E.ON International Finance B.V. Interim Report 2020
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E.ON International Finance B.V. Interim Report 2020 1 January 2020 – 30 June 2020 Amsterdam, The Netherlands
Condensed Interim Financial Statements 2 Content Report of the Board of Management 3 Statement from the Board of Management 5 Unaudited Balance Sheet (before profit appropriation) 6 Unaudited Income Statement 7 Unaudited Cash Flow Statement 8 Notes to the Condensed Interim Financial Statements 9
Condensed Interim Financial Statements 3
Report of the Board of Management
General information
As of June 30, 2020 the Board of Managers comprises the following members:
Mr. J. Otto
Mr. D. Jacobs
Mrs. M. Springintveld
Mr. J. Groesbeek
During the first half of 2020, the composition of the Board of Management did not change.
The objectives of E.ON International Finance B.V. are unchanged compared to the financial year ending
December 31, 2019. E.ON International Finance B.V. continues to be a wholly owned and fully consolidated
subsidiary of E.ON SE, Essen, Germany.
Internal organisation
The statutory seat and the office of E.ON International Finance B.V. is Kabelweg 37, 1014 BA Amsterdam,
The Netherlands.
As of June 30, 2020 E.ON International Finance B.V. had one employee (2019: 1). All other personnel is
either seconded from other E.ON group companies or engaged from external service providers.
Market review
The international equity capital markets experienced a highly turbulent first half 2020 which was
dominated by the COVID-19 pandemic and the resulting economic consequences. Major stock markets in
the US, Europe and Japan all fell sharply in the first quarter 2020 but recovered at least partially in the
second quarter amongst hopes that the economic downturn would not be as dramatic as originally
expected.
On foreign exchange markets the impact of the COVID-19 pandemic could also be seen. The British Pound
weakened substantially versus Euro in Q1 2020 also as a result of the particularly strong presence of the
pandemic in the UK. Whilst GBP recovered in April it again lost ground towards the end of the first half year
as concerns regarding a potential “Hard Brexit” again came into focus. US-Dollar in contrast strengthened
against Euro in the first quarter but gave up its gains in Q2, ending the half year at around 2019 year-end
level.
On interest rates, the Euro short-term rates went further into negative territory to record lows in the first
months of 2020, however increased with the pandemic in March and April whilst still remaining in negative
territory. Towards the end of the half-year interest rates declined again and ended up close to record
negative levels. Long term Euro interest rates also fell at year beginning to record lows, before also
increasing in March but still ending in June 2020 at an even lower level than at the end of 2019. Interest
rate levels in general were influenced by the stimulus from monetary policymakers both in Europe and in
the US.
Whilst credit spreads had decreased in 2019 this trend came to an end in the first half year of 2020 as risk
perception increased substantially, and thus credit spreads were higher across all rating categories and
sectors with Utility spreads following this development. With regard to volumes, the international debt
capital market volume was up significantly as compared to the first half of 2019 as especially liquidity issues
came into increased focus.Condensed Interim Financial Statements 4 Business review In the first half of 2020 E.ON International Finance B.V. did not issue any new notes into the debt capital markets. The total amounts of bonds outstanding decreased compared to year-end 2019 by scheduled maturities and resulting repayments of € 1.4 billion. Foreign exchange effects on Non-Euro denominated bonds decreased the remaining Euro amount of bonds outstanding by € 0.2 billion. The total amount of notes outstanding as of June 30, 2020 decreased to € 4.5 billion compared to € 6.1 billion of bonds outstanding at year end 2019. 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 April 2020 E.ON International Finance B.V. granted a new fixed rated medium term loan of € 100 million to an E.ON group entity. In June 2020 E.ON International Finance B.V. sold the € 750 million listed group security which it originally bought in January 2019 and used the proceeds to repay the short term intra-group loan taken up from E.ON SE to partially finance this investment. Through the sale E.ON International Finance B.V. was able to realize a one-time profit of € 14 million. E.ON’s creditworthiness has been assessed by Standard & Poor’s (“S&P”) and Moody’s with long-term ratings of BBB and Baa2, respectively. As all bonds outstanding are guaranteed by E.ON SE, the ratings continue to be a significant support for E.ON International Finance B.V. The total asset base decreased to € 5.2 billion as of June 30, 2020 compared to € 7.4 billion at year end 2019. Furthermore, E.ON International Finance B.V.’s net loss of € -2.4 million for the first half of 2019 increased to a profit of € 15.2 million for the reporting period. This is mainly due to the one-time profit realized on the sale of the group security. Financial information Preparation of Financial Statements The 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. The Interim Report 2020 has followed the same principles of recognizing and measuring as have been used for the preparation of the Financial Report 2019. The Interim Report 2020 has not been audited nor has it been reviewed by an audit firm. Financial performance E.ON International Finance B.V. closed the first six months of 2020 with a profit from ordinary activities before taxes of approximately € 15.2 million, compared to a loss of € -2.4 million in the first half of 2019. 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 2019. 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.
Condensed Interim Financial Statements 5 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 2020 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, 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 E.ON International Finance B.V., together with a description of the principal risks and uncertainties that it faces. The Interim Report 2020 has not been audited nor has it been reviewed by an audit firm. Amsterdam, August 25, 2020 Board of Management, E.ON International Finance B.V. Mr. J. Otto Mrs. M. Springintveld Mr. J. Groesbeek Mr. D. Jacobs
Condensed Interim Financial Statements 6
Unaudited Balance Sheet (before profit appropriation)
Jun 30, 2020 Dec 31, 2019
€ in thousands Note Unaudited Audited
Financial fixed assets
Loans to shareholder 3 3,018,582 3,160,692
Loans to group entities 3 1,890,395 1,861,473
Other group securities 3 - 747,942
4,908,977 5,770,107
Current assets
Amounts due from shareholder 80,928 142,144
Amounts due from group entities 66,043 1,489,519
146,971 1,631,663
Cash 4 141,819 -
Total assets 5,197,767 7,401,770
Shareholders’ equity
Issued share capital 200 200
Share premium reserve 36,992 36,992
Other reserves 516,382 518,040
Undistributed profit 15,222 (1,658)
5 568,796 553,574
Borrowings
Bonds 6 4,523,339 4,721,397
Current liabilities
Amounts due to shareholder 14,610 541,155
Amounts due to group entities 14 10
Amounts due to others 91,008 1,585,634
105,632 2,126,799
Total equity and liabilities 5,197,767 7,401,770Condensed Interim Financial Statements 7
Unaudited Income Statement
Six months ended June 30,
2020 2019
Unaudited Unaudited
€ in thousands Note
Interest and similar income 9 193,801 225,909
Exchange rate difference gains 209,999 21,599
Financial income 403,800 247,508
Interest and similar expenses 10 (177,455) (227,121)
Exchange rate difference losses (210,826) (22,585)
Financial expenses (388,281) (249,706)
Total financial result 15,519 (2,198)
Operating expenses (297) (250)
Total operating expenses (297) (250)
Result of ordinary activities before corporate
income tax 15,222 (2,448)
Corporate income taxes 0 0
Net (loss)/profit 15,222 (2,448)Condensed Interim Financial Statements 8
Unaudited Cash Flow Statement
Six months ended June 30
2020 2019
€ in thousands Unaudited Unaudited
Interest paid (265,389) (266,254)
Interest received 261,529 255,734
Expenses paid (249) (255)
Cash flows from operating activities (4,109) (10,775)
Loan repayments received from related parties 1,400,000 90,748
Short term loan received from related parties - 525,981
Repayment in other securities 764,246 -
Cash flows from investing activities 2,164,246 616,729
Repayments of borrowings (1,400,000) (76,309)
Repayment of short term loan received from
related parties (518,318) -
Investment in other securities - (747,435)
Investment in loans to related parties (100,000) -
Cash flows from financing activities (2,018,318) (823,744)
Net increase (decrease) in cash 141,819 (217,790)
Cash at January 1 0 223,743
Cash at June 30 141,819 5,953Condensed 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 Amsterdam, the Netherlands, considers E.ON SE, Essen, 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 Essen. The statutory seat and the office of E.ON International Finance B.V. is Kabelweg 37 1014 BA Amsterdam, The Netherlands. E.ON International Finance B.V. is registered with the Dutch Trade register under number 33174429. These financial statements were authorized for issue by the Board of Management on August 25, 2020. (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. 2019 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. 2019 Annual Report. Comparison with prior period The basis used for the valuation and result definition has remained unchanged with respect to the year-end 2019. 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 bank accounts 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 almost unchanged compared to the E.ON International Finance B.V. 2019 Annual Report. In April 2020 E.ON International Finance B.V. entered into a new medium-term market rate based intra- group loan.
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:
Jun 30, 2020 Dec 31, 2019 Jun 30, 2019
ISO code
British Pound EUR/GBP 0.91 0.85 0.90
U.S. Dollar EUR/USD 1.12 1.12 1.14
Japanese Yen EUR/JPY 120.66 121.94 122.60
Hong Kong Dollar EUR/HKD 8.68 8.75 8.89
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. 2019 Annual Report.
(3) Financial fixed assets
Movement schedule financial fixed assets Jun 30, 2020
Total Loans to Total Loans to Other group Total Financial
Shareholder Group Entities securities Fixed assets
€ in thousands
At January 1, 2020 3,160,692 1,861,473 747,942 5,770,107
- Increase - 100,000 - 100,000
- Amortization 136 373 284 793
- Exchange differences (130,837) (71,451) - (202,288)
- Repayment - - (748,226) (748,226)
- Current maturity (11,409) - - (11,409)
At June 30, 2020 3,018,582 1,890,395 - 4,908,977
During the first half of 2020, E.ON International Finance B.V. granted a new medium-term loan of € 100
million. The financial fixed assets in total however decreased by € 0.9 billion mainly due to the repayment
of the € 750 million capital market listed fixed rate bond. Due to the foreign exchange developments theCondensed Interim Financial Statements 11 reduction of the Euro value of Non-Euro denominated loans by € 0.2 billion also contributed to such decrease. The following tables show a detailed breakdown of these developments: Carrying amounts of loans in currencies to shareholder Jun 30 Dec 31 € in thousands 2020 2019 GBP 2,141,711 2,285,690 USD 888,280 885,286 Total loans to shareholder 3,029,991 3,170,976 Reclassification to current assets (11,409) (10,284) Total long-term loans in currencies to shareholder 3,018,582 3,160,692 The decrease in the Euro amount of British Pound denominated loans is solely due to the strengthening of the Euro against the British Pound. The USD denominated loan increased slightly as result of the strengthening of the U.S. Dollar against the Euro. In general the currency structure of the loan portfolio remained British Pound denominated. Carrying amounts of loans in currencies to group entities Jun 30 Dec 31 € in thousands 2019 2019 EUR 910,761 2,210,139 GBP 979,634 1,050,891 Total loans to group entities 1,890,395 3,261,030 Reclassification to current assets - (1,399,557) Total long-term loans in currencies to group entities 1,890,395 1,861,473 The amount of loans to group entities decreased significantly due to the current maturities in the first half year of 2020. A total amount of € 1.4 billion has been repaid to E.ON International Finance B.V. which however is slightly offset by the € 0.1 billion new loan granted. The slight decrease on the Euro amount of the British Pound denominated loans resulted from the strengthening of the Euro against the British Pound. Other group securities E.ON International Finance B.V. sold the other group securities back to the issuing group entity prior to its originally scheduled maturity in June 2020. The result on this sale is a one-time profit of € 14 million. (4) Cash Specification of Cash Jun 30 Dec 31 € in thousands 2020 2019 Inhouse banking account at shareholder 141,819 - Cash 141,819 - Total cash mainly includes the inhouse bank accounts at E.ON SE. Having such inhouse bank accounts at E.ON SE is common practice within the E.ON group. The total cash is at free disposal of E.ON International Finance B.V. and is almost entirely denominated in Euro.
Condensed Interim Financial Statements 12
(5) Shareholders’ equity
The total authorized number of ordinary shares is 9,000 (2019: 9,000) with a par value of € 100 per share.
The number of issued shares is 2,000 (2019: 2,000). All issued shares are fully paid in.
The share premium results exclusively from additional paid in capital.
Movement schedule equity Issued Share Other Undistributed Total
capital premium reserves profit
reserve
€ in thousands
At January 1, 2020 200 36,992 518,040 (1,658) 553,574
Appropriation of loss - - (1,658) 1,658 -
Profit for the period ended June 30, 2020 - - - 15,222 15,222
At June 30, 2020 200 36,992 516,382 15,222 568,796
Total equity of E.ON International Finance B.V. increased to € 568.8 million due to the profit € 15.2 million
generated in the first six months of 2020.
(6) Bonds
Movement schedule bonds Jun 30 Dec 31
€ in thousands 2020 2019
At January 1 4,721,397 5,945,337
- Amortization 844 2,884
- Exchange differences (198,902) 172,722
- Current maturity - (1,399,546)
At June 30 / December 31 4,523,339 4,721,397
In the first six months of 2020 no new bonds were issued by E.ON International Finance B.V. The reduction
in the long-term bond amounts outstanding mainly resulted from the foreign exchange effects resulting in
a decrease of the carrying Euro amount of such bonds, with the nominal denominated amounts of bonds
outstanding remaining unchanged. As there are no bonds maturing during the next 12 months no
reclassification into the current maturity item was done.
The carrying amounts of the bonds are denominated in the following currencies:
Carrying amounts of bonds in currencies Jun 30 Dec 31
€ in thousands 2020 2019
EUR 548,004 1,947,409
GBP 2,804,185 3,008,073
USD 888,377 885,384
JPY 164,709 162,941
Other currencies 118,064 117,136
Total bonds 4,523,339 6,120,943
Reclassification current liabilities - (1,399,546)
Total long-term bonds 4,523,339 4,721,397
During the first six months of 2020 the outstanding amount of Euro denominated bonds decreased due to
the scheduled maturities and the resulting repayments of such instruments. The Euro value of the U.S.Condensed Interim Financial Statements 13 Dollar, British Pound, Japanese Yen and other currencies denominated bonds mostly changed due to foreign exchange effects with the nominal denominated amounts remaining unchanged. The overall structure of the bonds outstanding remained overweighed on the Non-Euro denominated bonds. The market value of bonds per June 30, 2020 is € 7.7 billion (December 31, 2019: € 9.5 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 € in thousands 2020 2019 Currency swaps 249,038 249,038 Total amounts due to others 249,038 249,038 The amount of swaps transactions entered into by E.ON International Finance B.V. did not change compared to 31 December 2019. Specification fair values financial instruments Jun 30 Dec 31 € in thousands 2019 2019 Currency swaps (41,325) (34,257) Total amounts due to others (41,325) (34,257) The changes in the fair value amount of currency swaps correspond to the changes in the foreign exchanges rates of currencies hedged by such instruments. (8) Credit facility agreements As of June 30, 2020 E.ON International Finance B.V. did not participate in any capital market oriented facility agreements. Consequently, no funds are outstanding as of June 30, 2020 (December 31, 2019: € 0). (9) Interest and similar income Specification interest and similar income Six months ended June 30, € in thousands 2020 2019 - interest and similar income from shareholder 94,103 119,274 - interest and similar income from group entities 99,698 104,099 - interest and similar income from others - 2,536 Total interest and similar income 193,801 225,909 Interest and similar income again decreased in the first six months of 2020. For the interest income from shareholders this is mainly the result of the reduced lending volumes compared to the previous years period. For the interest income from group entities such lending volume reductions also resulted in a reduced interest income, which however was slightly offset by the € 14 million one- time gain from the sale of the other group security back to the issuing group entity.
Condensed Interim Financial Statements 14 (10) Interest and similar expenses Specification interest and similar expenses Six months ended June 30, € in thousands 2020 2019 - interest expense to shareholder 11,169 13,973 - interest expense to others 166,286 213,148 Total interest and similar expense 177,455 227,121 Interest expenses also again decreased in the first half of 2020. This is mainly the result of the reduced bond related interest expenses following the repayment of maturing bonds. Accordingly, interest expense to others decreased. The decrease in the interest expense to shareholders mainly resulted from lower guarantee fee expenses due to the lower amount of bonds outstanding following previous period maturities. (11) Subsequent events On August 13, 2020 innogy Finance B.V., also a wholly-owned E.ON group entity, invited bondholders of certain of its market-listed debt securities to vote without meeting – also called consent solicitations – in order to consent to, inter alia, a replacement of innogy Finance B.V. with E.ON International Finance B.V. as issuer and innogy SE by E.ON SE as guarantor. Depending on the outcome of these consent solicitations, E.ON International Finance B.V. may become the new issuer for such instruments. In such a case, E.ON International Finance B.V. would also become the new lender of any corresponding intra-group long term loan that was originally granted by innogy Finance B.V. using the proceeds of such bond and which would also be transferred to E.ON International Finance B.V. together with the respective debt instrument. Any such transaction is assumed to increase the business volumes of E.ON International Finance B.V. Amsterdam, August 25, 2020 Board of Management, E.ON International Finance B.V. Mr. J. Otto Mrs. M. Springintveld Mr. J. Groesbeek Mr. D. Jacobs
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