Washington, D.C. 20549

(Translation of Registrant’s Name Into English)

Düsseldorf, August 10, 2005

Ad hoc Announcement
in accordance with Article 15 of the Securities Trading Act (WpHG)

Re: Provisions for pensions

E.ON to use CTA to fund provisions for pensions

E.ON AG will use the group’s strong liquidity and financial position to fund up to €5.4 billion of its provisions for pensions by means of a contractual trust arrangement (CTA). The E.ON AG Supervisory Board made this decision at its meeting today. The CTA will increase the transparency of E.ON’s balance sheet and further strengthen the financial security of employees’ company pension plans. Under the CTA, the corresponding funds are converted to plan assets for the fulfillment of pension obligations. The funding process will begin soon and be complete in 2006.

- End of ad hoc announcement – August 10, 2005

January 1 - June 30, 2005

Interim Report II/2005

•

Positive earnings trend continues in second quarter

•

Successful divestment of Viterra and Ruhrgas Industries

•

Outlook for full year 2005 reaffirmed: slight increase in adjusted EBIT — significant increase in net income

Interim Report II/2005

E.ON Group Financial Highlights

E.ON Group Key Figures at a Glance

January 1 - June 30
€ in millions		2005				20041				+/–%
Power sales (in billion kWh)2			212.2				206.4				+3
Gas sales (in billion kWh)2			499.7				473.4				+6
Sales			28,408				24,588				+16
Adjusted EBITDA3			5,677				5,315				+7
Adjusted EBIT4			4,297				4,022				+7
Income/Loss (–) from continuing operations before income taxes and minority interests			4,677				4,176				+12
Income/Loss (–) from continuing operations			2,887				2,702				+7
Income/Loss (–) from discontinued operations, net			139				113				+23
Net income			3,026				2,815				+7
Investments			1,820				2,853				–36
Cash provided by operating activities			2,859				2,729				+5
Free cash flow5			1,808				1,687				+7
Net financial position6 (at June 30 and December 31)			–3,358				–5,483				+39
Employees (at June 30 and December 31)			78,006				60,596				+29
Earnings per share (in €)			4.59				4.29				+7

Non-GAAP financial measures: This report contains certain non-GAAP financial measures. Management believes that the non-GAAP financial measures used by E.ON, when considered in conjunction with (but not in lieu of) other measures that are computed in U.S. GAAP, enhance an understanding of E.ON’s results of operations. A number of these non-GAAP financial measures are also commonly used by securities analysts, credit rating agencies, and investors to evaluate and compare the periodic and future operating performance and value of E.ON and other companies with which E.ON competes. Additional information with respect to each of the non-GAAP financial measures used in this report is included together with the reconciliations described below.

E.ON prepares its financial statements in accordance with generally accepted accounting principles in the United States (U.S. GAAP). As noted above, this report contains certain consolidated financial measures (Group adjusted EBIT, adjusted EBITDA, net financial position, net interest expense, and free cash flow) that are not calculated in accordance with U.S. GAAP and are therefore considered “non-GAAP financial measures” within the meaning of the U.S. federal securities laws. In accordance with applicable rules and regulations, E.ON has presented in this report a reconciliation of each non-GAAP financial measure to the most directly comparable U.S. GAAP measure for historical measures and an equivalent U.S. GAAP target for forward-looking measures. The footnotes presented with the relevant historical non-GAAP financial measures indicate the page of this report on which the relevant reconciliation appears. The non-GAAP financial measures used in this report should not be considered in isolation as a measure of E.ON’s profitability or liquidity and should be considered in addition to, rather than as a substitute for, net income, cash provided by operating activities, and the other income or cash flow data prepared in accordance with U.S. GAAP presented in this report and the relevant reconciliations. The non-GAAP financial measures used by E.ON may differ from, and not be comparable to, similarly titled measures used by other companies.

Interim Report II/2005

Contents

4		Letter to Shareholders
5		E.ON Stock
6		Results of Operations
		— Energy Price Developments
		— Sales Volume, Sales, Earnings Performance
		— Investments
		— Financial Condition
		— Employees
		— Risk Situation
		— Outlook
12		Market Units
12		— Central Europe
14		— Pan-European Gas
15		— U.K.
16		— Nordic
18		— U.S. Midwest
20		Interim Financial Statements (Unaudited)
30		Business Segments
32		Financial Calendar

Interim Report II/2005

Dear Shareholders,

In the first half of 2005 the E.ON Group continued its positive earnings development. We increased adjusted EBIT by 7 percent year-on-year to €4.3 billion. At roughly €3 billion, net income (after taxes and minority interests) was also 7 percent above the high prior-year figure.

We expect net income for the entire year to considerably surpass last year’s figure, thanks in particular to the book gains totaling roughly €3 billion we expect on the sale of Viterra and Ruhrgas Industries. We will record a gain of approximately €2.4 billion on the sale of Viterra to Deutsche Annington. We sold Ruhrgas Industries to CVC Capital Partners, a European private equity firm, and expect to record a gain of approximately €600 million on the sale. With these disposals, we have almost completed E.ON’s transformation into a pure-play energy company.

In the second quarter we also took important steps to expand our market positions in our core energy business. We reached an agreement to acquire NRE Energie, a Dutch power and gas company. The acquisition gives us our first end customers in the Netherlands and complements our existing power production and gas trading operations there. In addition, we completed the acquisition of Distrigaz Nord, a Romanian gas distribution company, which further enlarges our market position in Central and Eastern Europe, a region experiencing dynamic economic growth. Our acquisition of Holford Gas Storage in the United Kingdom in July will set in motion the construction of one of the country’s largest natural gas storage facilities and in the future give us greater flexibility in gas procurement.

These growth initiatives represent a continuation of the course we have been pursuing in recent years. In the last two years we have implemented growth initiatives amounting to more than €7 billion. This figure includes small and medium-sized acquisitions in our European target markets and investments in power and gas transmission, distribution, and production assets.

An important energy policy development for us is Germany’s revised New Energy Law, which took effect on July 13. The law makes an important contribution towards the establishment of a stable investment environment for our grid operations. It is now essential that the regulatory agency moves forward as quickly as possible to develop and implement a system that rewards network operators for increases in productivity. We are actively involved in this discussion and have proposed a model that we believe achieves a balance between promoting cost reductions and ensuring supply security. By drawing on our experience in other regulated markets as we participate in this discussion we are making an important contribution towards the creation of a sensible incentive system for the regulation of Germany’s network infrastructure.

This demonstrates that we are playing a constructive role in shaping the regulatory landscape in which we operate so that we can supply our customers with power and gas reliably and efficiently. Ultimately, all of these efforts will create a reliable investment environment in which we can achieve further growth in our core business. We will continue to focus our energy and the Group’s capabilities on profitably expanding our market positions in and outside Germany.

Sincerely yours,

Dr. Wulf H. Bernotat

Interim Report II/2005

E.ON Stock

E.ON stock finished the first six months of 2005 up 14 percent (including the dividend), thereby outperforming other European blue chips as measured by the EURO STOXX 50 Performance Index, which advanced 10 percent over the same period. E.ON stock performed slightly weaker than its peer index, the STOXX Utilities, which rose by 16 percent.

The trading volume of E.ON stock climbed by more than 25 percent year-on-year to €27.9 billion, making E.ON the fifth most-traded stock in the DAX index of Germany’s top 30 blue chips. As of June 30, 2005, E.ON was the third-largest DAX issue in terms of market capitalization.

E.ON stock is listed on the New York Stock Exchange (NYSE) as American Depositary Receipts (ADRs). Effective March 29, 2005, the conversion ratio between E.ON ADRs and E.ON stock was changed to three to one. The value of three E.ON ADRs is effectively that of one share of E.ON stock.

For the latest information about E.ON stock, visit www.eon.com.

E.ON Stock

		June 30,				Dec.31,
		2005				2004
Shares outstanding (in millions)1			659				659
Closing price (in €)			73.68				67.06
Market capitalization (€ in billions)2			51.0				46.4

Performance and Trading Volume

January 1 - June 30		2005				2004
High (in €)1			73.68				59.63
Low (in €)1			64.50				49.27
Trading volume2
— Millions of shares			407.1				409.7
— € in billions			27.9				22.2

Interim Report II/2005

Results of Operations

Energy Price Developments

The gas and power markets E.ON operates in are heavily influenced by the development of oil and coal prices.The introduction of the European Emissions Trading Scheme has meant that CO₂ certificate prices play an increasingly important role in European energy markets.

Due to tight supply fundamentals, the price of Brent crude oil climbed to $59 per barrel by the end of June 2005, an $18 per barrel, or 45 percent, increase from the price at the start of the year and a $26 per barrel, or 80 percent, increase from the average price in the first half of 2004. Natural gas prices in Europe and the United States followed this trend.

CO₂ certificate prices tripled in the second quarter to nearly €26 per metric ton from the low prices in January. Rising gas and oil prices contributed to this development, since higher gas prices served to increase the share of electricity generated from coal, resulting in greater demand for certificates.

Coal prices remained high in the first half of 2005 and traded as high as $72 per metric ton for year-ahead delivery, which is slightly above the prices quoted in the first weeks of 2005 and $7 per metric ton, or 11 percent, above the average price for the first half of 2004. Since April, however, coal prices have declined due to lower freight rates.

Wholesale power prices increased, tracking fuel and CO₂ certificate prices. In the U.K. and U.S., power prices were mainly driven by natural gas prices, in Germany mainly by coal and CO₂ certificate prices. Prices at Nordpool, Scandinavia’s power exchange, appear to be increasingly influenced by CO₂ certificate prices and by prices on the EEX, the German power exchange.

Power and Gas Sales Volumes Higher

We sold 3 percent more electricity in the first half of 2005 than in the same period last year, due largely to increased sales volumes in Germany resulting from the national burden-sharing agreement for renewable-source electricity.The inclusion of Gorna and Varna, newly consolidated regional electric distribution companies in Bulgaria, also contributed to the improvement. Higher sales volumes outside Germany at our Pan-European Gas market unit were the main factor in the 6 percent increase in gas sales.

Sales

January 1 - June 30
€ in millions		2005				2004				+/-%
Central Europe			12,505				10,866				+15
Pan-European Gas			8,860				6,863				+29
U.K.			4,876				4,468				+9
Nordic			1,796				1,753				+2
U.S.Midwest			1,029				963				+7
Corporate Center			-658				-325				—
Sales			28,408				24,588				+16

Sales up 16 Percent

The increase in sales resulted in particular from the passthrough of costs under Germany’s Renewable Energy Law, higher sales volumes, changes in the scope of consolidation, and price developments in the power and gas businesses.

Adjusted EBIT up 7 Percent

In the first half of 2005 all of our market units, with the exception of Pan-European Gas, continued their positive earnings development. Adjusted EBIT rose by 7 percent year-on-year to €4.3 billion. We benefited in particular from higher wholesale prices for electricity. Also contributing to our improved adjusted EBIT performance were increased hydroelectric generation at Nordic and rate increases at U.S. Midwest.

Interim Report II/2005

Adjusted EBIT

January 1 - June 30
€ in millions		2005				2004				+/–%
Central Europe			2,337				2,159				+8
Pan-European Gas			803				870				–8
U.K.			613				520				+18
Nordic			447				393				+14
U.S. Midwest			180				168				+7
Corporate Center			–150				–170				—
Core Energy Business			4,230				3,940				+7
Other Activities1			67				82				–18
Adjusted EBIT2			4,297				4,022				+7

By contrast, Pan-European Gas’s results were negatively impacted by continued higher heating oil prices. Natural gas prices are linked to heating oil prices. As a result, natural gas procurement costs have risen substantially. Because gas prices respond to changes in heating oil prices more rapidly on the procurement side than on the sales side, there was a significant adverse affect on Pan-European Gas’s adjusted EBIT.

Net income Surpasses High Prior-Year Level
 
Adjusted interest income (net) declined to –€536 million, primarily due to the absence of last year’s one-off gain of approximately €270 million resulting from amendments to Germany’s Ordinance on Advance Payments for the Establishment of Federal Facilities for Safe Custody and Final Storage for Radioactive Wastes (Endlager-Vorausleistungsverordnung). Among the positive factors was a decline in net debt.

Net book gains in the first half of 2005 were significantly below last year’s figure. In the period under review they resulted from the sale of securities. The prior-year number includes book gains on the sale of equity interests in EWE and VNG (€317 million) and on the sale of securities (€124 million) and the sale of more Degussa stock (€63 million).

Other nonoperating earnings primarily reflect positive effects from the marking to market of energy derivatives at the U.K. market unit. We use derivatives to protect our operations from the effects of price fluctuations. Since March 2005 the market value of these derivatives has increased by about €680 million, in large part due to sharply higher power and gas prices. The costs relating to the severe storm in Sweden at the beginning of the year reduced other nonoperating earnings by about €140 million. The prior-year figure mainly includes positive effects from the marking to market of energy derivatives.

Net Income

January 1 - June 30
€ in millions		2005				2004				+/–%
Adjusted EBITDA1			5,677				5,315				+7
Depreciation, amortization, and impairments affecting adjusted EBIT2			–1,380				–1,293				—
Adjusted EBIT1			4,297				4,022				+7
Adjusted interest income (net)3			–536				–378				—
Net book gains			188				504				—
Restructuring expenses			–13				–31				—
Other nonoperating earnings			741				59				—
Income/Loss (-) from continuing operations before income taxes and minority interests			4,677				4,176				+12
Income taxes			–1,514				–1,199				—
Minority interests			–276				–275				—
Income/Loss (-) from continuing operations			2,887				2,702				+7
Income/Loss (-) from discontinued operations, net			139				113				+23
Net income			3,026				2,815				+7

Our continuing operations recorded a tax expense of €1,514 million in the first half of 2005. The increase results primarily from improved operating results and a lower share of tax-free earnings.

Income/Loss (–) from discontinued operations, net, mainly reflects the results of Viterra and Ruhrgas Industries, for which we have concluded sales agreements. Under U.S. GAAP, the results of disposal groups are reported separately in the Consolidated Statements of Income (see commentary on pages 24-25).

Net income (after income taxes and minority interests) surpassed the high prior-year level. Earnings per share of €4.59 were likewise up year-on-year, increasing 7 percent from last year’s figure.

Investments Significantly below Prior-Year Figure
 
In the period under review the E.ON Group invested €1.8 billion, a 36 percent decline year-on-year. We invested €1.1 billion (prior year: €1 billion) in intangible assets and property, plant, and equipment. Investments in financial assets totaled €769 million versus €1.8 billion in the prior year. The decline is in particular attributable to the Corporate Center. The high prior-year figure mainly reflects payments for bonds repurchased in conjunction with the acquisition of Midlands Electricity.

Interim Report II/2005

Results of Operations

Investments

January 1 - June 30
€ in millions		2005				2004				+/ –%
Central Europe			728				857				–15
Pan-European Gas			224				277				–19
U.K.			412				258				+60
Nordic			248				517				–52
U.S. Midwest			107				125				–14
Corporate Center			101				819				–88
Total			1,820				2,853				–36

In the first half of 2005 the Central Europe market unit invested €728 million, roughly 15 percent less than in the prior-year figure. Investments in intangible assets and property, plant, and equipment totaled €527 million (prior year: €432 million). Investments in financial assets totaled €201 million (prior year: €425 million). The greater part of capital expenditures for property, plant, and equipment went towards power generation and distribution assets.

Pan-European Gas invested approximately €224 million in the first half of 2005. Its largest single investments were the acquisition of a majority interest in Distrigaz Nord, a Romanian gas utility, and the increase of its shareholding in Interconnector Limited of the U.K. from 10 percent to 17.4 percent. This market unit also invested in infrastructure upgrade projects. Twenty-seven percent of investments went towards intangible assets and property, plant, and equipment, while 73 percent went towards the acquisition of shareholdings.

Investments at U.K. for the first half of 2005 were €412 million against €258 million for the prior year. Investments in financial assets were €220 million higher than in the prior year due to investments in the Enfield CCGT asset and the acquisition of Economy Power’s retail small and medium sized enterprise customers. Investments in intangible assets and property, plant, and equipment were €66 million lower than in the prior year, largely due to higher expenditure in 2004 on Scroby Sands offshore wind farm. Capital expenditure for additions to property, plant, and equipment was directed primarily at renewable generation, conventional power stations, and the regulated distribution business.

Nordic invested €150 million in intangible assets and property, plant, and equipment during the first half of 2005 in order to maintain its existing production plants and to upgrade and enhance its distribution network. This compares with €171 million during the corresponding period in 2004. Repair work and reconstruction necessitated by the severe storm in January have postponed other planned investments. The higher total investments during the first half of 2004 included the acquisition of the remaining shares in Graninge (€307 million).

Investments at U.S. Midwest were lower in 2005 due to lower construction spending on utility plant.

Financial Condition

Management’s analysis of E.ON’s financial condition uses, among other financial measures, cash provided by operating activities, free cash flow, and net financial position. Free cash flow is defined as cash provided by operating activities less investments in intangible assets and property, plant, and equipment. We use free cash flow primarily to make growth-creating investments, pay out cash dividends, repay debts, and make short-term financial investments. Net financial position equals the difference between our total financial assets and total financial liabilities. Management believes that these financial measures enhance the understanding of the E.ON Group’s financial condition and, in particular, its liquidity.

The E.ON Group’s cash provided by operating activities in the first half of 2005 was slightly above the prior-year level.

Cash Provided by Operating Activities

January 1 - June 30

€ in millions

2005

2004

+/ –

Central Europe

1,289

1,112

+177

Pan-European Gas

1,327

831

+496

U.K.

–330

379

–709

Nordic

305

578

–273

U.S. Midwest

150

95

+55

Corporate Center

118

–266

+384

Cash provided by operating activities

2,859

2,729

+130

Investments in intangible assets and property, plant, and equipment

–1,051

–1,042

–9

Free cash flow1

1,808

1,687

+121

Interim Report II/2005

Cash provided by operating activities at Central Europe increased year-on-year because the gross margin was higher and payments for nuclear fuel reprocessing were lower than in the prior-year period. In addition, tax payments were higher in the prior year. By contrast, in 2005 there was a higher increase in receivables which we expect to be reversed in the second half of the year.

In the first half of 2005 Pan-European Gas recorded a marked increase in cash provided by operating activities. The contributing factors were a temperature-driven increase in withdrawals from gas storage facilities and lower intercompany tax offsets compared with the prior-year period.

Cash provided by operating activities at U.K. declined significantly year-on-year because pension fund payments of €629 million in the second quarter of 2005 exceeded the prior-year figure. These one-off payments cover a portion of the actuarial deficit of U.K.’s pension plans. In addition, there was an increase in the working capital requirements in the first half of 2005 which we expect to be reversed in the third and fourth quarter.

The significant decline in Nordic’s cash provided by operating activities resulted from a number of nonrecurring items. These include increased cash outflows stemming from the severe storm in January and higher tax payments. Improvements at Nordic’s gas business and increased power production at its hydroelectric facilities had a positive influence on cash provided by operating activities.

Cash provided by operating activities at U.S. Midwest was higher year-on-year due to the absence of certain nonrecurring charges—including pension plan contributions and the phaseout of an asset-backed securities program—that negatively affected the prior-year figure.

The Corporate Center’s cash provided by operating activities was higher year-on-year due to positive effects from the unwinding of currency swaps and from higher tax refunds.

In general, surplus cash provided by operating activities at Central Europe, U.K., and U.S. Midwest is lower in the first quarter of the year (despite the high sales volume typical of this season) due to the nature of their billing cycles, which in the first quarter are characterized by an increase in receivables combined with cash outflows for goods and services. During the remainder of the year, particularly in the second and the third quarters, there is typically a corresponding reduction in working capital, resulting in significant surplus cash provided by operating activities, although sales volumes (with the exception of U.S. Midwest) are actually lower. The fourth quarter is characterized by an increase in working capital. At Pan-European Gas, by contrast, cash provided by operating activities is recorded principally in the first quarter, whereas there are cash outflows for intake at gas storage facilities in the second and third quarters and for gas tax prepayments in the fourth quarter. A major portion of the market units’ capital expenditures for intangible assets and property, plant, and equipment is paid in the fourth quarter.

With the stable level of investments in intangible assets and property, plant, and equipment, free cash flow was slightly above the prior-year number.

Net financial position, a non-GAAP financial measure, is derived from a number of figures which are reconciled to the most directly comparable U.S. GAAP measure in the table below.

Net Financial Position

June 30,

Dec.31,

June 30,

€ in millions

2005

2004

2004

Bank deposits

3,369

4,233

3,890

Securities and funds (current assets)

8,708

7,783

7,462

Total liquid funds

12,077

12,016

11,352

Securities and funds (fixed assets)

1,155

834

795

Total financial assets

13,232

12,850

12,147

Financial liabilities to banks

–2,328

–4,050

–4,599

Bonds

–9,572

–9,148

–10,302

Commercial paper

–4,073

–3,631

–4,380

Other financial liabilities

–617

–1,504

–914

Total financial liabilities

–16,590

–18,333

–20,195

Net financial position1

–3,358

–5,483

–8,048

We further improved our net financial position from the figure reported as of December 31, 2004 (-€5,483 million). This was caused mainly by strong cash provided by operating activities and by the fact that for the first time Viterra is recorded under discontinued operations. Our net financial position was adversely affected by financial outlays for investments in property, plant, and equipment and in shareholdings. The dividend payout and the related tax payment also led to cash outflows.

Interim Report II/2005

Results of Operations

Reconciliation of Net Financial Position

June 30,

Dec. 31,

June 30,

€ in millions

2005

2004

2004

Liquid funds shown in the Consolidated Financial Statements

12,077

12,016

11,352

Financial assets shown in the Consolidated Financial Statements

17,616

17,263

17,810

– Thereof loans

–1,212

–1,438

–1,818

– Thereof equity investments

–14,551

–14,420

–14,483

– Thereof shares in affiliated companies

–698

–571

–714

= Total financial assets

13,232

12,850

12,147

Financial liabilities shown in the Consolidated Financial Statements

–18,593

–20,301

–22,310

– Thereof to affiliated companies

110

134

228

– Thereof to associated companies

1,893

1,834

1,887

=Total financial liabilities

–16,590

–18,333

–20,195

Net financial position

–3,358

–5,483

–8,048

Net interest expense declined by a substantial €189 million year-on-year, mainly reflecting lower net debt in the first half of 2005. In addition, the prior-year figure includes a nonrecurring adverse effect relating to the repurchase of Powergen bonds. A further factor in the current-year period was the higher share of financial liabilities with a variable interest rate. Net interest expense only includes the interest income of those items that are also part of the net financial position.

Financial Key Figures

January 1 - June 30
€ in millions		2005				2004
Net interest expense1			–100				–289
Adjusted EBITDA2			5,677				5,315
Adjusted EBITDA ÷ net interest expense			56.8x				18.4x

On March 14, 2005, Standard & Poor’s confirmed its AA– long-term rating for E.ON bonds and lowered its outlook from stable to negative. Since April 30, 2004, Moody’s long-term rating for E.ON bonds is Aa3 with a stable outlook. Commercial paper issued by E.ON has a short-term rating of A-1+ and P-1 by Standard & Poor’s and Moody’s, respectively. E.ON has committed itself to maintaining at least a strong single-A rating.

Employees

On June 30, 2005, the E.ON Group had 78,006 employees worldwide in its core energy business, as well as 1,816 apprentices and 241 board members and managing directors. Our workforce increased by 17,410 employees, or 29 percent, since December 31, 2004. At the end of the first half of 2005, 43,809 employees, or 56 percent of all staff, were working outside Germany, about 11 percentage points more than at year end 2004 (45 percent). This development is mainly attributable to the addition of Distrigaz Nord (9,300 employees), a Romanian gas distribution company, at the Pan-European Gas market unit.

Employees¹

		June 30,				Dec. 31,
		2005				2004				+/-%
Central Europe			42,404				36,811				+15
Pan-European Gas			13,368				4,001				+234
U.K.			12,363				10,397				+19
Nordic			5,952				5,530				+8
U.S. Midwest			3,476				3,437				+1
Corporate Center			443				420				+5
Total			78,006				60,596				+29
Discontinued Operations2			8,874				9,114				–3
Degussa3			40,888				40,155				+2

The number of Central Europe’s employees increased by 15 percent from the figure for year end 2004. This resulted from the addition of Gorna Oryahovitza and Varna, regional electric distribution companies in Bulgaria (a total of about 3,700 employees), the IT service provider E.ON IS (formerly is:energy, about 1,300 employees), and DDGáz and Kögáz, Hungarian gas distribution companies (a total of about 900 employees).

At the end of the first half of 2005, the U.K. market unit had 12,363 employees. This roughly 19 percent rise from year end 2004 is attributable to the integration of staff formerly employed by an external service provider.

During the reporting period, wages and salaries including social security contributions totaled €2.2 billion, compared with €2 billion a year ago.

Interim Report II/2005

Risk Situation

In the normal course of business, we are subject to a number of risks that are inseparably linked to the operation of our businesses.

Technologically complex facilities are involved in the production and distribution of energy. Operational failures or extended production stoppages of facilities or components of facilities could adversely impact our earnings situation. We address these risks through ongoing employee training and qualification programs and regular facility and system maintenance.

During the normal course of business, E.ON is exposed to interest rate, currency, commodity price, and counterparty risks which we address through the targeted use of financial instruments.

Our market units operate in an international market environment characterized by general risks related to the business cycle and by more intense competition. We use a comprehensive sales monitoring system and derivative financial instruments to minimize the price and sales risks of liberalized markets.

The political, legal, and regulatory environment in which the E.ON Group does business is a source of additional external risks. Our goal is to play an active and informed role in shaping our business environment. We pursue this goal by engaging in a systematic and constructive dialog with political leaders and representatives of government agencies.

The operational and strategic management of the E.ON Group relies heavily on complex information technology. Our IT systems are maintained and optimized by qualified E.ON Group experts, outside experts, and certain technological security measures.

In the period under review the E.ON Group’s risk situation did not change substantially from year end 2004.

Outlook

For 2005 we expect the E.ON Group’s adjusted EBIT to be slightly above the record number we posted in 2004. Thanks to the successful divestment of Viterra and Ruhrgas Industries, we expect net income for 2005 to substantially surpass the prior-year figure.

The earnings forecast by market unit is as follows:

For 2005 we expect the adjusted EBIT of the Central Europe market unit to be above the prior-year number. The main drivers will be the passthrough of higher wholesale electricity prices to end customers, the implementation of groupwide optimization programs, and the realization of regional synergies.

We now expect Pan-European Gas’s adjusted EBIT to be slightly below the figure for 2004 due to sharply higher heating oil prices. In addition, we anticipate that our acquisition of a majority ownership interest in the gas business of Hungary’s Mol will be delayed.

For the U.K. market unit, we expect adjusted EBIT to be slightly above prior year’s level. From today’s perspective, the growth rate seen in the first half of 2005 will decrease, mainly due to integration costs in the non-regulated business.

We anticipate that Nordic’s adjusted EBIT for 2005 will be on par with the figure posted in 2004. For the remainder of the year the favorable development of Nordic’s business year to date will be largely offset by lower retail earnings as a result of the January storm and by planned costs for rebranding Sydkraft to E.ON Sverige.

We expect U.S. Midwest’s 2005 adjusted EBIT to be slightly ahead of the 2004 figure in local currency. From today’s perspective, the positive effects of higher gas and electric rates will be partly offset by higher coal prices in the non-regulated business.

Interim Report II/2005

Market Units

Central Europe

Central Europe

January 1 - June 30
€ in millions		2005				2004				+/– %
Sales			12,505				10,866				+15
— Thereof energy taxes			543				540				+1
Adjusted EBITDA			2,948				2,689				+10
Adjusted EBIT			2,337				2,159				+8

Electricity prices on European’s energy exchanges rose sharply during the first half of 2005. EEX prices for year-ahead baseload power topped €43 per MWh for the first time, a 25 percent increase from the prices quoted in January of this year. Price levels reflect continued high coal prices and the substantial increase in prices for CO₂ certificates.

Depending on their analysis of the market and their willingness to accept risk, larger industrial customers tended to be reluctant to enter into new supply agreements. Electricity prices for residential customers were unchanged in the second quarter.

Central Europe sold approximately 8.4 billion kWh more electricity than in the prior-year period, mainly due to the sale of larger volumes of electricity the company was required to purchase under the Renewable Energy Law. Another factor was the inclusion of Gorna and Varna, Bulgarian regional electric distribution companies that became consolidated E.ON subsidiaries in the period under review.

Central Europe met about 48 percent of its power requirements with electricity from its own generation assets, compared with 53 percent in the year-earlier period. Central Europe’s generation business can capitalize on the advantages of a flexible energy resource portfolio. Compared with the prior year, Central Europe procured around 11 billion kWh more electricity from jointly owned power stations and outside sources. This increase is principally attributable to the purchase of larger volumes of wind power subsidized under the Renewable Energy Law as well as to the inclusion of the Bulgarian regional electric distribution companies.

Despite the inclusion of Hungary’s Kögáz and DDGáz and two gas utilities at E.ON Bayern, all of which became consolidated E.ON companies in the period under review, gas sales at Central Europe’s regional utilities were unchanged from the prior-year figure. The factors include temperature-driven declines in sales volume and keener competition in the sales partner and the industrial and commercial segments.

Central Europe grew sales by 15 percent relative to the prior-year period, mainly due to the passthrough of costs for electricity subsidized under the Renewable Energy Law, higher electricity and gas prices in Germany, and the consolidation effects mentioned above.

Interim Report II/2005

Power Generation and Procurement¹

January 1 - June 30
Billion kWh		2005				2004				+/–%
Owned generation			66.5				68.4				–3
Purchases			73.1				61.8				+18
— from jointly owned power plants			6.7				6.0				+12
— from outside sources			66.4				55.8				+19
Power procured			139.6				130.2				+7
Plant-use, transmission losses, pumped-storage hydro			–6.1				–5.1				—
Power sales			133.5				125.1				+7

Adjusted EBIT rose €178 million year-on-year, with Central Europe’s business units developing as follows:

Central Europe West Power grew adjusted EBIT by €212 million, chiefly due to improved gross margins. The key factor was the passthrough to end customers of the fuel-driven increase in wholesale prices. Adverse affects include higher costs for conventional fuel and for electricity purchased from jointly owned power stations and outside sources.

Adjusted EBIT at Central Europe West Gas was €12 million below the prior-year level. Lower sales volumes and higher procurement costs could not be counteracted by the consolidation effects at E.ON Bayern or by higher sales prices.

Central Europe East’s adjusted EBIT increase of €14 million is attributable to the inclusion of Varna and Gorna, which became consolidated E.ON companies on March 1, 2005, and to the sale of minority stakes in the Czech Republic.

Adjusted EBIT recorded under Other/Consolidation declined by €36 million year-on-year, mainly due to lower equity earnings and the divestment of shareholdings in the prior year.

Financial Highlights by Business Unit

		Central Europe West																Central Europe								Other/
January 1 - June 30		Power								Gas								East								Consolidation								Central Europe
€ in millions		2005				2004				2005				2004				2005				2004				2005				2004				2005				2004
Sales1			8,580				7,406				2,086				1,864				1,201				944				95				112				11,962				10,326
Adjusted EBITDA			2,336				2,103				379				382				222				189				11				15				2,948				2,689
Adjusted EBIT			1,963				1,751				277				289				135				121				–38				–2				2,337				2,159

Interim Report II/2005

Market Units

Pan-European Gas

Pan-European Gas

January 1 - June 30
€ in millions		2005				2004				+/–%
Sales			8,860				6,863				+29
—Thereof energy taxes			1,682				1,583				+6
Adjusted EBITDA			978				1,042				–6
Adjusted EBIT			803				870				–8

In the first half of 2005 Germany’s consumption of primary energy fell by 1 percent, while its consumption of natural gas rose by 1 percent relative to the same period last year. A temperature-drive increase in demand in the first quarter was followed by a further slight increase in the second quarter. Second-quarter temperatures in E.ON Ruhrgas’s sales territory were on par with the prior-year figure and about 0.4°C below the historical average.

E.ON Ruhrgas AG sold 363.1 billion kWh of gas in the first half of 2005, about 8 percent more than in the prior-year period. Second-quarter sales volumes rose by 10 percent year-on-year to 137.5 billion kWh.

Gas Sales by Period¹

January 1 - June 30
Billion kWh		2005				2004				+/–%
First quarter			225.6				211.2				+7
April			57.7				52.9				+9
May			44.5				40.7				+9
June			35.3				31.8				+11
Second quarter			137.5				125.4				+10
Gas sales			363.1				336.6				+8

The volume growth resulted mainly from higher sales volumes outside Germany, which increased by over 70 percent year-on-year. Outside Germany, Pan-European Gas’s most import sales markets are the U.K. and Switzerland. Along with gas deliveries to E.ON UK, which began in October 2004, deliveries to new customers in France, Denmark, and Italy also contributed to the positive development of this market unit’s international business. In addition, a two-year supply contract was concluded with a new industrial customer in Denmark in the second quarter of 2005. Furthermore, a supply agreement was reached with Thüga Italia for the 2005/ 2006 delivery period. In Germany, E.ON Ruhrgas AG sold more gas in the second quarter, primarily to publicly owned power stations. Sales volumes to regional gas companies and municipal utilities were stable, while those to industrial customers declined slightly.

As in the previous year, regional gas companies constituted E.ON Ruhrgas AG’s largest customer segment, accounting for 49 percent of total gas sales (prior year: 53 percent). Twenty-four percent (prior year: 25 percent) of total sales went to municipal utilities. Deliveries to industrial customers accounted for 9 percent (prior year: 11 percent) of total sales. Sales outside Germany increased from 11 percent of total sales in the first half of 2004 to 18 percent in the period under review.

Sales at Pan-European Gas increased to €8.9 billion, while adjusted EBIT declined by 8 percent, in the first six months of 2005.

The Up-/Midstream business unit grew sales by 38 percent year-on-year to €6.4 billion. This positive sales performance results mainly from higher sales volumes in the midstream business in conjunction with higher average sales prices. The upstream business also benefited from higher sales prices and increased production compared with the prior-year period. In 2004 Scoter did not begin production until March, whereas in 2005 Scoter produced throughout the entire period under review.

Sales were higher at the Downstream Shareholdings business unit primarily due to consolidation effects at Thüga Italia. In late June 2005 E.ON Ruhrgas acquired a majority ownership interest in Distrigaz Nord, a Romanian gas distribution company. Distrigaz Nord became a consolidated E.ON company on June 30, 2005.

The main factor behind the decline in Pan-European Gas’s adjusted EBIT was the midstream business, which was adversely affected by continued higher heating oil prices. Natural gas prices are linked to heating oil prices. As a result, natural gas procurement costs have risen substantially. Because gas prices respond to changes in heating oil prices more rapidly on the procurement side than on the sales side, there was a significant adverse affect on adjusted EBIT.

Interim Report II/2005

Overall, the Up-/Midstream business unit’s adjusted EBIT fell by 21 percent. The positive development of the upstream business, where higher oil and gas prices contributed to an improved adjusted EBIT performance, counteracted only to a limited degree the adverse effects in the midstream business.

The Downstream business unit grew adjusted EBIT by 19 percent year-on-year to €347 million. This is principally attributable to higher equity earnings at E.ON Ruhrgas International and Thüga.

Financial Highlights by Business Unit

										Downstream								Other/
January 1 - June 30		Up-/Midstream								Shareholdings								Consolidation1								Pan-European Gas1
€ in millions		2005				2004				2005				2004				2005				2004				2005				2004
Sales2			6,438				4,678				956				768				–216				–166				7,178				5,280
Adjusted EBITDA			595				710				384				334				–1				–2				978				1,042
Adjusted EBIT			457				580				347				292				–1				–2				803				870

U.K.

U.K.

January 1 June 30
€ in millions		2005				2004				+/–%
Sales			4,876				4,468				+9
Adjusted EBITDA			908				800				+14
Adjusted EBIT			613				520				+18

Gas prices at the National Balancing Point rose significantly in the first half of 2005, driven by the rise in forward oil prices and continued security of supply concerns for the winter. Across the six months, the price of the 2006 calendar year product rose from 32 pence per therm to 56 pence per therm. This represents an increase of 75 percent since the start of the year and a 93 percent increase over the last 12 months.

Power prices in the U.K. continued to be driven by rising gas prices and increasingly by carbon prices. In the first six months of 2005, winter 2005/2006 baseload contracts increased from £33 per MWh to close at above £59 per MWh. This represents an increase of 79 percent since the start of the year and an increase of 90 percent over the last 12 months.

In response to increases in wholesale energy prices, the U.K. market unit has increased its consumer retail prices for electricity by 7.2 percent and for gas by 11.9 percent with effect from August 31, 2005. Other leading suppliers have indicated that increases in retail prices are likely due to soaring wholesale prices and higher energy efficiency and environmental costs.

The decrease in power and gas sales volumes is in the industrial and commercial market, where the focus has been on securing margin in volatile market conditions.

Sales by Customer Segment¹

January 1 - June 30
Billion kWh		2005				2004				+/–%
Power—Residential			18.9				18.7				+1
Power—SME and I&C			11.6				14.2				–18
Total Power sales			30.5				32.9				–7
Gas—Residential			39.7				38.0				+4
Gas—SME and I&C			18.1				20.0				–10
Total gas sales			57.8				58.0				—

Interim Report II/2005

Market Units

Power Generation and Procurement

January 1 - June 30
Billion kWh		2005				2004				+/ –%
Owned generation			17.7				17.8				–1
Purchases			13.8				16.1				–14
— Jointly owned power plants			0.9				1.4				–36
— Outside sources			12.9				14.7				–12
Power procured			31.5				33.9				–7
Plant-use, transmission losses, pumped-storage hydro			–1.0				–1.0				—
Power sales			30.5				32.9				–7

E.ON UK’s attributable generation portfolio was 8,807 MW at June 30, 2005, an increase of 842 MW from the figure for March 31, 2005, due to the recommissioning of Killingholme Module 2 (450 MW) in April and the purchase of the Enfield CCGT generating asset (392 MW) in April.

E.ON UK increased its sales in the first half of 2005 compared with the prior year as a result of rising retail prices to offset the increase in wholesale energy costs.

Adjusted EBIT at the regulated business was up €8 million due to a full six-month contribution from Midlands Electricity which was acquired on January 16, 2004.

In the non-regulated business, adjusted EBIT increased by €113 million, largely due to special items. These included benefits from the integration of customer services activities relating to former TXU customers that were previously outsourced to an external service provider. In addition, E.ON UK received payments from the TXU administrator for outstanding renewables obligation charges from 2002/2003 and benefited from a favorable settlement on outstanding TXU gas imbalance charges. Furthermore E.ON UK benefited from higher wholesale prices as well as further operational improvements.

The €28 million decrease in adjusted EBIT recorded under Other/Consolidation is mainly due to no deferred warranty income from previous asset sales and lower earnings from the international assets following divestment of the interests in the 1,220 MW Paiton plant in 2004.

Financial Highlights by Business Unit

		Regulated								Non-regulated								Other/
January 1 - June 30		business								business								Consolidation								U.K.
€ in millions		2005				2004				2005				2004				2005				2004				2005				2004
Sales			413				472				4,562				4,115				–99				–119				4,876				4,468
Adjusted EBITDA			297				288				655				530				–44				–18				908				800
Adjusted EBIT			223				215				442				329				–52				–24				613				520

Nordic

Nordic

January 1 - June 30
€ in millions		2005				2004				+/ –%
Sales			1,796				1,753				+2
— Thereof energy taxes			236				220				+7
Adjusted EBITDA			639				598				+7
Adjusted EBIT			447				393				+14

During the first six months of the year, average electricity spot prices were slightly lower than in the first half of 2004. Hydropower production has been high, particularly during the spring. This was based on a surplus in the hydrological balance of +15 TWh above long-term average at the beginning of the year. Demand was dampened by above-normal temperatures in January and February and then positively affected by colder weather in March. Spot prices declined

Interim Report II/2005

again at the end of May, when energy-intensive Finnish paper mills were closed due to an industry-wide lockout.

Forward prices for wholesale electricity increased substantially during the first half of this year reflecting rising prices for CO₂ emission rights and for oil and coal. In compliance with a decision by the Swedish government, Barsebäck 2, a 600 MW nuclear power plant, was permanently withdrawn on May 31, 2005.

Competition has remained keen on the Nordic retail markets. In the wake of the January storm, in Sweden Sydkraft has focused on restoring public and customer confidence. Recent opinion polls indicate that these measures have been effective. Preparations for rebranding Sydkraft to E.ON Sverige are in progress; the name change will take place in the fall.

After the January storm, Sydkraft estimates that the costs for rebuilding its distribution grid and compensating customers will be approximately €140 million.The direct and indirect effects were significant and affected much of our operations in Sweden.These effects are extraordinary in nature and will not affect adjusted EBIT.

Nordic sold 0.5 billion kWh less electricity compared with the same period in 2004.The decrease resulted from lower sales to residential and commercial customers, primarily as a result of the January storm. Nordic sold 94 percent of its power in Sweden and 6 percent in Finland.

Nordic covered approximately 70 percent of its electricity sales with power from its own generation assets. Generation increased by 0.6 billion kWh relative to the prior-year period. Higher reservoir levels at the start of the year along with higher inflow during the period under review resulted in higher hydropower generation. Nuclear power production declined compared with 2004, which was characterized by very high availability. In 2005, there was one longer and several shorter unplanned outages in Nordic’s reactors. Lower spot electricity prices explain the decline in generation from fossil-fuel and CHP units.

Power Generation and Procurement

January 1 - June 30
Billion kWh		2005				2004				+/–%
Owned generation			17.2				16.6				+4
Purchases			8.1				9.2				–12
— Jointly owned power plants			5.1				5.5				–7
— Outside sources			3.0				3.7				–19
Power procured			25.3				25.8				–2
Plant-use, transmission losses			–1.0				–1.0				—
Power sales			24.3				24.8				–2

Interim Report II/2005

Market Units

Gas and Heat Sales

January 1 - June 30
Billion kWh		2005				2004				+/–%
Gas sales			3.9				3.7				+5
Heat sales			6.0				5.8				+3

Gas sales increased slightly due to higher sales to industrial customers. Heat sales improved due to lower temperatures in the period under review.

Nordic’s sales of €1,796 million were slightly above the prior-year figure. Lower electricity sales volumes and somewhat lower spot prices were more than compensated by successful hedging activities.

Nordic increased adjusted EBIT by €54 million year-on-year to €447 million. The improvement was primarily a result of increased hydroelectric production and successful hedging activities, which enabled Nordic to secure higher effective sales prices for its production portfolio. Nordic’s adjusted EBIT from its gas operations improved due to a favorable spread between gas oil and fuel oil prices. Nordic’s Finnish business unit reported lower adjusted EBIT, mainly as a result of a decline in earnings from energy trading activities and lower revenues at its retail operations.

Financial Highlights by Business Unit

January 1 - June 30		Sweden								Finland								Nordic
€ in millions		2005				2004				2005				2004				2005				2004
Sales1			1,435				1,406				125				127				1,560				1,533
Adjusted EBITDA			602				550				37				48				639				598
Adjusted EBIT			428				363				19				30				447				393

U.S. Midwest

U.S.Midwest

January 1 - June 30
€ in millions		2005				2004				+/–%
Sales			1,029				963				+7
Adjusted EBITDA			280				261				+7
Adjusted EBIT			180				168				+7

Through June 2005, spot electricity prices in the Midwest, driven primarily by higher gas prices, increased to approximately $48 per MWh, compared to $44 per MWh for the same period in 2004. Prices at the Henry Hub natural gas spot market averaged $6.63 per MMBtu compared to $5.85 per MMBtu for the same period in 2004.

Forward gas prices increased slightly on average at Henry Hub driven by oil prices, wheather, and supply concerns. Forward power prices in the U.S. Midwest increased moderately driven by higher gas prices.

Interim Report II/2005

Sales by Customer Segment

January 1 - June 30
Billion kWh		2005				2004				+/–%
Regulated utility business			18.2				17.9				+2
— Retail customers			15.8				15.8				—
— Off-system sales			2.4				2.1				+14
Non-regulated business			5.7				5.7				—
Power sales			23.9				23.6				+1
Retail customers			8.0				8.5				–6
Off-system sales			0.8				0.4				+100
Gas sales			8.8				8.9				–1

Through June 2005, the regulated utility’s retail power sales volumes were relatively flat compared with 2004, while off-system sales volumes were higher compared to 2004 due to higher market prices during the off-peak period. Retail natural gas sales volumes declined due largely to milder winter weather compared with 2004. Off-system sales of natural gas increased due to the sale of volumes not used to serve retail customers.

Power Generation and Procurement

January 1 - June 30
Billion kWh		2005				2004				+/–%
Proprietary generation			22.9				22.7				+1
— Owned power stations			17.2				17.1				+1
— Leased power stations			5.7				5.6				+2
Purchases			2.4				2.5				–4
Power procurement			25.3				25.2				—
Plant-use and transmission losses			–1.4				–1.6				—
Power sales			23.9				23.6				+1

Ninety-eight percent of U.S. Midwest’s electricity generation was from coal-fired power stations. Gas, oil, hydro, and other energy sources accounted for 2 percent of generation. U.S. Midwest’s generation portfolio decreased by 275 MW from year end 2004 to 9,391 MW due to the sale of the Gregory partnership.

U.S. Midwest’s sales through June 2005 increased 7 percent (in local currency 12 percent) resulting primarily from higher wholesale revenues due to higher prices and the increase in retail electric and gas rates effective July 1, 2004, as approved by the Kentucky Public Service Commission, offset by the U.S. dollar’s deterioration against the euro. Adjusted EBIT increased 7 percent (in local currency 12 percent) mainly driven by higher sales.

Adjusted EBIT at U.S. Midwest’s regulated utility operations improved from 2004 primarily as a result of the increased retail electric and gas rates. In addition, the contribution from off-system sales exceeded the previous year’s figure due to higher prices and volumes in the off-system wholesale electric market offset by costs associated with participation in Midwest Independent Transmission System Operator (MISO), higher depreciation on newly installed assets, and the U.S. dollar’s deterioration against the euro in the first half 2005.

Adjusted EBIT at the non-regulated operations was comparable to 2004.

Financial Highlights by Business Unit

		Regulated								Non-regulated
January 1 - June 30		business								business/Other								U.S.Midwest
€ in millions		2005				2004				2005				2004				2005				2004
Sales			888				827				141				136				1,029				963
Adjusted EBITDA			263				243				17				18				280				261
Adjusted EBIT			169				156				11				12				180				168

Interim Report II/2005

Interim Financial Statements (Unaudited)

E.ON AG and Subsidiaries Consolidated Statements of Income

		April 1 - June 30								January 1 - June 30
€ in millions		2005				2004				2005				2004
Sales			12,507				10,465				28,408				24,588
Energy taxes			–1,017				–944				–2,453				–2,338
Sales, net of energy taxes			11,490				9,521				25,955				22,250
Cost of goods sold and services provided			–8,856				–6,495				–20,041				–16,090
Gross profit on sales			2,634				3,026				5,914				6,160
Selling expenses			–884				–988				–1,903				–2,099
General and administrative expenses			–356				–317				–684				–570
Other operating income			2,177				1,398				4,209				3,177
Other operating expenses			–1,401				–1,046				–3,029				–2,415
Financial earnings			184				12				170				–77
Income/Loss (–) from continuing operations before income taxes and minority interests			2,354				2,085				4,677				4,176
Income taxes			–766				–664				–1,514				–1,199
Minority interests			–100				–106				–276				–275
Income/Loss (–) from continuing operations			1,488				1,315				2,887				2,702
Income/Loss (–) from discontinued operations,net			79				45				139				113
Net income			1,567				1,360				3,026				2,815
Earnings per share in €, basic and diluted
— from continuing operations			2.25				2.00				4.38				4.12
— from discontinued operations			0.12				0.07				0.21				0.17
— from net income			2.37				2.07				4.59				4.29

Interim Report II/2005

E.ON AG and Subsidiaries Consolidated Balance Sheets

		June 30,				Dec. 31,
€ in millions		2005				2004
Assets
Goodwill			14,831				14,454
Intangible assets			3,717				3,788
Property, plant, and equipment			40,155				43,563
Financial assets			17,616				17,263
Fixed assets			76,319				79,068
Inventories			2,050				2,647
Financial receivables and other financial assets			1,965				2,124
Operating receivables and other operating assets			18,561				15,759
Assets of disposal groups			7,138				553
Liquid funds (thereof cash and cash equivalents < 3 months 2005: 3,336; 2004: 4,176)			12,077				12,016
Nonfixed assets			41,791				33,099
Deferred taxes			1,633				1,551
Prepaid expenses			346				344
Total assets			120,089				114,062

E.ON AG and Subsidiaries Consolidated Balance Sheets

		June 30,				Dec. 31,
€ in millions		2005				2004
Stockholders’ equity and liabilities
Stockholders’ equity			36,367				33,560
Minority interests			4,370				4,144
Provisions for pensions			7,771				8,589
Other provisions			25,292				25,653
Accrued liabilities			33,063				34,242
Financial liabilities			18,593				20,301
Operating liabilities			15,463				14,054
Liabilities			34,056				34,355
Liabilities of disposal groups			4,748				54
Deferred taxes			6,808				6,605
Deferred income			677				1,102
Total stockholders’ equity and liabilities			120,089				114,062

Interim Report II/2005

Interim Financial Statements (Unaudited)

E.ON AG and Subsidiaries Consolidated Statements of Cash Flow

January 1 - June 30
€ in millions		2005				2004
Net income			3,026				2,815
Income applicable to minority interests			276				275
Adjustments to reconcile net income to net cash provided by operating activities
Income from discontinued operations, net			–139				–113
Depreciation, amortization, impairment			1,380				1,333
Changes in provisions			–485				–533
Changes in deferred taxes			247				46
Other noncash income and expenses			–399				–134
Gain/Loss (–) on disposal of fixed assets			–60				–458
Changes in nonfixed assets and other operating liabilities			–987				–502
Cash provided by operating activities			2,859				2,729
Proceeds from disposal of
equity investments			280				1,461
intangible and fixed assets			72				171
Purchase of
equity investments			–769				–1,811
intangible and fixed assets			–1,051				–1,042
Changes in other liquid funds			–417				957
Cash provided by (used for) investing activities			–1,885				–264
Payments received/made from changes in capital, including minority interests			2				—
Payments for treasury stock, net			–30				—
Payment of cash dividends to
stockholders of E.ON AG			–1,549				–1,312
minority stockholders			–225				–255
Changes in financial liabilities			269				–360
Cash provided by (used for) financing activities			–1,533				–1,927
Net increase (decrease) in cash and cash equivalents maturing (< 3 months) from continuing operations			–559				538
Effect of foreign exchange rates on cash and cash equivalents (< 3 months)			94				8
Cash and cash equivalents (< 3 months) at the beginning of the period			4,176				3,321
Cash and cash equivalents (< 3 months) from discontinued operations at the beginning of the period			–375				–152
Cash and cash equivalents from continuing operations at the end of the period (< 3 months)			3,336				3,715
Available-for-sale securities (> 3 months) from continuing operations at the end of the period			8,741				7,463
Available-for-sale securities (> 3 months) from discontinued operations at the end of the period			—				22
Cash and cash equivalents (< 3 months) from discontinued operations at the end of the period			—				152
Liquid funds as shown on the balance sheet			12,077				11,352

Interim Report II/2005

Consolidated Statements of Changes in Stockholders’ Equity

														Accumulated other comprehensive income
						Additional								Currency				Available-				Minimum
						paid-in				Retained				translation				for-sale				pension				Cash flow				Treasury
€ in millions		Capital Stock				capital				earnings				adjustments				securities				liability				hedges				stock				Total
Balance as of January 1, 2004			1,799				11,564				16,976				–1,021				1,184				–492				20				–256				29,774
Shares repurchased/sold																															1				1
Dividends paid											–1,312																								–1,312
Net income											2,815																								2,815
Other comprehensive income															416				569				37				116								1,138
Total comprehensive income																																			3,953
Balance as of June 30, 2004			1,799				11,564				18,479				–605				1,753				–455				136				–255				32,416
Balance as of January 1, 2005			1,799				11,746				20,003				–896				2,178				–1,090				76				–256				33,560
Shares repurchased/sold																															–30				–30
Dividends paid											–1,549																								–1,549
Net income											3,026																								3,026
Other comprehensive income															426				831				14				89								1,360
Total comprehensive income																																			4,386
Balance as of June 30, 2005			1,799				11,746				21,480				–470				3,009				–1,076				165				–286				36,367

Interim Report II/2005

Notes

Accounting and Valuation Policies

The accounting and valuation policies used to prepare the Interim Financial Statements for the six months ended June 30, 2005, correspond to those used for the Consolidated Financial Statements for the year ended December 31, 2004.

Publication of New Accounting Standards

In March 2005 the FASB issued Interpretation (FIN) 47, Accounting for Conditional Asset Retirement Obligations—An Interpretation of FASB Statement No. 143. FIN 47 clarifies that SFAS 143 also applies to asset retirement obligations even though uncertainty exists about the timing and/or method of settlement. FIN 47 is effective for fiscal years ending after December 15, 2005. E.ON is currently evaluating what effect the adoption of FIN 47 will have on its Consolidated Financial Statements.

Variable Interest Entities

On January 1, 2004, E.ON adopted the revised version of FIN 46 published in December 2003 (FIN 46R).

As of June 30, 2005, E.ON’s variable interest entities (VIEs) consist of two real estate leasing companies, two jointly managed electric generating companies, a company to manage and dispose of real estate, and a company that manages shareholdings.

As of June 30, 2005, E.ON consolidated VIEs with total assets and corresponding liabilities and equity of approximately €1,128 million (including €304 million in assets and liabilities of disposal groups) and earnings of €21 million (including €12 million in income from discontinued operations). Fixed assets and other assets in the amount of €133 million serve as collateral for liabilities relating to financial leases and bank loans. With the exception of two VIEs, there are limits to the recourse of creditors of the consolidated VIEs to the consolidating companies. In the case of these two VIEs, the liabilities total €93 million for the consolidating companies.

In addition, since July 1, 2000, E.ON has had a contractual relationship with a VIE, a leasing company operating in the energy industry, for which we are not the primary beneficiary. This entity has total assets and corresponding liabilities and equity of €120 million and annual earnings of roughly €29 million. E.ON’s maximum exposure to loss relating to this VIE is approximately €15 million. Management considers it unlikely that this loss will be realized.

The financial situation of another special-purpose entity, which has existed since 2001 and will operate until the fourth quarter of 2005, cannot be computed pursuant to FIN 46R due to lack of information. The entity’s activities consist of liquidating the assets of divested operations. Its original assets and corresponding liabilities and equity totaled €127 million. Management does not expect E.ON’s results of operations to be adversely affected by this entity’s operations.

Acquisitions, Disposals, and Discontinued Operations

Acquisitions in 2005

On February 22, 2005, E.ON Energie acquired 67 percent ownership interests in Gorna Oryahovitza and Varna, Bulgarian regional electric distribution companies. The aggregate purchase price of approximately €140 million was paid in 2004. The two utilities became consolidated E.ON companies on March 1, 2005.

In the first half of 2005 E.ON UK acquired, in two tranches, 100 percent of the equity of Enfield Energy Centre Ltd., which operates a gas-fired power station near London. With an installed capacity of 392 MW, the power station can generate enough power for 300,000 homes. The purchase price was approximately €180 million. Enfield Energy Centre became a consolidated E.ON company on April 1, 2005.

On June 28, 2005, E.ON Ruhrgas purchased a 30 percent ownership interest in Distrigaz Nord from the Romanian government for €125 million. On the same date, the ownership interest rose to 51 percent following a capital increase of €178 million. Distrigaz Nord became a consolidated E.ON company on June 30, 2005.

Discontinued Operations

On May 17, 2005, E.ON sold Viterra to Deutsche Annington GmbH. The purchase price for Viterra’s equity was approximately €4 billion. The total value of the transaction was approximately €7 billion. This figure includes interest-bearing liabilities and provisions to be assumed by the purchaser. The transaction received antitrust approval in early August.

On June 15, 2005, E.ON Ruhrgas sold Ruhrgas Industries to CVC Capital Partners, a European private equity firm. The purchase price for Ruhrgas Industries’ equity was approximately €1.2 billion. The total value of the transaction was approximately €1.5 billion. This figure includes net debt and provisions to be assumed by the purchaser. Management expects the transaction, which is subject to antitrust approval, to close in September 2005.

Both disposals are in line with E.ON’s strategy of focusing on its core power and gas business.

Interim Report 11/2005

Pursuant to U.S. GAAP, the income and expenses related to these operations are reported separately under “Income/ Loss (–) from discontinued operations, net.” The Consolidated Statements of Income and the Consolidated Statements of Cash Flows, including the notes relating to them, for the period ended June 30, 2005, and for the prior periods have been adjusted for these discontinued operations. The assets and liabilities of these discontinued operations are shown in the Consolidated Balance Sheets for the period ended June 30, 2005, under “Assets of disposal groups” and “Liabilities of disposal groups.” No reclassification of prior-year balance-sheet line items attributable to discontinued operations takes place, as such reclassification is not permitted by SFAS 144.

The following table shows the major line items of the statements of income of the above-named operations:

Major Income Statement Line Items of Discontinued Operations (Summary)

January 1 - June 30		Viterra								Ruhrgas Industries								Other
in Mio €		2005				2004				2005				2004				2005				2004
Sales			439				439				629				567				—				—
Other operating income/expenses, net			–311				–348				–610				–535				10				–3
Income/Loss (–) before income taxes and minority interests			128				91				19				32				10				–3
Income taxes			–8				13				–6				–11				–4				—
Minority interests			—				–8				—				–1				—				—
Income/Loss (–) from discontinued operations, net			120				96				13				20				6				–3

The following table contains the major balance sheet line items of the discontinued operations Viterra and Ruhrgas Industries and of the hydroelectric capacity, classified as a disposal group, that E.ON obtained in conjunction with its acquisition of Graninge. This disposal group and our acquisitions in 2004 are described in detail in our 2004 Annual Report.

Major Balance Sheet Line Items of Discontinued Operations and Disposal Groups (Summary)

										Graninge
										hydroelectric
June 30, 2005						Ruhrgas				capacity
€ in millions		Viterra				Industries				disposal group				Total
Fixed assets			4,226				621				529				5,376
Nonfixed assets			1,185				577				—				1,762
Total assets			5,411				1,198				529				7,138
Total liabilities (including minority interests)			4,159				537				52				4,748
Net assets			1,252				661				477				2,390