E.ON International Finance B.V. Interim Report January June Rotterdam, the Netherlands

Transcription

1 Interim Report January June 2012 Rotterdam, the Netherlands

2 Contents 2 Company Board and Management 3 Report of the Board of Management 3 Statement from the Board of Management 5 Condensed Interim Financial Statements of 6 Condensed Balance Sheet (before profit appropriation) 6 Condensed Income Statement 7 Condensed Cash flow Statement 8 Notes to the condensed interim financial statements 9 Review report 14

3 Board of Management 3 Report of the Board of Management General information As of June 30, 2012, the composition of the Board of Management as well as the objectives of are unchanged compared to the financial year ended December 31, continues to be a wholly owned and fully consolidated subsidiary of E.ON AG, Düsseldorf, Germany. Internal organisation The statutory seat and the office of is Capelseweg 400 in Rotterdam. Until March 31, 2012 also operated a second office in Venlo, which has been closed. At June 30, 2012 had no own employees (2011: 0). All personnel is either seconded from other E.ON group companies or employed by E.ON Benelux N.V. under a service level agreement. Market review In the first half of 2012 concerns surrounding peripheral European countries continued to be the main driver influencing the international capital markets. This lead to a continuously high degree of volatility with regard to foreign exchange rates, with the Euro again weakening against the US Dollar and the British Pound. Interest rates both long term and short term rates again continued their downward trend in the first half of 2012 reaching new historic lows. Also credit spreads continued their trend towards a strong differentiation amongst European sovereign issuers, with spreads again increasing especially for peripheral countries. Corporate issuers credit spreads in general followed this trend resulting in a strong dependence on their respective country spread in addition to their own industry and company developments. Utility spreads specifically underlined this trend with companies domiciled in peripheral European countries reaching much wider spreads compared to their peers. As to issuance volumes, the Euro Corporate Bond market issuance activity increased significantly compared to the low prior year s figures, with corporate investment grade issuance levels as well as utility issuance activities being also well above 2011 levels. Business review Also in the first half of 2012 the liquidity situation of the E.ON group continued to be comfortable resulting in no new notes issuance for Instead bonds valuing 0.9 billion matured during the first half of Slightly offset by the foreign exchange effects due to the weakening of the Euro against the US Dollar and British Pound the total amount of notes outstanding as of June 30, 2012 decreased to 22.3 billion. At year end 2011 E.ON International Finance B.V. had 23.0 billion of bonds outstanding. Apart from the above mentioned foreign exchange effects on the Euro value of Non-Euro denominated bonds, the market developments only had a limited impact on E.ON International Finance B.V. s bond business. Throughout the first half of 2012 E.ON spreads overall remained fairly stable showing the continued confidence of investors in the E.ON credit. In terms of the intra-group financing business, in the first half of 2012 E.ON International Finance B.V. continued taking up intra-group loans or E.ON AG guaranteed short term deposits to fund lending activities to other E.ON group companies. Lending volumes increased during the first quarter 2012 and remained fairly stable thereafter. As of June 30, 2012 loans totalling 3.5 billion were granted on a short term basis, up from a portfolio of 2.1 billion as of year end Additionally, held liquidity amounting to 0.7 billion as of June 30, As a result of the above, the total asset base remained stable at 27.4 billion as of June 30, 2012 compared to 27.1 billion at year end Furthermore, s net profit increased slightly from 10.5 million to 10.7 million. The main reasons were the higher

4 Board of Management 4 average lending volumes within the treasury activities during the reporting period which, however, was somewhat offset by a change in the composition within the intra-group short term loan portfolio. During the first half of 2012 no drawings were made on behalf of under both the 6 Billion Syndicated Credit Facility and the 10 Billion Multi Currency Commercial Paper Programme. In April 2012, E.ON s Debt Issuance Programme was again extended for another year. The Debt Issuance Programme enables both E.ON AG and to issue debt to investors in public and private placements. The total programme volume is unchanged at 35 billion. Financial information Preparation of Financial Statements The financial statements were prepared in accordance with the statutory provisions of Part 9, Book 2, of the Netherlands Civil Code and the firm pronouncements in the Guidelines for Annual Reporting in the Netherlands as issued by the Dutch Accounting Standards Board. The Interim Report 2012 has followed the same principles of recognizing and measuring as have been used for the preparation of the Financial Report Financial performance closed the first six months of 2012 with a profit from ordinary activities before taxes of approximately 14.3 million, compared to 14.0 million in the first half of Risk Information s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The risk profile of did not materially change compared to the end of The overall risk management programme of focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on E.ON International Finance B.V. s financial performance. manages its risks with the procedures and systems used within the E.ON group. The Board is of the opinion that these procedures and systems provide an adequate risk management for

5 Board of Management 5 Statement from the Board of Management The Board of Management state that to the best of their knowledge, the condensed interim financial statements of 2012 prepared in accordance with the statutory provisions of Part 9, Book 2, of the Netherlands Civil Code and the firm pronouncements in the Guidelines for Annual Reporting in the Netherlands as issued by the Dutch Accounting Standards Board give a true and fair view of the assets, liabilities, financial position and profit or loss of E.ON International Finance B.V. and that the management report includes a fair review of the development and performance of the business and the position of the, together with a description of the principal risks and uncertainties that it faces. Rotterdam, August 27, 2012 Board of Management, M. Bokelmann J. Trapman J. Otto Director Director Director

6 Condensed Interim Financial Statements 6 Balance Sheet (before profit appropriation) in thousands Note Jun 30, 2012 Dec 31, 2011 Financial fixed assets Loans to shareholder 14,631,409 16,506,193 Loans to group entities 3,878,088 3,786, ,509,497 20,292,303 Current assets Amounts due from shareholder 4,495,540 3,471,440 Amounts due from group entities 3,628,733 2,176,561 Amounts due from tax authorities 1,268-8,125,541 5,648,001 Cash 4 716,952 1,187,997 Total assets 27,351,990 27,128,301 Shareholders equity Issued share capital Share premium reserve 36,992 36,992 Other reserves 152, ,768 Undistributed profit 10,711 21, , ,434 Provisions Provision for loss making contracts 70,980 77,581 Provision for deferred taxes ,399 78,043 Borrowings Bonds 6 18,586,484 20,488,696 Current liabilities Amounts due to shareholder 109,850 71,579 Amounts due to group entities 3,261,183 3,190,539 Amounts due to associated companies 878,151 6,985 Amounts due to others 4,244,778 3,098,078 Amounts due to tax authorities - 4,947 8,493,962 6,372,128 Total equity and liabilities 27,351,990 27,128,301

7 Condensed Interim Financial Statements 7 Income Statement in thousands Note Six months ended June 30, Interest and similar income 9 740, ,234 Exchange rate difference gains 402, ,665 Financial income 1,143,076 1,630,899 Interest and similar expenses 10 (726,205) (850,602) Exchange rate difference losses (402,187) (765,399) Financial expenses (1,128,392) (1,616,001) Total financial result 14,684 14,898 Operating expenses (403) (901) Total operating expenses (403) (901) Result of ordinary activities before corporate income tax 14,281 13,997 Corporate income taxes (3,570) (3,500) Net Profit 10,711 10,497

8 Condensed Interim Financial Statements 8 Cash flow Statement in thousands Six months ended June 30, Interest paid (813,361) (987,329) Interest received 849,166 1,033,657 Expenses paid (706) (801) Income tax paid (9,856) (5,932) Cash flows from operating activities 25,243 39,595 Loans granted to related parties (5,592,952) (14,152,877) Loan repayments received from related parties 5,045,322 14,612,787 Cash flows from investing activities (547,630) 459,910 Proceeds from borrowings 11,696,900 12,420,839 Repayments of borrowings (11,645,558) (12,246,597) Cash flows from financing activities 51, ,242 Net increase (decrease) in cash (471,045) 673,747 Cash at January 1 1,187,997 71,297 Cash at June , ,044

9 Other Information 9 Notes to the Condensed Interim Financial Statements (1) General information The activities of mainly comprise the financing of E.ON group companies., a corporation with limited liability, having its statutory seat in Rotterdam, the Netherlands, considers E.ON AG, Düsseldorf, Germany to be its ultimate parent company. The financial information of is included in the consolidated financial statements of E.ON AG, Germany. Copies of the consolidated financial statements of E.ON AG can be obtained from E.ON AG in Düsseldorf. The statutory seat and the office of is Capelseweg 400 in Rotterdam. Until March 31, 2012 also operated a second office in Venlo, which has been closed. These financial statements were authorized for issue by the Board of Management on August 27, (2) Summary of significant accounting policies Basis of preparation The Condensed Interim Financial Statements have been prepared in accordance with the statutory provisions of Part 9, Book 2, of the Netherlands Civil Code and the firm pronouncements in the Guidelines for Annual Reporting in the Netherlands as issued by the Dutch Accounting Standards Board. This interim report does not contain all information required for a full year financial report and needs to be read in conjunction with the 2011 Annual Report, which has been prepared in accordance with the statutory provisions of Part 9, Book 2, of the Netherlands Civil Code and the firm pronouncements in the Guidelines for Annual Reporting in the Netherlands as issued by the Dutch Accounting Standards Board. The principles applied in preparing the Condensed Interim Financial Statement of E.ON International Finance B.V. are similar to those applied in the 2011 Annual Report. Comparison with prior period The basis used for the valuation and result definition has remained unchanged with respect to the year-end Cash flow Statement The Cash flow Statement was prepared according to the direct method. The funds included in the Cash flow Statement consist of cash at banks and the inhouse banking account with E.ON AG. Cash flows in foreign currencies have been translated at the exchange rates existing on the day of settlement. Related parties In conducting its activities, has several transactions with its shareholder E.ON AG, E.ON group companies and non-consolidated E.ON companies. The types and the content of the transactions with related parties remain unchanged compared to the E.ON International Finance B.V Annual Report. Foreign currency translation The functional currency as well as the reporting currency of E.ON International Finance B.V, is the Euro ( ). The financial statements are presented in Euro.

10 Condensed Interim Financial Statements 10 Transactions denominated in foreign currencies are translated at the exchange rate at the date of the transaction. Monetary foreign currency items are adjusted to the exchange rate at each balance sheet date; any gains or losses resulting from fluctuations in the relevant currencies are included in the financial income and expenses, respectively. Settled transactions in foreign currencies during the reporting period have been incorporated in the financial statements at the rate of settlement. The following table shows the movements in exchange rates of the relevant foreign currencies for the periods indicated: ISO code Jun 30, 2012 Dec 31, 2011 Jun 30, 2011 British Pound EUR/GBP U.S. Dollar EUR/USD Swiss Franc EUR/CHF Japanese Yen EUR/JPY Swedish Krona EUR/SEK Czech Koruna EUR/CZK Norwegian Krone EUR/NOK Hong Kong Dollar EUR/HKD Critical accounting estimates and judgments The preparation of the financial statements requires management to make estimates and assumptions. It also requires management to exercise its judgment in the process of applying s accounting policies. Estimates and judgments are based on past experience and on additional knowledge obtained on transactions to be reported and are reviewed on an ongoing basis. makes estimates and assumptions concerning future events. Actual events may differ from expectations and actual results will, by definition, seldom equal the accounting estimates. Unless explained otherwise, the estimates made by the management in preparing the Condensed Interim Financial Statement are similar to those used in the Annual Report (3) Financial fixed assets Movement schedule financial fixed assets Jun 30, 2012 in thousands Total Loans to Shareholder Total Loans to Group Entities Total Financial Fixed assets At January 1, ,506,193 3,786,110 20,292,303 - New loans Amortization 5, ,025 - Exchange differences 133,032 91, ,676 - Current maturity (2,013,507) - (2,013,507) At June 30, ,631,409 3,878,088 18,509,497 During the first six months of 2012, did not issue any new longterm loans. Instead, the total amount of loans outstanding decreased by 0.6 billion, with 0.9 billion scheduled maturities being slightly compensated by an increase of the Euro amounts of Non-Euro denominated loans because of the weakening of the Euro. The following table shows a detailed breakdown of these developments:

11 Condensed Interim Financial Statements 11 Carrying amounts of loans in currencies to shareholder Jun 30 Dec 31 EUR 13,691,660 13,951,753 GBP 1,946,380 2,477,815 USD 2,369,279 2,304,298 Other 207, ,797 Total loans to shareholder 18,214,935 18,937,663 Reclassification to current assets 3,583,526 2,431,470 Total long term loans in currencies to shareholder 14,631,409 16,506,193 Despite the repayment of two Euro denominated loans the vast majority of loans outstanding at the end of the reporting period continue to be denominated in Euro. In general, the amount of Non- Euro denominated loans increased slightly due to the weakening of the Euro; however, the structure of the loan portfolio has not shifted significantly, although the amount of GBP denominated loans decreased due to a scheduled loan maturity being repaid. Carrying amounts of loans in currencies to group entities Jun 30 Dec 31 EUR 1,194,220 1,194,213 GBP 2,584,399 2,495,272 Other 99,469 96,625 Total loans to group entities 3,878,088 3,786,110 Reclassification to current assets - - Total long term loans in currencies to group entities 3,878,088 3,786,110 The currency split of loans to group entities is roughly unchanged compared to year end with most of the loans being denominated in British Pounds and Euro. The general weakening of the Euro resulted in a slight increase of the Non-Euro denominated loan amounts; however, the overall structure of the loan portfolio remained unchanged. (4) Cash Specification of Cash Jun 30 Dec 31 Cash and cash equivalents Inhouse banking account at shareholder 716,928 1,187,957 Cash 716,952 1,187,997 Total cash mainly includes the inhouse banking account at E.ON AG. Having such an inhouse banking account at E.ON AG is common practice within the E.ON group. The decrease in volume is a result of the higher amount of short term intragroup loans outstanding. The total cash is at free disposal of and is to a large degree denominated in Euro.

12 Condensed Interim Financial Statements 12 (5) Shareholders equity The total authorized number of ordinary shares is 9,000 (2011: 9,000) with a par value of 100 per share. The number of issued shares is 2,000 (2011: 2,000). All issued shares are fully paid in. The share premium results exclusively from additional paid in capital. Movement schedule equity in thousands Issued capital Share premium reserve Other reserves Undistributed profit Total At January 1, ,992 98,238 32, ,960 Appropriation of undistributed profit ,530 (32,530) - Profit for the year ended Dec 31, ,474 21,474 At December 31, , ,768 21, ,434 Appropriation of undistributed profit ,474 (21,474) - Profit for the half-year ended June 30, ,711 10,711 At June 30, , ,242 10, ,145 Total equity of E.ON International B.V. increased to 200,145 million due to the Net Profit of 11 million achieved in the first six months of (6) Bonds Movement schedule bonds Jun 30 Dec 31 At January 1 20,488,696 24,448,183 - New bonds Amortization 5,179 14,681 - Bond buyback transaction - (1,808,518) - Exchange differences 239, ,077 - Current maturity (2,147,051) (2,490,727) At Balance sheet date 18,586,484 20,488,696 In the first six months of 2012 no new bonds were issued due to the continuously comfortable liquidity situation of the E.ON group. In line with that scheduled bond maturities of 0.9 billion reduced the amount of bonds outstanding, slightly offset by the general weakening of the Euro, resulting in a total reduction of the value of bonds outstanding by 0.6 billion. The carrying amounts of the bonds are denominated in the following currencies: Carrying amounts of bonds in currencies Jun 30 Dec 31 EUR 13,155,739 13,201,763 GBP 4,525,795 4,968,385 USD 2,369,512 2,536,399 CHF 1,287,711 1,274,065 JPY 752, ,847 Other currencies 253, ,964 Total bonds 22,344,261 22,979,423 Reclassification current liabilities 3,757,777 2,490,727 Total long term bonds 18,586,484 20,488,696

13 Condensed Interim Financial Statements 13 At the end of the reporting period s outstanding bonds continue to be mainly denominated in Euro, followed by British Pounds, US Dollar and Swiss Francs. The change in Euro denominated bonds outstanding is due to the scheduled maturity and repayment of one Euro bond. For the amount of Non-Euro denominated bonds, the reduction due to the scheduled maturity and the repayment of one GBP and one USD denominated bond was slightly offset by the increased Euro values of the remaining bonds due to the weakening of the Euro. The market value of bonds per June 30, 2012 is 27,1 billion (December 31, 2011: 27,4 billion). (7) Contingent liability In addition to the liabilities carried on the balance sheet there are other (mostly long term) commitments arising from contracts entered into with third parties on the basis of legal requirements. Specification notional amounts financial instruments Jun 30 Dec 31 Interest swaps 35,503 35,503 Currency swaps 3,836,891 2,889,163 Total amounts due to others 3,872,394 2,924,666 The increase in currency swaps is mainly a result of increased hedges within the treasury activity of However, maturing bond and long term loan related hedges reduced the effect somewhat. Specification fair values financial instruments Jun 30 Dec 31 Interest swaps (7,470) (6,710) Currency swaps 386, ,632 Total amounts due to others 378, ,922 The fair value amount of currency swaps decreased due to the maturity of bond and long term loan related hedges. As the new treasury related hedges are generally of a short term nature, such fair value changes are usually smaller, despite the nominal amounts being bigger. Moreover, also the weakening of the Euro contributed to the reduction of the fair value amounts of the currency swaps contracted. (8) Credit facility agreements As of June 30, 2012 the following facilities are available: 35 Billion Debt Issuance Programme 10 Billion Multi Currency Commercial Paper Programme 6 Billion Dual Currency Syndicated Credit Facility Agreement In April 2012 the 35 Billion Debt Issuance Programme was updated and extended for another year. The Debt Issuance Programme enables both E.ON AG and to issue debt to investors in public and private placements. The total programme volume is unchanged at 35 billion. The terms and conditions of the other two facilities are unchanged compared to year-end 2011.

14 Condensed Interim Financial Statements 14 (9) Interest and similar income Specification interest and similar income Six months ended June 30, - interest and similar income from shareholder 573, ,920 - interest and similar income from group entities 156, ,721 - interest and similar income from others 10,114 9,593 Total interest and similar income 740, ,234 Interest and similar income decreased in the first six months of This is mainly the result of the reduction in interest income from shareholder corresponding to a reduced lending volume to shareholder due to loan maturities and repayments. Interest and similar income from group entities increased slightly following the increased average lending volume of the treasury operations, but also due to the increase of the Euro values of Non-Euro denominated interest income resulting from the weakening of the Euro. Interest income from others mainly reflects the release of the provision for loss making contracts, which is unchanged. (10) Interest and similar expenses Specification interest and similar expenses Six months ended June 30, - interest expense to shareholder 74,560 76,904 - interest expense to group entities 1,751 1,496 - interest expense to associated companies 13,616 18,532 - interest expense to others 636, ,670 Total interest and similar expense 726, ,602 Interest expenses decreased in the first half of 2012 mainly as a result of the reduced bond related interest expenses following last years bond buyback transaction as well as the repayment of maturing bonds. On the treasury activities, mainly the market driven reduction of short term interest rates lead to a reduction in the corresponding interest expenses. Rotterdam, August 27, 2012 Board of Management, M. Bokelmann J. Trapman J. Otto Director Director Director

15 Condensed Interim Financial Statements 15 Review report