55To Our Shareholders Supervisory Board Year in Review Combined Group Management Report Additional Information Market Units Corporate Governance Consolidated Financial Statements Tables and Explanations Financial Statements of E.ON AG E.ON AG prepares its Financial Statements in accordance with the German Commercial Code and the German Stock Corpo- ration Act. E.ON AG's net income for 2007 amounts to 5,116 mil- lion compared with 2,572 million in the prior year. After transferring 2,526 million to retained earnings, net income available for distribution totals 2,590 million. E.ON AG's income from equity interests increased by 3,534 mil- lion to 7,244 million, primarily because certain non-recurring effects led to higher income transferred under profit- and loss- pooling agreements. Income transferred under profit- and loss-pooling agreements (including income from group allo- cations) with E.ON Energie AG totaled 4,806 million and with E.ON Ruhrgas Holding GmbH 2,090 million. The negative figure recorded under other expenditures and income (net) improved by 331 million year on year to ­250 mil- lion. This resulted from the one-time discounting of long-term noninterest-bearing tax credits that occurred in the prior year and the revaluation of provisions for pensions. Twenty-five million of the shares purchased under the share buyback program were cancelled in 2007, which reduced E.ON AG's capital stock by 65 million. The 65 million was added to additional paid-in capital pursuant to Section 237, Paragraph 5 of the German Stock Corporation Act; this reduced retained earnings by 3,114 million. Income taxes include current taxes for 2007 and the prior year. In 2006, the first-time capitalization of noninterest-bearing tax credits reduced the tax expense pursuant to new stan- dards contained in Germany's Bill on the Tax Features for the Introduction of the European Corporation, partially offset by the effects of supplementary tax payments for previous years. At the Annual Shareholders Meeting on April 30, 2008, man- agement will propose that net income available for distribu- tion be used to pay a cash dividend of 4.10 per share, a 22 percent increase. The solid development of our operating earnings enables us to pay out a higher dividend for the ninth year in a row. We believe this makes E.ON stock even more attractive to investors. If the number of ordinary shares is reduced as a result of the repurchase of own shares by the time of the Annual Shareholders Meeting, we plan to amend the proposed reso- lution in such a way that the amount proportionate to those repurchased shares (at an unchanged distribution of 4.10 per ordinary share) be carried forward as income. The complete Financial Statements of E.ON AG, with the unqualified opinion issued by the auditors, Pricewaterhouse- Coopers Aktiengesellschaft, Wirtschaftsprüfungsgesellschaft, Düsseldorf, will be announced in the electronic Bundes- anzeiger. Copies are available on request from E.ON AG and at www.eon.com. Disclosures on Takeover Barriers The disclosers pursuant to Section 289, Paragraph 4, and Sec- tion 315, Paragraph 4 of the German Commercial Code are in the chapter Disclosures on Takeover Barriers and Explana- tory Report of the Board of Management on pages 83­84 of this report. in millions Intangible assets and property, plant, and equipment Financial assets Non-current assets Receivables from affiliated companies Other receivables and assets Liquid funds Current assets Total assets Equity Special items with provision component Provisions Liabilities to affiliated companies Other liabilities Total equity and liabilities 2007 158 27,667 27,825 20,466 2,569 1,634 24,669 52,494 14,076 414 3,191 30,388 4,425 52,494 December 31 2006 166 22,253 22,419 18,779 2,667 338 21,784 44,203 14,669 410 3,150 23,785 2,189 44,203 Balance Sheets of E.ON AG (Summary) in millions Income from equity interests Interest income Other expenditures and income Income from continuing operations before income taxes Income taxes Net income Net income transferred to retained earnings Net income available for distribution 2007 7,244 ­557 ­250 6,437 ­1,321 5,116 ­2,526 2,590 2006 3,710 ­539 ­581 2,590 ­18 2,572 ­362 2,210 Income Statement of E.ON AG (Summary)