E.ON to record impairment charge, expects 7-8 percent increase in 2008 earnings and higher per-share dividend


In preparing its Consolidated Financial Statements, E.ON AG is required under IAS 36 to perform impairment tests on a regular basis. In E.ON’s Consolidated Financial Statements for 2008, the impairment tests will result in an impairment charge of €1.5 billion on goodwill for the company’s U.S. Midwest market unit and an impairment charge of roughly €1.8 billion on the difference between the book value and the fair value of the operations in Italy, Spain, and France that it acquired from Enel/Acciona and Endesa. The main reasons for the U.S. Midwest impairment charge are an increase in the market-unit-specific cost of capital and lower long-term growth rates due to the deterioration of the overall economic situation. The increase in Italy’s corporate tax rate from 27.5 percent to 33 percent for companies in the energy, banking, and insurance industries is a main factor in the impairment charge regarding the shareholdings and power stations acquired from Enel/Acciona and Endesa. In addition, the outlook for the Italian energy market became gloomier in the fall of 2008, in part due to regulatory intervention in wholesale markets and to the current reduction in power production resulting from a delay in the start of operations at certain power plants. At the time the transaction closed, these factors, among others, were not fully apparent.

The impairment charges will reduce E.ON’s consolidated net income. But they will not affect the company’s adjusted EBIT or its adjusted net income, the key figure E.ON uses to determine its dividend payout.

Based on preliminary numbers, E.ON expects its adjusted EBIT for 2008 to surpass the prior-year figure by 7 to 8 percent. The company anticipates a similar increase in adjusted net income. Based on this figure, the E.ON Board of Management anticipates that it would propose to the E.ON Supervisory Board that the company pay a dividend of €1.50 per share. Adjusted for E.ON’s stock split, this represents an increase of roughly 9.5 percent on the dividend for the 2007 financial year. These figures are based on E.ON AG’s preliminary and unaudited Consolidated Financial Statements and are therefore subject to change.

E.ON AG E.ON-Platz 1 40479 Düsseldorf Deutschland / Germany ISIN: DE000ENAG999 (DAX) WKN: 761440 Listed: Amtlicher Markt in Berlin-Bremen, Düsseldorf, Frankfurt (Prime Standard), Hamburg, Hannover, München and Stuttgart; Eurex   

- End of ad hoc announcement –

February 10, 2009