EnBW International Finance B.V.

Annual report 2022

EnBW International Finance B.V.

Contents

Annual Report

Report of the Board of Management 3

Statement of financial position as at 31 December 2022 12

Statement of income for the period 1 January – 31 December 2022 13

Statement of cash flows for the period 1 January – 31 December 2022 14

Statement of changes in equity for the period 1 January - 31 December 2022 15

Notes 16

Other information 52

EnBW International Finance B.V.

Report of the Board of Management

The Directors of EnBW International Finance B.V. herewith submit its annual report for the period

from 1 January to 31 December 2022.

General

EnBW International Finance B.V. (hereinafter ‘the Company’) is a company domiciled in the

Netherlands. The Company has a controlling related party relationship with its parent company. The

Company is a wholly owned subsidiary of EnBW Energie Baden-Württemberg AG (ultimate parent

company, hereinafter ‘EnBW AG or the Shareholder’) in Germany. EnBW AG is part of the EnBW

Group.

The Company was founded by EnBW AG on 2 April 2001, under the Dutch law as a company with

limited liability (besloten vennootschap met beperkte aansprakelijkheid). The Company has its

registered office at Herikerbergweg 122, 1101 CM Amsterdam, The Netherlands.

Overview of objectives and activities

In accordance with Article 3 of its Articles of Association of the Company, the most important

mission, objectives and activities of the Company are:

• to incorporate, to participate in any way whatsoever, to manage, to supervise, to operate and

to promote enterprises, businesses and companies;

• to finance businesses and companies;

• to borrow, to lend and to raise funds, including the issuance of bonds, convertible bonds,

promissory notes or other securities or evidence of indebtedness as well as to enter into

agreements in connection with the aforementioned.

The activities of the Company take place in the Netherlands.

Internal structure

The Board of Directors of the Company consists of two board members and is responsible for the

strategic orientation, operational guidance, internal control and the management of risks within the

Company. The Board of Directors holds at least five formal board meetings per year to monitor and

exercise control to ensure that the Company is compliant with laws and regulations. Beside the formal

board meetings, the board members interact frequently and have contact with the staff members to be

updated about the day-to-day activities and management of the Company.

The Supervisory Board consists of three members, and the Audit Committee consists of three

members including an independent chairman. The Supervisory Board and Audit Committee hold at

least two meetings per year to supervise the management of the Company.

The Company employs three staff members.

Good Corporate Governance and Code of Conduct

The Company follows good corporate governance practice and applies Code of Conduct of EnBW

AG to cover fraud prevention and detection, anti-corruption aspects and violations of laws and

regulations.

EnBW International Finance B.V.

Report and control management

EnBW AG is a stock-listed entity and has a corporate governance policy in place. It is sufficiently

transparent and is bound to the strict regulations of the Frankfurt stock exchange and the regulated

market of Stuttgart. The Company is a direct subsidiary and a financing vehicle of EnBW AG and

therefore must adhere to its corporate governance policy. The Company itself must comply to the

legislations and regulations set by The Dutch Central Bank (DCB) and Dutch Authority for the

Financial Markets (AFM). In this regard, it should be noted that also the third party service providers

engaged are under supervision of the DCB and the AFM.

The companies risk management approach is based on EnBW AG’s framework of Integrated Risk

Management (IRM). The IRM Process does identify, assess, review and report relevant risks and

opportunities and their subsequent measures on a yearly basis, at least. A risk management meeting

is held by the Company with the risk management team of EnBW AG to comply with the mentioned

procedure.

To mitigate fraud risks, the Company has implemented measures to prevent frauds taking place. The

Company can be represented jointly by the two managing directors to ensure the 4-eyes principles

when binding the Company legally. The Supervisory Board is involved with the Board of Directors

when important economic decisions have to be taken. The Company applies 4-eyes principles by its

staff members to ensure that the day to day activities are compliant from legal and compliance

perspectives. From accounting perspectives, the Company makes use of an accounting software

system with its own ISAE audit, which prevents deletion of posted accounting entries. From

segregation of duties perspectives, the Board of Directors assigns posting and review roles of

accounting entries to two different persons within the Company as mitigating measures to accounting

fraud. Furthermore, the Company uses third party service providers which have their own Standard

ISAE 3402 reports describing among others the control environment and control objectives which

the Board of Directors of the Company can rely on as one of the control measures.

Activities during the year

On 3 February 2022, the Board of Managing Directors resolved to issue additional bonds in a total

amount of up to EUR 1.5 billion under the Company’s existing EUR 7,000,000,000 Debt Issuance

Programme in 2022. The Supervisory Board and the Shareholder of the Company have approved said

board resolution on the same date by way of execution of written resolutions.

The maturity date of the OPOLE loan has been extended until 28 October 2023 at an interest rate of

1.08%.

On 25 February 2022, the Shareholder resolved to accept resignation of Mr. Ingo Peter Voigt as

member of the Supervisory Board, with effective date of 31 March 2022. On the same date, the

Shareholder appointed Mr. Marcel Peter Münch as member of the Supervisory Board with effective

date of 31 March 2022.

On 25 February 2022, the Company entered into a Supervisory Board member agreement with

Mr. Marcel Peter Münch with effective date of 31 March 2022.

On 12 April 2022, the Board of Managing Directors resolved to update the Company’s Debt Issuance

Programme for the issuance, offer and sale of notes issued by the Company up to an aggregate

principal amount of EUR 10,000,000,000. The Supervisory Board and the Shareholder of the

Company have approved said resolutions on the same date by way of execution of written resolutions.

EnBW International Finance B.V.

On 11 July 2022, the Board of Managing Directors resolved to issue additional bonds in a total

amount of up to EUR 2.025 billion equivalent under the Company’s Debt Issuance Programme of

EUR 10,000,000,000. The Supervisory Board and the Shareholder of the Company have approved

said resolutions on the same date by way of execution of written resolutions. Subsequently on 22

November 2022, the Company issued two senior bonds of EUR 500 million each.

During the year under review, the Company continued to make use of the Commercial Paper (CP)

programme to fulfil short-term financial needs of EnBW AG. The accumulated volume of CP issued

during the year was in a total amount of EUR 6.0 billion divided in 176 short-term EUR notes. As

per balance sheet date, EUR notes in a total amount of EUR 712.5 million remain outstanding.

A provision for expected credit losses was updated during the year as disclosed in the “financial

assets” paragraph in the financial statement. No other impairments on loans or interest receivables

were considered to be necessary.

Result and financial performance indicators

Non-financial performance indicators

The Company is a financing vehicle of the EnBW Group and follows the ESG approach of EnBW

AG. Non-financial performance indicators are an important element of EnBW Group’s corporate

strategy.

The EnBW Group’s non-financial indicators are classified into the following goal dimensions:

1. Customers and society goal dimension measured with:

a. Reputation index

b. EnBW/ Yello Customer Satisfaction Index

c. SAIDI (electricity) in min./ year

2. Environmental goal dimension measured with:

a. Installed output of renewable energies (RE) in GW and the share of the generation

capacity accounted for by RE in %

b. CO

intensity in g/kWh

3. Employees goal dimemsion measured with:

a. People Engagement Index (PEI)

b. LTIF for companies controlled by the Group/ LTIF overall

Period ende d Year ended

31 December 31 December

2022 2021

(EUR million) (EUR million)

Net result (19) 14

Net interest result 4 11

Shareholder's equity 278 312

Total issued loans 5,917 4,946

Total issued bonds 5,641 4,649

Free cash 2.7 0.6

Net working capital 299 312

Solvency (equity/ total assets) 4% 6%

EnBW International Finance B.V.

COVID-19 pandemic

During the early start of 2020, the COVID-19 pandemic became visible in Europe. Since then the

Board of Directors of the Company has taken measures to assure business continuation.

Protection of employees has had the highest priority whereas the Board of Directors further assured

that compliance tasks were still taken care of as well as the daily management and operation of the

Company continued. For the most meetings, especially Board Meetings, videoconferences were held.

After the COVID-19 restrictions have been lifted by the Local Government in the begnning of 2022,

most meetings and especially Board meetings were held physically again. The impact on the

Company’s operation due to COVID-19 is nil. In view of the fact that the larger part of receivables

of the Company are loans to EnBW AG, the Board of Directors of the Company reviewed the

measures taken by EnBW AG and its ongoing financial performance.

In December 2022, German government leaders declared the corona pandemic over. Europe might

enter an endemic stage during the winter of 2022/23. According to virologists immunity will be

advanced after the winter of 2022/23, so that the virus will barely make it through summer 2023.

Significant risks and uncertainties

The significant risks and uncertainties that the Company faces are outlined below.

The Company has exposure to the following risks:

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial

instrument fails to meet its contractual obligations which arises principally from the Company’s

receivables from customers and investment securities.

The Company’s exposure to credit risk is influenced mainly by the individual characteristics of

EnBW AG. The net proceeds from each issue of interest-bearing loans and borrowings by the

Company only will be applied towards the purposes of on-lending to EnBW AG. The interest rates

and other interest conditions on the interest-bearing loans and borrowings are equal to these on the

loans to EnBW AG. EnBW AG has provided no securities but has taken over the irrevocable and

unconditional guarantee for the benefit of all bondholders with respect to the prescribed and punctual

payment of capital and interest of the bond notes issued by the Company.

The total value of the loans to EnBW AG including accrued interest per 31 December 2022 amounted

to EUR 6.7 billion.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they

fall due. The Company’s approach to managing liquidity is to ensure that it will always have sufficient

liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring

unacceptable losses or risking damage to the Company’s reputation.

There is only a small liquidity risk facing the equal terms of the non-current assets and the long-term

debts. The repayment schedules can be found on pages 35 and 43.

EnBW AG has taken over the irrevocable and unconditional guarantee for the benefit of all

bondholders with respect to the prescribed and punctual payment of capital and interest of the bond

notes issued by the Company.

Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and

equity prices will affect the Company’s income or the value of its holdings of financial instruments.

EnBW International Finance B.V.

The objective of market risk management is to manage and control market risk exposures within

acceptable parameters, while optimising the return.

The Company has one loan outstanding to EnBW AG (“OPOLE”) which is not on-lending loan from

debts. This loan was financed by equity and will mature in October 2023. The fair value of this loan

per 31 December 2022 amounted to EUR 0.3 billion.

Concentration risk

Concentration risk is the risk that the concentration of loans is not diversified and concentrated in a

certain geographic area. The loans are diverted in a variety of loans issued to EnBW AG in Germany.

As all loans are in one geographic area (Germany), and as all loans are issued to the same borrower

only, the Company has a significant exposure of concentration risk.

Interest rate risk

Interest rate risk is the risk that changes in interest rates will adversely impact the financial results of

the Company. The interest rates and other interest conditions on the interest-bearing loans and

borrowings are equal to these on the loans to EnBW AG, except for the loan granted 2012 and

extended until 28 October 2023. The loan bore an interest rate of 3.67% till 1 March 2022 and has

been extended at a new interest rate of 1.08% based on the market conditions. Therefore, the

Company is not significantly exposed to variability of cash flows due to market development in

interest rates.

Currency risk

Currency risk is the risk that the fair value of future cash flows of a financial instrument denominated

in foreign currency will fluctuate because of changes in exchange rates.

The net proceeds from each issue of interest-bearing loans and borrowings by the Company only will

be applied towards the purposes of on-lending to EnBW AG (for equal currency). Therefore, the

Company is not exposed to currency risk on investments and borrowings that are denominated in a

currency other than the functional currency of the Company.

The currencies in which these transactions primarily are denominated are Euro (EUR), Swiss Francs

(CHF) and Japanese Yen (JPY).

Operational risk

Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated

with the Company’s processes, personnel, and infrastructure and from external factors other than

credit, market- and liquidity risks such as those arising from legal and regulatory requirements and

generally accepted standards for corporate behaviour. Operational risks arise from all Company’s

operations. The Company was incorporated with the purpose of engaging in those activities outlined

in the preceding paragraphs. All administrative functions have been outsourced by the Company.

Political risk from the Russia-Ukraine Conflict

Throughout 2021, the Russian military build-up on the border of Ukraine has escalated tensions

between Russia and Ukraine and strained bilateral relations. These events have continued in 2022

with Russia commencing a full-scale military invasion of Ukraine in February 2022. On 21 February

2022, Russia recognized the independence of two separatist regions within Ukraine and ordered

Russian troops into these regions with a purported mission to maintain peace in the area. Following

the invasion of Ukraine, countries like the United States, the EU, UK, Switzerland, Canada, Japan

and Australia have made announcements regarding imposition of sanctions. The imposition of

sanctions has led to reactions from Russia particularly resulting in a disruption of gas supplies to the

EU. The reductions of gas supplies have led to higher gas prices in Germany and there is a risk that

EnBW AG may not be able to pass on higher costs to its customers. Additionally, high volatility in

commodity prices could lead to unforeseeable developments in EnBW AG’s liquidity position,

especially due to margin payments.

EnBW International Finance B.V.

In addition, the Russia-Ukraine Conflict has also led to an increased inflation which led to an increase

in interest rates. However, the Company is not significantly exposed to variability of cash flows due

to market development in interest rates as indicated in the interest rate risk paragraph.

However, due to the implementation of the Energy Security Act (EnSiG) by the German government

in July 2022, measures are in place to limit the potential impact on any utility.

Financially, EnBW AG expects an adjusted EBITDA of around EUR 3.3 billion for the 2022 financial

year. In the downgraded guidance of November 2022, EnBW was still expecting adjusted EBITDA

of up to EUR 2.9 billion. This development was mainly caused by negative effects of the reductions

and cessation in gas supplies due to the Russia - Ukraine crisis, namely increased re-procurement

expenses for natural gas in the Sustainable Generation Infrastructure segment. However, the impact

in the fourth quarter of 2022 was lower than had been assumed in the updated guidance of November

2022, notably due to the warmer than average weather at the end of the year.

Sensitivity analysis

The concentration risk is significant, cannot be avoided and can only be mitigated by a solid operation

and management of the parent company. The parent company reports publicly on a quarterly basis

and key figures, update of the business and upcoming transactions are being discussed on a regular

basis by the Board of Directors of the Company.

Capital management

The policy of EnBW AG is to maintain a strong capital base and solid investment grade ratings aiming

to maintain investors’-, creditors’- and market confidence and to sustain future development of the

business. No additional capital is needed to finance the activities of the Company. The margin of the

interest on the loans covers the expenses of the Company.

The loans payable are mirrored by loans receivables with identical characteristics. No impairments

are to be expected except for the provision as recognized in line with IFRS 9.

There were no changes in the Company’s approach to capital management during the period ended

31 December 2022.

The Company is not subject to externally imposed capital requirements.

Male and female split of board members

The Board of Directors of the Company consists of two male members and no female member. The

Supervisory Board consists of three male members and no female member.

The Board of Directors and the Supervisory Board recognize the importance of a gender balanced

composition and will take this into account when selecting potential nominees. The Board of

Directors and the Supervisory Board aim to have at least one third of the Board of Directors and

Supervisory Board consisting of females.

However, as gender is only part of diversity, the Board of Directors will not only reflect gender in

their selection process but continue to select their members also based on their background,

knowledge and experience.

Rights of the Shareholder

Under Article 26 of the Company’s Articles of Association, the profit is at the disposal of the General

Meeting of Shareholders which can allocate said profit either wholly or partly to the formation of –

or in addition to – one or more general or special reserve funds.

The Company can only make profit distributions to the Shareholder and other parties entitled to the

distributable profit insofar as the Shareholder’s equity exceeds the issued and paid-up capital plus the

legally required reserves. The decision lies with the Shareholders’ Meeting and is subject to the

cooperation of the Board of Directors.

EnBW International Finance B.V.

The authority to appoint and dismiss the members of the Supervisory Board and the Board of

Directors lies with the General Meeting of Shareholders.

Post-balance sheet events

On 11 January 2023, the Board of Managing Directors resolved to issue additional bonds in a total

amount of up to EUR 2 billion under the Company’s existing EUR 10,000,000,000 Debt Issuance

Programme in 2022. The Supervisory Board and the Shareholder of the Company have approved said

board resolution on 12 January 2023 by way of execution of written resolutions.

On 24 January 2023, the company issued two senior bonds for a total volume of EUR 1.25 billion.

The two bonds have a principal amount of EUR 500 million and EUR 750 million and a term of 5.5

years and 12 years, respectively, combined with coupons of 3.5% and 4.0%.

Following the invasion of Russia into Ukraine (disclosed under the Political risk paragraph),

commodity markets became more volatile. High volatility can lead to higher margin payments (i.e.

collaterals) for the trading activities of EnBW AG. To retain a comfortable level of liquidity and at

the same time have a maturity match, EnBW AG has requested the Company to issue Commercial

Paper notes under the existing EUR 2,000,000,000 Multi Currency Commercial Paper Programme.

Until 3 March 2023, the Company has issued EUR 190 million of Commercial Paper notes, of which

one Commercial Paper in the amount of EUR 130 million was repaid on 13 February 2023.

As the volatility in the commodities market is expected to remain, further issuance is assumed in the

weeks to come. The Board of Directors has assessed the whole situation and has reason to believe

that issuance of additional Commercial Paper notes does not have an impact on the financial position

and going concern of the Company, nor triggers any impairments of the loans due from EnBW AG.

No other events which would be significant for assessing the net assets, financial position and result

of the Company occurred after 31 December 2022.

Future outlook

It is expected that the financing activities will develop in line with the strategy of EnBW AG.

Activities in the field of research and development

The Company is not engaged in such activities.

Market environment

The Company issues bonds under the guarantee of EnBW AG and is therefore exposed to the market

conditions which affect EnBW AG as well.

The long-term credit ratings of EnBW AG are Baa1 with stable outlook (2021: Baa1 stable)

(Moody’s) and A- with negative outlook (2021: A- stable) (Standard & Poor’s).

EnBW AG has a comfortable level of liquidity.

EnBW International Finance B.V.

Board of Directors’ accountability

Herewith the Board of Directors confirms that the financial statements provide a fair presentation of

the financial position and that all relevant risks applicable to the Company have been identified and

mitigated. Furthermore, the Board of Directors confirms that the Report of the Board of Directors

provides a fair presentation of the situation as per 31 December 2022 and the described activities

during the year.

Amsterdam, 13 March 2023

EnBW International Finance B.V.

The Board of Directors

sgd. sgd.

P.A. Berlin W.P. Ruoff

EnBW International Finance B.V.

Financial statements

EnBW International Finance B.V.

Statement of financial position as at 31 December 2022

(before appropriation of the profit)

Note

31 December 2022 31 December 2021

EUR EUR EUR EUR

Non-current assets

Investments

Loans EnBW AG

.1a

5,518,799,119

4,648,091,055

Deferred tax assets

516,000

202,973

5,519,315,119

4,648,294,028

Current assets

Loans EnBW AG

.1b

1,107,899,446

537,917,363

Interest receivable loans EnBW AG

70,038,286

72,547,239

Current account EnBW AG

2,751,353

Corporation tax

2,733,344

185,283

Turnover tax

10,567

Deposit office lease

4,749

1,180,686,392

613,405,987

Cash and cash equivalents

2,689,049

634,223

6,702,690,560

5,262,334,238

Shareholder’s equity

Issued and paid up share capital

100,000

Share premium reserve

297,183,974

Other reserves

Undistributed result

(18,844,449)

14,470,900

278,439,525

311,754,874

Non-current liabilities

Interest

bearing loans and borrowings

5,539,468,970

4,648,809,165

5,539,468,970

4,648,809,165

Current liabilities

Interest-bearing loans and borrowings

814,028,279

240,000,000

Turnover tax

49,221

Current account EnBW AG

4,784,336

Accrued expenses

65,969,450

61,720,978

884,782,065

301,770,199

6,702,690,560

5,262,334,238

The notes on page 16 to 52 are integral part of the financial statements.

EnBW International Finance B.V.

Statement of income for the period 1 January – 31 December 2022

Continuing operations

2022 2021

Note EUR EUR EUR EUR

Interest income and similar income

123,089,371 120,147,039

Interest expense and similar expenses

(118,684,292)

(109,233,282)

Net interest result

4,405,079

10,913,757

Fees received from EnBW AG

3,116,938

2,553,644

Expenses

General expenses

577,333

503,548

Wages and salaries

141,148

155,691

(Decrease) / increase expected

credit

loss

24,247,800

(6,112,536)

Result before corporate

income tax

(17,444,264)

18,920,698

Corporate income tax

(1,400,185)

(4,449,798)

Net result

(18,844,449)

14,470,900

Other comprehensive income

Items that will never be reclassified

to profit or loss

Items that are or may be

reclassified to profit or loss

Other comprehensive income, net

of tax

Total comprehensive income

(18,844,449)

14,470,900

The notes on page 16 to 52 are integral part of the financial statements.

EnBW International Finance B.V.

Statement of cash flows for the period 1 January – 31 December 2022

(expressed in Euros)

Note 1 January -

31 December

2022

1 January -

31 December

2021

Operating Activities

Cash receipts from group companies

163,384,138

13,075,000

Cash paid to employees

(122,708)

(100,229)

Cash paid to suppliers

(1,475,775)

(544,883)

Cash

generated from operations

161,785,655

12,429,888

Interest paid

(111,728,584)

(104,690,769)

Interest received

111,723,527

104,690,769

Taxes paid

(3,453,115)

(3,180,720)

Cash flows from/(used in) operating activities

158,327,483

9,249,168

Investment activities

Repayment of investments

5,510,000,000

315,068,572

Proceeds from investments

(6,973,876,394)

(1,546,555,814)

Cash flows from/(used in) investment activities

(1,463,876,394)

(1,231,487,242)

Financing activities

Proceeds from borrowings

7,023,876,394

1,599,584,737

Repayment of (non

) current borrowings

(5,560,000,000)

(367,684,757)

Repayment current account group company

(156,275,884)

(9,375,000)

Cash flows from/(used in) financing activities

1,307,600,510

1,222,524,980

Net increase (decrease) in cash and cash equivalents

2,051,599

286,907

Exchange results

3,227

115,207

Cash and cash equivalents as 1 January

634,223

232,109

Cash and cash equivalents at

December

2,689,049

634,223

The notes on page 16 to 52 are integral part of the financial statements.

EnBW International Finance B.V.

Statement of changes in equity for the period 1 January – 31

December 2022

The notes on page 16 to 52 are integral part of the financial statements.

Share Share Othe r Undistributed

Note

capital pre mium reserves re sult Total

Balance at 1 January 2021

4, 5, 6

100,000 297,183,974 - 17,869,189 315,153,163

Appropriation of the result - - 17,869,189 (17,869,189) -

Distribution to shareholder

- - (17,869,189) - (17,869,189)

Result for the year - - - 14,470,900 14,470,900

Balance at 31 December 2021

4, 5, 6

100,000 297,183,974 - 14,470,900 311,754,874

Balance at 1 January 2022

4, 5, 6

100,000 297,183,974 - 14,470,900 311,754,874

Appropriation of the result - - 14,470,900 (14,470,900) -

Distribution to shareholder

- - (14,470,900) - (14,470,900)

Result for the year - - - (18,844,449) (18,844,449)

Balance at 31 December 2022

4, 5, 6

100,000 297,183,974 - (18,844,449) 278,439,525

(expressed in Euros)

EnBW International Finance B.V.

Notes

EnBW International Finance B.V. (hereinafter ‘the Company’) is a company domiciled and

established in the Netherlands. The Company has a controlling related party relationship with its

parent company. The Company is a wholly owned subsidiary of EnBW Energie Baden-Württemberg

AG (ultimate parent company, hereinafter ‘EnBW AG’). The annual accounts of the Company are

being consolidated in the annual accounts of EnBW AG.

The Company is a private company with limited liability, whereas EnBW AG holds 100% of the

issued shares.

The Company was incorporated and started its activities on April 2, 2001. The Company’s registered

address is Herikerbergweg 122, 1101 CM Amsterdam, The Netherlands. The registration number at

the Chamber of Commerce is 32085302.

The most important objectives of the Company are:

 to incorporate, to participate in any way whatsoever, to manage, to supervise, to operate and to

promote enterprises, businesses and companies;

 to finance businesses and companies (hereafter referred as investing activities);

 to borrow, to lend and to raise funds, including the issuance of bonds, convertible bonds,

promissory notes or other securities or evidence of indebtedness as well as to enter into

agreements in connection with the aforementioned.

These financial statements of the Company were authorized for issue by the shareholder EnBW AG

on 13 March 2023.

Basis of preparation

(a) Statement of compliance

The financial statements have been prepared in accordance with the International Financial Reporting

Standards (IFRS) as adopted by the European Union and with Part 9 of Book 2 of the Dutch Civil

Code.

(b) Basis of preparation

The financial statements are prepared in Euros, the functional and presentation currency of the

Company and on the historical cost basis unless indicated otherwise hereafter. All values are rounded

to the nearest Euro, except when otherwise indicated.

The financial statements have been drawn up on a going concern basis. Assets and liabilities are only

offset in the financial statements if and to the extent that an enforceable legal right exist to offset the

assets and liabilities and settle them simultaneously and the positive intention is to settle the assets

and liabilities on a net basis or simultaneously.

EnBW International Finance B.V.

1. New standards, interpretations and amendments effective from 1 January 2022

The following amended standards and interpretations do not have a significant impact on the

Company’s financial statements.

 Annual Improvements to IFRS Standards 2018–2020

 Business combinations (Amendments to IFRS 3)

 Onerous Contracts — Cost of Fulfilling a Contract (Amendments to IAS 37)

 Property, Plant and Equipment — Proceeds before Intended Use (Amendments to IAS 16)

2. New standards, interpretations and amendments not yet effective

Other standards

The following (amended) standards and interpretations are not expected to have a significant impact

on the Company’s financial statements.

Effective from 1 January 2023

 IFRS 17 Insurance Contracts

 Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)

 Definition of Accounting Estimates (Amendments to IAS 8)

 Deferred Tax related to Assets and Liabilities arising from a Single Transaction

(Amendments to IAS 12)

Effective from 1 January 2024

 Lease Liability in a Sale and Leaseback (Amendment to IFRS 16)

 Classification of Liabilities as Current or Non-current (Amendments to IAS 1)

 Non-current Liabilities with Covenants (Amendment to IAS 1)

The Board of Directors expects that the currently known new accounting standards that are applicable

for financial years after 1 January 2022 will not have significant impact for the Company.

Use of estimates and judgements

The preparation of financial statements in conformity with IFRS requires management to make

judgements, estimates and assumptions that affect the application of accounting policies and the

reported amounts of assets, liabilities, income and expenses. Actual results may differ from these

estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting

estimates are recognized in the period in which the estimates are revised and in any future periods

affected.

The following judgements are applicable:

Classification of financial assets: assessment of the business model in which the assets are held and

assessment of whether the contractual terms of the financial asset are SPPI on the principal amount

outstanding.

The following assumptions and estimation uncertainties are applicable:

Impairment of financial instruments: determining inputs into the ECL measurement model, including

incorporation of forward-looking information and a deferred tax asset.

EnBW International Finance B.V.

There are no other substantial judgements, estimates and assumptions in the financial statements 2022

and 2021.

Significant accounting policies

(a) Financial assets

Financial assets consist of investments, other receivables and cash and cash equivalents.

Initial Recognition and Classification

Financial instruments are recognized initially at fair value. The fair value of a financial instrument on

initial recognition is normally the transaction price (e.g., the fair value of the consideration given or

received). If a financial asset is not subsequently accounted for at fair value through profit and loss,

the initial measurement includes transaction costs that are directly attributable to the asset’s

acquisition or origination.

Financial assets are classified, at initial recognition, as subsequently measured at amortized cost, fair

value through other comprehensive income (OCI), and fair value through profit or loss. The

classification of financial assets at initial recognition depends on the financial asset’s contractual cash

flow characteristics and the Company’s business model for managing them.

The Company measures financial assets at amortized cost if both of the following conditions are met:

• The financial asset is held within a business model with the objective to hold financial assets

in order to collect contractual cash flow;

and

• the contractual terms of the financial asset give rise on specified dates to cash flows that are

solely payments of principal and interest on the principal amount outstanding.

Financial assets at amortized cost are subsequently measured using the effective interest (EIR)

method and are subject to impairment. Gains and losses are recognized in profit or loss when the asset

is derecognized, modified or impaired. The EIR amortization is included as interest income in the

statement of income.

In order for a financial asset to be classified and measured at amortized cost or fair value through

OCI, it needs to give rise to cash flows that are ‘Solely Payments of Principal and Interest (SPPI)’ on

the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at

an instrument level.

The Company’s business model for managing financial assets refers to how it manages its financial

assets in order to generate cash flows. The business model determines whether cash flows will result

from collecting contractual cash flows, selling the financial assets, or both.

Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a company of similar

financial assets) is primarily derecognized when:

• The rights to receive cash flows from the asset have expired;

• the Company has transferred its rights to receive cash flows from the asset or has assumed

an obligation to pay the received cash flows in full without material delay to a third party

under a ‘pass-through’ arrangement; and either (a) the Company has transferred substantially

all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained

substantially all the risks and rewards of the asset but has transferred control of the asset.

EnBW International Finance B.V.

When the Company has transferred its rights to receive cash flows from an asset or has entered into

a pass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards

of ownership.

When it has neither transferred nor retained substantially all of the risks and rewards of the asset,

nor transferred control of the asset, the Company continues to recognize the transferred asset to the

extent of its continuing involvement. In that case, the Company also recognizes an associated

liability. The transferred asset and the associated liability are measured on a basis that reflects the

rights and obligations that the Company has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at

the lower of the original carrying amount of the asset and the maximum amount of consideration that

the Company could be required to repay.

Impairment of financial assets

The Company recognizes an allowance for expected credit losses (ECLs) for all loans not held at fair

value through profit or loss. ECLs are based on the difference between the contractual cash flows due

in accordance with the contract and all the cash flows that the Company expects to receive, discounted

at an approximation of the original effective interest rate. The expected cash flows will include cash

flows from the sale of collateral held or other credit enhancements that are integral to the contractual

terms.

ECLs are recognized in three stages. For credit exposures for which there has not been a significant

increase in credit risk since initial recognition, ECLs are provided for credit losses that result from

default events that are possible within the next 12-months (a 12-month ECL). For those credit

exposures for which there has been a significant increase in credit risk since initial recognition, a loss

allowance is required for credit losses expected over the remaining life of the exposure, irrespective

of the timing of the default (a lifetime ECL).

(b) Financial liabilities

Financial liabilities consist of interest-bearing loans and borrowings and other payables.

Initial Recognition and Classification

All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings

and payables, net of directly attributable transaction costs.

After initial recognition, interest-bearing loans and borrowings are subsequently measured at

amortized cost using the effective interest method (EIR). Gains and losses are recognized in profit or

loss when the liabilities are derecognized or modified as well as through the EIR amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees

or costs that are an integral part of the EIR. The EIR amortization is included as interest expense in

the statement of income.

The Company’s financial liabilities consist of interest-bearing loans due to outstanding bonds and its

interest accrued.

Derecognition

A financial liability is derecognized when the obligation under the liability is discharged or cancelled

or expired. When an existing financial liability is replaced by another from the same lender on

substantially different qualitative or quantitative terms, or the terms of an existing liability are

substantially modified, such an exchange or modification is treated as the derecognition of the original

liability and the recognition of a new liability. The difference in the respective carrying amounts is

recognized in the statement of income.

EnBW International Finance B.V.

Financial assets and financial liabilities are set off and the net amount is reported if there is a currently

enforceable legal right to offset the recognized amounts and there is an intention to settle on a net

basis, or to realize the asset and settle the liability simultaneously.

(d) Income

Net financing income comprise interest receivable on lending’s calculated using the effective interest

rate method and interest receivable on funds invested, taking into account the effective yield on these

assets as per inception date. Furthermore, the Company recharges expenses to the shareholder

according to the advance pricing agreement.

(e) Expenses

Net financing costs comprise interest payable on borrowings calculated using the effective interest

rate method and interest payable on funds received, taking into account the effective yield on these

liabilities as per inception date. Other expenses are recognized in the year to which they are related.

(f) Lease

The Company applies an exemption for IFRS 16 as the office lease contract it has with its lessor,

has a duration of 12 months. The lease contract is automatically renewed for a period of 12 months

at the end of each term.

(g) Income tax

Current income tax

Income tax on the statement of income for the year comprises current tax and deferred tax.

Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted

or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of

previous years.

The taxable profit of the Company is based on the Advance Pricing Agreement. As a result of this

the taxable result can deviate from the commercial result.

In 2019 the Company had been granted an Advanced Pricing Agreement (APA) with the Dutch Tax

Authority which will expire on 31 December 2023. The political sentiment towards tax rulings is

changing. The Board of Directors believes that until the expiry date of this ruling, there will not be

uncertainty about the treatment of income tax for the Company. The developments in this respect are

monitored closely.

(h) Foreign currency

Transactions in foreign currency are translated to euro at the foreign exchange rate ruling at the date

of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance

sheet date are translated to euro at the foreign exchange rate ruling at that date. Foreign exchange

differences arising on translation are recognized in the statement of income.

Exchange rates applicable as at 31 December 2022 are as follows:

1 CHF = EUR 1.0155 (31 December 2021: EUR 0.9680)

1 JPY = EUR 0.0071 (31 December 2021: EUR 0.0077)

1 USD = EUR 0.9376 (31 December 2021: EUR 0.8829)

1 GBP = EUR 1.1275 (31 December 2021: EUR 1.1901)

The average exchange rates for the period 1 January to 31 December 2022 are as follows:

EnBW International Finance B.V.

1 CHF = EUR 0.9961 (31 December 2021: EUR 0.9252)

1 JPY = EUR 0.0073 (31 December 2021: EUR 0.0077)

1 USD = EUR 0.9515 (31 December 2021: EUR 0.8460)

1 GBP = EUR 1.1731 (31 December 2021: EUR 1.1636)

(i) Cash-flow statement

The Cash-flow statement has been prepared in accordance with the direct method.

Determination of fair values

The fair value of the long-term interest-bearing loans and borrowings is based on their listed market

price. The fair value of the loans and borrowings to EnBW AG as at 31 December 2022 amounts to

EUR 5,161 million (31 December 2021: EUR 5,453 million). Facing the fact that the net proceeds

from each issue of these loans and borrowings by the Company only is applied towards the purposes

of on-lending to EnBW AG and that the interest rates and other interest conditions on these loans and

borrowings are equal to these on the long-term loans to EnBW AG, the fair value of these non-current

assets is equal to the fair value of the long-term interest-bearing loans and borrowings. The difference

between the book value of the long-term loans to EnBW AG EUR 5,519 million (31 December 2021:

EUR 4,648 million) and the book value of the long-term interest-bearing loans and borrowings EUR

5,539 million (31 December 2021: EUR 4,649 million) relates to the Expected Credit Loss (ECL) as

required under IFRS-9, as disclosed on page 23 and 24 of this report.

The fair value of the other assets and liabilities as at 31 December 2022 and 31 December 2021 is

reflected by the carrying value in the balance sheet.

The fair value of the non-current loans to AG and the corresponding listed debts have decreased

during the period under review. The Board of Directors has assessed the decrease of the unrecognized

fair values and has reason to believe that the decrease does not impact the financial position and going

concern of the Company, as it is expected that the non-current loans to AG and corresponding listed

debts will be held until maturity date and repaid as per the carrying value.

The carrying and fair value of the assets and liabilities as at 31 December 2022 and 31 December

2021 is specified in the following overview.

IFRS 13 specifies a fair value hierarchy that identifies the following hierarchy levels:

 Level 1: Fair values measured using quoted prices (unadjusted) in active markets for identical

assets or liabilities.

Carrying value

31 December

2021 (EUR

million )

Loans EnBW AG (non-current)

(corresponding debts are listed) 5,519 5,161 (358) 4,648 5,453 805

Loans EnBW AG (current)

(corresponding debts is listed) 101.2 101.8 0.6 - - -

3 Commercial Paper onlending EnBW AG 709.9 712.5 2.6 240 239.5 (0.5)

3 Loan EnBW AG (OPOLE) 296.9 295.3 (1.6) 298 300 2

n.a. Current Assets 73 73 - 75 75 -

n.a. Cash and cash equivalents 2.7 2.7 - 0.6 0.6 -

1 Debts (non-current) (listed) 5,539 5,161 379 4,649 5,453 (804)

1 Debts (current) (listed) 101.5 101.8 (0.3) - - -

3 Commercial Paper 712.5 712.5 - 240.0 239.5 0.5

n.a. Current liabilities 71 71 - 62 62 -

Fair value 31

December

2021 (EUR

million)

Unrecognised

gain/(loss)

2021 (EUR

million)Level

Carrying value

31 December

2022 (EUR

million )

Fair value 31

December

2022 (EUR

million)

Unrecognised

gain/(loss)

2022 (EUR

million)

EnBW International Finance B.V.

 Level 2: Fair values measured using inputs other than quoted prices included within Level 1 that

are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived

from prices).

 Level 3: Fair values measured using inputs for the assets or liability that are not based on

observable market date (unobservable inputs).

Financial risk management

Overview

The Company has exposure to the following risks from its use of financial instruments:

 Credit risk

 Liquidity risk

 Market risk

This note presents information about the Company’s exposure to each of the above risks, the

Company’s objectives, policies and processes for measuring and managing risk, and the Company’s

management of capital.

The Board of Directors has overall responsibility for the establishment and oversight of the

Company’s risk management framework.

The Company’s risk management policies are established to identify and analyse the risks faced by

the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits.

Risk management policies and systems are reviewed regularly to reflect changes in market conditions

and the Company’s activities.

There have been no substantive changes in the Company’s exposure to financial instrument risks, its

objectives, policies and processes for managing those risks or the methods used to measure them from

previous periods unless otherwise stated in this note.

Principal financial instruments

The principal financial instruments used by the Company, from which financial instrument risk arises,

are as follows:

- Cash and cash equivalents

- Interest receivable loans EnBW AG

- Loans EnBW AG (current)

- Loans EnBW AG (non-current)

- Bond interest payable

- Interest-bearing loans and borrowing (current)

- Interest-bearing loans and borrowings (non-current)

The financial instruments held by the Company can be classified as follows:

EnBW International Finance B.V.

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial

instrument fails to meet its contractual obligations and arises principally from the Company’s

receivables from customers and investment securities.

The Company’s exposure to credit risk is influenced mainly by the individual characteristics of

EnBW AG. The net proceeds from each issue of interest-bearing loans and borrowings by the

Company only will be applied towards the purposes of on lending to EnBW AG.

The interest rates and other interest conditions on the interest-bearing loans and borrowings are equal

to these on the loans to EnBW AG. EnBW AG has provided no securities but has taken over the

irrevocable and unconditional guarantee for the benefit of all bondholders with respect to the

prescribed and punctual payment of capital and interest of the bond notes issued by the Company.

The total carrying value of the loans to EnBW AG including accrued interest but excluding the

provision for expected credit loss per 31 December 2022 amounted EUR 6.7 billion (31 December

2021: EUR 5.3 billion).

As loans receivables at amortized cost are considered to be low risk, the impairment allowance is

determined at 12-month expected credit losses (‘ECL’) with a reference to internal credit ratings of

the counterparties. The ECL is the sum of the value of all possible losses, each multiplied by the

probability of that loss occurring and calculated as follows: ECL = EAD × LGD × PD. Exposure at

Default (EAD) is the gross carrying value of loans receivable; Loss Given Default (LGD) is the

portion of loans receivable that the Company shall lose if a borrower defaults; Probability of Default

(PD) is the likelihood of a default of a counterparty over an observed period. The PD and LGD rates

31-12-2022 31-12-2021 31-12-2022 31-12-2021 31-12-2022 31-12-2021

EUR 1,000 EUR 1,000 EUR 1,000 EUR 1,000 EUR 1,000 EUR 1,000

Cash and cash

equivalents

- -

2,689 634

- -

Interest receivable

loans EnBW AG

- -

70,038 72,547

- -

Loan EnBW AG

(current)

- -

1,107,899 537,917

- -

Loan EnBW AG

(non-current)

- -

5,518,799 4,648,091

- -

6,699,425 5,259,190

- -

Financial liabilities

31-12-2022 31-12-2021 31-12-2022 31-12-2021

EUR 1,000 EUR 1,000 EUR 1,000 EUR 1,000

Interest bond loans

- - 65,859 61,622

Interest-bearing loans and

borrowings (current)

- - 814,028 240,000

Interest-bearing loans and

borrowings (non-curre nt)

- - 5,539,469 4,648,809

- - 6,419,356 4,950,431

Fair value through

profit or loss

Amortis ed cost

(Loans and re ce ivable 2021)

Fair value through

Other comprehensive

income

Fair value through

profit or loss

Amortis ed cost

EnBW International Finance B.V.

were defined based on historical loss rates of its parent company and adjusted for forward looking

macroeconomic data.

The 1-year Probability of Default rate for EnBW AG on 30 December 2022 was 0.6188% (2021:

0.0256%) which is derived from data service provider Bloomberg. The PD rate is driven by the

change of the default risk assessment of EnBW AG which increased to HY1 (2021: IG5) during the

year. The changes are to a certain extent driven by the volatility of the share price of EnBW AG

during 2022. In this context, the input parameter Price Volatility increased from 29% in 2021 to 43%

in 2022. As a result of a free float of the shares of EnBW AG of less than 1%, this volatility is well

known by the Board of Directors. In addition, Bloomberg accounted for a lower cash flow from

operations which also explains the development of the PD rate. The Loss Given Default (LGD)

remained 60% (2021: 60%) which is described on this page.

Below table shows the amounts and rates regarding above mentioned definitions, including the

outcome of the ECL-provisions.

The Board of Directors is very much aware of all indicators and believes that credit risks are well

assessed and that there are no reasons for concerns about the recent changes of these indicators at this

moment or in the foreseeable future. There were no loans receivables for which the Company

observed a significant increase in the credit risk which would require the application of the lifetime

expected credit losses impairment model. The loss allowance in the period January to December 2022

increased by EUR 24.3 million (31 December 2021: 6.1 million decrease). The Company assesses a

significant increase in credit risk using the delta in the lifetime default probability, internal ratings

and arrears. The Company evaluates qualitative information on the borrower’s other cash flow

obligations (including to other debt providers), its liquidity position and business performance and

on the regulatory, economic, and technological environment of the borrower.

The Company also considers forward-looking information on developments in the relevant

macroeconomic indicators such as GDP and/or other macroeconomic indicators. The Company uses

the 30 days past due criteria as a backstop rather than a primary driver of moving exposures into stage

2. The Company assumes that the credit risk of such assets has increased significantly if they are

more than 30 days past due. The Company considers a financial asset to be in default when the

counterparty is unlikely to pay its obligations to the Company in full. In assessing whether a

counterparty is in default, the Company considers both qualitative and quantitative indicators (e.g.

overdue status) that are based on data developed internally and for certain financial assets also

obtained from external sources. The following indicators are incorporated: internal credit rating,

significant increases in credit risk on other financial instruments of the same borrower, actual or

expected significant adverse changes in business, financial and economic conditions that are expected

to cause a significant change to the borrower’s ability to meet its obligations.

No significant changes to estimation techniques or assumptions were made during the reporting

period. As all loans and notes are towards EnBW AG, the Company assumes the expected credit loss

the same for all loans.

Financial year EAD LGD PD ECL

EUR 1 million EUR 1 million

2022 in total

6,750 60% 0.6188% 25.06

2022 < 1 year

1,182 60% 0.6188% 4.39

2022 > 1 year

5,568 60% 0.6188% 20.67

2021 in total

5,286 60% 0.0256% 0.81

2021 < 1 year

611 60% 0.0256% 0.09

2021 > 1 year

4,675 60% 0.0256% 0.72

EnBW International Finance B.V.

The long-term credit ratings of EnBW AG are Baa1 with stable outlook (2021: Baa1 stable)

(Moody’s) and A- with negative outlook (2021: A- stable) (Standard & Poor’s).

At 31 December 2022 the Company has no financial assets which are past due but not impaired (2021:

none) and one financial assets of which terms have been renegotiated (2021: none). The maturity date

of the OPOLE loan has been extended from 28 February 2022 to 28 October 2023 at an interest rate

of 1.08%. The maximum exposure to credit risk at the reporting date is the carrying value of each

class of financial assets disclosed in Note 1 and 2. The gross carrying amount of a financial asset is

written off and derecognized only when the Company has no reasonable expectation of recovering

the financial asset in its entirety, after all reasonable efforts and enforcement procedures for recovery

have been exhausted. The Company individually makes an assessment with respect to the timing and

amount of write-off based on the individual facts and circumstances.

The loss allowance for loans recognized at amortized cost as at 31 December 2022 reconciles to the

opening loss allowance on 1 January 2022 and to the closing loss allowance as at 31 December

2022 as follows:

For financial assets at amortized cost, the Company applies the general expected credit loss model.

The Company considers the probability of default upon initial recognition of asset and whether there

has been a significant increase in credit risk on an ongoing basis throughout each reporting period.

To assess whether there is a significant increase in credit risk the Company compares the risk of a

default occurring on the asset as at the reporting date with the risk of default as at the date of initial

recognition.

Evidence that a financial asset is credit-impaired also includes the following observable data:

- significant financial difficulty of the borrower;

- a breach of contract;

- the restructuring of a loan or advance by the Company on terms that the Company would

not consider otherwise;

- it is probable that the borrower will enter bankruptcy or another financial reorganisation; or

- the disappearance of an active market for a security because of financial difficulties.

Cash in bank

Cash is held with the following institutions:

2022 2021

EUR 1,000 EUR 1,000

Opening loss allowance as at 1 Janauary 812 6,924

Increase (decrease) in loan loss allowance recognised in profit or loss during the period/year 17,927 (6,303)

Increase (decrease) in loan loss allowance due to new financial assets originated or purchased 6,358 191

Increase (decrease) in loan loss allowance due to repaid financial asset during the period/year (37) -

Closing loss allowance as at 31 December 25,060 812

31-12-2022 31-12-2021

Rating (Moody's) EUR 1,000 EUR 1,000

Deutsche Bank AG (current account) A1 (stable) 62 58

Lande s bank Baden-Württemberg (curre nt accounts) Aa3 (stable) 2,627 576

2,689 634

EnBW International Finance B.V.

The Board of Directors monitors the credit ratings of counterparties regularly and at the reporting

date does not expect any losses from non-performance by the counterparties. For all financial assets

to which the ECL is considered as immaterial, the carrying amount represents the maximum exposure

to credit loss.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they

fall due. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will

always have sufficient liquidity to meet its liabilities when due, under both normal and stressed

conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

There is only a small liquidity risk facing the equal terms of the non-current assets and the long-term

debts. The repayment schedules can be found on pages 35 and 43.

EnBW AG has taken over the irrevocable and unconditional guarantee for the benefit of all

bondholders with respect to the prescribed and punctual payment of capital and interest of the bond

notes issued by the Company.

Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and

equity prices will affect the Company’s income or the value of its holdings of financial instruments.

The objective of market risk management is to manage and control market risk exposures within

acceptable parameters, while optimising the return. The Company has one loan outstanding to EnBW

AG (“OPOLE”) which is not on-lending loan from debt (2021: one loan). This loan was financed by

equity. The total fair value of this loan per 31 December 2022 amounted EUR 0.3 billion (31

December 2021: EUR 0.3 billion).

Concentration risk

Concentration risk is the risk that the concentration of loans is not diversified and concentrated in a

certain geographic area. The loans are diverted in a variety of loans issued to EnBW AG in Germany.

As all loans are in one geographic area (Germany), and as all loans are issued to the same borrower

only, the Company has a significant exposure of concentration risk.

Currency risk

The net proceeds from each issue of interest-bearing loans and borrowings by the Company only will

be applied towards the purposes of on-lending to EnBW AG (for equal currency). Therefore, the

Company is not exposed to currency risk on investments and borrowings that are denominated in a

currency other than the functional currency of the Company.

The currencies in which these transactions primarily are denominated are Euro (EUR), Swiss Franc

(CHF) and Japanese Yen (JPY). The related income per currency is: EUR: EUR 115.3 million (31

December 2021: EUR 112.4 million), CHF: EUR 2.3 million (31 December 2021: EUR 2.2 million),

JPY: EUR 5.4 million (31 December 2021: EUR 5.9 million) and GBP: EUR 0 million (31 December

2021: EUR 0.4).

Interest rate risk

The interest rates and other interest conditions on the interest-bearing loans and borrowings are equal

to these on the loans to EnBW AG, except for the loan granted 2012 and extended until 28 October

2023 at an interest rate of 1.08%. Therefore, the Company is not significantly exposed to variability

of cash flows due to market development in interest rates.

Political risk from the Russia-Ukraine Conflict

Throughout 2021, the Russian military build-up on the border of Ukraine has escalated tensions

between Russia and Ukraine and strained bilateral relations.

EnBW International Finance B.V.

These events have continued in 2022 with Russia commencing a full-scale military invasion of

Ukraine in February 2022. On 21 February 2022, Russia recognized the independence of two

separatist regions within Ukraine and ordered Russian troops into these regions with a purported

mission to maintain peace in the area. Following the invasion of Ukraine, countries like the United

States, the EU, UK, Switzerland, Canada, Japan and Australia have made announcements regarding

imposition of sanctions. The imposition of sanctions has led to reactions from Russia particularly

resulting in a disruption of gas supplies to the EU. The reductions of gas supplies have led to higher

gas prices in Germany and there is a risk that EnBW AG may not be able to pass on higher costs to

its customers. Additionally, high volatility in commodity prices could lead to unforeseeable

developments in EnBW AG’s liquidity position, especially due to margin payments.

However, due to the implementation of the Energy Security Act (EnSiG) from the German

government in July 2022, measures are in place to limit the potential impact on any utility.

Financially, EnBW AG expects an adjusted EBITDA of around EUR 3.3 billion for the 2022 financial

year. In the downgraded guidance of November 2022, EnBW was still expecting adjusted EBITDA

of up to EUR 2.9 billion. This development was mainly caused by negative effects of the reductions

and cessation in gas supplies due to the Russia – Ukraine crisis, namely increased re-procurement

expenses for natural gas in the Sustainable Generation Infrastructure segment. However, the impact

in the fourth quarter of 2022 was lower than had been assumed in the updated guidance of November

2022, notably due to the warmer than average weather at the end of 2022.

Sensitivity analysis

The concentration risk is significant, cannot be avoided and can only be mitigated by a solid operation

and management of the parent company. The parent company reports publicly on a quarterly basis

and key figures, update of the business and upcoming transactions are being discussed on a regular

basis by the Board of Directors of the Company.

Capital management

Capital includes ordinary share capital and other equity attributable to the equity holders of the parent.

As at 31 December 2022 and 31 December 2021, the Company’s equity amounted to EUR

278,439,525 and EUR 311,754,874 respectively. The policy of EnBW AG is to maintain a strong

capital base and solid investment grade ratings so as to maintain investor, creditor and market

confidence and to sustain future development of the business. No additional capital is needed to

finance the activities of the Company. The margin of the interest on the loans covers the expenses of

the Company. The loans payable are mirrored by loans receivables with identical characteristics.

There were no changes in the Company’s approach to capital management as described in the

previous paragraph during the year.

The Company is not subject to externally imposed capital requirements.

COVID-19 pandemic

During the early start of 2020, the COVID-19 pandemic became visible in Europe. The Board of

Directors of the Company since then has taken measures to assure business continuation. Protection

of employees has had the highest priority whereas the Board of Directors further assured that

compliance tasks were still taken care of as well as the daily management and operation of the