Obligation Deutsche Bahn 0.95% ( XS2010039035 ) en EUR

Deutsche Bahn

95.39 % ▲

Allemagne

XS2010039035 ( en EUR )

0.95% par an ( paiement annuel )

Perpétuelle

Prospectus brochure de l'obligation Deutsche Bahn XS2010039035 en EUR 0.95%, échéance Perpétuelle

22/04/2024 ( Dans 6 jours )

L'Obligation émise par Deutsche Bahn ( Allemagne ) , en EUR, avec le code ISIN XS2010039035, paye un coupon de 0.95% par an.
Le paiement des coupons est annuel et la maturité de l'Obligation est le Perpétuelle

Prospectus dated 16 October 2019

Deutsche Bahn Finance GmbH
(Berlin, Federal Republic of Germany)
EUR 1,000,000,000 Undated Subordinated Resettable Fixed Rate Notes
ISIN XS2010039035, Common Code 201003903, WKN A255C2
Issue Price: 100.00 per cent.
EUR 1,000,000,000 Undated Subordinated Resettable Fixed Rate Notes
ISIN XS2010039548, Common Code 201003954, WKN A255C3
Issue Price: 100.00 per cent.
each guaranteed on a subordinated basis by
Deutsche Bahn Aktiengesellschaft
(Berlin, Federal Republic of Germany)
Deutsche Bahn Finance GmbH, c/o Deutsche Bahn AG, Europaplatz 1, 10557 Berlin, Federal Republic of Germany (the "Issuer" or
"DB Finance") will issue on 18 October 2019 (the "Issue Date") EUR 1,000,000,000 Undated Subordinated Resettable Fixed Rate
Notes (the "NC5.5 Notes") and EUR 1,000,000,000 Undated Subordinated Resettable Fixed Rate Notes (the "NC10 Notes" and,
together with the NC5.5 Notes, the "Notes" and each a "Series of Notes") in the denomination of EUR 100,000 each.
The NC5.5 Notes and the NC10 Notes are each unconditionally and irrevocably guaranteed by Deutsche Bahn Aktiengesellschaft,
incorporated under the laws of Germany as a stock corporation (Aktiengesellschaft) (the "Guarantor" or "DB AG" and, together with
all its consolidated subsidiaries, "DB Group" or the "Group") pursuant to subordinated guarantees (the "Subordinated Guarantee
for the NC5.5 Notes" and the "Subordinated Guarantee for the NC10 Notes", respectively, and together, the "Subordinated
Guarantees").
The Notes and the Subordinated Guarantees will be governed by the laws of the Federal Republic of Germany ("Germany").
The NC5.5 Notes will bear interest from and including 18 October 2019 (the "Interest Commencement Date") to but excluding
22 April 2025 (the "NC5.5 First Reset Date") at a rate of 0.950 per cent. per annum. Thereafter, unless previously redeemed, the
NC5.5 Notes will bear interest from and including the NC5.5 First Reset Date to but excluding 22 April 2030 (the "NC5.5 First
Modified Reset Date") at a rate per annum equal to the Reference Rate for the relevant Reset Period (each as defined in § 3(2) of the
terms and conditions of the NC5.5 Notes (the "NC5.5 Terms and Conditions")) plus a margin of 125.9 basis points per annum (not
including a step-up). Thereafter, unless previously redeemed, the NC5.5 Notes will bear interest from and including the NC5.5 First
Modified Reset Date to but excluding 22 April 2045 (the "NC5.5 Second Modified Reset Date") at a rate per annum equal to the
Reference Rate for the relevant Reset Period plus a margin of 150.9 basis points per annum (including a step-up of 25 basis points).
Thereafter, unless previously redeemed, the NC5.5 Notes will bear interest from and including the NC5.5 Second Modified Reset at a
rate per annum equal to the Reference Rate for the relevant Reset Period plus a margin of 225.9 basis points per annum (including a
step-up of 100 basis points).
Interest on the NC5.5 Notes will be payable annually in arrear on 22 April of each year, commencing on 22 April 2020 (short first
coupon).
The NC10 Notes will bear interest from and including the Interest Commencement Date to but excluding 18 October 2029 (the "NC10
First Reset Date") at a rate of 1.600 per cent. per annum. Thereafter, unless previously redeemed, the NC10 Notes will bear interest
from and including the NC10 First Reset Date to but excluding 18 October 2049 (the "NC10 Modified Reset Date") at a rate per
annum equal to the Reference Rate for the relevant Reset Period (each as defined in § 3(2) of the terms and conditions of the NC10
Notes (the "NC10 Terms and Conditions" and together with the NC5.5 Terms and Conditions, the "Terms and Conditions")) plus
a margin of 189.4 basis points per annum (including a step-up of 25 basis points). Thereafter, unless previously redeemed, the NC10
Notes will bear interest from and including the NC10 Modified Reset Date at a rate per annum equal to the Reference Rate for the
relevant Reset Period plus a margin of 264.4 basis points per annum (including a step-up of 100 basis points).
Interest on the NC10 Notes will be payable annually in arrear on 18 October of each year, commencing on 18 October 2020.

The Issuer is entitled to defer interest payments under each Series of Notes under certain circumstances (as set out in § 4(1) of the
Relevant Terms and Conditions) (such payments the "Deferred Interest Payments"). Such Deferred Interest Payments will not bear
interest. The Issuer may pay such Deferred Interest Payments (in whole or in part) at any time upon due notice (as set out in § 4(2) of
the Terms and Conditions) and will be required to pay such Deferred Interest Payments (in whole, but not in part) under certain other
circumstances (as set out in § 4(3) of the Terms and Conditions).
The Notes have no final maturity date and will only be redeemed in accordance with the provisions set out in § 6 of the Terms and
Conditions for each Series of Notes.
Each Series of Notes will initially be represented by a Temporary Global Note, without interest coupons, which will be exchangeable
in whole or in part for a Permanent Global Note without interest coupons, not earlier than 40 days after the Interest Commencement
Date, upon certification as to non-U.S. beneficial ownership.
This prospectus (the "Prospectus") does not constitute a prospectus within the meaning of Regulation (EU) No 1129/2017 of the
European Parliament and of the Council of 14 June 2017 (as amended, the "Prospectus Regulation"). Neither the Luxembourg
Financial Supervisory Authority, the Commission de Surveillance du Secteur Financier, nor any other "competent authority" (as
defined in the Prospectus Regulation) has approved this Prospectus or reviewed information contained in this Prospectus.
This Prospectus constitutes a prospectus for the purpose of the Luxembourg Law of 16 July 2019 on Prospectuses for Securities, as
amended. Application has been made to list the Notes on the official list (the "Official List") of the Luxembourg Stock Exchange and
for admission to trading of the Notes on the Euro MTF Market operated by the Luxembourg Stock Exchange, which is a multilateral
trading facility for the purposes of Directive 2014/65/EU of the European Parliament and of the Council on markets in financial
instruments, as amended, ("MiFID II"), and, therefore, not an EU-regulated market.
This Prospectus will be published in electronic form together with all documents incorporated by reference on the website of the
Luxembourg Stock Exchange (www.bourse.lu).
This Prospectus does not constitute an offer to sell, or the solicitation of an offer to buy, the Notes in any jurisdiction where such offer
or solicitation is unlawful.
The Notes have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act")
and subject to certain exceptions, the Notes may not be offered or sold within the United States or to, or for the account or
benefit of, U.S. persons.
The Notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made
available to any retail investor in the European Economic Area ("EEA"). For these purposes, a retail investor means a person who is
one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of MiFID II; or (ii) a customer within the meaning of Directive
(EU) 2016/97 (as amended, the "Insurance Distribution Directive"), where that customer would not qualify as a professional client
as defined in point (10) of Article 4(1) of MiFID II. Consequently, no key information document required by Regulation (EU)
No 1286/2014 (as amended, the "PRIIPs Regulation") for offering or selling the Notes or otherwise making them available to retail
investors in the EEA has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail
investor in the EEA may be unlawful under the PRIIPs Regulation.
Following the respective First Reset Date, interest amounts payable under each Series of the Notes are calculated by reference to the
annual swap rate for swap transactions denominated in Euro with a term of 5 years, which appears on the Reuters Screen Page
ICESWAP2 and which is provided by ICE Benchmark Administration Limited ("IBA"). As at the date of this Prospectus, IBA appears
on the register of administrators and benchmarks established and maintained by the European Securities and Markets Authority
("ESMA") pursuant to Article 36 of the Benchmark Regulation (Regulation (EU) 2016/1011) (the "Benchmark Regulation").
Prospective purchasers of the Notes should ensure that they understand the nature of the Notes and the extent of their exposure to risks
and that they consider the suitability of the Notes as an investment in light of their own circumstances and financial condition. Investing
in the Notes involves certain risks. Please review the section entitled "Risk Factors" beginning on page 7 of this Prospectus.
Joint Structuring Agents to the Issuer
Goldman Sachs International
J.P. Morgan
Joint Bookrunners
Barclays
Commerzbank
Goldman Sachs
J.P. Morgan
International
2

RESPONSIBILITY STATEMENT
The Issuer and the Guarantor, both with registered office in Berlin, Germany, accept responsibility for the information
contained in this Prospectus and hereby declare that, having taken all reasonable care to ensure that such is the case,
the information contained in this Prospectus is, to the best of their knowledge, in accordance with the facts and does
not omit anything likely to affect the import of such information.
The Issuer and the Guarantor further confirm that (i) this Prospectus contains all information with respect to the
Issuer and the Guarantor and its subsidiaries taken as a whole ("DB Group" or the "Group"), to the Notes and the
Subordinated Guarantees which is material in the context of the issue and offering of the Notes, including all
information which, according to the particular nature of the Issuer, the Guarantor, the Notes and the Subordinated
Guarantees is necessary to enable investors and their investment advisers to make an informed assessment of the
assets and liabilities, financial position, profits and losses, and prospects of the Issuer and the Group and of the rights
attached to the Notes and the Subordinated Guarantees; (ii) the statements contained in this Prospectus relating to
the Issuer, the Group, the Notes and the Subordinated Guarantees are in every material particular true and accurate
and not misleading; (iii) there are no other facts in relation to the Issuer, the Guarantor, the Group, the Notes or the
Subordinated Guarantees the omission of which would, in the context of the issue and offering of the Notes, make
any statement in this Prospectus misleading in any material respect; and (iv) reasonable enquiries have been made
by the Issuer and the Guarantor to ascertain such facts and to verify the accuracy of all such information and
statements.
NOTICE
No person is authorised to give any information or to make any representation other than those contained in this
Prospectus and, if given or made, such information or representation must not be relied upon as having been
authorised by or on behalf of the Issuer, the Guarantor or the Joint Bookrunners (as defined in the section
"Subscription and Sale of the Notes").
This Prospectus should be read and understood in conjunction with any documents incorporated herein or therein by
reference.
Each investor contemplating purchasing any Notes should make its own independent investigation of the financial
condition and affairs, and its own appraisal of the creditworthiness, of the Issuer and the Guarantor. This Prospectus
does not constitute an offer of Notes or an invitation by or on behalf of the Issuer, the Guarantor or the Joint
Bookrunners to purchase any Notes. Neither this Prospectus nor any other information supplied in connection with
the Notes should be considered as a recommendation by the Issuer, the Guarantor or the Joint Bookrunners to a
recipient hereof and thereof that such recipient should purchase any Notes.
This Prospectus reflects the status as of its date. The offering, sale and delivery of the Notes and the distribution of
this Prospectus may not be taken as an implication that the information contained herein is accurate and complete
subsequent to the date hereof or that there has been no adverse change in the financial condition of the Issuer or the
Guarantor since the date hereof.
To the extent permitted by the laws of any relevant jurisdiction, neither any Joint Bookrunner nor any of its respective
affiliates nor any other person mentioned in this Prospectus, except for the Issuer and the Guarantor, accepts
responsibility for the accuracy and completeness of the information contained in this Prospectus or any document
incorporated by reference, and accordingly, and to the extent permitted by the laws of any relevant jurisdiction, none
of these persons accept any responsibility for the accuracy and completeness of the information contained in any of
these documents. The Joint Bookrunners have not independently verified any such information and accept no
responsibility for the accuracy thereof.
This Prospectus does not constitute, and may not be used for the purposes of, an offer or solicitation by anyone in
any jurisdiction in which such offer or solicitation is not authorised or to any person to whom it is unlawful to make
such offer or solicitation.
3

The distribution of this Prospectus and the offering, sale and delivery of the Notes in certain jurisdictions may be
restricted by law. Persons into whose possession this Prospectus comes are required to inform themselves about and
to observe any such restrictions. For a description of the restrictions applicable in the EEA, the United States of
America, Singapore, Australia and the United Kingdom, see "Subscription and Sale of the Notes Selling
Restrictions".
For the avoidance of doubt the content of any website referred to in this Prospectus does not form part of this
Prospectus and the information on such websites has not been scrutinised or approved by the Luxembourg Stock
Exchange.
The language of this Prospectus is English. In respect of the Terms and Conditions German is the controlling and
legally binding language.
In this Prospectus all references to "", "EUR" or "Euro" are to the currency introduced at the start of the third stage
of the European Economic and Monetary Union, and as defined in Article 2 of Council Regulation (EC) No 974/98
of 3 May 1998 on the introduction of the Euro, as amended.
MIFID II PRODUCT GOVERNANCE / TARGET MARKET: PROFESSIONAL
INVESTORS AND ECPS ONLY
Solely for the purposes of each manufacturer's product approval process, the target market assessment in respect of
both Series of Notes has led to the conclusion that: (i) the target market for the Notes is eligible counterparties and
professional clients only, each as defined in MiFID II; and (ii) all channels for distribution of the Notes to eligible
counterparties and professional clients are appropriate. Any person subsequently offering, selling or recommending
the Notes (a "distributor") should take into consideration the manufacturers' target market assessment; however, a
distributor subject to MiFID II is responsible for undertaking its own target market assessment in respect of the Notes
(by either adopting or refining the manufacturers' target market assessment) and determining appropriate distribution
channels.
PRIIPS REGULATION / PROHIBITION OF SALES TO EEA RETAIL INVESTORS
The Notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or
otherwise made available to any retail investor in the EEA. For these purposes, a retail investor means a person who
is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of MiFID II; or (ii) a customer within the
meaning of the Insurance Distribution Directive, where that customer would not qualify as a professional client as
defined in point (10) of Article 4(1) of MiFID II. Consequently, no key information document required by the PRIIPs
Regulation for offering or selling the Notes or otherwise making them available to retail investors in the EEA has
been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor
in the EEA may be unlawful under the PRIIPs Regulation.
Where acting as agent on behalf of a disclosed or undisclosed client when purchasing, or making or accepting an
offer to purchase, any Notes (or any beneficial interests therein) from the Issuer and/or the Joint Bookrunners the
foregoing representations, warranties, agreements and undertakings will be given by and be binding upon both the
agent and its underlying client.
SINGAPORE SECURITIES AND FUTURES ACT PRODUCT CLASSIFICATION
In connection with Section 309B of the Securities and Futures Act (Chapter 289) of Singapore (the "SFA") and the
Securities and Futures (Capital Markets Products) Regulations 2018 of Singapore (the "CMP Regulations 2018"),
the Issuer has determined, and hereby notifies all relevant persons (as defined in Section 309A(1) of the SFA), that
the Notes are `prescribed capital markets products' (as defined in the CMP Regulations 2018) and Excluded
Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS
Notice FAA-N16: Notice on Recommendations on Investment Products).
4

BENCHMARK REGULATION: STATEMENT ON REGISTRATION OF BENCHMARK
ADMINISTRATOR
Following the respective First Reset Date, interest amounts payable under each Series of the Notes are to be
calculated by reference to the annual swap rate for swap transactions denominated in Euro with a term of 5 years,
which appears on the Reuters Screen Page ICESWAP2 and which is provided by IBA. As at the date of this
Prospectus, IBA appears on the register of administrators and benchmarks established and maintained by ESMA
pursuant to Article 36 of the Benchmark Regulation.
STABILISATION
IN CONNECTION WITH THE ISSUE OF THE NOTES, J.P. MORGAN SECURITIES PLC (THE
"STABILISING MANAGER") (OR ANY PERSON ACTING ON BEHALF OF ANY STABILISING
MANAGER) MAY OVER-ALLOT NOTES OR EFFECT TRANSACTIONS WITH A VIEW TO SUPPORTING
THE MARKET PRICE OF THE NOTES AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISE
PREVAIL. HOWEVER, STABILISATION MAY NOT NECESSARILY OCCUR. ANY STABILISATION ACTION
MAY BEGIN ON OR AFTER THE DATE ON WHICH ADEQUATE PUBLIC DISCLOSURE OF THE TERMS
OF THE OFFER OF THE NOTES IS MADE AND, IF BEGUN, MAY CEASE AT ANY TIME, BUT IT MUST
END NO LATER THAN THE EARLIER OF 30 DAYS AFTER THE ISSUE DATE OF THE NOTES AND 60
DAYS AFTER THE DATE OF THE ALLOTMENT OF THE NOTES. ANY STABILISATION ACTION OR
OVER-ALLOTMENT MUST BE CONDUCTED BY THE STABILISING MANAGER (OR ANY PERSON
ACTING ON BEHALF OF THE STABILISING MANAGER) IN ACCORDANCE WITH ALL APPLICABLE
LAWS AND RULES.
FORWARD-LOOKING STATEMENTS
This Prospectus contains certain forward-looking statements. A forward-looking statement is a statement that does
not relate to historical facts and events. They are based on analyses or forecasts of future results and estimates of
amounts not yet determinable or foreseeable. These forward-looking statements are identified by the use of terms
and phrases such as "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "predict",
"project", "will" and similar terms and phrases, including references and assumptions. This applies, in particular, to
statements in this Prospectus containing information on future earning capacity, plans and expectations regarding the
Group's business and management, its growth and profitability, and general economic and regulatory conditions and
other factors that affect it.
Forward-looking statements in this Prospectus are based on current estimates and assumptions that the Issuer makes
to the best of its present knowledge. These forward-looking statements are subject to risks, uncertainties and other
factors which could cause actual results, including the Group's financial condition and results of operations, to differ
materially from and be worse than results that have expressly or implicitly been assumed or described in these
forward-looking statements. The Group's business is also subject to a number of risks and uncertainties that could
cause a forward-looking statement, estimate or prediction in this Prospectus to become inaccurate. Accordingly,
investors are strongly advised to read the section "Description of the Guarantor and the Group" of this Prospectus.
This section includes more detailed descriptions of factors that might have an impact on the Group's business and
the markets in which it operates.
In light of these risks, uncertainties and assumptions, future events described in this Prospectus may not occur. In
addition, neither the Issuer, nor the Guarantor, nor the Joint Bookrunners assume any obligation, except as required
by law, to update any forward-looking statement or to conform these forward-looking statements to actual events or
developments.
5

TABLE OF CONTENTS

RISK FACTORS ................................................................................................................................................ 7
USE OF PROCEEDS ........................................................................................................................................19
TERMS AND CONDITIONS OF THE NC5.5 NOTES ...................................................................................20
TERMS AND CONDITIONS OF THE NC10 NOTES ....................................................................................63
THE SUBORDINATED GUARANTEE FOR THE NC5.5 NOTES ..............................................................105
THE SUBORDINATED GUARANTEE FOR THE NC10 NOTES ............................................................... 113
DESCRIPTION OF THE ISSUER .................................................................................................................121
DESCRIPTION OF THE GUARANTOR AND THE GROUP ......................................................................125
TAXATION .....................................................................................................................................................148
SUBSCRIPTION AND SALE OF THE NOTES ............................................................................................155
GENERAL INFORMATION ..........................................................................................................................158
DOCUMENTS INCORPORATED BY REFERENCE ...................................................................................160

6

RISK FACTORS
Before deciding to purchase the Notes, investors should carefully review and consider the following risk factors and
the other information contained in this Prospectus. Should one or more of the risks described below materialise, this
may have a material adverse effect on the business, prospects, shareholders' equity, assets, financial position and
results of operations (Vermögens-, Finanz- und Ertragslage) or general affairs of the Issuer, the Guarantor or the
Group. Moreover, if any of these risks occur, the market value of the Notes and the likelihood that the Issuer or the
Guarantor will be in a position to fulfil their payment obligations under the Notes or the Subordinated Guarantees,
respectively, may decrease, in which case the holders of the Notes (the "Noteholders") could lose all or part of their
investments. Factors which the Issuer and the Guarantor believe may be material for the purpose of assessing the
market risks associated with the Notes are also described below.
The Issuer and the Guarantor believe that the factors described below represent the principal risks inherent in
investing in the Notes, but the Issuer may be unable to pay interest, principal or other amounts on or in connection
with the Notes for other unknown reasons than those described below. Additional risks of which the Group is not
presently aware could also affect the business operations of the Group and have a material adverse effect on the
Group's business activities and financial condition and results of operations. Prospective investors should read the
detailed information set out elsewhere in this Prospectus (including any documents incorporated by reference herein)
and reach their own views prior to making any investment decision.
Words and expressions defined in the Terms and Conditions of the Notes below shall have the same meanings in this
section.
Potential investors should, among other things, consider the following:
Risks relating to the Issuer
Financing subsidiary
As a financing company, the Issuer in general faces the risk that loans granted by it may not be repaid when due and
payable for whatever reason.
All loans are granted to either Deutsche Bahn AG or to one of its Group companies. Therefore, the risk of no
repayment is directly dependent on Deutsche Bahn AG.
The ability of Deutsche Bahn AG to meet its obligations under the Subordinated Guarantees is influenced by the risk
factors outlined in the subsection entitled "Risks relating to the Guarantor and DB Group" below. As a consequence,
these risk factors also apply with regard to the Issuer.
Risks relating to the Guarantor and DB Group
Economic climate, market and competition
Demand for DB Group's mobility services and, in particular, for its transport and logistics services is dependent on
the overall economic development, among other things:
· Economic growth fuels the trends underlying its strategy in its operating markets.
· Macroeconomic shocks such as economic and financial crises and economic fluctuations may adversely
affect DB Group's business.
· The development of key economic factors (such as disposable income or the number of persons in active
employment) is particularly important for passenger transport.
· Risks arising from depleted public-sector budgets could have adverse effects (particularly in the form of
spending cuts), especially on DB Arriva activities.
Developments in the competitive environment are of particular importance for DB Group:
7

· In long-distance transport, DB Group is exposed to heavy inter- and intramodal competition, particularly
with motorized individual transport as the dominant competitor, but also with long-distance bus services
and air transport. Increased competition has a negative impact on price perception.
· There is intense competition in regional transport throughout Europe for securing long-term contracts. The
market volume is largely determined by the financial situation of the contracting organizations. As a result,
DB Group may lose revenues and profits.
· There is a risk of performance loss or failure to win tenders. To be able to compete in this market, DB Group
is constantly working to optimize its tender management and cost structure. Furthermore, depending on the
contract type, there is also the risk of a loss of passengers without the possibility of being able to adapt the
operating schedules.
· There is fierce intramodal and considerable intermodal competitive pressure in the rail freight transport
industry. Risks arise from the fact that competitors can operate with less expensive cost structures while
enjoying greater flexibility, and from possible future efficiency gains of trucks (for example, by platooning).
· In the freight forwarding business, there is both intense competition with other providers and a concentration
in the carrier market, which causes changes in the offerings of cargo space with corresponding effects on
the purchase and sales prices.
Production and technology
If the quality of passenger transport services suffers, this has an impact on production and service quality and can
lead to the loss of customers. Postponed deliveries of new vehicles may result in revenue losses and additional
expenses, for example, due to substitute transport services or penalty payments.
The availability and the technical condition of rail infrastructure are significant prerequisites for competitive rail
transport. In order to maintain the future viability of rail in the long term, it is also necessary to modernize the
infrastructure through digitalization and automation. Intense construction work on the network affects schedules and
the production quality of carriers, part of which may not be compensated.
The range and quality of the services depend to a significant extent on the availability and reliability of the production
resources used, intermediate services procured and the quality of any partners' services. Deutsche Bahn therefore
keeps up an intense dialog with its suppliers and business partners on the subject of quality. This is of particular
importance in the vehicle industry.
Ensuring sufficient availability of DB Group's vehicle fleet is particularly critical. Significant restrictions on
resources jeopardize operating schedules. In regional transport, there is the additional risk of penalties being imposed
by the relevant contracting organizations if trains are cancelled or delayed.
The technical production resources used in rail transport must comply with applicable standards and any
requirements, which are potentially subject to change. Deutsche Bahn may receive technical complaints concerning
its vehicles, creating the risk that Deutsche Bahn may only be permitted to use individual series or rail car types
under certain conditions, such as limited speeds, shorter intervals between maintenance or reduced wheel set loads.
In addition, Deutsche Bahn cannot accept newly purchased vehicles that have flaws or for which the necessary
vehicle certification has not been granted.
Technical defects or requirements may make modifications to vehicles necessary, potentially leading to significant
restrictions of availability or even temporary suspensions of such vehicles.
In regional transport, cost risks can arise from the redundancy of vehicles following the expiry or re-tendering of a
transport contract.
Increasing digitalization leads to a higher dependence on secure and constantly available IT systems. This will result
in risks, such as the interruption of the availability of IT systems or unauthorized third parties accessing customer
data.
8

Personnel
Given the competitive environment, DB Group's staff cost structure plays an important role. The competitive
environment might result in labour disputes or even strikes. DB Group's intention is to conclude competitive
collective agreements in terms of the labour market and the transport market. Due to demographic changes and the
associated lack of skilled employees, it is becoming increasingly difficult to fill vacancies with qualified personnel.
This in turn leads to risks such as lack of know-how transfer and the restriction of opportunities for career
development.
Regulation
Regulation to the detriment of rail (for example due to additional legislative requirements) has the potential to
endanger intermodal competitiveness. Changes to the legal framework at a national or European level could pose
risks to DB Group's business. This general regulatory risk could result in tangible negative effects on DB Group's
revenues and profit.
These regulations govern the individual components of the pricing systems, and the general terms and conditions
applied by DB Group's Railway Infrastructure Companies so that margins can come under pressure or even become
negative.
Political risks concern particularly a tightening of existing standards and regulations affecting the railways (e.g.
passenger rights). The structure of DB Group may also be exposed to regulatory risks.
Procurement/energy market
Purchase prices for raw materials, energy and transport services vary according to market conditions.
DB Group responds to the risk of increasing energy prices by using among other things appropriate derivative
financial instruments and entering into long-term procurement contracts. However, these safeguards also limit
opportunities arising from trends in energy prices. In the event of falling prices, DB Group does not benefit from the
market development.
This means that depending on the market and competitive situation, it may not be possible, or may only be possible
to a very limited extent, to pass increased costs on to the customer in the short term. This in turn has a negative
impact on margins.
Noticeable train-path price increases outside of Germany result in significant cost increases for the use of
infrastructure. Due to the intensity of competition, it is not always possible to pass on cost increases.
Foreign exchange, pensions and taxes
A currency risk arises from DB Group's international business. This risk is largely limited to the so-called translation
risk, since usually there is a high regional congruence between the production and sales markets. DB Group uses
primary and derivative financial instruments to address interest rate, currency and energy price risks from its
operating business. There is a risk that these hedging measures will not pay off.
Pensions and similar retirement benefit obligations are partially covered by plan assets from stocks, real estate, fixed-
income securities and other investments. Value losses in these assets directly reduce the cover of pension plan
obligations, potentially resulting in DB AG having to provide additional cover.
In addition, there are potential risks from retrospective tax payments from tax audits that are in progress, and from
amendments to tax laws.
Law and contracts
As a result of delayed vehicle deliveries and vehicle defects, operating difficulties and breaches of contract or non-
compliance events arise with respect to contracting organizations in regional transport. Higher expenses and penalty
payments combined with lower revenues from fares are the result. Ensuing damage claims are asserted against the
manufacturers. Provisions have been made for legal and contractual risks based on an assessment of their probability
of occurrence, but there is a risk that such provisions may turn out to be insufficient.
9

With its very high purchasing volume and over 40,000 suppliers, DB Group is one of the largest purchasers in
Germany. Large-scale capital expenditures mean that the infrastructure business units in particular are exposed to a
significant risk of becoming the target and victim of corruption, cartel agreements or fraud. As a provider of grants,
the Federal Government places high demands on DB Group with its anti-corruption guidelines.
Significant events
DB Group's activities as a train-operating company are based on a technologically complex, networked production
system. In general, DB Group tries to combat the risk of potential operational disruptions through regular
maintenance and hiring qualified employees, along with continuous quality assurance and improvement of its
processes but there can be no assurance that these measures will turn out to be sufficient at all times.
The nature of rail transport as an open system means that certain factors (such as natural disasters, accidents, sabotage
and theft) over which DB Group has only limited influence could have a negative impact on operations. Its efforts in
such cases focus on minimizing the potential effects. However, this could also result in cost risks from
countermeasures and reputational risks.
Damage to the rail infrastructure caused by extreme weather events results, among other things, in a loss of income,
penalty payments and a higher resource requirement for repairing damages and preventative measures.
Additional measures to improve public security in passenger stations and other areas (for example, higher
requirements for the quality and quantity of video surveillance), may result in additional costs.
Project risks
DB Group's business operations not only involve huge capital expenditure volumes, but also a large number of highly
complex projects. Changes to the legal framework, delays in implementation (including due to ever-more
comprehensive public consultation) or necessary adjustments during terms (often lasting several years), deviations
from the ramp-up curve of funds for capital expenditures agreed with the Federal Government or changes to purchase
prices may lead to project and liquidity risks. In case of delays in completion, planned modal shifts from road to rail
will not be feasible.
With the implementation of planned profit and efficiency gains from various business-unit-specific programs and
projects (such as Agenda for a Better Railway for the integrated rail system in Germany or Primus at DB Schenker),
there is the risk that it will either not be possible to implement the planned effects at all, or only to a limited extent
and/or with delays.
Infrastructure Financing
As a key element of the German Rail Reform, the Federal Government has the constitutional obligation to finance
capital expenditures in rail infrastructure. The key factor here is securing sufficient funding, but also the ability to
plan the availability of funding for the existing network as well as new construction and expansion (requirement plan
capital expenditures). A limited availability may lead to less funding being available to maintain the existing network
or overcome shortages, thereby restricting the competitiveness of rail as a mode of transport.
DB Group has an agreement with the Federal Government that sets out the financing of the existing network until
2019. Risks result from a potential failure to achieve the quality objectives specified in this Service and Financing
Agreement (Leistungs- und Finanzierungsvereinbarung the "LuFV") II (for more information on the LuFV II see:
"Description of the Guarantor and the Group Financial Relationship with the Federal Republic of Germany or the
Federal States") and may result in a possible reclaim by the Federal Government based on an audit of the proper use
of Federal funds. Currently the LuFV III is under negotiation and should come into force on 1 January 2020.
The profits of infrastructure companies in turn are ploughed back into the infrastructure via the so-called "financing
circle". Risks result from a potential failure to achieve the contract objectives specified in the LuFV II and from a
possible reclaim by the Federal Government based on an audit of the proper application of funds.
The economic sustainability of capital expenditures or contributions to capital expenditure projects funded with DB
funds is essential to ensure DB Group's ability to invest in the long term.
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