EnBW Energie Baden Württemberg : Financial Statements EnBW AG 2023

Financial statements of EnBW AG 2023

Financial statements of EnBW AG 2023

The management report of EnBW Energie Baden-Württemberg AG (EnBW AG) and the Group management report are combined and published in the Integrated Annual Report 2023.

The financial statements and the management report of EnBW

AG contained in the combined management report for the 2023 financial year are published in the company register.

EnBW Energie Baden-Württemberg AG, Karlsruhe, balance sheet as of

31 December 2023

in € million Assets Non-current assets

Notes 31/12/2023 31/12/2022

Intangible assets	(1)	277.4	313.6
Property, plant and equipment	(2)	1,384.8	1,050.0
Financial assets	(3)	25,735.8	26,869.7
27,398.0	28,233.3
Current assets
Inventories	(4)	1,846.9	2,340.0
Receivables and other assets	(5)	5,796.9	7,288.0
Securities	(6)	230.0	0.0
Cash and cash equivalents	(7)	6,457.2	3,142.5
14,331.0	12,770.5
Prepaid expenses	(8)	4,674.3	6,744.7
Surplus from offsetting	(9)	47.1	31.9
46,450.4	47,780.4
Equity and liabilities
Equity	(10)
Subscribed capital	708.1	708.1
Treasury shares	-14.7	-14.7
Issued capital	(693.4)	(693.4)
Capital reserve	776.0	776.0
Revenue reserves	2,822.5	2,022.5
Retained earnings	1,155.4	652.9
5,447.3	4,144.8
Extraordinary items for investment cost subsidies and grants	(11)	24.0	25.9
Provisions	(12)	14,903.6	15,149.9
Liabilities	(13)	21,118.8	23,203.2
Deferred income	(14)	4,956.7	5,256.6
46,450.4	47,780.4
Financial statements of EnBW AG 2023

EnBW Energie Baden-Württemberg AG, Karlsruhe, income statement from

1 January to 31 December 2023

in € million	Notes	2023	2022
Revenue	(15)	116,487.0	134,746.7
Changes in inventories	21.9	12.8
Other own work capitalized	14.4	16.6
Other operating income	(16)	1,156.0	1,848.2
Cost of materials	(17)	-111,978.5	-132,374.8
Personnel expenses	(18)	-967.9	-1,035.2
Amortization and depreciation	(19)	-230.0	-201.9
Other operating expenses	(20)	-1,788.5	-1,604.6
Earnings before interest and taxes	2,714.4	1,407.8
Investment income	(21)	304.2	284.3
Income from profit and loss transfer agreements	668.8	544.4
Income from other securities and loans held as financial assets	(22)	90.4	89.3
Other interest and similar income	(23)	910.4	92.4
Impairment losses on financial assets and securities from current assets	(24)	-1,144.3	-134.4
Expenses from loss transfer agreements	-575.5	-369.3
Interest and similar expenses	(25)	-711.6	-614.8
Income taxes	(26)	-658.1	-322.7
Earnings after tax	1,598.7	977.0
Other taxes	(27)	1.7	-3.7
Annual net profit	(28)	1,600.4	973.3
Profit carried forward from the previous year	355.0	129.6
Transfers to other revenue reserves	-800.0	-450.0
Retained earnings	1,155.4	652.9
Financial statements of EnBW AG 2023

EnBW Energie Baden-Württemberg AG, Karlsruhe, notes to the financial statements 2023

General principles

EnBW Energie Baden-Württemberg AG (EnBW AG) has its headquarters in Karlsruhe and is entered in the commercial register at the District Court of Mannheim (reg. no. HRB 107956).

The financial statements as of 31 December 2023 have been prepared in accordance with the regulations in the German Commercial Code (HGB), the German Stock Corporation Act (AktG) and the law governing the electricity and gas industries in Germany (EnWG). The regulations for large corporations apply.

Items that have been combined in the balance sheet and in the income statement in the interest of clarity are disclosed separately and explained in the notes.

The income statement has been prepared using the nature of expense method.

The financial statements are presented in euros (€) and the amounts are stated in millions of euros

(€ million).

The consolidated financial statements of EnBW AG are prepared in accordance with section 315e (1) HGB using the International Financial Reporting Standards (IFRS) set by the International Accounting Standards Board (IASB), the adoption of which is mandatory in the EU as of the reporting date.

Accounting and valuation methods

The following accounting and valuation methods were applied as previously in the preparation of the financial statements.

Intangible assets acquired for a consideration are carried at acquisition cost and, if they have a limited life, are amortized using the straight-line method over their useful life. Internally generated intangible assets are carried at production cost and, if they have a limited life, are amortized using the straight-line method over their useful life. Production costs include all cost components that must be capitalized, interest for debt is not included. The capitalization option according to German commercial law is utilized. If costs incurred during the development phase meet the capitalization criteria, they are capitalized as production costs.

Property, plant and equipment are recognized at acquisition or production cost and, if depreciable, are subjected to scheduled depreciation. Production costs for internally generated assets contain all cost components that must be capitalized. Interest for debt is not included in the production costs.

Property, plant and equipment is depreciated over the expected useful life based on the official AfA tables. Assets that were added until the German Accounting Law Modernization Act came into force in 2010 are measured according to the regulations in force at the time the relevant asset was initially recognized. Depreciation was carried out based on the maximum depreciation rates permitted under tax law up to and including 2009 and on a straight-line basis since 2010. Movable assets are depreciated using the straight-line method, except for those assets added in 2006, 2007 and 2009. If permitted under tax law, the declining balance method of depreciation was used for movable assets in 2006, 2007 and 2009. Depreciation is recorded pro rata temporis in the year of addition.

For reasons of simplicity and due to their minor significance, low-value assets in the sense of section 6 (2) German Income Tax Act (EStG) are fully recognized as expenses in the year of acquisition or production.

Impairment losses are recognized on both intangible assets and property, plant and equipment if permitted under commercial law. Reversals of impairment losses are recognized as soon as the reasons for the impairment loss in previous years no longer exist.

In the financial assets, shares and securities are carried at the lower of their acquisition cost or fair value. Impairment to a lower value is only carried out if the loss in value is expected to be permanent. Reversals of impairment losses are recognized if the reasons for previously recognized impairment losses no longer exist.

Loans are generally recognized at the lower of their nominal value or fair value.

Inventories that are not included in a valuation unit are measured at the lower of the acquisition or production cost and the market price. The measurement is made on the basis of the lowest value principle. CO2 allowances that were allocated free of charge are recognized at €0. Income from the sale of emission allowances is reported under revenue. All identifiable risks associated with inventories, relating to above-average storage period, reduced marketability and lower replacement costs, are taken into account with appropriate loss allowances. Interest on debt is not capitalized. Appropriate provisions are made for losses from supply and purchase obligations subject to individual measurements and for losses from valuation units. Apart from the standard retention of title, inventories are free from third-party rights.

Receivables and other assets are recognized at their nominal value. The risk of default is taken into account with appropriate loss allowances. The trade receivables contain deferred income determined using an extrapolation procedure. Depending on the customer segment, the procedure takes into account historical consumption values, historical temperature cycles, the individual load profile and consumption and production behavior in the previous year.

Securities from current assets are recognized at the lower of the acquisition cost, stock market price or redemption value.

In cases where the capitalization option according to section 250 (3) sentence 1 HGB is utilized, the capitalized discounts are subjected to scheduled depreciation on an annual basis over the term of the loan agreement.

Non-current assets in a foreign currency are measured using the average spot exchange rate at the date of acquisition or a lower exchange rate on the reporting date. Assets in a foreign currency with a residual term of up to one year are measured using the exchange rate on the reporting date.

To determine deferred taxes due to temporary differences between the valuations for assets, liabilities and deferred income under commercial law and the tax-based valuations, the resulting tax burden and tax relief are determined at the specific tax rates that apply to the company at the time of the removal of the differences but not discounted. Deferred tax assets and liabilities are offset for the tax group at the EnBW AG level. Deferred tax assets are not reported on the balance sheet because overall there is a surplus of deferred tax assets over deferred tax liabilities. The option according to section 274 (1) sentence 2 HGB is not utilized. Deferred tax assets result mainly from measurement differences for the provisions for pensions and similar obligations, onerous contracts and other personnel provisions. Deferred tax liabilities mainly comprise deferred taxes due to measurement differences for intangible assets, extraordinary tax items and nuclear provisions. An income tax rate of 29.7% is used to determine deferred taxes. This includes corporate income tax together with a solidarity surcharge of 15.8% and trade tax of 13.9%. Subsidiaries and partnerships were also included in the calculation of the deferred taxes for EnBW AG. Deferred taxes for partnerships are simply determined using the tax rates for corporate income tax together with a solidarity surcharge.

If it is not possible to determine the fair value from an active market when offsetting assets and liabilities in accordance with section 246 (2) sentence 2 HGB, it is derived using an enterprise valuation model as the basis for the cash flow planning, which is in turn based on the medium- and long-term planning approved by the management of the company as of the date of the valuation. The plans are based on past experience and on estimates concerning future market development. Key assumptions underlying the determination of fair value include projections of future electricity prices, gas prices, raw materials prices, company-specific investing activities, the regulatory framework as well as growth and discount rates.

The subscribed capital is recognized at its nominal value. Treasury shares are recognized net of the subscribed capital at nominal value.

The construction cost subsidies that have not yet been recognized in profit and loss were primarily paid by customers for investment in the district heating sector. The reversal of construction cost subsidies received is carried out on a straight-line basis and is reported under revenue. The period for the reversal of construction cost subsidies corresponds to the useful life of the subsidized assets.

The capital subsidies which have not yet been recognized were granted for specific investments by the applicant. The reversal of capital subsidies received is carried out on a straight-line basis and is reported under other operating income. The period for the reversal of the capital subsidies is based on the useful life of the investment.

The provisions for pensions and similar obligations are determined actuarially according to the projected unit credit method using the "2018 G mortality tables" devised by Prof. Dr. Klaus Heubeck.

The provisions are discounted to the present value using an average market interest rate for the last 10 financial years, as calculated and published by the German Federal Bank. The discount rate applied was the average market interest rate for an assumed remaining term of 15 years of 1.8% (previous year: 1.8%) in accordance with the German Regulation on the Discounting of Provisions from 18 November 2009 (last amended by section 9 of the law from 11 March 2016, BGBI I p. 396 ). The difference between the valuation of the provisions for pension obligations with a 7-year and a 10-year average discount rate is ineligible for distribution as dividends in accordance with section 253 (6) HGB.

In addition, the following premises are taken into account (average values):

2023	2022
Salary increase including career trend	2.9%	3.1%
Inflation rates	2.3%	2.6%
Pension increase	2.2%	2.4%
Employee turnover	2.0%	2.0%

In order to cover the claims from pension commitments, investments were transferred to a trustee

(EnBW Trust e. V.) in a so-called Contractual Trust Arrangement (CTA). In accordance with section 246 (2) sentence 2 HGB, the pension provisions are offset by the corresponding dedicated financial assets. These dedicated financial assets are recognized at fair value in accordance with section 253 (1) sentence 4 HGB. If a surplus arises from the offsetting process, this is reported as a separate item (section 266 (2) letter E HGB). In accordance with section 246 (2) sentence 2 HGB, the expenses and income from the discounting process and from the assets to be offset are offset within the financial result. If the fair value of the dedicated financial assets exceeds the historical acquisition costs, this portion is ineligible for distribution as dividends in accordance with section 268 (8) HGB.

Tax provisions and other provisions take into account all uncertain liabilities and onerous executory contracts. They are recognized at the amount required to fulfill the obligations according to reasonable commercial judgment (i.e., including future cost and price increases). Provisions with a remaining term of more than one year were discounted. If the underlying obligation includes an interest portion, the provisions were discounted to the present value using an average market interest rate appropriate to the term of the provision for the last seven financial years, as calculated and published by the German Federal Bank. The fair value of the assets that are exclusively dedicated to the fulfillment of the obligations for semi-retirement and long-term working time accounts, which are not accessible to all other creditors (dedicated financial assets in the sense of section 246 (2) sentence 2 HGB), was

offset against the provisions. If a surplus arises from the offsetting process, this was reported under the item surplus from offsetting. The additions to the semi-retirement provisions are characterized as severance pay and accordingly are immediately recognized in full as an expense at the time of origin and reported under other operating expenses.

Provisions relating to nuclear power cover obligations for the decommissioning and dismantling of nuclear power plants, as well as the conditioning and specialist packaging of the radioactive waste.

The provisions for decommissioning and dismantling in relation to nuclear power are calculated using external appraisals, based on the contractual regulations and the company's own expectations.

The discount rates applied were the average market interest rates from the German Federal Bank based on the assumed remaining term, which were between 0.99% and 1.80% on the reporting date (previous year: between 0.43% and 1.54%). In addition, a rate of increase in prices of 3.0% for 2024 and 2.4% for the following years (previous year: 6.5% for 2023 and a constant rate of 2.4% for the following years) was taken into account. The decommissioning costs are still calculated on the basis of the scenario that assumes that the plants will be removed immediately.

Liabilities are recognized at their settlement amounts. Non-current liabilities in a foreign currency with a remaining term of more than one year are measured using the spot exchange rate on the date of acquisition or a lower exchange rate on the reporting date. Liabilities in a foreign currency with a residual term of up to one year are measured using the exchange rate on the reporting date.

Valuation units according to section 254 HGB are created to hedge against financial risks. The following accounting and valuation methods are applied here:

Economic hedges are accounted for by creating valuation units. In cases in which both the net hedge presentation method - where the offsetting changes in the value of the hedged risk are not recognized - and the gross hedge presentation method - where the offsetting changes in the value of the hedged risk are recognized for both the hedged item and also the hedging instrument - could be applied, the net hedge presentation method is used. The positive and negative offsetting changes in value are reported without any impact on the income statement.

The development of non-current assets can be found in Annex 1.

The EnBW financial statements as of 31 December 2023 were prepared taking into consideration the opportunities and risks related to climate change presented in the management report and to the goals for our strategy, sustainability and climate protection, including climate neutrality. Material and foreseeable effects with an impact on assets, liabilities, income and expenses, as well as any necessary disclosures in the notes, were taken into account in the financial statements. For example, physical and transitory climate risks are analyzed as part of the subsequent measurement of assets when assessing their useful lives and residual values, as well as determining their fair value. They are also taken into account when recognizing and measuring the settlement amount for provisions and, where relevant, for disclosing other financial commitments.

Notes to the balance sheet

(1) Intangible assets

Intangible assets mainly comprise customer bases, electricity procurement agreements and software.

In the previous year, development costs for internally generated intangible assets totaling €3.4 million were capitalized. There were no research and development costs for internally generated intangible assets in the financial year (previous year: €0.7 million).

(2) Property, plant and equipment

Property, plant and equipment mainly comprises power plants.

(3) Financial assets

The changes in shares in affiliated entities mainly comprise payments into the capital reserve and amortization and depreciation. In addition, EnBW sold minority shareholdings in He Dreiht GmbH & Co. KG and EnBW Übertragungsnetz Immobiliengesellschaft mbH & Co. KG, which holds 100% of the shares in TransnetBW GmbH.

The main changes to the investments concern additions to, and disposals of, financial investments.

Financial assets include shares in investment assets in which a shareholding of more than 10% is held. These comprise funds focusing on assets in the eurozone countries, which are mainly direct or indirect investments in fixed-income securities, shares, real estate and private equity investments, as well as an investment company with variable capital (SICAV), where infrastructure funds are bundled. The market value of the shares on the reporting date was €4,808.8 million, while the carrying amount was €3,845.0 million. The difference between the market value and the carrying amount is thus €963.8 million. In the reporting year, dividends of €36.0 million were received. There is a limitation to the possibility of selling the shares on a daily basis according to section 98 (2)

German Capital Investment Code.

For certain financial assets, the option of not recognizing an impairment despite proof of its fair value was exercised because permanent impairment is not expected. The main reasons for utilizing this option were temporary interest-driven falls in value, funds currently being established and the use of conservative valuation methods.

Information on shareholdings according to section 285 nos. 11 and 11a HGB can be found in Annex 2.

(4) Inventories

in € million
Materials and supplies	449.7	515.1
Work in progress	123.8	101.9
Finished goods and merchandise	1,269.0	1,721.0
Payments on account	4.4	2.0
Total	1,846.9	2,340.0

31/12/2023 31/12/2022

As of the reporting date, the materials and supplies comprise coal in the amount of €225.2 million (previous year: €376.6 million), CO2 allowances in the amount of €162.2 million (previous year: €38.5 million), nuclear fuel rods in the amount of €0.0 million (previous year: €3.4 million) and other materials and supplies in the amount of €62.2 million (previous year: €96.6 million).

Finished goods and merchandise mainly comprise stored gas in the amount of €1,269.0 million (previous year: €1,720.5 million).

(5) Receivables and other assets

of which with a	of which with a
remaining term of	remaining term of
in € million	31/12/2023	more than 1 year	31/12/2022	more than 1 year
Trade receivables	1,416.5	0.0	1,890.9	0.0
Receivables from affiliated entities	2,484.0	0.0	2,005.8	0.0
Receivables from entities in which participating interests are held	43.6	0.0	62.3	0.0
Other assets	1,852.8	589.7	3,329.0	0.0
Total	5,796.9	589.7	7,288.0	0.0

Trade receivables primarily concern receivables from trading activities and consumption accruals for electricity and gas deliveries not yet invoiced. Payments received on account are deducted from the receivables.

Receivables from affiliated entities primarily comprise receivables from intercompany settlement transactions as part of the centralized financial and liquidity management, as well as claims from profit and loss transfer agreements and short-term loans.

Other assets mainly comprise cash securities paid of €937.4 million (previous year: €2,679.1 million), tax receivables of €52.2 million (previous year: €155.7 million) and interest receivables of €30.7 million (previous year: €21.3 million). As in the previous year, there were no tax receivables incurred after the reporting date.

As part of the sale of minority shareholdings in EnBW Übertragungsnetz Immobiliengesellschaft mbH & Co. KG, which holds 100% of the shares in TransnetBW GmbH, the majority of the proceeds were paid in cash and cash equivalents. The remaining amount will be paid by 2028 at the latest.

(6) Securities

The securities are fixed-income securities.

(7) Cash and cash equivalents

Cash and cash equivalents mainly comprise bank deposits.

(8) Prepaid expenses

Prepaid expenses mainly comprise earnings components from futures of €4,578.3 million (previous year: €6,664.5 million) and insurance premiums of €7.3 million (previous year: €10.2 million), as well as discounts from loans to an affiliated entity of €37.1 million (previous year: €27.5 million).

Expenditure for nuclear energy due to future volumes of waste, which has already been paid in full to the government as part of the payment to the disposal fund, totaled €0.0 million (previous year: €3.0

million). These prepaid expenses were reversed on a pro rata basis until the end of the service life of Block II of the Neckarwestheim nuclear power plant up to 15 April 2023. The reversal for the 2023 financial year totaled €3.0 million (previous year: €8.9 million).

(9) Surplus from offsetting

The surplus from offsetting results from offsetting assets against provisions for pensions and similar obligations in accordance with section 246 (2) sentence 2 HGB.

Pensions and similar obligations

in € million	31/12/2023	31/12/2022
Settlement amount for the offset liabilities	-446.9	-506.6
Fair value of the assets	494.0	538.5
Balance from offsetting	47.1	31.9
Acquisition costs of the assets	518.2	598.7
Netted expenses	9.6	47.8
Netted income	27.3	0.8
Financial statements of EnBW AG 2023