EVN AG — Earnings Release 2007

Aug 28, 2007

News Details

Corporate | 28 August 2007 08:00

EVN AG: Development of business in the first three quarters of 2006/07

EVN AG / Quarter Results/Quarter Results

Release of a Corporate News, transmitted by DGAP - a company of EquityStory
AG.
The issuer / publisher is solely responsible for the content of this announcement.

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August 28, 2007

Press Release

Development of business in the first three quarters of 2006/07

(October 1 2006 – June 30, 2007)

• Initial consolidation of the Macedonian subsidiary ESM AD for an
  entire
  financial year

• Lower primary energy prices for gas passed on to consumers

• Conclusion of a contract to acquire Bulgaria´s 2nd largest district
  heating plant

• Agreement to increase EVN´s indirect shareholding in
  Rohöl-Aufsuchungs-AG

• Hydroelectric power plant projects in Albania recognised as being in
  the public interest

                                     2006/07
                                     Q. 1-3            Change
                                     EUR m             in %
  

  Sales revenues 1,701.7 + 6.5
  EBITDA 311.1 - 4.7
  Operating result (EBIT) 186.9 - 6.0
  Group net profit 221.8 +7.0

Despite a challenging business environment, we are able to report an
improvement in EVN Group results for the first three quarters 2006/07. The
revenue of the Energy segment rose by 10.2%, primarily due to the
first-time integration of our Macedonian subsidiary ESM AD for the entire
financial year. In the Environmental Services segment, the completion of a
large drinking water project in Moscow led to a decline in revenue below
last year´s level, in spite of numerous but smaller new projects. All in
all, EVN Group revenue climbed by 6.5%, to EUR 1,701.7m. Whereas the
results from operating activities were down only 6.0% compared to last
year’s level in spite of the unfavourable business environment prevailing
in the energy industry, Group net profit climbed 7.0%, to EUR 221.8m,
primarily as a consequence of the good development of EVN’s financial
results.

Consolidation effects in electricity, decline in gas and heating sales
volumes

Due to the initial consolidation of our Macedonian subsidiary for the
entire financial year, EVN more than compensated for the weather-related
decline in electricity sales volumes on the Austrian and Bulgarian markets.
As a result, total electricity sales volumes of the EVN Group rose by close
to 21% year on year. In contrast, gas sales volumes to end customers
dropped by 27%, whereas heating sales volumes decreased by about 13%.

Lower primary energy prices for gas passed on to consumers

Due to the extremely mild temperatures, primary energy prices and wholesale
prices for electricity started to decline at the beginning of October 2006.
Gas procurement costs, linked to the price of crude oil, also significantly
dropped during the first three months of 2007. Taking account of this
trend, effective July 1, EVN cut gas prices for its end customers, by an
average of 8%.

Expansion in the Bulgarian heating business

As a result of the acquisition of the district heating company TEZ Plovdiv,
EVN entered the heating market in Bulgaria, where EVN is already active in
the electricity supply market. The purchase price for TEZ Plovdiv totalled
EUR 32.1m. The company supplies heating to about 40,000 customers, thus
effectively doubling the number of EVN’s heating customers. This
acquisition also provides EVN with its first own generation facilities in
South East Europe.

Renewable energy projects in Albania

Following the signing of a Memorandum of Understanding with the Albanian
government in January 2007, we presented project proposals on the basis of
feasibility studies for three peak load, storage power stations on the
Devol River with an annual capacity of more than 1,000 GWh. After a
positive assessment by the responsible state commission, the Albanian
government approved the projects and declared them to be in the public
interest. As a result, EVN has received a bonus of ten evaluation points
(from a possible 100) for the definitive tendering process, which is due to
commence shortly.

Expansion in energy production

After the ground-breaking ceremony in November 2006 for the coal-fired
power plant in Duisburg, Germany, in cooperation with STEAG, construction
is proceeding on schedule. The installation of the technical components
will begin in the autumn of 2007. Construction of a biomass-fired pilot
plant at the Dürnrohr power station was completed in July 2007. The
facility is scheduled to commence operations by the end of this year. The
biomass-fired plant will generate biogas for the power station Dürnrohr,
which will substitute coal and gas to production of electricity and
heating. The pilot plant will be able to produce electricity for 2,500
households using straw of 6,000 tons.

Increase in EVN´s indirect stake in RAG

Further progress in the vertical integration of EVN was made by means of
the contractual agreement on the part of the partners holding stakes in RAG
Beteiligungs AG (RBG) to acquire E&P Holding GmbH, a subsidiary of the
Shell Group. E&P Holding GmbH has a 25% stake in Rohöl-Aufsuchungs-AG
(RAG), with a 75% shareholding in the hands of RBG, in which EVN has a
stake. As a consequence of the transaction, which is still subject to
normal provisos, in particular the approval of the responsible anti-trust
authorities, EVN will increase its indirect stake in RAG.

Environmental Services segment – regional expansion

EVN also made considerable progress in the Environmental Services segment
in the period under review. After the transfer of our newly completed large
drinking water facility to the municipal authorities of Moscow in November
2006, the waste incineration installation for the Russian capital entered
its final construction phase. Trial operations for parts of the facility
have already begun, ensuring that the plant will commence operations in the
autumn of 2007, as originally planned.

After the required licenses were granted, EVN began to expand capacity at
the waste incineration installation in Dürnrohr (third waste incineration
line) in June 2007, as scheduled. The planned construction time will be
about two years, increasing the facility’s capacity by about one-third to
an annual volume of 500,000 t.

Our fully-owned subsidiary WTE commenced operations for the fourth and
final biological phase of the central municipal wastewater treatment plant
in Zagreb, as well as the sludge treatment facility designed to produce
biogas for two combined cycle heat and power plants. In Moscow, the
ground-breaking ceremony for construction of a combined cycle heat and
power facility located next to the Kurjanovo wastewater purification plant
will take place in the near future. EVN is on the verge of concluding
additional contracts for large projects, for example in Cyprus, the Baltic
States and in large cities of the Russian Federation.

During the period under review, EVN Wasser doubled the number of end
customers it directly supplies with water to 30,000, due to intensified
partnerships with municipalities in Lower Austria. Moreover, EVN Wasser and
WTE were contracted to construct a new municipal wastewater treatment plant
in Tulln, Lower Austria. Total investment volume amounts to EUR 11.5m.

Outlook

In the light of the extremely mild winter, EVN expects a slight decline in
earnings for the 2006/07 financial year. EVN is confronted with declining
sales volumes in the Energy segment, and the numerous but smaller new
projects of the Environmental Services segment can not fully compensate for
the decrease in revenue resulting from the conclusion of large projects.
The network tariff cuts effective January 1, 2007, as stipulated by the
Austrian regulatory authorities, also put downward pressure on EVN´s
margins. In particular, the prescribed reduction in gas network tariffs
leads to a corresponding loss in revenue. EVN continues to expect strong
financial results for 2006/07 as a whole. However, these will be below the
particularly good results in the previous financial year, which were
positively impacted by one-off effects from investments in associates.
Subsequently, the Group net profit is expected to remain below the record
level achieved in the past financial year.

EVN’s Letter to Shareholders for the first three quarters 2006/07 can be
downloaded from http://www.investor.evn.at.
28.08.2007 Financial News transmitted by DGAP

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Language: English
Issuer: EVN AG
EVN Platz
2344 Maria Enzersdorf
Österreich
Phone: +43-2236-200-12294
Fax: +43-2236-200-82294
E-mail: info@evn.at
Internet: www.evn.at
ISIN: AT0000741053
WKN: 074105
Indices: ATX
Listed: Amtlicher Markt in Wien

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