EVN AG — Earnings Release 2014

Dec 11, 2014

News Details

Corporate | 11 December 2014 08:00

EVN AG: Business development in the 2013/14 financial year

DGAP-News: EVN AG / Key word(s): Final Results

11.12.2014 / 08:00

---

Business development in the 2013/14 financial year
(1 October 2013 - 30 September 2014)

Highlights

• Energy sales reduced by mild winter
• Weather-related decline in generation from windpower and hydropower
• Earnings influenced by negative one-off effects from impairments
• in the generation segment in Austria and Germany,
• in Bulgaria and Macedonia, and
• of environmental services projects in Moscow.
• Reduction of energy prices for electricity by 10% for an average Lower
  Austrian household customer as of 1 October 2014 and introduction of a
  bonus point programme.
• Investment of 1 billion euros into security of supply as well as
  renewable energy in Lower Austria in the coming four years.

Key figures

Revenue: EUR 1,974.8m (Change: -6.2%)
EBITDA: EUR 184.1m (Change: -65.9%)
Results from operating activities (EBIT): EUR 341.4m
Group net result: EUR -299.0m
Cash flow from operating activities: EUR 546.0m (Change: -4.2%)
Dividend per share: EUR 0.42 (Proposal to the Annual General Meeting)
Dividend yield: 4.1%

Energy sector environment

The reporting year was characterised by an unusually mild winter in 2013/14
throughout EVN's entire supply region with temperatures that were
substantially higher than in the previously warm winter season.
Consequently, the heating degree total, which is used to determine energy
requirements for comparative purposes, was lower than the prior year in all
of EVN's supply areas: the year-on-year decline equalled 20.6 percentage
points in Austria, 7.6 percentage points in Bulgaria and 5.7 percentage
points in Macedonia.

A reduction in the auction volume for CO2 emission certificates by the
European Union stabilised prices in year-on-year comparison, but the prices
for these certificates remain at a very low level. The reporting year also
brought a further decline in forward and spot market prices on the European
electricity exchanges. This trend is not expected to reverse over the short
or medium term because of the current supply overhang, which is a direct
result of the weak global economic development and the continued expansion
of electricity generation from renewable sources.

Negative Group net result due to one-off effects from impairments

Revenue recorded by the EVN Group fell by 6.2%, to EUR 1,974.8m in 2013/14.
The development of revenue was negatively influenced by the mild winter
weather as well as earlier tariff decisions in Bulgaria and Macedonia. A
further negative effect resulted from a communication by the Bulgarian
regulatory authority concerning the request for the repayment of revenue
from previous periods. In addition, a decline was recorded in orders
processed in the international project business.

In the 2013/14 financial year EVN generated an EBITDA of EUR 184.1m, which
is 65.9% lower than the previous year. This development resulted, above
all, from an valuation allowance of EUR 191.4m recognised on a leasing
receivable in the fourth quarter of 2013/14 in connection with the thermal
waste utilisation plant no. 1 in Moscow. Significant doubts over the
realisation of the project made this step necessary.

The impairment losses recognised during the previous year were related
primarily to goodwill and customer bases in Bulgaria und Macedonia, to the
sludge treatment plant and other components of the co-generation plant in
Ljuberzy, Moscow, and to generation capacity and corresponding investments
in Austria, Germany and Bulgaria. As a result of these impairment losses
totalling EUR 269.5m, EBIT fell to EUR -341.4m. Financial results amounted
to EUR -31.9m and were therefore EUR 39.6m higher than the previous year.
This improvement resulted primarily from an increase in income from
investments, which was influenced by the absence of negative prior year
effects, as well as an increased dividend from Verbund AG in 2013/14. On
balance, Group net result fell to EUR -299.0m (previous year: EUR 109.3m).

Since the effects that led to the negative Group net result were mainly not
cash effective, the Executive Board will recommend to the 86th Annual
General Meeting the distribution of a stable dividend of EUR 0.42 per share
for the 2013/14 financial year (previous year: EUR 0.42). This corresponds
to a dividend yield of 4.1%, (previous year: 3.7%) based on the share price
of the EVN AG on 30 September 2014 (EUR 10.13).

Reduced net debt; solid balance sheet structure

Group net result was heavily influenced by noncash items, meaning the
respective adjustments were made under gross cash flow or cash flow from
operating activities, depending on the balance sheet classification.
Therefore cash flow from operating activities was positive in spite of the
negative Group net result. All in all, gross cash flow fell 32.7% to EUR
337.4m; cash flow from operating activities reduced 4.2% to EUR 546.0m.
Working capital included an increase in trade payables, provisions and
other current liabilities. Cash flow from investing activities totalled EUR
-243.3m and was EUR 115.9m or 32.2% lower than in the previous year.

EVN reduced net debt by EUR 187.2m or 10.3%, to EUR 1,622.4m in 2013/14.
Equity totalled EUR 2,632.7m as of 30 September 2014. The equity ratio fell
from 42.3% in 2012/13 to 38.5% in 2013/14. The development of equity was
influenced mainly by the negative Group profit recorded for 2013/14, the
distribution of the dividend for the previous financial year in January
2014 and the change in the valuation reserve recorded directly in equity
without recognition through profit or loss. Due to this decline in equity,
the gearing ratio increased from 58.8% to 61.6%.

Developments in the energy and environmental services business

Energy business
The protection of supply security in Lower Austria is a key objective for
EVN and is reflected in numerous projects. In the area of electricity
network, investment focus was on infrastructure development to accommodate
the feed-in from the expansion of generation from renewable energy sources
in the network area. The 110 kV network was also expanded in the 2013/14
financial year to transport the increased feed-in of electricity generated
by windpower. Other investment projects involved the medium- and
low-voltage networks and were designed to improve the feed-in from
decentralised photovoltaic equipment. Investments in the natural gas
network included the completion of the 143 km Westschiene natural gas
transport pipeline, whereby the last section was filled with natural gas
during the reporting year. This pipeline creates a direct connection to the
natural gas storage facilities operated by Rohöl-Aufsuchungs AG in Upper
Austria.

A further priority of EVN's investment strategy is the expansion of
electricity production from renewable energy sources. The windpark in
Prellenkirchen, which has a capacity of 24 MW, was opened in 2013/14 and
increased the number of windparks operated by EVN to 14 with a total
capacity of 213 MW. The ground-breaking ceremony for the Prottes-Ollersdorf
windpark with a total capacity of 37 MW took place in November 2013 and
will save 55,000 tonnes of CO2 each year. In addition EVN invested in the
improvement of network coverage in the heating business. With more than 60
plants, EVN is the largest supplier of natural heat in Austria. The
photovoltaic plant in Schönkirchen was also commissioned as a public
participation model. In total, EVN plans to invest one billion euros in
supply security and renewable energy in Lower Austria over the next four
years.

Within the framework of EnergieAllianz Austria, EVN's supply company
reduced energy prices in electricity as of 1 October 2014. This will lower
the energy price by 10.0% for an average household of Lower Austria with a
power consumption of 3,500 kWh per year. With this price reduction, EVN is
passing on the lower wholesale. The newly introduced bonus point programme
enables customers to collect points and then to exchange them for energy
services or energy-saving products.

Environmental services business

In the international environmental services business EVN worked on nine
international projects during 2013/14. In Montenegro, a contract was signed
in February 2014 for the planning and construction of a wastewater
purification plant in Kotor-Tivat that will have a capacity to service
72,400 population equivalents. The Budva wastewater treatment project in
Montenegro entered the commissioning phase during the reporting year, and
work started on the river regulation for the second wastewater treatment
plant in the Budva project.

The official commissioning of the Mia Milia/Haspolat wastewater
purification plant in the Cypriote capital of Nicosia took place in April
2014. The plant has a capacity to service 270,000 population equivalents.
This project also covered the construction of a sludge treatment and a
biogas recovery facility. In Larnaca, Cyprus, nearly all buildings for the
wastewater purification plant have been completed. This plant will have a
capacity to service 100,000 population equivalents and is scheduled to be
commissioned in the first half of 2014/15. In Poland, EVN and its Polish
subsidiary received a contract for the planning, modernisation and
expansion of the Pruszkow wastewater purification plant in Warsaw which
will have the capacity to service 256,000 population equivalents after the
project is completed. The building permit for the modernisation and
expansion of the Kujawy wastewater purification plant in Krakow was
received and work has already started.

EVN constructed a sodium hypochlorite plant for the city of Moscow through
WTE Projektgesellschaft Natriumhypochlorit mbH, a company that is
headquartered in Germany. As announced in an ad-hoc press release on 29
October 2014, EVN reached an agreement with the Moscow city government over
the sale of the sodium hypochlorite plant: Mosvodokanal, the water supply
and wastewater disposal company of the city of Moscow, took over the shares
in the Russian property company that holds the sodium hypochlorite plant
from the project company. The sale price amounted to EUR 250.0m and
corresponds to the investment costs plus the expected earnings contribution
for the EVN Group. The sale closed on 30 October 2014. WTE has issued a
conditional guarantee for the functionality of the plant. Preparatory tests
and the commissioning are currently in progress.

EVN took over the management and operation of water supplies for the Lower
Austrian community of Göllersdorf in January 2014, which raised the number
of end customers who are supplied by EVN with drinking water to roughly
87,000. More than 500,000 residents in Lower Austria are currently supplied
by EVN. A further municipal customer, the municipality of Litschau, has
been serviced by EVN's cross-regional "Waldviertel" drinking water system
since mid-June 2014. Work also started on the construction of natural
filter plants in the Lower Austrian communities of Drösing and
Obersiebenbrunn during the reporting year. These plants will reduce the
hardness of the water by natural means. The commissioning of the
Obersiebenbrunn plant is scheduled for spring 2015.

Outlook

EVN will continue its consolidation course in the coming years, whereby the
current segments of business will represent the focal point of activities.
Continuous efficiency improvements should provide protection for earnings.
Assuming average conditions in the energy environment, the EVN Group
expects to record a Group net result for the business year 2014/15 that
will again exceed the result of financial year 2012/13. The factors that
could significantly influence earnings include the regulatory background,
developments in the proceedings related to claims from the tariff decisions
in Bulgaria and the Duisburg-Walsum power plant as well as the progress on
the activities in Moscow.

For the complete Full Report 2013/14 see www.investor.evn.at.

---

11.12.2014 Dissemination of a Corporate News, transmitted by DGAP - a
service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

The DGAP Distribution Services include Regulatory Announcements,
Financial/Corporate News and Press Releases.
Media archive at www.dgap-medientreff.de and www.dgap.de

---

Language: English
Company: EVN AG
EVN Platz
2344 Maria Enzersdorf
Austria
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: Foreign Exchange(s) Wien (Amtlicher Handel / Official
Market)

End of News DGAP News-Service

304391 11.12.2014