Annual Report 2019 E.ON Group Financial Highlights € in millions 2019 2018 +/- % Sales1 41,484 30,084 +38 Adjusted EBITDA1, 2 5,558 4,840 +15 – Regulated business3 (%) 65 57 +84 – Quasi-regulated and long-term contracted business3 (%) 13 21 -84 – Merchant business3 (%) 22 22 – Adjusted EBIT1, 2 3,235 2,989 +8 – Regulated business3 (%) 70 58 +124 – Quasi-regulated and long-term contracted business3 (%) 11 20 -94 – Merchant business3 (%) 19 22 -34 Net income/loss 1,808 3,524 -49 Net income/loss attributable to shareholders of E.ON SE 1,566 3,223 -51 Adjusted net income1, 2 1,536 1,505 +2 Investments1 5,492 3,523 +56 Cash provided by operating activities1 2,965 2,853 +3 Cash provided by operating activities before interest and taxes1 4,407 4,087 +8 Economic net debt (at year-end)1 39,430 16,580 +138 Equity 13,085 8,518 +54 Total assets 98,566 54,324 +81 ROCE (%)1 8.4 10.4 -2.04 Employees (at year-end)1 78,948 43,302 +82 – Percentage of female employees 33 32 +1.04 – Average age 42 42 – Earnings per share5, 6 (€) 0.68 1.49 -54 Adjusted net income per share1, 5, 6 (€) 0.67 0.69 -3 Dividend per share7 (€) 0.46 0.43 +7 Dividend payout 1,199 932 +29 1Includes until September 18, 2019, the discontinued operations in the Renewables segment (see Note 4 to the Consolidated Financial Statements). 2Adjusted for non-operating effects. 3E.ON and innogy’s definitions of regulated, quasi-regulated businesses, and so forth were harmonized and the prior-year figures adjusted accordingly. 4Change in percentage points. 5Attributable to shareholders of E.ON SE. 6Based on shares outstanding (weighted average). 7For the respective financial year; the 2019 figure represents management’s dividend proposal. Report of the Supervisory Board Strategy and Objectives Combined Group Management Report Combined Non-Financial Report Consolidated Financial Statements Other Information Contents 4 Report of the Supervisory Board 10 Strategy and Objectives 14 Combined Group Management Report 14 Corporate Profile 14 Business Model 17 Management System 18 Innovation 20 Business Report 20 Macroeconomic and Industry Environment 23 Business Performance 24 Earnings Situation 29 Financial Situation 33 Asset Situation 34 E.ON SE’s Earnings, Financial, and Asset Situation 36 Other Financial and Non-Financial Performance Indicators 36 – Analyzing Value Creation 37 – Employees 40 Forecast Report 42 Risk and Chances Report 50 Business Segments 57 Internal Control System for the Accounting Process 59 Disclosures Regarding Takeovers 62 Corporate Governance Report 62 Corporate Governance Declaration 70 Compensation Report 88 Separate Combined Non-Financial Report 104 Consolidated Financial Statements 104 Consolidated Statements of Income 105 Consolidated Statements of Recognized Income and Expenses 106 Consolidated Balance Sheets 108 Consolidated Statements of Cash Flows 110 Statement of Changes in Equity 112 Notes 210 List of Shareholdings 230 Other Information 230 Declaration of the Management 231 Independent Auditor’s Report 238 Independent Practitioner’s Report on Non-Financial Reporting 240 Members of the Supervisory Board 242 Members of the Management Board 243 Summary of Financial Highlights 245 Financial Calendar Report of the Supervisory Board Report of the Supervisory Board 4 Dear Shareholders, The year 2019 was characterized predominantly by the takeover of innogy SE. The closing of the transaction in September marked the beginning of a new chapter in E.ON’s history. The Supervisory Board would like to thank the Management Board and all employees for the enormous efforts that were and are connected with the transaction as well as the integration. In the 2019 financial year the Supervisory Board carefully performed all its duties and obligations under law, the Company’s Articles of Association, and its own rules and procedures. The Supervisory Board advised the Management Board intensively about the Company’s management and continually monitored the Management Board’s activities, assuring itself that the Company’s management was legal, pur- poseful, and orderly. At four regular and two extraordinary meetings, it addressed all issues relevant to the Company. On a regular basis, the shareholder representatives and the employee representatives made separate preparations for these meetings with the participation of one or all members of the Management Board. Two Supervisory Board members were unable to attend individual Supervisory Board meetings in 2019. Apart from that, all members attended all meetings. The Management Board regularly provided the Supervisory Board with timely and Dr. Karl-Ludwig Kley, comprehensive information about significant business transactions in both written Chairman of the Supervisory Board and oral form. At the meetings of the full Supervisory Board and its committees, the Supervisory Board had sufficient opportunity to actively discuss the Management Board’s reports, motions, and proposed resolutions. After thoroughly examining and discussing the resolutions proposed by the Management Board, the Supervisory Board voted on them when it was required by law, the Company’s Articles of Association, or the Supervisory Board’s rules and procedures. In addition, there was a regular exchange of information between the Chairman of the Supervisory Board and the members of the Management Board, in particular the Chairman, during the entire financial year. In the case of particularly pertinent issues, the Chairman of the Supervisory Board was kept informed at all times. He likewise maintained contact with the members of the Supervisory Board outside of board meetings. Takeover of innogy SE and Far-reaching Asset Swap with RWE The Supervisory Board dealt with the status of the innogy SE takeover at all of its meetings in 2019 and adopted any necessary resolutions. The Management Board kept the Supervisory Board continually informed about a variety of related matters, including the status of the voluntary public takeover offer, the merger-control procedure, and the progress of the integration preparations and measures. In this context, the Supervisory Board also discussed the European Commission’s antitrust conditions for selected markets in which E.ON operates and, where necessary, adopted resolutions. In addition, the Supervisory Board examined the options for the legal integration of innogy SE and adopted corresponding resolutions. Likewise in the context of the innogy SE takeover, the Supervisory Board carried out its expansion to 20 members and made personnel decisions regarding the composition of the E.ON Management Board. Report of the Supervisory Board Strategy and Objectives Combined Group Management Report 5 Combined Non-Financial Report Consolidated Financial Statements Other Information Other Key Topics of the Supervisory Corporate Governance Board’s Discussions In the declaration of compliance issued at the end of the year, the Super- Policy and regulatory developments in countries in visory Board and the Management Board declared that E.ON is in full which E.ON is active constituted another key topic of compliance with the recommendations of the “Government Commission the Supervisory Board’s discussions. Alongside the German Corporate Governance Code” dated February 7, 2017, published overall and economic policy situation in the individual by the Federal Ministry of Justice and for Consumer Protection in the countries, the Supervisory Board focused primarily on official section of the Federal Gazette (Bundesanzeiger), since the last the developments in European and German energy annual declaration in December 2018, with two exceptions regarding the policy and their respective consequences for E.ON’s recommendations in Section 7.1.2, Sentence 3, and Section 4.2.3, Para- business areas. graph 2, Sentence 8. The current version of the declaration of compliance as well as earlier versions are published online at www.eon.com. Furthermore, in the context of the Group’s current operating business, the Supervisory Board addressed In the 2019 financial year, two members of the Innovation and Sustain- in detail the impact of low interest rates on E.ON, the ability Committee (formerly: Investment and Innovation Committee) had general business situation of the Group and its compa- a conflict of interest in conjunction with a possible transaction owing nies, national and international energy markets, as well to their position with another company. In accordance with Supervisory as the currencies that are important to E.ON. It discussed Board rules, the members made this known prior to the meeting on E.ON SE’s and the E.ON Group’s asset, financial, and March 11, 2019, and did not take part in the committee’s adoption of a earnings situation, future dividend policy, workforce resolution. In addition, in his capacity as Chairman of the RWE AG Manage- developments, and earnings opportunities and risks. In ment Board, Rolf Martin Schmitz had conflicts of interest in relation to addition, the Supervisory Board and the Management certain operational matters and for this reason did not participate in the Board thoroughly discussed the E.ON Group’s medium- discussion of selected agenda items. Otherwise, the Supervisory Board term plan for 2020–2022. The Supervisory Board was is aware of no indications of conflicts of interest involving members of the provided with information on a regular basis about the Management Board or the Supervisory Board. Company’s health, (occupational) safety, and environ- mental performance (in particular, key accident indica- In the