E.ON AG Annual Report 2019

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FY2019 Annual Report · E.ON AG

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Annual Report
2019

E.ON Group Financial Highlights
€ in millions

Sales1

Adjusted EBITDA1, 2

– Regulated business3 (%)

– Quasi-regulated and long-term contracted business3 (%)

– Merchant business3 (%)

Adjusted EBIT1, 2

– Regulated business3 (%)

– Quasi-regulated and long-term contracted business3 (%)

– Merchant business3 (%)

Net income/loss

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

Adjusted net income1, 2

Investments1

Cash provided by operating activities1

Cash provided by operating activities before interest and taxes1

Economic net debt (at year-end)1

Equity

Total assets

ROCE (%)1

Employees (at year-end)1

– Percentage of female employees

– Average age

Earnings per share5, 6 (€)

Adjusted net income per share1, 5, 6 (€)

Dividend per share7 (€)

Dividend payout

2019

41,484

5,558

2018

30,084

4,840

3,235

2,989

1,808

1,566

1,536

5,492

2,965

4,407

39,430

13,085

98,566

8.4

78,948

0.68

0.67

0.46

1,199

3,524

3,223

1,505

3,523

2,853

4,087

16,580

8,518

54,324

10.4

43,302

1.49

0.69

0.43

932

+/- %

+38

+15

+84

-84

–

+124

-94

-34

-49

-51

+56

+138

+54

+81

-2.04

+82

+1.04

–

-54

-3

+29

1Includes until September 18, 2019, the discontinued operations in the Renewables segment (see Note 4 to the Consolidated Financial Statements).
2Adjusted for non-operating effects.
3E.ON and innogy’s definitions of regulated, quasi-regulated businesses, and so forth were harmonized and the prior-year figures adjusted accordingly.
4Change in percentage points.
5Attributable to shareholders of E.ON SE.
6Based on shares outstanding (weighted average).
7For the respective financial year; the 2019 figure represents management’s dividend proposal.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

Contents

Report of the Supervisory Board

Combined Group Management Report
Corporate Profile

Risk and Chances Report
Business Segments
Internal Control System for the Accounting Process

Macroeconomic and Industry Environment
Business Performance
Earnings Situation
Financial Situation
Asset Situation
E.ON SE’s Earnings, Financial, and Asset Situation
Other Financial and Non-Financial Performance Indicators
– Analyzing Value Creation
– Employees

4
10 Strategy and Objectives
14
14
Business Model
14
Management System
17
Innovation
18
20 Business Report
20
23
24
29
33
34
36
36
37
40 Forecast Report
42
50
57
59 Disclosures Regarding Takeovers
62 Corporate Governance Report
62
70
88 Separate Combined Non-Financial Report
104 Consolidated Financial Statements
104 Consolidated Statements of Income
105 Consolidated Statements of Recognized Income and Expenses
106 Consolidated Balance Sheets
108 Consolidated Statements of Cash Flows
110 Statement of Changes in Equity
112 Notes
210
230 Other Information
230 Declaration of the Management
231 Independent Auditor’s Report
238 Independent Practitioner’s Report on Non-Financial Reporting
240 Members of the Supervisory Board
242 Members of the Management Board
243 Summary of Financial Highlights
245 Financial Calendar

Corporate Governance Declaration
Compensation Report

List of Shareholdings

Report of the
Supervisory Board

Report of the Supervisory Board

Dr. Karl-Ludwig Kley,
Chairman of the Supervisory Board

Dear Shareholders,

The year 2019 was characterized predominantly by the takeover of innogy SE. The
closing of the transaction in September marked the beginning of a new chapter in
E.ON’s history. The Supervisory Board would like to thank the Management Board
and all employees for the enormous efforts that were and are connected with the
transaction as well as the integration.

In the 2019 financial year the Supervisory Board carefully performed all its duties
and obligations under law, the Company’s Articles of Association, and its own rules
and procedures. The Supervisory Board advised the Management Board intensively
about the Company’s management and continually monitored the Management
Board’s activities, assuring itself that the Company’s management was legal, pur-
poseful, and orderly. At four regular and two extraordinary meetings, it addressed
all issues relevant to the Company. On a regular basis, the shareholder representatives
and the employee representatives made separate preparations for these meetings
with the participation of one or all members of the Management Board. Two
Supervisory Board members were unable to attend individual Supervisory Board
meetings in 2019. Apart from that, all members attended all meetings.

The Management Board regularly provided the Supervisory Board with timely and
comprehensive information about significant business transactions in both written
and oral form. At the meetings of the full Supervisory Board and its committees, the
Supervisory Board had sufficient opportunity to actively discuss the Management
Board’s reports, motions, and proposed resolutions. After thoroughly examining
and discussing the resolutions proposed by the Management Board, the Supervisory
Board voted on them when it was required by law, the Company’s Articles of
Association, or the Supervisory Board’s rules and procedures.

In addition, there was a regular exchange of information between the Chairman of
the Supervisory Board and the members of the Management Board, in particular
the Chairman, during the entire financial year. In the case of particularly pertinent
issues, the Chairman of the Supervisory Board was kept informed at all times.
He likewise maintained contact with the members of the Supervisory Board outside
of board meetings.

Takeover of innogy SE and Far-reaching Asset Swap with RWE

The Supervisory Board dealt with the status of the innogy SE takeover at all of its
meetings in 2019 and adopted any necessary resolutions. The Management Board
kept the Supervisory Board continually informed about a variety of related matters,
including the status of the voluntary public takeover offer, the merger-control
procedure, and the progress of the integration preparations and measures. In this
context, the Supervisory Board also discussed the European Commission’s antitrust
conditions for selected markets in which E.ON operates and, where necessary,
adopted resolutions. In addition, the Supervisory Board examined the options for
the legal integration of innogy SE and adopted corresponding resolutions. Likewise
in the context of the innogy SE takeover, the Supervisory Board carried out its
expansion to 20 members and made personnel decisions regarding the composition
of the E.ON Management Board.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

Other Key Topics of the Supervisory
Board’s Discussions

Corporate Governance

Policy and regulatory developments in countries in
which E.ON is active constituted another key topic of
the Supervisory Board’s discussions. Alongside the
overall and economic policy situation in the individual
countries, the Supervisory Board focused primarily on
the developments in European and German energy
policy and their respective consequences for E.ON’s
business areas.

Furthermore, in the context of the Group’s current
operating business, the Supervisory Board addressed
in detail the impact of low interest rates on E.ON, the
general business situation of the Group and its compa-
nies, national and international energy markets, as well
as the currencies that are important to E.ON. It discussed
E.ON SE’s and the E.ON Group’s asset, financial, and
earnings situation, future dividend policy, workforce
developments, and earnings opportunities and risks. In
addition, the Supervisory Board and the Management
Board thoroughly discussed the E.ON Group’s medium-
term plan for 2020–2022. The Supervisory Board was
provided with information on a regular basis about the
Company’s health, (occupational) safety, and environ-
mental performance (in particular, key accident indica-
tors) as well as current customer numbers, customer
satisfaction, and the number of apprentices. Further-
more, the Supervisory Board dealt comprehensively with
the Company’s future energy-procurement strategy.

In addition, the Supervisory Board discussed E.ON’s
future funding needs and, where necessary, adopted
resolutions. It also discussed E.ON’s current and future
rating situation with the Management Board on a reg-
ular basis. Finally, it examined and approved the Group’s
non-financial reporting (“CSR”).

In the declaration of compliance issued at the end of the year, the Super-
visory Board and the Management Board declared that E.ON is in full
compliance with the recommendations of the “Government Commission
German Corporate Governance Code” dated February 7, 2017, published
by the Federal Ministry of Justice and for Consumer Protection in the
official section of the Federal Gazette (Bundesanzeiger), since the last
annual declaration in December 2018, with two exceptions regarding the
recommendations in Section 7.1.2, Sentence 3, and Section 4.2.3, Para-
graph 2, Sentence 8. The current version of the declaration of compliance
as well as earlier versions are published online at www.eon.com.

In the 2019 financial year, two members of the Innovation and Sustain-
ability Committee (formerly: Investment and Innovation Committee) had
a conflict of interest in conjunction with a possible transaction owing
to their position with another company. In accordance with Supervisory
Board rules, the members made this known prior to the meeting on
March 11, 2019, and did not take part in the committee’s adoption of a
resolution. In addition, in his capacity as Chairman of the RWE AG Manage-
ment Board, Rolf Martin Schmitz had conflicts of interest in relation to
certain operational matters and for this reason did not participate in the
discussion of selected agenda items. Otherwise, the Supervisory Board
is aware of no indications of conflicts of interest involving members of the
Management Board or the Supervisory Board.

In the 2019 financial year, three comprehensive education and training
sessions on selected operating and non-operating issues of E.ON’s busi-
ness were conducted for Supervisory Board members. Furthermore, an
on-boarding program gave new members of the Supervisory Board the
opportunity to receive a comprehensive introduction to the Company’s
business operations.

In 2019 the Supervisory Board conducted a regularly scheduled efficiency
review of the Supervisory Board’s work. An online questionnaire and
one-on-one conversations with the Chairman of the Supervisory Board
provided the Supervisory Board members with the opportunity to evaluate
the efficiency of the Supervisory Board’s work and to make suggestions
for improving it. The findings were used to design specific measures to
improve the Supervisory Board’s work, which are being implemented on
an ongoing basis. They relate primarily to the Supervisory Board devoting
more attention to selected strategic and operational issues, technological
and industry-specific trends, and the monitoring of E.ON’s competitive
environment. In addition, the Supervisory Board appointed some members
to serve as theme sponsors for selected operational themes.

Report of the Supervisory Board

independent auditor’s auditing services, established the
audit priorities, determined the independent auditor’s
compensation, and verified the auditor’s qualifications
and independence in line with the recommendations
of the German Corporate Governance Code. The com-
mittee also assured itself that the independent auditor
has no conflicts of interest and did the preparatory work
for the Supervisory Board’s decision regarding the man-
datory rotation of the independent auditor. In addition,
the committee addressed other matters assigned to it
by law, the Company’s Articles of Association, or the
Supervisory Board’s rules and procedures, in particular
Internal Audit’s activities and reports, accounting issues,
risk management, and developments in the area of
compliance. Furthermore, 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 them to the Supervisory Board. On
the basis of the quarterly risk reports, the committee
noted that no risks were identified that might jeopardize
the existence of the Company or individual segments.

The Nomination Committee carried out one written
resolution procedure in 2019 regarding the court
appointment of the new shareholder representatives to
the Supervisory Board. All members of the committee
took part.

Committee chairpersons reported the agenda and
results of their respective committee’s meetings to the
full Supervisory Board on a regular basis. Information
about the committees’ composition and responsibilities
is in the Corporate Governance Declaration on pages
67 to 68. An overview of Supervisory Board members’
attendance at meetings of the Supervisory Board and
its committees can also be found there.

Furthermore, the Supervisory Board extended its competency profile to
include the category of sustainability dimensions: environmental, social,
and governance (“ESG”). The targets for the Supervisory Board’s compo-
sition, including a competency profile and a diversity concept, with regard
to Item 5.4.1 of the German Corporate Governance Code and Section 289f,
Paragraph 2, Item 6 of the German Commercial Code and the status of
their achievement are available in the Corporate Governance Declaration
on pages at 65 and 66.

Committee Work

To fulfill its duties carefully and efficiently, the Supervisory Board has
created the committees described in detail below.

In the 2019 financial year the Executive Committee met eight times. All
members took part in all of the committee’s meetings. At its meetings,
the committee discussed in detail the planned takeover of innogy and the
related antitrust conditions and, in accordance with the authority granted
by the Supervisory Board, adopted the necessary resolutions regarding
the legal integration of innogy SE. In addition, it discussed significant
personnel matters, especially those relating to Management Board com-
pensation and Dr.-Ing. Birnbaum’s appointment to the innogy SE Manage-
ment Board; where necessary, it adopted resolutions. Furthermore, it
prepared the Supervisory Board’s resolutions regarding the composition
of the E.ON SE Management Board and adopted a resolution based on the
Management Board’s proposal to change its members’ respective areas
of responsibility. Additionally, the Executive Committee was periodically
informed about the progress toward the Management Board’s targets
for 2019. Finally, the Executive Committee thoroughly discussed the
medium-term plan for the period 2020–2022.

The Innovation and Sustainability Committee (formerly: Investment and
Innovation Committee) met five times and carried out one written reso-
lution procedure in 2019. All members took part in all of the committee’s
meetings and procedures. The matters addressed by the committee
included the investment in Big Raymond wind farm in the United States
and the Management Board’s planned refinancing of the syndicated credit
facility. Furthermore, in particular E.ON’s approach to innovation and
inorganic growth options were topics of discussion. Finally, in conjunction
with the ESG sustainability dimensions, the committee addressed in detail
the Group’s climate strategy and its activities related to sustainability.

The Audit and Risk Committee met four times in 2019. All members
took part in all meetings. The committee conducted a thorough review,
in particular of the 2018 Financial Statements of E.ON SE (prepared in
accordance with the German Commercial Code), the E.ON Group’s 2018
Consolidated Financial Statements (prepared in accordance with Interna-
tional Financial Reporting Standards, or “IFRS”), and the 2019 intermediate
financial reports of E.ON SE. The committee discussed the recommen-
dation for selecting an independent auditor for the 2019 financial year as
well as the intermediate financial reports and assigned the tasks for the

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

Personnel Changes on the Management Board

There were no personnel changes on the E.ON SE Management Board in
2019. Page 242 of this report shows E.ON SE Management Board
members’ respective areas of responsibility as of year-end 2019.

Personnel Changes on the Supervisory Board

In line with the 2019 Annual Shareholders Meeting’s resolution to expand
the Supervisory Board from 14 to 20 members, the court appointed
Ulrich Grillo, Dr. Rolf Martin Schmitz, and Deborah Wilkens to the Super-
visory Board as shareholder representatives effective October 1, 2019.
Stefan May, Monika Krebber, and René Pöhls were elected to the Super-
visory Board as employee representatives effective September 24, 2019.
Furthermore, on the employee side Clive Broutta ended his service on
the Supervisory Board at the conclusion of January 31, 2020, owing to
the United Kingdom’s departure from the European Union. Christoph
Schmitz was elected to succeed him effective February 1, 2020. Pages
240 to 241 of this report provide an overview of all members of the
Supervisory Board as of December 31, 2019.

Essen, March 24, 2020
The Supervisory Board

Best wishes,

Dr. Karl-Ludwig Kley
Chairman

Examination and Approval of the Financial
Statements, Approval of the Consolidated
Financial Statements, Proposal for
Profit Appropriation for the Year Ended
December 31, 2019

PricewaterhouseCoopers GmbH, Wirtschaftsprüfungs-
gesellschaft, Düsseldorf, audited and submitted an
unqualified opinion on the Consolidated Financial State-
ments of E.ON SE prepared in accordance with IFRS
and the Combined Group Management Report for the
year ended December 31, 2019. The IFRS Consolidated
Financial Statements exempt E.ON SE from the require-
ment to publish Consolidated Financial Statements in
accordance with German law.

The Supervisory Board reviewed and, at its annual-results
meeting on March 24, 2019, thoroughly discussed—in
the presence of the independent auditor and with
knowledge of, and reference to, the Independent Audi-
tor’s Report and the results of the preliminary review
by the Audit and Risk Committee—E.ON SE’s Financial
Statements prepared in accordance with the German
Commercial Code, Consolidated Financial Statements,
and Combined Group Management Report as well as the
Management Board’s proposal for profit appropriation.
The independent auditor was available for supplemen-
tary questions and answers. After concluding its own
examination, the Supervisory Board determined that
there are no objections to the findings. It therefore
acknowledged and approved the Independent Auditor’s
Report. In addition, the Supervisory reviewed and
approved the Separate Combined Non-Financial Report.

The Supervisory Board approved the Financial State-
ments of E.ON SE prepared by the Management Board
and the Consolidated Financial Statements. The Finan-
cial Statements are thus adopted. The Supervisory
Board agrees with the Combined Group Management
Report and, in particular, with its statements concerning
the Company’s future development.

The Supervisory Board examined the Management
Board’s proposal for profit appropriation, which includes
a cash dividend of €0.46 per ordinary share, also taking
into consideration the Company’s liquidity and its
finance and investment plans. After examining and
weighing all arguments, the Supervisory Board agrees
with the Management Board’s proposal for profit
appropriation.

Strategy and
Objectives

Strategy and Objectives

Our Strategy:
Leading Partner for the New Energy World

Decarbonization, decentralization, and digitization profoundly
shaped the energy market in 2019 and will continue to do so in
the decade ahead. We use these trends to enhance our position
as a leading player in Europe’s energy market, to successfully
tap new businesses, and to make our processes more efficient.

Our objective is to systematically focus the Company on the
new energy world of increasingly empowered and proactive
customers. We will create new markets for our customers by
providing them with new products, services, and technologies.
We will be policymakers and regulators’ partner of choice for
the energy transition. Our efforts will be guided by our principles
of integration, focus, efficiency, and growth.

We began integrating innogy SE last year and, after the squeeze-
out and acquisition of its remaining stock, will accelerate this
process in the current year. Our focus is on combining the respec-
tive organizational entities in line with our Target Operating
Model. We will use benchmarking analyses to further optimize
business units’ core processes or reorganize them to reflect
best practices.

Going forward, our business operations will focus on the key
segments of the new energy world: regulated, highly efficient
energy networks and innovative customer solutions. The acqui-
sition of innogy SE significantly strengthened these segments.
After the transaction is completed, the new E.ON will be the first
European player to focus exclusively on municipal, commercial,
and residential customers and will generate a large part of its
EBIT with regulated businesses. The combination of energy net-
works and customer solutions fits with the trend that, in an
increasingly distributed and digital energy world, these business
segments are converging. For example, smart meters make it
possible to improve the coordination of energy networks and
provide the basis for new sales offerings, such as time-based
electricity tariffs and energy-trading options for distributed
generating units.

In addition to strengthening our core businesses, the innogy
takeover will enable us to leverage substantial synergies of
about €740 million by 2022, thereby making important prog-
ress toward our efficiency targets. We expect the systematic
optimization and digitization of our business processes to deliver
additional efficiency gains.

Our growth strategy calls for extensive investments in both
business segments. The main focus will be on Energy Networks,
in which we will invest about €3.2 billion in 2020. We plan to
invest about €0.9 billion in Customer Solutions. Here, funds will
mainly go toward City Energy Solutions and our business of
providing solutions to industrial customers. We expect additional
growth to come from the innovation activities in our retail and
network operations as well as investments in startups (these
are described in greater detail in the Innovation chapter of the
Combined Group Management Report).

Energy Networks
The integration of innogy will result in E.ON operating regulated
distribution networks in eight European countries, making it
one of Europe’s biggest distribution system operator (“DSO”).
Excluding innogy, E.ON has a regulated asset base (“RAB”) of
€21 billion. Energy Networks’ principal objectives are to con-
tinually enhance its efficiency and to increase its RAB. All four
of E.ON’s DSOs in Germany achieved efficiency rates of
100 percent. innogy’s DSOs had a weighted-average efficiency
rate of 98.4 percent.

The further increase in the investment budget for our networks
will secure their asset integrity and expend their RAB. Distribution
networks connect our customers with one another and provide
the backbone for a successful energy transition. Our focus is
on evolving from a pure DSO to a smart platform provider. The
digitization of distribution networks plays an important role here.
For example, around 2,700 smart substations entered service
at E.ON and innogy’s DSOs in Germany. They will help ensure
that tomorrow’s smart grid operates reliably despite increasing
complexity and variable feed-in. A cooperative arrangement
with a startup called envelio gives E.ON the ability to transmit
information about a network connection directly to market par-
ticipants, which will greatly simplify the planning of distributed
generating units.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

Sustainability
Good corporate governance, corporate social responsibility, and
environmental responsibility are essential for E.ON to generate
sustainable business value over the long term. E.ON has there-
fore decided to be climate-neutral with regard to Scope 1 and
Scope 2 emissions by 2040. To underscore E.ON’s commitment
to sustainability, the Management Board has also pledged E.ON’s
support for the UN Sustainable Development Goals (“SDGs”).
Our success at embracing sustainability is reflected in our
performance in environmental, social, and governance (“ESG”)
ratings. Leading sustainability rating agencies like MSCI and
Sustainalytics gave us high ratings.

A sustainable energy supply is also the objective of Green Gas
from Green Power, an E.ON initiative to reduce carbon emissions
in heat generation, transport, and industry. The German Federal
Ministry for Economic Affairs and Energy selected the initiative
for funding under its Real-life Laboratory for the Energy Transi-
tion project. Our energy-transition laboratory will involve installing
and operating a power-to-gas (“P2G”) plant. The purpose is to
test and refine intelligent combinations of various technologies
for renewable energy production, conversion, storage, and dis-
tribution in order to further propel decarbonization (for further
details about sustainability, see the Separate Combined Non-
Financial Report).

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.

Together with innogy, E.ON will also make significant investments
to expand its broadband activities. By expanding its network
of fiber-to-the-home broadband connections, E.ON will bring
high-speed Internet with broad bandwidth to rural areas as well.

Customer Solutions
The integration of innogy will give the new E.ON a customer base
of 40 million (including 19 million innogy customers), making it
one of Europe’s biggest end-customer suppliers. Enerjisa Enerji,
our equity interst in Turkey, supplies an additional 10 million
customers.

Our objective in power and gas sales is to further strengthen our
competitive position through maximal cost-efficiency, innovation,
and relentless customer orientation. Digitization will be decisive
here as well: going forward, highly efficient digital systems will
make it possible for us to achieve lasting reductions in our oper-
ating costs.

Our objective for new customer solutions that go beyond power
and gas sales is to continually improve and renew our portfolio
of products and services for innovative heat solutions, energy
efficiency, distributed generation and storage, and sustainable
mobility solutions. This will enable E.ON to become the partner
of choice for public, commercial, and residential customers:

Several projects exemplified how E.ON is implementing its
strategy of helping customers become more sustainable. An
international paper manufacturer chose E.ON to install a biomass-
fired combined-heat-and-power (“CHP”) plant in Hürth, a
suburb of Cologne, Germany. The plant will supply heat to the
paper mill and feed renewable power into the public grid. We
also installed an advanced material and energy recycling system
in Högbytorp outside Stockholm, Sweden. It will help ensure
that one of Sweden’s fastest-growing regions can be supplied
with climate-neutral heat, power, and biogas. In addition, a
multinational packaging producer awarded E.ON a major contract
to install a CHP plant at its facility in Kent in the United Kingdom.
The plant, which is expected to enter service in 2021, will reduce
carbon emissions by 36,000 metric tons per year.

Combined Group
Management Report

• innogy takeover closed

• Adjusted EBIT and adjusted net income within the forecast

range for 2019 that was adjusted in November owing to

changes in E.ON’s setup

• As anticipated, economic net debt significantly higher due to

the innogy takeover

• 2020 adjusted EBIT expected to be between €3.9 and €4.1 billion,

2020 adjusted net income between €1.7 and €1.9 billion

• Proposed dividend of €0.46 per share for the 2019 financial year

• Annual growth of dividend per share of up to 5 percent through

the dividend for the 2022 financial year decided

Corporate Profile

Business Model

E.ON is an investor-owned energy company with approximately
79,000 employees. Led by corporate headquarters in Essen,
our operations are segmented into four operating units: Energy
Networks, Customer Solutions, innogy, and Renewables. Our
non- strategic operations are reported under Non-Core Business.

Corporate Headquarters
Corporate headquarters’ main task is to lead the E.ON Group.
This involves charting E.ON’s strategic course and managing and
funding its existing business portfolio. Corporate headquarters’
tasks include optimizing E.ON’s overall business across countries
and markets from a financial, strategic, and risk perspective and
conducting stakeholder management.

Energy Networks
This segment consists of our power and gas distribution net-
works and related activities. It is subdivided into three regional
markets: Germany, Sweden, and East-Central Europe/Turkey
(which consists of the Czech Republic, Hungary, Romania, Slo-
vakia, and Turkey). This segment’s main tasks include operating
its power and gas networks safely and reliably, carrying out any
necessary maintenance and repairs, and expanding its power
and gas networks, which frequently involves adding customer
connections. innogy’s network business is not reported here in
the 2019 financial year.

Customer Solutions
This segment serves as the platform for working with our
customers to actively shape Europe’s energy transition. This
includes supplying customers in Europe (excluding Turkey)
with power, gas, and heat as well as with products and services
that enhance their energy efficiency and autonomy and provide
other benefits. Our activities are tailored to the individual needs
of customers across all categories: residential, small and medium-
sized enterprises, large commercial and industrial, and public
entities. E.ON’s main presence in this business is in Germany,

the United Kingdom, Sweden, Italy, the Czech Republic, Hungary,
and Romania. E.ON Business Solutions, which provides cus-
tomers with turn-key distributed-energy solutions, is also part
of this segment. innogy’s sales business is not reported here in
the 2019 financial year.

innogy
This segment consists in particular of the network and sales busi-
nesses as well as the corporate functions and internal services
of the innogy Group, which E.ON took over in September 2019.
innogy operates its network business primarily in Germany,
Poland, Hungary, and Croatia. Its sales business is engaged
principally in Germany, the United Kingdom, the Netherlands,
Belgium, Hungary, and Poland. This segment does not contain
innogy’s renewables and gas-storage businesses or its stake
in Austrian energy utility KELAG, which are still to be transferred
to RWE.

Renewables
This segment consists of onshore wind, offshore wind, and solar
farms. E.ON planned, built, operated, and managed renewable
generation assets. Their output was marketed in several ways:
in conjunction with renewable incentive programs, under long-
term electricity supply agreements with key customers, and
directly to the wholesale market. Substantially all of the opera-
tions in this segment were classified as discontinued operations
effective June 30, 2018, and deconsolidated effective Septem-
ber 18, 2019 (more information is available on pages 15, 27,
and 28 of the Combined Group Management Report and in
Note 4 to the Consolidated Financial Statements). Certain busi-
ness operations of e.disnatur in Germany and Poland as well
as a 20-percent stake in Rampion offshore wind farm in the
United Kingdom were not transferred to RWE and continued to
be reported here in the 2019 financial year.

Non-Core Business
This segment consists of the E.ON Group’s non-strategic activities.
This applies to the operation and dismantling of nuclear power
stations in Germany (which is managed by our PreussenElektra
unit) and the generation business in Turkey.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

Restructuring Measures Initiated, including in Germany and
the United Kingdom
In conjunction with the innogy takeover, E.ON announced that it
would make up to 5,000 jobs redundant Group-wide. Before this
backdrop, in May 2019 the Collective Bargaining Agreement for
the Future and Job Security was concluded with employee repre-
sentatives and two trade unions, ver.di and IGBCE. The collective
bargaining agreement will initially apply to personnel changes
and adjustment initiatives carried out in Germany as a result of
the integration of the innogy Group into the E.ON Group. Among
other things, it includes provisions for severance payments for
employees who leave voluntarily, early retirement arrangements,
and the possibility of transfer to a special company for further
employment and qualifications. These measures were further
specified by the end of the year 2019 and they have been available
for selection at selected locations since February 2020.

In late November 2019 E.ON announced proposals to restructure
npower. These proposals call for npower’s residential and small
and medium-size enterprise customers (“B2C”) to be gradually
combined with E.ON UK’s B2C customers on a shared IT plat-
form. In addition, in February 2020 npower and E.ON UK con-
cluded an agreement on the sale of npower’s B2C customer
contracts. Furthermore, the plan is for npower’s business with
industrial and commercial customers to be carved out. npower’s
remaining operations will be restructured over the next two years.
This includes closing most npower offices and thus reducing staff.

Framework Agreement Signed with MVM and Opus to
Reorganize Business in Hungaria
In early October 2019 E.ON acquired EnBW’s 27-percent stake
in ELMŰ Nyrt. (“ELMŰ”) and ÉMÁSZ Nyrt. (“ÉMÁSZ”). Subse-
quently, E.ON, MVM Magyar Villamos Művek Zrt. (“MVM,” a
shareholder of ELMŰ and ÉMÁSZ), and Opus Global Nyrt. (“Opus”)
signed a framework agreement. Under the agreement, E.ON
intends to give itself a balanced and optimized portfolio in Hun-
gary that will also make it possible to swiftly integrate innogy’s
operations there.

Special Events in the Reporting Period

Acquisition of RWE’s innogy Stake Closed
The 76.8-percent stake in innogy previously held by RWE was
transferred to E.ON on September 18, 2019. In late September
E.ON also completed the voluntary public takeover offer to
innogy’s minority shareholders, thereby acquiring a further
9.4 percent of innogy stock. Together with the 3.8 percent of
innogy stock acquired on-market, E.ON holds 90 percent of
all innogy stock and thus fulfills the necessary requirement for
a merger squeeze-out (Note 4 to the Consolidated Financial
Statements contains additional details of the transaction).

Renewables
Pursuant to IFRS 5, the operations in the Renewables segment
transferred as part of the transaction with RWE were reported as
discontinued operations effective June 30, 2018. For the purpose
of internal management control, these operations were fully
included in the relevant key performance indicators until Septem-
ber 18, 2019. In addition, the scheduled depreciation charges
required by IFRS 5 and the carrying amount of these discontinued
operations were recorded in equity and disclosed accordingly.

This Annual Report’s presentation of sales and the key perfor-
mance indicators relevant for management control therefore
also includes the results of discontinued operations in the
Renewables segment. Pages 27 and 28 of the Combined Group
Management Report and Note 34 to the Consolidated Financial
Statements contain reconciliations of these indicators to the
disclosures in the E.ON SE and Subsidiaries Consolidated State-
ments of Income, Consolidated Balance Sheets, and Consolidated
Statements of Cash Flows.

E.ON Supervisory Board Enlarged, Composition of
E.ON Management Board Unchanged
As decided at E.ON’s Annual Shareholders Meeting in May 2019,
after the closure of the innogy takeover E.ON increased the
E.ON Supervisory Board to 20 members. E.ON appointed RWE
CEO Rolf Martin Schmitz, entrepreneur Ulrich Grillo, and U.S.
management consultant Deborah B. Wilkens as shareholder
representatives. In addition, Monika Krebber, Stefan May, and
René Pöhls joined the E.ON Supervisory Board as employee repre-
sentatives. The leadership of the new E.ON remains in the hands
of the current members of the Company’s Management Board.

Corporate Profile

The agreement is expected to be fully implemented in 2021.
This will give MVM 100 percent of distribution operator ÉMÁSZ
and a 25-percent stake in E.ON Hungária, which will then be
ELMŰ’s sole owner. In addition, Opus will be owner of current
E.ON subsidy E.ON Tiszántúli Áramhálózati Zrt. (“E.ON ETI”).

Syndicated Credit Facility with ESG Component Concluded
In October 2019 E.ON concluded a new €3.5 billion syndicated
credit facility with a term of five years and two options to extend
the maturity by one year each. In addition, the volume can be
increased by up to €0.75 billion during the facility’s lifetime. The
facility replaced two previously existing syndicated credit facili-
ties: E.ON SE’s €2.75 billion facility and innogy SE’s €2 billion
facility. The credit margin is linked in part to the development of
certain ESG ratings, which also gives E.ON financial incentives
to pursue a sustainable corporate strategy.

Green Bonds Issued
In August 2019 E.ON issued two €750 million Green Bonds that
mature in 2024 and 2030, respectively. High investor demand
enabled E.ON to secure favorable interest terms with coupons of
0 percent and 0.35 percent per year, respectively. A Green Bond
is a fixed-interest security whose issuance proceeds are used to
fund sustainable infrastructure and energy-efficiency projects.

Coromatic Acquisition
On July 11, 2019, E.ON concluded the acquisition of 100 percent
of Coromatic, a leading Sweden-based provider of facility-critical
services. The EQT Group was the seller. Coromatic has its head-
quarters in Stockholm and about 500 employees. The company
has more than 5,000 customers in Scandinavia in a wide variety
of sectors, such as data centers, healthcare, the public sector,
transportation, manufacturing, telecommunications, finance, and
retail. The parties agreed not to disclose the purchase price. For
the E.ON Group as a whole, the transaction volume is insignificant.

Nord Stream Stake Transferred to Contractual Trust Arrangement
E.ON Beteiligungen GmbH held all of the shares of PEG Infra-
struktur AG (“PEGI”) and thus an indirect, 15.5-percent stake in
Nord Stream AG. Nord Stream AG, a project company founded
in 2005, owns and operates two offshore gas pipelines, each
with a length of 1,224 kilometers, that transport natural gas
from Russia to Germany. In a contract dated December 18, 2019,
E.ON Beteiligungen GmbH sold all of its PEGI shares and thus
its indirect stake in Nord Stream AG to E.ON Pension Trust e.V.
(“EPT”) with effect and for the account of the trust assets of
MEON Pensions GmbH & Co. KG (“MEON”). The shares were
transferred at the end of the year (for more information, see
Note 4 to the Consolidated Financial Statements).

More Corporate Bonds Issued
In October 2019 E.ON issued two more €750 million bonds. High
investor demand enabled E.ON to secure favorable interest terms
for both maturities (2022 and 2026) with coupons of 0 percent
and 0.25 percent per year, respectively. Following the first Green
Bond in August, this was another placement of a bond with a
zero-percent coupon.

Transfer of Residual Power Output Rights
In July 2019, 10 TWh of residual power output rights was
acquired from Krümmel nuclear power station and transferred to
Grohnde nuclear power station, which is operated by Preussen-
Elektra. The legal framework ensures that Grohnde and the
other nuclear power stations operated by E.ON have a supply
of other residual power output rights.

In addition, in November 2019 E.ON issued a €500 million bond
with a 12-year maturity and a coupon of 0.625 percent per year.

In December 2019 E.ON issued another €500 million bond with
a three-year maturity and a coupon of 0 percent per year.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

IFRS 16 Leases
We apply IFRS 16 Leases for the first time effective the start
of 2019. It supersedes IAS 17 Leases and IFRIC 4 Determining
whether an Arrangement Contains a Lease. The application of
IFRS 16’s main impact on our Consolidated Balance Sheets is
an increase in fixed assets (due to the capitalization of right-of-
use assets) and of financial liabilities (due to the disclosure of
the corresponding lease liabilities). Initial application resulted in
lease liabilities of €0.8 billion and right-of-use assets of roughly
€0.8 billion, based on existing accruals and deferrals. In each case,
€0.3 billion of the amount was recorded at the discontinued oper-
ations at Renewables. In the Consolidated Statements of Income,
the application of IFRS 16 in the year under review resulted in
depreciation charges on right-of-use assets of €0.1 billion and
a decline in other operating expenses of likewise €0.1 billion.
The resulting earnings effect was insignificant (Note 2 to the
Consolidated Financial Statements contains more information
about the aforementioned reclassification effects resulting
from the initial application of IFRS 16).

Key Performance Indicators
For the 2019 financial year, E.ON’s most important key perfor-
mance indicators (“KPIs”) for managing its operating business
are adjusted EBIT and cash- effective investments. Other KPIs
for managing the E.ON Group are cash-conversion rate, ROCE,
adjusted net income, earnings per share (based on adjusted net
income), and debt factor. The Combined Group Management
Report’s presentation of sales and the KPIs relevant for manage-
ment control also includes the results of discontinued operations
in the Renewables segment that were deconsolidated effective
September 18, 2019 (for more information, see page 15 of the
Combined Group Management Report). Pages 27 and 28 of the
Combined Group Management Report and Note 34 to the Con-
solidated Financial Statements contain reconciliations of these
indicators to the disclosures in the E.ON SE and Subsidiaries Con-
solidated Statements of Income, Consolidated Balance Sheets,
and Consolidated Statements of Cash Flows. E.ON plans to
make changes to the KPIs for the 2020 financial year. These are
likewise described below.

Adjusted earnings before interest and taxes (“adjusted EBIT”)
is E.ON’s most important KPI for purposes of internal manage-
ment control and as an indicator of its businesses’ long-term
earnings power. The E.ON Management Board is convinced that
adjusted EBIT is the most suitable KPI for assessing operating
performance because it presents a business’s operating earnings
independently of non-operating factors, interest, and taxes.
The adjustments include net book gains, certain restructuring
expenses, impairment charges and reversals, the marking to
market of derivatives, and other non-operating earnings (see the
explanatory information on pages 27 and 28 of the Combined
Group Management Report and in Note 34 to the Consolidated
Financial Statements). In addition, the effects of the subsequent
valuation of hidden reserves and liabilities that were identified
as part of the purchase-price calculation and allocation for the
innogy transaction are disclosed separately.

Right-of-use assets and corresponding leasing liabilities both
totaled €3.1 billion at December 31, 2019. Leasing liabilities are
recorded under economic net debt. In addition, leasing agree-
ments resulted in cash outflow of €0.4 billion in 2019. Of this,
€0.1 billion was recorded under operating cash flow, €0.3 billion
under cash provided by financing activities. Note 32 to the
Consolidated Financial Statements contains more information
about the effects of the initial application of IFRS 16.

Management System

Our corporate strategy aims to deliver sustainable growth in
shareholder value. We have 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 increas-
ing 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 embed
these expectations progressively more deeply into our organiza-
tion—across all organizational entities and all processes—by
means of binding Group-wide policies that set minimum standards
(for more information, see the Separate Combined Non-Financial
Report on pages 88 to 101).

Corporate Profile

Cash-effective investments are equal to the investment expen-
ditures shown in the E.ON Group’s Consolidated Statements
of Cash Flows. These include the investments of discontinued
operations in the Renewables segment until they were decon-
solidated effective September 18, 2019.

Cash-conversion rate is equal to operating cash flow before inter-
est and taxes divided by adjusted EBITDA. It indicates whether
E.ON’s operating earnings are generating enough liquidity.
From the 2020 financial year onward, the expenditures for the
dismantling of nuclear power stations that are included in oper-
ating cash flow before interest and taxes will no longer be fac-
tored into cash-conversion rate. To balance out fluctuations
that result primarily from payments around the balance-sheet
date, E.ON will manage its cash-conversion rate by means of a
target figure over the three years of the medium-term plan.

Return on capital employed (“ROCE”) assesses the value perfor-
mance of E.ON’s operating business. ROCE is a pretax total return
on capital and is defined as the ratio of adjusted EBIT to annual
average capital employed. From the 2020 financial year onward,
ROCE will not be factored into components of the E.ON SE Man-
agement Board’s compensation. In the 2020 financial year, ROCE
is therefore no longer one of E.ON’s most important KPIs. In the
future, it will instead be reported as one of E.ON’s other KPIs.

Adjusted net income is an earnings figure after interest income,
income taxes, and non-controlling interests that has likewise
been adjusted to exclude non-operating effects (see the explan-
atory information on pages 27 and 28 of the Combined Group
Management Report).

E.ON manages its capital structure by means of its debt factor
(see the section entitled Finance Strategy on page 29). Debt
factor is equal to economic net debt divided by adjusted EBITDA
and is therefore a dynamic debt metric. Economic net debt
includes net financial debt as well as pension and asset-retire-
ment obligations.

Other KPIs
Alongside our most important financial management KPIs, the
Combined Group Management Report includes other financial
and non-financial KPIs to present the performance of E.ON’s
operating business and part of E.ON’s responsibility for all our
stakeholders: our employees, customers, shareholders, bond
investors, and the countries in which we operate. Operating
cash flow, power and gas passthrough, and selected employee
information are examples of other KPIs.

In addition, some KPIs are important for E.ON as a customer-
focused company. For example, we see our ability to acquire new
customers and retain existing ones as crucial to our company’s
success. Net promoter score (“NPS”) measures customers’
willingness to recommend E.ON to a friend or colleague. Our
Sustainability Report and the Separate Combined Non-Financial
Report describe how NPS fits into our management approach.

However, these other KPIs are not the focus of the ongoing
management of our businesses.

Innovation

E.ON’s innovation activities reflect its strategy of focusing sys-
tematically on the new energy world of empowered and proactive
customers, renewables and distributed energy, energy efficiency,
local energy systems, and digital solutions. The innovation
activities in the Group therefore have the following focus areas:

• Retail and end-customer solutions: develop new business

models for distributed-energy supply for end-customers and
industry, energy efficiency, sustainable city and city-district
solution, and mobility

•

Infrastructure and energy networks: develop energy-storage
and energy-distribution solutions for an increasingly distrib-
uted and volatile generation system

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

HoloBuilder, a startup with roots in Aachen and based in San
Francisco, has developed a cloud solution that not only enables
virtual construction site inspections and 360° live streaming
from construction sites but also time travel: construction man-
agers, business customers, and contractors can fast-forward
and rewind at any time and thus better track construction prog-
ress. Another feature is the virtual measurement of distances at
a construction site. The images for the software are provided
by a 360° camera in conjunction with the JobWalk app, which
employees can use on site to activate the camera and document
the project.

Going forward, E.ON will use HoloBuilder’s solution for projects to
install network equipment (such as substations and switchgears)
and for large city energy projects. We believe the digitization of
construction projects offers significant, as yet untapped potential.

Partnerships with Universities
Our innovation activities include partnering with universities
and research institutes to conduct research projects in a variety
of areas. The purpose is to study ways to expand the horizons
of energy conservation and sustainable energy and to draw on
this research to develop new offerings and solutions for cus-
tomers. Collaborative work in the E.ON Energy Research Center
at RWTH Aachen University focuses on technologically advanced
electricity networks, innovative heat solutions for buildings and
city districts, and new solutions for residential customers and
industrial enterprises.

• Energy intelligence and energy systems: study potentially

fundamental changes to energy systems and the role of data
in the new energy world

• Renewables generation: increase the cost-effectiveness of
existing wind and solar assets and study new renewables
technologies; E.ON’s renewables business along with its
innovation activities regarding renewables was transferred
to RWE in September 2019.

Strategic Co-Investments
We want 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 busi-
nesses that offer the best opportunities for partnerships, com-
mercialization, and equity investments. Our investments focus
on strategic technologies and business models that enhance
our ability to lead the move toward distributed, sustainable, and
innovative energy offerings. These arrangements benefit new
technology companies and E.ON, since we gain access to their
new business models and have a share in the value growth.

In 2019 we invested in Vinli and HoloBuilder and made a number
of follow-up investments in our portfolio.

Vinli, a U.S.-based startup, has developed software and a data
analysis platform for mobility solutions. The software solution not
only collects and clearly structures data from vehicles connected
to the system. It can also generate results-oriented insights that
enable large vehicle fleet operators, automakers, and service
providers to make the advantages of eMobility economical.

Business Report

Energy Policy and Regulatory Environment
Global
On November 4, 2019, the U.S. government under President
Donald Trump gave notice that it intends to withdraw from the
Paris climate agreement. The one-year transition period until
the formal exit will end on November 3, 2020, one day after the
upcoming presidential election.

The 25th UN climate change conference, held in Madrid from
December 2 to 15, 2019, was largely without result. The dele-
gates from just under 200 countries were only able to reach
agreement on a minimal compromise. In the final document,
countries agreed to review the gap between their existing vol-
untary climate targets and what would be necessary to limit
the increase in global temperatures to below 2 degrees Celsius
as foreseen in the Paris agreement. Consequently, key deci-
sions—such as a voluntary commitment by all countries to more
climate protection and the design of a global market mechanism
for trading in climate-protection certificates—were postponed
until the next climate summit, which will be held in Glasgow
later this year.

Europe
Following the elections to the European Parliament in May 2019,
the European Union elected a new Commission. Commission
President Ursula von der Leyen resolved to make climate and
environmental issues her top priority by launching the European
Green Deal. Its centerpiece is a legally binding commitment by
the EU to achieve climate neutrality by 2050. In addition, the
new Commission intends to consider raising the 2030 carbon-
reduction targets to 50 to 55 percent. To help achieve them, the
Commission will make proposals for an EU emissions trading
scheme for the transport and construction sectors (which will
eventually be merged with the existing emissions trading
scheme), introduce a carbon border tax that conforms with World
Trade Organization rules, and review the Energy Tax Directive.

Business Report

Macroeconomic and Industry Environment

Macroeconomic Environment
After peak growth in 2018, the world economy experienced a
downturn in 2019. Ongoing uncertainty about Brexit and
increasing trade tensions between the United States and China
were the dominant features of 2019. As a result, almost all
economies slowed, and world trade stagnated. Global economic
growth in 2019 is estimated to have declined by 0.8 percentage
points year on year to 2.9 percent.

GDP Growth in Real Terms in 2019

Annual change in percent

Germany

Italy

Euro zone

Sweden

United
Kingdom

USA

OECD

Turkey

0.6

0.2

0.3

1.2

1.4

2.3

1.7

Source: OECD, 2019.

COVID-19 (Coronavirus)
The outbreak and spread of the novel coronavirus has major
global implications, including economic and financial implications.
E.ON is aware of its responsibility as an operator of critical infra-
structure in this context as well. It has established a crisis team
which is monitoring current developments so that the Company
can, if necessary, expand the measures it has already taken.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

The European Green Deal will include a Just Transition Mecha-
nism to support regions dependent on fossil fuels. In addition, the
Commission will launch a Sustainable Europe Investment Plan,
mobilizing investments of €1 trillion over the next decade. As
part of this effort, it will seek to transform parts of the European
Investment Bank into a climate bank and double its funding for
climate investment by 2025. The new Commission also intends
to present a new industrial policy and proposals for the ethical
regulation of artificial intelligence. The proposals for relations,
consultation, and legislation are expected to be published in 2020
and 2021.

E.ON unequivocally supports the German federal government’s
65-percent renewables target. To get there, renewables output
would have to roughly double by 2030. Achieving growth of this
magnitude requires making sufficient land available. To garner
public support for the energy transition, however, land use is
often limited. Examples include minimum setback restrictions
for the siting of wind farms and limitations on the installation
of solar farms. To ensure that targets are reached and that the
energy transition as a whole is a success, E.ON advocates flexible
and ambitious rules for the expansion of wind energy and the
construction of solar facilities.

A ruling issued by the Federal Supreme Court on July 9, 2019,
affects E.ON’s core network business. It upheld the Federal
Network Agency’s reduction of the allowable pretax return on
equity for operators of electricity and gas distribution networks
from 9.05 percent to 6.91 percent for the third regulatory period.
E.ON’s distribution system operators (“DSOs”) and roughly
1,100 other companies had filed administrative appeals against
the reduction with the State Superior Court in Düsseldorf.

The Federal Ministry of Economics and Energy (“BMWi”) plans to
amend the Incentive Regulation Ordinance (“ARegV”) by mid-
2020. The amendment’s principal purpose is to establish stronger
economic incentives for efficient congestion management and
grid expansion. E.ON could benefit from a revision of the amended
ARegV’s allowed return on equity.

Germany
The continuation of the grand coalition means that the climate
targets contained in the coalition agreement that followed the
2017 Bundestag elections remain unchanged. One target is for
renewables to meet about 65 percent of the country’s gross
electricity consumption by 2030. The ambitious action plan for
upgrading and expanding energy networks also remains in place.

The package of climate legislation adopted by the German gov-
ernment at the end of 2019 focuses on four different areas for
achieving the country’s climate targets in 2030. One core ele-
ment is the introduction of certificate trading to put a price on
carbon emissions in the building and transport sectors. Another
is a mixture of regulatory requirements, financial incentives,
and socially motivated compensation mechanisms. The Cabinet
Committee on Climate Protection, or Climate Cabinet, will
assume responsibility for managing Germany’s climate-protec-
tion strategy, assesses progress annually, and adjust measures
as necessary.

Renewables expansion remains a controversial issue. The
governing parties could not agree on additional measures in
2019. Although the Coal Commission presented its final report
in January 2019, the federal cabinet did not adopt the corre-
sponding draft legislation until January 2020. The Renewable
Energy Sources Act (known by its German abbreviation, “EEG”)
is expected to be amended in the first half of 2020.

Business Report

In November 2019 the federal cabinet approved the master plan
for charging infrastructure. It contains measures for rapidly
establishing a nationwide, user-friendly charging infrastructure
for up to 10 million electric vehicles by 2030. The objective is
1 million public charging points, with 50,000 being installed in
the next two years. In addition, from 2020 onward €50 million
will be made available for residential charging options.

Great Britain
2019 proved to be a politically turbulent year in Great Britain.
Parliament’s vote on the Brexit agreement, which was originally
supposed to be held by March 29, was postponed several times.
The exit agreement, known as an Article 50 procedure, was
amended to include a “flextension,” which extended the deadline
again, this time to January 31, 2020. Amid the negotiation of a
revised exit agreement, the new Prime Minister, Boris Johnson,
was finally able to hold a general election on December 12.
Brexit was the election’s predominant issue, and a solution for it
was foremost in voters’ minds. Johnson and his party emerged
as the election’s clear winners. Afterward, Johnson carried out
his conception of the Brexit deal and led Britain out of the
European Union on January 31, 2020, as planned. The specter of
a hard Brexit—that is, Britain exiting without an agreement—was
forestalled. There is now a transition period until December 31,
2020. During this time, Britain can negotiate an exit agreement
with the European Union but will continue to be treated as an
EU member. In principle, both sides are interested in a far-reaching
free-trade agreement and very close relations in all policy areas,
especially in foreign and security policy. Given the very tight time-
frame and the British government’s decision not to extend the
transition period under any circumstances, the exit negotiations
will be a historic challenge for both sides.

In June 2019 the government formally amended the 2008 Cli-
mate Change Act to commit to net zero emissions by 2050. Net
zero is at the top of the energy agenda. It is becoming increasingly
important that measures be designed now to meet the ambitious
target, which will help put Britain on the road to decarbonization.

Italy
In August 2019, 18 months after the election, Italy experienced
a government crisis. A pro-environment center-left coalition
formed a new government in September. The new government’s
energy policy aims to increase renewables generation (with
particular emphasis on self-generation systems) and, as part of a
Green New Deal, to phase out coal-fired power stations by 2025.
In October the national regulatory agency presented a proposal
for the transition to a fully liberalized electricity market for
end-consumers. Regulated prices are currently scheduled to
expire on July 1, 2020.

Sweden
Sweden’s energy policy remains focused on the 2016 cross-party
energy agreement that foresees a fully renewable electricity
system over the long term. The agreement features a number of
climate policies, including a target of 100 percent renewable
electricity by 2040. The main policy instrument, the elcertificate
market scheme, has resulted in substantial growth in wind
power and the conversion of fossil fuel to biomass. Sweden will
likely achieve its 2030 renewables target in the early 2020s.
A new government was formed in January 2019. The coalition
agreement contains plans to revise eco-taxes. They include
increased taxation of fossil-fueled CHP plants and a planned tax
on waste incineration. The new regulatory period for electricity
grids began on January 1, 2020. It is anticipated that unused
discretionary investments from previous regulatory periods can
be carried over to the new period for a certain level of investment.

East-Central Europe
The Czech government still needs to present a draft law to trans-
pose the EU electricity market directive. The Czech Republic’s
National Energy and Climate Plan (“NECP”) will chart the future
course of its energy sector in the years ahead.

In March 2019 Slovakia held presidential elections in which
Zuzana Čaputová was elected the new president. An amended
law on support for renewables and high-efficiency cogeneration
that introduces feed-in tariffs for new power producers as
well as the exemption of DSOs from the support mechanisms
will impact E.ON’s business in Slovakia.

Municipal elections held in Hungary on October 13, 2019,
yielded significant gains for opposition parties. The incumbent
mayor of Budapest, supported by the governing Fidesz party,
lost to the opposition party candidate after nine years in office.
It is unclear how the national government will cooperate with
the opposition at the municipal level. The Hungarian government
submitted its draft National Energy Strategy 2020 to parliament
for approval. The strategy calls for Hungary’s electricity sector
to be 90 percent carbon-neutral by 2030 by adding more nuclear
and renewables capacity, especially solar.

A new Romanian government led by the National Liberal Party
was formed on November 4 after parliament’s vote of no
confidence against the former Social Democratic government.
It reinstated residential customers’ priority access to gas, to
which the European Commission responded by opening infringe-
ment proceedings regarding the country’s export ban.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

Business Performance

E.ON’s operating business delivered a positive performance in
2019. Sales of €41.5 billion were €11.4 billion above the prior-
year figure. The increase resulted largely from the takeover of
the innogy Group in September 2019.

Adjusted EBIT for the E.ON Group of €3.2 billion was €0.2 billion
above the prior-year level and likewise above the range of
€2.9 to €3.1 billion forecast in the 2018 Annual Report. This is
principally attributable to the closing of the innogy transaction.
Additional earnings streams from the innogy Group were partially
offset by the absence of the Renewables segment’s businesses
that were transferred to RWE. Adjusted net income of €1.5 billion
was at the prior-year level and thus within the range of €1.4 to
€1.6 billion forecast in the 2018 Annual Report. Earnings per
share, which are based on adjusted net income, amounted to
€0.67 in the reporting period (prior year: €0.69). In addition,
adjusted EBIT and adjusted net income were both within the
forecast ranges that were adjusted in November 2019 owing to
changes in E.ON’s setup.

In addition, our objective was to record a cash-conversion rate
of at least 80 percent. Cash-conversion rate is equal to operating
cash flow before interest and taxes (€4.4 billion) divided by
adjusted EBITDA (€5.6 billion). Our cash-conversion rate was
therefore roughly 80 percent. Our ROCE was 8.4 percent, within
our forecast range of 8 to 10 percent.

Investments of €5.5 billion were considerably above the prior-
year figure of €3.5 billion and the €3.7 billion forecast for
2019 in the E.ON 2018 Annual Report. The deviation is likewise
attributable to the innogy transaction. Additional investments
resulted primarily from the acquisition of innogy SE stock and

Business Report

from the innogy Group since the closing of its takeover by E.ON.
By contrast, investments at the Renewables segment declined
because substantially all of it was transferred to RWE. In Novem-
ber 2019 E.ON adjusted its investment forecast to €6 billion.
This figure was not achieved especially because certain payments
for the acquisition of additional shares in subsidiaries had to be
recorded in cash provided by financing activities.

Cash provided by operating activities of continuing and discon-
tinued operations of €3 billion was at the prior-year level.

Acquisitions, Disposals, and Discontinued Operations in 2019
In 2019 E.ON executed the following significant transactions and
made the following reclassifications pursuant to IFRS 5. Note 4
to the Consolidated Financial Statements contains detailed
information about them:

• Closure of the innogy takeover
• Transfer of substantially all of the renewables business and

two of PreussenElektra’s minority stakes to RWE
• Transfer of PEG Infrastruktur AG (“PEGI”), the parent

company of Nord Stream AG, into E.ON’s Contractual Trust
Arrangement (“CTA”)

• Reclassification of innogy’s sales business in the Czech

Republic as a discontinued operation

• Reclassification of Tiszántúli Áramhálózati Zrt. as a disposal

group.

Earnings Situation

Sales
E.ON recorded sales of €41.5 billion in 2019, about €11.4 billion
more than the prior-year figure. The increase is primarily attrib-
utable to the acquisition of the innogy Group in September
2019. In addition, the IFRS Interpretations Committee (“IFRS IC”)
clarified the accounting treatment of commodity futures trans-
actions that are settled with physical delivery, that cannot
be classified as own-use contracts pursuant to IFRS 9, and that
are accounted for as derivatives (failed-own-use contracts).
E.ON has applied this change in accounting methods from the
start of the 2019 financial year and adjusted the prior-year
figures accordingly. The adjustment’s effects include volatility
in reported sales (for more information, see Note 2 to the Con-
solidated Financial Statements).

Energy Networks’ sales were at the prior-year level. Customer
Solutions’ sales increased by €1.3 billion. Higher power and gas
sales volume in Germany was the primary factor. Sales also
rose principally because of higher sales prices and sales volume
in Italy, the Czech Republic, and Hungary.

Substantially all of the Renewables segment was transferred
to RWE in September 2019 as part of the innogy transaction.
Consequently, its sales declined by about €0.2 billion year on
year to €1.6 billion.

Cash provided by investing activities of continuing operations
includes cash-effective disposal proceeds totaling €256 million
in 2019 (prior year: €4,306 million).

Sales at Non-Core Business declined significantly to €1.2 billion
owing to the expiration of supply contracts and the transfer of
minority stakes in nuclear power stations to RWE.

Sales1, 2

€ in millions

Energy Networks

Customer Solutions

innogy

Renewables

Non-Core Business

Corporate Functions/Other

Consolidation

E.ON Group

Fourth quarter

2019

2,314

6,591

9,528

293

307

178

-1,238

17,973

2018

2,355

6,286

–

541

411

144

-1,169

8,568

+/- %

-2

–

-46

-25

+24

-6

+110

2019

8,870

23,279

10,444

1,596

1,174

622

-4,501

41,484

2018

8,769

21,987

–

1,754

1,370

644

-4,440

30,084

Full year

+/- %

–

-9

-14

-3

-1

+38

1Includes the discontinued operations in the Renewables segment until September 18, 2019. Sales from continuing operations amounted to €41 billion in 2019 (prior year: €29.4 billion).
2Includes effects resulting from failed-own-use contracts; we adjusted the prior-year quarters accordingly (see Note 2 to the Consolidated Financial Statements).

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

Other Line Items from the Consolidated Statements of Income
Own work capitalized of €487 million (prior year: €394 million)
mainly reflected the capitalization of work in IT projects and
network investments. The increase is mainly attributable to the
inclusion of innogy.

currency-translation effects amounted to €1,775 million (prior
year: €1,626 million). Other operating expenses also include
expenditures of €725 million resulting from the termination, as
part of the initial innogy purchase-price allocation, of own-use
contracts recorded as liabilities.

The aforementioned failed-own-use contracts also affect cost
of materials as well as other operating income and expenses.
See Note 2 to the Consolidated Financial Statements for more
information.

Other operating income rose by €315 million, from €5,334 million
to €5,649 million. The increase resulted mainly from higher
income from the termination, as part of the initial innogy pur-
chase-price allocation, of own-use contracts of €755 million
recorded as liabilities. By contrast, the sale of equity interests
and securities declined by €456 million to €612 million. In 2019
this includes €390 million from the sale of PEG Infrastruktur AG,
the parent company of Nord Stream AG. Income from the sale
of equity interests of €42 million was lower than in the prior year
(€91 million).

Income from companies accounted for under the equity method
of €421 million was considerably above the prior-year figure of
€269 million. Equity income from the stake in Enerjisa Üretim
Santralleri A.Ş . was €91 million above the prior-year level. Income
also rose through the inclusion of innogy’s equity interests for
the first time.

Adjusted EBIT
In 2019 adjusted EBIT in our core business surpassed the
prior-year figure by €262 million.

Energy Networks’ adjusted EBIT of €1,888 million was at the
prior-year level. An increase in adjusted EBIT in Germany and
Sweden was partially offset by a decrease in East-Central
Europe/Turkey.

Costs of materials of €32,126 million were significantly above
the prior-year level of €22,635 million. The increase is principally
attributable to the acquisition of the innogy Group.

Adjusted EBIT at Customer Solutions decreased significantly
(-€100 million), particularly because of the new regulatory price
caps and a smaller customer base in the United Kingdom.

Personnel costs of €4,101 million were €1,641 million above the
figure of €2,460 million. The innogy takeover is the main reason
for the increase. This also resulted in higher expenditures for
staff restructuring.

The innogy segment recorded adjusted EBIT of €421 million
from September 18 to December 31, 2019. These earnings are
principally attributable to innogy’s network business, primarily
in Germany.

Depreciation charges rose year on year, from €1,575 million to
€2,502 million. The change mainly reflects the inclusion of innogy
for the first time. The increase is also attributable to initial appli-
cation of IFRS 16 and the resulting depreciation of right-of-use
assets. In the year under review, E.ON recorded impairment
charges in particular at Energy Networks in Germany for decom-
missioning costs of a gas storage facility and at Customer Solu-
tions in the United Kingdom.

Other operating expenses increased by 54 percent, from
€4,786 million to €7,355 million. In particular, expenditures
relating to derivative financial instruments rose substantially,
from €866 million to €2,270 million. Expenditures relating to

As already described, substantially all of the Renewables segment
was transferred to RWE in September 2019. Consequently, its
adjusted EBIT declined by €174 million year on year.

The E.ON Group’s adjusted EBIT was €246 million above the
prior-year figure. Its core business was characterized by the
aforementioned items. Non-Core Business’s adjusted EBIT
declined slightly. PreussenElektra was adversely affected by
higher depreciation charges, the transfer of minority stakes
in nuclear power stations to RWE, and longer plant downtimes.
These factors were largely offset by higher earnings from the
generation business in Turkey.

Business Report

Adjusted EBIT

€ in millions

Energy Networks

Customer Solutions

innogy

Renewables

Corporate Functions/Other

Consolidation

Adjusted EBIT from core business

Non-Core Business

Adjusted EBIT

Full year

+/- %

-24

–

-33

–

+10

-4

2019

463

417

–

-1

987

1,027

Fourth quarter

+/- %

+24

+68

–

-92

–

+73

-41

+61

2018

372

–

238

-73

-21

569

637

2019

1,888

313

421

347

-107

2,869

366

3,235

2018

1,844

413

–

521

-153

-18

2,607

382

2,989

E.ON generates a large portion of its adjusted EBIT in very stable
businesses. Regulated, quasi-regulated, and long-term con-
tracted businesses accounted for the overwhelming proportion
of our adjusted EBIT in 2019.

Our regulated business consists of operations in which revenues
are largely set by law and based on costs. The earnings on these
revenues are therefore extremely stable and predictable.

Our quasi-regulated and long-term contracted business consists
of operations in which earnings have a high degree of predict-
ability because key determinants (price and/or volume) are largely
set for the medium to long term. Examples include the operation
of industrial customer solutions with long-term supply agreements
and the operation of heating networks.

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

Net Income/Loss
In 2019 E.ON recorded net income attributable to shareholders
of E.ON SE of €1.6 billion and corresponding earnings per
share of €0.68. In the prior year E.ON recorded net income of
€3.2 billion and earnings per share of €1.49.

Pursuant to IFRS 5, income/loss from discontinued operations,
net, is reported separately in the Consolidated Statements of
Income and, for 2019 and the prior year, includes primarily the
earnings from the discontinued operations at Renewables, which
were deconsolidated effective September 18, 2019. Alongside
the operating earnings of discontinued operations, this figure
contains items resulting from the deconsolidation. In this context,
items previously recognized in equity were recorded in income.
This figure also includes the earnings from the transitional
consolidation of Rampion wind farm following the reduction in
E.ON’s stake to 20 percent. Deconsolidation resulted in income of
€0.8 billion. Earnings from innogy’s sales business in the Czech
Republic are reported under this item as well.

E.ON’s tax expense was €53 million (prior year: €46 million).
E.ON’s tax rate in 2019 was 7 percent (prior year: 1 percent). In
particular, the release of tax provisions and liabilities for prior
years led to a lower tax rate in the year under review and in 2018.
In addition, higher tax-free income and/or income not subject to
tax exposure reduced the tax rate in 2018.

The improvement in financial results relative to the prior year
mainly reflects positive earnings effects from the marking to
market of securities, which were partially offset by negative

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

valuation effects relating to non-current provisions. Financial
results also include a positive effect of €142 million resulting
from the difference between the nominal and fair value of bonds
issued by innogy and innogy Finance B.V.

Net book gains in the 2019 financial year declined significantly.
They consist primarily of effects resulting from the deconsolida-
tion of PEGI, the parent company of Nord Stream. The prior- year
figure included book gains on the disposal of E.ON’s remaining
Uniper stake, Hamburg Netz, E.ON Gas Sverige, and, overall, a
book loss on the initial public offering of Enerjisa Enerji. In addi-
tion, book gains on the sale of securities were below the prior-
year figure.

Restructuring expenses were significantly higher than in the
prior year and in 2019 consisted primarily of expenditures in
conjunction with the acquisition of innogy. They also include

expenditures for the restructuring measures instigated in Ger-
many and, from the date of the acquisition’s closing, at npower,
innogy’s U.K. sales business.

A non-operating effect of -€707 million resulted from derivative
financial instruments in the 2019 financial year (prior year:
+€610 million). Negative items in 2019 resulted primarily from
hedging against price fluctuations, in particular at Customer
Solutions, and from the marking to market of derivatives at the
innogy segment. The figure for 2018 was mainly attributable to
derivative financial instruments in conjunction with contractual
rights and obligations relating to the sale of E.ON’s Uniper stake.
In addition, non-operating earnings includes, in the line item
“Effects from derivative financial instruments,” all effects
resulting from failed-own-use contracts (for more information,
see Note 2 to the Consolidated Financial Statements).

Net Income/Loss

€ in millions

Net income/loss

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

Income/Loss from discontinued operations, net

Income/Loss from continuing operations

Income taxes

Financial results

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

Income/Loss from equity investments

EBIT

Non-operating adjustments

Net book gains (-)/losses (+)
Restructuring expenses
Effects from derivative financial instruments
Impairments (+)/Reversals (-)
Carryforward of hidden reserves (-) and liabilities (+) from the innogy transaction
Other non-operating earnings

Reclassified businesses of Renewables1 (adjusted EBIT)

Adjusted EBIT

Impairments (+)/Reversals (-)

Scheduled depreciation and amortization

Reclassified businesses of Renewables1
(scheduled depreciation and amortization, impairment charges and reversals)

Adjusted EBITDA

1Deconsolidated effective September 18, 2019.

Fourth quarter

Full year

2018

369
303
66

-116

253

-152

215

316

-24

292

110
2
12
295
61
–
-260

235

637

414

1,165

2019

1,808
1,566
242

-1,064

744

554

1,351

1,409

1,526
-366
819
707
275
252
-161

300

3,235

1,986

271

5,558

2018

3,524
3,223
301

-286

3,238

669

3,953

3,997

-1,521
-857
64
-610
61
–
-179

513

2,989

1,475

331

4,840

2019

163
126
37

189

-306

-85

-3

-88

1,115
-398
640
633
273
113
-146

–

1,027

725

–

1,816

Business Report

In 2019 E.ON recorded impairment charges in particular at
Customer Solutions in the United Kingdom, Energy Networks in
Germany, and innogy. In the prior year E.ON recorded impairment
charges primarily at Customer Solutions in the United Kingdom
and E.ON Business Solutions.

Items resulting from the subsequent valuation of hidden reserves
and liabilities as part of the preliminary purchase-price allocation
and newly recorded items resulting from the valuation of finan-
cial assets at the innogy segment are disclosed separately. The
latter will be balanced out in subsequent reporting periods.

Other non-operating earnings were at the prior-year level. In 2019
they include, among other items, the positive effect of realized
income from hedging transactions for certain currency risks.

Adjusted Net Income
Like EBIT, net income also consists of non-operating effects,
such as the marking to market of derivatives. Adjusted net
income is an earnings figure after interest income, income taxes,
and non-controlling interests that has been adjusted to exclude
non-operating effects.

In addition to the marking to market of derivatives, the adjust-
ments include book gains and book losses on disposals, certain
restructuring expenses, other material non-operating income
and expenses (after taxes and non-controlling interests), and
interest expense/income not affecting net income, which consists
of the interest expense/income resulting from non-operating
effects. Other non-operating earnings and non-operating inter-
est expense also include the subsequent valuation of hidden
reserves and liabilities identified as part of the purchase-price
calculation and allocation for the innogy transaction.

In addition, adjusted net income includes the earnings (adjusted
to exclude non-operating effects) of the discontinued operations
at Renewables, which were deconsolidated effective Septem-
ber 18, 2019, as if their disclosure and valuation had not been
reclassified pursuant to IFRS 5. Pages 15 and 17 of the Com-
bined Group Management Report and Notes 4 and 34 to the
Consolidated Financial Statements contain more information.

Adjusted Net Income

€ in millions

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

Income/Loss from equity investments

EBIT

Non-operating adjustments

Reclassified businesses of Renewables1 (adjusted EBIT)

Adjusted EBIT

Net interest income/loss

Non-operating interest expense (+)/income (-)

Reclassified businesses of Renewables1 (operating interest expense (+)/income (-))

Operating earnings before taxes

Taxes on operating earnings

Operating earnings attributable to non-controlling interests

Reclassified businesses of Renewables1 (taxes and minority interests on operating earnings)

Adjusted net income

1Deconsolidated as of September 18, 2019.

Fourth quarter

Full year

2019

2018

-85

-3

-88

1,115

–

1,027

-29

-264

–

734

-206

-169

360

316

-24

292

110

235

637

-191

-36

463

-126

-54

297

2019

1,351

1,409

1,526

300

3,235

-612

-66

-123

2,434

-586

-316

1,536

2018

3,953

3,997

-1,521

513

2,989

-713

174

-135

2,315

-544

-221

-45

1,505

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

respective bonds. These balance-sheet and earnings effects
do not alter the interest and principal payments. To manage
economic net debt, we continue to use the nominal amount of
financial liabilities, which deviates from the figure shown in
E.ON’s balance sheets.

E.ON aims to reduce the debt factor to around 5 over the
medium term.

E.ON’s debt factor at year-end 2019 of 7.1 was above our
medium-term target of below 4. The informational value of this
key figure at year-end 2019 is very limited, however, because
following the closing of the innogy takeover it contains all of the
relevant items of innogy’s debt but only a portion of its adjusted
EBITDA, namely from the closure of the takeover to year-end 2019.

Economic Net Debt
Compared with the figure recorded at December 31, 2018
(€16.6 billion), E.ON’s economic net debt increased by
€22.8 billion to €39.4 billion.

Economic net debt at the balance-sheet date mainly reflects
special items. Debt rose in particular owing to the initial consol-
idation of innogy operations. This was partially counteracted
by the deconsolidation of reclassified operations at Renewables
and PreussenElektra that were still included in the figure at
year-end 2018. In addition, the figure at the balance-sheet date
includes cash-effective items relating to the innogy transaction
(see pages 31 and 32 for more information).

Provisions for pensions rose, in part because of significantly lower
actuarial interest rates, which led to an increase in defined ben-
efit obligations despite the positive development of plan assets.

Economic net debt in the year under review was also affected
by the initial application of IFRS 16 (see the section entitled
Special Events in the Reporting Period on page 17). The initial
application of IFRS 16 does not have a material impact on E.ON’s
debt-bearing capacity, because operating lease relationships
were already included in its calculation prior to the introduction
of IFRS 16.

Financial Situation

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

Finance Strategy
Our finance strategy focuses on E.ON’s capital structure. Ensuring
that E.ON has unrestricted access to capital markets is at the
forefront of this strategy.

With our target capital structure we aim to sustainably secure
a strong BBB/Baa rating.

We manage E.ON’s capital structure using debt factor, which
is equal to economic net debt divided by adjusted EBITDA; it is
therefore a dynamic debt metric. Economic net debt includes
not only financial liabilities but also provisions for pensions and
asset-retirement obligations. In addition, at year-end 2018 it
included the reclassified operations at Renewables that were
deconsolidated effective September 18, 2019, and the obligations
in conjunction with PreussenElektra’s divested minority stakes.

The low interest-rate environment continued. In some cases
this led to negative real interest rates on asset-retirement
obligations. As in prior years, provisions therefore exceeded the
actual amount of asset-retirement obligations at year-end 2019
without factoring in discounting and cost-escalation effects.
This limits the relevance of economic net debt as a key figure.
We want economic net debt to serve as a useful key figure that
aptly depicts E.ON’s debt situation. In the case of material provi-
sions affected by negative real interest rates, we have therefore
used the aforementioned actual amount of the obligations instead
of the balance-sheet figure to calculate economic net debt since
year-end 2016.

Pursuant to IFRS valuation standards, innogy’s financial liabilities
at the time of initial consolidation were recorded at their fair
value. This fair value is significantly higher than the original nomi-
nal value because interest-rate levels have declined since innogy’s
bonds were issued. The purchase-price allocation yielded a
difference between the nominal value and the fair value, which
results in additional liabilities of €2.5 billion at year-end 2019.
This amount will be recorded in financial earnings as a reduction
in expenditures and spread out over the maturity period of the

Business Report

Economic Net Debt

€ in millions

Liquid funds

Non-current securities

Financial liabilities1

FX hedging adjustment

Net financial position

Provisions for pensions

Asset-retirement obligations2

Economic net debt

Adjusted EBITDA

Debt factor

December 31,

2019

3,602

2,353

2018

5,423

2,295

-29,482

-10,721

167

-23,360

-7,201

-8,869

-39,430

5,558

7.1

-28

-3,031

-3,261

-10,288

-16,580

4,840

3.4

1Bonds issued by innogy are recorded at their nominal value. The figure shown in the Consolidated
Balance Sheets is €2.5 billion higher.
2This figure is not the same as the asset-retirement obligations shown in the Consolidated
Balance Sheet from continuing and discontinued operations (€10,571 million at December 31,
2019; €11,889 million at December 31, 2018). This is because we calculate economic net
debt in part based on the actual amount of the obligations.

Reconciliation of Economic Net Debt

€ in millions

Economic net debt

December 31

2019

2018

-39,430

-16,580

Reclassified businesses of Renewables and
PreussenElektra1

–

1,961

Economic net debt (continuing operations)

-39,430

-14,619

1Deconsolidated effective September 18, 2019.

Funding Policy and Initiatives
The key objective of our funding policy is for E.ON to have access
to a variety of financing sources at all times. We achieve this
objective by using different markets and debt instruments to
maximize the diversity of our investor base. E.ON issues bonds
with tenors that give its debt portfolio a balanced maturity
profile. Moreover, large-volume benchmark issues may in some
cases be combined with smaller issues, private placements,
and/or promissory notes. Furthermore, in 2019 E.ON for the
first time issued Green Bonds and, going forward, intends to
continue issuing a portion of its bonds as Green Bonds. External
funding is generally carried out by E.ON SE, and the funds are
subsequently on-lent in the Group. In the past, external funding

was also carried out by our Dutch finance subsidiary, E.ON Inter-
national Finance B.V. (“EIF”), under guarantee of E.ON SE and by
innogy SE and innogy Finance B.V. under guarantee of innogy SE.
In 2019 E.ON paid back in full maturities of €1.1 billion. E.ON
issued new debt totaling €4 billion.

Financial Liabilities

€ in billions

Bonds1
EUR
GBP
USD
JPY
Other currencies

Promissory notes

Commercial paper

Other liabilities

Total

1Includes private placements.

December 31

2019

2018

24.6
15.6
7.6
0.9
0.3
0.2

0.0

0.1

4.8

29.5

9.0
4.0
3.8
0.9
0.2
0.1

0.1

0.0

1.6

10.7

With the exception of a U.S.-dollar-denominated bond issued in
2008, all of E.ON SE and EIF’s currently outstanding bonds were
issued under a Debt Issuance Program (“DIP”). Similarly, innogy
and innogy Finance B.V. bonds were issued under the innogy
Group’s DIP. A DIP simplifies a company’s ability to issue debt to
investors in public and private placements in flexible time frames.
E.ON SE’s DIP was last updated in March 2019 with a total
volume of €35 billion, of which about €11.8 billion was utilized
at year-end 2019. E.ON SE intends to renew the DIP in 2020.

In addition to its DIP, E.ON has a €10 billion European Commercial
Paper (“CP”) program and a $10 billion U.S. CP program under
which it can issue short-term notes. At year-end 2019 E.ON had
€50 million of CP outstanding (prior year: €0).

E.ON also has access to a five-year, €3.5 billion syndicated credit
facility, which was concluded on October 24, 2019, and which
includes two options to extend the facility, in each case for one
year. The facility replaced two previously existing syndicated
credit facilities: E.ON SE’s €2.75 billion facility and innogy SE’s

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

Maturity Profile of Bonds Issued by E.ON SE, E.ON International Finance B.V., innogy SE, and innogy Finance B.V.

€ in billions

At December 31, 2019

10.0

8.0

6.0

4.0

2.0

2020

2021

2022

2023

2024

2025

2026

2027

2028+

€2 billion facility. The credit margin is linked in part to the
development of certain ESG ratings, which gives E.ON financial
incentives to pursue a sustainable corporate strategy. The ESG
ratings are set by three renowned agencies: ISS ESG, MSCI ESG
Research, and Sustainalytics. The facility serves as a reliable,
ongoing general liquidity reserve for the E.ON Group and can
be drawn on as needed. The credit facility is made available by
21 banks which constitute E.ON’s core group of banks.

In conjunction with the acquisition of innogy SE, on April 6, 2018,
E.ON originally secured a €5 billion acquisition facility, but in
August 2018 partially cancelled the facility down to €1.75 billion.
This credit facility is undrawn and remains available to the Group.

Alongside financial liabilities, E.ON has, in the course of its busi-
ness operations, entered into contingencies and other financial
obligations. These include, in particular, guarantees, obligations
from legal disputes and damage claims, as well as 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 liabilities, con-
tingencies, and other commitments.

E.ON’s creditworthiness has been assessed by Standard & Poor’s
(“S&P”) and Moody’s with long-term ratings of BBB and Baa2,
respectively. The outlook for both ratings is stable. In both cases
the ratings were based on the expectation that, over the near
to medium term, E.ON will be able to maintain a debt ratio com-
mensurate with these ratings. S&P’s and Moody’s short-term
ratings are unchanged at A-2 and P-2, respectively.

E.ON SE Ratings

Moody’s

Standard & Poor’s

Long term

Short term

Outlook

Baa2

BBB

P-2

A-2

Stable

E.ON will continue to take into account the trust of rating agen-
cies, investors, and banks by means of a clear strategy and trans-
parent communications and therefore holds events that include
an annual informational meeting for its core group of banks.

Investments
In 2019 investments in our core business and in the E.ON Group
as a whole were significantly above the prior-year level. E.ON
invested about €3.8 billion in property, plant, and equipment
and intangible assets (prior year: €3 billion). Share investments
totaled €1.7 billion versus €0.5 billion in the prior year.

Investments

€ in millions

Energy Networks

Customer Solutions

innogy

Renewables

Corporate Functions/Other

Consolidation

Investments in core business

Non-Core Business

E.ON Group investments

2019

1,655

724

878

722

1,305

5,285

207

5,492

2018

1,597

637

–

1,037

-3

3,354

169

3,523

+/- %

+14

–

-30

–

+58

+23

+56

Business Report

Energy Networks’ investments were €58 million above the prior-
year level. Investments in Germany rose primarily because of
new connections as well as replacements and upgrades. IT
investments in Sweden were lower than in 2018. Investments
in East-Central Europe/Turkey were lower than in 2018, in
particular because of the reassignment of investment projects
in the Czech Republic between Customer Solutions and Energy
Networks relative to the prior year.

Customer Solutions invested €87 million more than in the
prior year. The increase resulted in part from the acquisition of
Coromatic in Sweden. The aforementioned reassignment of
investment projects in the Czech Republic was an additional
reason for the increase in investments relative to the prior year.
By contrast, investments in the United Kingdom declined, pri-
marily because of lower investments in smart meters.

The innogy segment’s investments totaled €878 million from
September 18 to December 31, 2019. The biggest share of these
funds went toward the expansion and upgrade of network
infrastructure in Germany. Alongside maintenance, the focus
was on the connection of distributed generating facilities and
network expansion in conjunction with the energy transition.

Investments at Renewables were €442 million below the prior-
year figure. The reason is the departure of those of this segment’s
businesses that were transferred effective September 18, 2019,
as part of the transaction with RWE.

Corporate Functions/Other’s investment rose significantly, in
particular because of the innogy transaction. The 2019 figure
primarily reflects expenditures for the completion of the public
takeover offer and the acquisition of innogy stock on-market.

Cash Flow
Cash provided by operating activities of continuing and discon-
tinued operations before interest and taxes of €4.4 billion was
€0.3 billion above the prior-year figure. Negative working capital
the 2019 financial year was more than offset by the inclusion of
innogy for the first time. By contrast, cash provided by operating
activities of continuing and discontinued operations was only
slightly below the prior-year figure due to higher interest and
tax payments.

Cash provided by investing activities of continuing and discon-
tinued operations totaled -€5.8 billion versus +€1 billion in the
prior year. The sale of the remaining stake in Uniper SE in the
prior year was the main reason, accounting for €3.8 billion of
the change. In particular, the acquisition of innogy stock reduced
cash provided by investing activities in 2019. The purchase and
sale of securities and the change in financial receivables and
restricted funds resulted in net cash outflow of €0.6 billion in the
2019 financial year compared with net cash inflow of €0.2 billion
in the prior year.

Cash Flow1

€ in millions

Operating cash flow

Operating cash flow before interest and taxes2

Cash provided by (used for) investing
activities

Cash provided by (used for) financing
activities

2019

2,965

4,407

2018

2,853

4,087

-5,820

1,011

792

-2,637

1From continuing and discontinued operations.
2Excludes the innogy business in the Czech Republic reclassified pursuant to IFRS 5.

Investments at Non-Core Business were €38 million above the
prior-year level. The 2019 figure consists in particular of expen-
ditures by PreussenElektra in conjunction with the innogy trans-
action and the acquisition of residual power output rights. The
prior-year figure primarily reflects a capital increase at Enerjisa
Üretim in Turkey, which is accounted for using the equity method.

Cash provided by financing activities of continuing and discon-
tinued operations of +€0.8 billion was €3.4 billion above the prior-
year figure of -€2.6 billion. This primarily reflects the repayment
of bonds in 2018 and the issuance of bonds in 2019. The increase
in the dividend payout from €0.9 billion in 2018 to €1.1 billion
in 2019 was a countervailing factor.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

Asset Situation

E.ON’s asset situation in particular reflects the takeover of innogy
operations. Total assets and liabilities of roughly €98.6 billion
were €44.2 billion, or 81 percent, above the figure from year-end
2018. Non-current assets of €76.4 billion were €45.6 billion
higher than at year-end 2018. The takeover led mainly to an
increase in property, plant, and equipment in the amount of
€17.8 billion. In addition, E.ON recorded preliminary goodwill of
€15.5 billion in conjunction with the innogy takeover.

Current assets declined by €1.3 billion, or 6 percent, from
€23.4 billion to around €22.1 billion. This principally reflects the
departure of the Renewables segment from assets held for sale,
which reduced current assets by €11.3 billion. A €8.9 billion
increase in operating receivables and other operating assets
had a countervailing effect. This figure includes €6.6 billion in
operating receivables and other operating assets taken over
from innogy.

E.ON’s equity ratio (including non-controlling interests) at year-
end 2019 was 13 percent, which is 3 percentage points lower
than at year-end 2018.

A capital increase of subscribed capital was conducted in
September 2019. Under preponderant utilization of authorized
capital, E.ON increased its share capital from €2,201,099,000
to €2,641,318,800 through the issuance of 440,219,800 new
registered no-par-value shares against contributions in kind. The
€3.5 billion change in capital reserves results from the valuation
in connection with the capital increase against contributions in
kind of innogy SE stock received in excess of the nominal value of
the new E.ON SE stock that was issued (€440,219,800). Equity
attributable to E.ON SE shareholders was €9.1 billion at year-end
2019. Equity attributable to non-controlling interests amounted
to €4 billion.

Non-current debt almost doubled relative to year-end 2019.
As on the asset side, the increase reflects the inclusion of innogy
operations. In particular, bonds rose by €17.1 billion, of which
about €14.3 billion is attributable to innogy. In addition, the initial
consolidation of innogy companies and the reduction in actuarial
interest rates let to an increase in provisions for pensions.

Current debt of €26 billion was 70 percent above the figure at
year-end 2018. As part of the transaction, E.ON took on innogy
debt in the amount of €14.5 billion. This increase was partially
offset by the deconsolidation of the Renewables segment’s debt
of €2.7 billion that had previously been reclassified pursuant
to IFRS 5.

Consolidated Assets, Liabilities, and Equity

€ in millions

Non-current assets

Current assets

Total assets

Equity

Non-current liabilities

Current liabilities

Total equity and liabilities

Additional information about E.ON’s asset situation is contained
in Notes to the Consolidated Financial Statements.

Dec. 31,
2019

76,444

22,122

98,566

13,085

59,464

26,017

98,566

100

Dec. 31,
2018

30,883

23,441

54,324

8,518

30,545

15,261

54,324

100

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 conjunction
with the German Stock Corporation Act), and the Electricity and
Gas Supply Act (Energy Industry Act).

Balance Sheet of E.ON SE (Summary)

€ in millions

Intangible assets and property, plant, and
equipment

Financial assets

Non-current assets

Receivables from affiliated companies

Other receivables and assets

Liquid funds

Current assets

Accrued expenses

Asset surplus after offsetting of benefit
obligations

Total assets

Equity

Provisions

Bonds

Liabilities to affiliated companies

Other liabilities

Deferred income

December 31,

2019

2018

45,067

45,077

5,934

1,522

1,460

8,916

33,241

33,251

7,472

1,932

3,041

12,445

–

54,031

45,724

9,728

1,061

6,000

31,040

6,195

9,432

1,480

2,000

32,456

354

Total equity and liabilities

54,031

45,724

Following the clearance issued by the European Commission and
the relevant antitrust agencies on September 18, 2019, E.ON’s
earnings, financial, and asset situation in the 2019 financial year
was influenced primarily by the agreement reached between E.ON
and RWE on March 12, 2018, to transfer business operations.

The change in financial assets mainly reflects the addition of the
76.8-percent majority stake in innogy SE and its contribution to
a subsidiary. The repayment of the procurement costs and the
portion of the distribution of net income from E.ON Beteiligungen
GmbH that was not recorded in earnings were countervailing
factors.

The change in equity results mainly from the capital increase
executed in the financial year. Net income in 2019 was lower
than in the prior year.

Other liabilities consist primarily of the obligation to RWE relating
to the future transfer of innogy’s entire renewables business,
its entire gas-storage business, and its 37.9-percent stake in
Austrian energy utility KELAG.

The issuance of bonds with a total nominal value of €4,000 million
and the €1,581 million reduction in liquid funds were the main
items affecting the Company’s financial situation.

Information on treasury shares can be found in Note 19 to the
Consolidated Financial Statements.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

In the year under review, on balance the Company’s income taxes
yielded tax income of €59 million, which encompasses the year
under review as well as prior years. Applying the minimum tax
rate resulted in corporate taxes of €69 million, a solidarity sur-
charge of €4 million, and trade taxes of €33 million in 2019. For
previous years the Company recorded tax income of €165 million.

At the Annual Shareholders Meeting in 2020, management will
propose that net income available for distribution be used to pay
a dividend of €0.46 per ordinary share and the remaining amount
of €10 million to be brought forward as retained earnings.
Management’s proposal for the use of net income available for
distribution is based on the number of ordinary shares on
March 23, 2020, the date the Financial Statements of E.ON SE
were prepared.

Pending the Supervisory Board’s approval, the E.ON SE Manage-
ment Board has decided on a dividend policy that foresees annual
growth in the dividend per share of up to 5 percent through the
dividend for the 2022 financial year. E.ON will aim for an annual
increase in dividend per share after this as well.

The complete Financial Statements of E.ON SE, with an unquali-
fied opinion issued by the auditor, PricewaterhouseCoopers
GmbH, Wirtschaftsprüfungsgesellschaft, Düsseldorf, will be
announced in the Bundesanzeiger. Copies are available on request
from E.ON SE and at www.eon.com.

Income Statement of E.ON SE (Summary)

€ in millions

Income from equity interests

Interest income/loss

Other expenditures and income

Taxes

Net income

Profit carryforward from the prior year

Net income transferred to retained earnings

2019

1,620

-127

-763

789

121

300

2018

1,171

-140

-225

247

1,053

–

Net income available for distribution

1,210

1,053

E.ON SE is the parent company of the E.ON Group. As such, its
earnings situation is affected by income from equity interests.
The increase in income from equity interests reflects, in particular,
the in-phase distribution of net income from E.ON Beteiligungen
GmbH, of which €664 million was recorded in earnings, and
profit transfers of €979 million from E.ON Beteiligungen GmbH
and of €210 million from E.ON Energie AG. Income from equity
interests was adversely affected primarily by expenditures from
loss transfers of €241 million.

The change in the negative figure recorded under other expendi-
tures and income results predominantly from the transfer of
E.ON’s renewables business and two minority stakes in nuclear
power stations to RWE. In addition, this figure contains personnel
expenditures of €183 million, expenditures of €160 million for
consulting and auditing services, and expenditures of €156 million
for third-party services. The prior-year figure benefited from
income of €271 million from a necessary adjustment for certain
environmental remediation obligations of predecessor entities.

Business Report

Other Financial and Non-Financial Performance
Indicators

Analyzing Value Creation
ROCE is a pretax total return on capital and is defined as the
ratio of adjusted EBIT to annual average capital employed. In
the 2020 financial year, ROCE is no longer one of E.ON’s most
important key performance indicators (see pages 17 and 18).

Annual average capital employed represents the interest-bearing
capital invested in E.ON’s operating business. It is calculated
by subtracting non-interest-bearing available capital from non-
current and current operating assets. Depreciable non-current
assets are included at their book value. Goodwill from acquisitions
is included at acquisition cost, as long as this reflects its fair
value. 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.

Changes to E.ON’s portfolio during the course of the year are
factored into average capital employed. Consequently, the innogy
Group’s assets and debt relevant for capital employed were

included effective the end of September 2019. The components
of capital employed attributable to the discontinued operations
at Renewables transferred to RWE were included until the end of
September 2019 (footnote 4 of the ROCE table below contains
more information).

Annual average capital employed does not include the marking
to market of other share investments and derivatives. The
purpose of excluding these items is to provide us with a more
consistent picture of E.ON’s ROCE performance.

ROCE Performance in 2019
ROCE decreased from 10.4 percent in 2018 to 8.4 percent in
2019 owing mainly to the increase in capital employed. The
primary reasons are the inclusion of the innogy Group’s assets
(including preliminary goodwill from the purchase-price alloca-
tion) and debt for the first time and the inclusion of right-of-use
assets from the start of 2019 due to the initial application of
IFRS 16 Leases.

The table below shows the E.ON Group’s ROCE and its derivation.

ROCE

€ in millions

Property, plant, and equipment, right-of-use assets, intangible assets, and goodwill1

Shares in affiliated and associated companies and other share investments

Non-current assets

Inventories

Other non-interest-bearing assets/liabilities, including deferred income and deferred tax assets2

Current assets

Non-interest-bearing provisions3

Capital employed in continuing and discontinued operations4

Annual average capital employed in continuing and discontinued operations4

Adjusted EBIT5

ROCE6

2019

60,590

6,962

67,552

1,252

-2,455

-1,203

-3,557

62,792

38,726

3,235

8.4%

2018

30,915

4,263

35,178

710

-4,862

-4,152

-1,655

29,371

28,811

2,989

10.4%

1Includes preliminary goodwill from the innogy purchase-price allocation.
2Examples of other non-interest-bearing assets/liabilities include income tax receivables and liabilities.
3Non-interest-bearing provisions include current provisions, such as those relating to sales and procurement market obligations. In particular, they do not include provisions for pensions or
nuclear-waste management.
4As a rule, weighted capital employed is the arithmetical average of capital employed at the beginning and the end of the year. To adequately portray the innogy takeover in September 2019, capital
employed in 2019 was weighted on the basis of a number of month-end figures. This calculation reflected the following parameters:
a) Capital employed of continuing operations at December 31, 2018: €29.4 billion (includes the discontinued operations at Renewables).
b) Capital employed of continuing operations at June 30, 2019, projected to September 30, 2019, on the basis of net investments and depreciation charges: €32.4 billion (includes the discontinued

operations at Renewables).

c) Capital employed of continuing operations at September 30, 2019: €61.7 billion (includes innogy and excludes the discontinued operations at Renewables).
d) Capital employed of continuing operations at December 31, 2019: €62.8 billion (includes innogy and excludes the businesses transferred to RWE).
75 percent of the average of parameters a) and b) is factored into average capital employed, as is 25 percent of the mean of parameters c) and d).

5Adjusted for non-operating effects; for purposes of internal management control, adjusted EBIT includes the adjusted EBIT from the operations at Renewables classified as discontinued operations
and deconsolidated in September 2019.
6ROCE = adjusted EBIT divided by average capital employed.

Employees
People Strategy
The year 2019 was characterized predominantly by the prepa-
rations for innogy’s full integration into the E.ON Group. Accom-
plishing the integration of innogy’s roughly 36,500 employees is
of decisive importance for the transaction’s success. Consequently,
HR integration was one of the E.ON HR division’s most import-
ant topics in 2019.

In 2019 we also focused our people strategy on supporting and
shaping digital change. Our focus areas are digital culture and
leadership, capabilities of the future, adaptation of HR processes
and products, and employee development. We intend to work with
our business units to shape the digital transformation through
a number of Group-wide and unit-level projects.

In addition, we updated grow@E.ON, our Group-wide compe-
tency model for the professional and personal development of our
employees and leaders, and E.ON’s employee value proposition.
We also adjusted them to reflect the changes brought about by
the integration of innogy.

Diversity
Going forward, diversity will remain a key element of E.ON’s
competitiveness. Diversity and an appreciative corporate culture
promote creativity and innovation. This is a central aspect of
the E.ON vision as well. E.ON brings together a diverse team of
people who differ by nationality, age, gender, religion, sexual
orientation and identity, and/or cultural and social background.
We foster and utilize diversity in specific ways and create an
inclusive work environment. This is important for our success.
Studies show that heterogeneous teams outperform homoge-
nous 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 addition, a diverse
workforce enables us to do an even better job of meeting our
customers’ specific needs and requirements. As far back as 2006
we issued a Group Policy on Equal Opportunity and Diversity.
In late 2016 E.ON along with the SE Works Council of E.ON SE
renewed this commitment to diversity.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

In April 2018 the E.ON Management Board, the German Group
Works Council, and the Group representation for severely dis-
abled persons signed the Shared Understanding of Implementing
Inclusion at E.ON, creating a strong foundation for integrating
people with disabilities into our organization.

In 2008 E.ON publicly affirmed its commitment to fairness and
respect by signing the German Diversity Charter, which now
has about 2,700 signatories. E.ON therefore belongs to a large
network of companies committed to diversity, tolerance, fairness,
and respect.

Our approach to promoting diversity is holistic, encompassing
all dimensions of diversity. It ensures equal opportunity for all
employees and fosters and harnesses diversity in an individual
way.

In 2019 we again implemented numerous measures to promote
diversity at E.ON. An important purpose of these measures is to
foster the career development of female managers. We set new,
ambitious targets to increase the proportion of women in manage-
ment positions. At the end of the appointment process that was
part of the integration of innogy, we increased the proportion
of women in management roles that report directly to the E.ON
Management Board to 24 percent. By year-end 2026, we want
the proportion of women in management positions to be the
same—32 percent—as the proportion of women in our overall
workforce was at year-end 2018. After the integration of innogy
is completed, the specific targets for each unit will be reviewed
and, if necessary, adjusted.

Our units have had support mechanisms for female managers
in place for a number of years. These mechanisms include mento-
ring programs for female next-generation managers, coaching,
training to prevent unconscious bias, the provision of daycare,
and flexible work schedules. 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.

More information about E.ON’s compliance with Germany’s Law
for the Equal Participation of Women and Men in Leadership
Positions in the Private Sector and the Public Sector can be found
in the Corporate Governance Declaration.

Business Report

Workforce Figures
At year-end 2019 the E.ON Group had 78,948 employees world-
wide, substantially more (+82 percent) than at year-end 2018.
E.ON also had 2,563 apprentices and 238 board members and
managing directors worldwide.

Employees1

Headcount

Energy Networks

Customer Solutions

innogy

Renewables

Corporate Functions/Other2

Core business

Non-Core Business

E.ON Group

December 31

2019

20,438

17,669

36,537

2,414

2018

17,896

19,692

–

1,374

2,447

77,070

41,409

1,878

1,893

78,948

43,302

+/- %

+14

-10

–

-99

-1

+86

-1

+82

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

The main reason for the substantial increase in our headcount in
the year under review was the takeover of innogy.

Employees by Country1

Germany

United Kingdom

Hungary

Romania

Czech Republic

Netherlands

Sweden

Poland

Other2

Total

1Figures do not include board members, managing directors, or apprentices.
2Includes Italy, USA, Denmark, and other countries.
3Full-time equivalent.

Energy Networks’ headcount increased significantly relative
to year-end 2018. This was mainly attributable to the reassign-
ment of employees (primarily in the Czech Republic and Romania)
from Customer Solutions to this segment. The filling of vacan-
cies to expand the business (in Germany, predominantly with
apprentices who had successfully completed their training) was
another factor.

The decline in the number of employees at Customer Solutions
mainly reflects the aforementioned reassignment of employees to
Energy Networks. Headcount was also reduced by restructuring
projects. The acquisition of Coromatic in Sweden had a counter-
vailing effect.

In conjunction with the innogy takeover, nearly all of Renewables’
employees were transferred to RWE.

Geographic Profile
At year-end 2019, 40,612 employees, or 51 percent of all
employees, were working outside Germany, significantly fewer
than the 63 percent at year-end 2018.

Dec. 31,
2019

38,336

14,368

8,129

6,579

2,930

2,888

2,286

2,018

1,414

Headcount

Dec. 31,
2018

15,903

9,502

5,244

6,427

2,771

–

2,058

209

1,188

Dec. 31,
2019

36,510

13,737

8,104

6,410

2,913

2,628

2,263

2,003

1,385

FTE3

Dec. 31,
2018

15,400

9,077

5,234

6,363

2,758

–

2,027

208

1,174

78,948

43,302

75,953

42,241

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

Employees by Age

Percentages at year-end

30 and younger

31 to 50

51 and older

2019

2018

A total of 8,520 employees, or 10 percent of all E.ON Group
employees, were on a part-time schedule (prior year: 8 percent).
Of these, 6,520, or 77 percent, were women.

The turnover rate resulting from voluntary terminations averaged
4.6 percent across the organization, slightly lower than in the
prior year (4.8 percent).

Apprenticeships
E.ON continues to place great emphasis on vocational training
for young people. The E.ON Group had 2,456 apprentices and
work-study students in Germany at year-end 2019. This repre-
sented 6 percent of E.ON’s total workforce in Germany, higher
than at the end of the prior year (5.4 percent).

E.ON provides vocational training in more than 65 careers and
also offers work-study programs in order to meet its own needs
for skilled workers and to take targeted action to address the
consequences of demographic change. In addition, E.ON offers
young people the opportunity to receive training to qualify for
an apprenticeship.

Headcount

Percentage of workforce

2019

804

1,573

–

2,416

2,456

2018

818

–

856

899

2019

2018

8.0

0.7

6.6

–

0.9

6.2

2.1

6.0

8.4

0.9

–

0.7

5.8

2.2

5.4

Gender and Age Profile, Part-Time Staff
At the end of 2019, 33 percent of our employees were women,
slightly higher than at the end of 2018 (32 percent).

Proportion of Female Employees

Percentages

Energy Networks

Customer Solutions

innogy

Renewables

Corporate Functions/Other1

Core business

Non-Core Business

E.ON Group

1Includes E.ON Business Services.

2019

2018

–

At year-end 2019 the average E.ON Group employee was about
42 years old and had worked for us for 14 years.

Apprentices in Germany

At year-end

Energy Networks

Customer Solutions

innogy

Renewables

Corporate Functions/Other

Core business

Non-Core Business

E.ON Group

Forecast Report

Business Environment

Macroeconomic Situation
Current economic and financial policy developments point to a
prolonged period of subdued global growth. Due to the ongoing
political uncertainty and the resulting downside risks, the global
economic downturn will continue. The forecast for global GDP
growth for 2020–2021 is again below 3 percent. Substantial
uncertainty about the nature of future trade relations between
the EU and the United Kingdom, the continued risk of a further
escalation of bilateral trade tensions between the United States
and China, and tensions in Iran are sources of considerable con-
cern. GDP growth in the euro zone will stagnate, whereas growth
in the United States, China, and Japan will actually slow down.
The OECD forecasts a slight acceleration in GDP growth only for
India and Brazil.

Anticipated Earnings Situation

Forecast Earnings Performance
In line with our corporate strategy as well as the macroeconomic
and industry-specific environment, we continue to address the
challenges in our operating business. We invest systematically
in our energy networks, focusing in particular on innovative
digital solutions at all of our network companies. As for customer
solutions, we want to become even more cost-efficient and
expand our market share.

In 2019 we successfully closed the innogy takeover. Our forecast
for the E.ON Group and its segments therefore includes the
innogy businesses that E.ON took over as part of a far-reaching
transfer of business operations with RWE. From January 1, 2020,
onward, innogy’s operations will no longer be managed and
disclosed as a separate segment but rather integrated into Energy
Networks, Customer Solutions, and Corporate Functions/Other.
innogy’s network businesses will be assigned to Energy Networks.
Its power and gas sales along with new customer solutions (such
as eMobility services) will be reported at Customer Solutions.
Corporate Functions/Other includes innogy’s holding functions
and internal services. After substantially all of the Renewables
segment was transferred to RWE, its remaining businesses will
be reported at Energy Networks in Germany, Customer Solutions
in the United Kingdom, and Corporate Functions/Other.

Against this backdrop, we expect the E.ON Group’s 2020
adjusted EBIT to be between €3.9 and €4.1 billion and its 2020
adjusted net income to be between €1.7 and €1.9 billion, or
€0.65 to €0.73 per share (based on an average of 2,607 million
shares outstanding). In addition, we expect the E.ON Group to
achieve a cash-conversion rate of roughly 95 percent on average
for the 2020 to 2022 financial years (without factoring in the
expenditures for the decommissioning of nuclear power stations).

Our forecast by segment:

Adjusted EBIT1

€ in billions

Energy Networks

Customer Solutions

Corporate Functions/Other

Non-Core Business

E.ON Group

1Adjusted for non-operating effects.

2020 (forecast)

3.3 to 3.5

0.5 to 0.7

roughly -0.4

0.3 to 0.5

3.9 to 4.1

We expect Energy Networks’ 2020 adjusted EBIT to be signifi-
cantly higher than in the prior year due to the takeover of innogy’s
network business in Germany, Poland, Hungary, and Croatia.
The network business in Germany will continue to benefit from
investments in its regulated asset base. The new regulatory
period in Sweden will have an adverse impact on earnings.

We anticipate that Customer Solutions’ adjusted EBIT will be
significantly above the prior-year level. The inclusion, for the
first time, of innogy’s customer solutions business—which has
operations primarily in Germany, the United Kingdom, the
Netherlands, Belgium, Hungary, and Poland—for the entire year
will have a positive impact on earnings. The interventions of
the U.K. Competition and Markets Authority will continue to
have a negative effect on earnings.

Substantially all of the Renewables segment was transferred to
RWE in September 2019. As described, its remaining activities
will be assigned to other segments from January 1, 2020, onward.
There is therefore no forecast for 2020.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

We anticipate that adjusted EBIT at Corporate Functions/Other
will be significantly below the prior-year figure, primarily because
of the inclusion of innogy’s corporate functions. By contrast, cost
savings and synergy effects from combining E.ON and innogy’s
corporate functions will have a positive impact.

Investments at Customer Solutions will go toward IT, metering
and upgrade projects, and integrated energy solutions. We will
also invest in our heat business in Sweden, Germany, and the
United Kingdom and in solutions for industrial and commercial
customers.

We expect Non-Core Business’s adjusted EBIT to be slightly
above the prior-year level. We expect PreussenElektra’s earnings
to reflect, in particular, rising sales prices that will be partially
counteracted by expenditures for residual power output rights.

Non-Core Business’s investments will include investments
to acquire residual power output rights. Those at Corporate
Functions/Other will encompass investments in Group-wide
IT infrastructure.

Anticipated Financial Situation

General Statement of E.ON’s Future
Development

Planned Funding Measures
In addition to planned investments for 2020 and the dividend
for 2019, in 2020 E.ON will make payments for bonds that
have matured. We also expect to have increased funding needs
due to the innogy acquisition. Over the course of the year, these
payments will be funded with available liquid funds and debt.

Dividend
Pending the Supervisory Board’s approval, the E.ON SE Manage-
ment Board has decided on a dividend policy that foresees annual
growth in the dividend per share of up to 5 percent through the
dividend for the 2022 financial year. E.ON will aim for an annual
increase in dividend per share after this as well.

Planned Investments
We plan to make cash-effective investments of €4.5 billion in
2020. E.ON will continue its strategy aimed at delivering sus-
tainable growth. Our capital allocation will of course continue
to be selective and disciplined.

Cash-Effective Investments: 2020 Plan

Energy Networks

Customer Solutions

Corporate Functions/Other

Non-Core Business

Total

€ in billions

Percentages

3.2

0.9

0.2

4.5

100

Energy Networks’ investments will consist in particular of
numerous individual investments to expand our networks,
switching equipment, and metering and control technology
as well as other investments to continue to ensure the reliable
and uninterrupted transmission and distribution of electricity.

The E.ON Group’s new setup, which now includes innogy, will be
a dominant feature of the 2020 financial year. The integration
of the enlarged E.ON Group is of particular importance. It is the
prerequisite for developing the business, creating growth, and
leveraging the promised synergies. E.ON will of course duly
respect the interests of innogy’s remaining minority shareholders.

In addition, there is the matter of restructuring and successfully
returning the loss-making U.K. sales business to profitability.
Further developing E.ON’s IT and digital agenda for efficient and
technologically advanced support systems is another task.
Furthermore, there is the need for concessions in the network
business in Germany to be renewed. The daily work to achieve
these objectives and accomplish these tasks will take place
amid a challenging business environment characterized by low
interest rates, asset sales resulting from the antitrust clearance,
and keen competition for networks and customers.

There is currently a high degree of uncertainty regarding the
global spread of the coronavirus and the resulting economic
repercussions. At present time, this does yet not permit a suffi-
ciently precise estimate of the impact on the forecast for the
Company’s business development in 2020. That said, the E.ON
Group anticipates for 2020 that the coronavirus will have financial
impact in all markets in which E.ON is active with correspond-
ingly significant impact on E.ON’s key performance indicators.
Current analyses of individual markets of the Energy Networks
and Customer Solutions segments indicate that volume effects
from the demand for electricity and gas will be a critical driver
(volume risks). The Customer Solutions segment in particular
could also face other market price risks that, driven by volume
risks, could possibly impact the procurement of electricity and
gas. Furthermore, in a prolonged crisis a reduction in the credit-
worthiness of customers and business partners could also
become a risk in both segments. The short- and long-term
effects on adjusted EBIT and other key performance indicators
resulting from the spread of the coronavirus cannot currently
be estimated and are therefore not included in the forecast.

Risk and Chances Report

Enterprise Risk Management System in the
Narrow Sense

Group
Decision-Making
Bodies

Risk
Committee

E.ON SE
Management
Board

Steer

E.ON SE
Supervisory
Board

Audit and Risk
Committee

Group

Central Enterprise Risk Management

Units and
Departments

Customer
Solutions

Energy
Networks

Non-Core
Business

Corporate
Functions

Local Risk Committees

I
n
t
e
r
n
a
l

A
u
d
i
t

Govern
and
Consolidate

Identify,
Evaluate
and
Manage

Objective

Our Enterprise Risk Management (“ERM”) provides the man-
agement of all units as well as the E.ON Group with a fair and
realistic view of the risks and chances resulting from their
planned business activities. It provides:

• meaningful information about risks and chances to the

business, thereby enabling the business to derive individual
risks/chances as well as aggregate risk profiles within the
time horizon of the medium-term plan (three years)

• transparency on risk exposures in compliance with legal
requirements including KonTraG, BilMoG, and BilReG.

Our ERM is based on a centralized governance approach which
defines standardized processes and tools covering the identifi-
cation, evaluation, countermeasures, monitoring, and reporting
of risks and chances. Overall governance is provided by Group
Risk Management on behalf of the E.ON SE Risk Committee.

All risks and chances have an accountable member of the Man-
agement Board, have a designated risk owner who remains
operationally responsible for managing that risk/chance, and
are identified in a dedicated bottom-up process.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

Scope

Our risk management system in the broader sense has a total of
four components:

• an internal monitoring system
• a management information system
• preventive measures
• the ERM, which is a risk management system in the narrow

sense.

The purpose of the internal monitoring system is to ensure the
proper functioning of business processes. It consists of organi-
zational preventive measures (such as policies and work
instructions) and internal controls and audits (particularly by
Internal Audit).

The E.ON internal management information system identifies
risks early so that steps can be taken to actively address them.
Reporting by the Controlling, Finance, and Accounting depart-
ments as well as Internal Audit reports are of particular impor-
tance in early risk detection.

General Measures to Limit Risks

Managing Operational and IT Risks
To limit operational and IT risks, we continually improve our
network management and the optimal dispatch of our assets.
At the same time, we are implementing operational and infra-
structure improvements that will enhance the reliability of our
generation assets and distribution networks, even under extraor-
dinarily adverse conditions. In addition, we have factored the
operational and financial effects of environmental 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.

Our IT systems are maintained and optimized by qualified E.ON
Group experts, outside experts, and a wide range of technologi-
cal 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 Health, Safety, and Environmental (“HSE”), Human
Resources (“HR”), and Other Risks
The following are among the comprehensive measures we take
to address such risks (also in conjunction with operational and
IT risks):

We take the following general preventive measures to limit risks.

• systematic employee training, advanced training, and quali-

Managing Legal and Regulatory 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.

fication programs for our employees

• further refinement of our production procedures, processes,

and technologies

• regular facility and network maintenance and inspection
• company guidelines as well as work and process instructions
• quality management, control, and assurance
• project, environmental, and deterioration management
• crisis-prevention measures and emergency planning.

We attempt to minimize the operational risks of legal proceedings
and ongoing planning processes by managing them appropriately
and by designing appropriate contracts beforehand.

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

Risk and Chances Report

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

In order to limit our exposure to commodity price risks, we con-
duct 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 quantitative key
figures, the limitation of risks, and the strict separation of func-
tions 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 creditwor-
thiness we monitor on an ongoing basis. Our local sales units
and the remaining generation operations have set up local risk
management under central governance standards to monitor
these underlying commodity risks and to minimize them through
hedging.

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

Managing Finance and Treasury Risks
This category encompasses credit, interest-rate, currency, tax,
and asset-management risks and chances. 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 E.ON SE’s inter-
mediary role, its risk position is largely closed.

We use a Group-wide credit risk management system to system-
atically assess and monitor the creditworthiness of our busi-
ness 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 credit
risks. A further component of our risk management is a conser-
vative investment strategy for financial funds and a broadly
diversified portfolio.

Note 30 to the Consolidated Financial Statements contains
detailed information about the use of derivative financial instru-
ments 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.

Enterprise Risk Management (“ERM”)

Our risk management system, which is the basis for the risks
and chances described in the next section, encompasses:

• systematic risk and chance identification

• risk and chance analysis and evaluation

• management and monitoring of risks and chances by

analyzing and evaluating countermeasures and preventive
systems

• documentation and reporting.

As required by law, our ERM’s effectiveness is reviewed regularly
by Internal Audit. In compliance with the provisions of Section 91,
Paragraph 2, of the German Stock Corporation Act relating to
the establishment of a risk-monitoring and early warning system,
E.ON has a Risk Committee for the E.ON Group and for each of
its business units. The Risk Committee’s mission is to achieve a
comprehensive view of our risk exposure at the Group and unit
level and to actively manage risk exposure in line with our risk
strategy.

Our ERM applies to all fully consolidated E.ON Group companies
and all companies valued at equity whose book value is greater
than €50 million. We take an inventory of our risks and chances
at each quarterly balance-sheet date.

To promote uniform financial reporting Group-wide, we have in
place a central, standardized system that enables effective and
automated risk reporting. Company data are systematically col-
lected, transparently processed, and made available for analysis
both centrally and decentrally at the units.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

Risks and Chances

Methodology
Our IT-based system for reporting risks and chances has the
following risk categories:

Risk Category

Legal and regulatory risks

Operational and IT risks

HSE, HR, and other

Market risks

Strategic risks

Finance and treasury risks

Examples

Policy and legal risks and chances, regulatory risks, risks from public consent processes

IT and process risks and chances, risks and chances relating to the operation of generation
assets, networks, and other facilities, new-build risks

Health, safety, and environmental risks and chances

Risks and chances from the development of commodity prices and margins and from changes
in market liquidity

Risks and chances from investments and disposals

Credit, interest-rate, foreign-currency, tax, and asset-management risks and chances

E.ON uses a multistep process to identify, evaluate, simulate,
and classify risks and chances. Risks and chances are generally
reported on the basis of objective evaluations. If this is not
possible, we use internal estimates by experts. The evaluation
measures a risk/chance’s financial impact on our current earnings
plan while factoring in risk-reducing countermeasures. The
evaluation therefore reflects the net risk.

For quantifiable risks and chances, we then evaluate the likeli-
hood of occurrence and the potential loss or damage. In the
commodity business, for example, commodity prices can rise
or fall. This type of risk is modeled with a normal distribution.
Modeling is supported by a Group-wide IT-based system.
Extremely unlikely events—those whose likelihood of occurrence
is 5 percent or less—are classified as tail events. Tail events are
not included in the simulation described below.

This statistical distribution makes it possible for our IT-based
risk management system to conduct a Monte Carlo simulation of
these risks/chances. This yields an aggregated risk distribution
that is quantified as the deviation from our current earnings
plan for adjusted EBIT.

We use the 5th and 95th percentiles of this aggregated risk
distribution as the worst case and best case, respectively. Statis-
tically, this means that with this risk distribution there is a
90-percent likelihood that the deviation from our current earn-
ings plan for adjusted EBIT will remain within these extremes.

The last step is to assign, in accordance with the 5th and 95th
percentiles, the aggregated risk distribution to impact classes—
low, moderate, medium, major, and high—according to their
quantitative impact on adjusted EBIT. The impact classes are
shown in the table below.

Impact Classes

Low

Moderate

Medium

Major

High

x < €10 million

€10 million ≤ x < €50 million

€50 million ≤ x < €200 million

€200 million ≤ x < €1 billion

x ≥ €1 billion

Risk and Chances Report

General Risk Situation
The table below shows the average annual aggregated risk
position (aggregated risk distribution) across the time horizon of
the medium-term plan for all quantifiable risks and chances
(excluding tail events) for each risk category based on our most
important financial key performance indicator, adjusted EBIT.

Risk Category

Risk category

Legal and regulatory risks

Operational and IT risks

HSE, HR, and other

Market risks

Strategic risks

Finance and treasury risks

Worst case (5th percentile)

Best case (95th percentile)

Major

Medium

Low

Major

Medium

Moderate

Medium

Low

Medium

Low

Medium

The E.ON Group has major risk positions in the following cate-
gories: legal and regulatory risks and market risks. As a result,
the aggregate risk position of E.ON SE as a Group is major. In
other words, the E.ON Group’s average annual adjusted EBIT
risk ought not to exceed -€200 million to -€1 billion in 95 percent
of all cases.

At the time this report was prepared, potentially adverse business
effects of the outbreak of the coronavirus could not yet be suffi-
ciently estimated. The possible implications of this matter are
being analyzed on an ongoing basis. For more information, see
Forecast Report.

On December 6, 2016, Germany’s Federal Constitutional Court
in Karlsruhe ruled that the thirteenth amended version of the
Atomic Energy Act (“the Act”) is fundamentally constitutional.
The Act’s only unconstitutional elements are that certain NPP
operators will be unable to produce their electricity allotment
from 2002 and that it contains no mechanism for compensating
operators for investments to extend NPP operating lifetimes.
Lawmakers established a compensation mechanism in the six-
teenth amended version of the Act. In addition, NPPs need to
acquire residual power output rights in order to operate until
their closure dates prescribed by law. These matters could yield
major chances and major risks.

Risks and Chances by Segment
PreussenElektra
PreussenElektra’s business is substantially influenced by regu-
lation. In general, regulation can result in risks for its remaining
operating and dismantling activities. One example is the
Fukushima nuclear accident. Policy measures taken in response
to such events could have a direct impact on the further opera-
tion of a nuclear power plant (“NPP”) or trigger liabilities and
significant payment obligations stemming from the solidarity
obligation agreed on among German NPP operators. Further-
more, new regulatory requirements, such as additional manda-
tory safety measures or delays in dismantling, could lead to
production outages and higher costs. In addition, there may be
lawsuits that fundamentally challenge the operation of NPPs.
Regulation can also require an increase in provisions for disman-
tling. These factors could pose major risks for E.ON.

Customer Solutions
The E.ON Group’s operations subject it to certain risks relating to
legal proceedings, ongoing planning processes, and regulatory
changes. But these risks also relate, in particular, to legal actions
and proceedings concerning contract and price adjustments to
reflect market dislocations or (including as a consequence of the
energy transition) an altered business climate in the power and
gas business, alleged price-rigging, and anticompetitive practices.
This could pose a major risk.

Energy Networks
The operation of energy networks is subject to a large degree
of government regulation. New laws and regulatory periods
cause uncertainty for this business. In addition, matters related
to Germany’s Renewable Energy Sources Act, such as issues
regarding solar energy, can cause temporary fluctuations in our
cash flow and adjusted EBIT. This could create major chances

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

as well as pose a major risk. The rapid growth of renewables is
also creating new risks for the network business. For example,
insolvencies among renewables operators or feed-in tariffs unduly
paid by grid operators lead to court or regulatory proceedings.

innogy
The risk situation for the 2019 financial year encompasses
innogy’s existing portfolio, which consists of the business oper-
ations of the network and sales businesses as well as corporate
functions and internal services. Thanks to a comprehensive
framework for risk management, innogy is able to identify risks
and opportunities at an early stage and act accordingly. Conse-
quently, this framework satisfies the requirements of the German
Law on Corporate Control and Transparency (“KonTraG”). Initially,
this framework will remain in place unchanged.

In its risk governance functions delegated by the Management
Board, the Controlling & Risk Department bears primary respon-
sible for the implementation, further development and coordi-
nation of the innogy Group’s risk management framework and
strategy.

The innogy Group’s risk situation depends to a considerable
degree on the economic and regulatory environment. Its sales
business, for example, faces the risk of additional interventionist
regulations and, like E.ON, a competitive environment that
remains very intense. For the period of the medium-term plan,
the network business is currently confronted with minimal reg-
ulatory risks compared with the prior year relating to regulatory
clarifications and to the disposal of innogy’s stakes in its gas
networks business in the Czech Republic and in Východoslovenská
energetika Holding a.s. (“VSEH”) in Slovakia.

As with E.ON, innogy’s business operations and use of financial
instruments expose it to credit risks. In addition, its historical
interrelationship with RWE continues to pose a major, albeit
unlikely risk.

A comprehensive risk position drawn from innogy’s individual
business units will be presented for subsequent financial years.

At the balance-sheet date, innogy’s overall risk and chance
position was major.

Risks and Chances by Category
E.ON’s major risks and chances by risk category are described
below. Also described are major risks and chances stemming
from tail events as well as qualitative risks that would impact
adjusted EBIT by more than €200 million. Risks and chances
that would affect planned net income and/or cash flow by more
than €200 million are included as well.

Legal and Regulatory Risks
The political, legal, and regulatory environment in which the
E.ON Group does business is a source of risks, such as the
continued uncertainty that Brexit poses for the collaboration
between certain E.ON business units. This could confront E.ON
with direct and indirect consequences that could lead to possible
financial disadvantages. New risks—but also opportunities—arise
from energy-policy decisions at the European and national level.
Foremost among them are the European Commission’s Green
Deal presented at the end of 2019 and the German federal
government’s decision to phase out conventional, hard-coal- and
lignite-fired power generation (the planned Coal Phaseout Law).
The achievement of these objectives will require legal and regu-
latory implementation measures that themselves would pose new
risks for certain E.ON Group business operations.

In the wake of the economic and financial crisis in many EU mem-
ber states, interventionist policies and regulations have been
adopted in recent years, such as additional taxes and additional
reporting requirements (for example, EMIR, MAR, REMIT,
MiFID2). The relevant agencies monitor compliance with these
regulations closely. This leads to attendant risks for E.ON’s
operations. The same applies to price moratoriums, regulated
price reductions, and changes to support schemes for renewables,
which could pose risks to, as well as create opportunities for,
E.ON’s operations in the respective countries.

There may also be final risks from obligations arising from regu-
latory requirements following the Uniper split. This risk category
also includes major risks arising from possible litigation, fines,
and claims, governance- and compliance-related issues as well
as risks and chances related to contracts and permits. Changes
to this environment can lead to considerable uncertainty with
regard to planning and, under certain circumstances, to impair-
ment charges but can also create chances. This results in a major
risk position and a medium chance position.

Risk and Chances Report

Operational and IT Risks
The operational and strategic management of the E.ON Group
relies heavily on complex information technology. This includes
risks and chances arising from information security.

Technologically complex production facilities are used in the
production and distribution of energy, resulting in major risks
from procurement and logistics, construction, operations and
maintenance of assets as well as general project risks. In the case
of PreussenElektra, this also includes dismantling activities.
Our operations in and outside Germany face major risks of a
power failure, power-plant shutdown, and higher costs and
additional investments resulting from unanticipated operational
disruption or other problems. Operational failures or extended
production stoppages of facilities or components of facilities as
well as environmental damage could negatively impact our
earnings, affect our cost situation, and/or result in the imposition
of fines. In unlikely cases, this could lead to a high risk. Overall,
it results in a medium risk position and a low chance position in
this category. General project risks can include a delay in projects
and increased capital requirements.

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 increases in
our costs.

HSE, HR, and Other Risks
Health and occupational safety are important aspects of our
day-to-day business. Our operating activities can therefore pose
risks in these areas and create social and environmental risks
and chances. In addition, our operating business potentially
faces risks resulting from human error and employee turnover.
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. E.ON
actively considers environmental, social, and corporate-gover-
nance issues. These efforts support our business decisions and
our public relations. Our objective is to minimize our reputational
risks and garner public support so that we can continue to
operate our business successfully. These matters do not result
in a major risk or chance position.

In the past, predecessor entities of E.ON SE conducted mining
operations, resulting in obligations in North Rhine-Westphalia
and Bavaria. E.ON SE can be held responsible for damage. This
could lead to major individual risks that we currently only evalu-
ate qualitatively.

Market Risk
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 marketplace
along with more aggressive tactics by existing market partici-
pants and reputational risks have created a keener competitive
environment for our electricity business in and outside Ger-
many, which could reduce our margins. However, market devel-
opments could also have a positive impact on our business.
Such factors include wholesale and retail price developments,
customer churn rates, and temporary volume effects in the net-
work business. This results in a major risk position and a
medium chance position in this category.

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. We expect seasonal and weather-
related fluctuations in sales and results of operations to con-
tinue. Periods of exceptionally cold weather—very low average
temperatures or extreme daily lows—in the fall and winter
months can have a positive impact owing to higher demand for
electricity and natural gas.

E.ON’s portfolio of physical assets, long-term contracts, and
end-customer sales is exposed to uncertainty resulting from
fluctuations in commodity prices. After the Uniper spinoff, E.ON
established its own procurement organization for its sales busi-
ness and ensured market access for the output of its remaining
energy production in order to manage the remaining commodity
risks accordingly.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

effects when assets/liabilities and income/expenses of E.ON
companies outside the euro zone are translated into euros and
entered into our Consolidated Financial Statements. Positive
developments in foreign-currency rates can also create chances
for our operating business.

E.ON faces earnings risks from financial liabilities and interest-
rate derivatives that are based on variable interest rates and
from asset-retirement obligations.

In addition, the price changes and other uncertainty relating to
the current and non-current investments E.ON makes to cover
its non-current obligations (particularly pension and asset-
retirement obligations) could, in individual cases, be major.

Declining or rising discount rates could lead to increased or
reduced provisions for pensions and asset-retirement obliga-
tions, including non-current liabilities. This can create a high
risk for E.ON.

In principle, E.ON could also encounter tax risks and chances;
in one case, the chance could be high.

This category’s overall risk and chance position is not major.

Management Board’s Evaluation of the Risk
and Chances Situation

The overall risk and chances situation of the E.ON Group’s oper-
ating business at year-end 2019 remained nearly unchanged
relative to year-end 2018. Although the average annual risk for
the E.ON Group’s adjusted EBIT is classified as major and despite
the expansion of its risk and chance position through the innogy
transaction, from today’s perspective we do not perceive any
risk profile that could threaten the existence of the E.ON Group
or individual segments.

Strategic Risks
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 busi-
ness. 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 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. It
is also possible that we will not be able to realize our strategic
ambition of enlarging our investment pipeline and that signifi-
cant amounts of capital could be used for other opportunities.
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 dispos-
als not taking place or being delayed and the risk that E.ON
receives lower-than-anticipated disposal proceeds. In addition,
after transactions close we could face major liability risks
resulting from contractual obligations.

The overall risk and chance position in this category was not
major at the balance-sheet date.

Finance and Treasury 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 owed on existing accounts receivable, and
from replacement risks in open transactions. For example, E.ON’s
historical connection with Uniper continues to pose a major, albeit
unlikely, risk. In addition, in unlikely cases joint and several lia-
bility for jointly operated power plants could lead to a major risk.

E.ON’s international business operations expose it to risks from
currency fluctuation. One form of this risk is transaction risk,
which arises when payments are made in a currency other than
E.ON’s functional currency. Another form of risk is translation
risk, which arises when currency fluctuations lead to accounting

Business Segments

Energy Networks

Below we report on a number of important non-financial key
performance indicators for this segment, such as power and
gas passthrough, system length, and number of connections.

Energy Passthrough

Billion kWh

Fourth quarter

Power

Line loss, station use, etc.

Gas

Full year

Power

Line loss, station use, etc.

Gas

Germany

Sweden

East-Central Europe/
Turkey

2019

2018

2019

2018

2019

2018

2019

26.9

1.0

28.1

27.8

1.1

26.7

104.1

106.9

3.8

89.6

3.8

89.4

9.8

0.3

–

35.5

1.1

–

10.1

0.3

–

37.1

1.1

1.5

9.9

0.7

14.1

38.5

2.6

44.2

10.0

0.6

15.7

37.9

2.6

44.5

46.6

2.0

42.2

178.1

7.5

133.8

Total

2018

47.9

2.0

42.4

181.9

7.5

135.4

Power and Gas Passthrough
In 2019 power and gas passthrough of the segment as a whole,
in Germany, and in East-Central Europe/Turkey was at the prior-
year level.

Power passthrough in Sweden was slightly below the prior-year
level owing to weather factors. There was no gas passthrough
because of the sale of the gas distribution network in April 2018.

System Length and Connections
E.ON’s power system in Germany was about 351,000 kilometers
long, roughly the same as in 2018. As in the prior year, at year-
end it had about 5.8 million connection points for power. E.ON’s
gas system was around 52,000 kilometers long and had
0.7 million connection points, essentially unchanged from 2018.

The length of E.ON’s power system in Sweden was roughly
138,000 kilometers (prior year: 137,900 kilometers). The num-
ber of connection points in the power distribution system was
unchanged at 1 million. The gas distribution network was sold
in 2018.

System length in East-Central Europe/Turkey—about 232,000
kilometers for power and about 46,000 kilometers for gas—
was almost unchanged from the prior year, as were the roughly
4.8 million connection points for power and the roughly
1.3 million for gas.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

Sales and Adjusted EBIT
Energy Networks’ 2019 sales were €101 million above the prior-
year figure. Adjusted EBIT rose by €44 million.

Sales in Germany of €6.3 billion were at the prior-year level.
Adjusted EBIT increased by €26 million to €921 million, primarily
because of the expansion of the regulated asset base. By con-
trast, the non-recurrence of positive one-off items recorded in
the prior year and a reduction in the allowed return on equity
coinciding with the beginning of the third regulatory period for
power led to a reduction in adjusted EBIT.

Sales in Sweden of €1 billion were slightly above the prior-year
level. Higher power network fees led to an increase in sales,
whereas the sale of the gas distribution business led to a decline.

Currency-translation effects constituted another adverse factor.
Adjusted EBIT was higher, in particular because of an improved
gross margin in the power business. This was partially offset by
a number of factors, including the aforementioned sale of the gas
distribution business and adverse currency-translation effects.

Sales in East-Central Europe/Turkey were at the prior-year level.
Adjusted EBIT declined by 5 percent year on year to €428 million.
The reasons include a narrower gross margin in the gas business
and higher costs in Romania. An example of the latter is the sales
tax instituted in 2019, which is ultimately refunded through
network fees but only after a delay.

Energy Networks

€ in millions

Fourth quarter

Sales

Adjusted EBITDA

Adjusted EBIT

Full year

Sales

Adjusted EBITDA

Adjusted EBIT

Germany

Sweden

East-Central Europe/
Turkey

2019

2018

2019

2018

2019

2018

2019

Total

2018

1,617

1,683

414

228

6,263

1,565

921

306

140

6,243

1,488

895

276

183

145

1,024

692

539

260

172

135

989

648

498

421

153

412

154

1,583

1,537

667

428

683

451

2,314

2,355

750

463

8,870

2,924

1,888

632

372

8,769

2,819

1,844

Business Segments

Customer Solutions

Below we report on a number of important non-financial key
performance indicators for this segment, such as power and
gas sales volume and customer numbers.

Power Sales1

Billion kWh

Fourth quarter

Residential and SME

I&C

Sales partners

Customer groups

Wholesale market

Total

Full year

Residential and SME

I&C

Sales partners

Customer groups

Wholesale market

Total

Germany Sales

United Kingdom

2019

2018

2019

2018

2019

4.2

3.8

–

8.0

3.0

4.3

2.5

–

6.8

3.5

11.0

10.3

15.0

13.8

–

28.8

12.2

41.0

14.9

10.2

–

25.1

13.0

38.1

4.2

3.1

–

7.3

0.2

7.5

15.5

12.0

–

27.5

0.9

28.4

4.7

3.1

–

7.8

0.2

8.0

17.7

13.7

–

31.4

0.9

32.3

6.1

6.7

0.2

13.0

2.1

15.1

22.9

26.4

0.7

50.0

9.2

59.2

1We harmonized E.ON and innogy’s definitions of customer groups and adjusted the prior-year figures accordingly. Does not include innogy’s power sales.
2Excludes E.ON Business Solutions.

Gas Sales1

Billion kWh

Fourth quarter

Residential and SME

I&C

Sales partners

Customer groups

Wholesale market

Total

Full year

Residential and SME

I&C

Sales partners

Customer groups

Wholesale market

Total

Germany Sales

United Kingdom

2019

2018

2019

2018

2019

6.2

4.2

–

10.4

4.8

15.2

18.2

13.5

–

31.7

11.7

43.4

5.9

3.5

–

9.4

1.2

10.6

17.3

11.1

–

28.4

4.6

33.0

10.9

2.9

–

13.8

–

13.8

31.8

9.0

–

40.8

–

40.8

11.7

2.3

–

14.0

–

14.0

35.9

8.2

–

44.1

–

44.1

9.1

5.6

0.6

15.3

2.2

17.5

27.6

21.9

1.6

51.1

5.0

56.1

1We harmonized E.ON and innogy’s definitions of customer groups and adjusted the prior-year figures accordingly. Does not include innogy’s gas sales.
2Excludes E.ON Business Solutions.

Other 2

2018

6.0

6.3

0.2

12.5

2.6

15.1

22.5

25.6

0.7

48.8

8.9

57.7

Other 2

2018

9.9

6.3

0.7

16.9

1.6

18.5

28.2

22.3

1.7

52.2

5.8

58.0

2019

14.5

13.6

0.2

28.3

5.3

33.6

53.4

52.2

0.7

106.3

22.3

128.6

2019

26.2

12.7

0.6

39.5

7.0

46.5

77.6

44.4

1.6

123.6

16.7

140.3

Total

2018

15.0

11.9

0.2

27.1

6.3

33.4

55.1

49.5

0.7

105.3

22.8

128.1

Total

2018

27.5

12.1

0.7

40.3

2.8

43.1

81.4

41.6

1.7

124.7

10.4

135.1

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

Power and Gas Sales Volume
This segment’s power and gas sales rose by 0.5 billion kWh
and 5.2 billion kWh, respectively.

E.ON’s sales business in Germany increased its power sales by
8 percent to 41 billion kWh. Power sales to residential and small
and medium enterprise (“SME”) customers were at the prior-
year level, whereas power sales to industrial and commercial
(“I&C”) customers were significantly higher thanks to successful
customer acquisition. Power sales to the wholesale market
declined owing to lower sales volume on already-contracted
deliveries to some Uniper wholesale customers relative to 2018.
Gas sales of 43.4 billion kWh were significantly (32 percent)
above the prior-year level. This is partially attributable to the
acquisition of new residential, SME, and I&C customers. The
optimization of our procurement portfolio led to a significant
increase in gas sales to the wholesale market.

Power sales in the United Kingdom declined by 3.9 billion kWh.
Lower consumption and a decline in customer numbers were
the principal negative factors for residential and SME custom-
ers. Power sales to I&C customers declined owing likewise to
lower average offtake per customer. Gas sales decreased by
3.3 billion kWh. The decline in gas sales to residential and SME
customers resulted mainly from weather factors. This was par-
tially offset by a slight increase in gas sales to I&C customers due
to a somewhat larger customer base.

Power sales at the Other unit (Sweden, Hungary, the Czech
Republic, Romania, and Italy) were at the prior-year level for the
unit as a whole, for each customer group, and for the wholesale
market. Higher demand from I&C customers in the Czech
Republic and Italy was the primary factor behind the increase in
power sales. This was partially offset by the loss of customers

in Sweden. The optimization of our procurement portfolio in the
Czech Republic led to a significant increase in power sales to
the wholesale market. This was offset, in part, by a decline in
Sweden. Other’s gas sales were at the prior-year level for the
unit as a whole and for each customer group. A reduction in gas
sales to I&C customers resulting from the sale of an equity
interest in the second quarter of 2019 in Sweden and the loss
of customers in Romania was partially offset by successful
customer acquisition in Hungary. Gas sales to the wholesale
market declined owing in part to a reduction in demand spikes
in Romania relative to the prior year.

Customer Numbers
This segment had about 20.9 million customers at year-end
2019, fewer than the prior-year figure of 21 million. The number
of customers in the United Kingdom declined from 6.6 to
6.1 million, with losses among power as well as gas customers.
In Germany the customer base increased from 6 million in 2018
to around 6.2 million in 2019; of these, 5.2 million were power
customers and 0.9 million gas customers (prior year: 5.1 million
power customers, 0.9 million gas customers). This segment had
a total of 8.6 million customers in the other countries where it
operates (prior year: 8.5 million).

See page 54 for the innogy segment’s customer numbers.

Sales and Adjusted EBIT
Customer Solutions’ 2019 sales rose by €1,292 million. Its
adjusted EBIT decreased by €100 million.

Sales in Germany rose primarily because of higher power and
gas sales volume. As forecast during the year, adjusted EBIT
was at the prior-year level.

Business Segments

Customer Solutions

€ in millions

Fourth quarter

Sales

Adjusted EBITDA

Adjusted EBIT

Full year

Sales

Adjusted EBITDA

Adjusted EBIT

Germany Sales

United Kingdom

2019

2018

2019

2018

2019

Other

2018

2019

Total

2018

2,038

1,888

2,307

2,286

2,246

2,112

6,591

6,286

-3

-40

-1

124

199

134

7,313

6,798

7,683

7,633

8,283

7,556

23,279

21,987

198

159

193

160

133

237

142

353

143

294

111

684

313

724

413

Sales in the United Kingdom were at the prior-year level.
Adjusted EBIT was significantly lower, primarily because of the
regulatory price cap that took effect in 2019 and a decline in
customer numbers.

Other’s sales rose by €727 million, primarily because of higher
sales prices and higher sales volume in Italy, the Czech Republic,
and Hungary. Adjusted EBIT increased significantly year on year,
in part because of an improved gas margin in Romania and
higher sales volume in Italy.

innogy

This segment consists in particular of the network and sales
businesses as well as the corporate functions and internal ser-
vices of the innogy Group, which E.ON took over in September
2019. The businesses still to be transferred to RWE are not
included here (see page 14).

The network business encompasses the distribution of power
and gas in Germany, gas distribution in Croatia, and power dis-
tribution in Poland and Hungary. The power and gas distribution
business in Germany also includes the operations of innogy’s
fully consolidated regional utilities (including network opera-
tions, power generation, water) but not their sales operations,
which are reported separately; minority stakes (such as in
municipal utilities in Germany); and activities related to broad-
band expansion.

The sales business encompasses energy retail activities, which,
in addition to the sale of power and gas, include the provision of
innovative, needs-oriented energy solutions. The innogy Group
operates principally in Germany, the United Kingdom, the Nether-
lands, Belgium, and Eastern Europe. innogy supplies a total of
14.4 million customers with power and 4.7 million with gas.

Sales and Adjusted EBIT
The innogy segment’s sales totaled €10,444 million from Sep-
tember 18 to December 31, 2019, and resulted primarily from the
sale of power and gas and from the power and gas distribution
networks business.

The innogy segment recorded adjusted EBIT of €421 million from
September 18 to December 31, 2019. The network business,
primarily in Germany, was the principal source of earnings.

innogy

€ in millions

Fourth quarter

Sales

Adjusted EBITDA

Adjusted EBIT

Full year

Sales

Adjusted EBITDA

Adjusted EBIT

2019

9,528

711

417

10,444

756

421

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

Renewables

Non-Core Business

The Renewables segment significantly reflects the transfer of
substantially all of its operations effective September 18, 2019,
as part of the transaction with RWE.

Below we report on a number of important non-financial key
performance indicators for this segment, such as generating
capacity, power generation, and power sales volume.

At year-end 2019 this segment had no material fully consolidated
generating capacity or attributable generating capacity to report.
Its fully consolidated generating capacity was 5,334 MW at
year-end 2018; its attributable generating capacity, 5,742 MW.

This segment’s material power generation and power sales
volume are attributable to the operations transferred effective
September 18, 2019. Power sales volume from January 1 to
the time of the transfer amounted to 13.2 billion kWh (prior year:
17.7 billion kWh). Owned generation totaled 10.9 billion kWh
(prior year: 14.7 billion kWh). Power procurement amounted to
2.3 billion kWh (prior year: 3 billion kWh).

Sales and Adjusted EBIT
Renewables’ sales and adjusted EBIT declined by €158 million
and €174 million, respectively.

Fully Consolidated and Attributable Generating Capacity
As part of the innogy takeover, E.ON’s stakes in Gundremmingen
and Emsland nuclear power stations were transferred to RWE
(for more information, see Note 4 to the Consolidated Financial
Statements). Consequently, PreussenElektra’s fully consolidated
and attributable generating capacity at year-end 2019 declined
to 3,828 MW (prior year: 4,150 MW) and 3,319 MW (prior year:
3,808 MW), respectively.

Power Generation and Sales Volume
This segment’s power procured (owned generation and purchases)
of 32.5 billion kWh was significantly below the prior-year level.
This is primarily attributable to the departure of Gundremmingen
and Emsland nuclear power stations and the expiration of supply
contracts. In addition, there was less need to purchase power to
meet delivery obligation.

Renewables

€ in millions

Fourth quarter

Sales

Adjusted EBITDA

Adjusted EBIT

Full year

Sales

Adjusted EBITDA

Adjusted EBIT

2019

2018

294

1,596

628

347

541

327

238

1,754

861

521

The reduction in sales and adjusted EBIT resulted from the absence
of operations due to their transfer effective September 18, 2019,
as part of the transaction with RWE.

Power Generation

Billion kWh

Fourth quarter

Owned generation

Purchases

Jointly owned power plants
Third parties

Total power procurement

Station use, line loss, etc.

Power sales

Full year

Owned generation

Purchases

Jointly owned power plants
Third parties

Total power procurement

Station use, line loss, etc.

Power sales

PreussenElektra

2019

2018

7.7

0.2
–
0.2

7.9

–

7.9

30.1

2.5
0.9
1.6

32.6

-0.1

32.5

8.5

2.1
0.4
1.7

10.6

–

10.6

31.2

8.1
1.4
6.7

39.3

-0.1

39.2

Business Segments

By contrast, adjusted EBIT at the generation business in Turkey
improved, principally because its hydroelectric stations consid-
erably increased their output relative to the prior year.

Sales and Adjusted EBIT
PreussenElektra’s sales were €196 million below the prior-year
figure, mainly because of the expiration of supply contracts and
the aforementioned transfer of minority stakes in nuclear power
stations to RWE.

Adjusted EBIT in 2019 of €366 million was slightly below the
prior-year figure of €382 million. PreussenElektra’s adjusted
EBIT declined owing to an increase in depreciation charges and
the transfer of minority stakes in nuclear power stations. These
factors were not offset by higher sales prices.

Non-Core Business

€ in millions

Fourth quarter

Sales

Adjusted EBITDA

Adjusted EBIT

Full year

Sales

Adjusted EBITDA

Adjusted EBIT

PreussenElektra

Generation/Turkey

2019

2018

2019

2018

2019

307

120

1,174

543

292

411

120

1,370

556

399

–

-17

307

124

1,174

617

366

Total

2018

411

143

1,370

539

382

Internal Control System
for the Accounting Process

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

Disclosures Pursuant to Section 289,
Paragraph 4, and Section 315, Paragraph 4 of
the German Commercial Code on the Internal
Control System for the Accounting Process

General Principles

We apply Section 315e, Paragraph 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 IFRS Interpretations
Committee that were adopted by the European Commission for
use in the EU as of the end of the fiscal year and whose appli-
cation was mandatory as of the balance-sheet date (see Note 1
to the Consolidated Financial Statements). Energy Networks
(Germany, Sweden, and East-Central Europe/Turkey), Customer
Solutions (Germany, United Kingdom, Other), innogy, Renewables,
Non- Core Business, and Corporate Functions/Other 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.

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

Accounting Process

All companies included in the Consolidated Financial Statements
must comply with our uniform Accounting and Reporting Guide-
lines 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,
the treatment of financial instruments, and the treatment of
regulatory obligations. We continually analyze amendments
to laws, new or amended accounting standards, and other pro-
nouncements for their relevance to, and consequences for, our
Consolidated Financial Statements and, if necessary, update our
guidelines and systems accordingly.

Corporate headquarters defines and oversees the roles and
responsibilities of various Group entities in the preparation of
E.ON SE’s Financial Statements and the Consolidated Financial
Statements. These roles and responsibilities are described in a
Group Policy document.

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; Cluj, Romania; and Kraków, Poland. E.ON SE combines
the financial statements of subsidiaries belonging to its scope
of consolidation into its Consolidated Financial Statements using
standard consolidation software. Group Accounting is responsible
for conducting the consolidation and for monitoring adherence
to the guidelines for scheduling, processes, and contents. Moni-
toring of system-based automated controls is supplemented by
manual checks.

In conjunction with the year-end closing process, additional
qualitative and quantitative information relevant for accounting
is compiled. Furthermore, 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 prepared with SAP software.
The accounting and preparation processes are divided into
discrete functional steps. Bookkeeping processes are handled
by our Business Service Centers: Cluj has responsibility for pro-
cesses relating to subsidiary ledgers and several bank activities,
Regensburg for those relating to the general ledgers. Automated
or manual controls are integrated into each step. Defined proce-
dures 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 accu-
rate manner. Relevant data from E.ON SE’s Financial Statements
are, if necessary, adjusted to conform with IFRS and then trans-
ferred to the consolidation software system using SAP-supported
transfer technology.

The following explanations about our internal control system
(“ICS”) and our general IT controls apply equally to the Conso-
lidated Financial Statements and to E.ON SE’s Financial State-
ments. Pages 58 to 59 contain information about the innogy
Group’s internal control system, which has not yet been adapted
to E.ON’s internal control system.

Internal Control System

Internal controls are an integral part of our accounting processes.
Guidelines define uniform financial-reporting requirements and
procedures for the entire E.ON Group. These guidelines encom-
pass a definition of the guidelines’ scope of application; a Risk
Catalog (ICS Model); standards for establishing, documenting,

Internal Control System
for the Accounting Process

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 com-
pliance with these rules provides sufficient certainty to prevent
error or fraud from resulting in material misrepresentations in the
Financial Statements, the Combined Group Management Report,
the Half-Year Financial Report, and the Quarterly Statements.

COSO Framework
Our ICS is based on the globally recognized 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 establish-
ment, documentation, and implementation of internal controls.

The Catalog of ICS Principles, which is another key component
of our ICS, defines the minimum requirements for the system
to function. These principles encompass overarching principles
for matters such as authorization, the separation of functions,
and master data management as well as specific requirements
for managing risks in a range of issue areas and processes, such
as contractor management, project management, audit, and
transactions.

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 ICS applies use a central documen-
tation system to document key controls. The system defines the
scope, detailed documentation requirements, 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 processes
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 the testing of the ICS
performed by Internal Audit. These tests are a key part of the
process. Using a risk-oriented audit plan, Internal Audit tests
the E.ON Group’s ICS and identifies potential deficiencies (issues).
On the basis of its own evaluation and the results of tests per-
formed 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 submission
of a formal written declaration called a Sign-Off confirming the
ICS’s effectiveness. The Sign-Off process is conducted at all
levels of the Group before E.ON SE, as the final step, conducts it
for the Group as a whole. The Chairman of the E.ON SE Manage-
ment Board 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 ICS for financial reporting
and any significant issue areas it identifies in the E.ON Group’s
various processes.

General IT Controls

A functionally managed digital organization and third-party
service providers provide digital and IT services for the E.ON
Group. IT systems used for accounting are subject to provisions
of the internal control system, which encompasses the general
IT controls. These include access controls, the separation of
functions, processing controls, measures to prevent the inten-
tional and unintentional falsification of the programs, data,
and documents as well as controls related to contractor manage-
ment. The documentation of the general IT controls is stored
in our documentation system.

innogy’s Internal Control System

The set of rules for the design and monitoring of innogy SE’s ICS
remains in effect without any changes and has so far not been
adapted to E.ON’s ICS. The innogy SE CEO and CFO issued a
formal written declaration (Sign-Off) for the 2019 Consolidated
Financial Statements and their responsibility for, and the effec-
tiveness of, the innogy Group’s ICS.

Disclosures Regarding Takeovers

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

Report on innogy SE’s Accounting-related Internal Control
System
Risks associated with financial reporting reflect the fact that the
innogy Group’s annual, consolidated and interim financial state-
ments may contain misrepresentations that could have a signifi-
cant influence on the decisions made by the reader. The innogy
Group’s accounting-based ICS aims to detect potential sources of
error and limit the resulting risks. This enables innogy to ensure
with sufficient certainty that the Consolidated Financial State-
ments are prepared in compliance with statutory regulations.

Within the scope of external reporting, the members of the
Management Board of innogy SE have signed the responsibility
statement. They thus confirmed that the prescribed accounting
standards have been adhered to and that the figures give a true
and fair view of the net assets, financial position and results
of operations. At its meetings, the Supervisory Board’s Audit
Committee regularly concerned itself with the effectiveness
of the ICS. At the end of February 2020, the Management Board
submitted a report on the appropriateness of the design and
effectiveness of the ICS to innogy SE’s Audit Committee.

The foundations of the ICS are innogy’s basic principles, which
are set out in innogy’s Code of Conduct and include the ambition
to provide complete, objective, correct, intelligible and timely
information, as well as the company’s Group-wide guidelines.
Building on this, the ICS quality standards for the accounting-
related IT systems should ensure that the data are collected
and processed reliably.

The organization of the innogy Group’s accounting did not
change compared to the previous year. Expert management of
the innogy Group’s accounting units and Shared Service Center
in Kraków, in which the transaction-related accounting activities
are pooled, is the responsibility of the Accounting department
of innogy SE; this department is also responsible for preparing
the Consolidated Financial Statements of the innogy Group.

A dedicated unit within Accounting is responsible for designing
and monitoring the ICS of the innogy Group. It implements the
ICS with support from the ICS Committee. The committee works
to ensure that the ICS is implemented according to uniform
principles across the Group and meets high standards for correct-
ness and transparency. It consists of the heads of Accounting &
Reporting, Tax, Controlling & Risk as well as Finance & Credit Risk,
HR, procurement, IT, Tax, Retail Billing, Grid Billing, and Corpo-
rate Responsibility. The Group-wide set of rules for designing
and monitoring the ICS remain in effect without any changes.

In order to verify that the ICS is effective, as a first step, with
respect to the Accounting department, innogy examines whether
the risk situation is presented appropriately and whether suit-
able controls are in place for the identified risks. In a second step,
the effectiveness of the controls is verified. This task has been
entrusted to employees in Accounting and Internal Audit as well
as independent auditing companies, whose work is supported by
the IT system. The officers in charge check whether the agreed
ICS quality standards are complied with for the Finance, HR,
Procurement, IT, Tax, Retail Billing, and, in 2019 for the first time,
Grid Billing functions. The results of the checks are reported to
the Management Board. The CEO and CFO of innogy SE formally
confirm their responsibility for the effectiveness of the innogy
Group’s ICS.

The assessments and audits carried out in 2019 proved that
the ICS was effective yet again in the Accounting, Finance, HR,
Procurement, IT, and Tax functions. However, this merely reduces
the risk of gross misrepresentations in accounting, as such
cannot be eliminated completely.

Last year, the ICS was refined with a focus on accounting and
IT in conjunction with the introduction of the new SAP HANA IT
system.

Disclosures Pursuant to Section 289a,
Paragraph 1, and Section 315a, Paragraph 1,
of the German Commercial Code and Explana-
tory Report

Composition of Share Capital

The share capital totals €2,641,318,800 and consists of
2,641,318,800 registered shares without nominal value. Each
share of stock grants the same rights and one vote at a Share-
holders 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. The employee
stock purchase program was not offered in 2019.

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

Disclosures Regarding Takeovers

Legal Provisions and Rules of the Company’s
Articles of Association Regarding the Appoint-
ment and Dismissal of Management Board
Members and Amendments to the Articles of
Association

Pursuant to the Company’s Articles of Association, the Manage-
ment Board consists of at least two members. The Supervisory
Board decides on the number of members as well as on their
appointment and dismissal.

The Supervisory Board appoints members to the Management
Board for a term not exceeding five years; reappointment is per-
missible. If more than one person is appointed as a member of
the Management Board, the Supervisory Board may appoint
one of the members as Chairperson of the Management Board.
If there is a vacancy on the Management Board for a required
member, the court makes the necessary appointment upon
petition by a concerned party in the event of an urgent matter.
The Supervisory Board may revoke the appointment of a mem-
ber of the Management Board and of the Chairperson of the
Management Board 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 mandatory law or the Articles of
Association 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 manda-
tory 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 Association).
Furthermore, the Supervisory Board is authorized to revise the
wording of Section 3 of the Articles of Association upon utiliza-
tion of authorized or conditional capital.

Management Board’s Power to Issue or Buy
Back Shares

Pursuant to a resolution of the Shareholders Meeting of May 10,
2017, the Company is authorized, until May 9, 2022, to acquire
treasury shares. The shares acquired and other treasury shares
that are in possession of or to be attributed to the Company
pursuant 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 Management Board’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 Takeover Law, for Company
shares

• by the use of derivatives (put or call options or a combination

of both).

These authorizations may be utilized on one or several occasions,
in whole or in partial amounts, in pursuit of one or more objec-
tives by the Company and also by its affiliated companies or by
third parties for the Company’s account or one of its affiliates’
account.

With regard to treasury shares that will be, or have been, acquired
based on the aforementioned authorization and/or prior autho-
rizations by the Shareholders Meeting, the Management Board
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 contributions 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, with or without consideration, for purchase
and transferred to individuals who are or were employed
by the Company or one of its affiliates as well as to board
members of affiliates of the Company

• to be used for the purpose of a scrip dividend where share-

holders may choose to contribute their dividend entitlement
to the Company in the form of a contribution in kind in
exchange for new shares.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

These authorizations may be utilized on one or several occa-
sions, in whole or in partial amounts, separately or collectively,
including with respect to treasury shares acquired by affiliated
companies or companies majority-owned by the Company or
by third parties for their account or the Company’s account.

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

In each case, the Management Board will inform the Share-
holders Meeting about the utilization of the aforementioned
authorization, in particular 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 capital
represented by them, and their equivalent value.

By shareholder resolution adopted at the Annual Shareholders
Meeting of May 10, 2017, the Management Board was autho-
rized, subject to the Supervisory Board’s approval, to increase,
until May 9, 2022, the Company’s share capital 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
(authorized capital pursuant to Sections 202 et seq. of the AktG;
Authorized Capital 2017). Subject to the Supervisory Board’s
approval, the Management Board is authorized to exclude share-
holders’ subscription rights.

With the Supervisory Board’s approval, the Management Board
adopted a resolution that took effect on March 12, 2018, and
that the Management Board concretized on September 18, 2019,
to utilize almost all of Authorized Capital 2017, which had been
resolved by the Annual Shareholders Meeting of May 10, 2017,
to increase E.ON SE’s share capital—excluding shareholders’
subscription rights pursuant to Section 203, Paragraph 2, and
Section 186, Paragraph 3 of the AktG—from €2,201,099,000
to €2,641,318,800 through the issuance of 440,219,800 new
registered no-par-value shares against contributions in kind.
The Executive Committee approved the capital increase on Sep-
tember 18, 2019. The capital increase took effect when it was
entered into the Commercial Register on September 19, 2019.
Note 19 to the Consolidated Financial Statements contains
more information about Authorized Capital 2017.

At the Annual Shareholders Meeting of May 10, 2017, share-
holders approved a conditional increase of the Company’s share
capital (with the option to exclude shareholders’ subscription
rights) up to the amount of €175 million (Conditional Capital
2017). Note 19 to the Consolidated Financial Statements con-
tains more information about Conditional Capital 2017.

Significant Agreements to Which the Company
Is a Party That Take Effect on a Change of Control
of the Company Following a Takeover Bid

The underlying contracts of debt issued since 2007 contain
change-of-control clauses that give the creditor the right of
cancellation. This applies, inter alia, to bonds issued by E.ON SE
and 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 corporate governance and has
become standard market practice. More 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 Management Board Members or Employees
in the Case of a Change-of-Control Event

In the event of a premature loss of a Management Board posi-
tion due to a change-of-control event, the service agreements
of Management Board members entitle them to severance and
settlement payments (see the detailed presentation in the
Compensation Report).

To the extent that the Company has agreed to settlement pay-
ments for Management Board members in the case of a change
of control, the purpose of such agreements is to preserve the
independence of Management Board members.

A change-of-control event would also result in the early payout
of virtual shares under the E.ON Share Matching Plan and the
E.ON Performance Plan.

Other Disclosures Relevant to Takeovers

The Company has been notified about the follwing direct or
indirect interests in its share capital that exceed 10 percent of
the voting rights:

• notification on October 2, 2019, by RWE Aktiengesellschaft

for 15 percent of the voting rights

• notification on October 4, 2019, by The Capital Group
Companies, Inc., for 10.16 percent of the voting rights.

Stock with special rights granting power of control has not
been issued. In the case of stock given by the Company to
employees, employees exercise their rights of control directly
and in accordance with legal provisions and the provisions of
the Articles of Association, just like other shareholders.

Corporate Governance Report

Corporate Governance Declaration in Accor-
dance with Section 289f and Section 315d of
the German Commercial Code

Declaration Made in Accordance with Section 161 of the
German Stock Corporation Act by the Management Board 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 February 7, 2017, published by the
Federal Ministry of Justice and for Consumer Protection 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 February 7, 2017, published
by the Federal Ministry of Justice and for Consumer Protection
in the official section of the Federal Gazette (Bundesanzeiger)
since the last declaration in December 2018 with the exception
of the following two deviations, which have been declared in
the amendment to the compliance declaration in October 2019:

Section 7.1.2 sentence 3:
The consolidated financial statements and the group management
report shall be made publicly accessible within 90 days from the
end of the financial year, while mandatory interim financial infor-
mation shall be made publicly accessible within 45 days from the
end of the reporting period.

The quarterly report for the third quarter 2019 (reporting date
September 30, 2019) was only published on November 29, 2019
and thus not within the recommended period of 45 days after
the end of the reporting period. The reason for this was that due
to the completion of the takeover of innogy SE numerous tasks
were to be carried out within the scope of the initial consolidation.
In spite of all preparations, the necessary work could not be
carried out within the recommended period of 45 days after the
end of the reporting period. The one-time deviation from the
recommendation was necessary to ensure a proper financial
reporting for the third quarter 2019.

Section 4.2.3 para. 2 sentence 8:
Subsequent amendments to the performance targets or
comparison parameters shall be excluded.

The total remuneration of the members of the Board of Manage-
ment also includes variable components, the amount of which
depends on the achievement of certain target figures. The target
figures defined in December 2018 for the financial year 2019
(short-term variable remuneration) respectively in 2016 for a

period covering the financial year 2019 (long-term variable
remuneration) were based primarily on Group key figures which
were significantly affected by the completion of the acquisition
of innogy SE and its inclusion in the scope of consolidation of
E.ON SE. In order to ensure that both the short-term and the
long-term variable remuneration of the Board of Management
continues to be aligned with appropriate, demanding comparative
parameters, the relevant key figures were adjusted retrospectively.

Essen, December 18, 2019

For the Supervisory Board of E.ON SE:
Dr. Karl-Ludwig Kley
(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)

This declaration and those of the previous five years are con-
tinuously 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 foundation
of responsible and value-oriented management, efficient
collaboration between the Management Board and the Super-
visory Board, transparent disclosures, and appropriate risk
management.

In the past financial year, the Management Board and Super-
visory Board paid close attention to E.ON’s compliance with the
German Corporate Governance Code’s recommendations and
suggestions. They determined that E.ON SE fully complies with
all of the Code’s recommendations, with the exception of the
two aforementioned deviations, and also with nearly all of its
suggestions.

Transparent Management
Transparent management is a high priority of the Management
Board and Supervisory Board. Our shareholders, all capital market
participants, financial analysts, shareholder associations, and the
media regularly receive up-to-date information about the situa-
tion of, and any material changes to, the Company. We primarily
use the Internet to provide equal access to comprehensive and
timely information.

E.ON SE issues reports about its situation and earnings by the
following means:

• Half-Year Financial Report and Quarterly Statements
• Annual Report
• Annual press conferences
• Press releases
• Telephone conferences held on release of the quarterly and

annual results

• Numerous events for financial analysts in and outside Germany.

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

The Company issues ad hoc statements about information 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.

Managers’ Transactions
Persons with executive responsibilities, in particular members
of E.ON SE’s Management Board and Supervisory Board, and
persons closely related to them, must disclose specific dealings
in E.ON stock or bonds, related derivates, or other related finan-
cial instruments pursuant to Article 19 of the EU Market Abuse
Regulation in conjunction with Section 26, Paragraph 2, of the
German Securities Trading Act. Such dealings that took place in
2019 have been disclosed on the Internet at www.eon.com.

Compliance
Compliance—lawful, rule-abiding behavior—guides our actions.
The basis for this is the Code of Conduct established by the
Management Board. 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 (anti-corruption), and
the selection of suppliers and service providers. Other matters
addressed include human rights and the handling of company
information, property, and resources. The policies and procedures
of our compliance organization ensure the investigation, evalu-
ation, cessation, and punishment of reported violations by the
appropriate Compliance Officers and the E.ON Group’s Chief Com-
pliance 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.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

Description of the Functioning of the Management Board and
Supervisory Board and of the Composition and Functioning of
Their Committees
Management Board
The E.ON SE Management Board 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.

In 2019 the Management Board consisted of five members. It
had one Chairman. No Management Board member has more
than three supervisory board memberships in listed non-Group
companies or on the supervisory bodies of non-Group companies
that require a similar commitment. Someone who has reached
the general retirement age should not be a member of the Man-
agement Board. The Management Board has in place policies
and procedures for the business it conducts and, in consultation
with the Supervisory Board, has assigned areas of responsibility
to its members.

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

The Chairman of the Management Board informs, without undue
delay, the Chairman of the Supervisory Board of important events
that are of fundamental significance in assessing the Company’s
situation, development, and management 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 Management Board 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 Man-
agement Board. Members of the Management Board may only
assume other corporate positions, particularly appointments
to the supervisory boards of non-Group companies, with the
consent of the Executive Committee of the Supervisory Board.
There were no conflicts of interest involving members of the
E.ON SE Management Board in the year under review. Dr.-Ing.
Leonhard Birnbaum is also a member of the innogy SE Manage-
ment Board. After his appointment as a member of the innogy SE
Management Board on October 10, 2019, Dr.-Ing. Birnbaum no
longer participated in the adoption of resolutions or the other gov-
ernance matters on the E.ON SE Management Board that posed
a potential conflict of interest between E.ON SE and innogy SE.

Corporate Governance Report

Any material transactions between the Company and members
of the Management Board, 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 the reporting period.

that at least three different countries are represented and one
member is selected by a trade union that is represented at E.ON SE
or one of its subsidiaries in Germany. Persons are not eligible as
Supervisory Board members if they:

The Management Board has no board committees but 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, responsibilities, and expertise make them
particularly suited for their committee’s tasks. Among these
committees are the following:

The Management Board has established a Disclosure Committee
and an Ad Hoc Committee for issues relating to financial
disclosures. These committees ensure that such information
is disclosed in a correct and timely fashion.

A Risk Committee ensures the correct application and implemen-
tation of the legal requirements of Section 91 of the German
Stock Corporation Act (known by its German abbreviation, “AktG”).
This committee monitors the E.ON Group’s risk situation and
its risk-bearing capacity and devotes particular attention to
the early identification of developments that could potentially
threaten the Company’s continued existence. In this context,
the Risk Committee also deals with risk-mitigation strategies
(including hedging strategies). In collaboration with relevant
departments, the committee ensures and refines the implemen-
tation of, and compliance with, company policies regarding
commodity risks, credit risks, and enterprise risk management.

Supervisory Board
To ensure that, after the acquisition of the majority of the shares
of innogy SE, innogy’s employees are represented without delay
on the Supervisory Board of E.ON SE as the Group’s parent com-
pany, a resolution was adopted at the 2019 Annual Shareholders
Meeting to enlarge the Supervisory Board to 20 members for a
limited period of time. The enlargement was to be delayed until
the acquisition of the majority of the shares of innogy SE closed,
which has now occurred. Effective the conclusion of the 2023
Annual Shareholders Meeting, the size of the Supervisory Board
will be reduced to 12 members. Pursuant to E.ON SE’s Articles
of Association, the Supervisory Board 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 nomi-
nates candidates for this purpose. As a rule, the Annual Share-
holders Meeting decides on the elections by individual vote.
Pursuant to the agreement regarding employees’ involvement
in E.ON SE, the other currently ten members of the Supervisory
Board are appointed by the SE Works Council, with the provision

• 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
Management Board, or

• were a member of the Company’s Management Board 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.

An upper age limit of 75 years applies to members of the
Supervisory Board.

The members of the E.ON SE Supervisory Board fulfill these
requirements. Pursuant to the AktG, at least one member of the
Supervisory Board must have expertise in preparing or auditing
financial statements. The Supervisory Board believes that, in
particular, Andreas Schmitz meets this requirement. The Super-
visory Board believes that its members in their entirety are
familiar with the sector in which the Company operates.

The Supervisory Board oversees the Company’s management
and advises the Management Board on an ongoing basis. The
Management Board requires the Supervisory Board’s prior
approval for significant transactions and measures, such as the
Group’s investment, finance, and personnel plans; the acquisition
or sale of companies, equity interests, or parts of companies
whose fair value or, in the absence of a fair value, whose book
value exceeds €300 million; financing measures that exceed
€1 billion and have not been covered by Supervisory Board
resolutions regarding finance plans; and the conclusion, amend-
ment, or termination of affiliation agreements. The Supervisory
Board examines the Financial Statements of E.ON SE, the Man-
agement Report, and the proposal for profit appropriation and,
on the basis of the Audit and Risk Committee’s preliminary
review, the Consolidated Financial Statements and the Separate
Combined Non-Financial Report. The Supervisory Board provides
to the Annual Shareholders Meeting a written report on the
results of this examination.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

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

Kley, Dr. Karl-Ludwig

Clementi, Erich

Dybeck Happe, Carolina

Fröhlich, Klaus

Grillo, Ulrich3

Schmitz, Andreas

Schmitz, Dr. Rolf Martin3

Segundo, Dr. Karen de

Wilkens, Deborah3

Woste, Ewald

Scheidt, Andreas

Broutta, Clive

Krebber, Monika2

Luha, Eugen-Gheorghe

May, Stefan2

Pinczésné Márton, Szilvia

Pöhls, René2

Schulz, Fred

Wallbaum, Elisabeth

Zettl, Albert

1Until October 2, 2019: Investment and Innovation Committee.
2Member since September 24, 2019.
3Member since October 1, 2019.
4Committee member since March 12, 2019.
5Committee member since October 2, 2019.
5Committee member until October 2, 2019.
7Once as a guest.

5/6

6/6

2/2

6/6

2/2

5/6

2/2

6/6

2/2

6/6

2/2

6/6

2/2

6/6

8/8

–

1/15

6/64, 6

–

8/8

–

8/8

–

7/74

–

4/4

–

4/4

–

1/15

–

1/15

4/4

–

Innovation and
Sustainablility
Committee1

–

1/1 (guest)

–

5/5

–

5/5

–

5/5

–

5/5

–

5/5

1/15, 7

–

3/46, 7

Nomination
Committee

0/0

–

0/0

–

The Supervisory Board has established rules and procedures
for itself, which are available on the Company’s Internet page.
It holds at least four regular meetings in each financial year. Its
rules 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 at the request of a Management Board
member. Shareholder representatives and employee represen-
tatives can prepare for Supervisory Board meetings separately.
In the event of a tie vote on the Supervisory Board, the Chairman
has the tie-breaking vote.

Furthermore, the Supervisory Board’s rules and procedures
gave it the option, if necessary, of holding executive sessions;
that is, to meet without the Management Board.

In view of Item 5.4.1 of the German Corporate Governance Code,
dated February 7, 2017, and Section 289f, Paragraph 2, Item 6,
of the German Commercial Code, the Supervisory Board defined
targets for its composition, including a diversity concept and a
competency profile, that go beyond the applicable legal require-
ments. They are as follows:

“The composition of the Supervisory Board of E.ON SE shall
comply with the specific SE requirements and Germany’s Stock
Corporation Act, and with the recommendations of the German
Corporate Governance Code.

a) In this context, the following general objectives shall be observed:

• The Supervisory Board shall include a reasonable number of
independent members. Members shall be deemed to be inde-
pendent if they have no personal or business relationship with
the Company, its corporate bodies, a major shareholder or any
company affiliated with the latter, where such relationship
may give rise to a material and not merely temporary conflict
of interests. If the total number of Supervisory Board members
is 20, a reasonable number of independent members will be 14.
In this context, employee representatives will always be
regarded as independent members.

• The Supervisory Board shall not include more than two former

members of the Board of Management.

Corporate Governance Report

• Members of the Supervisory Board must not have seats on the
boards of, or act as consultants for, any of the Company’s
major competitors.

• At least two members shall be familiar, in particular, with
innovation, disruption and digitization and the associated
new business models and cultural change.

• Supervisory Board membership shall usually be limited to no

more than three full terms of office (15 years).

• All Supervisory Board members must have sufficient time

available to perform their duties on the boards of various com-
panies. Persons who are members of the board of manage-
ment of a listed company shall only be eligible as members of
E.ON’s Supervisory Board if they do not have seats on a total
of more than two supervisory boards of listed non-Group com-
panies or of comparable supervisory bodies.

b) In addition, the Supervisory Board has adopted the following
diversity concept so as to ensure a balanced structure of the
Supervisory Board in terms of age, gender, personality, educatio-
nal background and professional experience.

•

In the search for qualified Supervisory Board members, due
consideration shall be given to diversity. When preparing nom-
inations for the election of Supervisory Board members, due
consideration shall be given in each case to the question as to
whether complementary academic profiles, professional and
life experience, a balanced age mix, various personalities and
a reasonable gender balance benefit the Supervisory Board’s
work. In this context, care shall be taken to ensure that a gen-
der quota of 30 percent will be achieved; this shall apply to the
Supervisory Board as a whole and to the shareholders’ and
employees’ representatives separately.

• An upper age limit of 75 years shall apply to members of the

Supervisory Board; candidates shall not be older than 72 years
when they are elected.

• Four Supervisory Board members shall have international

experience, i.e. they shall have spent, for instance, many years
of their professional career outside Germany.

c) In addition, the following skills profile shall apply; especially
the Nominations Committee will strive to apply the skills profile
when preparing nominations of candidates for the shareholders’
representatives to be proposed to the Annual General Meeting.

• The shareholders’ representatives should have leadership

experience in companies or other large organizations by the
majority. At least four members shall have experience, as
management or supervisory board members, in the strategic
management or supervision of listed organizations and shall
be familiar with the functioning of capital and financial markets.

• At least four members shall have specific expertise in the
businesses and markets that are particularly relevant for
E.ON. This includes in particular the energy sector, the sales
and retail business, regulated industries, new technology as
well as relevant customer sectors.

• At least two independent representatives of the shareholders
shall have expertise in the fields of accounting, risk manage-
ment and auditing of financial statements.

• At least two members shall be familiar with legal and compli-
ance, HR, IT and sustainability, more specially in the dimensions
of environmental protection, social, and governance (“ESG”).”

Current Composition of the Supervisory Board
a) The Supervisory Board believes that all of its members are
independent. No former Management Board member sits on
the Supervisory Board. Furthermore, no member has a seat on
the boards of, or acts as a consultant for, any of the Company’s
major competitors or has been on the Supervisory Board for
more than three terms of office (15 years). The Supervisory
Board believes that in the case of no Supervisory Board member
is there specific indications of relevant situations or relationships
that could give rise to a conflict of interests. Only two manage-
ment board members of a listed company, Klaus Fröhlich, a
member of the Board of Management of Bayerische Motoren
Werke Aktiengesellschaft, and Rolf Martin Schmitz, Chairman
of the Board of Management of RWE Aktiengesellschaft, sit on
the Supervisory Board.

b) In its current composition the Supervisory Board meets the
objectives of its diversity concept. The Supervisory Board’s
composition of women and men complies with the legal require-
ments for minimum percentages; separate compliance with
the statutory gender quota occurred from the 2018 Annual
Shareholders Meeting. The age range of the Supervisory Board
is currently 44 to 73 years. At least four members have inter-
national experience.

c) In their entirety, the members bring a wide range of specific
knowledge to committee work and have special expertise in
one or more businesses and markets relevant to the Company.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

Current CVs of Supervisory Board members are published on
the Company’s Internet page.

To ensure that, after the acquisition of the majority of the shares
of innogy SE, innogy’s employees are represented without delay
on the Supervisory Board of E.ON SE as the Group’s parent com-
pany, a resolution was adopted at the 2019 Annual Shareholders
Meeting to enlarge the Supervisory Board to 20 members for a
limited period of time. The enlargement was to be delayed until
the acquisition of the majority of the shares of innogy SE closed,
which has now occurred. Effective the conclusion of the 2023
Annual Shareholders Meeting, the size of the Supervisory Board
will be reduced to 12 members. In view of continually changing
business requirements, the Supervisory Board will continue to
identify necessary competencies early to ensure that it has them.

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

The Executive Committee consists of six members: the Super-
visory Board Chairman, his two Deputies, another member
elected at the recommendation of employee representatives,
and two more members elected at the recommendation of
shareholder representatives. It prepares the meetings of the
Supervisory Board and advises the Management Board 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 materially prejudice
the Company), the Executive Committee acts on the full Super-
visory 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 com-
pensation of individual Management Board members within
the meaning of Section 87, AktG. Furthermore, it is responsible
for the conclusion, alteration, and termination of the service
agreements of Management Board members and for presenting
the Supervisory Board with a proposal for a resolution on the
Management Board’s compensation plan and its periodic review.
In addition, it prepares the Supervisory Board’s decision on the
Group’s investment, financial, and personnel plan for the next
financial year. 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 Executive Committee advises
the Management Board on all issues of Group financing and
investment planning. It decides on behalf of the Supervisory
Board on the approval of the acquisition and disposition of com-
panies, equity interests, and parts of companies whose value
exceeds €300 million but does not exceed €600 million. Further-
more, the Management Board must present to the Executive
Committee investments if, in the case of a fixed-asset investment

of more than €300 million, the Management Board is convinced
that the approved investment amount will be surpassed by
more than 10 percent or if the Management Board perceives
that the investment is no longer economic; that is, that it will
no longer achieve its cost of capital. Additionally, the Executive
Committee decides on behalf of the Supervisory Board on the
approval of financing measures whose value exceeds €1 billion
but not €2.5 billion if such measures are not covered by the
Supervisory Board’s resolutions regarding finance plans. If the
value of any such transactions or measures exceeds the afore-
mentioned thresholds, the committee prepares the Supervisory
Board’s decision.

The Audit and Risk Committee consists of six members. The
Supervisory Board believes that, in their entirety, the members
of the Audit and Risk Committee are familiar with the sector in
which the Company operates. According to the AktG, the Audit
and Risk Committee must include one Supervisory Board mem-
ber who has expertise in accounting or auditing. The Supervisory
Board believes that in particular Andreas Schmitz fulfills this
requirement. Pursuant to the recommendations of the German
Corporate Governance Code, dated February 7, 2017, the
Chairman of the Audit and Risk Committee should have special
knowledge and experience in the application of accounting
principles and internal control processes. In addition, this person
should be independent and should not be a former Management
Board member whose service on the Management Board ended
less than two years ago. The Supervisory Board believes that the
Chairman of the Audit and Risk Committee, Andreas Schmitz,
fulfills these requirements. In particular, the Audit and Risk Com-
mittee deals with accounting issues (including the accounting
process), risk management, compliance, the necessary inde-
pendence of the independent auditor, the issuance of the audit
mandate to the independent auditor, the definition of the audit
priorities, the agreement regarding the independent auditor’s
fees, and any additional services performed by the independent
auditor. The committee’s monitoring of risk management
encompasses reviewing the effectiveness of the internal control
system, internal risk management, and the internal audit system.
The 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 is responsible for the
preliminary review of the Financial Statements of E.ON SE, the
Management Report, the Consolidated Financial Statements,
the Combined Group Management Report and the proposal
for profit appropriation as well as—if these are not already part
of the (Combined Group) Management Report—the Separate
Non-Financial Report and the Separate Combined Non-Financial
Report. It discusses the half-yearly reports and quarterly state-
ments or financial reports with the Management Board prior
to their publication. The effectiveness of the internal control

Corporate Governance Report

mechanisms for the accounting process used at E.ON SE and the
Group’s units is tested on a regular basis by the Internal Audit
division; the Audit and Risk Committee regularly monitors the
work done by the Internal Audit division and the definition of
audit priorities. The Audit and Risk Committee may commission
an external review of the contents of the Non-Financial State-
ment or the Separate Non-Financial Report or the Combined
Non-Financial Statement or the separate Combined Non-Finan-
cial Report. 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 auditor 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:

• promptly inform the Chairman of the Audit and Risk Committee
should any facts arise during the course of the audit that could
lead to the audit firm being excluded for independence rea-
sons or otherwise conflicted, unless such facts are resolved
in a satisfactory manner

• promptly inform the Supervisory Board of anything it

becomes aware of during the course of the audit that is of
relevance to the Supervisory Board’s duties

•

inform the Chairman of the Audit and Risk Committee, or to
note in the audit report, if the audit has led to findings that
contradict the Declaration of Compliance with the German
Corporate Governance Code by the Management Board or
Supervisory Board.

In 2019 the Investment and Innovation Committee was renamed
the Innovation and Sustainability Committee. It consists of six
members. It advises the Management Board on all innovation
issues and growth opportunities. The focus is on opportunities
that could deliver significant growth in sales and profit within
the foreseeable future. These types of opportunities could range
from new business models, markets, products, and services to
innovative solutions that tangibly improve the customer expe-
rience, employees’ daily work, or processes. The Innovation and
Sustainability Committee advices the Management Board on
E.ON’s digital transformation with the aim of making the Com-
pany more automated, leaner, and more data-driven. The com-
mittee also addresses issues relating to E.ON’s HR agenda that
help employees adopt a growth and innovation mentality, such
as engagement, capabilities, work methods of the future, and
cultural change. In addition, the committee advises the Super-
visory Board and the Management Board on environmental,
social, governance (“ESG”), and sustainability issues.

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

All committees meet at regular intervals and when specific
circumstances require it under their rules and procedures. The
Report of the Supervisory Board (on pages 4 to 6) contains
information about the activities of the Supervisory Board and
its committees in the year under review. Pages 240 and 241
of the Annual Report show the composition 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 convening of the
Annual Shareholders Meeting and the reports and documents
required by law for the Annual Shareholders Meeting, including
the Annual Report, are published on the Company’s Internet
page together with the agenda and the explanation of the con-
ditions of participation, shareholders’ rights, and any counter-
motions and election proposals submitted by shareholders. The
Company’s financial calendar, which is published in the Annual
Report, in the quarterly statements or financial reports, and on
the Internet at www.eon.com, regularly informs shareholders
about important Company dates.

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 share-
holder’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 May 14, 2019, Price-
waterhouseCoopers GmbH, Wirtschaftsprüfungsgesellschaft,
was selected to be E.ON SE’s independent auditor for the 2019
financial year and to audit the Condensed Consolidated Interim
Financial Statements and Interim Group Management Report
for the 2019 financial year and the first quarter of 2020. The
independent auditors with signing authority for the Annual
Financial Statements of E.ON SE and the Consolidated Financial
Statements are Markus Dittmann (since the 2014 financial year)
and Aissata Touré (since the 2015 financial year).

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

In cooperation with the Executive Committee and the Manage-
ment Board, the Supervisory Board is in charge of long-term
succession planning for the Management Board. With regard to
the Management Board’s composition, the Supervisory Board of
E.ON SE has developed a diversity concept that is in line with the
recommendations of the German Corporate Governance Code.

Appointment Objectives

• When appointing members of the Management Board, the
candidates’ outstanding professional qualifications, long-
term leadership experience and past performance, as well as
value- driven management shall be of paramount importance.
Members shall be capable of taking forward-looking strate-
gic decisions. In particular, they shall be capable of managing
businesses sustainably and of ensuring that they are consis-
tently focused on customer needs.

• The Management Board as a whole must have expertise and
experience in the energy sector as well as in the fields of
finance and digitization.

• The members of the Management Board shall be leaders and
as such shall act as role models for the employees through
their own performance and conduct.

• Attention shall be paid to diversity when appointing mem-
bers of the Management Board. For the Supervisory Board,
diversity means, in particular, different complementary
academic profiles, professional and personal experience,
personalities, as well as internationality and a reasonable age
and gender structure. The Supervisory Board has therefore
adopted a target quota of 20 percent for the share of women
on the Management Board; this target shall be achieved by
December 31, 2021.

• The appointment period of a member of the Management

Board shall generally end at the end of the month on which the
Management Board member reaches the general retirement
age but by the end of the month of the subsequent Annual
Shareholders Meeting at the latest.

Achievement of Objectives
With the exception of the target quota regarding the share of
women, which is to be achieved by December 31, 2021, the
current composition of the Management Board already meets
the appointment objectives described above.

The EU Regulation on Statutory Audit introduced an obligation
for the statutory auditor and/or firm to be rotated periodically.
Such a rotation is intended for the 2021 financial year. After the
conclusion of the legally mandated multistage review process
and on the basis of the Audit and Risk Committee’s recommen-
dation, the Supervisory Board intends to recommend to the 2020
Annual Shareholders Meeting to appoint Pricewaterhouse-
Coopers GmbH Wirtschaftsprüfungsgesellschaft, Düsseldorf,
to be independent auditor and Group independent auditor for
the 2020 financial year and to audit the Condensed Consolidated
Interim Financial Statements and Interim Group Management
Reports for the 2020 financial year and to appoint KPMG AG
Wirtschaftsprü fungsgesellschaft to be independent auditor and
to audit the Condensed Consolidated Interim Financial State-
ments and Interim Group Management Report for the first quarter
of 2021 and to recommend to the 2021 Annual Shareholders
Meeting to appoint KPMG AG Wirtschaftsprü fungsgesellschaft
to be independent auditor and Group independent auditor and to
audit the Condensed Consolidated Interim Financial Statements
and Interim Group Management Reports for the 2021 financial
year and the first quarter of the 2022 financial year.

Women and Men in Leadership Positions Pursuant to Section 76,
Paragraph 4, and Section 111, Paragraph 5, of the German
Stock Corporation Act
In the year under review, the Management Board consisted ini-
tially of four and subsequently of five men. In December 2016
the Supervisory Board set a new target of 20 percent for the
proportion of women on the Management Board and a deadline
of December 31, 2021, for implementation.

In May 2017 the Management Board set a target of 30 percent
for the proportion of women in the first level of management
below the Management Board and a target of 35 percent for the
second level of management below the Management Board. The
deadline for achieving both targets is June 30, 2022. At year-end
2019, the proportion of women in first and second levels of man-
agement below the Management Board was roughly 31 percent
and roughly 23 percent, respectively.

For all other E.ON Group companies concerned, targets and dead-
lines pursuant to the Law for the Equal Participation of Women
and Men in Leadership Positions in the Private Sector and the
Public Sector were set for the proportion of women on these com-
panies’ supervisory board and management board or team of
managing directors as well as in the next two levels of manage-
ment. The deadline for achieving these targets is June 30, 2022.

Diversity Concept for the Management Board
At its meeting in December 2017 the E.ON SE Supervisory
Board adopted a resolution on the following succession planning/
diversity concept for the Management Board:

Corporate Governance Report

Compensation Report Pursuant to Section 289a,
Paragraph 2, and Section 315a, Paragraph 2, of
the German Commercial Code

This compensation report describes the basic features of the
compensation plans for members of the E.ON SE Management
Board and Supervisory Board and provides information about
the compensation granted and paid in 2019. It applies the pro-
visions 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 Corporate Governance
Code dated February 7, 2017.

Basic Features of the Management Board Compensation Plan
The Management Board compensation plan that took effect on
January 1, 2017, is supposed to create an incentive for success-
ful and sustainable corporate governance and to link the com-
pensation of Management Board members with the Company’s
short-term and long-term performance while also factoring in
their individual performance. The plan’s parameters are there-
fore transparent, performance-based, and aligned with the
Company’s business success; variable compensation is based
predominantly on multi-year metrics. In order to align manage-
ment’s and shareholders’ interests and objectives, long-term
variable compensation is based not only on the development of
E.ON’s stock price in absolute terms but also on a comparison
with competitors. Share ownership guidelines further strengthen
E.ON’s capital-market orientation and shareholder culture.

The Supervisory Board approves the Executive Committee’s
proposal for the Management Board’s compensation plan. It
reviews the plan and the appropriateness of the Management
Board’s total compensation as well as the individual components
on a regular basis and, if necessary, makes adjustments. It con-
siders the provisions of the German Stock Corporation Act and

follows the German Corporate Governance Code’s recommen-
dations and suggestions. In its review of the compensation plan’s
market conformity and the appropriateness of compensation
levels, the Supervisory Board was supported by an external com-
pensation expert.

The compensation plan that took effect on January 1, 2017,
was presented to the 2016 Annual Shareholders Meeting and
approved by a majority of 91.14 percent.

In view of the regulatory changes resulting from the Act on
the Implementation of the Second Shareholder Rights Directive
(“ARUG II”) and the new version of the German Corporate
Governance Code, which took effect at the start of 2020, the
Supervisory Board intends to review the Management Board’s
current compensation plan in the course of next financial year,
make any resulting adjustments, and put a potentially revised
compensation plan up for vote at the 2021 Annual Shareholders
Meeting.

Dr.-Ing. Birnbaum was appointed Chairman of the innogy SE
Management Board effective October 11, 2019, through Septem-
ber 30, 2022. As Chief Operating Officer–Integration, Dr.-Ing.
Birnbaum remains a member of the E.ON SE Management
Board and therefore has dual mandate within the meaning of
Section 88, Paragraph 1, Sentence 2 of the German Stock Corpo-
ration Act (see pages 80 and 81 for details). The compensation
modalities that apply to Dr.-Ing. Birnbaum due to his dual man-
date are explained in detail in the section entitled “Total Compen-
sation in 2019” on page 80.

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

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

Summary Overview of Compensation Components1

Compensation component

Metric/Parameter

Non-performance-based
compensation

Base salary

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

Fringe benefits

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

Performance-based compensation

Annual bonus

• Target bonus at 100 percent target attainment:

– Target bonus for Management Board Chairman: €1,417,500
– Target bonus for Management Board members: €675,000–€825,000

• Cap: 200 percent of target bonus
• Amount of bonus depends on:

– Company performance: actual earnings per share (“EPS”) versus budget
– Individual performance factor: collective performance and individual performance

(up/down or “bonus/malus adjustment”)

• Annual bonus corresponds to 45 percent of performance-based compensation

Possibility of special
compensation

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

Long-term variable compensation:
E.ON Share Matching Plan (granted
until 2016)

• Granting of virtual shares of E.ON stock with a four-year vesting period

– Target value for Management Board Chairman: €1,260,000 (excluding LTI components from annual bonuses)
– Target value for Management Board members: €600,000–€733,333 (excluding LTI components from annual

bonuses)

• 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 ROCE 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

•

Long-term variable compensation:
E.ON Performance Plan
(granted from 2017)

Pension benefits

Final-salary-based benefits2

Contribution-based benefits

Other compensation provisions

Share Ownership Guidelines

• Granting of virtual shares of E.ON stock with a four-year vesting period

•

– Target value for Management Board Chairman: €1,732,500
– Target value for Management Board members: €825,000–€1,008,333
Final number of virtual shares depends on E.ON stock’s TSR relative to the TSR of companies in the STOXX®
Europe 600 Utilities index; ¼ of TSR performance is locked in annually
• Allocation limit; that is, the maximum number of virtual shares: 150 percent
•

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

• Cap: 200 percent of the target value
•

Annual target allocation corresponds to 55 percent of performance-based compensation

• Lifelong pension payment equaling a maximum of 75 percent of fixed compensation from the 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 21 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

• Obligation to buy and hold E.ON stock until the end of service on the Management Board
•

Investment in E.ON stock equaling a percentage of base compensation:
– 200 percent (Management Board Chairperson)
– 150 percent (other Management Board members)
Until the required investment is reached, obligation to invest net payouts from long-term compensation in E.ON stock

•

Settlement cap

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 up to
20 percent

Non-compete clause

Clawback rule

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

The Supervisory Board’s right pursuant to Section 87, Paragraph 2 of the German Stock Corporation Act to reduce
compensation if the Company’s situation deteriorates

1Deviating compensation modalities apply to Dr.-Ing. Birnbaum due to his dual membership. They are described in the section “Total Compensation in 2019.”
2Only applies to Dr. Johannes Teyssen.

Corporate Governance Report

Non-Performance-Based Compensation
No revisions were made to non-performance-based compensa-
tion relative to the previous financial year.

Management Board members receive their fixed compensation
in twelve monthly payments.

Management Board members receive a number of contractual
fringe benefits, including the use of a chauffeur-driven company
car. The Company also provides them with the necessary tele-
communications equipment, covers costs that include those for
a periodic medical examination, and pays the premium for an
accident insurance policy.

Performance-Based Compensation
No revisions were made to performance-based compensation
relative to the previous financial year.

55 percent of performance-based compensation depends on
the achievement of long-term targets, ensuring that the variable
compensation is sustainable under the criteria of Section 87 of
the German Stock Corporation Act.

Annual Bonus
Management Board members’ annual bonus (45 percent of the
performance-based compensation) consists of a cash payment
made after the end of the financial year.

The amount of the annual 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.

Components and Compensation Structure
The compensation of Management Board members consists
of a fixed base salary, an annual bonus, and long-term variable
compensation. The components account for the following per-
centages of total compensation:1

30%
Base salary

31%
Bonus
(annual)

39%
E.ON Performance
Plan (multi-year)

1Not including fringe, other, and pension benefits.

The following graphic provides an overview of the compensation
plan for Management Board members:

Variable compensation
(~ 70%)

E.ON Performance Plan
(LTI)—stock-based

55%

Depends on:
TSR performance
relative to
peer companies

Bonus (STI)

45%

Depends on:
Actual EPS
versus budget
individual
performance

Granting
of virtual
shares (with
performance
requirement)

Paid out after
the conclusion
of the ﬁ nancial
year

Non-performance-
based compensation
(~ 30%)

Base salary

Share Ownership Guidelines

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

The Supervisory Board has no additional discretionary power
in the assessment of the Company’s performance.

Bonus
(target
bonus)

Company Performance
0–200%

• Actual EPS vs. budget:

Target attainment

200%

150%

100%

50%

-37.5% budget

+37.5% EPS

Individual Performance Factor
50–150%

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

• Overall performance of
Management Board

• Individual performance

(bonus/malus adjustment)

Bonus
Cap at 200% of
target bonus

100%
Payout in Cash

The Company’s performance is assessed on the basis of earnings
per share (“EPS”), E.ON’s key performance indicator. EPS used
for this purpose will be derived from adjusted net income as dis-
closed in this report. The EPS target for each year is set by the
Supervisory Board, taking into account the approved budget.
Because the budget is derived from the Company’s corporate
strategy, no specific target figures are disclosed for competitive
reasons. The target is fully achieved if actual EPS is equal to
the target. If actual EPS is 37.5 percentage points or more below
the target, this constitutes zero percent attainment. If actual
EPS is 37.5 percentage points or more above the target, this
constitutes 200 percent attainment. Linear interpolation is used
to translate intermediate EPS figures into percentages.

The Supervisory Board determines the degree to which Man-
agement Board members have attained the targets of their indi-
vidual performance factors, giving adequate consideration to
their individual and collective contributions. The factors range
between 50 and 150 percent. The amount of the bonus can
therefore be adjusted up or down depending on performance
(in the sense of a “bonus/malus adjustment”).

The targets for individual performance factors are set at the
beginning of each financial year and are exclusively strategic in
nature. Here too, therefore, no specific target figures are dis-
closed for competitive reasons. The Supervisory Board may also
factor in, for example, quantitative and qualitative customer
targets as well as performance indicators for the Company’s
core businesses or matters such as health, safety, and environ-
ment and personnel management.

In addition, the Supervisory Board may, as part of the annual
bonus, grant Management Board members special compensation
for outstanding achievements. In assigning Management Board
members their individual performance factors and in granting
special compensation, the Supervisory Board pays attention to
the criteria of Section 87 of the German Stock Corporation Act
and of the German Corporate Governance Code.

As before, the maximum bonus that can be attained (including any
special compensation) is 200 percent of the target bonus (cap).

Corporate Governance Report

Long-Term Variable Compensation
Long-term variable compensation currently consists of tranches
from several financial years granted under two different plans.
First, tranches of the E.ON Performance Plan—Performance
Plan, first tranche (2017–2020), second tranche (2018–2021),
and third tranche (2019–2022)—were granted in 2017, 2018,
and 2019. Second, there are still tranches of the E.ON Share
Matching Plan outstanding. The last tranche of the E.ON Share
Matching Plan—Share Matching Plan, fourth tranche (2016–
2020) and the LTI components of the bonus from 2016 Share
Matching Plan, fifth tranche (2017–2021)—was granted in 2016.

E.ON Performance Plan (Granted from 2017)
Management Board members receive stock-based, long-term
variable compensation under the E.ON Performance Plan, which
replaced the E.ON Share Matching Plan as the Company’s new
long-term compensation plan effective January 1, 2017. Each
tranche of the E.ON Performance Plan has a vesting period
of four years to serve as a long-term incentive for sustainable
business performance. Vesting periods start on January 1.

The Supervisory Board grants virtual shares to each member
of the Management Board in the amount of the contractually
agreed-on target. The conversion into virtual shares is based on
the fair market value on the date when the shares are granted.
The fair market value is determined by applying methods accepted
in financial mathematics, taking into account the expected future
payout, and hence, the volatility and risk associated with the

E.ON Performance Plan. The number of granted virtual shares
may change in the course of the four-year vesting period
depending on the total shareholder return (“TSR”) of E.ON
stock compared with the TSR of the companies in a peer group
(“relative TSR”).

TSR is the yield of E.ON stock. It takes into account the stock
price, including the assumption that dividends are reinvested,
and is adjusted to exclude changes in capital. The peer group
used for relative TSR will be the companies in E.ON’s peer index,
the STOXX® Europe 600 Utilities.

During a tranche’s vesting period, E.ON’s TSR performance is
measured once a year in comparison with the companies in the
peer group and set for that year. E.ON SE’s TSR performance
in a given year determines the final number of one fourth of the
virtual shares granted at the beginning of the vesting period.
For this purpose, the TSRs of all companies are ranked, and
E.ON SE’s relative position is determined based on the percentile
reached. Target attainment is 100 percent if E.ON SE’s TSR is
equal to the median of the peer group. The lower threshold is the
25th percentile; a TSR performance below this threshold would
reduce the number of virtual shares granted by one quarter. If
E.ON’s performance is at or above the 75th percentile (upper
cap) the quarter of virtual shares granted for that particular year
increases to a maximum of 150 percent. Linear interpolation is
used to translate intermediate figures into percentage.

Initial Number
of Granted
Share Units

TSR Performance Relative to
Peer Group
TSR of the E.ON share compared to the companies
of the STOXX® Europe 600 Utilities index (yearly lock-in)

Target achievement

Share Price
+
Dividends

Payout Amount
Cap at 200%
of target value

200%

175%

150%

125%

100%

75%

50%

25%

Percentile
achieved
by E.ON

25th percentile
Lower
threshold

50th percentile
(Median)
Target value

75th percentile
Upper
threshold

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

The resulting number of virtual shares at the end of the vesting
period is multiplied by the average price of E.ON stock in the
final 60 days of the vesting period. This amount is increased by
the dividends distributed on E.ON stock during the vesting
period and then paid out. The sum of the payouts is capped at
200 percent of the contractually agreed-on target.

E.ON Share Matching Plan (Granted until 2016)
Until the introduction of the new compensation plan on January 1,
2017, Management Board members received stock-based com-
pensation under the E.ON Share Matching Plan. At the beginning
of each financial year, the Supervisory Board decided, based on
the Executive 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 Manage-
ment Board. To serve as a long-term incentive for sustainable
business performance, each tranche had a vesting period of four
years. The tranche started on April 1 of each year.

ROCE
4-year
average in %

Stock Price
plus
Dividends

€

Performance
Matching

Base
Matching

1/3: LTI
component

Vesting period: 4 years

Following the Supervisory Board’s decision to allocate a new
tranche, Management Board members initially received vested
virtual shares equivalent to the amount of the LTI component
of their bonus. The determination of the LTI component took into
consideration the overall target attainment of the old compen-
sation plan’s bonus for the preceding financial year. The number
of virtual shares was calculated on the basis of the amount of
the LTI component and E.ON’s average stock price during the
first 60 days prior to the four-year vesting period. Furthermore,
Management Board members could receive, on the basis of
annual Supervisory Board decisions, a base matching of additional
non-vested virtual shares in addition to the virtual shares that
resulted from their LTI component. In addition, Management

Board members could, depending on the company’s performance
during the vesting period, receive performance matching of up
to two additional non-vested virtual shares per share that resulted
from base matching.

The arithmetical total target value allocated at the start of the
vesting period, which began on April 1 of the year in which a
tranche was allocated, was therefore the sum of the value of the
LTI component, base matching, and performance matching
(depending on the degree of attainment of a predefined company
performance target).

For the purpose of performance matching, the company perfor-
mance metric for tranches granted from 2013 to 2015 was ini-
tially E.ON’s average ROACE during the four-year vesting period
compared with a target rate of return set in advance by the
Supervisory Board for the entire period at the time it allocated
a new tranche. Pursuant to a Supervisory Board resolution,
from the 2016 financial year onward these performance targets
were based on ROCE. In view of the Uniper spinoff, this adjust-
ment was necessary because the ROACE targets were based
on old planning figures that did not foresee the Uniper spinoff.
Furthermore, from the start of 2016, the Company no longer
used ROACE as a key performance indicator and it was therefore
no longer available. In addition, the anticipated reduction in
E.ON’s stock price resulting from the Uniper spinoff had to be
factored in by means of a conversion method.

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 zero to two additional virtual shares at the end of
the vesting period. If the predetermined company performance
target is fully attained, Management Board 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 Man-
agement Board members are assigned a cash value based on
E.ON’s average stock price during the final 60 days of the vest-
ing 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.

Corporate Governance Report

Pension Entitlements
Members appointed to the Management Board since 2010 are
enrolled in the “Contribution Plan E.ON Management Board,”
which is a contribution-based pension plan.

Pension account

Capital contributions

Term in years

The Company makes virtual contributions to Management Board
members’ pension accounts in an amount equal to a percentage
of their pensionable income (base salary and annual bonus).
The contribution percentage is at most 21 percent. The annual
contribution consists of a fixed base percentage (16 percent)
and a matching contribution (5 percent). The requirement for the
matching contribution to be granted is that the Management
Board 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 ROCE is less than its cost of capital for three years in a
row. The contributions are capitalized using actuarial principles
(based on a standard retirement age of 62) and placed in Man-
agement Board 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 Management
Board 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 Management Board 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

The last complete tranche of the E.ON Share Matching Plan
(LTI components of prior-year bonus as well as base and perfor-
mance matching) was granted in the 2016 financial year and
runs through 2020 (Share Matching Plan, fourth tranche
[2016–2020]). Because the old compensation plan was in effect
until year-end 2016, in 2017 Management Board members
were granted virtual shares based on the LTI components of
their bonuses for the 2016 financial year under the terms of
the E.ON Share Matching Plan. This tranche runs through 2021
(Share Matching Plan, fifth tranche [2017–2021]).

Overall Cap
In line with the German Corporate Governance Code’s recommen-
dation, Management Board members’ annual compensation
has an overall cap. This means that the sum of the individual com-
pensation components in one year may not exceed 200 percent
of the total agreed-on target compensation, which consists of
base salary, target bonus, and the target allocation value of long-
term variable compensation. The cap increases in accordance
with the amounts of fringe benefits and pension benefits from
the respective financial year.

Share Ownership Guidelines
To strengthen E.ON’s capital-market focus and shareholder-
oriented culture, effective 2017 share ownership guidelines
apply to Management Board members. The guidelines obligate
Management Board members to invest in E.ON stock equaling
200 percent of base compensation (for the Management Board
Chairperson) and 150 percent of base compensation (for the
other Management Board members), to demonstrate that they
have done so, and to hold the stock until the end of their service
on the Management Board.

Until the required investment is reached, Management Board
members are obligated to invest amounts equivalent to the net
payouts from their long-term compensation in actual E.ON
stock. At December 31, 2019, the Management Board fulfilled
the share ownership guidelines at a rate of 98.22 percent.

Chairperson:
200% of base
compensation

Other Management
Board members:
150% of base
compensation

Base
compensation

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

of service, the attainment of company targets, and interest rates.
For a Management Board 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 pension benefits
accrued prior to being appointed to the Management Board).

The Company has agreed to a pension plan based on final salary
for the Management Board member, Dr. Johannes Teyssen, who
was appointed to the Management Board before 2010. Following
the end of his service for the Company, Dr. Johannes Teyssen is
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 criteria for this situation are
met if the termination or non-extension of Dr. Johannes 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. Johannes
Teyssen would receive an early pension during the period between
the end of his service and his reaching 60 years of age (transi-
tional allowance). Dr. Johannes Teyssen’s pension entitlements
provide for annual pension payments equal to 75 percent of his
annual base salary. The full amount of any pension entitlements
from earlier employment is offset against these payments. In
addition, in the case of a Management Board member’s death,
the pension plan includes benefits for the widow and each orphan
that are equal to 60 percent and 15 percent, respectively, of
the deceased’s pension entitlement. Together, pension payments
to a widow and children may not exceed 100 percent of the
deceased Management Board member’s pension.

Pursuant to the provisions of the German Occupational Pensions
Improvement Act, Management Board members’ pension entitle-
ments 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 recommen-
dation, the Supervisory Board reviews, on a regular basis, the
benefits level of Management Board members and the resulting
annual and long-term expense and, if necessary, adjusts the
payments.

Settlement Payments for Termination of Management Board
Duties
In line with the German Corporate Governance Code’s recommen-
dation, the service agreements of Management Board members
include a settlement cap. Under the cap, settlement payments
in conjunction with a termination of Management Board 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 Management Board position
due to a change of control, Management Board members are
entitled to settlement payments. The change-of-control agree-
ments stipulate that a change in 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 a non-affili-
ated company. Management Board members are entitled to a
settlement payment if, within 12 months of the change of con-
trol, 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 Management Board is materially affected
by the change in control). Management Board members’ settle-
ment payment consists of their base salary and target bonus
plus fringe benefits for two years. In accordance with the German
Corporate Governance Code, the settlement payments for
Management Board members may not exceed 100 percent
of the above-described settlement cap.

The service agreements of Management Board members
include a non-compete clause. For a period of six months after
the termination of their service agreement, Management Board
members are contractually prohibited from working directly
or indirectly for a company that competes directly or indirectly
with the Company or its affiliates. Management Board mem-
bers 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

Management Board Compensation in 2019
The Supervisory Board reviewed the Management Board’s
compensation plan and the components of individual members’
compensation. It determined that the Management Board’s
compensation is appropriate from both a horizontal and vertical
perspective and passed a resolution on the performance-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 Management Board’s compensation with that of the Com-
pany’s top management and the rest of its workforce. In the
Supervisory Board’s view, in the 2019 financial year there was
no reason to adjust the Management Board’s compensation.

Performance-Based Compensation in 2019
The performance metrics for the E.ON SE Management Board’s
performance-based compensation are based on key figures that
were considerably influenced by the closing of the innogy SE
takeover and by innogy’s entry into E.ON SE’s scope of consoli-
dation. The transaction’s effects could not of course be reflected
in the EPS budget set for the 2019 financial year or the Group
ROCE target set in 2016 for the fourth tranche of the Share
Matching Plan. To ensure that target setting remains consistent
and demanding, the Supervisory Board exercised its due discre-
tion to subsequently adjust the key figures used to determine
target attainment. This means that the unchanged EPS budget
and ROCE target are measured against key figures adjusted to
reflect E.ON’s former corporate structure prior to the transaction;
in other words, without innogy SE but with departing businesses
like E.ON Climate & Renewables and certain PreussenElektra

shareholdings. For departing businesses, the last available fore-
cast figures are used; for all other components, actual figures at
year-end. In addition, the calculation of actual EPS is based on
the number of shares prior to the capital increase in conjunction
with the innogy transaction. Due to these adjustments, the Super-
visory Board passed a resolution in October 2019 to amend,
pursuant to Section 161 of the German Stock Corporate Act,
the Declaration of Compliance issued on December 18, 2018.

The annual bonuses of Management Board members for 2019
totaled €6.0 million (prior year: €7.0 million). In determining
the performance factor, the Supervisory Board assessed and
discussed the Management Board’s overall performance.

The Supervisory Board issued the third tranche of the E.ON
Performance Plan (2019–2022) for the 2019 financial year and
granted Management Board members virtual shares of E.ON
stock. The present value assigned to the virtual shares of E.ON
stock at the time of granting—€6.68 per share—is shown in the
following tables entitled “Stock-based Compensation” and “Total
Compensation of the Management Board.” The value performance
of this tranche will be determined by the performance of E.ON
stock, per-share dividends, and TSR performance relative to the
companies in its peer index, the STOXX® Europe 600 Utilities,
for the years 2019 through 2022. The actual payments made
to Management Board members in 2023 may deviate, under
certain circumstances considerably, from the calculated figures
disclosed here.

The long-term variable compensation of Management Board
members resulted in the following expenses in 2019:

Stock-Based Compensation

€

Dr. Johannes Teyssen

Dr.-Ing. Leonhard Birnbaum

Thereof substitute payment “LTI innogy” (2019–2021)2

Dr. Thomas König (since June 1, 2018)

Dr. Marc Spieker

Dr. Karsten Wildberger

Total

Value of virtual shares
at time of granting

2019

2018

1,732,500

1,083,333
75,000

1,008,333
–

825,000

481,250

825,000

Number of virtual
shares granted

Expense (+)/income (-)1

2019

259,357

150,949
0

123,503

2018

2019

2018

270,281

2,277,079

1,570,520

157,307
–

75,078

128,706

1,400,308
75,000

288,515

529,777

870,727

943,816
–

104,171

412,378

577,297

5,290,833

4,872,083

780,815

760,078

5,366,406

3,608,182

1Expense pursuant to IFRS 2 for performance rights and virtual shares existing in the 2019 financial year.
2See the explanation regarding Dr.-Ing. Birnbaum on page 80.

Long-term variable compensation granted for the 2019 financial
year totaled €5.4 million. Note 11 to the Consolidated Financial
Statements contains additional details about stock-based com-
pensation.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

Management Board Pensions in 2019
The following table provides an overview of the current pension
obligations to Management Board members, the additions to
provisions for pensions, and the cash value of pension obligations
for the 2019 financial year. The cash value of pension obligations

is calculated pursuant to IFRS and the German Commercial
Code. An actuarial interest rate according to IFRS of 1.3 percent
(prior year: 2.0 percent) was used for discounting; the actuarial
interest rate pursuant to the German Commercial Code was
2.71 percent (prior year: 3.21 percent).

Pensions of Management Board Members Pursuant to IFRS

Current pension entitlement at December 31

Additions to provisions for pensions

Cash value at December 31

Dr. Johannes Teyssen

Dr.-Ing. Leonhard Birnbaum1
(E.ON SE)

Dr.-Ing. Leonhard Birnbaum2
(innogy SE)

Dr. Thomas König1
(since June 1, 2018)

Dr. Marc Spieker1

Dr. Karsten Wildberger1

2019

–

As a percentage
of annual base
compensation

2018

2019

(€)

2018

2019

(€)

2018

Thereof interest cost
(€)

2019

2018

2019

(€)

2018

930,000

1,410,074

1,378,642

525,001

520,125

28,139,682

26,250,050

–

245,953

332,609

29,011

27,917

1,890,048

1,450,521

195,667

–

195,667

–

213,076

79,088

209,825

237,498

277,975

290,723

44,685

17,223

14,393

24,281

2,733,075

2,234,273

17,431

1,279,272

10,881

1,198,385

861,135

719,674

1“Contribution Plan E.ON Management Board.”
2From October 11, 2019, onward, 50 percent of the contribution to Dr.-Ing. Birnbaum’s innogy SE pension entitlement is borne by E.ON SE.

Pensions of Management Board Members Pursuant to the German Commercial Code

Current pension entitlement at December 31

Additions to provisions for pensions

Cash value at December 31

Dr. Johannes Teyssen

Dr.-Ing. Leonhard Birnbaum1
(E.ON SE)

Dr.-Ing. Leonhard Birnbaum2
(innogy SE)

Dr. Thomas König1
(since June 1, 2018)

Dr. Marc Spieker1

Dr. Karsten Wildberger1

2019

–

As a percentage
of annual base
compensation

2018

2019

(€)

2018

2019

(€)

2018

Thereof interest cost
(€)

2019

2018

2019

(€)

2018

930,000

564,476

2,558,564

689,983

696,853

22,059,264

21,494,788

–

332,111

156,636

40,010

40,104

1,578,534

1,246,423

172,476

–

172,476

–

403,263

356,229

292,176

66,048

373,061

190,863

62,291

22,465

19,453

58,302

2,343,798

1,940,535

23,324

15,278

992,033

979,086

699,857

606,025

1“Contribution Plan E.ON Management Board.”
2 - Voluntary supplemental disclosure.
- from October 11, 2019, onward, 50 percent of the contribution to Dr.-Ing. Birnbaum’s innogy SE pension entitlement is borne by E.ON SE.

Pursuant to IFRS and the German Commercial Code, the cash
values of Management Board pensions for which provisions are
required increased as of December 31, 2019, relative to year-
end 2018. This resulted in part from increases in the number of
years of service. Another reason is that the actuarial interest rate
for discounting was below the prior-year figure.

Corporate Governance Report

Total Compensation in 2019
The total compensation of the members of the Management
Board in the 2019 financial year amounted to €15.6 million,
about 1.9 percent below the prior-year figure of €15.9 million
based on the Management Board’s total compensation disclosed
in the 2018 Annual Report.

Compensation Modalities of Dr.-Ing. Birnbaum’s Dual Mandate
Since his appointment as Chairman of the innogy SE Manage-
ment Board effective October 11, 2019, Dr.-Ing. Birnbaum has
had dual mandate within the meaning of Section 88, Paragraph 1,
Sentence 2 of the German Stock Corporation Act. Since this
date, Dr.-Ing. Birnbaum receives compensation from innogy SE
only. The compensation-related clauses of Dr.-Ing. Birnbaum’s
service agreement with E.ON SE will be suspended for the dura-
tion of his service as member and Chairman of the innogy SE
Management Board. The modalities of his compensation are as
follows:

Dr.-Ing. Birnbaum will continue to receive base compensation
of €800,000.

Since his appointment as Chairman of the innogy SE Manage-
ment Board effective October 11, 2019, Dr.-Ing. Birnbaum
receives, in place of his E.ON SE bonus, an innogy SE bonus
with a target bonus of €1,025,000 for a full financial year
(“bonus innogy”).

The “bonus innogy” is based on innogy’s business performance
and the degree to which the individual and collective goals of the
Management Board are met. The starting point for calculating
the bonus is what is referred to as the “company bonus,” which
depends on the level of innogy SE’s adjusted EBIT and is deter-
mined as follows: At the start of each financial year, the innogy SE
Supervisory Board sets a target figure for adjusted EBIT. After
the end of the financial year, the actual level of adjusted EBIT
achieved is compared with the target figure. If the figures are
identical, the target achievement is 100 percent and the com-
pany bonus equals the contractually agreed target bonus. If
adjusted EBIT exceeds or undershoots the established target,
target achievement increases or decreases by a factor of 2.5.
If adjusted EBIT is exactly 120 percent of the target figure, the

target achievement for the company bonus amounts to 150 per-
cent. The latter figure is also the cap on the company bonus,
which cannot be exceeded even if adjusted EBIT is higher. The
lower limit is reached if adjusted EBIT is exactly 80 percent
of the target figure which has been set. In this case, the target
achievement for the company bonus amounts to 50 percent.
If the EBIT figure is lower than this 80-percent threshold, no
company bonus is paid out to the Management Board members.
Depending on the level of adjusted EBIT achieved, the company
bonus paid can be between 0 percent and 150 percent of the
target bonus amount. The personal performance of Management
Board members is considered by multiplying the company bonus
by an individual performance factor, which can range between
0.8 and 1.2. At Dr.-Ing. Birnbaum’s appointment in October 2019,
it was decided to dispense with individual targets and target
key figures to determine his personal performance factor for the
remainder of the year. Instead, for a single time the innogy SE
Supervisory Board assessed Dr.-Ing. Birnbaum’s overall perfor-
mance for 2019 and set a performance factor for his 2019
bonus. The bonus is determined by multiplying the contractually
agreed target bonus by the target achievement for the company
bonus and the personal performance factor. The bonus deter-
mined in this manner can range between 0 percent and a maxi-
mum of 180 percent of the contractual target bonus and is paid
out in full after the end of the financial year.

Dr.-Ing. Birnbaum continues to participate in the E.ON Perfor-
mance Plan, which is described on page 74. This plan will be
continued analogously by innogy SE—that is, based on E.ON SE’s
capital market performance—and granted with a target value of
€1,008,333 per year. To reflect the increase in his responsibilities
and the bigger and special challenges he faces, from the 2020
financial year onward Dr.-Ing. Birnbaum will also be granted
annual long-term variable compensation with a target value
of €300,000, which depends exclusively on innogy SE’s perfor-
mance (“LTI innogy”). For the last three months of 2019, Dr.-Ing.
Birnbaum will receive, in place of the “LTI innogy,” a non-pension-
able one-time payment equal to one quarter of the target value.
In line with the modalities of innogy SE’s multi-year variable
compensation, payment will first be made in October 2021.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

In addition, Dr.-Ing. Birnbaum continues to participate in the
“Contribution Plan E.ON Management Board”, a contribution-
based pension plan. This plan is suspended at E.ON SE from
October 11, 2019, until Dr.-Ing. Birnbaum’s service agreement
with E.ON SE takes effect again and is continued and adminis-
tered by innogy SE during this period. Dr.-Ing. Birnbaum retains
his accrued entitlements from E.ON SE.

For Dr.-Ing. Birnbaum’s duties as a member of the E.ON SE
Management Board, E.ON SE reimburses innogy SE for the costs
of his duties that are attributable to E.ON SE; innogy SE pays
out these costs to Dr.-Ing. Birnbaum. Pursuant to the service
agreement between innogy SE and Dr.-Ing. Birnbaum, these
reimbursed costs consist of the following compensation compo-
nents: 50 percent of base compensation from October 11, 2019,
forward; 100 percent of the payment of the tranches of the
E.ON Performance Plan granted from January 1, 2020, forward;
50 percent of the contributions made by innogy SE to the “Con-
tribution Plan E.ON Management Board” from October 11, 2019.

The cost allocation is as follows:

Cost Allocation 2019 of Dr.-Ing. Leonhard Birnbaum’s
Compensation (since October 11, 2019)

Percentages

Fixed compensation

Benefits

2019 E.ON bonus

2019 innogy bonus

E.ON Performance Plan until 2019

Substitute payment “LTI innogy”
(2019–2021)

Company Pension Entitlements

E.ON SE

innogy SE

–

100

–

100

–

100

–

100

–

100

The individual members of the Management Board had the
following total compensation.

Total Compensation of the Management Board

Fixed annual
compensation

€

2019

2018

2019

Bonus

2018

Dr. Johannes Teyssen

1,240,000

1,984,500

2,494,800

Dr.-Ing. Leonhard Birnbaum2

Thereof innogy SE

800,000
88,406

800,000
–

1,137,309
241,788

1,452,000
–

Dr. Thomas König
(since June 1, 2018)

700,000

408,333

945,000

693,000

Dr. Marc Spieker

700,000

945,000

1,188,000

Dr. Karsten Wildberger

700,000

945,000

1,188,000

Other compensation

Value of stock-based
compensation granted1

Total

2018

2019

40,791

27,116
4,519

44,264

48,607

61,983

2018

2019

2018

2019

41,365

1,732,500

4,997,791

5,508,665

27,212
–

1,083,333
75,0003

1,008,333
–

3,047,758
409,713

3,287,545
–

25,776

825,000

481,250

2,514,264

1,608,359

43,456

825,000

2,518,607

2,756,456

67,442

825,000

2,531,983

2,780,442

Total

4,140,000

3,848,333

5,956,809

7,015,800

222,761

205,251

5,290,833

4,872,083

15,610,403

15,941,467

1The present value assigned to the virtual shares of E.ON stock at the time of granting for the third tranche of the E.ON Performance Plan was €6.68 per share.
2See the explanation regarding Dr.-Ing. Birnbaum on page 80.
3Dr.-Ing. Birnbaum receives the substitute payment “LTI innogy” with long-term incentive effect (2019–2021) in the amount of €75,000.

Corporate Governance Report

The following table shows the compensation granted and
allocated in 2019 in the format recommended by the German
Corporate Governance Code:

Table of Compensation Granted and Allocated

€

Fixed compensation

Fringe benefits

Total

2018

2019

Dr. Johannes Teyssen (Chief Executive Officer)

Compensation granted

Compensation allocated

2019
(min.)

2019
(max.)1, 2

2018

2019

1,240,000

41,365

40,791

41,365

40,791

1,281,365

1,280,791

1,281,365

1,280,791

One-year variable compensation

Multi-year variable compensation

– Share Matching Plan, second tranche (2014–2018)
– Share Matching Plan, third tranche (2015–2019)
– Performance Plan, second tranche (2018–2021)
– Performance Plan, third tranche (2019–2022)

1,417,500

1,732,500
–
–
1,732,500
–

1,732,500
–
–
–
1,732,500

–

–
–
–
–
–

2,835,000

2,494,800

1,984,500

3,465,000
–
–
–
3,465,000

2,039,145
2,039,145
–
–
–

2,254,138
–
2,254,138
–
–

Total

Service cost

Total

4,431,365

4,430,791

1,280,791

7,580,791

5,815,310

5,519,429

858,517

885,073

858,517

885,073

5,289,882

5,315,864

2,165,864

8,465,864

6,673,827

6,404,502

1The maximum amount disclosed under benefits granted represents the sum of the contractual (individual) caps for the various elements of the compensation of Management Board members.
2The overall cap on Management Board compensation, which was introduced in the 2013 financial year and is described on page 76, applies as well.

Table of Compensation Granted and Allocated

€

Fixed compensation

Thereof innogy SE5

Fringe benefits

Thereof innogy SE5

Total

One-year variable compensation4

Thereof innogy SE3,4

Multi-year variable compensation

Total

Service cost

Thereof innogy SE5, 6

Total

Dr.-Ing. Leonhard Birnbaum (Chief Operating Officer—Integration)

2018

2019

800,000
–

27,212
–

800,000
88,406

27,116
4,519

Compensation granted

Compensation allocated

2019
(min.)

800,000
88,406

27,116
4,519

2019
(max.)1, 2

800,000
88,406

27,116
4,519

2018

2019

800,000
–

27,212
–

800,000
88,406

27,116
4,519

827,212

827,116

827,212

827,116

825,000
–

1,008,333
–
–
1,008,333
–
–

869,932
230,274

1,083,333
–
–
–
1,008,333
75,000

–
–

75,000
–
–
–
–
75,000

1,693,808
414,493

2,091,666
–
–
–
2,016,666
75,000

1,452,000
–

939,502
939,502
–
–
–
–

1,137,309
241,788

1,387,150
–
1,312,150
–
–
75,000

2,660,545

2,780,381

902,116

4,612,591

3,218,714

3,351,575

304,692
–

412,609
195,667

304,692
–

412,609
195,667

2,965,237

3,192,990

1,314,725

5,025,200

3,523,406

3,764,184

1, 2See the footnotes on page 82.
3For the period October 11 – December 31, 2019.
4The maximum innogy SE cap is 180 percent; the maximum E.ON SE cap is 200 percent.
5See the explanation regarding Dr.-Ing. Birnbaum on page 80.
6From October 11, 2019, onward, 50 percent of the contribution to Dr.-Ing. Birnbaum’s innogy SE pension entitlement is borne by E.ON SE.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

Table of Compensation Granted and Allocated

€

Fixed compensation

Fringe benefits

Total

2018

2019

Dr. Thomas König
(Chief Operating Officer—Networks since June 1, 2018)

Compensation granted

Compensation allocated

2019
(min.)

2019
(max.)1, 2

2018

2019

408,333

700,000

408,333

700,000

25,776

44,264

25,776

44,264

434,109

744,264

434,109

744,264

One-year variable compensation

Multi-year variable compensation

393,750

675,000

481,250
–
–
481,250
–

825,000
–
–
–
825,000

–

–
–
–
–
–

1,350,000

693,000

945,000

1,650,000
–
–
–
1,650,000

–
–
–
–
–

Total

Service cost

Total

1, 2See footnotes on page 82.

Table of Compensation Granted and Allocated

€

Fixed compensation

Fringe benefits

Total

1,309,109

2,244,264

744,264

3,744,264

1,127,109

1,689,264

54,807

168,391

54,807

168,391

1,363,916

2,412,655

912,655

3,912,655

1,181,916

1,857,655

2018

2019

Dr. Marc Spieker (Chief Financial Officer)

Compensation granted

Compensation allocated

2019
(min.)

2019
(max.)1, 2

2018

2019

700,000

43,456

48,607

43,456

48,607

743,456

748,607

743,456

748,607

One-year variable compensation

Multi-year variable compensation

675,000

825,000
–
–
825,000
–

825,000
–
–
–
825,000

–

–
–
–
–
–

1,350,000

1,188,000

945,000

1,650,000
–
–
–
1,650,000

–
–
–
–
–

Total

Service cost

Total

1, 2See footnotes on page 82.

2,243,456

2,248,607

748,607

3,748,607

1,931,456

1,693,607

220,067

192,602

220,067

192,602

2,463,523

2,441,209

941,209

3,941,209

2,151,523

1,886,209

Corporate Governance Report

Table of Compensation Granted and Allocated

in €

Fixed compensation

Fringe benefits

Total

2018

2019

Dr. Karsten Wildberger (Chief Operating Officer—Commercial)

Compensation granted

Compensation allocated

2019
(min.)

2019
(max.)1, 2

2018

2019

700,000

67,442

61,983

67,442

61,983

767,442

761,983

767,442

761,983

One-year variable compensation

Multi-year variable compensation

675,000

825,000
–
–
825,000
–

825,000
–
–
–
825,000

–

–
–
–
–
–

1,350,000

1,188,000

945,000

1,650,000
–
–
–
1,650,000

–
–
–
–
–

Total

Service cost

Total

1, 2See footnotes on page 82.

2,267,442

2,261,983

761,983

3,761,983

1,955,442

1,706,983

279,842

263,582

279,842

263,582

2,547,284

2,525,565

1,025,565

4,025,565

2,235,284

1,970,565

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 on behalf of the members of the Management
Board in the 2019 financial year. Page 242 contains additional
information about the members of the Management Board.

Payments Made to Former Members of the Management Board
Total payments made to former Management Board members
and to their beneficiaries amounted to €10.8 million (prior
year: €12.5 million). Provisions of €161.3 million (prior year:
€155.8 million)—pursuant to IFRS—have been provided for
pension obligations to former Management Board members
and their beneficiaries.

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 com-
mittee receive the highest applicable committee compensation
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 Super-
visory Board or any of its committees for less than an entire
financial year receive pro rata compensation.

Compensation Plan for the Supervisory Board
The compensation of Supervisory Board members is determined
by the Annual Shareholders Meeting and governed by Section 15
of the Company’s Articles of Association. The purpose of the
compensation plan is to enhance the Supervisory Board’s inde-
pendence for its oversight role. Furthermore, there are a num-
ber 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 compen-
sation for committee duties.

Supervisory Board Compensation in 2019
The total compensation of the members of the Supervisory Board
in the 2019 financial year amounted to €4.3 million (prior year:
€4.1 million). The main reason for the increase in total compen-
sation is that the Annual Shareholders Meeting passed a resolu-
tion on May 14, 2019, to increase, owing to the acquisition of a
majority stake in innogy SE, the size of the E.ON SE Supervisory
Board by six members to a total of 20 members until new elec-
tions are held in 2020. As in the prior year, no loans or advance
payments were granted to Supervisory Board members in the
2019 financial year.

The Chairman of the Supervisory Board receives fixed compen-
sation of €440,000; the Deputy Chairmen, €320,000. The
other members of the Supervisory Board receive compensation
of €140,000. The Chairman of the Audit and Risk Committee

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

Supervisory Board
compensation from
affiliated companies

2019

2018

2019

Total

2018

–

452,000

448,000

–

138,333

334,000

269,000

333,000

329,000

218,000

–

218,000

142,000

–

62,333

56,498

–

259,000

245,667

–

62,333

81,215

–

15,821

218,000

233,821

–

146,000

96,333

–

96,129

119,615

–

334,000

306,667

37,000

–

8,938

–

71,271

–

288,000

289,000

–

140,333

259,000

260,000

66,664

–

Supervisory Board Compensation

Supervisory Board
compensation

Compensation for
committee duties

Attendance fees

€

2019

2018

2019

2018

2019

Dr. Karl-Ludwig Kley

440,000

Prof. Dr. Ulrich Lehner
(until May 9, 2018)

–

133,333

Erich Clementi

320,000

260,000

Andreas Scheidt

320,000

–

12,000

–

14,000

13,000

Clive Broutta

140,000

70,000

8,000

2018

8,000

5,000

9,000

8,000

140,000

93,333

70,000

46,667

8,000

2,000

Klaus Fröhlich
(since May 29, 2018)

Tibor Gila
(until May 9, 2018)

Ulrich Grillo
(since October 1, 2019)

–

58,333

–

35,000

–

17,500

–

Carolina Dybeck Happe

140,000

110,000

96,667

Baroness
Denise Kingsmill CBE
(until May 9, 2018)

Monika Krebber (since
September 24, 2019)

–

58,333

46,667

–

Eugen-Gheorghe Luha

140,000

70,000

Szilvia Pinczésné Márton
(since May 9, 2018)

Stefan May (since
September 24, 2019)

René Pöhls (since
September 24, 2019)

140,000

93,333

–

46,667

–

17,500

27,500

–

4,000

3,000

9,000

–

9,000

998

–

4,000

–

2,000

8,000

–

32,548

6,000

3,000

2,000

3,000

–

29,962

42,448

Andreas Schmitz

140,000

180,000

156,667

14,000

10,000

35,000

–

2,000

–

Dr. Rolf Martin Schmitz
(since October 1, 2019)

Fred Schulz
(until May 9, 2018;
since May 29, 2018)

Silvia Šmátralová
(until May 9, 2018)

Deborah Wilkens
(since October 1, 2019)

Ewald Woste

Albert Zettl

Total

140,000

110,000

16,000

13,000

17,856

24,469

283,856

287,469

–

58,333

–

4,000

9,000

Dr. Karen de Segundo

140,000

8,000

Dr. Theo Siegert
(until May 9, 2018)

–

58,333

–

75,000

–

7,000

Elisabeth Wallbaum

140,000

110,000

9,000

10,000

35,000

–

27,500

–

140,000

70,000

3,000

8,000

140,000

70,000

13,000

–

1,164

8,000

23,000

15,808

241,000

233,808

20,000

243,000

238,000

2,865,001

2,833,331

1,090,000

1,015,001

161,000

138,000

167,976

85,036

4,283,977

4,071,368

Other
The Company has taken out D&O insurance for Management
Board 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 Management Board and Supervisory Board members. The
deductible has a maximum cumulative annual cap of 150 percent
of a member’s annual fixed compensation.

Separate Combined
Non-Financial Report

Separate Combined Non-Financial Report

Purpose and Scope

The purpose of this Separate Combined Non-Financial Report is
to comply with the reporting requirements of the German CSR
Directive Implementation Act (Section 315c in conjunction with
Sections 289c to 289e of the German Commercial Code). It
applies to both the E.ON Group and E.ON SE (hereinafter: E.ON).
In addition to general information, the report contains informa-
tion on the five mandatory aspects: the environment, employees,
social matter, human rights, and anti-corruption. This informa-
tion is for the reporting period January 1 to December 31, 2019.
The report encompasses all subsidiaries that are fully consolidated
in E.ON’s Consolidated Financial Statements. Any deviations
from this are indicated.

Effective September 18, 2019 E.ON took ownership of RWE’s
innogy stake (76.8 per cent) and in late September the innogy
stock tendered in a voluntary public takeover offer. Together with
the innogy stock acquired on-market, this gave E.ON a roughly
90-percent stake in innogy, which is thus a fully consolidated
E.ON subsidiary.

The policies mentioned below issue instructions, set minimum
standards, assign responsibilities, and define management
tools for the various non-financial issues. They are reviewed on
an ongoing basis. Group policies are binding for all companies
in which E.ON holds a majority stake and for projects and part-
nerships for which E.ON has operational responsibility. Contrac-
tors and suppliers are also required to meet E.ON’s minimum
standards.

Although E.ON’s management approaches govern the innogy
takeover, innogy’s own guidelines continue to apply at its busi-
nesses on an interim basis. innogy has an established governance
organization. Its guidelines are backed by functioning processes
and reporting pathways. For a transitional phase, E.ON has no
specific plans for innogy’s management approaches. The man-
agement approaches described here therefore refer exclusively
to E.ON. innogy’s management approaches can be found in its
2019 Separate Combined Non-Financial Report. In the months
ahead, innogy’s and E.ON’s policies and processes will be
reviewed and, where necessary, harmonized or combined.

The business operations at the Renewables segment that was
transferred to RWE are included in E.ON’s key performance
indicators (“KPIs”) until late September 2019. A separate innogy
segment, consisting mainly of network and sales businesses,

became part of the E.ON Group on September 18, 2019. Con-
sequently, the reporting includes a number of innogy KPIs after
this date. As a rule, however, KPIs refer to E.ON without innogy.
If KPIs of innogy’s continuing operations are disclosed they and
their respective time frame are clearly indicated. Time frames
may differ owing to the nature of a KPI, the availability of data,
and internal collection and reporting processes. E.ON’s KPIs
include PreussenElektra’s business operations.

Business Model

E.ON’s two core businesses, Energy Networks and Customer
Solutions, promote the sustainable development of the energy
industry. Detailed information about E.ON’s business model
can be found in the Combined Group Management Report. The
Combined Group Management Report shows two other segments
for the 2019 financial year: Renewables and innogy.

General Information

E.ON strives to always do business responsibly and therefore
monitors all material impacts of its business operations. E.ON
considers not only financial aspects but also environmental
and social issues along the entire value chain. The systematic
consideration of non-financial issues enable E.ON to identify
opportunities and risks for its business development early. In
addition to the expectations of investors, E.ON takes into account
the expectations of other key stakeholders like customers and
employees.

In 2019 E.ON’s materiality assessment consisted of a thorough
review of its 2018 analysis to determine which non-financial
issues are essential for understanding E.ON’s business perfor-
mance, financial results, and situation and to evaluate the
impact of its business operations. E.ON checked whether there
had been important changes in the UN Sustainable Development
Goals (SDGs), E.ON’s own strategy, and its policy and regulatory
environment. In addition, E.ON compared innogy’s main issues
with its own. The review showed that there have been no sig-
nificant changes and that the innogy takeover does not appear
to necessitate a change in E.ON’s issues. The following non-
financial issues from 2018 therefore remain material for E.ON.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

E.ON’s Material Issues Subsumed under the Five Mandatory Aspects

Environmental matters

Employee matters

Social matters

• Climate protection
• Environmental management

• Occupational health and safety
• Employee development and working conditions

• Security of supply
• Customer loyalty
• Data protection

Human rights

Anti-corruption

• General significance of human rights

• General significance of compliance

E.ON’s approach to each issue and its progress in 2019 are
explained in the following sections. E.ON takes a comprehensive
approach to occupational health and safety (Aspect 2: employee
matters) and environmental management (Aspect 1: environ-
mental matters), which is explained below. The description of
all approaches is guided by the Global Reporting Initiative’s
Sustainability Reporting Standards (“GRI SRS”), in particular
GRI standard 103: Management Approach 2016.

Since 2018, E.ON’s management of non-financial risks has
been aligned with the five mandatory aspects. In 2019 E.ON
focused in particular on human rights and environmental and
climate matters in order to prepare to comply with possible new
regulatory requirements in these areas. E.ON also made signifi-
cant progress in further integrating non-financial risks into its
broader risk management processes. The process and findings
of the non-financial risk analysis for 2019 were presented to,
and approved by, the E.ON Group Risk Committee on December
2, 2019. The findings indicated that, on balance, as of year-end
2019 E.ON had no reportable non-financial net risk exposure.
Information about E.ON’s financial risks and chances can be
found in the Risk and Chances Report in the Combined Group
Management Report for the 2019 financial year.

E.ON’s sustainability efforts are guided by internationally recog-
nized standards, which provide orientation and help ensure that
E.ON considers all essential aspects of responsible corporate
governance. E.ON has been committed to the ten principles of
the United Nations Global Compact (“UNGC”) since 2005. Its
sustainability activities also support the achievement of the
United Nations’ SDGs. In particular, E.ON helps give access to
affordable, reliable, sustainable, and clean energy, support cities
and communities to become sustainable, and help protect the
earth’s climate.

Annual Sustainability Report

E.ON has published a Sustainability Report annually since 2004,
innogy since 2016. The report, which has been based on GRI
standards since 2005, serves as E.ON’s annual Communication
on Progress to the UNGC. It describes the issues that are material
to E.ON’s stakeholders and to E.ON as a company as well as
how these issues are addressed. It also reports on topics not
included in this Combined Non-Financial Report for reasons of
materiality and contains information about E.ON’s sustainability
strategy and organization.

Sustainability Ratings and Rankings

E.ON’s commitment to transparency includes subjecting its sus-
tainability performance to independent, detailed assessments
by specialized agencies and capital-market analysts. The results
of these assessments provide important guidance to investors
and to E.ON. They help E.ON identify its strengths and weak-
nesses and further improve its performance. The Sustainability
Channel on E.ON’s corporate website contains a list of current
sustainability ratings and rankings results.

Approach to Health, Safety, and the
Environment (“HSE”)

E.ON’s HSE organization, which has developed over the course
of many years, centrally manages all activities for the material
issues of climate protection, environmental management, and
occupational health and safety. E.ON’s overarching HSE policy
and the Function Policy “Sustainability and HSE” set minimum
standards, assign responsibilities, and define management
tools and reporting pathways. These policies are binding across
E.ON.

Separate Combined Non-Financial Report

The E.ON Management Board and the management of E.ON’s
units are responsible for HSE performance. They set strategic
objectives and adopt policies to promote continual improvement.
They are supported and advised by the HSE division at corporate
headquarters, employee representatives, and the HSE Council.
The council is composed of senior executives and employee
representatives from different business areas and countries
where E.ON operates. It meets at least three times a year and is
chaired by the Management Board member responsible for HSE.
The units have HSE committees and expert teams as well. They
draw up framework specifications to ensure that their unit meets
its HSE standards. The units also design HSE improvement
plans, which contain specific HSE targets for one or more years.

E.ON expects its HSE standards to be met further up the value
chain as well, for example by suppliers. New suppliers must
first undergo a qualification process if there is an increased risk
that their business activities could have a negative impact on
HSE. Depending on their size, E.ON sometimes also requires
them to be certified to international environmental and occupa-
tional health and safety standards (ISO 14001 or EMAS III;
OHSAS 18001 or ISO 45001) or conducts HSE audits of them.

HSE incidents are reported via PRISMA (Platform for Reporting
on Incident and Sustainability Management and Audits), E.ON’s
Group-wide online incident management system, in five cate-
gories of incidents. They range from 0 (low) to 4 (major). Pursuant
to E.ON’s HSE Standard on Incident Management, units must
use PRISMA to report category 4 incidents to the HSE division
at corporate headquarters within 24 hours. E.ON systematically
investigates and analyzes incidents depending on their severity
and/or potential to end up in an actual incident and use the
findings to take preventive action.

Aspect 1: Environmental Matters

Climate Protection
Climate change and the environmental damage caused by it are
serious and affect everyone. The use of fossil-based energy is
accompanied by greenhouse gas (“GHG”) emissions. Low-carbon
power generation and the efficient use of energy therefore play
key roles in reducing emissions and limiting global warming. For
E.ON as an energy company that intends to focus entirely on
the new energy world, climate protection is a crucial issue. The
transition to a low-carbon economy will require the concerted
efforts of everyone who makes or consumes energy. It poses

challenges for E.ON’s competitiveness but also creates oppor-
tunities to grow the business. Many countries, communities,
and companies have already embraced climate-friendly energy
production and energy efficiency to achieve their carbon-reduc-
tion targets. E.ON’s strategic focus on energy-efficient customer
solutions and reliable, smart grids is fully in line with these
global trends.

GHG emissions can be reduced not only by low-carbon generation
technologies but also by energy conservation and recovery. E.ON’s
energy solutions help its customers use energy more efficiently
and recover energy. E.ON offers individually tailored solutions to
residential, industrial, commercial, and public sector customers.
Its portfolio includes easy-to-use online energy audits and apps
that help residential customers better understand their energy
consumption. E.ON designs embedded cogeneration solutions
and energy-efficiency plans for commercial customers. It also
develops integrated solutions for cities, district developers, and
housing companies that encompass elements like efficient
heating and cooling, low-carbon generation, and smart energy
management. In addition, E.ON offers eMobility solutions such
as electric-vehicle charging systems for homes and businesses
as well as public charging infrastructure for cities that help
make transport less dependent on fossil fuels and thus less
carbon-intensive.

The Chief Operating Officer—Commercial, who is a member of
the E.ON Management Board, has overall responsibility for E.ON’s
customer-oriented businesses, including solutions enabling
customers to generate their own climate-friendly energy. The
regional units’ sales teams implement and market energy and
eMobility solutions for all classes of customers. Cross-regional
teams at corporate headquarters coordinate these activities in
technical, commercial, and strategical terms. E.ON Business
Solutions is responsible for the design of technical solutions for
commercial customers in Western and Central Europe, the
United Kingdom, and Scandinavia. The E.ON Management
Board is informed on an ongoing basis about developments at
all customer-oriented businesses through financial performance
reports, such as expected project turnover or EBIT, as well as
presentations at its meetings describing operational progress
using these key performance indicators.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

In mid-2017 the E.ON Management Board set new climate
targets for 2030. E.ON aims to reduce its total carbon footprint
by 30 percent and that of its customers (their carbon emissions
per kWh of power E.ON sells them) by 50 percent, both relative
to a 2016 baseline. Indirect carbon emissions (Scope 3), which
arise primarily in conjunction with the purchase and use of power
and gas in the energy sales business, account for most of E.ON’s
carbon footprint. To meet these targets, E.ON has defined
measures to reduce emissions in all three scopes of the GHG
Protocol. E.ON intends to reduce its direct emissions (Scope 1)
by updating and optimizing its gas networks and indirect emis-
sions (Scope 2) by conserving energy itself and by reducing line
losses in its power network business. E.ON’s main Scope 3
objective is to increase the proportion of renewable energy it
provides to its customers.

Distribution networks like E.ON’s are the backbone of the energy
transition. They facilitate low-carbon power generation and the
deployment of innovative, efficient energy solutions. Wind farms,
solar arrays, battery-storage systems, and other climate-friendly
technologies are connected to E.ON’s distribution grids. Going
forward, smart grids will serve as the transformative platform
for the innovative technologies and business models that are
essential to the energy transition’s success.

The activities of E.ON’s core businesses reflect the key emerging
energy trends and help protect the earth’s climate. But E.ON
also wants to shrink its own carbon footprint. E.ON measures the
annual carbon emissions from its distributed power and heat
generation and from its business activities that are not directly
related to power generation. E.ON discloses these figures in
its sustainability reporting. E.ON factors in upstream and down-
stream emissions as well. It calculates emissions using the
globally recognized WRI/WBCSD Greenhouse Gas Protocol
Corporate Accounting and Reporting Standard (“GHG Protocol”).

Total CO₂ Equivalents in Million Metric Tons

Scope 1: Direct emissions from own business operations

Scope 2: Indirect emissions associated with E.ON’s electricity and heat consumption3

Scope 3: Indirect emissions from all other business operations

Total

E.ON 2019

innogy 20191

E.ON 2018

E.ON 2017

4.91

2.73

59.67

67.31

0.87

3.05

88.13

92.05

4.582

2.892

61.31

68.78

4.532

3.37

71.02

78.92

1Figures for all of 2019 and not included in E.ON’s figures for 2019; see “Purpose and Scope” on page 88.
2Prior-year figures have been adjusted due to the subsequent adjustment of certain figures.
3Excludes the consumption of district heating due to the immateriality of the quantity compared with the other Scope 2 categories.

E.ON’s direct and indirect CO2e emissions totaled 67.31 million
tons in 2019, a slight reduction relative to the prior-year figure
of 68.78 million tons. The emission factors for innogy data
deviate in some cases from E.ON’s, leading principally to higher
Scope 3 figures. A harmonization of emission factors is planned
for 2020.

The adoption of a climate strategy set in motion actions to help
E.ON achieve its climate-protection targets for 2030. However,
year-on-year comparisons can be affected by temporary fluc-
tuations. A period of several years is necessary to determine
whether the action E.ON is taking is effective and where it stands
with regard to its targets. E.ON therefore assesses the trend
every three years. The first assessment was at year-end 2019.
The trend (in absolute terms and with regard to E.ON’s carbon
intensity target) indicated that the reduction rate is in line with
E.ON’s forecasts. Consequently, no corrective measures are

necessary at this point. Combining innogy’s GHG data with E.ON’s
will change key parameters for calculating emissions. E.ON will
revise its climate strategy in 2020 after this process is com-
pleted. Information about the progress E.ON makes toward its
climate targets is presented first to the Sustainability Council,
which met two times in 2019. The Chief Sustainability Officer,
who chairs the council, reports the information to the E.ON
Management Board on a regular basis.

E.ON is committed to acting sustainably in all respects. This
includes making steady progress toward its climate targets,
effectively managing its climate-related risks, seizing climate-
related opportunities that fit with its corporate strategy, and

Separate Combined Non-Financial Report

reporting transparently on all these matters. The recommenda-
tions of the Task Force on Climate-related Financial Disclosures
(“TCFD”) provide important guidance for its reporting. Established
in 2015, the TCFD aims to develop consistent, comparable, and
accurate climate-related financial risk disclosures that companies
can use to provide information to investors, lenders, insurers,
and other stakeholders. E.ON became an official TCFD supporter
in 2019, which marks the start of its TCFD reporting below:

• Governance

The importance of climate change for E.ON is reflected in
its governance. The Management Board has overall respon-
sibility for E.ON’s sustainability strategy, including its climate
strategy. The Supervisory Board is informed about E.ON’s
sustainability performance by its Audit and Risk Committee
and by the Management Board. Furthermore, it established
the Innovation and Sustainability Committee which started
its work in December 2019.

• Strategy

E.ON’s business operations promote sustainability: its current
climate strategy includes emission-reduction targets for
2030 and 2050. The acquisition of innogy substantially
strengthens E.ON’s core businesses and therefore enhances
its ability to promote sustainability. Going forward, E.ON
will continually expand its TCFD reporting. The reporting for
2020, for example, will provide additional detailed TCFD-
related information and include innogy’s data. Since climate
change could create risks as well as opportunities for E.ON’s
business, a range of climate scenarios is reviewed on an
ongoing basis.

• Risk Management

E.ON plans to continually monitor and assess its sustainabil-
ity, climate, and other non-financial risks and opportunities
and their potential impact in the short, medium, and long
term. In 2018 E.ON began to integrate the assessment and
management of these risks more systematically into its
overall risk management. This process is ongoing and, from
2020 onward, will reflect the TCFD’s recommendations.

• Metrics and Targets

E.ON’s current climate metrics consist mainly of the emission
figures for its carbon footprint categories (Scope 1, 2, and 3)
and the measurement of progress toward its climate targets.
In light of the innogy takeover and the intention to gradually
adopt the TCFD’s recommendations, E.ON will enhance its
climate metrics and targets in 2020 as part of the revision of
its sustainability.

More detailed information on E.ON’s TCFD reporting can be
found in the “Climate protection” chapter of the 2019 Sustain-
ability Report on E.ON’s corporate website and in the context
of E.ON’s CDP climate reporting. CDP is one of the largest inter-
national associations of investors that independently assess the
transparency and detail of companies’ climate reporting.

Environmental Management
Alongside climate protection, it is E.ON’s objective to prevent
environmental damage and to have as little environmental
impact as possible. Even if E.ON does not operate large-scale
conventional assets any longer, it still builds and operates distri-
bution networks and also consumes energy and other resources
at its facilities and offices. E.ON built and operated large-scale
renewable assets until late September 2019. At this time sub-
stantially all of this business was transferred to RWE. In order
to retain stakeholders’ trust and its license to operate, E.ON
has to ensure that it complies with all international and national
environmental laws and regulations. E.ON’s environmental
management is guided by the precautionary principle endorsed
by the United Nations.

E.ON addresses all environmental requirements in the frame-
work of its HSE management (see above) and has also defined
its own requirements, which are mandatory across E.ON. The
Sustainability & HSE Function Policy requires all E.ON units
(except for very small ones that are negligible from an environ-
mental management standpoint) to have in place an environ-
mental management system certified to ISO 14001 or EMAS,
internationally recognized standards for such systems. As of
year-end 2019, all units covered by this requirement had such
a system in place. These certifications require E.ON to evaluate
environmental aspects and impacts and strive for continual
improvement as defined in a management handbook. In 2018,
E.ON adopted a Policy Statement, which supersedes the pre-
vious statement and is signed by the Management Board. It
articulates E.ON’s commitment to comply with all HSE laws and
regulations and defines the appropriate management systems
for this. It pledges E.ON to protect the environment and the earth’s
climate, reduce its energy consumption, conserve resources,
operate responsibly, and strive for continual improvement in its
environmental performance. Energy management—continually
looking for ways to reduce its own energy consumption—plays
an important role as part of environmental management and
helps E.ON reduce its GHG emissions. At all sites at which ener-
gy-efficiency management systems according to ISO 50001 are
in place, E.ON measures and analyzes the energy consumed by
its facilities and office buildings. The findings help E.ON identify
opportunities to conserve energy and recommend cost-effective
energy-efficiency measures. E.ON has already implemented
several, such as installing smart LED lighting, and other smart
building technology.

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It helps ensure that E.ON recruits, retains, and develops the
people who will continue to drive E.ON’s success. Offering
a range of career paths ensures that E.ON is an attractive
employer to people who wish to pursue a specialist or a general-
ist career.

In 2018 E.ON decentralized its HR activities to bring them
closer to the business. One important function of Group HR is
the HR management of E.ON’s top 100 leaders. This includes
executive development, placement, succession planning, and
talent pipeline management. Each unit must have in place its
own mechanisms to identify and develop talent and to conduct
local succession planning. It is a management responsibility to
ensure that all new employees receive a company orientation
as well as training on essential topics like health and safety. For
this purpose, the units may use standardized E.ON eLearning
modules. These and other virtual learning tools as well as courses
and training programs are offered by the HR Business Solutions
team in Group HR. eLearning is an effective, flexible, and modern
way of delivering learning to employees.

The Senior Vice President for HR is regularly invited to attend
Management Board meetings to talk about people matters. The
Management Board discusses the current status of the talent
pool each time a top executive position is filled. Twice a year the
Management Board receives an overview of the entire talent
pool, including lower levels of management.

To ensure E.ON’s people have a consistent framework within
the Company’s decentralized management approach, in 2017
the HR team and the E.ON Management Board developed and
approved the People Commitments. The People Commitments
establish twelve principles that articulate E.ON’s values with
respect to its people. These principles are binding for the entire
E.ON Group and are agreed with the SE Works Council of E.ON
SE. Units apply these principles in a way that reflects their
particular legal, cultural, and business environment. The People
Guidelines and People Commitments encompass a number of
policies and guidelines. Examples include agreements on remote
working and flexible work arrangements, such as sabbaticals,
part-time work, and special holidays. E.ON’s international
transfer policy governs the temporary foreign deployment of
its employees. The average length of a foreign deployment is
between two and three years.

The E.ON Management Board is informed about serious (cate-
gory 3) environmental incidents by means of monthly reports
from HSE and periodic consultations with the Senior Vice Presi-
dent for Sustainability & HSE. In the case of a major incident
(category 4), the unit at which it occurred reports it directly to
the Management Board within 24 hours.

E.ON had one serious environmental incident in 2019. It occurred
at E.ON Business Solutions in the United Kingdom. A cracked
oil line in a combined-heat-power (CHP) plant led to engine oil
leaking into a nearby pond and river. The leak was quickly isolated
and repaired in the days that followed. Most of the leaked oil
was removed in the next two days. A specialist firm conducted
additional cleanup operations in the next two weeks.

E.ON consumed 228 million GJ of energy in 2019, 11 million GJ
less than in 2018 (which does not include innogy). The main
factor was lower electricity output due to the fact that E.ON now
operates fewer nuclear power stations and transferred substan-
tially all of its renewables operations in September. To further
reduce the electricity consumed by company buildings, in 2018
E.ON set the target of making them all carbon-neutral by 2030.

Aspect 2: Employee Matters

To shape tomorrow’s energy world, remain competitive, and
launch new businesses, E.ON needs talented, dedicated people
whose personal and professional skills match its current and
future needs. Yet with demographic change affecting the labor
market, skilled workers are more in demand than ever. E.ON
needs to maintain an attractive, supportive, and inclusive work
environment in which its people can realize their potential. It is
the only way to attract and retain great employees. Doing all this
in a rapidly changing business environment and amid technologi-
cal developments and corporate restructuring poses challenges
for human resources (“HR”) management.

Employee Development and Working Conditions
E.ON aims to attract talented people to the company and provide
them with a work environment that enables them to do their
best. A people strategy helps E.ON do this, especially in times of
change. Its three focus areas—Preparing Our People for the
Future, Providing Opportunities, and Recognizing Performance—
are crucial for maintaining attractive working conditions and
fostering employees’ personal and professional development.
A key enabler for the latter is Grow@E.ON, a Group-wide com-
petency framework that is integrated into all HR mechanisms.

Separate Combined Non-Financial Report

E.ON has in place a wide range of measures to make working
at E.ON attractive and to develop its employees. E.ON offers
vocational training in numerous careers as well as work-study
programs. One example is the E.ON training initiative in Germany,
which helps school-leavers get a start on their careers through
internships that prepare them for an apprenticeship as well as
school projects and other programs. The E.ON Graduate Program
(“EGP”) recruits highly qualified university graduates for a
24-month program during which they receive a broad overview
of E.ON’s business through three to six deployments in different
E.ON units and departments. In 2019 E.ON offered the EGP
in Germany, the United Kingdom, Sweden, the Czech Republic,
Hungary, and Romania.

E.ON periodically conducts employee surveys—called Pulse-
Checks—to find out how its people feel about their job, their super-
visor, the work atmosphere in their unit, and other topics. E.ON’s
2019 Pulse Check survey shows that the Group-wide health
and safety campaigns were effective in reinforcing employees’
awareness. Employees ranked health and safety and the unac-
ceptability of unethical or improper behavior above all other
topics in the survey and much higher than in previous surveys.

E.ON uses a single management hiring process throughout the
Group. It is designed to improve how E.ON fills senior manage-
ment positions, make hiring more transparent, and ensure equal
opportunity. Its main component is a biweekly placement
conference at which talent leaders from around the Company
discuss vacancies and potential candidates. E.ON also conducts
an annual management review. These mechanisms ensure that
managers are engaged in ongoing professional development,
that E.ON has a transparent view of its current talent situation
and the needs for the future, and that leaders across the E.ON
Group have development opportunities. Since feedback is
essential for empowering people to perform at their best, E.ON
also provides employees with periodic performance and career-
development reviews.

E.ON believes that an attractive compensation package includ-
ing appealing and up-to-date fringe benefits is essential for
rewarding its employees. The compensation plans of nearly all
employees contain an element that reflects E.ON’s performance.
This element is typically based on the same key performance
indicators that are also used in the Management Board’s com-
pensation plan.

A motivated, healthy, and diverse workforce is a key success
factor. The innogy integration marks the beginning of a change
process for all employees. E.ON is addressing it as part of HR
management and takes employees’ interests very seriously.
E.ON will actively involve its workforce in all upcoming changes
and work closely with employee representatives. E.ON has a

long tradition of maintaining a constructive, mutually trusting
partnership with employee representatives. Its collaborative
relationship with employees and their representatives lays the
foundation for a successful social partnership, particularly in
times of change. This partnership helps ensure that the integra-
tion of innogy employees and all other change initiatives remain
transparent and fair for every employee. In this way, E.ON
wants to ensure smooth restructuring. You’ll find more details
on page 27.

Occupational Health and Safety
E.ON’s employees’ health and safety (“H&S”) are essential
for their well-being and thus for the Company’s success. Some
employees perform potentially risky tasks, such as working on
power distribution networks. Strict safety standards are therefore
of particular importance to E.ON. First and foremost, accidents
endanger employees’ health. But accidents may also damage
property, cause work stoppages, and harm E.ON’s reputation.
Demographic change and a rapidly changing work environment
present additional challenges: E.ON needs to address the needs
of an aging workforce and maintain its people’s ability to work.

E.ON’s approach to H&S is proactive and preventive, and the
Company has zero tolerance for accidents. Consequently, the
overriding objective is to prevent accidents from ever happening.
By signing the Düsseldorf Statement on the Seoul Declaration
on Safety and Health at Work and the Luxembourg Declaration
on Workplace Health Promotion in 2009, E.ON pledged to pro-
mote a culture of prevention.

To live up to E.ON’s commitment to employees’ H&S, its HSE
management assigns responsibilities clearly and sets minimum
standards (see HSE Management below). These apply not only
to E.ON’s employees but also to contractor employees who do
work on E.ON’s behalf. With few exceptions, all E.ON units are
required to have an H&S management system certified to
ISO 45001 (ISO 45001 replaced OHSAS 18001), a globally rec-
ognized standard for such systems. The annual management
review is an important part of this management system. The
reviews are conducted by the units themselves and are a pre-
requisite for certification to be renewed. If necessary, Corporate
Audit and HSE at corporate headquarters conduct HSE audits
to determine whether E.ON’s standards are being met. To decide
whether an audit of a unit is necessary, E.ON analyzes its acci-
dents from the previous year as well as current risk assessments.
In addition to audits, performance indicators for lost time,
accidents, and dangerous situations also help E.ON investigate
accident causes and conduct comprehensive risk analyses. The

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documented and disseminated. This relates in particular to
E.ON’s internal H&S rules at its DSOs in Germany. Isolated
safety deficiencies that could put employees, contractors, and
members of the public at risk were found at some E.ON units
outside Germany. The deficiencies were prioritized and are
gradually in the process of being rectified. On balance, there
has been a steady improvement in recent years. E.ON views
audits—and the findings and recommendations they yield—as
opportunities to foster continuous improvement.

Total recordable injury frequency (“TRIF”) is E.ON’s key perfor-
mance indicator for safety. It measures the number of recordable
work-related injuries and illnesses per million hours of work.
E.ON has included contractor employees’ in its safety perfor-
mance since 2011 (combined TRIF). The HSE improvement
plans of many of E.ON’s units set annual targets for combined
TRIF as the Group strives to reach the goal of zero accidents.
E.ON’s most direct influence is on reducing the number of acci-
dents involving its own employees. E.ON therefore presents
below its employee TRIF performance for the past three years.

Employee TRIF1

E.ON 2019

innogy 20192

E.ON 2018

E.ON 2017

2.3

2.5

2.3

3.9

1TRIF measures the number of reported fatalities and occupational injuries and illnesses
per million hours of work. It includes injuries that occur during work-related travel that
result in lost time or no lost time and/or that lead to medical treatment, restricted work,
or work at a substitute work station.
2Figure for October 1 to December 31, 2019 and not included in E.ON’s 2019 figure; see
Purpose and Scope on page 88.

Employee TRIF of 2.3 in 2019 was slightly lower than the prior-
year figure of 2.5. Contractor TRIF increased from 2.1 to 2.6.
E.ON thinks that the increase in contractor TRIF may be due to
a better reporting culture. E.ON worked hard in 2019 to improve
its contractor management and thus its knowledge of contractor’s
accidents while working for E.ON.

E.ON Management Board is always informed about severe
accidents, developments relating to accidents, and related
measures and programs by means of monthly reports from HSE
and periodic consultations with the Senior Vice President for
Sustainability & HSE. In addition, the member of the E.ON Man-
agement Board responsible for HSE receives a weekly safety
update and presents it at board meetings. The update contains
major incidents that could have led to the death of employees,
contractors, customers, or third parties. E.ON investigates all
accidents carefully, learns from them and takes steps to avoid
them in the future.

E.ON places great emphasis on continually providing senior
managers with training and several tools to enable them to live
up to their responsibility for H&S and to ensure that the work-
places for which they are responsible are healthy and safe. In
2017 E.ON developed a one-day workshop to help managers at
its operating units recognize safety risks early and to motivate
their employees to work safely and responsibly. E.ON conducted
the workshop at its four distribution system operators (“DSO”)
in Germany and at E.ON Business Solutions in 2017 and 2018
and at other E.ON units in 2019. In 2019 E.ON added new mate-
rial to emphasize the importance of interpersonal relationships
in promoting safety. It trains managers to conduct how-we-care
workshops that help teams to develop a shared understanding
of what it means to take care of one another. In addition, one
of E.ON’s DSOs in Germany launched an initiative that brings
together managers and operational staff to discuss concerns
openly and identify new ways to improve the safety culture. E.ON
plans to emulate this approach at other units in 2020.

In several countries where E.ON operates, employees who have
questions or concerns about their physical or mental health
can contact a free, independent, and strictly confidential health
advisory service (employee assistance program). In Germany,
this service is a central component of the Group Works Health
Agreement, which was concluded between management and
the Group Works Council in 2015.

In 2019 E.ON started to harmonize the respective H&S manage-
ment systems and guidelines in place at the E.ON und innogy
parts of the Group. In addition, virtual working groups were
formed to address selected key H&S topics. These steps will
help ensure a seamless integration in 2020.

The findings of the incident investigations and HSE audits com-
pleted in 2019 show that E.ON’s H&S management systems
are largely effective. Most of the deficiencies identified were
rectified without delay. However, there remains work to do to
ensure that all new or revised policies and processes are fully

Separate Combined Non-Financial Report

instructions contained in the Incident and Crisis Management
Policy. A member of the E.ON Management Board oversees the
Energy Networks segment. Under his leadership, two depart-
ments at E.ON’s corporate headquarters actively manage Energy
Networks’ regional units. This includes strategic development,
capital allocation, business controlling, and so forth.

E.ON has in place investment and maintenance plans to maintain
and expand its grids to ensure that all of its network customers
are connected and have a reliable energy supply. E.ON’s DSOs
are responsible for implementing these plans, which encompass
one or more years. Their investment budgets are approved cen-
trally. Final approval comes from the E.ON Management Board
at the end of the annual medium-term planning and budgeting
process. A portion of the investment budgets goes towards
making E.ON’s grids smarter by equipping them with sensors
and command-and-control technology and by augmenting
them with a digital layer. The increasing use of smart-grid tech-
nologies makes it possible to avoid or delay costly investments
in conventional networks by, for example, using this technology
to maximize the distribution capacity of existing overhead lines.
Investment decisions always focus on efficiency as well as
security of supply. E.ON chooses the solutions that make the
most technical and economic sense. This is because grid invest-
ments affect the grid fees included in the electricity price paid
by customers.

E.ON records all planned and unplanned outages at its distribu-
tion networks. It uses these data to calculate the system average
interruption duration index (“SAIDI”), which measures the aver-
age outage duration per customer per year. This figure is not
relevant for management purposes but provides information on
the reliability of E.ON’s networks. Some countries where E.ON
operates have strict legal thresholds for SAIDI. Not meeting
these requirements may lead to fines or compensation payments.
Some E.ON regional units therefore set their own SAIDI targets
on an annual basis. At regular intervals, the unit managing
directors inform the member of the E.ON Management Board
responsible for network operations about their achievement of
these targets. The SAIDI of all regional units are included in a
quarterly performance report to the E.ON Management Board.

Regrettably, two contractor employees and one innogy employee
died in 2019. After a fatal accident, E.ON immediately initiates
an investigation to understand the exact course of events that
led to it. In addition, within 24 hours a report must be submitted
to the Management Board of the unit where the accident occurred
and to the member of the E.ON Management Board responsible
for H&S. The aim is to identify the root causes and to take all
necessary measures to prevent comparable accidents in future.

E.ON employees’ health rate was 96.0 percent in 2019 (includ-
ing innogy since October 1, 2019). It reflects the number of days
actually worked in relation to agreed-on work time. The 2019
figure was again high (E.ON 2018: 96.3 percent).

Aspect 3: Social Matters

Security of Supply
One of E.ON’s main tasks as an energy company and distribution
grid operator is to ensure that its customers have a secure supply
of electricity. A reliable electricity supply is essential for indus-
trialized countries to be able to maintain their infrastructure and
meet their inhabitants’ needs. For example, industrial customers
that operate a high-precision production facility require a con-
stant network frequency. If the frequency fluctuates, machinery
can break down, resulting in higher costs. A power outage can
have serious consequences, and not just for industrial customers.
Whether at companies, government agencies, or households,
most processes are no longer possible without electricity. One of
the challenges in energy supply is that, increasingly, electricity
comes from distributed sources. As a result, electricity is fed into
the networks at many different points. Moreover, renewables
feed-in fluctuates because it depends on the weather and other
factors beyond E.ON’s control.

Part of E.ON’s corporate strategy is to adapt its distribution grids
to the emerging distributed energy world. They form a crucial
link between electricity producers and consumers. E.ON’s distri-
bution grids must function properly and be equipped to meet
the challenges of the new energy world for E.ON to continue to
ensure a reliable electricity supply in the future. For this purpose,
E.ON continually upgrades its existing infrastructure with smart-
grid technology. This enables E.ON to better manage energy
generation, distribution, and storage.

E.ON’s DSOs are responsible for the safe and reliable operation
of its distribution networks. Their network control centers over-
see network operations. E.ON’s DSOs are also responsible for
resolving unforeseen outages in their network territory. In case
of widespread outages, E.ON’s crisis management system stip-
ulates responsibilities and processes in accordance with the

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SAIDI power1

E.ON 2019

innogy 20192

E.ON 2018

Minutes per year

Scheduled

Un-
scheduled

Total

Scheduled

Un-
scheduled

Total3

Scheduled

Un-
scheduled

Germany4

Sweden

Hungary

Czech Republic

Romania

Slovakia5

120

152

288

142

185

170

182

200

473

183

n/a

113

n/a

166

n/a

132

155

339

120

249

Total

144

192

203

588

176

1Totals may deviate due to rounding.
2Figures for all of 2019 and not included in E.ON’s 2019 figures; see Purpose and Scope on page 88. The table does not include innogy’s SAIDI in Poland (scheduled 9, unscheduled 42) for lack of
materiality. innogy’s network business in Poland is confined to the Warsaw region.
3Unaudited figures.
4Figures for Germany are for the respective previous year: 2019 for 2018, 2018 for 2017.
5DSO in which E.ON has a 49-percent stake.

In 2019 E.ON’s SAIDI was comparable to the 2018 figure in
most countries. A noteworthy change was in Sweden, where,
on average, customers were more affected by power outages
than in the previous years owing to a hurricane and severe
thunderstorms in the summer. A tangible positive change was
in Romania, where the overall interruption duration was reduced
by over 100 minutes per customer. This was likely attributable
to ongoing investments in automation and improvements in
maintenance crews’ work methods. As in previous years, E.ON’s
grids in Germany were its most reliable.

Customer Experience
E.ON’s ability to acquire new customers and retain existing ones
is crucial for its business success. Global trends like climate
protection and digitization are not only altering the energy land-
scape. They are also creating new customer needs. E.ON will only
remain successful in the marketplace by adapting its products
and services to meet these needs and by continually improving
its performance.

E.ON puts customers at the center of everything it does. This
pledge is a corporate value and is embedded in E.ON’s customer
experience principles, brand personality, and Grow@E.ON, its
Group-wide competency framework. E.ON’s objective is to con-
tinually enhance customer loyalty and to become a customer-
led business and the energy-solutions leader in its markets.

E.ON measures customer loyalty by means of Net Promoter
Score (NPS), which was introduced in 2009 and rolled out as
Group-wide program in 2013. NPS indicates customers’ will-
ingness to recommend E.ON to their family and friends. It also
helps E.ON identify which issues are currently of particular
importance to its customers and thus adapt its activities to cur-
rent customer needs. There are three types of NPS. Strategic
NPS or top-down NPS compares E.ON’s performance to com-
petitors’ and is based on the feedback of customers regardless

of whether they have had an interaction with E.ON. Bottom-up
NPS is based on the feedback of customers who have had a
specific interaction with E.ON, like talking to a call center agent.
Journey NPS measures the loyalty of customers who have com-
pleted a journey with E.ON, such as transferring their energy
service to their new residence when they move. NPS is used by
the units in all E.ON’s markets. A methodology adopted in Sep-
tember 2017 enables E.ON to measure strategic NPS consis-
tently across all its markets. This, in turn, makes it possible for
E.ON to identify and resolve cross-market customer issues and
also targets areas where it could provide useful innovations for
its customers. Furthermore, automated reporting eliminates
the errors of manual data entry, thereby improving data quality
and auditability. The internal NPS (“iNPS”) program aims to
sensitize employees who have no contact with customers to the
importance of customer loyalty. iNPS was rolled out across the
Group in 2014. It has been implemented in IT, human resources,
supply chain management, finance, and other support functions.

Earning customers’ loyalty by continually improving their expe-
rience is a major priority for innogy as well. Although innogy
does not use NPS, it has a similar process in place. E.ON is
working closely with innogy to adopt a single methodology.

E.ON defines Group-wide targets for strategic NPS and journey
NPS annually and uses both at the segment level for manage-
ment purposes. Strategic NPS is highly significant for manage-
ment purposes because of the information collected about
competitors. The Management Board holds quarterly discussions
with the units to evaluate their NPS and, if necessary, to decide
what action they should take to achieve their NPS target. The
variable compensation of senior managers has two components:
a company factor and a factor reflecting a manager’s individual

Separate Combined Non-Financial Report

performance. In 2019 strategic NPS accounted for 20 percent of
the company factor and journey NPS was included in the individ-
ual performance factor of E.ON’s senior managers’ compensation.
By contrast, the E.ON Management Board’s compensation does
not depend on NPS targets. Beyond the NPS program, each unit
has a set of Game-Changing Initiatives in place to systematically
improve its customer experience. They are sponsored by the
respective unit’s CEO and board, who are personally responsible
for improving their unit’s NPS. The initiatives, which are defined
annually, may span multiple years depending on the level of trans-
formation required. E.ON introduced these initiatives in 2017
and initially called them CEO-led signature actions.

The Chief Operating Office—Commercial (“COO-C”) at corporate
headquarters coordinates the Company’s marketing strategy
with the aim of bringing the E.ON brand to life. COO-C supports
the energy sales and solutions businesses for all customer divi-
sions, in all markets. E.ON’s customer experience teams serve
as ambassadors for customer loyalty in their respective unit.
They take the lead on related projects and activities in their sales
territory and share information about successful programs and
service improvements on a monthly basis. E.ON has customer
experience teams in Germany, the United Kingdom, Italy, Romania,
Sweden, the Czech Republic, and Hungary.

The Customer Immersion program enables senior managers and
employees to interact directly with residential and business
customers. Its purpose is to bring the customer’s voice into the
organization and enhance employees’ customer orientation. In
2019 E.ON put together an interactive video installation con-
sisting of 24 screens playing the recorded statements and stories
of real E.ON customers from a variety of countries.

E.ON’s average strategic NPS for residential customers increased
at the beginning of 2019, was steady for most of the year, and
reached its highest level at the end of the year. It was above the
competitor average throughout the year. In five of seven countries
where E.ON operates, the percentage of promoters (customers
who speak positively about E.ON and recommend it to friends
and family) rose. The percentage of detractors (customers who
speak negatively about E.ON) declined in six countries.

E.ON’s average strategic NPS for small and medium-sized
enterprises (SME) rose at the beginning of the year, continued to
improve over the course of the year, and finished the year at its
highest level. Like E.ON’s average strategic NPS for residential
customers, it was above the competitor average throughout the
year. The percentage of promoters rose in five of seven countries
and remained stable in two. The percentage of detractors
decreased in six countries and was largely unchanged in one.

Data Protection
Greater digitization opens a wide range of opportunities for
offering smart solutions and optimizing E.ON’s business, tech-
nical solutions, and processes. It also potentially poses a risk
to the integrity, confidentiality, and availability of personal data.
“Personal data” means any information relating to an identified
or identifiable natural person. The EU General Data Protection
Regulation (“GDPR”) and the new German Federal Data Protec-
tion Act came into force in 2018. The former harmonizes the
rules for the processing of personal data by organizations in the
EU and the wider European Economic Area; the latter establishes
specific regulations for Germany. E.ON has an obligation to
safeguard personal data in order to protect the persons whose
data the Company processes. In addition, data breaches could
damage E.ON’s reputation and lead to fines.

In 2019 E.ON started to update its business directives, policies,
guidelines and processes to comply with the GDPR in light
of the experience E.ON and innogy gained since it took effect.
The existing Data Protection Management System (“DPMS”)
provides guidance on data protection issues and is intended to
ensure that, to the extent possible, E.ON takes a structured,
coordinated, and consistent approach to data protection across
the Group. The DPMS has been audited by a law firm. In 2019
internal audits of several E.ON units regarding the status of the
data protection management took place. They too confirmed
that the approach to data protection is effective. The existing
data protection policy came into force in 2018. It defines roles
and responsibilities in a uniform manner E.ON-wide. In 2019
E.ON continued to take all steps necessary to comply with the
GDPR with regard to its business partners, stakeholders, cus-
tomers, and other relevant parties, including those affected by
the innogy transaction. The minimum standard all units must
meet is to implement, where necessary, an adapted version of
the DPMS. E.ON has in place an appropriate set of processes,

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

including those to fulfil the data subject’s rights (for information,
deletion, and so forth), to consider data protection requirements
in relation to its suppliers and other business partners, and
to report and handle personal data breaches. E.ON assesses a
breach’s severity using a method developed by the European
Network and Information Security Agency (ENISA). In addition,
these processes provide guidance to the units, which have
implemented the necessary processes in their organizations as
well. E.ON’s units are responsible for dealing with all data pro-
tection issues related to their business and with the claims that
individuals address to them pursuant to the individuals’ rights
under the GDPR, such as information, rectification, deletion,
and data portability. Where required by law, the units have
appointed Data Protection Officers (“DPOs”). In Germany, for
example, an organization handling sensitive personal data,
working in the business of address trading or having more than
twenty employees handling personal data must have a DPO.
However, the requirements for appointing DPOs vary by country.
The DPOs share information with each other on a regular basis
and report regularly to the Chief DPO at corporate headquarters
on the following dimensions of data protection: the rights of the
data subject, relations to third parties, company documentation,
and correspondence with supervisory authorities. The Chief
DPO’s duties include coordinating data protection activities across
the Group.

The Chief DPO reports periodically to the Information Security
and Data Protection Council, which includes inter alia two
Management Board members and, if the need arises, to the
entire Management Board.

Internal stakeholders are regularly informed about relevant
developments in data protection, such as legislation, technology,
decisions issued by regulatory agencies, and so forth. This
information is disseminated by email or, where appropriate,
through internal communications channels, including Connect,
E.ON’s corporate social media platform. E.ON’s employees
receive training in data protection every two to three years. New
employees typically receive such training in their first year. In
addition, individual departments and teams—such as call centers
and sales organizations—provide training to meet their special
data protection requirements. There is a Group-wide eLearning
module to familiarize employees with the GDPR’s rules.

The DPMS uses the plan-do-check-act (“PDCA”) method, which
helps the Company plan, implement, manage, and improve
processes, which is mandatory under the GDPR. The PDCA cycle
includes continuously monitoring the DPMS’s effectiveness and
taking action if the need for improvement arises. Where necessary
E.ON aligns changes of the DPMS with the E.ON Management
Board. E.ON therefore considers the existing DPMS to be
appropriate and effective. Nevertheless, E.ON and innogy’s data
protection team will review the DPMS as part of the innogy
integration process.

Aspect 4: Human Rights

E.ON is committed to respecting human rights in all its business
processes. Failure to respect people’s fundamental rights and
needs may have serious consequences for those affected and
may damage the Company’s reputation. Compliance with social
standards also plays an important role in the business relation-
ships with enterprise partners. In addition, there are increasing
regulatory requirements for corporate transparency and control.
For example, the U.K. Modern Slavery Act obliges E.ON to report
on the steps it takes to prevent international human trafficking.

To prevent human rights violations, E.ON adheres to external
standards and defines its own principles and policies. The E.ON
Code of Conduct (see “Aspect 5: Anti-corruption”), a revised
version of which took effect in 2018, obliges all employees to
contribute to a non-discriminatory and safe working environ-
ment and to respect human rights. In 2019 E.ON updated its
Human Rights Policy Statement from 2008. The statement
acknowledges the International Bill of Human Rights and the
Declaration on Fundamental Principles and Rights at Work of
the International Labour Organisation (ILO) and its fundamental
conventions and makes reference to E.ON’s own policies, such
as the Supplier Code of Conduct. The standards E.ON is guided
by include the Universal Declaration of Human Rights of the
United Nations, the principles of the UN Global Compact (UNGC),
and the European Convention for the Protection of Human Rights.
The Chief Sustainability Officer, who is a member of the E.ON
Management Board, is also the Chief Human Rights Officer. The
standards for human rights and ethical business practices E.ON
requires its suppliers to meet are defined in the Supplier Code
of Conduct. The supplier prequalification process consists of

Separate Combined Non-Financial Report

100

self-registration, formal agreement to adhere to the Supplier
Code of Conduct, and a compliance check. Non-fuel suppliers
who are not subject to supplier onboarding must agree to the
Company’s General Terms and Conditions for Purchase Contracts,
which are legally binding. These oblige non-fuel suppliers, among
other things, to comply with the Supplier Code of Conduct and
to endorse the principles of the UNGC. In addition, the Supply
Chain Function Policy and Supply Chain Handbook define Group-
wide principles, processes, and responsibilities for non-fuel
procurement, excluding the exceptional cases covered under the
exception list (such as commodity, financial and real estate
transactions, insurances, taxes).

E.ON’s employees can report potential violations of human rights
through internal reporting channels or a Group-wide external
whistle-blower hotline. In December 2019 E.ON extended the
hotline service and published the hotline number online. Not only
E.ON employees, but also business partners, their employees
and other third parties can contact this hotline confidentially.
Group Compliance forwards the information to the relevant
department or unit. Depending on the nature and severity of the
potential violation, Group Compliance may report it immediately
to the E.ON Management Board, notify law enforcement, initiate
its own investigation, or take other appropriate action. In 2019
no violation of human rights was reported through these channels.

At the end of 2018 E.ON put in place a revised and fully digital
supplier onboarding solution that is integrated into the Company’s
enterprise resource planning system. In 2019 E.ON focused
on monitoring existing and new suppliers to ensure that they
comply with its minimum requirements. Every non-fuel supplier
whose individual transaction volume exceeds €25,000 or whose
health, safety, and environment risk is medium or high must
complete an online onboarding process. In some cases, E.ON may
take additional steps during the supplier onboarding process,
such as conducting a supplier audit to assess, among other issues,
whether the supplier complies with E.ON’s standards for human
rights. As of year-end 2019, 98 percent of E.ON’s purchase order
and contract call-offs had completed the onboarding process.

In addition, E.ON periodically conducts supplier performance
reviews of its key non-fuel suppliers using five key performance
indicators (“KPIs”): quality, cost, delivery, innovation, and CSR;
the latter includes the protection of human rights. E.ON shares
the results with each supplier during a performance review
meeting. The outcome of the meeting may trigger specific actions
for the supplier to take to improve its performance in one or more
of the KPIs if it wants to continue doing business with E.ON.

E.ON’s goal is to prevent human rights, environmental and cor-
porate governance abuses by identifying associated risks along
its value chain from a holistic point of view. Onboarding assess-
ments help E.ON do business exclusively with suppliers com-
mitted to its standards, and periodic risk assessments enable
E.ON to identify violations or suspected violations. In such cases,
the Supply Chain Compliance Officer and the respective Supply
Chain Director are notified, and a process is set in motion to
ensure that the situation is rectified without delay. If it is not,
E.ON terminates its business dealings with the supplier.

Begun in 2017, the German National Action Plan on Business
and Human Rights (NAP) serves as a forum for companies, trade
associations, policymakers, non-governmental organizations,
and academia to promote respect for human rights along the
value chain. The NAP, which has defined guiding principles for
embedding human rights due diligence (HRDD) into corporate
strategy and business processes, encourages companies to
conduct voluntary HRDD. In September 2019 E.ON participated
in voluntary NAP monitoring conducted by the German govern-
ment. This provided useful insights into the status of E.ON’s
implementation of the NAP. With support from a consulting firm,
E.ON also assessed the maturity of its HRDD processes and
practices. Based on the assessment’s findings, the Company
defined measures to improve HRDD at E.ON and presented them
to the Sustainability Council and Management Board. E.ON began
implementing them in 2019. They include an updated Human
Rights Policy Statement and, as stated above, making the whistle-
blower hotline available to third parties. E.ON also refined its
human rights risk matrix, which in the future will enable the Com-
pany to adopt an even more structured approach to assessing
human rights risks. At the start of 2020 E.ON prepared to take
additional steps, which are expected to be implemented during
the rest of the year.

Aspect 5: Anti-corruption

E.ON is committed to combating corruption in all its manifesta-
tions and support national and international efforts directed
against it. E.ON rejects it as a member of the UN Global Compact
as well. Corruption leads to decisions being made for the wrong
reasons. It can thus impede progress and innovation, distort
competition, and do long-term damage to companies. Employees,

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

101

gifts is permissible, potentially problematic, or forbidden. Gra-
tuities above a certain threshold, which varies by country and
national regulations, must receive Compliance Officer approval.
Particularly strict requirements apply to invitations and gifts
from public, elected, or government officials and their represen-
tatives.

To determine in which functions the risk for some compliance
violations is particularly high, E.ON conducts compliance risk
assessments on a regular basis. Based on their findings, preven-
tive measures are taken.

If employees suspect misconduct or a violation of laws or com-
pany policies, they are instructed to report it immediately. If they
wish, they may do so anonymously through internal reporting
channels or a Group-wide external whistle-blower hotline, which
E.ON operates with a law firm. Not only E.ON employees, but
also business partners, their employees and other third parties
can contact the hotline confidentially. Group Compliance forwards
the information to the relevant department or unit.

E.ON wants to ensure compliance standards in its supply chain
as well. All non-fuel suppliers and all suppliers of uranium and
solid biomass must therefore sign the Supplier Code of Conduct,
which contains binding standards for ethical business practices.
In addition, E.ON conducts compliance checks to determine
whether potential suppliers act in accordance with the company’s
values and principles.

The effectiveness of E.ON’s CMS is the main indicator of the
Company’s compliance performance for purposes of manage-
ment control. All compliance measures, policies, processes,
controls, and so forth are assessed and guided by this criterion.
The CMS’s effectiveness is also monitored by the E.ON Manage-
ment Board, the Supervisory Board’s Audit and Risk Committee,
and Group Audit. The latter, an independent entity, is E.ON’s
third line of defense for monitoring the CMS. The criteria E.ON
uses for monitoring effectiveness include assessing whether
and how prescribed measures are implemented across E.ON.
The Management Board and the Audit and Risk Committee are
convinced that the CMS was again effective in 2019. Their
assessment was based in part on audits as well as surveys of
employees and stakeholders.

managers, and board members guilty of corruption may be
subject to fines and criminal prosecution. To earn stakeholders’
lasting trust, E.ON closely monitors compliance with laws and
its own policies. If violations occur, E.ON deals with them trans-
parently and, if necessary, takes disciplinary action.

The Management Board has the ultimate responsibility for
ensuring compliance with applicable laws and for monitoring
compliance risks. The E.ON Group has an effective compliance
management system (“CMS”). The CMS sets uniform Group-
wide minimum standards for certain compliance issues, such
as anti-corruption. Pursuant to a Group-wide policy, the Chief
Compliance Officer (“CCO”), the Group Compliance division,
and the business units’ Compliance Officers are responsible for
refining and optimizing the CMS on a continual basis.

The CCO reports biannually to the E.ON Management Board and
on a quarterly basis to the Supervisory Board’s Audit and Risk
Committee on the status of the CMS’s effectiveness and current
developments and incidents. In the event of serious incidents,
the Management Board and the Audit and Risk Committee are
informed immediately. The same applies to important new laws.
Potential violations are investigated centrally by Group Audit
and Group Compliance.

E.ON’s Code of Conduct focuses on the guiding principle, “Doing
the right thing.” It is supplemented by several People Guidelines
that lay down specific rules (“Doing things right”). As a compulsory
reference, the code helps employees make the right decisions in
various professional situations and remain true to the Company’s
values. In the preface, the E.ON Management Board calls on all
employees to act in a correct manner in order to protect them-
selves and the company. The introduction explains why a Code
of Conduct is needed. The main body of the Code contains com-
prehensible guidance on all issues that are of particular concern
to E.ON. These include human rights, anti-corruption, fair com-
petition, and good relationships with business partners. The Code
also contains an integrity test. By answering just a few questions,
employees can check whether their assessments are in com-
pliance with E.ON principles and values. The Code clearly states
E.ON’s prohibition against company donations to political parties,
political candidates, managers of political offices, or represen-
tatives of public agencies.

Managers and employees may be invited to events and restau-
rants, especially by business partners, or receive gifts. The
Anti-Corruption People Guideline contains a decision-making
scheme that uses the familiar green, amber, and red of traffic
lights to indicate when accepting or granting such offers or

Consolidated
Financial
Statements

E.ON SE and Subsidiaries Consolidated Statements of Income

€ in millions

Sales including electricity and energy taxes

Electricity and energy taxes

Sales 1

Changes in inventories (finished goods and work in progress)

Own work capitalized

Other operating income 1

Cost of materials 1

Personnel costs

Depreciation, amortization and impairment charges

Other operating expenses 1

Income from companies accounted for under the equity method

Income 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 from continuing operations

Income/Loss from discontinued operations, net

Net 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 2

from continuing operations

from discontinued operations

from net income

104

Note

(5)

(6)

(7)

(8)

(11)

(14)

(7)

(9)

(10)

(4)

(13)

2019

42,392

-1,389

41,003

-125

487

5,649

2018

30,089

-693

29,396

394

5,334

-32,126

-22,635

-4,101

-2,502

-7,355

421

1,351

-554
58
1,065
-1,677

-53

744

1,064

1,808
1,566
242

0.24

0.44

0.68

-2,460

-1,575

-4,786

269

3,953

-669
44
523
-1,236

-46

3,238

286

3,524
3,223
301

1.37

0.12

1.49

Weighted-average number of shares outstanding (in millions)

2,293

2,167

1Failed-own-use contracts are included due to the change in accounting method. The prior year was adjusted accordingly (see the explanations in Note 2).
2Based on weighted-average number of shares outstanding.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

105

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

€ in millions

Net 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

Cash flow hedges

Unrealized changes—hedging reserve
Unrealized changes—reserve for hedging costs
Reclassification adjustments recognized in income

Fair value measurement of financial instruments

Unrealized changes
Reclassification adjustments recognized in income

Currency-translation adjustments

Unrealized changes—hedging reserve /other
Unrealized changes—reserve for hedging costs
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

Continuing operations
Discontinued operations

Attributable to non-controlling interests

2019

1,808

-146

-36

-171

-453
-438
-3
-12

-1
29
-30

-622
-233
1
-390

-123
-116
-7

-1,189

-1,360

448
173
-371
544
275

2018

3,524

-488

-1

-54

-543

53
-15
59
9

-63
-24
-39

-84
-99
2
13

-40
-369
329

-8

-142

-685

2,839
2,610
2,413
197
229

E.ON SE and Subsidiaries Balance Sheets—Assets

€ in millions

Goodwill 1

Intangible assets

Right-of-use assets 2

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

Deferred tax assets

Income 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

106

December 31,

2018

2,054

2,162

–

2019

17,512

4,138

3,109

35,832

18,057

5,232

4,083
1,730
2,353

699

3,593

2,212

2,603

2,904
664
2,240

427

1,474

1,195

76,444

30,883

1,252

490

14,319

1,377

3,602
1,197
511
1,894

1,082

22,122

98,566

684

284

5,445

229

5,357
774
659
3,924

11,442

23,441

54,324

Note

(14)

(32)

(14)

(15)

(17)

(10)

(16)

(17)

(10)

(18)

(4)

1Includes the preliminary differential amount from the innogy purchase price allocation.
2New account due to IFRS 16 implementation, no prior-year figures, including finance leases previously recognized in accordance with IAS 17 (see the explanations in Note 2 and 32).

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

107

Note

(19)

(20)

(21)

(22)

(19)

(23)

(26)

(10)

(24)

(25)

(10)

(26)

(10)

(25)

(4)

December 31,

2018

2,201

9,862

-2,461

-2,718

-1,126

5,758

3,190

-430

2,760

8,518

8,323

4,506

304

3,247

12,459

1,706

30,545

1,563

7,637

262

2,117

3,682

15,261

54,324

2019

2,641

13,368

-1,897

-3,909

-1,126

9,077

5,491

-1,483

4,008

13,085

28,025

7,939

293

7,201

13,468

2,538

59,464

3,923

16,686

787

4,019

602

26,017

98,566

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

€ in millions

Capital stock

Additional paid-in capital

Retained earnings

Accumulated other comprehensive income 3

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 tax liabilities

Provisions for pensions and similar obligations

Miscellaneous provisions

Deferred tax liabilities

Non-current liabilities

Financial liabilities

Trade payables and other operating liabilities

Income tax liabilities

Miscellaneous provisions

Liabilities associated with assets held for sale

Current liabilities

Total equity and liabilities

3Thereof relating to discontinued operations (December 31, 2019): -€36 million.

E.ON SE and Subsidiaries Consolidated Statements of Cash Flows

€ in millions

Net 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 and securities (>3 months)

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 (used for) operating activities of continuing operations

Cash provided by (used for) operating activities of discontinued operations

Cash provided by (used for) operating activities (operating cash flow)

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 provided by (used for) investing activities of continuing operations

Cash provided by (used for) investing activities of discontinued operations

Cash provided by (used for) investing activities

Payments received/made from changes in capital 1

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 provided by (used for) financing activities of continuing operations

Cash provided by (used for) financing activities of discontinued operations

Cash provided by (used for) financing activities

1No material netting has taken place in either of the years presented here.

108

2019

1,808

-1,064

2,502

497

-242

-292

-466
-38
-392
-36

70
-1
-867
830
431
-323

2,813

152

2,965

256
192
64

-4,784
-3,241
-1,543

1,803

-2,576

197

-5,104

-716

-5,820

-342

-932

-188

5,824

-3,377

985

-193

792

2018

3,524

-286

1,575

-397

205

-926
-51
-795
-80

-1,457
63
-243
-232
-47
-998

2,295

558

2,853

4,306
118
4,188

-2,487
-2,280
-207

2,630

-3,533

1,122

2,038

-1,027

1,011

-650

-233

1,819

-3,674

-2,732

-2,637

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

109

E.ON SE and Subsidiaries Consolidated Statements of Cash Flows

€ in millions

Net increase/decrease 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 2

Cash and cash equivalents of discontinued operations at the beginning of the period

Cash and cash equivalents at the end of the period

Less: Cash and cash equivalents of discontinued operations at the end of the period

Cash and cash equivalents of continuing operations at the end of the period 3

Supplementary information on cash flows from operating activities

Income taxes paid (less refunds)

Interest paid

Interest received

Divdends received

2019

-2,063

-11

3,924

1,916

-14

1,902

-754

-1,219

568

448

2018

1,227

–

2,673

3,990

-66

3,924

-628

-784

178

331

2Cash and cash equivalents of continuing operations at the beginning of the prior year also includes holdings of €90 million in companies in the Renewables segment (which is reported as a
discontinued operation), and €55 million from Hamburg Netz GmbH, which was deconsolidated in the first quarter of 2018.
3Cash and cash equivalents of continuing operations at the balance-sheet date also include €4 million attributable to the sales operations in Hungary that were reclassified as a disposal group in the
third quarter of 2019, and €4 million attributable to the sales operations of the heating electricity business in Germany that were reclassified as a disposal group in the fourth quarter of 2019.

110

Changes in accumulated other comprehensive income

Currency translation
adjustments

Hedging
reserve/
other

Reserve for
hedging
costs

Fair value
measure-
ment of
financial
instruments

Cash flow hedges

Hedging
reserve

Reserve for
hedging
costs

Additional
paid-in
capital

Retained
earnings

Statement of Changes in Equity

€ in millions

Balance as of December 31, 2017

IFRS 9, IFRS 15 adjustment

Capital
stock

2,201

–

9,862

-4,552

-1,663

–

-9

–

Balance as of January 1, 2018

2,201

9,862

-4,561

-1,663

Change in scope of consolidation

Capital increase

Dividends

Share additions/reductions

Net additions/disposals from
reclassification related to put
options

Total comprehensive income

Net income/loss
Other comprehensive income

Remeasurements of defined
benefit plans
Changes in accumulated
other comprehensive
income

-650

2,747
3,223
-476

-476

Balance as of December 31, 2018

2,201

9,862

-2,461

IFRS 16 adjustment

–

-112

-1,775

–

Balance as of January 1, 2019

2,201

9,862

-2,460

-1,775

Change in scope of consolidation

Capital increase

Dividends

Share additions/reductions

Net additions/disposals from
reclassification related to put
options

Total comprehensive income

Net income/loss
Other comprehensive income

Remeasurements of defined
benefit plans
Changes in accumulated
other comprehensive
income

440

3,506

-2

-932

133

1,364
1,566
-202

-202

Balance as of December 31, 2019

2,641

13,368

-1,897

-743

-2,518

–

293

-203

-943

–

-943

-51

–

-6

-35

-978

–

-978

-440

-1,418

-73

–

-73

-14

–

-14

-3

-17

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

111

Treasury shares

-1,126

–

-1,126

–

-1,126

Equity attributable to
shareholders of
E.ON SE

Non-controlling
interests (before
reclassification)

Reclassification related
to put options

Non-controlling
interests

4,007

-212

3,795

-650

2,610
3,223
-613

-476

-137

5,758

5,759

-2

3,946

-932

133

173
1,566
-1,393

-202

-1,191

9,077

3,195

–

3,195

-43

-280

229
301
-72

-67

-5

3,190

3,191

2,613

-240

-364

275
242
33

5,491

-494

–

-494

-430

–

-430

2,701

–

2,701

-43

-280

229
301
-72

-67

-5

2,760

2,761

2,613

-240

-364

-1,053

275
242
33

4,008

-1,483

Total

6,708

-212

6,496

-43

-930

2,839
3,524
-685

-543

-142

8,518

8,520

2,611

3,962

-1,172

-231

-1,053

448
1,808
-1,360

-171

-1,189

13,085

Notes

112

(1) Summary of Significant Accounting Policies

Basis of Presentation

The Consolidated Financial Statements of E.ON SE, Essen, reg-
istered in the Commercial Register of Essen District Court under
number HRB 28196, have been prepared in accordance with
Section 315e (1) of the German Commercial Code (“HGB”) and
with those International Financial Reporting Standards (“IFRS”)
and IFRS Interpretations Committee interpretations (“IFRIC”)
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 December 31, 2019.

Principles

The Consolidated Financial Statements of the E.ON Group (“E.ON”
or the “Group”) are generally prepared at cost, with the exception
of financial assets that are measured at fair value through OCI
(FVOCI) and of financial assets and liabilities (including deriva-
tive financial instruments) that are recognized in income and
measured at fair value through profit or loss (FVPL).

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 can
direct the activities relevant to the business performance of
the entity, participate in this business performance in the form
of variable returns and influence the performance and the
related variable returns through its involvement. Control is nor-
mally deemed established if E.ON directly or indirectly holds a
majority of the voting rights in the investee. In structured entities,
control can be established by means of contractual arrangements
if control is not demonstrated through possession of a majority
of the voting rights.

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.

If a subsidiary or associate sells shares to a third party, leading
to a reduction in E.ON’s ownership interest in these investees
(“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.

Where necessary, adjustments are made to the subsidiaries’
financial statements to bring their accounting policies into line
with those of the Group. Intercompany receivables, liabilities
and results are eliminated in the consolidation process.

Associated Companies
An associate is an investee over whose financial and operating
policy decisions E.ON has significant influence and that is not
controlled by E.ON or jointly controlled with E.ON. Significant
influence is presumed if E.ON directly or indirectly holds at least
20 percent, but not more than 50 percent, of an entity’s voting
rights.

Interests in associated companies are 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 pro rata remeasured value of its net
assets is recognized in the Consolidated 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 they are material.

Companies accounted for using the equity method are tested for
impairment by comparing the carrying amount with its recover-
able amount. If the carrying amount exceeds the recoverable
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.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

113

The financial statements of equity interests accounted for using
the equity method are generally prepared using accounting that
is uniform within the Group.

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 they are material.

Joint Operations
A joint operation exists when E.ON and other investors directly
control an operation, but unlike a joint venture, they do not have
a claim to the changes in net assets from the operation. Instead,
they have direct rights to individual assets or direct obligations
with respect to individual liabilities in connection with the oper-
ation. E.ON recognizes assets and liabilities as well as revenues
and expenses in a joint operation pro rata according to the rights
and obligations attributable to E.ON.

Business Combinations
Business combinations are accounted for using the purchase
method, under which the purchase price is offset against the
proportional share in the acquired company’s net assets. 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 con-
tingent liabilities are generally recognized at their fair values
irrespective of the extent attributable to non-controlling inter-
ests. The fair values are determined using published exchange or
market prices at the time of acquisition in the case of marketable
securities or commodities, for example, and in the case of land,
buildings and major technical equipment, generally using inde-
pendent expert reports that have been prepared by third parties.
If exchange or market prices are unavailable for consideration,
fair values are derived from market prices for comparable assets
or comparable transactions. If these values are not directly
observable, fair value is determined using appropriate valuation
methods. 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 extrapolated through the end
of an asset’s useful life using a growth rate based on industry
and internal projections. In certain justified exceptional cases,
a longer detailed planning period is used as the calculation basis.

The discount rate reflects the specific risks inherent in the
acquired activities. In the network area, fair values are generally
determined by means of fair values in kind. The valuation of
customer groups also deviates from the general procedure
described above.

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.

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 differ-
ence 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 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 negative difference
is recognized in net income.

Foreign Currency Translation
The Company’s transactions denominated in foreign currency are
translated at the current exchange rate at the date of the trans-
action. At each balance sheet date monetary foreign currency
items are adjusted to the exchange rate on the reporting date;
any gains and losses resulting from fluctuations in the relevant
currencies are recognized in net 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 net income.

Notes

114

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 corre-
sponding 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.

Foreign currency translation effects that are attributable to the
cost of monetary financial instruments classified as at fair value
through OCI are recognized in income. In the case of fair-value
adjustments of monetary financial instruments, the foreign cur-
rency translation effects are recognized in equity as a component
of other comprehensive income.

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

Danish krone

Polish złoty

Romanian leu

Swedish krona

Czech crown

Turkish lira

€1, rate at
year-end

€1, annual
average rate

2019

2018

2019

2018

0.85

7.47

4.26

4.78

0.89

7.47

4.30

4.66

0.88

7.47

4.30

4.75

0.88

7.45

4.26

4.65

10.45

10.25

10.59

10.26

25.41

25.72

25.67

25.65

6.68

6.06

6.36

5.71

ISO-
code

GBP

DKK

PLN

RON

SEK

CZK

TRY

Hungarian forint

HUF

330.53 320.98

325.30 318.89

U.S. dollar

USD

1.12

1.15

1.12

1.18

Recognition of Income
a) Revenues
Revenues are generated primarily from the sale of electricity
and gas to retail customers, industrial and commercial cus-
tomers and wholesale markets. Revenues earned from the dis-
tribution of electricity and gas and from deliveries of steam and
heat are also primarily recognized under revenues.

Since the introduction of IFRS 15 with effect from January 1,
2018, revenues no longer include the fees for the promotion of
Renewables because these revenues are netted with the corre-
sponding cost of materials (net disclosure). E.ON acts as an agent
if another party is essentially responsible for fulfilling the con-
tract (in the case of the fee mandated by the German Renewable
Energy Sources Act, E.ON only transmits electricity generated
from renewable energy sources by third parties), E.ON bears no
inventory or default risk, E.ON cannot influence the pricing, and
E.ON receives a commission as remuneration.

Revenues are generally recognized when E.ON fulfills its perfor-
mance obligation by transferring a promised good or service to
a customer. An asset is deemed to be transferred when the cus-
tomer obtains control of the asset. The majority of the E.ON
Group’s performance obligations are fulfilled over time. The rel-
atively subordinate point-in-time revenue recognition occurs
primarily in the “Build & Sell” segment and for so-called linear
products, where a fixed amount of energy is provided to com-
mercial customers at a specific point in time. Revenue is recog-
nized when control is transferred to the customer, which means
that no significant discretionary decisions are required. For all
such revenues, progress is measured using output-based meth-
ods. The methods used appropriately reflect the pattern of trans-
fer of goods to customers or provision of services for customers.
Revenues from the sale of goods and services are measured
using the transaction prices allocated to these goods and services.
They reflect the value of the volume supplied, including an esti-
mated value of the volume supplied to customers between

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

115

Goodwill and Intangible Assets
Goodwill
Goodwill is not amortized, but rather tested for impairment at
the cash-generating unit level on at least an annual basis. Impair-
ment 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 allocated
are generally equivalent to the operating segments, since good-
will is reported, and considered in performance metrics for
controlling, only at that level. 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 procedures. Valuation
is performed using the discounted cash flow method unless
market transactions or valuations prepared by third parties for
com parable assets which are higher-level in the fair value hier-
archy according to IFRS 13 are available. If needed, a calculation
of value in use is also performed. Unlike fair value, the value in
use is calculated from the viewpoint of management. In accor-
dance 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 particular, 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.

the date of the last invoice and the end of the period. Monthly
advance payments for B2C customers are generally determined
on the basis of historical consumption data and peak payments
are settled at the end of the year. In B2B, a bottom-up approach
is used to calculate individual rates. E.ON’s sales transactions
generally are not based on any material finance components.
The average target payment period is between 14 and 45 days.
In individual cases, the payment period can also be below the
specified range. This may be the case, for example, if an agree-
ment provides for payment on the fifth calendar day of the fol-
lowing month. Refunds to customers are an exception and are
granted if the customer is disconnected from the power supply
for an extended period of time. Cash bonuses or bonus payments
to customers are recognized as refund liabilities and presented
as a decrease in revenues uniformly over the term of the contract.
As a rule, no warranties are granted in the Core Business. Warran-
ties are only granted in the “Build & Sell” activities.

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
Electricity and energy taxes are levied on electricity and natural
gas delivered to retail customers and are 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 payable are deducted from sales revenues on the face
of the income statement if those taxes are levied upon delivery
of energy to the retail customer.

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 com-
putation 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.

Notes

116

If the impairment thus identified exceeds the goodwill allocated
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 allocated pro
rata to the remaining assets of the unit.

E.ON performs the annual testing of goodwill for impairment at
the cash-generating unit level in the fourth quarter of each fiscal
year.

The purchase price allocation to the identified assets and liabilities
was made on a provisional basis (see Note 4 for further infor-
mation) due to the proximity of the acquisition of the distribution
and network business of innogy to the reporting date in Q3 2019
and the ongoing process of preparing the underlying financial
information in Q4 2019. Antitrust law factors also played a
role in this consideration. As a result, it was not yet possible to
allocate the preliminary goodwill of €15.5 billion to the cash
generating units. The unallocated goodwill was not tested for
impairment as there were no indications of impairment. The
preliminary goodwill will be tested for impairment in the annual
impairment test in 2020 as part of the standard test cycle.

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.

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 typical
product life cycles and legal or similar limits on use are taken
into account in the classification.

Acquired intangible assets subject to amortization are classified
as customer relationships and similar assets as well as conces-
sions, industrial property rights, licenses and similar rights (this
category also includes contractual claims). Internally generated
intangible assets subject to amortization are related to software
and are recognized as development costs. Intangible assets
subject to amortization are measured at cost and are generally
amortized using the straight-line method over their expected
useful lives. The useful lives of customer relationships and simi-
lar assets range between 2 and 50 years, and between 3 and
50 years for concessions, industrial property rights, licenses
and similar rights, unless depreciation based on use reflects an
appropriate level of depletion. This latter category includes soft-
ware in particular. Useful lives and amortization methods are
subject to annual verification. Intangible assets subject to amor-
tization are tested for impairment whenever events or changes
in circumstances indicate that such assets may be impaired.

Intangible assets not subject to amortization or intangible assets
whose use has not yet started 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. More-
over, 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.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

117

If a recoverable amount cannot be determined for an individual
intangible asset, the recoverable amount for the smallest iden-
tifiable group of assets (cash-generating unit) that the intangible
asset may be assigned to is determined. See Note 14 for addi-
tional information about goodwill and intangible assets.

Research and Development Costs
Under IFRS, expen diture on research is expensed as incurred,
while costs incurred during the development phase of new prod-
ucts, services and technologies are to be recognized as assets
when the general criteria for recognition specified in IAS 38 are
present. In the 2018 and 2019 fiscal years, E.ON capitalized
costs for internally generated software and other technologies
in this context.

Property, Plant and Equipment
Property, plant and equipment are initially measured at acquisi-
tion or production cost, including decommissioning or resto-
ration 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 asset classes of property, plant and equipment
are presented below:

Useful Lives of Property, Plant and Equipment

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 rele-
vant—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.

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 3.86 percent was applied for 2019
(2018: 5.37 percent). Other borrowing costs are expensed.

Government Grants
Government 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. They are rec-
ognized in income on a straight-line basis over the associated
asset’s expected useful life.

Buildings

Technical equipment, plant and machinery

Other equipment, fixtures, furniture and office
equipment

5 to 60 years

2 to 80 years

2 to 30 years

Government grants are recognized at fair value if the Group
satisfies the necessary conditions for receipt of the grant and
if it is highly probable that the grant will be issued.

Government grants for costs are posted as income over the
period in which the costs are incurred.

Property, plant and equipment are tested for impairment when-
ever 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 principles prescribed
for intangible assets in IAS 36. 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 impairment taken place during the
preceding periods.

Notes

118

Leasing
Lease agreements are accounted for in accordance with IFRS 16,
“Leases” (“IFRS 16”). A lease is an agreement that conveys the
right to use an identified asset for a specified period in exchange
for consideration. A right-of-use asset for an identified asset,
regardless of its formal structure, can arise in many agreements,
e.g., rental, lease and service agreements as well as in the frame-
work of outsourcing transactions. The formal designation of an
agreement is not relevant for the identification of a lease. E.ON is
party to some agreements in which it is the lessor and to others
in which it is the lessee.

Transactions in which E.ON acts as a lessee are accounted for on
the basis of the right-of-use model, irrespective of the economic
(ownership) relationship to the leased asset at the beginning of
the lease term. The option to facilitate the application of IFRS 16.5
is used for low-value leases and for lease agreements with a term
of less than twelve months (short-term leases). Accordingly, there
is no recognition of the right-of-use asset and the lease ability.
Instead, the payments are recognized on a straight-line basis in
income. In line with internal management practice, intragroup
leases are recognized as current expenses in the segment report.

A lease liability is recognized in the amount of the present value
of the existing payment obligation. Where an arrangement
provides for payments for lease components and non-lease
components, the payments are not separated using the option
under IFRS 16.15 (with the exception of real estate leases);
the lease liability is measured from the total amount of the pay-
ments. Present value is determined by discounting with an
incremental borrowing rate that is equivalent in terms of risk
and term if the implicit interest rate cannot be determined. The
liability is subsequently measured using the effective interest
method. The current portion of the lease liability to be recognized
separately in the balance sheet is measured on the basis of the
repayment portion of the next twelve months included in the
lease payments. A right-of-use asset corresponding with the
lease liability is recognized in the amount of the present value of
the lease liability. The initial recognition of the right-of-use asset
is also increased by the amount of the initial direct costs and
expected costs resulting from asset retirement obligations when
they do not relate to an item from property, plant and equipment;
prepayments increase the amount of the initial recognition and

lease incentives decrease the amount. A right-of-use asset is
subsequently recognized at amortized cost. Amortization is
carried out on a straight-line basis over the shorter of the lease
term or the useful life of the identified asset. An impairment
test is carried out in accordance with IAS 36 if events or changed
circumstances indicate an impairment.

E.ON protects its operational flexibility when concluding leasing
agreements through the use of extension and termination options.
In determining the lease term, E.ON considers all facts and
circumstances that provide an economic incentive to exercise
existing options. The assumed term therefore also includes
periods covered by extension options if it is assumed with reason-
able certainty that they will be exercised. A modification of the
term is taken into account if there is a change with regard to
whether an existing option will be exercised or not with reason-
able certainty.

Lease transactions in which E.ON acts as lessor are classified
as operating or finance leases depending on the distribution of
risks and rewards. If a lease is classified as an operating lease,
E.ON recognizes the identified asset and recognizes the lease
payments as other operating income on a straight-line basis
over the lease term. For finance leases, the identified asset is
derecognized and a receivable is recognized in the amount of
the net investment value. Payments made by the lessee are
treated as a reduction of the lease receivable or interest income.
The income from such arrangements is recognized over the term
of the lease using the effective interest method. Subleases are
classified based on the right-of-use asset under the head lease.

Financial Instruments
Non-Derivative Financial Instruments
Non-derivative financial instruments are measured in accordance
with IFRS 9, “Financial Instruments” (“IFRS 9”). They are recog-
nized at fair value, including transaction costs, on the settlement
date when acquired, provided they are not recognized at fair
value through profit and loss.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

119

Financial assets are classified as financial assets measured at
amortized cost (AmC), financial assets measured at fair value
through other comprehensive income (FVOCI) and financial
assets measured at fair value through profit and loss (FVPL) based
on the business model and the characteristics of the cash flows.

The expected future credit loss is calculated by multiplying the
probability of default by the carrying amount of the financial
asset (exposure at default) and the expected loss ratio (loss given
default). For information on the treatment of impairments under
IFRS 9, please see Note 31.

If a financial asset is held for the purpose of collecting contractual
cash flows and the cash flows of the financial asset represent
exclusively interest and principal payments, then the financial
asset is measured at amortized cost (AmC).

A financial asset is measured at fair value through other com-
prehensive income (FVOCI) if it is used both to collect contractual
cash flows and for sales purposes and the cash flows of the
financial asset consist exclusively of interest and principal pay-
ments.

Unrealized gains and losses from financial assets measured at
fair value through other comprehensive income (FVOCI), net of
related deferred taxes, are reported as a component of equity
(other comprehensive income) until realized. Realized gains and
losses are determined by analyzing each transaction individually.

Debt instruments that do not exclusively serve to collect contrac-
tual cash flows or to both generate contractual cash flows and
sales revenue, or whose cash flows do not exclusively consist of
interest and principal payments are measured at fair value through
profit and loss (FVPL). For equity instruments that are not held
for trading purposes, E.ON has uniformly exercised the option
of recognizing changes in fair value through profit or loss (FVPL).

Impairments of financial assets are both recognized for losses
already incurred and for expected future credit defaults. The
amount of the impairment loss calculated in the determination
of expected credit losses is recognized on the income statement.

Non-derivative financial liabilities (including trade payables)
within the scope of IFRS 9 are measured at amortized cost, using
the effective interest method. Initial measurement takes place
at fair value, with transaction costs included in the measurement.
In the subsequent measurement, the residual carrying amount
is adjusted by the amortization and accretion of any premium
or discount remaining until maturity. The premium or discount
is recognized in financial results over its term.

Derivative Financial Instruments and Hedging
Derivative financial instruments and separated embedded
derivatives are measured at fair value as of the balance sheet
date at initial recognition and in subsequent periods. Under
IFRS 9, they are classified as at fair value through profit and
loss (FVPL) as long as they are not a component of a hedge
accounting relationship. Gains and losses from changes in fair
value are immediately recognized in net income.

The instruments primarily used are foreign currency forwards
and cross-currency interest rate swaps, as well as interest rate
swaps. In commodities, the instruments used primarily include
physically and financially settled forwards and options related
to electricity and gas.

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 corresponding
counterparty (credit value adjustment). The counterparty risks
thus determined are allocated to the individual financial instru-
ments by applying the relative fair value method on a net basis.

Notes

120

E.ON has designated some of these derivatives as part of a
hedging relationship. IFRS 9 sets requirements for the admissi-
bility of hedging instruments and the underlyings, the formal
desig nation and documentation of hedging relationships, the
hedging strategy, as well as fulfilling requirements of effective-
ness in order to qualify for hedge accounting. The designated
hedged items and hedging instruments are subject to the same
risk. This economic relationship ensures that the amounts of the
hedged items and hedging instruments are offset against each
other and that the hedging relationships are therefore effective.
The hedge ratio of the hedges is 1:1. Ineffectiveness arises only
if the measurement parameters of the hedged item and the
hedging instrument differ from one another. All components of
derivative gains and losses from the measurement of hedge
ineffectiveness are taken into consideration during recognition.

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
IFRS 9, 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 transaction being
hedged affect income. In accordance with IFRS 9, the currency
basis spread (hedging costs) will be separated from the hedging
instrument and reported separately as an excluded component
in accumulated other comprehensive income in the reserve for
hedging costs as a component of equity.

The hedging result is reclassified into income during the period
in which the cash flows of the hedged asset are recognized in
income. The result is recognized imme diately in income 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 investment 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 recognized within equity, as a component of other compre-
hensive income, under currency translation adjustments.

E.ON currently uses hedges in the framework of cash flow hedges
and hedges of a net investment.

Changes in fair value of derivative instruments that are recognized
in income are presented as other operating income or expenses.
Gains and losses from interest-rate derivatives are included in
interest income.

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 unre-
alized gains and losses from the initial measurement are verified
by quoted market prices, observable prices of other current
market transactions or other observable data supporting the val-
uation technique. In this case the gains and losses are recognized
in income.

Contracts that are entered into for purposes of receiving or deliv-
ering 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 through profit and
loss (FVPL) in accordance with IFRS 9, but as open transactions
subject to the rules of IAS 37.

Embedded derivatives in own-use contracts must be separated
from the host contract and accounted for as derivatives in accor-
dance with IFRS 9 if the economic characteristics and risks of
these derivatives are not closely related to those of the host
contract. The contract is assessed upon conclusion to determine
whether a derivative is required to be separated. A reassessment
must be carried out if there is a significant change in the terms
of the contract or in the context of business combinations.

Agreements to buy or sell non-financial items that cannot be
classified as own-use contracts under IFRS 9 and that are required
to be accounted for as derivatives (so-called “failed own use”
contracts) must be realized or recognized in the balance sheet
at the market price applicable at the time of physical settlement.

IFRS 7, “Financial Instruments: Disclosures,” (“IFRS 7”) and
IFRS 13 both require comprehensive quantitative and qualitative
disclosures about the extent of risks arising from financial
instruments. Additional information on financial instruments is
provided in Notes 30 and 31.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

121

Non-derivative and derivative financial instruments are netted
on the balance sheet if under IAS 32 E.ON has both an uncon-
ditional right—even in the event of the counterparty’s insol-
vency—and the intention to settle offsetting positions simulta-
neously and/or on a net basis.

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 allow-
ances are provided to cover the expected loss. Impairments
must also be recognized for expected future credit losses.

Inventories
Inventories are measured 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 over-
heads based on normal capacity. The costs of general adminis-
tration are not capitalized. Inventory risks resulting from excess
and obsolescence are provided for using appropriate valuation
allowances, whereby inventories are written down to net real-
izable value.

Liquid Funds
Liquid funds include current securities, checks, cash on hand and
bank balances. Bank balances and securities with an original
maturity of more than three months are recognized under secu-
rities 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.

Emission Rights
Emission rights held under national and international emission-
rights systems for the settlement of obligations are reported
as other operating assets. 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.

Assets Held for Sale and Liabilities Associated with Assets
Held for Sale and Discontinued Operations
Non-current assets and any corresponding liabilities held for sale
and any directly attributable liabilities are recognized separately
from other assets and liabilities in the balance sheet in the line
items “Assets held for sale” and “Liabilities associated with assets
held for sale” if they can be disposed of in their current condition
and if there is sufficient probability of their disposal actually
taking place. The reclassification to the separate balance sheet
items is shown under Changes in scope of consolidation.

Receivables, Contract Assets and Other Assets
A receivable is recognized under IFRS 15 when the goods or
services are delivered, provided that the right to consideration
is unconditional, i.e., is only related to the passage of time.
However, if the right to receive the consideration is contingent
upon conditions other than the passage of time, a contract asset
is recognized. An asset is recognized under other assets under
IFRS 15 if the cost of obtaining the contract is expected to be
recovered and the amortization period is longer than one year.
Other assets are amortized over the estimated term of the con-
tract depending on how the goods or services to which the costs
relate are transferred to the customer. If the estimated term
of the contract is less than one year, the costs are immediately
recognized as an expense on the income statement. 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.

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 business 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 dis-
continued 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 this value is less than
the carrying amount, an impairment loss is recognized.

Notes

122

The income and losses resulting from the measurement of
components held for sale as well as the gains and losses arising
from the disposal of discontinued operations, are reported sep-
arately on the face of the income statement under income/loss
from discontinued operations, net, as is the income from the
ordinary 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 sepa-
rately 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 conditions.
None of the contractual obli gations has led to the transfer 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 separate 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 remaining
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 reclassification 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 probability of termination.
Changes in the value of the liability are reported within other
oper ating income. Accretion of the share of the results of the
non-controlling shareholders’ share in net income is recognized
in Net interest income/expense.

If E.ON SE or a Group company buys treasury shares of E.ON SE,
the value of the consideration paid, including directly attributable
additional costs (net after income taxes), is deducted from
E.ON SE’s equity until the shares are retired, distributed or resold.
If such treasury shares are subsequently distributed or sold, the
consideration received, net of any directly attributable additional
transaction costs and associated income taxes, is recognized in
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”). From 2013 to 2016, share-based payments were
based on the E.ON Share Matching Plan. Under this plan, the
number of allocated rights was governed by the development
of the financial measure ROCE (ROACE until 2015).

In 2015 and 2016, virtual shares were granted exclusively to
members of the Management Board of E.ON SE in the frame-
work of base and performance matching in accordance with the
share matching plan. Executives who in previous years had
participated in the share matching plan were granted a multi-year
bonus extending over a term of four years, whose payout amount
depends on the performance of the E.ON share up to the pay-
ment date, instead of base and performance matching. The
members of the Management Board of E.ON SE were granted
virtual shares under the E.ON Share Matching Plan for the last
time in 2017.

In fiscal years 2017, 2018 and 2019, virtual shares were
granted to members of the Management Board of E.ON SE and
certain E.ON Group executives under the E.ON Performance
Plan. The E.ON Performance Plan uses a fair value determined
by an external service provider using a Monte Carlo simulation.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

123

The amount reported on the balance sheet represents the pres-
ent value of the defined benefit obligations reduced by the fair
value of plan assets. If a net asset position arises from this cal-
culation, 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.

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 obli-
gations are reported as liabilities at the present value of their
expected settlement amounts if the interest rate effect (the differ-
ence between present value and repayment amount) resulting
from discounting is material; future cost increases that are fore-
seeable and likely to occur on the balance sheet date at year-end
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, provided that it is not
negative. The accretion amounts and the effects of changes in
interest rates are generally presented as part of financial results.
A reimbursement related to the provision that is virtually certain
to be collected is capitalized as a separate asset. No offsetting
within provisions is permitted. Advance payments remitted are
deducted from the provisions.

In all cases, these are commitments of the Company which pro-
vide for cash compensation based on the share price performance
at the end of the term. The compensation expense is recognized
in the income statement pro rata over the vesting period.

Provisions for Pensions and Similar Obligations
Measurement of defined benefit obligations in accordance with
IAS 19, “Employee Benefits,” (“IAS 19“) is based on actuarial com-
putations 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 esti-
mated 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
expected 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 fiscal
year is reported under personnel costs; the net interest on the
net liability or asset from defined benefit pension plans deter-
mined 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.

Notes

124

A more detailed description is not provided for certain contingent
liabilities and contingent receivables, particularly in connection
with pending litigation, as this information could influence
further proceedings.

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 restructuring
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 rec-
ognized 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 trans-
action other than a business combination that, at the time of
the transaction, affects neither accounting nor taxable profit/
loss (initial differences). 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 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. The planning horizon is basically three
to five years in this context. 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 associ-
ated with investments in affiliated and associated companies are
recognized unless the timing of the reversal of such temporary

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, pro-
vided 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, capital-
ized 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 reg-
ular adjustment of the discount rate to current market interest
rates. The adjustment of provisions for the decommissioning
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 concerned have already been
fully depreciated, changes to estimates are recognized within
the income statement.

The estimates for nuclear decommissioning provisions are
derived from studies, cost estimates, legally binding civil agree-
ments and legal information. A material element in the estimates
are the real interest rates applied (the applied discount rate, less
the cost increase rate). The impact on consolidated net income
depends on the level of the corresponding adjustment posted to
property, plant and equipment.

No provisions are established for contingent asset retirement
obligations where the type, scope, timing and associated proba-
bilities cannot 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
are recognized at the lower of the excess obligation upon per-
formance under the contract and any potential penalties or
compensation arising in the event of non-performance. Obliga-
tions under an open contractual relationship are determined
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 were not recognized on the
balance sheet.

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 gener-
ally recognized in net income. Equity is adjusted for deferred
taxes that had previously been recognized directly in equity. The
change is generally recognized in the period in which the material
legislative process is completed.

Deferred taxes for the E.ON Group’s major German companies
are–unchanged from the previous year–calculated using an
aggregate tax rate of 30 percent. This tax rate includes, in addi-
tion to the 15 percent corporate income tax, the solidarity
surcharge of 5.5 percent on the corporate tax and the average
trade tax rate of 14 percent. Foreign subsidiaries use applicable
national tax rates.

To the extent that they are material, income taxes for transaction
costs of an equity transaction are recognized directly in equity
under IAS 12.

Note 10 shows the major temporary differences so recorded.

Consolidated Statements of Cash Flows
In accordance with IAS 7, “Cash Flow Statements,” (“IAS 7”) the
Consolidated Statements of Cash Flows are classified in cash
flows from operating, investing and financing activities. Cash
flows from discontinued operations are reported separately in
the Consolidated Statements 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 activities
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 corresponding
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.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

125

Segment Information
In accordance with the so-called management approach required
by IFRS 8, “Operating Segments,” (“IFRS 8”) the internal report-
ing organization used by management for making decisions on
operating matters is used to identify the Company’s reportable
segments. The internal performance measure used as the seg-
ment result is EBIT adjusted to exclude certain non-operating
effects (see Note 34).

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 report-
ing date are generally classified as current.

The Consolidated Statements of Income are classified using the
nature of expense method, which is also applied for internal
purposes.

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 both influence the application of accounting principles
within the Group and affect the measurement and presentation
of reported figures. Estimates are based on past experience and
on current knowledge obtained on the 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 recog-
nized in the period in which the estimate is revised if the change
affects only that period, or in the period of the revision and sub-
sequent 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 miscella-
neous provisions, for impairment testing in accordance with
IAS 36, for the determination of the fair value of certain financial
instruments, and in the application of IFRS 15. Estimates also
arise from the application of IFRS 16, namely in connection with
the determination of the lease terms and the calculation of the
discount rate.

The underlying principles used for estimates in each of the
relevant topics are outlined in the respective sections.

Notes

126

(2) New Standards and Interpretations

Significant Standards and Interpretations
Applicable in 2019

IFRS 16, “Leases”
We are applying IFRS 16 “Leases” for the first time in 2019.
IFRS 16 replaces the previous IAS 17 “Leases” and IFRIC 4
“Determining whether an arrangement contains a lease.” E.ON
applied the modified retrospective approach to its transition
to IFRS 16; prior-year figures were not restated and no com-
parative information will be presented. As at the date of initial
transition the outstanding payment obligations with regard to
existing operating leases are discounted using the relevant
incremental borrowing rate and recognized as a lease liability.
Correspondingly, right-of-use assets were capitalized with an
amount equaling the present value of the lease payments,
adjusted by the amount of the prepaid or accrued lease payments.
Existing finance leases previously recognized in accordance with
IAS 17 were carried forward as right-of-use assets with their
carrying amounts as at December 31, 2018. The option to facil-
itate application is used for low-value assets and short-term
leases (with a maturity of less than twelve months); no right-of-
use assets and liabilities are recognized. In addition, E.ON will
not separate lease components from non-lease components for
any asset classes other than buildings.

The Group has also decided to apply various practical expedients
for the transition:

• Agreements entered into before January 1, 2019, and still

valid at the date of transition were not reviewed to determine
whether they qualify as leases under IFRS 16.

• Agreements entered into before January 1, 2019, with a
term of less than twelve months at the date of transition
were accounted for as short-term leases; no right-of-use
assets and liabilities are recognized.

• No impairment test was carried out for right-of-use assets

recognized for the first time; instead right-of-use assets were
adjusted by the amount of provisions for onerous contracts.

•

In determining the lease term, E.ON considered hindsight
when expectations with regard to the exercise of options
changed.

The incremental borrowing rate is used to discount future lease
payments when the lease’s implicit refinancing rate cannot be
reliably determined. The incremental borrowing rate is derived
on the basis of an essentially risk-free yield curve for a period of
up to 30 years, adjusted for the credit and country risk specific
to E.ON.

E.ON operates as a lessee in the areas of land and buildings,
networks and vehicle fleets, in particular. Lease payments are
broken down into principal and interest using the effective
interest method. The right-of-use asset is generally depreciated
on a straight-line basis over the shorter of the term of the lease
or the useful life of the leased asset. The provisions of IAS 36
concerning impairment testing also apply to capitalized right-
of-use assets. The liability should be remeasured as a reassess-
ment event whenever the expected lease payments or the lease
term change, for example, because of a change in the estimate
regarding the exercise of a contractual option. The carrying
amount of the right-of-use asset will be adjusted correspondingly
as subsequent acquisition costs. Modification of a contractual
arrangement may also affect the measurement of the lease lia-
bility and the right-of-use asset.

E.ON also operates as a lessor for networks and generation
plants. The transition to IFRS 16 resulted in only minor changes
in the accounting treatment for lessors. If E.ON transfers sub-
stantially all the risks and rewards incidental to ownership of
the leased asset to the counterparty, the lease is classified as a
finance lease. The present value of the outstanding minimum
lease payments is recognized as a receivable and the payments
made are treated as payments received or interest income. The
income from such arrangements is recognized over the term of
the lease using the effective interest method. If E.ON retains
substantially all the risks and rewards incidental to ownership
of the leased asset and they are not transferred to the counter-
party, the lease is classified as an operating lease. Consequently,
E.ON continues to recognize the leased asset on its balance sheet
and the lease payments collected are recognized as income on
a straight-line basis over the term of the lease.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

127

The transition effects from the first-time application of IFRS 16
were recognized directly in equity. The effects of the transition
on the balance sheet are shown in the following table:

Reconciliation of the Consolidated Balance Sheet Due to the Effects of IFRS 16

€ in millions

Non-current assets

of which right-of-use assets
of which property, plant and equipment
of which operating receivables and other operating assets
of which deferred tax assets

Current assets

of which trade receivables and other operating assets
of which assets held for sale

Total assets

Equity

of which retained earnings

Non-current liabilities

of which financial liabilities
of which miscellaneous provisions
of which deferred tax liabilities

Current liabilities

of which financial liabilities
of which trade payables and other operating liabilities
of which liabilities associated with assets held for sale

Total equity and liabilities

Dec. 31,
2018

Effects from
IFRS 16

Jan. 1, 2019

30,883
–
18,057
1,474
1,195

23,441
5,445
11,442

54,324

8,518
-2,461

30,545
8,323
12,459
1,706

15,261
1,563
7,637
3,682

54,324

538
870
-311
-21
–

288
-1
289

826

2
2

415
417
-2
–

409
119
1
289

826

31,421
870
17,746
1,453
1,195

23,729
5,444
11,731

55,150

8,520
-2,459

30,960
8,740
12,457
1,706

15,670
1,682
7,638
3,971

55,150

The effects of the introduction of IFRS 16 on the individual
components of the consolidated financial statements and the
presentation of the financial position and performance of the
Group can be described as follows:

• The first-time application of the standard resulted in an

increase in non-current assets (recognition of right-of-use
assets) and financial liabilities (recognition of the corresponding
lease liabilities) in the balance sheet. Financial obligations
from operating leases were previously reported off-balance
sheet. Taking into account existing accruals and deferrals
but excluding finance leases, the impact of the transition at
the time of initial application totaled around €0.8 billion for
lease liabilities and around €0.8 billion for right-of-use assets.
These effects totaled €0.3 billion for right-of-use assets and
lease liabilities for discontinued operations. This increased
retained earnings by €2 million as of January 1, 2019, taking
deferred taxes into account. As a result of the change in the
balance sheet, the equity ratio of the Group declined slightly
and net financial debt increased slightly.

• Since January 1, 2019, depreciation expenses for right-of-

use assets and interest expenses from the accretion of lease
liabilities have been recognized in the income statement
instead of other operating expenses (unless they relate to
expenses from short-term and low-value leases). In fiscal
year 2019, this led to an increase in interest expenses of
€11 million, an increase in depreciation of €105 million and
a decrease in other operating expenses of €141 million.
Consequently, there was no material effect on earnings per
share for fiscal year 2019.

• The revised presentation of lease payments arising from oper-
ating leases results in improved cash flows from operating
activities and a corresponding deterioration in cash flows from
financing activities. E.ON presents interest payments in cash
flow from operating activities.

Notes

128

In connection with initial application, deferred taxes were recog-
nized at the respective national tax rates on the revised amounts
for lease liabilities and the right-of-use assets reported in the
balance sheet, provided they relate to temporary differences.
Gross deferred tax assets and liabilities for operating leases each
totaled €148 million; there were no net effects.

Calculated on the basis of the operating lease obligations as of
December 31, 2018, the following table shows the reconciliation
to the opening balance of the lease liability as of January 1, 2019:

Reconciliation

€ in millions

Operating lease obligations as of December 31, 2018

Minimum lease payments (notional amount) on finance leases liabilities as of December 31, 2018

Relief option for short-term leases

Adjustments of the obligation due to a revised lease term

Other

Gross lease liabilities as of January 1, 2019

Discounting

Lease liabilities as of January 1, 2019

Present value of finance lease liabilities as of December 31, 2018

Additional lease liabilities as a result of the initial application of IFRS 16 as of January 1, 2019

585

467

-3

1,070

207

863

327

536

The weighted-average incremental borrowing rate for the lease
liabilities recognized for the first time as of January 1, 2019,
was 3.7 percent.

E.ON has accordingly adopted this change in accounting policy
as of the 2019 fiscal year. In addition, a retrospective adjustment
was made for the 2018 fiscal year.

IFRIC Update to IFRS 9–Physical Settlement of Contracts to
Buy or Sell a Non-Financial Item
In March 2019, the IFRS Interpretations Committee (IFRS IC)
clarified in an agenda decision that agreements to buy or sell
non-financial items that cannot be classified as own-use con-
tracts under IFRS 9 and that are required to be accounted for
as derivatives (so-called “failed own use” contracts) must be
realized or recognized in the balance sheet at the market price
applicable at the time of physical settlement. Industry practice
to date has provided for contracts to be recognized at their con-
tract value.

The adjustment results in higher volatility in revenue, cost of
materials and current assets. This is offset by a corresponding
change in other operating income and other operating expenses.

The restatement effect for fiscal year 2018 will result in a reduc-
tion in revenue of €169 million and a €178 million reduction in
cost of materials. In addition, other operating income increased
by €227 million and other operating expenses increased by
€236 million. The adjustment has no effect on earnings for the
2018 fiscal year.

For fiscal year 2019, the difference between contract values
and market prices results in a €232 million reduction in sales
and a €195 million reduction in cost of materials as well as a
€22 million increase in current assets. This is offset by an
increase in other operating income of €950 million and other
operating expenses of €891 million. The adjustment consequently
resulted in a pretax effect on earnings of €22 million and no
material effect on earnings per share for fiscal year 2019.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

129

Additional Standards and Interpretations
Applicable in 2019

• Amendments to the references to the accounting framework,
published in March 2018, adopted into European law, first-
time application in fiscal year 2020

In addition to the new standards and interpretations described
in detail above, other standards and interpretations are to be
applied that do not have a material impact on E.ON’s Consolidated
Financial Statements as of December 31, 2019:

• Amendments to IFRS 9, IAS 39 and IFRS 7, “Interest rate

benchmark reform,” published in September 2019, adopted
into European law, first-time application in fiscal year 2020

• First-time application of IFRIC 23, “Uncertainty over Income

•

Tax Treatment”

IFRS 17, “Insurance Contracts,” published in May 2017,
not yet transposed into European law, expected first-time
application in fiscal year 2021

• Amendments to IAS 19, “Plan Amendment, Curtailment or

Settlement”

• Amendments to IAS 28, “Long-Term Investments in Associates

and Joint Ventures”

• Amendments to IFRS 9, “Prepayment Features with Negative

Compensation”

• Omnibus Standard to Amend Multiple International Financial

Reporting Standards (2015–2017 Cycle)

Standards and Interpretations Not Yet
Applicable in 2019

The IASB and the IFRS IC have issued the following additional
standards and interpretations. E.ON does not apply these rules
because their application is not yet mandatory in some cases or
their recognition by the EU is still pending in others. Currently,
however, these adjustments are not expected to have a material
impact on the consolidated financial statements of E.ON:

• Amendments to IAS 1 and IAS 8, “Definition of Material,”
published in October 2018, adopted into European law,
first-time application in fiscal year 2020

• Amendments to IFRS 3, “Definition of a business,” published
in October 2018, not yet transposed into European law,
expected first-time application in fiscal year 2020

(3) Scope of Consolidation

The number of consolidated companies changed as follows in
2019:

Scope of Consolidation

Consolidated companies
as of January 1, 2018

Additions

Disposals/Mergers

Consolidated companies
as of December 31, 2018

Additions

Disposals/Mergers

Consolidated companies
as of December 31, 2019

Domestic

Foreign

Total

174

148

232

148

131

203

232

228

377

In 2019, a total of 78 domestic and 15 foreign associated
companies were consolidated under the equity method (2018:
17 domestic companies and 14 foreign companies). In 2019,
one domestic company reported as joint operations was pre-
sented pro rata on the consolidated financial statements (2018:
one domestic company).

Notes

130

(4) Acquisitions, Disposals and Discontinued
Operations

Significant transactions in 2019

Transfer of Business Activities with RWE
In March 2018, E.ON concluded an agreement with RWE to
acquire the network and sales business of innogy. Within this
framework, the 76.8-percent stake in innogy SE held by RWE
was transferred from RWE to E.ON following approval by the
antitrust authorities. The entire Renewables and Gas Storage
business of innogy as well as the 37.9-percent stake that innogy
holds in Austrian energy supplier KELAG will remain within the
RWE Group. The acquisition was concluded through a compre-
hensive transfer of business activities following the approval
of the EU Commission and the competent antitrust authorities
on September 18, 2019. The approval was granted subject to
conditions, the sale of various business activities of E.ON and
innogy. These include innogy’s electricity and gas customer busi-
ness in the Czech Republic and disposals in E.ON’s electricity
customer business in Hungary. For Germany, the conditions
primarily relate to significant parts of E.ON’s heating customer
business and to the construction and operation of individual
electric vehicle charging stations on motorways. Until the dis-
posals are completed, these business activities will be continued
in compliance with antitrust requirements.

The overall transaction reflects current developments in the
energy industry and, by combining the businesses of the E.ON
and innogy Group, it has created a clear and attractive energy
network and customer solutions business portfolio.

As consideration for innogy’s network and sales business, RWE
was granted a 16.7-percent shareholding in E.ON SE by way of
a 20-percent capital increase against contribution in kind from
existing authorized capital. The fair value of the 440,219,800
shares issued to RWE within the scope of the transaction is based
on the average daily price (Xetra) of €8.98 at the acquisition date.
The issue costs in the amount of €5 million, which are directly
attributable to the issue of the shares, were recognized directly
in equity as a reduction of the share premium. Other costs
associated with the business combination in the amount of
€134 million not directly attributable to the issue of the shares
are recognized in income under other operating expenses. The
costs were mainly incurred for consulting services.

As of December 31, 2019, RWE has reduced its shareholding
in E.ON SE to 15 percent through the disposal of shares.

E.ON has also transferred to RWE most of its Renewables
business and the minority interests held by E.ON subsidiary
PreussenElektra in the Lippe-Ems GmbH and Gundremmingen
GmbH nuclear power plants operated by RWE. Certain business
activities in the Renewables segment of e.disnatur in Germany
and Poland and a 20-percent shareholding in the Rampion off-
shore wind farm in the UK remained with the E.ON Group. The
transfer was executed with retroactive economic effect as of
January 1, 2018, and was completed in September 2019. The

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

131

€0.24 per share increase in the consideration paid in connection
with the agreed dividend payment for 2018 as well as the
€0.59 share price compensation resulting from the issue of
equity instruments to RWE and the increase in the price of
E.ON shares from the date of the agreement until its execution.

The E.ON Group and the innogy Group had already established
a variety of business relationships prior to the acquisition. Espe-
cially, these include a bond issued by innogy SE and subscribed
by E.ON SE (fair value as of September 30, 2019: €773 million).
E.ON also acquired one of RWE’s existing intragroup loan
receivables from innogy. All business relationships between
the E.ON Group and the innogy Group were eliminated as part
of the consolidation measures in E.ON’s consolidated financial
statements.

In particular due to the still preliminary determination of the
value of the consideration paid, the final determination of the fair
value of the net assets of innogy’s network and sales business,
and the allocation of the goodwill to the cash-generating units.
Consequently, changes to the allocation of the purchase price
to the individual assets and liabilities may still be made within
the agreed IFRS adjustment period of up to twelve months from
the completion of initial consolidation. Changes may arise in
particular in the valuation of right-of-use assets.

portion of the Renewables business to be transferred and the
minority interests included in Non-Core Business were presented
as discontinued operations or as a disposal group as of June 30,
2018. The gain on disposal amounted to €702 million. This also
includes the effect from the remeasurement of the remaining
interest in the Rampion offshore wind farm (€436 million). The
purchase prices for the deconsolidated activities were not recog-
nized in the cash flow statement. The deconsolidation of the
Renewables activities resulted in the derecognition of cash and
cash equivalents in the amount of €127 million.

Consideration Transferred

€ in millions

Equity instruments (440,219,800 shares)

Operations from the Renewables segment

Subsidiary PreussenElektra’s minority stakes in
Gundremmingen and Emsland nuclear power stations
(25 percent and 12.5 percent, respectively)

Consideration for public takeover offer and innogy dividend
settlement payment to RWE and minority shareholders 1

Fulfillment of preexisting business relationships between
E.ON and innogy

Acquisition of intra group receivables between innogy SE
and RWE 1

Agreed payment from RWE to E.ON

Consideration transferred

19.41 percent of innogy shares tendered under the takeover offer

2019

3,952

8,513

-838

2,068

784

702

-1,521

13,660

On March 12, 2018, E.ON made an offer to the remaining share-
holders of innogy SE to acquire all registered no-par value shares
of innogy SE in a voluntary public takeover offer. Subsequently,
a further 9.41 percent of innogy shares were tendered for a
total consideration of €37.59 per share. This figure included the

Notes

132

The preliminary calculations of the fair values of the acquired
assets and liabilities at the acquisition date and their adjustments
are as follows:

Acquired Net Assets at Fair Value

€ in millions

Concessions, commercial property rights, licenses, and similar rights

Customer relationships and similar items

Advance payments

Right-of-use assets

Property, plant, and equipment

Companies accounted for under the equity method

Other financial assets

Financial receivables and other financial assets

Operating receivables and other operating assets

Deferred tax assets

Non-current assets

Inventories

Receivables and other assets

Trade receivables and other operating assets

Liquid funds

Current assets

Financial liabilities

Operating liabilities

Provisions for pensions and similar obligations

Miscellaneous provisions

Deferred tax liabilities

Non-current liabilities

Financial liabilities

Trade payables and other operating liabilities

Miscellaneous provisions

Current liabilities

Acquired net assets

The largest change in terms of amount resulted from an adjust-
ment of the maturities of operating liabilities and trade payables
and other operating liabilities.

September 18,
2019

Adjustments

September 18,
2019 adjustments
included

356

1,994

2,128

17,618

2,548

1,076

215

2,065

1,228

29,234

612

849

8,250

2,394

12,105

17,955

5,266

4,384

1,151

1,289

30,045

1,774

7,212

1,667

10,653

641

-7

–

-94

–

-10

115

-136

–

-115

-6

-1,648

–

-382

-1,937

1,678

-9

1,743

122

371

1,987

2,128

17,524

2,548

1,097

205

2,068

1,343

29,277

613

713

8,270

2,394

11,990

17,949

3,618

4,384

769

1,388

28,108

1,848

8,890

1,658

12,396

763

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

133

On March 4, 2020, the extraordinary general shareholders
meeting of innogy SE in Essen approved the squeeze-out of the
minority shareholders of innogy SE. Under the terms of the
squeeze-out, the shares of the minority shareholders will be
transferred to E.ON SE as majority shareholder against payment
of a cash settlement. The squeeze-out, implemented in accor-
dance with German merger law, will enter into effect with entry
in the commercial register (see Note 36).

The goodwill identified on a preliminary base results primarily
from the strategic reorientation of the customer business and
the energy networks as well as the expected synergies from
the integration of innogy SE into the Group. E.ON has not made
the assumption that the preliminary goodwill will be deductible
for tax purposes.

The acquisition contributed €10,444 million to revenue and
-€458 million to consolidated net income from September 18,
2019, to December 31, 2019. If the acquisition had been effec-
tive from January 1, 2019, revenue would have totaled about
€33 billion and the contribution to consolidated net income
would have been about -€140 million as of December 31, 2019.

Renewables
The portions of the Renewables business to be transferred to RWE
have been presented as discontinued operations since June 30,
2018 and were deconsolidated as of September 18, 2019.

The expenses and income attributable to this were reported
separately on the face of the Group’s income statement under
income/loss from discontinued operations, net. The prior-year
figures were adjusted accordingly. The relevant assets and lia-
bilities were reported in a separate line on the balance sheet;
prior-year figures are not to be adjusted. The cash flows of the
parts of the Renewables business to be transferred are also
reported separately in the cash flow statement and adjusted
accordingly to the prior-year values.

As of the acquisition date, the nominal value of the trade receiv-
ables acquired is €5,105 million. An impairment of €332 million
was already recognized on the nominal value of the receivables
before the acquisition. The impaired portion of the receivables
continued to be classified as uncollectible within the framework
of the purchase price allocation. Consequently, the fair value of
the trade receivables acquired totals €4,773 million.

Goodwill

€ in millions

Consideration transferred

Fair value of shares in innogy SE that were previously
acquired and held on the market

Amount to be allocated as part of the purchase price
allocation

Fair Value of the negative net assets acquired

Acquisition of RWE’s intragroup receivables from innogy SE

Non-controlling shares

Deferred tax liabilities

Goodwill

13,660

949

14,609

-2,773

-702

2,330

2,010

15,474

Non-controlling interests were measured using the partial
goodwill method for identified pro rata net assets.

E.ON and RWE entered into an agreement on a compensatory
payment by RWE to E.ON in the amount of €1.5 billion as part
of the acquisition and the comprehensive transfer of assets
and business activities. This payment was offset against E.ON’s
payment obligations and indemnification assets with respect
to RWE as part of a shortened payment procedure. In addition,
cash and cash equivalents of €275 million were acquired.

By the acquisition date, E.ON had also acquired an additional
3.79 percent of innogy shares on the market. As a result, in total
E.ON held a 90-percent interest in innogy SE as of September 18,
2019 and as of December 31, 2019. The remeasurement of the
shares previously acquired on the market at the acquisition date
resulted in income of €115 million in 2018 and 2019, which is
reported in net interest income.

Notes

134

All intragroup receivables, payables, expenses and income
between the companies of the discontinued operation and the
remaining E.ON Group companies will be eliminated. For deliv-
eries, goods and services that were previously intragroup in
nature, but which after the deconsolidation will be continued
either between the companies to be transferred or with third
parties, the elimination entries required for the consolidation of
income and expenses were allocated entirely to the discontinued
operation.

The key figures presented in the segment reporting also include
the business activities in the Renewables segment which were
transferred to RWE. These figures are presented as if the trans-
ferred operation had not been reclassified in accordance with
IFRS 5. Note 34 provides additional information and the corre-
sponding reconciliations.

Pursuant to IFRS 5.18, the carrying amounts of all of the dis-
continued operation’s assets and liabilities must be measured
in accordance with applicable IFRS immediately before their
reclassification. In the course of this measurement, no material
impairments or need for reversals were recognized. In addition,
the carrying amount of the discontinued operation as a whole
must be tested for impairment by comparing it with the fair value
less costs to sell. The fair value less costs to sell is determined
from the transaction price agreed with RWE for the parts of the
Renewables business to be transferred less the expected trans-
action costs. The comparison did not result in the recognition of
any additional impairment as of the disposal date.

In fiscal year 2019, E.ON generated revenues of €37 million
(2018: €81 million), interest income of €70 million (2018:
€83 million), interest expenses of €1 million (2018: €1 million),
as well as other income of €14 million (2018: €243 million)
and other expenses of €441 million (2018: €1,050 million),
with the fully consolidated companies to be transferred in the
Renewables segment.

The following table shows the main items of the income state-
ment of the discontinued operation in the Renewables segment
(after allocation of elimination entries) until the date of decon-
solidation:

Income Statement—Renewables (Summary) 1

€ in millions

Sales

Other income

Other expense

Income/Loss from discontinued operations
before income taxes

Income taxes

Income/Loss from discontinued
operations, net

2019

481

-125

365

-101

264

2018

688

140

-386

442

-156

286

1This does not include the deconsolidation income amounting to €784 million.

The disposed assets and liabilities in the Renewables segment
related to intangible assets (€0.3 billion), right-of-use assets
(€0.3 billion), property, plant and equipment (€8.0 billion), other
assets (€4.2 billion), provisions (€0.8 billion) and liabilities
(€8.3 billion).

The deconsolidation gain results mainly from the recognition in
income of currency translation effects (€0.5 billion) previously
recognized in other comprehensive income.

Since the loss of control, the remaining 40-percent stake in
Rampion Renewables Limited, which itself holds 50 percent of
the Rampion offshore wind farm, has qualified as an associated
company and been included in the consolidated financial state-
ments using the equity method.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

135

Minority Interests in Nuclear Power Plants
In addition to the transfer of the majority of the Renewables
business, under the agreement RWE will acquire the minority
interests held by E.ON in the nuclear power plants operated
by RWE, Kernkraftwerke Lippe-Ems GmbH and Kernkraftwerk
Gundremmingen GmbH. The minority interests included in the
Non-Core Business segment and related liabilities were classified
as a disposal group from June 30, 2018. In total, assets in the
amount of €0.2 billion, provisions in the amount of €0.8 billion
and liabilities in the amount of €0.2 billion were transferred to
RWE in September 2019.

innogy in the Czech Republic
The EU approval of the acquisition of RWE’s innogy shares was
subject to conditions which include the sale of various business
activities of E.ON and innogy. Because innogy’s electricity and
gas customer business in the Czech Republic, which is to be sold,
consists of four subsidiaries acquired exclusively with the inten-
tion of reselling them, they have been presented as a discontinued
operation in the E.ON Group since September 30, 2019. The
disposal is expected in the course of the 2020 fiscal year.

The expenses and income attributable to this were reported
separately on the face of the Group’s income statement under
income/loss from discontinued operations, net. The relevant
assets and liabilities were reported in a separate line on the
balance sheet. The cash flows of the parts to be transferred are
also reported separately in the cash flow statement.

All intragroup receivables, payables, expenses and income
between the companies to be disposed of and the remaining
E.ON Group companies will be eliminated. For deliveries, goods
and services that were previously intragroup in nature, but which
after the deconsolidation will be continued either between the
companies to be transferred or with third parties, the elimination
entries required for the consolidation of income and expenses
were allocated entirely to the discontinued operation.

In the course of the measurement under IFRS 5.18 directly
before the reclassification of all assets and liabilities of the
activities to be disposed of, no material impairments or need for
reversals were recognized. In addition, the comparison of the
carrying amount of the discontinued operation as a whole with
the fair value less costs to sell did not result in the recognition
of any additional impairment as of the reporting date.

In the 2019 fiscal year, E.ON generated revenues of €19 million,
interest income of €5 million, interest expense of €8 million
and other expenses of €2 million with the fully consolidated
companies to be transferred.

The following table shows the main items of the income state-
ment of the discontinued operation (after allocation of elimination
entries):

Income Statement—
Customer Solutions—Czech Republic innogy (Summary)

€ in millions

Sales

Other income

Other expense

Income/Loss from discontinued operations before income
taxes

Income taxes

Income/Loss from discontinued operations, net

2019

384

-419

-2

The following table shows major balance sheet line items for
the discontinued operation:

Major Balance Sheet Line Items—Customer
Solutions—Czech Republic innogy (Summary)

€ in millions

Intangible assets and goodwill

Property, plant and equipment

Miscellaneous assets

Assets held for sale

Liabilities

Provisions

Liabilities associated with assets held for sale

Dec. 31,
2019

314

140

212

666

-419

-7

-426

The preceding figures do not include receivables from or liabilities
to the E.ON Group.

Notes

136

Coromatic
On July 11, 2019, the E.ON Group concluded the takeover of
Swedish service provider Coromatic, a leading Nordic supplier
of critical building infrastructure. The seller was the EQT Group.
Coromatic has its registered office in Stockholm and has around
500 employees. The company has more than 5,000 customers
in Scandinavia that are active in a wide variety of industries,
including data centers, healthcare, the public sector, transport,
industry, telecommunications, finance and retail. The parties
agreed not to disclose the purchase price. Overall, the transaction
is not significant for the Group.

Material transactions in 2018

Uniper
E.ON and Finnish energy company Fortum Corporation, Espoo,
Finland, entered into an agreement in September 2017 that
enabled E.ON to decide to sell its 46.65-percent stake in Uniper
to Fortum at a total value of €22 per share at the beginning of
2018. In this connection Fortum published a takeover offer for
all of the shares of Uniper on November 7, 2017. In January
2018, E.ON decided to offer its shareholding in Uniper for sale
in the framework of the takeover bid. After all regulatory approv-
als and conditions for the completion of the voluntary public
takeover bid had been met, the sale of the stake in Uniper to
Fortum was completed on June 26, 2018. The purchase price
was €3.8 billion. This includes the dividends paid by Uniper to
E.ON in 2018.

After derecognition of the Uniper shares of approximately
€3.0 billion reported as assets held for sale prior to completion of
the transaction and the recognition in income of effects from the
equity valuation previously recognized in other comprehensive
income, the gain on disposal amounted to €0.6 billion. Upon
completion of the transaction, derivative financial instruments
with a negative fair value of €0.5 billion were also derecognized
through profit and loss. The derivative financial instruments
were related to the reciprocal rights and obligations arising from
the agreement with Fortum.

Nord Stream
E.ON Beteiligungen GmbH held all of the shares of PEG Infra-
struktur AG (PEGI), and consequently also holds an indirect
interest in Nord Stream AG (15.5 percent). Nord Stream AG,
a project company founded in 2005, owns and operates two
pipelines, each 1,224 km long, that transport natural gas from
Russia to Germany. Under an agreement dated December 18,
2019, E.ON Beteiligungen GmbH transferred and sold all of the
shares of PEGI, and consequently the indirect interest in Nord
Stream AG, to E.ON Pension Trust e.V. (EPT), with effect on and
for account of the trust assets of MEON Pensions GmbH & Co.
KG (MEON). EPT acts as trustee under the Contractual Trust
Arrangements (CTA), with MEON as trustor, which has bundled
the benefit obligations and the plan assets of companies of the
E.ON Group and is responsible for fulfillment of the acquired
benefit obligations and the investment of the plan assets trans-
ferred for this purpose. There are additional CTA trust agree-
ments with EPT as trustee with companies of the E.ON Group
as trustors. Based on the assets, as of the end of 2019 MEON,
with a volume of €2.9 billion, is the largest trustor within the
framework of the CTAs with EPT. The shares were transferred
to PEGI with effect from the close of December 31, 2019. The
preliminary purchase price of the PEGI interest is €1.1 billion and
the gains on consolidation are €0.4 billion.

Reorganization of the Hungary Business
E.ON acquired the 27-percent stake held by EnBW in ELMŰ Nyrt.
(“ELMŰ”) and ÉMÁSZ Nyrt. (“ÉMÁSZ”) at the beginning of
October 2019. A framework agreement was subsequently signed
between E.ON, MVM Magyar Villamos Művek Zrt. (a shareholder
of ELMŰ and ÉMÁSZ) (“MVM”) and Opus Global Nyrt. (“Opus”).
Under this agreement, E.ON intends to create a balanced and
optimized portfolio in Hungary, which will also facilitate the rapid
integration of innogy’s facilities.

The agreement is expected to be fully implemented in 2021.
Subsequently, MVM will hold 100 percent of the ÉMÁSZ distri-
bution network operator and a 25-percent investment in E.ON
Hungária, which will be the sole owner of ELMŰ. Opus will
also be the owner of E.ON’s current subsidiary E.ON Tiszántúli
Áramhálózati Zrt. (“E.ON ETI”). E.ON ETI was reported as a dis-
posal group in accordance with IFRS 5 as of December 31, 2019.
In total, assets totaling €0.3 billion, primarily property, plant and
equipment and other assets, and liabilities totaling €0.1 billion,
primarily liabilities and provisions, were reclassified to the dis-
posal group.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

137

E.ON Elektrárne
On July 26, 2018, E.ON sold its interest in E.ON Elektrárne s.r.o.
to Západoslovenská energetika a.s. (ZSE). The parties agreed not
to disclose the sale price. The transaction also resulted in the
repayment of shareholder loans. ZSE is owned by the Slovak state
(51 percent) and the E.ON Group (49 percent). The assets of E.ON
Elektrárne s.r.o. primarily include the Malženice gas and steam
power plant. The transaction was closed on August 15, 2018.

E.ON Gas Sverige
On April 25, 2018, the E.ON Group completed the sale of its
Swedish gas distribution company E.ON Gas Sverige AB, which
is part of the Energy Networks segment. The transaction was
completed with retroactive economic effect to January 1, 2018.
The buyer was the European Diversified Infrastructure Fund II.
The gain on deconsolidation amounted to around €0.1 billion.

Hamburg Netz
In July 2017, the Hamburg Senate approved the exercise of a call
option agreed in 2014 (following a corresponding referendum)
with the Free and Hanseatic City of Hamburg on the previous

E.ON majority stake in Hamburg Netz GmbH (74.9 percent,
HHNG). E.ON held this stake in the Energy Networks segment
through HanseWerk AG (E.ON’s ownership interest: 66.5 percent).
After the exercise of this option on October 20, 2017, the corre-
sponding HHNG shares were transferred to the buyer effective
January 1, 2018. As of December 31, 2017, the balance sheet
items related to HHNG were classified as a disposal group in
accordance with IFRS 5. The cash inflow of €0.3 billion that
occurred in 2017 is recorded in the consolidated cash flow state-
ment for 2017 under disposals and does not have an effect on
economic net debt as of December 31, 2017. HHNG was decon-
solidated in the first quarter of 2018. The gain on deconsolidation
amounted to €154 million.

Enerjisa
On February 8, 2018, a 20-percent stake (10 percent E.ON stake)
in Enerjisa Enerji A.Ş. was floated on the stock exchange. The
issue price was TRY 6.25 per 100 shares. Enerjisa Enerji A.Ş.
continues to retain the status of a joint venture between E.ON
and Sabanci (40 percent each).

(5) Revenues

At €41.0 billion, revenues in 2019 were roughly €11.6 billion
higher than in the previous year, primarily due to the acquisition
of the innogy Group in September 2019. Revenue also increased
compared to the previous year in the Customer Solutions
Germany Sales segment, primarily due to higher sales volumes
in the electricity and gas business.

Revenues recognized in the current reporting period arising
from performance obligations that have been fully or partially
settled in prior reporting periods amounted to €0.2 billion. The
total amount of benefit obligations already contracted but still
outstanding (excluding expected contract renewals and expected

new contracts) was €20.6 billion as of December 31, 2019
(December 31, 2018: €9.5 billion). The majority of these benefit
obligations are expected to be met within the next three years.

Revenues are broken down into intragroup and external revenues
in the segment information (Note 34). They are also broken
down into key regions and technologies. The overview also shows
the effect of revenues on operating cash flow before interest
and taxes.

In the 2019 fiscal year, revenues include effects from so-called
“failed own use” contracts. The prior-year figures were adjusted
accordingly. Note 2 provides additional information.

Notes

138

(6) Own Work Capitalized

Own work capitalized amounted to €487 million in 2019
(2018: €394 million) and resulted primarily from capitalized
work performed in connection with IT projects and network
assets. The increase is primarily due to the inclusion of innogy.

(7) Other Operating Income and Expenses

The table below provides details of other operating income for
the periods indicated:

Income and expenses from derivative financial instruments
relate to fair value measurement under IFRS 9. Income from
derivative financial instruments in the amount of €950 million
(2018: €227 million) resulted from the change in accounting
method when accounting for “failed own use” contracts (see
Note 2 for more information).

Other Operating Income

€ in millions

Income from exchange rate differences

Gain on derivative financial instruments

Gain on disposal of non-current assets and
securities

Gain on the reversal of provisions

Gain on reversal of valuation allowances on
loans and receivables

Miscellaneous

Total

2019

1,861

1,581

612

1,540

5,649

2018

1,607

1,530

1,068

388

688

5,334

Corresponding items from exchange rate differences and
derivative financial instruments are included in other operating
expenses.

The gain on the disposal of property, plant and equipment and
securities consisted primarily of gains on the disposal of PEGI
in the amount of €390 million. In addition, in 2018 there were
gains on the disposal of Uniper in the amount of €593 million,
Hamburg Netz (€154 million) and E.ON Gas Sverige in the
amount of €134 million. Gains were realized on the sale of
securities in the amount of €42 million (2018: €91 million).

Other operating income increased by €315 million to €5,649 mil-
lion (2018: €5,334 million). Income from exchange rate differ-
ences consisted primarily of realized gains from currency deriv-
atives in the amount of €1,543 million (2018: €1,170 million)
and from receivables and payables denominated in foreign cur-
rency in the amount of €265 million (2018: €47 million). In
addition, there were effects from foreign currency translation
on the balance sheet date in the amount of €49 million (2018:
€389 million).

Income from the reversal of provisions in the prior year resulted
primarily from the adjustment of long-term environmental
remediation obligations due to the clarification of measures and
payment dates.

Miscellaneous other operating income included effects from
the reversal of own-use contracts recognized as liabilities in the
amount of €755 million in the framework of the preliminary
innogy purchase price allocation, the proceeds of passing on
charges for the provision of personnel and services, reimburse-
ments, and rental and lease interest.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

139

Losses from exchange rate differences consisted primarily
of realized losses from currency derivatives in the amount
of €1, 350 million (2018: €1,122 million) and from receivables
and payables denominated in foreign currency in the amount
of €71 million (2018: €293 million). In addition, there were
effects from foreign currency translation on the balance sheet
date in the amount of €354 million (2018: €211 million).

Miscellaneous other operating expenses include effects in the
amount of €725 million from the reversal of own-use contracts
capitalized as part of the preliminary innogy purchase price allo-
cation. Also included are external consulting and audit services
expenses in the amount of €229 million (2018: €162 million),
advertising and marketing expenses in the amount of €131 million
(2018: €176 million), write-downs of trade receivables, loans and
other assets in the amount of €322 million (2018: €188 million),
rents and leases in the amount of €46 million (2018: €130 million)
and other services rendered by third parties in the amount of
€597 million (2018: €537 million). This item also includes IT
expenditures in the amount of €344 million (2018: €131 million),
insurance premiums in the amount of €43 million (2018:
€38 million) and travel expenses in the amount of €76 million
(2018: €80 million).

Cost of Materials

€ in millions

Expenses for raw materials and supplies
and for purchased goods

Expenses for purchased services

Total

2019

2018

20,741

11,385

32,126

20,697

1,938

22,635

In the 2019 fiscal year, cost of materials includes effects from
so-called “failed own use” contracts. The prior-year figures were
adjusted accordingly. Note 2 provides additional information.

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 non-current assets and
securities

Miscellaneous

Total

2019

1,775

2,270

144

3,075

7,355

2018

1,626

866

141

2,085

4,786

Other operating expenses of €7,355 million were 54 percent
above the prior-year level of €4,786 million. This is principally
because expenditures relating to derivative financial instruments
increased by €1,404 million to €2,270 million. Expenses from
derivative financial instruments in the amount of €891 million
(2018: €236 million) resulted from the change in accounting
method when accounting for “failed own use” contracts (see
Note 2 for more information). Expenses from exchange rate differ-
ences in the amount of €1,775 million increased by €149 million
compared to the previous year (€1,626 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. Fuel supply is also included in this line item. Expenses
for purchased services consist primarily of network usage
charges and maintenance costs. The first of these amounted to
€8,575 million in the reporting year and was reclassified in
2019 from cost of raw materials and supplies to expenses for
purchased services within cost of materials. In the previous
year, the cost of materials included network usage fees in the
amount of €6,452 million.

Cost of materials of €32,126 million was significantly higher
than the prior- year level of €22,635 million. The increase is
primarily attributable to the acquisition of the innogy Group in
September 2019. The cost of materials also rose, especially in
the German sales business, due to increased customer numbers
and higher grid fees.

Notes

140

(9) Financial Results

The following table provides details of financial results for the
periods indicated:

Financial Results

€ in millions

Income/Loss from companies in which
equity investments are held
Fair value through P&L
Other

Impairment charges/reversals on other
financial assets

Income/Loss from equity investments

Income/Loss from securities, interest and
similar income

Amortized cost
Fair value through P&L
Fair value through OCI
Other interest income

Interest and similar expenses

Amortized cost
Fair value through P&L
Other interest expenses

Net interest income/loss

Financial results

2019

2018

55
47
8

1,065
472
443
13
137

-1,677
-939
-176
-562

-612

-554

74
59
15

-30

523
109
111
21
282

-1,236
-593
-126
-517

-713

-669

(10) Income Taxes

The following table provides details of income taxes, including
deferred taxes, for the periods indicated:

The increase in financial results relative to the previous year is
primarily attributable to the positive effect from the elimination
of the measurement differences between the nominal value
and the fair value recognized during initial consolidation of the
bonds of innogy SE and innogy Finance B.V. in the amount of
€142 million. Financial results in fiscal year 2019 also include
positive operating earnings effects from the change in fair value
of securities, which was offset by the negative valuation effects
of the long-term provisions.

Other interest income consists primarily of effects from the
reversal of provisions. Other interest expenses include the
accretion of provisions for asset retirement obligations in the
amount of €44 million (2018: €61 million). Also contained in
this item is the net interest cost from provisions for pensions in
the amount of €73 million (2018: €62 million).

Interest expenses also include €9 million of negative earnings
effects (2018: €3 million of positive earnings effects) from non-
controlling interests in fully consolidated partnerships, which
are to be recognized as liabilities in accordance with IAS 32,
and with legal structures that give their shareholders a statutory
right of withdrawal combined with an entitlement to a settle-
ment payment.

Interest expense was reduced by capitalized interest on debt
totaling €13 million (2018: €12 million).

Income Taxes

€ in millions

Domestic income taxes

Foreign income taxes

Current taxes

Domestic

Foreign

Deferred taxes

Total income taxes

2019

320

-25

295

-435

193

-242

2018

-110

-49

-159

125

205

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

141

As of December 31, 2019, €32 million (2018: €5 million) in
deferred tax liabilities were recognized for the differences between
net assets and the tax bases of subsidiaries and associated
companies (outside basis differences). Accordingly, deferred tax
liabilities were not recognized for temporary differences of
€538 million (2018: €259 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 tax rates resulted in deferred tax income of
€27 million in total (2018: tax income of €46 million).

Income taxes relating to discontinued operations (see also Note 4)
are reported in the income statement under “Income from dis-
continued operations.” In the fiscal year they amounted to tax
expense of €103 million (2018: tax expense of €156 million).

The base income tax rate of 30 percent applicable in Germany,
which is unchanged from the previous year, is composed of
corporate income tax (15 percent), trade tax (14 percent) and
the solidarity surcharge (1 percent). The differences from the
effective tax rate are reconciled as follows:

2019

€ in millions

in %

€ in millions

797

239

231

-27

-140

-377

-51

515

-378

100.0

3,284

30.0

29.1

-3.4

-17.6

-47.3

-6.4

64.6

2.1

-47.4

2.9

6.6

985

-129

-46

-124

-212

-571

2018

in %

100.0

30.0

-3.9

-1.4

-3.8

-6.5

0.7

2.7

1.0

-17.4

0.0

1.4

The tax expense in 2019 amounted to €53 million (2018:
€46 million). In 2019, the tax rate was 7 percent (2018: 1 percent).
In the reporting year as well as in fiscal year 2018, the reversal
of tax provisions and liabilities for previous years led to a reduc-
tion in the tax rate. In addition, higher tax-free earnings com-
ponents or deferred tax liabilities led to a reduction in the 2018
tax rate.

Of the amount reported as current taxes, -€309 million is
attributable to previous years (2018: -€570 million).

Deferred taxes resulted from changes in temporary differ-
ences affecting net income, which totaled -€571 million (2018:
€376 million), loss carryforwards of €314 million (2018:
-€171 million) and tax credits amounting to €15 million (2018:
€0 million). There were also changes recognized directly in
equity and disposal effects for deferred taxes from discontinued
operations totaling €56 million.

Income tax assets amounted to €1,411 million (previous year:
€236 million), of which €1,377 million was short-term (previous
year: €229 million), while income tax liabilities amounted to
€1,080 million (previous year: €566 million), of which €787 mil-
lion was short-term (previous year: €262 million). These items
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.

Reconciliation to Effective Income Taxes/Tax Rate

Income/Loss from continuing operations before taxes

Expected income taxes

Foreign tax rate differentials

Changes in tax rate/tax law

Tax effects on tax-free income

Tax effects of non-deductible expenses and permanent differences

Tax effects on income from companies accounted for under the equity method

Tax effects of changes in value and non-recognition of deferred taxes

Tax effects of other taxes on income

Tax effects of income taxes related to other periods

Other

Effective income taxes/tax rate

Notes

142

Deferred tax assets and liabilities as of December 31, 2019, and
December 31, 2018, break down as shown in the following table:

Deferred Tax Assets and Liabilities

€ in millions

Intangible assets

Right-of-use assets

Property, plant and equipment

Financial assets

Inventories

Receivables

Provisions for pensions and similar obligations

Miscellaneous provisions

Liabilities

Loss carryforwards

Tax credits

Other

Subtotal

Changes in value

Deferred taxes (gross)

Netting

Deferred taxes (net)

Current

December 31, 2019

December 31, 2018

Tax assets

Tax liabilities

Tax assets

Tax liabilities

581

–

170

196

764

3,183

1,878

3,063

824

680

11,374

-2,584

8,790

-6,578

2,212
717

1,046

923

4,152

270

1,234

107

397

–

966

9,116

–

9,116

-6,578

2,538
271

–

115

174

241

1,364

1,241

1,298

1,068

480

6,101

-2,716

3,385

-2,190

1,195
563

365

–

1,579

110

–

921

528

–

315

3,896

–

3,896

-2,190

1,706
227

Income taxes recognized in other comprehensive income for the
years 2019 and 2018 break down as follows:

Of the deferred taxes reported, a total of -€538 million was
charged directly to equity in 2019 (2018: -€564 million charge).
A further €49 million in current taxes (2018: €49 million)
was also recognized directly in equity. Currency translation
differences with an impact on income tax within this item were
reclassified to other comprehensive income.

Income Taxes on Components of Other Comprehensive Income

€ in millions

Cash flow hedges

Securities (IFRS 9)

Currency translation adjustments

Remeasurements of defined benefit plans

Companies accounted for under the equity method

Total

Before
income
taxes

-453

-1

-622

-146

-112

-1,334

Income
taxes

–

-33

-3

-26

2019

After
income
taxes

-444

–

-622

-179

-115

-1,360

Before
income
taxes

-63

-84

-488

-41

-623

Income
taxes

-15

–

-54

-62

2018

After
income
taxes

-63

-84

-542

-34

-685

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

143

The preliminary purchase price allocation to the acquisition of
innogy SE resulted in deferred tax assets of €655 million and
deferred tax liabilities of €2,657 million as of December 31, 2019.

In connection with the acquisition of the Swedish service pro-
vider Coromatic, deferred tax assets of €4 million and deferred
tax liabilities of €18 million resulted from the purchase price
allocation as of December 31, 2019.

Deferred taxes were not recognized, or no longer recognized,
on a total of €7,813 million (2018: €4,006 million) in tax loss
carryforwards that for the most part do not expire. Deferred
tax assets were not recognized, or no longer recognized, on
non-expiring domestic corporate tax loss carryforwards of
€142 million (2018: €477 million) or on domestic trade tax
loss carryforwards of €1,742 million (2018: €2,092 million).

The declared tax loss carryforwards as of the dates indicated
are as follows:

Deferred tax assets were not recognized, or are no l onger recog-
nized, in the amount of €12,142 million (2018: €9,831 million) for
temporary differences which are recognized in income and equity.

Tax Loss Carryforwards

€ in millions

Domestic tax loss carryforwards

Foreign tax loss carryforwards

Total

December 31,

2018

2,614

5,466

8,080

2019

1,935

8,803

10,738

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 corpo-
rate tax loss carryforwards amounting to €162 million (2018:
€495 million) and trade tax loss carryforwards amounting to
€1,773 million (2018: €2,119 million).

The foreign tax loss carryforwards consist of corporate tax loss
carryforwards amounting to €8,738 million (2018: €5,064 million)
and tax loss carryforwards from local income taxes amounting
to €65 million (2018: €402 million).

Of the foreign tax loss carryforwards, a significant portion
relates to previous years.

As of December 31, 2019, and December 31, 2018, 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 €74 million and €21 million, respectively. The
basis for recognizing deferred tax assets is an estimate by manage-
ment based on the development of temporary reversal effects
and concrete tax structuring measures 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.

Income tax items are regularly assessed in particular against
the backdrop of numerous changes in tax laws, tax regulations,
legal decisions and ongoing tax audits. E.ON is responding to this
circumstance, in particular through the application of IFRIC 23,
by continuously identifying and assessing the tax environment
and the resulting effects. The most current information is then
incorporated into the estimate parameters necessary for mea-
suring the tax provisions. Related potential interest rate effects
are also assessed and measured accordingly. They are presented
in separate items.

Notes

144

(11) Personnel-Related Information

Personnel Costs

The following discussion includes reports on the E.ON Share
Matching Plan introduced in 2013, on the multi-year bonus
granted in 2015 and 2016 and on the E.ON Performance Plan
introduced in 2017.

The following table provides details of personnel costs for the
periods indicated:

E.ON Share Matching Plan

Personnel Costs

€ in millions

Wages and salaries

Social security contributions

Pension costs and other employee benefits

Pension costs

Total

2019

3,301

436

364
355

2018

2,086

316

58
53

4,101

2,460

Personnel costs of €4,101 million were €1,641 million higher
than the prior-year figure of €2,460 million, mainly because of
the takeover of innogy. This also resulted in increased expenses
from personnel reorganization.

Share-Based Payment

The expenses for share-based payment in 2019 (the E.ON Share
Matching Plan, the multi-year bonus and the E.ON Performance
Plan) amounted to €21.2 million (2018: €21.9 million). Expenses
of €10 million were also incurred in the 2019 reporting period
in connection with innogy SE’s share-based payment system.

Employee Stock Purchase Program

The voluntary employee stock purchase program, which through
2015 provided employees of German Group companies the
opportunity to purchase E.ON shares at preferential terms, was
again suspended in 2019, as it had been from 2016 to 2018.

Long-Term Variable Compensation

Members of the Management Board 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 contribution
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.

From 2013 to 2016, E.ON granted virtual shares to members of
the Management Board of E.ON SE and certain executives of
the E.ON Group 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 compen-
sation package are equity deferral, base matching and perfor-
mance 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. Beneficiaries were additionally
granted virtual shares in the context of base matching and per-
formance matching. For members of the Management Board of
E.ON SE, the proportion of base matching to the equity deferral
was determined at the discretion of the Supervisory Board; for
all other beneficiaries it was 2:1. The performance-matching
target value at allocation was equal to that for base matching in
terms of amount. Performance matching will result in a payout
only on achievement of a minimum performance as specified at
the beginning of the term by the Management Board and the
Supervisory Board.

In 2015 and 2016, virtual shares from the third and fourth tranche
were granted in the context of base matching and performance
matching exclusively to members of the Management Board of
E.ON SE. Executives were granted a multi-year bonus, the terms
of which are described further below, instead of the base and
performance matching.

In 2017 virtual shares were granted for the last time under the
E.ON Share Matching Plan, only to members of the Management
Board of E.ON SE and only to the extent of the “equity deferral.”
The total of these allocations is shown below as the fifth tranche
of the E.ON Share Matching Plan. Additional information can be
found on pages 75 and 76 of the compensation report.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

145

The plan also contains adjustment mechanisms to eliminate the
effect of events such as interim corporate actions.

The following are the base parameters of the tranches of the
share matching plan active in 2019:

E.ON Share Matching Virtual Shares

Date of issuance

Term

Target value at issuance

5th tranche

4th tranche

Apr. 1, 2017

Apr. 1, 2016

4 years

€7.17

4 years

€8.63

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 ROCE is simulated for performance
matching. The provision for the fourth and fifth tranches
of the E.ON Share Matching Plan as of the balance sheet date
is €9.3 million (2018: €14.1 million). The income for the fourth
and fifth tranches amounted to €0.5 million in the 2019 fiscal
year (2018: income of €0.7 million).

Multi-Year Bonus

In 2015 and 2016, E.ON extended to those executives who in
previous years had been granted virtual shares in the context of
base matching and performance matching a multi-year bonus
extending over a term of four years. Beneficiaries were informed
individually of the target value of the multi-year bonus.

For executives in the E.ON Group, the amount paid out is equal
to the target value if the E.ON share price at the end of the term
is equal to the E.ON share price after the spinoff of Uniper. If
the share price at the end of the term is higher or lower than the
share price after the spinoff, the amount paid out relative to
the target value will increase or decrease in equal proportion to
the change in the share price, but in no event shall the payout
be higher than twice the target value.

Under the plan’s original structure, the amount paid out under
performance matching was to be equal to the target value
at issuance if the E.ON share price was maintained at the end
of the term and if the average ROACE performance matched
a target value specified by the Management Board and the Super-
visory Board. If the average ROACE during the four-year term
exceeded the target value, the number of virtual shares granted
under performance matching increased up to a maximum of
twice the target value. If the average ROACE had fallen short
of the target value, the number of virtual shares, and thus also
the amount paid out, were to decrease.

In 2016, the plan was changed to the effect that for periods from
2016 onwards, ROCE was used instead of ROACE for measuring
performance. Accordingly, new targets were defined for 2016
and/or subsequent years. At the same time, the previous ROACE
target achievement for the previous years will be included in
the total performance of the respective tranches on a pro rata
basis. In the event of a defined underperformance, there is no
payout under performance matching.

A payout generally will not take place until after the end of the
four-year term. This is true even if the beneficiary retires before-
hand, 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 rela-
tionship 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 the ordi-
nary shareholders during the term is added to each virtual share.
The maximum amount to be paid out to a plan participant is
limited to twice the sum of the equity deferral, base 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. To offset the
change in value resulting from the spinoff of Uniper SE, both
the 60-day average price of the E.ON share and the total divi-
dends paid to a shareholder starting from 2017 will be multiplied
by a correction factor at the end of the term.

Notes

146

A payout generally will not take place until after the end of the
four-year term. This is true even if the beneficiary retires before-
hand, 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, there is no entitlement to a multi-
year bonus payout.

60-day average prices are used to determine both the share
price after the spinoff 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 provision for the multi-year bonus as of the balance sheet
date is €28.8 million (2018: €47.3 million). The expense amounted
to €8.7 million in the 2019 fiscal year (2018: €12.8 million).

E.ON Performance Plan (EPP)

In 2017, 2018 and 2019, E.ON granted the members of the
Management Board of E.ON SE and certain executives of the
E.ON Group virtual shares under the E.ON Performance Plan.
The vesting period of each tranche is four years. Vesting periods
start on January 1 of each year.

The beneficiary will receive virtual shares in the amount of the
agreed target. The conversion into virtual shares will be based on
the fair market value on the date when the shares are granted.
The fair market value will be determined by applying methods
accepted in financial mathematics, taking into account the
expected future payout and consequently the volatility and risk
associated with the EPP. The number of virtual shares allocated

may change during the four-year vesting period, depending on
the total shareholder return (“TSR”) of E.ON stock compared
with the TSR of the companies in a peer group (“relative TSR”).

The TSR is the return on E.ON stock, which takes into account
the stock price plus the assumption of reinvested dividends,
adjusted for changes in capital. The peer group used for relative
TSR will be the other companies in E.ON’s peer index, the
STOXX® Europe 600 Utilities. Only companies included in the
STOXX® Europe 600 Utilities for which no takeover offer pursu-
ant to Section 29(1) of the German Securities Acquisition and
Takeover Act (WpÜG) or pursuant to an applicable comparable
regulation of a foreign legal system was or is effective during
the fiscal year in question and in which E.ON does not hold or
did not hold a significant portion of shares during the fiscal year
in question will be taken into consideration for the tranche allo-
cated in 2019. The peer group for the tranche allocated in 2019
is also adjusted for companies that have not been in the index
for the full year.

During a tranche’s vesting period, E.ON’s TSR performance is
measured once a year in comparison with the companies in the
peer group and set for that year. E.ON’s TSR performance in a
given year determines the final number of one fourth of the vir-
tual shares granted at the beginning of the vesting period. For
this purpose, the TSRs of all companies are ranked, and E.ON’s
relative position is determined based on the percentile reached.
If target attainment in a year is below the threshold defined by
the Supervisory Board upon allocation, the number of virtual
shares is reduced by one fourth. If E.ON’s performance is at
the upper cap or above, the fourth of the virtual shares allocated
for the year in question will increase, but to a maximum of
150 percent. Linear interpolation is used to translate interme-
diate figures into percentage.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

147

The provision for the first, second and third tranche of the E.ON
Performance Plan as of the balance sheet date is €26.8 million
(2018: €16.2 million). The expense for the first, second and third
tranches amounted to €11.9 million in the 2019 fiscal year
(2018: €9.8 million).

Employees

During 2019, E.ON employed an average of 61,050 persons
(2018: 42,949), not including an average of 1,656 apprentices
(2018: 816).

The breakdown by segment is shown in the following table:

Employees 1

Headcount

Energy Networks

Customer Solutions

innogy

Renewables

Corporate Functions & Other 2

Employees, core business

Non-Core Business (PreussenElektra)

Total employees, E.ON Group

2019

20,058

17,615

18,343

742

2,414

59,172

1,878

61,050

2018

17,519

19,751

–

1,332

2,456

41,058

1,891

42,949

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

The virtual shares are canceled if the employment relationship
of the beneficiary ends before the end of the term for reasons
within the control of the beneficiary. This shall apply in particular
in the event of termination by the beneficiary and in the event
of extraordinary termination for good cause by the Company.
If the employment relationship of the beneficiary is terminated
before retirement, through the end of a limited term or for oper-
ational reasons before the end of the term, the virtual shares do
not expire but are settled at maturity.

If the employment relationship ends before maturity due to death
or permanent invalidity, the virtual shares are settled before
maturity, whereby in this case the average TSR performance of
the fiscal years that have already completely ended is used to
calculate the payment amount. The same shall apply in the case
of a change in control related to E.ON SE and also if the allocating
company leaves the E.ON Group before maturity.

The following are the base parameters of the tranches of the
E.ON Performance Plan active in 2019:

E.ON Performance Plan Virtual Shares

3rd tranche

2nd tranche

1st tranche

Date of issuance

Jan. 1, 2019

Jan. 1, 2018

Jan. 1, 2017

Term

Target value at issuance

4 years

€6.68

4 years

€6.41

4 years

€5.84

Notes

148

(12) Other Information

German Corporate Governance Code

On December 18, 2019, the Management Board and the Super-
visory 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).

On December 11, 2019, the Management Board and Supervisory
Board of innogy SE issued a statement of compliance pursuant to
Section 161 of the German Stock Corporation Act and published
it on the Internet at www.innogy.com to make it permanently and
publicly accessible to the Company’s stockholders.

Fees and Services of the Independent Auditor

During 2019 and 2018, the following fees for services provided
by the independent auditor of the Consolidated Financial State-
ments, Pricewaterhouse Coopers (“PwC”) GmbH, Wirtschafts-
prüfungs gesellschaft, (domestic) and by companies in the inter-
national 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

2019

37
28

4
4

–
–

1
1

42
33

2018

20
15

3
2

–
–

1
1

24
18

The auditor’s fees relate to the audit of the Consolidated Financial
Statements and the legally mandated financial statements of
E.ON SE and its affiliates. They also include fees for auditing
reviews of the IFRS interim financial statements and other tests
directly required by the audit. This figure also includes additional
auditing services in relation to the innogy transaction.

The fees for other auditing services include all attestation ser-
vices that are not auditing services and are not used in connection
with the audit. In 2019, these costs are for the legally required
attestation services (e.g., as a result of the Renewable Energy Act
[EEG], the Act on Combined Heat and Power Generation [KWKG])
and the other half of the costs will be for other voluntary attes-
tation services (primarily in connection with new IT systems).

The fees for tax consulting services mainly relate to services in
the area of tax compliance.

Fees for other services consist primarily of technical support
in connection with the implementation of transactions and new
requirements in the areas of IT and accounting issues.

The fees indicated take into consideration the innogy subsidiaries
from the acquisition date and the companies transferred to RWE
from the date of deconsolidation.

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 210 through 227.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

149

(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/Loss from discontinued operations, net

Less: Non-controlling interests

Income/Loss from discontinued operations, net (attributable to shareholders of E.ON SE)

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

in €

Earnings per share (attributable to shareholders of E.ON SE)

from continuing operations

from discontinued operations

from net income/loss

2019

744

-189

555

1,064

-53

1,011

1,566

0.24

0.44

0.68

2018

3,238

-263

2,975

286

-38

248

3,223

1.37

0.12

1.49

Weighted-average number of shares outstanding (in millions)

2,293

2,167

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.

The increase in the weighted-average number of shares out-
standing resulted primarily from the capital increase carried out
in September. As a result, E.ON increased the share capital from
€2,201,099,000 to €2,641,318,800 through the majority utili-
zation of its authorized capital via the issue of 440,219,800
new, registered ordinary shares against a contribution in kind.

(14) Goodwill, Intangible Assets, Right-of-use
Assets and Property, Plant and Equipment

The changes in goodwill and intangible assets, in right-of-use
assets, and in property, plant and equipment, are presented in
the tables on the following pages:

Notes

150

Goodwill, Intangible Assets, Right-of-use Assets and Property, Plant and Equipment 1

Acquisition and production costs

Additions

Disposals

Transfers

€ in millions

Goodwill

Customer relationships and similar items

Concessions, commercial property rights, licenses, and
similar rights

Development expenditures

Advance payments

Intangible assets

Land and buildings

Networks

Storage, e-charging and production capacities

Technical equipment and machinery

Fleet, office and business equipment

Right-of-use assets 1

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 2

Exchange
rate
differences

Jan. 1, 2019

3,847

541

2,303

396

370

3,610

361

387

105

870

539

2,780

40,197

835

1,921

46,272

-16

-1

-76

-8

-83

1New account due to IFRS16. Please see Note 32 for more information on rights of use.
2The first-time application of IFRS 16 resulted in adjustments to the initial inventories (see Note 2).

Changes in
scope of
consolida-
tion

15,413

1,750

–

446

1,204

–

2,202

282

1,778

–

2,117

353

925

14,193

310

875

16,656

218

1,489

242

–

374

1,727

116

1,141

3,092

–

-47

-816

-14

-7

-884

-14

-3

–

-6

-26

-32

-57

-325

-38

-30

-482

–

-39

-379

259

-213

-372

-8

–

-4

422

-1,274

-777

Dec. 31,
2019

19,303

2,218

2,742

720

379

6,059

727

2,397

167

3,338

885

3,781

56,138

1,249

2,625

64,678

Changes in Goodwill and in Other Reversals and Impairment Charges by Segment from January 1, 2019

Energy Networks

Customer Solutions

€ in millions

Germany

Sweden

ECE/Turkey

Germany Sales

Net carrying amount of goodwill as of January 1, 2019

Changes resulting from acquisitions and disposals

Impairment charges

Other changes 1

Net carrying amount of goodwill as of December 31, 2019

Growth rate (in %) 2, 3

Cost of capital (in %) 2, 3

Other non-current assets 4

Impairment

Reversals

589

–

589

n/a

–

-2

–

152

–

152

–

838

–

881

0.5

5.9

Other

131

112

–

245

–

1Other changes include effects from intragroup restructuring, transfers, exchange rate differences and reclassifications to assets held for sale.
2Presented here are the 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.
3Energy Networks Germany was valued on the basis of the regulatory asset base, taking into account the upcoming regulatory period for gas in 2018 and for electricity in 2019.
4Other non-current assets consist of intangible assets, of right-of-use assets and of property, plant and equipment.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

151

Accumulated depreciation

Net carrying
amounts

Exchange
rate
differences

Changes in
scope of
consolida-
tion

Jan. 1, 2019

Additions

Disposals

Transfers

Impairment

Reversals

-1,793

-445

-818

-185

–

-1,448

–

-58

-1,710

-26,119

-597

-42

-28,526

-5

-3

-1

–

-1

–

-2

–

402

-2

–

438

–

-93

-151

-119

-363

-78

-1

-2

-45

-204

-102

-1,417

-100

–

-1,619

–

106

–

210

–

274

–

-1

-44

-2

-13

-2

-3

–

-1

-6

–

589

-6

612

–

-128

-14

-10

-71

-223

-20

–

-3

-23

-2

-1

-55

-10

-16

-84

–

Dec. 31,
2019

-1,791

-625

-866

-357

-73

-1,921

-100

-81

-2

-3

-43

-229

-54

-1,727

-26,337

-680

-48

Dec. 31,
2019

17,512

1,593

1,876

363

306

4,138

627

2,316

124

3,109

831

2,054

29,801

569

2,577

-28,846

35,832

innogy

15,481

–

15,481

–

216

–

Renewables

PreussenElektra

Generation Turkey

Non-Core Business

Corporate Functions/
Other

E.ON Group

–

179

-179

–

2,054

15,414

17,512

–

330

Notes

152

Goodwill, Intangible Assets, Right-of-use Assets and Property, Plant and Equipment

Acquisition and production costs

€ in millions

Goodwill

Customer relationships and similar items

Concessions, commercial property rights, licenses, and
similar rights

Development expenditures

Advance payments

Intangible assets

Land and buildings

Networks

Storage, e-charging and production capacities

Technical equipment and machinery

Fleet, office and business equipment

Right-of-use 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

5,171

591

2,865

327

370

4,153

–

589

3,060

49,144

951

2,674

56,418

Exchange
rate
differences

Jan. 1, 2018

Additions

Disposals

Transfers

Changes in
scope of
consolida-
tion

-1,322

–

-738

-5

-112

-854

–

-13

-270

-2

-3

-6

-1

-11

–

-7

-20

-328

-10,845

-4

-33

-277

-363

-11,438

–

824

278

1,116

–

1,181

1,279

2,578

–

-47

-739

-30

-5

-821

–

-31

-41

-298

-176

-66

-612

Dec. 31,
2018

3,847

541

2,303

396

370

3,610

–

539

2,797

40,491

835

1,921

–

-161

–

-2

1,637

-1,685

46,583

Changes in Goodwill and in Other Reversals and Impairment Charges by Segment from January 1, 2018

Energy Networks

Customer Solutions

€ in millions

Germany

Sweden

ECE/Turkey

Germany Sales

Net carrying amount of goodwill as of January 1, 2018

Changes resulting from acquisitions and disposals

Impairment charges

Other changes 2

Net carrying amount of goodwill as of December 31, 2018

Growth rate (in %) 3, 4

Cost of capital (in %) 3, 4

Other non-current assets 5

Impairment

Reversals

589

–

589

n/a

–

-2

–

-5

–

183

–

-31

152

–

845

–

-7

838

1.3

7.6

–

Other

102

–

131

–

4.0

1Recognized goodwill expected to be eliminated from the scope of consolidation soon.
2Other changes include effects from intragroup restructuring, transfers, exchange rate differences and reclassifications to assets held for sale. This item also includes impairments on goodwill from disposal groups.
3Presented here are the 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.
4Energy Networks Germany was valued on the basis of the regulatory asset base, taking into account the upcoming regulatory period for gas in 2018 and for electricity in 2019.
5Other non-current assets consist of intangible assets and of property, plant and equipment.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

153

Accumulated depreciation

Net carrying
amounts

Exchange
rate
differences

Changes in
scope of
consolida-
tion

Jan. 1, 2018

Additions

Disposals

Transfers

Impairment

Reversals

-1,834

-437

-1,300

-113

-54

-1,904

–

-72

-1,842

-29,021

-658

-73

-3

-1

–

169

–

568

626

–

166

3,830

–

-32

-82

-72

-186

–

-1

-73

-1,297

-81

–

-31,666

187

4,025

-1,452

–

203

120

391

–

-1

–

-1

-20

–

-26

-6

-29

-5

-66

–

-3

-15

–

-31

-49

–

Dec. 31,
2018

-1,793

-445

-819

-184

–

Dec. 31,
2018

2,054

1,484

212

370

-1,448

2,162

–

-59

-1,711

-26,118

-596

-42

–

480

1,086

14,373

239

1,879

-28,526

18,057

innogy

Renewables

PreussenElektra

Generation Turkey

Non-Core Business

Corporate Functions/
Other 1

–

1,286

–

-1,267

–

179

–

179

–

E.ON Group

3,337

-2

–

-1,281

2,054

–

115

Notes

154

Goodwill and Non-Current Assets

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 150 through 153.

Impairments
IFRS 3 prohibits the amortization of goodwill. Instead, goodwill
is tested for impairment at least annually at the level of the
cash-generating units. Goodwill must also be tested for impair-
ment at the level of individual cash-generating units between
these annual tests if events or changes in circumstances 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.
Because, with the exception of the inclusion of the interest in
Nord Stream in the CTA, there were no binding sales transactions
or market prices for the respective cash-generating units in
2019, fair values were otherwise calculated based on discounted
cash flow methods.

Valuations are based on the medium-term corporate planning
authorized by the Management Board. The calculations for
impairment-testing purposes are generally based on the three
planning years of the medium-term plan plus two additional
detailed planning years. In certain justified exceptional cases, a
longer detailed planning period is used as the calculation basis.
The cash flow assumptions extending beyond the detailed plan-
ning period are determined using growth rates that generally
correspond to the growth rates in each of the currency areas
where the cash-generating units are tested. In 2019, the inflation
rate used for the euro area was 0.5 percent (2018: 1.25 percent).

The interest rates used for discounting cash flows in the annual
impairment test are calculated using market data for each cash-
generating unit, and as of December 31, 2019, ranged between
3.3 and 7.1 percent after taxes (2018: 3.5 and 8.7 percent).

The principal assumptions underlying the determination by
management of recoverable amount are the respective forecasts
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
external market data from established providers and on internal
estimates.

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. If the goodwill of a
cash-generating unit is combined with assets or groups of
assets for impairment testing, the assets must be tested first.

As in 2018, the goodwill impairment testing performed in 2019
resulted in the recognition of no impairment charges.

The tested goodwill of all cash-generating units whose respec-
tive goodwill as of the balance sheet date 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 situa-
tion, only a significant change in the material valuation parame-
ters would necessitate the recognition of goodwill impairment.

Impairments of property, plant and equipment in 2019 totaled
around €84 million, of which around €38 million were in the
German network business, mainly in connection with the decom-
missioning of a gas storage facility, and also around €38 million
for innogy, primarily due to the optimization and restructuring
of the joint UK business of innogy and E.ON. In this connection,
an impairment loss was recognized for several innogy buildings
in the UK.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

155

Approximately €223 million of impairments were recognized
on intangible assets. The largest effect in terms of amount
(€159 million) arose at innogy, again mainly from business in
the UK for the reasons outlined above. Impairments were recog-
nized in particular for IT infrastructure in the private customer
segment. E.ON’s UK business was also impacted, with around
€55 million. Impairments were recognized primarily on IT projects
that are currently being discontinued because of a management
decision, with the result that they are no longer expected to
generate any economic advantages.

Intangible Assets

Most of the change results from the takeover of innogy.

In 2019, the Company recorded an amortization expense of
€363 million (2018: €186 million). Impairment charges on
intangible assets amounted to €223 million (2018: €66 million).

Reversals of impairments on intangible assets in the amount of
€0 million (2018: €3 million) were recognized in the reporting
year.

In fiscal year 2019, a total of €23 million in impairments was
charged to right-of-use assets. About €19 million again resulted
from the restructuring at innogy in the UK.

The closing balance of intangible assets not subject to amorti-
zation as of December 31, 2019, amounted to €299 million.

Reversals of impairments on property, plant and equipment
and intangible assets recognized in previous years amounted to
around €3 million in 2019, significantly influenced by the posi-
tive outcome of litigation in the UK.

€68 million in research and development costs as defined by
IAS 38 were expensed in 2019 (2018: €2 million).

Right-of-use Assets

In fiscal year 2018, a total of €49 million in impairments
was charged to property, plant and equipment, primarily from
€20 million in impairments in the UK.

Scheduled depreciation amounted to €204 million in 2019.
Impairments on right-of-use assets amounted to €23 million.

Impairments on intangible assets amounted to approximately
€66 million in 2018. Developments in the retail customer busi-
ness at E.ON Business Solutions in the UK (around €26 million)
and the impairment of capitalized IT costs at the holding com-
pany (around €16 million) had the greatest impact.

Reversals of impairments on property, plant and equipment
and intangible assets recognized in previous years amounted to
€36 million in 2018, significantly influenced by developments
in Hungary.

Property, Plant and Equipment

Most of the change results from the takeover of innogy.

Borrowing costs in the amount of €13 million were capitalized
in 2019 (2018: €12 million) as part of the historical cost of
property, plant and equipment.

Depreciation amounted to €1,619 million in 2019 (2018:
€1,452 million).

In addition, write-downs on property, plant and equipment in
the amount of €84 million (2018: €49 million) were made in the
year under review. Reversals of impairments on property, plant
and equipment in the amount of €3 million (2018: €33 million)
were recognized in the reporting year.

Notes

156

(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

Companies accounted for under the equity method

Equity investments

Non-current securities

Total

5,232

1,730

2,353

9,315

3,280

556

–

3,836

Joint
ventures 1

1,952

155

–

2,107

E.ON Group

Associates 1

2,603

664

2,240

5,507

1,421

250

–

1,671

Joint
ventures 1

1,182

–

1,202

December 31, 2019

December 31, 2018

1The associates and joint ventures presented as equity investments are associated companies and joint ventures accounted for at cost on materiality grounds.

Companies accounted for under the equity method consist
solely of associates and joint ventures.

Shares in Companies Accounted for under the
Equity Method

The amount shown for non-current securities relates primarily
to fixed-income securities.

In 2019, impairment charges on companies accounted for under
the equity method amounted to €3 million (2018: €7 million).

Impairments on other financial assets amounted to €15 million
(2018: €30 million). The carrying amount of other financial
assets with impairment losses was €22 million as of the end of
the fiscal year (2018: €16 million).

The carrying amounts of the immaterial associates accounted
for under the equity method totaled €1,905 million (2018:
€363 million), and those of the joint ventures totaled €896 million
(2018: €102 million). The increase resulted primarily from the
addition of the equity interests of innogy SE.

Investment income generated from companies accounted for
under the equity method amounted to €330 million in 2019
(2018: €235 million). The increase results in particular from the
increased dividend paid by Nord Stream AG and the initial inclu-
sion of the equity interests of innogy SE.

The following table summarizes significant line items of the aggre-
gated 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

2019

2018

Proportional share of net income from continuing operations

Proportional share of other comprehensive income

Proportional share of total comprehensive income

–

2019

113

114

2018

-5

2019

201

202

Associates

Joint ventures

Total

2018

114

-5

109

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

157

The Group adjustments shown in the table mainly relate to
goodwill determined as part of initial recognition, temporary
differences, changes in ownership interests, exchange-rate
effects and effects from the elimination of intragroup profits.

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 RheinEnergie AG, Rampion Renewables Limited, GASAG
Berliner Gaswerke AG and, until its sale to E.ON Pension Trust e.V.
the end of December 2019, Nord Stream AG. PEGI, as parent
company of Nord Stream AG, was sold to E.ON Pension Trust e.V.

Material Associates—Balance Sheet Data as of December 31

RheinEnergie AG

Rampion Renewables
Ltd.

Nord Stream AG

GASAG Berliner
Gaswerke AG

€ in millions

Non-current assets 1

Current assets

Current liabilities (including provisions)

Non-current liabilities (including provisions)

Equity

Non controlling interests

Ownership interest (in %)

Proportional share of equity

Consolidation adjustments

Carrying amount of equity investment

2019

3,419

577

563

1,410

2,023

–

20.00

405

166

571

2018

–

2019

672

–

703

–

39.93

281

181

462

1Undisclosed accruals/provisions from acquisitions are recognized in assets.

2018

2019

–

2018

5,775

801

392

3,300

2,884

–

2019

1,882

230

542

896

674

2018

1,775

237

358

813

841

15.50

36.85

447

457

248

342

282

362

Material Associates—Earnings Data

RheinEnergie AG

Rampion Renewables
Ltd.

Nord Stream AG

GASAG Berliner
Gaswerke AG

€ in millions

Sales

Net income/loss from continuing operations

Non-controlling interests in the net income/
loss from continuing operations

Net income from discontinued operations

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

2019

694

–

20.00

–

1Rampion Renewables Ltd. holds 50,1 percent on Rampion Offshore Wind Ltd.

2018

2019

2018

–

-18

–

39.93 1

-7

-1

–

2019

1,074

451

–

667

514

2018

1,074

434

–

334

516

2019

1,253

–

-56

-25

2018

1,197

–

15.50

36.85

–

-2

-9

–

Notes

158

Presented in the tables below are significant line items of the
aggregated balance sheets and of the aggregated income state-
ments of the joint ventures accounted for under the equity
method, Enerjisa Enerji A.Ş. and Enerjisa Üretim Santralleri A.Ş.

Material Joint Ventures—Balance Sheet Data as of December 31

€ in millions

Non-current assets

Current assets

Current liabilities (including provisions)

Non-current liabilities (including 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

Material Joint Ventures—Earnings Data

€ in millions

Sales

Net income/loss from continuing operations

Write-downs

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

Enerjisa Enerji A.Ş.

Enerjisa Üretim Santralleri A.Ş.

2019

2,678

865

1,097

1,381

560

850

1,065

40.00

426

438

2018

2,820

1,056

1,235

1,541

563

1,015

1,100

40.00

440

451

2019

1,980

299

467

656

146

319

604

1,156

50.00

578

618

2018

2,233

331

505

888

180

337

879

1,171

50.00

586

629

Enerjisa Enerji A.Ş.

Enerjisa Üretim Santralleri A.Ş.

2019

2,910

143

-67

-250

-54

-113

40.00

2018

3,029

111

-55

-246

-95

-355

-244

40.00

-98

2019

981

137

-106

-51

-16

–

-170

-33

50.00

-16

2018

875

-33

-108

-53

–

-486

-519

50.00

-260

-17

–

-17

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

159

Of investments in associates, the shareholding in companies
with a carrying amount of €573 million (2018: €457 million)
are restricted because it was 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.

The cost of raw materials, finished products and goods purchased
for resale is determined based on the average cost method.

Write-downs totaled €5 million in 2019 (2018: €9 million).
Reversals of write-downs amounted to €17 million in 2019
(2018: €14 million).

The increase in inventories compared to December 31, 2018, is
primarily due to the acquisition of innogy.

No inventories have been pledged as collateral.

The material associates and the material joint ventures 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 material joint arrangements and
associates can be found in the list of shareholdings pursuant
to Section 313 (2) HGB (see Note 37).

As of December 31, 2019, the investment in Enerjisa Enerji A.Ş. is
marketable. The pro rata market value amounted to €522 million
as of December 31, 2019 (2018: €398 million). The carrying
amount is €438 million as of December 31, 2019.

(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,

2018

511

111

684

2019

670

199

383

1,252

Notes

160

(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 1

Other financial receivables and financial assets

Financial receivables and other financial assets

Trade receivables

Contract assets

Other assets

Receivables from derivative financial instruments

Other operating assets

Trade receivables and other operating assets

Total

1See also Note 32.

December 31, 2019

December 31, 2018

Current

Non-current

Current

Non-current

440

490

8,438

907

4,944

14,319

14,809

320

379

699

–

2,378

372

835

3,593

4,292

246

284

3,896

324

1,199

5,445

5,729

291

136

427

–

1,213

142

112

1,474

1,901

Receivables arising from IFRS 15 primarily consist of trade
receivables. Impairments on receivables arising from IFRS 15
totaled €0.3 billion in 2019 (2018: €0.2 billion).

The following table shows the opening and closing balances of
contractual assets under IFRS 15:

As of December 31, 2019, other financial assets include receiv-
ables from owners of non-controlling interests in jointly owned
power plants of €74 million (2018: €53 million).

The increase in other operating assets compared to December 31,
2018, is primarily due to the acquisition of innogy. In addition,
a purchase price receivable in the amount of €1.1 billion is due
from E.ON Pension Trust e.V. from the sale of shares in PEG
Infrastruktur AG and its interest in Nord Stream AG as of
December 31, 2019.

Other assets under IFRS 15 changed as follows:

Contract Assets

€ in millions

Balance as of January 1

Balance as of December 31

2019

2018

The increase in contractual assets is mainly due to the takeover
of innogy.

In addition, the E.ON Group had no contingent assets as of
December 31, 2019, as in the prior year.

Other Assets

€ in millions

Amortization and impairment

Balance as of December 31

2019

176

386

2018

138

165

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

161

In 2019, there was €49 million in restricted cash (2018:
€17 million) with a maturity greater than three months.

Cash and cash equivalents include €1,880 million (2018:
€2,881 million) in checks, cash on hand and balances at financial
institutions with an original maturity of less than three months,
to the extent that they are not restricted.

(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

Restricted cash and cash equivalents

Cash and cash equivalents

Total

December 31,

2018

774

659

3,924

5,357

2019

1,197

511

1,894

3,602

(19) Capital Stock

The capital stock is subdivided into 2,641,318,800 registered
shares with no par value (no-par-value shares) and amounts to
€2,641,318,800 (2018: €2,201,099,000). The capital stock of
the Company was provided by way of conversion of E.ON AG
into a European Company (SE), through a capital increase carried
out on March 20, 2017, partially using the Authorized Capital
2012, which expired on May 2, 2017, and through a capital
increase registered in the commercial register of the Company
on September 19, 2019, with majority use of the Authorized
Capital 2017.

Pursuant to a resolution by the Annual Shareholders Meeting
of May 10, 2017, the Company is authorized to purchase own
shares until May 9, 2022. 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
Management Board was authorized at the aforementioned
Annual Shareholders Meeting to cancel any shares thus acquired

without requiring a separate shareholder resolution for the can-
cellation or its implementation. The total number of outstanding
shares as of December 31, 2019, was 2,607,369,233 (Decem-
ber 31, 2018: 2,167,149,433). As of December 31, 2019, E.ON SE
held a total of 33,949,567 treasury shares (December 31, 2018:
33,949,567) having a book value of €1,126 million (equivalent to
approximately 1.29 percent or €33,949,567 of the capital stock).

The Company has further been authorized by the Annual Share-
holders 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 with a financial insti-
tution or a company operating in accordance with Section 53 (1)
sentence 1 or Section 53b (1) sentence 1 or 7 of the German
Banking Act (KWG) or at market terms on the stock exchange.
No shares were acquired in 2019 using this purchase model.

Neither a scrip dividend nor an employee stock purchase program
was offered in the 2019 fiscal year.

Notes

162

Authorized Capital

By shareholder resolution adopted at the Annual Shareholders
Meeting of May 10, 2017, the Management Board was autho-
rized, subject to the Supervisory Board’s approval, to increase
until May 9, 2022, 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 (authorized capital pursuant to Sections 202 et seq. AktG,
Authorized Capital 2017).

Subject to the Supervisory Board’s approval, the Management
Board is authorized to exclude shareholders’ subscription rights.

By the resolution that took effect on March 12, 2018, and that
was clarified by the Management Board on September 18, 2019,
the Management Board resolved, with the approval of the Super-
visory Board, to make almost full use of the Authorized Capital
2017 resolved by the Annual Shareholders Meeting of May 10,
2017, and to increase the share capital of E.ON SE, excluding
shareholder subscription rights, in accordance with Sections
203 (2) and 186 (3) of the German Stock Corporation Act (AktG),
from €2,201,099,000 by €440,219,800 to €2,641,318,800
through the issue of 440,219,800 new registered shares
with no par value, against contributions in kind. The Executive
Committee approved this use of the Authorized Capital on
September 18, 2019.

Only RWE Downstream Beteiligungs GmbH, with its registered
office in Essen and registered in the commercial register of
Essen District Court under number HRB 26911, was permitted
to subscribe for and acquire the new shares. RWE Downstream
Beteiligungs GmbH is a wholly-owned subsidiary of RWE AG. It
was merged into GBV Vierunddreißigste Gesellschaft für Beteil-
igungsverwaltung mbH, another wholly-owned subsidiary of
RWE AG, with effect from December 4, 2018. The object of the
contribution in kind is the contribution of a total of 100,714,051
no-par-value bearer shares (shares without par value) in innogy SE,
Essen, registered in the Commercial Register of Essen District
Court under number HRB 27091, with a pro rata amount of the
share capital of €2.00 each by way of transfer of ownership to

E.ON SE. With the approval of the Supervisory Board, the Manage-
ment Board has made use of the option granted to it by the
Annual Shareholders Meeting to exclude subscription rights in
the case of capital increases against contributions in kind. The
capital increase and its implementation were entered in the
commercial register on September 19, 2019. The remaining
Authorized Capital 2017 totals €19.8 million.

Conditional Capital

At the Annual Shareholders Meeting of May 10, 2017, share-
holders approved a conditional increase of the capital stock (with
the option to exclude shareholders’ subscription rights) in the
amount of up to €175 million.

The conditional capital increase will be used to grant registered
no-par-value shares to the holders of convertible bonds or bonds
with warrants, profit participation rights or income bonds (or
combinations of these instruments), in each case with option
rights, conversion rights, option obligations and/or conversion
obligations, which are issued by the Company or a Group com-
pany of the Company as defined by Section 18 of the German
Stock Corporation Act (AktG), under the authorization approved
by the Annual Shareholders Meeting on May 10, 2017, under
agenda item 9, through May 9, 2022. The new shares will be
issued at the conversion or option price to be determined in
accordance with the authorization resolution.

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 con-
version or option rights, profit participation rights or profit par-
ticipating 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
under the authorization approved by the Annual Shareholders
meeting of May 10, 2017, under agenda item 9, and to the
extent that no cash settlement has been granted in lieu of con-
version or exercise of an option.

The Conditional Capital 2017 was not used.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

163

Voting Rights

The following notices pursuant to Section 33 (1) of the German
Securities Trading Act (“WpHG”) concerning changes in voting
rights have been received:

Information on Stockholders of E.ON SE

Reporting entity

Date of notice

Threshold

Canada Pension Plan Investment
Board, Toronto, Canada

Oct. 4, 2018

Capital Income Builder,
Wilmington, USA

Jul. 30, 2019

BlackRock Inc., Wilmington, USA

Sep. 24, 2019

Over and
under

Gained voting
rights on

Allocation

Percentages

Absolute

Voting rights

over

Sep. 27, 2018

direct/indirect

3,13 3

68,831,843

over

Jul. 23, 2019

under

Sep. 19, 2019

direct

indirect

5,07 3

111,607,922

4,41

116,368,320

RWE Aktiengesellschaft, Essen,
Germany 1

The Capital Group Companies Inc.,
Los Angeles, USA 2

Oct. 2, 2019

15%

exceeded

Oct. 1, 2019

indirect

15,00

396,197,820

Oct. 4, 2019

10%

over

Oct. 1, 2019

indirect

10,16

268,341,921

1Name of shareholder holding 3.0 percent or more of the voting rights as indicated in the voting rights notification received: GBV Vierunddreißigste Gesellschaft für Beteiligungsverwaltung mbH.
2Name of shareholder holding 3.0 percent or more of the voting rights as indicated in the voting rights notification received: Capital Income Builder.
3Notification before the increase of the share capital on September 19, 2019.

(20) Additional Paid-in Capital

Additional paid-in capital rose to €13,368 million (2018:
€9,862 million) as of December 31. The change of €3.5 billion
results mainly from the valuation of innogy SE shares received

in connection with the capital increase through contributions
in kind (using the existing authorized capital), which exceeds
the nominal value of the new E.ON SE shares issued
(€440,219,800).

(21) Retained Earnings

The following table breaks down the E.ON Group’s retained
earnings as of the dates indicated:

Retained Earnings

€ in millions

Legal reserves

Other retained earnings

Total

December 31,

2019

-1,942

-1,897

2018

-2,506

-2,461

As of December 31, 2019, these German-GAAP retained earnings
totaled €2,254 million (2018: €2,554 million). Of this amount,
legal reserves of €45 million (2018: €45 million) are restricted
pursuant to Section 150 (3) and (4) AktG.

The amount of retained earnings available for distribution is
€2,086 million (2018: €2,400 million).

A proposal to distribute a cash dividend for 2019 of €0.46 per
share will be submitted to the Annual Shareholders Meeting. For
2018, shareholders at the May 14, 2019, Annual Shareholders
Meeting voted to distribute a dividend of €0.43 for each dividend-
paying ordinary share. Based on a €0.46 dividend, the total profit
distribution is €1,199 million (2018: €932 million).

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.

Notes

164

(22) Changes in Other Comprehensive Income

The change in other comprehensive income is primarily the
result of exchange rate differences recognized on the balance
sheet.

The table at right illustrates the share of OCI attributable to
companies accounted for under the equity method.

Share of OCI Attributable to Companies
Accounted for under the Equity Method

€ in millions

Balance as of December 31 (before taxes)

Taxes

2019

-1,552

-1

2018

-1,441

Balance as of December 31 (after taxes)

-1,553

-1,438

(23) Non-Controlling Interests

Non-Controlling Interests

Non-controlling interests by segment as of the dates indicated
are shown in the table at right.

The increase in non-controlling interests in the Non-Core
Business resulted primarily from the acquisition of innogy. The
transfer of significant portions of the Renewables business to
RWE has an offsetting effect.

The table below illustrates the share of OCI that is attributable
to non-controlling interests:

€ in millions

Energy Networks
Germany
Sweden
ECE/Turkey

Customer Solutions

Germany
UK
Other

innogy

Renewables

Non-Core Business

Corporate Functions/Other

E.ON Group

December 31,

2018

1,729
1,418
–
311

84
-1
2
83

–

663

–

284

2019

1,681
1,370
–
311

85
6
2
77

2,025

-57

267

4,008

2,760

Share of OCI Attributable to Non-Controlling Interests

€ in millions

Balance as of January 1, 2018

Changes

Balance as of December 31, 2018

Changes

Balance as of December 31, 2019

Cash flow hedges

Available-for-sale
securities

Currency translation
adjustments

Remeasurements of
defined benefit plans

–

-1

–

-122

-7

-129

-82

-201

-48

-249

-221

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

165

In compliance with IFRS 12, the following tables include sub-
sidiaries with significant non-controlling interests and provide an
overview of significant items on the aggregated balance sheet
and on the aggregated income statement, and significant cash

flow items. The list of shareholdings pursuant to Section 313 (2)
HGB (see Note 37) contains information on the registered office
of the company and disclosures on equity interests.

Subsidiaries with Material Non-Controlling Interests—Balance Sheet Data as of December 31

innogy SE

Delgaz Grid S.A.

E.DIS AG 1

Avacon AG 1

€ in millions

Non-controlling interests in equity

Non-controlling interests in equity (in %)

Dividends paid out to non-controlling interests

Operating cash flow

Non-current assets

Current assets

Non-current liabilities

Current liabilities

1Holding companies without operational business.

2019

487

10,0

–

-550

19,104

8,957

4,610

19,509

2018

2019

2018

313

43,5

–

105

311

43,5

104

2019

523

33,0

1,081

1,053

1,622

433

120

103

411

125

2018

2019

2018

517

33,0

-42

1,483

192

562

38,5

-63

557

38,5

-97

1,649

1,621

236

257

–

Subsidiaries with Material Non-Controlling Interests—Earnings Data

€ in millions

2019

2018

2019

2018

2019

2018

2019

2018

innogy SE

Delgaz Grid S.A.

E.DIS AG 1

Avacon AG 1

Share of earnings attributable to
non-controlling interests

Sales

Net income/loss

Comprehensive Income

1Holding companies without operational business.

-122

4,776

-1,007

-908

–

379

390

110

109

134

132

148

149

There are no major restrictions beyond those under customary
corporate or contractual provisions.

Notes

166

(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 €28.8 billion,
were covered by plan assets having a fair value of €21.6 billion
as of December 31, 2019. This corresponds to a funded status
of 75 percent.

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 table below. A significant component
of the change compared to December 31, 2018, is the first-time
consolidation of the innogy companies, which is presented under
Changes in scope of consolidation in the tables below on the
development of the present value, the fair value of the plan assets
and the net liability.

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

December 31,

2019

2018

22,483

6,222

10,180

5,080

28,754

15,301

15,471

6,154

7,164

4,880

21,634

12,054

7,012

7,120
-81
7,201

3,016

200

3,247
–
3,247

Report of the Supervisory Board
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Consolidated Financial Statements
Other Information

167

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 retirement 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 developments and rising wages and salaries.

The existing entitlements under defined benefit plans as of the
balance sheet date cover about 71,000 retirees and their bene-
ficiaries (2018: 47,000), about 18,000 former employees with
vested entitlements (2018: 14,000) and about 50,000 active
employees (2018: 28,000). The corresponding present value of
the defined benefit obligations is attributable to retirees and their
beneficiaries in the amount of €15.7 billion (2018: €9.2 billion),
to former employees with vested entitlements in the amount of
€3.4 billion (2018: €2.4 billion) and to active employees in the
amount of €9.7 billion (2018: €3.7 billion).

The features and risks of defined benefit plans are 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 covered by
both cash balance plans and pension plans based on final salary.
Pension plans based on final salary are closed to new hires. All
new hires will receive cash balance plans in accordance with
a capital or pension module system, which, depending on the
pension plan, can provide for alternative payout options of a
prorated single payment and payments of installments in addi-
tion to the payment of a regular pension. The cash balance plans
use different interest rules. Depending on the underlying pension
plan, either interest rates adjusted to market developments
with a fixed lower limit or guaranteed interest rates are used to
determine the capital or pension modules. The benefit expense
for the cash balance plans is determined at different percentage
rates based on the ratio between compensation and the con-
tribution limit in the statutory retirement pension system in
Germany. Employees can additionally choose to defer compen-
sation. Future pension adjustments are either guaranteed at
1 percent per annum or largely track the development of the
inflation rate, usually in a three-year cycle.

To fund the pension plans for the German Group companies, plan
assets were established. The major part of these plan assets is
administered in the form of Contractual Trust Arrangements
(“CTAs”) in accordance with specified investment principles. There
are additional plan assets available through the implementation
channels of the pension fund (“Pensionsfonds”) and smaller
German pension vehicles (“Pensions- und Unterstützungskassen”).
Only the pension fund and the “Pensions kassen” vehicles are
subject to regulatory provisions in relation to the investment of
capital and funding requirements.

Notes

168

United Kingdom
In the United Kingdom, there are various pension plans. In the
past, 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. Benefit payments to the beneficiaries are adjusted for
inflation on a limited basis. These pension plans were closed
to new hires. Since then, new hires are offered a defined contri-
bution plan. Aside from the payment of contributions, this plan
entails no additional risks for the employer.

Plan assets in the United Kingdom are administered by inde-
pendent trustees for E.ON UK and innogy UK, respectively, in
independent special-purpose sections of the Electricity Supply
Pension Scheme (ESPS). The trustees are selected by the mem-
bers of the plan or appointed by the respective entity. In that
capacity, the trustees are particularly responsible for the invest-
ment of the plan assets.

The Pensions Regulator in the United Kingdom requires that
a so-called “technical valuation” of the plan’s funding status be
performed every three years. The actuarial assumptions under-
lying the valuation are agreed upon by the trustees and the
entities. They include presumed life expectancy, wage and sal-
ary growth rates, investment returns, inflationary assumptions
and interest rate levels.

E.ON UK’s most recent completed technical valuation took place
as of March 31, 2018, and resulted in a technical funding deficit
of £502 million. In the framework of the agreed deficit repair
plan, in 2019 payments of £299 million were made. Depending on
the future remeasurement of the technical deficit on March 31,
2021, two payments of a maximum of £92 million to the Pen-
sion Trust are planned in 2022 and 2023.

The most recent technical valuation for the entire innogy section
was completed on March 31, 2016. The innogy section was
split into two sections (Retail section and innogy section) at the
beginning of 2018 in preparation for the originally planned
merger of the UK retail activities with Scottish energy supplier
SSE. An agreement was reached with RWE in the context of the
innogy takeover that the innogy section will be transferred to
RWE in the course of 2020. For this reason, it is not part of the
benefit obligation described above. The technical funding deficit
of the Retail section relevant to the E.ON Group was in the low
double-digit million range at the time the overall plan was split.
The technical financing status of the retail section will be
remeasured as of the measurement date of March 31, 2019.
This had not yet been concluded as of the balance sheet date.

Other Countries
The remaining pension obligations are divided between Belgium,
the Netherlands, Luxembourg, Sweden, Italy, Poland, Romania,
the Czech Republic and the USA.

The defined benefit plan in the Netherlands consists of commit-
ments made by various employers within the framework of a
sector-specific fund and does not permit a pro rata allocation of
the obligations, plan assets and service cost. The E.ON Group
accordingly accounts for this obligation as a defined contribution
plan. There are no minimum funding requirements in this respect.
Benefits may be reduced or contributions increased if there is
insufficient funding.

From the perspective of the Group, however, the benefit plans
are relatively insignificant in the above-mentioned countries.

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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 Obligations

€ in millions

Total

Germany

United
Kingdom

Other
countries

Total

Germany

United
Kingdom

Other
countries

2019

2018

Defined benefit obligation as of January 1

15,301

10,180

5,080

15,713

9,979

5,690

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

186

-1

389

1,233

-14

1,270

-23

-809

152

-1

239

697

–

721

-24

–

-539

Changes in scope of consolidation

12,016

11,552

Exchange rate differences

Other 1

294

–

171

–

149

531

-12

543

–

-267

463

294

-96

Defined benefit obligation as of December 31

28,754

22,483

6,222

1In the current reporting year, the item in Germany primarily comprises the reclassification of benefit plans.

–

-2

–

-3

–

135

-150

–

358

-66

-47

-11

-8

–

206

298

158

–

-663

-410

-40

-44

–

-43

-159

–

151

-362

-145

-167

-50

–

-250

–

-40

–

15,301

10,180

5,080

–

-2

–

-2

–

-3

–

-1

The net actuarial losses shown in the table for the development
of the present value of the defined benefit obligations are largely
attributable to a decrease in the discount rates used.

The actuarial assumptions used to measure the defined benefit
obligations and to compute the net periodic pension cost at
E.ON’s German and UK subsidiaries as of the respective balance
sheet date are as follows:

Actuarial Assumptions

Percentages

Discount rate

Germany

United Kingdom

Wage and salary growth rate

Germany

December 31,

2019

2018

2017

1.30

2.00

2.35

2.00

2.90

2.50

2.00

1.75

3.20

2.10

2.70

2.50

3.40

1.75

3.20

United Kingdom 1

1.80/2.90

Pension increase rate

Germany 2

United Kingdom

1.60

2.90

1Different salary growth rates were applied in 2019 due to different benefit plans
(E.ON: 1.80 percent; innogy: 2.90 percent).
2The pension increase rate for Germany applies to eligible individuals not subject to an agreed
guarantee adjustment.

Notes

170

The discount rate assumptions used by E.ON reflect the currency-
specific rates available at the end of the respective fiscal year
for high-quality corporate bonds. Since the third quarter of 2019,
interest rates for the EUR and GBP currency areas have been
determined on the basis of the so-called single equivalent dis-
count rate method instead of the duration method that was
previously used. The full interest curve is used to determine the
present value of the defined benefit obligation, and the IAS 19
discount rate disclosed is determined retrospectively as the dis-
count rate that leads to the identical present value of the
defined benefit obligation when applied uniformly. This adjust-
ment will result in an increase of 10 basis points in the discount
rate in Germany and a decrease of 10 basis points in the UK
as of December 31, 2019. This results in a net actuarial gain of
€288 million. In the following year there will be a reduction in
service cost of €8 million and an increase in net interest expense
of €4 million.

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

2018 G versions of the Heubeck biometric tables (2018)

United Kingdom “S2” series base mortality tables with the CMI 2018

projection model for future improvements

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, 2019

December 31, 2018

+50
-7.85

+25
0.36

+25
2.22

+10
-3.50

- 50
9.04

- 25
-0.35

- 25
-2.10

- 10
3.73

+50
-7.35

+25
0.25

+25
1.72

+10
-3.16

- 50
8.34

- 25
-0.24

- 25
-1.66

- 10
3.54

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 sensi-
tivity 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.

Report of the Supervisory Board
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171

Description of Plan Assets and the
Investment Policy

The defined benefit plans are funded by plan assets held in spe-
cially 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

Total

Germany

United
Kingdom

Other
countries

Total

Germany

United
Kingdom

Other
countries

2019

2018

Fair value of plan assets as of January 1

12,054

7,164

4,880

12,093

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

316

1,101

1,041

-775

7,697

287

-88

168

738

–

631

-507

7,277

–

148

363

410

-267

420

287

-88

Fair value of plan assets as of December 31

21,634

15,471

6,154

–

-1

–

296

-554

–

937

-657

-39

-31

12,054

6,945

158

-318

–

807

-406

–

-31

7,164

5,137

138

-236

–

130

-250

–

-39

–

4,880

–

-1

–

The plan assets include virtually no owner-occupied real estate
or equity and 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.

Notes

172

The plan assets thus classified break down as shown in the
following table:

Classification of Plan Assets 1

Percentages

Total

Germany

Plan assets listed in an active market

December 31, 2019

United
Kingdom

Other
countries

Total

Germany

December 31, 2018

United
Kingdom

Other
countries

Equity securities (stocks)

Debt securities

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

49
27
20

–

49
20
25

–

100

50
45
5

–

100

–

–
–
–

–

100

–

100

46
34
8

–

45
26
12

–

100

49
47
2

–

100

–

–
–
–

–

100

–

100

1The table shows the percentage allocation of the plan assets as at December 31, 2019. At the end of the 2019 fiscal year, 100 percent of the shares of PEG Infrastruktur AG (“PEGI”), including the
shareholding in Nord Stream AG held by PEGI, were acquired by E.ON Pension Trust e.V. for the plan assets. The purchase price was not paid to the seller, E.ON Beteiligungen GmbH,
until January 15, 2020; a corresponding liability therefore existed on December 31, 2019.

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. An increase in the net defined benefit
liability or a deterioration in 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. 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 primarily
pursues an investment approach that takes into account the
structure of the benefit obligations. This long-term investment
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 corresponding changes
in the fair value of plan assets. The investment strategy may
also involve the use of derivatives (for example, interest rate
swaps and inflation swaps, as well as currency hedging instru-
ments) 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
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 investments and
the discount rate.

The determination of the target portfolio structure for the indi-
vidual 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 obligations,
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 port-
folio structure. They are monitored for target achievement on
a regular basis.

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173

Description of the Pension Cost

The net periodic pension cost for defined benefit plans included
in the provisions for pensions and similar obligations and in
operating receivables 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

2019

2018

Total

186

-1

324

Germany

United
Kingdom

Other
countries

152

-1

254

–

Total

133

-150

–

Germany

United
Kingdom

Other
countries

–

139

-159

–

-96

–

The past service cost consists mostly of the expenses incurred
in the context of restructuring measures. In 2018, the negative
past service cost resulted from an adjustment to the pension
plans in the UK.

In addition to the total net periodic pension cost for defined
benefit plans, an amount of €77 million in fixed contributions to
external insurers or similar institutions was paid in 2019 (2018:
€59 million) for defined contribution plans.

Description of Contributions and Benefit
Payments

Prospective benefit payments under the defined benefit plans
existing as of December 31, 2019, for the next ten years are
shown in the following table:

Prospective Benefit Payments

Contributions to state plans totaled €0.2 billion (2018: €0.2 billion).

€ in millions

Total

Germany

United
Kingdom

Other
countries

2020

2021

2022

2023

2024

2025–2029

Total

1,052

1,032

1,055

1,077

1,084

5,562

10,862

802

824

843

847

4,365

8,483

248

228

229

231

234

1,181

2,351

Notes

174

For the following fiscal year, it is expected that Group-wide
employer contributions to plan assets for new and existing obli-
gations will amount to a total of €300 million.

The weighted-average duration of the defined benefit obliga-
tions measured within the E.ON Group was 18.4 years as of
December 31, 2019 (2018: 18.2 years).

Changes in the Net Defined Benefit Liability

€ in millions

Net liability as of January 1

Net periodic pension cost

Changes from remeasurements

Employer contributions to plan assets

Net benefit payments

Changes in scope of consolidation

Exchange rate differences

Other

Total

Germany

3,247

3,016

324

132

-1,041

-34

4,319

166

254

-41

-631

-32

4,275

–

171

Net liability as of December 31

7,120

7,012

(25) Miscellaneous Provisions

The following table lists the miscellaneous provisions as of the
dates indicated:

Miscellaneous Provisions

€ in millions

Nuclear-waste management obligations

Personnel obligations

Other asset retirement obligations

Supplier-related and customer-related obligations

Environmental remediation and similar obligations

Other

Total

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:

2019

2018

United
Kingdom

Other
countries

Total

Germany

United
Kingdom

Other
countries

3,620

3,034

200

168

-410

–

-8

488

-937

-6

-1

-13

141

616

-807

-4

–

-12

553

-96

-126

-130

–

-1

–

3,247

3,016

200

–

-2

–

-2

–

-2

–

-1

December 31, 2019

December 31, 2018

Current

Non-current

Current

Non-current

398

742

386

2,390

4,019

9,363

1,180

766

110

470

1,579

13,468

425

190

1,362

2,117

9,463

830

637

492

938

12,459

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175

The changes in the miscellaneous provisions are shown in the
table below:

Changes in Miscellaneous Provisions

€ in millions

Nuclear-waste management
obligations

Personnel obligations

Other asset retirement
obligations

Supplier-related and
customer-related obligations

Environmental remediation
and similar obligations

Other

Total

Jan. 1,
2019

9,888

927

652

287

520

2,300

14,574

Exchange
rate differ-
ences

Changes in
scope of
consolida-
tion

Unwinding
of dis-
counts

Additions

Utilization

Reclassifi-
cations 1

Reversals

Changes in
estimates

Dec. 31,
2019

–

-1

-5

811

236

1,263

2,440

–

122

185

781

108

1,921

2,930

-351

-346

-9

-98

-39

-1,396

-2,239

–

-182

–

-3

–

-121

–

-88

-1

-35

-64

-365

-553

149

–

9,761

1,922

810

496

529

3,969

203

17,487

The accretion expense resulting from the changes in provisions
is shown in the financial results (see Note 9). The provision items
are discounted in accordance with the maturities with interest
rates of between 0 and 2.55 percent.

external studies, external and internal cost estimates and con-
tractual agreements, as well as the supplementary provisions
of the German Act Transferring Responsibility for Nuclear Waste
Storage and the German Disposal Fund Act.

As of December 31, 2019, provisions for nuclear-waste manage-
ment obligations exclusively relate to Germany; other provisions
mainly relate to euro zone countries and the United Kingdom.

Provisions for Nuclear-Waste Management
Obligations

The provisions for nuclear-waste management obligations as
of December 31, 2019, in the amount of €9.8 billion exclusively
relate to nuclear-power activities in Germany.

The provisions for nuclear-waste management based on nuclear-
power legislation comprise all those 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 determined on the basis of

The asset retirement obligations recognized include the anticipated
costs of post- and service operation of the facility, dismantling
costs, and the cost of removal and disposal of the nuclear com-
ponents of the nuclear power plant.

Provisions for the disposal of spent nuclear-fuel rods also com-
prise the contractual costs of finalizing reprocessing and the
associated return of waste to interim storage, as well as costs
incurred for expert handling, including the necessary interim
storage containers and transport to interim storage.

The cost estimates used to determine the provision amounts are
based on studies and analyses performed by external specialists
and are updated annually, provided that the cost estimates are not
based on contractual agreements.

Notes

176

In the following, the provision items after deduction of advance
payments are classified based on technical criteria:

Nuclear-Waste Management Obligations in Germany
(Less Advance Payments)

€ in millions

Retirement and decomissioning

Containers, transports, operational waste,
other

Total

December 31,

2018

8,404

1,484

9,888

2019

8,269

1,492

9,761

Provisions, if they are non-current, are measured at their settle-
ment amounts, discounted to the balance sheet date.

A risk-free discount rate of an average of about 0.0 percent is
used for the measurement of E.ON’s disposal obligations (previous
year: 0.4 percent). Correspondingly, an applicable cost increase
rate of 2.0 percent per annum was applied to E.ON’s remaining
disposal obligations (previous year: 2.0 percent), corresponding
to a net interest rate of -2.0 percent (previous year: -1.6 percent).
A change in the net interest rate of 0.1 percent would change
the amount of the provision recognized on the balance sheet by
approximately €0.1 billion.

Excluding the effects of discounting and cost increases, the
amounts for E.ON’s remaining disposal obligations would
be €8,195 million with average credit terms of approximately
9 years. This amount flows into the economic net debt.

There were changes in estimates for the remaining nuclear-
power business in 2019 in the amount of €149 million (2018:
€379 million). This mainly includes the effects of the reduction
in the discount interest rate, with counteracting effects from
the optimization of decommissioning and disposal of nuclear
power plants. €351 million (2018: €308 million) of this was
used, of which €250 million (2018: €220 million) related to
decommissioning and non-operating nuclear power plants
based on circumstances for which decommissioning and dis-
mantling costs were recognized.

Personnel Obligations

Provisions for personnel costs primarily cover provisions for
early retirement benefits, performance-based compensation
components, restructuring and other deferred personnel costs.
Restructuring provisions were made in Germany and the UK,
in particular:

In connection with the acquisition of innogy, E.ON has announced
the elimination of up to 5,000 jobs across the Group. Against
this backdrop, the “Collective Agreement on the Future and Job
Security” was concluded in 2019 with employer associations
and unions as well as ver.di and the Mining, Chemical and Energy
Industrial Union. This collective agreement will initially apply to
personnel changes and adjustment measures implemented in
Germany as a result of the integration of the innogy Group into
the E.ON Group. Among other aspects, it includes regulations
on severance payments for employees who voluntarily depart,
early retirement and the possibility of transferring to an Employ-
ment and Qualification Company. These measures were further
specified by the end of the year 2019 and they have been available
for selection at selected locations since February 2020.

At the end of November 2019, E.ON announced proposals to
restructure npower. The plan calls for npower’s household and
small commercial customers (B2C) to be successively brought
together on a common IT platform with the B2C customers of
E.ON UK. In February 2020, an agreement between npower
and E.ON UK was concluded on the sale of the B2C customer
contracts of npower. There are also plans to spin off npower’s
business with industrial and large commercial customers (B2B).
npower’s remaining activities will be restructured over the next
two years. This includes the closure of most of npower’s sites
and the resulting headcount reduction.

Provisions for Other Asset Retirement
Obligations

The provisions for other asset retirement obligations consist of
obligations for renewable-energy power plants and infrastructure.
In addition, the provisions for dismantling conventional plant
components in the nuclear power segment, which are based
on legally binding civil agreements and public provisions, in the
amount of €475 million (2018: €440 million) are taken into
account here. Excluding discounting and cost-increase effects, the
amounts for these disposal obligations would be €338 million.
This amount flows into the economic net debt. The increase in
other asset retirement obligations is mainly due to the takeover
of innogy.

The amount of other asset retirement obligations disclosed
under economic net debt, not including the provisions for dis-
mantling conventional plant components in the nuclear power
segment, amounts to €336 million.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

177

Supplier-Related Obligations

Other

Provisions for supplier-related obligations consist of provisions
for potential losses on open purchase contracts, among others.

Customer-Related Obligations

Provisions for customer-related obligations consist primarily
of potential losses on rebates and open sales contracts as well
as from pending meter readings.

Environmental Remediation and Similar
Obligations

Provisions for environmental remediation refer primarily
to redevelopment protection measures and the rehabilitation
of contaminated sites.

The other miscellaneous provisions consist primarily of provisions
from the electricity and gas business. These include provisions
for Renewables Obligation Certificates (ROCs) in the amount of
€1.1 billion (prior year: €0.3 billion), which represent an important
mechanism for promoting Renewables. The ROCs represent a
fixed share of renewable energies in power sales and can be
acquired either from renewable sources or on the market. During
a twelve-month ROC period, the obligations accrued for this
purpose are offset against the acquired certificates and used.
Provisions for ROCs were increased by €0.7 billion through the
takeover of innogy. Further included here are certain environ-
mental remediation obligations from predecessor companies
(€0.4 billion) and provisions for potential obligations arising
from tax-related interest expenses and from taxes other than
income taxes.

(26) Liabilities

The following table provides a breakdown of liabilities:

Liabilities

€ in millions

Financial liabilities

Trade payables

Capital expenditure grants

Liabilities from derivatives

Advance payments

Contract liabilities (IFRS 15)

Other operating liabilities

Trade payables and other operating liabilities

Total

December 31, 2019

December 31, 2018

Current

Non-current

Current

Non-current

3,923

8,782

1,418

489

527

5,446

16,686

20,609

28,025

–

198

3,571

–

2,975

1,195

7,939

35,964

1,563

5,104

427

248

1,768

7,637

9,200

8,323

–

1,986

–

1,898

527

4,506

12,829

Notes

178

Financial Liabilities

The following tables present the changes to financial liabilities
in fiscal years 2019 and 2018:

Financial Liabilities

€ in millions

Bonds

Commercial paper

Bank loans/Liabilities to banks

Lease obligations 1

Other financial liabilities

Financial liabilities

1For more information see Note 32.

Financial Liabilities

€ in millions

Bonds

Bank loans/Liabilities to banks

Liabilities from finance leases

Other financial liabilities

Financial liabilities

Jan. 1, 2019

Cash flows

Exchange
rate
differences

Changes in
scope of
consolidation

8,958

3,021

343

14,737

–

138

863

463

-150

-392

-292

222

–

-2

200

1,394

2,169

-193

10,422

2,409

411

18,307

Jan. 1, 2018

Cash flows

Exchange
rate
differences

Changes in
scope of
consolidation

10,641

-1,460

-223

116

357

1,907

13,021

-53

-367

–

-3

-1,856

-226

–

-1,096

Other

–

399

–

399

Other

–

-2

Dec. 31,
2019

27,059

1,138

3,144

557

31,948

Dec. 31,
2018

8,958

138

327

463

9,886

Liabilities to financial institutions include, among other items,
collateral received, measured at a fair value of €68 million
(2018: €20 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 €0 million (2018: €50 million) and financial guarantees
totaling €8 million (2018: €8 million). Also included is collateral
received in connection with goods and services in the amount
of €10 million (2018: €22 million). E.ON can use this collateral
without restriction.

The financial liabilities of innogy recognized at the date of initial
consolidation were marked to market under IFRS. This market
value was considerably higher than the nominal value because
market interest rates had fallen since the bonds were issued.
The difference between the nominal value and the market value
calculated during the preliminary purchase price allocation
totaled €2,466 million as of December 31, 2019. This difference
is not taken into account in the economic net debt.

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.

Corporate Headquarters
Covenants
The financing activities involve the use of covenants (contractual
obligations) consisting primarily of change-of-control clauses
(right of cancellation upon change of ownership), 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
A Debt Issuance Program simplifies the issuance from time to
time of debt instruments through public and private placements
to investors. The Debt Issuance Program of E.ON SE was
most recently renewed in March 2019, with a total amount of
€35 billion. E.ON SE plans to renew the program in 2020.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

179

At year-end 2019, the following E.ON SE, E.ON International
Finance B.V., innogy SE and innogy Finance B.V. bonds were
outstanding:

Major Bond Issues of E.ON SE, E.ON International Finance B.V., innogy SE and innogy Finance B.V. 1

Issuer

innogy Finance B.V.

E.ON International Finance B.V. 3

innogy Finance B.V.

E.ON SE

innogy Finance B.V.

E.ON SE

innogy Finance B.V.

E.ON SE

innogy Finance B.V.

E.ON SE

innogy Finance B.V.

E.ON SE

innogy Finance B.V.

E.ON SE

innogy Finance B.V.

E.ON SE

E.ON International Finance B.V. 4

innogy Finance B.V.

E.ON International Finance B.V.

E.ON International Finance B.V. 2

E.ON International Finance B.V.

innogy Finance B.V.

Volume in the
respective currency

EUR 750 million

EUR 1,400 million

GBP 570 million

EUR 1,000 million

EUR 750 million

GBP 500 million

EUR 500 million

EUR 750 million

GBP 488 million

EUR 800 million

EUR 500 million

EUR 750 million

EUR 500 million

EUR 750 million

EUR 850 million

EUR 750 million

EUR 1,000 million

EUR 750 million

GBP 760 million

EUR 500 million

GBP 975 million

EUR 600 million

GBP 600 million

GBP 900 million

USD 1,000 million

GBP 700 million

GBP 1,000 million

Initial term

7 years

12 years

20 years

13 years

4 years

13 years

3 years

5 years

20 years

10 years

7 years

5 years

8 years

7 years

10 years

12 years

11 years

28 years

12 years

30 years

22 years

30 years

Repayment

Jan 2020

May 2020

Apr 2021

Aug 2021

Jul 2022

Sep 2022

Oct 2022

Nov 2022

Dec 2023

Jan 2024

May 2024

Aug 2024

Apr 2025

May 2026

Oct 2026

Oct 2027

May 2029

Jul 2029

Feb 2030

Jun 2030

Nov 2031

Jun 2032

Feb 2033

Jan 2034

Oct 2037

Apr 2038

Jan 2039

Jul 2039

Coupon

1.875%

5.750%

6.500%

0.375%

5.500%

0.000%

0.750%

5.625%

3.000%

0.875%

0.000%

1.000%

1.625%

0.250%

1.250%

1.625%

1.500%

0.350%

6.250%

0.625%

6.375%

5.750%

4.750%

5.875%

6.650%

6.750%

6.125%

1Listing: All bonds ≥ 500 million EUR are listed in Luxembourg with the exception of the Rule 144A/Regulation S USD bond, which is unlisted.
2Rule 144A/Regulation S bond.
3The volume of this issue was raised from originally EUR 1,000 million to EUR 1,400 million.
4The volume of this issue was raised from originally GBP 850 million to GBP 975 million.

Additionally outstanding as of December 31, 2019, were private
placements with a total volume of approximately €1.7 billion
(2018: €0.9 billion).

€3.5 Billion Syndicated Revolving Credit Facility
Effective October 24, 2019, E.ON arranged a syndicated
revolving credit facility in the amount of €3.5 billion over an
original term of five years, with two renewal options for one
year each. The facility replaces both of the existing syndicated
credit facilities of €2.75 billion for E.ON and of €2.0 billion for

innogy. The credit margin is in part coupled with the develop-
ment of certain ESG ratings on which E.ON bases financial
incentives for a sustainable corporate strategy. The ESG ratings
are calculated by three prominent agencies: ISS ESG, MSCI ESG
Research, and Sustainalytics. The facility was granted by
21 banks, which make up E.ON’s core banking group. The facility
has not been drawn; rather, it serves as the Group’s reliable,
long-term liquidity reserve, one purpose of which is to function
as a backup facility for the commercial paper programs.

Notes

180

Acquisition Financing of €1.75 Billion
In connection with the acquisition of innogy SE, on April 6, 2018,
E.ON originally secured a €5 billion acquisition facility, which
was reduced to €1.75 billion by August 2018. The credit facility
has not been drawn on and remains available to the Group.

original maturities of up to 397 days (and a subsequent extension
option for the investor) to investors. As of December 31, 2019,
€50 million in commercial paper was outstanding under the euro
commercial paper program (2018: €0). As in the prior year, no
commercial paper was outstanding under the U.S. commercial
paper program.

€10 Billion and $10 Billion Commercial Paper Programs
The euro commercial paper program in the amount of €10 billion
allows 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 maturities of up to 366 days and extendible notes with

The bonds issued by E.ON SE and E.ON International Finance B.V.
(guaranteed by E.ON SE) as well as innogy SE and innogy
Finance B.V. (guaranteed by innogy SE) have the maturities
presented in the table below. Liabilities denominated in foreign
currency include the effects of economic 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., innogy SE and innogy Finance B.V.

€ in millions

December 31, 2019

December 31, 2018

Total

25,011

9,618

Due in
2019

–

1,218

Due in
2020

2,150

1,400

Due in
2021

2,420

750

Due in
2022

2,688

100

Due in
2023

923

350

Due
between
2024 and
2030

8,382

1,339

Due
after
2030

8,448

4,461

Financial Liabilities by Segment
The following table breaks down the financial liabilities by
segment:

Financial Liabilities by Segment as of December 31

€ in millions

Energy Networks
Germany
Sweden
ECE/Turkey

Customer Solutions

Germany Sales
UK
Other

innogy

Renewables

Non-Core Business

Bonds

Commercial paper

Bank loans/
Liabilities to banks

Lease obligations 1

Other financial
liabilities

Financial liabilities

2019

2018

2019

2018

2019

2018

2019

2018

2019

2018

2019

2018

–
–
–
–

14,968

–

–
–
–
–

–

–
–
–
–

–

–
–
–
–

–

55
55
–
–

85
2
–
83

958

–

59
59
–
–

59
–
–
59

–

548
504
5
39

242
5
93
144

2,299

302
302
–
–

25
–
–
25

–

1,138

138

3,144

327

71
71
–
–

70
10

161

–

172

557

74
74
–
–

80
3
31
46

–

674
630
5
39

397
17
93
287

18,386

435
435
–
–

164
3
31
130

–

210

12,395

9,188

463

31,948

9,886

Corporate Functions/Other

12,091

8,958

E.ON-Group

27,059

8,958

1The previous year included liabilities from finance leases.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

181

Trade Payables and Other Operating Liabilities

Trade payables totaled €8,782 million as of December 31,
2019 (2018: €5,104 million). The increase over the prior year
is primarily due to the takeover of innogy. Accruals, formerly
accounted for as a component of other operating liabilities, are
now included in trade payables. The prior-year figures were
adjusted accordingly.

Capital expenditure grants of €222 million (2018: €103 million)
have not yet been recognized as revenue. The E.ON Group
retains ownership 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.

The change in derivative liabilities from €2,413 million as of
December 31, 2018, to €4,989 million as of December 31, 2019,
is primarily due to the takeover of innogy.

Liabilities under IFRS 15 in the amount of €3,502 million
(2018: €2,146 million) consist primarily of construction grants
that were paid by customers for the cost of new gas and electric-
ity 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 in the amount of €239 million according to the useful
lives of the related assets. The significant increase in liabilities
under IFRS 15 compared to the prior year is primarily due to the
takeover of innogy.

Other operating liabilities consist primarily of other tax liabilities
in the amount of €1,276 million (2018: €472 million) and inter-
est payable in the amount of €469 million (2018: €360 million).
Also included in other operating liabilities are carryforwards of
counterparty obligations to acquire additional shares in already
consolidated subsidiaries 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 €2,069 million (2018:
€289 million).

(27) Contingent Liabilities and Other Financial
Obligations

As part of its business activities, E.ON is subject to contingent
liabilities and other financial obligations involving a variety of
underlying matters. These primarily include guarantees, obliga-
tions from litigation and claims (as discussed in more detail in
Note 28), short- and long-term contractual, legal and other
obligations and commitments.

Contingent Liabilities

The fair value of the E.ON Group’s contingent liabilities was
€1.3 billion as of December 31, 2019 (December 31, 2018:
€0.5 billion), and primarily includes contingent liabilities in con-
nection with contingencies and potential long-term environ-
mental remediation measures.

E.ON has issued direct and indirect guarantees and surety bonds
to third parties in connection with its own operations or the
operations of affiliated companies, which may trigger payment
obligations based on the occurrence of certain events. These
instruments include both financial guarantees as well as opera-
tional guarantees, which primarily secure contractual obligations
and benefit obligations for active and former employees.

In addition, E.ON has entered into indemnification agreements,
which as a rule are incorporated in agreements concerning the
disposal of shareholdings and, above all, affect the customary
representations and warranties with relation to liability risks for
environmental damage and contingent tax risks. 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 companies that were later sold
by E.ON SE or its legal predecessors are usually included in the
respective final sales contracts in the form of indemnities.

Notes

182

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, 2019, purchase commitments for invest-
ments in intangible assets and in property, plant and equipment
amounted to €1.9 billion (2018: €0.8 billion). Of these com-
mitments, €1.2 billion are due within one year. The purchase
commitment mainly includes financial obligations for as yet
outstanding investments, in particular in the Energy Networks
Germany and Sweden segments. On December 31, 2019, these
obligations totaled €1.4 billion.

Additional long-term contractual obligations in place at the
E.ON Group as of December 31, 2019, relate primarily to the
purchase of electricity and natural gas. Financial obligations
under the electricity purchase contracts amount to approximately
€6.5 billion on December 31, 2019 (€3.7 billion due within
one year). Financial obligations under the gas purchase contracts
amount to approximately €4.4 billion on December 31, 2019
(€2.4 billion due within one year). Additional purchase commit-
ments as of December 31, 2019, amounted to approximately
€0.6 billion (€0.1 billion due within one year). They include long-
term contractual commitments to purchase heat and alterna-
tive fuels.

In addition, further financial obligations in place as of Decem-
ber 31, 2019, totaled approximately €2.4 billion (€2.0 billion
due within one year). These include financial obligations from
services to be procured, capital obligations from joint ventures
and obligations concerning the acquisition of real estate funds
held as financial assets, as well as corporate actions.

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 opera-
tion 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 Deckungsvorsorge-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 billion per incident.

The coverage requirement is satisfied in part by a standardized
insurance facility in the amount of €255.6 million. The institution
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 sub-
sidiaries 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 pro-
portion to their shareholdings 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 Soli-
darity 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, 2019,
was 46.8 percent (prior year: 44.6 percent), plus an additional
5.0 percent charge for the administrative costs of processing
damage claims; this share will change to 47.1 percent starting
from January 1, 2020. Sufficient liquidity has been provided for
and is included within the liquidity plan.

Furthermore, as of December 31, 2019, E.ON is continuing to
provide collateral in the amount of €3,011.3 million for the former
Group companies transferred to RWE which will be repaid or
assumed by RWE Group companies in the short term.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

183

The changes to the legal and regulatory framework can in some
cases also significantly impact subsidies and remuneration
practices in the area of Renewables, which in turn are the object
of regulatory or court proceedings. Lawsuits are also pending
in connection with the construction and operation of plants for
generating electricity from renewable energy sources.

On April 13, 2017, the Federal Constitutional Court declared
the Nuclear Fuel Tax Act to be incompatible with the Basic Law
and invalid. The nuclear-fuel tax plus interest paid by E.ON was
refunded. Nuclear operators use two models for the calculation
of interest with the German customs authorities, one of which
is used by PreussenElektra. With the 16th amendment to the
German Nuclear Energy Act, the German Federal Government
has implemented the ruling of the German Federal Constitutional
Court on the phase-out of nuclear energy. This amendment
regulated compensation claims for certain investments and
residual volumes of electricity, and created an obligation to offer
these residual volumes at reasonable terms and conditions.
PreussenElektra sued Krümmel GmbH & Co. OHG and Vattenfall
Nuclear GmbH with the aim of transferring, without compen-
sation, the residual volumes of electricity from the Krümmel
nuclear power plant corresponding to the ownership interest.

The total consideration received by E.ON in 2019 on the disposal
of consolidated equity interests and activities generated cash
inflows of €37 million (2018: €239 million). Cash and cash equiva-
lents sold amounted to €32 million (2018: €20 million). The sale
of the consolidated activities led to reductions of €742 million
(2018: €167 million) in assets and €10 million (2018: €62 million)
in provisions and liabilities. The derecognition of assets and liabili-
ties primarily relates to the sale of PEGI, as parent company of
Nord Stream AG, to E.ON Pension Trust e.V., for which payment
will be received in 2020.

(28) Litigation and Claims

A number of different court actions, governmental investigations
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 particular includes legal actions and proceed-
ings on contract amendments and price adjustments initiated
in response to market upheavals and the changed economic sit-
uation in the electricity and gas sectors (also as a consequence
of the energy transition) and concerning price increases and
anticompetitive practices. The courts and authorities are also
subjecting competitive practices to stricter reviews.

In the Energy Networks segment, Group companies are involved
in proceedings for the award of concessions, the insolvency of
energy suppliers and in connection with grid connections and
the calculation of the grid fee. Official regulations and changes
in regulatory practice have given rise to legal disputes. The
national regulatory regimes within Europe are also subject to
changes, some of which have a significant impact on network
operations. Of particular note here are effects in connection
with the regulatory treatment of capital costs and return on
equity. Owing to a number of factors, including regulatory and
legal decisions, the regulatory framework has increased here.
However, these regulatory interventions are not restricted to the
network area; distribution activities in the customer solutions
area have also been affected by regulatory measures.

(29) Supplemental Cash Flow Disclosures

Note 4 provides a detailed presentation of the acquisition of the
shares in innogy. The agreement with RWE includes a provision
for the cash settlement of fractional shares. innogy shares were
also acquired within the framework of a public takeover offer
and through additional purchases on the market. On balance, this
results in a cash purchase price of €1.3 billion in connection with
the innogy transaction in 2019. Of this amount, €0.2 billion is
attributable to payments made in connection with the transfer
of minority interests in nuclear power plants.

Not including the acquisition of innogy, E.ON paid a total of
€92 million for additions to consolidated equity interests. The
cash acquired totaled €16 million. Assets in the amount of
€166 million and provisions and liabilities in the amount of
€161 million were recognized. This primarily includes additions
from the acquisition of the Coromatic Group in the Customer
Solutions Sweden segment.

Notes

184

Cash provided by operating activities before interest and taxes
from continuing and discontinued operations, at €4.4 billion, was
€0.3 billion higher than in the prior-year period. At the same
time, negative working capital adjustments during fiscal year
2019 were more than offset by the initial inclusion of innogy.
Cash provided by operating activities from continuing and dis-
continued operations also declined due to higher interest and
tax payments.

Cash provided by investing activities from continuing and discon-
tinued operations amounted to roughly -€5.8 billion in 2019
(2018: +€1.0 billion). The disposal of the shareholding in Uniper SE
(-€3.8 billion) in the prior year had a particular impact in this
regard. In fiscal year 2019, the acquisition of the innogy shares

in particular had the effect of reducing cash flow from investing
activities. The purchase and sale of securities as well as changes
in financial receivables and restricted cash resulted in a net
cash outflow (-€0.6 billion) in fiscal 2019, compared with a net
cash inflow (+€0.2 billion) in the prior year.

At +€0.8 billion, cash provided by financing activities from
continuing and discontinued operations was €3.4 billion higher
than the prior-year figure of -€2.6 billion. This development
was mainly due to the repayment of bonds in the 2018 fiscal
year and bond issues in the 2019 reporting period. By contrast,
dividends paid out rose from €0.9 billion in 2018 to €1.1 billion
in fiscal 2019.

(30) Derivative Financial Instruments and
Hedging Transactions

Fair Value Hedges

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.

At the E.ON Group, hedge accounting in accordance with IFRS 9
is employed primarily in connection with hedging long-term
liabilities and bonds to be issued in the future via interest-rate
derivatives and for hedging long-term foreign currency receiv-
ables and payables and foreign investments via currency deriv-
atives. E.ON also hedges net investments in foreign operations.

In commodities, potentially volatile future cash flows resulting
primarily from planned purchases and sales of electricity
within and outside of the Group are hedged.

To hedge currency risk, E.ON entered into hedging transactions in
the reporting year in pounds sterling at an average hedging rate
of GBP 0.86/EUR (2018: GBP 0.84/EUR) and in U.S. dollars at an
average hedging rate of USD 1.17/EUR (2018: USD 1.22/EUR).
Hedging transactions were concluded at an average interest
rate of 3.43 percent (2018: 3.53 percent) to hedge the interest
rate risk in the euro zone. The average hedging price for hedging
electricity price change risks amounted to €47.10/MWh in the
year under review (2018: €52.63/MWh).

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 statement
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 and cross-currency
interest rate swaps are the principal instruments used to limit
interest rate and currency 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.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

185

The following table presents the carrying amounts of the
hedging instruments and the changes in the fair values of the
hedging instruments and hedged items by hedged risk type:

Carrying Amounts of Hedging Instruments and Changes in Fair Value of Hedging Instruments and Hedged
Items in Connection with Cash Flow Hedges

€ in millions

Currency risk

Interest-rate risk

Electricity price change risk

Carrying amount

Receivables from
derivative financial
instruments

Liabilities from
derivatives

Change in the fair value
of the designated portion
of hedging instruments

Change in the fair value
of hedged items

2019

140

2018

135

2019

1,350

2018

257

911

2019

-435

-15

2018

2019

2018

-67

–

-8

423

-24

–

The amount of ineffectiveness for cash flow hedges recorded for
the year ended December 31, 2018, produced an expense of
€12 million (2018: €4 million gain). Of this amount, €12 million
relates to hedging of interest-rate risk (2018: €3 million).

Gains and losses from the ineffective portions of cash flow hedges
are classified as other operating income or other operating
expenses.

The development of OCI arising from cash flow hedges, broken
down by hedged risk type, is as follows:

Changes in OCI Arising from Cash Flow Hedges

€ in millions

Balance as of January 1, 2018

Unrealized changes—hedging reserve

Unrealized changes—reserve for hedging costs

Reclassification adjustments recognized in income

Companies accounted for under the equity method

Income taxes

Balance as of December 31, 2018 1

Balance as of January 1, 2019

Unrealized changes—hedging reserve

Unrealized changes—reserve for hedging costs

Reclassification adjustments recognized in income

Companies accounted for under the equity method

Income taxes

Balance as of December 31, 2019 1

1The balance as of December 31, 2019, includes -€241 million (2018: -€249 million) from terminated cash flow hedges.

The balance of the OCI arising from cash flow hedges as of
December 31, 2019, contains -€1.2 billion relating to hedging
of interest-rate risk (2018: -€0.8 billion).

Interest-rate
risk

Electricity
price change
risk

Total

Currency risk

-1,016

-2

-45

-25

-3

-74

-13

–

-370

–

-43

–

-15

-14

-992

-438

-3

-12

-1,435

Notes

186

Reclassifications recognized in income are generally reported
in that line item of the income statement which also includes
the respective hedged transaction.

The nominal volume of the hedging instruments is presented
in the following table:

Nominal Values of Hedging Instruments in Connection with Cash Flow Hedges

€ in millions

Currency risk

Interest-rate risk

Electricity price change risk

Net Investment Hedges

The Company uses foreign currency forwards, foreign currency
swaps and foreign currency loans to protect the value of its net
investments in its foreign operations denominated in foreign
currency.

The carrying amount of the assets used as hedging instruments
as of December 31, 2019, was €27 million (2018: €12 million)
and the carrying amount of the liabilities used as hedging instru-
ments was €1,220 million (2018: €1,131 million). The fair values
of the designated portion of the hedging instruments changed
by -€87 million in the reporting period (2018: €50 million).

As in 2018, no ineffectiveness resulted from net investment
hedges in 2019.

<1 year

1–5 years

154

–

110

855

1,554

242

Maturity

>5 years

894

2,750

–

2019

1,903

4,304

352

Total

2018

2,845

4,492

The development of OCI arising from net investment hedges
is as follows:

Changes in OCI Arising from Net Investment Hedges

€ in millions

Currency risk

Balance as of January 1, 2018

Unrealized changes—hedging reserve

Unrealized changes—reserve for hedging costs

Reclassification adjustments recognized in income

Income taxes

Balance as of December 31, 2018 1

Balance as of January 1, 2019

Unrealized changes—hedging reserve

Unrealized changes—reserve for hedging costs

Reclassification adjustments recognized in income

Income taxes

Balance as of December 31, 2019 1

-124

–

-77

-140

565

350

1The balance as of December 31, 2019, includes -€71 million (2018: -€71 million) from
terminated net investment hedges.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

187

As a rule, reclassifications recognized in income are reported
under other operating income and expenses. The nominal volume
of hedging instruments in net investment hedges amounted to
€7,891 million as of December 31, 2019 (2018: €7,122 million).
Since the currency risk of net investment hedges is hedged
through the ongoing rollover of the hedging instruments, the major-
ity are concluded with a remaining term of less than one year.

Valuation of Derivative Instruments

The fair value of derivative financial instruments is sensitive to
movements in underlying market rates and other relevant vari-
ables. 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 for both own credit risk (debt value
adjustment) and the risk of the corresponding counterparty
(credit value adjustment) when determining fair value. 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 and oil 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 forward premiums
and discounts taken into consideration.

• Market prices for electricity options are valued using standard

option pricing models commonly used in the market.

• 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 balance sheet date. Interest
income and expenses are 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 clear-
ing 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 €16 million or an increase of €12 million,
respectively.

• The measurement of weather derivatives used to hedge

temperature-dependent fluctuations in demand is particularly
dependent on temperature developments. In general, under
otherwise equivalent conditions, the fair value of these deriv-
atives increases with rising temperatures and decreases
with falling temperatures. Assumptions about the extent to
which the future development during the remaining term of
the derivatives will deviate from the historically observed
long-term average temperatures can only be made for an
extremely short period of time. Consequently, the fair value
is primarily determined on the basis of the long-term average
temperatures. A change in temperature of ±0.1°C as of the
balance sheet date would lead to an increase in fair value of
€3 million or a decrease of €3 million.

Notes

188

(31) Additional Disclosures on Financial
Instruments

The carrying amounts of the financial instruments, their grouping
into IFRS 9 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, 2019

€ 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
Bank loans/Liabilities to banks
Lease obligations
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

Liabilities associated with assets held for sale

Carrying
amounts

1,730

1,189
370
819

17,912
8,438
3,049
236
6,189

3,550

1,894

511

1,082

27,868

31,948
27,059
1,138
3,144
607

24,625
8,782
3,550
1,439
2,069
8,785

602

Carrying
amounts
within the
scope of
IFRS 7

Carrying
amounts
within the
scope of
IFRS 9

Determined
using market
prices
(Level 1)

Derived from
active market
prices
(Level 2)

Fair value

455

817
336
481
341
140

13,231
8,250
3,049
236
1,696

3,550
1,935
1,615

1,894

511

20,473

31,655
27,059
1,138
3,133
325

17,496
8,709
3,550
1,439
2,069
1,729

245
214
31

FVPL

n/a

AmC
FVPL

AmC
FVPL
n/a
AmC

FVPL
FVOCI

AmC

AmC
AmC
n/a
AmC

AmC
FVPL
n/a
AmC
AmC

AmC
FVPL

455

336
481
341
140

3,049
236
1,700

3,550
1,935
1,615

29,935
1,147
3,232
325

3,550
1,439
2,069
1,752

214
31

1
–

40
10
3

3,031
1,511
1,520

28,679
70

65
25
–
–

–

160
–

2,597
226
95

520
424
96

1,256
64

3,158
1,414
–
–

Total liabilities

57,175

49,396

1FVPL: Fair Value through P&L; FVOCI: Fair Value through OCI; AmC: Amortized Cost. The measurement categories are described in detail in Note 1. The amounts determined using valuation techniques
with unobservable inputs (Level 3 of the fair value hierarchy) correspond to the difference between the total 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).

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

189

The carrying amounts of cash and cash equivalents and of trade
receivables and trade payables are considered reasonable esti-
mates 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.

Carrying Amounts, Fair Values and Measurement Categories by Class
within the Scope of IFRS 7 as of December 31, 2018

Carrying
amounts
within the
scope of
IFRS 7

IAS 39
measure-
ment
category 1

Determined
using market
prices
(Level 1)

Derived from
active market
prices
(Level 2)

Fair value

€ 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
Bank loans/Liabilities to banks
Lease obligations
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

Liabilities associated with assets held for sale

Carrying
amounts

664

711
329
382

6,919
3,896
1,367
170
1,486

3,014

3,924

659

11,442

110

485
305
180

5,739
3,786
1,367
170
416

3,014
1,612
1,155
247

3,924
3,226
698

659

413
269
144

27,333

14,344

9,886
8,958
138
327
463

12,143
1,660
1,241
1,172
289
7,781

3,682

9,705
8,958
138
327
282

8,757
1,654
1,241
1,172
289
4,401

1,125
1,073
52

FVPL

n/a
AmC

AmC
FVPL
n/a
AmC

–
FVPL
FVOCI
AmC

AmC
FVPL

AmC

AmC
FVPL

AmC
AmC
n/a
AmC

AmC
FVPL
n/a
AmC
AmC

AmC
FVPL

110

305
180

1,367
170
416

3,014
1,612
1,155
247

–

35
2
–

2,415
1,302
1,113
–

698

269
144

11,116
138
427
282

1,241
1,172
289
4,401

1,073
52

11,116
58

–

36
2
–
–

–

1,293
168
–

599
310
42
247

–
20

–

1,205
1,170
–
–

Total liabilities

25,711

19,587

Notes

190

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 determined by
discounting future cash flows. Any necessary discounting takes
place using current market interest rates over the remaining
terms of the financial instruments.

The determination of the fair value of derivative financial instru-
ments is discussed in Note 30.

In 2019, there were no material reclassifications 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. In 2019, derivative
financial instruments with a fair value of €39 million were

reclassified from hierarchy level 3 to hierarchy level 2 because
fair values are no longer determined using valuation techniques
but can be derived from active market prices.

The input parameters of Level 3 of the fair value hierarchy for
equity investments are specified taking into account economic
developments and available industry and corporate data (see
also Note 1). A hypothetical 10-percent increase or decrease in
these key internal valuation parameters as of the balance sheet
date would lead to a theoretical decrease in market values of
€52 million or an increase of €64 million, respectively.

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

€ in millions

Equity investments

Derivative financial
instruments

Total

Jan. 1,
2019

110

149

Purchases
(including
additions)

Sales
(including
disposals)

Settlements

Gains/
Losses in
income
statement

Transfers

into
Level 3

out of
Level 3

Gains/
Losses in
OCI

Dec. 31,
2019

332

429

-41

–

-41

–

-3

-11

-9

-20

–

-39

-1

–

-1

389

474

The extent to which the offsetting of financial assets is covered
by netting agreements is presented in the following tables:

Netting Agreements for Financial Assets and Liabilities as of December 31, 2019

€ in millions

Financial assets

Trade receivables

Interest-rate and currency derivatives

Commodity derivatives

Total

Financial liabilities

Trade payables

Interest-rate and currency derivatives

Commodity derivatives

Total

Gross
amount

Amount
offset

Carrying
amount

Conditional
netting
amount
(netting
agreements)

Financial
collateral
received/
pledged

8,250

1,585

2,378

12,213

8,709

2,802

2,865

14,376

–

678

–

678

8,250

1,585

1,700

11,535

8,709

2,802

2,187

13,698

–

1,064

–

1,029

–

461

178

639

Net value

8,250

1,517

626

10,393

8,709

2,341

980

12,030

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

191

Netting Agreements for Financial Assets and Liabilities as of December 31, 2018

€ in millions

Financial assets

Trade receivables

Interest-rate and currency derivatives

Commodity derivatives

Total

Financial liabilities

Trade payables

Interest-rate and currency derivatives

Commodity derivatives

Total

Gross
amount

Amount
offset

Carrying
amount

Conditional
netting
amount
(netting
agreements)

Financial
collateral
received/
pledged

3,786

1,203

449

5,438

1,654

2,207

321

4,182

–

115

–

115

3,786

1,203

334

5,323

1,654

2,207

206

4,067

–

206

–

206

–

580

–

580

Net value

3,786

1,183

128

5,097

1,654

1,627

–

3,281

The E.ON Group did not net interest-rate and currency derivatives
and non-derivative financial instruments. Compulsory netting
is carried out for commodity derivatives if the netting criteria
pursuant to IAS 32.42 are met cumulatively.

Transactions and business relationships resulting in the deriva-
tive financial receivables and liabilities presented are largely
concluded on the basis of standard contracts that permit the
conditional netting of open transactions in the event that a
counterparty becomes insolvent.

The netting agreements are derived from netting clauses con-
tained in master agreements including those of the International
Swaps and Derivatives Asso ciation (ISDA), the German Master
Agreement for Financial Derivatives Trans actions (DRV), the
European Federation of Energy Traders (EFET) and the Financial
Energy Master Agreement (FEMA).

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 shown in the table. The collateral for
commodity derivatives presented in the table relate to variation
margin payments.

Notes

192

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, 2019

€ in millions

Bonds

Commercial paper

Bank loans/Liabilities to banks

Lease obligations

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, 2018

€ 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
2020

Cash
outflows
2021

Cash
outflows
2022–2024

Cash
outflows
from 2025

3,276

3,427

7,455

20,102

946

454

1,479

6,213

8,709

5,531

1,724

5,473

21,437

27,650

–

415

–

1,017

–

139

1,909

–

3,894

8,555

22,233

–

673

318

1,012

4,906

–

689

–

692

9,247

–

2,687

2,770

25,003

Cash
outflows
2019

Cash
outflows
2020

Cash
outflows
2021–2023

Cash
outflows
from 2024

1,430

1,749

1,739

8,801

–

436

2,012

1,654

3,387

4,512

9,573

–

115

–

1,822

1,868

–

560

128

690

–

728

180

909

–

255

–

9,099

–

2,614

2,662

11,761

Cash outflows for liabilities within the scope of IFRS 7

11,585

2,512

2,777

Financial guarantees with a total nominal volume of €8 million
(2018: €8 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. E.ON has
recognized a liability for this in the amount of €8 million (2018:
€8 million).

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. Finan-
cial 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 2019.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

193

For trade receivables, expected credit losses are recognized over
their entire residual term using the simplified method (lifetime
ECL trade receivables). For other financial assets, E.ON first deter-
mines the credit loss expected within the first twelve months
(stage 1—12 month ECL). In derogation of this, in the event of
a significant increase in the default risk, the expected credit loss
over the entire residual term of the respective instrument is
recognized (stage 2—lifetime ECL). A significant increase in the
default risk is assumed if the internally determined counterparty
risk has been downgraded by at least three levels since initial
recognition. If there are objective indications of an actual default,
an individual impairment loss must be recognized on the income
statement (stage 3—losses already incurred).

E.ON distinguishes between two approaches when calculating
expected future credit losses. If external or internal rating infor-
mation is available, the expected credit loss is determined on
the basis of this data. If no rating information is available, E.ON
determines default ratios on the basis of historical default rates,
taking into account forward-looking information on economic
developments. In the E.ON Group, a default or the classification
of a receivable as uncollectible is assumed after 180 or 360 days,
depending on the region.

In 2019, valuation allowances for trade receivables changed as
shown in the following table:

Valuation Allowances for Trade Receivables

€ in millions

Balance as of January 1

Disposals

Write-downs

Other 1

Balance as of December 31

1The item Other includes currency translation differences.

2019

-805

136

-283

-5

-957

2018

-803

150

-160

-805

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 IFRS 9
category are shown in the following table:

Net Gains and Losses by Category

€ in millions

Financial assets Amortized Cost

Financial liabilities Amortized Cost

Fair Value through P&L

Fair Value through OCI

Total

2019

189

-1,059

-136

-965

2018

-25

-659

711

The net result of the category fair value through OCI results in
particular from interest income and proceeds from the sale of
fair value through OCI securities.

In addition to impairments of financial assets, net gains and
losses in the amortized cost category are due primarily to interest
income from financial assets and liabilities and effects from the
currency translation of financial liabilities.

The net gains and losses in the fair value through profit or loss
measurement category encompass both the changes in fair value
of equity instruments, from derivative financial instruments and
gains and losses on realiza tion.

Impairments of Financial Assets

Impairment losses on financial assets must be recognized not
only for losses already incurred but also for expected future
credit losses. E.ON takes into account expected future credit
losses of financial assets carried at amortized cost, financial
assets measured at fair value through other comprehensive
income, and receivables from finance leases.

Notes

194

There were no significant changes in valuation allowances in
2019 for other financial assets measured at amortized cost or at
fair value through other comprehensive income, or for receivables
from finance leases.

The default risks for financial assets for which rating information
is available can be found in the following table for each rating
grade and separately according to the stages of impairment
existing in 2019:

Credit Risk Exposure for Financial Assets for Which Rating Information Is Available as of December 31, 2019

€ in millions

Gross carrying amount investment grade

Gross carrying amount non investment grade

Gross carrying amount default grade

Total

Stage 1–12 month ECL

Lifetime–ECL trade receivables

2019

6,829

–

6,897

2018

5,374

–

5,417

2019

1,682

622

2,396

2018

1,867

1,910

The default risks for trade receivables for which no rating infor-
mation is available and the amount of expected credit losses
over the remaining term are shown in the following matrix for
each maturity class:

Credit Risk Exposure for Trade Receivables for Which No Rating Information Is Available as of December 31, 2019

€ in millions

Not past-due

Past-due by

up to 30 days
31 to 60 days
61 to 90 days
91 to 180 days
more than 180 days

Total

Gross carrying amount

Lifetime–ECL trade receivables

2019

5,279

1,427
389
130
75
188
645

6,706

2018

1,923

388
129
47
21
38
153

2,311

2019

2018

254
18
10
10
29
187

295

109
5
6
4
8
86

140

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

195

1. Liquidity Management
The primary objectives of liquidity management at E.ON consist
of ensuring ability to pay at all times, the timely satisfaction 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, interest
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.

Risk Management

Principles
The prescribed processes, responsibilities and actions concerning
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 and credit for banks and liquidity management is
performed by the Financial Controlling department, while risk
controlling and reporting in the area of commodities and in the
credit area for industrial enterprises is performed at Group level
by a separate department.

E.ON uses a Group-wide treasury, risk management and report-
ing system. This system is a standard information technology
solution that is fully integrated and is continuously updated.
The system is designed to provide for the analysis and monitor-
ing of the E.ON Group’s exposure to liquidity, foreign exchange
and interest risks. On a Group-wide basis, Financial Controlling
monitors and controls credit risks for banks, and Risk Manage-
ment monitors and controls industrial enterprises. These activ-
ities are carried out using a uniform standard software package.

Separate Risk Committees are responsible for the maintenance
and further development of the strategy set by the Management
Board of E.ON SE with regard to commodity, treasury and credit
risk management policies.

Due to legal restrictions, innogy SE and innogy subsidiaries are
not currently fully integrated into E.ON Group risk management.
Risks at innogy are additionally managed by innogy SE and
reported to E.ON. innogy uses separate IT systems for some
aspects of the management and quantification of its risks.

Notes

196

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 value-at-risk (“VaR”)
and sensitivity analyses are “forward- looking statements” that
involve risks and uncertainties. Actual results could differ mate-
rially from those projected due to actual, unforeseeable develop-
ments 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 princi-
pally 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. Fluctua-
tions 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 include shareholder loans in foreign currency.
In addition, derivative and non-derivative 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 whenever necessary. The
respective debt factor, net assets and the enterprise value
denominated in the foreign currency are the principal criteria
governing the level of hedging.

The E.ON Group is also exposed to operating and financial
transaction risks attributable to foreign currency transactions.
The subsidiaries are respon sible for managing their operating
currency risks and are generally required to hedge their currency
risks through E.ON SE. E.ON SE coordinates hedging throughout
the Group companies and makes use of external derivatives as
needed. It may either directly close out foreign currency positions
that have been tendered, in whole or in part, through external
transactions, or keep the position open within approved limits.
The one-day value-at-risk (95 percent confidence) for transactional
foreign currency positions totaled €1.1 million as of December 31,
2019. In the prior year, the one-day value-at-risk (99 percent
confidence) from the translation of deposits and borrowings
denominated in foreign currency, plus foreign- exchange deriv-
atives, was €67 million as of December 31, 2018. The reason
for the change in method is the harmonization of the level of risk
used for quantifying currency risks at E.ON and innogy.

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 hedged.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

197

Interest Risk Management
E.ON is exposed to profit risks arising from floating-rate financial
liabilities. 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-
interest and floating-rate debt over time. This is influenced,
among other factors, by the type of business model, existing
liabilities as well as the regulatory framework in which E.ON
operates. To manage the interest rate position, several instru-
ments, including derivatives, are deployed.

With interest rate derivatives included, the share of financial
liabilities with floating interest rates was 10 percent as of Decem-
ber 31, 2019 (2018: 0 percent). Under otherwise unchanged
circumstances, the volume of financial liabilities with fixed interest
rates, which amounted to €25.8 billion at year-end 2019, would
decline to €24.2 billion in 2020 and €21.5 billion in 2021. The
effective interest rate duration of the financial liabilities, including
interest rate deriv atives, was 10.1 years as of December 31,
2019 (2018: 13.5 years). The volume-weighted average interest
rate of the financial liabilities, including interest rate deriv atives,
was 3.8 percent as of December 31, 2019 (2018: 5.3 percent).

As of December 31, 2019, the E.ON Group held interest rate
derivatives with a nominal value of €4,306 million (2018:
€4,495 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 internal
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 raise or lower interest
charges by ±€59.3 million (2018: ±€8.0 million) in the subse-
quent fiscal year.

Commodity Price Risk Management
The E.ON portfolio of physical assets, long-term contracts
and end-customer sales is exposed to substantial risks from
fluc tuations in commodity prices. The principal commodity
prices to which E.ON is exposed relate to electricity, gas, green
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 EBIT.

Since the spinoff of Uniper, E.ON has established procurement
capabilities for its sales business and thus ensured market access
for E.ON’s remaining energy production. In the normal course
of business of the underlying energy production and retail sales
activities, E.ON’s individual management units are exposed to
uncertain commodity market prices, which impacts operating
gains and costs. All external trading on commodity markets
must be related to reducing open commodity positions and be
undertaken in strict accordance with approved commodity
hedging strategies.

Due to the decentralized governance approach and the primary
focus on procurement and purely hedging transactions, the
allocation of risk capital is no longer necessary. The processes
and operational management models within the trading system
are monitored by the local market risk teams and centrally
managed by the Risk Management department. At the end of
2019, the open position from the procurement on the markets
in Germany, the UK, the Czech Republic, Sweden, Romania,
Hungary and the innogy companies for the reporting period from
2020 to 2022 was not more than 4,100 GWh per commodity
in each case. The biggest drivers primarily relate to the special
market conditions in Romania, where hedging activities are
carried out within the approved commodity hedging strategy.

Notes

198

As of December 31, 2019, the E.ON Group primarily held elec-
tricity and gas derivatives with a nominal value of €32,831 million
(2018: €4,076 million).

A key foundation of the commodity 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 risks at the innogy distribution companies are
hedged in accordance with the hedging guidelines of innogy SE.
Commodity risks are hedged using limits. Policies applicable to the
entire Group specify clear structures and processes for handling
commodity risks. They are consistent with the basic requirements
for commodity risk management within the E.ON Group.

Commodity exposures and risks are reported across the Group
on a monthly basis to the members of the Risk Committee for
both the E.ON and the innogy portfolios.

Credit Risk Management
In order to minimize credit risk arising from operating activities
and from the use of financial instruments, the Company enters
into transactions only with counterparties that satisfy the Com-
pany’s internally established minimum requirements. Maxi-
mum 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 trans-
actions 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 Corporate Headquarters. Regular reports on credit limits,
including their utilization, are submitted to the Risk Committee.
Intensive, standardized monitoring of quantitative and qualita-
tive 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 €1,481 million.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

199

The levels and details of financial assets received as collateral
are described in more detail in Notes 18 and 26.

Asset Management

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
and exchange clearing.

There is no credit risk with respect to the exchange-traded for-
ward and option contracts with an aggregate nominal value of
€1,073 million as of December 31, 2019 (2018: €630 million).
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.

For the purpose of financing long-term payment obligations,
including those relating to asset retirement obligations (see
Note 25) and cash investments, financial investments totaling
€3.5 billion (2018: €1.4 billion) were held predominantly by
German E.ON Group companies as of December 31, 2019. The
increase of €2.1 billion is related to the recognition of investments
of the innogy companies.

These financial assets are invested on the basis of an accumula-
tion strategy (total-return approach), with investments broadly
diversified across the various asset classes, for example the
money market, bond and equity asset classes, as well as alter-
native asset classes like real estate. The majority of the assets are
held in investment funds managed by external fund managers.
Corporate Asset 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. The three-month VaR with a 98-percent confidence
interval for these financial assets was €109 million (2018:
€54 million). The increase resulted primarily from the above-
mentioned additional asset investments and, to a lesser extent,
from changes to the market situation or risk assumption.

As of December 31, 2018, Versorgungskasse Energie VVaG was
in liquidation (VKE i.L.); at that date, it managed €78.8 million
in financial investments. The company was deconsolidated on
June 30, 2019.

Notes

(32) Leasing

E.ON as Lessee

Since 2019, transactions in which E.ON is the lessee have been
recognized under the right-of-use model pursuant to IFRS 16.
Initial application of the standard was made using the modified
retrospective method. In addition to reclassified arrangements
that had previously been classified as finance leases with a
present value of €327 million, the right-of-use assets as of
January 1, 2019, also include the initial recognition of previous
operating leases with a present value of €536 million after
taking into consideration prepayments and accruals (see Note 2).
The tables in Note 14 present the changes in the assets in the
reporting year. The conclusion of new agreements and the
presentation of changes in estimates as well as modifications
resulted in an addition of €374 million in the reporting year.
Impairments of right-of-use assets in the amount of €229 million
are allocated among the asset classes as follows:

200

issue residual value guarantees. Leases in which E.ON is the lessee
but where the lease has not yet begun result in potential future
cash outflows of €556 million. The existing lease liabilities do not
contain any covenant clauses that are linked to financial ratios.

As of the balance sheet date of December 31, 2019, right-of-use
assets in the amount of €3,109 million are offset by lease liabil-
ities with a present value of €3,144 million. This is recognized
under financial liabilities (see Note 26); the short-term portion
of the lease liabilities totals €411 million. The maturity structure
of the future payment obligations from leases is presented in
Note 31.

Due to the simplification provisions used, the recognition of a
right-of-use asset is not necessary for low-value leases and
leases with a term of less than twelve months. Instead, a lease
expense is recognized in these cases. The following amounts
are recognized in the income statement in connection with
leases in the fiscal year:

Right-of-use Assets 1

E.ON as Lessee—Effects within the Income Statement 1

€ in millions

Land and buildings

Networks

Storage and production capacities

Technical equipment and machinery

Fleet, office and business equipment

1New account due to IFRS 16 implementation, no prior-year figures.

Accumulated
depreciation
2019

100

€ in millions

Expenses from short-term leases (<12 months)

Expense for low-value leases not included in the above
short-term leases

Variable lease payments

Interest expense from leasing

Lease income sublease

Gain/Loss from sale and leaseback transactions

1New account due to IFRS 16 implementation, no prior-year figures.

2019

–

E.ON operates as a lessee in the areas of land and buildings, net-
works and vehicle fleets, in particular. To ensure operative flexi-
bility, E.ON enters into agreements relating to the extension and
termination of real estate leases, in particular. In determining
the term of the contract, E.ON considers all facts and circum-
stances that have an economic influence on the exercise of the
extension option or the non-exercise of the termination option.
In the determination of the lease liability, and correspondingly,
of the right-of-use assets, all reasonably certain cash outflows
are taken into consideration. As of December 31, 2019, potential
future cash outflows in the amount of €322 million were not
included in the lease liability as it is not reasonably certain that
the leases will be renewed or not terminated. Variable lease
payments occur in only immaterial amounts and E.ON does not

The liabilities from short-term agreements with a term of less
than twelve months entered into for the next fiscal year do not
vary materially from the expenses of the current fiscal year.

Cash outflows from lease agreements totaled €377 million in
the fiscal year; this will be allocated to operating cash flow in
the amount of €85 million. This includes the lease expense for
short-term and low-value leases as well as the expense from
variable lease payments and interest expense for the period.
Payments allocated to payments for the lease liability are recog-
nized in cash flows from financing activities in the amount of
€292 million.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

201

E.ON as Lessor

E.ON enters into leases as lessor to a limited extent. Finance
leases includes technical equipment and machinery, in particular
generation plants, that has been transferred to customers for
use. Operating leases includes assets that have been transferred
for use, in particular real estate, heat and electricity generation
plants and lines. There are no material risks in connection with
rights retained to the assets temporarily transferred for use,

with the result that risk management strategies, in particular,
are not necessary. Residual-value guarantees are only entered
into on an individual basis for purposes of additional hedging.

The present value of minimum lease payments is recognized
under receivables from finance leases. The short-term portion
totals €50 million (see Note 17). There were no material changes
to net investments in the period under review. The nominal and
present values of the lease payments had the following maturities:

E.ON as Lessor—Finance Leases 1

€ in millions

Due within 1 year

Due in 1 to 2 years

Due in 2 to 3 years

Due in 3 to 4 years

Due in 4 to 5 years

Due in more than 5 years

Total

1New account due to IFRS 16 implementation, no prior-year figures.

Undiscounted
lease payments

Unrealized
interest income

2019

143

484

2019

129

Discounted
non-guaranteed
residual value

2019

–

Present value
of minimum
lease payments

2019

131

370

The following effects from activity as a lessor are recognized for
the period under review:

finance leases with variable lease payments. Payments recog-
nized as financing income from net investments increase oper-
ating cash flow.

E.ON as Lessor—Effects within the Income
Statement 1

The following payments are expected from existing operating
leases:

€ in millions

Finance–Lease

Gain/loss on the disposal of assets
Financial income from net investments
Income of variable lease payments

Operating–Lease

Income from leasing
Thereof income of variable lease payments

1New account due to IFRS 16 implementation, no prior-year figures.

2019

–
11
1

69
–

Results from the disposal of assets were recognized in income.
Cash flows from operating leases are allocated to cash flow
before interest and taxes. This also applies to flows from

E.ON as Lessor—Operating Leases 1

Undiscounted lease payments

€ in millions

Due within 1 year

Due in 1 to 2 years

Due in 2 to 3 years

Due in 3 to 4 years

Due in 4 to 5 years

Due in more than 5 years

Total

1New account due to IFRS 16 implementation, no prior-year figures.

2019

123

447

Notes

202

Liabilities of E.ON payable to related companies as of Decem-
ber 31, 2019, include €21 million (2018: €48 million) in trade
payables and shareholder loans to operators of jointly-owned
nuclear power plants. These shareholder loans bear interest
based on Euribor at 1.0 percent (2018: 1.0 percent) 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 personnel
(members of the Management Board and of the Super visory
Board of E.ON SE) must be disclosed.

The total expense for 2019 for members of the Management
Board amounted to €10.3 million (2018: €11.1 million) in short-
term benefits and €2.6 million (2018: €2.3 million) in post-
employment benefits. The cost of post-employment benefits
is equal to the service and interest cost of the provisions for
pensions. Additionally taken into account in 2019 were actuarial
losses of €1.4 million (2018: actuarial gains of €0.4 million).

The expense determined in accordance with IFRS 2 for existing
commitments arising from share-based payment in 2019 was
€5.4 million (2018: €3.6 million).

Provisions for these commitments amounted to €14.5 million
as of December 31, 2019 (2018: €12.8 million).

The members of the Supervisory Board received a total of
€4.3 million for their activity in 2019 (2018: €4.1 million).
Employee representatives on the Supervisory Board were paid
compensation under the existing employment contracts
with subsidiaries totaling €0.6 million (2018: €0.5 million).

Detailed, individualized information on compensation can be
found in the Compensation Report on pages 70 through 85.

(33) 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, including associated companies
accounted for under the equity method and their subsidiaries.
Receivables and payables consist primarily of lease obligations
from leaseback models and trade receivables. Joint ventures
and subsidiaries that are not fully consolidated continue to be
accounted for as associated companies. Transactions with related
parties in the reporting year and in the previous year are sum-
marized 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

Provisions

Associated companies
Other related parties

2019

676
542
38
96

560
216
107
237

627
456
9
162

1,278
726
177
375

31
26
5

2018

1,379
1,224
11
144

2,496
2,112
4
380

374
166
3
205

1,013
568
15
430

20
20
–

In 2019, E.ON generated income from transactions with related
companies 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. Expenses from transactions with related companies
are generated mainly through electricity and gas deliveries as
well as through management fees, IT services and third-party
services.

For the first six months of 2018, until their sale to Fortum, the
companies of the Uniper Group generated revenue in the amount
€820 million, interest income of €0 million and other income
of €100 million, as well as other expenses in the amount of
€1,957 million and interest expenses in the amount of €6 million.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

203

(34) Segment Reporting

Segment Information

Led by its Corporate Headquarters in Essen, Germany, the E.ON
Group comprises the eight reporting segments described below,
and the Non-Core Business and Corporate Functions/Other, all
of which are reported here in accordance with IFRS 8. The com-
bined segments, which are not separately reportable, in the
East-Central Europe/Turkey Energy Networks unit and the Cus-
tomer Solutions Other unit are of subordinate importance and
have similar economic characteristics with respect to customer
structure, products and distribution channels.

Energy Networks
Germany
This segment combines the electricity and gas distribution
networks and all related activities in Germany.

Sweden
This segment comprises the electricity networks businesses in
Sweden.

East-Central Europe/Turkey
This segment combines the distribution network activities in
the Czech Republic, Hungary, Romania, Slovakia and Turkey.

Customer Solutions
Germany
This segment consists of activities that supply our customers in
Germany with electricity and gas and the distribution of specific
products and services in areas for improving energy efficiency
and energy independence.

United Kingdom
The segment comprises sales activities and customer solutions
in the UK.

Other
This segment combines sales activities and the corresponding
Customer Solutions in Sweden, Italy, the Czech Republic, Hungary
and Romania and E.ON Business Solutions as well as the heating
business in Germany.

innogy
The innogy segment comprises, in particular, the network and
sales distribution business, as well as the holding functions and
internal service providers of the innogy Group, which was taken
over in September 2019. innogy operates its network business
primarily in Germany, Poland, Hungary and Croatia. innogy main-
tains its sales business primarily in the markets of Germany, the
UK, the Netherlands, Belgium, Hungary and Poland.

Renewables
The Renewables segment combines the Group’s activities for
the production of wind power plants (onshore and offshore) as
well as solar farms.

In connection with the takeover of innogy, E.ON will transfer the
majority of its Renewables business to RWE. Since June 30,
2018, the transferred businesses were reported as a discontinued
operation in E.ON’s consolidated financial statements in accor-
dance with IFRS 5 (see Note 4 for further information).

For internal management purposes, these activities therefore
continued to be fully included in the relevant key performance
indicators. The presentation of key performance indicators and
revenue in segment reporting therefore also includes the compo-
nents attributable to discontinued operations in the Renewables
business. Recon ciliations of these figures to the information in
the E.ON Group’s consolidated income statement and consoli-
dated statement of cash flows are provided on pages 204, 205
and 207.

Non-Core Business
Non-Core Business comprises the non-strategic activities of
the E.ON Group. This includes the operation and retirement of
the German nuclear power plants, which are managed by the
PreussenElektra operating unit, and the electricity generation
business in Turkey.

Corporate Functions/Other
Corporate Functions/Other contains E.ON SE itself and the
interests held directly by E.ON SE. Until June 26, 2018, the
Uniper Group, which was accounted for in the consolidated
financial statements using the equity method, was also allo-
cated to this segment. Additional information regarding the
Uniper Group is provided in Note 4.

Notes

204

Financial Information by Business Segment

€ in millions

External sales

Intersegment sales

Sales

Depreciation and
amortization 1

Adjusted EBIT

Equity-method earnings 2

Operating cash flow before
interest and taxes

Investments

Energy Networks

Customer Solutions

Germany

Sweden

ECE/Turkey

Germany

United Kingdom

Other

2019

2018

2019

2018

2019

2018

2019

2018

2019

2018

2019

2018

4,790

1,473

4,819

1,424

1,018

6,263

6,243

1,024

978

989

670

913

598

939

7,178

6,678

7,626

7,574

7,951

7,244

135

120

332

312

1,583

1,537

7,313

6,798

7,683

7,633

8,283

7,556

-644

-593

-153

-150

-239

-232

921
62

770

947

895
69

1,559

802

539
–

718

313

498
–

771

341

428
116

770

395

451
97

652

454

-39

159
–

166

-33

160
–

273

-122

11
–

-86

154

-95

142
–

207

-210

-183

143
12

199

507

111
10

211

395

1Adjusted for non-operating effects.
2Under IFRS, impairment charges on companies accounted for using the equity method and impairment charges on other financial assets (and any reversals of such charges) are included in
income/loss from companies accounted for using the equity method and financial results, respectively. These income effects are not part of adjusted EBIT.
3Operating business including the divisions in the Renewables segment reclassified as discontinued operations in accordance with IFRS 5 and deconsolidated as of September 18, 2019

The following table shows the reconciliation in segment report-
ing of operating cash flow before interest and taxes to operating
cash flow:

Reconciliation of Sales

€ in millions

Sales

1Deconsolidated as of September 18, 2019.

E.ON Group

2019

2018

41,484

30,084

Reclassified businesses
at Renewables 1

2019

-481

2018

-688

E.ON Group
(continuing operations)

2019

2018

41,003

29,396

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

205

innogy

Renewables 3

PreussenElektra

Generation Turkey

Non-Core Business

Corporate
Functions/Other

Consolidation

E.ON Group 3

2019

2018

2019

2018

2019

2018

2019

2018

2019

2018

2019

2018

2019

2018

10,381

10,444

-335

421
55

1,277

878

–

–
–

–

682

914

784

970

1,174

1,370

–

1,596

1,754

1,174

1,370

-281

-340

-251

-157

347
56

690

722

521
44

657

1,037

292
51

313

207

399
53

199

–

74
74

–

-17
-17

608

622

-53

-107
70

606

644

-72

-153
65

–

-413

-328

154

1,305

–

41,484

30,084

-4,501

-4,441

-4,501

-4,440

41,484

30,084

7
-1

-2,323

-1,851

-18
-1

3,235
495

2,989
320

-3

4,407

5,492

4,087

3,523

The following table shows the reconciliation of operating cash
flow before interest and taxes to operating cash flow from
continuing operations:

Reconciliation of Operating Cash Flow

€ in millions

2019

2018

Operating cash flow before interest and
taxes

Interest payments

Tax payments

Reclassified innogy business in the Czech
Republic (operating cash flow)

Operating cash flow

Reclassified businesses at Renewables 1

Reclassified innogy business in the Czech
Republic

Operating cash flow from continuing
operations

1Deconsolidated as of September 18, 2019.

4,407

-740

-754

2,965

-100

-52

4,087

-606

-628

–

2,853

-558

–

2,813

2,295

The following table shows the reconciliation in segment reporting
of the investments shown in segment reporting to the investments
of continuing operations. The latter correspond to payments for
investments reported in the Consolidated Statements of Cash
Flows.

Reconciliation of Investments

€ in millions

Investments

Reclassified businesses at Renewables 1

Investments from continuing operations

1Deconsolidated as of September 18, 2019.

2019

5,492

-708

4,784

2018

3,523

-1,036

2,487

Of the equity result, which is reported in the segment information,
€57 million (2018: €44 million) is attributable to discontinued
operations and the activities in the Renewables segment that
were deconsolidated with effect from September 18, 2019.

Notes

206

Adjusted EBIT

Adjusted EBIT, a measure of earnings before interest and taxes
(“EBIT”) adjusted to exclude non-operating effects, is used at
E.ON for purposes of internal management control and as the
most important indicator of a business’s sustainable earnings
power.

The E.ON Management Board is convinced that adjusted EBIT is
the most suitable key figure for assessing operating performance
because it presents a business’s operating earnings independently
of non-operating factors, interest, and taxes.

Unadjusted EBIT represents the Group’s income/loss reported
in accordance with IFRS before financial results and income
taxes, taking into account the net income/expense from equity
investments. To improve its meaningfulness as an indicator of
the sustainable earnings power of the E.ON Group’s business,
unadjusted EBIT is adjusted for certain non-operating effects.

Operating earnings also include income from investment sub-
sidies for which liabilities are recognized.

The non-operating earnings effects for which EBIT is adjusted
include, in particular, non-operating interest expense/income,
income and expenses from the marking to market of derivative
financial instruments used for hedging and, where material,
book gains/losses, certain restructuring expenses, impairment
charges and reversals recognized in the context of impairment
tests on non-current assets, on equity investments in affiliated or
associated companies and on goodwill, and other contributions
to non-operating earnings. In addition, effects from the valuation
of certain provisions on the balance sheet date are disclosed in
non-operating earnings.

In addition, earnings from discontinued operations and activities
in the Renewables segment that were deconsolidated with effect
from September 18, 2019, adjusted for non-operating effects,
are also included in adjusted EBIT. Pursuant to IFRS 5, equity
carried forward from investments in discontinued operations is
to be terminated. However, this was continued within the frame-
work of internal management and was then also included in
adjusted EBIT. As with the treatment of the effects of the equity
carried forward, depreciation in discontinued operations, which
is generally to be deferred in accordance with IFRS 5, is continued
and carried forward in adjusted EBIT.

Net book gains declined significantly in the 2019 fiscal year. They
mainly comprise the effects of the deconsolidation of PEGI as
parent company of Nord Stream. The prior-year figure included
positive effects from the disposal of Uniper, Hamburg Netz, and
E.ON Gas Sverige and, offsetting these effects, the overall nega-
tive gain on the disposal of Enerjisa Enerji. In addition, income
from the disposal of securities was lower than in the prior year.

Restructuring expenses were significantly above the level of the
2018 reporting period and in 2019 mainly included expenses in
connection with the acquisition of innogy. This item also includes
the expenses incurred in connection with the restructuring
measures initiated at npower, the UK sales business of innogy.

Derivative financial instruments resulted in a non-operating
effect of -€707 million in fiscal year 2019 (previous year:
+€610 million). Negative effects in the 2019 reporting period
resulted primarily from hedging price fluctuations, particularly
in Customer Solutions, and from the marking to market of
derivatives in the innogy segment. The value in 2018 is mainly
attributable to the derivative financial instruments in connection
with contractual rights and obligations from the sale of the
Uniper shares. In addition, all effects resulting from so-called
“failed own use” contracts (see Note 2 for further information)
in non-operating earnings are summarized in the item “Effects
from derivative financial instruments.”

In the 2019 reporting period, impairments were recognized in
particular in the areas of Customer Solutions in the United
Kingdom, Energy Networks Germany and innogy. In the prior
year, impairments were incurred primarily in the UK Customer
Solutions segment and E.ON Business Solutions.

Effects that are to be initially recognized from the subsequent
measurement of hidden reserves and charges in connection with
the preliminary innogy purchase price allocation and newly
recognized effects from the measurement of financial assets in
the innogy segment are presented separately. These effects will
be balanced out in subsequent periods.

Other non-operating earnings were on a par with the previous
year and in 2019 include, among other elements, positive effects
from realized hedging transactions for certain currency risks.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

207

The following table shows the reconciliation of earnings before
interest and taxes to adjusted EBIT or adjusted EBITDA:

Reconciliation of Income before Financial Results and Income Taxes

€ in millions

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

Income/Loss from equity investments

EBIT

Non-operating adjustments
Net book gains/losses
Restructuring/cost-management expenses
Effects from market valuation derivatives
Impairments (+)/Reversals (-)
Carryforward of hidden reserves (-) and liabilities (+) from the innogy transaction
Other non-operating earnings

Reclassified businesses of Renewables (adjusted EBIT)

Adjusted EBIT

Impairments (+)/Reversals (-)

Scheduled depreciation and amortization

Reclassified businesses of Renewables (scheduled depreciation and amortization, impairments and reversals)

Adjusted EBITDA

2019

1,351

1,409

1,526
-366
819
707
275
252
-161

300

3,235

1,986

271

5,558

2018

3,953

3,997

-1,521
-857
64
-610
61
–
-179

513

2,989

1,475

331

4,840

Page 27 of the Combined Group Management Report provide a
more detailed explanation of the reconciliation of adjusted EBIT
to the net income/loss reported in the Consolidated Financial
Statements.

Additional Entity-Level Disclosures

External sales by product break down as follows:

Segment Information by Product

€ in millions

Electricity

Gas

Other

Total

2019

30,166

8,178

3,140

2018

22,456

5,799

1,829

41,484

30,084

The “Other” item consists in particular of revenues generated
from services.

Notes

208

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

2019

2018

2019

2018

2019

2018

2019

2018

2019

Germany

United Kingdom

Sweden

Europe (other)

Other

2018

2019

Total

2018

External sales by
location of customer

External sales by
location of seller

Intangible assets

Right-of-use assets

Property, plant and
equipment

Companies accounted for
under the equity method

20,198

13,224

10,068

7,702

2,176

2,209

8,758

6,667

284

282

41,484

30,084

19,281

13,653

10,713

7,740

2,138

2,203

1,634

2,718

600

–

355

126

287

–

183

145

–

9,057

1,947

214

6,208

1,130

–

25,135

9,557

697

620

4,762

4,593

5,235

3,287

3,192

787

461

–

1,509

1,745

295

–

280

41,484

30,084

–

4,138

3,109

2,162

–

35,832

18,057

5,232

2,603

E.ON’s customer structure resulted in a focus on the Germany
region. Aside from that, there was no major concentration 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.

(35) Compensation of Supervisory Board and
Management Board

Supervisory Board

Total remuneration to members of the Supervisory Board in
2019 amounted to €4.3 million (2018: €4.1 million).

As in 2018, there were no loans to members of the Supervisory
Board in 2019.

The Supervisory Board’s compensation structure and the
amounts for each member of the Supervisory Board are
presented on page 84 and 85 in the Compensation Report.

Additional information about the members of the Supervisory
Board is provided on pages 240 and 241.

Management Board

Total compensation of the Management Board in 2019 amounted
to €15.6 million (2018: €15.9 million). This consisted of base
salary, bonuses, other compensation elements and share-based
payments.

In 2019, the members of the Management Board were granted
third-tranche virtual shares under the E.ON Performance Plan
(2018: second tranche of the E.ON Performance Plan) with
a value of €5.2 million (2018: €4.9 million) and a total number
of shares of 780,815 (2018: 760,078).

Total payments to former members of the Management Board
and their beneficiaries amounted to €10.8 million (2018:
€12.5 million). Provisions of €161.3 million (2018: €155.8 million)
have been established for the pension obligations to former
members of the Management Board and their beneficiaries.

As in 2018, there were no loans to members of the Management
Board in 2019.

The Management Board’s compensation structure and the indi-
vidual amounts for each member of the Management Board as
well as additional disclosures on the amounts are presented on
pages 70 through 85 in the Compensation Report.

Additional information about the members of the Management
Board is provided on page 242.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

209

(36) Subsequent Events

Disposal of the Heating Electricity Business

Cash Settlement Determined for the Remaining
Minority Shareholders of innogy

In September of last year, E.ON notified the Management Board
of innogy that innogy SE would soon be merged into E.ON
Verwaltungs SE, and that the remaining minority shareholders
would be excluded (a so-called “squeeze-out under German
merger law”). In mid-January 2020, E.ON notified the Manage-
ment Board of innogy that the determination had been made
to pay out an appropriate cash settlement of €42.82 per innogy
share to the remaining minority shareholders. Independent
auditors appointed by the court confirmed the appropriateness
of the cash settlement.

The extraordinary general shareholders meeting of innogy SE
passed a resolution on the transfer of the innogy shares of
the remaining minority shareholders on March 4, 2020. The
squeeze- out under German merger law approved by resolution
at that meeting will become effective with the entry of the
transfer resolution and the merger in the commercial register.

Corporate Bonds Issued

At the beginning of January 2020, E.ON issued three corporate
bonds with a total volume of €2.25 billion. High investor
demand enabled E.ON to lock in attractive interest rates for all
maturities:

• €750 million bond due in 2023 with 0 percent coupon per

annum

One of the conditions imposed on E.ON by the EU Commission
is the disposal of the so-called heating electricity business in
Germany. This heating electricity business includes all customer
contracts for the supply of heating electricity by E.ON Energie
Deutschland (“EDG”) and all contracts between EDG and those
heating electricity customers that purchase heating and general
electricity via separate meters. In anticipation of the disposal, the
heating electricity business was spun off to two newly founded
companies, E.ON Heizstrom Nord GmbH and E.ON Heizstrom
Süd GmbH. Because of the obligation to dispose of these activi-
ties, E.ON has already reported the relevant balance sheet items
of both companies as a disposal group pursuant to IFRS 5 with
effect from September 30, 2019. The agreement was signed on
March 3, 2020.

Strategic Partnership Agreement with Kraken
Technologies

In March 2020, E.ON entered into a strategic partnership with
Kraken Technologies, a sister company of Octopus Energy. The
strategic partnership, E.ON Next, will leverage the technology
platform of Kraken Technologies and transform E.ON UK’s busi-
ness with residential and small and medium-sized commercial
customers in the UK.

E.ON and Kraken Technologies will continue to develop the
platform to deliver outstanding customer service based on the
principles of customer focus, simplicity, transparency and cost
efficiency. The first phase will involve the migration of npower’s
customers to the new platform, followed by a second phase for
E.ON UK customers.

• €1 billion green bond due in 2027 with 0.375 percent coupon

per annum

COVID-19 (Coronavirus)

• €500 million bond due in 2030 with 0.75 percent coupon

per annum

The outbreak and spread of the novel coronavirus has global
implications, including economic and financial effects. At the
time this report was prepared, potentially adverse business
effects of the outbreak of the coronavirus were not yet apparent.
The possible implications of this matter are being analyzed on
an ongoing basis. For further details, please refer to the com-
bined group management report.

Notes

210

(37) 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, 2019)

Name, location

Stake (%)

Name, location

Stake (%)

:agile accelerator GmbH, DE, Düsseldorf 2

100.0

Abwasserentsorgung Uetersen GmbH, DE, Uetersen 6

100 Kilowatt Naperőmű Alfa Korlátolt Felelősségű Társaság,
HU, Budapest 2

100 Kilowatt Naperőmű Béta Korlátolt Felelősségű Társaság,
HU, Budapest 2

100 Kilowatt Naperőmű Delta Korlátolt Felelősségű Társaság,
HU, Budapest 2

100 Kilowatt Naperőmű Epszilon Korlátolt Felelősségű Társaság,
HU, Budapest 2

100 Kilowatt Naperőmű Éta Korlátolt Felelősségű Társaság,
HU, Budapest 2

100 Kilowatt Naperőmű Gamma Korlátolt Felelősségű Társaság,
HU, Budapest 2

100 Kilowatt Naperőmű Kappa Korlátolt Felelősségű Társaság,
HU, Budapest 2

2. CR Immobilien-Vermietungsgesellschaft mbH & Co. Objekt
MEAG Halle KG, DE, Düsseldorf 1, 12

2. CR Immobilien-Vermietungsgesellschaft mbH & Co. Objekt
Naumburg KG, DE, Düsseldorf 2, 12

4Motions GmbH, DE, Leipzig 2

A/V/E GmbH, DE, Halle (Saale) 1

Abens-Donau Netz GmbH & Co. KG, DE, Mainburg 6

Abens-Donau Netz Verwaltung GmbH, DE, Mainburg 6

Abfallwirtschaft Dithmarschen GmbH, DE, Heide 6

Abfallwirtschaft Schleswig-Flensburg GmbH, DE, Schleswig 6

Abfallwirtschaft Südholstein GmbH - AWSH -, DE, Elmenhorst 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 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

100.0

0.0

100.0

76.1

50.0

49.0

39.0

33.3

49.0

27.0

49.0

25.0

20.0

49.0

25.1

25.0

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

Aceve Totaalinstallateurs B.V., NL, Capelle aan den IJssel 1

Ackermann & Knorr Ingenieur GmbH, DE, Chemnitz 2

Airco-Klima Service GmbH, DE, Garbsen 2

AirSon Engineering AB, SE, Ängelholm 2

Alfred Thiel-Gedächtnis-Unterstützungskasse GmbH, DE, Essen 2

Alsdorf Netz GmbH, DE, Aachen 1

Alt Han Company Limited, GB, London 6

ANCO Sp. z o.o., PL, Jarocin 2

Aralt BV, BE, Hasselt 1

Areal LDS Blansko a.s., CZ, Blansko 2

Artelis S.A., LU, Luxembourg 1

AV Packaging GmbH, DE, Munich 1

Avacon AG, DE, Helmstedt 1

Avacon Beteiligungen GmbH, DE, Helmstedt 1

Avacon Connect GmbH, DE, Laatzen 1

Avacon Hochdrucknetz GmbH, DE, Helmstedt 1

Avacon Natur GmbH, DE, Sarstedt 1

Avacon Netz GmbH, DE, Helmstedt 1

Avon Energy Partners Holdings, GB, Coventry 2

AVU Aktiengesellschaft für Versorgungs-Unternehmen, DE,
Gevelsberg 4

AWOTEC Gebäude Servicegesellschaft mit beschränkter
Haftung, DE, Saarbrücken 6

Bäderbetriebsgesellschaft St. Ingbert mbH, DE, St. Ingbert 6

BAG Port 1 GmbH, DE, Regensburg 2

Balve Netz GmbH & Co. KG, DE, Balve 6

Basking Automation GmbH, DE, Berlin 6

Bayerische Bergbahnen-Beteiligungs-Gesellschaft mbH, DE,
Gundremmingen 1

Bayerische Elektrizitätswerke GmbH, DE, Augsburg 2

Bayerische Ray Energietechnik GmbH, DE, Garching 6

Bayerische-Schwäbische Wasserkraftwerke Beteiligungs-
gesellschaft mbH, DE, Gundremmingen 1

Bayernwerk AG, DE, Regensburg 1

Bayernwerk Energiedienstleistungen Licht GmbH, DE,
Regensburg 2

49.0

25.0

30.0

100.0

80.0

100.0

50.0

100.0

21.0

100.0

90.0

0.0

61.5

100.0

50.0

48.0

49.0

100.0

25.1

46.4

100.0

49.0

62.2

100.0

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). · 7Investments Pursuant to Section 313 (2) No. 5 HGB. · 8This company
exercised its exemption option under Section 264, Paragraph 3 of the German Commercial Code or under Section 264b. · 9Control by virtue of company contract. · 10No control by virtue of company
contract. · 11Significant influence via indirect investments. · 12Structured entity pursuant to IFRS 10 and 12. · 13Affiliated company which is held by E.ON Pension Trust e.V. on behalf of MEON Pensions
GmbH & Co. KG. · 14Other equity investment which is held by E.ON Pension Trust e.V. on behalf of MEON Pensions GmbH & Co. KG.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

211

Disclosures Pursuant to Section 313 (2) HGB of Companies in Which Equity Investments Are Held
(as of December 31, 2019)

Name, location

Stake (%)

Name, location

Stake (%)

Bayernwerk Energietechnik GmbH, DE, Regensburg 2

Bayernwerk Natur 1. Beteiligungs-GmbH, DE, Regensburg 2

Bayernwerk Natur GmbH, DE, Unterschleißheim 1

Bayernwerk Netz GmbH, DE, Regensburg 1

Bayernwerk Portfolio GmbH & Co. KG, DE, Regensburg 2

Bayernwerk Portfolio Verwaltungs GmbH, DE, Regensburg 1

Bayernwerk Regio Energie GmbH, DE, Regensburg 2

Beteiligung H1 GmbH, DE, Helmstedt 2

Beteiligung H2 GmbH, DE, Helmstedt 2

Beteiligung N1 GmbH, DE, Helmstedt 2

Beteiligung N2 GmbH, DE, Helmstedt 2

Beteiligungsgesellschaft der Energieversorgungsunternehmen
an der Kerntechnische Hilfsdienst GmbH GbR, DE,
Eggenstein-Leopoldshofen 6

Beteiligungsgesellschaft e.disnatur mbH, DE, Potsdam 2

Beteiligungsgesellschaft Werl mbH, DE, Essen 2

BEW Netze GmbH, DE, Wipperfürth 4, 10

BHL Biomasse Heizanlage Lichtenfels GmbH, DE, Lichtenfels 6

BHO Biomasse Heizanlage Obernsees GmbH, DE, Hollfeld 6

BHP Biomasse Heizwerk Pegnitz GmbH, DE, Pegnitz 6

Bikesquare Srl, IT, Cuneo 6

bildungszentrum energie GmbH, DE, Halle (Saale) 2

Bioenergie Bad Wimpfen GmbH & Co. KG, DE, Bad Wimpfen 2

Bioenergie Bad Wimpfen Verwaltungs-GmbH, DE, Bad Wimpfen 2

Bioenergie Kirchspiel Anhausen GmbH & Co.KG, DE, Anhausen 2

Bioenergie Kirchspiel Anhausen Verwaltungs-GmbH, DE,
Anhausen 2

Bioenergie Merzig GmbH, DE, Merzig 2

Bioerdgas Hallertau GmbH, DE, Wolnzach 2

Bioerdgas Schwandorf GmbH, DE, Schwandorf 2

Biogas Ducherow GmbH, DE, Ducherow 2

Biogas Schwalmtal GmbH & Co. KG, DE, Schwalmtal 2

Biogas Steyerberg GmbH, DE, Steyerberg 2

Biogas Wassenberg GmbH & Co. KG, DE, Wassenberg 6

Biogas Wassenberg Verwaltungs GmbH, DE, Wassenberg 6

Biogasanlage Schwalmtal GmbH, DE, Schwalmtal 2

Biomasseverwertung Straubing GmbH, DE, Straubing 2

Bio-Wärme Gräfelfing GmbH, DE, Gräfelfing 6

BMV Energie Beteiligungs GmbH, DE, Fürstenwalde/Spree 2

BMV Energie GmbH & Co. KG, DE, Fürstenwalde/Spree 6

Borowski GmbH & Co. KG, DE, Essen 2

Breitband-Infrastrukturgesellschaft Cochem-Zell mbH, DE,
Cochem 6

bremacon GmbH, DE, Bremen 6

Broadband TelCom Power, Inc., US, Santa Ana 1

100.0

46.3

100.0

51.0

61.0

25.1

40.7

46.5

30.0

100.0

51.0

100.0

51.0

100.0

51.0

90.0

100.0

80.0

65.5

100.0

32.4

99.2

100.0

40.0

100.0

25.6

100.0

20.7

48.0

100.0

Brüggen.E-Netz GmbH & Co. KG, DE, Brüggen 6

Brüggen.E-Netz Verwaltungs-GmbH, DE, Brüggen 6

Brunnshög Energi AB, SE, Malmö 2

BTB Bayreuther Thermalbad GmbH, DE, Bayreuth 6

BTB-Blockheizkraftwerks, Träger- und
Betreibergesellschaft mbH Berlin, DE, Berlin 1

BTC Power Cebu Inc., PH, Lapu-Lapu City 2

BTC POWER EUROPE SL, ES, Altea 2

Budapesti Dísz- és Közvilágítási Korlátolt Felelősségű Társaság,
HU, Budapest 4

Budapesti Elektromos Művek Nyrt., HU, Budapest 1

Bützower Wärme GmbH, DE, Bützow 6

Cameleon B.V., NL, Rotterdam 2

Cegecom S.A., LU, Luxembourg 1

Celle-Uelzen Netz GmbH, DE, Celle 1

Celsium Serwis Sp. z o.o., PL, Skarżysko-Kamienna 2

Celsium Sp. z o.o., PL, Skarżysko-Kamienna 2

CERBEROS s.r.o., CZ, Prague 2

Certified B.V., NL, Amsterdam 1

Charge4Europe GmbH, DE, Essen 6

Charge-ON GmbH, DE, Essen 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

CM Intressenter AS, NO, Trollåsen 1

Colonia-Cluj-Napoca-Energie S.R.L., RO, Cluj-Napoca 6

COMCO MCS S.A., LU, Luxembourg 2

Conjoule GmbH, DE, Essen 2

Coromatic A/S, DK, Odense 1

Coromatic AB, SE, Bromma 1

Coromatic AS, NO, Trollåsen 1

Coromatic As a Service AB, SE, Bromma 2

Coromatic Group AB, SE, Bromma 1

Coromatic Group ApS, DK, Odense 1

Coromatic Holding AB, SE, Bromma 1

Coromatic International AB, SE, Bromma 2

Coromatic Nord AS, NO, Trollåsen 2

Coromatic OY, FI, Helsinki 2

Coromatic Syd AB, SE, Västra Frölunda 2

Coromatic Tullinge AB, SE, Bromma 2

Cremlinger Energie GmbH, DE, Cremlingen 6

Cuculus GmbH, DE, Ilmenau 6

D E M GmbH, DE, Elsdorf 2

25.1

100.0

33.3

100.0

50.0

98.9

20.0

100.0

97.5

100.0

87.8

100.0

50.0

100.0

33.3

100.0

94.5

100.0

49.0

20.4

99.9

Notes

212

Disclosures Pursuant to Section 313 (2) HGB of Companies in Which Equity Investments Are Held
(as of December 31, 2019)

Name, location

Stake (%)

Name, location

Stake (%)

Dampfversorgung Ostsee-Molkerei GmbH, DE, Wismar 6

DANEB Datennetze Berlin GmbH, DE, Berlin 2

DD Turkey Holdings S.à r.l., LU, Luxembourg 1

Decadia GmbH, DE, Essen 2

Delgaz Grid S.A., RO, Târgu Mureş 1

Der Solarbauer Borowski Verwaltungs GmbH, DE, Essen 2

DES Dezentrale Energien Schmalkalden GmbH, DE, Schmalkalden 6

Deutsche Gesellschaft für Wiederaufarbeitung von Kernbrenn-
stoffen AG & Co. oHG, DE, Gorleben 6

DigiKoo GmbH, DE, Essen 2

Dii GmbH, DE, Munich 6

Discovergy GmbH, DE, Aachen 6

DON-Stromnetz GmbH & Co. KG, DE, Donauwörth 2

DON-Stromnetz Verwaltungs GmbH, DE, Donauwörth 2

Dorsten Netz GmbH & Co. KG, DE, Dorsten 6

Dortmunder Energie- und Wasserversorgung Gesellschaft mit
beschränkter Haftung, DE, Dortmund 5

Drivango GmbH i. L., DE, Düsseldorf 2

DUKO Hlinsko, s.r.o., CZ, Hlinsko 6

Dutchdelta Finance S.à r.l., LU, Luxembourg 1

E WIE EINFACH GmbH, DE, Cologne 1

e.dialog Netz GmbH, DE, Potsdam 2

E.DIS AG, DE, Fürstenwalde/Spree 1

E.DIS Bau- und Energieservice GmbH, DE, Fürstenwalde/Spree 2

E.DIS Netz GmbH, DE, Fürstenwalde/Spree 1

e.discom Telekommunikation GmbH, DE, Rostock 2

e.disnatur Erneuerbare Energien GmbH, DE, Potsdam 1

e.distherm Wärmedienstleistungen GmbH, DE, Potsdam 1

e.kundenservice Netz GmbH, DE, Hamburg 1

E.ON (Cross-Border) Pension Trustees Limited, GB, Coventry 2

E.ON 8. Verwaltungs GmbH, DE, Essen 2

E.ON 9. Verwaltungs GmbH, DE, Essen 2

E.ON 11. Verwaltungs GmbH, DE, Essen 2

E.ON 12. Verwaltungs GmbH, DE, Essen 2

E.ON 26. Verwaltungs GmbH, DE, Essen 2

E.ON 28. Verwaltungs GmbH, DE, Essen 2

E.ON 29. Verwaltungs GmbH, DE, Essen 2

E.ON Agile Nordic AB, SE, Malmö 2

E.ON Áramszolgáltató Korlátolt Felelősségű Társaság, HU,
Budapest 2

E.ON Asist Complet S.A., RO, Târgu Mureş 2

E.ON Asset Management GmbH & Co. EEA KG, DE, Grünwald 1, 8

E.ON Bayern Verwaltungs AG, DE, Essen 2

E.ON Beteiligungen GmbH, DE, Essen 1, 8

E.ON Bioerdgas GmbH, DE, Essen 1

50.0

100.0

50.0

56.5

100.0

33.3

42.5

100.0

20.0

24.4

100.0

49.0

39.9

100.0

49.0

100.0

67.0

100.0

96.0

100.0

E.ON Biofor Sverige AB, SE, Malmö 1

E.ON Business Services Cluj S.R.L., RO, Cluj-Napoca 1

E.ON Business Services Czech Republic s.r.o., CZ,
České Budějovice 2

E.ON Business Services Iași S.A., RO, Bucharest 2

E.ON Business Services Regensburg GmbH, DE, Regensburg 1, 8

E.ON Business Services Sverige AB, SE, Malmö 2

E.ON Business Solutions GmbH, DE, Essen 1

E.ON Business Solutions S.r.l., IT, Milan 1

E.ON Business Solutions SAS, FR, Levallois-Perret 2

E.ON CDNE. S.p.A., IT, Milan 2

E.ON Česká republika, s.r.o., CZ, České Budějovice 1

E.ON Connecting Energies Limited, GB, Coventry 1

E.ON Control Solutions Limited, GB, Coventry 1

E.ON Country Hub Germany GmbH, DE, Berlin 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 Dialog S.R.L., RO, Șelimbăr 2

E.ON Digital Technology GmbH, DE, Hanover 1

E.ON Digital Technology Hungary Kft., HU, Budapest 2

E.ON Distribuce, a.s., CZ, České Budějovice 1

E.ON Drive Infrastructure France SAS, FR, Levallois-Perret 2

E.ON Drive Infrastructure GmbH, DE, Essen 1, 8

E.ON Drive Infrastructure Italy S.r.l., IT, Milan 2

E.ON Drive Infrastructure UK Limited, GB, Coventry 2

E.ON edis Contracting GmbH, DE, Fürstenwalde/Spree 2

E.ON edis energia Sp. z o.o., PL, Warsaw 1

E.ON Elnät Stockholm AB, SE, Malmö 1

E.ON Energia S.p.A., IT, Milan 1

E.ON Energiakereskedelmi Kft., HU, Budapest 1

E.ON Energiamegoldások Kft., HU, Budapest 2

E.ON Energiatermelő Kft., HU, Budapest 1

E.ON Energidistribution AB, SE, Malmö 1

E.ON Energie 25. Beteiligungs-GmbH, DE, Munich 2

E.ON Energie 38. 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 Real Estate Investment GmbH, DE, Munich 2

E.ON Energie România S.A., RO, Târgu Mureş 1

E.ON Energie, a.s., CZ, České Budějovice 1

E.ON Energihandel Nordic AB, SE, Malmö 1

100.0

99.8

100.0

68.2

100.0

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

213

Disclosures Pursuant to Section 313 (2) HGB of Companies in Which Equity Investments Are Held
(as of December 31, 2019)

Name, location

Stake (%)

Name, location

Stake (%)

E.ON Energija d.o.o., HR, Zagreb 1

E.ON Energilösningar 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 Installation Services Limited, GB, Coventry 1

E.ON Energy Projects GmbH, DE, Munich 1

E.ON Energy Solutions GmbH, DE, Essen 2

E.ON Energy Solutions Limited, GB, Coventry 1

E.ON Észak-dunántúli Áramhálózati Zrt., HU, Győr 1

E.ON Fastigheter 2 AB, SE, Malmö 2

E.ON Fastigheter Sverige AB, SE, Malmö 1

E.ON Finanzanlagen GmbH, DE, Düsseldorf 1, 8

E.ON Finanzholding Beteiligungs-GmbH, DE, Berlin 2

E.ON Finanzholding SE & Co. KG, DE, Essen 1, 8

E.ON First Future Energy Holding B.V., NL, Rotterdam 2

E.ON Flash S.R.L., RO, Târgu Mureş 2

E.ON Fünfundzwanzigste Verwaltungs GmbH, DE, Düsseldorf 1, 8

E.ON Gas Mobil GmbH, DE, Essen 2

E.ON Gashandel Sverige AB, SE, Malmö 2

E.ON Gaz Furnizare S.A., RO, Târgu Mureş 1

E.ON Gazdasági Szolgáltató Kft., HU, Győr 1

E.ON Gruga Geschäftsführungsgesellschaft mbH, DE,
Düsseldorf 1, 8

E.ON Gruga Objektgesellschaft mbH & Co. KG, DE, Essen 1, 8

E.ON Grund&Boden Beteiligungs GmbH, DE, Essen 2

E.ON Heizstrom Nord GmbH, DE, Essen 1

E.ON Heizstrom Süd GmbH, DE, Essen 1

E.ON Hrvatska d.o.o., HR, Zagreb 1

E.ON Hungária Energetikai Zártkörűen Működő Részvénytársaság,
HU, Budapest 1

E.ON Iberia Holding GmbH, DE, Düsseldorf 1, 8

E.ON Inhouse Consulting GmbH, DE, Essen 2

E.ON Innovation Co-Investments Inc., US, Wilmington 1

E.ON Innovation Hub S.A., RO, Târgu Mureş 2

E.ON Insurance Services GmbH, DE, Essen 2

E.ON INTERNATIONAL FINANCE B.V., NL, Amsterdam 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 Közép-dunántúli Gázhálózati Zrt., HU, Nagykanizsa 1

E.ON Kundsupport Sverige AB, SE, Malmö 1

E.ON Ljubljana d.o.o., SI, Ljubljana 1

E.ON Mälarkraft Värme AB, SE, Örebro 1

E.ON Metering GmbH, DE, Munich 2

E.ON NA Capital LLC, US, Wilmington 1

100.0

68.2

100.0

99.9

100.0

99.8

100.0

E.ON Nord Sverige AB, SE, Malmö 1

E.ON Nordic AB, SE, Malmö 1

E.ON Norge AS, NO, Stavanger 2

E.ON North America Finance, LLC, US, Wilmington 1

E.ON Nutzenergie GmbH, DE, Essen 2

E.ON Perspekt GmbH, DE, Düsseldorf 2

E.ON Plin d.o.o., HR, Zagreb 1

E.ON Power Plants Belgium BVBA, BE, Mechelen 1

E.ON Produktion Danmark A/S, DK, Frederiksberg 1

E.ON Produzione S.p.A., IT, Milan 1

E.ON Project Earth Limited, GB, Coventry 1

E.ON RAG Beteiligungsgesellschaft mbH, DE, Düsseldorf 1

E.ON RE Investments LLC, US, Wilmington 1

E.ON Real Estate GmbH, DE, Essen 1

E.ON Rhein-Ruhr Werke GmbH, DE, Essen 2

E.ON România S.R.L., RO, Târgu Mureş 1

E.ON Ruhrgas GPA GmbH, DE, Essen 1, 8

E.ON Ruhrgas Portfolio GmbH, DE, Essen 1, 8

E.ON Sechzehnte Verwaltungs GmbH, DE, Düsseldorf 1, 8

E.ON Service GmbH, DE, Essen 2

E.ON Servicii Clienţi 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 Slovensko, a.s., SK, Bratislava 1

E.ON Software Development SRL, RO, Târgu Mureş 2

E.ON Solar d.o.o., HR, Zagreb 1

E.ON Solar GmbH, DE, Essen 2

E.ON Solutions GmbH, DE, Essen 1, 8

E.ON Sverige AB, SE, Malmö 1

E.ON Telco, s.r.o., CZ, České Budějovice 2

E.ON Tiszántúli Áramhálózati Zrt., HU, Debrecen 1

E.ON Ügyfélszolgálati Kft., HU, Budapest 1

E.ON UK Blackburn Meadows Limited, GB, Coventry 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 Markets Limited, GB, Coventry 1

E.ON UK Energy Services Limited, GB, Coventry 2

E.ON UK Heat 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 Pension Trustees Limited, GB, Coventry 2

E.ON UK plc, GB, Coventry 1

E.ON UK Property Services Limited, GB, Coventry 2

100.0

70.0

100.0

Notes

214

Disclosures Pursuant to Section 313 (2) HGB of Companies in Which Equity Investments Are Held
(as of December 31, 2019)

Name, location

Stake (%)

Name, location

Stake (%)

E.ON UK PS Limited, GB, Coventry 2

E.ON UK Secretaries Limited, GB, Coventry 2

E.ON UK Steven’s Croft Limited, GB, Coventry 1

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 Verwaltungs AG Nr. 1, DE, Munich 2

E.ON Verwaltungs SE, DE, Essen 1, 8

E.ON-CAPNET S.R.L., IT, Milan 2

E+ Operatie Noord-Oost BV, NL, ’s-Hertogenbosch 2

E3 Haustechnik GmbH, DE, Magdeburg 2

East Midlands Electricity Distribution Holdings, GB, Coventry 2

East Midlands Electricity Share Scheme Trustees Limited, GB,
Coventry 2

easyOptimize GmbH, DE, Essen 2

EBERnetz GmbH & Co. KG, DE, Ebersberg 6

EBY Immobilien GmbH & Co KG, DE, Regensburg 2

EBY Port 1 GmbH, DE, Munich 1, 8

EBY Port 3 GmbH, DE, Regensburg 1

Economy Power Limited, GB, Coventry 1

EDT Energie Werder GmbH, DE, Werder (Havel) 2

EE1 Erneuerbare Energien GmbH & Co. KG, DE, Lützen 2

EE2 Erneuerbare Energien GmbH & Co. KG, DE, Lützen 2

EfD Energie-für-Dich GmbH, DE, Potsdam 6

EFG Erdgas Forchheim GmbH, DE, Forchheim 6

EFR Europäische Funk-Rundsteuerung GmbH, DE, Munich 6

EGD-Energiewacht Facilities B.V., NL, Assen 1

ElbEnergie GmbH, DE, Seevetal 1

ELE - GEW Photovoltaikgesellschaft mbH, DE, Gelsenkirchen 6

ELE Verteilnetz GmbH, DE, Gelsenkirchen 1

Elektrizitätsnetzgesellschaft Grünwald mbH & Co. KG, DE,
Grünwald 6

Elektrizitätswerk Landsberg Gesellschaft mit beschränkter
Haftung, DE, Landsberg am Lech 1

Elektrizitätswerk Schwandorf GmbH, DE, Schwandorf 2

ELE-RAG Montan Immobilien Erneuerbare Energien GmbH, DE,
Bottrop 6

ELE-Scholven-Wind GmbH, DE, Gelsenkirchen 6

Elmregia GmbH, DE, Schöningen 6

ELMŰ DSO Holding Korlátolt Felelősségű Társaság, HU, Budapest 1

ELMŰ Hálózati Elosztó Kft., HU, Budapest 1

ELMŰ-ÉMÁSZ Energiakereskedő Kft., HU, Budapest 1

100.0

90.0

100.0

49.0

100.0

49.0

24.9

39.9

100.0

49.0

100.0

49.0

100.0

50.0

30.0

49.0

100.0

Elmű-Émász Energiaszolgáltató Zrt., HU, Budapest 1

ELMŰ-ÉMÁSZ Energiatároló Kft., HU, Budapest 1

ELMŰ-ÉMÁSZ Solutions Kft., HU, Budapest 1

ELMŰ-ÉMÁSZ Telco Kft., HU, Budapest 1

ELMŰ-ÉMÁSZ Ügyfélszolgálati Kft., HU, Budapest 1

ÉMÁSZ Hálózati Kft., HU, Miskolc 1

Emscher Lippe Energie GmbH, DE, Gelsenkirchen 1

EMSZET Első Magyar Szélerőmű Korlátolt Felelősségű Társaság,
HU, Kulcs 2

Energetyka Cieplna Opolszczyzny S.A., PL, Opole 5

Energie BOL GmbH, DE, Ottersweier 6

Energie Mechernich GmbH & Co. KG, DE, Mechernich 6

Energie Mechernich Verwaltungs-GmbH, DE, Mechernich 6

Energie Schmallenberg GmbH, DE, Schmallenberg 6

Energie und Wasser Potsdam GmbH, DE, Potsdam 5

Energie und Wasser Wahlstedt/Bad Segeberg GmbH & Co. KG
(ews), DE, Bad Segeberg 6

Energie Vorpommern GmbH, DE, Trassenheide 6

Energie-Agentur Weyhe GmbH i. L., DE, Weyhe 6

Energiedirect B.V., NL, Waalre 1

Energiegesellschaft Leimen GmbH & Co.KG, DE, Leimen 2

Energiegesellschaft Leimen Verwaltungsgesellschaft mbH, DE,
Leimen 2

energielösung GmbH, DE, Regensburg 2

energienatur Gesellschaft für Erneuerbare Energien mbH, DE,
Siegburg 6

Energienetz Neufahrn/Eching GmbH & Co. KG, DE,
Neufahrn bei Freising 6

Energienetze Bayern GmbH, DE, Regensburg 1

Energienetze Berlin GmbH, DE, Berlin 1

Energienetze Großostheim GmbH & Co. KG, DE, Großostheim 6

Energienetze Holzwickede GmbH, DE, Holzwickede 6

Energienetze Ingolstadt GmbH, DE, Regensburg 2

Energienetze Schaafheim GmbH, DE, Regensburg 2

Energiepartner Dörth GmbH, DE, Dörth 6

Energiepartner Elsdorf GmbH, DE, Elsdorf 6

Energiepartner Hermeskeil GmbH, DE, Hermeskeil 6

Energiepartner Kerpen GmbH, DE, Kerpen 6

Energiepartner Niederzier GmbH, DE, Niederzier 6

Energiepartner Projekt GmbH, DE, Essen 6

Energiepartner Solar Kreuztal GmbH, DE, Kreuztal 6

Energiepartner Wesseling GmbH, DE, Wesseling 6

Energie-Pensions-Management GmbH, DE, Hanover 2

EnergieRegion Taunus - Goldener Grund - GmbH & Co. KG, DE,
Bad Camberg 6

EnergieRevolte GmbH, DE, Düren 2

100.0

50.1

74.7

46.7

49.9

49.0

44.0

35.0

50.1

49.0

50.0

100.0

74.9

100.0

44.0

49.0

100.0

31.7

25.1

100.0

49.0

40.0

20.0

49.0

40.0

30.0

70.0

49.0

100.0

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

215

Disclosures Pursuant to Section 313 (2) HGB of Companies in Which Equity Investments Are Held
(as of December 31, 2019)

Name, location

Stake (%)

Name, location

Stake (%)

Energie-Service-Saar GmbH, DE, Völklingen 6

Energieversorgung Alzenau GmbH (EVA), DE, Alzenau 6

Energieversorgung Bad Bentheim GmbH & Co. KG, DE,
Bad Bentheim 6

Energieversorgung Bad Bentheim Verwaltungs-GmbH, DE,
Bad Bentheim 6

Energieversorgung Beckum GmbH & Co. KG, DE, Beckum (Westf.) 6

Energieversorgung Beckum Verwaltungs-GmbH, DE, Beckum
(Westf.) 6

Energieversorgung Buching-Trauchgau (EBT) Gesellschaft mit
beschränkter Haftung, DE, Halblech 6

Energieversorgung Guben GmbH, DE, Guben 5

Energieversorgung Horstmar/Laer GmbH & Co. KG, DE, Horstmar 6

Energieversorgung Hürth GmbH, DE, Hürth 5

Energieversorgung Kranenburg Netze GmbH & Co. KG, DE,
Kranenburg 6

Energieversorgung Kranenburg Netze Verwaltungs GmbH, DE,
Kranenburg 6

Energieversorgung Marienberg GmbH, DE, Marienberg 6

Energieversorgung Niederkassel GmbH & Co. KG, DE,
Niederkassel 6

Energieversorgung Oberhausen Aktiengesellschaft, DE,
Oberhausen 5, 11

Energieversorgung Putzbrunn GmbH & Co. KG, DE, Putzbrunn 6

Energieversorgung Putzbrunn Verwaltungs GmbH, DE,
Putzbrunn 6

Energieversorgung Sehnde GmbH, DE, Sehnde 6

Energieversorgung Timmendorfer Strand GmbH & Co. KG, DE,
Timmendorfer Strand 2

Energieversorgung Vechelde GmbH & Co. KG, DE, Vechelde 6

Energiewacht Facilities B.V., NL, Zwolle 1

Energiewacht Groep B.V., NL, Meppel 1

Energiewacht N.V., NL, Veendam 1

Energiewacht West Nederland B.V., NL, Assen 1

Energie-Wende-Garching GmbH & Co. KG, DE, Garching 6

Energie-Wende-Garching Verwaltungs-GmbH, DE, Garching 6

Energiewerke Isernhagen GmbH, DE, Isernhagen 6

Energiewerke Osterburg GmbH, DE, Osterburg (Altmark) 6

Energiewerken B.V., NL, Almere 1

energis GmbH, DE, Saarbrücken 1

energis-Netzgesellschaft mbH, DE, Saarbrücken 1

Energy Collection Services Limited, GB, Coventry 2

Energy Ventures GmbH, DE, Saarbrücken 2

energy4u GmbH & Co. KG, DE, Siegburg 6

Enerjisa Enerji A.Ş., TR, Istanbul 4

Enerjisa Üretim Santralleri A.Ş., TR, Istanbul 4

enermarket GmbH, DE, Frankfurt am Main 6

50.0

69.5

25.1

34.0

50.0

45.0

49.0

24.9

25.1

49.0

10.0

50.0

30.0

51.0

49.0

100.0

50.0

49.0

100.0

71.9

100.0

49.0

40.0

50.0

60.0

ENERVENTIS GmbH & Co. KG, DE, Saarbrücken 6

Enervolution GmbH, DE, Bochum 2

ENNI Energie & Umwelt Niederrhein GmbH, DE, Moers 5

Ense Stromnetz GmbH & Co. KG, DE, Ense 6

ENTRO GmbH Marktbergel, DE, Marktbergel 6

envia Mitteldeutsche Energie AG, DE, Chemnitz 1

envia SERVICE GmbH, DE, Cottbus 1

envia TEL GmbH, DE, Markkleeberg 1

envia THERM GmbH, DE, Bitterfeld-Wolfen 1

enviaM Beteiligungsgesellschaft Chemnitz GmbH, DE, Chemnitz 1

enviaM Beteiligungsgesellschaft mbH, DE, Essen 1

enviaM Erneuerbare Energien Verwaltungsgesellschaft mbH,
DE, Lützen 2

enviaM Neue Energie Management GmbH, DE, Lützen 2

enviaM Zweite Neue Energie Management GmbH, DE, Lützen 2

eprimo GmbH, DE, Neu-Isenburg 1

EPS Polska Holding Sp. z o.o., PL, Warsaw 1

Erdgasversorgung Industriepark Leipzig Nord GmbH, DE, Leipzig 6

Erdgasversorgung Schwalmtal GmbH & Co. KG, DE, Viersen 6

Erdgasversorgung Schwalmtal Verwaltungs-GmbH, DE, Viersen 6

e-regio GmbH & Co. KG, DE, Euskirchen 5

Ergon Energia S.r.l. in liquidazione, IT, Milan 6

Ergon Overseas Holdings Limited, GB, Coventry 1

Erneuerbare Energien Rheingau-Taunus GmbH, DE,
Bad Schwalbach 6

ErwärmBAR GmbH, DE, Eberswalde 6

eShare.one GmbH, DE, Dortmund 6

ESK GmbH, DE, Dortmund 2

ESN EnergieSystemeNord GmbH, DE, Schwentinental 2

ESN Sicherheit und Zertifizierung GmbH, DE, Schwentinental 2

Essent Belgium N.V., BE, Antwerp 1

Essent Energie Verkoop Nederland B.V., NL, ’s-Hertogenbosch 1

Essent EnergieBewust Holding B.V., NL, ’s-Hertogenbosch 1

Essent Energy Group B.V., NL, Arnhem 1

Essent IT B.V., NL, Arnhem 1

Essent N.V., NL, ’s-Hertogenbosch 1

Essent Nederland B.V., NL, Arnhem 1

Essent Retail Energie B.V., NL, ’s-Hertogenbosch 1

Essent Rights B.V., NL, ’s-Hertogenbosch 1

Essent Sales Portfolio Management B.V., NL, ’s-Hertogenbosch 1

Észak-magyarországi Áramszolgáltató Nyrt., HU, Miskolc 1

EuroSkyPark GmbH, DE, Saarbrücken 1

EVG Energieversorgung Gemünden GmbH, DE,
Gemünden am Main 6

EVIP GmbH, DE, Bitterfeld-Wolfen 1

25.1

100.0

20.0

25.1

24.2

58.6

100.0

50.0

40.5

50.0

100.0

25.1

50.0

25.1

100.0

55.0

100.0

97.1

51.0

49.0

100.0

Notes

216

Disclosures Pursuant to Section 313 (2) HGB of Companies in Which Equity Investments Are Held
(as of December 31, 2019)

Name, location

Stake (%)

Name, location

Stake (%)

evm Windpark Höhn GmbH & Co. KG, DE, Höhn 6

EWIS BV, NL, Ede 1

EWR Aktiengesellschaft, DE, Worms 5, 11

EWR Dienstleistungen GmbH & Co. KG, DE, Worms 5

EWR GmbH, DE, Remscheid 5

ews Verwaltungsgesellschaft mbH, DE, Bad Segeberg 6

EWV Baesweiler GmbH & Co. KG, DE, Baesweiler 6

EWV Baesweiler Verwaltungs GmbH, DE, Baesweiler 6

EWV Energie- und Wasser-Versorgung GmbH, DE, Stolberg 1

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

FAMIS GmbH, DE, Saarbrücken 1

FAMOS - Facility Management Osnabrück GmbH, DE, Osnabrück 6

Fernwärmeversorgung Freising Gesellschaft mit beschränkter
Haftung (FFG), DE, Freising 6

Fernwärmeversorgung Saarlouis- Steinrausch Investitions-
geselIschaft mbH, DE, Saarlouis 2

Fernwärmeversorgung Zwönitz GmbH (FVZ), DE, Zwönitz 6

FEVA Infrastrukturgesellschaft mbH, DE, Wolfsburg 6

FIDELIA Holding LLC, US, Wilmington 1

Fitas Verwaltung GmbH & Co. Dritte Vermietungs-KG, DE,
Pullach im Isartal 2

FITAS Verwaltung GmbH & Co. REGIUM-Objekte KG, DE,
Pullach im Isartal 2

Foton Technik Sp. z o.o., PL, Warsaw 1

Fraku Installaties B.V., NL, Venlo 1

Fraku Service B.V., NL, Venlo 1

Free Electrons LLC, US, Palo Alto 2

Freiberger Stromversorgung GmbH (FSG), DE, Freiberg 5

Frendi AB, SE, Malmö 1

Fresh Energy GmbH, DE, Berlin 2

FSO GmbH & Co. KG, DE, Oberhausen 4

FSO Verwaltungs-GmbH, DE, Oberhausen 6

FUCATUS Vermietungsgesellschaft mbH & Co. Objekt
Recklinghausen Kommanditgsellschaft, DE, Düsseldorf 2

Fundacja innogy w Polsce, PL, Warsaw 2

G&L Gastro-Service GmbH, DE, Augsburg 6

Gas- und Wasserwerke Bous-Schwalbach GmbH, DE, Bous 5

GASAG AG, DE, Berlin 5

Gasgesellschaft Kerken Wachtendonk mbH, DE, Kerken 6

GasLine Telekommunikationsnetz-Geschäftsführungsgesellschaft
deutscher Gasversorgungsunternehmen mbH, DE, Straelen 6

GasLINE Telekommunikationsnetzgesellschaft deutscher
Gasversorgungsunternehmen mbH & Co. KG, DE, Straelen 5

25.1

49.0

25.1

49.0

100.0

49.0

50.0

95.0

49.0

50.0

100.0

49.0

45.0

49.0

33.2

100.0

1.3

25.0

20.0

50.2

45.0

53.7

28.9

28.8

65.0

100.0

49.0

50.0

100.0

50.0

49.0

100.0

Gas-Netzgesellschaft Bedburg GmbH & Co. KG, DE, Bedburg 6

Gas-Netzgesellschaft Elsdorf GmbH & Co. KG, DE, Elsdorf 6

Gas-Netzgesellschaft Kolpingstadt Kerpen GmbH & Co. KG, DE,
Kerpen 6

Gas-Netzgesellschaft Kreisstadt Bergheim GmbH & Co. KG, DE,
Bergheim 6

Gasnetzgesellschaft Laatzen-Süd mbH, DE, Laatzen 6

Gasnetzgesellschaft Mettmann mbH & Co. KG, DE, Mettmann 6

Gas-Netzgesellschaft Rheda-Wiedenbrück GmbH & Co. KG,
DE, Rheda-Wiedenbrück 6

Gas-Netzgesellschaft Rheda-Wiedenbrück Verwaltungs-GmbH,
DE, Rheda-Wiedenbrück 6

Gasnetzgesellschaft Warburg GmbH & Co. KG, DE, Warburg 6

Gasnetzgesellschaft Windeck mbH & Co. KG, DE, Siegburg 2

Gasnetzgesellschaft Wörrstadt mbH & Co. KG, DE, Saulheim 6

Gasnetzgesellschaft Wörrstadt Verwaltung mbH, DE, Saulheim 6

Gasversorgung Bad Rodach GmbH, DE, Bad Rodach 6

Gasversorgung Ebermannstadt GmbH, DE, Ebermannstadt 6

Gasversorgung im Landkreis Gifhorn GmbH, DE, Gifhorn 1

Gasversorgung Unterfranken Gesellschaft mit beschränkter
Haftung, DE, Würzburg 5

Gasversorgung Wismar Land GmbH, DE, Lübow 6

Gasversorgung Wunsiedel GmbH, DE, Wunsiedel 6

GasWacht Friesland Facilities B.V., NL, Leeuwarden 1

90.0

Geas Energiewacht B.V., NL, Enschede 1

90.0

100.0

30.0

100.0

52.8

50.0

94.0

100.0

35.0

49.0

36.9

49.0

20.0

Gelsenberg GmbH & Co. KG, DE, Düsseldorf 1, 8

Gelsenberg Verwaltungs GmbH, DE, Düsseldorf 2

Gelsenwasser Beteiligungs-GmbH, DE, Munich 2

Gemeindewerke Bissendorf Netze GmbH & Co. KG, DE,
Bissendorf 6

Gemeindewerke Bissendorf Netze Verwaltungs-GmbH, DE,
Bissendorf 6

Gemeindewerke Everswinkel GmbH, DE, Everswinkel 6

Gemeindewerke Gräfelfing GmbH & Co. KG, DE, Gräfelfing 6

Gemeindewerke Gräfelfing Verwaltungs GmbH, DE, Gräfelfing 6

Gemeindewerke Namborn, Gesellschaft mit beschränkter
Haftung, DE, Namborn 6

Gemeindewerke Uetze GmbH, DE, Uetze 6

Gemeindewerke Wedemark GmbH, DE, Wedemark 6

Gemeindewerke Wietze GmbH, DE, Wietze 6

Gemeindewerke Windeck GmbH & Co. KG, DE, Siegburg 2

100.0

Gemeinnützige Gesellschaft zur Förderung des E.ON Energy
Research Center mbH, DE, Aachen 6

Gemeinschaftskernkraftwerk Grohnde GmbH & Co. oHG, DE,
Emmerthal 1

Gemeinschaftskernkraftwerk Grohnde Management GmbH,
DE, Emmerthal 2

Gemeinschaftskernkraftwerk Isar 2 GmbH, DE, Essenbach 2

50.0

100.0

83.2

75.0

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

217

Disclosures Pursuant to Section 313 (2) HGB of Companies in Which Equity Investments Are Held
(as of December 31, 2019)

Name, location

Stake (%)

Name, location

Gemeinschaftskraftwerk Weser GmbH & Co. oHG., DE,
Emmerthal 1

Geotermisk Operaterselskab ApS, DK, Kirke Saby 6

Geothermie-Wärmegesellschaft Braunau-Simbach mbH, AT,
Braunau am Inn 6

Gesellschaft für Energie und Klimaschutz Schleswig-Holstein
GmbH, DE, Kiel 6

Get Energy Solutions Szolgáltató Kft., HU, Budapest 1

GfB, Gesellschaft für Baudenkmalpflege mbH, DE, Idar-Oberstein 6

GfS Gesellschaft für Simulatorschulung mbH, DE, Essen 6

GHD Bayernwerk Natur GmbH & Co. KG, DE, Dingolfing 2

Gichtgaskraftwerk Dillingen GmbH & Co. KG, DE, Dillingen 6

Ginger Teplo, s.r.o., CZ, Prague 2

GISA GmbH, DE, Halle (Saale) 6

66.7

20.0

33.3

100.0

20.0

41.7

75.0

25.2

100.0

23.9

GKB Gesellschaft für Kraftwerksbeteiligungen mbH, DE, Cottbus 2

100.0

GkD Gesellschaft für kommunale Dienstleistungen mbH, DE,
Cologne 6

GNEE Gesellschaft zur Nutzung erneuerbarer Energien mbH
Freisen, DE, Freisen 6

GNS Gesellschaft für Nuklear-Service mbH, DE, Essen 6

GOLLIPP Bioerdgas GmbH & Co. KG, DE, Gollhofen 6

GOLLIPP Bioerdgas Verwaltungs GmbH, DE, Gollhofen 6

Gondoskodás-Egymásért Alapítvány, HU, Debrecen 2

Gottburg Energie- und Wärmetechnik GmbH & Co. KG i. L., DE,
Leck 6

Gottburg Verwaltungs GmbH i. L., DE, Leck 6

GREEN GECCO Beteiligungsgesellschaft mbH & Co. KG, DE,
Troisdorf 6

GREEN GECCO Beteiligungsgesellschaft-Verwaltungs GmbH,
DE, Troisdorf 6

GREEN Gesellschaft für regionale und erneuerbare Energie
mbH, DE, Stolberg 6

Green Sky Energy Limited, GB, Coventry 1

Green Solar Herzogenrath GmbH, DE, Herzogenrath 6

Greenergetic Energie Service GmbH & Co. KG, DE, Bielefeld 2

Greenergetic Energie Service Management GmbH, DE, Bielefeld 2

Greenergetic GmbH, DE, Bielefeld 1

greenited GmbH, DE, Hamburg 6

Greenplug GmbH, DE, Hamburg 6

greenXmoney.com GmbH i. L., DE, Neu-Ulm 2

GrønGas Partner A/S, DK, Hirtshals 6

GSH Green Steam Hürth GmbH, DE, Munich 2

GWG Grevenbroich GmbH, DE, Grevenbroich 1

GWG Kommunal GmbH, DE, Grevenbroich 2

Hams Hall Management Company Limited, GB, Coventry 6

HanseGas GmbH, DE, Quickborn 1

HanseWerk AG, DE, Quickborn 1

50.0

49.0

48.0

50.0

100.0

49.9

20.7

49.2

100.0

45.0

100.0

50.0

49.0

100.0

50.0

100.0

60.0

89.9

44.8

100.0

66.5

HanseWerk Natur GmbH, DE, Hamburg 1

Harzwasserwerke GmbH, DE, Hildesheim 5

HaseNetz GmbH & Co. KG, DE, Gehrde 6

Havelstrom Zehdenick GmbH, DE, Zehdenick 6

HCL Netze GmbH & Co. KG, DE, Herzebrock-Clarholz 6

Heizkraftwerk Zwickau Süd GmbH & Co. KG, DE, Zwickau 6

Heizungs- und Sanitärbau WIJA GmbH, DE,
Bad Neuenahr-Ahrweiler 2

Heizwerk Holzverwertungsgenossenschaft Stiftland eG & Co.
oHG, DE, Neualbenreuth 6

HELIOS MB s.r.o., CZ, Prague 2

Hennef (Sieg) Netz GmbH & Co. KG, DE, Hennef 6

Hermann Stibbe Verwaltungs-GmbH, DE, Wunstorf 2

HGC Hamburg Gas Consult GmbH, DE, Hamburg 2

hmstr GmbH, DE, Saarbrücken 6

HOCHTEMPERATUR-KERNKRAFTWERK GmbH (HKG).
Gemeinsames europäisches Unternehmen, DE, Hamm 6

Hof Promotion B.V., NL, Eindhoven 1

Holsteiner Wasser GmbH, DE, Neumünster 6

Home.ON GmbH, DE, Aachen 6

HSL Laibacher GmbH, DE, Wiesen 2

Hub2Go GmbH, DE, Hamburg 6

Huisman Warmtetechniek B.V., NL, Stadskanaal 1

iamsmart GmbH i. L., DE, Essen 2

Improbed AB, SE, Malmö 2

Improvers B.V., NL, ’s-Hertogenbosch 1

Improvers Community B.V., NL, Amsterdam 1

iND Asset Komplementär GmbH, DE, Essen 2

iND Immobilien GmbH & Co. KG, DE, Essen 1

iND Kommunikationsleitungen GmbH & Co. KG, DE, Essen 1

Induboden GmbH, DE, Düsseldorf 2

Induboden GmbH & Co. Grundstücksgesellschaft oHG, DE,
Essen 2

Industriekraftwerk Greifswald GmbH, DE, Kassel 6

Industry Development Services Limited, GB, Coventry 2

InfraServ - Bayernwerk Gendorf GmbH, DE, Burgkirchen a.d.Alz 6

Infrastrukturgesellschaft Stadt Nienburg/Weser mbH, DE,
Nienburg/Weser 6

innogy Aqua GmbH, DE, Mülheim an der Ruhr 1, 8

innogy Benelux Holding B.V., NL, ’s-Hertogenbosch 1

innogy Beteiligungsholding GmbH, DE, Essen 1, 8

innogy Business Services Benelux B.V., NL, Arnhem 1

innogy Business Services Polska Sp. z o.o., PL, Kraków 1

Innogy Business Services UK Limited, GB, Swindon 1

innogy Česká republika a.s., CZ, Prague 1

innogy Commodity Markets GmbH, DE, Essen 2

Stake (%)

100.0

20.8

25.1

49.0

25.1

40.0

100.0

50.0

100.0

49.0

100.0

25.1

26.0

100.0

50.0

45.0

100.0

49.0

100.0

49.0

100.0

50.0

49.9

100.0

Notes

218

Disclosures Pursuant to Section 313 (2) HGB of Companies in Which Equity Investments Are Held
(as of December 31, 2019)

Name, location

Stake (%)

Name, location

Stake (%)

innogy Consulting & Ventures Americas, LLC, US, Boston 2

innogy Consulting & Ventures Holdings LLC, US, Boston 2

innogy Consulting & Ventures UK Ltd., GB, London 2

innogy Consulting GmbH, DE, Essen 2

innogy Consulting U.S. LLC, US, Boston 2

innogy Direkt GmbH, DE, Dortmund 1

INNOGY E-MOBILITY LIMITED, GB, London 2

innogy eMobility Solutions GmbH, DE, Dortmund 1

innogy e-mobility US LLC, US, Delaware 1

innogy Energetika Plhov - Náchod, s.r.o., CZ, Náchod 2

innogy Energie, s.r.o., CZ, Prague 1

innogy Energo, s.r.o., CZ, Prague 1

innogy Energy Belgium BVBA, BE, Hove 1

innogy Finance B.V., NL, ’s-Hertogenbosch 1

innogy Fünfzehnte Vermögensverwaltungs GmbH, DE, Essen 2

innogy Gastronomie GmbH, DE, Essen 1, 8

innogy Hungária Tanácsadó Kft., HU, Budapest 1

innogy Innovation Berlin GmbH, DE, Berlin 1, 8

INNOGY INNOVATION CENTER LTD, IL, Tel Aviv 1

innogy Innovation GmbH, DE, Essen 1, 8

innogy Innovation UK Ltd., GB, London 1

innogy International Middle East, AE, Dubai 6

innogy International Participations N.V., NL, ’s-Hertogenbosch 1

innogy Metering GmbH, DE, Mülheim an der Ruhr 1

innogy Neunte Vermögensverwaltungs GmbH, DE, Essen 2

innogy New Ventures LLC, US, Palo Alto 1

innogy Polska Development Sp. z o.o., PL, Warsaw 2

innogy Polska IT Support Sp. z o.o., PL, Warsaw 1

innogy Polska Operations Sp. z o.o., PL, Warsaw 2

innogy Polska S.A., PL, Warsaw 1

innogy Polska Solutions Sp. z o.o., PL, Warsaw 1

innogy Rheinhessen Beteiligungs GmbH, DE, Essen 1, 8

innogy SE, DE, Essen 1

Innogy Solutions Ireland Limited, IE, Dublin 1

innogy solutions Kft., HU, Budapest 1

innogy South East Europe s.r.o., SK, Bratislava 2

innogy Stiftung für Energie und Gesellschaft gGmbH, DE, Essen 2

innogy Stoen Operator Sp. z o.o., PL, Warsaw 1

innogy Sustainable Solutions LLC, US, Boston 2

innogy TelNet GmbH, DE, Essen 1, 8

innogy TelNet Holding, s.r.o., CZ, Prague 2

innogy Ventures GmbH, DE, Essen 1, 8

innogy Ventures Vermögensverwaltung 6 GmbH, DE, Essen 2

innogy Vierzehnte Vermögensverwaltungs GmbH, DE, Essen 2

100.0

93.0

100.0

49.0

100.0

90.0

100.0

innogy Westenergie GmbH, DE, Essen 1

innogy Zákaznické služby, s.r.o., CZ, Ostrava 1

innogy Zweite Vermögensverwaltungs GmbH, DE, Essen 1, 8

innogy Zwölfte Vermögensverwaltungs GmbH, DE, Essen 2

innogy.C3 GmbH, DE, Essen 6

innogy-EnBW Magyarország Energiaszolgáltató Korlátolt
Felelősségű Társaság, HU, Budapest 2

Installatietechniek Totaal B.V., NL, Leeuwarden 1

Intelligent Maintenance Systems Limited, GB, Milton Keynes 6

IPP ESN Power Engineering GmbH, DE, Kiel 2

Isoprofs B.V., NL, Meijel 1

Isoprofs België BVBA, BE, Hasselt 1

iSWITCH GmbH, DE, Essen 1, 8

It’s a beautiful world B.V., NL, Amersfoort 1

Jihočeská plynárenská, a.s., CZ, České Budějovice 2

Kalmar Energi Försäljning AB, SE, Kalmar 6

Kalmar Energi Holding AB, SE, Kalmar 4

Kavernengesellschaft Staßfurt mbH, DE, Staßfurt 6

KAWAG AG & Co. KG, DE, Pleidelsheim 6

KAWAG Netze GmbH & Co. KG, DE, Abstatt 6

KAWAG Netze Verwaltungsgesellschaft mbH, DE, Abstatt 6

KDT Kommunale Dienste Tholey GmbH, DE, Tholey 6

Kemkens B.V., NL, Oss 5

Kemsley CHP Limited, GB, Coventry 1

KEN Geschäftsführungsgesellschaft mbH, DE, Neunkirchen 6

KEN GmbH & Co. KG, DE, Neunkirchen 6

Kernkraftwerk Brokdorf GmbH & Co. oHG, DE, Hamburg 1

Kernkraftwerk Brunsbüttel GmbH & Co. oHG, DE, Hamburg 5

Kernkraftwerk Krümmel GmbH & Co. oHG, DE, Hamburg 3

Kernkraftwerk Stade GmbH & Co. oHG, DE, Hamburg 1

Kernkraftwerke Isar Verwaltungs GmbH, DE, Essenbach 1

KEVAG Telekom GmbH, DE, Koblenz 6

KEW Kommunale Energie- und Wasserversorgung Aktien-
gesellschaft, DE, Neunkirchen 5

KGW - Kraftwerk Grenzach-Wyhlen GmbH, DE, Munich 1

Kite Power Systems Limited, GB, Chelmsford 6

Kiwigrid GmbH, DE, Dresden 6

KlickEnergie GmbH & Co. KG, DE, Neuss 6

KlickEnergie Verwaltungs-GmbH, DE, Neuss 6

Klíma és Hűtéstechnológia Tervező, Szerelő és Kereskedelmi Kft.,
HU, Budapest 1

Klimacom B.V., NL, Groningen 1

Komáromi Kogenerációs Erőmű Kft., HU, Budapest 2

KommEnergie Erzeugungs GmbH, DE, Eichenau 6

KommEnergie GmbH, DE, Eichenau 6

100.0

25.1

100.0

25.0

51.0

100.0

40.0

50.0

49.0

100.0

50.0

46.5

80.0

33.3

50.0

66.7

100.0

50.0

28.6

100.0

26.6

21.5

65.0

100.0

61.0

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

219

Disclosures Pursuant to Section 313 (2) HGB of Companies in Which Equity Investments Are Held
(as of December 31, 2019)

Name, location

Stake (%)

Name, location

Stake (%)

Kommunale Dienste Marpingen Gesellschaft mit beschränkter
Haftung, DE, Marpingen 6

Kommunale Energieversorgung GmbH Eisenhüttenstadt, DE,
Eisenhüttenstadt 6

Kommunale Klimaschutzgesellschaft Landkreis Celle gemein-
nützige GmbH, DE, Celle 6

Kommunale Klimaschutzgesellschaft Landkreis Uelzen
gemeinnützige GmbH, DE, Celle 6

Kommunale Netzgesellschaft Steinheim a. d. Murr GmbH & Co.
KG, DE, Steinheim an der Murr 6

Kommunalwerk Rudersberg GmbH & Co. KG, DE, Rudersberg 6

Kommunalwerk Rudersberg Verwaltungs-GmbH, DE, Rudersberg 6

Konnektor B.V., NL, Amsterdam 1

Konsortium Energieversorgung Opel beschränkt haftende oHG,
DE, Karlstein 4, 10

Koprivnica Opskrba d.o.o., HR, Koprivnica 1

Koprivnica Plin d.o.o., HR, Koprivnica 1

Kraftwerk Burghausen GmbH, DE, Munich 1

Kraftwerk Hattorf GmbH, DE, Munich 1

Kraftwerk Marl GmbH, DE, Munich 1

Kraftwerk Plattling GmbH, DE, Munich 1

Kraftwerk Wehrden Gesellschaft mit beschränkter Haftung,
DE, Völklingen 6

KSG Kraftwerks-Simulator-Gesellschaft mbH, DE, Essen 6

KSP Kommunaler Service Püttlingen GmbH, DE, Püttlingen 6

Kurgan Grundstücks-Verwaltungsgesellschaft mbH & Co. oHG i. L.,
DE, Grünwald 2

KVK Kompetenzzentrum Verteilnetze und Konzessionen GmbH,
DE, Cologne 6

KWS Kommunal-Wasserversorgung Saar GmbH, DE,
Saarbrücken 2

LandE GmbH, DE, Wolfsburg 1

Landwehr Wassertechnik GmbH, DE, Schöppenstedt 2

Lech Energie Gersthofen GmbH & Co. KG, DE, Gersthofen 2

Lech Energie Verwaltung GmbH, DE, Augsburg 2

Lechwerke AG, DE, Augsburg 1

Leitungspartner GmbH, DE, Düren 1

Lemonbeat GmbH, DE, Dortmund 2

LEW Anlagenverwaltung Gesellschaft mit beschränkter
Haftung, DE, Gundremmingen 1

LEW Beteiligungsgesellschaft mbH, DE, Gundremmingen 1

LEW Netzservice GmbH, DE, Augsburg 1

LEW Service & Consulting GmbH, DE, Augsburg 1

LEW TelNet GmbH, DE, Neusäß 1

LEW Verteilnetz GmbH, DE, Augsburg 1

LEW Wasserkraft GmbH, DE, Augsburg 1

Licht Groen B.V., NL, Amsterdam 1

Lichtverbund Straßenbeleuchtung GmbH, DE, Helmstedt 2

49.0

25.0

49.0

49.9

100.0

66.7

100.0

33.3

41.7

40.0

90.0

74.9

100.0

69.6

100.0

89.9

100.0

89.8

Lighting for Staffordshire Holdings Limited, GB, Coventry 1

Lighting for Staffordshire Limited, GB, Coventry 1

Liikennevirta Oy, FI, Helsinki 6

Lillo Energy NV, BE, Brussels 6

Limfjordens Bioenergi ApS, DK, Frederiksberg 2

Livisi GmbH, DE, Essen 1

Local Energies, a.s., CZ, Zlín - Malenovice 2

Lößnitz Netz GmbH & Co. KG, DE, Lößnitz 2

Lößnitz Netz Verwaltungs GmbH, DE, Lößnitz 2

LSW Energie Verwaltungs-GmbH, DE, Wolfsburg 6

LSW Holding GmbH & Co. KG, DE, Wolfsburg 5, 10

LSW Holding Verwaltungs-GmbH, DE, Wolfsburg 6

LSW Netz Verwaltungs-GmbH, DE, Wolfsburg 6

Luna Lüneburg GmbH, DE, Lüneburg 6

Magnalink, a.s., CZ, Hradec Králové 2

MAINGAU Energie GmbH, DE, Obertshausen 5

Mainzer Wärme PLUS GmbH, DE, Mainz 6

Matrix Control Solutions Limited, GB, Coventry 1

medl GmbH, DE, Mülheim an der Ruhr 5

Melle Netze GmbH & Co. KG, DE, Melle 6

MEON Pensions GmbH & Co. KG, DE, Grünwald 1, 8

MEON Verwaltungs GmbH, DE, Grünwald 2

MeteringSüd GmbH & Co. KG, DE, Augsburg 6

Midlands Electricity Limited, GB, Coventry 2

MINUS 181 GmbH, DE, Parchim 6

MITGAS Mitteldeutsche Gasversorgung GmbH, DE, Halle (Saale) 1

Mitteldeutsche Netzgesellschaft Gas HD mbH, DE, Halle (Saale) 2

Mitteldeutsche Netzgesellschaft Gas mbH, DE, Halle (Saale) 1

Mitteldeutsche Netzgesellschaft mbH, DE, Chemnitz 2

Mitteldeutsche Netzgesellschaft Strom mbH, DE, Halle (Saale) 1

Mittlere Donau Kraftwerke AG, DE, Landshut 1, 12

MNG Stromnetze GmbH & Co. KG, DE, Lüdinghausen 6

MNG Stromnetze Verwaltungs GmbH, DE, Lüdinghausen 6

Montcogim - Plinara d.o.o., HR, Sveta Nedelja 1

MONTCOGIM-SISAK d.o.o., HR, Sisak 2

Mosoni-Duna Menti Szélerőmű Kft., HU, Budapest 2

MotionWerk GmbH, DE, Essen 2

Murrhardt Netz AG & Co. KG, DE, Murrhardt 6

Nahwärme Ascha GmbH, DE, Ascha 2

Naturstrom Betriebsgesellschaft Oberhonnefeld mbH, DE,
Koblenz 6

Nebelhornbahn-Aktiengesellschaft, DE, Oberstdorf 5

Nederland Isoleert B.V., NL, Amersfoort 1

Nederland Schildert B.V., NL, Amersfoort 1

60.0

100.0

34.3

50.0

78.0

100.0

57.0

49.0

85.0

46.6

45.0

100.0

39.0

50.0

100.0

34.0

100.0

25.1

75.4

100.0

40.0

25.1

100.0

59.7

49.0

90.0

25.0

20.1

100.0

Notes

220

Disclosures Pursuant to Section 313 (2) HGB of Companies in Which Equity Investments Are Held
(as of December 31, 2019)

Name, location

Stake (%)

Name, location

Stake (%)

Nederland Schildert Rijnmond B.V., NL, Amersfoort 1

Nederland Verkoopt B.V., NL, Amersfoort 1

Netz- und Wartungsservice (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 Bedburg Verwaltungs-GmbH, DE, Bedburg 6

Netzgesellschaft Betzdorf GmbH & Co. KG, DE, Betzdorf 6

Netzgesellschaft Bühlertal GmbH & Co. KG, DE, Bühlertal 6

Netzgesellschaft Elsdorf Verwaltungs-GmbH, DE, Elsdorf 6

Netzgesellschaft Gehrden mbH, DE, Gehrden 6

Netzgesellschaft GmbH & Co. KG Bad Homburg v. d. Höhe, DE,
Bad Homburg v. d. Höhe 6

Netzgesellschaft Grimma GmbH & Co. KG, DE, Grimma 6

Netzgesellschaft Hemmingen mbH, DE, Hemmingen 6

Netzgesellschaft Hennigsdorf Strom mbH, DE, Hennigsdorf 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 Horn-Bad Meinberg GmbH & Co. KG, DE,
Horn-Bad Meinberg 6

Netzgesellschaft Hüllhorst GmbH & Co. KG, DE, Hüllhorst 6

Netzgesellschaft Korb GmbH & Co. KG, DE, Korb 6

Netzgesellschaft Korb Verwaltungs-GmbH, DE, Korb 6

Netzgesellschaft Kreisstadt Bergheim Verwaltungs-GmbH, DE,
Bergheim 6

Netzgesellschaft Lauf GmbH & Co. KG, DE, Lauf 6

Netzgesellschaft Leutenbach GmbH & Co. KG, DE, Leutenbach 6

Netzgesellschaft Leutenbach Verwaltungs-GmbH, DE,
Leutenbach 6

Netzgesellschaft Maifeld GmbH & Co. KG, DE, Polch 6

Netzgesellschaft Maifeld Verwaltungs GmbH, DE, Polch 6

Netzgesellschaft Osnabrücker Land GmbH & Co. KG, DE,
Bohmte 4

Netzgesellschaft Ottersweier GmbH & Co. KG, DE, Ottersweier 6

Netzgesellschaft Panketal GmbH, DE, Panketal 2

Netzgesellschaft Rheda-Wiedenbrück GmbH & Co. KG, DE,
Rheda-Wiedenbrück 6

Netzgesellschaft Rheda-Wiedenbrück Verwaltungs-GmbH, DE,
Rheda-Wiedenbrück 6

Netzgesellschaft Rietberg-Langenberg GmbH & Co. KG, DE,
Rietberg 6

Netzgesellschaft Ronnenberg GmbH & Co. KG, DE, Ronnenberg 6

Netzgesellschaft S-1 GmbH, DE, Helmstedt 2

Netzgesellschaft Schwerin mbH (NGS), DE, Schwerin 6

100.0

34.8

49.0

Netzgesellschaft Stuhr/Weyhe mbH i. L., DE, Helmstedt 2

Netzgesellschaft Südwestfalen mbH & Co. KG, DE, Netphen 6

Netzgesellschaft Syke GmbH, DE, Syke 6

Netzgesellschaft W-1 GmbH, DE, Helmstedt 2

Neumünster Netz Beteiligungs-GmbH, DE, Neumünster 1

NEW AG, DE, Mönchengladbach 1, 9

NEW b_gas Eicken GmbH, DE, Schwalmtal 2

New Cogen Sp. z o.o., PL, Warsaw 2

NEW Netz GmbH, DE, Geilenkirchen 1

NEW Niederrhein Energie und Wasser GmbH, DE,
Mönchengladbach 1

NEW NiederrheinWasser GmbH, DE, Viersen 1

NEW Re GmbH, DE, Mönchengladbach 2

NEW Smart City GmbH, DE, Mönchengladbach 2

NEW Tönisvorst GmbH, DE, Tönisvorst 1

NEW Viersen GmbH, DE, Viersen 1

NEW Windenergie Verwaltung GmbH, DE, Mönchengladbach 2

NEW Windpark Linnich GmbH & Co. KG, DE, Mönchengladbach 2

NEW Windpark Viersen GmbH & Co. KG, DE, Mönchengladbach 2

NFPA Holdings Limited, GB, Newcastle upon Tyne 6

NiersEnergieNetze GmbH & Co. KG, DE, Kevelaer 6

NiersEnergieNetze Verwaltungs-GmbH, DE, Kevelaer 6

NIS Norddeutsche Informations-Systeme Gesellschaft mbH,
DE, Schwentinental 2

NORD-direkt GmbH, DE, Neumünster 2

NordNetz GmbH, DE, Quickborn 2

Novenerg limited liability company for energy activities, HR,
Zagreb 6

Novo Innovations Limited, GB, Coventry 2

Npower Business and Social Housing Limited, GB, Swindon 1

Npower Commercial Gas Limited, GB, Swindon 1

Npower Direct Limited, GB, Swindon 1

Npower Financial Services Limited, GB, Swindon 1

Npower Gas Limited, GB, Swindon 1

Npower Group Limited, GB, Swindon 1

Npower Limited, GB, Swindon 1

Npower Northern Limited, GB, Swindon 1

Npower Northern Supply Limited, GB, Swindon 2

Npower Yorkshire Limited, GB, Swindon 1

Npower Yorkshire Supply Limited, GB, Swindon 1

NRF Neue Regionale Fortbildung GmbH, DE, Halle (Saale) 2

Oberland Stromnetz GmbH & Co. KG, DE, Murnau a. Staffelsee 6

ocean5 Business Software GmbH, DE, Kiel 6

Octopus Electrical Limited, GB, Swindon 1

Oebisfelder Wasser und Abwasser GmbH, DE, Oebisfelde 6

49.0

49.9

49.0

45.7

49.0

50.0

49.0

49.9

49.0

49.9

49.0

50.0

49.9

100.0

49.0

25.1

49.0

100.0

40.0

100.0

49.0

100.0

50.1

40.0

100.0

95.5

100.0

98.1

100.0

25.0

51.0

100.0

50.0

100.0

33.9

50.2

100.0

49.0

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

221

Disclosures Pursuant to Section 313 (2) HGB of Companies in Which Equity Investments Are Held
(as of December 31, 2019)

Name, location

Stake (%)

Name, location

Stake (%)

Oer-Erkenschwick Netz GmbH & Co. KG, DE, Oer-Erkenschwick 6

OIE Aktiengesellschaft, DE, Idar-Oberstein 1

OMNI Energy Kft., HU, Kiskunhalas 6

OOO E.ON Connecting Energies, RU, Moscow 4

OOO E.ON IT, RU, Moscow 2

Oschatz Netz GmbH & Co. KG, DE, Oschatz 2

Oschatz Netz Verwaltungs GmbH, DE, Oschatz 2

Oskarshamn Energi AB, SE, Oskarshamn 4

Ostwestfalen Netz GmbH & Co. KG, DE, Bad Driburg 6

OurGreenCar Sweden AB, SE, Malmö 6

PannonWatt Energetikai Megoldások Zrt., HU, Győr 6

pear.ai Inc., US, San Francisco 6

PEG Infrastruktur AG, CH, Zug 13

Peißenberger Kraftwerksgesellschaft mit beschränkter Haftung,
DE, Peißenberg 2

Peißenberger Wärmegesellschaft mbH, DE, Peißenberg 2

Perstorps Fjärrvärme AB, SE, Perstorp 6

PFALZWERKE AKTIENGESELLSCHAFT, DE,
Ludwigshafen am Rhein 5

Placense Ltd., IL, Caesarea 6

Plus Shipping Services Limited, GB, Swindon 1

Portfolio EDL GmbH, DE, Helmstedt 1, 8

Powergen Holdings B.V., NL, Rotterdam 1

Powergen International Limited, GB, Coventry 1

Powergen Limited, 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 Serang Limited, GB, Coventry 2

Powergen UK Investments, GB, Coventry 2

Powerhouse B.V., NL, Almere 1

Powerhouse Energy Solutions S.L., ES, Madrid 2

prego services GmbH, DE, Saarbrücken 6

PRENU Projektgesellschaft für Rationelle Energienutzung in
Neuss mit beschränkter Haftung, DE, Neuss 4

PreussenElektra GmbH, DE, Hanover 1

Projecta 14 GmbH, DE, Saarbrücken 5

Propan Rheingas GmbH, DE, Brühl 6

Propan Rheingas GmbH & Co Kommanditgesellschaft, DE, Brühl 5

Przedsiębiorstwo Energetyki Cieplnej Sp. z o.o., PL, Choszczno 2

PS Energy UK Limited, GB, Swindon 1

Purena Consult GmbH, DE, Wolfenbüttel 2

Purena GmbH, DE, Wolfenbüttel 1

Qualitas-AMS GmbH, DE, Siegen 2

Rain Biomasse Wärmegesellschaft mbH, DE, Rain 4, 10

49.0

100.0

50.0

100.0

74.9

100.0

50.0

25.1

30.0

49.9

40.0

100.0

50.0

26.7

20.0

100.0

50.0

100.0

50.0

27.5

29.6

100.0

94.1

100.0

64.9

Rampion Renewables Limited, GB, Coventry 5

Rauschbergbahn Gesellschaft mit beschränkter Haftung, DE,
Ruhpolding 2

RDE Regionale Dienstleistungen Energie GmbH & Co. KG, DE,
Veitshöchheim 2

RDE Verwaltungs-GmbH, DE, Veitshöchheim 2

Recargo Inc., US, El Segundo 1

Recklinghausen Netzgesellschaft mbH & Co. KG, DE,
Recklinghausen 5

Recklinghausen Netz-Verwaltungsgesellschaft mbH, DE,
Recklinghausen 6

Redsted Varmetransmission ApS, DK, Frederiksberg 2

Refarmed ApS, DK, Copenhagen 6

REGAS GmbH & Co KG, DE, Regensburg 6

REGAS Verwaltungs-GmbH, DE, Regensburg 6

REGENSBURGER ENERGIE- UND WASSERVERSORGUNG AG,
DE, Regensburg 6

Regionetz GmbH, DE, Aachen 1, 9

RegioNetzMünchen GmbH & Co. KG, DE, Garching 6

RegioNetzMünchen Verwaltungs GmbH, DE, Garching 6

Regnitzstromverwertung Aktiengesellschaft, DE, Erlangen 6

Remoty Visual Ltd, IL, Tel Aviv 6

Renergie Stadt Wittlich GmbH, DE, Wittlich 6

rEVUlution GmbH, DE, Essen 2

REWAG REGENSBURGER ENERGIE- UND
WASSERVERSORGUNG AG & CO KG, DE, Regensburg 5

Rhegio Dienstleistungen GmbH, DE, Rhede 6

Rhein-Ahr-Energie Netz GmbH & Co. KG, DE, Grafschaft 6

RheinEnergie AG, DE, Cologne 5

Rheinland Westfalen Energiepartner GmbH, DE, Essen 2

Rhein-Main-Donau GmbH, DE, Landshut 5

Rhein-Sieg Netz GmbH, DE, Siegburg 1

rhenag Rheinische Energie Aktiengesellschaft, DE, Cologne 1

RHENAGBAU Gesellschaft mit beschränkter Haftung, DE,
Cologne 2

RIWA GmbH Gesellschaft für Geoinformationen, DE,
Kempten (Allgäu) 6

R-KOM Regensburger Telekommunikationsgesellschaft mbH &
Co. KG, DE, Regensburg 6

R-KOM Regensburger Telekommunikationsverwaltungs-
gesellschaft mbH, DE, Regensburg 6

RL Besitzgesellschaft mbH, DE, Monheim am Rhein 1

RL Beteiligungsverwaltung beschr. haft. OHG, DE,
Monheim am Rhein 1

RUMM Limited, GB, Ystrad Mynach 1

RURENERGIE GmbH, DE, Düren 6

Rüthen Gasnetz GmbH & Co. KG, DE, Rüthen 6

RWE Dhabi Union Energy LLC, AE, Abu Dhabi 6

39.9

77.4

100.0

49.9

49.0

100.0

20.0

50.0

35.5

49.2

50.0

33.3

38.8

30.0

100.0

35.5

24.9

25.1

20.0

100.0

22.5

100.0

66.7

100.0

33.3

20.0

100.0

30.1

25.1

24.5

Notes

222

Disclosures Pursuant to Section 313 (2) HGB of Companies in Which Equity Investments Are Held
(as of December 31, 2019)

Name, location

Stake (%)

Name, location

Stake (%)

RWW Rheinisch-Westfälische Wasserwerksgesellschaft mbH,
DE, Mülheim an der Ruhr 1

S.C. Salgaz S.A., RO, Salonta 2

Safekont GmbH, DE, Munich 2

Safetec Entsorgungs- und Sicherheitstechnik GmbH, DE,
Heidelberg 2

Safetec-Swiss GmbH, CH, Stans 2

Sandersdorf-Brehna Netz GmbH & Co. KG, DE,
Sandersdorf-Brehna 6

SARIO Grundstücks-Vermietungsgesellschaft mbH & Co.
Objekt Würzburg KG, DE, Düsseldorf 1, 12

Scarcroft Investments Limited, GB, Swindon 2

Scharbeutzer Energie- und Netzgesellschaft mbH & Co. KG, DE,
Scharbeutz 2

SchlauTherm GmbH, DE, Saarbrücken 2

Schleswig-Holstein Netz AG, DE, Quickborn 1

Schleswig-Holstein Netz Verwaltungs-GmbH, DE, Quickborn 1

SEC A Sp. z o.o., PL, Szczecin 2

SEC B Sp. z o.o., PL, Szczecin 2

SEC C Sp. z o.o., PL, Szczecin 2

SEC D Sp. z o.o., PL, Szczecin 2

SEC E Sp. z o.o., PL, Szczecin 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 H Sp. z o.o., PL, Szczecin 2

SEC I Sp. z o.o., PL, Szczecin 2

SEC J Sp. z o.o., PL, Szczecin 2

SEC K Sp. z o.o., PL, Szczecin 2

SEC L Sp. z o.o., PL, Szczecin 2

SEC M Sp. z o.o., PL, Szczecin 2

SEC Myślibórz Sp. z o.o., PL, Myślibórz 2

SEC N Sp. z o.o., PL, Szczecin 2

SEC O Sp. z o.o., PL, Szczecin 2

SEC Obrót Sp. z o.o., PL, Szczecin 2

SEC P Sp. z o.o., PL, Szczecin 2

SEC Region Sp. z o.o., PL, Barlinek 2

SEC Serwis Sp. z o.o., PL, Szczecin 2

SEG Solarenergie Guben GmbH & Co. KG, DE, Guben 6

SEG Solarenergie Guben Management GmbH, DE, Lützen 2

Selm Netz GmbH & Co. KG, DE, Selm 6

SERVICE plus GmbH, DE, Neumünster 2

Service Plus Recycling GmbH, DE, Neumünster 2

share2drive GmbH, DE, Aachen 6

SHS Ventures GmbH & Co. KGaA, DE, Völklingen 6

SHW/RWE Umwelt Aqua Vodogradnja d.o.o., HR, Zagreb 4

79.8

55.6

100.0

Siegener Versorgungsbetriebe GmbH, DE, Siegen 5

Skandinaviska Kraft AB, SE, Halmstad 2

Skive GreenLab Biogas ApS, DK, Frederiksberg 6

ŠKO-ENERGO, s.r.o., CZ, Mladá Boleslav 6

ŠKO-ENERGO FIN, s.r.o., CZ, Mladá Boleslav 5

Smart Energy Plattling GmbH, DE, Munich 2

SmartSim GmbH, DE, Essen 6

49.0

Söderåsens Bioenergi AB, SE, Malmö 2

Solar Energy Group S.p.A., IT, Pordenone 1

0.0

100.0

51.0

75.0

78.0

100.0

89.9

100.0

25.1

100.0

25.1

100.0

14.0

50.0

Solar Noord B.V., NL, Stadskanaal 1

Solar Service S.r.l., IT, Pordenone 2

Solar Supply Sweden AB, SE, Karlshamn 2

SolarProjekt Mainaschaff GmbH, DE, Mainaschaff 6

Solnet d.o.o., HR, Zagreb 1

Sønderjysk Biogas Bevtoft A/S, DK, Vojens 6

Sønderjysk Biogas Løgumkloster ApS, DK, Bevtoft 6

SPIE Energy Solutions Harburg GmbH, DE, Hamburg 6

SpreeGas Gesellschaft für Gasversorgung und
Energiedienstleistung mbH, DE, Cottbus 5

SSW - Stadtwerke St. Wendel GmbH & Co KG., DE, St. Wendel 5

SSW Stadtwerke St. Wendel Geschäftsführungsgesellschaft mbH,
DE, St. Wendel 6

Stadtentwässerung Schwerte GmbH, DE, Schwerte 6

Städtische Betriebswerke Luckenwalde GmbH, DE, Luckenwalde 6

Städtische Werke Borna GmbH, DE, Borna 6

Städtische Werke Magdeburg GmbH & Co. KG, DE, Magdeburg 5

Städtische Werke Magdeburg Verwaltungs-GmbH, DE,
Magdeburg 6

Städtisches Wasserwerk Eschweiler GmbH, DE, Eschweiler 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

Stadtwerk Verl Netz GmbH & Co. KG, DE, Verl 6

Stadtwerke - Strom Plauen GmbH & Co. KG, DE, Plauen 6

Stadtwerke Ahaus GmbH, DE, Ahaus 6

Stadtwerke Aschersleben GmbH, DE, Aschersleben 5

Stadtwerke Aue-Bad Schlema GmbH, DE, Aue-Bad Schlema 6

Stadtwerke Bad Bramstedt GmbH, DE, Bad Bramstedt 6

Stadtwerke Barth GmbH, DE, Barth 6

Stadtwerke Bayreuth Energie und Wasser GmbH, DE, Bayreuth 5

Stadtwerke Bergen GmbH, DE, Bergen 6

Stadtwerke Bernburg GmbH, DE, Bernburg (Saale) 5

Stadtwerke Bitterfeld-Wolfen GmbH, DE, Bitterfeld-Wolfen 5

24.9

100.0

50.0

21.0

42.5

100.0

24.0

63.3

80.0

100.0

50.0

100.0

50.0

35.0

33.3

49.5

48.0

29.0

36.8

26.7

24.9

49.0

25.1

49.0

36.0

35.0

24.5

36.0

49.0

24.9

49.0

45.0

40.0

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

223

Disclosures Pursuant to Section 313 (2) HGB of Companies in Which Equity Investments Are Held
(as of December 31, 2019)

Name, location

Stake (%)

Name, location

Stake (%)

Stadtwerke Blankenburg GmbH, DE, Blankenburg 6

Stadtwerke Bogen GmbH, DE, Bogen 6

Stadtwerke Burgdorf GmbH, DE, Burgdorf 6

Stadtwerke Dillingen/Saar GmbH, DE, Dillingen 6

Stadtwerke Duisburg Aktiengesellschaft, DE, Duisburg 5

Stadtwerke Dülmen Dienstleistungs- und
Beteiligungs-GmbH & Co. KG, DE, Dülmen 4

Stadtwerke Dülmen Verwaltungs-GmbH, DE, Dülmen 6

Stadtwerke Düren GmbH, DE, Düren 1, 9

Stadtwerke Ebermannstadt Versorgungsbetriebe GmbH, DE,
Ebermannstadt 6

Stadtwerke Eggenfelden GmbH, DE, Eggenfelden 6

Stadtwerke Emmerich GmbH, DE, Emmerich am Rhein 5

Stadtwerke Essen Aktiengesellschaft, DE, Essen 5

Stadtwerke Frankfurt (Oder) GmbH, DE, Frankfurt (Oder) 5

Stadtwerke Garbsen GmbH, DE, Garbsen 6

Stadtwerke Geesthacht GmbH, DE, Geesthacht 6

Stadtwerke Geldern GmbH, DE, Geldern 5

Stadtwerke Gescher GmbH, DE, Gescher 6

Stadtwerke Geseke Netze GmbH & Co. KG, DE, Geseke 6

Stadtwerke Geseke Netze Verwaltung GmbH, DE, Geseke 6

Stadtwerke GmbH Bad Kreuznach, DE, Bad Kreuznach 5

Stadtwerke Goch Netze GmbH & Co. KG, DE, Goch 6

Stadtwerke Goch Netze Verwaltungsgesellschaft mbH, DE, Goch 6

Stadtwerke Haan GmbH, DE, Haan 6

Stadtwerke Husum GmbH, DE, Husum 6

Stadtwerke Kamp-Lintfort GmbH, DE, Kamp-Lintfort 5

Stadtwerke Kerpen GmbH & Co. KG, DE, Kerpen 6

Stadtwerke Kirn GmbH, DE, Kirn/Nahe 5

30.0

41.0

49.0

20.0

50.0

49.9

25.0

49.0

24.9

29.0

39.0

24.9

49.0

25.1

24.5

25.1

49.9

49.0

25.1

49.0

Stadtwerke Korschenbroich GmbH, DE, Korschenbroich 2

100.0

Stadtwerke Langenfeld GmbH, DE, Langenfeld 6

Stadtwerke Lingen GmbH, DE, Lingen (Ems) 4

Stadtwerke Lübz GmbH, DE, Lübz 6

Stadtwerke Ludwigsfelde GmbH, DE, Ludwigsfelde 6

Stadtwerke Meerane GmbH, DE, Meerane 5

Stadtwerke Meerbusch GmbH, DE, Meerbusch 5

Stadtwerke Merseburg GmbH, DE, Merseburg 5

Stadtwerke Merzig Gesellschaft mit beschränkter Haftung, DE,
Merzig 5

Stadtwerke Neunburg vorm Wald Strom GmbH, DE,
Neunburg vorm Wald 6

Stadtwerke Neuss Energie und Wasser GmbH, DE, Neuss 5

Stadtwerke Nordfriesland GmbH, DE, Niebüll 6

Stadtwerke Oberkirch GmbH, DE, Oberkirch 6

Stadtwerke Olching Stromnetz GmbH & Co. KG, DE, Olching 6

20.0

40.0

25.0

29.0

24.5

40.0

49.9

24.9

49.9

33.3

49.0

Stadtwerke Olching Stromnetz Verwaltungs GmbH, DE, Olching 6

Stadtwerke Parchim GmbH, DE, Parchim 6

Stadtwerke Premnitz GmbH, DE, Premnitz 6

Stadtwerke Pritzwalk GmbH, DE, Pritzwalk 6

Stadtwerke Radevormwald GmbH, DE, Radevormwald 5

Stadtwerke Ratingen GmbH, DE, Ratingen 5

Stadtwerke Reichenbach/Vogtland GmbH, DE,
Reichenbach im Vogtland 5

Stadtwerke Ribnitz-Damgarten GmbH, DE, Ribnitz-Damgarten 6

Stadtwerke Roßlau Fernwärme GmbH, DE, Dessau-Roßlau 6

Stadtwerke Saarlouis GmbH, DE, Saarlouis 5

Stadtwerke Schwarzenberg GmbH, DE,
Schwarzenberg/Erzgeb. 6

Stadtwerke Schwedt GmbH, DE, Schwedt/Oder 6

Stadtwerke Siegburg GmbH & Co. KG, DE, Siegburg 6

Stadtwerke Steinfurt, Gesellschaft mit beschränkter Haftung,
DE, Steinfurt 6

Stadtwerke Tornesch GmbH, DE, Tornesch 6

Stadtwerke Unna GmbH, DE, Unna 6

Stadtwerke Velbert GmbH, DE, Velbert 5

Stadtwerke Vilshofen GmbH, DE, Vilshofen 6

Stadtwerke Vlotho GmbH, DE, Vlotho 6

Stadtwerke Wadern GmbH, DE, Wadern 6

Stadtwerke Waltrop Netz GmbH & Co. KG, DE, Waltrop 6

Stadtwerke Weilburg GmbH, DE, Weilburg 6

Stadtwerke Weißenfels Gesellschaft mit beschränkter Haftung,
DE, Weißenfels 5

Stadtwerke Werl GmbH, DE, Werl 6

Stadtwerke Wesel Strom-Netzgesellschaft mbH & Co. KG, DE,
Wesel 6

Stadtwerke Willich Gesellschaft mit beschränkter Haftung, DE,
Willich 5

Stadtwerke Wismar GmbH, DE, Wismar 5

Stadtwerke Wittenberge GmbH, DE, Wittenberge 6

Stadtwerke Wolfenbüttel GmbH, DE, Wolfenbüttel 6

Stadtwerke Wolmirstedt GmbH, DE, Wolmirstedt 6

Stadtwerke Zeitz Gesellschaft mit beschränkter Haftung, DE,
Zeitz 5

STAWAG Abwasser GmbH, DE, Aachen 2

STAWAG Infrastruktur Monschau GmbH & Co. KG, DE,
Monschau 2

STAWAG Infrastruktur Monschau Verwaltungs GmbH, DE,
Monschau 2

STAWAG Infrastruktur Simmerath GmbH & Co. KG, DE,
Simmerath 2

STAWAG Infrastruktur Simmerath Verwaltungs GmbH, DE,
Simmerath 2

STEAG Windpark Ullersdorf GmbH & Co. KG, DE, Jamlitz 6

49.0

25.2

35.0

49.0

49.9

24.8

24.5

39.0

49.0

27.5

37.8

49.0

33.0

49.0

24.0

30.4

41.0

24.9

49.0

25.1

20.0

24.5

25.1

25.0

25.1

49.0

22.7

26.0

49.4

24.5

100.0

20.8

Notes

224

Disclosures Pursuant to Section 313 (2) HGB of Companies in Which Equity Investments Are Held
(as of December 31, 2019)

Name, location

Stake (%)

Name, location

Stake (%)

Stibbe Kälte-Klima-Technik GmbH & Co. KG, DE, Wunstorf 2

100.0

Strom Germering GmbH, DE, Germering 2

Stromnetz Diez GmbH und Co. KG, DE, Diez 6

Stromnetz Diez Verwaltungsgesellschaft mbH, DE, Diez 6

Stromnetz Euskirchen GmbH & Co. KG, DE, Euskirchen 6

Stromnetz Friedberg GmbH & Co. KG, DE, Friedberg 4

Stromnetz Gersthofen GmbH & Co. KG, DE, Gersthofen 4

Stromnetz Günzburg GmbH & Co. KG, DE, Günzburg 4

Stromnetz Günzburg Verwaltungs GmbH, DE, Günzburg 6

Stromnetz Hallbergmoos GmbH & Co. KG, DE, Hallbergmoos 2

Stromnetz Hallbergmoos Verwaltungs GmbH, DE, Hallbergmoos 2

Stromnetz Hofheim GmbH & Co. KG, DE, Hofheim am Taunus 6

Stromnetz Hofheim Verwaltungs GmbH, DE, Hofheim am Taunus 6

Stromnetz Kulmbach GmbH & Co. KG, DE, Kulmbach 6

Stromnetz Kulmbach Verwaltungs GmbH, DE, Kulmbach 6

Stromnetz Neckargemünd GmbH, DE, Neckargemünd 6

Stromnetz Pulheim GmbH & Co. KG, DE, Pulheim 6

Stromnetz Pullach GmbH, DE, Pullach im Isartal 6

Stromnetz Siegen Verwaltungs GmbH, DE, Siegen 2

Stromnetz Traunreut GmbH & Co. KG, DE, Traunreut 2

Stromnetz Traunreut Verwaltungs GmbH, DE, Traunreut 6

Stromnetz Verbandsgemeinde Katzenelnbogen GmbH & Co. KG,
DE, Katzenelnbogen 6

Stromnetz Verbandsgemeinde Katzenelnbogen
Verwaltungsgesellschaft mbH, DE, Katzenelnbogen 6

Stromnetz VG Diez GmbH und Co. KG, DE, Altendiez 6

STROMNETZ VG DIEZ Verwaltungsgesellschaft mbH, DE,
Altendiez 6

Stromnetz Weiden i.d.OPf. GmbH & Co. KG, DE, Weiden i.d.OPf. 6

Stromnetz Würmtal GmbH & Co. KG, DE, Planegg 2

Stromnetz Würmtal Verwaltungs GmbH, DE, Planegg 2

Stromnetze Peiner Land GmbH, DE, Ilsede 6

Stromnetzgesellschaft Bad Salzdetfurth-Diekholzen mbH &
Co. KG, DE, Bad Salzdetfurth 6

Stromnetzgesellschaft Barsinghausen GmbH & Co. KG, DE,
Barsinghausen 6

Strom-Netzgesellschaft Bedburg GmbH & Co. KG, DE, Bedburg 6

Stromnetzgesellschaft Bramsche mbH & Co. KG, DE, Bramsche 6

Strom-Netzgesellschaft Elsdorf GmbH & Co. KG, DE, Elsdorf 6

Stromnetzgesellschaft Gescher GmbH & Co. KG, DE, Gescher 6

Strom-Netzgesellschaft Kolpingstadt Kerpen GmbH & Co. KG,
DE, Kerpen 6

Strom-Netzgesellschaft Kreisstadt Bergheim GmbH & Co. KG,
DE, Bergheim 6

Stromnetzgesellschaft Mettmann mbH & Co. KG, DE, Mettmann 6

Stromnetzgesellschaft Neuenhaus mbH & Co. KG, DE,
Neuenhaus 6

90.0

25.1

49.0

100.0

49.0

49.9

25.1

49.0

100.0

49.0

74.5

100.0

49.0

25.1

49.0

Stromnetzgesellschaft Neuenhaus Verwaltungs-GmbH, DE,
Neuenhaus 6

Stromnetzgesellschaft Neunkirchen-Seelscheid mbH & Co. KG,
DE, Neunkirchen-Seelscheid 6

Stromnetzgesellschaft Schwalmtal mbH & Co. KG, DE,
Schwalmtal 6

Stromnetzgesellschaft Windeck mbH & Co. KG, DE, Siegburg 2

Stromnetzgesellschaft Wunstorf GmbH & Co. KG, DE, Wunstorf 6

Stromversorgung Angermünde GmbH, DE, Angermünde 6

Stromversorgung Penzberg GmbH & Co. KG, DE, Penzberg 6

Stromversorgung Pfaffenhofen a. d. Ilm GmbH & Co. KG, DE,
Pfaffenhofen 6

Stromversorgung Pfaffenhofen a. d. Ilm Verwaltungs GmbH,
DE, Pfaffenhofen 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

Stromverwaltung Schwalmtal GmbH, DE, Schwalmtal 6

strotög GmbH Strom für Töging, DE, Töging am Inn 6

StWB Stadtwerke Brandenburg an der Havel GmbH & Co. KG,
DE, Brandenburg an der Havel 5

StWB Verwaltungs GmbH, DE, Brandenburg an der Havel 6

SüdWasser 1. Beteiligungs GmbH, DE,
Schönbrunn i. Steigerwald 2

SüdWasser GmbH, DE, Erlangen 2

Südwestfalen Netz-Verwaltungsgesellschaft mbH, DE, Netphen 6

Südwestsächsische Netz GmbH, DE, Crimmitschau 1

Süwag Energie AG, DE, Frankfurt am Main 1

Süwag Grüne Energien und Wasser AG & Co. KG, DE,
Frankfurt am Main 1

Süwag Management GmbH, DE, Frankfurt am Main 2

Süwag Vertrieb AG & Co. KG, DE, Frankfurt am Main 1

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

SVS-Versorgungsbetriebe GmbH, DE, Stadtlohn 4

SWG Glasfaser Netz GmbH, DE, Geesthacht 6

SWL-energis Netzgesellschaft mbH & Co. KG., DE, Lebach 2

SWL-energis-Geschäftsführungs-GmbH, DE, Lebach 2

SWN Stadtwerke Neustadt GmbH, DE, Neustadt bei Coburg 6

SWS Energie GmbH, DE, Stralsund 5

SWT trilan GmbH, DE, Trier 6

SWTE Netz GmbH & Co. KG, DE, Ibbenbüren 5

SWTE Netz Verwaltungsgesellschaft mbH, DE, Ibbenbüren 6

49.0

51.0

100.0

49.0

100.0

49.0

51.0

50.0

36.8

100.0

49.0

100.0

77.6

100.0

50.0

25.1

50.1

100.0

30.0

33.4

100.0

25.1

49.0

26.0

33.0

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

225

Disclosures Pursuant to Section 313 (2) HGB of Companies in Which Equity Investments Are Held
(as of December 31, 2019)

Name, location

Stake (%)

Name, location

Syna GmbH, DE, Frankfurt am Main 1

100.0

Versorgungsbetriebe Helgoland GmbH, DE, Helgoland 6

Szczecińska Energetyka Cieplna Sp. z o.o., PL, Szczecin 1

Szombathelyi Erőmű Zrt., HU, Budapest 2

Szombathelyi Távhőszolgáltató Kft., HU, Szombathely 6

Tankey B.V., NL, ’s-Hertogenbosch 5

Technische Werke Naumburg GmbH, DE, Naumburg (Saale) 6

Tegel Energie GbR, DE, Berlin 6

Teplo T s.r.o., CZ, Tišnov 2

TEPLO Votice s.r.o., CZ, Votice 6

The Power Generation Company Limited, GB, Coventry 2

TNA Talsperren- und Grundwasser-Aufbereitungs- und
Vertriebsgesellschaft mbH, DE, Nonnweiler 6

Triangeln 10 i Norrköping Fastighets AB, SE, Malmö 2

Triangeln 11 AB, SE, Malmö 2

Triangeln 15 i Norrköping Fastighets AB, SE, Malmö 2

Trinkwasserverbund Niederrhein TWN GmbH, DE, Grevenbroich 6

Trocknungsanlage Zolling GmbH & Co. KG, DE, Zolling 6

Trocknungsanlage Zolling Verwaltungs GmbH, DE, Zolling 6

TWE Technische Werke der Gemeinde Ensdorf GmbH, DE,
Ensdorf 6

TWL Technische Werke der Gemeinde Losheim GmbH, DE,
Losheim am See 6

TWM Technische Werke der Gemeinde Merchweiler
Gesellschaft mit beschränkter Haftung, DE, Merchweiler 6

TWRS Technische Werke der Gemeinde Rehlingen-Siersburg
GmbH, DE, Rehlingen-Siersburg 6

TWS Technische Werke der Gemeinde Saarwellingen GmbH,
DE, Saarwellingen 6

Überlandwerk Krumbach Gesellschaft mit beschränkter
Haftung, DE, Krumbach 1

Überlandwerk Leinetal GmbH, DE, Gronau 6

ucair GmbH, DE, Berlin 2

Ultra-Fast Charging Venture Scandinavia ApS, DK, Copenhagen 6

Umspannwerk Miltzow-Mannhagen GbR, DE, Sundhagen 6

Union Grid s.r.o., CZ, Prague 6

UNTERE ILLER AKTIENGESELLSCHAFT, DE, Landshut 6

Untermain EnergieProjekt AG & Co. KG., DE, Kelsterbach 6

Untermain Erneuerbare Energien GmbH, DE, Raunheim 6

Uranit GmbH, DE, Jülich 4

Utility Debt Services Limited, GB, Coventry 2

Vandebron B.V., NL, Amsterdam 2

VEBA Electronics LLC, US, Wilmington 1

VEBACOM Holdings LLC, US, Wilmington 2

Veiligebuurt B.V., NL, Enschede 6

VEM Neue Energie Muldental GmbH & Co. KG, DE, Markkleeberg 6

Versorgungsbetrieb Waldbüttelbrunn GmbH, DE,
Waldbüttelbrunn 6

66.5

80.0

25.0

42.5

47.0

50.0

80.0

20.0

100.0

22.8

100.0

33.3

49.0

49.9

49.0

Versorgungskasse Energie (VVaG) i. L., DE, Hanover 6

Versuchsatomkraftwerk Kahl GmbH, DE, Karlstein 6

Verteilnetz Plauen GmbH, DE, Plauen 1

Verteilnetze Energie Weißenhorn GmbH & Co. KG, DE,
Weißenhorn 6

Verwaltungsgesellschaft Dorsten Netz mbH, DE, Dorsten 6

Verwaltungsgesellschaft Energie Weißenhorn GmbH, DE,
Weißenhorn 6

Verwaltungsgesellschaft Energieversorgung Timmendorfer
Strand mbH, DE, Timmendorfer Strand 2

Verwaltungsgesellschaft GKW Dillingen mbH, DE, Dillingen 6

Verwaltungsgesellschaft Scharbeutzer Energie- und
Netzgesellschaft mbH, DE, Scharbeutz 2

Verwaltungsgesellschaft Strom-Netzgesellschaft Voerde mbH,
DE, Voerde 2

Veszprém-Kogeneráció Energiatermelő Zrt., HU, Budapest 2

Visioncash, GB, Coventry 1

Visualix GmbH, DE, Berlin 6

VKB-GmbH, DE, Neunkirchen 1

Volta Limburg B.V., NL, Schinnen 1

Volta Participaties 1 BV, NL, Schinnen 1

Volta Service B.V., NL, Schinnen 1

Volta Solar B.V., NL, Heerlen 1

Volta Solar VOF, NL, Heerlen 1

35.0

VOLTARIS GmbH, DE, Maxdorf 6

51.0

74.6

48.0

94.9

50.0

22.2

34.0

40.0

49.0

25.0

50.0

100.0

49.9

50.0

VSE-Windpark Merchingen GmbH & Co. KG, DE, Saarbrücken 2

VSE-Windpark Merchingen VerwaltungsGmbH, DE, Saarbrücken 2

VSE Agentur GmbH, DE, Saarbrücken 2

VSE Aktiengesellschaft, DE, Saarbrücken 1

VSE NET GmbH, DE, Saarbrücken 1

VSE Verteilnetz GmbH, DE, Saarbrücken 1

VSE-Stiftung Gemeinnützige Gesellschaft zur Förderung von
Bildung, Erziehung, Kunst und Kultur mbH, DE, Saarbrücken 2

VWS Verbundwerke Südwestsachsen GmbH, DE,
Lichtenstein/Sa. 1

Wärmeversorgung Limburg GmbH, DE, Limburg an der Lahn 6

Wärmeversorgung Mücheln GmbH, DE, Mücheln 6

Wärmeversorgung Schenefeld GmbH, DE, Schenefeld 6

Wärmeversorgung Schwaben GmbH, DE, Augsburg 2

Wärmeversorgung Wachau GmbH, DE, Markkleeberg 6

Wärmeversorgung Würselen GmbH, DE, Stolberg 2

Wärmeversorgungsgesellschaft Königs Wusterhausen mbH,
DE, Königs Wusterhausen 2

Wasser- und Abwassergesellschaft Vienenburg mbH, DE, Goslar 6

Wasserkraft Baierbrunn GmbH, DE, Unterschleißheim 6

49.0

Wasserkraft Farchet GmbH, DE, Bad Tölz 2

Stake (%)

49.0

69.6

20.0

100.0

35.0

49.0

35.0

51.0

25.2

51.0

100.0

25.0

50.0

100.0

60.0

50.0

100.0

51.4

100.0

97.9

50.0

49.0

40.0

100.0

49.0

100.0

50.1

49.0

50.0

60.0

Notes

226

Disclosures Pursuant to Section 313 (2) HGB of Companies in Which Equity Investments Are Held
(as of December 31, 2019)

Name, location

Stake (%)

Name, location

Stake (%)

Wasserkraftnutzung im Landkreis Gifhorn GmbH, DE,
Müden/Aller 6

Wasser-Netzgesellschaft Kolpingstadt Kerpen GmbH & Co. KG,
DE, Kerpen 6

Wasserverbund Niederrhein Gesellschaft mit beschränkter
Haftung, DE, Moers 6

Wasserversorgung Main-Taunus GmbH, DE, Frankfurt am Main 6

Wasserversorgung Sarstedt GmbH, DE, Sarstedt 6

Wasserwirtschafts- und Betriebsgesellschaft Grafenwöhr GmbH,
DE, Grafenwöhr 6

Wasserzweckverband der Gemeinde Nalbach, DE, Nalbach 6

WB Wärme Berlin GmbH, DE, Schönefeld 6

WEA Schönerlinde GbR mbH Kiepsch & Bosse & Beteiligungs-
ges. e.disnatur mbH, DE, Berlin 2

WeAre GmbH, DE, Berlin 6

weeenergie GmbH, DE, Dresden 6

Weißmainkraftwerk Röhrenhof Aktiengesellschaft, DE,
Bad Berneck 2

WEK Windenergie Kolkwitz GmbH & Co. KG, DE, Kolkwitz 2

Wendelsteinbahn Gesellschaft mit beschränkter Haftung, DE,
Brannenburg am Inn 1

Wendelsteinbahn Verteilnetz GmbH, DE, Brannenburg am Inn 1

werkkraft GmbH, DE, Unterschleißheim 6

Werne Netz GmbH & Co. KG, DE, Werne 6

Westerwald-Netz GmbH, DE, Betzdorf-Alsdorf 1

Westnetz GmbH, DE, Dortmund 1

WET Windenergie Trampe GmbH & Co. KG, DE, Lützen 2

WEV Warendorfer Energieversorgung GmbH, DE, Warendorf 6

WEVG Salzgitter GmbH & Co. KG, DE, Salzgitter 1

WEVG Verwaltungs GmbH, DE, Salzgitter 2

WGK Windenergie Großkorbetha GmbH & Co. KG, DE, Lützen 2

Willems Koeltechniek B.V., NL, Beek 2

Windenergie Briesensee GmbH, DE, Neu Zauche 6

Windenergie Frehne GmbH & Co. KG, DE, Lützen 6

50.0

25.1

38.5

49.0

29.0

49.0

51.0

70.0

20.0

40.0

93.5

100.0

50.0

49.0

100.0

25.1

50.2

90.0

100.0

31.5

41.0

Windenergie Leinetal 2 Verwaltungs GmbH, DE, Freden (Leine) 2

100.0

Windenergie Leinetal GmbH & Co. KG, DE, Freden (Leine) 6

Windenergie Leinetal Verwaltungs GmbH, DE, Freden (Leine) 6

Windenergie Merzig GmbH, DE, Merzig 6

Windenergie Osterburg GmbH & Co. KG, DE, Osterburg (Altmark) 6

Windenergie Osterburg Verwaltungs GmbH, DE,
Osterburg (Altmark) 6

Windenergie Schermbeck-Rüste GmbH & Co. KG, DE,
Schermbeck 6

26.2

24.9

20.0

49.0

20.3

Windenergiepark Heidenrod GmbH, DE, Heidenrod 6

WINDENERGIEPARK WESTKÜSTE GmbH, DE,
Kaiser-Wilhelm-Koog 2

Windkraft Hochheim GmbH & Co. KG, DE, Lützen 2

Windkraft Jerichow-Mangelsdorf I GmbH & Co. KG, DE, Burg 6

Windpark Anhalt-Süd (Köthen) OHG, DE, Potsdam 2

Windpark Büschdorf GmbH, DE, Perl 2

Windpark Eschweiler Beteiligungs GmbH, DE, Stolberg 6

Windpark Losheim-Britten GmbH, DE, Losheim am See 6

Windpark Lützen GmbH & Co. KG, DE, Lützen 2

Windpark Lützen Infrastruktur GmbH & Co. KG, DE, Lützen 2

Windpark Mutzschen OHG, DE, Potsdam 2

Windpark Naundorf OHG, DE, Potsdam 2

Windpark Nohfelden-Eisen GmbH, DE, Nohfelden 6

Windpark Oberthal GmbH, DE, Oberthal 6

Windpark Paffendorf GmbH & Co. KG, DE, Bergheim 6

Windpark Perl GmbH, DE, Perl 6

Windpark Verwaltungsgesellschaft mbH, DE, Lützen 2

Windpark Wadern-Felsenberg GmbH, DE, Wadern 2

WKH Windkraft Hochheim Management GmbH, DE, Lützen 2

WLN Wasserlabor Niederrhein GmbH, DE, Mönchengladbach 6

WPB Windpark Börnicke GmbH & Co. KG, DE, Lützen 2

WPF Windpark Frankenheim GmbH & Co. KG, DE, Lützen 2

WPK Windpark Kraasa GmbH & Co. KG, DE, Lützen 2

WTTP B.V., NL, Arnhem 1

WUN Pellets GmbH, DE, Wunsiedel 6

WVG - Warsteiner Verbundgesellschaft mbH, DE, Warstein 6

WVL Wasserversorgung Losheim GmbH, DE, Losheim am See 6

WVM Wärmeversorgung Maßbach GmbH, DE, Maßbach 6

WVW Wasser- und Energieversorgung Kreis St. Wendel
Gesellschaft mit beschränkter Haftung, DE, St. Wendel 5

WWS Wasserwerk Saarwellingen GmbH, DE, Saarwellingen 6

WWW Wasserwerk Wadern GmbH, DE, Wadern 6

xtechholding GmbH, DE, Berlin 6

Zagrebacke otpadne vode d.o.o., HR, Zagreb 4

Zagrebacke otpadne vode-upravljanje i pogon d.o.o., HR, Zagreb 5

Západoslovenská energetika a.s. (ZSE), SK, Bratislava 4

Zenit-SIS GmbH i. L., DE, Düsseldorf 2

ZonnigBeheer B.V., NL, Lelystad 1

Zwickauer Energieversorgung GmbH, DE, Zwickau 5

45.0

80.0

90.0

25.1

83.3

51.0

55.1

50.0

100.0

77.8

66.7

50.0

35.0

49.0

42.0

100.0

45.0

100.0

25.1

49.9

22.2

28.1

49.0

28.4

48.5

29.0

49.0

100.0

27.0

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

227

Disclosures Pursuant to Section 313 (2) HGB of Companies in Which Equity Investments Are Held
(as of December 31, 2019)

Name, location

Consolidated investment funds

ASF, DE, Düsseldorf 1

HANSEFONDS, DE, Düsseldorf 1

MI-FONDS 178, DE, Frankfurt am Main 1

MI-FONDS F55, DE, Frankfurt am Main 1

MI-FONDS G55, DE, Frankfurt am Main 1

MI-FONDS J55, DE, Frankfurt am Main 1

MI-FONDS K55, DE, Frankfurt am Main 1

OB 2, DE, Düsseldorf 1

OB 5, DE, Düsseldorf 1

Name, location

Investments Pursuant to Section 313 (2) No. 5 HGB

BEW Bergische Energie- und Wasser-Gesellschaft mit beschränkter Haftung, DE, Wipperfürth 7

Energieversorgung Limburg Gesellschaft mit beschränkter Haftung, DE, Limburg an der Lahn 7

e-werk Sachsenwald GmbH, DE, Reinbek 7

Herzo Werke GmbH, DE, Herzogenaurach 7

HEW HofEnergie+Wasser GmbH, DE, Hof 7

infra fürth gmbh, DE, Fürth 7

Nord Stream AG, CH, Zug 7, 14

PSI Software AG, DE, Berlin 7

Stadtwerke Bamberg Energie- und Wasserversorgungs GmbH, DE, Bamberg 7

Stadtwerke Detmold GmbH, DE, Detmold 7

Stadtwerke Straubing Strom und Gas GmbH, DE, Straubing 7

Stadtwerke Wertheim GmbH, DE, Wertheim 7

SWT Stadtwerke Trier Versorgungs-GmbH, DE, Trier 7

Thermondo GmbH, DE, Berlin 7

Stake (%)

100.0

Stake (%)

Equity
€ in millions

Earnings
€ in millions

19.5

10.0

16.0

19.9

15.5

17.8

10.0

12.5

19.9

10.0

18.7

19.4

33.2

28.7

29.3

14.3

22.1

75.1

6.2

4.4

0.0

3,127.4

414.5

84.5

30.1

31.5

10.8

20.5

55.5

10.7

5.9

0.0

2.7

0.0

9.8

-9.6

Other
Information

Declaration of the Management Board

230

Declaration of the Management Board

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.

Essen, March 23, 2020

The Management Board

Teyssen

Birnbaum

König

Spieker

Wildberger

Independent Auditor’s Report

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

231

Report on the Audit of the Consolidated
Financial Statements and of the Group
Management Report

To E.ON SE, Essen

Audit Opinions

We have audited the consolidated financial statements of
E.ON SE, Essen, and its subsidiaries (the Group), which comprise
the consolidated balance sheet as at December 31, 2019, and
the consolidated statement of income, consolidated statement
of recognized income and expenses, consolidated statement
of changes in equity and consolidated statement of cash flows
for the financial year from January 1 to December 31, 2019,
and notes to the consolidated financial statements, including
a summary of significant accounting policies. In addition, we
have audited the group management report of E.ON SE, which
is combined with the Company’s management report, for the
financial year from January 1 to December 31, 2019. In accor-
dance with the German legal requirements, we have not audited
the content of the statement on corporate governance pursuant
to § [Article] 289f HGB [Handelsgesetzbuch: German Commer-
cial Code] and § 315d HGB.

In our opinion, on the basis of the knowledge obtained in the audit,

• the accompanying consolidated financial statements comply,
in all material respects, with the IFRSs as adopted by the EU,
and the additional requirements of German commercial
law pursuant to § 315e Abs. [paragraph] 1 HGB and, in com-
pliance with these requirements, give a true and fair view of
the assets, liabilities, and financial position of the Group as
at December 31, 2019, and of its financial performance for
the financial year from January 1 to December 31, 2019, and

• the accompanying group management report as a whole
provides an appropriate view of the Group’s position. In all
material respects, this group management report is consis-
tent with the consolidated financial statements, complies
with German legal requirements and appropriately presents
the opportunities and risks of future development. Our audit
opinion on the group management report does not cover the
content of the statement on corporate governance referred
to above.

Pursuant to § 322 Abs. 3 Satz [sentence] 1 HGB, we declare
that our audit has not led to any reservations relating to the
legal compliance of the consolidated financial statements and
of the group management report.

Basis for the Audit Opinions

We conducted our audit of the consolidated financial state-
ments and of the group management report in accordance with
§ 317 HGB and the EU Audit Regulation (No. 537/2014, referred
to subsequently as “EU Audit Regulation”) in compliance with
German Generally Accepted Standards for Financial Statement
Audits promulgated by the Institut der Wirtschaftsprüfer [Insti-
tute of Public Auditors in Germany] (IDW). We performed the
audit of the consolidated financial statements in supplementary
compliance with the International Standards on Auditing (ISAs).
Our responsibilities under those requirements, principles and
standards are further described in the “Auditor’s Responsibilities
for the Audit of the Consolidated Financial Statements and of
the Group Management Report” section of our auditor’s report.
We are independent of the group entities in accordance with
the requirements of European law and German commercial and
professional law, and we have fulfilled our other German pro-
fessional responsibilities in accordance with these requirements.
In addition, in accordance with Article 10 (2) point (f) of the EU
Audit Regulation, we declare that we have not provided non-audit
services prohibited under Article 5 (1) of the EU Audit Regulation.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinions on the
consolidated financial statements and on the group management
report.

Key Audit Matters in the Audit of the
Consolidated Financial Statements

Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the consoli-
dated financial statements for the financial year from January 1
to December 31, 2019. These matters were addressed in the
context of our audit of the consolidated financial statements as
a whole, and in forming our audit opinion thereon; we do not
provide a separate audit opinion on these matters.

Independent Auditor’s Report

232

In our view, the matters of most significance in our audit were
as follows:

a. First-time consolidation of innogy’s network and sales

businesses

1 Transactions with RWE
2 Recoverability of goodwill

Our presentation of these key audit matters has been structured
in each case as follows:

1 Matter and issue
2 Audit approach and findings
3 Reference to further information

Hereinafter we present the key audit matters:

1 Transactions with RWE
On March 12, 2018, E.ON and RWE entered into agreements
for E.ON to acquire RWE’s 76.8 % interest in innogy SE, Essen
(innogy) and to sell substantially all of its former renewables
business and two nuclear power minority stocks to RWE. The
agreements also stipulate that innogy’s entire renewables and
gas storage business as well as its equity interest in KELAG-
Kärntner Elektrizitäts-Aktiengesellschaft (Kelag) will be trans-
ferred to RWE. As part of RWE’s claim against E.ON arising
from the acquisition of the interest in innogy, RWE received
440,219,800 new shares of E.ON SE, corresponding to a 16.67 %
interest in the share capital of E.ON. Finally, E.ON was entitled
to a cash payment of EUR 1.5 billion for all transactions, which
is subject to contractually agreed purchase price adjustments.
The acquisition of RWE’s 76.8 % interest in innogy SE was closed
on September 18, 2019 following clearance from the European
Commission and the relevant antitrust authorities. By acquiring
the interest in innogy from RWE, E.ON also acquired shares that
had already been tendered as part of the voluntary public take-
over offer in 2018, amounting to 9.4 %. Taking into consideration
the further 3.8 % interest that E.ON had already acquired on the
capital market, E.ON held 90 % of all innogy shares as at the
date of the innogy acquisition.

1 Effective as of September 18, 2019, E.ON obtained control

within the meaning of IFRS 10 of innogy’s network and sales
businesses. By contrast, due to contractual arrangements
E.ON did not obtain control of innogy’s renewables and gas
storage businesses or its equity interests in Kelag. The acqui-
sition is accounted for as a business combination using the
acquisition method in accordance with IFRS 3. The identifi-
able assets acquired and the liabilities assumed of innogy
were recognized at their acquisition-date fair value. Taking
into account the consideration transferred (including the
cash payment), the other shares previously acquired on the
capital market and the non-controlling interests, the pre-
liminary goodwill amounted to EUR 15.5 billion.

The clearance of the European Commission was linked to
conditions, including in particular to dispose of certain E.ON
and innogy sales businesses in Germany, Hungary and the
Czech Republic. Based on the assessment by the Company’s
executive directors that the disposal of these business activities
is highly probable, since the date of the innogy acquisition
they have been recognized as disposal group and assets held
for sale, respectively.

From September 18, 2019 onwards, the innogy companies
have been managed as a new independent segment within
the E.ON Group and are presented as such in the segment
reporting.

Due to the highly complex nature of the transaction as a

whole, the associated complex calculation of the consideration
transferred, the estimation uncertainties and the scope of
discretion in measuring the assets acquired and liabilities
assumed, as well as the overall material effect of the amounts
involved in the acquisition on the assets, liabilities, financial
position and financial performance, the first-time consoli-
dation of innogy was of particular significance in the context
of our audit.

2 As part of our audit, we initially assessed the preconditions
for E.ON obtaining control. The focus was on determining
which assets and liabilities E.ON had obtained control of. We
also verified the acquisition date. To that end, we inspected
and assessed in particular the contractual agreements and
other relevant documents. On that basis, we reconciled the
components of the consideration transferred and their amounts
with the underlying agreements and articles of association,
the contractually agreed purchase prices and purchase price
adjustments, and the payments made. Furthermore, we
assessed the recognition and measurement of the assets
and liabilities underlying the acquisition. This included their
identification, the application of consistent accounting and
measurement policies, and their fair value accounting as of
the date of first-time consolidation. In this context, one focal
point for our audit was to address the external reports for the
purchase price allocation. As well as assessing the external
appraiser’s professional qualifications, we also assessed
the appropriateness of, among other things, the models on
which the valuations were based and the valuation inputs
and assumptions used. Given the special characteristics
relating to the calculation of the fair values in the context of
the business combination, our valuation specialists assisted
in the process. Furthermore, we verified how the first-time
consolidation was performed from a technical perspective
and assessed the calculation of the preliminary goodwill. We
also assessed as of the reporting date December 31, 2019
whether there were indications of impairment in accordance
with IAS 36 as the starting point for an impairment test.
Another focal point of our audit was to assess the disclosures
in the notes required under IFRS 3 and the presentation as
part of segment reporting. Overall, we were able to satisfy
ourselves that the acquisition was appropriately presented in
the financial statements, that the estimates and assumptions,
also with regard to the preliminary goodwill, made by the
executive directors are substantiated and sufficiently docu-
mented, and that the corresponding disclosures in the notes
are appropriate.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

233

With respect to the business activities in Germany, Hungary
and the Czech Republic recognized under IFRS 5, we assessed
whether the classification as disposal group and assets held
for sale, respectively, as at the date of the reclassification and
as at December 31, 2019 was appropriate and whether the
presentation in the balance sheet complies with the relevant
standards and generally accepted professional interpretations.
For this purpose, we first of all obtained an understanding of
the underlying contractual agreements and the respective con-
ditions imposed by the European Commission, and assessed
their impact on the presentation of the relevant business
activities and the accounting treatment. Overall, we were able
to satisfy ourselves that the business activities classified as
held for sale are appropriately presented.

3 The Company’s disclosures relating to the first-time consoli-
dation are contained in notes 1, 4 and 34 to the consolidated
financial statements.

b. Disposal of the renewables business and nuclear power

equity interests

1 Based on the assessment of the Company’s executive directors
that the overall transaction is highly probable to close, the
renewables business subject to transfer was recognized as a
discontinued operation and the nuclear power equity inter-
ests were reclassified as a disposal group effective June 30,
2018, in accordance with IFRS 5. Since E.ON managed the
renewables business until the disposal took effect, however,
the activities continued to be fully included in the relevant key
performance indicators and the segment reporting. Due to
the contractual agreements with RWE, E.ON lost control of
substantially all of the renewables business on September 18,
2019. Taking into consideration the reclassification to profit
or loss of currency translation gains that had previously been
recognized directly in equity, the deconsolidation resulted in
a total gain of EUR 0.8 billion, which was recognized under
discontinued operations together with the current profit or loss
from the business. The transferred business activities were
included in segment reporting and the Group’s management
key performance indicators until September 18, 2019. The
disposal of the nuclear power equity interests resulted in a
EUR 0.1 billion loss.

Independent Auditor’s Report

234

Due to the highly complex nature of the transaction as a

whole and the overall material effect of the amounts involved
on the assets, liabilities, financial position and financial per-
formance of the E.ON Group, the deconsolidation of the
renewables business and the disposal of the nuclear power
equity interests were of particular significance in the context
of our audit.

2 As part of our audit, we inspected, verified and assessed the
contractual agreements on disposal of the renewables busi-
ness and the nuclear power equity interests. We verified
whether the disposal was properly presented from a technical
standpoint, whether the assets and liabilities subject to dis-
posal were fully and correctly derecognized, and whether the
net gain on disposal was appropriately calculated and recorded.
We reconciled the calculation of the purchase price with
the contractual agreements. Overall, we were able to satisfy
ourselves that the disposals were appropriately presented
in the financial statements and that the corresponding dis-
closures in the notes are appropriate.

3 The Company’s disclosures relating to the disposal of the

renewables business and the nuclear power equity interests
are contained in notes 4 and 34 to the consolidated financial
statements.

2 Recoverability of goodwill
1 In the consolidated financial statements of E.ON SE as of

December 31, 2019, an amount of EUR 17.5 billion is reported
under the “Goodwill” balance sheet item. This amount com-
prises of preliminary goodwill from the first-time consolida-
tion of innogy that has not yet been allocated in the amount
of EUR 15.5 billion as well as existing goodwill in the total
amount of EUR 2.0 billion. The preliminary goodwill from the
first-time consolidation of innogy not yet allocated was not
part of the regular impairment test. Nor was it subject to an
ad hoc impairment test, since as of December 31, 2019 there
were no indications of impairment in accordance with IAS 36.

It was also not necessary to recognize impairment losses
on existing goodwill in financial year 2019. The Company
allocates goodwill to cash-generating units or groups of
cash- generating units that correspond to the E.ON Group’s
operating segments. These are subject to impairment tests
on a regular basis in the fourth quarter of a given financial
year or whenever there are indications of impairment. The
carrying amount of the relevant cash-generating units, includ-
ing goodwill, is compared with the corresponding recoverable
amount in the context of the regular impairment test. The
present value of the future cash flows from the respective

cash-generating unit serves as the basis of valuation in the
context of an impairment test. The cash flows are based on
the E.ON Group’s medium-term planning for the years 2020
to 2022. For the purposes of assessing the recoverability of
goodwill, the three-year detailed planning period is generally
extended by another two years – or more, if required – and
is then extrapolated on the basis of assumptions about long-
term growth rates in perpetual annuity. The discount rate
used is the weighted average cost of capital for the relevant
cash-generating unit in each case. The result of this measure-
ment depends to a large extent on the executive directors’
estimates of the amount of future cash flows, the discount
rate applied and the growth rate. The assumptions about the
long-term development of the underlying contributions to
earnings and the relevant regulatory influencing factors are
also of particular importance. Due to the complexity of the
measurement and the considerable uncertainties relating to
the underlying assumptions, this matter was of particular
significance in the context of our audit.

2 As part of our audit, we assessed, among other things,

whether the measurement model for performing impairment
tests properly reflects the conceptual requirements of the
relevant standards and whether the calculations in the models
were correctly performed. The critical assessment of the key
assumptions underlying the measurements was the focal
point of our audit. We evaluated the appropriateness of the
future cash flows used for the measurement by reconciling
this data against general and sector-specific market expecta-
tions and by comparing it with the current budgets in the
Group investment, finance and HR plan for 2020 prepared by
the executive directors and approved by the supervisory
board on December 17, 2019, as well as the planning for the
years 2021 and 2022 prepared by the executive directors
and acknowledged by the supervisory board. Among other
things, we assessed how the long-term growth rates used for
perpetual annuities were derived from the observable market
data and market expectations, and reconciled this with the
cost of capital applied. We also assessed the parameters used
to determine the discount rate applied, and evaluated the
measurement model. In addition, we compared the assump-
tions about the long-term price development and the relevant
regulatory influencing factors against sector-specific expec-
tations. Within the context of our assessment of the recover-
ability of goodwill, we also evaluated whether the costs for

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

235

corporate overheads were properly ascertained, allocated, and
included in the impairment tests of the respective cash-
generating units. Finally, we assessed the calculation of the
carrying amounts of the cash-generating units, which were
compared against the corresponding recoverable amount,
as well as the mathematical comparison.

Overall, we consider the measurement inputs and assump-
tions used by the executive directors to be in line with our
expectations. We were able to verify the inclusion in the
measurement models.

3 The Company’s disclosures relating to the recoverability

of goodwill and the preliminary goodwill, respectively, are
contained in note 14 and 1 to the consolidated financial
statements.

Other Information

The executive directors are responsible for the other information.
The other information comprises the statement on corporate
governance pursuant to § 289f HGB and § 315d HGB.

The other information comprises further the remaining parts
of the annual report – excluding cross-references to external
information – with the exception of the audited consolidated
financial statements, the audited group management report
and our auditor’s report, and the separate non-financial report
pursuant to § 289b Abs. 3 HGB and § 315b Abs. 3 HGB.

Our audit opinions on the consolidated financial statements and
on the group management report do not cover the other infor-
mation, and consequently we do not express an audit opinion
or any other form of assurance conclusion thereon.

In connection with our audit, our responsibility is to read the
other information and, in so doing, to consider whether the
other information

Responsibilities of the Executive Directors and the Supervisory
Board for the Consolidated Financial Statements and the Group
Management Report
The executive directors are responsible for the preparation of
the consolidated financial statements that comply, in all material
respects, with IFRSs as adopted by the EU and the additional
requirements of German commercial law pursuant to § 315e
Abs. 1 HGB and that the consolidated financial statements, in
compliance with these requirements, give a true and fair view
of the assets, liabilities, financial position, and financial perfor-
mance of the Group. In addition the executive directors are
responsible for such internal control as they have determined
necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether
due to fraud or error.

In preparing the consolidated financial statements, the executive
directors are responsible for assessing the Group’s ability to
continue as a going concern. They also have the responsibility
for disclosing, as applicable, matters related to going concern.
In addition, they are responsible for financial reporting based on
the going concern basis of accounting unless there is an inten-
tion to liquidate the Group or to cease operations, or there is no
realistic alternative but to do so.

Furthermore, the executive directors are responsible for the
preparation of the group management report that, as a whole,
provides an appropriate view of the Group’s position and is, in
all material respects, consistent with the consolidated financial
statements, complies with German legal requirements, and
appropriately presents the opportunities and risks of future
development. In addition, the executive directors are responsible
for such arrangements and measures (systems) as they have
considered necessary to enable the preparation of a group
management report that is in accordance with the applicable
German legal requirements, and to be able to provide sufficient
appropriate evidence for the assertions in the group manage-
ment report.

•

is materially inconsistent with the consolidated financial
statements, with the group management report or our
knowledge obtained in the audit, or

The supervisory board is responsible for overseeing the Group’s
financial reporting process for the preparation of the consolidated
financial statements and of the group management report.

• otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that
there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report
in this regard.

Independent Auditor’s Report

236

Auditor’s Responsibilities for the Audit of the Consolidated
Financial Statements and of the Group Management Report
Our objectives are to obtain reasonable assurance about
whether the consolidated financial statements as a whole are
free from material misstatement, whether due to fraud or error,
and whether the group management report as a whole provides
an appropriate view of the Group’s position and, in all material
respects, is consistent with the consolidated financial state-
ments and the knowledge obtained in the audit, complies with
the German legal requirements and appropriately presents the
opportunities and risks of future development, as well as to
issue an auditor’s report that includes our audit opinions on the
consolidated financial statements and on the group manage-
ment report.

Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with § 317 HGB
and the EU Audit Regulation and in compliance with German
Generally Accepted Standards for Financial Statement Audits
promulgated by the Institut der Wirtschaftsprüfer (IDW) and
supplementary compliance with the ISAs will always detect a
material misstatement. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggre-
gate, they could reasonably be expected to influence the eco-
nomic decisions of users taken on the basis of these consolidated
financial statements and this group management report.

We exercise professional judgment and maintain professional
skepticism throughout the audit. We also:

•

Identify and assess the risks of material misstatement of the
consolidated financial statements and of the group manage-
ment report, whether due to fraud or error, design and per-
form audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a
basis for our audit opinions. The risk of not detecting a material
misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal control.

• Obtain an understanding of internal control relevant to the
audit of the consolidated financial statements and of
arrangements and measures (systems) relevant to the audit
of the group management report in order to design audit
procedures that are appropriate in the circumstances, but
not for the purpose of expressing an audit opinion on the
effectiveness of these systems.

• Evaluate the appropriateness of accounting policies used by
the executive directors and the reasonableness of estimates
made by the executive directors and related disclosures.

• Conclude on the appropriateness of the executive directors’
use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast signifi-
cant doubt on the Group’s ability to continue as a going con-
cern. If we conclude that a material uncertainty exists, we
are required to draw attention in the auditor’s report to the
related disclosures in the consolidated financial statements
and in the group management report or, if such disclosures
are inadequate, to modify our respective audit opinions. Our
conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events
or conditions may cause the Group to cease to be able to
continue as a going concern.

• Evaluate the overall presentation, structure and content of
the consolidated financial statements, including the disclo-
sures, and whether the consolidated financial statements
present the underlying transactions and events in a manner
that the consolidated financial statements give a true and
fair view of the assets, liabilities, financial position and finan-
cial performance of the Group in compliance with IFRSs as
adopted by the EU and the additional requirements of German
commercial law pursuant to § 315e Abs. 1 HGB.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

237

Other Legal and Regulatory Requirements

Further Information Pursuant to Article 10
of the EU Audit Regulation

We were elected as group auditor by the annual general meeting
on May 14, 2019. We were engaged by the supervisory board on
June 11, 2019. We have been the group auditor of the E.ON SE,
Essen, without interruption since the Company first met the
requirements as a public-interest entity within the meaning of
§ 319a Abs. 1 Satz 1 HGB in the financial year 1965.

We declare that the audit opinions expressed in this auditor’s
report are consistent with the additional report to the audit
committee pursuant to Article 11 of the EU Audit Regulation
(long-form audit report).

German Public Auditor Responsible for the
Engagement

The German Public Auditor responsible for the engagement is
Aissata Touré.

Düsseldorf, March 23, 2020

PricewaterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft

Markus Dittmann
Wirtschaftsprüfer
(German Public Auditor)

Aissata Touré
Wirtschaftsprüferin
(German Public Auditor)

• Obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities
within the Group to express audit opinions on the consolidated
financial statements and on the group management report.
We are responsible for the direction, supervision and perfor-
mance of the group audit. We remain solely responsible for
our audit opinions.

• Evaluate the consistency of the group management report

with the consolidated financial statements, its conformity with
German law, and the view of the Group’s position it provides.

• Perform audit procedures on the prospective information
presented by the executive directors in the group manage-
ment report. On the basis of sufficient appropriate audit evi-
dence we evaluate, in particular, the significant assumptions
used by the executive directors as a basis for the prospective
information, and evaluate the proper derivation of the pro-
spective information from these assumptions. We do not
express a separate audit opinion on the prospective infor-
mation and on the assumptions used as a basis. There is
a substantial unavoidable risk that future events will differ
materially from the prospective information.

We communicate with those charged with governance regard-
ing, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a state-
ment that we have complied with the relevant independence
requirements, and communicate with them all relationships and
other matters that may reasonably be thought to bear on our
independence, and where applicable, the related safeguards.

From the matters communicated with those charged with
governance, we determine those matters that were of most sig-
nificance in the audit of the consolidated financial statements
of the current period and are therefore the key audit matters.
We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter.

Independent Practitioner’s Report
on Non-financial Reporting

238

Independent Practitioner’s Report on a Limited
Assurance Engagement on Non-financial
Reporting

To E.ON SE, Essen

We have performed a limited assurance engagement on the
combined separate non-financial report pursuant to §§ (Arti-
cles) 289b Abs. (paragraph) 3 and 315b Abs. 3 HGB (“Handels-
gesetzbuch”: “German Commercial Code”) of E.ON SE, Essen
(hereinafter the “Company”) for the period from 1st January to
31st December 2019 (hereinafter the “Non-financial Report”).

Responsibilities of the Executive Directors

The executive directors of the Company are responsible for
the preparation of the Non-financial Report in accordance with
§§ 315c in conjunction with 289c to 289e HGB.

This responsibility of the Company’s executive directors
includes the selection and application of appropriate methods
of non- financial reporting as well as making assumptions and
estimates related to individual non-financial disclosures which
are reasonable in the circumstances. Furthermore, the executive
directors are responsible for such internal control as they have
considered necessary to enable the preparation of a Non-financial
Report that is free from material misstatement whether due to
fraud or error.

Independence and Quality Control of the Audit
Firm

We have complied with the German professional provisions
regarding independence as well as other ethical requirements.

Our audit firm applies the national legal requirements and
professional standards – in particular the Professional Code
for German Public Auditors and German Chartered Auditors
(“Berufssatzung für Wirtschaftsprüfer und vereidigte Buch-
prüfer“: “BS WP/vBP”) as well as the Standard on Quality Con-
trol 1 published by the Institut der Wirtschaftsprüfer (Institute
of Public Auditors in Germany; IDW): Requirements to quality
control for audit firms (IDW Qualitätssicherungsstandard 1:
Anforderungen an die Qualitätssicherung in der Wirtschafts-
prüferpraxis–IDW QS 1) – and accordingly maintains a compre-
hensive system of quality control including documented policies
and procedures regarding compliance with ethical requirements,
professional standards and applicable legal and regulatory
requirements.

Practitioner’s Responsibility

Our responsibility is to express a limited assurance conclusion
on the Non-financial Report based on the assurance engagement
we have performed.

Within the scope of our engagement we did not perform an
audit on external sources of information or expert opinions,
referred to in the Non-financial Report.

We conducted our assurance engagement in accordance with
the International Standard on Assurance Engagements (ISAE)
3000 (Revised): Assurance Engagements other than Audits or
Reviews of Historical Financial Information, issued by the IAASB.
This Standard requires that we plan and perform the assurance
engagement to allow us to conclude with limited assurance
that nothing has come to our attention that causes us to believe
that the Company’s Non-financial Report for the period from
1st January to 31st December 2019 has not been prepared, in all
material aspects, in accordance with §§ 315c in conjunction
with 289c to 289e HGB.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

239

In a limited assurance engagement the assurance procedures
are less in extent than for a reasonable assurance engagement,
and therefore a substantially lower level of assurance is obtained.
The assurance procedures selected depend on the practitioner’s
judgment.

Within the scope of our assurance engagement, we performed
amongst others the following assurance procedures and further
activities:

• Obtaining an understanding of the structure of the sustain-
ability organization and of the stakeholder engagement

•

Inquiries of personnel involved in the preparation of the
Non-financial Report regarding the preparation process, the
internal control system relating to this process and selected
disclosures in the Non-financial Report

•

Identification of the likely risks of material misstatement of
the Non-financial Report

Assurance Conclusion

Based on the assurance procedures performed and assurance
evidence obtained, nothing has come to our attention that
causes us to believe that the Company’s Non-financial Report
for the period from 1st January to 31st December 2019 has
not been prepared, in all material aspects, in accordance with
§§ 315c in conjunction with 289c to 289e HGB.

Intended Use of the Assurance Report

We issue this report on the basis of the engagement agreed with
the Company. The assurance engagement has been performed
for purposes of the Company and the report is solely intended
to inform the Company about the results of the limited assurance
engagement. The report is not intended for any third parties to
base any (financial) decision thereon. Our responsibility lies only
with the Company. We do not assume any responsibility
towards third parties.

• Analytical evaluation of selected disclosures in the Non-

Essen, March 23, 2020

financial Report

• Survey regarding decentral data gathering and approval of

information on GHG emissions FY19

PricewaterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft

• Comparison of selected disclosures with corresponding data
in the consolidated financial statements and in the group
management report

Markus Dittmann
Wirtschaftsprüfer
(German public auditor)

Hendrik Fink
Wirtschaftsprüfer
(German public auditor)

• Evaluation of the presentation of the non-financial information

Boards

240

Supervisory Board (and Information on Other Directorships)

Dr. Karl-Ludwig Kley
Chairman of the Supervisory Board, E.ON SE

Bayerische Motoren Werke AG
Deutsche Lufthansa AG (Chairman)

Erich Clementi
Deputy Chairman of the Supervisory Board, E.ON SE

Andreas Scheidt
Deputy Chairman of the Supervisory Board, E.ON SE
Unified Service Sector Union, ver.di

Clive Broutta
Full-time Representative of the General, Municipal,
Boilermakers, and Allied Trade Union (GMB)

Klaus Fröhlich
Member of the Board of Management,
Bayerische Motoren Werke AG

Ulrich Grillo (since October 1, 2019)
Chairman of the Board of Management, Grillo-Werke AG

Rheinmetall AG (Chairman)
innogy SE (until October 4, 2019)
Grillo Zinkoxid GmbH2
Zinacor S.A.2

Carolina Dybeck Happe
Chief Financial Officer, A.P. Møller – Mærsk A/S
(since January 1, 2019)

Schneider Electric SE (since April 25, 2019)

Monika Krebber (since September 24, 2019)
Deputy Chairperson of the General Works Council, innogy SE

innogy SE

Eugen-Gheorghe Luha
Chairman of Gas România (Romanian Federation of Gas Unions)
Chairman of Romanian employee representatives
Member of the SE Works Council, E.ON SE

Stefan May (since September 24, 2019)
Deputy Chairman of the E.ON Group Works Council
Chairman of the Joint Works Council, Westnetz GmbH
Chairman of the Works Council of the Münster Region of
Westnetz GmbH
innogy SE
innogy Westenergie GmbH

Szilvia Pinczésné Márton
Chairperson of the Works Council, E.ON Dél-dunántúli
Áramhálózati Zrt.
Member of the European Works Council, E.ON SE

René Pöhls (since September 24, 2019)
Deputy Chairman of the SE Works Council, E.ON SE
Chairman of the SE Works Council, innogy SE
Deputy Chairman of the Group Works Council, E.ON SE
Chairman of the Group Works Council, envia Mitteldeutsche
Energie AG
Chairman of the Joint General Works Council and the Joint
Works Council Halle/Kabelsketal, envia Mitteldeutsche
Energie AG, MITGAS Mitteldeutsche Gasversorgung GmbH,
Mitteldeutsche Netzgesellschaft Strom mbH,
and Mitteldeutsche Netzgesellschaft Gas mbH

innogy SE
envia Mitteldeutsche Energie AG

Andreas Schmitz
Attorney and bank manager

HSBC Trinkaus & Burkhardt AG (Chairman)
Scheidt & Bachmann GmbH (Chairman)
Andersch AG (Chairman, until July 31, 2019)

Dr. Rolf Martin Schmitz (since October 1, 2019)
CEO, RWE AG

Amprion GmbH
RWE Generation SE (Chairman)1
RWE Power AG (Chairman )1
RWE Supply & Trading GmbH1
TÜV Rheinland AG
Jaeger Grund GmbH & Co. KG (Jaeger Gruppe, Chairman)
Kärntner Energieholding Beteiligungs GmbH
KELAG-Kärntner Elektrizitäts-AG

Unless otherwise indicated, information is as of December 31, 2019, or as of the date on which membership in the E.ON SE Supervisory Board ended.

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 within the meaning of Section 100, Paragraph 2, Sentence 2 of the German Stock Corporation Act.
2Other E.ON Group directorship.

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

241

Fred Schulz
Chairman of the SE Works Council, E.ON SE
Deputy Chairman of the E.ON Group Works Council
Chairman of the Combined Works Council, E.DIS AG
Chairman of the Works Council, E.DIS Netz GmbH-East Region

E.DIS AG
Szczecińska Energetyka Cieplna Sp. z o.o.

Dr. Karen de Segundo
Attorney

Elisabeth Wallbaum
Expert, SE Works Council E.ON SE and
E.ON Group Works Council

Deborah Wilkens (since October 1, 2019)
Management consultant

innogy SE (until October 4, 2019)

Ewald Woste
Management consultant

GASAG AG
Bayernwerk AG
GreenCom Networks AG
Deutsche Energie-Agentur GmbH (dena)
Energie Steiermark AG

Albert Zettl
Deputy Chairman of the SE Works Council, E.ON SE
Chairman of the E.ON Group Works Council
Chairman of the Division Works Council, Bayernwerk AG
Chairman of the Eastern Bavaria Works Council,
Bayernwerk Netz GmbH
Bayernwerk AG
Versorgungskasse Energie VVaG i. L.

Supervisory Board Committees

Executive Committee
Dr. Karl-Ludwig Kley, Chairman
Andreas Scheidt, Deputy Chairman
Erich Clementi
Ulrich Grillo (since October 2, 2019)
Andreas Schmitz (from March 12 to October 2, 2019)
Fred Schulz
Albert Zettl (since March 12, 2019)

Audit and Risk Committee
Andreas Schmitz, Chairman
Fred Schulz, Deputy Chairman
Caroline Dybeck Happe
René Pöhls (since October 2, 2019)
Elisabeth Wallbaum
Deborah Wilkens (since October 2, 2019)

Innovation and Sustainability Committee
(until October 2, 2019: Investment and Innovation Committee)
Dr. Karen de Segundo, Chairperson
Albert Zettl, Deputy Chairman (until October 2, 2019)
Stefan May (since October 2, 2019; Deputy Chairman since
December 17, 2019)
Clive Broutta
Klaus Fröhlich
Eugen-Gheorghe Luha
Ewald Woste

Nomination Committee
Dr. Karl-Ludwig Kley, Chairman
Erich Clementi, Deputy Chairman
Dr. Karen de Segundo

Unless otherwise indicated, information is as of December 31, 2019, or as of the date on which membership in the E.ON SE Supervisory Board ended.

1Exempted E.ON Group directorship within the meaning of Section 100, Paragraph 2, Sentence 2 of the German Stock Corporation Act.
2Other E.ON Group directorship.

Boards

242

Management Board (and Information on Other Directorships)

Dr. Johannes Teyssen
Born in 1959 in Hildesheim, Germany
Chairman of the Management Board since 2010
Member of the Management Board since 2004
Strategy & Innovation, Human Resources, Communications &
Political Affairs, Legal & Compliance, Corporate Audit, Health/
Safety and Environment, Sustainability

innogy SE1 (Chairman, since October 5, 2019)
Nord Stream AG

Dr.-Ing. Leonhard Birnbaum
Born in 1967 in Ludwigshafen, Germany
Member of the Management Board of E.ON SE since 2013
Member of the Management Board of innogy SE
since October 11, 2019 (Chairman)
innogy integration project, Consulting, PreussenElektra

E.ON Italia S.p.A.2
Georgsmarienhütte Holding GmbH

Dr. Thomas König
Born in 1965 in Finnentrop, Germany
Member of the Management Board since 2018
Energy Networks (including Turkey), Procurement

Avacon AG1 (Chairman)
Bayernwerk AG1 (Chairman)
E.DIS AG1 (Chairman)
HanseWerk AG1 (Chairman)
E.ON Sverige AB2 (Chairman)
E.ON Hungária Zrt.2 (Chairman)
E.ON Česká republika s.r.o.2 (Chairman)
E.ON Distribuce, a.s.2 (Chairman)

Dr. Marc Spieker
Born in 1975 in Essen, Germany
Member of the Management Board since 2017
Finance, Mergers & Acquisitions and Participation Management,
Risk Management, Accounting & Controlling, Investor Relations,
Tax, S4 Transformation

innogy SE1 (since October 5, 2019)
E.ON Verwaltungs SE1 (Chairman)
Nord Stream AG

Dr. Karsten Wildberger
Born in 1969 in Gießen, Germany
Member of the Management Board since 2016
Retail and Customer Solutions (including Turkey),
Decentralized Generation, Energy Management,
Marketing, Digital Transformation & IT

E.ON Digital Technology GmbH

(formerly E.ON Business Services GmbH)1 (Chairman)

E.ON Sverige AB2
E.ON Energie A.S.2 (Chairman)

Unless otherwise indicated, information is as of December 31, 2019, or as of the date on which membership in the E.ON Management Board ended.

1Exempted E.ON Group directorship within the meaning of Section 100, Paragraph 2, Sentence 2 of the German Stock Corporation Act.
2Other E.ON Group directorship.

Summary of Financial Highlights

Report of the Supervisory Board
Strategy and Objectives
Combined Group Management Report
Combined Non-Financial Report
Consolidated Financial Statements
Other Information

243

Summary of Financial Highlights1, 2

€ in millions

Sales and earnings

Sales

Adjusted EBITDA3

Adjusted EBIT3

Net income/Net loss

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

Adjusted net income3

Value measures

ROCE (%)

Asset and capital structure

Non-current assets

Current assets

Total assets

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, investments and financial ratios

Cash provided by operating activities of continuing operations4

Cash-effective investments

Equity ratio (%)

Economic net debt (at year-end)

Cash provided by operating activities of continuing operations
as a percentage of sales

Stock and E.ON SE long-term ratings

Earnings per share attributable to shareholders of E.ON SE (€)

Dividend per share5 (€)

Dividend payout

Moody’s

Standard & Poor’s

Employees

Employees at year-end

2015

2016

2017

2018

2019

42,656

38,173

37,965

30,084

41,484

5,844

3,563

-6,377

-6,999

1,076

4,939

3,112

-16,007

-8,450

904

4,955

3,074

4,180

3,925

1,427

4,840

2,989

3,524

3,223

1,505

5,558

3,254

1,808

1,566

1,536

10.9

10.4

10.6

10.4

8.4

73,612

40,081

113,693

19,077
2,001
2,648

61,172
30,655
14,954
15,563

33,444
4,280
2,788
26,376

113,693

4,191

3,227

46,296

17,403

63,699

1,287
2,001
2,342

39,287
19,618
10,435
9,234

23,125
12,008
3,792
7,325

63,699

2,961

3,169

40,164

15,786

55,950

6,708
2,201
2,701

35,198
18,001
9,922
7,275

14,044
2,041
3,099
8,904

55,950

-2,952

3,308

30,883

23,441

54,324

8,518
2,201
2,760

30,545
15,706
8,323
6,516

15,261
2,117
1,563
11,581

54,324

2,853

3,523

76,444

22,122

98,566

13,085
2,641
4,008

59,464
20,669
28,025
10,770

26,017
4,019
3,923
18,075

98,566

2,965

5,492

27,714

26,320

19,248

16,580

39,430

9.8

7.8

–

9.5

7.1

-3.6

0.50

976

Baa1

BBB+

-4.33

0.21

410

Baa1

BBB+

1.84

0.30

650

Baa2

BBB

1.49

0.43

932

Baa2

BBB

0.68

0.46

1,199

Baa2

BBB

43,162

43,138

42,699

43,302

78,948

1Adjusted for discontinued operations and for the application of IFRS 10 and 11 and IAS 32. · 2Line items from the Consolidated Statements of Income for 2016 were adjusted to exclude Uniper;
they include Uniper prior to 2016. Line items from the Consolidated Balance Sheets for 2016 were adjusted to exclude Uniper; they include Uniper prior to 2016. · 3Adjusted for non-operating effects.
4The Renewables segment is included fully from January 1, 2018, to September 18, 2019. · 5For the respective financial year; the 2019 figure is management’s proposed dividend.

244

Contact

E.ON SE
Brüsseler Platz 1
45131 Essen
Germany

T +49 201-184-00
info@eon.com
eon.com

Journalists
T +49 201-184-4236
eon.com/en/about-us/media.html

Analysts, shareholders and bond investors
T +49 201-184-2806
investorrelations@eon.com

Only the German version of this Annual Report is legally binding.

Production & Typesetting

Jung Produktion, Düsseldorf

Printing

G. Peschke Druckerei, Parsdorf

This Annual Report was printed on paper produced from fiber that comes from
a responsibly managed forest certified by the Forest Stewardship Council® and
other controlled sources.

Financial Calendar

May 12, 2020

Quarterly Statement: January – March 2020

June 2020

2020 Annual Shareholders Meeting

August 12, 2020

Half-Year Financial Report: January – June 2020

November 11, 2020

Quarterly Statement: January – September 2020

March 24, 2021

Release of the 2020 Annual Report

May 11, 2021

Quarterly Statement: January – March 2021

May 19, 2021

2021 Annual Shareholders Meeting

August 11, 2021

Half-Year Financial Report: January – June 2021

November 10, 2021

Quarterly Statement: January – September 2021

This Annual Report was published on March 25, 2020.

This Annual 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.

E.ON SE

Brüsseler Platz 1
45131 Essen
Germany
T +49 201-184-00
info@eon.com

eon.com