2007

>Financial Statements 2007ofRWE AG >FinancialStatements of RWEAG

Thefinancial statements and review of operations of RWEAGfor the 2007fiscalyear aresubmitted to Bundesanzeiger Verlagsgesellschaft mbH, Cologne,Germany, the operatorofthe electronicBundesanzeiger (Federal Gazette) and published in the electronicBundesanzeiger.The review of operations of RWEAGhas been combined with the review of operationsofthe RWEGroupand has beenpublished in ourannualreportonpages 38 to 111.

Thejoint listofRWE AG’s investments has been prepared in accordance with Sec. 285, Item 11,and Sec. 313, Para.2, Items 1through4ofthe German Commercial Code (HGB) and published in the electronicBundesanzeiger.

Balance Sheet 1 IncomeStatement 2 Notes2 Dividend Proposal 16 Auditor’s Report 17 MaterialInvestments 19 Boards and Committees 21 Imprint 27 Financial Calendar 1

Material Investments

BalanceSheetatDecember 31,2007

Assets Note 12/31/07 12/31/06 €million Non-current assets (1) Financialassets 29,546 32,899 Current assets Accounts receivable and otherassets (2) Accounts receivable from affiliatedcompanies 5,542 7,134 Otherassets 886 800 Marketable securities (3) 4,184 7,039 Cash and cash equivalents (4) 595 1,501 11,207 16,474 Prepaidexpenses (5) 39 61 40,792 49,434

Equityand liabilities Note 12/31/07 12/31/06 €million Equity (6) Subscribed capital Common shares 1,340 1,340 Preferred shares 100 100 1,440 1,440 Capital reserve 1,288 1,288 Retained earnings 3,900 2,728 Distributable profit 1,772 1,968 8,400 7,424 Provisions (7) Provisions forpensionsand similarobligations 2,987 7,170 Provisionsfor taxes 2,666 2,084 Otherprovisions 1,335 1,214 6,988 10,468 Liabilities (8) Bonds 913 1,806 Bank debt 516 438 Trade accounts payable 23 56 Accounts payabletoaffiliatedcompanies 23,515 28,563 Otherliabilities 359 590 25,326 31,453 Deferred income (9) 78 89 40,792 49,434 Income Statement forthe periodfrom January 1, 2007toDecember 31,2007

€million Note 2007 2006 Netincome from financial assets (12) 4,130 4,279 Net interest (13) -1,210 -1,457 Otheroperatingincome (14) 1,964 1,718 Staff costs (15) -114 -138 Other operating expenses (16) -1,048 -1,752 Profitfrom ordinary activities 3,722 2,650 Taxesonincome (17) -777 -237 Netprofit 2,945 2,413 Profit carried forwardfromthe previousyear 1 1 Transfer to retainedearnings -1,173 -445 Distributable profit 1,772 1,968 1Negligibleamount.

Notes at December 31,2007

Roll-forward of non- Cost Accumulated Carryingamounts Depreciation currentassets depreciation forthe report- ingperiod Balanceat Additions Disposals Balanceat Balanceat Balanceat Balanceat €million 12/31/06 12/31/07 12/31/07 12/31/06 12/31/07 Financialassets Shares in affiliated companies 12,190 154 287 12,057 89 11,949 11,968 Loanstoaffiliated companies 15,006 2,825 12,181 15,006 12,181 Investments 79 46 25 100 6 76 94 3 Long-termsecurities 5,874 7,017 7,464 5,427 126 5,866 5,301 118 Otherloans 2 2 2 2 33,151 7,217 10,601 29,767 221 32,899 29,546 121 3

Material Investments

Basis of presentation

Thefinancialstatements of RWEAGhavebeenprepared in and explained separately in the notes to thefinancial accordance with the German CommercialCode(HGB) and statements.The income statement has been prepared the German StockCorporation Act(AktG). Individual bal- using the nature of expense method. Thefinancial state- ance sheetand income statement items have beencom- mentshavebeen prepared in euros(€) and amounts are binedinorder to improveclarity. These itemsare stated stated in millions of euros (€ million).

Accountingpolicies

Investments in affiliated companies and investmentsare All identifiable risks,uncertain liabilities and anticipated stated at cost,oratlower fair values in individual cases. lossesfrom pending business transactionsare takeninto accountinthe assessment of other provisions. Long-term securities arevalued at costorlower market value. Liabilities are on principle valued at repayable amounts.

Loans and employerloans areaccounted foratnominal Contingentliabilities are valuedaccording to the extent of value or at lowerfairvalue. liability existing as of the balance-sheet date.

Accounts receivable andotherassetsare disclosed at Foreign-currencytransactions arevalued at the exchange nominal value after deducting required value adjustments. rate prevailingatthe time of firstentry or—whenhedged— All identifiable individual risksare takenintoaccount. at theforward rate.Asregardsreceivables,liabilities and Current securitiesare valued at costorlower market value. foreigncurrencyholdings, losses arising from exchange- rate fluctuations areincludedinthe resultsasofthe bal- Provisions forpensions and similar obligationsare based on ance sheetdate. actuarialcomputations using KlausHeubeck’s2005G refer- ence tables—which take into account generation-dependent life expectancies—applying theentry agenormal method and an interestrate of 5%. Notes to the Balance Sheet

(1) Non-current assets An analysis and description of the movements of non- As per an agreement datedAugust7,2007, the 30.2%stake currentassetssummarized in thebalance sheet forthe in RAGAktiengesellschaft, Essen, held indirectlyand di- 2007 financialyear is provided on page 2. Thefollowing is rectly was sold to RAG-Stiftung, Essen.The transfer of the an overviewofmaterialchangesinthe fiscal year: shares took legaleffectasofNovember30, 2007.

As per the contribution and transfer agreement dated Thedecrease in loans to affiliated companies predomi- September 3, 2007, RWEAGcontributed 94.9% of its nantly relates to the repayment of loans by RWEFinance shares in GfV Gesellschaft für Vermögensverwaltung AG, B.V.,Hoofddorp/Netherlands, andthe WaterDivision. Dortmund,toRWE SystemsAG, Dortmund.Thistransaction had an effect of €125 million on additionsand disposals Long-term securitiesnearly exclusivelyincludespecial relatingtoshares in affiliatedcompanies,respectively. funds.Additionsand disposalsinthe year under review are primarily affectedbythe establishment of acontractual Thecarryingamount of RWEGas Midstream GmbH, Essen, trustarrangement (CTA)asofMarch 30, 2007,and of a increased as aresult of an addition to thecapital reserveof non-insurance-likePensionsfonds as of November 1, 2007. €15millionand acapitalincreaseof€5million.

(2) Accounts receivable andother assets

€million 12/31/07 Thereof 12/31/06 Thereof RT1 >1y. RT1 >1y. Accounts receivable from affiliatedcompanies 5,542 146 7,134 1,002 Otherassets 886 630 800 624 6,428 776 7,934 1,626 1RT=remainingterm.

Accountsreceivable from affiliatedcompanies include half-income procedurein2001and is basedonthe fact that claims arising from loans,tax groupaccounting settlements the taxburdenofretained earningsinthe past washigher and ongoing clearing transactions. than the taxburdenonthe profitswhich were distributed. Thedistribution-dependent realization of the credit appli- Otherassets primarily include claims from corporate tax cable in thepastwas replaced by aprocedurebywhich credits. Theenactment of the SocietasEuropeae Introduc- paymentsare made in instalmentsoveraperiod of 10 years tion TaxLaw (SEStEG)onDecember 13, 2006, resulted in a (2008 to 2017;generally effectiveSeptember30).Since the legally unconditional claim to thereimbursement of corpo- instalments do notbear interest, thereceivable is statedat rate taxcredits from the taximputationperiod(Sec. 37 of itspresent value. the German CorporateTax Act(KStG)—new version) at the end of theday on December31, 2006.The credit is aresult In addition,interestaccruals andreceivables aredisclosed. of the system switchfromthe imputationmethod to the 5

Material Investments

(3) Marketablesecurities €26,754,755.58. Differences to the purchaseprice were Marketable securities arefixed-interest securitiesobtained recorded with an effect on results. from theplacement of liquid funds. (4)Cashand cash equivalents In the 2007fiscalyear,RWE AG bought 465,629 RWEcom- Cash and cashequivalents nearlyexclusivelyrelatetobank mon shares on the capital marketatanaverage purchase balances. priceof€94.06 per individual sharecertificate.Theyac- count for€1,192,010.24 of thecorporation’s share capital (5)Prepaidexpenses (0.1%ofthe subscribed capital). Employees of RWEAGand itsaffiliated companies received atotal of 457, 354 common €million 12/31/07 12/31/06 shares at an averageprice of €57. 27 per individual share Discount 30 50 certificatewithin the scopeofcapital formationand 6,902 Other 9 11 common shares at an averageprice of €62.70 on the occa- 39 61 sion of service anniversaries. Atotal of 1,373unneeded common shares were sold on thecapitalmarketataprice Otherprepaid expenses predominantly consistofaccrued of €94.20 pershare. Aggregateproceeds amounted to prepayment of rent.

(6) Equity

Changes in equity Balanceat Rounding Dividend Net profit Balanceat €million 12/31/06 adjustment payments 12/31/07 Subscribed capital 1,440 1,440 Capital reserve 1,288 1,288 Retained earnings Other retainedearnings 2,728 -1 1,173 3,900 Distributable profit 1,968 -1,968 1,772 1,772 7,424 -1 -1,968 2,945 8,400

RWEAG’ssharecapitalremained unchanged at In the course of the distribution of profits, the non- €1,439,756,800and breaksdownasfollows: votingpreferred shares shallbeentitledtoapreferred dividend of €0.13per preferred shareunder certain Common shares: 523,405,000 no-par-valuecommon conditions. shares in the name of the bearer with 523,405,000votes (93.1% of thesubscribedcapital). Contingentcapital in theamount of €51,200,000 as of December 31,2006, to offer subscription rights for Preferredshares: 39,000,000no-par-valuepreferred common shares in the name of the bearer to members of shares in the name of the bearer without voting rights the Executive Boardand to otherexecutivesofRWE AG (6.9%ofthe subscribed capital). and subordinate affiliatedcompanies no longerexists. TheArticlesofAssociation of RWEAGwerereworded appropriately, as peraSupervisory Boardresolution. Pursuanttothe resolution passed by the AnnualGeneral In the year underreview, the groupwideshare-based Meeting on April18, 2007,the Executive Boardwas payment systems forexecutives of RWEAGand subordi- authorized to purchase shares of any classinRWE, total- nate affiliates consisted of the following: the Long-Term ling up to 10%ofthe company’ssharecapitaluntil IncentivePlan(LTIP)and ‘Beat’. If the persons holding October 17,2008. In addition,authorization was stockoptionsare notemployedbyRWE AG,the ex- grantedtoacquirethe company’s shares by exercising penses associated with the exercise of the options are put or call options. bornebythe respective Group company.

LTIP1 2002 tranche 2003 tranche 2004 tranche Grant date 09/20/02 07/01/03 05/25/04 Number of options granted 5,950,350 6,677,450 9,192,800 Term 5years 5years 5years Vestingconditions Two-yearwaiting period; the common shareprice musthave risen by at least10% priortothe exercise date andmusthave outperformed the DowJones STOXXUtilitiesPrice Indexonten consecutivedaysin the same period(this lastcondition does notapply if the common shareprice increases by at least20%). Upon achievementofthe above performance targets,the options canbeexercised on adaily basis following expiration of the waiting period,with the exception of shortblockingperiods priortothe publication of corporatedata. Thenumber of options which maybeexercised depends on theincrease in the priceofthe common sharecomparedtothe exercise pricedeterminedwhen theoptions aregranted. In the eventofa20% priceincrease allofthe options canbeexercised; fora15 or 10% increase,60or 25% of the options can be exercised,respectively. Exercise price €34.24 €26.37 €35.45 Form of settlement Cash settlementamounting to the difference between theshare priceupon exercise andthe exercise price or provisionofcommon shares(at the discretion of RWE AG).Settlement is limitedto50% of the exercise price. 1Long-Term Incentive Plan. 7

Material Investments

Beat 2005 tranche 2006 tranche 2007 tranche Grant date 01/01/05 01/01/06 01/01/07 Numberofconditionally 2,551,800 2,444,191 1,468,132 grantedperformanceshares Term 3years 3years 3years Pay-out conditions Automaticpay-out if following awaitingperiodofthree yearsanoutperformance of at least25% compared to the Dow Jones STOXXUtilities Indexpeer group hasbeenachieved,measured in termsof theirindex weighting as of theinceptionofthe programme. Measurementofoutperformance is carried out using Total Shareholder Return (TSR), which takes into accountboththe developmentofthe share price and reinvested dividends. Determination of payment 1. Determination of the indexweightingofthe peer group companies which exhibit alowerTSR than RWEatthe end of theterm. 2. Performance factoriscalculatedbysquaringthis percentage rate andmultiplying it by 1.25. 3. Total number of performance shares which can be paid out is calculated by multiplyingthe performanceshares conditionally grantedbythe performance factor. 4. Paymentcorrespondstothe finalnumber of performance shares valued at theaverage RWEshare priceduringthe last 20 tradingdaysprior to expiration of the programme (with aceiling of two times and threetimes the value of theperformance shares as of the grantdate,for the2006 and 2007 tranche andthe 2005 tranche, respectively). Change in corporate • If during the waiting periodthere is achange in corporate control,acompensation paymentismade. control/merger This is calculatedbymultiplyingthe price paid in the acquisition of the RWE sharesbythe final number of performance shares.The latter shallbedeterminded as per theregulations of the compensation plan with regardtothe time when the bidfor corporate control is submitted. • In the eventofamerger with another company,compensation shall be calculatedonthe basisofthe expectedvalueofthe performance shares at thetimeofthe merger, multiplied by the prorated number of performance shares corresponding to theratiobetween thetotal waiting periodand the waitingperioduntil the mergertakes place. Form of settlement Cash settlement

Long-TermIncentive Plan. Thefollowing changes in the number of outstandingLTIPoptions occurredinthe year under review:

LTIP 2002 tranche 2003 tranche 2004 tranche Outstanding at the startofthe fiscal year 1,200 24,200 116,850 Change in grant/expired -1,200 -3,000 5,000 Exercised 0 -8,000 -36,850 Outstanding at the end of the fiscal year 0 13,200 85,000 Exercisableatthe endofthe fiscal year 0 13,200 85,000

Theaverage weightedshareprice as of the exercise date Beat. Thefair valueofthe performance shares (PS) condi- amounted to €80.63 forthe options fromLTIPexercised tionally granted in the Beat programmeamounted to fiscal2007. Theexercise prices of the outstanding LTIP €24.99 per shareasofthe grant date forthe 2007tranche, optionsasofthe balance-sheetdateranged from €13.19 to to €17.48 per share forthe 2006 tranche and to €18.62 per €17.73.The weightedaverage remaining contractualterm amountedto1.4 years. sharefor the 2005tranche.These values were calculated performance share, discountrates forthe remaining term, externally using amultivariateBlack-Scholes standard volatilities andthe expected dividendsofpeercompanies modelvia MonteCarlo simulations on thebasis of one as well as the expected dividends of RWEAG. million scenarios each. In the calculations,due considera- tion was takenofthe maximumpayment stipulatedinthe In theyearunder review, the numberofperformance programme’s conditions foreachconditionally granted shares issued in the Beat programme developed as follows:

Beat 2005 tranche 2006 tranche 2007 tranche Outstanding at the startofthe fiscal year 2,287,886 2,429,155 0 Granted 1,468,132 Change in grant/expired -4,768 -7,794 -4,582 Outstanding at the end of the fiscal year 2,283,118 2,421,361 1,463,550 Payableatthe end of the fiscal year 2,283,118 0 0

Theremaining contractualtermamountedtoone year for regulations,the payment amount is determinedbased on a the 2006 tranche and twoyearsfor the 2007tranche.The share priceof€55.86. contractualtermfor the2005tranche endeduponcomple- tion of the year under review. In accordance with theplan

(7) Provisions

€million 12/31/07 12/31/06 Provisions forpensionsand similarobligations 2,987 7,170 Provisionsfor taxes 2,666 2,084 Otherprovisions 1,335 1,214 6,988 10,468

Disclosedprovisions forpensions also includebenefits obligationsare carried on RWEAG’sbalance sheetdue to payable to current and former employees of RWEEnergyAG, cumulative debt assumption agreements,entered thePen- RWEGas Midstream GmbH, RWEPower AG,RWE Rhein-Ruhr sionsfondsagreement that wasconcludedonOctober 22, AG,RWE SystemsAG, RWESystems Applications GmbH, 2007.The redemption contribution,which wascalculated RWESystems ComputingGmbH, actuarially in compliance with statutory regulations, RWESystems ImmobilienGmbH&Co. KG, amountedto€4,655 million.The transfer resulted in a RWETrading GmbH,RWE TransportnetzStrom GmbH and disposal of pensionobligations accountedfor under com- RWEWestfalen-Weser-Ems AG.Expenses incurredfor the merciallaw in theamountof€4,218million. retirement benefits of the companiesconcernedare reim- bursed by them. Provisions fortaxes predominantly concernthe year under reviewaswellastax auditing periods which arestill open. As of November 1, 2007, RWEAGtransferredcertain bene- fitobligations to RWEPensionsfonds AG.Inthe future, Otherprovisions primarily relate to risksassociated with company pension plan benefitsfor this groupofbeneficiar- investments, interestpayment obligations, and contingent ies will be administeredbyanon-insurance-likePensions- lossesfrompending financial transactions. fonds. Companies affiliatedwithRWE AG,whose pension 9

Material Investments

(8) Liabilities

12/31/07 Thereof Thereof 12/31/06 Thereof €million RT1 <1y. RT1 >5y. RT1 <1y. Bonds 913 700 1,806 663 Bank debt 516 378 83 438 234 Trade accounts payable 23 23 56 56 Accounts payabletoaffiliatedcompanies 23,515 8,000 10,475 28,563 3,769 Otherliabilities 359 248 107 590 477 of which tax -198 -198 -70 -70 of which social security -6 -1 -1 -7 -4 25,326 8,649 11,365 31,453 5,199 1RT=remainingterm.

Bondslargely comprise mediumtermnotes of RWEAGwith (9) Deferred income varying maturitiesand interest rates. This item exclusively relates to accrued interestequaliza- tion payments. Bank debtprincipally relates to obligationsarising from bank loansand interest accruals from existingswapagree- (10) Contingent liabilities &other financialobligations ments. Contingentliabilities include warrantyagreements, bank guarantees and liabilities from guarantees. Accountspayabletoaffiliated companies concern the trans- feroffinancial resources as well as ongoing clearing trans- Warrantyagreements reflect €688million in warranties actions. granted to third parties forthe benefitofaffiliated compa- nies. Otherliabilities primarily include accountspayablerelated to taxesand interestaccruals. Accountspayable duetobank guarantees amount to €348 million andexclusivelyrelatetocurrent businessconducted by affiliated companies.

Furthermore, theguarantees areperformance andwarranty guarantees totalling €83million, €17million of which are from current businessconductedbyaffiliated companies. Thefollowing payment guarantees to the creditorsofthe of the balance-sheet date within the scopeofthe debt bondsofRWE Finance B. V.,Hoofddorp, Netherlands, issuance programme: (a subsidiary wholly ownedbyRWE AG)wereinexistence as

Issuer Issue volume Coupon in % Maturity RWE Finance B.V. €1,282 million 5,375 April2008 RWEFinance B.V. CHF 500 million 2.0 December 2008 RWEFinance B.V. £500 million 4,625 August 2010 RWE FinanceB.V. €1,808 million 6,125 October2012 RWE Finance B.V. £886 million 6,375 June 2013 RWE Finance B.V. €530 million 4,625 July 2014 RWE Finance B.V. €850 million 6,250 April2016 RWEFinance B.V. €980 million 5,125 July 2018 RWE Finance B.V. £801 million 6.5 April2021 RWEFinance B.V. £685 million 5,625 December 2023 RWEFinance B.V. £1,068 million 6.25 June 2030

Furthermore,RWE AG hasassumed €17million in liabilities the split-upofRWE GasAGfor €800 million effective De- on behalf of oneaffiliate. cember31, 2008.RWE AG acceptedthe obligation to pay the purchaseprice through acumulative assumption of Due to the transfer of certain pension obligationstoRWE debt, which results in acollective liability. PensionsfondsAGinthe year under review, RWEAGand the affiliated companies that entered intothe Pensions- RWEAGisaco-guarantor forajoint and severalliability of fonds agreementare legally obligated to contribute further GBP146 millionwithin thescopeofanotionalcashpool capitalintheir function as employerinthe event that the betweenaffiliates. Pensionsfonds hasinsufficient fundsinthe future. Anumber of shareholder compensationclaimswerefiled by Additionally, thereare joint andseveral liabilitiesfrom the outsideshareholders in connection with restructuring transferofpension obligationstoeight affiliated compa- programmesunder companylaw to examinethe reasonabil- nies in the amount of €35 million and to an investmentof ityofthe conversion ratios and/orthe amount of the cash an affiliate in theamount of €11million. compensations. RWEAGassumes thatthe conversion ratios and cash compensations determined by appraisers and By signing amutualbenefit agreement, RWEAGand other verified by auditing firmswerereasonable.Ifthe legally parent companies of German nuclear powerplant operators enforceabledecisions come up with adifferent result, the undertook to provide €2,244.4 million in funding to liable compensationwill be carried outbymaking an additional nuclear powerplant operators to ensurethattheyare able cashpayment to the affected shareholders, including those to meettheir payment obligations in the event of nuclear whoare notinvolvedinthe conciliation proceedings. damages. RWEAGhas a25.851% contractualshare in the liability, plus 5% fordamagesettlement costs. In Mayand December 2006,the EU Commission conducted EU-widefollow-upsectorinquiries. Among those affected Pursuanttothe shareholders’agreement of December 22, were companies belonging to theRWE GroupinGermany. 2003, RWEEnergywill purchase allofRWE Westfalen- Subsequently, the EU Commission requestedinformation Weser- EmsAG’soutstandingsharesthatweregranted to on specific issues concerning theenergymarketfromRWE, the former shareholdersofRWE GasAGinconnection with among others,which it will processfurther. 11

Material Investments

TheEUCommission instigated market abuseproceedings both its ownemployees as well as the employeesofgroup against RWEatthe beginning of May2007, basedonthe companies. suspicion thatRWE obstructedaccesstothe German gas transmission system,inorder to safeguardRWE’s alleged €8 millioninaccounts receivable from reinsurance policies market-leadingpositionasagassupplier.Inparticular,this have been pledgedinconnection with company pension accusation is being levelled at RWETransportnetz Gas, a benefit obligations from deferred compensationschemes. subsidiaryofRWE Energy.The Commission,however,ex- pressly notes that itsinstigation of legalproceedings does Otherfuture—undiscounted—financial obligations from notmeanthatthe Commission has conclusive proofofany leases and rent amountedto€186million as of December wrongdoing by RWE. 31,2007. €123 million thereof are payable to affiliated companies. At the endofMarch2007, €7,856 million in assets were transferred to thetrustRWE Pensionstreuhand e.V. to fi- (11) Derivativefinancialinstruments nance partsofthe corporate pension plan externally viaa We usederivativefinancial instrumentstohedge currency, contractualtrustarrangement(CTA).Due to thetransferof interest-rateand pricerisks from foreigncurrency items, certain pension obligationstoRWE Pensionsfonds AG, cash investments and financing transactions. Thenominal which also took place in the fiscal year,RWE AG’s assets volume of derivativesconcludedwithexternalcounterpar- held in trustasofthe balance-sheet date amounted to ties amountsto€18.6 billion as of the balance-sheet date. €3,073 million(of which€2,987millionwerefinancial assets and €86millionwereother assets). Offsetting derivatives with anominal volume of €15.3 billionhavebeen concludedwithgroup companies. Marketable securities with anominal value of €50 million have been depositedinatrustfor RWEAGand subsidiaries Thefollowingoverviewshows ourderivativefinancial in- to secureentitlementsfromthe old-age part-timeblock strumentsasofDecember 31,2007: model in accordance with Sec. 8a of the German Old-Age Part-Time Employment Act(AltTZG). This collateralbenefits

Nominal volume Remainingterm>1year Fair value External Within the External Within the External Within the €million group group group Foreign currency derivatives Foreignexchange forwards 2,555 10,046 461 2,753 -39 3 Interest-rate/cross-currency swaps 12,035 5,238 2,604 2,723 214 -271 14,590 15,284 3,065 5,476 175 -268 Interest rate derivatives 4,000 4,000 -41 Total 18,590 15,284 7,065 5,476 134 -268

Thefair value generally corresponds to themarketvalue of Within the scope of currencyhedging,among otherthings, the derivativefinancial instrumentifitcan be reliably de- interest-rate/cross-currency swapsaswellasmatching termined.Ifthe market valuecannotbedetermined relia- offsetting transactionshavebeenconcludedwithwholly- bly, thefair value is derivedfromthe marketvalue of simi- owned subsidiaries.RWE AG’s derivative transactions con- lar financial instruments or usinggenerally acceptedvalua- cluded with banks and therespective offsetting transac- tion methods(discounted cash flow method,optionprice tions form an evaluation unit to avoid an evaluationresult. model). Thecompanies usethese interest-rate/cross-currency swaps in addition to foreign-currencyliabilities to hedge the Changesinthe marketvalue of derivatives are offset by prices of their foreigninvestments. On termination of a corresponding offsetting changesinthe market valueof swap,the positive or negativemarketvalue is offset existing underlying transactions.€29 million in provisions againstthe cost of theinvestments without an effecton to coverpossiblelossesfrom negativemarketvalues of profits or losses. financial instrumentswereaccrued fornegative currency portfoliobalances and financial instruments which do not RWEAGconcluded cross-currency swap transactions in have acounteracting transaction on the balancesheet. order to hedge itsgroup companies’ foreign-currencyre- ceivables and liabilities. Internal directivesthatare binding upon RWEAGand its subsidiaries define the rangeofaction, responsibilities and Interest-rate andinterest-rate/cross-currency swapsare controlsallowable when tradingwithderivatives.Inpar- used to hedgebondsand notes payable. ticular,withthe exception of arbitrage dealsinenergy trading,derivativefinancial instruments mayonlybeused Furthermore,currency futures andcross-currency swaps to hedge risks arising from underlying transactions and were purchasedfor contractually agreed andforecastpay- associated liquidityinvestment and financing procedures. mentspayableby—and individual currency risks associated All external counterparties have goodcreditratings. with—RWE AG andgroupcompanies.Mostofthemwere passed on to groupcompanies congruently.

Notes to the Income Statement

(12) Netincomefromfinancialassets

€million 2007 2006 Income fromprofitand losstransferagreements with affiliatedcompanies 3,918 2,734 Income from investments in affiliatedcompanies 107 1,070 othercompanies 1 1 108 1,071 Expenses fromprofitand losstransferagreements with affiliatedcompanies -591 -302 Income from other securitiesand loans held as financial assets 831 1,040 of which fromaffiliated companies (629) (835) Amortization of financial assets and currentsecurities -136 -264 4,130 4,279

Net income from financialassets largely consists of income Theamortizationoffinancialassetsand current securities transfered from RWEPower AG and RWEEnergyAG. largely relates to special funds. 13

Material Investments

(13) Netinterest

€million 2007 2006 Other interestand similarincome 568 554 of which fromaffiliated companies (211) (223) Interest andsimilar expenses -1,778 -2,011 of which fromaffiliated companies (-1,355) (-1,403) -1,210 -1,457

(14) Otheroperating income sale of marketable securities and theuse and release of Otheroperating income mainly consists of income from investment risk provisions. intra-group taxallocations.Italsoincludesincome from the

(15) Staffcosts

€million 2007 2006 Wages and salaries -67 -72 Cost of socialsecurity, pensionsand other benefits -47 -66 of which forpensions (-43) (-61) -114 -138

Annual average full time equivalents 2007 2006 Salariedstaff 355 360 of which part-timeand fixed-termemployees (41) (40) Apprentices 11 10 366 370

(16) Other operating expenses (17) Taxesonincome Otheroperatingexpensesprimarily concern expenses Taxesonincome primarily relate to the fiscalyearand prior associated with the interestsharecredited to theRWE yearsaswellastoanaddition to provisions forcorporate Group’sdivisional managementcompanies forthe pension and tradetax risks. provisions reportedonRWE AG’s balance sheet. This item also includes other taxes. Otherdisclosures

Information on the membersofthe SupervisoryBoard and As of the balance-sheet date,the Executive Boardheld ExecutiveBoard pursuant to Sec. 285, No.10ofthe German 359,100performance shares from the 2005 trancheofthe Commercial Code (HGB)isprovidedonpages 21 to 26. long-termincentiveplan (Beat),324,198 performance shares from the 2006 tranche and 183,824performance TheExecutiveand SupervisoryBoardshaveissuedthe shares from the2007tranche.The long-term incentive plan declaration regarding the German CorporateGovernance is described in detail in the section on equity. Code pursuant to Sec. 161 of theGermanStock Corporation Act(AktG) and madeitpermanently accessible to the sha- On February 27,2007, CapitalResearch and Management reholdersonRWE AG’s website. Company,Los Angeles/USA, informeduspursuanttoSecs. 21 and 22 of theGermanSecurities Trading Act(WpHG) Theprinciples of the compensation system and the amount that itsshareofvotingrightsinRWE AG crossedthe thresh- of compensation forthe Executive and Supervisory Boards oldof3%asofFebruary27, 2007, andthatitheld3.41% of arepresentedinthe compensation report.The compensa- the voting rights in RWEAGonthatday. tion reportispartofthe review of operations. On March29, 2007, AllianzSE, Munich,informedusin In total, theExecutive Boardreceived €10,882,000short- accordance with Secs. 21, 22 and 24 of the German Securi- term compensationcomponents in fiscal 2007.Inaddition ties Trading Act(WpHG) that its shareholding exceeded the to this,long-term compensation components from the 2007 3% hurdle on March26, 2007,amounting to 3.69%. This tranche of the Beat programme amounting to €4,594,000 includes3.68% of the voting rightsinRWE AG,which are wereallocated(183,824 performance shares). Totalcom- allocable to Allianz SE pursuant to Sec. 22 of the German pensation of the Executive Board forfiscal2007thus Securities TradingAct (WpHG).Furthermore, Allianz SE amountsto€15,467,000. Thefixed remuneration paid to informed us in connection with Sec. 24 of the German membersofthe SupervisoryBoard was€1,191,000, andthe Securities TradingAct (WpHG) that Allianz Deutschland AG, variable remuneration amountedto€2,046,000. Munich,and Allianz Versicherungs-Aktiengesellschaft, Munich,eachexceeded the3%hurdleofvoting rightson No loans or advances were granted to membersofthe March26, 2007.Inthisconnection,the voting rightsof Executive Board or Supervisory Board in the year under Allianz Versicherungs-Aktiengesellschaft, Munich, arealloc- review. able to Allianz Deutschland AG,Munich,inaccordance with Sec. 22 of the German Securities TradingAct (WpHG). Former members of the ExecutiveBoard of RWEAGand theirsurviving dependantsreceived €5,961,000.Nolong- On April11, 2007,RWEnergie-Beteiligungsgesellschaft term incentivecomponents were awarded.€28,483,000 in mbH &Co. KG,Dortmund, informed us thatthe 11.10% provisions have been madetocoverpension obligations to shareofvotingrights in RWEAG, previously held by former membersofthe Executive Boardand their surviving RW Energie-Beteiligungsgesellschaft mbH,was transferred dependants. Theaforementioned figuresare influenced by to it effective December 13,2006, the date on which the the transfer of pensionobligations to RWEPensionsfonds company changed its legalform. Furthermore, RWEB Ver- AG,which wascarried outeffectiveNovember 1, 2007. waltungsGmbH, Dortmund,informedusthat, as general partnerinRWEnergie-BeteiligungsgesellschaftmbH &Co. TheEconomicAdvisoryBoard received €289,000. KG,its shareofvoting rightsinRWE AG exceeded the thresholdsof5%and 10%onDecember 13,2006, and amounted to 11.10% on that day. Thesevoting rights are 15

Material Investments

allocable to it viaRWEnergie-Beteiligungsgesellschaft mbH On December19, 2007, CapitalWorld Growth andIncome &Co. KG in accordance with Sec. 22 of the German Securi- Fund,Los Angeles/USA,informed us in accordance with ties TradingAct (WpHG). Secs.21and 22 of the German Securities Trading Act (WpHG) that its shareofvoting rightsinRWE AG exceeded On May7,2007, AllianzSE, Munich, informed us in accor- the thresholdof3%onDecember13, 2007, and amounted dancewithSecs.21, 22 and24ofthe German Securities to 3.02% on that day. Trading Act(WpHG) that itsshareholding fell below the 3% hurdle on May2,2007, and that it amounted to 1.52% on On December21, 2007, RW Energie-Beteiligungs- thatday.Thisincludes1.52% of the votingrights in RWE gesellschaftmbH &Co. KG,Dortmund,informedusin AG,which are allocable to it in accordance with Sec. 22 of accordance with Secs. 21 and 22 of theGermanSecurities the German Securities Trading Act. Furthermore, Allianz SE, Trading Act(WpHG) that itsshareofvoting rights in RWE Munich,informedusinconnection with Sec. 24 of the AG exceeded thethresholdof15% on December 21, 2007, German SecuritiesTrading Act(WpHG)thatthe shares of and amountedto16.09%onthat day. Furthermore, RWEB voting rightsheldbyAllianz Deutschland AG,Munich, and VerwaltungsGmbH, Dortmund,informed us that it fell Allianz Versicherungs-Aktiengesellschaft, Munich, eachfell belowthe 10%, 5% and3%thresholdsonDecember 10, belowthe 3% hurdle of votingrights on May2,2007. Ac- 2007, and thatnovotingrights in RWEAGare allocable to cording to Sec. 22 of the German Securities Trading Act it any longer. (WpHG), theshare of voting rightsheldbyAllianz Versi- cherungs-Aktiengesellschaft, Munich, is allocabletoAllianz Thefollowing fees were recognized as expensesfor the ser- Deutschland AG,Munich. vicesrenderedinfiscal2007bythe auditorofthe financial statements,PricewaterhouseCoopersAktiengesellschaft On May9,2007, UBSAG, Zurich/Switzerland,informed us Wirtschaftsprüfungsgesellschaft: in accordance with Secs. 21 and 22 of the German Securi- ties TradingAct (WpHG)thatits shareofvotingrights in €million 2007 2006 RWEAGexceeded the thresholdof3%onMay 3, 2007, and Auditservices 1.9 0.4 amounted to 3.14%ofthe voting rights in RWEAGonthat Other assuranceand 0.4 valuation services 0.5 day. This includes0.02% in votingrightsthatare allocable Other 0.1 0.2 to UBS AG in accordance with Sec. 22 of the German Securi- 2.5 1.0 ties TradingAct (WpHG).

On May10, 2007, UBSAG, Zurich/Switzerland,informedus Thefees foraudit services contain the fees forthe legally in accordance withSecs. 21 and 22 of the German Securi- required audit of the financial statements of the parent ties trading Act(WpHG)thatits shareofvotingrightsin company (RWE AG)and of the RWEGroup andfor theaudit- RWEAGfellbelow the 3% hurdle on May4,2007, and like reviewofthe interimGroup financial statements of amounted to 1.43%onthatday.Thisincludes 0.05%in RWEAG, insofarasthese aredirectlyborne by RWEAG. voting rightsthatare allocable to UBS AG in accordance Fees forother assurance and valuation services related with Sec. 22 of the German Securities TradingAct (WpHG). principally to duediligence,consultingservicesrelatingto, andthe auditof, theimplementation of groupwideac- On May30, 2007,Capital Research andManagementCom- counting principlesand ongoing or plannedtransactions pany, Los Angeles/USA,informed us in accordance with and otherspecial audits.Thisitemalso includes fees forthe Secs. 21 and 22 of the German Securities Trading Act auditofthe internalcontrolling system and,above all, of IT (WpHG) that its shareofvoting rightsinRWE AG exceeded systems as well as expenses incurredinconnection with the thresholdof5%onMay 24,2007, andamounted to statutory regulations and courtorders. 5.12% on that day. Dividend proposal

Distributable profit developedasfollows:

Net profit 2,944,905,865.32 € Profit carried forwardfrom theprevious year 80,757.23 € Transfer to retainedearnings 1,173,400,000.00 € Distributable profit 1,771,586,622.55 €

We proposetothe AnnualGeneral Meeting that RWEAG’s distributable profit forfiscal2007beappropriated as fol- lows:

Distribution of adividendof€3.15 perdividend-bearing individual share certificate:

Dividend 1,771,575,750.00 € Profitcarryforward 10,872.55 € Distributable profit 1,771,586,622.55 €

Essen, February 13, 2008

TheExecutiveBoard

GroßmannBonekampFitting JobsPohlig 17

Material Investments

Auditor’s Report

We have audited theannual financial statements— dence supporting thedisclosures in the booksand records, comprising the balance sheet,the income statement and the annualfinancial statementsand thecombined man- the notes to the financial statements—togetherwith the agement report areexamined primarily on atestbasis bookkeepingsystemand the managementreportofRWE within the framework of theaudit.The auditincludesas- Aktiengesellschaft,Essen,which is combined withthe sessing the accounting principles used and significant groupmanagement report, forthe business year from estimates madebythe Company’s BoardofManaging January1to December 31,2007. Themaintenance of the Directors as well as evaluatingthe overall presentation of books and records and the preparation of theannual finan- the annualfinancial statementsand combined manage- cial statementsand thecombined management report in ment report.Webelieve that our auditprovides areason- accordancewith German commercial law and supplemen- able basis forour opinion. tary provisions of the articles of incorporation arethe re- sponsibilityofthe Company’sBoard of ManagingDirectors. Ouraudit has notled to anyreservations. Ourresponsibility is to express an opinion on the annual financial statements,together withthe bookkeeping sys- In our opinion based on the findings of our audit,the tem,and the combined management reportbasedonour annualfinancial statements comply with the legal require- audit. mentsand supplementaryprovisions in the articles of incorporation and give atrueand fair viewofthe netassets, We conductedour auditofthe annual financial statements financial positionand results of operationsofthe Company in accordance with§(Article) 317HGB (“Handelsgesetz- in accordance with(German) principles of proper account- buch”: “German CommercialCode”)and German generally ing.The combined management report is consistent with accepted standards forthe audit of financial statements the annualfinancialstatementsand as awhole provides a promulgated by the Institutder Wirtschaftsprüfer (Insti- suitable view of the Company’sposition and suitablypre- tute of PublicAuditorsinGermany) (IDW). Thosestandards sents the opportunities andrisks of futuredevelopment. requirethatweplanand perform theaudit such that mis- statementsmaterially affecting the presentation of the net Essen, February 14,2008 assets,financial positionand results of operationsinthe annual financial statementsinaccordance with German PricewaterhouseCoopers principles of proper accounting andinthe combined man- Aktiengesellschaft agement report aredetectedwith reasonable assurance. Wirtschaftsprüfungsgesellschaft Knowledgeofthe businessactivities and the economicand legalenvironment of the Company and expectations as to M. Wiegand MarkusDittmann possible misstatements are takeninto account in the de- Wirtschaftsprüfer Wirtschaftsprüfer termination of auditprocedures. Theeffectiveness of the (German Certified(German Certified accounting-relatedinternal control system and the evi- PublicAuditor)PublicAuditor) MaterialInvestments as of December 31,2007

I. Affiliates Investment in Equity Net income/ Revenue Employees2 acc. With of the last lossofthe 2007 2007 Sec. 16 of the fiscal year last average German Stock fiscal year Corporation Act % €'000 €'000 €million RWEAktiengesellschaft,Essen 8,400,050 2,944,906 – 355 RWEPower RWE Power Aktiengesellschaft, Cologne and Essen 100 2,171,058 -1 8,579 13,184 KernkraftwerkeLippe-Ems GmbH,Lingen(Ems) 99 165,545 -1 267 303 Kernkraftwerk Gundremmingen GmbH,Gundremmingen 75 84,184 8,343 256 712 Mátrai ErömüZártkörüen Müködö Részvénytársaság (MÁTRA), Visonta/Hungary 51 200,203 47,002 277 2,420 Rheinbraun BrennstoffGmbH, Cologne 100 63,294 -1 543 164 RWEDea AG,Hamburg 100 1,323,905 -1 1,020 807 RWEDea Norge AS,Oslo/Norway 100 153,201 54,506 251 59 RWE Dea Suez GmbH, Hamburg 100 87,226 -1 185 106 RWE Trading GmbH, Essen 100 51,100 -1 13,760 511 RWEEnergy RWE Energy Aktiengesellschaft, Dortmund 100 1,017,905 -1 7,785 488 Budapesti Elektromos Müvek Nyrt. (ELMÜ), Budapest/Hungary 55 1,041,267 767,498 1,080 695 EmscherLippe Energie GmbH,Gelsenkirchen 79 73,371 12,317 485 649 EnergisGmbH, Saarbrücken 64 136,782 22,588 345 327 enviaMitteldeutsche Energie AG,Chemnitz 64 888,810 99,286 2,348 2,173 enviaNetzservice GmbH,Chemnitz 100 4,045 -1 341 7 enviaVerteilnetz GmbH,Halle (Saale) 100 24 -1 1,653 4 eprimoGmbH, Neu-Isenburg 100 4,600 -1 87 30 Észak-magyarországi Áramszolgáltató Nyrt. (ÉMÁSZ), Miskolc/Hungary 54 366,442 229,688 387 356 EWVEnergie- undWasser-VersorgungGmbH, Stolberg 54 36,457 11,261 349 370 Jihomoravská plynárenská,a.s., Brno/Czech Republic 50 205,446 24,540 595 945 Koblenzer Elektrizitätswerk und Verkehrs-Aktiengesellschaft, Koblenz 58 71,793 5,539 412 532 LechwerkeAG, Augsburg 90 226,756 53,150 883 1,142 LEWVerteilnetz GmbH,Augsburg 100 25 -1 530 4 MITGAS MitteldeutscheGasversorgungGmbH, Halle 60 93,786 25,004 677 293 rhenag Rheinische Energie Aktiengesellschaft, Cologne 75 278,434 164,192 267 325 RWE Energy Beteiligungsgesellschaft mbH, Dortmund 100 4,350,032 -1 – – RWEEnergy Nederland N.V.,Hoofddorp/Netherlands 100 368,240 35,730 1,198 166 RWE Gas International B.V.,Hoofddorp/Netherlands 100 4,507,949 241,407 – – RWE KeyAccountGmbH, Essen 100 25 -1 1,999 98 RWE Kundenservice GmbH, Bochum 100 25 -1 260 14 RWE ObragasN.V., Helmond/Netherlands 100 99,211 20,643 240 78 1Profit- andloss-pooling agreement. 2Converted to full-timepositions. 19

Material Investments

I. Affiliates Investment in Equity Net income/ Revenue Employees3 acc. With of the last lossofthe 2007 2007 Sec. 16 of the fiscal year last average German Stock fiscal year Corporation Act % €'000 €'000 €million RWEEnergy RWE Rhein-RuhrAktiengesellschaft, Essen 100 238,405 -1 5,114 4,816 RWERhein-RuhrNetzservice GmbH,Siegen 100 25 -1 704 30 RWERhein-Ruhr Verteilnetz GmbH,Wesel 100 25 -1 2,241 6 RWE StoenS.A., Warschau/Poland 100 190,384 15,042 516 919 RWE Transgas,a.s., Prag/CzechRepublic 100 3,465,323 461,602 2,579 315 RWE Trangas Net, s.r.o.,Prag/CzechRepublic 100 2,054,020 243,586 369 710 RWE Transportnetz Gas GmbH,Dortmund 100 55 -1 299 76 RWETransportnetz Strom GmbH, Dortmund 100 613,025 -1 4,860 276 RWEWestfalen-Weser-Ems Aktiengesellschaft, Dortmund 80 283,185 -1 4,784 2,646 RWE Westfalen-Weser-Ems Netzservice GmbH,Dortmund 100 25 -1 912 23 RWEWestfalen-Weser-Ems Verteilnetz GmbH,Recklinghausen 100 25 -1 1,663 3 RWWRheinisch-Westfälische Wasserwerksgesellschaft mbH, Mülheimander Ruhr 80 74,690 8,433 106 433 Severočeská plynárenská, a.s.,Ústínad Labem/Czech Republic 100 117,107 20,226 308 380 Severomoravská plynárenská, a.s.,Ostrava/Czech Republic 68 190,149 36,655 442 640 StadtwerkeDüren GmbH, Düren 75 27,044 6,312 155 214 Středočeská plynárenská, a.s.,Prag/Czech Republic 97 92,267 2,270 258 366 SüwagEnergie AG,FrankfurtamMain 78 264,359 44,050 1,501 1,441 Süwag Netz GmbH, FrankfurtamMain 100 25 -1 481 13 Thyssengas GmbH,Duisburg 100 179,695 -1 101 – VSEAktiengesellschaft, Saarbrücken 69 133,212 14,301 327 297 Východočeská plynárenská,a.s., Hradec Králové/Czech Republic 67 121,360 16,373 269 461 Západočeská plynárenská,a.s., Plzen/Czech Republic 100 99,893 24,030 201 343 RWEnpower RWE NpowerHoldings plc, Swindon/UK2 100 940,138 216,912 8,925 11,845 WaterDivision American WaterWorks Company, Inc., Wilmington/Delaware/USA American Water-Group2.4 with 65 subsidiaries in the US and Canada 100 3,801,662 -117,592 1,601 5,257 Othersubsidiaries RWEFinance B.V.,Hoofddorp/Netherlands 100 10,309 4,214 – – RWESystems Aktiengesellschaft,Dortmund 100 275,775 -1 2,009 1,506 1Profit- andloss-pooling agreement. 2Figuresfromthe company’s financial statements. 3Converted to full-timepositions. 4Discontinued operation. II. Companies accounted for Investment in Equity Net income/ using the equitymethod acc. With of the last lossofthe last Sec. 16 of the fiscalyear fiscal year German Stock Corporation Act % €'000 €'000 RWEPower TCP PetcokeCorporation,Dover/Delaware/USA1 50 5,649 10,607 GrosskraftwerkMannheimAktiengesellschaft, Mannheim 40 114,141 6,647 RWEEnergy AVUAktiengesellschaft fürVersorgungs-Unternehmen, Gevelsberg 50 62,965 14,436 CegedelS.A., Luxemburg/Luxembourg1 30 488,450 75,286 DortmunderEnergie-und WasserversorgungGmbH(DEW21), Dortmund 47 150,437 65,406 EVHGmbH, Halle (Saale) 30 76,736 236 Fövárosi Gázmüvek Zrt.,Budapest/Hungary 50 162,886 20,765 Kärntner Energieholding Beteiligungs-GmbH,Klagenfurt/Austria1 49 418,262 31,470 KEWKommunale Energie- und Wasserversorgung AG,Neunkirchen 29 71,171 8,533 NiederrheinischeVersorgung undVerkehr Aktiengesellschaft, Mönchengladbach1 50 437,706 32,558 PfalzwerkeAktiengesellschaft, Ludwigshafen 27 186,256 19,089 RegionalgasEuskirchen GmbH &Co. KG,Euskirchen 43 48,803 9,297 RheinEnergie AG,Cologne 20 564,045 185,358 RWE-VeoliaBerlinwasser Beteiligungs AG,Berlin 50 275,854 11,925 SpreeGas Gesellschaft für Gasversorgung und Energiedienstleistung mbH, Cottbus 33 21,044 6,616 StadtwerkeDuisburg Aktiengesellschaft, Duisburg 20 153,223 26,543 StadtwerkeEssen Aktiengesellschaft,Essen 29 116,557 33,945 Südwestfalen Energie und Wasser AG,Hagen 19 277,865 13,261 TIGÁZ Tiszántúli Gázszolgáltató Zrt.,Hajdúszoboszló/Hungary 44 141,190 -2,854 Východoslovenská energetika, a.s.,Košice/Slovakia 49 194,940 61,089 ZOVZagrebackeOptpadneVoded.o.o., Zagreb/Croatia 49 81,835 29,863 1Figuresfromthe company’s financial statements.

III.Other Investments Investment in Equity Net income/ acc. With of the last lossofthe last Sec. 16 of the fiscalyear fiscal year German Stock Corporation Act % €'000 €'000 RWEEnergy StadtwerkeChemnitz Aktiengesellschaft, Chemnitz 19 255,387 20,967 21

Imprint

Boards and Committees

Supervisory Board

Dr.ThomasR.Fischer Werner Bischoff Berlin Monheim am Rhein Chairman Memberofthe Main Executive Boardof Banker IG Bergbau,Chemie,Energie • Audi AG • ContinentalAG • Hapag-Lloyd AG • Evonik-Degussa GmbH • RWEDea AG FrankBsirske • Sanofi-Aventis Deutschland GmbH Berlin • HoechstGmbH DeputyChairman • RWEPower AG Chairmanofver.di •BGAGBeteiligungsgesellschaftder Vereinte Dienstleistungsgewerkschaft Gewerkschaften GmbH • DeutscheLufthansaAG •THS TreuHandStelle für Bergmannswohnstätten • IBMCentralHoldingGmbH im rheinisch-westfälischenSteinkohlenbezirkGmbH •KfW –Kreditanstalt für Wiederaufbau Carl-Ludwig vonBoehm-Bezing Dr.PaulAchleitner BadSoden Munich Former member of the BoardofManagementof Memberofthe Board of ManagementofAllianzSE Deutsche Bank AG • Allianz Deutschland AG • Allianz GlobalInvestorsAG HeinzBüchel • AllianzLebensversicherungs-AG Tr ier • BayerAG Chairmanofthe GeneralWorks Council of •Allianz Elementar Versicherungs-AG(Chairman) RWERhein-RuhrAG •Allianz Elementar Lebensversicherungs-AG(Chairman) • RWEEnergyAG

Sven Bergelin* Dieter Faust Berlin Eschweiler –until August 15,2007– Chairmanofthe WorksCouncil, Plant Services/ GeneralManager forEnergyat Materials Management of RWEPower AG ver.di Vereinte Dienstleistungsgewerkschaft • E.ON AG SimoneHaupt • E.ON AvaconAG Hagen Chairmanofthe GeneralWorks Council of RWESystems AG • Memberofother mandatory supervisoryboards. •Memberofcomparabledomesticand foreignsupervisory bodies of commercialenterprises. *Information valid as of the date of retirement fromthe SupervisoryBoard. Heinz-EberhardHoll Dr.WolfgangReiniger Osnabrück Essen Former ChiefAdministrativeOfficer, Mayorofthe City of Essen OsnabrückRural District •EGZ Entwicklungsgesellschaft Zollverein mbH • Georgsmarienhütte GmbH •EMG Essen Marketing GmbH Gesellschaft für Stadt- • Georgsmarienhütte HoldingGmbH werbung,Touristik und Zentrenmanagement (Chairman) •Entwicklungsgesellschaft Universitätsviertel Dr.Gerhard Langemeyer Essen mbH (Chairman) Dortmund •Essener Wirtschaftsförderungsgesellschaft mbH Mayorofthe City of Dortmund (Chairman) • Dortmunder StadtwerkeAG(Chairman) •MargaretheKrupp-Stiftungfür Wohnungsfürsorge • Gesellschaft für Vermögensverwaltung AG (Chairman) • KEB Holding AG (Chairman) •Messe Essen GmbH (Chairman) •Klinikum Dortmund gGmbH(Chairman) •Sparkasse Essen (Chairman) •Schüchtermann Schiller’sche Kliniken KG •Sparkasse Dortmund (Chairman) GünterReppien Lingen Dagmar Mühlenfeld Chairmanofthe GeneralWorks Council of Mülheim an derRuhr RWEPower AG Mayorofthe City of Mülheim an derRuhr • RWEPower AG • MülheimerWohnungsbau e.G. (Chairman) •StadtwerkeLingenGmbH •Beteiligungsholding Mülheim an der Ruhr GmbH •Flughafen Essen/Mülheim GmbH(Chairman) Karl-Heinz Römer •medlGmbH(Chairman) Mülheim an derRuhr •Mülheim &BusinessGmbH (Chairman) –since October 2, 2007– •RuhrbaniaProjektentwicklungsgesellschaft mbH(Chair- District GeneralManager of man) ver.di Vereinte Dienstleistungsgewerkschaft •Ruhrgebiet TourismusManagement GmbH • RWEEnergyAG • RWERhein-RuhrAG ErichReichertz • RWEWestfalen-Weser-Ems AG Mülheim an derRuhr Diploma in engineering Dagmar Schmeer • RWEEnergyAG Saarbrücken Chairmanofthe WorksCouncil of VSEAG • VSEAG

• Memberofother mandatory supervisoryboards. •Memberofcomparabledomesticand foreignsupervisory bodies of commercialenterprises. *Information valid as of the date of retirement fromthe SupervisoryBoard. 23

Imprint

Dr.Manfred Schneider UweTigges Leverkusen Bochum Chairmanofthe SupervisoryBoard of BayerAG Chairmanofthe GeneralWorks Council of • DaimlerAG RWEWestfalen-Weser-Ems AG • Linde AG (Chairman) • RWEEnergyAG • MetroAG • RWEWestfalen-Weser-Ems AG • TUI AG Prof. KarelVan Miert Dr.-Ing. Ekkehard D. Schulz Beersel Krefeld Professor,NyenrodeUniversity Chairmanofthe Executive BoardofThyssenKruppAG • MünchenerRückversicherungs-Gesellschaft AG • AXAKonzern AG •Agfa-GevaertN.V. • BayerAG •Anglo American plc • MAN AG •DePersgroup • ThyssenKruppServicesAG(Chairman) •KoninklijkePhilipsElectronics N.V. • ThyssenKruppSteel AG (Chairman) •SIBELCO N.V. • ThyssenKruppTechnologies AG (Chairman) •SOLVAYS.A. •Vivendi UniversalS.A.

• Memberofother mandatory supervisoryboards. •Memberofcomparabledomesticand foreignsupervisory bodies of commercialenterprises. *Information valid as of the date of retirement fromthe SupervisoryBoard. Supervisory BoardCommittees

ExecutiveCommittee of theSupervisoryBoard Dr.Thomas R. Fischer (Chairman) FrankBsirske Dr.Paul Achleitner HeinzBüchel Dieter Faust SimoneHaupt Dagmar Mühlenfeld –since September 20,2007- Dr.Wolfgang Reiniger –until July 5, 2007- Dr.Manfred Schneider

Mediation CommitteeinaccordancewithSec.27, Par. 3ofthe GermanCo-DeterminationAct (MitbestG) Dr.Thomas R. Fischer (Chairman) FrankBsirske Werner Bischoff Dr.Manfred Schneider

Personnel AffairsCommittee Dr.Thomas R. Fischer (Chairman) FrankBsirske Dr.Paul Achleitner Heinz-EberhardHoll Günter Reppien Uwe Tigges

Audit Committee Carl-Ludwigvon Boehm-Bezing(Chairman) Werner Bischoff Dr.GerhardLangemeyer GünterReppien Dr.-Ing. EkkehardD.Schulz Uwe Tigges

NominationCommittee Dr.Thomas R. Fischer (Chairman) Dr.Paul Achleitner Heinz-EberhardHoll 25

Imprint

Executive Board

Dr.JürgenGroßmann Dr.UlrichJobs -since October 1, 2007- -sinceApril 1, 2007- CEOofRWE AG Executive Vice-PresidentofRWE AG • BATIGGesellschaft für Beteiligungen mbH • Deutsche Steinkohle Aktiengesellschaft • British American Tobacco (Industrie) GmbH • RAGAG • British American Tobacco (Germany) • RheinEnergieAG Beteiligungen GmbH • RWEDea AG • Deutsche Bahn AG • RWEEnergyAG(Chairman) • SURTECO AG (Chairman) • RWEPower AG (Chairman) • VolkswagenAG •RWE NpowerHoldingsplc (Chairman) •Hanover Acceptances Limited •RWE Trading GmbH(Chairman)

Harry Roels* Dr.RolfPohlig -until September 30,2007- Executive Vice-PresidentofRWE AG Former CEOofRWE AG • RWEEnergyAG • Deutsche Post AG • RWEPensionsfonds AG (Chairman) • RWEDea AG (Chairman) • RWEPower AG • RWEEnergyAG(Chairman) •American Waterplc • RWEPower AG (Chairman) •RWE NpowerHoldingsplc •RWE NpowerHoldingsplc (Chairman) •RWE Rhenas Versicherungsvermittlung GmbH •RWE Trading GmbH(Chairman) (Chairman)

Berthold Bonekamp Dr.Klaus Sturany* Executive Vice-PresidentofRWE AG -until April30, 2007- • Berlinwasser Holding AG Former Executive Vice-President of RWEAG • RWEEnergyAG • BayerAG • RWERhein-Ruhr AG (Chairman) • CommerzbankAG • RWEWestfalen-Weser-Ems AG (Chairman) • HannoverRückversicherungAG •BerlinerWasserbetriebeAöR • Heidelberger DruckmaschinenAG •RWE NpowerHoldingsplc •Österreichische Industrieholding AG •VSE a. s. Jan Zilius* Alwin Fitting -until April30, 2007- ExecutiveVice-PresidentofRWE AG Former Executive Vice-President of RWEAG • RWEEnergyAG • RAGAG • RWEPensionsfonds AG • RAGBeteiligungs-AG • RWESystems AG (Chairman) •European School of Management andTechnologyGmbH

• Memberofother mandatory supervisoryboards. •Memberofcomparabledomesticand foreignsupervisory bodies of commercialenterprises. *Information valid as of the date of retirement fromthe SupervisoryBoard. EconomicAdvisory Board

Prof. Dr.Dr. TheodorBaums Klaus-PeterMüller Frankfurt am Main Frankfurt am Main Memberofthe Executive Committee of Deutsche Chairmanofthe BoardofManaging Directors Schutzvereinigungfür Wertpapierbesitz e.V. of Commerzbank AG

Jürgen Dormann Dr.Udo Oels Glattbrugg Odenthal -until October 31,2007- -until September 30,2007- Chairmanofthe AdministrativeCouncil of Former Executive Vice-President of Bayer AG Adecco management &consultingS.A. Dr.Heinrichvon Pierer Dr.Michael Frenzel Munich Hanover Chairmanofthe Executive BoardofTUI AG Dr.Bernd Pischetsrieder Wolfsburg Dr.JürgenGroßmann -until September 30,2007- -until September 30,2007- VolkswagenAG

Dr.Dietmar Kuhnt KlausSchneider Essen Munich Former CEOofRWE AG ChairmanofSchutzgemeinschaft derKapitalanleger e.V.

Prof. Dr.HubertMarkl Prof. Dr.JürgenStrube Constance Ludwigshafen Former President of Max-Planck-Gesellschaft Chairmanofthe SupervisoryBoard of BASF Aktiengesellschaft Wolfgang Mayrhuber Frankfurt am Main Dr.AlfonsFriedrich Titzrath CEOofDeutscheLufthansaAG Cologne -until May15, 2007- Dr.Thomas Middelhoff Former Chairmanofthe Supervisory Boardof Essen Dresdner Bank AG Chairmanofthe Management BoardofArcandor AG Anton Werhahn Neuss Businessexecutive 27

Imprint

Imprint

RWEAktiengesellschaft Production: Opernplatz 1 Produced in-house using FIRE.sys 45128Essen Germany Design: Claus Koch Identity, Düsseldorf Phone+49 20112-00 Fax+49 20112-15199 Printing: E-mail contact@rwe.com D+LPrintpartnerGmbH, Bocholt

InvestorRelations: RWEismember of DIRK, Phone +49201 12-15025 the German Investor Relations Association. Fax+49 20112-15265 E-mail [email protected]

Corporate Communications: Phone +49201 12-15250 Fax+49 20112-15094

Forannualreports,interim reports andother information on RWE, please visitusonthe Webat www.rwe.comorcallour shareholderhotline: Phone 0180 1451280 (callers in Germany) Phone+49 1801451280 (callersoutside Germany, excluding theUSA) Phone +1149180 1451280 (fromthe USA)

This is atranslation of the German financial statements. In caseofdivergence from the German version,the German version shall prevail.

>FinancialCalendar 2008/20091

04/17/2008 Annual General Meeting

04/18/2008 Ex-dividend date

05/15/2008 Interim reportfor the first quarterof2008 with analystconference call

08/14/2008 Interim reportfor the first half of 2008 •Press conference •Analystconference

11/11/2008 Interim reportfor the first three quarters of 2008 with analystconference call

02/26/2009 Annualreportfor fiscal2008 •Press conference •Analyst conference

04/22/2009 Annual General Meeting

04/23/2009 Ex-dividend date

05/14/2009 Interim reportfor the first quarterof2009 with analystconference call

08/13/2009 Interim reportfor the first half of 2009 •Press conference •Analystconference

11/12/2009 Interim reportfor the first three quarters of 2009 with analystconference call

1All events will be broadcastliveonthe Internet and can thus be followed by the public at large,investorsand analysts simultaneously. We will keep the recordings on our websitefor at leasttwelvemonths. RWEAktiengesellschaft Opernplatz 1 45128 Essen,Germany T+49 20112-00 F+49 20112-15199 Iwww.rwe.com