E.ON International Finance B.V. 2017 Annual Report...The principal activity of E.ON International...

E.ON International Finance B.V. 2017 Annual Report Amsterdam, The Netherlands

Content

Company Board and Management

Report from the Supervisory Board ............................................................................................................... 3

Adoption by the Annual General Meeting of Shareholders ................................................................ 4

Report of the Board of Management ........................................................................................................... 5

Financial Statements of E.ON International Finance B.V.

Balance Sheet as at 31 December 2017 (before profit appropriation) .......................................... 10

Income Statement for the year ended 31 December 2017 ................................................................. 11

Cash flow Statement for the year ended 31 December 2017 ............................................................ 12

Notes ......................................................................................................................................................................... 13

Additional Information 29

Independent Auditor’s report 30

Financial Statements of E.ON International Finance B.V. 3

Report from the Supervisory Board

At the end of 2017 the Supervisory Board comprised the following members: Mrs. V. Volpert Mrs. A. Peters Mr. S.W. Hloch

The composition of the members of the Board did not change during the reporting year. The Supervisory Board met once on March 09, 2017. During this meeting the Board of Management presented the business results for the year 2016 which were discussed and approved by the Supervisory Board. Also, the planned business activities for 2017 were discussed. During 2017 E.ON International Finance B.V. did not engage into any capital market transaction; despite, it continued to be an important liquidity provider and financing hub within the E.ON Group. The financial statements 2017 have been audited and were given an unqualified report by the independent auditor of PricewaterhouseCoopers Accountants N.V.. The independent auditor’s report is included in this report. The Income Statement for the year 2017 discloses a Net Loss of € 4.0 million. The Supervisory Board approves the proposal made by the Board of Management to deduct this amount from the ”Other reserves”. The Supervisory Board recommends that the General Meeting of Shareholders adopts the financial statements for the year 2017. The Supervisory Board takes this opportunity to express its appreciation for the performance of the management during the past year. Amsterdam, March 23, 2018 Mrs. V. Volpert Mrs. A. Peters Mr. S.W. Hloch


Adoption by the Annual General Meeting of Shareholders In accordance with Article 20(8) of the Articles of Association, the Annual General Meeting of Shareholders has adopted the 2017 financial statements of E.ON International Finance B.V. The Income Statement discloses a Net Loss of € 4.0 million. The entire amount will be deducted from the “Other reserves”. Amsterdam, March 23, 2018 E.ON SE


Report of the Board of Management General information Composition of the Board of Management At the end of 2017 the Board of Management comprised the following members:

Mr. J. Otto Mrs. M. Springintveld Mr. J. Groesbeek

The composition of the Board of Management did not change during the reporting period. Company objectives and core activities According to article 3 of the Articles of Association of E.ON International Finance B.V., the objectives of E.ON International Finance B.V. are:

to borrow, to lend and to raise funds, including the issue of bonds, promissory notes or other securities or evidence of indebtedness as well as to enter into agreements in connection with aforementioned activities;

to participate in any way whatsoever in, to manage, to incorporate and to supervise businesses and companies;

to perform any and all activities of a commercial or financial nature; and to do all that is connected therewith or may be conductive thereto, all to be interpreted

in the broadest sense. The principal activity of E.ON International Finance B.V. is the financing of E.ON Group entities mainly via the issuance of bonds or other securities, or by taking deposits or intra-group loans.

Composition of the Group E.ON International Finance B.V., a corporation with limited liability, having its statutory seat in Kabelweg 37, 1014 BA 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.

Internal organisation At the end of 2017 E.ON International Finance B.V. had no own employees (2016: 0). All personnel is either seconded from other E.ON Group companies or engaged from external service providers.

Market review The international capital markets experienced a good year 2017 influenced by positive and improving global growth expectations despite some increasingly difficult geopolitical developments. Major stock markets in the US, Europe and Japan increased substantially with some, such as the Dow Jones Industrial Average in the U.S., reaching all-time highs at year end 2017. These developments were supported by the generally low interest rate environment especially in the Euro area. Oil prices in contrast declined especially in the first half of the year but experienced a rebound in the second half and closed the year in double digit positive territory. On foreign exchange markets the Euro strengthened in 2017 against nearly all major currencies such as U.S. Dollar, British Pound and Japanese Yen fueled amongst other factors by positive economic news as well as announcements from the European Central Bank that they would cautiously start reducing their expansionary monetary measures. Most notably the U.S. Dollar significantly weakened against the EURO by 14% due partially to political factors related to the new US administration as well as market doubts surrounding potential interest rate increases in the US.


The British Pound depreciated by 4% versus Euro and continued to be influenced to a large degree by uncertainties with regard to the BREXIT process. Regarding interest rates, the short term interest rates in Europe remained in negative territory at record lows with limited volatility in 2017. Long term interest rates continued to remain at low levels however experiencing a slight upward trend towards the end of the year also as a result of expectations that the ECB could potentially start exiting from its expansionary monetary policy. Credit spreads in 2017 tightened for Euro Investment Grade across all rating bands. Looking at different sectors, the Utility sector also experienced a decrease in credit spreads, with the tightening being one of the strongest of all sectors. As to issuance volumes, the Euro Corporate Bond market issuance volumes again slightly increased by 5% compared to 2016 high record levels, however with considerably reduced deal sizes. Business review As E.ON International Finance B.V. did not receive any new liquidity request from E.ON Group entities no new notes were issued into the debt capital markets during 2017. The total amounts of bonds outstanding however did change compared to year-end 2016 by scheduled maturities and the resulting repayments of € 2.7 billion. In addition to these repayments, the foreign exchange effects of € 0.5 billion on the Non-Euro denominated bonds resulted in a further decrease of the Euro amount of bonds outstanding. The total amount of notes outstanding as of December 31, 2017 decreased to € 8.7 billion compared to € 11.9 billion of bonds outstanding at year-end 2016. Apart from the above mentioned foreign exchange effects on the Euro value of Non-Euro denominated bonds, the market developments only had a limited impact on E.ON International Finance B.V.’s bond business. In line with the overall market developments E.ON spreads tightened during 2017 proving the stable confidence of investors in the E.ON credit. In December 2017 E.ON International Finance B.V. agreed with its main borrower and shareholder E.ON SE that the borrower could sell its Euro liabilities to another E.ON group entity. As E.ON SE acts in this new borrower as general partner it will remain liable for these obligations and therefore no change in credit risk materializes. Due to this change of borrower the classification of the respective loans has changed to Loans to group entities. The change did not have any impact on the profits and losses of E.ON International Finance B.V. The liquidity position of E.ON International Finance B.V. amounted to € 224.3 million at year-end 2017 compared to € 32 million at December 31, 2016. The increase is due to proceeds from scheduled loan repayments being higher then corresponding bond repayments. As a result of the above, the total asset base decreased from € 12.7 billion at year-end 2016 to € 9.4 billion as of December 31, 2017. Furthermore, E.ON International Finance B.V. in 2017 generated a Net Loss of € 4.0 million compared to a Net Profit of € 275.4 million in 2016. The main reason for this significant decrease was the non-recurrence of the one-time gain on the sale of the 700 million British Pound denominated loan in 2016. Besides this, also the reduced on-lending of long term bonds due to the repayment of maturing loans and bonds slightly reduced the ongoing business results if compared to the previous year. Except for the US Dollar benchmark bonds issued in 2008, all other bonds outstanding are issued under Debt Issuance Programmes which usually have been renewed in the respective years of issuance of the respective instruments. In 2017 E.ON International Finance B.V. did not participate in the renewal of the E.ON Debt Issuance Programme. In 2017 E.ON International Finance B.V. also continued to be a party under the € 3.5 billion Syndicated Dual Currency Revolving Credit Facility Agreement dated November, 2013. In November 2017 this facility was cancelled. As of December 31, 2017, E.ON International Finance B.V. had no facility and hence no borrowings outstanding (2016: 0). E.ON International Finance B.V. decided to not participate in a new facility as such liquidity backup was no longer needed because of the ending of the former treasury business.


Moreover, also during 2017 E.ON International Finance B.V. decided to end its participation in the € 10 billion Multi-Currency Commercial Paper Programme, again as also this liquidity source was no longer needed because of the ending of the former treasury business. With the update in July 2017 in which E.ON International Finance B.V. did not participate, its ability to issue under this programme ended. As of December 31, 2017, E.ON International Finance B.V. had no facility and hence no borrowings outstanding (2016: 0). The creditworthiness of E.ON has been assessed by Standard & Poor’s (“S&P”) and Moody’s with long-term ratings of BBB and Baa2, respectively. In March 2017 both S&P and Moody’s downgraded E.ON’s rating from BBB+ and Baa1 with a negative outlook, respectively. The outlook of both ratings is now stable. The new ratings reflect both agencies’ anticipation that in the near to medium term E.ON will be able to maintain a leverage ratio as required for these ratings. E.ON’s short-term ratings have been unchanged with A-2 (S&P) and P-2 (Moody’s). As all bonds issued are guaranteed by E.ON SE, the ratings continue to be a significant support of such outstanding instruments of E.ON International Finance B.V. Financial information Financial performance E.ON International Finance B.V. closed the financial year 2017 with a loss from ordinary activities before taxes of € 4.5 million compared to a profit of € 367.1 million in 2016. This significant decrease is due to the non-recurrence of the one-time gain on the sale of the 700 million British Pound denominated loan in 2016. At the balance sheet date 2017 E.ON International Finance B.V. showed a continued strong solvency which is underlined by an again improved proportion of Shareholders’ equity to the again declined amount of Total Assets. Also the liquidity situation of E.ON International Finance B.V. remained strong given the significantly increased amount of Cash shown in the Total Assets. Risk Management 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.

Cash flows and financing needs E.ON International Finance B.V.’s financing needs are directly related to funding requests of other E.ON Group companies. Financial instruments

Financial risk factors 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. E.ON International Finance B.V.’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on E.ON International Finance B.V.’s financial performance.

Market risk Market risk is defined as the risk of a loss due to a negative change of market prices. Due to the international nature of its business activities, E.ON International Finance B.V. is exposed to exchange risks related to income, expenses, receivables and liabilities denominated in foreign currencies. E.ON International Finance B.V.’s exposure results mainly from transactions in U.S. Dollars and British Pounds.


According to the risk management policy set up by management, E.ON International Finance B.V. is required to hedge its foreign exchange rate risk. To minimize its foreign exchange risk arising from future transactions and recognized assets and liabilities E.ON International Finance B.V. uses cross-currency swaps, or cash deposits in foreign currencies, both transacted with E.ON SE. E.ON International Finance B.V.’s interest rate risk arises from assets and liabilities having either a different interest rate base (fixed vs. variable) or different tenures (short term vs. long term). Bonds and loans issued at variable rates expose E.ON International Finance B.V. to cash flow interest rate risk. Bonds and loans issued at fixed rates expose E.ON International Finance B.V. to fair value interest rate risk. E.ON International Finance B.V.’s policy is to mitigate the interest rate risk using interest or cross currency interest swaps, transacted with E.ON SE or interest rate matching transactions wherever economically viable. However, depending on the transaction as well as on its individual market assessment E.ON International Finance B.V. may also be prepared to accept interest rate risks. Any such remaining interest rate risks are monitored closely and steered actively. Credit risk Credit risk is the risk of loss due to a counterparty’s non-payment of a loan or other receivable. Following the purpose of E.ON International Finance B.V., its main counterparties for loans and receivables are all related parties and hence members of the E.ON Group.

Liquidity risk Liquidity risk is the risk that liabilities cannot be met when they fall due. Also a substantial and / or a simultaneous withdrawal of deposits fall into such risks in case they exist. E.ON International Finance B.V. addresses such risk by matching the cash flows resulting from assets and liabilities wherever economically sensible and possible. Additionally E.ON International Finance B.V. maintains a significant cash balance to sufficiently cover any non-matching open liquidity position. Prospects Also in 2018 E.ON International Finance B.V. will continue to act as significant liquidity provider for E.ON Group entities. As such E.ON International Finance B.V. expects to continue the long-term on-lending of the currently outstanding bonds, assuming however reducing volumes due to scheduled repayments and maturities of these instruments. The short term treasury business of E.ON International Finance B.V. – which ended in 2015 – is not assumed to come back due to the continued lack of short term cash deposits from E.ON group entities. Moreover as a consequence of the sale of the 700 million British Pound denominated loan in 2016, the interest income generated from the in 2016 newly granted British Pound denominated long term loans will remain lower than the interest expense under the corresponding British Pound long term bond. This mismatch will result in British Pound denominated losses for the remaining tenure of these instruments. All together E.ON International Finance B.V. is expecting for 2018 again a Net Loss as the income from the reducing long-term lending may not be sufficient to cover the British Pound denominated interest losses which ultimately depends of the development of the Euro – British Pound exchange rate. The liquidity position of E.ON International Finance B.V. is expected to remain positive based on the anticipated scheduled repayments.


Statement from the Board of Management The Board of Management state that to the best of their knowledge, the financial statements of 2017 are 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 and 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 the 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, as required pursuant to section 5:25d(8)/(9) of the Dutch Financial Markets Supervision Act ('Wet op het financieel toezicht"). Amsterdam, March 23, 2018 E.ON International Finance B.V. Board of Management Mr. J. Otto Mrs. M. Springintveld Mr. J.Groesbeek


Balance Sheet as at 31 December 2017 (before profit appropriation)

Dec 31, 2017 Dec 31, 2016

€ in thousands Note Financial fixed assets Loans to shareholder 3 3,800,826 8,152,754 Loans to group entities 4 3,481,370 1,336,432 7,282,196 9,489,186 Current assets Amounts due from shareholder 5 1,848,375 2,035,373 Amounts due from group entities 6 90,488 1,156,767 1,938,863 3,192,140 Cash 7 224,335 32,218 Total assets 9,445,394 12,713,544 Shareholders’ equity

Issued share capital 200 200 Share premium reserve 36,992 36,992 Other reserves 531,189 255,832 Undistributed (loss)/profit (3,990) 275,357 8 564,391 568,381 Provisions Provision for loss making contracts 9 0 5,328 Provision for deferred taxes 10 0 35 0 5,363 Borrowings Bonds 11 6,944,579 9,176,485 Current liabilities Amounts due to shareholder 12 13,809 16,282 Amounts due to group entities 13 58 589 Amounts due to others 14 1,922,557 2,946,444 1,936,424 2,963,315 Total equity and liabilities 9,445,394 12,713,544


Income Statement for the year ended 31 December 2017

Year ended December 31 € in thousands Note 2017 2016 Interest and similar income 17 663,752 1,108,606 Exchange rate difference gains 497,173 650,768 Financial income 1,160,925 1,759,374 Interest and similar expenses 18 (667,515) (740,726) Exchange rate difference losses (497,500) (651,024) Financial expenses (1,165,015) (1,391,750) Total financial (loss)/profit (4,090) 367,624 Operating expenses 19 (391) (494) Total operating expenses (391) (494) (Loss)/profit on ordinary activities before corporate income tax

(4,481) 367,130

Corporate income taxes 21 491 (91,773) Net (loss)/profit (3,990) 275,357


Cash Flow Statement for the year ended 31 December 2017

Year ended December 31

€ in thousands Note 2017 2016 Interest paid (727,740) (796,084) Interest received 697,634 1,174,508 Expenses paid (471) (576) Income tax received - - Income tax paid - (109,748)

Cash flows (used in)/generated from operating activities

(30,577) 268,100

Loans granted to related parties - (1,313,879) Loan repayments received from related parties 2,891,847 2,118,552

Cash flows generated from investing activities 2,891,847 804,673 Proceeds from borrowings - - Repayments of borrowings (2,669,153) (1,238,215)

Cash flows from financing activities (2,669,153) (1,238,215)

Net increase/(decrease) in cash 192,117 (165,442) - Cash at beginning of the year 32,218 197,660

Cash at end of the year 7 224,335 32,218


Notes (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 and office in Kabelweg 37 in 1014 BA 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. 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 March 23, 2018. (2) Summary of significant accounting policies Basis of preparation 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. Unless stated otherwise in the principles set forth below, assets and liabilities are stated at the amounts at which they were acquired or incurred. Profit is determined on the basis of historical cost. The Balance Sheet, the Income Statement and the Cash flow Statement include references to the notes. Comparison with prior year The basis used for the valuation and result definition has remained unchanged with respect to the previous year. 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 relation to its activities, E.ON International Finance B.V. has several transactions with both its shareholder E.ON SE, E.ON Group companies and non-consolidated E.ON companies. The interest which E.ON International Finance B.V. charges to related parties is based on market rates and includes a borrower specific credit margin. All bonds issued by E.ON International Finance B.V. under a Debt Issuance Programme as well as under stand-alone documentations are guaranteed by E.ON SE. In return, E.ON International Finance B.V. pays a market based guarantee fee to E.ON SE. E.ON International Finance B.V. conducts derivative transactions as hedging instruments. To that extent E.ON International Finance B.V. uses interest rate swaps and cross-currency swaps. Such transactions are exclusively concluded with E.ON SE as counterparty. The assets and liabilities with related parties comprise: loans, interest and guarantee fee on such loans; interest on concluded swaps; intra-group financings, interest and guarantee fee on such intra-group financing.


The interest and similar income mainly comprises: the interest on loans issued to related parties; amortization of the corresponding discounts on these loans; interest on swaps concluded with E.ON SE and the interest on the intra-group financings to related parties. The interest and similar expenses are mainly paid to third parties, with the exception of the interest on swaps concluded with E.ON SE, the interest on deposits or loans from related parties, both used for intra-group financing to related parties and the guarantee fee. All personnel of E.ON International Finance B.V. is either seconded from other E.ON Group companies or engaged from external service providers. Starting July 2016 E.ON International Finance B.V. entered into a new fiscal unity with E.ON First Future Energy Holdings B.V. again applying art. 15 of the Dutch Wet op de vennootschapsbelasting 1969. Within the Balance Sheet and the Income Statement the transactions with related parties are broken down into transactions with the shareholder, transactions with E.ON Group companies and transactions with associated companies. 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 period indicated:

Dec 31, 2017

Dec 31, 2016

ISO code British Pound EUR/GBP 0.89 0.86 U.S. Dollar EUR/USD 1.20 1.05 Japanese Yen EUR/JPY 135.01 123.40 Norwegian Krone EUR/NOK 9.84 9.09 Hong Kong Dollar EUR/HKD 9.37 8.18


Financial assets Currently all non-derivative financial assets of E.ON International Finance B.V. are classified in the category loans and receivables. They are included in non-current assets, except for maturities less than 12 months after the balance sheet date. These are classified as current assets. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are initially recognized at fair value plus transaction costs. Loans and receivables are subsequently stated at amortized cost. The premiums, discounts and transaction costs are depreciated on the straight-line method (on the basis of historical costs), based on the lifecycle of each of the items involved. This method of calculation does not lead to material differences in comparison with the calculation based on the effective interest method. Current assets Current assets are carried at the fair value of the consideration, usually amortized costs. Any difference to the nominal value is due to any premium or discount and any transaction costs associated to such assets. Unless stated otherwise, the maturity is less than one year. Prepaid expenses are recognized if the period in which expenses are paid differs to the period to which they are attributable. Cash Cash and cash equivalents are stated at face value. Cash and cash equivalents include all highly liquid financial instruments with original maturities of three months or less. This includes bank balances and the inhouse banking accounts with E.ON SE. Bank overdrafts are shown within borrowings in current liabilities on the Balance Sheet. Provisions Provisions are recognized for legally enforceable or constructive obligations existing at the balance sheet date, the settlement of which is probable to require an outflow of resources whose extent can be reliably estimated. Provisions are measured on the basis of the best estimate of the amounts required to settle the obligations at the balance sheet date. Unless indicated otherwise, provisions are stated at the present value of the expenditure expected to be required to settle the obligations. Provisions for loss making contracts are established for contracts in which a loss is anticipated. The provision is created to level interest rate differences between refinanced loans compared to new loans over the remaining live of the refinancing. These provisions are included at face value and released on a pro rata basis. Provisions for deferred taxes are recognized in respect of timing differences between valuation of assets and liabilities according to fiscal provisions and the valuation principles as used in these annual accounts. Deferred taxes are determined using the applicable tax rates as at year-end or future applicable rates and laws that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled. Borrowings Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost. Any difference to the nominal value is due to any premium or discount and any transaction costs associated to such liabilities. Any difference between the proceeds (net of transaction costs) and the redemption value are taken into the Income Statement on the straight-line method (on the basis of historical costs), based on the lifecycle of each of the items involved. This method of calculation does not lead to material differences in comparison with the calculation based on the effective interest method. Borrowings are classified as non-current liabilities unless their maturity is less than 12 months after the balance sheet date. These are classified as current liabilities.


Current liabilities Liabilities are carried at the fair value of the consideration, usually amortized costs, Any difference to the nominal value is due to any premium or discount and any transaction costs associated to such liabilities. Unless stated otherwise, the maturity is less than one year. Interest paid and received Interest paid and received is recognized on a time-weighted basis, taking account of the effective interest rate of the assets and liabilities concerned. When recognizing interest paid, allowance is made for transaction costs on loans received as part of the calculation of effective interest. Current income tax The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted on the balance sheet date. Income tax is calculated on the profit/loss before tax in the income statement, taking into account i.a. tax-exempt items, and non-deductible expenses. Account is also taken of changes in deferred income tax assets and liabilities owing to changes in the applicable tax rates. Financial instruments E.ON International Finance B.V. conducts derivative transactions as hedging instruments. To that extent E.ON International Finance B.V. uses interest rate swaps and cross-currency swaps. These are concluded with E.ON SE as counterparty. The foreign currency elements on the cross-currency swaps are translated into Euro at the rates of exchange prevailing on the balance sheet date. Resulting net gains or losses from translation of foreign currencies on the cross-currency swaps are immediately taken to the Income Statement. E.ON International Finance B.V. applies cost price hedge accounting mainly on all of its derivative financial instruments. E.ON International Finance B.V. uses interest rate swaps to hedge the interest risk on bonds and cross currency swaps for its currency risk on bonds and intra-group financing. The results of the hedging instrument are recorded as profit or loss at the same moment as the hedged item. E.ON International Finance B.V. documents at the inception of the transaction the relationship between hedging instruments and hedged items. E.ON International Finance B.V. also tests its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. Cost price hedge In applying cost price hedge accounting, the initial recognition of, and the accounting policies for, the hedging instrument are dependent on the hedged item, which has the following implications: if the hedged item is recognized at cost in the Balance Sheet, the derivate instrument is also

stated at cost; as long as the hedged item is not yet recognized in the Balance Sheet, the hedging instrument

is not re-measured. This applies, for instance, to hedging currency risks on future transactions; if the hedged item qualifies as a monetary item denominated in a foreign currency, the

derivative instrument, where it has currency elements, is also stated at the spot rate prevailing on the balance sheet date. Resulting net gains or losses from translation of foreign currencies on the cross-currency swaps are immediately taken to the Income Statement. If the derivate instrument has currency elements, the difference between the spot rate on the date the derivate instrument is contracted and the forward rate at which it will be settled is spread over the maturity of the derivative instrument;

any ineffective portion of a hedge relation is recognized directly in profit or loss.


The gain or loss relating to the ineffective portion is recognized in the Income Statement within financial income or financial expenses. The Company shall discontinue prospectively the cost price hedge accounting if the hedging instrument expires or is sold, terminated or exercised; or if the hedge no longer meets the criteria for hedge accounting. Recognition of income The result represents the difference between the value of the consideration rendered and the costs and other charges for the year. The results on transactions are recognized in the year they are realized. Losses are taken as soon as they are foreseeable. Costs are recognized on the historical cost convention and are allocated to the reporting year to which they relate. Interest income and expenses are recognized on a time-proportion basis using the effective interest method. 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. Financial risk factors 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. E.ON International Finance B.V.’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on E.ON International Finance B.V.’s financial performance.

Market risk Market risk is defined as the risk of a loss due to a negative change of market prices. Due to the international nature of its business activities, E.ON International Finance B.V. is exposed to exchange risks related to income, expenses, receivables and liabilities denominated in foreign currencies. E.ON International Finance B.V.’s exposure results mainly from transactions in U.S. dollars and British Pounds. According to the risk management policy set up by management, E.ON International Finance B.V. is required to hedge its foreign exchange rate risk. To minimize its foreign exchange risk arising from future transactions and recognized assets and liabilities E.ON International Finance B.V. uses cross-currency swaps, or cash deposits in foreign currencies, both transacted with E.ON SE. E.ON International Finance B.V.’s interest rate risk arises from assets and liabilities having either a different interest rate base (fixed vs. variable) or different tenures (short term vs. long term). Bonds and loans issued at variable rates expose E.ON International Finance B.V. to cash flow interest rate risk. Bonds and loans issued at fixed rates expose E.ON International Finance B.V. to fair value interest rate risk. E.ON International Finance B.V.’s policy is to mitigate the interest rate risk using interest or cross currency interest swaps, transacted with E.ON SE or interest rate matching transactions wherever economically viable. However, depending on the transaction as well as on its individual market assessment E.ON International Finance B.V. may also be prepared to accept interest rate risks. Any such remaining interest rate risks are monitored closely and steered actively.

Credit risk Credit risk is the risk of loss due to a counterparty’s non-payment of a loan or other receivable. Following the purpose of E.ON International Finance B.V., its main counterparties for loans and receivables are all related parties and hence members of the E.ON Group.


Liquidity risk Liquidity risk is the risk that liabilities cannot be met when they fall due. Also a substantial and / or a simultaneous withdrawal of deposits fall into such risks in case they exist. E.ON International Finance B.V. addresses such risk by matching the cash flows resulting from assets and liabilities wherever economically sensible and possible. Additionally E.ON International Finance B.V. maintains a significant cash balance to sufficiently cover any non-matching open liquidity position. Fair value estimation E.ON International Finance B.V. tested the financial instruments on impairment. The test did not lead to impairments of any financial instruments. The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. The quoted market price used for financial assets held by E.ON International Finance B.V. is the current bid price. The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. E.ON International Finance B.V. uses a variety of methods and makes assumptions that are based on market conditions existing at each balance sheet date. Quoted market prices or dealer quotes for similar instruments are used for long-term debt. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments. The fair value of interest rate, cross-currency and cross-currency interest rate swaps is calculated as the present value of the estimated future cash flows. (3) Loans to shareholder Movement schedule loans to shareholder € in thousands 2017 2016 At January 1 8,152,754 8,884,443 - Amortization 3,322 3,182 - New loans - 1,313,879 - Transfer to group entity (2,192,036) - - Exchange differences (437,562) (278,659) - Current maturity (1,725,652) (1,770,091) At December 31 3,800,826 8,152,754

During 2017 the loans to shareholders decreased by EUR 2.2 billion which reflects the sale of these loans by E.ON SE to another E.ON group entity to which E.ON International Finance B.V. agreed. In addition, also the reclassification of the scheduled loan maturities into the current maturities together with the negative foreign exchange differences on non-Euro denominated loans resulted in a further decrease of EUR 2.1 billion. The total amount of loans to shareholder decreased significantly compared to 2016. The following table shows a detailed breakdown of the currency split:

Carrying amounts of loans in currencies to shareholder Dec 31, Dec 31, € in thousands 2017 2016 EUR 116,539 4,076,606 GBP 2,914,246 3,007,395 USD 2,495,693 2,838,844 Total loans to shareholder 5,526,478 9,922,845 Reclassification to current assets 1,725,652 1,770,091 Total long term loans in currencies to shareholder 3,800,826 8,152,754


At the end of the reporting period the majority of total loans to shareholder was denominated in British Pound for the first time. The amount of Euro denominated loans decreased significantly due to the sale of these loans by E.ON SE to another E.ON group entity to which E.ON International Finance B.V. agreed. The decrease in the Euro amount of British Pound and U.S. Dollar denominated loans was solely due to the strengthening of the Euro against both currencies, with no change to the nominal amounts of loans granted in each of the currency. In general the currency structure of the loan portfolio to shareholder shifted significantly with Euro loans now being the smallest group and non-Euro denominated loans now representing the majority.

Maturities of loans at nominal value to shareholder Dec 31, Dec 31, € in thousands 2017 2016 6 months or less 1,690,514 - 6-12 months 35,503 1,769,153 1-2 years 757,298 1,932,856 2-3 years - 781,823 3-4 years - 1,400,000 4-5 years - - Over 5 years 3,050,411 4,056,042 Total loans to shareholder 5,533,726 9,939,874 Reclassification to current assets 1,726,017 1,769,153 Total long term loans in maturities to shareholder 3,807,709 8,170,721

The maturity structure of the loan portfolio to shareholder also has changed with now more than half of it having a remaining tenure of more than 5 years. At maturity all loans are repaid at nominal value. The total nominal value of outstanding loans to shareholder amounts to € 5.5 billion. The differences to book values lie in net discounts of € 7.2 million. The amounts of discount and premium on the loans are amortized over the period of the underlying asset on a straight-line basis. The market values of the loans to shareholder per December 31, 2017 is € 7.4 billion (December 31, 2016: € 13.0 billion). The interest rate range on these assets is from 0.21% to 6.658%. (4) Loans to group entities Movement schedule loans to group entities € in thousands 2017 2016 At January 1 1,336,432 3,613,866 - Amortization (92) (92) - Transfer from shareholder 2,192,036 - - Early repayments - (943,653) - Exchange differences (47,006) (223,689) - Current maturity - (1,110,000) At December 31 3,481,370 1,336,432

During 2017 E.ON International Finance B.V. did not issue any new long-term loans to group entities. However, the sale of loans by E.ON SE to another E.ON group entity to which E.ON International Finance B.V. agreed resulted in a corresponding reclassification and in an increase of EUR 2.2 billion of long-term loans to group entities. Such increase was only slightly reduced by the reduction of the Euro value of non-Euro denominated loans due to foreign exchange movements. Moreover, there is no reclassification into the current maturity as none if the loans outstanding is scheduled to be repaid during the next 12 months. In total the amount of loans to group entities significantly increase in 2017. The following table shows a detailed breakdown of the currency split:


Carrying amounts of loans in currencies to group entities Dec 31, Dec 31, € in thousands 2017 2016 EUR 2,192,036 1,110,000 GBP 1,289,334 1,336,432 Total loans to group entities 3,481,370 2,446,432 Reclassification to current assets - 1,110,000 Total long term loans in currencies to group entities 3,481,370 1,336,432

The currency split of loans to group entities was mostly effected by the sale of loans by E.ON SE to another E.ON group entity and the significant increase of Euro denominated loans to group entities. The reduction of the Euro value of British Pound denominated loans was solely caused by the weakening of the British Pound against the Euro. Overall, the structure of the loan portfolio to group entities did change, with Euro denominated loans now representing the majority.

Maturities of loans at nominal value to group entities Dec 31, Dec 31, € in thousands 2017 2016 6 months or less - 1,110,000 6-12 months - - 1-2 years 281,776 - 2-3 years 1,400,000 291,995 3-4 years - - 4-5 years 100,000 - Over 5 years 1,712,887 1,051,181 Total loans to group entities 3,494,663 2,453,176 Reclassification to current assets - 1,110,000 Total long term loans in maturities to group entities 3,494,663 1,343,176

Following the sale of loans by E.ON SE to another E.ON group entity the maturity profile also changed with now half of the total amounts maturing during the next 1-5 years and the other half only after 5 years and longer. The total nominal value of outstanding loans to group entities now amounts to € 3.5 billion which is a significant increase compared to 2016 and which is solely due to the reclassification of loans form shareholder to now being loans to group entities. The differences to book values lie in net discounts of € 13.3 million. The amounts of discount and premium on the loans are amortized over the period of the underlying asset on a straight-line basis. The market values of the loans to group entities per December 31, 2017 is € 4.9 billion (December 31, 2016: € 3.4 billion). The interest rate range on these assets is from 4.97% to 6.65%. (5) Amounts due from shareholder

Specification amounts due from shareholder Dec 31, Dec 31, € in thousands 2017 2016 Current receivable from shareholder 1,711,952 1,770,091 Interest receivable from shareholder 119,989 209,757 Cross-currency swaps 12,176 50,960 Other 4,258 4,565 Total amounts due from shareholder 1,848,375 2,035,373


Current receivables from shareholder This item consists of loans maturing within one year of the balance sheet date. The amount of current receivable from shareholder reflects the scheduled loan maturities for 2018. The current maturity of the loans outstanding includes the discount/premium on these loans until December 31, 2017. Interest receivables from shareholder This item consists of interest receivables on loans as well as interest receivables on interest rate swaps and on cross-currency swaps. The interest receivables account for the amount of accrued interest. The reduction in the interest receivables from shareholder is mainly due to the sale of loans by E.ON SE to another E.ON group entity to which E.ON International Finance B.V. agreed and the resulting reduction of interest receivables from shareholder. Besides, a part of the interest receivables on swaps is also attributable to transactions which E.ON International Finance B.V. entered into in past years and which it continued in 2017. Cross-currency swaps The foreign currency element on the cross-currency swaps is translated into Euro at the exchange rates prevailing at balance sheet date. Resulting net gains or losses from translation of foreign currencies on the cross-currency swaps are immediately taken to the Income Statement. Total exchange rate differences from cross-currency swaps decreased to € 12.2 million which is due to the strengthening of the Euro against these currencies. (6) Amounts due from group entities

Specification amounts due from group entities Dec 31, Dec 31, € in thousands 2017 2016 Current receivable from group entities - 1,110,000 Interest receivable from group entities 90,488 46,767 Total amounts due from group entities 90,488 1,156,767

Current receivables from group entities This item consists of loans maturing within one year of the balance sheet date. Interest receivables from group entities Interest receivables refers to interest on loans outstanding and accounts for the amount of accrued interest. Compared to 2016 the increased amount is mainly a consequence of the reclassification of loans form shareholder to now being loans to group entities. (7) Cash

Specification of cash Dec 31, Dec 31, € in thousands 2017 2016 Cash and cash equivalents - 1 Inhouse banking account at shareholder 224,335 32,217 Cash 224,335 32,218

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 total cash is at free disposal of E.ON International Finance B.V. and is mostly denominated in Euro. The increase reflects the higher liquidity reserve held by E.ON International Finance B.V. at year end.


(8) Shareholders’ equity The total authorized number of ordinary shares is 9,000 (2016: 9,000) with a par value of € 100 per share. The number of issued shares is 2,000 (2016: 2,000). All issued shares are fully paid in. The share premium results exclusively from additional paid in capital.

Movement schedule equity Issued capital

Share premium

reserve

Other reserves

Undistributed profit

Total

€ in thousands At January 1, 2017 200 36,992 255,832 275,357 568,381 Appropriation of undistributed profit - - 275,357 (275,357) - Loss for the year ended Dec 31, 2017 - - - (3,990) (3,990) At December 31, 2017 200 36,992 531,189 (3,990) 564,391

Total equity of E.ON International B.V. decreased to € 564.4 million due to a Net Loss of € 4.0 million from 2017. It is proposed that the Net Loss for 2017 of € 4.0 million will be deducted from the “Other reserves”. (9) Provision for loss making contracts Based on the strict direct relationship of the nominal value, currency, interest and maturity date the € 0.9 billion bond issued in 2002 has become a loss making contract at the moment the receivable loan from E.ON SE had been early repaid as the market interest rate (at that moment) for the new loan to E.ON UK Holding Co. Ltd. was lower than the interest rate on the bond. A provision is created to level these interest differences over the years. The provision is calculated on the nominal amount of the repaid loans and exclusive of the percentage for risk/costs and guarantee fee. The release is based on the term of the loan. The provision has expired completely in 2017. Movement schedule provision for loss making contracts € in thousands 2017 2016 At January 1 5,328 21,084 - Addition interest 241 952 - Release (5,569) (16,708) At December 31 - 5,328

The release of the provision is included in interest and similar income and the interest addition is included in interest and similar expenses. (10) Provision for deferred taxes Due to different treatment on the tax balance sheet compared to the valuation in these financial statements, a provision for deferred tax liabilities has been taken into account. Movement schedule provision deferred taxes € in thousands 2017 2016 At January 1 35 122 - Realization temporary differences to income statement (35) (87) At December 31 - 35


Provisions for deferred taxes was released completely as a result of the final realization of all temporary differences to the income statement.

Specification current / non- current Dec 31, Dec 31, € in thousands 2017 2016 - current - 35 - non-current - - Total deferred tax - 35

(11) Bonds Movement schedule bonds € in thousands 2017 2016 At January 1 9,176,485 12,397,411 - Amortization 4,838 3,886 - Exchange differences (525,024) (554,939) - Current maturity (1,711,720) (2,669,873) At December 31 6,944,579 9,176,485

In 2017 E.ON International Finance B.V. did not issue any new bonds. The reduction in the amount of bonds outstanding results from the amounts of bonds maturing within one year which have been reclassified as current maturity. Moreover, the strengthening of the Euro against the British Pound, the U.S. Dollar and the Japanese Yen resulted in a decrease in the Euro value of such non-Euro denominated bonds. At year-end 2017 the total amount of long term bonds outstanding reduced to € 6.9 billion compared to € 9.2 billion at year-end 2016. The developments are shown in more detail in the following tables. The carrying amounts of the bonds are denominated in the following currencies:

Carrying amounts of bonds in currencies Dec 31, Dec 31, € in thousands 2017 2016 EUR 1,944,462 4,612,421 GBP 3,839,133 3,977,684 USD 2,495,808 2,838,981 JPY 191,390 209,452 Other currencies 185,506 207,820 Total bonds 8,656,299 11,846,358 Reclassification current liabilities 1,711,720 2,669,873 Total long term bonds 6,944,579 9,176,485

In 2017 scheduled bond maturities resulted in a reduction of Euro denominated bonds outstanding. The Euro value of all non-Euro denominated bonds decreased solely due to the weakening of the respective currency against the Euro, with the most notable decrease coming from the U.S. Dollar denominated bonds. The nominal volumes of all non-Euro denominated bonds remained unchanged. For the first time, the majority of bonds continued to be British Pound denominated followed by U.S. Dollar and only thirdly by Euro denominated bonds.


Maturities of bonds at nominal value Dec 31, Dec 31, € in thousands 2017 2016 6 months or less 1,667,639 900,000 6-12 months 44,441 1,769,153 1-2 years 1,034,013 1,945,976 2-3 years 1,400,000 1,074,949 3-4 years - 1,400,000 4-5 years 100,000 - Over 5 years 4,440,512 4,790,425 Total bonds 8,686,605 11,880,503 Reclassification to current liabilities 1,712,081 2,669,153 Total long term bonds 6,974,524 9,211,350

At year end 2017 the maturity profile of E.ON International Finance B.V.’s outstanding bonds continues to be well balanced. More than half of all outstanding bonds have a maturity of five years or longer, with no single maturity representing substantially more than € 1.5 billion. At maturity all bonds are repaid at nominal value. Total nominal value of bonds at year-end 2017 amounts to € 8.7 billion. The differences to book values lie mainly in net discounts of € 30.3 million. The amounts of discount, premium and issue expenses are amortized over the life-time of the underlying liability on a straight-line basis. The weighted average interest rate (after interest derivatives) over all outstanding bonds amounts to 5.9% in 2016 (2016: 5.9%). The market values of the bonds per December 31, 2017 is € 11.3 billion (December 31, 2016: € 15.0 billion). (12) Amounts due to shareholder

Specification amounts due to shareholder Dec 31, Dec 31, € in thousands 2017 2016 Guarantee fees payables 7,922 10,382 Interest payables to shareholder 5,887 5,900 Total amounts due to shareholder 13,809 16,282

Guarantee fee payables All Bonds issued by E.ON International Finance B.V. under the different Debt Issuance Programmes as well as under stand-alone documentations are guaranteed by E.ON SE. The guarantee fee is charged by E.ON SE starting from the date of issuance. The reduction is due to the reduced volume of bonds outstanding. Interest payables to shareholder This item consists of interest payables on loans, interest rate swaps and cross currency swaps. The interest payables account for the amount of accrued interest.


(13) Amounts due to group entities

Specification amounts due to group entities Dec 31, Dec 31, € in thousands 2017 2016 Liability to group entity due to fiscal unity - 456 Others 58 133 Total amounts due to group entities 58 589

Liability to group entity due to fiscal unity In September 2016 E.ON International Finance B.V. requested the entering into a new fiscal unity with E.ON First Future Energy Holding B.V. starting July 2016 again applying art. 15 of the Dutch Wet op de vennootschapsbelasting 1969. E.ON International Finance B.V. can partly offset the Net Loss 2017 with the taxable income as from July 2016, this will lead to a current tax receivable for the company. The remaining losses 2017 can be offset against future positive income. Others This item consists of outstanding operating expenses against group entities. (14) Amounts due to others

Specification amounts due to others Dec 31, Dec 31, € in thousands 2017 2016 Current payables to others 1,711,720 2,669,873 Interest payables to others 210,752 276,528 Others 85 43 Total amounts due to others 1,922,557 2,946,444

Current payables to others This item comprises bonds maturing within one year of the balance sheet date. The current maturity of the bonds outstanding includes the discount or premium on these bonds until December 31, 2017. Interest payables to others Interest payables account for the amount of accrued interest. The reduction is due to the reduced volume of bonds outstanding and to the reduced Euro value of non-Euro denominated interest payables due to the strengthening of the Euro against all other currencies in which E.ON International Finance B.V. has bonds outstanding. (15) 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 derivatives Dec 31, Dec 31, € in thousands 2017 2016 Interest swaps 35,503 35,503 Currency swaps 365,576 365,576 Total amounts due to others 401,079 401,079


The notional amounts of both the interest and currency swaps remained the same in 2017.

Specification fair values derivatives Dec 31, Dec 31, € in thousands 2017 2016 Interest swaps (1,095) (2,939) Currency swaps (44,274) (38,905) Total amounts due to others (45,369) (41,844)

The fair value of derivative instruments is sensitive to movements in the underlying market rates and other relevant variables. E.ON International Finance B.V. assesses and monitors the fair value of derivative instruments on a periodic basis. Fair values for each derivative instrument are determined as being equal to the price at which one party would assume the rights and duties of another party. The fair values of existing instruments to hedge interest risks are determined by discounting future cash flows using market interest rates over the remaining term of the instrument. Discounted cash values are determined for interest rate and cross-currency swaps for each individual transaction as of the balance sheet date. The changes of the market value for both the interest swaps and the currency swaps do reflect the movements of the underlying market rates as of both reporting dates. (16) Credit facility agreements In 2017 E.ON International Finance B.V. also continued to be a party under the € 3.5 billion Syndicated Dual Currency Revolving Credit Facility Agreement dated November, 2013. In November 2017 this facility was cancelled. As of December 31, 2017, E.ON International Finance B.V. had no facility and hence no borrowings outstanding (2016: 0). E.ON International Finance B.V. decided to not participate in a new facility as such liquidity backup was no longer needed because of the ending of the former treasury business. Moreover, also during 2017 E.ON International Finance B.V. decided to end its participation in the € 10 billion Multi-Currency Commercial Paper Programme, again as also this liquidity source was no longer needed because of the ending of the former treasury business. With the update in July 2017 in which E.ON International Finance B.V. did not participated its ability to issue under this programme ended. As of December 31, 2017, E.ON International Finance B.V. had no facility and hence no borrowings outstanding (2016: 0). Except for the US Dollar benchmark bonds issued in 2008, all other bonds outstanding are issued under Debt Issuance Programmes which usually have been renewed in the respective years of issuance of the respective instruments. In 2017 E.ON International Finance B.V. did not participate in the renewal of the E.ON Debt Issuance Programme. Consequently, as of December 31, 2017 E.ON International Finance B.V. did not participate in any facility agreements anymore. (17) Interest and similar income

Specification interest and similar income € in thousands 2017 2016 - interest and similar income from shareholder 512,636 954,179 - interest and similar income from group entities 143,664 135,481 - interest and similar income from others 7,452 18,946 Total interest and similar income 663,752 1,108,606

Interest and similar income from shareholder significantly decreased in 2017. The main reason was the non-recurrence of the 280 million British Pound one-time gain realized on the sale of the 700 million British Pound denominated loan in 2016. Besides this, the ongoing interest income from shareholder reduced because of the reduction in lending volumes to shareholder due to loan


maturities and repayments, but also due to the sale of Euro loans from the shareholder to another E.ON group entity in December 2017. Interest and similar income from group entities increased following increased lending volumes resulting also from the sale of Euro loans from the shareholder to another E.ON group entity in December 2017 Interest and similar income from others includes the release of the provision for loss making contract and the prepayment rebate on corporate income tax which came to an end in 2017 and which explains the reduction compared to 2016. In total, interest and similar income therefore decreased to € 0.7 billion. (18) Interest and similar expenses

Specification interest and similar expenses € in thousands 2017 2016 - interest and similar expenses to shareholder 37,787 44,139 - interest and similar expenses to group entities 481 482 - interest and similar expenses to others 629,247 696,105 Total interest and similar expenses 667,515 740,726

Interest and similar expenses again declined in 2017 mainly as a result of the reduced bond related interest expenses following the repayment of maturing bonds. Accordingly interest expense to others decreased. Interest expense to shareholder decreased due to the reduced Euro values of the non-Euro swap payments caused by the strengthening of the Euro against such currencies, but also due to negative interest rates under the inhouse bank cash deposits. (19) Operating expenses Operating expenses consist mainly of auditor’s fees, consultancy costs and personnel expenses. In 2017 the total operating expenses amounted to € 0.4 million (2016: € 0.5 million). The breakdown of the audit fees at December 31, 2017 is as follows: Specification audit fees € in thousands 2017 2016 Audit of the financial statements 97 129 Other audit services - 15 Total audit fees 97 144

20) Number of employees At the end of 2017 E.ON International Finance B.V. had no employees (2016: 0). All personnel is either seconded from other E.ON Group or engaged from an external service provider.


(21) Corporate income taxes Specification corporate income taxes € in thousands 2017 2016 Current income tax 456 (91,858) Deferred income tax 35 85 Total income tax 491 (91,773)

The effective tax rate in 2017 was 11% (2016: 25%). The effective tax rate is significantly lower than 2016 because only part of the Net Loss can be offset. For further details see note 13. The applicable nominal tax rate in 2017 was 25% (2016: 25%). For further details on deferred taxes see note 10. Amsterdam, March 23, 2018 E.ON International Finance B.V. Board of Management, Mr. J. Otto Mrs. M. Springintveld Mr. J. Groesbeek E.ON International Finance B.V. Supervisory Board Mrs. V. Volpert Mrs. A. Peters Mr. S.W. Hloch


Additional Information Provisions in the Articles of Association Governing Profit Appropriation Article 21(1) of the Articles of Association stipulates that the distributable profit shall be at the free disposal of the Annual General Meeting of Shareholders. Profit Appropriation It is proposed that the Net Loss for 2017 of € 4.0 million will be deducted from the “Other reserves”.

Independent auditor’s report 30

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