E.ON International Finance B.V. 2016 Annual Report · E.ON International Finance B.V. therefore...

E.ON International Finance B.V. 2016 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 (before profit appropriation) ........................................................................................... 10

Income Statement ............................................................................................................................................... 11

Cash flow Statement .......................................................................................................................................... 12

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

Additional Information 29

Auditors report 30

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

Report from the Supervisory Board

At the end of 2016 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 change during the reporting year. Beginning of March 2016 Mrs. C. Mencke was leaving and Mrs. A. Peters joined the Board. The Supervisory Board met once on March 23, 2016. During this meeting the Board of Management presented the business results for the year 2015 which were discussed and approved by the Supervisory Board. Also, the planned business activities for 2016 as well as the ongoing reorganization of E.ON International Finance B.V. were discussed. During 2016 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 and is constantly prepared to act in the debt capital markets if deemed appropriate. The financial statements 2016 have been audited and were given an unqualified report by the auditors of PricewaterhouseCoopers. The auditor’s report is included in this report. The Income Statement for the year 2016 discloses a Net Profit of € 275.4 million. The Supervisory Board approves the proposal made by the Board of Management to add this amount to the ”Other reserves”. The Supervisory Board recommends that the General Meeting of Shareholders adopts the financial statements for the year 2016. The Supervisory Board takes this opportunity to express its appreciation for the performance of the management during the past year. Amsterdam, March 09, 2017 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 2016 financial statements of E.ON International Finance B.V. The Income Statement discloses a Net Profit of € 275.4 million. The entire amount of € 275.4 million will be added to the “Other reserves”. Amsterdam, March 09, 2017 E.ON SE


Report of the Board of Management General information Composition of the Board of Management At the end of 2016 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 change during the reporting period. Beginning of September 2016 Mr. R. Toering resigned from the Board of Management of E.ON International Finance B.V. and both Mrs. Marga Springintveld and Mr. Jack Groesbeek joined the Board. 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., is a corporation with limited liability. During 2016 E.ON International Finance B.V. changed its statutory seat from Capelseweg 400, 3068 AX Rotterdam, The Netherlands to now Kabelweg 37, 1014 BA Amsterdam, The Netherlands. E.ON International Finance B.V. considers E.ON SE, Düsseldorf, Germany to be its ultimate parent company. The financial information of E.ON International Finance B.V. is included in the consolidated financial statements of E.ON SE, Germany. Copies of the consolidated financial statements of E.ON SE can be obtained from E.ON SE in Düsseldorf.

Internal organisation At the end of 2016 E.ON International Finance B.V. had no own employees (2015: 0). All personnel is either seconded from other E.ON Group companies or engaged from external service providers.

Market review In 2016 the international capital markets experienced again a very volatile year. Starting with sharp declines in the equity markets at the beginning of the year fuelled by growth concerns around the US, China and the Emerging Markets together with very low oil and energy prices. Markets improved somewhat starting March due to new and expanded supporting measures announced by the European Central Bank. However, any such improved sentiment stopped with the decision of the UK public memorandum to leave the European Union (BREXIT), which resulted in significant market reaction for all asset and trading classes. During the second half of 2016 market confidence however returned as corporate earnings continued to strengthen and recession fears


disappeared while oil and energy prices also improved. Overall the markets ended 2016 in even higher territories than they started. On foreign exchange markets the BREXIT memorandum itself and the final decision significantly influenced both the first half but also the second half of 2016. Most notably the British Pound significantly weakened against the EURO and also against all other currencies. The Euro however weakened against the U.S. Dollar and also against the Japanese Yen while experiencing quite wide pricing ranges over the course of the year. On interest rates, the again expanded actions of the ECB resulted in even further decline of both the long and short term interest rates. In detail, the long term rates returned to a declining trend in 2016 reaching even new historical lows until the end of Q3, returning thereafter almost back to 2015 levels. Short term rates – despite being in negative territories since 2015 already – continued their decline, not showing any signs of bottoming out yet. Also credit spreads had a somewhat volatile 2016 with widening seen at the beginning of the year and following the BREXIT decision. Despite such negative factors, the supporting ECB measures announced in March and the continuous ECB buying thereafter supported the markets significantly, leading to an overall reduction of spreads across industries and rating classes for the full year 2016. In line with that utility spreads also experienced an industry wide tightening. As to issuance volumes, the Euro Corporate Bond market issuance volumes again increased compared previous years volumes, however varying significantly during the year, with March, April, May and October being the months with the highest issuance volumes ever. Business review As the liquidity situation of the E.ON Group remained strong also during 2016 E.ON International Finance B.V. did not issue any new notes into the debt capital markets. The total amounts of bonds outstanding however did change compared to year-end 2015 by scheduled maturities and the resulting repayments of € 1.2 billion. In addition to these repayments, the foreign exchange effects of € 0.6 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, 2016 decreased to € 11.8 billion compared to € 13.6 billion of bonds outstanding at year-end 2015. 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 2016 proving the stable confidence of investors in the E.ON credit. As a result of the ongoing implementation of the new E.ON Group Strategy announced in December 2014, in June 2016 E.ON International Finance B.V. sold a 700 million British Pound denominated loan to E.ON SE at market prices. Consequently E.ON International Finance B.V. realized a one-time profit of 280 million British Pound. The sales proceeds from this transaction have been completely used to grant two new long term loans which are again denominated in British Pound. As such, E.ON International Finance B.V. continues to have a fully matching British Pound cash flow position for the entire lifetime of these instruments. Also due to the structural changes in the E.ON Group the intra-group financing business stopped by the end of 2015 as the E.ON SE guaranteed deposits from E.ON Group entities where no longer available to E.ON International Finance B.V. and thus no short term loans could be granted anymore. E.ON International Finance B.V. therefore consequently stopped all efforts on this treasury business during 2016. Consequently the loan portfolio amounted € 0 as of December 31, 2016 compared to € 0 as of year-end 2015. At year-end 2016 E.ON International Finance B.V. held liquidity amounting to € 32 million. As a result of the above, the total asset base decreased from € 14.3 billion at year-end 2015 to € 12.7 billion as of December 31, 2016. Furthermore, E.ON International Finance B.V.’s net profit increased from € 30.1 million to € 275.4million. The main reason for this significant increase was the one-time gain on the sale of the 700 million British Pound denominated loan. Besides this, the ending of the treasury activities and 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 a Debt Issuance Programme which usually has been renewed annually in the past. In 2016 however this Debt Issuance Programme has not been renewed due to the ongoing implementation of the new E.ON Group strategy and the associated organisational changes, namely the split of E.ON and Uniper. In 2016 E.ON International Finance B.V. also continued to be a party under the € 5 billion Syndicated Dual Currency Revolving Credit Facility Agreement dated November, 2013. The facility does have an original life time of five years plus two extension options of each one year. As one extension option has been exercised the current tenure is until 2019. In September 2016 the size of this facility has been reduced to now € 3.5 billion through a partial voluntarily cancellation. As of December 31, 2016, E.ON International Finance B.V. had no borrowings outstanding under this facility (2015: 0). Additionally, E.ON International Finance B.V. continues to be a potential issuer under the € 10 billion Multi-Currency Commercial Paper Programme. During 2016 also no drawings were made on behalf of E.ON International Finance B.V. under the € 10 billion Multi-Currency Commercial Paper Programme. E.ON continues to have credit ratings assigned from both Standard & Poor’s (“S&P”) and Moody’s. In the beginning of 2016 both rating agencies placed E.ON’s ratings on review for possible downgrades. The reviews were based on a number of factors, including a sector-wide review of European utility companies with exposure to commodity and power price developments. The reviews were also based on the uncertainties surrounding the policy discussions on the possible funding of German nuclear provisions. In May 2016 both agencies removed the ratings from review and assigned a negative outlook to the long-term credit ratings of BBB+ and Baa1, respectively. The short-term ratings are 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 the bond business of E.ON International Finance B.V. Financial information Financial performance E.ON International Finance B.V. closed the financial year 2016 with a profit from ordinary activities before taxes of € 367.6 million, compared to € 40.1 million in 2015. This significant increase is due to the one-time gain on the sale of the 700 million British Pound denominated loan. At the balance sheet date 2016 E.ON International Finance B.V. showed an improved solvency compared to the previous year which is underlined by the decline in total assets and the increase in Shareholders’ equity. Also the liquidity situation of E.ON International Finance B.V. remained strong given the significant amount of funding sources that continued to be available. 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. E.ON International Finance B.V. addresses such risk by matching the cash flows resulting from assets and liabilities wherever economically viable but also by maintaining a wide range of financing possibilities. As such E.ON International Finance B.V. has short term deposits readily available with E.ON SE, but also continues to be an issuer under the € 10 billion Multi-Currency Commercial Paper Programme and counterparty to the new € 3.5 billion Syndicated Dual Currency Revolving Credit Facility. Prospects Following the implementation of the new E.ON Group strategy announced in December 2014 and the successful split of E.ON and Uniper in 2015, E.ON International Finance B.V. will continue to act as liquidity provider for E.ON Group entities also in 2017. 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 on these instruments. The short term treasury business of E.ON International Finance B.V. – which ended in 2015 – is not


assumed to come back again due to the continued lack of short term cash deposits from E.ON group entities. Moreover, the in 2016 conducted sale of the 700 million British Pound denominated loan to E.ON SE at market prices, which resulted in a one-time profit of 280 million British Pound, is not expected to be repeated again in 2017. However, as a consequence of this sale, the new market based interest income generated from the newly granted British Pound denominated long term loans is expected to be somewhat lower than the interest expense under the corresponding British Pound long term loan. All together E.ON International Finance B.V. is expecting for 2017 a reduction in lending volumes and a significant reduction on profitability compared to 2016. Statement from the Board of Management The Board of Management state that to the best of their knowledge, the financial statements of 2016 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. Amsterdam, March 09, 2017 E.ON International Finance B.V. Board of Management Mr. J. Otto Mrs. M. Springintveld Mr. J.Groesbeek


Balance Sheet (before profit appropriation)

Dec 31, 2016 Dec 31, 2015

€ in thousands Note Financial fixed assets Loans to shareholder 3 8,152,754 8,884,443 Loans to group entities 4 1,336,432 3,613,866 9,489,186 12,498,309 Current assets Amounts due from shareholder 5 2,035,373 1,534,718 Amounts due from group entities 6 1,156,767 114,352 3,192,140 1,649,070 Cash 7 32,218 197,660 Total assets 12,713,544 14,345,039 Shareholders’ equity

Issued share capital 200 200 Share premium reserve 36,992 36,992 Other reserves 255,832 225,767 Undistributed profit 275,357 30,065 8 568,381 293,024 Provisions Provision for loss making contracts 9 5,328 21,084 Provision for deferred taxes 10 35 122 5,363 21,206 Borrowings Bonds 11 9,176,485 12,397,411 Current liabilities Amounts due to shareholder 12 16,282 18,539 Amounts due to group entities 13 589 18,435 Amounts due to others 14 2,946,444 1,596,424 2,963,315 1,633,398 Total equity and liabilities 12,713,544 14,345,039


Income Statement Year ended December 31 € in thousands Note 2016 2015 Interest and similar income 17 1,108,606 968,700 Exchange rate difference gains 650,768 591,521 Financial income 1,759,374 1,560,221 Interest and similar expenses 18 (740,726) (928,002) Exchange rate difference losses (651,024) (591,605) Financial expenses (1,391,750) (1,519,607) Total financial result 367,624 40,614 Operating expenses 19 (494) (528) Total operating expenses (494) (528) Result on ordinary activities before corporate income tax

367,130 40,086

Corporate income taxes 21 (91,773) (10,021) Net Profit 275,357 30,065


Cash Flow Statement Year ended December 31

€ in thousands Note 2016 2015 Interest paid (796,084) (923,817) Interest received 1,174,508 953,983 Expenses paid (576) (765) Income tax received - 6,465 Income tax paid (109,748) -

Cash flows from operating activities 268,100 35,866 Loans granted to related parties (1,313,879) (19,595,853) Loan repayments received from related parties 2,118,552 25,535,411

Cash flows from investing activities 804,673 5,939,558 Proceeds from borrowings - 14,620,000 Repayments of borrowings (1,238,215) (21,477,632)

Cash flows from financing activities (1,238,215) (6,857,632)

Net increase (decrease) in cash (165,442) (882,208) Cash at beginning of the year 197,660 1,079,868

Cash at end of the year 7 32,218 197,660


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., is a corporation with limited liability. During 2016 E.ON International Finance B.V. changed its statutory seat from Capelseweg 400, 3068 AX Rotterdam, The Netherlands to now Kabelweg 37, 1014 BA Amsterdam, The Netherlands. E.ON International Finance B.V. considers E.ON SE, Düsseldorf, Germany to be its ultimate parent company. The financial information of E.ON International Finance B.V. is included in the consolidated financial statements of E.ON SE, Germany. Copies of the consolidated financial statements of E.ON SE can be obtained from E.ON SE in Düsseldorf. The statutory seat and the office of E.ON International Finance B.V. is Kabelweg 37 in Amsterdam. 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 09, 2017. (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 the € 35 billion 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. E.ON International Finance B.V. entered into a fiscal unity with Uniper Benelux Holding B.V. (former E.ON Benelux Holding B.V.) starting January 2014, applying art. 15 of the Dutch Wet op de vennootschapsbelasting 1969. This fiscal unity ended in June 2016. 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, 2016

Dec 31, 2015

ISO code British Pound EUR/GBP 0.86 0.73 U.S. Dollar EUR/USD 1.05 1.09 Japanese Yen EUR/JPY 123.40 131.07 Swedish Krona EUR/SEK 9.55 9.19 Norwegian Krone EUR/NOK 9.09 9.60 Hong Kong Dollar EUR/HKD 8.18 8.44


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. 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 falls into such risks. E.ON International Finance B.V. addresses such risk by matching the cash flows resulting from assets and liabilities wherever economically viable but also by maintaining a wide range of financing possibilities. As such E.ON International Finance B.V. has short term deposits readily available with E.ON SE, but also continues to be an issuer under the € 10 Billion Multi-Currency Commercial Paper Programme and counterparty to the € 3.5 Billion Syndicated Dual Currency Revolving Credit Facility. 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 2016 2015 At January 1 8,884,443 9,709,683 - Amortization 3,182 4,455 - New loans 1,313,879 - - Exchange differences (278,659) 408,454 - Current maturity (1,770,091) (1,238,149) At December 31 8,152,754 8,884,443

During 2016 the loans to shareholders increased by EUR 1.3 billion which reflects two newly granted long term British Pound denominated loans as well as a smaller Euro denominated medium term loan. The reclassification of the scheduled loan maturities into the current maturities together with the negative foreign exchange differences on non-Euro denominated loans together resulted on the total amount of loans to shareholder to be smaller than compared to 2015. 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 2016 2015 EUR 4,076,606 5,232,740 GBP 3,007,395 2,142,877 USD 2,838,844 2,746,975 Total loans to shareholder 9,922,845 10,122,592 Reclassification to current assets 1,770,091 1,238,149 Total long term loans in currencies to shareholder 8,152,754 8,884,443


At the end of the reporting period the majority of total loans to shareholder continue to be denominated in Euro. The amount of Euro denominated loans decreased significantly despite the newly granted medium-term Euro loans was due to the scheduled loan repayments in 2016. The increase in the amount of British Pound denominated loans coming from the two newly granted long term loans was somewhat offset by the reducing Euro value of all British Pound denominated assets due to the weakening of the British Pound against the Euro. The increase of the Euro value of U.S. Dollar denominated loans was solely due to the weakening Euro against the U.S. Dollar. In general the currency structure of the loan portfolio to shareholder shifted with Euro loans still being the single largest group, but with all non-Euro denominated loans now representing the majority. Maturities of loans at nominal value to shareholder Dec 31 Dec 31 € in thousands 2016 2015 6 months or less - 1,238,215 6-12 months 1,769,153 - 1-2 years 1,932,856 1,769,153 2-3 years 781,823 1,872,556 3-4 years 1,400,000 817,494 4-5 years - 1,400,000 Over 5 years 4,056,042 3,045,449 Total loans to shareholder 9,939,874 10,142,867 Reclassification to current assets 1,769,153 1,238,215 Total long term loans in maturities to shareholder 8,170,721 8,904,652 The maturity structure of the loan portfolio to shareholder continues to be well balanced. At maturity all loans are repaid at nominal value. The total nominal value of outstanding loans to shareholder amounts to € 9.9 billion. The difference to book values lie in net discounts of € 17.0 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, 2016 is € 13.0 billion (December 31, 2015: € 12.9 billion). The interest rate range on these assets is from 0.21% to 6.805%. (4) Loans to group entities Movement schedule loans to group entities € in thousands 2016 2015 At January 1 3,613,866 3,550,945 - Amortization (92) 404 - Early repayments (943,653) (78,489) - Exchange differences (223,689) 141,006 - Current maturity (1,110,000) - At December 31 1,336,432 3,613,866

During 2016 E.ON International Finance B.V. did not issue any new long-term loans to group entities. However, the sale of a 700 million British Pound denominated long term loan at market price to E.ON SE together with the reduction of the Euro value of non-Euro denominated loans due to foreign exchange movements and the reclassification of upcoming scheduled loan maturities into the current maturities significantly reduced the total amount of loans to group entities.


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 2016 2015 EUR 1,110,000 1,110,000 GBP 1,336,432 2,503,866 Total loans to group entities 2,446,432 3,613,866 Reclassification to current assets 1,110,000 - Total long term loans in currencies to group entities 1,336,432 3,613,866 The currency split of loans to group entities was mostly effected by the significant reduction of British Pound denominated loans. This reduction was caused by the sale of the 700 million British Pound denominated loan and by the reduced Euro value of the remaining British Pound denominated loans due to the weakening of the British Pound against the Euro. Overall, the structure of the loan portfolio to group entities did change, with British Pound denominated loans still representing the majority, but now almost on parity with the Euro denominated assets.

Maturities of loans at nominal value to group entities Dec 31 Dec 31 € in thousands 2016 2015 6 months or less 1,110,000 - 6-12 months - - 1-2 years - 1,110,000 2-3 years 291,995 - 3-4 years - 340,623 4-5 years - - Over 5 years 1,051,181 2,179,985 Total loans to group entities 2,453,176 3,630,608 Reclassification to current assets 1,110,000 - Total long term loans in maturities to group entities 1,343,176 3,630,608 Loans to group entities mainly comprise loans maturing in one year and after five years and longer. At maturity all loans are repaid at nominal value. The total nominal value of outstanding loans to group entities amounts to € 2.5 billion with the decrease compared to last year’s value being due to the sale of the 700 million British Pound denominated loan and the above explained foreign exchange effects. The difference to book values lie in net discounts of € 6.7 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, 2016 is € 3.4 billion (December 31, 2015: € 5.5 billion). The interest rate range on these assets is from 4.966% to 6.65%.


(5) Amounts due from shareholder Specification amounts due from shareholder Dec 31 Dec 31 € in thousands 2016 2015 Current receivable from shareholder 1,770,091 1,238,149 Interest receivable from shareholder 209,757 258,484 Cross-currency swaps 50,960 34,246 Other 4,565 3,839 Total amounts due from shareholder 2,035,373 1,534,718 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 2017. The current maturity of the loans outstanding includes the discount/premium on these loans until December 31, 2016. 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 loan repayments which however have been slightly offset by the new loans granted to the shareholder in 2016. 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 2016. 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 increased to € 51.0 million which is due to the weakening of the Euro against these currencies. (6) Amounts due from group entities Specification amounts due from group entities Dec 31 Dec 31 € in thousands 2016 2015 Current receivable from group entities 1,110,000 - Interest receivable from group entities 46,767 114,352 Total amounts due from group entities 1,156,767 114,352

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 2015 the reduced amount is mainly a consequence of sale of the 700 million British Pound denominated loan together with the reduced Euro value of Non-Euro denominated interest receivables due to the strengthening of the Euro mainly against the British Pound.


(7) Cash Specification of cash Dec 31 Dec 31 € in thousands 2016 2015 Cash and cash equivalents 1 30 Inhouse banking account at shareholder 32,217 197,630 Cash 32,218 197,660

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 decrease reflects the lower 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 (2015: 9,000) with a par value of € 100 per share. The number of issued shares is 2,000 (2015: 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, 2016 200 36,992 225,767 30,065 293,024 Appropriation of undistributed profit - - 30,065 (30,065) - Profit for the year ended Dec 31, 2016 - - - 275,357 275,357 At December 31, 2016 200 36,992 255,832 275,357 568,381

Total equity of E.ON International B.V. increased to € 568.3 million due to a Net Profit of € 275.4 million achieved in 2016. It is proposed that the Net Profit for 2016 of € 275.4 million will be added to 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 a short-term part of € 5.3 million and will expire in 2017. Movement schedule provision for loss making contracts € in thousands 2016 2015 At January 1 21,084 36,158 - Addition interest 952 1,634 - Release (16,708) (16,708) At December 31 5,328 21,084

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 2016 2015 At January 1 122 207 - Realization temporary differences to income statement (87) (85) At December 31 35 122

Provisions for deferred taxes decreased to € 35 thousand as a result of the realization of temporary differences to the income statement.

Specification current / non- current Dec 31 Dec 31 € in thousands 2016 2015 - current 35 85 - non-current - 37 Total deferred tax 35 122

(11) Bonds Movement schedule bonds € in thousands 2016 2015 At January 1 12,397,411 13,049,145 - Amortization 3,886 5,368 - Exchange differences (554,939) 581,047 - Current maturity (2,669,873) (1,238,149) At December 31 9,176,485 12,397,411

In 2016 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 decrease in the Euro value of the non-Euro denominated bonds mostly due to the weakening of the Euro against the British Pound, slightly compensated by the strengthening of the U.S. Dollar and the Japanese Yen against the Euro further reduced the Euro amount of bonds outstanding. At year-end 2016 the total amount of long term bonds outstanding reduced to € 9.2 billion compared to € 12.4 billion at year-end 2015. 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 2016 2015 EUR 4,612,421 5,849,333 GBP 3,977,684 4,642,574 USD 2,838,981 2,747,133 JPY 209,452 197,065 Other currencies 207,820 199,455 Total bonds 11,846,358 13,635,560 Reclassification current liabilities 2,669,873 1,238,149 Total long term bonds 9,176,485 12,397,411


In 2015 scheduled bond maturity resulted in a reduction of Euro denominated bonds outstanding. The Euro value of the British Pound denominated bonds solely decreased due to the weakening of the British Pound against the Euro. The Euro value of all other Non-Euro denominated bonds increased due to the weakening of the Euro against these currencies. The nominal volumes of all non-Euro denominated bonds remained unchanged. The majority of bonds continued to be Euro denominated followed by British Pound, and U.S. Dollar. Maturities of bonds at nominal value Dec 31 Dec 31 € in thousands 2016 2015 6 months or less 900,000 1,238,215 6-12 months 1,769,153 - 1-2 years 1,945,976 2,879,153 2-3 years 1,074,949 1,872,556 3-4 years 1,400,000 1,158,117 4-5 years - 1,400,000 Over 5 years 4,790,425 5,225,434 Total bonds 11,880,503 13,773,475 Reclassification to current liabilities 2,669,153 1,238,215 Total long term bonds 9,211,350 12,535,260 At year end 2016 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 three 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 2016 amounts to € 11.9 billion. The difference to book values lie mainly in net discounts of € 34.1 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 (2015: 5.9%). The market values of the bonds per December 31, 2016 is € 15.0 billion (December 31, 2015: € 16.6 billion). (12) Amounts due to shareholder Specification amounts due to shareholder Dec 31 Dec 31 € in thousands 2016 2015 Guarantee fees payables 10,382 14,762 Interest payables to shareholder 5,900 3,777 Total amounts due to shareholder 16,282 18,539

Guarantee fee payables All Bonds issued by E.ON International Finance B.V. under the € 35 billion Debt Issuance Programme 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 2016 2015 Liability to group entity due to fiscal unity 456 18,350 Others 133 85 Total amounts due to group entities 589 18,435

Liability to group entity due to fiscal unity In December 2015, E.ON International Finance B.V. entered into a fiscal unity with Uniper Benelux Holding B.V. (former E.ON Benelux Holding B.V.) starting January 2014, applying art. 15 of the Dutch Wet op de vennootschapsbelasting 1969. Due to the positive corporate income tax charges in the years 2014 and 2015 a liability consist at year-end 2015 with this group company comprising such corporate income tax charges. Due to the fiscal unity the Dutch Tax Authorities returned all such corporate income tax payments made during the years 2014 and 2015 to E.ON International Finance B.V.. In June 2016 E.ON International Finance B.V. ended the fiscal unity with Uniper Benelux Holding B.V. due to the split of E.ON and Uniper. 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. Due to the positive corporate income tax charges for the second half of 2016 a liability consist at year-end 2016 with this group company comprising such corporate income tax charges. The corporate income tax charges for the first half of 2016 have been settled with Uniper Benelux Holding B.V. under the then existing fiscal unity. 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 2016 2015 Current payables to others 2,669,873 1,238,216 Interest payables to others 276,528 358,187 Others 43 21 Total amounts due to others 2,946,444 1,596,424 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, 2016. 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 the British Pound but slightly compensated by the weakening of the Euro against the U.S. Dollar and the Japanese Yen.


(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 2016 2015 Interest swaps 35,503 35,503 Currency swaps 365,576 284,541 Total amounts due to others 401,079 320,044 The notional amounts of the interest swaps remained the same. The increase in the currency swaps is due to a new medium-term transaction entered into in 2016. Specification fair values derivatives Dec 31 Dec 31 € in thousands 2016 2015 Interest swaps (2,939) (4,624) Currency swaps (38,905) (43,462) Total amounts due to others (41,844) (48,086) 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 As of December 31, 2016 the following facilities are available:

€ 10 billion Multi-Currency Commercial Paper Programme € 3.5 billion Dual Currency Syndicated Revolving Credit Facility Agreement

The existing € 10 billion Multi-Currency Commercial Paper Programme allows E.ON International Finance B.V., under the guarantee of E.ON SE, to issue commercial paper with maturities of up to 729 days to investors. The Multi-Currency Commercial Paper Programme was last updated in November 2012. As of December 31, 2016, E.ON International Finance B.V. had no borrowings outstanding under this programme (2015: 0). In 2016 E.ON International Finance B.V. also continued to be a party under the € 5 billion Syndicated Dual Currency Revolving Credit Facility Agreement dated November, 2013. The facility does have an original life time of five years plus two extension options of each one year. As one extension option has been exercised the current tenure is until 2019. In September 2016 the size of this facility has been reduced to now € 3.5 billion through a partial voluntarily cancellation. As of December 31, 2016, E.ON International Finance B.V. had no borrowings outstanding under this facility (2015: 0).


(17) Interest and similar income Specification interest and similar income € in thousands 2016 2015 - interest and similar income from shareholder 954,179 676,676 - interest and similar income from group entities 135,481 272,979 - interest and similar income from others 18,946 19,045 Total interest and similar income 1,108,606 968,700

Interest and similar income from shareholder significantly increased in 2016. The main reason for that was the one-time profit of 280 million British Pound realized on the sale of a long term loan in June 2016 in the interest and similar income from shareholders. Besides this, the ongoing interest income from shareholder reduced because of the reduction in lending volumes to shareholder due to loan maturities and repayments. Interest and similar income from group entities also decreased following reduced lending volumes caused by the ending of the treasury business of E.ON International Finance B.V. and the sale of the 700 million British Pound denominated loan that had originally been granted to a group entity. Interest and similar income from others includes the release of the provision for loss making contract and the prepayment rebate on corporate income tax. In total, interest and similar income therefore slightly increased to € 1.1 billion. (18) Interest and similar expenses Specification interest and similar expenses € in thousands 2016 2015 - interest and similar expenses to shareholder 44,139 55,666 - interest and similar expenses to group entities 482 4,987 - interest and similar expenses to others 696,105 867,349 Total interest and similar expenses 740,726 928,002

Interest and similar expenses again declined in 2016 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 swap volumes and the hence reduced interest payments under such swap contracts, but also due to lower volumes and interest rates under the inhouse bank cash deposits. Interest expense to group entities decreased due to the ending of the treasury business of E.ON International Finance B.V. at the end of 2015.


(19) Operating expenses Operating expenses consist mainly of auditor’s fees, consultancy costs and personnel expenses. In 2016 the total operating expenses amounted to € 0.5 million (2015: € 0.5 million). The breakdown of the audit fees at December 31, 2016 is as follows: Specification audit fees € in thousands 2016 2015 Audit of the financial statements 129 93 Other audit services 15 - Total audit fees 144 93

20) Number of employees At the end of 2016 E.ON International Finance B.V. had no employees (2015: 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 2016 2015 Current income tax (91,695) (10,106) Deferred income tax 85 85 Total income tax (91,610) (10,021)

The effective tax rate in 2016 was 25% (2015: 25%). The applicable nominal tax rate in 2016 was 25% (2015: 25%) For further details on deferred taxes see note 10. Amsterdam, March 09, 2017 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 Profit for 2016 of € 275.4 million will be added to the “Other reserves”.

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