RWE AG Annual Report 2019

FY2019 Annual Report · RWE AG

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Our energy for a
sustainable life
Annual Report 2019

Our energy for a
sustainable life

Electricity. This is what we have been
producing for over 120 years. And it hasn’t
changed. But what has changed is that it is
capable of so much more compared to when
our company was founded in 1898. Electricity
is indispensable for driving innovation and
progress and it is ubiquitous in our daily lives.
Charging mobile phones, taking the train to
work and so much more would be impossible
without electricity. It powers robots used on
production lines, enables billions of digital
processes, and propels entire fleets of electric
vehicles.

A lot has also changed in electricity generation.
We now increasingly produce electricity by
harnessing the energy all around us – from
wind, sun and water. By contrast, we use less
and less CO2-intensive coal. In doing so, we are
channelling all our energy into achieving a goal
that is more important today than ever before:
sustainability.

We have become a world leader in electricity
generation from renewables as the result of
an asset swap with E.ON. Right from the start,
we will be investing in the expansion of
renewable energy – a net 1.5 to 2 billion euros
every year. In doing so, we will build onshore
and offshore wind farms and explore new
technologies enabling energy harnessed from
the wind and sun to be stored so that it can be
used when the wind isn’t blowing and it‘s dark
outside. Until storage infrastructure has been
expanded to entirely meet demand with green
electricity, we will use our flexible power
stations to guarantee security of supply. We
want our electricity generation to be carbon
neutral by no later than 2040.

Who would have dreamt of this 120 years ago?

We aim to be
carbon neutral by 2040

This is ten years ahead of the schedule for the EU. If you’re
wondering how we intend to go about this, we will rapidly expand
renewables while making an exit from coal-fired electricity
generation. Our accomplishments demonstrate how seriously we
take this: since 2012 we have halved our CO2 emissions.

We produce clean,
secure and affordable
electricity

The electricity we generate from wind, sun, water and biomass is
our energy for a sustainable life. However, it is also important to
ensure the availability of this energy. And under no circumstances
should it become a luxury. Here, we are doing all we can by
spurring the development of high-capacity, economically viable
energy storage.

A global player
in renewable energy

Efforts to protect the climate shouldn’t stop at country borders.
We also build wind and solar farms outside Europe, especially in
North America and in the Asia-Pacific region. The USA is already
our largest onshore wind market.

€1.5 to 2 billion in net
investments per year
in renewable energy

The new RWE focuses on wind, sun, water and biomass as
energy sources. We want to make increasing use of them.
We will set aside 1.5 to 2 billion euros to invest in this every year.
As these are net figures, the funds of project partners will
increase this capital expenditure.

At a glance

RWE Group – key figures

2019

2018

+/–

Power generation

billion kWh

External revenue (excluding natural gas tax/electricity tax)

Adjusted EBITDA

Adjusted EBIT

Income from continuing operations before tax

Net income

Cash flows from operating activities of
continuing operations

Capital expenditure

Property, plant and equipment and intangible assets

Financial assets

Free cash flow

€ million

153.2

13,125

2,489

1,267

– 752

8,498

– 977

9,838

2,090

7,748

– 2,053

176.0

13,4061

1,538

619

335

4,611

1,260

1,079

181

3,439

Number of shares outstanding (annual average)

thousands

614,745

Earnings per share

Dividend per share

€

13.82

0.802

0.54

0.70

– 22.8

– 281

951

648

– 801

8,163

– 5,588

8,578

1,011

7,567

– 5,492

–

13.28

0.10

Net debt of continuing operations

€ million

Workforce3

31 Dec 2019

31 Dec 2018

9,066

19,792

4,389

17,748

4,677

2,044

1 Figure adjusted due to changes in the recognition of revenues from derivative transactions.
2 Dividend proposal for RWE AG’s 2019 fiscal year, subject to the passing of a resolution by the 28 April 2020 Annual General Meeting.
3 Converted to full-time positions.

RWE Annual Report 2019Contents

To our investors

Interview with the CEO

The Executive Board of RWE AG

Supervisory Board report

RWE on the capital market

1.1

1.2

1.3

1.4

Combined review of operations

Strategy

Innovation

Economic environment

Political environment

1.5 Major events

1.6 Notes on reporting

1.7

1.8

1.9

Business performance

Financial position and net worth

Notes to the financial statements of

RWE AG (holding company)

1.10

Presentation of the RWE Group with

innogy as a purely financial investment

1.11 Disclosure relating to

German takeover law

1.12 Remuneration report

1.13 Development of risks and opportunities 84

Five-year overview

1.14 Outlook

Imprint

Financial calendar

Further information

Responsibility statement

3.1

3.2

3.3

3.4

3.5

Consolidated financial statements

Income statement

Statement of comprehensive income

Balance sheet

Cash flow statement

Statement of changes in equity

3.6 Notes

3.7

List of shareholdings

(part of the notes)

3.8

3.9

Boards (part of the notes)

Independent auditor‘s report

3.10

Information on the auditor

100

101

102

104

176

207

212

220

221

222

223

“It will take a while for what the new RWE stands for to
become engrained in the public mind.”

Rolf Martin Schmitz on the ‘new’ RWE, the plans for

attractive returns, reliable framework conditions and wide

growth in renewable energy, and Germany’s planned

public acceptance. RWE has returned to being a growth

lignite phaseout

company in which the concept of being international has

been expanded from being European to being global. And

Mr. Schmitz, RWE has gone through major changes since

we have set ourselves a goal that places our actions in a

the company was founded 122 years ago. And now it’s

much broader context than the world of economics, as we

transforming itself yet again. What’s different about the

‘new’ RWE?

Our company has always risen to new challenges and

want our electricity generation to be carbon neutral by 2040.
In other words, our business will stop adding to CO2 in the
atmosphere by then. So, as you can see, I can finish describing

adapted to the expectations of society. So what we are

the new RWE even before the end of the elevator ride.

doing today is no different. One of the major challenges of

our time is climate change. And the greatest expectation

Becoming carbon neutral by 2040 sounds like a very

that society has of us is that we move quickly to play our

ambitious target. The EU has given itself ten years longer to

part in combating it. We have therefore positioned our

accomplish this.

business to tackle climate change head on. So the ‘new’

It is indeed ambitious. You can’t become carbon neutral

RWE is a company that is staying true to itself.

overnight. It requires a lot of hard work and suitable

framework conditions. Our message is clear: we are ready

Assuming that you had to give an elevator pitch to describe

to do the heavy lifting and will go the extra mile to meet

the new RWE ...

the target.

... I could put it in a nutshell fairly quickly. By executing a

clever asset swap with E.ON, RWE has become a world-

Is that credible?

leading producer of electricity from renewables. The

I’m sure that some people are distrustful or feel that

transaction has given us a business characterised by

change simply doesn’t happen quickly enough. But I would

RWE Annual Report 2019To our investors > Interview with the CEO

like to remind them of what we have accomplished

When it comes to renewables, nearly every country in the

already. In the last seven years, RWE has cut its carbon

world has viable locations. But the fact is that many of these

dioxide emissions in half. I don’t know of any other

markets lack suitable framework conditions or are simply

company that can say this. Germany’s accelerated coal

out of the question because our competitors have cultural

phaseout will contribute to ensuring that our emissions in

advantages. This applies to most countries in Latin America,

2030 will be just a quarter of what they were in 2012. And

for example.

ten years after that, we should have achieved our goal of

generating all our electricity from renewables or hydrogen

Renewable energy is really being hyped up now. Companies

produced without carbon dioxide. If we do end up still

like RWE are the hot tickets on the stock market. Are you

using fossil fuels like natural gas to ensure security of

afraid of dashing the hopes of investors?

supply, we will take countermeasures to offset these

We will do everything we can to make sure that this doesn’t

emissions, for example through forestation.

happen. Subsidy conditions for wind turbines and solar

panels are much worse now than they were ten years ago.

RWE has to invest huge sums in order to generate most of its

What’s more, tenders have become more competitive.

electricity from renewables. Do you have the necessary

At the same time, there has been an incredible amount

funds?

of technological progress since then. This has made

I don’t believe we will have any difficulty with financing. It’s

generation assets much more affordable and efficient.

important that we find enough attractive projects that

As a result, despite the reduction in payments, renewable

meet our return expectations. I’m confident that we can,

energy is an attractive business ...

especially given that we have set our sights beyond

European borders. We will invest 1.5 to 2 billion euros to

... which – as you said – is becoming ever more competitive.

expand renewable energy every year. As this is a net figure,

That’s right. Unlike with lignite, when it comes to renewable

it will be topped up by funds contributed by project partners.

energy, we no longer have our own fuel to set us apart from

By the end of 2022, we intend to increase our wind and

the competition. In addition, the number of players

solar generation capacity from nine to over thirteen

competing for project subsidies is rising. Cost advantages

gigawatts. A large share of the new capacity is already being

and good project management are the key success factors

built, including the wind farms Triton Knoll in the British

in this business. On top of that, we must become a leader in

North Sea and Big Raymond in Texas. On top of that, we

technological innovations.

hope to soon put Limondale online in Australia, which will

be the largest solar farm on the continent.

Hold on: you want to turn RWE into a tech company?

To a certain degree, yes. What I would ask of our project

Now that RWE is becoming more international, people

developers and engineers is, “Always keep up with the pace

might be minded to recall the company’s failed venture into

of technology.” This is because renewables are in an era

the US water business, although that lies far in the past.

where the best technology decides who is successful. And

What do you plan to do differently this time around?

this also applies to energy storage. We simply have to lead

I can only speculate on what went wrong, as I wasn’t at RWE

from the front. Take floating platforms for wind turbines

in those days. My impression is that RWE was still a very

for instance. They would enable offshore wind farms to be

German company back then. They acquired companies

built even in very deep water. This could be done in the

abroad and thought that it would be business as usual, the

Mediterranean or off the steep coasts of Asia and the

only difference being that everything was under the

Americas. We’re working on intelligent and cost-effective

umbrella of a new parent company. But that simply isn’t how

variants of such platforms. If our efforts prove successful,

things work.

this could set us apart from the competition.

Does that mean that you want to keep a tighter rein on the

business outside Germany?

We have to manage it so that everyone understands that

each and every asset is important to us, be it a wind farm

in Ohio or in the North Sea. This means that we have to be

on site, understand every single detail of the business

and contribute to shaping it. Naturally, we will be more

successful in some regions than others. This is why it is so

important that we determine exactly where we want to go.

RWE’s new purpose is ‘Our energy for a sustainable life’. Last

prosperity of millions of people. We should pay our dues to

year, more than 40 percent of the company’s electricity

this old power production technology by bidding it farewell

generation was from coal. How can this be reconciled?

in style and with dignity. And as far as RWE is concerned,

Let me start with the facts: we will stop generating electricity

I would like to add that our early investments in renewable

from coal early, by no later than 2038. We agreed a lignite

energy were made with the money we earned with our lignite

phaseout roadmap with the federal government, according

and nuclear power stations.

to which RWE will bear almost all of the initial burden.

Quickly discarding a carbon-intensive generation

technology while expanding renewable energy will make a

very large contribution to ensuring a sustainable life.

RWE will receive 2.6 billion euros in compensation for the

early coal phaseout. However, the actual burdens are much

higher. Why did you go along with this?

That’s right – we will foot part of the bill for the exit from coal.

And it’s true that this will take us to the limits of what is

feasible. However, the fact that we found a compromise

after months of negotiating with policymakers is also worth

something. The agreed exit path gives us a reliable

framework for our plans and optimisation measures. Most

of all, however, it protects the interests of our 10,000

employees in the Rhenish lignite mining region. They will

This brings us to the business performance in 2019. You

receive adjustment allowances from the state so that they

made two upward adjustments to the EBITDA outlook

are not left in the lurch. If we hadn’t reached this

during the year and nearly exceeded the last forecast.

compromise, we would have been stuck in a legal tug of war

We had originally forecast adjusted EBITDA for 2019

for years, with an uncertain outcome. Now we can look to

coming in between 1.4 and 1.7 billion euros. We ended up

the future and focus entirely on implementing the lignite

achieving a figure of 2.5 billion euros. This was mainly due to

phaseout smoothly, efficiently and in a socially acceptable

the outstanding trading performance. Another positive

manner.

factor which we had not considered from the outset was the

resumption of payments from the British capacity market.

Do the miners in the Rhenish region also feel the same way?

Furthermore, we benefited from the asset swap with E.ON.

I’m sure not all of them do. But I think that the miners have

After receiving approval from the European Commission, we

less of an issue with RWE than they do with people who

largely executed the transaction in September. Consequently,

protest against lignite, some of whom violate the rules of

the renewable energy business that we received from E.ON

common decency and the law in every respect. Many feel

contributed to our Group earnings for three-and-a-half

abandoned by the state and some perhaps also by RWE.

months.

I think that’s completely understandable. But we mustn’t

forget that lignite-fuelled electricity generation would have

You signed the asset swap agreement with E.ON two years

ended by the middle of this century anyway. Change is

ago. When will the deal finally be completed?

happening in nearly every sector – take the auto industry, for

Fairly soon, I hope. Basically, the remaining steps are

example. I’ve known the utility sector for decades. My motto

formalities: the legal transfer of the innogy operations to us,

is “Every energy has its time, and every time has its energy.”

particularly the renewables business. However, these

Perhaps the time has come to recognise the coal miners for

activities are already included in our books. This means that

all they have done for Germany in the past. They were

the 2020 consolidated financial statements already fully

instrumental to the economic miracle and the resulting

reflect the new RWE.

RWE Annual Report 2019To our investors > Interview with the CEO

You anticipate adjusted EBITDA of 2.7 to 3.0 billion euros for

One last question: at the end of September 2019, you

the current fiscal year. That would be even more than in

launched the new RWE brand. Is the company’s image

2019.

already benefiting from it?

The rise will largely result from the inclusion in our earnings

In some areas, yes. But it will take a while for what the new

of E.ON’s renewable energy business for a full twelve

RWE stands for to become ingrained in the public mind.

months. The continued expansion of our wind and solar

The capital markets were the first to understand the

generation capacity will also have a positive impact.

transformation that RWE is going through. In the two years

However, we cannot expect to repeat the exceptional

since the announcement of the deal with E.ON, our share

performance of our energy trading business, from which we

price has basically only moved in one direction: up.

benefited in 2019, anytime soon.

Conversely, when I speak with politicians, they are often

surprised that we’re pulling in the same direction when it

RWE’s financial reporting will be presented in a new segment

comes to renewables. As regards the general public, we still

structure from 2020 onwards. Your newly defined core

have a lot of work ahead of us. In discussion forums and

business excludes coal and nuclear energy. Why?

debates, I hear time and again that many haven’t even

We simply asked ourselves what parts of our business will

realised how much we have changed. But sometimes I feel

have a role to play in the energy world of tomorrow and

as if people are now friendlier when they greet me. And that’s

should therefore become a fixture in our portfolio.

a good start.

Renewables definitely fit the bill. Gas-fired power stations

will also be needed in the foreseeable future to meet

This interview was conducted by Burkhard Pahnke and

demand during periods of insufficient electricity generation

Jérôme Hördemann.

from wind and solar farms. Of course, the same applies to

pumped storage. In addition, we can continue operating our

Amer 9 and Eemshaven hard coal-fired power plants in the

Netherlands after the established end dates for coal if we

fully convert them to biomass. And, our trading subsidiary

RWE Supply & Trading, which is the Group’s commercial hub,

is indispensable in terms of optimising our generation

portfolio. All of these activities form our core business. Our

German hard coal, lignite and nuclear power stations are

not part of our core business, because clear exit paths have

been defined for them. And we will not build any new

coal-fired power plants, not even in countries where they

would be widely accepted by the public.

What growth prospects do you see for the new core

business?

The prospects for operating earnings growth are good,

especially thanks to renewables. We expect to grow adjusted

EBITDA by an average of eight percent in the next two years.

And we also want our shareholders to benefit from this. We

envisage paying a dividend of €0.85 per share for fiscal

2020, which would be five cents more than the dividend

planned for 2019. After that, we intend to continually

increase the dividend in line with the development of

earnings in our core business.

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

Born in 1973 in Kleve; Banker; doctorate in economics;

engineering; Planning Engineer at STEAG AG from 1986 to

Management Consultant at McKinsey & Company from

1988; various positions, including Head of Corporate

2000 to 2005; various management positions at

Development and Economic Policy, at VEBA AG from 1988

Commerzbank AG from 2005 to 2012; Managing Director

to 1998; Member of the Executive Board of rhenag

and Chief Financial Officer of RWE Supply & Trading GmbH

Rheinische Energie AG from 1998 to 2001; Member of the

from November 2012 to August 2016; Chief Executive

Board of Management of Thüga AG from 2001 to 2004;

Officer of RWE Supply & Trading GmbH from March 2015

Chairman of the Board of Directors of E.ON Kraftwerke

to May 2017; Chief Financial Officer of RWE AG since

GmbH from 2004 to 2005; Chairman of the Executive

October 2016.

Board of RheinEnergie AG and Managing Director of

Stadtwerke Köln from 2006 to 2009; Chief Operating

Group-level responsibilities

Officer National of RWE AG from May 2009 to September

• Business Services

2010; Chief Operating Officer of RWE AG from October

• Controlling & Risk Management

2010 to October 2016 and Deputy Chairman of the

• Finance & Credit Risk

Executive Board of RWE AG from July 2012 to October

• Investor Relations

2016; Chairman of the Executive Board and Chief Executive

• IT

Officer of RWE AG since October 2016; concurrently Labour

• Portfolio Management/Mergers & Acquisitions

• Accounting

• Tax

Director of RWE AG since May 2017.

Group-level responsibilities

• Corporate Transformation

• Internal Audit & Compliance

• Group Communications & Public Affairs

• Group Strategy

• Human Resources

• Legal & Insurance

• Corporate Business Development

RWE Annual Report 2019To our investors > The Executive Board of RWE AG

Supervisory Board report

“Our shareholders benefit from a renewed
RWE becoming the pacesetter of the
energy transition. But most importantly,
this benefits all of society and therefore
all of us.”

Mahatma Ghandi once said, “Be the change you want to see in the world.” At RWE, we have taken this to heart. As a result

of the asset swap agreed with E.ON in March 2018, the company has become one of the world’s leading producers of

electricity from renewables. In the process, the company is supporting climate protection policies and opening itself up to

promising prospects. Fiscal 2019 was a pivotal year for the ‘new’ RWE. On 17 September, the European Commission gave

the go-ahead to the asset swap, which the company began to implement the day after. E.ON received a majority stake in

innogy, and RWE received E.ON’s renewable energy business soon thereafter. These and several other transactions have

since been completed. The final step involves the legal transfer of some innogy operations to RWE, including the renewable

energy business. This is scheduled to happen as soon as possible this year.

Management announced the future course of the new RWE in September 2019. The key message was that the company

wants to have converted enough of its electricity generation to achieve its goal of being carbon neutral by 2040, ten years

earlier than envisaged by the EU. Playing on Ghandi’s quote, our company is changing faster than the world around it. This

holds true not only for the future, as demonstrated by the following comparison: in the last seven years, RWE has reduced its

carbon emissions by 51 %. This is roughly twice as much as what Europe has accomplished since 1990.

RWE will expand its renewable energy production rapidly with a view to becoming carbon neutral. The second building block

of our emission reduction strategy is an accelerated coal phaseout. Until recently, the German government and industry

have been negotiating the details of this exit intensively. The starting point was the concept presented by the Growth,

Structural Change and Employment Commission (‘Structural Change Commission’ for short) in January 2019, which

envisages gradually putting an end to electricity generation from coal by 2038. It was clear early on that the initial burdens

of the lignite phaseout would primarily be shouldered by RWE. After months of talks with policymakers, an agreement was

reached in January 2020 on the roadmap for the power plant closures and the level of compensation. However, the

compensation of €2.6 billion pledged by the government will not be enough to fully offset RWE’s burdens. At short notice, we

convened a Supervisory Board meeting at which the Executive Board provided us with information on the compromise

reached. What is important is that we now have clarity and the people affected know what they are up against. First and

RWE Annual Report 2019To our investors > Supervisory Board report

foremost, this makes me think of the 10,000 people working in the Rhenish lignite mining region: they now have certainty

and can rest assured that the coal phaseout will not put them at a loss.

Now let me go into the work we did on the Supervisory Board last year. 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 as well as in between meetings. We

passed the resolutions required of us by German 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, allowing us to discuss major

developments without delay.

Main points of debate of the Supervisory Board meetings. Last year, the Supervisory Board convened for five ordinary

and two extraordinary meetings, the subject matter of which I will outline in more detail later on. In our sessions, we were

informed by the Executive Board in great detail of current affairs of significance to RWE. We also discussed matters in the

absence of the Executive Board. The shareholder and the employee representatives on the Supervisory Board always met

separately before these meetings, so that they had the opportunity to consult on agenda items and establish joint positions

where necessary in advance of the plenary sessions.

Our consultations centred on the recommendations of the Structural Change Commission and the talks between

government and industry on implementing them in the Rhenish lignite mining area. The legislative process regarding the

Dutch coal phaseout, the uphill battle for an orderly Brexit and the events concerning the British capacity market were also

among the issues on which we concentrated. The asset swap with E.ON also drew the Supervisory Board’s special attention.

We followed the approval procedure and the steps taken to execute the deal very closely. In addition, we discussed the

RWE Group’s future strategy and its ambitious climate-protection goals.

The following issues were discussed at our meetings:

• Last year, our first meeting took place on 5 February. After the Structural Change Commission published its

recommendations regarding Germany’s coal phaseout, we convened an extraordinary session in which we discussed

the recommendations and their potential effects on RWE and the people working in the Rhenish lignite mining region. The

compensation for RWE and the measures for a socially acceptable redundancy scheme were among the issues addressed.

• At our ordinary meeting on 8 March 2019, we discussed and approved the 2018 financial statements of RWE AG, the

consolidated financial statements, and the separate consolidated non-financial report. Furthermore, we adopted the

agenda of the Annual General Meeting of 3 May 2019, at which a resolution was passed to convert RWE preferred

shares to common shares. As the conversion required the convocation of a Preferred Shareholders Meeting, we also had

to approve the agenda of that meeting. In our March session, we again discussed the final report of the Structural Change

Commission. Moreover, I reported on the talks on corporate governance matters that I regularly conduct with major

institutional investors. The last exchanges of this kind occurred at the end of 2018 and the beginning of 2019. Executive

Board remuneration, the composition of the Executive Board and the Supervisory Board as well as succession planning

were among the topics discussed.

• The ordinary meeting on 3 May 2019 centred on the last steps to prepare the Annual General Meeting and the Preferred

Shareholders Meeting held on the same day, which I mentioned earlier.

• At our ordinary meeting on 11 July 2019, we decided to subject the work of the Supervisory Board to an efficiency audit

with the help of the business consultants Russell Reynolds Associates. In addition, we informed ourselves of how the most

recent amendments to the German Corporate Governance Code (GCGC) will affect the system of remunerating RWE’s

Executive Board. Furthermore, we debated the succession planning for the Executive Board and the Group’s position on

completion of the asset swap with E.ON.

• On 6 September 2019, we convened for another extraordinary meeting because a tender procedure for Polish offshore

wind projects was about to be held and RWE’s participation was subject to Supervisory Board approval. Although other

companies placed the winning bids on this occasion, the Group succeeded in entering the Polish offshore wind market

in 2019, securing a project pipeline in the Baltic Sea with a total installed capacity of more than 1.5 GW.

• Two weeks later, on 20 September, we met at an ordinary Supervisory Board meeting where we again discussed the

succession plan for the Executive Board. One of the issues addressed was the general procedure followed in selecting and

appointing new Executive Board members. We decided to seek the assistance of an external consultant in the future.

RWE’s new strategy and new brand appearance were highlights of our deliberations. In addition, the Executive Board kept

us abreast of the developments relating to the asset swap with E.ON.

• We reviewed and adopted the company’s planning for fiscal 2020 at our ordinary meeting on 18 December 2019. We

also dealt in depth with the new version of the GCGC. Together with the Executive Board, we approved an updated

statement of compliance as well as the corporate governance declaration along with the Corporate Governance Report.

Another topic of discussion was the German law on the implementation of the Second Shareholder Rights Directive

(ARUG II), which entered into force on 1 January 2020 and introduces a series of new regulations affecting management

board compensation, transactions with related parties, and the transparency duties of institutional investors, among

other things. We analysed the outcome of the efficiency audit of our work that began in July in great depth and debated

how Supervisory Board work can be even more effective in the future. I will report on this in more detail later on.

Supervisory Board committees. Last year, the Supervisory Board had six standing committees, the members of which are

listed on page 210. 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 is informed of

the work of the committees by their chairs at every ordinary meeting. In the year under review, a total of 14 committee

meetings were held, about which I would now like to inform you.

• The Executive Committee convened three times. In two extraordinary sessions, it discussed details concerning the

execution of the asset swap with E.ON, which it had been authorised to do by the Supervisory Board in March 2018. As

usual, the Committee discussed the company’s planning for fiscal 2020 as well as the outlook for the two subsequent

years at its December meeting.

• 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, the report for the first half of the year, the quarterly

statements and the consolidated non-financial report. The Committee discussed the financial statements 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. In doing so, it also paid attention to the quality of the financial statement audits. Furthermore,

the body submitted a recommendation to the Supervisory Board regarding the election of the independent auditors for

fiscal 2019, prepared the grant of the audit award to the independent auditors including the fee agreement, and set the

priorities of the audit. As usual, the Committee was informed of the effectiveness of the accounting-related Internal

Control System (ICS). This did not reveal any issues that would call the effectiveness of the ICS into question. Moreover, the

Committee discussed the spot check performed by the German Financial Reporting Enforcement Panel on the financial

RWE Annual Report 2019To our investors > Supervisory Board report

statements of RWE AG and the Group for fiscal 2018, which did not reveal any errors. Furthermore, the Committee dealt

with 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, compliance matters as well as legal and tax issues. The independent

auditors attended all of the Audit Committee meetings and also exchanged information with the Committee Chairman in

between meetings. In-house experts were consulted when necessary.

• The Personnel Affairs Committee held four meetings during the year being reviewed. The debates focused on the level of

Executive Board compensation and the design of the Executive Board’s remuneration system as well as the future effects

of ARUG II and the new GCGC on said system. In addition, the Committee concerned itself with planning for the successor

to the CEO Rolf Martin Schmitz, whose contract expires in the middle of 2021.

• The Nomination Committee convened twice in 2019. Both meetings focused on the new elections of the shareholder

representatives to the Supervisory Board scheduled for 2021. A key issue, which I will revisit in more detail later on, was

the requirement and skills matrix of the Supervisory Board, which is considered when selecting candidates. Another

topic of discussion was the consequences of the German law on the implementation of ARUG II and the new GCGC

recommendations for the elections. The Committee thoroughly debated whether to shorten and stagger the tenures

of the shareholder representatives. The Nomination Committee and the Supervisory Board endorse this. So far, as is

customary in Germany, RWE’s shareholder representatives have been elected simultaneously for five years at a time. We

will make a case for limiting their tenures to a maximum of three years covering various periods. This will result in a certain

degree of fluctuation every year. The advantage of this is that the Supervisory Board’s staffing could be adapted more

rapidly to new requirements. This would also prevent too many people from leaving the Committee at the same time,

resulting in a loss of valuable experience.

• The members of the Strategy Committee held one session. This meeting focused on RWE’s earnings prospects and

growth opportunities in renewable energy.

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

meet in 2019.

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. In March 2018, Monika Krebber and Erhard Schipporeit, who sat 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. These conflicts of interest remained in 2019. Therefore, Ms. Krebber and Mr. Schipporeit 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. Monika Krebber also had a conflict of interest as it became apparent to her that she

would transfer to E.ON due to the sale of the shareholding in innogy. Therefore, she requested not to be informed about

RWE’s plans to reduce its financial investment in E.ON in September 2019.

Efficiency audit. The Supervisory Board is obligated to review the efficiency of its work on a regular basis. This is mandated

by the GCGC. We conducted such an audit in 2019 with the assistance of Russell Reynolds Associates. One of the aspects

scrutinised was whether we as a body possess the expertise required to effectively monitor the new RWE. The efficiency

audit found that, on the whole, our work procedures are goal-oriented and effective. The same applies to our co-operation

with the Executive Board. However, certain measures were established to help us further improve the quality of our work on

the Supervisory Board, which is already high. For example, we will expand the requirement matrix that will be applied when

new candidates are selected for the Supervisory Board to include certain skills, in particular relating to technology and

digitisation, as well as international experience. Furthermore, we want to place greater emphasis on know-how in the energy

business, in particular with regard to renewable energy.

Attendance. The table below contains an overview of Supervisory Board member attendance at the meetings of this

corporate body and its committees. As the Mediation Committee did not convene in 2019, it has been omitted from this

table. Here is an example of how to interpret the numbers: ‘3/4’ means that the individual attended three of a body’s

meetings although their tenure on the body would have allowed them to attend four of them. As can be seen from the

overview, absences were an exception, and the rare cases of absence were for good reasons (e. g. a conflict of interest).

Attendance at meetings in fiscal
2019 by Supervisory Board member

Supervisory
Board

Executive
Committee

Audit
Committee

Personnel
Affairs
Committee

Nomination
Committee

Strategy
Committee

Dr. Werner Brandt, Chairman

Frank Bsirske, Deputy Chairman

Michael Bochinsky

Reiner Böhle (until 18 Sep 19)

Sandra Bossemeyer

Martin Bröker

Anja Dubbert (since 27 Sep 19)

Matthias Dürbaum (since 27 Sep 19)

Ute Gerbaulet

Prof. Dr. Hans-Peter Keitel

Dr. h. c. Monika Kircher

Monika Krebber (until 18 Sep 19)

Harald Louis

Dagmar Mühlenfeld

Peter Ottmann

Günther Schartz

Dr. Erhard Schipporeit

Dr. Wolfgang Schüssel

Ullrich Sierau

Ralf Sikorski

Marion Weckes

Leonhard Zubrowski

7/7

5/5

7/7

1/1

7/7

6/7

7/7

4/5

7/7

6/7

7/7

6/7

7/7

3/3

0/23

3/3

4/4

2/2

4/4

3/4

4/41

4/4

3/32

4/4

1/14

3/4

2/4

4/4

2/2

1/1

2/2

1/1

2/2

1/1

1 Dr. Werner Brandt attended meetings of the Audit Committee as a guest.
2 Dr. Monika Kircher has been a member of the Audit Committee since 1 April 2019.
3 Monika Krebber did not attend either of the meetings of the Executive Committee during her tenure due to potential conflicts of interest.
4 Dr. Wolfgang Schüssel resigned from the Audit Committee as of the end of 31 March 2019.

Personnel matters. There were two changes in personnel on the Supervisory Board in the year under review: Monika

Krebber and Reiner Böhle, both of whom were employee representatives, resigned from the Board on 18 September. Given

that they are innogy employees, they left the Group when the company was acquired by E.ON, which forbade them by

German law from remaining on the Supervisory Board of RWE AG. Anja Dubbert and Matthias Dürbaum were appointed

their successors by the Essen District Court on 27 September. On behalf of the Supervisory Board, I thank Ms. Krebber and

Mr. Böhle for their valuable work and for their commitment to RWE.

RWE Annual Report 2019To our investors > Supervisory Board report

The staffing of some of our committees also changed. Wolfgang Schüssel resigned the mandate he held on the Audit

Committee effective at the close of 31 March. Monika Kircher was appointed his successor per a Supervisory Board

resolution dated 8 March. The resignations of Monika Krebber and Reiner Böhle from the Supervisory Board also required

their seats on the Executive Committee and the Personnel Affairs Committee to be filled. In addition, Leonhard Zubrowski

resigned from the Executive Committee at the close of 17 December. In its session on 18 December, the Supervisory Board

elected Anja Dubbert and Matthias Dürbaum to the Executive Committee and Leonhard Zubrowski to the Personnel Affairs

Committee.

Financial statements for fiscal 2019. PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft audited and

issued an unqualified auditor’s opinion on the 2019 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, the combined review of

operations for RWE AG and the Group, and the accounts, which were prepared pursuant to Section 315a of the German

Commercial Code in compliance with International Financial Reporting Standards (IFRS). 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 3 May 2019 and commissioned by the Supervisory Board to audit

the financial statements of RWE AG and the Group.

The 2019 Annual Report and the audit reports 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 6 March 2020. 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 5 March 2020, 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.

The Supervisory Board reviewed the financial statements of RWE AG and the Group, the combined review of operations,

the Executive Board’s proposal regarding the appropriation of distributable profit, and the consolidated 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 2019 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 €0.80 per share.

Thanks to the employees of RWE. The changes we are experiencing at RWE present everyone involved with huge challenges

which demand courage and tenacity as well as flexibility and creativity. RWE’s employees demonstrated that they can adapt

to change, even if it has serious consequences for them. They therefore deserve the utmost respect. I would like to take this

opportunity to express my sincere gratitude to them for this on behalf of the entire Supervisory Board. I have absolutely no

doubt that RWE is on the right path. Proof of this can be found on the stock market: an investment in RWE common shares

at the end of 2017 yielded a total return of over 100 % by the end of January 2020. Our shareholders benefit from a

renewed RWE becoming the pacesetter of the energy transition. But most importantly, this benefits all of society and therefore all

of us. With this motivation, we will also rise to the challenges that will inevitably arise in the future.

On behalf of the Supervisory Board

Werner Brandt

Chairman

Essen, 6 March 2020

RWE on the capital market

The stock markets had a good year in 2019. Germany's blue chip index, the DAX, rose by 25 %, more than offsetting

its weak performance in 2018. The biggest stimulus was provided by the expansionary monetary policy of leading

central banks. Our share actually outperformed the DAX: it yielded a total return of 49 %, closing the year far above the

sector average. This proves that the capital market rewarded us in particular for the progress made in implementing

our asset swap with E.ON, which has transformed us into one of the leading producers of electricity from renewables.

Total return of the RWE common share compared with the DAX and STOXX Europe 600 Utilities
% (average weekly figures)
60

3 1 D ec 2 0 1 8

3 1 M ar 2 0 1 9

3 0 Jun 2 0 1 9

3 0 Sep 2 0 1 9

3 1 D ec 2 0 1 9

RWE common share

DAX

STOXX Europe 600 Utilities

Source: Bloomberg.

Stock market on the rise despite economic cooldown.

better development than the sector index STOXX Europe

Equity investors were able to celebrate high returns in 2019

600 Utilities (+ 30 %). The main reason for RWE’s strong

after a weak year on stock markets in 2018. Germany’s

performance was the progress made in the asset swap with

leading index, the DAX, rose by 25 % to 13,249 points, the

E.ON. Large parts of the transaction have been finalised, a

biggest increase since 2013 when it rose by exactly the

move that will see RWE become a world leading producer

same percentage. This development came as a surprise to

of electricity from renewable sources. Many investors and

some experts, as the trade conflict between the USA and

analysts see this as being a considerable value driver for the

China and the Brexit saga caused considerable uncertainty

RWE share. RWE’s successful business performance

among investors. However, the DAX benefited from the fact

together with the reinstatement of the British capacity

that the European Central Bank further relaxed its monetary

market had a positive effect on our share price, whilst the

policy in the face of negative economic signals. Zero interest

continued uncertainty concerning the framework conditions

rates and partly negative yields on government bonds are

of the German coal phaseout had a negative impact. After

attracting more and more investors to the stock market.

the Growth, Structural Change and Employment

RWE common share posts total return of 49 %. Fiscal

proposals and recommended appropriate compensation

2019 was a particularly good year on the stock market for

for the power producers concerned in January 2019, the

RWE shareholders. Our common share rose from €18.97

subsequent negotiations on the implementation between

to €27.35. Including the dividend of €0.70 paid in May, this

the government, states and industry ran through to 2020

Commission appointed by the government made specific

resulted in a total return of 49 %, thereby clearly outperforming

(see pages 42 et seqq.).

the DAX for the third time running and displaying much

RWE Annual Report 2019To our investors > RWE on the capital market

RWE share indicators

Earnings per share1

Cash flows from operating activities of
continuing operations per share1

Dividend per common share

Dividend per preferred share3

Dividend payment

Common share price

End of fiscal year

Highest closing price

Lowest closing price

Common share dividend yield4

Number of shares outstanding
(annual average)

€

€ million

€

2019

13.82

– 1.59

0.802

–

4922

27.35

28.69

18.97

2.9

2018

0.54

7.50

0.70

430

18.97

22.48

15.10

3.7

2017

3.09

– 6.13

1.50

922

17.00

23.14

11.80

8.8

2016

– 9.29

3.83

–

0.13

11.82

15.95

10.17

–

2015

– 0.28

5.43

–

0.13

11.71

25.68

9.20

–

thousands

614,745

Market capitalisation at the end of the year

€ billion

16.8

11.7

10.3

7.1

1 In relation to the annual average number of shares outstanding.
2 Dividend proposal for RWE AG’s 2019 fiscal year, subject to the passing of a resolution by the 28 April 2020 Annual General Meeting.
3 RWE preferred shares were converted to common shares in mid-2019 (see commentary below).
4 Ratio of the dividend per share to the share price at the end of the fiscal year.

RWE converts preferred shares into common shares.

Dividend proposal for fiscal 2019. The Supervisory Board

In mid-2019, we converted all 39 million RWE preferred

and the Executive Board of RWE AG will propose to the

shares into voting common shares, thereby securing equal

Annual General Meeting on 28 April 2020 a dividend of

rights for every RWE shareholder. The conversion occurred

€0.80 per share for the past fiscal year, a €0.10 gain on the

1:1 without any payments. The corresponding resolution

previous year. The dividend proposal reflects RWE’s strong

was passed on 3 May 2019 by the Group’s Annual General

earnings.

Meeting and Preferred Shareholders Meeting, acting on

the proposal of the Executive Board and the Supervisory

Broad international shareholder base. Based on our latest

Board. On 28 June 2019, the required amendment to the

survey, at the beginning of 2020, an estimated 86 % of the

Articles of Incorporation was entered in the Commercial

total of 614.7 million RWE shares were held by institutional

investors and 14 % were owned by individuals (including

trading, the preferred shares were delisted. In early July, the

employees). Institutional investors from Germany owned

custodians reclassified the RWE preferred shares of their

24 % of RWE (previous year: 25 %). In other countries in

customers as RWE common shares. This increased the total

Continental Europe, this investor group held 14 % of RWE’s

number of common shares to 614.7 million. Institutional

subscribed capital (previous year: 15 %). In North America,

investors favour the ‘one share - one vote’ principle, which

the United Kingdom and Ireland, it accounted for a combined

RWE is now honouring.

44 % (previous year: 43 %). At the start of the year, RWE AG’s

single-largest shareholder was the US asset management

company BlackRock, which owned 7 % of our subscribed

capital. KEB Holding, which is backed by the City of Dortmund,

was in second place with just under 5 %, followed by the City

of Essen in third place, with 3 %.

Shareholder structure of RWE AG1

1 % Employee shareholders

7 % BlackRock, Inc.

13 % Private shareholders

5 % KEB Holding AG

3 % City of Essen

71 % Other institutional shareholders

86 %

Institutional
shareholders:

24 % Germany
22 % USA/Canada
22 % UK/Ireland
14 %

Continental Europe
excluding Germany

4 % Rest of the world

1 As of 1 January 2020; percentages reflect shares in subscribed capital.
Sources: RWE data and notifications from shareholders in accordance with the German Securities Trading Act.

The free float of our common shares considered by

RWE represented on numerous stock markets.

Deutsche Börse in terms of index weighting was 100 % when

RWE shares are traded on the Frankfurt Stock Exchange

this report went to print. Normally, shares held by investors

and other stock exchanges in Germany, as well as via

accounting for at least a cumulative 5 % of the capital stock

electronic platforms such as Xetra. They are also available on

are not included in the free float. However, a higher threshold

stock markets in the rest of Europe. In the USA, instead of

of 25 % applies to asset management companies like

our shares being traded, RWE is represented via American

BlackRock.

Depositary Receipts (ADRs) in a Level 1 ADR programme.

ADRs are share certificates issued by US depositary banks,

About 1 % of our stock is owned by our current and former

representing a certain number of a foreign company’s

staff members. We enable the personnel of our German

deposited shares. Under RWE’s programme, one ADR

and British subsidiaries to take shares in the company on

represents one common share.

preferential terms through employee share ownership plans.

Last year, over 5,852 people, representing 36 % of all

qualifying staff members, made use of this offer. They

Ticker symbols of RWE common share

bought a total of 333,000 common shares. We spent

Reuters: Xetra

€2,503,000 on the preferential terms and the

administration of the programme.

Reuters: Frankfurt Stock Exchange

Bloomberg: Xetra

Bloomberg: Frankfurt Stock Exchange

German Securities Identification Number

International Securities Identification
Number (ISIN)

American Depositary Receipt
(CUSIP Number)

RWEG.DE

RWEG.F

RWE GY

RWE GR

703712

DE0007037129

74975E303

RWE Annual Report 2019Combined
review of operations

1.1 Strategy

Last year saw the launch of the new RWE: our asset swap with E.ON has turned us into one of the world’s leading

renewable energy companies. We are now an all-rounder in electricity generation and are leading the field in the

creation of a sustainable energy system. For as long as necessary, we will ensure security of supply with our flexible

power plants. Sustainable power production must be carbon neutral. We intend to meet this ambition as early as

2040. To this end, every year, we will invest billions in wind and solar power as well as in energy storage. And, we will

play our part by exiting from coal-based electricity generation early in a socially acceptable manner.

The new RWE: focus on sustainable power generation

offshore wind. In addition to existing assets, we have

and energy trading. Our company has repositioned itself

acquired a large number of growth projects in various

fundamentally over the last few years. At the beginning of

stages of development. Here again, the focus is on wind,

this transformation process, RWE was still an integrated

followed by photovoltaics. Electricity production from

utility, which was active along the entire energy value chain.

renewables will clearly be our strongest income generator.

Now, we are a company specialising in power production

It will account for more than half of our adjusted EBITDA as

and energy trading that wants to make a contribution to the

early as 2020.

substantial transformation of the energy sector on the

strength of almost carbon-free electricity generation that is

Our goal by 2040: RWE will become carbon neutral. We

both secure and affordable.

continued to develop our strategy concurrently to the

implementation of the asset swap with E.ON and set

The road to the new RWE began in 2016 when we pooled

ourselves ambitious goals in terms of lowering our

the Renewables, Grid & Infrastructure and Retail divisions in

greenhouse gas emissions. RWE reduced its annual carbon

a new subsidiary called innogy and took it to the stock

dioxide emissions by 51 % from 2012 to 2019. By 2030,

market. One-and-a-half years later, in early 2018, we

we plan to have lowered them by 75 %. The phaseout of

agreed an extensive asset swap with E.ON, which has since

electricity generation from coal will play a central role. By

largely been completed. As part of the transaction, we sold

2040, we want to have converted enough of our power

our 76.8 % investment in innogy in September 2019 and

plant portfolio to achieve our goal of being carbon neutral.

received in return E.ON’s renewable energy business,

a 16.67 % stake in E.ON, and the minority interests in our

nuclear power stations Gundremmigen (25 %) and Emsland

To this end, we will rapidly expand renewable energy, make
more use of storage technologies and use CO2-neutral fuel
to produce electricity. This strategic alignment is also

(12.5 %) held by the E.ON subsidiary PreussenElektra. The

reflected in RWE’s brand. Our purpose, ‘Our energy for a

final step will be the legal transfer of certain innogy

sustainable life’, is an expression of the determination of the

operations back to RWE: the renewable energy business,

RWE Group and its approximately 20,000 employees to

the German and Czech gas storage facilities, and a 37.9 %

ensure a sustainable energy system.

stake in the Austrian energy utility Kelag. They have been

recognised in the item ‘innogy – continuing operations’ in the

Fast growth in wind and solar power. The most important

consolidated financial statements. We provide detailed

element of our strategy is shifting our focus to make

commentary on the asset swap with E.ON on page 45.

increased use of renewable energy sources. The asset

swap with E.ON gives us an excellent starting position, which

Outstanding starting position in renewable energy. The

we will strengthen rapidly. We want to increase our wind

renewable energy operations of E.ON and innogy under the

and solar capacity, which totalled 8.7 GW (pro-rata) at the

RWE umbrella have turned us into a world leading producer

end of 2019, to over 13 GW by the end of 2022. We plan

of electricity from renewable sources. At the end of 2019,

to invest a net €1.5 billion to €2.0 billion on this every year.

we had a renewable energy portfolio with a total capacity

Reinvesting proceeds from the sale of stakes in projects

of 9.9 GW. This is the generation capacity allocable to us on

could actually cause the gross expenditure to be much

a prorated basis, i. e. in accordance with the stakes that we

higher. Our technological focus rests on wind energy and

hold. Onshore and offshore wind farms account for the

photovoltaics. Geographically, we will concentrate on

largest share of this: 8.6 GW. We are the world No. 2 in

markets in Europe, the Americas and the Asia-Pacific region.

RWE Annual Report 2019Combined review of operations > Strategy

At present, our largest construction project is the 860 MW

Conventional electricity generation: growing significance

Triton Knoll offshore wind farm off the eastern coast of

of gas as a source of energy. Building the storage

England, for which innogy secured a guaranteed payment

infrastructure required for a nationwide supply of green

of £74.75/MWh. We are also building huge onshore wind

electricity is a task that will take decades, not years to

farms, e. g. Big Raymond and Cranell in the US state of

accomplish. Therefore, power stations capable of offsetting

Texas, which will have total capacities of 440 MW and

fluctuating wind and solar power feed-ins will remain

220 MW, respectively. In 2020, we want to commission our

necessary for the foreseeable future. With our conventional

Limondale solar farm in New South Wales, Australia. With an

generation capacity, we are making an indispensable

installed capacity of 349 MWp, it will be the most powerful

contribution to the reliable and tailored supply of electricity

installation of its kind in the country. We will maintain the

in our core markets in Germany, the United Kingdom and

integrated business model pursued by innogy and E.ON to

the Benelux region. Our gas-fired power stations, most of

date, meaning that our new projects will cover the entire

which are state-of-the-art, are especially well suited to

value chain from development to construction and operation

partner with renewable energy because they emit little carbon

wherever possible.

dioxide and their output can be adapted to load fluctuations

in the grid very quickly. In terms of generation capacity, gas

High-capacity storage: prerequisite for 100 % electricity

is already our major conventional source of energy, and its

generation from renewables. Expanding renewable energy

share of our power plant portfolio is expected to increase

is not enough. Electricity generated by wind and solar power

further. However, we believe the greatest potential for

greatly depends on the weather, time of day and season.

growth is currently harboured by the acquisition of existing

Sometimes, power produced from renewable sources only

stations. New builds are usually unprofitable at present,

covers a fraction of demand, and at other times, it exceeds

unless the assets receive guaranteed payments under the

local needs to such an extent that it actually has to be

German Combined Heat and Power Act or as a result of

throttled. Consequently, storage technologies are increasingly

invitations to tender from the network operators.

coming to the fore as renewable energy continues to be

expanded. They do not yet meet the technical and economic

Conversely, coal and nuclear power stations will increasingly

requirements for large-scale use to secure supply. But we

lose importance within our generation portfolio. In Germany,

are working on changing the situation. In several research

nuclear energy is subject to a phaseout roadmap, which

and development projects, we are dedicating ourselves to

stipulates a latest possible shutdown date for every single

Power-to-Gas technologies, which convert green electricity

plant. Two RWE nuclear power stations are still online:

to hydrogen and then use this gas as a carbon-neutral

Gundremmingen C and Emsland. We can operate these

commodity. For example, we joined forces with gas network
operators and industrial enterprises in the Get H2 initiative
to put the production, storage, transport and use of

assets until the end of 2021 and the end of 2022,

respectively, after which they must be closed. Thereafter,

our nuclear operations will largely be limited to safe and

hydrogen to the test on an industrial scale at our power

efficient dismantling. In addition, we are exploring how to

plant site in Lingen (see page 36). In addition to Power-to-Gas

continue to make use of the locations of our power plants in

and thermal or mechanical storage concepts, batteries can

the energy business.

also help to mitigate fluctuations in renewable energy. RWE

is already involved in the development and construction of

Permission to use coal as a source of energy is also likely to

battery storage facilities, which is a business we are expanding.

end in the foreseeable future. All three countries in which RWE

has coal-fired power stations already have concrete phaseout

roadmaps. The United Kingdom has set its sights on the

earliest exit year, which is 2024. Aberthaw B, the last RWE

hard coal-fired power plant in operation there, was taken

offline in December 2019 so that it can be decommissioned

early.

The Netherlands intend to phase out coal by the end of

Supply & Trading – commercial hub for the generation

2029. This has been enshrined in law since last year. We

business. Energy trading is part of RWE’s core business.

currently have two hard coal-fired power plants there,

It forms the economic link between the elements of our

Amer 9 and Eemshaven, which will have to be converted to

value chain, the regional markets and the various energy

run on alternative fuels or shut down after 2024 and 2029,

commodities. It is overseen by the Group company

respectively. Thanks to state subsidies, we have begun to

co-fire biomass in both these stations. Moreover, we will

explore whether we can run them solely on this energy fuel in

the long run.

RWE Supply & Trading, which focuses on trading
electricity, gas, coal, oil, biomass, and CO2 certificates.
RWE Supply & Trading mainly conducts these activities from

Europe as well as via subsidiaries in New York, Singapore

and Beijing. Another of the Group company’s activities

At the beginning of 2020, the German government

consists of marketing the electricity from RWE power

presented a draft law on the country’s exit from coal, which

stations and procuring the fuel and emission allowances

orients itself towards the recommendations of the Growth,

required to produce it. The objective here is to limit price

Structural Change and Employment Commission. The

risks. On top of that, RWE Supply & Trading is in charge of the

roadmap envisages the country gradually reducing the

commercial optimisation of our power plant dispatch.

number of coal power plants to zero by 2038. The draft law

However, the generation segments are entitled to the

also mandates the early closure of lignite-fired power

resulting earnings, which is why we report them in those

stations in the Rhenish coal mining region, on which we

segments. Companies outside of the RWE Group can also

reached an agreement with the government following

benefit from the expertise of our trading business. They are

lengthy negotiations. Detailed information can be found on

offered a wide range of products and services, running the

pages 42 et seqq. The exit roadmap makes it possible to

gamut from traditional energy supply contracts and

have a reliable regulatory framework, within which we can

comprehensive energy management solutions to

work towards carbon-neutral electricity generation by

sophisticated risk management concepts. In addition,

2040. However, it also poses major social and operational

RWE Supply & Trading makes minor investments in energy

challenges, mainly relating to our lignite business in the

assets or energy companies, for which value-enhancing

Rhineland. For example, we have to end our opencast

measures can be taken in order to realise high returns

mining activities in Hambach early, which will be extremely

upon resale (referred to as principal investments). At the

expensive as this will involve maintaining Hambach Forest.

end of 2019, RWE Supply & Trading had a portfolio of seven

Furthermore, we are forced to implement major layoffs

principal investments, four of which are in the USA.

and redundancy programmes for the affected employees.

We managed to negotiate a total of €2.6 billion in

Intermediary trading and storage of gas harbour

compensation with the government, but we will have to

additional earnings potential. Another string to

cover some of the additional costs ourselves.

RWE Supply & Trading’s bow is the gas business. This is an

area in which the company aims to establish itself as a

Germany’s coal phaseout will accelerate structural change

leading European intermediary. The company already

in the Rhenish lignite mining region substantially. We intend

supplies gas to numerous companies inside and outside of the

to play an active role in shaping this change and help to

RWE Group. To this end, it enters into long-term supply

ensure that the energy industry continues to prosper in the

agreements with producers, organises gas transportation

region. Some recultivation land is very well suited for the

by booking pipelines and optimises the timing of deliveries

expansion of renewable energy. Three innogy onshore wind

using leased gas storage facilities. The greater the size

farms are already located there. We also intend to continue

and diversification of the procurement and supply

developing our power plant sites. For example, there are

portfolios, the greater the chances to commercially optimise

plans to build an innovation, technology and commercial

them. RWE Supply & Trading also concludes transactions

park in Frimmersdorf and the surrounding area. We will

involving liquefied natural gas (LNG). The main objective is

perform test drillings at the Weisweiler site within the scope

to take advantage of differences in price between regional

of an EU project in order to determine whether the location’s

gas markets which are not connected via pipelines.

geothermal activity is suitable for generating district heat

(see pages 34 et seq.). In addition, we will thoroughly explore

Power-to-Gas technology at the Niederaussem Innovation

Centre, where we have been operating an electrolyser for

producing hydrogen since 2013.

RWE Annual Report 2019Combined review of operations > Strategy

The asset swap with E.ON further expands our gas business.

New Group structure: coal and nuclear pooled in single

We will receive eleven gas storage facilities from our former

segment. We will present the RWE Group in a new structure

subsidiary innogy: five in Germany with a total capacity of

from 2020 onwards. One major change compared to 2019

1.6 billion cubic metres and six in the Czech Republic with a

is that we will dissolve the interim ‘innogy – continuing

total capacity of 2.7 billion cubic metres. In 2020, we will

operations’ and ‘acquired E.ON operations’ segments and

start reporting income from the management of these

break down the generation business solely by energy

assets in the Supply & Trading segment. Due to regulatory

source. We have pooled our German lignite, hard coal and

restrictions these storage facilities will not be owned by

nuclear power stations in a single segment. As these

RWE Supply & Trading, but by legally independent Group

technologies are subject to exit roadmaps mandated by the

companies, which lease them to companies such as

state, plant dismantling and opencast mine recultivation will

RWE Supply & Trading. The lessees use the storage facilities

gain importance relative to electricity generation. Additional

for timing arbitrage transactions. They are filled in the warm

information on the new segment breakdown can be found

months, when little gas is needed to heat buildings, and

on pages 94 et seq. The old structure, which forms the basis

gradually emptied in the cold season, when demand is high.

for our financial reporting on fiscal 2019, is set out on

The income achieved through such arbitrage transactions

pages 49 et seq.

and, in turn, storage capacity auctions depends on the

seasonal differences in gas prices. The differences in price

RWE AG’s management system. Ensuring sustainable

between summer and winter gas are much smaller today

growth in shareholder value is at the heart of our business

than they have been in the past. This applies above all to

policy. To manage the Group’s activities, RWE AG deploys a

the German market, which currently has an oversupply of

groupwide planning and controlling system, which ensures

storage capacity. A recovery of margins is not in sight.

that resources are used efficiently, and provides timely,

However, we believe that periods of scarcity and price spikes

detailed insight into the current and prospective

will become more frequent again in the long run, in part due

development of the company’s assets, financial position

to rising demand for gas used to generate electricity. This is

and net worth. Based on the targets set by the Executive

something from which we would benefit two-fold, both as

Board and management’s expectations regarding the

user and as owner of the storage facilities.

development of the business, once a year we formulate our

medium-term plan, in which we forecast the development of

Attractive investment portfolio increases financial

key financial indicators. This plan contains the budget

strength. RWE’s business operations are supplemented

figures for the following fiscal year and planned figures for

by a portfolio of financial investments in energy companies,

the years thereafter. The Executive Board submits the plan

which we believe will be a reliable source of substantial

to the Supervisory Board, which reviews and approves it. The

income. The largest position is the stake in E.ON, which we

Supervisory Board occasionally requests adjustments to be

received as part of the asset swap. It amounted to 16.7 %

made prior to giving its approval. During the fiscal year, we

when it was acquired in September 2019. We reduced it to

produce internal forecasts linked to the budget. The

15 % shortly thereafter. Our investment portfolio also

Executive Boards of RWE AG and the main operating units

includes a 25.1 % share of the German transmission system

meet regularly to analyse the interim and annual financial

operator Amprion and the 37.9 % interest in the Austrian

statements and update the forecasts. In the event that the

utility Kelag mentioned earlier, which is part of the continuing

updated forecast figures deviate significantly from the

innogy operations. Kelag’s strong position in hydroelectric

budget figures, the underlying reasons are analysed and

power makes the company a perfect fit for our renewable

countermeasures are taken if necessary. We also

energy strategy.

immediately notify the capital market if published forecasts

need to be modified.

Important key performance indicators used in managing

including provisions for mining damage and the financial

our business are adjusted EBITDA, adjusted EBIT, adjusted

assets used to cover them in net debt from fiscal 2020

net income, and net debt. EBITDA is defined as earnings

onwards. In managing our indebtedness, we orientate

before interest, taxes, depreciation and amortisation.

ourselves towards the leverage factor, the ratio of net debt

In order to improve its explanatory power in relation to the

to adjusted EBITDA. In the future, we will calculate this ratio

development of ordinary activities, we remove non-operating

solely based on income achieved in our core business, the

or aperiodic effects: capital gains or losses, temporary

definition of which is provided on pages 94 et seq.

effects from the fair valuation of derivatives, impairments

and other material special items are shown in the

Sustainable management – more than just reducing

non-operating result. Subtracting operating depreciation

emissions. We can only succeed over the long term if we

and amortisation from adjusted EBITDA yields adjusted

ensure society’s acceptance by embracing our corporate

EBIT. Net income corrected to exclude all major special items

responsibility (CR). Today, CR is a top priority. It relates to

(adjusted net income), is another key operating indicator.

multifaceted environmental, economic and social matters

and therefore goes far beyond the reduction of greenhouse

Until 2019, for management purposes, we also used key

gas emissions. To optimise our assessment of the

figures reflecting innogy as a purely financial investment in

expectations which society has of us, we constantly seek to

accounting terms. innogy was considered on the income

engage in dialogue with stakeholder groups. These are

statement only with the dividend due RWE. This approach,

primarily shareholders, employees, politicians, associations,

which deviates from IFRS consolidation principles, is

non-government organisations and civic initiatives. The

explained in further detail on page 69. It enabled us to

stimulus we receive by interacting with our stakeholders

present innogy’s role adequately. Another advantage of the

helps us to determine the focal points of our CR activities. In

greater independence of accounting regulations was that

addition to reducing our emissions, we take a number of

we did not have to make any methodological adjustments

further matters very seriously. These include the health of

when implementing the asset swap with E.ON. Therefore,

our staff, biodiversity at our sites, the diversity of our

this approach was also applied to determine the key

workforce and the attractiveness of RWE as an employer.

earnings figures forming the basis of the Executive Board’s

We have set ourselves specific goals in respect of numerous

variable remuneration.

CR issues and measure the degree to which we achieve

them using KPIs. In so doing, we create transparency while

We primarily use the internal rate of return for evaluating

making our sustainability strategy more binding. This is also

the attractiveness of investment projects. The Group’s

achieved by the fact that the degree to which CR targets are

financial position is analysed using cash flows from

met has a direct effect on the remuneration of the Executive

operating activities, amongst other things. We also attach

Board of RWE AG (see page 80).

special importance to the development of free cash flow. It

is the result of deducting capital expenditure from cash

Further information on our goals and measures in relation

flows from operating activities and adding to them

to CR can be found in our separate consolidated

proceeds from divestments and asset disposals. Net debt is

non-financial report in accordance with Section 315b,

another indicator of RWE’s financial strength. The starting

Paragraph 3 of the German Commercial Code, which will

point for calculating it is RWE’s net financial position, to

be published separately from the combined review of

which provisions for pensions and similar obligations, for

operations as part of our CR Report in April 2020. The

nuclear waste management, for mining damage (e. g. the

CR Report is entitled ’Our responsibility‘ and can be

recultivation of opencast mining sites) and for the

accessed on the internet at www.rwe.com/cr-report.

dismantling of wind farms are added. However, we will stop

RWE Annual Report 2019Combined review of operations > Innovation

1.2 Innovation

Few other industrial sectors are in the throes of as great a transformation as that affecting the energy industry.

Armed with innovative spirit, curiosity and drive, we are helping to shape this change, prompting us to have launched

or helped progress 190 innovation projects this past year alone. A total of 370 employees and numerous industrial

and research partners were involved in these projects. And as varied as they may be, they have one goal in common:

overcoming the technical and economic challenges of the energy transition.

With around 290 inventions, we are amongst the

working on concepts for floating wind turbines, which can be

pioneers of European utilities. RWE is innovative in many

secured to the seabed using anchor chains. This opens up

ways. We are motivated both by a desire to remain competitive

the possibility of utilising deeper waters as sites for turbines,

in an ever-changing environment as well as a passion to be

making completely new regions available for wind power,

a driving force propelling this transition. With the help of our

such as the Mediterranean and steeply sloping coasts in

innovation projects, we are looking to develop solutions that

Asia and America in particular. According to WindEurope,

help us advance power generation from renewable sources

the European wind industry association, in about 80 % of all

and harness the potential of our conventional power plants

areas where wind speeds are suitable for electricity

in order to facilitate a successful energy transition.

generation, the sea is simply too deep for conventional

forms of offshore wind.

With 1,070 patents and patent applications, based on close

to 290 inventions, we are in the leading pack of European

Floating technology is still in its infancy. Commercially

utilities. Last year, we worked on approximately 190 projects

available turbines are usually used, but the floating

in the field of research and development (R & D). About

foundations are custom-made and expensive. Together with

370 of our staff were solely dedicated to these activities or

oil company Shell and Danish company Stiesdal Offshore

contributed to them in addition to performing their normal

Technologies (SOT), innogy is currently testing a modular

tasks. In most R & D projects, we co-operate with other

concept called TetraSpar, which the project partners believe

companies or research institutions, meaning we generally

will enable considerable cost savings. SOT has developed a

only bear a portion of the project costs. In 2019, the

tubular steel support structure which is kept stable in the

RWE Group’s operating R & D spending amounted to

water by a keel. As it has a modular design, the individual

€21 million (previous year: €18 million). innogy is only

parts of the support structure can be prefabricated at

included in all of these figures based on the operations we

different locations. One advantage this technology holds

are continuing.

over other floating concepts is that it is possible to construct

the floating base and mount a turbine to it – all within the

In the following we present a small selection of current

harbour.

innovation projects. They illustrate the range of challenges

we are facing in light of the energy transition and signify the

The project team’s model-scale tests on a floating

creativity with which we are tackling these issues.

installation, conducted in wind and wave tunnels, have

largely been completed and production of individual test

The floating TetraSpar turbine: new solution for offshore

installation components is already under way. In 2020, the

wind expansion. RWE is the world No. 2 in offshore wind

first TetraSpar base is due to be assembled and launched in

power production. Traditional offshore wind turbines have

the Danish port of Grenaa, before a 3.6 MW wind turbine

one thing in common: they are firmly secured to the seabed

is mounted upon it. Tugboats will then take the entire

and therefore located in waters with a maximum depth of

installation to the test site ten kilometres off the Norwegian

50 metres, with 70 metres likely to be possible in the

coast near Stavanger, where it will be attached to the

medium term. The reason for this limitation is that the need

seabed 200 metres below with three anchor chains, before

for building materials increases in tandem with the need to

finally being connected to the power grid via a cable. The

make stronger structures which can withstand wind and

floating turbine will be equipped with a large number of

waves in much deeper waters. The associated construction

sensors to measure whether its behaviour in real life

costs would be considerable, rendering the wind farms

conditions is in line with our predictions based on

uneconomical. However, in order to harness the potential of

calculations and tests. In TetraSpar, we hope to have found

wind power more effectively, companies are currently

a concept that will allow us to venture into entirely new wind

power territories using floating technology.

Weatherproofing wind farms: lower repair costs thanks

specialists teach the software to work autonomously and

to rotor blade coating. Wind turbine blades are constantly

distinguish between normal and irregular wind turbine

exposed to the elements. This applies in particular to the

behaviour based on existing data sets. The ideal combination

leading edge of the blades where dust, water droplets and,

of hardware and software will then be installed in individual

at offshore sites, even sea salt strike the coating and, over

turbine models or even entire onshore and offshore fleets.

time, permeate to the layers below. The damage caused by

With the help of our condition monitoring systems, we have

the erosion must regularly be repaired at great expense.

already been able to considerably reduce the number of

This is precisely where we want to make a change, true to

unplanned maintenance outages.

the saying “Prevention is better than cure.”

Heat from under the ground: new tasks for our Weisweiler

For some time now, manufacturers have been making

site. One regenerative energy source simply brimming with

materials that can be applied to the edges of the blades to

promise is deep geothermal energy. Not only does it offer

protect them from erosion. Three types of material are

promising prospects for energy supply, but possibly also for

available for this purpose: special paints, adhesive strips

the future of the Rhenish lignite mining region. As part of an

and precast foams – all of which have already been tested

R & D initiative under the umbrella of EU funding project

in our laboratory, using products from ten manufacturers.

INTERREG, we are currently researching whether and how

At the offshore wind farms Gwynt y Môr off the coast of

we can extract geothermal energy, stored deep in the

Wales and Rödsand 2 near Lolland in Denmark, these

ground under our Weisweiler power station to the east of

investigations are being continued under real life conditions.

Aachen. In concrete terms, the objective is to pump hot

In offshore locations, the number, size and salt content of

water from deep underneath the earth’s crust to the

water droplets in the air is particularly high, making these

surface. The heat could then be captured by a heat

material tests even more crucial. The main objective is to

exchanger and fed into the Aachen district heating network,

establish how easily these materials can be applied under

while the thermal water would be pumped back into the

marine weather conditions and how they might affect the

ground via a second borehole. This would make it possible

aerodynamics of the turbines.

to supply Greater Aachen with green energy from the

Rhenish coal mining region and Weisweiler to maintain its

Testing is expected to continue until 2021, by which time

place as a key location for the energy industry. It would also

we want to have identified the material with the best cost-

offer the workforce secure prospects, even once the

benefit ratio. We could then apply it to rotor blades during

planned phaseout of lignite-fired electricity generation is

regular maintenance, avoiding unneccessary downtime. In

complete.

addition, when building wind farms, we will make sure that

the blades are precoated with the ideal protective layer.

Ten partners have come together as part of our DGE Rollout

NWE project (development of deep geothermal energy in

Wind turbines under observation: condition monitoring

north-western Europe) under the direction of North Rhine-

systems. Once a wind turbine has been installed, it must

Westphalia’s Geological Service. RWE Power is contributing

be regularly serviced and maintained. Damage should be

the on-site energy infrastructure at Weisweiler, and the

detected, assessed and repaired as quickly as possible to

know-how of its employees to the project. District heating

prevent turbine downtime. In order to ensure a safe and

pipelines already run from our power plant to Aachen, some

ideally seamless operation of a given wind farm, we use

20 kilometres away. The first project phase will be dedicated

condition monitoring systems. The systems use sensors to

to the underground exploration of the conditions in

record rotation speeds, vibrations, ambient temperatures

Weisweiler. In the second half of 2020, we want to use a test

and much more. Measurements are taken around the clock,

well to reach a depth of more than 1,000 metres. If it then

and that information is stored, so that software can

transpires that the use of geothermal energy is

evaluate the data later.

economically viable, this would mark the birth of a

Weisweiler geothermal energy site. The state of North

As part of our R & D activities, we are working on improving

Rhine-Westphalia has set itself the goal of ensuring that a

the interaction between the sensors (hardware) and the

2038 phaseout of coal-fired electricity generation coincides

analysis methods (software). We are exploring which

with a massive expansion of renewable energy capacity. It is

hardware is particularly well suited for data acquisition,

envisaged that the Rhenish region will serve as a model for

for example. We improve the software using machine

how a region in Europe can best transform its energy

learning approaches, among other things. Engineers and IT

system into a modern, innovative and climate-friendly one.

RWE Annual Report 2019Combined review of operations > Innovation

Geothermal energy is of particular interest in this regard

As part of the StoreToPower project, RWE has joined forces

because it is available around the clock, regardless of

with the German Aerospace Centre and the Aachen

weather conditions. With its mining traditions and its high

University of Applied Sciences. Together, the partners are

professional and technical standards, North Rhine-

seeking to retrofit a thermal storage module as a test

Westphalia ticks all the necessary boxes to create a

facility on the premises of a large lignite-fired power plant

successful geothermal energy hub. In Belgium and the

unit in the Rhenish region, thus proving the technical viability

Netherlands, district heating networks, greenhouses,

of the concept. The state of North Rhine-Westphalia is

industrial plants and thermal baths already benefit from

already backing the planning work financially and has

this environmentally friendly energy stored below the

included StoreToPower as a key project in its programme of

earth’s crust.

urgent operations called ‘The Rhenish region of the future’.

In July 2019, the project cleared an important hurdle: the

StoreToPower: converting coal-fired power stations into

Federal Ministry of Economics and Energy listed it as one of

thermal storage power plants. StoreToPower is another

20 projects that are eligible to apply for funding within the

project aimed at tackling the impending structural change

scope of the ideas competition entitled ‘Real Laboratories

in the Rhenish lignite mining region whilst also securing the

of the Energy Transition’. The contest is aimed at ensuring

area as a key location for the energy industry. As the name

that sustainable energy technologies can be tested under

implies, the focus is on electricity storage. One of the major

real life conditions and on an industrial scale.

challenges of the energy transition is that wind turbines and

solar panels are not reliable sources of electricity. The more

these systems replace conventional power plants, the more

Innovative CO2 application: synthetic fuel from carbon
dioxide. For some time now, we have been working on

urgently we need storage solutions that make it possible to

reconcile the considerable fluctuations of electricity

generated from renewable sources with demand profiles.

various processes that allow us to separate carbon dioxide
from power plant flue gases (CO2 scrubbing). At our
innovation centre in Niederaussem in the Rhenish lignite

mining region, we have developed one of the world’s

How we transition from phasing out coal to phasing in

energy storage solutions is the key question when it comes

to StoreToPower. As part of this initiative, we are looking to

use a lignite-fired power station as a thermal storage power

plant. This will not involve a complete redesign of the plant:

in coal-fired power stations, heat is generated by burning

pioneering technologies in this field together with BASF and
Linde. Our CO2 scrubbing pilot plant has already proven its
capabilities over years of extensive testing. Since 2009, it

has completed more than 80,000 operating hours,
achieving CO2 scrubbing efficiencies of 90 %. We use
carbon dioxide from the pilot plant to produce synthetic fuel

coal. This heat is used to produce steam. Under high

and feedstock for the chemical industry, which can be used

pressure, the steam drives a turbine, which produces

to replace fossil fuels such as crude oil and natural gas. To

electricity via a generator. In a coal-fired power station

this end, we have initiated five projects, all of which qualify

which has been converted into a heat storage power plant,

for EU funding. Two examples are presented below.

the heat needed for steam generation can be produced

with alternatives to coal, namely wind and solar power.

Whenever excess amounts of green electricity are available,

As part of the first project, MefCO2 (Methanol from CO2),
which has already been completed, we produced methanol

they could be used to heat a thermal storage tank. Later,

from carbon dioxide and hydrogen. The hydrogen in turn

when wind and solar power is in short supply, the stored

was produced by electrolysis using water and electricity. A

heat can be used to generate steam to drive the turbine.

wide variety of chemical products are based on methanol,

The modules of the thermal storage system can be

one of the most commonly manufactured chemicals in the

gradually built next to existing power plant units. In this way,

world. It is also suitable as a long-term storage medium for

the steam generated in the green storage plant can

renewable energy, provided the hydrogen used to generate

progressively be used to replace large portions of the steam

it is produced using green electricity and the methanol itself

otherwise generated using lignite. This continues until the

is subsequently used to generate electricity.

power station operates exclusively as a thermal storage

power plant using renewable energy sources once the

phaseout of coal-fired power generation has been completed.

A second project, ALIGN-CCUS, has been under way at

Lignite-fired power plants: lower mercury emissions

Niederaussem since 2017. Backing is provided by both the

thanks to rotary hearth furnace coke. In our efforts to

EU and the German Ministry for Economic Affairs and

generate electricity with ever lower emissions, we are not

Energy. A total of 30 industrial enterprises and research

only targeting the greenhouse gas carbon dioxide but also

institutions from five European countries are involved in the

pollutants such as mercury. We are already able to

project. They are looking to show that it is possible to create

successfully separate and extract most of the mercury

an entire value chain, from carbon capture to its use and

contained within flue gases, meaning our plants are already

storage. The project involves converting carbon dioxide and

well below the current legal emission thresholds. However,

hydrogen into dimethyl ether (DME), which can be used as a

new EU regulations will impose much stricter limits on our

low-carbon, low-nitrogen-oxide diesel substitute. Our pilot

lignite-fired power plants from summer 2021 onwards. So,

plant in Niederaussem became operational in early 2020.

the fact that we have been working intensively for years now

Every day, we produce up to 50 kilogrammes of DME from

on ways to further reduce mercury emissions cost-effectively

carbon dioxide and hydrogen, which is used as a fuel for

very much works in our favour. We have specifically been

the production of peak-load electricity in a stationary

giving much consideration to a process which makes use of

diesel generator at Niederaussem. ALIGN-CCUS is another

furnace coke extracted from lignite. We are already using

example of how generation shortages from renewable
energy could be cushioned moving forward. All CO2
conversion projects serve to further our understanding of

this substance to extract mercury at our refining plants,

where we process lignite into briquettes or lignite dust for

the cement and lime industry. Tests carried out in 2018 at a

new technologies and products whilst gaining experience

pilot plant at the Niederaussem Innovation Centre

with new partners, thus laying the groundwork for the next

demonstrated that furnace coke can also be used to reduce

step: the construction and operation of a demonstration plant

emissions from power plants. In Niederaussem, we injected

where the processes can be tested on an industrial scale.

furnace coke into the smokestack of a lignite block. The

GET H2: blueprint for entry into the hydrogen business.
As demonstrated by the MefCO2 and ALIGN-CCUS projects,
hydrogen plays a key role in using carbon dioxide. However,

its importance for the energy industry goes far beyond this
application. After all, hydrogen (H2) can be used in a myriad
of ways, for instance to generate electricity and heat, as a

result showed that the mercury attached itself to the fine

furnace coke particles so that both materials could be

extracted by the electrostatic precipitator and subsequently

disposed of. The experiments led to a significant reduction

in mercury emissions, which encouraged us to apply the

method on a large scale and under real life conditions. To

this end, we built a demonstration plant, which is also

fuel to power cars, or as a commodity for industry. Another

connected to one of the power station units at Niederaussem.

advantage of hydrogen is that it can be obtained by

During an extensive series of tests between February and

electrolysis from electricity and water and is therefore a

July 2019, the method proved its value and effectiveness

candidate for renewable energy storage. Producing,

once again. We now plan to install it in further lignite units,

transporting and using hydrogen take centre stage in the
GET H2 initiative, for which we joined forces with numerous
industrial and research partners. The objective of GET H2 is
to build a nationwide hydrogen infrastructure in Germany.

This initiative will kick off with a project at our power plant

which would otherwise not be able to comply with the

impending new limitations. In the meantime, we are using

the demonstration plant to explore ways in which we can

further perfect the technology.

site in Lingen, where we intend to produce green hydrogen

Detailed information on these projects and our other R & D

for industrial processes on a large scale. Furthermore, there

ventures can be found at www.rwe.com/innovation and at

are plans to repurpose an existing gas pipeline from Lingen

www.innogy.com/innovation > Renewable Energy.

to the Ruhr region to transport hydrogen. This undertaking

is still in the planning stage and is subject to economic

feasibility.

RWE Annual Report 2019Combined review of operations > Economic environment

1.3 Economic environment

World economic growth slowed in 2019. Initial estimates have German GDP posting a marginal rise, with industrial

output on the decline, resulting in a drop in electricity consumption. Following a multi-year upturn, prices of thermal

coal and natural gas dropped on international markets. Despite this, average electricity forward prices in Germany
and the Netherlands were higher than in 2018. A major factor was the rise in the price of CO2 emission allowances
witnessed since 2017. This was also a major reason why the margins of low-emission gas power plants improved,

whereas those of hard coal-fired power stations worsened.

Eurozone posts only slight growth. The economy

Decrease in demand for electricity in Germany. Electricity

experienced a tangible cool-down in the past fiscal year.

consumption trends largely depend on the economic cycle,

Based on preliminary estimates, global economic output

which weakened significantly in our European markets.

rose by 2.5 %, which was less than in 2018 (3.3 %). The

Furthermore, less electricity was needed for heating due to

Eurozone may well have posted just over 1 % economic

the weather. Preliminary data from the German Association

growth, with Germany recording a gain of merely 0.6 %.

of Energy and Water Industries (BDEW) indicate that

Due to its dependency on exports, the country, which is the

electricity consumption in Germany was down 2 % in 2019.

largest economy in the currency area, is significantly affected

Expert estimates for the UK have the country recording a

by international trade conflicts. By contrast, the

decline of a similar order, whereas there was apparently no

Netherlands, recording an estimated increase of 1.7 %,

major change versus 2018 in the Netherlands. Power usage

occupied one of the top spots among Eurozone countries.

in the USA is likely to have dropped by more than 2 %,

In the United Kingdom, our most important market outside

despite the country’s robust economy. This was in part

of the currency union, the economy displayed robust

because the summer temperatures were below the unusually

development, despite the UK’s exit from the EU with effect

high level recorded in the preceding year, resulting in a

from 31 January 2020. Based on the latest figures, the

commensurate decline in electricity consumption for air

country’s GDP rose by more than 1 %. Since the acquisition

conditioning.

of E.ON’s renewables business, the USA has also become

one of RWE’s core markets. Economic research institutes

estimate that the US economy expanded by more than 2 %.

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

2018 forward

2019 forward

2020 forward

2017

2018

2019

Source: Bloomberg.

Mild weather causes natural gas spot prices to collapse.

Declining demand curbs hard coal prices. Spot prices

The utilisation and earnings of our power plants are heavily

paid for hard coal used in power plants (steam coal) also

dependent on how fuel and emission allowance prices

declined substantially. Deliveries to the ARA ports (ARA =

develop. Natural gas, our most important tradable energy

Amsterdam, Rotterdam, Antwerp) including freight and

source, was characterised by extremely low spot prices in

insurance were settled for an average of US$61/metric ton

2019. Quotations at the Title Transfer Facility (TTF) – the

(€54), US$31 less than in the previous year. The background

Continental European trading hub – averaged €14/MWh,

to this is that little use was made of coal-fired power

€9 less than a year before. Unusually low demand for heating

stations in Europe, leading to a corresponding reduction of

gas caused by the mild 2018/2019 winter played an

steam coal consumption. Furthermore, import restrictions

important role. Moreover, the European market was flooded

in China and the reactivation of Japanese nuclear power

with liquefied natural gas (LNG), putting even more pressure

plants curtailed demand from Asia. Quotations on the

on prices. Increased gas consumption due to the improved

forward market also dropped owing to the aforementioned

capacity utilisation of gas-fired power stations was unable

factors. In 2019, the one-year forward (API 2 Index) cost an

to offset this. Gas forward prices also dropped, although not

average of US$70/metric ton (€62), US$17 less than in the

to the same extent. In the year under review, the 2020 TTF

preceding year.

forward cost €18/MWh compared to the €21/MWh paid

for the 2019 forward in 2018.

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

2018 forward

2019 forward

2020 forward

100

2017

2018

2019

Source: RWE Supply & Trading.

RWE Annual Report 2019
Combined review of operations > Economic environment

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

December 2018 forward

December 2019 forward

December 2020 forward

2017

2018

2019

Source: RWE Supply & Trading.

Reform of European Emissions Trading System causes
rapid increase in CO2 certificate prices. An important
cost factor of electricity generation from fossil fuel-fired
power stations is the procurement of CO2 emission
allowances, which have increased substantially in price

the following year. The considerable rise in price is due to

the fundamental reform of the EU Emissions Trading

System. The new regulations, some of which have started

having an impact at the beginning of 2019, should result in

a gradual reduction of the oversupply of emission

since the middle of 2017. An EU Allowance (EUA), which

allowances on the market. Many participants in emissions

confers the right to emit one metric ton of carbon dioxide,

trading therefore expect a shortage of available EUAs and

cost €25 on average, €9 more than in 2018. These figures

made early purchases. This resulted in a massive surge in

relate to contracts for delivery that mature in December of

prices even before the reform package was implemented.

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

2018 forward

2019 forward

2020 forward

2017

2018

2019

Germany

Netherlands

United Kingdom

Source: RWE Supply & Trading.

Significant decline in electricity spot prices. The drop in

the price of coal and gas weighed on quotations on

Rise in price of CO2 emission allowances puts coal
power plant margins under pressure. Power plant

wholesale electricity markets, whereas the rise in the price

margins are calculated by taking the price per unit of

of emission allowances had a counteracting effect. Base-

load power traded for an average of €38/MWh on the

German spot market, €6 less than in the previous year. Spot

electricity generated and deducting the costs of the fuel
and CO2 emission allowances required for said electricity
generation. As a rule, we procure the fuel for our hard coal

prices declined by £14 to £43/MWh (€49) in the UK and by

and gas-fired power stations in liquid markets at prevailing

€12 to €41/MWh in the Netherlands. The situation on

conditions. The generation costs of the plants can therefore

forward markets was as follows: the German 2020

fluctuate considerably. In the case of gas-fired power

base-load forward cost an average of €48/MWh, €4 more

stations, margins are known as clean spark spreads and

than what was paid for the 2019 forward in the previous

when it comes to hard coal-fired plants, they are referred to

year. The Netherlands recorded a slight increase in the price

as clean dark spreads.

of the one-year forward of €1 to €50/MWh, with the UK

recording a decrease of £2 to £52/MWh (€59).

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

2018 forward

2019 forward

2020 forward

– 5

– 10

2017

2018

2019

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.

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

2018 forward

2019 forward

2020 forward

– 5

– 10

2017

2018

2019

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.

RWE Annual Report 2019Combined review of operations > Economic environment

The graphs on page 40 illustrate the development of the

Wind conditions better than in 2018. The availability

aforementioned spreads in our main generation markets

and profitability of plants that produce electricity from

since 2017, based on the respective year-forward

renewable energy sources greatly depend on weather

transactions. In 2019, clean spark spreads in Germany and

conditions. This is why wind speeds are extremely important

the Netherlands were above the previous year’s average,

to us. In 2019, they occasionally exceeded the long-term

whereas they remained slightly below it in the UK. The UK

average at our production sites in Poland, Spain and Italy,

and the Netherlands saw significant declines in clean dark

whereas they remained below it at most of our UK and some

spreads versus 2018, with Germany recording a slight

of our US locations. Wind speeds in the other regions in

increase.

which we are active were largely normal. Compared to 2018,

by and large, wind speeds measured at our locations in

Fuel costs for lignite-fired and nuclear power stations are

2019 were similar or higher. Only in parts of the USA and

generally more stable as we obtain lignite from our own

Sweden was a decline recorded. The utilisation of run-of-river

opencast mines and source uranium via long-term contracts

power stations strongly depends on precipitation and melt

at firm conditions. The rise in German wholesale electricity

water volumes. In Germany, where most of our run-of-river

prices caused realisable nuclear energy margins to improve.

power plants are located, these volumes were slightly below

As regards lignite-fired power stations, the positive price

the long-term average. However, they were marginally

effect was contrasted by substantial additional costs
resulting from more expensive CO2 emission allowances.

higher than in 2018.

RWE: slightly higher margins of base-load forward

contracts for 2019. 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, our generation margins in

the year under review strongly depended on the conditions

at which we concluded forward contracts for 2019 in earlier

years. For electricity from lignite and nuclear power stations,

we realised marginally higher prices with such transactions.

In sum, this led to slightly better margins than with the

transactions for 2018. Forward sales of electricity from gas

and hard coal-fired power stations are typically concluded

with less lead time. Therefore, the electricity prices realised

for 2019 were higher, but there were also cost increases

due to the notable fuel price hike which had an affect until

2018. In addition, the rise in the price of emission

allowances also left its mark. The margins on electricity

sales for 2019 of our gas-fired power stations in Germany,

the UK and the Netherlands improved year on year despite

these burdens. By contrast, our hard coal-fired power plants

recorded declining margins in all the markets mentioned.

1.4 Political environment

Climate protection remains at the top of the political agenda. The European Commission presented the ‘Green Deal’,

a package of measures aiming for a significant reduction of greenhouse gas emissions across all sectors. The

ultimate goal is to make the EU climate neutral by 2050. Policymakers in our home market, Germany, are also spurring

climate protection. In January 2020, the federal government submitted a draft law on the exit from coal, which

envisages gradually phasing out electricity generation from coal by 2038. The draft requires our lignite power stations

and opencast mines to be closed ahead of schedule. The compensation that we would receive in exchange would

clearly fall short of offsetting the actual burden. However, we welcome the fact that the framework conditions for our

power plants will become more reliable and that the necessary redundancies will be mitigated in a socially

acceptable manner.

EU Commission presents ‘Green Deal’: Europe to become

participate in such mechanisms to a very limited degree.

carbon neutral by 2050. The new European Commission

under President Ursula von der Leyen put forward its

‘European Green Deal’ on 11 December 2019. The

One prerequisite for this is that they do not emit more than
350 kg of CO2 per kilowatt of installed capacity per year.
Consequently, coal-fired power plants can no longer

programme contains a list of measures to lower greenhouse

participate in a general capacity market with full utilisation,

gas emissions across various sectors. The Commission is

but can participate in reserve schemes which only involve a

pursuing two goals with the Green Deal: the first sees

low number of operating hours. The emission caps for new

Europe becoming carbon neutral by 2050. The second goal

power stations entered into effect on 1 January 2020.

focuses on 2030, the deadline by which the EU should have

Transitional regulations apply to existing generation

decreased its greenhouse gas emissions by 50–55 %

facilities until the middle of 2025. Existing capacity

compared to 1990. Previously, the aim was to reduce

agreements will remain unaffected by the threshold values.

emissions by 40 %. The new targets are set to be achieved

through far-reaching reforms to industry, energy supply,

German coal phaseout plan: RWE to shoulder the lion’s

transport and agriculture. The EU Commission is planning

share of initial burdens in exchange for €2.6 billion in

comprehensive legislative changes and a number of

compensation. In Germany, our main electricity generation

different programmes in order to provide for the

market, the stage is now set for an early phaseout of

accelerated expansion of renewable energy, a new strategy

coal-fired power production. In January 2019, the Growth,

for the industrial sector, import barriers for goods produced

Structural Change and Employment Commission (Structural

using processes that are harmful to the climate as well as a

Change Commission), which was appointed by the federal

strategy for clean transport, among other things. Regions

government, made a concrete proposal to achieve climate

which are most affected by these measures will be

protection goals within the energy sector. The panel, made

supported by way of a ‘Just Transition Fund’. The EU wants to

up of representatives from industry, trade unions, science,

enshrine the goal of becoming carbon neutral by 2050 in

associations, citizen groups and environmental

law. This will be followed by the legislative process to

organisations, called for a coal phaseout by no later than

increase the target for 2030, which will most likely begin this

2038. In addition, the Commission presented a roadmap

summer. Depending on the outcome, the rules of the

for plant closures and voted in favour of power plant

European Emissions Trading System would then have to be

operators being allocated appropriate compensation.

revised and the number of certificates placed on the market

The amount of compensation is either to be determined by

would have to be reduced.

auction (hard coal) or via negotiations (lignite). Redundancies

for operational reasons as well as inappropriate social and

EU limits participation of coal-fired power plants in

economic disadvantages to employees are to be avoided as

capacity mechanisms. The European Parliament and the

much as possible. The Commission also requested that the

Council of Ministers passed a reform of EU electricity

Hambach Forest be preserved. We published a detailed

market legislation in March and May 2019, respectively.

overview of the panel’s recommendations on page 33 of

Some of the new rules took effect from 1 January 2020

our 2018 Annual Report.

(Electricity Market Regulation). Other provisions (Electricity

Market Directive) will have to be transposed into national

The suggestions of the Structural Change Commission were

law by the member states by the end of 2020. One core

predominantly well-received by politicians and other

component of the reform is guidelines on designing

stakeholders. After they were published, the government,

capacity market mechanisms. The new Electricity Market
Regulation envisages that power stations with CO2
emissions of more than 550 g/kWh will only be allowed to

the affected federal states and the power plant and

opencast mine operators started negotiating the

implementation of the recommendations in the lignite

RWE Annual Report 2019Combined review of operations > Political environment

industry. These talks led to a consensus in early 2020. On

industry’s need for the Garzweiler opencast mine to remain

this basis, the Federal Cabinet published a draft Coal

operational should be reflected in the Coal Phaseout Act.

Phaseout Act on 29 January 2020, thus launching the

parliamentary procedure. Once it has been completed, the

The lignite phaseout will place a considerable financial

government will be authorised to conclude public-law

burden on our company. The draft law envisages RWE

contracts with operators of lignite assets which protect their

receiving €2.6 billion compensation over the next 15 years.

legitimate interests.

We recognised the entire amount as an asset in the 2019

consolidated financial statements. The federal government

According to the draft law, RWE will shoulder the lion’s share

is of the opinion that this satisfies all our claims. However,

of the initial burdens of the lignite phaseout. It envisages an

the damage we will actually incur will clearly exceed

additional 3 GW of lignite-fired generation capacity being

€2.6 billion. A large part of the expected burden is reflected

taken off the market by 2022, with around 2.8 GW of this

in the consolidated financial statements. We have

total figure being allocable to us. According to the draft law,

transferred €2,022 million to our mining provisions to cover

the first 300 MW block will be decommissioned in the

the additional operating costs and the earlier recultivation

Rhenish lignite mining area as early as the end of 2020,

(including interest effects). Impairments of our lignite power

followed closely by three additional 300 MW units in the

stations and opencast mines have resulted in burdens totalling

following year, and another 300 MW facility as well as two

€527 million. Moreover, we have set aside €347 million for

600 MW blocks in 2022. The power stations in Neurath and

socially acceptable redundancy schemes. Future outlays

Niederaussem will be most heavily affected by these plans,

ensuring the continued operation of our power plants and

along with Weisweiler, albeit to a lesser extent. We will also

opencast mines under these new conditions are only

be ceasing production of lignite briquettes at the Frechen

partially considered in our consolidated financial

site, thus decommissioning 120 MW of electricty generation

statements.

capacity.

Intended recipients of state compensation in addition to

We will gradually reduce our lignite-fired generation

RWE include the affected workforce. According to current

capacity even further until the end of the decade, by which

figures, over 3,000 of the 10,000 jobs in our lignite business

time it will have dropped considerably. In 2025, a 300 MW

will be cut in the short term; by 2030, this figure could increase

block will be taken off the grid in Weisweiler. The two on-site

to around 6,000. Among other things, the proposed

600 MW units will then follow suit in 2028 and 2029,

legislation provides for an adjustment allowance and

respectively. The Inden opencast mine, which exclusively

compensation for any disadvantages concerning statutory

supplies Weisweiler with coal, will then also be

pensions. It is envisaged that these be paid by the state.

decommissioned. One of the two remaining 600 MW blocks

is set to be shut down at the end of 2029, with the other

The draft legislation also regulates the details of the hard

being placed on security standby for four years starting on

coal phaseout. The federal government is of the opinion

1 January 2030. From 2030 onwards, this will only leave

that auctions should decide which hard coal capacities

our three most modern lignite units at 1,000 MW apiece on

are taken off the grid and how much their operators receive

the market. They will most likely remain operational until the

in compensation. The draft law envisages annual tender

end of 2038.

procedures from 2020 to 2026. However, operator bids

will be subject to specific caps which are set to be lowered

The closures will have considerable consequences for the

from €165,000/MW to €49,000/MW during the

opencast mines. More than half of the lignite reserves, i. e.

aforementioned period. Thereafter, the proposed legislation

1.1 billion metric tons, which had been approved for mining,

provides for closures without compensation. If the tenders

will now remain underground. In addition, at the behest of

do not result in enough capacity being decommissioned,

the Structural Change Commission and politicians,

starting in 2024, power plant operators could be ordered to

Hambach Forest will be preserved. Of our three opencast

shut down stations without compensation. Company

mines in the Rhenish lignite mining region – Inden, Hambach

representatives, trade unions and numerous federal states

and Garzweiler – only the latter will remain operational from

have levelled criticism at this draft legislation and demand

2030 onwards to supply the remaining assets with fuel. This

that it be amended, in particular with regard to combined

will mean a complete overhaul of our opencast mining

heat and power generation.

operations and recultivation activities, especially in

Hambach. We will initiate the necessary steps as agreed with

The legislative process for the coal phaseout is expected to

the North Rhine-Westphalian state government. The energy

last until mid-2020. Furthermore, we will be concluding a

public-law contract with the German government on the

energy. Measures in the energy sector involve the

basis of the Act, which will protect our interests with regard

accelerated expansion of offshore wind power: the federal

to the regulations made. Thereafter, the compensation has

government is now aiming for a total capacity of 20 GW

to be approved by the European Commission under state

by 2030 instead of the 15 GW targeted originally. The

aid law.

Programme envisages that municipalities in which wind

turbines are built receive additional financial benefits. In

German government seeks to provide coal regions with

addition, there are plans to abolish the subsidy cap on new

up to €40 billion in subsidies. In August 2019, the Federal

photovoltaic installations. Based on the current rules, such

Cabinet adopted a draft law to strengthen the coal regions

assets will stop receiving feed-in payments once the country

structurally. However, the Lower House and the Upper House

has built 52 GW in solar capacity.

postponed their consultation in order to discuss the planned

legislation in conjunction with the Coal Phaseout Act. The

Netherlands wants to phase out coal-fired electricity

draft of the Structural Reinforcement Act envisages the

generation by 2030. In 2019, the Dutch Lower and Upper

federal government providing up to €14 billion in financial

House passed a law envisaging the end of the country’s

support to the lignite mining regions for investments of

electricity production from coal in this decade. According to

particular importance through to 2038, with 37 % going to

the law, by 2025 at the latest, coal may no longer be used

the Rhenish coal mining region. The funds can be used by

as fuel in power stations built in the 1990s. For plants

the states, e. g. to invest in industrial infrastructure and

constructed later than this, the ban would come into effect

public transport. The government intends to flank this by

in 2030. Compensation payments for the power utilities

supporting the regions through its own measures. A total of

affected are not foreseen in the law. At present, there are

€26 billion has been budgeted for this and earmarked for

five hard coal-fired power stations still operating in the

measures such as the expansion of the rail and road networks

Netherlands. Two of these belong to us: Amer 9 and

and the creation of research hubs.

Eemshaven, which have a net installed capacity of 631 MW

and 1,554 MW. They would have to stop firing coal at the

German government presents Climate Protection

end of 2024 and 2029 according to the law. After that,

Programme 2030 and adopts Climate Protection Act.

these stations could only be operated with other fuels.

October saw the Federal Cabinet adopt the Climate

After taking the first retrofitting measures, we have started

Protection Programme 2030. In the same month, it passed

co-firing with biomass in both plants. We are receiving

the draft of a nationwide climate protection law, which was

subsidies for this to finance the capital expenditure and

adopted by the Lower House and Upper House in December

additional costs incurred to purchase fuel. Conversion to

following several amendments. The objective of the Climate

100 % biomass-firing would involve significant additional

Protection Programme and the Climate Protection Act is to

expenses. However, the government refuses to provide

ensure that the national emission reduction goals for 2030

further subsidies. We believe that our ownership rights are

are achieved. These targets will be enshrined in law for the

being violated by the Dutch coal phaseout due to the lack

first time in the Climate Protection Act. The Climate

of compensation. Therefore, we are considering taking

Protection Programme 2030 describes the tools and

legal action.

measures with which these goals should be achieved. For
example, the government plans to introduce CO2 pricing in
sectors which are not covered by the European Emissions

Trading System (e. g. transportation and heating). This will

first be introduced at the national level starting in 2021.

Going forward, the government wants to push for the

introduction of an EU-wide, cross-sector emissions trading

scheme with a moderate price floor. The idea is to offset
CO2 surcharges paid by consumers on petrol, diesel and
other combustibles by providing relief in other areas through

measures such as the increase in commuter allowances,

which will come into effect in 2021. The Climate Protection

Programme contains a number of measures in the areas of

building, transportation, agriculture, forestry, industry and

RWE Annual Report 2019
Combined review of operations > Major events

1.5 Major events

The past fiscal year took us a major step closer to the ‘new’ RWE. In mid-September, the EU gave us the go-ahead for

our asset swap with E.ON. Major parts of the transaction were executed soon thereafter. Further highlights in 2019

were the tender won for the subsidisation of the Sofia offshore wind project in the UK and the European Commission’s

reapproval of the British capacity market. In this chapter, we present the major events that occurred in 2019 and the

beginning of 2020. We focus on events that have not been commented on in detail elsewhere in this report.

Events in the fiscal year

Asset swap with E.ON largely executed: RWE transfers

provider and infrastructure investor Macquarie, MIRA,

stake in innogy and receives renewables business from

exercised its right of first refusal. We therefore transferred

E.ON. In September 2019, RWE and E.ON completed major

the shares in IGH to MIRA and not to E.ON. This sale was

parts of the asset swap agreed in March 2018. The

completed with effect from 30 September. The price

prerequisite for this was the final approval of the transaction

totalled about €1.8 billion and therefore matched the

by the European Commission, which was granted on

conditions at which we had purchased the stake from

17 September. E.ON received our 76.8 % interest in innogy

innogy. Therefore, on the whole, the IGH transaction was

on the following day and conducted a capital increase in

neutral for us in financial terms.

exchange for contributions in kind immediately thereafter.

The approximately 440 million newly created shares were

Also as part of the asset swap, in August 2019, RWE

issued to RWE. This gave us a 16.7 % stake in E.ON, but by

acquired innogy’s 49 % stake in VSE, the energy utility based

late September/early October we reduced it to 15.0 % by

in Košice, Slovakia. We plan to transfer the shareholding to

selling off shares. In addition, as of the end of 30 September,

E.ON at the conditions at which we acquired it. The purchase

E.ON transferred its renewable energy activities and

price payable by E.ON was considered when netting the

minority interests in the RWE nuclear power plants

payment claims from the asset swap in September. The

Gundremmingen (25 %) and Emsland (12.5 %) from its

stake in VSE is still included in our Group figures: we state it

subsidiary PreussenElektra to us. We paid E.ON €1.5 billion as

as a ‘discontinued operation’.

financial consideration also at the end of September. The

transaction will be fully implemented once E.ON transfers

When settling the financial receivables and liabilities from

back to us parts of the innogy portfolio which are already

the asset swap, a loan was considered, which we had

assigned to our operations commercially and are

granted innogy in the run-up to the IPO in October 2016.

recognised in our Group figures: the renewable energy

It amounted to €700 million and would have come due in

business, the German and Czech gas storage facilities, and

October 2020. By netting it against other payment claims,

a 37.9 % stake in the Austrian energy utility Kelag. This transfer

E.ON refunded us the principal with accrued interest early.

shall take place as soon as possible in the current year.

The asset swap also envisaged RWE acquiring the majority

financial position, net worth and earnings in the past fiscal

stake in the Czech gas network operator innogy Grid

year, which we present on pages 51 et seqq. In addition, the

Holding (IGH) from innogy and transferring it to E.ON

acquisition of E.ON’s renewable energy business changed

thereafter. We acquired the 50.04 % shareholding in

the structure of our financial reporting. Details on this can

The asset swap with E.ON had substantial effects on our

February 2019. However, the co-owner of IGH, the

be found on pages 49 et seq.

consortium managed by the Australian financial service

European Commission gives go-ahead to reinstate

200 kilometres from the English coast has very good wind

British capacity market. After a thorough investigation, in

conditions and moderate water depths. All of the approvals

October 2019 the European Commission reapproved the

required for the wind farm have been obtained and the final

British capacity market. This established the prerequisite for

investment decision is expected to be reached in 2020.

payments to be resumed following a lengthy suspension

Based on current planning, the first wind turbines could be

and for postponed capacity auctions to be held. The

commissioned in 2024/2025. The wind farm would then be

Commission holds the view that the capacity market rules

fully operational in 2026.

comply with EU state aid regulations. It had originally

reached this conclusion in July 2014, but the Court of the

In the United Kingdom, renewable energy has been

European Union found that the review conducted at the

supported via contracts for difference (CfDs) since April 2015.

time had not been extensive enough. Therefore, the judges

If the price realised by the plant operators on the wholesale

had declared the first approval invalid in November 2018.

market is below the feed-in tariff, they are paid the

Thereafter, the British capacity market was suspended,

difference. If it exceeds the tariff, the operators are obliged

with the participating power generators not receiving any

to make a payment. Projects receiving CfDs are selected as

payments. This caused RWE to temporarily forego

follows: if the budget set aside for a certain generation

contractually secured capacity payments of around

technology is big enough, all applicants receive a CfD. If it is

€50 million for 2018 and about €180 million for 2019.

too small, a tender process decides which bidders win a

We were paid these amounts retrospectively in January

contract. The September 2019 auction was the third since

2020 and recognised them in our earnings for the 2019

the introduction of the CfD scheme in the United Kingdom.

fiscal year.

Entry into the Polish offshore wind business. In the future,

In mid-2019, i. e. whilst the capacity market was still on

we will also invest in Polish offshore wind farms. Our subsidiary

hold, British grid operator National Grid held a capacity

RWE Renewables International purchased a project pipeline

auction for the delivery period from 1 October 2019 to

with a total capacity of over 1.5 GW from several private

30 September 2020. Power plants with a total capacity of

owners and developers. The four projects are set to be

3.6 GW qualified for a very low payment of £0.77/kW. An

implemented on the Słupsk Sandbank in the Baltic Sea. We

invitation to tender for the same delivery period had already

already operate several onshore wind farms in Poland.

taken place at the end of 2015. At this auction, stations with

a combined 46.4 GW, including 8.0 GW belonging to RWE,

Neurath C lignite unit placed on security standby. At

won a contract for a payment of £18/kW. The second

the end of September, we took the 300 MW Unit C of the

auction was held to close remaining capacity gaps. Two

Neurath lignite-fired power plant offline, placing it on

small RWE power plants submitted bids, but will not receive

legally mandated security standby. This was mainly for

any payments.

environmental reasons. The German Electricity Market Act

obliged the country’s energy sector to take a total of eight

Large-scale project in the UK North Sea: innogy secures

lignite units with a combined capacity of 2.7 GW off the

contract for Sofia wind farm. Our offshore wind growth

system between 2016 and 2019. However, these blocks

prospects continued to improve in 2019. innogy was

are to serve as the last resort to ensure security of supply for

awarded a remuneration contract for the Sofia project in an

four years each, after which they will be shut down for good.

auction in September. This venture involves building wind

RWE is participating in the lignite security standby scheme

turbines in the UK North Sea with a total capacity of 1.4 GW.

with five 300 MW units. By the end of September 2017, we

The investment volume is an estimated £3 billion, including

had already shut down units P and Q of the Frimmersdorf

the grid connection. The state will guarantee £39.65/MWh

power plant, with Niederaussem E and F following suit a

plus adjustments for inflation. The contract period extends

year later.

over 15 years. Sofia’s location on Dogger Bank nearly

RWE Annual Report 2019Combined review of operations > Major events

Decision on Hambach Forest: Cologne Administrative

In July 2019, we decided to decommission the Aberthaw B

Court rejects lawsuit by BUND. On 12 March 2019, the

hard coal-fired power plant in Wales early. The station,

Cologne Administrative Court ruled that Hambach Forest is

which has a net installed capacity of 1,560 MW, was taken

not a potential special area of conservation according to

offline in December. Its obligations from the British capacity

the EU Directive on the conservation of natural habitats

market through to the end of September 2021 were

and of wild fauna and flora. Consequently, the lawsuit filed

transferred to third parties with a small proportion being

by the environmental activist group Bund für Umwelt und

transferred to other units within RWE’s power plant fleet.

Naturschutz Deutschland e. V. (BUND) was rejected. In the

Aberthaw B was commissioned in 1971 and has thus

opinion of the judges, the approval of the 2018–2020 main

contributed to security of supply in the United Kingdom for

operational plan for the Hambach opencast mine by the

nearly half a century. The closure will bring RWE’s electricity

Arnsberg District Council was legal. This plan includes the

generation from coal in the United Kingdom to an end.

clearance of Hambach Forest. However, its admissibility

must be confirmed by the Münster Higher Administrative

RWE sells Belgian CHP station. At the end of February

Court, which in October 2018 had ordered that clearance

2019, we sold the Inesco CHP station in Belgium to the UK

be suspended. Meanwhile, it looks likely that Hambach Forest

chemicals group INEOS. This gas-fired power plant is

will be preserved. As explained on pages 42 et seqq., we

located in a chemical park operated by INEOS near Antwerp

agreed with the German government on an accelerated

and has a generation capacity of 133 MW. In addition to

phaseout of electricity generation from lignite and an early

electricity, it also supplies steam and demineralised water to

closure of the Hambach opencast mine.

the companies in the chemical park. One of the reasons for

our decision to sell the station was its tight integration in the

RWE ends hard coal firing in Bergkamen, Werne and

business activities of INEOS.

Aberthaw. Last year, we discontinued a number of hard

coal operations. Firstly, we sold our 51 % shareholding in the

German government takes over interim storage for highly

Bergkamen power station to Essen-based energy utility

radioactive waste from RWE. As of 1 January 2019, our

STEAG. The buyer previously owned 49 % of the plant and

interim storage facilities for highly radioactive waste on the

exercised a contractual purchase option. The transaction

sites of our Emsland, Biblis and Gundremmingen nuclear

entered into effect on 1 January 2019. The Bergkamen

power plants were transferred to BGZ, the state-owned

hard coal-fired power station has been in operation since

company responsible for interim storage. A year later, with

1981, with a net capacity of 720 MW. RWE was responsible

effect from 1 January 2020, BGZ took over another two

for the commercial management of this plant, while STEAG

interim storage facilities for low- and intermediate-level

handled technical operations. The disposal of the stake

radioactive waste in Biblis. The legal basis for this is the law

goes hand in hand with the termination of a contract that

on the reassignment of responsibility for nuclear waste

obliged us to purchase electricity produced by the station.

disposal, which was passed at the end of 2016, pursuant to

which the government took charge of processing and

At the end of March 2019, we decommissioned the hard

financing interim and final nuclear waste storage. In exchange,

coal-fired part of the combined Unit K at the Gersteinwerk

German power plant operators gave the government

station in Werne (Westphalia). The shutdown was motivated

€24.1 billion in 2017, which was paid into a public-law fund

by upcoming maintenance work, which would not have been

for financing nuclear waste disposal. Responsibility for shutting

cost-effective. Unit K consists of a topping gas turbine (K1)

down and safely dismantling the stations remains with the

with a net capacity of 112 MW and the (now decommissioned)

companies. They are also accountable for packing the

steam turbine (K2), which ran on steam generated by firing

radioactive waste properly before it is handed over to BGZ.

hard coal and had a capacity of 620 MW. Electricity is still

being produced at Gersteinwerk, albeit only from gas. The

station’s current available capacity amounts to 965 MW.

Events after the close of the fiscal year

German cabinet submits draft coal phaseout law. In late

British capacity market auction for 2022/2023: RWE

January 2020, the German cabinet adopted a draft law on

secures payments for 6.5 GW in generation capacity.

the reduction and end of electricity generation from coal. In

Early 2020 saw several auctions for the British capacity

this document, the government specifies how it intends to

market. The first round of bids, which took place at the end

implement the recommendations of the Growth, Structural

of January, related to the delivery period from 1 October 2022

Change and Employment Commission regarding the

to 30 September 2023. With the exception of some small

German coal phaseout. As proposed by the Commission,

generation assets, all RWE power stations represented in

it is envisaged that Germany gradually stop generating

the auction qualified for a capacity payment. Together, they

electricity from coal by 2038. The draft law contains a

have a secured capacity of 6.5 GW. However, at £6.44/kW

timeline for this. There is also a roadmap for shutting down

(before being adjusted for inflation), the capacity payment

lignite-fired power stations, which the government agreed

established in the auction lagged behind the market’s

with the affected states and energy companies beforehand.

expectations.

We have been awarded €2.6 billion in compensation for the

early closure of power plants and opencast mines in the

At the beginning of February, a second auction was held,

Rhenish lignite mining region. However, we estimate that our

which related to the delivery period from 1 October 2020 to

actual financial burdens will be much higher. The draft law

30 September 2021. An earlier auction for this delivery

stipulates that hard coal power plants participate in calls for

period had already taken place in December 2016, at which

tenders in which their operators can apply for compensation

RWE stations with a total capacity of 8.0 GW (including

for early closures of their stations. Detailed information on

Aberthaw) qualified for a payment of £22.50/kW. Contracts

this topic can be found on pages 42 et seqq.

for an additional 1.0 GW in generation capacity for a

payment of £1.00/kW were won at the recent auction. RWE

RWE acquires state-of-the-art gas-fired power plant in

entered a small asset, which did not submit a successful bid.

the east of England. We cemented our position as a leading

generator of electricity from gas in the UK. In mid-February

The British government has scheduled a further auction for

2020, we bought the King’s Lynn gas-fired power station in

early March 2020, in order to secure the generation

Norfolk (eastern England) from the British energy utility

capacity needed for the period from 1 October 2023 to

Centrica for £101 million. The station has a net installed

30 September 2024. The results were not known when the

capacity of 382 MW and boasts a high efficiency of 57 %.

review of operations was prepared.

Its operating mode can be adapted flexibly in response to

demand. A remuneration contract secures fixed capacity

payments for King’s Lynn from October 2020 to

September 2035. Recently, the power plant was modernised

extensively and equipped with a new gas turbine.

RWE Annual Report 2019Combined review of operations > Notes on reporting

1.6 Notes on reporting

We executed major parts of our asset swap with E.ON in September 2019. This affected both our key financials as

well as our financial reporting. The renewable energy business we received from E.ON has been included in our

consolidated financial statements as a new segment. Therefore, the presentation of our business performance in

2019 is based on a Group structure with five segments, which we describe in detail in this chapter.

Effects of the asset swap with E.ON on our financial

Fiscal 2019: Group structure featuring five segments.

reporting. In September 2019, we executed a large part of

In our 2019 financial reporting, we divide the RWE Group

our asset swap with E.ON, on which we provide detailed

into the following five segments: (1) Lignite & Nuclear,

information on page 45. We present how the transaction is

(2) European Power, (3) Supply & Trading, (4) innogy –

reflected in our financial reporting on the past fiscal year

continuing operations, and (5) Operations acquired from

below:

E.ON. The individual segments are as follows:

• innogy’s grid and retail businesses remaining with E.ON

• Lignite & Nuclear: This segment encompasses our

for good and the 50.04 % stake in the Czech gas network

German electricity generation from lignite and nuclear

operator IGH sold to the MIRA consortium were

power as well as our lignite production in the Rhineland.

deconsolidated as of 18 and 30 September, respectively.

Operating responsibility for these activities lies with RWE

These activities were recognised in the items

Power. The segment also includes our investments in the

‘discontinued operations’ in the income statement and

Dutch nuclear power plant operator EPZ (30 %) and the

‘assets/liabilities held for sale’ on the balance sheet. As

German company URANIT (50 %), which holds a 33 %

such, our figures also include the 49 % interest in the

stake in Urenco, a uranium enrichment specialist.

Slovak energy utility VSE, which we intend to transfer to E.ON.

• European Power: This is where we report on our electricity

• The innogy operations we are continuing – encompassing

production from gas, hard coal and biomass, which

the renewable energy business, the German and Czech

focuses on Germany, the United Kingdom and the Benelux

gas storage facilities and the 37.9 % shareholding in the

region. The segment also includes our 70 % stake in the

Austrian energy utility Kelag – legally belong to E.ON for

Turkish gas-fired power station Denizli, some hydroelectric

the time being, but are assigned to us in our financial

power plants in Germany and Luxembourg, and RWE

reporting. Therefore, they continue to contribute to RWE’s

Technology International, which specialises in project

earnings, cash flows and debt. We will receive these

management and engineering services. All of these

activities from E.ON in 2020 as soon as the formal

activities are overseen by RWE Generation.

requirements for this have been met.

• Supply & Trading: This division encompasses the

• We present the renewable energy business received from

operations of RWE Supply & Trading, the business activities

E.ON at the end of September in the newly established

of which are presented on pages 30 et seq. The company

segment ‘Operations acquired from E.ON’. We started

specialises in independent commodity trading, acts as an

including it in our Group figures on 18 September 2019

intermediary for gas, and supplies large industrial and

although it was legally transferred on a different date. We

corporate customers with energy. Furthermore, it markets

started recognising the stakes in the Gundremmingen

the electricity of our generation companies and optimises

and Emsland nuclear power plants we received from the

the Group’s power plant dispatch commercially; however,

E.ON subsidiary PreussenElektra in the Lignite & Nuclear

earnings achieved through the latter activities are reported

segment with effect from 30 September 2019.

in the Lignite & Nuclear and European Power segments.

• innogy – continuing operations: The main element in this

Forward-looking statements. This annual report

segment is innogy’s renewable energy business. The

contains forward-looking statements regarding the future

company ranks among the leading producers of electricity

development of the RWE Group and its companies as well

from renewable sources, with a strong focus on Europe –

as of the economic and political environment. These

in particular Germany and the United Kingdom – and with

statements are assessments that we have made based on

footholds in North America and Australia. The focus in

information available to us at the time this document was

terms of energy sources rests on wind, followed by hydro

prepared. In the event that the underlying assumptions

and solar. This segment also includes the German and

do not materialise or unforeseen risks arise, actual

Czech gas storage facilities as well as the 37.9 % interest

developments can deviate from the developments

in the Austria-based energy utility Kelag.

expected at present. Therefore, we cannot assume

responsibility for the correctness of these statements.

• Operations acquired from E.ON: This is where we present

the renewable energy operations we received from E.ON.

References to the internet. The contents of pages on the

Its geographical focus is on North America and Europe.

internet and publications to which we refer in the review

By far its main source of energy is wind, supplemented

of operations are not part of the review of operations and

by smaller solar and energy storage activities. After their

are merely intended to provide additional information.

acquisition in September 2019, we pooled these operations

The corporate governance declaration in accordance with

in RWE Renewables GmbH, which was founded in 2018.

Section 289f as well as Section 315d of the German

Commercial Code is an exception.

Group companies with cross-segment tasks like the

Group holding company RWE AG are stated under ‘other,

consolidation’. This item also includes our 25.1 % stake in

the German transmission system operator Amprion and

consolidation effects.

Adoption of IFRS 16: higher net debt, higher

depreciation. We began applying the new accounting

standard IFRS 16 Leases in fiscal 2019. Consequently,

leases are now reported on the balance sheet, unless they

are short-term (up to twelve months) or relate to low-value

assets. The lessee must recognise a right-of-use asset and

a corresponding lease liability in the amount of the present

value of the future lease payments. Further details on this

can be found on page 115 in the Notes. This methodological

change leads to an increase in the balance-sheet total and

net debt. On the income statement, depreciation increases

and the financial result declines, but these effects are offset

by fairly similar changes in adjusted EBITDA, leaving net

income almost unchanged. Prior-year figures were not

adjusted.

RWE Annual Report 2019Combined review of operations > Business performance

1.7 Business performance

Business in 2019 was so successful that we made substantial upward corrections to our earnings forecast during the

year. We closed the year with an adjusted EBITDA of €2.5 billion, far above the previous year’s level. The main driver was

our exceptionally strong trading performance. In addition, we benefited from the acquisition of E.ON’s renewable energy

business and the resumption of the capacity payments for our British power stations. Besides recording a substantial

increase in our earnings position, we saw a significant decrease in our carbon footprint, which shrank by one quarter

compared to 2018.

Business performance in 2019: what we forecast and what we accomplished

Outlook vs. actual
€ million

2018
actual

Original forecast
for 20191

Adjusted forecast
for 20191

2019
actual

Forecast fulfilled?

Adjusted EBITDA

1,538

1,400 – 1,700

2,200 – 2,500

2,489

Lignite & Nuclear

European Power

Supply & Trading

innogy – continuing operations

Operations acquired from E.ON

356

334

183

699

–

300 – 400

250 – 350

100 – 300

800 – 900

–

300 – 400

450 – 550

Significantly
above 300

800 – 900

200 – 300

374

453

702

833

253

1 We announced our original forecast for 2019 on pages 83 et seq. of the 2018 Annual Report, which was published on 14 March 2019. The forecast
was updated twice thereafter. The column ‘Adjusted forecast for 2019‘ reflects the latest update; see page 16 of the interim statement on the first
three quarters of 2019, which was published on 14 November 2019.

Electricity generation 13 % down on previous year. In the

power station and the end of production from coal at

financial year that just came to a close, the RWE Group

Gersteinwerk in Werne (see page 47). Downtime caused

produced 153.2 billion kWh of electricity, of which 33 % was

by overhauls led to a drop in nuclear energy generation

from gas, 32 % from lignite, 9 % from hard coal, 14 % from

(– 0.6 billion kWh). By contrast, gas-fired power plants

nuclear, and 11 % from renewables. Our electricity

produced more electricity (+ 3.6 billion kWh), benefiting from

production was 13 % lower than in the previous year. We

improved market conditions. We posted an even bigger gain

recorded the steepest decrease at our lignite-fired power

in renewable energy (+ 6.5 billion kWh), which was primarily

stations (– 18.9 billion kWh). Market conditions and

attributable to the E.ON operations we acquired in

overhauls played a role in the reduction in operating hours

September 2019. They produced 4.5 billion kWh of

of stations, as did the preliminary halt to the clearance of

electricity in the three-and-half months during which they

Hambach Forest, which limited our lignite production.

belonged to the RWE Group. In addition, we started biomass

Moreover, we switched off Niederaussem Units E and F at

co-firing at our Dutch Amer 9 and Eemshaven hard coal

the end of September 2018 (295 MW and 299 MW,

power stations. At innogy, the commissioning of new wind

respectively) followed by Neurath’s Unit C (292 MW) a year

turbines had a positive effect, while more favourable

later, and put them into the statutory security standby

weather conditions improved the use of existing capacity.

scheme. Furthermore, the Hungary-based power producer

Mátra stopped contributing to our generation, because we

In addition to our in-house generation, we procure electricity

sold our 51 % stake in the company in 2018. Electricity

from suppliers outside of the Group. In the year being

generation from hard coal also experienced a substantial

reviewed, these purchases totalled 46.4 billion kWh

drop (– 13.2 billion kWh), with unfavourable market

(previous year: 49.0 billion kWh). In-house generation and

conditions and power plant outages for overhauls also

power purchases combined for 199.6 billion kWh (previous

coming to bear here. Further declines in volume resulted

year: 225.0 billion kWh).

from the sale of our majority interest in the Bergkamen

Power generation

Renewables

Pumped
storage,
batteries

Gas

Lignite

Hard coal

Nuclear

Total1

Billion kWh

2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018

Lignite & Nuclear

–

0.2

–

48.3 67.2

–

21.2 21.8

70.1

89.2

European Power

2.2

1.1

1.8

2.1

50.6 47.2

of which:

Germany2

United Kingdom

Netherlands/Belgium

Turkey

innogy – continuing
operations

Operations acquired
from E.ON

0.2

0.4

1.6

–

0.7

0.4

–

9.7

8.8

4.5

–

1.8

2.1

7.8

5.5

–

33.5 33.2

6.6

2.7

5.5

3.0

–

14.2 27.4

–

4.7 13.0

0.7

0.5

8.8 13.9

–

68.9

78.0

–

14.6

21.5

34.6

34.1

17.0

19.4

2.7

3.0

9.7

8.8

4.5

–

RWE Group

16.4

9.9

1.8

2.1

50.8 47.2

48.3 67.2

14.2 27.4

21.2 21.8 153.2 176.0

1 Including capacity not attributable to any of the energy sources mentioned (e. g. oil-fired power stations).
2 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 2019, 3.6 billion kWh were purchased (previous year: 5.0 billion kWh), of which 1.5 billion kWh were from hard coal-fired power stations (previous year:
2.3 billion kWh).

Rise in generation capacity thanks to asset swap with

In terms of generation capacity, gas is our major source of

E.ON. At the end of 2019, we had a total installed power

energy. At the end of 2019, it accounted for 33 %. Lignite

generation capacity of 42.9 GW, giving us a leading market

was in second place with 24 %, followed by renewables with

position in Europe. This figure includes power plants that we

21 %. Disregarding the five lignite units we placed in security

took offline temporarily for economic reasons and the five

stand-by, renewables, consisting of wind, hydro, biomass

lignite units we put into security standby. Our generation

and photovoltaics, are already in second place in the

capacity grew by 1.9 GW over the course of the past year.

RWE Group. A detailed overview of our generation capacity

This was attributable to renewables, which accounted for an

based on renewables is provided on the next page.

installed capacity of 9.2 GW at the end of 2019. This figure

was calculated applying IFRS consolidation principles, which

The geographic focus of our generation business is Germany,

explains why it deviates from the disclosure on page 28. It

where 55 % of our installed capacity is located. The United

was 5.3 GW higher than the previous year’s figure, above all

Kingdom and the Netherlands follow, accounting for shares

due to the acquisition of E.ON’s renewable energy business.

of 21 % and 12 %, respectively. As a result of the acquisition

In addition, we converted the Dutch Amer 9 and Eemshaven

of E.ON’s renewable energy business, the USA has become

hard coal-fired power stations to co-fire biomass and

our fourth most important generation site. Nearly half of our

commissioned new wind turbines. Conversely, we recorded a

onshore wind turbines are situated there, making the USA

significant drop in hard coal-fired capacity, which declined

our single-largest market for renewable energy.

by 3.2 GW. This was mainly due to the shutdown of

Aberthaw B in Wales and parts of Gersteinwerk as well as

the sale of our 51 % stake in the Bergkamen power plant

(see page 47). The aforementioned retrofits of Amer 9 and

Eemshaven for biomass co-firing also contributed to the

reduction in installed hard coal-fired capacity.

RWE Annual Report 2019Combined review of operations > Business performance

Power generation capacity
As of 31 Dec 2019, in MW

Renewables

Pumped storage,
batteries

Gas

Lignite Hard coal Nuclear

Total1

–

400 10,255

–

2,770

13,459

Lignite & Nuclear

European Power

of which:

Germany2

United Kingdom

Netherlands /Belgium

Turkey

innogy – continuing
operations

Operations acquired
from E.ON

RWE Group

670

560

–

3,639

4,864

9,180

2,336 13,553

2,336

3,767

–

6,676

2,323

787

–

3,977

2,341

–

1,636

–

Total1
31 Dec 2018

13,459

23,906

9,872

8,595

4,652

787

20,879

8,538

7,035

4,519

787

3,639

3,571

4,884

–

2,3583 13,953 10,255

3,977

2,770

42,8633

40,9373

1 Including capacity not attributable to any of the energy sources mentioned (e. g. oil-fired power stations).
2 Including 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 2019, as in the previous

year, it amounted to a net 2,986 MW, including hard coal-fired power stations with a total capacity of 783 MW.

3 Including insignificant capacity at RWE Supply & Trading.

Generation capacity based on
renewables
As of 31 Dec 2019, in MW

Offshore
wind

Onshore
wind

Germany

United Kingdom

Netherlands

Poland

Spain

Italy

USA

Others

597

1,272

–

666

706

295

385

447

475

2,824

126

RWE Group

1,917

5,924

Solar

Hydro

Biomass

Total

–

125

–

128

435

–

601

549

–

1,706

2,115

855

386

459

475

2,949

235

31 Dec 2018

1,366

1,165

517

242

459

–

610

9,180

3,912

Significant decline in CO2 emissions. Last year, our power
stations emitted 88.1 million metric tons of carbon dioxide.

We purchase nearly all of the emission allowances we

need on the market. Since the beginning of the third

This was 29.9 million metric tons, or 25 %, less than in 2018.

emissions trading period, which started on 1 January 2013,

The main reason for the decline was the substantial

reduction in electricity generation from lignite and hard coal

last year. We posted a decline not only in our absolute but

the countries of Western Europe have only allocated free
CO2 certificates to energy utilities in exceptional cases. Of
our emissions in EU countries (87.1 million metric tons) in

also our specific emissions, i. e. carbon dioxide emissions per

the year being reviewed, we were only able to cover

megawatt hour of electricity generated, which dropped

1.1 million metric tons with such state allocations.

from 0.67 to 0.58 metric tons.

Emissions balance

Million metric tons of CO2

Lignite & Nuclear

European Power

of which:

Germany1

United Kingdom

Netherlands /Belgium

Turkey2

innogy – continuing operations

Operations acquired from E.ON

CO2 emissions

Free allocation of CO2
certificates

Shortage of CO2
certificates

2019

57.7

30.4

7.4

12.9

9.1

1.0

–

2018

79.4

38.6

13.0

12.4

12.1

1.1

–

2019

2018

0.6

0.5

–

0.7

0.6

–

2019

57.1

28.9

6.9

12.9

9.1

–

2018

78.7

36.9

12.4

12.1

–

RWE Group

88.1

118.0

1.1

1.3

86.0

115.6

1 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 2019, these stations emitted a total of 1.3 million metric tons of CO2 (previous year: 2.0 million metric tons).

2 As Turkey does not participate in European emissions trading, we do not need emission allowances to cover CO2 emissions in that country.

64.8 million metric tons of lignite produced. Our generation

Electricity and gas sales down year on year. Last year, we

companies procure the fuel used by their power stations

sold 192.0 billion kWh of electricity and 56.6 billion kWh of

either directly on the market or via RWE Supply & Trading.

gas. In 2018, these figures stood at 216.1 billion kWh and

We source lignite from proprietary opencast mines. In our

67.0 billion kWh, respectively. Most of these transactions

Rhenish mining area west of Cologne, we produced

were concluded in the Supply & Trading segment. Electricity

64.8 million metric tons of lignite last year. This was

sales experienced a drop of 11 %, largely due to declining

21.5 million metric tons less than in the preceding year, in

in-house production, which resulted in a drop in electricity

part due to the halt to the clearance of Hambach Forest

from RWE power stations sold by RWE Supply & Trading

and the resulting curtailment of our opencast mining

on the wholesale market. Gas deliveries were down 16 %.

activities. We used the lion’s share, or 53.8 million metric tons,

This was mainly because we now classify gas sales by

of lignite to generate electricity. The remainder was used to

RWE Supply & Trading in the Czech Republic merely as pure

manufacture refined products (e. g. lignite briquettes) and, to

trading transactions. The change in accounting occurred

a limited extent, to generate process steam and district heat.

with effect from 1 July 2019. Since then, the affected

transactions have no longer been considered in our sales

volume or revenue.

External revenue1
€ million

Lignite & Nuclear

European Power

Supply & Trading

innogy – continuing operations

Operations acquired from E.ON

Other, consolidation

RWE Group (excluding natural gas tax /electricity tax)

Natural gas tax /electricity tax

RWE Group

2019

2018

+/–

1,003

1,062

9,514

1,164

374

1,132

925

10,208

1,124

–

13,125

13,406

152

141

13,277

13,547

– 129

137

– 694

374

– 9

– 281

– 270

1 Some prior-year figures have been adjusted, mainly due to changes in the recognition of revenue from derivative transactions (see page 98 in the Notes).

RWE Annual Report 2019Combined review of operations > Business performance

External revenue by product1
€ million

Electricity revenue

of which:

Lignite & Nuclear

European Power

Supply & Trading

innogy – continuing operations

Operations acquired from E.ON

Gas revenue

of which:

European Power

Supply & Trading

innogy – continuing operations

Other revenue

2019

2018

+/–

10,272

10,121

151

282

620

303

542

8,259

8,478

869

242

799

–

1,156

1,547

1,094

1,484

1,697

1,738

– 21

– 219

242

– 391

– 5

– 390

– 41

RWE Group (excluding natural gas tax/electricity tax)

13,125

13,406

– 281

1 Some prior-year figures have been adjusted, mainly due to changes in the recognition of revenue from derivative transactions (see page 98 in the Notes).

Immaterial electricity revenue in the ‘other, consolidation’ item is not stated separately.

External revenue marginally down. In 2019, the RWE

therefore no longer considered in revenue. We recorded

Group’s external revenue declined by 2 % to €13,125 million

€10,272 million in revenue from our main product,

(excluding natural gas tax and electricity tax). The drop

electricity, corresponding to a marginal gain year on year.

was primarily due to the 25 % decline in gas revenue to

The backdrop to this is that RWE Supply & Trading realised

€1,156 million. As mentioned earlier, since 1 July 2019 gas

higher prices for electricity on the wholesale market,

sales by RWE Supply & Trading in the Czech Republic have

whereas the reduction in sales volume had a counteracting

been recognised as pure trading transactions and are

effect.

Adjusted EBITDA
€ million

Lignite & Nuclear

European Power1

Supply & Trading

innogy – continuing operations

Operations acquired from E.ON

Other, consolidation

RWE Group

1 In the period under review, €368 million was attributable to the UK (previous year: €102 million).

2019

2018

+/–

374

453

702

833

253

– 126

2,489

356

334

183

699

–

– 34

1,538

119

519

134

253

– 92

951

Adjusted EBITDA jumps 62 %. Our adjusted earnings

made that had been withheld during the suspension of

before interest, taxes, depreciation and amortisation

the capacity market. Although we received the payments

(adjusted EBITDA) amounted to €2,489 million. This was at

at the beginning of 2020, the reimbursement was

the upper end of the range of €2.2 billion to €2.5 billion we

reflected in earnings in the year being reviewed. We had

forecast in November 2019 (see page 16 of the interim

not planned for this in our original outlook for 2019. The

statement on the first three quarters of 2019). Our March

reimbursement was the main reason why the segment’s

2019 forecast envisaged adjusted EBITDA of €1.4 billion to

adjusted EBITDA was 36 % up year on year. However,

€1.7 billion (see pages 83 et seq. of the 2018 Annual Report).

there were also some negative effects, e. g. from a

We clearly exceeded this expectation. Our exceptional

signifcant drop in the margins and utilisation of our hard

trading performance played a major role. Furthermore, we

coal-fired power stations.

benefited from the reinstatement of the British capacity

market and the acquisition of E.ON’s renewable energy

• Supply & Trading: Here, adjusted EBITDA totalled

business, neither of which had been considered in our first

€702 million, which was substantially above the originally

forecast. Our adjusted EBITDA rose by 62 % compared to

forecast range of €100 million to €300 million. The

the previous year, largely driven by the aforementioned

previous year’s figure (€183 million) was also clearly

factors. In addition, earnings from the continuing innogy

exceeded. The exceptional trading performance was

operations were significantly higher year on year, as we had

the main driver. The gas and LNG business of

expected.

RWE Supply & Trading also displayed encouraging

development. Furthermore, a burden experienced in

The following developments were observed in the segments:

2018 resulting from a value adjustment recognised for

an equity stake did not recur.

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

€374 million, which is within the forecast range of

• innogy – continuing operations: Adjusted EBITDA posted

€300 million to €400 million. It represents an increase of

by the innogy business remaining with RWE amounted to

5 % compared to the previous year. A positive effect was

€833 million, which was within the anticipated range of

felt from our realisation of slightly higher wholesale prices

€800 million to €900 million. It was 19 % higher than in

for the generation from our lignite-fired and nuclear

2018. The overall increase in the use of innogy wind farms

power stations than in 2018. We had already sold forward

due to the weather played a role. In addition, income from

nearly all of the production of these plants in earlier

renewable energy assets that do not receive fixed feed-in

years. The acquisition of the minority interests in the

subsidises rose, driven by an increase in realised

Gundremmingen and Emsland power plants also

electricity prices. The continued expansion of wind power

contributed to the rise in earnings. This was contrasted

capacity also had a positive impact on earnings.

by the negative effects of power plant outages for

maintenance and the preliminary halt to the clearance of

• Operations acquired from E.ON: We included the

Hambach Forest.

renewable energy business transferred from E.ON to

RWE in our consolidated financial statements as of

• European Power: We recorded €453 million in adjusted

18 September 2019. In the last three-and-a-half months

EBITDA in this segment. This clearly exceeded the range

of the year, it posted €253 million in adjusted EBITDA.

of €250 million to €350 million forecast in March 2019.

This confirmed our November 2019 forecast, which

The reinstatement of the British capacity market came to

envisaged a range of €200 million to €300 million. Our

bear here, which resulted in retrospective payments being

March 2019 outlook did not consider the acquisition of

the E.ON business.

RWE Annual Report 2019Combined review of operations > Business performance

Adjusted EBIT
€ million

Lignite & Nuclear

European Power1

Supply & Trading

innogy – continuing operations

Operations acquired from E.ON

Other, consolidation

RWE Group

2019

2018

+/–

132

691

443

116

– 127

1,267

177

349

–

– 21

619

– 65

514

116

– 106

648

1 In the year under review, €198 million was attributable to the UK (previous year: –€48 million).

Adjusted EBIT more than twice as high as in 2018.

Reconciliation to net income: positive one-off effect due

Adjusted EBITDA minus operating depreciation and

to asset swap with E.ON. The reconciliation from adjusted

amortisation results in adjusted EBIT which, at €1,267 million,

EBIT to net income was greatly affected by the asset swap

was within the range of €1.1 billion to €1.4 billion forecast in

with E.ON. A €8.3 billion book gain on the deconsolidation of

November 2019. The originally anticipated range of

innogy’s grid and retail business and the stake in IGH came

€0.4 billion to €0.7 billion was clearly exceeded. The deviation

to bear in particular. It was the reason why we closed fiscal

was caused by the same factors that came to bear on

2019 with unusually high net income.

adjusted EBITDA. Adjusted EBIT more than doubled versus

2018 (€619 million).

Non-operating result
€ million

Disposal result

Impact of derivatives on earnings

Other

Non-operating result

2019

2018

+/–

– 1,210

– 1,081

– 25

– 146

– 161

227

– 1,220

– 920

The non-operating result, in which we recognise certain

pursuant to IFRS, financial instruments used to hedge

effects that are not related to operations or to the period

price risks are accounted for at fair value at the

being reviewed, totalled – €1,081 million, which was much

corresponding balance-sheet date, whereas transactions

less than in 2018 (previous year: – €161 million). Its

which are hedged with them are only recognised as a

components were as follows:

profit or loss when they are realised.

• Disposals of investments and assets resulted in earnings

• Income stated under ‘other’ totalled – €1,210 million

of €48 million (previous year: – €25 million). This was

(previous year: €10 million). This reflects a large portion of

largely due to the book gains on the sale of the Belgian

the curtailments that will result from the German lignite

gas-fired power plant Inesco and property that was no

phaseout. Impairments recognised for power plants and

longer needed.

opencast mines as well as transfers to provisions for

mining damage reduced income by €2,087 million.

• The valuation of derivatives had an effect of €81 million

Furthermore, a €347 million provision was formed for

(previous year: – €146 million). However, such effects on

redundancy schemes. A counteracting effect came from

earnings are temporary and are due to the fact that,

our €2.6 billion claim for damages from the government,

which we also recognised in the non-operating result. The

which was subjected to an impairment test because the

expected early decommissioning of German hard coal-

insolvency of a service provider required the maintenance

fired power stations required additions to provisions and

concept to be revised fundamentally. The test led to an

impairments totalling €432 million. However, these were

impairment of €225 million. This took account of the fact

contrasted by write-ups on gas-fired power plants and a

that the wind farm, which was completed in 2015, is

pumped storage power station of €363 million. The

being subsidised according to the acceleration model.

Dutch coal phaseout, which has been enshrined in law,

This model envisages a very high starting payment, which

was taken into account by recognising power plant

is limited to eight years. This is why the fair value of the

impairments of €693 million. Another impairment loss

wind farm declines faster than what the straight-line

related to the German Nordsee Ost offshore wind farm,

depreciation pursuant to IFRS reflects.

Financial result
€ million

Interest income

Interest expenses

Net interest

Interest accretion to non-current provisions

Other financial result

Financial result

2019

2018

185

– 258

– 73

– 881

– 938

166

– 180

– 14

– 264

– 131

– 409

+/–

– 78

– 59

– 617

147

– 529

Our financial result totalled – €938 million, deteriorating by

Owing to the curtailments of the non-operating result and

€529 million compared to 2018. Its components changed as

the financial result, we are stating earnings before taxes

follows:

from our continuing operations of – €752 million (previous

year: €49 million). This goes hand in hand with €92 million

• Net interest declined by €59 million to – €73 million due

in tax income, which is less than what could have been

to higher interest expenses, in part as a result of the initial

expected based on the (theoretically) normal effective tax

application of IFRS 16 (see page 50). Furthermore, the

rate. This is because we did not capitalise any deferred taxes

interest expenses include fees paid to top up our credit

in the RWE AG tax group unless they were offset by deferred

line in 2019.

tax liabilities, because we will probably not be able to use the

deferred tax claims in the foreseeable future. A

• The interest accretion to non-current provisions reduced

counteracting effect came from a reduction of our tax risk

the result by €881 million, much more than in the

provision. After taxes, our continuing operations generated

previous year (– €264 million). The main reason for this is

income of – €660 million (previous year: – €54 million).

that the real discount rate used to calculate provisions for

mining damage had to be lowered and the associated

Income from discontinued operations, which encompass

rise in the present value of obligations was partially

innogy’s grid and retail businesses as well as the stakes in

recognised as an expense in the interest accretion. The

IGH and VSE, amounted to €9,816 million (previous year:

reason for the interest adjustment is the expected

€1,127 million). The high figure is due to our sale of these

premature end to electricity generation from lignite

activities, except for the interest in VSE, in September 2019,

within the scope of the German coal phaseout.

which resulted in a deconsolidation gain of €8,258 million.

The assets we sold had been recognised on the consolidated

• The ‘other financial result’ improved to €16 million

balance sheet at their historic carrying amounts, whereas

(previous year: – €131 million) in part thanks to gains on

the purchase prices were derived from their fair values,

our portfolio of securities after losses in the previous year.

most of which were much higher. Income from operating

RWE Annual Report 2019Combined review of operations > Business performance

Reconciliation to net income
€ million

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

2019

2018

+/–

2,489

– 1,222

1,267

– 1,081

– 938

– 752

– 660

9,816

9,156

643

8,498

1,538

– 919

619

– 161

– 409

– 103

– 54

1,127

1,073

679

335

951

– 303

648

– 920

– 529

– 801

195

– 606

8,689

8,083

– 36

– 44

8,163

activities of discontinued operations totalled €1,558 million,

The portion of earnings attributable to RWE hybrid capital

rising substantially year on year although only VSE

investors amounted to €15 million (previous year:

contributed to Group earnings for all twelve months of

€59 million). This sum corresponds to the finance costs

2019. The increase was due to IFRS accounting policies,

related to our £750 million hybrid bond, which was called on

which stipulate that no depreciation or amortisation may

20 March 2019. As this bond did not have a predefined

be recognised for discontinued operations since they were

maturity, the proceeds we recorded from it were classified

stated separately as of 30 June 2018.

as equity pursuant to IFRS. RWE’s other hybrid capital is

classified as debt, and we recognise the interest accrued on

Non-controlling interests in income declined by €36 million

it in the financial result.

to €643 million. The main reason for this is that post-tax

income from continuing innogy operations declined, driving

Due to the aforementioned developments, we closed the

down the share in income allocable to the minority

year with exceptionally high net income, which amounted to

shareholders of these activities.

€8,498 million (previous year: €335 million). Based on the

614.7 million RWE shares outstanding, this corresponds to

earnings per share of €13.82 (previous year: €0.54).

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

2019

2018

+/–

Lignite & Nuclear

European Power

Supply & Trading

innogy – continuing operations

Operations acquired from E.ON

Other , consolidation

RWE Group

Capital expenditure on financial assets
€ million

Lignite & Nuclear

European Power

Supply & Trading

innogy – continuing operations

Operations acquired from E.ON

Other, consolidation

RWE Group

342

252

1,215

267

230

245

592

–

– 1

112

– 2

623

267

2,090

1,079

1,011

2019

2018

+/–

7,557

7,748

–

141

–

– 1

181

– 2

– 118

7,558

7,567

Significant rise in capital expenditure due to asset

nearly twice as high as in 2018. Among other things, this

swap with E.ON. At €9,838 million, our capital expenditure

can be traced back to the construction of the British

was exceptionally high (previous year: €1,260 million). This

offshore wind farm Triton Knoll and the Australian solar farm

was primarily due to the asset swap with E.ON. As a result,

Limondale. Further details on these two large-scale projects

our capital spending on financial assets amounted to

can be found on page 38 of the 2018 Annual Report. The

€7,748 million (previous year: €181 million). €4.0 billion of

inclusion of E.ON’s renewable energy business and power

this sum was attributable to the purchase of the 16.7 %

plant maintenance also contributed to the increase in capital

stake in E.ON, while €3.6 billion was allocable to the

expenditure on property, plant and equipment. Furthermore,

acquisition of its renewable energy business. As expected,

the adoption of IFRS 16 came to bear, as it resulted in the

our capital expenditure on property, plant and equipment

capitalisation of rights of use for leased assets.

also grew substantially. Totalling €2,090 million, it was

RWE Annual Report 2019Combined review of operations > Business performance

Workforce 1

Lignite & Nuclear

European Power

Supply & Trading

innogy – continuing operations

Operations acquired from E.ON

Other2

RWE Group

31 Dec 2019 31 Dec 2018

11,150

11,292

2,927

1,337

2,505

1,559

314

2,738

1,267

2,192

–

259

+/–

– 142

189

313

1,559

19,792

17,748

2,044

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

Much higher headcount due to acquisition of E.ON

added 1,559 employees, 763 of whom are in the USA. In

renewable energy business. As of 31 December 2019, the

purely operating terms, i. e. disregarding the effects of

RWE Group’s continuing operations had 19,792 people on

acquisitions and disposals, our headcount rose by 485,

the payroll, of which 15,056 were employed in Germany

with the expansion of innogy’s offshore wind capacity being

and 4,736 worked at locations abroad. Part-time positions

a major factor. Personnel figures do not include apprentices

were calculated in these figures on a pro-rata basis.

or trainees. At the end of 2019, 701 young adults were

Compared to the end of 2018, the workforce expanded by

learning a profession at RWE, compared to 666 in the

2,044 staff members. This was predominantly due to the

previous year.

acquisition of E.ON’s renewable energy business, which

1.8 Financial position and net worth

The asset swap with E.ON made RWE more financially robust. Due to the deconsolidation of innogy’s grid and retail

activities, our net debt in 2019 more than halved to €9.3 billion. The asset swap also had a positive effect on the

equity ratio, which rose by 9.4 percentage points to 27.2 %. Our solid financial and asset positions are reflected in the

ratings issued by Moody’s and Fitch, with both agencies classifying our creditworthiness as investment grade.

Responsibility for procuring funds. RWE AG regained sole

• Furthermore, we have access to a syndicated credit line,

responsibility for financing within the RWE Group when we

which serves to secure liquidity. We increased our credit

sold our investment in innogy. Although we held a majority

line from €3 billion to €5 billion in April 2019 by

stake in innogy, the company was operationally independent

concluding a new agreement. This was prompted by the

and therefore took care of the financing of the activities for

transaction with E.ON, because it increased the operating

which it was responsible. As the parent company, RWE AG is

activities for which we are responsible. The new credit line

responsible for acquiring funds from banks or the money

was granted to us by a consortium of 27 international

and capital market. Subsidiaries only raise debt capital

banks. It consists of two tranches: one tranche of

directly in specific cases, for example if it is advantageous

€3 billion with a tenor of five years and one of €2 billion

economically to make use of local credit and capital

with a tenor of two years. With the agreement of the

markets. RWE AG also acts as a co-ordinator when

banks, the former tranche can be extended twice for one

subsidiaries assume contingent liabilities. This allows for

year at a time. The latter tranche can be extended once,

central management and monitoring of financial risks.

for one year, without requiring approval from the banks.

Moreover, it strengthens our position when negotiating with

So far, RWE has not used the syndicated credit line.

banks, business partners, suppliers and customers.

Tools for raising debt capital. We cover a major portion

2019, RWE bonds with a total value of €1.1 billion were

of our financing needs with earnings from our operating

outstanding. Essentially, these were three hybrid bonds:

activities. In addition, we have a wide range of tools to procure

one of €539 million (2.75 % coupon; earliest possible

Bond volume drops to €1.1 billion. As of 31 December

debt capital.

redemption in October 2020), one of €282 million (3.5 %;

April 2025) and one of US$317 million (6.625 %;

• Our Debt Issuance Programme (DIP) gives us latitude in

March 2026). Due to early buybacks in October 2017, the

procuring debt capital for the long term. A DIP is a

amounts are lower than the issue volumes (€700 million,

framework prospectus for the flexible issuance of bonds.

€550 million and US$500 million). A fourth hybrid bond with

Our current programme allows us to make issuances with

a coupon of 7 % and a nominal value of £750 million was

a total nominal value of €10 billion. However, RWE AG has

redeemed at the first call date, on 20 March 2019, without

not issued a bond since 2015.

replacing it with new hybrid capital. Therefore, the volume of

RWE AG bonds as of the balance-sheet date was notably

• We have a Commercial Paper Programme for short-term

lower than at the end of 2018 (€1.9 billion).

refinancing that enables us to raise funds equivalent to

up to US$5 billion on the money market. We only used a

portion of these funds in the past fiscal year. At times, a

maximum of €3.4 billion in commercial paper was

outstanding.

RWE Annual Report 2019Combined review of operations > Financial position and net worth

Credit rating of RWE AG (as of 31 Dec 2019)

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

Borrowing costs down to 1.4 %. In 2019, the cost of debt

Solid investment grade rating. The level of our borrowing

for RWE was 1.4 %. It was calculated for our average

costs partially depends on the rating agencies’ assessment

liabilities from bonds, commercial paper and bank loans

of our creditworthiness. We have commissioned Moody’s

held during the year. The £750 million bond redeemed in

and Fitch to provide such credit ratings. Moody’s gives our

March 2019 was not considered, as it was classified as

long-term creditworthiness a rating of ‘Baa3’, which was

equity pursuant to IFRS. The cost of debt declined

confirmed in October 2019 after an extensive review. Fitch

considerably compared to 2018 (2.9 %). This was because

we made more use of commercial paper with favourable

interest rates to refinance our business in the reporting year.

rates us one grade better at ‘BBB’. Both agencies thus attest
to our investment grade creditworthiness – each with a
stable rating outlook.

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

2019

2018

+/–

1,809

– 2,786

– 977

474

189

– 301

138

4,473

4,611

– 2,999

– 1,559

1,671

– 7,259

– 5,588

3,473

1,748

–

– 367

Cash flows from operating activities of continuing operations

– 977

4,611

– 5,588

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.

– 1,771

– 1,246

695

– 525

621

– 2,053

3,439

– 5,492

Operating cash flows: high outflows from the realisation

commodity forward transactions, for which we had received

of commodity forward transactions. Despite a significant

high variation margins before 2019. Variation margins are

improvement in our funds from operations, our cash flows

payments with which transaction partners offset profit and

from operating activities of continuing operations declined

loss positions resulting from the daily revaluation of active

to – €977 million (previous year: €4,611 million). This was

contracts. However, their influence on cash flows is

mainly due to transactions reflected in the change in net

temporary and ends once the forward transactions are

working capital. For example, there were substantial cash

realised.

outflows in the period under review from the realisation of

Investing activities of continuing operations resulted in a net

an outflow of €869 million. On top of that, we made

cash inflow of €474 million. This was mainly due to income

dividend payments to RWE shareholders, hybrid investors

from the sale of securities, whereas capital expenditure on

and co-owners of fully consolidated RWE companies

property, plant and equipment and financial assets had a

amounting to €560 million.

counteracting effect. In the previous year, we recorded a

cash outflow of €2,999 million in part due to substantial

On balance, the aforementioned cash flows from operating,

purchases of securities.

investing and financing activities decreased our cash and

cash equivalents by €301 million.

Cash flows from financing activities of continuing operations

amounted to €189 million (previous year: – €1,559 million).

Our free cash flow amounted to – €2,053 million. This was

In the year under review, we took on more financial debt

far below the previous year’s level (€3,439 million), primarily

than we repaid. This resulted in a net inflow of €1,678 million

due to declining operating cash flows.

which was contrasted by the redemption of the £750 million

hybrid bond not included in financial liabilities, which led to

Net debt
€ million

Cash and cash equivalents

Marketable securities

Other financial assets

Financial assets

Bonds, other notes payable, bank debt, commercial paper

Hedging of bond currency risk

Other financial liabilities

Financial liabilities

Correction of hybrid capital

Plus 50 % of the hybrid capital stated as equity

Minus 50 % of the hybrid capital stated as debt

Net financial assets (including correction of hybrid capital)

Provisions for pensions and similar obligations

Surplus of plan assets over benefit obligations

Provisions for nuclear waste management

Provisions for mining damage

Provisions for dismantling wind farms

Net debt of continuing operations

Net debt of discontinued operations

Net debt

31 Dec 2019 31 Dec 2018

+/–

3,192

3,523

4,983

3,523

3,863

2,809

11,698

10,195

2,466

1,657

3,268

5,741

– 562

–

– 562

6,519

3,446

– 153

6,723

4,618

951

9,066

1,107

2,776

– 88

470

– 558

7,507

3,287

– 213

5,944

2,516

362

4,389

– 331

– 340

2,174

1,503

809

– 5

2,161

2,965

– 474

– 470

– 4

– 988

159

779

2,102

589

4,677

232

14,950

– 14,718

9,298

19,339

– 10,041

RWE Annual Report 2019Combined review of operations > Financial position and net worth

Notable debt reduction due to deconsolidation of

Slightly lower off-balance-sheet obligations from

innogy’s grid and retail businesses. As of 31 December

electricity and fuel. Net debt does not include our

2019, our net debt amounted to €9.3 billion. This represents

off-balance-sheet obligations, which largely stem from

a decline of €10.0 billion compared to the end of the

long-term fuel and electricity purchase agreements. As of

previous year. The asset swap with E.ON played a major role.

the balance-sheet date, payment obligations from material

procurement contracts amounted to €27.1 billion for fuel

Net debt of discontinued operations dropped by

(previous year: €27.9 billion) and €7.1 billion for electricity

€14.7 billion to €0.2 billion. This was due to the

(previous year: €7.8 billion). These figures are based on

deconsolidation of innogy’s grid and retail businesses,

assumptions regarding the prospective development of

which were sold to E.ON, and of the 50.04 % stake in Czech

commodity prices. For further information on our off-

gas network operator IGH, which we sold to the MIRA

balance-sheet obligations, please see page 168 in the Notes.

consortium. The remainder was attributable to our stake in

Slovakian energy provider VSE, which we acquired from

Group balance sheet: equity ratio increased to 27.2 %.

innogy in 2019 and plan to sell on to E.ON.

The asset swap with E.ON had a notable impact on the

Group balance sheet. This was the main reason why the

Conversely, as expected, net debt of continuing operations

balance-sheet total decreased by €15.9 billion to

rose considerably, by €4.7 billion to €9.1 billion. The

€64.2 billion compared to the end of 2018. Due to the

negative free cash flow came to bear here. Effects from the

deconsolidation of the innogy operations continued by E.ON

asset swap with E.ON factored in at €3.0 billion, of which

and the stake in IGH, assets held for sale dropped from

€1.5 billion was attributable to the net debt which we

€40.5 billion to €1.3 billion and liabilities held for sale fell

assumed from E.ON’s renewable energy business,

from €32.8 billion to €0.5 billion. By contrast, the first-time

€0.7 billion was attributable to additional nuclear provisions

consolidation of the acquired E.ON activities inflated the

and another €0.7 billion to the purchase price for VSE paid

balance sheet by €12.2 billion. The RWE Group’s equity

to innogy. The German coal phaseout also affected net

increased by €3.2 billion. As of the cut-off date for the

debt. It was the main reason why provisions for mining

financial statements, its share in the balance-sheet total

damage rose by €2.1 billion. We are claiming €2.6 billion in

(equity ratio) was 27.2 %, 9.4 percentage points higher than

compensation from the government, which should cover

at the end of the previous year. The main reason was the

the majority of the financial damage we will suffer from the

substantial gain on the deconsolidation of innogy’s grid and

coal phaseout. This is recognised in other financial assets

retail businesses. This was counteracted by the fact that the

and had a counteracting effect. The adoption of IFRS 16

non-controlling interests decreased. Our dividend payments

drove up net debt by €0.4 billion. Another €0.4 billion stems

and the redemption of the £750 million hybrid bond also

from our redemption of the £750 million hybrid bond,

contributed to the reduction in equity.

eliminating the advantage of classifying half of it as equity.

However, at the same time, innogy repaid a loan to us which

was about as high as the redemption amount. This resulted

from an agreement that our former subsidiary had reached

with us prior to its IPO in 2016 (see page 52 of the 2016

Annual Report).

Group balance-sheet structure

31 Dec 2019

31 Dec 2018

Assets

Non-current assets

of which:

Intangible assets

Property, plant and equipment

Current assets

of which:

Trade accounts receivable

Receivables and other assets

Marketable securities

Assets held for sale

Total

Equity and liabilities

Equity

Non-current liabilities

of which:

Provisions1

Financial liabilities

Current liabilities

of which:

Provisions1

Financial liabilities

Trade accounts payable

Other liabilities

Liabilities held for sale

Total

1 Prior-year figures adjusted: see commentary on page 116 in the Notes.

€ million

35,951

56.0

18,595

23.2

4,809

19,097

28,241

3,621

15,311

3,258

1,274

7.5

29.7

44.0

5.6

23.9

5.1

2.0

64,192

100.0

17,448

27,018

18,936

3,924

19,726

2,638

1,810

2,987

11,781

510

27.2

42.1

29.5

6.1

30.7

4.1

2.8

4.7

18.4

0.8

64,192

100.0

2,193

12,409

61,513

1,963

10,291

3,609

40,496

80,108

14,257

20,007

14,366

1,998

45,844

2,572

766

2,429

7,281

32,796

80,108

2.7

15.5

76.8

2.5

12.8

4.5

50.6

100.0

17.8

25.0

17.9

2.5

57.2

3.2

1.0

3.0

9.1

40.9

100.0

RWE Annual Report 2019Combined review of operations > Notes to the financial statements of RWE AG (holding company)

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. Thanks to its

strong trading performance, RWE Supply & Trading contributed in particular to the Group parent’s earnings last year.

However, there were also some burdens, for example as a result of impairments triggered by the Dutch coal phaseout.

At €514 million, RWE AG’s net profit was slightly higher than in 2018. We intend to raise the dividend and therefore

propose a payment of €0.80 per share to the Annual General Meeting taking place in April 2020.

Financial statements. RWE AG prepares its financial

Germany, which publishes them in the Federal Gazette.

statements in compliance with the rules set out in the

The financial statements of RWE AG can be ordered

German Commercial Code and the German Stock

directly from us and are also available on the internet at

Corporation Act. The financial statements are submitted

www.rwe.com/reports.

to Bundesanzeiger Verlag GmbH, located in Cologne,

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 2019 31 Dec 2018

20,628

10,233

6,056

2,929

25,166

3,669

479

4,864

39,846

34,178

5,738

2,237

5,654

2,700

29,213

23,169

2,658

2,655

39,846

34,178

2019

2018

1,758

– 1,550

275

514

– 22

492

1,091

– 391

– 227

– 1

472

– 42

430

Assets. RWE AG had €39.8 billion in total assets as of

• The ‘other income and expenses’ line item deteriorated by

31 December 2019, compared to €34.2 billion in the prior

€1,323 million to – €1,550 million. The main reason for

year. This is mainly due to the effects of the asset swap with

this was an impairment recognised for financial accounts

E.ON. For example, RWE transferred the renewable energy

receivable from a Dutch subsidiary, the earnings

business received from E.ON to a subsidiary, resulting in a

prospects of which deteriorated considerably due to the

corresponding account receivable from that company.

coal phaseout mandated by law. Furthermore, IT projects

Conversely, the sale of the stake in innogy held by another

drove up expenses at RWE AG.

subsidiary led to a liability vis-à-vis that company. However,

some developments reduced the balance-sheet total.

• In the year under review, we recorded tax income of

Among other things, securities and cash and cash

€275 million, largely because we reduced our tax risk

equivalents were down. Here, the cash outflows from

provision and received tax refunds for earlier years.

the realisation of commodity forwards relating to

RWE AG had recorded a tax expense of €1 million in 2018.

RWE Supply & Trading set out on page 63 came to bear. At

the end of 2019, the equity ratio was 14.4 %. Due to the rise

• The presented earnings figures lead to net profit of

in total assets, it was lower than in the previous year (16.5 %).

€514 million. This represents an improvement of

€42 million compared to 2018.

Financial position. RWE AG is set up solidly in economic

terms and has a number of financing tools at its disposal

• The distributable profit of €492 million corresponds to

that it can use flexibly. This is reflected in our credit ratings,

the planned payment of a dividend of €0.80 per share to

which are investment grade. A detailed presentation of

our shareholders.

RWE’s financial position and financing activity in the year

under review has been made on pages 62 et seqq.

Outlook for 2020. RWE AG’s earnings prospects will largely

depend on the business performance of its subsidiaries.

Earnings position. RWE AG’s earnings position improved

Our current assessment makes us confident of being able

slightly compared to 2018. The main items on the income

to achieve a net profit in 2020 that is slightly higher than

statement developed as follows:

in 2019.

• Income from financial assets rose by €667 million to

Corporate governance declaration in accordance with

€1,758 million. The exceptional energy trading

Section 289f and Section 315d of the German

performance was a major driver. In addition, the business

Commercial Code. On 14 February 2020, the Executive

activities received from E.ON contributed to earnings for

Board and the Supervisory Board of RWE AG issued a

the first time. However, there were also some curtailing

corporate governance declaration in accordance with

factors such as the significant deterioration of market

Section 289f and Section 315d of the German Commercial

conditions for hard coal-fired power plants faced by

Code. The declaration contains the Corporate

RWE Generation.

Governance Report for the first time and has been

published on the internet at www.rwe.com/corporate-

• Net interest also improved considerably, advancing by

governance-declaration.

€422 million to €31 million. This was due to substantial

capital gains from pension fund management.

RWE Annual Report 2019Combined review of operations > Presentation of the RWE Group with innogy as a purely financial investment

1.10 Presentation of the RWE Group with innogy as a

purely financial investment

For fiscal 2019, we are also presenting Group figures reflecting our former subsidiary innogy as a purely financial

investment for the last time. We do not apply the principles of consolidation pursuant to IFRS to determine these

figures. In doing so, we do not consider innogy based on its earnings, but on the dividend we are paid. Applying this

method leads to adjusted EBITDA of €2.1 billion and adjusted net income of €1.2 billion for the Group. This is much

more than we had predicted originally. The main reasons for this were our strong trading performance and the

reinstatement of the British capacity market.

Former subsidiary innogy: full consolidation of limited

This largely disregards the effects of the asset swap with

informational value. International Financial Reporting

E.ON (e. g. the acquisition of the renewable energy business).

Standards (IFRS) stipulate that we fully consolidate

Therefore, the figures give some insight into the business

companies that are directly or indirectly controlled by

trend that is virtually untainted by the exceptional effects of

RWE AG in the Group’s financial statements. This means

the transaction. We also use these figures to measure

that the revenue, expenses, cash flows, assets, liabilities, etc.

performance in determining Executive Board remuneration.

of the affected activities are included in the Group’s figures.

This approach also had to be applied to innogy. However, it

Adjusted EBITDA and adjusted net income higher than

did not reflect the way in which we managed our former

forecast. The overview below presents some key earnings

subsidiary. We held innogy as a purely financial investment,

figures that were calculated applying the method described

which was allowed to operate as an independent business

above. The figure determined for adjusted EBITDA in 2019

entity.

was €2,106 million (previous year: €1,521 million) and

adjusted net income amounted to €1,210 million (previous

Adjusted figures. Therefore, we applied a second method,

year: €591 million). Our outlook of November 2019

which deviated from IFRS consolidation principles, to

envisaged ranges of €1.8 billion to €2.1 billion and

calculate the figures for the Group, which reflected the

€0.9 billion to €1.2 billion, respectively (see page 16 of the

status of our subsidiary more accurately. In doing so, the

interim statement on the first three quarters of 2019) . In

stake in innogy was recognised on the balance sheet under

our first earnings forecast of March 2019, we had

‘other financial assets’. In RWE’s earnings figures, innogy was

envisaged adjusted EBITDA of €1.2 billion to €1.5 billion

considered only with the dividend payable to us. We treated

and adjusted net income of €0.3 billion to €0.6 billion (see

the transactions of the rest of the Group with innogy as

page 84 of the 2018 Annual Report). We clearly exceeded

transactions with third parties. Since we sold our stake in

these expectations. This was primarily due to the

innogy to E.ON in September 2019, we have stopped

exceptional trading performance of RWE Supply & Trading

preparing balance sheets applying the above method, but

and the effect on earnings of the reinstatement of the

we applied it one last time to calculate earnings for 2019.

British capacity market.

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

Adjusted EBITDA

Adjusted EBIT

Adjusted net income

2019

2018

+/–

2,106

1,412

1,210

1,521

953

591

585

459

619

1 Figures not calculated in compliance with IFRS. In addition to the issues mentioned above, this relates to the following items, amongst others: all supply and
service agreements of the Group with innogy have been accounted for as pending transactions, even if they would have had to be recognised at fair value.
Provisions for impending losses from these transactions have not been formed. Supply and service agreements 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. Earnings for 2019 do not contain the actual innogy dividend of €1.40 per share, but include the theoretical value of €1.64, which was the basis for the
conditions of the asset swap with E.ON.

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 capital stock

the Articles of Incorporation that only concern the wording

amounts to €1,573,748,744.44 and is divided among

without changing the content.

614,745,499 no-par-value common shares in the name of

the bearer. As set out on page 25, our 39,000,000 preferred

RWE AG authorisation to implement share buybacks.

shares were converted to common shares in the middle of

Pursuant to a resolution passed by the Annual General

2019. Since then, all RWE shares have granted their bearer

Meeting on 26 April 2018, RWE AG is authorised until

the same rights.

25 April 2023 to conduct share buybacks accounting for

up to 10 % of the capital stock as of the effective date of

Shares in capital accounting for more than 10 % of voting

the resolution or as of the exercise date of the authorisation

rights. As of 31 December 2019, no holding in RWE AG

if the capital stock is lower on this date. At the Executive

exceeded 10 % of the voting rights.

Board’s discretion, the acquisition can be made on the stock

exchange or via a public purchase offer.

Limitation of share transfers. Within the scope of the

employee share plan of RWE AG, 305,216 RWE common

Shares purchased in this way may then be cancelled.

shares were issued to staff in Germany in the financial year

Furthermore, they may be transferred to third parties or

that just ended. The securities must be held until

sold otherwise in connection with mergers or acquisitions of

31 December 2020.

companies, parts of companies, operations, or of stakes in

companies. Shares that are not sold on the stock exchange

We also have employee stock purchase plans in the UK.

or through a tender to all shareholders may only be sold for

Staff members of RWE Generation UK plc, RWE Technology

cash. Moreover, in such cases, the sale price may not be

UK Limited and RWE Supply & Trading GmbH UK Branch

significantly lower than the price at which the shares are

qualify for them. The shares are subject to a five-year

listed on the stock market. The company may transfer

holding period starting from their respective issue dates.

shares bought back to the holders of option or convertible

A total of 27,742 RWE common shares were purchased

bonds and also use the shares to fulfil its obligations

under the UK plans.

resulting from employee share schemes. In the

aforementioned cases, shareholder subscription rights are

Appointment and dismissal of Executive Board

waived. These authorisations may be exercised in full or in

members/amendments to the Articles of Incorporation.

part, or once or several times for partial amounts.

Executive Board members are appointed and dismissed in

accordance with Section 84 et seq. of the German Stock

Executive Board authorisation to issue new shares.

Corporation Act in conjunction with Section 31 of the German

Pursuant to the resolution passed by the Annual General

Co-Determination Act. Amendments to the Articles of

Meeting on 26 April 2018, the Executive Board is authorised

Incorporation are made pursuant to Section 179 et seqq.

to increase the company’s capital stock, subject to the

of the German Stock Corporation Act in conjunction with

Supervisory Board’s approval, by up to €314,749,693.44

Article 16, Paragraph 5 of the Articles of Incorporation of

until 25 April 2023, through the issuance of up to

RWE AG. According to the aforementioned provision in the

122,949,099 new bearer common shares in return for

Articles of Incorporation, unless otherwise required by law

contributions in cash or in kind (authorised capital). These

or the Articles of Incorporation, the Annual General

authorisations may be exercised in full or in part, or once or

Meeting shall adopt all resolutions by a simple majority of the

several times for partial amounts.

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

RWE Annual Report 2019Combined review of operations > Disclosure relating to German takeover law

In principle, shareholders are entitled to subscription rights.

RWE AG’s €5 billion syndicated credit line also includes a

However, subject to the approval of the Supervisory Board,

change-of-control clause, which essentially has the following

the Executive Board may waive them in the following cases:

content: in the event of a change of control or majority at RWE,

• They may be waived in order to prevent the number of

shall enter into negotiations with us on a continuation of the

shares allocated from the subscription resulting in

credit line. Should we fail to reach an agreement with the

fractional amounts (fractions of shares).

majority of them within 30 days from such a change of

drawings are suspended until further notice. The lenders

control, the lenders may cancel the line of credit.

• Subscription rights may be waived in order to issue shares

in exchange for contributions in kind for the purposes of

Effects of a change of control on Executive Board and

mergers or acquisitions of companies, parts of

executive remuneration. Members of the Executive Board of

companies, operations, or of stakes in companies.

RWE AG have the special right to terminate their employment

contract in the event that shareholders or third parties obtain

• Subscription rights may be waived in the event of a cash

control over the company and this would be linked to

capital increase if the price at which the new shares are

significant disadvantages for the Executive Board members.

issued is not significantly lower than the price at which

In such a case, they are free to resign for cause from their

shares are quoted on the stock market and the portion of

position within six months of the change of control by giving

the capital stock accounted for by the new shares, for which

three months’ notice. In addition, they can request the

subscription rights are waived, does not exceed 10 % in total.

termination of their employment contract and receive a

• Furthermore, subscription rights may be waived in order

one-off payment.

to offer shares to potential holders of convertible or

The amount of the one-off payment shall correspond to

option bonds commensurate to the rights to which they

the compensation that would have been due until the end

would be entitled on conversion of the bond or on exercise

of the contractually agreed term of service, but no more

of the option.

than three times the total contractual annual remuneration.

Share-based payment is not included in this. This is in line

The Executive Board is authorised, subject to the approval

with the recommendations of the German Corporate

of the Supervisory Board, to determine the further details

Governance Code applicable to the year under review.

and conditions of the share issuance.

In sum, the capital stock may not be increased by more

stipulates for the Executive Board and executives of RWE AG

than 20 % through the issuance of new shares waiving

and subordinated associated companies that in the event

The Strategic Performance Plan presented on page 75 et seq.

subscription rights.

of a change of control the granted performance shares,

which have already been finally determined but not yet paid

Effects of a change of control on debt financing. Our

out, shall be paid out early. The payout amount shall

debt financing instruments often contain clauses that take

correspond to the number of performance shares multiplied

effect in the event of a change of control. The following

by the sum of the average closing price of the RWE common

rule applies to a small residual amount of a senior bond

share on the last 30 trading days prior to the announcement

remaining with us, which was the only bond that could not be

of the change of control and the amount of dividend paid

fully transferred to innogy in 2016: in the event of a change

out per share until then, calculated starting from the time

of control in conjunction with a drop in RWE AG’s credit

when the number of performance shares was finally

rating below investment-grade status, creditors may

granted. All performance shares granted on a preliminary

demand immediate redemption. In such cases, RWE AG has

basis at the time of the change of control shall expire without

the right to cancel its subordinated hybrid bonds within the

replacement or compensation.

defined change of control period; if this does not occur, the

annual compensation payable on the hybrid bonds

increases by 500 basis points.

1.12 Remuneration report

The capital market expects companies to have performance-linked remuneration systems which bring the interests of

management in line with those of the company’s owners. Another demand is that Executive Board members be

rewarded if their company applies the principles of sustainable development and takes its responsibility vis-à-vis

society seriously. RWE’s remuneration system meets these requirements. Despite this, we want to refine it and have

already worked closely with investors to this end. This year, the Supervisory Board of RWE AG will finalise the new rules

and present them to the 2021 Annual General Meeting for a vote.

Structure of Supervisory Board remuneration

The remuneration of the Supervisory Board is governed by

In addition to the remuneration paid, out-of-pocket expenses

the provisions of the Articles of Incorporation of RWE AG.

are refunded to the members of the Supervisory Board.

Accordingly, the Chairman of the Supervisory Board receives

Some Supervisory Board members also receive income

fixed remuneration of €300,000 per fiscal year. His Deputy

from the exercise of Supervisory Board mandates at

receives €200,000 per fiscal year. The other members of

subsidiaries of RWE AG.

the Supervisory Board receive fixed remuneration of

€100,000 and additional compensation for committee

The members of the Supervisory Board imposed on

mandates according to the following rules.

themselves the obligation, subject to any commitment to

relinquish their pay, to use 25 % of the total annual

Members of the Audit Committee receive additional

compensation (before taxes) to buy RWE shares and to hold

remuneration of €40,000. This payment is increased to

them for the duration of their membership of the Supervisory

€80,000 for the Chair of this committee. With the exception

Board of RWE AG. Last year, all of the members who do

of the Nomination Committee, the members of which do

not relinquish their compensation met this self-imposed

not receive additional remuneration, the members and the

obligation for their compensation for 2018. For the new

Chairs of all the other Supervisory Board committees receive

members who joined the Board in 2019, this self-imposed

an additional €20,000 and €40,000 in remuneration,

obligation begins when the remuneration for fiscal 2019 is

respectively. Remuneration for a committee mandate is only

paid at the beginning of 2020.

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

In total, the remuneration of the Supervisory Board

remuneration paid for mandates on committees of the

(excluding out-of-pocket expenses) amounted to

Supervisory Board and €543,000 (previous year:

€3,304,000 in fiscal 2019 (previous year: €3,480,000).

€720,000) was remuneration paid for mandates at

Of this sum, €465,000 (previous year: €460,000) was

subsidiaries.

RWE Annual Report 2019Combined review of operations > Remuneration report

The remuneration of all individuals who have served on the

Supervisory Board in 2018 and/or 2019 is shown in the

following table.

Supervisory Board remuneration1

Fixed remuneration

Remuneration for
committee offices

Remuneration for
mandates at
subsidiaries2

Total remuneration3

€ ‘000

2019

2018

2019

2018

2019

2018

2019

2018

Dr. Werner Brandt, Chairman

Frank Bsirske, Deputy Chairman

Michael Bochinsky (since 1 Aug 2018)

Reiner Böhle (until 18 Sep 2019)

Sandra Bossemeyer

Martin Bröker (since 1 Sep 2018)

Anja Dubbert (since 27 Sep 2019)

Matthias Dürbaum (since 27 Sep 2019)

300

200

100

300

200

100

–

Ute Gerbaulet

100

Reinhold Gispert (until 31 Jul 2018)

Andreas Henrich (until 31 Aug 2018)

Prof. Dr. Hans-Peter Keitel

Dr. h. c. Monika Kircher

Monika Krebber (until 18 Sep 2019)

Harald Louis

Dagmar Mühlenfeld

Peter Ottmann

Günther Schartz

Dr. Erhard Schipporeit

Dr. Wolfgang Schüssel

Ullrich Sierau

Ralf Sikorski

Marion Weckes

Leonhard Zubrowski

Total3

–

100

–

143

–

200

–

120

–

215

300

–

300

343

140

120

100

300

400

120

–

100

–

120

130

172

140

120

395

125

140

190

140

150

120

100

240

140

120

480

140

190

140

150

2,296

2,300

465

460

543

720

3,304

3,480

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 sum totals.

Structure of Executive Board remuneration

Fundamentals. The structure and level of the Executive

Recipients of Executive Board remuneration. In the

Board’s remuneration are determined by the Supervisory

financial year that just ended, Rolf Martin Schmitz and

Board of RWE AG and reviewed on a regular basis to

Markus Krebber received compensation for their work on

determine whether they are appropriate and in line with the

the Executive Board of RWE AG. Rolf Martin Schmitz has

market. The remuneration system described in the following

been a member of the Executive Board since 1 May 2009

has been applied since 1 October 2016. It is made up of

and its Chairman since 15 October 2016. His contract

non-performance-based and performance-based

expires on 30 June 2021. Markus Krebber was appointed

components. The former consists of the fixed salary, the

to this corporate body with effect from 1 October 2016 and

pension instalment as well as fringe benefits. The

has been in charge of finance since 15 October 2016. His

performance- based components include the bonus and a

tenure on the Executive Board runs through to

share-based payment, the latter of which is a long-term

30 September 2024.

compensation component.

Non-performance-based Executive Board remuneration

Fixed compensation and pension instalments. The

on retirement, but not before the Executive Board member

members of the Executive Board of RWE AG receive a fixed

turns 62. Members of the Executive Board of RWE reach the

annual salary, which is paid in twelve monthly instalments.

established age limit when they are 63 years old. They can

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

be reappointed for one year at a time thereafter, but may
not hold office beyond their 65th birthday.

with Rolf Martin Schmitz – they belonged to the Executive

When retiring, Executive Board members can choose a

Board before the pension instalment was introduced and

one-time payment or a maximum of nine instalments. They

have therefore received a pension commitment (see

and their surviving dependants do not receive any further

page 78).

benefits. Vested retirement benefits from earlier activities

within the RWE Group remain unaffected by this.

The pension instalment is paid in cash or retained in part

or in full in exchange for a pension commitment of equal

Fringe benefits. Non-performance-based compensation

value through a gross compensation conversion. RWE has

components also include fringe benefits, primarily

concluded a reinsurance policy to finance the pension

consisting of company cars and accident insurance

commitment. The accumulated capital may be drawn upon

premiums.

Performance-based Executive Board remuneration

Bonus. Executive Board members receive a bonus which is

page 69. This means that innogy, the subsidiary acquired by

based on the economic performance of the company and

E.ON in September 2019, is considered only in terms of the

the degree to which they achieve their individual goals and

dividend payment it owes to RWE. The rules of Executive

the collective goals of the Executive Board. The starting

Board remuneration stipulate that the Supervisory Board

point for calculating the bonus is what is referred to as the

may modify adjusted EBIT to make this figure more suitable

‘company bonus’, which depends on the level of EBIT of

for measuring performance. Such adjustments can relate to

relevance to remuneration in the relevant fiscal year. The

gains on disposals, changes in provisions, as well as

basis for determining this figure is adjusted EBIT (EBIT minus

impairments and their consequences. This converts

the non-operating result). We calculated adjusted EBIT for

adjusted EBIT to EBIT of relevance to remuneration.

2019 and the preceding year using the method set out on

RWE Annual Report 2019Combined review of operations > Remuneration report

The company bonus is determined as follows: the

compensation and the performance of the share price over

Supervisory Board sets a target as well as a floor and a

the long term motivates the Executive Board to consider the

ceiling for EBIT of relevance to remuneration at the

interests of the company’s owners when taking decisions.

beginning of every fiscal year. After the end of the fiscal year,

Another of the SPP’s success factors is net income of

the actual level of adjusted EBIT and EBIT of relevance to

relevance to remuneration of the fiscal year in question. This

remuneration resulting from the modifications explained

key figure is derived from adjusted net income, which is

earlier are determined. If the latter is identical to the EBIT

arrived at by deducting the non-operating result and other

target, the target achievement is 100 %. In this case, the

exceptional items including their effects on income taxes

company bonus equals the contractually agreed baseline

from net income. Like adjusted EBIT, we calculated it using

bonus. If EBIT of relevance to remuneration is exactly at the

the method described on page 69, with innogy being

pre-defined floor, target achievement is 50 %; if it is at the

considered only in terms of the dividend payment it owes

ceiling, target achievement is 150 %. Target achievement is

RWE. The conditions of the SPP allow the Supervisory Board

adjusted linearly between the two limits. If EBIT of relevance

to make limited modifications to adjusted net income in

to remuneration is below the floor, no company bonus is

predefined cases in order to arrive at net income of

paid. If the ceiling is exceeded, the maximum target

relevance to remuneration. Such modifications may be

achievement remains 150 %.

made as long as they reflect the impact of unforeseeable

events such as capital measures, acquisitions, sales and

To calculate the individual bonus, the company bonus is

regulatory changes.

multiplied by a factor reflecting the personal performance

of the Executive Board member in question. This

The SPP is based on performance shares with a term

performance factor depends on the achievement of:

(vesting period) made up of the fiscal year to which they

(1) individual goals, (2) general collective goals, and

relate and the three subsequent years. The Executive Board

(3) collective goals in relation to corporate responsibility and

members receive a grant letter for each tranche, in which

employee motivation. The aforementioned target

they are informed of their personal gross allocation amount.

categories are each weighted by one-third. Degrees of

The preliminary number of performance shares is

achievement can range between 0 % and 200 %. However,

calculated by dividing the grant amount by the average

the derivable performance factor is limited to between 80 %

closing quotation of the RWE share over the last 30 days of

and 120 %. This means that the performance factor for an

trading on Xetra before the grant.

Executive Board member with a 150 % target achievement

is only 120 %.

Only after the end of the fiscal year is the number of fully

granted performance shares determined. It depends on the

After the end of every fiscal year, the Supervisory Board

net income of relevance to remuneration in the fiscal year in

evaluates the individual performance of the Executive

question. The actual figure is compared to a pre-defined

Board members relative to the three categories above and

target figure. The procedure is similar to the approach taken

determines their individual performance factor. This is done

when determining the company bonus. The Supervisory

in line with the binding goals and targets which it sets at the

Board pre-defines a target, a floor and a ceiling for net

beginning of the financial year. The bonus determined in this

income of relevance to remuneration, orienting itself

manner is paid out in full to the Executive Board members

towards the approved medium-term plan in doing so. If the

after the end of the fiscal year.

target figure is achieved exactly, 100 % of the conditionally

granted performance shares is fully allocated. If net income

Share-based payment. Executive Board members are

of relevance to remuneration is exactly at the floor, 50 % of

granted a payment under the Strategic Performance Plan

the conditionally granted performance shares is fully

(SPP), which rewards the achievement of long-term goals.

allocated; if it is at the ceiling, the final grant amounts to

The key determinant of success is the total return of the

150 %. At a level below the floor, all of the conditionally

RWE common share, which is made up of the share price

granted performance shares from the tranche lapse. If the

and the dividend (performance). The link between

ceiling is exceeded, the maximum grant remains 150 %.

The finally granted performance shares are fully paid out

Remuneration for exercising mandates. During the past

in cash to the Executive Board member after the end of the

fiscal year, members of the RWE AG Executive Board were

four-year vesting period. The level of the payment depends

paid to exercise supervisory board mandates at affiliates.

on the performance of the RWE common share. It corresponds

This income is deducted from the bonus and therefore does

to the final number of performance shares multiplied by the

not increase the total remuneration.

sum of the average closing quotation of the RWE common

share over the 30 days of trading on Xetra leading to the

Remuneration broken down by component. Assuming

end of the vesting period and the dividends accumulated in

that both the company and the Executive Board members

the last three years. However, a cap applies in this case as

achieve their performance targets to a degree of 100 %, the

well: even in the event of an extremely good share

compensation structure roughly breaks down as follows: the

performance, the payment is limited to a maximum of

base salary accounts for around 30 % of total remuneration.

200 % of the initial gross grant amount.

Approximately 30 % is allocable to short-term variable

remuneration, i. e. the bonus. As a long-term compensation

The members of the Executive Board are obliged to reinvest

component, the SPP accounts for about 40 % of total

25 % of the payment (after taxes) in RWE shares. The shares

remuneration.

must be held until at least the end of the third year after

conclusion of the vesting period.

Limitation of Executive Board remuneration. As set out

earlier, the level of variable compensation components is

The performance shares remain unaffected after an

limited. The company bonus amounts to a maximum of

Executive Board member leaves the body at the end of

150 % of the contractually agreed bonus budget. Multiplying

their contract and are paid out as planned at the end of the

this by the individual performance factor (80 % to 120 %), it

vesting period. If an Executive Board member voluntarily

is possible to reach a maximum of 180 % of the bonus

leaves the company early or is dismissed with good cause,

budget. With regard to share-based payment under the

all performance shares which have not yet reached the end

SPP, payout of the performance shares after the

of the vesting period lapse. The SPP also contains a

completion of the vesting period is limited to a maximum of

provision which gives the Supervisory Board the power to

200 % of the grant budget. Due to the above maximum

punish infractions by Executive Board members, for

values, there is also a cap on total compensation (see the

example serious violations of the company’s Code of

diagram on the next page).

Conduct, by reducing or completely voiding ongoing

SPP tranches.

When the SPP was introduced in 2016, the Supervisory

Board established a transitional tranche for 2016 and

three further regular tranches for 2017, 2018 and 2019.

In doing so, it also determined target figures for adjusted

net income and the aforementioned ceilings and floors. 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. One

major modification was made relating to the 2018 and

2019 tranches: instead of deriving adjusted net income

from net income according to IFRS, it was calculated using

the method explained earlier, with innogy being considered

only in terms of the dividend it owes RWE. Accordingly, the

target figures for the ceiling and floor of net income of

relevance to remuneration were also adjusted

retrospectively.

RWE Annual Report 2019Combined review of operations > Remuneration report

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

period, the performance shares from the SPP are paid out

fixed salary in twelve monthly instalments. The pension

during the month of the Annual General Meeting held in the

instalment is paid out at the end of the year, insofar as it is

following year. As explained earlier, Executive Board

not converted into a pension commitment. After the fiscal

members must invest 25 % of the payment in RWE common

year, the Supervisory Board determines the target

shares and may not sell these shares until after three

achievement for the company bonus and the individual

additional calendar years have passed from completion of

performance factor. The bonus is paid out in the month of

the four-year vesting period. As a result, it takes a total of

the Annual General Meeting (AGM) which attends to the

seven years for Executive Board members to obtain the full

financial statements of RWE AG. After the end of the vesting

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 at
the beginning
of the year

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

Pension scheme. Until the introduction of the pension

based payments under the SPP are not included in this

instalment as of 1 January 2011 described earlier, pension

payment.

benefits were granted to the members of the Executive

Board. Of the Executive Board members in 2019, this only

In the event of a change of control, all of the fully granted

applies to Rolf Martin Schmitz; the pension commitment

performance shares under the SPP that have not been paid

made to him in 2009 will remain unchanged. It entitles him

out are paid out early. All performance shares granted

to life-long retirement benefits in the event of retirement

under the SPP on a preliminary basis lapse on the date of

from the Executive Board of RWE AG upon turning 59,

the change of control.

permanent disability, early termination or non-extension of

his employment contract by the company. In the event of

Early termination of Executive Board mandate and

death, his surviving dependants are entitled to benefits.

severance cap. Following a recommendation of the

The amount of Rolf Martin Schmitz’s qualifying income and

German Corporate Governance Code (GCGC), the

the level of benefits determined by the duration of service

Executive Board’s employment contracts include a

are taken as a basis for his individual pension and surviving

provision stipulating that if an Executive Board mandate is

dependants’ benefits.

otherwise terminated early without due cause, a severance

payment of no more than the remuneration due until the

Change of control. If shareholders or third parties obtain

end of the employment contract and no more than two total

control over the company and this results in major

annual compensations including fringe benefits is made

disadvantages for the Executive Board members, they

(severance cap).

have a special right of termination. They have the right to

resign from the Executive Board and to request that their

Refinement of the remuneration system planned. Last

employment contract be terminated in combination with a

year, we discussed ways to refine the Executive Board’s

one-off payment within six months of the change of control.

remuneration system with representatives of institutional

investors. One of the objectives was to meet the demands of

A change of control as defined by this provision occurs when

the world’s capital markets, which have become more

one or several shareholders or third parties acting jointly

exigent over time. With the help of investor feedback, we

account for at least 30 % of the voting rights in the company,

started revising major parts of the system. However, we

or if any of the aforementioned can exert a controlling

have maintained its basic structure. The new features are

influence on the company in another manner. A change of

set to be approved by the Supervisory Board of RWE AG this

control also occurs if the company is merged with another

year and applied to all new employment contracts

legal entity, unless the value of the other legal entity is less

thereafter. Furthermore, we intend to put them up for a vote

than 50 % of the value of RWE AG.

at the 2021 Annual General Meeting.

On termination of their employment contract, Executive

The Supervisory Board passed a resolution to continue the

Board members receive a one-off payment equalling the

Strategic Performance Plan, which used to encompass

compensation due until the end of the term of their contract.

tranches only for 2016 to 2019 without any changes for

However, this amount will not be higher than three times

the time being. Accordingly, new target ceilings and floors

their total contractual annual remuneration. The share-

have been established for net income of relevance to

remuneration.

Level of Executive Board remuneration

The remuneration of the Executive Board of RWE AG is

The previous year’s figure was €6,880,000. The

calculated in compliance with the rules set out in the

remuneration components are shown in the following table.

German Commercial Code. The members of the Executive

Board received €7,571 ,000 in total remuneration for their

work in fiscal 2019.

RWE Annual Report 2019Combined review of operations > Remuneration report

Level of Executive Board
remuneration (according to HGB)
€ ‘000

Non-performance-based

of which:

Fixed remuneration

Pension instalments1

Fringe benefits

Performance-based

Bonus (short-term)

of which:
credited remuneration for mandates2

Value of performance shares at grant3
(long-term)

Total remuneration

Dr. Rolf Martin Schmitz

Dr. Markus Krebber

Total

2019

1,183

2018

1,180

1,160

–

3,032

1,782

–

2,636

1,386

2019

1,085

763

300

2,271

1,171

2018

1,066

750

300

1,998

898

2019

2,268

2018

2,246

1,923

1,910

300

5,303

2,953

300

4,634

2,284

115

146

180

261

295

1,250

4,215

1,250

3,816

1,100

3,356

1,100

3,064

2,350

7,571

2,350

6,880

1 The pension instalment paid to Markus Krebber is part of his remuneration under the German Commercial Code (HGB), but this does not apply to the annual

service cost of the pension commitment to Rolf Martin Schmitz.

2 Income from the exercise of Supervisory Board offices within the Group are fully deducted from the bonus.
3 The German Commercial Code mandates the statement of the value of the grant at the beginning of the fiscal year.

EBIT of relevance to remuneration, the basis for calculating

therefore eliminated from the actual figure. The EBIT target

the bonus, amounted to €1,207 million in the fiscal year

derived from the medium-term plan was €786 million

that just ended. It differs from adjusted EBIT (€1,412 million)

(target achievement of 100 %), with a floor of €186 million

in that we make certain modifications to it to neutralise

(target achievement of 50 %) and a ceiling of €1,386 million

effects that are not considered in the target figures. For

(target achievement of 150 %). These figures result in a

example, when determining the target figure, we did not

target achievement of 135 % for 2019. This means that the

consider any income from the potential reinstatement of

company bonus was 35 % higher than the bonus budget

the British capacity market. The effect on income of the

established at the beginning of the year.

delayed capacity payments for 2018 and 2019 was

Calculation of the 2019 company bonus

Adjusted EBIT

Adjustments1

EBIT of relevance to remuneration

Target

Ceiling

Floor

1 See commentary above.

2019
€ million

1,412

– 205

1,207

786

1,386

186

Target achievement
%

–

135

100

150

The Supervisory Board found that the Executive Board

generation portfolio, occupational safety, and adherence to

overachieved the individual and collective targets. The main

compliance, environmental and social standards. The only

success factors were the rapid implementation of the asset

target that was missed concerned the number of work-

swap with E.ON and the progress made in transforming

related accidents which, at 2.1 for every one million hours

RWE into a leading renewable energy company. The

worked, exceeded the predefined upper limit of 1.9.

compromise reached with the German government on

the lignite phaseout and the Executive Board’s further

Each of the Executive Board members had a target

development of RWE’s strategy to reflect the future of

achievement of 153 %. Due to the cap, the individual

renewable energy and electricity generation from coal were

performance factor was 120 %. Multiplying this figure by the

also rewarded. The above-average performance of the RWE

company bonus (135 %) results in a factor of 162 %. The

share and investor feedback demonstrated that the capital

latter translates into the individual bonus, which amounted

market welcomes the new strategy. Requirements in relation

to €1,782,000 for Rolf Martin Schmitz and €1,171,000 for

to employee motivation, which is regularly measured using

Markus Krebber. These sums correspond to 1.62 times the

internal surveys, were also met to a degree of at least

predetermined budgeted figures of €1,100,000 (Schmitz)

100 %. With one exception, this also applies to the CR
targets, which primarily related to the CO2 intensity of the

and €723,000 (Krebber).

Calculation of the 2019 tranche of the
Strategic Performance Plan

Adjusted net income

Adjustments1

Net income of relevance to remuneration

Target

Ceiling

Floor

1 See commentary.

2019
€ million

1,210

– 363

847

351

– 249

Target achievement
%

–

150

100

150

The German Commercial Code stipulates that the long-

Net income of relevance to remuneration is adjusted net

term performance-based remuneration component is the

income (€1,210 million) minus several exceptional items.

value of the performance shares granted on a preliminary

For example, we recognised significant impairments for

basis at the beginning of a fiscal year. As set out on page 75,

power stations in the 2016 consolidated financial

the level of the full grant depends on the development of net

statements, which had not yet been included in the

income of relevance to remuneration in the fiscal year

medium-term plan at the time and cause depreciation and

compared to a predefined target. The latter was set by the

amortisation to be much lower now. We eliminated this

Supervisory Board at €51 million for 2019 (grant of 100 %).

effect on depreciation and amortisation. The same applies

The floor was - €249 million (grant of 50 %) and the ceiling

to the income we received in the British generation business

was €351 million (grant of 150 %). The amount actually

due to the retroactive capacity payments we received for

achieved was €847 million (after modifications), which

2018.

corresponds to a target achievement of 150 %. This means

that the final grant of performance shares for 2019 was

50 % higher than the preliminary grant.

RWE Annual Report 2019Combined review of operations > Remuneration report

Long-term incentive payment:
Strategic Performance Plan

Tranche

Grant date

Fair value at grant date

Share price (average)

Dr. Rolf Martin Schmitz

Year

2019

2018

2017

2016

1 Jan 2019

1 Jan 2018

1 Jan 2017

1 Jan 2016

€ ‘000

€

1,250

19.10

1,250

18.80

1,250

11.62

769

13.78

Number of performance shares allocated
on a provisional basis

65,445

66,489

107,573

55,787

Measurement date of performance conditions

31 Dec 2019 31 Dec 2018 31 Dec 2017

31 Dec 2017

Target achievement in relation to net income of relevance
to remuneration

150

123

115

Final number of fully granted performance shares

98,168

81,781

123,709

64,155

End of vesting period

31 Dec 2022 31 Dec 2021 31 Dec 2020

31 Dec 2019

Long-term incentive payment:
Strategic Performance Plan

Tranche

Grant date

Fair value at grant date

Share price (average)

Number of performance shares allocated
on a provisional basis

Dr. Markus Krebber

Year

2019

2018

2017

2016

1 Jan 2019

1 Jan 2018

1 Jan 2017

1 Jan 2016

€ ‘000

€

1,100

19.10

1,100

18.80

988

11.62

247

13.78

57,592

58,511

84,983

17,915

Measurement date of performance conditions

31 Dec 2019 31 Dec 2018 31 Dec 2017 31 Dec 2017

Target achievement in relation to net income of relevance
to remuneration

150

123

115

Final number of fully granted performance shares

86,388

71,969

97,730

20,602

End of the vesting period

31 Dec 2022 31 Dec 2021 31 Dec 2020 31 Dec 2019

The table below shows the increase in provisions to cover

obligations from share-based payments under the SPP.

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

Dr. Rolf Martin Schmitz

Dr. Markus Krebber

Total

2019

2018

2,726

1,982

4,708

1,413

934

2,347

Obligations under the former pension scheme. The

(previous year: €10,534,000). The pension obligation for

service cost of pension obligations to Rolf Martin Schmitz

2019 increased by €1,360,000 (previous year:

amounted to €554,000 in 2019 (previous year:

€1,248,000).

€536,000). This is not a remuneration component in

accordance with the German Commercial Code. As of

Based on the emoluments qualifying for a pension as of

year-end, the net present value of the defined benefit

31 December 2019, the projected annual pension of

obligation determined in accordance with IFRS amounted

Rolf Martin Schmitz on retiring from the company as of

to €14,997,000 (previous year: €13,370,000). The present

the expiry of his appointment amounted to €556,000

value of the pension obligation determined according to

(same as in the previous year). This includes vested pension

the German Commercial Code totalled €11,894,000

benefits due from former employers transferred to RWE AG.

Recommendations of the German Corporate Governance Code

In presenting the remuneration system, we also follow the

• The term ‘benefits received’ defines the extent to which

recommendations of the version of the GCGC applicable to

the management board member has already received

2019, which was published on 7 February 2017. In line with

payments. In this regard, the relevant aspect is the time at

the GCGC, the total remuneration of management board

which the amount being paid is sufficiently certain and

members comprises the monetary compensation elements,

not the actual time of the payment.

pension commitments, other awards, fringe benefits of all

kinds and benefits from third parties which were granted or

This distinction made in the Code can be illustrated with

paid in the financial year with regard to management board

the example of the bonus: the contractually agreed and

work. Item 4.2.5, Paragraph 3 of the Code lists the

promised budgeted bonus for the fiscal year in question is

compensation components that should be disclosed. Unlike

considered ‘granted’. Conversely, the benefits received

German commercial law, the GCGC stipulates that the

table shows the bonus level which will actually be paid with a

annual service cost of pension benefits is also part of total

high degree of probability. In this regard, it is irrelevant that

remuneration.

the payment will not be made until the following year. The

payment date is deemed to have been reached when the

The GCGC provides specific examples for the

indicators and results needed to determine target

recommended presentation of management board

achievement (and therefore the bonus) are known with

compensation based on model tables, which distinguishes

sufficient certainty. The Code assumes that this is already

between ‘benefits granted’ and ‘benefits received’.

the case at the end of the year. As a result, the Executive

Board bonuses are stated in the reporting year in the benefits

• According to the GCGC, benefits or compensation are

received table.

granted when a binding commitment to such is made to

the management board member. In deviation from

In the following, we present the compensation of the

German commercial law, it is not relevant to what extent

Executive Board of RWE AG based on the sample tables

the management board member has already provided

recommended by the GCGC.

the services being remunerated.

Benefits granted

€ ‘000

Fixed remuneration

Pension instalment

Fringe benefits

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

Dr. Markus Krebber
Chief Financial Officer
since 15 October 2016

2019
(Min.)

2019
(Max.)

2019

2018

1,160

–

2019
(Min.)

763

300

2019
(Max.)

763

300

2019

2018

763

300

750

300

Total fixed remuneration

1,183

1,180

1,085

1,066

One-year variable remuneration
(bonus)

Multi-year variable remuneration
(SPP)

2018 tranche
(term: 2018 – 2021)

2019 tranche
(term: 2019 – 2022)

Total variable remuneration

–

1,980

1,782

1,386

2,500

1,250

–

1,250

2,500

1,250

–

4,480

3,032

2,636

–

1,302

1,171

898

2,200

1,100

–

1,100

2,200

1,100

–

3,502

2,271

1,998

Total variable and fixed remuneration

1,183

5,663

4,215

3,816

1,085

4,587

3,356

3,064

Service cost

554

536

–

Total remuneration

1,737

6,217

4,769

4,352

1,085

4,587

3,356

3,064

RWE Annual Report 2019Combined review of operations > Remuneration report

Benefits received

€ ‘000

Fixed remuneration

Pension instalment

Fringe benefits

Total fixed remuneration

One-year variable remuneration (bonus)

Multi-year variable remuneration (SPP)

Payment from the 2016 tranche

Total variable remuneration

Total variable and fixed remuneration

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

2019

1,160

–

1,183

1,782

1,538

3,320

4,503

554

5,057

2018

1,160

–

1,180

1,386

–

1,386

2,566

536

3,102

2019

2018

763

300

1,085

1,171

494

1,665

2,750

–

750

300

1,066

898

–

898

1,964

–

2,750

1,964

1.13 Development of risks and opportunities

RWE’s risk exposure continued to improve in 2019. It was important to us that the European Commission gave the

go-ahead for the asset swap with E.ON. The renewable energy business gives us a new operating mainstay with a high

level of regulated income. This makes us more profitable and crisis-proof. Despite this, RWE remains exposed to risks.

For example, the adverse effects of the German coal phaseout may be more significant than expected. This and

further material risks are identified, assessed and managed using our proven Group risk management system, which

helps us to keep RWE on course despite the persistent uncertainties in our business.

Distribution of risk management tasks at RWE.

• The Internal Audit & Compliance Department monitors

Responsibility for Group risk management lies with RWE AG.

compliance with RWE’s Code of Conduct, focusing on

The parent company’s Executive Board monitors and

avoiding corruption. It reports to the CEO of RWE AG or, if

manages the overall risk of the RWE Group. In addition, it

members of the Executive Board are affected, directly to

determines the general risk appetite of RWE and defines

the Chairman of the Supervisory Board and the Chairman

upper limits for single risk positions. At the level below the

of the Audit Committee.

Executive Board, the Controlling & Risk Management

Department has the task of applying and developing the

• Risks from changes in commodity prices are monitored

risk management system. It derives detailed limits for the

by RWE Supply & Trading in so far as they relate to the

individual business fields and operating units from the risk

conventional electricity generation, energy trading and

caps set by the Executive Board. Its tasks also include

gas businesses.

checking the identified risks for completeness and

plausibility and aggregating them. In so doing, it receives

• Strategies to limit market risks in conventional electricity

support from the Risk Management Committee, which is

generation must be approved by the Commodity

composed of the heads of the following five RWE AG

Management Committee. The members of this expert

departments: Controlling & Risk Management (Chair),

panel are the CFO of RWE AG, individuals from the

Finance & Credit Risk, Accounting, Legal & Insurance, and

management team of RWE Supply & Trading and a

Corporate Business Development. The Controlling & Risk

representative of the Controlling & Risk Management

Management Department provides the Executive Board and

Department.

the Supervisory Board of RWE AG with regular reports on

the company’s risk exposure.

• In October 2019, we also set up such a committee for

market risks associated with renewable energy. The

A number of additional organisational units and committees

Renewables Commodity Management Committee

have been entrusted with risk management tasks:

consists of the CFO of RWE AG, members of the

management of RWE Renewables GmbH and a

• Financial risks and credit risks are managed by the

representative of the Controlling & Risk Management

Finance & Credit Risk Department, which reports directly

Department.

to the CFO of RWE AG.

• The strategic guidelines for the management of financial

• The Accounting Department, which also reports to the

assets (including the funds of RWE Pensionstreuhand e. V.)

CFO, sees to it that financial reporting is free of material

are determined by the Asset Management Committee.

misstatements. It has an accounting-related internal

The following individuals belong to it: the CFO of

control system for this purpose. A committee consisting of

RWE AG, the Managing Director in charge of finance at

officers from Accounting and other departments of

RWE Supply & Trading, the heads of the following

relevance to accounting assists in securing the quality of

departments: Controlling & Risk Management,

financial reporting. More detailed information can be

Finance & Credit Risk, Portfolio Management/

found on page 92.

Mergers & Acquisitions and – from the last department in

the list – the head of Financial Asset Management.

RWE Annual Report 2019Combined review of operations > Development of risks and opportunities

Under the expert management of the aforementioned

Risk management as a continuous process. Risks and

organisational units, RWE AG and its operating subsidiaries

opportunities are defined as negative or positive deviations

are responsible for identifying risks early, assessing them

from expected figures. Their management is an integral and

correctly and managing them in compliance with corporate

continuous part of operating processes. We assess risks

standards. Internal Audit regularly assesses the quality and

every six months, using a bottom-up analysis. We also

functionality of our risk management system.

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 Group’s risks once a quarter.

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
€ million

Earnings risks
Potential impact on net income2

Indebtedness/equity risks
Potential impact on net debt2 and equity2

Category V

≥ 8,000

Category IV

≥ 1,500 and < 8,000

Category III

≥ 600 and < 1,500

Category II

Category I

≥ 300 and < 600

< 300

≥ 8,000

≥ 4,000 and < 8,000

≥ 2,000 and < 4,000

≥ 1,000 and < 2,000

< 1,000

1 Aggregated for 2020 to 2022.
2 Since the sale of innogy, we have returned to the definition of net income, net debt and equity according to IFRS consolidation principles. These figures were
previously determined using the method presented on page 69, with innogy being recognised as a purely financial investment.

Our risk analysis normally covers the three-year horizon of

that share the same cause are aggregated to a single risk

our medium-term plan, but can extend beyond that in

if possible. To clearly assign them to the matrix fields, we

individual cases. We measure the potential damage based

have established thresholds for net income, net debt and

on the possible effects on net income, net debt and equity.

equity, which are oriented towards the RWE Group’s ability to

Hedging measures are considered. We define the potential

bear risks. They are presented in the table below the matrix.

damage as the deviation from the budgeted figure in

Depending on their position in the matrix, we distinguish

question, accumulated over the three-year planning

between low, medium and high risks. Based on this systematic

horizon. We analyse the material risks using a matrix (see

risk identification, we determine whether there is a need for

chart on the preceding page) in which they are categorised

action and initiate measures to mitigate the risks if necessary.

by potential damage and probability of occurrence. Risks

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 2019

31 Dec 2018

Medium

High

Low

Medium

Low

Medium

High

Medium

High

Main risks for the RWE Group. Depending on their causes,

In this section, we provide commentary on the main risks

our risks can be classified into seven groups, which are

and opportunities and explain what measures have been

shown in the table above. The highest individual risk

taken to counter the threat of negative developments.

determines the classification of the risk of the entire risk

class. Only the regulatory and political risks are currently

• Market risks. In most of the countries in which we are

classified as ‘high’. They primarily result from the coal

active the energy sector is characterised by the free

phaseout in Germany. It is already apparent that the

formation of prices. Declines in quotations on wholesale

compensation we have been awarded will not fully cover the

electricity markets can cause generation assets to

financial damage we will sustain as a result of the early

become less profitable. This relates to power plants as

closure of lignite power plants and opencast mines. In fact,

well as wind farms and other renewable energy assets

the difference between the compensation and the actual

that are not subsidised with fixed feed-in payments.

damage could increase if the burdens are greater than

Declines in electricity prices can cause us to recognise

planned. Furthermore, regulatory pressure on our lignite

impairments.

business may continue to rise despite the exit agreement.

We no longer see any high risks in the ‘other risks’ category.

Power purchase agreements with firm conditions expose

In the previous year, we had factored in the potential failure

us to the risk of having to pay more for electricity than we

of the asset swap with E.ON. Since the transaction was

can earn when selling it on the market. This may force us

approved and implemented to a substantial extent, ‘other

to form provisions to cover this risk. We have identified

risks’ are now classified as ‘low’.

such a risk inherent in the two contracts we concluded to

purchase electricity from the 1,055 MW Datteln 4 hard

coal-fired power plant in 2005 and 2006. Based on the

RWE Annual Report 2019
Combined review of operations > Development of risks and opportunities

estimates of its operator Uniper, the station will go online

Our risk management system for energy trading is firmly

in the summer of 2020, ten years later than planned. We

aligned with best practice as applied to the trading

intend to adapt or cancel the purchase agreements and

businesses of banks. As part of this, transactions with third

have therefore taken legal recourse.

parties are concluded only if the associated risks are

within approved limits. There are guidelines governing the

Wholesale electricity prices in our most important

treatment of commodity price risks and associated credit

generation markets, i. e. Germany, the UK and the

risks. Our subsidiaries constantly monitor their commodity

Netherlands, are far above the lows recorded in 2016.

positions. Risks associated with trades conducted by

This is primarily due to the development of the prices of
fuel and CO2 emission allowances. It cannot be ruled out
that electricity prices come under significant pressure

RWE Supply & Trading for its own account are monitored

daily.

again. The continued expansion of renewable energy

The Value at Risk (VaR) is of central importance for risk

could be a contributing factor. However, there is also a

measurement in energy trading. It specifies the maximum

chance that prices develop in our favour, not least due to

loss from a risk position not exceeded with a

the German nuclear and coal phaseouts. The reduction of

predetermined probability over a predefined period of

secured generation capacity could lead to more frequent

time. The VaR figures within the RWE Group are based on

shortages along with high electricity prices.

a confidence interval of 95 %. The assumed holding

We assess the price risks to which we are exposed on the

probability of 95 %, the daily loss will not exceed the VaR.

period for a position is one day. This means that, with a

procurement and supply markets taking account of

current forward prices and expected volatility. For our

The VaR for the price risks of commodity positions in the

power plants, we limit these risks by selling most of our

trading business of RWE Supply & Trading may not rise

electricity forward and securing the prices of the fuel and
CO2 emission allowances needed for its generation.

above €40 million. In the past financial year, it averaged

€12 million, and the daily maximum was €22 million. In

addition, limits derived from the aforementioned VaR

We also use financial instruments to hedge our

thresholds have been set for every trading desk.

commodity positions. In the consolidated financial

Furthermore, we develop extreme scenarios and factor

statements, such instruments, including those serving the

them into stress tests, determine their consequences for

purpose of limiting interest and currency risks, are

earnings, and take countermeasures if we deem the risks

usually presented through the statement of on-balance-

to be too high.

sheet hedges. More detailed information on this can be

found on pages 113 et seqq. in the Notes.

The management of our gas portfolio and the liquefied

natural gas (LNG) business is pooled in a new

RWE Supply & Trading plays a central role when it comes

organisational unit at RWE Supply & Trading. We

to managing commodity price risks. It functions as the

established a VaR cap of €14 million for these activities.

Group’s interface to the global wholesale markets for

The average VaR in 2019 was €6 million, and the daily

electricity and energy commodities. On behalf of our power

maximum was €8 million.

plant companies, RWE Supply & Trading markets large

portions of our generation position and purchases the
fuel and CO2 certificates needed to produce electricity.
The role of RWE Supply & Trading as internal transaction

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

partner makes it easier for us to limit the risks associated

adjusted EBITDA. To this end, we calculate the overall risk

with price volatility on energy markets. However, the

for the Group on the basis of the commodity risk positions

trading transactions are not exclusively intended to

of the individual companies; this overall risk mainly stems

reduce risks. In compliance with risk thresholds, the

from power generation. As the majority of our generation

company also takes commodity positions to achieve

position is already fully hedged for 2020, only minor

a profit.

market price risks remain for this year. Opportunities for

additional profits arise, because we are able to flexibly

adapt our power plant deployment to short-term market

developments.

In the UK generation business, our earnings not only

As much as the most recent decisions to phase out coal

depend on the development of the price of electricity, fuel

place a burden on us, they can contribute to de-escalating

and emission allowances, but also on the level of the

the dispute over coal-based electricity generation,

payments we receive for participating in the national

thereby increasing the planning security of power plant

capacity market. The payments are determined in annual

operators. However, the risk of regulatory pressure rising

auctions and fluctuate depending on supply and

despite this remains, for example through the introduction

demand.

of price floors for carbon dioxide or the determination of

extremely restrictive pollutant emission limits.

We are also exposed to market risks in the gas storage

business, which has gained importance for us as a result

We are also exposed to risks in the field of nuclear energy,

of the transaction with E.ON. As set out on page 31, the

albeit to a much lesser extent than in the past. Since we

realisable margins depend significantly on the seasonal

made contributions to the German nuclear energy fund in

differences in the price of gas. If the price differences are

the middle of 2017, the state has assumed complete

large, they can be taken advantage of to generate

responsibility for the interim and final storage of our

substantial income. The German gas storage business is

radioactive waste. However, we are still exposed to cost

currently characterised by overcapacity and substantial

risks associated with disposal tasks which remain within

pressure on margins. However, we are confident that

our remit. For example, it cannot be ruled out that the

market conditions will improve in the long run.

dismantling of nuclear power stations will be more

expensive than estimated and we will therefore have to

Our biggest market risks remain unchanged in the

establish higher provisions. However, we also see the

‘medium’ category.

opportunity to leverage synergies and cut costs.

• Regulatory and political risks. Energy supply is a long-

Our risk exposure in the British capacity market also

term business and companies involved in this industry are

improved. The market had been suspended in November

dependent on a stable, reliable framework, which has

2018, because the Court of the European Union had

recently ceased to exist especially in conventional

declared its approval issued by the European Commission

electricity generation. Ambitious emission reduction

in 2014 null and void. Following an extensive review,

targets have caused the governments in our core

the Commission reapproved the capacity market in

markets to intervene in the energy sector repeatedly. The

October 2019. This meant that capacity payments could

most recent examples of this are the decisions to phase

be resumed and the retained payments could be made

out coal-fired power generation in Germany and the

retrospectively.

Netherlands, on which we provide detailed information on

pages 42 et seqq. After intense negotiations, we reached

Even in the present political environment, we are exposed

an agreement with the government on the early closure

to risks associated with, for instance, approvals when

of our lignite-fired power plants and opencast mines. In

building and operating production facilities. This

exchange, we were promised compensation, but it will not

particularly affects our opencast mines and power

fully cover our expected financial burdens. Furthermore,

stations. The danger here is that approvals are granted

there is a risk of the actual burdens being more substantial

late or not at all and that granted approvals are

than planned, and, in turn, the earnings shortfalls as well.

withdrawn temporarily or for good. One example is the

Legislation on the coal phaseout in the Netherlands does

preliminary halt to the clearance of Hambach Forest

not provide for compensating the affected power

ordered by the Münster Higher Administrative Court in

producers at all. Despite this, we are pushing for

October 2018, which curtailed the continued operation

compensation for our financial disadvantages and will

of the Hambach opencast mine. However, the suit

take legal recourse if necessary.

pending before the Münster Higher Administrative Court

should lose importance as we have reached an

agreement on the preservation of the forest with the

government.

RWE Annual Report 2019Combined review of operations > Development of risks and opportunities

In Germany, we do not have to pay an apportionment

We currently have low exposure to legal risks. At the end of

under the Renewable Energy Act (EEG) for electricity that

2019, a claim for damages filed against us due to a failed

we consume ourselves in our power stations and

joint venture with the Russian Sintez Group was dismissed.

opencast mines. However, the legal situation surrounding

This eliminated our sole legal risk in the ‘medium’ category.

the own electricity privilege is vague and requires

clarification on certain points from the country’s highest

• Operational risks. RWE operates technologically

court, for example with regard to the EEG exemption of

complex, interconnected production facilities such as

leased assets. There is a danger that the options to

conventional power stations, opencast mines and large-

benefit from the own electricity privilege may be limited

scale onshore and offshore wind farms. Damage and

and that back payments may even have to be made for

outages can result in substantial lost earnings. During

previous years.

their construction and modernisation, delays and cost

increases can occur, for example due to accidents,

By acquiring the renewable energy businesses of E.ON

material defects, late deliveries or time-consuming

and innogy, we are positioning ourselves in an area of the

approval processes. Furthermore, renewable energy

energy sector that is characterised by fairly stable

assets run the risk of delayed commissioning being

framework conditions and wide public acceptance.

disadvantageous to subsidisation. We counter the

However, there are regulatory risks in this area as well.

described risks through diligent plant and project

Adjustments to state subsidy schemes can lead to

management as well as high safety standards. We also

reductions in payments and new projects losing their

regularly inspect and maintain our facilities. If

appeal. This can lead to investment undertakings being

economically viable, we take out insurance policies.

broken off. It is also conceivable that firmly pledged state

payments may be cut retrospectively. In the dialogue we

In relation to capital expenditure, there is a risk that the

maintain with policymakers, we point out that reliable

return may fall short of expectations and prices paid for

framework conditions are the basic precondition for

acquisitions may retrospectively prove to be too high.

companies to invest in building sustainable, climate- friendly

Before we take investment decisions, we conduct

energy infrastructure.

extensive analyses to try and map the financial and

strategic effects as realistically as possible. Moreover,

Although our exposure to regulatory and political risks has

RWE has specific accountability provisions and approval

decreased, we continue to classify them as ‘high’. We

processes in place to prepare and implement the

ascribe the greatest importance to the burdens resulting

decisions.

from the German coal phaseout, which cannot be offset

by compensatory payments from the state.

Our business processes are supported by secure data

processing systems. Nevertheless, we cannot rule out a

• Legal risks. Individual RWE Group companies are

lack of availability of IT infrastructure or a breach in data

involved in litigation and arbitration proceedings due to

security. Our high security standards are designed to

their operations or the acquisition of companies. Out-of-

prevent this. In addition, we regularly invest in hardware

court claims have been filed against some of them.

and software upgrades.

Furthermore, Group companies are directly involved in

various procedures with public authorities or are at least

As in the previous year, our operating risks are classified

affected by their outcomes. To the extent necessary, we

as ‘medium’.

have accrued provisions for possible losses resulting from

pending proceedings before ordinary courts and

arbitration courts.

Risks may also result from exemptions and warranties

that we granted in connection with the sale of assets.

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 cover risks that are unknown at the time of

sale. These hedging instruments are standard procedure

in sales of companies and equity holdings.

• Financial risks. Market interest rates, currency exchange

Collateral pledged for forward transactions can have a

rates, share prices and collateral pledged for forward

significant effect on our liquidity. Its level is determined by

transactions can have a substantial effect on our

the extent to which the contractually agreed prices deviate

financial position. We are exposed to various interest rate

from market quotations as of the respective cut-off date.

risks. For example, rises in interest rates can lead to

These differences can be substantial, especially on volatile

reductions in the price of the securities we hold. This

markets. In recent times, the prices of commodities of

primarily relates to fixed-interest bonds. Last year, the

VaR for the interest rate-related price risk of capital

investments was €5 million on average at RWE AG.

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

Moreover, increases in interest rates cause our financing

collateral from contracting parties, resulting in a

costs to rise. We measure this risk using the Cash Flow at

temporary increase in our equity.

Risk (CFaR), applying a confidence level of 95 % and a

holding period of one year. Our average CFaR at RWE AG

Risks and opportunities from changes in the price of

in 2019 was €18 million.

securities are controlled by a professional fund

management system. Range of action, responsibilities

Furthermore, market interest rates have an effect on our

and controls are set out in internal guidelines which the

provisions, as they are the point of reference for the

Group companies are obliged to adhere to when

discount rates used for determining the net present

concluding financial transactions. All financial

values of obligations. This means that, all other things

transactions are recorded using special software and are

being equal, provisions rise when market interest rates fall

monitored by RWE AG.

and vice versa. On pages 144 et seqq. of the Notes, we

present the effects of changes in interest rates on the net

The conditions at which we can finance our business on

present values of our pension obligations and on the

the debt capital market are in part dependent on the

nuclear and mining provisions.

credit ratings we receive from international rating

agencies. As set out on page 63, Moody’s and Fitch place

We are exposed to foreign exchange risks primarily owing

our creditworthiness in the investment grade category

to our business activities in the UK and the USA.

with a stable outlook. However, the agencies may change

Furthermore, energy commodities such as coal and oil

their assessments and lower our credit rating, which can

are traded in US dollars. Companies which are overseen

result in additional costs if we have to raise debt capital.

by RWE AG have their currency risks managed by the

This would probably also increase the liquidity

parent company. RWE AG aggregates the risks to a net

requirement when pledging collateral for forward

financial position for each currency and hedges it if

transactions.

necessary. In the year being reviewed, the average VaR for

RWE AG’s foreign currency position was €2 million.

Our growth strategy in the renewables business envisages

annual spending of €1.5 billion to €2.0 billion plus

The securities we hold in our portfolio include shares. The

proceeds from the sale of shares in projects. This exposes

single-largest position is currently the 15 % stake in E.ON,

us to the risk of a timing offset between fund procurement

which had a fair value of €3.8 billion as of the end of

and fund usage: we are often bound to firm time frames

2019. Substantial changes in the quotation of the E.ON

when spending capital, but the divestments necessary to

share can affect our financial power significantly. Besides

refinance them can be delayed or fail. In such cases, our

the stake in E.ON, our assets under management include

net debt would rise – at least temporarily.

other substantial shareholdings. In 2019, the average

VaR for the share price risk of these equities (without the

As in the previous year, we classify our financial risks as

stake in E.ON) was €5 million.

‘medium’.

RWE Annual Report 2019

Combined review of operations > Development of risks and opportunities

• Creditworthiness of business partners. Our business

Germany’s coal phaseout in particular has negative

relations with key accounts, suppliers, trading partners

consequences for us. The state compensation that we have

and financial institutions expose us to credit risks.

been offered does not fully cover the foreseeable damage.

Therefore, we track the creditworthiness of our

This discrepancy could become more significant if the

transaction partners closely and assess their credit

burdens we actually experience exceed our expectations.

standing based on internal ratings, both before and

We welcome the planning security gained due to the exit

during the business relationship. Transactions that exceed

roadmap. In the renewable energy business, we are also

certain approval thresholds and all trading transactions

exposed to regulatory risks, albeit to a lesser extent. Cuts in

are subject to credit limits, which we determine before the

state subsidies could cause investment projects to stop

transaction is concluded and adjust if necessary, for

being worthwhile. Retrospective intervention in the subsidy

instance in the event of a change in creditworthiness. At

scheme could even render existing assets unprofitable. We

times, we request cash collateral or bank guarantees. In

have not identified any further material regulatory risks for

the trading and financing business, credit risks and the

the time being. Brexit is also highly unlikely to have a

utilisation of the limits are measured daily.

substantial impact on our business.

We agree on collateral when concluding over-the-counter

Besides the regulatory environment, market conditions can

trading transactions. Furthermore, we enter into

also change substantially. This exposes us to risks in

framework agreements, e. g. those of the European

particular in power production. Decreases in wholesale

Federation of Energy Traders (EFET). For financial

electricity prices can shrink our margins. However, prices

derivatives, we make use of the German master

and margins can also display positive development. In

agreement for forward financial transactions or the

Germany, our main market, we could benefit from

master agreement of the International Swaps and

temporary price spikes, which may become more frequent

Derivatives Association (ISDA).

given the expected shortage of conventional generation

As in the past, our risks stemming from the

capacity.

creditworthiness of our business partners do not exceed

Through extensive restructuring, ambitious efficiency-

the category ‘medium’.

enhancing measures and strict investing discipline, we have

established a solid financial foundation for the RWE Group.

• Other risks. This risk class includes reputation risks and

By analysing the effects of risks on our liquidity and pursuing

risks associated with non-compliance and criminal

a conservative financing strategy, we ensure that we can

offences. Until September 2019, this category covered

meet our payment obligations punctually. We have

the possibility of a failure of the asset swap with E.ON. This

considerable liquid funds and great leeway in terms of debt

risk, which we had classified as ‘high’ due to its huge

financing, thanks to the Debt Issuance Programme, the

potential damage, has since been eliminated. As a result,

Commercial Paper Programme and the syndicated credit

the overall risk in this category is now ‘low’.

line. We budget our liquidity with foresight, based on the

short, medium and long-term funding needs of our Group

RWE’s risks and opportunities: general assessment by

companies, and have a significant amount of minimum

management. As demonstrated by the commentary in this

liquidity on a daily basis.

chapter, RWE’s overall risk exposure improved. The risk of

our asset swap with E.ON failing has been eliminated and

Thanks to our comprehensive risk management system and

our operating activities will become more stable and

the measures for safeguarding our financial and earning

crisis-proof thanks to the large contribution to earnings

power described earlier, we are confident that we can

made by renewable energy. The reinstatement of the British

manage the current risks to RWE. At the same time, we are

capacity market is also having a positive effect.

establishing the prerequisites for ensuring that this remains

Nevertheless, we remain exposed to substantial risks.

the case in the future.

Accounting-related internal control system: statements

processing. The representatives of the finance, human

in accordance with Section 289, Paragraph 4, and

resources, procurement, trading and IT functions document

Section 315, Paragraph 4 of the German Commercial

whether the agreed ICS quality standards are adhered to by

Code. Risks associated with financial reporting reflect the

their respective areas. Our Internal Audit Department is also

fact that our annual, consolidated and interim financial

involved in the ICS reviews. The results of the reviews are

statements may contain misrepresentations that could

documented in a report to the Executive Board of RWE AG.

have a significant influence on the decisions made by their

addressees. For example, stated earnings that are too high

The review conducted in 2019 once again demonstrated

could cause capital investors to invest in the company. Our

that the ICS is effective. The tests related to RWE without

accounting-related Internal Control System (ICS) aims to

innogy. However, our subsidiary, which has been sold in the

detect potential errors and misrepresentations that result

meantime, applied the audit procedure described above

from non-compliance with accounting standards. The

analogously. The results obtained were considered in the

foundations of the ICS are our basic principles – which are

assessment of the ICS of RWE.

set out in RWE’s Code of Conduct and, first and foremost,

include our ambition to provide complete, objective, correct,

Within the scope of external reporting, the members of the

clear and timely information – as well as our groupwide

Executive Board of RWE AG take a half-year and full-year

guidelines. Building on this, minimum requirements for the

balance-sheet oath, confirming that the prescribed

accounting-related IT systems are designed to ensure the

accounting standards have been adhered to and that the

reliability of data collection and processing.

financial statements give a true and fair view of the net

worth, financial position and earnings. When in session, the

RWE AG is responsible for the design and monitoring of

Supervisory Board‘s Audit Committee regularly concerns

the ICS. These tasks are performed by our Accounting

itself with the effectiveness of the ICS. Once a year, the

Department. In doing so, it can rely on a groupwide set of

Executive Board of RWE AG submits a report on this to the

rules. On top of this, we created a committee, the objective

Committee.

of which 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

ICS Committee consists of representatives from the

Accounting, Controlling & Risk Management and Internal

Audit & 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 preparation of

financial statements or consolidation, they are conducted

by employees from the Accounting Department. The

appropriateness and effectiveness of the controls are

certified by an accounting firm for processes handled by

service centres on our behalf, for example invoice

RWE Annual Report 2019Combined review of operations > Outlook

1.14 Outlook

Our earnings forecast for 2020 already reflects the new RWE entirely. The renewable energy business that we

acquired from E.ON in September 2019 is now contributing to the Group’s earnings for a full year for the first time.

This will have a positive impact on adjusted EBITDA, which we estimate will amount to between €2.7 billion and

€3.0 billion. This would be substantially above the €2.5 billion achieved last year. Here, we will benefit from the

progressive expansion of our wind and solar power capacity. By contrast, we will probably not match the

extraordinarily good energy trading performance achieved in 2019.

Experts predict steady growth. Initial forecasts see the

Electricity production for 2020 nearly completely sold

world economy expanding by about 2.5 % in 2020, roughly

forward. The development of commodity prices will depend

as much as last year. The economic outlook for the

on a number of factors that are very difficult to predict.

Eurozone is also similar to the development in 2019, with

However, it will only have a minor impact on our earnings in

estimated growth of some 1 %. Experts anticipate a similar

the current year, because we have sold forward nearly all

gain in Germany, whereas growth in the Netherlands may

well once again exceed the average of the Eurozone

countries. The UK’s prospects largely depend on whether the

our electricity generation for 2020 and have secured the
prices of the required fuel and CO2 emission allowances.
These transactions have been concluded up to three years

country manages to maintain its close economic relations

in advance. Therefore, the realised electricity prices can

with the EU after Brexit. If so, UK GDP could post an increase

differ from the current market quotations significantly. The

of 1 %. The US economy is expected to expand by some 2 %.

price realised for the electricity generated by our German

Power consumption expected to stagnate. Our

forward with long lead times, was higher for 2020 than for

lignite-fired and nuclear power stations, which we sold

expectations regarding this year’s electricity usage are

2019.

based on the above economic outlooks. If the German

economy grows as expected, demand for electricity in our

Focus on completing the asset swap with E.ON and the

home country should be flat relative to 2019. The

agreement on the lignite phaseout. This year, we want to

precondition for this is that the decline in industrial output

bring the asset swap with E.ON to a rapid conclusion. Once

witnessed in 2019 comes to a halt. However, as in other

the continuing operations have been transferred to us, the

RWE markets, Germany is also expected to feel the

new RWE will also be complete in legal terms. The German

dampening effects of energy savings. Electricity usage in

coal phaseout will remain a central topic. Now that we have

the UK should also be on a par year on year, whereas it will

reached an agreement with the federal government on the

probably post a slight rise in the Netherlands due to the

exit conditions for our lignite power stations and opencast

country’s more dynamic economy. Despite the favourable

mines, the next step is to convert this agreement into a

growth forecast for the USA, we anticipate that the country’s

public law contract. This is the only way to give our Rhenish

demand for electricity will stagnate because we expect the

lignite business and its 10,000 workers certainty.

need for energy for air conditioning to decline further. This is

based on the assumption that summer temperatures will

Financial reporting for 2020 reflects the new RWE. This

be normal and therefore slightly lower than in 2019.

year’s financial reporting reflects the new RWE from the

outset. The renewable energy business transferred from

E.ON to RWE in September 2019 and the minority interests

in our Gundremmingen and Emsland nuclear power stations

we received in the same month will contribute to the Group’s

earnings for a full year in 2020 for the first time. The innogy

operations which we will continue remain included in our

figures although, legally, they still belong to the E.ON Group for

the time being.

Earnings forecast1
€ million

Adjusted EBITDA

of which:

Core business

of which:

Offshore Wind

Onshore Wind / Solar

Hydro / Biomass / Gas

Supply & Trading

Coal / Nuclear

Adjusted EBIT

Adjusted net income

1 New segment structure; prior-year figures adjusted.

2019 actual

Outlook for 2020

2,489

2,183

614

295

671

731

307

1,267

–

2,700 – 3,000

2,150 – 2,450

900 – 1,100

500 – 600

550 – 650

150 – 350

500 – 600

1,200 – 1,500

850 – 1,150

Starting in 2020, we have a new segment structure. We

We anticipate adjusted net income of €850 million to

eliminated the provisional items ‘innogy – continuing

€1,150 million. This figure differs from net income

operations’ and ‘acquired E.ON operations’ and reassigned

according to IFRS in that the non-operating result, which

the generation activities based on energy source. Going

reflects exceptional items, and other major non-recurrent

forward, we will distribute our business among the following

effects as well as the applicable taxes are deducted from it.

five segments: (1) Offshore Wind, (2) Onshore Wind / Solar,

We did not calculate adjusted net income for the last two

(3) Hydro / Biomass / Gas, (4) Supply & Trading and

years because this figure would have been of limited

(5) Coal / Nuclear. Segments (1) to (4) represent our core

informational value due to the significant one-off effects of

business. In (5), we have pooled our German electricity

the asset swap with E.ON.

generation from lignite, hard coal and nuclear fuel. These

technologies must follow exit paths established by the

The positive earnings trend is primarily due to the

government, as a result of which plant dismantling and

renewable energy business acquired from E.ON. As we have

opencast mine recultivation will gain importance relative to

been including it in our figures since 18 September 2019, it

power production. Figures for 2019 will be adapted to the

will contribute a full twelve months of earnings to our Group

new segment structure to enable comparability.

in 2020 for the first time. By contrast, RWE Supply & Trading

will probably not be able to match the exceptional trading

Adjusted EBITDA for fiscal 2020 forecast between

performance posted last year.

€2.7 billion and €3.0 billion. Our operating result should

continue to improve. We expect adjusted EBITDA for 2020

Our outlook broken down by segment is as follows:

in the order of €2,700 million to €3,000 million (previous

year: €2,489 million), with around €2,150 million to

• Offshore Wind: We anticipate that our offshore wind farm

€2,450 million coming from the core business. Including

business in 2020 will post adjusted EBITDA of

anticipated operating depreciation and amortisation of

€900 million to €1,100 million. This would represent a

about €1,500 million, the Group’s adjusted EBIT is estimated

significant increase over last year’s figure (€614 million),

to total between €1,200 million and €1,500 million (previous

which only considered three-and-a-half months of the

year: €1,267 million). The earnings figures do not include

acquired E.ON operations.

the income from our 15 % shareholding in E.ON, which we

recognise in the financial result.

RWE Annual Report 2019Combined review of operations > Outlook

• Onshore Wind / Solar: Adjusted EBITDA recorded by our

Capital expenditure on property, plant and equipment

onshore wind power and photovoltaic activities is expected

markedly up on previous year. Capital expenditure on

to total between €500 million and €600 million, clearly

property, plant and equipment and intangible assets is

exceeding last year’s figure (€295 million). In addition to

estimated to be much higher than in 2019 (€2,090 million).

the full-year inclusion of the E.ON business for the first

The full-year inclusion of the renewable energy business

time, the commissioning of new generation capacity will

received from E.ON will come to bear here. However, capital

also contribute to the rise in earnings.

expenditure on property, plant and equipment in our core

business will probably increase even without this effect,

• Hydro / Biomass / Gas: This segment encompasses our

because we are building several large-scale wind farms,

run-of-river, pumped storage, biomass and gas power

for example, Triton Knoll in the British North Sea and

stations. It also includes the Dutch Amer 9 and Eemshaven

Big Raymond in Texas. We plan to spend €200 million to

hard coal power plants, because we are increasingly

€300 million outside of the core business in the Coal / Nuclear

co-firing them with biomass. Furthermore, the Aberthaw

segment. These funds are primarily being used to maintain

hard coal-fired power station, which was decommissioned

our power plants and opencast mines.

at the end of 2019, is still considered in this segment.

Our 37.9 % stake in Kelag, the Austrian energy utility

Net debt not to exceed three times EBITDA. One of our

specialising in hydroelectric power, is also reported here.

key management parameters is the ratio of net debt to

We expect adjusted EBITDA generated in this segment to

adjusted EBITDA of the core business, also referred to as the

total between €550 million and €650 million in 2020.

leverage factor. This key figure is more indicative than total

This would represent a decline compared to 2019

liabilities because it also reflects earning power and

(€671 million). Lower payments from the British capacity

therefore our ability to meet our debt obligations. We set

market are the main reason. Last year, we benefited from

the upper limit for the leverage factor at 3.0, which we

retrospective capacity payments for 2018.

intend to comply with over the long term. This involves a new

definition of net debt: in the future, it will no longer contain

• Supply & Trading: Starting in 2020, this segment also

our provisions for mining damage, which essentially cover

includes innogy’s German and Czech gas storage

our obligations to recultivate opencast mining areas. The

facilities. We expect Supply & Trading to achieve annual

same applies to the assets we use to cover these provisions.

average adjusted EBITDA in the order of €250 million

These assets include our 15 % stake in E.ON and the

over the long term. This figure should usually range

€2.6 billion claim for damages from the lignite phaseout,

between €150 million and €350 million. Following the

which was recognised in net debt in 2019.

exceptionally strong earnings posted in 2019 (€731 million),

we anticipate a figure within the aforementioned range

Dividend for 2020. RWE AG’s dividend policy will remain

in 2020.

in line with the principle of economic sustainability. The

Executive Board intends to pay a dividend of €0.85 per share

• Coal / Nuclear: Our German lignite, hard coal and nuclear

for fiscal 2020, which is slightly higher than for 2019. It is

power stations as well as lignite production in the Rhenish

envisaged that the dividend payment will continue rising

coal mining region are subsumed here. We expect

steadily in line with the development of our core business in

adjusted EBITDA in this segment to amount to €500 million

the following years.

to €600 million, clearly surpassing the figure achieved

last year (€307 million). This is due to higher generation

margins and the full-year impact on earnings of the

acquired minority stakes in the Gundremmingen and

Emsland nuclear power plants.

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 2020

The Executive Board

Schmitz

Krebber

RWE Annual Report 2019
Consolidated
financial statements

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 share in €

(26)

of which: from continuing operations in €

of which: from discontinued operations in €

2019

13,277

152

13,125

4,756

9,078

2,526

3,166

3,254

321

688

1,626

– 752

– 92

– 660

9,816

9,156

643

8,498

13.82

–1.13

14.95

20181

13,547

141

13,406

630

9,998

1,895

948

906

211

– 42

472

881

103

– 54

1,127

1,073

679

335

0.54

– 0.32

0.86

1 Figures restated: Due to changes in the recognition of revenue and the cost of materials, which primarily related to derivative transactions, these two items

decreased by €90 million each in the 2018 reporting period. Furthermore, the implementation of the failed own use IFRS IC agenda decision drove up
revenue by €108 million and drove down the cost of materials by €149 million. This did not affect earnings because other operating expenses and other
operating income declined by €44 million and €301 million in this context.

RWE Annual Report 2019Consolidated financial statements > Statement of comprehensive income

3.2 Statement of comprehensive income

Figures stated after taxes – € million

Income

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)

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 debt instruments

Fair valuation of financial instruments used for hedging purposes

Note

(12)

(20)

(27)

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

2019

9,156

2018

1,073

– 639

– 1,183

130

279

– 230

1,060

479

– 15

1,551

1,321

10,477

9,687

775

−105

– 1,275

−8

−18

3,170

– 1

3,143

1,868

2,941

2,350

532

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

Income tax 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 2019

31 Dec 2018

(10)

(11)

(12)

(13)

(14)

(15)

(16)

(17)

(14)

(15)

(18)

(19)

4,809

19,097

3,236

4,391

128

3,320

264

706

2,193

12,409

1,467

400

110

946

246

824

35,951

18,595

1,585

2,359

3,621

12,756

196

3,258

3,192

1,274

28,241

64,192

1,631

2,782

1,963

7,408

101

3,609

3,523

40,496

61,513

80,108

Note

31 Dec 2019

31 Dec 2018

(20)

(22)

(23)

(24)

(25)

(16)

(22)

(23)

(24)

(25)

16,945

503

17,448

8,736

940

4,581

14,257

18,936

14,3661

3,924

1,050

849

2,259

1,998

1,4971

508

1,638

27,018

20,007

2,638

1,810

2,987

193

11,588

510

19,726

64,192

2,5721

766

2,429

811

7,200

32,796

45,844

80,108

1 Figures restated: Due to the IFRS IC agenda decision of September 2019, tax balances previously stated as tax provisions are now recognised in income tax

liabilities.

100

RWE Annual Report 2019

Consolidated financial statements > Cash flow statement

3.4 Cash flow statement

€ million

Income

Note (30)

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

2019

– 660

2,754

2,825

– 77

– 3,077

– 2,786

– 977

– 546

– 1,523

2018

– 54

958

– 418

– 97

– 6

– 245

4,473

4,611

2,037

6,648

– 1,767

– 1,050

– 4

623

– 196

Changes in marketable securities and cash investments

1,592

– 1,704

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)

Changes in hybrid capital

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

101

516

– 42

474

– 1,203

– 729

– 60

– 869

– 560

15,876

– 14,198

189

224

– 2,028

– 2,013

5,225

1,702

3,523

3,212

– 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

3,192

3,523

3.5 Statement of changes in equity

Statement of changes in equity

€ million

Subscribed
capital
of RWE AG

Addi tional paid-in
capital of
RWE AG

Retained
earnings and
distributable
profit

Note (20)

Balance at 1 Jan 2018

Capital paid out

Dividends paid1

Income

Other comprehensive income

Total comprehensive income

Other changes

Balance at 31 Dec 2018

Capital paid out/paid in

Dividends paid1

Income

Other comprehensive income

Total comprehensive income

Other changes

Balance at 31 Dec 2019

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

1,574

2,385

2,393

6,723

– 922

335

– 1,126

– 791

459

1,139

– 430

8,498

– 125

8,373

– 174

8,908

1,574

2,385

1,574

2,385

Accumulated other

comprehensive Income

Currency

trans lation

adjust ments

Fair value measurement

of financial instruments

RWE AG

Non-controlling

Total

interests

RWE AG

share-

holders’

interest

hybrid

capital

investors’

interest

Used for

hedging

purposes

Debt instruments

measured at fair

value through

comprehensive

other

income

304

– 19

285

793

1,078

– 14

3,174

126

3,336

493

– 874

2,955

– 922

335

2,015

2,350

585

8,736

– 430

8,498

1,189

9,687

– 1,048

16,945

940

– 60

940

– 869

– 61

– 25

4,283

– 29

– 506

679

– 147

532

301

4,581

– 460

643

132

775

– 4,399

503

11,946

– 29

– 1,488

1,073

1,868

2,941

887

14,257

– 863

– 951

9,156

1,321

10,477

– 5,472

17,448

102

RWE Annual Report 2019Note (20)

Balance at 1 Jan 2018

Capital paid out

Dividends paid1

Income

Other comprehensive income

Total comprehensive income

Other changes

Balance at 31 Dec 2018

Capital paid out/paid in

Dividends paid1

Income

Other comprehensive income

Total comprehensive income

Other changes

Balance at 31 Dec 2019

Statement of changes in equity

€ million

Subscribed

Addi tional paid-in

capital

of RWE AG

capital of

RWE AG

Retained

earnings and

distributable

profit

Consolidated financial statements > Statement of changes in equity

Accumulated other
comprehensive Income

Currency
trans lation
adjust ments

Fair value measurement
of financial instruments

Debt instruments
measured at fair
value through
other
comprehensive
income

Used for
hedging
purposes

RWE AG
share-
holders’
interest

RWE AG
hybrid
capital
investors’
interest

Non-controlling
interests

Total

940

– 60

940

– 869

– 61

– 25

4,283

– 29

– 506

679

– 147

532

301

4,581

– 460

643

132

775

– 4,399

503

11,946

– 29

– 1,488

1,073

1,868

2,941

887

14,257

– 863

– 951

9,156

1,321

10,477

– 5,472

17,448

1,574

2,385

2,393

304

6,723

1,574

2,385

– 922

335

– 1,126

– 791

459

1,139

– 430

8,498

– 125

8,373

– 174

8,908

– 19

285

793

1,078

– 14

3,174

126

3,336

493

– 874

2,955

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

1,574

2,385

– 922

335

2,015

2,350

585

8,736

– 430

8,498

1,189

9,687

– 1,048

16,945

103

3.6 Notes

Basis of presentation

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

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

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

may occur.

RWE is a producer of power using renewable and conventional

technologies operating mainly in Europe and the USA.

These consolidated financial statements were prepared for the

fiscal year from 1 January to 31 December 2019.

The consolidated financial statements for the period ended

31 December 2019 were approved for publication on 27 Febru-

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

ary 2020 by the Executive Board of RWE AG. The statements

completeness and accuracy of the consolidated financial state-

were prepared in accordance with the International Financial

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

Reporting Standards (IFRSs) applicable in the European Union

the review of operations of RWE AG.

(EU), as well as in accordance with the supplementary accounting

regulations applicable pursuant to Sec. 315e, Para. 1 of the German

We employ internal control systems, uniform groupwide directives,

Commercial Code (HGB). The previous year’s figures were calculated

and programmes for basic and advanced staff training to ensure

according to the same principles.

that the consolidated financial statements and combined review of

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

regulations and the internal guidelines as well as the reliability and

the income statement, the statement of comprehensive income, the

viability of the control systems are continuously monitored

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

throughout the Group.

operations are adequately prepared. Compliance with legal

segment reporting.

Several balance sheet and income statement items have been

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

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

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

explained separately in the Notes to the financial statements. The

take countermeasures, if necessary.

In line with the requirements of the German Corporate Control and

income statement is structured according to the nature of expense

method.

The consolidated financial statements, the combined review of

operations, and the independent auditors’ report are discussed in

The consolidated financial statements have been prepared in euros.

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

Unless specified otherwise, all amounts are stated in millions of

meeting on financial statements with the independent auditors

present. The results of the Supervisory Board’s examination are

presented in the report of the Supervisory Board on page 20 et seqq.

104

RWE Annual Report 2019Consolidated financial statements > Notes

Scope of consolidation

In addition to RWE AG, the consolidated financial statements contain

The number of fully consolidated companies changed compared to

all material German and foreign companies which RWE AG controls

the previous year, primarily due to the acquisition of the E.ON

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

operations that were taken over (first-time consolidations) and the

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

disposal of the discontinued innogy operations (deconsolidations).

articles of incorporation and potential voting rights are also taken

into consideration.

The number of companies accounted for using the equity method

decreased in fiscal 2018 due to the asset swap agreed upon with

Material associates are accounted for using the equity method, and

E.ON and the associated assignment to discontinuing operations.

principal joint arrangements are accounted for using the equity

method or as joint operations.

Furthermore, two companies are presented as joint operations

(previous year: six). Of these, Greater Gabbard Offshore Winds

Associates are companies on which RWE AG exercises a significant

Limited, UK, is a material joint operation of the RWE Group. Greater

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

Gabbard holds a 500 MW offshore wind farm, which the continued

on the basis of contractual agreements. In classifying joint

innogy operations operate together with Scottish and Southern

arrangements which are structured as independent vehicles, as

Energy (SSE) Renewables Holdings. Innogy Renewables UK owns

joint operations or as joint ventures, other facts and circumstances –

50 % of the shares and receives 50 % of the power generated

in particular delivery relationships between the independent vehicle

(including green power certificates). The wind farm is a key element in

and the parties participating in such – are taken into consideration,

the offshore portfolio of the segment innogy – continuing operations.

in addition to the legal form and contractual agreements.

First-time consolidation and deconsolidation generally take place

Investments in subsidiaries, joint ventures, joint operations or

when control is obtained or lost.

associates which are of secondary importance from a Group

perspective are accounted for in accordance with IFRS 9.

Sales of shares which led to a change of control resulted in sales

proceeds from disposals amounting to €18 million, which were

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

reported in other operating income (previous year: –€46 million).

German Commercial Code (HGB) is presented on page 176 et seqq.

Furthermore, the €8,258 million deconsolidation gain on the sale of

The following summaries show the changes in the number of fully

from discontinued operations’ line item on the income statement.

the discontinued innogy operations was recognised in the ‘income

consolidated companies and joint ventures and investments

accounted for using the equity method:

Within the framework of purchases and sales of subsidiaries and

Germany

Abroad

Total

sales prices amounted to €14,296 million (previous year:

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

prices amounted to €3,592 million (previous year: €27 million) and

Number of fully
consolidated companies

1 Jan 2019

First-time consolidation

141

215

105

356

112

Deconsolidation

– 90

– 115

– 205

Mergers

31 Dec 2019

– 4

201

– 4

259

Number of companies
accounted for using the
equity method

1 Jan 2019

Acquisitions

31 Dec 2019

Germany

Abroad

Total

€13 million). The sales prices were paid using equity interests

(previous year: solely cash) and offset against other payments within

the scope of the transaction agreed with E.ON. The latter also

applies to the purchase prices with the exception of €25 million

which was paid in cash and cash equivalents (in the previous year, all

purchase prices were paid in cash). In relation to this, cash and cash

equivalents (excluding assets held for sale) were acquired in the

amount of €113 million (previous year: €0 million) and were

disposed of in the amount of €1,250 million (previous year: €0 million).

105

Acquisitions

Acquired E.ON operations

If all business combinations in the period under review had been

effected as of 1 January 2019, the Group’s adjusted EBITDA would

have amounted to €2,982 million and the Group’s revenue would

On 18 September 2019, as part of the extensive asset swap agreed

have amounted to €13,904 million.

upon with E.ON SE on 12 March 2018, RWE gained control of major

parts of E.ON’s former renewable energy business. The acquired

operations are active in onshore and offshore wind as well as in the

photovoltaic business in Europe and the USA.

Disposals and discontinued operations

innogy – discontinued operations

The assets and liabilities acquired within the scope of the transaction

are presented in the following table:

On 18 September 2019, RWE sold the parts of innogy stated as

Balance-sheet items

€ million

Non-current assets

Intangible assets

Property, plant and equipment

Other non-current assets

Current assets

Non-current liabilities

Provisions

Financial liabilities

Other non-current liabilities

Current liabilities

Net assets

Purchase price

Goodwill

‘innogy – discontinued operations’ since 30 June 2018 to E.ON SE

as part of the extensive asset swap contractually agreed upon with

E.ON SE on 12 March 2018. This largely related to the lion’s share of

the grid and retail business.

IFRS carrying
amounts (fair value)
at initial consolidation

10,292

The transaction also involved E.ON acquiring the stake in the Czech

1,951

6,332

2,009

distribution system operator innogy Grid Holding (IGH) previously

held by innogy. RWE had acquired innogy SE’s majority interest in

IGH in the middle of February 2019 to this end. The execution of the

agreement with E.ON triggered a right of first refusal of IGH

1,886

co-shareholder Macquarie Infrastructure and Real Assets (MIRA)

3,979

613

2,447

919

5,260

2,939

3,592

653

managed consortium of investors. MIRA exercised this right of first

refusal on 29 April 2019. As a result, MIRA purchased the 50.04 %

stake at the terms and conditions at which it would have been sold

by RWE to a third party, which in this case would have been E.ON.

The sale to MIRA closed on 30 September 2019. Due to the

unchanged overall plan to divest the grid and retail business, IGH

was stated under ‘innogy – discontinued operations’ until it was

deconsolidated on 30 September 2019.

In late August 2019, RWE acquired innogy’s stake in the investment

in the Slovak power and gas utility Východoslovenská energetika

Holding a.s., (VSEH), which is fully consolidated and also stated as

The fair value of the receivables included in non-current and current

part of the discontinued operations the stake in VSEH was not yet

assets amounted to €1,663 million (of which €834 million were

transferred to E.ON on 18 September 2019. However, since the

financial receivables and €829 million were trade accounts

envisaged sale of the VSE Group is part of the overall plan to divest

receivable) and corresponded to the gross amount of the receivables

the grid and retail business, the VSE Group will continue to be stated

that are fully recoverable.

under the discontinued operations as of 31 December 2019, the

discontinued operations are thus solely comprised of the VSE Group.

The acquired E.ON operations have contributed €374 million to the

Group’s revenue and €86 million to the Group’s earnings since they

The elimination bookings within the scope of the consolidation of

were consolidated for the first time.

expenses and income for the intragroup deliveries and services

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

The purchase price amounted to €3,592 million. The payment of

third parties after the deconsolidation of the innogy assets that are

the purchase price was made using €25 million in cash and cash

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

equivalents, with the remainder being offset against other payments

within the scope of the transaction agreed upon with E.ON.

Goodwill is primarily based on expected future use and synergy

effects.

The initial accounting of the business combination has not been

finalised due to the complex structure and the size of the transac-

tion, in particular because the material information could not be

exchanged until the antitrust restrictions had been removed.

106

RWE Annual Report 2019

Consolidated financial statements > Notes

Major key figures of the activities of the discontinued operations are

Key figures of discontinued operations

2019

2018

presented in the following tables:

31 Dec
2019

Disposals
Q3 2019

31 Dec
2018

Key figures of
discontinued
operations

€ million

Non-current assets

€ million

Revenue1

Other income2

Expenses3

Income of discontinued operations before
tax

Taxes on income

23,890

34,077

1,518

1,503

23,214

33,877

2,194

1,703

636

576

Intangible assets

405

10,434

10,716

Deconsolidation gain

8,258

Property, plant and
equipment

Other non-current
assets

734

14,147

14,000

5,085

5,363

Income of discontinued operations

9,816

1,127

1 Including income with continuing operations in the amount of

€1,402 million (previous year: €2,570 million).

2 Including income with continuing operations in the amount of

1,147

29,666

30,079

€108 million (previous year: €266 million).

3 Including expenses with continuing operations in the amount of

€9,772 million (previous year: €13,835 million).

Current assets

127

12,763

10,417

Non-current
liabilities

Provisions

The deconsolidation gain amounted to €8,258 million and is stated

in the ‘Income from discontinued operations’ line item in the income

statement. It includes a deconsolidation gain of €140 million from

5,212

4,557

the sale of IGH.

Financial liabilities

225

13,521

14,147

Other non-current
liabilities

131

365

2,622

3,065

21,355

21,769

In the previous year, accumulated other comprehensive income

from discontinued operations amounted to – €773 million.

Of the share of total comprehensive income attributable to RWE AG

shareholders, €218 million (previous year: €2,267 million) were

Current liabilities

145

13,443

11,027

allocable to continuing operations and €9,469 million (previous

year: €83 million) were allocable to discontinued operations.

The impairment test performed for the discontinued operations as

a whole in accordance with IFRS 5 as of 31 December 2019 did not

reveal a need for impairment.

Due to contractual arrangements, RWE retains control of the main

activities of the innogy operations remaining with RWE over the long

term (the renewable energy business, the gas storage business and

the stake in the Austrian power utility Kelag). Furthermore, RWE is

entitled to the proceeds from the development of the value of these

business activities since 1 January 2018. Therefore, they are still

fully consolidated at RWE and stated as part of the ‘innogy – continuing

operations’ segment.

107

Consolidation principles

Expenses and income as well as receivables and payables between

consolidated companies are eliminated; intra-group profits and

The financial statements of German and foreign companies

losses are eliminated.

included in the scope of the Group’s financial statements are

prepared using uniform accounting policies. On principle, subsidiar-

For investments accounted for using the equity method, goodwill is

ies whose fiscal years do not end on the Group’s balance-sheet date

not reported separately, but rather included in the value recognised

(31 December) prepare interim financial statements as of this date.

for the investment. In other respects, the consolidation principles

Three subsidiaries have a different balance-sheet date of 31 March

described above apply analogously. If impairment losses on the

(previous year: three). Different fiscal years compared to the

equity value become necessary, we report such under income from

calendar year stem from tax-related reasons or country-specific

investments accounted for using the equity method. The financial

regulations.

statements of investments accounted for using the equity method

are prepared using uniform accounting policies.

Business combinations are reported according to the acquisition

method. This means that capital consolidation takes place by

offsetting the purchase price, including the amount of the non-

controlling interests, against the acquired subsidiary’s revalued net

Foreign currency translation

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

In their individual financial statements, the companies measure

interests can either be measured at the prorated value of the

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

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

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

identifiable assets, liabilities and contingent liabilities are measured

recognised. Monetary items are converted using the exchange rate

at full fair value, regardless of the amount of the non-controlling

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

interests. Intangible assets are reported separately from goodwill if

from the measurement of monetary balance-sheet items in foreign

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

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

contractual or other right. In accordance with IFRS 3, no new

the income statement.

restructuring provisions are recognised within the scope of the

purchase price allocation. If the purchase price exceeds the

Functional foreign currency translation is applied when converting

revalued prorated net assets of the acquired subsidiary, the

the financial statements of companies outside of the Eurozone. As

difference is capitalised as goodwill. If the purchase price is lower,

the principal foreign enterprises included in the consolidated financial

the difference is included in income.

statements conduct their business activities independently in their

In the event of deconsolidation, the related goodwill is derecognised

euros in the consolidated financial statements using the average

with an effect on income. Changes in the ownership share which do

exchange rate prevailing on the balance-sheet date. This also

not alter the ability to control the subsidiary are recognised without

applies for goodwill, which is viewed as an asset of the economically

an effect on income. By contrast, if there is a change in control, the

autonomous foreign entity. We report differences to previous-year

remaining shares are revalued with an effect on income.

translations in other comprehensive income without an effect on

national currencies, their balance-sheet items are translated into

income. Expense and income items are translated using annual

average exchange rates. When translating the adjusted equity of

foreign companies accounted for using the equity method, we follow

the same procedure.

108

RWE Annual Report 2019Consolidated 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

1 Danish crown

1 Swedish crown

1 Norwegian crown

Average

Year-end

2019

2018

31 Dec 2019

31 Dec 2018

0.89

1.14

3.90

0.23

0.13

0.09

0.10

0.85

1.13

3.89

0.23

0.13

0.10

0.89

1.18

3.94

0.23

0.13

0.10

0.87

1.12

3.89

0.23

0.13

0.10

Accounting policies

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

impairment loss is calculated based on the recoverable amount of

Intangible assets are accounted for at amortised cost. With the

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

exception of goodwill, all intangible assets have finite useful lives

the carrying amount of the unit exceeds the recoverable amount,

and are amortised using the straight-line method. Useful lives and

the allocated goodwill is initially written down by the difference.

methods of amortisation are reviewed on an annual basis.

Impairment losses which must be recognised in addition to this are

taken into account by reducing the carrying amount of the other

Software for commercial and technical applications is amortised

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

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

for an impairment loss recognised in prior periods has ceased to

permits and approvals required for the operation of a power plant.

exist, a write-back to intangible assets is performed. The increased

Such rights are generally amortised over the economic life of the

carrying amount resulting from the write-back may not, however,

power plant, using the straight-line method. Capitalised customer

exceed the amortised cost. Impairment losses on goodwill are not

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

reversed.

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

Property, plant and equipment is stated at depreciated cost.

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

Borrowing costs are capitalised as part of the asset’s cost, if they are

impairment.

incurred directly in connection with the acquisition or production of a

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

Development costs are capitalised if a newly developed product

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

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

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

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

the estimated expenses for the decommissioning of plants or site

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

restoration. Maintenance and repair costs are recognised as expenses.

sufficient level of certainty that the development costs lead to future

cash inflows. Capitalised development costs are amortised over the

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

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

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

expenditures are recognised as expenses in the period in which they

unless in exceptional cases another depreciation method is better

are incurred.

suited to the usage pattern. The depreciation methods are reviewed

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

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

plant and equipment according to the following useful lives, which

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

apply throughout the Group and are also reviewed annually:

regulation applies for cases when the asset is part of a cash-generat-

ing unit. Such units are defined as the smallest identifiable group of

assets which generates cash inflows; these inflows must be largely

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

109

Useful life in years

Buildings

Technical plants

Thermal power plants

Wind turbines

Gas and water storage facilities

Mining facilities

Mining developments

Other renewable generation facilities

The initial measurement of other financial assets occurs at the

settlement date. Shares in non-consolidated subsidiaries and in

associates or joint ventures are recognised at fair value through profit

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

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

7 – 50

6 – 40

Up to 25

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

10 – 60

3 – 25

44 – 52

5 – 50

these equity instruments. Non-current securities are accounted for

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

loss or other comprehensive income depending on their classifica-

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

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

Within the scope of the annual useful life review, the useful lives of

losses is recognised through profit or loss for debt instruments that

wind turbines were adjusted to up to 25 years (previously up to

are recognised at fair value through other comprehensive income.

23 years). This change in estimate was made prospectively as of

1 October 2019. This resulted in a reduction of depreciation and

Receivables are comprised of financial receivables, trade

amortisation of €4 million for 2019. Depreciation and amortisation

accounts receivable and other receivables. Aside from financial

are expected to be reduced by €17 million for 2020.

derivatives, receivables and other assets are stated at amortised

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

Property, plant and equipment also include right-of-use assets

resulting from leases of which RWE is the lessee. These right-of-use

Loans reported under financial receivables are stated at amortised

assets are measured at cost. The cost results from the present value

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

of the lease instalments, adjusted by advance payments, initial

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

direct costs and potential dismantling obligations and corrected for

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

received lease incentives. Right-of-use assets are depreciated using

low-interest loans are disclosed at their present value discounted

the straight-line method over the lease term or the expected useful

using an interest rate commensurate with the risks involved.

life, whichever is shorter.

For short-term leases and leases for low-value assets, lease

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

instalments are recognised as an expense over the lease term. For

assets. Allowances which are purchased and allowances allocated

operating leases of which RWE is the lessor, the minimum lease

free of charge are both stated at cost and are not amortised.

instalments are recognised as income over the lease term.

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

amount in the separate IFRS financial statements and tax bases,

are recognised according to the principles described for intangible

and from consolidation procedures. Deferred tax assets also include

Deferred taxes result from temporary differences in the carrying

assets.

tax reduction claims resulting from the expected utilisation of

existing loss carryforwards in subsequent years. Deferred taxes are

Investments accounted for using the equity method are initially

capitalised if it is sufficiently certain that the related economic

accounted for at cost and thereafter based on the carrying amount

advantages can be used. Their amount is assessed with regard to

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

the tax rates applicable or expected to be applicable in the specific

reduced annually by prorated profits or losses, dividends and all

country at the time of realisation. The tax regulations valid or

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

adopted as of the balance-sheet date are key considerations in this

rather included in the recognised value of the investment. Goodwill

regard. Deferred tax assets and deferred tax liabilities are netted out

is not amortised. An impairment loss is recognised for investments

for each company and/or tax group.

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

less than the carrying amount.

110

RWE Annual Report 2019

Consolidated financial statements > Notes

Inventories are assets which are held for sale in the ordinary course

Cash and cash equivalents consist of cash on hand, demand

of business (finished goods and goods for resale), which are in the

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

Assets are stated under Assets held for sale if they can be sold in

excavated earth for lignite mining).

their present condition and their sale is highly probable within the

Insofar as inventories are not acquired primarily for the purpose of

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

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

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

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

with assets are a part of a disposal group or discontinued operations,

the full costs directly related to production; they are determined

and are reported separately under Liabilities held for sale.

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

based on normal capacity utilisation and, in addition to directly

allocable costs, they also include adequate portions of required

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

materials and production overheads. They also include production-

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

related depreciation. Borrowing costs, however, are not capitalised

long as 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

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.

until final completion of the sale. Gains or losses on the valuation of

Nuclear fuel assemblies are stated at depreciated cost. Deprecia-

The stock option plans are accounted for as cash-settled share-

tion is determined by operation and capacity, based on consump-

based payment. At the balance-sheet date, a provision is recog-

tion and the reactor’s useful life.

nised in the amount of the prorated fair value of the payment

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.

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

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

Securities classified as current marketable securities essentially

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

consist of marketable securities held in special funds as well as

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

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

carried at their prospective settlement amount and are not offset

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

against reimbursement claims. If a provision involves a large

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

number of items, the obligation is estimated by weighting all possible

loss or at fair value through other comprehensive income. The

outcomes by their probability of occurrence (expected value method).

transaction costs directly associated with the acquisition of these

securities are included in the initial measurement, which occurs on

All non-current provisions are recognised at their prospective

their settlement date. Unrealised gains and losses are recognised

settlement amount, which is discounted as of the balance-sheet

through profit or loss or other comprehensive income, with due

date. In the determination of the settlement amount, any cost

consideration of any deferred taxes depending on the underlying

increases likely to occur up until the time of settlement are taken

valuation category. An impairment in the amount of the expected

into account.

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

ments that are stated at fair value through other comprehensive

income. Changes included in other comprehensive income are

recognised through profit or loss on disposal of such instruments.

111

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

Waste management provisions in the nuclear energy sector are

the estimated expenses for the decommissioning of plants or site

based on obligations under public law, in particular the German

restoration. Decommissioning, restoration and similar provisions

Atomic Energy Act, and on restrictions from operating licenses.

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

These provisions are measured using estimates, which are based

or changes in the estimated timing or amount of the payments

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

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

and external specialists (e. g. experts).

respective asset is increased or decreased by the corresponding

amount. If the decrease in the provision exceeds the carrying

Obligations existing as of the balance-sheet date and identifiable

amount, the excess is recognised immediately through profit or loss.

when the balance sheet is being prepared are recognised as

provisions for mining damage to cover land recultivation and

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

remediation of mining damage that has already occurred or been

on which the provision was originally recognised.

caused. The provisions must be recognised due to obligations under

public law, such as the German Federal Mining Act, and formulated,

Provisions for pensions and similar obligations are recognised for

above all, in operating schedules and water law permits. Provisions

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

are generally fully related to the degree of mining in question. Such

future and ongoing post-employment benefits to entitled current

provisions are measured at full expected cost or according to

and former employees and their surviving dependents. In particular,

estimated compensation payments. Cost estimates are based on

the obligations refer to retirement pensions. Individual commit-

external expert opinions to a significant extent.

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

Provisions for defined benefit plans are based on the actuarial

present value of the respective obligation. This is measured using

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

respective authorities; this provision is primarily measured at the
secured forward price of the CO2 allowances or certificates for
renewable energies. If a portion of the obligation is not covered with

account the pension benefits and benefit entitlements known as of

allowances that are available or have been purchased forward, the

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

provision for this portion is measured using the market price of the

salaries and pension benefits. The calculation is based on actuarial

emission allowances or certificates for renewable energies on the

reports, taking into account appropriate biometric parameters (for

reporting date.

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

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

Liabilities consist of financial liabilities, trade accounts payable,

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

income tax liabilities and other liabilities. Upon initial recognition,

The provision derives from the balance of the actuarial present

these are generally stated at fair value including transaction costs

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

and are carried at amortised cost in the periods thereafter (except

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

for derivative financial instruments). Lease liabilities are measured

financial result.

at the present value of the future lease payments. For subsequent

measurements, the lease payments are divided into the financing

Gains and losses on the revaluation of net defined benefit liability or

costs and repayment portion of the outstanding debt. Financing

asset are fully recognised in the fiscal year in which they occur.

costs are distributed over the lease term in such a manner that a

They are reported outside of profit or loss, as a component of other

steady interest rate is created for the outstanding debt. If uncertain

comprehensive income in the statement of comprehensive income,

income tax items are recognised in income tax liabilities because

and are immediately assigned to retained earnings. They remain

they are probable, the former are generally measured at the most

outside profit or loss in subsequent periods as well.

likely amount. Measurement at expected value is only considered in

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

exceptional cases.

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

Moreover, other liabilities also include contract liabilities.

the plan are reported under staff costs.

A contract liability is the obligation of the Group to transfer goods

or services to a customer, for which we have already received

consideration or for which the consideration is already due.

112

RWE Annual Report 2019Consolidated financial statements > Notes

Derivative financial instruments are recognised as assets or

Only the effective portion of a hedge is recognised in accordance

liabilities and measured at fair value, regardless of their purpose.

with the preceding rules. The ineffective portion is recognised

Changes in this value are recognised with an effect on income,

immediately on the income statement with an effect on income.

unless the instruments are used for hedge accounting purposes. In

such cases, recognition of changes in the fair value depends on the

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

type of hedging transaction.

accordance with the company’s expected purchase, sale or usage

requirements (own-use contracts) are not accounted for as

Fair value hedges are used to hedge assets or liabilities carried on

derivative financial instruments, but rather as executory contracts.

the balance sheet against the risk of a change in their fair value.

If the contracts contain embedded derivatives, the derivatives are

The following applies: changes in the fair value of the hedging

accounted separately from the host contract, insofar as the

instrument and the fair value of the respective underlying transactions

economic characteristics and risks of the embedded derivatives

are recognised in the same line item on the income statement.

are not closely related to the economic characteristics and risks of

Hedges of unrecognised firm commitments are also recognised as

the host contract. Written options to buy or sell a non-financial item

fair value hedges. Changes in the fair value of the firm commitments

which can be settled in 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

economic benefits or the amount of which cannot be measured

cash flows related to an asset or liability carried on the balance

reliably. Contingent liabilities are only recognised on the balance

sheet or related to a highly probable forecast transaction. If a cash

sheet if they were assumed within the framework of a business

flow hedge exists, unrealised gains and losses from the hedging

combination. The amounts disclosed in the Notes correspond to the

instrument are initially stated as other comprehensive income. Such

exposure at 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

Management judgements in the application of accounting policies.

transactions are hedged and such transactions lead to the recogni-

Management judgements are required in the application of

tion of a financial asset or financial liability in subsequent periods,

accounting policies. In particular, this pertains to the following

the amounts that were recognised in equity until this point in time

aspects:

are recognised on the income statement in the period during which

the asset or liability affects the income statement. If the transac-

• With regard to certain contracts, a decision must be made as to

tions result in the recognition of non-financial assets or liabilities,

whether they are to be treated as derivatives or as so-called

for example the acquisition of property, plant and equipment, the

own-use contracts, and be accounted for as executory contracts.

amounts recognised in equity without an effect on income are

• Financial assets are classified by contractual cash flows and

included in the initial cost of the asset or liability.

applied business model. Whereas the contractual cash flows are

determined by the characteristics of the financial instruments,

The purpose of hedges of a net investment in foreign operations

the business model is based on the Group’s internal require-

(net investment hedges) is to hedge the currency risk from invest-

ments relating to the portfolios of financial instruments.

ments with foreign functional currencies. Unrealised gains and

• With regard to assets held for sale, it must be determined if they

losses from such hedges are recognised in other comprehensive

can be sold in their current condition and if the sale of such is

income until disposal of the foreign operation.

highly probable in the next twelve months. If both conditions apply,

Hedging relationships must be documented in detail and meet the

measured as assets or liabilities held for sale, respectively.

the assets and any related liabilities must be reported and

following effectiveness requirements:

• there is an economic relationship between the hedged item and

consolidated financial statements pursuant to IFRS requires

the hedging instrument,

assumptions and estimates to be made, which have an impact on

• the value change of hedging relationship is not dominated by

the recognised value of the assets and liabilities carried on the

the credit risk, and

balance sheet, on income and expenses and on the disclosure of

Management estimates and judgements. Preparation of

• the hedge ratio is the same as that resulting from the quantities

contingent liabilities.

used within the scope of risk management.

113

Amongst other things, these assumptions and estimates relate to

As of the date of preparation of the consolidated financial state-

the accounting and measurement of provisions. With regard to

ments, it is not presumed that there will be any material changes

non-current provisions, the discount factor to be applied is an

compared to the assumptions and estimates.

important estimate, in addition to the amount and timing of future

cash flows. The discount factor for pension obligations is deter-

Capital management. The focus of RWE’s financing policy is on

mined on the basis of yields on high-quality, fixed-rate corporate

ensuring uninterrupted access to the capital market. The goal is to

bonds on the financial markets as of the balance-sheet date.

be in a position to refinance maturing debts and finance the

operating activities at all times. Maintaining a solid rating and a

The rules governing valuation allowances for financial assets under

positive operating cash flow serve this purpose.

IFRS 9 stipulate that the expected credit losses must be determined.

The valuation allowance is based on information from within and

The management of RWE’s capital structure is oriented towards net

outside the Group.

debt. It is calculated by adding material non-current provisions to

and deducting the net assets of funded pension obligations from

The impairment test for goodwill and non-current assets is based

net financial debt. RWE’s liabilities of relevance to net debt primarily

on certain assumptions pertaining to the future, which are regularly

consist of hybrid bonds and provisions for pensions, nuclear waste

adjusted. Property, plant and equipment is tested for indications of

management, mining, and wind farms.

impairment on each cut-off date.

Power plants are grouped together as a cash-generating unit if their

significantly. This was in part due to the execution of the transaction

production capacity and fuel needs are centrally managed as part

with E.ON (see page 106 et seq.). In addition, the net debt of the

of a portfolio, and it is not possible to ascribe individual contracts

continuing operations was greatly affected by the loss of variation

During the reporting period, RWE’s capital structure changed

and cash flows to the specific power plants.

Upon first-time consolidation of an acquired company, the identifiable

margins on forward transactions with electricity, commodities and
CO2 certificates. Variation margins are payments with which
transaction partners mutually collateralise profit and loss positions

assets, liabilities and contingent liabilities are recognised at fair

resulting from the daily revaluation of active contracts. However, their

value. Determination of the fair value is based on valuation methods

influence on cash flows is temporary and ends once the transac-

which require a projection of anticipated future cash flows.

tions are realised. Both of these effects resulted in a significant

Deferred tax assets are recognised if realisation of future tax benefits

financial assets of continuing operations totalling €6.0 billion as of

is probable. Actual future development of income for tax purposes

31 December 2019 (previous year: €7.4 billion). Furthermore, net

and hence the realisability of deferred tax assets, however, may

debt provisions rose by €3.7 billion to €15.6 billion (previous year:

deviate from the estimation made when the deferred taxes are

€11.9 billion). On average, provisions have a very long duration; their

decrease in financial assets and contributed to a decline in net

capitalised.

level is primarily determined by external factors such as the general

level of interest rates. A precise calculation of net debt and net

Further information on the assumptions and estimates upon which

financial debt is presented on page 32 of the review of operations.

these consolidated financial statements are based can be found in

the explanations of the individual items.

RWE’s credit rating is influenced by a number of qualitative and

All assumptions and estimates are based on the circumstances and

cash flows and debt as well as market conditions, competition,

forecasts prevailing on the balance-sheet date. Furthermore, as of

and the political framework. Our hybrid bonds also have a positive

the balance-sheet date, realistic assessments of overall economic

effect on our rating. The leading rating agencies, Moody’s and Fitch,

conditions in the sectors and regions in which RWE conducts

classify part of hybrid capital as equity.

quantitative factors. These include aspects such as the amount of

operations are taken into consideration with regard to the

prospective development of business. Actual amounts may

RWE’s creditworthiness is currently rated ‘Baa3’ by Moody’s and

deviate from the estimated amounts if the overall conditions

‘BBB’ by Fitch. Our rating thus remains in the investment-grade

develop differently than expected. In such cases, the assumptions,

range. The short-term credit ratings for RWE are ‘P-3’ and ‘F2’,

and, if necessary, the carrying amounts of the affected assets and

respectively.

liabilities are adjusted.

114

RWE Annual Report 2019Consolidated financial statements > Notes

Changes in accounting regulations

The obligations from operating leases as of 31 December 2018

lead to the following reconciliation to the opening balance of lease

The International Accounting Standards Board (IASB) and the IFRS

liabilities as of 1 January 2019:

Interpretations Committee (IFRS IC) have implemented new IFRSs

and approved amendments of existing IFRSs and a new interpreta-

tion, which became effective for the RWE Group as of fiscal 2019:

IFRS 16 Leases (2016) replaces IAS 17 Leases and the related

interpretations IFRIC 4, SIC-15 and SIC-27. RWE applied the

modified retrospective method when applying the new lease

accounting rules for the first time. Comparable information for

fiscal 2018 was not adjusted. RWE maintained the existing lease

assessment in accordance with IAS 17 and IFRIC 4 for existing

contracts. Furthermore, RWE is making use of exemptions allowing

for leases relating to short-term or low-value assets not to be

recognised on the balance sheet as a right-of-use asset. The

transition to IFRS 16 did not have an effect on equity.

Initial application of IFRS 16:
reconciliation

Obligations from operating leases as of
31 Dec 2018

Simplified application for short-term leases

Lease instalments related to contractually
agreed leases that have not yet
commenced

Other differences

Nominal value of lease liabilities as of
1 Jan 2019

Effect of discounting lease liabilities

The initial adoption of IFRS 16 had the following effects on the

continued operations of the RWE Group: Right-of-use assets in the

amount of €353 million and net debt-increasing lease liabilities in

Lease liabilities recognised as of
1 Jan 2019 due to the initial application
of IFRS 16

the same amount were stated as of 1 January 2019. Taking

Finance lease liabilities as of 31 Dec 2018

account of the discontinued operation which have been deconsoli-

Total lease liabilities as of 1 Jan 2019

dated in the meantime, the initial adoption of IFRS 16 led to an

increase in the balance-sheet total of €2,251 million. At the

transition date, RWE did not apply the new rules to leases with a

€ million

572

– 10

– 67

– 3

492

– 139

353

241

594

term expiring within the first twelve months from the date of

The ‘Other differences’ line item mainly consists of non-lease

first-time adoption. These contracts are accounted for as short-

components exempted from recognition in the lease liabilities and

term leases and the lease payments are recognized in the current

differences due to changed term assessments pursuant to IFRS 16.

costs of the period. Likewise, initial direct costs are not considered

Lease liabilities are discounted using the term and currency-specific

in the initial measurement of the right-of-use asset. Pursuant to

incremental borrowing rate. The weighted average incremental

IFRS 16, right-of-use assets are recognised as property, plant and

borrowing rate was 3.7 % on the IFRS 16 initial application date.

equipment and amortised over the shorter of the term of the lease

or the useful life using the straight-line method. Obligations entered

The following amendments to standards and new interpretations

into within the scope of leases are measured at the present value of

mandatory for the RWE Group from fiscal 2019 onwards did not

the future lease payments and recognised as financial liabilities.

have any material effects on RWE’s consolidated financial statements:

The lease payments are divided into principal and interest

components using the effective interest method. In the period under

• Annual Improvements to IFRS Standards 2015–2017 Cycle

review, as a result of the introduction of IFRS 16, depreciation and

(2017),

amortisation increased by €58 million and interest expenses

• Amendments to IFRS 9: Prepayment Features with Negative

increased by €17 million in the period under review. The discontinu-

Compensation (2017),

ation of the recognition of nominal lease payments as an expense

• Amendments to IAS 28 Long-term Interests in Associates and

provided adjusted EBITDA in the period under review with relief of

Joint Ventures (2017),

roughly the same amount, as a result of which net income was not

• Amendments to IAS 19 Plan Amendment, Curtailment or

affected significantly.

Settlement (2018),

•

IFRIC 23 Uncertainty over Income Tax Treatments (2017).

115

IFRS 9 Financial Instruments – Physical Settlement of

Contracts to Buy or Sell a Non-financial Item (Own Use

New accounting policies

Contracts)

The IASB issued further standards and amendments to standards,

The IFRS IC found within the scope of an agenda decision in

which were not yet mandatory in the EU in fiscal 2019. These

March 2019 that physically settled contracts for the purchase or

standards and amendments to standards, which are not expected

sale of non-financial items must be recognised at the market price

to have any material effects on RWE’s consolidated financial

applicable at settlement, as long as such contracts are not covered

statements, are listed below:

by an own use scope exception according to IFRS 9 Financial

Instruments (referred to as ‘failed own-use contracts’). The practice

•

IFRS 17 Insurance Contracts (2017),

customary thus far has been to recognise the contracts at their

• Amendments to References to the Conceptual Framework in

settlement amount.

IFRS Standards (2018),

• Amendment to IFRS 3 Business Combinations (2018),

This caused revenue for fiscal 2018 to rise by €108 million, with the

• Amendments to IAS 1 and IAS 8 Definition of Material (2018),

cost of materials declining by €149 million. In sum, this did not have

• Amendments to IFRS 9, IAS 39 and IFRS 7 Interest Rate

an effect on earnings, because other operating expenses and other

Benchmark Reform (2019),

operating income dropped by €44 million and €301 million in this

• Amendments to IAS 1 Presentation of Financial Statements:

context.

Classification of Liabilities as Current or Non-current (2020).

IAS 12/IFRIC 23 – Uncertainty over Income Tax Treatments

At its meeting in September 2019, the IFRS IC found within the

IFRS 16 – Determining the Lease Term

scope of an agenda decision that uncertain income tax items must

At its meeting in November 2019, the IFRS IC established that both

be recognised as current tax liabilities.

contractual penalties and other financial incentives must be

considered when determining the binding term of a lease. Consider-

In RWE’s consolidated financial statements, this causes amounts

ation of financial incentives can generally result in longer lease

previously recognized as tax provisions in other provisions to be

terms and, in turn, higher amounts recognised for right-of-use

reclassified to income tax liabilities. Prior-year figures were adjusted

assets and lease liabilities.

accordingly.

The effects of the IFRS IC agenda decision on the consolidated

financial statements of RWE are currently being determined. We

plan to implement the IFRS IC agenda decision at the end of the first

half of 2020.

116

RWE Annual Report 2019Consolidated financial statements > Notes

Notes to the Income Statement

(1) Revenue

A breakdown of revenue by division, geographical region and prod-

uct is contained in the segment reporting on page 169 et seqq.

Revenue is recorded when the customer has obtained control over

The item ‘Natural gas tax/electricity tax’ comprises the taxes paid

goods or services.

directly by Group companies.

We recognise income from the sale of our in-house generation and

Certain performance obligations of the RWE Group were not yet or

the consumer business in revenue. Revenue from in-house

not yet fully met by the end of the fiscal year. The €4,276 million in

generation is based on the sale price achieved through commercial

revenue due from these performance obligations (previous year:

optimisation. Consumer revenue is reported on a gross basis.

€4,650 million) is expected to be received over the following three

In the year under review, RWE generated external revenue of

performance obligations to the customer are met. It does not

€7,455 million with the innogy Group and €1,472 million with the

include future revenue from contracts with an original contractual

years. The receipt of this revenue will depend on when these

Centrica Group (previous year: gross revenue of €13,752 million

term of twelve months or less.

from discontinued innogy operations) in the Supply & Trading

segment.

(2) Other operating income

Other operating income

€ million

Income from own work capitalised

Income from changes in product inventories

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

Income from leases

Miscellaneous

2019

2018

116

525

897

3,061

4,756

103

1071

205

630

1 Figure restated: The implementation of the failed own use IFRS IC agenda decision caused income from derivative financial instruments to drop by €301 million.

In the year under review, write-backs of €71 million were recognised

In the previous year, write-backs of €38 million were made for

for the Scottish biomass-fired power station Markinch in the

onshore wind farms in Poland in the innogy – continuing operations

European Power segment (recoverable amount: €0.2 billion). This

segment (recoverable amount: €0.2 billion). This was primarily due

was predominantly due to changed assumptions regarding

to the rise in the prices of electricity and of green electricity

subsidies in the renewable energy business. The write-ups were fully

certificates. Of the write-backs, €36 million was allocable to

allocated to property, plant and equipment.

property, plant and equipment and €2 milion was allocable to

Furthermore, write-backs of €363 million were recognised for the

German Gas and Hydroelectric Power Plants cash-generating unit

Miscellaneous income contained the compensatory payments of

along with the associated power purchase agreements in the

€2,600 million for the early exit from our lignite business awarded

European Power segment (recoverable amount: €0.5 billion). This

by the German government.

operating rights recognised as intangible assets.

was largely due to the new definition of cash-generating units in the

European Power segment presented on page 118 et seq. All of the

write-backs were allocable to property, plant and equipment.

117

Income from the disposal of non-current financial assets and

The stated number of employees (average for the year) encompasses

loans is disclosed under income from investments if it relates to

the continuing innogy operations, the acquired E.ON operations and –

investments; otherwise it is recorded as part of the financial result

until and including Q2 2019 – the discontinued innogy operations.

as is the income from the disposal of current marketable securities.

The discontinued innogy operations account for 14,663 wage earners

To improve the presentation of the development of business, we

staff (previous year: 8,614). On average, 1,280 trainees were

state unrealised and realised income from contracts measured at

employed (previous year: 2,031), of which 659 (previous year: 1,452)

fair value of the Supply & Trading segment as net amounts. The net

were assigned to the innogy – discontinued operations segment.

and other personnel (previous year: 32,232) and 4,561 salaried

amount totalled €258 million (previous year: €42 million).

(5) Depreciation, amortisation and impairment losses

(3) Cost of materials

Cost of materials

€ million

Cost of raw materials and of goods for
resale

Cost of purchased services

2019

20181

Depreciation, amortisation and
impairment losses

2019

2018

€ million

Intangible assets

Property, plant and equipment

7,663

8,615

1,415

1,383

9,078

9,998

107

3,059

3,166

922

948

1 Figure restated: due to changes in income recognition in relation to

derivative transactions, the cost of materials decreased by €90 million.
The implementation of the failed own use IFRS IC agenda decision caused
it to drop by a further €149 million.

Depreciation, amortisation and impairment losses contain the

following impairments:

The cost of materials primarily includes expenses for the input

materials of power plants. Expenses for coal of €195 million

Impairments

€ million

Intangible assets

(previous year: €370 million) were recognised at the market price

Property, plant and equipment

prevailing at settlement.

2019

2018

1,922

1,968

In the year under review, an impairment of €21 million (previous

year: €4 million) was recognised for coal inventories due to a drop in

The legal steps to reduce and end electricity generation from lignite

market prices.

(4) Staff costs

Staff costs

€ million

and hard coal in Germany that are materialising resulted in the

split-up and spin-off of the two former Lignite & Nuclear and

German Power Plant Portfolio cash-generating units in the

European Power segment. In so doing, RWE is reacting to the

2019

2018

changing regulatory environment and the resulting consequences

for electricity sales.

Wages and salaries

2,124

1,487

Cost of social security, pensions and
other benefits

402

408

2,526

1,895

The impairment test performed in the Lignite & Nuclear segment

for this reason resulted in the recognition of an impairment loss of

€400 million (recoverable amount: – €0.2 billion) for the new

Hambach cash-generating unit, of €114 million for the new Inden

cash-generating unit (recoverable amount: €0.0 billion) and of

Number of employees

2019

2018

€253 million for the new Garzweiler cash-generating unit (recover-

Employees covered by collective
agreements and other employees

Employees not covered by collective
agreements

28,214

45,333

agreement reached with the German government to phase out

able amount: €1.3 billion). These effects are solely due to the

9,868

13,108

38,082

58,441

electricity generation from lignite early. The assets are distributed

among the new cash-generating units based on their association

with lignite or nuclear energy, with the lignite assets being further

distinguished by their geographical, logistical and technical

circumstances. €240 million in impairments are attributable to

The number of employees is arrived at by conversion to full-time

changes in provisions that were capitalised in the ‘property, plant

positions, meaning that part-time and fixed-term employment

and equipment’ item.

relationships are included in accordance with the ratio of the

part-time work or the duration of the employment to the annual

employment time.

118

RWE Annual Report 2019

Consolidated financial statements > Notes

Moreover, the impairment test performed in the European Power

Other impairments on intangible assets and property, plant and

segment led to reversals of write-downs of €363 million for the

equipment were recognised primarily on the basis of cost increases

new Gas and Hydroelectric Power Plants cash-generating unit

and changes in price expectations.

along with the associated power purchase agreements, which

was recognised in other operating income (recoverable amount:

Recoverable amounts are generally determined on the basis of fair

€0.5 billion). For the first time, the recoverable amount was

values less costs to sell; in the innogy – continuing operations

calculated separately for each of the assets in the hard coal

segment, they are also determined on the basis of values in use. Fair

business, owing to the changed regulatory environment. This

values are determined using valuation models based on planned

resulted in impairment losses of €76 million (recoverable amount:

cash flows. In the fiscal year, the valuation models were based on

€0.2 billion). These effects stem from the compensation lost due

discount rates (after taxes) in the range of 2.50 % to 4.75 %. In the

to the spin-off of the hard coal-fired power stations along with the

innogy – continuing operations segment, they are based on discount

associated power purchase agreements from the former cash-

rates (before taxes) of 3.90 % and 4.25 %. In the previous year, the

generating unit. The latter were also valued separately for the

valuation model for the UK power station Staythorpe used a

first time.

In addition, an impairment loss of €693 million (recoverable

amount: €1.1 billion) was recognised for the Dutch Power Plant

discount rate of 4.75 %. Our key planning assumptions 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. Based on

Portfolio cash-generating unit in the European Power segment.

the use of internal planning assumptions, the determined fair values

This was due to the early phase-out of electricity generation from

are assigned to Level 3 of the fair value hierarchy.

hard coal in the Netherlands.

In the previous year, a €29 million impairment was recognised for

the UK power station Staythorpe in the European Power segment

(recoverable amount: €0.3 billion).

In the innogy – continuing operations segment, an impairment loss

of €225 million was recognised for the Nordsee Ost offshore wind

farm (recoverable amount: €0.6 billion). This primarily resulted from

changed price and cost expectations.

Furthermore, an impairment loss of €69 million was recognised for

gas storage facilities (of which €65 million for property, plant and

equipment and €4 million for intangible assets) in the innogy –

continuing operations segment, primarily due to changed price

expectations (recoverable amount: €0.0 billion).

119

(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

Expenses from leases

Fees and membership dues

Exchange rate losses

Other taxes (primarily on property)

Miscellaneous

2019

2018

505

1,814

151

273

150

3,254

465

– 196

166

115

906

1 Figure restated: The implementation of the failed own use IFRS IC agenda decision caused expenses from derivative financial instruments to drop by

€44 million .

Additions to provisions in fiscal 2019 primarily relate to the nuclear

(7) Income from investments

energy and mining business (see commentary on page 146 et seqq.).

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

Income from other investments

Income from the disposal of investments

Income from loans to investments

Other income from investments

2019

2018

321

329

211

– 45

– 6

– 42

169

120

RWE Annual Report 2019

Consolidated financial statements > Notes

(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

2019

2018

185

503

688

258

723

109

487

1,626

– 938

166

306

472

180

183

437

881

– 409

The financial result breaks down into net interest, interest accretion

Net interest stems from financial assets and liabilities, which were

to provisions, other financial income and other finance costs.

allocated to the following measurement categories pursuant to

Interest accretion to provisions contains the annual amounts of

accrued interest. It is reduced by the imputed interest income on

IFRS 9:

plan assets for the coverage of pension obligations. Due to the

Interest result by category

2019

2018

early end of electricity generation from lignite resulting from the

€ million

German coal phase-out, the real discount rate used to calculate

provisions for mining damage was reduced and the associated

Debt instruments measured at
amortised cost

increase in the net present value of obligations of €463 million was

recognised as an expense in the interest accretion to additions to

provisions.Interest expenses incurred for lease liabilities amounted

to €26 million in the year under review.

Net interest essentially includes interest income from interest-

bearing securities and loans, income and expenses relating to

marketable securities, and interest expenses.

In the year under review, €39 million in borrowing costs were

capitalised as costs in connection with the acquisition, construction

or production of qualifying assets (previous year: €9 million). The

underlying capitalisation rate ranged from 3.7 % to 4.0 % (previous

year: from 4.4 % to 4.8 %).

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

123

108

– 258

– 180

– 73

– 14

Other financial income includes €19 million in gains realised from

the disposal of marketable securities (previous year: €6 million). Of

the other finance costs, €5 million (previous year: €13 million) stem

Net interest

€ million

Interest and similar income

Interest and similar expenses

2019

2018

from realised losses on the disposal of marketable securities.

185

258

– 73

166

180

– 14

121

(9) Taxes on income

Taxes on income

€ million

Current taxes on income

Deferred taxes

Due to the utilisation of tax loss carryforwards unrecognised in

prior years, current taxes on income were reduced by €37 million

2019

2018

(previous year: €28 million).

– 136

– 92

122

– 19

103

Income taxes recognised in other
comprehensive income

€ million

2019

2018

Fair valuation of equity instruments

Fair valuation of debt instruments

– 3

– 12

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.

– 288

– 1,442

176

410

– 127

– 1,025

Taxes in the amount of €394 million (previous year: – €61 million)

were offset directly against equity.

2019

2018

– 752

– 245

– 37

– 49

– 10

– 55

175

– 48

207

– 89

– 92

12.2

– 28

– 38

– 21

– 24

– 14

– 3

172

– 11

103

210.2

Of the deferred taxes, €29 million is related to temporary differences

(previous year: – €2 million). In the year under review, changes in

valuation allowances for deferred tax assets amounted to €572 mil-

lion (previous year: – €73 million).

Current taxes on income contain €74 million in net tax income

(previous year: expense of €30 million) relating to prior periods.

Tax reconciliation

€ million

Income before tax

Theoretical tax expense

Differences to foreign tax rates

Tax effects on

Tax-free 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: 32.6 %). 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.

122

RWE Annual Report 2019

Notes

Consolidated financial statements > Notes

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 2019

2,214

1,718

3,978

Additions /disposals due to
changes in the scope of consoli-
dation

Additions

Transfers

Currency translation adjustments

Disposals

Balance at 31 Dec 2019

Accumulated amortisation /
impairment losses

Balance at 1 Jan 2019

Additions /disposals due to changes in
the scope of consolidation

Amortisation /impairment losses in
the reporting period

Currency translation adjustments

Balance at 31 Dec 2019

Carrying amounts

Balance at 31 Dec 2019

1,601

295

653

– 5

2,550

100

3,917

301

2,386

6,650

– 2

1,751

– 57

1,799

1,785

– 59

107

1,841

2,118

295

2,386

4,809

123

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

– 3

– 25

18,403

– 14,455

– 14,564

– 35

– 24

1,718

3,978

Balance at 1 Jan 2018

489

2,493

2,564

474

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

– 460

– 2,579

– 475

– 792

– 10

1,751

6,020

– 4,306

105

– 6

1,785

463

1,718

2,193

124

RWE Annual Report 2019
Consolidated financial statements > Notes

In the reporting period, the RWE Group’s total expenditures on

Mid-term business plans are based on country-specific assumptions

research and development amounted to €25 million (previous year:

regarding the development of key economic indicators such as

€116 million).

gross domestic product, consumer prices, interest rate levels and

nominal wages. These estimates are, amongst others, derived from

Goodwill breaks down as follows:

macro- economic and financial studies.

Goodwill

€ million

Acquired E.ON operations

innogy – continuing operations1

Supply & Trading

31 Dec 2019 31 Dec 2018

Our key planning assumptions for the business segments active in

653

727

1,006

2,386

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.

712

1,006

1,718

The discount rates used for business valuations are determined on

1 Goodwill is solely allocable to the renewable energy activities recognised

in ' innogy – continuing operations'.

the basis of market data. During the period under review, they were

5.50 % (previous year: 5.25 %) for the Supply & Trading and 4.00 %

(previous year: 4.25 %) for the innogy – continuing operations

cash-generating units.

In the year under review, goodwill increased by €653 million as a

result of the first-time consolidation of the acquired E.ON operations.

We do not base the extrapolation of future cash flows going beyond

This goodwill passed the impairment test in the fourth quarter. In the

the detailed planning period on growth rates. The growth rate for

previous year, goodwill increased by €0 million as a result of

each division is generally derived from experience and expectations

first-time consolidations.

of the future and does not exceed the long-term average growth

rates of the respective markets in which the Group companies

In the third quarter of every fiscal year, an impairment test is

are active. The annual cash flows assumed for the years after the

performed to determine if there is any need to write down goodwill.

detailed planning period include as a deduction capital expenditure

In the course of this, goodwill is allocated to the cash-generating units.

in the amount necessary to maintain the scope of business.

The recoverable amount of the cash-generating unit is determined,

As of the balance-sheet date, the recoverable amounts of the

which is defined as the higher of fair value less costs to sell or value

cash-generating units – determined as the fair value less costs to

in use. Fair value is the best estimate of the price that an independent

sell – were higher than their carrying amounts. The surpluses react

third party would pay to purchase the cash-generating unit as of

especially sensitively to changes in the discount rate, the growth

the balance-sheet date. Value in use reflects the present value of

rate and cash flows in terminal value.

the future cash flows which are expected to be generated with the

cash-generating unit.

The Supply & Trading cash-generating unit exhibited the smallest

surplus of recoverable amount over the carrying amounts. The

Fair value less costs to sell is assessed from an external perspective

recoverable amount was €1.4 billion higher than the carrying

and value in use from a company-internal perspective. Values are

amount. Impairment would have been necessary if the calculations

determined using a business valuation model, based on planned

had used an after-tax discount rate increased by more than

future cash flows. These cash flows, in turn, are based on the business

3.2 percentage points to above 8.7 %, a growth rate decreased by

plan, as approved by the Executive Board and valid at the time of

more than 3.9 percentage points to below – 3.9 %, or cash flows

the impairment test. They pertain to a detailed planning period of

reduced by more than €86 million in terminal value.

three years. In certain justifiable cases, a longer detailed planning

period is taken as a basis, insofar as it is necessary due to economic

or regulatory conditions. The cash flow plans are based on experience

as well as on expected market trends in the future. If available,

market transactions in the same sector or third-party valuations are

taken as a basis for determining fair value. Based on the use of internal

planning assumptions, the determined fair values are assigned to

Level 3 of the fair value hierarchy.

125

(11) Property, plant and equipment

Property, plant and equipment

€ million

Cost

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

Balance at 1 Jan 2019

4,868

43,733

934

2,061

51,5961

Additions /disposals due to changes in the scope of
consolidation

Additions

Transfers

Currency translation adjustments

Disposals

282

300

151

3,863

1,153

217

401

683

1,450

1,077

−239

5,614

2,596

– 8

470

895

Balance at 31 Dec 2019

5,323

48,684

989

4,377

59,373

Accumulated depreciation /impairment losses

Balance at 1 Jan 2019

3,073

34,214

Additions /disposals due to changes in the scope of
consolidation

Amortisation /impairment losses in the reporting period

Transfers

Currency translation adjustments

Disposals

Additions

Balance at 31 Dec 2019

Carrying amounts

Balance at 31 Dec 2019

– 51

222

– 6

– 640

2,685

– 2

169

509

412

756

– 12

791

38,834

– 1

– 703

3,059

– 4

181

652

439

3,128

35,505

770

873

40,276

2,195

13,179

219

3,504

19,097

126

RWE Annual Report 2019

Consolidated financial statements > Notes

Property, plant and equipment

€ million

Cost

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

Balance at 1 Jan 2018

7,325

74,280

2,123

2,317

86,045

Additions /disposals due to changes in the scope of
consolidation

of which: stated as ‘held for sale’

Additions

Transfers

Currency translation adjustments

Disposals

– 2,740

– 30,747

– 2,738

– 30,708

– 1,238

– 42

109

665

283

– 294

478

– 2

– 7

– 845

– 859

1,014

– 332

– 10

– 35,570

– 35,543

1,818

– 6

– 353

691

Balance at 31 Dec 2018

4,544

43,709

915

2,075

51,243

Accumulated depreciation /impairment losses

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

– 1,455

– 20,646

– 1,453

– 20,580

– 20

1,209

– 1

– 149

352

– 803

– 4

3,073

34,214

756

– 1

791

– 22,905

– 22,837

1,375

– 173

521

38,834

1,471

9,495

159

1,284

12,409

1 Including the effect of the initial adoption of IFRS 16 in the amount of €353 million.

127

Property, plant and equipment in the amount of €1,024 million

These leases primarily comprise long-term rights of use to leased

(previous year: €504 million) were subject to restrictions from land

office buildings and land (e. g. leaseholds, properties for renewable

charges, chattel mortgages or other restrictions. Disposals of

energy production) and rights of use to leased assets relating to

property, plant and equipment resulted from sale or decommissioning.

vehicle fleets and power plants.

Property, plant and equipment includes owned assets as well as

The following table shows the development of right-of-use assets

right-of-use assets from leases of which RWE is the lessee.

recognised in property, plant and equipment:

Right-of-use assets

€ million

Cost

Buildings

Land

Technical plant and machinery

Pumped storage power stations

Vehicle fleet

Other plant, factory and office
equipment

Balance at:
1 Jan 2019

Additions

Depreciation,
amortisation
and
impairments

Disposals

Other
changes1

Balance at:
31 Dec 2019

274

380

142

270

279

204

666

261

500

1,081

1 Other changes comprise transfers, additions, currency translation adjustments as well as additions and disposals in the scope of consolidation.

Disclosure on the corresponding lease liabilities and interest

In addition, leases had the following effect on the RWE Group’s

expenses can be found in Notes (8) Financial result, (23) Financial

earnings and cash flows in the year under review:

liabilities and (27) Reporting on financial instruments.

Effects of leases on income and cash flows
€ million

RWE as lessee

Expenses from short-term leases

Expenses from variable lease payments not considered in the measurement of lease liabilities

Total cash outflows from leases

RWE as lessor

Income from operating leases

2019

128

RWE Annual Report 2019Consolidated financial statements > Notes

Leases primarily relating to office buildings that have been

In addition to right-of-use assets, property, plant and equipment

contractually agreed, but not begun yet, lead to future lease

also include land and buildings leased as operating leases by RWE

payments of €195 million. Moreover, potential lease payments

as lessor. The carrying amount of these assets totalled €193 million

predominantly relating to leases of wind farm space were disregarded

as of 31 December 2019.

when valuing lease liabilities. This relates to €471 million in variable

payments which may come due depending on generation volumes

The following payment claims resulted from these operating leases:

and €100 million in potential payments associated with extension

and termination options.

Nominal Lease payments from operating leases
€ million

Due in up to 1 year

Due in > 1 to 2 years

Due in > 2 to 3 years

Due in > 3 to 4 years

Due in > 4 to 5 years

Due after 5 years

129

(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 presented in the following summaries:

Material investments accounted for using the equity method

Amprion GmbH,
Dortmund

KELAG-Kärntner
Elektrizitäts-AG/
Kärntner Energieholding
Beteiligungs GmbH (KEH),
Klagenfurt (Austria)

€ 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

1 Figures based on a shareholding of 100 % in KEH.
2 Figures based on proportional share of equity in KEH and Kelag.

31 Dec 2019 31 Dec 2018 31 Dec 2019

31 Dec 2018

5,225

1,825

2,012

2,496

638

4,192

2,906

1,401

3,555

538

638

538

1,664

1,630

383

869

285

383

198

581

373

857

276

365

198

563

14,773

13,495

1,285

1,172

523

–22

501

25 %

372

– 17

355

25 %

–15

49 %

– 1

49 %

Amprion GmbH, headquartered in Dortmund, Germany, is a

KELAG-Kärntner Elektrizitäts-AG, headquartered in Klagenfurt,

transmission system operator (TSO) for the electricity sector,

Austria, is a leading Austrian energy supplier in the fields of electricity,

pursuant to the German Energy Act (EnwG). Amprion’s main

district heating and natural gas. RWE has an economic interest of

shareholder is a consortium of financial investors led by Commerz

49 % in Kärntner Energieholding Beteiligungs GmbH (KEH), which is

Real, a subsidiary of Commerzbank.

Kelag’s largest shareholder and is assigned to innogy – continuing

operations.

130

RWE Annual Report 2019
Consolidated financial statements > Notes

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 2019 31 Dec 2018 31 Dec 2019 31 Dec 2018

246

142

104

1,771

224

The RWE Group holds shares with a book value of €3 million

subject to temporary restrictions or conditions in relation to their

(previous year: €3 million) in associates and joint ventures, which are

distributions of profits, due to provisions of loan agreements.

(13) Other non-current financial assets

Non-current securities amounting to €29 million and €4 million

Other financial assets encompass non-consolidated subsidiaries,

(previous year: €31 million and €4 million) were deposited in a trust

other investments and non-current securities.

account for RWE AG and its subsidiaries, in order to cover credit

balances stemming from the block model for pre-retirement

The rise in other financial assets in fiscal 2019 was primarily due to

part-time work, pursuant to Sec. 8a of the Pre-Retirement Part-Time

the addition of the stake in E.ON SE within the scope of the sale of

Work Act (AltTZG) and from the management of long-term working

discontinued innogy operations.

hours accounts pursuant to Sec. 7e of the German Code of Social

Law (SGB IV), respectively. This coverage applies to the employees

of RWE AG as well as to the employees of Group companies.

(14) Financial receivables

Financial receivables

€ million

31 Dec 2019

31 Dec 2018

Non-current

Current Non-current

Current

Loans to non-consolidated subsidiaries and investments

103

Collateral for trading activities

Other financial receivables

Accrued interest

Miscellaneous other financial receivables

128

1,638

681

2,359

110

2,458

234

2,782

Companies of the RWE Group deposited collateral for the trading

favourable for RWE. Regular replacement of the deposited collateral

activities stated above for exchange-based and over-the-counter

depends on the contractually agreed thresholds, above which

transactions. These are to guarantee that the obligations from the

collateral must be provided for the market value of the trading

transactions are discharged even if the development of prices is not

activities.

131

(15) Other receivables and other assets

Other receivables and other assets

31 Dec 2019

31 Dec 2018

€ 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

Non-current

Current Non-current

Current

661

153

2,506

3,320

824

2,496

11,447

144

407

758

12,756

11,564

1,192

704

213

946

924

6,567

137

329

375

7,408

6,684

724

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.

€2,600 million of the miscellaneous other assets comprise the

compensatory payments for the early exit from our lignite business

awarded by the German government.

Furthermore, €43 million of the miscellaneous other assets

(previous year: €7 million in other liabilities) were allocable to

government grants awarded in relation with co-firing biomass in

two Dutch power plants.

132

RWE Annual Report 2019
Consolidated financial statements > Notes

(16) Deferred taxes

Deferred tax assets and liabilities principally stem from the fact that

differences reduce in the foreseeable future. €5,316 million and

measurements in the IFRS statements differ from those in the tax

€6,166 million of the gross deferred tax assets and liabilities,

bases. As of 31 December 2019, no deferred tax liabilities were

respectively, will be realised within twelve months (previous year:

recognised for the difference between net assets and the carrying

€5,335 million and €6,254 million).

value of the subsidiaries and associates for tax purposes (known as

‘outside basis differences’) in the amount of €969 million (previous

The following is a breakdown of deferred tax assets and liabilities by

year: €618 million), as it is neither probable that there will be any

item:

distributions in the foreseeable future, nor will the temporary

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 2019

31 Dec 2018

Assets

Liabilities

Assets

Liabilities

1,157

1,450

2,506

3,876

815

2,101

2,290

8,809

139

289

3,234

6,578

148

487

3,866

7,108

125

938

3,009

194

3,245

7,485

7,256

8,809

6,671

7,485

– 6,550

– 5,847

706

2,259

824

1,638

As of 31 December 2019, RWE reported deferred tax claims which

€569 million in corporate income tax loss carryforwards for which

exceeded the deferred tax liabilities by €144 million (previous year:

no deferred tax claims have been recognised will apply to the

€56 million), in relation to companies which suffered a loss in the

following eight years. The other loss carryforwards do not have any

current or previous period. The basis for the recognition of deferred

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 2019, temporary differences for which no

which unutilised tax losses and deductible temporary differences

deferred tax assets were recognised amounted to €12,791 million

can be applied.

(previous year: €11,180 million).

The capitalised tax reduction claims from loss carryforwards result

In the year under review, a deferred tax expense of €14 million

from the expected utilisation of previously unused tax loss carryfor-

arising from the currency translation of foreign financial statements

wards in subsequent years.

was offset against equity (previous year: €5 million).

It is sufficiently certain that these tax carryforwards will be realised.

At the end of the reporting period, corporate income tax loss

carryforwards and trade tax loss carryforwards for which no deferred

tax claims have been recognised amounted to €1,492 million and

€879 million, respectively (previous year: €1,463 million and

€490 million).

133

(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 2019 31 Dec 2018

728

839

–15

723

872

– 1

1,585

1,631

The carrying amount of inventories acquired for resale purposes

(19) Cash and cash equivalents

was €605 million (previous year: €33 million). In the year under

review, the entire amount related to gas inventories (previous year:

Cash and cash equivalents

31 Dec 2019 31 Dec 2018

€29 million). In the previous year, €4 million of this sum was

€ million

attributable to coal inventories.

Cash and demand deposits

3,192

3,521

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

of inventories acquired for resale purposes are recognised on the

Marketable securities and other
cash investments (maturity less
than three months from the date
of acquisition)

3,192

3,523

income statement at the end of the month.

RWE keeps demand deposits exclusively for short-term cash positions.

(18) Marketable securities

creditworthiness criteria. Such criteria include their rating from one

Of the current marketable securities, €2,809 million were fixed-

of the three renowned rating agencies – Moody’s, Standard & Poor’s

interest marketable securities (previous year: €3,226 million) with a

and Fitch – as well as their equity capital and the prices for credit

maturity of more than three months from the date of acquisition, and

default swaps. As in the previous year, interest rates on cash and

€449 million were stocks and profit-participation certificates

cash equivalents were at market levels in 2019.

For cash investments, banks are selected on the basis of various

(previous year: €383 million). Marketable securities are stated at

fair value.

134

RWE Annual Report 2019

Consolidated financial statements > Notes

(20) Equity

A breakdown of fully paid-up equity is shown on page 102 et seq.

The subscribed capital of RWE AG is structured as follows:

Subscribed capital

Common shares

Preferred shares

31 Dec 2019
Number
of shares

31 Dec 2018
Number
of shares

in ’000

in %

in ’000

614,745

100.0

575,745

39,000

in %

93.7

6.3

614,745

100.0

614,745

100.0

1,574

31 Dec
2019
Carrying
amount

31 Dec
2018
Carrying
amount

€ million

1,574

1,474

100

1,574

Pursuant to resolutions passed by the Annual General Meeting and

Furthermore, treasury shares may be issued to holders of option or

the Preferred Shareholders Meeting on 3 May 2019 as well as the

convertible bonds. The Executive Board is also authorised to use

entry of the amendment to the Articles of Incorporation in the

the treasury shares to discharge obligations from future employee

Commercial Register on 28 June 2019, all of the 39,000,000

share schemes; in this regard, shareholders’ subscription rights

non-voting preferred shares in RWE AG were converted to voting

shall be excluded.

common shares. The conversion was effected at a 1:1 ratio without

additional payment. The number of common shares thus rose from

No treasury shares were held as of 31 December 2019.

575,745,499 to 614,745,499.

In fiscal 2019, RWE AG purchased a total of 305,216 RWE shares

The common shares are no-par-value bearer share certificates.

for a purchase price of €7,998,155.06 on the capital market. This is

Pursuant to a resolution passed by the Annual General Meeting on

bed capital). Employees of RWE AG and its subsidiaries received a

26 April 2018, the Executive Board was authorised to increase the

total of 305,216 shares for capital formation under the employee

company’s capital stock with the Supervisory Board’s approval by

share plan. This generated total proceeds of €7,924,538.24. The

up to €314,749,693.44 until 25 April 2023 through the issue of up

difference to the purchase price was offset against freely available

equivalent to €781,352.96 of the capital stock (0.05 % of subscri-

to 122,949,099 bearer common shares in return for contributions

retained earnings.

in cash and/or in kind (approved capital). In certain cases, with the

approval of the Supervisory Board, the subscription rights of

On 6 February 2019, RWE cancelled the hybrid bond issued by

shareholders can be excluded.

Group companies that was previously classified as equity pursuant

Pursuant to a resolution passed by the Annual General Meeting on

effected on 20 March 2019 without refinancing the hybrid bond

26 April 2018, the Company was further authorised until 25 April

with fresh hybrid capital. The hybrid bond had a 7 % coupon and a

2023 to acquire any kind of shares of the Company up to a volume

theoretically perpetual tenor.

to IAS 32. The redemption in the amount of €869 million was

of 10 % of the capital stock when the resolution on this authorisation

was passed, or if the following is lower, when this authorisation is

exercised. Based on the authorisation, the Executive Board is also

authorised to cancel treasury shares without a further resolution by

the Annual General Meeting. Moreover, the Executive Board is

authorised to transfer or sell such shares to third parties under

certain conditions and excluding shareholders’ subscription rights.

135

As a result of equity capital transactions with subsidiary companies

Dividend proposal

which did not lead to a change of control, the share of equity

We propose to the Annual General Meeting that RWE AG’s distribu-

attributable to RWE AG’s shareholders changed by a total of

table profit for fiscal 2019 be appropriated as follows:

– €149 million (previous year: €491 million) and the share of equity

attributable to other shareholders changed by a total of – €746 million

Distribution of a dividend of €0.80 per share.

(previous year: €258 million). This includes the effects of the

acquisition of the 25 % and 12.5 % minority interests in the

Gundremmingen and Emsland nuclear power stations operated by

Dividend

RWE held by the E.ON subsidiary Preussen Elektra (change in RWE AG

shareholders' interest in Group equity of €58 million) and the effects

of the acquisition of the 23.2 % minority interest in the continuing

innogy operations (change in RWE AG shareholders' interest in

Profit carryforward

Distributable profit

€ 491,796,399.20

€ 61,201.42

€ 491,857,600.62

Group equity of – €201 million).

Based on a resolution of RWE AG’s Annual General Meeting on

3 May 2019, the dividend for fiscal 2018 amounted to €0.70 per

Accumulated other comprehensive income reflects changes in

dividend-bearing common and preferred share. The dividend

the fair values of debt instruments measured at fair value through

payment to shareholders of RWE AG amounted to €430 million.

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.

As of 31 December 2019, the share of accumulated other

comprehensive income attributable to investments accounted for

using the equity method amounted to – €22 million (previous year:

– €7 million).

During the reporting year, €523 million in differences from currency

translation which had originally been recognised without an effect

on income were realised as an expense (previous year: expense of

€48 million).

136

RWE Annual Report 2019

Consolidated financial statements > Notes

Non-controlling interests

The income and expenses recognised directly in equity (other

The share ownership of third parties in Group entities is presented in

comprehensive income – OCI) include the following non-controlling

this item.

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

2019

2018

– 138

– 134

– 10

– 2

– 13

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

– 105

– 149

Currency translation adjustment

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

267

– 3

– 29

237

132

– 4

– 5

– 147

137

(21) Share-based payment

RWE AG‘s and innogy SE’s share price. Executives receive conditio-

For executives of RWE AG and innogy SE as well as of affiliated

nally granted virtual shares (performance shares). The final number

companies, Long Term Incentive Plans (LTIPs) are in place as

of virtual shares in a tranche is determined based on the achie-

share-based payment systems known as Strategic Performance

vement of the adjusted net income target. Each of the issued LTIP

Plans (SPPs) and the predecessor model Beat 2010, which is being

SPP tranches has a term of four years before payment is possible.

phased out. The expenses associated with these are borne by the

The prerequisite for participating in the plan was the renounce-

Group companies which employ the persons holding notional stocks.

ment of the options of the predecessor model Beat 2010 which

The LTIP SPP was introduced in 2016. It uses an internal performance

renouncement declarations. The plan has expired with the exception

target (net income of relevance to remuneration) derived from the

of some immaterial remaining components.

had not yet lapsed. The large majority of the participants made such

mid-term planning and takes into account the development of

RWE AG SPP

Start of term

2016 tranche

2017 tranche

2018 tranche

2019 tranche

1 Jan 2016

1 Jan 2017

1 Jan 2018

1 Jan 2019

Number of conditionally
granted performance
shares

Term

486,436

4 years

1,338,027

4 years

883,974

4 years

932,889

4 years

Performance target

Adjusted net income

Cap/number of
performance shares

150 %

Cap/payment amount

200 %

150 %

200 %

150 %

200 %

150 %

200 %

Determination of payment The payment amount is calculated on the basis of the determined number of performance shares multiplied by

Change in corporate
control/merger

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 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 considered 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 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 condi-
tions, 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 consideration.

Form of settlement

Cash settlement

Payment date

2020

2021

2022

2023

138

RWE Annual Report 2019
Consolidated financial statements > Notes

innogy SE SPP

2016 tranche

2017 tranche

2018 tranche

Start of term

1 Jan 2016

1 Jan 2017

1 Jan 2018

Number of conditionally
granted performance
shares

Term

352,834

4 years

1,178,133

4 years

1,108,599

4 years

Performance target

Adjusted net income

Cap/number of perfor-
mance shares

150 %

Cap/payment amount

200 %

150 %

200 %

150 %

200 %

Determination of payment The payment amount is calculated on the basis of the determined number of finally granted performance

shares multiplied 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 considered twice.

Change in corporate
control/merger

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.

Form of settlement

Cash settlement

Payment date

2020

2021

2022

139

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

2019 tranche

Fair value per share

13.78

11.62

18.80

19.10

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

rules set out earlier will be reflected in the valuation in the event of a

the term of the corresponding tranche. The limited payment per SPP

change of control. The expected payout amount will be calculated on

was implemented via a sold call option. The option value calculated

the basis of the average innogy share price on the 30 stock

using the Black Scholes Model was deducted. The maximum

market trading days leading up to 11 March 2018 plus dividends

payments per conditionally granted SPP (= option strike) established

paid. In line with the payout conditions in the event of a change of

in the plan conditions, the discount rates relative to the remaining

control, the amount was paid after the completion of the transaction.

term as well as the volatilities and expected dividends of RWE AG

and 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

2019 tranche

Outstanding at the start of the fiscal year

528,207

1,628,391

883,974

Granted

932,889

Change (granted/expired)

306

3,737

207,021

Paid out

Outstanding at the end of the fiscal year

Payable at the end of the fiscal year

528,513

1,632,128

1,090,995

932,889

Performance Shares from the innogy SE SPP

2016 tranche

2017 tranche

2018 tranche

Outstanding at the start of the fiscal year

27,876

55,212

56,546

Granted

Change (granted/expired)

Paid out

Outstanding at the end of the fiscal year

Payable at the end of the fiscal year

8,041

– 35,917

25,699

– 80,911

3,321

– 59,867

During the period under review, expenses for the share-based

based payment programmes amounted to €60 million (previous

payment system totalled €34 million (previous year: €20 million).

year: €32 million).

As of the balance-sheet date, provisions for cash-settled share-

140

RWE Annual Report 2019

Consolidated financial statements > Notes

(22) Provisions

Provisions

€ million

Provisions for pensions and similar obligations

Provisions for nuclear waste management

Provisions for mining damage

Other provisions1

Staff-related obligations (excluding restructuring)

Restructuring obligations

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 2019

31 Dec 2018

Non-
current

3,446

6,355

4,559

Current

Total

3,446

6,723

4,618

368

Non-
current

3,287

5,659

2,460

Current

Total

3,287

5,944

2,516

285

14,360

427

14,787

11,406

341

11,747

361

591

1,390

948

557

281

370

622

116

771

588

983

622

1,506

952

634

281

771

958

378

109

905

358

528

261

331

446

824

132

997

362

580

262

885

721

885

1,052

4,576

2,211

6,787

2,960

2,231

5,191

18,936

2,638

21,574

14,366

2,572

16,938

1 Prior-year figures restated: Due to the IFRS IC agenda decision of September 2019, tax balances previously stated as tax provisions are now recognised in

income tax liabilities.

Provisions for pensions and similar obligations. The company

post-employment benefits, or increase the contributions of the

pension plan consists of defined contribution and defined benefit

employer and employees. In the event that RWE terminates the

plans. The defined benefit commitments mainly relate to pension

ABP pension plan, ABP will charge a termination fee. Amongst other

benefits based on final salary. These are exposed to the typical risks

things, its level depends on the number of participants in the plan,

of longevity, inflation and salary increases.

the amount of salary and the age structure of the participants. As

of 31 December 2019, we had around 600 active participants in

In the reporting period, €24 million (previous year: €23 million) was

the plan (previous year: approximately 600).

paid into defined contribution plans. This includes payments made

by RWE for a benefit plan in the Netherlands which covers the

RWE transferred assets to RWE Pensionstreuhand e.V. within the

commitments of various employers. This fund does not provide the

framework of a contractual trust arrangement (CTA) in order to

participating companies with information allowing for the pro-rata

finance the pension commitments of German Group companies.

allocation of defined benefit obligations, plan assets and service

There is no obligation to provide further funds. From the assets held

cost. In the consolidated financial statements, the contributions are

in trust, funds were transferred to RWE Pensionsfonds AG to cover

thus recognised analogously to a defined contribution plan, although

pension commitments to most of the employees who have already

this is a defined benefit plan. The pension plan for employees in the

retired. RWE Pensionsfonds AG falls under the scope of the Act on

Netherlands is administered by Stichting Pensioenfonds ABP (see

the Supervision of Insurance Undertakings and oversight by the

www.abp.nl). Contributions to the pension plan are calculated as a

Federal Financial Supervisory Agency (BaFin). Insofar as a regulatory

percentage rate of employees’ salaries and are paid by the emplo-

deficit occurs in the pension fund, supplementary payment shall be

yees and employers. The rate of the contributions is determined by

requested from the employer. Independently of the aforementioned

ABP. There are no minimum funding obligations. Approximately

rules, the liability of the employer shall remain in place. The boards

€9 million in employer contributions are expected to be paid to the

of RWE Pensionstreuhand e.V. and RWE Pensionsfonds AG are

ABP pension fund in fiscal 2020 (previous year: €8 million). The

responsible for ensuring that the funds under management are used

contributions are used for all of the beneficiaries. If ABP’s funds are

in compliance with the contract and thus fulfil the requirements for

insufficient, it can either curtail pension benefits and future

recognition as plan assets.

141

In the United Kingdom, it is legally mandated that defined benefit

The last funding valuations of the ESPS sections were carried out on

plans are provided with adequate and suitable assets to cover

31 March 2019. They showed that the RWE section had a financing

pension obligations. The corporate pension system is managed by

deficit of £44.3 million. RWE will rectify this deficit with a payment of

the sector-wide Electricity Supply Pension Scheme (ESPS), in which

£48.3 million as of 31 March 2020. A technical financing deficit of

RWE and the continuing innogy operations each have their own

£103.4 million was revealed for the section of the continuing innogy

dedicated independent sections. The sections are managed by

operations. innogy and the trustees subsequently agreed to rectify

trustees which are elected by members of the pension plans or

this deficit with annual payments of £37.5 million, £36.3 million,

appointed by the sponsoring employers. The trustees are respon-

£17.0 million and £17.0 million from 2020 to 2023. The next

sible for managing the pension plans. This includes investments,

valuations have to occur by 31 March 2022. From this point in time,

pension payments and financing plans. The pension plans

the company and the trustees have 15 months to approve the

comprise the benefit obligations and plan assets for the

funding valuation.

subsidiaries of the RWE Group and the continuing innogy opera-

tions. It is required by law to assess the required financing of the

The payments to settle the deficit are charged to the participating

pension plans once every three years. This involves measuring

companies on the basis of a contractual agreement. Above and

pension obligations on the basis of conservative assumptions, which

beyond this, payments are regularly made to finance the newly arising

deviate from the requirements imposed by IFRS. The underlying

benefit obligations of active employees which increase the pension

actuarial assumptions primarily include the projected life expectan-

claims.

cies of the members of the pension plans as well as assumptions

relating to inflation, imputed interest rates and the market returns

Provisions for defined benefit plans are determined using actuarial

on the plan assets.

methods. We apply the following assumptions:

Calculation assumptions

31 Dec 2019

31 Dec 2018

in %

Discount rate

Wage and salary growth rate

Germany

Foreign 1

Germany

Foreign 1

1.20

2.35

2.00

3.00

1.70

2.35

2.70

3.30

Pension increase rate

1.00, 1.60 and 1.75

1.90 and 2.80

1.00, 1.60 and 1.75

2.20 and 3.10

1 Pertains to benefit commitments to employees of the RWE Group in the UK.

142

RWE Annual Report 2019Consolidated financial statements > Notes

Composition of plan assets (fair value)

€ million

31 Dec 2019

Of
which:
Level 1
pur-
suant to
IFRS 13 Foreign 2

Of
which:
Level 1
pur-
suant to
IFRS 13

31 Dec 2018

Of
which:
Level 1
pur-
suant to
IFRS 13 Foreign 2

Of
which:
Level 1
pur-
suant to
IFRS 13

Ger-
many1

Equity instruments, exchange-traded funds

1,539

1,519

468

131

1,396

1,375

469

208

Interest-bearing instruments

3,620

3,502

3,245

3,720

1,641

Real estate

Mixed funds 3

Alternative investments

Other 4

705

685

375

1,539

160

438

661

407

613

689

229

406

613

784

308

324

6,616

2,453

6,577

393

6,019

2,082

5,894

2,182

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

investments over the long term. Furthermore, in order to achieve

the plan assets and the pension commitments and the relation of

consistently high returns, there is also investment in products which

these two items to each other, in order to determine the best possible

are more likely to offer relatively regular positive returns over time.

investment strategy (Asset Liability Management Study). Using an

This involves products with returns which fluctuate like those of

optimisation process, portfolios are identified which can earn the

bond investments, but which achieve an additional return over the

best targeted results at a defined level of risk. One of these efficient

medium term, such as so-called absolute return products (including

portfolios is selected and the strategic asset allocation is determined;

funds of hedge funds).

furthermore, the related risks are analysed in detail.

In the United Kingdom, our capital investment takes account of the

The focus of RWE’s strategic investment policy is on domestic and

structure of the pension obligations as well as liquidity and risk matters.

foreign government bonds. In order to increase the average yield,

The goal of the investment strategy in this context is to maintain the

corporate bonds with a higher yield are also included in the

level of pension plan funding and ensure the full financing of the

portfolio. The ratio of equities in the portfolio is lower than that of

pension plans over time. To reduce financing costs and earn surplus

bonds. Investment occurs in various regions. The investment

returns, we also include higher-risk investments in our portfolio. The

position in equities is intended to earn a risk premium over bond

capital investment focusses on government and corporate bonds.

143

Pension provisions for pension commitments changed as follows:

Changes in pension provisions

€ million

Balance at 1 Jan 2019

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

Employer contributions 1

Benefits paid 2

Changes in the scope of consolidation/transfers

Past service cost

General administration expenses

Change in capitalised surplus of plan assets

Balance at 31 Dec 2019

of which: domestic

of which: foreign

Present value of
pension
commitments

Fair value of
plan assets

Capitalised
surplus of plan
assets

14,987

11,913

213

123

312

– 49

1,272

308

– 718

209

– 7

16,486

10,041

6,445

262

1,096

315

157

– 694

145

– 7

13,193

6,616

6,577

– 70

153

Total

3,287

123

– 1,096

– 49

1,272

– 157

– 24

– 7

– 70

3,446

3,425

1 Of which: €42 million from initial and subsequent transfers to plan assets and €115 million in cash flows from operating activities.
2 Contained in cash flows from operating activities.

144

RWE Annual Report 2019Consolidated financial statements > Notes

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

Employer contributions1

Benefits paid 2

Changes in the scope of consolidation

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

Total

25,316

19,999

103

5,420

210

413

380

– 71

– 45

– 907

– 10,376

– 10,461

340

– 788

– 46

259

– 852

– 7,001

– 7,005

– 6

14,987

11,913

9,208

5,779

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.

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 2019

31 Dec 2018

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

– 734

– 433

– 55

– 35

– 489

– 300

145

– 644

– 373

– 49

– 29

– 442

– 267

833

489

537

407

482

259

728

420

484

298

425

202

The sensitivity analyses are based on the change of one assumption

commitments in the United Kingdom due to a ruling on the

each, with all other assumptions remaining unchanged. Actual

equalisation of minimum pension entitlements through the

developments will probably be different than this. The methods of

consideration of gender-specific factors and due to severance

calculating the aforementioned sensitivities and for calculating the

payments. Furthermore, employee rights to compensation for

pension provisions are in agreement. The dependence of pension

disadvantages were remeasured in some cases in German

provisions on market interest rates is limited by an opposite effect.

pre-retirement regulations.

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 Impro-

fixed-interest securities. Consequently, declines in market interest

vement of Company Pensions (Sec 16 of the German Company

rates are typically reflected in an increase in plan assets, whereas

Pension Act (BetrAVG)). Additionally, some commitments grant

rising market interest rates are typically reflected in a reduction in

annual adjustments of pensions, which may exceed the adjustments

plan assets.

in compliance 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

result in higher pension payments by RWE.

As of the balance-sheet date, the recognised amount of pension

provisions totalled €2,889 million for funded pension plans

The weighted average duration of the pension obligations was

(previous year: €2,826 million) and €557 million for unfunded

16 years in Germany (previous year: 15 years) and 15 years outside

pension plans (previous year: €461 million).

of Germany (previous year: 14 years).

In fiscal 2019, a substantial portion of the past service cost

In fiscal 2020, RWE expects to make €275 million in payments for

related to effects in connection with restructuring measures in

defined benefit plans of continuing operations (previous-year target:

Germany and severance payments in Great Britain. In the previous

€220 million), as direct benefits and contributions to plan assets.

year, the past service cost predominantly consisted of pension

Provisions for nuclear energy
and mining

Balance at
1 Jan 2019

Additions

Unused
amounts
released

Interest
accretion

Amounts
used

Balance at
31 Dec 2019

Changes in the
scope of
consoli dation,
currency
adjustments,
transfers

€ million

Provisions for nuclear waste
management

Provisions for mining damage

5,944

800

2,516

1,384

8,460

2,184

227

765

992

– 9

– 3

– 245

– 38

6,723

4,618

– 3

– 283

11,341

Provisions for nuclear waste management are recognised in the

as of the balance-sheet date (previous year: 0.4 %). The escalation

full amount for the nuclear power plants Biblis A and B, Mülheim-

rate based on expectations with regard to general increases in

Kärlich, Emsland, Lingen and Gundremmingen A, B and C. Provisions

wages and prices and productivity growth was 1.5 % (previous year:

for waste disposal for the Dutch nuclear power plant Borssele are

1.5 %). As a result, the real discount rate used for nuclear waste

included at a rate of 30 %, in line with RWE’s stake.

management purposes, which is the difference between the

Provisions for nuclear waste disposal are almost exclusively

(previous year: – 1.1 %). An increase (decrease) in this rate by

reported as non-current provisions, and their settlement amount is

0.1 percentage point would reduce (increase) the present value of

discounted to the balance-sheet date. Based on the current state of

the provision by roughly €50 million.

discount rate and the escalation rate, amounted to – 1.5 %

planning, we will use most of these provisions by the beginning of

the 2040s. The discount rate calculated on the basis of the current

level of market interest rates for no-risk cash investments was 0.0 %

146

RWE Annual Report 2019

Consolidated financial statements > Notes

Excluding the interest accretion, additions to provisions for nuclear

Provisions for the residual operation of nuclear power station

waste management amount to €800 million. €719 million of this

facilities cover all steps that must be taken largely independent of

sum is allocable to the nuclear energy obligations assumed from the

dismantling and disposal but are necessary to ensure that the

E.ON subsidiary PreußenElektra within the scope of the acquisition

assets are safe and in compliance with permits or are required by

of the minority interests in the Gundremmingen nuclear power plant

the authorities. In addition to works monitoring and facility protection,

units. Besides quantity-related increases in the provisions, the other

these mainly include service, recurrent audits, maintenance, radiation

additions to provisions are due to the fact that the current estimates

and fire protection as well as infrastructural adjustments.

resulted in a net increase in the antici pated nuclear waste manage-

ment costs. Of the changes in provisions, – €51 million was offset

Provisions for the dismantling of nuclear power plant facilities include

against the corresponding costs of nuclear power plants still in

all work done to dismantle plants, parts of plants, systems and

operation and the fuel elements. Prepayments for services in the

components as well as on buildings that must be dismantled to

amount of €8 million were deducted from these provisions. In the

comply with the Nuclear Energy Act. They also consider the

reporting period, we also used provisions of €193 million for the

conventional dismantling of nuclear power plant facilities to fulfil

decommissioning of nuclear power plants. Decommissioning and

legal or other obligations.

dismantling costs had originally been capitalised in a corresponding

amount and reported under the cost of the respective nuclear

Provisions for residual material processing and waste management

power plants.

include the costs of processing radioactive residual material for

non-hazardous recycling and the costs of treating radioactive

The provisions of the law on the reassignment of responsibility for

waste produced during the plant’s service life and dismantling

nuclear waste disposal stipulates that accountability for the

operations. This includes the various processes for conditioning,

shutdown and dismantling of the assets as well as for packaging

proper packaging of the low-level and intermediate-level radioactive

radio active waste remains with the companies. The shutdown and

waste in suitable containers and the transportation of such waste to

dismantling process encompasses all activities following the final

BGZ Gesellschaft für Zwischenlagerung mbH (BGZ), which has been

termination of production by the nuclear power plant until the plant

commissioned by the Federal government for intermediate storage.

site is removed from the regulatory scope of the Nuclear Energy Act.

This item also contains the cost of transporting the waste produced

A request to decommission and dismantle the nuclear power plant

by recycling and the cost of the proper packaging of spent nuclear

will be filed with the nuclear licensing authority during its operating

fuel elements, i.e. the cost of loading and procuring freight and

period so that the decommissioning and dismantling work can be

interim storage containers.

performed in time after the expiry of the operating permit.

Dismantling operations essentially consist of dismantling and

Commissioned by the plant operator, the internationally renowned

removal of the radioactive contamination from the facilities and

company NIS Ingenieurgesellschaft mbH (NIS), Alzenau, assesses

structures, radiation protection, and regulatory monitoring of the

the prospective residual operation and dismantling costs for the

dismantling measures and residual operations.

nuclear power plants on an annual basis. The costs are determined

specifically for each facility and take into consideration the current

We thus subdivide our provisions for nuclear waste management

state of the art, regulatory requirements and previous practical

into the residual operation of nuclear power plants, the dismantling

experience from ongoing and completed dismantling projects.

of nuclear power station facilities as well as the cost of residual

Additionally, current developments are also incorporated into the

material processing and radioactive waste treatment facilities.

cost calculations. They also include the cost of conditioning and

Provisions for nuclear waste
management
€ million

Residual operation

Dismantling

Processing of residual material and
waste management

31 Dec
2019

31 Dec
2018

2,840

2,086

1,797

6,723

2,515

1,810

1,619

5,944

packaging radioactive waste generated during dismantling

operations and the transportation of such waste to BGZ, which has

been commissioned by the Federal government for intermediate

storage. Further cost estimates for the disposal of radioactive waste

are based on contracts with foreign reprocessing companies and

other disposal companies. Furthermore, they are based on plans

by internal and external experts, in particular GNS Gesellschaft für

Nuklear-Service mbH, (GNS) Essen.

147

In terms of their contractual definition, provisions for nuclear waste

So far, due to the long-term nature of the obligations, both the

management break down as follows:

escalation rate and the discount rate have been determined as the

Provisions for nuclear waste
management
€ million

Provisions for nuclear obligations, not
yet contractually defined

Provisions for nuclear obligations,
contractually defined

31 Dec
2019

31 Dec
2018

average values for a longer period in the past. Since the develop-

ment of inflation has an impact both on the fulfilment amounts and

the level of interest rates, this approach resulted in a consistent real

discount rate of 1.3 % specific to the provisions, as the difference

between the discount rate of 4.1 % and the escalation rate of 2.8 %.

Since a major portion of the amounts used will now occur in the next

4,849

4,462

30 years due to the early phase-out of electricity generation from

1,874

6,723

1,482

5,944

lignite and the associated additional cost of restoring the opencast

lignite mines, it became necessary to adjust the calculation of the

discount rate and the escalation rate. In discounting the amounts

used in the coming 30 years, we have oriented ourselves towards

the current market interest rates for risk-free cash investments.

The provision for obligations which are not yet contractually

Since no market interest rates are available for later periods, a

defined covers the costs of the remaining operational phase of the

sustainable, long-term interest rate is used to discount the amounts

operating plants, the costs of dismantling as well as the residual

used after the next 30 years. In sum, this results in an average

material processing and waste treatment costs incurred in

discount rate of 1.99 %. The escalation rate used (1.5 %) is also lower

connection with waste produced as a result of shut-downs.

than in the previous year (2.8 %). The escalation rate reflects

Provisions for contractually defined nuclear obligations relate to

applied for mining purposes, which is the difference between the

all obligations the value of which is specified in contracts under civil

discount rate and the escalation rate, is thus 0.49 % (previous year:

law. The obligations include the anticipated residual costs of

1.3 %). An increase (decline) in the real discount rate by 0.1 percen-

reprocessing and returning the resulting radioactive waste. These

tage point would reduce (increase) the present value of the provision

currently expected price and cost increases. The real discount rate

costs stem from existing contracts with foreign reprocessing

by around €140 million.

companies and with GNS. Moreover, these provisions also include

the costs for transport and intermediate storage containers for and

Excluding the interest accretion, €1,384 million was added to

the loading of spent fuel assemblies within the framework of final

provisions for mining damage. This includes the cost of the quantity-

direct storage. Furthermore, this item also includes the amounts for

induced increase in the obligatory volume and the cost of restoring

the professional packaging of radioactive operational waste as well

the opencast lignite mines due to the phase-out of electricity

as the in-house personnel costs incurred for the residual operation

generation from lignite by 2038. €258 million of the changes in

of plants which are permanently decommissioned.

provisions was capitalised under ‘Property, plant and equipment’.

Provisions for mining damage also consist almost entirely of

non-current provisions and fully covered the volume of obligations

as of the balance-sheet date. They are reported at their settlement

amount discounted to the balance-sheet date. Provisions for mining

damage also contain the expected additional cost of restoring the

opencast lignite mines associated with the phase-out of electricity

generation from lignite by 2038. In addition to continuous

recultivation of opencast mine sites a large part of the claims for

site restoration of lignite opencast mining areas is expected through

to 2050. The cost estimates are to a great extent based on

external expert opinions.

148

RWE Annual Report 2019

Consolidated financial statements > Notes

Other provisions

Additions

Balance at
1 Jan
2019

Unused
amounts
released

Interest
accretion

Amounts
used

Balance at
31 Dec
2019

Changes in
the scope
of
consoli-
dation,
currency
adjust-
ments,
transfers

€ million

Staff-related obligations
(excluding restructuring)

Restructuring obligations

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

824

132

997

362

580

262

885

1,052

541

537

367

775

605

– 17

– 23

– 178

– 21

– 41

– 19

−5

– 11

– 24

5,1911

3,014

– 339

– 45

114

– 28

378

594

– 355

– 410

– 3

– 90

– 17

– 10

– 67

– 887

– 348

983

622

1,506

952

634

281

771

958

639

– 1,832

6,787

1 Figure restated: Due to the IFRS IC agenda decision of September 2019, tax balances previously stated as tax provisions are now recognised in income tax

liabilities.

149

Provisions for staff-related obligations mainly consist of

This is the case if individual contracts governing socially acceptable

provisions for pre-retirement part-time work arrangements,

payroll downsizing are signed by affected employees.

severance, outstanding vacation and service jubilees and perfor-

mance-based pay components. Based on current estimates, we

Provisions for purchase and sales obligations primarily relate to

expect most of these to be used from 2020 to 2025.

contingent losses from pending transactions.

Provisions for restructuring obligations pertain mainly to measures

From the current perspective, we expect that the majority of the

for socially acceptable payroll downsizing. We currently expect most

provisions for the dismantling of wind farms will be used from

of these to be used from 2020 to 2030. In so doing, sums ear-marked

2020 to 2045, and the other dismantling and retrofitting

for personnel measures are reclassified from provisions for

obligations will be used from 2020 to 2060.

restructuring obligations to provisions for staff-related obligations

as soon as the underlying restructuring measure has been specified.

(23) Financial liabilities

Financial liabilities

€ million

Bonds payable1

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 2019

31 Dec 2018

Non-current

Current

Non-current

Current

1,110

965

1,849

3,924

391

400

1,019

1,810

1,103

473

422

1,998

533

152

766

€631 million of the non-current financial liabilities were interest-

The following overview shows the key data on the bonds of the

bearing liabilities (previous year: €523 million).

RWE Group as of 31 December 2019:

Bonds payable
Issuer

RWE AG

Bonds payable

Outstanding
amount

Carrying amount
€ million

Coupon in %

Maturity

€ 12 million

€ 539 million1

€ 282 million1

US$ 317 million1

538

281

279

1,110

3.5

2.75

3.5

October 2037

April 2075

6.625

July 2075

1 Hybrid bonds classified as debt as per IFRS.

€39 million of the financial liabilities are secured by mortgages

(previous year: €72 million).

Other financial liabilities contain lease liabilities.

150

RWE Annual Report 2019Consolidated financial statements > Notes

In the previous year, liabilities arising from finance lease agreements

had the following maturities:

Liabilities from finance
lease agreements

€ million

Due in the following year

Due after 1 to 5 years

Due after 5 years

The introduction of IFRS 16 abolishes the distinction between

operating leases and finance leases by the lessee. A maturity

analysis of all lease liabilities as of 31 December 2019 can be found

in the reporting on financial instruments (see Note 27).

Maturities of minimum lease payments

31 Dec 2018

Nominal value

Discount

Present value

192

241

192

241

(24) Income tax liabilities
Income tax liabilities contain uncertain income tax items in the

primarily includes income taxes for periods for which the tax

amount of €1,174 million (previous year: €1,540 million;

authorities have not yet finalised a tax assessment and for the

1 January 2018: €1,969 million). Due to the IFRS IC agenda

current year.

decision in September 2019, these are now recognised as

income tax liabilities instead of as tax provisions. This item

(25) Other liabilities

Other liabilities

€ million

Tax liabilities

Social security liabilities

Derivatives

Miscellaneous other liabilities

of which: financial debt

of which: non-financial debt

31 Dec 2019

31 Dec 2018

Non-current

Current

Non-current

Current

391

456

849

435

414

129

10,088

1,354

11,588

10,303

1,285

362

144

508

379

129

105

6,698

383

7,200

6,877

323

The principal component of social security liabilities are the

Moreover, €46 million (previous year: €56 million) in miscellaneous

amounts payable to social security institutions.

other liabilities were allocable to state investment subsidies primarily

granted in connection with the construction of wind farms and in the

Miscellaneous other liabilities contain €269 million in contract

preceding year with biomass co-firing.

liabilities (previous year: €76 million).

151

Other information

(26) Earnings per share

• Equity instruments measured at fair value through other

Basic and diluted earnings per share are calculated by dividing the

comprehensive income: the option to recognise changes in fair

portion of net income attributable to RWE shareholders by the

value directly in equity is exercised.

average number of shares outstanding; treasury shares are not

• Financial assets measured at fair value through profit or loss: the

taken into account in this calculation.

contractual cash flows of a debt instrument do not solely consist of

In the previous year, earnings per share were the same for both

recognise changes in the fair value of equity instruments in other

common and preferred shares.

comprehensive income is not exercised.

interest and principal on the outstanding capital or the option to

Earnings per share

2019

2018

include liabilities measured at amortised cost.

On the liabilities side, non-derivative financial instruments principally

8,498

335

Financial instruments recognised at fair value are measured based

on the published exchange price, insofar as the financial instru-

– 691

– 196

ments are traded on an active market. The fair value of non-quoted

Net income for RWE AG
shareholders

€
million

of which: from continuing
operations

of which: from discontinued
operations

Number of shares outstan-
ding (weighted average)

in
‘000

614,745

9,189

531

Basic and diluted earnings
per common share

of which: from continuing
operations

of which: from discontinued
operations

Dividend per common share

Dividend per preferred share

€

1 Proposal for fiscal 2019.

€

13.82

0.54

– 1.13

– 0.32

14.95

0.801

0.86

0.70

debt and equity instruments is generally determined on the basis of

discounted expected payment flows, taking into consideration

macro-economic developments and corporate business plan data.

Current market interest rates corresponding to the remaining

maturity are used for discounting.

Derivative financial instruments are recognised at their fair values

as of the balance-sheet date, insofar as they fall under the scope of

IFRS 9. Exchange-traded products are measured using the

published closing prices of the relevant exchange. Non-exchange

traded products are measured on the basis of publicly available

broker quotations or, if such quotations are not available, on

generally accepted valuation 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

(27) Reporting on financial instruments

account in the course of price determination. Assumptions

Financial instruments are divided into non-derivative and derivative.

pertaining to the energy sector and economy are made within the

Non-derivative financial assets essentially include other non-current

scope of a comprehensive process with the involvement of both

financial assets, accounts receivable, marketable securities and

in-house and external experts.

cash and cash equivalents. Financial instruments are recognised

either at amortised cost or at fair value, depending on their

Measurement of the fair value of a group of financial assets and

classification. Financial instruments are recognised in the following

financial liabilities is conducted on the basis of the net risk exposure

categories:

per business partner.

• Debt instruments measured at amortised cost: the contractual

cash flows solely consist of interest and principal on the outstan-

ding capital: there is an intention to hold the financial instrument

until maturity.

• Debt instruments measured at fair value through other compre-

hensive income: the contractual cash flows solely consist of

interest and principal on the outstanding capital: there is an

intention to hold and sell the financial instrument.

152

RWE Annual Report 2019
Consolidated financial statements > Notes

The following overview presents the classifications of financial

• Level 2: Measurement on the basis of input parameters which

instruments measured at fair value in the fair value hierarchy

are not the prices from Level 1, but which can be observed for the

prescribed by IFRS 13. The individual levels of the fair value

financial instrument either directly (i.e. as price) or indirectly (i.e.

hierarchy are defined as follows:

derived from prices),

• Level 3: Measurement using factors which cannot be observed on

• Level 1: Measurement using (unadjusted) prices of identical financial

the basis of market data.

instruments formed on active markets,

Fair value hierarchy
€ million

Total
2019

Level 1

Level 2

Level 3

Other financial assets

4,391

3,853

188

Derivatives (assets)

12,108

11,443

350

665

of which: used for hedging
purposes

2,961

Total
2018

400

7,271

1,644

159

7,115

1,644

Level 1

Level 2

Level 3

Securities

3,258

1,829

1,429

3,606

1,618

1,988

Assets held for sale

Derivatives (liabilities)

of which: used for hedging
purposes

Liabilities held for sale

10,479

1,513

4,031

1,755

1,472

9,902

577

7,060

1,513

1,134

1,343

7,025

1,134

1,343

148

156

804

Due to the increase in the number of price quotations on active

in the reporting year, derivatives with a fair value of €44 million were

markets, financial assets with a fair value of €24 million (previous

reclassified from Level 2 to Level 3.

year: €14 million) were reclassified from Level 2 to Level 1.

Conversely, due to a drop in the number of price quotations,

The development of the fair values of Level 3 financial instruments

financial assets with a fair value of €25 million (previous year:

is presented in the following table:

€12 million) were reclassified from Level 1 to Level 2. Furthermore,

Level 3 financial
instruments:
Development in
2019

€ million

Other financial assets

Derivatives (assets)

Assets held for sale

Derivatives
(liabilities)

Liabilities held for
sale

Balance at
1 Jan 2019

148

156

804

Changes in the
scope of
consolidation,
currency
adjustments
and other

155

182

– 819

138

Changes

Balance at
31 Dec 2019

Recognised in
profit or loss

Recognised in
OCI

With a
cash effect

– 9

– 23

434

– 8

432

– 107

– 28

350

665

577

153

Level 3 financial
instruments:
Development in
2018

€ million

Other financial assets

Financial receivables

Derivatives (assets)

Assets held for sale

Derivatives
(liabilities)

Balance at
1 Jan 2018

821

Changes in the
scope of
consolidation,
currency
adjustments
and other

– 741

– 35

736

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

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
2019

242

– 449

209

– 23

– 8

– 29

Of which:
attributable to
financial instru-
ments held at the
balance-sheet date

Total
2018

Of which:
attributable to
financial instru-
ments held at the
balance-sheet date

242

– 449

209

– 10

– 8

– 24

– 45

– 24

– 45

100

Level 3 derivative financial instruments essentially consist of energy

the fair values to increase, whereas declining gas prices cause them

purchase and commodity agreements, which relate to trading

to drop. A change in pricing by +/– 10 % would cause the market

periods for which there are no active markets yet. The valuation of

value to rise by €61 million (previous year: €41 million) or decline by

such depends on the development of electricity, oil and gas prices in

€61 million (previous year: €41 million).

particular. All other things being equal, rising market prices cause

154

RWE Annual Report 2019Consolidated financial statements > Notes

Financial assets and liabilities can be broken down into the

measurement categories with the following carrying amounts

according to IFRS 9 in the year under review:

Carrying amounts by category
€ million

Financial assets measured at fair value through profit or loss

of which: obligatorily measured at fair value – continuing operations

of which: obligatorily measured at fair value – held for sale

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: 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 2019

31 Dec 2018

10,829

10,821

9,543

112

1,727

4,247

8,970

8,966

8,091

311

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

The carrying amounts of financial assets and liabilities within the

Due to the initial adoption of IFRS 16, the figures stated for financial

scope of IFRS 7 basically correspond to their fair values. The only

liabilities in the period under review no longer include lease liabilities,

deviations are for financial liabilities. The carrying amount of these is

whereas these were still considered in the previous year's figures.

€4,632 million (previous year: €2,764 million), while the fair value

amounts to €4,919 million (previous year: €2,842 million). Of this,

The following net results from financial instruments as per IFRS 7 were

€1,180 million (previous year: €1,080 million) is related to Level 1

recognised on the income statement, depending on the category:

and €3,739 million (previous year: €1,762 million) to Level 2 of the

fair value hierarchy.

Net gain/loss by category
€ million

Financial assets and liabilities measured at fair value through profit or loss

of which: obligatorily measured at fair value

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

2019

2018

941

137

– 95

186

Financial liabilities measured at (amortised) cost

– 317

– 236

155

The net result as per IFRS 7 essentially includes interest, dividends and

In the 2019 fiscal year, €27 million (previous year: €13 million) in

results from the measurement of financial instruments at fair value.

income from dividends from these financial instruments was

recognised, of which €5 million (previous year: €4 million) is

The option to recognise changes in fair value in other comprehensi-

attributable to equity instruments sold during the same year.

ve income is exercised for a portion of the investments in equity

More over, in the year under review, equity instruments measured

instruments. These are strategic investments and other long-term

through other comprehensive income were sold in line with the

investments as well as securities in special funds.

existing investment strategy. Their fair value at the derecognition

Fair value of equity instruments
measured at fair value through
other comprehensive income

€ million

31 Dec 2019 31 Dec 2018

Securities in special funds

Nordsee One GmbH

E.ON SE

444

3,780

378

date amounted to €738 million (previous year: €312 million).

The resulting gain amounted to €5 million (previous year: loss of

€2 million).

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

collateral for stock market transactions due on a daily basis.

Netting of financial assets and financial
liabilities as of 31 Dec 2019

Gross
amounts
recognised

Netting

Net amounts
recognised

Related amounts not set off Net amount

€ million

Derivatives (assets)

Derivatives (liabilities)

10,381

– 9,801

9,031

– 8,185

580

846

– 119

Financial
instruments

Cash
collateral
received/
pledged

– 318

– 727

262

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)

14,915

– 14,232

10,532

– 10,101

683

431

– 186

Financial
instruments

Cash
collateral
received/
pledged

– 400

– 245

283

The related amounts not set off include cash collateral received and

Market risks stem from changes in exchange rates and share

pledged for over-the-counter transactions as well as collateral

prices as well as interest rates and commodity prices, which can

pledged in advance for stock market transactions.

have an influence on business results.

As a utility enterprise with international operations, the RWE Group

Due to the RWE Group’s international profile, currency management

is exposed to market, credit and liquidity risks in its ordinary business

is a key issue. Fuels are traded in British pounds and US dollars as

activity. We limit these risks via systematic, groupwide risk manage-

well as in other currencies. In addition, RWE does business in a num-

ment. The range of action, responsibilities and controls are defined

ber of currency areas. The companies of the RWE Group are required

in binding internal directives.

to hedge their foreign currency risks via RWE AG. Foreign currency

risks arising from the involvement in and the financing of the rene-

wable energy business are hedged by RWE Renewables Internatio-

nal Participations B.V.

156

RWE Annual Report 2019

Consolidated financial statements > Notes

Interest rate risks stem primarily from financial debt and the Group’s

The key internal control parameters for commodity positions at

interest-bearing investments. We hedge against negative changes

RWE Supply & Trading are the VaR for the trading business and the

in value caused by unexpected interest-rate movements using

VaR for the pooled gas and liquefied natural gas (LNG) business.

non-derivative and derivative financial instruments.

Here, the maximum VaR is €40 million and €14 million, respectively.

As of 31 December 2019, the VaR was €12.0 million in the trading

Opportunities and risks from changes in the values of non-current

business (previous year: €12.4 million) and €4.7 million for the pooled

securities are centrally controlled by a professional fund manage-

gas and LNG business (previous year: €5.1 million).

ment system operated by RWE AG.

The Group’s other financial transactions are recorded using centra-

relation to the trading and pooled LNG and gas business of

lised risk management software and monitored by RWE AG.

RWE Supply & Trading to model the impact of commodity price

Additionally, stress tests are carried out on a monthly basis in

changes on the earnings conditions and take risk-mitigating measures

For commodity operations, risk management directives have been

if necessary. In these stress tests, market price curves are modified,

established by RWE AG’s Controlling & Risk Management Depart-

and the commodity position is revalued on this basis. Historical

ment. These regulations stipulate that derivatives may be used to

scenarios of extreme prices and realistic, fictitious price scenarios

hedge price risks. Furthermore, commodity derivatives may be traded,

are modelled. In the event that the stress tests exceed internal

subject to limits. Compliance with limits is monitored daily.

thresholds, these scenarios are then analysed in detail in relation

to their impact and probability, and – if necessary – risk-mitigating

Risks stemming from fluctuations in commodity prices and financial

measures are considered.

market risks (foreign currency risks, interest rate risks, securities risks)

are monitored and managed by RWE using indicators such as the

Commodity risks of the Group’s power generation companies

Value at Risk (VaR), amongst other things. In addition, for the manage-

belonging to the Lignite & Nuclear and European Power segments

ment of interest rate risk, a Cash Flow at Risk (CFaR) is determined.

are hedged by the Supply & Trading segment on the basis of

available market liquidity in accordance with Group guidelines. In

Using the VaR method, RWE determines and monitors the maxi-

accordance with the approach for long-term investments for

mum expected loss arising from changes in market prices with a

example, it is not possible to manage commodity risks from

specific level of probability during specific periods. Historical price

long-term positions or positions which cannot be hedged due to

volatility is taken as a basis in the calculations. With the exception of

their size and the prevailing market liquidity using the VaR concept.

the CFaR data, all VaR figures are based on a confidence interval of

As a result, these positions are not included in the VaR figures.

95 % and a holding period of one day. For the CFaR, a confidence

Above and beyond open production positions which have not

interval of 95 % and a holding period of one year is taken as a basis.

yet been transferred, the Group companies belonging to the

Lignite & Nuclear and European Power segments are not allowed to

In respect of interest rate risks, RWE distinguishes between two risk

maintain significant risk positions, according to a Group guideline.

categories: on the one hand, increases in interest rates can result in

Furthermore, commodity price risks can exist in relation to the

declines in the prices of securities from the holdings of RWE. This

renewable generation positions and in the gas storage business.

pertains primarily to fixed-rate instruments. A VaR is determined to

The commodity price risks associated with the renewable generation

quantify securities price risk. As of the balance- sheet date, it amoun-

positions are managed by the Renewables Commodity Manage-

ted to €4.8 million (previous year: €2.3 million). On the other hand,

ment Committee (RES CMC), which was newly established for this

financing costs also increase along with the level of interest rates.

purpose. The subsidiaries owning the gas storage facilities also

The sensitivity of interest expenses to increases in market interest

manage their positions independently, in compliance with unbund-

rates is measured with the CFaR. As of 31 December 2019 this

ling regulations.

amounted to €34.8 million (previous year: €5.9 million). RWE cal-

culates the CFaR based on the assumption of the refinancing of

One of our most important instruments to limit market risk is the

maturing debt.

conclusion of hedging transactions. The instruments most

commonly used are forwards and options with foreign currency,

As of 31 December 2019, the VaR for foreign currency positions

interest rate swaps, interest rate currency swaps, and forwards,

was €1.6 million (previous year: €1.1 million). This corresponds to

options, futures and swaps with commodities.

the figure used internally, which also includes the underlying

transactions for cash flow hedges. The VaR also reflects the risk of

Maturities of derivatives related to interest rates, currencies, equities,

timing differences.

indices and commodities for the purpose of hedging are based on

the maturities of the underlying transactions and are thus primarily

As of 31 December 2019, the VaR for risks related to the RWE share

short term and medium term in nature. Hedges of the foreign currency

portfolio amounted to €3.7 million (previous year: €6.9 million).

risks of foreign investments have maturities of up to twelve years.

157

All derivative financial instruments are recognised as assets or

ineffectiveness. When hedging foreign currency risks, ineffective-

liabilities and are measured at fair value. When interpreting their

ness can result from the difference in timing between the origination

positive and negative fair values, it should be taken into account

of the hedged item and the hedging instrument. Ineffectiveness can

that, with the exception of trading in commodities, these financial

likewise stem from hedges containing material foreign currency

instruments are generally matched with underlying transactions

basis spreads. Upon realisation of the underlying transaction, the

that carry offsetting risks.

hedge’s contribution to income from accumulated other compre-

hensive income is recognised on the income statement or is offset

Hedge accounting pursuant to IFRS 9 is used primarily for mitigating

against the initial value recognition of an asset or a liability.

currency risks from net investments in foreign functional currencies,

commodity market price risks, interest risks from non-current

RWE held the following instruments to hedge future cash flows

liabilities and currency and price risks from sales and purchase

relating to foreign currency risks:

transactions.

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 (in

relation to the hedged risk) are recorded at fair value with an effect on

income.

Cash flow hedges
as of 31 Dec 2019

Currency forwards –
purchases

Maturity

1 – 6
months

7 – 12
months

>12
months

RWE held the following instruments to hedge the fair value of

commodity price risks:

Fair value hedges
as of 31 Dec 2019

Maturity

1 – 6
months

7 – 12
months

>12
months

CO2 derivatives

Nominal volume (€ million)

Secured average price
(€/metric ton)

5.57

Nominal volume (€ million)

2,276

Avg. EUR/USD exchange rate

Avg. EUR/GBP exchange rate

Avg. EUR/CAD exchange rate

1.15

0.87

1.54

134

1.18

0.89

1.56

1.19

1.64

Currency forwards –
sales

Nominal volume (€ million)

– 2,947

– 401

– 112

Avg. EUR/USD exchange rate

Avg. EUR/GBP exchange rate

Avg. EUR/CAD exchange rate

1.13

0.87

1.51

1.18

0.88

1.26

0.86

1.57

Fair value hedges
as of 31 Dec 2018

Maturity

1 – 6
months

7 – 12
months

>12
months

Cash flow hedges
as of 31 Dec 2018

Maturity

1 – 6
months

7 – 12
months

>12
months

CO2 derivatives

Nominal volume (€ million)

Secured average price
(€/metric ton)

Currency forwards –
purchases

Nominal volume (€ million)

1,534

135

5.57

Avg. EUR/USD exchange rate

1.20

0.90

1.57

0.91

1.58

738

1.19

0.92

1.55

Avg. EUR/GBP exchange rate

Avg. EUR/CAD exchange rate

Currency forwards –
sales

Nominal volume (€ million)

– 1,743

– 339

– 217

Cash flow hedges are primarily used to hedge against interest risks

from non-current liabilities as well as currency and price risks from

sales and purchase transactions. Hedging instruments consist of

forwards, swaps and options with foreign currency and interest

rates, and forwards, futures and swaps with commodities. Changes

Avg. EUR/USD exchange rate

in the fair value of the hedging instruments – insofar as they affect

the effective portion – are recorded under other comprehensive

income until the underlying transaction is realised. The ineffective

portion of changes in value is recognised in profit or loss. When

hedging commodities, underlying and hedging transactions are

based on the same price index. This generally does not result in

Avg. EUR/GBP exchange rate

Avg. EUR/CAD exchange rate

1.28

0.91

1.17

0.91

1.23

0.90

1.53

158

RWE Annual Report 2019Consolidated financial statements > Notes

RWE held the following instruments to hedge future cash flows

relating to interest risks:

Net investment hedges
as of 31 Dec 2019

Maturity

1 – 6
months

7 – 12
months

>12
months

Cash flow hedges
as of 31 Dec 2019

Interest swaps

Nominal volume (£ million)

Secured average interest
rate (%)

Maturity

Bonds and currency
forwards – sales

1 – 6
months

7 – 12
months

>12
months

808

1.55

Nominal volume (€ million)

– 1,037

– 349

– 631

Avg. EUR/AUD exchange rate

Avg. EUR/GBP exchange rate

0.90

0.86

0.63

Avg. EUR/USD exchange rate

Cash flow hedges
as of 31 Dec 2018

Maturity

1 – 6
months

7 – 12
months

>12
months

Net investment hedges
as of 31 Dec 2018

Bonds and currency
forwards – purchases

Maturity

1 – 6
months

7 – 12
months

>12
months

Interest swaps

Nominal volume (£ million)

Secured average interest
rate (%)

1,642

1.56

Nominal volume (€ million)

Avg. EUR/GBP exchange rate

0.89

Bonds and currency
forwards – sales

The commercial optimisation of the power plant portfolio is based

on a dynamic hedging strategy. Hedged items and hedging

instruments are constantly adjusted based on changes in market

Avg. EUR/AUD exchange rate

Avg. EUR/GBP exchange rate

prices, market liquidity and the sales business with consumers.

Avg. EUR/USD exchange rate

1.58

0.89

1.23

0.85

Nominal volume (€ million)

– 1,576

– 4,370

Commodity prices are hedged if this leads to a positive margin.

Proprietary commodities trading is strictly separated from this

when managing risks.

As regards bonds used as hedging instruments for net investment

hedges, the average price was calculated using the foreign exchange

Hedges of net investment in a foreign operation are used to hedge

rate valid on the designation date of the hedging relationship.

the foreign currency risks of net investment in foreign entities whose

functional currency is not the euro. We use bonds with various terms

in the appropriate currencies, interest rate currency swaps, and other

currency derivatives as hedging instruments. If there are changes in

the exchange rates of currencies in which the bonds used for

hedging 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.

RWE held the following instruments to hedge net investments in

foreign operations:

159

The hedging instruments designated in hedging relationships had

the following effects on the company’s net asset, financial and

earnings position:

Hedging instruments – effects on the net asset,
financial and earnings position
as of 31 Dec 2019

Nominal
amount

Carrying amount

1 The net nominal amount stated is made up of purchases in the amount of €3,494 million and sales in the amount of €7,619 million.

Hedging instruments – effects on the net asset,
financial and earnings position
as of 31 Dec 2018

Nominal
amount

Carrying amount

Fair value
changes in
the current
period

Recognised
ineffective-
ness

Assets

Liabilities

Fair value
changes in
the current
period

Recognised
ineffective-
ness

Assets

Liabilities

931

296

135

105

– 4,1251

2,337

1,046

– 571

328

1,642

108

4,5161

1,056

146

– 126

861

– 26

– 18

4,611

– 11

– 5,890

4,070

– 3

€ million

Fair value hedges

Commodity price risks

Cash Flow Hedges

Interest risks

Foreign currency risks

Commodity price risks

Net investment hedges

Foreign currency risks

€ million

Fair value hedges

Commodity price risks

Cash Flow Hedges

Interest risks

Foreign currency risks

Commodity price risks

Net investment hedges

Foreign currency risks

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.

160

RWE Annual Report 2019Consolidated financial statements > Notes

The carrying amounts of the hedging instruments are recognised in

The hedged items designated in hedging relationships had the

the ‘Other receivables and other assets’ and ‘Other liabilities’

following effects on the company’s net asset, financial and

balance- sheet items.

earnings position:

Fair value hedges
as of 31 Dec 2019

€ million

Commodity price risks

Fair value hedges
as of 31 Dec 2018

€ million

Commodity price risks

Cash flow hedges and net investment hedges
as of 31 Dec 2019

€ million

Cash flow hedges

Interest risks

Foreign currency risks

Commodity price risks

Net investment hedges

Foreign currency risks

Cash flow hedges and net investment hedges
as of 31 Dec 2018

€ million

Cash flow hedges

Interest risks

Foreign currency risks

Commodity price risks

Net investment hedges

Foreign currency risks

Carrying amount

Of which cumulative fair value
adjustments

Assets

Liabilities

Assets

Liabilities

Changes in fair
value in the
reporting year

174

135

Carrying amount

Of which cumulative fair value
adjustments

Assets

Liabilities

Assets

Liabilities

Changes in fair
value in the
reporting year

185

146

126

Changes in fair
value during the
current period

Reserve for
current hedges

Reserve for
terminated
hedges

623

– 94

107

4,574

1,151

– 15

328

Changes in fair
value during the
current period

Reserve for
current hedges

Reserve for
terminated
hedges

4,611

– 158

5,004

– 19

1,380

171

161

The carrying amounts of the hedged items for fair value hedges are

stated in the ‘Other receivables and other assets’ balance-sheet

item. Amounts realised from OCI and any ineffectiveness are

recognised in the items on the income statement in which the

Hedge reserve – 2018

€ million

Balance at 1 Jan 2018

underlying transactions are also recognised with an effect on

Cash flow hedges

income. The amounts realised from OCI are recognised in revenue

Effective portion of changes in market value

and the cost of materials, whereas any ineffectiveness is recogni-

sed in other operating income and expenses. Amounts recognised

and any ineffectiveness of hedging interest risks are recognised in

Interest risks

Foreign currency risks

financial income and financial expenses on the income statement.

Commodity price risks

The reconciliation of the changes in the hedge reserve in relation

to the various risk categories of hedge accounting follows below:

Gain or loss reclassified from OCI to the income
statement – realisation of underlying transactions

Commodity price risks

Gain or loss recognised as a basis adjustment

Hedge reserve – 2019

€ million

Balance at 1 Jan 2019

Cash flow hedges

Interest risks

Foreign currency risks

3,344

Commodity price risks

5,085

– 26

5,099

– 473

187

– 15

171

Tax effect of the change in the hedge reserve

– 1,498

Net investment hedges

Effective portion of changes in market value

Foreign currency risks

Ofsetting against currency adjustments

Balance at 31 Dec 2018

– 57

3,344

Effective portion of changes in market value

Interest risks

Foreign currency risks

Commodity price risks

Gain or loss reclassified from OCI to the income
statement – realisation of underlying transactions

Foreign currency risks

Commodity price risks

332

– 53

– 223

608

136

– 127

263

Gain or loss recognised as a basis adjustment

– 1,267

Interest risks

Foreign currency risks

Commodity price risks

Tax effect of the change in the hedge reserve

Net investment hedges

Effective portion of changes in market value

Foreign currency risks

Ofsetting against currency adjustments

Balance at 31 Dec 2019

– 1,307

434

– 95

2,979

162

RWE Annual Report 2019

Consolidated financial statements > Notes

Credit risks. In the fields of finance and commodities, RWE primarily

• Stage 1 – Expected 12-month credit losses: At initial recognition,

has credit relationships with banks that have good creditworthiness

financial assets are generally assigned to this stage – with the

and other trading partners, most of which have good creditworthi-

exception of those that have been purchased or originated credit

ness. Furthermore, RWE has credit relationships primarily with banks

impaired, which are thus considered separately. The level of

and other business partners with good creditworthiness within the

impairment results from the cash flows expected for the entire

scope of large-scale projects such as the construction of wind

term of the financial instrument, multiplied by the probability of

farms. RWE reviews counterparty default risks before contracts are

a default within 12 months from the reporting date. The effective

concluded. RWE mitigates such risks by establishing limits which are

interest rate used for measurement is determined on the basis of

adjusted during the business relationships if the creditworthiness of

the carrying amount before impairment (gross).

the business partners changes. Counterparty risks are monitored

• Stage 2 – Lifetime expected credit losses (gross): If the credit

constantly so that countermeasures can be initiated early on.

risk has risen significantly between initial recognition and the

Furthermore, RWE is exposed to credit risks due to the possibility of

reporting date, the financial instrument is assigned to this stage.

customers failing to meet their payment obligations. We identify

Unlike Stage 1, default events expected beyond the 12-month

these risks by conducting regular analyses of the creditworthiness

period from the reporting date are also considered in calculating

of our customers and initate countermeasures if necessary.

the impairment. The effective interest rate used for measurement

is still determined on the basis of the carrying amount before

Amongst other things, RWE demands guarantees, cash collateral

impairment (gross).

and other forms of security in order to mitigate credit risks. Further-

• Stage 3 – Lifetime expected credit losses (net): If in addition to the

more, RWE takes out credit insurance policies to protect against

criteria for Stage 2 there is an objective indication of an

defaults. Bank guarantees received as collateral are from financial

impairment, the financial asset is assigned to Stage 3. The

institutions with the required good ratings. Collateral for credit

impairment is calculated analogously to Stage 2. In this case,

insurance is pledged by insurers with an investment-grade rating.

however, the effective interest rate used for measurement is

The maximum balance-sheet default risk is derived from the

carrying amounts of the financial assets stated on the balance

In the RWE Group, risk provisions are formed for financial instru-

sheet. The default risks for derivatives correspond to their positive

ments in the following categories:

fair values. Risks can also stem from financial guarantees and loan

commitments which we have to fulfill vis-à-vis external creditors in

• debt instruments measured at amortised cost,

the event of a default of a certain debtor. As of 31 December 2019,

• debt instruments measured at fair value through other compre-

applied to the carrying amount after impairment (net).

these obligations amounted to €174 million (previous year:

hensive income.

€223 million). As of 31 December 2019, default risks were

balanced against credit collateral, financial guarantees, bank

For debt instruments for which there has been no significant rise in

guarantees and other collaterals amounting to €5.5 billion (previous

credit risk since initial recognition, a risk provision is recognised in

year: €1.3 billion). Of this, €1.1 billion relates to trade receivables

the amount of the expected 12-month credit losses (Stage 1). In

(previous year: €0.2 billion), €1.1 billion to derivatives used for

addition, a financial instrument is assigned to Stage 1 of the

hedging purposes (previous year: €0.3 billion), and €3.3 billion to

impairment model if the absolute credit risk is low on the balan-

other derivatives (previous year: €0.8 billion). There were no

ce-sheet date. The credit risk is classified as low if the debtor’s

material defaults in fiscal 2019 or the previous year.

internal or external rating is investment-grade. For trade accounts

receivable, the risk provision corresponds to the lifetime expected

In the RWE Group, the risk provision for financial assets is deter-

credit losses (Stage 2).

mined on the basis of expected credit losses. These are determined

on the basis of the probability of default, loss given default and the

To determine whether a financial instrument is assigned to Stage 2

exposure at default. We determine the probability of default and

of the impairment model, it must be determined whether the credit

loss given default using historical data and forward-looking

risk has increased significantly since initial recognition. To make this

information. The exposure at default date for financial assets is the

assessment, we consider quantitative and qualitative information

gross carrying amount on the balance-sheet date. The expected

supported by our experience and assumptions regarding future

credit loss for financial assets determined on this basis corres-

developments.

ponds to the difference between the contractually agreed payments

and the payments expected by RWE, discounted by the original

effective interest rate. The assignment to one of the levels described

below influences the level of the expected losses and the effective

interest income recognised.

163

In so doing, special importance is accorded to the sector in which

• The debtor of the receivable has apparent financial difficulties.

the RWE Group’s debtors are active. Our experience is based on

• The debtor has already commited a breach of contract by

studies and data from financial analysts and government authori-

missing or delaying payments.

ties, amongst others. Special attention is paid to the following

• Concessions already had to be made to the debtor.

developments:

• An insolvency or another restructuring procedure is impending.

• The market for the financial asset is no longer active.

• significant deterioration of the internal or external rating of

• A sale is only possible at a high discount, which reflects the

the financial instrument,

debtor’s reduced creditworthiness.

• unfavourable changes in risk indicators, e. g. credit spreads or

debtor-related credit default swaps,

A payment default and an associated assignmet of the financial

• negative development of the debtor’s regulatory, technological or

asset to Stage 3 is also assumed if the contractually agreed

economic environment,

payments are more than 90 days overdue and there is no informati-

• danger of an unfavourable development of business resulting in

on disproving the assumption of a payment default. Based on our

a significant reduction in operating income.

experience, we generally assume that this assumption does not

Independent thereof, a significant rise in credit risk and thus an

assignment of the financial instrument to Stage 2 are assumed if

A financial asset is depreciated if there are indications that the

the contractually agreed payments are more than 30 days overdue

counterparty is in serious financial difficulty and the situation is

and there is no information that contradicts the assumption of a

unlikely to improve. We may also take legal recourse and other

payment default.

measures in order to enforce the contractually agreed payments

apply to trade accounts receivable.

in the event of an impairment.

We draw conclusions about the potential default of a counterparty

from information from internal credit risk management. If internal

The following impairments were recognised for financial assets stated

or external information indicates that the counterparty cannot fulfil

under the following balance-sheet items within the scope of IFRS 7:

its obligations, the associated receivables are classified as unreco-

verable and assigned to Stage 3 of the impairment model. Examples

of such information are:

Impairment of financial assets

€ million

Financial receivables

Balance at 1 Jan 2019

Remeasurement due to new measure-
ment parameters

Newly acquired/issued financial assets

Redeemed or derecognised financial
assets

Transfer from Level 2 to Level 1

Balance at 31 Dec 2019

Stage 1 –
12-month
expected credit
losses

Stage 2 –
lifetime expected
credit losses

Stage 3 –
lifetime expected
credit losses

Purchased or
originated credit
impaired

– 18

– 4

Total

– 18

– 4

164

RWE Annual Report 20192

– 1

– 81

– 21

405

– 81

– 2

– 390

Consolidated financial statements > Notes

Impairment of financial assets

€ million

Financial receivables

Balance at 1 Jan 2018

Remeasurement due to new measure-
ment 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

Total

140

– 1

– 10

– 21

– 71

For trade accounts receivable, the expected credit loss is deter-

Risk provision for trade accounts receivable

mined by applying the simplified approach taking account of the

€ million

entire lifetime of the financial instruments.

Balance at 1 Jan 2018

In the RWE Group, there are no cases where a risk provision for trade

Addition

accounts receivable was not recognised due to the collateral on the

Withdrawal

books.

The following table shows the development of the risk provisions for

trade accounts receivable:

Currency translation

Changes in the scope of consolidation

Transfers

Balance at 31 Dec 2018

Risk provision for trade accounts receivable

€ million

Balance at 1 Jan 2019

Addition

Changes in the scope of consolidation

Balance at 31 Dec 2019

– 4

165

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 2019

€ million

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

Total

Class 1 – 5: low risk

AAA to BBB–

7,262

Class 6 – 9: medium risk

Class 10: high risk

Class 11: doubtful

Class 12: loss

121

BB+ to BB–

B+ to B–

CCC to C

7,426

3,261

10,562

229

120

3,465

10,954

Gross carrying amounts of financial assets
as of 31 Dec 2018

€ million

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

Total

8,839

376

1,611

297

1,999

9,325

Class 1 – 5: low risk

AAA to BBB–

7,228

Class 6 – 9: medium risk

Class 10: high risk

Class 11: doubtful

Class 12: loss

BB+ to BB–

B+ to B–

CCC to C

7,301

166

RWE Annual Report 2019Consolidated financial statements > Notes

Liquidity risks. As a rule, RWE Group companies refinance with

RWE AG’s credit line was increased to €5 billion in April 2019. Its two

RWE AG. In this regard, there is a risk that liquidity reserves will prove

tranches expire in April 2021 (€2 billion) and April 2024 (€3 billion).

to be insufficient to meet financial obligations in a timely manner. In

As of the balance-sheet date, US$0 billion (previous year: US$0

2020, liabilities owed to banks of €0.4 billion (previous year:

billion) of RWE AG’s US$5 billion commercial paper programme

€0.1 billion) are due. In addition, short-term debt must be repaid.

(previous year: US$5 billion) was used. Above and beyond this,

Furthermore, taking account of the earliest possible call date of the

RWE AG can finance itself using a €10 billion debt issuance

hybrid bond, which is classified as debt pursuant to IFRS, €0.5 billion

programme; as of the balance- sheet date, outstanding bonds from

in capital market debt matures in 2020 (previous year: €0.8 billion).

this programme amounted to €0 billion (previous year: €0 billion)

at RWE AG. Accordingly, RWE AG's medium- term liquidity risk can

As of 31 December 2019, holdings of cash and cash equivalents

be classified as low.

and current marketable securities amounted to €6,450 million

(previous year: €7,132 million).

Financial liabilities falling under the scope of IFRS 7 are expected

to result in the following (undiscounted) payments in the coming years:

Redemption and interest payments on
financial liabilities

Redemption payments

Interest payments

€ million

Bonds payable 1

Bank debt

Lease liabilities

Other financial liabilities

Derivative financial liabilities

Collateral for trading activities

Carrying
amounts
31 Dec
2019

1,110

1,356

1,102

1,766

2020

539

393

921

10,479

10,092

400

2021
to 2024

From
2025

2020

2021
to 2024

From
2025

571

894

784

541

302

244

329

116

164

200

508

153

Miscellaneous other financial liabilities

3,147

3,143

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

Redemption payments

Interest payments

€ million

Bonds payable 1

Bank debt

Lease liabilities

Other financial liabilities

Carrying
amounts
31 Dec
2018

1,103

554

241

333

2019

2020
to 2023

From
2024

539

155

2019

102

2020
to 2023

129

From
2024

428

143

564

413

192

170

282

Derivative financial liabilities

7,060

6,681

100

Collateral for trading activities

533

Miscellaneous other financial liabilities

2,553

2,549

1 Including hybrid bonds classified as debt as per IFRS, taking into account the earliest possible call date.

167

Above and beyond this, as of 31 December 2019, there were

We bear legal and contractual liability from our membership in

financial guarantees for external creditors in the amount of

various associations which exist in connection with power plant

€121 million (previous year: €145 million), which are to be

projects, profit- and loss-pooling agreements and for the provision

allocated to the first year of repayment. Additionally, Group

of liability cover for nuclear risks, amongst others.

companies have provided loan commitments to third-party

companies amounting to €53 million (previous year: €78 million),

On the basis of a mutual benefit agreement, RWE AG and other

which are callable in 2020.

parent companies of German nuclear power plant operators

undertook to provide approximately €2,244 million in funding to

Detailed information on the risks of the RWE Group and on the

liable nuclear power plant operators to ensure that they are able to

objectives and procedures of the risk management is presented on

meet their payment obligations in the event of nuclear damages.

page 84 et seqq. in the review of operations.

From 1 January 2020, onwards, RWE AG has a 30.452 % contrac-

tual share in the liability (23.259 % until 31 December 2019) plus

(28) Contingent liabilities and financial commitments

5 % for damage settlement costs.

As of 31 December 2019, the amount of capital commitments

totalled €1,989 million (previous year: €2,396 million). This mainly

RWE AG and its subsidiaries are involved in official, regulatory and

consisted of investment in property, plant and equipment.

antitrust proceedings, litigation and arbitration proceedings related

to their operations and are affected by the results of such. In some

In the previous year, commitments from operating leases referred

cases, out-of-court claims are also filed. However, RWE does not

largely to rental arrangements for power generation and supply

expect any material negative repercussions from these proceedings

plants as well as rent and lease contracts for storage and administ-

on the RWE Group’s economic or financial position.

ration buildings. Minimum lease payments had the following

maturity structure:

Operating leases

€ million

Due within 1 year

Due after 1 to 5 years

Due after 5 years

(29) Segment reporting

RWE is divided into five segments, which are separated from each

Nominal
value

other based on functional criteria.

31 Dec 2018

We report on German electricity generation from lignite and nuclear

159

354

572

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

We have made long-term contractual purchase commitments for

specialist RWE Technology International. The segment is supple-

supplies of fuels, including natural gas in particular. Payment

mented by hydroelectric power stations in Germany and Luxembourg.

obligations stemming from the major long-term purchase

contracts amounted to €27.1 billion as of 31 December 2019

The Supply & Trading segment contains energy and commodities

(previous year: €27.9 billion), of which €0.3 billion is due within one

trading, the marketing and hedging of the RWE Group’s electricity

year (previous year: €0.8 billion).

position and the gas midstream business. This segment is the respon-

Gas purchases by the RWE Group are partially based on long-term

industrial and commercial customers with electricity and natural gas.

sibility of RWE Supply & Trading, which also supplies certain major

take-or-pay contracts. The conditions in these contracts, which

have terms up to 2036 in some cases, are renegotiated by the

The innogy – continuing operations segment encompasses the

contractual partners at certain intervals, which may result in

parts of innogy the control of which was not transferred to E.ON.

changes in the reported payment obligations. Calculation of the

These are the renewables business, innogy’s gas storage facilities

payment obligations resulting from the purchase contracts is based

located in Germany and the Czech Republic, and the stake in the

on parameters from the internal planning.

Austrian energy utility Kelag. Along with electricity generation,

activities in the field of renewables include the development and

Furthermore, RWE has long-term financial commitments for

implementation of projects to expand capacities. Wind and

purchases of electricity. As of 31 December 2019, the minimum

hydro electric power are the two dominant production technologies.

payment obligations stemming from the major purchase

The main production sites are located in Germany, the United

contracts totalled €7.1 billion (previous year: €7.8 billion), of which

Kingdom, the Netherlands, Poland, Spain and Italy.

€0.2 billion is due within one year (previous year: €0.8 billion). Above

and beyond this, there are also long-term purchase and service

contracts for uranium, conversion, enrichment and fabrication.

168

RWE Annual Report 2019

Consolidated financial statements > Notes

The Acquired E.ON operations segment comprises the main parts

‘Other, consolidation’ covers RWE AG, consolidation effects and the

of E.ON's former renewable energy business, of which RWE gained

activities of other business areas which are not presented separately.

control on 18 September 2019. It includes onshore and offshore

These activities primarily include our non-controlling interests in the

wind and photovoltaic activities.

German transmission system operator Amprion and in E.ON.

Segment reporting
Divisions 2019
€ million

Lignite &
Nuclear

European
Power

Supply &
Trading

innogy –
continuing
operations

Acquired
E.ON
operations

Other,
consoli-
dation

RWE Group

External revenue
(incl. natural gas tax/electricity
tax)

Intra-group revenue

Total revenue

Adjusted EBIT

Operating income from invest-
ments

Operating income from invest-
ments 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

1,018

2,166

3,184

362

785

374

1,065

3,483

9,649

3,274

1,164

399

4,548²

12,923

1,563

132

691

443

374

13,277

– 9,322¹

374

116

− 9,315

13,277

− 127

1,267

321

772

453

702

390

414

833

133

305

132

323

137

253

−126

1,222

2,001

2,489

139

750

1,638

638

3,236

342

252

1,215

267

2,090

1 Of which: consolidation of intra-group revenue of –€9,322 million.
2 Of which: total revenue from power generation in the United Kingdom of €2,640 million.

Regions 2019

€ million

External revenue 1, 2

Intangible assets and property, plant
and equipment

Germany

Other EU

Rest of
Europe

Other

RWE Group

4,840

5,035

2,368

484

398

13,125

6,758

9,845

3,353

3,950

23,906

1 Excluding natural gas tax/electricity tax.
2 Broken down by the region in which the service was provided.

169

Segment reporting
Divisions 2018
€ million

Lignite &
Nuclear

European
Power

Supply &
Trading

innogy –
continuing
operations

Acquired
E.ON
operations

Other,
consoli-
dation

RWE Group

External revenue
(incl. natural gas tax/electricity
tax)

Intra-group revenue

Total revenue

Adjusted EBIT

Operating income from invest-
ments

Operating income from invest-
ments 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

1,144

2,340

3,484

279

356

926

10,335

1,124

13,547

3,768

3,434

386

– 9,928¹

4,694²

13,769

1,510

– 9,910

13,547

177

349

297

334

– 44

183

350

699

– 21

– 13

619

176

211

919

– 34

1,538

125

740

539

1,467

230

245

592

– 1

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

Germany

Other EU

Rest of
Europe

Other

RWE Group

External revenue 1, 2, 3

4,549

4,358

3,130

984

385

13,406

Intangible assets and property, plant
and equipment

5,882

5,286

3,004

430

14,602

1 Excluding natural gas tax/electricity tax.
2 Broken down by the region in which the service was provided.
3 Prior-figures restated.

170

RWE Annual Report 2019Consolidated financial statements > Notes

External revenue by product
in 2019

Lignite &
Nuclear

European
Power

Supply &
Trading

€ million

innogy –
continuing
operations

Acquired
E.ON
operations

Other,
consoli-
dation

RWE Group

External revenue1,2

1,003

1,062

of which: electricity

of which: gas

of which: other revenue

282

721

620

430

9,514

8,259

1,094

161

1,164

869

245

374

242

132

13,125

10,272

1,156

1,697

1 Excluding natural gas tax/electricity tax.
2 Of which €3,054 million in external revenue on the basis of coal-based electricity generation and coal sales.

External revenue by product
in 2018

Lignite &
Nuclear

European
Power

Supply &
Trading

innogy –
continuing
operations

Acquired
E.ON
operations

Other,
consoli-
dation

RWE Group

€ million

External revenue1,2

of which: electricity

of which: gas

1,132

303

of which: other revenue

829

925

542

366

10,208

1,124

8,478

1,484

246

799

278

− 1

– 1

13,406

10,121

1,547

1,738

1 Excluding natural gas tax/electricity tax.
2 Of which €4,196 million in external revenue on the basis of coal-based electricity generation and coal sales.

Notes on segment data. We report revenue between the segments

internal management. The following table presents the reconciliation

as RWE intra-group revenue. Internal supply of goods and services is

of adjusted EBITDA to adjusted EBIT and income from continuing

settled at arm’s length conditions. Adjusted EBITDA is used for

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

2019

2018

2,489

– 1,222

1,267

– 1,081

– 938

– 752

1,538

– 919

619

– 161

– 409

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

operating activities. They are reclassified to the non-operating result.

companies, as well as effects of the fair valuation of certain

Amongst other things, these can include book gains or losses from

derivatives.

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 57 et seq. of the review of operations.

171

2019

2018

– 1,210

– 1,081

−25

−146

−161

(30) Notes to the cash flow statement

Flows of funds from the acquisition and sale of consolidated

The cash flow statement classifies cash flows according to

companies are included in cash flows from investing activities.

operating, investing and financing activities. Cash and cash

Effects of foreign exchange rate changes and other changes in value

equivalents in the cash flow statement correspond to the amount

are stated separately.

stated on the balance sheet. Cash and cash equivalents consist of

cash on hand, demand deposits and fixed-interest marketable

Cash flows from financing activities of continuing operations include

securities with a maturity of three months or less from the date of

€430 million (previous year: €922 million) which was distributed to

acquisition.

RWE shareholders, €51 million (previous year: €43 million) which

was distributed to non-controlling shareholders, and €61 million

Among other things, cash flows from operating activities include:

(previous year: €60 million) which was distributed to hybrid

• cash flows from interest income of €184 million (previous year:

include purchases of €86 million (previous year: €2 million) and

€166 million) and cash flows used for interest expenses of

sales in the amount of €0 million (previous year: €687 million) of

€257 million (previous year: €176 million),

shares in subsidiaries and other business units which did not lead to

capital investors. Furthermore, cash flows from financing activities

• €325 million (previous year: €321 million) in taxes on income

a change of control.

paid (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 €187 million (previous year: €107 million).

Statement of changes
in financial liabilities

1 Jan 20191

Increase/
repayment

Changes in
the scope of
consoli-
dation

Currency
effects

Changes in
fair values

Other
changes

31 Dec 2019

€ million

Current financial
liabilities

Non-current financial
liabilities

Other items

787

986

7,081

– 392

137

− 6,789

1,810

2,330

218

474

2,468

− 1,109

3,924

1 Including the effect of the initial adoption of IFRS 16 in the amount of €353 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
consoli-
dation

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

− 58

1,046

766

14,414

435

− 13,840

984

1,998

− 1,494

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

to €51 million (previous year: €0 million).

and margin payments, which are recognised in cash flows from

financing activities in the cash flow statement.

172

RWE Annual Report 2019
Consolidated financial statements > Notes

(31) Related party disclosures

Business transactions were concluded with major associates and

Within the framework of their ordinary business activities, RWE AG

joint ventures, resulting in the following items in RWE’s consolidated

and its subsidiaries have business relationships with numerous

financial statements:

companies. These include associated companies and joint ventures,

which are classified as related parties. In particular, this category

includes material investments of the RWE Group, which are

accounted for using the equity method.

Key items from transactions with associates
and joint ventures
€ million

Income

Expenses

Receivables

Liabilities

Associated companies

Joint ventures

2019

258

142

123

2018

1,855

3,193

140

191

2019

2018

The key items from transactions with associates and joint ventures

The remuneration model and remuneration of the Executive and

mainly stem from supply and service transactions. In addition to

Supervisory Boards of RWE AG calculated pursuant to the German

supply and service transactions, there are also financial links with

Commercial Code is presented in the remuneration report, which is

joint ventures. During the reporting period, income of €2 million

included in the review of operations.

(previous year: €4 million) was recorded from interest-bearing loans

to joint ventures. As of the balance-sheet date, financial receivables

In total, the remuneration of the Executive Board amounted to

accounted for €55 million of the receivables from joint ventures

€7,571,000 (previous year: €6,880,000). This contains share-

(previous year: €56 million). All transactions were completed at

based payments amounting to €2,350,000 (123,037 RWE

arm’s length conditions, i.e. on principle the conditions of these

performance shares) granted within the framework of the LTIP SPP.

transactions did not differ from those with other enterprises.

In the previous year, share-based payments amounting to

€108 million of the receivables (previous year: €165 million) and

€2,350,000 (125,000 RWE performance shares) were granted.

€10 million of the liabilities (previous year: €166 million) fall due

within one year. Other obligations from executory contracts

Including remuneration from subsidiaries for the exercise of mandates,

amounted to €99 million (previous year: €578 million).

the Supervisory Board received total remuneration of €3,304,000

Above and beyond this, the RWE Group did not execute any material

tatives on the Supervisory Board have labour contracts with the

transactions with related companies or persons.

respective Group companies. Remuneration occurs in accordance

(previous year: €3,480,000) in fiscal 2019. The employee represen-

with the relevant contractual conditions.

With regard to fiscal 2019, in addition to the members of the

Executive Board and Supervisory Board of RWE AG, the Executive

During the period under review, no loans or advances were granted

Board members and Supervisory Board members of innogy SE were

to members of the Executive or Supervisory Boards.

deemed to be key management personnel for the RWE Group until

18 September 2019. The following information pertains to total

Former members of the Executive Board and their surviving

compensation pursuant to IAS 24.

dependants received €10,623,000 (previous year: €10,802,000),

of which €651,000 came from subsidiaries (previous year:

Key management personnel (Executive and Supervisory Board

€940,000). As of the balance-sheet date, €146,568,000 (previous

members) received €16,457,000 in short-term compensation

year: €146,721,000) were accrued for defined benefit obliga-

components for fiscal 2019 (previous year: €19,721,000).

tions to former members of the Executive Board and their surviving

Additionally, share-based payments within the framework of LTIP

dependants. Of this, €6,980,000 was set aside at subsidiaries

SPP amounted to €8,386,000 (previous year: €7,479,000) and

(previous year: €8,516,000).

the pension service cost amounted to €554,000 (previous year:

€536,000). Provisions totalling €25,607,000 (previous year:

Information on the members of the Executive and Supervisory

€36,052,000) were formed for obligations vis-à-vis key manage-

Boards is presented on page 207 et seqq. of the Notes.

ment personnel.

173

(32) Auditors‘ fees

tax-related matters as well as review of resolutions of the tax

The fees for audit services primarily contain the fees for the audit of

authorities. Other services primarily include compensation for

the consolidated financial statements and for the audit of the financial

M&A activity and IT project consulting.

statements of RWE AG and its subsidiaries, along with the review of

the interim statements. Other assurance services include fees for

RWE recognised the following fees as expenses for the services

review of the internal controlling system, as well as expenses related

rendered by the auditors of the consolidated financial statements,

to statutory or court-ordered requirements. In particular, the fees

PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft

for tax services include compensation for consultation in the

(PwC) and companies belonging to PwC’s international network:

preparation of tax returns and other national and international

PwC network fees

€ million

Audit services

Other assurance services

Tax services

Other services

2019

2018

Total

17.5

2.5

0.9

5.8

26.7

Of which:
Germany

12.9

2.3

0.3

5.6

21.1

Total

17.7

5.1

0.7

3.8

27.3

Of which:
Germany

11.0

4.7

0.6

1.8

18.1

(33) Application of the exemption rule pursuant to Sec. 264,

(34) Events after the balance-sheet date

Para. 3 and Sec. 264b of the German Commercial Code

In the period from 1 January 2020 until the completion of the

In fiscal 2019, the following German subsidiaries made partial use

consolidated financial statements on 27 February 2020, the

of the exemption clause pursuant to Sec. 264, Para. 3 and Sec.

following significant events occurred:

264b of the German Commercial Code (HGB):

Acquisition of the King's Lynn power station

• BGE Beteiligungs-Gesellschaft für Energieunternehmen mbH,

On 12 February 2020, the acquisition of a 100 % stake in Centrica

Essen,

KL Limited (CKLL), Windsor, UK, agreed with the British energy

• GBV Vierunddreißigste Gesellschaft für Beteiligungsverwaltung

company GB Gas Holdings Limited, a subsidiary of Centrica plc,

mbH, Essen,

Windsor, UK, at the end of December 2019, was completed.

• GBV Zweiunddreißigste Gesellschaft für Beteiligungsverwaltung

mbH, Essen,

The power station is a combined-cycle gas turbine (CCGT) power

• Kernkraftwerk Lingen Gesellschaft mit beschränkter Haftung,

plant located in King’s Lynn, Norfolk, UK. The plant has a capacity of

Lingen (Ems),

382 megawatts and will receive reliable, stable capacity payments

• KMG Kernbrennstoff-Management Gesellschaft mit beschränk-

until 2035 based on a 15-year contract in the British capacity

ter Haftung, Essen,

• Rheinbraun Brennstoff GmbH, Cologne,

market with a term starting in October 2020.

• Rheinische Baustoffwerke GmbH, Bergheim,

The preliminary purchase price amounts to £28 million (excluding

• RV Rheinbraun Handel und Dienstleistungen GmbH, Cologne,

repaid shareholder loans in the amount of £73 million). The final

• RWE Nuclear Beteiligungs-GmbH, Essen,

purchase price is subject to adjustments depending on the net debt

• RWE Renewables GmbH, Essen,

and net working capital as of the completion date. The closing

• RWE Technology International GmbH, Essen,

balance sheet as of this cut-off date is currently being finalised.

• RWE Trading Services GmbH, Essen.

Since the closing balance sheet of CKLL had not been finalised when

the RWE consolidated financial statements were prepared, the

statements cannot present the information on the fair values of the

acquired assets (including acquired receivables) and liabilities, or the

information on the factors which may comprise goodwill, or any

necessary information on acquisition at a price below market value.

174

RWE Annual Report 2019Consolidated financial statements > Notes

(35) Declaration according to Sec. 161 of the

German Stock Corporation Act

The declaration on the German Corporate Governance

Code prescribed by Sec. 161 of the German Stock

Corporation Act (AktG) has been submitted for RWE AG

and has been made permanently and publicly available to

shareholders on the Internet pages of RWE AG1.

Essen, 27 February 2020

The Executive Board

Schmitz

Krebber

1 www.rwe.com/statement-of-compliance-2019

175

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 2019

I. Affiliated companies which are included in the

Shareholding in %

Equity Net income/loss

consolidated financial statements

Direct

Total

€ ’000

Aktivabedrijf Wind Nederland B.V., Zwolle/Netherlands

Alte Haase Bergwerks-Verwaltungs-Gesellschaft mbH, Dortmund

Amrum-Offshore West GmbH, Düsseldorf

An Suidhe Wind Farm Limited, Swindon/United Kingdom

Anacacho Holdco, LLC, Wilmington/USA

Anacacho Wind Farm, LLC, Wilmington/USA

Andromeda Wind s.r.l., Bolzano/Italy

Belectric Australia Pty. Limited, Melbourne/Australia

Belectric Canada Solar Inc. , Vancouver/Canada

Belectric Chile Energia Fotovoltaica LTDA, Santiago de Chile/Chile

Belectric Espana Fotovoltaica S.L., Barcelona/Spain

Belectric France S.à.r.l., Vendres/France

BELECTRIC GmbH, Kolitzheim

Belectric Inversiones Latinoamericana S.L., Barcelona/Spain

Belectric Israel Ltd., Be’er Scheva/Israel

Belectric Italia s.r.l., Latina/Italy

Belectric Photovoltaic India Private Limited, Mumbai/India

BELECTRIC PV Dach GmbH, Sömmerda

Belectric Solar & Battery GmbH, Kolitzheim

Belectric Solar Ltd., Slough/United Kingdom

BELECTRIC Solar Power, S.L., Barcelona/Spain

BGE Beteiligungs-Gesellschaft für Energieunternehmen mbH, Essen

100

Bilbster Wind Farm Limited, Swindon/United Kingdom

Boiling Springs Wind Farm, LLC, Wilmington/USA

Bruenning’s Breeze Holdco, LLC, Wilmington/USA

Bruenning’s Breeze Wind Farm, LLC, Wilmington/USA

Carl Scholl GmbH, Cologne

Carnedd Wen Wind Farm Limited, Swindon/United Kingdom

Cassadaga Wind LLC, Chicago/USA

Champion WF Holdco, LLC, Wilmington/USA

Champion Wind Farm, LLC, Wilmington/USA

Cloghaneleskirt Energy Supply Limited, Kilkenny/Ireland

Colbeck’s Corner Holdco, LLC, Wilmington/USA

Colbeck’s Corner, LLC, Wilmington/USA

Cranell Holdco, LLC, Wilmington/USA

Cranell Wind Farm, LLC, Wilmington/USA

DOTTO MORCONE S.r.l., Rome/Italy

Dromadda Beg Wind Farm Limited, Kilkenny/Ireland

Edgware Energy Limited, Swindon/United Kingdom

100

25,645

– 67,329

€ ’000

23,154

– 3,664

126

149,501

24,290

56,488

1,202

134,952

– 5,062

9,579

508

- 978

– 851

554

– 5,710

12,467

12,329

3,299

727

1,177

12,461

1,734

4,317,938

3,846

- 60

75,011

2,876

1,872

- 964

– 5,747

– 199

– 5,129

– 4,442

– 18

537

409

– 2,980

201

– 3,064

394

352

- 60

238,456

– 5,287

581

– 4,340

66,403

114,010

73,239

– 318

– 296

– 5,254

– 5,258

243,854

– 7,489

29,363

29,298

– 1,161

1,515

– 7

– 64

– 1,617

– 7

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 Profit and loss-pooling agreement with

non-Group companies.

176

RWE Annual Report 2019Consolidated financial statements > List of shareholdings (part of the notes)

I. Affiliated companies which are included in the

Shareholding in %

Equity Net income/loss

Direct

Total

100

€ ’000

29,823

33,206

€ ’000

687

1,8782

consolidated financial statements

Electra Insurance Limited, Hamilton/Bermuda

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

Energy Resources Holding B.V., ’s-Hertogenbosch/Netherlands

Energy Resources Ventures B.V., ’s-Hertogenbosch/Netherlands

E.ON Energie Odnawialne Sp. z o.o., Szczecin/Poland

Farma Wiatrowa Barzowice Sp. z o.o., Warsaw/Poland

Forest Creek Investco, Inc., Wilmington/USA

Forest Creek WF Holdco, LLC, Wilmington/USA

Forest Creek Wind Farm, LLC, Wilmington/USA

Fri-El Anzi Holding s.r.l., Bolzano/Italy

Fri-El Anzi s.r.l., Bolzano/Italy

Fri-El Guardionara s.r.l., Bolzano/Italy

GBV Vierunddreißigste Gesellschaft für Beteiligungsverwaltung mbH, Essen

GBV Zweiunddreißigste Gesellschaft für Beteiligungsverwaltung mbH, Essen

100

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

Glen Kyllachy Wind Farm Limited, Swindon/United Kingdom

Grandview Holdco, LLC, Wilmington/USA

Green Gecco GmbH & Co. KG, Essen

Hardin Class B Holdings LLC, Wilmington/USA

Hardin Wind Holdings LLC, Wilmington/USA

Hardin Wind LLC, Chicago/USA

Harryburn Wind Farm Limited, Swindon/United Kingdom

Inadale Wind Farm, LLC, Wilmington/USA

innogy Bergheim Windparkbetriebsgesellschaft mbH, Hanover

innogy Brise Windparkbetriebsgesellschaft mbH, Hanover

Innogy Energy Marketing LLC, Wilmington/USA

innogy Evendorf Windparkbetriebsgesellschaft mbH, Hanover

100

96,292

18,776

61,917

16,727

109

88,869

7,354

7,629

10,334

– 20,770

-5,191

29,764

7,464

– 3,728

1,743

1,776

2,344

100

17,923,746

5,268,288

100

– 20

62,922

46,072

135,281

– 4,198

103,297

80,321

104,969

104,933

42,250

– 2,391

121,398

226

– 42

18,351

14,266

6,817

– 4,078

2,260

3,795

– 3

– 464

– 3,842

– 42,733

– 42,885

317,572

innogy Gas Storage NWE GmbH, Dortmund

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 Profit and loss-pooling agreement with

non-Group companies.

177

I. Affiliated companies which are included in the

Shareholding in %

Equity Net income/loss

Direct

Total

€ ’000

consolidated financial statements

innogy Gas Storage, s.r.o., 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 indeland Windpark Eschweiler GmbH & Co. KG, Eschweiler

innogy Italia s.p.a., Milan/Italy

innogy Kaskasi GmbH, Hamburg

innogy Lengerich Windparkbetriebsgesellschaft mbH, Gersten

innogy Limondale Sun Farm Holding Pty. Ltd., Melbourne/Australia

innogy Lüneburger Heide Windparkbetriebsgesellschaft mbH, Walsrode

innogy Mistral Windparkbetriebsgesellschaft mbH, Hanover

innogy Offshore Wind Netherlands B.V., ’s-Hertogenbosch/Netherlands

Innogy Renewables Australia Pty Ltd., Melbourne/Australia

innogy Renewables Benelux B.V., ’s-Hertogenbosch/Netherlands

innogy Renewables Beteiligungs GmbH, Dortmund

innogy Renewables Canada Inc., Vancouver/Canada

Innogy Renewables Ireland Limited, Kilkenny/Ireland

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, Chicago/USA

innogy Seabreeze II GmbH & Co. KG, Essen

innogy Slovensko s.r.o., Bratislava/Slovakia

innogy Sommerland Windparkbetriebsgesellschaft mbH, Sommerland

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 Süderdeich Windparkbetriebsgesellschaft mbH, Süderdeich

innogy Titz Windparkbetriebsgesellschaft mbH, Essen

innogy Wind Onshore Deutschland GmbH, Hanover

innogy Windpark Bedburg GmbH & Co. KG, Bedburg

innogy Windpower Netherlands B.V., ’s-Hertogenbosch/Netherlands

Inversiones Belectric Chile LTDA, Santiago de Chile/Chile

540,881

– 13,399

– 13,401

– 40,229

53,581

16,766

€ ’000

11,337

– 552

– 554

– 1,662

3,159

1,507

40,071

– 582

578

621

– 16

– 396

– 16

– 71,621

54,655

7,350

1,485

– 3,237

245,878

– 1,060

– 2,281

38,464

1,842,861

328,572

2,373,332

712,184

197,193

– 11,792

2,550

9,452

– 47,591

10,061

153,356

20,6082

106

77,373

81,458

1,158

– 39

5,845

171,067

– 3

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 Profit and loss-pooling agreement with

non-Group companies.

178

RWE Annual Report 2019Consolidated financial statements > List of shareholdings (part of the notes)

I. Affiliated companies which are included in the

Shareholding in %

Equity Net income/loss

consolidated financial statements

Direct

Total

€ ’000

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 Solar NC Lessee LLC, Wilmington/USA

IRUS Solar NC Pledgor LLC, Wilmington/USA

IRUS Solar Operations LLC, Wilmington/USA

IRUS Wind Development LLC, Dover/USA

IRUS Wind Holdings LLC, Dover/USA

IRUS Wind Operations LLC, Wilmington/USA

Jurchen Technology GmbH, Kitzingen

Jurchen Technology India Private Limited, Mumbai/India

Kernkraftwerk Gundremmingen GmbH, Gundremmingen

Kernkraftwerk Lingen Gesellschaft mit beschränkter Haftung, Lingen (Ems)

Kernkraftwerke Lippe-Ems Gesellschaft mit beschränkter Haftung,
Lingen (Ems)

Kernkraftwerksbeteiligung Lippe-Ems beschränkt haftende OHG,
Lingen/Ems

KMG Kernbrennstoff-Management Gesellschaft mit beschränkter
Haftung, Essen

Knabs Ridge Wind Farm Limited, Swindon/United Kingdom

Limondale Sun Farm Pty. Ltd., Melbourne/Australia

Little Cheyne Court Wind Farm Limited, Swindon/United Kingdom

MI-FONDS G50, Frankfurt am Main

ML Wind LLP, Swindon/United Kingdom

Munnsville Investco, LLC, Wilmington/USA

Munnsville WF Holdco, LLC, Wilmington/USA

Munnsville Wind Farm, LLC, Wilmington/USA

Nordsee Windpark Beteiligungs GmbH, Essen

NRW Pellets GmbH, Erndtebrück

Padcon GmbH, Kitzingen

Panther Creek Holdco, LLC, Wilmington/USA

Panther Creek Wind Farm I&II, LLC, Wilmington/USA

Panther Creek Wind Farm Three, LLC, Wilmington/USA

Peyton Creek Holdco, LLC, Wilmington/USA

Peyton Creek Wind Farm, LLC, Wilmington/USA

Piecki Sp. z o.o., Warsaw/Poland

21,174

2,5802

100

– 165

22,385

14,165

14,198

13,361

65,602

198,798

104,969

2,035

1,158

96,736

20,034

100

432,269

– 165

– 270

– 33

– 839

– 1,210

– 397

– 62

8,343

100

144,433

35,516

100

696,225

11,391

– 172

39,374

100

1,940,959

100

75,549

14,309

38,797

21,408

312

2,574

241,364

259,732

147,251

16,498

15,865

19,635

1,378

– 171

9,669

84,296

9,501

– 1,378

13,321

365

– 8,837

510

– 635

2,799

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 Profit and loss-pooling agreement with

non-Group companies.

179

I. Affiliated companies which are included in the

Shareholding in %

Equity Net income/loss

Direct

Total

€ ’000

consolidated financial statements

Pioneer Trail Wind Farm, LLC, Wilmington/USA

Primus Projekt GmbH & Co. KG, Hanover

Pyron Wind Farm, LLC, Wilmington/USA

Radford’s Run Holdco, LLC, Wilmington/USA

Radford’s Run Wind Farm, LLC, Wilmington/USA

Raymond Holdco, LLC, Wilmington/USA

Raymond Wind Farm, LLC, Wilmington/USA

Rheinbraun Brennstoff GmbH, Cologne

Rheinische Baustoffwerke GmbH, Bergheim

Rheinkraftwerk Albbruck-Dogern Aktiengesellschaft, Waldshut-Tiengen

Rhenas Insurance Limited, Sliema/Malta

100

Rhyl Flats Wind Farm Limited, Swindon/United Kingdom

Roscoe WF Holdco, LLC, Wilmington/USA

Roscoe Wind Farm, LLC, Wilmington/USA

RV Rheinbraun Handel und Dienstleistungen GmbH, Cologne

RWE & Turcas Güney Elektrik Üretim A.S., Ankara/Turkey

RWE Aktiengesellschaft, Essen

RWE Canada Ltd., Saint John/Canada

RWE Czech Gas Grid Holding B.V., Geertruidenberg/Netherlands

100

RWE Eemshaven Holding II B.V., Geertruidenberg/Netherlands

RWE Energy Services, LLC, Wilmington/USA

RWE Generation NL B.V., Arnhem/Netherlands

RWE Generation NL Corner Participations B.V., Geertruidenberg/
Netherlands

RWE Generation NL Participations B.V., Arnhem/Netherlands

RWE Generation NL Personeel B.V., Arnhem/Netherlands

RWE Generation SE, Essen

100

RWE Generation UK Holdings Limited, Swindon/United Kingdom

RWE Generation UK plc, Swindon/United Kingdom

RWE Investco EPC Mgmt, LLC, Wilmington/USA

RWE Investco Mgmt, LLC, Wilmington/USA

RWE Investco Mgmt II, LLC, Wilmington/USA

RWE Magicat Holdco, LLC, Wilmington/USA

RWE Markinch Limited, Swindon/United Kingdom

RWE Nuclear Beteiligungs-GmbH, Essen

RWE Nuclear GmbH, Essen

RWE Personeel B.V., Arnhem/Netherlands

RWE Power Aktiengesellschaft, Cologne and Essen

RWE Renewables Americas, LLC, Wilmington/USA

1 Profit and loss-pooling agreement.
2 Figures from the Group’s consolidated financial

statements.

3 Newly founded, financial statements not yet

available.

167,466

– 1,388

203,648

159,020

432,077

35,514

82,619

9,236

31,817

59,176

€ ’000

– 2,390

– 734

– 1,558

12,818

1,757

300

152,512

16,393

172,832

– 10,392

172,832

– 10,419

36,694

190,537

– 11,278

5,736,616

513,498

78,616

1,526

– 48,396

3,108

1,526

9,487

1,683

– 20,424

– 187,664

48,270

– 10,869

12,464

264,673

3,029

2,121

639

3,024,201

– 173,543

1,779,495

– 108,464

234,047

1,586,717

579,256

– 6,778

91,555

49,408

100,000

– 17

2,037,209

– 5,402

263,978

– 156,882

100

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 Profit and loss-pooling agreement with

non-Group companies.

180

RWE Annual Report 2019Consolidated financial statements > List of shareholdings (part of the notes)

I. Affiliated companies which are included in the

Shareholding in %

Equity Net income/loss

Direct

Total

€ ’000

consolidated financial statements

RWE Renewables Asset Management, LLC, Wilmington/USA

RWE Renewables Canada Ltd., Saint John/Canada

RWE Renewables Development, LLC, Wilmington/USA

RWE Renewables Energy Marketing, LLC, Wilmington/USA

RWE Renewables GmbH, Essen

RWE Renewables International GmbH, Essen

RWE Renewables International Participations B.V., Geertruidenberg/
Netherlands

RWE Renewables Italia S.r.l., Rome/Italy

RWE Renewables O&M, LLC, Wilmington/USA

RWE Renewables QSE, LLC, Wilmington/USA

RWE Renewables Services, LLC, Wilmington/USA

RWE Renewables Sweden AB, Malmö/Sweden

RWE Renewables UK Blyth Limited, Coventry/United Kingdom

RWE Renewables UK Developments Limited, Coventry/United Kingdom

RWE Renewables UK Humber Wind Limited, Coventry/United Kingdom

RWE Renewables UK Limited, Coventry/United Kingdom

RWE Renewables UK London Array Limited, Coventry/United Kingdom

RWE Renewables UK Offshore Wind Limited, Coventry/United Kingdom

RWE Renewables UK Operations Limited, Coventry/United Kingdom

RWE Renewables UK Robin Rigg East Limited, Coventry/United Kingdom

RWE Renewables UK Robin Rigg West Limited, Coventry/United Kingdom

RWE Renewables UK Wind Limited, Coventry/United Kingdom

RWE Renewables UK Zone Six Limited, Coventry/United Kingdom

RWE Slovak Holding B.V., Geertruidenberg/Netherlands

100

RWE Solar Development, LLC, Wilmington/USA

RWE Solar PV, LLC, Wilmington/USA

RWEST Middle East Holdings B.V., ’s-Hertogenbosch/Netherlands

RWE Supply & Trading Asia-Pacific PTE. LTD., Singapore/Singapore

RWE Supply & Trading CZ, a.s., Prague/Czech Republic

RWE Supply & Trading GmbH, Essen

100

RWE Supply & Trading (India) Private Limited, Mumbai/India

RWE Supply & Trading Participations Limited, London/United Kingdom

RWE Supply and Trading (Shanghai) Co. Ltd, Shanghai/China

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

– 25,066

8,299

€ ’000

32,107

1,877

57,181

– 11,440

– 56,319

– 31,364

18,024

918

– 111,318

– 28,518

463,789

19,292

6,559

– 9,898

9,375

478

– 46,542

– 48,922

43,392

– 4,557

56,274

116,605

64,839

101,571

51,971

33,842

55,160

60,955

16,051

704,083

– 31,891

36,139

6,465

41,607

1,208,523

446,778

801

13,255

2,624

12,463

192

2,948

9,558

1,899

– 708

17,103

45,449

16,403

24,297

6,797

6,770

14,570

10,495

15,058

– 317

– 9,735

– 7,435

– 79

10,726

64,941

165

– 2,876

– 267

113

1,006

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 Profit and loss-pooling agreement with

non-Group companies.

181

I. Affiliated companies which are included in the

Shareholding in %

Equity Net income/loss

consolidated financial statements

RWE Trading Services GmbH, Essen

RWE Wind Karehamn AB, Malmö/Sweden

RWE Wind Services Denmark A/S, Rødby/Denmark

Sand Bluff WF Holdco, LLC, Wilmington/USA

Sand Bluff Wind Farm, LLC, Wilmington/USA

Settlers Trail Wind Farm, LLC, Wilmington/USA

Sofia Offshore Wind Farm Holdings Limited, Swindon/United Kingdom

Sofia Offshore Wind Farm Limited, Swindon/United Kingdom

SOLARENGO Energia, Unipessoal, Lda., Cascais/Portugal

Solar Holding India GmbH, Kolitzheim

Solar Holding Poland GmbH, Kolitzheim

SRS EcoTherm GmbH, Salzbergen

Stella Holdco, LLC, Wilmington/USA

Stella Wind Farm, LLC, Wilmington/USA

Taber Solar 1 Inc., Vancouver/Canada

Taber Solar 2 Inc., Vancouver/Canada

Tamworth Holdings, LLC, Charlotte/USA

Tanager Holdings, LLC, Charlotte/USA

Tech Park Solar, LLC, Wilmington/USA

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

Valencia Solar, LLC, Tucson/USA

Východoslovenská distribucná, a.s., Košice/Slovakia

Východoslovenská energetika a.s., Košice/Slovakia

Východoslovenská energetika Holding a.s., Košice/Slovakia

West of the Pecos Solar, LLC, Wilmington/USA

West Raymond Holdco, LLC, Wilmington/USA

West Raymond Wind Farm, LLC, Wilmington/USA

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 Oostpolderdijk B.V., ’s-Hertogenbosch/Netherlands

Windpark Zuidwester B.V., ’s-Hertogenbosch/Netherlands

WKN Windkraft Nord GmbH & Co. Windpark Wönkhausen KG, Hanover

Direct

Total

100

€ ’000

5,735

33,150

5,400

6,823

€ ’000

– 177

2,758

– 13,390

193,435

– 8,844

– 394

– 81

5,925

13,758

97,537

235,593

9,521

10,210

7,743

7,129

– 11,511

604

3,528

97,484

– 25,460

– 19,810

290,463

67,856

608,317

91,352

33,054

24,403

– 2

520

256

9,336

2,016

– 383

– 81

– 50

– 3

1,706

– 169

– 69

– 64

– 1

767

– 1,048

1,852

565

30,641

8,641

77,8774

– 3,049

1,909

– 2

153

– 593

649

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 Profit and loss-pooling agreement with

non-Group companies.

182

RWE Annual Report 2019Consolidated financial statements > List of shareholdings (part of the notes)

II. Affiliated companies which are not included in the consolidated

Shareholding in %

Equity Net income/loss

financial statements due to secondary importance for the assets,
liabilities, financial position and profit or loss of the Group

Direct

Total

€ ’000

Adensis GmbH, Dresden

Agenzia Carboni S.R.L., Genoa/Italy

Alcamo II S.r.l., Milan/Italy

Alvarado Solar S.L., Barcelona/Spain

Ashwood Solar I, LLC, Wilmington/USA

Aurum Solaris 4 GmbH & Co. KG, Kassel

Avolta Storage Limited, Kilkenny/Ireland

Awel y Môr Offshore Wind Farm Limited, Swindon/United Kingdom

Baltic Trade and Invest Sp. z o.o., Slupsk/Poland

Baron Winds LLC, Chicago/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 5 (SARL), Vendres/France

Belectric PV 10 (SARL), Vendres/France

Belectric SP Solarprojekte 14 GmbH & Co. KG, Sömmerda

Belectric SP Solarprojekte 14 Verwaltungs-GmbH, Sömmerda

Belectric SP Solarprojekte 15 GmbH & Co. KG, Sömmerda

Belectric SP Solarprojekte 15 Verwaltungs-GmbH, Sömmerda

Belectric SP Solarprojekte 16 GmbH & Co. KG, Sömmerda

Belectric SP Solarprojekte 16 Verwaltungs-GmbH, Sömmerda

Belectric US LLC, Wilmington/USA

Biomasseheizkraftwerk Schameder GmbH, Essen

Blackbeard Solar, LLC, Wilmington/USA

Blackbriar Battery, LLC, Wilmington/USA

Blackjack Creek Wind Farm, LLC, Wilmington/USA

Blueberry Hills LLC, Chicago/USA

BO Baltic Offshore GmbH, Hamburg

Boiling Springs Holdco, LLC, Wilmington/USA

Bowler Flats Energy Hub LLC, Chicago/USA

Brahman Solar, LLC, Wilmington/USA

Broken Spoke Solar, LLC, Wilmington/USA

Buckeye Wind LLC, Chicago/USA

Burgar Hill Wind Farm Limited, Swindon/United Kingdom

Bursjöliden Vind AB, Malmö/Sweden

Camellia Solar LLC, Wilmington/USA

Camellia Solar Member LLC, Wilmington/USA

1 Profit and loss-pooling agreement.
2 Figures from the Group’s consolidated financial

statements.

3 Newly founded, financial statements not yet

available.

100

381

191

– 84

– 292

– 13

– 138

– 12

– 288

10,913

– 4,926

– 5

– 146

– 11

– 8

561

– 5

356

– 44

– 10

– 2

– 1

– 7

– 2

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 Profit and loss-pooling agreement with

non-Group companies.

183

II. Affiliated companies which are not included in the consolidated

Shareholding in %

Equity Net income/loss

financial statements due to secondary importance for the assets,
liabilities, financial position and profit or loss of the Group

Direct

Total

€ ’000

Cardinal Wind Farm, LLC, Wilmington/USA

Casey Fork Solar, LLC, Wilmington/USA

Cassadaga Class B Holdings LLC, Wilmington/USA

Cassadaga Wind Holdings LLC, Wilmington/USA

Catalina-Cypress Holding Limited, Swindon/United Kingdom

Cattleman Wind Farm, LLC, Wilmington/USA

Cattleman Wind Farm II, LLC, Wilmington/USA

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

Climagy Stromertrag GmbH & Co. KG, Kolitzheim

Climagy Stromertrag Verwaltungs-GmbH, Kolitzheim

Clinton Wind, LLC, Wilmington/USA

Clocaenog Wind Farm Limited, Swindon/United Kingdom

Coralese Investments Sp. z o.o., Warsaw/Poland

Cordova Wind Farm, LLC, Wilmington/USA

Curns Energy Limited, Kilkenny/Ireland

Decadia GmbH, Essen

E & Z Industrie-Lösungen GmbH, Essen

Eko-En 1 Sp. z o.o., Warsaw/Poland

Eko-En 2 Sp. z o.o., Warsaw/Poland

Eko-En 3 Sp. z o.o., Warsaw/Poland

Eko-En 4 Sp. z o.o., Warsaw/Poland

El Algarrobo (SpA), Santiago de Chile/Chile

El Algodon Alto Wind Farm, LLC, Wilmington/USA

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

1 Profit and loss-pooling agreement.
2 Figures from the Group’s consolidated financial

statements.

3 Newly founded, financial statements not yet

available.

100

– 5

– 26

– 20

– 29

– 18

– 501

893

– 22

– 39

– 1

– 2

– 1

– 2

– 12

– 266

– 45

16,874

– 2,885

1,236

134

535

– 10

– 78

– 58

– 69

– 76

– 23

– 5

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 Profit and loss-pooling agreement with

non-Group companies.

184

RWE Annual Report 2019Consolidated financial statements > List of shareholdings (part of the notes)

II. Affiliated companies which are not included in the consolidated

Shareholding in %

Equity Net income/loss

financial statements due to secondary importance for the assets,
liabilities, financial position and profit or loss of the Group

Direct

Total

€ ’000

Enchant Solar 3 Inc., Vancouver/Canada

Enchant Solar 4 Inc., Vancouver/Canada

Energio Co., Ltd., Bangkok/Thailand

Eólica de Sarnago, S.A., Soria/Spain

EverPower Maine LLC, Chicago/USA

EverPower Ohio LLC, Chicago/USA

EverPower Solar LLC, Chicago/USA

EverPower Wind Development, LLC, Chicago/USA

Farma Wiatrowa Lubsko Sp. z o.o. , Zielona Góra/Poland

Fifth Standard Solar PV, LLC, Wilmington/USA

"Finelectra" Finanzgesellschaft für Elektrizitäts-Beteiligungen AG in
Liquidation, Hausen/Switzerland

Five Estuaries Offshore Wind Farm Limited, Swindon/United Kingdom

Flatlands Wind Farm, LLC, Wilmington/USA

Florida Solar and Power Group LLC, Wilmington/USA

Frazier Solar, LLC, Wilmington/USA

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

100

GBV Sechsunddreißigste Gesellschaft für Beteiligungsverwaltung mbH,
Essen

GBV Siebenunddreißigste Gesellschaft für Beteiligungsverwaltung mbH,
Essen

GBV Siebte Gesellschaft für Beteiligungsverwaltung mbH, Essen

Generación Fotovoltaica Castellano Manchega, S.L., Murcia/Spain

Goole Fields II Wind Farm Limited, Swindon/United Kingdom

Grandview Wind Farm III, LLC, Wilmington/USA

Grandview Wind Farm IV, LLC, Wilmington/USA

Grandview Wind Farm V, LLC, Wilmington/USA

Green Gecco Verwaltungs GmbH, Essen

Haube Wind Sp. z o.o., Slupsk/Poland

Highland III LLC, Chicago/USA

Horse Thief Wind Project LLC, Chicago/USA

INDI Energie B.V., ’s-Hertogenbosch/Netherlands

Infraestructuras de Aldehuelas, S.A., Barcelona/Spain

Infrastrukturgesellschaft Netz Lübz mit beschränkter Haftung, Hanover

innogy Energy Marketing Australia PTY LTD, Melbourne/Australia

100

1,550

– 1

– 29

7,562

122

– 58

100

663

428

– 137

– 255

– 24

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 Profit and loss-pooling agreement with

non-Group companies.

185

II. Affiliated companies which are not included in the consolidated

Shareholding in %

Equity Net income/loss

financial statements due to secondary importance for the assets,
liabilities, financial position and profit or loss of the Group

Direct

Total

€ ’000

Innogy Energy Services LLC, Wilmington/USA

innogy Hillston Sun Farm Holding Pty. Ltd., Melbourne/Australia

innogy indeland Windpark Eschweiler Verwaltungs GmbH, Eschweiler

Innogy Management Services LLC, Wilmington/USA

innogy Middle East & North Africa Ltd., Dubai/UAE

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 Seabreeze II Verwaltungs GmbH, Essen

innogy Solar Netherlands B.V., ’s-Hertogenbosch/Netherlands

innogy Solar Polska Sp. z o.o., Warsaw/Poland

innogy Solutions s.r.o., Bratislava/Slovakia

Innogy Stallingborough Limited, Swindon/United Kingdom

innogy Windpark Bedburg Verwaltungs GmbH, Bedburg

innogy Windpark Garzweiler GmbH & Co. KG, Essen

Innogy Windpark Jüchen A44n Verwaltungs GmbH, Essen

innogy Windpark Papenhagen GmbH & Co. KG, Hanover

innogy Windpark Papenhagen Verwaltungs GmbH, Hanover

Iron Horse Battery Storage, LLC, Wilmington/USA

IRUS Offshore Wind Holdings LLC, Dover/USA

iWATT s.r.o., Košice/Slovakia

Jerez Fotovoltaica S.L., Barcelona/Spain

Kasson Manteca Solar, LLC, Wilmington/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

Lake Fork Wind Farm, LLC, Wilmington/USA

Lampasas Wind LLC, Chicago/USA

Las Vaguadas I Fotovoltaica S.L., Barcelona/Spain

Las Vaguadas II Solar S.L., Barcelona/Spain

Lochelbank Wind Farm Limited, Swindon/United Kingdom

Mahanoy Mountain, LLC, Chicago/USA

Major Wind Farm, LLC, Wilmington/USA

1 Profit and loss-pooling agreement.
2 Figures from the Group’s consolidated financial

statements.

3 Newly founded, financial statements not yet

available.

– 169

€ ’000

– 168

– 7,654

– 5,550

559

10,849

2,200

– 17

– 42

– 6

– 23

– 3

679

– 35

656

– 54

– 79

100

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 Profit and loss-pooling agreement with

non-Group companies.

186

RWE Annual Report 2019Consolidated financial statements > List of shareholdings (part of the notes)

II. Affiliated companies which are not included in the consolidated

Shareholding in %

Equity Net income/loss

financial statements due to secondary importance for the assets,
liabilities, financial position and profit or loss of the Group

Direct

Total

€ ’000

March Road Solar, LLC, Wilmington/USA

Maricopa East Solar PV, LLC, Wilmington/USA

Maricopa East Solar PV 2 , LLC, Wilmington/USA

Maricopa Land Holding, LLC, Wilmington/USA

Maricopa West Solar PV 2, LLC, Wilmington/USA

Maryland Sunlight 1 LLC, Wilmington/USA

Mason Dixon Wind LLC, Chicago/USA

Mud Springs Wind Project LLC, Chicago/USA

Nadácia VSE Holding , Košice/Slovakia

Northern Orchard Solar PV, LLC, Wilmington/USA

Northern Orchard Solar PV 2, LLC, Wilmington/USA

Northern Orchard Solar PV 3, LLC, Wilmington/USA

Novar Two Wind Farm Limited, Swindon/United Kingdom

Offshore-Windpark Delta Nordsee GmbH, Hamburg

Ohio Sunlight 1 LLC, Wilmington/USA

Oranje Wind Power B.V., ’s-Hertogenbosch/Netherlands

Oranje Wind Power C.V., ’s-Hertogenbosch/Netherlands

Owen Prairie Wind Farm, LLC, Wilmington/USA

Painter Energy Storage, LLC, Wilmington/USA

Panther Creek Solar, LLC, Wilmington/USA

Paradise Cut Battery, LLC, Wilmington/USA

Parc Ynni Cymunedol Alwen Cyfyngedig, Swindon/United Kingdom

Park Wiatrowy Dolice Sp. z o.o., Warsaw/Poland

Park Wiatrowy Gaworzyce Sp. z o.o., Warsaw/Poland

Pawnee Spirit Wind Farm, LLC, Wilmington/USA

Pe Ell North LLC, Chicago/USA

Peg Project #1 Pty Ltd, Melbourne/Australia

Peg Project #2 Pty Ltd, Melbourne/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

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

100

246

– 2,662

– 143

– 16

– 26

– 29

– 27

– 19

– 227

124

– 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 Profit and loss-pooling agreement with

non-Group companies.

187

II. Affiliated companies which are not included in the consolidated

Shareholding in %

Equity Net income/loss

financial statements due to secondary importance for the assets,
liabilities, financial position and profit or loss of the Group

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

Pinckard Solar LLC, Wilmington/USA

Pinckard Solar Member LLC, Wilmington/USA

Pipkin Ranch Wind Farm, LLC, Wilmington/USA

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

Quintana Fotovoltaica SLU, Barcelona/Spain

Rampion Extension Development Limited, Swindon/United Kingdom

RD Hanau GmbH, Hanau

Rose Rock Wind Farm, LLC, Wilmington/USA

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 Carbon Sourcing North America, LLC, Wilmington/USA

RWE Energy APAC Co. Ltd., Chengdu/China

RWE Enerji Toptan Satis A.S., Istanbul/Turkey

RWE Generation Hydro GmbH, Essen

RWE Ingen!us Limited, Swindon/United Kingdom

RWE NSW PTY LTD, Sydney/Australia

RWE Pensionsfonds AG, Essen

RWE Power Climate Protection GmbH, Essen

RWE Power Climate Protection Southeast Asia Co., Ltd., Bangkok/Thailand

RWE Principal Investments USA, LLC, New York City/USA

RWE Renewables Australia Holdings Pty Ltd., Brisbane/Australia

RWE Renewables Chile SpA, Santiago/Chile

RWE Renewables France SAS, Levallois-Perret/France

Direct

Total

€ ’000

100

45,505

45,377

277

– 5

855

1,451

1,977

4,294

2,670

219

3,694

3,032

169

176

1,133

– 1,532

– 11

– 78

– 14

– 20

– 1

– 5

161

– 14

– 82

– 105

– 244

– 45,462

– 145

– 77

– 971

– 27

– 570

– 4,337

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 Profit and loss-pooling agreement with

non-Group companies.

188

RWE Annual Report 2019Consolidated financial statements > List of shareholdings (part of the notes)

II. Affiliated companies which are not included in the consolidated

Shareholding in %

Equity Net income/loss

financial statements due to secondary importance for the assets,
liabilities, financial position and profit or loss of the Group

Direct

Total

€ ’000

RWE Renewables Japan G.K., Tokyo/Japan

RWE Renewables Mexico, S. de R.L. de C.V., Mexico City/Mexico

RWE Renewables Services GmbH, Essen

RWE Renewables Services Mexico, S. de R.L. de C.V., Mexico City/Mexico

RWE Slovensko s.r.o., Bratislava/Slovakia

100

RWEST PI Bras Limited, London/United Kingdom

RWEST PI FRE Holding LLC, New York City/USA

RWEST PI Limetree GmbH, Essen

RWE Supply & Trading CZ GmbH, Essen

RWE SUPPLY TRADING TURKEY ENERJI ANONIM SIRKETI, Istanbul/Turkey

RWE Technology International Energy Environment Engineering GmbH,
Essen

RWE TECNOLOGIA LTDA, Rio de Janeiro/Brazil

RWE Trading Services Limited, Swindon/United Kingdom

RWE Wind Denmark AB, Malmö/Sweden

RWE Wind Norway AB, Malmö/Sweden

RWE Windparks Deutschland GmbH, Essen

RWE Wind Projects AB, Malmö/Sweden

RWE Wind Service Italia S.r.l. , Milan/Italy

RWE Wind Services GmbH, Neubukow

RWE Wind Services Norway AS, Oslo/Norway

RWE Wind Songkjølen AS, Oslo/Norway

Santa Severa Centrale PV s.a.s. (s.r.l.), Rome/Italy

SB Retrofit, LLC, Wilmington/USA

Scioto Solar LLC, Wilmington/USA

Snow Shoe Wind Farm, LLC, Wilmington/USA

Songkjølen Wind Farm DA, Oslo/Norway

Sparta North, LLC, Wilmington/USA

Sparta South, LLC, Wilmington/USA

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 7 GmbH & Co. KG, Kolitzheim

SP Solarprojekte 7 Verwaltungs-GmbH, Kolitzheim

100

3,643

1,166

1,360

– 1

100,990

1,054

1,349

684

6,634

– 399

2,165

1,515

3,533

– 151

€ ’000

– 384

– 179

– 23

– 31

176

788

– 1

– 444

– 8

– 18

4,943

– 25

– 3

– 4

– 2

– 3

– 2

– 3

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 Profit and loss-pooling agreement with

non-Group companies.

189

II. Affiliated companies which are not included in the consolidated

Shareholding in %

Equity Net income/loss

financial statements due to secondary importance for the assets,
liabilities, financial position and profit or loss of the Group

Direct

Total

€ ’000

SP Solarprojekte 8 GmbH & Co. KG, Sömmerda

SP Solarprojekte 8 Verwaltungs-GmbH, Sömmerda

SP Solarprojekte 9 GmbH & Co. KG, Sömmerda

SP Solarprojekte 9 Verwaltungs-GmbH, Sömmerda

SP Solarprojekte 10 GmbH & Co. KG, Sömmerda

SP Solarprojekte 10 Verwaltungs-GmbH, Sömmerda

SP Solarprojekte 11 GmbH & Co. KG, Kolitzheim

SP Solarprojekte 11 Verwaltungs-GmbH, Kolitzheim

SP Solarprojekte 12 GmbH & Co. KG , Kolitzheim

SP Solarprojekte 12 Verwaltungs-GmbH, Kolitzheim

SP Solarprojekte 13 GmbH & Co. KG, Kolitzheim

SP Solarprojekte 13 Verwaltungs-GmbH, Kolitzheim

Stillwater Energy Storage, LLC, Wilmington/USA

Stockton Solar I, LLC, Wilmington/USA

Stockton Solar II, LLC, Wilmington/USA

Storage Facility 1 Ltd., Slough/United Kingdom

Sun Data GmbH (i.L.), Kolitzheim

Sunpow 1 Sp. z o.o., Warsaw/Poland

Sunrise Energy Generation Pvt. Ltd., Mumbai/India

Sunrise Wind Holdings, LLC, Chicago/USA

SVFR 12 (SAS), Vendres/France

Terrapin Hills LLC, Chicago/USA

Three Rocks Solar, LLC, Wilmington/USA

Tierra Blanca Wind Farm, LLC, Wilmington/USA

Tipton Wind, LLC, Wilmington/USA

Valverde Wind Farm, LLC, Wilmington/USA

VDE Komplementär GmbH, Kassel

VDE Projects GmbH, Kassel

Venado Wind Farm, LLC, Wilmington/USA

Versuchsatomkraftwerk Kahl GmbH, Karlstein am Main

Vici Wind Farm, LLC, Wilmington/USA

Vici Wind Farm II, LLC, Wilmington/USA

Vici Wind Farm III, LLC, Wilmington/USA

Vortex Energy Deutschland GmbH, Kassel

Vortex Energy Windpark GmbH & Co. KG, Kassel

VSE Call centrum, s.r.o., Košice/Slovakia

VSE Ekoenergia, s.r.o., Košice/Slovakia

West of the Pecos Holdco, LLC, Wilmington/USA

1 Profit and loss-pooling agreement.
2 Figures from the Group’s consolidated financial

statements.

3 Newly founded, financial statements not yet

available.

100

– 28

– 29

– 20

– 112

604

4,661

– 2

– 20

– 2

– 9

– 22

986

– 29

– 119

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 Profit and loss-pooling agreement with

non-Group companies.

190

RWE Annual Report 2019Consolidated financial statements > List of shareholdings (part of the notes)

II. Affiliated companies which are not included in the consolidated

Shareholding in %

Equity Net income/loss

financial statements due to secondary importance for the assets,
liabilities, financial position and profit or loss of the Group

Direct

Total

€ ’000

Wildcat Wind Farm II, LLC, Wilmington/USA

Wildcat Wind Farm III, LLC, Wilmington/USA

Willowbrook Solar I, LLC, Wilmington/USA

Windpark Hölzerberg GmbH & Co. KG, Kassel

Windpark Winterlingen-Alb GmbH & Co. KG, Kassel

Wiregrass, LLC, Wilmington/USA

WIT Ranch Wind Farm, LLC, Wilmington/USA

WR Graceland Solar, LLC, Wilmington/USA

Zielone Glówczyce Sp. z o.o., Glówczyce/Poland

1 Profit and loss-pooling agreement.
2 Figures from the Group’s consolidated financial

statements.

3 Newly founded, financial statements not yet

available.

100

– 12

472

– 519

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 Profit and loss-pooling agreement with

non-Group companies.

III. Joint operations

Shareholding in %

Equity Net income/loss

Direct

Total

€ ’000

Greater Gabbard Offshore Winds Limited, Reading/United Kingdom

1,122,469

101,728

N.V. Elektriciteits-Produktiemaatschappij Zuid-Nederland EPZ, Borssele/
Netherlands

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.

81,302

5,609

7 Significant influence by virtue of company

contract.

8 Profit and loss-pooling agreement with

non-Group companies.

IV. Associated companies of joint operations

Shareholding in %

Equity Net income/loss

B.V. NEA, Arnhem/Netherlands

1 Profit and loss-pooling agreement.
2 Figures from the Group’s consolidated financial

statements.

3 Newly founded, financial statements not yet

available.

Direct

Total

€ ’000

71,714

€ ’000

216

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 Profit and loss-pooling agreement with

non-Group companies.

191

V. Joint ventures accounted for using the equity method

Shareholding in %

Equity Net income/loss

AS 3 Beteiligungs GmbH, Essen

AWE-Arkona-Windpark Entwicklungs-GmbH, Hamburg

C-Power N.V., Oostende/Belgium

Elevate Wind Holdco, LLC, Wilmington/USA

Galloper Wind Farm Holding Company Limited, Swindon/United Kingdom

Grandview Wind Farm, LLC, Wilmington/USA

Gwynt y Môr Offshore Wind Farm Limited, Swindon/United Kingdom

Innogy Venture Capital GmbH, Dortmund

Rampion Renewables Limited, Coventry/United Kingdom

Société Electrique de l’Our S.A., Luxembourg/Luxembourg

TCP Petcoke Corporation, Dover/USA

URANIT GmbH, Jülich

1 Profit and loss-pooling agreement.
2 Figures from the Group’s consolidated financial

statements.

3 Newly founded, financial statements not yet

available.

Direct

Total

€ ’000

515

36,819

€ ’000

5,740

26,952

22,227

16,100

33,135

1,074,954

247,933

245,884

– 101,690

302,098

– 12,364

– 2,103

714

11,617

35,437

72,127

– 992

119

5,6862

25,4252

98,094

755

605

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 Profit and loss-pooling agreement with

non-Group companies.

VI. 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/Ireland

DOTI Deutsche Offshore-Testfeld- und Infrastruktur-GmbH & Co. KG,
Oldenburg

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 (i.L.), Dortmund

Kärntner Energieholding Beteiligungs GmbH, Klagenfurt/Austria

KELAG-Kärntner Elektrizitäts-AG, Klagenfurt/Austria

Kish Offshore Wind Limited, Kilkenny/Ireland

Magicat Holdco, LLC, Wilmington/USA

Mingas-Power GmbH, Essen

Nysäter Wind AB, Malmö/Sweden

PEARL PETROLEUM COMPANY LIMITED, Road Town/British Virgin Islands

Rødsand 2 Offshore Wind Farm AB, Malmö/Sweden

Direct

Total

€ ’000

785

136

107

1,823,000

203,400

4,862

4,758

– 83

84,844

36,339

127,435

12,588

16,637

912,286

893,675

– 103

278,448

5,114

20,419

532

4,173

– 12

– 46,276

15,6902

6,647

1,964

– 1,833

96,6382

93,316

– 12

1,552

4,445

– 5,869

1,951,247

242,061

143,174

14,320

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 Profit and loss-pooling agreement with

non-Group companies.

192

RWE Annual Report 2019Consolidated financial statements > List of shareholdings (part of the notes)

VI. Associates accounted for using the equity method

Shareholding in %

Equity Net income/loss

Schluchseewerk Aktiengesellschaft, Laufenburg Baden

Vliegasunie B.V., De Bilt/Netherlands

Direct

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.

Total

605

€ ’000

64,957

10,679

€ ’000

2,809

3,070

7 Significant influence by virtue of company

contract.

8 Profit and loss-pooling agreement with

non-Group companies.

VII. Companies which are not accounted for using the equity method

Shareholding in %

Equity Net income/loss

due to secondary importance for the assets, liabilities, financial
position and profit or loss of the Group

Abwasser-Gesellschaft Knapsack, Gesellschaft mit beschränkter Haftung,
Hürth

Alfred Thiel-Gedächtnis-Unterstützungskasse GmbH, Essen

Ascent Energy LLC, Wilmington/USA

CARBON Climate Protection GmbH, Langenlois/Austria

CARBON Egypt Ltd. (Under Liquidation), Cairo/Egypt

DBO Energia S.A., Rio de Janeiro /Brazil

Deutsche Gesellschaft für Wiederaufarbeitung von Kernbrennstoffen
AG & Co. oHG, Essen

DOTI Management GmbH, Oldenburg

EMDO S.A.S., Paris/France

Energotel, a.s., Bratislava/Slovakia

Eoliennes en mer de Dunkerque (EMD) S.A.S., Paris/France

Fassi Coal Pty. Ltd., 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., Rutherford/Australia

Limetree Bay Preferred Holdings LLC, Boston/USA

London Array Limited, Tunbridge Wells/United Kingdom

Moravske Hidroelektrane d.o.o., Belgrade/Serbia

Netzanbindung Tewel OHG, Cuxhaven

PV Projects GmbH & Co. KG (i.L.), Kolitzheim

1 Profit and loss-pooling agreement.
2 Figures from the Group’s consolidated financial

statements.

3 Newly founded, financial statements not yet

available.

Direct

Total

€ ’000

415

5,113

83,664

3,052

– 2,274

604

2,159

119

– 10,890

6,922

– 9,954

– 1,410

1,476

2,045

5,113

615

– 101

3,538

627

236

185

– 3,349

1,422

– 245

– 988

1,647

– 5,906

1,410

– 2,975

– 7,597

– 4

– 685

– 1

– 18

– 41

– 33

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 Profit and loss-pooling agreement with

non-Group companies.

193

VII. Companies which are not accounted for using the equity method

Shareholding in %

Equity Net income/loss

due to secondary importance for the assets, liabilities, financial
position and profit or loss of the Group

Direct

Total

€ ’000

PV Projects Komplementär GmbH (i.L.), Kolitzheim

RWE Dhabi Union Energy LLC, Abu Dhabi/UAE

Scarweather Sands Limited, Coventry/United Kingdom

SPX, s.r.o., Zilina/Slovakia

TetraSpar Demonstrator ApS, Copenhagen/Denmark

Toledo PV A.E.I.E., Madrid/Spain

TPG Wind Limited, Coventry/United Kingdom

TRANSELEKTRO, s.r.o., Košice/Slovakia

Umspannwerk Putlitz GmbH & Co. KG, Oldenburg

WALDEN GREEN ENERGY LLC, New York City/USA

Walden Renewables Development LLC, New York City/USA

Windesco Inc, Boston/USA

Windpark Fresenhede GmbH & Co. KG, Kassel

Windpark Herßum-Vinnen Projekt GmbH & Co. KG, Kassel

Windpark Rotenburg GmbH & Co. KG, Kassel

Windpark Schapen GmbH & Co. KG, Kassel

WINDTEST Grevenbroich GmbH, Grevenbroich

Yorkshire Windpower Limited, Coventry/United Kingdom

163

– 1,037

1,607

516

– 36

13,697

– 1,985

681

904

– 69

– 137

18,618

– 1,029

– 1,120

2,276

26,121

– 38

– 7

– 119

– 9

118

4,176

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 Profit and loss-pooling agreement with

non-Group companies.

VIII. Other investments

Shareholding in %

Equity Net income/loss

Direct

APEP Dachfonds GmbH & Co. KG, Munich

Chrysalix Energy II U.S. Limited Partnership, Vancouver/Canada

Chrysalix Energy III U.S. Limited Partnership, Vancouver/Canada

Dry Bulk Partners 2013 LP, Grand Cayman/Cayman Islands

Energías Renovables de Ávila, S.A., Madrid/Spain

E.ON SE, Essen

Focal Energy Solar Three Ltd., Nicosia/Cyprus

Glenrothes Paper Limited, Glenrothes/United Kingdom

Globus Steel & Power Pvt. Limited, New Delhi/India

High-Tech Gründerfonds II GmbH & Co. KG, Bonn

HOCHTEMPERATUR-KERNKRAFTWERK Gesellschaft mit beschränkter
Haftung (HKG) Gemeinsames Europäisches Unternehmen, Hamm

Total

€ ’000

159,315

9,155

€ ’000

67,583

– 51

115,776

– 6,846

6,578

595

9,431,700

1,053,000

5,430

715

– 1,337

111,181

– 4

– 937

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 Profit and loss-pooling agreement with

non-Group companies.

194

RWE Annual Report 2019Consolidated financial statements > List of shareholdings (part of the notes)

VIII. Other investments

Shareholding in %

Equity Net income/loss

Direct

Total

€ ’000

Nordsee One GmbH, Oststeinbek

Nordsee Three GmbH, Oststeinbek

Nordsee Two GmbH, Oststeinbek

OPPENHEIM PRIVATE EQUITY Institutionelle Anleger GmbH & Co. KG,
Cologne

Parque Eólico Cassiopea, S.L., Oviedo/Spain

Parque Eólico Escorpio, S.A., Oviedo/Spain

Parque Eólico Leo, S.L., Oviedo/Spain

PEAG Holding GmbH, Dortmund

People2People, s.r.o., Bratislava /Slovakia

Promocion y Gestion Cáncer, S.L., Oviedo/Spain

REV LNG LLC, Ulysses/USA

SET Fund II C.V., Amsterdam/Netherlands

Stem Inc., Milbrae/USA

Sustainable Energy Technology Fund C.V., Amsterdam/Netherlands

Technologiezentrum Jülich GmbH, Jülich

Transport- und Frischbeton-Gesellschaft mit beschränkter Haftung & Co.
Kommanditgesellschaft Aachen, Aachen

Trinkaus Secondary GmbH & Co. KGaA, Düsseldorf

UMBO GmbH, Hamburg

Umspannwerk Lübz GbR, Lübz

Versorgungskasse Energie (VVaG) i.L., Hanover

1 Profit and loss-pooling agreement.
2 Figures from the Group’s consolidated financial

statements.

3 Newly founded, financial statements not yet

available.

121,250

226

385

522

126

€ ’000

49,274

– 7

– 20

18,858

2,425

177

3,163

49,078

– 43

325

10,271

2,211

– 45,187

15,030

1,791

390

1,058

1,487

51,729

– 1,949

198

164

– 144

1,387

– 39

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 Profit and loss-pooling agreement with

non-Group companies.

195

Changes in shareholding with change of control

Shareholding in %
31 Dec 2019

Shareholding in %
31 Dec 2018

Change

Additions to affiliated companies included in the consolidated financial
statements

Amrum-Offshore West GmbH, Düsseldorf

Anacacho Holdco, LLC, Wilmington/USA

Anacacho Wind Farm, LLC, Wilmington/USA

Belectric Canada Solar Inc. , Vancouver/Canada

Boiling Springs Wind Farm, LLC, Wilmington/USA

Bruenning’s Breeze Holdco, LLC, Wilmington/USA

Bruenning’s Breeze Wind Farm, LLC, Wilmington/USA

Champion WF Holdco, LLC, Wilmington/USA

Champion Wind Farm, LLC, Wilmington/USA

Colbeck’s Corner Holdco, LLC, Wilmington/USA

Colbeck’s Corner, LLC, Wilmington/USA

Cranell Holdco, LLC, Wilmington/USA

Cranell Wind Farm, LLC, Wilmington/USA

DOTTO MORCONE S.r.l., Rome/Italy

E.ON Energie Odnawialne Sp. z o.o., Szczecin/Poland

Energiewerken B.V., Almere/Netherlands

Farma Wiatrowa Barzowice Sp. z o.o., Warsaw/Poland

Forest Creek Investco, Inc., Wilmington/USA

Forest Creek WF Holdco, LLC, Wilmington/USA

Forest Creek Wind Farm, LLC, Wilmington/USA

Get Energy Solutions Szolgáltató Kft., Budapest/Hungary

Glen Kyllachy Wind Farm Limited, Swindon/United Kingdom

Grandview Holdco, LLC, Wilmington/USA

Hardin Class B Holdings LLC, Wilmington/USA

Hardin Wind Holdings LLC, Wilmington/USA

Inadale Wind Farm, LLC, Wilmington/USA

IRUS Solar NC Lessee LLC, Wilmington/USA

IRUS Solar NC Pledgor LLC, Wilmington/USA

IRUS Solar Operations LLC, Wilmington/USA

IRUS Wind Operations LLC, Wilmington/USA

Klima és Hutéstechnológia Tervezo, Szerelo és Kereskedelmi Kft., Budapest/
Hungary

Munnsville Investco, LLC, Wilmington/USA

Munnsville WF Holdco, LLC, Wilmington/USA

Munnsville Wind Farm, LLC, Wilmington/USA

Panther Creek Holdco, LLC, Wilmington/USA

Panther Creek Wind Farm I&II, LLC, Wilmington/USA

Panther Creek Wind Farm Three, LLC, Wilmington/USA

Peyton Creek Holdco, LLC, Wilmington/USA

Peyton Creek Wind Farm, LLC, Wilmington/USA

Pioneer Trail Wind Farm, LLC, Wilmington/USA

196

100

RWE Annual Report 2019Consolidated financial statements > List of shareholdings (part of the notes)

Changes in shareholding with change of control

Shareholding in %
31 Dec 2019

Shareholding in %
31 Dec 2018

Change

Additions to affiliated companies included in the consolidated financial
statements

Pyron Wind Farm, LLC, Wilmington/USA

Radford’s Run Holdco, LLC, Wilmington/USA

Radford’s Run Wind Farm, LLC, Wilmington/USA

Raymond Holdco, LLC, Wilmington/USA

Raymond Wind Farm, LLC, Wilmington/USA

Roscoe WF Holdco, LLC, Wilmington/USA

Roscoe Wind Farm, LLC, Wilmington/USA

RWE Canada Ltd., Saint John/Canada

RWE Czech Gas Grid Holding B.V., Geertruidenberg/Netherlands

RWE Energy Services, LLC, Wilmington/USA

RWE Investco EPC Mgmt, LLC, Wilmington/USA

RWE Investco Mgmt, LLC, Wilmington/USA

RWE Investco Mgmt II, LLC, Wilmington/USA

RWE Magicat Holdco, LLC, Wilmington/USA

RWE Renewables Americas, LLC, Wilmington/USA

RWE Renewables Asset Management, LLC, Wilmington/USA

RWE Renewables Canada Ltd., Saint John/Canada

RWE Renewables Development, LLC, Wilmington/USA

RWE Renewables Energy Marketing, LLC, Wilmington/USA

RWE Renewables International GmbH, Essen

RWE Renewables International Participations B.V., Geertruidenberg/Netherlands

RWE Renewables Italia S.r.l., Rome/Italy

RWE Renewables O&M, LLC, Wilmington/USA

RWE Renewables QSE, LLC, Wilmington/USA

RWE Renewables Services, LLC, Wilmington/USA

RWE Renewables Sweden AB, Malmö/Sweden

RWE Renewables UK Blyth Limited, Coventry/United Kingdom

RWE Renewables UK Developments Limited, Coventry/United Kingdom

RWE Renewables UK Humber Wind Limited, Coventry/United Kingdom

RWE Renewables UK Limited, Coventry/United Kingdom

RWE Renewables UK London Array Limited, Coventry/United Kingdom

RWE Renewables UK Offshore Wind Limited, Coventry/United Kingdom

RWE Renewables UK Operations Limited, Coventry/United Kingdom

RWE Renewables UK Robin Rigg East Limited, Coventry/United Kingdom

RWE Renewables UK Robin Rigg West Limited, Coventry/United Kingdom

RWE Renewables UK Wind Limited, Coventry/United Kingdom

RWE Renewables UK Zone Six Limited, Coventry/United Kingdom

RWE Slovak Holding B.V., Geertruidenberg/Netherlands

RWE Solar Development, LLC, Wilmington/USA

RWE Solar PV, LLC, Wilmington/USA

RWE Wind Karehamn AB, Malmö/Sweden

197

100

Changes in shareholding with change of control

Shareholding in %
31 Dec 2019

Shareholding in %
31 Dec 2018

Change

Additions to affiliated companies included in the consolidated financial
statements

RWE Wind Services Denmark A/S, Rødby/Denmark

Sand Bluff WF Holdco, LLC, Wilmington/USA

Sand Bluff Wind Farm, LLC, Wilmington/USA

Settlers Trail Wind Farm, LLC, Wilmington/USA

Stella Holdco, LLC, Wilmington/USA

Stella Wind Farm, LLC, Wilmington/USA

Tamworth Holdings, LLC, Charlotte/USA

Tanager Holdings, LLC, Charlotte/USA

Tech Park Solar, LLC, Wilmington/USA

Valencia Solar, LLC, Tucson/USA

West of the Pecos Solar, LLC, Wilmington/USA

West Raymond Holdco, LLC, Wilmington/USA

West Raymond Wind Farm, LLC, Wilmington/USA

Additions to joint ventures accounted for using the equity method

AWE-Arkona-Windpark Entwicklungs-GmbH, Hamburg

Elevate Wind Holdco, LLC, Wilmington/USA

Grandview Wind Farm, LLC, Wilmington/USA

Rampion Renewables Limited, Coventry/United Kingdom

Additions to associates accounted for using the equity method

DOTI Deutsche Offshore-Testfeld- und Infrastruktur-GmbH & Co. KG, Oldenburg

Magicat Holdco, LLC, Wilmington/USA

Nysäter Wind AB, Malmö/Sweden

Rødsand 2 Offshore Wind Farm AB, Malmö/Sweden

Disposal of affiliated companies included in the consolidated financial
statements

2. CR-Immobilien-Vermietungsgesellschaft mbH & Co. KG Cottbus, Düsseldorf

2. CR Immobilien-Vermietungsgesellschaft mbH & Co. Objekt MEAG Halle KG,
Düsseldorf

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

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

100

603

100

– 90

– 76

– 100

– 62

– 100

– 55

100

1 Structured entity pursuant to IFRS 10 and 12.
2 Control by virtue of company contract.
3 No control by virtue of company contract.

4 Significant influence via indirect investments.
5 Addition 2019.

198

RWE Annual Report 2019Consolidated financial statements > List of shareholdings (part of the notes)

Changes in shareholding with change of control

Shareholding in %
31 Dec 2019

Shareholding in %
31 Dec 2018

Change

Disposal of affiliated companies included in the consolidated financial
statements

Cegecom S.A., Luxembourg/Luxembourg

Certified B.V., Amsterdam/Netherlands

Channel Energy Limited, Bristol/United Kingdom

EGD-Energiewacht Facilities B.V., Assen/Netherlands

Elektrizitätswerk Landsberg GmbH, Landsberg am Lech

ELE Verteilnetz GmbH, Gelsenkirchen

ELMU DSO Holding Korlátolt Felelosségu Társaság, 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

ELMU Halozati Eloszto Kft., Budapest/Hungary

ÉMÁSZ Halozati Kft., Miskolc/Hungary

Emscher Lippe Energie GmbH, Gelsenkirchen

Energiedirect B.V., Waalre/Netherlands

Energienetze Berlin GmbH, Berlin

Energiewacht Facilities B.V., Zwolle/Netherlands

Energiewacht Groep B.V., Meppel/Netherlands

Energiewacht N.V., Veendam/Netherlands

Energiewacht West Nederland B.V., Assen/Netherlands

Energiewerken B.V., Almere/Netherlands

energis GmbH, Saarbrücken

energis-Netzgesellschaft mbH, Saarbrücken

enviaM Beteiligungsgesellschaft Chemnitz GmbH, Chemnitz

enviaM Beteiligungsgesellschaft mbH, Essen

envia Mitteldeutsche Energie AG, Chemnitz

envia SERVICE GmbH, Cottbus

envia TEL GmbH, Markkleeberg

envia THERM GmbH, Bitterfeld-Wolfen

eprimo GmbH, Neu-Isenburg

Essent Belgium N.V., Antwerp/Belgium

Essent EnergieBewust Holding B.V., ’s-Hertogenbosch/Netherlands

Essent Energie Verkoop Nederland 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

1 Structured entity pursuant to IFRS 10 and 12.
2 Control by virtue of company contract.
3 No control by virtue of company contract.

4 Significant influence via indirect investments.
5 Addition 2019.

199

100

– 100

– 50

– 100

– 72

– 100

– 59

– 100

Changes in shareholding with change of control

Shareholding in %
31 Dec 2019

Shareholding in %
31 Dec 2018

Change

Disposal of affiliated companies included in the consolidated financial
statements

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

EWIS BV, Ede/Netherlands

EWV Energie- und Wasser-Versorgung GmbH, Stolberg

FAMIS Gesellschaft für Facility Management und Industrieservice mbH,
Saarbrücken

GasNet, s.r.o., Ústí nad Labem/Czech Republic

GasWacht Friesland Facilities B.V., Leeuwarden/Netherlands

Geas Energiewacht B.V., Enschede/Netherlands

Gemeinschaftskraftwerk Bergkamen A beschränkt haftende OHG, Bergkamen

Get Energy Solutions Szolgáltató Kft., Budapest/Hungary

GridServices, s.r.o., Brno/Czech Republic

GWG Grevenbroich GmbH, Grevenbroich

Hof Promotion B.V., Eindhoven/Netherlands

Improvers B.V., ’s-Hertogenbosch/Netherlands

Improvers Community B.V., Amsterdam/Netherlands

innogy Aqua GmbH, Mülheim an der Ruhr

innogy Benelux Holding B.V., ’s-Hertogenbosch/Netherlands

innogy Beteiligungsholding GmbH, Essen

innogy Business Services Benelux B.V., Arnhem/Netherlands

innogy Business Services Polska Sp. z o.o., Cracow/Poland

Innogy Business Services UK Limited, Swindon/United Kingdom

innogy Ceská republika a.s., Prague/Czech Republic

innogy eMobility Solutions GmbH, Dortmund

innogy e-mobility US LLC, Delaware/USA

innogy Energie, s.r.o., Prague/Czech Republic

innogy Energo, s.r.o., Prague/Czech Republic

innogy Finance B.V., ’s-Hertogenbosch/Netherlands

innogy Gastronomie GmbH, Essen

innogy Grid Holding, a.s., Prague/Czech Republic

innogy Hungária Tanácsadó Kft., Budapest/Hungary

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

1 Structured entity pursuant to IFRS 10 and 12.
2 Control by virtue of company contract.
3 No control by virtue of company contract.

4 Significant influence via indirect investments.
5 Addition 2019.

200

100

– 100

– 54

– 51

– 100

– 54

– 100

– 51

– 100

– 60

– 100

– 50

– 100

RWE Annual Report 2019Consolidated financial statements > List of shareholdings (part of the notes)

Changes in shareholding with change of control

Shareholding in %
31 Dec 2019

Shareholding in %
31 Dec 2018

Change

Disposal of affiliated companies included in the consolidated financial
statements

innogy IT Magyarország Kft. „v.a.”, Budapest/Hungary

innogy Metering GmbH, Mülheim an der Ruhr

innogy Netze Deutschland GmbH, Essen

innogy New Ventures LLC, Palo Alto/USA

innogy Polska IT Support Sp. z o.o., Warsaw/Poland

innogy Polska S.A., Warsaw/Poland

innogy Polska Solutions Sp. z o.o., Warsaw/Poland

innogy Rheinhessen Beteiligungs GmbH, Essen

innogy SE, Essen

Innogy Solutions Ireland Limited, Dublin/Ireland

innogy solutions Kft., Budapest/Hungary

innogy Solutions s.r.o., Banská Bystrica/Slovakia

innogy South East Europe s.r.o., Bratislava/Slovakia

innogy Stoen Operator Sp. z o.o., Warsaw/Poland

innogy TelNet GmbH, Essen

innogy Ventures GmbH, Essen

innogy Zákaznické služby, s.r.o., Ostrava/Czech Republic

innogy Zweite Vermögensverwaltungs GmbH, Essen

Installatietechniek Totaal B.V., Leeuwarden/Netherlands

IsoFitters BVBA, Herentals/Belgium

Isoprofs België BVBA, Hasselt/Belgium

Isoprofs B.V., Meijel/Netherlands

iSWITCH GmbH, Essen

It’s a beautiful world B.V., Amersfoort/Netherlands

Klima és Hutéstechnológia Tervezo, Szerelo és Kereskedelmi Kft., Budapest/
Hungary

Konnektor B.V., Amsterdam/Netherlands

Koprivnica Opskrba d.o.o., Koprivnica/Croatia

Koprivnica Plin d.o.o., Koprivnica/Croatia

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

Livisi GmbH, Essen

1 Structured entity pursuant to IFRS 10 and 12.
2 Control by virtue of company contract.
3 No control by virtue of company contract.

4 Significant influence via indirect investments.
5 Addition 2019.

201

100

– 100

– 77

– 100

– 75

– 90

– 100

Changes in shareholding with change of control

Shareholding in %
31 Dec 2019

Shareholding in %
31 Dec 2018

Change

Disposal of affiliated companies included in the consolidated financial
statements

MI-FONDS 178, Frankfurt am Main

MI-FONDS F55, 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

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

NEW Viersen GmbH, Viersen

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

Octopus Electrical Limited, Swindon/United Kingdom

OIE Aktiengesellschaft, Idar-Oberstein

Plus Shipping Services Limited, Swindon/United Kingdom

Powerhouse B.V., Almere/Netherlands

PS Energy UK Limited, Swindon/United Kingdom

Recargo Inc., El Segundo/USA

Regionetz GmbH, Aachen

Rhein-Sieg Netz GmbH, Siegburg

rhenag Rheinische Energie Aktiengesellschaft, Cologne

1 Structured entity pursuant to IFRS 10 and 12.
2 Control by virtue of company contract.
3 No control by virtue of company contract.

4 Significant influence via indirect investments.
5 Addition 2019.

202

100

401

100

402

100

492

100

– 100

– 75

– 100

– 40

– 100

– 40

– 100

– 98

– 100

– 49

– 100

– 67

RWE Annual Report 2019Consolidated financial statements > List of shareholdings (part of the notes)

Changes in shareholding with change of control

Shareholding in %
31 Dec 2019

Shareholding in %
31 Dec 2018

Change

Disposal of affiliated companies included in the consolidated financial
statements

RL Besitzgesellschaft mbH, Gundremmingen

RL Beteiligungsverwaltung beschr. haft. OHG, Gundremmingen

RUMM Limited, Ystrad Mynach/United Kingdom

RWE Cogen UK (Hythe) Limited, Swindon/United Kingdom

RWE Cogen UK Limited, Swindon/United Kingdom

RWE Energija d.o.o., Zagreb/Croatia

RWE Generation Belgium N.V., Antwerp/Belgium

RWE Hrvatska d.o.o., Zagreb/Croatia

RWE Ljubljana d.o.o., Ljubljana/Slovenia

RWE Plin d.o.o., Zagreb/Croatia

RWE Supply & Trading Switzerland S.A., Geneva/Switzerland

RWW Rheinisch-Westfälische Wasserwerksgesellschaft mbH,
Mülheim an der Ruhr

SARIO Grundstücks-Vermietungsgesellschaft mbH & Co. Objekt Würzburg KG,
Düsseldorf

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

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.

Wendelsteinbahn Gesellschaft mit beschränkter Haftung, Brannenburg

Wendelsteinbahn Verteilnetz GmbH, Brannenburg

Westerwald-Netz GmbH, Betzdorf-Alsdorf

Westnetz GmbH, Dortmund

WTTP B.V., Arnhem/Netherlands

ZonnigBeheer B.V., Lelystad/Netherlands

1 Structured entity pursuant to IFRS 10 and 12.
2 Control by virtue of company contract.
3 No control by virtue of company contract.

4 Significant influence via indirect investments.
5 Addition 2019.

203

100

502

100

– 100

– 80

– 50

– 100

– 78

– 100

– 75

– 100

– 50

– 100

– 95

– 60

– 51

– 100

– 98

– 100

Changes in shareholding with change of control

Shareholding in %
31 Dec 2019

Shareholding in %
31 Dec 2018

Change

Disposal of joint ventures not accounted for using the equity method due to
application of IFRS 5

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

Disposal of associates not accounted for using the equity method due to
application of IFRS 5

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

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

1 Structured entity pursuant to IFRS 10 and 12.
2 Control by virtue of company contract.
3 No control by virtue of company contract.

4 Significant influence via indirect investments.
5 Addition 2019.

204

613

673

703

104

– 50

– 61

– 50

– 33

– 50

– 67

– 50

– 70

– 50

– 40

– 49

– 30

– 49

– 40

– 49

– 45

– 25

– 10

– 20

– 43

– 1

– 25

– 20

– 30

– 49

– 29

– 47

– 39

– 20

– 27

– 50

RWE Annual Report 2019Consolidated financial statements > List of shareholdings (part of the notes)

Changes in shareholding with change of control

Shareholding in %
31 Dec 2019

Shareholding in %
31 Dec 2018

Change

Disposal of associates not accounted for using the equity method due to
application of IFRS 5

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

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

205

– 30

– 50

– 20

– 23

– 25

– 33

– 50

– 35

– 45

– 40

– 20

– 25

– 29

– 49

– 25

– 49

– 25

– 40

– 50

– 25

– 50

– 25

– 49

– 30

– 25

– 33

– 43

– 28

– 34

– 31

– 27

Changes in shareholding without change of control

Shareholding in %
31 Dec 2019

Shareholding in %
31 Dec 2018

Change

Affiliated companies which are included in the consolidated financial
statements

Fri-El Guardionara s.r.l., Bolzano/Italy

innogy indeland Windpark Eschweiler GmbH & Co. KG, Eschweiler

Kernkraftwerk Gundremmingen GmbH, Gundremmingen

Kernkraftwerke Lippe-Ems Gesellschaft mit beschränkter Haftung, Lingen (Ems)

Kernkraftwerksbeteiligung Lippe-Ems beschränkt haftende OHG, Lingen/Ems

RWE & Turcas Güney Elektrik Üretim A.S., Ankara/Turkey

100

– 49

206

RWE Annual Report 2019Consolidated financial statements > Boards (part of the notes)

3.8 Boards (part of the notes)

As of: 28 February 2020

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

Member since 1 September 2018

Anja Dubbert2

Essen

Business Development Manager / Member of the

Works Council of RWE Supply & Trading GmbH

Year of birth 1979

Member since 27 September 2019

Matthias Dürbaum2

Former Chairman of ver.di Vereinte Dienstleistungsgewerkschaft

Heimbach

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

Chairman of the Works Council of the Hambach Opencast Mine

Year of birth: 1987

Member since 27 September 2019

Ute Gerbaulet

Düsseldorf

General Partner of Bankhaus Lampe KG

Year of birth: 1968

Member since 27 April 2017

Deputy Chairman of the General Works Council of RWE Power AG

Other appointments:

Year of birth: 1967

Member since 1 August 2018

Reiner Böhle2,4

Witten

- NRW.Bank AöR

Prof. Dr.-Ing. Dr.-Ing. E. h. Hans-Peter Keitel

Essen

Former Chairman of the Executive Board of HOCHTIEF AG

Consultant for Special Tasks and Project Work at Westnetz GmbH

Year of birth: 1947

Year of birth: 1960

Member since 18 April 2013

Member from 1 January 2013 to 18 September 2019

Sandra Bossemeyer2

Duisburg

Chairwoman of the Works Council of RWE AG

Representative of the disabled

Year of birth: 1965

Member since 20 April 2016

Other appointments:

• National-Bank AG

- Consolidated Contractors Group S.A.L.

• 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 until 18 September 2019.
4 Information valid as of the date of retirement.

207

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

Year of birth: 1951

Member since 20 April 2016

- Kärntner Energieholding Beteiligungs GmbH (Chairwoman)3

Günther Schartz

- KELAG-Kärntner Elektrizitäts AG1,3

- Siemens AG Österreich

Wincheringen

Chief Administrative Officer of the District of Trier-Saarburg

Monika Krebber2,4

Mülheim an der Ruhr

Year of birth: 1962

Member since 20 April 2016

Deputy Chairwoman of the General Works Council of innogy SE

Other appointments:

Year of birth: 1962

- A.R.T. Abfallberatungs- und Verwertungsgesellschaft mbH

Member from 20 April 2016 to 18 September 2019

(Chairman)

Other appointments:

•

innogy SE1,3

Harald Louis2

Jülich

- Kreiskrankenhaus St. Franziskus Saarburg GmbH (Chairman)

- Sparkassenverband Rheinland-Pfalz

- Sparkasse Trier (Chairman)

- Trierer Hafengesellschaft mbH

- Zweckverband Abfallwirtschaft Region Trier

Chairman of the General Works Council of RWE Power AG

Dr. Erhard Schipporeit

Year of birth: 1967

Member since 20 April 2016

Other appointments:

• RWE Power AG5

Dagmar Mühlenfeld

Mülheim an der Ruhr

Former Mayor of the City of Mülheim an der Ruhr/

Managing Director of JUNI gGmbH (Junior-Uni Ruhr)

Year of birth: 1951

Member since 4 January 2005

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.

• Talanx AG1

• 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 until 18 September 2019.
4 Information valid as of the date of retirement.
5 Office within the Group.

208

RWE Annual Report 2019Consolidated financial statements > Boards (part of the notes)

Dr. Wolfgang Schüssel

Vienna, Austria

Former Federal Chancellor of the Republic of Austria

Year of birth: 1945

Member since 1 March 2010

Other appointments:

- Adenauer Stiftung (Chairman of the Board of Trustees)

- PJSC LUKOIL1

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)

Marion Weckes2

Dormagen

Head of Unit

Institut für Mitbestimmung und Unternehmensführung

der Hans-Böckler-Stiftung

Year of birth: 1975

Member since 20 April 2016

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 SE5

• 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

Deputy Chairman of IG Bergbau, Chemie, Energie

Year of birth: 1961

Member since 1 July 2014

Other appointments:

• CHEMIE Pensionsfonds AG (Chairman)

• Lanxess AG1

• Lanxess Deutschland GmbH

• RAG AG

• RWE Generation SE5

• RWE Power AG5

- KSBG Kommunale Verwaltungsgesellschaft GmbH

• 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 until 18 September 2019.
4 Information valid as of the date of retirement.
5 Office within the Group.

209

Supervisory Board Committees

Executive Committee of the Supervisory Board

Audit Committee

Dr. Werner Brandt (Chairman)

Frank Bsirske

Sandra Bossemeyer

Anja Dubbert

Matthias Dürbaum

Prof. Dr. Hans-Peter Keitel

Dagmar Mühlenfeld

Dr. Wolfgang Schüssel

Dr. Erhard Schipporeit (Chairman)

Michael Bochinsky

Mag. Dr. h. c. Monika Kircher

Ullrich Sierau

Ralf Sikorski

Marion Weckes

Nomination Committee

Dr. Werner Brandt (Chairman)

Mediation Committee in accordance with Section 27,

Prof. Dr. Hans-Peter Keitel

Paragraph 3 of the German Co-Determination Act

Peter Ottmann

Dr. Werner Brandt (Chairman)

Frank Bsirske

Dr. Wolfgang Schüssel

Ralf Sikorski

Personnel Affairs Committee

Dr. Werner Brandt (Chairman)

Frank Bsirske

Harald Louis

Peter Ottmann

Dr. Wolfgang Schüssel

Leonhard Zubrowski

Strategy Committee

Dr. Werner Brandt (Chairman)

Frank Bsirske

Prof. Dr. Hans-Peter Keitel

Günther Schartz

Ralf Sikorski

Leonhard Zubrowski

210

RWE Annual Report 2019Consolidated financial statements > Boards (part of the notes)

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 GmbH

• E.ON SE1

• RWE Generation SE5 (Chairman)

• RWE Power AG5 (Chairman)

• RWE Supply & Trading GmbH5

• TÜV Rheinland AG

- Jaeger Grund GmbH & Co. KG (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:

• RWE Generation SE5

• RWE Pensionsfonds AG5 (Chairman)

• RWE Power AG5

• RWE Supply & Trading GmbH5 (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 until 18 September 2019.
4 Information valid as of the date of retirement.
5 Office within the Group.

211

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

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

and the EU Audit Regulation (No. 537/2014, referred to

We have audited the consolidated financial statements of RWE

subsequently as “EU Audit Regulation”) in compliance with German

Aktiengesellschaft, Essen, and its subsidiaries (the Group), which

Generally Accepted Standards for Financial Statement Audits

comprise the consolidated statement of financial position as at

promulgated by the Institut der Wirtschaftsprüfer [Institute of Public

December 31, 2019, and the consolidated statement of profit or

Auditors in Germany] (IDW). We performed the audit of the

loss, the consolidated statement of comprehensive income,

consolidated financial statements in supplementary compliance

consolidated statement of changes in equity and consolidated

with the International Standards on Auditing (ISAs). Our

statement of cash flows for the financial year from January 1 to

responsibilities under those requirements, principles and standards

December 31, 2019, and notes to the consolidated financial

are further described in the “Auditor’s Responsibilities for the

statements, including a summary of significant accounting policies.

Audit of the Consolidated Financial Statements and of the Group

In addition, we have audited the group management report of

Management Report” section of our auditor’s report. We are

RWE Aktiengesellschaft, which is combined with the Company’s

independent of the group entities in accordance with the

management report, for the financial year from January 1 to

requirements of European law and German commercial and

December 31, 2019. We have not audited the content of those

professional law, and we have fulfilled our other German

parts of the group management report listed in the “Other

professional responsibilities in accordance with these requirements.

Information” section of our auditor’s report in accordance with the

In addition, in accordance with Article 10 (2) point (f) of the EU Audit

German legal requirements.

Regulation, we declare that we have not provided non-audit

In our opinion, on the basis of the knowledge obtained in the audit,

We believe that the audit evidence we have obtained is sufficient

and appropriate to provide a basis for our audit opinions on the

• the accompanying consolidated financial statements comply, in

consolidated financial statements and on the group management

services prohibited under Article 5 (1) of the EU Audit Regulation.

all material respects, with the IFRSs as adopted by the EU, and

report.

the additional requirements of German commercial law pursuant

to § [Article] 315e Abs. [paragraph] 1 HGB [Handelsgesetzbuch:

Key Audit Matters in the Audit of the Consolidated Financial

German Commercial Code] and, in compliance with these

Statements

requirements, give a true and fair view of the assets, liabilities, and

Key audit matters are those matters that, in our professional

financial position of the Group as at December 31, 2019, and of

judgment, were of most significance in our audit of the consolidated

its financial performance for the financial year from January 1 to

financial statements for the financial year January 1 to

December 31, 2019 and

December 31, 2019. These matters were addressed in the context

of our audit of the consolidated financial statements as a whole, and

• the accompanying group management report as a whole

in forming our audit opinion thereon; we do not provide a separate

provides an appropriate view of the Group’s position. In all

audit opinion on these matters.

material respects, this group management report is consistent

with the consolidated financial statements, complies with

In our view, the matters of most significance in our audit were as

German legal requirements and appropriately presents the

follows:

opportunities and risks of future development. Our audit opinion

on the group management report does not cover the content of

Deconsolidation of the discontinued operations

those parts of the group management report listed in the “Other

Business combinations

Information” section of our auditor’s report.

Accounting effects from the coal phaseout

Recoverability of goodwill

Pursuant to § 322 Abs. 3 Satz [sentence] 1 HGB, we declare that

our audit has not led to any reservations relating to the legal

Our presentation of these key audit matters has been structured in

compliance of the consolidated financial statements and of the

each case as follows:

group management report.

Matter and issue

Audit approach and findings

Reference to further information

212

RWE Annual Report 2019Consolidated financial statements > Independent auditor’s report

Hereinafter we present the key audit matters:

As part of our audit, we first assessed whether the conditions for

Deconsolidation of the discontinued operations
On March 12, 2018, RWE Aktiengesellschaft and E.ON SE

the accounting treatment of the transaction were generally

fulfilled, e.g. that the approval of the antitrust authorities for the

execution of the transaction was obtained, and whether the

(hereinafter E.ON SE and its subsidiaries are abbreviated as

conditions for deconsolidation in compliance with IFRS 10 were

“E.ON”) agreed to divestments and acquisitions of business

met. We then assessed which assets should be included in the

operations. It stipulates the following, among other items:

deconsolidation. For this purpose, we reviewed the contractual

RWE AG will transfer its entire stake in innogy SE (innogy)

agreements with E.ON and assessed the underlying IT concept

(76.8 %) to E.ON. In return, the renewable energy business and

for executing the deconsolidation and its implementation in the

the gas storage activities of innogy as well as the investment in

consolidation system. On this basis, we also assessed whether

KELAG-Kärntner Elektrizitäts-AG/Kärntner Energieholding

the separation of the assets of VSEH to be deconsolidated and

Beteiligungs GmbH, Klagenfurt/Austria, will be returned to the

the assets not to be deconsolidated was performed

Group. The renewable energy business of E.ON will also be

appropriately.

transferred to RWE. Since June 30, 2018, RWE Aktiengesellschaft

has accounted for the operations of innogy to be transferred on

We also assessed the appropriateness of the methods and

a long-term basis to E.ON – essentially the grid and retail

calculations used in the deconsolidation in accordance with

business – as discontinued operations in accordance with IFRS 5.

IFRS 10 and the amount of the equity value of the assets given

up for the discontinued operations as of September 18, 2019.

Following regulatory approval by the antitrust authorities, the

Furthermore, we reviewed the amount of the consideration

first partial transaction took place on September 18, 2019 with

received on the basis of agreements and other correspondence

the sale of the innogy shares. The discontinued operations were

with E.ON as well as calculations of the Company and in particular

therefore– with the retention of the relatively insignificant share

considered the allocation between the deconsolidation

in the Slovakian electricity and gas supplier Východoslovenská

calculation and the calculation for derecognition of minority

energetika Holding a.s. (VSEH), which will probably be transferred

interests for the renewable energy business. In addition, we

to E.ON in 2020 – deconsolidated.

assessed the determination of the assets and liabilities

(especially derivatives) for transactions now restored to an

The equity value of the assets given in the amount of about

external outside-the-group basis and assessed their recognition

€3.5 billion was offset by a fair value of the consideration

and measurement in the consolidated balance sheet.

received of approximately €12.8 billion. Taking into account

further technical deconsolidation effects (primarily:

In addition and in connection with the assumption of the sole

reclassification of the other earnings attributable to the

control of RWE over the renewable energy business of innogy,

deconsolidated subsidiaries (so-called “Recycling”) to the

we assessed whether the carrying value of the former minority

income statement and restoring the transactions that were

interests, which existed at the innogy SE level, was appropriately

previously considered intercompany to a new external

derecognized against retained earnings with no effect on profit

outside-the-group basis with respect to innogy), a

or loss.

deconsolidation profit was generated in the total amount of

€8.1 billion. The profit is reported in the result from discontinued

In our view, the estimates applied and assumptions made by

operations.

the executive directors regarding the deconsolidation of the

discontinued operations are sufficiently documented and

At the same time of the deconsolidation of the grid and retail

justified and result in a fair presentation in the consolidated

business, RWE acquired the sole control over the renewable

financial statements overall.

energy business of innogy. The carrying value (€607 million) of

the previous minority interests of the renewable energy

The disclosures required under IFRS 5 up until deconsolidation

business, that existed at the level of innogy SE, was accordingly

are contained in the notes to the consolidated financial

derecognized against the retained earnings (reduction to

statements in the section “Disposals and discontinued

retained earnings: €347 million) as of September 18, 2019 with

operations”. Explanations about the divestment are also given in

no effect on profit or loss.

this section. In addition, information from the Group concerning

the transaction in general can be found in the section “Strategy

The deconsolidation was of particular significance in the

and Structure” of the Group Management Report.

context of our audit due to the complexity of the contractual

agreements and accounting provisions as well as the overall

material effects of the transaction on the assets, liabilities,

financial position and financial performance of the RWE Group.

213

Business combinations

Overall, we were able to satisfy ourselves that the accounting

On March 12, 2018, RWE Aktiengesellschaft and E.ON SE

presentation of the acquisition of the renewable energy

(hereinafter E.ON SE and its subsidiaries are abbreviated as

business is appropriately made on the basis of the preliminary

“E.ON”) agreed to divestments and acquisitions of business

results of the purchase price allocation and is sufficiently

operations. It stipulates the following, among other items:

documented.

RWE AG will transfer its entire stake in innogy SE (innogy) (76.8 %)

to E.ON. In return, the renewable energy business and the gas

The disclosures required under IFRS 3 concerning business

storage activities of innogy as well as the investment in

combinations are contained in the notes to the consolidated

KELAG-Kärntner Elektrizitäts-AG/Kärntner Energieholding

financial statements in the section “Acquisitions”. In addition,

Beteiligungs GmbH, Klagenfurt/Austria, will remain in the

information from the Group concerning the transaction in

RWE Group. The renewable energy business of E.ON will also

general can be found in the section “Strategy and Structure” of

be transferred to RWE.

the Group Management Report.

The economic and legal transfer of the renewable energy

Accounting effects from the coal phaseout

business from E.ON to RWE, which is accounted for as a business

In 2019, political developments in Germany and the

combination under IFRS 3, took place in September 2019. The

Netherlands progressed further, which further specified the

first-time consolidation occurred on September 18, 2019. The

termination of coal-fired power generation in both countries.

preliminary purchase price (taking into account purchase price

This applies to the use of black coal and, in Germany, also to

adjustments) amounted to €3,593 million. The identified assets

brown coal (lignite) for electricity generation and the

acquired and the liabilities assumed of the renewable energy

decommissioning of the corresponding surface lignite mines

business from E.ON were recognized at their fair values at the

(hereinafter collectively referred to as “coal phaseout”).

date of acquisition. Including acquired net assets of

€2,940 million, goodwill arose in the amount of €653 million.

Due to the shorter operating lives of black coal and lignite-fired

The fair values and the goodwill are preliminary because the

power plants, impairment charges were recognized on property,

purchase price allocation has not yet been fully completed as of

plant and equipment in the total amount of €1,540 million. The

December 31, 2019.

recoverability of the power plant assets was reviewed on the

basis of their fair values less costs of disposal. The fair values of

The purchase price allocation was of particular significance in

the respective power plants assets were determined by the

the context of our audit due to the complexity of the contractual

Company as the present values of future cash flows using

agreements and accounting provisions.

discounted cash flow models. This was based on the planning

As part of our audit of the presentation of the acquisition of the

renewable energy business from E.ON, we first gained an

projections prepared by the executive directors, which include
long-term assumptions regarding electricity, coal and CO2
certificate prices and planned power plant operating times. The

understanding of the underlying contractual stipulations and,

results from these valuations depends to a large extent on the

among other items, the determination of the closing date for

planning assumptions and the estimates of the future cash

the acquisition of control and the preliminary purchase price.

inflows made by the executive directors as well as on the

On this basis, we assessed the opening balance sheet of the

discount rates used in the valuation models. The amount of the

underlying business combination. To this end, we assessed the

impairment charges was also impacted by the fact that the

recognition and measurement of the assets and liabilities. This

definition of cash-generating units for power plants changed.

included their identification, the application of uniform

accounting policies and the recognition of the preliminary fair

The coal phaseout was also a major reason for the increase in

values at the date of first-time consolidation. In this context, we

the provisions for loss-making power purchase agreements.

assessed in particular the preliminary fair values calculated

The consideration of the shorter terms of the coal-fired power

with the support of an external expert from RWE. Among other

plants associated with the individual contracts resulted in the

items, we assessed the models underlying the valuations and

fact that the expected positive value contributions in later years

the valuation parameters and assumptions applied. The

of the contract terms no longer applied. The provisions for

assessment covered in particular the examination of the

loss-making power purchase agreements increased in 2019 by

methodology and mathematical accuracy of the valuation

€225 million year-on-year.

models. In addition, we assessed the costs of capital applied. We

also reviewed the technical implementation of the first-time

consolidation and the derivation of the preliminary goodwill.

214

RWE Annual Report 2019

Consolidated financial statements > Independent auditor’s report

Due to the coal phaseout, additional provisions had to be

rates applied and the escalation rates used in the measurement

increased or recognized for the first time by a total of

of the provisions for recultivation can in some cases have a

€2,262 million. This mainly relates to the increase in provisions

material impact on the amount of the fair value less costs of

for recultivation. In order to determine the settlement amount,

disposal or settlement amount calculated using this method,

the expected future disbursements are first escalated at the

we also evaluated the parameters used to determine the

closing date prices using the expected rates of price increase

discount rates and escalation rates and assessed the

and then discounted using an appropriate discount rate. This

respective measurement model. We reviewed the appraisals

was based on the recultivation plans drawn up by the executive

prepared by external experts and assessed their usability by,

directors with the assistance of reports prepared by external

among other items, assessing and checking the plausibility of

expert appraisers. The escalation rate and discount rate were

the premises contained in the appraisals. We also assessed that

adjusted in the financial year to reflect the earlier incurrence of

the capitalization of the compensation claim is appropriate in

expenditure due to the coal phaseout and the market interest

terms of reason and amount.

rate level in that period.

The result from the measurement of the provisions depends to

directors of the underlying accounting treatment of the coal

a large extent on the planning assumptions and the estimates

phaseout are sufficiently justified and documented. Overall, the

of the executive directors regarding the amount and the timing

measurement parameters and assumptions used by the

of future cash outflows as well as the escalation rates and

executive directors are in line with our expectations and are also

discount rates used in the valuation models.

within the ranges considered by us to be reasonable.

In our view, the estimates and assumptions of the executive

Due to the connection between the lignite phaseout and the

related compensation, RWE recognized the compensation

The information provided by the Company on the impact of the
coal phaseout in Germany and the Netherlands is contained in

amount of €2,600 million provided by the German government

the notes to the consolidated financial statements under

as a reimbursement or indemnification claim for increased or

section “Notes to the income statement” in note “(5)

newly arising obligations and for impairment charges and

Depreciation, amortization and impairment losses” and in

reported it under other assets.

section “Notes to the balance sheet” in note “(15) Other

receivables and other assets” and in note “(22) Provisions”.

The accounting presentation of the fixed or expected effects of

Supplementary information can also be found in section

the coal phaseout on the basis of measures taken in 2019 and

“Political environment” of the Group Management Report.

on the basis of its accountability to be ascertained has a

significant impact on the assets, liabilities and financial

Recoverability of goodwill

performance of the RWE group. In addition, the assessment of

In the consolidated financial statements of RWE Aktien-

the impact is subject to considerable uncertainty and is

gesellschaft, goodwill amounting to €2.4 billion (3.7 % of

complex. In this context, this matter was of particular

consolidated total assets) (prior year: €1.7 billion or 2 % of

significance for our audit.

As part of our audit, we first assessed whether the conditions for
accounting of the coal phaseout were basically met. We then

consolidated total assets) is reported under the balance sheet

item “Intangible assets”. In addition to the goodwill of the

cash-generating units “innogy – continuing operations” and

“supply & trading”, this item includes the newly acquired business

assessed which assets could be impaired or which obligations

value of “operations acquired from E.ON” for the first time as of

could be increased in value and which obligations and claims

December 31, 2019.

should be recognized for the first time.

Goodwill is tested for impairment (“impairment test”) annually or

In our audit of the measurement of the power plant assets as

when there are indications of impairment, to determine any

well as the provisions for existing or newly incurred obligations,

possible need for write-downs. The carrying amounts of the

we have, among other items, assessed the methodology for

relevant cash-generating units, including goodwill, are

carrying out the measurements and assessed the calculations

compared with the corresponding recoverable amounts in the

of the discount rates and escalation rates. We also assessed

context of the impairment tests. The recoverable amount is

whether the future cash inflows and outflows of the underlying

generally calculated on the basis of fair value less costs of

measurements in connection with the discount rates and

disposal. The impairment tests are performed at the level of the

escalation rates used, form an appropriate basis for the

cash-generating units or groups of cash-generating units to

measurement overall. We assessed the appropriateness of the

which the respective goodwill is allocated. The measurements to

future cash flows used in the calculations by comparing these

calculate the fair value less costs of disposal carried out for the

figures with the planning projections or recultivation plans

purposes of the impairment tests are based on the present

prepared by the executive directors and by reconciling them

values of the future cash flows derived from the planning

with general and sector-specific market expectations. In the

projections for the next three years (medium-term plan)

knowledge that even relatively small changes in the discount

prepared by the executive directors and acknowledged by the

215

supervisory board. In doing so, expectations relating to future

Other information

market developments and country-specific assumptions about

The executive directors are responsible for the other information.

the performance of macroeconomic indicators are also taken

The other information comprises the following non-audited parts of

into account. Present values are calculated using discounted

the group management report:

cash flow models. The discount rate applied is the weighted

average cost of capital for the relevant cash-generating unit.

• the statement on corporate governance pursuant to § 289f HGB

The impairment test did not result in the recognition of a

and § 315d HGB included in section 1.8 of the group

write-down. The outcome of these valuations is dependent to a

management report

large extent on the estimates made by the executive directors

of the future cash inflows of the cash-generating units, and on

• the separate non-financial group report pursuant to § 315b

the respective discount rates and rates of growth employed as

Abs. 3 HGB

well as on further assumptions. The valuation is therefore

subject to considerable uncertainty. Against this background

The other information comprises further the remaining parts of the

and due to the underlying complexity of the valuation, this

annual report – excluding cross-references to external information

matter was of particular significance in the context of our audit.

– with the exception of the audited consolidated financial

statements, the audited group management report and our

As part of our audit, we evaluated the methodology used for the

auditor’s report.

purpose of performing the impairment tests and assessed the

calculation of the weighted average cost of capital, among

Our audit opinions on the consolidated financial statements and on

other items. In addition, we assessed whether the future cash

the group management report do not cover the other information,

inflows underlying the measurements together with the

and consequently we do not express an audit opinion or any other

weighted cost of capital used represent an appropriate basis for

form of assurance conclusion thereon.

the impairment tests overall. We evaluated the appropriateness

of the future cash inflows used in the calculations, among other

In connection with our audit, our responsibility is to read the other

items, by comparing this data with the Group’s medium-term

information and, in so doing, to consider whether the other

plan and by reconciling it against general and sector-specific

information

market expectations. In this context, we also assessed whether

the costs of Group functions were properly included in the

•

is materially inconsistent with the consolidated financial

respective cash-generating unit. In the knowledge that even

statements, with the group management report or our knowledge

relatively small changes in the discount rate applied can in

obtained in the audit, or

some cases have a material impact on the fair value less costs

of disposal calculated using this method, we also evaluated the

• otherwise appears to be materially misstated.

parameters used to determine the discount rate applied and

assessed the measurement model. Furthermore, we evaluated

If, based on the work we have performed, we conclude that there is a

the sensitivity analyses performed by the Company in order to

material misstatement of this other information, we are required to

evaluate any impairment risk (carrying amount higher than

report that fact. We have nothing to report in this regard.

recoverable amount) in the event of a reasonably possible

change in a material assumption underlying the measurement.

Overall, the measurement parameters and assumptions used

by the executive directors are in line with our expectations and

are also within the ranges considered by us to be reasonable.

The Company’s disclosures relating to goodwill are contained in
the notes to the consolidated financial statements in section

“Notes to the Balance Sheet” in note “(10) Intangible assets”.

216

RWE Annual Report 2019
Consolidated financial statements > Independent auditor’s report

Responsibilities of the Executive Directors and the Supervisory

Reasonable assurance is a high level of assurance, but is not a

Board for the Consolidated Financial Statements and the Group

guarantee that an audit conducted in accordance with § 317 HGB

Management Report

and the EU Audit Regulation and in compliance with German

The executive directors are responsible for the preparation of the

Generally Accepted Standards for Financial Statement Audits

consolidated financial statements that comply, in all material

promulgated by the Institut der Wirtschaftsprüfer (IDW) and

respects, with IFRSs as adopted by the EU and the additional

supplementary compliance with the ISAs will always detect a

requirements of German commercial law pursuant to § 315e Abs. 1

material misstatement. Misstatements can arise from fraud or error

HGB and that the consolidated financial statements, in compliance

and are considered material if, individually or in the aggregate, they

with these requirements, give a true and fair view of the assets,

could reasonably be expected to influence the economic decisions

liabilities, financial position, and financial performance of the Group.

of users taken on the basis of these consolidated financial

In addition, the executive directors are responsible for such internal

statements and this group management report.

control as they have determined necessary to enable the

preparation of consolidated financial statements that are free

We exercise professional judgment and maintain professional

from material misstatement, whether due to fraud or error.

skepticism throughout the audit. We also

In preparing the consolidated financial statements, the executive

•

Identify and assess the risks of material misstatement of the

directors are responsible for assessing the Group’s ability to

consolidated financial statements and of the group management

continue as a going concern. They also have the responsibility for

report, whether due to fraud or error, design and perform audit

disclosing, as applicable, matters related to going concern. In

procedures responsive to those risks, and obtain audit evidence

addition, they are responsible for financial reporting based on the

that is sufficient and appropriate to provide a basis for our audit

going concern basis of accounting unless there is an intention to

opinions. The risk of not detecting a material misstatement

liquidate the Group or to cease operations, or there is no realistic

resulting from fraud is higher than for one resulting from error, as

alternative but to do so.

fraud may involve collusion, forgery, intentional omissions,

misrepresentations, or the override of internal control.

Furthermore, the executive directors are responsible for the

preparation of the group management report that, as a whole,

• Obtain an understanding of internal control relevant to the audit

provides an appropriate view of the Group’s position and is, in all

of the consolidated financial statements and of arrangements

material respects, consistent with the consolidated financial

and measures (systems) relevant to the audit of the group

statements, complies with German legal requirements, and

management report in order to design audit procedures that are

appropriately presents the opportunities and risks of future

appropriate in the circumstances, but not for the purpose of

development. In addition, the executive directors are responsible

expressing an audit opinion on the effectiveness of these 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

to events or conditions that may cast significant doubt on the

financial statements and of the group management report.

Group’s ability to continue as a going concern. If we conclude that

a material uncertainty exists, we are required to draw attention in

Auditor’s Responsibilities for the Audit of the Consolidated

the auditor’s report to the related disclosures in the consolidated

Financial Statements and of the Group Management Report

financial statements and in the group management report or, if

Our objectives are to obtain reasonable assurance about whether

such disclosures are inadequate, to modify our respective audit

the consolidated financial statements as a whole are free from

opinions. Our conclusions are based on the audit evidence

material misstatement, whether due to fraud or error, and whether

obtained up to the date of our auditor’s report. However, future

the group management report as a whole provides an appropriate

events or conditions may cause the Group to cease to be able to

view of the Group’s position and, in all material respects, is

continue as a going concern.

consistent with the consolidated financial statements and the

knowledge obtained in the audit, complies with the German legal

• Evaluate the overall presentation, structure and content of the

requirements and appropriately presents the opportunities and

consolidated financial statements, including the disclosures, and

risks of future development, as well as to issue an auditor’s report

whether the consolidated financial statements present the

that includes our audit opinions on the consolidated financial

underlying transactions and events in a manner that the

statements and on the group management report.

consolidated financial statements give a true and fair view of the

217

assets, liabilities, financial position and financial performance of

We communicate with those charged with governance regarding,

the Group in compliance with IFRSs as adopted by the EU and the

among other matters, the planned scope and timing of the audit

additional requirements of German commercial law pursuant to

and significant audit findings, including any significant deficiencies

§ 315e Abs. 1 HGB.

in internal control that we identify during our audit.

• Obtain sufficient appropriate audit evidence regarding the

We also provide those charged with governance with a statement

financial information of the entities or business activities within

that we have complied with the relevant independence

the Group to express audit opinions on the consolidated financial

requirements, and communicate with them all relationships and

statements and on the group management report. We are

other matters that may reasonably be thought to bear on our

responsible for the direction, supervision and performance of the

independence, and where applicable, the related safeguards.

group audit. We remain solely responsible for our audit opinions.

From the matters communicated with those charged with

• Evaluate the consistency of the group management report with

governance, we determine those matters that were of most

the consolidated financial statements, its conformity with

significance in the audit of the consolidated financial statements

German law, and the view of the Group’s position it provides.

of the current period and are therefore the key audit matters. We

• Perform audit procedures on the prospective information

regulation precludes public disclosure about the matter.

describe these matters in our auditor’s report unless law or

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.

218

RWE Annual Report 2019Consolidated financial statements > Independent auditor’s report

Other legal and regulatory requirements

Further Information pursuant to Article 10 of the EU Audit

Regulation

We were elected as group auditor by the annual general meeting on

May 3, 2019. We were engaged by the supervisory board on

May 6, 2019. We have been the group auditor of RWE Aktien-

gesellschaft, 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 2020

PricewaterhouseCoopers GmbH

Wirtschaftsprüfungsgesellschaft

Michael Reuther

Wirtschaftsprüfer

Ralph Welter

Wirtschaftsprüfer

(German Public Auditor)

219

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 six previous audits of RWE.

220

RWE Annual Report 2019Five-year overview

Five-year overview

Key figures of the RWE Group1

External revenue
(excluding natural gas tax/electricity tax)

Income

Adjusted EBITDA

Adjusted EBIT

Income before tax

Net income /RWE AG shareholders’ share in income

Earnings per share

Cash flow

2019

2018

2017

2016

2015

€ million

13,125

13,406

13,822

43,590

45,848

€ million

€

2,489

1,267

– 752

8,498

13.82

1,538

619

335

0.54

2,149

1,170

5,403

3,082

2,056

– 5,807

1,900

– 5,710

7,017

3,837

– 637

– 170

3.09

– 9.29

– 0.28

Cash flows from operating activities

€ million

– 977

4,611

– 3,771

2,352

3,339

Free cash flow

Asset /capital structure

Non-current assets

Current assets

Balance sheet equity

Non-current liabilities

Current liabilities

Balance sheet total

Equity ratio

Net debt

€ million

– 2,053

3,439

– 4,439

809

441

€ million

35,951

18,595

45,694

45,911

51,453

€ million

28,241

61,513

23,365

30,491

27,881

€ million

17,448

14,257

11,991

7,990

8,894

€ million

27,018

20,007

36,774

39,646

45,315

€ million

19,726

45,844

20,294

28,766

25,125

€ million

64,192

80,108

69,059

76,402

79,334

27.2

17.8

17.4

10.5

11.2

€ million

9,298

19,339

20,227

22,709

25,463

Net debt of continuing operations

€ million

9,066

4,389

–

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

19,792

17,748

59,547

58,652

59,762

€ million

182

165

101

million
metric tons

metric tons/
MWh

88.1

118.0

131.8

148.3

150.8

1.1

1.3

4.5

5.6

86.0

115.6

129.1

142.6

143.9

0.575

0.670

0.658

0.686

0.708

1 The comparability of some of the figures for various fiscal years is limited due to changes in reporting.
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.

221

Imprint

RWE Aktiengesellschaft

Altenessener Strasse 35

45141 Essen

Germany

Phone

+49 201 5179-0

Fax

+49 201 5179-5005

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

Phone

+49 201 12-23986

Fax

+49 201 12-22115

Typesetting and production

MPM Corporate Communication Solutions,

Mainz, Düsseldorf, Germany

www.mpm.de

Design concept and layout

Scholz & Friends Düsseldorf GmbH

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

For annual reports, interim reports, interim statements and

further information on RWE, please visit us on the internet at

RWE is a member of DIRK –

www.rwe.com.

the German Investor Relations Association.

This annual report was published on 12 March 2020. This is a

translation of the German annual report. In case of divergence

from the German version, the German version shall prevail.

222

RWE Annual Report 2019Further information

Financial Calendar
2020/2021

12 March 2020

Capital Market Day

28 April 2020

29 April 2020

4 May 2020

14 May 2020

Annual General Meeting

Ex-dividend date

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

16 March 2021

Annual report for fiscal 2020

28 April 2021

29 April 2021

3 May 2021

12 May 2021

Annual General Meeting

Ex-dividend date

Dividend payment

Interim statement on the first quarter of 2021

12 August 2021

Interim report on the first half of 2021

11 November 2021

Interim statement on the first three quarters of 2021

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
www.rwe.com