0

49.0

49.8

49.0

70.0

93.5

100.0

50.2

100.0

22.7

24.9

100.0

80.0

83.3

77.8

66.7

22.2

50.0

25.0

49.0

51.5

100.0

20.1

100.0

50.0

100.0

48.0

22.2

100.0

50.0

34.0

60.0

50.0

100.0

49.0

79.3

20.0

100.0

95.0

215

Disclosures Pursuant to Section 313 (2) HGB of Companies in Which Equity
Investments Are Held (as of December 31, 2014)

Name, location

Consolidated investment funds

E.ON Treasury, DE, Düsseldorf 1

EBWFONDS, DE, Düsseldorf 1

GRPFONDS, DE, Düsseldorf 1

GSBW, DE, Düsseldorf 1

HANSEFONDS , DE, Düsseldorf 1

OB 1, DE, Düsseldorf 1

OB 2, DE, Düsseldorf 1

OB 3, DE, Düsseldorf 1

OB 4, DE, Düsseldorf 1

OB 5, DE, Düsseldorf 1

OP-Fonds ONE, DE, Düsseldorf 1

TASSILO, DE, Düsseldorf 1

VKE-FONDS, DE, Düsseldorf 1

Stake (%)

100.0

Name, location

Other companies in which share investments are held

BKW Energie AG, CH, Bern 7, 9

Forsmarks Kraftgrupp AB, SE, Östhammar 7

HEW HofEnergie+Wasser GmbH, DE, Hof 7

infra fürth gmbh, DE, Fürth 7

Parnaíba Gás Natural S.A., BR, Rio de Janeiro 7

Stadtwerke Bamberg Energie- und Wasserversorgungs GmbH, DE, Bamberg 7

Stadtwerke Wertheim GmbH, DE, Wertheim 7

Stake (%)

Equity
€ in millions

Earnings
€ in millions

6.6

8.5

19.9

9.1

10.0

1,127.7

38.8

22.1

67.8

47.8

30.1

20.5

52.6

1.1

0.0

4.4

0.0

216 Supervisory Board and Board of Management

Supervisory Board (and Information on Other Directorships Held by Supervisory Board Members)

Werner Wenning
Chairman of the Supervisory Board,
E.ON SE
Chairman of the Supervisory Board,
Bayer AG
• Bayer AG (Chairman)
• Henkel Management AG
• Siemens AG
• Henkel AG & Co. KGaA

(Shareholders’ Committee)

Prof. Dr. Ulrich Lehner
Member of the Shareholders’ Committee,
Henkel AG & Co. KGaA
Deputy Chairman of the Supervisory
Board, E.ON SE
• Deutsche Telekom AG (Chairman)
• Porsche Automobil Holding SE
• ThyssenKrupp AG

(Chairman)

• Henkel AG & Co. KGaA

(Shareholders’ Committee)

• Novartis AG (Administrative Council,

Deputy Chairman,
until February 27, 2015)

• Dr. Oetker KG (Advisory Board,

until May 15, 2014)

Erhard Ott
Member of National Board, Unified
Service Sector Union, ver.di
Deputy Chairman of the Supervisory
Board, E.ON SE

Baroness Denise Kingsmill, CBE
Attorney at the Supreme Court,
member of the House of Lords
• APR Energy plc (Deputy Chairwoman)
• International Consolidated Airlines

Clive Broutta
(since July 1, 2014)
Full-time Representative of the General,
Municipal, Boilermakers and Allied
Trade Union (GMB)

Thies Hansen
(since January 1, 2015)
Chairman of the Combined Works
Council, HanseWerk AG
• HanseWerk AG
• Schlewsig-Holstein Netz AG
• Hamburg Netz GmbH

Group S.A.

• Telecom Italia S.p.A.

Eugen-Gheorghe Luha
Chairman of Gas România (Romanian
Federation of Gas Unions), Chairman of
Romanian employee representatives
• SEA Complet S.A. (Administrative

Council)

René Obermann
Chairman of the Board of Management,
Ziggo N.V.
(until November 12, 2014)
Partner at Warburg Pincus LLG
(since January 1, 2015)
• ThyssenKrupp AG
• Spotify Technology S.A.

Unless otherwise indicated, information is as of December 31, 2014.
• Directorships/supervisory board memberships within the meaning of Section 100, Paragraph 2 of the German Stock Corporation Act.
• Directorships/memberships in comparable domestic and foreign supervisory bodies of commercial enterprises.

217

Supervisory Board Committees

Executive Committee
Werner Wenning, Chairman
Erhard Ott, Deputy Chairman
Prof. Dr. Ulrich Lehner, Deputy Chairman
Eberhard Schomburg

Klaus Dieter Raschke
(until December 31, 2014)
Commercial Clerk, E.ON Kernkraft GmbH
• Versorgungskasse Energie VVaG

Dr. Karen de Segundo
Attorney
• British American Tobacco plc

(Board of Directors)

• Lonmin plc (Board of Directors, until

January 29, 2015)

• Pöyry Oyj (Board of Directors)

Eberhard Schomburg
Chairman of the E.ON SE Works Council
and E.ON European Works Council
• E.ON Kraftwerke GmbH
• E.ON Generation GmbH

(Deputy Chairman)

Fred Schulz
First Deputy Chairman of the E.ON
European Works Council, Chairman of
the Combined Works Council, E.DIS AG
• E.DIS AG
• Szczecińska Energetyka

Cieplna Sp. z o.o.

Dr. Theo Siegert
Managing Partner, de Haen-Carstanjen
& Söhne
• Henkel AG & Co. KGaA
• Merck KGaA
• DKSH Holding Ltd.

(Administrative Council)

• E. Merck KG

(Shareholders’ Committee)

Audit and Risk Committee
Dr. Theo Siegert, Chairman
Klaus Dieter Raschke, Deputy Chairman
(until December 31, 2014)
Eberhard Schomburg (Deputy Chairman,
since January 1, 2015)
Fred Schulz
(since January 1, 2015)
Werner Wenning

Willem Vis
(until June 30, 2014)
Director of Training (Generation),
E.ON Benelux N.V.

Finance and Investment
Committee
Werner Wenning, Chairman
Thies Hansen, Deputy Chairman
(since January 1, 2015)
Fred Schulz (until December 31, 2014),
Deputy Chairman (from March 11 until
December 31, 2014)
Eugen-Gheorghe Luha (since July 2, 2014)
Dr. Karen de Segundo
Willem Vis (until June 30, 2014)

Nomination Committee
Werner Wenning, Chairman
Prof. Dr. Ulrich Lehner, Deputy Chairman
Dr. Karen de Segundo

218 Supervisory Board and Board of Management

Board of Management (and Information on Other Directorships Held by Board of Management Members)

Dr. Johannes Teyssen
Born 1959 in Hildesheim,
Chairman and Chief Executive Officer
since 2010
Member of the Board of Management
since 2004
Group Executive Human Resources,
Investor Relations, Corporate
Communications, Group Audit,
Corporate Strategy & Development
• Deutsche Bank AG
• Salzgitter AG

Jørgen Kildahl
Born 1963 in Bærum, Norway,
Member of the Board of Management
since 2010
Brazil, Russia, Turkey, Exploration & Pro-
duction, Health/Safety & Environment,
Corporate Incident & Crisis Management,
Procurement & Real Estate Management,
Sustainability
• E.ON Global Commodities SE1
• ENEVA S.A. (Chairman)
• OAO E.ON Russia² (Chairman)

Dr.-Ing. Leonhard Birnbaum
Born 1967 in Ludwigshafen,
Member of the Board of Management
since 2013
Global Commodities, Distributed Gener-
ation, Engineering & Major Projects,
Commercial Operations, Political Affairs
& Regulatory, Technology & Innovation,
Consulting
• E.ON Global Commodities SE1

(Chairman)

• E.ON Technologies GmbH1

(Chairman)

• Georgsmarienhütte Holding GmbH

(Second Deputy Chairman)

Dr. Bernhard Reutersberg
Born 1954 in Düsseldorf,
Member of the Board of Management
since 2010
Coordination of Regional Units, Distri-
bution and Retail Businesses, Group-
wide program E.ON 2.0
• E.ON Czech Holding AG1 (Chairman)
• E.ON Benelux Holding B.V.²

(Chairman)

• E.ON España S.L.²
• E.ON France S.A.S.² (Chairman)
• E.ON Hungária Zrt.² (Chairman)
• E.ON Italia S.p.A.²
• E.ON Sverige AB² (Chairman)
• Nord Stream AG
• OAO E.ON Russia²

Klaus Schäfer
Born 1967 in Regensburg,
Member of the Board of Management
since 2013
Finance, Mergers & Acquisitions,
Accounting & Controlling, Legal
Affairs & Compliance, Taxes,
IT & Business Services
• E.ON Business Services GmbH1

(Chairman)

Mike Winkel
Born 1970 in Neubrandenburg,
Member of the Board of Management
since 2013
Generation, Renewables, Human
Resources, Operational Efficiency
• E.ON Generation GmbH1

(Chairman)

• E.ON Sverige AB²
• OAO E.ON Russia²

• Directorships/supervisory board memberships within the meaning of Section 100, Paragraph 2, of the German Stock Corporation Act.
• Directorships/memberships in comparable domestic and foreign supervisory bodies of commercial enterprises.

1Exempted E.ON Group directorship. ²Other E.ON Group directorship.

219

Internal controls are an integral part of our accounting pro-
cesses. Guidelines define uniform financial-reporting docu-
mentation requirements and procedures for the entire E.ON
Group. We believe that compliance with these rules provides
sufficient certainty to prevent error or fraud from resulting in
material misrepresentations in the Consolidated Financial
Statements, the Combined Group Management Report, and
the Interim Reports.

Düsseldorf, February 27, 2015

E.ON SE
Board of Management

Teyssen

Birnbaum

Kildahl

Reutersberg

Schäfer

Winkel

Explanatory Report of the Board of Management on
the Disclosures Pursuant to Section 289, Paragraph 4,
and Section 315, Paragraph 4, as well as Section 289,
Paragraph 5, of the German Commercial Code

The Board of Management has read and discussed the dis-
closures pursuant to Section 289, Paragraph 4 and Section 315,
Paragraph 4 of the German Commercial Code contained in
the Combined Group Management Report for the year ended
December 31, 2014, and issues the following declaration
regarding these disclosures:

The disclosures pursuant to Section 289, Paragraph 4 and
Section 315, Paragraph 4 of the German Commercial Code
contained in the Company’s Combined Group Management
Report are correct and conform with the Board of Manage-
ment’s knowledge. The Board of Management therefore con-
fines itself to the following statements:

Beyond the disclosures contained in the Combined Group
Management Report (and legal restrictions such as the exclu-
sion of voting rights pursuant to Section 136 of the German
Stock Corporation Act), the Board of Management is not aware
of any restrictions regarding voting rights or the transfer of
shares. The Company is not aware of shareholdings in the Com-
pany’s share capital exceeding ten out of one hundred voting
rights, so that information on such shareholdings is not
necessary. There is no need to describe shares with special con-
trol rights (since no such shares have been issued) or special
restrictions on the control rights of employees’ shareholdings
(since employees who hold shares in the Company’s share
capital exercise their control rights directly, just like other
shareholders).

To the extent that the Company has agreed to settlement
payments for Board of Management members in the case of
a change of control, the purpose of such agreements is to
preserve the independence of Board of Management members.

The Board of Management also read and discussed the dis-
closures in the Combined Group Management Report pursuant
to Section 289, Paragraph 5, of the German Commercial Code.
The disclosures contained in the Combined Group Management
Report on the key features of our internal control and risk
management system for accounting processes are complete
and comprehensive.

220 Tables and Explanations

Summary of Financial Highlights1
€ in millions

Sales and earnings

Sales

EBITDA2

EBIT2

Net income/Net loss

Net income/Net loss attributable to shareholders of E.ON SE

Value measures

ROACE/through 2009 ROCE (%)

Pretax cost of capital (%)

Value added3

Asset structure

Non-current assets

Current assets

Total assets

Capital structure

Equity

Capital stock
Minority interests without controlling influence

Non-current liabilities

Provisions
Financial liabilities
Other liabilities and other

Current liabilities
Provisions
Financial liabilities
Other liabilities and other

Total assets and liabilities

Cash flow and investments

Cash provided by operating activities of continuing operations

Cash-effective investments

Financial ratios

Equity ratio (%)

Long-term capital as a percentage of non-current assets (%)

Economic net debt (at year-end)

Debt factor4

Cash provided by operating activities of continuing operations as a percentage of sales

Stock

Earnings per share attributable to shareholders of E.ON SE (€)

Equity5 per share (€)

Twelve-month high per share (€)

Twelve-month low per share (€)

Year-end closing price per share6 (€)

Dividend per share7 (€)

Dividend payout

Market capitalization6, 8 (€ in billions)

E.ON SE long-term ratings

Moody’s

Standard & Poor’s

Employees

Employees at year-end

2010

2011

2012

2013

2014

92,863

13,346

9,454

6,281

5,853

14.4

8.3

4,000

112,954

132,093

119,615

111,556

9,293

5,438

-1,861

-2,219

8.4

8.3

10,771

7,012

2,613

2,189

11.1

7.7

2,139

9,191

5,642

2,459

2,091

9.2

7.5

1,031

8,337

4,664

-3,130

-3,160

8.5

7.4

609

106,657

102,221

46,224

50,651

96,563

43,863

95,580

36,750

83,065

42,625

152,881

152,872

140,426

132,330

125,690

45,585
2,001
3,932

69,580
23,631
28,880
17,069

37,716
4,950
3,611
31,527

39,613
2,001
3,876

67,129
25,672
24,029
17,428

46,130
4,985
5,885
35,260

38,820
2,001
3,862

65,027
28,601
21,937
14,489

36,579
4,049
4,007
28,523

36,638
2,001
2,915

63,179
28,153
18,051
16,975

32,513
4,353
4,673
23,487

26,713
2,001
2,128

63,335
31,376
15,784
16,175

35,642
4,120
3,883
27,639

152,881

152,872

140,426

132,330

125,690

10,614

8,286

108

6,610

6,524

104

8,808

6,997

108

6,260

7,992

104

6,253

4,633

108

37,821

36,520

35,845

32,218

33,394

2.8

11.4

3.07

21.86

29.36

21.13

22.94

1.50

2,858

43.7

3.9

5.9

-1.16

18.76

25.11

12.88

16.67

1.00

1,905

31.8

3.3

6.7

1.15

18.33

19.52

13.80

14.09

1.10

2,097

26.9

A-

3.5

5.2

1.10

17.68

14.71

11.94

13.42

0.60

1,145

25.6

A-

4.0

5.6

-1.64

12.72

15.46

12.56

14.20

0.50

966

27.4

A-

85,105

78,889

72,083

61,327

58,503

1Adjusted for discontinued operations and, in the case of 2013 and 2014, for the application of IFRS 10 and 11 and IAS 32. · 2Adjusted for extraordinary effects. · 3The figure is as
of the balance-sheet date. · 4Ratio between economic net debt and EBITDA. · 5Attributable to shareholders of E.ON SE. · 6At the end of December. · 7For the respective financial
year; the 2014 figure is management’s proposed dividend. · 8Based on shares outstanding.

221

Attributable Generating Capacity

Generation

Renewables

Germany

Other EU Countries Non-EU Countries

E.ON Group

2014

2013

2014

2013

2014

2013

2014

2013

December 31
MW

Nuclear

Lignite

Hard coal

Natural gas

Oil

Hydro

Wind

Other

2014

5,403

500

4,976

3,414

1,003

–

2013

5,403

500

5,279

3,637

1,003

–

1,904

174

–

168

–

473

102

Germany

15,296

15,822

2,078

2,072

632

Nuclear

Lignite

Hard coal

Natural gas

Oil

Hydro

Wind

Other

2,799

–

6,273

6,993

12,172

12,590

1,714

1,727

–

812

–

Outside Germany

23,770

24,109

–

3,018

4,216

130

7,363

3,028

4,558

916

8,502

–

1,263

–

2014

5,403

500

4,976

3,887

1,105

1,925

179

2013

5,403

500

5,279

4,121

1,104

1,911

168

18,006

18,518

2,799

1,293

6,273

2,799

1,292

6,993

1,102

1,353

7,050

20,324

20,993

–

253

1,419

234

1,648

–

1,714

3,049

4,218

1,195

1,727

3,059

4,559

1,150

8,313

40,865

42,572

–

484

101

–

624

–

E.ON Group

39,066

39,931

9,441

10,574

632

624

1,419

1,648

8,313

58,871

61,090

Fully Consolidated Generating Capacity

Generation

Renewables

Germany

Other EU Countries Non-EU Countries

E.ON Group

2014

2013

2014

2013

2014

2013

2014

2013

December 31
MW

Nuclear

Lignite

Hard coal

Natural gas

Oil

Hydro

Wind

Other

2014

5,746

900

4,916

3,875

1,003

–

2013

5,746

900

5,219

4,210

1,003

–

1,985

2,072

213

–

203

–

Germany

16,440

17,078

2,198

2,275

Nuclear

Lignite

Hard coal

Natural gas

Oil

Hydro

Wind

Other

2,511

–

6,273

6,993

12,322

12,333

1,714

2,028

–

812

–

2,824

3,610

Outside Germany

23,632

23,865

6,490

–

2,808

4,179

844

7,831

–

931

–

102

–

226

–

101

–

224

–

1,509

–

2014

5,746

900

4,916

3,960

1,105

1,992

213

2013

5,746

900

5,219

4,291

1,104

2,082

203

18,864

19,577

2,511

1,529

6,273

2,511

1,528

6,993

1,323

8,419

21,672

22,075

–

1,714

2,856

3,610

1,122

2,028

2,839

4,179

1,078

9,928

41,287

43,232

253

1,237

234

1,608

E.ON Group

40,072

40,943

8,688

10,106

226

224

1,237

1,608

9,928

60,151

62,809

222 Tables and Explanations

Owned Generation by Energy Source

Generation

Renewables

Germany

Other EU Countries Non-EU Countries

E.ON Group

2014

2013

2014

2013

2014

2013

2014

2013

Billion kWh

Nuclear

Lignite

Hard coal

Natural gas, oil

Hydro

Wind

Other

Germany

Nuclear

Lignite

Hard coal

Natural gas, oil

Hydro

Wind

Other

Outside Germany

2014

43.1

2.9

17.9

1.1

–

2013

44.4

4.3

26.5

2.6

–

65.0

77.8

12.3

–

29.5

16.9

–

1.8

60.5

11.7

–

36.2

21.0

–

68.9

Total

125.5

146.7

Percentages

Nuclear

Lignite

Hard coal

Natural gas, oil

Hydro

Wind

Other

Germany

Nuclear

Lignite

Hard coal

Natural gas, oil

Hydro

Wind

Other

Outside Germany

–

Total

100

–

100

–

4.7

0.3

–

5.0

–

9.6

11.9

–

21.5

26.5

–

6.1

0.3

–

6.4

–

9.7

12.1

1.0

22.8

29.2

–

0.2

–

0.3

0.5

–

0.5

–

0.8

1.3

–

0.5

1.3

–

100

–

100

–

100

–

0.2

–

2.7

–

0.6

3.5

–

100

–

0.2

–

4.0

0.1

–

0.7

5.0

–

100

–

9.0

–

50.2

–

59.2

–

100

2014

43.1

2.9

17.9

1.3

4.7

0.3

2013

44.4

4.3

26.5

3.1

6.1

0.3

0.8

70.5

85.5

12.3

9.2

29.5

69.8

9.6

11.9

2.4

11.7

10.2

36.2

78.0

9.8

12.1

1.7

–

10.0

–

53.0

–

63.0

144.7

159.7

63.0

215.2

245.2

–

100

–

100

223

Power Procurement1

Generation

Renewables

Global
Commodities

Germany

Other EU
Countries

Non-EU
Countries

Consolidation

E.ON Group

2013

29.2

2014

2013

2014

2013

2014

2013

–

0.5

1.3

3.5

5.0

6.3

597.2

540.3

135.2

162.2

128.8

128.6

2014

59.2

4.8

2013

63.0

2014

2013

–

4.5

-362.6

-400.9

2014

215.2

536.9

2013

245.2

469.3

1.1

–

0.2

–

14.2

14.0

5.2

35.5

597.2

540.3

135.2

135.7

162.0

163.5

128.6

132.3

128.6

133.6

-1.0

34.5

–

-3.9

-4.5

-7.8

-8.1

597.2

540.3

131.8

159.0

124.5

125.5

4.8

64.0

-2.0

62.0

4.5

-362.6

-400.9

67.5

-362.6

-400.9

522.7

752.1

455.3

714.5

-2.2

–

-16.2

-17.6

65.3

-362.6

-400.9

735.9

696.9

Billion kWh

2014

2013

Owned generation 125.5

146.7

Purchases

28.0

28.3

Jointly owned
power plants
Global Com-
modities/out-
side sources

Total

Station use,
line loss, etc.

Power sales

13.2

12.7

14.8

15.6

153.5

175.0

-1.6

-1.8

151.9

173.2

1Adjusted for discontinued operations.

2014

26.5

5.5

0.8

4.7

32.0

-0.9

31.1

Power Sales1

Generation

Renewables

Global
Commodities

Germany

Other EU
Countries

Non-EU
Countries

Consolidation

E.ON Group

Billion kWh

2014

2013

2014

2013

2014

2013

2014

2013

2014

2013

2014

2013

2014

2013

2014

2013

Residential and
SME

I&C

–

3.6

–

3.5

Sales partners

28.4

32.8

Customer
segments

32.0

36.3

–

5.6

0.2

–

8.0

8.2

–

19.1

21.0

61.3

21.6

25.1

75.5

42.9

65.8

0.1

47.3

64.9

0.6

101.4

122.2

108.8

112.8

–

-0.2

-4.1

–

-0.4

-4.4

62.0

90.2

91.3

69.1

93.1

112.5

-4.3

-4.8

243.5

274.7

Wholesale market/
Global
Commodities

Total

119.9

151.9

136.9

173.2

25.5

31.1

26.3

34.5

597.2

540.3

30.4

36.8

15.6

12.7

131.8

159.0

124.4

125.5

62.0

65.3

-358.2

-396.1

-362.5

-400.9

492.4

735.9

422.2

696.9

1Adjusted for discontinued operations.

Gas Sales1

Billion kWh

Residential and SME

I&C

Sales partners

Customer segments

Global Commodities

Germany

Other EU Countries

Consolidation

E.ON Group

2014

2013

–

2014

22.2

82.5

234.7

339.4

2013

29.2

109.0

333.4

471.6

2014

71.1

35.4

0.5

107.0

14.7

121.7

2013

89.0

42.5

–

131.5

16.8

148.3

2014

2013

–

2014

93.3

117.9

235.2

446.4

2013

118.2

151.5

333.4

603.1

-517.0

-653.5

714.6

616.2

1,161.0

1,219.3

Wholesale market/Global Commodities2

Total

1,216.9

1,252.9

–

339.4

471.6

1Adjusted for discontinued operations.
2E.ON Global Commodities, including the former E.ON Ruhrgas; prior-year figures were adjusted accordingly.

224 Glossary of Financial Terms

Actuarial gains and losses
The actuarial calculation of provisions for pensions is based
on projections of a number of variables, such as projected
future salaries and pensions. An actuarial gain or loss is
recorded when the actual numbers turn out to be different
from the projections.

Beta factor
Indicator of a stock’s relative risk. A beta coefficient of more
than one indicates that a stock has a higher risk than the
overall market; a beta coefficient of less than one indicates
that it has a lower risk.

Bond
Debt instrument that gives the holder the right to repayment
of the bond’s face value plus an interest payment. Bonds are
issued by public entities, credit institutions, and companies
and are sold through banks. They are a form of medium- and
long-term debt financing.

Capital employed
Represents the interest-bearing capital tied up in the E.ON
Group. It is equal to a segment’s non-current and current
operating assets less the amount of non-interest-bearing
available capital. Other equity interests are included at their
acquisition cost, not their fair value.

Capital stock
The aggregate face value of all shares of stock issued by a com-
pany; entered as a liability in the company’s balance sheet.

Cash flow statement
Calculation and presentation of the cash a company has
generated or consumed during a reporting period as a result
of its operating, investing, and financing activities.

Cash provided by operating activities
Cash provided by, or used for, operating activities of continuing
operations.

Commercial paper (“CP”)
Unsecured, short-term debt instruments issued by commercial
firms and financial institutions. CPs are usually quoted on a
discounted basis, with repayment at par value.

Consolidation
Accounting approach in which a parent company and its affil-
iates are presented as if they formed a single legal entity. All
intracompany income and expenses, intracompany accounts
payable and receivable, and other intracompany transactions
are offset against each other. Share investments in affiliates
are offset against their capital stock, as are all intracompany
credits and debts, since such rights and obligations do not
exist within a single legal entity. The adding together and con-
solidation of the remaining items in the annual financial
statements yields the consolidated balance sheets and the
consolidated statements of income.

Contractual trust arrangement (“CTA”)
Model for financing pension obligations under which company
assets are converted to assets of a pension plan administered
by an independent trust that is legally separate from the
company.

225

Controllable costs
Our key figure for monitoring operational costs that manage-
ment can meaningfully influence: the controllable portions
of the cost of materials (in particular, maintenance costs and
the costs of goods and services), certain portions of other
operating income and expenses, and most personnel costs.

Cost of capital
Weighted average of the costs of debt and equity financing
(weighted-average cost of capital: “WACC”). The cost of equity
is the return expected by an investor in a given stock. The
cost of debt is based on the cost of corporate debt and bonds.
The interest on corporate debt is tax-deductible (referred to
as the tax shield on corporate debt).

EBIT
Earnings before interest and taxes. The EBIT figure used by
E.ON is derived from income/loss from continuing operations
before interest income and income taxes and is adjusted to
exclude certain extraordinary items, mainly other income and
expenses of a non-recurring or rare nature (see Other non-
operating earnings).

EBITDA
Earnings before interest, taxes, depreciation, and amortization.
It equals the EBIT figure used by E.ON before depreciation
and amortization. It is our key earnings figure for purposes of
internal management control and as an indicator of our busi-
nesses’ long-term earnings power.

Credit default swap (“CDS”)
A credit derivative used to hedge the default risk on loans,
bonds, and other debt instruments.

Economic investments
Cash-effective capital investments plus debt acquired and
asset swaps.

Debt factor
Ratio between economic net debt and EBITDA. Serves as a
metric for managing E.ON’s capital structure.

Debt issuance program
Contractual framework and standard documentation for the
issuance of bonds.

Discontinued operations
Businesses or parts of a business that are planned for divest-
ment or have already been divested. They are subject to
special disclosure rules.

Economic net debt
Key figure that supplements net financial position with
pension obligations and asset retirement obligations (less
prepayments to the Swedish nuclear fund).

Equity method
Method for valuing shareholdings in associated companies
whose assets and liabilities are not fully consolidated. The pro-
portional share of the company’s annual net income (or loss)
is reflected in the shareholding’s book value. This change is
usually shown in the owning company’s income statement.

226 Glossary of Financial Terms

Fair value
The price at which assets, debts, and derivatives pass from a
willing seller to a willing buyer, each having access to all the
relevant facts and acting freely.

Financial derivative
Contractual agreement based on an underlying value (reference
interest rate, securities prices, commodity prices) and a
nominal amount (foreign currency amount, a certain number
of stock shares).

Goodwill
The value of a subsidiary as disclosed in the parent company’s
consolidated financial statements resulting from the consoli-
dation of capital (after the elimination of hidden reserves and
liabilities). It is calculated by offsetting the carrying amount
of the parent company’s investment in the subsidiary against
the parent company’s portion of the subsidiary’s equity.

Impairment test
Periodic comparison of an asset’s book value with its fair value.
A company must record an impairment charge if it determines
that an asset’s fair value has fallen below its book value. Good-
will, for example, is tested for impairment on at least an
annual basis.

International Financial Reporting Standards (“IFRS”)
Under regulations passed by the European Parliament and
European Council, capital-market-oriented companies in the
EU must apply IFRS.

Net financial position
Difference between total financial assets (cash and non-
current securities) and total financial liabilities (debts to
financial institutions, third parties, and associated companies,
including effects from currency translation).

Option
The right, not the obligation, to buy or sell an underlying
asset (such as a security or currency) at a specific date at
a predetermined price from or to a counterparty or seller.
Buy options are referred to as calls, sell options as puts.

Other non-operating earnings
Income and expenses that are unusual or infrequent, such as
book gains or book losses from significant disposals as well
as restructuring expenses (see EBIT).

Profit at Risk (“PaR”)
Risk measure that indicates, with a certain degree of confi-
dence (for example, 95 percent), that changes in market prices
will not cause a profit margin to fall below expectations
during the holding period, depending on market liquidity. For
E.ON’s business, the main market prices are those for power,
gas, coal, and carbon.

Purchase price allocation
In a business combination accounted for as a purchase, the
values at which the acquired company’s assets and liabilities
are recorded in the acquiring company’s balance sheet.

227

Rating
Standardized performance categories for an issuer’s short-
and long-term debt instruments based on the probability of
interest payment and full repayment. Ratings provide investors
and creditors with the transparency they need to compare
the default risk of various financial investments.

Return on equity
The return earned on an equity investment (in this case, E.ON
stock), calculated after corporate taxes but before an investor’s
individual income taxes.

ROACE
Acronym for return on average capital employed. A key indi-
cator for monitoring the performance of E.ON’s business,
ROACE is the ratio between E.ON’s EBIT and average capital
employed. Average capital employed represents the average
interest-bearing capital tied up in the E.ON Group.

ROCE
Acronym for return on capital employed. ROCE is the ratio
between E.ON’s EBIT and capital employed. Capital employed
represents the interest-bearing capital tied up in the E.ON
Group.

Syndicated line of credit
Credit facility extended by two or more banks that is good
for a stated period of time.

Underlying net income
An earnings figure after interest income, income taxes, and
non-controlling interests that has been adjusted to exclude
certain extraordinary effects. The adjustments include effects
from the marking to market of derivatives, book gains and
book losses on disposals, restructuring expenses, and other
non-operating income and expenses of a non-recurring or
rare nature (after taxes and non-controlling interests). Under-
lying net income also excludes income/loss from discontinued
operations, net.

Value added
Key measure of E.ON’s financial performance based on residual
wealth calculated by deducting the cost of capital (debt and
equity) from operating profit. It is equivalent to the return
spread (ROACE minus the cost of capital) multiplied by average
capital employed, which represents the average interest-
bearing capital tied up in the E.ON Group.

Value at risk (“VaR”)
Risk measure that indicates the potential loss that a portfolio
of investments will not exceed with a certain degree of prob-
ability (for example, 99 percent) over a certain period of time
(for example, one day). Due to the correlation of individual
transactions, the risk faced by a portfolio is lower than the
sum of the risks of the individual investments it contains.

Working capital
The difference between a company’s current operating assets
and current operating liabilities.

228

Further information

E.ON SE
E.ON-Platz 1
40479 Düsseldorf
Germany

T +49 211-4579-0
F +49 211-4579-501
info@eon.com
www.eon.com

Media Relations
T +49 211-4579-544 or -3570
presse@eon.com

Investor Relations
T +49 211-4579-345
investorrelations@eon.com

Creditor Relations
T +49 211-4579-262
creditorrelations@eon.com

Only the German version of this Annual Report is legally binding.

Production
Printing

Jung Produktion, Düsseldorf

Ernst Kabel Druck GmbH, Hamburg

Financial Calendar

May 7, 2015 2015 Annual Shareholders Meeting
May 7, 2015
August 12, 2015
November 11, 2015

Interim Report: January – March 2015
Interim Report: January – June 2015
Interim Report: January – September 2015

March 9, 2016 Release of the 2015 Annual Report

Interim Report: January – March 2016

May 11, 2016
June 8, 2016 2016 Annual Shareholders Meeting
Interim Report: January – June 2016
Interim Report: January – September 2016

August 10, 2016
November 9, 2016

E.ON Group Financial Highlights1
€ in millions

Attributable generating capacity (MW)

– thereof renewables (MW)

Fully consolidated generating capacity (MW)

– thereof renewables (MW)

Owned generation (billion kWh)

– thereof renewables (billion kWh)

Carbon emissions from power and heat production (million metric tons)

Specific carbon emissions (million metric tons/MWh)

Electricity sales (billion kWh)

Gas sales (billion kWh)

Sales
EBITDA2
EBIT2

Net loss/Net income

Net loss/Net income attributable to shareholders of E.ON SE
Underlying net income2

Investments

Expenditures on technology and innovation (including software)

Cash provided by operating activities of continuing operations

Economic net debt (at year-end)
Debt factor4

Equity

Total assets

ROACE (%)

Pretax cost of capital (%)

After-tax cost of capital (%)

Value added

Employees (at year-end)

– Percentage of female employees

– Percentage of female executives and senior managers

– Average turnover rate (%)

– Average age

– TRIF (E.ON employees)
Earnings per share6, 7 (€)
Equity per share6, 7 (€)
Dividend per share8 (€)

Dividend payout
Market capitalization7 (€ in billions)

2014

58,871

10,472

60,151

9,768

215.2

29.3

95.7

0.43

735.9

1,161.0

111,556

8,337

4,664

-3,130

-3,160

1,612

4,633

6,253

33,394

4.0

26,713

125,690

8.5

7.4

5.4

609

58,503

28.8

15.8

3.3

2.0

-1.64

13.02

0.50

966

27.4

2013

61,090

10,885

62,809

10,414

245.2

30.8

114.3

0.45

696.9

1,219.3

119,688

9,191

5,624

2,459

2,091

2,126

7,992

6,260

32,218

3.5

36,638

132,330

9.2

7.5

5.5

1,031

61,327

28.6

14.0

3.5

2.6

1.10

17.68

0.60

1,145

25.6

+/- %

-4

-6

-12

-5

-16

-4

-5

-7

-9

-17

–

-24

-42

-29

–

+4
+0.53

-27

-5
-0.85
-0.15
-0.15

-41

-5
+0.25
+1.85
-0.25

–
-0.65

–

-26

-17

-16

2014 Annual Report

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