RWE annual Report 2011

FiNaNCial CalENdar 2012/2013

19 April 2012

Annual General Meeting

20 April 2012

Dividend payment

10 May 2012

Interim report for the first quarter of 2012

14 August 2012

Interim report for the first half of 2012

14 November 2012

Interim report for the first three quarters of 2012

5 March 2013

Annual report for fiscal 2012

18 April 2013

Annual General Meeting

19 April 2013

Dividend payment

15 May 2013

Interim report for the first quarter of 2013

14 August 2013

Interim report for the first half of 2013

14 November 2013

Interim report for the first three quarters of 2013

annual RepoRT 2011

2011 kEY FigurES aT a glaNCE.

Heavy burden on earnings through accelerated nuclear phase-out in Germany

Operating result of 5.8 billion
Dividend of 2.00 per share proposed
First measures for securing financial strength implemented
Outlook for 2012: Operating result in the order of last years level despite divestments
RWE Group

5.3

322.2

395.4

18.5

million

51,686

53,320

3.1

EBITDA

million

8,460

10,256

17.5

Operating result

million

5,814

7,681

24.3

Income before tax

million

3,024

4,978

39.3

Net income/RWE AG shareholders' share in income

million

1,806

3,308

45.4

Recurrent net income

million

2,479

3,752

33.9

10.9

14.4

Weighted average cost of capital (WACC) before tax

8.5

9.0

million

1,286

2,876

55.3

Capital employed

million

53,279

53,386

0.2

Cash flows from operating activities

million

5,510

5,500

0.2

Capital expenditure
Property, plant and equipment and intangible assets
Financial assets
Number of shares outstanding (average)

million

7,072

6,643

6.5

million

6,353

6,379

0.4

million

719

264

172.3

million

843

879

4.1

thousands

538,971

533,559

1.0

Earnings per share

3.35

6.20

46.0

Recurrent net income per share

4.60

7.03

34.6

Dividend per share

2.001

3.50

42.9

31 Dec 2011

31 Dec 2010

29,948

28,964

3.4

72,068

70,856

1.7

Net debt of the RWE Group

Workforce

T +49 201 12-00

F +49 201 12-15199
I [Link]

311.2

billion kWh

Value added

STarTiNg NEw CHapTErS.

294.6

External gas sales volume

Free cash flow

The Annual General Meeting and all events concerning the publication of the financial reports are broadcast live on the internet and recorded.
We will keep the recordings on our website for at least twelve months.

+ /
%

billion kWh

Return on capital employed (ROCE)

Opernplatz 1
45128 Essen
Germany

2010

External electricity sales volume

External revenue

RWE Aktiengesellschaft

2011

million

1 Dividend proposal for RWE AGs 2011 fiscal year, subject to approval by the 19 April 2012 Annual General Meeting.
2 Converted to full-time positions.

RWE annual Report 2011

FiNaNCial CalENdar 2012/2013

19 April 2012

Annual General Meeting

20 April 2012

Dividend payment

10 May 2012

Interim report for the first quarter of 2012

14 August 2012

Interim report for the first half of 2012

14 November 2012

Interim report for the first three quarters of 2012

5 March 2013

Annual report for fiscal 2012

18 April 2013

Annual General Meeting

19 April 2013

Dividend payment

15 May 2013

Interim report for the first quarter of 2013

14 August 2013

Interim report for the first half of 2013

14 November 2013

Interim report for the first three quarters of 2013

annual RepoRT 2011

2011 kEY FigurES aT a glaNCE.

Heavy burden on earnings through accelerated nuclear phase-out in Germany

Operating result of 5.8 billion
Dividend of 2.00 per share proposed
First measures for securing financial strength implemented
Outlook for 2012: Operating result in the order of last years level despite divestments
RWE Group

5.3

322.2

395.4

18.5

million

51,686

53,320

3.1

EBITDA

million

8,460

10,256

17.5

Operating result

million

5,814

7,681

24.3

Income before tax

million

3,024

4,978

39.3

Net income/RWE AG shareholders' share in income

million

1,806

3,308

45.4

Recurrent net income

million

2,479

3,752

33.9

10.9

14.4

Weighted average cost of capital (WACC) before tax

8.5

9.0

million

1,286

2,876

55.3

Capital employed

million

53,279

53,386

0.2

Cash flows from operating activities

million

5,510

5,500

0.2

Capital expenditure
Property, plant and equipment and intangible assets
Financial assets
Number of shares outstanding (average)

million

7,072

6,643

6.5

million

6,353

6,379

0.4

million

719

264

172.3

million

843

879

4.1

thousands

538,971

533,559

1.0

Earnings per share

3.35

6.20

46.0

Recurrent net income per share

4.60

7.03

34.6

Dividend per share

2.001

3.50

42.9

31 Dec 2011

31 Dec 2010

29,948

28,964

3.4

72,068

70,856

1.7

Net debt of the RWE Group

Workforce

T +49 201 12-00

F +49 201 12-15199
I [Link]

311.2

billion kWh

Value added

STarTiNg NEw CHapTErS.

294.6

External gas sales volume

Free cash flow

The Annual General Meeting and all events concerning the publication of the financial reports are broadcast live on the internet and recorded.
We will keep the recordings on our website for at least twelve months.

+ /
%

billion kWh

Return on capital employed (ROCE)

Opernplatz 1
45128 Essen
Germany

2010

External electricity sales volume

External revenue

RWE Aktiengesellschaft

2011

million

1 Dividend proposal for RWE AGs 2011 fiscal year, subject to approval by the 19 April 2012 Annual General Meeting.
2 Converted to full-time positions.

The RWE Group

How we have organised ourselves.

What we do.

RWE is one of Europes five leading electricity and gas companies. Through our
expertise in oil, gas and lignite production, the construction and operation of
conventional and renewables-based power plants, commodities trading as well as
electricity and gas transmission and sales, we cover the entire energy value chain.
Some 72,000 employees supply almost 17 million customers with electricity and
nearly 8 million customers with gas via our fully consolidated companies. In fiscal
2011, we recorded just below 52 billion in revenue.

CONTENTS

Five-year overview
RWE Group

Power
Generation
RWE Power

Europe is our market: RWE is the No. 1 power producer in Germany, No. 2 in the
Netherlands, and No. 3 in the UK. We continuously expand our position in Central
Eastern and South Eastern Europe.

Netherlands/
Belgium

United
Kingdom

Sales/
Distribution
Networks
RWE
Deutschland

Essent

RWE npower

Central
Eastern and
South Eastern
Europe

RWE East

Renewables

RWE Innogy

Upstream
Gas&Oil

RWE Dea

Trading/Gas
Midstream

RWE Supply
& Trading

Five-Year Overview
Fold-Out Table of contents

Germany

The RWE Group

RWE AG

NET4GAS
Gas transmission system operator in the Czech Republic
(unbundled)

12,239

11,904

10,382

650

2,064

million

29,948

28,964

25,787

18,659

16,514

3.5

2.8

2.8

2.1

2.1

Leverage factor
Workforce
Workforce at the end of the year

70,856

70,726

65,908

63,439

146

149

110

105

74

410

360

350

330

270

Internal services
RWE Consulting
RWE IT
RWE Service
RWE Technology

The energy to lead with smart solutions.

To our investors
Letter from the CEO
The RWE Executive Board
2011 in brief
RWE on the capital market

16
20
22
24

Research & development

R&D costs

million

R&D employees
CO2 emissions

million metric tons

162

165

149

172

187

Free allocation of CO2 certificates

million metric tons

117

115

105

105

170

Shortage of CO2 certificates

million metric tons

45

50

44

67

17

metric tons/MWh

0.787

0.732

0.796

0.768

0.866

2011

2010

2009

2008

2007

Specific CO2 emissions

Dividend payment

million

1,2293

1,867

1,867

2,401

1,689

Dividend per share

2.003

3.50

3.50

4.50

3.15

billion

16.6

28.0

38.0

35.4

53.5

Moodys

A3

A2

A2

A1

A1

Outlook

negative

negative

negative

negative

stable

A+

negative

negative

negative

stable

negative

Market capitalisation
Market capitalisation at the end of the year

1 Since 2008, EBITDA has also included operating income from investments.
2 Converted to full-time positions.
3 Proposed dividend for RWE AGs 2011 fiscal year, subject to approval by the 19 April 2012 Annual General Meeting.

Customers

3.0

Responsibility statement

124

4.0
4.1
4.2

4.3
4.4
4.5
4.6
4.7
4.8

4.9

Consolidated financial statements

Income statement
Statement of recognised income
and expenses
Balance sheet
Cash flow statement
Statement of changes in equity
Notes
Boards (part of the notes)
List of shareholdings
(part of the notes)
Independent auditors report

125
126
127

1.0
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8

1.9

1.10
1.11


1.12

Review of operations
Strategy
Economic environment
Political environment
Major events
Commentary on the segments
Business performance
Financial position and net worth
Notes to the financial statements
of RWE AG (holding company)
Disclosure relating to German
takeover law

29
30
36
43
46
49
51
73
78
80

Further information
Organisation chart of the RWE Group
Glossary
Index
Imprint

Innovation
Development of risks and opportunities
including the report on the internal
control and risk management system
Outlook

83
87

Five-year overview
Financial calendar 2012/2013

2.0

Our responsibility
Supervisory Board report
Corporate governance
Compensation report
(part of the review of operations)

101
102
106
109

Workforce
Sustainability

116
118

96

Long-term credit rating

Power generation
Electricity and
gas sales

72,068

Dividend/dividend payment

ELECTRICITY and GAS: RWE OFFERS EVERYTHING

FROM A SINGLE SOURCE.
Electricity and
gas networks

2007

million

Outlook

Energy trading/
gas midstream

2008

Net debt of the RWE Group

Standard & Poors

Renewable
energy

2009

Net financial debt

Five-year overview
RWE Aktiengesellschaft

We operate in a dynamic market environment that is characterised by highly volatile

prices, changing structures, ambitious climate protection goals and increasing
political and regulatory intervention. Our response is a three-dimensional corporate
strategy: RWE is becoming more sustainable, more international, and more robust.

Conventional
generation

2010

Emissions balance

Our power plant portfolio and our investment programme for building efficient,
environmentally friendly and flexible generation capacity are the main basis
forgrowing earnings in the future. We invest billions in this every year. Meanwhile,
we are one of Europes biggest investors in offshore wind farms. Our leading
position in energy trading helps us make optimal use of our power plants on the
market. Wereact to changing customer needs by offering new products for homes,
commerce and industry. Climate protection and energy efficiency are becoming
increasingly important for our customers, too.

Gas and oil

production

2011

2.1
2.2
2.3

2.4
2.5

128
129
130
131
191
196
224

226
227
230
231

The RWE Group

How we have organised ourselves.

What we do.

RWE is one of Europes five leading electricity and gas companies. Through our
expertise in oil, gas and lignite production, the construction and operation of
conventional and renewables-based power plants, commodities trading as well as
electricity and gas transmission and sales, we cover the entire energy value chain.
Some 72,000 employees supply almost 17 million customers with electricity and
nearly 8 million customers with gas via our fully consolidated companies. In fiscal
2011, we recorded just below 52 billion in revenue.

CONTENTS

Five-year overview
RWE Group

Power
Generation
RWE Power

Europe is our market: RWE is the No. 1 power producer in Germany, No. 2 in the
Netherlands, and No. 3 in the UK. We continuously expand our position in Central
Eastern and South Eastern Europe.

Netherlands/
Belgium

United
Kingdom

Sales/
Distribution
Networks
RWE
Deutschland

Essent

RWE npower

Central
Eastern and
South Eastern
Europe

RWE East

Renewables

RWE Innogy

Upstream
Gas&Oil

RWE Dea

Trading/Gas
Midstream

RWE Supply
& Trading

Five-Year Overview
Fold-Out Table of contents

Germany

The RWE Group

RWE AG

NET4GAS
Gas transmission system operator in the Czech Republic
(unbundled)

12,239

11,904

10,382

650

2,064

million

29,948

28,964

25,787

18,659

16,514

3.5

2.8

2.8

2.1

2.1

Leverage factor
Workforce
Workforce at the end of the year

70,856

70,726

65,908

63,439

146

149

110

105

74

410

360

350

330

270

Internal services
RWE Consulting
RWE IT
RWE Service
RWE Technology

The energy to lead with smart solutions.

To our investors
Letter from the CEO
The RWE Executive Board
2011 in brief
RWE on the capital market

16
20
22
24

Research & development

R&D costs

million

R&D employees
CO2 emissions

million metric tons

162

165

149

172

187

Free allocation of CO2 certificates

million metric tons

117

115

105

105

170

Shortage of CO2 certificates

million metric tons

45

50

44

67

17

metric tons/MWh

0.787

0.732

0.796

0.768

0.866

2011

2010

2009

2008

2007

Specific CO2 emissions

Dividend payment

million

1,2293

1,867

1,867

2,401

1,689

Dividend per share

2.003

3.50

3.50

4.50

3.15

billion

16.6

28.0

38.0

35.4

53.5

Moodys

A3

A2

A2

A1

A1

Outlook

negative

negative

negative

negative

stable

A+

negative

negative

negative

stable

negative

Market capitalisation
Market capitalisation at the end of the year

1 Since 2008, EBITDA has also included operating income from investments.
2 Converted to full-time positions.
3 Proposed dividend for RWE AGs 2011 fiscal year, subject to approval by the 19 April 2012 Annual General Meeting.

Customers

3.0

Responsibility statement

124

4.0
4.1
4.2

4.3
4.4
4.5
4.6
4.7
4.8

4.9

Consolidated financial statements

Income statement
Statement of recognised income
and expenses
Balance sheet
Cash flow statement
Statement of changes in equity
Notes
Boards (part of the notes)
List of shareholdings
(part of the notes)
Independent auditors report

125
126
127

1.0
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8

1.9

1.10
1.11


1.12

Review of operations
Strategy
Economic environment
Political environment
Major events
Commentary on the segments
Business performance
Financial position and net worth
Notes to the financial statements
of RWE AG (holding company)
Disclosure relating to German
takeover law

29
30
36
43
46
49
51
73
78
80

Further information
Organisation chart of the RWE Group
Glossary
Index
Imprint

Innovation
Development of risks and opportunities
including the report on the internal
control and risk management system
Outlook

83
87

Five-year overview
Financial calendar 2012/2013

2.0

Our responsibility
Supervisory Board report
Corporate governance
Compensation report
(part of the review of operations)

101
102
106
109

Workforce
Sustainability

116
118

96

Long-term credit rating

Power generation
Electricity and
gas sales

72,068

Dividend/dividend payment

ELECTRICITY and GAS: RWE OFFERS EVERYTHING

FROM A SINGLE SOURCE.
Electricity and
gas networks

2007

million

Outlook

Energy trading/
gas midstream

2008

Net debt of the RWE Group

Standard & Poors

Renewable
energy

2009

Net financial debt

Five-year overview
RWE Aktiengesellschaft

We operate in a dynamic market environment that is characterised by highly volatile

prices, changing structures, ambitious climate protection goals and increasing
political and regulatory intervention. Our response is a three-dimensional corporate
strategy: RWE is becoming more sustainable, more international, and more robust.

Conventional
generation

2010

Emissions balance

Our power plant portfolio and our investment programme for building efficient,
environmentally friendly and flexible generation capacity are the main basis
forgrowing earnings in the future. We invest billions in this every year. Meanwhile,
we are one of Europes biggest investors in offshore wind farms. Our leading
position in energy trading helps us make optimal use of our power plants on the
market. Wereact to changing customer needs by offering new products for homes,
commerce and industry. Climate protection and energy efficiency are becoming
increasingly important for our customers, too.

Gas and oil

production

2011

2.1
2.2
2.3

2.4
2.5

128
129
130
131
191
196
224

226
227
230
231

SMarT ENErgY EquaTES TO iNNOvaTivE

THiNkiNg aNd FOrward-lOOkiNg aCTiON.

Five-YeaR oveRvieW

Five-year overview
RWE Group

2011

2010

2009

2008

2007

million

51,686

53,320

47,741

48,950

42,507

EBITDA1

million

8,460

10,256

9,165

8,773

7,915

Operating result

million

5,814

7,681

7,090

6,826

6,533

Income before tax

million

3,024

4,978

5,598

4,866

5,246

Net income/RWE AG shareholders share in net income

million

1,806

3,308

3,571

2,558

2,667

3.35

6.20

6.70

4.75

4.74

Recurrent net income per share

4.60

7.03

6.63

6.25

5.29

Return on equity

12.6

23.1

28.5

20.7

20.1

Return on revenue

8.3

12.3

14.8

12.3

16.0

10.9

14.4

16.3

17.2

16.5

Value added

million

1,286

2,876

3,177

3,453

2,970

Capital employed

million

53,279

53,386

43,597

39,809

39,710

Cash flows from operating activities

million

5,510

5,500

5,299

8,853

6,085

Free cash flow

million

843

879

614

4,399

2,020

Capital expenditure including acquisitions

million

7,072

6,643

15,637

5,693

4,227

of which: Property, plant and equipment

and intangible assets

million

6,353

6,379

5,913

4,454

4,065

Depreciation, amortisation, impairment losses

and asset disposals

External revenue
Income

Earnings per share

Value management
Return on capital employed (ROCE)

Cash flow/capital expenditure/depreciation

and amortisation

million

3,632

3,410

2,553

2,416

2,629

Degree of asset depreciation

58.5

61.8

64.0

69.4

70.9

Free cash flow per share

1.56

1.65

1.15

8.17

3.59

Non-current assets

million

63,539

60,465

56,563

41,763

41,360

Current assets

million

29,117

32,612

36,875

51,667

42,060

Balance sheet equity

million

17,082

17,417

13,717

13,140

14,659

Non-current liabilities

million

44,391

45,162

45,633

36,793

36,796

Current liabilities

million

31,183

30,498

34,088

43,497

31,965

Balance sheet total

million

92,656

93,077

93,438

93,430

83,420

Fixed asset intensity of investments

56.0

53.4

49.4

35.5

38.4

Current asset intensity of investments

31.4

35.0

39.5

55.3

50.4

Asset coverage

96.7

103.5

104.9

119.6

124.4

Equity ratio

18.4

18.7

14.7

14.1

17.6

Energy drives our lives. It enables us to be mobile, productive and

connected. But energy is a limited resource and its price is rising. For
companies and households, this means that making efcient use of
energy pays off. And if this is done intelligently, it does not reduce growth
or quality of life.
As one of Europes leading utilities, conserving energy is at the centre of
our business model. We continuously improve our electricity generation
in order to lower fuel consumption and emissions. However, our horizon
extends beyond our plant premises. We also want our customers to benet
from the opportunities offered by making more efcient use of energy.
With innovative products and services, we help households and companies
to reduce costs and protect the environment. From electric cars to home
automation, we offer solutions across the board while setting new product
standards.
We invite you to begin a new chapter with us and convince yourself
rst-hand of the benets of smart energy!

Asset/capital structure

[Link]

imprint 231

To our investors Review of operations our responsibility

Responsibility statement consolidated financial statements Further information

iMpriNT
RWE Aktiengesellschaft
Opernplatz 1
45128 Essen
Germany
Phone
Fax
E-mail

+49 201 12-00

+49 201 12-15199
contact@[Link]

Investor Relations:
Phone +49 201 12-15025
Fax
+49 201 12-15265
E-mail invest@[Link]
Corporate Communications:
Phone +49 201 12-15250
Fax
+49 201 12-15094

Design concept and layout:

Jung von Matt/brand identity, Hamburg
Typesetting, image editing and production:
CHIARI Agentur fr Markenkommunikation, Dsseldorf
Photographs:
Catrin Moritz, Essen
Jann Klee, Hamburg
RWE archive
Printing:
Kunst- und Werbedruck GmbH & Co KG, Bad Oeynhausen
RWE is a member of DIRK
the German Investor Relations Association.

For annual reports, interim reports and further information

on RWE, please visit us on the internet at [Link]

This annual report was published on 6 March 2012. This is a

translation of the German annual report. In case of divergence
from the German version, the German version shall prevail.

Electricity used to only go in one direction: from power plant to customer. However, traffic on former
one-way streets has become more complex. Numerous small solar panels and wind turbines now feed
electricity into the grid from distributed points. And they do this irregularly, depending on the weather
and time of day. This places completely new demands on network operators.
With the Smart Country project in the District of Bitburg-Prm in Germany, RWE is demonstrating the
advantages to be gained in being properly connected. Thanks to a sophisticated control system,

carbon neutral
[Link] | DE-149-453272

print production

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

SMarT ENErgY CaN FlOw

iN all dirECTiONS.

electricity can be drawn and fed in from various points. But that is not all: a biogas facility, combined
with gas storage, ensures that electricity supply can be flexibly adjusted to demand.
Smart Country demonstrates that renewable energy alone has its limits. Together with smart networks
and electricity storage facilities, however, it can form a successful trio.

Those who feel the wind in their face notice how much energy it contains. This holds true in particular on
the open seas, where the wind blows strongly and more evenly than on land. Offshore wind turbines
have a further advantage: they do not impose on residents.
RWE currently operates wind farms with a total installed capacity of almost 1,800 megawatts. Offshore
wind already accounts for 150 megawatts, and its capacity is set to multiply in the coming years.
By 2015, we intend to have completed four additional major wind farms: two off the UK coast, one off the

Smart energy takes the wind

out of the sails of CO2.

coast of Belgium andone north of Heligoland. Excluding the shares owned by our partners, this will
cause our offshore wind capacity to rise to more than 1,100 megawatts. This is enough to provide all
households in a city the size of Hamburg with electricity.
However, this comes at a price. We are investing over three billion euros in these wind farms. Money well
spent, we believe. After all, by doing this, we are diversifying our generation portfolio and taking the
wind out of the sails of CO2.

Smart energy is the key to

tomorrows mobility.

Electricity is the energy form of the future, even when it comes to putting horsepower on the road.
Electric cars are quiet and can be driven nearly CO2-free on green electricity. In terms of particulate and
nitric oxide emissions, they have a clear edge as well. In the future, they can even make a contribution to
grid stability: electric cars are small electricity storage devices, which can be accessed by network
operators when energy is scarce.

RWE began rolling out a nationwide electric charging station network three years ago. We now have
more than 1,000 charging points in Germany making use of sophisticated technology: they automatically
recognise customers, adding each charge to their electricity bill. This enables convenient and cashless
car charging, whether at home, at work or in a shopping mall.
With our RWE ePower Basic product, we also offer the matching green fuel for mobility that is gentle
on the climate and is fun.

Imagine you are on your way home and the heating gets switched on half an hour before you arrive
because you have turned it on while on the road. And the lights go on as soon as you walk in without
your having to look for the switch in the dark. With RWE SmartHome, this is no longer avision it is
simply modern living.
RWE SmartHome enables you to use your smartphone or PC as a remote control for your lights, heating
and household appliances. The required retrofit to your home is childs play. An encryptedwireless

SMART ENERGY RENDERS

THE OLD LIGHT SWITCH OBSOLETE.

network connects the household appliances of your choice to a central home control unit. In addition to
lights and heating, sensors for doors and windows as well as smoke and motion detectors can also be
integrated into your RWE SmartHome package.
This is how smart energy makes living more convenient, safe and affordable. Three really convincing
arguments in favour of RWE SmartHome.

Smart energy is
fast and flexible.

Electricity increasingly comes from renewable sources. Whereas this is good for the environment, it is a
huge challenge for grid management. The wind does not blow and the sun does not shine depending on
when electricity is needed. In view of the small amount of available storage, the question that arises is:
How can we ensure that supply and demand are kept in balance at all times in the future?

One solution are power plants capable of adjusting capacity utilisation by the minute. In a nutshell:
sprinters capable of going flat out one second and standing still the next are needed. Just like our new
gas-fired power station at Lingen. The plant is optimally equipped for flexible deployment. Furthermore,
as it is connected to five different gas pipelines and a storage facility, it will not run outoffuel.
As paradoxical as this may sound, conventional power plants such as Lingen are the basis for enlarging
the renewable footprint because they are both nimble and reliable.

A situation commonly faced in daily life: you fill your washing machine, press the start button and the
drum starts turning. In tomorrows energy world, after pressing the start button, often nothing happens
at first. Because the electricity price is too high for the moment. Only hours later is the machine set in
motion taking advantage of a temporary drop in prices on the electricity wholesale market.

Smart energy starts the

wash cycle when electricity
is more affordable.
For some 100 households in Mlheim on the Ruhr, this is no longer just a vision. They are participating in
an RWE field trial making use of the new generation of washing machines, tumble dryers and dishwashers.
These appliances are started by remote control, whenever electricity becomes more affordable.
We benefit from the important findings provided by the field trial on the functionality and acceptance of
this new technology. The advantage for participating households is that they can keep the cutting-edge
appliances and use them to save money over the long term.

HavE wE arOuSEd YOur

iNTErEST iN SMarT ENErgY?
Then visit us at
[Link]

The energy to lead with smart solutions.

To our investors
Letter from the CEO
The RWE Executive Board
2011 in brief
RWE on the capital market

16
20
22
24

1.0 Review of operations

1.1 Strategy
1.2 Economic environment
1.3 Political environment
1.4 Major events
1.5 Commentary on the segments
1.6 Business performance
1.7 Financial position and net worth
1.8 Notes to the financial statements
of RWE AG (holding company)
1.9 Disclosure relating to German takeover law
1.10 Innovation
1.11 Development of risks and opportunities
including the report on the internal
control and risk management system
1.12 Outlook

2.0 Our responsibility

2.1 Supervisory Board report
2.2 Corporate governance
2.3 Compensation report
(part of the review of operations)
2.4 Workforce
2.5 Sustainability

29
30
36
43
46
49
51
73
78
80
83
87

3.0 Responsibility statement

124

4.0
4.1
4.2

4.3
4.4
4.5
4.6
4.7
4.8
4.9

125
126
127

Consolidated financial statements

Income statement
Statement of recognised income
and expenses
Balance sheet
Cash flow statement
Statement of changes in equity
Notes
Boards (part of the notes)
List of shareholdings (part of the notes)
Independent auditors report

Further information
Organisation chart of the RWE Group
Glossary
Index
Imprint
Five-year overview
Financial calendar 2012/2013

96

101
102
106
109
116
118

Fold-out contents in back cover

128
129
130
131
191
196
224

226
227
230
231

CONTENTS

CONTENTS

16 Letter from the CEO

RWE Annual Report 2011

LETTER FROM THE CEO

When I wrote to you for the first time in an RWE Annual Report in 2008, my knowledge of the energy sector largely came
from the perspective of a customer. However, I was aware of the challenging times that lay ahead for RWE, especially in
terms of climate protection. Back then, I promised you that we would be among the front-runners when it came to shaping
the future of energy supply. Today, four years later and a few months before the end of my time at RWE, I believe it is safe
tosay that we have risen to this challange. Instead of waiting for the energy sector to undergo major changes, we proved
wehave the energy to lead, with the biggest capex programme in our companys history. RWE has already spent a total of
23billion on it. A substantial portion of the investment has been used to make our electricity generation use less resources
and be more environmentally friendly. This work is now bearing fruit: four of the nine state-of-the-art gas and coal-fired
power stations from our new-build programme have already gone online. These plants replace old, emission-intensive power
stations. This is a boon to the climate, as it helps us save millions of tons of carbon dioxide each and every year!
However, our efforts go much further than this. Today, RWE ranks among the worlds largest investors in renewable energy.
We paved the way for this in early 2008, by establishing RWE Innogy. By 2020, we want the share of our generation capacity
accounted for by renewables to have risen to at least 20%. And lets not forget our investments of over 800 million per year
in networks in Germany alone, with which we ensure that electricity and gas supplies remain reliable. These examples prove
that RWE plays a proactive role in shaping tomorrows energy world. Politicians set goals, and we work on achieving them.

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Letter from the CEO 17

In my first letter to you on these pages, I referred to the speed at which our sector is changing. And I must admit that I
actually underestimated this speed. No one could have foreseen the momentous burdens we would face. The best example
of this is the turn-around in German energy policy last year. Of course, I fully understand why people have been more
criticalof nuclear energy since the reactor accident at Fukushima. However, Germanys taking 40% of its nuclear power
capacity offline at once does little to improve security. In fact, it leads to a lack of security of supply. This became evident
especially during the cold February days. To prevent blackouts, the transmission system operators actually had to resort to
an old oil-fired power plant in Austria. You, RWEs owners, are also affected by Germanys accelerated nuclear phase-out: the
burdens the company had to shoulder as a result of it amounted to more than 1 billion last year alone.
Last year, I told you about two further unexpected developments, which I do not want to leave unmentioned. Let us first take
a look at the earnings of our hard coal and gas-fired power plants: recently, they have deteriorated considerably. One reason
is the explosive growth of Germanys highly subsidised solar generation capacity. It has risen by 150% since the beginning
of2010, now accounting for more than twice the nominal capacity of all nine remaining nuclear power stations. The solar
panelsmainly feed electricity into the system during periods of peak usage. As renewable energy is given priority, the
aforementioned hard coal and gas-fired power plants in particular have to yield. One may remark that an increase in solar
power is desirable. But that is just one side of the coin. The flipside is that there are less than two hours of sunshine on an
average January day in Germany. But who provides electricity when it gets dark? And who provides electricity when the wind
doesnt blow? The answer: it is those very hard coal and gas-fired power stations, the profitability of which is coming under
increasing pressure. This results in situations that are in stark contrast to each other: in certain periods, we have huge
overcapacities on the German electricity market, followed by substantial shortages. This is difficult to handle, especially for
those who use their reserve arsenal of fossil fuel-fired power plants to ensure that electricity is always on tap whenever we
need it irrespective of the weather or time of day.
Equally unpredictable was the decoupling of the price of gas from that of oil. For decades, the German gas business was
conducted following firm rules, which helped us to guarantee supplies to our customers. Like our competitors, we purchased
gas from major producers like Statoil and Gazprom based on long-term contracts linked to the price of oil. These contracts
still exist. However, gas is increasingly traded on liquid markets, where prices are not directly influenced by oil. Supply on
these markets has risen significantly since 2009. One reason for this is the increasing production of shale gasin the USA. The
consequence is that since 2009, prices in gas trading have been much lower than those in purchase contracts which depend
on the oil market. This is why parts of our gas sales no longer cover their procurement costs. This is reflected in substantial
burdens on the earnings of the gas midstream business of RWE Supply&Trading. But we reacted to this early on, by entering
into negotiations with our gas suppliers. I am confident that we will be able to find good solutions. However, this is a lengthy
process, which requires patience.
There is one main reason why I am talking about all these developments in detail once again: they are mirrored by the
Groups figures for 2011. RWE ended the year with an operating result of 5.8 billion. This is 24% less than in the previous
year. Our recurrent net income decreased by 34% to 2.5 billion. Declines in earnings of this order were included in the
forecast we gave you in August 2011. Another thing we did in August was to present you with a package of measures with
which we intend to keep RWE on course for success, even in stormy seas. These measures have either been partially
implemented, or refined. They can be divided into four categories:
Strengthening equity: This is where we have already taken the biggest step. In December 2011, we placed a total of
2.1billion in new and treasury shares on the capital market. The capital increase was overshadowed by the major turmoil
on the stock markets in reaction to the sovereign debt crisis in the Eurozone. Nevertheless, we are satisfied with the

18 Letter from the CEO

RWE Annual Report 2011

proceeds of the issuance. Furthermore, we issued a second hybrid bond. This is a mix of debt and equity, with
corresponding advantages for our credit rating. As far as possible given the market environment, we will conduct further
hybrid issuances.
Divestments: By selling parts of our business, we want to make a further contribution to maintaining our good credit
rating. At the top of our list of assets for sale are activities that are associated with substantial investments and will not
add to earnings until several years from now. This applies, among other things, to some of RWE Deas growth projects.
Weare already in talks with potential buyers. But RWE Dea itself is not up for sale. We intend to dispose of the Czech longdistance gas transmission system operator NET4GAS, our stake in Berlinwasser, select power plant capacities and some
German sales and network activities. Last fiscal year, we completed the sales of Thyssengas, the majority of Amprion and
aminority stake in a hard coal-fired power plant at Rostock. We aim to generate proceeds of up to 7 billion with the
remaining divestments. This is good news, because, just six months ago, we felt that we needed to make more substantial
divestments.
Efficiency enhancements: You are familiar with our current programme. By taking measures to cut costs and increase
revenue, we want to make an annual contribution to earnings that gradually rises to a total of 1.5 billion by 2012
compared to 2006. We have made faster progress than planned and are now turning onto the home straight with a huge
lead. And, once we have crossed the finishing line, we will not rest on our laurels, but launch a new programme. By the
end of 2014, we intend to tap an additional 1 billion in earnings potential compared to 2012. We have already initiated
some of the measures. I am optimistic that the programme can be implemented in agreement with the workforce.
Streamlining the investment budget: By spending 6.4 billion on property, plant and equipment in both 2010 and 2011,
we reached the peak of our record capital expenditure programme. We now plan to invest about 16 billion in the threeyear period ending in 2014. About half of the funds are earmarked for growth projects. In addition to electricity generation
from renewables, we also want to expand our oil and gas production. Among our geographic divisions, Central Eastern and
South Eastern Europe harbours the greatest potential for growth. This is a region in which we could envisage undertaking
power plant projects as well as building wind farms. And let us not forget that work on our power plant new-build
programme will last until 2014. Once it has been completed, i.e. no later than 2015, we will adjust our spending on
investments to the amount of operating cash flow left over after deducting the dividend. This means that we will not
spend more than we can finance with the cash flows we earn. In so doing, we will maintain our payout ratio of between
50% and 60% of recurrent net income.
By taking the aforementioned measures, we will prepare the ground for pulling ourselves through these difficult times. In
addition, we will benefit from the fact that we did not just start preparing ourselves for a rough market in 2011. Take our
reorganisation in 2009 and 2010 for example, through which we became leaner and more flexible, reduced duplicated
functions and pooled important tasks, including research and development. Many of these measures continue to have a
positive effect on our earnings today. These should stabilise this year: earnings before interest, taxes, depreciation and
amortisation EBITDA for short and the operating result should be in the order of last years level, as should recurrent net
income, the yardstick for determining your dividend. This is good news, because we will probably be able to offset the
earnings lost through the divestment of assets. In that sense, we will make ground in 2012.

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Letter from the CEO 19

The fact that our 2013 earnings are likely to be of the order achieved in 2011 is even better news. Especially given that we
no longer receive free allocations of CO2 emission allowances. In addition, further earnings will be lost as we continue
ourdivestment programme. We are confident of being able to compensate for this. Our operating result and our recurrent
net income should thus be on a par with their 2011 levels. EBITDA could be even higher. We are anticipating a figure of
around 9billion.
What does this mean for you, our shareholders? Despite the turbulent market environment that brings with it the
aforementioned burdens, RWE offers you the prospect of receiving an attractive dividend in the coming years. Granted, the
dividend of 2 per share we will propose to this years Annual General Meeting is far below last years, owing to the recent
development of our earnings. However, from our current perspective, it has bottomed out. Based on the closing price of our
common shares at the end of the year, the dividend yield amounts to 7.4%. This puts us among the leaders in the DAX.
Last year I asked you to place your trust in us. I told you that we were preparing ourselves for rough waters. We are charting
a good course. This also applies to personnel matters: in Peter Terium, who will take the helm in the middle of the year, RWE
has found an executive from within our own ranks, who also has international experience, to succeed me. I am certain that
with him the company will be in good hands, as with his fellow board members and the companys approximately 72,000
employees.
Energy supply is also in good hands at RWE. We are ready to take action as a partner in the transformation of the German
energy market by staying our course for renewable energy, efficient gas and coal-fired power plants, and a more powerful
network infrastructure. However, politicians must also play their part, as what we need much more than ambitious goals
areice breakers, who can clear the way so that necessary infrastructure projects can be implemented. And we need the
acceptance of the population. Everyone has to get on board, including the residents in whose neighbourhood new power
lines will be erected. Last but not least, European co-operation needs to be intensified, as national solo attempts are not only
inefficient, but also dangerous in terms of security of supply.
Despite the huge challenges ahead of us, RWE will not be the reason for any failure of the transformation of the German
energy market. It is in stormy weather that good sailors can really prove themselves. RWE is an extremely seaworthy ship
with a strong crew which deserves your trust. I have convinced myself of this first hand during my four-and-a-half years on
board, during which I contributed to ensuring that this status is preserved. I would therefore be all the more pleased if RWE
could continue to count on your support.
Sincerely yours,

Dr. Jrgen Gromann

President and CEO of RWE AG
Essen, 17 February 2012

Alwin Fitting
Labour Director

Dr. Jrgen Gromann

President and CEO

Dr. Rolf Martin Schmitz

Chief Operating Officer

Peter Terium
Deputy Chairman of the Executive Board

Dr. Rolf Pohlig

Chief Financial Officer

Dr. Leonhard Birnbaum

Chief Commercial Officer

22

2011 in BRIEF

February

April

June

RWE completes sale of

Thyssengas

Foundation stone laid for gasfired power station in Turkey

German Lower House resolves

accelerated nuclear phase-out

With this transaction, we divest our

German long-distance gas network.
Thebuyers are infrastructure funds
managed by the Australian financial
service provider Macquarie. Also in
February, we sell our minority stake in
aRostock hard coal-fired power plant
toRheinEnergie.

The plant is being built at Denizli in the

west of thecountry. It will have a net
installed capacity of 775 megawatts and
is scheduled to go online at the end of
2012. The co-owner is the Turkish energy
company Turcas, which holds a 30%
interest in the power station. The capex
budget is an estimated 0.5 billion.

The 13th amendment to the German

Nuclear Energy Act reverses the lifetime
extension for German nuclear power
plants resolved in 2010. The eight
stations affected by the nuclear
moratorium may no longer be operated.
Shut-down deadlines are established for
the nine remaining German nuclear
power stations. Our three remaining
reactors must be taken offline at the end
of2017 (Gundremmingen B), 2021
(Gundremmingen C) and 2022 (Emsland).

March

May

July

German government orders

shut-down of eight nuclear
power plants after Fukushima
reactor accident

Wood pellet factory in Georgia

begins operation

Tracks laid for hydroelectric

power from RWE

The facility is among the largest and

most modern of its kind in the world. It
iscapable of producing 750,000 metric
tons per year. The wood pellets made
inGeorgia are being used to co-fire our
Dutch Amer hard coal power station as
well as other facilities.

In July, we sign an electricity supply

agreement with the German railway.
Wewill provide about 900 million
kilowatt hours of electricity every year,
which will be generated by our German
hydroelectric power plants. This is
enough to run around one-third of
thelong-distance fleet (ICE and ICtrains).

The nuclear moratorium is limited

to three months. However, a later
amendment to the German Nuclear
Energy Act results in the definitive
shut-down of the stations affected,
including our Biblis A and B reactors.
In early April, we file a lawsuit against
the moratorium with the Kassel
Administrative Court, on the grounds
that Biblis met all applicable safety
standards.

23

August

September

December

RWE puts together

package ofmeasures to
secure financialstrength

RWE sells 74.9 percent of

Amprion

Equity increased by 2.1 billion

It envisages further efficiency

enhancements, streamlining the capex
programme, numerous divestments
andacapital increase. The package is
scheduled to be implemented by the end
of 2013. This is in reaction to Germanys
accelerated nuclear phase-out, which is
imposing heavy burdens on RWE.

The stake is bought by a consortium

ofinsurance companies and pension
funds. Amprion is Germanys largest
transmission system operator. The
company plans to invest substantially
innetwork infrastructure. In the
consortium of investors, we have found
areliable, financially strong partner.

In a difficult market environment, we

place 52.3 million new and 28.1 million
treasury common shares on the capital
market. The issue price is 26 per
share,resulting in gross proceeds
fromthe issuance of 2.1 billion. Our
capital increase is one of the biggest
transactions of its kind conducted by a
European industrial enterprise in recent
years. The financial headroom gained
benefits our creditworthiness.

August

October

December

Supervisory Board appoints

PeterTerium RWE AGs
futureCEO

RWE first German industrial

enterprise to issue hybrid bond
in Switzerland

Major power plant new-build

milestones passed

The 48-year-old Dutchman joined RWE

in 2003. Since then, he has held a
number of positions including that of
CEO of Essent. He has been Dr. Jrgen
Gromanns deputy onthe Executive
Board of RWE AG since1September
2011. Peter Terium will assume
chairmanship when [Link] leaves
with effect from 30June 2012.

The issuance totals CHF 250 million, with

a tenor of slightly more than 60 years.
The earliest redemption date is in April
2017. Hybrid bonds are a mix of equity
and debt. Rating agencies classify only
half of the volume as debt.

In the Netherlands, our new

1,304megawatt Claus C combined-cycle
gas turbine power station begins a
trialrun. The facility starts commercial
production in January 2012. We also
finished building our second new
DutchCCGT plant: Moerdijk 2 has a net
installed capacity of 426 megawatts and
has been online since February 2012. We
spent a total of 1.5 billion on the two
power stations.

24 RWE on the capital market

RWE Annual Report 2011

RWE ON THE CAPITAL MARKET

The 2011 stock-trading year was a weak one. A key role was played by the sovereign debt crisis in the Eurozone. The
German lead index, DAX, lost 15% of its value. Holders of RWE stock suffered even greater losses: our common shares
closed the year with a total return of 41%. Among other things, this reflects the burdens of the U-turn in German
energypolicy after the reactor accident at Fukushima, Japan. Losses in the gas midstream business also curtailed the
development of our share price.

Performance of RWE common shares compared with the DAX 30 and the Dow Jones STOXX Utilities indices
% (average weekly figures)
20
0
20
40

RWE common share

DAX 30

Dow Jones STOXX Utilities

Sovereign debt crisis weighs on stock markets. In the

pastfinancial year, the debt crisis of several Eurozone
memberstates cast dark shadows on the stock markets.
Thedramatic situation created by the Greek state budget
crisis caused investors to have serious doubts about
themonetary unions stability. In addition, the rating
agencies downgraded the creditworthiness of countries such
as Spain, Portugal, Ireland and Italy. The share prices of
banks which had invested in the government bonds of the
affected countries also came under increasing pressure.
Against this backdrop, the economic outlook deteriorated
aswell. All ofthis was mirrored by substantial drops in share
prices on the stock market. Germanys lead index, the

1
De
31

Se
30

c1

11
p

11
n
Ju
30

ar
M
31

31

De

c1

11

60

Source: Bloomberg.

DAX30, declined from 6,914 to 5,898 points over the course

of the year. It thus lost 15% of its value. At times, it was
down by more than 25%. However, the downward trendwas
halted in September. By setting up a bail-out fund for
Eurozone countries in financial crisis, which wasenlarged
significantly in the autumn, and announcing aidfor
distressed lending institutions, policymakers facilitated a
marginal recovery of stock-market quotations. In the fourth
quarter, the DAX returned to levels above 6,000points on
several occasions. The index managed to exceed this mark
again at the beginning of 2012. It closed the month of
January at 6,459 points.

RWE on the capital market 25

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Monthly highs and lows of the RWE common share in 2011

60

55.26

55
50

50.27

45

53.73
48.24

47.23

48.91

44.12
42.86

40

40.11

42.96

39.14

40.31

35

37.06

35.53

32.91

35.17

30

30.73

28.38

25

24.66

20

26.81

27.61

Oct

Nov

30.50

26.02

21.77

15
Jan

Feb

Monthly average

Mar

Apr

May

Jun

Monthly highs and lows (daily closing price)

Jul

Aug

Sep

Dec

Source: Bloomberg.

Fiscal 2011 was also a weak year on stock markets for the
utility sector. The European sector index, the Dow Jones
STOXX Utilities, fell by 12%. Shares of German energy
utilities and RWE stock fared even worse: our common
shares, which had traded at 49.89 at the end of 2010,
declined in price to 27.15. The quotation for our preferred
shares dropped from 47.99 to 25.44. This corresponds to
total returns (return on the share price plus the dividend) of
41% (common stock) and 42% (preferred stock). Potential
proceeds from subscription rights from the capital increase
we conducted in December 2011 and reported on page 46
have not been considered here, as they are immaterial.

Amajor reason for the weak performance of RWE shares is

the U-turnin German energy policy following the reactor
incident at the nuclear power station at Fukushima, Japan.
Extensive information on this topic is provided on page 43.
The accelerated nuclear phase-out resolved by the German
government is imposing substantial burdens on us.
Furthermore, capital market participants have identified
riskswith respect to the implementation of our ongoing
divestment programme and the outcome of the price
reviews that are being conducted for our loss-making
oil-indexed gas procurement contracts.

Total return of RWE shares and important indices up to the end of 2011
% p.a.

1 year

5 years

10 years

RWE common share

41.1

15.2

0.1

RWE preferred share

42.5

13.2

3.1

DAX 30

14.7

2.2

1.3

Dow Jones EURO STOXX 50

14.1

7.9

2.2

5.1

5.3

1.4
0.7

Dow Jones STOXX 50

Dow Jones STOXX 600
Dow Jones STOXX Utilities
REXP1
1 Index for the performance of government securities on the German bond market.

8.6

4.9

12.5

7.1

3.5

8.3

5.9

5.4

26 RWE on the capital market

RWE Annual Report 2011

Collapse in RWE share price curtails long-term return.

Dueto their weak performance last year, the long-term
return ofRWE shares also declined. Anyone who purchased
RWEcommon shares at the end of 2001, held them for
tenyears and reinvested the dividends, achieved an average
return of 0.1% per year. By comparison, the DAX rose by
anaverage of 1.3% per annum during the same period of
time, which was overshadowed by two serious stock market
crises. Acash investment in RWE preferred shares was much
more profitable: these investors received an average annual
return of 3.1%.

RWE share indicators

Dividend of 2 per share proposed for 2011.

TheSupervisory and Executive Boards of RWE AG will
propose adividend of 2 per share for fiscal 2011 to
theAnnualGeneral Meeting on 19 April 2012. Based on
the614.4million dividend-bearing RWE shares at present,
thisresults in a dividend payment of 1,229 million. This
corresponds to 50% of recurrent net income. Based on
theyear-end closing prices of our common and preferred
shares, the dividend yields stood at 7.4% and 7.9%,
respectively. This means we continue to have a leading
position in the DAX.

2011

2010

2009

2008

Earnings per share1

3.35

6.20

6.70

4.75

4.74

Recurrent net income per share1

4.60

7.03

6.63

6.25

5.29

Cash flows from operating activities per share1

10.22

10.31

9.94

16.44

10.82

Dividend per share

2.002

3.50

3.50

4.50

3.15

Dividend payment

million

1,2292

1,867

1,867

2,401

1,689

50

50

53

71

57

Payout ratio3

2007

Dividend yield on common shares

7.4

7.0

5.2

7.1

3.3

Dividend yield on preferred shares4

7.9

7.3

5.6

8.4

3.8

End of fiscal year

27.15

49.89

67.96

63.70

96.00

High

55.26

68.96

68.58

100.64

97.90

Low

21.77

47.96

46.52

52.53

74.72

End of fiscal year

25.44

47.99

62.29

53.61

83.07

High

52.19

62.52

62.65

84.39

86.00

Low

20.40

44.51

41.75

37.46

66.33

thousands

538,971

533,559

533,132

538,364

562,373

billion

16.6

28.0

38.0

35.4

53.5

Common share price

Preferred share price

Number of shares outstanding (average)

Market capitalisation at the end of the year
1
2
3
4

Based on the annual average number of shares outstanding.

Dividend proposal for RWE AGs 2011 fiscal year, subject to the approval of the 19 April 2012 Annual General Meeting.
The payout ratio is the ratio of the dividend payment to recurrent net income.
The dividend yield is the ratio of the dividend per share to the share price at the end of the fiscal year.

RWE on the capital market 27

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Shareholder structure of RWE AG1

1% Employee shareholders

15% RW Energie-Beteiligungsgesellschaft

13% Private shareholders

5% BlackRock Financial Management

86% Institutional shareholders:

34% Germany
12% USA/Canada
19% UK/Ireland
19% Continental Europe
excluding Germany
2% Rest of the world

3% Mondrian Investment

63% Other institutional shareholders

1 Percentages reflect shares in the subscribed capital.

Sources: notifications of shareholdings in accordance with the German Securities Trading Act and shareholder identification, as of December 2011.

Wide international shareholder base. As described on page

46, we issued 52.3 million new and 28.1 million treasury
RWE shares in December of last year. The total number
ofour shares thus rose from 562.4 million to 614.7 million.
Bythe end of the year, 86% of them were owned by
institutional investors, while 14% were held by private
investors (including employee shareholders). Institutional
investors in Germany hold 34% of the capital stock (end
of2010: 36%), with those in North America, the United
Kingdom and Ireland accounting for a combined 31% (23%)
and those in Continental Europe, excluding Germany,
owning 19% (17%). RW Energie-Beteiligungsgesellschaft,
inwhich municipal shares are pooled, is still RWEs single
largest shareholder, owning 15% (16%). The asset

management company BlackRock Financial Management

(USA) accounts for about 5%, and Mondrian Investment
Partners (UK) holds roughly 3%. These are the largest
RWEpositions outside Germany. Some 1% of the shares
areunder RWE employee ownership. In the year under
review, 25,783 staff members, or 57% of those entitled to
subscribe, participated in our employee stock ownership
plan, subscribing a total of 442,692 shares. Byoffering this
programme, we enable our personnel at German sites to buy
RWE shares at favourable conditions. We spent 8.1million
on this in the year being reviewed. The free float of RWE
common shares considered by Deutsche Brse in terms of
index weighting was 85% at the end of the year.

28 RWE on the capital market

RWE Annual Report 2011

Ticker symbols
Reuters
Bloomberg
German Securities Identification Number
ISIN
USA CUSIP No. (ADR)

RWE is traded on stock markets in Germany and the USA.

InGermany, RWE shares are traded on the Frankfurt am Main
and Dsseldorf Stock Exchanges as well as via the electronic
platform Xetra. They can also be obtained over the counter
inBerlin, Bremen, Hamburg, Hanover, Munich and Stuttgart.
Outside Germany, RWE stock is not traded directly in the

Common shares

Preferred shares

[Link] (Xetra)

RWEG_p.DE (Xetra)

RWEG.F (Frankfurt)

RWEG_p.F (Frankfurt)

RWE GY (Xetra)

RWE3 GY (Xetra)

RWE GR (Frankfurt)

RWE3 GR (Frankfurt)

703712

703714

DE 0007037129

DE 0007037145

74975E303

United States, but over the counter via American Depositary

Receipts (ADRs) in what is known as a Level 1 ADR
Programme. ADRs are share certificates issued by US
depositary banks, representing a certain number of a foreign
companys deposited shares.

Development of the five-year credit default swap (CDS) for RWE compared with the CDS index iTraxx Europe
in basis points (average weekly figures)
220
200
180
160
140
120
100
80

RWE

iTraxx Europe

31

De

c1

11
30

Se

11
n
Ju
30

31

31

De
c

M
ar

10

11

60

Source: Bloomberg.

RWE maintains good creditworthiness on the capital

market. The corporate bond market was also dominated by
the sovereign debt crisis. Although the base lending rates
declined over the course of the year in the Eurozone and in
the United Kingdom, the risk premiums that bond issuers had
to pay on top of these rates rose, driven by the crisis. The
latter was clearly reflected in the market forcredit default
swaps (CDSs). The iTraxx Europe index, which is made up of
the CDS prices of 125 major European companies, rose from
105 to 173 basis points during the course of last year. In the

autumn, it surpassed the 200-point mark twice, reaching

thehighest level since the financial crisis of 2008. A similar
development, albeit at a lower level, was displayed by the
CDS price curve for RWE. Quotations temporarily increased
from 83 to 160 basis points, before dropping back down
to137 basis points at the end of the year. As of the balance
sheet date, they were more than 20% below the market
index and were even lower than the European sector average
proof of RWEs good creditworthiness.

29

1.0 rEviEw OF OpEraTiONS

49.2 gw
205.7 billion kwh
16.6 million
7.8 million
51.7 billion
5.8 billion
72,068

Power plant capacity

Electricity production
Electricity customers
Gas customers
External revenue
Operating result
Workforce

30 Strategy

RWE Annual Report 2011

1.1 Strategy
RWE ranks among Europes five leading electricity and gas companies. With activities in numerous countries and along
the entire value chain, we are well positioned for managing the increasing risks and challenges in the energy sector. This
branch of industry is characterised by strong price fluctuations, changing market structures, ambitious climate protection
goals and increasing regulatory intervention by policymakers. We are tackling these challenges with a strategy that
determines our course in three respects: RWE is becoming more sustainable, more international and more robust.

Our strategy: RWE is becoming ...

... more sustainable

... more international

... more robust

Increase the share of our generation

capacity accounted for by renewables to
at least 20% by 2020

Secure strong earnings in our core

markets, i.e. Germany, the UK and the
Netherlands

Realise stable earnings through our

presence along the entire energy value
chain

Reduce our specific CO2 emissions by more

than 20% by 2020 compared to 2005

Achieve organic growth primarily in

Central Eastern and South Eastern Europe

Maintain a balanced portfolio of regulated

and unregulated activities

Improve the efficiency of our power plant

fleet and promote the conservation of
energy by our customers

RWE is becoming more sustainable. Energy supply requires

a long-term business model. We plan our investments in
power stations, networks and raw material production
facilities in terms of decades, not in terms of years. To secure
the profitability of these projects, we see to it that they
arein line with the principles of sustainable development.
Protecting the climate is high on our list of priorities. It
setsthe course for the modernisation and expansion of
ourelectricity generation portfolio and also motivates us to
champion the efficient use of energy outside RWEs factory
gates. To this end, we plan to take the following steps:
We intend to increase the share of our generation capacity
accounted for by renewables to at least 20% by 2020. At
the end of 2011, it amounted to 8%.

Adhere to the guiding principle of our

growth: increasing the companys value

By 2020, we want to have lowered the CO2 emissions of

our power plant fleet per megawatt hour (MWh) of
electricity by more than 20% compared to 2005. In the
baseline year, we emitted 0.79 metric tons of CO2 per
MWh. Our target is 0.62 metric tons.
We want to improve the degree of energy utilisation of
our coal and gas-fired power stations significantly and
promote the conservation of energy by our customers.
Against the backdrop of the reactor catastrophe at
Fukushima, in the middle of 2011 the German government
reversed the extension of the lifetimes of German nuclear
power plants it had resolved shortly before. This eliminated a
major component of our CO2 reduction strategy to date.
However, this does not affect our commitment to electricity
generation that is gentle on the climate. To this end, we are

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

focusing above all on the expansion of renewable energy

and, from 2012 to 2014, we intend to spend about 4 billion
on this. RWE Innogy, our Group company which specialises in
producing electricity and heat from renewable sources,
should be building or operating power generating facilities
with a total of 4.5 gigawatts (GW) of capacity by the end of
2014. The company is focusing its capital expenditure on
onshore and offshore wind farms. The regional focus lies on
Germany, the United Kingdom, the Netherlands, Poland,
Spain and Italy. RWE is one of the largest investors in
European offshore wind power. We are building four largescale projects either alone or with partners, with a combined
installed capacity of 1,670 megawatts (MW): Gwynt y Mr
off the coast of North Wales, Greater Gabbard in the UK
North Sea, Thornton Bank off the Belgian coast and Nordsee
Ost near the German Isle of Heligoland. Furthermore, several
RWE companies are investing in the production of electricity
from biomass. In addition, we are looking into building new
hydroelectric power plants. RWE Innogy is developing
projects with a total installed capacity of 13.9GW.
The construction of highly efficient coal and gas-fired power
stations that replace emission-intensive plant also makes a
contribution to protecting the climate. We are investing
approximately 12 billion for this within the scope of the
power plant new-build programme that we launched in 2006
and is scheduled for completion in 2014. How much we can
achieve by this is typified by the new 2,100 MW twin-unit
lignite-fired facility at Neurath near Cologne, which, once
operational, will enable us to decommission a number of
older plants. Thereby, on the back of an essentially
unchanged capacity, we are reducing our CO2 emissions by
about 6 million metric tons per year! This is a result of the
new power stations high efficiency of over 43%, which
surpasses that of the old plants by up to 13 percentage
points.

Strategy 31

At the end of 2011, new power stations with a total installed

capacity of 2.6 GW were online as a result of the power plant
new-build programme. Another 6.8 GW will be added this
year. The Dutch Claus C (1,304 MW) and Moerdijk 2
(426MW) gas-fired power stations began operating
commercially in January and February 2012. The dual-block
lignite-fired power plant at Neurath is scheduled to follow at
the end of March, with two combined-cycle gas turbine
power stations coming online in the second half of the year:
one at Pembroke, Wales (2,188 MW), and the other at
Denizli, West Turkey (775 MW). Further power plants
accounting for a combined 3.1 GW in installed capacity will
be added before the new-build programme ends in 2014.
Bythen, state-of-the-art gas and coal-fired power plants will
account for more than 25% of our installed capacity. The
degree of energy utilisation of our fossil fuel-fired facilities,
namely the amount of electricity and usable heat produced
by the energy contained in the fuel, will then have reached
an average of 42%.
Networks are also of great importance for an energy supply
which increases resource conservation and climate
protection. As a distribution system operator, we face huge
challenges from the rising amounts of electricity fed into the
grid from weather-dependent sources such as wind and solar
power, as well as the mounting number of small, distributed
generation units. Under these conditions, substantial
investments in the maintenance and expansion of
distribution networks need to be made to keep the system
stable. RWE plans to spend a total of 2.6 billion on this
from 2012 to 2014. One of the focal points is the
development and use of new control technologies enabling
the more effective and flexible use of networks. We are
conducting field trials to this end within the scope of the
Smart Country project in Bitburg/Prm in Eifel County
(Germany), on which we have reported in detail on page 85.

32 Strategy

When it comes to making efficient use of scarce resources,

however, the onus is not just on us, but on our customers as
well. We assist them in various ways, including the use of
smart meters, automated domestic consumption (smart
homes) and by promoting electric cars. Our German website
at [Link] includes advice on how to save
energy as well as information on subsidy programmes and
manufacturer offers. We also offer our energy efficiency
expertise to commercial and medium-sized industrial
enterprises. Using state-of-the-art measuring techniques and
RWEs energy controlling system, our experts analyse energy
consumption and develop optimisation measures tailored to
the business in question.
To us, managing our business sustainably means considering
the wide range of expectations that society has of RWE
when we take action. These go far beyond the imperative to
conserve resources and protect the climate. For example,
society feels we are responsible for ensuring the supply of
energy, embedding high occupational safety standards,
setting fair prices, and making certain that our suppliers
protect human rights. We divided this large number of
expectations into ten fields of action. We set ourselves goals
for each of these fields as well as establishing key

RWE Annual Report 2011

performance indicators which we use to measure the degree

to which we achieve our targets and document this for the
public.
RWE is becoming more international. It is becoming
increasingly important to give RWE a large geographic
footprint in order to diversify enhanced political and
regulatory risks and to take advantage of growth
opportunities. However, Europe remains the focal point of
our electricity and gas business. Our most important markets
are Germany, the United Kingdom, the Benelux countries as
well as Central Eastern and South Eastern Europe. We
become active in other regions whenever this enhances our
business in our core markets. This applies especially to
upstream operations: we produce gas and oil not only in
Europe, but also in North Africa. In addition, we are seeking
to expand our operating reach to include, for example, the
Caspian region. In the field of electricity and heat generation
from renewables, we are also active outside our core
markets, for instance in Spain and in Italy. In the US state of
Georgia, we operate one of the biggest and most modern
wood pellet factories in the world, thereby covering a
substantial part of our need for sustainably produced
biomass for firing in some of our power plants.

Strategy 33

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

RWE markets
with established market positions

Norway

Growth markets under observation

(initial activities in some cases)
Additional markets
especially for renewables

Poland
Germany
1.00/

0.00

Additional markets
especially for upstream gas & oil
x/y

2.25/
2.75

0.50/
1.25
2.75/
1.50

Forecast average growth

of electricity/gas consumption
in % p.a. (20112020)

Algeria

Libya

Egypt

Mauritania

From a geographic perspective, our strategy can be

described as follows:
We want to safeguard strong earnings in our mature core
markets, namely Germany, the United Kingdom and the
Netherlands.
We aim to achieve organic growth primarily in Central
Eastern and South Eastern Europe, where the energy
consumption trend is dynamic compared to our markets in
the northwest of Europe and which still have some ground
to make up in terms of infrastructure.
In the financial year that just ended, the RWE Group earned
four-fifths of its revenue in Germany, the United Kingdom
and the Netherlands. These markets remain attractive to us
although they have little potential for growth as regards
electricity and gas consumption. Major challenges in these
countries are the continued development of energy
infrastructure to enable them to achieve their ambitious
goals in relation to energy efficiency and climate protection.
Only companies that play an active role in this respect will
succeed over the long term. We intend to consolidate our

market position with our new-build power plant programme,

the expansion of renewables as well as our products and
services relating to energy efficiency.
The markets of Central Eastern and South Eastern Europe are
characterised by above-average economic growth and
mounting demand for energy. The political environment of
this region is fairly stable. RWE has a variety of opportunities
to contribute to expanding the energy infrastructure of
these countries. We are already active at all stages of the
energy sectors value chain in Central Eastern Europe. In the
field of electricity generation, we are focusing our growth
activities on Poland and Turkey. As mentioned earlier, we are
building a state-of-the-art gas-fired power plant with a net
installed capacity of 775 MW in Denizli. We are also
considering tapping into the Turkish hydroelectric power
market. In Poland, we have already built several onshore
wind farms. We intend to dedicate more than 60% of our
capital expenditure to regions outside Germany, our home
market, in the coming years. In so doing, we will focus on
organic growth, but we do not rule out making minor
acquisitions.

34 Strategy

RWE Annual Report 2011

Market positions of the RWE Group

in terms of sales

Electricity

Gas

Germany

No. 1

No. 3

United Kingdom

No. 4

No. 4

Netherlands

No. 2

No. 1

Central Eastern and South Eastern Europe

No. 2 in Hungary
No. 3 in Slovakia
No. 5 in Poland
Presence in the Czech Republic
Presence in Turkey

No. 1 in the Czech Republic

No. 2 in Slovakia
Leading position in Hungary

Total Europe

No. 3

No. 6

RWE is becoming more robust. We operate in a dynamic

market environment, which is increasingly characterised by
imponderables. In the last few years, the prices of fuel,
emission allowances and electricity fluctuated considerably.
The expansion of renewables is causing the supply of
electricity and therefore also spot prices to be
increasingly influenced by changing weather conditions. The
political framework has also become less stable, as
demonstrated by Germanys accelerated nuclear phase-out,
among other things. Moreover, investments in energy
infrastructure are increasingly meeting with resistance from
the public.
Thanks to our fully integrated business model and our
presence in various markets, we are well equipped to tackle
the challenges of a volatile market environment. On the
strength of our balanced portfolio structure, we can offset
earnings fluctuations in individual divisions and countries
and stabilise our earnings. We intend to take the following
steps in the future:
We intend to remain present along the energy sectors
entire value chain, as an integrated business model is the
basis for generating stable income.
We will maintain our balanced portfolio of regulated (e.g.
the network business) and unregulated assets (e.g. the
generation of freely marketed electricity).
We will continue to evaluate our projects based on the
contribution they make to increasing the value of our
company. This is the basis for generating profitable
growth.

In the field of electricity generation, we believe it is

extremely important to have a broad energy mix. We are
currently focusing on expanding renewables, as they still
account for a disproportionately small share of our portfolio.
We also rely on modern gas and coal-fired power stations as
they are a natural partner for renewables due to their high
degree of flexibility. For example, they can be ramped up
quickly, thereby stabilising the supply of electricity when
there is little wind or sunshine. We also want to increase
ourregional diversification in electricity generation. This
willcurtail the influence of regulatory intervention and
cyclical fluctuations in individual countries. In addition, a
geographically balanced renewable generation portfolio
hasthe advantage of being better suited to offset weatherrelated effects, e.g. when wind lulls in one region coincide
with high wind levels in another. This is one of the reasons
why we are increasing our wind power capacity in both
northern and southern Europe.
The regulated business will remain a fixture in our portfolio.
As a network operator, we are independent of commodity
price fluctuations and have a fairly low exposure to earnings
risks because the regulations governing the return on equity
and revenue caps are valid for several years. State subsidy
systems provide for a robust earnings base in the field of
renewables. Therefore, we will manage our capital
expenditure in order to ensure that we maintain a balanced
portfolio of regulated and unregulated activities over the
long term.

Strategy 35

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

We still plan to double annual oil and gas production,

although our ongoing divestment programme envisages the
sale of stakes in upstream projects. We originally intended
toincrease production to about 70 million barrels of oil
equivalent (OE) by 2016. Due to the impending divestments,
however, we will be unable to stay on schedule. Based on
our current planning, we will initially raise our gas and oil
production to over 40 million barrels of OE in 2014. RWE
Deas operating result should be in the order of 800 million
by then.
For us, becoming more robust also means making use of a
wide range of market-ready technologies. For instance, we
are not only investing in large-scale power plants, but also
insmall distributed units. In the field of renewables, we
relynot only on wind energy, but also on biomass and
hydroelectric power. We offer our customers flexible
complete energy solutions, from energy consulting and the
planning, installation, maintenance and operation of
distributed energy-producing units to the supply of district
heat. When rolling out major projects, we often involve
partners, rising to the technical and financial challenges
with them.

Our diverse portfolio provides us with a variety of ways to

mitigate country-related, technological and political risks
along the entire value chain, while laying a solid foundation
for generating profitable growth. This makes us more
independent and robust. Furthermore, as a result, we
strengthen our creditworthiness, which is the prerequisite
for favourable refinancing conditions, and creates the basis
for paying an attractive dividend.
Value added is a measure of the implementation of our
strategy. With our growth strategy, we are primarily
pursuing the goal of increasing the companys value. All
investment projects are measured by this. The central
control instrument is value added. It is the return on capital
employed, minus the cost of capital. In addition to other
individually agreed targets, value added is also a parameter
for the variable compensation of our executives. Details on
RWEs value management are described on page 62 et seqq.

Power generation

Raw material production

Gas and oil

Lignite

Wood pellets

Conventional
generation

Renewable
energy

RWE Dea

RWE Power

RWE Innogy

RWE Power

RWE Innogy

RWE npower

RWE npower

Essent

Essent

RWE East

RWE Power

RWE East

1 Long-distance gas transmission system operator in the Czech Republic (unbundled).

Energy trading/
gas midstream

Electricity and
gas networks

RWE
Supply
&Trading

RWE Deutschland

Electricity
and gas sales

RWE East
NET4GAS1

RWE npower
Essent

36 Economic environment

RWE Annual Report 2011

1.2 ECONOMIC ENVIRONMENT

The economies in most RWE core markets lost some of their momentum in 2011. One of the reasons was the Eurozone
sovereign debt crisis. However, Germanys economy proved robust, posting an estimated 3% growth. The unusually mild
weather affected energy consumption considerably. This applied above all to demand for gas. Prices of commodities such
as oil, hard coal and gas were higher than in 2010, driving up wholesale electricity quotations. Germanys accelerated
nuclear phase-out also caused electricity to become more expensive, whereas declining CO2 prices had a dampening
effect.
Economy loses some momentum. The strong recovery
witnessed in 2010 was followed by a slight decline in world
economic growth in 2011. Stimulus packages ended in the
USA and China, and the severe earthquake in March forced
Japan into a temporary recession. The Eurozones sovereign
debt crisis also left its mark. Based on estimates, the
cumulative gross domestic product (GDP) of all OECD
member states was up a mere 1.3% in 2011. Estimates have
the Eurozone recording a gain of 1.6%. Posting a rise of 3%,
Germany remained Europes growth engine. The dynamic
development displayed by the industrial sector played a key
role. Based on available data, economic output in the
Netherlands was up 1.5%. The Dutch economy, which was
strong at the beginning of the year, has since weakened
considerably. UK GDP grew by an estimated 0.9%. Industrial
production in Poland and Slovakia advanced significantly.
The GDP of these countries rose by an estimated 4% and
3%, respectively. As production in the Czech Republic and
Hungary did not develop quite as dynamically, growth in
those countries was somewhat weaker, at an estimated 2%
and 1.4%, respectively.
Weather much milder than in 2010. Whereas the economic
trend is primarily reflected in demand for energy among
industrial enterprises, the residential need for electricity
andgas is influenced more by weather conditions. This is a
result of the dependency of the heating requirement on
temperatures. In most of our European core markets,
theweather was much milder than in 2010. The average
temperature of the last ten years was also clearly exceeded.
Weather conditions were unusually mild especially in April
and December. In addition to energy consumption, the
generation of electricity is also subject to weather-related
influences, in particular with regard to wind turbines and
solar panels. Wind levels in Germany, the United Kingdom
and the Netherlands were slightly below average in 2011.

However, the prior years unusually low level was surpassed

significantly. The situation in Spain was different, where
wind levels dropped after having been especially high in
2010.
Heating demand markedly down. Demand for energy in our
core markets was marked by opposing factors: increasing
economic output on the one hand and the markedly milder
weather on the other. Based on available data for 2011,
electricity consumption was roughly on a par year on year in
Germany, whereas it was up 0.4% in the Netherlands. Even
higher growth rates were posted in Slovakia (0.5%), Hungary
(1.0%) and Poland (1.3%). Conversely, the Czech Republic
recorded a decline of 1.2%. The most significant decrease,
amounting to 2%, was experienced by the United Kingdom.
Progress made in the field of energy efficiency played a
major role. The development of gas consumption was largely
determined by the significant decline in demand for heating
and by decreasing gas consumption in the power generation
sector. Volumes dropped by 13% in Germany, 11% in the
Netherlands, and 18% in the United Kingdom. In the Czech
Republic and Hungary, gas usage slipped more moderately,
by 6% and 7%, respectively.
Oil price 40% higher year on year. Fuel prices on
international markets rose significantly compared to 2010.
This applies especially to crude oil. A barrel of Brent crude
traded at an average of US$111, making it US$32, or 40%,
more expensive than in the preceding year. However, the
price increase in euro terms was lower (33%) due to the
depreciation of the dollar. Developments on oil markets
were in part determined by rising demand in Asias fastgrowing economies. Another factor was the political turmoil
in North Africa and the Middle East, which resulted in
production shortfalls in several countries and gave rise to
the concern that oil supplies may tighten further. In

Economic environment 37

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

oil market also influence the price of gas. However, this

typically occurs with a time lag of several months. In
addition to the long-term oil price-indexed supply contracts,
trades of freely available quantities with shorter terms
increasingly determine the situation on gas markets. Oil
does not have a direct impact on the formation of prices for
such types of transactions. Major trading hubs are the
National Balancing Point (NBP) in the United Kingdom and
the Title Transfer Facility (TTF) in the Netherlands. Since
2009, prices on these markets have been far below those of
contracts indexed to oil prices. This caused numerous gas
purchasers including RWE to renegotiate with their
suppliers. Initial results of these renegotiations indicate that
the link between long-term gas procurement contracts and
oil prices may become less important and that volumes may
be increasingly settled at wholesale gas spot prices.

addition, numerous investors fearing inflation increasingly

put their money in commodities, which drove up prices.
However, the situation on the oil market eased somewhat
over the course of the year. Contributing to this was that
theconsumption forecasts for the USA, the Eurozone and
China were lowered and the International Energy Agency
(IEA) member states sold parts of their strategic reserves.
Furthermore, Libyas crude oil production recovered faster
than expected. Sentiment on the markets became more
nervous again in December, in reaction to the increased
tension with respect to Iran. Tehrans threatened closure of
the Hormus sea route, which is important to oil transport,
gave rise to renewed fear of an oil supply shortage.
Gas becomes much more expensive. As a large proportion
of gas imports to Continental Europe is based on long-term
agreements linked to the price of oil, developments on the

Crude oil (Brent) and gas (TTF wholesale market) forward prices for 2012
/MWh (average weekly figures)
40

15

35

10

30

15

10

10

15

Gas forward price

(TTF, left axis)

De
c
31

n
Ju
30

31

De

c1

11

10
n
Ju
30

31

De

c0

09
30

Ju

c0
De
31

Crude oil forward price

(Brent, indexed to TTF, left axis)

11

20

25

Gas/oil forward price difference

(right axis)

Source: RWE Supply & Trading.

Gas imports to Germany were an average of 26% more

expensive than in 2010. This was largely due to the
continued boom on oil markets. Quotations at Europes gas
trading points were also up. The TTF spot price averaged
23 per megawatt hour (MWh), up 5 on the comparable

figure in 2010. In forward trading, contracts for delivery in

the coming calendar year (2012 forward) sold for 26 per
MWh (TTF wholesale market). This is 7 more than what was
paid for the 2011 forward in 2010.

38 Economic environment

RWE Annual Report 2011

One-year forward prices on the TTF gas wholesale market

/MWh (average monthly figures)
Forward for delivery in 2010

Forward for delivery in 2011

Forward for delivery in 2012

Trading year: 2009

Trading year: 2010

Trading year: 2011

30
25
20
15
10

Source: RWE Supply & Trading.

In Germany, residential gas tariffs were about 5% up on the

prior year. For industrial enterprises, they were 15% higher,
as prices in this customer segment react much faster to
developments on the wholesale market. Gas also became
much more expensive in our other markets. Households and
industrial enterprises had to pay 7% and 17% more in the
Netherlands, 8% and 22% more in the United Kingdom, and
15% and 18% more in the Czech Republic. In Hungary, both
customer groups had to pay 9% more.
Demand from Asia leads to boom on hard coal markets.
Despite adverse weather-related events such as the floods in
Queensland (Australia) and heavy monsoon rainfall in the
southern hemisphere, steam coal production rose worldwide.
Demand also displayed dynamic development: in particular,
imports to China increased, which was one of the reasons
why the price level rose further. In 2011, a metric ton of
thermal coal cost an average of US$122 (including freight
and insurance) in Rotterdam spot trading. This is US$29 more
than in the preceding year.
Sea freight rates are a major component of hard coal
quotations. They amounted to US$10.70 per metric ton for
the standard route from South Africa to Rotterdam,
compared to US$12.50 in the previous year. Demand for sea
cargo has continued to increase, but this effect was more
than offset by expansion in shipping capacity.

The German Federal Office of Economics and Export Control

(BAFA) determines the price of hard coal produced in
Germany based on quotations for imported hard coal.
Therefore, the BAFA price follows developments on
international markets, albeit with a time lag. No average
figure was available for 2011 when this report went to print,
but experts estimate it to be 106 per metric ton of hard coal
unit. This would be 21 more than in the previous year.
Fears concerning the economy weigh on the price of CO2
emission allowances. European trading of CO2 emission
allowances (referred to as EU Allowances EUAs) was
characterised by significant price fluctuations last year.
Certificates became more expensive at the start of 2011.
EUAs for 2011, which were quoted at 14.40 per metric ton
of CO2 at the beginning of the year, occasionally cost over
17 in the spring. The backdrop to this was that the German
government set the course for the countrys accelerated
nuclear phase-out after the reactor accident at Fukushima
(see page 43). Market participants thus expected the need
for certificates to rise, because the electricity generated by
nuclear reactors is nearly free of carbon dioxide and some of
this production must now be replaced with generation from
more emission-intensive plants such as hard coal and gasfired power stations. Nevertheless, prices in emissions
trading collapsed in the second half of the year. At the end
of December, EUAs for 2011 traded for a mere 7.40. One of
the main reasons was the sovereign debt crisis in the

Economic environment 39

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Eurozone and the resultant fear of a weakening economic

output. The rapid increase in renewable energy also curtails
prices as this reduces the deployment of CO2-emitting, fossilfuelled power plants. Moreover, at the end of 2011, the
European Investment Bank started auctioning off certificates
for the third trading period. The emission allowances stem
from the new entrant reserve, which includes a total of
300million EUAs. By October 2012, the first 200 million of
them are to be placed on the market.

Last year, EUAs for 2011 traded for an average of 13.20.

The comparable figure for 2010 was 14.50. Certified
Emission Reductions (CERs), which cost an average of 9.80,
also became cheaper than in 2010. At the end of 2011, only
4.30 had to be paid for them. CERs are credits earned from
emission-reducing measures taken in developing and newly
industrialising countries. Companies in Europe may cover
their emissions up to a predetermined level by submitting
such certificates.

CO2 certificate prices in the European emissions trading system

/metric ton of CO2 (average monthly figures)
20
15
10
5
0
Trading year: 2009
EU Allowance (EUA)
for the corresponding trading year

Trading year: 2010

Certified Emission Reduction (CER)
for the corresponding trading year

Higher wholesale electricity prices. The rise in fuel prices

and the acceleration of Germanys nuclear phase-out left
deep marks on electricity wholesale markets. In spot trading
at the EEX Energy Exchange in 2011, base-load power sold
for an average of 51 per MWh, while peak-load electricity
settled at 61 per MWh. At 44 and 55, the comparable
year-earlier figures were lower. Quotations in German
electricity forward trading were also up. This is because
market participants expect fuel costs to remain high in the

Trading year: 2011

Source: RWE Supply & Trading.

medium term. In addition, the decisions taken by the German

government regarding the nuclear phase-out had an impact
on quotations, whereas the price collapse in emissions
trading had a counteracting effect. The forward contract for
the 2012 calendar year traded for an average of 56 per
MWh of base-load power and 69 per MWh of peak-load
power. An average of 50 and 65 was paid for 2011
forwards a year earlier.

40 Economic environment

RWE Annual Report 2011

Wholesale electricity spot prices in Germany

/MWh (average monthly figures)
80
70
60
50
40
30
20
Trading year: 2009
Base load

Trading year: 2010

Trading year: 2011

Forward for delivery in 2010

Forward for delivery in 2011

Forward for delivery in 2012

Trading year: 2009

Trading year: 2010

Trading year: 2011

Peak load

Source: EEX Energy Exchange.

One-year forward wholesale electricity prices in Germany

/MWh (average monthly figures)
80
70
60
50
40

Base load

Peak load

Source: RWE Supply & Trading.

We sell forward nearly all of the output of our power

plantsin order to reduce short-term volume and price
[Link], electricity prices in 2011 only had a small
impact on our income during the year. What was much
moredecisive was the price at which we had concluded
electricity contracts for delivery in 2011 in preceding years.
In Germany, we sold the electricity we produced in the year
under review for an average of 63 per MWh. By comparison,

the price we realised for our 2010 generation was 67.

We had already sold parts of this production in 2008 when
prices on commodity markets were at record highs.
When concluding electricity forward sales, we usually
procure the fuel and CO2 emission allowances required to
generate the electricity or at least secure their prices at the
same time as signing the supply agreement. The earnings of

Economic environment 41

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

our hard coal and gas-fired power plants are predominantly

determined by clean dark spreads (hard coal) and clean
spark spreads (gas). These are calculated by deducting the
cost ofthe respective fuel used and of emission allowances
fromthe price of electricity. The average clean dark spreads
and clean spark spreads we realised in Germany in 2011
were lower than the prior years comparable figures. The
spreads of our German lignite and nuclear power plants also
declined. The fuel costs of lignite-fired power stations
onlyfluctuate marginally, as this coal is not traded on
international markets. We cover the uranium requirement
of our nuclear power plants at stable conditions based on
long-term contracts. However, these plants have borne
a huge additional cost factor since 2011, namely the
nuclear fuel tax.
In the German end-customer business, electricity prices
rosefurther. Many supply companies had bought electricity
at prices that were lower than in 2010; however, levies
included in power bills in accordance with the German

Renewable Energy Act rose. This is due to increasing

amounts of electricity from renewables being fed into the
grid as a result of the expansion of wind, biomass and,
above all, solar generation capacity. Electricity tariffs
charged to households and small commercial enterprises in
2011 were therefore an average of 7% higher than in the
previous year. Prices paid by industrial companies track
developments on the spot market in some cases. They were
10% higher on average.
Quotations for UK wholesale electricity were also up. The
average price on the spot market was 48 (55) per MWh of
base-load power and 53 (61) per MWh of peak-load
power, increasing by 7 and 6 compared to 2010. In the UK
electricity forward market, contracts for delivery in the 2012
calendar year were settled for an average of 54 (62) per
MWh of base-load power in 2011. This is 9 more than what
was paid for the 2011 forward in the preceding year.
Peak-load power rose in price by 10, climbing to 61 (70)
per MWh.

Wholesale electricity spot prices in the United Kingdom

/MWh (average monthly figures)
80
70
60
50
40
30
20
Trading year: 2009
Base load

Peak load

Source: RWE Supply & Trading.

Trading year: 2010

Trading year: 2011

42 Economic environment

RWE Annual Report 2011

One-year forward wholesale electricity prices in the United Kingdom

/MWh (average monthly figures)
70

Forward for delivery in 2010

Forward for delivery in 2011

Forward for delivery in 2012

Trading year: 2010

Trading year: 2011

60
50
40
30
Trading year: 2009
Base load

Peak load

Source: RWE Supply & Trading.

Most of the electricity we generate outside Germany is also

sold forward. As our generation portfolio in the United
Kingdom largely consists of hard coal and gas-fired power
plants, the earnings trend of RWE npower was largely
determined by the clean dark spreads and clean spark
spreads realised. For the electricity produced in 2011, they
were both down on the previous years comparable figures.
The majority of UK energy suppliers have raised their
electricity tariffs for customers owing to higher procurement
costs several times in some cases. In the year being
reviewed, households and small commercial enterprises had
to pay an average of 6% more than in 2010. Prices charged
to industrial customers experienced the same percentage
increase.

In the Netherlands, wholesale electricity prices displayed

adevelopment similar to that in Germany. The clean dark
spreads and clean spark spreads realised by Essent were
down on last years comparable levels. In the end-customer
business, prices were up an average of 3% for households,
whereas they hardly changed for industrial enterprises.
End-customer prices in our Central Eastern European
electricity markets displayed varied developments.
Households had to pay 1.5% and 5% more in Poland and
Slovakia, but about 1% less in Hungary. Electricity supplied
to industrial customers in Poland and Slovakia was over 2%
and just under 4% more expensive, respectively, whereas in
Hungary it was 9% cheaper.

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Political environment 43

1.3 POLITICAL ENVIRONMENT

The U-turn in German energy policy made headlines last year. After the reactor accident at Fukushima, the German
government reversed the lifetime extension it had only just resolved for nuclear power plants. This move imposes heavy
burdens on RWE. Moreover, it has made it more difficult for Germany to achieve its ambitious climate protection goals. The
UK government is charting a different course, with plans for a new system for promoting environmentally friendly electricity
generation, also focusing on nuclear energy. It also intends to spur climate protection by introducing a new CO2 tax.

Germany accelerates nuclear phase-out. Against the

backdrop of the reactor accident at Fukushima in Japan, the
German Lower House of Parliament adopted an amendment
to the German Nuclear Energy Act (NEA) on 30 June 2011,
which became effective in August. The lifetime extension for
German nuclear power stations introduced in 2010 was thus
reversed. In addition, the legislator set deadlines for shutting
down each individual reactor. Accordingly, eight of
Germanys 17 reactors, including our Biblis A and B units,
have not been allowed to generate electricity since the
amendment to the NEA entered into force. In March 2011,
these power plants, most of which exceed a certain age, had
been ordered to cease operations, initially for a period of
three months (nuclear moratorium). The countrys nine
remaining nuclear power stations must be taken offline by
the end of 2015 (Grafenrheinfeld), 2017 (Gundremmingen
B), 2019 (Philippsburg II), 2021 (Grohnde, Brokdorf and
Gundremmingen C) and 2022 (Isar II, Neckarwestheim II and
Emsland). Of the aforementioned plants, Gundremmingen B
and C as well as Emsland are majority-owned by RWE.
We believe the amendment to the NEA is unconstitutional
because the plant operators will not be compensated and
the shut-down dates were established without sound
reasoning. Therefore, we lodged a constitutional complaint
in February 2012. We are also of the opinion that the nuclear
moratorium is unlawful, because we feel the prerequisites for
it did not exist. In April 2011, we filed a lawsuit with the
Hessian Higher Administrative Court in Kassel against it. The
German government based the moratorium on Sec. 19 of the
NEA, according to which the operation of nuclear facilities
may be forbidden if they pose an immediate risk. Our action
builds on the fact that Biblis complied with all applicable
safety standards.

The reversal of the lifetime extension eliminates payments

into the new Climate and Energy Fund, to which the
countrys nuclear power plant operators had committed
contractually. It was to be funded with the additional profits
that would have been achieved if the nuclear power stations
had been allowed to run longer than originally planned.
However, the fund will remain in existence despite the U-turn
in German energy policy. The German government intends
touse it to finance the promotion of electric cars, energy
storage facilities and the optimisation of the energy
efficiency of buildings. The fund will also be used to provide
relief to energy-intensive manufacturing companies. The
financing gap resulting from the reversal of the lifetime
extension is to be closed using the proceeds of auctioned
CO2 certificates.
The nuclear phase-out was flanked by a package of laws,
which was also passed at the end of June. They are designed
to promote the increased use of renewable energy, energyefficiency measures and the accelerated expansion of
network infrastructure. For example, the German Renewable
Energy Act (REA) now includes a model for promoting
offshore wind farms, which increases profitability in the
initial years of operation. Operators of plants that go
onlinebefore 1 January 2018 will receive feed-in revenue
of19eurocents per kilowatt hour (kWh), compared to
15euro cents at present. However, this start-up subsidy will
only be paid for eight instead of twelve years.
Fiscal courts doubt legality of nuclear fuel tax. The
Germangovernment is maintaining the new tax on nuclear
fuel despite the heavy additional burdens placed on the
operators of nuclear power plants by the U-turn in German
energy policy. The levy was introduced with effect from
1January 2011 and will expire at the end of 2016. As there
are strong arguments against its legal validity, we filed
lawsuits with the appropriate fiscal courts. In October, the

44 Political environment

Munich Fiscal Court provided temporary relief, ruling that no

nuclear fuel tax needs to be paid for the GundremmingenB
nuclear power station for the time being. The judges
doubtwhether it is a permissible consumption tax. They
aretherefore in line with the Hamburg Fiscal Court, which
suspended tax payments in similar cases. A Hamburg
judgement issued in January 2012 related to our Emsland
nuclear power station. We have been reimbursed the
74million and 154 million in taxes we paid for
Gundremmingen B and Emsland, respectively. The Fiscal
Court of Baden-Wrttemberg handed down different
judgements, in relation to two motions filed by EnBW, as it
does not have serious doubts regarding the legitimacy of the
nuclear fuel tax. The main customs authorities responsible
for collecting the tax and EnBW have lodged an appeal
against the judgements, on which the German Fiscal Court
will have to hand down aruling. Ultimately, the decision on
whether the nuclear fueltax is legitimate will be reached by
the German Constitutional Court or the European Court of
Justice. Until then, we will recognise the reimbursed funds as
a tax liability. The judgements of the Munich and Hamburg
Fiscal Courts therefore have no direct effects on our
earnings.
Slight decline in returns on equity for network capex in
Germany. In early November, the Federal Network Agency
set the Returns on Equity (RoE) that electricity and gas
network operators are allowed to earn for the upcoming fiveyear regulatory period. The allowable annual RoE before
corporate tax will be 9.05% for assets capitalised after 2005
and 7.14% for older assets. The new rates become effective
as of 1 January 2013 for gas network operators and as of
1January 2014 for electricity network operators. The current
allowed returns on equity are 9.29% and 7.56%,
respectively. The Federal Network Agency states that it
established the returns on equity based on the development
of the interest rates prevailing on capital markets and the
assessment of company risk. The network regulator had
initially intended to implement a much more significant
reduction. In our opinion, this would have made the muchneeded expansion of networks in Germany even more
difficult.

RWE Annual Report 2011

German government considers accelerating reduction

insolar power subsidies. The controversy over the
subsidisation of solar energy in Germany is continuing. The
backdrop to this is the unfettered expansion of photovoltaic
plants, which recently hit another all-time high. According to
the Federal Network Agency, installed capacity rose by
7.5gigawatts (GW) to approximately 25 GW last year. Based
on estimates by the German Association of Energy and Water
Industries, more than half of the subsidies paid pursuant to
the REA in 2012 are allocable to photovoltaics, although
solar panels produce a mere fifth of the electricity subject to
the REA. As a result of the significant increase in capacity,
the REA apportionment paid by consumers via their
electricity bills will increase substantially. It already amounts
to 3.59 euro cents per kWh for 2012. Based on calculations
of the four German transmission system operators, it may
rise to as much as 4.74 euro cents in the coming year. The
German government has been reducing the subsidy rates for
solar power every six months since the middle of 2010.
However, this was more than offset by the erosion of prices
on the market for photovoltaic components. The German
Environmental Minister now plans to reduce the subsidies in
monthly steps. The cuts will depend on the degree of
expansion.
State veto powers put a de facto end to CO2 storage in
Germany. Projects for capturing and storing carbon dioxide
underground have very little prospects for the future in
Germany. In the middle of June, the German Lower House of
Parliament passed a CO2 storage law, which would have
established the legal framework for such undertakings.
However, the act did not get a majority vote in the Upper
House of Parliament. In addition, it would have granted the
federal states the right to refuse the storage of carbon
dioxide in their territory. Some states still feel that their
powers are too limited, whereas others are of the opinion
that the law is too restrictive. No agreement is crystallising
on the Arbitration Committee so far. EU member states are
obliged to translate the Brussels directive on the capture and
storage of carbon dioxide into national law. The United
Kingdom and the Netherlands have already passed
corresponding laws. The deadline for doing so expired in
June 2011.

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

United Kingdom: UK electricity market on the verge of

fundamental reform. In July 2011, the British governing
coalition of conservatives and liberals published a White
Paper on the reform of the electricity market, with which it
mainly intends to spur climate protection. Although the
White Paper was refined in December, key details of the
comprehensive electricity market reform have not yet been
specified. The government is working on a legislative
proposal that it will submit to parliament in the spring
of2012.
By reforming the electricity market, the government aims to
reduce the CO2 intensity of UK electricity production from
0.5 metric tons of carbon dioxide per megawatt hour (MWh)
at present to 0.1 by 2030. Another goal is to increase the
share of primary energy consumption covered by renewables
to at least 15% and to have them account for at least 30% of
electricity generated in 2020. The reform package described
in the White Paper includes the introduction of a tax on fossil
fuel in April 2013. Besides the costs incurred for emission
allowances, operators of coal and gas-fired power plants
would then have to shoulder additional burdens. The amount
of the tax will depend on the CO2 intensity of the fuel, with
the tariff increasing over time. The result envisaged by the
government is for the total cost of CO2 emissions to amount
to at least 30 per metric ton of carbon dioxide in 2020. In
addition, the White Paper establishes a cap for new plant
emissions of 0.45 metric tons of CO2 per MWh, which is to
become effective in 2014. This would mean that only new
coal-fired power stations that capture and store at least a
part of the carbon dioxide they produce could be built.
In the long run, the UK government intends to introduce a
capacity market. Energy utilities will then be compensated
for keeping reliable power station capacity on standby. The
government believes that reserve capacity of this kind is
becoming increasingly important, as the expansion of the
renewable footprint is resulting in a rise in electricity feed-ins
that are dependent on the weather or time of day.

Political environment 45

Another mainstay of the electricity market reform is a new

compensation system for climate-friendly electricity
generation from renewable sources and nuclear power, as
well as from fossil fuels in combination with carbon capture
and storage. This is intended to replace the existing system
for the promotion of renewable energy after a transitional
phase. Producers of renewable energy currently receive
renewable obligation certificates. They can sell these
certificates to supply companies which can use them to
prove that the share of their electricity sales determined by
the government stems from renewable sources. A
mechanism termed Contract for Difference (CfD) has also
been planned. According to the principle on which it is
based, there is a contractually guaranteed fee for the
electricity the energy companies put on the system. If the
price realised on the wholesale market is below the fee, they
are paid the difference. However, if the opposite is true, the
energy company is retrospectively obliged to reimburse the
difference. The governments plan envisages the first CfDs
being concluded in 2014.

46 Major events

RWE Annual Report 2011

1.4 Major Events

The German governments nuclear energy resolutions marked our last financial year. They caused us to launch a package
of measures to strengthen our financial clout, containing additional efficiency enhancements, a leaner capital expenditure
programme and numerous divestments. We already sold some assets in 2011, including the majority of the electricity
transmission system operator Amprion. The package of measures also included a capital increase, which we completed
ina difficult market environment. We passed some major milestones in modernising our generation portfolio: three
state-of-the-art large-scale power plants with a total capacity of 3.8 gigawatts were about to start commercial operation
at the end of2011.
Germany accelerates nuclear phase-out. Against the
backdrop of the reactor accident at Fukushima, the German
Lower House accelerated the countrys nuclear phase-out.
On30 June 2011, it passed an amendment to the German
Nuclear Energy Act, which entered into force in August and
mandates the immediate shut-down of eight of Germanys
17reactors. This affects our Biblis A and B units. The
legislator set the deadlines for taking the remaining nine
nuclear power plants offline. They cover the period from
theend of 2015 through to the end of 2022. Detailed
information on this topic can be found on page 43.
RWE adopts package of measures to strengthen financial
power. Not least due to the considerable earnings shortfalls
resulting from the resolutions passed by the German
government on nuclear energy, in August we adopted a
package of measures designed to strengthen RWEs financial
clout and offer new growth prospects. A key component of
this package are divestments. In August 2011, we presented
the assets we may consider selling. These are the Czech longdistance gas network operator NET4GAS, our stake in
Berlinwasser, some German sales and network activities, and
select generation capacity. Furthermore, we announced that
we intend to sell RWE Dea either as a whole or individual
upstream activities. However, a complete divestment is no
longer on the agenda. The divestments are scheduled for
completion by the end of 2013. Part of the package of
measures is a leaner capital expenditure budget. Moreover,
we raised the target figure for the ongoing efficiencyenhancement programme. We now intend to make an annual
earnings contribution that rises to 1.5 billion by the end of
2012 compared to the 2006 level. Previously, the goal was
1.4 billion. A new efficiency programme is already being

prepared for the period after 2012 (see page 98). The
measures we approved in August include strengthening
equity by issuing RWE common shares that are either new or
held by us as treasury shares. We managed to take this step
before the end of the year despite a difficult market
environment.
Capital increased by 2.1 billion. In December, we placed
52.3 million new and 28.1 million treasury RWE common
shares. The issue price of 26 per share resulted in gross
proceeds from the issuance of some 2.1 billion. All of the
stock was offered to institutional investors by way of an
accelerated bookbuilding. Subscription rights were excluded
for the new stock, but not for the treasury shares. The latter
were therefore allocated with a right of withdrawal. RWE
shareholders made frequent use of the subscription right,
purchasing a total of 18.96 million shares. The capital
increase was completed on 21 December, on expiry of the
subscription deadline. It is one of the biggest transactions of
this type concluded by a European industrial enterprise in
recent years and benefits our credit rating. In the middle of
2011, Standard & Poors and Moodys had downgraded
RWEby one notch each, to A- and A3, respectively. They
maintained their negative outlooks.
RWE sheds majority of Amprion. We also made progress in
implementing our divestment programme. In early
September, we sold a 74.9% stake in our German electricity
transmission system operator Amprion. It was acquired by a
consortium of insurance companies and utilities, to which
companies of Munich Re, ERGO, Swiss Life and Talanx belong,
as does the Westphalia-Lippe Physicians Pension Fund. RWE
initially held an interest in the consortium, which it sold at

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

the end of 2011. The sale price for Amprion is based on

thecompanys total assessed enterprise value of about
1.3billion including 370 million in net debt (cut-off date:
1January 2011). This roughly corresponds to the companys
assets recognised by the regulator and eight times recurrent
EBITDA. The transaction provides us with relief in terms of
net debt and capital expenditure. Amprion plans to invest
more than 3 billion to maintain and expand network
infrastructure this decade. In the consortium of investors,
wegained a reliable partner with a strong capital base.
Thyssengas and minority interest in Rostock-based coal
power plant sold. In addition to Amprion, we sold two other
assets in 2011. In February, we completed the divestment of
Thyssengas, the German long-distance gas network operator.
It was purchased by an infrastructure fund managed by the
Australian financial service provider Macquarie. Thyssengas
transmits close to 10billion cubic metres of natural gas every
year over a long-distance network with a length of some
4,100 kilometres. We had made a commitment to the
EU Commission to sell the company. Also in February, we
divested a minority interest of24.6% in a hard coal-fired
power station at Rostock. Thefacility has an electricity
generation capacity of 553megawatts (MW) and provides
district heat for the Rostock municipal utilitys network. The
buyer of our share isRheinEnergie AG, which is domiciled in
Cologne.
RWE acquires 30% stake in Dutch power plant operator
EPZ. In addition to the aforementioned divestments, we also
made some acquisitions in 2011. The largest transaction was
the purchase of Energy Resources Holding B.V. (ERH). ERH
used to belong to Essent, but we were unable to obtain it
when we acquired the Dutch energy utility in 2009 as certain
legal issues remained to be resolved. ERH owns 30% of EPZ,
a Dutch electricity generator. EPZ operates the 485MW
Borssele nuclear power plant, a 406 MW hard coal-fired
power station, and a small number of wind turbines. In line
with our stake in EPZ, we can market 30% of the companys
electricity generation ourselves. The remaining 70% of EPZ is
held by the power utility Delta N.V.

Major events 47

Major milestones passed in building new power plants.

In2011, we made major progress in modernising and
expanding our power plant fleet. We have completed the
construction of the dual-block lignite-fired power station at
Neurath near Cologne. We paid a total of 2.6 billion for
theplant, which has an installed capacity of 2,100 MW. It is
scheduled to begin commercial production at the end of
March 2012. The two Dutch gas-fired power stations, Claus C
and Moerdijk 2, have also been completed. Claus C is located
at Maasbracht, has a net installed capacity of 1,304 MW, and
went online in January 2012 several months earlier than
originally planned. We spent 1.1billion on the state-of-theart plant, which has an efficiency of nearly 60%. The 426 MW
Moerdijk 2 gas-fired power station has been operating
commercially since February 2012. The associated investment
cost amounted to0.4 billion. Furthermore, in April 2011, we
laid the cornerstone for a gas-fired power plant in Denizli in
the west of Turkey. The facility will have a net installed
capacity of 775MW and is scheduled to become operational
at the end of 2012. The owner and operator will be a joint
venture, in which RWE holds 70%, with the Turkish energy
utility Turcas owning the remaining 30%. The capex budget
isan estimated 0.5 billion.
Wood pellet factory in Georgia commences production.
Webuilt a plant for manufacturing wood pellets in the US
state of Georgia in order to secure a sustainable fuel supply
for our biomass facilities. The factory was commissioned in
the middle of May 2011. Its annual production capacity of
750,000 metric tons makes it one of the largest worldwide.
The wood pellets will initially be used in our hard coal-fired
power station at Amer (Netherlands). Some of the plants
units already co-fire up to 30% biomass. This proportion
should be increased considerably in the years ahead.
Furthermore, we intend to use the pellets in our power
station at Tilbury (UK). The three hard-coal units were
converted for firing biomass in 2011. They now have a
combined installed capacity of 750 MW.

48 Major events

RWE concludes billion euro contract with the German

railway. RWE will supply Deutsche Bahn with electricity
generated by hydroelectric power plants for a period of
15years. This was agreed in a contract worth in the order of
1 billion at the end of July. From 2014 onwards, we will
provide the German railway with 0.9 billion kilowatt hours
(kWh) per annum, enough to run one-third of the longdistance fleet (ICE and IC trains). Through certificates of
origin, we will guarantee that we generate electricity from
RWE Innogy hydro plants matching the amounts we supply
toDeutsche Bahn. The transaction was designated the
Commodity Deal of the Year 2011 at the Commodity Business
Awards in November 2011.

RWE Annual Report 2011

Supervisory Board appoints Peter Terium as future CEO

ofRWE AG. Peter Terium will succeed Dr. Jrgen Gromann
asCEO of RWE AG. This was decided by the Supervisory
Board of RWE AG at its meeting on 8 August 2011. The
48-year-old Dutchman joined RWEs Executive Board as of
1September as Jrgen Gromanns deputy and will assume
chairmanship when the current CEO retires with effect from
30 June 2012. Peter Terium held positions at KPMG and
Schmalbach-Lubeca AG before joining RWE. He started as
Head of Group Controlling after which he became the
CEOofRWE Supply&Trading and, most recently, Essent.
[Link] Schmitz will be his deputy with effect from
1July 2012. The 54-year-old Rhinelander has been a member
of the Executive Board of RWE AG since 2009 and is the
companys Chief Operating Officer.

Commentary on the segments 49

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

1.5 COMMENTARY ON THE SEGMENTS

Group structure with seven divisions. Reporting on the
financial year that just ended is based on the segment
structure used in the 2010 financial statements. The
RWEGroup is divided into seven divisions based on
geographic and functional criteria. The following is an
overview of them.
Germany. This division consists of the Power Generation
and Sales/Distribution Networks Business Areas.
Power Generation: This business area includes the
activities of RWE Power, Germanys largest electricity
generator. The company mainly produces power from coal,
gas and nuclear fuel. Lignite is produced by RWE Power
through in-house mining activities.
Sales/Distribution Networks: Our German sales and
distribution network operations are pooled in this
business area. They are overseen by RWE Deutschland,
which mainly encompasses the network companies RheinRuhr and Westfalen-Weser-Ems, RWE Vertrieb (including
eprimo, RWE Energiedienstleistungen and RWE Aqua),
RWE Effizienz, RWE Gasspeicher and our German regional
utilities. The latter operate their own electricity generation
facilities to a small extent, as well as managing network
and end-customer operations. The Sales/Distribution
Networks Business Area also includes some non-German
activities: our minority interests in Austria-based KELAG
and Luxembourg-based ENOVOS as well asour water
operations in Zagreb, Croatia, which have been assigned
to RWE Aqua.
Netherlands/Belgium: By acquiring Essent with effect from
30 September 2009, we have become a leading energy
utility in the Benelux region. In the Netherlands, the
business areas core market, Essent generates electricity
from gas, hard coal and biomass and holds a minority
stake in Borssele, the only nuclear power station in the
Netherlands. In addition, the company is active in the
electricity and gas sales business and runs gas midstream
operations. Since the acquisition, some of Essents former
activities have been transferred to other RWE divisions.
Most recently, since 1 January 2011, parts of the gas
midstream business of Essent have been transferred to
RWE Supply & Trading.

United Kingdom: This is the division under which we

report on RWE npower, one of the countrys leading
energy utilities. The company generates electricity from
gas, hard coal, oil and biomass. Furthermore, RWE npower
sells electricity and gas to end-customers.
Central Eastern and South Eastern Europe: This division
contains our companies in the Czech Republic, Hungary,
Poland, Slovakia and Turkey. In the Czech Republic,
ouractivities encompass the supply, distribution,
supraregional transmission, transit and storage of gas. In
2010, we started marketing electricity there as well. In
Hungary, we cover the entire electricity value chain, from
production through to the operation of the distribution
system and the end-customer business, and are also active
in the gas and water supply sector via minority stakes. Our
Polish operations consist of the distribution and supply of
electricity. In Slovakia, we are active in theelectricity
network and electricity end-customer businesses via our
minority interest in VSE and in the gas supply sector via
RWE Gas Slovensko. In Turkey, we are building a gas-fired
power station with a partner. The newly established RWE
East, headquartered in Prague, Czech Republic, started
overseeing the companies belonging to the Central
Eastern and South Eastern Europe Division in 2011. One
exception is NET4GAS, theoperator of our Czech longdistance gas network. Tocomply with regulatory
requirements, this company is assigned directly to
RWE AG. However, it is still part of theCentral Eastern and
South Eastern Europe Division foraccounting purposes.
Renewables: This division comprises the activities of
RWEInnogy, which specialises in electricity and heat
production from renewable sources.
Upstream Gas & Oil: This segment consists of RWE Deas
business. The company produces gas and oil, focusing on
Germany, the United Kingdom, Norway and Egypt.
Trading/Gas Midstream: This is the item under which we
report on RWE Supply&Trading, which is responsible
forour energy trading activities and most of our gas
midstream business. Furthermore, the division supplies
major German industrial and corporate customers with
electricity and gas. However, parts of these activities were
transferred to the Germany Division with effect from
1January 2011.

50 Commentary on the segments

We report certain groupwide activities outside the divisions

as part of other, consolidation. These are the Group
holding company, RWE AG, and our internal service
providers, namely RWE Service, RWE IT, RWE Consulting
andRWE Technology. This item also encompasses
Thyssengas, the long-distance gas network operator we sold
on 28February 2011. The company is considered in the
January and February figures for 2011. We also report the
electricity transmission system operator Amprion in other,
consolidation. However, we started accounting for it using
the equity method in September 2011, as we have only held
a minority stake in Amprion since then. Revenue and capital
expenditure following the change in accounting treatment
are no longer considered in the consolidated financial
statements. However, Amprion continues to contribute to
both RWEs EBITDA and operating result, on the basis of
pro-rated income after tax.

RWE Annual Report 2011

Full consolidation of the German regional utility NVV.

Atthe beginning of 2011, we started including NVV AG,
which has since been renamed NEW AG, in the consolidated
financial statements as a fully consolidated company.
Headquartered in Mnchengladbach, NEW is one of the
leading utilities in the Lower Rhine region. Among other
things, it owns majority interests in NEW Viersen (formerly
Niederrheinwerke Viersen) and NEW Tnisvorst (formerly
Stadtwerke Tnisvorst). NEW was previously accounted for
as an associated company of RWE Deutschland AG using the
equity method.

Business performance 51

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

1.6 BUSINESS PERFORMANCE

Fiscal 2011 imposed substantial burdens on us, including some that we had not expected. We were especially hard hit by
Germanys accelerated nuclear phase-out. Loss-making gas procurement contracts and declining electricity generation
margins also clearly left their mark on the consolidated financial statements. The operating result and recurrent net
income lagged behind the high levels recorded in 2010 by 24% and 34%, respectively. Despite these earnings drops, we
recorded continued organic growth. Capital expenditure on property, plant and equipment matched the previous years
record figure.

Electricity production
bydivision

Germany

Netherlands/
Belgium

United Kingdom

Central Eastern and

South Eastern
Europe
2011
2010

Billion kWh

2011

2010

2011

2010

2011

2010

In-house generation

152.01

165.11

11.5

14.3

29.9

34.3

5.9

5.7

Renewables

RWE Group

2011

2010

2011

2010

6.4

5.9

205.7

225.3

Lignite

68.3

65.4

5.8

5.6

74.1

71.0

Hard coal

34.0

39.0

5.1

5.7

8.6

10.4

0.1

0.1

47.8

55.2

Nuclear

34.3

45.2

34.3

45.2

Gas

11.8

11.9

5.1

6.8

21.3

23.8

0.1

0.1

0.2

0.2

38.5

42.8

Renewable energy

1.4

1.5

1.3

1.8

6.1

5.6

8.8

8.9

Pumped storage, oil,

other

2.2

2.1

0.1

2.2

2.2

32.1

27.2

10.22

8.62

22.32

18.02

19.22

20.52

0.1

107.13

104.43

184.1

192.3

21.7

22.9

52.2

52.3

25.1

26.2

6.4

6.0

312.8

329.7

Electricity purchased from

third parties
Total

1 Including electricity procured from power plants not owned by RWE that we can deploy at our discretion on the basis of long-term agreements. In fiscal 2011, it amounted to
22.9billion kWh, of which 20.8 billion kWh were generated from hard coal.
2 Electricity stated was fully or partially purchased through our trading business.
3 Including purchases by RWE Supply&Trading and Amprion.

Electricity generation down 9%. In the financial year that

just came to a close, the RWE Group produced 205.7 billion
kilowatt hours (kWh) of electricity, 9% less than in 2010.
During 2011, 36% of electricity generation was from lignite,
23% from hard coal, 19% gas, and 17% nuclear. The share of
renewable energy amounted to 4%. In-house generation
and power purchases combined for 312.8 billion kWh
(2010: 329.7 billion kWh). Developments in our divisions
were as follows.
Germany: The Germany Division produced 152.0 billion
kWh of electricity. This includes electricity generated by
power plants not owned by RWE that we can deploy at our
discretion on the basis of long-term agreements. These
are primarily hard coal units. Compared to 2010,
generation by the Germany Division was down 8%. As a
result of the German governments U-turn in energy policy
following the reactor accident at Fukushima, neither of the
Biblis units have been allowed to produce electricity since
March 2011. We have provided detailed information on
this on page 43. Our hard coal power stations were also

used less than in the previous year, because market

conditions for these plants deteriorated. In addition,
maintenance work resulted in prolonged interruptions.

Netherlands/Belgium: Essents electricity production was
down 20% to 11.5 billion kWh. Capacity utilisation at our
Dutch gas-fired power plants in particular was markedly
down, due to unfavourable market conditions. In addition,
we took a unit of the Amer hard coal-fired power plant
offline for planned maintenance from April to November
2011.
United Kingdom: RWE npowers contribution to our
electricity generation was 29.9 billion kWh, which was
13% lower than in the previous year. In March, we took
our three hard coal units at Tilbury offline in order to
convert them to biomass facilities. They were ramped
back up again sequentially starting in December 2011.
Our new gas-fired power station at Staythorpe had a
positive impact on generation volumes. The plant has an
aggregate net installed capacity of 1,728 megawatts (MW)

52 Business performance

RWE Annual Report 2011

and began commercial operation in the second half of

2010. However, two of the four units were taken offline for
several months because their transformers had to be
replaced by the manufacturer.
Central Eastern and South Eastern Europe: At 5.9 billion
kWh, generation by this division was a little higher year on
year. Almost all of it is allocable to the Hungarian lignitebased power producer Mtra.
Renewables: RWE Innogy increased electricity generation
by 8% to 6.4 billion kWh, primarily due to the growth of
its wind power capacity. During 2010, the company
commissioned four onshore wind farms: two in Poland and
two in Italy, with a combined net installed capacity of
118MW. Electricity generation facilities totalling 95 MW
were added in 2011. These are primarily onshore wind
turbines in Spain, the United Kingdom, Italy and Germany.
The utilisation of our wind turbines improved considerably
compared to the previous year, during which wind levels
were low. Nevertheless, it slightly lagged behind
expectations in 2011. In contrast, we produced far less
electricity at our German run-of-river power plants as
rainfall and melt water levels were unusually low, causing
rivers to carry less water.
In addition to in-house generation, we procure electricity
from external suppliers. These purchases totalled
107.1billion kWh, exceeding the year-earlier level by 3%
and reflecting the decline in in-house generation. Purchases

Power plant capacity

by division
as of 31 Dec 2011, in MW

Germany1

include electricity which was fed into RWEs network by third

parties in accordance with the German Renewable Energy
Act.
Among Europes leading electricity generators, with
49gigawatts in power plant capacity. At the end of the
2011 financial year, the RWE Group had an installed capacity
of 49.2 GW. We rank fifth among Europes energy utilities.
These figures include the aforementioned contractually
secured capacities that are not owned by RWE. Conversely,
they do not include the new gas-fired power stations in the
Netherlands or the twin-unit lignite power plant at Neurath
near Cologne. These plants were completed by the end of
2011, but had not yet taken up commercial operation by
then. The RWE Groups generation capacity dropped by
3.0GW compared to 2010. The main reason was that our
Biblis nuclear power plant was forced to stop production due
to the U-turn in German energy policy. Hard coal still
accounts for the biggest share of the RWE Groups installed
electricity generation capacity at 28% (preceding year:
29%), followed by gas at 24% (22%) and lignite at 21%
(21%), with the proportion of nuclear power amounting to a
mere 8% (12%). Renewables have the same share, growing
by two percentage points compared to 2010. The main
contributing factor is the aforementioned conversion of the
Tilbury UK hard coal power station to a biomass facility. The
Germany Division accounted for 64% of our generation
capacity, with the United Kingdom and Netherlands/Belgium
Divisions making up 23% and 6%, respectively.

Netherlands/
Belgium

United Kingdom

Central Eastern
and South
Eastern Europe

Renewables

RWE Group

Primary energy source

Hard coal

9,555

916

3,512

102

13,993

Gas

5,228

1,897

4,557

147

442

11,873

Lignite

9,799

763

19

10,581

Nuclear

3,901

3,901

313

331

742

2,357

3,744

2,489

2,657

5,146

31,285

3,144

11,468

911

2,430

49,238

Renewable energy
Pumped storage, oil, other
Total

1 Including capacities of power stations not owned by RWE that we can deploy at our discretion on the basis of long-term agreements. As of 31 December 2011, these generation
capacities amounted to 8,547 MW, of which 6,382 MW were based on hard coal.
2 Mostly combined heat and power plants.

Business performance 53

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

CO2 emissions down 2%. In fiscal 2011, our power stations

emitted 161.9 million metric tons of carbon dioxide. Our own
plants accounted for 141.5 million metric tons, and the
remaining 20.4 million metric tons came from contractually
secured capacity. Our emissions were 3.0 million metric tons,
or 2%, lower year on year. This is a consequence of the
decline in electricity generation by our hard coal and gasfired power plants. By contrast, our specific emission factor,
reflecting the carbon dioxide emissions per megawatt hour
(MWh) of electricity produced, increased, i.e. from 0.732 to
0.787 metric tons per MWh. This is mainly because our Biblis
nuclear power station stopped operating. As a result, the
share of CO2-free or low-carbon generation in our total

Emissions balance
by division

Germany1

production decreased. The continued expansion of our gas

and renewable generation capacity had a counteracting
effect.
In the year under review, we were allocated free state
emission allowances (known as EU Allowances, or EUAs)
corresponding to 116.6 million metric tons in CO2 emissions.
We received emission allowances for 85.4 million metric tons
in Germany, 17.2 million metric tons in the UK, and
8.6million metric tons in the Netherlands. In total, the
allocation was far from being enough to cover our emissions.
Therefore, we had to purchase certificates. At the Group
level, the shortage amounted to 45.3 million metric tons.

Netherlands/
Belgium

United Kingdom

Central Eastern and

South Eastern
Europe

RWE Group2

Million metric tons of CO2

2011

2010

2011

2010

2011

2010

2011

2010

2011

2010

CO2 emissions

132.4

130.9

6.2

8.3

16.2

18.9

6.8

6.5

161.9

164.9

Free allocation of CO2 certificates

85.4

85.1

8.6

8.5

17.2

16.2

5.0

4.9

116.6

115.1

Shortage of CO2 certificates

47.0

45.8

2.4

0.2

1.0

2.7

1.8

1.6

45.3

49.8

1 Includes power stations not owned by RWE that we can deploy at our discretion on the basis of long-term agreements. In the year under review, they produced 20.4 million metric tons
of CO2 and were allocated certificates for 18.9 million metric tons.
2 Includes small amounts in the Renewables Division largely attributable to combined heat and power plants.

Until 2020, we are allowed to cover approximately

100million metric tons of our CO2 emissions by submitting
certificates obtained through emission reductions within the
scope of Kyoto Clean Development Mechanism (CDM) and
Joint Implementation (JI) projects. We make use of this
option because the cost of such emission allowances is
normally far below the market price of EUAs. As of the
balance sheet date, we had contractually secured certificates
from CDM/JI measures for 74.5 million metric tons of carbon
dioxide. However, it cannot be ruled out that some projects
may not be implemented or that their emission savings may
lag behind expectations. Taking such risks into account, we

estimate that we will obtain emission certificates covering

43.7 million metric tons of CO2. By the end of 2011, we had
already received certificates for 25.5 million metric tons, of
which we have already used an equivalent of 16.4 million
metric tons.
RWE Dea strengthens upstream position. In addition to
electricity, RWE also produces gas and oil. By making
substantial investments, our upstream subsidiary, RWE Dea,
continued to strengthen its position in 2011. The main
growth projects the company is implementing are in the
UK North Sea, off the coast of Norway, and in North Africa.

54 Business performance

RWE Annual Report 2011

As of 31 December 2011, RWE Dea had crude oil and gas

reservesand resources of 237 million cubic metres of oil
equivalent (OE). This is 4% more than in the previous year
(228millioncubic metres of OE). Reserves is the term used
for hydrocarbons stored under the ground, the existence
ofwhich has been proven, and the production of which is
economically feasible and legally secured. These are different
to resources, which are hydrocarbons that fail to meet all the
aforementioned criteria, or which have not yet been clearly
identified geologically.

Electricity sales volume down 5%. In the past financial year,

we supplied 294.6 billion kWh of power to external
customers, 5% less than in 2010. Electricity sales are
typically slightly lower than generation levels, mainly due to
transmission losses and in-house use by lignite mining
operations and pumped storage power stations.

Electricity sales volume of the RWE Group by region in 2011 (2010)

%
17.1 (16.1) United Kingdom

Oil production up 9%, gas production down 4% year on

year. In the fiscal year being reviewed, RWE Dea produced
2,664 million cubic metres of gas and 2,478 thousand cubic
metres of oil. In sum, this results in a total output of
5,056thousand cubic metres, or 31.8 million barrels, of OE.
Production was up 2% compared to 2010. We posted a
significant rise of 9% in crude oil production, in part driven
by additional wells in the German Mittelplate North Sea field
and in the Gulf of Suez. However, an even bigger role was
played by the commissioning of the Norwegian Gja field in
November 2010, where we produce not only oil but also gas.
Nevertheless, RWE Deas gas volumes declined by 4%
overall. The main reason was the depletion of existing
reserves in our German and UK concession areas, which we
could not yet offset despite the continuous expansion of our
upstream position.

External electricity
sales volume

65.4 (67.5) Germany1

9.0 (8.1) Netherlands1

294.6 billion kWh
(311.2 billion kWh)

5.6 (5.7) Hungary

2.9 (2.6) Other

1 Prior-year figures adjusted.

Residential and
Industrial and corporate
commercial customers
customers

Distributors

Electricity trading

Total

Billion kWh

2011

2010

2011

2010

2011

2010

2011

2010

2011

2010
113.1

Germany

25.5

26.0

31.4

29.1

60.4

58.0

117.3

Netherlands/Belgium1

10.7

11.0

10.3

11.0

21.0

22.0

United Kingdom

17.4

19.1

32.9

30.8

50.3

49.9

8.7
-

7.9
-

9.2
28.8

10.2
32.0

5.8
-

6.5
-

20.8

31.3

23.7
49.6

24.6
63.3

62.6

64.4

113.1

113.2

98.1

102.3

20.8

31.3

294.6

311.2

Central Eastern and

South Eastern Europe
Trading/Gas Midstream1
RWE Group1, 2

1 Prior-year figures adjusted.

2 Including sales of the Renewables Division and of companies stated under other, consolidation (mainly Amprion).

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Germany: The division sold 117.3 billion kWh of electricity,

4% more than in the previous year. A major contributing
factor was the initial full consolidation of NVV, which now
operates as NEW (see page 50). Excluding NEW, we would
have recorded an increase of 2%. In business with
industrial and corporate customers, the transfer of parts of
the key account business from RWE Supply&Trading
added sales volume. In addition, we benefited from the
robust economy. Moreover, there was a rise in electricity
fed into our network and passed through to distributors
pursuant to the German Renewable Energy Act. In
contrast, the milder weather caused power consumption
by users of electric storage heaters to drop. This curtailed
sales to households and small commercial enterprises. By
the balance sheet date, we were supplying 6,959,000
customers with electricity in this segment. This compares
to 6,674,000 at the end of 2010. The significant growth is
due to the inclusion of NEW, which added 361,000
residential and commercial customers. Furthermore, we
took over customers from TelDaFax, a discounter which
became insolvent.
Netherlands/Belgium: Electricity sales achieved by Essent
amounted to 21.0 billion kWh. This corresponds to a
decline of 5% compared to 2010, partly because some
industrial and corporate customers switched providers.
Wealso suffered volume shortfalls in the residential and
small commercial enterprise segment. This is partially
dueto weather-related effects. By the end of 2011, we
were supplying 2,169,000 residential and commercial
customers with electricity in the Netherlands. Our share
ofthe market thus remained stable. In Belgium, our
customer base grew by 17,000 to 177,000.

Business performance 55

United Kingdom: RWE npower supplied 50.3 billion kWh

ofelectricity, slightly more than in 2010. In the UK, we
won industrial and corporate customers. The number of
households and small commercial operations we serve
rose by 58,000 to 3,935,000. However, electricity
consumption per customer was down, due to the milder
weather as well as progress made in the field of energy
efficiency.
Central Eastern and South Eastern Europe: We marketed
23.7billion kWh of electricity in this division, 4% less
thanin the preceding year. Our industrial and corporate
customer bases in Hungary and Poland shrank. The
number of residential and small commercial enterprises we
served developed as follows: by the end of 2011, we had
2,178,000 customers in Hungary, which was close to the
previous years level, while in Poland, the corresponding
customer base had risen marginally to 897,000. Since the
spring of 2010, we have also been supplying electricity in
the Czech Republic. Our expansion in this market had a
positive impact on sales. We already have 80,000
residential and commercial customers there.
Trading/Gas Midstream: External electricity sales achieved
by this division fell by 22% to 49.6 billion kWh. As our
production dropped, RWE Supply&Trading sold less
electricity generated by RWEs own power plants on the
wholesale market. In addition, sales to key accounts
declined because parts of this business were transferred
to the Germany Division.

56 Business performance

External gas sales volume

RWE Annual Report 2011

Residential and
commercial customers

Industrial and
corporate customers

Distributors

Total

Billion kWh

2011

2010

2011

2010

2011

2010

2011

Germany

27.5

29.0

24.0

23.7

31.8

44.9

83.3

97.6

Netherlands/Belgium1

36.9

43.2

50.8

69.6

87.7

112.8

United Kingdom

38.0

48.8

2.2

4.5

40.2

53.3

27.0
-

35.6
-

27.4
1.7

29.4
2.1

4.5
16.0

8.5
16.5

58.9
17.7

73.5
18.6

23.1

26.4

11.32

12.6

34.4

39.0

129.4

156.6

129.2

155.7

63.6

83.1

322.2

395.4

Central Eastern and

South Eastern Europe
Upstream Gas & Oil
Trading/Gas Midstream
RWE Group

2010

1 Prior-year figures adjusted.

2 Including gas trading.

Mild weather curtails gas sales. External gas sales dropped

by 19% to 322.2 billion kWh. As temperatures were much
higher than in 2010, demand for heating was down.
Competition-induced customer losses also contributed to the
decline in volume, especially in the Czech Republic.
Germany: The division sold 83.3 billion kWh of gas. This
was 15% less than in 2010, even though we included the
sales volume of NEW for the first time. The effect of the
weather dampened sales across all customer segments. A
substantial decline in volume was experienced in business
with distributors, some of which reduced their gas
purchases from RWE and increased procurement from
competitors. Industrial and corporate customer sales
volumes were also lost to the competition. However, this
was more than offset by positive economic effects and the
inclusion of parts of RWE Supply&Tradings key account
business. The negative impact of the weather was felt
especially in sales to households and small commercial
enterprises, whereas we posted a slight improvement in
market share. As of the balance sheet date, the Germany
Division had 1,295,000 gas customers, 204,000 more than
in the previous financial year, 137,000 of whom came
from NEW.
Netherlands/Belgium: The higher temperatures also had a
strong influence on Essents gas sales, causing them to
decline by 22% to 87.7 billion kWh. In addition, some of
our bigger industrial and corporate customers switched
suppliers. The number of households and small

Gas sales volume of the RWE Group by region in 2011 (2010)

%
12.5 (13.5) United Kingdom

14.9 (16.6)
Czech Republic

5.1 (3.2) Other

38.8 (37.1) Germany

322.2 billion kWh

(395.4 billion kWh)

28.7 (29.6) Netherlands

commercial enterprises served by Essent in the

Netherlands declined by 17,000 to 1,942,000, whereas in
Belgium, it rose by 25,000 to 82,000.
United Kingdom: RWE npowers gas sales dropped by
25%to 40.2 billion kWh. This was due to the weather,
withenergy efficiency also playing a role. On top of that,
RWEnpower lost some industrial and corporate
customers. Conversely, the number of households and
small commercial enterprises to which we supplied gas
rose by 75,000 year on year, to 2,636,000, of which
2,373,000 customers also obtained electricity from us.
Central Eastern and South Eastern Europe: Gas sales
achieved by this division were down 20% year on year to
58.9 billion kWh. The reduced need for heating also

Business performance 57

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

played a central role here, as did mounting competitive

pressure in our core market, the Czech Republic, where we
lost some major industrial and corporate customers.
Moreover, a distributor we supply further diversified its
procurement. The number of our Czech residential and
commercial customers declined by 300,000 to 1,836,000.
Conversely, a positive trend was observed in Slovakia
where RWE Gas Slovensko, the subsidiary founded in
July2008, grew its share of the market. The company
increased its sales by 3.1 billion kWh to 10.9 billion kWh,
despite the unfavourable effect of the weather.
Upstream Gas & Oil: External gas sales by RWE Dea
totalled 17.7 billion kWh, 5% lower than a year earlier.
This reflects the decline in gas produced in our German
and UK concession areas.
Trading/Gas Midstream: The division sold 34.4 billion kWh
of gas outside the Group. RWE Supply&Trading focuses
on procuring gas for RWE companies and therefore
predominantly generates internal sales. The companys
external sales consist of deliveries to key accounts as well
as surplus purchased gas, which we sell on directly to

External revenue
million

distributors or on the wholesale market. Compared to

2010, gas sales volume was down 12%. This was
predominantly due to the aforementioned transfer of
parts of the key account business to the Germany Division.
External revenue 3% down year on year. The RWE Group
generated 51,686 million in external revenue, 3% less
than the preceding years figure. There was a marked
decline in revenue from the sale of in-house electricity
generation through RWE Supply&Trading. In addition, the
decrease in gas sales volume and the deconsolidation of
Thyssengas and Amprion had an effect. This was contrasted
by the positive impact of the full consolidation of NEW and
by the rise in crude oil prices. Developments of foreign
exchange rates also had an effect on the revenue trend. In
2011, the British pound cost an average of 1.15, as
opposed to 1.17 the year before. The US dollar was also
down on the euro, decreasing in value from 0.76 to 0.71.
Conversely, the Czech crown appreciated from 0.040 to
0.041. Net of material consolidation and foreign exchange
effects, Group revenue was down 2%.

2011

2010

+/
%

21,520

19,528

10.2

1,166

1,072

8.8

20,354

18,456

10.3

Netherlands/Belgium

5,818

6,510

10.6

United Kingdom

7,696

7,759

0.8

Central Eastern and South Eastern Europe

4,990

5,297

5.8

443

366

21.0

1,766

1,353

30.5

Germany
Power Generation
Supply/Distribution Networks

Renewables
Upstream Gas & Oil
Trading/Gas Midstream

5,750

7,517

23.5

Other, consolidation

3,703

4,990

25.8

51,686

53,320

3.1

RWE Group
of which:
Electricity revenue

33,765

34,803

3.0

Gas revenue

13,229

14,491

8.7

Oil revenue

1,641

1,049

56.4

2,533

2,598

2.5

49,153

50,722

3.1

Natural gas tax/electricity tax

RWE Group (excluding natural gas tax/electricity tax)

58 Business performance

Germany: External revenue achieved by this division

totalled 21,520 million, up 10% year on year. Excluding
NEW would lead to a gain of 6%. Electricity revenue rose
by 14% to 16,148 million, due to the aforementioned
volume effects and price increases. The latter were
in response to the significant rise in expenses caused
by theGerman Renewable Energy Act (REA). The
apportionment for REA electricity amounted to 3.5euro
cents per kWh in 2011. This is 1.5 euro cents upon 2010.
However, our price increases were less pronounced, as we
realised savings in electricity purchasing and passed these
through to our customers. Revenue in the gas business
declined by 8% to 3,526million. The main reason is the
fall in sales volumes triggered by the weather.
Netherlands/Belgium: The division earned 5,818 million
in revenue, 11% less than in the prior year. Electricity
revenue declined by 2% to 2,141 million and gas revenue
decreased by 16% to 3,460 million. Again, volume
effects were the main cause.
United Kingdom: External revenue generated by
RWEnpower amounted to 7,696 million, which was
slightly less than in 2010. Net of the foreign exchange
impact, however, it would have risen marginally. Electricity
revenue was up 3% to 5,447 million, which equates to
anincrease of 5% in Sterling terms. Besides the successful
acquisition of industrial and corporate customers,
cost-driven price adjustments were the main reason.
RWEnpower raised its residential customer tariffs by an
average of 5.1% with effect from 4 January 2011 and
byafurther 7.2% as of 1 October. Gas tariffs were also
increased with effect from the aforementioned dates,
by5.1% and 15.7%, respectively. Nevertheless, gas
revenue achieved by RWE npower experienced a volumeinduced decrease of 16% to 1,697 million, equating to
adecline of 14% in Sterling terms.

RWE Annual Report 2011

Renewables: RWE Innogy improved external revenue by

21% to 443 million. The increase in generation was a
contributing factor. Furthermore, we benefited from
therise in prices on electricity wholesale markets. This
primarily related to Spanish wind turbines and those
German run-of-river power stations that are not subject
tothe Renewable Energy Act. We also achieved higher
revenue through the sale of certificates of origin for
electricity sold directly. The certificates enable resellers
wesupply to prove that the electricity they market comes
from renewable sources.
Upstream Gas&Oil: RWE Dea boosted external revenue
by31% to 1,766 million. The company realised much
higher prices for its crude oil and gas production than
inthe preceding year. The rise in oil production also had
apositive impact, whereas the slight decline in gas
production and the depreciation of the US dollar against
the euro curtailed revenue growth.
Trading/Gas Midstream: External revenue generated
bythis division fell by 24% to 5,750 million. This was
aneffect of the decline in electricity and gas sales.
Furthermore, the average price realised by RWE
Supply&Trading when marketing in-house generation
for2011 was lower than the comparable figure for 2010.

Revenue1 of the RWE Group by region in 2011 (2010)

%
53.2 (53.8) Germany

17.0 (16.4) United Kingdom

10.6 (12.4) Netherlands

5.3 (5.2)
Czech Republic

49.2 billion
(50.7 billion)

4.2 (4.0) Hungary

Central Eastern and South Eastern Europe: At

4,990million, external revenue was 6% lower than
ayearearlier. Excluding currency effects results in the
samedecline. Electricity revenue dropped by 3% to
2,406million, and gas revenue was down 8% to
2,478million. Again, volume shortfalls determined
therevenue trend.

9.7 (8.2) Other

1 Excluding electricity tax and natural gas tax.

Business performance 59

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Reconciliation of income from operating activities to EBITDA

million

2011

2010

+/
%

Income from operating activities1

4,129

6,507

36.5

+ Operating income from investments

600

345

73.9

+ Non-operating income from investments

72

62

Non-operating result

1,157

767

Operating result

5,814

7,681

24.3

+ Operating depreciation and amortisation

2,646

2,575

2.8

EBITDA

8,460

10,256

17.5

EBITDA
million

2011

2010

+/
%

Germany

5,419

6,728

19.5

Power Generation

3,252

4,510

27.9

Supply/Distribution Networks

2,167

2,218

2.3

Netherlands/Belgium

462

660

30.0

United Kingdom

606

504

20.2

1 See the income statement on page 126.

1,364

1,440

5.3

Renewables

338

211

60.2

Upstream Gas & Oil

923

619

49.1

784

Central Eastern and South Eastern Europe

Trading/Gas Midstream

132

101

30.7

8,460

10,256

17.5

Operating result
million

2011

2010

+/
%

Germany

Other, consolidation
RWE Group

4,205

5,575

24.6

Power Generation

2,700

4,000

32.5

Supply/Distribution Networks

1,505

1,575

4.4

245

391

37.3

Netherlands/Belgium
United Kingdom
Central Eastern and South Eastern Europe

357

272

31.3

1,109

1,173

5.5

Renewables

181

72

151.4

Upstream Gas & Oil

558

305

83.0

800

21

41

86

52.3

5,814

7,681

24.3

Trading/Gas Midstream
Other, consolidation
RWE Group

60 Business performance

Operating result reflects burdens from German energy

policy. The RWE Groups earnings deteriorated considerably
year on year. EBITDA declined by 18% to 8,460 million, and
the operating result was down 24% to 5,814 million. We
thus marginally exceeded the forecast we issued in August
2011, which envisaged declines in EBITDA and the operating
result of 20% and 25%, respectively. We had to make a
downward correction to the original earnings forecast we
published in February 2011 (15% and 20%, respectively)
in view of the U-turn in German energy policy. The lifetime
reduction imposed on our German nuclear power stations in
the middle of 2011 was a major burden on RWE. Together
with the new nuclear fuel tax, it reduced the operating result
by about 1.3 billion compared to the prior year. Lower
electricity generation margins also had a negative impact.
Losses in the gas midstream business and an unusually weak
performance by our energy trading activities contributed to
the earnings shortfall as well. On balance, consolidation and
foreign exchange effects did not have a notable influence on
the Groups earnings.
Germany: The division posted an operating result of
4,205 million, down 25% on the previous year. The
following developments were observed in the Power
Generation and Sales/Distribution Networks Business
Areas:
Power Generation: The operating result recorded by this
business area declined by 33% to 2,700 million.
Decisions made by the German government on energy
policy following the reactor disaster at Fukushima were
the main reason. Our margins declined significantly as a
result of the nuclear moratorium imposed in March, which
included the immediate cessation of operation of both
Biblis A and B and was initially limited to three months.
Further burdens came from the 13th amendment to the
Nuclear Energy Act, which entered into force in early
August (see page 43). Due to the accelerated nuclear
phase-out, we had to increase the provisions we built to
decommission the plants. Furthermore, we were forced to

RWE Annual Report 2011

recognise an impairment loss on the power plant facilities

and fuel rods we will not be able to use any longer at
Biblis. The nuclear fuel tax, levied for the first time, had a
negative effect of 251 million. Besides energy policy,
unfavourable developments on commodity markets were
also a burden. The average price realised by RWE Power
for its 2011 electricity generation was 63 per MWh,
which was below the previous years comparable figure
(67 per MWh). In addition, our hard coal purchases
became more expensive. We typically sell our generation
up to three years before the electricity is delivered,
purchasing the required fuel and emission allowances at
the same time. We experienced some relief in procuring
CO2 emission allowances, as the associated cost dropped
by 87 million to 602 million. Further adjustments to our
nuclear provisions became necessary, countering the
negative effect of the lifetime reduction. Furthermore, the
release of mining provisions generated income.
Sales/Distribution Networks: This business areas
operating result fell by 4% to 1,505 million. Net of the
effect of the full consolidation of NEW, it would have
declined by 11%. In the network business, there was a rise
in costs incurred to improve infrastructure. Furthermore,
throughput and in turn network fee revenue - declined
due to weather-related reasons, especially in the gas
network. However, there was a positive effect: the German
Federal Network Agency is of the opinion that revenue
from network fees charged at the beginning of network
regulation (2005 to 2007) was too high. The excess
amounts must be refunded via rebates on network fees
from 2010 onwards. The effect of this issue decreased.
Despite declining gas volumes, earnings in our German
sales business were stable year on year, partially because
margins were slightly higher. The business areas income
from investments improved.
Netherlands/Belgium: The operating result recorded by
this division dropped by 37% to 245 million. As set out
earlier, we started reporting parts of Essents gas
midstream business under RWE Supply&Trading with

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

effect from 2011. In the preceding year, the earnings

contribution made by these activities was unusually high,
partly due to weather-related reasons. The fact that
Essents earnings worsened is also because of the decline
in electricity generation margins. This was contrasted by
the positive impact of cost reductions. In addition, we
benefited from expanding our Dutch gas midstream
activities. We are increasingly organising the transmission
of gas from suppliers or traders to our end-customers
ourselves.
United Kingdom: RWE npower increased its operating
result by 85 million to 357 million, due to extensive
measures to cut costs and improve efficiency. These steps
primarily affected the supply business, enabling it, among
other things, to decrease bad debt significantly. Overall,
earnings generated by supply activities improved
considerably. Here, improved margins in the industrial
customer business also played a role. In the residential
customer segment, the decline in sales curtailed earnings,
especially from gas. Furthermore, we faced higher
electricity and gas procurement prices and increased
network usage fees. There was also a rise in the cost
caused by government programmes to promote energy
savings in households. These burdens were cushioned by
the tariff rises in January and October. In the generation
business, margins deteriorated due to unfavourable
market conditions. However, we benefited from
compensation for damages paid to us by a supplier for
project delays as well as from the commissioning of our
gas-fired power station at Staythorpe. Another positive
factor was that some of the amortised old accounts
receivable from Enron, the energy trader which went
bankrupt at the end of 2001, have been paid.
Central Eastern and South Eastern Europe: The operating
result we achieved in this division decreased by 5% to
1,109 million. Currency effects did not have a material
impact on this. In the Czech gas business, volume

Business performance 61

shortfalls reduced the result and lower throughput

curtailed margins in the distribution network.
Furthermore, a change in regulatory requirements led to a
decline in NET4GAS transmission revenue and, in turn,
earnings. In Hungary, competition-driven volume shortfalls
curtailed earnings achieved by electricity sales.
Renewables: A rise in generation output and the recent
increase in electricity prices helped RWE Innogy to grow
its operating result by 109 million to 181 million.
Similarto RWE npower, a positive effect was felt from the
compensation for damages which we received for delays
in the construction of the Greater Gabbard offshore
windfarm, in which we have a 50% stake. However,
RWEInnogys growth strategy continues to have a
negative impact on the bottom line, as both on-going
andplanned capital expenditure projects go hand in hand
with high run-up costs.
Upstream Gas&Oil: RWE Dea grew its operating result by
83% to 558 million, mainly due to the increase in oil and
gas prices, with the rise in oil production also playing a
role. However, this resulted in higher production costs,
which together with the weaker US dollar and the decline
in gas volume slowed RWE Deas earnings growth. In
addition, we had to pay higher gas royalties at our site in
Lower Saxony. In contrast, exploration costs were
essentially unchanged.
Trading/Gas Midstream: RWE Supply&Trading closed the
year with an operating loss of 800 million, which was
much higher than in the prior year (21 million). Our
performance in the trading business was unusually weak.
On top of that, compared to 2010, we benefited less from
the realisation of successful forward transactions from
earlier years. This related above all to the external
marketing of RWE Power and RWE npowers electricity
generation. The realised trading margins are recognised in
earnings once the underlying transactions are effected,

62 Business performance

RWE Annual Report 2011

i.e. on delivery of the electricity. Earnings in the gas

midstream business remain hampered by the fact that
parts of our gas purchases are based on long-term, oilindexed contracts and, for some time, we have had to
payprices for this gas that are much higher than those
werealise when we re-sell it on the market. Therefore,

Key figures for

value management

Operating
result

2011

Capital
employed

20111

weentered into contract renegotiations with our suppliers

in the last few years. We received the first compensatory
payments at theend of 2011. The transfer of part of
Essents gas midstream activities to RWE Supply&Trading
also had a positive impact.

ROCE

2011

Weighted
average cost
of capital
(WACC)
before tax
2011

Absolute
value
added
2011

Weighted
average cost
of capital
(WACC)
before tax
2010

Absolute
value
added

million

2010

million

million

million

4,205

29,4222

14.3

8.75

1,6312

9.5

2,7652

Power Generation

2,700

13,297

20.3

9.5

1,437

10.0

2,620

Supply/Distribution Networks

1,505

16,133

9.3

8.0

215

8.75

195

Netherlands/Belgium

245

4,912

5.0

9.0

197

9.5

42

United Kingdom

357

5,143

6.9

9.0

106

9.5

217

1,109
181

5,840
4,402

19.0
4.1

7.75
9.0

656
215

8.5
9.5

697
289

Germany

Central Eastern and

South EasternEurope
Renewables
Upstream Gas & Oil
Trading/Gas Midstream
Other, consolidation
RWE Group

558

2,768

20.1

12.75

205

12.5

800

3,393

23.6

9.75

1,130

9.5

327

41

2,601

442

297

5,814

53,279

10.9

8.5

1,286

9.0

2,876

1 Averaged for the year.

2 This figure is not the sum of the figures for Power Generation and Sales/Distribution Networks. With respect to capital employed, this is due to the booking of consolidations, whereas
in terms of absolute value added, it is due to the differences in the costs of capital.

RWE achieved a return on capital employed of 10.9%. In

the financial year that just ended, we earned a return on
capital employed (ROCE) of 10.9%. It was thus below the
year-earlier figure (14.4%), but clearly surpassed the Groups
cost of capital, which was 8.5% before tax. ROCE minus
thecost of capital, multiplied by capital employed, equals
absolute value added. It is an important criterion for
assessing investments and determining our executives
performance-linked payments. In 2011, value added
amounted to 1,286 million. This was much less than the
high figure achieved in the preceding year (2,876 million).
The main reason for this is the weaker earnings. The
development of value added benefited from the fact that the

Groups cost of capital was reduced by 0.5 percentage points

compared to 2010 (9.0%). This is a result of the development
of market interest rates. We also re-adjusted the capital cost
rates for the individual divisions, thereby taking into account
the decline in interest rates and the changes in operating
risks. The adjustments range from 0.75 to +0.25 percentage
points.
Germany: The biggest contribution by far, i.e.
1,631million, to increasing value within the RWE Group
came from this division. Despite a substantial drop in
earnings, the Power Generation Business Area was the
main contributor once again. However, value added here

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Business performance 63

declined by 1,183 million to 1,437 million. In contrast,

in the Sales/Distribution Networks Business Area, we
recorded a rise of 20 million to 215 million. This was
largely due to the reduction in the cost of capital, which
had a stronger effect than the decline in earnings.

Upstream Gas&Oil: At RWE Dea, the successful

development of business caused value added to increase
by 213 million to 205 million. A dampening effect was
felt from the significant amount of capital we spent to
expand our upstream position, which led to a rise in capital
employed. In addition, the cost of capital was lifted
somewhat.

Netherlands/Belgium: Despite the lower cost of capital,

value added by this division dropped by 155 million to
197 million. This was primarily due to the decline in the
operating result. Furthermore, capital employed rose,
driven by investing activity.
United Kingdom: RWE npowers value added was also
negative. However, owing to the significant improvement
in the companys earnings and reduced cost of capital, it
improved by 111 million to 106 million year on year.
Central Eastern and South Eastern Europe: At 656 million,
the division made the second-largest contribution to value
added within the RWE Group. However, it fell just short of
the previous years level. Besides the marginal decrease in
earnings, the increase in capital employed was decisive,
whereas the lower cost of capital had a counteracting
effect.
Renewables: At RWE Innogy, the extensive investment in
the expansion of the generation portfolio was the main
reason why the cost of capital could not be earned back
yet. The background to this is that new plants are already
considered in capital employed during the construction
phase, although they do not contribute to earnings yet. In
particular, the large-scale offshore wind projects will only
start producing income in the coming years. However,
value added by this division increased considerably
compared to 2010, rising by 74 million to 215 million.
This climb is primarily due to the positive earnings trend,
which is likely to continue in the next few years.

Trading/Gas Midstream: The significant operating loss was

reflected in negative value added by RWE Supply&Trading.
It amounted to 1,130 million, clearly down on the prioryear figure (327 million) which was already very low.

64 Business performance

RWE Annual Report 2011

THE RWE GROUPS VALUE MANAGEMENT

Return-oriented control of the company. Increasing
shareholder value lies at the heart of our strategy. Additional
value is created when the return on capital employed
(ROCE) exceeds the cost of capital. ROCE reflects the pure
operating return. It is the ratio of the operating result to
capital employed.
The table at the top of page 65 shows the parameters used
to calculate the cost of capital. We calculate it as a weighted
average cost of equity and debt.
The cost of equity corresponds to the capital markets
expectation of company-specific returns when investing in
an RWE share over and above that of a risk-free investment.
The cost of debt is linked to long-term financing conditions
for the RWE Group and allows interest on debt to be
classified as tax deductible (tax shield).
Some of the figures we used as a basis for determining the
cost of capital for 2011 differ from those of the previous
year. This is mainly because the base lending rates in RWEs
core regions declined substantially over the course of last
year. We calculate the cost of equity as follows: we use an
interest rate for a risk-free investment of 3.7% (previous
year: 4.3%) as a basis, plus risk charges specific to the Group
and the Groups divisions. The applied beta factor for the
RWE Group is 0.90 (previous year: 0.95). As before, the ratio
of equity to debt is 50:50. We do not derive this parameter
from the amounts carried on the balance sheet, but, among
other things, from the marked-to-market valuation of equity
and assumptions concerning the long-term development of
our net financial position and provisions. In sum, the RWE
Groups total cost of capital for 2011 was 8.5% before tax
(previous year: 9.0%).

When determining capital employed, depreciable noncurrent assets are not stated at carrying amounts. Instead,
we recognise half of their historic costs over their entire
useful life. The advantage of this procedure is that the
determination of ROCE is not influenced by the depreciation
period. This reduces the fluctuation in value added caused
by the investment cycle. However, we fully account for
goodwill from acquisitions.
ROCE minus the cost of capital equals relative value added.
Multiplying this figure by the capital employed results in the
absolute value added, which we employ as a central
management benchmark. The higher the value added, the
more attractive a particular activity is for our portfolio.
Absolute value added is another important parameter for
evaluating capital expenditure and for determining the
performance-linked compensation of RWE Group executives.
Higher cost of capital from 2012 onwards. Our annual
review of our cost of capital caused us to make some new
adjustments. The sale of our 74.9% stake in the transmission
system operator Amprion caused the share of stable
regulated business in the Group portfolio to decline.
Furthermore, risks increased in certain divisions, in part
owing to the Eurozones sovereign debt crisis. In view of the
aforementioned events, we are raising the beta factor from
0.90 to 1.03. This and the marginal adjustment in interest
rates led to an increase in the pre-tax cost of capital at the
Group level from 8.5% to 9.0% for 2012.

Business performance 65

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

RWE Group - capital costs

2012

2011

2010

Risk-free interest rate

3.8

3.7

4.3

Market premium

5.0

5.0

5.0

1.03

0.90

0.95
9.0

Beta factor
Cost of equity after tax

8.9

8.2

Cost of debt before tax

5.0

4.9

5.8

Tax rate for debt

27.4

27.4

27.1

Tax shield

1.4

1.3

1.6

Cost of debt after tax

3.6

3.6

4.2

Proportion of equity

50

50

50

Proportion of debt

50

50

50

Capital costs after tax

6.3

5.8

6.5

Tax rate for blanket conversion

31

31

30

Weighted average cost of capital (WACC) before tax

9.0

8.5

9.0

31 Dec 2011

31 Dec 2010

RWE Group - determining capital employed

Intangible assets/property, plant and equipment

million

57,596

58,849

+ Investments including loans2

million

6,286

5,998

+ Inventories

million

3,342

3,293

+ Trade accounts receivable

million

7,459

9,481

+ Other accounts receivable and other assets

million

9,978

12,872

- Non-interest-bearing provisions4

million

11,566

12,384

- Non-interest-bearing liabilities5

million

20,225

22,156

- Adjustments6

million

890

954

Capital employed

million

51,981

54,999

RWE Group - determining value added

2011
53,490

Capital employed before adjustments (averaged for the year)

million

+ Adjustments7

million

211

Capital employed after adjustments (averaged for the year)

million

53,279

Operating result

million

5,814

10.9

ROCE
Relative value added
Absolute value added

2.4

million

1,286

1 Intangible assets; property, plant and equipment; and investment property were stated at half of their cost (see the statement of changes in assets); goodwill and
the customer base were recognised at carrying amounts. For 2011, 808 million in non-productive assets in the German network business were deducted.
2 Investments accounted for using the equity method and other financial assets (excluding non-current securities).
3 Including tax refund claims; excluding the net present value of defined contribution pension benefit obligations as well as derivative financial instruments in the
amount of 1,204 million (previous year: 938 million).
4 Including tax provisions and other provisions; excluding non-current provisions in the amount of 598 million (previous year: 425 million).
5 Including trade liabilities, income tax liabilities and other liabilities; excluding derivative financial instruments in the amount of 981 million
(previousyear:534million) and purchase price liabilities of 1,593 million (previous year: 1,775 million) from put options.
6 Essentially, assets capitalised in accordance with IAS 16.15 in the amount of 447 million (previous year: 486 million) are not taken into account since they do not
employ capital. Deferred tax liabilities relating to RWE npowers capitalised customer base are not taken into account, either.
7 Corrections to reflect timing differences, primarily due to first-time consolidations/deconsolidations during the year. In addition, corrections to 2010 assets to
reflect non-productive assets in the German network business.

66 Business performance

Reconciliation to net income: significant special items. The

reconciliation from the operating result to net income is
characterised by a number of special items. Capital gains and
the absence of the previous years burdens arising from
commodity derivatives had a positive impact.

Non-operating result
million
Capital gains
Goodwill impairment losses

RWE Annual Report 2011

Acounteracting effect was felt from provisions for socially

acceptable redundancies. Furthermore, we recognised an
impairment for our Dutch power plants and the gas storage
business obtained when we acquired Essent.

2011

2010

+/
million

393

68

325

176

337

161

Restructuring, other

1,374

498

876

Non-operating result

1,157

767

390

Impact of commodity derivatives on earnings

The aforementioned special items are reflected in the nonoperating result, which deteriorated by 390 million to
1,157 million. Its components developed as follows:
In the period under review, we realised 393 million
incapital gains, mainly stemming from the sale of
Thyssengas, our minority stake in a hard coal-fired power
station at Rostock, and the majority of Amprion. We have
provided information on these transactions on page 46 et
seq. In contrast, no material gains on disposals were
achieved in 2010.
The accounting treatment of certain commodity
derivatives used to hedge the prices of forward
transactions resulted in a net expense of 176 million
(prior year: 337 million). In accordance with International
Financial Reporting Standards (IFRS), these derivatives are
recognised at fair value at the respective balance sheet
date, whereas the underlying transactions, which display
the opposite development, are only recognised with an
effect on profit or loss when they are realised. These
timing differences result in short-term effects on earnings,
which are neutralised over time.

The result stated under restructuring, other worsened by

876 million to 1,374 million. We set aside 486 million
for old-age part-time employment schemes and severance
payments with which we can take personnel reduction
measures in a socially acceptable manner. This largely
relates to RWE Power, RWE Deutschland and Essent.
Furthermore, an impairment loss of about 270 million
was recognised for Essents generation portfolio. This was
because the margins realisable by our Dutch gas and hard
coal-fired power stations on the wholesale market shrank
considerably. Due to a deterioration in earnings prospects,
we also recognised an impairment loss of 200 million for
Essents former gas storage business, which is now
managed by the Germany and Trading/Gas Midstream
Divisions. The amortisation of RWE npowers customer
base amounted to 256 million and was thus slightly
lower than in the previous year (262 million) due to
foreign exchange rates. It will end in May 2012.

Financial result
million

2011

2010

+/ million

Interest income

430

448

18

1,063

1,258

195

633

810

177

Interest accretion to non-current provisions

869

940

71

Other financial result

131

186

55

1,633

1,936

303

Interest expenses
Net interest

Financial result

Business performance 67

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

The financial result improved by 303 million to

1,633million. Its components changed as follows:
Net interest improved by 177 million to 633 million.
Apositive effect was felt from the fact that the German
nuclear power plant operators obligations relating to noninterest-bearing advance payments for the Climate and
Energy Fund ceased to exist due to the U-turn in German
energy policy (see page 43). Therefore, we were able to
reverse the provisions we had built in 2010.
The interest accretion to non-current provisions decreased
by 71 million to 869 million. This was partially due
to the re-measurement of provisions as aresult of the
adjustment in discount rates.
The other financial result, which mostly includes expense
items, improved by 55 million to 131 million. Positive
effects from the fair valuation of financial transactions
were a factor. Conversely, there was a drop in income from
the sale of securities.
Our income before tax decreased by 39% to 3,024 million.
Although tax-free capital gains were higher year on year, our
effective tax rate remained at 28%. One reason for this was
the increase in the earnings contributions generated by

RWEDea in countries with relatively high tax rates. After tax,

Group income totalled 2,170 million, corresponding to a
drop of 40%. The minority interest rose by 9% to
305million. We started recognising earnings contributions
allocable to NEW co-shareholders in this item due to the
first-time full consolidation of this company. The share in net
income allocable to the holders of the 1.75 billion hybrid
bond issued in September 2010 totalled 59 million. This
sum corresponds to the post-tax financing costs allocable
tothe year under review. The CHF 250 million hybrid bond
issued in October 2011 has not been considered in these
figures, as it is classified as a borrowing in accordance with
IFRS.
The RWE Groups net income declined by 45% to
1,806million. Accordingly, our earnings per share dropped
from 6.20 to 3.35. The number of RWE shares outstanding
in 2011 averaged 539.0 million, up on the level recorded in
2010 (533.6 million). As set out on page 46, we issued
52.3million new common shares and sold 28.1 million
treasury common shares last year. However, as the capital
increase was not conducted until December, it only had a
slight effect on the average number of shares held during the
year. Relative to the number of RWE shares outstanding at
the end of the year (614.4 million), earnings per share
amounted to 2.94.

Reconciliation to net income

2011

2010

+/
%

7,681

24.3
50.8

Operating result

million

5,814

Non-operating result

million

1,157

767

Financial result

million

1,633

1,936

15.7

Income before tax

million

3,024

4,978

39.3

Taxes on income

million

854

1,376

37.9
39.8

Income

million

2,170

3,602

Minority interest

million

305

279

9.3

RWE AG hybrid investors interest

million

59

15

293.3

Net income/RWE AG shareholders' share in net income

million

1,806

3,308

45.4

million

2,479

3,752

33.9

3.35

6.20

46.0

Recurrent net income

Earnings per share
Recurrent net income per share
Number of shares outstanding (average)
Effective tax rate

4.60

7.03

34.6

millions

539.0

533.6

1.0

28

28

68 Business performance

RWE Annual Report 2011

Recurrent net income down 34% year on year. The yardstick

for determining the dividend is recurrent net income, which
does not include the non-operating result or the tax on it. If
major non-recurrent effects in the financial result and income
taxes occur, these are also excluded.
In the period under review, recurrent net income totalled
2,479 million, 34% down year on year. The earnings outlook
we issued in August 2011, which predicted a decline of
some35%, was therefore roughly confirmed. Conversely, in
February 2011, we had forecast a drop of about 30%.

Efficiency enhancements compared to 2006

million (accumulated)
Contribution to earnings

Recurrent net income per share amounted to 4.60, which

was much less than in 2010 (7.03). Based on the number of
shares outstanding at the end of 2011, the figure totalled
4.03. Holders of the RWE shares issued in December will
already bear full dividend entitlements at the next dividend
payment date, which is 20 April 2012. Given the dividend of
2.00 per share proposed by the Executive and Supervisory
Boards of RWE, the payout ratio will be 50%.

2007

2008

2009

2010

2011

Target
2012

100

200

450

700

>900

1,500

Efficiency-enhancement programme: target for 2011

exceeded. We are making good progress with the efficiencyimprovement programme we initiated in 2007. By taking
measures to reduce costs and increase revenue, we aim to
tap additional earnings potential and do so more and more
every year. One of the projects goals is to enhance the
performance of our German electricity and gas network
business, which should limit the impact on our earnings
from tariff cuts mandated by the network regulator. Further
savings will be achieved through improvements in IT services
and purchasing as well as the pooling of back-office
functions. Moreover, we intend to increase revenue by
improving the availability of our power plants.

We wanted to achieve a positive effect on earnings of

900million through the programme by the end of 2011,
compared to 2006, the baseline year. By the balance sheet
date, we had actually achieved even more than originally
intended. The efficiency-enhancement programme will run
until the end of 2012 and we want to increase the positive
impact on earnings to 1.5 billion compared to 2006. We
had originally aimed for 1.2 billion. We were able to raise
thistarget because we identified additional potential for
savings,especially in terms of project and material costs.
Onconclusion of the ongoing efficiency-enhancement
programme, we will launch a new one in 2013 (see page 98).

Business performance 69

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

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

million

2011

2010

+/
million

Germany

2,374

2,410

36

Power Generation

1,168

1,180

12

Supply/Distribution Networks

1,206

1,230

24

Netherlands/Belgium

971

1,144

173

United Kingdom

416

876

460

Central Eastern and South Eastern Europe

852

430

422

Renewables

825

614

211

Upstream Gas & Oil

701

507

194

20

16

Trading/Gas Midstream
Other, consolidation
RWE Group

Capital expenditure on financial assets

million
Germany
Power Generation

194

394

200

6,353

6,379

26

2011

2010

+/
million

19

45

26

19

43

24

Netherlands/Belgium

431

428

United Kingdom

184

23

161

2
29

Supply/Distribution Networks

Central Eastern and South Eastern Europe

66

95

Upstream Gas & Oil

Trading/Gas Midstream

61

55

Other, consolidation

29

22

719

264

455

Renewables

RWE Group

Capital expenditure up 6% year on year. We spent

7,072million in capital in the year under review. This
exceeded the 2010 level (6,643 million) by 6%. The
acquisition of Energy Resources Holding B.V., on which we
reported on page 47, was a contributing factor. This
transaction was the main reason why capital spending on
financial assets rose by 455 million to 719 million. Our
capital expenditure on property, plant and equipment and
intangible assets totalled 6,353 million, roughly equalling
the previous years record level. Capex focused on
expanding and modernising our electricity generation
capacity. However, we spent fewer funds in the year being
reviewed than expected, in part because power plant and
wind energy projects were delayed.

Germany: Capital expenditure by this division amounted

to 2,393 million, 3% less than in the preceding year.
Itsbusiness areas displayed the following development:
Power Generation: This business area spent 1,168million
in capital, just below the year-earlier level. All of it was
dedicated to property, plant and equipment, including the
new 2,100 MW dual-block lignite-fired power station at
Neurath near Cologne. The plant has been completed, but
we were unable to adhere to our original schedule owing
to quality-related problems caused by suppliers and a
serious accident on the construction site in 2007. The two
units are set to commence commercial operation at the

70 Business performance

end of March 2012. We spent a total of 2.6 billion on the

station. RWE Powers second large-scale project is a twinunit hard coal facility at Hamm, with a net installed
capacity of 1,528 MW. Again, suppliers caused delays. The
power station will therefore probably not go online until
the second half of 2013. Based on current planning, a
total of approximately 2.4 billion in capital will be spent
on this facility. These new builds will help us achieve
significant improvements in terms of efficiency and
emission reductions.
Sales/Distribution Networks: We spent 1,225 million in
capital on this business area, which was also slightly less
than in 2010. Capital expenditure on property, plant and
equipment decreased marginally to 1,206 million. These
funds were mainly allocated to upgrades to and the
expansion of the network infrastructure. In addition, we
invested in new gas storage capacity. At 19 million, our
capital expenditure on financial assets was immaterial.
Netherlands/Belgium: At 1,402 million, capital
expenditure by this division was 22% up on the previous
years figure. This was mainly due to the acquisition of
Energy Resources Holding B.V., which had an impact
of429 million. Almost all of the spending on financial
assets was allocated to this transaction. In contrast,
capital expenditure on property, plant and equipment was
down year on year, amounting to 971 million. The
divisions largest undertaking is a hard coal twin-unit
facility at Eemshaven, which has a net installed capacity of
1,560 MW and is scheduled to go online in 2014. Further
investment magnets in the year under review were the
Claus C and Moerdijk 2 combined-cycle gas turbine (CCGT)
power plants. Claus C started commercial production in
January 2012, four months ahead of schedule. It has a
netinstalled capacity of 1,304 MW and replaces the
ClausB (640 MW) gas-fired power station. Associated
capital expenditure totalled 1.1 billion. Moerdijk 2 was
commissioned in February 2012. The CCGT facility is
located at the site of the existing Moerdijk power station
and has an installed capacity of 426 MW. We spent a total
of 0.4 billion on it.

RWE Annual Report 2011

United Kingdom: RWE npower invested 600 million, a

third less than in 2010. There was a considerable drop in
capital expenditure on property, plant and equipment.
At416 million, it was less than half the level posted in
2010 when we completed the Staythorpe CCGT power
station. The largest project in the period being reviewed
was the gas-fired power plant atPembroke. It will have a
net installed capacity of 2,188MW and is scheduled to
begin commercial operation in the second half of 2012.
Additional funds were dedicated to converting our three
hard coal units at Tilbury in order to fire them with
biomass. Furthermore, we invested in a new customer
billing system. Capital expenditure on financial assets
totalled 184 million, clearly up on the preceding year.
Part of these funds was allocated to land at Wylfa (Wales),
which we purchased together with [Link] in order to
develop it into a potential nuclear energy site. We had
obtained the land in an auction as early as 2009. However,
only a downpayment had to be made at the time. At the
same auction, together with [Link], we managed to secure
a second site, which is also earmarked for the construction
of a nuclear power plant and is located at Oldbury. We
paid the purchase price at the beginning of 2012.
Central Eastern and South Eastern Europe: At
858million, capital spent by this division was nearly
twice as high as in the previous year. It was almost
exclusively used on property, plant and equipment. The
focus continues to be on measures to improve electricity
and gas network infrastructure. For instance, in 2011,
construction work began on a new gas transit pipeline in
the west of the Czech Republic. Additional funds were
dedicated to expanding our gas storage capacity. We
made good progress with building our 775 MW CCGT
power station in the Turkish town of Denizli, which is
scheduled for completion by the end of 2012. We will
allocate a total of 0.5 billion to this project. About half of
this sum was spent in the financial year thatjust ended.
Renewables: RWE Innogy increased capital expenditure
by26% to 891 million, with 825 million going to
property, plant and equipment, up 34% on 2010. The
construction of new wind power capacity took centre
stage. Our largest project is the Gwynt y Mr wind farm

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

off the coast of North Wales. It will have a total installed

capacity of 576 MW, of which we own 60%. At the end of
2011, we began laying the first foundations for a total of
160 wind turbines, with completion scheduled for 2014.
Another investment is the planned Nordsee Ost wind farm
north of the German Isle of Heligoland, which will have an
aggregate installed capacity of 295 MW. Construction is
due to be completed in 2013. To build the Gwynt y Mr
and Nordsee Ost wind farms, we will use our own special
construction ships, to which we allocated substantial
funds in the year under review. Furthermore, RWE Innogy
granted loans to associated companies, but these are not
stated as capital expenditure: in 2011, 120million
(previous year: 300 million) was allocated to the Greater
Gabbard Offshore Winds Ltd. joint venture, which is
erecting the namesake wind farm off the UK coast. We
own 50% of the company. In addition, we invested in
onshore wind energy, for example at sites in the United
Kingdom, Poland, Germany and Italy. Besides wind power,
biomass plays a role for us. The main undertaking in this
field is a 45 MW combined heat and power plant in the
Scottish town of Markinch, which should take up
production in 2013. Moreover, in December 2011, we
commissioned a small biomass-fired thermal power station
in Kehl on theRhine, Germany. In addition, we finished
building a wood pelletmanufacturing plant in the US state
of Georgia in May2011. With an annual production
capacity of 750,000metric tons, the factory is one of the
biggest worldwide. Capital spent by RWE Innogy on
financial assets declined by 31% to 66 million. We
dedicated 26million of this sum to doubling our stake in
the Spanish wind farm operator Explotaciones Elicas de
Aldehuelas to 95%. As a result, our Spanish installed
windpower capacity rose by 47 MW to 447 MW.
Upstream Gas&Oil: Capital expenditure at RWE Dea
increasedby 38% to 701 million, all of which was
allocated toproperty, plant and equipment. In the year
being reviewed, we focused on the development of oil and
gas fields in preparation for production. Major funds were
dedicated to the construction of a rig in the Breagh North
Sea field and of its pipeline connection to the UK
mainland.

Business performance 71

Trading/Gas Midstream: RWE Supply&Trading spent

26million in capital, which was 60% less than in the
preceding year. Capital expenditure on property,
plantand equipment of 20 million was allocated to
construction work at our trading floors, among other
things, which made workflow more efficient. Spending on
financial assets totalled 6 million, accounting for just one
tenth of the year-earlier figure, which included transfers
ofinternal funds to the US-based liquefied natural gas
company Excelerate Energy.
The other, consolidation item includes 201 million in
capital expenditure for 2011, largely relating to property,
plant and equipment. Most of the funds were used by
Amprion to modernise and expand the electricity
transmission network.
RWE creates new jobs. As of the balance sheet date, the
RWE Group employed 72,068 people, 41,632, or 58%,
ofwhom worked at German sites. Part-time positions
werecalculated in these figures on a pro-rata basis.
Theheadcount was up by 1,212 personnel compared to
31December 2010, corresponding to a rise of 1.7%.
Operating changes were responsible for 1,172 of the
additional positions, while 40 were due to consolidation
effects. For the first time, our figures include the 1,154 staff
members of NEW, which belongs to the Germany Division.
Conversely, the sale of Thyssengas and of the majority of
Amprion removed 289 and 816 employees from the Groups
payroll, respectively. This explains the significant decline
inthe other line item. As in previous years, we trained
farmore people than required to cover our own needs.
By31December 2011, 3,020 young adults were in a
professional training programme at RWE. Staff figures
donot include trainees.

72 Business performance

RWE Annual Report 2011

Workforce1

31 Dec
2011

31 Dec
2010

+/
%

Germany

35,769

34,184

4.6

Power Generation

15,371

15,409

0.2

Supply/Distribution Networks

20,398

18,775

8.6

3,794

3,899

2.7

United Kingdom

12,053

11,711

2.9

Central Eastern and South Eastern Europe

Netherlands/Belgium

11,328

11,163

1.5

Renewables

1,493

1,232

21.2

Upstream Gas & Oil

1,362

1,363

0.1

Trading/Gas Midstream

1,562

1,512

3.3

4,707

5,792

18.7

72,068

70,856

1.7

Other

RWE Group
1 Converted to full-time positions.
2 Of which 2,417 at RWE IT and 1,557 at RWE Service.

Cost reductions and efficiency improvements in Group

purchasing. RWE Service, our internal service provider, is
incharge of purchasing goods and services for Group
companies. This does not include the procurement of
electricity, commodities, or power plant components needed
for new-build projects. RWE Service complies with the
principles of best practice and uses purchasing systems that
have been standardised throughout the Group. In the 2011
financial year, we once again realised substantial cost
savings. The key to this was the continued pooling and
strategic management of our groupwide procurement
activities. Furthermore, we started monitoring our suppliers
more closely. In so doing, we intend to ensure that we only
work with companies that comply with international
environmental and social standards.
Raw materials are sourced by our generation companies
either directly on the market, or via RWE Supply&Trading.
In2011, the amount of hard coal procured to generate
electricity totalled 15.0 million metric tons of hard coal unit
(HCU), compared to 16.3 million metric tons in the previous
year. The decline is a result of the decrease in electricity
produced by our hard coal-fired power stations. The figures
include coal for plants not owned by RWE that we can deploy
at our discretion on the basis of long-term agreements. In the
financial year that just came to a close, RWE Power sourced
11.0 million metric tons of HCU (previous year: 12.2 million
metric tons). RWE npower purchased 2.4 million metric tons
of HCU, slightly more than in the preceding year (2.2 million
metric tons), which was markedly affected by a reduction in

stockpiles. Essent accounts for 1.6 million metric tons of

HCU(prior year: 1.9 million metric tons). Furthermore, the
company procured 0.7 million metric tons of biomass to
co-fire at coal power stations (previous year: 0.8 million
metric tons). A large portion of the hard coal purchased for
German facilities comes from domestic production sources.
The UK and Russia are RWE npowers major supplier regions,
and Essent procures two thirds of the hard coal it uses from
Colombia. Biomass used for the co-firing of our Dutch coal
power plants is largely sourced from North America.
RWE procures lignite from proprietary opencast mines. In the
Rhineland, our main mining region, we produced 95.6 million
metric tons of lignite in the year under review (previous year:
91 million metric tons). We used 83.9 million metric tons to
generate electricity and 11.7 million metric tons to
manufacture refined products.
Nearly all of our gas purchasing is pooled in the Trading/Gas
Midstream Division. In 2011, the Groups procurement
volume amounted to 47 billion cubic metres. Of this total,
24billion cubic metres was sourced on the basis of long-term
take-or-pay contracts, the conditions of which are linked to
the development of oil prices. We concluded such supply
agreements largely with companies in Norway, Russia, the
Netherlands and Germany. In addition, we bought 22 billion
cubic metres of gas on European wholesale markets or via
short-term contracts and 1 billion cubic metres of RWE Deas
production.

Financial position and net worth 73

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

1.7 Financial Position and net worth

Companies seeking to grow in difficult times need robust financing. Thanks to our good creditworthiness, we can procure
debt capital at favourable conditions. To safeguard this position, we intend to secure our financial power. In view of the
heavy burdens resulting from the resolutions passed by the German government on nuclear energy, we conducted a capital
increase in December 2011. The most important mainstay of our financing is and will continue to be our high cash flows
from operating activities, which amounted to 5.5 billion in 2011, matching the good level posted in the previous year.
Central financing through RWE AG. The RWE Groups
financing is the responsibility of RWE AG, a task in which it is
assisted by RWE Finance B.V. This is the company through
which we usually issue bonds, which are backed by RWE AG.
Only in specific cases do other subsidiaries raise capital
directly, especially if it is more advantageous economically
to make use of local credit and capital markets. Furthermore,
RWE AG acts as co-ordinator when Group companies assume
a liability: the company decides on the scope of warranties
issued and letters of comfort signed. Pooling these activities
is a basic prerequisite for managing and monitoring financial
risks centrally. Moreover, this strengthens our position when
negotiating with banks, business partners, suppliers and
customers.
Flexible tools available for raising debt capital. We primarily
meet our financing needs with the high and stable cash
flows from our operating activities. In addition, we have
access to a number of flexible financing instruments. One of
our major tools is the Debt Issuance Programme (DIP) for
long-term refinancing on the capital market. The maximum
counter value of the bonds that we can issue through the
DIP totals 30 billion. Last but not least, a commercial paper
programme gives us a maximum of US$5 billion in headroom
for short-term financing on the money market. An unused
4.0 billion credit line serves as an additional liquidity
reserve. Its tenor expires in November 2016. In November
2012, RWE has the option to file for a one-year extension of
the credit line.
Neither the aforementioned financing instruments, nor the
current credit facilities, contain specific financial covenants
such as interest coverage, leverage or capitalisation ratios
that could trigger actions, such as acceleration of
repayment, provision of additional collateral, or higher
interest payments. Likewise, they do not contain rating
triggers.

RWE issues hybrid bond in Switzerland. We have become

the first German industrial enterprise to issue a hybrid bond
in Switzerland, which also contributed to further improving
our capital structure. The issuance totalled CHF 250 million.
The RWE bond has a 5.25% annual coupon at an issue rate
of 100%, with a tenor of slightly more than 60 years. We can
redeem it no earlier than April 2017. Eligible subscribers
were exclusively private investors domiciled in Switzerland as
well as institutional investors. Hybrid bonds are a mix of
equity and debt financing. They are recognised in our net
debt on a 50% basis. This is in line with the procedure
followed by the rating agencies. Deviating from this,
International Financial Reporting Standards (IFRS) may
stipulate that the bonds be fully classified as equity or debt,
depending on the terms and conditions. Due to its limited
tenor, our Swiss hybrid bond must be fully recognised as
debt on the IFRS balance sheet. Conversely, the 1.75 billion
hybrid bond we issued in September 2010 is classified as
equity due to its theoretically perpetual tenor.
16.9 billion in bonds were outstanding at the end of 2011.
Apart from the Swiss hybrid bond, RWE did not issue any
bonds in 2011. We redeemed 1.5 billion in bonds. In the
financial year being reviewed, the total volume of our bonds
outstanding thus declined by 1.1 billion to 16.9 billion
(including hybrid bonds). Currency effects played a role in
addition to the hybrid issuance and the redemptions. Our
bonds outstanding are denominated in euros, sterling, Swiss
francs, US dollars and Japanese yen. We concluded hedges to
manage our currency exposure. Taking such transactions into
account, at the balance sheet date, our debt broke down into
72% in euros and 28% in sterling. This means that we did not
have any currency exposure from capital market debt in
US dollars, Swiss francs or in yen. Our bonds initial tenors

74 Financial position and net worth

RWE Annual Report 2011

range from 2 to 30 years. Their weighted average remaining

term to maturity at the end of 2011 was 8.5 years. The hybrid
bonds are not included in this figure. 1.8 billion in bonds
are due for repayment in 2012.

RWE issues sterling bond. At the beginning of 2012, we

tookadvantage of the favourable conditions for German
companies on the international capital market by issuing a
600 million bond. The paper has a tenor of 22 years and a
coupon of 4.75%. The issuance met with keen interest
among investors and was considerably oversubscribed.

Maturity profile of the RWE Groups capital market debt (as of 31 Dec 2011)
Maturity
billion
2.5
2.0
1.5
1.0
0.5
0.0
Year 2012 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
RWE AG/RWE Finance B.V.

RWE AG hybrid bonds (may be redeemed for the first time in 2015 and 2017, respectively)

RWE issues commercial paper and obtains low-interest EIB

loan. Last year, we issued a total of 5.8 billion within the
scope of our Commercial Paper Programme. During the same
period of time, we redeemed a total of 2.9 billion. This
caused the volume of commercial paper outstanding by the
end of the year to rise by 2.9 billion to 3.4 billion. In
addition, in October, the European Investment Bank (EIB)
granted us a 645 million low-interest programme loan with
a maturity of nine years. The funds will serve to finance
capital expenditure on our electricity distribution network.

2.1 billion in proceeds from the issuance of new and

treasury RWE shares. Besides refinancing through debt, we
conducted a capital increase last year. The objective was to
secure our financial power in view of the heavy burdens
imposed by German energy policy. In a difficult stock market
environment, we placed 52.3 million new RWE common
shares and 28.1 million treasury RWE common shares for
26 per share in December. Our gross proceeds on the
issuance amounted to about 2.1 billion. The transaction is
thus one of the largest capital increases conducted by a
European industrial enterprise in recent years. Further
information can be found on page 46.

The RWE Groups capital market debt as of 31 Dec 2011

by maturity1
Nominal volume
Relative share of total volume of capital market debt
1 Maturities exclude the hybrid bonds issued.

20122015

20162019

20202024

from 2025

billion

6.3

2.9

2.9

2.9

42

20

19

19

Financial position and net worth 75

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Net debt rises to 29.9 billion. In the fiscal year under

review, our net debt advanced by 1.0 billion to
29.9billion. This was mainly due to our capital expenditure
(7.1 billion) and RWE AGs dividend payment (1.9 billion).
In addition, provisions were up, in particular for pensions.
This rise totalled 0.6 billion. There was a debt-reducing
effect from cash provided by operating activities, which

amounted to 5.5 billion. Added to this were proceeds from

the capital increase (2.1 billion) and from the sale of
investments (0.8 billion). The issuance of a CHF 250 million
hybrid bond also contributed to the reduction in financial
liabilities, because, in determining net debt, we classify half
of its issue volume as equity and the other half as debt.

Net debt
million

31 Dec 2011

31 Dec 2010

+/
%

Cash and cash equivalents

2,009

2,476

18.9

Marketable securities

5,353

3,445

55.4

Other financial assets

2,322

1,985

17.0

Financial assets

9,684

7,906

22.5

19,959

17,572

13.6

1,964

2,238

12.2

Bonds, other notes payable, bank debt, commercial paper

Other financial liabilities
Financial liabilities

21,923

19,810

10.7

Net financial debt

12,239

11,904

2.8

Provisions for pensions and similar obligations

3,846

3,318

15.9

Surplus of plan assets over benefit obligations

60

56

7.1

10,366

10,010

3.6

2,780

2,920

4.8

777

880

11.7

880

880

0.0

103

12

100.0

29,948

28,964

3.4

Provisions for nuclear waste management

Mining provisions
Adjustment for hybrid capital (portion of relevance to the rating)
of which recognised in equity in accordance with IRFS
of which recognised in debt in accordance with IFRS
Net assets held for sale
Net debt of the RWE Group

Securing current A rating is a high priority. Assessments of

creditworthiness made by independent rating agencies have
a substantial influence on a companys options to raise debt
capital. The better the rating, the easier it is to gain access to
international capital markets and the better the conditions
for debt financing. Therefore, we benefit from the fact that
the two leading rating agencies, Standard & Poors and
Moodys, have given RWE high credit ratings. Last year,

Credit rating

however, the agencies downgraded us by one notch, from

A to A- (Standard & Poors) and from A2 to A3 (Moodys),
maintaining their negative outlook. Among the reasons
given by the agencies are the burdens resulting from
Germanys accelerated nuclear phase-out and the difficult
conditions prevailing on the gas market. The rating
downgrades did not have a material impact on our financing
costs.

Moodys

Standard & Poors

Non-current financial liabilities

Senior debt
Subordinated debt
Current financial liabilities
Outlook

A3

Baa2

BBB

P-2

A-2

negative

negative

76 Financial position and net worth

Leverage factor rises to 3.5. We manage our debt based on

performance indicators, among other things. One of the key
figures is the ratio of net debt to EBITDA, which is referred to
as the leverage factor. This key performance indicator is of
more informational value than total liabilities as it reflects
the companys earnings power and, in turn, its ability to
service the debt. To secure our rating, in February 2010, we
set ourselves the goal to orientate our leverage factor
towards an upper limit of 3.0. As expected, we failed to hit

RWE Annual Report 2011

this target in 2011, despite the capital increase: our leverage

factor rose from 2.8 (2010) to 3.5. We intend to quickly
return it to the 3.0 mark.
Cost of debt on a par year on year. In 2011, our cost of
debtwas unchanged, at 4.9%. This figure relates to the
RWEGroups average debt outstanding such as bonds,
commercial paper and bank loans, including interest
derivatives. Hybrid capital is not considered.

Cash flow statement

million

2011

Cash flows from operating activities

5,510

5,500

10

436

2,349

1,913

Cash flows from investing activities

7,766

6,683

1,083

Cash flows from financing activities

1,742

638

1,104

12

18

5261

539

13

of which: changes in working capital

Effects of changes in foreign exchange rates and other changes

in value on cash and cash equivalents
Total net changes in cash and cash equivalents
Cash flows from operating activities
Minus capital expenditure on property, plant and equipment and on intangible assets
Free cash flow

2010

+/
million

5,510

5,500

10

6,353

6,379

26

843

879

36

1 Including a 59 million reduction in the cash and cash equivalents reported on the balance sheet for the period ending on 31 December 2010 as assets held for sale.

Operating cash flows in the order of last year. We generated

5,510 million in cash flows from operating activities,
matching the previous years level. They therefore developed
much better than earnings. The main reasons are positive
effects in working capital. For example, we had brought
forward some of our CO2 certificate expense to 2010.
Furthermore, liquidity was temporarily improved by the
increased lump sum Amprion received under the German
Renewable Energy Act on 1 January 2011 in compensation
for added costs resulting from electricity from renewables
being fed into the grid. This sum is re-determined once a year
on the basis of estimates.

Cash outflows for investing activities totalled 7,766 million.

This is the sum by which our capital expenditure (including
cash investments) exceeded proceeds from the disposal of
assets and the sale of companies. Our financing activities
led to a net cash inflow of 1,742 million. 2.1 billion was
allocable to the capital increase and 2.9 billion to the
issuance of commercial paper. This was contrasted by
RWEAGs 1.9 billion dividend payment. Furthermore, we
redeemed a 1.5 billion bond in September. On balance,
the aforementioned cash flows reduced our cash and cash
equivalents by 526 million in 2011.

Financial position and net worth 77

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Cash flows from operating activities, minus capital

expenditure on property, plant and equipment and
intangible assets, result in free cash flow, which at

Balance sheet structure

843million was negative, as in 2010 (879 million). This

is a consequence of our extensive investing activity.

31 Dec 2011
million

31 Dec 2010
%

million

Assets
Non-current assets
Intangible assets
Property, plant and equipment
Current assets
Receivables and other assets1
Total

63,539

68.6

60,465

65.0

16,946

18.3

17,350

18.6

34,847

37.6

32,237

34.6

29,117

31.4

32,612

35.0

18,771

20.3

23,258

25.0

92,656

100.0

93,077

100.0

17,082

18.4

17,417

18.7

Equity and liabilities

Equity
Non-current liabilities
Provisions
Financial liabilities
Current liabilities
Other liabilities2
Total

44,391

47.9

45,162

48.5

23,829

25.7

23,485

25.2

15,428

16.7

15,908

17.1

31,183

33.7

30,498

32.8

19,361

20.9

20,881

22.4

92,656

100.0

93,077

100.0

1 Including financial accounts receivable, trade accounts receivable, and tax refund claims.
2 Including trade accounts payable and income tax liabilities.

Balance sheet structure: equity ratio of 18.4% roughly on a

par year on year. As of 31 December 2011, the RWE Groups
balance sheet total amounted to 92.7 billion. This is
0.4billion less than at the end of 2010. On the assets side,
accounts receivable and derivative positions decreased by
2.6 billion and 1.6 billion, respectively. In contrast, the
value of property, plant and equipment increased by
2.6billion due to our substantial capital expenditure,
despite the deconsolidation of Amprion. Current securities

were also clearly up on the prior year, rising by 1.8 billion.

On the equity and liabilities side, current liabilities were up
because we increased our refinancing via commercial paper.
In contrast, non-current liabilities were down. In sum,
liabilities rose by 0.4 billion. The RWE Groups equity
declined by 0.3 billion due to effects in other
comprehensive income. It amounted to 17.1 billion. This
corresponds to 18.4% of the balance sheet total. The equity
ratio thus roughly matched the previous years level (18.7%).

78 Notes to the financial statements of RWE AG (holding company)

RWE Annual Report 2011

1.8 N
 OTES TO THE FINANCIAL STATEMENTS OF
RWE AG (HOLDING COMPANY)
As the management holding company of the RWE Group, RWE AG handles central management tasks and procures the
funds for the subsidiaries business operations. Its assets and income largely depend on the economic success of the
Group companies. Therefore, the burdens on earnings, which were felt above all in the German electricity generation and
gas midstream businesses, clearly left their mark on RWE AGs separate financial statements: the net profit determined on
the basis of German commercial law was significantly below the high figure achieved in the preceding year.
Financial statements. RWE AG prepares its financial
statements in compliance with the rules set out in the
German Commercial Code and the German Stock Corporation
Act. The financial statements are submittedto

Balance sheet of RWE AG (abridged)

million

Bundesanzeiger Verlagsgesellschaft mbH, Cologne,

Germany, which publishes them in the electronic Federal
Gazette. They can be ordered directly from RWE and are also
available on the internet at [Link]/ir.

31 Dec 2011

31 Dec 2010

39,246

39,849

7,719

3,950

214

876

Marketable securities and cash and cash equivalents

3,054

1,679

Deferred tax assets

2,761

52,994

46,354

9,925

8,146

Non-current assets
Financial assets
Current assets
Accounts receivable from affiliated companies
Other accounts receivable and other assets

Total assets
Equity
Provisions
Accounts payable to affiliated companies
Other liabilities
Total equity and liabilities

Income statement of RWE AG (abridged)

million
Net income from financial assets
Net interest
Other income and expenses
Profit from ordinary activities

4,509

4,851

30,902

29,462

7,658

3,895

52,994

46,354

2011

2010

353

3,184

1,419

681

510

1,413

1,262

3,916

29

Taxes on income

2,771

1,397

Net profit

1,538

2,520

Allocation to retained earnings

308

653

Distributable profit

1,230

1,867

Extraordinary income and expenses

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Notes to the financial statements of RWE AG (holding company) 79

Assets. RWE AG had 53.0 billion in total assets as of

31December 2011, up 14% year on year. This is in part
dueto the fact that several Group companies had an
increased need for financial resources, which resulted in
a rise in accounts receivable by the holding company
from these entities. In 2011, the holding company
increasingly refinanced itself through the issuance of
commercial paper. This was reflected in a rise in other
liabilities. Another reason for the growth in total assets
was that we exercised our discretionary right to capitalise
deferred taxes in 2011. Furthermore, there was a rise
in marketable securities and cash and cash equivalents.
The backdrop to this is that we conducted a capital
increase and sold RWE treasury shares in December.
As of 31December2011, the equity ratio was 18.7%,
compared to 17.6% in the preceding year.

Earnings position. At 1,538 million, net profit was

markedly lower than in the prior year. Net income from
financial assets declined substantially. The contribution
made by RWE Power was much smaller than in 2010. The
decisive factors were the reduction in the lifetimes of our
German nuclear power plants, the new nuclear fuel tax, the
decline in margins in the electricity generation business
andthe effects on earnings from hedges. An unusually weak
performance in energy trading and heavy burdens in the
gasmidstream business caused RWE AG to appropriate
substantial losses from RWE Supply&Trading. The declines in
earnings recorded by RWE Power and RWE Supply&Trading
were more significant in the separate financial statements
complying with the German Commercial Code than in the
consolidated financial statements according to IFRS. This is
due to differing accounting standards.

Financial position. To raise funds on the bond market, RWE

usually uses the services of its subsidiary RWE Finance B.V.,
which conducts issuances backed by RWE AG. Besides the
aforementioned issuance of new and treasury RWE shares,
which generated gross proceeds of 2.1 billion, the issuance
of a hybrid bond in October had a positive effect on the
financial position. The issuance totalled CHF 250 million,
andthe bond has a tenor of slightly over 60 years. As of
31December 2011, there was a total of 16.9 billion and
3.4 billion in bonds and commercial paper outstanding,
compared to 18.1 billion and 0.5 billion in the preceding
year. In January 2012, a further bond was placed on the
market, with an issue volume of 600 million and a term to
maturity of 22 years. In addition, a 4.0 billion syndicated
credit line granted us by a group of banks, which we have
not made use of so far, serves as a liquidity reserve.

Net interest also decreased. The main reason for this was
losses on securities used to hedge pension obligations. In
the previous year, we had generated income from such
securities. The other income and expenses item also
deteriorated, especially due to a reduction in income tax
apportionments from subsidiaries. The fact that the current
tax expense also dropped and that deferred taxes were
capitalised for the first time, in the amount of 2.8 billion,
had a positive effect.
Appropriation of distributable profit. The Supervisory and
Executive Boards of RWE AG will propose to the Annual
General Meeting on 19 April 2012 that a dividend of 2
per share be paid for fiscal 2011. Relative to the Groups
recurrent net income, this equates to a payout ratio of 50%.
Corporate Governance Declaration in accordance with
Sec.289a of the German Commercial Code. The Executive
Board of RWE Aktiengesellschaft issued a corporate
governance statement in accordance with Sec. 289a of the
German Commercial Code on 16 February 2012 and
published it on the internet at [Link]/corporategovernance-declaration-sec-289a-HGB.

80 Disclosure relating to German takeover law

RWE Annual Report 2011

1.9 DISCLOSURE RELATING TO GERMAN TAKEOVER LAW

The following disclosure is in accordance with Sec. 315, Para. 4 and Sec. 289, Para. 4 of the German Commercial Code as
well as with Sec. 176, Para. 1, Sentence 1 of the German Stock Corporation Act. The information relates, among other
things, to issues that may play a role in obtaining control over a company as well as executive board authorisations to
change a companys capital structure. All of the rules are in line with the standards generally accepted by German listed
companies.
Composition of the subscribed capital. Since the capital
increase was entered in the Commercial Register on
7December 2011, RWE AGs subscribed capital has
consisted of 575,745,499 no-par-value common shares in
the name of the bearer and 39,000,000 no-par-value
preferred shares in the name of the bearer without voting
rights. They account for 93.66% and 6.34% of the
subscribed capital, respectively. Holders of preferred shares
are given priority when distributable profit is distributed.
Pursuant to the Articles of Incorporation, it is appropriated
in the following order: 1) to make back payments on shares
of the profit allocable to preferred shares from preceding
years; 2) to pay a preferred share of the profit of 0.13 per
preferred share; 3) to pay the share of the profit allocable to
common shares of up to 0.13 per common share; and 4) to
make consistent payments of potential further portions of
the profit allocable to common and preferred shares unless
the Annual General Meeting decides in favour of a different
appropriation. The composition of the subscribed capital
and the rights and obligations of the shareholders comply
with the requirements of the law and the Articles of
Incorporation.
Shares in capital accounting for more than 10% of the
voting rights. As of 31 December 2011, one holding in
RWEAG exceeded 10% of the voting rights. It is held by
RWEnergie-Beteiligungsgesellschaft mbH & Co. KG, which
is headquartered in Dortmund. In compliance with Sec. 21,
Para. 1 of the German Securities Trading Act, on
21December 2007, the company informed us that it
held16.089% of RWE AGs voting stock at the time.
Within the scope of the capital increase conducted in
December 2011, Deutsche Bank AG, headquartered in
Frankfurt am Main, temporarily held a stake exceeding the
10% threshold. Pursuant to the German Securities Trading
Act, Deutsche Bank informed us on 12 December 2011
that it held 71,416,748 voting rights on 7 December,
corresponding to 12.4% of the voting rights. At the same
time, the bank informed us that its share of voting rights
had fallen back under the 10% threshold on 8 December.

In accordance with Sec. 27a, Para. 1 of the German Securities

Trading Act, Deutsche Bank declared that the technical
implementation of RWE AGs capital increase was the only
reason for the purchase of voting stock, which temporarily
caused it to exceed the reportable threshold of 10%.
Appointment and dismissal of Executive Board members/
amendments to the Articles of Incorporation. Executive
Board members are appointed and dismissed in accordance
with Sec. 84 et seq. of the German Stock Corporation Act in
connection with Sec. 31 of the German Co-Determination
Act. Amendments to the Articles of Incorporation are made
pursuant to Sec. 179 et seqq. of the German Stock
Corporation Act in connection with Art. 16, Para. 6 of the
Articles of Incorporation of RWE AG. According to Art. 16,
Para. 6 of the Articles of Incorporation, unless otherwise
required by law or in the Articles of Incorporation, the
Annual General Meeting shall adopt all resolutions with a
simple majority of the votes cast; if a majority of the capital
stock represented is required, the simple majority shall
suffice. The legal right to determine a majority of the capital
required to amend the Articles of Incorporation that differs
from the majority required by law was thus exercised.
Pursuant to Art. 10, Para. 9 of the Articles of Incorporation,
the Supervisory Board is authorised to pass resolutions to
amend the Articles of Incorporation that only concern the
wording, without changing the content.
Executive Board authorisations to conduct share buybacks.
Pursuant to the resolution passed by the Annual General
Meeting on 20 April 2011, the Executive Board was
authorised to purchase shares of any class in the company
until 19October 2012, totalling up to 10% of the share
capital when the Annual General Meeting passed the
resolution or if the following is lower when the
authorisation is exercised. The purchase may be limited to
shares of a single class. It is at the Executive Boards
discretion to purchase the shares on the stock market or by
making a public call for shares. This can be done through the
use of put or call options. The treasury shares may then be
called in.

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

If common shares are bought back, they can also be

transferred to third parties within the scope of mergers or
acquisitions of companies, parts of companies or stakes in
companies, or sold in another manner. A sale not conducted
on the stock exchange or via a tender to all shareholders
may only be made in exchange for cash. Moreover, the price
at the time of sale may not be significantly lower than the
stock-market price for common shares bearing the same
rights. The company may use common shares bought back
to redeem convertible and option bonds issued on the basis
of the resolutions passed by the Annual General Meeting
held on 22 April 2009. The company may also use the
common shares bought back to meet obligations arising
from employee stock ownership plans. The authorisations
may be exercised in full or in part and also for partial
amounts. Within the scope of the capital increase conducted
in December 2011, 28,105,327 treasury shares were sold on
the basis of the authorisations in effect. This corresponds to
4.57% of the companys subscribed capital.
Executive Board authorisation for the issuance of option
and convertible bonds. Pursuant to the resolution passed by
the Annual General Meeting on 22 April 2009, the Executive
Board is authorised to issue option or convertible bonds
until 21 April 2014. The bonds combined nominal value is
limited to 6 billion. The shareholders subscription rights
can be excluded if the bonds are issued at a price in line
with the market and the new shares do not account for more
than 10% of the share capital when the Annual General
Meeting passed the resolution or if the following is lower
when the authorisation is exercised. The 10% limit is
calculated taking into account other cash capital measures
under exclusion of subscription rights, such as the cash
capital increase from authorised capital conducted in
December 2011. The Executive Board may also exclude the
shareholders subscription rights in order to prevent the
number of shares allocated from the subscription resulting in
fractional amounts (fractions of shares). Furthermore, the
subscription rights of holders of convertible or option bonds
already issued may be excluded. They may be granted
subscription rights commensurate to the rights to which they
would be entitled as shareholders on conversion of the bond
or on exercise of the option. Pursuant to Art. 4, Paras. 3a
and 3b of the Articles of Incorporation, 143,975,680 in

Disclosure relating to German takeover law 81

conditional capital, divided among 56,240,500 common

shares in the name of the bearer, may be used to exercise
conversion or option rights.
Executive Board authorisations for the issuance of new
shares. In December 2011, RWE AG issued 52,340,499 new
common shares in the name of the bearer from authorised
capital in exchange for a cash contribution and excluding
shareholders subscription rights. As a result, the capital
stock was increased by 133,991,677.44 to
1,573,748,477.44. The Executive Board is now authorised
to increase the companys capital stock with the Supervisory
Boards approval by up to 153,959,682.56 until 16 April
2013 either at once or in several increments through the
issuance of common shares in the name of the bearer in
exchange for contributions in cash or in kind (authorised
capital). The shareholders subscription rights can be
excluded with the Supervisory Boards approval, in order to
avoid allocating fractions of shares as a result of the
subscription. The subscription rights can also be excluded in
order to issue shares in exchange for contributions in kind
within the scope of mergers or for the purpose of acquiring
stakes in companies. Subscription rights can also be
excluded in the event of a cash capital increase if the price
at which the new shares are issued is not significantly lower
than the price at which shares outstanding are traded on the
stock market, and if the portion of the capital stock
accounted for by the new shares, for which subscription
rights are excluded, does not exceed 10% of the share
capital in total. We already made use of most of this
amountby implementing the cash capital increase in
December2011.
The Executive Board shall be empowered, subject to the
consent of the Supervisory Board, to determine the further
details and conditions of the share issuance. Shares from
authorised capital are added to shares from conditional
capital in cases where they are both issued excluding the
shareholders subscription rights.
Effects of a change of control on debt financing. RWE AGs
syndicated credit line has a change of control clause
including the following main provisions: in the event of a
change of control or majority at RWE, further drawings are
suspended until further notice. The lenders shall enter into

82 Disclosure relating to German takeover law

negotiations with us on a continuation of the credit line.

Should we fail to reach an agreement with the majority of
them within 30 days from such a change of control, the
lenders may cancel the line of credit.
RWEs non-subordinated bonds also have a change of
control clause: in the event of a change of control in
conjunction with a drop in RWE AGs credit rating below
investment-grade status, creditors may demand immediate
redemption. The redemption amount is calculated on the
basis of the corresponding bond conditions. Our
1.75billion and CHF 250 million hybrid bonds also have
change of control clauses. We have the right to cancel and
redeem them within the defined change of control period. If
they are not redeemed and the credit rating drops below
investment-grade status during the change of control
period, the annual compensation payable on the hybrid
bonds increases by 500 basis points.
Effects of a change of control on Executive Board and
executive compensation. Members of the Executive Board
of RWE AG have a special right of termination in the event
of a change of control. On exercise of this right, they
receive a one-off payment covering the contracts agreed
term, which shall correspond to at least twice and no more
than three times their annual contractual compensation.
This is in line with the requirements of the German Corporate
Governance Code, which has been in force since 2008.
[Link] was granted a special right of
termination before these Code rules became effective. His
employment contract provides for a one-off payment that
covers all of the remuneration due until the end of the
contractual term as well as the sum contractually agreed
instead of a pension commitment.

RWE Annual Report 2011

Furthermore, in the event of a change of control, retained

Executive Board bonuses are prematurely valued and
possibly paid. This is done on the basis of the average bonus
malus factor of the three preceding years. This is what
determines whether retained bonuses are paid out and the
amount of the payout. You will find detailed information on
this topic on page 109 et seq.
The 2005 long-term incentive plan (Beat) and the 2010 RWE
performance share plan (Beat 2010) for the Executive Board
and executives of RWE AG and of affiliated companies
include a provision for a change of control. In such events,
all holders of performance shares receive a compensatory
payment. It is determined by multiplying the price paid for
RWE shares as part of the takeover by the final number of
performance shares as of the date of the takeover offer, in
line with the corresponding plan conditions.
Provisions are in line with generally accepted standards.
The authorisation to conduct share buybacks and the
authorised capital are in line with standards generally
accepted by German listed companies. The same applies to
the provisions governing changes of control, in particular
clauses included in the contracts governing the syndicated
credit line, the RWE bonds and Executive Board
compensation.

Innovation 83

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

1.10 Innovation
The only way for us to remain competitive in the long run is to constantly invest in new technologies and refine existing
ones. The goals of energy policy in our markets determine the course. This presents us with huge challenges, which has
particularly been the case since the U-turn in German energy policy. How can we replace nuclear energy without falling
behind in terms of climate protection? Which measures must we take in order to maintain network stability and security
of supply as increasing amounts of weather-dependent wind and solar power are put on the system? How can our
customers conserve energy without having to renounce convenience? With our research and development work, we help
answer these questions. In recognition of this, the European School of Management and Technology recently elected us
the sectors innovation leader.
Developing the energy supply of the future. Our activity in
the field of research and development (R&D) covers all
stages of the value chain in the energy sector, from the
extraction of raw materials, electricity generation, network
operation and storage through to energy use. In so doing,
we build not only on in-house know-how, but also on
co-operation with partners in the plant engineering and

Research and development

R&D costs

million

R&D employees

Reducing emissions from electricity generation remains at

the heart of R&D activity. Coal and gas-fired power plants
remain the linchpins of energy supply in our core markets.
This applies even more so as, by the end of 2022, all German
nuclear power stations will be offline and the gap they
leave cannot be closed by renewable energy and increased
electricity imports alone. Our R&D activity focuses on
determining how the use of fossil fuel to produce electricity
can be reconciled with climate protection objectives. Over
the past decades, we continuously improved the efficiency of
our power plants by making use of new technologies and
methods, while reducing carbon dioxide emissions at the
same time. Nevertheless, the generation of electricity from
coal is still the source of substantial emissions. Therefore,
for several years, we have been working on ways to prevent
carbon dioxide from being released into the atmosphere.
This involves isolating and then capturing the gas. In a
subsequent step, it can be stored in underground rock
formations or used as a commodity.

chemical sectors as well as research institutions. Our

rangeof action is therefore wider than the Groups R&D
costs would have one assume. In 2011, it amounted to
146million, compared to 149 million a year earlier.
Atotalof 410 of our employees were solely or partially
dedicated toR&D activities.

2011

2010

2009

2008

2007

146

149

110

105

74

410

360

350

330

270

One promising approach to capturing carbon dioxide is

known as CO2 washing. This technique binds carbon dioxide
within a chemical solution and then removes it from the flue
gas. We have been testing this method in a pilot plant at our
Niederaussem lignite-fired power station since 2009. Our
partners are BASF and Linde. The goal is to develop new
CO2 washing agents for use in large-scale facilities. The results
are quite respectable: more than 90% of the carbon dioxide
can now be captured. Our CO2 washing is thus much more
efficient than the methods commonly in use at present. In
addition, we have shown that the high efficiency can be
maintained over several wash cycles. These successes can
betraced back to the high quality of the washing agent. At
the same time, we are exploring how making adjustments
tothesetup of the pilot plant can help us reduce capital
expenditure on large-scale facilities later on. In the autumn
of 2011, we downsized the absorber, a central component,
without this reducing the amount of carbon dioxide washed.
CO2 washing is also the subject of a project in the
UnitedKingdom. At the end of 2011, we completed the
construction of a pilot plant at the Aberthaw hard coal-fired

84 Innovation

power station where we will test detergents that are

different than the ones in use in Niederaussem. Within the
scope of another project, we have already tested the entire
process, from capture via transport to the storage of carbon
dioxide. We assisted in operating an American Electric Power
demonstration plant at the Mountaineer site in New Haven
(USA) for nearly two years, using technology developed
byAlstom. The project provided us with valuable knowledge.
Our goal is to be in a position to use CO2 washing
commercially no later than 2020.
Carbon dioxide from pollutant to commodity. Capturing
the carbon dioxide is only the first step. In addition, the gas
must be kept from the atmosphere permanently. Germany
still lacks a sufficient legal basis for storing the gas, for
example in rock formations deep under the surface of the
earth. Another obstacle is the lack of acceptance that exists
in and outside Germany. Therefore, we are taking another
step forward: we are investigating how to turn a harmful
greenhouse gas into a valuable commodity in times of
increasingly scarce resources, although the emission
reduction potential of this method is much lower than
through storage. Our ideas centre on how to use carbon
dioxide as an alternative to oil as a source of carbon for
chemical intermediates and in energy conversion. Three
projects which we launched in 2010 are dedicated to this.
The first undertaking involves using micro-organisms to
convert carbon dioxide to biomass, bio-plastics and chemical
intermediates. Our co-operation partner BRAIN is a leader in
the field of white biotechnology, the term that designates
the use of biotech methods in industrial production. The first
important finding from the project is that micro-organisms
absorb carbon dioxide from flue gas even under the
conditions that prevail in power plants.
In a second project, entitled Dream Production, we have
joined forces with Bayer and RWTH Aachen University to
look into ways to manufacture high-quality plastics from

RWE Annual Report 2011

CO2. To supply our project partners with carbon dioxide, in

2011, we expanded the pilot plant at Niederaussem to
include units for processing and liquefying CO2 as well as
storing it in containers. We received special recognition for
our pioneering work: the German Sustainability Award
Foundation ranked Dream Production among the top 3 in
the Germanys Most Sustainable Initiative category.
Our third project is called CO2RRECT, which we are
developing in conjunction with experts from Siemens and
Bayer as well as several universities and research institutes.
Centre stage is taken by the concept of making use of an
oversupply of electricity from renewables in order to
permanently integrate carbon dioxide into chemical
intermediates. To this end, hydrogen is produced from water
through electrolysis and is then brought into contact with
CO2. The result is hydrocarbons that serve as a basis for
chemical intermediates such as carbon monoxide. In this
manner, carbon dioxide can be used as a starting material
for producing household goods and CDs. One of
CO2RRECTs special features is that it aims to flexibly adapt
production to the availability of electricity from renewables.
Siemens will build a highly flexible electrolysis unit in the
Niederaussem power station this year.
Construction of an ocean current power generation plant in
Scotland. Our R&D activity in the field of electricity
production also addresses energy from renewables. We are
taking various approaches in this area, such as making
commercial use of the energy of the sea. Together with the
hydroelectric power specialist Voith Hydro, we are installing
a 1 megawatt (MW) ocean current turbine in the waters of
the Orkney Islands (Scotland). We have already anchored the
turbines foundation in the seabed. The facility is scheduled
to begin a two-year test phase starting in 2012. We hope
that this will provide us with new findings on the operation
of ocean current power generation facilities.

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Improved noise abatement for porpoises during

construction of offshore wind farms. Another focal point of
research activity is the development of noise abatement
methods when building wind farms at sea. To this end, we
began co-operating with seven other offshore investors in
May 2011. At the centre of the initiative are German wind
farms which are often built in very deep waters far offshore,
in order to comply with statutory regulations. Therefore, the
foundations have to be anchored in the seabed using driven
steel piles. The project partners want to reduce the noise
produced by this significantly, particularly in order to protect
harbour porpoises. Findings gained from this undertaking
will be shared with the entire offshore industry, including
manufacturers of noise abatement systems and approval
authorities.
Highly efficient electricity storage facility supports
renewable energy. Due to the rapid rise in the number of
wind turbines and photovoltaic units, electricity on the
system is increasingly influenced by weather conditions.
However, the supply of electricity must always meet demand
in order for the mains frequency to remain stable. Striking
this balance is becoming an ever-more ambitious task, which
cannot be accomplished without new electricity storage
facilities. Against this backdrop, we, the German Aerospace
Centre as well as General Electric Group and Zblin jointly
developed an adiabatic pressurised-air storage facility.
When electricity supply is high, air is compressed and forced
into subterranean cavities, where it is stored. This
compressed air can be used to generate electricity when
needed. We are considering the construction of a
demonstration plant in Stassfurt (Saxony-Anhalt) capable of
storing 360 megawatt hours (MWh) with an electrical
capacity of up to 90 MW. It should have an efficiency of
70%. We intend to accomplish this by capturing the heat
generated during the compression process and returning it
to the facilitys energy cycle. It would be the very first time
this method was used on a large scale.

Innovation 85

In view of the key role played by storage technologies in the

transformation of the energy sector, in September 2011,
RWE as well as twelve research and energy companies
founded the European Association for Storage of Energy
(EASE). The association will serve as a platform for expert
exchange on technical, economic and regulatory issues.
Smart electricity network in practice. Historically, electricity
was produced almost exclusively by large-scale power plants,
whereas the role assumed by homes was limited to that of
consumer. Since then, the situation has changed. More and
more households are equipped with solar panels and
produce electricity themselves, feeding their surplus energy
into the system. This translates into additional co-ordination
work, particularly for operators of medium and low-voltage
networks. Smart equalising mechanisms have to be
developed using new technologies in order to prevent the
grid from falling out of balance. One such example is the use
of flexible transformers that automatically adjust voltage
depending on the grids state. Another option is to store
biogas and use it to generate electricity, for example when
the sun is not shining. Aiming to test and refine such
techniques in practice, in June 2011, RWE Deutschland
launched one of Germanys first smart electricity networks
asthe consortium leader of Smart Country Networks for
theElectricity Supply of the Future, a smart grid model
experiment subsidised by the German Ministry of Economics
and Technology. The goal is to gain knowledge of the
operation of this type of network in a region in Bitburg-Prm
County over a period of three years. Together with our
partners ABB, Consentec and Dortmund Technical University,
we want to demonstrate how to ensure security of supply,
especially in rural regions, despite fluctuations in electricity
fed into the grid from renewable sources.

86 Innovation

Power plant for domestic use. The transformation of

Germanys energy industry is not just taking place among
utilities and network operators it also involves customers.
Together with Vaillant, we developed and brought to market
a home power plant. It consists of a gas motor that
generates both electricity and heat. What is special about
this is that customers can make use of the electricity
themselves or feed it into the grid. In the future, it should
also be possible to fit the unit with an ecological heating rod
that enables the production of heat with electricity from a
wall socket. In this case, the motor is switched off. This is
worthwhile especially when electricity is affordable, for
instance during periods in which large amounts of electricity
are put on the system by wind turbines and solar panels. A
smart control developed by RWE ensures that the systems
operating mode is ideally matched to the situation on the
market and consumption.
Heating with green electricity. Another way of optimising
domestic energy usage involves the use of the wind heater
which we are in the process of developing and testing. The
term describes a novel electrical storage heater, the charging
times of which can be flexibly adapted to fluctuations in
electricity produced from renewables. To date, electric
heaters have generally been charged overnight. In March
2011, RWE Effizienz GmbH teamed up with Siemens and
tekmar GmbH to launch an R&D project for managing loads
and making wind heaters economically feasible. Fifty of
RWEVertrieb AGs customers are also participating in the
pilot project. Initial results are expected by the end of the
2011/2012 heating period.

RWE Annual Report 2011

RWE recognised as innovation leader. We rank first in

the 2010 Innovation Index of the European School of
Management and Technology (ESMT). The ESMT assessed
the innovative capabilities of Europes 15 largest energy
utilities from 2007 to 2010. The Innovation Leader among
European Energy Utilities Award is particularly in recognition
of our wide range of R&D activity: we cover 14 of 15 fields
of research classified as important by ESMT more than
any of our competitors. The jury members also honoured our
relatively high R&D expenditure and large number of patent
applications.

Development of risks and opportunities 87

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

1.11 DEVELOPMENT OF RISKS AND OPPORTUNITIES

The U-turn in German energy policy demonstrates how suddenly the framework conditions in the energy sector can
change. However, political interventions are not the only risks to which utilities such as RWE are exposed today. Changing
market structures and fluctuating electricity and fuel prices also bring major commercial challenges, making professional
risk management indispensable. To us, the early systematic recording, assessment and control of risks is a key element of
solid business management. It is equally important to identify and take advantage of opportunities.
Organisation of risk management in the RWE Group.
Overall responsibility for the groupwide risk management
system sits with the Executive Board of RWE AG. It
establishes the rules and minimum standards, defines the
caps for the aggregated market and credit risks and takes
decisions on individual transactions that can result in
substantial risks.
The Corporate Controlling Department, which reports
to the CFO, bears responsibility for the control, steering
and co-ordination of the risk management system. This
organisational unit regularly reports on the Groups risk
situation to the Executive Board and the Risk Management
Committee of RWE AG.
The Risk Management Committee is in charge of
monitoring and refining the risk management system.
It is composed of the heads of the following RWE AG
departments: Commodity Management, Compliance &
Management Board Office, Corporate Controlling, Finance,
Accounting, Legal/Board Affairs, Audit and Corporate
Development & Strategy. The Committee is chaired by
the head of the Corporate Controlling Department.
In addition, the following organisational units have
been entrusted with corporate risk management tasks:
The Executive Board mandate relating to commercial
management, to which the Commodity Management
Department is assigned, controls commodity positions.
Within a framework determined by the entire Executive
Board, this Executive Board mandate grants approvals
for hedging strategies and large commodity transactions
which are not covered by limits. Decisions concerning
hedging strategies are prepared by the Commodity
Management Committee, to which the Executive Board

member in charge of commercial management and the

Head of the Commodity Management Department as
well asrepresentatives of the Board of Directors of
RWE Supply&Trading belong.
Limits for the commodity risks of operating companies are
defined by the Commodity Management Department. The
basis for these are the risk caps established by the entire
Executive Board.
The CFO of RWE AG monitors commodity risks. In fulfilling
this task, he is assisted by the CFOs and managing directors
in charge of finance of our major Group companies. The
RiskControlling Unit, which belongs to the Corporate
Controlling Department, establishes groupwide performance
targets for risk measurement, tracks commodity risks and
reports on this to the Executive Board. By using dual
controls, we ensure that major risks are closely monitored
andthat guidelines are implemented uniformly throughout
the Group.
The controlling of the RWE Groups credit risks is handled by
the Credit Risk Controlling Unit, which also belongs to the
Corporate Controlling Department.
Monitoring financial risks at the RWE AG level is the
responsibility of the Financial Controlling Unit, which belongs
to the Finance Department. Its tasks include reporting on
currency, interest and liquidity risks.
The strategic guidelines for the management of our financial
assets (including the funds of RWE Pensionstreuhand e.V.
and RWE Pensionsfonds AG) are determined by RWE AGs
Asset Management Committee. It weighs the earnings
prospects and risks against each other, selects suitable asset
classes (bonds, stocks, etc.) and decides on the allocation of

88 Development of risks and opportunities

the companys funds to them. The members of the Asset

Management Committee are the CFO of RWE AG, the Head
of Group Finance and the CFOs of the following Group
companies: RWE Dea, RWE Power, RWE npower, enviaM,
Swag Energie and Lechwerke.
Risks associated with financial reporting are monitored
by RWE AGs Corporate Accounting Department. This
department also reports directly to the CFO. It uses an
internal control system, which is described in detail on
page 94 et seq.
In addition, the Corporate Compliance Department
monitors compliance with RWEs Code of Conduct, paying
special attention to the avoidance of corruption risks. It
reports to the President and CEO of RWE AG or, if members
of the Executive Board are affected, directly to the Chairman
of the Supervisory Board and the Chairman of the Audit
Committee.
Under the expert management of the aforementioned
areas, our Group companies ensure that the risk
management guidelines are implemented throughout
the Group.
Risk management as a continuous process. Risk
management is an integral part of our operating workflow
asa continuous process. Risks and opportunities, defined
asnegative or positive deviations from target figures,
areidentified and classified early on. We evaluate risks
according to their probability of occurrence and damage
potential and aggregate them at the Group company or
Group level. Our analysis covers the three-year horizon of our
medium-term planning. It may extend beyond that for
material strategic risks. Risks that share the same cause are
aggregated to one position. If a risk can be reduced, the
residual risk is reported together with the countermeasures
already taken. The damage potential is defined in relation to
the operating result and equity of the business unit
concerned and the Group as a whole. We analyse risks using
a matrix, in which the risks as well as their probability of
occurrence and potential damage are represented. We can
derive from this whether there is a need for action and the

RWE Annual Report 2011

scope of such action. Risks with a high probability of

occurrence or damage potential are mitigated by taking
operational measures. Where necessary, we account for
them by taking precautionary steps on the balance sheet,
e.g. provisions. We evaluate and manage opportunities as
part of our regular planning process.
We prepare standardised reports on our risks and
opportunities for our management and supervisory
committees on a quarterly basis. The Executive Board of
RWEAG is immediately informed of unforeseen material
changes to the risk situation. Our Group Audit Department
regularly appraises the quality and functionality of our risk
management system. Nevertheless, we cannot guarantee
with absolute certainty that all relevant risks are identified
early on and that the controls work. For example, human
error can never be ruled out completely.
Overall assessment of the risk and opportunity situation by
executive management. As an energy company with a longterm investment strategy, RWE is especially dependent on
reliable political framework conditions. However, we are
witnessing a rising trend towards regulatory intervention in
the energy market. Proof of this is the nuclear fuel tax levied
in Germany since 2011, against which we have filed lawsuits.
The sudden change of course in German nuclear energy
policy after the reactor accident at Fukushima is further
evidence of the fact that political risks have risen in the
utility sector. We have taken legal recourse here as well,
inorder to limit financial damage.
In addition to energy policy, the development of supply and
demand on electricity and gas markets affects our earnings
in particular. Should the Eurozones sovereign debt crisis
lead to a recession, a decline in energy consumption and
energy prices may be the consequence. Furthermore, we are
witnessing structural changes on energy markets. For
instance, the continued rise in the number of wind turbines
and solar panels is crowding out gas and coal-based
generation, the margins of which have come under pressure.
If they continue to deteriorate, a curtailment of the
profitability of our large-scale new-build projects may be one
of the consequences.

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Development of risks and opportunities 89

The gas market is also undergoing change. The increasing

significance of liquid gas trading points and the expansion
of shale gas production in the USA have made a major
contribution to prices in gas trading decoupling themselves
from those set in long-term agreements indexed to the price
of oil, with the former being much lower than the latter since
2009. We procure parts of our gas based on contracts linked
to the price of oil. We entered into renegotiations with our
suppliers to obtain conditions that are adapted to the
markets development. A large number of them have since
entered the arbitration phase.

and supply markets taking account of current forward

prices and expected price volatility. Commodity and
creditrisks faced by generation and sales companies are
managed by following hedging rules established by
RWEAG. As already mentioned, in the generation
business, we limit risks by selling most of our electricity
early on, via forward contracts, and hedging the price
ofthe required fuel and emission certificates. We also
make use of forward markets to limit risks in RWE Deas
upstream business and in RWE Supply&Tradings gas
midstream business.

In view of all the issues mentioned above be it contract

renegotiations, legal proceedings, commodity price changes
or political intervention we are exposed to substantial risks,
but are also presented with opportunities. In sum, the
imponderables in our business have grown. Nevertheless,
there are no identifiable risks that jeopardise the continued
operation of RWE AG or the RWE Group.

RWE Supply&Trading plays a central role when it comes

tomanaging commodity price risks. This is the company
inwhich we pool our commodity transaction expertise
aswell as the associated risks. RWE Supply&Trading is the
RWE Groups interface to the worlds wholesale markets
for electricity and energy commodities. The company
markets large portions of the Groups generation position
and purchases the fossil fuels and CO2 emission
certificates needed to produce electricity. Its role as
internal transaction partner makes it easier for us to limit
the earnings risks for the generation and supply
businesses stemming from price swings on energy
markets. RWE Supply&Trading also uses commodity
derivatives to minimise risk in the procurement and supply
businesses. However, the trading activities are not
exclusively orientated towards reducing risks. RWE
Supply&Trading undertakes proprietary trading to a
strictly limited extent in order to take advantage of
changes in prices on energy markets.

Major risk and opportunity categories. The following

illustrates the risks and opportunities which may have a
substantial impact on our asset, financial and earnings
positions. They belong to the following categories, the first
four of which are particularly important to us at present.
Risks and opportunities arising from the volatility of
commodity prices: The development of prices on
commodity markets greatly influences our earnings,
especially in the field of electricity generation. For
example, decreasing electricity prices or rising fuel costs
may lead to a decline in margins and reduce the value of
our power plants. RWE Deas upstream business is also
exposed to price risks. Moreover, unfavourable market
developments can cause the costs we incur purchasing
electricity and gas to exceed the prices we can realise
through sales to end-customers and distributors. This
primarily relates to those of our gas procurement contracts
which are linked to the price of oil. However, the
aforementioned risks are contrasted by the possibility that
the prices may develop in RWEs favour. We assess the
price risks to which we are exposed on the procurement

The RWE Groups risk management system for energy

trading is firmly aligned with best practice as applied to
the trading transactions of banks. Transactions are
concluded with third parties only if credit risks are within
approved limits. Groupwide guidelines provide structures
and processes for the treatment of commodity price risks
and associated credit risks. The commodity positions in
our subsidiaries are constantly monitored, and findings are
reported to the responsible committees. Furthermore, the
Executive Board of RWE AG receives detailed updates on

90 Development of risks and opportunities

our consolidated commodity risk positions on a quarterly

basis. The Group companies inform the Corporate Risk
Controlling Department about their positions, which
consolidates them. This procedure is not followed for
market risks arising in connection with the proprietary
trades conducted by RWE Supply&Trading. Such risks are
monitored daily and stated separately.
The upper risk limits in the energy trading business are
setby the Executive Board of RWE AG. The Value at Risk
(VaR) is of central significance. It quantifies the potential
loss resulting from a risk position that will not be
exceeded with a predetermined probability and within a
predetermined time period. In principle, the VaR figures
within the RWE Group are based on a confidence interval
of 95% and a holding period of one day. This means that,
with a probability of 95%, the maximum daily loss will not
exceed the VaR. The central risk controlling parameter for
commodity positions is the Global VaR that relates to the
trading business of RWE Supply&Trading and may not
exceed 40 million. In fiscal 2011, it averaged 14 million,
and the daily maximum was 27 million. In addition, we
have set limits for each trading desk. Furthermore, we
factor extreme scenarios into stress tests, determine the
influence they can have on liquidity and earnings, and
take countermeasures whenever the risks are too high.
Risks and opportunities resulting from gas procurement
contract renegotiations: We source gas on liquid
wholesale gas markets such as the TTF (Netherlands) and
the NBP (United Kingdom) as well as based on long-term
purchase agreements linked to the price of oil. Prices at
the aforementioned trading points have been decoupled
from those of contracts linked to the price of oil since
2009, temporarily falling significantly below it. As a result,
due to contractual provisions, some of the gas we buy is
much more expensive than on the market, causing
declines in margins and customer losses. This primarily
affects our German and Czech activities. To obtain

RWE Annual Report 2011

purchase conditions adapted to the development of the

market, we entered into contract renegotiations with our
gas suppliers, a large number of which have already
turned into arbitration proceedings. The outcomes of the
renegotiations will have a substantial influence on our
medium-term earnings. We have already reached
agreements with respect to some long-term contracts:
large parts of them were either converted to wholesale
gas price indexation or terminated prematurely by mutual
consent. Nevertheless, there is a risk that the outcomes of
the ongoing renegotiations may lag behind the original
expectations we had based on detailed legal assessments.
However, we may be able to enforce conditions that are
more favourable than assumed initially.
Risks resulting from CO2 emissions: Lignite and hard coal
power plants account for a significant proportion of our
electricity generation portfolio. Our specific carbon
dioxide emissions are thus far above the sector average.
InDecember 2008, the EU member states agreed that
theWestern European electricity sector will hardly be
allocated any free certificates in the third emissions
trading period, which starts in 2013. This will cause our
annual spending on emission allowances to again be much
higher than in the current trading period, which ends in
2012. By 2020, we intend to reduce our specific carbon
dioxide emissions by more than 20% compared to 2005
by modernising our power stations and expanding
renewable energy. Furthermore, we limit our CO2 risk by
participating in climate-protection projects within the
scope of theKyoto Clean Development Mechanism and
Joint Implementation programme. Another measure
involves the virtual swapping of power plant capacity with
other generators. In addition, we conclude long-term
electricity supply agreements, in which the CO2 price risk
is borne bythe customer. Furthermore, we have already
purchased a certain number of CO2 certificates for the
third emissions trading period.

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Development of risks and opportunities 91

Regulatory and political risks: As a utility, we plan our

capital expenditure for periods extending over decades,
making us especially dependent on reliable political
framework conditions. However, we are witnessing an
increasing trend towards regulatory intervention in
theenergy market. Due to the budgetary difficulties of
numerous European countries, there is now an increased
risk of governments imposing new burdens on the
economy. This could particularly affect companies that are
bound to certain locations, such as utilities. An example of
this is the German nuclear fuel tax, which curtails our
earnings considerably. As its legality is questionable, we
filed lawsuits with the appropriate fiscal courts to have the
enforcement of the tax repealed. Ultimately, the German
Constitutional Court or if necessary the European Court
of Justice will rule on the admissibility of the nuclear fuel
tax. However, this is unlikely to happen until several years
from now. Until then, there will be substantial uncertainty,
which will make our planning difficult.

The rise in political risks in the field of nuclear energy

isalso reflected in the current debate on the selection of
afinal storage site in Germany. The final storage facility
isto be used to dispose of highly radioactive waste
produced by nuclear power stations. We believe that a
new law will lead to the risk of a further delay in the
selection process and impose additional financial burdens
on utilities.

The sudden change of course in German energy policy

following the reactor catastrophe at Fukushima also proves
that the political risks in the utility sector have risen. The
13th amendment to the German Nuclear EnergyAct (NEA),
which became effective at the beginning of August 2011,
nullified the lifetime extension for German nuclear power
plants introduced in 2010 and required theimmediate
shutdown of eight of the countrys 17 reactors. Staggered
decommissioning dates were established for the remaining
units (see page 43). The riskconcerning thenuclear
powerstations that are still online is that theymay not
beable tomake full use of thetransferable electricity
generation allotments whichthey are entitled toaccording
to theNEA. We believe the 13th amendment tothe
NEAisunconstitutional because the operators of the
reactorsaffected will not becompensated and the
decommissioning dates were established without sound
justification. Therefore, in February 2012, we filed an
appeal with the German Constitutional Court. Prior to this,
in April 2011, we hadbrought lawsuits before the Hessian
Administrative Court of Justice in Kassel against the
nuclear moratorium imposed on Biblis A and B from
Marchto June 2011.

The incentive-based regulation of electricity and gas

networks in Germany introduced in 2009 also harbours
earnings risks. The regulator has yet to determine the
maximum revenue each company is allowed to earn in the
second five-year regulatory period, which begins on
1January 2013 for gas and 1 January 2014 for electricity.
Furthermore, it has not yet assessed the efficiency of the
network operators. Should shortcomings be identified,
the companies shall be obliged to eliminate them by the
end of the regulatory period by cutting costs. Irrespective
of whether they succeed in doing so, the regulator will
gradually reduce the earnings caps of the affected
companies. In general, there is a risk that our network
companies may be subjected to revenue caps that are too
low and that these may actually be reduced further on
grounds of alleged inefficiencies. However, we also see an
opportunity, as the regulator may establish parameters
that are favourable to our network companies. Moreover,
we are confident that the framework conditions for
network investments will be improved.

Risks also arise from the monitoring of anti-competitive

pricing practices, the legal framework of which became
stricter at the end of 2007. In addition, legislative
initiatives have been launched at the European level,
which aim to increase the regulation of energy trading
transactions. One of the objectives is to oblige utilities to
trade commodity derivatives at clearing points, pledging
more financial collateral than previously in cases in which
the derivative positions exceed a financial cap that is yet
to be determined.

We are exposed to risks associated with approvals when

building and operating production facilities. This
particularly affects our wind farms, opencast mines and

92 Development of risks and opportunities

power plants. If their operation is interrupted or curtailed,

this can result in significant production and earnings
shortfalls. Furthermore, there is a danger of newbuild projects either receiving late or no approval, or
of granted approvals being withdrawn. Depending
on the construction progress made and the contractual
obligations to suppliers, this can have a significant
negative financial impact. We take precautionary measures
against this by preparing our applications for approval
with great care and ensuring that approval processes are
handled competently.
We are following the political upheaval in North Africa
very closely. RWE Dea is active in this region, where it is
conducting upstream projects. We already produce oil and
gas in Egypt. Furthermore, we are planning activities in
Libya. As in all non-OECD countries, we have backed our
capital expenditure there largely through federal
guarantees and will also do this for future projects.
Other legal and arbitration procedures: Individual RWE
Group companies are involved in litigation and arbitration
proceedings due to their operations or the sale of
companies. Out-of-court claims have been filed against
some of them. Furthermore, Group companies are directly
involved in various procedures with public authorities or
are at least affected by their results. However, we do not
expect any material effects on the RWE Group.
Some conciliation proceedings in connection with the
legal restructuring of companies are still pending.
They were initiated by outside shareholders in order to
examine the appropriateness of conversion ratios or cash
compensation. Since these figures were calculated by
independent experts and several first-instance decisions
have been in our favour, we believe the associated
risks are low. If different legally enforceable decisions
are reached, we will pay compensation to all affected
shareholders, including those who are not directly
involved in the conciliation proceedings.

RWE Annual Report 2011

Financial risks and opportunities: The volatility of foreign

exchange rates, interest rates and share prices can also
have a significant effect on our earnings. We attach
significant importance to currency risk management, due
to our international presence. Furthermore, energy
commodities such as coal and oil are traded in US dollars.
Group companies are generally obliged to limit their
currency risks via RWE AG. The parent company
determines the net financial position for each currency
and hedges it if necessary. The VaR concept is one of
the tools used to measure and limit risk. In 2011, the
average VaR for RWE AGs foreign currency position was
less than 1 million.
We differentiate between two categories of interest rate
risks. On the one hand, rises in interest rates can lead to
reductions in the price of securities held by RWE. This
primarily relates to fixed-interest bonds. On the other
hand, interest rate increases also cause our financing costs
to rise. The VaR for the securities price risk of our capital
investments in 2011 averaged 7 million (previous year:
9 million). We measure the sensitivity of the interest
expense with respect to rises in market interest rates using
the Cash Flow at Risk. We apply a confidence level of 95%
and a holding period of one year. In 2011, the average
Cash Flow at Risk was 19 million.
The securities we hold in our portfolio include shares.
The VaR for the risk associated with changes in share
prices averaged 12 million (previous year: 11 million).
Risks and opportunities from changes in the price of
securities are controlled by a professional fund
management system. The Groups financial transactions
are recorded centrally using special software and are
monitored by RWE AG. This enables us to balance risks
across individual companies. Range of action,
responsibilities and controls are set out in internal
guidelines, to which our Group companies are obliged
toadhere.

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Creditworthiness of business partners: Our business

relations with financial institutions, trading partners,
customers and suppliers expose us to credit risks. These
may increase considerably if the Eurozones sovereign
debt crisis becomes more serious. We counter them with
widely diversified financing sources, cash investments
andbank partners across various currencies, jurisdictions
and maturities.
We track the creditworthiness of our counterparties
closely. In addition, we ensure compliance with
groupwidestandards when measuring and managing
credit risks. We manage credit risks by setting limits
andby adjusting them, especially in the event of
changesin creditworthiness. If necessary, we request
cashcollateral or bank guarantees. We also take out
creditinsurance policies or make use of credit default
swaps as far as economically feasible.
Most of the banks and trading partners with which we
have credit relationships are of good creditworthiness.
We assess their credit standing based on external ratings.
If no such ratings are available, we apply internal
assessment methods. In addition, for banks, we use an
early warning indicator, which we developed in light of
the financial market crisis in 2008. We sell a significant
portion of our electricity generation on exchanges. The
credit risk for these sales is assumed by a clearing unit. As
a rule, over-the-counter energy trading transactions are
concluded on the basis of framework agreements, e.g.
those prescribed by the European Federation of Energy
Traders (EFET). In addition, we agree on collateral. For
financial derivatives, we make use of the German master
agreement or the master agreement of the International
Swaps and Derivatives Association (ISDA). We measure our
credit risk exposure in the trading and finance sectors on
a daily basis.
Liquidity risk: Liquidity risks consist of the danger of
ourliquidity reserves no longer being sufficient to meet
our financial obligations in a timely manner. At RWE,
suchobligations result above all from the refinancing of
financial liabilities due. Furthermore, we must put up

Development of risks and opportunities 93

collateral if trading contracts marked to market result in a

loss. We classify our liquidity risk as low. The basis for this
is our solid financing. We have strong cash flows from
operating activities, substantial cash and cash equivalents,
unused credit lines and further financial latitude thanks to
our Commercial Paper and Debt Issuance Programmes.
Our careful planning ensures that we are liquid at all
times. Among other things, we make use of a groupwide
notification system, which records the Group companies
short, medium and long-term need for financial resources.
Risks and opportunities associated with corporate
strategy: Decisions on capital expenditure on property,
plant and equipment and acquisitions are associated with
major risks and opportunities, due to the amount of
capital employed and the fact that it is tied up long term.
When a company is acquired, problems can arise in
relation to the integration of employees, processes and
technologies. RWE has specific accountability provisions
and approval processes in place to prepare and implement
strategic decisions concerning capital expenditure on
property, plant and equipment as well as acquisitions.
Closely monitoring both our markets and competitors
helps us record and assess strategic risks and
opportunities early on.
Continuity of business activities: We operate
technologically complex and interconnected production
plants in all parts of our value chain. Uninsured damage
can be incurred by our lignite mining equipment,
production facilities, power stations, power plant
components and networks. There is an increasing risk of
outages in our power plants as their components age. In
addition, the construction of new plants can be delayed
due to accidents, faulty materials, late deliveries or timeconsuming approval procedures. As far as possible, we
mitigate these risks through diligent project management.
Our network business is exposed to the risk of facilities
being damaged by force majeure such as severe weather
conditions. We limit these risks through high safety
standards as well as regular inspection, maintenance and
servicing work. If economically viable, we take out
appropriate insurance policies.

94 Development of risks and opportunities

Information technology: Our business processes are

supported by efficient data processing systems.
Nevertheless, we cannot fully rule out a lack of availability
of IT infrastructure or a breach in the security of our data.
We mitigate these risks by applying high security
standards as well as raising user awareness and limiting
access privileges. In addition, we regularly invest in
hardware and software upgrades. Our IT is largely based
on common market standards. Its operations are run in
modern data centres. We have established a mandatory
groupwide process for managing risks associated with
engineering IT solutions.
Human resources: Competition for the best talent is
becoming increasingly fierce. To secure and strengthen
our position in this area, when recruiting staff, we
highlight RWEs attractiveness as an employer. In addition,
we strive to retain experts and executives over the long
term. In addition to performance-based compensation
and progressive employee benefits, we put a great deal
of effort into the varied prospects they are offered
throughout the RWE Group: trainee programmes, crossdisciplinary career paths, assignments in various European
Group companies as well as attractive continued
education and advanced training offerings. We limit staff
fluctuation risks through replacement arrangements and
early succession planning.
Report on the accounting-related internal control system:
statements in accordance with Sec. 315, Para. 2, No. 5 and
Sec. 289, Para. 5 of the German Commercial Code. Risks
associated with financial reporting reflect the fact that our
annual, consolidated and interim financial statements may
contain misrepresentations that could have a significant
influence on the decisions made by their addressees. Our
accounting-based Internal Control System (ICS) aims to
detect potential sources of error and limit the resulting risks.
It covers the financial reporting of the entire RWE Group.
This enables us to ensure with sufficient certainty that the
parent company and consolidated financial statements are
prepared in compliance with statutory regulations.

RWE Annual Report 2011

The design of the accounting-related ICS largely mirrors

the organisation of our accounting and financial reporting
process. One of the main features of this process is the
control over the Group and its operating units. The basis
is provided by the target parameters determined by the
Executive Board of RWE AG. Building on them and our
expectations concerning the operating business trend, we
develop our medium-term budget once a year. It includes
the figures budgeted for the following fiscal year as
well as the figures planned for subsequent years. We
prepare forecasts in line with the budget for financial
years underway. The Executive Board of RWE AG and the
management boards of its major subsidiaries convene
once a quarter in order to evaluate the interim and annual
financial statements and update the forecasts.
Accounting is mostly organised locally. Occasionally, this
task is performed by Group companies for their subsidiaries.
Certain processing tasks such as payroll accounting are
pooled at internal service providers like RWE Service GmbH
or are at least subject to uniform groupwide quality
standards. As holding company, RWE AG performs central
accounting tasks. These include consolidation, the
accounting treatment of provisions for pensions in Germany,
and goodwill impairment tests. RWE AG is also in charge of
tasks relating to the management and monitoring of
financial instruments, money transactions, cash investments
and tax group accounting. External service providers are
commissioned in certain cases.
The CEOs and CFOs or the managing directors of major
subsidiaries as well as certain RWE AG department heads
must take an internal balance-sheet oath for external half
and full-year reporting. Only then do the members of the
Executive Board of RWE AG take an external half and fullyear balance-sheet oath and sign the responsibility
statement. Thereby, they confirm that the prescribed
accounting standards have been adhered to and that the
figures give a true and fair view of the net assets, financial
position and results of operations.

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

We prepare our financial statements using a groupwide

reporting system that we also use to prepare the budgets
and forecasts. All fully consolidated subsidiaries use this
system. It forms the basis for a standardised data reporting
process within the Group. The financial accounting systems
are largely maintained by RWE IT GmbH.
We identify risks in financial reporting at the divisional
level on the basis of quantitative, qualitative and processrelated criteria. The foundations of the ICS are our generally
binding guidelines and ethical values, which are also set out
in RWEs Code of Conduct. Building on this, the minimum
requirements of the major processing steps ensure the
integrity of data collection and management. The risks of
individual balance-sheet items resulting from subjective
discretion or complex transactions are recorded in a
groupwide risk and control matrix. Once a year, we prove
that the necessary controls have actually been implemented
and carried out properly. This is done by the Internal Audit
Department, external auditors, or the management in
charge of performing the controls.
When in session, the Audit Committee of the Supervisory
Board regularly concerns itself with the effectiveness of the
accounting-related ICS. Once a year, the CFO of RWE AG
presents to the committee on the risks of financial reporting.
He also explains which control measures were taken and
how the proper implementation of the controls was verified.
Our Corporate Audit Department is certified to the
Quality Management in Internal Auditing Standard
recommended by the German Internal Audit Association.
It reports to the entire Executive Board. For disciplinary
matters, it is assigned to the Deputy Chairman of the
Executive Board, and in functional respects, it reports to
theCFO.

Development of risks and opportunities 95

96 Outlook

RWE Annual Report 2011

1.12 OUTLOOK
RWE increasingly reaps the benefits of past investments. When new electricity generation plants are commissioned, they
provide us with additional income. Higher oil and gas production volumes also have a positive effect on our earnings.
Furthermore, we benefit from long-term efficiency improvements. This helps us to cushion the burdens resulting from
declining generation margins and loss-making gas procurement contracts. We expect that our operating result for 2012
and 2013 will be in the order of the level achieved in 2011. Notably, the effects of the ongoing divestment programme
have already been considered in this forecast. Recurrent net income is also expected to display a stable development. The
prospects for keeping our dividend attractive are therefore good.
Global economy loses momentum. Based on initial
forecasts, global economic output will increase by 2.5% in
2012, as long as the Eurozones sovereign debt crisis does
not escalate. China will probably remain the economys
engine, although the countrys real-estate sector is showing
initial signs of weakening. In the Eurozone, measures to
consolidate the state budgets will dampen growth: its gross
domestic product (GDP) may stagnate in 2012. Germanys
prospects are a little brighter. Following 3% growth last
year, the German Council of Economic Experts is of the
opinion that a gain of nearly 1% is possible. German
investment in fixed assets is expected to drop compared
to2011. Furthermore, the difficult economic situation in
neighbouring European countries is likely to curtail exports,
whereas consumer spending should inject stabilising
stimulus. GDP in the Netherlands and Belgium is forecast
torise by about 0.5%. The same applies to the United
Kingdom. Austerity measures mandated by the government
and the persistently weak property market will probably
curtail consumer spending. Initial estimates for our Central
Eastern European markets also indicate a decline in
economic momentum. Polands economy is likely to grow
bymore than 2%, whereas in the Czech Republic, it will
probably expand by a mere 0.5%. Hungary may see a
decline in economic output.
Weather expected to have positive effect on energy
consumption. The forecast weakening of economic growth
will be reflected in the use of energy. However, weatherrelated effects, which are difficult to predict, will outweigh
the economic impact, especially with regard to gas. As
mentioned earlier, 2011 temperatures were much higher
than the ten-year average. A normalisation would thus lead
to an increase in the need for energy.

As regards electricity, we anticipate that consumption in

Germany will demonstrate weak growth at best, advancing
by less than 1%. Stimulus will probably come primarily
from the service sector, with demand in energy-intensive
branches of industry actually likely to drop. Our forecast for
the United Kingdom and the Netherlands is similar. The
situation in Central Eastern Europe is slightly more disparate.
Poland is likely to post a gain of 2%, with the Czech Republic
and above all Hungary probably lagging far behind.
As far as gas is concerned, we expect to see a weatherdriven rise in demand across all core markets. Disregarding
temperature effects, Germany will probably experience a
decrease in consumption of about 1%. This estimate is
based on the assumption that the continued expansion of
renewable energy and the currently low price of CO2
emission allowances will result in a further decline in the
deployment of gas-fired power plants. In the Netherlands
and the United Kingdom, gas consumption could actually
drop by more than 1% if temperatures do not have an
impact. In these countries, gas-fired power stations account
for a fairly large share of electricity generation. Moreover,
the United Kingdom is making substantial progress in the
heat insulation of buildings. Poland will probably be the only
one of our Central Eastern European countries to record a
significant, temperature-adjusted rise in demand for gas.
The countrys good economy is the basis for this.
Commodity prices to maintain high level. Despite the
anticipated deterioration of the economy, we do not expect
prices on commodity markets to decline substantially. Even if
they did, this would not significantly affect our earnings in
the financial year underway as we have sold forward nearly

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

all our 2012 electricity generation and purchased the

necessary fuel or atleast secured its price. The electricity
price realised by RWEPower is lower than the comparable
figure for 2011 of63 per MWh. We also limited the
exposure to price risksof this years oil and gas production
by concluding forward sales.
However, 2013 earnings may be significantly influenced by
the future development of commodity quotations. Our
current forecast is largely based on the forward prices
prevailing at the beginning of 2012. At the end of January,
the 2013 forward for Brent crude was trading in London at
US$105 per barrel. The same contract for thermal hard coal
(including freight and insurance) was quoted at US$115 per
metric ton on the Rotterdam market. At the Dutch trading
point, gas cost 27 per MWh, still clearly less than in oil
price-indexed gas purchasing contracts. At the end of
January 2012, CO2emission allowances traded for 9 per
EUA. The fact that they have recently become much cheaper
is reflected in the price of electricity. The 2013 forward for
base-load deliveries in Germany traded for 52 per MWh
on31January. RWE Power has already placed over 50%
ofits 2013 electricity production on the market.
Organic growth despite difficult framework conditions.
Climate protection, resource conservation and organic
growth remain at the very top of our agenda. We are thus
staying on our strategic course, despite adverse economic
and political framework conditions. However, we will slow
down in reaction to the burdens we will face in the coming
years resulting from the cessation of operation of our Biblis
nuclear power plant, the nuclear fuel tax and lower power
plant margins. For the three-year period through to 2014, we
plan to spend a total of 16 billion on property, plant and
equipment. Our capital expenditure is thus likely to exceed
the funds at our disposal after deducting the dividend
payment from cash provided by operating activities. This
should change no later than 2015, on completion of our
ongoing power plant new-build programme. The Dutch
Claus C and Moerdijk 2 combined-cycle gas turbine power
plants took up commercial operation in January and
February 2012, respectively. The dual-block lignite-fired

Outlook 97

power station at Neurath near Cologne is scheduled to

follow at the end of March, with commissioning at the
Pembroke (United Kingdom) and Denizli (Turkey) gas-fired
power plants planned for the second half of the year. These
facilities are the most modern of their kind. They consume
less fuel than older comparable power stations, thereby
producing less emissions.
At the centre of our growth strategy is the expansion of
electricity generation from renewables. We intend to
dedicate approximately 4 billion to this in the period from
2012 to 2014. Nearly half of these funds are earmarked for
offshore wind farms. By 2020, the share of our electricity
production capacity accounted for by renewable energy
should have risen to at least 20%. At the end of 2011, it
totalled 8%.
RWE Deas upstream business is still one of our growth
areas, although we want to sell stakes in projects in this
area. RWE Dea plans to spend a total of 2.7 billion in
capital in 2012 and the two following years. The regions of
focus are the UK North Sea, the offshore areas of Norway, as
well as Germany and North Africa. In 2014, RWE Dea wants
to produce more than 40 million barrels of oil equivalent in
terms of oil and gas and generate an operating result in the
order of 800 million. We have also identified opportunities
for growth in our Central Eastern and South Eastern Europe
Division, especially in the field of electricity generation.
Divesting to preserve financial headroom. In order to
implement the aforementioned growth plans, we will sell
assets. We are considering disposal options for the Czech
gas transmission system operator NET4GAS, our stake in
Berlinwasser, some German sales and network activities,
select power plant capacity and stakes in upstream projects.
We plan to divest up to 7 billion in assets. This is less than
we had originally envisaged. The number and selection
of assets we put up for sale will primarily depend on the
extent to which their disposal improves our leverage factor.
Thelatter is defined as the ratio of net debt to EBITDA.
Thedivestments are scheduled to be completed by the end
of 2013.

98 Outlook

Efficiency enhancements on target new programme

starting in 2013. We intend to conclude our current
cost-cutting and revenue-enhancing programme at the end
of 2012. The goal is to add a recurrent 1.5 billion to
earnings compared to 2006. We plan to launch a new
programme for 2013 and 2014. It should have a recurrent
effect on earnings of 1 billion. We intend to realise
three quarters of this as early as next year. The new
programme covers all Group companies. We have already
determined some of the measures, which are designed
to improve operating procedures and to achieve savings in
administration and IT, among other areas.
Forecast for 2012: revenue in the order of last year. We
expect external revenue to be on a par with 2011. Since
wehave only held a minority stake in the transmission
system operator Amprion since September 2011, we will
nolonger recognise that companys revenues in 2012.
Thiswill probably be contrasted by rising revenue in our

RWE Annual Report 2011

German and UK sales businesses. In addition, the revenue

earned by our German distribution system operators from
Amprion is now being recognised as external instead of
internal revenue.
Stable earnings trend expected. Despite divestments, we
anticipate that earnings will be stable in 2012. Positive
stimulus is expected to come from an increase in oil and gas
production at RWE Dea. Furthermore, we will benefit from
the commissioning of new generation capacity, with the
dual-block lignite-fired power plant at Neurath near Cologne
leading the way. This will be contrasted by mounting
burdens caused by the German nuclear fuel tax. In the gas
midstream business, in some cases, we still have to pay
much more for gas purchases based on oil price-indexed
contracts in 2012 than we can realise when selling it on.
Thiswill result in further negative effects on earnings. Most
of the contract renegotiations with our gas suppliers will
probably not provide relief until 2013.

2011 actual

2012 forecast vs. 2011

51,686

In the order of last years level

EBITDA

8,460

In the order of last years level

Operating result

5,814

In the order of last years level

Germany

4,205

Above last year

Power Generation

2,700

Above last year

Sales/Distribution Networks

Outlook for 2012

million
External revenue

1,505

In the order of last years level

Netherlands/Belgium

245

Significantly below last year

United Kingdom

357

Significantly above last year

1,109

Below last year

Central Eastern and South Eastern Europe

Renewables

181

Above last year

Upstream Gas & Oil

558

Significantly above last year

800

Significantly below last year1

2,479

In the order of last years level

Trading/Gas Midstream
Recurrent net income

1 This divisions earnings will depend significantly on the development of gas and oil prices. The earnings forecast is based on market data valid as of mid-February 2012.

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

In 2012, the RWE Groups EBITDA and operating result are

expected to be comparable to 2011. We also anticipate that
recurrent net income will be in the order of last years level.
The outlook considers the effects of the ongoing divestment
programme.

Germany: From our current perspective, the divisions

operating result is expected to be up on last years level.
Power Generation: We expect this business area to
improve earnings. RWE Power can make an additional
contribution with the new dual-block lignite-fired power
station at Neurath. Furthermore, we anticipate that nuclear
provisions will have a positive effect, in part because
ofthe absence of one-off burdens experienced in2011
from the U-turn in German energy policy. Maintenance
andoperating costs will probably be lower than in 2011,
as should the cost of procuring emission allowances.
However, there will also be counteracting effects: the price
of the electricity we generate in Germany this year, nearly
all of which we have placed on the market, is down on last
years level (63 per MWh). In addition, we will incur
additional costs when purchasing fuel and expect the
nuclear fuel tax to place a heavier burden on us.
Sales/Distribution Networks: We anticipate that this
business area will close the reporting period on a par
withlast year. On the one hand, we expect to benefit
considerably from efficiency-enhancement measures.
Onthe other hand, positive exceptional effects in 2011
resulting from the initial full consolidation of NEW will
notrecur. In addition, income from investments is likely
todrop.

Netherlands/Belgium: From our current perspective, the

operating result posted by Essent will decline significantly,
primarily due to the shrinking margins of our Dutch hard
coal and gas-fired power plants. Income from Essents
remaining gas midstream business is also likely to be
lower than in 2011. We intend to cushion these effects by
taking comprehensive measures to reduce costs.

Outlook 99

United Kingdom: From our current perspective, RWE

npower will close 2012 significantly up year on year. The
basis for this are additional measures taken to improve
efficiency. We will benefit from this above all in our supply
business, where margins should continue to recover.
RWEnpower raised residential electricity and gas tariffs by
an average of 7.2% and 15.7% with effect from 1 October
2011. This was followed by a reduction in gas prices by an
average of 5% as of 1 February 2012 through which we
are passing price-induced relief in wholesale gas
procurement through to our customers. Earnings in the
generation business will probably continue to deteriorate
due to market conditions. However, we will benefit
considerably from the resumption of electricity production
at our Tilbury site after having converted the hard coalfired power station to run on biomass. Another positive
impact will be felt from our new gas-fired power plant at
Pembroke beginning commercial operation in the second
half of the year.

Central Eastern and South Eastern Europe: The division

will probably not be able to match the good operating
result achieved last year. We expect to see declining sales
and distribution margins in the Czech gas business.
However, earnings posted by our local gas transmission
activities should be stable. The same applies to our
Hungarian and Polish electricity businesses.

Renewables: The commissioning of new renewable

generation capacity will add to revenue, contributing to
an improvement in RWE Innogys operating result. In
particular, we will benefit from the fact that our wood
pellet factory in the US state of Georgia, which opened
inMay 2011, will be available for the first full year.
Furthermore, we expect the construction of the Greater
Gabbard offshore wind farm to be completed over the
course of the year. However, the income from
compensation for damages received in 2011 for delays in
the construction of the wind farm will not recur this year.
Should weather conditions be normal in 2012, both wind
levels and rainfall should be higher than in 2011, and the
utilisation of our wind turbines and run-of-river power
plants should also rise accordingly. This would have a
positive impact on earnings. A counteracting effect will
come from ongoing investment projects causing
substantial run-up costs. In addition, we expect proceeds
on the sale of projects we developed to drop.

100 Outlook

Upstream Gas&Oil: RWE Deas operating result should

improve significantly as we will commence production in
several gas fields which we developed. Furthermore, we
expect that we will be able to realise higher gas prices. We
believe we will experience further relief in terms of
exploration costs. However, as production increases, so do
production costs.

Trading/Gas Midstream: We expect these activities to

record another operating loss, which from our current
perspective will be much more significant than in 2011.
Burdens in the gas midstream business are the main
reason. Prices linked to the oil market for purchasing gas
for 2012 will continue to be much higher than those
realisable when the gas is re-sold on the market. Our
earnings forecast is based on the market quotations
observed in the middle of February 2012. We are in
renegotiations with our gas suppliers, the outcomes of
which will have a substantial effect on our medium-term
earnings. However, most of the decisions will not be made
until after 2012. We anticipate that the trading business of
RWE Supply&Trading will deliver a much improved
performance compared to last years weak level.
Dividend for fiscal 2012. Our dividend proposal for the
current fiscal year will be in line with our usual payout ratio
of 50% to 60%. The basis for calculating the dividend is
recurrent net income. As set out earlier, we expect the latter
to be in the order of last years level.
Capex of 6 billion planned. Our capital expenditure on
property, plant and equipment in 2012 will total
approximately 6 billion. This would be slightly below the
record levels achieved in the two previous years
(6.4billion). The reason is the gradual completion of
facilities as we implement our power plant new-build
programme. However, we anticipate spending more on
expanding renewable capacity than in 2011. We also want to
step up capital expenditure on our upstream gas and oil
activities.

RWE Annual Report 2011

Leverage factor: slight improvement expected. Our net

debt, which amounted to 29.9 billion at the end of 2011,
will decline marginally. Sales proceeds from our divestment
programme will be a contributing factor. If EBITDA remains
stable, this would also cause the leverage factor to decrease
somewhat. However, it will still probably exceed the upper
limit of 3.0 to which we are orientating ourselves. We intend
to return the leverage factor closer to this limit quickly, in
order to support our solid A rating.
Headcount: slightly down year on year. We expect to see
aslight decline in our workforce in the current financial
[Link] figures in the United Kingdom will drop
significantly. RWE npower intends to reduce staff numbers
by improving sales processes. We also expect positions to
bemade redundant in the Germany Division: in the Sales/
Distribution Business Area, the planned divestments will
cause the labour force to shrink. In the Power Generation
Business Area, efficiency-enhancing measures and the
shutdown of the Biblis nuclear power plant will have an
effect. In contrast, RWE Innogy will continue to enlarge its
workforce.
Earnings forecast for 2013. The earnings prospects for 2013
are favourable, although we will face additional burdens in
the field of electricity generation. These will result from
thefact that our power stations will stop receiving free
allocations of CO2 emission allowances from 2013 onwards.
However, this will be contrasted by the positive effects of
the new efficiency-enhancement programme, which should
total an estimated 750 million. In addition, we expect to
beable to conclude most of the ongoing renegotiations
with RWE Supply&Tradings gas suppliers and that they
willleadto substantial relief. We want to have completed
our divestment programme by the end of 2013. This will
eliminate the earnings contributed by the disposed assets.
Nevertheless, we anticipate that our operating result and
recurrent net income will be of the order achieved in 2011.
EBITDA will probably improve: we expect it to total about
9billion in 2013.
Dividend remains attractive. We will maintain our payout
ratio of 50% to 60% over the medium term. This means that
we still want to pay out at least half of our recurrent net
income to our shareholders. RWE will therefore continue to
pay an attractive dividend.

101

2.9 billion
146 million
0.787 mt
8%

Environmental expenditure

41.3 %

Thermal efciency of fossil

fuel-red power plants

Research and development costs

CO2 emissions per megawatt hour
Share of renewables in
generation capacity

ouR ResponsibilTY

2.0 Our rESpONSibiliTY

102 Supervisory Board report

RWE Annual Report 2011

2.1 SUPERVISORY BOARD REPORT

In fiscal 2011, the Supervisory Board fulfilled all of the duties imposed on it by German law and the companys Articles of
Incorporation. We regularly advised the Executive Board on running the company and monitored its activities. In so doing,
wewere consulted on all fundamental decisions. The Executive Board informed us of all the material aspects of business
developments, major events and transactions both verbally and in writing. This was done regularly, extensively and in a
timely fashion. We were kept abreast of the earnings situation, risks and risk management in an equally thorough manner.
The Supervisory Board convened six times in the year under review, including a constituent session following the Annual
General Meeting on 20 April 2011 and an extraordinary session. The average participation rate was 93%. None of the
Supervisory Board members attended less than half of the meetings. We took our decisions on the basis of detailed reports
and draft resolutions submitted by the Executive Board. We were also informed of projects and transactions of special
importance or urgency between meetings. The Supervisory Board passed the resolutions required of it by law or the Articles
of Incorporation. Where necessary, it also did so in committee meetings. As Chairman of the Supervisory Board, I was
constantly in touch with the Chairman of the Executive Board in order to discuss events of material importance to the
RWEGroups situation and development.
Main points of debate. One of the focal topics of our discussions in fiscal 2011 was the German governments U-turn in
energy policy following the reactor incident at Fukushima and its effects on the RWE Groups earnings. The Executive Board
provided us with detailed reports on the Fukushima events. We were also informed comprehensively about the legal
assessment of the resolutions passed on nuclear energy by the German government and on the lawsuits filed in this context.
The Executive Board also informed us of the political situation in Libya and Egypt, countries in which RWE Dea is active. Also
at the centre of our debates were the sale of a 74.9% stake in Amprion and of our minority interest in the Rostock hard coalfired power station as well as further divestment projects. Moreover, we concerned ourselves with the acquisition of the
Dutch company Energy Resources Holding and progress made in our power plant new-build projects.
At an extraordinary meeting, we directed our attention to the Executive Boards concept for the RWE Groups strategic
alignment and the strengthening of its financial power. With regards to the Executive Boards proposed issuance of new RWE
shares by making use of authorised capital and of treasury shares, we transferred the powers held by the Supervisory Board
to a committee set up for this purpose. The focal points of one of our ordinary sessions included the prospects of generating
electricity from renewables, the expansion of which is a core element of RWEs strategy.
The Executive Board regularly informed us of the revenue and earnings, measures to reduce costs, and price developments
on energy markets. At our session on 12 December 2011, following in-depth consultations, we adopted the Executive
Boards planning for 2012 and the forecasts for 2013 and 2014. We received detailed commentary in cases where there were
deviations from plans and goals established previously.
Another item we approved at the meeting on 12 December 2011 was the requirements that have to be met by members of
the Executive and Supervisory Boards. These requirements are designed to ensure that the selection of new Supervisory and
Executive Board members is conducted in an orderly fashion and is based on objective criteria.

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Supervisory Board report 103

Dr. Manfred Schneider, Chairman of the Supervisory Board of RWE AG

Conflicts of interest. Good corporate governance entails the members of the Supervisory Board disclosing potential conflicts
of interest. No such notifications were made in the year under review.
Committees. The Supervisory Board has five regular committees. Their members are listed on page 193. These committees
are charged with preparing for the Supervisory Board meetings, including drafting resolutions. In certain cases, they exercise
decision-making powers conferred on them by the Supervisory Board. The committee chairmen regularly informed the
Supervisory Board of their work.
The Executive Committee convened one extraordinary and one ordinary meeting in the 2011 financial year. Among other
things, it did preparatory work for the Supervisory Board debates regarding the planning for fiscal 2012 and forecasts for
2013 and 2014.
The Audit Committee convened five times. It discussed at length the quarterly financial reports, the half-year financial
statements and the annual financial statements. In addition, it prepared the award of the audit contract to the independent
auditor, including setting the priorities of the audit and the fee agreement. Special attention was paid to the Groups risk
management and the accounting-related internal control system. Furthermore, the committee dealt with compliance issues
and the audit results of the internal audit department as well as its audit schedule. A large number of other topics were on
the committees agenda in fiscal 2011, including the refinement of RWE Supply&Tradings internal control system, the RWE
Groups budgeting and controlling system, the state of information safety, sustainability reporting, the ongoing gascontract

104 Supervisory Board report

RWE Annual Report 2011

renegotiations, the power plant new-build programme, and the economic situation in the German network business as well
as at RWE Innogy. In the meetings on 7 November 2011 and 27 February 2012, the Executive Board reported on the sample
audit of the annual financial statements for the Group and RWE Aktiengesellschaft conducted by the German Financial
Reporting Enforcement Panel (DPR) on 31 December 2010. The sample audit was completed by DPR without it identifying
any errors in our reporting. In addition, the committee discussed the annual and interim financial statements at length with
the Executive Board and the independent auditor before they were published. The independent auditor was present at all of
the committee meetings, participated in the debates, and reported on his audit and/or his audit-like review.
The Personnel Affairs Committee held three meetings. Debates primarily addressed the amount of Executive Board
remuneration and the compensation system. Furthermore, the committee prepared the Supervisory Boards personnelrelated decisions.
The Nomination Committee was in session once, during which it prepared the candidate proposals for the Annual General
Meeting on 20 April 2011.
In the 2011 financial year, there was again no reason to convene the Mediation Committee, which complies with
Sec.27,Para. 3 of the German Co-Determination Act.
In August 2011, we established a Financial Structure Improvement Committee, which convened three times. The committee
members concerned themselves in detail with the capital increase implemented in the year under review. In December 2011,
the committee approved the use of authorised capital in exchange for a cash contribution and the price for placing the new
shares and adopted the resulting amendments to the companys Articles of Incorporation. The committees work ended on
completion of the capital increase at the end of 2011.
Financial statements for fiscal 2011. PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprfungsgesellschaft
scrutinised and issued an unqualified auditors opinion on the 2011 financial statements of RWE Aktiengesellschaft, which
were prepared by the Executive Board in compliance with the German Commercial Code, the financial statements of the
Group, which were prepared in compliance with International Financial Reporting Standards (IFRS) pursuant to Sec. 315a of
the German Commercial Code, the combined review of operations for RWE Aktiengesellschaft and the Group, and the
accounts. In addition, PricewaterhouseCoopers found that the Executive Board had established an appropriate early risk
detection system. The company was elected independent auditor by the Annual General Meeting on 20 April 2011 and
commissioned by the Supervisory Board to audit the financial statements of RWE AG and the Group.
Documents supporting the annual financial statements, the annual report and the audit reports were submitted to the
members of the Supervisory Board in good time. Furthermore, the Executive Board commented on the documents in the
Supervisory Boards balance sheet meeting of 28 February 2012. The independent auditor reported at this meeting on the
material results of the audit and was available to provide supplementary information. The Audit Committee had previously
concerned itself in depth with the financial statements of RWE Aktiengesellschaft and the Group, as well as audit reports,
during its meeting on 27 February 2012, with the auditor present. It had recommended that the Supervisory Board approve
the financial statements as well as the appropriation of profits proposed by the Executive Board.
At its meeting on 28 February 2012, the Supervisory Board reviewed the financial statements of RWE Aktiengesellschaft and
the Group, the combined review of operations for RWE Aktiengesellschaft and the Group, and the proposed appropriation
ofdistributable profit. No objections were raised as a result of this review. As recommended by the Audit Committee, the
Board approved the results of the audits of both financial statements and adopted the annual financial statements of
RWEAktiengesellschaft and the Group. The 2011 annual financial statements are thus adopted. The Supervisory Board
concurs with the proposed appropriation of profits, which envisages a dividend payment of 2 per share.

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Supervisory Board report 105

Changes in personnel on the Supervisory and Executive Boards. The tenure of the members of the Supervisory Board
endedon conclusion of the Annual General Meeting on 20 April 2011. The following shareholder representatives were
re-elected to the Board: Ms. Dagmar Mhlenfeld, Dr. Paul Achleitner, Mr. Carl-Ludwig von Boehm-Bezing, Mr. Frithjof Khn,
[Link], Dr.-Ing. Ekkehard D. Schulz, Dr. Wolfgang Schssel and Dr. Dieter Zetsche. Dr. Gerhard Langemeyer
and Dr. Wolfgang Reiniger retired from the Supervisory Board. They are succeeded by Messrs. Ullrich Sierau and Roger Graef.
The re-elected employee representatives were Ms. Dagmar Schmeer as well as Messrs. Frank Bsirske, Werner Bischoff, Heinz
Bchel, Dieter Faust, Hans Peter Lafos, Uwe Tigges and Manfred Weber. Messrs. Andreas Henrich and Gnter Reppien retired
from the Supervisory Board. They were replaced by Ms. Christine Merkamp and Mr. Manfred Holz. At the Supervisory Boards
constituent meeting on 20 April 2011, I was confirmed as Chairman of the Supervisory Board and Frank Bsirske as my
deputy. In addition, the committees were re-staffed. In accordance with the German Stock Corporation Act, Carl-Ludwig von
Boehm-Bezing was appointed independent financial expert of the Supervisory Board and of the Audit Committee.
The Supervisory Board thanks its exiting members for their dedicated and constructive work as well as for their commitment
to the company.
At its session on 8 August 2011, the Supervisory Board appointed Mr. Peter Terium Deputy Chairman of the Executive
Boardof RWE Aktiengesellschaft with effect from 1 September 2011. As of 1 July 2012, the Supervisory Board appointed
[Link] successor to Dr. Jrgen Gromann as President and CEO and Dr. Rolf Martin Schmitz his deputy. Dr. Gromanns
tenure was ended with effect from 30 June 2012.
I wish to express my gratitude to the entire workforce for the work it did in the past year. Our employees dedication and
expertise made a substantial contribution to RWE being able to master the challenges it faced in 2011, despite the difficult
framework conditions.
On behalf of the Supervisory Board

Dr. Manfred Schneider

Chairman
Essen, 28 February 2012

106 Corporate governance

RWE Annual Report 2011

2.2 Corporate Governance

Responsible, transparent and long-term corporate governance has always been given substantial significance at RWE.
Thelatest version of the German Corporate Governance Code introduced in 2002 acts as a guideline for us. In the middle
of 2010, diversity recommendations were included in the Code, which required RWE to do a lot of preparatory work
andthus could not be implemented immediately. We made up this ground in the financial year that just ended. Since
December 2011 we have once again complied with all of the points of the Codes recommendations.
The German Corporate Governance Code. Corporate
governance defines the responsible and transparent
management and monitoring of a company, focused on
long-term commercial success. RWE allows itself to be
judged by this. We use the recommendations of the
German Corporate Governance Code (hereinafter referred
to as the Code) as the benchmark for this. The Code aims
to increase the confidence placed by investors, customers,
employees and the public in German listed companies.
The Government Commission of the German Corporate
Governance Code submitted the first version of the
Code in February 2002. Since then, the Commission has
reviewed it every year against the backdrop of domestic
and international developments and adapted it whenever
necessary. Last year was the first year in which no changes
were made. The version of the Code announced in the
electronic edition of the German Federal Gazette on
2July2010 thus remains valid.
Diversity in supervisory and management boards. In the
fiscal year that just ended, we took measures to follow the
recommendations concerning diversity in supervisory and
management boards, which we were unable to comply with
in the last declaration of compliance we made in February
2011. These recommendations had been included in the
Code in 2010. They require supervisory boards to establish
specific goals regarding their composition (Item 5.4.1).
Taking into account the companys situation, the objectives
must consider the companys international activity, potential
conflicts of interest of the supervisory board members and
diversity, as well as specifying an age limit. In particular,
women are to be represented appropriately. The Code
further recommends that companies report on their goals
concerning the composition of their supervisory boards and
the status of their implementation in future corporate
governance reports (cf. Item 5.4.1, Para 3). With respect to

the staffing of management boards, supervisory boards are

to ensure compliance with diversity requirements, with due
regard to the appropriate representation of women
(Item 5.1.2). The same recommendation was issued for
management boards in relation to the staffing of
management positions (Item 4.1.5).
In order to comply with the recommendations, at its meeting
on 12 December 2011 the Supervisory Board of RWE AG
adopted the requirements that have to be met by members
of the Executive and Supervisory Boards. The requirements
ensure that new members of these boards are selected in an
orderly fashion and that this selection is based on objective
criteria. The following goals were set with respect to staffing
the Supervisory Board:
As envisaged by the German Stock Corporation Act and
the German Corporate Governance Code, companies are
to ensure that their supervisory boards provide qualified
supervision and advice. The goal is to have at least one
supervisory board member as a competent contact for
every aspect of supervisory board activity in order for the
necessary knowledge and experience to be represented
comprehensively among all supervisory board members.
Individuals who may be put up as candidates must have
the integrity, commitment, independence and personality
necessary to perform the tasks of a supervisory board
member in a major stock corporation with international
activities and to maintain the companys reputation in
public. Proposals for candidates must take account of the
situation specific to the company and of diversity, while in
particular ensuring an appropriate degree of female
representation. Women currently account for 15% of our
Supervisory Board members. We intend to increase this
ratio to 20% over the medium term. This would bring it in

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

line with the female representation among RWEs staff in

Germany. We intend to achieve this goal early on, when
re-staffing positions that become vacant through natural
attrition, and no later than the next Supervisory Board
elections in 2016. Furthermore, we want to secure the
international experience of individuals who do not come
from Germany or have worked outside Germany for an
extended period of time.
Supervisory Board members are expected to know and
understand the RWE Groups divisions, market
environment, customer needs and strategy. They must
possess all the skills required to perform the tasks of a
Supervisory Board member (e.g. for evaluating Executive
Board reports, business decisions and documents
supporting financial statements) or acquire these where
necessary.
The requirements also include specific qualifications that
are of importance to business activity. For instance, these
may include experience from international activity or
leadership roles in politics and business as well as
expertise in the fields of energy, worker co-determination,
accounting and financial statement audits as well as
knowledge of the public sector.

Supervisory boards must have an adequate number of
independent members. Independence is deemed to exist
if there are no business or personal relations with RWE AG
or a Group company which could cause a permanent
conflict of interest. Individuals who advise or sit on a
committee of a major competitor of RWE may not belong
to the Supervisory Board.
Supervisory board members must have sufficient time to
perform their mandates with the requisite dedication and
care.
When staffing vacancies, the search for candidates should
focus on those who are capable of providing expertise
that is either lacking or needs to be increased on the
Supervisory Board.

Corporate governance 107

Some of the requirements described above were met when

re-staffing the Supervisory Board at the Annual General
Meeting on 20 April 2011, before the requirements were
adopted. They supplement the provisions already included
in the Supervisory Boards bylaws, in particular relating to
the age limit.
Since we adopted the requirements for the Executive and
Supervisory Boards in December 2011, we have again
complied with all of the recommendations of the current
version of the Code and take up its suggestions, with a few
exceptions.
Our listed Group company Lechwerke AG is also putting the
Code into practice. However, the specifics of membership in
the Group must be taken into account in this context.
Lechwerke AG has included information on the deviations
from the Codes recommendations in its statement of
compliance.
Directors dealings and potential conflicts of interest.
Transparency is a core element of good corporate
governance. It is indispensable, especially in cases where
transactions concluded by the Executive Board may lead to
conflicts of interest. We would like to highlight the following
aspects of RWEs corporate governance practice:
Material transactions concluded between RWE or a Group
company and an Executive Board member or related party
were in line with prevailing market standards. No conflicts
of interest of members of the Executive Board going
above and beyond this were reported. No Supervisory
Board member concluded a contract with an RWE Group
company.
Executive Board members, related parties and members
ofthe Supervisory Board purchased RWE shares in the
year under review. No sales were notified to us. We were
notified of transactions in accordance with Sec. 15a of the
German Stock Corporation Act. We published information
on them throughout Europe.
The RWE shares and related financial instruments directly or
indirectly held by members of the Executive and Supervisory
Boards account for less than 1% of the share capital.

108 Corporate governance

We publish further information on our corporate governance

practices on the internet at [Link]/corporategovernance. This web page also provides access to our
Articles of Incorporation, the bylaws of the Supervisory
Board and the Executive Board, RWEs Code of Conduct, all
the corporate governance reports and statements of
compliance as well as the corporate governance declaration
in accordance with Sec. 289a of the German Commercial
Code.
Statement of compliance in accordance with Sec. 161 of
the German Stock Corporation Act. After an orderly audit,
the Executive and Supervisory Boards of RWE AG issued the
following declaration of compliance:
Between its last statement of compliance on 22February
2011 and 11 December 2011, RWE Aktiengesellschaft
complied with all of the recommendations of the
Government Commission of the German Corporate
Governance Code issued in the 2 July 2010 version of the
Code, with the following exception:
The diversity recommendations set out in Item 5.1.2,
Sentence 2 and Item 5.4.1, Paras. 2 and 3 were not fully
complied with in the past. Ensuring diversity was and is
common practice throughout the Group. Among other

RWE Annual Report 2011

things, we have had diversity programmes tailored to

increase the share of women in managerial positions for
quite a while. However, an overall concept for achieving
diversity goals when staffing the Executive Board had
yet to be created. The same applied to the staffing of the
Supervisory Board. As before, the Nomination Committee
and the plenary session of the Supervisory Board considered
the issue of diversity, RWEs international operations,
potential conflicts of interest, and the age limit established
for Supervisory Board members when selecting the
candidates for the election of the shareholder
representatives held on 20 April 2011. However, no
specific objectives existed for the staffing of that Board at
that time. The Supervisory Board of RWE AG was of the
opinion that the establishment of such goals and of an
overall concept required extensive preparatory work and
in-depth discussions, which have since been completed.
On 12December 2011, the Supervisory Board adopted
requirements for its members and for those of the Executive
Board, thus creating a concept for achieving diversity targets.
Since 12 December 2011, RWE Aktiengesellschaft has
complied with all of the recommendations of the
Government Commission of the German Corporate
Governance Code contained in the 2 July 2010 version
of the Code.

RWE Aktiengesellschaft
On behalf of the Supervisory Board

On behalf of the Executive Board

Dr. Manfred Schneider

Dr. Jrgen Gromann

Essen, 28 February 2012

Peter Terium

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Compensation report 109

2.3 COMPENSATION REPORT

Part of good corporate governance involves making the remuneration of management and supervisory boards
transparent. The principles of RWE AGs compensation system as well as its structure and payments are presented on
thefollowing pages. As in preceding years, RWE fully complies with the recommendations of the German Corporate
Governance Code. The compensation report is part of the combined review of operations and the corporate governance
report.

Executive Board compensation

Compensation structure. The structure and amount of
Executive Board member compensation are determined by
the Supervisory Board and reviewed on a regular basis. The
existing compensation system, which was approved by the
2010 Annual General Meeting, ensures that the structure
and amount of Executive Board member compensation is in
line with common practice within the Group and on the
market. It takes into account not only personal performance,
but also RWEs business situation, performance and
prospects for the future.
The Executive Boards total remuneration is essentially made
up of short-term components such as the base pay and
bonus as well as a long-term share-based component
(performance shares). With target fulfilment at 100%, base
pay, the bonus and the performance shares account for
approximately 30%, 40% and 30% of total remuneration,
respectively. The compensation components are presented
in further detail hereinafter.
Short-term compensation components. Executive Board
members receive cash compensation made up of a base
salary, which is independent of performance, as well as a
performance-based bonus, which is therefore variable.
The baseline bonus contractually agreed in addition to the
fixed compensation consists of a company bonus and an
individual component, with a 70:30 split. The company
bonus is based on the degree to which the value added
agreed at the beginning of the fiscal year has been achieved.
If the actual and target figures are identical, the degree to
which the target has been achieved is 100%, and the
company bonus is identical to the contractually agreed
baseline amount. Depending on the value added, the

company bonus can range between 0% and 150% of the

baseline bonus amount. Thepersonal bonus depends on the
degree to which an Executive Board member achieves the
performance goals agreed with the Chairman of the
Supervisory Board at the beginning of the financial year. The
maximum degree to which this target can be achieved is
130%.
Since fiscal 2010, RWE has been paying only 75% of the
bonus. The remaining 25% is withheld for a period of three
years. A review based on what is termed a bonus malus
factor is conducted by the Supervisory Board at the end of
the three-year period, in order to determine whether the
Executive Board has managed the company sustainably.
Only if this applies is the retained part of the bonus paid.
The development of the Groups value added determines
45% of the bonus malus factor. Another 45% is determined
on the basis of a company-specific Corporate Responsibility
(CR) Index, which builds on the sustainability reporting
thathas been a fixture at RWE for many years and reflects
RWEsenvironmental and social activity. The remaining
10%of thebonus malus factor is determined by the Groups
internalMotivation Index, which measures employee
commitment and satisfaction. Before the three-year period,
the Supervisory Board establishes binding target figures
forvalue added, the CR Index, and the Motivation Index. At
theend of the period, these target figures are compared to
thefigures actually achieved. The result of this comparison
determines whether the retained part of the bonus is paid as
well as its amount. The better the figures actually achieved,
the higher the bonus malus factor. It may vary between
0%and 130%.

110 Compensation report

RWE Annual Report 2011

1 January 2011 is presented in further detail in the section

on pensions on page 112.

In line with statutory regulations, the rules governing the

bonus retention and the bonus malus factor do not apply to
the President and CEO, Dr. Jrgen Gromann.

In addition, all Executive Board members receive both noncash and other remuneration, consisting primarily of the
useof company cars and accident insurance premiums.
Compensation also includes payment for exercising
Supervisory Board mandates held by Executive Board
members at affiliates. All this income is deducted from
thebonus and therefore does not increase the total
remuneration.

In addition to a base salary and bonus, Dr. Jrgen Gromann

is entitled to an annual pension capital contribution instead
of a pension commitment.
Peter Terium receives as a pension benefit an annual pension
instalment corresponding to 15% of his target cash
compensation, i.e. his base salary and the target bonus.
Inthe year under review, the pension instalment amounted
to 85,000, of which 2,000 was turned into apension
commitment of equal value through a gross compensation
conversion. The pension concept introduced with effect from

Short-term Executive
Board compensation
in 2011

Non-performancePerformancebased compensation based compensation

The short-term components of Executive Board

compensation for fiscal 2011 were as follows:

Non-cash
and other
remuneration

Payment
for exercise
of mandates1

Other payments

Total

000

2011

2010

2011

2010

2011

2010

2011

2010

2011

2010

2011

2010

Dr. Jrgen Gromann2

2,700

2,700

3,708

3,898

35

30

37

2,000

2,000

8,443

8,665

Dr. Leonhard Birnbaum

750

750

694

779

24

24

40

1,508

1,553

Alwin Fitting

796

769

756

794

10

18

20

1,582

1,584

Peter Terium3

250

245

85

581

Dr. Rolf Pohlig

840

840

759

809

29

32

60

60

1,688

1,741

Dr. Rolf Martin Schmitz

Total

750

750

574

543

17

20

160

236

1,501

1,549

6,086

5,809

6,736

6,823

116

124

280

336

2,085

2,000

15,303

15,092

1 Income from the exercise of mandates is part of variable compensation.

2 Dr. Jrgen Gromann receives an annual 2,000,000 instead of a pension commitment.
3 Peter Terium receives a pension instalment corresponding to 15% of his targeted cash compensation instead of a pension commitment.

The retained bonus is not included in the compensation

because it does not have an impact on remuneration until
the end of the three-year period and only affects it if the

Bonus retention
000
Dr. Jrgen Gromann

necessary prerequisites are met. To convey a complete

picture of the compensation components, the retained
bonus has been presented in the following table voluntarily.

2011

2010

Dr. Leonhard Birnbaum

245

260

Alwin Fitting

259

266

Peter Terium

82

Dr. Rolf Pohlig

273

290

Dr. Rolf Martin Schmitz

245

260

1,104

1,076

Total

Compensation report 111

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Long-term incentive compensation. In addition to the shortterm remuneration components, performance shares are
awarded to members of the Executive Board, excluding the
President andCEO Dr. Jrgen Gromann, as part of the
Beat2010 long-term incentive plan (Beat for short). This
long-term incentive compensation component aims to
reward executives for the sustainability of the contribution
they make to the companys success.
Performance shares are granted on condition that the
Executive Board members invest in RWE common shares a
sum which is equal to one-third of the value of the grant
after taxes. The shares must be held for the respective Beat
tranches entire waiting period.
Performance shares consist of the conditional right to
receivea payout in cash following a waiting period of four
(optionally five) years. However, a payout only takes place if,
on conclusion of the waiting period, the total return on the
RWE common share consisting of the return on the share
price, dividend and subscription right is better than the
performance of at least 25% of the peer group companies

Long-term incentive
share-based payment

included in the Dow Jones STOXX Utilities Index. When

performance is measured, the latter are given the same
weighting as they had at the inception of the corresponding
Beat tranche. Consequently, the decisive factor is not only
RWEs position among the companies in the peer group,
butalso which of the companies RWE outperforms. If
RWEoutperforms 25% of the index weighting, 7.5% of
theperformance shares are paid out. The proportion of
performance shares that is paid out increases by 1.5%
forevery further percentage point by which the index
weighting is exceeded.
Payment is based on the payout factor as determined above,
on the average RWE share price during the last 60trading
days prior to the expiry of the programme, and onthe
number of allocated performance shares. Payment for
Executive Board members is limited to one-and-a-half times
the value of the performance shares at grant.
Beat allocations in the year under review break down as
follows:

Beat 2010: 2011 tranche

No.

Allocation value
at grant
000

Dr. Leonhard Birnbaum

44,092

750

Alwin Fitting

44,092

750

Dr. Rolf Pohlig

44,092

750

Dr. Rolf Martin Schmitz

44,092

750

176,368

3,000

Total

In the year under review, the 2008 long-term incentive

tranche of the Beat 2005 programme was paid out as
follows:

Long-term incentive
share-based payment

Beat 2005: 2008 tranche

payout 000

Dr. Leonhard Birnbaum

150

Alwin Fitting

563

Dr. Rolf Pohlig

Total

563
1,276

112 Compensation report

Due to the development of RWEs share price, no expenses

were recognised for share-based payments in 2011.

Release of provisions for long-term incentive share-based payments

2009/2010/2011 tranches

RWE Annual Report 2011

Instead,provisions were released as follows:

2011
000

2010
000

Dr. Leonhard Birnbaum

241

65

Alwin Fitting

241

161

Dr. Rolf Pohlig

241

161

Dr. Rolf Martin Schmitz

241

29

Total

964

416

Total compensation. In total, the Executive Board

received15,303,000 in short-term compensation
components infiscal 2011. In addition to this, long-term
compensation components from the 2011 tranche of
theBeat programme amounting to 3,000,000 were
allocated. Total compensation of the Executive Board for
fiscal 2011 therefore amounted to 18,303,000.
Pension and employment termination benefits. Executive
Board members receive the following benefits from RWE
when they retire from the Board:
Pensions. With effect from 1 January 2011, the former
pension model was replaced by a defined-contribution
pension scheme. New Executive Board members now receive
a pension instalment amounting to 15% of their target cash
compensation in each year of active service. Every year, they
can choose whether the sum is paid in cash or retained for
inclusion in a pension benefit later on. In the latter case, the
funds are turned into a pension commitment of equal value
through a gross compensation conversion. Areinsurance
policy is concluded to finance the pension commitment. The
pension commitment benefits correspond to the benefits
guaranteed by the reinsurance policy. The amassed capital
may be drawn upon in the form of a one-off payment or in a
maximum of nine instalments on retirement, but not before
the Executive Board member turns 60.

Executive Board members and their surviving dependants do

not receive any further benefits. Vested retirement benefits
from earlier activities remain unaffected by this.
The pension commitments to the Executive Board members
Dr. Leonhard Birnbaum, Alwin Fitting, Dr. Rolf Pohlig and
[Link] Martin Schmitz were made before the introduction
of the new model and will remain unchanged. The
aforementioned Executive Board members are entitled to
life-long retirement or surviving dependants benefits in the
event of retirement upon reaching the age of 60 (company
age limit), permanent disability, death and early termination
or non-extension of the employment contract by the
company. Theamount of qualifying income and the level of
benefits determined by the duration of service are taken as a
basisfor each members individual pension and surviving
dependants benefits. The ceiling for pension benefits for
members of the Executive Board is 60% of the last qualifying
income before they reach retirement age. The widows
pension amounts to 60% of her husbands pension, the
orphans pension amounts to 20% of the widows pension.
Vested pension benefits do not expire. The amount of
thepension and the surviving dependants benefits are
reviewed every three years, taking account of all major
circumstances, with due regard to changes in the cost of
living. Due to earlier provisions, there are some differences
in the pension commitments in terms of the calculation of

Compensation report 113

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

The vested pension benefits of Executive Board members

from earlier activities or years of service with previous
employers which have been recognised are deducted by
contractual arrangement from the pension payments made
by RWE.

the level of benefits, the crediting of other pensions and

benefits, and the adjustment mode selected for pensions
and surviving dependants benefits.
In the event of an early termination or non-extension of an
employment contract, Executive Board members shall only
receive payment if the termination or non-extension was
occasioned by the company and effected without due cause.
In such cases, they start receiving pension payments when
they leave the company, but not before they turn 55. Fifty
percent of the income earned by an Executive Board member
until they turn 60 or the beginning of the members
occupational disability is taken into account in determining
early retirement payments.

The service cost of pension commitments in 2011 totalled

725,000. At the end of the year, the present value of the
defined benefit obligation was 14,161,000. The following
is a breakdown of service costs and the present value of
pension benefits, taking into account both age and years of
service.

Predicted annual pension

onreaching the company
age limit (60 years)1
000

Pensions

Service cost

Defined benefit
obligation

000

000

Age

2011

2010

2011

2010

2011

Dr. Leonhard Birnbaum

45

270

270

134

111

1,090

889

Alwin Fitting

58

312

312

210

188

5,046

4,648

59

302

302

103

84

2,995

2,733

54

408

408

Dr. Rolf Pohlig

Dr. Rolf Martin Schmitz

2010

278

244

5,030

4,486

725

627

14,161

12,756

1 Based on compensation qualifying for pensions as of 31 December 2011.

2 Dr. Rolf Martin Schmitzs projected pension includes pensions due from former employers.

Change of control. Executive Board members have a special

right of termination in the event that the company loses its
independence as the result of control being taken over by
shareholders or third parties. In such cases, they have the
right to retire from the Executive Board within six months of
the time at which the change of control becomes known and
to request that their employment contract be terminated
incombination with a one-off payment. To the extent
necessary to ensure the companys survival, however, the
Supervisory Board can demand that the Executive Board
member remain in office until the end of the six-month
period. A change of control as defined by this provision
occurs when a shareholder or a group of shareholders
actingjointly, or third parties acting jointly, acquire at least
30% ofthe voting rights in the company, or if any of the
aforementioned can exert a controlling influence on the
company in another manner.

On termination of their employment contracts, Executive

Board members receive a one-off payment equal to the
compensation due until the end of the duration of their
contract: this amount shall not be higher than three
timestheir total contractual annual compensation and
shallnotbeless than twice their total contractual annual
compensation. As regards benefits, effective from the end of
the employment contracts agreed duration, Executive Board
members are treated as if the company had not extended
their employment contracts at that time, without there being
a material reason in the sense of Section 626 of the German
Civil Code.

114 Compensation report

The Chairman of the Executive Board, Dr. Jrgen Gromann,

was granted a special right of termination before the
amendment to the German Corporate Governance Code with
effect from 6 June 2008. On exercise of his contractually
secured special right of termination, Dr. Gromann shall
receive a one-off payment that covers all of the
remuneration due until the expiry of his employment
contract, including the amount contractually agreed instead
of a pension commitment.
In the event of a change of control, all the performance
shares granted to the Executive Board and entitled
executives shall expire. Instead, a compensatory payment
shall be made, which shall be determined when the takeover
offer is made. The amount shall be in line with the price
paidfor RWE shares at the time of the takeover. This shall
then be multiplied by the final number of performance
shares. Performance shares shall also expire in the event
ofamerger with another company. In this case, the
compensatory payment shall be calculated based on the
expected value of the performance shares at the time of
themerger. This expected value shall be multiplied by

RWE Annual Report 2011

thenumber of performance shares granted, pro-rated

uptothe date of the merger.
In the event of a change of control, the Executive Boards
retained bonuses are valued early and, if applicable, paid
out. The amount shall be in line with the average bonus
malus factor for the three preceding years.
Severance cap. If an Executive Board mandate is otherwise
terminated early without due cause, Executive Board
members shall receive a severance payment of no more than
two total annual compensations and no more than the
compensation due until the end of the employment
contract.
Other commitments. In agreement with the company,
[Link] Gromanns positions as member of the Executive
Board and its Chairman, which were scheduled to expire
asof 30 September 2012, will end early with effect from
30June 2012. He will receive his base salary, bonus
andpension capital for the period from 1 July 2012 to
30September 2012 in sums corresponding to those
established in his contract. Dr. Jrgen Gromann will not
receive a pension.

Supervisory Board compensation

The compensation of the Supervisory Board is set out in the
Articles of Incorporation and is determined by the Annual
General Meeting. Supervisory Board members receive a fixed
compensation of 40,000 per fiscal year for their services
after each fiscal year. The compensation increases by 225
for every 0.01 by which the dividend exceeds 0.10 per
common share.

The Chairperson of the Supervisory Board receives three

times and the Deputy Chairperson receives twice the
aforementioned amount. If a committee has been active
atleast once in a fiscal year, committee members are
awarded one-and-a-half times the compensation and the
committee chairperson twice the compensation. If a
memberof the Supervisory Board holds several offices on
the Supervisory Board of RWE AG concurrently, he or she
receives compensation only for the highest-paid position.
Out-of-pocket expenses are refunded.

Compensation report 115

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Supervisory Board compensation

000

2011 base compensation

2011 committee compensation

Total

Fixed

Variable

Fixed

Variable

2011

Dr. Manfred Schneider, Chairman

40

43

80

86

249

2010
350

Frank Bsirske, Deputy Chairman

40

43

40

43

166

234

Dr. Paul Achleitner

40

43

20

21

124

175

Werner Bischoff

40

43

20

21

124

175

Carl-Ludwig von Boehm-Bezing

40

43

40

43

166

234

Heinz Bchel

40

43

20

21

124

175
175

Dieter Faust

40

43

20

21

124

Roger Graef (since 20 Apr 2011)

28

30

58

Andreas Henrich (until 20 Apr 2011)

12

13

25

117

Manfred Holz (since 20 Apr 2011)

28

30

14

15

87

Frithjof Khn

40

43

20

21

124

160

Hans-Peter Lafos

40

43

83

117

Dr. Gerhard Langemeyer (until 20 Apr 2011)

12

13

37

175

Christine Merkamp (since 20 Apr 2011)

28

30

58

Dagmar Mhlenfeld

40

43

20

21

124

175

Dr. Wolfgang Reiniger (until 20 Apr 2011)

12

13

25

117

Gnter Reppien (until 20 Apr 2011)

12

13

37

175

Dagmar Schmeer

40

43

20

21

124

175

Dr.-Ing. Ekkehard D. Schulz

40

43

20

21

124

175

Dr. Wolfgang Schssel

40

43

83

98

Ullrich Sierau (since 20 Apr 2011)

28

30

14

15

87

Uwe Tigges

40

43

20

21

124

175

Manfred Weber

40

43

14

15

112

117

Dr. Dieter Zetsche

40

43

83

117

800

860

394

418

2,472

3,411

Total

In total, the emoluments of the Supervisory Board amounted

to 2,472,000 in fiscal 2011. Additionally, certain
Supervisory Board members were paid compensation
totalling 192,000 for exercising mandates at subsidiaries.

116 Workforce

RWE Annual Report 2011

2.4 Workforce
In most of RWEs core markets, low birth rates cause skilled workers to become an increasingly scarce resource, and
competition for them fiercer. Our long-term success will therefore largely depend on how we manage to recruit,
promote and retain talent at RWE. We make sure that RWE is an attractive place to work: excellent training schemes,
support programmes for high-potential individuals, and flexible working opportunities are but a few of the numerous
assets which help us prevail when vying for the best talent.
Attractive training offerings and scholarships. To meet
ourlong-term requirement for qualified employees, we are
training young adults in more than 30 commercial and
technical professions. RWEs offering goes far above and
beyond imparting expert skills. Apprentices can participate
in ambitious projects or spend part of their apprenticeship
inGroup companies outside Germany. In addition, we
enablethem to combine an apprenticeship with studies.
Bythe endof 2011, some 3,000 young adults were
learninga profession at RWE. We offer significantly more
apprenticeships than we need to cover our own needs.

of our about 400 senior executives. In addition, we create

candidate pools for specific fields of activity. The basis for
this is the regular assessment of the potential of those of
our employees who demonstrate leadership skills. In 2011,
for the fourth time we used a method tailored to RWEs
needs that measures skills such as entrepreneurial thinking
and ability to motivate employees to this end. Candidates
identified for possible succession are prepared for their
future tasks. This approach enabled us to staff about 90% of
executive positions that became vacant last financial year
with people from within our own ranks.

Our academic support programmes are designed to attract

young students to the Group early on. We are currently
supporting 64 students and doctoral candidates for about
four semesters through a scholarship within the scope of our
RWE Fellows programme. They are also provided with a
mentor from among our executives, who gives them insight
into the daily work at our company while promoting their
skills and providing them with practical experience. By
offering internships, we give students an opportunity to link
academic theory to business practice early on. Retaining
high performers is something we place special importance
on at RWE. Upon completion of their internship, they can be
recommended for an attractive programme that supports
participants in their personal and professional development
through continued-education seminars and networking
events, for example.

Promoting diversity. Society increasingly demands that we

promote diversity. This is an area in which RWE is pursuing a
number of goals. In line with the international reach of our
business, we promote cross-country mobility within the
RWE Group and respect for people from all cultural
backgrounds. Moreover, we want to hire more women at
RWE. Our aim is also to have more female representation in
executive positions. At the end of 2011, 11% of all executive
staff at RWE were women. We intend to double this ratio to
22% by the end of 2018. One of the initiatives we have in
place for this purpose is a mentoring programme, which has
already been used by over 80 participants since it was
launched in 2007. In addition, we have created an
international network for women in managerial positions
and offer them specific training.

Early succession planning. Every entrepreneur wants to

hand over his or her house in good order. What is a matter
of course for medium-sized enterprises also applies to large
corporations such as RWE. This is why, every year, we
identify employees who have the potential to succeed one

Work-life balance. It is a dream situation for many working

parents: the day care centre is close to the office, open from
early morning to evening, and offers individual care for
children, including the very youngest. By opening its doors
in the summer of 2011 in Essen, our Lumiland Day Care
Centre turned this dream into reality for the employees of

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Workforce 117

RWE Group headquarters. More than 100 children are looked

after in Lumiland: the children of both RWE staff and families
living in the neighbourhood. We have undertaken to set up
company-sponsored nursery schools at major RWE sites in
Germany, in order to help as many employees as possible to
strike a healthy work-life balance. Children and careers
should not be mutually exclusive at RWE, neither for women
nor for men. The fact that the latter gender is increasingly
dedicated to family life is a pleasing development, which
wesupport. Last year, 246 fathers went on paternity leave,
more than ever before.

Employee shares participating in success. RWEs

commercial success should benefit our employees as well.
Part of their compensation is linked to it. Through our
employee stock ownership plan, we give our personnel the
opportunity to take a direct stake in the company at
favourable conditions. In 2011, a total of 25,783 staff
members subscribed 442,692 shares. The take-up thus
amounted to 57% of those eligible to participate. As the
shares were issued below their market price, this resulted in
an expense of 8.1 million. Our workforce currently owns
approximately 1% of RWEs subscribed capital.

Ideas management. Employees who come up with ideas and

develop initiatives on top of performing their daily tasks at
work are a benefit to any company. We encourage this with
our groupwide ideas management system. This provides our
employees with an incentive to capitalise on their experience
and creativity in order to improve work processes. The result
is commendable: in the last fiscal year alone, some 6,800
ideas were submitted. We estimate the commercial benefit
to exceed 50 million per year. For example, an idea
submitted to improve cost transparency in IT led to six-digit
savings in just a few months. In the year under review,
werewarded our employees for their suggestions for
improvement with about 2.6 million in bonuses. We are
building a new database system to facilitate the recording
and sharing of ideas, while saving costs.

HR Cockpit. We have created the HR Cockpit, a modern

information platform which helps our executives obtain a
better picture of their teams. The Cockpit provides data on
age structure, continued education, qualifications, and days
missed due to illness. Team managers receive this
information condensed into keyfigures (e.g. average age or
health ratio) or can run theirown analyses. The HR Cockpit
particularly benefits executives with large teams. It supports
their staff management efforts and helps to identify any
need for action early. Following a pilot phase, we began
introducing the HR Cockpit throughout the Group in October
2011. It is already being used by some 1,000 executives.

Jump!2011, RWEs start-up initiative. Last year, we took an

entirely new approach to leveraging the entrepreneurial and
innovative thinking of our employees, by launching the
Jump!2011 start-up initiative. The concept: staff members
develop new business models for RWEs fields of activity,
either alone or in small teams. Employees who present
outstanding ideas can market these on their own behalf with
RWEs support. Jump!2011 was started in May and ended in
February 2012 with the winners award ceremony. More than
300 employees from across the Group entered 223 ideas
into the contest. One in ten of these drafts was turned into a
bona fide business model with the assistance of experienced
RWE managers. Five teams presented their concepts to a
jury in the last project phase. Some of the ideas not only
those of the winners are so convincing that they are to be
put into practice with the support of RWEs Executive Board.

Our 2011 Personnel Report, available at [Link],

contains further information on our HR work.

118 Sustainability

RWE Annual Report 2011

2.5 SUSTAINABILITY
When we invest in power stations or networks, we invest for decades. Sustainability is therefore at the centre of the
business model. In order to be successful in the long run, we need the acceptance of society, ranging from
policymakers and associations to employees and conservation organisations. In dialogue with these stakeholder
groups, we defined ten fields of action that are pivotal to RWE in terms of sustainability. In each action field, we pursue
specific, measureable goals. In addition, parts of Executive Board compensation are dependent on whether and the
degree to which these goals are achieved.
Ten fields of sustainable action. To us, sustainable business
operations are not an abstract concept. Our strategy in the
area of Corporate Responsibility (CR) covers ten fields of
action which we believe harbour the most important
challenges for RWE. Following in-depth dialogue with our
stakeholders, we identified the fields of action in 2007. We
have established goals for each of them, the achievement of
which we measure based on key performance indicators.
Thisgives our sustainability strategy a binding character.
Moreover, this makes our performance and progress both
transparent and measureable.
Whether and the degree to which we reach our CR targets
also affects the compensation of the members of the
Executive Board of RWE AG. Since 2010, 25% of their annual
bonus has been retained for three years. At the end of this
period, the Supervisory Board decides, based on a bonus
malus factor, whether the Executive Board has run the
company in a sustainable manner. Only in such an event is
the retained bonus also paid out. The bonus malus factor
depends on several aspects, one of which is the
development of an index specific to RWE, which bears a
weighting of 45%. This index measures the degree to which
we have achieved RWEs sustainability objectives based on
the key performance indicators established for our CR action
fields.
In the following passages, we will present our goals and
measures in the ten CR action fields and demonstrate the
key performance indicators we use to gauge our success.
Further information can be found in the report entitled
OurResponsibility, which can be accessed on the internet
at [Link]/cr-report.

(1) Climate protection. Generating electricity while

constantly reducing carbon dioxide emission levels is an
essential building block of our Group strategy. To this end,
we invest billions of euros. A large proportion of this
expenditure is used to expand our renewable generation
base. Furthermore, we are building state-of-the-art gas and
coal-fired power stations and taking plants with higher
emissions offline. Our objective is to reduce the carbon
dioxide emissions of our power plant fleet per MWh by more
than 20% by 2020 compared to 2005. In the baseline year,
we emitted 0.79 metric tons of CO2 per MWh. We have
setourselves a target of 0.62 metric tons. Initially, we
wanted toreduce the emission factor by 2020 even more.
However,Germanys accelerated nuclear phase-out made
itnecessary for us to adjust our objectives. Last year, we
hadto shut down 2.4 GW in capacity which generates
electricity nearly free of carbon dioxide (the Biblis A and B
units). Consequently, our emission factor for 2011 was
0.79metric tons of carbon dioxide per MWh, which is
clearlyabove the 0.73 recorded in 2010. AnotherRWE
nuclear power plant will be taken offline at the end of
2017(Gundremmingen B). This affects our CO2 reduction
path through to 2020 significantly. Nevertheless, we are
continuing to transform our generation portfolio with
resolve: by 2020, we intend to increase the share of
renewables in our electricity production capacity, which
wasabout 8% at the end of 2011, to at least 20%.
(2) Energy efficiency. By modernising our power plants, we
are not only protecting the climate, but also conserving
limited resources such as coal and gas, as our new stations
have a higher degree of energy utilisation. On conclusion of
our ongoing power plant new-build programme in 2014, the

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

degree of energy utilisation ofour fossil fuel-fired power

plants should amount to 42%. Last year, it was 41.3%. We
also intend to further reduce theenergy consumption of our
vehicle fleet and buildings. Moreover, we help our customers
to make more efficient useof energy in order to protect the
climate and save moneywhile increasing quality of life. We
are doing this in various ways, including the use of smart
meters, automated domestic consumption (smart homes)
and thepromotion of electric cars. Our German website at
[Link] includes in-depth advice on how to
save energy as well as information on subsidy programmes
and manufacturer offers. We also put our expertise in the
field of energy efficiency at the disposal of commercial and
small industrial enterprises. Using cutting-edge measuring
technology and RWEs energy controlling system, our
experts detect the weak points in acompany and develop
business-specific optimisation measures. We have already
helped over 300 medium-sized enterprises in a wide range of
sectors to make more efficient use of energy, thereby
increasing their economic success.
(3) Innovation. Secure, affordable and environmentally
friendly energy supplies are unattainable without
technological progress. Therefore, we accord major
importance to research and development (R&D). We are
conducting over 200 projects along the entire value chain
from raw material extraction and the conversion, distribution
and storage of energy to its use by the customer (see page
83 et seqq.). To manage our R&D activities, we set up a
groupwide innovation management system. We identify the
most strategically important issues for R&D work at the
beginning of every year. We measure our success by the
degree to which we have taken specific measures in these
areas and informed the public about our activities. Last year,
we addressed 95% of the major R&D areas. We intend to
maintain this high coverage.

Sustainability 119

(4) Security of supply. Energy must be available whenever

itis needed. Our customers rely on us to ensure this both
today and tomorrow. Therefore, RWE places great
importance on a widely diversified generation portfolio,
including nuclear, coal, gas and renewables. The availability
of coal and nuclear fuel has been secured long term. We
cover our need for gas with long-term agreements with
various producers, through purchases on liquid wholesale
markets and, to a small extent, through in-house production.
At present, however, the debate on security of supply is
focusing on another aspect: the stability of electricity
networks. Supply and demand must constantly be balanced
in order to keep network frequency stable. We aim to keep
the average annual system availability interruption duration
indicator (SAIDI) inGermany below 30 minutes per customer
from 2013 onwards. Based on the latest available statistics,
at just under 22 minutes, it was clearly below this mark in
2010. Nevertheless, we believe our goal is ambitious,
because therequirements placed on the capabilities and
operation ofnetworks are rising due to the expansion of
renewable energy and the increasing use of decentralised
power generation units. Interruptions in the supply of gas
are muchshorter, because the gas network acts as a buffer.
In2010, they averaged under one minute per customer.
(5) Supply chain. When purchasing goods and services,
wealways make sure that the price is right. However, it is
equally important that our contractual partners comply with
basic work and social standards and do business sustainably.
Our groupwide Code of Conduct forbids us to work with
companies which are known to infringe fundamental ethical
principles formulated by the UN Global Compact Initiative.
We therefore gather information about such violations.
For example, in 2011, we created the Bettercoal initiative
together with other major coal-based electricity generators
to gain more insight into working conditions in hard coal
mines. Within the scope of this initiative, independent

120 Sustainability

experts will audit production sites worldwide from 2012

onwards. To ensure the sustainable cultivation of biomass
used to fire our power plants, we rely on independent
certification systems such as the Green Gold Label, which
was developed with the help of our Dutch Group company
Essent.
Our contracts for procuring staple goods and services
include provisions that oblige our suppliers to comply with
minimum international standards in relation to work
conditions and environmental protection. These include the
principles of the UN Global Compact. When purchasing
energy commodities, we undertake a risk assessment of our
business partners. Our goal for 2013 is for at least 95% of
ourpurchasing volume to be covered by such minimum
standards and risk assessments. In2011, the ratio was 93%.
We have set up a quality management system for
purchasesof plant and complex components. Last year,
RWETechnology, which is in charge of our conventional
power plant new builds, obtained ISO 9001 certification. As
a result, the company is obliged to verify compliance with
occupational and environmental standards by partner
companies and their vendors, for example by visiting their
premises.
(6) Pricing and marketplace. Competition on our electricity
and gas markets has become fiercer. Increasing numbers of
customers are willing to switch suppliers. In so doing, they
are primarily guided by price. We aim to have satisfied
customers whom we can retain over the long term because
they are convinced of the quality and value for money of our
product range. In 2010, we started measuring our success in
this respect in Germany using a loyalty index. It is based on
surveys of the residential and commercial customers we
supply with electricity. The index moves on a scale of
0 to 100 points. A score below 70 designates low satis
faction, with values from 70 to 79 indicating mediocre satis
faction and 80 points or more representing high satisfaction.
In the year under review, we improved from 71 (2010) to
73points. Our current score is the minimum goal we set
ourselves for 2013.

RWE Annual Report 2011

(7) Demographic change. In view of the low birth rates,

especially in Germany, we must see to it early on that RWE
retains access to adequately qualified staff over the long
term. This also involves avoiding disruption among the
workforce as well as losing know-how when significantly
represented age groups retire. We already take advantage
ofmany ways to attract young talent to our company and
create a working environment that meets their expectations.
In addition, we project our need for personnel over the long
term, determining by analysis whether there are manpower
shortage threats in the professions represented within the
Group. One of the tools we use in this analysis is a
demographic index, which measures the RWE Groups age
structure. The higher the index score, the more evenly
theage groups are represented in our Group companies.
Thebest possible ranking is 100. In the financial year under
review, we achieved a score of 84 points. We intend to
maintain this level.
(8) Occupational health and safety management. We want
our employees to return home as healthy as when they
arriveat work. In order to do the best possible justice to this
ambition, we constantly work on improving occupational
health and safety. The measures taken as part of the
company health management system are tailored to
maintain staff performance. For example, we launched the
Finding a Balance initiative in 2011 to help our employees
prevent stress and better cope with the demands placed on
them at work and at home. This includes being of assistance
in looking after their children and relatives in need of care.
Anationwide campaign we also launched last year is Staying
Healthy: With All Your Heart for the prevention of
cardiovascular diseases.

Sustainability 121

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

The safety of work processes is also very important to RWE.

To improve it even further, we initiated the Safety First
campaign in early 2008, focusing on executive training.
Thisand a host of additional measures have integrated the
health and safety philosophy into teams and made them a
part of daily routines. Proof of this success is that the
number of accidents resulting in at least one lost day of
work per employee dropped for the tenth straight year in
2011. The rate was 2.8 for every million hours worked.
By2013, we intend to reduce it to no more than 2.7. This
target quota also considers external personnel.
(9) Environmental protection. Our opencast mines,
production facilities, power stations and networks all affect
nature and landscapes. This is why environmental protection
has always been part of RWEs business model. Most of the
measures we take are required by law or by approvals and
are thus considered a matter of course. None of the RWE
companies had to report serious infringements of legal

Environmental expenditure

requirements in the year being reviewed. In this context,

webenefit from the fact that our groupwide environmental
management system now covers 99% of all our activities.
We are thus marginally below our target for 2013 of 100%.
Many of our companies have been certified to the
international ISO 14001 standard, which establishes globally
accepted requirements of environmental management
systems. The proportion of certified Group activities
amounted to approximately 42% at the end of 2011. Our
environmental expenditure in the year under review totalled
2,875 million, which was roughly on a par with 2010. More
than 60% of it was dedicated to climate protection. This
particularly includes investments in the modernisation of our
power plant portfolio and the expansion of renewable
generation capacity. A large proportion of environmental
expenditure is dedicated to clean air, resulting from the
operation of flue gas desulphurisation units, among other
things. Most of the spending on water protection was
dedicated to the purification of wastewater.

Cost

Capital expenditure

Total

million

2011

2010

2011

2010

2011

2010

Clean air

366

348

41

45

407

393

Nature and landscape protection

71

73

22

18

93

91

Water protection

246

261

52

43

298

304

Waste disposal

207

162

208

163

13

18

20

21

Noise abatement
Brownfield sites, soil contamination
Climate protection
Total

232

172

1,613

1,714

1,845

1,886

1,138

1,038

1,737

1,825

2,875

2,863

122 Sustainability

(10) Community engagement. As we are an energy

company, we have strong links with the communities at our
sites: some of the relationships have been in existence for
decades. We are a reliable employer and principal in these
communities, where we work on social issues. Our charitable
activities are pooled in the RWE Foundation, which began
itswork in 2009. It is endowed with a capital stock of
56million and promotes the education, culture and social
integration of children and teenagers. In the financial year
that just ended, it spent 1.4million on this. Furthermore,
we support the strong effort put in by RWE employees for
social causes through the RWE Companius initiative. In 2011,
a total of 2.3 million was spent supporting more than
1,900 projects. All these measures benefit RWE, as they
improve our acceptance. Once a year, we commission an
opinion survey institute to identify how RWE is perceived
bythe public in Germany when compared to its major
competitors. The most recent poll confirmed that, as in
2010, we had the best reputation in our peer group, a
position we intend to maintain.

RWE Annual Report 2011

RWE qualifies for renowned sustainability index. Our

strategy in the field of sustainability and our high degree
oftransparency were recognised once again in 2011.
InSeptember, we were included in the Dow Jones
Sustainability Index (DJSI) for yet another year for the
13th time in a row. Selections are made based on economic,
ecological and social criteria. RWE is represented in the
DJSI World and the DJSI Europe. DJSI is widely recognised as
theworlds prime index group for corporate performance in
thefield of sustainability. It is established and published
bySustainable Asset Management (SAM) in co-operation
withDow Jones Indexes. We are one of the few German
companies to have belonged to it without interruption since
its inception in 1999.
Sustainability indicators reflect responsible action. Our
success in the field ofcorporate responsibility is reflected by
numerous indicators, and not only those used to determine
Executive Board compensation. The following is an overview
of the development of some key performance indicators
which we believe are particularly informative. They are
divided into categories, i.e. environment, society and
corporate governance. The selection of indicators is
orientated towards the recommendations of the Society of
Investment Professionals in Germany (DVFA).

Sustainability 123

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Field

Performance indicator

Environment

RWE power plant portfolio

2011

2010

2009

2008

0.60

0.58

0.67

0.67

NOx emissions1

g/kWh

SO2 emissions

g/kWh

0.31

0.29

0.34

0.39

Particulate emissions1

g/kWh

0.021

0.019

0.024

0.028

Ash1

thousand mt

7,843

7,740

7,429

6,406

Gypsum1

thousand mt

2,148

2,053

1,956

1,533
396.0

Primary energy consumption

billion kWh

390.6

403.0

368.2

Water consumption1, 3

m3/MWh

1.62

1.41

1.70

1.49

Scope 1 CO2 emissions4

million mt

143.4

144.9

135.9

147.4

mt/MWh

0.778

0.715

0.792

0.749

million mt
million mt

163.8

167.1

151.3

174.5

Scope 2 CO2 emissions6

2.4

3.1

3.5

3.8

Scope 3 CO2 emissions7

million mt

121.0

135.7

128.1

127.0

Specific CO2 emissions

mt/MWh

0.787

0.732

0.796

0.768

Capital expenditure of the Renewables Division

Share of the Groups electricity generation
accounted for by renewables

million

891

709

733

1,102

4.38

4.0

3.5

2.4

72,068

70,856

70,726

65,908

26.1

25.6

Specific CO2 emissions

Total power plant portfolio

Scope 1 CO2 emissions4

Society

Employees

Share of women in the company

27.1

26.2

Share of women in executive positions

11.3

10.8

9.010

8.9

Fluctuation rate

10.1

8.3

8.7

8.8

4.6

4.7

4.8

4.6

95.8

95.6

95.4

95.4

LTIF11

2.8

3.5

4.3

5.3

12

12.4
146

12.0
149

12.7
110

12.9
105

Training days per employee (Germany)

Health ratio
Lost-time incident frequency
Fatal work-related accidents12
Corporate governance

Share of the RWE Group's revenue earned in

countries with a high or very high risk of corruption13
R&D costs

%
million

1 Figures for 2009 adjusted due to the inclusion of Netherlands/Belgium and Hungary.
2 Figures for 2009 adjusted due to the inclusion of Netherlands/Belgium.
3 Difference between power plant water withdrawals and returns to rivers and other surface water; excluding power plants with sea water cooling.
4 Scope 1: direct CO2 emissions from in-house sources (oil and gas production, gas transmission & electricity generation).
5 Including power stations not under RWE ownership, but that we can deploy at our discretion on the basis of long-term agreements.
6 Scope 2: indirect CO2 emissions from the transmission and distribution of electricity purchased from third parties.
7 Scope 3: indirect CO2 emissions that do not fall under scope 1 or 2, produced through the generation of electricity procured from third parties, the transmission and
distribution of electricity in third-party networks, the production and transmission of used fuel, as well as the consumption of gas sold to customers.
8 Electricity generation based on wind (4.1 TWh), hydro (2.8 TWh) and biomass (1.9 TWh).
9 Converted to full-time positions.
10 Figures for 2009 excluding Essent.
11 Sum of all accidents for every million hours worked. Excluding employees of third-party companies.
12 Including employees of third-party companies.
13 Countries rated lower than six on a scale of zero to ten in the Corruption Perceptions Index by the anti-corruption organisation Transparency International,
with ten corresponding to the lowest risk of corruption.

124 Responsibility statement

RWE Annual Report 2011

3.0 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, 17 February 2012
The Executive Board

Gromann

Fitting

Terium

Birnbaum

Pohlig

Schmitz

125

4.0 CONSOlidaTEd FiNaNCial STaTEMENTS

EBITDA
Operating result
Capital expenditure
Dividend proposal per share
consolidaTed Financial sTaTeMenTs

8.5 billion
5.8 billion
7.1 billion
2.00

126 Income statement

RWE Annual Report 2011

4.1 Income Statement1

million

Note

2011

2010

Revenue (including natural gas tax/electricity tax)

(1)

51,686

53,320

Natural gas tax/electricity tax

(1)

2,533

2,598

Revenue

(1)

49,153

50,722

Other operating income

(2)

2,151

1,495

Cost of materials

(3)

33,928

33,176

Staff costs

(4)

5,170

4,873

Depreciation, amortisation, and impairment losses

(5)

3,404

3,213

Other operating expenses

(6)

4,673

4,448

Income from operating activities

4,129

6,507

Income from investments accounted for using the equity method

(7)

400

310

Other income from investments

(7)

128

97

Financial income

(8)

695

1,248

Finance costs

(8)

Income before tax

Taxes on income

(9)

Income
of which: minority interest
of which: RWE AG hybrid capital investors interest
of which: net income/income attributable to RWE AG shareholders
Basic and diluted earnings per common and preferred share in
1 Prior-year figures adjusted.

(28)

2,328

3,184

3,024

4,978

854

1,376

2,170

3,602

305

279

59

15

1,806

3,308

3.35

6.20

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Statement of recognised income and expenses 127

4.2 Statement of Recognised Income and Expenses1

million

Note

2011

2010

Income

2,170

3,602

Currency translation adjustment

344

218

Fair valuation of financial instruments available for sale

(29)

97

Fair valuation of financial instruments used for hedging purposes

(29)

1,585

161

50

34

Other comprehensive income of investments accounted for using the equity method
(pro rata)
Actuarial gains and losses of defined benefit pension plans and similar obligations
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 minority interests
1 Figures stated after taxes.

641

2,717

348

547

3,950

(823)

(3,671)

(59)

(15)

(217)

(264)

128 Balance sheet

RWE Annual Report 2011

4.3 Balance Sheet

Assets
million

Note

31 Dec 2011

31 Dec 2010

Non-current assets
Intangible assets

(10)

16,946

17,350

Property, plant and equipment

(11)

34,847

32,237

Investment property

(12)

136

162

Investments accounted for using the equity method

(13)

4,113

3,694

Other non-current financial assets

(14)

836

750

Financial receivables

(15)

1,928

1,042

Other receivables and other assets

(16)

2,041

2,213

71

626

Income tax assets

Deferred taxes

(17)

2,621

2,391

63,539

60,465

3,342

3,293

Current assets
Inventories

(18)

Financial receivables

(15)

2,171

2,746

Trade accounts receivable

(19)

7,468

9,485

Other receivables and other assets

(16)

8,934

10,484

198

543

Income tax assets

Marketable securities

(20)

4,995

3,196

Cash and cash equivalents

(21)

2,009

2,476

29,117

32,612

92,656

93,077

31 Dec 2011

31 Dec 2010

13,979

14,574

1,759

1,759

Assets held for sale

389

Equity and liabilities

million

Note

Equity

(22)

RWE AG shareholders interest

RWE AG hybrid capital investors interest
Minority interest

1,344

1,084

17,082

17,417

(24)

23,829

23,485

Non-current liabilities
Provisions
Financial liabilities

(25)

15,428

15,908

Other liabilities

(27)

3,438

3,584

Deferred taxes

(17)

1,696

2,185

44,391

45,162

5,327

5,572

Current liabilities
Provisions

(24)

Financial liabilities

(25)

6,495

3,902

Trade accounts payable

(26)

7,886

8,415

144

90

(27)

11,331

12,376

31,183

30,498

92,656

93,077

Income tax liabilities

Other liabilities
Liabilities held for sale

143

Cash flow statement 129

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

4.4 Cash Flow Statement

million

Note (32)

2011

2010

Income

2,170

3,602

Depreciation, amortisation, impairment losses/write-backs

3,443

3,184

Changes in provisions
Changes in deferred taxes
Income from disposal of non-current assets and marketable securities

87

338

224

680

364

165

386

1,570

Changes in working capital

436

2,349

Cash flows from operating activities

5,510

5,500

6,353

6,379

313

176

625

258

Other non-cash income/expenses

Intangible assets/property, plant and equipment/investment property

Capital expenditure
Proceeds from disposal of assets
Acquisitions and investments
Capital expenditure

779

220

Changes in marketable securities and cash investments

Proceeds from disposal of assets/divestitures

1,880

442

Cash flows from investing activities

7,766

6,683

2,141

27

2,301

2,198

Net change in equity (incl. minority interest)

1,738

Issuance of hybrid capital

Dividends paid to RWE AG shareholders and minority interests

Issuance of financial debt2
Repayment of financial debt

8,955

3,485

7,053

2,414

Cash flows from financing activities

1,742

638

Net cash change in cash and cash equivalents

514

545

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

12

Net change in cash and cash equivalents

5263

539

Cash and cash equivalents at beginning of the reporting period

2,535

3,074

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 end of the reporting period

59
2,476
2,009

of which: reported as Assets held for sale

Cash and cash equivalents at end of the reporting period as per the consolidated balance
sheet
1 Includes equity capital to be classified as hybrid capital as per IFRS.
2 Including hybrid bonds to be classified as debt as per IFRS.
3 Of which: a change of 59 million is due to cash and cash equivalents reported as Assets held for sale as of 31 December 2010.

2,535
59

2,009

2,476

130 Statement of changes in equity

RWE Annual Report 2011

4.5 Statement of Changes in Equity

Statement
of changes in
equity
million

Subscribed
capital of
RWE AG

Additional
paid-in
capital of
RWE AG

Retained
earnings
and
distributable profit

Treasury
shares

Accumulated other
comprehensive income
Currency
translation
adjustments

Fair value measurement of financial

instruments
Available
for sale

Used for
hedging
purposes

129

573

Note (22)
Balance at
1 Jan 2010

1,440

1,158

11,537

2,272

227

RWE AG
shareholders
interest

12,792

Capital paid in

1,738

Dividends
paid1

1,867

1,867

Income

3,308

3,308

Other comprehensive
income
Total comprehensive income
Other changes
Balance at
31 Dec 2010
Capital paid in

RWE AG
hybrid
capital
investors
interest

1,158

134

1,227

Total

925

13,717

21

1,759

160

2,027

279

3,602

15

348

14

218

30

161

363

3,322

218

30

161

3,671

15

264

3,950

22

34

18

14,574

1,759

1,084

17,417

22

1,383

22
1,440

15

Minority
interest

12,970

2,272

445

99

734

1,361

Sales of
treasury shares

1,512

Dividends
paid1

1,867

1,867

81

285

2,233

1,806

59

305

2,170

88

2,717

2,248

736

736

Income

1,806

Other comprehensive
income

640

268

136

1,585

2,629

Total comprehensive income

1,166

268

136

1,585

823

59

217

547

22

306

326

13,979

1,759

1,344

17,082

Other changes
Balance at
31 Dec 2011

2
1,574

2,385

10,755

24

1 Following reclassification of minority interests to other liabilities as per IAS 32.

177

37

851

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Notes 131

4.6 Notes
Basis of presentation
RWE AG, headquartered at Opernplatz 1, 45128 Essen,
Germany, is the parent company of the RWE Group (RWE
or Group).
The consolidated financial statements for the period ended
31December 2011 were approved for publication on 17 February 2012 by the Executive Board of RWE AG. The statements
were prepared in accordance with the International Financial
Reporting Standards (IFRSs) applicable in the EU, as well as in
accordance with the supplementary accounting regulations
applicable pursuant to Sec. 315a, Para. 1 of the German Commercial Code (HGB). The previous years figures were calculated
according to the same principles.
A statement of changes in equity has been disclosed in addition
to the income statement, the statement of recognised income
and expenses, the balance sheet and the cash flow statement.
The Notes to the financial statements also include segment
reporting.
Several balance sheet and income statement items have been
combined in the interests of clarity. These items are stated and
explained separately in the Notes to the financial statements.
The income statement is structured according to the nature of
expense method.
The consolidated financial statements have been prepared
in euros. Unless specified otherwise, all amounts are stated in
millions of euros ( million). Due to calculation procedures,
rounding differences may occur.

These consolidated financial statements were prepared for the

2011 fiscal year (1 January to 31 December).
The Executive Board of RWE AG is responsible for the completeness and accuracy of the consolidated financial statements and
the Group review of operations, which is combined with the
review of operations of RWE AG.
We employ internal control systems, uniform groupwide directives, and programmes for basic and advanced staff training to
ensure that the consolidated financial statements and combined
review of operations are adequately prepared. Compliance with
legal regulations and the internal guidelines as well as the reliability and viability of the control systems are continuously monitored throughout the Group.
In line with the requirements of the German Corporate Control
and Transparency Act (KonTraG), the Groups risk management
system enables the Executive Board to identify risks at an early
stage and take countermeasures, if necessary.
The consolidated financial statements, the combined review of
operations and the independent auditors report are discussed
in detail by the Audit Committee and at the Supervisory Boards
meeting on financial statements with the independent auditors
present. The results of the Supervisory Boards examination are
presented in the report of the Supervisory Board (pages 102 et
seqq. of this Annual Report).

132 Notes

RWE Annual Report 2011

Scope of consolidation
In addition to RWE AG, the consolidated financial statements
contain all material German and foreign companies which RWE
AG controls directly or indirectly. Material associates and material joint ventures are accounted for using the equity method.
Investments in subsidiaries, joint ventures or associates which
are of secondary importance from a Group perspective are
accounted for in accordance with IAS 39.
The list of Group shareholdings pursuant to Sec. 313, Para. 2 of
the German Commercial Code (HGB) is presented on pages 196
et seqq.

Scope of consolidation

In the year under review, 17 companies domiciled in Germany

and 14 outside of Germany were consolidated for the first time.
33 companies, five of which were headquartered in Germany,
are no longer included in the scope of consolidation; 30 companies were merged, of which 18 were domiciled in Germany.
Furthermore, six associates (of which four in Germany) were
accounted for using the equity method for the first time. In
respect of companies accounted for using the equity method in
the previous year, four were sold, including one headquartered
in Germany; two companies were included in the consolidated
financial statements, of which one was headquartered in Germany. First-time consolidation and deconsolidation generally
take place when control is transferred.
Germany

Total

Total

31 Dec 2011

Foreign
countries
31 Dec 2011

31 Dec 2011

31 Dec 2010

198

215

413

445

71

50

121

121

Fully consolidated companies

Investments accounted for using the equity method

Corporate acquisitions
The following business combinations are worth mentioning:

Balance-sheet items

When we acquired Essent in 2009, we made a commitment to

the companys previous owners to exercise a put option by
purchasing the shares in Energy Resources Holding B.V. (ERH),
s-Hertogenbosch/Netherlands, if certain prerequisites were
met and to pay conditional compensation for the Essent
acquisition. On 30 September 2011, RWE acquired 100% of
the voting stock in ERH, which holds a 30% equity stake in the
power plant company EPZ, Borssele/Netherlands.

Non-current assets

364

Current assets

144

The acquisition of ERH involved payments totalling 754 million. This redeemed the conditional purchase price liability of
132 million and the put option amounting to 193 million.
The acquisition costs of the shares in ERH totalled 429 million.
The following assets and liabilities were assumed:

million (preliminary figures)

IFRS carrying amounts

(fair value) upon
first-time consolidation

Non-current liabilities

70
7

Current liabilities
Net assets

431

Acquisition costs

429

Negative difference

The fair value of the receivables included in current assets

amounted to 42 million.
Since its first-time consolidation, the ERH Group has contributed 4 million to Group revenue and 3 million to Group
income.

Notes 133

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

The first-time accounting treatment of the business combination has not yet been finalised, due to the complex structure of
the transaction.
A contractual agreement dated 10 January 2011 gave RWE
control over NVV AG (NVV, from 2012 NEW AG), Mnchengladbach, which was previously included in the consolidated
financial statements using the equity method. The following
table shows the assets and liabilities assumed:
Balance-sheet items
million

IFRS carrying amounts

(fair value) upon
first-time consolidation

Non-current assets

639

Current assets

335

Non-current liabilities

307

Current liabilities

319

Net assets

348

Minority interest
Acquisition costs (non-cash)

204
179

Goodwill

35

The fair value of the previous shares amounted to 137 million.

The first-time consolidation of the previous shares resulted in
42 million in income, which is recognised in the Other operating income line item in the income statement.
The fair value of the receivables included in non-current and current assets totalled 250 million.

Accounting treatment of the business combination was finalised

as of 31 December 2011.
If all business combinations from the reporting period had been
completed by 1 January 2011, Group income would have
amounted to 2,188 million and Group revenue would have
amounted to 49,170 million.
Disposals
In July 2011, RWE AG reached an agreement on the sale of a
74.9% stake in Amprion GmbH. The purchaser is a consortium
of mostly German institutional financial investors headed by
Commerz Real AG, a subsidiary of Commerzbank AG.
The sale of the majority stake previously recognised under
Other, consolidation was completed in fiscal 2011, and the
company was deconsolidated. RWE AGs remaining stake in
Amprion GmbH of 25.1% is reported as an investment
accounted for using the equity method. The deconsolidation
gain amounted to 65 million and has been recognised in the
Other operating income line item in the income statement.
7 million of the deconsolidation gain was allocable to the fair
valuation of the remaining investment of 25.1%, which is
accounted for using the equity method.
Assets and liabilities held for sale
RWE concluded a contract on the sale of its 100% stake in
Thyssengas GmbH in December 2010. The transaction was
subject to the approval of the EU Commission and the competent anti-trust authorities. The anti-trust authorities and the
EU Commission granted approval in December 2010 and late
January 2011, respectively.

The measurement of the minority interest was based on the prorated net assets of the group of companies that was consolidated for the first time.
The goodwill largely results from anticipated future economic
benefits and synergy effects.

The following assets and liabilities of Thyssengas were stated

as held for sale as of 31 December 2010:
Key figures for Thyssengas
million
Non-current assets

Since its first-time consolidation, the NVV Group has contributed 834 million to Group revenue and 31 million to Group
income.

31 Dec 2010
296

Current assets

93

Non-current liabilities

36

Current liabilities

107

134 Notes

RWE Annual Report 2011

The sale of Thyssengas was completed in February 2011.

The company was deconsolidated in the first quarter of 2011.
The deconsolidation gain amounted to 207 million and is
recognised in the Other operating income line item in the
income statement.

Changes in the scope of consolidation resulted in a decrease

of 355 million in non-current assets (including deferred taxes),
1,235 million in current assets (excluding cash and cash
equivalents), and 258 million in cash and cash equivalents;
non-current and current liabilities declined by 1,553 million.

The total sales price for business transactions amounted to

1,216 million (previous year: 227 million) which was fully
paid in cash.

Effects of changes in the scope of consolidation have been

stated in the Notes insofar as they are of particular importance.

Consolidation principles
The financial statements of German and foreign companies
included in the scope of the Groups financial statements are
prepared using uniform accounting policies. On principle, subsidiaries whose fiscal years do not end on the Groups balancesheet date (31 December) prepare interim financial statements
as of this date.
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
minority interest, against the acquired subsidiaries revalued
net assets at the time of acquisition. In doing so, the minority
interest can either be measured at the prorated value of the
subsidiaries identifiable net assets or at fair value. Subsidiaries
identifiable assets, liabilities and contingent liabilities are measured at full fair value, regardless of the amount of the minority
interest. Intangible assets are reported separately from goodwill if they are separable from the company or if they stem from
a contractual or other right. In accordance with IFRS 3, no new
restructuring provisions are recognised within the scope of the
purchase price allocation. If the purchase price exceeds the
revalued prorated net assets of the acquired subsidiary, the difference is capitalised as goodwill. If the purchase price is lower,
the difference is included in income.

Capitalised goodwill is not amortised: it is tested for impairment once every year, or more frequently if there are indications of impairment. In the event of deconsolidation, residual
carrying amounts of capitalised goodwill are taken into account
when calculating income from disposals. Changes in share ownership which do not alter the ability to control the subsidiary
are recognised without an effect on income. If shares in a subsidiary are sold resulting in a change in control, the remaining
shares are revalued with an effect on income.
Expenses and income as well as receivables and payables
between consolidated companies are eliminated. Intra-group
profits and losses are eliminated.
For investments accounted for using the equity method, goodwill is not reported separately, but rather included in the value
recognised for the investment. In other respects, the consolidation principles described above apply. Goodwill is not amortised. If impairment losses on the equity value become necessary, we report such under income from investments accounted
for using the equity method. The financial statements of investments accounted for using the equity method are prepared
using uniform accounting policies.

Notes 135

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Foreign currency translation

In their individual financial statements, the companies measure
non-monetary foreign currency items at the balance-sheet date
using the exchange rate in effect on the date they were initially
recognised. Monetary items are converted using the exchange
rate valid on the balance-sheet date. Exchange rate gains and
losses from the measurement of monetary balance-sheet items
in foreign currency occurring up to the balance-sheet date are
recognised in the income statement under other operating
income or expenses.
Functional foreign currency translation is applied when converting the financial statements of companies outside of the euro
area. As the principal foreign enterprises included in the consolidated financial statements conduct their business activities
Exchange rates

independently in their national currencies, their balance-sheet

items are translated into euros in the consolidated financial
statements using the average exchange rate prevailing on the
balance-sheet date. This also applies for goodwill, which is
viewed as an asset of the economically autonomous foreign
entity. We report differences to previous-year translations in
other comprehensive income without an effect on 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.
The following exchange rates (among others) were used as a
basis for foreign currency translations:
Average

Year-end

in

2011

2010

31 Dec 2011

31 Dec 2010

1 US dollar

0.71

0.76

0.77

0.75

1 pound sterling

1.15

1.17

1.20

1.16

100 Czech korunas

4.07

3.96

3.88

3.99

100 Hungarian forints

0.36

0.36

0.32

0.36

1 Polish zloty

0.24

0.25

0.22

0.25

136 Notes

RWE Annual Report 2011

Accounting policies
Intangible assets are accounted for at amortised cost. With the
exception of goodwill, all intangible assets have finite useful
lives and are amortised using the straight-line method. Useful
lives and methods of amortisation are reviewed on an annual
basis.
Software for commercial and technical applications is amortised
over three to five years. Operating rights refer to the entirety
of the permits and approvals required for the operation of a
power plant. Such rights are generally amortised over the economic life of the power plant, using the straight-line method.
Easement agreements in the electricity and gas business, and
other easement rights, generally have useful lives of up to 20
years. Concessions in the water business generally have terms
of up to 25 years. Capitalised customer relations are amortised
over a maximum period of up to ten years. Useful lives and
methods of amortisation are reviewed on an annual basis.
Goodwill is not amortised; instead it is subjected to an impairment test once every year, or more frequently if there are indications of impairment.
Development costs are capitalised if a newly developed product or process can be clearly defined, is technically feasible and
it is the companys intention to either use the product or process itself or market it. Furthermore, asset recognition requires
that there be a sufficient level of certainty that the development costs lead to future cash inflows. Capitalised development costs are amortised over the time period during which the
products are expected to be sold. Research expenditures are
recognised as expenses in the period in which they are
incurred.
An impairment loss is recognised for an intangible asset if the
recoverable amount of the asset is less than its carrying
amount. A special regulation applies for cases when the asset is
part of a cash-generating unit. Such units are defined as the
smallest identifiable group of assets which generates cash
inflows; these inflows must be largely independent of cash
inflows from other assets or groups of assets. If the intangible
asset is a part of a cash-generating unit, the impairment loss is
calculated based on the recoverable amount of this unit. If

goodwill was allocated to a cash-generating unit and the carrying amount of the unit exceeds the recoverable amount, the
allocated goodwill is initially written down by the difference.
Impairment losses which must be recognised in addition to this
are taken into account by reducing the carrying amount of the
other assets of the cash-generating unit on a prorated basis. If
the reason for an impairment loss recognised in prior periods
has ceased to exist, a write-back is performed. The increased
carrying amount resulting from the write-back may not, however, exceed the amortised cost. Impairment losses on goodwill
are not reversed.
Property, plant and equipment is stated at depreciated cost.
Borrowing costs are capitalised as part of the assets cost, if
they are incurred directly in connection with the acquisition or
production of a qualified asset for which a considerable
period of time is required to prepare the asset for use or sale. If
necessary, the cost of property, plant and equipment may contain the estimated expenses for the decommissioning of plants
or site restoration. Maintenance and repair costs are recognised
as expenses.
Exploratory wells are accounted for at cost, according to the
successful efforts method, meaning that expenses for exploration activities are only capitalised for successful projects, for
example when wells specifically lead to the discovery of crude
oil or natural gas. Seismology and geology expenditures are
recognised as expenses. Within the framework of the unit-ofproduction method, we do not depreciate or amortise capitalised exploration expenses in the exploration phase, but rather
after production begins. Exploration assets are tested for
impairment as soon as facts and information indicate that the
carrying value exceeds the recoverable amount.
With the exception of land and leasehold rights, as a rule, property, plant and equipment is depreciated using the straight-line
method, unless in exceptional cases another depreciation
method is better suited to the usage pattern. We calculate the
depreciation of RWEs typical property, plant and equipment
according to the following useful lives, which apply throughout
the Group:

Notes 137

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Useful life in years

Buildings

12 75

Technical plants
Thermal power plants

10 43

Wind turbines

up to 20

Electricity grids

20 45

Water main networks

20 80

Gas and water storage facilities

15 60

Gas distribution facilities

15 40

Mining facilities

3 25

Mining developments

33 35

Wells in Upstream Gas&Oil

up to 27

Property, plant and equipment held under a finance lease is

capitalised at the fair value of the leased asset or the present
value of the minimum lease payments, depending on which is
lower. They are depreciated using the straight-line method over
the expected useful life or the lease term, whichever is shorter.
Impairment losses and write-backs on property, plant and
equipment are recognised according to the principles described
for intangible assets.
Investment property consists of all real property held to earn
rental income or for long-term capital appreciation rather than
for use in production or for administrative purposes. This property is measured at depreciated cost. Transaction costs are also
included in the initial measurement. Depreciable investment
property is depreciated over 12 to 50 years using the straightline method. Fair values of investment property are stated in
the Notes and are determined using internationally accepted
valuation methods such as the discounted cash flow method or
are derived from the current market prices of comparable real
estate.
Impairment losses and write-backs for investment property are
also recognised according to the principles described for intangible assets.
Investments accounted for using the equity method are initially accounted for at cost and thereafter based on the carrying
amount of their prorated net assets. The carrying amounts are
increased or reduced annually by prorated profits or losses, div-

idends and all other changes in equity. Goodwill is not reported

separately, but rather included in the recognised value of the
investment. Goodwill is not amortised. An impairment loss is
recognised for investments accounted for using the equity
method, if the recoverable amount is less than the carrying
amount.
Other financial assets are comprised of shares in non-consolidated subsidiaries and in associates/joint ventures not
accounted for using the equity method, as well as other investments and non-current marketable securities; these assets are
shown in the category Available for sale. This category
includes financial instruments which are neither loans or receivables, nor financial investments held to maturity, and which are
not measured at fair value through profit or loss. Initially and in
the following periods, they are recognised at fair value as long
as such can be determined reliably. They are initially measured
on their settlement date; unrealised gains and losses are stated
as other comprehensive income, with due consideration of any
deferred taxes. Gains or losses are recognised in the income
statement upon sale of the financial instruments. If there are
objective, material indications of a reduction in the value of an
asset, an impairment loss is recognised with an effect on
income. If a debtor is experiencing significant financial difficulties, or is delinquent on payments of interest or principal, this
can be an indication of impairment of the financial asset in
question. The same is true when there is no longer an active
market for a financial asset.
Receivables are comprised of financial receivables, trade
accounts receivable and other receivables. With the exception
of financial derivatives, receivables and other assets are stated
at amortised cost. Allowances for doubtful accounts are based
on the actual default risk. As a rule, the amounts of receivables
are corrected through the use of an allowance account, in
accordance with internal Group guidelines. Prepayments
received from customers for consumption which is yet to be
metered and billed are netted out against trade accounts
receivable of the utilities.
Loans reported under financial receivables are stated at amortised cost. Loans with interest rates common in the market are
shown on the balance sheet at nominal value; as a rule, however, non-interest or low-interest loans are disclosed at their
present value discounted using an interest rate commensurate
with the risks involved.

138 Notes

CO2 emission allowances are accounted for as intangible assets

and reported under other assets. Allowances which are purchased and allowances allocated free of charge are both stated
at cost and are not amortised.
Deferred taxes result from temporary differences in the carrying amount in the separate IFRS financial statements and tax
bases, and from consolidation procedures. Deferred tax assets
also include tax reduction claims resulting from the expected
utilisation of existing loss carryforwards in subsequent years.
Deferred taxes are capitalised if it is sufficiently certain that the
related economic advantages can be used. Their amount is
assessed with regard to the tax rates applicable or expected to
be applicable in the specific country at the time of realisation.
The tax regulations valid or adopted as of the balance-sheet
date are key considerations in this regard. The tax rate used to
calculate deferred taxes in Germany is 31.2%, as in the previous year. This is derived from the prevailing 15% corporate tax
rate, the 5.5% solidarity surcharge, and the Groups average
local trade tax rate in Germany. Deferred tax assets and
deferred tax liabilities are netted out for each company and/or
tax group.
Inventories are assets which are held for sale in the ordinary
course of business (finished goods and goods for resale), which
are in the process of production (work in progress goods and
services) or which are consumed in the production process or in
the rendering of services (raw materials including nuclear fuel
assemblies and excavated earth for lignite mining).
Insofar as inventories are not acquired primarily for the purpose
of realising a profit on a short-term resale transaction, they are
carried at the lower of cost or net realisable value. Production
costs reflect the full costs directly related to production; they
are determined based on normal capacity utilisation and, in
addition to directly allocable costs, they also include adequate
portions of required materials and production overheads,
including production-related depreciation. Borrowing costs,
however, are not capitalised as part of the cost. The valuation is
generally based on average values. The usage of excavated
earth for lignite mining is calculated using the FIFO (first in
first out) method.

RWE Annual Report 2011

If the net realisable value of inventories written down in earlier

periods has increased, the reversal of the write-down is recognised as a reduction of the cost of materials.
Nuclear fuel assemblies are stated at depreciated cost. Depreciation is determined by operation and capacity, based on consumption and the reactors useful life.
Inventories which are acquired primarily for the purpose of realising a profit on a short-term resale transaction are recognised
at their net realisable value less distribution costs. Changes in
value are recognised with an effect on income.
Securities classified as current marketable securities essentially
consist of marketable securities held in special funds as well as
fixed-interest securities which have a maturity of more than
three months and less than one year from the date of acquisition. All of these securities are classified as Available for sale
and are stated at fair value. The transaction costs directly associated with the acquisition of these securities are included in
the initial measurement; they are initially measured on their settlement date. Unrealised gains and losses are included in other
comprehensive income without an effect on income, with due
consideration of any deferred taxes. If there are objective,
material indications of a reduction in value, an impairment loss
is recognised with an effect on income. The result of sales of
securities are also recognised in the income statement.
Financial assets are derecognised when the contractual rights
to cash flows from the asset expire or if the entity transfers the
financial asset. The latter applies when substantially all the risks
and rewards of ownership of the asset are transferred, or the
entity no longer has control of the asset.
Cash and cash equivalents consist of cash on hand, demand
deposits and current fixed-interest securities with a maturity of
three months or less from the date of acquisition.
Assets are stated under Assets held for sale if they can be sold
in their present condition and their sale is highly probable. Such
assets may be certain non-current assets, asset groups (disposal groups) or operations (discontinued operations). Lia-

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

bilities intended to be sold in a transaction together with assets

are a part of a disposal group or discontinued operations, and
are reported separately under Liabilities held for sale.
Non-current assets held for sale are no longer depreciated or
amortised. They are recognised at fair value less costs to sell, as
long as this amount is lower than the carrying amount.
Gains or losses on the valuation of specific assets held for sale
and of disposal groups are stated under income from continuing operations until final completion of the sale.
The groupwide stock option plans are accounted for as cashsettled share-based payment. At the balance-sheet date, a provision is recognised in the amount of the prorated fair value of
the payment obligation. Changes in the fair value are recognised with an effect on income. The fair value of options is
determined using generally accepted valuation methodologies.
Provisions are recognised for all legal or constructive obligations to third parties which exist on the balance-sheet date and
relate to past events which will probably lead to an outflow of
resources, and the amount of which can be reliably estimated.
Provisions are carried at the their prospective settlement
amount and are not offset against reimbursement claims. If the
provision to be measured involves a large number of items, the
obligation is estimated by weighting all possible outcomes by
their probability of occurrence (expected value method).
All non-current provisions are recognised at their prospective
settlement amount, which is discounted as of the balance-sheet
date. In the determination of the settlement amount, any cost
increases likely to occur up until the time of settlement are
taken into account.
If necessary, the cost of property, plant and equipment may
contain the estimated expenses for the decommissioning of
plants or site restoration, for which decommissioning, restoration and similar provisions are recognised. If changes in the discount rate or changes in the estimated timing or amount of the
payments result in changes in the provisions, the carrying
amount of the respective asset is adjusted by the same
amount. If the decrease in the provision exceeds the carrying

Notes 139

amount of the underlying asset, the excess is recognised immediately through profit or loss.
As a rule, releases of provisions are credited to the expense
account on which the provision was originally recognised.
Provisions for pensions and similar obligations are recognised
for defined benefit plans. These are obligations of the company
to pay future and ongoing post-employment benefits to entitled current and former employees and their surviving dependents. In particular, the obligations refer to retirement pensions.
Individual commitments are generally oriented to the employees length of service and compensation.
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 benefit/years-ofservice method not only takes into account the pension benefits and benefit entitlements known as of the balance-sheet
date, but also anticipated future increases in salaries and pension benefits. The calculation is based on actuarial reports, taking into account appropriate biometric parameters (for Germany, in particular the Richttafeln 2005 G by Klaus Heubeck).
The provision derives from the balance of actuarial present
value of the obligations and the fair value of the plan assets.
The service cost is disclosed in staff costs. The interest cost and
expected return on plan assets are included in the financial
result.
Actuarial gains and losses are fully recognised in the fiscal year
in which they occur. They are reported as a component of other
comprehensive income outside of profit or loss in the statement of recognised income and expenses and immediately
assigned to retained earnings. They remain outside profit or
loss in subsequent periods as well.
In the case of defined contribution plans, the enterprises
obligation is limited to the amount it contributes to the plan.
Contributions to the plan are reported under staff costs.
Waste management provisions in the nuclear energy sector are
based on obligations under public law, in particular the German
Atomic Energy Act, and on restrictions stipulated in operating

140 Notes

licenses. These provisions are measured using estimates, which

are based on and defined in contracts, on information from
internal and external specialists and expert opinions, as well as
on data from the German Federal Office for Radiation Protection (BfS).
Obligations existing as of the balance-sheet date and identifiable when the balance sheet is being prepared are recognised as
provisions for mining damage to cover land recultivation and
remediation of mining damage that has already occurred or
been caused. The provisions must be recognised due to obligations under public law, such as the German Federal Mining Act,
and formulated, above all, in operating schedules and water
law permits. Provisions are generally recognised based on the
increase in the obligation, e.g. in line with lignite production.
Such provisions are measured at full expected cost or according
to estimated compensation payments.
Furthermore, provisions are made owing to obligations under
public law to dismantle production facilities and fill wells. The
amount of these provisions is determined on the basis of total
cost estimates, which reflect past experience and the comparative rates determined by the German Association of Oil and
Natural Gas Production Industry. An analogous approach is
taken for foreign subsidiaries.
A provision is recognised to cover the obligation to deliver CO2
emission allowances to the respective authorities; this provision
is measured at the carrying amount of the CO2 allowances capitalised for this purpose. If a portion of the obligation is not covered with the available allowances, the provision for this portion is measured using the market price of the emission
allowances on the reporting date.
Liabilities consist of financial liabilities, trade accounts payable
and other liabilities. Upon initial recognition, liabilities are
stated at fair value including transaction costs and are carried
at amortised cost in the periods thereafter (except for derivative financial instruments). Liabilities from finance lease agreements are measured at the lower of fair value of the leased
asset or the present value of minimum lease payments.
Deferred income and prepayments from customers are recognised as liabilities under other liabilities. Deferred income

RWE Annual Report 2011

includes advances and contributions in aid of construction and

building connection that are carried as liabilities by the utilities
and which are generally amortised and included in income over
the useful life of the corresponding asset. Deferred income also
includes taxable and non-taxable government grants for capital
expenditure on non-current assets, which are generally recognised as other operating income in line with the assets
depreciation.
Certain minority interests are also presented under other liabilities. Specifically, this pertains to purchase price obligations
from rights to tender minority interests (put options).
Derivative financial instruments are recognised as assets or liabilities and measured at fair value, regardless of their purpose.
Changes in this value are recognised 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 type of hedging transaction.
Fair value hedges are used to hedge assets or liabilities carried
on the balance sheet against the risk of a change in their fair
value. Hedges of unrecognised firm commitments are also recognised as fair value hedges. For fair value hedges, changes in
the fair value of the hedging instrument as well as the fair value
of the respective underlying transactions are recognised in the
income statement. This means that gains and losses from the
fair valuation of the hedging instrument are allocated to the
same line items of the income statement as the gains or losses
from the underlying hedged transaction or portions thereof. In
the event that unrecognised firm commitments are hedged,
changes in the fair value of the firm commitments with regard
to the hedged risk result in the recognition of an asset or liability with an effect on income.
Cash flow hedges are used to hedge the risk of variability in
cash flows related to an asset or liability carried on the balance
sheet or related to a highly probable forecast transaction. If a
cash flow hedge exists, unrealised gains and losses from the
hedging instrument are initially stated as other comprehensive
income. Such gains or losses are only included in the income
statement when the hedged underlying transaction has an
effect on income. If forecast transactions are hedged and such
transactions lead to the recognition of a financial asset or finan-

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

cial liability in subsequent periods, the amounts that were recognised in equity until this point in time are recognised in the
income statement in the period during which the asset or liability affects the income statement. If the transactions result in
the recognition of non-financial assets or liabilities, for example
the acquisition of property, plant and equipment, the amounts
recognised in equity without an effect on income are included
in the initial cost of the asset or liability.
The purpose of hedges of a net investment in foreign entities is
to hedge the currency risk from investments with foreign functional currencies. Unrealised gains and losses from such hedges
are recognised in other comprehensive income until disposal of
the foreign unit.
IAS 39 stipulates the conditions for the recognition of hedging
relationships. Amongst other things, the hedging relationship
must be documented in detail and be effective. According to
IAS 39, a hedging relationship is effective when the changes in
the fair value of the hedging instrument are within 80% to
125%, both prospectively and retrospectively, of the opposite
change in the fair value of the hedged item. Only the effective
portion of a hedge is recognised in accordance with the preceding rules. The ineffective portion is recognised immediately in
the income statement with an effect on income.
Contracts on the receipt or delivery of non-financial items in
accordance with the companys expected purchase, sale or
usage requirements (own-use contracts) are not accounted for
as derivative financial instruments, but rather as executory contracts. If the contracts contain embedded derivatives, the derivatives are accounted separately from the host contract, insofar
as the economic characteristics and risks of the embedded
derivatives are not closely related to the economic characteristics and risks of the host contract. Written options to buy or sell
a non-financial item which can be settled in cash are not ownuse contracts.
Fiscal 2011 is the first time that Changes in finished goods and
work in progress and Other own work capitalised are not
reported as separate items in the income statement, on the
basis of materiality. Changes in finished goods and work in
progress are disclosed in the items Other operating income
and Other operating expenses, whilst other own work capital-

Notes 141

ised is reported in the item Other operating income. Prioryear figures have been adjusted accordingly.
Contingent liabilities are possible obligations to third parties
or existing obligations which will probably not lead to outflow
of economic benefits or the amount of which cannot be measured reliably. Contingent liabilities are only recognised on the
balance sheet, if they were assumed within the framework of
abusiness combination. The amounts disclosed in the Notes
correspond to the exposure at the balance-sheet date.
Management judgements in the application of accounting
policies. Management judgements are required in the application of accounting policies. In particular, this pertains to the
following aspects:
With regard to certain contracts a decision must be made as
to whether they are to be treated as derivatives or as socalled own-use contracts, and be accounted for as executory
contracts.
Financial assets must be allocated to the categories Held to
maturity investments, Loans and receivables, Financial
assets available for sale, and Financial assets at fair value
through profit or loss.
With regard to Financial assets available for sale a decision
must be made as to if and when reductions in value are to be
recognised as impairments with an impact on income.
With regard to assets held for sale, it must be determined if
they can be sold in their current condition and if the sale of
such is highly probable. If both conditions apply, the assets
and any related liabilities must be reported and measured as
Assets held for sale or Liabilities held for sale, respectively.
Management estimates and judgements. Preparation of
c onsolidated financial statements pursuant to IFRS requires
assumptions and estimates to be made, which have an impact
on the recognised value of the assets and liabilities carried
on the balance sheet, on income and expenses and on the dis
closure of contingent liabilities.
Amongst other things, these assumptions and estimates relate
to the accounting and measurement of provisions. With regard
to pension provisions and similar obligations, the discount factor and the expected return on plan assets are important esti-

142 Notes

mates. The discount factor for pension obligations is determined on the basis of yields on high quality, fixed-rate
corporate bonds on the financial markets as of the balancesheet date. In Germany, an increase or decrease of one percentage point in the discount factor would result in a reduction of
1,378 million (previous year: 1,314 million) or an increase of
1,754 million (previous year: 1,672 million), respectively, in
the present value of the obligations of the pension plans. For
the Group companies in the UK, identical changes in the discount factor would reduce or increase pension obligations by
679 million (previous year: 627 million) or 867 million (previous year: 798 million), respectively.
However, as the commitments stemming from company pension plans are primarily covered by funds and the value of most
plan assets typically exhibits negative correlation with the market yields of fixed-interest securities, the pension provisions
as determined taking into account the existing plan assets
only depend on the prevailing level of market interest rates to a
limited degree.
For the accounting of business combinations, the identifiable
assets, liabilities and contingent liabilities are recognised at fair
value as of the date of acquisition. In this regard, the most
important estimates relate to the determination of the fair
value of these items as of the acquisition date. These estimates
are calculated on the basis of reports of independent external
valuation experts or internal analyses using suitable valuation
techniques. Amongst other things, special attention is paid in
this regard to the projection of future cash flows and determination of the discount rate.
The impairment test for goodwill is based on certain assumptions pertaining to the future, which are regularly adjusted.

RWE Annual Report 2011

overall economic conditions in the sectors and regions in which

RWE conducts operations are taken into consideration with
regard to the prospective development of business. Actual
amounts may deviate from the estimated amounts if the overall
conditions develop differently than expected. In such cases, the
assumptions, and, if necessary, the carrying amounts of the
affected assets and liabilities are adjusted.
As of the date of preparation of the consolidated financial
statements, it is not presumed that there will be a material
change in the assumptions and estimates.
Capital management. RWEs capital management is determined by the Groups strategic objectives and focuses on
increasing the value of the business over the long term. To
achieve this goal, the RWE Group endeavours to constantly
optimise its existing operations, to safeguard its market position by offering competitive products and services and, if necessary, to optimise its portfolio via value-creating acquisitions
and divestitures.
RWE manages its capital structure on the basis of financial indicators. One key indicator is the debt factor (leverage factor),
which is calculated using net debt. Net debt is calculated by
adding material non-current provisions to net financial debt,
subtracting the surplus of plan assets over benefit obligations
and adjusting for one half of the issued hybrid capital. The debt
factor is the ratio of net debt to EBITDA. For the year under
review, this factor was 3.5 (previous year: 2.8). The debt factor
is not to exceed 3.0 over the long term. With this target, we
support our strong credit rating. We ascribe great importance
to securing this rating and thus maintaining financial flexibility.

Further information on the assumptions and estimates upon

which these consolidated financial statements are based can be
found in the explanations of the individual items.

The credit rating is influenced by a number of qualitative

and quantitative factors. These include aspects such as
the amount of cash flows and debt as well as market conditions, competition, and the political framework. The issuance
of a 1.75 billion hybrid bond in September 2010 and a
CHF250millionhybrid bond in October 2011 also helped to
stabilise this rating. One half of the hybrid capital is classified
as equity by the two leading rating agencies, Moodys and
Standard & Poors. As a result, the debt indicators relevant to
the rating are better than they would be if a traditional bond
had been issued.

All assumptions and estimates are based on the circumstances

and forecasts prevailing on the balance-sheet date. Furthermore, as of the balance-sheet date realistic assessments of

At present, Moodys and Standard & Poors assign the ratings

A3 and A-, both with a negative outlook, to the non-subordinated bonds issued by RWE AG and by RWE Finance B.V. with

Deferred tax assets are recognised if realisation of future tax

benefits is probable. Actual future income for tax purposes and
hence the actual realisability of deferred tax assets, however,
may deviate from the estimation made when the deferred taxes
are capitalised.

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

aguarantee by RWE AG. RWE thus continues to have investment-grade ratings. The short-term credit ratings are P2 and
A2. We are committed to maintaining a solid A rating.

Changes in accounting policies

The International Accounting Standards Board (IASB) and the
IFRS Interpretations Committee (IFRS IC) have approved several
amendments to existing International Financial Reporting
Standards (IFRSs) and adopted several new IFRSs and interpretations, which became effective for the RWE Group as of fiscal
2011:
Improvements to International Financial Reporting Standards
(2010)
Amendment to IFRS 1 (2010) Limited exemption from Comparative IFRS 7 Disclosures for First-time Adopters
IAS 24 (2009) Related Party Disclosures
Amendment to IAS 32 (2009) Classification of Rights Issues
Amendment to IFRIC 14 (2009) Prepayments of a Minimum
Funding Requirement
IFRIC 19 (2009) Extinguishing Financial Liabilities with
Equity Instruments
The standards and interpretations as well as amendments to
standards and interpretations applicable for the first time have
no material effects on the RWE Groups consolidated financial
statements.

Notes 143

144 Notes

RWE Annual Report 2011

New accounting policies

The IASB has adopted further standards and amendments to
standards, which are not yet mandatory in the European Union
(EU) in fiscal 2011. The most important changes are presented
below. EU endorsement is still pending in some cases.
IFRS 9 (2011) Financial Instruments replaces the previous
regulations of IAS 39 for the classification and measurement of
financial assets and contains minor changes in relation to the
measurement of financial liabilities. The adopted amendments
primarily relate to the reduction in the number of measurement
categories for financial assets. IFRS 9 (2011) becomes effective
for the first time for fiscal years starting on or after 1 January
2015.
IFRS 10 (2011) Consolidated Financial Statements replaces
the previous regulations of IAS 27 and of SIC12 for consolidation. According to IFRS 10 (2011), the following three requirements must be cumulatively fulfilled in order for control to
exist: power over the relevant activities, a right to variable
returns from the investee, and the ability to use power over the
investee to affect the amount of the variable returns. IFRS 10
(2011) becomes effective for the first time for fiscal years starting on or after 1 January 2013.
IFRS 11 (2011) Joint Arrangements replaces the previous
regulations of IAS 31 and of SIC13 for the accounting treatment of joint ventures. IFRS 11 (2011) regulates the accounting
treatment of cases in which a company is managed jointly or an
activity is carried out jointly. A further amendment is that in the
future proportionate consolidation is no longer allowed. RWE
had not exercised this option in the past anyway. IFRS 11
(2011) becomes effective for the first time for fiscal years starting on or after 1 January 2013.

IFRS 12 (2011) Disclosure of Interests in Other Entities

encompasses the disclosure obligations resulting from the
application of IFRS 10, IFRS 11 and IAS 28. The mandatory disclosures are to enable users of financial statements to evaluate
the risks and financial effects resulting from subsidiaries, joint
ventures and joint operations, associated companies and
unconsolidated structured entities. IFRS 12 (2011) becomes
effective for the first time for fiscal years starting on or after
1January 2013.
IFRS 13 (2011) Fair Value Measurement defines a single
framework for measuring fair value across all standards. Furthermore, IFRS 13 (2011) introduces extensive disclosure on
fair valuations in the notes. IFRS 13 (2011) becomes effective
for the first time for fiscal years starting on or after 1 January
2013.
IAS 28 (2011) Investments in Associates and Joint Ventures
was supplemented with regulations for the accounting treatment of investments in joint ventures when it was revised. IAS
28 (2011) becomes effective for the first time for fiscal years
starting on or after 1 January 2013.
Presentation of Other Comprehensive Income (Amendments
of IAS 1) (2011) relates to the presentation of items included
in the statement of recognised income and expenses. In the
future, these must be divided into two categories, depending
on how they are to be recognised in the income statement in
the future (recycling). These amendments become effective
for the first time for fiscal years starting on or after 1 July 2012.
Amendments to IAS 19 (2011) Employee Benefits abolish
options to recognise actuarial gains and losses. New regulations on considering the expected return on plan assets
arealso introduced. In addition, the disclosure obligations
inthenotes are expanded. These amendments become effective forthe first time for fiscal years starting on or after
1January2013.

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32) (2011) and Disclosures Offsetting Financial
Assets and Financial Liabilities (Amendments to IFRS 7)
(2011) regulate the offsetting of financial assets and financial
liabilities and the related reporting requirements. While the
requirements for offsetting are only detailed by application
guidances, the scope of reporting requirements is expanded
considerably. These amendments related to IFRS 7 become
effective for the first time for fiscal years starting on or after
1January 2013, the amendments related to IAS 32 for fiscal
years starting on or after 1 January 2014.
The effects of the amendments to the standards on the RWE
Groups consolidated financial statements are currently being
reviewed.
The following standards, amendments to standards, and interpretations are not expected to have any material effects on the
RWE Groups consolidated financial statements:
IAS 27 (2011) Separate Financial Statements
Amendment to IFRS 1 (2010) Severe Hyperinflation and
Removal of Fixed Dates for First-time Adopters
Amendment to IFRS 7 (2010) Financial Instruments: Disclosures Transfers of Financial Assets
Amendment to IAS 12 (2010) Deferred Tax: Recovery of
Underlying Assets
IFRIC 20 (2011) Stripping Costs in the Production Phase of a
Surface Mine

Notes 145

146 Notes

RWE Annual Report 2011

Notes to the Income Statement

(1) Revenue
As a rule, revenue is recorded when the services or goods have
been delivered and the risks have been transferred to the customer.
To improve the presentation of business development, we
report revenue generated by energy trading operations as net
figures, reflecting realised gross margins. By contrast, we report
electricity, gas, coal and oil transactions that are subject to
physical settlement on a gross basis. Energy trading revenue is
generated by the segment Trading/Gas Midstream. In fiscal

2011, gross revenue (including energy trading) totalled

118,579 million (previous year: 114,682 million).
A breakdown of revenue by division and geographical region is
contained in the segment reporting on pages 183 et seqq.
Revenue decreased by a net total of 317 million as a result of
first-time consolidations and deconsolidations.
The item natural gas tax/electricity tax comprises the taxes
paid directly by Group companies. Changes in the scope of consolidation resulted in an increase of 61 million in this item.

(2) Other operating income

Other operating income
million

2011

2010

Income from own work capitalised

315

219

Release of provisions

348

97

74

218

Cost allocations/refunds
Disposal and write-back of current assets excluding marketable securities

41

51

Disposal and write-back of non-current assets including income from deconsolidation

536

139

Income from derivative financial instruments

124

322

Compensation for damage/insurance benefits

93

10

Rent and lease

31

28

Exchange rate gains

60

Miscellaneous

529

411

2,151

1,495

Income from the disposal of non-current financial assets and

loans is disclosed under income from investments if it relates to
investments; otherwise it is recorded as part of the financial
result as is the income from the disposal of current marketable
securities.
(3) Cost of materials
Cost of materials
million
Cost of raw materials and of goods
for resale
Cost of purchased services

2011

2010

29,447

29,169

4,481

4,007

33,928

33,176

The cost of raw materials also includes expenses for the use
and disposal of spent nuclear fuel assemblies. This item also
includes expenses from emission allowances for our CO2 emissions.
Cost of materials in exploration activities amounted to 65 million in the reporting period (previous year: 85 million).
A total of 66,893 million in energy trading revenue (previous
year: 61,362 million) was netted out against cost of materials.
Changes in the scope of consolidation resulted in a decline of
589 million in the cost of materials.

Notes 147

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

(4) Staff costs

An increase of 51 million in staff costs is attributable to

changes in the scope of consolidation.

Staff costs
million

2011

2010

Wages and salaries

4,204

3,946

Cost of social security, pensions and

other benefits

966

927

5,170

4,873

The RWE Groups average personnel headcount amounted to

72,163 (previous year: 71,001). This figure is arrived at by conversion to full-time positions, meaning that part-time and fixedterm employment relationships are included in accordance with
the ratio of the part-time work or the duration of the employment to the annual employment time. Of the total average personnel headcount, 55,851 were staff covered by collective or
other agreements (previous year: 55,224) and 16,312 were
staff who were not covered by collective agreements (previous
year: 15,777). In addition, 2,756 trainees were employed on
average (previous year: 2,800). Trainees are not included in the
personnel headcount.

(5) Depreciation, amortisation and impairment losses

Depreciation and impairment losses on property, plant and
equipment amounted to 2,572 million (previous year:
2,600million) and to 9 million (previous year: 10 million)
on investment property. Intangible assets were written down
by 823 million (previous year: 603 million), of which
301million (previous year: 314 million) pertained to customer bases of acquired enterprises. Exploration activities
resulted in depreciation, amortisation and impairment losses
of 21 million (previous year: 5 million) on property, plant
and equipment and intangible assets.
Impairment losses were recognised in the reporting period.
These impairment losses amounted to 372 million (previous
year: 471 million) on property, plant and equipment, 3 million (previous year: 3 million) on investment property and
259 million (previous year: 37 million) on intangible assets
(without goodwill).

(6) Other operating expenses

Other operating expenses
million

2011

2010

24

20

Maintenance and renewal obligations

954

917

Additions to provisions

210

271

Concessions, licenses and other contractual obligations

536

515

Structural and adaptation measures

423

196

Legal and other consulting and data processing services

296

295

Disposal of current assets and decreases in values

(excluding decreases in the value of inventories and marketable securities)

357

380

Disposal of non-current assets including expenses from deconsolidation

124

102

Insurance, commissions, freight and similar distribution costs

247

235

General administration

219

224

Advertising

249

241

Expenses from derivative financial instruments

138

70

Lease payments for plant and grids as well as rents

135

123

Postage and monetary transactions

83

86

Fees and membership dues

99

89

Expenses from changes in finished goods and work in progress

Exchange rate losses

Other taxes (primarily on property)
Miscellaneous

Exploration activities resulted in other operating expenses

of 57 million (previous year: 57 million).

52
80

79

499

553

4,673

4,448

An increase of 92 million in other operating expenses is

attributable to changes in the scope of consolidation.

148 Notes

RWE Annual Report 2011

(7) Income from investments

Income from investments includes all income and expenses
which have arisen in relation to operating investments. It is

comprised of income from investments accounted for using

the equity method and other income from investments.

Income from investments

million
Income from investments accounted for using the equity method
of which: amortisation/impairment losses/additions on investments accounted for using the equity method
Income from non-consolidated subsidiaries
of which: amortisation/impairment losses on non-consolidated subsidiaries
Income from other investments
of which: impairment of shares in other investments
Income from the disposal of investments
Expenses from the disposal of investments

400

310

(41)

(24)

(10)
105

53

(3)

(3)

34

34

Expenses from loans to investments

Other income from investments

In the year under review, an impairment of 26 million

(previous year: 40 million) was recognised on Fri-El S.p.A.,
due to delays in project development, and an impairment of
15 million (previous year: 0 million) was recognised on

2010

Income from loans to investments

Expenses from loans to investments relate exclusively to

impairment losses.

2011

27

17

16

128

97

528

407

power plant investments in the Netherlands which are

accounted for using the equity method. In the previous year,
additions of 71 million were recognised in relation to
Krntner Energieholding Beteiligungs GmbH, Austria, and
Stadtwerke Duisburg AG, both investments accounted for using
the equity method, based on increases in company value.

(8) Financial result

Financial result
million
Interest and similar income

2011

2010

430

448

Other financial income

265

800

Financial income

695

1,248

1,063

1,258

Provisions for pensions and similar obligations (including capitalised surplus of plan assets)

113

147

Provisions for nuclear waste management as well as to mining provisions

609

623

Other provisions

147

170

Other finance costs

396

986

Interest and similar expenses

Interest accretion to

Finance costs

The financial result breaks down into net interest, interest

accretion to provisions, other financial income and other
finance costs.

2,328

3,184

1,633

1,936

Notes 149

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Interest accretion to provisions contains the reversal allocable

to the current year of the discounting of non-current provisions
from the annual update of the present value calculation. It is
reduced by the projected income on plan assets for the coverage of pension obligations.

(9) Taxes on income

Taxes on income
million
Current taxes on income
Deferred taxes

Net interest essentially includes interest income from interestbearing securities and loans, income and expenses relating to
marketable securities, and interest expenses.
In the year under review, 50 million in borrowing costs were
capitalised as costs in connection with the acquisition, construction or production of qualifying assets (previous year:
4million). The underlying capitalisation rate ranged from
5.20% to 5.30% (previous year: from 5.30% to 5.45%).
Net interest
million
Interest and similar income
Interest and similar expenses

2011

2010

430

448

1,063

1,258

633

810

Net interest stems from financial assets and liabilities, which

are allocated to the following categories:
Interest result by category
million
Loans and receivables
Financial assets available for sale
Financial liabilities carried at
(amortised) cost

2011

2010

341

359

89

89

1,063

1,258

633

810

The financial result also contains all other financial income and
finance costs which cannot be allocated to net interest or to
interest accretion to provisions.
Other financial income includes 82 million in gains realised
from the disposal of marketable securities (previous year:
161million). Other finance costs include 5 million (previous
year: 0 million) in write-downs of marketable securities due to
decreases in their fair value and 78 million (previous year:
44million) in realised losses from the disposal of marketable
securities.

2011

2010

630

2,056

224

680

854

1,376

Of the deferred taxes, 392 million is related to temporary differences (previous year: 586 million).
Current taxes on income contain 63 million in net tax
expenses (previous year: 26 million) relating to prior periods.
Due to the utilisation of tax loss carryforwards unrecognised in
prior years, current taxes on income were reduced by 50 million (previous year: 32 million). Expenses from deferred taxes
declined by 18 million (previous year: 0 million), due to reassessments of and previously unrecognised tax carryforwards.
Changes in the scope of consolidation increased income taxes
by 42 million.
During the period under review, equity increased by 926 million (previous year: 8 million) by offsetting deferred taxes with
other comprehensive income, as follows:
Income taxes recognised in other
comprehensive income
million
Fair valuation of financial instruments
available for sale

2011

2010

34

Fair valuation of financial instruments used

for hedging purposes

676

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

252

32

Income

926

Taxes in the amount of 28 million (previous year: 9 million)

were offset directly against equity in relation to hybrid capital
issued in 2010 and the equity capital measures taken during
the year under review.

150 Notes

RWE Annual Report 2011

Tax reconciliation
million

2011

2010

3,024

4,978

Theoretical tax expense

944

1,555

Differences from foreign tax rates

112

142

Tax-free domestic dividend income

83

76

Tax-free foreign dividend income

29

28

Other tax-free income

15

11

Expenses not deductible for tax purposes

117

132

Accounting for associates using the equity method (including impairment losses on associates goodwill)

19

16

Unutilisable loss carryforwards / utilisation of unrecognised loss carryforwards /

write-downs on loss carryforwards / recognition of loss carryforwards

64

122

12

Income from continuing operations before tax

Tax effects on

Income on the disposal of investments

Changes in domestic tax rates
Changes in foreign tax rates
Other

10
41

56

147

130

Effective tax expense

854

1,376

Effective tax rate in %

28.2

27.6

Notes 151

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Notes to the Balance Sheet

(10) Intangible assets

Intangible assets

Development
costs

Concessions,
patent rights,
licenses and
similar rights

Customer
relationships
and similar
assets

Goodwill

Prepayments

Total

Balance at 1 Jan 2011

607

3,829

2,866

13,578

20,882

Additions/disposals due to changes in the scope of

consolidation

12

314

31

15

286

million
Cost

Additions

89

Transfers

191

11

291

79

81

352

25

21,158

10

Disposals

181

170

Balance at 31 Dec 2011

513

4,082

2,939

13,599

Balance at 1 Jan 2011

297

1,122

2,107

Additions/disposals due to changes in the scope of

consolidation

16

66

456

Currency translation adjustments

73

52

132

Accumulated amortisation/impairment losses

Amortisation/impairment losses in the reporting period

Transfers
Currency translation adjustments

3,532
15

301

823

73

73

66

133

200

287

1,439

2,480

226

2,643

459

13,593

25

16,946

475

3,734

2,790

13,258

20,259

16

130

Additions

112

165

278

Transfers

Disposals
Balance at 31 Dec 2011

4,212

Carrying amounts
Balance at 31 Dec 2011
Cost
Balance at 1 Jan 2010
Additions/disposals due to changes in the scope of
consolidation

Currency translation adjustments

Disposals
Balance at 31 Dec 2010

74

149

11

21

93

192

298

104

607

3,829

2,866

13,578

223

968

1,742

10

16

69

220

314

603

20,882

Accumulated amortisation/impairment losses

Balance at 1 Jan 2010
Additions/disposals due to changes in the scope of
consolidation
Amortisation/impairment losses in the reporting period
Transfers

Currency translation adjustments

Disposals

83

297

1,122

2,107

310

2,707

759

13,572

Balance at 31 Dec 2010

2,939

52

65
92
3,532

Carrying amounts
Balance at 31 Dec 2010

17,350

152 Notes

RWE Annual Report 2011

In the reporting period, the RWE Groups total expenditures on

research and development amounted to 146 million (previous
year: 149 million). Development costs of 89 million were capitalised (previous year: 112 million).
As of the balance-sheet date, the carrying amount of intangible
assets related to exploration activities amounted to 288 million
(previous year: 374 million).
Goodwill breaks down as follows:
Goodwill
million

31 Dec
2011

31 Dec
2010

Germany

4,100

4,186

Power Generation

(404)

(404)

(3,696)

(3,782)

Netherlands/Belgium

2,654

2,665

United Kingdom

3,058

2,968

Central Eastern and South Eastern Europe

2,000

2,048

761

736

Sales/Distribution Networks

Renewables
Upstream Gas&Oil
Trading/Gas Midstream

25

25

995

944

13,593

13,572

In the year under review, goodwill decreased by 31 million. In

the previous year, goodwill increased by 130 million. Changes
in current redemption liabilities from put options resulted in an
adjustment without an effect on income of 121 million (previous year: 213 million) to the goodwill of the segment Sales/
Distribution Networks. During the year under review, this was
essentially balanced out by the addition from the acquisition of
NVV AG in the amount of 35 million.
In the third quarter of every fiscal year, an impairment test is
performed to determine if there is any need to write down
goodwill. In this test, goodwill is allocated to the cash-generating units at the segment level. The recoverable amount of the
cash-generating unit is determined, which is defined as the
higher of fair value less costs to sell or value in use. Fair value is
the best estimate of the price that an independent third party
would pay to purchase the cash-generating unit as of the bal-

ance-sheet date. Value in use reflects the present value of the

future cash flows which are expected to be generated with the
cash-generating unit.
Fair value is assessed from an external perspective and value in
use from a company-internal perspective. We determine both
variables using a business valuation model, taking into account
planned future cash flows. These cash flows, in turn, are based
on the business plan, as approved by the Executive Board and
valid at the time of the impairment test, and pertain to a
detailed planning period of up to five years. In certain justifiable cases, a longer detailed planning period is taken as a basis,
insofar as this 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.
Mid-term business plans are based on country-specific assumptions regarding the development of key economic indicators
such as gross domestic product, consumer prices, interest rate
levels and nominal wages. These estimates are, amongst others,
derived from macroeconomic and financial studies.
Our key planning assumptions for the business segments active
in Europes electricity and gas markets relate to the development of wholesale prices for electricity, crude oil, natural gas,
coal and CO2 emission allowances, retail prices for electricity
and gas, market shares and regulatory framework conditions.
The discount rates used for business valuations are determined
on the basis of market data. With regard to cash-generating
units, during the period under review they ranged from 5.5% to
8.75% after tax (previous year: 6.25% to 9.0%) and from 7.8%
to 17.4% before tax (previous year: 8.0% to 16.5%).
For the extrapolation of future cash flows going beyond the
detailed planning horizon, we assumed constant growth rates
of 0.0% to 1.0% (previous year: 0.0% to 1.0%). These figures
are derived from experience and future expectations for the
individual divisions and do not exceed the long-term average
growth rates in the markets in which the Group companies are
active. In calculating cash flow growth rates, the capital expenditures required to achieve the assumed cash flow growth are
subtracted.

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

As of the balance-sheet date, both the fair values less costs to

sell and the values in use were higher than the carrying
amounts of the cash-generating units. These surpluses react
especially sensitively to changes in the discount rate, the
growth rate and the operating result after taxes in terminal
value.
Of all the segments, United Kingdom, Netherlands/Belgium and
Trading/Gas Midstream exhibited the smallest surpluses of
recoverable amount over carrying amount.
The goodwill allocated to the segment United Kingdom
amounted to 3.1 billion (2.6 billion) as of 31 December 2011.
The impairment test showed a recoverable amount which
exceeded the carrying amount by 1.2 billion. Valuation of the
segment United Kingdom was calculated using an after-tax discount rate of 6.75% and a growth rate of 1.0%. An increase in
the after-tax discount rate by more than 1.31 percentage points
to above 8.06%, the assumption of a negative growth rate
higher than 1.76% or a decrease of more than 92 million in
the operating result after taxes in terminal value would result in

Notes 153

the recoverable amount being lower than the carrying amount

of the cash-generating unit United Kingdom.
The goodwill allocated to the segment Netherlands/Belgium
amounted to 2.7 billion. The recoverable amount exceeded the
carrying amount by 1.4 billion. Impairment would have been
necessary if the calculations had used an after-tax discount rate
increased by more than 0.78 percentage points to above
7.03%, a growth rate decreased by more than 1.38 percentage
points to below 0.38% or an operating result reduced by more
than 97 million in terminal value.
The goodwill allocated to the segment Trading/Gas Midstream
amounted to 1.0 billion. The recoverable amount exceeded the
carrying amount by 0.9 billion. Impairment would have been
necessary if the calculations had used an after-tax discount rate
increased by more than 1.95 percentage points to above
8.70%, a growth rate decreased by more than 2.88 percentage
points to below 2.88% or an operating result reduced by more
than 78 million in terminal value.

154 Notes

RWE Annual Report 2011

(11) Property, plant and equipment

Property, plant and equipment

million

Land, land
rights and
buildings
incl.
buildings on
third-party
land

Technical
plant and
machinery

Other Prepayments
equipment,
factory
and office
equipment

Plants
under
construction

Total

Cost
Balance at 1 Jan 2011

7,233

66,596

2,188

Additions/disposals due to changes in the scope of consolidation

194

4,262

28

Additions

156

1,774

177

Transfers

121

1,217

67

Currency translation adjustments

79

265

14

54

307

Disposals

110

1,626

322

44

2,102

7,127

63,434

2,079

9,301

83,989

Balance at 31 Dec 2011

2,652

5,823

84,492

43

4,441

913

3,234

6,254

1,503

191

93

2,048

Accumulated depreciation/impairment losses

Balance at 1 Jan 2011

3,678

46,934

1,603

Additions/disposals due to changes in the scope of consolidation

150

3,323

30

176

2,163

190

41

2,570

21

19

Depreciation/impairment losses in the reporting period

Transfers
Currency translation adjustments
Disposals
Write-backs
Balance at 31 Dec 2011

40

52,255
3,503

41

122

73

1,621

318

2,013

166

77

49,142

10

10

3,579

44,042

1,444

20

3,548

19,392

635

2,048

9,224

34,847

Carrying amounts
Balance at 31 Dec 2011
Cost
Balance at 1 Jan 2010

6,959

64,004

2,079

1,869

4,593

79,504

Additions/disposals due to changes in the scope of consolidation

39

729

112

60

715

Additions

285

1,908

171

681

3,198

6,243

Transfers

73

1,737

52

1,914

59

Currency translation adjustments

32

380

18

Disposals

77

704

133

7,233

66,596

2,188

3,566

45,747

1,559

20

601

Depreciation/impairment losses in the reporting period

208

2,195

162

Transfers

40

Balance at 31 Dec 2010

2,652

60

487

54

968

5,823

84,492

50,877

Accumulated depreciation/impairment losses

Balance at 1 Jan 2010
Additions/disposals due to changes in the scope of consolidation

623
35

2,600
40

Currency translation adjustments

13

204

13

230

Disposals

44

609

129

782

Write-backs
Balance at 31 Dec 2010

3,678

46,934

1,603

3,555

19,662

585

40

52,255

5,783

32,237

Carrying amounts
Balance at 31 Dec 2010

2,652

Notes 155

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

The carrying amount of property, plant, and equipment for

exploration activities was 307 million (previous year: 346 million).
Property, plant and equipment were subject to restrictions in
the amount of 175 million (previous year: 1,026 million) in
the form of land charges and chattel mortgages. Of the carry-

ing amount of property, plant and equipment, 187 million

(previous year: 136 million) was attributable to assets leased
under finance leases. These assets consist of technical plant
and equipment. Disposals of property, plant and equipment
resulted from sale or decommissioning.

(12) Investment property

Investment property
million

Investment property
million

Cost

Cost

Balance at 1 Jan 2011

401

Balance at 1 Jan 2010

Transfers

26

Transfers

34

Disposals

Disposals
Balance at 31 Dec 2011

341

Accumulated depreciation/impairment losses

Balance at 1 Jan 2011
Depreciation/impairment losses in the reporting period

Balance at 31 Dec 2010

378
40
17
401

Accumulated depreciation/impairment losses

239

196

Depreciation/impairment losses in the reporting period

10

Transfers

18

Transfers

40

Disposals

24

Disposals

Write-backs
Balance at 31 Dec 2011

Balance at 1 Jan 2010

1
205

Carrying amounts
Balance at 31 Dec 2011

Write-backs
Balance at 31 Dec 2010

239

Carrying amounts
136

Of the carrying amount of investment property, 8 million

(previous year: 0 million) is attributable to assets leased under
finance leases. As of 31 December 2011, the fair value of
investment property amounted to 226 million (previous year:
257 million). Of this, 70 million (previous year: 85 million) is

Balance at 31 Dec 2010

162

based on valuations by independent appraisers. Rental income

in the reporting period amounted to 22 million (previous year:
23 million). Direct operating expenses totalled 12 million
(previous year: 14 million).

156 Notes

RWE Annual Report 2011

(13) Investments accounted for using the equity method

The following summaries present the key items from the balance sheets and income statements of companies accounted
for using the equity method:
Investments accounted for using the equity method

31 Dec 2011

31 Dec 2010

Total

Of which:
joint ventures

Total

Of which:
joint ventures

31,786

8,493

24,436

4,524

million
Equity
Assets
Liabilities
Adjustment to RWE interest and equity method

Income from investments accounted for using the equity method

21,563

6,421

17,078

3,564

10,223

2,072

7,358

960

6,110

1,187

3,664

477

4,113

885

3,694

483

Of which:
joint ventures

Total

23,707

677

15,814

480

743

53

840

207

343

32

530

105

400

21

310

102

2011
Total

million
Revenue
Income
Adjustment to RWE interest and equity method

As of 31 December 2011, the fair value of investments

accounted for using the equity method for which quoted
market prices exist amounted to 3 million (previous year:
2million).

2010
Of which:
joint ventures

In respect of joint ventures, 7,594 million of assets (previous

year: 4,280 million) and 5,810 million of liabilities (previous
year: 1,831 million) were non-current.

(14) Other non-current financial assets

Other non-current financial assets
million

31 Dec 2011

31 Dec 2010

Non-consolidated subsidiaries

158

145

Other investments

320

356

Non-current securities

358

249

836

750

Non-current securities primarily consist of fixed-interest marketable securities and shares of listed companies. Long-term securities amounting to 250 million and 20 million (previous year:
189 million and 0 million) were deposited in a trust account
for RWE AG and its subsidiaries, in order to cover credit balances stemming from the block model for pre-retirement part-

time work, pursuant to Sec. 8a of the Pre-Retirement Part-Time

Work Act (AltTZG) and from the management of long-term
working 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.

Notes 157

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

(15) Financial receivables

Financial receivables
million
Loans to non-consolidated subsidiaries and investments

31 Dec 2011

31 Dec 2010

Non-current

Current

Non-current

Current

1,673

104

809

994

Collateral for trading activities

1,201

674

Other financial receivables

Accrued interest
Miscellaneous other financial receivables

As of the balance-sheet date, financial receivables from

associates amounted to 2,338 million (previous year:
2,195million).

115

114

255

751

233

964

1,928

2,171

1,042

2,746

Companies of the RWE Group deposited collateral for the trading activities stated above for exchange-based and over-thecounter (OTC) transactions. These are to guarantee that the
obligations from the transactions are discharged even if the
development of prices is not favourable for RWE.

(16) Other receivables and other assets

Other receivables and other assets
million
Derivatives
Surplus of plan assets over benefit obligations

31 Dec 2011

31 Dec 2010

Non-current

Current

Non-current

Current

1,556

5,799

1,696

7,222

60

56

Prepayments for items other than inventories

957

769

CO2 emission allowances

749

983

Prepaid expenses

260

178

Miscellaneous other assets

With the exception of derivatives, the financial instruments

reported under other receivables and other assets are measured at amortised cost. Derivative financial instruments are
stated at fair value.

425

1,169

461

1,332

2,041

8,934

2,213

10,484

The carrying values of exchange-traded derivatives with netting

agreements are offset.
Changes in the scope of consolidation decreased other receivables and other assets by 234 million.

158 Notes

RWE Annual Report 2011

(17) Deferred taxes

Deferred tax assets and liabilities principally stem from the fact
that measurements in the IFRS statements differ from measurements in the tax bases. 3,317 million and 2,366 million of
the gross deferred tax assets and liabilities, respectively, will be
realised within twelve months (previous year: 2,558 million
and 2,496 million).

The following is a breakdown of deferred tax assets and liabilities by item:

31 Dec 2011

Deferred taxes
million

31 Dec 2010

Assets

Liabilities

Assets

Liabilities

Non-current assets

556

3,045

412

2,856

Current assets

248

2,034

267

1,756

Exceptional tax items

207

239

Non-current liabilities
Provisions for pensions
Other non-current provisions
Current liabilities

688

18

641

24

1,798

116

2,079

17

3,069

332

2,291

740

6,359

5,752

5,690

5,632

Tax loss carryforwards

Corporate income tax (or comparable foreign income tax)
Trade tax
Gross total

312

142

6,677

5,752

5,838

5,632

Netting

4,056

4,056

3,447

3,447

Net total

2,621

1,696

2,391

2,185

The capitalised tax reduction claims from loss carryforwards

result from the expected utilisation of previously unused tax
loss carryforwards in subsequent years.
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
1,081million and 226 million, respectively (previous year:

660 million and 266 million). 722 million of these income

tax loss carryforwards apply to the next seven years.
The other loss carryforwards can essentially be used for an
unlimited period.
In the year under review, deferred tax expenses of 11 million
arising from the translation of foreign financial statements were
offset against equity (previous year: 37 million).

(18) Inventories
Inventories
million

31 Dec
2011

31 Dec
2010

1,840

2,373

Work in progress goods

35

25

Work in progress services

96

88

1,356

788

15

19

3,342

3,293

Raw materials, incl. nuclear fuel assemblies and earth excavated for lignite mining

Finished goods and goods for resale

Prepayments

Notes 159

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Inventories were not subject to any restrictions on disposal and

there were no further obligations.
The carrying amount of inventories acquired for resale purposes
was 481 million (previous year: 627 million).

the average return on fixed-interest securities was 1.3% (previous year: 2.1%). Securities in the amount of 708 million
(previous year: 812 million) were deposited with clearing
banks as collateral.
(21) Cash and cash equivalents

Changes in the scope of consolidation resulted in a decrease

of 20 million in inventories.
(19) Trade accounts receivable
As of the balance-sheet date, trade accounts receivable
from associates amounted to 350 million (previous year:
241 million).
Trade accounts receivable decreased by 609 million due to
changes in the scope of consolidation.
(20) Marketable securities
The total value of current marketable securities was 4,995 million (previous year: 3,196 million), consisting of fixed-interest
marketable securities of 4,416 million (previous year:
2,670million) with a maturity of more than three months from
the date of acquisition, and stocks and profit-participation certificates of 579 million (previous year: 526 million). Marketable securities are stated at fair value. As of 31 December 2011,

Subscribed capital

Cash and cash equivalents

million

31 Dec 2011

31 Dec 2010

Cash and demand deposits

1,661

2,317

348

159

2,009

2,476

Marketable securities and other cash

investments (maturity less than three
months from the date of acquisition)

RWE keeps demand deposits exclusively for short-term cash

positions. For cash investments, banks are selected on the basis
of various creditworthiness criteria. Examples of such criteria
include a banks rating from one of the two renowned rating
agencies, Moodys or Standard & Poors, its equity capital and
the prices for its credit default swaps (CDS). As in the previous
year, interest rates are maintained at market levels.
(22) Equity
A breakdown of equity is shown on page 130.
The subscribed capital of RWE AG is structured as follows:

31 Dec 2011
Number of shares

31 Dec 2010
Number of shares

31 Dec 2011
Carrying
amount

31 Dec 2010
Carrying
amount

in 000

in %

in 000

in %

million

million

Common shares

575,745

93.7

523,405

93.1

1,474

1,340

Preferred shares

39,000

6.3

39,000

6.9

100

100

614,745

100.0

562,405

100.0

1,574

1,440

Common and preferred shares are no-par-value bearer share

certificates. Preferred shares have no voting rights. Under certain conditions, preferred shares are entitled to payment of a
preference dividend of 0.13 per share, upon allocation of the
companys profits.
On 5 December 2011, RWE AG decided to implement a capital
increase and sale of treasury shares, as part of an overall package to strengthen the equity capital base and improve the capital structure of the Group. Both the newly issued shares and the
treasury shares sold are eligible for dividends starting from
1January 2011.

During the reporting period, the authorisation of 17 April 2008

was partially used to issue 52,340,499 new bearer common
shares from the authorised capital at a price of 26.00 per
share, issued on a cash basis, excluding shareholders subscription rights. As a result, the capital stock increased by
133,991,677.44 to 1,573,748,477.44 and the capital reserve
increased by 1,226,861,296.56 to 2,384,745,363.45. The
capital increase was completed with registration in the commercial register on 7December 2011.

160 Notes

Above and beyond this, the company also sold 28,105,327 of

its treasury shares. This amounted to 71,949,637.12 of the
capital stock (4.57% of subscribed capital, following the capital
increase). Proceeds from the capital increase amounted to
730,738,502.00.
Within the framework of the staff programme, 442,692 treasury
shares were sold to employees of RWE AG and its subsidiaries
for capital formation; this is equivalent to 1,133,291.52 of the
capital stock (0.08% of the subscribed capital). Proceeds
amounted to 16,396,747.18.
During the year under review, transaction costs of 16 million
(previous year: 12 million) were recorded as a deduction from
equity.
Pursuant to a resolution passed by the Annual General
Meeting on 17 April 2008, the Executive Board was authorised
to increase the companys capital stock, subject to the Super
visory Boards approval, by up to 287,951,360.00 until
16April2013, through the issuance of new, bearer common
shares in return for contributions in cash or in kind (authorised
capital). In certain cases, the subscription rights of shareholders can be excluded, with the approval of the Supervisory
Board. During the reporting period, this authorisation was used
to the extent of the capital increase, leaving 153,959,682.56
in authorised capital.
Pursuant to a resolution passed by the Annual General
Meeting on 22 April 2009, the Executive Board was authorised
to issue option or convertible bonds until 21 April 2014. The
total nominal value of the bonds is limited to 6,000 million.
Shareholders subscription rights may be excluded under certain conditions. The Annual General Meeting decided to establish 143,975,680 in conditional capital divided into
56,240,500 bearer common shares, in order to redeem the
bonds. Shares from the authorised capital are to be deducted
from the shares from the conditional capital, insofar as they are
both issued with an exclusion of shareholders subscription
rights.
Pursuant to a resolution passed by the Annual General Meeting
on 20 April 2011, the company was authorised until 19 October2012 to buy back any kind of the companys shares totalling up to 10% of the capital stock as of the date upon which
the resolution was passed by the Annual General Meeting ,

RWE Annual Report 2011

or if such amount is lower of the capital stock on the date of

exercising such authorisation; share buy-backs may also be carried out using put or call options. Based on the authorisation,
the Executive Board is also entitled to cancel the treasury
shares without a further resolution by the Annual General Meeting. Moreover, the Executive Board is also authorised to transfer
or sell such shares to third parties, under certain conditions and
excluding shareholders subscription rights. The Executive
Board was furthermore authorised to use the treasury shares to
discharge obligations from future employee share schemes; in
this regard, shareholders subscription rights shall be excluded.
As of 31 December 2011, RWE AG held 298,454 no-par-value
common shares in RWE AG (31 December 2010: 28,846,473),
equivalent to 764,042.24 of the share capital (0.05% of subscribed capital) . The acquisition costs of treasury shares
amounting to 24 million (31 December 2010: 2,272 million)
were deducted from the carrying amount of equity. The companys shares were acquired during the period from 21 February
to 16 May 2008, on the basis of the resolutions of the Annual
General Meeting of 18 April 2007 and 17 April 2008. These
shares can be used for all purposes of treasury shares determined by the Annual General Meeting.
In September 2010, RWE AG issued a hybrid bond with a nominal volume of 1.75 billion. The bond, which is subordinated to
all other creditor securities, is a perpetual and may be called
only by RWE AG on specific, contractually agreed call dates or
occasions. It bears an interest rate of 4.625% p.a. until the first
call date, which is in 2015. If the bond is not called as of this
date, its interest rate until the next call date, which is in 2020,
will be the sum of the then applicable five-year interbank rate
and a credit spread of 265 basis points. If it is not called as of
that date, either, it will be converted into a variable-interest
bond with an annual call right and an interest rate equalling
the 12-month EURIBOR plus 365 basis points. Interest payments may be deferred under certain conditions, especially if
the Executive and Supervisory Boards propose to the Annual
General Meeting that a dividend not be paid. Deferred interest
payments must be made up for when payment of a dividend is
proposed again. After ten years, the hybrid bond may only be
redeemed by issuing equity or equity-like financial instruments,
for example new hybrid bonds. At the first call date, which is
after five years, the hybrid bond may be redeemed without
restrictions with respect to the follow-up financing.

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Notes 161

Pursuant to IAS 32, the issued hybrid bond must be classified

as equity. Proceeds from the bond issue were reduced by the
capital procurement costs and added to equity, taking account
of taxes. Interest due to bondholders will be booked directly
against equity, after deduction of taxes.

Based on a resolution of RWE AGs Annual General Meeting

on 20 April 2011, the dividend for fiscal 2010 amounted to
3.50 per dividend-bearing common and preferred share.
The dividend payment to shareholders of RWE AG amounted
to 1,867 million.

Accumulated other comprehensive income reflects changes

in the fair values of financial instruments available for sale,
cash flow hedges and hedges of the net investment in foreign
entities, as well as changes stemming from foreign currency
translation adjustments from foreign financial statements.

Minority interest
The share ownership of third parties in Group entities is
presented in this item.

Dividend proposal
We propose to the Annual General Meeting that RWE AGs
distributable profit for fiscal 2011 be appropriated as follows:
Distribution of a dividend of 2.00 per individual dividendbearing share:
Dividend

1,228,894,090.00

Profit carryforward

892,779.53

Distributable profit

1,229,786,869.53

The dividend proposal takes into account the non-dividendbearing shares held by the company as of 31 December 2011.
The number of dividend-bearing shares may decline before the
Annual General Meeting if further treasury shares are purchased. Conversely, the number of dividend-bearing shares may
rise if treasury shares are sold prior to the Annual General Meeting. In these cases, based on an unchanged dividend per dividend-bearing share, an adjusted proposal for the appropriation
of the distributable profit will be made to the Annual General
Meeting, according to which the amount of the appropriation is
reduced by the partial amount that would be distributable for
the treasury shares additionally purchased between 1 January2012 and the date of the proposal for the appropriation of
distributable profit or is increased by the partial amount that is
distributable for the treasury shares sold between 1 January2012 and the date of the proposal for the appropriation of
distributable profit. The profit carryforward increases or
declines by these partial amounts.

Significant minority interests are mainly found in the Hungarian

energy utilities, the Czech gas distribution companies and German regional utilities.
(23) Share-based payment
In the year under review, the groupwide share-based payment
systems for executives of RWE AG and subordinate affiliates
consisted of the following: Beat 2005 and Beat 2010. The
expenses associated with these are borne by the respective
Group companies which employ the persons holding notional
stocks.

162 Notes

RWE Annual Report 2011

Beat 2005
2008 tranche

2009 tranche

Grant date

1 Jan 2008

1 Jan 2009

Number of conditionally
granted performance shares

1,668,836

3,251,625
Three years

Term

Three years

Pay-out conditions

Automatic pay-out, if following a waiting period of three years an outperformance compared to 25%
of the peer group of the Dow Jones STOXX Utilities Index has been achieved, measured in terms of their
index weighting as of the inception of the programme. Measurement of outperformance is carried out using
Total Shareholder Return, which takes into account both the development of the share price together with
reinvested dividends.

Determination of payment

1. Determination of the index weighting of the peer group companies which exhibit a lower Total Shareholder
Return than RWE at the end of the term.
2. Performance factor is calculated by squaring this percentage rate and multiplying it by 1.25.
3. Total number of performance shares which can be paid out is calculated by multiplying the performance
shares conditionally granted by the performance factor.
4. Payment corresponds to the final number of performance shares valued at the average RWE share price
during the last 20 exchange trading days prior to expiration of the programme. The payment is limited to
twice the value of the performance shares as of the grant date.

Change in corporate
control/merger

If during the waiting period there is a change in corporate control, a compensatory payment is made. This
is calculated by multiplying the price paid in the acquisition of the RWE shares by the final number of
performance shares. The latter shall be determined as per the plan conditions with regard to the time when
the bid for corporate control is submitted.
In the event of merger with another company, the compensatory payment shall be calculated on the basis
of the fair value of the performance shares at the time of the merger multiplied by the prorated number
of performance shares corresponding to the ratio between the total waiting period and the waiting period
until the merger takes place.

Form of settlement

Cash settlement

Notes 163

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Beat 2010
2010 tranche
Waiting period: 3 years

2010 tranche
Waiting period: 4 years

2011 tranche
Waiting period: 4 years

Grant date

1 Jan 2010

1 Jan 2010

1 Jan 2011

Number of conditionally
granted performance shares

826,954

1,059,467

2,621,542

Term

Three years

Five years

Five years

Pay-out conditions

Automatic pay-out, if following a

waiting period of three years (valuation date: Dec 31 of the third year)
an outperformance compared to at
least 25% of the peer group of the
Dow Jones STOXX Utilities Index has
been achieved, measured in terms of
their index weighting as of the issue
of the tranche. Measurement of outperformance is carried out using Total
Shareholder Return, which takes into
account both the development of the
share price together with reinvested
dividends.

Possible pay-out on three exercise dates (valuation dates: Dec 31 of the fourth
year, June 30 and Dec 31 of the fifth year) if as of the valuation date an
outperformance compared to at least 25% of the peer group of the Dow Jones
STOXX Utilities Index has been achieved, measured in terms of their index
weighting as of the issue of the tranche. Measurement of outperformance is
carried out using Total Shareholder Return, which takes into account both the
development of the share price together with reinvested dividends. Automatic
pay-out occurs on the third valuation date; the number of performance shares
available for pay-out can be freely chosen on the first and second valuation
date.

Determination of payment

1. Determination of the index weighting of the peer group companies which exhibit a lower Total Shareholder Return
than RWE at the valuation date.
2. The total number of performance shares which can be paid out is determined on the basis of a linear payment curve.
If the index weighting of 25% is outperformed, 7.5% of the conditionally-granted performance shares can be paid
out. Another 1.5% of the performance shares granted can be paid out for each further percentage point above and
beyond the index weighting of 25%.
3. Payment corresponds to the number of payable performance shares valued at the average RWE share price during the
last 60 exchange trading days prior to the valuation date. The payment is limited to twice the value of the performance shares as of the grant date.

Change in corporate
control/merger

If during the waiting period there is a change in corporate control, a compensatory payment is made. This is calculated by multiplying the price paid in the acquisition of the RWE shares by the final number of performance shares
which have not been used. The latter shall be determined as per the plan conditions with regard to the time when the
bid for corporate control is submitted.
In the event of merger of RWE AG with another company, the performance shares shall expire and a compensatory
payment shall be made. First, the fair value of the performance shares as of the time of merger shall be calculated.
This fair value is then multiplied by the number of performance shares granted, reduced pro-rata. The reduction factor
is calculated as the ratio of the time from the beginning of the total waiting period until the merger takes place to the
entire waiting period of the programme, multiplied by the ratio of the performance shares not yet used as of the time
of the merger to the total number of performance shares granted at the beginning of the programme.

Personal investment

As a prerequisite for participation, plan participants must demonstrably invest one sixth of the gross grant value of the
performance shares before taxes in RWE common shares and hold such investment until expiration of the waiting period
of the tranche in question.

Form of settlement

Cash settlement

The fair value of the performance shares conditionally granted

in the Beat programme amounted to 17.01 per share as of the
grant date for the 2011 tranche, 25.96 per share for the 2010
tranche (four-year waiting period), 28.80 per share for the
2010 tranche (three-year waiting period), and 11.93 per share
for the 2009 tranche. These values were calculated externally
using a stochastic, multivariate Black-Scholes standard model

via Monte Carlo simulations on the basis of one million scenarios each. In the calculations, due consideration was taken of the
maximum payment stipulated in the programmes conditions for
each conditionally granted performance share, the discount
rates for the remaining term, the volatilities and the expected
dividends of RWE AG and of peer companies.

164 Notes

RWE Annual Report 2011

In the year under review, the number of performance shares

developed as follows:
Performance Shares from Beat 2005
Outstanding at the start of the fiscal year

2008 tranche

2009 tranche

1,652,025

3,226,809

Granted
Change (granted/expired)

69,955

Paid out

1,652,025

Outstanding at the end of the fiscal year

3,156,854

Payable at the end of the fiscal year

Performance Shares from Beat 2010

Outstanding at the start of the fiscal year

2010 tranche
Waiting period: 3 years

2010 tranche
Waiting period: 4 years

815,020

1,046,028

11,523

13,194

60,924

803,497

1,032,834

2,560,618

Granted
Change (granted/expired)

2011 tranche
Waiting period: 4 years
2,621,542

Paid out
Outstanding at the end of the fiscal year
Payable at the end of the fiscal year
The remaining contractual term amounts to four years for the
2011 tranche, three years for the 2010 tranche with four-year
waiting period and one year for the 2010 tranche with three-year
waiting period. The contractual term for the 2009 tranche ended
upon completion of the year under review. No pay-out occurred
as the pay-out conditions were not fulfilled.
RWE Npower plc./RWE Supply&Trading GmbH/
RWE IT UK Ltd./RWE Npower Renewables Ltd.
Tranches
Number of options granted per tranche
Term
Waiting period

In addition to the above, there were the following share-based

payment systems with equity settlement for executives and
employees at RWE Npower plc., RWE Supply&Trading GmbH,
RWE IT UK Ltd. and RWE Npower Renewables Ltd. (Sharesave
Scheme):

Sharesave Scheme
2008 2011
9,146 501,892
Three years
Three years

Exercise price

26.20 50.24

Form of settlement

Existing shares

Notes 165

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

In the year under review, the number of outstanding options

from the Sharesave Scheme developed as follows:
Options from the Sharesave Scheme
Outstanding at the start of the fiscal year

Tranches
2008 to 2011
915,699

Granted

627,093

Exercised

13,282

Expired

316,344

Outstanding at the end of the fiscal year

1,213,166

Exercisable at the end of the fiscal year

During the period under review, income for the groupwide

share-based payment systems totalled 9 million (previous
year: 7 million). As in the previous year, the claims were settled in cash only. As of the balance-sheet date, provisions for
cash-settled share-based payment programmes amounted to
4million (previous year: 44 million). The intrinsic value of the
cash-settled share-based payment transactions payable as of
the balance-sheet date amounted to 0 million (previous year:
28 million).

142,979

(24) Provisions
31 Dec 2011

Provisions
million

Non-current

Provisions for pensions and similar obligations

3,846

Provisions for taxes

2,645

Provisions for nuclear waste management

9,896

Provisions for mining damage

Current

31 Dec 2010
Total

Non-current

3,846

3,318

Current

Total

260

2,905

3,194

407

3,601

470

10,366

9,686

324

10,010

3,318

2,683

97

2,780

2,822

98

2,920

19,070

827

19,897

19,020

829

19,849

1,000

773

1,773

901

747

1,648

Other provisions
Staff-related obligations (excluding restructuring)
Restructuring obligations

645

141

786

456

139

595

1,028

910

1,938

820

867

1,687

Uncertain obligations in the electricity business

465

90

555

451

337

788

Environmental protection obligations

136

48

184

133

49

182

Interest payment obligations

725

35

760

714

27

741

902

902

972

972

760

1,601

2,361

990

1,605

2,595

4,759

4,500

9,259

4,465

4,743

9,208

23,829

5,327

29,156

23,485

5,572

29,057

Purchase and sales obligations

Obligations to deliver CO2 emission allowances/

certificates for renewable energies
Miscellaneous other provisions

166 Notes

RWE Annual Report 2011

Provisions for pensions and similar obligations. The company

pension plan consists of defined contribution and defined benefit plans.
In the reporting period, 65 million (previous year: 50 million)
was paid into defined contribution plans. This includes payments made by RWE for a benefit plan in the Netherlands
which covers the commitments of various employers. This fund
does not provide the participating companies with information
allowing for the pro-rata allocation of commitments, plan assets
and service cost. In RWEs consolidated financial statements,
the contributions are recognised analogously to a defined contribution plan.
Calculation assumptions
in %
Discount factor
Compensation increase
Pension increase
Expected return on plan assets

During 2011, corporate tax credits of 495 million were transferred to RWE Pensionstreuhand e.V. for the external financing
of the companys pension plans, within the framework of
contractual trust arrangements. As the transferred assets are
qualified as plan assets in the sense of IAS 19, pensions for
provisions and similar obligations were netted against the
transferred funds as of 31 December 2011. Provisions declined
by a corresponding amount.
Provisions for defined benefit plans are determined using actuarial methods. The following assumptions are applied:

31 Dec 2011

31 Dec 2010

Germany

Foreign

5.25

4.80

Germany

Foreign1

5.25

5.30

2.75

4.50

2.75

4.90

1.00 or 1.75

2.90

1.00 or 1.50

3.30

5.50

4.24

5.75

5.50

1 Pertains to benefit commitments to employees of the RWE Group in the UK.

Development of plan assets

million

Fair value
2011

2010

13,833

13,139

Expected return on plan assets

767

730

Employer contributions to funded plans

716

166

Balance at 1 Jan

Employee contributions to funded plans

15

16

Benefits paid by funded plans

877

871

Actuarial gains (losses) of funded plans

250

541

153

124

Currency translation adjustments

Changes in the scope of consolidation
Balance at 31 Dec

The expected returns on plan assets are determined depending

on the specific asset categories. For equity investments, they
are based on the long-term average performance observed for
the industries and geographical markets involved, taking into
account the current composition of the equity portfolio. For
fixed-interest securities, they are derived from appropriately

12

14,355

13,833

selected trading prices and indices, in accordance with accepted

methods. The expected returns on real estate are calculated
with regard to marketing possibilities, which depend on contractual obligations and local market conditions.

Notes 167

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Provisions for pensions are broken down as follows:

Provisions for pensions and similar obligations (funded and unfunded plans)
million

31 Dec 2011

31 Dec 2010

Present value of funded benefit obligations

16,114

15,170

Fair value of plan assets

14,355

13,833

1,759

1,337

Net balance for funded plans

Capitalised surplus of plan assets over benefit obligations

60

56

Provision recognised for funded plans

1,819

1,393

Provision recognised for unfunded plans

2,027

1,925

3,846

3,318

Excluding taxes, as of 31 December 2011 cumulative actuarial

gains/losses of 7,136 million (31 December 2010:
6,254million) were offset against retained earnings.

In 2011, the actual returns on plan assets amounted to

517million (previous year: 1,271 million).

Composition of plan assets (fair value)

million

31 Dec 2011
Germany

31 Dec 2010

Foreign

Total

Germany

Foreign2

Total

Equity instruments

2,385

544

2,929

2,783

781

3,564

Interest-bearing instruments

4,248

3,538

7,786

4,537

2,856

7,393

164

193

357

166

196

362

927

947

663

1,540

918

439

1,357

Real estate
Mixed funds

927

Alternative investments

877

Other4

947

777

39

816

155

55

210

9,378

4,977

14,355

9,506

4,327

13,833

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 a UK pension fund for covering benefit commitments to employees of the RWE Group in the UK.
3 Includes dividend securities and interest-bearing instruments.
4 Includes claims from corporate tax credits transferred to RWE Pensionstreuhand e.V., reinsurance claims against insurance companies and other fund assets
of provident funds.

Composition of plan assets (targeted investment structure)

in %

31 Dec 2011

31 Dec 2010

Germany

Foreign

Equity instruments

23.4

10.9

23.4

17.5

Interest-bearing instruments

54.2

71.1

54.3

67.5

2.4

3.9

2.3

5.0

Real estate

Germany1

Foreign2

Mixed funds

10.0

Alternative investments

10.0

14.1

10.0

10.0

100.0

100.0

100.0

100.0

10.0

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 a UK pension fund for covering benefit commitments to employees of the RWE Group in the UK.
3 Includes dividend securities and interest-bearing instruments.

168 Notes

RWE Annual Report 2011

Development of pension claims

Present value

million

2011

2010

17,095

16,341

Current service cost

204

201

Interest cost

880

877

Balance at 1 Jan

Contributions by employees
Actuarial gains (losses)
Benefits paid
Past service cost

15

16

632

508

993

979

14

Currency translation adjustments

172

145

Changes in the scope of consolidation

122

21

18,141

17,095

Balance at 31 Dec

In fiscal 2011, past service costs only contained an increase in

benefit commitments in the United Kingdom. In the previous
year, these resulted from increased benefit commitments in the

United Kingdom (22 million), whereas contrasting effects were

recorded in Germany.

Expenses for pensions

million
Service cost
Interest cost
Expected return on plan assets
Amortisation of past service cost

The present value of pension claims, less the fair value of the
plan assets, equals the net amount of funded and unfunded
Net amount of funded and unfunded pension plans
million

2011

2010

204

201

880

877

767

730

14

331

355

pension plans. The following developments have been seen

over the last five years:
2011

2010

2009

2008

2007

Present value of pension claims

18,141

17,095

16,341

13,768

15,733

Fair value of plan assets

14,355

13,833

13,139

11,030

12,675

3,786

3,262

3,202

2,738

3,058

Experience adjustments
million

2011

2010

2009

2008

2007

Present value of pension claims

149

199

451

40

367

Fair value of plan assets

250

541

1,162

2,107

494

Balance

For the same period, the following experience adjustments

were made to the present values of the pension claims and the
fair values of the plan assets:

Notes 169

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

The experience adjustments can pertain to the present values

of pension claims or the fair values of plan assets. Depending
on this, they are part of actuarial gains or losses on the plan
assets or the pension claims for the year in question.
Roll-forward of provisions

Payments for defined benefit plans are expected to amount to

293 million in fiscal 2012.

Balance at
1 Jan 2011

Additions

3,318

214

3,601

322

10,010

104

Unused
amounts
released

Interest
accretion/
change in
discount
rate

Changes in
the scope
of conso-
lidation,
currency
adjustments,
transfers

Amounts
used

Balance at
31 Dec
2011

117

1,0181

821

3,846

277

495

2,905

32

272

10,366

million
Provisions for pensions
Provisions for taxes
Provisions for nuclear waste management
Provisions for mining damage

246
492

2,920

146

337

117

66

2,780

19,849

786

583

726

773

1,654

19,897

Staff-related obligations
(excluding restructuring)

1,648

821

60

39

672

1,773

Restructuring obligations

595

349

41

10

116

786

Other provisions

Purchase and sales obligations

1,687

800

343

86

383

675

1,938

Uncertain obligations in the electricity

business

788

74

175

110

30

555

Environmental protection obligations

182

22

17

184

Interest payment obligations

741

82

55

760

Obligations to deliver CO2 emission allowances/certificates for renewable energies

972

983

135

921

902

Miscellaneous other provisions

Provisions

2,595

620

302

22

237

337

2,361

9,208

3,751

1,063

147

2,775

9,259

29,057

4,537

1,646

873

764

4,429

29,156

of which: changes in the scope of

consolidation

(68)

1 Including treatment of actuarial gains and losses as per IAS 19.93A.

Provisions for nuclear waste management are almost exclusively recognised as non-current provisions, and their settlement amount is discounted to the balance-sheet date. From the
current perspective, the majority of utilisation is anticipated to
occur in the years 2020 to 2050. As in the previous year, the
discount factor was 5.0%. Volume-based increases in the provisions are measured at their present value. In the reporting
period, they amounted to 35 million (previous year: 92 million). Further additions of 69 million in provisions (previous
year: 88 million) stem from the fact that on balance current

estimates resulted in an increase in the anticipated nuclear

waste management costs, as in the previous year. Additions to
provisions for nuclear waste management primarily consist of
an interest accretion of 492 million (previous year: 472 million). 944 million in prepayments, primarily to foreign repro
cessing companies and to the German Federal Office for Radiation Protection (BfS) for the construction of final storage
facilities, were deducted from these provisions (previous year:
833 million).

170 Notes

RWE Annual Report 2011

In terms of their contractual definition, provisions for nuclear

waste management break down as follows:
Provisions for nuclear waste management
million

31 Dec
2011

31 Dec
2010

Provisions for nuclear obligations,

not yet contractually defined

7,724

7,977

Provisions for nuclear obligations,

c ontractually defined

2,642

2,033

10,366

10,010

In respect of the disposal of spent nuclear fuel assemblies, the

provisions for obligations which are not yet contractually
defined cover the estimated long-term costs of direct final storage of fuel assemblies, which is currently the only possible disposal method in Germany, as well as the costs for the disposal
of radioactive waste from reprocessing, which essentially consist of costs for transport from centralised storage facilities and
the plants intermediate storage facilities to reprocessing plants
and final storage as well as conditioning for final storage and
containers. These estimates are mainly based on studies by
internal and external experts, in particular by GNS Gesellschaft
fr Nuklear-Service mbH in Essen, Germany. With regard to the
decommissioning of nuclear power plants, the costs for the
post-operational phase and dismantling are taken into consideration, on the basis of data from external expert opinions prepared by NIS Ingenieurgesellschaft mbH, Alzenau, Germany,
which are generally accepted throughout the industry and are
updated continuously. Finally, this item also covers all of the
costs of final storage for all radioactive waste, based on data
provided by BfS.
Provisions for contractually defined nuclear obligations are
related to all nuclear obligations for the disposal of fuel assemblies and radioactive waste as well as for the decommissioning
of nuclear power plants, insofar as the value of said obligations
is specified in contracts under civil law. They include the antici-

pated residual costs of reprocessing, return (transport, containers) and intermediate storage of the resulting radioactive
waste, as well as the additional costs of the utilisation of uranium and plutonium from reprocessing activities. These costs
are based on existing contracts with foreign reprocessing companies and with GNS. Moreover, these provisions also take into
account the costs for transport and intermediate storage of
spent fuel assemblies within the framework of final direct storage. The power plants intermediate storage facilities are
licensed for an operational period of 40 years. These facilities
commenced operations between 2002 and 2006. Furthermore,
the amounts are also stated for the conditioning and intermediate storage of radioactive operational waste, which is primarily
performed by GNS.
With due consideration of the German Atomic Energy Act (AtG),
in particular to Sec. 9a of AtG, the provisions for nuclear waste
management break down as follows:
Provisions for nuclear waste management
million

31 Dec
2011

31 Dec
2010

Decommissioning of nuclear facilities

4,964

4,490

Disposal of nuclear fuel assemblies

4,658

4,831

744

689

10,366

10,010

Disposal of radioactive operational waste

Provisions for mining damage also consist almost entirely of

non-current provisions. They are reported at the settlement
amount discounted to the balance-sheet date. As in the previous year, we use a discount factor of 5.0%. In the reporting
period, additions to provisions for mining damage amounted to
146 million (previous year: 117 million). Of this, an increase
of 99 million (previous year: 67 million) was capitalised under
property, plant and equipment. The interest accretion of the
additions to provisions for mining damage amounted to
117million (previous year: 151 million).
Provisions for restructuring pertain mainly to measures for
socially acceptable payroll downsizing.

(25) Financial liabilities

Financial liabilities
million
Bonds payable1

31 Dec 2011
Non-current

Current

Non-current

Current

13,395

1,815

14,864

1,496

293

426

Commercial paper
Bank debt

31 Dec 2010

3,403
1,178

168

493

Other financial liabilities

Collateral for trading activities
Miscellaneous other liabilities

1 Including other notes payable and hybrid bonds classified as debt as per IFRS.

283

567

855

826

751

920

15,428

6,495

15,908

3,902

Notes 171

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Financial liabilities to associates totalled 197 million (previous

year: 187 million).

The outstanding bonds payable were primarily issued by RWE

AG or RWE Finance B.V.

14,698 million of the non-current financial liabilities were

interest-bearing liabilities (previous year: 15,679 million).

In October 2011, RWE AG issued a hybrid bond with a volume

of CHF250 million, which matures on 4 April 2072. The bond
may be called by the issuer for the first time on 4 April 2017.
The bond has a coupon of 5.25%.

Changes in the scope of consolidation caused financial liabilities to decline by 268 million.

The following overview shows the key data on the major bonds
payable as of 31 December 2011:
Bonds payable
Issuer

Outstanding amount

Carrying amount

Coupon in %

Maturity

RWE Finance B.V.

1,808 million

1,815 million

6.125

October 2012

RWE Finance B.V.

US$250 million

193 million

2.0

February 2013

RWE Finance B.V.

630 million

754 million

6.375

June 2013

RWE Finance B.V.

1,000 million

997 million

5.75

November 2013

RWE Finance B.V.

530 million

529 million

4.625

July 2014

RWE Finance B.V.

2,000 million

1,989 million

5.0

February 2015

RWE Finance B.V.

850 million

853 million

6.25

April 2016

RWE AG

100 million

100 million

Variable

November 2017

RWE Finance B.V.

980 million

979 million

5.125

July 2018

RWE Finance B.V.

1,000 million

992 million

6.625

January 2019

RWE Finance B.V.

570 million

685 million

6.5

April 2021

RWE Finance B.V.

1,000 million

997 million

6.5

August 2021

RWE Finance B.V.

500 million

593 million

5.5

July 2022

RWE Finance B.V.

488 million

581 million

5.625

December 2023

RWE Finance B.V.

760 million

912 million

6.25

June 2030

RWE AG

600 million

594 million

5.75

February 2033

1,000 million

1,178 million

6.125

July 2039

RWE AG

160 million

166 million

4.76

February 2040

RWE AG

CHF250 million

204 million

5.25

April 2072

99 million

Various

Various

RWE Finance B.V.

Other

Various

Bonds payable4
1
2
3
4

15,210 million

Interest payment dates: 15 May/15 Nov.

After swap into euro.
Including other notes payable.
Including other notes payable and hybrid bonds classified as debt as per IFRS.

During the reporting period, RWE placed issues on the European

capital market within the framework of the commercial paper
programme. Up to 3.4 billion was raised within the framework
of this programme in 2011 (previous year: 0.5 billion). The
interest rates on the instruments ranged between 1.3% and
2.0% (previous year: 0.4% and 1.3%).

Other financial liabilities contain finance lease liabilities. Lease

agreements principally relate to capital goods in the electricity
business.

172 Notes

RWE Annual Report 2011

Liabilities arising from finance lease agreements have the

following maturities:
Liabilities from finance
lease agreements
million
Due in the following year
Due after 1 to 5 years
Due after 5 years

Maturities of minimum lease payments

31 Dec 2011
Nominal
value

Discount

31 Dec 2010
Present
value

Nominal
value

Discount

Present
value
8

53

52

29

28

128

127

101

99

189

187

138

135

Above and beyond this, other financial liabilities include collateral for trading activities.
47 million (previous year: 47 million) of the financial liabilities are secured by mortgages, and 86 million (previous year:
107 million) by similar rights.

(26) Trade accounts payable

Accounts payable to associates amounted to 220 million (previous year: 115 million).
Exploration activities accounted for liabilities of 19 million
(previous year: 21 million).
Changes in the scope of consolidation resulted in a decline of
811 million in trade accounts payable.

(27) Other liabilities

Other liabilities
million

31 Dec 2011
Non-current

Tax liabilities

31 Dec 2010
Current

Non-current

1,065

Current
1,055

Social security liabilities

30

62

44

45

Restructuring liabilities

75

32

98

42

Derivatives

1,323

6,459

910

7,036

Deferred income

1,679

276

1,894

299

Miscellaneous other liabilities

The principal component of social security liabilities are the

amounts payable to social security institutions.

331

3,437

638

3,899

3,438

11,331

3,584

12,376

Changes in the scope of consolidation resulted in a decline of

237 million in other liabilities.

Notes 173

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Deferred income

31 Dec 2011

million
Advances and contributions in aid of construction and building connection
Government grants for non-current assets
Other

31 Dec 2010

Non-current

Current

Non-current

Current

1,492

186

1,614

160

24

11

163

88

269

137

1,679

276

1,894

299

Miscellaneous other liabilities include 1,593 million (previous

year: 1,775 million) in current redemption liabilities from put
options on minority interests.

Other information
(28) Earnings per share
Basic and diluted earnings per share are calculated by dividing
the portion of net income attributable to RWE shareholders by
the average number of shares outstanding; treasury shares are
not taken into account in this calculation. The earnings per
share are the same for both common and preferred shares.
Earnings per share
Net income for RWE AG
shareholders
Number of shares
outstanding
(weighted average)

2011

2010

million

1,806

3,308

thousands

538,971

533,559

other non-derivative financial assets at amortised cost. On the

liabilities side, non-derivative financial instruments principally
include liabilities recorded at amortised cost.
The maximum default risk corresponds to the carrying amount
of the financial assets. If default risks associated with financial
assets are identified, they are recognised through impairment.
Fair values are derived from the relevant stock market quotations or are measured using generally accepted valuation methods.

(29) Reporting on financial instruments

Financial instruments are divided into non-derivative and
derivative.

Prices on active markets (e.g. exchange prices) are drawn upon

for the measurement of commodity derivatives. If no prices are
available, for example because the market is not sufficiently liquid, the fair values are determined on the basis of generally
accepted valuation methods. In doing so, we draw on prices on
active markets as much as possible. If such are not available,
company-specific planning estimates are used in the measurement process. These estimates contain all of the market factors
which other market participants would take into account in the
course of price determination.

Non-derivative financial assets essentially include other noncurrent financial assets, accounts receivable, marketable securities and cash and cash equivalents. Financial instruments in the
category Available for sale are recognised at fair value, and

Forwards, futures, options and swaps involving commodities

are recognised at their fair values as of the balance-sheet date,
insofar as they fall under the scope of IAS 39. Exchange-traded
products are measured using the published closing prices of

Basic and diluted

earnings per common
and preferred share

3.35

6.20

Dividend per share

2.00

3.50

1 Proposal for fiscal 2011.

174 Notes

RWE Annual Report 2011

the relevant exchange. For non-exchange traded products,

measurement is based on publicly available broker quotations
or, if such quotations are not available, on generally accepted
valuation methods. The fair value of certain long-term procurement or sales contracts is determined using recognised valuation models, on the basis of internal data if no market data are
available.

fair value of non-quoted debt and equity instruments is determined on the basis of discounted expected payment flows.
Current market interest rates corresponding to the remaining
maturity are used for discounting.

Forward purchases and sales of shares of listed companies are

measured on the basis of the spot prices of the underlying
shares, adjusted for the relevant time component.
For derivative financial instruments which we use to hedge
interest risks, the future payment flows are discounted using
the current market interest rates corresponding to the remaining maturity, in order to determine the fair value of the hedging
instruments as of the balance-sheet date.

The following overview presents the main classifications of

financial instruments measured at fair value in the fair value
hierarchy prescribed by IFRS 7. In accordance with IFRS 7, the
individual levels of the fair value hierarchy are defined as follows:
Level 1: Measurement using (unadjusted) prices of identical
financial instruments formed on active markets;
Level 2: Measurement on the basis of input parameters which
are not the quoted prices from Level 1, but which can be
observed for the financial instrument either directly (i.e. as
price) or indirectly (i.e. derived from prices);
Level 3: Measurement using factors which cannot be observed
on the basis of market data.

The fair value of financial instruments reported under other

financial assets and securities is the published exchange price,
insofar as these instruments are traded on active markets. The

Fair value hierarchy

million
Other financial assets

Total
2011

Level 1

Level 2

836

83
2,117

2,878

Derivatives (assets)

7,355

Securities

4,995

Derivatives (liabilities)

7,782

Redemption liabilities from

put options

1,593

Level 3

Total
2010

Level 1

Level 2

Level 3

370

383

750

67

237

446

6,933

422

8,304

614

6,935

8,918
3,196

847

7,946

1,593

1,775

992

2,204
7,748

198
1,775

Notes 175

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Due to increasing price quotations on active markets, financial

assets with a fair value of 150 million were reclassified from
Level 2 to Level 1 in fiscal 2011.
Level 3 financial instruments:
Development in 2011

Balance at
1 Jan 2011

million

The development of the fair values of Level 3 financial instruments is presented in the following table:

Changes in the
scope of
consolidation,
currency
adjustments
and other

Changes

Recognised in
profit or loss

Other financial assets

446

57

Derivatives (assets)

614

83

68

Derivatives (liabilities)

198

78

860

1,775

182

Redemption liabilities from put

options

With the disappearance of directly or indirectly observable

input factors in the assessment of Level 2 financial instruments,
Level 3 financial instruments:
Development in 2010

Balance at
1 Jan 2010

million
Other financial assets

Changes in the
scope of
consolidation,
currency
adjustments
and other

458
271

646

1,562

213

The other change in derivatives (liabilities) of 646 million in

2010 mainly stemmed from the first-time fair value measureTotal
2011

million
Revenue

With a cash
effect

13

383

199

144

422

14

303

847
1,593

Changes

Recognised in
profit or loss

Balance at
31 Dec 2010

Not recognised
in profit or
loss (OCI)

With a cash
effect

141

522

Derivatives (assets)

Level 3 financial instruments:

Amounts recognised in profit or loss

Not recognised
in profit or loss
(OCI)

83 million in derivatives (assets) and 78 million in derivatives

(liabilities) were reclassified from Level 2 to Level 3.

Derivatives (liabilities)
Redemption liabilities from put
options

Balance at
31 Dec 2011

65

446

69

40

47

614

65

108

546

198
1,775

ment of gas supply contracts which were previously classified

as own-use contracts.
Of which:
attributable to
financial instruments
held at the
balance-sheet date

Total
2010

Of which:
attributable to
financial instruments
held at the
balance-sheet date

68

59

210

210

Cost of materials

727

727

16

13

Other operating expenses

133

60

60

Income from investments

13

805

671

134

137

176 Notes

RWE Annual Report 2011

The following impairments were recognised on financial assets

which fall under the scope of IFRS 7 and are reported under the
balance-sheet items stated below:
Impairments on financial assets
in 2011
million
Balance at 1 Jan 2011

Other non-current
financial assets

Financial
receivables

Trade accounts
receivable

Other receivables
and other assets

Total

146

278

343

773

286

Additions

17

39

229

Transfers

48

55

10

11

Currency translation
a djustments
Disposals
Balance at 31 Dec 2011

Impairments on financial assets

in 2010
million
Balance at 1 Jan 2010

1
6

23

209

164

293

401

865

238

Other non-current
financial assets

Financial
receivables

Trade accounts
receivable

Other receivables
and other assets

Total

123

344

531

1,002

Additions

18

259

282

Transfers

33

35

Currency translation
adjustments
Disposals
Balance at 31 Dec 2010

11

11

13

83

456

557

146

278

343

773

Notes 177

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

As of the cut-off date, there were unimpaired, past due

receivables falling under the scope of IFRS 7 in the following
amounts:
Receivables, past due and not impaired

million

Gross
amount as
of 31 Dec
2011

Receivables,
past due,
impaired

Financial receivables

4,392

49

Trade accounts receivable

7,869

1,075

Other receivables and other assets

Receivables, past due and not impaired

million

Receivables not impaired,

past due by:
less than
30 days

31 to 60
days

61 to 90
days

91 to 120
days

over 120
days

373

79

55

52

192

79

55

52

194

8,071

20,332

1,129

375

Gross
amount as
of 31 Dec
2010

Receivables,
past due,
impaired

Financial receivables

4,065

53

Trade accounts receivable

9,829

1,160

Other receivables and other assets

Receivables not impaired,

past due by:
less than
30 days

31 to 60
days

61 to 90
days

91 to 120
days

over 120
days

785

94

53

39

120

94

53

40

128

31 Dec
2011

31 Dec
2010

4,613

6,040

(4,613)

(6,040)

5,832

3,947

14,285

16,553

5,141

6,503

9,731

23,625

1,218

786

Financial assets and liabilities can be broken down into

categories with the following carrying amounts:
Carrying amounts by category
million
Financial assets recognised at fair value through profit or loss
of which: held for trading
Financial assets available for sale
Loans and receivables
Financial liabilities recognised at fair value through profit or loss
of which: held for trading
Financial liabilities carried at (amortised) cost

(5,141)

(6,503)

28,807

28,019

178 Notes

RWE Annual Report 2011

The carrying amounts of financial assets and liabilities within

the scope of IFRS 7 basically correspond to their fair values.
The only deviation is for bonds, commercial paper and other
financial liabilities, where the carrying amount of 21,923 mil-

lion (previous year: 19,810 million) deviates from the fair

value of 23,890 million (previous year: 21,444 million).
The following net results from financial instruments as per
IFRS7 were recognised in the income statement:

Net gain/loss on financial instruments as per IFRS 7

million

2011

2010

Financial assets and liabilities recognised at fair value through profit or loss

190

813

(190)

(813)

of which: held for trading

Financial assets available for sale
Loans and receivables
Financial liabilities carried at (amortised) cost
The net result as per IFRS 7 essentially includes interest, dividends and results from the measurement of financial instruments at fair value.
In fiscal 2011, changes of 93 million after taxes in the value
of financial assets available for sale were recognised in accumulated other comprehensive income without an effect on income
(previous year: 91 million). Above and beyond this, 4 million
in changes in the value of financial instruments available for
sale which had originally been recognised without an effect on
income were realised as income (previous year: 89 million).
As a utility enterprise with international operations, the RWE
Group is exposed to credit, liquidity and market risks in its ordinary business activity. In particular, market risks stem from
changes in commodity prices, exchange rates, interest rates
and share prices.
We limit these risks via systematic, groupwide risk management. The key instruments include hedging transactions. The
range of action, responsibilities and controls are defined in
binding internal directives.
Derivative financial instruments are used to mitigate currency,
commodity and interest rate risks from operations as well as
from financing transactions. The instruments most commonly
used are forwards and options with foreign currency, interest
rate swaps, interest rate currency swaps, and forwards, options,
futures and swaps with commodities. Additionally, derivatives
may be used for proprietary trading purposes within defined
limits.

199

292

289

286

1,551

1,741

Detailed information on the risks of the RWE Group and on the

objectives and procedures of the risk management is presented
in the chapter Development of risks and opportunities in the
review of operations.
Hedge accounting pursuant to IAS 39 is used primarily for mitigating currency risks from net investments in foreign entities
with foreign functional currencies, risks related to foreign currency items and interest rate risks from non-current liabilities,
as well as for price risks from sales and purchase transactions.
Fair value hedges are used to limit market price risks related to
fixed-interest loans and liabilities. Fixed-interest instruments are
transformed into variable-rate instruments, thereby hedging
their fair value. Instruments used are interest rate swaps and
interest rate currency swaps. In the case of fair value hedges,
both the derivative as well as the underlying hedged transaction are recorded at fair value with an effect on income. As of
the reporting date, the fair value of instruments used as fair
value hedges amounted to 90 million (previous year: 99 million).
In the year under review, losses of 17 million (previous year:
26 million) were recognised from adjustment of the carrying
amounts of the underlying transactions, while a gain of
18million (previous year: 24 million) stemming from changes
in the fair value of the hedges was recognised. Both of these
are reported in the financial result.
Cash flow hedges are primarily used to hedge against foreign
currency and price risks from future sales and purchase transactions. Hedging instruments consist of forwards and options

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

with foreign currency, and forwards, options, futures and swaps

with commodities. Changes in the fair value of the hedging
instruments insofar as they affect the effective portion are
disclosed under other comprehensive income until the underlying transaction is realised. The ineffective portion of changes in
value is recognised in profit or loss. Upon realisation of the
underlying transaction, the hedges contribution to income
from accumulated other comprehensive income is recognised in
the income statement. As of the reporting date, the recognised
fair value of instruments used as cash flow hedges amounted to
173 million (previous year: 61 million).
The future sales and purchase transactions hedged with
cash flow hedges are expected to be realised in the following
15years and recognised in profit or loss.
In the year under review, changes of 1,135 million after taxes
in the fair values of instruments used for cash flow hedges (previous year: 1,310 million) were disclosed under accumulated
other comprehensive income without an effect on income.
These changes in value reflect the effective portion of the
hedges.
An expense of 27 million was recognised with an effect on
income in relation to the ineffective portions of cash flow
hedges (previous year: 2 million).
Above and beyond this, changes of 478 million after taxes in
the value of cash flow hedges which had originally been recognised without an effect on income were realised as income (previous year: 1,152 million) during the reporting period.
In the period under review, the cost of non-financial assets was
decreased by 2 million (previous year: increase of 188 million) by changes in the value of cash flow hedges reported in
other comprehensive income and not recognised in profit or
loss.
Hedges of net investment in a foreign entity are used to
hedge the foreign currency risks of net investment in foreign
entities with foreign functional currencies. We use bonds with
various terms in the appropriate currencies and interest rate
currency swaps 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. As of

Notes 179

the reporting date, the fair value of the bonds amounted to

2,167 million (previous year: 2,103 million) and the fair value
of the swaps amounted to 159 million (previous year:
284million).
During the year under review, an expense of 3 million (previous year: 1 million) was recognised with an effect on income
in relation to the ineffective portions of hedges of net investment in foreign entities.
Market risks stem from fluctuations in prices on financial markets and commodity markets. Changes in exchange rates, interest rates and share prices can have an influence on the Groups
results. Due to the RWE Groups international profile, exchange
rate management is a key issue. Sterling and US dollar are two
important currencies for the RWE Group. Fuels are traded in
these two currencies, and RWE also does business in the UK
currency area. Group companies are required to hedge all currency risks via RWE AG. The net financial position for each currency is determined by RWE AG and hedged with external market partners if necessary.
Interest rate risks stem primarily from financial debt and the
Groups interest-bearing investments. We hedge against negative changes in value caused by unexpected interest-rate movements using non-derivative and derivative financial instruments.
Opportunities and risks from changes in the values of securities
are controlled by a professional fund management system. The
Groups financial transactions are recorded using centralised
risk management software and monitored by RWE AG. This enables the balancing of risks across the individual companies.
For commodity operations, risk management directives have
been established by the commodity management area and the
risk controlling department, which is part of the controlling
area. These regulations stipulate that derivatives may be used
to hedge price risks, optimise power plant schedules and
increase margins. Furthermore, commodity derivatives may be
traded, subject to limits defined by independent organisational
units. Compliance with limits is monitored daily.
All derivative financial instruments are recognised as assets or
liabilities and are measured at fair value. When interpreting
their positive and negative fair values, it should be taken into
account that, with the exception of proprietary trading in com-

180 Notes

modities, these financial instruments are generally matched

with underlying transactions that carry offsetting risks.
Maturities of derivatives related to interest rates, currencies,
equities, indices and commodities for the purpose of hedging
are based on the maturities of the underlying transactions and
are thus primarily short term and medium term in nature.
Hedges of the foreign currency risks of foreign investments
have maturities of up to 30 years.
Risks stemming from fluctuations in commodity prices and
financial market risks (foreign currency risks, interest rate risks,
securities risks) are monitored and managed by RWE using indicators such as Value at Risk (VaR), amongst other things. In
addition, for the management of interest rate risk, a Cash Flow
at Risk (CFaR) is determined.
Using the VaR method, we determine and monitor the maximum expected loss arising from changes in market prices with
a specific level of probability during specific periods. Historical
price volatility is taken as a basis in the calculations. With the
exception of the CFaR data, all VaR figures are based on a confidence interval of 95% and a holding period of one day. For
CFaR, a confidence interval of 95% and a holding period of one
year is taken as a basis.
In respect of interest rate risks, RWE distinguishes between two
risk categories: on the one hand, increases in interest rates can
result in declines in the prices of securities from RWEs holdings. This pertains primarily to fixed-rate instruments. On the
other hand, financing costs also increase along with the level of
interest rates. A VaR is determined to quantify securities price
risk. As of 31 December 2011, the VaR for securities price risk
amounted to 7.2 million (previous year: 7.1 million). The sensitivity of interest expenses to increases in market interest rates
is measured with CFaR. As of 31 December 2011 this amounted
to 13.3 million (previous year: 4.9 million).
The companies of the RWE Group are required to hedge their
foreign currency risks via RWE AG. Only RWE AG itself may
maintain open foreign currency positions, subject to predefined
limits. As of 31 December 2011, the VaR for these foreign currency positions was less than 1 million (previous year: less
than 1 million). This corresponds to the figure used internally,
which also includes the underlying transactions for cash flow
hedges.

RWE Annual Report 2011

As of 31 December 2011, the VaR for risks related to the RWE

share portfolio amounted to 13.1 million (previous year:
7.7million).
As of 31 December 2011, VaR for the commodity positions of
the trading business of RWE Supply&Trading amounted to
6.1million (previous year: 10.0 million). This corresponds to
the figure actually used for management purposes.
Additionally, stress tests are continuously carried out in relation
to the trading operations of RWE Supply&Trading to model the
impact of commodity price changes on the liquidity and earnings conditions and take risk-mitigating measures if necessary.
In these stress tests, market price curves are modified, and the
commodity position is revalued on this basis. Historical scenarios of extreme prices and realistic, fictitious price scenarios are
modelled. Above and beyond this, possible extreme scenarios
for the major trading desks are assessed on a monthly basis. In
the event that the stress tests exceed internal thresholds, these
scenarios are then analysed in detail in relation to their impact
and probability, and if necessary risk-mitigating measures
are considered.
If market liquidity is available, commodity risks of the Groups
power generation companies are transferred in accordance
with Group guidelines at market prices to the segment Trading/Gas Midstream, where they are hedged. In accordance with
the approach for long-term investments for example, it is not
possible to manage commodity risks from long-term positions
or positions which cannot be hedged due to their size and the
prevailing market liquidity using the VaR concept. As a result,
these positions are not included in the VaR figures. Above and
beyond open production positions which have not yet been
transferred, Group companies are not allowed to maintain significant risk positions, according to Group guidelines.
Credit risks. In financial and trading operations, we primarily
have credit relationships with banks and other trading partners
with good creditworthiness. The resulting counterparty risks
are reviewed upon conclusion of the contract and constantly
monitored. We also limit such risks by defining limits for trading
with contractual partners and, if necessary, by requiring additional collateral, such as cash collateral. Credit risks in trading
and financial operations are monitored on a daily basis.

Notes 181

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Liquidity risks. As a rule, RWE Group companies centrally refinance with RWE AG. In this regard, there is a risk that liquidity
reserves will prove to be insufficient to meet financial obligations in a timely manner. In 2012, capital market debt with a
nominal volume of approximately 1.8 billion (previous year:
1.5 billion) and bank debt of 0.2 billion (previous year:
0.4billion) are due. Additionally, short-term debt must also
be repaid.

We are exposed to credit risks in our retail business, because it

is possible that customers will fail to meet their financial obligations. We identify such risks in regular analyses of the creditworthiness of our major customers and take appropriate countermeasures, if necessary.
We also employ credit insurance, financial guarantees, bank
guarantees and other forms of security to protect against credit
risks in our financial and trading activities, and our retail business.

As of 31 December 2011, holdings of cash and cash equivalents

and current marketable securities amounted to 7,004million
(previous year: 5,672 million). Additionally, as of the balancesheet date, RWE AG had a fully committed, unused syndicated
credit line of 4 billion (previous year: 4billion) at its disposal.
As of the balance-sheet date, the US$5 billion commercial
paper programme (previous year: US$5billion) had been used
to a considerable degree of 3.4billion (previous year: 0.5 billion). Above and beyond this, we can finance ourselves using
our 30 billion debt issuance programme; as of the balancesheet date, outstanding bonds from this programme amounted
to 15.0 billion (previous year: 16.3 billion). Accordingly,
liquidity risk is low.

The maximum balance-sheet default risk is expressed by the

carrying value of the receivables stated in the balance sheet.
The default risks for derivatives correspond to their positive fair
values. Risks can also stem from financial guarantees and loan
commitments for external creditors. As of 31 December 2011,
these obligations amounted to 768 million (previous year:
709 million). As of 31 December 2011, default risks were balanced against credit collateral, financial guarantees, bank guarantees and other collaterals amounting to 1.8 billion (previous
year: 2.7 billion). There were no material defaults in 2011 or
the previous year.

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
million
Bonds payable1

Redemption payments

Interest payments

Carrying
amount 31
Dec 2011

2012

2013
to 2016

From
2017

2012

2013
to 2016

From
2017

5,362

8,095

943

2,792

4,358

30

109

115

15,210

1,808

Commercial paper

3,403

3,413

Bank debt

1,346

172

197

976

187

53

128

Liabilities arising from finance lease

agreements
Other financial liabilities

1,494

817

220

486

31

124

80

Derivative financial liabilities

7,782

6,328

906

558

40

309

503

65

68

283

283

Redemption liabilities from put options

Collateral for trading activities

1,593

1,593

Miscellaneous other financial liabilities

9,238

9,112

1 Including other notes payable and hybrid bonds classified as debt as per IFRS.

182 Notes

RWE Annual Report 2011

Redemption and interest payments on

financial liabilities
million
Bonds payable1

Redemption payments

Interest payments

Carrying
amount 31
Dec 2010

2011

2012
to 2015

From
2016

2011

2012
to 2015

From
2016

6,263

8,590

967

3,148

4,804

24

16,360

1,561

Commercial paper

493

493

Bank debt

719

432

170

117

Liabilities arising from finance lease

agreements

135

29

101

Other financial liabilities

1,536

941

191

445

28

102

81

Derivative financial liabilities

7,946

7,013

779

40

35

88

245

61

73

Collateral for trading activities

567

567

Redemption liabilities from put options

1,775

1,775

Miscellaneous other financial liabilities

10,447

10,390

1 Including other notes payable and hybrid bonds classified as debt as per IFRS.

Above and beyond this, as of 31 December 2011, there were

financial guarantees in the amount of 359 million (previous
year: 524 million) for external creditors, which are to be allocated to the first year of repayment. Additionally, Group companies have provided loan commitments to third-party companies
amounting to 409 million. Of this amount, 407 million is callable in 2012 and 2 million in the years 2013 to 2016.
(30) Contingent liabilities and financial commitments
As of 31 December 2011, the Group had 3,310 million in
capital commitments (previous year: 5,609 million).
Commitments from operating leases refer largely to long-term
rental arrangements for power generation and supply plants as
well as rent and lease contracts for storage and administration
buildings. Minimum lease payments have the following maturity
structure:
Operating leases
million

Nominal value
31 Dec 2011

31 Dec 2010

Due within 1 year

141

145

Due within 1 to 5 years

376

398

Due after 5 years

406

389

923

932

Capital contributions to joint ventures amounted to 1.2 billion

(previous year: 1.3 billion).

Long-term contractual purchase commitments exist for supplies

of fuels, including natural gas and hard coal in particular. Payment obligations stemming from the major purchase contracts
amounted to 89.5 billion as of 31 December 2011 (previous
year: 90.8 billion), of which 8.0 billion was due within one
year (previous year: 6.7 billion).
Gas purchases by the RWE Group are mostly based on longterm take-or-pay contracts. The conditions in these long-term
contracts, which have terms up to 2035, are renegotiated by
the contractual partners at certain intervals, which may result
in changes in the reported payment obligations. Calculation of
the payment obligations resulting from the purchase contracts
is based on parameters from the internal planning.
Furthermore, RWE has long-term financial commitments for purchases of electricity. As of 31 December 2011, the minimum
payment obligations stemming from the major purchase contracts totalled 18.3 billion (previous year: 14.6 billion), of
which 1.1 billion was due within one year (previous year:
0.9billion). Above and beyond this, there are also long-term
purchase and service contracts for uranium, conversion, enrichment and fabrication.
We bear legal and contractual liability from our membership in
various associations which exist in connection with power plant
projects, profit- and loss-pooling agreements and for the provision of liability cover for nuclear risks, amongst others.

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

On the basis of a mutual benefit agreement, which was

extended for an additional ten years in 2011, RWE AG and
other parent companies of German nuclear power plant operators undertook to provide approximately 2,244 million in
funding to liable nuclear power plant operators to ensure that
they are able to meet their payment obligations in the event of
nuclear damages. RWE AG has a 25.851% contractual share in
the liability, plus 5% for damage settlement costs.
RWE AGs payment commitments stemming from the agreement between the power utilities and the German Federal Government ceased to exist, due to rescission of the lifetime extensions for the nuclear power plants.
RWE AG and its subsidiaries are involved in regulatory and antitrust proceedings, litigation and arbitration proceedings related
to their operations. However, we do not expect any material
negative repercussions from these proceedings on the RWE
Groups economic or financial position. Additionally, companies
belonging to the RWE Group are directly involved in various
administrative and regulatory proceedings (including approval
procedures) or are directly affected by their results.
Outside shareholders initiated several legal proceedings to
examine the appropriateness of the conversion ratios and the
amount of cash paid in compensation in connection with company restructurings pursuant to German company law. We are
convinced that the conversion ratios and cash compensation
calculated on the basis of expert opinions and verified by auditors are adequate. If a different legally enforceable conclusion
is reached, all affected shareholders will be compensated, even
if they are not involved in the conciliation proceedings.
At end-September 2011, the EU Commission conducted reviews
of gas wholesale trading throughout Europe, including at RWE.
The main focus of these investigations was the suspicion that
the Russian gas producer Gazprom had abused its market
power and was concluding anti-competitive agreements with its
customers. It is unclear whether RWE continues to be investigated. These investigations may last for several years.

Notes 183

(31) Segment reporting

Within the RWE Group segments are defined both in accordance with functional and geographical criteria.
The segment Power Generation essentially consists of the
power generation business and lignite production in Germany.
For the most part, the segment Sales/Distribution Networks
encompasses sales and distribution networks in Germany.
The segment Netherlands/Belgium comprises the Groups
electricity and gas business in this region.
The segment United Kingdom consists of almost all of the
electricity and gas business in this region.
Central Eastern and South Eastern European power generation
and the supply and the distribution activities in this region are
included in the segment Central Eastern and South Eastern
Europe.
Activities for the generation of electricity and heat from renewable energy sources are bundled in RWE Innogy and presented
in the segment Renewables.
The segment Upstream Gas&Oil covers all of the Groups gas
and oil production activities.
The segment Trading/Gas Midstream covers energy trading
and the commercial optimisation of non-regulated gas activities. The latter aspect comprises procurement, transport and
storage contracts in Germany, the UK and the Czech Republic,
and the liquefied natural gas (LNG) business. This segment is
also responsible for key account business with major German
and Dutch industrial and commercial customers, as well as the
trading activities of the Essent Group.
Other, consolidation covers consolidation effects, the Group
Centre and the activities of other Group areas which are not
presented separately. Such activities consist primarily of the
cross-segment services provided by RWE Service GmbH, RWE IT
GmbH, and RWE Consulting GmbH, as well as German transmission grid activities in the electricity and gas business, until such
are sold.

184 Notes

Segment
reporting
Divisions 2011

RWE Annual Report 2011

Germany
Power
Generation

Sales/
Distri
bution
Networks

1,166

20,354

million
External revenue
(incl. natural gas
tax/electricity
tax)
Intra-group
revenue
Total revenue
Operating result
Operating
income from
investments

Netherlands/
Belgium

United
Kingdom

Central
Eastern
and South
Eastern
Europe

Renew
ables

Upstream
Gas & Oil

Trading/
Gas Midstream

5,818

7,696

4,990

443

1,766

Other, consolidation
Operating
companies

Other

5,750

3,564

139

RWE
Group

51,686

9,064

3,846

53

17

500

282

176

21,742

1,633

37,313

10,230

24,200

5,871

7,713

5,490

725

1,942

27,492

5,197

37,174

51,686

2,700

1,505

245

357

1,109

181

558

800

189

230

5,814

124

450

25

18

61

47

49

40

600

Operating
income from
investments
accounted for
using the equity
method

50

361

22

18

63

41

49

461

Operating
depreciation and
amortisation

552

662

217

249

255

157

365

16

107

2,646

Total impairment
losses

56

44

276

71

70

158

12

690

EBITDA

3,252

2,167

462

606

1,364

338

923

784

255

123

8,460

Cash flows
from operating
activities

720

1,473

452

19

5,510

178

4,113

77

6,353

2,793

989

312

344

1,213

141

Carrying amount
of investments
accounted for
using the equity
method

171

2,404

312

195

357

496

Capital expenditure on
intangible assets,
property, plant
and equipment
and investment
property

1,168

1,206

971

416

852

825

Regions 2011

701

EU

20

66

117

RWE Group

UK

Other EU

Rest of
Europe

Other

Germany

External revenue1,2

26,168

8,358

13,250

1,038

339

49,153

Intangible assets, property, plant and

equipment and investment property

25,164

9,241

15,624

967

933

51,929

million

1 Excluding natural gas tax/electricity tax.

2 Broken down by the region in which the service was provided.

Notes 185

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Segment
reporting
Divisions 2010

Germany
Power
Generation

Sales/
Distri
bution
Networks

1,072

18,456

million
External revenue
(incl. natural gas
tax/electricity
tax)

Netherlands/
Belgium

United
Kingdom

Central
Eastern
and South
Eastern
Europe

Renew
ables

Upstream
Gas & Oil

Trading/
Gas Midstream

6,510

7,759

5,297

366

1,353

Other, consolidation
Operating
companies

Other

7,517

4,936

54

RWE
Group

53,320

Intra-group
revenue

10,378

4,426

551

11

474

203

134

21,466

1,790

39,433

Total revenue

11,450

22,882

7,061

7,770

5,771

569

1,487

28,983

6,726

39,379

53,320

305

21

178

264

7,681

31

345

Operating result

4,000

1,575

391

272

1,173

72

Operating
income from
investments

47

373

23

20

60

10

119

Operating
income from
investments
accounted for
using the equity
method

28

294

22

20

59

118

Operating
depreciation and
amortisation

510

643

269

232

267

139

314

14

94

Total impairment
losses

21

67

11

296

119

53

EBITDA

4,510

2,218

660

504

1,440

211

619

Cash flows
from operating
activities

489

1,431

3,164

1,475

308

679

1,157

128

Carrying amount
of investments
accounted for
using the equity
method

149

2,383

210

31

377

474

Capital expenditure on
intangible assets,
property, plant
and equipment
and investment
property

1,180

1,230

1,144

876

430

614

Regions 2010

274

93

2,575

574

272

171

10,256

470

5,500

32

3,694

79

6,379

102

507

EU

315

Rest of
Europe

Other

RWE Group

Germany

UK

Other EU

External revenue1, 2

27,283

8,332

14,190

683

234

50,722

Intangible assets, property, plant and

equipment and investment property

24,841

8,416

15,052

929

511

49,749

million

1 Excluding natural gas tax/electricity tax.

2 Broken down by the region in which the service was provided.

186 Notes

RWE Annual Report 2011

Products

RWE Group
2011

2010

49,153

50,722

of which: electricity

(32,310)

(33,480)

of which: gas

(12,151)

(13,216)

(1,641)

(1,049)

million
External revenue1

of which: crude oil

1 Excluding natural gas tax/electricity tax.

Notes on segment data. We report revenue between the

segments as RWE intra-group revenue. Internal supply of goods
and services is settled at arms length conditions. The operating
result is used within the Group for control purposes. It is derived
Reconciliation of income items
million
EBITDA
- Operating depreciation and amortisation
Operating result

from the value management concept (cf. page 64 et seq.). The

following table presents the reconciliation of EBITDA to the
operating result and to income from continuing operations
before tax:
2011

2010

8,460

10,256

2,646

2,575

5,814

7,681

+ Non-operating result

1,157

767

+ Financial result

1,633

1,936

Income before tax

3,024

4,978

Income and expenses that are unusual from an economic perspective, or stem from exceptional events, prejudice the assessment of operating activities. They are reclassified to the nonoperating result. Amongst other things, these can include sale
proceeds from the disposal of investments or non-current
assets not required for operations, impairment of the goodwill
of fully consolidated companies, effects of the fair valuation of
certain commodity derivatives and restructuring expenses.
More detailed information is presented on page 66 of the
review of operations.
RWE did not generate more than 10% of sales revenues with
any single customer in the year under review and the previous
year.
(32) Notes to the cash flow statement
The cash flow statement classifies cash flows according to operating, investing and financing activities. Cash and cash equivalents in the cash flow statement correspond to the amount

stated in the balance sheet. Cash and cash equivalents consist

of cash on hand, demand deposits and fixed-interest marketable securities with a maturity of three months or less from the
date of acquisition.
Among other things, cash flows from operating activities
include:
cash flows from interest income of 429 million (previous
year: 460 million) and cash flows used for interest expenses
of 1,061 million (previous year: 1,257 million)
920 million (previous year: 1,723 million) in taxes on
income paid (less income tax refunds)
income from investments, corrected for items without an
effect on cash flows, in particular from accounting using the
equity method, amounted to 461 million (previous year:
428 million)
Flows of funds from the acquisition and sale of consolidated
companies are included in cash flows from investing activities.
Effects of foreign exchange rate changes are stated separately.

Notes 187

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Cash flows from financing activities include 1,867 million

(previous year: 1,867 million) which was distributed to RWE
shareholders, 353 million (previous year: 331 million) which
was distributed to minority shareholders and 81 million
(previous year: 0 million) which was distributed to hybrid
capital investors.
Changes in the scope of consolidation (without consideration
of Assets held for sale) decreased cash and cash equivalents
by a net amount of 258 million (previous year: decrease of
2million). Offsetting additions of 172 million (previous year:
5million) against capital expenditures on financial assets
and disposals of 437 million (previous year: 7 million) against
proceeds from divestitures results in a balance of 7 million
(previous year: 0 million), which is attributed to companies
consolidated for the first time.
Exploration activities reduced cash flows from operating activities by 84 million (previous year: 162 million) and cash flows
from investing activities by 106 million (previous year:
170million).
There are no restrictions on the disposal of cash and cash
equivalents.
(33) Information on concessions
In the fields of electricity, gas and water supply, there are a
number of easement agreements and concession contracts
between RWE Group companies and governmental authorities
in the areas supplied by RWE.
Easement agreements are used in the electricity and gas business to regulate the use of public rights of way for laying and
operating lines for public energy supply. These agreements are
generally limited to a term of 20 years. After expiry, there is a
legal obligation to transfer ownership of the local distribution
facilities to the new operator, for appropriate compensation.
Water concession agreements contain provisions for the right
and obligation to provide water and wastewater services, operate the associated infrastructure, such as water utility plants, as
well as to implement capital expenditure. Concessions in the
water business generally have terms of up to 25 years.
(34) Related party disclosures
Within the framework of their ordinary business activities,
RWEAG and its subsidiaries have business relationships with
numerous companies. These include associated companies

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.
Business transactions were concluded with major associates,
resulting in the following items in RWEs consolidated financial
statements:
Key items from transactions
with associates
million

2011

2010

Income

1,470

907

Expenses
Receivables
Liabilities

759

278

2,048

1,004

176

12

The receivables mainly consist of interest-bearing loans, whilst

the liabilities stem exclusively from supply and service transactions with related companies. All transactions were completed
at arms length conditions, which on principle do not differ
from the financing conditions and conditions for supply and
services with other enterprises. 593 million of the receivables
(previous year: 414 million) and 171 million of the liabilities
(previous year: 6 million) fall due within one year. In respect of
the receivables, there was collateral amounting to 1 million
(previous year: 5 million). Other obligations from executory
contracts amounted to 6,206 million (previous year:
4,073million).
Companies in which Dr. Jrgen Gromann, CEO of RWE AG,
is a partner are classified as related parties of the RWE Group.
These are corporate groups of Georgsmarienhtte Holding
GmbH and RGM Holding GmbH. RWE Group companies provided services and deliveries amounting to 12.1million to
these companies (previous year: 9.9 million), and received
from them services and deliveries amounting to 2.4million
(previous year: 2.4 million). As of 31 December 2011, there
were receivables of 0.4 million (previous year: 0.8 million)
and liabilities of 0.9 million (previous year: 0.5million). Furthermore, there were obligations from executory contracts
totalling 0.5 million (previous year: 6.2 million). All transactions are completed at arms length prices and on principle the
business relations do not differ from those maintained with
other companies.

188 Notes

RWE Annual Report 2011

Above and beyond this, the RWE Group did not execute any
material transactions with related companies or persons.
The compensation model and compensation of the Executive
and Supervisory Boards is presented in the compensation
report, which is included in the review of operations.
In total, the compensation of the Executive Board amounted
to 18,303,000 (previous year: 20,358,000), plus pension
service costs of 725,000 (previous year: 776,000). The Exe
cutive Board received short-term compensation components
amounting to 15,303,000 for fiscal 2011 (previous year:
16,608,000). In addition to this, long-term compensation
components of the Beat programme (2011 tranche) in the
amount of 3,000,000 were allocated (3,750,000 from the
2010 Beat tranche in the previous year).
The Supervisory Board received total compensation of
2,472,000 (previous year: 3,434,000) in fiscal 2011. Super
visory Board members also received 192,000 in compensation
from subsidiaries for the exercise of mandates (previous year:
243,000). The employee representatives on the Supervisory
Board have labour contracts with the respective Group companies. Remuneration occurs in accordance with the relevant
contractual conditions.

Auditors fees

During the period under review, no loans or advances were

granted to members of the Executive or Supervisory Boards. An
advance for travel expenses was granted to one employee representative on the Supervisory Board, and a further employee
representative has outstanding loans from the period before his
membership of the Board.
Former members of the Executive Board and their surviving
dependents received 11,832,000 (previous year:
14,717,000), of which 1,940,000 came from subsidiaries
(previous year: 1,861,000). Of this, 375,000 was related to
long-term incentive remuneration components (previous year:
1,842,000). As of the balance-sheet date, 128,688,000 (previous year: 129,692,000) had been accrued for defined benefit obligations to former members of the Executive Board and
their surviving dependents. Of this, 19,473,000 was set aside
at subsidiaries (previous year: 19,369,000).
Information on the members of the Executive and Supervisory
Boards is presented on pages 191 et seqq. of the notes.
(35) Auditors fees
RWE recognised the following fees as expenses for the services
rendered by the auditors of the consolidated financial statements, PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprfungsgesellschaft (PwC) and companies belonging to PwCs
international network:
2011
Total

million
Audit services
Other assurance services

2010
Of which:
Germany

Total

Of which:
Germany

18.3

(9.7)

18.0

(9.1)

7.9

(7.5)

8.5

(8.3)

Tax services

0.5

(0.2)

0.3

(0.2)

Other services

0.8

(0.4)

0.6

(0.5)

27.5

(17.8)

27.4

(18.1)

Notes 189

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

The fees for audit services primarily contain the fees for the
audit of the consolidated financial statements and for the audit
of the financial statements of RWE AG and its subsidiaries.
Other assurance services include fees for the review of interim
reports, review of the internal controlling system, in particular
the IT systems and due diligence audits, as well as expenses
related to statutory or court ordered requirements. In particular, the fees for tax services include compensation for consultation in the preparation of tax returns and review of resolutions
of the tax authorities as well as other national and international
tax-related matters.
Amprion GmbH recognised fees amounting to 0.1 million
(previous year: 0.1 million) in relation to services rendered by
the auditor BDO Deutsche Warentreuhand AG in fiscal 2011
until the time of its sale.
(36) Application of Sec. 264, Para. 3 and Sec. 264b of the
German Commercial Code
In fiscal 2011, the following German subsidiaries made partial
use of the exemption clause included in Sec. 264, Para. 3
and Sec. 264b of the German Commercial Code (HGB):
BGE Beteiligungs-Gesellschaft fr Energieunternehmen mbH,
Essen
eprimo GmbH, Neu-Isenburg
GBV Dreizehnte Gesellschaft fr Beteiligungsverwaltung
mbH & Co. KG, Gundremmingen
GBV Fnfte Gesellschaft fr Beteiligungsverwaltung mbH,
Essen
GBV Siebte Gesellschaft fr Beteiligungsverwaltung mbH,
Essen
OIE Aktiengesellschaft, Idar-Oberstein
Rheinische Baustoffwerke GmbH, Bergheim
Rhein-Ruhr Verteilnetz GmbH, Wesel
rhenag Beteiligungs GmbH, Cologne

RWE Aqua GmbH, Berlin

RWE Aqua Holdings GmbH, Essen
RWE Beteiligungsgesellschaft mbH, Essen
RWE Beteiligungsverwaltung Ausland GmbH, Essen
RWE Consulting GmbH, Essen
RWE Dea AG, Hamburg
RWE Dea North Africa/Middle East GmbH, Hamburg
RWE Dea Suez GmbH, Hamburg
RWE Deutschland Aktiengesellschaft, Essen
RWE Effizienz GmbH, Dortmund
RWE Energiedienstleistungen GmbH, Dortmund
RWE FiberNet GmbH, Essen
RWE Gasspeicher GmbH, Dortmund
RWE Innogy Brise Windparkbetriebsgesellschaft mbH,
Hannover
RWE Innogy Cogen GmbH, Dortmund
RWE Innogy GmbH, Essen
RWE Innogy Nordost Windparkbetriebsgesellschaft mbH,
Marienflie
RWE Innogy Windpower Hannover GmbH, Hanover
RWE IT GmbH, Essen
RWE Kundenservice GmbH, Bochum
RWE Metering GmbH, Essen
RWE Offshore Logistics Company GmbH, Hamburg
RWE Power Aktiengesellschaft, Cologne and Essen
RWE Rheinhessen Beteiligungs GmbH, Essen
RWE Rhein-Ruhr Netzservice GmbH, Siegen
RWE RWN Beteiligungsgesellschaft Mitte mbH, Essen
RWE Service GmbH, Dortmund
RWE Supply&Trading GmbH, Essen
RWE Technology GmbH, Essen
RWE Vertrieb Aktiengesellschaft, Dortmund
RWE Westfalen-Weser-Ems Netzservice GmbH, Dortmund
Westfalen-Weser-Ems Verteilnetz GmbH, Recklinghausen

(37) Events after the balance-sheet date

Information on events after the balance-sheet date is presented
in the review of operations.

190 Notes

RWE Annual Report 2011

(38) Declaration according to Sec. 161 of the German Stock

Corporation Act
The declarations on the German Corporate Governance Code
prescribed by Sec. 161 of the German Stock Corporation Act
(AktG) have been submitted for RWE AG and its publicly traded
German subsidiaries and have been made accessible to the
shareholders on the Internet pages of RWE AG and its publicly
traded German subsidiaries.
Essen, 17 February 2012
The Executive Board

Gromann

Fitting

Terium

Birnbaum

Pohlig

Schmitz

Notes 191

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

4.7 BOARDS (Part of the notes)

As of 17 February 2012

Supervisory Board
Dr. Manfred Schneider
Leverkusen
Chairman
Year of birth: 1938
Member since: 10 December 1992
Other appointments:
Bayer AG (Chairman)
Linde AG (Chairman)
Frank Bsirske1
Berlin
Deputy Chairman
Chairman of [Link] Vereinte Dienstleistungsgewerkschaft
Year of birth: 1952
Member since: 9 January 2001
Other appointments:
Deutsche Lufthansa AG
Deutsche Postbank AG
IBM Central Holding GmbH

Carl-Ludwig von Boehm-Bezing

Bad Soden
Former member of the Board of Management of
Deutsche Bank AG
Year of birth: 1940
Member since: 11 December 1997
Heinz Bchel1
Trier
Chairman of the General Works Council of RWE Deutschland AG
Year of birth: 1956
Member since: 13 April 2006
Dieter Faust1
Eschweiler
Chairman of the Group Works Council of RWE Power AG
Year of birth: 1958
Member since: 1 August 2005
Other appointments:
RWE Power AG

-- KfW Bankengruppe
Dr. Paul Achleitner
Munich
Member of the Board of Management of Allianz SE
Year of birth: 1956
Member since: 16 March 2000

Roger Graef
Bollendorf
Managing Director of Verband der kommunalen
RWE-Aktionre GmbH
Year of birth: 1943
Member since: 20 April 2011

Other appointments:
Allianz Global Investors AG
Bayer AG
Daimler AG
-- Allianz Investment Management SE (Chairman)

Andreas Henrich1, 2
Mlheim an der Ruhr
Head of HR Management at RWE Deutschland AG
Year of birth: 1956
until 20 April 2011

Werner Bischoff1
Monheim am Rhein
Former member of the Main Executive Board of IG Bergbau,
Chemie, Energie
Year of birth: 1947
Member since: 13 April 2006

Other appointments:
ELE Emscher Lippe Energie GmbH
RWE Deutschland AG

Other appointments:
Continental AG
Evonik Industries AG
RWE Dea AG
RWE Power AG
-- THS TreuHandStelle fr Bergmannswohnsttten im
rheinisch-westflischen Steinkohlenbezirk GmbH (Chairman)

Member of other mandatory supervisory boards.

- Member of comparable domestic and foreign supervisory bodies of

commercial enterprises.

Manfred Holz1
Grevenbroich
Deputy Chairman of the General Works Council of
RWEPowerAG
Year of birth: 1954
Member since: 20 April 2011

1 Employee representative.
2 Information valid as of the date of retirement from the Supervisory Board.

192 Notes

RWE Annual Report 2011

Frithjof Khn
Sankt Augustin
Chief Administrative Officer, Rhein Sieg Rural District
Year of birth: 1943
Member since: 1 February 2010

Dagmar Mhlenfeld
Mlheim an der Ruhr
Mayor of the City of Mlheim an der Ruhr
Year of birth: 1951
Member since: 4 January 2005

Other appointments:
RW Holding AG (Chairman)
-- Elektrische Bahnen der Stadt Bonn und des
Rhein-Sieg-Kreises oHG
-- Energie- und Wasserversorgung Bonn/Rhein-Sieg GmbH

Other appointments:
RW Holding AG
-- Beteiligungsholding Mlheim an der Ruhr GmbH
-- Flughafen Essen/Mlheim GmbH (Chairwoman)
-- medl GmbH (Chairwoman)
-- Mlheim & Business GmbH (Chairwoman)

-- Gemeinntzige Wohnungsbaugesellschaft fr den

Rhein-Sieg-Kreis GmbH
-- Kreissparkasse Kln
-- Rhein-Sieg-Abfallwirtschaftsgesellschaft mbH
-- Rhein-Sieg-Verkehrsgesellschaft mbH
Hans Peter Lafos1
Bergheim
Regional District Sector Head, Utilities and Disposal (Sector 2),
[Link] Vereinte Dienstleistungsgewerkschaft, District of NRW
Year of birth: 1954
Member since: 28 October 2009
Other appointments:
GEW Kln AG
RWE Power AG
RWE Vertrieb AG

Dr. Wolfgang Reiniger2

Essen
Lawyer
Year of birth: 1944
until 20 April 2011
Gnter Reppien1, 2
Lingen
Former Chairman of the General Works Council
of RWE Power AG
Year of birth: 1951
until 20 April 2011
Other appointments:
-- Stadtwerke Lingen GmbH

Dr. Gerhard Langemeyer2

Dortmund
Former Mayor of the City of Dortmund
Year of birth: 1944
until 20 April 2011

Dagmar Schmeer1
Saarbrcken
Chairwoman of the Works Council of VSE AG
Year of birth: 1967
Member since: 9 August 2006

Christine Merkamp1
Cologne
Head of Controlling, Upgrading, RWE Power AG
Year of birth: 1967
Member since: 20 April 2011

Other appointments:
VSE AG
Prof. Dr.-Ing. Dr.-Ing. E.h. Dr. h.c. Ekkehard D. Schulz
Krefeld
Former member of the Supervisory Board of ThyssenKrupp AG
Year of birth: 1941
Member since: 13 April 2006
Other appointments:
AXA Konzern AG
Bayer AG
MAN SE

Member of other mandatory supervisory boards.

- Member of comparable domestic and foreign supervisory bodies of

commercial enterprises.

1 Employee representative.
2 Information valid as of the date of retirement from the Supervisory Board.

Notes 193

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Supervisory Board Committees

Dr. Wolfgang Schssel
Vienna
Former Federal Chancellor of Austria
Year of birth: 1945
Member since: 1 March 2010
Other appointments:
-- Bertelsmann Stiftung
Ullrich Sierau
Dortmund
Mayor of the City of Dortmund
Year of birth: 1956
Member since: 20 April 2011
Other appointments:
Dortmunder Stadtwerke AG (Chairman)
-------

Emschergenossenschaft
KEB Holding AG (Chairman)
Klinikum Dortmund gGmbH (Chairman)
KSBG Kommunale Verwaltungsgesellschaft GmbH
Medicos Holding GmbH & Co. KG
Schchtermann-Schillersche Kliniken
Bad Rothenfelde GmbH & Co. KG
-- Sparkasse Dortmund (Chairman)
Uwe Tigges1
Bochum
Chairman of the Group Works Council of RWE AG
Year of birth: 1960
Member since: 1 December 2003
Other appointments:
RWE Vertrieb AG
Manfred Weber1
Wietze
Chairman of the General Works Council of RWE Dea AG
Year of birth: 1947
Member since: 1 December 2008
Other appointments:
RWE Dea AG

Executive Committee of the Supervisory Board

Dr. Manfred Schneider (Chairman)
Frank Bsirske
Dr. Paul Achleitner
Heinz Bchel until 20 April 2011
Dieter Faust until 20 April 2011
Manfred Holz since 20 April 2011
Dagmar Mhlenfeld
Dagmar Schmeer
Prof. Dr.-Ing. Dr.-Ing. E.h. Dr. h.c. Ekkehard D. Schulz
Manfred Weber since 20 April 2011
Mediation Committee in accordance with Sec. 27 Para. 3 of
the German Co-Determination Act (MitbestG)
Dr. Manfred Schneider (Chairman)
Frank Bsirske
Werner Bischoff
Prof. Dr.-Ing. Dr.-Ing. E.h. Dr. h.c. Ekkehard D. Schulz
Personnel Affairs Committee
Dr. Manfred Schneider (Chairman)
Frank Bsirske
Dr. Paul Achleitner
Heinz Bchel since 20 April 2011
Frithjof Khn
Gnter Reppien until 20 April 2011
Uwe Tigges
Audit Committee
Carl-Ludwig von Boehm-Bezing (Chairman)
Werner Bischoff
Dieter Faust since 20 April 2011
Dr. Gerhard Langemeyer until 20 April 2011
Gnter Reppien until 20 April 2011
Prof. Dr.-Ing. Dr.-Ing. E.h. Dr. h.c. Ekkehard D. Schulz
Ullrich Sierau since 20 April 2011
Uwe Tigges
Nomination Committee
Dr. Manfred Schneider (Chairman)
Dr. Paul Achleitner
Frithjof Khn

Dr. Dieter Zetsche

Stuttgart
Chairman of the Executive Board of Daimler AG
Year of birth: 1953
Member since: 16 July 2009

Member of other mandatory supervisory boards.

- Member of comparable domestic and foreign supervisory bodies of

commercial enterprises.

1 Employee representative.

194 Notes

RWE Annual Report 2011

Executive Board
Dr. Jrgen Gromann
President and CEO of RWE AG,
appointed until 30 June 2012
Born in 1952 in Mlheim an der Ruhr; studied ferrous
metallurgy and economics; doctorate in ferrous metallurgy;
active within the Klckner Group from 1980 to 1993, exiting asmember of the Executive Board of Klckner-Werke AG;
acquired Georgsmarienhtte in 1993; Owner and Managing
Director of Georgsmarienhtte Holding GmbH from 1993 to
2006; joined RWE AG as President and CEO with effect from
1October 2007.
Group-level responsibilities: Compliance & Management Board
Office, Communication, Executive Management
Other appointments:
BATIG Gesellschaft fr Beteiligungen mbH
British American Tobacco (Industrie) GmbH
British American Tobacco (Germany) GmbH
Deutsche Bahn AG
SURTECO SE (Chairman)
-- Hanover Acceptances Limited

Peter Terium
Deputy Chairman of the Executive Board of RWE AG,
appointed until 30 June 2012,
appointed as Chief Executive Officer of RWE AG from
1July2012 until 31 August 2016
Born in 1963 in Nederweert, Netherlands, trained as a
chartered accountant at Nederlands Institut voor Register
accountants; Audit Supervisor at KPMG from 1985 to 1990;
various positions at Schmalbach-Lubeca AG from 1990 to 2002;
joined as Head of Group Controlling at RWE AG in 2003;
Chief Executive Officer of RWE Supply&Trading GmbH from
2005 to 2009; CEO of Essent N.V. from 2009 to 2011; member
of the Executive Board and Deputy Chairman of the Board of
RWE AG since 1September 2011.
Group-level responsibilities: Public Affairs/Energy Politics,
Legal/Board Affairs, Corporate Development & Strategy, Audit,
and Corporate Responsibility/Environmental Protection
Other appointments:
RWE IT GmbH (Chairman)
RWE Supply&Trading GmbH
-- NET4GAS, s.r.o.
-- N.V. KEMA

Member of other mandatory supervisory boards.

- Member of comparable domestic and foreign supervisory bodies of

commercial enterprises.

Notes 195

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Dr. Leonhard Birnbaum

Member of the Executive Board of RWE AG,
appointed until 30 September 2013

Dr. Rolf Pohlig

Member of the Executive Board of RWE AG,
appointed until 31 December 2012

Born in 1967 in Ludwigshafen on the Rhine; doctorate in

chemical engineering; consultant at McKinsey & Company Inc.
from 1996 to 2008; promoted to partner (principal) in 2000
and to senior partner (director) at McKinsey in 2006, exiting as
member of McKinseys global management team for the energy
sector; joined RWE AG as Head of Corporate Strategy and
Business Development with effect from 7 April 2008; member
of the Executive Board since 1 October 2008; Chief Strategy
Officer of RWE AG from January 2009 to September 2010;
ChiefCommercial Officer of RWE AG since 1 October 2010.

Born in 1952 in Solingen; doctorate in economics; Executive

Vice-President Finance and Accounting of VEBA AG from 1993
to 2000; Executive Vice-President Mergers & Acquisitions of
[Link] AG from 2000 to 2006; member of the Executive Board
of RWE AG since January 2007 and Chief Financial Officer of
RWEAG since May 2007.

Group-level responsibilities: Commodity Management, Mergers

& Acquisitions, Research & Development
Other appointments:
RWE Dea AG (Chairman)
RWE Supply&Trading GmbH (Chairman)
-- RWE Turkey Holding A.S.
Alwin Fitting
Member of the Executive Board of RWE AG,
appointed until 31 March 2013
Born in 1953 in Westhofen (Rhine-Hesse); joined the RWE
Group in 1974; trained master electrician; Executive Board
member and Labour Director of RWE Power AG from October
2000 to July 2005; member of the Executive Board and Labour
Director of RWE AG since August 2005.
Group-level responsibilities: Security, HR Management & Labour
Law, Diversity Office
Other appointments:
Amprion GmbH
RWE Pensionsfonds AG
RWE Service GmbH (Chairman)

Group-level responsibilities: Controlling, Finance, Investor

Relations, Accounting and Tax
Other appointments:
RWE Dea AG
RWE Pensionsfonds AG (Chairman)
RWE Power AG
RWE Deutschland AG
-- Essent N.V.
-- RWE Transgas, a.s.
Dr. Rolf Martin Schmitz
Member of the Executive Board of RWE AG,
appointed until 30 April 2014
Born in 1957 in Mnchengladbach; doctorate in engineering;
i.a. in charge of corporate development and economic policy
at VEBA AG from 1988 to 1998; Executive Vice-President of
rhenag Rheinische Energie AG from 1998 to 2001; Member
of the Board of Management of Thga AG from 2000 to
2004; Chairman of the Board of Directors of [Link] Kraftwerke
GmbH from 2004 to 2005; Chairman of the Executive Board of
RheinEnergie AG and Managing Director of Stadtwerke Kln
from 2006 to 2009; Chief Operating Officer National of RWE AG
from May 2009 to September 2010; since 1 October 2010 Chief
Operating Officer of RWE AG.
Group-level responsibilities: Participation Management,
Municipalities and Generation/Networks/Sales Coordination
Other appointments:
RWE Power AG (Chairman)
RWE Deutschland AG (Chairman)
Swag Energie AG (Chairman)
-- Essent N.V.
-- KELAG-Krntner Elektrizitts-AG
-- RWE Transgas, a.s. (Chairman)
-- RWE Turkey Holding A.S.

Member of other mandatory supervisory boards.

- Member of comparable domestic and foreign supervisory bodies of

commercial enterprises.

196 Notes

RWE Annual Report 2011

4.8 List of Shareholdings (Part of the Notes)

List of shareholdings as per Sec. 285 No. 11 and Sec. 313 Para. 2 (in relation to Sec. 315 a I) of HGB as of 31 Dec 2011

I. Affiliated companies which are included

in the consolidated financial statements

Shareholding in %
Direct

Total

Agrupaci Energas Renovables, S.A.U.- Group - (pre-consolidated)2

Danta de Energas, S.A., Soria/Spain

99

Explotaciones Elicas de Aldehuelas, S.L., Soria/Spain

95

Explotaciones Elicas de Muel, S.L., Barcelona/Spain

100

General de Mantenimiento 21, S.L.U., Barcelona/Spain

100

Hidroelctrica del Trasvase, S.A., Barcelona/Spain

Equity

Net
income/loss

000

000

285,946

287

60

RWE Innogy AERSA, S.A.U., Barcelona/Spain

100

Aktivabedrijf Wind Nederland B.V., Zwolle/Netherlands

100

59,182

15,976

An Suidhe Wind Farm Limited, Swindon/United Kingdom

100

19,848

682

Andromeda Wind S.r.l., Bolzano/Italy

51

5,882

118

Artelis S.A., Luxembourg/Luxembourg

53

36,808

2,980

A/V/E GmbH, Halle (Saale)

76

2,123

576

B E B Bio Energie Baden GmbH, Kehl

51

37,633

2,321

Bayerische Bergbahnen Beteiligungs-Gesellschaft mbH, Gundremmingen

100

21,047

756

Bayerische Elektrizittswerke GmbH, Augsburg

100

34,008

-1

62

79,513

9,142

Bayerische-Schwbische Wasserkraftwerke Beteiligungsgesellschaft mbH,

Gundremmingen
BC-Therm Energiatermel s Szolgltat Kft., Budapest/Hungary

100

3,713

657

100

4,317,944

-1

Bilbster Wind Farm Limited, Swindon/United Kingdom

100

1,007

425

Biomasse Sicilia S.p.A., Enna/Italy

100

208

1,008

BGE Beteiligungs-Gesellschaft fr Energieunternehmen mbH, Essen

100

BPR Energie Geschftsbesorgung GmbH, Essen

100

17,274

27

Bristol Channel Zone Limited, Swindon/United Kingdom

100

168

BTB Netz GmbH, Berlin

100

25

-1

BTB-Blockheizkraftwerks, Trger- und Betreibergesellschaft mbH Berlin, Berlin

100

18,122

-1

Budapesti Elektromos Muvek Nyrt., Budapest/Hungary

55

824,738

40,864

Burgar Hill Wind Farm Limited, Swindon/United Kingdom

100

Carl Scholl GmbH, Cologne

100

529

764

Carsphairn Windfarm Limited, Glasgow/United Kingdom

100

Cegecom S.A., Luxembourg/Luxembourg

100

13,297

3,489

Central de Biomasa Lebrija, S.L.U., Alcobendas/Spain

100

30

844

Channel Energy Limited, Swindon/United Kingdom

100

213

86

Danij Wind B.V., Ens/Gemeente Noordoostpolder/Netherlands

100

10

Delta Gasservice B.V., Middelburg/Netherlands

100

901

78

Dorcogen B.V.,s Hertogenbosch/Netherlands

100

376

358

1 Profit- and loss-pooling agreement

2 Figures from the Groups consolidated financial statements
3 Newly founded, financial statements not yet available

Notes 197

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

I. Affiliated companies which are included

in the consolidated financial statements

Shareholding in %
Direct

Equity

Net
income/loss

Total

000

000

E & Z Industrie-Lsungen GmbH, Gundremmingen

100

11,851

5,936

Eemspolder L.P. B.V., Groningen/Netherlands

100

ELE Verteilnetz GmbH, Gelsenkirchen

100

25

6,981

Electra Insurance Limited, Hamilton/Bermudas

100

23,949

2,221

Electricity Plus Supply Ltd., Oak House/United Kingdom

100

29,340

21,249

Elektrizittswerk Landsberg GmbH, Landsberg am Lech

100

3,035

1,448

70

18,871

2,759

Elektrocieplownia Bedzin S.A., Bedzin/Poland

ELES BV, Arnhem/Netherlands

100

3,559

69,190

ELMU Halozati Eloszto Kft., Budapest/Hungary

100

867,972

41,571

ELMU-EMASZ Halozati Szolgaltato Kft., Budapest/Hungary

100

4,249

2,495

ELMU-EMASZ Ugyfelszolgalati Kft., Budapest/Hungary

100

1,607

102

EMASZ Halozati Kft., Miskolc/Hungary

100

280,265

12,925

79

77,306

22,651

100

33,867

2,714

32,657

636

Emscher Lippe Energie GmbH, Gelsenkirchen

Energie Direct B.V., Waalre/Netherlands
Energies France S.A.S. - Group - (pre-consolidated)2
Centrale Hydroelectrique d`Oussiat S.A.S., Paris/France

100

Energies Charentus S.A.S., Paris/France

100

Energies France S.A.S., Paris/France

100

Energies Maintenance S.A.S., Paris/France

100

Energies Saint Remy S.A.S., Paris/France

100

Energies VAR 1 S.A.S., Paris/France

100

Energies VAR 2 S.A.S., Paris/France

100

Energies VAR 3 S.A.S., Paris/France

100

RWE Innogy Dvloppement France S.A.S., Paris/France

100

SAS le de France S.A.S., Paris/France

100

Energis GmbH, Saarbrcken

64

140,491

26,268

energis-Netzgesellschaft mbH, Saarbrcken

100

25

-1

Energy Direct Limited, Swindon/United Kingdom

100

292,768

1,581

Energy Direct Supply Limited, Swindon/United Kingdom

100

258,074

Energy Resources BV, s-Hertogenbosch/Netherlands

100

119,491

12,065

Energy Resources Holding BV, s-Hertogenbosch/Netherlands

100

195,576

27,745

Energy Resources Ventures BV, s-Hertogenbosch/Netherlands

100

22,958

432

Enerservice Maastricht B.V., Maastricht/Netherlands

100

95,978

1,577

1 Profit- and loss-pooling agreement

2 Figures from the Groups consolidated financial statements
3 Newly founded, financial statements not yet available

198 Notes

I. Affiliated companies which are included

in the consolidated financial statements

RWE Annual Report 2011

Shareholding in %
Direct

envia AQUA GmbH, Chemnitz

envia INFRA GmbH, Bitterfeld-Wolfen

Equity

Net
income/loss

Total

000

000

100

510

-1

100

17,366

5,708

59

1,291,804

252,390

envia Netzservice GmbH, Kabelsketal

100

4,046

-1

envia SERVICE GmbH, Cottbus

100

2,590

1,590

envia TEL GmbH, Markkleeberg

100

9,760

1,964

envia THERM GmbH, Bitterfeld-Wolfen

100

62,844

-1

enviaM Beteiligungsgesellschaft mbH, Essen

100

175,915

31,898

eprimo GmbH, Neu-Isenburg

100

4,600

-1

Essent Belgium N.V., Antwerp/Belgium

100

3,991

1,152

envia Mitteldeutsche Energie AG, Chemnitz

Essent Corner Participations B.V., s-Hertogenbosch/Netherlands

100

3,871

3,417

Essent Energie Belgie N.V., Antwerp/Belgium

100

113,697

4,661

Essent Energie Productie B.V., s-Hertogenbosch/Netherlands

100

751,777

148,778

Essent Energie Verkoop Nederland B.V., s-Hertogenbosch/Netherlands

100

123,286

40,529

Essent Energy Gas Storage B.V., s-Hertogenbosch/Netherlands

100

132

112

Essent Energy Group B.V., Arnhem/Netherlands

100

149

129

Essent Energy Systemen B.V., Arnhem/Netherlands

100

1,845

Essent Energy Systems Noord B.V., Zwolle/Netherlands

100

4,287

159

Essent Energy Trading Germany GmbH i.L., Dsseldorf

100

180

Essent IT B.V., Arnhem/Netherlands

100

193,676

15,999

Essent Meetdatabedrijf B.V., s-Hertogenbosch/Netherlands

100

4,249

1,565

Essent Nederland B.V., Arnhem/Netherlands

100

765,125

160,371

Essent New Energy B.V., s-Hertogenbosch/Netherlands

100

11,033

6,152

Essent N.V., s-Hertogenbosch/Netherlands

100

6,392,615

113,858

Essent Participations Holding B.V., Arnhem/Netherlands

100

339,382

4,952

Essent Personeel Service B.V., Arnhem/Netherlands

100

428

481

Essent Power BV, Arnhem/Netherlands

100

33,538

33,557

Essent Productie Geleen B.V., s-Hertogenbosch/Netherlands

100

2,836

3,270

Essent Projects B.V., s-Hertogenbosch/Netherlands

100

28,136

8,148

Essent Re Ltd., Dublin/Ireland

100

18,032

3,192

Essent Retail Bedrijven B.V., Arnhem/Netherlands

100

281,154

26,832

Essent Retail Energie B.V., s-Hertogenbosch/Netherlands

100

75,536

9,984

Essent Shared Service Center B.V., s-Hertogenbosch/Netherlands

100

14,311

14,290

Essent Support Group B.V., Arnhem/Netherlands

100

38,423

13,415

Essent Wind Kaskasi Planungs- und Betriebsgesellschaft mbH, Hanover

100

25

-1

Essent Wind Nordsee Ost Planungs- und Betriebsgesellschaft mbH, Helgoland

100

256

-1

Essent Zuid B.V., Waalre/Netherlands

100

93,194

905

1 Profit- and loss-pooling agreement

2 Figures from the Groups consolidated financial statements
3 Newly founded, financial statements not yet available

Notes 199

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

I. Affiliated companies which are included

in the consolidated financial statements

Shareholding in %
Direct

Eszak-magyarorszagi Aramszolgaltato Nyrt., Miskolc/Hungary

EuroSkyPark GmbH, Saarbrcken
EWK Nederland B.V., Groningen/Netherlands
EWV Energie- und Wasser-Versorgung GmbH, Stolberg
EZN Swentibold B.V., Geleen/Netherlands
FAMIS Gesellschaft fr Facility Management und Industrieservice mbH,
Saarbrcken
Fri-El Anzi Holding S.r.l., Bolzano/Italy
Fri-El Anzi S.r.l., Bolzano/Italy
Fri-El Guardionara Holding S.r.l., Bolzano/Italy

Equity

Net
income/loss

Total

000

000

54

296,510

23,648

51

91

12

100

8,714

202

54

43,321

16,875

100

3,103

3,085

63

12,422

1,121

51

3,346

41

100

1,030

29

51

12,881

634

Fri-El Guardionara S.r.l., Bolzano/Italy

100

33,753

1,006

Frijling Milieu Technologie (FMT) B.V., Waddinxveen/Netherlands

100

72

49

Gas Plus Supply Ltd., Oak House/United Kingdom

100

30,674

30,568

80

1,375

457

94

94

18,006

516

100

100

4,202,487

-1

100

100

-1

51

15,991

1,453

78

50,725

65,342

100

46,107

849

GBE - Gocher Bioenergie GmbH, Goch

GBV Dreizehnte Gesellschaft fr Beteiligungsverwaltung mbH & Co. KG,
Gundremmingen
GBV Fnfte Gesellschaft fr Beteiligungsverwaltung mbH, Essen
GBV Siebte Gesellschaft fr Beteiligungsverwaltung mbH, Essen
Gemeinschaftskraftwerk Bergkamen A OHG der STEAG GmbH und der
RWE Power AG, Bergkamen
Gemeinschaftskraftwerk Steinkohle Hamm GmbH & Co. KG, Essen
Georgia Biomass Holding LLC, Norcross/USA
Georgia Biomass LLC, Savannah/USA

100

40,935

4,087

GfV Gesellschaft fr Vermgensverwaltung mbH, Dortmund

100

75,507

18,169

GISA GmbH, Halle (Saale)

75

8,252

2,652

100

3,593

Green Gecco GmbH & Co. KG, Essen

51

39,630

17

GWG Grevenbroich GmbH, Grevenbroich

60

19,674

4,835

Great Yarmouth Power Ltd., Swindon/United Kingdom

Hameldon Hill Wind Farm Limited, Swindon/United Kingdom

100

Hanze Essent N.V., Zwolle/Netherlands

100

9,075

Hanze Re-use N.V., Rotterdam/Netherlands

100

ICS adminservice GmbH, Leuna

100

550

21

Industriepark LH Verteilnetz GmbH, Chemnitz

100

100

-1

Infrastrukturgesellschaft Netz Lbz mbH, Hanover

100

12

Innogy Nordsee 1 GmbH, Hamburg

100

11,300

-1

1 Profit- and loss-pooling agreement

2 Figures from the Groups consolidated financial statements
3 Newly founded, financial statements not yet available

200 Notes

I. Affiliated companies which are included

in the consolidated financial statements

RWE Annual Report 2011

Shareholding in %
Direct

Total

Equity

Net
income/loss

000

000

12,568

1,641

50

299,685

56,081

JMP Net, s.r.o., Brno/Czech Republic

100

412,721

39,927

KA Contracting CR s.r.o., Prague/Czech Republic

100

18,302

966

Kazinc-Therm Fterm Kft., Kazincbarcika/Hungary

100

1,231

522

75

84,184

8,343

100

20,034

-1

99

432,269

-1

KEVAG Verkehrs-Service GmbH, Koblenz

100

1,371

-1

KEVAG Verteilnetz GmbH, Koblenz

100

25

-1

KMG Kernbrennstoff-Management Gesellschaft mbH, Essen

100

696,225

-1

Knabs Ridge Wind Farm Limited, Swindon/United Kingdom

100

2,940

693

Koblenzer Elektrizittswerk und Verkehrs-Aktiengesellschaft, Koblenz

58

78,608

13,066

Kraftwerksbeteiligungs-OHG der RWE Power AG und der [Link] Kernkraft GmbH,

Lingen (Ems)

88

144,407

21,075

KUP Berlin Brandenburg GmbH, Berlin

100

372

1,952

KUP Nordrhein-Westfalen GmbH, Dortmund

100

199

301

INVESTERG - Investimentos em Energias, SGPS, Lda. - Group - (pre-consolidated)2

INVESTERG - Investimentos em Energias, Sociedade Gestora de Participaes
Sociais, Lda., So Joo do Estoril/Portugal

100

LUSITERG - Gesto e Produo Energtica, Lda., So Joo do Estoril/Portugal

74

Jihomoravsk plynrensk, a.s., Brno/Czech Republic

Kernkraftwerk Gundremmingen GmbH, Gundremmingen

Kernkraftwerk Lingen GmbH, Lingen (Ems)
Kernkraftwerke Lippe-Ems GmbH, Lingen (Ems)

Lechwerke AG, Augsburg

90

385,580

71,100

LEW Anlagenverwaltung GmbH, Gundremmingen

100

214,753

11,400

LEW Beteiligungsgesellschaft mbH, Gundremmingen

100

213,728

14,371

LEW Netzservice GmbH, Augsburg

100

87

-1

LEW Service & Consulting GmbH, Augsburg

100

1,250

-1

LEW TelNet GmbH, Neus

100

5,100

3,884

LEW Verteilnetz GmbH, Augsburg

100

4,816

-1

Lindhurst Wind Farm Limited, Swindon/United Kingdom

100

352

337

Little Cheyne Court Wind Farm Limited, Swindon/United Kingdom

100

10,473

7,064

Magyar ramszolgltat Kft., Budapest/Hungary

100

11,510

11,283

Mtrai Erm Zrtkren Mkd Rszvnytrsasg, Visonta/Hungary

MEWO Wohnungswirtschaft GmbH & Co. KG, Halle (Saale)
MITGAS Mitteldeutsche Gasversorgung GmbH, Halle (Saale)

51

301,994

68,082

100

10,307

1,358

75

139,491

45,705

Mitteldeutsche Netzgesellschaft Gas mbH, Kabelsketal

100

25

-1

Mitteldeutsche Netzgesellschaft Strom mbH, Halle (Saale)

100

24

-1

40

5,113

Mittlere Donau Kraftwerke AG, Munich

1 Profit- and loss-pooling agreement
2 Figures from the Groups consolidated financial statements
3 Newly founded, financial statements not yet available

Notes 201

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

I. Affiliated companies which are included

in the consolidated financial statements

Shareholding in %
Direct

Equity

Net
income/loss

Total

000

000

Naturstrom Rheinland-Pfalz GmbH, Koblenz

100

832

135

NET4GAS, s.r.o., Prague/Czech Republic

100

1,487,140

203,294

NEW Energie GmbH, Mnchengladbach

100

1,000

416

NEW Netz GmbH, Geilenkirchen

100

47,415

9,559

NEW Service GmbH, Mnchengladbach

100

154

2,135

Niederrhein Wasser GmbH, Viersen

100

11,195

1,181

Niederrheinwerke Energie GmbH, Viersen

100

434

384

Niederrheinwerke Viersen GmbH, Viersen

100

38,360

13,651

Novar Windfarm Limited, Glasgow/United Kingdom

100

13

12

Npower Cogen (Hythe) Limited, Swindon/United Kingdom

100

20,253

4,698

Npower Cogen Ireland Limited, Dublin/Ireland

100

1,568

787

Npower Cogen Limited, Swindon/United Kingdom

100

202,668

12,205

Npower Cogen Trading Limited, Swindon/United Kingdom

100

701

7,556

Npower Commercial Gas Limited, Swindon/United Kingdom

100

21,720

5,883

Npower Direct Ltd, Swindon/United Kingdom

100

128,446

49,442

Npower Financial Services Limited, Swindon/United Kingdom

100

382

19,884

Npower Gas Limited, Swindon/United Kingdom

100

289,567

50,296

Npower Limited, Swindon/United Kingdom

100

303,436

46,821

Npower Northern Limited, Swindon/United Kingdom

100

364,018

179,924

Npower Yorkshire Limited, Swindon/United Kingdom

100

607,988

142,725

Npower Yorkshire Supply Limited, Swindon/United Kingdom

100

NRW Pellets GmbH, Erndtebrck

90

20,979

142

NVV AG, Mnchengladbach

43

144,702

46,050

Octopus Electrical Limited, Swindon/United Kingdom

100

3,134

574

OIE Aktiengesellschaft, Idar-Oberstein

100

5,778

-1

Oval (2205) Ltd, Swindon/United Kingdom

100

5,748

zdi Erm Tvhtermel s Szolgltat Kft., Kazincbarcika/Hungary

100

1,108

294

Park Wiatrowy Suwalki Sp. z o.o., Warsaw/Poland

100

8,273

6,828

Park Wiatrowy Tychowo Sp. z o.o., Warsaw/Poland

100

2,592

11

Piecki Sp. z o.o., Warsaw/Poland

51

44,147

410

Plus Shipping Services Ltd., Oak House/United Kingdom

100

14,306

4,367

Powerhouse B.V., Almere/Netherlands

100

20,286

4,657

Projecta 10 GmbH, Saarbrcken

100

54,303

-1

1 Profit- and loss-pooling agreement

2 Figures from the Groups consolidated financial statements
3 Newly founded, financial statements not yet available

202 Notes

I. Affiliated companies which are included

in the consolidated financial statements

RWE Annual Report 2011

Shareholding in %
Direct

RE GmbH, Cologne
Recuperacin y Tratamiento de Biomasa Trabisa, S.L., Requena/Spain

Equity

Net
income/loss

Total

000

000

100

12,463

-1

87

1,134

995

Regenesys Holdings Limited, Swindon/United Kingdom

100

1,602

Regenesys Technologies Ltd., Swindon/United Kingdom

100

711

regionetz GmbH, Dren

100

64

Restabwicklung SNR 300 GmbH, Essen

100

4,328

141

Rheinbraun Benelux N.V., Wondelgem/Belgium

100

9,577

328

Rheinbraun Brennstoff GmbH, Cologne

100

63,316

-1

Rheinische Baustoffwerke GmbH, Bergheim

100

9,236

-1

Rheinkraftwerk Albbruck-Dogern Aktiengesellschaft, Waldshut-Tiengen

77

30,641

1,757

Rhein-Ruhr Verteilnetz GmbH, Wesel

100

25

-1

rhenag Beteiligungs GmbH, Cologne

100

25

-1

67

146,463

32,255

rhenag Rheinische Energie Aktiengesellschaft, Cologne

Rhenas Insurance Limited, Sliema/Malta

100

48,345

709

Rhyl Flats Wind Farm Limited, Swindon/United Kingdom

100

1,348

4,365

100

355,895

27,308

RSB LOGISTIC GMBH, Cologne

RL Beteiligungsverwaltung beschr. haft. OHG, Gundremmingen

51

100

19,304

-1

RV Rheinbraun Handel und Dienstleistungen GmbH, Cologne

100

68,227

31,533

70

173,438

1,579

RWE & Turcas Gney Elektrik retim A.S., Ankara/Turkey

RWE Aktiengesellschaft, Essen
RWE Aqua GmbH, Berlin
RWE Aqua Holdings GmbH, Essen

100

RWE Benelux Holding B.V., s-Hertogenbosch/Netherlands

9,924,478

1,537,748

100

233,106

-1

100

500,950

-1

100

2,412,371

253,454

RWE Beteiligungsgesellschaft mbH, Essen

100

100

7,820,490

-1

RWE Beteiligungsverwaltung Ausland GmbH, Essen

100

100

435,420

-1

RWE Consulting GmbH, Essen

100

1,569

-1

RWE Dea AG, Hamburg

100

1,407,378

-1

RWE Dea Cyrenaica GmbH, Hamburg

100

26

-1

RWE Dea E & P GmbH, Hamburg

100

32,930

-1

RWE Dea Idku GmbH, Hamburg

100

78,772

-1

RWE Dea International GmbH, Hamburg

100

290,741

-1

RWE Dea Nile GmbH, Hamburg

100

581

-1

RWE Dea Norge AS, Oslo/Norway

100

161,079

37,374

RWE Dea North Africa/Middle East GmbH, Hamburg

100

130,025

-1

RWE Dea Polska Sp. z o.o., Warsaw/Poland

100

64

11,400

1 Profit- and loss-pooling agreement

2 Figures from the Groups consolidated financial statements
3 Newly founded, financial statements not yet available

Notes 203

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

I. Affiliated companies which are included

in the consolidated financial statements

Shareholding in %
Direct

Equity

Net
income/loss

Total

000

000

RWE Dea Speicher GmbH, Hamburg

100

25

-1

RWE Dea Suez GmbH, Hamburg

100

87,226

-1

RWE Dea Trinidad & Tobago GmbH, Hamburg

100

25

-1

RWE Dea UK Holdings Limited, Aberdeen/United Kingdom

100

297,935

520

RWE Dea UK SNS Limited, London/United Kingdom

100

170,350

19,769

100

502,413

-1

100

16,012

13,431

RWE Deutschland Aktiengesellschaft, Essen

12

RWE Distribun sluby, s.r.o., Prague/Czech Republic

100

424

405

RWE Eemshaven Holding B.V., Arnhem/Netherlands

RWE East, s.r.o., Prague/Czech Republic

100

23,370

27,446

RWE Effizienz GmbH, Dortmund

100

25

-1

RWE Energie, a.s., st nad Labem/Czech Republic

100

182,553

81,772

RWE Energiedienstleistungen GmbH, Dortmund

100

17,911

-1

RWE Energy Beteiligungsverwaltung Luxembourg S.A.R.L.,

Luxembourg/Luxembourg

100

86,283

14,886

RWE Energy Nederland N.V., Hoofddorp/Netherlands

100

56,483

6,348

RWE FiberNet GmbH, Essen

100

25

-1

100

9,829

2,580

RWE Finance B.V., s-Hertogenbosch/Netherlands

100

RWE Gas International N.V., s-Hertogenbosch/Netherlands

100

100

5,422,554

252,257

RWE Gas Slovensko, s.r.o., Koice/Slovakia

100

5,715

-1,285

RWE Gas Storage, s.r.o., Prague/Czech Republic

100

609,029

78,462

RWE GasNet, s.r.o., st nad Labem/Czech Republic

100

341,775

67,130

100

350,087

-1

100

133

140

RWE Gasspeicher GmbH, Dortmund

100

RWE Gastronomie GmbH, Essen

RWE Hungaria Tanacsado Kft., Budapest/Hungary

100

6,548

107

RWE Innogy Benelux B.V., s-Hertogenbosch/Netherlands

100

3,622

1,390

RWE Innogy Brise Windparkbetriebsgesellschaft mbH, Hanover

100

25

-1

RWE Innogy Cogen Beteiligungs GmbH, Dortmund

100

7,350

-1

100

201,320

-1

100

100

514,582

-1

RWE Innogy Cogen GmbH, Dortmund

RWE Innogy GmbH, Essen
RWE Innogy Iberia Biomasa S.L.U., Madrid/Spain

100

5,928

117

RWE Innogy Italia S.p.A., Bolzano/Italy

100

75,570

48,479

RWE Innogy Lneburger Heide Windparkbetriebsgesellschaft mbH, Walsrode

100

25

-1

RWE Innogy Nordost Windparkbetriebsgesellschaft mbH, Marienflie

100

25

-1

RWE Innogy Nordwest Windparkbetriebsgesellschaft mbH, Hanover

100

25

-1

RWE Innogy (UK) Ltd., Swindon/United Kingdom

100

1,084,765

8,053

RWE Innogy Windpark GmbH, Essen

100

31,825

-1

1 Profit- and loss-pooling agreement

2 Figures from the Groups consolidated financial statements
3 Newly founded, financial statements not yet available

204 Notes

I. Affiliated companies which are included

in the consolidated financial statements

RWE Annual Report 2011

Shareholding in %
Direct

Equity

Net
income/loss

Total

000

000

RWE Innogy Windpower Hannover GmbH, Hanover

100

73,530

-1

RWE Innogy Windpower Netherlands B.V., s-Hertogenbosch/Netherlands

100

16,636

4,705

RWE Intern sluby, s.r.o., Prague/Czech Republic

100

4,600

1,367

RWE IT Czech s.r.o., Brno/Czech Republic

RWE IT GmbH, Essen

100

7,075

338

100

100

22,724

-1

RWE IT MAGYARORSZG Kft., Budapest/Hungary

100

376

227

RWE IT Poland Sp. z o.o., Warsaw/Poland

100

1,676

32

RWE IT Slovakia s.r.o., Koice/Slovakia

15

RWE IT UK Ltd., Swindon/United Kingdom

100

2,238

2,196

100

19,991

13,216

RWE KAC Dezentrale Energien GmbH & Co. KG, Dortmund

100

9,403

1,220

RWE Key Account CZ, s.r.o., Prague/Czech Republic

100

1,864

4,301

RWE Kundenservice GmbH, Bochum

100

25

-1

RWE Metering GmbH, Essen

100

25

-1

RWE Npower Holdings plc, Swindon/United Kingdom

100

1,828,521

2,395

RWE Npower plc., Swindon/United Kingdom

100

1,495,628

188,001

RWE Npower Renewables (Galloper) No. 1 Limited, Swindon/United Kingdom

100

RWE Npower Renewables (Galloper) No. 2 Limited, Swindon/United Kingdom

100

RWE Npower Renewables Limited, Swindon/United Kingdom

100

650,170

32,644

RWE Npower Renewables (Markinch) Limited, Swindon/United Kingdom

100

1,287

1,234

RWE Npower Renewables (NEWCO)1 Limited, Swindon/United Kingdom

100

11

10

RWE Npower Renewables (NEWCO)2 Limited, Swindon/United Kingdom

100

RWE Npower Renewables (NEWCO)3 Limited, Swindon/United Kingdom

100

11

10

RWE Npower Renewables (NEWCO)4 Limited, Swindon/United Kingdom

100

32

30

RWE Npower Renewables (Stallingborough) Limited, Swindon/United Kingdom

100

5,191

130

RWE Offshore Logistics Company GmbH, Hamburg

100

30

-1

RWE Offshore Wind Nederland B.V., Utrecht/Netherlands

100

880

1,105

RWE Plynoprojekt, s.r.o., Prague/Czech Republic

100

5,166

749

RWE Polska Contracting Sp. z o.o., Wroclaw/Poland

100

2,655

RWE Polska S.A., Warsaw/Poland

100

458,810

27,152

100

3,476,964

-1

RWE Renewables Polska Sp. z o.o., Warsaw/Poland

100

53,824

2,659

RWE Rheinhessen Beteiligungs GmbH, Essen

100

57,840

-1

RWE Rhein-Ruhr Netzservice GmbH, Siegen

100

25

-1

RWE RWN Beteiligungsgesellschaft Mitte mbH, Essen

100

286,356

-1

RWE Seabreeze I GmbH & Co. KG, Bremerhaven

100

25,706

1,019

100

25,893

831

100

248,451

-1

RWE Power Aktiengesellschaft, Cologne and Essen

100

RWE Seabreeze II GmbH & Co. KG, Bremerhaven

RWE Service GmbH, Dortmund
1 Profit- and loss-pooling agreement
2 Figures from the Groups consolidated financial statements
3 Newly founded, financial statements not yet available

100

Notes 205

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

I. Affiliated companies which are included

in the consolidated financial statements
RWE Solutions Aktiengesellschaft, Karlstein

Shareholding in %

Equity

Net
income/loss

Direct

Total

000

000

100

100

186,856

-1

RWE Solutions Ireland Ltd, Dublin/Ireland

100

10,413

1,993

RWE Solutions UK Ltd, London/United Kingdom

100

19,840

105

RWE Stoen Operator Sp z o.o., Warsaw/Poland

100

612,943

RWE Supply & Trading Asia-Pacific PTE. LTD., Singapore/Singapore

100

6,083

6,083

100

446,800

-1

RWE Supply & Trading GmbH, Essen

100

RWE Supply & Trading Hungary Karltolt Felelssg Trsasg,

Budapest/Hungary

100

197

RWE Supply & Trading Iberia S.L., Madrid/Spain

100

2,205

RWE Supply & Trading Italy S.r.l., Rome/Italy

100

411

RWE Supply & Trading Netherlands B.V., s-Hertogenbosch/Netherlands

100

675,916

RWE Supply & Trading Nordic AS, Oslo/Norway

100

165

RWE Supply & Trading Participations Limited, London/United Kingdom

100

383,177

26,434

RWE Supply & Trading Switzerland S.A., Geneva/Switzerland

100

41,449

263,339

RWE Technology GmbH, Essen

100

25

-1

RWE Technology Tasarim ve Mhendislik Danismanlik Ticaret Limited Sirketi,

Istanbul/Turkey

100

1,000

999

RWE Technology UK Limited, Swindon/United Kingdom

100

300

RWE Trading Americas Inc., New York/USA

100

20,694

3,667

RWE Trading Services GmbH, Essen

100

5,776

-1

RWE Transgas, a.s., Prague/Czech Republic

100

3,306,460

380,135

100

70,423

3,820

RWE Vertrieb Aktiengesellschaft, Dortmund

100

16,143

-1

RWE Westfalen-Weser-Ems Netzservice GmbH, Dortmund

100

25

-1

RWE Zkaznick sluby, s.r.o., Prague/Czech Republic

100

2,552

2,228

80

75,730

10,267

100

14,368

-1

RWE Turkey Holding A.S., Istanbul/Turkey

100

RWW Rheinisch-Westflische Wasserwerksgesellschaft mbH,

Mlheim an der Ruhr
Saarwasserkraftwerke GmbH, Essen
Scarcroft Investments Limited, Swindon/United Kingdom

100

13,427

100

5,143,013

272,191

Scaris Limited, Sliema/Malta

100

4,826,337

185,961

Schwbische Entsorgungsgesellschaft mbH, Gundremmingen

100

18,748

1,117

Scaris Investment Limited, Sliema/Malta

Severomoravsk plynrensk, a.s., Ostrava/Czech Republic

100

68

198,249

41,059

Sinergy Energiaszolgltat, Beruhz s Tancsad Kft., Budapest/Hungary

100

27,011

4,723

SMP Net, s.r.o., Ostrava/Czech Republic

100

272,460

36,766

Speicher Breitbrunn/Eggsttt RWE Dea & Storengy, Hamburg

80

19,729

Speicherbecken Geeste OHG der RWE Power AG und der [Link] Kernkraft GmbH,
Geeste

94

26

1 Profit- and loss-pooling agreement

2 Figures from the Groups consolidated financial statements
3 Newly founded, financial statements not yet available

206 Notes

I. Affiliated companies which are included

in the consolidated financial statements

RWE Annual Report 2011

Shareholding in %

Equity

Net
income/loss

Total

000

000

70

13,653

267

100

205,481

205,381

90

7,273

1,171

100

2,970

-1

STADTWERKE DREN GMBH, Dren

75

28,542

7,778

Stadtwerke Kamp-Lintfort GmbH, Kamp-Lintfort

51

13,930

3,941

Stadtwerke Tnisvorst GmbH, Tnisvorst

95

5,961

3,467

Superior Plumbing Installations Limited, Swindon/United Kingdom

100

2,607

2,712

Swag Beteiligungs GmbH, Frankfurt am Main

100

4,425

-1

Direct
SPER S.p.A., Enna/Italy
SPM Sales Portfolio Management BV, Arnhem/Netherlands
SRS EcoTherm GmbH, Salzbergen
Stadtwrme Kamp-Lintfort GmbH, Kamp-Lintfort

Swag Energie AG, Frankfurt am Main

78

355,675

60,800

Swag Kundenservice GmbH, Frankfurt am Main

100

180

-1

Swag Netz GmbH, Frankfurt am Main

100

25

-1

Swag Netzservice GmbH, Frankfurt am Main

100

28

-1

Swag Wasser GmbH, Frankfurt am Main

100

318

-1

Taff-Ely Wind Farm Project Limited, Swindon/United Kingdom

100

105

The Hollies Wind Farm Limited, Swindon/United Kingdom

100

283

158

Tisza-Therm Fterm Kft., Tiszajvros/Hungary

100

675

564

Tisza-WTP Vzelkszt s Szolgltat Kft., Tiszajvros/Hungary

100

1,737

324

Transpower Limited (Republic of Ireland), Dublin/Ireland

100

2,369

952

Triton Knoll Offshore Wind Farm Ltd., Swindon/United Kingdom

100

75

4,388

733

berlandwerk Krumbach GmbH, Krumbach

Uniti Limited, Swindon/United Kingdom

100

2,589,498

54,093

VCP Net, s.r.o., Hradec Krlov/Czech Republic

100

208,981

25,588

Verteilnetz Plauen GmbH, Plauen

100

22

-1

89

23,738

5,903

Volta Limburg B.V., Schinnen/Netherlands

VSE Aktiengesellschaft, Saarbrcken

69

159,364

14,445

VSE Net GmbH, Saarbrcken

100

13,315

1,318

VSE Verteilnetz GmbH, Saarbrcken

100

25

-1

VSW Netz GmbH, Crimmitschau

100

451

252

VSW Verbundwerke Sdwestsachsen GmbH, Lichtenstein

98

25,310

667

Vchodocesk plynrensk, a.s., Hradec Krlov/Czech Republic

67

138,495

32,173

Wendelsteinbahn GmbH, Brannenburg

100

2,817

302

Wendelsteinbahn Verteilnetz GmbH, Brannenburg

100

38

-1

Westfalen-Weser-Ems Verteilnetz GmbH, Recklinghausen

100

25

-1

Westland Energie Services B.V., Poeldijk/Netherlands

100

9,491

8,954

Windpark Westereems B.V., Zwolle/Netherlands

100

7,764

358

WINKRA Dransfeld Windparkbetriebsgesellschaft mbH, Dransfeld

100

25

-1

1 Profit- and loss-pooling agreement

2 Figures from the Groups consolidated financial statements
3 Newly founded, financial statements not yet available

Notes 207

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

I. Affiliated companies which are included

in the consolidated financial statements

Shareholding in %
Direct

Equity

Net
income/loss

Total

000

000

WINKRA Eicklingen Windparkbetriebsgesellschaft mbH, Eicklingen

100

25

-1

WINKRA Eystrup Windparkbetriebsgesellschaft mbH, Hassel

100

25

-1

WINKRA Friedrichsgabekoog Windparkbetriebsgesellschaft mbH,

Friedrichsgabekoog

100

26

-1

WINKRA Gethsemane Windparkbetriebsgesellschaft mbH, Philippsthal

100

26

-1

WINKRA Grmitz Windparkbetriebsgesellschaft mbH, Grmitz

100

26

-1

WINKRA Halle Windparkbetriebsgesellschaft mbH, Halle

100

25

-1

WINKRA Helmstedt Windparkbetriebsgesellschaft mbH, Grasleben

100

25

-1

WINKRA Hrup Windparkbetriebsgesellschaft mbH, Hrup

100

26

-1

WINKRA Krokhorst Windparkbetriebsgesellschaft mbH, Schwanewede

100

25

-1

WINKRA Krusemark Windparkbetriebsgesellschaft mbH, Hohenberg-Krusemark

100

26

-1

WINKRA Krusemark 5 Windparkbetriebsgesellschaft mbH, Lindtorf

100

25

-1

WINKRA Krusemark 6 Windparkbetriebsgesellschaft mbH, Lindtorf

100

25

-1

WINKRA Krusemark 7 Windparkbetriebsgesellschaft mbH, Lindtorf

100

25

-1

WINKRA Krusemark 8 Windparkbetriebsgesellschaft mbH, Lindtorf

100

25

-1

WINKRA Lengerich Windparkbetriebsgesellschaft mbH, Gersten

100

25

-1

WINKRA Lichtenau Windparkbetriebsgesellschaft mbH, Lichtenau

100

26

-1

WINKRA Messingen Windparkbetriebsgesellschaft mbH, Messingen

100

25

-1

WINKRA Oedelum Windparkbetriebsgesellschaft mbH, Schellerten

100

25

-1

WINKRA Ottersberg Windparkbetriebsgesellschaft mbH, Ottersberg

100

25

-1

WINKRA Regesbostel Windparkbetriebsgesellschaft mbH, Regesbostel

100

25

-1

WINKRA Rethen Windparkbetriebsgesellschaft mbH, Vordorf

100

25

-1

WINKRA Riepsdorf Windparkbetriebsgesellschaft mbH, Riepsdorf

100

26

-1

WINKRA Sommerland Windparkbetriebsgesellschaft mbH, Sommerland

100

26

-1

WINKRA Sderdeich Windparkbetriebsgesellschaft mbH, Sderdeich

100

26

-1

WINKRA Welver Windparkbetriebsgesellschaft mbH, Welver

100

25

-1

WINKRA Zicherie Windparkbetriebsgesellschaft mbH, Brome

100

25

-1

WKN Windkraft Nord GmbH & Co. Windpark Wnkhausen KG, Hanover

100

34

WVP-Wrmeversorgung Plauen GmbH, Plauen

100

260

-1

YE Gas Limited, Swindon/United Kingdom

100

112,247

Yorkshire Energy Limited, Swindon/United Kingdom

100

13,427

Zuidermeerwindenergie B.V., Heerenveen/Netherlands

100

66

17

1 Profit- and loss-pooling agreement

2 Figures from the Groups consolidated financial statements
3 Newly founded, financial statements not yet available

208 Notes

II. Affiliated companies which are not included in the consolidated financial
statements due to secondary importance for the assets, liabilities, financial
position and profit or loss of the Group
Agenzia Carboni S.R.L., Genoa/Italy

RWE Annual Report 2011

Shareholding in %
Direct

Equity

Net
income/loss

Total

000

000

100

591

26

Alfred Thiel-Gedchtnis-Untersttzungskasse GmbH, Essen

100

5,113

Allt Dearg Wind Farm Limited, Swindon/United Kingdom

100

Alte Haase Bergwerks-Verwaltungs-Gesellschaft mbH, Dortmund

100

70,148

5,227

aqua.t Wassergesellschaft Thringen mbH, Hermsdorf

100

100

-1

Ardoch Over Enoch Windfarm Limited, Glasgow/United Kingdom

100

Ballindalloch Muir Wind Farm Limited, Swindon/United Kingdom

100

b_gas Eicken GmbH, Schwalmtal

100

793

294

bildungszentrum Energie GmbH, Halle (Saale)

100

883

408

Bioenergie Anhausen Mainborn Verwaltungs GmbH, Anhausen

100

51

Bioenergie Bad Wimpfen Verwaltungs GmbH, Bad Wimpfen

100

Bioenergie Kirchspiel Anhausen GmbH & Co. KG, Anhausen

51

Bioenergie Bad Wimpfen GmbH & Co. KG, Bad Wimpfen

Biogasanlage Schwalmtal GmbH, Schwalmtal

75

29

BRAWA, a.s., Prague/Czech Republic

100

80

Brims Ness Tidal Power Limited, Swindon/United Kingdom

100

Carnedd Wen Wind Farm Limited, Swindon/United Kingdom

100

Carr Mor Windfarm Limited, Glasgow/United Kingdom

100

Causeymire Two Wind Farm Limited, Swindon/United Kingdom

100

Central de Biomasa de la Demanda, S.L.U., Alcobendas/Spain

100

Central de Biomasa de la Vega, S.L.U., Alcobendas/Spain

100

273

166

Central de Biomasa Sierra Nevada, S.L.U., Alcobendas/Spain

100

309

718

Cilciffeth Windfarm Limited, Swindon/United Kingdom

100

Comco MCS S.A., Luxembourg/Luxembourg

95

410

228

Craigenlee Wind Farm Limited, Swindon/United Kingdom

100

Culbin Farm Wind Farm Limited, Swindon/United Kingdom

100

Cuthberts Hill Windfarm Limited, Swindon/United Kingdom

100

Doggerbank Project 1A RWE Limited, Swindon/United Kingdom

100

Doggerbank Project 1B RWE Limited, Swindon/United Kingdom

100

Doggerbank Project 2A RWE Limited, Swindon/United Kingdom

100

Doggerbank Project 2B RWE Limited, Swindon/United Kingdom

100

Doggerbank Project 3A RWE Limited, Swindon/United Kingdom

100

Doggerbank Project 3B RWE Limited, Swindon/United Kingdom

100

ECS - Elektrrna Cechy-Stred, a.s., Prague/Czech Republic

51

3,599

EDON Group Costa Rica S.A., San Jose/Costa Rica

100

837

133

EL-Pfr Epitsi s zemeltetsi Kft., Budapest/Hungary

100

570

62

Energetyka Wschod Sp. z o.o., Wroclaw/Poland

100

34

15

Energetyka Zachod Sp. z o.o., Wroclaw/Poland

100

52

12

enviaM Beteiligungsgesellschaft Chemnitz GmbH, Chemnitz

100

56,366

-1

enviaM Erneuerbare Energien Verwaltungsgesellschaft mbH, Markkleeberg

100

ESK GmbH, Dortmund

100

1 Profit- and loss-pooling agreement

2 Figures from the Groups consolidated financial statements
3 Newly founded, financial statements not yet available

128

1,653

Notes 209

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

II. Affiliated companies which are not included in the consolidated financial
statements due to secondary importance for the assets, liabilities, financial
position and profit or loss of the Group

Shareholding in %
Direct

Total

Equity

Net
income/loss

000

000

ESM Entwicklungsgesellschaft fr kommunale Dienstleistungen mbH,

Saarbrcken

100

54

Executive Aviation Centre Limited (i.L.), London/United Kingdom

100

6,239

FAMIS Energieservice GmbH, Saarbrcken

100

687

-1

95

7,567

-1

Fernwrme Saarlouis-Steinrausch Investitionsgesellschaft mbH, Saarlouis

Finelectra Finanzgesellschaft fr Elektrizitts-Beteiligungen AG,
Hausen/Switzerland

100

13,856

580

GBV Achtundzwanzigste Gesellschaft fr Beteiligungsverwaltung, Essen

100

100

25

GBV Achtzehnte Gesellschaft fr Beteiligungsverwaltung, Essen

100

100

23

GBV Einundzwanzigste Gesellschaft fr Beteiligungsverwaltung, Essen

100

100

25

GBV Neunundzwanzigste Gesellschaft fr Beteiligungsverwaltung, Essen

100

100

25

GBV Siebenundzwanzigste Gesellschaft fr Beteiligungsverwaltung, Essen

100

100

25

GBV Verwaltungsgesellschaft mbH, Gundremmingen

GBV Zweiundzwanzigste Gesellschaft fr Beteiligungsverwaltung, Essen

94

94

19

100

100

25

Gelligaer Windfarm Limited, Swindon/United Kingdom

100

Gesellschaft fr Kommunikationstechnik und Medienarbeit mbH, Essen

100

60

-1

GKB Gesellschaft fr Kraftwerksbeteiligungen mbH, Cottbus

100

191

69

GkD Gesellschaft fr kommunale Dienstleistungen mbH, Siegburg

100

53

Green Gecco Verwaltungs GmbH, Essen

51

17

Green Gesellschaft fr regionale und erneuerbare Energien mbH, Stolberg

52

GWG Netzgesellschaft GmbH, Grevenbroich

100

100

466

High Moor Windfarm Limited, Swindon/United Kingdom

100

HM&A UK Limited (i.L.), London/United Kingdom

100

2,405

HM&A Verwaltungs GmbH i.L., Essen

100

92

12

Hospitec Facility Management GmbH, Saarbrcken

100

1,788

Infraestructuras de Aldehuelas, S.A., Soria/Spain

100

428

Jordanston Windfarm Limited, Swindon/United Kingdom

100

KA Contracting SK s.r.o., Bansk Bystrica/Slovakia

100

948

52

Kieswerk Kaarst GmbH & Co. KG, Bergheim

51

109

234

Kieswerk Kaarst Verwaltungs GmbH, Bergheim

51

27

Kiln Pit Hill Wind Farm Limited, Swindon/United Kingdom

100

Kirkby Moor Windfarm Limited, Swindon/United Kingdom

100

2,131

KMC Services GmbH, Kaiserslautern

100

36

KWS Kommunal-Wasserversorung Saar GmbH , Saarbrcken

100

30

-1

Lochelbank Wind Farm Limited, Swindon/United Kingdom

100

Low Houses Windfarm Limited, Swindon/United Kingdom

100

Mtrai Erm Kzponti Karbantart KFT, Visonta/Hungary

100

2,799

401

Meterplus Limited, Swindon/United Kingdom

100

MEWO Wohnungswirtschaft Verwaltungs-GmbH, Halle (Saale)

100

43

Middlemoor Wind Farm Limited, Swindon/United Kingdom

100

MIROS Mineralische Rohstoffe, GmbH i.L., Bergheim

100

1 Profit- and loss-pooling agreement

2 Figures from the Groups consolidated financial statements
3 Newly founded, financial statements not yet available

210 Notes

II. Affiliated companies which are not included in the consolidated financial
statements due to secondary importance for the assets, liabilities, financial
position and profit or loss of the Group
Mitteldeutsche Netzgesellschaft mbH, Chemnitz

RWE Annual Report 2011

Shareholding in %
Direct

Total

Equity

Net
income/loss

000

000

100

Naturstrom Betriebsgesellschaft Oberhonnefeld mbH, Koblenz

100

149

Netzwerke Saarwellingen GmbH, Saarwellingen

100

50

-1

Neue Energie Gro-Gerau GmbH, Frankfurt am Main

100

24

NEW Re GmbH, Mnchengladbach

100

100

Niederrheinwerke Impuls GmbH, Grefrath

67

394

319

100

6,215

342

Niederrheinwerke Schwalm-Nette Netz GmbH, Viersen

100

25

North Kintyre Wind Farm Limited, Swindon/United Kingdom

100

Niederrheinwerke Schwalm-Nette GmbH, Viersen

Novar Two Wind Farm Limited, Swindon/United Kingdom

100

Npower Northern Supply Limited, Swindon/United Kingdom

100

NRF Neue Regionale Fortbildung GmbH, Halle (Saale)

100

144

12

NRL (GEM) Limited, Swindon/United Kingdom

100

Park Wiatrowy Dolice Sp. z o.o., Warsaw/Poland

100

106

Park Wiatrowy Gaworzyce Sp. z o.o., Warsaw/Poland

100

27

26

Park Wiatrowy Msciwojw Sp. z o.o., Warsaw/Poland

100

10

Park Wiatrowy Nowy Staw Sp. z o.o., Warsaw/Poland

100

Park Wiatrowy Prudziszki Sp. z o.o., Warsaw/Poland

100

Park Wiatrowy Smigiel I Sp. z o.o., Warsaw/Poland

100

10

Park Wiatrowy Znin Sp. z o.o., Warsaw/Poland

100

PHP Poland Sp. z o.o., Warsaw/Poland

100

Projecta 12 GmbH, Saarbrcken

100

148

-1

Projecta 15 GmbH, Saarbrcken

100

17

Projecta 5 - Entwicklungsgesellschaft fr kommunale Dienstleistungen mbH,

Saarbrcken

100

21

Rain Biomasse Wrmegesellschaft mbH, Rain

75

RD Hanau GmbH, Hanau

100

Rebyl Limited, Swindon/United Kingdom

100

56

1,551

29

Rheinland Westfalen Energiepartner GmbH, Essen

100

25

-1

rhenagbau GmbH, Cologne

100

1,258

-1

ROTARY-MATRA Ktfr s Karbantart KFT, Visonta/Hungary

100

855

RWE & Turcas Enerji Toptan Satis A.S., Istanbul/Turkey

100

14

15

ReEnergie Niederrhein Biogas Schwalmtal GmbH & Co. KG, Schwalmtal

RWE & Turcas Kuzey Elektirk retim Anonim Sirketi, Ankara/Turkey

423

533

70

38

14

RWE Aqua International GmbH, Essen

100

50

-1

RWE Dea UK Development Limited, London/United Kingdom

100

RWE Dea UK EC Limited, London/United Kingdom

100

RWE Dea UK Exploration Limited, London/United Kingdom

100

RWE Dea UK Limited, Aberdeen/United Kingdom

100

RWE Dea UK PV Limited, London/United Kingdom

100

RWE DEA Ukraine LLC, Kiev/Ukraine

100

63

193

1 Profit- and loss-pooling agreement

2 Figures from the Groups consolidated financial statements
3 Newly founded, financial statements not yet available

Notes 211

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

II. Affiliated companies which are not included in the consolidated financial
statements due to secondary importance for the assets, liabilities, financial
position and profit or loss of the Group

Shareholding in %
Direct

RWE East Bucharest S.R.L, Bucharest/Romania

Equity

Net
income/loss

Total

000

000

100

2,968

1,839

RWE Energetyka Trzemeszno Sp. z o.o., Wroclaw/Poland

100

1,283

194

RWE EUROtest Gesellschaft fr Prfung-Engineering-Consulting mbH, Dortmund

100

51

-1

RWE Gas Transit, s.r.o., Prague/Czech Republic

100

RWE Hrvatska d.o.o., Zagreb/Croatia

100

21

RWE Innogy d.o.o. za koristenje obnovljivih izvora energije, Sarajevo/Bosnia and

Herzegovina

100

145

RWE Innogy Holding S.R.L., Bucharest/Romania

100

RWE Innogy Kaskasi GmbH, Hamburg

100

RWE Innogy Serbia d.o.o., Belgrade/Serbia

100

RWE KAC Dezentrale Energien Verwaltungsgesellschaft mbH, Dortmund

100

66

1
3

19

100

20

100

3,913

RWE Power Benelux B.V., Hoofddorp/Netherlands

100

632

160

RWE Power Beteiligungsverwaltung GmbH & Co. KG, Grevenbroich

100

RWE Power Climate Protection China GmbH, Essen

100

25

-1

RWE Power Climate Protection Clean Energy Technology (Beijing) Co., Ltd.,
Beijing/China

100

210

74

RWE Power Climate Protection GmbH, Essen

100

23

-1

RWE Power Zweite Gesellschaft fr Beteiligungsverwaltung mbH, Grevenbroich

100

24

RWE Rhein Oel Ltd., London/United Kingdom

100

RWE Seabreeze I Verwaltungs GmbH, Bremerhaven

100

17

RWE Kuzey Holding Anonim Sirketi, Istanbul/Turkey

RWE Pensionsfonds AG, Essen

100

RWE Seabreeze II Verwaltungs GmbH, Bremerhaven

100

16

100

59,013

893

RWE Trading New Business Ltd., London/United Kingdom

100

1,238

127

RWE Trading Services Ltd., Swindon/United Kingdom

100

915

91

RWE Trading UK Ltd., London/United Kingdom

100

4,487

120

RWE WP 4 Sp.z o.o., Warsaw/Poland

100

267

70

1,105

117

RWE Stiftung gemeinntzige GmbH, Essen

100

RWE-EnBW Magyarorszg Energiaszolgltat Korltolt Felelssg Trsasg,

Budapest/Hungary
Sandersdorf-Brehna Netz GmbH & Co. KG, Sandersdorf-Brehna

100

Sandersdorf-Brehna Netz Verwaltungs GmbH, Sandersdorf-Brehna

100

SASKIA Informations-Systeme GmbH, Chemnitz

90

599

185

SchlauTherm GmbH, Saarbrcken

75

96

59

Securum AG, Zug/Switzerland

100

3,640

40

Snowgoat Glen Wind Farm Limited, Swindon/United Kingdom

100

100

85

14

Steinkohlendoppelblock Verwaltungs GmbH, Essen

Societe Nouvelle Sidechar S.A., Paris la Defense/France

100

156

48

Stoen Nieruchomosci Sp. z o.o., Warsaw/Poland

100

487

31

Stroupster Wind Farm Limited, Swindon/United Kingdom

100

Swag Erneuerbare Energien GmbH, Frankfurt am Main

100

124

1 Profit- and loss-pooling agreement

2 Figures from the Groups consolidated financial statements
3 Newly founded, financial statements not yet available

100

212 Notes

II. Affiliated companies which are not included in the consolidated financial
statements due to secondary importance for the assets, liabilities, financial
position and profit or loss of the Group

RWE Annual Report 2011

Shareholding in %

Net
income/loss

Total

000

000

Tarskavaig Wind Farm Limited, Swindon/United Kingdom

100

T.B.E. TECHNISCHE BERATUNG ENERGIE fr wirtschaftliche Energieanwendung

GmbH, Duisburg

100

337

-1

TEPLO Rumburk s.r.o., Rumburk/Czech Republic

Direct

Equity

98

256

38

Thermolux S.a.r.l., Luxembourg/Luxembourg

100

1,521

Thyssengas-Untersttzungskasse GmbH, Dortmund

100

113

43

60

Tisza BioTerm Kft., Budapest/Hungary

Trenewydd Windfarm Limited, Swindon/United Kingdom

100

51

3,344

662

Versuchsatomkraftwerk Kahl GmbH, Karlstein am Main

80

5,711

31

VKN Geschftsfhrungs GmbH, Ensdorf

51

42

TWS Technische Werke der Gemeinde Saarwellingen GmbH, Saarwellingen

VKN Saar Gesellschaft fr Verwertung von Kraftwerksnebenprodukten und

Ersatzbrennstoffen GmbH, Ensdorf

51

50

235

VSE-Windpark Merchingen GmbH & Co. KG, Saarbrcken

100

1,863

937

VSE-Windpark Merchingen Verwaltungs GmbH, Saarbrcken

100

53

VSE Stiftung gGmbH, Saarbrcken

100

2,535

24

Wabea Wasserbehandlungsanlagen Berlin GmbH i.L., Berlin

100

420

19

Wrmeversorgung Schwaben GmbH, Augsburg

100

64

Windpark Westerwald GmbH, Waigandshain

Windpark Zuidermeerdijk C.V., Soest/Netherlands
WLN Wasserlabor Niederrhein GmbH, Mnchengladbach
1 Profit- and loss-pooling agreement
2 Figures from the Groups consolidated financial statements
3 Newly founded, financial statements not yet available

54

1,617

25

100

457

134

60

325

13

Notes 213

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

III. Companies accounted for using the equity method

Shareholding in %

Equity

Net
income/loss

Direct

Total

000

000

25

25

613,025

118,527

AS 3 Beteiligungs GmbH, Essen

51

20,321

146

ATBERG - Elicas do Alto Tmega e Barroso, Lda., Ribeira de Pena/Portugal

40

2,341

453

AVA Abfallverwertung Augsburg GmbH, Augsburg

25

18,111

4,151

AVU Aktiengesellschaft fr Versorgungs-Unternehmen, Gevelsberg

50

102,721

15,408

BC-Eromu Kft., Miskolc/Hungary

74

18,556

4,622

Bergische Energie und Wasser - Netzgesellschaft GmbH, Wipperfrth

61

9,605

1,496

Budapesti Disz- es Kzvilagitsi Korlatolz Felelsseg Tarsasag, Budapest/Hungary

50

33,981

1,364

C-Power N.V., Zwijndrecht/Belgium

27

155,430

5,227

Amprion GmbH, Dortmund

Delesto B.V., Delfzijl/Netherlands

50

57,431

1,151

Desco B.V., Dordrecht/Netherlands

33

10,342

834

Desco C.V., Dordrecht/Netherlands

33

12,901

Dortmunder Energie- und Wasserversorgung GmbH (DEW 21), Dortmund

47

165,417

7,828

EAH Holding B.V., Heerenveen/Netherlands

33

4,177

336

EdeA VOF, Geleen/Netherlands

50

36,300

1,964

EGG Holding BV, s-Hertogenbosch/Netherlands

50

629

375

Electrorisk Verzekeringsmaatschappij N.V., Arnhem/Netherlands

25

10,506

388

Elsta B.V., Middelburg/Netherlands

25

154

34

Elsta B.V. & CO C.V., Middelburg/Netherlands

25

1,333

7,241

Energie Nordeifel GmbH & Co. KG, Kall2

50

10,654

2,622

Energie- und Wasserversorgung Altenburg GmbH, Altenburg

30

29,933

2,962

Energieversorgung Guben GmbH, Guben

45

5,535

443

Energieversorgung Hrth GmbH, Hrth

25

4,961

Energieversorgung Oberhausen AG, Oberhausen

10

30,224

Energiewacht B.V., Veendam/Netherlands

50

3,120

3,343

ENNI Energie & Umwelt Niederrhein GmbH, Moers

20

32,447

9,359

Enovos International S. A., Luxembourg/Luxembourg

18

619,146

89,553

oliennes de Mouns S.A.S., Paris/France

50

4,522

3,316

EPZ - N.V. Elektriciteits Produktiemij Zuid-Nederland, Borssele/Netherlands

30

37,507

EWR Aktiengesellschaft, Worms

74,307

16,474

EWR Dienstleistungen GmbH & Co. KG, Worms

50

142,528

16,488

Excelerate Energy LLC, The Woodlands/USA

50

9,026

Excelerate Energy LP, The Woodlands/USA2

50

205,130

194,184

Exemplar NV, Brussels/Belgium

15

29

24

Expedient NV, Antwerp/Belgium

15

241

176

Exquisite NV, Antwerp/Belgium

15

874

195

Fovarosi Gazmuvek Zrt., Budapest/Hungary

50

143,952

30,838

Freiberger Stromversorgung GmbH (FSG), Freiberg

30

9,785

2,945

Fri-El S.p.A., Bolzano/Italy2

50

15,432

1,550

FSO GmbH & Co. KG, Oberhausen2

50

40,204

11,198

1 Profit- and loss-pooling agreement

2 Figures from the Groups consolidated financial statements
3 Newly founded, financial statements not yet available

214 Notes

III. Companies accounted for using the equity method

RWE Annual Report 2011

Shareholding in %
Direct

Equity

Net
income/loss

Total

000

000

Gaswacht Friesland B.V., Sneek/Netherlands

50

7,801

1,012

Geas Energiewacht B.V., Enschede/Netherlands

50

8,409

1,425

GNS Gesellschaft fr Nuklear-Service mbH, Essen2

28

239

6,374

Greater Gabbard Offshore Winds Limited, Reading/United Kingdom

50

80,903

77,526

Grosskraftwerk Mannheim Aktiengesellschaft, Mannheim

40

114,142

6,647

Gwynt Y Mr Offshore Wind Farm Limited, Swindon/United Kingdom

60

3,342

326

Hastrabau-Kommunale Entsorgungsdienste GmbH & Co. KG, Langenhagen

50

128

68

HIDROERG - Projectos Energticos, Lda., Lisbon/Portugal

32

8,681

1,954

Horizon Nuclear Power Limited, London/United Kingdom

50

66,566

40,897

Hungriavz Vagyonkezel Zrt., Budapest/Hungary

49

47,678

Innogy Renewables Technology Fund I GmbH & Co. KG, Essen

78

40,587

5,157

Innogy Venture Capital GmbH, Essen

75

25

31

Krntner Energieholding Beteiligungs GmbH, Klagenfurt/Austria2

49

585,156

97,700

KBM Kommunale Beteiligungsgesellschaft mbH an der

envia Mitteldeutsche Energie AG, Bitterfeld

19

190,485

24,045

Kemkens B.V., Oss/Netherlands

49

10,122

4,175

KEW Kommunale Energie- und Wasserversorgung AG, Neunkirchen

29

72,780

10,071

Konsortium Energieversorgung Opel oHG der RWE Innogy Cogen GmbH und der
Kraftwerke Mainz-Wiesbaden AG, Karlstein

67

25,994

7,524

medl GmbH, Mlheim an der Ruhr

49

21,972

13,411

Mingas-Power GmbH, Essen

40

4,703

4,034

Nebelhornbahn-Aktiengesellschaft, Oberstdorf

27

4,961

405

NV Energiewacht Groep, Zwolle/Netherlands

50

7,801

1,012

NV KEMA, Arnhem/Netherlands

25

127,894

7,700

27

192,102

18,816

100

308

757

Pfalzwerke Aktiengesellschaft, Ludwigshafen

Pistazit Anlagen-Vermietungs GmbH & Co. Objekt Willich KG, Mainz
PRENU Projektgesellschaft fr Rationelle Energienutzung in Neuss mbH, Neuss

50

287

18

Projecta 14 GmbH, Saarbrcken

50

37,733

974

Propan Rheingas GmbH & Co KG, Brhl

30

15,445

1,919

Przedsibiorstwo Wodociagw i Kanalizacji Sp. z o.o., Dabrowa Grnica/Poland

34

32,465

1,698

Regionalgas Euskirchen GmbH & Co. KG, Euskirchen

43

55,211

10,138

RheinEnergie AG, Cologne

20

691,918

15,000

Rhein-Main-Donau AG, Munich

22

110,169

RWE-Veolia Berlinwasser Beteiligungs GmbH, Berlin

50

296,728

77,169

100

196

1,330

50

59,339

2,809

Sampi Anlagen-Vermietungs GmbH & Co. Objekt Meerbusch KG, Mainz

Schluchseewerk Aktiengesellschaft, Laufenburg (Baden)
SET Sustainable Energy Technology Fund C.V., Amsterdam/Netherlands

50

10,034

SHW/RWE Umwelt Aqua Vodogradnja d.o.o., Zagreb/Croatia

50

1,836

476

Siegener Versorgungsbetriebe GmbH, Siegen

25

21,173

2,698

1 Profit- and loss-pooling agreement

2 Figures from the Groups consolidated financial statements
3 Newly founded, financial statements not yet available

Notes 215

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

III. Companies accounted for using the equity method

Shareholding in %
Direct

Equity

Net
income/loss

Total

000

000

Socit Electrique de l'Our S.A., Luxembourg/Luxembourg2

40

9,756

6,650

SpreeGas Gesellschaft fr Gasversorgung und Energiedienstleistung mbH,

Cottbus

33

38,000

9,434

SSW Stadtwerke St. Wendel GmbH & Co. KG, St. Wendel

50

20,215

1,852

Stadtwerke Bernburg GmbH, Bernburg

45

31,709

7,534

Stadtwerke Bitterfeld-Wolfen GmbH, Bitterfeld-Wolfen

40

19,827

1,702

Stadtwerke Bhl GmbH, Bhl

30

21,757

600

Stadtwerke Duisburg Aktiengesellschaft, Duisburg

20

157,409

45,956

Stadtwerke Dlmen Dienstleistungs- und Beteiligungs-GmbH & Co. KG, Dlmen

50

26,903

4,143

Stadtwerke Emmerich GmbH, Emmerich am Rhein

25

12,115

3,419

Stadtwerke Essen Aktiengesellschaft, Essen

29

117,256

Stadtwerke Geldern GmbH, Geldern

49

11,171

3,191

Stadtwerke GmbH Bad Kreuznach, Bad Kreuznach

25

39,925

2,291

Stadtwerke Kirn GmbH, Kirn

49

1,612

343

Stadtwerke Lutherstadt Eisleben GmbH, Lutherstadt Eisleben

42

17,949

4,113

Stadtwerke Meerane GmbH, Meerane

24

11,943

2,377

Stadtwerke Merseburg GmbH, Merseburg

40

20,392

4,731

Stadtwerke Merzig GmbH, Merzig

50

15,906

1,727

Stadtwerke Neuss Energie und Wasser GmbH, Neuss

25

88,344

12,094

Stadtwerke Radevormwald GmbH, Radevormwald

50

4,818

1,392

Stadtwerke Ratingen GmbH, Ratingen

25

45,220

4,792

Stadtwerke Reichenbach/Vogtland GmbH, Reichenbach

24

11,302

1,636

Stadtwerke Remscheid GmbH, Remscheid

25

114,095

5,379

Stadtwerke Saarlouis GmbH, Saarlouis

49

33,522

5,069

Stadtwerke Velbert GmbH, Velbert

50

82,005

11,443

Stadtwerke Weienfels GmbH, Weienfels

24

21,770

4,655

Stadtwerke Willich GmbH, Willich

25

12,581

Stadtwerke Zeitz GmbH, Zeitz

24

20,384

3,400

Sdwestfalen Energie und Wasser AG, Hagen2

19

212,885

29,160

TCP Petcoke Corporation, Dover/USA2

50

12,776

15,895

TE Plomin d.o.o., Plomin/Croatia

50

34,165

1,891

TIGAZ Tiszantuli Gazszolgaltato Zrt., Hajduszoboszlo/Hungary

44

533,883

2,154

TVK Eromu Termelo es Szolgaltato Korlatolt Felelossegu Tarsasag,

Tiszaujvaros/Hungary

74

16,027

3,508

URANIT GmbH, Jlich

50

85,617

23,584

Vliegasunie B.V., De Bilt/Netherlands

43

2,348

403

VOF Dobbestroom, Veendam/Netherlands

50

14,076

119

VOF Hunzestroom, Veendam/Netherlands

50

10,462

248

49

232,601

82,244

Vchodoslovensk energetika a.s., Koice/Slovakia2

1 Profit- and loss-pooling agreement
2 Figures from the Groups consolidated financial statements
3 Newly founded, financial statements not yet available

49

216 Notes

RWE Annual Report 2011

III. Companies accounted for using the equity method

Shareholding in %
Direct

Equity

Net
income/loss

Total

000

000

Wasser- und Energieversorgung Kreis St. Wendel GmbH, St. Wendel

28

19,497

1,295

WBM Wirtschaftsbetriebe Meerbusch GmbH, Meerbusch

40

19,875

3,171

WestEnergie und Verkehr GmbH, Geilenkirchen

50

37,578

7,624

Zagrebacke otpadne vode d.o.o., Zagreb/Croatia

48

121,240

19,916

Zagrebacke otpadne vode-upravljanje i pogon d.o.o., Zagreb/Croatia

33

4,242

4,219

Zephyr Investments Limited, Swindon/United Kingdom

33

20,347

19,623

27

34,360

13,875

Zwickauer Energieversorgung GmbH, Zwickau

1 Profit- and loss-pooling agreement
2 Figures from the Groups consolidated financial statements
3 Newly founded, financial statements not yet available

Notes 217

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

IV. Companies which are not accounted for using the equity method due to
secondary importance for the assets, liabilities, financial position and profit
or loss of the Group

Shareholding in %
Direct

Equity

Net
income/loss

Total

000

000

Abwasser-Gesellschaft Knapsack, GmbH, Hrth

33

389

159

Astralis S.A., Betzdorf/Luxembourg

49

51

Awotec Gebude Servicegesellschaft mbH, Saarbrcken

48

96

Bderbetriebsgesellschaft St. Ingbert GmbH, St. Ingbert

49

55

Biogas Mnchengladbach-Sd GmbH & Co KG, Mnchengladbach

50

232

Breer Gebudedienste Heidelberg GmbH, Heidelberg

45

243

77

Brockloch Rig Windfarm Limited, Glasgow/United Kingdom

50

CARBON CDM Korea Ltd., Seoul/South Korea

49

6,693

5,681

CARBON Climate Protection GmbH, Langenlois/Austria

50

1,113

481

CARBON Egypt Ltd., Cairo/Egypt

49

2,202

1,984

- Energy Company Limited, London/United Kingdom

Caspian

50

Central de Biomasa Juneda, S.L., Juneda/Spain

30

CZT Valask Mezirc s.r.o., Valasske Mezirici/Czech Republic

20

83

35

Deutsche Gesellschaft fr Wiederaufarbeitung

von Kernbrennstoffen AG & Co. oHG, Gorleben

31

799

291

D&S Geo Innogy GmbH, Essen

50

740

230

ELE-GEW Photovoltaikgesellschaft mbH, Gelsenkirchen

50

20

ELE-Scholven-Wind GmbH, Gelsenkirchen

30

511

Energie Nordeifel Beteiligungs-GmbH, Kall

50

28

Energie Service Saar GmbH, Vlklingen

50

1,401

2,036

Energieversorgung Beckum GmbH & Co. KG, Beckum

49

6,086

2,942

Energieversorgung Beckum Verwaltungs-GmbH, Beckum

49

44

Energieversorgung Marienberg GmbH, Marienberg

49

1,310

847

Energieversorgung Oelde GmbH, Oelde

46

4,874

406

Enerventis GmbH & Co. KG, Saarbrcken

33

1,090

69

Ensys AG, Frankfurt am Main

25

672

3,781

Elica de la Mata, S.A., Soria/Spain

26

606

Elica de Sarnago, S.A., Soria/Spain

50

73

15

Erdgasversorgung Industriepark Leipzig Nord GmbH, Leipzig

50

826

390

Erdgasversorgung Oranienburg GmbH, Oranienburg

24

6,320

1,061

EWC Windpark Cuxhaven GmbH, Munich

50

268

152

Facility Management Osnabrck GmbH, Osnabrck

49

99

20

Fernwrmeversorgung Zwnitz GmbH, Zwnitz

50

2,440

235

Forewind Limited, Swindon/United Kingdom

25

FSO Verwaltungs-GmbH, Oberhausen

50

40

Galloper Wind Farm Limited, Reading/United Kingdom

50

Gas Service Freiberg GmbH, Freiberg

29

257

206

Gas- und Wasserwerke Bous-Schwalbach, Bous

49

11,953

2,117

Gasgesellschaft Kerken Wachtendonk mbH, Geldern

49

2,223

132

Gasversorgung Delitzsch GmbH, Delitzsch

49

5,623

878

Gemeindewerke Everswinkel GmbH, Everswinkel

45

3,945

289

1 Profit- and loss-pooling agreement

2 Figures from the Groups consolidated financial statements
3 Newly founded, financial statements not yet available

218 Notes

IV. Companies which are not accounted for using the equity method due to
secondary importance for the assets, liabilities, financial position and profit
or loss of the Group

RWE Annual Report 2011

Shareholding in %
Direct

Equity

Net
income/loss

Total

000

000

Gemeindewerke Namborn GmbH, Namborn

49

650

136

Gemeindewerke Schwalbach GmbH, Schwalbach

49

550

247

Gemeinschaftswerk Hattingen GmbH, Essen

52

4,939

440

GfB, Gesellschaft fr Baudenkmalpflege mbH, Idar-Oberstein

20

59

GfS Gesellschaft fr Simulatorschulung mbH, Essen

31

54

GKW Dillingen GmbH & Co. KG, Saarbrcken

25

12,084

133

Green Gecco Beteiligungsgesellschaft mbH & Co. KG, Troisdorf

21

20,092

423

Green Gecco Beteiligungsgesellschaft-Verwaltungs GmbH, Troisdorf

21

25

GWE-energis Netzgesellschaft mbH & Co. KG, Eppelborn

50

59

34

GWE-energis-GeschftsfhrungsGmbH, Eppelborn

50

29

Hastrabau Kommunale Entsorgungsdienste Verwaltungsgesellschaft mbH,

Langenhagen

50

64

HOCHTEMPERATUR-KERNKRAFTWERK GmbH (HKG). Gemeinsames Europisches

Unternehmen, Hamm

31

Hochtief Hungria Facility Management Kft., Budapest/Hungary

25

353

164

Homepower Retail Limited, Leeds/United Kingdom

50

26,784

Industriekraftwerke Oberschwaben beschrnkt haftende OHG,

Biberach an der Ri

50

9,307

5,655

IWW Rheinisch-Westflisches Institut fr Wasserforschung gemeinntzige GmbH,

Mlheim an der Ruhr

32

1,413

183

Kavernengesellschaft Stafurt mbH, Stafurt

50

589

302

KEVAG Telekom GmbH, Koblenz

65

2,023

866

Klrschlammentsorgung Hesselberg Service GmbH, Unterschwaningen

49

23

K-net GmbH, Kaiserslautern

25

895

40

Kommunale Dienste Marpingen GmbH, Marpingen

49

3,072

284

663

147

Kommunale Dienste Tholey GmbH, Tholey

49

Kommunale Entsorgung Neunkirchen Geschftsfhrungsgesellschaft mbH,

Neunkirchen

50

51

Kommunale Entsorgung Neunkirchen (KEN) GmbH & Co. KG, Neunkirchen

46

2,604

129

Kraftwagen-Verkehr Koblenz GmbH, Koblenz

23

1,515

89

Kraftwerk Buer Betriebsgesellschaft mbH i.L., Gelsenkirchen

50

15

Kraftwerk Buer GbR, Gelsenkirchen

50

5,113

Kraftwerk Voerde OHG der STEAG GmbH und RWE Power AG, Voerde

25

5,735

440

Kraftwerk Wehrden GmbH, Vlklingen

33

10,627

194

KSG Kraftwerks-Simulator-Gesellschaft mbH, Essen

31

538

26

KSP Kommunaler Service Pttlingen GmbH, Pttlingen

40

99

57

K-Tec GmbH, Kaiserslautern

33

237

40

KCKHOVENER Deponiebetrieb GmbH & Co. KG, Bergheim

50

50

KCKHOVENER Deponiebetrieb Verwaltungs-GmbH, Bergheim

50

34

Maingau Energie GmbH, Obertshausen

47

17,000

3,300

MBS Ligna Therm GmbH, Hofheim am Taunus

33

Moravske Hidroelektrane d.o.o., Belgrade/Serbia

51

1 Profit- and loss-pooling agreement

2 Figures from the Groups consolidated financial statements
3 Newly founded, financial statements not yet available

Notes 219

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

IV. Companies which are not accounted for using the equity method due to
secondary importance for the assets, liabilities, financial position and profit
or loss of the Group

Shareholding in %
Direct

Equity

Net
income/loss

Total

000

000

Netzanbindung Tewel OHG, Cuxhaven

25

1,157

Niederrheinwerke ReEnergie GmbH, Viersen

50

16

14

Objektverwaltungsgesellschaft Dampfkraftwerk Bernburg mbH, Hanover

58

568

56

Offshore Trassenplanungs-GmbH OTP, Hannover

50

90

Peienberger Wrmegesellschaft mit beschrnkter Haftung, Peienberg

50

660

271

Prego - Gesellschaft fr IT- und HR-Services mbH, Saarbrcken

37

9,285

2,101

Propan Rheingas GmbH, Brhl

28

41

rhenag - Thga Rechenzentrum GbR, Cologne

50

223

219

RIWA GmbH Gesellschaft fr Geoinformationen, Kempten

33

1,353

367

RKH Rheinkies Hitdorf GmbH & Co. KG i.L., Bergheim

33

302

43

RKH Rheinkies Hitdorf Verwaltungs GmbH i.L., Bergheim

33

42

RurEnergie GmbH, Dren

25

SE SAUBER ENERGIE GmbH & Co. KG, Cologne

33

253

SSW Stadtwerke St. Wendel Geschftsfhrungsgesellschaft mbH, St. Wendel

50

99

Stadtentwsserung Schwerte GmbH, Schwerte

48

51

305

721

Stdtische Werke Borna GmbH, Borna

37

3,202

260

Stdtisches Wasserwerk Eschweiler GmbH, Eschweiler

25

4,188

815

Stadtwerke - Strom Plauen GmbH & Co. KG, Plauen

49

4,107

250

Stadtwerke Aschersleben GmbH, Aschersleben

35

15,369

3,081

Stadtwerke Attendorn GmbH, Attendorn

20

10,073

701

Stadtwerke Aue GmbH, Aue

24

12,407

1,540

Stadtwerke Dillingen/Saar Gesellschaft mbH, Dillingen

49

5,134

1,104

Stadtwerke Dlmen Verwaltungs-GmbH, Dlmen

50

29

Stadtwerke Gescher GmbH, Gescher

42

3,018

589

Stadtwerke Langenfeld GmbH, Langenfeld

20

4,766

2,329

Stadtwerke Lingen GmbH, Lingen

40

12,671

1,500

Stadtwerke Lbbecke GmbH, Lbbecke

25

16,894

1,337

Stadtwerke Meinerzhagen GmbH, Meinerzhagen

27

20,873

879

Stadtwerke Oberkirch GmbH, Oberkirch

33

6,192

Stadtwerke Rolau Fernwrme GmbH, Dessau-Rolau

49

1,566

386

Stadtwerke Schwarzenberg GmbH, Schwarzenberg

25

13,413

1,106

Stadtwerke Steinfurt GmbH, Steinfurt

48

6,878

1,391

Stadtwerke Vlotho GmbH, Vlotho

25

5,150

489

Stadtwerke Wadern GmbH, Wadern

49

2,425

733

Stadtwerke Weilburg GmbH, Weilburg

20

8,077

826

Stadtwerke Werl GmbH, Werl

25

6,135

2,814

STEAG - Kraftwerksbetriebsgesellschaft mbH, Essen

21

327

SVS-Versorgungsbetriebe GmbH, Stadtlohn

38

19,638

2,901

SWL-energis Netzgesellschaft mbH & Co. KG, Lebach

50

3,406

381

SWL-energis-Geschftsfhrungs-GmbH, Lebach

50

29

1 Profit- and loss-pooling agreement

2 Figures from the Groups consolidated financial statements
3 Newly founded, financial statements not yet available

220 Notes

IV. Companies which are not accounted for using the equity method due to
secondary importance for the assets, liabilities, financial position and profit
or loss of the Group

RWE Annual Report 2011

Shareholding in %
Direct

Equity

Net
income/loss

Total

000

000

Talsperre Nonnweiler Aufbereitungsgesellschaft mbH, Saarbrcken

23

400

31

Technische Werke Naumburg GmbH, Naumburg (Saale)

49

6,990

342

Teplarna Kyjov, a.s., Kyjov/Czech Republic

32

25,583

1,703

TEPLO Votice s.r.o., Votice/Czech Republic

20

65

31

The Bristol Bulk Company Limited, London/United Kingdom

25

Toledo PV A.E.I.E., Madrid/Spain

33

756

312

Topell Nederland B.V., Den Haag/Netherlands

50

1,295

1,957

trilan GmbH, Trier

26

670

270

TWE Technische Werke Ensdorf GmbH, Ensdorf

49

2,359

35

TWL Technische Werke der Gemeinde Losheim GmbH, Losheim

50

4,393

1,002

TWM Technische Werke der Gemeinde Merchweiler GmbH, Merchweiler

49

1,781

90

TWN Trinkwasserverbund Niederrhein GmbH, Grevenbroich

33

90

15

TWR Technische Werke der Gemeinde Rehlingen - Siersburg GmbH, Rehlingen

35

4,719

194

Umspannwerk Putlitz GmbH & Co. KG, Frankfurt am Main

25

40

270

Untere Iller Aktiengesellschaft, Landshut

40

1,134

41

Verteilnetze Energie Weienhorn GmbH & Co. KG, Weienhorn

35

731

256

Verwaltungsgesellschaft GKW Dillingen mbH, Saarbrcken

25

141

Verwaltungsgesellschaft Energie Weienhorn GmbH, Weienhorn

35

24

VEW-VKR Fernwrmeleitung Shamrock-Bochum GbR, Gelsenkirchen

45

Voltaris GmbH, Maxdorf

50

1,885

398

Wrmeversorgung Mcheln GmbH, Mcheln

49

855

91

Wrmeversorgung Wachau GmbH, Markkleeberg

49

98

Wrmeversorgung Wrselen GmbH, Wrselen

49

1,241

14

Wasser- und Abwassergesellschaft Elsterwerda mbH, Elsterwerda

49

83

Wasserverbund Niederrhein GmbH, Mlheim an der Ruhr

42

8,786

763

Wasserversorgung Main-Taunus GmbH, Frankfurt am Main

49

103

Wasserwerk Wadern GmbH, Wadern

49

3,230

168

2,173

WEV Warendorfer Energieversorgung GmbH, Warendorf

25

Windenergie Frehne GmbH & Co. KG, Marienflie

45

WINDTEST Grevenbroich GmbH, Grevenbroich

38

174

30

Wohnungsbaugesellschaft fr das Rheinische Braunkohlenrevier GmbH, Cologne

50

45,020

499

WPD Windpark Damme Beteiligungsgesellschaft mbH, Damme

30

47

WVG-Warsteiner Verbundgesellschaft mbH, Warstein

35

1,675

925

WVL Wasserversorgung Losheim GmbH, Losheim

50

4,861

216

WWS Wasserwerk Saarwellingen GmbH, Saarwellingen

49

3,073

133

Zugl-Therm Kft., Budapest/Hungary

49

4,437

1,626

Zweckverband Wasser Nalbach, Nalbach

49

1,600

118

1 Profit- and loss-pooling agreement

2 Figures from the Groups consolidated financial statements
3 Newly founded, financial statements not yet available

Notes 221

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

V. Other investments

Equity

Net
income/loss

Total

000

000

30

20,129

1,283

Shareholding in %
Direct

Aarewerke AG, Koblenz/Switzerland

Adria LNG Study Limited, Valleta/Malta

16

Agrinergy PTE Ltd., Singapore/Singapore2

50

288

547

48

472,453

42,530

91

19

24,537

4,396

11,024

182

APEP Dachfonds GmbH & Co. KG, Munich

48

AURICA AG, Aarau/Switzerland

BEW Bergische Energie- und Wasser GmbH, Wipperfrth
BFG - Bernburger Freizeit GmbH, Bernburg (Saale)
CELP II Chrysalix Energy II US Limited Partnership, Vancouver/Canada

2,409

CELP III Chrysalix Energy III US Limited Partnership, Vancouver/Canada

11

1,326

1,873

279

DII GmbH, Munich

Doggerbank Project 1 Bizco Limited, Reading/United Kingdom

25

Doggerbank Project 2 Bizco Limited, Reading/United Kingdom

25

Doggerbank Project 3 Bizco Limited, Reading/United Kingdom

25

eins energie in sachsen GmbH & Co. KG, Chemnitz

454,523

73,512

Energas Renovables de vila, S.A., Madrid/Spain

17

517

Energieagentur Region Trier GmbH, Trier

10

19

Energieallianz Bayern GmbH & Co. KG, Freising

314

115

Energiehandel Saar GmbH & Co. KG, Neunkirchen

428

Energiehandel Saar Verwaltungs-GmbH, Neunkirchen

25

Energiepartner Drth GmbH, Drth

49

21

Energiepartner Elsdorf GmbH, Elsdorf

40

Energiepartner Kreuztal GmbH, Kreuztal

40

Energieversorgung Limburg GmbH, Limburg an der Lahn

10

22,809

EnergoNuclear S.A., Bucharest/Romania

17,523

704

ENO Entwicklungsgesellschaft Neu Oberhausen mbH, Oberhausen

852

1,092

6,522

13,454

10

23,082

2,913

Erdgas Mnster GmbH, Mnster

Erdgas Westthringen Beteiligungsgesellschaft mbH, Bad Salzungen

3,203

ESV-ED GmbH & Co. KG, Buchloe

153

18

European Energy Exchange AG, Leipzig

54,401

16,881

Fernklte Geschftsstadt Nord GbR, Hamburg

Fvrosi Vzmvek Zrt., Budapest/Hungary

272,149

5,197

GasLINE Telekommunikationsnetz-Geschftsfhrungsgesellschaft deutscher

Gasversorgungsunternehmen mbH, Straelen

10

54

GasLINE Telekommunikationsnetzgesellschaft deutscher Gasversorgungs

unternehmen mbH & Co. KG, Straelen

10

41,000

42,804

Gemeinschafts-Lehrwerkstatt Neheim-Hsten GmbH, Arnsberg

1,074

109

Gesellschaft fr Stadtmarketing Bottrop GmbH, Bottrop

223

330

Gesellschaft fr Wirtschaftsfrderung Duisburg mbH, Duisburg

761

1,765

41,376

1,020

GSG Wohnungsbau Braunkohle GmbH, Cologne

15

High-Tech Grnderfonds II GmbH & Co. KG, Bonn

ISR Internationale Schule am Rhein in Neuss GmbH, Neuss

1 Profit- and loss-pooling agreement

2 Figures from the Groups consolidated financial statements
3 Newly founded, financial statements not yet available

19

55

222 Notes

V. Other investments

RWE Annual Report 2011

Shareholding in %
Direct

Equity

Net
income/loss

Total

000

000

IZES GmbH, Saarbrcken

700

KEV Energie GmbH, Kall/Eifel

Kreis-Energie-Versorgung Schleiden GmbH, Kall/Eifel

8,030

2,235

Nabucco Gas Pipeline International GmbH, Vienna/Austria

17

9,441

30,500

Neckar-Aktiengesellschaft, Stuttgart

12

10,179

Ningxia Antai New Energy Resources Joint Stock Co., Ltd., Yinchuan/China

25

15,797

988

383

26

14,564

1,763

18

kostrom Saar Biogas Losheim KG, Merzig

Oppenheim Private Equity Institutionelle Anleger GmbH & Co. KG, Cologne

26

Parkstad Energiediensten BV, Voerendaal/Netherlands

Parque Elico Cassiopea, S.L., Oviedo/Spain

10

55

Parque Elico Escorpio, S.A., Oviedo/Spain

10

552

78

Parque Elico Leo, S.L., Oviedo/Spain

10

146

11

Parque Elico Sagitario, S.L., Oviedo/Spain

10

128

12

13,500

1,325

PEAG Personalentwicklungs- und Arbeitsmarktagentur GmbH, Dortmund

12

Photovoltaikgenossenschaft SolarRegion RengsdorferLAND eG, Rengsdorf

16

Promocion y Gestion Cncer, S.L., Oviedo/Spain

10

67

PSI AG fr Produkte und Systeme der Informationstechnologie, Berlin

18

68,090

7,047

ROSOLA Grundstcks-Vermietungsgesellschaft mbH & Co. Objekt Alzenau KG,

Dsseldorf

100

488

433

SALUS Grundstcks-Vermietungsges. mbH & Co. Objekt Leipzig KG, Dsseldorf

100

63

14

Sdruzen k vytvoren a vyuzvn digitln technick mapy mesta Pardubic,

Pardubice/Czech Republic

12

SE SAUBER ENERGIE Verwaltungs-GmbH, Cologne

17

89

Shanxi Baolai Power Development Co., Ltd., Taiyuan/China

25

2,028

60

Simon & Weyel GbR, Niederfischbach

13

22

289

19

Solar & Spar Contract GmbH & Co. KG, Wuppertal

Solarpark St. Wendel, St. Wendel

15

SolarProjekt Mainaschaff GmbH, Mainaschaff

50

SolarProjekt Rheingau-Taunus GmbH, Bad Schwalbach

50

50

12

151

46

Stadtmarketing-Gesellschaft Gelsenkirchen mbH, Gelsenkirchen

32

Stadtwerke Ahaus GmbH, Ahaus

46

9,273

Stadtwerke Detmold GmbH, Detmold

12

31,495

Stadtwerke ETO GmbH & Co. KG, Telgte

30,561

3,710

Stadtwerke Porta Westfalica GmbH, Porta Westfalica

12

6,389

571

Stadtwerke Sulzbach GmbH, Sulzbach

15

11,431

2,717

Stadtwerke Unna GmbH, Unna

24

12,523

Stadtwerke Vlklingen Netz GmbH, Vlklingen

18

16,387

2,591

Stadtwerke Vlklingen Vertriebs GmbH, Vlklingen

18

7,301

2,267

Store-X storage capacity exchange GmbH, Leipzig

12

1,538

206

Studiengesellschaft Kohle mbH, Mlheim an der Ruhr

10

33

SWT Stadtwerke Trier Versorgungs-GmbH, Trier

19

50,607

8,952

1 Profit- and loss-pooling agreement

2 Figures from the Groups consolidated financial statements
3 Newly founded, financial statements not yet available

Notes 223

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

V. Other investments

Direct
Technologiezentrum Jlich GmbH, Jlich
TGZ Halle TECHNOLOGIE- UND GRNDERZENTRUM HALLE GmbH, Halle (Saale)
Towarowa Gielda Energii S.A., Warsaw/Poland
Transport- und Frischbeton-GmbH & Co. KG Aachen, Aachen
Trianel GmbH, Aachen
Trinkaus Secondary GmbH & Co. KGaA, Dsseldorf
Umspannwerk Lbz GbR, Lbz

Equity

Net
income/loss

Total

000

000

587

139

15

14,124

208

8,878

3,868

Shareholding in %

43

17

390

435

72,486

6,559

43

33,953

278

18

10

Union Group, a.s., Ostrava/Czech Republic

83,674

URSUS, Warsaw/Poland

121,723

1,274

Versorgungsbetriebe Hoyerswerda GmbH, Hoyerswerda

10

27,159

10,771

vitronet Holding GmbH, Essen

15

2,186

49

Wasserver- und Abwasserentsorgungsgesellschaft Thringer Holzland mbH,

Hermsdorf

49

4,501

453

Wasserwerke Paderborn GmbH, Paderborn

10

24,508

932

306

306

WiN Emscher-Lippe GmbH, Herten

Windpark Saar GmbH & Co. KG, Merzig

11

708

147

WPD Windpark Damme GmbH & Co. KG, Damme

10

6,172

1,182

Zellstoff Stendal GmbH, Arneburg

25

39,614

26,105

1 Profit- and loss-pooling agreement

2 Figures from the Groups consolidated financial statements
3 Newly founded, financial statements not yet available

224 Independent Auditors Report

RWE Annual Report 2011

4.9 Independent Auditors Report

To RWE Aktiengesellschaft, Essen
Report on the Consolidated Financial
Statements
We have audited the accompanying consolidated financial
statements of RWE Aktiengesellschaft, Essen, and its subsidiaries, which comprise the income statement and statement of
recognised income and expenses, balance sheet, cash flow
statement, statement of changes in equity and the notes to the
financial statements for the business year from 1 January to
31December 2011.
Executive Boards Responsibility for the Consolidated Financial
Statements
The Executive Board of RWE Aktiengesellschaft is responsible
for the preparation of these consolidated financial statements.
This responsibility includes that these consolidated financial
statements are prepared in accordance with International Financial Reporting Standards, as adopted by the EU, and the additional requirements of German commercial law pursuant to
(Article) 315a Abs. (paragraph) 1 HGB (Handelsgesetzbuch:
German Commercial Code) and that these consolidated financial
statements give a true and fair view of the net assets, financial
position and results of operations of the Group in accordance
with these requirements. The Executive Board is also responsible for the internal controls as the Executive Board determines
are necessary to enable the preparation of consolidated
financial statements that are free from material misstatement,
whether due to fraud or error.
Auditors Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our
audit in accordance with 317 HGB and German generally
accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprfer (Institute of Public Auditors in Germany) (IDW) and additionally observed the
International Standards on Auditing (ISA). Accordingly, we are
required to comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether
the consolidated financial statements are free from material
misstatement.

An audit involves performing audit procedures to obtain audit

evidence about the amounts and disclosures in the consolidated financial statements. The selection of audit procedures
depends on the auditors professional judgment. This includes
the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In
assessing those risks, the auditor considers the internal control
system relevant to the entitys preparation of consolidated
financial statements that give a true and fair view. The aim of
this is to plan and perform audit procedures that are appropriate in the given circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the groups internal control system. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness
of accounting estimates made by the Executive Board, as well
as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Audit Opinion
According to 322 Abs. 3 Satz (sentence) 1 HGB, we state that
our audit of the consolidated financial statements has not led
to any reservations.
In our opinion based on the findings of our audit, the consolidated financial statements comply, in all material respects, with
IFRSs, as adopted by the EU, and the additional requirements of
German commercial law pursuant to 315a Abs. 1 HGB and
give a true and fair view of the net assets and financial position
of the Group as at 31 December 2011 as well as the results of
operations for the business year then ended, in accordance with
these requirements.

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Report on the Group Management

Report
We have audited the accompanying group management report,
which is combined with the management report of RWE Aktiengesellschaft, for the business year from 1 January to 31 December 2011. The Executive Board of RWE Aktiengesellschaft is
responsible for the preparation of the combined management
report in accordance with the requirements of German commercial law applicable pursuant to 315a Abs. 1 HGB. We conducted our audit in accordance with 317 Abs. 2 HGB and German
generally accepted standards for the audit of the combined
management report promulgated by the Institut der Wirtschaftsprfer (Institute of Public Auditors in Germany) (IDW).
Accordingly, we are required to plan and perform the audit of
the combined management report to obtain reasonable assurance about whether the combined management report is consistent with the consolidated financial statements and the audit
findings, as a whole provides a suitable view of the Groups
position and suitably presents the opportunities and risks of
future development.
According to 322 Abs. 3 Satz 1 HGB we state, that our audit
of the group management report has not led to any reservations.
In our opinion based on the findings of our audit of the consolidated financial statements and combined management report,
the combined management report is consistent with the consolidated financial statements, as a whole provides a suitable
view of the Groups position and suitably presents the opportunities and risks of future development.
Essen, 20 February 2012
PricewaterhouseCoopers
Aktiengesellschaft
Wirtschaftsprfungsgesellschaft

Manfred Wiegand
Wirtschaftsprfer
(German Public Auditor)

Markus Dittmann
Wirtschaftsprfer
(German Public Auditor)

Independent Auditors Report 225

226 Organisation chart of the RWE Group

RWE Annual Report 2011

Organisation Chart of The RWE Group

As of 17 February 2012
President and Chief
Executive Officer

Deputy Chairman of
the Executive Board

Chief Financial
Officer

Labour Director

Dr. Jrgen Gromann

Peter Terium

Dr. Rolf Pohlig

Alwin Fitting

Chief Commercial
Officer

Chief Operating
Officer

Dr. Leonhard
Birnbaum

Dr. Rolf Martin

Schmitz

RWE AG
Group Compliance &
Management Board
Office

Group Public Affairs/

Energy Politics

Group Controlling

Group Security

Commodity
anagement
M

Participation
Management

Group Communication

Group Legal/
Board Affairs

Group Finance

Group HR
Management &
Labour Law

Mergers &
Acquisitions

Municipalities

Group Executive
Management

Corporate
Development &
Group Strategy

Investor Relations

Diversity Office

Group Research &

Development

Group Coordination
Generation/
Networks/Sales

Group Audit

Group Accounting

Corporate
Responsibility/
Group Environmental
Protection

Group Tax

Group companies/internal service providers

Net4Gas, s.r.o.,
Prague

RWE IT GmbH,
Essen

RWE Service GmbH,

Dortmund

RWE Consulting
GmbH,
Essen

RWE Deutschland AG,

Essen

RWE Dea AG,

Hamburg

RWE East, s.r.o.,

Prague

RWE Innogy GmbH,

Essen

Essent N.V.,
s-Hertogenbosch

RWE Supply
& Trading GmbH,
Essen

RWE Npower plc.,

Swindon

RWE Technology
GmbH,
Essen

RWE Power AG,

Cologne and Essen

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Glossary 227

GLOSSARY
Asset coverage. Ratio of long-term capital (shareholders
equity and non-current liabilities) to long-term assets.

Commodity. Term for standardised, tradeable goods such as

electricity, oil or gas.

BAFA prices. To enable German coal to be sold at competitive

prices, mining companies receive financial support equalling
the difference between their production costs and the price
of coal imported from non-EU countries. In this context,
the German Federal Office of Economics and Export Control
(BAFA) determines free-at-frontier third-country coal prices
asasubsidy parameter. The price of thermal hard coal is
published by BAFA quarterly and annually in shipping tons
andtons of hard coal units.

Confidence level. Probability of a value lying within a certain

interval.

Barrel. International unit of measurement for trading oil.

A USbarrel corresponds to 158.987 litres.

Current asset intensity of investment. Ratio of current assets

to total assets.

Base load. Constant minimum demand for electricity

irrespective of load fluctuation. This electricity is used by
household appliances running 24 hours a day, industrial
enterprises that operate around the clock, etc. Base-load power
is primarily generated by lignite and nuclear power stations.
These facilities are usually in operation more than 6,000 hours
a year. Run-of-river power stations and biomass plants also
supply base-load power.

Debt issuance programme (DIP). Contractual master and

model documents for the issuance of bonds. Based on the DIP,
bonds with tenors of one to 30 years can be issued both quickly
and flexibly.

Clean Development Mechanism. In accordance with the Kyoto

Protocol, companies and countries can obtain emission
certificates by participating in projects to reduce emissions in
newly industrialising and developing countries, which are not
obliged to reduce emissions themselves. They can use these
certificates to meet their own requirements.

Degree of asset depreciation. Cumulative property, plant and

equipment depreciation-to-cost ratio.

CO2. Chemical formula for carbon dioxide. CO2 is a chemical

compound made of carbon and oxygen.
Combined heat and power generation (CHP). In CHP plants,
heat produced during chemical or physical conversion and the
electric power generated by the energy conversion process are
used. Unlike thermal power stations, which are solely designed
to generate electricity, CHP plants use waste heat, thereby
achieving much higher efficiencies, which result in fuel savings.
Commercial paper. Tradeable, unsecured bearer bond issued
only for short-term debt financing. Commercial paper is a
revolving credit facility, with terms typically ranging from one
day to 24 months.

Credit default swap (CDS). Financial derivative for trading

default risks associated with debt financing. The party seeking
to hedge such risks generally pays an annual fee to the
principal. In the event that the underlying credit is not repaid,
the hedge-seeking party receives a contractually agreed sum
from the principal.

Defined benefit obligation. Net present value of an employees

benefit entitlements from a company pension plan as of the
balance-sheet date.

Diluted earnings per share. If a company places new shares on

the financial market as part of a capital increase, the portion of
the company represented by each share decreases. In addition,
the rise in the total number of shares causes earnings per share
to decline. This drop in value is referred to as a dilution.
EBITDA. Earnings before interest, taxes, depreciation and
amortisation.
Thermal efficiency. In energy conversion, the ratio of useful
work performed to total energy expended. In thermal power
stations, the efficiency is the percentage of thermal energy
contained in the fuel which can be converted to electricity.
Thehigher the efficiency, the lower the loss of the fuels energy
content. Modern gas-fired power plants have an efficiency of
up to 60%. Efficiencies of 46% and 43% can currently be
achieved with hard coal and lignite, respectively.

228 Glossary

Equity accounting. Method for accounting for entities, the

assets and liabilities of which cannot be entirely included in the
consolidated financial statements by fully consolidating the
entity. In such cases, the carrying amount of the investment is
recorded on the basis of the development of the share held in
the entitys equity. This change is recorded in the income
statement of the company which owns the share in the entity.
Exploration. Term used for the search for, and prospecting of,
oil and gas resources.

RWE Annual Report 2011

Joint implementation. In accordance with the Kyoto Protocol,

countries or companies can obtain emission certificates by
participating in projects to reduce emissions in certain other
countries which are also obliged to reduce emissions. They can
use these certificates to meet their own reduction
requirements.
Kilowatt (kW). Unit of measurement of electric output.
1 megawatt (MW) = 103 kilowatts,
1 gigawatt (GW) = 106 kilowatts,
1 terawatt (TW) = 109 kilowatts.

Fixed asset intensity of investments. Ratio of non-current

assets to total assets.

Leverage factor. Ratio of net debt to EBITDA.

Forward market/forward trading. Contracts for transactions

to be fulfilled at a fixed point in time in the future are traded
on forward markets. Certain conditions, e.g. the price or
settlement date, are established when the contract is agreed.

LNG. Acronym for liquefied natural gas. LNG is obtained by

cooling gas until it becomes liquid. It occupies only 1/600 of
the space filled by natural gas in its gaseous state. In this form,
it is very well suited for transportation and storage.

Full consolidation. Method for including subsidiaries in the

financial statements of a group in cases where the subsidiaries
are controlled by the parent company (through the majority of
the voting rights or by other means).

Peak load. Designates phases in which electricity demand is

especially high, for example, at noon, when meals are prepared
in many factories and homes. Peak-load power plants are often
in service less than 3,000 hours per year. Gas-fired and hydro
storage power stations belong to this category.

Hard coal unit (HCU). Unit of measurement for the energy

content of primary energy carriers. One kilogram HCU
corresponds to 29,308 kilojoules.
Hybrid bond. Mixture of debt and equity financing. Hybrid
bonds usually have very long or unlimited tenors and can
usually only be redeemed by the issuer on contractually agreed
dates. Depending on the bond provisions, interest payments
may be suspended if certain contractual conditions are met.
Impairment test. Method of verifying the value of assets,
involving a comparison of the carrying amount to the realisable
amount. The objective is not to account for assets at an amount
higher than their realisable amount. The difference is
recognised as a reduction in value with an effect on the profit
or loss.
Investment grade. Rating category for companies of very good
to average creditworthiness. This category includes the AAA to
BBB and Aaa to Baa rating classes awarded by S&P/Fitch and
Moodys, respectively. Non-investment-grade companies are at
a much higher risk of not being able to meet their financial
obligations.

Performance shares. Virtual shares, which entitle participants

in the Beat Long-Term Incentive Plan to receive a payment at
the end of the plan period. The prerequisite is that the
predefined performance targets have been met or exceeded.
Put or call options. Options granting their buyer the right to
purchase (call option) or sell (put option) a specific underlying,
for example a share, at a pre-arranged price within a
predetermined period of time.
Rating. Standardised method in international capital markets
for assessing the risk exposure and creditworthiness of debt
issuers. A Single A rating is given to borrowers of strong
creditworthiness.
Service cost. Reflects the increase in the cost associated
with the net present value of an employees pension benefit
entitlements in accordance with the employees work
performance in the period being reviewed.
Spot market/spot trading. General term for markets where
payment and delivery are usually effected soon after conclusion
of the transaction.

To our investors Review of operations Our responsibility

Responsibility statement Consolidated financial statements Further information

Syndicated credit line. Credit line offered to companies, backed

by several banks, which can be drawn down in various amounts,
terms and currencies. Generally used to secure liquidity.
Upstream. Term for all activities involved in the exploration and
production of oil and gas. Also includes the processing of these
resources into marketable raw materials meeting generally
accepted quality standards.
Value at Risk (VaR). Measure of risk indicating the maximum
loss that might occur from a risk position (e.g. a securities
portfolio) assuming a certain probability under normal market
conditions and that the position is held for a certain period
of time. A VaR of 1 million with a holding period of one day
and a confidence level of 95% means that there is a 95%
probability that the potential loss resulting from the risk
position will not exceed 1 million from one day to the next.

Glossary 229

230 Index

RWE Annual Report 2011

Index
A
Amortisation

H
126, 136, 147, 148, 151, 154

Hybrid bond

23, 73, 160, 171, 228

Balance sheet

77, 78, 128, 151

Impairment losses

66, 126, 136, 147, 148, 151, 154

Bonds

23, 28, 73, 79, 81, 142, 171, 181

Income statement

78, 126, 146

Inventories

128, 138, 158

C
Capacity market

45

Capital expenditure

30, 69, 97, 100, 121

Leverage factor

76, 97, 100, 142, 228

Capital increase

23, 46, 74, 80, 159

Liabilities

75, 128, 140, 170, 181

Cash and cash equivalents

75, 78, 93, 128, 129, 134, 138, 159

Cash flow

76, 129, 186

Climate protection

30, 43, 83, 97, 118, 121

Net income

66, 173

CO2 emission trading

38, 90

Nuclear energy

43, 46, 51, 75, 91, 169

CO2 emissions

30, 45, 53, 83, 90, 118, 123

Nuclear fuel tax

43, 60, 91, 98

Commentary on the
segments

183

Nuclear moratorium

22, 43, 91

Nuclear phase-out

22, 43, 118

Corporate responsibility

109, 118

Cost of capital

62

Cost of debt

64, 76, 136, 138, 149

Operating result

59, 98, 184

Debt

73, 100, 128, 142, 181

126, 136, 147, 148, 151, 154

Property, plant and

equipment

69, 100, 128, 136, 154

Depreciation
Disclosure relating to
Germantakeover law

80

Provisions

75, 77, 78, 128, 139, 165, 169

Dividend

26, 68, 79, 100, 161

Rating

46, 73, 75, 142, 228

REA levy

44, 76

EBITDA

59, 184, 227

Recurrent net income

67, 98

Efficiency enhancement

46, 68, 72, 98

Renewable energy

30, 52, 58, 70, 84, 99

Employees

71, 94, 100, 116, 120, 147

Research and development

83, 119, 152

Energy efficiency

32, 118

Revenue

57, 98, 126, 146, 184

Equity

46, 77, 78, 128, 130, 159, 196

Risk management

87, 131, 178

Executive Board

20, 23, 48, 80, 102, 106, 109, 194, 226

ROCE

62

RWE AG (holding company)

78, 226

F
Financial assets

69, 78, 87, 128, 137, 156

Financial result

66, 148

Share

G
Group structure

49, 226

24, 46, 67, 74, 80, 159, 173

Shareholder structure

27

Strategy

30, 118

Supervisory Board

102, 106, 114, 191

V
Value management

62

imprint 231

To our investors Review of operations our responsibility

Responsibility statement consolidated financial statements Further information

iMpriNT
RWE Aktiengesellschaft
Opernplatz 1
45128 Essen
Germany
Phone
Fax
E-mail

+49 201 12-00

+49 201 12-15199
contact@[Link]

Investor Relations:
Phone +49 201 12-15025
Fax
+49 201 12-15265
E-mail invest@[Link]
Corporate Communications:
Phone +49 201 12-15250
Fax
+49 201 12-15094

Design concept and layout:

Jung von Matt/brand identity, Hamburg
Typesetting, image editing and production:
CHIARI Agentur fr Markenkommunikation, Dsseldorf
Photographs:
Catrin Moritz, Essen
Jann Klee, Hamburg
RWE archive
Printing:
Kunst- und Werbedruck GmbH & Co KG, Bad Oeynhausen
RWE is a member of DIRK
the German Investor Relations Association.

For annual reports, interim reports and further information

on RWE, please visit us on the internet at [Link]

This annual report was published on 6 March 2012. This is a

translation of the German annual report. In case of divergence
from the German version, the German version shall prevail.

Electricity used to only go in one direction: from power plant to customer. However, traffic on former
one-way streets has become more complex. Numerous small solar panels and wind turbines now feed
electricity into the grid from distributed points. And they do this irregularly, depending on the weather
and time of day. This places completely new demands on network operators.
With the Smart Country project in the District of Bitburg-Prm in Germany, RWE is demonstrating the
advantages to be gained in being properly connected. Thanks to a sophisticated control system,

carbon neutral
[Link] | DE-149-453272

print production

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

SMarT ENErgY EquaTES TO iNNOvaTivE

THiNkiNg aNd FOrward-lOOkiNg aCTiON.

Five-YeaR oveRvieW

Five-year overview
RWE Group

2011

2010

2009

2008

2007

million

51,686

53,320

47,741

48,950

42,507

EBITDA1

million

8,460

10,256

9,165

8,773

7,915

Operating result

million

5,814

7,681

7,090

6,826

6,533

Income before tax

million

3,024

4,978

5,598

4,866

5,246

Net income/RWE AG shareholders share in net income

million

1,806

3,308

3,571

2,558

2,667

3.35

6.20

6.70

4.75

4.74

Recurrent net income per share

4.60

7.03

6.63

6.25

5.29

Return on equity

12.6

23.1

28.5

20.7

20.1

Return on revenue

8.3

12.3

14.8

12.3

16.0

10.9

14.4

16.3

17.2

16.5

Value added

million

1,286

2,876

3,177

3,453

2,970

Capital employed

million

53,279

53,386

43,597

39,809

39,710

Cash flows from operating activities

million

5,510

5,500

5,299

8,853

6,085

Free cash flow

million

843

879

614

4,399

2,020

Capital expenditure including acquisitions

million

7,072

6,643

15,637

5,693

4,227

of which: Property, plant and equipment

and intangible assets

million

6,353

6,379

5,913

4,454

4,065

Depreciation, amortisation, impairment losses

and asset disposals

External revenue
Income

Earnings per share

Value management
Return on capital employed (ROCE)

Cash flow/capital expenditure/depreciation

and amortisation

million

3,632

3,410

2,553

2,416

2,629

Degree of asset depreciation

58.5

61.8

64.0

69.4

70.9

Free cash flow per share

1.56

1.65

1.15

8.17

3.59

Non-current assets

million

63,539

60,465

56,563

41,763

41,360

Current assets

million

29,117

32,612

36,875

51,667

42,060

Balance sheet equity

million

17,082

17,417

13,717

13,140

14,659

Non-current liabilities

million

44,391

45,162

45,633

36,793

36,796

Current liabilities

million

31,183

30,498

34,088

43,497

31,965

Balance sheet total

million

92,656

93,077

93,438

93,430

83,420

Fixed asset intensity of investments

56.0

53.4

49.4

35.5

38.4

Current asset intensity of investments

31.4

35.0

39.5

55.3

50.4

Asset coverage

96.7

103.5

104.9

119.6

124.4

Equity ratio

18.4

18.7

14.7

14.1

17.6

Energy drives our lives. It enables us to be mobile, productive and

connected. But energy is a limited resource and its price is rising. For
companies and households, this means that making efcient use of
energy pays off. And if this is done intelligently, it does not reduce growth
or quality of life.
As one of Europes leading utilities, conserving energy is at the centre of
our business model. We continuously improve our electricity generation
in order to lower fuel consumption and emissions. However, our horizon
extends beyond our plant premises. We also want our customers to benet
from the opportunities offered by making more efcient use of energy.
With innovative products and services, we help households and companies
to reduce costs and protect the environment. From electric cars to home
automation, we offer solutions across the board while setting new product
standards.
We invite you to begin a new chapter with us and convince yourself
rst-hand of the benets of smart energy!

Asset/capital structure

[Link]

The RWE Group

How we have organised ourselves.

What we do.

RWE is one of Europes five leading electricity and gas companies. Through our
expertise in oil, gas and lignite production, the construction and operation of
conventional and renewables-based power plants, commodities trading as well as
electricity and gas transmission and sales, we cover the entire energy value chain.
Some 72,000 employees supply almost 17 million customers with electricity and
nearly 8 million customers with gas via our fully consolidated companies. In fiscal
2011, we recorded just below 52 billion in revenue.

CONTENTS

Five-year overview
RWE Group

Power
Generation
RWE Power

Europe is our market: RWE is the No. 1 power producer in Germany, No. 2 in the
Netherlands, and No. 3 in the UK. We continuously expand our position in Central
Eastern and South Eastern Europe.

Netherlands/
Belgium

United
Kingdom

Sales/
Distribution
Networks
RWE
Deutschland

Essent

RWE npower

Central
Eastern and
South Eastern
Europe

RWE East

Renewables

RWE Innogy

Upstream
Gas&Oil

RWE Dea

Trading/Gas
Midstream

RWE Supply
& Trading

Five-Year Overview
Fold-Out Table of contents

Germany

The RWE Group

RWE AG

NET4GAS
Gas transmission system operator in the Czech Republic
(unbundled)

12,239

11,904

10,382

650

2,064

million

29,948

28,964

25,787

18,659

16,514

3.5

2.8

2.8

2.1

2.1

Leverage factor
Workforce
Workforce at the end of the year

70,856

70,726

65,908

63,439

146

149

110

105

74

410

360

350

330

270

Internal services
RWE Consulting
RWE IT
RWE Service
RWE Technology

The energy to lead with smart solutions.

To our investors
Letter from the CEO
The RWE Executive Board
2011 in brief
RWE on the capital market

16
20
22
24

Research & development

R&D costs

million

R&D employees
CO2 emissions

million metric tons

162

165

149

172

187

Free allocation of CO2 certificates

million metric tons

117

115

105

105

170

Shortage of CO2 certificates

million metric tons

45

50

44

67

17

metric tons/MWh

0.787

0.732

0.796

0.768

0.866

2011

2010

2009

2008

2007

Specific CO2 emissions

Dividend payment

million

1,2293

1,867

1,867

2,401

1,689

Dividend per share

2.003

3.50

3.50

4.50

3.15

billion

16.6

28.0

38.0

35.4

53.5

Moodys

A3

A2

A2

A1

A1

Outlook

negative

negative

negative

negative

stable

A+

negative

negative

negative

stable

negative

Market capitalisation
Market capitalisation at the end of the year

1 Since 2008, EBITDA has also included operating income from investments.
2 Converted to full-time positions.
3 Proposed dividend for RWE AGs 2011 fiscal year, subject to approval by the 19 April 2012 Annual General Meeting.

Customers

3.0

Responsibility statement

124

4.0
4.1
4.2

4.3
4.4
4.5
4.6
4.7
4.8

4.9

Consolidated financial statements

Income statement
Statement of recognised income
and expenses
Balance sheet
Cash flow statement
Statement of changes in equity
Notes
Boards (part of the notes)
List of shareholdings
(part of the notes)
Independent auditors report

125
126
127

1.0
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8

1.9

1.10
1.11


1.12

Review of operations
Strategy
Economic environment
Political environment
Major events
Commentary on the segments
Business performance
Financial position and net worth
Notes to the financial statements
of RWE AG (holding company)
Disclosure relating to German
takeover law

29
30
36
43
46
49
51
73
78
80

Further information
Organisation chart of the RWE Group
Glossary
Index
Imprint

Innovation
Development of risks and opportunities
including the report on the internal
control and risk management system
Outlook

83
87

Five-year overview
Financial calendar 2012/2013

2.0

Our responsibility
Supervisory Board report
Corporate governance
Compensation report
(part of the review of operations)

101
102
106
109

Workforce
Sustainability

116
118

96

Long-term credit rating

Power generation
Electricity and
gas sales

72,068

Dividend/dividend payment

ELECTRICITY and GAS: RWE OFFERS EVERYTHING

FROM A SINGLE SOURCE.
Electricity and
gas networks

2007

million

Outlook

Energy trading/
gas midstream

2008

Net debt of the RWE Group

Standard & Poors

Renewable
energy

2009

Net financial debt

Five-year overview
RWE Aktiengesellschaft

We operate in a dynamic market environment that is characterised by highly volatile

prices, changing structures, ambitious climate protection goals and increasing
political and regulatory intervention. Our response is a three-dimensional corporate
strategy: RWE is becoming more sustainable, more international, and more robust.

Conventional
generation

2010

Emissions balance

Our power plant portfolio and our investment programme for building efficient,
environmentally friendly and flexible generation capacity are the main basis
forgrowing earnings in the future. We invest billions in this every year. Meanwhile,
we are one of Europes biggest investors in offshore wind farms. Our leading
position in energy trading helps us make optimal use of our power plants on the
market. Wereact to changing customer needs by offering new products for homes,
commerce and industry. Climate protection and energy efficiency are becoming
increasingly important for our customers, too.

Gas and oil

production

2011

2.1
2.2
2.3

2.4
2.5

128
129
130
131
191
196
224

226
227
230
231

RWE annual Report 2011

FiNaNCial CalENdar 2012/2013

19 April 2012

Annual General Meeting

20 April 2012

Dividend payment

10 May 2012

Interim report for the first quarter of 2012

14 August 2012

Interim report for the first half of 2012

14 November 2012

Interim report for the first three quarters of 2012

5 March 2013

Annual report for fiscal 2012

18 April 2013

Annual General Meeting

19 April 2013

Dividend payment

15 May 2013

Interim report for the first quarter of 2013

14 August 2013

Interim report for the first half of 2013

14 November 2013

Interim report for the first three quarters of 2013

annual RepoRT 2011

2011 kEY FigurES aT a glaNCE.

Heavy burden on earnings through accelerated nuclear phase-out in Germany

Operating result of 5.8 billion
Dividend of 2.00 per share proposed
First measures for securing financial strength implemented
Outlook for 2012: Operating result in the order of last years level despite divestments
RWE Group

5.3

322.2

395.4

18.5

million

51,686

53,320

3.1

EBITDA

million

8,460

10,256

17.5

Operating result

million

5,814

7,681

24.3

Income before tax

million

3,024

4,978

39.3

Net income/RWE AG shareholders' share in income

million

1,806

3,308

45.4

Recurrent net income

million

2,479

3,752

33.9

10.9

14.4

Weighted average cost of capital (WACC) before tax

8.5

9.0

million

1,286

2,876

55.3

Capital employed

million

53,279

53,386

0.2

Cash flows from operating activities

million

5,510

5,500

0.2

Capital expenditure
Property, plant and equipment and intangible assets
Financial assets
Number of shares outstanding (average)

million

7,072

6,643

6.5

million

6,353

6,379

0.4

million

719

264

172.3

million

843

879

4.1

thousands

538,971

533,559

1.0

Earnings per share

3.35

6.20

46.0

Recurrent net income per share

4.60

7.03

34.6

Dividend per share

2.001

3.50

42.9

31 Dec 2011

31 Dec 2010

29,948

28,964

3.4

72,068

70,856

1.7

Net debt of the RWE Group

Workforce

T +49 201 12-00

F +49 201 12-15199
I [Link]

311.2

billion kWh

Value added

STarTiNg NEw CHapTErS.

294.6

External gas sales volume

Free cash flow

The Annual General Meeting and all events concerning the publication of the financial reports are broadcast live on the internet and recorded.
We will keep the recordings on our website for at least twelve months.

+ /
%

billion kWh

Return on capital employed (ROCE)

Opernplatz 1
45128 Essen
Germany

2010

External electricity sales volume

External revenue

RWE Aktiengesellschaft

2011

million

1 Dividend proposal for RWE AGs 2011 fiscal year, subject to approval by the 19 April 2012 Annual General Meeting.
2 Converted to full-time positions.

The RWE Group

How we have organised ourselves.

What we do.

RWE is one of Europes five leading electricity and gas companies. Through our
expertise in oil, gas and lignite production, the construction and operation of
conventional and renewables-based power plants, commodities trading as well as
electricity and gas transmission and sales, we cover the entire energy value chain.
Some 72,000 employees supply almost 17 million customers with electricity and
nearly 8 million customers with gas via our fully consolidated companies. In fiscal
2011, we recorded just below 52 billion in revenue.

CONTENTS

Five-year overview
RWE Group

Power
Generation
RWE Power

Europe is our market: RWE is the No. 1 power producer in Germany, No. 2 in the
Netherlands, and No. 3 in the UK. We continuously expand our position in Central
Eastern and South Eastern Europe.

Netherlands/
Belgium

United
Kingdom

Sales/
Distribution
Networks
RWE
Deutschland

Essent

RWE npower

Central
Eastern and
South Eastern
Europe

RWE East

Renewables

RWE Innogy

Upstream
Gas&Oil

RWE Dea

Trading/Gas
Midstream

RWE Supply
& Trading

Five-Year Overview
Fold-Out Table of contents

Germany

The RWE Group

RWE AG

NET4GAS
Gas transmission system operator in the Czech Republic
(unbundled)

12,239

11,904

10,382

650

2,064

million

29,948

28,964

25,787

18,659

16,514

3.5

2.8

2.8

2.1

2.1

Leverage factor
Workforce
Workforce at the end of the year

70,856

70,726

65,908

63,439

146

149

110

105

74

410

360

350

330

270

Internal services
RWE Consulting
RWE IT
RWE Service
RWE Technology

The energy to lead with smart solutions.

To our investors
Letter from the CEO
The RWE Executive Board
2011 in brief
RWE on the capital market

16
20
22
24

Research & development

R&D costs

million

R&D employees
CO2 emissions

million metric tons

162

165

149

172

187

Free allocation of CO2 certificates

million metric tons

117

115

105

105

170

Shortage of CO2 certificates

million metric tons

45

50

44

67

17

metric tons/MWh

0.787

0.732

0.796

0.768

0.866

2011

2010

2009

2008

2007

Specific CO2 emissions

Dividend payment

million

1,2293

1,867

1,867

2,401

1,689

Dividend per share

2.003

3.50

3.50

4.50

3.15

billion

16.6

28.0

38.0

35.4

53.5

Moodys

A3

A2

A2

A1

A1

Outlook

negative

negative

negative

negative

stable

A+

negative

negative

negative

stable

negative

Market capitalisation
Market capitalisation at the end of the year

1 Since 2008, EBITDA has also included operating income from investments.
2 Converted to full-time positions.
3 Proposed dividend for RWE AGs 2011 fiscal year, subject to approval by the 19 April 2012 Annual General Meeting.

Customers

3.0

Responsibility statement

124

4.0
4.1
4.2

4.3
4.4
4.5
4.6
4.7
4.8

4.9

Consolidated financial statements

Income statement
Statement of recognised income
and expenses
Balance sheet
Cash flow statement
Statement of changes in equity
Notes
Boards (part of the notes)
List of shareholdings
(part of the notes)
Independent auditors report

125
126
127

1.0
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8

1.9

1.10
1.11


1.12

Review of operations
Strategy
Economic environment
Political environment
Major events
Commentary on the segments
Business performance
Financial position and net worth
Notes to the financial statements
of RWE AG (holding company)
Disclosure relating to German
takeover law

29
30
36
43
46
49
51
73
78
80

Further information
Organisation chart of the RWE Group
Glossary
Index
Imprint

Innovation
Development of risks and opportunities
including the report on the internal
control and risk management system
Outlook

83
87

Five-year overview
Financial calendar 2012/2013

2.0

Our responsibility
Supervisory Board report
Corporate governance
Compensation report
(part of the review of operations)

101
102
106
109

Workforce
Sustainability

116
118

96

Long-term credit rating

Power generation
Electricity and
gas sales

72,068

Dividend/dividend payment

ELECTRICITY and GAS: RWE OFFERS EVERYTHING

FROM A SINGLE SOURCE.
Electricity and
gas networks

2007

million

Outlook

Energy trading/
gas midstream

2008

Net debt of the RWE Group

Standard & Poors

Renewable
energy

2009

Net financial debt

Five-year overview
RWE Aktiengesellschaft

We operate in a dynamic market environment that is characterised by highly volatile

prices, changing structures, ambitious climate protection goals and increasing
political and regulatory intervention. Our response is a three-dimensional corporate
strategy: RWE is becoming more sustainable, more international, and more robust.

Conventional
generation

2010

Emissions balance

Our power plant portfolio and our investment programme for building efficient,
environmentally friendly and flexible generation capacity are the main basis
forgrowing earnings in the future. We invest billions in this every year. Meanwhile,
we are one of Europes biggest investors in offshore wind farms. Our leading
position in energy trading helps us make optimal use of our power plants on the
market. Wereact to changing customer needs by offering new products for homes,
commerce and industry. Climate protection and energy efficiency are becoming
increasingly important for our customers, too.

Gas and oil

production

2011

2.1
2.2
2.3

2.4
2.5

128
129
130
131
191
196
224

226
227
230
231

RWE annual Report 2011

FiNaNCial CalENdar 2012/2013

19 April 2012

Annual General Meeting

20 April 2012

Dividend payment

10 May 2012

Interim report for the first quarter of 2012

14 August 2012

Interim report for the first half of 2012

14 November 2012

Interim report for the first three quarters of 2012

5 March 2013

Annual report for fiscal 2012

18 April 2013

Annual General Meeting

19 April 2013

Dividend payment

15 May 2013

Interim report for the first quarter of 2013

14 August 2013

Interim report for the first half of 2013

14 November 2013

Interim report for the first three quarters of 2013

annual RepoRT 2011

2011 kEY FigurES aT a glaNCE.

Heavy burden on earnings through accelerated nuclear phase-out in Germany

Operating result of 5.8 billion
Dividend of 2.00 per share proposed
First measures for securing financial strength implemented
Outlook for 2012: Operating result in the order of last years level despite divestments
RWE Group

5.3

322.2

395.4

18.5

million

51,686

53,320

3.1

EBITDA

million

8,460

10,256

17.5

Operating result

million

5,814

7,681

24.3

Income before tax

million

3,024

4,978

39.3

Net income/RWE AG shareholders' share in income

million

1,806

3,308

45.4

Recurrent net income

million

2,479

3,752

33.9

10.9

14.4

Weighted average cost of capital (WACC) before tax

8.5

9.0

million

1,286

2,876

55.3

Capital employed

million

53,279

53,386

0.2

Cash flows from operating activities

million

5,510

5,500

0.2

Capital expenditure
Property, plant and equipment and intangible assets
Financial assets
Number of shares outstanding (average)

million

7,072

6,643

6.5

million

6,353

6,379

0.4

million

719

264

172.3

million

843

879

4.1

thousands

538,971

533,559

1.0

Earnings per share

3.35

6.20

46.0

Recurrent net income per share

4.60

7.03

34.6

Dividend per share

2.001

3.50

42.9

31 Dec 2011

31 Dec 2010

29,948

28,964

3.4

72,068

70,856

1.7

Net debt of the RWE Group

Workforce

T +49 201 12-00

F +49 201 12-15199
I [Link]

311.2

billion kWh

Value added

STarTiNg NEw CHapTErS.

294.6

External gas sales volume

Free cash flow

The Annual General Meeting and all events concerning the publication of the financial reports are broadcast live on the internet and recorded.
We will keep the recordings on our website for at least twelve months.

+ /
%

billion kWh

Return on capital employed (ROCE)

Opernplatz 1
45128 Essen
Germany

2010

External electricity sales volume

External revenue

RWE Aktiengesellschaft

2011

million

1 Dividend proposal for RWE AGs 2011 fiscal year, subject to approval by the 19 April 2012 Annual General Meeting.
2 Converted to full-time positions.