Discontinued operations


Since the initiation of the sale of American Water Works Company Inc., Wilmington/Delaware, USA, this company has been stated as a discontinued operation. Following the sale of the first share tranche last year, 55.65 million additional shares were sold in two tranches at a price of US$ 17.25 and US$ 19.25 per share in the first three quarters of 2009, including the exercise of over-allotment options (“greenshoes”). Concurrently, American Water increased its capital by some US$ 250 million in 2009 through the issuance of new shares.

In sum, the RWE Group’s remaining stake in American Water was reduced to approximately 23.5 %. Due to the loss of the voting right majority and the continued intention to sell American Water, the presentation of the company’s assets and liabilities has been replaced with the associated company’s statement as an “asset held for sale” in accordance with IFRS 5. Earnings components are still shown in “income from discontinued operations.”

In accordance with IFRS 5, assets held for sale are recognised at the lower of the carrying amount and the fair value less costs to sell.

Recognition at fair value less costs to sell is essentially based on the market price of American Water. The following resulting measurement adjustments are included in the fair value adjustment. Changes in the market price can have an impact on the Group’s income in the future.

Key figures for the activities of American Water are presented in the following table:

Key figures for American Water1
€ million

Jan – Sep
2009

Jan – Sep
2008

1

Including the treatment of depreciation and amortisation.

Revenue

1,346

1,161

Expenses / income

–1,164

–1,028

Income before tax

182

133

Taxes on income

–67

–54

Income

115

79

As of December 31, 2008, € 8,432 million in non-current assets, € 278 million in current assets, € 5,824 million in non-current liabilities, and € 890 million in current liabilities were attributable to American Water.

Income from discontinued operations includes –€ 23 million in sales proceeds (first three quarters of 2008: € 0 million) and –€ 2 million in fair value adjustments (first three quarters of 2008: –€ 783 million).

Income from the investment in American Water in the second and third quarters of 2009 amounted to € 20 million.