2011 Annual Report - OTCIQ.com

future exercise price. This amount is reclassified from a separate
component within non-controlling interests and reported
separately as a liability. The reclassification occurs irrespective
of the probability of exercise. The accretion of the liability
is recognized as interest expense. If a purchase commitment
expires unexercised, the liability reverts to non-controlling
interests. Any difference between liabilities and non-controlling
interests is recognized directly in retained earnings.
Where shareholders of entities own statutory, non-excludable
rights of termination (as in the case of German partnerships,
for example), such termination rights require the reclassification
of non-controlling interests from equity into liabilities
under IAS 32. The liability is recognized at the present value
of the expected settlement amount irrespective of the probability
of termination. Changes in the value of the liability are
reported within other oper ating income. Accretion of the
liability and the non-controlling shareholders’ share in net
income are shown as interest expense.
If an E.ON Group company buys treasury shares of E.ON AG,
the value of the consideration paid, including directly attributable
additional costs (net after income taxes), is deducted
from E.ON AG’s equity until the shares are retired, distributed
or resold. If such treasury shares are subsequently distributed
or sold, the consideration received, net of any directly attributable
additional transaction costs and associated income taxes,
is added to E.ON AG’s equity.
Share-Based Payment
Share-based payment plans issued in the E.ON Group are
accounted for in accordance with IFRS 2, “Share-Based Payment”
(“IFRS 2”). The E.ON Share Performance Plan introduced in
fiscal 2006 involves share-based payment transactions that are
settled in cash and measured at fair value as of each balance
sheet date. E.ON determines the fair value of the fifth tranche
using the Monte Carlo simulation technique. From the sixth
tranche forward, the 60-day average of the E. ON share price
as of the balance sheet date is used as the fair value. In addition,
the calculation of the provision for the sixth tranche takes
into account the financial measures ROACE and WACC. The
compensation expense is recognized in the income statement
pro rata over the vesting period.
CEO Letter
E.ON Stock
Combined Group Management Report
Consolidated Financial Statements
Corporate Governance Report
Supervisory Board and Board of Management
Tables and Explanations
Provisions for Pensions and Similar Obligations
The valuation of defined benefit obligations in accordance
with IAS 19, “Employee Benefits” (“IAS 19”), is based on actuarial
computations using the projected unit credit method,
with actuarial valuations performed at year-end. The valuation
encompasses both pension obligations and pension entitlements
that are known on the balance sheet date, as well as
economic trend assumptions made in order to reflect realistic
expectations.
Actuarial gains and losses that may arise from differences
between the estimated and actual number of beneficiaries and
from differences between the estimated and actual underlying
assumptions are recognized in full in the period in which
they occur. Such gains and losses are not reported within the
Consolidated Statements of Income but rather are recognized
within the Statements of Recognized Income and Expenses
as part of equity.
The employer service cost representing the additional benefits
that employees earned under the benefit plan during the
fiscal year is reported under personnel costs; interest cost
and expected return on plan assets are reported under financial
results.
Unrecognized past service cost is recognized immediately to
the extent that the benefits are already vested or else amortized
on a straight-line basis over the average period until the
benefits become vested.
The amount reported on the balance sheet represents the
present value of the defined benefit obligations adjusted for
unrecognized past service cost and reduced by the fair value
of plan assets. If a net asset position arises from this calculation,
the amount is limited to the as yet unrecognized past
service cost plus the present value of available refunds and of
the reduction in future contributions and to the benefit from
prepayments of minimum funding requirements.
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