RWE AG Annual Report 2018

FY2018 Annual Report · RWE AG

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Powering into
the future.

Annual Report 2018

The new RWE:
engine of the energy
transition

We all need electricity – children and adults, small businesses and industrial heavyweights.
Where there is electricity, there is light, warmth and communication; there is production,
medical care and mobility. Electricity is life.

For more than 120 years, RWE has been a reliable electricity provider to people and
companies alike. We see to it that electricity is available wherever it is needed, day and night,
when the sun is shining, in wind, sleet or snow, and across all seasons. For people in our
core markets, electricity is a matter of course – not because it is, but because that is what we
have turned it into.

Today, climate change presents us with a new challenge. It is no longer just about ensuring
that electricity is generated, but also about how it is produced. If possible, it should be
zero-carbon, like solar, wind and hydro. We will also tackle this challenge with resolve and
spur the sector’s transformation into a sustainable energy system that preserves the
climate. We are laying the foundation for this by acquiring the renewable energy business
of E.ON and of our financial subsidiary innogy. In the future, we will spend billions of euros
building new wind and solar farms – in Europe, the USA and many other places around the
world.

But expanding renewable energy is not the end of the road. The wind and the sun are not
available around the clock. This is why high-capacity energy storage is needed, and we intend
to play our part in developing and building it. Moreover, in the foreseeable future, there will
be a need for conventional power stations that generate electricity whenever wind turbines
and solar panels can’t. Otherwise, we will go back to square one, when security of supply was
not a matter of course.

At RWE we’re powering into the future of electricity supply: a supply of energy that preserves
the climate and is absolutely reliable. Our mission is to ensure that these objectives do not
become mutually exclusive. This mission is:

Powering. Reliable. Future.

CONTENTS

To our investors
Interview with the CEO
The Executive Board of RWE AG
Supervisory Board report
RWE on the capital market

1
1.1
1.2
1.3
1.4
1.5 Major events
1.6
1.7
1.8
1.9

1.10

Combined review of operations
Strategy and structure
Innovation
Economic environment
Political environment

Notes on reporting
Business performance
Financial position and net worth
Notes to the financial statements of
RWE AG (holding company)
Presentation of the RWE Group with
innogy as a pure financial investment

1.11 Disclosure relating to
German takeover law
1.12 Remuneration report
1.13 Development of risks and opportunities
1.14 Outlook

3
6
8
13

17
18
24
27
32
35
40
42
51

59
61
73
83

Responsibility statement

3
3.1
3.2
3.3
3.4
3.5
3.6
3.7

3.8
3.9
3.10

Consolidated financial statements
Income statement
Statement of comprehensive income
Balance sheet
Cash flow statement
Statement of changes in equity
Notes
List of shareholdings
(part of the notes)
Boards (part of the notes)
Independent auditor‘s report
Information on the auditor

Further information
Five-year overview
Imprint
Financial calendar

87
88
89
90
91
92
93

160
196
201
207

208
210
211

AT A GLANCE

RWE Group – key figures1

Power generation

External revenue (excluding natural gas tax/electricity tax)

Adjusted EBITDA

Adjusted EBIT

Income from continuing operations before taxes

Net income

Cash flows from operating activities of continuing operations

Capital expenditure

Property, plant and equipment and intangible assets

Financial assets

Free cash flow

billion kWh

€ million

176.0

13,388

1,538

619

335

4,611

1,260

1,079

181

3,439

2018

2017

200.2

13,822

2,149

1,170

2,056

1,900

– 3,771

902

706

196

– 4,439

614,745

3.09

1.50

+/–
%

– 12.1

– 3.1

– 28.4

– 47.1

– 97.6

– 82.4

222.3

39.7

52.8

– 7.7

177.5

–

– 82.5

–

– 7.1

Number of shares outstanding (annual average)

thousands

614,745

Earnings per share

Dividend per common share

Dividend per preferred share

€

0.54

0.702

Net debt of continuing operations

€ million

Workforce3

31 Dec 2018

31 Dec 2017

4,389

17,748

–

19,106

1 Change in reporting; see explanation on page 40.
2 Dividend proposal for RWE AG’s 2018 fiscal year, subject to the passing of a resolution by the 3 May 2019 Annual General Meeting.
3 Converted to full-time positions.

To our investors > Interview with the CEO

“2019 HAS THE POTENTIAL TO BE A VERY GOOD YEAR FOR RWE.”

The asset swap with E.ON will turn RWE into a new company,
transforming at least half of it ...
The ‘new RWE’ won’t be an entirely different company. With
our power plants, we will continue to provide security of
supply and with renewables, we will become the engine of
the energy transition. And both are important. Conventional
and renewable generation have always been two sides of
the same coin for us.

But the focus will probably increasingly shift towards
renewable energy, an area in which you have ambitious
growth targets.
In terms of earnings, renewables will have the upper hand
right from the start. In the first year after the completion
of the asset swap, they will account for more than half of
the Group’s adjusted EBITDA. The transaction will turn us
into the No. 3 in renewable energy in Europe. In offshore
wind, we will even be No. 2 globally. We want to expand this
position through initial net investments of 1.5 billion euros
per year. This should enable us to place 2 to 3 gigawatts of
new generation capacity on the system every year. The
focus remains on wind and we have also set our sights on
solar and storage projects. Our focus will lie on markets in
Europe, North America and the Asia-Pacific region.

Will RWE become a global player in renewable energy?
The global aspect of our approach is that we will only enter
certain international markets with certain technologies. In
Asia, for example, we’re looking to only invest in offshore
wind projects, and in Australia only in onshore wind and
solar power. Basically, we will serve regional markets around
the globe.

As a part of the transaction you will receive a project pipeline
of over 17 gigawatts, mostly wind projects. How much of this
do you intend to implement?
Of course, we can’t make this decision until we have
operational control. However, we probably won’t implement
a fair share of the projects in the pipeline. Only those that
meet our return requirements will be considered. Under no
circumstances will we make investment decisions ‘no matter
what the cost’. This should really go without saying, but it
probably isn’t a bad idea to come out and reiterate it.

Rolf Martin Schmitz on the planned asset swap with E.ON,
the future of RWE as a renewable energy company and the
consequences of Germany’s exit from coal

Mr. Schmitz, many market observers were surprised at your
announcement in March 2018 that you would sell innogy to
E.ON and receive the renewable energy activities of the two
companies in return. Had you been planning this move for
a while?
No. The idea didn’t crop up until the end of 2017. This
was followed in January 2018 by the first talks between
my opposite number at E.ON, Johannes Teyssen, and myself.
And then it all went very fast. That’s the way it goes
sometimes: someone comes up with an idea that is so
compelling that you just want to implement it both
rapidly and well.

On 12 March, the first stock trading day after the announcement
of the transaction, the share prices of all three companies
involved rose significantly. RWE’s common stock gained 9 %.
How do investors feel about the envisaged transaction?
The capital market is a reliable barometer of the quality
of a deal. And based on the reactions of the stock market,
there is no doubt that most investors welcome the
transaction. I also get this feedback directly, when I speak
with institutional investors. We often receive praise for the
fact that we are exchanging a purely financial investment,
where we don’t have any influence in operating terms, for
a high earning business that we can run ourselves.
Furthermore, our investors welcome the fact that RWE once
again has a growth story. And that we will soon have a
broader setup in electricity generation and reduce our
dependency on conventional energy sources.

4 RWE Annual Report 2018

You have set yourself the goal of completing the asset swap
with E.ON this year. Is everything on schedule?
Executing a transaction of this magnitude involves a lot of
work and demands patience. But we are making very good
progress. In January 2019, we filed the asset swap with the
European Commission and received clearance from Brussels
on 26 February. On the same day, the German Cartel Office
also gave its go-ahead. However, this only relates to our
part of the transaction. E.ON also filed its part with the
Commission in January. In this case, the approval process
will take some more time. A hard Brexit may cause delays,
but I’m confident that we will stay on track.

There is some resistance to the deal. Your competitors claim
that the merger of innogy and E.ON will jeopardise
competition. How would you respond to this?
Not at all, really, because that falls in E.ON’s remit. What I
can say is that the German grid business is regulated by the
state. And there are far more than a thousand suppliers in
the domestic retail electricity market. The hurdles to
switching supplier are low. Nowadays, you can do that
online with just a few clicks. So that market works and there
is no reason to believe that this will change.

Experience shows that ‘soft’ factors are also instrumental to
the success of company transactions. Will the managers, who
have different cultural backgrounds, agree on a common
language? Will the employees at all sites be able to identify
with the company’s goals? These and other questions are no
doubt on peoples’ minds at RWE.
Yes, absolutely. This is why the integration of the new
activities under the RWE umbrella is one of our most
important tasks. We will be limited in our actions in this
respect until the transaction closes. But we’ve already
accomplished a lot within the allowed framework. We have
determined our strategy for the renewables business and
put together the team that will lead it. And we will soon
reach decisions on the second management level. One thing
is clear: RWE is not just expanding through the addition of
a new subsidiary – the company will be fundamentally
transformed. We will become much more diverse and much
more international. Be it engineers in Neurath, project
developers in Chicago or traders in Singapore, they will all
represent the new RWE. What is important is that we take
this as an opportunity and learn from our differences.

RWE should become popular as a leading green electricity
producer. Are you already feeling an effect on your image?
This hasn’t yet trickled down into the public’s consciousness,
but that doesn’t surprise me. Only once the transaction has
been completed will we be able to operate as a renewable
energy company. And even then, it will take at least a
couple of years for what the new RWE stands for to be
engrained in peoples’ minds.

Why will it take so long?
Because RWE’s history is deeply rooted in electricity
generation from coal, gas and nuclear energy. This
somewhat one-sided picture will not change overnight. In
addition, I don’t really want our image to be changed
completely. RWE has the reputation of being a responsible,
reliable partner. This is something we’re proud of and would
like to keep on living up to when we cover the entire range
of power generation technologies. What would allow us to
make considerable progress regarding our image is a clear
political framework for the future of coal-fired electricity
generation which is acceptable to all stakeholders.

Germany should soon have such a framework. The Growth,
Structural Change and Employment Commission has submitted
a concept for a coal phase-out by 2038. It envisages further
power stations being taken offline in the next few years. Does
that come as an unpleasant surprise to you?
I was pleasantly surprised that the Commission nearly
unanimously agreed on a concept for the future. With
just one exception, all of the members endorsed the
recommendations, including representatives of industry,
trade unions, environmental associations and civic
initiatives. This is an outstanding accomplishment by the
Commission and its chairs. They established a solid
basis, on which talks can now be held between the federal
government and companies.

To our investors > Interview with the CEO

So the framework is in place. What are the next steps?
Now everything hinges on whether the government follows
the Commission’s recommendations entirely. I would caution
against taking apart a package that has been agonised
over for months. The objective of the talks between the
government and the companies must be to reach an
agreement on the details, because the final report includes
a lot of points that need clarification. It’s good news that
companies will be granted compensation for premature
shutdowns and that the impact on mining operations will be
taken into consideration. This is in line with our legal
understanding.

The Commission recommends further power plant closures
through to 2022. This will affect about 3 gigawatts of
lignite-fired capacity. Will North Rhine-Westphalia have to
shoulder most of the burden?
Yes, that’s highly likely, as structural change here seems to
be easier than in the lignite mining regions in the east of
the country. But one mustn’t forget that in the Rhenish lignite
mining region, we are already decommissioning 1.5 gigawatts
prematurely under the security stand-by regime. Further
closures will be much more difficult to implement and will
probably have severe ramifications for the opencast mining
system leading to job cuts. I expect significant redundancies
through to 2023, which far exceed planning to date and
normal churn. We will be able to make reliable estimates of
the number of affected employees once we know exactly
what we have to deal with.

How can you ensure that the interests of the affected
employees are safeguarded?
Of course, any measures taken must be socially acceptable as
the employees shouldn’t be made to pay the price for political
decisions. In its report, the Commission clearly spoke out
against forced layoffs and leaving people in the lurch. Similar
to the exit from hard coal mining, an adjustment allowance is
envisaged. But we need some more details, as there are still a
lot of questions that require answers.

Let’s talk about last year’s business performance. At slightly
more than 1.5 billion euros, adjusted EBITDA was at the lower
end of the forecast range. What are your views?
All told, we can be satisfied with our operating performance.
The things we had control of went well. Our employees
did another formidable job in 2018. But some things can’t be
foreseen or influenced, such as the court-ordered suspension
of the UK capacity market. This cost us about 50 million euros
in 2018. It’s impossible to predict these things in advance.
This is why we forecast ranges instead of specific figures.

Another unwelcome surprise was the temporary halt to the
clearance of Hambach Forest in Germany ordered by the
Münster Higher Administrative Court last autumn. How big of
a burden do you currently think this will be for you?
We maintain the assessment we made shortly after the court
ruling for the time being. We anticipate that lignite production
from the Hambach opencast mine will be reduced by an
average of 10 to 15 million metric tons in 2019 and the two
following years. This translates into 9 to 13 terawatt hours
less electricity and 100 to 200 million euros less EBITDA – per
year. In 2019, the earnings curtailment will probably still hover
around the lower end of the range, because we have
optimised operating procedures.

Speaking of 2019: what are your expectations for the current
fiscal year?
In tems of operations, we could fare as we did in 2018,
despite the burdens resulting from the court order regarding
Hambach Forest. We anticipate that adjusted EBITDA will
come in between 1.4 and 1.7 billion euros. Here, we assume
that the UK capacity market will remain inactive in 2019.
In addition, we expect the recovery of wholesale electricity
prices to have positive effects. But more than anything,
2019 is the year in which we want to complete the asset
swap with E.ON and fire the starting shot for the new RWE.
If longer-term, reliable prospects can be created for coal-fired
electricity generation on top of that, 2019 will be a very
good year for RWE.

A last word on the new RWE, where coal-fired generation and
nuclear power will share a home with renewable energy. One
part of the business is a political hot potato and will be scaled
back, while the other basks in the limelight and is only set to
grow. Could this contrast possibly turn into a stress test?
I think that quite the opposite is true. As I said earlier,
conventional generation and renewable energy are two
sides of the same coin. And if we manage, for example, to
be extremely efficient in dismantling our nuclear power
stations, this will make a contribution to our economic
success just as a profitable wind farm would. A manager
in the nuclear energy business recently told me that working
for a company with growth prospects motivates him. At
the new RWE, everyone can benefit from everyone else. And
everyone is important no matter where they are. If that’s
communicated clearly, we will have the best possible chance
to have a successful shared future.

This interview was conducted by Burkhard Pahnke and
Jérôme Hördemann.

6 RWE Annual Report 2018

THE EXECUTIVE BOARD OF RWE AG

Dr. Rolf Martin Schmitz
Dr. Markus Krebber

To our investors > The Executive Board of RWE AG

Dr. Rolf Martin Schmitz
Chief Executive Officer

Dr. Markus Krebber
Chief Financial Officer

Born in 1957 in Mönchengladbach; doctorate in engineering;
Planning Engineer at STEAG AG from 1986 to 1988; various
positions, including Head of Corporate Development and
Economic Policy, at VEBA AG from 1988 to 1998; Member
of the Executive Board of rhenag Rheinische Energie AG
from 1998 to 2001; Member of the Board of Management
of Thüga AG from 2001 to 2004; Chairman of the Board
of Directors of E.ON Kraftwerke GmbH from 2004 to 2005;
Chairman of the Executive Board of RheinEnergie AG and
Managing Director of Stadtwerke Köln from 2006 to 2009;
Chief Operating Officer National of RWE AG from May 2009
to September 2010; Chief Operating Officer of RWE AG from
October 2010 to October 2016 and Deputy Chairman of the
Executive Board of RWE AG from July 2012 to October 2016;
Chairman of the Executive Board and Chief Executive Officer
of RWE AG since October 2016; concurrently Labour Director
of RWE AG since May 2017.

Born in 1973 in Kleve; Banker; doctorate in economics;
Management Consultant at McKinsey & Company from 2000 to
2005; various management positions at Commerzbank AG
from 2005 to 2012; Managing Director and Chief Financial
Officer of RWE Supply & Trading GmbH from November 2012
to August 2016; Chief Executive Officer of RWE Supply &
Trading GmbH from March 2015 to May 2017; Chief Financial
Officer of RWE AG since October 2016.

Group-level responsibilities
• Business Services
• Controlling & Risk Management
• Finance & Credit Risk
• Investor Relations
• Portfolio Management /Mergers & Acquisitions
• Accounting
• Tax

Group-level responsibilities
• Corporate Transformation
• Internal Audit & Compliance
• Group Communications & Public Affairs
• Group Strategy
• Human Resources
• Legal
• Corporate Business Development

8 RWE Annual Report 2018

SUPERVISORY BOARD REPORT

“In renewable energy, RWE will receive a business
characterised by stable income, attractive growth
options and widespread public acceptance. As a
result, the company will take a major step forward.”

Following the founding and the IPO of innogy in 2016, another landmark decision was taken last year, which will fundamentally
change the RWE Group. An extensive asset swap was agreed with our German competitor E.ON, which is scheduled to be
completed in 2019. This will make RWE Europe’s No. 3 in renewable energy, with E.ON strengthening itself through the
addition of innogy’s grid and retail businesses. My fellow Supervisory Board members and I welcome the transaction. In
renewable energy, RWE will receive a business characterised by stable income, attractive growth options and widespread
public acceptance. As a result, the company will take a major step forward. This assessment is apparently shared by the
capital market: buoyed by the new operating prospects, the RWE common share earned a total return of 20 % last year,
impressively bucking the market’s negative trend.

RWE’s share performance would probably have been even better, if the temporary halt to the clearance of Hambach
Forest ordered by the Münster Higher Administrative Court had not abruptly reminded us of the risks to which RWE remains
exposed in conventional power generation. The ruling handed down in October 2018 will curtail the operation of the
Hambach opencast lignite mine considerably and weigh on earnings. Following the occasionally heated debate on the
clearance of the forest and the future of electricity production from coal in Germany, one can only hope that these topics are
once again addressed with less bias and more far-sightedness in the future. The recommendations of the Growth, Structural
Change and Employment Commission submitted in January 2019 could make an important contribution to this end. The
Commission, which was established by the government, is in favour of Germany taking further coal-fired power stations offline
by the end of 2022 and phasing out electricity generation from coal entirely by no later than 2038 (also see page 33 of this
annual report). We thoroughly discussed the Commission’s recommendations at an extraordinary Supervisory Board meeting
on 5 February 2019. It is likely that there will be serious consequences for RWE’s lignite business. The recommendations
harbour both risks and opportunities. They can give policymakers a basis for providing planning certainty to companies,
employees and the regions. In doing so, it must be ensured that those affected are not put at a disadvantage.

To our investors > Supervisory Board report

Now let me go into the work we did on the Supervisory Board in the financial year that just ended. Once again, we fulfilled
all of the duties imposed on us by German law and the Articles of Incorporation. We advised the Executive Board on running
the company and monitored its actions attentively. Moreover, we were consulted on all fundamental decisions. The Executive
Board informed us of all material aspects of business developments, the earnings situation as well as the risks and the
management thereof both verbally and in writing. This was done regularly, extensively and in a timely fashion. Decisions
were taken on the basis of detailed reports and draft resolutions submitted by the Executive Board. The Supervisory Board
had ample opportunity to concern itself with these in its plenary sessions and its committees. We were also informed by the
Executive Board of projects and transactions of special importance or urgency in several extraordinary meetings and
between meetings. We passed the resolutions required of us by law or the Articles of Incorporation. Occasionally, we did so
by circular. As Chairman of the Supervisory Board, I was constantly in touch with the Executive Board. This allowed us to
discuss events of material importance to the Group’s situation and development without delay.

Last year, the Supervisory Board convened for five ordinary and three extraordinary meetings. The shareholder and the
employee representatives on the Supervisory Board consulted separately on the agenda items of the plenary sessions in
advance. The following table provides an overview of the attendance of the members of the corporate bodies at the
meetings of the Supervisory Board and its committees:

Attendance at meetings in fiscal 2018
by Supervisory Board member 1

Supervisory
Board

Executive
Committee

Audit
Committee

Personnel
Affairs
Committee

Dr. Werner Brandt, Chairman

Frank Bsirske, Deputy Chairman

Michael Bochinsky (since 1 August)

Reiner Böhle

Sandra Bossemeyer

Martin Bröker (since 1 September)

Ute Gerbaulet

Reinhold Gispert (until 31 July)

Andreas Henrich (until 31 August)

Prof. Dr. Hans-Peter Keitel

Dr. h. c. Monika Kircher

Monika Krebber

Harald Louis

Dagmar Mühlenfeld

Peter Ottmann

Günther Schartz

Dr. Erhard Schipporeit

Dr. Wolfgang Schüssel

Ullrich Sierau

Ralf Sikorski

Marion Weckes

Leonhard Zubrowski

8/8

6/8

3/3

8/8

7/8

3/3

7/8

5/5

7/8

8/8

6/83

8/8

7/8

6/83

8/8

7/8

8/8

1/1

3/3

3/42

2/2

4/4

3/4

4/4

Strategy
Committee

1/1

1 Attendance is indicated by the ratio of the number of meetings attended by the Supervisory Board member to the total number of meetings during the individual’s term

as a member of the corporate body in question. Only the committees that convened in the year under review are listed.

2 Dr. Werner Brandt attended meetings of the Audit Committee as a guest.
3 Due to potential conflicts of interest, Monika Krebber and Dr. Erhard Schipporeit, who also sit on the Supervisory Board of innogy SE, did not attend the extraordinary

Supervisory Board meetings on 11 and 12 March 2018, at which the envisaged asset swap with E.ON was discussed.

10 RWE Annual Report 2018

Main points of debate of the Supervisory Board meetings. We were informed by the Executive Board very thoroughly of
current events of importance to RWE in the ordinary sessions. A focal point of regular reporting was the political debate
concerning Germany’s coal phase-out and the work of the Growth, Structural Change and Employment Commission. We also
discussed the German Environmental Ministry’s initial ideas on how to translate the new EU clean air standards for power
stations into national law. The Executive Board also kept us abreast of the developments in energy policy in neighbouring
countries, e. g. the coal phase-out planned in the Netherlands. In addition to these and other issues, Brexit was also
addressed. We only discussed special topics in our extraordinary meetings. Now I would like to address the main points of
our sessions in more detail:

• At its ordinary meeting on 7 March 2018, the Supervisory Board discussed and approved the financial statements for fiscal
2017 and the agenda of the Annual General Meeting of 26 April 2018. Furthermore, we consulted about the talks that I
conducted with major institutional investors on corporate governance matters (Executive Board remuneration,
composition of the Supervisory Board, etc.) and on RWE’s climate protection strategy. This dialogue was received very
positively by investors and is scheduled to be continued once a year.

• The main topic at two extraordinary meetings, which took place on 11 and 12 March 2018 was the asset swap planned

between RWE and E.ON through which the two companies will have a fundamentally new setup. We gave the go-ahead to
the transaction on 12 March after intensive debates. The asset swap was contractually agreed on the same day.

• At the ordinary meeting on 26 April 2018, we discussed how politicians will translate the new EU clean air standards for
power plants into national law. By then, the German Environmental Ministry had already presented its first concepts
regarding the matter. In addition, we made the final preparations for the Annual General Meeting, which was held on the
same day.

• Our ordinary meeting on 6 July 2018 was dedicated to IT security. The state and industry are exposed to the ever greater
risk of cyber attacks. Both the frequency and severity of such attacks have increased. In our meeting we discussed the
protective measures that had already been taken and the next steps necessary in order to continue guaranteeing the
security of RWE’s IT infrastructure in the future.

• At the ordinary meeting on 21 September 2018, we focused on the capital market’s view of RWE. The Executive Board

informed us of the positive feedback from investors on the envisaged asset swap with E.ON. We addressed in great detail
whether RWE should maintain the preferred shares in the long run. On international capital markets, it is customary for
every share to have a vote. Together with the Executive Board, we discussed various possible actions and features,
including the conversion of preferred shares to common shares.

• On 14 October 2018, the Supervisory Board convened for an extraordinary session at which it concerned itself with the
preliminary halt to the clearance of Hambach Forest ordered by the Münster Higher Administrative Court. The Executive
Board informed us about the far-reaching consequences that the Court’s ruling could have for the opencast mining
operations and the company’s earnings and consulted with us regarding the next steps.

• We reviewed and adopted the planning for fiscal 2019 at an ordinary meeting on 12 December 2018. As usual, we also

discussed the recommendations of the German Corporate Governance Code (GCGC) which were unchanged from 24 April
2017, and approved an updated statement of compliance together with the Executive Board. Another focal topic was
digitisation and its increasing importance to the corporate world. We agreed that expertise in this area should be
considered expressly in the Supervisory Board’s competence and skills matrix and expanded it accordingly. During the
meeting, we also discussed the ruling of the General Court of the Court of Justice of the European Union on the UK
capacity market, which led to a suspension of capacity payments. We conducted an in-depth debate on the United
Kingdom’s impending exit from the EU and its possible effects on RWE. Furthermore, we received a report from the
Executive Board on the increasingly critical views that banks and insurance companies have of coal. However, to date this
has hardly affected the business relations between RWE and financial institutions.

To our investors > Supervisory Board report

Supervisory Board committees. Last year, the Supervisory Board had five standing committees, the members of which are
listed on page 199. These committees are charged with preparing topics and resolutions for plenary sessions. Occasionally,
they exercise decision-making powers conferred on them by the Supervisory Board. The Supervisory Board was informed of
the work of the committees by their chairmen at every ordinary meeting. In the year under review, a total of nine committee
meetings were held, on which I would like to report in more detail. Attendance by individual is presented in the table on
page 9.

• The Executive Committee convened once. Its members discussed the company’s planning for fiscal 2019 as well as the

outlook for 2020 and 2021 in depth and prepared their adoption by the Supervisory Board.

• The Audit Committee was in session four times. It concerned itself in particular with the financial statements of RWE AG
and the Group, together with the combined review of operations, as well as with the report for the first half of the year
and the quarterly statements. The Committee discussed the financial statements in detail with the Executive Board before
they were published and received reports on the outcome of the audits and audit-like reviews from the independent
auditors. It paid special attention to the quality of the financial statement audits. The Committee also engaged in dialogue
with the independent auditors via its chairman in between sessions. Furthermore, the body submitted a recommendation
to the Supervisory Board regarding the election of the independent auditors for fiscal 2018, prepared the grant of the
audit award to the independent auditors including the fee agreement, and set the priorities of the audit. Non-financial
reporting was also on the agenda: analyses and comparisons to other companies prove that RWE has a high level of
transparency in this area. As usual, the Committee was informed of the effectiveness of the accounting-related internal
control system. This did not reveal any issues that would call the effectiveness of the control system into question.
Furthermore, the Committee dealt with the design of the compliance management system, the planning and findings of
the internal audit, the RWE Group’s exposure to risk pursuant to the German Corporate Control and Transparency Act, data
security as well as legal and tax issues. In-house experts were consulted when necessary.

• The Personnel Affairs Committee held three meetings during the year being reviewed. Amongst other things, the

corporate body discussed the adjustments to the target figures for the variable remuneration of the Executive Board and
executives necessary due to the envisaged asset swap with E.ON. Detailed information on the changes can be found on
page 64 et seqq. Moreover, the Committee prepared the Supervisory Board resolution on the renewed appointment of
Markus Krebber as member of the Executive Board of RWE AG.

• The Nomination Committee did not convene in 2018.

• The members of the Strategy Committee held one session. This meeting focused on the asset swap agreed with E.ON.
The Executive Board explained the key points of its future strategy for the renewable energy business. In addition, it
informed the Committee of the measures taken to prepare the integration of the business activities that will be transferred
to RWE as part of the transaction.

• The Mediation Committee pursuant to Section 27, Paragraph 3 of the German Co-Determination Act did not have to meet

in 2018.

Conflicts of interest. The members of the Supervisory Board are obliged by law and the GCGC to immediately disclose any
conflicts of interest they have. Last year, Monika Krebber and Erhard Schipporeit, who sit on the Supervisory Board of both
RWE AG and innogy SE, filed notifications of conflicts of interest in respect of the decisions regarding the envisaged asset
swap with E.ON. Therefore, they did not receive any of the preparatory documents in relation to the relevant agenda items
and did not participate in the relevant consultations or passing of resolutions.

12 RWE Annual Report 2018

Financial statements for fiscal 2018. PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft scrutinised and
issued an unqualified auditor’s opinion on the 2018 financial statements of RWE AG, which were prepared by the Executive
Board in compliance with the German Commercial Code, the financial statements of the Group, which were prepared in
compliance with International Financial Reporting Standards (IFRS) pursuant to Section 315a of the German Commercial
Code, the combined review of operations for RWE AG and the Group, and the accounts. In addition, PricewaterhouseCoopers
found that the Executive Board had established an appropriate early risk detection system. The company had been elected
independent auditor by the Annual General Meeting on 26 April 2018 and commissioned by the Supervisory Board to audit
the financial statements of RWE AG and the Group.

The annual report and the audit reports for 2018 as well as documents supporting the annual financial statements were
submitted to the members of the Supervisory Board in good time. Furthermore, the Executive Board commented on the
documents in the Supervisory Board’s balance sheet meeting of 8 March 2019. The independent auditors reported at this
meeting on the material results of the audit and were available to provide supplementary information. The Audit Committee
had previously concerned itself in depth with the financial statements of RWE AG and the Group, as well as audit reports,
during its meeting on 7 March 2019, with the auditors present. It recommended that the Supervisory Board approve the
financial statements as well as the appropriation of profits proposed by the Executive Board.

At its balance-sheet meeting, the Supervisory Board reviewed the financial statements of RWE AG and the Group, the
combined review of operations for RWE AG and the Group, and the Executive Board’s proposal regarding the appropriation of
distributable profit and the Group’s separate non-financial report. No objections were raised as a result of this review. As
recommended by the Audit Committee, the Supervisory Board approved the results of the audits of the financial statements
of RWE AG and the Group and approved both financial statements. The 2018 financial statements are therefore adopted. The
Supervisory Board concurs with the Executive Board’s proposal regarding the appropriation of profits, which envisages
paying a dividend of €0.70 per share.

Changes in personnel on the Supervisory Board. There were two staffing changes on the Supervisory Board in the year
under review. Reinhold Gispert and Andreas Henrich, both of whom were employee representatives, resigned from the
corporate body with effect from the end of the day on 31 July and 31 August, respectively. The Essen District Court
appointed Michael Bochinsky to replace Reinhold Gispert on the Supervisory Board with effect from 1 August 2018. As of
1 September, Andreas Henrich was succeeded by Martin Bröker, who had been elected Mr. Henrich’s successor by the
Employees Delegate Assembly on 2 March 2016. On behalf of the Supervisory Board, I thank Messrs. Gispert and Henrich for
their valuable work in our corporate body and dedication to RWE.

Thanks to the employees of RWE. In keeping with tradition, I would like to dedicate the last few lines of my report to those
who made the most important contribution to RWE’s success and continued development: the employees. As in the past, in
2018, they proved once again that a great deal can be accomplished with expertise and commitment. My colleagues and I
really appreciate this and would like to express our sincere gratitude to them for this. Last year, the groundwork was laid for
a new RWE, which will stand for both stability and growth. Our company’s journey will lead to a promising future, but might
also be difficult at times. I am convinced that with the support of its staff, RWE will navigate this course successfully and
master the huge challenges along the way.

On behalf of the Supervisory Board

Werner Brandt
Chairman

Essen, 8 March 2019

To our investors > RWE on the capital market

RWE ON THE CAPITAL MARKET

Sentiment on the German stock market in 2018 was clouded by increasing economic risks. The DAX closed the
year with a negative performance after six years of positive returns. RWE stock performed much better: our common
shares ended the year with a gain of 20 %. A main reason was the asset swap we agreed upon with E.ON. Investors
and analysts welcome the transaction, because it will give us renewable energy activities, an attractive business with
outstanding growth prospects. The continued recovery of German wholesale electricity prices also had a positive
impact on RWE’s share price.

Performance of the RWE common share compared with the DAX and STOXX Europe 600 Utilities
% (average weekly figures)

– 10

– 20

31 Dec 2017

31 M ar 2018

30 Jun 2018

30 Sep 2018

31 Dec 2018

RWE common share

DAX

STOXX Europe 600 Utilities

Source: Bloomberg.

DAX markedly down due to economic cooldown. Sentiment
on the German stock market deteriorated substantially in
2018: the DAX was down 18 % to 10,559 points. This was its
first negative performance since 2011 and made it one of
the weakest of the European share indices. Due to its strong
dependence on foreign trade, the DAX was particularly hard
hit by the trade conflict between the USA and other industrial
nations. The emerging economic slowdown also weighed
on it. In addition, some branches of industry faced difficulties,
in particular the automotive sector, which is heavily
represented in the DAX and had to contend with impending
diesel bans. Brexit and the Italian government’s unclear
economic agenda also contributed to investor uncertainty.
The extremely expansive monetary policy of the European
Central Bank had a stabilising effect on the development of
share prices.

RWE common share posts total return of 20 %. RWE stock
clearly outperformed the DAX. Our common share closed
2018 at €18.97. Including the dividend of €1.50 paid at the
beginning of May, it achieved a total return of 20 % for
the year. This ranked it second in the DAX. RWE’s common

stock also displayed much better development than the
sector index STOXX Europe 600 Utilities (+ 2 %). The main
reason for its strong performance was the asset swap
agreed with E.ON, through which we will become one of
Europe’s leading renewable energy companies. We have
provided detailed information on this transaction on page
35 et seq. On 12 March, the first stock market trading day
following the announcement of the envisaged transaction,
our common share gained 9 %. Rising wholesale electricity
prices also had a positive effect on the development of the
share price. Our preferred share, which by far exceeded
the performance of our common share with a total return of
43 %, benefited from an exceptional effect: in December,
the Executive Board of RWE AG announced that it will propose
to the Annual General Meeting on 3 May 2019 a 1:1 conversion
of preferred shares to common shares without any payments.
This announcement drove up the quotation of our preferred
stock nearly to the level of that of our common stock. In
October, however, RWE shares suffered a severe setback as a
result of the court-ordered halt to the clearance of Hambach
Forest, which will lead to production and income shortages
in electricity generation from lignite (see page 36).

14 RWE Annual Report 2018

RWE share indicators

Earnings per share1

Cash flows from operating activities of continuing
operations per share1

Dividend per common share

Dividend per preferred share

Dividend payment

Dividend yield on common shares3

Dividend yield on preferred shares3

Common share price

End of fiscal year

High

Low

Preferred share price

End of fiscal year

High

Low

€

€ million

€

2018

0.54

7.50

0.702

4302

3.7

18.97

22.48

15.10

18.84

19.20

13.46

2017

3.09

– 6.13

1.50

922

8.8

10.5

17.00

23.14

11.80

14.33

17.46

8.87

2016

– 9.29

3.83

–

0.13

–

1.5

11.82

15.95

10.17

8.72

11.61

7.95

2015

– 0.28

5.43

–

0.13

–

1.5

11.71

25.68

9.20

8.94

19.62

7.33

2014

2.77

9.04

1.00

615

3.9

5.3

25.65

32.83

24.95

18.89

25.61

18.89

Number of shares outstanding (annual average)

thousands

614,745

Market capitalisation at the end of the year

€ billion

11.7

10.3

7.1

15.5

1 In relation to the annual average number of shares outstanding. The comparability of some of the figures for various fiscal years is limited due to changes in reporting

(see page 40).

2 Dividend proposal for RWE AG’s 2018 fiscal year, subject to the passing of a resolution by the 3 May 2019 Annual General Meeting.
3 Ratio of the dividend per share to the share price at the end of the fiscal year.

Dividend proposal for fiscal 2018. The Supervisory Board
and the Executive Board of RWE AG will propose to the
Annual General Meeting on 3 May 2019 a dividend of €0.70
per common and preferred share. This would cause the
ordinary dividend to increase by €0.20 compared to the
previous year. We paid a total dividend of €1.50 for
fiscal 2017, but it included a special payment of €1.00,
through which we enabled our shareholders to benefit from
the nuclear fuel tax refund.

voting right notifications, the two companies held 6 %
and 5 % of the subscribed capital, respectively. Third place
is occupied by the City of Essen, with 3 %. The free float of
our common shares considered by Deutsche Börse in terms
of index weighting was 94 % when this report went to print.
Only the shares held by KEB Holding were deducted. Stakes
held by asset management companies like BlackRock are
classified by Deutsche Börse as free float as long as they do
not exceed 25 % of the capital stock.

Broad international shareholder base. At the end of 2018,
an estimated 86 % of the total of 614.7 million RWE shares
(including 39 million non-voting preferred shares) were
held by institutional investors and 14 % were owned by
individuals (including employees). Institutional investors
from Germany owned 25 % of RWE (previous year: 29 %). In
other countries on the European continent, this investor
group held 15 % of RWE’s subscribed capital (previous year:
14 %). In North America, the United Kingdom and Ireland,
it accounted for a combined 43 % (previous year: 40 %).
RWE AG’s single-largest shareholder is KEB Holding, which is
backed by the City of Dortmund, followed by the US asset
management company BlackRock. Based on their latest

About 1 % of our stock is owned by our current and former
staff members. For years, we have enabled the personnel of
our German subsidiaries to take shares in the company on
preferential terms through employee share ownership
plans, with such schemes being available to the staff of our
UK subsidiaries since 2018. Last year, over 3,300 people,
representing 21 % of all qualifying staff members, made use
of this offer. They bought a total of about 226,000 common
shares. We spent some €565,000 on the preferential terms
and the administration of the programme. The employees
of innogy SE and its subsidiaries are not included in the
figures, as they qualify for an innogy stock ownership plan,
which was launched in 2017.

To our investors > RWE on the capital market

Shareholder structure of RWE AG 1

1 % Employee shareholders

6 % KEB Holding AG

13 % Private shareholders

5 % BlackRock, Inc.

3 % City of Essen

72 % Other institutional shareholders

86 % Institutional shareholders:

25 % Germany
24 % USA/Canada
19 % UK/Ireland
15 % Continental Europe
excluding Germany

3 % Rest of the world

1 As of the end of 2018; percentages reflect shares in the subscribed capital.

Sources: RWE data and notifications of shareholders in accordance with the German Securities Trading Act (WpHG).

RWE represented on numerous stock markets. In
Germany, RWE shares are traded on the stock markets in
Frankfurt am Main, Düsseldorf, Berlin, Hamburg, Hanover,
Munich and Stuttgart, as well as via electronic platforms
such as Xetra. They are also available on some stock markets
in the rest of Europe. In the USA, instead of our shares

being traded, RWE is represented via American Depositary
Receipts (ADRs) in a Level 1 ADR programme. ADRs are
share certificates issued by US depositary banks,
representing a certain number of a foreign company’s
deposited shares. Under RWE’s programme, one ADR
represents one common share.

Ticker symbols of RWE shares

Reuters: Xetra

Reuters: Frankfurt Stock Exchange

Bloomberg: Xetra

Bloomberg: Frankfurt Stock Exchange

German Securities Identification Number (WKN)

International Securities Identification Number (ISIN)

American Depositary Receipt (CUSIP Number)

Common share

RWEG.DE

RWEG.F

RWE GY

RWE GR

703712

DE0007037129

74975E303

Preferred share

RWEG_p.DE

RWEG_p.F

RWE3 GY

RWE3 GR

703714

DE0007037145

–

Combined review
of operations

18 RWE Annual Report 2018

1.1 STRATEGY AND STRUCTURE

Our establishment and IPO of innogy in 2016 were but the first steps on the way to a new RWE. Now we are taking
another major step by exchanging our financial investment in innogy for a leading operating position in renewable
energy. The basis for this is a transaction agreed with E.ON in March 2018, through which the two companies will
realign themselves. Once the asset swap has been completed, we will expedite the expansion of renewable energy –
with annual net capital expenditure of about €1.5 billion. We will take on a new role as an all-rounder in electricity
generation, ensuring security of supply with our flexible power stations, while playing an active part in the
transformation of the energy system which will increase climate protection.

Planned asset swap with E.ON: laying the foundation for
a new RWE. RWE is in the midst of a transformation through
which the company is giving itself a new operational and
organisational setup. The basis for this is an agreement
reached with E.ON in March 2018 pursuant to which the
two companies will conduct an extensive exchange of
business activities and shareholdings. It is envisaged that
E.ON will acquire our financial investment of 76.8 % in
innogy while we will receive nearly the entire renewables
business of E.ON and innogy. Furthermore, we will receive
a 16.67 % shareholding in E.ON, the non-controlling
interests of the E.ON subsidiary PreussenElektra in our
Gundremmingen (25 %) and Emsland (12.5 %) nuclear power
stations, innogy’s gas storage business, and innogy’s 37.9 %
stake in the Austrian energy utility Kelag. We will also make
a one-off cash payment of €1.5 billion to E.ON as part of
the transaction. The business activities and equity interests
will be transferred with retrospective economic effect to
1 January 2018. We are confident of being able to complete
the asset swap by the end of 2019.

RWE will become Europe’s No. 3 in renewable energy.
The transaction with E.ON will give us approximately
9 GW of zero-carbon electricity generation capacity from
renewable sources, mostly from onshore and offshore wind
farms. This will make us Europe’s No. 3 in renewables and
the world No. 2 in offshore wind. In addition to generation
assets, we will receive a large portfolio of growth projects in
various stages of development. Here again, the focus is on
wind energy, followed by photovoltaics. Renewable energy
will account for more than half of the RWE Group’s adjusted
EBITDA as early as the first year after the completion of the
asset swap with E.ON, making this business our strongest
income generator.

Refinement of RWE’s strategy. Concurrently to the
implementation of the asset swap with E.ON, we have begun
to develop the key points of our future renewable energy
strategy. We presented the first results of our deliberations
to the Supervisory Board of RWE AG and our employees at
the end of 2018. We intend to rapidly expand the leading
position in renewable energy that we will obtain through
the transaction. To this end, we plan to invest about a net
€1.5 billion every year. These funds should be sufficient to
increase capacity by between 2 GW and 3 GW per annum.
Our technological focus rests on wind energy, photovoltaics
and storage solutions. Geographically, we will concentrate
on markets in Europe, the Americas and the Asia-Pacific
region. We will maintain the integrated business model
pursued by innogy and E.ON to date, meaning that our new
projects will cover the entire value chain from development
to construction and operation wherever possible. To ensure
efficient management, we will divide the renewable energy
business into the following business fields: (1) Onshore Wind
and Photovoltaics in Europe and Asia-Pacific, (2) Onshore Wind
and Photovoltaics in the Americas and (3) Global Offshore Wind.
These activities will be spearheaded by a six-member
management team, including three chief operating officers,
each in charge of one of the aforementioned business fields.

In parallel to our growth ambitions in renewable energy, we
want to maintain our leading position in conventional
electricity production. With our power plant fleet – one of
the largest in Europe – we are making an indispensable
contribution to ensuring a reliable supply of electricity that
satisfies demand in our core markets, i. e. Germany, the
United Kingdom and the Benelux region. Wind turbines and
PV installations cannot accomplish this due to their strongly
fluctuating load. Electricity storage techniques are not yet
able to meet the technical and economic requirements
necessary to be used for ensuring the supply of electricity
on a large scale. This is why conventional generation
capacity that is capable of adjusting to the fluctuations of
wind and solar feed-ins will be needed for a long time to come.

Combined review of operations > Strategy and structure

Lignite and nuclear power stations will lose importance
within our generation portfolio even though their earnings
prospects have improved. This is mainly due to the energy
policy framework in Germany. Nuclear energy is subject to a
legally binding phase-out roadmap, which stipulates a latest
possible shutdown date for every single plant. Two RWE
stations are still online: Gundremmingen C and Emsland. We
can operate these units until the end of 2021 and the end of
2022, respectively, after which they must be closed.

Electricity generation from lignite is also subject to a time
limit. This results from the global and national climate
protection goals. Germany wants to reduce greenhouse gas
emissions in the energy sector by slightly more than 60 % by
2030 compared to the level in 1990. We have made a major
contribution to this in the past and will continue to do so in
the future. For example, we are participating in the lignite
security standby scheme, which involves eight power plant
units – including five of RWE’s – being gradually taken off
the market from 2016 to 2019 and being used as the last
resort to ensure security of supply for four years each,
before they are decommissioned. On 30 September 2017,
our Frimmersdorf Units P and Q were taken off the grid,
followed twelve months later by Units E and F at Niederaussem.
Neurath’s Unit C is scheduled to follow suit at the end of
September 2019. This will cause our carbon dioxide emissions
in the Rhenish lignite mining region to drop by about 15 %
compared to 2015.

We expect to have to take further lignite units offline early in
the coming years. This is a consequence of the proposals
submitted by the Growth, Structural Change and Employment
Commission, on which we provide detailed information on
page 33. The body recommends a complete exit from coal
by 2038. It envisages the capacity of lignite-fired power
stations on the market being reduced to a total of 15 GW by
the end of 2022. This would represent a decline of nearly
5 GW compared to the end of 2017. The objective is to have
only 9 GW remaining on the market in 2030. The federal
government is expected to follow these recommendations.
The timing and choice of the stations that will be shut down
remains to be clarified. Talks will be held with the companies
to this end. We believe we should receive appropriate
compensation – as recommended by the Commission – for
our plants that are affected by the measures.

Energy trading will also remain one of RWE’s core areas of
activity, not least due to its strong connection to the generation
business. Our trading company RWE Supply & Trading is in
charge of marketing the electricity of our power stations while
procuring the fuel and emission allowances needed to produce
it. In this role, combined with the commercial optimisation of
our generation asset dispatch, it makes a major contribution
to the Group’s operational success.

Our deliberations concerning the strategy of the new RWE
have not yet been finalised. For example, we still have to
determine the dividend policy we intend to pursue and the
leverage we will aim for. We will be able to reach decisions
on the details of our strategy once the asset swap with E.ON
has been completed and we have operational control of the
new activities. After that, we want to provide comprehensive
information on our new strategy.

RWE in fiscal 2018: Group structure featuring four
segments. In the transitional period leading up to the
completion of the transaction, the RWE Group is divided
into four segments (divisions), which are described in
detail below. In addition to the three RWE operating divisions
Lignite & Nuclear, European Power and Supply & Trading,
they consist of the innogy activities that will remain with us.

(1) Lignite & Nuclear. This is where we report our German
electricity generation from lignite and nuclear power as
well as our lignite mining in the Rhineland. These activities
are managed by our subsidiary RWE Power. This segment
also encompasses our equity holdings in the Dutch nuclear
power plant operator EPZ (30 %) and the German company
URANIT (50 %), which holds a 33 % stake in the uranium
enrichment specialist Urenco. Our 51 % interest in
Hungary-based Mátra, which generates electricity from
lignite, was also included in this segment until it was sold
in March 2018.

Lignite and nuclear power plants are primarily used to
generate base-load power due to their relatively low and
stable fuel costs. Their profitability is primarily determined
by the price level on the wholesale market. Electricity prices
were on a downward trend until 2016, after which they
recovered. A massive cost cutting exercise enabled us to
curb the resulting earnings shortfalls. Our ongoing
efficiency-enhancement programme in conventional power
generation is designed to cut annual expenditure by a total
of €300 million compared to 2016. Of this sum, €200 million
and €100 million are allocable to the Lignite & Nuclear and
European Power segments, respectively. We aim to conclude
the programme by the end of 2019. We have already achieved
the planned savings for the most part.

20 RWE Annual Report 2018

(2) European Power. Our electricity generation from gas,
hard coal and biomass is subsumed under this segment.
Here, the geographic focus is on Germany, the United Kingdom
and the Benelux region. The segment also contains our 70 %
stake in the Denizli gas-fired power station in Turkey, some
hydroelectric power plants in Germany and Luxembourg and
RWE Technology International, which specialises in project
management and engineering services. All of these activities
are overseen by RWE Generation.

The economic and political environment is also challenging
for our gas and hard coal-fired power stations, which
usually cover medium and peak loads. The rapid expansion
of renewable energy has resulted in a significant decline in
the use of some of these assets compared to the beginning
of the decade. In some cases, their margins are far below
the levels prevailing at that time. We therefore shut down
several hard coal-fired power stations or saw to it that they
were closed. Examples are Voerde A and B on the Lower
Rhine, which were taken offline in April 2017. We held a
stake of 25 % in these units and marketed their electricity
generation. We have temporarily taken some gas-fired power
plants off the grid that could no longer cover their fixed
operating costs, for example the Dutch Moerdijk 1 unit as
of 1 February 2018. They can come back online as soon as
market conditions allow. Besides temporary and permanent
power plant closures, we have taken additional measures to
cut costs and will continue to do so in the future. As set
out earlier, we aim to reduce expenses in the European Power
segment by €100 million via our ongoing efficiency-
enhancement programme, most of which we have
accomplished.

Despite the persistent pressure from consolidation, we
believe the European Power segment has long-term growth
prospects. We expect that secured generation capacity will
become tight, causing our stations to become more
profitable. In the long run, this should benefit gas-fired
power plants in particular. In light of the slight improvement
in market prospects, we have put some mothballed stations
back online or decided to return them to service, as was
the case with the Dutch Claus C gas-fired power plant, which
is scheduled to resume power production at full capacity in
2020, following about six years of inactivity.

In terms of installed capacity, gas is already our most
important fuel, and its share in our generation portfolio will
probably grow even more. Political decisions play a major
role. The governments in our most important generation
markets, i. e. Germany, the United Kingdom and the
Netherlands, are pursuing ambitious climate protection goals
and are relying on a rapid phase-out of electricity production
from coal to achieve them. Therefore, gas will become an
increasingly important energy source in the coming years
in order to secure electricity supply. Gas-fired power
stations emit less carbon dioxide than coal-fired power
plants and are therefore accepted more by the public as a
partner to renewable energy.

The proportion of our electricity generation accounted for by
hard coal should continue to decline in 2019, in part because
we will decommission the coal unit of Gersteinwerk in Werne
(Westphalia) in the spring. In addition, we are currently
converting our two Dutch hard coal-fired power stations
Amer 9 and Eemshaven for biomass co-firing. We have been
granted up to €2.6 billion in state subsidies due to the
required expenditure and the much higher price of biomass
compared to hard coal. We will receive these funds over a
period of eight years, enabling biomass shares of 80 % at
Amer 9 and 15 % at Eemshaven. The conversion work is
making good progress and we are confident that we will be
able to establish the technical prerequisites for achieving
these quotas before the end of this year.

(3) Supply & Trading. This segment encompasses the
multi-faceted activities of RWE Supply & Trading, which acts
as the commercial centre for the RWE Group. Its core
business, energy trading, forms the economic link between
the elements of our value chain, the regional markets and
the various energy commodities. Our subsidiary mainly
trades electricity, natural gas, coal, oil, CO2 certificates and
biomass. RWE Supply & Trading increasingly conducts these
activities outside of Europe: it already runs trading floors in
New York, Singapore and Shanghai. Another of the
company’s activities consists of marketing the electricity
from RWE power stations and procuring the fuel and
emission allowances required to produce it. One objective
is to limit price risks. On top of that, RWE Supply & Trading
is in charge of the commercial optimisation of our power
plant dispatch. The resulting earnings are reported in the
generation segments. The company also markets its
expertise to major European customers outside of the
RWE Group, offering services ranging from traditional energy
supply contracts and comprehensive energy management
solutions to sophisticated risk management concepts.

Combined review of operations > Strategy and structure

Another focal point of RWE Supply & Trading’s activities is the
gas business. The company supplies gas to companies outside
of the RWE Group. To this end, it enters into long-term supply
agreements with producers, organises gas transportation by
booking pipelines and optimises the timing of deliveries using
leased gas storage facilities. The company also concludes
transactions involving liquefied natural gas (LNG). The
objective is to take advantage of differences in price between
regional gas markets which are not connected via pipelines.
RWE Supply & Trading intends to establish itself as one of
Europe’s leading gas intermediaries. To this end, the company
also looks at markets outside of RWE’s core regions, because
the greater the size and diversification of the procurement
and supply portfolios, the greater the chances are to
commercially optimise them.

RWE Supply & Trading also leverages its expertise to make
short to medium-term investments in energy assets or
energy companies, for which value-enhancing measures can
be taken in order to realise high returns upon resale
(referred to as principal investments). At the end of 2018,
RWE Supply & Trading had a portfolio of ten investments,
a large portion of which was in the USA.

(4) innogy – continuing operations. This is the segment
in which we report all of the innogy assets that should
remain within the RWE Group over the long term: renewables,
gas storage and the 37.9 % stake in the Austria-based power
utility Kelag. Once E.ON has acquired our majority interest in
innogy, it will return the aforementioned activities to us.

innogy ranks among Europe’s leading renewable energy
companies. In terms of generation capacity, our subsidiary’s
strongest presence is currently in Germany and the United
Kingdom, followed by Spain, the Netherlands and Poland. In
terms of energy sources, its focus is on onshore and offshore
wind, followed by hydroelectric power and photovoltaics.
innogy further expanded its generation capacity last year.
One milestone was the inauguration of the Galloper large-scale
UK North Sea wind farm, in which innogy holds a 25 % stake.
Furthermore, the company has initiated the continued
expansion of its wind power capacity by beginning the
onshore work on Triton Knoll, another large-scale wind farm
in the UK North Sea. Our subsidiary holds a 59 % stake in it.
In addition, innogy acquired a project portfolio with over
2 GW in the USA and secured subsidies under the German
Renewable Energy Act for the Kaskasi offshore wind project
in Germany. We report on the projects mentioned here in
detail on page 37 et seq.

With Belectric Solar & Battery, a subsidiary acquired in
early 2017, innogy is also one of the largest international
suppliers of ground-mounted solar panel arrays and battery
storage facilities with a presence in Europe, the Middle East,
North Africa, India, Australia, South America and the USA.
Photovoltaics is one of the fastest growing technologies
in the energy sector and has become profitable without
subsidies in many markets since its introduction. In addition
to the development and construction of ground-mounted
solar farms, Belectric also handles operation and maintenance.
Since its inception in 2001, the company has already set up
solar panel arrays with a total capacity of about 2 GW. It is
currently building such a facility in Australia, which on
completion will probably be the country’s largest to date
(see page 38). Moreover, by manufacturing battery storage
units, Belectric is making a major contribution to distributed
power supply and will play a pivotal role in stabilising
electricity grids in the future.

Besides the renewable energy and electricity storage
business, we will continue innogy’s gas storage activities.
Our subsidiary currently owns eleven gas storage facilities,
of which five, with a combined capacity of 1.6 billion cubic
metres, are located in Germany, and six, with a total
capacity of 2.5 billion cubic metres, are situated in the Czech
Republic. innogy leases the capacities to companies such as
RWE Supply & Trading, which use them for timing arbitrage
transactions. Storage units are filled in the warm months,
when little gas is needed to heat buildings, and gradually
emptied in the cold season, when demand is high. The
income achieved through such arbitrage transactions and,
in turn, storage capacity auctions depends on the seasonal
differences in gas prices. The differences in price between
summer and winter gas are much smaller today than they
have been in the past. However, we believe that periods of
scarcity and price spikes will become more frequent again in
the future, in part due to rising demand for gas used to
generate electricity. Therefore, we feel there is a good chance
of achieving attractive returns in the gas storage business
once again.

It is also envisaged that innogy’s minority interest in Kelag
will remain in the RWE Group. Headquartered in Klagenfurt
(Carinthia), Kelag is a leading Austrian energy utility. Its
activities cover all stages of the value chain, from electricity
generation, energy trading and distribution system operation
to the sale of electricity, gas and innovative energy solutions.
Kelag primarily produces its electricity from renewable
sources such as hydro, wind and photovoltaics. The minority
interest in the company is therefore a good complement to
our future renewable energy activities.

fair valuation of derivatives, impairments and other material
special items are shown in the non-operating result.
Subtracting operating depreciation and amortisation from
adjusted EBITDA yields adjusted EBIT. Net income corrected
to exclude all major special items (‘adjusted net income’), is
another key operating indicator. However, we will determine
this figure solely using the method deviating from IFRS
consolidation principles until the transaction with E.ON has
been completed. Adjusted EBIT and adjusted net income
are key performance indicators regarding the variable
compensation of the Executive Board and executives (see
page 63 et seqq.).

We primarily use the internal rate of return for evaluating
the attractiveness of investment projects. The Group’s
financial position is analysed using cash flows from
operating activities, amongst others. We also attach special
importance to the development of free cash flow. It is the
result of deducting capital expenditure from cash flows
from operating activities and adding to them proceeds
from divestments and asset disposals. Net debt is another
indicator of RWE’s financial strength. It consists of net
financial debt together with provisions for pensions and
similar obligations, for nuclear waste management, for
mining damage (e. g. the recultivation of opencast mining
sites) and for the dismantling of wind farms. One half of the
liabilities from hybrid bonds is recognised in net debt.

22 RWE Annual Report 2018

RWE AG’s management system. Ensuring sustainable
growth in shareholder value is at the heart of our business
policy. To manage the Group companies, RWE AG deploys a
groupwide planning and controlling system, which ensures
that resources are used efficiently, and provides timely,
detailed insight into the current and prospective development
of the company’s assets, financial position and net worth.
Based on the targets set by RWE’s Executive Board and our
expectations regarding the development of the business,
once a year we formulate our medium-term plan, in which we
forecast the development of key financial indicators. This
plan contains the budget figures for the following fiscal year
and planned figures for the years thereafter. The Executive
Board submits the plan to the Supervisory Board, which
reviews and approves it. The Supervisory Board occasionally
requests adjustments to be made prior to giving its approval.
During the fiscal year, we produce internal forecasts linked
to the budget. The Executive Boards of RWE AG and the
main operating units meet regularly to analyse the interim
and annual financial statements and update the forecasts.
In the event that the updated forecast figures deviate
significantly from the budget figures, the underlying
reasons are analysed and countermeasures are taken if
necessary. We also immediately notify the capital market
if published forecasts need to be modified.

The main key performance indicators we use in managing
our business are adjusted EBITDA, adjusted EBIT, adjusted
net income, and net debt. As set out in more detail on
page 40, the business activities of our subsidiary innogy are
considered in these figures either in full or in part, although
we classify this company as a pure financial investment.
For management purposes, we therefore also use key figures
calculated in deviation from IFRS consolidation principles:
our majority interest in innogy is recognised in the ‘other
financial assets’ line item on the balance sheet and we only
consider the dividend received on the income statement.
More detailed information on this can be found on page 58.

Adjusted EBITDA is defined as earnings before interest,
taxes, depreciation and amortisation. In order to improve its
explanatory power in relation to the development of
ordinary activities, we remove non-operating or aperiodic
effects: capital gains or losses, temporary effects from the

Combined review of operations > Strategy and structure

Sustainability – a standard we hold ourselves to. We
can only succeed over the long term if we ensure society’s
acceptance by embracing our corporate responsibility (CR).
In order to focus on the various aspects of this responsibility,
we maintain a dialogue with all our stakeholder groups,
such as shareholders, employees, customers, politicians,
associations and non-governmental organisations. We are
making use of the findings from this exchange to revise our
CR strategy. This involves identifying our major sustainability
challenges and determining how we can overcome them.
We still believe that contributing to achieving national and
international climate protection goals through continuous
emission reductions is a key task. Our carbon dioxide
emissions have dropped steadily in the last six years, in part
because we took coal-fired power plants offline. We believe
that this trend will continue. Furthermore, we aim to be a
driving force in the creation of a sustainable energy system
by spurring the expansion of renewable energy.

Further information on our measures in relation to CR can be
found in our separate non-financial statement in accordance
with Section 315b, Paragraph 3 of the German Commercial
Code, which will be published as part of our CR Report in
April 2019 and does not form part of the combined review
of operations. The CR Report is entitled ’Our responsibility‘
and can be accessed on the internet at www.rwe.com/cr-report.

24 RWE Annual Report 2018

1.2 INNOVATION

Those who are innovative need not be afraid of change. This also holds true for companies in a changing market
environment – companies like RWE. We have a whole host of development projects looking for new technical
solutions. Our goal is to make opencast mines more profitable, power plants less emissions-intensive as well as
develop and refine future-oriented uses of lignite and carbon dioxide. In addition, we support start-ups and receive
important stimulus for our business by working with them. In our daily operations, we benefit from the ingenuity
and entrepreneurial spirit of our employees. Once again, they had thousands of good ideas in 2018, which will
allow us to achieve millions of euros in savings.

With about 520 inventions, we are in the leading pack
of European utilities. RWE is innovative in many ways.
Our motivation is to remain competitive in an environment
undergoing substantial change as well as to be a driving
force behind this transformation. With a tally of around
1,760 patents and patent applications, based on roughly
520 inventions, the RWE Group is in the vanguard of Europe’s
most innovative utilities. These figures also consider all of
the activities of our subsidiary innogy SE. Last year, we
worked on about 360 research and development (R & D)
projects. In many of these projects, we co-operate with
companies or research institutes and usually only have to
bear a portion of the costs. The RWE Group’s operating
R & D spending including innogy amounted to €116 million
in 2018 (previous year: €182 million). A total of about 600 of
the Group’s employees were solely or partially dedicated to
R & D activities.

RWE AG: solutions for more economic opencast mining,
lower emissions and new ways of using carbon dioxide.
RWE AG is responsible for the R & D activities of the areas of
the Group under its management. Its measures are therefore
primarily dedicated to conventional electricity generation.
They aim to make the operation of our opencast mines and
power stations more profitable and reduce emissions.
Another major area of research is converting lignite and
carbon dioxide for use as starting materials for the chemical
industry. Furthermore, we work with start-ups, the ideas of
which have the potential to help us make further progress.
Since 2016, R & D activities in the fields of renewable energy,
grids and retail have been the responsibility of innogy SE.

In this chapter, we present a small selection of RWE AG’s
important R & D projects, followed by an overview of our
co-operation with new companies as well as a brief insight
into the innovative work done by innogy. We end with an
example of how valuable our employees’ ideas are to us.

The transformation of mining: increasingly automated and
digital. Opencast lignite mining is a complex, multi-stage
process, involving the use of numerous heavy-duty
machines: huge bucketwheel excavators dig out the coal and
the topsoil (known as the overburden) from the terraced
opencast mines and deposit it on conveyor belts, on which it
is often transported for several kilometres. The coal is then
temporarily stored in a bunker before being transported by
rail or conveyor belts to the surrounding power stations
and refining plants. At the same time, the overburden is
transported to the other side of the opencast mine where
mining has already been completed. Here, stackers use it to
fill the depression resulting from coal extraction. Automation
and digitisation enable the processes described above to
be rendered much simpler and more efficient. We began
automating heavy machinery components as early as the
1990s, and we have made substantial headway in this area
since then. We are also making good progress in terms of
digitisation. For instance, we are currently working on a
digital, three-dimensional representation of opencast mine
operations. As is the case for automobile navigation devices,
a satellite is used to determine the current position of our
heavy machinery, while sensors monitor the material flow on
the conveyor belts. This transparency offers multiple benefits:
control centre personnel receive precise information as to
the location of the on-site machinery and the progress of the
work performed using it, thereby creating a reliable basis for
resource planning. Excavator operators can monitor the
exact job data via a display, enabling them to control their
machine as efficiently as possible. Furthermore, workers
around the stacker operators are able to preplan their daily
activities, based on the information on the overburden that
is already on its way over via the conveyor belt. Above and
beyond this, the 3D visualisation of the working environment
makes it easier for them to adhere to the specified heights
for backfilling and modelling the surfaces for recultivation.
By taking the measures described above, we are lifting our
opencast mines to a new technological level, establishing
major prerequisites for being able to operate them profitably
in the future as well.

Combined review of operations > Innovation

New opportunities for CO2 use: carbon dioxide is turned
into methanol. For some time now, we have been working
on various processes to enable us to separate carbon dioxide
from power plant flue gases (CO2 washing). At the Coal
Innovation Centre in Niederaussem, we have developed one
of the world’s leading technologies in this field together
with BASF and Linde. This technology has been tested in a
pilot plant and has proven its efficiency over more than
70,000 operating hours since 2009 with carbon capture
rates of 90 %. Now we are taking the next step: we use the
carbon dioxide from the pilot plant to produce fuel and
feedstock for the chemical industry, which can be used to
replace fossil fuels such as crude oil and natural gas. We
are doing this within the scope of four projects that are
subsidised by the EU. One of them is MefCO2 (Methanol
from CO2). Its purpose is to show how carbon dioxide, water
and electricity can be used to make methanol, which is
traditionally produced with natural gas or coal, on a large
technical scale. A wide variety of chemical products are
based on methanol, one of the most commonly produced
chemicals in the world, which is also suitable as a long-term
storage medium for renewable energy. Therefore, the
benefits of conversion extend far beyond simply reducing
industrial CO2 emissions. Nine partners from seven European
countries are involved in MefCO2, amongst them industrial
companies, universities and research institutes. The project
was launched in 2014, and we joined it in 2017 during the
project partners’ search for a site for a demonstration plant
that could be used to convert carbon dioxide into methanol.
Today, the plant is located at Niederaussem. It went into
operation in early 2019 and has a production capacity of
about 1 metric ton of methanol per day, making it one of the
largest CO2 utilisation plants in Europe.

The path to carbon-neutral economic cycles: an
opportunity for the coal mining regions. Many experts
believe that human intervention in the climate can only be
limited effectively if the global social and economic system
successfully makes the shift to largely closed carbon cycles.
Ideally, only as much carbon enters the atmosphere as is
bound by other processes at the same time. However, this is
not without its own challenges. The crux of the matter is that
we will ultimately continue to rely on electricity in the future
and we will also want to live in warm homes. In addition,
industry remains reliant on carbon-based raw materials. The
transition to the circular carbon economy is a herculean task,
which cannot be accomplished without investment. RWE
has been co-operating with the Fraunhofer Institute for
Environmental, Safety and Energy Technology (Fraunhofer
UMSICHT) in Oberhausen and Bochum Ruhr University since
September 2018 to develop the technical and systemic
framework necessary for a circular carbon economy. Our

goal is to establish a centre of competence for carbon
conversion which brings together the know-how, equipment
and components as well as research work. We are focusing
on regions in which the phase-out of carbon-intensive
technologies will result in the demise of established
industrial structures. The centre, which will be called ITZ CC
(Innovation and Technology Centre for Carbon Conversion),
will initiate structural change in the Rhenish lignite mining
region and the Ruhr area by way of technologies and
know-how relating to the use of carbon. The objective is to
build a bridge from conventional to innovative carbon usage
and make a contribution to new industries replacing old ones.

A key method in transitioning to the circular carbon
economy is the gasification of carbonaceous material. We
intend to dedicate ourselves intensively to this process at
the Niederaussem Innovation Centre. We are doing this as
part of an initiative of the Fraunhofer Institute named
Carbon Chains (IK2). The project is based on the fact that
coal and other carbonaceous materials can be used to
produce raw materials for the chemical industry and for fuels
through gasification. What is special about this method is
that, during the combustion process, rather than carbon
dioxide and water vapour, carbon monoxide and hydrogen
are produced. The latter are building blocks of a synthesis
gas that is already being used in the production of fuels,
plastics and fine chemicals. From 2020 onwards, pilot plants
are due to be built in Niederaussem to develop suitable
gasification, processing and synthesis technologies. We use
lignite, which is increasingly losing importance as a fuel for
generating electricity, as a base raw material. Its use in the
production of basic materials will open up exciting long-term
prospects to the Rhenish coal mining region. In addition,
waste products, residual materials and biomass can also be
converted through gasification. In this way, previously unused
carbon sources could be integrated in order to supply
industry with raw materials.

Lower mercury emissions thanks to rotary hearth
furnace coke. We want to operate our power plants in as an
environmentally-friendly manner as possible and legislation
gives us strict guidelines in this regard, e. g. in relation to
mercury emissions. In 2021, they will be subjected to new
EU limits making the framework conditions for the operation
of our lignite-fired power plants stricter than ever. We are
already able to successfully separate and extract most of the
mercury contained within flue gases so, as a result, our plants
are already well below the current upper limits. Independently
of this, we have been investing in intensive research for
some years now, in order to identify ways which allow us to
further reduce mercury emissions cost effectively. We have
been giving much consideration to a process which makes

26 RWE Annual Report 2018

use of furnace coke from lignite. We are already using this
substance to extract mercury at our refining plants and then
use it to manufacture lignite briquettes or lignite dust for
the cement and lime industries. Tests in a pilot plant at the
Coal Innovation Centre at the Niederaussem power station
show that lignite-based furnace coke can also help reduce
emissions from power plants. We mixed finely ground
furnace coke with water and sprayed the resulting mixture
into one of the power station’s smoke stacks (wet spraying).
This results in the mercury attaching itself to the fine
furnace coke particles; both materials are extracted by
the electrostatic precipitator and disposed of. The tests
indicate a significant reduction in mercury emissions. The
findings gained have since influenced the construction of a
large-scale demonstration plant, also located in Niederaussem,
which took up operation at the beginning of 2019. This is
where wet spraying will be compared to the alternative
method of dry spraying in a long-term test. We intend to
implement the more suitable of the two technologies in
other lignite-fired power stations.

Innovation at innogy: contributing to the success of the
energy transition. Our subsidiary innogy is pursuing a
broad range of innovation projects designed to contribute to
making the energy transition a success. They are described
in more detail at www.innogy.com/innovation. An example of
a project that turned out especially well is the development of
the Smart Wind Farm Output Controller (SWOC), a remote
control for onshore wind farms. SWOC is a cube, no larger
than a hat box, with integrated software. It enables any wind
turbine variant to be controlled from several locations.
Thanks to SWOC, the operators of the grids which receive
the electricity can ramp down production, thereby
protecting powerlines from overload. Direct marketers of
wind energy can also ramp down output, for example if
there is an oversupply of power on the market resulting in
negative electricity prices. The control box makes wind
turbine operation more flexible and efficient. innogy has
already started using these devices for its German and Dutch
wind farms and intends to upgrade solar farms with the
intelligent switch cubes.

Detailed information on these projects and other RWE R & D
ventures can be found at www.rwe.com/innovation.

Promoting new companies and their ideas. In addition
to working on our own research projects, we also support
fledgling, innovative companies. RWE has been involved
in the third High-Tech Gründerfonds (HTGF III) since 2017.
HTGF is Germany’s largest start-up financer. It acquires
stakes in firms that make commercial use of technological
progress and has invested in over 500 companies since
2005, being part of numerous success stories. HTGF is a
public-private partnership: its group of investors includes the
Federal Ministry of Economics and Energy, the KfW Group,
Fraunhofer Gesellschaft and numerous companies. RWE
has been investing in venture capital funds since 2006.
This allows us to more easily identify start-ups with ideas
that could be interesting for our business. To deepen our
ties to the founder scene and pave the way for potential
co-operations, we held our first Start-up Day in 2018. A
large number of the attendees were attracted through our
involvement in HTGF. The valuable talks and contacts
resulting from the event have encouraged us to hold at least
one further Start-up Day in 2019.

We leverage the experience and know-how of our
employees. Another source of useful ideas can be found
within our daily operations. Many of our employees pass on
their observations from their day-to-day activities, thereby
enabling the company to progress. Last year, employees of
the Group submitted approximately 2,000 suggestions for
ways in which to improve the business to their idea managers.
We estimate the economic benefit of their suggestions for
the first year of implementation to be €2.6 million. The
suggestions can make operating procedures both more
efficient and environmentally friendly, while being less
dangerous than before. For example, workers in the Rhenish
lignite mining region observed that the process of refuelling
vehicles and machines was much too cumbersome: the tank
lorry drivers would climb atop the tank, hose in hand, in order
to refuel the vehicles and machines through their top-mounted
filler necks using a conventional pump nozzle. Besides being
hazardous, this resulted in small residual amounts of fuel
escaping and seeping into the ground. The employees
therefore suggested retrofitting the vehicles and machines
for pressure fuelling. There are several advantages to this
solution: the filler necks can be mounted where they are more
convenient to reach, the fixed connection between the hose
and the tank prevents fuel from overflowing, and fuelling
times are reduced considerably. These benefits were so
compelling that the ball soon got rolling. At the beginning
of 2019, where technically possible and sensible, all track
vehicles in the Rhenish opencast mine and even some
emergency back-up generators for heavy-duty equipment
were converted to pressure refuelling.

Combined review of operations > Economic environment

1.3 ECONOMIC ENVIRONMENT

The global economic upswing continued in 2018, but lost some steam over the course of the year. The economic
trend stimulated demand for commodities and contributed to the increase in the price of gas and coal compared
to the previous year. Furthermore, a reform of the European Emissions Trading System caused a rapid increase in CO2
certificate prices. These developments were responsible for the recovery of wholesale electricity prices in 2018, which
began at the beginning of 2016. However, this has not had a significant affect on RWE’s earnings so far, because
we had sold forward most of our electricity generation for 2018 in earlier years when prices were still far below the
current level.

German electricity consumption flat. Economic growth
stimulated demand for electricity, whereas the trend
towards energy savings had an opposing effect. According
to proforma calculations by the German Association of
Energy and Water Industries (BDEW), German electricity
usage was roughly on a par year on year. Data available for
the UK indicates that the country did not experience a
significant change compared to 2017, either. Conversely,
power consumption is estimated to have risen by 2 % in the
Netherlands, with the country’s above-average growth
probably playing a role.

Eurozone posts 2 % economic growth. The global economy
continued its upward trend in 2018, but lost some momentum
during the year. One reason was the trade conflict between
the USA and other nations, in particular China. Based on initial
estimates, global economic output was a respectable 3 %
higher in 2018 than in the previous year. The Eurozone may
well have recorded approximately 2 % growth. Germany, the
currency area’s largest economy, appears to have recorded
a gain of just 1.5 %, whereas the Netherlands occupied one of
the top spots among the euro countries, posting an expansion
of about 2.5 %. In the United Kingdom, our most important
market outside the currency union, gross domestic product
rose by nearly 1.5 %. Brexit and the associated risks slowed
the UK economy.

One-year forward prices of gas on the TTF wholesale market
€/MWh (average weekly figures)

2017 forward

2018 forward

2019 forward

2016

2017

2018

Source: Bloomberg.

28 RWE Annual Report 2018

One-year forward prices of coal deliveries to Amsterdam/Rotterdam/Antwerp
US$/metric ton (average weekly figures)

2017 forward

2018 forward

2019 forward

100

2016

2017

2018

Source: RWE Supply & Trading.

Hard coal trading developed as follows: including freight
and insurance, hard coal imports via the ARA ports
(Amsterdam/Rotterdam/Antwerp) were settled at an
average of US$92 (€78) per metric ton in spot trading
in 2018, an increase of US$8 compared to 2017. The
2019 forward (API 2 Index) traded at US$87 (€74) per
metric ton, US$13 higher than the comparable figure for
the previous year. This was in part due to the dynamic
economy in the Asia-Pacific region and its stimulating
effect on demand for coal.

Hard coal and gas quotations up year on year. In addition
to demand for electricity, the development of fuel costs also
determines power plant deployment. In the financial year that
just came to a close, the freely tradeable energy sources of
most importance to us, i. e. gas and hard coal, were much
more expensive than a year before: gas spot prices at the
Dutch Title Transfer Facility (TTF) averaged €23 per MWh,
up €6 compared to 2017. In TTF forward trading, contracts
for delivery in the following calendar year (2019 forward)
were settled for €21 per MWh. By comparison, in 2017 the
price paid for the 2018 forward was €17. Gas prices were
influenced in part by oil quotations, which were higher than
in 2017 overall. Furthermore, the positive economic cycle
came to bear.

Forward prices of CO2 emission allowances (EU Allowances)
€/metric ton of CO2 (average weekly figures)

December 2017 forward

December 2018 forward

December 2019 forward

2016

2017

2018

Source: RWE Supply & Trading.

Combined review of operations > Economic environment

Reform of European Emissions Trading System causes
rapid increase in CO2 certificate prices. An important cost
factor of fossil fuel-fired power stations is the procurement
of CO2 emission allowances. The price of an EU Allowance
(EUA), which confers the right to emit one metric ton of
carbon dioxide, tripled to €25 over the course of the year. The
average for 2018 was €16, which was €10 more than in 2017.
These figures relate to contracts for delivery in December of
the following year. There continue to be many more emission

allowances on the market than companies need to cover
their carbon dioxide emissions. However, in the meantime
the EU has adopted a package of measures enabling it to
significantly reduce the surplus of certificates from 2019
onwards (see page 32). This has apparently given many
market participants a reason to expect a reduction in available
emission allowances, which has made them more expensive
and resulted in early purchases. Consequently, EUAs have risen
in price even before the package of reforms was implemented.

One-year forward prices of base-load electricity on the wholesale market
€/MWh (average weekly figures)

2017 forward

2018 forward

2019 forward

2016

2017

2018

Germany

Netherlands

United Kingdom

Source: RWE Supply & Trading.

Wholesale electricity prices continue upward trend.
The rise in fuel and emission allowance prices was reflected
in the development of wholesale electricity prices, which
continued to trend upwards. Last year, base-load power
traded for an average of €44 per MWh on the German spot
market, up €10 on the figure recorded in 2017. Significant
price increases were also observed on RWE’s two other
major generation markets: quotations on the UK spot market
advanced by £12 to £57 (€65) per MWh and by €14 to €53
per MWh in the Netherlands.

Forward markets displayed the following development: last
year, the average quotation of the 2019 base-load forward
in Germany was €44 per MWh, €12 more than what was paid
for the 2018 forward in 2017. The price of base-load power
in year-ahead forward contracts rose by £10 to £54 (€61)
per MWh in the United Kingdom and by €13 to €49 per MWh
in the Netherlands.

30 RWE Annual Report 2018

Clean dark spreads¹ forward trading
€/MWh (average weekly figures)

2017 forward

2018 forward

2019 forward

2016

2017

2018

Germany

Netherlands

United Kingdom

Source: RWE Supply & Trading.

1 Price of base-load electricity minus the cost of hard coal and CO2 emission allowances based on a power plant efficiency of 40 %; including CO2 tax in the UK.

Clean spark spreads¹ forward trading
€/MWh (average weekly figures)

– 5

– 10

2017 forward

2018 forward

2019 forward

2016

2017

2018

Germany

Netherlands

United Kingdom

Source: RWE Supply & Trading.

1 Price of base-load electricity minus the cost of gas and CO2 emission allowances based on a power plant efficiency of 50 %; including CO2 tax in the UK.

Rise in German generation margins. Power plant margins
are the difference between the price of electricity and the
costs (including taxes) of the fuel and CO2 emission allowances
required to produce it. We generally source the fuel for our
hard coal and gas-fired power plants from liquid markets at
prevailing conditions. Therefore, the generation costs of
these stations can change significantly. The margins are
referred to as clean dark spreads for hard coal-fired power
plants and clean spark spreads for gas-fired power plants.

The two above graphs illustrate the development of the
aforementioned spreads in our main generation markets
since 2016, based on the respective year-forward transactions.
In Germany and the Netherlands, clean dark spreads and
clean spark spreads grew somewhat after a moderate first
six months. For the full year, they therefore slightly exceeded
the 2017 level. By contrast, in the UK, clean spark spreads
and clean dark spreads were slightly and significantly lower
than their respective averages in the previous year.

Combined review of operations > Economic environment

Wind speeds below average in Central Europe and
the United Kingdom. The utilisation and profitability of
renewable generation assets greatly depend on weather
conditions. Wind speeds are particularly important to
innogy. At the company’s generation sites in Central
Europe and the United Kingdom they were much lower
than the average of the last 30 years. By contrast, they
matched the long-term average in Italy and Spain. Wind
speeds recorded at all innogy sites were lower than in 2017.
The utilisation of run-of-river power stations strongly
depends on precipitation and melt water volumes. In
Germany, our main hydroelectric power region, these
volumes were below the long-term average and the level
observed in 2017.

Fuel costs for lignite-fired and nuclear power stations are
generally more stable as we source uranium via long-term
contracts at firm conditions and produce lignite from our
own opencast mines. The rise in wholesale power prices
caused realisable nuclear energy margins to increase
substantially. By contrast, the margins of lignite-fired
power stations only improved slightly as the price of both
electricity and CO2 emission allowances rose.

Decline in income from RWE power stations. We sell
forward most of the output of our power stations and
secure the prices of the required fuel and emission
allowances in order to reduce short-term volume and price
risks. Therefore, the income we earned from our power
plants in the year under review was determined by the
conditions at which we concluded forward contracts for
2018 years in advance. We conducted such sales relatively
early on for our lignite and nuclear power plants, which
mostly cover the need for base-load electricity, realising
lower prices than in the contracts for 2017. Given that
generation costs were virtually stable, the margins of these
stations dropped accordingly. We typically conduct forward
sales of electricity produced by hard coal and gas-fired
power plants with a smaller lead time. As a result, we
benefited more from the recovery of prices in wholesale
electricity trading. However, we had to pay much more for
fuel. Therefore, overall the margins realised in forward
contracts also deteriorated for these stations.

32 RWE Annual Report 2018

1.4 POLITICAL ENVIRONMENT

Climate protection remains at the top of the energy policy agenda. The European Union has fundamentally reformed
the European Emissions Trading System and set itself an ambitious goal regarding the expansion of renewable energy
through to 2030. In addition, Germany and the Netherlands are setting the course for an early coal phase-out.
The government in The Hague presented a first bill in this respect in May 2018. Berlin is set to follow suit soon,
orientating itself towards the proposals of a state commission, which at the beginning of 2019 recommended a German
exit from coal by 2038. It further envisages the number of coal-fired power plants on the market being reduced
significantly by 2022. It is foreseeable that the proposals will have serious ramifications for RWE’s lignite business.

Reform of European Emissions Trading System decided.
In February and March 2018, the European Parliament and
the Council of Ministers decided to fundamentally reform
the European Emissions Trading System (ETS). This was
preceded by trilateral talks held by representatives of the
two bodies and the European Commission. The objective of
the reform, which entered into force in April 2018, is to
strengthen the ETS and bring it in line with the European
greenhouse gas reduction goal for 2030. By then, branches
of industry participating in the ETS must reduce their
emissions by a total of 43 % compared to 2005. Therefore,
the number of CO2 certificates issued will be lowered by
2.2 % annually during the fourth trading period, which runs
from 2021 to 2030. Until then, the reduction rate will be
1.74 %. Another objective of the amendment to the ETS is
to reduce the existing glut of allowances on the market.
This will be done by transferring a much larger volume of
allowances into the ‘market stability reserve’ (MSR)
compared to what was prescribed by former legislation. The
MSR, which has been used since the beginning of the year, is
a tool capable of providing more flexibility in bringing the
supply of certificates in line with demand. The new regulation
envisages reducing the number of certificates placed on the
market via auctions accounting for 24 % of the surplus annually
from 2019 to 2023 and transferring them to the MSR. It also
envisages cancelling MSR emission allowances exceeding
the auctioned volume in the preceding year from 2023
onwards. In addition, it will allow member states to cancel
certificates in exchange for emission reductions resulting
from national measures leading to power plant closures.

EU Winter Package: new energy efficiency and
renewables expansion goals. At the end of 2018, the
European Parliament and the Council of Ministers adopted
new versions of the directives concerning renewable energy
and energy efficiency as well as a regulation for monitoring
progress in climate and energy policy. The legal acts entered
into force on 24 December after they were published in the
Official Journal of the European Union. They are part of a
legislative package entitled ‘Clean Energy for all Europeans’

(also referred to as the ‘Winter Package’), which has largely
been adopted. In the package, the EU has set itself an
ambitious goal in relation to the expansion of renewable
energy, which is envisaged to cover at least 32 % of energy
demand by 2030. The EU currently aims to achieve a share
of 20 % by 2020. The target in respect of energy efficiency
is also ambitious: the EU intends to reduce its primary
energy consumption by 32.5 % by 2030, relative to the
development under normal circumstances. Furthermore, the
member states are obliged to present national energy and
climate plans for the period running until 2030 and to
develop long-term climate-protection strategies by the end
of 2019. Germany has already fulfilled these requirements.

EU limits participation of coal-fired power plants in
capacity mechanisms. The EU also achieved a breakthrough
by amending the Electricity Market Directive and the
Electricity Market Regulation, which are also part of the
Winter Package. The European Parliament and the Council
of Ministers agreed on a joint position in December. Both
of these bodies intend to introduce provisions to the EMR
which national governments must comply with if they are
introducing capacity mechanisms or have already done so.
Participation of power plants emitting more than 550 g
CO2/kWh in such mechanisms will be very limited in the future.
The prerequisite for this is that they do not emit more than
350 kg CO2 per kilowatt of installed capacity per year. A
modern lignite-fired power plant achieves this threshold
after a maximum of 375 hours under full load, whereas a
modern hard coal-fired power station hits this mark after no
more than 470 hours. In concrete terms, this means that
coal-fired power plants cannot participate in a general
capacity market under full load, but can be part of back-up
schemes envisaging a small number of operating hours. An
example of such rules is the existing lignite security stand-by
regime, which is conceivable under the new EU regulations
in the future. The ceiling of 550 grams will apply to new
power plants as of 1 January 2020. Existing assets will be
subject to transitional arrangements until the middle of
2025. Capacity agreements already in place and contracts

Combined review of operations > Political environment

concluded during the current year will be entirely unaffected
by the threshold values. This is the concession made by the
EU in particular to Poland: the country has already
introduced a general capacity market including coal-fired
power stations. The amendments to the Electricity Market
Directive and the Electricity Market Regulation require formal
approval from the European Parliament and the Council of
Ministers to enter into force. This is expected to happen in
the first half of 2019.

Commission for structural change proposes roadmap for
German coal phase-out. An accelerated coal phase-out is
materialising in Germany, our most important generation
market. In January 2019, following lengthy consultations,
the Growth, Structural Change and Employment Commission
established by the German government presented a concept
for the country achieving its climate protection goals in the
energy sector avoiding structural upheaval, social hardship
or jeopardising security of supply. The body, which consists
of representatives from industry, trade unions, the scientific
community, associations, civic initiatives and environmental
organisations, recommends that Germany phase out coal by
no later than 2038. However, it envisages reviewing the
feasibility of this goal in 2032 and possibly bringing the exit
date forward to 2035. In addition, the Commission has set
milestones for the coal phase-out: it envisages the total
capacity of lignite and hard coal-fired power stations on the
market being reduced to 15 GW each by the end of 2022
through shutdowns or conversions. Compared to the end of
2017, this corresponds to a decrease of at least 12.5 GW, of
which nearly 5 GW and 7.7 GW will be accounted for by
lignite and hard coal, respectively. These figures include
shutdowns that have already occurred or have been
announced as well as lignite-fired units which had not yet
been placed on security stand-by at the end of 2017. The
objective is to have lignite and hard coal-fired power stations
with a total capacity of only 9 GW and 8 GW (excluding
back-up capacity) on the market in 2030. Moreover, the
Commission recommends removing emission allowances
matching the additional CO2 savings from the national auction
budget, as otherwise the certificates no longer needed for
the decommissioned power plants would be available to
other participants in the European Emissions Trading
System, enabling additional emissions from their assets.

The Commission further proposes that the German
government conduct reviews in 2023, 2026 and 2029
involving an analysis of the effects of measures taken by
then on security of supply, electricity prices, climate
protection and structural development in the affected regions
and that countermeasures be initiated if necessary. It is
also recommended that policymakers implement the
phase-out roadmap in agreement with the operators and
grant them appropriate compensation. The Commission also
deems it desirable that Hambach Forest be preserved.
With respect to relocations in the opencast mining
regions, the states are being asked to enter into dialogue
with the affected residents in order to avoid social and
financial hardship. Layoffs and undue social and economic
disadvantages for the workers should be prevented, in part
by paying them an adjustment allowance.

By and large, the Commission’s proposals met with the
approval of politicians and stakeholder groups. It was viewed
positively that widespread consensus has now been reached,
which can serve as a basis for policymakers in order to
establish planning certainty for companies, employees and
regions. Observers therefore anticipate that the German
government will implement the main points of the
Commission’s concept. This would have serious ramifications
for our Rhenish lignite business. RWE has already taken four
power plant units offline prematurely under the security
stand-by scheme, with a further block to follow at the end of
September 2019. Additional shutdowns are therefore all the
more difficult and result in burdens going far beyond the
lost electricity revenue. For instance, we would have to
implement substantial job cuts and introduce redundancy
programmes for the affected workers at short notice. If
opencast mines are closed early, new recultivation concepts
would have to be developed and the mining provisions
would have to be increased as they would be used earlier.
Additional costs would be incurred if Hambach Forest were
preserved, provided that this is at all technically feasible. In
addition, substantial investments are needed in order to
adapt opencast mines and power plants to a new operating
concept. We can only reliably estimate the burdens we will
face when the government presents specific plans and
initiates talks with us. We welcome the fact that the
Commission has recognised the need to pay power plant
operators adequate compensation and has also considered
the knock-on costs for the opencast mines.

34 RWE Annual Report 2018

Netherlands plans exit from coal-fired generation.
There is also a high probability of an early coal phase-out in
the Netherlands. The government adopted a bill to this end
in May. It envisages power plants dating back to the 1990s
being prohibited from running on hard coal from 2025
onwards. The ban will enter into force five years later for
newer stations. This would mean that, in the Netherlands,
power would no longer be produced from coal starting in
2030. This objective has also been set out in the coalition
agreement signed by the four governing parties under Prime
Minister Mark Rutte in October 2017. Following a public
consultation in the summer of 2018, the government revised
the draft law and submitted an as yet unpublished new
version to the Dutch State Council, a constitutional body that
advises the government. The parliament is scheduled to
decide on the draft in the spring of 2019. Five hard coal-fired
power stations are still in operation in the Netherlands,
with two belonging to us: Amer 9 and Eemshaven. The
former has a net installed capacity of 631 MW and was
commissioned in 1993. According to the draft law of May,
this power plant would have to stop generation from coal
at the end of 2024. The Eemshaven power station is a
1,554 MW twin unit, which we have been operating since
2014. It would be subject to the later exit date, which is
the end of 2029. Amer 9 and Eemshaven would have to be
shut down or operated only using alternative fuels. Both
stations are being retrofitted for co-firing biomass. We are
receiving subsidies for this, with which we are financing the
investment outlay and the additional cost of sourcing the
fuel. A full conversion to biomass would result in substantial
additional burdens. In our dialogue with policymakers,
we are discussing the options for compensation for the
financial disadvantages that we would suffer as a result of
the planned coal phase-out and will take legal recourse to
this end if necessary.

Dutch government intends to introduce CO2 emissions
price floor. In addition, the government in The Hague wants
to flank the European Emissions Trading System with a
national carbon tax in the electricity sector. The objective is
to prevent the total cost per metric ton of carbon dioxide
emitted from falling below a predefined floor even if
certificate prices are low. The introduction of the levy is part
of a national climate accord, which is likely to be adopted
this year. In the convention, the government intends to
agree measures with environmental associations, trade
unions and energy companies through which the country
can achieve its ambitious emission-reduction goals. Initial
plans envisaged the tax guaranteeing a minimum price of
€18 per metric ton of carbon dioxide when it is introduced in
2020 and gradually lifting the floor to €43 by 2030.
However, the government was criticised for this. A state-
commissioned study reached the conclusion that the reform
would only make a small contribution to reducing emissions
and could jeopardise security of supply. For the same
reasons, the energy sector opposed the levy, referring to the
significant rise in prices in European emissions trading in the
meantime. Despite this, policymakers did not want to
abandon the undertaking entirely. Following talks with the
energy companies and environmental associations, a much
lower floor was established, along with a more gradual
increase than the one planned originally. It starts at €12.30
in 2020 and rises incrementally to €31.90 in 2030. The path
is based on estimates regarding the future development of
prices in European emissions trading. It is assumed that
certificate quotations will rise substantially and exceed the
pre-determined CO2 floor along the entire path.

Combined review of operations > Major events

1.5 MAJOR EVENTS

Fiscal 2018 was an eventful year for us. Through the asset swap agreed with E.ON, we have set the course towards
a new RWE, which will rank among Europe’s leading producers of electricity from renewable sources. In addition, our
subsidiary innogy passed further milestones in the expansion of its wind and solar power capacity. The past year was
less pleasing for our lignite business: the Münster Higher Administrative Court ordered a temporary halt to the
clearance of Hambach Forest, which will curtail our opencast mining activities and reduce our electricity generation.
In this chapter, we present the major events that occurred in 2018 and the beginning of 2019. We focus on events
that have not been commented on in detail elsewhere in this report.

Events in the fiscal year

Extensive asset swap agreed: E.ON will acquire innogy –
RWE will become Europe’s No. 3 in renewables. RWE
and E.ON have jointly set the course for a fundamental
redistribution of their business activities. RWE will become
Europe’s No. 3 in renewable energy while E.ON will
enlarge its grid and retail operations. The two companies
envisage that this will be achieved through a substantial
asset swap, which was contractually agreed on 12 March
2018. According to the deal, E.ON will acquire RWE’s 76.8 %
stake in innogy SE. In return, RWE will receive the following
assets: (1) a 16.67 % stake in E.ON which will be created by
way of a capital increase from authorised capital in exchange
for a contribution in kind; (2) nearly all of E.ON’s and
innogy’s renewable energy activities; (3) the minority
interests held by the E.ON subsidiary PreussenElektra in the
RWE-operated nuclear power stations Gundremmingen and
Emsland of 25 % and 12.5 %, respectively; (4) innogy’s gas
storage business and (5) the 37.9 % stake in the Austrian
energy utility Kelag held by innogy. The deal also involves
RWE paying €1.5 billion to E.ON. It is envisaged that the
transfers take retrospective economic effect from 1 January
2018. The transaction was based on a valuation of our
76.8 % stake in innogy of €40 per share when the contract
was concluded. This corresponds to a premium of 28 % on
the closing quotation of the innogy share on 22 February
(€31.29), the last figure that was largely unaffected by
takeover speculation. The €40 per share includes the
dividends of innogy SE for fiscal 2017 and 2018, to which
RWE will continue to be entitled.

Through the transaction, RWE will become an all-rounder
in electricity production, making a major contribution to
security of supply with its flexible power stations while
spurring the transition of the energy sector towards
climate-friendly electricity production. We will not only

broaden our operating base, but also establish a more
robust financial position. The renewables business is
characterised by a large portion of stable regulated income.
After the transaction closes, it should contribute more
than half of the RWE Group’s adjusted EBITDA. Our leverage
factor, which represents the ratio of net debt to adjusted
EBITDA, will then probably be below 3.0. More detailed
information on the effects of the transaction on our business
model can be found on page 18 et seq.

We are confident of being able to complete the asset swap
by the end of 2019. It will be carried out in several steps,
some of which have already been taken:

• On 27 April 2018, E.ON made a voluntary public offer to
innogy’s minority shareholders for the acquisition of their
shares. At €40 per share minus the innogy dividends for the
2017 and 2018 fiscal years, the offer price was in line with
the conditions underlying the transaction between E.ON
and us. When the acceptance deadline expired on 25 July
2018, 9.4 % of the shares in innogy were tendered to E.ON.

• On 18 July, RWE and innogy as well as E.ON and innogy
reached agreements to co-operate in implementing the
transaction. innogy’s management has committed to
supporting the implementation of the asset swap –
also vis-à-vis the capital market. It is envisaged that the
integration will be a transparent process in which all
employees are treated as equally as possible, irrespective
of the company they currently work for. Another objective
is that the integration plays to the strengths of each
company. The agreement paves the way to the early joint
planning of the integration measures and an expedited
completion of the transaction.

36 RWE Annual Report 2018

• On 22 January 2019, we registered the acquisition of
the business activities and shareholdings to which we
are entitled with the European Commission and received
clearance from Brussels on 26 February. This was
preceded by an advance review lasting several months
through which the Commission gained an accurate
picture of the effects of the transaction on competition.
E.ON registered the acquisition of innogy with the
Commission on 31 January 2019. Furthermore, national
antitrust approvals must be obtained. One relates to the
acquisition of the financial investment in E.ON. Requests
for this clearance were filed with the German Cartel Office
on 28 January 2019 and with the UK Competition and
Markets Authority (CMA) on 25 February 2019. We
received the go-ahead from the German Cartel Office on
26 February 2019, the day on which we also received
approval from the Commission.

It is envisaged that the transaction be completed in two
steps as soon as all of the necessary approvals have been
obtained from the relevant competition and regulatory
authorities. First, E.ON will receive our 76.8 % shareholding
in innogy and the agreed €1.5 billion in cash and we will
acquire the 16.67 % stake in E.ON as well as the minority
interests in the Gundremmingen and Emsland nuclear power
stations. Second, E.ON will transfer to us its own and
innogy’s renewable energy activities, innogy’s gas storage
business, and the shareholding in Kelag.

German Court orders temporary halt to clearance of
Hambach Forest – RWE anticipates decline in earnings
due to curtailment of opencast mining operations. On
5 October, the Münster Higher Administrative Court ruled
in summary proceedings that RWE Power may not clear
Hambach Forest, which is near Cologne, for the time being.
This will lead to a massive curtailment of lignite production
from the Hambach opencast mine. We anticipate annual
volume shortfalls of 10 million to 15 million metric tons over
the medium term (2019 to 2021). This will probably reduce
adjusted EBITDA by €100 million to €200 million per year.
The clearance of Hambach Forest is part of the mine’s main
operating plan for 2018 to 2020, which was approved in
March 2018 by the relevant district government under an
immediate implementation order. Thereupon, the BUND
environmental activist group filed a motion to set aside the
immediate implementation, which was denied by the
Cologne Administrative Court. An appeal lodged by BUND
against the Cologne ruling was allowed by the Münster
Higher Administrative Court in October, which ordered the
temporary halt to the clearance of Hambach Forest, during
which the other opencast mining operations could be

continued. The reasons given by the Court for its decision
were that the matter could not be clarified in expedited
proceedings due to the complexity of the legal situation.

Whether and when Hambach Forest can be cleared must
now be decided in the principal proceedings, which are
pending before the Cologne Administrative Court. The main
question is whether the remainder of the forest, which
covers about 200 hectares, is subject to the protective
provisions applicable to flora and fauna habitats (FFH areas)
under European law. According to an expert opinion
published by the Kiel Institute for Landscape Ecology at the
beginning of 2018, this is not the case. The same conclusion
was reached by the Cologne Administrative Court in an
earlier lawsuit filed by BUND concerning the general
operating plan for 2020 to 2030. The case was dismissed on
24 November 2017. On 5 October 2018, the Münster Higher
Administrative Court granted the motion for an appeal by
BUND against this decision. As a result, both the Cologne
Administrative Court and the Münster Higher Administrative
Court are addressing the FFH issue in principal proceedings.
It remains to be seen when a final ruling will be handed
down, but it is possible that this will not happen before the
end of 2020. However, it cannot be ruled out that the matter
is placed on the agenda of the federal government
beforehand. The preservation of Hambach Forest is deemed
desirable in the final report of the Growth, Structural Change
and Employment Commission published on 26 January 2019.
We provide detailed information on the recommendations of
the Commission to the federal government on page 33.

Electricity generated from Hambach lignite corresponds
to about 15 % of demand in the state of North Rhine-
Westphalia. It is not only the power plants at the Neurath
and Niederaussem sites that are connected to the opencast
mine, but also refining factories, which supply a large
number of small and medium-sized enterprises with lignite
products for their electricity and heat generation. There are
currently about 4,600 RWE employees working in the
Hambach mining area as well as in the downstream power
stations and businesses. In addition, personnel in the supply
chain are affected.

EU Court shelves UK capacity market. In mid-November,
the General Court of the Court of Justice of the European
Union declared that the approval of the UK capacity market
granted by the European Commission was invalid. The
judges found that the Commission should have conducted
an extensive investigation before giving the go-ahead for
the state aid. The UK capacity market has been suspended
since the ruling. This means that no capacity payments may

Combined review of operations > Major events

Dutch Claus C gas-fired power station to go back online.
Claus C, our mothballed Dutch gas-fired power plant in
Maasbracht, will return to operation. This was decided by
the Executive Board of RWE Generation in October. The
station has a net installed capacity of 1,304 MW and, at
58 %, meets the highest efficiency standards. It was
commissioned in 2012 but taken offline two years later due
to its lack of profitability. The reasons for it coming back
online are improved market conditions and rising demand
for flexible generation capacity. Commercial opportunities
could also arise as Belgium intends to phase out nuclear
energy and would therefore need additional generation
capacity. Claus C could be connected directly to the Belgian
grid thanks to its proximity to the border. However, the
power station will probably not be fully operational again
until the autumn of 2020, because extensive maintenance
work has to be carried out first.

Unlike Claus C, the neighbouring gas-fired power plant
Claus A will not go back online. The station, which has a net
installed capacity of 610 MW, was taken off the grid in
March 2012 and shut down for good in 2018. It would not
have been worthwhile to reactivate it given its technical
condition. In addition, we temporarily took the Moerdijk 1
gas-fired power station offline as of 1 February 2018, a decision
that was made for economic reasons in 2016. Moerdijk 1
is located south of Rotterdam in the Dutch province of
North Brabant and has a net installed capacity of 348 MW.

UK’s Galloper offshore wind farm completed. Our
subsidiary innogy expanded its electricity generation
capacity from renewables with the completion of
Galloper, a large-scale wind farm in the UK North Sea.
It consists of 56 turbines with a total capacity of 353 MW.
innogy owns 25 % of the wind farm, operates it and was
mainly responsible for its development and construction.
Galloper has been fully online since March 2018 and has
the capability to supply about 380,000 UK households.
The total investment in Galloper amounted to £1.5 billion.

be made under existing agreements and no new capacity
auctions may be held until the Commission has reapproved
the subsidies. This caused the capacity payments we
received in the year under review to be about €50 million
lower than expected. The UK Department for Business,
Energy and Industrial Strategy (BEIS) declared that it will do
everything within its power to regain approval for the
capacity market as soon as possible. This may happen during
the current year. The European Commission has since
initiated an in-depth investigation through which it intends
to clarify whether the UK capacity market qualifies for state
aid under EU regulations. If the Commission grants the UK’s
original request for approval again, capacity payments could
be resumed. Although we are confident that the UK capacity
market can be continued in its current form, we have not
budgeted any payments for the year under review. We had
been granted a total of approximately €180 million in capacity
payments for 2019 in earlier auctions.

Niederaussem E and F units placed on security standby.
On 30 September, we took two 300 MW units (E and F) of
the Niederaussem lignite-fired power plant offline as
planned. These units have been placed on lignite security
stand-by and can be brought back onto the grid within ten
days to bridge electricity shortages. These security stand-by
regulations were enshrined in law in 2016 for environmental
reasons. Under the regime, a total of eight lignite units with
a combined 2.7 GW must be taken off the market from 2016
to 2019 and placed on standby as the last resort to ensure
security of supply for four years each until they are shut
down for good. Five of the eight stations, which have a total
capacity of 1.5 GW, belong to RWE. In 2017 – also at the end
of September – we placed units P and Q of the Frimmersdorf
power plant on security standby. Unit C of the Neurath
power station will follow suit in 2019.

RWE sells majority stake in Hungarian generator Mátra.
RWE and the energy utility EnBW jointly sold their stakes of
51 % and 21.7 % in Hungarian power producer Mátrai Erőmű
ZRt. (Mátra for short). The transaction was completed in
March 2018. The buyer is a consortium consisting of Czech
Republic-based EP Holding and Hungarian investor Lőrinc
Mészáros. Mátra specialises in producing lignite and
generating electricity from this fuel. At the end of 2017, the
company had slightly more than 2,000 people on its payroll
and a net generation capacity of about 840 MW. Mátra is no
longer of strategic importance to us, because we want to focus
our conventional electricity generation business on our core
markets Germany, the United Kingdom and the Benelux region.

38 RWE Annual Report 2018

RWE subsidiary innogy partners up for Triton Knoll
offshore wind project. In line with its strategy of carrying
out large-scale wind projects with partners, innogy sold
stakes of 25 % and 16 % in the Triton Knoll offshore project
to the Japanese energy groups J-Power and Kansai Electric
Power. innogy retains the majority of Triton Knoll (59 %). The
transaction was contractually agreed in August and closed
in September. Triton Knoll is a wind farm with a capacity of
approximately 860 MW which is due to be built in the
North Sea off the English coast. innogy and its new partners
will invest a total of around £2 billion to this end. A large
portion of this sum (£1.75 billion) will be provided by an
international consortium of banks. innogy developed
Triton Knoll and will also be responsible for the construction,
operation and maintenance of the wind farm. Once project
financing had been secured, work began in September on
the onshore grid connection. If the project progresses as
planned, the 90 wind turbines could be commissioned
successively from 2021 onwards. The state has guaranteed
a payment of £74.75 per MWh for the electricity fed into the
grid. The subsidy period is 15 years.

Acquisition of a major wind project pipeline in the USA.
innogy also aims to grow its renewable energy business
outside of Europe. Our subsidiary took a major step in
accomplishing this in 2018. In July, it purchased a portfolio
of wind power projects in the USA. The envisaged turbines
have a total capacity of over 2 GW. The seller is the UK
investment company Terra Firma Capital Partners. The
acquired portfolio encompasses more than 20 projects
across eight states that have progressed to various degrees.
innogy has already taken the final investment decision on
one of the projects: in November 2018, our subsidiary gave
the go-ahead for the construction of the Scioto Ridge wind
farm in the US state of Ohio, which is scheduled to take its
full capacity of 242 MW online by the end of 2020. It will be
able to supply about 60,000 Ohio homes with green electricity.

Subsidies for wind farm in German North Sea secured.
In the spring of 2018, innogy set the stage for a further
attractive offshore wind project. The company secured
state subsidies for the Kaskasi wind farm under the German
Renewable Energy Act at an auction. The decision on the
construction of Kaskasi is scheduled to be taken in 2020. It
is expected to have a generation capacity of 325 MW and
could begin operating in 2022. Its location in the vicinity of
Heligoland has good wind conditions and moderate water
depths. Another advantage is its proximity to innogy’s
existing wind farm Nordsee Ost.

innogy to build Australia’s largest solar farm. In September,
innogy decided to invest in the Limondale ground-mounted
solar array in the state of New South Wales in Australia.
The solar farm should have a total net installed capacity of
349 MW when it is commissioned in the middle of 2020. This
would currently make it the largest solar farm in Australia.
Belectric, the company acquired by innogy in early 2017, is
responsible for construction and will also handle Limondale’s
operation and maintenance.

Solar developer Birdseye grants innogy exclusive rights
to projects in the USA. In June 2018, innogy agreed to join
forces with US-based Birdseye Renewable Energy to develop
solar projects. The partnership encompasses 13 projects with
a total capacity of about 440 MW, which have been initiated
by Birdseye and are in various stages of development. As a
result of the agreement, innogy has secured the right of
first refusal to acquire projects from the pipeline as soon as
they have reached construction maturity. Moreover, innogy
and Birdseye want to explore further opportunities to
work together.

Combined review of operations > Major events

Events after the close of the fiscal year

Commission publishes recommendations concerning
German coal phase-out. In January 2019, the Growth,
Structural Change and Employment Commission set up by
the German government submitted its final report. Consisting
of representatives of industry, trade unions, associations, the
scientific community, civic initiatives and environmental
organisations, the report advocates an exit from German
electricity generation from coal by 2038. It envisages the
capacity of the lignite and hard coal-fired power stations on
the market being reduced to a total of 15 GW each through
shutdowns or conversions by as early as the end of 2022.
The Commission further envisages that by 2030, lignite and
hard coal power plants on the market will have a combined
capacity of 9 GW and 8 GW, respectively. The federal
government now intends to present a package of laws on the
basis of the recommendations and conduct talks with the
affected companies. We provide detailed information on the
Commission’s recommendations and the consequences they
may have for RWE on page 33.

STEAG acquires majority stake in Bergkamen hard coal-
fired power plant from RWE. As of 1 January 2019, we
sold our 51 % shareholding in the Bergkamen hard coal-fired
power station to the Essen-based energy utility STEAG.
The buyer previously owned 49 % of the plant and exercised
a contractual purchase option. The parties agreed to keep
the price confidential. The power station has been in operation
since 1981 and has a generation capacity of 720 MW. RWE
was in charge of commercial management, while STEAG was
responsible for technical plant management. The disposal of
the stake put an end to a contract that obliged us to purchase
electricity produced by the station.

RWE sells Belgian CHP station. A further divestment was
completed when we sold the Inesco CHP station in Belgium
to the UK chemicals group INEOS at the end of February
2019. The plant is eleven years old and located in a chemical
park operated by INEOS near Antwerp. It is gas-fired, has a
net electric capacity of 133 MW and supplies the companies
situated in the chemical park with steam and demineralised
water in addition to electricity. One of the reasons for our
decision to sell the station was its tight integration in the
business activities of INEOS.

German government takes over interim storage for
radioactive waste from RWE. As of 1 January 2019, we
transferred the interim storage facilities for highly radioactive
waste on the sites of our Emsland, Biblis and Gundremmingen
nuclear power plants to BGZ, the state-owned company
responsible for interim storage. The legal basis for this is the
law on the reassignment of responsibility for nuclear waste
disposal which was passed at the end of 2016, pursuant to
which the government assumed responsibility for processing
and financing interim and final nuclear waste storage.
German power plant operators gave the government
€24.1 billion for this. In the middle of 2017, these funds
were paid into a public-law fund for financing nuclear waste
disposal. Responsibility for shutting down and safely
dismantling the stations remains with the companies. They
are also responsible for packaging the radioactive waste
properly before it is handed over to BGZ. A total of eleven
decentralised interim storage facilities were transferred from
the nuclear power plant operators to BGZ as of 1 January 2019.
The interim storage facilities for low and medium-radioactive
waste are to follow at the beginning of 2020, including two at
RWE’s Biblis site.

RWE cancels £750 million hybrid bond. At the beginning
of February 2019, we announced that we will cancel our
£750 million hybrid bond as of 20 March 2019 without
replacing it with fresh hybrid capital. The bond had been
issued seven years earlier. It has a 7 % coupon and a
theoretically perpetual tenor. We are exercising our right to
cancel it at the earliest possible date. In doing so, we are
taking account of RWE’s solid financial position and the
significantly improved earnings prospects resulting from the
planned asset swap with E.ON.

RWE acquires Czech grid investment from innogy for
resale to E.ON. At the end of February 2019, RWE
purchased the majority stake in the Czech gas network
operator innogy Grid Holding (IGH) held by innogy SE. We
had committed to this as part of the exchange of business
activities and equity interests agreed with E.ON. We had
also undertaken to sell on the stake in IGH to E.ON. We are
financing the temporary acquisition using cash and a bank
credit line secured for this purpose. innogy held a 50.04 %
interest in IGH, with the remainder being owned by the
Australian financial service provider and infrastructure
investor Macquarie.

40 RWE Annual Report 2018

1.6 NOTES ON REPORTING

The asset swap agreed with E.ON requires a methodological change in reporting before it is implemented.
International Financial Reporting Standards (IFRS) require us to state the innogy activities that will no longer be part
of the RWE Group following the transaction separately when presenting our business performance. We have set out
the consequences this has in detail in this chapter. Furthermore, we explain how the new IFRS 9 and IFRS 15 accounting
standards affect our consolidated financial statements.

New presentation of innogy’s activities. As set out on
page 19 et seqq., our financial reporting is based on a
Group structure with four segments. Whereas the first
three segments (Lignite & Nuclear, European Power and
Supply & Trading) are unchanged from 2017, the fourth
segment has been adjusted due to the asset swap agreed
with E.ON. In the past, we presented innogy in this
segment in its entirety. Now, we consider only those parts
of the company that are due to remain within the RWE Group
in the long run. Accordingly, the new segment is called
‘innogy – continuing operations’. The other parts of innogy,
which will be transferred to E.ON, are presented outside
of this segment as ‘discontinued operations’. This primarily
applies to the distribution grid and retail businesses.

The recognition of ‘discontinued operations’ has substantial
effects on the income statement, the balance sheet and the
cash flow statement:

• We recognise the innogy business assigned to E.ON in the
income statement only in condensed form under ‘income
from discontinued operations’. It is no longer considered
in the Group’s revenue, adjusted EBITDA, adjusted EBIT,
non-operating result, financial result, or taxes on income.
Prior-year figures are adjusted accordingly.

• On the consolidated balance sheet, discontinued

operations have been combined under ‘assets held for
sale’ and ‘liabilities held for sale’. In accordance with IFRS,
we are maintaining the presentation of the previous
year’s balance sheet figures.

• In the cash flow statement in the consolidated financial

statements, we present the cash flows from discontinued
operations for the reporting and prior-year periods
separately. We take a different approach in the condensed
cash flow statement in the review of operations. Here,
we only state cash flows from continuing operations.

The change in reporting caused some of the statements
made in our forecasts for 2018, which we published on
page 83 et seqq. of the 2017 Annual Report, to become
irrelevant. Amongst other things, this relates to our
statements regarding adjusted EBITDA and capital
expenditure. We brought these forecasts in line with our
new reporting method in the report on the first half of 2018.
The forecast concerning adjusted net income also became
irrelevant: this key performance indicator will not be
determined for the time being, as it is only of limited
informational value during the transitional period until the
completion of the asset swap with E.ON.

In the 2017 Annual Report, we also made forecasts in
relation to key performance indicators in which innogy
was considered as a pure financial investment instead of
as a fully consolidated company. These figures are not in
compliance with IFRS. We explain how we calculate them on
page 58. There is no need for methodological adjustments
here until the asset swap with E.ON has been completed.
Therefore, we maintained our forecasts relating to adjusted
EBITDA and adjusted net income, the latter of which
continues to be determined based on the above distinction.

Change in revenue recognition due to adoption of
IFRS 15. In the 2018 fiscal year, we began applying the new
accounting standard IFRS 15 ‘Revenue from Contracts with
Customers’. One of the consequences is that changes in the
fair value of commodity derivatives, which occur before the
contracts are realised, are now recognised in other operating
income instead of in revenue or the cost of materials.
Therefore, our 2018 revenue is lower, particularly in the gas
business. Prior-year figures have not been adjusted.

Combined review of operations > Notes on reporting

Financial instruments have stronger effect on earnings
due to adoption of IFRS 9. We also started to apply the
new accounting standard IFRS 9 ‘Financial Instruments’ in
2018. This results in changes to the classification and
measurement of financial instruments and to the recognition
of impairments based on expected credit losses. Again,
prior-year figures have not been adjusted. Changes in the
fair value of some of our securities, which previously had no
effect on profit or loss, were recognised on the income
statement for the first time in 2018. Furthermore, the
recognition of expected credit losses reduced the value of
our assets. In consequence, net debt was slightly higher.

Forward-looking statements. This annual report
contains forward-looking statements regarding the future
development of the RWE Group and its companies as well
as of the economic and political environment. These
statements are assessments that we have made based on
information available to us at the time this document was
prepared. In the event that the underlying assumptions
do not materialise or unforeseen risks arise, actual
developments can deviate from the developments expected
at present. Therefore, we cannot assume responsibility for
the correctness of these statements.

References to the internet. The contents of pages on the
internet and publications to which we refer in the review
of operations are not part of the review of operations and
are merely intended to provide additional information.
The corporate governance declaration in accordance with
Section 289f as well as Section 315d of the German
Commercial Code is an exception.

42 RWE Annual Report 2018

1.7 BUSINESS PERFORMANCE

The RWE Group achieved its operating earnings goal for 2018: at €1.5 billion, adjusted EBITDA was within the
forecast range. We had to contend with some unexpected burdens. For example, the temporary suspension of the UK
capacity market caused us to lose contractually committed capacity payments. Furthermore, utilisation of innogy’s
wind farms was low due to the weather. The strongest effect was felt from the market-induced decline in our
generation margins, which we had already considered in our forecast. Efficiency-enhancing measures cushioned the
earnings shortfalls somewhat. The continued expansion of innogy’s wind energy capacity also had a positive impact.

Business performance in 2018: what we forecast and what we accomplished

Outlook vs. actual
€ million

Adjusted EBITDA

Lignite & Nuclear

European Power

Supply & Trading

innogy - continuing operations

2017 actual

Outlook for fiscal 20181

2018 actual

Forecast fulfilled?

2,149

671

463

271

785

1,500–1,800

350–450

300–400

100–300

700–800

1,538

356

334

183

699

Yes

Actual < Outlook

1 See page 83 et seq. of the 2017 Annual Report and page 26 of the interim report on the first half of 2018.

Electricity production 12 % down on previous year. In
the financial year that just came to a close, the RWE Group
produced 176.0 billion kWh of electricity. In 2018, 38 % of
our electricity generation was from lignite, 27 % from
gas, 16 % from hard coal, 12 % from nuclear, and 6 % from
renewables. Our electricity production was 12 % lower
than in the previous year. We recorded declines across all
generation technologies. Nuclear power production (– 8.5 TWh)
was primarily affected by the fact that we had to take
Gundremmingen B (1,284 MW) offline at the end of 2017
as part of the German nuclear phase-out. Volumes declined
in electricity generation from lignite (– 7.0 TWh) due to the
sale of our majority interest in Mátra in Hungary. The
decommissioning of four 300 MW units in the Rhenish
lignite mining region and their placement in legally
mandated security standby (two on 30 September 2017
and two on 30 September 2018) also came to bear.
Unfavourable market conditions resulted in a decline in

production volume from our gas-fired power stations
(– 5.7 TWh). Furthermore, we mothballed Moerdijk 1 in the
Netherlands for economic reasons. The drop in generation
from hard coal (– 1.9 TWh) was caused in part by the closure
of the Voerde A/B dual unit (1,390 MW) as of 1 April 2017.
In addition, our Aberthaw hard coal-fired power plant in the
UK was only in use occasionally due to market conditions.
Unusually low wind speeds in the United Kingdom and
Central Europe caused renewable energy volumes to drop
(– 0.5 TWh). This was contrasted by the positive effects of
commissioning new wind turbines.

In addition to our in-house generation, we procure
electricity from external suppliers. In the year being
reviewed, these purchases totalled 49.0 billion kWh
(previous year: 36.6 billion kWh). In-house generation
and power purchases combined for 225.0 billion kWh
(previous year: 236.8 billion kWh).

Combined review of operations > Business performance

Power generation

Gas

Lignite

Hard coal

Nuclear

Renewables

Total

Pumped
storage,
other

2018

2017

2018

2017

2018

2017

2018

2017

2018

2017

2018

2017

2018

2017

Billion kWh

Lignite & Nuclear

European Power

of which:

Germany1

United Kingdom

–

67.2

74.2

–

21.8

30.3

47.2

52.9

5.5

7.4

33.2

32.4

–

27.4

29.3

13.0

13.3

0.5

2.6

13.9

13.4

–

1.1

0.7

0.4

–

8.8

9.9

–

1.1

0.7

0.4

–

9.3

10.4

0.2

2.3

0.7

2.4

89.2

105.2

78.0

85.7

2.3

2.4

–

21.5

34.1

19.4

23.8

35.4

22.7

8.8

9.3

2.5

3.1

176.0

200.2

Netherlands/Belgium

5.5

9.3

innogy -
continuing operations

–

RWE Group

47.2

52.9

67.2

74.2

27.4

29.3

21.8

30.3

1 Including electricity from generation assets not owned by RWE that we can deploy at our discretion on the basis of long-term use agreements.

In 2018, it amounted to 5.0 billion kWh (previous year: 6.3 billion kWh), of which 2.3 billion kWh (previous year: 3.5 billion kWh) were from hard coal-fired power stations.

One of Europe’s biggest power producers, with 41.7 GW
in generation capacity. At the end of 2018, we had a total
installed power generation capacity of 41.7 GW, giving us
a leading market position in Europe. This figure includes
power plants that we took offline temporarily for economic
reasons and the four lignite units we put into security
standby. Our generation capacity declined by 1.6 GW over
the course of the past year. This was because we sold our
majority interest in the Hungarian lignite-based power
producer Mátra and shut down the Dutch Claus A gas-fired
power plant (see page 37). A positive effect was felt from
innogy’s commissioning of new wind turbines, primarily in
the United Kingdom.

In terms of generation capacity, gas is our major source
of energy. At the end of 2018, it accounted for 34 %.
Lignite was in second place with 25 %, followed by hard
coal, with 17 %. Renewables and nuclear energy had a share
of 10 % and 7 %, respectively. The geographic focus of
our generation business is Germany, where 61 % of our
installed capacity is located. The United Kingdom and the
Netherlands follow, accounting for shares of 23 % and 12 %,
respectively.

Power generation capacity
As of 31 Dec 2018, in MW

Lignite & Nuclear

European Power

of which:

Germany1

United Kingdom

Netherlands /Belgium

Turkey

innogy -
continuing operations

Gas

400

13,686

3,767

6,676

2,456

787

235

Lignite

Hard coal

Nuclear

Renewables

Pumped
storage, other

Total

Total
31 Dec 2017

10,255

–

7,210

3,6752

1,560

1,975

–

2,770

–

331

221

–

3,955

4,293

2,679

2,375

304

–

137

2,8443

13,459

23,906

9,872

8,595

4,652

787

4,337

41,7033

14,297

24,727

10,125

8,541

5,274

787

4,245

43,269

RWE Group

14,321

10,255

7,220

2,770

1 Including generation capacity not owned by RWE that we can deploy at our discretion on the basis of long-term use agreements. As of the end of 2018, it amounted to a net

2,986 MW, including hard coal-fired power stations with a total capacity of 783 MW.

2 The Bergkamen hard coal-fired power plant (720 MW) is still included in this figure: we sold our 51% stake in the station as of 1 January 2019 (see page 39).
3 Including small capacities at RWE Supply & Trading.

44 RWE Annual Report 2018

Significant decline in CO2 emissions. Last year, our power
stations emitted 118.0 million metric tons of carbon dioxide.
Compared to 2017, our CO2 emissions declined by 13.8
million metric tons, or 10 %. This resulted from the decline in
our electricity generation from coal and gas. By contrast,
specific emissions, i. e. carbon dioxide emissions per
megawatt hour of electricity generated, rose from 0.66 to
0.67 metric tons. This was mainly because last year we
produced much less zero-carbon electricity from our nuclear
power stations owing to the decommissioning of
Gundremmingen B.

We purchase most of the emission allowances we need on
the market. This is because, since the beginning of the third
emissions trading period, which started on 1 January 2013,
the countries of Western Europe have only allocated free CO2
certificates to energy utilities in exceptional cases. Of our
emissions in EU countries (116.9 million metric tons) in the
year being reviewed, we were only able to cover 1.3 million
metric tons with such state allocations.

Emissions balance

Million metric tons of CO2
Lignite & Nuclear

European Power1

of which:

Germany2

United Kingdom

Netherlands /Belgium

innogy - continuing operations

RWE Group

CO2 emissions
2018

79.4

38.6

13.0

12.4

12.1

–

2017

88.5

43.3

14.1

14.0

13.8

–

118.0

131.8

Free allocation of CO2 certificates
2017

2018

Shortage of CO2 certificates

2018

78.7

36.9

12.4

12.1

–

2017

87.8

41.3

13.5

14.0

13.8

–

0.7

0.6

–

1.3

115.6

129.1

0.7

0.6

–

1.3

1 Includes the CO2 emissions of our gas-fired power station in the Turkish town of Denizli, which amounted to 1.1 million metric tons in 2018 (previous year: 1.4 million metric

tons). As Turkey does not participate in European emissions trading, we do not need emission allowances for these volumes.

2 Including figures relating to generation capacity not owned by RWE that we can deploy at our discretion on the basis of long-term use agreements. In 2018, these stations

emitted a total of 2.0 million metric tons of CO2 (previous year: 3.1 million metric tons).

86.3 million metric tons of lignite produced. The fuel used
by our power stations is procured by our generation companies
either directly on the market or via RWE Supply & Trading.
We source lignite from proprietary opencast mines. In our
mining region, which is west of Cologne, we produced
86.3 million metric tons of lignite last year (previous year:
91.3 million metric tons), of which 74.2 million metric tons
were used to generate electricity in our power plants. The
remainder was used to manufacture refined products
(e. g. lignite briquettes) and, to a limited extent, to generate
process steam and district heat.

Electricity sales 5 % lower – gas sales 5 % higher. The
RWE Group’s continuing operations sold 216.1 billion kWh of
electricity and 67.0 billion kWh of gas to external customers.
Most of these volumes are allocable to the Supply & Trading
segment. Electricity sales experienced a drop of 5 %, in part
due to the decline in the amount of in-house production sold
by RWE Supply & Trading on the wholesale market. Further
volume shortfalls were recorded as a result of the sale of
the Hungarian lignite-based power producer Mátra, which
sold its generation independently. A positive effect was
felt from RWE Supply & Trading winning new industrial and
corporate customers. This affected both electricity and gas
sales and was the main reason why the latter were 5 %
higher year on year.

Combined review of operations > Business performance

External revenue
€ million

Lignite & Nuclear

European Power

Supply & Trading

innogy - continuing operations

Other, consolidation

RWE Group (excluding natural gas tax /electricity tax)

Natural gas tax /electricity tax

RWE Group

External revenue by product1
€ million

Electricity revenue

of which:

Lignite & Nuclear

European Power

Supply & Trading

innogy - continuing operations

Gas revenue

of which:

Supply & Trading

innogy - continuing operations

Other revenue

RWE Group (excluding natural gas tax/electricity tax)

+/–
%

– 10.1

0.2

– 3.1

3.4

– 52.8

– 3.1

7.6

– 3.0

+ /−
%

– 3.3

– 32.8

– 8.8

– 2.1

5.8

– 12.8

– 13.6

– 2.1

8.5

– 3.1

2018

2017

1,132

925

10,190

1,124

13,388

141

13,529

1,259

923

10,517

1,087

13,822

131

13,953

2018

2017

10,090

10,430

303

542

8,447

799

1,565

1,502

1,733

13,388

451

594

8,628

755

1,795

1,738

1,597

13,822

1 Immaterial electricity revenue in the ‘other, consolidation’ item and immaterial gas revenue in the European Power segment is not stated separately.

External revenue down 3 % on previous year. In the year
being reviewed, we posted external revenue of €13,388 million
(excluding natural gas and electricity tax). This represents a
decline of 3 % compared to 2017. At €10,090 million, our
electricity revenue was also 3 % lower than in the preceding
year. The decline in sales volume came to bear. The Group’s
gas revenue dropped by 13 % to €1,565 million.

It therefore trended against delivery volumes, in part due
to a decrease in revenue from the realisation of hedging
transactions. Furthermore, our initial adoption of IFRS 15
played a role, because it caused certain items to no longer
be recognised in revenue (see commentary on page 40).

46 RWE Annual Report 2018

Adjusted EBITDA
€ million

Lignite & Nuclear

European Power1

Supply & Trading

innogy - continuing operations

Other, consolidation

RWE Group

2018

2017

356

334

183

699

– 34

671

463

271

785

– 41

1,538

2,149

+/–
%

– 46.9

– 27.9

– 32.5

– 11.0

17.1

– 28.4

1 In the period under review, €102 million was attributable to the UK (previous year: €205 million).

Adjusted EBITDA of €1.5 billion in line with expectations.
Our adjusted earnings before interest, taxes, depreciation and
amortisation (adjusted EBITDA) amounted to €1,538 million.
This confirmed our August 2018 forecast envisaging a range
of €1.5 billion to €1.8 billion (see page 26 of the interim report
on the first half of 2018). As set out on page 40, during the
year we had to adjust our forecast for 2018 that we published
in the 2017 Annual Report, because the asset swap agreed
with E.ON required us to change our reporting. Adjusted
EBITDA was 28 % lower than in 2017. Shrinking margins and
volumes in conventional electricity generation were the main
reasons. Furthermore, Supply & Trading and innogy – continuing
operations delivered lower earnings.

The following developments were observed in the segments:

• Lignite & Nuclear: This division’s adjusted EBITDA totalled

€356 million, which is within the forecast range of
€350 million to €450 million. It represents a decline of 47 %
compared to the previous year. A major reason for this is
that we realised lower wholesale prices for the generation
from our lignite-fired and nuclear power stations than in
2017. We had already sold forward nearly all of the
production of these plants in earlier years. The closure of
unit B of the Gundremmingen nuclear power station at the
end of 2017 also had a negative effect on earnings. Savings
achieved through our efficiency-enhancement programme
cushioned the aforementioned burdens slightly.

• European Power: We recorded €334 million in adjusted
EBITDA in this segment. This confirmed our forecast,
which envisaged a range of €300 million to €400 million.
Compared to 2017, we recorded a decline of 28 %. One
reason was that EBITDA in the previous year included

capital gains on property sales. In addition, the margins
of our gas and hard coal-fired power stations shrank.
The suspension of the UK capacity market caused the
payments which we received for the availability of our
stations to be significantly lower than planned. However,
at €47 million, they were higher than in 2017 (€16 million).
Efficiency-enhancing measures had a positive effect on
earnings.

• Supply & Trading: Here, adjusted EBITDA totalled

€183 million, which is within the forecast range of
€100 million to €300 million. Earnings therefore decreased
by 32 % relative to 2017, caused in part by a weaker trading
performance. In addition, we recognised a value adjustment
for an equity stake acquired by RWE Supply & Trading
within the scope of its principal investments (see page 21).
Fortunately, we were able to pick up where we left off in
terms of earnings in the gas business.

• innogy – continuing operations: Adjusted EBITDA posted
by the innogy business remaining with RWE amounted
to €699 million, which was just below the forecast range
of €700 million to €800 million. One of the reasons for
this was the unexpectedly low electricity production due
to unfavourable wind conditions. Compared to 2017,
adjusted EBITDA decreased by 11 %. In addition to the
weather conditions, the positive impact of income
resulting from the revaluation of innogy’s stake in the
Triton Knoll offshore wind project in the prior year did not
recur. Furthermore, start-up costs were incurred in the
year under review, which will result in revenue later on.
A positive effect was felt from innogy’s commissioning of
new wind turbines and realisation of higher prices for
electricity and green energy certificates.

Combined review of operations > Business performance

Adjusted EBIT
€ million

Lignite & Nuclear

European Power1

Supply & Trading

innogy - continuing operations

Other, consolidation

RWE Group

1 In the year under review, – €48 million was attributable to the UK (previous year: €40 million).

+/–
%

– 80.7

– 76.1

– 33.2

– 12.3

55.3

– 47.1

2018

2017

177

349

– 21

619

399

155

265

398

– 47

1,170

Reconciliation to net income characterised by the
non-recurrence of exceptional income from 2017. The
reconciliation from adjusted EBITDA to net income in 2017
was characterised by the substantial exceptional income in
Germany from the nuclear fuel tax refund, whereas there
were no such positive effects in 2018. This led to a significant
deterioration in the non-operating result and the financial
result.

As expected, adjusted EBIT recorded by the RWE Group
declined considerably, falling by 47 % to €619 million. This
figure differs from adjusted EBITDA in that it does not
include operating depreciation and amortisation, which
amounted to €919 million (prior year: €979 million).

Non-operating result
€ million

Disposal result

Impact of derivatives on earnings

Other

Non-operating result

2018

– 25

– 146

– 161

2017

107

– 480

1,322

949

+/–
€ million

– 132

334

– 1,312

– 1,110

The non-operating result, in which we recognise certain
effects which are not related to operations or to the period
being reviewed, totalled – €161 million (prior year:
€949 million). Its components developed as follows:

• Disposals of investments and assets resulted in a net
book loss of €25 million compared to the book gain of
€107 million posted in the previous year. The loss was
incurred in connection with the sale of our 51 % stake in
the Hungarian company Mátra in March 2018. This caused
charges resulting from the conversion of Mátra’s financial
statements to euros, which were recognised in equity until
the transaction, to have an effect on earnings. Capital gains
on property sales were unable to offset this effect.

• The ‘impact of derivatives on earnings’ totalled

– €146 million, as opposed to – €480 million in the previous
year. We use derivatives to hedge price risks. Pursuant to
IFRS, these types of financial instruments are recognised
at fair value at the corresponding balance-sheet date,
whereas transactions which are hedged with them are

only recognised as a profit or loss when they are realised.
This results in temporary effects on earnings, which are
neutralised over time.

• The earnings stated under ‘other’ amounted to

€10 million, which was much less than the high figure
recorded in the preceding year (€1,322 million), which
benefited from the nuclear fuel tax refund. In the year
under review, a positive effect came from the write-up
performed by innogy on its Polish wind farms due to a
rise in the price of electricity and green energy certificates
and the resulting improvement in the earnings prospects
of the stations. This was contrasted by smaller burdens
resulting in part from the accrual of provisions for partial
retirement measures and costs associated with the
execution of the asset swap with E.ON. Moreover, we
recognised an impairment for the Staythorpe gas-fired
power station in the UK because a slight downward
correction had to be made to the expected earnings from
this plant.

48 RWE Annual Report 2018

Financial result
€ million

Interest income

Interest expenses

Net interest

Interest accretion to non-current provisions

Other financial result

Financial result

2018

166

– 180

– 14

– 264

– 131

– 409

2017

197

– 298

– 101

– 226

264

– 63

+/–
€ million

– 31

118

– 38

– 395

– 346

Our financial result deteriorated by €346 million to
– €409 million. Its components changed as follows:

• Net interest improved by €87 million to – €14 million,
above all due to lower interest expenses. One of the
reasons for this was our cancellation and buyback of
hybrid bonds in the prior year (see page 54 of the 2017
Annual Report).

• The interest accretion to non-current provisions curtailed
earnings by €264 million, having a bigger effect than in
2017 (– €226 million). One contributing factor was the
reduction in the discount rate we use to calculate nuclear
provisions. The resulting increase in the net present value
of the obligations was recognised in part as an expense
in the interest accretion.

• The ‘other financial result’ amounted to – €131 million,
which was much lower than the preceding year’s figure
(€264 million). The latter figure was unusually high,
because it contained the interest we were granted for the
nuclear fuel tax payments we had made until 2016 and
were refunded thereafter. Furthermore, in the year under
review, there was a decline in the quotations of marketable
securities which were recognised through profit or loss
due to the initial adoption of IFRS 9, as explained on page
41. In the previous year, such changes in fair value had
been recognised without an effect on earnings. Smaller
losses from the sale of securities provided some relief.

Reconciliation to net income

Adjusted EBITDA

Operating depreciation, amortisation and impairment losses

Adjusted EBIT

Non-operating result

Financial result

Income from continuing operations before taxes

Taxes on income

Income from continuing operations

Income from discontinued operations

Income

of which:

Non-controlling interests

RWE AG hybrid capital investors’ interest

Net income/income attributable to RWE AG shareholders

Earnings per share

Number of shares outstanding (annual average)

2018

2017

1,538

– 919

619

– 161

– 409

– 103

– 54

1,127

1,073

679

335

0.54

614.7

2,149

– 979

1,170

949

– 63

2,056

– 333

1,723

592

2,315

373

1,900

3.09

614.7

+/−
%

– 28.4

6.1

– 47.1

– 117.0

– 549.2

– 97.6

69.1

– 103.1

90.4

– 53.7

82.0

40.5

– 82.4

– 82.5

–

€ million

€

millions

Combined review of operations > Business performance

At €49 million, income from continuing operations before tax
was far below the comparable figure for 2017 (€2,056 million).
Income taxes amounted to €103 million. The effective tax
rate was therefore above the theoretical normal level. The
reason for this was that RWE AG’s tax group did not capitalise
any deferred tax assets unless they were matched by
deferred tax liabilities. This was because we are unlikely to
be able to use the deferred tax claims in the foreseeable
future. They can only be used in coming fiscal years if tax
gains are achieved against which the claims can be netted.
There is currently no sufficient certainty that this will occur
in RWE AG’s tax group.

After taxes, we posted income from continuing operations
of – €54 million (prior year: €1,723 million). Income from
discontinued operations amounted to €1,127 million, a
significant gain compared to 2017 (€592 million). This is
primarily a result of IFRS accounting rules: they stipulate
that we no longer consider depreciation or amortisation for
discontinued operations from their separate statement as of
30 June 2018 onwards. By contrast, the preceding year’s
income included depreciation and amortisation for a full
twelve months and was further curtailed by an impairment
recognised for the UK retail business.

Income from non-controlling interests rose by €306 million
to €679 million. In the previous year, impairments recognised
for the Hungarian power producer Mátra led to a decline in
the earnings of RWE and the co-owners, which did not recur.
In addition, we state much higher income for innogy in RWE’s
consolidated financial statements. Accordingly, there was
also a rise in the income allocable to the minority shareholders
of our subsidiary, which hold a total stake of 23.2 %.

The portion of earnings attributable to hybrid capital
investors amounted to €59 million (prior year: €42 million).
This sum corresponds to the finance costs related to our
£750 million hybrid bond. This bond, which was called in
the beginning of 2019, did not have a predefined fixed
tenor. Associated proceeds were therefore classified as
equity according to IFRS. RWE’s remaining hybrid capital is
classified as debt and we record interest accrued on it in the
financial result.

As a consequence of the above developments, net income
decreased considerably compared to 2017, falling to
€335 million (prior year: €1,900 million). Based on the
614.7 million in RWE shares outstanding, earnings per share
amounted to €0.54 (prior year: €3.09).

Capital expenditure on property, plant and equipment and on intangible assets
€ million

2018

2017

+/–
€ million

Lignite & Nuclear

European Power

Supply & Trading

innogy – continuing operations

Other , consolidation

RWE Group

Capital expenditure on financial assets
€ million

Lignite & Nuclear

European Power

Supply & Trading

innogy – continuing operations

Other, consolidation

RWE Group

230

245

592

– 1

1,079

269

147

285

– 2

706

– 39

307

373

2018

2017

+/–
€ million

–

141

– 1

181

153

196

– 1

– 12

– 15

50 RWE Annual Report 2018

Significant rise in capital expenditure on renewables.
In the financial year that just came to a close, RWE recorded
capital expenditure of €1,260 million, up €358 million, or
40 % compared to 2017. Spending on property, plant and
equipment and on intangible assets increased by 53 % to
€1,079 million. The considerable rise was primarily attributable
to innogy’s continuing operations, in particular the large-scale
Triton Knoll and Limondale projects, on which we report on

page 38. In the European Power segment, the conversion
of the Dutch hard coal-fired power stations Amer 9 and
Eemshaven to biomass co-firing drove up capital spending.
Furthermore, there was a rise in expenditure on maintenance.
We spent €181 million on financial assets, 8 % less than in
2017. A large portion of the funds was used by innogy to
acquire a portfolio of onshore wind projects in the USA
(see page 38).

Workforce 1

Lignite & Nuclear

European Power

Supply & Trading

innogy – continuing operations

Other2

RWE Group

1 Converted to full-time positions.
2 This item exclusively comprises employees of the holding company RWE AG.

31 Dec 2018

31 Dec 2017

11,292

13,132

2,738

1,267

2,192

259

2,656

1,156

1,952

210

17,748

19,106

+/–
%

– 14.0

3.1

9.6

12.3

23.3

– 7.1

Lower headcount due to sale of Mátra. As of 31 December
2018, the RWE Group’s continuing operations had 17,748
people on the payroll, of which 15,101 were employed in
Germany and 2,647 worked at locations abroad. Part-time
positions were considered in these figures on a pro-rata basis.
The workforce in Germany expanded by 582 staff members
compared to the end of 2017. By contrast, elsewhere in the
Group, 1,940 employees left the company, predominantly

due to the sale of our majority stake in the Hungarian power
producer Mátra (see page 37). In purely operating terms, i. e.
disregarding such consolidation effects, our headcount rose
by 702. Personnel figures do not include apprentices or
trainees. At the end of 2018, 666 young adults were learning
a profession at RWE, compared to 615 in the previous year.
This information relates exclusively to the RWE Group’s
continuing operations.

Combined review of operations > Financial position and net worth

1.8 FINANCIAL POSITION AND NET WORTH

RWE’s financial position and net worth is fundamentally solid despite the difficult framework conditions in our
business. This is demonstrated by the credit ratings issued by Moody’s and Fitch: both rating agencies confirmed
their investment grade rating of RWE last year. The good operating and financial prospects arising from the planned
acquisition of the renewable energy activities of E.ON and innogy were among the influential factors. In fiscal 2018,
we generated very high operating cash flows of €4.6 billion. However, this was largely due to temporary effects. The
Group’s net debt declined to €19.3 billion and amounted to a mere €4.4 billion excluding the innogy activities that
are up for sale.

Responsibility for procuring funds. Responsibility for
financing within the RWE Group lies with the parent company
RWE AG and its operationally independent subsidiary innogy.
The two companies procure funds for the business that they
control. They act independently of each other in doing so.
Companies which are controlled by RWE AG or innogy SE
only raise debt capital in specific cases, for example if it is
advantageous economically to make use of local credit
markets. RWE AG and innogy SE act as co-ordinators when
subsidiaries assume a liability. This allows for the central
management and monitoring of financial risks. Moreover, it
strengthens our position when negotiating with banks,
business partners, suppliers and customers.

Tools for raising debt capital. RWE AG and innogy SE have
a wide range of tools which they can use in addition to cash
flows from operating activities to meet their financing needs.

• Debt Issuance Programmes (DIPs) give the companies

latitude in procuring debt capital on the capital market for
the long term. A DIP is a framework prospectus for the
flexible issuance of bonds. RWE AG’s current programme
enables us to make issuances with a total nominal value of
€10 billion. The innogy DIP has a maximum financing
volume of €20 billion.

• RWE AG has a Commercial Paper Programme for short-

term refinancing that enables it to raise funds equivalent
to up to US$5 billion on the money market. We
intermittently used a maximum of €0.8 billion of this
headroom in the year under review. innogy also launched
a Commercial Paper Programme. It has a funding
framework of €3 billion. Up to €1.1 billion thereof was
used in the financial year that just ended.

• To secure liquidity, RWE AG and innogy SE can resort to

lines of credit granted them by international bank
syndicates. RWE AG has such a credit line with a volume of
€3 billion which expires in March 2021. It has not been
used so far. The same holds true for innogy’s syndicated
credit line, with which our subsidiary can cover up to
€2 billion in financing needs. Its original tenor expires in
October 2022 and can be prolonged twice for a year at a
time subject to the banks’ approval. innogy has already
received the approval of nearly the whole of the bank
consortium for a first extension through to October 2023.
Moreover, the credit line can be topped up by €1 billion.
This option is also subject to the approval of the
consortium of banks.

Bond volume increases to €15.2 billion. At the end of
2018, the Group (including innogy) had bonds with a
total nominal volume of an equivalent of €15.2 billion
outstanding, compared to €14.0 billion a year before. The
total of 26 issues are denominated in euros, sterling,
US dollars and yen. We concluded hedges to manage our
currency exposure. Taking such transactions into account,
the RWE Group’s debt broke down into 66 % in euros and
34 % in sterling on the balance-sheet date. At the end of the
year, the senior bonds outstanding had an average
remaining maturity of 8.5 years.

As of 31 December 2018, the volume of bonds commercially
and legally attributable to RWE AG amounted to €1.9 billion.
It was essentially unchanged compared to the previous year.
RWE AG’s long-term debt financing is primarily based on four
hybrid bonds with outstanding volumes of £750 million
(7 % coupon; earliest possible redemption in March 2019),
€539 million (2.75 %; October 2020), €282 million (3.5 %;
April 2025) and US$ 317 million (6.625 %; March 2026). We
will redeem the first of the above bonds, with a volume of
£750 million, on 20 March 2019, without replacing it with
new hybrid capital (see page 39). We do not plan to issue
senior bonds for the time being.

52 RWE Annual Report 2018

RWE Group bonds: maturities/first possible call dates
(as of 31 Dec 2018)

€ billion

2.0

1.5

1.0

0.5

0.0

Year

2019 ’20

’21

’22

’23

’24

’25

’26

’27

’28

’29

’30

’31

’32

’33

’34

’35

’36

’37

’38

’39

’40

’41

’42

’43

Senior bonds innogy (maturities)

Hybrid bonds RWE AG (first possible call dates)

By the end of 2018, innogy had a total of €13.3 billion in
outstanding bonds, €1.2 billion more than a year before.
These include a total of 21 senior bonds in euros (13),
sterling (6), US dollars (1) and yen (1). innogy conducted
three new placements in the financial year that just came to
a close. The company started by issuing a €1 billion bond
with a tenor of 11.5 years and a coupon of 1.5 % in January.
This was followed by two further placements in May: one
with a volume of €500 million, a tenor of eight years and a
coupon of 1.625 %, and another, also with a volume of
€500 million, with a tenor of 4.5 years and a coupon of
0.75 %. The latter bond was topped up to €750 million soon
thereafter. The issuances were contrasted in July 2018 by
the redemption of a 15-year bond with a nominal volume of
€980 million and a coupon of 5.125 %.

RWE AG’s borrowing costs reflect decline in refinancing
via commercial paper. In 2018, the cost of debt for RWE AG
was 3.4 %, as opposed to 2.5 % in the preceding year. These
figures were calculated for the liabilities allocable to the
Group parent from bonds, commercial paper and bank loans
at the end of the year. Only hybrid bonds classified as debt
pursuant to International Financial Reporting Standards (IFRS)
were considered. The rise in the cost of capital was primarily
due to our reduction to zero of short-term financing via
low-interest commercial paper due to high operating cash
flows by the end of 2018. innogy’s cost of debt dropped
from 4.1 % to 3.6 %. One reason was that the bonds issued
during the year being reviewed have relatively small coupons
due to the development of market interest rates, whereas
the redeemed bond had a much higher yield.

Shortly after the end of the year under review, innogy took
advantage of the favourable interest rates to issue another
bond. At the end of January 2019, the company placed
paper with a nominal volume of €750 million, a tenor of
4.5 years and a coupon of 0.75 %. One of the purposes of
the issuance is to refinance liabilities as they mature.

Credit rating of RWE AG (as of 31 Dec 2018)

Non-current financial liabilities

Senior debt

Subordinated debt (hybrid bonds)

Current financial liabilities

Outlook

Moody’s

Baa3

Ba2

P-3

Stable

Fitch

BBB

BB+

Stable

Combined review of operations > Financial position and net worth

Rating agencies confirm RWE’s investment grade rating.
The level of our borrowing costs partially depends on the
rating agencies’ assessment of our creditworthiness.
Moody’s and Fitch are currently providing such credit ratings
for RWE. Another leading agency, Standard & Poor’s,
withdrew its RWE rating in February 2018 at our request. As
next to no RWE senior bonds are outstanding due to the
transfer of debt to innogy, we therefore deem the ratings by
Moody‘s and Fitch sufficient. Before discontinuing its rating
of RWE, Standard & Poor’s had issued us a rating of BBB– for
long-term financing, which is investment grade. This is the
same category as the credit assessments of our current
rating agencies. The RWE ratings by Moody’s and Fitch are
Baa3 and BBB, respectively. Once our envisaged asset swap
with E.ON was announced, the two agencies reviewed our

creditworthiness in 2018, confirming their assessments –
both with a stable outlook. Fitch even raised its rating of our
short-term financial debt by one notch to F2.

By contrast, innogy continues to receive credit ratings from
all three of the aforementioned agencies, which are each
one notch higher than for RWE, with a stable outlook. The
creditworthiness of our subsidiary is rated BBB at
Standard & Poor’s, Baa2 at Moody’s and BBB+ at Fitch (with a
rating of A– for its senior bonds). One of the reasons for the
good grades is that innogy has a relatively stable earnings
profile due to its high share of regulated business. The
company provides detailed information on its credit rating in
its 2018 Annual Report.

Cash flow statement1
€ million

Funds from operations

Change in working capital

Cash flows from operating activities of continuing operations

Cash flows from investing activities of continuing operations

Cash flows from financing activities of continuing operations

Effects of changes in foreign exchange rates and other changes in value on cash and cash equivalents

Total net changes in cash and cash equivalents

Cash flows from operating activities of continuing operations

Minus capital expenditure2

Plus proceeds from divestitures/asset disposals2

Free cash flow

1 All items relate solely to continuing operations.
2 This item solely relates to transactions with an effect on cash.

2018

2017

138

4,473

4,611

– 2,999

– 1,559

4,611

– 1,246

3,439

– 3,971

200

– 3,771

3,750

– 997

– 19

– 1,037

– 3,771

– 902

234

– 4,439

+/–
€ million

4,109

4,273

8,382

– 6,749

– 562

1,103

8,382

– 344

– 160

7,878

Extraordinarily high operating cash flows due to received
collateral. In the past fiscal year, our continuing operations
generated €4,611 million in cash flows from operating
activities. This was much more than the negative figure
recorded in the prior year (– €3,771 million), which was
significantly curtailed by the endowment of the German
nuclear energy fund. However, our operating cash flows also
improved disregarding this effect. The fact that we obtained

high variation margins in connection with forward contracts
for electricity, commodities and CO2 certificates in 2018
played a major role. Variation margins are payments with
which transaction partners offset profit and loss positions
resulting from the daily revaluation of active contracts.
However, their influence on cash flows is temporary and
ends once the transactions are realised.

54 RWE Annual Report 2018

Investing activities of our continuing operations resulted in
cash outflows of €2,999 million. In addition to the capital
expenditure presented on page 50, purchases of securities
also made a contribution, whereas proceeds on sales of
property, plant and equipment and financial assets had a
counteracting effect. In the previous year, we recorded
substantial cash inflows of €3,750 million, which largely
resulted from the sale of securities. We used the funds to
make our contribution to the nuclear energy fund.

Financing activities of our continuing operations resulted in
cash outflows of €1,559 million (previous year: €997 million).
€1.0 billion thereof was used to make dividend payments
to RWE shareholders, co-owners of fully consolidated
RWE companies and hybrid investors. In the period under

review, we redeemed €2.8 billion and issued €1.6 billion in
financial debt. In addition, there were proceeds from the
sale of minority stakes in the Triton Knoll offshore wind
project (see page 37 et seq.).

On balance, the aforementioned cash flows from operating,
investing and financing activities increased our cash and
cash equivalents by €66 million.

The significant variation margins mentioned above were also
reflected in free cash flow, which amounted to €3,439 million.
By contrast, the figure recorded in the preceding year
(– €4,439 million) was characterised by the contribution to
the nuclear energy fund.

Net debt1
€ million

Cash and cash equivalents

Marketable securities

Other financial assets

Financial assets

Bonds, other notes payable, bank debt, commercial paper

Hedge transactions related to bonds

Other financial liabilities

Financial liabilities

Net financial debt

Provisions for pensions and similar obligations

Surplus of plan assets over benefit obligations

Provisions for nuclear waste management

Mining provisions

Provisions for dismantling wind farms

Adjustment for hybrid capital

Plus 50 % of the hybrid capital stated as equity

Minus 50 % of the hybrid capital stated as debt

Net debt of continuing operations

Net debt of discontinued operations

Net debt

31 Dec 2018

31 Dec 2017

3,523

3,863

2,809

10,195

1,657

1,107

2,776

7,419

3,287

– 213

5,944

2,516

362

– 88

470

– 558

4,389

14,950

19,339

3,933

5,131

1,863

10,927

15,099

2,102

17,228

– 6,301

5,420

– 103

6,005

2,322

359

– 77

470

– 547

–

+/–
€ million

– 410

– 1,268

946

– 732

– 13,442

– 15

– 995

– 14,452

13,720

– 2,133

– 110

– 61

194

– 11

–

– 11

–

20,227

– 888

1 As of the balance-sheet date, discontinued operations were recognised in the collective item ‘net debt of discontinued operations’, whereas at the end of 2017, they were

still included in the individual items of the table.

Net debt slightly down on 2017. As of 31 December 2018,
our net debt amounted to €19.3 billion, of which €4.4 billion
was allocable to continuing operations and the remainder
was allocable to discontinued operations. We only disclose
the figures for the Group as a whole for the previous year.
Our net debt dropped by €0.9 billion compared to 2017.
Therefore, our forecast of March 2018, which envisaged a
moderate increase, was not confirmed. The main reason was
the unexpectedly high cash inflows from variation margins.

Operating cash flows of continuing operations (€4.6 billion)
and of discontinued operations (€2.0 billion) reduced
net debt, whereas investing activities (€1.2 billion and
€1.7 billion) and dividend payments (€1.0 billion and
€0.5 billion) had a counteracting effect. In addition, pension
provisions rose by €0.8 billion and €0.7 billion, respectively.
One reason is that the plan assets which cover the majority
of the pension obligations declined due to negative market
developments.

Combined review of operations > Financial position and net worth

Slightly higher off-balance-sheet obligations from
electricity and fuel. Net debt does not include our
off-balance-sheet obligations, which largely stem from
long-term fuel and electricity purchase agreements. As of
the balance-sheet date, payment obligations from
material procurement contracts amounted to €27.9 billion

for fuel (previous year: €25.8 billion) and €7.8 billion
for electricity (previous year: €6.8 billion). These figures
are based on assumptions regarding the prospective
development of commodity prices. For further information
on our off-balance-sheet obligations, please see page 151
in the Notes.

Group balance sheet structure

Assets

Non-current assets

of which:

Intangible assets

Property, plant and equipment

Current assets

of which:

Receivables and other assets2

Assets held for sale

Total

Equity and liabilities

Equity

Non-current liabilities

of which:

Provisions

Financial liabilities

Current liabilities

of which:

Provisions

Financial liabilities

Other liabilities3

Liabilities held for sale

Total

31 Dec 2018

31 Dec 2017

€ million

18,595

23.2

45,694

2,193

12,409

61,513

12,254

40,496

80,108

14,257

20,007

15,863

1,998

45,844

2,615

766

9,667

32,796

80,108

2.7

15.5

76.8

15.3

50.6

100.0

17.8

25.0

19.8

2.5

57.2

3.3

1.0

12.1

40.9

100.0

12,383

24,9471

23,365

12,487

128

69,059

11,991

36,774

19,249

14,414

20,294

5,137

2,787

12,259

111

69,059

66.2

17.9

36.1

33.8

18.1

0.2

100.0

17.4

53.3

27.9

20.9

29.3

7.4

4.0

17.8

0.2

100.0

1 Figure adjusted due to the assignment of investment property to property, plant and equipment.
2 Including financial accounts receivable, trade accounts receivable and income tax refund claims.
3 Including trade accounts payable and income tax liabilities.

Equity ratio records slight increase to 17.8 %. As of the
cut-off date for the financial statements, we had a balance-
sheet total of €80.1 billion, compared to €69.1 billion as of
31 December 2017. We have subsumed the innogy assets
that are to be transferred to E.ON over the long term
separately under the items ‘assets held for sale’ (€40.5 billion)
and ‘liabilities held for sale’ (€32.8 billion). In line with IFRS,
prior-year figures were not adjusted. This was a major reason
why certain balance-sheet items decreased substantially: on
the assets side, intangible assets were €10.2 billion and

property, plant and equipment was €12.5 billion down year
on year; on the equity and liabilities side, financial liabilities
declined by €14.4 billion, with provisions falling by
€5.9 billion. The change in the reporting did not have an
impact on the development of the balance-sheet total. Its
increase of €11.0 billion relative to 2017 was primarily driven
by the rise in the value of commodity derivatives. The
RWE Group’s equity climbed by €2.3 billion to €14.3 billion,
with its share of the balance sheet total (equity ratio) also
rising, advancing by 0.4 percentage points to 17.8 %.

56 RWE Annual Report 2018

1.9 NOTES TO THE FINANCIAL STATEMENTS OF RWE AG

(HOLDING COMPANY)

The financial statements of RWE AG primarily reflect the business performance of its subsidiaries. On the whole, the
electricity margins achieved by our generation companies RWE Power and RWE Generation deteriorated last year.
Furthermore, the financial statements for fiscal 2017 benefited from the positive one-off effect of the nuclear fuel tax
refund. At €0.5 billion, RWE AG’s net profit was therefore significantly lower year on year. However, it gives us
enough leeway to pay an attractive dividend: the Executive Board and the Supervisory Board of RWE AG will propose
to the Annual General Meeting taking place in May that a dividend of €0.70 per share be paid for fiscal 2018.

Financial statements. RWE AG prepares its financial
statements in compliance with the rules set out in the German
Commercial Code and the German Stock Corporation Act.
The financial statements are submitted to Bundesanzeiger

Verlag GmbH, located in Cologne, Germany, which publishes
them in the Federal Gazette. The financial statements
of RWE AG can be ordered directly from us and are also
available on the internet at www.rwe.com/reports.

Balance sheet of RWE AG (abridged)
€ million

Assets

Financial assets

Accounts receivable from affiliated companies

Other accounts receivable and other assets

Marketable securities and cash and cash equivalents

Total assets

Equity and liabilities

Equity

Provisions

Accounts payable to affiliated companies

Other liabilities

Total equity and liabilities

Income statement of RWE AG (abridged)
€ million

Income from financial assets

Net interest

Other income and expenses

Taxes on income

Net profit

Transfer to other retained earnings

Distributable profit

31 Dec 2018

31 Dec 2017

25,166

3,669

479

4,864

34,178

5,654

2,700

23,169

2,655

34,178

2018

1,091

− 391

− 227

− 1

472

− 42

430

24,901

4,811

505

3,951

34,168

6,104

2,368

22,623

3,073

34,168

2017

2,268

− 339

− 345

− 172

1,412

− 490

922

Combined review of operations > Notes to the financial statements of RWE AG (holding company)

Net interest deteriorated by €52 million to – €391 million.
The main reason for this was the aforementioned value
adjustments of the assets covering the pension obligations.

The net amount from other income and expenses improved
by €118 million to – €227 million because expenses from the
reversal of deferrals in the previous year did not recur.
Burdens in the year under review resulted in part from
project costs in connection with the impending asset swap
with E.ON on which we report in detail on page 35 et seq.

With a tax expense of €1 million (previous year: €172 million),
RWE AG achieved a net profit of €472 million in fiscal 2018
(previous year: €1,412 million).

The distributable profit of €430 million corresponds to the
planned dividend payment to our shareholders. The
Supervisory Board and the Executive Board of RWE AG will
propose to the Annual General Meeting on 3 May 2019
that a dividend of €0.70 be paid per share for fiscal 2018.

Outlook for 2019. RWE AG’s earnings prospects largely
depend on the business performance of its subsidiaries.
Our current assessments make us confident of being able to
achieve a net profit in 2019 that is slightly higher than in 2018.

Corporate governance declaration in accordance with
Section 289f and Section 315d of the German Commercial
Code. On 15 February 2019, the Executive Board of RWE AG
issued a corporate governance statement in accordance with
Section 289f and Section 315d of the German Commercial
Code. It is published on the internet at
www.rwe.com/corporate-governance-declaration.

Assets. RWE AG had €34.2 billion in total assets as of
31 December 2018, just as much as in the previous year.
Major changes occurred on the assets side of the balance
sheet, e. g. a decline in accounts receivable from affiliated
companies. One reason for this was that RWE Power
transferred to us its 2017 profit, which was unusually high
due to the nuclear fuel tax refund received from the
government. There was an increase in marketable securities
and cash and cash equivalents, in part because our
subsidiary RWE Supply & Trading received substantial
amounts of collateral relating to forward transactions
involving electricity, commodities and CO2 certificates (see
page 53). On the equity and liabilities side of the balance
sheet, there was a rise in provisions for pensions. A
downward adjustment to the discount rates used to calculate
the net present values of obligations and value adjustments
of the assets covering the pension obligations came to bear
here. There was a rise in liabilities to affiliated companies
arising from our obligation to assume their losses. By
contrast, other liabilities dropped, in part because we
eliminated short-term refinancing via commercial paper by
the balance-sheet date. Equity also decreased, as did the
equity ratio, in view of the unchanged amount of total
assets. As of 31 December 2018, the equity ratio was 16.5 %
as opposed to 17.9 % in the previous year. The special
dividend of €1 per share paid by RWE AG for fiscal 2017
played a role in the decline.

Financial position. RWE AG is set up solidly in financial
terms and has a number of flexible financing tools at its
disposal. This is reflected in our long-term credit ratings,
which are investment grade. A detailed presentation of
RWE’s financial position and financing activity in the year
under review has been made on page 51 et seqq.

Earnings position. RWE AG’s earnings position deteriorated
compared to 2017. This was primarily due to factors
reflected in income from financial assets, which declined
by €1,177 million to €1,091 million. As set out earlier,
RWE Power benefited from the nuclear fuel tax refund in
fiscal 2017. This one-off effect did not recur. Moreover,
margins in conventional electricity generation and energy
trading declined.

58 RWE Annual Report 2018

1.10 PRESENTATION OF THE RWE GROUP WITH INNOGY

AS A PURE FINANCIAL INVESTMENT

Since its IPO in October 2016, our subsidiary innogy has been able to conduct its business activities independently.
Consequently, we consider it as a purely financial investment. Therefore, our company planning also considers
Group figures which better reflect this status than those determined by applying IFRS consolidation principles. We
calculate these figures by recognising innogy in the financial assets on the balance sheet and based on the dividend it
pays to us on the income statement. Adjusted EBITDA calculated in this manner amounted to €1.5 billion in 2018, which
was in line with our expectations. Net debt amounted to €2.3 billion, which was lower than we had assumed initially.

Full consolidation reflects economic status of RWE
investment in innogy only to a limited extent. Pursuant to
International Financial Reporting Standards (IFRS) we must
include companies that are indirectly or directly controlled
by RWE AG in the Group’s financial statements on a fully
consolidated basis. This means that the income, expenses,
cash flows, assets, liabilities, etc. of these activities are
considered in the Group figures. This approach must also
be applied to our 76.8 % stake in innogy, whereas we
recognise the business activities of this company, which
will be transferred to E.ON as a result of the asset swap,
separately as ‘discontinued operations’. However, this
representation only partially reflects the manner in which
we manage our subsidiary. For us, innogy has the status
of a pure financial investment. This is documented by a
comprehensive agreement which stipulates that our
subsidiary can act independently in business matters and
that RWE AG may only exercise its influence by way of the
legally mandated bodies, i. e. the Supervisory Board and
the Annual General Meeting.

Adjusted figures. For planning purposes, we therefore
adopt a presentation that does not conform with IFRS
consolidation principles and better represents the actual
relationship between RWE AG and innogy. This involves

assigning the investment in innogy to the ‘other financial
assets’ line item on the balance sheet. The figure stated is
calculated by multiplying the number of shares we hold in
innogy with the share price of €38.40 established by the
conditions governing the impending sale to E.ON. The
Group’s earnings figures consider innogy only based on
the dividend for RWE, which amounted to €683 million in
2018. In addition, the change in accounting also has an
indirect effect on our figures, because business transactions
between the rest of the Group and innogy are treated as
transactions with third parties.

Adjusted EBITDA in line with expectations. The following
is an overview of some key financial indicators calculated
applying the aforementioned method. Adjusted EBITDA
amounted to €1,521 million (prior year: €2,066 million) and
adjusted net income totalled €591 million (prior year:
€973 million). Therefore, the actual figures were within the
forecast ranges of €1.4 billion to €1.7 billion and €0.5 billion
to €0.8 billion, respectively (see page 85 of the 2017
Annual Report). Net debt amounted to €2,280 million
(prior year: €4,510 million), which was less than planned.
At the start of the year, we had anticipated a slight increase.
The significant drop was a result of unexpectedly high cash
inflows from variation margins (see page 53).

Key figures for the RWE Group including innogy as a
financial investment that is not fully consolidated1
€ million

Adjusted EBITDA

Adjusted EBIT

Income before taxes

Net income

Adjusted net income

Net financial assets

Net debt

2018

2017

1,521

953

305

265

591

9,266

2,280

2,066

1,474

2,320

2,160

973

6,070

4,510

+/–
%

– 26.4

– 35.3

– 86.9

– 87.7

– 39.3

52.7

– 49.4

1 Figures not calculated according to IFRS requirements. In addition to recognising innogy as a financial investment, this relates to the following items: supply and service

agreements of the rest of the Group with innogy have all been accounted for as executory contracts, although they would have had to be measured at fair value. We have not
formed provisions for contingent losses from these transactions. Figures for supply and service relationships with external third parties and associated provisions have been
accounted for as in the IFRS consolidated financial statements. The same applies to the accounting effects of hedges and deferred taxes.

Combined review of operations > Disclosure relating to German takeover law

1.11 DISCLOSURE RELATING TO GERMAN TAKEOVER LAW

The following disclosure is in accordance with Section 315a, Paragraph 1 and Section 289a, Paragraph 1 of the German
Commercial Code as well as with Section 176, Paragraph 1, Sentence 1 of the German Stock Corporation Act. The
information relates to company-specific regulations, for example relating to adjustments to the capital structure by
the Executive Board or a change of control of the company. At RWE, these provisions are in line with the standards of
German listed companies.

Composition of subscribed capital. RWE AG’s subscribed
capital consists of 575,745,499 no-par-value common shares
and 39,000,000 no-par-value preferred shares without voting
rights, each in the name of the bearer. They account for 93.7 %
and 6.3 % of the subscribed capital, respectively. Holders of
preferred shares are given priority when distributable profit
is distributed. Pursuant to the Articles of Incorporation, it is
appropriated in the following order:

1) to make any back payments on shares of the profit allocable

to preferred shares from preceding years,

2) to pay a preferred share of the profit of €0.13 per preferred

share,

3) to pay the share of the profit allocable to common shares

of up to €0.13 per common share, and

4) to make equal payments of potential further portions of
the profit allocable to common and preferred shares,
unless the Annual General Meeting decides in favour of a
different appropriation.

The composition of the subscribed capital and the rights and
obligations of the shareholders comply with the requirements
of the law and the Articles of Incorporation.

Shares in capital accounting for more than 10 % of voting
rights. As of 31 December 2018, no holding in RWE AG
exceeded 10 % of the voting rights.

Limitation of share transfers. Within the scope of the
employee share plan of RWE AG, 196,560 RWE common shares
were issued to employees in the financial year that just
ended. These securities must be held until 31 December 2019.

Last year, employee stock purchase plans were also launched
for the first time in the United Kingdom. Employees of
RWE Generation UK plc, RWE Technology UK Limited and
RWE Supply & Trading GmbH UK Branch qualified for them.
A total of 29,452 RWE common shares were purchased under
these plans. These shares are subject to a five-year holding
period starting from their respective issue dates.

Appointment and dismissal of Executive Board members/
amendments to the Articles of Incorporation. Executive
Board members are appointed and dismissed in accordance
with Section 84 et seq. of the German Stock Corporation Act
in conjunction with Section 31 of the German Co-Determination
Act. Amendments to the Articles of Incorporation are made
pursuant to Section 179 et seqq. of the German Stock
Corporation Act in conjunction with Article 16, Paragraph 6
of the Articles of Incorporation of RWE AG. According to
the aforementioned provision in the Articles of Incorporation,
unless otherwise required by law or the Articles of
Incorporation, the Annual General Meeting shall adopt all
resolutions by a simple majority of the votes cast or – if a capital
majority is required – by the simple majority of the capital
stock represented when the resolution is passed. Pursuant
to Article 10, Paragraph 9 of the Articles of Incorporation,
the Supervisory Board is authorised to pass resolutions in
favour of amendments to the Articles of Incorporation that
only concern the wording without changing the content.

RWE AG authorisation to implement share buybacks.
Pursuant to a resolution passed by the Annual General
Meeting on 26 April 2018, RWE AG is authorised to buy back
up to 10 % of its capital stock as of the entry into force of
said resolution or – if this figure is lower – at the exercise of
this authorisation in shares of any kind until 25 April 2023.
At the Executive Board’s discretion, the acquisition shall be
made on the stock exchange or via a public purchase offer.

Shares purchased in this way may then be cancelled.
Furthermore, they may be transferred to third parties or
sold otherwise in connection with mergers or acquisitions of
companies, parts of companies, operations, or of stakes in
companies. Shares that are not sold on the stock exchange
or through a tender to all shareholders may only be sold for
cash. Moreover, in such cases, the sale price may not be
significantly lower than the price at which the shares are
listed on the stock market. The company may transfer
shares bought back to the holders of option or convertible
bonds and also use the shares to fulfil its obligations
resulting from employee share schemes. In the aforementioned
cases, shareholder subscription rights are waived. These
authorisations may be exercised in full or in part, or once or
several times for partial amounts.

60 RWE Annual Report 2018

Executive Board authorisation to issue new shares.
Pursuant to the resolution passed by the Annual General
Meeting on 26 April 2018, the Executive Board is authorised
to increase the company’s capital stock, subject to the
Supervisory Board’s approval, by up to €314,749,693.44 until
25 April 2023, through the issuance of up to 122,949,099 new
bearer common shares in return for contributions in cash or
in kind (authorised capital). These authorisations may be
exercised in full or in part, or once or several times for partial
amounts.

In principle, shareholders are entitled to subscription rights.
However, subject to the approval of the Supervisory Board,
the Executive Board may waive them in the following cases:
they may be waived in order to prevent the number of shares
allocated from the subscription resulting in fractional
amounts (fractions of shares). Subscription rights may also
be waived in order to issue shares in exchange for contributions
in kind for the purposes of mergers or acquisitions of
companies, parts of companies, operations, or of stakes in
companies. Subscription rights may be waived in the event
of a cash capital increase if the price at which the new shares
are issued is not significantly lower than the price at which
shares are quoted on the stock market and the portion of
the capital stock accounted for by the new shares, for which
subscription rights are waived, does not exceed 10 % in total.
Furthermore, subscription rights may be waived in order to
offer shares to potential holders of convertible or option
bonds commensurate to the rights to which they would be
entitled on conversion of the bond or on exercise of the option.

The Executive Board is authorised, subject to the approval of
the Supervisory Board, to determine the further details and
conditions of the share issuance.

In sum, the capital stock may not be increased by more
than 20 % through the issuance of new shares waiving
subscription rights.

Effects of a change of control on debt financing. Our
debt financing instruments often contain clauses that take
effect in the event of a change of control. The following rule
applies to a residual amount of a senior bond remaining with
RWE AG after the transfer of debt to innogy: in the event of
a change of control in conjunction with a drop in RWE AG’s
credit rating below investment-grade status, creditors may
demand immediate redemption. In such cases, RWE AG has
the right to cancel its subordinated hybrid bonds within the
defined change of control period; if this does not occur, the
annual compensation payable on the hybrid bonds increases
by 500 basis points.

RWE AG’s €3 billion syndicated credit line also includes a
change-of-control clause, which essentially has the following
content: in the event of a change of control or majority at RWE,
drawings are suspended until further notice. The lenders
shall enter into negotiations with us on a continuation of the
credit line. Should we fail to reach an agreement with the
majority of them within 30 days from such a change of
control, the lenders may cancel the line of credit. A similar
rule applies to the credit line we were granted in connection
with the temporary acquisition of the 50.04 % stake in
innogy Grid Holding (see page 39).

Effects of a change of control on Executive Board and
executive remuneration. Members of the Executive Board of
RWE AG have the special right to terminate their employment
contract in the event that shareholders or third parties obtain
control over the company and this would be linked to
significant disadvantages for them. In such a case, they are
free to resign from their position within six months of the
change of control with cause by giving three months’ notice.
In addition, they can request the termination of their
employment contract and receive a one-off payment.

The amount of the one-off payment shall correspond to
the compensation that would have been due until the end
of the contractually agreed term of service, but no more
than three times the total contractual annual remuneration.
Share-based payment is not included in this. This is in line
with the current recommendations of the German
Corporate Governance Code.

The Strategic Performance Plan presented on page 64 et seq.
stipulates for the Executive Board and executives of RWE AG
and subordinated associated companies that in the event
of a change of control the granted performance shares,
which have already been finally determined but not yet paid
out, shall be paid out early. The payout amount shall
correspond to the number of performance shares multiplied
by the sum of the average closing price of the RWE common
share on the last 30 trading days prior to the announcement
of the change of control and the amount of dividend paid
out per share until then, calculated starting from the time
when the number of performance shares was finally granted.
All performance shares granted on a preliminary basis at the
time of the change of control shall expire without
replacement or compensation.

Combined review of operations > Remuneration report

1.12 REMUNERATION REPORT

Performance-oriented and transparent supervisory and management board remuneration are fundamental to good
corporate governance. This is ascribed great importance in particular by institutional investors. In this chapter, we
have provided information on the structure and level of the remuneration of the Supervisory Board and Executive
Board of RWE AG. In addition to the requirements of German stock corporation and commercial law, we also consider
the recommendations of the German Corporate Governance Code concerning the design and presentation of
remuneration systems.

Structure of Supervisory Board remuneration

In addition to the remuneration paid, out-of-pocket expenses
are refunded to the members of the Supervisory Board.
Some Supervisory Board members also receive income from
the exercise of Supervisory Board mandates at subsidiaries
of RWE AG.

The members of the Supervisory Board imposed on
themselves the obligation, subject to any commitment to
relinquish their pay, to use 25 % of the total compensation
paid (before taxes) to buy RWE shares and to hold them for
the duration of their membership of the Supervisory Board of
RWE AG. Last year, all of the members who do not relinquish
their compensation met this self-imposed obligation for their
compensation for 2017. For the new members who joined the
Board in 2018, this self-imposed obligation applies for the
first time to the remuneration for fiscal 2018, which was
paid out at the start of fiscal 2019.

Fundamentals. The remuneration of the Supervisory Board
is governed by the provisions of the Articles of Incorporation
of RWE AG. Accordingly, the Chairman of the Supervisory
Board receives fixed remuneration of €300,000 per fiscal year.
His Deputy receives €200,000 per fiscal year. The other
members of the Supervisory Board receive fixed remuneration
of €100,000 and additional compensation for committee
mandates according to the following rules.

Members of the Audit Committee receive additional
remuneration of €40,000. This payment is increased to
€80,000 for the Chair of this committee. With the exception
of the Nomination Committee, the members of which do not
receive additional remuneration, the members and the Chairs
of all the other Supervisory Board committees receive an
additional €20,000 and €40,000 in remuneration, respectively.
Remuneration for a committee mandate is only paid if the
committee is active at least once in the fiscal year.

Supervisory Board members who concurrently hold several
offices in this body only receive compensation for the highest-
paid position. Remuneration is prorated if a Supervisory Board
member only performs a function for part of a fiscal year.

Level of Supervisory Board remuneration

Remuneration for fiscal 2018. In total, the remuneration
of the Supervisory Board (excluding out-of-pocket
expenses) amounted to €3,480,000 in fiscal 2018 (previous
year: €3,637,000). Of this sum, €460,000 (previous year:

€459,000) was remuneration paid for mandates on
committees of the Supervisory Board and €720,000
(previous year: €877,000) was remuneration paid for
mandates at subsidiaries.

62 RWE Annual Report 2018

The remuneration of all individuals who have served on the
Supervisory Board in 2017 and/or 2018 is shown in the
following table.

Supervisory Board remuneration1

Fixed remuneration

Remuneration for
committee offices

Remuneration for
mandates at subsidiaries2

Total remuneration3

€ ‘000

2018

2017

2018

2017

Dr. Werner Brandt, Chairman

Frank Bsirske, Deputy Chairman

Michael Bochinsky (since 1 August 2018)

Reiner Böhle

Sandra Bossemeyer

Martin Bröker (since 1 September 2018)

Ute Gerbaulet (since 27 April 2017)

Reinhold Gispert
(27 April 2017 to 31 July 2018)

Arno Hahn (until 27 April 2017)

Andreas Henrich (until 31 August 2018)

Prof. Dr. Hans-Peter Keitel

Dr. h.c. Monika Kircher

Martina Koederitz
(20 April 2016 to 27 April 2017)

Monika Krebber

Harald Louis

Dagmar Mühlenfeld

Peter Ottmann

Günther Schartz

Dr. Erhard Schipporeit

Dr. Wolfgang Schüssel

Ullrich Sierau

Ralf Sikorski

Marion Weckes

Leonhard Zubrowski

Total3

300

200

100

–

100

–

100

300

200

–

100

–

100

–

2018

–

200

–

120

–

300

–

2017

2018

2017

300

200

–

120

–

300

400

120

100

–

120

100

–

240

140

120

480

140

190

140

150

600

400

–

240

120

–

108

100

120

100

187

160

120

180

140

190

140

150

2,300

2,301

460

459

720

877

3,480

3,637

1 Supervisory Board members who joined or retired from the corporate body during the year receive prorated remuneration.
2 Remuneration for exercising mandates at subsidiaries is only included for periods of membership of the Supervisory Board of RWE AG.
3 The commercial rounding of certain figures can result in inaccurate sums.

Combined review of operations > Remuneration report

Structure of Executive Board remuneration

Executive Board remuneration. The structure and level of
the Executive Board’s remuneration are determined by the
Supervisory Board of RWE AG and reviewed on a regular
basis to determine whether they are appropriate and in line
with the market. The remuneration system described in the
following has been applied since 1 October 2016. It is made
up of non-performance-based and performance-based
components. The former consists of the fixed salary, the
pension instalment as well as fringe benefits. The
performance-based components include the bonus and a
share-based payment, the latter of which is a long-term
compensation component.

Recipients of Executive Board remuneration. In the
financial year that just ended, Rolf Martin Schmitz and
Markus Krebber received compensation for their work on
the Executive Board of RWE AG. Rolf Martin Schmitz has
been a member of the Executive Board since 1 May 2009
and its Chairman since 15 October 2016. His tenure on the
Executive Board expires on 30 June 2021. Markus Krebber
was appointed to this corporate body for an initial period of
three years with effect from 1 October 2016 and has been in
charge of finance since 15 October 2016. In December 2018,
his appointment was extended by five years through to
30 September 2024.

Non-performance-based Executive Board remuneration

Fixed compensation and pension instalments. The
members of the Executive Board of RWE AG receive a fixed
annual salary, which is paid in twelve monthly instalments.
As a second fixed remuneration component, they are entitled
to a pension instalment for every year of service, which is
determined on an individual basis, unless – as is the case
with Rolf Martin Schmitz – they belonged to the Executive
Board before the pension instalment was introduced and
have therefore received a pension commitment (see page 67).

The pension instalment is paid in cash or retained in part
or in full in exchange for a pension commitment of equal
value through a gross compensation conversion. RWE has
concluded a reinsurance policy to finance the pension
commitment. The accumulated capital may be drawn upon

on retirement, but not before the Executive Board member
turns 62. Members of the Executive Board of RWE reach the
established age limit when they are 63 years old. They can
be reappointed for one year at a time thereafter, but may
not hold office beyond their 65th birthday.

When retiring, Executive Board members can choose a
one-time payment or a maximum of nine instalments. They
and their surviving dependants do not receive any further
benefits. Vested retirement benefits from earlier activities
within the RWE Group remain unaffected by this.

Fringe benefits. Non-performance-based compensation
components also include fringe benefits, primarily consisting
of company cars and accident insurance premiums.

Performance-based Executive Board remuneration

Bonus. Executive Board members receive a bonus which is
based on the economic performance of the company and
the degree to which they achieve their individual goals and
the collective goals of the Executive Board. The starting
point for calculating the bonus is what is referred to as the
‘company bonus’, which depends on the level of adjusted
EBIT (EBIT minus the non-operating result) and is determined
as set out in the next paragraph.

The Supervisory Board sets a target as well as a floor and a
ceiling for adjusted EBIT at the beginning of every fiscal
year. After the end of the fiscal year, the actual level of
adjusted EBIT achieved is compared with the target figure. If
the figures are identical, the target achievement is 100 %. In
this case, the company bonus equals the contractually
agreed baseline bonus. If adjusted EBIT is exactly at the
pre-defined floor, target achievement is 50 %; if it is at the

64 RWE Annual Report 2018

ceiling, target achievement is 150 %. Target achievement is
adjusted linearly if adjusted EBIT is between the two limits.
If it is below the floor, no company bonus is paid. If the
ceiling is exceeded, the maximum target achievement
remains 150 %. The rules of the remuneration system for
the Executive Board stipulate that the Supervisory Board
may make adjustments to adjusted EBIT. Such adjustments
can relate to gains on disposals, changes in provisions, as
well as impairments and their consequences.

The German Corporate Governance Code (GCGC) recommends
prohibiting retrospective changes to performance targets and
reference parameters (Item 4.2.3, Paragraph 2, Sentence 8).
In our Declaration of Compliance, which was published on
21 September 2018, we stated that we deviated from the
Code in this point. However, we do not believe that we acted
contrary to the basic intention of the recommendation, as
the update to the target figures was methodological in nature
and occasioned by German stock corporation law.

The performance of each Executive Board member is
considered by multiplying the company bonus by a
performance factor. It may vary between 0.8 and 1.2. The
value achieved depends on the following criteria, each of
which is weighted by one-third: (1) achievement of individual
targets, (2) collective performance of the Executive Board,
and (3) performance in corporate responsibility (CR) and
employee motivation. Success in CR depends on the
achievement of environmental and social goals and is
documented in our sustainability reporting. Employee
motivation is measured with a motivation index, which is
based on anonymous surveys of employee commitment
and satisfaction.

After the end of every fiscal year, the Supervisory Board
evaluates the individual performance of the Executive Board
members relative to the three criteria above and determines
their individual performance factor. This is done in line with
the binding goals and targets which it sets at the beginning
of the financial year. The bonus determined in this manner is
paid out in full to the Executive Board members after the
end of the fiscal year.

Adjusted EBIT, the target figure used to determine the
company bonus, was revised per a Supervisory Board
resolution of September 2018. In the past, innogy SE, in
which we hold a 76.8 % stake, was considered as a fully
consolidated subsidiary in determining EBIT, in accordance
with International Financial Reporting Standards (IFRS). As
set out on page 40, the envisaged asset swap with E.ON
required methodological accounting adjustments to be made,
as a result of which adjusted EBIT according to the old
definition no longer exists. When measuring performance, we
now use an adjusted EBIT that reflects RWE’s current situation
better and is determined on a continuous basis. In so doing,
deviating from IFRS consolidation principles, innogy is
considered as a purely financial investment. More detailed
information on this approach can be found on page 58. The
change in the composition of adjusted EBIT made it necessary
to revise the target parameter for performance measurement
retrospectively. This was decided by the Supervisory Board of
RWE AG in September 2018.

Share-based payment. Executive Board members are
granted a share-based payment according to RWE AG’s
Strategic Performance Plan (SPP). The SPP rewards the
achievement of long-term goals. The key determinants of
success are the level of adjusted net income and the
performance of the RWE common share (return on share
price development and dividend) over a period of several
years. The link between compensation and the development
of the share price over the long term motivates the Executive
Board to consider the interests of the company’s owners
when taking decisions.

The SPP is based on conditionally granted performance
shares. Performance shares are granted as of 1 January of
every fiscal year. The SPP’s conditions envisage a transitional
tranche in fiscal 2016 (year of introduction) and three more
regular tranches for 2017, 2018 and 2019. The Executive
Board members receive a grant letter for each tranche, in
which they are informed of their personal gross allocation
amount. The preliminary number of performance shares is
calculated by dividing the grant amount by the average
closing quotation of the RWE share over the last 30 days of
trading on Xetra before the grant.

The granted performance shares have a term of four years
(vesting period). After the end of the first year, the number
of fully granted performance shares is determined. It
depends on the adjusted net income achieved by RWE for
the year. The actual figure is compared to a pre-defined
target figure. The procedure is similar to the approach taken
when determining the company bonus. The Supervisory
Board pre-defines a target, a floor and a ceiling for adjusted
net income, orienting itself towards the approved medium-
term plan in doing so. If the target figure is achieved exactly,
100 % of the conditionally granted performance shares of
the tranche is fully allocated. If adjusted net income is
exactly at the floor, 50 % of the conditionally granted
performance shares is fully allocated; if it is at the ceiling,
the final grant amounts to 150 %. If adjusted net income is
below the floor, all of the conditionally granted performance
shares from the tranche lapse. If the ceiling is exceeded, the
maximum grant remains 150 %.

Combined review of operations > Remuneration report

We published information on this deviation from the
German Corporate Governance Code in the aforementioned
statement of compliance on 21 September 2018.

Remuneration for exercising mandates. During the past
fiscal year, members of the RWE AG Executive Board were
paid to exercise supervisory board mandates at affiliates.
This income is deducted from the bonus and therefore does
not increase the total remuneration.

Shares of total remuneration accounted for by the
individual components. Assuming that both the company
and the Executive Board members achieve their performance
targets to a degree of 100 %, the compensation structure
roughly breaks down as follows: the base salary accounts for
around 30 % of total remuneration. Approximately 30 % is
allocable to short-term variable remuneration, i. e. the
bonus. As a long-term compensation component, the SPP
accounts for about 40 % of total remuneration.

Limitation of Executive Board remuneration. As set out
earlier, the level of variable compensation components is
limited. The company bonus amounts to a maximum of
150 % of the contractually agreed bonus budget. Multiplying
this by the individual performance factor (0.8 to 1.2), it is
possible to reach a maximum of 180 % of the bonus budget.
With regard to share-based payment under the SPP, payout
of the performance shares after the completion of the
vesting period is limited to a maximum of 200 % of the grant
budget. Due to the above maximum values, there is also a
cap on total compensation (see diagram overleaf).

The fully vested performance shares are fully paid out in
cash to the Executive Board member after the end of the
four-year vesting period. The level of the payment depends
on the performance of the RWE common share. It corresponds
to the final number of performance shares multiplied by the
sum of the average closing quotation of the RWE common
share over the last 30 days of trading on Xetra before the
end of the vesting period and the cumulative dividend paid
during the holding period. However, a cap applies in this case
as well: even in the event of an extremely good share
performance, the payment is limited to a maximum of 200 %
of the initial gross grant amount.

The members of the Executive Board are obliged to reinvest
25 % of the payment (after taxes) in RWE shares. The shares
must be held until at least the end of the third year after
conclusion of the vesting period.

The performance shares remain unaffected after an
Executive Board member leaves the body at the end of
their contract and are paid out as planned at the end of the
vesting period. If an Executive Board member voluntarily
leaves the company early or is dismissed with good cause,
all performance shares which have not yet reached the end
of the plan’s duration lapse. The SPP also contains a
provision which gives the Supervisory Board the power to
punish infractions by Executive Board members, for example
serious violations of the company’s Code of Conduct, by
reducing or completely voiding ongoing SPP tranches.

In 2016, the Supervisory Board established target figures
for adjusted net income for the planned SPP tranches (2016
to 2019). As part of this, the aforementioned ceilings and
floors were also determined. The SPP conditions stipulate
that the Supervisory Board may retrospectively adjust the
target and threshold values only to a very limited extent in
precisely defined cases. Such adjustments are permissible
if they take account of the effects of capital measures,
acquisitions, divestments and regulatory changes, which
were not yet known or unforeseeable when the figures were
determined. As set out in the commentary on the bonus, in
2018, we changed the method used to determine the
figures due to the envisaged asset swap with E.ON. This also
affected adjusted net income, which we had derived from
the IFRS net income in the past and now determine in the
manner described on page 58, i. e. by considering innogy as
a pure financial investment. Accordingly, the target figures
for adjusted net income for the 2018 and 2019 SPP tranches
were also adjusted retrospectively.

66 RWE Annual Report 2018

Range of Executive Board remuneration

Budget: 100 %

Strategic
Performance
Plan (100 %)

Bonus
(100 %)

40 %

30 %

Floor: 30 %

Ceiling: 164 %

Strategic
Performance Plan
(Maximum: 200 %)

80 %

Bonus
(Maximum: 180 %)

54 %

Fixed salary

30 %

Fixed salary

30 %

Fixed salary

30 %

Payment dates. Executive Board members receive their
fixed salary in twelve monthly instalments. The pension
instalment is paid out at the end of the year, insofar as it is
not converted into a pension commitment. After the fiscal
year, the Supervisory Board determines the target
achievement for the company bonus and the individual
performance factor. The bonus is paid out in the month of
the Annual General Meeting (AGM) which attends to the
financial statements of RWE AG. After the end of the four-

year vesting period, the performance shares from the SPP
are paid out during the month of the Annual General
Meeting held in the following year. As explained earlier,
Executive Board members must invest 25 % of the payment
in RWE common shares and may not liquidate these shares
until after three additional calendar years have passed from
completion of the four-year vesting period. As a result, it
takes a total of seven years for Executive Board members to
obtain the full amount of their compensation.

Executive Board remuneration payment timeline for a fiscal year

Bonus

Payment in the
month in which
the AGM is held

Strategic
Performance
Plan

Payment in the
month in which
the AGM is held

25 % reinvestment
in RWE shares

End of the
minimum
holding period

Pension
instalment

Payment
at year-end

Fixed salary

Monthly
payment

Fiscal year

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Combined review of operations > Remuneration report

Pension scheme. Until the introduction of the pension
instalment as of 1 January 2011 described earlier, pension
benefits were granted to the members of the Executive
Board. Of the Executive Board members in 2018, this only
applies to Rolf Martin Schmitz; the pension commitment
made to him in 2009 will remain unchanged. It entitles him
to life-long retirement benefits in the event of retirement
from the Executive Board of RWE AG upon turning 59,
permanent disability, early termination or non-extension of
his employment contract by the company. In the event of
death, his surviving dependants are entitled to benefits.
The amount of Rolf Martin Schmitz’s qualifying income and
the level of benefits determined by the duration of service
are taken as a basis for his individual pension and surviving
dependants’ benefits.

Change of control. If shareholders or third parties obtain
control over the company and this results in major
disadvantages for the Executive Board members, they have
a special right of termination. They have the right to resign
from the Executive Board and to request that their
employment contract be terminated in combination with a
one-off payment within six months of the change of control.

A change of control as defined by this provision occurs when
one or several shareholders or third parties acting jointly
account for at least 30 % of the voting rights in the company,

or if any of the aforementioned can exert a controlling
influence on the company in another manner. A change of
control also occurs if the company is merged with another
legal entity, unless the value of the other legal entity is less
than 50 % of the value of RWE AG.

On termination of their employment contract, Executive
Board members receive a one-off payment equalling the
compensation due until the end of the term of their contract:
however, this amount will not be higher than three times
their total contractual annual remuneration. The share-based
payments under the SPP are not included in this payment.

In the event of a change of control, all of the fully granted
performance shares under the SPP that have not been paid
out are paid out early. All performance shares granted under
the SPP on a preliminary basis lapse on the date of the
change of control.

Early termination of Executive Board mandate and
severance cap. Following a recommendation of the GCGC,
the Executive Board’s employment contracts include a
provision stipulating that if an Executive Board mandate is
otherwise terminated early without due cause, a severance
payment of no more than the remuneration due until the
end of the employment contract and no more than two total
annual compensations including fringe benefits is made
(severance cap).

Level of Executive Board remuneration

Total amount of the remuneration components for 2018.
The following section presents the remuneration granted to
the Executive Board members of RWE AG for their work in
fiscal 2018. It was calculated in compliance with the rules
set out in the German Commercial Code.

Total Executive Board compensation for the past fiscal year
amounted to €6,880,000. The previous year’s figure was
€7,274,000 and included the emoluments of Uwe Tigges, who
resigned from the Executive Board at the end of April 2017.

In 2018, non-performance-based components, i. e. the fixed
salary of the Executive Board members, fringe benefits and
the pension instalment, amounted to €2,246,000 (previous
year: €2,342,000). Pursuant to the German Commercial
Code, the annual service cost of the pension commitment to
Rolf Martin Schmitz is not recognised as remuneration, as
opposed to the pension instalment of €300,000 paid to
Markus Krebber (previous year: €255,000).

In 2018, performance-based components amounted to a
total of €4,634,000 (previous year: €4,932,000). Of this,
€2,284,000 (previous year: €2,365,000) was attributable to
the bonus for fiscal 2018 paid directly and €2,350,000
(previous year: €2,567,000) to the allocation of performance
shares under the SPP.

As set out on page 64, last year we started calculating
adjusted EBIT, the yardstick for determining the level of
the bonus, using a new method that considers innogy as a
purely financial investment. Therefore, the target for 2018
was adjusted retrospectively, to €831 million (target
achievement of 100 %) with a floor of €131 million (target
achievement of 50 %) and a ceiling of €1,531 million
(target achievement of 150 %). The new figures were also
determined on the basis of the medium-term planning
prepared in 2017. We actually achieved adjusted EBIT of
€953 million. The adjusted EBIT figure was adjusted by
–€49 million to €904 million. The adjustment relates to
changes in the amortisation periods of certain assets and

68 RWE Annual Report 2018

valuation effects regarding provisions. The adjustment leads
to a target achievement of 105 % for the company bonus.

Calculation of the 2018 company bonus

Adjusted EBIT
€ million

Target achievement
%

Target

Floor

Ceiling

Actual

Adjustments1

Adjusted actual

1 See commentary above.

831

131

1,531

953

– 49

904

100

150

–

105

As set out above, the company bonus resulting from this
target achievement is multiplied by a personal performance
factor. Based on the assessment of the personal goals, the
collective performance of the Executive Board as a whole as
well as the targets relating to corporate responsibility and
employee motivation, the Supervisory Board set the
performance factor for Rolf Martin Schmitz and Markus Krebber
at 1.2. This results in a bonus of 126 % of the contractually
agreed budget. The Supervisory Board acknowledged that
the Executive Board made better progress than expected in
implementing the strategic and financial goals established in
advance. In particular, the substantial progress made in

transforming RWE into a leading renewable energy company
was recognised. On the whole, feedback from the capital
market on the initiated transformation of the company has
been positive. The annual employee opinion survey proves
that personnel motivation improved even further from a
level that was already high, despite the challenging
environment.

The following table summarises the short-term remuneration
paid in accordance with the German Commercial Code for
fiscal 2018.

Short-term Executive
Board remuneration

€ ‘000

Non-performance-based remuneration

Fixed remuneration

Fringe benefits
(company car,
accident insurance)

Other payments
(pension instalments)

Total

Performance-based remuneration

Direct bonus payment

Remuneration for
mandates1

Bonus

Total

Dr. Rolf Martin Schmitz

Dr. Markus Krebber

Uwe Tigges
until 30 April 2017

Total

2018

2017

2018

2017

2018

2017

2018

2017

1,160

960

750

–

1,180

–

975

300

1,066

255

1,025

1,271

1,168

115

1,386

2,566

138

1,306

2,281

718

180

898

643

203

846

1,964

1,871

–

250

1,910

1,960

342

213

–

213

555

300

2,246

340

2,342

1,989

2,024

295

2,284

4,530

341

2,365

4,707

1 In 2018, the remuneration for exercising intragroup supervisory board offices was fully set off against the bonus.

Combined review of operations > Remuneration report

Share-based payment according to the Strategic
Performance Plan. In fiscal 2018, Rolf Martin Schmitz and
Markus Krebber were granted performance shares under the
SPP of RWE AG (see the following overview). The main factor
in determining the ratio of the number of performance
shares granted on a preliminary basis to the final number
of performance shares granted was adjusted net income in
fiscal 2018. The target figure (€49 million) was derived from
the 2016 medium-term plan and corresponds to an
allocation of 100 %. The floor is – €351 million, and the

ceiling is €449 million. Similar to adjusted EBIT, a downward
adjustment to €233 million was made to the figure actually
achieved (€591 million). Accordingly, the allocation was
123 %. The adjustments were made pursuant to the SPP
conditions in order to eliminate unplanned exceptional
effects. For example, we recognised substantial impairments
for power plants in the 2016 consolidated financial
statements, which had not been included in the medium-term
plan at the time and have resulted in a significant decrease
in depreciation. We eliminated this effect on depreciation.

Calculation of the 2018 tranche of the
Strategic Performance Plan

Adjusted net income
€ million

Target achievement
%

Target

Floor

Ceiling

Actual

Adjustments1

Adjusted actual

1 See commentary above.

Long-term incentive payment
Strategic Performance Plan

Tranche

Company

Grant date

Fair value at grant date

Share price (average)

Number of performance shares
allocated on a provisional basis

Measurement date of
performance conditions

Target achievement in relation
to adjusted net income

Final number of fully granted
performance shares

– 351

449

591

– 358

233

100

150

–

123

Dr. Rolf Martin Schmitz

Dr. Markus Krebber

Year

€ ‘000

€

2018

RWE AG

2017

RWE AG

2016

RWE AG

2018

RWE AG

2017

RWE AG

2016

RWE AG

1 Jan 2018

1 Jan 2017

1 Jan 2016

1 Jan 2018

1 Jan 2017

1 Jan 2016

1,250

18.80

1,250

11.62

769

13.78

1,100

18.80

988

11.62

247

13.78

66,489

107,573

55,787

58,511

84,983

17,915

31 Dec 2018

31 Dec 2017

31 Dec 2018

31 Dec 2017

123

115

123

115

81,781

123,709

64,155

71,969

97,730

20,602

End of the vesting period

31 Dec 2021

31 Dec 2020

31 Dec 2019

31 Dec 2021

31 Dec 2020

31 Dec 2019

70 RWE Annual Report 2018

Long-term incentive payment
Strategic Performance Plan

Tranche

Company

Grant date

Fair value at grant date

Share price (average)

Number of performance shares allocated on a provisional basis

Measurement date of performance conditions

Target achievement in relation to adjusted net income

Final number of fully granted performance shares

End of the vesting period

The table below shows the level of provisions formed for
share-based payment obligations under the SPP.

Addition of provisions for long-term share-based incentive payments
€ ‘000

Dr. Rolf Martin Schmitz

Dr. Markus Krebber

Uwe Tigges (until 30 April 2017)

Total

Obligations under the former pension scheme. The
service cost of pension obligations to Rolf Martin Schmitz
amounted to €536,000 in 2018 (previous year: €538,000).
This is not a remuneration component in accordance with
the German Commercial Code. As of year-end, the net
present value of the defined benefit obligation determined
in accordance with IFRS amounted to €13,370,000 (previous
year: €12,391,000). The present value of the pension
obligation determined according to the German Commercial
Code totalled €10,534,000 (previous year: €9,287,000). The
pension obligation for 2018 increased by €1,248,000
(previous year: decrease of €607,000).

Uwe Tigges
until 30 April 2017

Year

2018

2017

2016

innogy SE

1 Jan 2018

1 Jan 2017

1 Jan 2016

€ ‘000

€

–

329

32.07

10,264

706

37.13

19,021

31 Dec 2017

9,032

16,738

31 Dec 2020

31 Dec 2019

2018

2017

1,413

934

–

2,347

592

393

124

1,109

Based on the emoluments qualifying for a pension as of
31 December 2018, the projected annual pension of
Rolf Martin Schmitz on retiring from the company as of
the expiry of his appointment amounted to €556,000
(unchanged from the previous year). This includes vested
pension benefits due from former employers transferred to
RWE AG.

Combined review of operations > Remuneration report

Recommendations of the German Corporate Governance Code

According to the version of the GCGC published on
7 February 2017, the total remuneration of management
board members comprises the monetary compensation
elements, pension commitments, other awards, fringe
benefits of all kinds and benefits from third parties which
were granted or paid in the financial year with regard to
management board work. Item 4.2.5, Paragraph 3 of the
Code lists the compensation components that should be
disclosed. Unlike under German commercial law, according
to the GCGC the annual service cost of pension benefits is
also part of total remuneration.

The GCGC provides specific examples for the recommended
presentation of management board compensation based on
model tables, which distinguishes between ‘benefits
granted’ and ‘benefits received’.

• According to the GCGC, benefits or compensation are

granted when a binding commitment to such is made to
the management board member. In deviation from
German commercial law, it is not relevant to what extent
the management board member has already provided the
services being remunerated.

• The term ‘benefits received’ defines the extent to which
the management board member has already received
payments. In this regard, the relevant aspect is the time at
which the amount being paid is sufficiently certain and
not the actual time of the payment.

This distinction made in the Code can be illustrated with
the example of the bonus: the contractually agreed and
promised budgeted bonus for the fiscal year in question is
considered ‘granted’. Conversely, the benefits received
table shows the bonus level which will actually be paid with
a high degree of probability. In this regard, it is irrelevant
that the payment will not be made until the following year.
The payment date is deemed to have been reached when
the indicators and results needed to determine target
achievement (and therefore the bonus) are known with
sufficient certainty. The Code assumes that this is already
the case at the end of the year. As a result, the Executive
Board bonuses are stated in the reporting year in the benefits
received table.

In the following, we present the compensation of the
Executive Board of RWE AG based on the sample tables
recommended by the GCGC.

Benefits granted

€ ‘000

Fixed remuneration

Pension instalment

Fringe benefits

Total fixed remuneration

One-year variable remuneration

Bonus

Multi-year variable remuneration

SPP 2017 tranche
(term: 2017–2020)

SPP 2018 tranche
(term: 2018–2021)

Total variable remuneration

Total

Service cost

Total remuneration

Dr. Rolf Martin Schmitz
Chief Executive Officer
since 15 October 2016

2017

2018

960

–

975

1,100

1,250

–

2,350

3,325

538

3,863

1,160

–

1,180

1,100

1,250

–

1,250

2,350

3,530

536

4,066

2018
(Min)

1,160

–

1,180

–

1,180

536

1,716

Dr. Markus Krebber
Chief Financial Officer
since 15 October 2016

2017

2018

750

255

750

300

2018
(Min)

750

300

1,025

1,066

713

988

–

1,701

2,726

–

713

1,100

–

1,100

1,813

2,879

–

1,066

–

2018
(Max)

750

300

1,066

1,283

2,200

–

2,200

3,483

4,549

–

2,726

2,879

1,066

4,549

2018
(Max)

1,160

–

1,180

1,980

2,500

–

2,500

4,480

5,660

536

6,196

72 RWE Annual Report 2018

Benefits received

€ ‘000

Fixed remuneration

Pension instalment

Fringe benefits

Total fixed remuneration

One-year variable remuneration

Bonus1

Multi-year variable remuneration

Total variable remuneration

Total

Service cost

Total remuneration

Dr. Rolf Martin Schmitz
Chief Executive Officer
since 15 October 2016

Dr. Markus Krebber
Chief Financial Officer
since 15 October 2016

2018

1,160

–

1,180

1,386

2,566

536

3,102

2017

960

–

975

1,306

2,281

538

2,819

2018

750

300

1,066

898

1,964

–

1,964

2017

750

255

1,025

846

1,871

–

1,871

1 The bonus includes remuneration for exercising intragroup supervisory board offices; also see the table ‘Short-term Executive Board remuneration’ on page 68.

Combined review of operations > Development of risks and opportunities

1.13 DEVELOPMENT OF RISKS AND OPPORTUNITIES

RWE’s risk position is significantly affected by changes in the regulatory framework in the energy sector. State
intervention with the object of reducing greenhouse gas emissions could have a very negative effect on us. For
instance, we may have to shut down further lignite power plants prematurely in Germany. However, we expect to
receive adequate compensation in such an event. Through the envisaged transaction with E.ON, we intend to improve
and stabilise our operating earnings power. However, the RWE Group already rests on a solid foundation in both
financial and organisational terms. An important part of this foundation is our risk management, which has proven
itself over many years, enabling us to identify, assess and control risks and opportunities systematically.

Responsibility for risk management at RWE. Responsibility
for risk management within the RWE Group lies with two
companies: RWE AG, which manages the risks of the
companies subordinate to it that do not belong to the
innogy Group, and innogy SE, which has been accountable
for the management of its own risks and those of its
subsidiaries since its IPO in October 2016. This distribution
of tasks will remain until the sale of our stake in innogy to
E.ON, which we intend to complete in 2019. However, we
have adopted a new approach to recording RWE AG’s risk
exposure due to innogy. Until the beginning of 2018, we
faced a significant risk of our 76.8 % stake in the company
losing value as a result of decreasing share prices. Such
declines in the share price no longer represent a notable risk
because the acquisition of our share in innogy by E.ON was
agreed upon at a fixed price. This would only change if the
transaction failed, a scenario that has the potential to cause
substantial damage, but is unlikely.

The following is a detailed presentation of RWE AG’s risk
management. Corresponding information regarding our
subsidiary innogy can be found in its latest annual report.

Organisation of RWE AG’s risk management. The
primary responsibility for our risk management lies with the
Executive Board of RWE AG. It monitors and manages the
overall risk of the Group and its operational subsidiaries. In
doing so, it determines the risk appetite of RWE and defines
upper limits for risk positions.

At the level below the Executive Board, the Controlling & Risk
Management Department has the task of applying and
developing the risk management system. It derives detailed
limits for the individual business fields and operating units
from the risk caps set by the Executive Board. Its tasks also
include checking the identified risks for completeness and
plausibility and aggregating them. In so doing, it receives
support from the Risk Management Committee, which
is composed of the heads of the following five RWE AG
departments: Controlling & Risk Management (Chair),
Finance & Credit Risk, Accounting, Legal and Corporate

Business Development. The Controlling & Risk Management
Department provides the Executive Board and the Supervisory
Board of RWE AG with regular reports on the company’s risk
exposure.

A number of additional organisational units and committees
have been entrusted with risk management tasks:

• Financial risks and credit risks are managed by the

Finance & Credit Risk Department, which reports directly
to the CFO of RWE AG.

• The Accounting Department, which also reports to the CFO,
is tasked with limiting the risk of material misstatements
in financial reporting. It has an accounting-related internal
control system for this purpose. Our activities for securing
the quality of financial reporting are supported by a
committee consisting of officers from Accounting and other
departments of relevance to accounting. More detailed
information can be found on page 82.

• The Internal Audit & Compliance Department monitors

compliance with RWE’s Code of Conduct. One of its main
focal points is avoiding corruption risks. It reports to the
CEO of RWE AG or, if members of the Executive Board are
affected, directly to the Chairman of the Supervisory
Board and the Chairman of the Supervisory Board’s Audit
Committee.

• Risks from changes in commodity prices are monitored
by RWE Supply & Trading in so far as they relate to the
conventional electricity generation, energy trading and
gas businesses.

• Strategies to limit market risks from the generation

business are approved by the Commodity Management
Committee. This is an expert body which currently consists
of the CFO of RWE AG, members of the management of
RWE Supply & Trading and a representative of the
Controlling & Risk Management Department.

74 RWE Annual Report 2018

• The strategic guidelines for the management of financial

assets (including the funds of RWE Pensionstreuhand e. V.)
are determined by the Asset Management Committee.
This body also currently attends to this task for the
financial investments of innogy SE. Its members include
the CFO of RWE AG, the head of the Finance & Credit Risk
Department, the head of the Portfolio Management/
Mergers & Acquisitions Department and the head of
Financial Asset Management from the Portfolio
Management/Mergers & Acquisitions Department. The
heads of the innogy Finance and Controlling & Risk
Departments and the CFO of innogy’s Grid & Infrastructure
Division are also members.

Under the expert management of the aforementioned
organisational units, RWE AG and its operating subsidiaries
are responsible for identifying risks early, assessing them
correctly and managing them in compliance with corporate
standards. The Internal Audit Department regularly assesses
the quality and functionality of our risk management system.

RWE AG risk matrix

Potential damage1

Category V

Category IV

Category III

Category II

Category I

1 % ≤ P ≤ 10 %

10 % < P ≤ 20 %

20 % < P ≤ 50 %

P > 50 %

Low risk

Medium risk

High risk

Probability of occurrence (P)

Potential damage1

Category V

Category IV

Category III

Category II

Category I

Earnings risks2
Potential impact on net income quantified as a
percentage of adjusted EBITDA3 and/or equity4

≥ 50 % of equity

≥ 100 % of adjusted EBITDA and < 50 % of equity

≥ 40 % and < 100 % of adjusted EBITDA

≥ 20 % and < 40 % of adjusted EBITDA

< 20 % of adjusted EBITDA

Indebtedness/liquidity/equity risks2
Potential impact on net debt
and equity

≥ €8 billion

≥ €4 billion and < €8 billion

≥ €2 billion and < €4 billion

≥ €1billion and < €2 billion

< €1 billion

1 Aggregated figure for 2019 to 2021.
2 innogy is not included in the figures as a fully consolidated company, but as a purely financial investment (see page 58).
3 Average for 2019 to 2021 derived from the medium-term plan.
4 Equity as of 30 September 2018 (€18,918 million).

Combined review of operations > Development of risks and opportunities

Risk management as a continuous process. Risks and
opportunities are defined as negative or positive deviations
from expected figures. Their management is an integral and
continuous part of operating processes. We assess risks
every six months, using a bottom-up analysis. We also
monitor risk exposure between the regular survey dates.
The Executive Board of RWE AG is immediately notified of
any material changes. Our executive and supervisory bodies
are updated on the risk exposure on a quarterly basis.

share the same cause are aggregated to a single risk if
possible. We analyse the material risks of the RWE Group
using a matrix in which the risks’ probability of occurrence
and potential net damage are represented, i. e. taking
account of hedging measures. Depending on their position
in the matrix, we distinguish between low, medium and high
risks. Based on this analysis, we determine whether there is
a need for action and initiate measures to mitigate the risks
if necessary.

Our analysis normally covers the three-year horizon of our
medium-term plan, but can extend beyond that for long-
term risks. We evaluate risks to determine their impact on
net income on the one hand and on net debt and equity on
the other hand. We calculate the probability of occurrence
for all risks as well as their potential damage. Risks that

We calculate the effects of risks on net income as
percentages of adjusted EBITDA and equity. We apply the
non-IFRS method in which innogy is recognised as a purely
financial investment in calculating these key figures, as set
out on page 58. We classify the potential influence on net
debt and equity based on fixed threshold values.

Risk classes

Market risks

Regulatory and political risks

Legal risks

Operational risks

Financial risks

Creditworthiness of business partners

Other risks

Classification of the highest single risk

31 Dec 2018

31 Dec 2017

Medium

High

Medium

High

Medium

High

Medium

High

Medium

Low

Main risks for the RWE Group. As presented in the table
above, our main risks can be classified into seven groups,
depending on their nature. The highest individual risk
determines the classification of the risk of the entire risk
class. Single risks, to which innogy is exposed and on which
we receive reports twice a year, are not recorded here. We
currently classify two risks as ‘high’. These are the
‘regulatory and political risks’, the overall assessment of
which did not change compared to the previous year, and
the ‘other risks’, which were in the ‘low’ category in the prior
year and became much more significant in the year under

review. The latter is due to the fact that we have recorded
the potential failure of the envisaged asset swap with E.ON
under ‘other risks’ since 2018. We believe that this is
unlikely, but we realise that the damage potential is high.
Therefore, we classify this risk as ‘high’. In exchange, the
market value risk associated with our financial stake in
innogy became of secondary importance. In the previous
year, it was classified as ‘high’, with the same therefore
applying to the ‘financial risks’ in general. Since then, the
highest risks of this class have been ‘medium’.

76 RWE Annual Report 2018

In the following, we discuss the main risks and opportunities
and explain what measures have been taken to counter the
threat of negative developments.

• Market risks. In most of the countries in which we are
active the energy sector is characterised by the free
formation of prices. Declines in quotations on wholesale
electricity markets can cause power plants and electricity
procurement contracts concluded at fixed prices to
become less economically attractive and, in some cases,
even unprofitable. In such events, we may have to
recognise impairments or form provisions. Since 2016,
wholesale electricity prices have increased significantly in
our most important generation markets, Germany, the
United Kingdom and the Netherlands. This was primarily
due to the recovery in prices of commodities, especially
hard coal and gas. CO2 emission allowances have also
become much more expensive. It cannot be ruled out that
this trend ends and electricity becomes much cheaper
again. However, there is also a chance that wholesale
electricity prices continue to rise and that generation
margins improve.

In addition to fuel costs, demand for electricity and the
amount of generation capacity available to meet it are
also decisive to the development of wholesale electricity
prices. The increased use of batteries could result in
households with photovoltaic units increasingly being
self-sufficient in terms of energy, causing a drop in demand
for electricity generated using conventional techniques.
Conversely, the electrification of the heating and
transportation sector would create additional demand.
On the supply side, the continued expansion of renewable
energy will put wholesale electricity prices under pressure.
However, secured generation capacity should continue to
drop. Therefore, we expect increasingly frequent periods
of shortages with high electricity prices – especially in
Germany.

We assess the price risks to which we are exposed on the
procurement and supply markets taking account of current
forward prices and expected volatility. For our power plants,
we limit margin risks by selling most of our electricity
forward and securing the prices of the fuel and CO2 emission
allowances needed for its generation. Our goal is to limit
the consequences of negative price developments.

RWE Supply & Trading plays a central role when it comes
to managing commodity price risks. It functions as the
Group’s interface to the global wholesale markets for
electricity and energy commodities. The company markets
large portions of our power generation and purchases the
necessary fuels and CO2 certificates needed to produce
electricity. The role of RWE Supply & Trading as internal
transaction partner makes it easier for us to limit the risks
associated with price volatility on energy markets.
However, the trading transactions are not exclusively
intended to reduce risks. In compliance with risk
thresholds, the company also takes commodity positions
to achieve a profit.

Our risk management system for energy trading is firmly
aligned with best practice as applied to the trading
businesses of banks. As part of this, transactions with
third parties are concluded only if the associated risks are
within approved limits. There are guidelines governing the
treatment of commodity price risks and associated credit
risks. Our subsidiaries constantly monitor their commodity
positions. Risks associated with trades conducted by
RWE Supply & Trading for its own account are monitored
daily.

The Value at Risk (VaR) is of central importance for risk
measurement in energy trading. It specifies the maximum
loss from a risk position not exceeded with a given
probability over a certain period of time. The VaR figures
within the RWE Group are based on a confidence interval
of 95 %. The assumed holding period for a position is one
day. This means that, with a probability of 95 %, the daily
loss will not exceed the VaR.

The VaR for the price risks of commodity positions in the
trading business of RWE Supply & Trading may not rise
above €40 million. In the past financial year, it averaged
€12 million (previous year: €10 million), and the daily
maximum was €19 million (previous year: €15 million).
In addition, limits derived from the aforementioned VaR
thresholds have been set for every trading desk.
Furthermore, we develop extreme scenarios and factor
them into stress tests, determine their consequences for
earnings, and take countermeasures if we deem the risks
to be too high.

Combined review of operations > Development of risks and opportunities

In the middle of 2017, we pooled the management of our
gas portfolio and the liquefied natural gas (LNG) business
in a new organisational unit at RWE Supply & Trading and
established a VaR cap of €12 million for these activities.
The average VaR in 2018 was €4 million (previous year:
€3 million), and the daily maximum was €7 million
(previous year: €4 million).

We also apply the VaR concept to measure the extent to
which the commodity price risks that we are exposed to
outside the trading business can affect the RWE Group’s
adjusted EBITDA. To this end, we calculate the overall risk
for the Group on the basis of the commodity risk positions
of the individual companies; this overall risk mainly stems
from power generation. As the majority of our generation
position is already fully hedged for 2019, only minor
market price risks remain for this year. Opportunities for
additional profits arise, because we are able to adapt our
power plant deployment to short-term market
developments flexibly.

To a certain extent, financial instruments used to hedge
commodity positions are considered through the
statement of on-balance-sheet hedging relationships in
the consolidated financial statements. This also applies
to the financial instruments we use to limit interest and
currency risks. More detailed information can be found on
page 142 et seqq in the Notes to the consolidated
financial statements.

In the UK generation business, our earnings depend not
only on the development of the price of electricity, fuel
and emission allowances, but also on the level of the
payments we receive for participating in the national
capacity market. The capacity payments are determined
in annual auctions. Major differences can occur depending
on supply and demand. In the auctions held so far, the
range has been between €6.95/kW (2017/2018) and
€22.50/kW (2020/2021; before adjusting for inflation).
However, as set out on page 36 et seq., the UK capacity
market has been suspended for the time being and must
be approved again by the European Commission.

Our biggest market risks remain unchanged in the
‘medium’ category.

• Regulatory and political risks. Energy supply is a long-
term business and companies involved in this industry
are dependent on a stable, reliable framework. Stricter
emissions thresholds for the electricity sector can result
in massive declines in earnings, if the transition periods are
too short and power plants have to be taken offline early.
In the lignite industry, this could also have negative effects
on the upstream opencast mines. This kind of risk emanates,
inter alia, from the German Climate Action Plan 2050.
According to the Plan, by 2030 the energy sector must
lower its emissions by more than 60 % compared to the
level of 1990. In January 2019, the Growth, Structural
Change and Employment Commission charged by the
federal government submitted recommendations on how
to accomplish this in detail (see page 33). The body
speaks out in favour of phasing out electricity generation
from coal-fired power plants in Germany by 2038. It also
envisages further stations being shut down or converted
for alternative fuel firing by the end of 2022. We expect
the federal government to follow the Commission’s
recommendations and demand that we close further
lignite units. We cannot make any forecasts regarding the
extent or timing of the burdens that we will be facing until
the federal government has submitted specific plans after
speaking with us. It is still unclear when this will happen.
However, we firmly believe that we will receive adequate
compensation for the revenue shortfalls and the additional
costs. In addition, we see that the framework conditions
for the lignite business could become more reliable.

In the Netherlands, the new government aims to phase
out electricity generation from coal by 2030 and
submitted a draft law for this purpose in May 2018 (see
page 33 et seq.). It envisages that we shut down or
completely convert our Amer 9 and Eemshaven power
stations for biomass firing by the end of 2024 and the end
of 2029, respectively. This is still pending a decision by
parliament. Earnings could be curtailed significantly if the
government implemented its plans. In such an event, we
would endeavour to ensure that we received appropriate
compensation and take legal recourse if necessary.

78 RWE Annual Report 2018

In addition to the exit from coal, the Dutch government
seeks to introduce a CO2 tax (see page 34). The levy is
to supplement the European Emissions Trading System
and ensure a minimum price of carbon dioxide emissions
from power stations. This could lead to substantial
disadvantages for Dutch power plant operators.
Furthermore, there is a danger that security of supply
might be jeopardised. In dialogue with policymakers, the
energy companies have pointed out that these risks exist
and that prices in European emission allowance trading
are already high. Despite this, the politicians have not
abandoned this plan. However, they now intend to
establish lower carbon price floors. Even in Germany,
where the matter is not currently on the political agenda,
we are in favour of renouncing imposing additional
burdens on utilities through national CO2 levies.

We are also exposed to risks in the field of nuclear energy,
albeit to a much lesser extent than in the past. Since we
made contributions to the German nuclear energy fund
in the middle of 2017, the state has assumed complete
responsibility for interim and final storage. However, we
are still exposed to cost risks associated with disposal
tasks which remain within our remit. For example, it
cannot be ruled out that the dismantling of nuclear
power stations will be more expensive than estimated
and we will therefore have to establish higher provisions.
However, we also have the opportunity to leverage
synergies and cut costs. Furthermore, we face the risk that
our power plants which are still in operation become less
profitable or indeed unprofitable if safety standards
become stricter. However, since the safety standards of
nuclear power stations in Germany are already very high,
we feel that this is unlikely.

being. Theoretically, it is possible that the payments
will be resumed with a substantial delay or not at all.
There is also a chance that the European Commission will
conclude its investigation this year and approve the
capacity market retroactively. In the best case scenario,
the capacity payments would be resumed immediately
and the suspended payments would be refunded
retrospectively.

Even in the present political environment, we are exposed
to risks associated, for instance, with approvals when
building and operating production facilities. This particularly
affects our opencast mines and power stations. The
danger here is that approvals are granted late or not at
all and that granted approvals are withdrawn temporarily
or for good. One example is the preliminary halt to the
clearance of Hambach Forest ordered by the Münster
Higher Administrative Court. As set out on page 36, this
will curtail our earnings from electricity generation from
lignite for several years. We are doing everything we can
to see to it that the pending lawsuits are concluded as
quickly as possible and the delays in the operation of our
opencast mine are minimised. However, it has since become
likely that the German government will become active and
aim for a political solution. In doing so, it would lean on
the final report by the Growth, Structural Change and
Employment Commission, which deems the preservation
of Hambach Forest desirable.

We continue to classify our regulatory and political risks as
‘high’. We ascribe the greatest importance to the potential
burdens resulting from an accelerated coal phase-out, the
introduction of CO2 taxes and an extended or permanent
halt to the clearance of Hambach Forest.

In November 2018 the General Court of the Court of
Justice of the European Union repealed the approval
granted for the UK capacity market by the European
Commission, because it had not been preceded by a
comprehensive investigation. Until this requirement has
been complied with, there is a ban on capacity payments –
even under existing agreements. This curtailed our EBITDA
by €50 million in 2018, and we have not included any
capacity payments in our plans for 2019 for the time

• Legal risks. Individual RWE Group companies are involved

in litigation and arbitration proceedings due to their
operations or the acquisition of companies. Out-of-court
claims have been filed against some of them. Furthermore,
companies from the RWE Group are directly involved in
various procedures with public authorities or are at least
affected by their outcomes. We have accrued provisions
for possible losses resulting from pending proceedings
before ordinary courts and arbitration courts.

Combined review of operations > Development of risks and opportunities

Risks may also result from exemptions and warranties that
we granted in connection with the sale of shareholdings.
Exemptions ensure that the seller covers the risks that are
identified within the scope of due diligence, the probability
of occurrence of which is, however, uncertain. In contrast,
warranties also cover risks that are unknown at the time of
sale. The hedging instruments described above are standard
procedure in sales of companies and equity holdings.

The maximum classification of our legal risks is ‘medium’
There was no change in this regard compared to the
previous year.

• Financial risks. The development of market interest rates,

foreign exchange rates, share prices and collateral
pledged for forward transactions can have a significant
effect on our financial position. As set out earlier, our
greatest financial risk until the beginning of 2018 was the
potential decline in the market value of our stake in innogy.
This risk has become much less important because we
agreed the sale of the shareholding to E.ON at a fixed price.
However, the remaining shares in our financial portfolio
are still exposed to the risk of decreases in value. The
average VaR for the share price risk of these stocks
(without innogy) in 2018 was €5 million (previous year:
€2 million).

• Operational risks. RWE operates technologically

complex, interconnected production facilities. During
their construction and modernisation, delays and cost
increases can occur, for example due to accidents, material
defects, late deliveries or time-consuming approval
processes. We counter this through diligent plant and
project management as well as high safety standards.
We also regularly inspect and maintain our facilities.
Nevertheless, it is impossible to prevent occasional outages.
If economically viable, we take out insurance policies.
In relation to capital expenditure on property, plant and
equipment and intangible assets, there is a risk that the
return may fall short of expectations. Furthermore, prices
paid for acquisitions may retrospectively prove to be too
high. However, it is also possible that the returns on
investments turn out to be higher than originally assumed.
We conduct extensive analyses to try and map the financial
and strategic effects of transactions as realistically as
possible. Moreover, RWE has specific accountability
provisions and approval processes in place to prepare and
implement investment decisions.

Our business processes are supported by secure data
processing systems. Nevertheless, we cannot rule out a
lack of availability of IT infrastructure or a breach in data
security. Our high security standards are designed to
prevent this. In addition, we regularly invest in hardware
and software upgrades.

We classify our operating risks as ‘medium’.

We differentiate between several categories of interest
rate risks. For example, rises in interest rates can lead to
reductions in the price of the securities we hold. This
primarily relates to fixed-interest bonds. The VaR for the
interest rate-related price risk of capital investments was
€3 million on average at RWE AG (previous year: €5 million).

Moreover, increases in interest rates cause our financing
costs to rise. We measure this risk using the Cash Flow at
Risk (CFaR), applying a confidence level of 95 % and a
holding period of one year. The average CFaR at RWE AG
in 2018 and the previous year was €3 million.

Furthermore, market interest rates have an effect on our
provisions, as they are the point of reference for the
discount rates used for determining the net present values
of obligations. This means that, all other things being equal,
provisions rise when market interest rates fall and vice versa.

We are exposed to foreign exchange risks primarily
owing to our business activities in the United Kingdom.
Furthermore, energy commodities such as coal and oil are
traded in US dollars. Companies which are overseen by
RWE AG have their currency risks managed by the parent
company. RWE AG aggregates the risks to a net financial
position for each currency and hedges it if necessary. In
2018, the average VaR for RWE AG’s foreign currency
position was less than €1 million. The same applies to
the prior year.

80 RWE Annual Report 2018

Collateral pledged for forward transactions can have a
significant effect on our liquidity. Its level is determined
by the extent to which the contractually agreed prices
deviate from current market quotations. These differences
can be substantial, especially on volatile markets. In recent
times, the prices of commodities of importance to us have
fluctuated considerably, in particular those of CO2 emission
allowances. This development exposes us to risks.
However, this also increases the probability of receiving
substantial collateral from contracting parties, resulting
in a temporary increase in our equity.

Risks and opportunities from changes in the price of
securities are controlled by a professional fund
management system. Range of action, responsibilities
and controls are set out in internal guidelines which the
Group companies are obliged to adhere to when concluding
financial transactions. All financial transactions are
recorded using special software and are monitored by
RWE AG.

The conditions at which we can finance our business on
the debt capital market are in part dependent on the
credit ratings we receive from international rating
agencies. As set out on page 53, Moody’s and Fitch place
our long-term creditworthiness in the investment grade
category with a stable outlook. However, the agencies
may change their assessments and lower our credit rating,
which can result in additional costs if we have to raise
debt capital. This would probably also make it more
expensive to pledge collateral for forward transactions.

We classify our financial risks as ‘medium’ as opposed to
‘high’ in the previous year. The improved classification
results from the aforementioned decline in the share price
risk of our stake in innogy.

• Creditworthiness of business partners. Our business
relations with key accounts, suppliers, trading partners
and financial institutions expose us to credit risks.
Therefore, we track the creditworthiness of our partners
closely and assess their credit standing based on internal
and external ratings, both before and during the business
relationship. Transactions that exceed certain approval
thresholds and all trading transactions are subject to a
credit limit, which we determine before the transaction is
concluded and adjust if necessary, for instance in the

event of a change in creditworthiness. At times, we
request cash collateral or bank guarantees. Credit risks
and the utilisation of the limits in the trading and
financing business are measured daily.

We agree on collateral when concluding over-the-counter
trading transactions. Furthermore, we enter into
framework agreements, e. g. those of the European
Federation of Energy Traders (EFET). For financial
derivatives, we make use of the German master agreement
for forward financial transactions or the master agreement
of the International Swaps and Derivatives Association
(ISDA).

As in the past, our risks stemming from the creditworthiness
of our business partners do not exceed the category
‘medium’.

• Other risks. This risk class includes reputation risks and

risks associated with non-compliance and criminal
offences. It also encompasses the possibility of planned
acquisitions or divestments not being implemented, for
example owing to regulatory requirements. Our single-
largest risk in this category is the potential failure of the
planned asset swap with E.ON. We endeavour to ensure
that the transaction is executed as planned by maintaining
intense dialogue with the parties involved and preparing
and supporting the approval processes carefully. Negative
developments after the successful completion of the asset
swap cannot be ruled out, either. For instance, the
integration of the assets that we receive from E.ON and
are returned to us from the innogy portfolio may prove
more difficult than anticipated. Furthermore, the
operational development of these activities may lag
behind expectations. As far as legally possible, we are
already seeing to it that the new assets are integrated into
RWE successfully and have taken the first staffing and
organisational measures necessary to continue managing
these activities successfully in the future.

Despite legal and economic imponderables, we deem it
improbable that the asset swap with E.ON will fail. Should
this occur nevertheless, it would have extremely negative
ramifications. In consequence, we classify this risk as high,
and therefore the entire ‘other risks’ class as well (previous
year: ‘low’).

Combined review of operations > Development of risks and opportunities

• Risks related to innogy – continuing operations. As
set out earlier, our subsidiary innogy manages its risks
independently. The parent company RWE AG is informed
of the subsidiary’s risk exposure once every six months.
If the asset swap with E.ON is executed as planned, the
risks and opportunities relating to the innogy assets that
will be transferred to E.ON will no longer affect RWE as
they will be transferred with retrospective economic effect
to 1 January 2018. The developments at innogy relating
to the renewable energy business, gas storage and the
minority interest in Austria-based Kelag are still of
importance to us.

Earnings in the renewable energy business strongly
depend on state subsidy schemes. Here, there is a risk
that the realisable compensation declines and new
projects cease to be attractive. This can lead to investment
undertakings being broken off. Reductions in the
subsidisation of existing generation units cannot be fully
ruled out. The revenue of these plants is also exposed to
the risk of unfavourable market developments to the
extent that it is determined by wholesale electricity prices.
This applies for example to wind farms when subsidies
have expired. If such risks materialise, impairments may
have to be recognised for these plants or they may be sold
below their carrying amount. However, these plants can
earn unexpectedly high returns if wholesale electricity
prices increase.

The margins realisable in the gas storage business
partially depend on seasonal differences in the price of
gas. Significant differences enable substantial income to
be achieved. Conversely, shrinking price gaps can lead to
earnings shortfalls and impairments.

innogy monitors these and its other risks continuously and
takes countermeasures where necessary. The company
provides more detailed information on its risk
management system and the material risks and
opportunities in its current annual report.

RWE’s risk and opportunity situation: general
assessment by management. As demonstrated by the
contents of this chapter, RWE’s risk exposure is largely
influenced by economic and regulatory framework
conditions and the implementation of the asset swap with
E.ON. Regulatory risks arise inter alia from the
recommendations of the Growth, Structural Change and
Employment Commission. We anticipate that the German
government will follow the proposals and that we will
therefore have to shut down further lignite units prematurely.
However, we firmly believe that we will receive adequate
compensation for the economic damage. In addition, it is
possible that the framework conditions for the lignite
business become more reliable. We are also exposed to
regulatory risks outside Germany. Of notable mention in this
context is the uncertainty surrounding the continuation of
the UK capacity market. The plans of the Dutch government
to phase out coal in the coming decade and introduce a
carbon floor price also expose us to risks. We are raising
awareness of the consequences of such intervention and are
lobbying for a reliable regulatory framework. We have not
identified any material risks for RWE arising from the
impending exit of the United Kingdom from the EU, even in
the event of a hard Brexit.

Market conditions in electricity generation have a significant
influence on our earnings. German wholesale prices are
currently far above the record low at the beginning of 2016,
in part because prices of fuel such as hard coal and gas
have increased. Should these trends reverse and electricity
prices drop sharply once again, significant earnings
shortfalls are possible, which may lead to a downgrade of
our credit rating and additional collateralisation of hedging
trading transactions. However, prices may continue to trend
upwards and generation margins may improve. Such a
development may also be driven by the German nuclear
phase-out, because additional power plant closures cause
reliably available generation capacity to become tighter.

82 RWE Annual Report 2018

The envisaged asset swap with E.ON will enable us to
broaden our operational setup and thus better cushion the
risks of conventional electricity generation. The transaction
will also make us stronger financially. Therefore, its failure
would have a negative impact. We are confident of being
able to complete the asset swap this year.

With ambitious efficiency-enhancement programmes, strict
investing discipline and the IPO of innogy, we have given the
Group a solid financial foundation. By analysing the effects
of risks on our liquidity and pursuing a conservative
financing strategy, we ensure that we always have enough
cash and cash equivalents in order to meet our payment
obligations punctually. We have strong operating cash flows,
considerable liquid funds and great financial leeway, thanks
to the Debt Issuance Programme, the Commercial Paper
Programme and the syndicated credit line. We budget our
liquidity with foresight, based on the short, medium and
long-term funding needs of our Group companies, and have
a significant amount of minimum liquidity on a daily basis.

Thanks to our comprehensive risk management system and
the measures for safeguarding our financial and earning
power described earlier, we are confident that we can manage
the current risks to RWE. At the same time, we are working
hard to ensure that this remains the case in the future.

Report on the accounting-related internal control system:
statements in accordance with Sec. 289, Para. 4, and
Sec. 315, Para. 4 of the German Commercial Code. Risks
associated with financial reporting reflect the fact that our
annual, consolidated and interim financial statements may
contain misrepresentations that could have a significant
influence on the decisions made by their addressees. Our
accounting-related Internal Control System (ICS) aims to
detect potential errors and misrepresentations that result
from non-compliance with accounting standards. The
foundations of the ICS are our basic principles – which are
set out in RWE’s Code of Conduct and, first and foremost,
include our ambition to provide complete, objective, correct,
clear and timely information – as well as our groupwide
guidelines. Building on this, minimum requirements for the
accounting-related IT systems are designed to ensure the
reliability of data collection and processing.

RWE AG is responsible for the design and monitoring of
the ICS. These tasks are performed by the Accounting
Department, adhering to a groupwide set of rules. On top
of this, we created the ICS Committee. Its objective is to
ensure that the ICS is applied throughout the Group following
uniform principles and meeting high ambitions in terms of
correctness and transparency. The Committee consists of
representatives from the Accounting, Controlling & Risk
Management and Internal Auditing & Compliance departments,
along with officers from the areas of human resources,
procurement, trading, finance, taxes and IT, all of whom
play an important role in accounting.

We subject the ICS to a comprehensive review every year.
As a first step, we examine whether the risk situation is
presented appropriately and whether suitable controls are
in place for the identified risks. In a second step, we test
the effectiveness of the controls. If the ICS reviews pertain
to accounting-related processes, e. g. the receipt and
processing of invoices in our service centre in Cracow, the
preparation of financial statements or consolidation, they
are conducted by employees from the Accounting
Department. The representatives of the finance, human
resources, procurement, trading and IT functions document
whether the agreed ICS quality standards are adhered to by
their respective areas. The Internal Audit Department and
external auditing firms are also involved in the ICS reviews.
The results of the reviews are documented in a report to the
Executive Board of RWE AG. The review conducted in 2018
once again demonstrated that the ICS is effective.

Our ICS reviews do not cover innogy SE or its subsidiaries.
However, these entities apply the aforementioned process
analogously. The results obtained are considered in the
assessment of the ICS of RWE AG.

Within the scope of external reporting, the members of the
Executive Board of RWE AG take a half-year and full-year
balance-sheet oath, confirming that the prescribed accounting
standards have been adhered to and that the financial
statements give a true and fair view of the net worth,
financial position and earnings. When in session, the
Supervisory Board‘s Audit Committee regularly concerns
itself with the effectiveness of the ICS. Once a year, the
Executive Board of RWE AG submits a report on this to the
Committee.

Combined review of operations > Outlook

1.14 OUTLOOK

Our generation margins will probably improve somewhat in fiscal 2019. Furthermore, electricity generation from wind
is expected to increase substantially, resulting in a significant rise in earnings from the renewable energy business
of our subsidiary innogy. However, we also anticipate curtailments, for example due to the temporary halt to the
clearance of Hambach Forest and the suspension of payments from the UK capacity market. Based on current planning,
our adjusted EBITDA will total between €1.4 billion and €1.7 billion this year. This forecast relates to RWE’s continuing
operations. We are confident of being able to complete the asset swap with E.ON this year. However, this forecast
does not consider the impact on earnings stemming from the completion of the transaction.

Experts predict weaker growth. Based on initial forecasts,
the global economy will expand by approximately 2.5 % in
2019, which would be less than last year. Economic prospects
also clouded in the Eurozone, with estimated growth of
some 1.5 %. Experts anticipate a similar gain in Germany,
whereas growth in the Netherlands may well once again exceed
the average of the Eurozone countries. The development of
gross domestic product in the United Kingdom largely
depends on an orderly Brexit, in which case the country could
post an increase of 1.5 %.

Power consumption likely to be stable in Germany and
the UK. Our forecast for this year’s electricity usage is based
on the economy’s assumed development. If it grows as
expected, demand for electricity should be roughly flat in
Germany and the United Kingdom. Positive economic stimulus
will probably be contrasted once again by the dampening
effects of energy savings. In view of the slightly stronger
economic expansion in the Netherlands, we expect the
country’s electricity consumption to post a marginal rise.

Adjusted EBITDA forecast
€ million

RWE Group

of which:

Lignite & Nuclear

European Power

Supply & Trading

innogy - continuing operations

Electricity production for 2019 nearly completely sold
forward. The development of commodity prices will
depend on a number of factors that are nearly impossible
to predict. At any rate, this would only have a minor
impact on our earnings this year, as we have sold forward
nearly all of our electricity generation for 2019 and secured
the prices of the required fuel and CO2 emission allowances.
These transactions have been concluded up to three years
in advance. Therefore, the realised electricity prices do not
reflect current market prices, which are much higher than
in 2016. The price realised for 2019 for the electricity
generated by our German lignite-fired and nuclear power
stations, which we sold forward with especially long lead
times, was slightly higher year on year.

2018 actual

Outlook for 2019

1,538

356

334

183

699

1,400–1,700

300–400

250–350

100–300

800–900

Adjusted EBITDA in 2019: range of €1.4 billion to
€1.7 billion expected. The upward trend of realised
electricity prices will have a positive effect on earnings in
2019. Additional income is anticipated in the renewable
energy business due to the commissioning of new
generation capacity. Earnings contributed by existing
stations would rise, assuming normalised wind conditions.
Burdens will be imposed by the court rulings on Hambach
Forest and the UK capacity market (see page 36 et seq.).

Based on our current planning for 2019, the RWE Group’s
adjusted EBITDA will range from €1.4 billion to €1.7 billion
(2018: €1.5 billion). In light of the expected depreciation
and amortisation of about €1 billion, adjusted EBIT is
anticipated to be in the order of €0.4 billion to €0.7 billion.
As mentioned elsewhere in this report, adjusted EBITDA and
adjusted EBIT exclude material non-operating and aperiodic
effects. The latter are assigned to the non-operating result,
the components of which are presented in the reporting on
actuals on page 47.

84 RWE Annual Report 2018

The aforementioned forecast ranges only relate to continuing
operations. They do not consider the potential impact on
earnings of a completion of the transaction with E.ON, which
is scheduled for this year. However, we would recognise
book gains from this transaction in the non-operating
result. Likewise, the outlook does not take account of a
potential coal phase-out ordered by the government as it
is currently impossible to make a reliable assessment of its
effects. In addition, we assume that payments on the UK
capacity market will not resume this year.

We anticipate that earnings will develop as follows at the
segment level:

• Lignite & Nuclear: Here, adjusted EBITDA should range
between €300 million and €400 million. As mentioned
earlier, we have already placed most of this year’s
electricity production on the market. In sum, the margins
we achieved were slightly higher than those for 2018.
By contrast, the temporary halt to the clearance of
Hambach Forest will reduce earnings. We estimate that
the curtailment will amount to between €100 million and
€200 million per year for 2019 to 2021. Thanks to
optimised processes, we are confident that the earnings
shortfalls will be at the lower end of this range in 2019.

• European Power: Adjusted EBITDA recorded by this

segment is expected to total between €250 million and
€350 million. This assumes that we will not receive any
capacity payments in the United Kingdom this year. About
€180 million had been secured for 2019 in earlier auctions,
which we have disregarded in our planning due to the
suspension of the capacity market.

• Supply & Trading: We anticipate that we will be able to

achieve average adjusted EBITDA in the order of
€200 million per year in this segment in the long run. It is
highly probable that it will range from €100 million to
€300 million, which is what we expect for 2019 as well.

• innogy – continuing operations: In this segment, adjusted
EBITDA is likely to close the year between €800 million
and €900 million. Compared to last year (€699 million)
this would represent a significant increase, which would
primarily be attributable to the renewable energy business.
Assuming that wind conditions in 2019 are in line with
the long-term average, the usage of the UK and Central
European wind farms will be much higher than in 2018.

Commissioning new generation capacity will also have a
positive impact on earnings. Furthermore, renewable
generation assets, which are not subsidised through fixed
feed-in payments, should benefit from the rise in wholesale
electricity quotations.

Capital expenditure in 2019 markedly up year on year.
According to current planning, capital expenditure this
year is likely to be much higher than in 2018 (€1.3 billion).
We expect a considerable increase to be posted by
innogy’s continuing operations (last year: €0.7 billion):
the construction of the Triton Knoll offshore wind farm in
the UK and the Limondale solar farm in Australia will
increase expenditure. In conventional power generation,
we anticipate spending capital in the order of €0.5 billion on
property, plant and equipment, primarily on the maintenance
and modernisation of power plants and opencast mines. A
small portion of these funds is earmarked for growth projects,
e. g. the conversion of our Dutch hard coal-fired power
stations to biomass co-firing.

Significant rise in net debt expected. The net debt of
the RWE Group’s continuing operations, which totalled
€4.4 billion at the end of 2018, is likely to rise substantially
in the fiscal year underway. As set out on page 53, last year
was characterised by high cash inflows from variation
margins relating to forward transactions involving CO2
certificates and other commodities. Once the contracts are
realised, some of which mature in 2019, the effects will be
reversed. The rise in investing activity will also be reflected in
net debt.

Outlook for the RWE Group with innogy as a purely
financial investment. For management purposes, we also
use Group figures in which innogy is considered as a purely
financial investment. On the income statement, our subsidiary
is only reflected based on the dividend to which RWE is
entitled. Further details on how these figures are calculated
can be found on page 58. Applying this method, our
adjusted EBITDA is expected to total between €1.2 billion and
€1.5 billion in fiscal 2019 (last year: €1.5 billion). Net income
adjusted for aperiodic and non-operating effects is
anticipated to range from €0.3 billion to €0.6 billion (last
year: €0.6 billion).

Responsibility statement

2 RESPONSIBILITY STATEMENT

To the best of our knowledge, and in accordance with the applicable 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 the Group review of operations includes a fair review of the development and performance of
the business and the position of the Group, together with a description of the principal opportunities and
risks associated with the expected development of the Group.

Essen, 27 February 2019

The Executive Board

Schmitz

Krebber

Consolidated
financial
statements

88 RWE Annual Report 2018

3.1 INCOME STATEMENT

€ million

Revenue (including natural gas tax /electricity tax)

Natural gas tax /electricity tax

Revenue

Other operating income

Cost of materials

Staff costs

Depreciation, amortisation and impairment losses

Other operating expenses

Income from investments accounted for using the equity method

Other income from investments

Financial income

Finance costs

Income from continuing operations before tax

Taxes on income

Income from continuing operations

Income from discontinued operations

Income

of which: non-controlling interests

of which: RWE AG hybrid capital investors’ interest

Note

(1)

(2)

(3)

(4)

(5), (10)

(6)

(7), (12)

(7)

(8)

(9)

of which: net income/income attributable to RWE AG shareholders

Basic and diluted earnings per common and preferred share in €

(25)

of which: from continuing operations in €

of which: from discontinued operations in €

1 Prior-year figures adjusted.

2018

13,529

141

13,388

931

10,237

1,895

948

950

211

−42

472

881

103

−54

1,127

1,073

679

335

0.54

−0.32

0.86

2017¹

13,953

131

13,822

3,256

10,029

1,848

1,330

1,909

137

1,545

1,608

2,056

333

1,723

592

2,315

373

1,900

3.09

2.77

0.32

Consolidated financial statements > Statement of comprehensive income

3.2 STATEMENT OF COMPREHENSIVE INCOME

Figures stated after taxes – € million

Income

Note

Actuarial gains and losses of defined benefit pension plans and similar obligations

Income and expenses of investments accounted for using the equity method (pro rata)

(12)

Fair valuation of equity instruments

Income and expenses recognised in equity, not to be reclassified through
profit or loss

Currency translation adjustment

Fair valuation of financial instruments available for sale

Fair valuation of debt instruments

Fair valuation of financial instruments used for hedging purposes

(20)

(26)

Income and expenses of investments accounted for using the equity method (pro rata)

(12), (20)

Income and expenses recognised in equity, to be reclassified through
profit or loss in the future

Other comprehensive income

Total comprehensive income

of which: attributable to RWE AG shareholders

of which: attributable to RWE AG hybrid capital investors

of which: attributable to non-controlling interests

2018

1,073

−1,183

−105

−1,275

−8

−18

3,170

−1

3,143

1,868

2,941

2,350

532

2017

2,315

1,346

– 85

1,261

174

818

– 15

1,021

2,282

4,597

3,996

559

90 RWE Annual Report 2018

3.3 BALANCE SHEET

Assets
€ million

Non-current assets

Intangible assets

Property, plant and equipment

Investments accounted for using the equity method

Other non-current financial assets

Financial receivables

Other receivables and other assets

Income tax assets

Deferred taxes

Current assets

Inventories

Financial receivables

Trade accounts receivable

Other receivables and other assets

Income tax assets

Marketable securities

Cash and cash equivalents

Assets held for sale

Equity and liabilities
€ million

Equity

RWE AG shareholders’ interest

RWE AG hybrid capital investors’ interest

Non-controlling interests

Non-current liabilities

Provisions

Financial liabilities

Other liabilities

Deferred taxes

Current liabilities

Provisions

Financial liabilities

Trade accounts payable

Income tax liabilities

Other liabilities

Liabilities held for sale

Note

31 Dec 2018

31 Dec 2017

(10)

(11)

(12)

(13)

(14)

(15)

(16)

(17)

(14)

(15)

(18)

(19)

Note

(20)

(22)

(23)

(24)

(16)

(22)

(23)

(24)

2,193

12,409

1,467

400

110

946

246

824

12,383

24,947¹

2,846

1,109

359

1,187

236

2,627

18,595

45,694

1,631

2,782

1,963

7,408

101

3,609

3,523

40,496

61,513

80,108

1,924

1,745

5,405

4,892

445

4,893

3,933

128

23,365

69,059

31 Dec 2018

31 Dec 2017

8,736

940

4,581

14,257

15,863

1,998

508

1,638

20,007

2,615

766

2,429

7,200

32,796

45,844

80,108

6,759

940

4,292

11,991

19,249

14,414

2,393

718

36,774

5,137

2,787

5,077

100

7,082

111

20,294

69,059

1 Figure adjusted because investment property (carrying amount as of 31 December 2017: €43 million) has been subsumed under property, plant and equipment.

Note (29)

Consolidated financial statements > Cash flow statement

3.4 CASH FLOW STATEMENT

€ million

Income

Depreciation, amortisation, impairment losses /write-backs

Changes in provisions

Changes in deferred taxes

Income from disposal of non-current assets and marketable securities

Other non-cash income /expenses

Changes in working capital

Cash flows from operating activities of continuing operations

Cash flows from operating activities of discontinued operations

Cash flows from operating activities

Intangible assets/property, plant and equipment

Capital expenditure

Proceeds from disposal of assets

Acquisitions, investments

Capital expenditure

Proceeds from disposal of assets /divestitures

Changes in marketable securities and cash investments

Cash flows from investing activities of continuing operations
(before initial/subsequent transfer to plan assets)

Initial /subsequent transfer to plan assets

Cash flows from investing activities of continuing operations
(after initial/subsequent transfer to plan assets)

Cash flows from investing activities of discontinued operations

Cash flows from investing activities
(after initial/subsequent transfer to plan assets)

Net change in equity (incl. non-controlling interests)

Dividends paid to RWE AG shareholders and non-controlling interests

Issuance of financial debt

Repayment of financial debt

Cash flows from financing activities of continuing operations

Cash flows from financing activities of discontinued operations

Cash flows from financing activities

Net cash change in cash and cash equivalents

Effects of changes in foreign exchange rates and other changes in value on cash and
cash equivalents

Net change in cash and cash equivalents

Cash and cash equivalents at beginning of the reporting period

of which: reported as ‘Assets held for sale’

Cash and cash equivalents at beginning of the reporting period as per the consolidated
balance sheet

Cash and cash equivalents at the end of the reporting period

of which: reported as ‘Assets held for sale’

Cash and cash equivalents at end of the reporting period as per the consolidated
balance sheet

1 Prior-year figures adjusted.

2017¹

1,723

968

− 6,878

− 90

225

200

− 3,771

2,017

− 1,754

− 685

168

− 217

4,442

3,774

− 24

3,750

− 1,059

2,691

− 5

− 159

130

− 963

− 997

− 539

− 1,536

− 599

− 19

− 618

4,576

3,958

3,933

2018

− 54

958

− 418

− 97

− 6

− 245

4,473

4,611

2,037

6,648

− 1,050

− 196

− 1,704

− 2,876

− 123

− 2,999

− 1,405

− 4,404

721

− 1,025

1,580

− 2,835

− 1,559

569

− 990

1,254

1,267

3,958

3,933

5,225

1,702

3,523

92 RWE Annual Report 2018

3.5 STATEMENT OF CHANGES IN EQUITY

Statement of changes
in equity

€ million

Sub-
scribed
capital
of
RWE AG

Addi-
tional
paid-in
capital of
RWE AG

Retained
earnings
and
distribut-
able profit

Note (20)

RWE AG
share-
holders’
interest

RWE AG
hybrid
capital
investors’
interest

Total

Non-con-
trolling
interests

Accumulated other
Comprehensive Income

Currency
trans-
lation
adjust-
ments

Fair value measure-
ment of financial
instruments

Used for
hedging
purposes

Available for
sale1/debt
instruments
measured at
fair value
through
other com-
prehensive
income

Balance at 1 Jan 2017

1,574

2,385

– 652

165

– 777

2,754

942

4,294

Capital paid out

Dividends paid2

Income

Other comprehensive
income

Total comprehensive
income

Other changes

– 5

1,900

1,110

3,010

139

Balance at 31 Dec 2017

1,574

2,385

2,367

304

Initial adoption of IFRS 9

Initial adoption of IFRS 15

– 21

– 5

1,900

813

2,096

813

3,996

6,759

– 15

– 21

– 62

– 60

940

7,990

– 45

– 545

2,315

– 45

– 480

373

186

2,282

559

– 36

4,597

– 6

4,292

11,991

– 4

– 5

– 19

– 26

Balance at 1 Jan 2018

1,574

2,385

2,393

304

6,723

940

4,283

11,946

Capital paid out

Dividends paid2

Income

Other comprehensive
income

Total comprehensive
income

Other changes

Balance at 31 Dec 2018

1,574

2,385

– 922

335

– 1,126

– 791

459

1,139

– 19

285

– 922

335

– 60

– 29

– 506

679

– 29

– 1,488

1,073

– 14

3,174

2,015

– 147

1,868

– 14

3,174

126

3,336

2,350

585

8,736

940

532

301

2,941

887

4,581

14,257

1 Changes in the ‘Financial assets available for sale’ category stated for the last time in fiscal 2017 in accordance with IAS 39. Starting in fiscal 2018, changes in the

‘Debt instruments measured at fair value through other comprehensive income’ category are stated instead due to the application of IFRS 9.

2 Following reclassification of non-controlling interests to other liabilities as per IAS 32 and to liabilities held for sale.

Consolidated financial statements > Notes

3.6 NOTES

Basis of presentation

RWE AG, headquartered at Altenessener Straße 35 in 45141 Essen,

These consolidated financial statements were prepared for the fiscal

Germany, is the parent company of the RWE Group (‘RWE’ or ‘Group’).

year from 1 January to 31 December 2018.

RWE is a supplier of electricity and natural gas in Europe.

The consolidated financial statements for the period ended

completeness and accuracy of the consolidated financial statements

31 December 2018 were approved for publication on 27 February

and the Group review of operations, which is combined with the

The Executive Board of RWE AG is responsible for the preparation,

2019 by the Executive Board of RWE AG. The statements were

review of operations of RWE AG.

prepared in accordance with the International Financial Reporting

Standards (IFRSs) applicable in the EU, as well as in accordance

We employ internal control systems, uniform groupwide directives,

with the supplementary accounting regulations applicable pursuant

and programmes for basic and advanced staff training to ensure

to Sec. 315e, Para. 1 of the German Commercial Code (HGB). The previ-

that the consolidated financial statements and combined review of

ous year’s figures were calculated according to the same principles.

operations are adequately prepared. Compliance with legal regula-

tions and the internal guidelines as well as the reliability and viability

A statement of changes in equity has been disclosed in addition to

of the control systems are continuously monitored throughout the

the income statement, the statement of comprehensive income, the

Group.

balance sheet and the cash flow statement. The Notes also include
segment reporting.

In line with the requirements of the German Corporate Control and

Transparency Act (KonTraG), the Group’s risk management system

Several balance sheet and income statement items have been

enables the Executive Board to identify risks at an early stage and

combined in the interests of clarity. These items are stated and

take countermeasures, if necessary.

explained separately in the Notes to the financial statements. The

income statement is structured according to the nature of expense

The consolidated financial statements, the combined review of oper-

method.

ations, and the independent auditors’ report are discussed in detail

by the Audit Committee and at the Supervisory Board’s meeting

The consolidated financial statements have been prepared in euros.

on financial statements with the independent auditors present. The

Unless specified otherwise, all amounts are stated in millions of

results of the Supervisory Board’s examination are presented in the

euros (€ million). Due to calculation procedures, rounding differences

report of the Supervisory Board on page 8 et seqq.

may occur.

94 RWE Annual Report 2018

Scope of consolidation

In addition to RWE AG, the consolidated financial statements contain

The number of companies accounted for using the equity method

all material German and foreign companies which RWE AG controls

decreased primarily due to the asset swap agreed upon with E.ON

directly or indirectly. In determining whether there is control, in

and the associated assignment to ‘discontinuing operations’.

addition to voting rights, other rights in the company contracts or

articles of incorporation and potential voting rights are also taken

Furthermore, six companies are presented as joint operations (previous

into consideration.

year: six). Of these, Greater Gabbard Offshore Winds Limited, UK, is

a material joint operation of the RWE Group. Greater Gabbard holds

Material associates are accounted for using the equity method, and

a 500 MW offshore wind farm, which innogy operates together with

principal joint arrangements are accounted for using the equity

Scottish and Southern Energy (SSE) Renewables Holdings. Innogy

method or as joint operations.

Renewables UK owns 50 % of the shares and receives 50 % of the

power generated (including green power certificates). The wind farm

Associates are companies on which RWE AG exercises a significant

is a key element in the offshore portfolio of the segment innogy –

influence on the basis of voting rights between 20 % and 50 % or

continuing operations.

on the basis of contractual agreements. In classifying joint arrange-

ments which are structured as independent vehicles, as joint opera-

First-time consolidation and deconsolidation generally take place

tions, or as joint ventures, other facts and circumstances – in particular
delivery relationships between the joint arrangement and the parties

when control is transferred.

participating in such – are taken into consideration, in addition to

In total, sales of shares which led to a change of control resulted

the legal form and contractual agreements.

in sales proceeds from disposals amounting to –€46 million, which

Investments in subsidiaries, joint ventures, joint operations or asso-

Of this, €14 million pertained to the remeasurement of remaining

were reported in other operating income (previous year: €19 million).

ciates which are of secondary importance from a Group perspective

shares.

are accounted for in accordance with IFRS 9.

The list of Group shareholdings pursuant to Sec. 313, Para. 2 of the

other business units which resulted in a change of control, purchase

German Commercial Code (HGB) is presented on page 160 et seqq.

prices amounted to €27 million (previous year: €159 million) and

sales prices amounted to €13 million (previous year: €5 million).

The following summaries show the changes in the number of fully

As in the previous year, all sales prices were paid in cash. In the year

consolidated companies, investments accounted for using the

under review, all purchase prices were paid in cash. In the previous

Within the framework of purchases and sales of subsidiaries and

equity method, and joint ventures:

Number of fully
consolidated companies

1 Jan 2018

First-time consolidation

Deconsolidation

Mergers

31 Dec 2018

Number of companies accounted for
using the equity method

1 Jan 2018

Acquisitions

Other changes

31 Dec 2018

Germany

Abroad

Total

in the previous year, cash and cash equivalents (excluding ‘Assets

year, purchase prices in the amount of €134 million were paid in

cash and €25 million in liabilities were assumed. In relation to this,

142

– 3

– 4

141

199

– 10

– 37

215

341

– 13

– 41

356

held for sale’) were acquired in the amount of €25 million and were

disposed of in the amount of €5 million.

Disposals

Mátra
RWE Power sold Hungary-based Mátrai Erőmű ZRt. (Mátra) to a

consortium in the middle of December 2017. The transaction was

Germany

Abroad

Total

completed in March 2018. Mátra had been assigned to the

– 63

– 8

– 71

‘Lignite & Nuclear’ segment. As of 31 December 2017, the assets

and liabilities of this company were stated as ‘held for sale’ on the

balance sheet. The deconsolidation loss amounts to €46 million

and was recognised in other operating expenses.

Consolidated financial statements > Notes

Triton Knoll
On 13 September 2018, innogy sold a 41 % stake in the UK offshore

Key figures of discontinued operations
€ million

31 Dec 2018

wind project Triton Knoll, in which innogy was the sole shareholder

until that date. The sale increased RWE AG shareholders’ equity by

€472 million. Since the sale of the stake, innogy has held a 59 %

interest and thus retained control of the project. Triton Knoll is

assigned to the innogy – continuing operations segment.

Non-current assets

Intangible assets

Property, plant and equipment

Other non-current assets

Discontinued operations

Current assets

Asset swap with E.ON

On 12 March 2018, RWE AG and E.ON SE reached a contractual

agreement to transfer the 76.8 % majority stake in innogy held by

RWE to E.ON as part of an extensive exchange of operations and

shareholdings. The innogy assets that are to be transferred to E.ON

over the long term have been stated as ‘discontinued operations’
since 30 June 2018. This mainly relates to the grid and retail busi-

ness, which has been assigned to the ‘innogy’ segment thus far.

By contrast, due to contractual arrangements RWE will retain control

over the main activities of the innogy operations remaining with

Non-current liabilities

Provisions

Financial liabilities

Other non-current liabilities

Current liabilities

RWE over the long term (the renewables business, the gas storage

business and the interest in Austria-based power utility Kelag).

Key figures of discontinued operations
€ million

Furthermore, as RWE is entitled to the results of the development

Revenue1

of the value of these operations, they will remain fully consolidated

at RWE and stated as continuing innogy operations in segment

reporting. The transaction values the 76.8 % stake in innogy held by

RWE including the dividends of innogy SE for fiscal 2017 and 2018

totalling €3.24 per share, to which RWE remains entitled, at €40.00

per share. The transaction volume thus amounts to about €17.1 billion.

The Supervisory Board of RWE AG has approved the sale. The trans-

Other income2

Expenses3

Income of discontinued operations before tax

Taxes on income

Income of discontinued operations

1 Including income with continuing operations in the amount of €2,570 million

action is subject to authority approvals and is envisaged to close by

(previous year: €2,283 million).

the end of 2019.

2 Including income with continuing operations in the amount of €266 million

(previous year: €409 million).

3 Including expenses with continuing operations in the amount of €13,835 million

The elimination bookings within the scope of the consolidation

(previous year: €11,282 million).

of expenses and income for the intragroup deliveries and services

existing so far, which will be continuing either with innogy or with

third parties after the deconsolidation of the innogy assets that are

The first-time application of IFRS 15 involved identifying issues, in

to be transferred, were fully assigned to the discontinued operations.

which companies belonging to the innogy – discontinued operations

segment qualify as agents pursuant to IFRS 15 instead of as principals

Major key figures of the activities of the discontinued innogy opera-

pursuant to IAS 18. This is primarily because under IFRS 15, the

tions are presented in the following tables:

credit risk no longer constitutes an indicator for principal presentation.

Pursuant to IFRS 15, payments received from the transmission

system operator under the direct marketing and feed-in model of

the German Renewable Energy Act are thus no longer recognised

as revenue. In fiscal 2018, this caused revenue and the cost of ma-

terials within income from discontinued operations to decline by

€5.1 billion. This did not have an impact on earnings.

10,716

14,000

5,363

30,079

10,417

4,557

14,147

3,065

21,769

11,027

2018

2017

34,077

1,503

33,877

1,703

576

1,127

39,060

1,088

39,148

1,000

409

591

96 RWE Annual Report 2018

Accumulated other comprehensive income from discontinued opera-

Expenses and income as well as receivables and payables between

tions amounted to – €773 million (previous year: – €730 million).

consolidated companies are eliminated; intra-group profits and

losses are eliminated.

Of the share of total comprehensive income attributable to RWE AG

shareholders, €2,267 million (previous year: €4,159 million) were

For investments accounted for using the equity method, goodwill is

allocable to continuing operations and €83 million (previous year:

not reported separately, but rather included in the value recognised

– €163 million) were allocable to discontinued operations.

for the investment. In other respects, the consolidation principles

The impairment test performed for the discontinued operations as

equity value become necessary, we report such under income from

a whole in accordance with IFRS 5 as of 31 December 2018 did not

investments accounted for using the equity method. The financial

reveal a need for impairment.

statements of investments accounted for using the equity method

described above apply analogously. If impairment losses on the

Consolidation principles

are prepared using uniform accounting policies.

For joint operations, the assets and liabilities and the expenses

and income of the companies which are attributable to RWE are

The financial statements of German and foreign companies included

reported. In the event that RWE’s shareholding differs from the

in the scope of the Group’s financial statements are prepared using

share of the output from the activity to which RWE is entitled (share

uniform accounting policies. On principle, subsidiaries whose fiscal
years do not end on the Group’s balance-sheet date (31 December)

of output), the assets, liabilities, expenses and revenue are recognised
in accordance with the share of output.

prepare interim financial statements as of this date. Three subsidiaries

have a different balance-sheet date of 31 March (previous year:

three). Different fiscal years compared to the calendar year stem

from tax-related reasons or country-specific regulations.

Foreign currency translation

In their individual financial statements, the companies measure

Business combinations are reported according to the acquisition

non-monetary foreign currency items at the balance-sheet date

method. This means that capital consolidation takes place by offset-

using the exchange rate in effect on the date they were initially

ting the purchase price, including the amount of the non-controlling

recognised. Monetary items are converted using the exchange rate

interests, against the acquired subsidiary’s revalued net assets at

valid on the balance-sheet date. Exchange rate gains and losses

the time of acquisition. In doing so, the non-controlling interests

from the measurement of monetary balance-sheet items in foreign

can either be measured at the prorated value of the subsidiary’s

currency occurring up to the balance-sheet date are recognised on

identifiable net assets or at fair value. The subsidiary’s identifiable

the income statement.

assets, liabilities and contingent liabilities are measured at full fair

value, regardless of the amount of the non-controlling interests.

Functional foreign currency translation is applied when converting

Intangible assets are reported separately from goodwill if they are

the financial statements of companies outside of the Eurozone. As

separable from the company or if they stem from a contractual or

the principal foreign enterprises included in the consolidated financial

other right. In accordance with IFRS 3, no new restructuring provi-

statements conduct their business activities independently in their

sions are recognised within the scope of the purchase price alloca-

national currencies, their balance-sheet items are translated into euros

tion. If the pur-chase price exceeds the revalued prorated net assets

in the consolidated financial statements using the average exchange

of the acquired subsidiary, the difference is capitalised as goodwill.

rate prevailing on the balance-sheet date. This also applies for good-

If the purchase price is lower, the difference is included in income.

will, which is viewed as an asset of the economically autonomous

In the event of deconsolidation, the related goodwill is derecog-

other comprehensive income without an effect on income. Expense

nised with an effect on income. Changes in the ownership share

and income items are translated using annual aver- age exchange

which do not alter the ability to control the subsidiary are recognised

rates. When translating the adjusted equity of foreign companies

without an effect on income. By contrast, if there is a change in

accounted for using the equity method, we follow the same procedure.

foreign entity. We report differences to previous-year translations in

control, the remaining shares are revalued with an effect on income.

Consolidated financial statements > Notes

The following exchange rates (among others) were used as a basis

for foreign currency translations:

Exchange rates

in €

1 US dollar

1 pound sterling

100 Czech korunas

1 Polish zloty

Accounting policies

Average

Year-end

2018

0.85

1.13

3.89

0.23

2017

0.88

1.14

3.80

0.24

31 Dec 2018

31 Dec 2017

0.87

1.12

3.89

0.23

0.83

1.13

3.92

0.24

Intangible assets are accounted for at amortised cost. With the
exception of goodwill, all intangible assets have finite useful lives

An impairment loss is recognised for an intangible asset if the recov-

erable amount of the asset is less than its carrying amount. A special

and are amortised using the straight-line method. Useful lives and
meth-ods of amortisation are reviewed on an annual basis.

regulation applies for cases when the asset is part of a cash-generating
unit. Such units are defined as the smallest identifiable group of

assets which generates cash inflows; these inflows must be largely

Software for commercial and technical applications is amortised

independent of cash inflows from other assets or groups of assets.

over three to five years. ‘Operating rights’ refer to the entirety of

If the intangible asset is a part of a cash-generating unit, the impair-

the permits and approvals required for the operation of a power

ment loss is calculated based on the recoverable amount of this

plant. Such rights are generally amortised over the economic life of

unit. If goodwill was allocated to a cash-generating unit and the

the power plant, using the straight-line method. Easement agree-

carrying amount of the unit exceeds the recoverable amount, the

ments in the electricity and gas business, and other easement rights,

allocated goodwill is initially written down by the difference. Impair-

usually have useful lives of 20 years. Concessions in the water busi-

ment losses which must be recognised in addition to this are taken

ness generally have terms of up to 25 years. Capitalised customer

into account by reducing the carrying amount of the other assets

relations are amortised over a maximum period of up to ten years.

of the cash-generating unit on a prorated basis. If the reason for an

Goodwill is not amortised; instead it is subjected to an impairment

write-back to intangible assets is performed. The increased carrying

test once every year, or more frequently if there are indications of

impairment.

amount resulting from the write-back may not, however, exceed the
amortised cost. Impairment losses on goodwill are not reversed.

impairment loss recognised in prior periods has ceased to exist, a

Development costs are capitalised if a newly developed product

or process can be clearly defined, is technically feasible and it is the

Property, plant and equipment is stated at depreciated cost.
Borrowing costs are capitalised as part of the asset’s cost, if they

company’s intention to either use the product or process itself or

are incurred directly in connection with the acquisition or production

market it. Furthermore, asset recognition requires that there be a

of a ‘qualified asset’. What characterises a qualified asset is that a

sufficient level of certainty that the development costs lead to future

considerable period of time is required to prepare it for use or sale.

cash inflows. Capitalised development costs are amortised over the

If necessary, the cost of property, plant and equipment may contain

period during which the products are expected to be sold. Research

the estimated expenses for the decommissioning of plants or site

expenditures are recognised as expenses in the period in which they

restoration. Maintenance and repair costs are recognised as expenses.

are incurred.

98 RWE Annual Report 2018

With the exception of land and leasehold rights, as a rule, property,

plant and equipment is depreciated using the straight-line method,

The initial measurement of other financial assets occurs at the
settlement date. Shares in non-consolidated subsidiaries and in

unless in exceptional cases another depreciation method is better

associates or joint ventures are recognised at fair value through profit

suited to the usage pattern. The depreciation methods are reviewed

or loss as long as such can be determined reliably. Other invest-

annually. We calculate the depreciation of RWE’s typical property,

ments are also recognised at fair value. The option to state changes

plant and equipment according to the following useful lives, which

in fair value in other comprehensive income is exercised for some of

apply throughout the Group and are also reviewed annually:

these equity instruments. Non-current securities are accounted for

Useful life in years

Buildings

Technical plants

Thermal power plants

Wind turbines

Power grids

Water mains

Gas and water storage facilities

Gas distribution facilities

Mining facilities

Mining developments

Other renewable generation
facilities

at fair value and changes in value are recognised through profit or

loss or other comprehensive income depending on their classifica-

9 – 54

tion. Gains and losses on sales of equity instruments, for which the

10 – 40

Up to 23

20 – 45

20 – 80

10 – 60

10 – 40

3 – 25

44 – 52

4 – 50

option to state changes in fair value in other comprehensive income

is exercised, remain in equity and are not reclassified to the income

statement. An impairment in the amount of the expected credit

losses is recognised through profit or loss for debt instruments that

are recognised at fair value through other comprehensive income.

Receivables are comprised of financial receivables, trade accounts
receivable and other receivables. Aside from financial derivatives,
receivables and other assets are stated at amortised cost minus
a risk provision in the amount of the expected losses. Prepayments

received from customers for consumption which is yet to be metered

and billed are netted out against trade accounts receivable of the

utilities.

Property, plant and equipment held under a finance lease is capital-

Loans reported under financial receivables are stated at amortised

ised at the fair value of the leased asset or the present value of the

cost minus a risk provision in the amount of the expected losses.

minimum lease payments, depending on which is lower. They are

Loans with interest rates common in the market are shown on the

depreciated using the straight-line method over the expected useful

balance sheet at nominal value; as a rule, however, non-interest or

life or the lease term, whichever is shorter.

low-interest loans are disclosed at their present value discounted

For operating leasing transactions, in which RWE is the lessee, the

leasing payments are recognised as an expense over the term of the

lease. If RWE is the lessor, the leasing payments are recognised as

income over the term of the lease.

Impairment losses and write-backs on property, plant and equipment

are recognised according to the principles described for intangible

assets.

using an interest rate commensurate with the risks involved.

CO2 emission allowances and certificates for renewable energies are
accounted for as intangible assets and reported under other assets.

Allowances which are purchased and allowances allocated free of

charge are both stated at cost and are not amortised.

Deferred taxes result from temporary differences in the carrying
amount in the separate IFRS financial statements and tax bases, and

from consolidation procedures. Deferred tax assets also include tax

Investments accounted for using the equity method are initially
accounted for at cost and thereafter based on the carrying amount

reduction claims resulting from the expected utilisation of existing

loss carryforwards in subsequent years. Deferred taxes are capital-

of their prorated net assets. The carrying amounts are increased or

ised if it is sufficiently certain that the related economic advantages

reduced annually by prorated profits or losses, dividends and all

can be used. Their amount is assessed with regard to the tax rates

other changes in equity. Goodwill is not reported separately, but

applicable or expected to be applicable in the specific country at

rather included in the recognised value of the investment. Goodwill

the time of realisation. The tax regulations valid or adopted as of

is not amortised. An impairment loss is recognised for investments

the balance-sheet date are key considerations in this regard. Deferred

accounted for using the equity method, if the recoverable amount is

tax assets and deferred tax liabilities are netted out for each company

less than the carrying amount.

and/or tax group.

Consolidated financial statements > Notes

Inventories are assets which are held for sale in the ordinary course
of business (finished goods and goods for resale), which are in the

Cash and cash equivalents consist of cash on hand, demand
deposits and current fixed-interest securities with a maturity of

process of production (work in progress – goods and services) or

three months or less from the date of acquisition.

which are consumed in the production process or in the rendering

of services (raw materials including nuclear fuel assemblies and

excavated earth for lignite mining).

Assets are stated under Assets held for sale if they can be sold in
their present condition and their sale is highly probable within the

next twelve months. Such assets may be certain non-current assets,

Insofar as inventories are not acquired primarily for the purpose of

asset groups (‘disposal groups’) or operations (‘discontinued opera-

realising a profit on a short-term resale transaction, they are carried

tions’). Liabilities intended to be sold in a transaction together with

at the lower of cost or net realisable value. Production costs reflect

the full costs directly related to production; they are determined

based on normal capacity utilisation and, in addition to directly

assets are a part of a disposal group or discontinued operations, and
are reported separately under Liabilities held for sale.

allocable costs, they also include adequate portions of required

Non-current assets held for sale are no longer depreciated or amor-

materials and production overheads. They also include production-

tised. They are recognised at fair value less costs to sell, as long as

related depreciation. Borrowing costs, however, are not capitalised

this amount is lower than the carrying amount.

as part of the cost. The determination of cost is generally based on

average values. The usage of excavated earth for lignite mining is

Gains or losses on the valuation of specific assets held for sale and of

calculated using the ‘first in – first out’ method (FIFO).

disposal groups are stated under income from continuing operations
until final completion of the sale. Gains or losses on the valuation of

If the net realisable value of inventories written down in earlier

discontinued operations and on certain assets of a discontinued

periods has increased, the reversal of the write-down is recognised

operation, which are not subject to the valuation rules pursuant to

as a reduction of the cost of materials.

IFRS 5, are stated under income from discontinued operations.

Nuclear fuel assemblies are stated at depreciated cost. Depreciation

is determined by operation and capacity, based on consumption

and the reactor’s useful life.

The stock option plans are accounted for as cash-settled share-
based payment. At the balance-sheet date, a provision is recog-
nised in the amount of the prorated fair value of the payment

obligation. Changes in the fair value are recognised with an effect

Inventories which are acquired primarily for the purpose of realising

on income. The fair value of options is determined using generally

a profit on a short-term resale transaction are recognised at fair

accepted valuation methodologies.

value less costs to sell. Changes in value are recognised with an

effect on income.

Provisions are recognised for all legal or constructive obligations
to third parties which exist on the balance-sheet date and stem from

Securities classified as current marketable securities essentially
consist of marketable securities held in special funds as well as

past events which will probably lead to an outflow of resources, and

the amount of which can be reliably estimated. Provisions are carried

fixed-interest securities which have a maturity of more than three

at their prospective settlement amount and are not offset against

months and less than one year from the date of acquisition. Securities

reimbursement claims. If a provision involves a large number of

held in special funds are measured at fair value through profit or

items, the obligation is estimated by weighting all possible outcomes

loss or at fair value through other comprehensive income. The trans-

by their probability of occurrence (expected value method).

action costs directly associated with the acquisition of these securi-

ties are included in the initial measurement, which occurs on their

All non-current provisions are recognised at their prospective settle-

settlement date. Unrealised gains and losses are recognised

ment amount, which is discounted as of the balance-sheet date. In

through profit or loss or other comprehensive income, with due

the determination of the settlement amount, any cost increases likely

consideration of any deferred taxes depending on the underlying

to occur up until the time of settlement are taken into account.

valuation category. An impairment in the amount of the expected

credit losses is recognised through profit or loss for debt instru-

If necessary, the cost of property, plant and equipment may contain

ments that are stated at fair value through other comprehensive in-

the estimated expenses for the decommissioning of plants or site

come. Changes included in other comprehensive income are recog-

restoration. Decommissioning, restoration and similar provisions are

nised through profit or loss on disposal of such instruments.

recognised for these expenses. If changes in the discount rate or

100 RWE Annual Report 2018

changes in the estimated timing or amount of the payments result

Obligations existing as of the balance-sheet date and identifiable

in changes in the provisions, the carrying amount of the respective

when the balance sheet is being prepared are recognised as provi-

asset is increased or decreased by the corresponding amount. If the

sions for mining damage to cover land recultivation and remediation

decrease in the provision exceeds the carrying amount, the excess is

of mining damage that has already occurred or been caused. The

recognised immediately through profit or loss.

provisions must be recognised due to obligations under public law,

As a rule, releases of provisions are credited to the expense account

in operating schedules and water law permits. Provisions are gener-

on which the provision was originally recognised.

ally fully related to the degree of mining in question. Such provisions

Provisions for pensions and similar obligations are recognised for

pensation payments. Cost estimates are based on external expert

defined benefit plans. These are obligations of the company to pay

opinions to a significant extent.

are measured at full expected cost or according to estimated com-

such as the German Federal Mining Act, and formulated, above all,

future and ongoing post-employment benefits to entitled current

and former employees and their surviving dependents. In particular,

the obligations refer to retirement pensions. Individual commit-

ments are generally oriented to the employees’ length of service

and compensation.

A provision is recognised to cover the obligation to submit CO2
emission allowances and certificates for renewable energies to the

respective authorities; this provision is measured at the carrying
amount of the CO2 allowances or certificates for renewable energies
capitalised for this purpose. If a portion of the obligation is not

Provisions for defined benefit plans are based on the actuarial
present value of the respective obligation. This is measured using

covered with the available allowances, the provision for this portion
is measured using the market price of the emission allowances or

the projected unit credit method. This method not only takes into

certificates for renewable energies on the reporting date.

account the pension benefits and benefit entitlements known as of

the balance-sheet date, but also anticipated future increases in

salaries and pension benefits. The calculation is based on actuarial

reports, taking into account appropriate biometric parameters (for

Liabilities consist of financial liabilities, trade accounts payable,
income tax liabilities and other liabilities. Upon initial recognition,
these are stated at fair value including transaction costs and are

Germany, in particular the ‘Richttafeln 2018 G’ by Klaus Heubeck,

carried at amortised cost in the periods thereafter (except for deriv-

in the previous year the ‘Richttafeln 2005 G’ by Klaus Heubeck,

ative financial instruments). Liabilities from finance lease agree-

and the Standard SAPS Table S2PA of the current year for the United

ments are either measured at the fair value of the leased asset or

Kingdom, taking into consideration future changes in mortality rates).

the present value of minimum lease payments, depending on which

The provision derives from the balance of the actuarial present value

amount is lower. For subsequent measurements, the minimum lease

of the obligations and the fair value of the plan assets. The service

payments are divided into the financing costs and repayment portion

cost is disclosed in staff costs. Net interest is included in the financial

of the outstanding debt. Financing costs are distributed over the

result.

term of lease in such a manner that a steady interest rate is created

for the outstanding debt.

Gains and losses on the revaluation of net debt or net assets are fully

recognised in the fiscal year in which they occur. They are reported

In the previous year, other liabilities included advances and contri-

outside of profit or loss, as a component of other comprehensive

butions in aid of construction and building connection that are

income in the statement of comprehensive income, and are immedi-

carried as liabilities by the utilities and are generally amortised and

ately assigned to retained earnings. They remain outside profit or

included in income over the useful life of the corresponding asset.

loss in subsequent periods as well.

In the case of defined contribution plans, the enterprise’s obligation

were also included in other liabilities. Specifically, this pertained to

is limited to the amount it contributes to the plan. Contributions to

purchase price obligations from rights to tender non-controlling

the plan are reported under staff costs.

interests (put options).

Furthermore, in the previous year, certain non-controlling interests

Waste management provisions in the nuclear energy sector are

Moreover, other liabilities also include contract liabilities. A con-

based on obligations under public law, in particular the German

tract liability is the obligation of the Group to transfer goods or ser-

Atomic Energy Act, and on restrictions from operating licenses.

vices to a customer, for which we have already received considera-

These provisions are measured using estimates, which are based

tion or for which the consideration is already due.

on and defined in contracts as well as on information from internal

and external specialists (e.g. experts).

Consolidated financial statements > Notes

101

Derivative financial instruments are recognised as assets or liabili-
ties and measured at fair value, regardless of their purpose. Changes

Only the effective portion of a hedge is recognised in accordance

with the preceding rules. The ineffective portion is recognised

in this value are recognised with an effect on income, unless the

immediately on the income statement with an effect on income.

instruments are used for hedge accounting purposes. In such cases,

recognition of changes in the fair value depends on the type of

Contracts on the receipt or delivery of non-financial items in accord-

hedging transaction.

ance with the company’s expected purchase, sale or usage require-

ments (own-use contracts) are not accounted for as derivative financial

Fair value hedges are used to hedge assets or liabilities carried on

instruments, but rather as executory contracts. If the contracts contain

the balance sheet against the risk of a change in their fair value.

embedded derivatives, the derivatives are accounted separately

The following applies: changes in the fair value of the hedging

from the host contract, insofar as the economic characteristics and

instrument and the fair value of the respective underlying transactions

risks of the embedded derivatives are not closely related to the

are recognised in the same line item on the income statement.

economic characteristics and risks of the host contract. Written

Hedges of unrecognised firm commitments are also recognised as

options to buy or sell a non-financial item which can be settled in

fair value hedges. Changes in the fair value of the firm commitments

cash are not own-use contracts.

with regard to the hedged risk result in the recognition of an asset

or liability with an effect on income.

Contingent liabilities are possible obligations to third parties or
existing obligations which will probably not lead to an outflow of

Cash flow hedges are used to hedge the risk of variability in future
cash flows related to an asset or liability carried on the balance

economic benefits or the amount of which cannot be measured reli-
ably. Contingent liabilities are only recognised on the balance sheet

sheet or related to a highly probable forecast transaction. If a cash

if they were assumed within the framework of a business combination.

flow hedge exists, unrealised gains and losses from the hedging

The amounts disclosed in the Notes correspond to the exposure at

instrument are initially stated as other comprehensive income. Such

the balance-sheet date.

gains or losses are only included on the income statement when the

hedged underlying transaction has an effect on income. If forecast

transactions are hedged and such transactions lead to the recognition

Management judgements in the application of accounting policies.
Management judgements are required in the application of account-

of a financial asset or financial liability in subsequent periods, the

ing policies. In particular, this pertains to the following aspects:

amounts that were recognised in equity until this point in time are

recognised on the income statement in the period during which the

• With regard to certain contracts, a decision must be made as to

asset or liability affects the income statement. If the transactions

whether they are to be treated as derivatives or as so-called

result in the recognition of non-financial assets or liabilities, for

own-use contracts, and be accounted for as executory contracts.

example the acquisition of property, plant and equipment, the amounts

• Financial assets are classified by contractual cash flows and applied

recognised in equity without an effect on income are included in

business model. Whereas the contractual cash flows are deter-

the initial cost of the asset or liability.

mined by the characteristics of the financial instruments, the

business model is based on the Group’s internal requirements

The purpose of hedges of a net investment in foreign operations

relating to the portfolios of financial instruments.

(net investment hedges) is to hedge the currency risk from invest-

• With regard to assets held for sale, it must be determined if they

ments with foreign functional currencies. Unrealised gains and

can be sold in their current condition and if the sale of such is

losses from such hedges are recognised in other comprehensive

highly probable in the next twelve months. If both conditions apply,

income until disposal of the foreign operation.

the assets and any related liabilities must be reported and measured

Hedging relationships must be documented in detail and meet the

following effectiveness requirements:

as ‘Assets held for sale’ or ‘Liabilities held for sale’, respectively.

Management estimates and judgements. Preparation of consoli-
dated financial statements pursuant to IFRS requires assumptions

• there is an economic relationship between the hedged item and

and estimates to be made, which have an impact on the recognised

the hedging instrument,

value of the assets and liabilities carried on the balance sheet, on

• the value change of hedging relationship is not dominated by

income and expenses and on the disclosure of contingent liabilities.

the credit risk, and

• the hedge ratio is the same as that resulting from the quantities

used within the scope of risk management.

102 RWE Annual Report 2018

Amongst other things, these assumptions and estimates relate to

of the Growth, Structural Change and Employment Commission may

the accounting and measurement of provisions. With regard to

have an impact. If opencast mines are closed prematurely, new

non-current provisions, the discount factor to be applied is an

recultivation concepts will have to be developed and the mining

important estimate, in addition to the amount and timing of future

provisions will have to be increased due to their earlier usage.

cash flows. The discount factor for pension obligations is deter-

mined on the basis of yields on high-quality, fixed-rate corporate

bonds on the financial markets as of the balance-sheet date.

Capital management. The focus of RWE’s financing policy is on
ensuring uninterrupted access to the capital market. The goal is to

be in a position to refinance maturing debts and finance the operat-

The rules governing valuation allowances for financial assets under

ing activities at all times. Maintaining a solid rating and a positive

IFRS 9 stipulate that the expected credit losses must be determined.

operating cash flow serve this purpose.

The valuation allowance is based on information from within and

outside the Group.

The management of RWE’s capital structure is oriented towards net

debt. It is calculated by adding material non-current provisions to

The impairment test for goodwill and non-current assets is based

and deducting the net assets of funded pension obligations from

on certain assumptions pertaining to the future, which are regularly

net financial debt. RWE’s liabilities of relevance to net debt primarily

adjusted. Property, plant and equipment is tested for indications of

consist of hybrid bonds and provisions for pensions, nuclear waste

impairment on each cut-off date.

management and mining.

Power plants are grouped together as a cash-generating unit if their

During the reporting period, RWE’s capital structure changed sig-

production capacity and fuel needs are centrally managed as part of

nificantly. This was in part due to the separate statement of the net

a portfolio, and it is not possible to ascribe individual contracts and

debt of the discontinued innogy operations. In addition, the net

cash flows to the specific power plants.

debt of the continuing operations was very positively affected by

Upon first-time consolidation of an acquired company, the identifiable

assets, liabilities and contingent liabilities are recognised at fair

variation margins obtained from forward transactions with electricity,
commodities and CO2 certificates. Variation margins are payments
with which transaction partners mutually offset profit and loss posi-

value. Determination of the fair value is based on valuation methods

tions resulting from the daily revaluation of active contracts. However,

which require a projection of anticipated future cash flows.

their influence on cash flows is temporary and ends once the trans-

Deferred tax assets are recognised if realisation of future tax benefits

increase in financial assets and contributed to the statement of net

is probable. Actual future development of income for tax purposes

financial assets of continuing operations in the amount of €7.4 billion

and hence the realisability of deferred tax assets, however, may

as of 31 December 2018. The previous year’s figures contained the

deviate from the estimation made when the deferred taxes are

net financial debt of the discontinued innogy operations; the associ-

actions are realised. Both of these effects resulted in a significant

capitalised.

ated net financial debt amounted to €6.3 billion. Furthermore, net

debt provisions declined by €2.1 billion to €11.9 billion (previous

Further information on the assumptions and estimates upon which

year: €14.0 billion). On average, provisions have a very long duration;

these consolidated financial statements are based can be found in

their level is primarily determined by external factors such as the

the explanations of the individual items.

general level of interest rates. A precise calculation of net debt and

net financial debt is presented on page 54 of the review of operations.

All assumptions and estimates are based on the circumstances and

forecasts prevailing on the balance-sheet date. Furthermore, as of

RWE’s credit rating is influenced by a number of qualitative and

the balance-sheet date, realistic assessments of overall economic

quantitative factors. These include aspects such as the amount of

conditions in the sectors and regions in which RWE conducts opera-

cash flows and debt as well as market conditions, competition,

tions are taken into consideration with regard to the prospective

and the political framework. Our hybrid bonds also have a positive

development of business. Actual amounts may deviate from the

effect on our rating. The leading rating agencies, Moody’s and Fitch,

estimated amounts if the overall conditions develop differently than

classify part of hybrid capital as equity.

expected. In such cases, the assumptions, and, if necessary, the

carrying amounts of the affected assets and liabilities are adjusted.

RWE’s creditworthiness is currently rated ‘Baa3’ by Moody’s and

As of the date of preparation of the consolidated financial state-

range. The short-term credit ratings for RWE are ‘P-3’ and ‘F2’,

‘BBB’ by Fitch. Our rating thus remains in the investment-grade

ments, it is not presumed that there will be any material changes

respectively.

compared to the assumptions and estimates. However, the govern-

ment’s potential implementation of major aspects of the concept

Consolidated financial statements > Notes

103

Changes in accounting regulations

regulations and the recognition of the associated effects of the

changeover occur through the adjustment of the carrying amounts

of the financial assets and liabilities as well as retained earnings as

The International Accounting Standards Board (IASB) and the IFRS

of 1 January 2018.

Interpretations Committee (IFRS IC) have implemented new IFRSs

and approved amendments of existing IFRSs and a new interpreta-

IFRS 9 includes new rules for classifying financial instruments. They

tion, which became effective for the RWE Group as of fiscal 2018:

envisage four measurement categories:

IFRS 9 Financial Instruments (2014) replaces the previous regula-
tions of IAS 39 on financial instruments. The standard contains

• Debt instruments measured at amortised cost,

• Debt instruments measured at fair value through other compre-

amended regulations on measurement categories for financial assets

hensive income, the changes in value of which are to be reclassi-

and includes some smaller changes in relation to the measurement

fied through profit or loss in the future,

of financial liabilities. It also contains regulations on impairments,

• Financial instruments measured at fair value through profit or

which are based on expected losses for the first time. The new

loss,

hedge accounting regulations are to improve the presentation of

• Equity instruments measured at fair value through other compre-

risk management activities in consolidated financial statements.

hensive income, the changes in value of which are not to be reclas-

In line with the transitional rules of IFRS 9, prior-year figures are not

sified through profit or loss in the future.

adjusted. The application of the new classification and valuation

104 RWE Annual Report 2018

The following tables summarise the effects of the new classification

and impairment regulations for financial assets on the individual

balance-sheet line items and the respective measurement categories

at the changeover date:

Reclassification by balance
sheet item in accordance
with IFRS 9
€ million

Other non-current financial
assets

Measurement category in
accordance with IAS 39

Measurement category in accordance with
IFRS 9

Financial assets
available for sale

Debt instruments measured at fair value
through other comprehensive income

Financial receivables

Trade accounts receivable

Other receivables and other
assets

Marketable securities

Loans and
receivables

Financial assets recog-
nised at fair value
through profit or loss

Financial assets
available for sale

Equity instruments measured at fair value
through other comprehensive income

Financial instruments measured at fair value
through profit or loss

Debt instruments measured
at amortised cost

Financial instruments measured at fair value
through profit or loss

Debt instruments measured
at amortised cost

Financial instruments measured at fair value
through profit or loss

Debt instruments measured
at amortised cost

Debt instruments measured at fair value
through other comprehensive income

Equity instruments measured at fair value
through other comprehensive income

Financial instruments measured at fair value
through profit or loss

Carrying
amount in
accordance
with IAS 39

Additional
impairment in
accordance
with IFRS 9

Carrying
amount in
accordance
with IFRS 9

959

2,069

2,051

5,405

244

2,807

1,306

796

2,780

5,397

243

2,807

1,3061

796

2,780

3,933

20,4681

Cash and cash equivalents

Loans and
receivables

Debt instruments measured
at amortised cost

3,933

20,495

1 Additional impairments pursuant to IFRS 9 of debt instruments measured at fair value through other comprehensive income do not lead to a reduction in the carrying

amounts as the impairments have already been considered in equity through the previous fair value measurement.

Some of the securities that were assigned to the category ‘Financial

Some of the other financial assets and securities have been reclassified

assets available for sale’ under IAS 39 are now assigned to the cate-

from the ‘financial assets available for sale’ to the ‘debt instruments

gory ‘Financial instruments measured at fair value through profit or

recognised at fair value through other comprehensive income’ category

loss’ due to the adoption of IFRS 9 because the cash flows from

because the cash flows from these financial instruments solely

these financial instruments do not solely consist of interest and prin-

represent the interest and principal on the outstanding capital and

cipal on the outstanding capital.

the corresponding business model envisages the appropriation of

cash flows as well as the sale of financial instruments. Furthermore,

these positions include equity instruments which are not intended to

be traded anywhere within the Group. The discretion to recognise

changes in fair value through other comprehensive income is exercised

Consolidated financial statements > Notes

105

depending on the equity instrument in question. On this basis, they

Certain securities were reclassified from the mesurement category

are assigned to the ‘equity instruments recognised at fair value

‘Financial assets available for sale’ to the category ‘Debt instru-

through other comprehensive income’ or the ‘financial instruments

ments measured at amortised cost’ due to the adoption of IFRS 9.

recognised at fair value through profit or loss’ category.

Had these financial instruments not been reclassified, there

In certain cases, financial receivables assigned to the ‘loans and

these financial instruments in 2018. The carrying amount as of

receivables’ category under IAS 39 are assigned to the ‘financial

31 December 2018 corresponds to the fair value of the financial

would not have been any gains or losses from the fair valuation of

instruments recognised at fair value through profit or loss’ category

instruments of €3 million.

due to the first-time application of IFRS 9, because the cash flows

from these financial instruments do not solely represent interest and

In addition to the aforementioned effects, deferred tax assets in the

principal on the outstanding capital.

amount of €7 million were recognised.

Reclassification in accordance with IFRS 9 – sum by measurement category

Measurement category in accordance
with IAS 39

€ million

Loans and receivables

Measurement category in accordance with IFRS 9

Carrying
amount in
accordance
with IAS 39

Additional
impairment in
accordance
with IFRS 9

Carrying
amount in
accordance
with IFRS 9

Debt instruments measured at amortised cost

11,651

11,624

Financial assets available for sale

Debt instruments measured at amortised cost

Financial instruments measured at fair value
through profit or loss

Debt instruments measured at fair value
through other comprehensive income

Equity instruments measured at fair value
through other comprehensive income

Financial instruments measured at fair value
through profit or loss

Financial assets recognised at
fair value through profit or loss

The reconciliation from the closing balance of the impairments

according to IAS 39 to the opening balance of the impairments

according to IFRS 9 is presented in the following table:

Reconciliation of the risk provision in accordance with IFRS 9

€ million

Other financial assets

Financial receivables

Trade accounts receivable

Other receivables and other assets

Marketable securities

1,379

873

3,739

2,807

20,495

1,379

873

3,739

2,807

20,468

Risk provi-
sion in
accordance
with IAS 39

Additional
risk provi-
sion in
accordance
with IFRS 9

Risk provision
in accordance
with IFRS 9

179

241

397

819

179

259

405

864

106 RWE Annual Report 2018

In addition to the new regulations regarding the statement of financial

revenue is realised for a performance obligation at a point in time or

assets, IFRS 9 encompasses minor amendments to the statement of

over time. Revenue is recognised when the customer obtains control

financial liabilities. These amendments do not have an impact on

of the agreed goods and services and can benefit from such.

the RWE Group.

Furthermore, IFRS 9 introduces new regulations for hedge account-

method for the first-time application as of 1 January 2018. Prior-year

ing, which aim to improve the presentation of risk management

figures were not restated. The effects of the first-time application of

activities in consolidated financial statements. For this purpose,

IFRS 15 are recognised in equity, causing retained earnings to drop

IFRS 9 extends the scope of underlying transactions qualifying for

by €21 million.

RWE applied the modified retrospective method as the transition

hedge accounting and introduces a new approach for assessing

effectiveness, among other things.

The first-time application of IFRS 15 has the following effects on

equity at the beginning of fiscal 2018 and on the income statement

RWE is continuing its existing hedge accounting relationships in

for fiscal 2018:

accordance with IFRS 9. Hedge accounting for foreign-currency risks

will lead to changes in the treatment of foreign-currency basis

• As of 1 January 2018, RWE recognised contractual liabilities for

spreads. If this component is designated as a part of the hedging

basic fees received from customers in advance in the amount of

relationship, this will tend to lead to a higher ineffectiveness of

€12 million. In addition, expenses incurred for free giveaways and

existing hedging relationships. If the forward component of a forward
transaction or foreign-currency basis spread is excluded from hedge

goods in the amount of €26 million, previously recognised in
accordance with IAS 18, were reversed. Furthermore, €8 million

accounting, changes in value attributable to this component are

in costs associated with obtaining a contract were capitalised.

recognised through profit or loss in the RWE Group. This change

Moreover, €2 million in deferred tax assets and €7 million in deferred

does not have any material effects on the RWE Group. New hedging

tax liabilities were recognised.

relationships were not designated at the date of initial application.

• The first-time application of IFRS 15 caused RWE to change the

presentation of unrealised changes in the fair value of commodity

The fair value option for own-use contracts and the possibility to

derivatives. Since 1 January 2018, they have no longer been pre-

exclude the fair value component of options for hedging relationships

sented as revenue or costs of material, but in other operating

are not made use of in the RWE Group. Overall, the new regulations

income. The change does not affect our income and leads to a

regarding hedge accounting do not have any material effects on the

stabilisation of revenue given that the other parameters did not

consolidated financial statements of RWE.

change. €55 million was recognised in other operating expenses

IFRS 15 Revenue from Contracts with Customers (2014) including
Amendments to IFRS 15, Effective Date of IFRS 15 (2015) and
Clarifications to IFRS 15 Revenue from Contracts with Customers
(2016) replaced the contents of IAS 18 Revenue and IAS 11
Construction Contracts and the associated interpretations as of
1 January 2018.

The new standard does not distinguish between different types

of orders and performance. It defines uniform criteria as to when

and €352 million was recognised in other operating income for

unrealised changes in the fair value of commodity derivatives for

fiscal 2018.

In fiscal 2018, the application of IFRS 15 had the following effects

on the balance sheet and the income statement:

Effects of applying IFRS 15
€ million

Balance-sheet items

Contract liabilities

Income statement items

Revenue

Cost of materials

Other operating income

Other operating expenses

Figure in accordance
with IFRS 15

Figure in accordance
with IAS 18 / 11

Application effect

13,388

10,237

931

950

13,740

10,292

579

895

– 352

– 55

352

Consolidated financial statements > Notes

107

The following amendments to standards and new interpretations

• Measurement of the right-of-use asset at the date of first-time

mandatory for the RWE Group from fiscal 2018 onwards do not have

adoption without considering initial direct costs,

a material effect on the consolidated financial statements of RWE:

• Leases with a term expiring within the first twelve months from

the date of first-time adoption are treated as short-term leases.

• Amendments to IFRS 4 Applying IFRS 9 Financial Instruments with

IFRS 4 Insurance Contracts (2016)

RWE is making use of exemptions allowing for leases relating to

• Annual Improvements to IFRS Standards 2014–2016 Cycle (2016)

short-term or low-value assets not to be recognised on the balance

• Amendments to IAS 40 Transfers of Investment Property (2016)

sheet as a right-of-use asset.

• Amendments to IFRS 2 Classification and Measurement of Share-

based Payment Transactions (2016)

With respect to continuing operations, RWE expects the implemen-

•

IFRIC 22 Foreign Currency Transactions and Advance Considera-

tation of IFRS 16 to result in an increase in depreciation and amorti-

tion (2016)

New accounting policies

sation of between €25 million and €50 million and a curtailment

of the financial result of between €10 million and €20 million. By

contrast, other operating expenses will receive relief in the amount

of the two aforementioned ranges, as a result of which no material

impact on net income is anticipated. Furthermore, RWE expects net

financial debt for continuing operations to increase by between

The IASB issued further standards, which were not yet mandatory in
the European Union (EU) in fiscal 2018. The major new regulations

€400 million and €500 million. Taking account of discontinued oper-
ations, we anticipate that the initial adoption of IFRS 16 will increase

and the anticipated effects based on the current state of implemen-

the balance-sheet total by about €2.3 billion.

tation are presented below:

In the cash flow statement, the change in lease accounting provides

IFRS 16 Leases (2016) will replace IAS 17 Leases and the related
interpretations IFRIC 4, SIC-15 and SIC-27. According to the new

relief to cash flows from operating activities, whereas a heavier

burden is placed on cash flows from financing activities because a

standard on leases, aside from short-term leases (less than 12 months)

significant portion of the lease instalments paid will be presented

and leases of low-value assets, all leases are to be reported on the

as principal of the lease liabilities. The interest accretion continues

balance sheet. Consequently, the lessee must recognise a right-of-use

to be recognised in cash flows from operating activities.

asset and a corresponding lease liability in the amount of the present

value of the lease payments for all leased assets. For lessors, the

The following standards, amendments to standards, and interpreta-

new Standard does not result in any significant changes to the current

tions are not expected to have any material effects on RWE’s consol-

accounting treatment pursuant to IAS 17 and still requires the classi-

idated financial statements:

fication of leases as finance or operating leases.

The new standard becomes effective for fiscal years starting on

Compensation (2017),

or after 1 January 2019. RWE will apply the modified retrospective

• Amendments to IAS 28 Long-term Interests in Associates and

method in transitioning to the new regulations concerning lease

Joint Ventures (2017),

accounting. The comparable information for fiscal 2018 will not be

• Annual Improvements to IFRS Standards 2015–2017 Cycle (2017).

adjusted in the consolidated financial statements for 2019.

The collective standard contains amendments and clarifications

• Amendments to IFRS 9: Prepayment Features with Negative

The following options and exemptions are being made use of at the

•

IFRS 17 Insurance Contracts (2017),

date of initial application:

• Amendments to IAS 19 Plan Amendment, Curtailment or Settle-

to IFRS 3 and IFRS 11 as well as to IAS 12 and IAS 23,

• Renouncement of an assessment as to whether contracts existing

• Amendments to References to the Conceptual Framework in

before the date of first adoption contain a lease in accordance

IFRS Standards (2018),

with IFRS 16,

• Amendments to IFRS 3 Business Combinations (2018),

• Recognition of the right-of-use asset and measurement in the

• Amendments to IAS 1 and IAS 8 Definition of Material (2018),

amount of the lease liability, adjusted for lease payments that

•

IFRIC 23 Uncertainty over Income Tax Treatments (2017).

ment (2018),

had already been recognised as an asset or a liability,

• Adjustment of the right-of-use asset by the amount recognised as

a provision for onerous leases on the balance sheet for the period

ending on 31 December 2018,

108 RWE Annual Report 2018

Notes to the Income Statement

(1) Revenue
Revenue is recorded when the customer has obtained control over

A breakdown of revenue by division, geographical region and

product is contained in the segment reporting on page 151 et seqq.

goods or services.

The item ‘Natural gas tax/electricity tax’ comprises the taxes paid

To improve the presentation of business development, we report

directly by Group companies.

revenue generated by energy trading operations as net figures,

reflecting realised gross margins. Energy trading revenue is generated

Certain performance obligations of the RWE Group were not yet or

in the Supply & Trading segment. By contrast, we report consumer

not yet fully met by the end of the fiscal year. The €4,650 million in

revenue on a gross basis. In fiscal 2018, gross revenue (including energy

revenue due from these performance obligations is expected to be

trading) totalled €76,345 million (previous year: €60,788 million).

received over the following three years. The receipt of this revenue

In the year under review, RWE generated €13,752 million in gross

are met. It does not include future revenue from contracts with an

revenue from discontinued innogy operations (previous year:

original contractual term of twelve months or less.

will depend on when these performance obligations to the customer

€10,937 million).

(2) Other operating income

Other operating income
€ million

Income from own work capitalised

Release of provisions

Cost allocations /refunds

Disposal and write-back of current assets (excluding marketable securities)

Disposal and write-back of non-current assets including income from deconsolidation

Income from derivative financial instruments

Compensation and insurance benefits

Rent and lease

Exchange rate gains

Miscellaneous

2018

2017

103

408

205

931

111

258

531

159

2,023

3,256

In the year under review, write-backs of €38 million were made for

was based on a decision by the German Constitutional Court dated

onshore wind farms in Poland in the innogy – continuing operations

7 June 2017. The nuclear fuel tax levied until 31 December 2016

segment (recoverable amount: €0.2 billion). This was primarily due

could not be reconciled with constitutional rules, becoming null

to the rise in the prices of electricity and of green electricity certifi-

and void retroactively. The refund included the €100 million share

cates. Of the write-backs, €36 million was allocable to property,

economically attributable to E.ON.

plant and equipment and €2 milion was allocable to operating

rights recognised as intangible assets. The fair value less costs to

Income from the disposal of non-current financial assets and loans

sell was calculated using a company valuation model based on cash

is disclosed under income from investments if it relates to invest-

flow planning and a discount rate of 5.5 % after taxes. The central

ments; otherwise it is recorded as part of the financial result as is

planning assumptions relate to the development of wholesale and

the income from the disposal of current marketable securities.

retail electricity prices and regulatory framework conditions amongst

other things. The calculated fair value is assigned to Level 3 of the fair

To improve the presentation of the development of business, we

value hierarchy due to the use of internal planning assumptions.

state unrealised changes in the fair value of commodity derivatives

in net amounts under other operating expenses or income. Gross

In the previous year, the refund of the €1,797 million in nuclear fuel

income totaled €493 million in fiscal 2018.

taxes paid in earlier periods contained in the ‘Miscellaneous’ item

Consolidated financial statements > Notes

109

(3) Cost of materials

Cost of materials
€ million

Cost of raw materials and of goods for resale

Cost of purchased services

2018

2017

8,716

1,521

8,118

1,911

10,237

10,029

Impairments
€ million

Intangible assets

Property, plant and equipment

2018

2017

373

382

The cost of raw materials also includes expenses for the use and

In the year being reviewed, a €29 million impairment was recog-

disposal of spent nuclear fuel assemblies. This item also includes
expenses for CO2 emission allowances.

nised for the UK power station Staythorpe in the European Power

segment. Its earnings are expected to be slightly lower than antici-

pated thus far (recoverable amount: €0.3 billion).

A total of €62,817 million in energy trading revenue (previous year:

€46,835 million) was netted out against the cost of materials.

In the previous year, the division of the former Conventional Power

(4) Staff costs

Staff costs
€ million

Wages and salaries

Cost of social security, pensions and
other benefits

Number of employees

2018

2017

Employees covered by collective agreements
and other employees

Employees not covered by collective agreements

45,333

13,108

58,441

46,757

12,576

59,333

2018

2017

Generation segment into the two new Lignite & Nuclear and European

Power segments had resulted in the division of the former cash-

generating unit for the German power plant portfolio due to the
resulting new management. The impairment test occasioned by

this in the previous year resulted in a write-up of €401 million for

1,487

1,433

the Lignite & Nuclear cash-generating unit, which was recognised in

408

1,895

415

1,848

other operating income in the previous year (recoverable amount:

€1.4 billion). In contrast, in the previous year, an impairment of

€321 million was recognised for the new cash-generating unit for

the German power plant portfolio in the European Power segment

and provisions for impending losses were formed (recoverable

amount: €0.0 billion). These effects stemmed from the non-recurrence

of the compensatory effects of the division of the cash-generating

unit.

In the previous year, in the Lignite & Nuclear segment, an impair-

ment loss of €301 million was recognised for property, plant and

equipment stated as being held for sale of the Hungarian company

The stated number of employees includes the 32,232 wage earners

Mátrai Erőmű ZRt. (Mátra) which has since been sold (recoverable

and other personnel assigned to the innogy – discontinued opera-

amount: €0.0 billion).

tions segment (previous year: 31,897) and 8,614 salaried staff

(previous year: 8,294). The number of employees is arrived at by

In the previous year, an impairment loss of €16 million was recog-

conversion to full-time positions, meaning that part-time and fixed-

nised for gas storage facilities in the innogy – continuing operations

term employment relationships are included in accordance with the

segment (€12 million of which for property, plant and equipment

ratio of the part-time work or the duration of the employment to

and €4 million of which for intangible assets) (recoverable amount:

the annual employment time. On average, 2,031 trainees were em-

€0.0 billion), essentially due to changed price expectations.

ployed (previous year: 1,998), of which 1,452 (previous year: 1,448)

were assigned to the innogy – discontinued operations segment.

Furthermore, in the previous year, an impairment loss of €20 million

Trainees are not included in the personnel headcount.

was recognised for property, plant and equipment for the construc-

tion of offshore wind farms in the innogy – continuing operations

segment due to permanent decreases in value (recoverable amount:

(5) Depreciation, amortisation and impairment losses

€0.1 billion).

Depreciation, amortisation and
impairment losses
€ million

Intangible assets

Property, plant and equipment

2018

2017

Other impairments on intangible assets and property, plant and

equipment were recognised primarily on the basis of cost increases

and changes in price expectations.

922

948

1,294

1,330

110 RWE Annual Report 2018

Recoverable amounts are determined on the basis of fair values less

costs to sell using valuation models based on planned cash flows.

wholesale prices of electricity, crude oil, natural gas, coal and CO2
emission allowances, retail prices of electricity and gas, market

In the fiscal year, the valuation model for the UK power station

shares and regulatory framework conditions. Based on the use of

Staythorpe used a discount rate of 4.75 %. In the previous year, the

internal planning assumptions, the determined fair values are

valuation models used discount rates ranging from 4.25 % to

assigned to Level 3 of the fair value hierarchy.

5.50 %. Our key planning assumptions relate to the development of

(6) Other operating expenses

Other operating expenses
€ million

Expenses associated with changes in product inventories

Maintenance and renewal obligations

Additions to provisions/reversals

Structural and adaptation measures

Legal and other consulting and data processing services

Disposal of current assets and decreases in values
(excluding decreases in the value of inventories and marketable securities)

Disposal of non-current assets including expenses from deconsolidation

Insurance, commissions, freight and similar distribution costs

General administration

Expenses from derivative financial instruments

Lease payments for plant and grids as well as rents

Fees and membership dues

Exchange rate losses

Other taxes (primarily on property)

Miscellaneous

2018

465

− 196

166

114

950

2017

500

402

148

166

175

171

1,909

In the previous year, the ‘Miscellaneous’ item contained the

To improve the presentation of the development of business, we

€100 million share of the refund of the nuclear fuel tax paid in earlier

recognise unrealised changes in the fair value of commodity deriva-

periods economically allocable to E.ON.

tives in net amounts in other operating expenses or income. In fiscal

2018, the gross expenses totalled €196 million.

Consolidated financial statements > Notes

111

(7) Income from investments
Income from investments includes all income and expenses which

have arisen in relation to operating investments. It is comprised of

income from investments accounted for using the equity method

and other income from investments.

Income from investments
€ million

Income from investments accounted for using the equity method

Income from non-consolidated subsidiaries

of which: amortisation/impairment losses on non-consolidated subsidiaries

Income from other investments

of which: impairment of shares in other investments

Income from the disposal of investments

Income from loans to investments

Other income from investments

(8) Financial result

Financial result
€ million

Interest and similar income

Other financial income

Financial income

Interest and similar expenses

Interest accretion to

Provisions for pensions and similar obligations (including capitalised surplus of plan assets)

Provisions for nuclear waste management as well as to mining provisions

Other provisions

Other finance costs

Finance costs

2018

2017

211

– 45

– 6

– 42

169

2018

166

306

472

180

183

437

881

− 409

137

– 30

– 31

– 2

– 16

157

2017

197

1,348

1,545

298

146

1,084

1,608

– 63

112 RWE Annual Report 2018

The financial result breaks down into net interest, interest accretion

Other financial income includes €6 million in gains realised from the

to provisions, other financial income and other finance costs.

disposal of marketable securities (previous year: €50 million). It also

includes €257 million in interest income on portions of the nuclear

Interest accretion to provisions contains the annual amounts of

fuel tax paid by RWE and refunded in 2017. €243 million thereof is

accrued interest. It is reduced by the imputed interest income on

allocable to RWE shareholders. Of the other finance costs, €13 million

plan assets for the coverage of pension obligations.

(previous year: €71 million) stem from realised losses on the disposal

Net interest essentially includes interest income from interest-

bearing securities and loans, income and expenses relating to

(9) Taxes on income

marketable securities, and interest expenses.

of marketable securities.

In the year under review, €9 million in borrowing costs were capital-

ised as costs in connection with the acquisition, construction or pro-

Taxes on income
€ million

Current taxes on income

duction of qualifying assets (previous year: €1 million). The under-

Deferred taxes

lying capitalisation rate ranged from 4.4 % to 4.8 % (previous year:

2018

2017

122

− 19

103

203

130

333

from 3.8 % to 4.4 %).

Net interest
€ million

Interest and similar income

Interest and similar expenses

2018

2017

166

180

− 14

197

298

– 101

Of the deferred taxes, – €2 million is related to temporary differences
(previous year: €72 million). In the year under review, changes in

valuation allowances for deferred tax assets amounted to – €73 million

(previous year: €110 million).

Current taxes on income contain €30 million in net tax income

(previous year: income of €111 million) relating to prior periods.

Net interest stems from financial assets and liabilities, which were

allocated to the measurement categories pursuant to IFRS 9 in the

Due to the utilisation of tax loss carryforwards unrecognised in

year under review and pursuant to IAS 39 in the previous year:

prior years, current taxes on income were reduced by €28 million

Interest result by category
€ million

Loans and receivables

Financial assets available for sale

Debt instruments measured at amortised
cost

Financial instruments measured at fair value
through profit or loss

Debt instruments measured at fair value
through other comprehensive income

Equity instruments measured at fair value
through other comprehensive income

Financial liabilities measured at (amortised)
cost

2018

2017

(previous year: €189 million).

Income taxes recognised in other
comprehensive income
€ million

169

Fair valuation of financial instruments avail-
able for sale

Fair valuation of debt instruments

Fair valuation of financial instruments
used for hedging purposes

Actuarial gains and losses of defined benefit
pension plans and similar obligations1

1 Including valuation allowances.

108

− 180

− 14

– 298

– 101

2018

2017

− 1,442

410

− 1,025

– 3

– 171

– 166

Taxes in the amount of – €61 million (previous year: €16 million)

were offset directly against equity.

Consolidated financial statements > Notes

Tax reconciliation
€ million

Income before tax

Theoretical tax expense

Differences to foreign tax rates

Tax effects on

Tax-free domestic dividends

Tax-free foreign dividends

Other tax-free income

Expenses not deductible for tax purposes

Accounting for associates using the equity method
(including impairment losses on associates’ goodwill)

Unutilisable loss carryforwards, utilisation of unrecognised loss carryforwards,
write-downs on loss carryforwards, recognition of loss carryforwards

Income on the disposal of investments

Changes in foreign tax rates

Other allowances for deferred taxes in the RWE AG tax group

Other

Effective tax expense

Effective tax rate in %

The theoretical tax expense is calculated using the tax rate for the

RWE Group of 32.6 % (previous year: 32.5 %). This is derived from the

prevailing 15 % corporate tax rate, the solidarity surcharge of 5.5 %,

and the Group’s average local trade tax rate.

113

2017

2,056

668

− 15

− 31

− 2

− 16

− 3

− 105

− 2

− 236

333

16.2

2018

− 28

− 31

− 7

− 21

− 24

− 14

− 3

172

− 11

103

210.2

NOTES

114 RWE Annual Report 2018

Notes to the Balance Sheet

(10) Intangible assets

Intangible assets

€ million

Cost

Development
costs

Concessions,
patent rights,
licences and
similar rights

Customer
relationships
and similar
assets

Goodwill

Prepayments

Total

Balance at 1 Jan 2018

837

3,054

2,810

11,671

Additions /disposals due to changes in the
scope of consolidation

of which: stated as ‘Held for sale’

Additions

Transfers

Currency translation adjustments

Disposals

Balance at 31 Dec 2018

Accumulated amortisation /impairment losses

− 821

− 890

− 999

− 15

2,214

− 2,812

− 9,929

Balance at 1 Jan 2018

489

2,493

2,564

− 3

− 25

18,403

− 14,455

− 14,564

− 35

3,978

6,020

− 4,306

105

− 6

1,785

2,193

18,448

167

203

– 126

298

– 4

− 24

1,718

474

− 475

1,718

− 460

− 2,579

− 792

− 10

1,751

463

1,047

2,816

2,915

11,664

143

– 3

– 83

– 10

– 29

– 30

228

837

630

104

– 5

– 18

225

489

348

3,054

2,810

11,671

18,403

2,410

2,658

– 2

107

2,493

– 84

2,564

479

– 6

474

5,699

717

– 104

293

6,020

561

246

11,197

12,383

Additions /disposals due to changes in the
scope of consolidation

of which: stated as ‘Held for sale’

Amortisation /impairment losses in the reporting
period

Currency translation adjustments

Disposals

Write-ups

Balance at 31 Dec 2018

Carrying amounts

Balance at 31 Dec 2018

Cost

Balance at 1 Jan 2017

Additions /disposals due to changes in the
scope of consolidation

Additions

Transfers

Currency translation adjustments

Disposals

Balance at 31 Dec 2017

Accumulated amortisation /impairment losses

Balance at 1 Jan 2017

Additions /disposals due to changes in the
scope of consolidation

Amortisation /impairment losses in the reporting
period

Transfers

Currency translation adjustments

Disposals

Balance at 31 Dec 2017

Carrying amounts

Balance at 31 Dec 2017

Consolidated financial statements > Notes

115

In the reporting period, the RWE Group’s total expenditures on

ence as well as on expected market trends in the future. If available,

research and development amounted to €116 million (previous year:

market transactions in the same sector or third-party valuations are

€182 million).

taken as a basis for determining fair value. Based on the use of internal

planning assumptions, the determined fair values are assigned to

Goodwill breaks down as follows:

Level 3 of the fair value hierarchy.

Goodwill
€ million

Grid & Infrastructure Germany

Grid & Infrastructure Eastern Europe

Retail Netherlands /Belgium

Retail Germany

Retail United Kingdom

Retail Eastern Europe

Renewables

Supply & Trading

31 Dec 2018

31 Dec 2017

Mid-term business plans are based on country-specific assumptions

2,736

1,159

2,704

923

1,525

429

715

1,006

11,197

712

1,006

1,718

regarding the development of key economic indicators such as gross

domestic product, consumer prices, interest rate levels and nominal

wages. These estimates are, amongst others, derived from macro-

economic and financial studies.

Our key planning assumptions for the business segments active in

Europe’s electricity and gas markets relate to the development of
wholesale prices of electricity, crude oil, natural gas, coal and CO2
emission allowances, retail prices of electricity and gas, market

shares and regulatory framework conditions.

The discount rates used for business valuations are determined on

the basis of market data. During the period under review, they were
5.25 % for the Supply & Trading and 4.25 % for the Renewables
cash-generating units (previous year: range of 3.25 % to 5.50 %)

The goodwill reported in the Grid & Infrastructure and Retail cash-

generating units in the previous year is stated under assets held for

sale of innogy – discontinued operations.

after tax.

In the third quarter of every fiscal year, an impairment test is per-

We do not base the extrapolation of future cash flows going beyond

formed to determine if there is any need to write down goodwill. In

the detailed planning period on growth rates. The growth rate for

the course of this, goodwill is allocated to the cash-generating units.

each division is generally derived from experience and expectations

In the previous year, goodwill increased by €53 million as a result of

rates of the respective markets in which the Group companies

of the future and does not exceed the long-term average growth

first-time consolidations.

are active. The annual cash flows assumed for the years after the

detailed planning period include as a deduction capital expenditure

The recoverable amount of the cash-generating unit is determined,

in the amount necessary to maintain the scope of business.

which is defined as the higher of fair value less costs to sell or value

in use. Fair value is the best estimate of the price that an independ-

As of the balance-sheet date, the recoverable amounts of the

ent third party would pay to purchase the cash-generating unit as of

cash-generating units – determined as the fair value less costs to

the balance-sheet date. Value in use reflects the present value of

sell – were higher than their carrying amounts. The surpluses react

the future cash flows which are expected to be generated with the

especially sensitively to changes in the discount rate, the growth

cash-generating unit.

rate and cash flows in terminal value.

Fair value less costs to sell is assessed from an external perspective

The Supply & Trading cash-generating unit exhibited the smallest

and value in use from a company-internal perspective. Values are

surplus of recoverable amount over the carrying amounts. The

determined using a business valuation model, based on planned

recoverable amount was €1.2 billion higher than the carrying

future cash flows. These cash flows, in turn, are based on the business

amount. Impairment would have been necessary if the calculations

plan, as approved by the Executive Board and valid at the time of

had used an after-tax discount rate increased by more than 3.1 per-

the impairment test. They pertain to a detailed planning period of

centage points to above 8.4 %, a growth rate decreased by more

three years. In certain justifiable cases, a longer detailed planning

than 3.6 percentage points to below – 3.6 %, or cash flows reduced

period is taken as a basis, insofar as it is necessary due to economic

by more than €74 million in terminal value.

or regulatory conditions. The cash flow plans are based on experi-

116 RWE Annual Report 2018

(11) Property, plant and equipment

Property, plant and equipment

€ million

Cost

Balance at 1 Jan 2018

Additions /disposals due to changes in the scope
of consolidation

of which: stated as ‘Held for sale’

Additions

Transfers

Currency translation adjustments

Disposals

Balance at 31 Dec 2018

Accumulated depreciation /impairment losses

Land, land
rights and
buildings
incl. buildings
on third-party
land

Technical
plant and
machinery

Other
equipment,
factory
and office
equipment

Prepayments
and plants
under
construction

Total

7,325

74,280

2,123

2,317

86,045

− 2,740

− 2,738

− 30,747

− 30,708

− 1,238

− 42

109

665

283

− 294

478

4,544

43,709

− 2

− 7

915

− 845

− 859

1,014

− 332

− 10

2,075

− 35,570

− 35,543

1,818

− 6

− 353

691

51,243

Balance at 1 Jan 2018

4,555

54,187

1,505

851

61,098

Additions /disposals due to changes in the scope of
consolidation

of which: stated as ‘Held for sale’

Amortisation /impairment losses in the reporting period

Transfers

Currency translation adjustments

Disposals

Additions

Balance at 31 Dec 2018

Carrying amounts

Balance at 31 Dec 2018

Cost

Balance at 1 Jan 2017

Additions /disposals due to changes in the scope of
consolidation

Additions

Transfers

Currency translation adjustments

Disposals

Balance at 31 Dec 2017

Accumulated depreciation /impairment losses

− 1,455

− 1,453

− 20,646

− 20,580

− 20

1,209

− 1

− 149

352

3,073

34,214

1,471

9,495

− 803

− 4

756

159

− 1

791

− 22,905

− 22,837

1,375

− 173

521

38,834

1,284

12,409

7,544

74,257

2,152

1,708

85,661

– 149

237

7,325

– 950

1,477

237

– 121

620

74,280

– 6

138

170

2,123

162

825

– 273

– 10

2,317

– 943

2,532

– 1

– 82

1,122

86,045

Balance at 1 Jan 2017

4,581

54,126

1,521

915

61,143

Additions /disposals due to changes in the scope of
consolidation

Amortisation /impairment losses in the reporting period

Currency translation adjustments

Disposals

Additions

Balance at 31 Dec 2017

Carrying amounts

Balance at 31 Dec 2017

– 149

225

116

– 890

1,829

– 53

421

404

– 11

142

151

– 8

– 1,058

2,223

– 29

771

410

4,555

54,187

1,505

851

61,098

2,770

20,093

618

1,466

24,947

Consolidated financial statements > Notes

117

Property, plant and equipment in the amount of €504 million (previous

€248 million) was attributable to assets leased under finance leases.

year: €82 million) were subject to restrictions from land charges, chattel

These assets essentially consist of technical plant and equipment.

mortgages or other restrictions. Of the total carrying amount of

Disposals of property, plant and equipment resulted from sale or

property, plant and equipment, €241 million (previous year:

decommissioning.

(12) Investments accounted for using the equity method
Information on material and non-material investments in associates

and joint ventures accounted for using the equity method is pre-

sented in the following summaries:

Material investments accounted for using the equity method

€ million

Balance sheet1

Non-current assets

Current assets

Non-current liabilities

Current liabilities

Share of equity2

Goodwill

Carrying amounts

Statement of comprehensive income1

Revenue

Income

Other comprehensive income

Total comprehensive income

Dividends (prorated)

RWE shareholding

Amprion GmbH,
Dortmund

KELAG-Kärntner Elektrizitäts-AG /
Kärntner Energieholding
Beteiligungs GmbH, (KEH)
Klagenfurt /Austria

31 Dec 2018

31 Dec 2017

31 Dec 2018

31 Dec 2017

4,192

2,906

1,401

3,555

538

3,607

2,609

1,092

3,238

474

538

474

1,630

1,626

373

857

276

365

198

563

370

874

277

354

198

552

13,495

12,418

1,172

1,0653

372

– 17

355

25 %

142

– 25

117

25 %

– 1

– 4

49 %

1 Figures based on a shareholding of 100 % in KEH.
2 Figures based on proportional share of equity in KEH and Kelag.
3 Figure adjusted due to the switch from gross to net presentation for energy trading activities.

Amprion GmbH, headquartered in Dortmund, Germany, is a trans-
mission system operator (TSO) for the electricity sector, pursuant to

KELAG-Kärntner Elektrizitäts-AG, headquartered in Klagenfurt,
Austria, is a leading Austrian energy supplier in the fields of electricity,

the German Energy Act (EnwG). Amprion’s main shareholder is a

district heating and natural gas. RWE has a share of 49 % in Kärntner

consortium of financial investors led by Commerz Real, a subsidiary

Energieholding Beteiligungs GmbH (KEH), which is Kelag’s largest

of Commerzbank.

shareholder and is assigned to innogy - continuing operations.

118 RWE Annual Report 2018

Non-material investments accounted for using the equity method

Associates

Joint ventures

€ million

Income (pro-rata)

Other comprehensive income

Total comprehensive income

Carrying amounts

31 Dec 2018

31 Dec 2017

31 Dec 2018

31 Dec 2017

142

– 78

– 71

1,317

224

– 22

503

The RWE Group holds shares with a book value of €3 million (previ-

subject to temporary restrictions or conditions in relation to their

ous year: €97 million) in associates and joint ventures, which are

distributions of profits, due to provisions of loan agreements.

(13) Other non-current financial assets

Other non-current financial assets
€ million

Non-consolidated subsidiaries

Other investments

Non-current securities

31 Dec 2018

31 Dec 2017

254

400

254

617

238

1,109

Non-current securities primarily consist of fixed-interest marketable

block model for pre-retirement part-time work, pursuant to Sec. 8a

securities and shares of listed companies. Long-term securities

of the Pre-Retirement Part-Time Work Act (AltTZG) and from the

amounting to €31 million and €4 million (previous year: €87 million

management of long-term working hours accounts pursuant to

and €12 million) were deposited in a trust account for RWE AG and

Sec. 7e of the German Code of Social Law (SGB IV), respectively.

its subsidiaries, in order to cover credit balances stemming from the

This coverage applies to the employees of RWE AG as well as to

the employees of Group companies.

(14) Financial receivables

Financial receivables

€ million

Loans to non-consolidated subsidiaries and investments

Collateral for trading activities

Other financial receivables

Accrued interest

Miscellaneous other financial receivables

31 Dec 2018

31 Dec 2017

Non-current

Current

Non-current

110

2,458

234

2,782

237

122

359

Current

1,051

117

572

1,745

Companies of the RWE Group deposited collateral for the trading

For the miscellaneous other financial receivables, in the previous

activities stated above for exchange-based and over-the-counter

year, there was limited control in the amount of €260 million related

transactions. These are to guarantee that the obligations from the

to the financing of the pension commitments of three companies

transactions are discharged even if the development of prices is not

assigned to innogy – discontinued operations.

favourable for RWE. Regular replacement of the deposited collateral

depends on the contractually agreed thresholds, above which collat-

eral must be provided for the market value of the trading activities.

Consolidated financial statements > Notes

119

(15) Other receivables and other assets

Other receivables and other assets

€ million

Derivatives

Capitalised surplus of plan assets over benefit obligations

Prepayments for items other than inventories

CO2 emission allowances
Miscellaneous other assets

of which: financial assets

of which: non-financial assets

The financial instruments reported under miscellaneous other assets

are measured at amortised cost. Derivative financial instruments are

stated at fair value. The carrying values of exchange-traded derivatives
with netting agreements are offset.

31 Dec 2018

31 Dec 2017

Non-current

Current

Non-current

704

213

946

924

6,567

137

329

375

7,408

6,684

724

1,014

103

1,187

1,127

Current

3,249

217

121

1,305

4,892

3,483

1,409

120 RWE Annual Report 2018

(16) Deferred taxes
Deferred tax assets and liabilities principally stem from the fact that

ences reduce in the foreseeable future. €5,335 million and €6,254 mil-

measurements in the IFRS statements differ from those in the tax

lion of the gross deferred tax assets and liabilities, respectively, will

bases. As of 31 December 2018, no deferred tax liabilities were

be realised within twelve months (previous year: €4,135 million and

recognised for the difference between net assets and the carrying

€3,572 million).

value of the subsidiaries and associates for tax purposes (known as

‘outside basis differences’) in the amount of €618 million (previous

The following is a breakdown of deferred tax assets and liabilities by

year: €441 million), as it is neither probable that there will be any

item:

distributions in the foreseeable future, nor will the temporary differ-

Deferred taxes

€ million

Non-current assets

Current assets

Exceptional tax items

Non-current liabilities

Provisions for pensions

Other non-current liabilities

Current liabilities

Tax loss carryforwards

Corporate income tax (or comparable foreign income tax)

Trade tax

Gross total

Netting

Net total

31 Dec 2018

31 Dec 2017

Assets

815

2,101

139

289

3,234

6,578

6,671

− 5,847

824

Liabilities

938

3,009

194

3,245

7,485

− 5,847

1,638

Assets

1,525

1,401

932

1,252

2,734

7,844

328

8,184

– 5,557

2,627

Liabilities

1,619

2,312

748

325

1,260

6,275

– 5,557

718

As of 31 December 2018, RWE reported deferred tax claims which

€1,183 million in corporate income tax loss carryforwards for

exceeded the deferred tax liabilities by €56 million (previous year:

which no deferred tax claims have been recognised will apply to

€417 million), in relation to companies which suffered a loss in the

the following nine years. The other loss carryforwards do not have

current or previous period. The basis for the formation of deferred

any time limits, but they are mostly not expected to be used.

tax assets is the judgement of the management that it is likely that

the companies in question will generate taxable earnings, against

As of 31 December 2018, temporary differences for which no

which unutilised tax losses and deductible temporary differences

deferred tax assets were recognised amounted to €11,180 million

can be applied.

(previous year: €12,185 million).

The capitalised tax reduction claims from loss carryforwards result

In the year under review, a deferred tax expense of €5 million arising

from the expected utilisation of previously unused tax loss carryfor-

from the currency translation of foreign financial statements was

wards in subsequent years.

offset against equity (previous year: €14 million).

It is sufficiently certain that these tax carryforwards will be realised.

At the end of the reporting period, corporate income tax loss carry-

forwards and trade tax loss carryforwards for which no deferred tax

claims have been recognised amounted to €1,463 million and

€490 million, respectively (previous year: €2,513 million and

€344 million).

Consolidated financial statements > Notes

121

(17) Inventories

Inventories
€ million

Raw materials, incl. nuclear fuel assemblies and earth excavated for lignite mining

Work in progress – goods /services

Finished goods and goods for resale

Prepayments

31 Dec 2018

31 Dec 2017

723

872

– 1

998

200

719

1,631

1,924

The carrying amount of inventories acquired for resale purposes was

(19) Cash and cash equivalents

€33 million (previous year: €58 million). Of this, €29 million related

to gas inventories (previous year: €44 million) and €4 million related

to coal inventories (previous year: €10 million). In the previous year,

€4 million related to biomass inventories.

Cash and cash equivalents
€ million

Cash and demand deposits

31 Dec 2018

31 Dec 2017

3,521

3,924

The fair value of gas and coal inventories is determined every month

on the basis of the current price curves of the relevant indices for gas

(e.g. NCG) and coal (e.g. API#2). The valuations are based on prices

which can be observed directly or indirectly (Level 2 of the fair value

hierarchy). Differences between the fair value and the carrying value

Marketable securities and other cash
investments (maturity less than three
months from the date of acquisition)

3,523

3,933

of inventories acquired for resale purposes are recognised on the

RWE keeps demand deposits exclusively for short-term cash positions.

income statement at the end of the month.

For cash investments, banks are selected on the basis of various credit-

(18) Marketable securities
Of the current marketable securities, €3,226 million were fixed-

worthiness criteria. Such criteria include their rating from one of the

three renowned rating agencies – Moody’s, Standard & Poor’s and

Fitch – as well as their equity capital and the prices for credit default

interest marketable securities (previous year: €4,065 million) with a

swaps. As in the previous year, interest rates on cash and cash

maturity of more than three months from the date of acquisition, and

equivalents were at market levels in 2018.

€383 million were stocks and profit-participation certificates (previ-

ous year: €828 million). Marketable securities are stated at fair value.

122 RWE Annual Report 2018

(20) Equity
A breakdown of fully paid-up equity is shown on page 92. The sub-

scribed capital of RWE AG is structured as follows:

Subscribed capital

Common shares

Preferred shares

31 Dec 2018
Number
of shares

31 Dec 2017
Number
of shares

in ’000

575,745

39,000

614,745

in %

93.7

6.3

in ’000

575,745

39,000

in %

93.7

6.3

100.0

614,745

100.0

31 Dec 2018
Carrying
amount
€ million

31 Dec 2017
Carrying
amount
€ million

1,474

100

1,574

1,474

100

1,574

Common and preferred shares are no-par-value bearer share certifi-

No treasury shares were held as of 31 December 2018.

cates. Preferred shares have no voting rights. Under certain condi-

tions, preferred shares are entitled to payment of a preference
dividend of €0.13 per share, upon allocation of the company’s profits.

In fiscal 2018, RWE AG purchased a total of 196,604 RWE common
shares for a purchase price of €3,626,221.16 on the capital market.

This is equivalent to €503,306.24 of the capital stock (0.03 % of

Pursuant to a resolution passed by the Annual General Meeting on

subscribed capital). Employees of RWE AG and its subsidiaries

26 April 2018, the Executive Board was authorised to increase the

received a total of 196,560 common shares for capital formation

company’s capital stock with the Supervisory Board’s approval by

under the employee share plan and 44 common shares for service

up to €314,749,693.44 until 25 April 2023 through the issue of up

anniversaries. This generated total proceeds of €3,617,602.33. The

to 122,949,099 bearer common shares in return for contributions in

differences to the purchase price were offset against freely available

cash and/or in kind (approved capital). In certain cases, with the

retained earnings.

approval of the Supervisory Board, the subscription rights of share-

holders can be excluded.

Pursuant to IAS 32, the following hybrid bond issued by Group com-

panies must be classified as equity:

Pursuant to a resolution passed by the Annual General Meeting on

26 April 2018, the Company was authorised until 25 April 2023 to

acquire any kind of shares of the Company up to a volume of 10 %

of the capital stock when the resolution on this authorisation was

passed, or if the following is lower, when this authorisation is exer-

cised. Based on the authorisation, the Executive Board is also au-

thorised to cancel treasury shares without a further resolution by

Hybrid bonds
Issuer

RWE AG

1 Until the first call date.

Nominal
value

£750 m

First call
date

2019

Coupon
in % p.a.1

7.0

the Annual General Meeting. Moreover, the Executive Board is au-

Proceeds from the bond issue were reduced by the capital procure-

thorised to transfer or sell such shares to third parties under certain

ment costs and added to equity, taking account of taxes. Interest

conditions and excluding shareholders’ subscription rights. Further-

payments to bondholders will be booked directly against equity,

more, treasury shares may be issued to holders of option or convert-

after deduction of taxes. Such payments can be deferred by the

ible bonds. The Executive Board is also authorised to use the treas-

company; under certain circumstances, however, they must be made

ury shares to discharge obligations from future employee share

up again, for example if the Executive Board and Supervisory Board

schemes; in this regard, shareholders’ subscription rights shall be

propose to the Annual General meeting that a dividend be paid.

excluded.

Consolidated financial statements > Notes

123

As a result of equity capital transactions with subsidiary companies

which did not lead to a change of control, the share of equity attrib-

Dividend proposal
We propose to the Annual General Meeting that RWE AG’s distribut-

utable to RWE AG’s shareholders changed by a total of €491 million
(previous year: – €4 million) and the share of equity attributable to
other shareholders changed by a total of €258 million (previous
year: – €15 million).

Accumulated other comprehensive income reflects changes in
the fair values of debt instruments measured at fair value through

other comprehensive income, cash flow hedges and hedges of the

net investment in foreign operations, as well as changes stemming

from foreign currency translation adjustments from foreign financial

statements.

able profit for fiscal 2018 be appropriated as follows:

Distribution of a dividend of €0.70 per dividend-bearing common

and preferred share.

Dividend

Profit carryforward

Distributable profit

€430,321,849.30

€59,392.54

€430,381,241.84

Based on a resolution of RWE AG’s Annual General Meeting on

26 April 2018, the dividend for fiscal 2017 amounted to €0.50

As of 31 December 2018, the share of accumulated other compre-

per dividend-bearing common and preferred share. In addition, a

hensive income attributable to investments accounted for using the
equity method amounted to – €7 million (previous year: €11 million).

special dividend of €1.00 from the nuclear fuel tax refund was paid

per dividend-bearing common and preferred share. The dividend

payment to shareholders of RWE AG amounted to €922 million.

During the reporting year, €48 million in differences from currency

translation which had originally been recognised without an effect

on income were realised as an expense (previous year: income of

€13 million).

124 RWE Annual Report 2018

Non-controlling interests
The share ownership of third parties in Group entities is presented

in this item.

The income and expenses recognised directly in equity (other

comprehensive income – OCI) include the following non-controlling

interests:

Non-controlling interests in OCI
€ million

Actuarial gains and losses of defined benefit pension plans and similar obligations

Pro-rata income and expenses of investments accounted for using the equity method

Fair valuation of equity instruments

Income and expenses recognised directly in equity, not to be reclassified through profit or loss

Currency translation adjustment

Fair valuation of financial instruments available for sale

Fair valuation of debt instruments

Fair valuation of financial instruments used for hedging purposes

Pro-rata income and expenses of investments accounted for using the equity method

Income and expenses recognised directly in equity, to be reclassified through profit or loss in the future

2018

2017

− 134

− 2

− 13

− 149

− 4

− 5

– 147

165

− 14

151

− 2

− 3

186

In the previous year, material non-controlling interests were attribut-

able to the innogy Group, which is essentially accounted for as a

discontinued operation in the year under review:

Subsidiaries with material non-controlling interests

€ million

Balance sheet

Non-current assets

Current assets

Non-current liabilities

Current liabilities

Statement of comprehensive income

Revenue

Other comprehensive income

Total comprehensive income

Cash flows from operating activities

Non-controlling interests

Dividends paid to non-controlling interests

Income of non-controlling interests

Shareholdings of non-controlling interests

In addition to the 23.2 % share accounted for by non-controlling

interests disclosed, there are also non-controlling interests in

subsidiaries of innogy SE.

innogy – continuing
operations

innogy Group

31 Dec 2018

31 Dec 2017

8,133

4,313

1,524

8,092

1,505

360

538

951

237

37,229

12,645

24,980

14,980

35,063

− 576

− 862

2,565

4,442

501

663

23.2 %

36,502

10,312

22,913

12,649

41,119

722

1,871

2,654

4,135

469

492

23.2 %

Consolidated financial statements > Notes

125

(21) Share-based payment
For executives of RWE AG and innogy SE as well as of subordinate

and takes into account the development of RWE AG‘s and innogy

SE’s share price. Executives receive conditionally granted virtual

affiliates, Long Term Incentive Plans (LTIPs) are in place as share-

shares (performance shares). The final number of virtual shares in a

based payment systems known as Strategic Performance Plans

tranche is determined based on the achievement of the adjusted

(SPPs) and the predecessor model Beat 2010, which is being phased

net income target. Each of the issued LTIP SPP tranches has a term

out. The expenses associated with these are borne by the Group

of four years before payment is possible. The prerequisite for partici-

companies which employ the persons holding notional stocks.

pating in the plan was the renouncement of the options of the

predecessor model Beat 2010 which had not yet lapsed. The large

The LTIP SPP was introduced in 2016. It uses an internal performance

majority of the participants made such renouncement declarations.

target (adjusted net income) derived from the mid-term planning

The plan has expired with the exception of some immaterial remaining

components.

RWE AG SPP

Start of term

Number of conditionally
granted performance shares

Term

2016 tranche

1 Jan 2016

486,436

4 years

2017 tranche

1 Jan 2017

1,338,027

4 years

2018 tranche

1 Jan 2018

883,974

4 years

Performance target

Adjusted net income

Cap/number of performance
shares

Cap/payment amount

Determination of payment

Change in corporate control/
merger

150 %

200 %

150 %

200 %

150 %

200 %

The payment amount is calculated on the basis of the determined number of performance shares multiplied by the sum of
a) the mathematical average of the closing share price of the RWE common share (ISIN DE 000703129), with all available
decimal places, in Xetra trading of Deutsche Börse AG (or a successor trading system which subsequently takes the
place of the Xetra system) for the last 30 trading days prior to the end of the vesting period rounded according to
standard commercial practice to two decimal places, and

b) the dividend paid per share for the fiscal years between the determination of the final number of performance shares

and the end of the vesting period. Dividends do not bear interest and are not reinvested.
If a dividend payment occurs during the 30-day period for calculating the share price in accordance with item a), the
share prices of the trading days leading up to the payment (CUM share prices) are adjusted by the dividend, as the
dividend would otherwise be considered twice.

Payment amount = (number of finally granted performance shares) x (mathematical average of the share price + divi-
dends paid)
The payment amount calculated in this manner is limited to no more than 200 % of the grant amount.

A change in corporate control (‘change of control’) shall occur if
a) a shareholder gains control in accordance with Sec. 29 of the German Securities Acquisition and Takeover Act (WpÜG)
by holding at least 30 % of the voting rights including third-party voting rights attributable to it in accordance with
Sec. 30 WpÜG, or

b) a control agreement in accordance with Sec. 291 of the Stock Corporation Act (AktG) is concluded with RWE AG as the

dependent company, or

c) RWE AG is merged with another legal entity that does not belong to the Group in accordance with Sec. 2 of the German
Company Transformation Act (UmwG), unless the value of the other legal entity is less than 50 % of the value of RWE AG
based on the agreed conversion rate; in such a case, item a) shall not apply.

In the event of a change of control, all of the performance shares which have been fully granted and have not been paid
out shall be paid out early. The payment amount is determined according to the exercise conditions, with the deviation
that the last 30 trading days prior to the announcement of the change in control is to be used; plus the dividends paid
per share in the fiscal years between the determination of the final number of performance shares and the time of the
change in control. The payment amount calculated in this manner shall be paid to the plan participant together with his
or her next salary payment.
All conditionally granted performance shares as of the effective date of the change of control shall lapse without consid-
eration.

Form of settlement

Cash settlement

Payment date

2020

2021

2022

126 RWE Annual Report 2018

innogy SE SPP

Start of term

Number of conditionally
granted performance shares

Term

2016 tranche

1 Jan 2016

352,834

4 years

2017 tranche

1 Jan 2017

1,178,133

4 years

2018 tranche

1 Jan 2018

1,108,599

4 years

Performance target

Adjusted net income

Cap/number of performance
shares

Cap/payment amount

Determination of payment

Change in corporate control/
merger

150 %

200 %

150 %

200 %

150 %

200 %

The payment amount is calculated on the basis of the determined number of finally granted performance shares multi-
plied by the sum of
a) the mathematical average of the closing share price (including all available decimal places) of the innogy SE share

(ISIN DE 000A2AADD2) in Deutsche Börse AG’s Xetra trading (or a successor trading system which subsequently takes
the place of the Xetra system) for the last 30 trading days prior to the end of the vesting period rounded to two decimal
places according to standard commercial practice and

b) the dividends paid per share for the fiscal years between the determination of the final number of performance shares
and the end of the vesting period. Dividends do not bear interest and are not reinvested. If a dividend payment occurs
during the 30-day period for calculating the share price in accordance with item a), the share prices of the trading days
leading up to the payment (CUM share prices) are adjusted by the dividend, as the dividend would otherwise be consid-
ered twice.

Payment amount = (number of finally granted performance shares) x (mathematical average of the share price + dividends
paid)
The payment amount calculated in this manner is limited to no more than 200 % of the grant amount.

A change in corporate control (‘change of control’) shall occur if
a) a shareholder obtains control in the sense of Sec. 29 of the German Securities Acquisition and Takeover Act (WpÜG) by
acquiring at least 30 % of the voting rights, including the voting rights of third parties which can be attributed to the
shareholder pursuant to Sec. 30 of WpÜG, whereby RWE AG or an RWE Group company may no longer have control in
the sense of Sec. 29 of WpÜG (30 % of the voting rights), or

b) a control agreement in accordance with Sec. 291 of the Stock Corporation Act (AktG) is concluded with a company

which is not part of the RWE Group with innogy SE as the dependent company, or

c) innogy SE is merged with another legal entity that does not belong to the Group in accordance with Sec. 2 of the

German Company Transformation Act (UmwG), unless the value of the other legal entity is less than 50 % of the value
of innogy SE based on the agreed conversion rate; in such a case, item a) shall not apply.

In the event of a change of control, all of the performance shares which have been fully granted and have not been paid
out shall be paid out early. The payment amount is determined according to the exercise conditions, with the deviation
that the last 30 trading days prior to the announcement of the change in control is to be used; plus the dividends paid per
share in the fiscal years between the determination of the final number of performance shares and the time of the change
in control. The payment amount calculated in this manner shall be paid to the plan participant together with his or her
next salary payment.
All conditionally granted performance shares as of the effective date of the change of control shall lapse without consider-
ation.

Form of settlement

Cash settlement

Cash settelement

Payment date

2020

2021

2022

Consolidated financial statements > Notes

127

The fair value of the performance shares conditionally granted

under SPP included the following sums on the grant date:

Performance Shares from the RWE AG SPP
€

2016 tranche

2017 tranche

2018 tranche

Fair value per share

13.78

11.62

18.80

Performance Shares from the innogy SE SPP
€

2016 tranche

2017 tranche

2018 tranche

Fair value per share

37.13

32.07

36.78

The fair values of the tranches of the RWE AG SPP are based on

The fair values of the tranches of the innogy SE SPP are affected by

RWE AG’s and innogy SE’s current share price plus the dividends

the asset swap with E.ON announced in March 2018 because the

per share which have already been paid to the shareholders during

the rules set out earlier will be reflected in the valuation in the event

the term of the corresponding tranche. The limited payment per SPP

of a change of control. The expected payout amount will be calculated

was implemented via a sold call option. The option value calculated
using the Black Scholes Model was deducted. The maximum payments

on the basis of the average innogy share price on the 30 stock
market trading days leading up to 11 March 2018 plus dividends

per conditionally granted SPP (= option strike) established in the

paid. In line with the payout conditions in the event of a change of

plan conditions, the discount rates relative to the remaining term

control, the payout will be effected after the completion of the

as well as the volatilities and expected dividends of RWE AG and

transaction.

innogy SE were considered in determining the option price.

The performance shares displayed the following development in the

fiscal year that just came to a close:

Performance Shares from the RWE AG SPP

2016 tranche

2017 tranche

2018 tranche

Outstanding at the start of the fiscal year

446,035

1,338,027

Granted

Change (granted/expired)

Paid out

82,172

290,364

883,974

Outstanding at the end of the fiscal year

528,207

1,628,391

883,974

Payable at the end of the fiscal year

Performance Shares from the innogy SE SPP

2016 tranche

2017 tranche

2018 tranche

Outstanding at the start of the fiscal year

460,572

1,178,133

Granted

Change (granted/expired)

– 432,696

– 1,122,921

1,108,599

– 1,052,053

Of which: assigned to innogy –
discontinued operations

Paid out

– 367,338

– 975,733

– 1,042,949

Outstanding at the end of the fiscal year

27,876

55,212

56,546

Payable at the end of the fiscal year

During the period under review, expenses for the share-based

based payment programmes amounted to €32 million (previous

payment system totalled €20 million (previous year: €19 million).

year: €25 million).

As of the balance-sheet date, provisions for cash-settled share-

128 RWE Annual Report 2018

(22) Provisions

Provisions
€ million

Provisions for pensions and similar obligations

Provisions for nuclear waste management

Provisions for mining damage

Other provisions

Staff-related obligations (excluding restructuring)

Restructuring obligations

Provisions for taxes

Purchase and sales obligations

Provisions for dismantling wind farms

Other dismantling and retrofitting obligations

Environmental protection obligations

Interest payment obligations

Obligations to deliver CO2 emission allowances/certificates for
renewable energies

Miscellaneous other provisions

31 Dec 2018

31 Dec 2017

Non-current

Current

Total Non-current

Current

3,287

5,659

2,460

11,406

378

109

1,497

905

358

528

261

331

4,457

15,863

285

341

446

885

721

2,274

2,615

3,287

5,944

2,516

5,420

5,725

2,263

11,747

13,408

824

132

1,540

997

362

580

262

885

1,052

6,731

723

234

1,620

1,208

359

587

108

398

604

5,841

18,478

19,249

280

340

844

349

321

1,600

1,472

4,797

5,137

Total

5,420

6,005

2,323

13,748

1,567

317

1,969

1,529

360

665

146

409

1,600

2,076

10,638

24,386

Provisions for pensions and similar obligations. The company
pension plan consists of defined contribution and defined benefit

ABP will charge a termination fee. Amongst other things, its level

depends on the number of participants in the plan, the amount of

plans. The defined benefit commitments mainly relate to pension

salary and the age structure of the participants. As of 31 Decem-

benefits based on final salary.

ber 2018, we had around 600 active participants in the plan (previ-

ous year: approximately 2,000). The information relating to the pri-

In the reporting period, €23 million (previous year: €45 million) was

or year includes information from businesses subsumed under the

paid into defined contribution plans. This includes payments made

discontinued innogy operations.

by RWE for a benefit plan in the Netherlands which covers the com-

mitments of various employers. This fund does not provide the

RWE transferred assets to RWE Pensionstreuhand e.V. within the

participating companies with information allowing for the pro-rata

framework of a contractual trust arrangement (CTA) in order to

allocation of defined benefit obligations, plan assets and service

finance the pension commitments of German Group companies.

cost. In the consolidated financial statements, the contributions are

There is no obligation to provide further funds. From the assets held

thus recognised analogously to a defined contribution plan, although

in trust, funds were transferred to RWE Pensionsfonds AG to cover

this is a defined benefit plan. The pension plan for employees in the

pension commitments to most of the employees who have already

Netherlands is administered by Stichting Pensioenfonds ABP (see

retired. RWE Pensionsfonds AG falls under the scope of the Act on

www.abp.nl). Contributions to the pension plan are calculated as a

the Supervision of Insurance Undertakings and oversight by the

percentage rate of employees’ salaries and are paid by the employees

Federal Financial Supervisory Agency (BaFin). Insofar as a regulatory

and employers. The rate of the contributions is determined by ABP.

deficit occurs in the pension fund, supplementary payment shall be

There are no minimum funding obligations. Approximately €8 mil-

requested from the employer. Independently of the aforementioned

lion in employer contributions are expected to be paid to the ABP

rules, the liability of the employer shall remain in place. The boards

pension fund in fiscal 2019 (previous year: €20 million). The contri-

of RWE Pensionstreuhand e.V. and RWE Pensionsfonds AG are respon-

butions are used for all of the beneficiaries. If ABP’s funds are in-

sible for ensuring that the funds under management are used in

sufficient, it can either curtail pension benefits and future post-em-

compliance with the contract and thus fulfil the requirements for

ployment benefits, or increase the contributions of the employer and

recognition as plan assets.

employees. In the event that RWE terminates the ABP pension plan,

Consolidated financial statements > Notes

129

In the United Kingdom, it is legally mandated that defined benefit

deficit of £574.6 million. RWE, innogy and the trustees subsequently

plans are provided with adequate and suitable assets to cover pen-

prepared a plan for annual payments to rectify this deficit. These

sion obligations. The corporate pension system is managed by the

payments were calculated for the period from 2017 to 2025. The

sector-wide Electricity Supply Pension Scheme (ESPS), in which RWE

amounts determined were as follows: £106 million for 2017,

and innogy each have their own dedicated independent sections.

£76 million annually for 2018 to 2021, and £39.6 million annually

The sections are managed by trustees which are elected by members

for 2022 to 2025. In October 2016, an early payment in a nominal

of the pension plans or appointed by the sponsoring employers.

amount of £45.4 million was made. Thereafter, the contribution

The trustees are responsible for managing the pension plans. This

plans of the RWE and innogy sections were extended until 2022

includes investments, pension payments and financing plans. The

and 2029, respectively, while maintaining the annual contributions.

pension plans comprise the benefit obligations and plan assets

The next valuation has to occur by 31 March 2019. From this point

for the subsidiaries of the innogy Group and the RWE Group. It is

in time, the company and the trustees have 15 months to approve

required by law to assess the required financing of the pension plans

the funding valuation.

once every three years. This involves measuring pension obligations

on the basis of conservative assumptions, which deviate from the

The payments to settle the deficit are charged to the participating

requirements imposed by IFRS. The underlying actuarial assump-

companies on the basis of a contractual agreement. Above and beyond

tions primarily include the projected life expectancies of the members

this, payments are regularly made to finance the newly arising benefit

of the pension plans as well as assumptions relating to inflation,

obligations of active employees which increase the pension claims.

imputed interest rates and the market returns on the plan assets.

Provisions for defined benefit plans are determined using actuarial

The last funding valuations of the RWE and innogy ESPS sections

methods. We apply the following assumptions:

were carried out on 31 March 2016. In sum, they showed a financing

Calculation assumptions

in %

Discount rate

Wage and salary growth rate

Pension increase rate

31 Dec 2018

31 Dec 2017

Germany

Foreign 1

Germany

Foreign 1

1.70

2.35

2.70

3.30

2.00

2.35

2.30

3.20

1.00, 1.60 and 1.75

2.20 and 3.10

1.00, 1.60 and 1.75

2.10 and 3.00

1 Pertains to benefit commitments to employees of the RWE Group in the UK.

Provisions for pensions and similar obligations of innogy – discontinued

operations included in liabilities held for sale as of 31 December

2018 are based on the following calculation assumptions:

Calculation assumptions
in %

Discount rate

Wage and salary growth rate

Pension increase rate

31 Dec 2018

Germany

Foreign1

1.80

2.35

1.00, 1.60
and 1.75

2.80

3.30

2.20 and 3.10

1 Pertains to benefit commitments to employees of the RWE Group in the UK.

130 RWE Annual Report 2018

Composition of plan assets (fair value)

31 Dec 2018

31 Dec 2017

€ million

Equity instruments, exchange-traded funds

Interest-bearing instruments

Real estate

Mixed funds 3

Alternative investments

Other 4

Of which:
Level 1
pursuant
to IFRS 13

Of which:
Level 1
pursuant
to IFRS 13 Domestic 1

Of which:
Level 1
pursuant
to IFRS 13

Foreign 2

Of which:
Level 1
pursuant
to IFRS 13

Foreign 2

1,375

469

208

3,720

1,641

229

406

613

784

308

324

3,559

6,874

1,326

1,412

241

1,699

662

254

4,793

2,109

364

544

102

922

193

Domestic1

1,396

3,245

613

689

6,019

2,082

5,894

2,182

13,429

2,709

6,570

2,371

1 Plan assets in Germany primarily pertain to assets of RWE AG and other Group companies which are managed by RWE Pensionstreuhand e.V. as a trust, as well

as to assets of RWE Pensionsfonds AG.

2 Foreign plan assets pertain to the assets of two UK pension funds for covering benefit commitments to employees of the RWE Group in the UK.
3 Includes equity and interest-bearing instruments.
4 Includes reinsurance claims against insurance companies and other fund assets of provident funds.

Our investment policy in Germany is based on a detailed analysis of

over the long term. Furthermore, in order to achieve consistently

the plan assets and the pension commitments and the relation of

high returns, there is also investment in products which offer rela-

these two items to each other, in order to determine the best possible

tively regular positive returns over time. This involves products

investment strategy (Asset Liability Management Study). Using an

with returns which fluctuate like those of bond investments, but

optimisation process, portfolios are identified which can earn the

which achieve an additional return over the medium term, such as

best targeted results at a defined level of risk. One of these efficient

so-called absolute return products (including funds of hedge funds).

portfolios is selected and the strategic asset allocation is determined;

furthermore, the related risks are analysed in detail.

In the United Kingdom, our capital investment takes account of the

structure of the pension obligations as well as liquidity and risk matters.

The focus of RWE’s strategic investment policy is on domestic and

The goal of the investment strategy in this context is to maintain the

foreign government bonds. In order to increase the average yield,

level of pension plan funding and ensure the full financing of the

corporate bonds with a higher yield are also included in the port-

pension plans over time. To reduce financing costs and earn surplus

folio. The ratio of equities in the portfolio is lower than that of bonds.

returns, we also include higher-risk investments in our portfolio. The

Investment occurs in various regions. The investment position in

capital investment focusses on government and corporate bonds.

equities is intended to earn a risk premium over bond investments

131

Total

Consolidated financial statements > Notes

Pension provisions for pension commitments changed as follows:

Changes in pension provisions

€ million

Balance at 1 Jan 2018

Current service cost

Interest cost/income

Return on fund assets less interest components

Gain/loss on change in demographic assumptions

Gain/loss on change in financial assumptions

Experience-based gains/losses

Currency translation adjustments

Employee contributions to funded plans

Employer contributions to funded plans 1

Benefits paid by funded plans 2

Changes in the scope of consolidation/transfers

of which: stated as ‘Held for sale’

Past service cost

General administration expenses

Change in capitalised surplus of plan assets

Balance at 31 Dec 2018

of which: domestic

of which: foreign

Present value of
pension
commitments

Fair value of plan
assets

Capitalised
surplus of plan
assets

25,316

19,999

103

5,420

210

413

380

− 71

− 45

− 907

− 10,376

− 10,461

14,987

9,208

5,779

340

− 788

− 46

259

− 852

− 7,001

− 7,005

− 6

11,913

6,019

5,894

210

788

380

− 71

− 259

− 55

− 3,481

− 3,562

217

3,287

3,189

− 1

− 106

217

213

1 Of which: €138 million from initial and subsequent transfers to plan assets and €121 million in cash flows from operating activities.
2 Contained in cash flows from operating activities.

132 RWE Annual Report 2018

Changes in pension provisions

€ million

Balance at 1 Jan 2017

Current service cost

Interest cost /income

Return on fund assets less interest components

Gain /loss on change in demographic assumptions

Gain /loss on change in financial assumptions

Experience-based gains /losses

Currency translation adjustments

Employee contributions to funded plans

Employer contributions to funded plans 1

Benefits paid by funded plans 2

Changes in the scope of consolidation

Past service cost

General administration expenses

Change in capitalised surplus of plan assets

Balance at 31 Dec 2017

of which: domestic

of which: foreign

Present value of
pension
commitments

Fair value of plan
assets

Capitalised
surplus of plan
assets

26,334

325

501

− 145

− 528

− 89

− 246

− 1,069

278

− 57

25,316

18,613

6,703

19,602

381

744

− 233

476

− 980

− 6

19,999

13,429

6,570

103

1 Of which: €190 million from initial and subsequent transfers to plan assets and €286 million in cash flows from operating activities.
2 Contained in cash flows from operating activities.

Changes in the actuarial assumptions would lead to the following

changes in the present value of the defined benefit obligations:

Sensitivity analysis of pension provisions

Changes in the present value of defined benefit obligations

€ million

31 Dec 2018

31 Dec 2017

Change in the discount rate by + 50 /− 50 basis points

– Domestic

– Foreign

Change in the wage and salary growth rate by − 50 /+ 50 basis points

– Domestic

– Foreign

Change in the pension increase rate by − 50 /+ 50 basis points

– Domestic

– Foreign

Increase of one year in life expectancy

– Domestic

– Foreign

− 644

− 373

− 49

− 29

− 442

− 267

− 1,370

− 485

− 151

− 61

− 937

− 350

728

420

484

298

425

202

Total

6,761

325

120

− 744

− 145

− 528

− 89

− 13

− 476

− 89

275

− 57

5,420

5,287

133

1,554

554

158

1,027

394

772

245

Consolidated financial statements > Notes

133

The sensitivity analyses are based on the change of one assumption

eration of gender-specific factors and severance payments. Further-

each, with all other assumptions remaining unchanged. Actual

more, employee rights to compensation for disadvantages were

developments will probably be different than this. The methods of

remeasured in some cases in German pre-retirement regulations.

calculating the aforementioned sensitivities and for calculating the

In the previous year, the past service cost was primarily based on

pension provisions are in agreement. The dependence of pension

effects in relation to restructuring measures and the remeasurement

provisions on market interest rates is limited by an opposite effect.

of a pension policy – both in Germany.

The background of this is that the commitments stemming from

company pension plans are primarily covered by funds, and mostly

Domestic company pensions are subject to an obligation to review

plan assets exhibit negative correlation with the market yields of

for adjustment every three years pursuant to the Act on the Improve-

fixed-interest securities. Consequently, declines in market interest

ment of Company Pensions (Sec 16 of the German Company Pension

rates are typically reflected in an increase in plan assets, whereas

Act (BetrAVG)). Additionally, some commitments grant annual ad-

rising market interest rates are typically reflected in a reduction in

justments of pensions, which may exceed the adjustments in com-

plan assets.

pliance with the legally mandated adjustment obligation.

The present value of pension obligations, less the fair value of the

Some domestic pension plans guarantee a certain pension level,

plan assets, equals the net amount of funded and unfunded pension

taking into account the statutory pension (total retirement earnings

obligations.

schemes). As a result, future reductions in the statutory pension can

As of the balance-sheet date, the recognised amount of pension

provisions totalled €2,826 million for funded pension plans (previ-

The weighted average duration of the pension obligations was

ous year: €3,694 million) and €461 million for unfunded pension

15 years in Germany (previous year: 16 years) and 14 years outside

plans (previous year: €1,726 million).

of Germany (previous year: 16 years).

result in higher pension payments by RWE.

In fiscal 2018, the past service cost predominantly consisted of

In fiscal 2019, RWE expects to make €220 million in payments for

pension commitments in the United Kingdom due to a ruling on the

defined benefit plans of continuing operations (previous-year target:

equalisation of minimum pension entitlements through the consid-

€400 million), as direct benefits and contributions to plan assets.

Provisions for nuclear energy and mining

Balance at
1 Jan 2018

Additions

Unused
amounts
released

Interest
accretion

Amounts
used

Balance at
31 Dec 2018

Changes in
the scope of
consoli-
dation,
currency
adjustments,
transfers

€ million

Provisions for nuclear waste management

Provisions for mining damage

6,005

2,323

8,328

127

175

− 56

135

231

− 244

− 51

− 295

5,944

2,516

8,460

Provisions for nuclear waste management are recognised in the
full amount for the nuclear power plants Biblis A and B, Mülheim-

we will use most of these provisions by 2045. The discount rate

calculated on the basis of the current level of market interest rates

Kärlich, Emsland and Lingen, and at a rate of 75 % for the nuclear

for no-risk cash investments was 0.4 % as of the balance-sheet date

power plant Gundremmingen A, B and C, in accordance with RWE’s

(previous year: 0.6 %). The escalation rate based on expectations

share in the nuclear obligations. Provisions for waste disposal for

with regard to general increases in wages and prices and productivity

the Dutch nuclear power plant Borssele are included at a rate of

growth was 1.5 % (previous year: 1.5 %). As a result, the real discount

30 %, in line with RWE’s stake.

rate used for nuclear waste management purposes, which is the

difference between the discount rate and the escalation rate,

Provisions for nuclear waste disposal are almost exclusively reported

amounted to – 1.1 % (previous year: – 0.9 %). An increase (decrease)

as non-current provisions, and their settlement amount is discounted

in this rate by 0.1 percentage point would reduce (increase) the

to the balance-sheet date. Based on the current state of planning,

present value of the provision by roughly €50 million.

134 RWE Annual Report 2018

Excluding the interest accretion, additions to provisions for nuclear

Provisions for the dismantling of nuclear power plant facilities include

waste management amount to €48 million. Besides quantity-related

all work done to dismantle plants, parts of plants, systems and com-

increases in the provisions, additions to provisions are due to the

ponents as well as on buildings that must be dismantled to comply

fact that the current estimates resulted in a net increase in the antici-

with the Nuclear Energy Act. They also consider the conventional

pated nuclear waste management costs. The interest accretion in

dismantling of nuclear power plant facilities to fulfil legal or other

the additions to provisions for nuclear waste management amounted

obligations.

to €135 million. Of the changes in provisions, €74 million was

capitalised under the corresponding costs of nuclear power plants

Provisions for residual material processing and waste management

and fuel elements still in operation. Prepayments for services in the

include the costs of processing radioactive residual material for

amount of €8 million were deducted from these provisions. In the

non-hazardous recycling and the costs of treating radioactive waste

reporting period, we also used provisions of €171 million for the

produced during the plant’s service life and dismantling operations.

decommissioning of nuclear power plants. Decommissioning and

This includes the various processes for conditioning, proper packag-

dismantling costs had originally been capitalised in a corresponding

ing of the low-level and intermediate-level radioactive waste in suitable

amount and reported under the cost of the power plants.

containers and the transportation of such waste to BGZ Gesellschaft

für Zwischenlagerung mbH (BGZ), which has been commissioned by

The provisions of the law on the reassignment of responsibility for

the Federal government for intermediate storage. This item also

nuclear waste disposal stipulates that accountability for the shut-

contains the cost of transporting the waste produced by recycling

down and dismantling of the assets as well as for packaging
radio active waste remains with the companies. The shutdown and

and the cost of the proper packaging of spent nuclear fuel elements,
i.e. the cost of loading and procuring freight and interim storage

dismantling process encompasses all activities following the final

containers.

termination of production by the nuclear power plant until the plant

site is removed from the regulatory scope of the Nuclear Energy Act.

Commissioned by the plant operator, the internationally renowned

Actual dismantling begins after the fuel assemblies, operating

company NIS Ingenieurgesellschaft mbH (NIS), Alzenau, assesses the

equipment and radioactive operational waste are removed from the

prospective residual operation and dismantling costs for the nuclear

facility and the approval process is completed. Dismantling opera-

power plants on an annual basis. The costs are determined specifi-

tions essentially consist of the dismantling of the facilities, removal

cally for each facility and take into consideration the current state

of the radioactive contamination from the structures, radiation pro-

of the art, regulatory requirements and previous practical experi-

tection, and regulatory monitoring of the dismantling measures and

ence from ongoing and completed dismantling projects. Additionally,

residual operations.

current developments are also incorporated into the cost calcula-

tions. They also include the cost of conditioning and packaging radi-

We thus subdivide our provisions for nuclear waste management

oactive waste generated during dismantling operations and the

into the residual operation of nuclear power plants, the dismantling

transportation of such waste to BGZ, which has been commissioned

of nuclear power station facilities as well as the cost of residual

by the Federal government for intermediate storage. Further cost

material processing and radioactive waste treatment facilities.

estimates for the disposal of radioactive waste are based on con-

Provisions for nuclear waste management
€ million

31 Dec 2018

31 Dec 2017

companies. Furthermore, they are based on plans by internal and

tracts with foreign reprocessing companies and other disposal

external experts, in particular GNS Gesellschaft für Nuklear-Service

Residual operation

Dismantling

Processing of residual material and waste
management

2,515

1,810

1,619

5,944

2,577

1,766

1,662

6,005

Provisions for the residual operation of nuclear power station

facilities cover all steps that must be taken largely independent of

dismantling and disposal but are necessary to ensure that the assets

are safe and in compliance with permits or are required by the

authorities. In addition to works monitoring and facility protection,

these mainly include service, recurrent audits, maintenance, radia-

tion and fire protection as well as infrastructural adjustments.

mbH, (GNS) Essen.

In terms of their contractual definition, provisions for nuclear waste

management break down as follows:

Provisions for nuclear waste management
€ million

31 Dec 2018

31 Dec 2017

Provisions for nuclear obligations,
not yet contractually defined

Provisions for nuclear obligations,
contractually defined

4,462

4,453

1,482

5,944

1,552

6,005

Consolidated financial statements > Notes

135

The provision for obligations which are not yet contractually defined

Due to the long-term nature of the obligations, both the escalation

covers the costs of the remaining operational phase of the operat-

rate and the discount rate are determined as the average values for

ing plants, the costs of dismantling as well as the residual material

a longer period in the past. Since the development of inflation has

processing and waste treatment costs incurred in connection with

an impact both on the fulfilment amounts and the level of interest

waste produced as a result of shut-downs.

rates, this approach results in a consistent real discount rate specific

to the provisions, as the difference between the discount rate and

Provisions for contractually defined nuclear obligations relate to

the escalation rate. Due to developments in long-term interest rates

all obligations the value of which is specified in contracts under civil

on the capital markets, the discount rate was lowered from 4.2 % to

law. The obligations include the anticipated residual costs of repro-

4.1 % in the 2018 reporting year. The escalation rate, which takes

cessing and returning the resulting radioactive waste. These costs

into consideration anticipated future increases in costs and prices,

stem from existing contracts with foreign reprocessing companies

as well as a risk premium, declined to the same degree, from 2.9 %

and with GNS. Moreover, these provisions also include the costs for

to 2.8 %. The real discount rate applied for mining purposes, which

transport and intermediate storage containers for and the loading

is the difference between the discount rate and the escalation rate,

of spent fuel assemblies within the framework of final direct storage.

thus remained unchanged at 1.3 %. An increase (decline) in the real

Furthermore, this item also includes the amounts for the professional

discount rate by 0.1 percentage point would reduce (increase) the

packaging of radioactive operational waste as well as the in-house

present value of the provision by around €70 million.

personnel costs incurred for the residual operation of plants which

are permanently decommissioned.

In the reporting year, €127 million was added to provisions for min-
ing damage amounted due to the quantity-induced increases in the

Provisions for mining damage also consist almost entirely of
non-current provisions and fully covered the volume of obligations

obligatory volume, of which €109 million was capitalised under

‘Property, plant and equipment’. Releases of provisions in the

as of the balance-sheet date. They are reported at their settlement

amount of €56 million resulted in part from the fact that current

amount discounted to the balance-sheet date. In addition to contin-

estimates led to a reduction in the anticipated costs of restoration.

uous recultivation of opencast mine sites a large part of the claims

The interest accretion increased provisions for mining damage by

for site restoration of lignite opencast mining areas is expected for

€96 million.

the period from 2030 to 2100. The cost estimates are to a great

extent based on external expert opinions.

Other provisions

Balance at
1 Jan 2018

Additions

Unused
amounts
released

Interest
accretion

Of which:
‘Held for
sale’

Amounts
used

Balance at
31 Dec 2018

Changes in
the scope
of consoli-
dation,
currency
adjustments,
transfers

€ million

Staff-related obligations (excluding
restructuring)

Restructuring obligations

Provisions for taxes

Purchase and sales obligations

Provisions for dismantling wind farms

Other dismantling and retrofitting
obligations

Environmental protection obligations

Interest payment obligations

Obligations to deliver CO2 emission
allowances/certificates for renewable
energies

Miscellaneous other provisions

1,567

317

1,969

1,529

360

665

146

409

640

125

171

1,600

2,076

10,638

1,339

490

2,842

− 21

− 45

− 10

− 309

− 1

− 6

− 1

− 9

− 113

− 515

− 5

− 689

− 172

− 379

− 225

− 1

− 88

− 47

− 154

− 745

− 127

− 369

− 224

− 87

− 47

− 26

− 676

− 18

− 165

− 177

− 1

− 14

− 4

− 1,069

− 1,034

− 3,858

− 1,066

− 1,096

− 976

− 380

− 3,787

− 2,411

824

132

1,540

997

362

580

262

885

1,052

6,731

136 RWE Annual Report 2018

Provisions for taxes primarily consist of income taxes.

turing obligations to provisions for staff-related obligations as soon

Provisions for staff-related obligations mainly consist of provisions
for pre-retirement part-time work arrangements, severance, out-

standing vacation and service jubilees and performance-based pay

components. Based on current estimates, we expect most of these

to be used from 2019 to 2025.

as the underlying restructuring measure has been specified. This is

the case if individual contracts governing socially acceptable payroll

downsizing are signed by affected employees.

Provisions for purchase and sales obligations primarily relate to
contingent losses from pending transactions.

Provisions for restructuring obligations pertain mainly to measures
for socially acceptable payroll downsizing. We currently expect most

of these to be used from 2019 to 2025. In so doing, sums ear-marked

for personnel measures are reclassified from provisions for restruc-

From the current perspective, we expect that the majority of the
provisions for the dismantling of wind farms will be used from
2020 to 2038, and the other dismantling and retrofitting obliga-
tions will be used from 2019 to 2060.

(23) Financial liabilities

Financial liabilities

€ million

Bonds payable1

Commercial paper

Bank debt

Other financial liabilities

Collateral for trading activities

Miscellaneous other financial liabilities

1 Including hybrid bonds classified as debt as per IFRS.

31 Dec 2018

31 Dec 2017

Non-current

Current

Non-current

Current

1,103

473

422

1,998

12,059

1,333

1,022

14,414

533

152

766

990

456

261

389

691

2,787

€523 million of the non-current financial liabilities were interest-

The following overview shows the key data on the major bonds of

bearing liabilities (previous year: €12,633 million).

the RWE Group as of 31 December 2018:

Bonds payable
Issuer

RWE AG/innogy SE

RWE AG

Bonds payable

Outstanding
amount

€ 480 million1

€ 539 million2

€ 282 million2

US$ 317 million2

Carrying amount
€ million

Coupon in %

Maturity

537

281

273

1,103

3.5

2.75

3.5

6.625

October 2037

April 2075

July 2075

1 Of which €12 million is attributable to RWE AG and €468 million is attributable to innogy SE.
2 Hybrid bonds classified as debt as per IFRS.

Other financial liabilities contain finance lease liabilities. Lease agree-

ments principally relate to capital goods in the electricity business.

Consolidated financial statements > Notes

137

Liabilities arising from finance lease agreements have the following

maturities:

Liabilities from finance
lease agreements

€ million

Due in the following year

Due after 1 to 5 years

Due after 5 years

Maturities of minimum lease payments

31 Dec 2018

31 Dec 2017

Nominal
value

Discount

Present
value

Nominal
value

Discount

Present
value

192

241

192

241

197

249

197

248

31 Dec 2018

31 Dec 2017

Non-current

Current

Non-current

Current

362

144

508

379

129

105

6,698

383

7,200

6,877

323

975

1,168

244

2,393

1,033

1,360

725

3,282

168

2,841

7,082

5,337

1,745

€72 million (previous year: €85 million) of the financial liabilities are

secured by mortgages.

(24) Other liabilities

Other liabilities

€ million

Tax liabilities

Social security liabilities

Derivatives

Advances and contributions in aid of construction and building connection

Miscellaneous other liabilities

of which: financial debt

of which: non-financial debt

The principal component of social security liabilities are the amounts

payable to social security institutions.

Miscellaneous other liabilities contain €76 million in contract liabilities.

The opening balance as of 1 January 2018 of €1,314 million was re-

duced essentially because €1,274 million was stated under ‘Liabilities

held for sale’.

Moreover, €56 million (previous year: €8 million) in miscellaneous

other liabilities were allocable to state investment subsidies primarily

granted in connection with the construction of wind farms and the

modernisation of a power station.

In the previous year, of the miscellaneous other liabilities,

€1,451 million related to financial debt in the form of current

purchase price obligations from rights granted to tender non-

controlling interests (put options).

138 RWE Annual Report 2018

Other information

(25) Earnings per share
Basic and diluted earnings per share are calculated by dividing the

portion of net income attributable to RWE shareholders by the aver-

On the liabilities side, non-derivative financial instruments principally

include liabilities measured at amortised cost.

age number of shares outstanding; treasury shares are not taken

The fair value of financial instruments is determined based on the

into account in this calculation. The earnings per share are the same

published exchange price, insofar as the financial instruments are

for both common and preferred shares.

traded on an active market. The fair value of non-quoted debt and

Earnings per share

Net income for RWE AG
shareholders

of which: from continuing
operations

of which: from discontinued
operations

Number of shares outstanding
(weighted average)

Basic and diluted earnings per
common and preferred share

of which: from continuing
operations

of which: from discontinued
operations

Dividend per common share

Dividend per preferred share

1 Proposal for fiscal 2018.

2018

2017

expected payment flows, taking into consideration macro-economic

equity instruments is generally determined on the basis of discounted

developments and corporate business plan data. Current market

€ million

335

1,900

interest rates corresponding to the remaining maturity are used for

− 196

1,702

discounting.

Derivative financial instruments are recognised at their fair values as

531

198

of the balance-sheet date, insofar as they fall under the scope of

in
‘000

614,745

IFRS 9. Exchange-traded products are measured using the published

closing prices of the relevant exchange. Non-exchange traded prod-
ucts are measured on the basis of publicly available broker quotations

€

0.54

3.09

or, if such quotations are not available, on generally accepted valua-

– 0.32

0.86

0.701

2.77

0.32

1.50

tion methods. In doing so, we draw on prices on active markets as

much as possible. If such prices are not available, company-specific

planning estimates are used in the measurement process. These

estimates encompass all of the market factors which other market

participants would take into account in the course of price determi-

nation. Assumptions pertaining to the energy sector and economy

are made within the scope of a comprehensive process with the

involvement of both in-house and external experts.

(26) Reporting on financial instruments
Financial instruments are divided into non-derivative and derivative.

Non-derivative financial assets essentially include other non-current

Measurement of the fair value of a group of financial assets and

financial liabilities is conducted on the basis of the net risk exposure

per business partner.

financial assets, accounts receivable, marketable securities and cash

The following overview presents the classifications of financial

and cash equivalents. Financial instruments are recognised at amor-

instruments measured at fair value in the fair value hierarchy pre-

tised cost or fair value, depending on their classification. Financial

scribed by IFRS 13. The individual levels of the fair value hierarchy

instruments are recognised in the following categories:

are defined as follows:

• Debt instruments measured at amortised cost: the contractual

• Level 1: Measurement using (unadjusted) prices of identical financial

cash flows solely consist of interest and principal on the outstand-

instruments formed on active markets,

ing capital and there is an intention to hold the financial instrument

• Level 2: Measurement on the basis of input parameters which

until maturity.

are not the prices from Level 1, but which can be observed for the

• Debt instruments measured at fair value through other compre-

financial instrument either directly (i.e. as price) or indirectly

hensive income: the contractual cash flows solely consist of inter-

(i.e. derived from prices),

est and principal on the outstanding capital: there is an intention

• Level 3: Measurement using factors which cannot be observed on

to hold and sell the financial instrument.

the basis of market data.

• Equity instruments measured at fair value through other compre-

hensive income: the option to recognise changes in fair value

directly in equity is exercised.

• Financial assets measured at fair value through profit or loss: the

contractual cash flows of a debt instrument do not solely consist of

interest and principal on the outstanding capital or the option to

recognise changes in the fair value of equity instruments in other

comprehensive income is not exercised.

Consolidated financial statements > Notes

139

Fair value hierarchy
€ million

Other financial assets

Derivatives (assets)

of which: used for hedging purposes

Securities

Assets held for sale

Derivatives (liabilities)

of which: used for hedging purposes

Liabilities held for sale

Total
2018

400

7,271

1,644

3,606

4,031

7,060

1,134

1,343

Level 1

Level 2

Level 3

1,618

1,755

159

7,115

1,644

1,988

1,472

7,025

1,134

1,343

148

156

804

Total
2017

1,109

4,263

1,456

4,893

4,257

643

Level 1

Level 2

Level 3

3,168

208

4,230

1,456

1,725

4,253

643

821

Due to the increase in the number of price quotations on active

markets, marketable securities with a fair value of €14 million were

reclassified from Level 2 to Level 1. Conversely, due to a drop in the

number of price quotations, financial assets with a fair value of

€12 million were reclassified from Level 1 to Level 2.

The development of the fair values of Level 3 financial instruments

is presented in the following table:

Level 3 financial
instruments:
Development in 2018

Balance at
1 Jan 2018

€ million

Other financial assets

Financial receivables

Derivatives (assets)

Assets held for sale

Derivatives (liabilities)

821

Level 3 financial
instruments:
Development in 2017

Balance at
1 Jan 2017

€ million

Other financial assets

Derivatives (assets)

Derivatives (liabilities)

789

Changes in the
scope of
consolidation,
currency
adjustments
and other

− 741

− 35

736

Changes in the
scope of
consolidation,
currency
adjustments
and other

− 48

Changes

Balance at
31 Dec 2018

Recognised in
profit or loss

Recognised in OCI

With a
cash effect

− 42

140

− 1

− 17

− 5

148

156

804

Changes

Balance at
31 Dec 2017

Recognised in
profit or loss

Recognised in OCI

With a
cash effect

− 6

− 20

− 10

821

140 RWE Annual Report 2018

Amounts recognised in profit or loss generated through Level 3

financial instruments relate to the following line items on the

income statement:

Level 3 financial instruments:
Amounts recognised in profit or loss

€ million

Revenue

Cost of materials

Other operating income/expenses

Income from investments

Income from discontinued operations

Total
2018

− 24

− 45

Of which:
attributable to
financial instru-
ments held at the
balance-sheet date

− 24

− 45

100

Total
2017

− 4

− 22

Of which:
attributable to
financial instruments
held at the
balance-sheet date

− 4

− 22

Level 3 derivative financial instruments essentially consist of energy

Acquisition costs are used as an approximate figure for shares in

purchase and commodity agreements, which relate to trading peri-

non-consolidated subsidiaries and associates/joint ventures not

ods for which there are no active markets yet. The valuation of such

accounted for using the equity method included in other financial

depends on the development of electricity and gas prices in particular.

assets as well as for other investments, the fair value of which

All other things being equal, rising market prices cause the fair

cannot be determined reliably.

values to increase, whereas declining gas prices cause them to drop.

A change in pricing by +/−10 % would cause the market value to rise

In the previous year, pursuant to IAS 39 the following impairments

by €41 million or decline by €41 million.

were recognised on financial assets which fall under the scope of

IFRS 7 and are reported under the balance-sheet items stated below:

Impairments on financial assets
€ million

Other non-current
financial assets

Financial
receivables

Trade accounts
receivable

Other receivables
and other assets

Balance at 1 Jan 2017

Additions

Transfers

Currency translation adjustments

Disposals

Balance at 31 Dec 2017

127

179

233

− 2

241

469

157

− 4

233

397

− 2

Total

840

235

− 4

265

819

In the previous year, according to IAS 39 there were unimpaired,

past due receivables falling under the scope of IFRS 7 in the

following amounts:

Receivables, past due

€ million

Financial receivables

Trade accounts receivable

Other receivables and other assets

Gross
amount as
of 31 Dec
2017

Receiva-
bles,
impaired,
past due,

2,345

5,808

4,509

12,662

474

495

Receivables not impaired, past due by:

less than
30 days

31 to 60
days

61 to 90
days

91 to 120
days

over 120
days

343

138

142

Consolidated financial statements > Notes

141

The disclosures on the impairments in accordance with IFRS 9 for

Financial assets and liabilities can be broken down into the measure-

the current fiscal year are commented upon in the section on credit

ment categories with the following carrying amounts according to

risks (see page 147 et seqq.).

IFRS 9 in the year under review (previous year: IAS 39):

Carrying amounts by category
€ million

Financial assets measured at fair value through profit or loss

of which: held for trading

of which: obligatorily measured at fair value – continuing operations

of which: obligatorily measured at fair value – held for sale

Financial assets available for sale

Loans and receivables

Debt instruments measured at amortised cost

of which: held for sale

Debt instruments measured at fair value through other comprehensive income

of which: held for sale

Equity instruments measured at fair value through other comprehensive income

of which: held for sale

Financial liabilities measured at fair value through profit or loss

of which: held for trading

of which: obligatorily measured at fair value – continuing operations

of which: obligatorily measured at fair value – held for sale

Financial liabilities measured at (amortised) cost

of which: held for sale

31 Dec 2018

31 Dec 2017

11,128

8,483

2,645

14,757

6,244

1,715

975

817

408

7,258

5,926

1,332

20,621

15,545

2,807

6,002

11,692

3,614

19,754

The carrying amounts of financial assets and liabilities within the

Level 1 and €1,762 million (previous year: €4,393 million) to Level 2

scope of IFRS 7 basically correspond to their fair values. The only

of the fair value hierarchy.

deviations are for financial liabilities. The carrying amount of these

is €2,764 million (previous year: €17,201 million), while the fair

The following net results from financial instruments as per IFRS 7 were

value amounts to €2,842 million (previous year: €19,167 million).

recognised on the income statement, depending on the category

Of this, €1,080 million (previous year: €14,744 million) is related to

(according to IFRS 9 in 2018; according to IAS 39 in 2017):

Net gain/loss by category
€ million

Financial assets and liabilities measured at fair value through profit or loss

of which: held for trading

of which: obligatorily measured at fair value

Financial assets available for sale

Loans and receivables

Debt instruments measured at amortised cost

Debt instruments measured at fair value through other comprehensive income

Equity instruments measured at fair value through other comprehensive income

Financial liabilities measured at (amortised) cost

2018

362

186

− 236

2017

− 178

1,926

− 5

142 RWE Annual Report 2018

The net result as per IFRS 7 essentially includes interest, dividends and

results from the measurement of financial instruments at fair value.

Fair value of equity instruments measured at fair value
through other comprehensive income
€ million

In the previous year, changes of €74 million after taxes in the value

Securities in special funds

of financial assets available for sale were recognised in accumulated

Nordsee One GmbH

other comprehensive income without an effect on income. Above

and beyond this, €30 million in changes in the value of financial

31 Dec 2018

378

instruments available for sale which had originally been recognised

In the 2018 fiscal year, €13 million in income from dividends from

without an effect on income was realised as income in the previous

these financial instruments was recognised, of which €4 million is

year.

attributable to equity instruments sold during the same year. More-

over, in the year under review, equity instruments measured through

The option to recognise changes in fair value in other comprehen-

other comprehensive income were sold in line with the existing

sive income is exercised for a portion of the investments in equity

investment strategy. Their fair value at the derecognition date

instruments. These are strategic investments and other long-term

amounted to €312 million. The resulting loss amounted to €2 million.

investments as well as securities in special funds.

The following is an overview of the financial assets and financial

liabilities which are netted out in accordance with IAS 32 or are subject

to enforceable master netting agreements or similar agreements.
The netted financial assets and liabilities essentially consist of collat-

eral for stock market transactions due on a daily basis.

Netting of financial assets and financial liabilities
as of 31 Dec 2018

Gross amounts
recognised

Netting

Net amounts
recognised

Related amounts not set off

Net amount

€ million

Derivatives (assets)

Derivatives (liabilities)

Financial
instruments

Cash collateral
received/
pledged

14,915

10,532

– 14,232

– 10,101

683

431

– 186

– 400

– 245

283

Netting of financial assets and financial liabilities
as of 31 Dec 2017

Gross amounts
recognised

Netting

Net amounts
recognised

Related amounts not set off

Net amount

€ million

Derivate (aktiv)

Derivate (passiv)

Financial
instruments

Cash collateral
received/
pledged

8,204

8,291

– 7,419

– 7,264

785

1,027

– 118

– 305

– 318

480

591

The related amounts not set off include cash collateral received and

pledged for over-the-counter transactions as well as collateral

Market risks stem from changes in exchange rates and share prices
as well as interest rates and commodity prices, which can have an

pledged in advance for stock market transactions.

influence on business results.

As a utility enterprise with international operations, the RWE Group

RWE AG manages its fully consolidated subsidiary innogy as a financial

is exposed to market, credit and liquidity risks in its ordinary busi-

investment and exercises its control over innogy SE via the legal

ness activity. We limit these risks via systematic, groupwide risk

bodies of the Supervisory Board and its majority influence at the

management. The range of action, responsibilities and controls are

Annual General Meeting. One of the results of this is that RWE and

defined in binding internal directives.

innogy each have their own independent management of interest

rate, currency, liquidity and credit risks. In accordance with this, the

risk figures from these areas are reported for the respective parts of

the Group.

Consolidated financial statements > Notes

143

Due to the RWE Group’s international profile, currency management

In respect of interest rate risks, RWE and innogy distinguish between

is a key issue. Sterling and US dollar are two important currencies

two risk categories: on the one hand, increases in interest rates can

for the RWE Group. In certain cases, fuels are traded in these two

result in declines in the prices of securities from the holdings of RWE

currencies. In addition, RWE does business in the UK currency area.

and innogy. This pertains primarily to fixed-rate instruments. A VaR

The companies of the RWE Group are required to hedge their foreign

is determined to quantify securities price risk. As of the balance- sheet

currency risks via RWE AG or innogy SE, depending on which part of

date, it amounted to €2.3 million for RWE (previous year:

the Group they belong to. Only these two companies themselves

€2.7 million) and €3.4 million for innogy (previous year: €3.2 million).

may maintain open foreign currency positions, subject to predefined

On the other hand, financing costs also increase along with the level

limits, or approve such limits for their Group companies.

of interest rates. The sensitivity of interest expenses to increases in

market interest rates is measured with the CFaR. As of 31 December

Interest rate risks stem primarily from financial debt and the Group’s

2018 this amounted to €5.9 million for RWE (previous year: €3.7 mil-

interest-bearing investments. We hedge against negative changes

lion) and €11.0 million for innogy (previous year: €10.8 million).

in value caused by unexpected interest-rate movements using

RWE calculates the CFaR based on the assumption of the refinancing

non-derivative and derivative financial instruments. The financial

of maturing debt, whereas innogy determines it based on the

liabilities and interest-bearing bonds transferred to innogy SE are

planned financing requirement.

managed exclusively by innogy SE.

As of 31 December 2018, the VaR for foreign currency positions was

Opportunities and risks from changes in the values of non-current
securities are centrally controlled by a professional fund management

less than €1.1 million for RWE (previous year: less than €1 million)
and also less than €1 million for innogy (previous year: less than

system operated by RWE AG. This also includes fund management

€1 million). This corresponds to the figure used internally, which

for the assets of the innogy subgroup.

also includes the underlying transactions for cash flow hedges. Unlike

The Group’s other financial transactions are recorded using central-

ised risk management software, with RWE AG and innogy SE each

As of 31 December 2018, the VaR for risks related to the RWE share

monitoring their own transactions.

portfolio amounted to €6.9 million for RWE (previous year: €2.7 mil-

in the previous year, the VaR also reflects the risk of timing differences.

lion) and €4.7 million for innogy (previous year: €3.0 million).

For commodity operations, risk management directives have been

established by RWE AG’s Controlling & Risk Management Depart-

The key internal control parameters for commodity positions at RWE

ment. These regulations stipulate that derivatives may be used to

Supply & Trading are the VaR for the trading business and the VaR

hedge price risks, optimise power plant schedules and increase

for the pooled gas and liquefied natural gas (LNG) business. Here,

margins. Furthermore, commodity derivatives may be traded, subject

the maximum VaR is €40 million and €12 million, respectively. As of

to limits. Compliance with limits is monitored daily. innogy does not

31 December 2018, the VaR was €12.4 million in the trading business

hold derivatives for trading purposes.

(previous year: €7.9 million) and €5.1 million for the pooled gas and

LNG business (previous year: €2.2 million).

Risks stemming from fluctuations in commodity prices and financial

market risks (foreign currency risks, interest rate risks, securities

Additionally, stress tests are carried out on a monthly basis in

risks) are monitored and managed by RWE using indicators such as

relation to the trading and pooled LNG and gas business of

the Value at Risk (VaR), amongst other things. In addition, for the

RWE Supply & Trading to model the impact of commodity price

management of interest rate risk, a Cash Flow at Risk (CFaR) is deter-

changes on the earnings conditions and take risk-mitigating measures

mined. innogy exclusively manages financial risks using these key

if necessary. In these stress tests, market price curves are modified,

figures amongst others.

and the commodity position is revalued on this basis. Historical

scenarios of extreme prices and realistic, fictitious price scenarios

Using the VaR method, RWE and innogy determine and monitor the

are modelled. In the event that the stress tests exceed internal

maximum expected loss arising from changes in market prices with

thresholds, these scenarios are then analysed in detail in relation

a specific level of probability during specific periods. Historical price

to their impact and probability, and – if necessary – risk-mitigating

volatility is taken as a basis in the calculations. With the exception

measures are considered.

of the CFaR data, all VaR figures are based on a confidence interval

of 95 % and a holding period of one day. For the CFaR, a confidence

Commodity risks of the Group’s power generation companies

interval of 95 % and a holding period of one year is taken as a basis.

belonging to the Lignite & Nuclear and European Power segments

are transferred on the basis of available market liquidity – in accord-

ance with Group guidelines – at market prices to the Supply & Trading

segment, where they are hedged. In accordance with the approach

for long-term investments for example, it is not possible to manage

144 RWE Annual Report 2018

commodity risks from long-term positions or positions which cannot

As of 31 December 2018, RWE held the following instruments to

be hedged due to their size and the prevailing market liquidity using

hedge the fair value of commodity price risks:

the VaR concept. As a result, these positions are not included in the

VaR figures. Above and beyond open production positions which

Fair value hedges

have not yet been transferred, the Group companies belonging to

the Lignite & Nuclear and European Power segments are not allowed

to maintain significant risk positions, according to a Group guide-

line. Commodity price risks at innogy can exist in relation to the

renewable generation positions, in the gas storage business and in

the retail business separate from fixed price products. As of

31 December 2018, the aggregated commodity price risk for 2019

at innogy, which was calculated based on the as yet unhedged

CO2 derivatives
Nominal volume (€ million)

Secured average price
(€/metric ton)

Maturity

7 - 12
months

1 - 6
months

>12
months

5.57

commodity risk positions at innogy, was €90 million (previous year:

Cash flow hedges are primarily used to hedge against interest risks

€20 million).

from non-current liabilities as well as currency and price risks from

sales and purchase transactions. Hedging instruments consist of for-

One of our most important instruments to limit market risk is the

wards, swaps and options with foreign currency and interest rates,

conclusion of hedging transactions. The instruments most common-

and forwards, futures and swaps with commodities. Changes in the

ly used are forwards and options with foreign currency, interest rate
swaps, interest rate currency swaps, and forwards, options, futures

fair value of the hedging instruments – insofar as they affect the
effective portion – are recorded under other comprehensive income

and swaps with commodities.

until the underlying transaction is realised. The ineffective portion

of changes in value is recognised in profit or loss. When hedging

Maturities of derivatives related to interest rates, currencies, equities,

commodities, underlying and hedging transactions are based on the

indices and commodities for the purpose of hedging are based on

same price index. This generally does not result in ineffectiveness.

the maturities of the underlying transactions and are thus primarily

When hedging foreign currency risks, ineffectiveness can result from

short term and medium term in nature. Hedges of the foreign currency

the difference in timing between the origination of the hedged item

risks of foreign investments have maturities of up to 20 years.

and the hedging instrument. Ineffectiveness can likewise stem from

hedges containing material foreign currency basis spreads. Upon

All derivative financial instruments are recognised as assets or liabili-

realisation of the underlying transaction, the hedge’s contribution

ties and are measured at fair value. When interpreting their positive

to income from accumulated other comprehensive income is recog-

and negative fair values, it should be taken into account that, with

nised on the income statement or is offset against the initial value

the exception of trading in commodities, these financial instruments

recognition of an asset or a liability. In the prior year, the recognised

are generally matched with underlying transactions that carry offset-

fair value of the hedging instruments used as cash flow hedges

ting risks.

amounted to €478 million.

Hedge accounting pursuant to IFRS 9 is used primarily for mitigating
currency risks from net investments in foreign functional currencies,

commodity market price risks, interest risks from non-current liabilities

As of 31 December 2018, RWE held the following instruments to

hedge future cash flows relating to foreign currency risks:

and currency and price risks from sales and purchase transactions.

Cash flow hedges

Fair value hedges are used to limit the market price risk exposure
related to CO2 emission allowances. In the case of fair value hedges,
both the derivative as well as the underlying hedged transaction

Currency forwards –
purchases

Maturity

7 - 12
months

1 - 6
months

>12
months

(in relation to the hedged risk) are recorded at fair value with an effect

Nominal volume (€ million)

1,534

135

on income. As of the cut-off date for the financial statements of the

preceding year, the fair value of hedging instruments used as fair

value hedges totalled €10 million. In the prior year, the adjustment

to the carrying amount of the underlying transactions in view of the

hedged risk resulted in €17 million in gains, whereas changes in the

value of the hedging instruments resulted in €17 million in losses,

both of which were recognised in the financial result.

Avg. EUR/USD exchange rate

Avg. EUR/GBP exchange rate

Avg. EUR/CAD exchange rate

1.20

0.90

1.57

Currency forwards –
sales

Nominal volume (€ million)

– 1,743

Avg. EUR/USD exchange rate

Avg. EUR/GBP exchange rate

Avg. EUR/CAD exchange rate

1.23

0.90

1.53

0.91

1.58

– 339

1.28

0.91

738

1.19

0.92

1.55

– 217

1.17

0.91

Consolidated financial statements > Notes

145

As of 31 December 2018, RWE held the following instruments to

in the appropriate currencies, interest rate currency swaps, and other

hedge future cash flows relating to interest risks:

currency derivatives as hedging instruments. If there are changes in

Maturity

7 – 12
months

1 – 6
months

Cash flow hedges

Interest swaps

Nominal volume (£ million)

Secured average interest
rate (%)

>12
months

1,642

1.56

the exchange rates of currencies in which the bonds used for hedg-

ing are denominated or changes in the fair value of interest rate

currency swaps, this is recorded under foreign currency translation

adjustments in other comprehensive income. As of 31 December 2018,

RWE held the following instruments to hedge net investments in

foreign operations:

Net investment hedges

Maturity

7 - 12
months

1 - 6
months

>12
months

The commercial optimisation of the power plant portfolio is based

on a dynamic hedging strategy. Hedged items and hedging instru-

ments are constantly adjusted based on changes in market prices,

market liquidity and the sales business with consumers. Commodity

prices are hedged if this leads to a positive margin. Proprietary com-

modities trading is strictly separated from this when managing risks.

In the previous year, changes of €950 million after taxes in the

fair values of hedging instruments used as cash flow hedges were

recognised in accumulated other comprehensive income. Ineffective-

nesses of cash flow hedges amounted to €0 million in the prior year.

Furthermore, in the previous year, changes of €148 million after

tax in the value of cash flow hedges, which had originally not been

Bonds and currency
forwards – purchases

Nominal volume (€ million)

Avg. EUR/GBP exchange rate

0.89

Bonds and currency
forwards – sales

Nominal volume (€ million)

– 1,576

Avg. EUR/AUD exchange rate

Avg. EUR/GBP exchange rate

Avg. EUR/USD exchange rate

1.58

0.89

1.23

– 4,370

0.85

recognised through profit or loss, were recognised as income. More-

As regards bonds used as hedging instruments for net investment

over, in the previous year, changes in the values of cash flow hedges

hedges, the average price was calculated using the foreign exchange

recognised in other comprehensive income increased the cost of

rate valid on the designation date of the hedging relationship.

non-financial assets by €208 million.

Hedges of net investment in a foreign operation are used to hedge

31 December 2018 had the following effects on the company’s net

The hedging instruments designated in hedging relationships as of

the foreign currency risks of net investment in foreign entities whose

asset, financial and earnings position:

functional currency is not the euro. We use bonds with various terms

Hedging instruments – effects on the net asset, financial and
earnings position

Nominal
amount

Carrying amount

Fair value
changes in the
current period

Recognised
ineffectiveness

€ million

Fair value hedges

Commodity price risks

Cash flow hedges

Interest risks

Foreign currency risks

Commodity price risks

Net investment hedges

Foreign currency risks

Assets

Liabilities

1,642

108

4,5161

1,056

146

861

– 126

– 26

– 18

4,611

– 11

– 5,890

4,070

– 3

1 The net nominal amount stated is made up of purchases in the amount of €7,904 million and sales in the amount of €3,388 million.

146 RWE Annual Report 2018

The carrying amounts of the hedging instruments are recognised in

The hedged items designated in hedging relationships as of

the ‘Other receivables and other assets’ and ‘Other liabilities’

31 December 2018 had the following effects on the company’s

balance- sheet items.

net asset, financial and earnings position:

Fair value hedges

€ million

Commodity price risks

Carrying amount

Of which cumulative fair value
adjustments

Assets

185

Liabilities

Assets

146

Liabilities

Changes in fair
value in the
reporting year

126

Cash flow hedges and net investment hedges

€ million

Cash flow hedges

Interest risks

Foreign currency risks

Commodity price risks

Net investment hedges

Foreign currency risks

Changes in fair
value during the
current period

Reserve for current
hedges

Reserve for
terminated hedges

4,611

– 19

– 158

5,004

1,380

The carrying amounts of the hedged items for fair value hedges are

stated in the ‘Other receivables and other assets’ balance-sheet

Hedge reserve
€ million

item. Amounts realised from OCI and any ineffectiveness are recog-

Balance at 1 Jan 2018

nised in the items on the income statement in which the underlying

Cash flow hedges

transactions are also recognised with an effect on income. The

Effective portion of changes in market value

amounts realised from OCI are recognised in revenue and the cost

of materials, whereas any ineffectiveness is recognised in other

operating income and expenses. Amounts recognised and any

ineffectiveness of hedging interest risks are recognised in financial

income and financial expenses on the income statement.

Interest risks

Foreign currency risks

Commodity price risks

Gain or loss reclassified from OCI to the income
statement – realisation of underlying transactions

The reconciliation of the changes in the hedge reserve in relation

Commodity price risks

to the various risk categories of hedge accounting for fiscal 2018

Gain or loss recognised as a basis adjustment

follows below:

Interest risks

Foreign currency risks

Commodity price risks

171

5,085

– 26

5,099

– 473

187

– 15

171

Tax effect of the change in the hedge reserve

– 1,502

Net investment hedges

Effective portion of changes in market value

Foreign currency risks

Ofsetting against currency adjustments

Balance at 31 Dec 2018

– 57

3,340

Consolidated financial statements > Notes

147

Credit risks. In the fields of finance and commodities, RWE and
innogy primarily have credit relationships with banks that have good

• Stage 1 – Expected 12-month credit losses: At initial recognition,

financial assets are generally assigned to this stage – with the

creditworthiness and other trading partners, most of which have

exception of those that have been purchased or originated credit

good creditworthiness. Furthermore, innogy has credit relationships

impaired, which are thus considered separately. The level of im-

primarily with banks and other business partners with good credit-

pairment results from the cash flows expected for the entire term

worthiness within the scope of large-scale projects such as the con-

of the financial instrument, multiplied by the probability of a

struction of wind farms. RWE and innogy review counterparty de-

default within 12 months from the reporting date. The effective

fault risks before contracts are concluded. Both companies mitigate

interest rate used for measurement is determined on the basis of

such risks by establishing limits which are adjusted during the busi-

the carrying amount before impairment (gross).

ness relationships if the creditworthiness of the business partners

• Stage 2 – Lifetime expected credit losses (gross): If the credit

changes. Counterparty risks are monitored constantly so that coun-

risk has risen significantly between initial recognition and the re-

termeasures can be initiated early on. Furthermore, RWE and innogy

porting date, the financial instrument is assigned to this stage.

are exposed to credit risks due to the possibility of customers failing

Unlike Stage 1, default events expected beyond the 12-month

to meet their payment obligations. We identify these risks by con-

period from the reporting date are also considered in calculating

ducting regular analyses of the creditworthiness of our customers

the impairment. The effective interest rate used for measurement

and initate countermeasures if necessary.

is still determined on the basis of the carrying amount before im-

pairment (gross).

Amongst other things, RWE and innogy demand guarantees, cash
collateral and other forms of security in order to mitigate credit

• Stage 3 – Lifetime expected credit losses (net): If in addition to
the criteria for Stage 2 there is an objective indication of an im-

risks. Furthermore, we take out credit insurance policies to protect

pairment, the financial asset is assigned to Stage 3. The impair-

against defaults. Bank guarantees received as collateral are from

ment is calculated analogously to Stage 2. In this case, however,

financial institutions which normally have been issued a rating of at

the effective interest rate used for measurement is applied to

least ‘A-/A3’ by rating agencies. Collateral for credit insurance is

the carrying amount after impairment (net).

pledged by insurers with an investment-grade rating.

The maximum balance-sheet default risk is derived from the carry-

ments in the following categories:

ing amounts of the financial assets stated on the balance sheet.

The default risks for derivatives correspond to their positive fair

• debt instruments measured at amortised cost,

values. Risks can also stem from financial guarantees and loan

• debt instruments measured at fair value through other compre-

In the RWE Group, risk provisions are formed for financial instru-

commitments which we have to fulfill vis-à-vis external creditors in

hensive income.

the event of a default of a certain debtor. As of 31 December 2018,

these obligations amounted to €223 million (previous year:

For debt instruments for which there has been no significant rise in

€161 million). As of 31 December 2018, default risks were balanced

credit risk since initial recognition, a risk provision is recognised in

against credit collateral, financial guarantees, bank guarantees and

the amount of the expected 12-month credit losses (Stage 1). In

other collaterals amounting to €1.3 billion (previous year: €1.4 billion).

addition, a financial instrument is assigned to Stage 1 of the impair-

Of this, €0.2 billion relates to trade receivables (previous year:

ment model if the absolute credit risk is low on the balance-sheet

€0.5 billion), €0.3 billion to derivatives used for hedging purposes

date. The credit risk is classified as low if the debtor’s internal or

(previous year: €0.4 billion), €0.8 billion to other derivatives (previ-

external rating is investment-grade. For trade accounts receivable,

ous year: €0.5 billion), and €0 billion to ‘Assets held for sale’.

the risk provision corresponds to the lifetime expected credit losses

There were no material defaults in fiscal 2018 or the previous year.

(Stage 2).

In the RWE Group, the risk provision for financial assets is deter-

To determine whether a financial instrument is assigned to Stage 2

mined on the basis of expected credit losses. These are determined

of the impairment model, it must be determined whether the credit

on the basis of the probability of default, loss given default and the

risk has increased significantly since initial recognition. To make this

exposure at default. We determine the probability of default and

assessment, we consider quantitative and qualitative information

loss given default using historical data and forward-looking infor-

supported by our experience and assumptions regarding future

mation. The exposure at default date for financial assets is the

developments. In so doing, special importance is accorded to the

gross carrying amount on the balance-sheet date. The expected

sector in which the RWE Group’s debtors are active. Our experience

credit loss for financial assets determined on this basis corresponds

is based on studies and data from financial analysts and govern-

to the difference between the contractually agreed payments and

ment authorities, amongst others. Special attention is paid to the

the payments expected by RWE, discounted by the original effective

following developments:

interest rate. The contractually agreed payments for lease receiva-

bles are determined in accordance with IAS 17. The assignment to

one of the levels described below influences the level of the expect-

ed losses and the effective interest income recognised.

148 RWE Annual Report 2018

• significant deterioration of the internal or external rating of the

• An insolvency or another restructuring procedure is impending.

financial instrument,

• The market for the financial asset is no longer active.

• unfavourable changes in risk indicators, e.g. credit spreads or

• A sale is only possible at a high discount, which reflects the

debtor-related credit default swaps,

debtor’s reduced creditworthiness.

• negative development of the debtor’s regulatory, technological or

economic environment,

A payment default and an associated assignmet of the financial

• danger of an unfavourable development of business resulting in

asset to Stage 3 is also assumed if the contractually agreed payments

a significant reduction in operating income.

are more than 90 days overdue and there is no information disprov-

Independent thereof, a significant rise in credit risk and thus an

we generally assume that this assumption does not apply to trade

ing the assumption of a payment default. Based on our experience,

assignment of the financial instrument to Stage 2 are assumed if the

accounts receivable.

contractually agreed payments are more than 30 days overdue and

there is no information that contradicts this assumption.

A financial asset is depreciated if there are indications that the

counterparty is in serious financial difficulty and the situation is

We draw conclusions about the potential default of a counterparty

unlikely to improve. We may also take legal recourse and other

from information from internal credit risk management. If internal or

measures in order to enforce the contractually agreed payments

external information indicates that the counterparty cannot fulfil its

in the event of an impairment.

obligations, the associated receivables are classified as unrecoverable
and assigned to Stage 3 of the impairment model. Examples of such

information are:

• The debtor of the receivable has apparent financial difficulties.

• The debtor has already commited a breach of contract by missing

or delaying payments.

• Concessions already had to be made to the debtor.

The following impairments were recognised for financial assets

stated under the following balance-sheet items within the scope of

IFRS 7:

Impairment of financial assets

€ million

Financial receivables

Balance at 1 Jan 2018

Remeasurement due to new measurement
parameters

Newly acquired/issued financial assets

Redeemed or derecognised financial assets

Change in the scope of consolidation

Transfers

Balance at 31 Dec 2018

Stage 1 –
12-month
expected credit
losses

Stage 2 –
lifetime expected
credit losses

Stage 3 –
lifetime expected
credit losses

Purchased or
originated credit
impaired

– 1

– 10

– 21

– 71

Total

140

– 1

– 81

– 21

Consolidated financial statements > Notes

149

For trade accounts receivable, the expected credit loss is deter-

mined by applying the simplified approach taking account of the

entire lifetime of the financial instruments.

In the RWE Group, there are no cases where a risk provision for trade

accounts receivable was not recognised due to the collateral on the

books.

The following table shows the development of the risk provisions for

trade accounts receivable:

Risk provision for trade accounts receivable
€ million

Balance at 1 Jan 2018 (pursuant to IFRS 9)

Addition

Withdrawal

Currency translation

Changes in the scope of consolidation

Transfers

Balance at 31 Dec 2018

405

– 81

– 2

– 390

The following table presents the gross carrying amounts of the

financial instruments under the scope of the impairment model:

Gross carrying amounts of financial assets
as of 31 Dec 2018

€ million

Class 1 – 5: low risk

Class 6 – 9: medium risk

Class 10: high risk

Class 11: doubtful

Class 12: loss

Equivalent
to
S&P scale

Stage 1 –
12-month
expected
credit losses

Stage 2 –
lifetime
expected
credit losses

Stage 3 –
lifetime
expected
credit losses

Trade accounts
receivable

AAA to BBB–

BB+ to BB–

B+ to B–

CCC to C

7,228

7,301

1,611

297

Total

8,839

376

1,999

9,325

150 RWE Annual Report 2018

Liquidity risks. As a rule, RWE Group companies refinance with
RWE AG or innogy SE, depending on which part of the Group they

reduced to €3 billion in October 2017. It expires in March 2021. As

of the balance-sheet date, US$0 billion (previous year: US$0.5 billion)

belong to. In this regard, there is a risk that liquidity reserves will

of RWE AG’s US$5 billion commercial paper programme (previous

prove to be insufficient to meet financial obligations in a timely

year: US$5 billion) was used. As of 31 December 2018, innogy SE

manner. In 2019, bonds with a volume of approximately €0.8 billion

had a commercial paper programme with a volume of €3 billion, but

(previous year: €1.0 billion) and liabilities owed to banks of

this programme has not yet been used. Above and beyond this, RWE

€0.1 billion (previous year: €0.3 billion) are due. In addition,

AG and innogy SE can finance themselves using €10 billion and

short-term debt must be repaid.

€20 billion debt issuance programmes, respectively; as of the balance-

sheet date, outstanding bonds from this programme amounted to

As of 31 December 2018, holdings of cash and cash equivalents and

€0 billion (previous year: €0 billion) at RWE AG and €13.3 billion

current marketable securities amounted to €7,132 million (previous

(previous year: €12.1 billion) at innogy SE. Accordingly, the medium-

year: €8,826 million).

term liquidity risk can be classified as low for both RWE AG and

Since the beginning of October 2017, innogy SE has had its own

innogy.

€2 billion syndicated credit line, which expires in October 2022.

Financial liabilities falling under the scope of IFRS 7 are expected

It may be prolonged twice by a year at a time. Furthermore, the

to result in the following (undiscounted) payments in the coming

credit line can be topped up by €1 billion. RWE AG’s credit line was

years:

Redemption and interest payments on
financial liabilities

€ million

Bonds payable 1

Bank debt

Liabilities arising from finance lease agreements

Other financial liabilities

Derivative financial liabilities

Collateral for trading activities

Miscellaneous other financial liabilities

Redemption payments

Interest payments

Carrying
amounts
31 Dec 2018

1,103

554

241

333

7,060

533

2,553

2019

155

6,681

533

2,549

2020
to 2024

From 2024

539

100

564

413

192

170

282

2019

102

2020
to 2023

From 2024

129

428

143

1 Including hybrid bonds classified as debt as per IFRS, taking into account the earliest possible call date.

Redemption and interest payments on
financial liabilities

€ million

Bonds payable 1

Bank debt

Liabilities arising from finance lease agreements

Other financial liabilities

Derivative financial liabilities

Collateral for trading activities

Redemption liabilities from put options

Miscellaneous other financial liabilities

Redemption payments

Interest payments

Carrying
amounts
31 Dec 2017

13,049

1,594

248

1,464

4,257

389

1,451

5,601

2018

990

262

712

3,429

389

1,451

5,525

2019
to 2022

4,495

810

385

From 2023

7,677

522

197

684

447

2018

666

2019
to 2022

1,912

105

From 2023

3,189

434

296

1 Including hybrid bonds classified as debt as per IFRS, taking into account the earliest possible call date.

Consolidated financial statements > Notes

151

Above and beyond this, as of 31 December 2018, there were financial

We bear legal and contractual liability from our membership in

guarantees for external creditors in the amount of €145 million (pre-

various associations which exist in connection with power plant

vious year: €90 million), which are to be allocated to the first year

projects, profit- and loss-pooling agreements and for the provision

of repayment. Additionally, Group companies have provided loan

of liability cover for nuclear risks, amongst others.

commitments to third-party companies amounting to €78 million

(previous year: €71 million), which are callable in 2019.

On the basis of a mutual benefit agreement, RWE AG and other

Detailed information on the risks of the RWE Group and on the

took to provide approximately €2,244 million in funding to liable

objectives and procedures of the risk management is presented on

nuclear power plant operators to ensure that they are able to meet

page 73 et seqq. in the review of operations.

their payment obligations in the event of nuclear damages. From

parent companies of German nuclear power plant operators under-

(27) Contingent liabilities and financial commitments
As of 31 December 2018, the amount of capital commitments

totalled €2,396 million (previous year: €489 million). This mainly

1 January 2019, onwards, RWE AG has a 23.259 % contractual share

in the liability (21.347 % until 31 December 2018) plus 5 % for

damage settlement costs.

consisted of investment in property, plant and equipment. In the

RWE AG and its subsidiaries are involved in official, regulatory and

previous year, there were unrecognised obligations to provide loans

antitrust proceedings, litigation and arbitration proceedings related

or other financial means to joint ventures, which amounted to

to their operations and are affected by the results of such. In some

€10 million.

cases, out-of-court claims are also filed. However, RWE does not
expect any material negative repercussions from these proceedings

Commitments from operating leases refer largely to rental arrange-

on the RWE Group’s economic or financial position.

ments for power generation and supply plants as well as rent and

lease contracts for storage and administration buildings. Minimum

lease payments have the following maturity structure:

(28) Segment reporting
RWE is divided into four segments, which are separated from each

other based on functional criteria.

Operating leases

€ million

Due within 1 year

Due after 1 to 5 years

Due after 5 years

Nominal value

31 Dec 2018

31 Dec 2017

We report on German electricity generation from lignite and nuclear

159

354

572

265

685

1,261

2,211

fuel in the Lignite & Nuclear segment. This includes the Rhenish

opencast lignite mining operations.

The European Power segment encompasses the German, British,

Dutch/Belgian and Turkish power generation business via gas and

hard coal-fired power stations, the Scottish biomass-fired power

plant Markinch, and the project management and engineering spe-

We have made long-term contractual purchase commitments for

cialist RWE Technology International. The segment is supplemented

supplies of fuels, including natural gas in particular. Payment obliga-

by hydroelectric power stations in Germany and Luxembourg.

tions stemming from the major long-term purchase contracts

amounted to €27.9 billion as of 31 December 2018 (previous year:

The Supply & Trading segment contains energy and commodities

€25.8 billion), of which €0.8 billion is due within one year (previous

trading, the marketing and hedging of the RWE Group’s electricity

year: €0.9 billion).

position and the gas midstream business. This segment is the respon-

sibility of RWE Supply & Trading, which also supplies certain major

Gas purchases by the RWE Group are partially based on long-term

industrial and commercial customers with electricity and natural gas.

take-or-pay contracts. The conditions in these contracts, which have

terms up to 2036 in some cases, are renegotiated by the contractual

The innogy – continuing operations segment encompasses the parts

partners at certain intervals, which may result in changes in the

of innogy which will remain within the RWE Group over the long

reported payment obligations. Calculation of the payment obligations

term against the backdrop of the asset swap agreed with E.ON.

resulting from the purchase contracts is based on parameters from

These are the renewables business, innogy’s gas storage facilities

the internal planning.

located in Germany and the Czech Republic, and the stake in the

Austrian energy utility Kelag. Along with electricity generation,

Furthermore, RWE has long-term financial commitments for purchases

activities in the field of renewables include the development and

of electricity. As of 31 December 2018, the minimum payment

implementation of projects to expand capacities. Wind and hydro-

obligations stemming from the major purchase contracts totalled

electric power are the two dominant production technologies. The

€7.8 billion (previous year: €6.8 billion), of which €0.8 billion is due

main production sites are located in Germany, the United Kingdom,

within one year (previous year: €0.4 billion). Above and beyond this,

the Netherlands, Poland, Spain and Italy.

there are also long-term purchase and service contracts for uranium,

conversion, enrichment and fabrication.

152 RWE Annual Report 2018

The grid and retail activities included in the innogy segment in the

‘Other, consolidation’ covers consolidation effects, RWE AG and the

previous year as well as the holding company and the internal ser-

activities of other business areas which are not presented separately.

vice providers are now stated as ‘Discontinued operations’ and are

These activities primarily include our non-controlling interest in the

no longer included in segment reporting.

German transmission system operator Amprion.

Segment reporting
Divisions 2018
€ million

External revenue
(incl. natural gas tax/electricity tax)

Intra-group revenue

Total revenue

Adjusted EBIT

Operating income from investments

Operating income from investments accounted
for using the equity method

Operating depreciation, amortisation and impairment
losses

Impairment losses

Adjusted EBITDA

Carrying amount of investments accounted
for using the equity method

Capital expenditure on intangible assets, property,
plant and equipment

Lignite &
Nuclear

European
Power

Supply &
Trading

innogy –
continuing
operations

Other,
consolidation

RWE Group

1,144

2,340

3,484

279

356

230

926

3,768

4,694²

297

334

125

245

10,317

3,434

13,751

177

− 44

183

1,124

386

1,510

349

350

699

740

592

13,529

− 9,928¹

− 9,910

− 21

− 13

− 34

539

− 1

13,529

619

176

211

919

1,538

1,467

1,079

1 Of which: consolidation of intra-group revenue of – €9,929 million and intra-group revenue of other companies of €1 million.
2 Of which: total revenue from power generation in the United Kingdom of €2,213 million.

Regions 2018

€ million

External revenue 1, 2

Intangible assets and property, plant and
equipment

Germany

4,531

5,882

4,358

5,286

Other EU

3,130

3,004

Rest of
Europe

984

Other

RWE Group

385

430

13,388

14,602

1 Excluding natural gas tax/electricity tax.
2 Broken down by the region in which the service was provided.

Consolidated financial statements > Notes

153

Segment reporting
Divisions 2017
€ million

External revenue
(incl. natural gas tax/electricity tax)

Intra-group revenue

Total revenue

Adjusted EBIT

Operating income from investments

Operating income from investments accounted
for using the equity method

Operating depreciation, amortisation and impairment
losses

Impairment losses

Adjusted EBITDA

Carrying amount of investments accounted
for using the equity method

Capital expenditure on intangible assets and property,
plant and equipment

Lignite &
Nuclear

European
Power

Supply &
Trading

innogy –
continuing
operations

Other,
consolidation

RWE Group

1,271

2,898

4,169

399

272

311

671

269

926

3,967

4,893²

155

− 2

308

463

105

147

10,632

3,419

14,051

265

− 16

271

1,087

377

1,464

398

387

785

2,214

285

13,953

− 10,661¹

− 10,624

− 47

− 41

460

− 2

13,953

1,170

121

137

979

382

2,149

2,846

706

1 Of which: consolidation of intra-group revenue of – €10,679 million and intra-group revenue of other companies of €18 million.
2 Of which: total revenue from power generation in the United Kingdom of €2,166 million.

Regions 2017

€ million

External revenue 1, 2, 3

Germany

4,995

4,593

Other EU

2,915

Rest of
Europe

849

Intangible assets and property, plant and
equipment

18,660

6,930

11,418

Other

RWE Group

470

322

13,822

37,330

1 Excluding natural gas tax/electricity tax.
2 Broken down by the region in which the service was provided.
3 Prior-year figures adjusted.

154 RWE Annual Report 2018

External revenue by product in 2018

€ million

External revenue1

of which: electricity

of which: gas

of which: other revenue

1 Excluding natural gas tax/electricity tax.

External revenue by product in 2017

€ million

External revenue1

of which: electricity

of which: gas

of which: other revenue

1 Excluding natural gas tax/electricity tax.

Lignite &
Nuclear

European
Power

Supply &
Trading

innogy –
continuing
operations

Other,
consolidation

RWE Group

1,132

303

829

925

542

366

10,190

1,124

8,447

1,502

241

799

278

− 1

13,388

10,090

1,565

1,733

Lignite &
Nuclear

European
Power

Supply &
Trading

innogy –
continuing
operations

Other,
consolidation

RWE Group

1,259

451

808

923

594

318

10,517

1,087

8,628

1,738

151

755

284

− 2

13,822

10,430

1,795

1,597

Notes on segment data. We report revenue between the segments
as RWE intra-group revenue. Internal supply of goods and services is

ternal management. The following table presents the reconciliation

of adjusted EBITDA to adjusted EBIT and income from continuing

settled at arm’s length conditions. Adjusted EBITDA is used for in-

operations before tax:

Reconciliation of income items
€ million

Adjusted EBITDA

– Operating depreciation, amortisation and impairment losses

Adjusted EBIT

+ Non-operating result

+ Financial result

income from continuing operations before tax

2018

2017

1,538

− 919

619

− 161

− 409

2,149

− 979

1,170

949

− 63

2,056

Income and expenses that are unusual from an economic perspec-

the disposal of investments or non-current assets not required for

tive, or stem from exceptional events, prejudice the assessment of

operations, impairment of the goodwill of fully consolidated compa-

operating activities. They are reclassified to the non-operating result.

nies, as well as effects of the fair valuation of certain derivatives.

Amongst other things, these can include book gains or losses from

Non-operating result
€ million
Disposal result

Impact of derivatives on earnings

Other

Non-operating result

Further commentary on the non-operating result can be found on

page 47.

2018

2017

− 25

− 146

− 161

107

− 480

1,322

949

Consolidated financial statements > Notes

155

(29) Notes to the cash flow statement
The cash flow statement classifies cash flows according to operat-

Flows of funds from the acquisition and sale of consolidated compa-

nies are included in cash flows from investing activities. Effects of

ing, investing and financing activities. Cash and cash equivalents in

foreign exchange rate changes and other changes in value are stated

the cash flow statement correspond to the amount stated on the

separately.

balance sheet. Cash and cash equivalents consist of cash on hand,

demand deposits and fixed-interest marketable securities with a

Cash flows from financing activities include €922 million (previous

maturity of three months or less from the date of acquisition.

year: €5 million) which was distributed to RWE shareholders,

Among other things, cash flows from operating activities include:

non-controlling shareholders, and €60 million (previous year:

€43 million (previous year: €88 million) which was distributed to

€60 million) which was distributed to hybrid capital investors.

• cash flows from interest income of €166 million (previous year:

Furthermore, cash flows from financing activities include purchases

€166 million) and cash flows used for interest expenses of

of €2 million (previous year: €19 million) and sales in the amount of

€176 million (previous year: €341 million),

€687 million (previous year: €0 million) of shares in subsidiaries and

• €321 million (previous year: €409 million) in taxes on income paid

other business units which did not lead to a change of control.

(less refunds),

•

income from investments, corrected for items without an effect on

Changes in liabilities from financing activities are presented in the

cash flows, in particular from accounting using the equity method,

following table:

which amounted to €107 million (previous year: €137 million).

Statement of changes
in financial liabilities
€ million

Current financial
liabilities

Non-current financial
liabilities

Other items

1 Jan 2018

Increase/
repayment

Changes in
the scope of
consolidation

Of which
stated as
‘held for sale’

Currency
effects

Changes in
fair values

Other
changes

31 Dec 2018

2,787

− 196

− 2,845

− 2,779

14,414

435

− 13,840

− 1,494

− 58

1,046

766

984

1,998

Statement of changes
in financial liabilities
€ million

1 Jan 2017

Increase/
repayment

Changes in the
scope of con-
solidation

Currency
effects

Changes in
fair values

Other
changes

31 Dec 2017

Current financial liabilities

2,142

− 209

Non-current financial
liabilities

Other items

16,041

− 322

− 338

− 39

− 13

175

− 144

862

2,787

− 377

− 915

14,414

The amount stated in the ‘Other items’ line item contains cash-

Restrictions on the disposal of cash and cash equivalents amounted

effective changes resulting from derivative financial instruments and

to €0 million (previous year: €38 million).

margin payments, which are recognised in cash flows from financing

activities in the cash flow statement.

156 RWE Annual Report 2018

(30) Information on concessions
In the fields of electricity, gas and water supply, there are a number

ciated infrastructure, such as water utility plants, as well as to im-

plement capital expenditure. Concessions in the water business

of easement agreements and concession contracts between

generally have terms of up to 25 years.

RWE Group companies and the governmental authorities in the

areas we supply.

(31) Related party disclosures
Within the framework of their ordinary business activities, RWE AG

Easement agreements are used in the electricity and gas business

and its subsidiaries have business relationships with numerous

to regulate the use of public rights of way for laying and operating

companies. These include associated companies and joint ventures,

lines for public energy supply. These agreements are generally limited

which are classified as related parties. In particular, this category

to a term of 20 years. After expiry, there is a legal obligation to

includes material investments of the RWE Group, which are account-

transfer ownership of the local distribution facilities to the new

ed for using the equity method.

operator, for appropriate compensation.

Water concession agreements contain rules for the right and obliga-

joint ventures, resulting in the following items in RWE’s consolidated

tion to provide water and wastewater services, to operate the asso-

financial statements:

Business transactions were concluded with major associates and

Key items from transactions with associates
and joint ventures
€ million

Income

Expenses

Receivables

Liabilities

Associated companies

Joint ventures

2018

1,855

3,193

140

191

2017

3,553

2,992

247

168

2018

2017

145

The key items from transactions with associates and joint ventures

share-based payments within the framework of LTIP SPP amounted

mainly stem from supply and service transactions. In addition to

to €7,479,000 (previous year: 3,183,000) and the pension service

supply and service transactions, there are also financial links with

cost amounted to €536,000 (previous year: €538,000). Provisions

joint ventures. During the reporting period, income of €4 million

totalling €36,052,000 (previous year: €32,624,000) were formed for

(previous year: €7 million) was recorded from interest-bearing loans

obligations vis-à-vis key management personnel.

to joint ventures. As of the balance-sheet date, financial receivables

accounted for €56 million of the receivables from joint ventures

The remuneration model and remuneration of the Executive and

(previous year: €142 million). All transactions were completed at

Supervisory Boards of RWE AG calculated pursuant to the German

arm’s length conditions, i.e. on principle the conditions of these

Commercial Code is presented in the remuneration report, which is

transactions did not differ from those with other enterprises.

included in the review of operations.

€165 million of the receivables (previous year: €285 million) and

€166 million of the liabilities (previous year: €139 million) fall due

In total, the remuneration of the Executive Board amounted to

within one year. Other obligations from executory contracts

€6,880,000 (previous year: €7,274,000). This contains share-based

amounted to €578 million (previous year: €1,426 million).

payments amounting to €2,350,000 (125,000 RWE performance

shares) granted within the framework of the LTIP SPP. In the previous

Above and beyond this, the RWE Group did not execute any material

year, share-based payments amounting to €2,567,000 (192,556

transactions with related companies or persons.

RWE and 10,264 innogy performance shares) were granted.

With regard to fiscal 2018, in addition to the members of the Exec-

Including remuneration from subsidiaries for the exercise of mandates,

utive Board and Supervisory Board of RWE AG, the Executive Board

the Supervisory Board received total remuneration of €3,480,000

members and Supervisory Board members of innogy SE are deemed

(previous year: €3,637,000) in fiscal 2018. The employee represent-

to be key management personnel for the RWE Group. The following

atives on the Supervisory Board have labour contracts with the

information pertains to total compensation pursuant to IAS 24.

respective Group companies. Remuneration occurs in accordance

Key management personnel (Executive and Supervisory Board

members) received €19,721,000 in short-term compensation com-

During the period under review, no loans or advances were granted

ponents for fiscal 2018 (previous year: €22,121,000). Additionally,

to members of the Executive or Supervisory Boards.

with the relevant contractual conditions.

Consolidated financial statements > Notes

157

Former members of the Executive Board and their surviving depend-

statements of RWE AG and its subsidiaries, along with the review of

ants received €10,802,000 (previous year: €10,699,000), of which

the interim statements. Other assurance services include fees for

€940,000 came from subsidiaries (previous year: €918,000). As of

review of the internal controlling system, as well as expenses related

the balance-sheet date, €146,721,000 (previous year:

to statutory or court-ordered requirements. In particular, the fees

€146,430,000) were accrued for defined benefit obligations to

for tax services include compensation for consultation in the prepa-

former members of the Executive Board and their surviving depend-

ration of tax returns and other national and international tax-related

ants. Of this, €8,516,000 was set aside at subsidiaries (previous

matters as well as review of resolutions of the tax authorities. Other

year: €8,601,000).

services primarily include compensation for IT project consulting.

Information on the members of the Executive and Supervisory

RWE recognised the following fees as expenses for the services

Boards is presented on page 196 et seqq. of the Notes.

rendered by the auditors of the consolidated financial statements,

(32) Auditors‘ fees
The fees for audit services primarily contain the fees for the audit of

the consolidated financial statements and for the audit of the financial

PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft

(PwC) and companies belonging to PwC’s international network:

PwC network fees

€ million

Audit services

Other assurance services

Tax services

Other services

2018

2017

Total

17.7

5.1

0.7

3.8

27.3

Of which:
Germany

11.0

4.7

0.6

1.8

18.1

Total

17.5

3.4

0.3

3.2

24.4

Of which:
Germany

10.9

3.2

0.3

0.8

15.2

(33) Application of the exemption rule pursuant to Sec. 264,

Para. 3 and Sec. 264b of the German Commercial Code
In fiscal 2018, the following German subsidiaries made partial use of

(34) Events after the balance-sheet date
In the period from 1 January 2019 until the completion of the con-

solidated financial statements on 27 February 2019, the following

the exemption clause pursuant to Sec. 264, Para. 3 and Sec. 264b of

significant events occurred:

the German Commercial Code (HGB):

• BGE Beteiligungs-Gesellschaft für Energieunternehmen mbH,

Essen,

Recommendation of the Structural Change Commission
In January 2019, the Growth, Structural Change and Employment

Commission established by the German government submitted its

• GBV Vierunddreißigste Gesellschaft für Beteiligungsverwaltung

final report. The body, which consists of representatives from industry,

mbH, Essen,

trade unions, science, civic initiatives and environmental organisa-

• Kernkraftwerk Lingen Gesellschaft mit beschränkter Haftung,

tions, recommends that Germany phase out coal by 2038. It envis-

Lingen (Ems),

ages the total capacity of lignite and hard coal-fired power stations

• KMG Kernbrennstoff-Management Gesellschaft mit beschränkter

on the market being reduced to 15 GW each by the end of 2022

Haftung, Essen,

through shutdowns or conversions. The objective is to have lignite

• Rheinbraun Brennstoff GmbH, Cologne,

and hard coal-fired power stations with a total capacity of only 9 GW

• Rheinische Baustoffwerke GmbH, Bergheim,

and 8 GW on the market by 2030. The government intends to submit

• RV Rheinbraun Handel und Dienstleistungen GmbH, Cologne,

a package of climate protection laws based on the recommendations

• RWE Technology International GmbH, Essen,

and initiate talks with the affected companies. We report on the

• RWE Trading Services GmbH, Essen.

Commission’s recommendations and their potential consequences

for RWE in detail on page 33.

158 RWE Annual Report 2018

Sale of a CHP station
The sale of the Belgian CHP station Inesco to the UK chemicals

group INEOS marked the completion of a further divestment at the

end of February 2019. The plant is eleven years old and is located

in a chemical park near Antwerp operated by INEOS.

Cancellation of a hybrid bond
On 6 February 2019, we announced the cancellation of a £750 mil-

lion hybrid bond as of 20 March 2019 without replacing it with new

hybrid capital. The hybrid bond was classified as as equity pursuant

to IAS 32 as of the balance-sheet date.

Acquisition of a grid shareholding
At the end of February, RWE purchased innogy SE’s majority interest

in Czech distribution system operator innogy Grid Holding (IGH). We

had made this commitment as part of the asset swap agreed upon

with E.ON. We had also undertaken to sell the shareholding in IGH

on to E.ON. innogy held a 50.04 % stake in IGH. The remaining
shares are held by Australian financial service provider and infra-

structure investor Macquarie. The acquisition of IGH is an intra-

group transaction, which will result in a reduction in non- controlling

interests in the RWE consolidated financial statements.

Consolidated financial statements > Notes

159

(35) Declaration according to Sec. 161 of the German Stock

Corporation Act
The declarations on the German Corporate Governance Code pre-

scribed by Sec. 161 of the German Stock Corporation Act (AktG)

have been submitted for RWE AG and innogy SE and have been

made permanently and publicly available to shareholders on the
Internet pages of RWE AG¹ and innogy SE2.

Essen, 27 February 2019

The Executive Board

Schmitz

Krebber

1 www.rwe.com/statement-of-compliance-2018
2 www.innogy.com/statement-of-compliance-2018

160 RWE Annual Report 2018

3.7 LIST OF SHAREHOLDINGS (PART OF THE NOTES)

List of shareholdings as per Sec. 285 No. 11 and No. 11a and Sec. 313 Para. 2 (in relation to Sec. 315 e I) of HGB as of 31 December 2018

Shareholding in %

Equity

Net income/loss

Direct

I. Affiliated companies which are included in the

consolidated financial statements

Aktivabedrijf Wind Nederland B.V., Zwolle/Netherlands

Alte Haase Bergwerks-Verwaltungs-Gesellschaft mbH, Dortmund

An Suidhe Wind Farm Limited, Swindon/United Kingdom

Andromeda Wind s.r.l., Bolzano/Italy

Artelis S.A., Luxembourg/Luxembourg

A/V/E GmbH, Halle (Saale)

Bayerische Bergbahnen-Beteiligungs-Gesellschaft mbH, Gundremmingen

Bayerische Elektrizitätswerke Gesellschaft mit beschränkter Haftung, Augsburg

Bayerische-Schwäbische Wasserkraftwerke Beteiligungsgesellschaft mbH,
Gundremmingen

Belectric Australia Pty. Limited, Southbank/Australia

Belectric France S.à.r.l., Vendres/France

Belectric Italia s.r.l., Latina/Italy

Belectric Solar & Battery - Group - (pre-consolidated)

Belectric Chile Energia Fotovoltaica LTDA, Santiago de Chile/Chile

Belectric Espana Fotovoltaica S.L., Madrid/Spain

BELECTRIC GmbH, Kolitzheim

Belectric Inversiones Latinoamericana S.L., Madrid/Spain

Belectric Israel Ltd., Be’er Scheva/Israel

Belectric Photovoltaic India Private Limited, Mumbai/India

BELECTRIC PV Dach GmbH, Sömmerda

Belectric Solar & Battery GmbH, Kolitzheim

Belectric Solar Ltd., Slough/United Kingdom

hoch.rein Beteiligungen GmbH, Kolitzheim

Inversiones Belectric Chile LTDA, Santiago de Chile/Chile

Jurchen Technology India Private Limited, Mumbai/India

Solar Holding Poland GmbH, Kolitzheim

BGE Beteiligungs-Gesellschaft für Energieunternehmen mbH, Essen

100

Bilbster Wind Farm Limited, Swindon/United Kingdom

Bristol Channel Zone Limited, Bristol/United Kingdom

Broadband TelCom Power, Inc., Santa Ana/USA

BTB-Blockheizkraftwerks, Träger- und Betreibergesellschaft mbH Berlin, Berlin

Budapesti Elektromos Muvek Nyrt., Budapest/Hungary

Carl Scholl GmbH, Cologne

Carnedd Wen Wind Farm Limited, Swindon/United Kingdom

Cegecom S.A., Luxembourg/Luxembourg

Channel Energy Limited, Bristol/United Kingdom

Cloghaneleskirt Energy Supply Limited, Kilkenny City/Ireland

Dromadda Beg Wind Farm Limited, Kilkenny City/Ireland

ELE Verteilnetz GmbH, Gelsenkirchen

Electra Insurance Limited, Hamilton/Bermuda

Elektrizitätswerk Landsberg GmbH, Landsberg am Lech

ELMU DSO Holding Korlátolt Felelosségu Társaság, Budapest/Hungary

Total

100

€ '000

172,445

– 66,665

21,926

8,903

38,900

1,754

27,208

24,728

57,581

– 503

356

2,574

40,347

4,317,938

3,313

– 2,070

19,783

644,109

536

– 3,816

10,705

– 17,066

1.421

883

28,541

1,562

692,199

€ '000

– 9,306

– 1,462

837

3,387

2,898

– 1,604

763

3,128

– 36

– 182

– 160

– 25,8202

335

– 100

31,711

– 101

– 373

805

– 780

– 181

– 288

115

32,842

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with non-

Group companies.

Consolidated financial statements > List of shareholdings (part of the notes)

161

I. Affiliated companies which are included in the

consolidated financial statements

ELMU Halozati Eloszto Kft., Budapest/Hungary

ELMU-ÉMÁSZ Energiakereskedo Kft., Budapest/Hungary

ELMU-ÉMÁSZ Energiaszolgáltató Zrt., Budapest/Hungary

ELMU-ÉMÁSZ Energiatároló Kft., Budapest/Hungary

ELMU-ÉMÁSZ Solutions Kft., Budapest/Hungary

ELMU-ÉMÁSZ Telco Kft., Budapest/Hungary

ELMU-ÉMÁSZ Ügyfélszolgálati Kft., Budapest/Hungary

ÉMÁSZ Halozati Kft., Miskolc/Hungary

Emscher Lippe Energie GmbH, Gelsenkirchen

Energiedirect B.V., Waalre/Netherlands

Energienetze Berlin GmbH, Berlin

Energies France S.A.S. - Group - (pre-consolidated)

Centrale Hydroelectrique d'Oussiat S.A.S., Paris/France

Energies Charentus S.A.S., Paris/France

Energies France S.A.S., Paris/France

Energies Maintenance S.A.S., Paris/France

Energies Saint Remy S.A.S., Paris/France

Energies VAR 1 S.A.S., Paris/France

Energies VAR 3 S.A.S., Paris/France

SAS Île de France S.A.S., Paris/France

Energiewacht Groep B.V. - Group - (pre-consolidated)

Energiewacht Facilities B.V., Zwolle/Netherlands

Energiewacht Groep B.V., Meppel/Netherlands

GasWacht Friesland Facilities B.V., Leeuwarden/Netherlands

Energiewacht N.V. - Group - (pre-consolidated)

EGD-Energiewacht Facilities B.V., Assen/Netherlands

Energiewacht installatie B.V., Assen/Netherlands

Energiewacht N.V., Veendam/Netherlands

Energiewacht West Nederland B.V., Assen/Netherlands

energis GmbH, Saarbrücken

energis-Netzgesellschaft mbH, Saarbrücken

Energy Resources B.V., 's-Hertogenbosch/Netherlands

Energy Resources Holding B.V., 's-Hertogenbosch/Netherlands

Energy Resources Ventures B.V., 's-Hertogenbosch/Netherlands

envia Mitteldeutsche Energie AG, Chemnitz

envia SERVICE GmbH, Cottbus

envia TEL GmbH, Markkleeberg

envia THERM GmbH, Bitterfeld-Wolfen

enviaM Beteiligungsgesellschaft Chemnitz GmbH, Chemnitz

enviaM Beteiligungsgesellschaft mbH, Essen

eprimo GmbH, Neu-Isenburg

Shareholding in %

Equity

Net income/loss

Direct

Total

100

€ '000

738,577

3,407

6,593

– 359

105

1,113

274,107

56,917

– 52,480

31,329

€ '000

26,885

2,009

708

– 370

1,107

10,491

36,492

500

1982

15,272

2,9342

28,546

2,2902

128,852

33,002

141,252

38,055

23,867

14,832

1,098

– 6,048

– 114

1,750,245

202,522

2,167

22,116

67,266

56,366

175,691

4,600

3,118

31,675

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with

non-Group companies.

162 RWE Annual Report 2018

I. Affiliated companies which are included in the

consolidated financial statements

Essent Belgium N.V., Antwerp/Belgium

Essent CNG Cleandrive B.V., 's-Hertogenbosch/Netherlands

Essent Energie Verkoop Nederland B.V., 's-Hertogenbosch/Netherlands

Essent EnergieBewust Holding B.V., 's-Hertogenbosch/Netherlands

Essent Energy Group B.V., Arnhem/Netherlands

Essent IT B.V., Arnhem/Netherlands

Essent Nederland B.V., Arnhem/Netherlands

Essent N.V., 's-Hertogenbosch/Netherlands

Essent Retail Energie B.V., 's-Hertogenbosch/Netherlands

Essent Rights B.V., 's-Hertogenbosch/Netherlands

Essent Sales Portfolio Management B.V., 's-Hertogenbosch/Netherlands

Eszak-magyarorszagi Aramszolgáltató Nyrt., Miskolc/Hungary

EuroSkyPark GmbH, Saarbrücken

EVIP GmbH, Bitterfeld-Wolfen

EWV Energie- und Wasser-Versorgung GmbH, Stolberg

FAMIS Gesellschaft für Facility Management und Industrieservice mbH,
Saarbrücken

Fri-El Anzi Holding s.r.l., Bolzano/Italy

Fri-El Anzi s.r.l., Bolzano/Italy

Fri-El Guardionara Holding s.r.l., Bolzano/Italy

Fri-El Guardionara s.r.l., Bolzano/Italy

GasNet, s.r.o., Ústí nad Labem/Czech Republic

GBV Vierunddreißigste Gesellschaft für Beteiligungsverwaltung mbH, Essen

100

Geas Energiewacht B.V., Enschede/Netherlands

Gemeinschaftskraftwerk Bergkamen A beschränkt haftende OHG, Bergkamen

Generación Fotovoltaica De Alarcos, S.L.U., Barcelona/Spain

Georgia Biomass Holding LLC, Savannah/USA

Georgia Biomass LLC, Savannah/USA

GfV Gesellschaft für Vermögensverwaltung mbH, Dortmund

100

Green Gecco GmbH & Co. KG, Essen

GridServices, s.r.o., Brno/Czech Republic

GWG Grevenbroich GmbH, Grevenbroich

Hardin Wind LLC, Chicago/USA

Harryburn Wind Farm Limited, Swindon/United Kingdom

Hof Promotion B.V., Eindhoven/Netherlands

Improvers B.V. - Group - (pre-consolidated)

Certified B.V., Amsterdam/Netherlands

Improvers B.V., 's-Hertogenbosch/Netherlands

Improvers Community B.V., Amsterdam/Netherlands

Konnektor B.V., Amsterdam/Netherlands

innogy Aqua GmbH, Mülheim an der Ruhr

innogy Benelux Holding B.V., 's-Hertogenbosch/Netherlands

innogy Bergheim Windparkbetriebsgesellschaft mbH, Hanover

Shareholding in %

Equity

Net income/loss

Direct

Total

€ '000

99,503

– 28

98,220

– 4

446

– 275,174

723,500

6,981,400

842,220

328,482

286,599

828

11,347

53,527

7,468

7,368

7,652

10,184

9,690

908,842

13,855,458

17,700

5,929

59,014

40,061

128,465

89,423

38,266

24,683

– 1,820

– 66

1,002

€ '000

4,323

– 17

– 4,600

– 4

– 20

– 8,392

8,300

– 755,900

149,900

55,654

10,794

495

17,181

1,961

1,161

2,221

2,463

2,385

177,895

– 19,392

1,600

556

1,018

16,548

24,784

1,098

32,536

2,545

– 410

– 337

5922

233,106

1,576,700

– 1,413,500

100

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with

non-Group companies.

Consolidated financial statements > List of shareholdings (part of the notes)

163

I. Affiliated companies which are included in the

consolidated financial statements

innogy Beteiligungsholding GmbH, Essen

innogy Brise Windparkbetriebsgesellschaft mbH, Hanover

innogy Business Services Benelux B.V., Arnhem/Netherlands

innogy Business Services Polska Sp. z o.o., Krakow/Poland

Innogy Business Services UK Limited, Swindon/United Kingdom

innogy Ceská republika a.s., Prague/Czech Republic

innogy e-mobility US LLC, Delaware/USA

innogy Energie, s.r.o., Prague/Czech Republic

innogy Energo, s.r.o., Prague/Czech Republic

innogy Evendorf Windparkbetriebsgesellschaft mbH, Hanover

innogy Finance B.V., 's-Hertogenbosch/Netherlands

innogy Gas Storage NWE GmbH, Dortmund

innogy Gas Storage, s.r.o., Prague/Czech Republic

innogy Gastronomie GmbH, Essen

innogy Grid Holding, a.s., Prague/Czech Republic

Innogy GyM 2 Limited, Swindon/United Kingdom

Innogy GyM 3 Limited, Swindon/United Kingdom

Innogy GyM 4 Limited, Swindon/United Kingdom

innogy Hörup Windparkbetriebsgesellschaft mbH, Hörup

innogy Hungária Tanácsadó Kft., Budapest/Hungary

innogy indeland Windpark Eschweiler GmbH & Co. KG, Eschweiler

innogy Innovation Berlin GmbH, Berlin

INNOGY INNOVATION CENTER LTD, Tel Aviv/Israel

innogy Innovation GmbH, Essen

innogy Innovation UK Ltd., London/United Kingdom

innogy International Participations N.V., 's-Hertogenbosch/Netherlands

innogy IT Magyarország Kft. „v.a.”, Budapest/Hungary

innogy Italia s.p.a., Milan/Italy

innogy Kaskasi GmbH, Hamburg

innogy Lengerich Windparkbetriebsgesellschaft mbH, Gersten

innogy Limondale Sun Farm Holding Pty. Ltd., Southbank/Australia

innogy Lüneburger Heide Windparkbetriebsgesellschaft mbH, Walsrode

innogy Metering GmbH, Mülheim an der Ruhr

innogy Mistral Windparkbetriebsgesellschaft mbH, Hanover

innogy Netze Deutschland GmbH, Essen

innogy New Ventures LLC, Palo Alto/USA

innogy Offshore Wind Netherlands B.V., 's-Hertogenbosch/Netherlands

innogy Polska IT Support Sp. z o.o., Warsaw/Poland

innogy Polska S.A., Warsaw/Poland

Innogy Renewables Australia Pty Ltd., Southbank/Australia

innogy Renewables Benelux B.V., 's-Hertogenbosch/Netherlands

innogy Renewables Beteiligungs GmbH, Dortmund

Innogy Renewables Ireland Limited, Kilkenny City/Ireland

Shareholding in %

Equity

Net income/loss

Direct

Total

100

€ '000

3,895,026

226

– 1,390

5,156

– 797

2,153,310

1,719

171,035

21,434

13,809

350,087

528,702

275

€ '000

602

1,252

– 21,123

254,531

– 536

105,208

– 2,114

1,726

5,884

1,135,490

193,020

– 12,204

– 36,635

1,689

55,222

3,868

6,694

180,038

– 1,067

– 1,066

– 3,226

– 694

2,000

– 831

9,316,100

– 64,000

1,141

17,259

5,061

578

497,854

61,665

– 2,983

411,754

– 22,813

7,350

3,381

– 456

99,841

– 4,877

– 956

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with

non-Group companies.

164 RWE Annual Report 2018

I. Affiliated companies which are included in the

consolidated financial statements

innogy Renewables Polska Sp. z o.o., Warsaw/Poland

Innogy Renewables UK Holdings Limited, Swindon/United Kingdom

Innogy Renewables UK Limited, Swindon/United Kingdom

Innogy Renewables US LLC, Dover/USA

innogy Rheinhessen Beteiligungs GmbH, Essen

innogy SE, Essen

innogy Seabreeze II GmbH & Co. KG, Essen

innogy Slovensko s.r.o., Bratislava/Slovakia

Innogy Solutions Ireland Limited, Dublin/Ireland

innogy solutions Kft., Budapest/Hungary

innogy Solutions s.r.o., Banská Bystrica/Slovakia

innogy Sommerland Windparkbetriebsgesellschaft mbH, Sommerland

innogy South East Europe s.r.o., Bratislava/Slovakia

innogy Spain, S.A.U. - Group - (pre-consolidated)

Danta de Energías, S.A., Soria/Spain

Explotaciones Eólicas de Aldehuelas, S.L., Soria/Spain

General de Mantenimiento 21, S.L.U., Barcelona/Spain

Hidroeléctrica del Trasvase, S.A., Barcelona/Spain

innogy Spain, S.A.U., Barcelona/Spain

Innogy Stallingborough Limited, Swindon/United Kingdom

innogy Stoen Operator Sp. z o.o., Warsaw/Poland

innogy Süderdeich Windparkbetriebsgesellschaft mbH, Süderdeich

innogy TelNet GmbH, Essen

innogy Titz Windparkbetriebsgesellschaft mbH, Essen

innogy Ventures GmbH, Essen

innogy Wind Onshore Deutschland GmbH, Hanover

innogy Windpark Bedburg GmbH & Co. KG, Bedburg

innogy Windpower Netherlands B.V., 's-Hertogenbosch/Netherlands

innogy Zákaznické služby, s.r.o., Ostrava/Czech Republic

innogy Zweite Vermögensverwaltungs GmbH, Essen

Installatietechniek Totaal B.V., Leeuwarden/Netherlands

INVESTERG - Investimentos em Energias, SGPS, Lda. - Group - (pre-consolidated)

INVESTERG - Investimentos em Energias, Sociedade Gestora de Participações
Sociais, Lda., São João do Estoril/Portugal

LUSITERG - Gestão e Produção Energética, Lda., São João do Estoril/Portugal

IRUS Solar Development LLC, Dover/USA

IRUS Solar Holdings LLC, Dover/USA

IRUS Wind Development LLC, Dover/USA

IRUS Wind Holdings LLC, Dover/USA

IsoFitters BVBA, Herentals/Belgium

Isoprofs België BVBA, Hasselt/Belgium

Isoprofs B.V., Meijel/Netherlands

iSWITCH GmbH, Essen

Shareholding in %

Equity

Net income/loss

Direct

Total

100

€ '000

195,301

2,023,560

1,791,052

72,477

57,865

8,926,111

11,140

8,240

5,271

891

1,177

1,058

€ '000

– 7,235

100,676

174,766

– 6,601

907,605

– 2,245

7,841

571

– 1,004

147

– 54

132,941

1,8432

656,499

106

75,704

77,373

80,613

– 34,615

2,468

1,720,555

1,114

19,054

617

– 96

8,346

45,674

4,843

1,631

2,044

340

2,6922

331

– 157

– 110

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with

non-Group companies.

Consolidated financial statements > List of shareholdings (part of the notes)

165

I. Affiliated companies which are included in the

consolidated financial statements

It's a beautiful world B.V., Amersfoort/Netherlands

Jurchen Technology GmbH, Kitzingen

Kernkraftwerk Gundremmingen GmbH, Gundremmingen

Kernkraftwerk Lingen Gesellschaft mit beschränkter Haftung, Lingen (Ems)

Kernkraftwerke Lippe-Ems Gesellschaft mit beschränkter Haftung, Lingen (Ems)

KMG Kernbrennstoff-Management Gesellschaft mit beschränkter Haftung, Essen

Knabs Ridge Wind Farm Limited, Swindon/United Kingdom

Koprivnica Opskrba d.o.o., Koprivnica/Croatia

Koprivnica Plin d.o.o., Koprivnica/Croatia

Kraftwerksbeteiligungs-OHG der RWE Nuclear GmbH und der PreussenElektra
GmbH, Lingen/Ems

Lechwerke AG, Augsburg

Leitungspartner GmbH, Düren

LEW Anlagenverwaltung Gesellschaft mit beschränkter Haftung, Gundremmingen

LEW Beteiligungsgesellschaft mbH, Gundremmingen

LEW Netzservice GmbH, Augsburg

LEW Service & Consulting GmbH, Augsburg

LEW TelNet GmbH, Neusäß

LEW Verteilnetz GmbH, Augsburg

Licht Groen B.V., Amsterdam/Netherlands

Limondale Sun Farm Pty. Ltd., Southbank/Australia

Little Cheyne Court Wind Farm Limited, Swindon/United Kingdom

MI-FONDS 178, Frankfurt am Main

MI-FONDS F55, Frankfurt am Main

MI-FONDS G50, Frankfurt am Main

MI-FONDS G55, Frankfurt am Main

MI-FONDS J55, Frankfurt am Main

MI-FONDS K55, Frankfurt am Main

MITGAS Mitteldeutsche Gasversorgung GmbH, Halle (Saale)

Mitteldeutsche Netzgesellschaft Gas mbH, Halle (Saale)

Mitteldeutsche Netzgesellschaft Strom mbH, Halle (Saale)

Mittlere Donau Kraftwerke AG, Munich

ML Wind LLP, Swindon/United Kingdom

Montcogim - Plinara d.o.o., Sveta Nedelja/Croatia

Nederland Isoleert B.V., Amersfoort/Netherlands

Nederland Schildert B.V., Amersfoort/Netherlands

Nederland Schildert Rijnmond B.V., Amersfoort/Netherlands

Nederland Verkoopt B.V., Amersfoort/Netherlands

NEW AG, Mönchengladbach

NEW Netz GmbH, Geilenkirchen

NEW Niederrhein Energie und Wasser GmbH, Mönchengladbach

NEW NiederrheinWasser GmbH, Viersen

NEW Tönisvorst GmbH, Tönisvorst

Shareholding in %

Equity

Net income/loss

Direct

Total

100

408

100

404

100

€ '000

4,987

2,665

90,464

20,034

432,269

696,225

9,485

112

8,857

144,433

501,772

100

295,990

461,243

1,250

8,548

139,816

192

48,751

753,875

573,856

€ '000

2,625

– 1,702

8,343

663

111

489

6,204

78,205

13,873

10,154

7,289

101

4,668

5,415

3,967

1,738,989

– 17,193

277,938

15,185

121,755

129,988

4,171

5,113

77,984

14,712

1,921

– 293

– 2

189

175,895

95,699

15,587

46,613

13,961

1,333

– 440

– 2,856

38,032

9,050

424

1,782

– 174

– 4

176

59,552

17,896

41,904

11,501

2,022

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with

non-Group companies.

166 RWE Annual Report 2018

I. Affiliated companies which are included in the

consolidated financial statements

NEW Viersen GmbH, Viersen

Nordsee Windpark Beteiligungs GmbH, Essen

Npower Business and Social Housing Limited, Swindon/United Kingdom

Npower Commercial Gas Limited, Swindon/United Kingdom

Npower Direct Limited, Swindon/United Kingdom

Npower Financial Services Limited, Swindon/United Kingdom

Npower Gas Limited, Swindon/United Kingdom

Npower Group Limited, Swindon/United Kingdom

Npower Limited, Swindon/United Kingdom

Npower Northern Limited, Swindon/United Kingdom

Npower Yorkshire Limited, Swindon/United Kingdom

Npower Yorkshire Supply Limited, Swindon/United Kingdom

NRW Pellets GmbH, Erndtebrück

Octopus Electrical Limited, Swindon/United Kingdom

OIE Aktiengesellschaft, Idar-Oberstein

Padcon GmbH, Kitzingen

Piecki Sp. z o.o., Warsaw/Poland

Plus Shipping Services Limited, Swindon/United Kingdom

Powerhouse B.V., Almere/Netherlands

Primus Projekt GmbH & Co. KG, Hanover

PS Energy UK Limited, Swindon/United Kingdom

Recargo Inc., El Segundo/USA

Regionetz GmbH, Aachen

Rheinbraun Brennstoff GmbH, Cologne

Rheinische Baustoffwerke GmbH, Bergheim

Rheinkraftwerk Albbruck-Dogern Aktiengesellschaft, Waldshut-Tiengen

Rhein-Sieg Netz GmbH, Siegburg

rhenag Rheinische Energie Aktiengesellschaft, Cologne

Rhenas Insurance Limited, Sliema/Malta

Rhyl Flats Wind Farm Limited, Swindon/United Kingdom

RL Besitzgesellschaft mbH, Gundremmingen

RL Beteiligungsverwaltung beschr. haft. OHG, Gundremmingen

RUMM Limited, Ystrad Mynach/United Kingdom

RV Rheinbraun Handel und Dienstleistungen GmbH, Cologne

RWE & Turcas Güney Elektrik Üretim A.S., Ankara/Turkey

RWE Aktiengesellschaft, Essen

RWE Cogen UK (Hythe) Limited, Swindon/United Kingdom

RWE Cogen UK Limited, Swindon/United Kingdom

RWE Eemshaven Holding II B.V., Geertruidenberg/Netherlands

RWE Energija d.o.o., Zagreb/Croatia

RWE Generation Belgium N.V., Antwerp/Belgium

RWE Generation NL B.V., Arnhem/Netherlands

RWE Generation NL Corner Participations B.V., Geertruidenberg/Netherlands

Shareholding in %

Equity

Net income/loss

Direct

Total

100

€ '000

13,330

9,943

4,647

6,879

58,278

– 157

– 216,413

2,087

275,006

– 1,256,531

– 784,395

312

2,420

9,081

1,980

18,548

26,639

56,718

– 3,961

100

494

269,214

100

82,619

9,236

31,817

20,774

139,972

59,174

158,966

115,086

356,579

36,694

222,050

5,653,514

12,153

163,508

– 57,873

719

73,949

167,713

45,241

€ '000

4,139

1,855

701

5,673

– 43,143

– 2,303

– 283

– 34,991

– 117,388

– 26,653

– 730

– 426

7,900

– 1,013

– 3,023

1,757

25,788

942

15,566

14,683

27,991

– 256

– 6,911

472,184

1,204

511

– 4,451

– 1,068

2,943

– 61,783

9,982

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with

non-Group companies.

Consolidated financial statements > List of shareholdings (part of the notes)

167

I. Affiliated companies which are included in the

consolidated financial statements

RWE Generation NL Participations B.V., Arnhem/Netherlands

RWE Generation NL Personeel B.V., Arnhem/Netherlands

RWE Generation SE, Essen

RWE Generation UK Holdings Limited, Swindon/United Kingdom

RWE Generation UK plc, Swindon/United Kingdom

RWE Hrvatska d.o.o., Zagreb/Croatia

RWE Ljubljana d.o.o., Ljubljana/Slovenia

RWE Markinch Limited, Swindon/United Kingdom

RWE Nuclear GmbH, Essen

RWE Personeel B.V., Arnhem/Netherlands

RWE Plin d.o.o., Zagreb/Croatia

RWE Power Aktiengesellschaft, Cologne and Essen

RWE Supply & Trading Asia-Pacific PTE. LTD., Singapore/Singapore

RWE Supply & Trading CZ, a.s., Prague/Czech Republic

RWE Supply & Trading CZ GmbH, Essen

RWE Supply & Trading GmbH, Essen

RWE Supply & Trading (India) Private Limited, Mumbai/India

RWE Supply & Trading Participations Limited, London/United Kingdom

RWE Supply & Trading Switzerland S.A., Geneva/Switzerland

RWE Technology International GmbH, Essen

RWE Technology Tasarim ve Mühendislik Danismanlik Ticaret Limited Sirketi,
Istanbul/Turkey

RWE Technology UK Limited, Swindon/United Kingdom

RWE Trading Americas Inc., New York City/USA

RWE Trading Services GmbH, Essen

RWEST Middle East Holdings B.V., 's-Hertogenbosch/Netherlands

RWW Rheinisch-Westfälische Wasserwerksgesellschaft mbH,
Mülheim an der Ruhr

SARIO Grundstücks-Vermietungsgesellschaft mbH & Co. Objekt Würzburg KG,
Düsseldorf

Sofia Offshore Wind Farm Holdings Limited, Swindon/United Kingdom

Sofia Offshore Wind Farm Limited, Swindon/United Kingdom

SRS EcoTherm GmbH, Salzbergen

Stadtwerke Düren GmbH, Düren

Südwestsächsische Netz GmbH, Crimmitschau

Süwag Energie AG, Frankfurt am Main

Süwag Grüne Energien und Wasser GmbH, Frankfurt am Main

Süwag Vertrieb AG & Co. KG, Frankfurt am Main

Syna GmbH, Frankfurt am Main

The Hollies Wind Farm Limited, Swindon/United Kingdom

Transpower Limited, Dublin/Ireland

Triton Knoll HoldCo Limited, Swindon/United Kingdom

Triton Knoll Offshore Wind Farm Limited, Swindon/United Kingdom

Shareholding in %

Equity

Net income/loss

Direct

Total

100

504

100

€ '000

– 12,700

11,825

264,673

3,049,658

1,817,722

8,185

52,282

100,000

– 40

266

2,037,209

14,381

1,128,683

100,983

446,778

642

15,817

32,241

12,463

722

1,819

16,318

5,735

6,544

€ '000

– 16,300

– 327

14,673

182,854

– 3,222

– 3,263

155,115

– 40

– 798

17,579

63,846

314

5,994

3,085

105

393

6,268

2,396

77,574

5,094

– 9,640

12,052

27,378

1,400

649,555

6,441

680

8,053

508

3,528

– 18,089

462

2,891

5,414

283

67,850

– 1,048

– 2,504

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with

non-Group companies.

168 RWE Annual Report 2018

I. Affiliated companies which are included in the

consolidated financial statements

Überlandwerk Krumbach GmbH, Krumbach

Verteilnetz Plauen GmbH, Plauen

VKB-GmbH, Neunkirchen

Volta Energycare N.V., Houthalen-Helchteren/Belgium

Volta Limburg B.V., Schinnen/Netherlands

Volta Service B.V., Schinnen/Netherlands

Volta Solar B.V., Heerlen/Netherlands

Volta Solar VOF, Heerlen/Netherlands

VSE Aktiengesellschaft, Saarbrücken

VSE NET GmbH, Saarbrücken

VSE Verteilnetz GmbH, Saarbrücken

VWS Verbundwerke Südwestsachsen GmbH, Lichtenstein/Sa.

Východoslovenská distribucná, a.s., Kosice/Slovakia

Východoslovenská energetika a.s., Kosice/Slovakia

Východoslovenská energetika Holding a.s., Kosice/Slovakia

Wendelsteinbahn Gesellschaft mit beschränkter Haftung, Brannenburg

Wendelsteinbahn Verteilnetz GmbH, Brannenburg

Westerwald-Netz GmbH, Betzdorf-Alsdorf

Westnetz GmbH, Dortmund

Wind Farm Deliceto s.r.l., Bolzano/Italy

Windpark Eekerpolder B.V., 's-Hertogenbosch/Netherlands

Windpark Kattenberg B.V., 's-Hertogenbosch/Netherlands

Windpark Nordsee Ost GmbH, Heligoland

Windpark Zuidwester B.V., 's-Hertogenbosch/Netherlands

WKN Windkraft Nord GmbH & Co. Windpark Wönkhausen KG, Hanover

WTTP B.V., Arnhem/Netherlands

2. CR Immobilien-Vermietungsgesellschaft mbH & Co. Objekt MEAG Halle KG,
Düsseldorf

2. CR-Immobilien-Vermietungsgesellschaft mbH & Co. KG Cottbus, Düsseldorf

Shareholding in %

Equity

Net income/loss

Direct

Total

100

494

100

€ '000

6,015

43,002

– 310

44,800

370

1,377

211,743

14,817

3,109

25,989

600,975

59,243

576,445

2,882

9,875

281,306

24,203

367

256

9,930

1,366

12,254

– 538

-966

€ '000

1,088

3,427

– 68

5,800

1,143

17,879

2,731

1,325

30,626

1,870

15,824

164

746

161

– 855

228

300

473

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with

non-Group companies.

Consolidated financial statements > List of shareholdings (part of the notes)

169

II. Affiliated companies which are not included in the consolidated financial

Shareholding in %

Equity

Net income/loss

statements due to secondary importance for the assets, liabilities, financial
position and profit or loss of the Group

Direct

Total

Adensis GmbH, Dresden

Agenzia Carboni S.R.L., Genoa/Italy

Alfred Thiel-Gedächtnis-Unterstützungskasse GmbH, Essen

Alvarado Solar S.L., Barcelona/Spain

Baron Winds LLC, Chicago/USA

Belectric Inc., San Mateo/USA

Belectric International GmbH, Kolitzheim

BELECTRIC JV GmbH, Kolitzheim

Belectric Mexico Fotovoltaica S.de R.L. de C.V., Bosques de las Lomas/Mexico

Belectric Polska Sp. z o.o., Warsaw/Poland

Belectric PV 10 (SARL), Vendres/France

Belectric PV 5 (SARL), Vendres/France

Belectric PV 9 (SARL), Vendres/France

BELECTRIC Solar Power, S.L., Barcelona/Spain

Beteiligungsgesellschaft Werl mbH, Essen

bildungszentrum energie GmbH, Halle (Saale)

Bioenergie Bad Wimpfen GmbH & Co. KG, Bad Wimpfen

Bioenergie Bad Wimpfen Verwaltungs-GmbH, Bad Wimpfen

Bioenergie Kirchspiel Anhausen GmbH & Co. KG, Anhausen

Bioenergie Kirchspiel Anhausen Verwaltungs-GmbH, Anhausen

Biogas Schwalmtal GmbH & Co. KG, Schwalmtal

Biogasanlage Schwalmtal GmbH, Schwalmtal

Biomasseheizkraftwerk Schameder GmbH, Essen

Blueberry Hills LLC, Chicago/USA

Bowler Flats Energy Hub LLC, Chicago/USA

Buckeye Wind LLC, Chicago/USA

Burgar Hill Wind Farm Limited, Swindon/United Kingdom

Cassadaga Wind LLC, Chicago/USA

Catalina-Cypress Holding Limited, Swindon/United Kingdom

Causeymire Two Wind Farm Limited, Swindon/United Kingdom

CERBEROS s.r.o., Prague/Czech Republic

Champaign Wind LLC, Chicago/USA

Ciriè Centrale PV s.a.s. (s.r.l.), Rome/Italy

Clavellinas Solar, S.L., Barcelona/Spain

Climagy Photovoltaikprojekt Verwaltungs-GmbH, Kolitzheim

Climagy PV-Sonnenanlage GmbH & Co. KG, Kolitzheim

Climagy PV-Sonnenanlage Verwaltungs-GmbH, Kolitzheim

Climagy Sonneneinstrahlung GmbH & Co. KG, Kolitzheim

Climagy Sonneneinstrahlung Verwaltungs-GmbH, Kolitzheim

Climagy Sonnenkraft Verwaltungs-GmbH, Kolitzheim

Climagy Sonnenstrom GmbH & Co. KG, Kolitzheim

Climagy Sonnenstrom Verwaltungs-GmbH, Kolitzheim

100

€ '000

381

317

5,113

121

– 490

– 144

– 6

– 9

– 5

1,281

768

2,314

192

631

– 5

– 6

– 27

– 18

– 29

€ '000

– 30

603

– 5

– 44

– 1

– 6

270

210

– 57

– 9

– 2

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with

non-Group companies.

170 RWE Annual Report 2018

II. Affiliated companies which are not included in the consolidated financial

Shareholding in %

Equity

Net income/loss

statements due to secondary importance for the assets, liabilities, financial
position and profit or loss of the Group

Direct

Total

€ '000

Climagy Stromertrag GmbH & Co. KG, Kolitzheim

Climagy Stromertrag Verwaltungs-GmbH, Kolitzheim

Clocaenog Wind Farm Limited, Swindon/United Kingdom

CNGvitall s.r.o., Ostrava/Czech Republic

COMCO MCS S.A., Luxembourg/Luxembourg

Conjoule GmbH, Essen

Curns Energy Limited, Kilkenny City/Ireland

Decadia GmbH, Essen

DigiKoo GmbH, Essen

E & Z Industrie-Lösungen GmbH, Essen

easyOptimize GmbH, Essen

Edgware Energy Limited, Swindon/United Kingdom

Eko-En 1 Sp. z o.o., Warsaw/Poland

El Algarrobo (SpA), Santiago de Chile/Chile

El Chañar (SpA), Santiago de Chile/Chile

El Navajo Solar, S.L., Barcelona/Spain

El Pimiento (SpA), Santiago de Chile/Chile

El Solar (SpA), Santiago de Chile/Chile

El Tamarugo (SpA), Santiago de Chile/Chile

Enchant Solar 1 Inc., Vancouver/Canada

Enchant Solar 2 Inc., Vancouver/Canada

Enchant Solar 3 Inc., Vancouver/Canada

Enchant Solar 4 Inc., Vancouver/Canada

Energenti plus d.o.o., Cerknica/Slovenia

Energiegesellschaft Leimen GmbH & Co. KG, Leimen

Energiegesellschaft Leimen Verwaltungsgesellschaft mbH, Leimen

EnergieRevolte GmbH, Düren

Energieversorgung Timmendorfer Strand GmbH & Co. KG, Timmendorfer Strand

Energiewerken B.V., Almere/Netherlands

Energy Ventures GmbH, Saarbrücken

enervolution GmbH, Bochum

Ense Netz Verwaltung GmbH, Ense

enviaM Erneuerbare Energien Verwaltungsgesellschaft mbH, Markkleeberg

enviaM Neue Energie Management GmbH, Halle (Saale)

enviaM Zweite Neue Energie Management GmbH, Halle (Saale)

Eólica de Sarnago, S.A., Soria/Spain

ESK GmbH, Dortmund

EverPower Maine LLC, Chicago/USA

EverPower Ohio LLC, Chicago/USA

EverPower Solar LLC, Chicago/USA

EverPower Wind Development, LLC, Chicago/USA

EWIS BV, Ede/Netherlands

– 16

438

– 234

– 369

19,759

– 2,771

175

– 17

198

3,198

501

1,579

128

100

– 2

300

– 232

– 469

1,619

– 4,795

– 1,101

– 9

– 372

156

– 5

– 1

– 22

1,645

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with

non-Group companies.

Consolidated financial statements > List of shareholdings (part of the notes)

171

II. Affiliated companies which are not included in the consolidated financial

Shareholding in %

Equity

Net income/loss

Direct

Total

€ '000

statements due to secondary importance for the assets, liabilities, financial
position and profit or loss of the Group

Fernwärmeversorgung Saarlouis- Steinrausch Investitionsgesellschaft mbH,
Saarlouis

"Finelectra" Finanzgesellschaft für Elektrizitäts-Beteiligungen AG,
Hausen/Switzerland

Free Electrons LLC, Palo Alto/USA

Fresh Energy GmbH, Berlin

FUCATUS Vermietungsgesellschaft mbH & Co. Objekt Recklinghausen
Kommanditgsellschaft, Düsseldorf

Fundacja innogy w Polsce, Warsaw/Poland

Gasnetzgesellschaft Warburg GmbH & Co. KG, Warburg

Gasnetzgesellschaft Windeck mbH & Co. KG, Siegburg

Gazules I Fotovoltaica, S.L., Barcelona/Spain

Gazules II Solar, S.L., Barcelona/Spain

GBV Achtunddreißigste Gesellschaft für Beteiligungsverwaltung mbH, Essen

GBV Dreiunddreißigste Gesellschaft für Beteiligungsverwaltung mbH, Essen

GBV Einunddreißigste Gesellschaft für Beteiligungsverwaltung mbH, Essen

GBV Fünfunddreißigste Gesellschaft für Beteiligungsverwaltung mbH, Essen

GBV Sechsunddreißigste Gesellschaft für Beteiligungsverwaltung mbH, Essen

GBV Siebenunddreißigste Gesellschaft für Beteiligungsverwaltung mbH, Essen

GBV Siebte Gesellschaft für Beteiligungsverwaltung mbH, Essen

100

GBV Zweiunddreißigste Gesellschaft für Beteiligungsverwaltung mbH, Essen

100

Gemeindewerke Windeck GmbH & Co. KG, Siegburg

GKB Gesellschaft für Kraftwerksbeteiligungen mbH, Cottbus

Goole Fields II Wind Farm Limited, Swindon/United Kingdom

Green Gecco Verwaltungs GmbH, Essen

GWG Kommunal GmbH, Grevenbroich

Heizungs- und Sanitärbau WIJA GmbH, Bad Neuenahr-Ahrweiler

HELIOS MB s.r.o., Prague/Czech Republic

Highfield Storage Limited, Dublin/Ireland

Highland III LLC, Chicago/USA

Horse Thief Wind Project LLC, Chicago/USA

Infraestructuras de Aldehuelas, S.A., Barcelona/Spain

Infrastrukturgesellschaft Netz Lübz mit beschränkter Haftung, Hanover

innogy Charge Tech GmbH, Dortmund

innogy Commodity Markets GmbH, Essen

innogy Consulting & Ventures Americas, LLC, Boston/USA

innogy Consulting GmbH, Essen

innogy Direkt GmbH, Essen

innogy Dreizehnte Vermögensverwaltungs GmbH, Essen

innogy Elfte Vermögensverwaltungs GmbH, Essen

innogy e-Mobility Limited, London/United Kingdom

innogy eMobility Solutions GmbH, Dortmund

7,567

7,962

100

252

1,100

300

– 4

428

5,761

100

130

– 30

– 16

– 560

– 178

– 4

– 97

– 16

– 1

4,267

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with

non-Group companies.

172 RWE Annual Report 2018

II. Affiliated companies which are not included in the consolidated financial

Shareholding in %

Equity

Net income/loss

statements due to secondary importance for the assets, liabilities, financial
position and profit or loss of the Group

Direct

Total

€ '000

Innogy Energy Marketing LLC, Wilmington/USA

Innogy Energy Services LLC, Wilmington/USA

innogy Hillston Sun Farm Holding Pty. Ltd., Southbank/Australia

innogy indeland Windpark Eschweiler Verwaltungs GmbH, Eschweiler

innogy Middle East & North Africa Ltd., Dubai/UAE

innogy Neunte Vermögensverwaltungs GmbH, Essen

innogy Offshore Wind Netherlands Participations I B.V.,
's-Hertogenbosch/Netherlands

innogy Offshore Wind Netherlands Participations II B.V.,
's-Hertogenbosch/Netherlands

innogy Offshore Wind Netherlands Participations III B.V.,
's-Hertogenbosch/Netherlands

innogy Offshore Wind Netherlands Participations IV B.V.,
's-Hertogenbosch/Netherlands

innogy Polska Development Sp. z o.o., Warsaw/Poland

innogy Polska Operations Sp. z o.o., Warsaw/Poland

innogy Polska Solutions Sp. z o.o., Warsaw/Poland

innogy Renewables Canada Inc., Vancouver/Canada

innogy Seabreeze II Verwaltungs GmbH, Essen

innogy Solar Netherlands B.V., 's-Hertogenbosch/Netherlands

innogy Solar Polska Sp. z o.o., Warsaw/Poland

innogy Stiftung für Energie und Gesellschaft gGmbH, Essen

innogy TelNet Holding, s.r.o., Prague/Czech Republic

Innogy US Renewable Projects LLC, Dover/USA

innogy Ventures Vermögensverwaltung 6 GmbH, Essen

innogy Vierzehnte Vermögensverwaltungs GmbH, Essen

innogy Windpark Bedburg Verwaltungs GmbH, Bedburg

innogy Windpark Garzweiler GmbH & Co. KG, Essen

Innogy Windpark Jüchen A44n Verwaltungs GmbH, Essen

innogy Zehnte Vermögensverwaltungs GmbH, Essen

Jerez Fotovoltaica S.L., Barcelona/Spain

Jurchen Technology USA Inc., Newark/USA

Kieswerk Kaarst GmbH & Co. KG, Bergheim

Kieswerk Kaarst Verwaltungs GmbH, Bergheim

Kiln Pit Hill Wind Farm Limited, Swindon/United Kingdom

Kimberly Run LLC, Chicago/USA

Korproject Energy Sp. z o.o., Warsaw/Poland

KWS Kommunal-Wasserversorgung Saar GmbH, Saarbrücken

Lampasas Wind LLC, Chicago/USA

Las Vaguadas I Fotovoltaica S.L., Barcelona/Spain

Las Vaguadas II Solar S.L., Barcelona/Spain

Lech Energie Gersthofen GmbH & Co. KG, Gersthofen

Lech Energie Verwaltung GmbH, Augsburg

100

– 7,654

134

2,469

51,602

9,995

284

1,544

282

– 5,550

– 10

– 2,036

– 10

– 3,366

– 16

– 30

– 5

436

– 30

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with

non-Group companies.

Consolidated financial statements > List of shareholdings (part of the notes)

173

II. Affiliated companies which are not included in the consolidated financial

Shareholding in %

Equity

Net income/loss

statements due to secondary importance for the assets, liabilities, financial
position and profit or loss of the Group

Direct

Total

Lemonbeat GmbH, Dortmund

Livisi GmbH, Essen

Lochelbank Wind Farm Limited, Swindon/United Kingdom

Lößnitz Netz GmbH & Co. KG, Lößnitz

Lößnitz Netz Verwaltungs GmbH, Lößnitz

Magnalink, a.s., Hradec Králové/Czech Republic

Mahanoy Mountain, LLC, Chicago/USA

Mason Dixon Wind LLC, Chicago/USA

Mitteldeutsche Netzgesellschaft Gas HD mbH, Halle (Saale)

Mitteldeutsche Netzgesellschaft mbH, Chemnitz

MONTCOGIM-KARLOVAC d.o.o., Karlovac/Croatia

MONTCOGIM-SISAK d.o.o., Sisak/Croatia

MotionWerk GmbH, Essen

Mud Springs Wind Project LLC, Chicago/USA

Netzwerke Saarwellingen GmbH, Saarwellingen

NEW b_gas Eicken GmbH, Schwalmtal

NEW Re GmbH, Mönchengladbach

NEW Smart City GmbH, Mönchengladbach

NEW Windenergie Verwaltung GmbH, Mönchengladbach

NEW Windpark Linnich GmbH & Co. KG, Mönchengladbach

NEW Windpark Viersen GmbH & Co. KG, Mönchengladbach

Novar Two Wind Farm Limited, Swindon/United Kingdom

Npower Northern Supply Limited, Swindon/United Kingdom

NRF Neue Regionale Fortbildung GmbH, Halle (Saale)

Oer-Erkenschwick Netz Verwaltung GmbH, Oer-Erkenschwick

Oranje Wind Power B.V., 's-Hertogenbosch/Netherlands

Oranje Wind Power C.V., 's-Hertogenbosch/Netherlands

Oschatz Netz GmbH & Co. KG, Oschatz

Oschatz Netz Verwaltungs GmbH, Oschatz

Parc Ynni Cymunedol Alwen Cyfyngedig, Swindon/United Kingdom

Park Wiatrowy Dolice Sp. z o.o., Warsaw/Poland

Park Wiatrowy Elk Sp. z o.o., Warsaw/Poland

Park Wiatrowy Gaworzyce Sp. z o.o., Warsaw/Poland

Park Wiatrowy Msciwojów Sp. z o.o., Warsaw/Poland

Park Wiatrowy Smigiel I Sp. z o.o., Warsaw/Poland

Pe Ell North LLC, Chicago/USA

Peg Project #1 Pty Ltd, Southbank/Australia

Peg Project #2 Pty Ltd, Southbank/Australia

Photovoltaikkraftwerk Götz Verwaltungs-GmbH, Kolitzheim

Photovoltaikkraftwerk Groß Dölln Infrastruktur GmbH & Co. KG, Templin

Photovoltaikkraftwerk Groß Dölln Infrastruktur Verwaltungs-GmbH, Templin

Photovoltaikkraftwerk Reinsdorf GmbH & Co. KG, Kolitzheim

100

€ '000

9,952

€ '000

– 3,169

– 871

9,863

825

3,935

174

518

– 2,408

602

– 266

202

605

– 16

– 30

– 3

– 2

– 172

136

– 149

– 6

174

– 3,444

– 1,348

– 60

– 51

– 1

– 2

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with

non-Group companies.

174 RWE Annual Report 2018

II. Affiliated companies which are not included in the consolidated financial

Shareholding in %

Equity

Net income/loss

statements due to secondary importance for the assets, liabilities, financial
position and profit or loss of the Group

Photovoltaikkraftwerk Reinsdorf Verwaltungs-GmbH, Kolitzheim

Photovoltaikkraftwerk Tramm GmbH & Co. KG, Kolitzheim

Photovoltaikkraftwerk Tramm Netzanschluss GmbH & Co. KG, Kolitzheim

Photovoltaikkraftwerk Tramm Netzanschluss Verwaltungs-GmbH, Kolitzheim

Photovoltaikkraftwerk Tramm PV-Finanzierung GmbH & Co. KG, Kolitzheim

Photovoltaikkraftwerk Tramm PV-Finanzierung Verwaltungs-GmbH, Kolitzheim

Photovoltaikkraftwerk Tramm Verwaltungs-GmbH, Kolitzheim

PI E&P Holding Limited, George Town/Cayman Islands

PI E&P US Holding LLC, New York City/USA

Plum Energie S.A.S., Saint-Denis La Plaine/France

Powerhouse Energy Solutions S.L., Madrid/Spain

Proyecto Rio Putaendo S.p.A., Santiago de Chile/Chile

Proyecto Tabalongo Solar S.p.A., Santiago de Chile/Chile

Proyectos Solares Iberia I, S.L., Barcelona/Spain

Proyectos Solares Iberia II, S.L., Barcelona/Spain

Proyectos Solares Iberia III, S.L., Barcelona/Spain

Proyectos Solares Iberia IV, S.L., Barcelona/Spain

Proyectos Solares Iberia V, S.L., Barcelona/Spain

Pryor Caves Wind Project LLC, Chicago/USA

PT Rheincoal Supply & Trading Indonesia, PT, Jakarta/Indonesia

Qualitas-AMS GmbH, Siegen

Quintana Fotovoltaica SLU, Madrid/Spain

RD Hanau GmbH, Hanau

Rheinland Westfalen Energiepartner GmbH, Essen

RHENAGBAU Gesellschaft mit beschränkter Haftung, Cologne

Rowantree Wind Farm Ltd., Swindon/United Kingdom

RWE & Turcas Dogalgaz Ithalat ve Ihracat A.S., Istanbul/Turkey

RWE Australia Pty. Ltd., Brisbane/Australia

RWE Belgium BVBA, Brussels/Belgium

RWE Enerji Toptan Satis A.S., Istanbul/Turkey

RWE Ingen!us Limited, Swindon/United Kingdom

RWE NSW PTY LTD, Sydney/Australia

RWE Nuclear Beteiligungs-GmbH, Essen

RWE Pensionsfonds AG, Essen

RWE Power Climate Protection China GmbH, Essen

RWE Power Climate Protection Clean Energy Technology (Beijing) Co., Ltd.,
Beijing/China

RWE Power Climate Protection GmbH, Essen

RWE Power Climate Protection Southeast Asia Co., Ltd., Bangkok/Thailand

RWE Power International Ukraine LLC, Kiev/Ukraine

RWE Supply & Trading Asia-Pacific Holdings PTE. Ltd., Singapore/Singapore

RWE Supply & Trading China Holdings PTE. Ltd., Singapore/Singapore

RWE Supply and Trading (Shanghai) Co. Ltd, Shanghai/China

Direct

Total

€ '000

– 29

– 27

– 17

26,030

25,966

269

– 1,127

– 2

5,369

4,058

774

4,482

10,923

32,625

3,839

2,066

2,806

100

– 2

– 15

– 37

– 1,015

– 165

– 1,147

– 19

100

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with

non-Group companies.

Consolidated financial statements > List of shareholdings (part of the notes)

175

II. Affiliated companies which are not included in the consolidated financial

Shareholding in %

Equity

Net income/loss

statements due to secondary importance for the assets, liabilities, financial
position and profit or loss of the Group

Direct

RWE SUPPLY TRADING TURKEY ENERJI ANONIM SIRKETI, Istanbul/Turkey

RWE Trading Services Limited, Swindon/United Kingdom

RWE-EnBW Magyarország Energiaszolgáltató Korlátolt Felelösségü Társaság,
Budapest/Hungary

RWEST PI Bras Limited, London/United Kingdom

RWEST PI FRE Holding LLC, New York City/USA

RWEST PI LNG 1 LLC, New York City/USA

RWEST PI WALDEN HOLDING LLC, New York City/USA

RWEST PI WALDEN 1 LLC, New York City/USA

Santa Severa Centrale PV s.a.s. (s.r.l.), Rome/Italy

Scarcroft Investments Limited, Swindon/United Kingdom

Scharbeutzer Energie- und Netzgesellschaft mbH & Co. KG, Scharbeutz

SchlauTherm GmbH, Saarbrücken

SEG Solarenergie Guben Management GmbH, Halle (Saale)

SOLARENGO Energia, Unipessoal, Lda., Cascais/Portugal

Solarkraftwerk Herlheim GmbH & Co. KG, Kolitzheim

Solarkraftwerk Herlheim Verwaltungs-GmbH, Kolitzheim

Solarkraftwerk Meuro GmbH & Co. KG, Kolitzheim

Solarkraftwerk Meuro Verwaltungs-GmbH, Kolitzheim

Solarkraftwerk Oberspiesheim GmbH & Co. KG, Kolitzheim

Solarkraftwerk Oberspiesheim Verwaltungs-GmbH, Kolitzheim

SP Solarprojekte 1 GmbH & Co. KG, Kolitzheim

SP Solarprojekte 1 Verwaltungs-GmbH, Kolitzheim

SP Solarprojekte 2 GmbH & Co. KG, Kolitzheim

SP Solarprojekte 2 Verwaltungs-GmbH, Kolitzheim

SP Solarprojekte 3 GmbH & Co. KG, Kolitzheim

SP Solarprojekte 3 Verwaltungs-GmbH, Kolitzheim

SP Solarprojekte 4 GmbH & Co. KG, Kolitzheim

SP Solarprojekte 4 Verwaltungs-GmbH, Kolitzheim

SP Solarprojekte 5 GmbH & Co. KG, Kolitzheim

SP Solarprojekte 5 Verwaltungs-GmbH, Kolitzheim

SP Solarprojekte 6 GmbH & Co. KG, Kolitzheim

SP Solarprojekte 6 Verwaltungs-GmbH, Kolitzheim

SP Solarprojekte 7 GmbH & Co. KG, Kolitzheim

SP Solarprojekte 7 Verwaltungs-GmbH, Kolitzheim

Stadtwerke Korschenbroich GmbH, Mönchengladbach

STAWAG Abwasser GmbH, Aachen

STAWAG Infrastruktur Monschau GmbH & Co.KG, Monschau

STAWAG Infrastruktur Monschau Verwaltungs GmbH, Monschau

STAWAG Infrastruktur Simmerath GmbH & Co.KG, Simmerath

STAWAG Infrastruktur Simmerath Verwaltungs GmbH, Simmerath

Storage Facility 1 Ltd., Slough/United Kingdom

Total

100

€ '000

995

1,252

399

635

12,310

12,284

– 151

4,399

312

– 81

– 29

– 2

3,162

3,485

€ '000

– 14

– 9,908

498

– 46

– 17

227

– 1

– 81

– 2

– 3

– 6

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with

non-Group companies.

176 RWE Annual Report 2018

II. Affiliated companies which are not included in the consolidated financial

Shareholding in %

Equity

Net income/loss

statements due to secondary importance for the assets, liabilities, financial
position and profit or loss of the Group

Stromnetzgesellschaft Windeck mbH & Co. KG, Siegburg

Sun Data GmbH, Kolitzheim

Sunpow 1 Sp. z o.o., Warsaw/Poland

Sunrise Energy Generation Pvt. Ltd., Mumbai/India

Sunrise Wind Holdings, LLC, Chicago/USA

Süwag Vertrieb Management GmbH, Frankfurt am Main

SVFR 12 (SAS), Vendres/France

Terrapin Hills LLC, Chicago/USA

Trireme Energy Development III, LLC, Wilmington/USA

TWS Technische Werke der Gemeinde Saarwellingen GmbH, Saarwellingen

ucair GmbH, Berlin

Versuchsatomkraftwerk Kahl GmbH, Karlstein am Main

Verwaltungsgesellschaft Energieversorgung Timmendorfer Strand mbH,
Timmendorfer Strand

Verwaltungsgesellschaft Scharbeutzer Energie- und Netzgesellschaft mbH,
Scharbeutz

VSE - Windpark Merchingen GmbH & Co. KG, Saarbrücken

VSE - Windpark Merchingen VerwaltungsGmbH, Saarbrücken

VSE Agentur GmbH, Saarbrücken

VSE Call centrum, s.r.o., Kosice/Slovakia

VSE Ekoenergia, s.r.o., Kosice/Slovakia

VSE-Stiftung Gemeinnützige Gesellschaft zur Förderung von Bildung, Erziehung,
Kunst und Kultur mbH, Saarbrücken

Wärmeversorgung Schwaben GmbH, Augsburg

Wärmeversorgung Würselen GmbH, Würselen

Warsun Project Sp. z o.o., Warsaw/Poland

WEK Windenergie Kolkwitz GmbH & Co.KG, Kolkwitz

WGK Windenergie Großkorbetha GmbH & Co.KG, Lützen

Windkraft Hochheim GmbH & Co. KG, Hochheim

Windpark Büschdorf GmbH, Perl

Windpark Eschweiler Beteiligungs GmbH, Stolberg

Windpark Oostpolderdijk B.V., 's-Hertogenbosch/Netherlands

Windpark Verwaltungsgesellschaft mbH, Lützen

Windpark Wadern-Felsenberg GmbH, Wadern

WK Solar Project Sp. z o.o., Warsaw/Poland

WKH Windkraft Hochheim Management GmbH, Halle (Saale)

ZonnigBeheer B.V., Lelystad/Netherlands

2. CR Immobilien-Vermietungsgesellschaft mbH & Co. Objekt Naumburg KG,
Düsseldorf

4Motions GmbH, Leipzig

Direct

Total

€ '000

100

– 112

– 2

1,697

– 2,523

573

2,800

229

184

2,568

– 456

1,511

6,180

8,093

3,194

2,325

10,118

4,123

161

171

– 29

– 59

– 3

– 543

446

217

363

– 100

– 576

– 1

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with

non-Group companies.

Consolidated financial statements > List of shareholdings (part of the notes)

177

III. Joint operations

Shareholding in %

Equity

Net income/loss

EnergieRegion Taunus - Goldener Grund - GmbH & Co. KG, Bad Camberg

Gas-Netzgesellschaft Kolpingstadt Kerpen GmbH & Co. KG, Kerpen

Gas-Netzgesellschaft Kreisstadt Bergheim GmbH & Co. KG, Bergheim

Greater Gabbard Offshore Winds Limited, Reading/United Kingdom

Netzgesellschaft Südwestfalen mbH & Co. KG, Netphen

N.V. Elektriciteits-Produktiemaatschappij Zuid-Nederland EPZ,
Borssele/Netherlands

Direct

Total

€ '000

29,903

4,211

3,656

1,160,950

12,548

€ '000

1,757

1,155

1,167

84,316

64,729

9,142

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with

non-Group companies.

IV. Affiliated companies of joint operations

Shareholding in %

Equity

Net income/
loss

EnergieRegion Taunus - Goldener Grund Verwaltungsgesellschaft mbH,
Bad Camberg

Gas-Netzgesellschaft Kolpingstadt Kerpen Verwaltungs-GmbH, Kerpen

Direct

Total

€ '000

100

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with

non-Group companies.

V. Associated companies of joint operations

B.V. NEA, Arnhem/Netherlands

Shareholding in %

Equity

Net income/loss

Direct

Total

€ '000

71,498

€ '000

706

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with

non-Group companies.

VI. Joint ventures accounted for using the equity method

Shareholding in %

Equity

Net income/loss

AS 3 Beteiligungs GmbH, Essen

C-Power N.V., Ostend/Belgium

Galloper Wind Farm Holding Company Limited, Swindon/United Kingdom

Gwynt y Môr Offshore Wind Farm Limited, Swindon/United Kingdom

Innogy Venture Capital GmbH, Dortmund

Société Electrique de l'Our S.A., Luxembourg/Luxembourg

TCP Petcoke Corporation, Dover/USA

URANIT GmbH, Jülich

Direct

Total

515

755

€ '000

39,914

227,455

– 132,797

– 1,029

595

5,697

22,139

71,317

€ '000

5,335

18,081

– 8,149

– 936

123

5,1372

10,7462

98,284

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with

non-Group companies.

178 RWE Annual Report 2018

VII. Joint ventures not accounted for using the equity method due to applica-

Shareholding in %

Equity

Net income/loss

tion of IFRS 5

Direct

Total

AVU Aktiengesellschaft für Versorgungs-Unternehmen, Gevelsberg

BEW Netze GmbH, Wipperfürth

Budapesti Disz- es Közvilagitasi Korlatolt Felelössegü Tarsasag, Budapest/
Hungary
Energie Nordeifel GmbH & Co. KG, Kall

FSO GmbH & Co. KG, Oberhausen

Konsortium Energieversorgung Opel beschränkt haftende oHG, Karlstein

PRENU Projektgesellschaft für Rationelle Energienutzung in Neuss mit
beschränkter Haftung, Neuss
Rain Biomasse Wärmegesellschaft mbH, Rain

SHW/RWE Umwelt Aqua Vodogradnja d.o.o., Zagreb/Croatia

Stadtwerke Dülmen Dienstleistungs- und Beteiligungs-GmbH & Co. KG, Dülmen

Stadtwerke Lingen GmbH, Lingen (Ems)

Stromnetz Friedberg GmbH & Co. KG, Friedberg

Stromnetz Gersthofen GmbH & Co. KG, Gersthofen

Stromnetz Günzburg GmbH & Co. KG, Günzburg

SVS-Versorgungsbetriebe GmbH, Stadtlohn

Zagrebacke otpadne vode d.o.o., Zagreb/Croatia

615

675

705

€ '000

95,950

11,410

30,694

13,691

33,007

29,032

165

6,165

568

27,020

13,971

431

2,999

25,340

221,901

€ '000

10,936

438

1,567

4,579

11,445

5,257

– 13

525

156

4,260

113

1,123

24,383

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with

non-Group companies.

VIII. Associates accounted for using the equity method

Shareholding in %

Equity

Net income/loss

Amprion GmbH, Dortmund

ATBERG - Eólicas do Alto Tâmega e Barroso, Lda., Ribeira de Pena/Portugal

Belectric Gulf Limited, Abu Dhabi/UAE

Bray Offshore Wind Limited, Kilkenny City/Ireland

GNS Gesellschaft für Nuklear-Service mbH, Essen

Grosskraftwerk Mannheim Aktiengesellschaft, Mannheim

HIDROERG - Projectos Energéticos, Lda., Lisbon/Portugal

Innogy Renewables Technology Fund I GmbH & Co. KG, Dortmund

Kish Offshore Wind Limited, Kilkenny City/Ireland

Mingas-Power GmbH, Essen

PEARL PETROLEUM COMPANY LIMITED, Road Town/British Virgin Islands

Schluchseewerk Aktiengesellschaft, Laufenburg Baden

Vliegasunie B.V., De Bilt/Netherlands

Direct

Total

785

107

605

€ '000

1,717,100

4,583

4,664

– 71

47,872

120,788

11,730

16,362

– 91

6,742

€ '000

173,700

315

3,962

– 1

24,1822

6,647

586

– 1,070

– 1

6,073

2,027,129

198,287

62,148

12,608

2,809

2,660

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with

non-Group companies.

Consolidated financial statements > List of shareholdings (part of the notes)

179

IX. Associated companies not accounted for using the equity method due to

Shareholding in %

Equity

Net income/loss

application of IFRS 5

Direct

Total

€ '000

Dortmunder Energie- und Wasserversorgung Gesellschaft mit beschränkter
Haftung, Dortmund

EnergieServicePlus GmbH, Düsseldorf

Energieversorgung Guben GmbH, Guben

Energieversorgung Hürth GmbH, Hürth

Energieversorgung Oberhausen Aktiengesellschaft, Oberhausen

ENNI Energie & Umwelt Niederrhein GmbH, Moers

e-regio GmbH & Co. KG, Euskirchen

EWR Aktiengesellschaft, Worms

EWR Dienstleistungen GmbH & Co. KG, Worms

EWR GmbH, Remscheid

Freiberger Stromversorgung GmbH (FSG), Freiberg

Gas- und Wasserwerke Bous - Schwalbach GmbH, Bous

Kärntner Energieholding Beteiligungs GmbH, Klagenfurt/Austria

KELAG-Kärntner Elektrizitäts-AG, Klagenfurt/Austria

Kemkens B.V., Oss/Netherlands

KEW Kommunale Energie- und Wasserversorgung Aktiengesellschaft,
Neunkirchen

MAINGAU Energie GmbH, Obertshausen

medl GmbH, Mülheim an der Ruhr

Nebelhornbahn-Aktiengesellschaft, Oberstdorf

PFALZWERKE AKTIENGESELLSCHAFT, Ludwigshafen am Rhein

Projecta 14 GmbH, Saarbrücken

Propan Rheingas GmbH & Co Kommanditgesellschaft, Brühl

Recklinghausen Netzgesellschaft mbH & Co. KG, Recklinghausen

RheinEnergie AG, Cologne

Rhein-Main-Donau GmbH, Munich

Siegener Versorgungsbetriebe GmbH, Siegen

SpreeGas Gesellschaft für Gasversorgung und Energiedienstleistung mbH,
Cottbus

SSW - Stadtwerke St. Wendel GmbH & Co KG., St. Wendel

Stadtwerke Aschersleben GmbH, Aschersleben

Stadtwerke Bernburg GmbH, Bernburg (Saale)

Stadtwerke Bitterfeld-Wolfen GmbH, Bitterfeld-Wolfen

Stadtwerke Duisburg Aktiengesellschaft, Duisburg

Stadtwerke Emmerich GmbH, Emmerich am Rhein

Stadtwerke Essen Aktiengesellschaft, Essen

Stadtwerke Geldern GmbH, Geldern

Stadtwerke GmbH Bad Kreuznach, Bad Kreuznach

Stadtwerke Kamp-Lintfort GmbH, Kamp-Lintfort

Stadtwerke Kirn GmbH, Kirn/Nahe

Stadtwerke Meerane GmbH, Meerane

Stadtwerke Meerbusch GmbH, Meerbusch

106

136

188,831

6,296

17,338

4,960

34,345

35,915

89,342

74,307

147,781

83,816

11,429

14,161

871,074

855,527

37,941

73,736

40,371

21,829

5,971

261,971

38,127

9,813

16,044

896,918

110,112

25,335

34,554

20,215

17,536

32,759

20,239

193,636

12,115

132,112

13,408

39,925

14,607

2,137

14,048

24,310

2,066

1,246

13,323

15,624

12,896

2,192

2,424

79,2572

81,400

8,411

10,522

12,539

812

30,285

1,902

2,076

1,125

145,309

4,613

5,783

2,147

2,577

5,815

1,802

48,754

2,923

3,417

232

2,202

5,106

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with

non-Group companies.

180 RWE Annual Report 2018

IX. Associated companies not accounted for using the equity method due to

Shareholding in %

Equity

Net income/loss

application of IFRS 5

Stadtwerke Merseburg GmbH, Merseburg

Stadtwerke Merzig Gesellschaft mit beschränkter Haftung, Merzig

Stadtwerke Neuss Energie und Wasser GmbH, Neuss

Stadtwerke Radevormwald GmbH, Radevormwald

Stadtwerke Ratingen GmbH, Ratingen

Stadtwerke Reichenbach/Vogtland GmbH, Reichenbach im Vogtland

Stadtwerke Saarlouis GmbH, Saarlouis

Stadtwerke Velbert GmbH, Velbert

Stadtwerke Weißenfels Gesellschaft mit beschränkter Haftung, Weißenfels

Stadtwerke Willich Gesellschaft mit beschränkter Haftung, Willich

Stadtwerke Zeitz GmbH, Zeitz

SWTE Netz GmbH & Co. KG, Ibbenbüren

Tankey B.V., 's-Hertogenbosch/Netherlands

WVW Wasser- und Energieversorgung Kreis St. Wendel Gesellschaft mit
beschränkter Haftung, St. Wendel

Xelan SAS, Saint-Denis La Plaine/France

Zagrebacke otpadne vode-upravljanje i pogon d.o.o., Zagreb/Croatia

Zwickauer Energieversorgung GmbH, Zwickau

Direct

Total

€ '000

25,092

15,906

88,344

6,627

58,756

14,056

38,022

82,005

25,254

13,981

21,420

36,640

23,778

1,015

3,376

44,360

€ '000

3,000

253

19,852

2,607

4,835

1,551

4,074

4,029

24,221

3,041

4,642

1,818

– 770

3,371

12,106

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with

non-Group companies.

Consolidated financial statements > List of shareholdings (part of the notes)

181

X. Companies which are not accounted for using the equity method due to sec-
ondary importance for the assets, liabilities, financial position and profit or
loss of the Group

Abwasser-Gesellschaft Knapsack, Gesellschaft mit beschränkter Haftung, Hürth

Ascent Energy LLC, Wilmington/USA

CARBON Climate Protection GmbH, Langenlois/Austria

CARBON Egypt Ltd., Cairo/Egypt

DBO Projectos e Participacoes S.A., Leblon/Brazil

Deutsche Gesellschaft für Wiederaufarbeitung von Kernbrennstoffen AG & Co.
oHG, Gorleben

Elsta B.V., Middelburg/Netherlands

EMDO S.A.S., Paris/France

Fassi Coal Pty. Ltd., Newcastle-Rutherford/Australia

First River Energy LLC, Denver/USA

Focal Energy Photovoltaic Holdings Limited, Nicosia/Cyprus

Gemeinschaftswerk Hattingen Gesellschaft mit beschränkter Haftung, Essen

GfS Gesellschaft für Simulatorschulung mbH, Essen

Kraftwerk Buer GbR, Gelsenkirchen

KSG Kraftwerks-Simulator-Gesellschaft mbH, Essen

KÜCKHOVENER Deponiebetrieb GmbH & Co. Kommanditgesellschaft, Bergheim

KÜCKHOVENER Deponiebetrieb Verwaltungs-GmbH, Bergheim

LDO Coal Pty. Ltd., Ruthersford/Australia

Moravske Hidroelektrane d.o.o., Belgrade/Serbia

Netzanbindung Tewel OHG, Cuxhaven

PV Projects GmbH & Co. KG (i.L.), Kolitzheim

PV Projects Komplementär GmbH (i.L.), Kolitzheim

TetraSpar Demonstrator ApS, Copenhagen/Denmark

The Bristol Bulk Company Limited, London/United Kingdom

Toledo PV A.E.I.E., Madrid/Spain

Umspannwerk Putlitz GmbH & Co. KG, Oldenburg

WALDEN GREEN ENERGY LLC, New York City/USA

Windesco Inc, Boston/USA

Windpark Paffendorf GmbH & Co. KG, Essen

WINDTEST Grevenbroich GmbH, Grevenbroich

Shareholding in %

Equity

Net income/loss

Direct

Total

€ '000

443

48,307

3,130

– 1,773

1,384

40,154

– 4,984

– 9,816

– 1,384

1,476

2,045

5,113

589

– 99

3,540

668

377

1,619

11,978

4,474

2,276

€ '000

213

– 2,962

2,283

– 341

873

32,683

– 4,999

– 3,021

– 7,211

– 4

– 506

– 8

– 16

– 30

285

693

– 179

– 826

– 1,172

– 27

118

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with

non-Group companies.

182 RWE Annual Report 2018

XI. Associates and joint ventures of secondary importance for the assets, liabili-
ties, financial position and profit or loss of the Group falling under the
scope of IFRS 5

Alt Han Company Limited, London/United Kingdom

AWOTEC Gebäude Servicegesellschaft mit beschränkter Haftung, Saarbrücken

Bäderbetriebsgesellschaft St. Ingbert mbH, St. Ingbert

Balve Netz GmbH & Co. KG, Balve

Basking Automation GmbH, Berlin

Bayerische Ray Energietechnik GmbH, Garching

Biogas Wassenberg GmbH & Co. KG, Wassenberg

Biogas Wassenberg Verwaltungs GmbH, Wassenberg

Breitband-Infrastrukturgesellschaft Cochem-Zell mbH, Cochem

bremacon GmbH, Bremen

Brüggen.E-Netz GmbH & Co. KG, Brüggen

Brüggen.E-Netz Verwaltungs-GmbH, Brüggen

Centralny System Wymiany Informacji Sp. z o.o., Poznan/Poland

DES Dezentrale Energien Schmalkalden GmbH, Schmalkalden

Dii GmbH, Munich

Discovergy GmbH, Aachen

Dorsten Netz GmbH & Co. KG, Dorsten

EfD Energie-für-Dich GmbH, Potsdam

ELE - GEW Photovoltaikgesellschaft mbH, Gelsenkirchen

ELE-RAG Montan Immobilien Erneuerbare Energien GmbH, Bottrop

ELE-Scholven-Wind GmbH, Gelsenkirchen

Energie BOL GmbH, Ottersweier

Energie Mechernich GmbH & Co. KG, Mechernich

Energie Mechernich Verwaltungs-GmbH, Mechernich

Energie Nordeifel Beteiligungs-GmbH, Kall

Energie Schmallenberg GmbH, Schmallenberg

energienatur Gesellschaft für Erneuerbare Energien mbH, Siegburg

Energienetze Holzwickede GmbH, Holzwickede

Energiepartner Dörth GmbH, Dörth

Energiepartner Elsdorf GmbH, Elsdorf

Energiepartner Hermeskeil GmbH, Hermeskeil

Energiepartner Kerpen GmbH, Kerpen

Energiepartner Niederzier GmbH, Niederzier

Energiepartner Projekt GmbH, Essen

Energiepartner Solar Kreuztal GmbH, Kreuztal

Energiepartner Wesseling GmbH, Wesseling

Energie-Service-Saar GmbH, Völklingen

Energieversorgung Bad Bentheim GmbH & Co. KG, Bad Bentheim

Energieversorgung Bad Bentheim Verwaltungs-GmbH, Bad Bentheim

Energieversorgung Beckum GmbH & Co. KG, Beckum

Energieversorgung Beckum Verwaltungs-GmbH, Beckum

Shareholding in %

Equity

Net income/loss

Direct

Total

€ '000

114

3,284

1,255

1,323

– 18

3,780

282

288

3,643

5,744

1,134

843

3,618

115

– 1,796

2,909

5,701

590

141

103

530

– 2,170

772

1,105

318

225

– 9

– 1

– 2

556

3,470

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with

non-Group companies.

Consolidated financial statements > List of shareholdings (part of the notes)

183

XI. Associates and joint ventures of secondary importance for the assets, liabili-
ties, financial position and profit or loss of the Group falling under the
scope of IFRS 5

Energieversorgung Horstmar/Laer GmbH & Co. KG, Horstmar

Energieversorgung Kranenburg Netze GmbH & Co. KG, Kranenburg

Energieversorgung Kranenburg Netze Verwaltungs GmbH, Kranenburg

Energieversorgung Marienberg GmbH, Marienberg

Energieversorgung Niederkassel GmbH & Co. KG, Niederkassel

Energotel, a.s., Bratislava/Slovakia

energy4u GmbH & Co. KG, Siegburg

enermarket GmbH, Frankfurt am Main

ENERVENTIS GmbH & Co. KG, Saarbrücken

Erdgasversorgung Industriepark Leipzig Nord GmbH, Leipzig

Erdgasversorgung Schwalmtal GmbH & Co. KG, Viersen

Erdgasversorgung Schwalmtal Verwaltungs-GmbH, Viersen

Erneuerbare Energien Rheingau-Taunus GmbH, Bad Schwalbach

eShare.one GmbH, Dortmund

Esta VOF, Ridderkerk/Netherlands

evm Windpark Höhn GmbH & Co. KG, Höhn

EWV Baesweiler GmbH & Co. KG, Baesweiler

EWV Baesweiler Verwaltungs GmbH, Baesweiler

FAMOS - Facility Management Osnabrück GmbH, Osnabrück

Fernwärmeversorgung Zwönitz GmbH (FVZ), Zwönitz

Foton Technik Sp. z o.o., Warsaw/Poland

FSO Verwaltungs-GmbH, Oberhausen

Gasgesellschaft Kerken Wachtendonk mbH, Kerken

Gas-Netzgesellschaft Bedburg GmbH & Co. KG, Bedburg

Gas-Netzgesellschaft Elsdorf GmbH & Co. KG, Elsdorf

Gasnetzgesellschaft Mettmann GmbH & Co. KG, Mettmann

Gas-Netzgesellschaft Rheda-Wiedenbrück GmbH & Co. KG, Rheda-Wiedenbrück

Gas-Netzgesellschaft Rheda-Wiedenbrück Verwaltungs-GmbH,
Rheda-Wiedenbrück

Gasnetzgesellschaft Wörrstadt mbH & Co. KG, Saulheim

Gasnetzgesellschaft Wörrstadt Verwaltung mbH, Saulheim

Gemeindewerke Bad Sassendorf Gasnetz GmbH & Co. KG, Bad Sassendorf

Gemeindewerke Bad Sassendorf Netze GmbH & Co. KG, Bad Sassendorf

Gemeindewerke Bad Sassendorf Netze Verwaltung GmbH, Bad Sassendorf

Gemeindewerke Bissendorf Netze GmbH & Co. KG, Bissendorf

Gemeindewerke Bissendorf Netze Verwaltungs-GmbH, Bissendorf

Gemeindewerke Everswinkel GmbH, Everswinkel

Gemeindewerke Namborn, Gesellschaft mit beschränkter Haftung, Namborn

GfB, Gesellschaft für Baudenkmalpflege mbH, Idar-Oberstein

Gichtgaskraftwerk Dillingen GmbH & Co. KG, Dillingen

GISA GmbH, Halle (Saale)

GkD Gesellschaft für kommunale Dienstleistungen mbH, Cologne

Shareholding in %

Equity

Net income/loss

Direct

Total

€ '000

4,386

1,698

3,007

2,745

6,805

1,090

252

3,109

526

993

– 763

2,404

105

3,320

– 1,264

4,405

2,012

1,538

3,211

1,930

2,143

1,837

2,756

6,871

811

32,685

9,958

€ '000

275

206

1,231

127

1,293

– 154

227

1,496

– 58

– 79

– 108

873

17,434

– 917

588

454

439

351

819

724

301

482

210

– 3

3,696

2,566

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with

non-Group companies.

184 RWE Annual Report 2018

XI. Associates and joint ventures of secondary importance for the assets, liabili-
ties, financial position and profit or loss of the Group falling under the
scope of IFRS 5

Shareholding in %

Equity

Net income/loss

Direct

Total

€ '000

G&L Gastro-Service GmbH, Augsburg

GNEE Gesellschaft zur Nutzung erneuerbarer Energien mbH Freisen, Freisen

GREEN GECCO Beteiligungsgesellschaft mbH & Co. KG, Troisdorf

GREEN GECCO Beteiligungsgesellschaft-Verwaltungs GmbH, Troisdorf

GREEN Gesellschaft für regionale und erneuerbare Energie mbH, Stolberg

Green Solar Herzogenrath GmbH, Herzogenrath

Greenergetic GmbH, Bielefeld

Greenplug GmbH, Hamburg

HaseNetz GmbH & Co. KG, Gehrde

HCL Netze GmbH & Co. KG, Herzebrock-Clarholz

Heizkraftwerk Zwickau Süd GmbH & Co. KG, Zwickau

Hennef (Sieg) Netz GmbH & Co. KG, Hennef

hmstr GmbH, Saarbrücken

Hochsauerland Netze GmbH & Co. KG, Meschede

Hochsauerland Netze Verwaltung GmbH, Meschede

innogy International Middle East, Dubai/UAE

innogy.C3 GmbH, Essen

Kavernengesellschaft Staßfurt mbH, Staßfurt

KAWAG AG & Co. KG, Pleidelsheim

KAWAG Netze GmbH & Co. KG, Abstatt

KAWAG Netze Verwaltungsgesellschaft mbH, Abstatt

KDT Kommunale Dienste Tholey GmbH, Tholey

KEN Geschäftsführungsgesellschaft mbH, Neunkirchen

KEN GmbH & Co. KG, Neunkirchen

KEVAG Telekom GmbH, Koblenz

Kiwigrid GmbH, Dresden

KlickEnergie GmbH & Co. KG, Neuss

KlickEnergie Verwaltungs-GmbH, Neuss

KnGrid, Inc., Laguna Hills/USA

Kommunale Dienste Marpingen Gesellschaft mit beschränkter Haftung,
Marpingen

Kommunale Netzgesellschaft Steinheim a. d. Murr GmbH & Co. KG,
Steinheim a. d. Murr

Kommunalwerk Rudersberg GmbH & Co. KG, Rudersberg

Kommunalwerk Rudersberg Verwaltungs-GmbH, Rudersberg

Kraftwerk Wehrden Gesellschaft mit beschränkter Haftung, Völklingen

KSP Kommunaler Service Püttlingen GmbH, Püttlingen

KVK Kompetenzzentrum Verteilnetze und Konzessionen GmbH, Cologne

Mainzer Wärme PLUS GmbH, Mainz

MeteringSüd GmbH & Co. KG, Augsburg

MNG Stromnetze GmbH & Co. KG, Lüdinghausen

MNG Stromnetze Verwaltungs GmbH, Lüdinghausen

690

49,843

2,110

707

3,788

4,126

605

2,293

3,402

1,000

106

6,236

– 2,069

794

15,412

2,328

1,348

2,887

2,438

3,350

– 1,597

2,747

4,966

3,082

102

187

230

7,632

447

19,599

327

606

– 5

469

589

362

– 14

2,045

854

149

602

– 5,952

– 664

– 2

346

176

1,620

2,000

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with

non-Group companies.

Consolidated financial statements > List of shareholdings (part of the notes)

185

XI. Associates and joint ventures of secondary importance for the assets, liabili-
ties, financial position and profit or loss of the Group falling under the
scope of IFRS 5

Murrhardt Netz AG & Co. KG, Murrhardt

Naturstrom Betriebsgesellschaft Oberhonnefeld mbH, Koblenz

Netzgesellschaft Bedburg Verwaltungs-GmbH, Bedburg

Netzgesellschaft Betzdorf GmbH & Co. KG, Betzdorf

Netzgesellschaft Bühlertal GmbH & Co. KG, Bühlertal

Netzgesellschaft Elsdorf Verwaltungs-GmbH, Elsdorf

Netzgesellschaft Grimma GmbH & Co. KG, Grimma

Netzgesellschaft Horn-Bad Meinberg GmbH & Co. KG, Horn-Bad Meinberg

Netzgesellschaft Hüllhorst GmbH & Co. KG, Hüllhorst

Netzgesellschaft Korb GmbH & Co. KG, Korb

Netzgesellschaft Korb Verwaltungs-GmbH, Korb

Netzgesellschaft Kreisstadt Bergheim Verwaltungs-GmbH, Bergheim

Netzgesellschaft Lauf GmbH & Co. KG, Lauf

Netzgesellschaft Leutenbach GmbH & Co. KG, Leutenbach

Netzgesellschaft Leutenbach Verwaltungs-GmbH, Leutenbach

Netzgesellschaft Maifeld GmbH & Co. KG, Polch

Netzgesellschaft Maifeld Verwaltungs GmbH, Polch

Netzgesellschaft Ottersweier GmbH & Co. KG, Ottersweier

Netzgesellschaft Rheda-Wiedenbrück GmbH & Co. KG, Rheda-Wiedenbrück

Netzgesellschaft Rheda-Wiedenbrück Verwaltungs-GmbH, Rheda-Wiedenbrück

NFPA Holdings Limited, Newcastle upon Tyne/United Kingdom

NiersEnergieNetze GmbH & Co. KG, Kevelaer

NiersEnergieNetze Verwaltungs-GmbH, Kevelaer

Novenerg limited liability company for energy activities, Zagreb/Croatia

pear.ai Inc., San Francisco/USA

Peißenberger Wärmegesellschaft mbH, Peißenberg

Placense Ltd., Tel Aviv/Israel

prego services GmbH, Saarbrücken

Propan Rheingas GmbH, Brühl

Recklinghausen Netz-Verwaltungsgesellschaft mbH, Recklinghausen

Renergie Stadt Wittlich GmbH, Wittlich

Rhegio Natur Dienstleistungen GmbH, Rhede

Rhein-Ahr-Energie Netz GmbH & Co. KG, Grafschaft

RIWA GmbH Gesellschaft für Geoinformationen, Kempten

RURENERGIE GmbH, Düren

RWE Dhabi Union Energy LLC, Abu Dhabi/UAE

Sandersdorf-Brehna Netz GmbH & Co. KG, Sandersdorf-Brehna

SEG Solarenergie Guben GmbH & Co. KG, Guben

Selm Netz GmbH & Co. KG, Selm

SHS Ventures GmbH & Co. KGaA, Völklingen

SolarProjekt Mainaschaff GmbH, Mainaschaff

Shareholding in %

Equity

Net income/loss

Direct

Total

€ '000

2,790

159

1,833

2,296

7,670

1,998

1,415

819

1,524

6,098

2,027

2,465

2,000

6,158

5,739

– 1,894

1,350

12,667

4,826

3,264

4,198

1,219

€ '000

240

151

175

501

165

101

581

159

337

269

498

– 166

730

– 1

458

– 130

250

105

521

– 12

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with

non-Group companies.

186 RWE Annual Report 2018

XI. Associates and joint ventures of secondary importance for the assets, liabili-
ties, financial position and profit or loss of the Group falling under the
scope of IFRS 5

SPX, s.r.o., Zilina/Slovakia

SSW Stadtwerke St. Wendel Geschäftsführungsgesellschaft mbH, St. Wendel

Stadtentwässerung Schwerte GmbH, Schwerte

Städtische Werke Borna GmbH, Borna

Städtisches Wasserwerk Eschweiler GmbH, Eschweiler

Stadtwerk Verl Netz GmbH & Co. KG, Verl

Stadtwerke - Strom Plauen GmbH & Co. KG, Plauen

Stadtwerke Ahaus GmbH, Ahaus

Stadtwerke Aue GmbH, Aue

Stadtwerke Dillingen/Saar GmbH, Dillingen

Stadtwerke Dülmen Verwaltungs-GmbH, Dülmen

Stadtwerke Gescher GmbH, Gescher

Stadtwerke Geseke Netze GmbH & Co. KG, Geseke

Stadtwerke Geseke Netze Verwaltung GmbH, Geseke

Stadtwerke Goch Netze GmbH & Co. KG, Goch

Stadtwerke Goch Netze Verwaltungsgesellschaft mbH, Goch

Stadtwerke Haan GmbH, Haan

Stadtwerke Kerpen GmbH & Co. KG, Kerpen

Stadtwerke Kerpen Verwaltungs-GmbH, Kerpen

Stadtwerke Langenfeld GmbH, Langenfeld

Stadtwerke Oberkirch GmbH, Oberkirch

Stadtwerke Roßlau Fernwärme GmbH, Dessau-Roßlau

Stadtwerke Schwarzenberg GmbH, Schwarzenberg/Erzgeb.

Stadtwerke Siegburg GmbH & Co. KG, Siegburg

Stadtwerke Steinfurt Gesellschaft mit beschränkter Haftung, Steinfurt

Stadtwerke Unna GmbH, Unna

Stadtwerke Vlotho GmbH, Vlotho

Stadtwerke Wadern GmbH, Wadern

Stadtwerke Waltrop Netz GmbH & Co. KG, Waltrop

Stadtwerke Weilburg GmbH, Weilburg

Stadtwerke Werl GmbH, Werl

STEAG Windpark Ullersdorf GmbH & Co. KG, Jamlitz

Stromnetz Diez GmbH & Co. KG, Diez

Stromnetz Diez Verwaltungsgesellschaft mbH, Diez

Stromnetz Euskirchen GmbH & Co. KG, Euskirchen

Stromnetz Günzburg Verwaltungs GmbH, Günzburg

Stromnetz Hofheim GmbH & Co. KG, Hofheim am Taunus

Stromnetz Hofheim Verwaltungs GmbH, Hofheim am Taunus

Stromnetz Neckargemünd GmbH, Neckargemünd

Stromnetz Pulheim GmbH & Co. KG, Pulheim

Stromnetz Verbandsgemeinde Katzenelnbogen GmbH & Co. KG, Katzenelnbogen

Shareholding in %

Equity

Net income/loss

Direct

Total

€ '000

153

128

4,740

3,439

3,991

5,906

11,336

13,412

4,951

3,304

3,605

2,867

795

1,230

491

1,384

3,113

2,061

– 479

608

563

20,778

1,003

9,251

7,192

1,586

14,225

8,439

11,465

15,838

4,897

1,800

2,778

8,010

7,435

19,127

1,546

4,358

3,590

2,863

804

406

774

386

2,750

4,244

131

– 2,578

234

464

2,687

1,355

103

840

270

2,278

177

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with

non-Group companies.

Consolidated financial statements > List of shareholdings (part of the notes)

187

XI. Associates and joint ventures of secondary importance for the assets, liabili-
ties, financial position and profit or loss of the Group falling under the
scope of IFRS 5

Stromnetz Verbandsgemeinde Katzenelnbogen Verwaltungsgesellschaft mbH,
Katzenelnbogen

Stromnetz VG Diez GmbH & Co. KG, Altendiez

STROMNETZ VG DIEZ Verwaltungsgesellschaft mbH, Altendiez

Strom-Netzgesellschaft Bedburg GmbH & Co. KG, Bedburg

Stromnetzgesellschaft Bramsche mbH & Co. KG, Bramsche

Strom-Netzgesellschaft Elsdorf GmbH & Co. KG, Elsdorf

Stromnetzgesellschaft Gescher GmbH & Co. KG, Gescher

Strom-Netzgesellschaft Kolpingstadt Kerpen GmbH & Co. KG, Kerpen

Strom-Netzgesellschaft Kreisstadt Bergheim GmbH & Co. KG, Bergheim

Stromnetzgesellschaft Mettmann mbH & Co. KG, Mettmann

Stromnetzgesellschaft Neuenhaus mbH & Co. KG, Neuenhaus

Stromnetzgesellschaft Neuenhaus Verwaltungs-GmbH, Neuenhaus

Stromnetzgesellschaft Neunkirchen-Seelscheid mbH & Co. KG,
Neunkirchen-Seelscheid

Stromnetzgesellschaft Schwalmtal mbH & Co. KG, Schwalmtal

Stromverwaltung Schwalmtal GmbH, Schwalmtal

Südwestfalen Netz-Verwaltungsgesellschaft mbH, Netphen

SWL-energis Netzgesellschaft mbH & Co. KG, Lebach

SWL-energis-Geschäftsführungs-GmbH, Lebach

SWT trilan GmbH, Trier

SWTE Netz Verwaltungsgesellschaft mbH, Ibbenbüren

Technische Werke Naumburg GmbH, Naumburg (Saale)

TEPLO Votice s.r.o., Votice/Czech Republic

TNA Talsperren- und Grundwasser-Aufbereitungs- und Vertriebsgesellschaft mbH,
Nonnweiler

TRANSELEKTRO, s.r.o., Kosice/Slovakia

TWE Technische Werke der Gemeinde Ensdorf GmbH, Ensdorf

TWL Technische Werke der Gemeinde Losheim GmbH, Losheim

TWM Technische Werke der Gemeinde Merchweiler Gesellschaft mit beschränkter
Haftung, Merchweiler

TWN Trinkwasserverbund Niederrhein GmbH, Grevenbroich

TWRS Technische Werke der Gemeinde Rehlingen-Siersburg GmbH,
Rehlingen Siersburg

Untere Iller Aktiengesellschaft, Landshut

Untermain EnergieProjekt AG & Co. KG., Kelsterbach

Untermain Erneuerbare Energien GmbH, Raunheim

Veiligebuurt B.V., Enschede/Netherlands

VEM Neue Energie Muldental GmbH & Co. KG, Markkleeberg

Verteilnetze Energie Weißenhorn GmbH & Co. KG, Weißenhorn

Verwaltungsgesellschaft Dorsten Netz mbH, Dorsten

Verwaltungsgesellschaft Energie Weißenhorn GmbH, Weißenhorn

Shareholding in %

Equity

Net income/loss

Direct

Total

€ '000

2,407

3,420

6,256

3,565

1,000

4,587

6,910

3,156

3,330

2,601

3,553

3,239

1,330

11,125

103

1,132

627

2,133

5,098

2,139

138

4,718

1,176

1,996

906

179

384

378

373

253

452

690

195

315

289

557

177

530

3,101

– 51

166

– 1,631

– 5

193

– 19

312

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with

non-Group companies.

188 RWE Annual Report 2018

XI. Associates and joint ventures of secondary importance for the assets, liabili-
ties, financial position and profit or loss of the Group falling under the
scope of IFRS 5

Verwaltungsgesellschaft GKW Dillingen mbH, Dillingen

Visualix GmbH, Berlin

VOLTARIS GmbH, Maxdorf

Wadersloh Netz GmbH & Co. KG, Wadersloh

Wadersloh Netz Verwaltungs GmbH, Wadersloh

Wärmeversorgung Limburg GmbH, Limburg an der Lahn

Wärmeversorgung Mücheln GmbH, Mücheln

Wärmeversorgung Wachau GmbH, Markkleeberg OT Wachau

Wasser-Netzgesellschaft Kolpingstadt Kerpen GmbH & Co. KG, Kerpen

Wasserverbund Niederrhein Gesellschaft mit beschränkter Haftung, Moers

Wasserversorgung Main-Taunus GmbH, Frankfurt am Main

Wasserzweckverband der Gemeinde Nalbach, Nalbach

WeAre GmbH, Essen

Werne Netz GmbH & Co. KG, Werne

WEV Warendorfer Energieversorgung GmbH, Warendorf

Windenergie Briesensee GmbH, Neu Zauche

Windenergie Frehne GmbH & Co. KG, Marienfließ

Windenergie Merzig GmbH, Merzig

Windenergie Schermbeck-Rüste GmbH & Co. KG, Schermbeck

Windenergiepark Heidenrod GmbH, Heidenrod

Windkraft Jerichow - Mangelsdorf I GmbH & Co. KG, Burg

Windpark Losheim-Britten GmbH, Losheim

Windpark Nohfelden-Eisen GmbH, Nohfelden

Windpark Oberthal GmbH, Oberthal

Windpark Perl GmbH, Perl

WLN Wasserlabor Niederrhein GmbH, Mönchengladbach

WVG-Warsteiner Verbundgesellschaft mbH, Warstein

WVL Wasserversorgung Losheim GmbH, Losheim am See

WWS Wasserwerk Saarwellingen GmbH, Saarwellingen

WWW Wasserwerk Wadern GmbH, Wadern

xtechholding GmbH, Berlin

Shareholding in %

Equity

Net income/loss

Direct

Total

€ '000

187

2,946

3,626

461

929

11,789

144

1,776

1,023

1,616

5,596

3,907

2,763

€ '000

575

401

109

851

1,884

368

100

491

12,766

1,480

4,167

1,901

3,530

4,685

7,987

521

8,676

5,236

3,887

3,892

703

– 71

186

252

1,547

382

345

299

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with

non-Group companies.

Consolidated financial statements > List of shareholdings (part of the notes)

189

XII. Other investments

Abel & Co., Tilburg/Netherlands

Adom Intelligent Transport Ltd., Tel Aviv-Jaffa/Israel

aiPod Inc, Pasadena/USA

AKSELOS S.A., Lausanne/Switzerland

APEP Dachfonds GmbH & Co. KG, Munich

AutoGrid Systems Inc., Wilmington/USA

BeeRides Gepjarmü-kölcsönzö Kft., Székesfehérvár/Hungary

BEW Bergische Energie- und Wasser-GmbH, Wipperfürth

BFG-Bernburger Freizeit GmbH, Bernburg (Saale)

BIDGELY Inc., Sunnyvale/USA

BigchainDB GmbH, Berlin

Blackhawk Mining LLC, Lexington/USA

Bootstraplabs VC Follow-On Fund 2016, San Francisco/USA

Bootstraplabs VC Seed Fund 2016 L.P., San Francisco/USA

Buildots Ltd., Tel Aviv/Israel

Bürgerenergie Untermain eG, Kelsterbach

CALIPSA LIMITED, London/United Kingdom

Chrysalix Energy II U.S. Limited Partnership, Vancouver/Canada

Chrysalix Energy III U.S. Limited Partnership, Vancouver/Canada

Cryptowerk Corp., San Mateo/USA

DCUSA Ltd., London/United Kingdom

Deutsches Forschungszentrum für Künstliche Intelligenz GmbH, Kaiserslautern

Die BürgerEnergie eG, Dortmund

Doozer Real Estate Systems GmbH, Berlin

Dry Bulk Partners 2013 LP, Grand Cayman/Cayman Islands

eins energie in sachsen GmbH & Co. KG, Chemnitz

eluminocity GmbH, Munich

Energías Renovables de Ávila, S.A., Madrid/Spain

Energie Rur-Erft GmbH & Co. KG, Kall

Energie Rur-Erft Verwaltungs-GmbH, Kall

Energieagentur Region Trier GmbH, Trier

Energiegenossenschaft Chemnitz - Zwickau eG, Chemnitz

Energiehandel Saar GmbH & Co. KG, EHS, Neunkirchen

Energiehandel Saar Verwaltungs-GmbH, Neunkirchen

Energieversorgung Limburg GmbH, Limburg an der Lahn

Entwicklungsgesellschaft Neu-Oberhausen mbH-ENO, Oberhausen

ESV-ED GmbH & Co. KG, Buchloe

FirstPoint Mobile Guard Ltd., Tel Aviv/Israel

Focal Energy Solar Three Ltd., Nicosia/Cyprus

Fractal Blockchain GmbH, Berlin

GasLINE Telekommunikationsnetz-Geschäftsführungsgesellschaft deutscher Gasver-
sorgungsunternehmen mbH, Straelen

Shareholding in %

Equity

Net income/loss

Direct

Total

€ '000

254,921

84,767

32,014

10,397

9,678

5,700

– 1,229

– 4,897

– 314,857

108,180

– 7

– 1,230

1,542

1,699

82,386

1,147

– 39

– 5

4,290

– 523

– 4

108

8,988

114,962

18,441

1,802

4,704

467,844

595

1,227

1,140

391

28,327

134

370

5,430

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with

non-Group companies.

190 RWE Annual Report 2018

XII. Other investments

GasLINE Telekommunikationsnetzgesellschaft deutscher
Gasversorgungsunternehmen mbH & Co. KG, Straelen

Gemeinschafts-Lehrwerkstatt Arnsberg GmbH, Arnsberg

Gemserv Limited, London/United Kingdom

Gesellschaft für Wirtschaftsförderung Duisburg mbH, Duisburg

GETAWAY GmbH, Berlin

Glenrothes Paper Limited, Glenrothes/United Kingdom

Globus Steel & Power Pvt. Limited, New Delhi/India

gridX GmbH, Aachen

Gründerfonds Ruhr GmbH & Co. KG, Essen

Heliatek GmbH, Dresden

High-Tech Gründerfonds II GmbH & Co. KG, Bonn

HOCHTEMPERATUR-KERNKRAFTWERK Gesellschaft mit beschränkter Haftung
(HKG) Gemeinsames Europäisches Unternehmen, Hamm

Holo-Light GmbH, Westendorf/Austria

Hubject GmbH, Berlin

INDI Energie B.V., 's-Hertogenbosch/Netherlands

INS Insider Navigation Systems GmbH, Vienna/Austria

Intertrust Technologies Corporation, Sunnyvale/USA

iTy Labs Corp., Dover/USA

IWW Rheinisch-Westfälisches Institut für Wasserforschung gemeinnützige GmbH,
Mülheim an der Ruhr

IZES gGmbH, Saarbrücken

KEV Energie, Gesellschaft mit beschränkter Haftung, Kall

Kreis-Energie-Versorgung Schleiden, Gesellschaft mit beschränkter Haftung, Kall

LEW Bürgerenergie e.G., Augsburg

LIBRYO LTD, London/United Kingdom

ME SolShare International PTE. LTD., Singapore/Singapore

Moj.io Inc., Vancouver/Canada

Move24 Group GmbH, Berlin

MRA Service Company Limited, London/United Kingdom

Neckar-Aktiengesellschaft, Stuttgart

Neue Energie Ostelbien eG, Arzberg

Neustromland GmbH & Co. KG, Saarbrücken

Nordsee One GmbH, Oststeinbek

Nordsee Three GmbH, Oststeinbek

Nordsee Two GmbH, Oststeinbek

Shareholding in %

Equity

Net income/loss

Direct

Total

€ '000

99,888

1,429

8,136

721

852

– 1,344

8,414

100,631

9,040

58,888

– 36

1,791

– 916

– 7,701

– 1,957

73,927

– 17,007

– 74

2,320

2,221

– 1,628

129

33,713

– 42

295

904

406

457

16,098

1,770

7,964

10,179

2,759

71,977

442

518

126

Ökostrom Saar Geschäftsführungsgesellschaft mbH & Co. Biogas Losheim KG,
Merzig

OPPENHEIM PRIVATE EQUITY Institutionelle Anleger GmbH & Co. KG, Cologne

Oriient New Media Ltd., Tel Aviv/Israel

Parque Eólico Cassiopea, S.L., Oviedo/Spain

Parque Eólico Escorpio, S.A., Oviedo/Spain

Parque Eólico Leo, S.L., Oviedo/Spain

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with

non-Group companies.

Consolidated financial statements > List of shareholdings (part of the notes)

191

XII. Other investments

Shareholding in %

Equity

Net income/loss

PEAG Holding GmbH, Dortmund

People Power Company, Redwood City/USA

PIO Security GmbH, Berlin

pro regionale energie eG, Diez

Promocion y Gestion Cáncer, S.L., Oviedo/Spain

PSI Software AG, Berlin

QMerit Inc., Irvine/USA

REV LNG LLC, Ulysses/USA

ROSOLA Grundstücks-Vermietungsgesellschaft mbH & Co. Objekt Alzenau KG,
Düsseldorf

Rydies GmbH, Hanover

SALUS Grundstücks-Vermietungsgesellschaft mbH & Co. Objekt Leipzig KG,
Düsseldorf

ScanTrust SA, Lausanne/Switzerland

Sdruzení k vytvorení a vyuzívání digitální technické mapy mesta Pardubic,
Pardubice/Czech Republic

SE SAUBER ENERGIE GmbH & Co. KG, Cologne

SE SAUBER ENERGIE Verwaltungs-GmbH, Cologne

Segasec Labs Ltd., Tel Aviv/Israel

SET Fund II C.V., Amsterdam/Netherlands

SkenarioLabs Oy, Espoo/Finland

Smart Energy Code Company Limited, London/United Kingdom

Solarpark Freisen: "Auf der Schwann" GmbH, Freisen

Solarpark St. Wendel GmbH, St. Wendel

SolarRegion RengsdorferLAND eG, Rengsdorf

Solidified Technologies LLC, Garland/USA

SPAA Ltd, London/United Kingdom

St. Clements Services Limited, London/United Kingdom

Stadtmarketing-Gesellschaft Gelsenkirchen mbH, Gelsenkirchen

Stadtwerke Delitzsch GmbH, Delitzsch

Stadtwerke Detmold GmbH, Detmold

Stadtwerke Ostmünsterland GmbH & Co. KG, Telgte

Stadtwerke Porta Westfalica Gesellschaft mit beschränkter Haftung,
Porta Westfalica

Stadtwerke Sulzbach/Saar GmbH, Sulzbach

Stadtwerke Tecklenburger Land Energie GmbH, Ibbenbüren

Stadtwerke Tecklenburger Land GmbH & Co. KG, Ibbenbüren

Stadtwerke Völklingen Netz GmbH, Völklingen

Stadtwerke Völklingen Vertrieb GmbH, Völklingen

Stem Inc., Milbrae/USA

Sustainable Energy Technology Fund C.V., Amsterdam/Netherlands

SWT Stadtwerke Trier Versorgungs-GmbH, Trier

SWTE Verwaltungsgesellschaft mbH, Ibbenbüren

Direct

Total

100

€ '000

17,933

877

1,861

85,020

8,324

3,036

1,978

142

31,868

382

1,190

315

1,844

16,072

31,495

27,483

16,438

11,431

1,006

16,387

7,301

€ '000

2,007

– 2,194

5,007

854

423

– 3

389

– 467

154

– 91

2,878

4,380

259

1,487

– 451

687

1,818

3,400

– 47,097

16,742

55,225

– 52,279

– 810

3,920

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with

non-Group companies.

192 RWE Annual Report 2018

XII. Other investments

Shareholding in %

Equity

Net income/loss

Direct

Total

Technologiezentrum Jülich GmbH, Jülich

TechSee Augmented Vision Ltd., Herzliya/Israel

Telecom Plus plc, London/United Kingdom

Transport- und Frischbeton-Gesellschaft mit beschränkter Haftung & Co. Kom-
manditgesellschaft Aachen, Aachen

T-REX Group Inc., New York City/USA

Trianel Erneuerbare Energien GmbH & Co. KG, Aachen

Trianel GmbH, Aachen

Trinkaus Secondary GmbH & Co. KGaA, Düsseldorf

Umspannwerk Lübz GbR, Lübz

Union Group, a.s., Ostrava/Czech Republic

Westly Capital Partners Fund III, L.P., Dover/USA

WiN Emscher-Lippe Gesellschaft zur Strukturverbesserung mbH, Herten

Windenergie Schermbeck-Rüste Verwaltungsgesellschaft m.b.H., Schermbeck

Windpark Jüchen GmbH & Co. KG, Roth

Windpark Mengerskirchen GmbH, Mengerskirchen

Windpark Saar GmbH & Co. Repower KG, Freisen

Windpark Saar 2016 GmbH & Co. KG, Freisen

€ '000

1,593

221,660

390

64,750

85,442

1,822

89,401

1,203

254

2,110

3,013

7,474

4,204

€ '000

162

35,8642

118

– 1,112

1,504

139

– 262

– 212

216

297

718

– 368

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with

non-Group companies.

Consolidated financial statements > List of shareholdings (part of the notes)

193

Changes in shareholding with change of control

Shareholding in %
31 Dec 2018

Shareholding in %
31 Dec 2017

Change

Additions to affiliated companies included in the consolidated financial statements

Broadband TelCom Power, Inc., Santa Ana/USA

Business Improvers B.V., Amsterdam/Netherlands

Certified B.V., Amsterdam/Netherlands

Charity Improvers B.V., Amsterdam/Netherlands

Deal Improvers B.V., Amsterdam/Netherlands

Dealmakers B.V., Amsterdam/Netherlands

Dealmakers Community B.V., Amsterdam/Netherlands

Dealmakers Contract B.V., Amsterdam/Netherlands

DealmakersNetwork B.V., Amsterdam/Netherlands

ELMU-ÉMÁSZ Solutions Kft., Budapest/Hungary

Energy Dealmakers B.V., Amsterdam/Netherlands

Energy Improvers B.V., Amsterdam/Netherlands

Essent Rights B.V., 's-Hertogenbosch/Netherlands

Facility Dealmakers B.V., Amsterdam/Netherlands

Finance Dealmakers B.V., Amsterdam/Netherlands

FlexQuarters B.V., Amsterdam/Netherlands

Generación Fotovoltaica De Alarcos, S.L.U., Barcelona/Spain

Hardin Wind LLC, Chicago/USA

Improvers B.V., Amsterdam/Netherlands

Improvers B.V., 's-Hertogenbosch/Netherlands

Improvers Community B.V., Amsterdam/Netherlands

Improvers Concepts B.V., Amsterdam/Netherlands

Improvers Contracts B.V., Amsterdam/Netherlands

Improvers Network B.V., Amsterdam/Netherlands

innogy Limondale Sun Farm Holding Pty. Ltd., Southbank/Australia

innogy Polska IT Support Sp. z o.o., Warsaw/Poland

Innogy Renewables Australia Pty Ltd., Southbank/Australia

innogy Rheinhessen Beteiligungs GmbH, Essen

Installatietechniek Totaal B.V., Leeuwarden/Netherlands

IRUS Solar Development LLC, Dover/USA

IRUS Solar Holdings LLC, Dover/USA

IRUS Wind Development LLC, Dover/USA

IsoFitters BVBA, Herentals/Belgium

Isoprofs België BVBA, Hasselt/Belgium

Konnektor B.V., Amsterdam/Netherlands

Licht Groen B.V., Amsterdam/Netherlands

Limondale Sun Farm Pty. Ltd., Southbank/Australia

Lottery Improvers B.V., Amsterdam/Netherlands

Media Improvers B.V., Amsterdam/Netherlands

Montcogim - Plinara d.o.o., Sveta Nedelja/Croatia

Nederland Isoleert B.V., Amersfoort/Netherlands

Nederland Schildert B.V., Amersfoort/Netherlands

Nederland Schildert Rijnmond B.V., Amersfoort/Netherlands

Nederland Verkoopt B.V., Amersfoort/Netherlands

Recargo Inc., El Segundo, CA/USA

Regionetz GmbH, Aachen

1 Control by virtue of company contract.

100

491

100

194 RWE Annual Report 2018

Changes in shareholding with change of control

Shareholding in %
31 Dec 2018

Shareholding in %
31 Dec 2017

Change

Additions to affiliated companies included in the consolidated financial statements

RomeoDelta B.V., Amsterdam/Netherlands

Telecom Dealmakers B.V., Amsterdam/Netherlands

Telecom Improvers B.V., Amsterdam/Netherlands

Triton Knoll HoldCo Limited, Swindon/United Kingdom

Wind Farm Deliceto s.r.l., Bolzano/Italy

Additions to associates accounted for using the equity method

Bray Offshore Wind Limited, Kilkenny City/Ireland

Kish Offshore Wind Limited, Kilkenny City/Ireland

Additions to associates not accounted for using the equity method due to application
of IFRS 5

Tankey B.V., 's-Hertogenbosch/Netherlands

Reclassification of companies not accounted for using the equity method due to sec-
ondary importance for the assets, liabilities, financial position and profit or loss of the
Group to affiliated companies included in the consolidated financial statements

100

Sofia Offshore Wind Farm Limited, Swindon/United Kingdom

100

Reclassification of companies not included in the consolidated financial statements due
to secondary importance for the assets, liabilities, financial position and profit or loss
of the Group to joint ventures not accounted for using the equity method due to appli-
cation of IFRS 5

Stromnetz Friedberg GmbH & Co. KG, Friedberg

Disposal of affiliated companies included in the consolidated financial statements

ÉMÁSZ DSO Holding Korlátolt Felelosségu Társaság, Miskolc/Hungary

Great Yarmouth Power Limited, Swindon/United Kingdom

Immobilien-Vermietungsgesellschaft Schumacher GmbH & Co. Objekt
Kundenzentren KG, Düsseldorf

innogy Energetyka Trzemeszno Sp. z o.o., Wroclaw/Poland

innogy Polska Contracting Sp. z o.o., Wroclaw/Poland

Mátrai Erömü Zártkörüen Müködö Részvénytársaság, Visonta/Hungary

Regenesys Holdings Limited, Swindon/United Kingdom

Regenesys Technologies, Swindon/United Kingdom

RegioTemp GmbH, Eschweiler

RWE Cogen UK Trading Limited, Swindon/United Kingdom

RWE East, s.r.o., Prague/Czech Republic

RWE Energie S.R.L., Bucharest/Romania

1 Structured entity pursuant to IFRS 10 and 12.

100

– 51

– 100

– 51

– 100

Consolidated financial statements > List of shareholdings (part of the notes)

195

Changes in shareholding without change of control

Shareholding in %
31 Dec 2018

Shareholding in %
31 Dec 2017

Change

Affiliated companies which are included in the consolidated financial statements

Nordsee Windpark Beteiligungs GmbH, Essen

Associates not accounted for using the equity method due to application of IFRS 5

EWR Aktiengesellschaft, Worms

EWR Dienstleistungen GmbH & Co. KG, Worms

Nebelhornbahn– Aktiengesellschaft, Oberstdorf

Stadtwerke Velbert GmbH, Velbert

Joint ventures not accounted for using the equity method due to application of IFRS 5

Rain Biomasse Wärmegesellschaft mbH, Rain

Joint operations

Gas– Netzgesellschaft Kolpingstadt Kerpen GmbH & Co. KG, Kerpen

Gas– Netzgesellschaft Kreisstadt Bergheim GmbH & Co. KG, Bergheim

100

– 10

– 1

– 25

– 7

– 20

– 5

– 24

196 RWE Annual Report 2018

3.8 BOARDS (PART OF THE NOTES)

As of: 28 February 2019

Supervisory Board
(End of term: 2021 Annual General Meeting)

Dr. Werner Brandt
Bad Homburg

Chairman

Martin Bröker2
Bochum

Head of HR & Business Functions IT at RWE Generation SE

Chairman of the Supervisory Board of ProSiebenSat.1 Media SE

Year of birth: 1966

Year of birth: 1954

Member since: 18 April 2013

Other appointments:
• ProSiebenSat.1 Media SE (Chairman)1
• Siemens AG1

Frank Bsirske2
Berlin

Deputy Chairman
Chairman of ver.di Vereinte Dienstleistungsgewerkschaft

Year of birth: 1952

Member since: 9 January 2001

Other appointments:

• DB Privat- und Firmenkundenbank AG
• Deutsche Bank AG1
•

innogy SE1,3

Michael Bochinsky2
Grevenbroich

Member since: 1 September 2018

Ute Gerbaulet
Düsseldorf

General Partner of Bankhaus Lampe KG

Year of birth: 1968

Member since: 27 April 2017

Other appointments:
• Gerry Weber International AG1
- NRW.Bank AöR

Reinhold Gispert2,4
Worms

Former Chairman of the Group Works Council of RWE AG

Year of birth: 1960

Member from 27 April 2017 to 31 July 2018

Andreas Henrich2,4
Mülheim an der Ruhr

Former Head of Human Resources at RWE AG

Deputy Chairman of the General Works Council of RWE Power AG

Year of birth: 1956

Year of birth: 1967

Member since: 1 August 2018

Reiner Böhle2
Witten

Consultant for Special Tasks and Project Work

Year of birth: 1960

Member since: 1 January 2013

Sandra Bossemeyer2
Duisburg

Chairwoman of the Works Council of RWE AG

Representative of the disabled

Year of birth: 1965

Member since: 20 April 2016

Member from 20 April 2016 to 31 August 2018

Prof. Dr.-Ing. Dr.-Ing. E. h. Hans-Peter Keitel
Essen

Former Chairman of the Executive Board of HOCHTIEF AG

Year of birth: 1947

Member since: 18 April 2013

Other appointments:

• National-Bank AG

• Voith GmbH & Co. KGaA (Chairman)

•

Member of other mandatory supervisory boards as defined in Section 125 of the
German Stock Corporation Act.
Member of comparable domestic and foreign supervisory boards of commercial
enterprises as defined in Section 125 of the German Stock Corporation Act.

1 Listed company.
2 Employee representative.
3 Office within the Group.
4 Information valid as of the date of retirement.

Consolidated financial statements > Boards (part of the notes)

197

Mag. Dr. h. c. Monika Kircher
Krumpendorf, Austria

Consultant

Year of birth: 1957

Peter Ottmann
Nettetal

Managing Director of Verband der kommunalen

RWE-Aktionäre GmbH

Member since: 15 October 2016

Attorney, Former Chief Administrative Officer of Viersen County

Other appointments:
- Andritz AG1
- Austrian Airlines AG
- Kärntner Energieholding Beteiligungs GmbH (Chairwoman)3
- KELAG-Kärntner Elektrizitäts AG3
- Siemens AG Österreich

Year of birth: 1951

Member since: 20 April 2016

Other appointments:

• RW Holding AG (in liquidation)

Günther Schartz
Wincheringen

Monika Krebber2
Mülheim an der Ruhr

Chief Administrative Officer of the District of Trier-Saarburg

Year of birth: 1962

Deputy Chairwoman of the General Works Council of innogy SE

Member since: 20 April 2016

Deputy Chairwoman of the Group Works Council of RWE AG
Year of birth: 1962

Member since: 20 April 2016

Other appointments:

• RW Holding AG (in liquidation)

Other appointments:

•

innogy SE1,3

Harald Louis2
Jülich

- A.R.T. Abfallberatungs- und Verwertungsgesellschaft mbH

(Chairman)

- Kreiskrankenhaus St. Franziskus Saarburg GmbH (Chairman)

- LBBW-RheinLand-Pfalz-Bank Verwaltungsrat (Deputy Member)

- Sparkassenverband Rheinland-Pfalz

- Sparkasse Trier

Chairman of the General Works Council of RWE Power AG

- Trierer Hafengesellschaft mbH

Year of birth: 1967

Member since: 20 April 2016

Other appointments:
• RWE Power AG3

Dagmar Mühlenfeld
Mülheim an der Ruhr

Former Mayor of Mülheim an der Ruhr

Year of birth: 1951

Member since: 4 January 2005

Other appointments:

• RW Holding AG (in liquidation)

- Zweckverband Abfallwirtschaft Region Trier

Dr. Erhard Schipporeit
Hanover

Independent Corporate Consultant

Year of birth: 1949

Member since: 20 April 2016

Other appointments:

• BDO AG
• Fuchs Petrolub SE1
• Hannover Rück SE1
• HDI V. a. G.

innogy SE1,3 (Chairman)

•
• SAP SE1
• Talanx AG1

•

1 Listed company.
2 Employee representative.
3 Office within the Group.

198 RWE Annual Report 2018

Dr. Wolfgang Schüssel
Vienna, Austria

Marion Weckes2
Dormagen

Former Federal Chancellor of the Republic of Austria

Head of Unit, Institut für Mitbestimmung und Unternehmens-

Year of birth: 1945

Member since: 1 March 2010

Other appointments:

führung, Hans-Böckler-Stiftung

Year of birth: 1975

Member since: 20 April 2016

- Adenauer Stiftung (Chairman of the Board of Trustees)
- Mobile Telesystems PJSC1

Leonhard Zubrowski2
Lippetal

Chairman of the Group Works Council of RWE AG

Year of birth: 1961

Member since: 1 July 2014

Other appointments:
• RWE Generation SE3

Ullrich Sierau
Dortmund

Mayor of the City of Dortmund

Year of birth: 1956

Member since: 20 April 2011

Other appointments:

• Dortmunder Energie- und Wasserversorgung GmbH (Chairman)
• Dortmunder Stadtwerke AG (Chairman)

• Dortmunder Stadtwerke Holding GmbH (Chairman)

• KEB Holding AG (Chairman)

- KSBG Kommunale Verwaltungsgesellschaft GmbH

- Schüchtermann-Schiller’sche Kliniken

Bad Rothenfelde GmbH & Co. KG

- Sparkasse Dortmund (Chairman)

Ralf Sikorski2
Hanover

Member of the Main Executive Board

of IG Bergbau, Chemie, Energie

Year of birth: 1961

Member since: 1 July 2014

Other appointments:

• Chemie Pensionsfonds AG (Chairman)

• KSBG Kommunale Verwaltungsgesellschaft GmbH, Essen
• Lanxess AG1
• Lanxess Deutschland GmbH

• RAG AG
• RWE Generation SE3
• RWE Power AG3

•

1 Listed company.
2 Employee representative.
3 Office within the Group.

Consolidated financial statements > Boards (part of the notes)

199

Supervisory Board Committees

Executive Committee of the Supervisory Board
Dr. Werner Brandt (Chairman)

Audit Committee
Dr. Erhard Schipporeit (Chairman)

Frank Bsirske

Sandra Bossemeyer

Prof. Dr. Hans-Peter Keitel

Monika Krebber

Dagmar Mühlenfeld

Dr. Wolfgang Schüssel

Leonhard Zubrowski

Mediation Committee in accordance with Sec. 27,

Para. 3 of the German Co-Determination Act (MitbestG)
Dr. Werner Brandt (Chairman)

Frank Bsirske

Dr. Wolfgang Schüssel

Ralf Sikorski

Personnel Affairs Committee
Dr. Werner Brandt (Chairman)

Frank Bsirske

Reiner Böhle

Harald Louis

Peter Ottmann

Dr. Wolfgang Schüssel

Michael Bochinsky

Dr. Wolfgang Schüssel

Ullrich Sierau

Ralf Sikorski

Marion Weckes

Nomination Committee
Dr. Werner Brandt (Chairman)

Prof. Dr. Hans-Peter Keitel

Peter Ottmann

Strategy Committee
Dr. Werner Brandt (Chairman)

Frank Bsirske
Prof. Dr. Hans-Peter Keitel

Günther Schartz

Ralf Sikorski

Leonhard Zubrowski

200 RWE Annual Report 2018

The Executive Board

Dr. Rolf Martin Schmitz (Chief Executive Officer)
Chairman of the Executive Board of RWE AG since 15 October 2016

Member of the Executive Board of RWE AG since 1 May 2009,

appointed until 30 June 2021

Labour Director of RWE AG since 1 May 2017

Other appointments:
• Amprion GmbH3
• RWE Generation SE3 (Chairman)
• RWE Power AG3 (Chairman)
• RWE Supply & Trading GmbH3
• TÜV Rheinland AG1
- Jaeger-Gruppe (Chairman)
- Kärntner Energieholding Beteiligungs GmbH3
- KELAG-Kärntner Elektrizitäts-AG1,3

Dr. Markus Krebber (Chief Financial Officer)
Member of the Executive Board of RWE AG since 1 October 2016,

appointed until 30 September 2024

Other appointments:

innogy SE1,3

•
• RWE Generation SE3
• RWE Pensionsfonds AG3
• RWE Power AG3
• RWE Supply & Trading GmbH3 (Chairman)

•

1 Listed company.
3 Office within the Group.

Consolidated financial statements > Independent auditor’s report

201

3.9 INDEPENDENT AUDITOR’S REPORT

To RWE Aktiengesellschaft, Essen

Report on the audit of the consolidated financial statements
and of the group management report

Audit Opinions
We have audited the consolidated financial statements of RWE

Germany] (IDW). We performed the audit of the consolidated

financial statements in supplementary compliance with the

Aktiengesellschaft, Essen, and its subsidiaries (the Group), which

International Standards on Auditing (ISAs). Our responsibilities

comprise the statement of financial position as at 31 December 2018,

under those requirements, principles and standards are further

and the statement of profit or loss, statement of comprehensive

described in the ‘Auditor’s Responsibilities for the Audit of the

income, statement of cash flows and statement of changes in equity

Consolidated Financial Statements and of the Group Management

for the financial year from 1 January to 31 December 2018, and

Report’ section of our auditor’s report. We are independent of the

notes to the consolidated financial statements, including a summary

group entities in accordance with the requirements of European law

of significant accounting policies. In addition, we have audited the

and German commercial and professional law, and we have fulfilled

group management report of RWE Aktiengesellschaft, which is

our other German professional responsibilities in accordance with

combined with the Company’s management report, for the financial

these requirements. In addition, in accordance with Article 10

year from 1 January to 31 December 2018. We have not audited the
content of those parts of the group management report listed in the

(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

‘Other Information’ section of our auditor’s report in accordance

Audit Regulation. We believe that the audit evidence we have

with the German legal requirements.

obtained is sufficient and appropriate to provide a basis for our

audit opinions on the consolidated financial statements and on the

In our opinion, on the basis of the knowledge obtained in the audit,

group management report.

• the accompanying consolidated financial statements comply, in

Key Audit Matters in the Audit of the Consolidated Financial

all material respects, with the IFRSs as adopted by the EU, and

the additional requirements of German commercial law pursuant

Statements
Key audit matters are those matters that, in our professional

to § [Article] 315e Abs. [paragraph] 1 HGB [Handelsgesetzbuch:

judgment, were of most significance in our audit of the consolidated

German Commercial Code] and, in compliance with these

financial statements for the financial year from 1 January to

requirements, give a true and fair view of the assets, liabilities,

31 December 2018. These matters were addressed in the context of

and financial position of the Group as at 31 December 2018, and

our audit of the consolidated financial statements as a whole, and

of its financial performance for the financial year from 1 January

in forming our audit opinion thereon; we do not provide a separate

to 31 December 2018, and

audit opinion on these matters.

• the accompanying group management report as a whole provides

In our view, the matters of most significance in our audit were as

an appropriate view of the Group’s position. In all material

follows:

respects, this group management report is consistent with the

consolidated financial statements, complies with German legal

Accounting of discontinued operations

requirements and appropriately presents the opportunities and

Recoverability of goodwill

risks of future development. Our audit opinion on the group

Recognition and measurement of pension provisions

management report does not cover the content of those parts of

the group management report listed in the ‘Other Information’

Our presentation of these key audit matters has been structured in

section of our auditor’s report.

each case as follows:

Pursuant to § 322 Abs. 3 Satz [sentence] 1 HGB, we declare that

Matter and issue

our audit has not led to any reservations relating to the legal

Audit approach and findings

compliance of the consolidated financial statements and of the

Reference to further information

group management report.

Hereinafter we present the key audit matters:

Basis for the Audit Opinions
We conducted our audit of the consolidated financial statements

and of the group management report in accordance with § 317 HGB

Accounting of discontinued operations
On March 12, 2018, RWE Aktiengesellschaft and E.ON SE (E.ON)

and the EU Audit Regulation (No. 537/2014, referred to subsequently

agreed on a comprehensive exchange of their business

as ‘EU Audit Regulation’) and in compliance with German Generally

operations. It stipulates the following, amongst other things:

Accepted Standards for Financial Statement Audits promulgated by
the Institut der Wirtschaftsprüfer [Institute of Public Auditors in

RWE AG will transfer its entire stake in innogy SE (76.8 %) to
E.ON. In return, innogy’s renewable energy business will be

202 RWE Annual Report 2018

returned to the Group as well as the renewable energy business

The disclosures required under IFRS 5 are contained in the

of E.ON. The transaction is subject to regulatory approvals and,

notes to the consolidated financial statements in the section

in the opinion of the executive directors, will be completed

‘discontinued operations’. In addition, information from the

during the course of 2019.

Group concerning the transaction in general can be found in the

section ‘Strategy and structure’ of the Group Management Report.

Since June 30, 2018, RWE Aktiengesellschaft has accounted

for the operations of innogy to be transferred on a long-term

Recoverability of goodwill

basis to E.ON – essentially the grid and retail business – as

In the consolidated financial statements of RWE

discontinued operations in accordance with IFRS 5. The change

Aktiengesellschaft, goodwill amounting to €1.7 billion (2 % of

in the accounting of discontinued operations resulted in

consolidated total assets) (prior year: €11.2 billion or 16 % of

extensive adjustments being made to the Group’s consolidation

consolidated total assets) is reported under the balance sheet

system. These adjustments also take into account the option

item ‘Intangible assets’. Since the 2018 financial year, this item

exercised to allocate the elimination entries to the discontinued

has only included the goodwill of the cash-generating units

operations. The presentation of the business to be transferred

Renewable Energy and Energy Trading. The remaining goodwill

is shown in the income statement and in the cash flow

shown under intangible assets up to the previous year is

statement under ‘discontinued operations’ and in the balance

reported under the balance sheet item ‘Assets held for sale’ and

sheet as ‘assets held for sale’ and as ‘liabilities held for sale’.

measured in accordance with the provisions for ‘discontinued

The measurement of these balance sheet items is based on the
specific provisions of IFRS 5, which generally require measurement

operations’.

at the lower of the carrying amount and fair value less costs of

Goodwill is tested for impairment annually or when there are

disposal. The Company’s impairment test carried out at the date

indications of impairment, to determine any possible need for

of transition did not identify any need for write-downs.

write-downs. The carrying amounts of the relevant cash-

generating units, including goodwill, are compared with the

Given the material importance of the discontinued operations,

corresponding recoverable amounts in the context of the

this matter of the adjustment in presentation and measurement

impairment tests. The recoverable amount is generally

according to the provisions of IFRS 5 was of particular

calculated on the basis of fair value less costs of disposal. The

significance in the context of our audit.

impairment tests are performed at the level of the cash-

generating units or groups of cash-generating units to which

As part of our audit, we first evaluated whether and which

the respective goodwill is allocated. The measurements to

business operations fall under the scope of IFRS 5 ‘Non-current

calculate the fair value less costs of disposal carried out for the

Assets Held for Sale and Discontinued Operations’. For this

purposes of the impairment tests are based on the present

purpose, we evaluated the provisions contained in the contractual

values of the future cash flows derived from the planning

agreements with E.ON and obtained information on the status

projections for the next three years (medium-term plan)

of the antitrust authorities’ proceedings. On this basis, we

prepared by the executive directors and acknowledged by the

assessed whether the criteria are met for accounting innogy’s

supervisory board. In doing so, expectations relating to future

grid and retail business as discontinued operations and whether

market developments and country-specific assumptions about

innogy’s renewable energy operations are appropriately

the performance of macroeconomic indicators are also taken

reported unchanged as continuing operations.

into account. Present values are calculated using discounted

cash flow models. The discount rate applied is the weighted

We also evaluated the appropriateness of the IT concept

average cost of capital for the relevant cash-generating unit.

underlying the change in accounting and reviewed the

The impairment test did not result in the recognition of a write-

implementation of the changes in the consolidation system.

down. The outcome of these valuations is dependent to a large

In addition, we examined the impairment test for the

extent on the estimates made by the executive directors of the

discontinued operations conducted at the date of transition.

future cash inflows of the cash-generating units, and on the

Furthermore, we assessed the completeness and accuracy of

as on further assumptions. The valuation is therefore subject to

the disclosures in the notes required under IFRS 5 and the

considerable uncertainty. Against this background and due to

prescribed adjustments of the prior year figures in the income

the underlying complexity of the valuation, this matter was of

statement and in the cash flow statement.

particular significance in the context of our audit.

respective discount rates and rates of growth employed as well

In our view, the estimates applied and assumptions made by the

executive directors regarding the accounting presentation of

innogy’s operations to be transferred to E.ON are sufficiently

documented and justified and result in a fair presentation in the

consolidated financial statements overall.

Consolidated financial statements > Independent auditor’s report

203

As part of our audit, we evaluated the methodology used for

In our view, these matters were of particular significance in the

the purpose of performing the impairment tests and assessed

context of our audit because the recognition and measurement

the calculation of the weighted average cost of capital, among

of this significant item in terms of its amount are based to a

other things. In addition, we assessed whether the future cash

material extent on estimates and assumptions made by the

inflows underlying the measurements together with the

Company’s executive directors.

weighted cost of capital used represent an appropriate basis for

the impairment tests overall. We evaluated the appropriateness

For the purposes of our audit, we firstly assessed whether the

of the future cash inflows used in the calculations, among other

criteria for recognition as defined benefit or defined

things by comparing this data with the Group’s medium-term

contribution pension commitments were met and evaluated the

plan and by reconciling it against general and sector-specific

actuarial expert reports obtained and the professional

market expectations. In this context, we also assessed whether

qualifications of the external actuarial experts. We also

the costs of Group functions were properly included in the

examined the specific features of the actuarial calculations and

respective cash-generating unit. In the knowledge that even

evaluated the numerical data, the actuarial parameters and the

relatively small changes in the discount rate applied can in some

valuation methods on which the valuations were based for

cases have a material impact on the value of the entity

compliance with standards and appropriateness, in addition to

calculated using this method, we also evaluated the parameters

other procedures. In addition, we analysed the changes in the

used to determine the discount rate applied and assessed the

obligation and the cost components in accordance with

measurement model. Furthermore, we evaluated the sensitivity
analyses performed by the Company in order to evaluate any

actuarial expert reports in the light of changes occurring in the
valuation parameters and the numerical data, and assessed

impairment risk (carrying amount higher than recoverable

their plausibility. For the audit of the fair value of the plan

amount) in the event of a reasonably possible change in a

assets, we obtained bank and fund confirmations and evaluated

material assumption underlying the measurement. Overall, the

the methods on which the respective valuation was based and

measurement parameters and assumptions used by the

the valuation parameters applied.

executive directors are in line with our expectations and are also

within the ranges considered by us to be reasonable.

Based on our audit procedures, we were able to satisfy ourselves

The Company’s disclosures relating to goodwill are contained in
the notes to the consolidated financial statements in section

that the estimates applied and assumptions made by the

executive directors are justified and sufficiently documented.

‘Notes to the Balance Sheet’ in note ‘(10) Intangible assets’.

The Company’s disclosures relating to the pension provisions

are contained in the notes to the consolidated financial

Recognition and measurement of pension provisions

statements in section ‘Notes to the Balance Sheet’ in note

In the consolidated financial statements of RWE Aktiengesellschaft

‘(22) Provisions’.

provisions for pensions and similar obligations are reported

under the balance sheet item ‘Provisions’. The pension provisions

comprise obligations from defined benefit pension plans

Other information
The executive directors are responsible for the other information.

amounting to €15.0 billion, plan assets of €11.9 billion and a

The other information comprises the following non-audited parts of

reported surplus of plan assets over benefit obligations of

the group management report:

€0.2 billion. The obligations from defined benefit pension

plans were measured using the projected unit credit method.

• the statement on corporate governance pursuant to § 289f HGB

This requires assumptions to be made in particular about

and § 315d HGB included in section 1.8 of the group

long-term rates of growth in salaries and pensions, average life

management report

expectancy, and staff turnover. The new reference tables of

Heubeck-Richttafeln GmbH (Heubeck RT 2018 G reference

• the separate non-financial group report pursuant to § 315b

tables) were used for the first time in Germany for the average

Abs. 3 HGB

life expectancy as of 31 December 2018. The effect from the

first-time adoption of the mortality tables amounts to

The other information comprises further the remaining parts of the

- €105 million. The discount rate must be determined by

annual report – excluding cross-references to external information –

reference to market yields on high-quality corporate bonds with

with the exception of the audited consolidated financial statements,

matching currencies and consistent maturities. This usually

the audited group management report and our auditor’s report.

requires the data to be extrapolated, since there is an

insufficient number of long-term corporate bonds. The plan

Our audit opinions on the consolidated financial statements and on

assets are measured at fair value, which in turn involves making

the group management report do not cover the other information,

estimates that are subject to uncertainties.

and consequently we do not express an audit opinion or any other

form of assurance conclusion thereon.

204 RWE Annual Report 2018

In connection with our audit, our responsibility is to read the other

information and, in so doing, to consider whether the other

information

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

•

is materially inconsistent with the consolidated financial

material misstatement, whether due to fraud or error, and whether

statements, with the group management report or our knowledge

the group management report as a whole provides an appropriate

obtained in the audit, or

view of the Group’s position and, in all material respects, is

consistent with the consolidated financial statements and the

• otherwise appears to be materially misstated.

knowledge obtained in the audit, complies with the German legal

If, based on the work we have performed, we conclude that there is

of future development, as well as to issue an auditor’s report that

a material misstatement of this other information, we are required

includes our audit opinions on the consolidated financial statements

to report that fact. We have nothing to report in this regard.

and on the group management report.

requirements and appropriately presents the opportunities and risks

Reasonable assurance is a high level of assurance, but is not a

Responsibilities of the Executive Directors and the Supervisory

guarantee that an audit conducted in accordance with § 317 HGB

Board for the Consolidated Financial Statements and the Group

and the EU Audit Regulation and in compliance with German

Management Report
The executive directors are responsible for the preparation of the

Generally Accepted Standards for Financial Statement Audits
promulgated by the Institut der Wirtschaftsprüfer (IDW) and

consolidated financial statements that comply, in all material respects,

supplementary compliance with the ISAs will always detect a

with IFRSs as adopted by the EU and the additional requirements

material misstatement. Misstatements can arise from fraud or error

of German commercial law pursuant to § 315e Abs. 1 HGB and that

and are considered material if, individually or in the aggregate, they

the consolidated financial statements, in compliance with these

could reasonably be expected to influence the economic decisions

requirements, give a true and fair view of the assets, liabilities,

of users taken on the basis of these consolidated financial

financial position, and financial performance of the Group. In

statements and this group management report.

addition the executive directors are responsible for such internal

control as they have determined necessary to enable the

We exercise professional judgement and maintain professional

preparation of consolidated financial statements that are free from

skepticism throughout the audit. We also

material misstatement, whether due to fraud or error.

•

Identify and assess the risks of material misstatement of the

In preparing the consolidated financial statements, the executive

consolidated financial statements and of the group management

directors are responsible for assessing the Group’s ability to

report, whether due to fraud or error, design and perform audit

continue as a going concern. They also have the responsibility for

procedures responsive to those risks, and obtain audit evidence

disclosing, as applicable, matters related to going concern. In

that is sufficient and appropriate to provide a basis for our audit

addition, they are responsible for financial reporting based on the

opinions. The risk of not detecting a material misstatement

going concern basis of accounting unless there is an intention to

resulting from fraud is higher than for one resulting from error, as

liquidate the Group or to cease operations, or there is no realistic

fraud may involve collusion, forgery, intentional omissions,

alternative but to do so.

misrepresentations, or the override of internal control.

Furthermore, the executive directors are responsible for the

• Obtain an understanding of internal control relevant to the audit

preparation of the group management report that, as a whole,

of the consolidated financial statements and of arrangements and

provides an appropriate view of the Group’s position and is, in

measures (systems) relevant to the audit of the group

all material respects, consistent with the consolidated financial

management report in order to design audit procedures that are

statements, complies with German legal requirements, and

appropriate in the circumstances, but not for the purpose of

appropriately presents the opportunities and risks of future

expressing an audit opinion on the effectiveness of these

development. In addition, the executive directors are responsible

systems.

for such arrangements and measures (systems) as they have

considered necessary to enable the preparation of a group

• Evaluate the appropriateness of accounting policies used by the

management report that is in accordance with the applicable

executive directors and the reasonableness of estimates made by

German legal requirements, and to be able to provide sufficient

the executive directors and related disclosures.

appropriate evidence for the assertions in the group management

report.

• Conclude on the appropriateness of the executive directors’ use

of the going concern basis of accounting and, based on the audit

The supervisory board is responsible for overseeing the Group’s

evidence obtained, whether a material uncertainty exists related

financial reporting process for the preparation of the consolidated
financial statements and of the group management report.

to events or conditions that may cast significant doubt on the
Group’s ability to continue as a going concern. If we conclude

Consolidated financial statements > Independent auditor’s report

205

that a material uncertainty exists, we are required to draw

We communicate with those charged with governance regarding,

attention in the auditor’s report to the related disclosures in the

among other matters, the planned scope and timing of the audit

consolidated financial statements and in the group management

and significant audit findings, including any significant deficiencies

report or, if such disclosures are inadequate, to modify our

in internal control that we identify during our audit.

respective audit opinions. Our conclusions are based on the audit

evidence obtained up to the date of our auditor’s report.

We also provide those charged with governance with a statement

However, future events or conditions may cause the Group to

that we have complied with the relevant independence

cease to be able to continue as a going concern.

requirements, and communicate with them all relationships and

other matters that may reasonably be thought to bear on our

• Evaluate the overall presentation, structure and content of the

independence, and where applicable, the related safeguards.

consolidated financial statements, including the disclosures, and

whether the consolidated financial statements present the

From the matters communicated with those charged with

underlying transactions and events in a manner that the

governance, we determine those matters that were of most

consolidated financial statements give a true and fair view of the

significance in the audit of the consolidated financial statements

assets, liabilities, financial position and financial performance of

of the current period and are therefore the key audit matters. We

the Group in compliance with IFRSs as adopted by the EU and the

describe these matters in our auditor’s report unless law or

additional requirements of German commercial law pursuant to

regulation precludes public disclosure about the matter.

§ 315e Abs. 1 HGB.

• 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 performance 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 management

report. On the basis of sufficient appropriate audit evidence 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 prospective information

from these assumptions. We do not express a separate audit

opinion on the prospective information and on the assumptions

used as a basis. There is a substantial unavoidable risk that future

events will differ materially from the prospective information.

206 RWE Annual Report 2018

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 26 April 2018. We were engaged by the supervisory board

on 27 April 2018. We have been the group auditor of RWE

Aktiengesellschaft, Essen, without interruption since the financial

year 2001.

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

Ralph Welter.

Essen, 28 February 2019

PricewaterhouseCoopers GmbH

Wirtschaftsprüfungsgesellschaft

Michael Reuther

Wirtschaftsprüfer

Ralph Welter

Wirtschaftsprüfer

(German Public Auditor)

Consolidated financial statements > Information on the auditor

207

3.10 INFORMATION ON THE AUDITOR

The consolidated financial statements of RWE AG and its

subsidiaries for the 2018 fiscal year – consisting of the Group

balance sheet, Group income statement and statement of

comprehen sive income, Group statement of changes in equity,

Group cash flow statement and Group notes to the financial

statements – were audited by the auditing company

PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft.

The auditor at PricewaterhouseCoopers GmbH

Wirtschaftsprüfungsgesellschaft responsible for RWE is

Mr Ralph Welter. Mr Welter has performed this function

in five previous audits of RWE.

208 RWE Annual Report 2018

FIVE-YEAR OVERVIEW

Key figures of the RWE Group1

External revenue (excluding natural gas tax/electricity tax)

€ million

2018

13,388

2017

13,822

Income

Adjusted EBITDA

Adjusted EBIT

Income before tax

Net income /RWE AG shareholders’ share in income

Earnings per share

Cash flow /capital expenditure /depreciation and
amortisation

Cash flows from operating activities

Free cash flow

Free cash flow per share

Asset /capital structure

Non-current assets

Current assets

Balance sheet equity

Non-current liabilities

Current liabilities

Balance sheet total

Equity ratio

Net debt

Net debt of continuing operations

Workforce

Workforce at year-end2

Research & development

Operating R & D costs

Emissions balance

CO2 emissions

Free allocation of CO2 certificates

Shortage of CO2 certificates3

Specific CO2 emissions

€ million

€

€ million

€

€ million

1,538

619

335

0.54

4,611

3,439

5.59

18,595

61,513

14,257

20,007

45,844

80,108

17.8

19,339

4,389

2,149

1,170

2,056

1,900

3.09

– 3,771

– 4,439

– 7.22

45,694

23,365

11,991

36,774

20,294

69,059

17.4

20,227

–

2016

43,590

5,403

3,082

– 5,807

– 5,710

– 9.29

2,352

809

1.32

45,911

30,491

7,990

39,646

28,766

76,402

10.5

22,709

–

2015

45,848

2014

46,149

7,017

3,837

– 637

– 170

– 0.28

3,339

441

0.72

51,453

27,881

8,894

45,315

25,125

79,334

11.2

25,463

–

7,131

4,017

2,246

1,704

2.77

5,556

2,311

3.76

54,224

32,092

11,772

46,324

28,220

86,316

13.6

30,972

–

17,748

59,547

58,652

59,762

59,784

€ million

116

182

165

101

110

million
metric tons

metric tons /
MWh

118.0

131.8

148.3

150.8

155.2

1.3

4.5

5.6

5.8

115.6

129.1

142.6

143.9

148.3

0.670

0.658

0.686

0.708

0.745

1 The comparability of some of the figures for various fiscal years is limited due to changes in reporting (also see page 40).
2 Converted to full-time positions.
3 As Turkey does not participate in the European Union Emissions Trading System, we do not need emission allowances for our CO2 emissions in that country.

210 RWE Annual Report 2018

IMPRINT

RWE Aktiengesellschaft
Altenessener Strasse 35

45141 Essen

Germany

Phone

+49 201 12-00

Fax

+49 201 12-15199

E-mail

contact@rwe.com

Investor Relations:
Phone

+49 201 5179-3112

Fax

+49 201 12-15033

Internet www.rwe.com/ir

E-mail

invest@rwe.com

Corporate Communications:
+49 201 12-23986
Phone

Fax

+49 201 12-22115

For annual reports, interim reports, interim statements and

further information on RWE, please visit us on the internet at

www.rwe.com.

This annual report was published on 14 March 2019. This is a

translation of the German annual report. In case of divergence

from the German version, the German version shall prevail.

Typesetting and production:
MPM Corporate Communication Solutions,

Mainz, Düsseldorf, Germany

www.mpm.de

Photography:
André Laaks, Essen, Germany

Printing:
D+L Printpartner GmbH, Bocholt, Germany

Translation:
Olu Taylor Translation & Interpretation Services, Geretsried, Germany

Proofreading:
Nicola Thackeray, Swindon, UK

RWE is a member of DIRK –
the German Investor Relations Association.

Further information

Financial Calendar
2019/2020

3 May 2019

8 May 2019

15 May 2019

Annual General Meeting

Dividend payment

Interim statement on the first quarter of 2019

14 August 2019

Interim report on the first half of 2019

14 November 2019

Interim statement on the first three quarters of 2019

12 March 2020

Annual report for fiscal 2019

28 April 2020

4 May 2020

14 May 2020

Annual General Meeting

Dividend payment

Interim statement on the first quarter of 2020

13 August 2020

Interim report on the first half of 2020

12 November 2020

Interim statement on the first three quarters of 2020

The Annual General Meeting (until the beginning of the Q & A session) and all
events concerning the publication of our financial reports are broadcast live
on the internet and recorded. We will keep the recordings on our website for
at least twelve months.

RWE Aktiengesellschaft
Altenessener Strasse 35
45141 Essen
Germany