E.on International Finance B.V. Semi Annual Report 2012

E.ON International Finance B.V.
Interim Report 2012

1 January 2012 30 June 2012 Rotterdam, the Netherlands
Contents
Company Board and Management Report of the Board of Management Statement from the Board of Management Condensed Interim Financial Statements of E.ON International Finance B.V. Condensed Balance Sheet (before profit appropriation) Condensed Income Statement Condensed Cash flow Statement Notes to the condensed interim financial statements Review report
3 3 5 6 6 7 8 9 14
Board of Management
Report of the Board of Management General information
As of June 30, 2012, the composition of the Board of Management as well as the objectives of E.ON International Finance B.V. are unchanged compared to the financial year ended December 31, 2011. E.ON International Finance B.V. continues to be a wholly owned and fully consolidated subsidiary of E.ON AG, Dsseldorf, Germany.
Internal organisation
The statutory seat and the office of E.ON International Finance B.V. is Capelseweg 400 in Rotterdam. Until March 31, 2012 E.ON International Finance B.V. also operated a second office in Venlo, which has been closed. At June 30, 2012 E.ON International Finance B.V. had no own employees (2011: 0). All personnel is either seconded from other E.ON group companies or employed by E.ON Benelux N.V. under a service level agreement.
Market review
In the first half of 2012 concerns surrounding peripheral European countries continued to be the main driver influencing the international capital markets. This lead to a continuously high degree of volatility with regard to foreign exchange rates, with the Euro again weakening against the US Dollar and the British Pound. Interest rates both long term and short term rates again continued their downward trend in the first half of 2012 reaching new historic lows. Also credit spreads continued their trend towards a strong differentiation amongst European sovereign issuers, with spreads again increasing especially for peripheral countries. Corporate issuers credit spreads in general followed this trend resulting in a strong dependence on their respective country spread in addition to their own industry and company developments. Utility spreads specifically underlined this trend with companies domiciled in peripheral European countries reaching much wider spreads compared to their peers. As to issuance volumes, the Euro Corporate Bond market issuance activity increased significantly compared to the low prior years figures, with corporate investment grade issuance levels as well as utility issuance activities being also well above 2011 levels.
Business review
Also in the first half of 2012 the liquidity situation of the E.ON group continued to be comfortable resulting in no new notes issuance for E.ON International Finance B.V. Instead bonds valuing 0.9 billion matured during the first half of 2012. Slightly offset by the foreign exchange effects due to the weakening of the Euro against the US Dollar and British Pound the total amount of notes outstanding as of June 30, 2012 decreased to 22.3 billion. At year end 2011 E.ON International Finance B.V. had 23.0 billion of bonds outstanding. Apart from the above mentioned foreign exchange effects on the Euro value of Non-Euro denominated bonds, the market developments only had a limited impact on E.ON International Finance B.V.s bond business. Throughout the first half of 2012 E.ON spreads overall remained fairly stable showing the continued confidence of investors in the E.ON credit. In terms of the intra-group financing business, in the first half of 2012 E.ON International Finance B.V. continued taking up intra-group loans or E.ON AG guaranteed short term deposits to fund lending activities to other E.ON group companies. Lending volumes increased during the first quarter 2012 and remained fairly stable thereafter. As of June 30, 2012 loans totalling 3.5 billion were granted on a short term basis, up from a portfolio of 2.1 billion as of year end 2011. Additionally, E.ON International Finance B.V. held liquidity amounting to 0.7 billion as of June 30, 2012. As a result of the above, the total asset base remained stable at 27.4 billion as of June 30, 2012 compared to 27.1 billion at year end 2011. Furthermore, E.ON International Finance B.V.s net profit increased slightly from 10.5 million to 10.7 million. The main reasons were the higher
Board of Management
average lending volumes within the treasury activities during the reporting period which, however, was somewhat offset by a change in the composition within the intra-group short term loan portfolio. During the first half of 2012 no drawings were made on behalf of E.ON International Finance B.V. under both the 6 Billion Syndicated Credit Facility and the 10 Billion Multi Currency Commercial Paper Programme. In April 2012, E.ONs Debt Issuance Programme was again extended for another year. The Debt Issuance Programme enables both E.ON AG and E.ON International Finance B.V. to issue debt to investors in public and private placements. The total programme volume is unchanged at 35 billion.
Financial information Preparation of Financial Statements

The financial statements were prepared in accordance with the statutory provisions of Part 9, Book 2, of the Netherlands Civil Code and the firm pronouncements in the Guidelines for Annual Reporting in the Netherlands as issued by the Dutch Accounting Standards Board. The Interim Report 2012 has followed the same principles of recognizing and measuring as have been used for the preparation of the Financial Report 2011.
Financial performance
E.ON International Finance B.V. closed the first six months of 2012 with a profit from ordinary activities before taxes of approximately 14.3 million, compared to 14.0 million in the first half of 2011.
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 2011. The overall risk management programme of E.ON International Finance B.V. focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on E.ON International Finance B.V.s financial performance. E.ON International Finance B.V. manages its risks with the procedures and systems used within the E.ON group. The Board is of the opinion that these procedures and systems provide an adequate risk management for E.ON International Finance B.V.
Board of Management
Statement from the Board of Management
The Board of Management state that to the best of their knowledge, the condensed interim financial statements of 2012 prepared in accordance with the statutory provisions of Part 9, Book 2, of the Netherlands Civil Code and the firm pronouncements in the Guidelines for Annual Reporting in the Netherlands as issued by the Dutch Accounting Standards Board give a true and fair view of the assets, liabilities, financial position and profit or loss of E.ON International Finance B.V. and that the management report includes a fair review of the development and performance of the business and the position of the E.ON International Finance B.V., together with a description of the principal risks and uncertainties that it faces. Rotterdam, August 27, 2012 Board of Management, E.ON International Finance B.V.
M. Bokelmann Director
J. Trapman Director
J. Otto Director
Condensed Interim Financial Statements

Balance Sheet (before profit appropriation)
Jun 30, 2012 in thousands Financial fixed assets Loans to shareholder Loans to group entities 3 Current assets Amounts due from shareholder Amounts due from group entities Amounts due from tax authorities Note Dec 31, 2011
14,631,409 3,878,088 18,509,497 4,495,540 3,628,733 1,268 8,125,541
16,506,193 3,786,110 20,292,303 3,471,440 2,176,561 5,648,001 1,187,997 27,128,301
Cash Total assets
716,952 27,351,990
Shareholders equity Issued share capital Share premium reserve Other reserves Undistributed profit 5 Provisions Provision for loss making contracts Provision for deferred taxes
200 36,992 152,242 10,711 200,145
200 36,992 130,768 21,474 189,434
70,980 419 71,399 6 18,586,484 109,850 3,261,183 878,151 4,244,778 8,493,962 27,351,990
77,581 462 78,043 20,488,696 71,579 3,190,539 6,985 3,098,078 4,947 6,372,128 27,128,301
Borrowings Bonds Current liabilities Amounts due to shareholder Amounts due to group entities Amounts due to associated companies Amounts due to others Amounts due to tax authorities
Total equity and liabilities

Income Statement
Six months ended June 30, 2012 2011 in thousands Note
Interest and similar income Exchange rate difference gains Financial income Interest and similar expenses Exchange rate difference losses Financial expenses Total financial result Operating expenses Total operating expenses Result of ordinary activities before corporate income tax Corporate income taxes Net Profit
740,551 402,525 1,143,076 (726,205) (402,187) (1,128,392) 14,684 (403) (403) 14,281 (3,570) 10,711
866,234 764,665 1,630,899 (850,602) (765,399) (1,616,001) 14,898 (901) (901) 13,997 (3,500) 10,497
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Cash flow Statement
Six months ended June 30, 2012 2011 in thousands Interest paid Interest received Expenses paid Income tax paid Cash flows from operating activities Loans granted to related parties Loan repayments received from related parties Cash flows from investing activities (813,361) 849,166 (706) (9,856) 25,243 (5,592,952) 5,045,322 (547,630) 11,696,900 (11,645,558) 51,342 (471,045) 1,187,997 716,952 (987,329) 1,033,657 (801) (5,932) 39,595 (14,152,877) 14,612,787 459,910 12,420,839 (12,246,597) 174,242 673,747 71,297 745,044
Proceeds from borrowings Repayments of borrowings Cash flows from financing activities Net increase (decrease) in cash Cash at January 1 Cash at June 30
Other Information
Notes to the Condensed Interim Financial Statements (1) General information
The activities of E.ON International Finance B.V. mainly comprise the financing of E.ON group companies. E.ON International Finance B.V., a corporation with limited liability, having its statutory seat in Rotterdam, the Netherlands, considers E.ON AG, Dsseldorf, 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 AG, Germany. Copies of the consolidated financial statements of E.ON AG can be obtained from E.ON AG in Dsseldorf. The statutory seat and the office of E.ON International Finance B.V. is Capelseweg 400 in Rotterdam. Until March 31, 2012 E.ON International Finance B.V. also operated a second office in Venlo, which has been closed. These financial statements were authorized for issue by the Board of Management on August 27, 2012.
(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. 2011 Annual Report, which has been prepared in accordance with the statutory provisions of Part 9, Book 2, of the Netherlands Civil Code and the firm pronouncements in the Guidelines for Annual Reporting in the Netherlands as issued by the Dutch Accounting Standards Board. The principles applied in preparing the Condensed Interim Financial Statement of E.ON International Finance B.V. are similar to those applied in the E.ON International Finance B.V. 2011 Annual Report.
Comparison with prior period

The basis used for the valuation and result definition has remained unchanged with respect to the year-end 2011.
Cash flow Statement

The Cash flow Statement was prepared according to the direct method. The funds included in the Cash flow Statement consist of cash at banks and the inhouse banking account with E.ON AG. Cash flows in foreign currencies have been translated at the exchange rates existing on the day of settlement.
Related parties
In conducting its activities, E.ON International Finance B.V. has several transactions with its shareholder E.ON AG, E.ON group companies and non-consolidated E.ON companies. The types and the content of the transactions with related parties remain unchanged compared to the E.ON International Finance B.V. 2011 Annual Report.
Foreign currency translation

The functional currency as well as the reporting currency of E.ON International Finance B.V, is the Euro (). The financial statements are presented in Euro.

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, 2012 ISO code British Pound U.S. Dollar Swiss Franc Japanese Yen Swedish Krona Czech Koruna Norwegian Krone Hong Kong Dollar EUR/GBP EUR/USD EUR/CHF EUR/JPY EUR/SEK EUR/CZK EUR/NOK EUR/HKD 0.81 1.26 1.20 100.13 8.77 25.64 7.53 9.77 0.84 1.29 1.22 100.20 8.91 25.79 7.75 10.05 0.90 1.45 1.21 116.25 9.17 24.35 7.79 11.25 Dec 31, 2011 Jun 30, 2011
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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 Annual Report 2011.
(3) Financial fixed assets

Movement schedule financial fixed assets Jun 30, 2012 Total Loans to Total Loans Total Shareholder to Group Financial Entities Fixed assets in thousands At January 1, 2012 - New loans - Amortization - Exchange differences - Current maturity At June 30, 2012 16,506,193 5,691 133,032 (2,013,507) 14,631,409 3,786,110 334 91,644 3,878,088 20,292,303 6,025 224,676 (2,013,507) 18,509,497
During the first six months of 2012, E.ON International Finance B.V. did not issue any new longterm loans. Instead, the total amount of loans outstanding decreased by 0.6 billion, with 0.9 billion scheduled maturities being slightly compensated by an increase of the Euro amounts of Non-Euro denominated loans because of the weakening of the Euro. The following table shows a detailed breakdown of these developments:

Carrying amounts of loans in currencies to shareholder in thousands EUR GBP USD Other Total loans to shareholder Reclassification to current assets Total long term loans in currencies to shareholder Jun 30 2012 13,691,660 1,946,380 2,369,279 207,616 18,214,935 3,583,526 14,631,409 Dec 31 2011 13,951,753 2,477,815 2,304,298 203,797 18,937,663 2,431,470 16,506,193
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Despite the repayment of two Euro denominated loans the vast majority of loans outstanding at the end of the reporting period continue to be denominated in Euro. In general, the amount of NonEuro denominated loans increased slightly due to the weakening of the Euro; however, the structure of the loan portfolio has not shifted significantly, although the amount of GBP denominated loans decreased due to a scheduled loan maturity being repaid.
Carrying amounts of loans in currencies to group entities in thousands EUR GBP Other Total loans to group entities Reclassification to current assets Total long term loans in currencies to group entities Jun 30 2012 1,194,220 2,584,399 99,469 3,878,088 3,878,088 Dec 31 2011 1,194,213 2,495,272 96,625 3,786,110 3,786,110
The currency split of loans to group entities is roughly unchanged compared to year end with most of the loans being denominated in British Pounds and Euro. The general weakening of the Euro resulted in a slight increase of the Non-Euro denominated loan amounts; however, the overall structure of the loan portfolio remained unchanged.
(4) Cash
Specification of Cash in thousands Cash and cash equivalents Inhouse banking account at shareholder Cash Jun 30 2012 24 716,928 716,952 Dec 31 2011 40 1,187,957 1,187,997
Total cash mainly includes the inhouse banking account at E.ON AG. Having such an inhouse banking account at E.ON AG is common practice within the E.ON group. The decrease in volume is a result of the higher amount of short term intragroup loans outstanding. The total cash is at free disposal of E.ON International Finance B.V. and is to a large degree denominated in Euro.

(5) Shareholders equity
The total authorized number of ordinary shares is 9,000 (2011: 9,000) with a par value of 100 per share. The number of issued shares is 2,000 (2011: 2,000). All issued shares are fully paid in. The share premium results exclusively from additional paid in capital.
Movement schedule equity Issued capital Share premium reserve Other reserves Undistributed profit Total
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in thousands At January 1, 2011 Appropriation of undistributed profit Profit for the year ended Dec 31, 2011 At December 31, 2011 Appropriation of undistributed profit Profit for the half-year ended June 30, 2012 At June 30, 2012 200 200 200 36,992 36,992 36,992 98,238 32,530 130,768 21,474 152,242 32,530 (32,530) 21,474 21,474 (21,474) 10,711 10,711 167,960 21,474 189,434 10,711 200,145
Total equity of E.ON International B.V. increased to 200,145 million due to the Net Profit of 11 million achieved in the first six months of 2012.
(6) Bonds
Movement schedule bonds
in thousands At January 1 - New bonds - Amortization - Bond buyback transaction - Exchange differences - Current maturity At Balance sheet date Jun 30 2012 20,488,696 5,179 239,660 (2,147,051) 18,586,484 Dec 31 2011 24,448,183 14,681 (1,808,518) 325,077 (2,490,727) 20,488,696
In the first six months of 2012 no new bonds were issued due to the continuously comfortable liquidity situation of the E.ON group. In line with that scheduled bond maturities of 0.9 billion reduced the amount of bonds outstanding, slightly offset by the general weakening of the Euro, resulting in a total reduction of the value of bonds outstanding by 0.6 billion. The carrying amounts of the bonds are denominated in the following currencies: Carrying amounts of bonds in currencies
in thousands EUR GBP USD CHF JPY Other currencies Total bonds Reclassification current liabilities Total long term bonds Jun 30 2012 13,155,739 4,525,795 2,369,512 1,287,711 752,436 253,068 22,344,261 3,757,777 18,586,484 Dec 31 2011 13,201,763 4,968,385 2,536,399 1,274,065 751,847 246,964 22,979,423 2,490,727 20,488,696

At the end of the reporting period E.ON International Finance B.V.s outstanding bonds continue to be mainly denominated in Euro, followed by British Pounds, US Dollar and Swiss Francs. The change in Euro denominated bonds outstanding is due to the scheduled maturity and repayment of one Euro bond. For the amount of Non-Euro denominated bonds, the reduction due to the scheduled maturity and the repayment of one GBP and one USD denominated bond was slightly offset by the increased Euro values of the remaining bonds due to the weakening of the Euro. The market value of bonds per June 30, 2012 is 27,1 billion (December 31, 2011: 27,4 billion).
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(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 in thousands Jun 30 2012 35,503 3,836,891 3,872,394 Dec 31 2011 35,503 2,889,163 2,924,666
Interest swaps Currency swaps

Total amounts due to others
The increase in currency swaps is mainly a result of increased hedges within the treasury activity of E.ON International Finance B.V. However, maturing bond and long term loan related hedges reduced the effect somewhat.
Specification fair values financial instruments in thousands Jun 30 2012 (7,470) 386,220 378,750 Dec 31 2011 (6,710) 457,632 450,922
Interest swaps Currency swaps

Total amounts due to others
The fair value amount of currency swaps decreased due to the maturity of bond and long term loan related hedges. As the new treasury related hedges are generally of a short term nature, such fair value changes are usually smaller, despite the nominal amounts being bigger. Moreover, also the weakening of the Euro contributed to the reduction of the fair value amounts of the currency swaps contracted.
(8) Credit facility agreements

As of June 30, 2012 the following facilities are available: 35 Billion Debt Issuance Programme 10 Billion Multi Currency Commercial Paper Programme 6 Billion Dual Currency Syndicated Credit Facility Agreement
In April 2012 the 35 Billion Debt Issuance Programme was updated and extended for another year. The Debt Issuance Programme enables both E.ON AG and E.ON International Finance B.V. to issue debt to investors in public and private placements. The total programme volume is unchanged at 35 billion. The terms and conditions of the other two facilities are unchanged compared to year-end 2011.

(9) Interest and similar income
Specification interest and similar income in thousands - interest and similar income from shareholder - interest and similar income from group entities - interest and similar income from others Total interest and similar income Six months ended June 30, 2012 2011 573,712 156,725 10,114 740,551 701,920 154,721 9,593 866,234
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Interest and similar income decreased in the first six months of 2012. This is mainly the result of the reduction in interest income from shareholder corresponding to a reduced lending volume to shareholder due to loan maturities and repayments. Interest and similar income from group entities increased slightly following the increased average lending volume of the treasury operations, but also due to the increase of the Euro values of Non-Euro denominated interest income resulting from the weakening of the Euro. Interest income from others mainly reflects the release of the provision for loss making contracts, which is unchanged.
(10) Interest and similar expenses

Specification interest and similar expenses in thousands - interest expense to shareholder - interest expense to group entities - interest expense to associated companies - interest expense to others Total interest and similar expense Six months ended June 30, 2012 2011 74,560 1,751 13,616 636,278 726,205 76,904 1,496 18,532 753,670 850,602
Interest expenses decreased in the first half of 2012 mainly as a result of the reduced bond related interest expenses following last years bond buyback transaction as well as the repayment of maturing bonds. On the treasury activities, mainly the market driven reduction of short term interest rates lead to a reduction in the corresponding interest expenses.
Rotterdam, August 27, 2012 Board of Management, E.ON International Finance B.V.
M. Bokelmann Director
J. Trapman Director
J. Otto Director

Review report
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Interim Report 2012