Storengy Deutschland GmbH, Berlin/Germany. Long-form Report on the Audit of the Financial Statements for the Year ended 31 December 2015

Transcription

1 Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft Kurfürstendamm Berlin Germany Tel 0 (30) Fax 0 (30) Storengy Deutschland GmbH, Berlin/Germany Long-form Report on the Audit of the Financial Statements for the Year ended 31 December 2015 TRANSLATION German version prevails NOTE: This PDF file of the audit report is only a non-binding copy for information purposes. The hard copy of the audit report in paper form is the only binding version.

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3 Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft Content Page 1 AUDIT ENGAGEMENT 1 2 FUNDAMENTAL FINDINGS 2 3 SUBJECT, NATURE AND SCOPE OF THE AUDIT 4 4 FINDINGS AND COMMENTARY REGARDING THE FINANCIAL REPORTING Propriety of accounting Accounting records and other audited documents Financial statements Management report Overall assertion from the financial statements Conclusions on the overall assertion from the financial statements Explanations concerning the overall assertion from the financial statements Analysis of net assets, financial position and results from operations 9 5 FINDINGS REGARDING EXTENSIONS TO THE SCOPE OF THE AUDIT ENGAGEMENT 10 6 COPY OF THE [INDEPENDENT] AUDITORS' REPORT 11 7 CONCLUDING REMARK /15 - StoreD I

4 Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft Appendices 1 MANAGEMENT REPORT AND FINANCIAL STATEMENTS 1.1 Management report 1.2 Balance sheet 1.3 Income statement 1.4 Notes to the financial statements 2 LEGAL STATUS GENERAL ENGAGEMENT TERMS FOR WIRTSCHAFTSPRÜFER AND WIRTSCHAFTSPRÜFUNGSGESELLSCHAFTEN (GERMAN PUBLIC AUDITORS AND GERMAN PUBLIC AUDIT FIRMS) We draw attention to the fact that differences may arise due to the use of rounded figures and percentages /15 - StoreD II

5 Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft Abbreviations AuS EnWG HGB auditing standard Act on the Supply with Electricity and Gas German Commercial Code IDW Institute of Public Auditors in Germany, Incorporated Association, Düsseldorf/Germany StoreD StoreDB StoreDI StoreDS Storengy Deutschland GmbH, Berlin/Germany Storengy Deutschland Betrieb GmbH, Hanover/Germany Storengy Deutschland Infrastructures GmbH, Berlin/Germany Storengy Deutschland Services GmbH, Hanover/Germany /15 - StoreD III

6 Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft 1 AUDIT ENGAGEMENT By resolution of the Supervisory Board meeting held on 11 May 2015 of Storengy Deutschland GmbH, Berlin/Germany hereafter also referred to as "StoreD" or "entity" we were elected as independent auditors for the financial year Based on this resolution, Management engaged us to conduct an audit of the financial statements for the year ended 31 December 2015 in accordance with Sec. 317 German Commercial Code (HGB). In accordance with Sec. 321 (4a) German Commercial Code (HGB) we confirm that our audit was conducted in compliance with the applicable regulations on independence. Our long-form audit report was prepared in accordance with German Generally Accepted Standards for the Issuance of Long-form Audit Reports for the Audits of Financial Statements promulgated by the Institute of Public Auditors in Germany (IDW) Auditing Standard IDW PS 450. The scope of the engagement and our responsibilities thereunder, both towards the entity as well as any other party, are governed by our agreements dated 10 November/8 December 2015 and additionally by the enclosed "General Engagement Terms for Wirtschaftsprüfer and Wirtschaftsprüfungsgesellschaften (German Public Auditors and German Public Audit Firms)" as of 1 January This long-form audit report has been prepared solely for documenting the audit work performed to the entity and for no other purpose. In accordance with the legal position pursuant to Sec. 323 German Commercial Code (HGB), we do not accept or assume liability to any other person /15 - StoreD 1

7 Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft 2 FUNDAMENTAL FINDINGS Opinion on Management's assessment of the position of the entity We draw attention to the following aspects of the financial statements and the management report as well as the other audited documents which are of particular relevance in assessing the economic position of the entity: StoreD was established in September 2007 as an unbundled company with the aim of centralising gas storage activities in the German market. The entity provides crude gas storage capacities. The entity generated revenue of meur for the reporting period compared to meur for the prior year. According to Management, the reduction in revenue is mainly due to the challenging market situation, which no longer provides for the marketing of available capacities at previous prices, and due to the sale of the pore-space storage facility in Reitbrook in the fourth quarter of The start of operations of the fifth cavern in Peckensen in October 2014 and the revenue realised since then have partially offset the above effects. The result from ordinary activities totals meur 31.3 compared to meur in the prior year. The decline in revenue and the sale of the pore-space storage facility in Reitbrook (including release of provisions for removal costs), which had realised a profit of meur 84.5 at the end of 2014, are considered to be the main reasons for the reduction in the result from ordinary activities. The profit for the year amounted to meur 22.4 (prior year: meur 113.9) and was transferred to the shareholder under the existing profit and loss transfer agreement. The entity's fixed assets decreased from meur as at 31 December 2014 to meur as at 31 December In 2015, StoreD pursued its investment strategy with respect to both existing storage facilities and realisation of new projects. Capital expenditure on property, plant and equipment and purchased intangible assets totalled meur 9.8 (prior year: meur 14.9) and primarily concerned the completion of the extension works regarding the underground storage tank in Peckensen. As discussed in the management report, the entity's financing needs were covered by the operating cash flow in the current financial year. The entity and Engie S.A., Paris/France, and Engie Treasury Management S.à r.l., Luxembourg, have entered into cash pooling agreements. As at the balance sheet date, the financing volume with companies of the Engie Group amounted to meur 60.2 like in the prior year. Based on these negotiated financing agreements, the entity's liquidity was ensured at all times. According to Management, there were no risks endangering the continued existence of the entity during the financial year Nor are any such risks expected for the following year /15 - StoreD 2

8 Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft The entity is, however, exposed to risks significantly affecting the results of operations from market developments including price adjustments and prices for newly marketed storage capacities. The risks are permanently evaluated especially when bringing available capacities to the market and as part of budget and forecast calculations. The default risk is considered to be low. As discussed in the Management Report, the European market for storage services is still challenging for entities operating in this segment. In view of the demand that is currently not increasing and existing over-capacities on the German gas storage market, several operators started to close gas storage facilities. The considerably higher network charges have also resulted in a more selective usage of gas storage facilities by customers, according to Management. StoreD expects that the current situation will continue for the medium term. Based on its facility portfolio, the entity, however, is optimistic about its market position. Management anticipates slightly declining revenue ranging between meur 105 and meur 115 and profits between meur 12 and meur 18 for the financial year For 2016, capital investments are planned to cover a volume between meur 10 and meur 15. Summing up we state in accordance with Sec. 321 (1) Sentence 2 German Commercial Code (HGB) that we deem the Management's assessment of the position of the entity, notably the going-concern assumption and the assessment concerning the future development of the entity as expressed in the financial statements and in the management report, to be realistic. Furthermore, pertaining to the evaluation of the position, we refer to our explanations on the overall presentation of the financial statements in Chapter 4.2 of our long-form audit report /15 - StoreD 3

9 Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft 3 SUBJECT, NATURE AND SCOPE OF THE AUDIT Subject of the audit Our audit covered the accounting records the financial statements (comprising balance sheet, income statement as well as notes to the financial statements) the management report Management's compliance with the accounting obligations under Sec. 6b (3) Act on the Supply of Electricity and Gas (EnWG) of the entity. The entity's management is responsible for the maintenance of the books and accounting records and the preparation of the financial statements in accordance with German commercial law as well as compliance with the obligations according to Sec. 6b (3) Act on the Supply of Electricity and Gas (EnWG); this also applies to the information which was provided to us concerning these documents. Our responsibility is to express an opinion on these documents and this information based on our audit in accordance with professional auditing standards. We are only required to audit compliance with other regulations to the extent that these normally impact the financial statements or the management report. Nature and scope of the audit Our audit was based on the prior year's financial statements audited by us, on which was expressed an unmodified opinion on 28 April 2015; these financial statements were adopted on 11 May We performed the audit in October 2015 (interim audit) and in January, April and May 2016 (year-end audit). We conducted our audit in accordance with Sec. 317 German Commercial Code (HGB) and with German generally accepted standards for the audit of financial statements promulgated by the Institute of Public Auditors in Germany (IDW). According to Sec. 317 German Commercial Code (HGB), an appropriate audit of financial statements must be designed in such a way that material misstatements and violations in the financial reporting are identified with reasonable assurance. In order to meet these requirements, we apply our risk and /15 - StoreD 4

10 Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft process-based audit approach; for this purpose we use our Engagement Management System (EMS) auditing software. It supports planning, performing and documentation of the audit. In planning the audit, we obtained an understanding of the entity's operations, its economic and legal environment as well as its accounting system, performed an analytical review of the financial statements and inspected articles of incorporation, resolutions of shareholders' meetings and the minutes of the Supervisory Board. We determined the overall audit strategy based on that knowledge and on the expectations as to possible misstatements. We examined the entity's system of internal control as far as it is necessary to enable the preparation of financial statements that are in compliance with the applicable financial reporting framework; internal control as a whole was not within the scope of our audit. According to our audit plan, we placed audit evidence generally not on internal control. Therefore, in accordance with our risk assessment, we did not reduce the scope of substantive analytical procedures and tests of details of selected transactions and account balances. Tests of details were performed on the basis of judgemental selections and by applying sampling methods respectively. Our audit focused on: Fixed assets with respect to substantiation and valuation, Receivables with respect to substantiation and valuation, Completeness and valuation of provisions and liabilities, Recognition and valuation of deferred taxes. Gas used for own purposes of the entity, which accounts for most of the inventories, are stored in the pore-space storage facilities and caverns of the entity. According to information, it is not possible to record its inventories technically and physically. As a result, the entity did not perform an inventory count. The entity provided evidence of these inventories in an ancillary account, where prior-year inventories were carried forward taking into account additions and disposals at the balance sheet date. As part of the audit, we verified selected inventories by inspecting purchase vouchers and consumption reports. In auditing accounts receivable, accounts payable, bank balances and provisions we requested external confirmations from selected customers and suppliers as well as from all banks and all lawyers plus tax accountants of the entity concerning its debits, rights, credits and obligations /15 - StoreD 5

11 Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft In auditing the provisions for retirement benefit obligations, for early-retirement obligations and for long service awards, we inspected the actuarial reports prepared by Rüss, Dr. Zimmermann und Partner (GbR), Hamburg/Germany, in accordance with our estimates on its competence, capabilities and objectivity with professional scepticism and used the relevant results. Based on the findings of our audit of the financial statements we examined any forward-looking statements in the management report for plausibility and consistency with the disclosures in the financial statements. In accordance with Sec. 6b (5) Act on the Supply of Electricity and Gas (EnWG) we have audited as to whether the entity is in compliance with its duties of accounting. In this context, we have, besides the existence of separate accounts, also examined whether the values have been recognised, and the accounts have been allocated, in an appropriate and understandable manner and whether the entity is in compliance with the consistency concept. For the results of our audit, please refer to the statements in Section 5 of this long-form audit report. Management provided all information and evidence requested and on 17 May 2016 issued a written letter of representation in accordance with professional standards. With this letter of representation Management in particular confirmed that all transactions which require recognition in the accounting records are recorded in the books presented and in compliance with the applicable accounting principles the financial statements include and reflect all assets, liabilities (obligations, risks etc.), accruals and debt items, all expenses and income as well as required disclosures /15 - StoreD 6

12 Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft 4 FINDINGS AND COMMENTARY REGARDING THE FINANCIAL REPORTING 4.1 Propriety of accounting Accounting records and other audited documents The accounting records comply with the legal requirements including the German principles of proper accounting. The entity is in compliance with the special accounting regulations in accordance with Sec. 6b (3) Act on the Supply of Electricity and Gas (EnWG). The information derived from the other audited documents results in a proper presentation in the accounting records, the financial statements and the management report Financial statements The financial statements for the year ended 31 December 2015 are enclosed as Appendices 1.2 to 1.4 to this long-form audit report. The financial statements were derived properly from the accounting records and the other audited documents. The entity complies with the legal requirements on classification, recognition and valuation and on the notes to the financial statements. The disclosures on the total remuneration of the Management have been omitted, as permitted by Sec. 286 (4) German Commercial Code (HGB). The entity abstained from disclosing the total fees charged by the independent auditor according to Sec. 285 No. 17 German Commercial Code (HGB) Management report The management report for the year 2015 is enclosed as Appendix 1.1 to this long-form audit report. Our audit work indicates that the management report is consistent with the financial statements and the findings of our audit, and as a whole provides a suitable view of the position of the entity. The significant opportunities and risks of future development are presented suitably. The disclosures required by Sec. 289 (2) and (3) German Commercial Code (HGB) are complete and appropriate. Therefore, the management report complies with the legal requirements /15 - StoreD 7

13 Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft 4.2 Overall assertion from the financial statements Conclusions on the overall assertion from the financial statements We refer to our following explanations on the overall assertion from the financial statements. The financial statements taken as a whole, i.e. the combined presentation of the balance sheet, income statement and the notes to the financial statements, give a true and fair view of the entity's net assets, financial position and results from operations in accordance with German principles of proper accounting Explanations concerning the overall assertion from the financial statements The information given below relates to significant accounting policies. Pension provisions were measured based on an interest rate of 3.88% p.a. as well as an estimated salary trend of 3.00% p.a. and a pension trend of 1.50% p.a. Other estimations include the increase in the social security contribution ceiling of 2.60% p.a., employee turnover ratio of 2.00% p.a. until the age of 50 and of 1.00% p.a. beyond the age of 50. The earliest possible calculated age for receiving old-age benefits from the legal pension insurance fund as imposed by the Retirement Age Adjustment Act (Altersgrenzenanpassungsgesetz) was assumed. The determination of the provisions was based on the 2005 G Standard Tables issued by Dr. Klaus Heubeck in The measurement of the provision for field clearance and well plugging is determined based on plugging lump-sums for boreholes with respect to the size and quantity of the space to be levelled and equipment as set out by the Wirtschaftsverband Erdöl- und Erdgasgewinnung e.v. (WEG, German Gas and Oil Producers Association), Hanover/Germany. Future price and cost increases are taken into account on the basis of lump-sums based on an anticipated inflationary factor of 2.00%. The provisions are discounted in accordance with Sec. 253 (1) German Commercial Code (HGB) on the basis of the average market interest rates of the last seven years issued by the German Central bank. The residual term of the individual gas storage facility was taken into account. Deferred tax assets of meur 13.0 (prior year: meur 11.7) have been recognised at the balance sheet date primarily due to different values of the provision for field clearance and well plugging recognised in the financial statements and tax balance sheet. As a general rule, deferred tax assets are not eliminated against deferred tax liabilities (31 December 2015: meur 16.2; prior year: meur 17.9) in accordance with Sec. 274 (1) German Commercial Code (HGB). However, part of deferred taxes of opposite valuation differences are offset within individual balance sheet items. Deferred taxes were calculated based on a company-specific tax rate of about 28% /15 - StoreD 8

14 Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft 4.3 Analysis of net assets, financial position and results from operations Multi-year data overview Due to the reporting in the management report and notes to the financial statements of the entity, we here only display a summary of the key ratios Revenue keur 116, , ,548 76,950 Capital expenditure on intangible assets and property, plant and equipment keur 9,798 14,925 62,824 49,334 Capital expenditure to amortisation ratio (=capital expenditure/amortisation, depreciation, write-downs) % Net operating result keur 31, ,255 12,332 14,034 Financial result keur ,814 Profit for the period (prior to profit transfer) keur 22, ,916 8,044 8,496 Balance sheet total keur 485, , , ,781 Equity ratio % Return on revenue % Return on equity % Information on the legal environment of the entity is provided in Appendix 2 to this long-form audit report. 1 The year 2012 represents a stub period from 2 July to 31 December The information is thus only comparable to a limited extend /15 - StoreD 9

15 Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft 5 FINDINGS REGARDING EXTENSIONS TO THE SCOPE OF THE AUDIT ENGAGEMENT Findings according to Sec. 6b (5) Act on the Supply of Electricity and Gas (EnWG) regarding the accounting obligations under Sec. 6b (3) Act on the Supply of Electricity and Gas (EnWG) In accordance with Sec. 6b (5) Act on the Supply of Electricity and Gas (EnWG), as part of our audit of the financial statements, we assessed whether Management had fulfilled its accounting obligations under Sec. 6b (3) Act on the Supply of Electricity and Gas (EnWG). We conducted our audit on the basis of the Auditing Standard IDW PS 610 (The audit according to Sec. 6b Act on the Supply of Electricity and Gas (EnWG)) promulgated by the Institute of Public Auditors in Germany (IDW). Our audit indicated that the entity has observed the accounting obligations under Sec. 6b (3) Act on the Supply of Electricity and Gas (EnWG) in a proper manner. The entity's purpose of business solely includes the operation of gas storage facilities and thus gas storage in compliance with Sec. 6b (3) Act on the Supply of Electricity and Gas (EnWG). The financial statements thus comply with the report on business activity for the gas storage segment. The principle of consistency has been observed /15 - StoreD 10

16 Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft 6 COPY OF THE [INDEPENDENT] AUDITORS' REPORT We issued the following unmodified [independent] auditors' report, signed on 17 May 2016, on the financial statements and the management report of Storengy Deutschland GmbH, Berlin/Germany, for the financial year 2015 as set out in Appendix 1: "[Independent] Auditors' Report We have audited the [annual] financial statements, comprising the balance sheet, the income statement and the notes to the financial statements, together with the bookkeeping system, and the management report of Storengy Deutschland GmbH, Berlin/Germany, for the year from 1 January to 31 December In accordance with Sec. 6b (5) Act on the Supply of Electricity and Gas (EnWG), our audit also comprised the entity's compliance with accounting obligations under Sec. 6b (3) Act on the Supply of Electricity and Gas (EnWG), which stipulates that separate accounts are to be maintained for the various business areas according to Sec. 6b (3) Act on the Supply of Electricity and Gas (EnWG). The maintenance of the books and records and the preparation of the [annual] financial statements and the management report in accordance with German commercial law are the responsibility of the Company's Management. Our responsibility is to express an opinion on the [annual] financial statements, together with the bookkeeping system, and the management report as well as Management's compliance with the accounting obligations under Sec. 6b (3) Act on the Supply of Electricity and Gas (EnWG) based on our audit. We conducted our audit of the [annual] financial statements in accordance with Section 317 German Commercial Code (HGB) and German generally accepted standards for the audit of financial statements promulgated by the Institute of Public Auditors in Germany (IDW). Those standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the net assets, financial position and results of operations in the [annual] financial statements in accordance with German principles of proper accounting and in the management report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Company and expectations as to possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the disclosures in the books and records, the [annual] financial statements and the management report as well as Management's compliance with the accounting obligations under Sec. 6b (3) Act on the Supply of Electricity and Gas (EnWG) are examined primarily on a sample basis within the framework of the audit. The audit includes assessing the accounting principles used and significant estimates made by Management, as well as evaluating the overall presentation of the /15 - StoreD 11

17 Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft [annual] financial statements and the management report as well as assessing whether the values were recognised and accounts were allocated in a proper and understandable manner in accordance with Sec. 6b (3) Act on the Supply of Electricity and Gas (EnWG) and the principle of consistency has been complied with. We believe that our audit provides a reasonable basis for our opinion. Our audit has not led to any reservations. In our opinion, based on the findings of our audit, the [annual] financial statements of Storengy Deutschland GmbH, Berlin/Germany, comply with the legal requirements and give a true and fair view of the net assets, financial position and results of operations of the Company in accordance with German principles of proper accounting. The management report is consistent with the [annual] financial statements and as a whole provides a suitable view of the Company's position and suitably presents the opportunities and risks of future development. Our audit on Management's compliance with the accounting obligations under Sec. 6b (3) Act on the Supply of Electricity and Gas (EnWG) according to which Management is committed to maintaining separate accounts pursuant to Sec. 6b (3) Act on Supply of Electricity and Gas (EnWG) has not led to any reservations." /15 - StoreD 12

18 Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft 7 CONCLUDING REMARK The above long-form report on our audit of the financial statements and the management report of Storengy Deutschland GmbH, Berlin/Germany, for the year 2015 complies with the legal regulations and the German Generally Accepted Standards for the Issuance of Long-form Audit Reports for the Audits of Financial Statements promulgated by the Institute of Public Auditors in Germany (IDW) Auditing Standard IDW PS 450. Concerning the unmodified auditors' report, issued by us, we refer to Chapter 6 "Copy of the [Independent] Auditors' Report". Berlin/Germany, 17 May 2016 Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft Signed: Scharpenberg Wirtschaftsprüfer [German Public Auditor] Signed: Mertin Wirtschaftsprüfer [German Public Auditor] For publication or issuing to third parties of the [annual] financial statements and/or the management report in a form other than the version on which our [independent] auditors' report has been issued, or for translation into other languages our renewed representation is required, if our [independent] auditors' report is quoted or reference is made to our audit of the [annual] financial statements in this context; in this respect we draw attention to the regulations under Sec. 328 German Commercial Code (HGB) /15 - StoreD 13

19 Management Report and Financial Statements /15 - StoreD Appendix 1

20 STORENGY DEUTSCHLAND GMBH, BERLIN/GERMANY Management Report for the Year from 1 January to 31 December Business and Framework Conditions Storengy Deutschland GmbH (hereafter referred to as: StoreD) is a fully-owned subsidiary of Storengy Deutschland Infrastructures GmbH, Berlin/Germany (hereafter referred to as: StoreDI), which is a member of the Engie Group. StoreD's purpose of business comprises the acquisition, construction and operation of gas storage facilities and all related activities as well as the marketing of storage services. The entity and the shareholder StoreDI have entered into a profit and loss transfer agreement and tax allocation agreement. StoreD was established in September 2007 as an unbundled company with the aim of centralising gas storage activities in the German market. StoreD provides capacities for crude gas storage. Comprehensive restructuring measures of the storage services of Storengy in Germany were implemented in The companies (BEB Speicher GmbH and ExxonMobil Gasspeicher Deutschland GmbH) acquired in 2011 were merged with StoreD in At the end of 2015, StoreD has available capacities in seven gas storage facilities. These storage facilities provide for storage capacities of about 1.9 billion cubic metres of crude gas (StoreD's share), which accounts for about 8% of storage capacities in Germany. The pore-space storage facility in Fronhofen (StoreD share: 100%) in Baden-Württemberg provides for storage capacities of 12 million cubic metres. A maximum of 30,000 cubic metres of crude gas can be delivered per hour. The storage cavern in Harsfeld (StoreD share: 100%) near Hamburg provides for storage capacities of 112 million cubic metres. A maximum of 300,000 cubic metres of crude gas can be delivered per hour. The L gas storage cavern in Lesum (StoreD share: 100%) near Bremen provides for storage capacities of 168 million cubic metres. A maximum of 220,000 cubic metres of crude gas can be delivered per hour. The storage cavern in Peckensen (StoreD share: 100%) near Salzwedel (Saxony Anhalt) provides for storage capacities of 407 million cubic metres. A maximum of 870,000 cubic metres of crude gas can be delivered per hour. The pore-space storage facility in Schmidhausen (StoreD share: 100%) in Bavaria provides for storage capacities of 150 million cubic metres. A maximum of 150,000 cubic metres of crude gas can be delivered per hour /15 - StoreD Appendix 1.1/1

21 The pore-space storage facility in Uelsen (StoreD share: 100%) near Nordhorn (Lower Saxony) provides for storage capacities of 840 million cubic metres. A maximum of 395,000 cubic metres of crude gas can be delivered per hour. The pore-space storage facility in Breitbrunn-Eggstätt (StoreD share: 19.72%) in Bavaria provides for storage capacities of 992 million cubic metres. A maximum of 520,000 cubic metres of crude gas can be delivered per hour. As part of the restructuring measures undertaken in 2012, the operational management company Storengy Deutschland Betrieb GmbH merged with Storengy Betrieb Deutschland Nord GmbH (both located in Hanover). The name of the two merged entities was changed into Storengy Deutschlland Betrieb GmbH (hereafter referred to as: StoreDB) on 1 August StoreD holds 100% of the shares in Store DB. StoreDB renders technical operation management services for all storage facilities (except for the storage facility in Breitbrunn-Eggstätt). StoreD's registered office is located in Berlin. Information concerning the areas of activity in accordance with Sec. 6b (7) Sentence 4 Act on the Supply of Electricity and Gas (EnWG): The entity's scope of business only comprises gas storage activities. The financial statements thus comply with the report on business activity for the gas storage segment. 2. Net assets, financial position and results from operations The European market for storage services is still challenging for the companies operating in this segment. This challenging market situation is also driven by price trends on international trade markets and the completed extension of the gas import infrastructure. As a result, seasonal price fluctuations were almost eliminated, thereby reducing the revenue that can be realised in the market. Although competitive pressure increased again, the entity was able to completely market available capacities in 2015 primarily driven by StoreD's continuously extended and targeted product and service portfolio. However, the prices realised from the marketing efforts were lower than in the past due to the challenging market situation. The entity generated revenue of meur in 2015 compared with meur in the prior year. The reduction in revenue is mainly due to the challenging market situation, which no longer provides for the marketing of available capacities at previously common prices, and due to the sale of the pore-space storage facility in Reitbrook at the end of 2014, which did not generate revenue in The start of operations of the fifth cavern in Peckensen in October 2014 and the revenue realised since then have partially offset the above effects. StoreD achieved a result from ordinary activities of meur 31.3 in the financial year 2015 (prior year: meur 116.8). In addition to the reduction in revenue, the special effect resulting from the sale of the pore-space storage facility in Reitbrook (incl. release of provisions for removal costs), which had realised a profit of meur 84.5 at the end of 2014, is considered to be a main reason for the decline in ordinary activities. This effect was, however, partially compensated by savings in operating costs. The profit of meur 22.4 after tax (prior year: meur 113.9) is to be transferred to the shareholder StoreDI under the profit and loss transfer agreement that has been in effect since 2 July /15 - StoreD Appendix 1.1/2

22 The development of fixed assets depends largely on the investment activities concerning both the existing storage facilities and the completion of the Peckensen project as well as on amortisation and depreciation. The fixed assets of StoreD decreased from meur as at 31 December 2014 to meur as at the balance sheet date (31 December 2015), 70% of which are covered by equity while the remaining 30% are covered by debt capital. Capital expenditure on property, plant and equipment and purchased intangible assets totalled meur 9.8 (prior year: meur 14.9) and primarily concerned the completion of the extension works regarding the underground storage tank in Peckensen as well as the general capital expenditure on maintenance. Current assets amount to meur 60.9 (prior year: meur 121.6) comprising receivables from companies of the Engie Group in the amount of meur 50.2 (prior year: meur 114.4), receivables from investment companies in the amount of meur 1.0 (prior year: meur 1.7), trade receivables of meur 2.1 (prior year: meur 2.3) and other assets, inventories and cash in hand of meur 7.6 (prior year: meur 3.2). The entity and Engie S.A., Paris/France, and Engie Treasury Management S.à r.l., Luxembourg, have entered into cash pooling agreements. The entity's financing needs were covered by the operating cash flow during the financial year. As at the balance sheet date, the financing volume with companies of the Engie Group amounted to meur 60.2 like in the prior year. Based on the negotiated financing agreements, the entity's liquidity was ensured at all times. As at 31 December 2015, there are no open credit lines. The deliverability rates mentioned in Chapter 1 are among the key nonfinancial performance indicators. Overall Statement of net assets, financial position and results of operations The adverse development of the European gas storage market has also led to a slight decline in StoreD's revenue compared with previous periods. Cost saving measures have partially offset the revenue reduction. The complete marketing of the storagecapacities partially driven by innovative products have, however, resulted in satisfying results of operations. The cash pooling agreements entered into with the Engie Group provide StoreD with a stable and long-term financing framework for the operative business. 3. Risk reporting StoreD is integrated into the risk management and internal control system of the Engie Group, which guarantees the ongoing identification, evaluation and reporting of risks according to the provisions of the Engie Group. This ensures the selection and implementation as well as surveillance of appropriate preservation and controlling measures. Significant risks and opportunities are regularly reported to the Management of StoreD and the related functions of the Engie Group. Business decisions are only made after a serious assessment of opportunities and risks according to defined risk policy principles of the Engie Group /15 - StoreD Appendix 1.1/3

23 There were no risks endangering the continued existence of the entity during the financial year Nor are such risks currently identifiable for the following year. The entity is, however, exposed to risks significantly affecting the results of operations from market developments including price adjustments and prices for newly marketed storage capacities. The risks are permanently evaluated especially when bringing available capacities to the market and as part of budget and forecast calculations. We expect the default risk to be low, since we verify the customers' credit worthiness prior to contract conclusions and periodically during the contract term. In addition, we periodically and systematically take receivables management measures. The entity is exposed to business-related risks (e.g. geological risks), which are regularly assessed and fought, if need be. In addition, the entity is exposed to a sophisticated political, legal and regulatory environment. Resulting changes especially with respect to addition and salary models in the logistics segment may materially affect the economic success of StoreD. StoreD thus aims at taking an active part in the creation of framework conditions by having efficient dialogues with the responsible authorities and politicians and based on the "INES" initiative. Any price changing risks regarding gas inventories that have to be temporarily stored are covered by StoreD, which concluded forward contracts for part of these gas inventories with the resale amounting to meur Regarding further explanations we refer to the Notes to the Financial Statements The current business development is compared with projections and budgets during regular Supervisory Board meetings, where action plans for target achievements are defined. 4. Opportunities Although StoreD currently faces a challenging market situation, it has proved to be a highly flexible entity that is able to quickly adapt and act in an increasingly changing market environment. The complete marketing of StoreD's storage capacities in 2015 demonstrates that the targeted extension of the product and service portfolio is the right answer to the ongoing challenging market situation. In addition, the strict analysis and adjustment of internal cost structures and cost drivers, which was also carried out in close cooperation with the technical operational management company StoreDB, is the right answer to the market-related loss in revenue. These new products, intended new operations and internal structure and process adjustments are also considered to be opportunities for the future. 5. Staff As at 31 Dec. 2015, the entity has 61 employees (head count) compared to 60 employees in the prior year /15 - StoreD Appendix 1.1/4

24 6. Reporting on subsequent events There have been no events of major significance after the balance sheet date. 7. Outlook The European market for storage services is still challenging for the companies operating in this segment. This challenging market situation is also driven by price trends on international trade markets and the completed extension of the gas import infrastructure. As a result, seasonal price fluctuations were almost eliminated. In view of the currently not increasing demand and existing over-capacities on the German gas storage market, several operators started to close gas storage facilities. The considerably higher network charges have also resulted in a more selective usage of gas storage facilities by customers. Based on its facility portfolio, StoreD is optimistic about its market position and in line with other market participants expects that the current situation of the storage operators will continue for the medium term. Consequently, the entity changed its activities and product portfolio accordingly to be able to exactly identify and benefit from market opportunities. The current market trends will also affect StoreD's results of operations. Although StoreD has a large amount of storage capacities defined under medium-term and long-term contracts with storage customers and thus benefits from relatively stable revenue, available volumes can only be sold at lower prices, from a current perspective. For the storage year 2016/2017 storage capacities have been completely sold. Revenue is expected to range between meur 105 and meur 115 for 2016, which means a slight reduction compared with the 2015 financial year. A profit between meur 12 and meur 18 prior to profit transfer is expected for the financial year For 2016, capital investments are planned to cover a volume between meur 10 and meur 15. Berlin/Germany, 15 April 2016 Storengy Deutschland GmbH The General Management Alain Caracatzanis /15 - StoreD Appendix 1.1/5

25 Storengy Deutschland GmbH, Berlin/Germany BALANCE SHEET AS AT 31 DECEMBER 2015 (Balance Sheet as at 31 December 2014 for comparison) A S S E T S 31 Dec Dec E Q U I T Y A N D L I A B I L I T I E S 31 Dec Dec EUR EUR EUR EUR A. FIXED ASSETS A. EQUITY I. Intangible assets I. Issued capital , ,00 Concessions, industrial rights and similar rights and assets as well as licenses in such rights and assets acquired for a consideration , ,00 II. Capital reserves , ,74 II. Property, plant and equipment III. Net retained profits 0,00 0,00 1. Land, land rights and buildings including buildings on third-party land , , , ,74 2. Technical equipment and machinery , ,12 3. Other equipment, operating and office equipment , ,00 4. Prepayments and assets under construction , ,35 B. PROVISIONS , ,39 1. Provisions for retirement benefit obligations and similar commitments , ,00 III. Financial assets 2. Other provisions , ,86 1. Shares in affiliated companies , ,00 2. Equity investments , , , ,86 3. Other loans , , , ,00 C. LIABILITIES , ,39 1. Trade payables , ,06 2. Liabilities to affiliated companies , ,88 B. CURRENT ASSETS 3. Other liabilities , ,19 - thereof from taxes: EUR 410,390 (prior year: EUR 404,309) I. Inventories: Raw materials, consumables and supplies , ,77 - thereof related to social security: EUR 6,771 (prior year: EUR 0) II. Receivables and other assets 1. Trade receivables , , , ,13 2. Receivables from affiliated companies , ,29 3. Receivables from equity investments , ,92 4. Other assets , ,39 D. DEFERRED TAX LIABILITIES , ,65 - thereof with a residual term of more than one year: EUR 48,735 (prior year: EUR 49,435) , ,59 III , , , ,35 C. PREPAID EXPENSES , ,43 D. DEFERRED TAX ASSETS , , , , , , /15 Ber - StoreD Appendix 1.2

26 Storengy Deutschland GmbH, Berlin/Germany INCOME STATEMENT FOR THE YEAR FROM 1 JANUARY TO 31 DECEMBER 2015 (Financial Year from 1 January to 31 December 2014 for comparison) 1 Jan Dec Jan Dec EUR EUR 1. Revenue , ,51 2. Decrease in inventories 0, ,66 3. Other own work capitalised 0, ,73 4. Other operating income , ,36 5. Cost of materials a) Cost of raw materials, consumables and supplies , ,88 b) Cost of purchased services , , , ,15 6. Personnel expenses a) Wages and salaries , ,90 b) Social security, post-employment costs and other employee benefits , ,50 - thereof post-employment costs: EUR 383,615 (prior year: EUR 325,657) , ,40 7. Amortisation of and write-downs on intangible assets and depreciation and write-downs on property, plant and equipment , ,78 8. Other operating expenses , ,62 9. Income from equity investments , , Income from profit transfers and tax allocation , , Other interest and similar income , ,59 - thereof from affiliated companies: EUR 30,495 (prior year: EUR 40,563) 12. Interest and similar expenses , ,01 - thereof to affiliated companies: EUR 1,672,987 (prior year: EUR 1,188,739) - thereof resulting from interest compound: EUR 2,179,862 (prior year: EUR 2,207,952) 13. Result from ordinary activities , , Taxes on income a) Taxes resulting from tax allocation , ,43 b) Expenses resulting from changes to deferred taxes , , , , Other taxes , , Profits transferred under profit and loss transfer agreement , , Profit/loss for the period 0,00 0, /15 Ber - StoreD Appendix 1.3

27 Storengy Deutschland GmbH, Berlin/Germany Notes to the Financial Statements for the Year from 1 January to 31 December General notes 1.1 The financial statements of Storengy Deutschland GmbH (hereafter referred to as: StoreD) for the year ended 31 December 2015 have been prepared according to the accounting regulations under German Commercial Law as well as the provisions under the German Law on Limited Liability Companies (GmbHG) and the Act on the Supply of Electricity and Gas (EnWG). The entity and the shareholder, Storengy Deutschland Infrastructures GmbH (hereafter referred to as: StoreDI) located in Berlin (local court Berlin-Charlottenburg, HRB B) have entered into a profit and loss transfer agreement. The entity was entered into the Commercial Register on 3 September The entity and the shareholder have also signed a tax allocation agreement. 1.2 The entity is a large firm organised in a corporate form within the meaning of Sec. 267 German Commercial Code (HGB). 1.3 The income statement has been prepared according to the nature of expense format according to Sec. 275 (2) German Commercial Code (HGB). 1.4 The principle of consistency has been observed. 2. Accounting and valuation rules The balance sheet and income statement have been prepared according to the accounting regulations applicable under German Commercial Law in the financial year. The following accounting and valuation rules were applied: 2.1 Fixed assets are valued at amortised acquisition and production cost. 2.1 Additions to fixed assets are recognised at acquisition and production cost. Own work capitalised related to production cost includes direct labour costs and appropriate and necessary indirect costs (indirect labour and materials costs, amortisation and depreciation of fixed assets) as well as indirect costs that are attributable to the period of production (general and administrative costs, expenses for social amenities of the company and costs of voluntary social benefits and of occupational pensions). The entity does not exercise the option of including borrowing costs that are attributable to the period of production. 2.3 Amortisation, depreciation and write-downs have been determined based on the individual operating useful life. In the case of permanent impairment, they are written down to the fair value. 2.4 Current assets are carried at acquisition cost taking into account the lower of cost or market value principle. 2.5 Inventories of raw materials, consumables and supplies in the warehouses have been recorded and valued as part of inventory counts /15 - StoreD Appendix 1.4/1

28 2.6 Liquid funds are recognised at nominal value. 2.7 Deferred taxes that result from differences between the asset and liability values recognised in the financial statements and those recognised in the tax balance sheet are disclosed at the level of the controlling company in compliance with the German Accounting Standard (GAS) 18 Item 35. The entity exercised its option of recognising deferred tax assets in accordance with Sec. 274 (1) Sentence 2 German Commercial Code (HGB) at 31 December The issued capital is recognised at nominal value. 2.9 Provisions have been recognised at the amount of anticipated liabilities based on sound business judgement. Provisions with a residual term of more than one year consider future price and cost trends, if relevant, and are discounted at the balance sheet date. The discount rates equal the average market interest rates with matching maturities of the past seven years issued on a monthly basis by the German Central Bank Liabilities have been recognised at their settlement amount Requirements under Sec. 6b (3) Act on the Supply of Electricity and Gas concerning the maintenance of separate accounts: StoreD was not required to maintain separate accounts or prepare separate internal balance sheets and income statements for individual business areas within and out of the gas sector as set out in Sec. 6b (3) Act on the Supply of Electricity and Gas (EnWG) since the entity does not operate outside the gas sector Deferral and accrual items are accounted for in accordance with the principles set out in Sec. 250 German Commercial Code (HGB). 3.1 Fixed assets 3. Notes to the balance sheet The movements in fixed assets are presented in the statement of movements in fixed assets (Annexe to the Notes). Financial assets were valued at acquisition cost. Construction loans carrying no interest granted to employees have been recognised at nominal value. In the case of permanent impairment, they are written down to the fair value. The equity investments carried under financial assets relate to: Company Storengy Deutschland Betrieb GmbH, Hanover/Germany Storage facility Breitbrunn/Eggstätt DEA & Storengy GbR, Hamburg/Germany Shares Issued capital as at 31 Dec (EUR) Equity (EUR) Profit for the year (EUR) % 25,000 2,940, % ,343,851 Other loans of keur 18.6 (prior year: keur 23.2) relate to loans given to employees /15 - StoreD Appendix 1.4/2