2015 Annual Report E.ON Group Financial Highlights1 € in millions 2015 2014 +/- % Attributable generating capacity (MW) 45,335 58,871 -23 – thereof renewables (MW) 8,428 10,474 -20 Fully consolidated generating capacity (MW) 46,479 60,151 -23 – thereof renewables (MW) 7,889 9,703 -19 Owned generation (billion kWh) 188.5 215.2 -12 – thereof renewables (billion kWh) 26.1 27.2 -4 Carbon emissions from power and heat production (million metric tons) 76.8 95.7 -20 Specific carbon emissions (million metric tons/MWh) 0.40 0.43 -7 Electricity sales (billion kWh) 780.9 780.2 – Gas sales (billion kWh) 1,721.8 1,171.0 +47 Sales 116,218 113,095 +3 EBITDA2 7,557 8,376 -10 EBIT2 4,369 4,695 -7 Net income/Net loss -6,377 -3,130 -104 Net income/Net loss attributable to shareholders of E.ON SE -6,999 -3,160 -121 Underlying net income2 1,648 1,646 – Investments 4,174 4,637 -10 Research and development costs 34 30 +13 Cash provided by operating activities of continuing operations 6,133 6,354 -3 Economic net debt (at year-end) 27,714 33,394 -17 Debt factor4 3.7 4.0 -0.33 Equity 19,077 26,713 -29 Total assets 113,693 125,690 -10 ROACE (%) 9.4 8.6 +0.85 Pretax cost of capital (%) 6.7 7.4 -0.75 After-tax cost of capital (%) 4.9 5.4 -0.55 Value added 1,251 640 +95 Employees (at year-end) 56,490 58,811 -4 – Percentage of female employees 29.9 28.9 +1.05 – Percentage of female executives and senior managers 16.7 15.8 +0.95 – Average turnover rate (%) 3.7 3.3 +0.45 – Average age 42 43 -13 – TRIF (E.ON employees) 2.0 2.0 – Earnings per share6, 7 (€) -3.60 -1.64 -120 Equity per share6, 7 (€) 8.42 12.72 -34 Dividend per share8 (€) 0.50 0.50 – Dividend payout 976 966 +1 Market capitalization7 (€ in billions) 17.4 27.4 -36 1Adjusted for discontinued operations. 2Adjusted for extraordinary effects (see Glossary). 3Change in absolute terms. 4Ratio of economic net debt and EBITDA. 5Change in percentage points. 6Attributable to shareholders of E.ON SE. 7Based on shares outstanding. 8For the respective financial year; the 2015 figure represents management’s dividend proposal. CEO Letter Contents Report of the Supervisory Board E.ON Stock Strategy and Objectives Combined Group Management Report Consolidated Financial Statements Tables and Explanations 2 CEO Letter 4 Report of the Supervisory Board 10 E.ON Stock 12 Strategy and Objectives 16 Combined Group Management Report 16 Corporate Profile 16 Business Model 18 Management System 19 Technology and Innovation 22 Business Report 22 Macroeconomic and Industry Environment 28 Business Performance 33 Earnings Situation 41 Financial Situation 45 Asset Situation 46 E.ON SE’s Earnings, Financial, and Asset Situation 47 Other Financial and Non-financial Performance Indicators 47 – ROACE and Value Added 48 – Corporate Sustainability 50 – Employees 56 Subsequent Events Report 56 Forecast Report 60 Risk Report 69 Opportunity Report 70 Internal Control System for the Accounting Process 72 Disclosures Regarding Takeovers 75 Corporate Governance Report 75 Corporate Governance Declaration 82 Compensation Report 96 Consolidated Financial Statements 96 Independent Auditor’s Report 98 Consolidated Statements of Income 99 Consolidated Statements of Recognized Income and Expenses 100 Consolidated Balance Sheets 102 Consolidated Statements of Cash Flows 104 Statement of Changes in Equity 106 Notes 202 Declaration of the Management Board 203 List of Shareholdings 216 Members of the Supervisory Board 218 Members of the Management Board 219 Tables and Explanations 219 Explanatory Report of the Management Board 220 Summary of Financial Highlights/Installed Capacity/Sales Volume 224 Glossary of Financial Terms 229 Financial Calendar 2 CEO Letter The dominant theme of the 2015 financial year was the separation of our operations into two independent companies. We announced this complex project about 15 months ago and since then have been working hard to carry out, on schedule, what is perhaps the most ambitious reorganization of a European company. E.ON and Uniper have been operating independently of one another since the beginning of the year. Each is a sharply focused company. Each will concentrate on one of the two energy worlds that are becoming increasingly distinct from one another and that require dramatically different business approaches. E.ON’s three core businesses—renewables, energy networks, and customer solutions—will enable us to seize opportunities in the new energy world. Although we already have a solid track record in these businesses, we’ll now put them at the center of what we do and focus resolutely on our customers. Over the past few years E.ON has installed more than 2,400 wind turbines and commissioned several solar farms. We’ve invested about €10 billion in these projects. Last year alone we completed two large offshore wind farms in the North Sea—Amrumbank West off the German island of Helgoland and Humber Gateway off the east coast of England—on time and on budget. We’re the world’s second-largest offshore wind company and have a well- deserved reputation for excellence in planning, building, and operating offshore assets. This makes us a sought-after partner for companies that want to invest in green energy. The new E.ON’s second core business is energy networks. Just as modern communications need the internet, the modern energy world needs advanced energy networks that can connect millions of production sources and customers and respond seamlessly to customer needs and fluctuations in renewables output. Our increasing deployment of smart technology enables our customers to use, share, and sell energy like never before. Developing and operating innovative energy networks is one of our strengths. No energy company in Germany has integrated more renewables capacity into its network than E.ON. We invest about €1 billion a year to expand, add connections to, and upgrade our networks in Germany. Our third core business is customer solutions, from standard energy sales to new and innovative products and services. Our solar and battery experts help customers to generate their own green energy and store it for later use. In addition, E.ON has for years been a market leader in Germany in providing embedded combined-heat-and-power (“CHP”) solutions. We’ve installed more than 4,000 CHP units, and each year we generate almost €1 billion in sales from this business. In November 2015, for instance, we commissioned the largest CHP unit in the Hamburg region. It will generate power for to up to 21,500 households and heat for up to 6,000. singe-family houses. These examples demonstrate that we have outstanding capabilities to help shape tomorrow’s energy world. Our next objective is to pool and digitalize our capabilities across these businesses in order to develop new products and integrated energy plans for our customers. The E.ON brand will continue to serve as the familiar face for all three of our core businesses. Uniper will focus on the conventional energy world. It has a portfolio of conventional assets with a strong emphasis on opera- tionally flexible gas-fired power plants and global energy trading. Uniper’s generation fleet encompasses about 40 gigawatts of capacity in Europe and Russia. This flexible, dispatchable capacity—which includes a significant proportion of hydro—will play an important role in ensuring supply security during the long, gradual transition to a low-carbon future. Unit 3, a state-of-the-art coal-fired generating unit at Maasvlakte power station outside Rotterdam in the Netherlands, entered service in 2015 and has now obtained its operating permit. Uniper has demonstrated how a power plant can be deftly tailored to the energy needs of nearby industry in a way that helps protect the climate; Maasvlakte 3 will add to Uniper’s portfolio of efficient generating capacity in the European market. Many of Uniper’s power plants also produce heat for district-heating systems as well as process steam, compressed air, and other services for nearby industrial enterprises. Extensive expertise and experience in power-plant engineering, planning, construction, operations, and management give Uniper a very good platform for developing new services businesses in its home markets in Europe and elsewhere. And many years of experience in sourcing gas through long-term contracts and LNG, proven expertise in global commodity trading, and a portfolio of gas-storage facilities make Uniper a mainstay of Europe’s CEO Letter Report of the Supervisory Board 3 E.ON Stock Strategy and Objectives Combined Group Management Report Consolidated Financial Statements Tables and Explanations supply security. In the years ahead Uniper will also play a key role in a variety of energy markets around the world. For example, Uniper is testing new technologies—energy storage foremost among them—that will be crucial for tomorrow’s electricity system, which will consist of a high proportion of renewables. Uniper already operates a number of pilot units that transform surplus wind power into hydrogen, which is injected into the gas pipeline system. Uniper is also involved in the development of utility-scale battery storage systems. The transformation of E.ON remained on schedule even though in September 2015 we decided to keep our remaining nuclear power business in Germany at E.ON and to rename it PreussenElektra. At about the same time, the German federal government appointed a commission to explore viable long-term solutions for the funding of nuclear asset-retirement obligations. We believe strongly that energy companies and the German state share the responsibility for the phaseout of nuclear energy.