EVN AG - Earnings Release 2016 | FinancialReports.eu

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Corporate | 28 February 2017 08:00

EVN AG: Business development in the first quarter of 2016/17

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

28.02.2017 / 08:00

The issuer is solely responsible for the content of this announcement.

(1 October – 31 December 2016)

Highlights

– 18.4% increase in electricity production due to a rise in renewable generation and a further increase in thermal generation for network stabilisation

– Higher energy sector result, above all due to lower temperatures and improvements in South Eastern Europe

– Average reduction of 5% in the electricity and natural gas working prices for household customers within the framework of EnergieAllianz Austria as of 1 October 2016

– Take over of the management of the drinking water network in Schwadorf, a community south-east of Vienna, starting on 1 October 2016

– Arbitration decision on the Walsum 10 power plant project in favour of the project company

Key results

– Revenue: +6.0% to EUR 607.4m

– EBITDA: +18.8% to EUR 219.8m

– EBIT: +4.8% to EUR 125.2m

– Group net result: +20.9% to EUR 95.3m

– Net debt: -12.7% to EUR 1,031.5m

Energy sector environment

The first quarter of 2016/17 brought considerably colder temperatures in EVN’s relevant markets. The heating degree total in Austria and Macedonia even exceeded the long-term average.

The forward and spot market prices for base load and peak load electricity increased during the reporting period, which points toward a preliminary trend reversal. In contrast, the prices for primary energy carriers showed different developments. The average price for coal exceeded the previous year, but the average EEX exchange price for natural gas declined.

EBITDA, EBIT and Group net result above prior year

EVN recorded an increase of EUR 34.1m, or 6.0%, in revenue to EUR 607.4m in the first quarter of 2016/17. The main factors underlying this growth were higher supplies of electricity from the thermal generation plants to support network stability, an increase in temperature-based electricity and natural gas distribution volumes in Lower Austria and a temperature-related rise in revenue in South Eastern Europe. Additional positive impulses were provided by the international project business in the Environmental Services Segment.

The increase in the energy business result is attributable, above all, to the favourable temperature trends and improvements in South Eastern Europe. EBITDA rose by EUR 34.8m, or 18.8%, to EUR 219.8m in the first quarter of 2016/17. This growth also reflected the increase in operating expenses which was caused primarily by higher costs for the electricity purchased from third parties and primary energy expenses as well as an increase in third party services and other materials. A further positive factor was the higher share of results from equity accounted investees with operational nature.

Depreciation and amortisation were nearly stable at EUR 65.7m (previous year: EUR 65.5m). Due to changes in the energy policy environment in Bulgaria the Gorna Arda hydropower plant project was put on hold because its realisation is not possible under the current circumstances. Impairment losses of EUR 28.9m were therefore recognised during the reporting period. In total, results from operating activities (EBIT) rose by EUR 5.8m, or 4.8%, to EUR 125.2m.

Financial results improved by EUR 8.1m year-on-year to EUR -8.6m due to positive non-recurring effects in the interest results. Group net result equalled EUR 95.3m in the first quarter 2016/17. This represents an increase of EUR 16.5m, or 20.9%, over the first quarter of the previous year.

Sound balance sheet structure; reduction of net debt

EVN’s positive operating results create the foundation for a solid balance sheet structure. The equity ratio rose to 43.8% as of 31 December 2016 (30 September 2016: 42.3%). Net debt declined by EUR 90.0m below the level on 30 September 2016 to EUR 1,031.5m, and gearing fell to 35.7% (30 September 2016: 40.5%).

Developments in the energy and project business

Energy business

EVN’s electricity generation rose by 18.4% to 1,936 GWh in the first quarter of 2016/17. Higher wind and water flows and the commissioning of the Paasdorf-Lanzendorf windpark in July 2016 led to a year-on-year increase of 84 GWh, or 19.1%, in the share of electricity from renewable energy to 522 GWh. EVN’s thermal power plants, which are again used to stabilise the networks in Austria and Germany during the winter 2016/17, also recorded an increase in generation during the reporting period.

The capital expenditure programme announced by EVN in the 2013/14 financial year, which calls for investments of EUR 1bn in Lower Austria, was also pursued in the reporting period according to plan. Approximately 70% of the EUR 1bn investment programme will flow into network expansion and safeguard the transport and distribution of the rising, but volatile volumes of electricity from renewable generation. Current projects in the network area include, in particular, the new construction or expansion and performance improvement of the 110 kV power lines and transformer stations.

EVN’s supply company again passed on procurement advantages to its household customers in 2015/16 within the framework of the EnergieAllianz: after several reductions in previous years the electricity and natural gas working prices for households were again reduced by 5% on average as of 1 October 2016.

On 23 November 2016, an arbitral tribunal has awarded the project company for the construction of the power plant Walsum 10 in which EVN AG holds an indirect stake of 49% claims in the amount of approximately EUR 200m, which led primarily to a reduction of the acquisition cost for the power plant.

The supply company EVN Bulgaria EC and the state-owned Bulgarian electricity provider NEK reached an out-of-court settlement on 13 February 2017. It involved outstanding receivables for the additional costs of renewable energy which were financed in advance by EVN Bulgaria EC (plus default interest). The positive earnings effect of approximately EUR 38m from this agreement resulted from the reversal of previous valuation allowances to receivables and the recognition of default interest. It will be recognised to Group net result in the second quarter of 2016/17. The international arbitration proceedings initiated by EVN against the Republic of Bulgaria at the World Bank’s International Centre for the Settlement of Investment Disputes (ICSID) will remain active without regard to the execution of such agreement with NEK and subject to potential implications of such settlement.

Environmental business

In the Environmental business EVN will be continuing the investment programme for drinking water supplies in Lower Austria, in particular to accommodate the weather-related increase in water consumption that EVN has been observing over the last years. The related activities by the Environmental Services Segment are focused on the construction of cross-regional pipeline networks, the expansion of pumping station capacity and the construction of natural filter plants to reduce water hardness. In addition to the continuous strengthening of the cross-regional supply structure, EVN is also expanding its activities in the area of local water supplies: for example, it took over the management of the drinking water network in Schwadorf, a community south-east of Vienna with approximately 2,100 residents, starting on 1 October 2016.

In the international project business, the operation of the South-West Moscow drinking water supply plant that was constructed and financed by EVN was concluded at the end of December 2016 after a ten-year contract term. The city of Moscow acquired the local property company with the payment of the final instalment. EVN was working on the realisation of six wastewater projects in Croatia, Macedonia, Montenegro and the Czech Republic as of 31 December 2016. A contract for a further project in Macedonia was also received in January 2017: in Kočani, EVN will serve as the general contractor for a new wastewater treatment plant with a capacity for approximately 65,000 residents and a contract value of approximately EUR 15.0m. This infrastructure project will be financed with subsidies from Switzerland, which will be granted to the customer to improve the environmental situation in Kočani.

Outlook

Under the assumption of average conditions in the energy business environment, the Group net result for 2016/17, which is derived from the operating business, is expected to remain largely stable. Effects from the proceedings related to the Duisburg-Walsum power plant must be evaluated separately. Other factors that could influence the Group net result include the regulatory environment, developments in the proceedings in Bulgaria and the progress of activities in Moscow. An additional positive effect of approximately EUR 38m on Group net result will be recognised in the second quarter of 2016/17 following an out-of-court settlement in February 2017 between the supply company EVN Bulgaria EC and the state-owned Bulgarian electricity provider NEK.

The complete Letter to Shareholders for the first quarter of 2016/17 is available under: www.investor.evn.at .

28.02.2017 Dissemination of a Corporate News, transmitted by DGAP – a service of EQS Group AG.

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Language:	English
Company:	EVN AG
	EVN Platz
	2344 Maria Enzersdorf
	Austria
Phone:	+43-2236-200-12294
E-mail:	[email protected]
Internet:	www.evn.at
ISIN:	AT0000741053
WKN:	074105
Indices:	ATX
Listed:	Foreign Exchange(s) Wien (Amtlicher Handel / Official Market)