Carrying amounts and Net results

Financial assets and liabilities can be broken down into categories with the following carrying amounts:

The carrying amount of financial assets and liabilities within the scope of IFRS 7 basically corresponds to the fair value. The only deviation is found under financial liabilities in the category “financial liabilities carried at (amortized) cost”, where the carrying amount of €11,503 million (previous year: €10,429 million) deviates from the fair value of €11,923 million (previous year: €10,712 million).

The following net results from financial instruments as per IFRS 7 were recognized in the income statement:

The net result as per IFRS 7 essentially includes interest, dividends and results from the measurement of financial instruments at fair value.

In fiscal 2008, -€447 million in changes in the value of financial assets available for sale were recognized under accumulated other comprehensive income without an effect on income (previous year: -€143 million). During the reporting period, €217 million in changes in the value of financial instruments available for sale which had originally been recognized without an effect on income were realized as an expense (previous year: income of €283 million).

As a utility enterprise with international operations, the RWE Group is exposed to credit, liquidity and market risks in its ordinary business activity. In particular, market risks stem from changes in commodity Glossary prices, exchange rates, interest rates and share prices.

These risks are limited via systematic risk management. Among other things, risks are mitigated through hedges. RWE Group companies are also subjected to strict risk management. Binding internal directives define the range of action, responsibilities and controls.

Derivative financial instruments are used to hedge currency, commodity and interest rate risks from operations as well as risks from cash investments and financing transactions. The instruments most commonly used are foreign exchange forwards and options, interest rate swaps, interest rate currency swaps, and commodity forwards, options, futures and swaps. Additionally, derivatives may be used for proprietary trading purposes within defined limits.

Detailed information on the risks to which the RWE Group is exposed and on the objectives and procedures of the risk management is presented in the chapter “Development of opportunities and risks” in the review of operations.