Condensed Interim Financial Statements 1. E.ON International Finance B.V. Interim Report January June Rotterdam, The Netherlands

Transcription

1 Condensed Interim Financial Statements 1 E.ON International Finance B.V. Interim Report January June 2015 Rotterdam, The Netherlands

2 Condensed Interim Financial Statements 2 Content Company Board and Management Report of the Board of Management 3 Statement from the Board of Management 5 Balance Sheet (before profit appropriation) 6 Income Statement 7 Cash Flow Statement 8 Notes to the Condensed Interim Financial Statements 9

3 Condensed Interim Financial Statements 3 Report of the Board of Management General information As of June 30, 2015 the Board of Managers comprises the following members: Mr. J. Otto Mr. R.A. Toering During the first half of 2015, the composition of the Board of Management did not change compared to the financial year ending December 31, The objectives of E.ON International Finance B.V. are unchanged compared to the financial year ending December 31, E.ON International Finance B.V. continues to be a wholly owned and fully consolidated subsidiary of E.ON SE, Düsseldorf, Germany. Internal organisation The statutory seat and the office of E.ON International Finance B.V. is Capelseweg 400 in Rotterdam. At June 30, 2015 E.ON International Finance B.V. had no own employees (2014: 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 Beginning 2015 the capital markets again continued their positive tone started in previous years. The announcement of the European Central Bank in January 2015 to start a new and expanded asset purchase programme even further improved the market sentiment resulting in new historical stock market highs and reduced volatility during Q1. However, during Q2 the European sovereign crisis this time solely focused around Greece came back into the focus. Together with still existing geopolitical problems, this significantly increased market volatilities. Irrespective of that, the economic growth in Europe and the United States however remained positive fuelling some discussion about the end of supporting measures by the U.S. Central Bank and first interest rate increases starting still in On foreign exchange rates the weakening of the Euro against most of the major currencies continued in Q1. Such trend somewhat stopped in Q2 but increased volatilities then resulted in somewhat fluctuating exchange rates. Emerging market currencies again moved significantly during the reporting period. On the interest side the picture was twofold: while the new ECB asset purchase programme resulted in the beginning in new historical lows for both long-term and short-term rates, long-term rates later on changed this trend and increased to 2014 levels, while short-term rates stayed in negative territories. Credit spreads stopped their positive trend from previous years, with most of the issuers only widening slightly or even remaining stable during the first half of Utility spreads experienced almost entirely a slight widening still leaving the yields at very low levels. As to issuance volumes, the Euro Corporate Bond market issuance volumes increased compared to the first half of 2014, however volumes dropped significantly towards the end of the reporting period. Net supply including redemptions remained positive for the corporate market, but the issuances returned to much less complexity. Business review Also in the first half of 2015 the liquidity situation of the E.ON group continued to be strong, resulting in no new notes issuance for E.ON International Finance B.V. Moreover, as no bonds matured during the first half of 2015 the nominal amount of bonds outstanding remained unchanged compared to year-end Only due to the foreign exchange effects of 0.6 billion

4 Condensed Interim Financial Statements 4 which are mainly driven by the weakening of the Euro against the British Pound and the U.S. Dollar the total amount of notes outstanding as of June 30, 2014 increased to 14.8 billion compared to 14.2 billion of bonds outstanding at year end Besides the above pictured 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. In line with the overall market developments E.ON spreads widened moderately during the first half of 2015 still proving the stable confidence of investors in the E.ON credit. E.ON continues to have credit ratings assigned from both Standard & Poor s ( S&P ) and Moody s. Long-term credit ratings assigned are BBB+ and Baa1, respectively. The short-term ratings are A- 2 (S&P) and P-2 (Moody s). Moody s changed the assigned rating in March 2015 from A3 to Baa1. S&P changed the assigned ratings in May 2015 from A- to BBB+. The outlook on both ratings is stable. Following E.ON s announcement of a new strategy in December 2014, both agencies had placed its respective ratings under review for a potential downgrade. As all bonds issued are guaranteed by E.ON SE, the ratings continue to be a significant support of the bond business of E.ON International Finance B.V. In terms of the intra-group financing business, in the first half of 2015 E.ON International Finance B.V. continued taking up intra-group loans or E.ON SE guaranteed short term deposits to fund lending activities to other E.ON group companies. Lending activities reduced due to loan repayments on short term loans granted. As of June 30, 2015 loans totalling 3.9 billion were granted on a short term basis, compared to 4.7 billion as of year-end Additionally, E.ON International Finance B.V. held liquidity amounting to 0.7 billion as of June 30, As a result of the above, the total asset base declined to 20.0 billion as of June 30, 2015 compared to 20.6 billion at year end Furthermore, E.ON International Finance B.V. s net profit declined from 12.6 million to 10.1 million. The main reasons were the lower average lending volumes within the treasury activities and the reduced on-lending of long term bonds due to the repayment of maturing loans and bonds in the second half of The reduced interest rates also lowered the income during the reporting period. During the first half of 2015 no drawings were made on behalf of E.ON International Finance B.V. under both the 5 Billion Syndicated Credit Facility and the 10 Billion Multi Currency Commercial Paper Programme. In April 2015, E.ON s Debt Issuance Programme was again extended for another year. The Debt Issuance Programme enables both E.ON SE and E.ON International Finance B.V. 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 2015 has followed the same principles of recognizing and measuring as have been used for the preparation of the Financial Report The Interim Report 2015 has not been audited nor has it been reviewed by an auditor. Financial performance E.ON International Finance B.V. closed the first six months of 2015 with a profit from ordinary activities before taxes of approximately 13.5 million, compared to 16.8 million in the first half of 2014.

5 Condensed Interim Financial Statements 5 Risk Information E.ON International Finance B.V. 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 E.ON International Finance B.V. did not materially change compared to the end of The overall risk management programme of E.ON International Finance B.V. focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on E.ON International Finance B.V. s financial performance. E.ON International Finance B.V. 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 E.ON International Finance B.V. Statement from the Board of Management The Board of Management state that to the best of their knowledge, the condensed interim financial statements of 2015 is 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 E.ON International Finance B.V., together with a description of the principal risks and uncertainties that it faces. The Interim Report 2015 has not been audited nor has it been reviewed by an auditor. Rotterdam, August 27, 2015 Board of Management, E.ON International Finance B.V. J. Otto R.A. Toering Director Director

6 Condensed Interim Financial Statements 6 Balance Sheet (before profit appropriation) in thousands Note Jun 30, 2015 Dec 31, 2014 Financial fixed assets Loans to shareholder 3 8,876,491 9,709,683 Loans to group entities 3 3,778,857 3,550,945 12,655,348 13,260,628 Current assets Amounts due from shareholder 2,651,768 1,419,375 Amounts due from group entities 3,997,299 4,834,320 Amounts due from tax authorities 4,648-6,653,715 6,253,695 Cash 4 678,824 1,079,868 Total assets 19,987,887 20,594,191 Shareholders equity Issued share capital Share premium reserve 36,992 36,992 Other reserves 225, ,100 Undistributed profit 10,113 24, , ,959 Provisions Provision for loss making contracts 28,621 36,158 Provision for deferred taxes ,783 36,365 Borrowings Bonds 6 12,464,205 13,049,145 Current liabilities Amounts due to shareholder 31,119 1,369,968 Amounts due to group entities 4,493,461 4,390,173 Amounts due to others 2,697,247 1,483,726 Amounts due to tax authorities - 1,855 7,221,827 7,245,722 Total equity and liabilities 19,987,887 20,594,191

7 Condensed Interim Financial Statements 7 Income Statement in thousands Note Six months ended June 30, Interest and similar income 9 496, ,809 Exchange rate difference gains 662, ,584 Financial income 1,158, ,393 Interest and similar expenses 10 (482,252) (528,734) Exchange rate difference losses (662,573) (340,627) Financial expenses (1,144,825) (869,361) Total financial result 13,758 17,032 Operating expenses (288) (192) Total operating expenses (288) (192) Result of ordinary activities before corporate income tax 13,470 16,840 Corporate income taxes (3,357) (4,210) Net Profit 10,113 12,630

8 Condensed Interim Financial Statements 8 Cash Flow Statement in thousands Six months ended June 30, Interest paid (482,325) (642,541) Interest received 497, ,928 Expenses paid (27) (231) Income tax paid (9,823) (9,908) Cash flows from operating activities 5,040 30,248 Loans granted to related parties (12,480,086) (10,682,517) Loan repayments received from related parties 13,324,003 13,740,433 Cash flows from investing activities 843,917 3,057,916 Proceeds from borrowings 10,600,000 8,040,000 Repayments of borrowings (11,850,000) (10,283,554) Cash flows from financing activities (1,250,000) (2,243,554) Net increase (decrease) in cash (401,043) 844,610 Cash at January 1 1,079, ,996 Cash at June , ,606

9 Condensed Interim Financial Statements 9 Notes to the Condensed Interim Financial Statements (1) General information The activities of E.ON International Finance B.V. mainly comprise the financing of E.ON group companies. E.ON International Finance B.V., a corporation with limited liability, having its statutory seat in Rotterdam, the Netherlands, considers E.ON SE, Düsseldorf, Germany to be its ultimate parent company. The financial information of E.ON International Finance B.V. is included in the consolidated financial statements of E.ON SE, Germany. Copies of the consolidated financial statements of E.ON SE can be obtained from E.ON SE in Düsseldorf. The statutory seat and the office of E.ON International Finance B.V. is Capelseweg 400 in Rotterdam. 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 E.ON International Finance B.V 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 E.ON International Finance B.V 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 SE. Cash flows in foreign currencies have been translated at the exchange rates existing on the day of settlement. Related parties In conducting its activities, E.ON International Finance B.V. has several transactions with its shareholder E.ON SE, 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.

10 Condensed Interim Financial Statements 10 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. 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, 2015 Dec 31, 2014 Jun 30, 2014 British Pound EUR/GBP U.S. Dollar EUR/USD 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 E.ON International Finance B.V. 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. E.ON International Finance B.V. 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 E.ON International Finance B.V Annual Report.

11 Condensed Interim Financial Statements 11 (3) Financial fixed assets Movement schedule financial fixed assets Jun 30, 2015 in thousands Total Loans to Shareholder Total Loans to Group Entities Total Financial Fixed assets At January 1, ,709,683 3,550,945 13,260,628 - New loans Amortization 2, ,393 - Exchange differences 402, , ,830 - Current maturity (1,237,503) - (1,237,503) At June 30, ,876,491 3,778,857 12,655,348 During the first six months of 2015, E.ON International Finance B.V. did not issue any new long term loans. The amount of total financial fixed assets reduced due to the reclassification of long term loans into the current maturity. This reduction however has been partially compensated by the value increase of British Pound and U.S. Dollar denominated loans due to the weakening of the Euro against these currencies. The following table shows a detailed breakdown of these developments: Carrying amounts of loans in currencies to shareholder Jun 30 Dec 31 EUR 6,349,067 6,347,527 USD 2,671,891 2,460,942 GBP 2,210,504 2,018,255 Total loans to shareholder 11,231,462 10,826,724 Reclassification to current assets 2,354,971 1,117,041 Total long term loans in currencies to shareholder 8,876,491 9,709,683 As there have been no repayments of loan during the first half of 2015 the nominal amounts granted remained unchanged. However, due to the weakening of the Euro mainly against the British Pounds and the U.S. Dollar, the Euro value of loans denominated in these currencies increased. Such increases partially compensated the reduction resulting from the reclassification of long term loans into current maturities. Overall the structure of the loan portfolio shifted slightly further towards Non-Euro denominated loans. Carrying amounts of loans in currencies to group entities Jun 30 Dec 31 EUR 1,110,000 1,110,000 GBP 2,583,595 2,358,058 Other 85,262 82,887 Total loans to group entities 3,778,857 3,550,945 Reclassification to current assets - - Total long term loans in currencies to group entities 3,778,857 3,550,945 Also on the loans to group entities there had been no repayments during the first half of 2015 leaving the nominal amounts also unchanged. The increase in the total amount granted is solely due to the weakening of the Euro resulting in an increase of the Euro values of mainly British Pound denominated loans. The overall structure of this loan portfolio remained fairly unchanged.

12 Condensed Interim Financial Statements 12 (4) Cash Specification of Cash Jun 30 Dec 31 Cash and cash equivalents Inhouse banking account at shareholder 678,804 1,079,849 Cash 678,824 1,079,868 Total cash mainly includes the inhouse banking account at E.ON SE. Having such an inhouse banking account at E.ON SE is common practice within the E.ON group. The decrease in the cash balance is a result of usage of such funds for short term intragroup lendings. E.ON International Finance B.V. has this cash balance to be able to respond quickly to any new lending requests it may receive. The total cash is at free disposal of E.ON International Finance B.V. and is almost entirely denominated in Euro. (5) Shareholders equity The total authorized number of ordinary shares is 9,000 (2014: 9,000) with a par value of 100 per share. The number of issued shares is 2,000 (2014: 2,000). All issued shares are fully paid in. The share premium results exclusively from additional paid in capital. Movement schedule equity in thousands Issu ed capi tal Share premium reserve Other reserves Undistributed profit Total At January 1, , ,462 28, ,292 Appropriation of undistributed profit ,638 (28,638) - Profit for the year ended Dec 31, ,667 24,667 At December 31, , ,100 24, ,959 Appropriation of undistributed profit ,667 (24,667) - Profit for the half-year ended June 30, ,113 10,113 At June 30, , ,767 10, ,072 Total equity of E.ON International B.V. increased to 273 million due to the Net Profit of 10 million achieved in the first six months of 2015.

13 Condensed Interim Financial Statements 13 (6) Bonds Movement schedule bonds Jun 30 Dec 31 At January 1 13,049,145 14,717,560 - Amortization 2,668 8,331 - Bond buyback transaction - (1,150,000) - Exchange differences 649, ,295 - Current maturity (1,237,503) (1,117,041) At Balance sheet date 12,464,205 13,049,145 In the first six months of 2015 no new bonds were issued due to the continuously strong liquidity situation of the E.ON group. The reduction in the long term bond amounts outstanding resulted from the reclassification of bonds maturing in the next 12 months into the current maturity item. This reduction was partially offset by the increase in the Euro amount of Non-Euro denominated bonds outstanding due to the weakening of the EUR mainly against the British Pound and the U.S. Dollar. However, the nominal denominated amounts of bonds outstanding did not change. The carrying amounts of the bonds are denominated in the following currencies: Carrying amounts of bonds in currencies Jun 30 Dec 31 EUR 6,965,531 6,966,183 GBP 4,789,803 4,369,566 USD 2,672,059 2,461,121 JPY 188, ,672 Other currencies 203, ,644 Total bonds 14,819,176 14,166,186 Reclassification current liabilities 2,354,971 1,117,041 Total long term bonds 12,464,205 13,049,145 At the end of the first six months of 2015 E.ON International Finance B.V. s outstanding bonds continue to be mainly denominated in Euro, followed by British Pounds, and U.S. Dollar. As there have been no bond maturities during the reporting period, the nominal amount of bonds outstanding remained unchanged compared to year end The reduction in the total Euro value of long term bonds outstanding resulted from the bonds maturing within the next 12 months being reclassified to the current liabilities. Such reduction was partially compensated by the increases in the Euro values of Non-Euro denominated bonds as the Euro weakened against all currencies in which E.ON International Finance B.V. has bonds outstanding. Consequently the structure of the bonds outstanding did change slightly towards the Non-Euro denominated bonds. The market value of bonds per June 30, 2015 is 18.2 billion (December 31, 2014: 17.9 billion).

14 Condensed Interim Financial Statements 14 (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 2,343,858 2,690,304 Total amounts due to others 2,379,361 2,725,807 The change in currency swaps is mainly a result of changing hedges within the treasury activity of E.ON International Finance B.V. Specification fair values financial instruments Jun 30 Dec 31 Interest swaps (5,206) (6,046) Currency swaps (69,001) (73,121) Total amounts due to others (74,207) (79,167) The changes in the fair value amount of currency swaps corresponds to the changes in the foreign exchanges rates of currencies hedged by such instruments. The reduction also results from the reduced volumes of hedges within the treasury activities. (8) Credit facility agreements As of June 30, 2015 the following facilities are available: 35 Billion Debt Issuance Programme 10 Billion Multi Currency Commercial Paper Programme 5 Billion Dual Currency Syndicated Credit Facility Agreement In April 2015 the 35 Billion Debt Issuance Programme was updated and extended for another year. The Debt Issuance Programme enables both E.ON SE and E.ON International Finance B.V. 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 2014.

15 Condensed Interim Financial Statements 15 (9) Interest and similar income Specification interest and similar income Six months ended June 30, - interest and similar income from shareholder 351, ,961 - interest and similar income from group entities 135, ,011 - interest and similar income from others 9,458 10,837 Total interest and similar income 496, ,809 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 during the second half of 2014 including the liability management transactions executed. Interest and similar income from group entities also decreased following reduced lending volumes and reduced interest rates. Interest income from others mainly reflects the release of the provision for loss making contracts. (10) Interest and similar expenses Specification interest and similar expenses Six months ended June 30, - interest expense to shareholder 32,212 44,644 - interest expense to group entities 3,675 8,450 - interest expense to others 446, ,640 Total interest and similar expense 482, ,734 Interest expenses decreased in the first half of 2015 mainly as a result of the reduced bond related interest expenses following the repayment of maturing bonds during the second half of 2014 including the liability management transactions executed. Accordingly interest expense to others decreased. Interest expense to shareholder decreased due to the reduced swap volumes and the hence reduced interest payments under such swap contracts, but also due to lower volumes and interest rates under the treasury activities of E.ON International Finance B.V.. Due to changes in the E.ON group consolidation the interest expenses to associated companies have been reclassified and are now included in the interest expense to group entities. Such interest expense to group entities decreased due to the on average lower volumes and lower interest rates compared to the first six months of Rotterdam, August 27, 2015 Board of Management, E.ON International Finance B.V. J. Otto R.A. Toering Director Director