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in which the Energy Business Area operates, is highly regulated and subject to constant supervision by the
German Federal Network Agency (Bundesnetzagentur) and other government authorities, including recently
initiated sector enquiries by the German Federal Cartel Office (Bundeskartellamt). Any actions initiated by
government authorities may include fines, sanctions and other measures and may entail third party claims for
damages.
The realisation of one or more legal risks, in particular should the current provisions made and insurances
taken out prove to be insufficient, could have materially adverse effects on the asset, financial and profit
situation of Evonik-Group.
Tax risks
There is a principle risk that the tax authorities carrying out tax audits in the future may not concur with
previous tax assessments with regard to certain transactions or the intra-group performance of services.
Accordingly, the tax authorities may re-assess these transactions or intra-group services which may increase
the tax burden. Evonik-Group considers the provisions made for risks of this kind to be sufficient. There is
also a risk that existing tax loss carry forwards may not be set-off or will cease to exist. Should Evonik-
Group be requested to pay taxes for prior years or should the extent or manner of offsetting existing loss
carry forwards be limited or should the taxation be increased as a consequence of the interest barrier rules
(Zinsschrankenregelung) this would have a detrimental impact on the asset, financial and profit situation of
Evonik-Group.
Pension risks
Evonik-Group has made certain pension commitments to its existing and some of its previous employees.
These commitments are partially covered by a pensions scheme, by pensions funds, special purpose funds
and insurance policies. The remainder is being accounted for by balance sheet reserves in the amount of EUR
3.9 billion as per 31 December 2008. The amount of the obligations is based on certain actuarial
assumptions, which Evonik-Group considers reasonable, including discount factors, life expectancy, pension
trends, future salary development as well as expected interest rates applicable to the plan assets. If the actual
results deviate from these assumptions, in particular with regard to the discount factors, this will entail a
considerable increase of the pension commitments and thus to higher allocations to the pension reserves in
future years. This applies in particular in case of a reduction of the present value factor or an increase in the
pension increase/inflation rate or salary raises.
Country risks
Evonik-Group operates its Chemicals and Energy Business Areas in numerous countries and distributes its
products and services globally. The general conditions in some of the countries in which Evonik-Group
operates or to which it exports its products are different to those in Western Europe and the economic,
political or legal situation is less stable. Evonik-Group therefore faces a number of political, social,
economic, financial and market-related instabilities in those countries and may also be subject to currency
control regulations as well as currency exchange rules it cannot influence. These factors include the risk of
possible nationalisations. Evonik-Group's operations may also be jeopardised by insufficient infrastructure,
trade limits or under-developed legal and administrative systems.
Intellectual property rights risks
Evonik-Group possesses a large number of patent and other intellectual property rights in the Chemicals and
Energy Business Areas. Evonik-Group attaches the same significance to non-patentable or not patented
business secrets as well as confidential and non-confidential know how, which are important for Evonik-
Group's continued success. Insufficient protection of the intellectual property of Evonik-Group may limit its
ability to make use of technological advantages reached in a profitable manner or result in a reduction of
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