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MVV Energie AG Interim / Quarterly Report 2003
297_10-q_2003-08-18_b6e6e0a0-0a81-400e-97ed-5f4b4a2ffc33.pdf
Interim / Quarterly Report
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Key Economic Indicators $1^{st}-3^{rd}$ Quarters 2002/2003 October 1, 2002-June 30, 2003
| MVV Energie Group 1 In Euro Mill. |
2002/2003 1/10-30/6 |
2001/2002 1/10-30/6 |
± % |
|---|---|---|---|
| Sales | 1346 | 1 312 | +3 |
| EBITDA | 344 | 207 | +66 |
| EBITA | 262 | 132 | +98 |
| EBIT | 252 | 124 | +103 |
| EBT | 211 | 93 | +127 |
| Net earnings after taxes for this | period 175 | 61 | +187 |
| Net earnings after taxes for this | • | 53 | +217 |
| after deducting minority inte | 3.32 | 1.04 | +217 |
| Earnings per share 2 in Euro | 3.32 | 1.04 | +219 |
| Cash flow in accordance with D | VFA/SG 135 | 139 | -3 |
| Total assets (30/6) | 2758 | 2 709 | +2 |
| Equity (30/6) | 823 | 709 | +16 |
Adjusted Key Indicators on Developments in Business3
Key Economic Indicators
| MVV Energie Group 1 In Euro Mill. |
Adjusted 2002/2003 1/10-30/6 | Adjusted 2001/2002 1/10-30/6 | ± % |
|---|---|---|---|
| EBITDA | 215 | 182 | +18 |
| EBITA | 133 | 107 | +24 |
| EBIT (adjusted) | 123 | 99 | +24 |
| EBT | 83 | 67 | +24 |
| Net earnings after taxes for this pe | eriod 4 44 | 39 | +13 |
| Net earnings after taxes for this pe | eriod | ||
| after deducting minority interes | ts 4 37 | 31 | +19 |
| Earnings per share 2,4 in Euro | 0.73 | 0.61 | +20 |
1 In accordance with IAS/IFRS
2 In accordance with IAS 33
3 Without the proceeds from the sale of GVS shares and net income from GVS as a participation as well as measures to enhance MVV Energie's competitive edge
4 Adjusted for accounting tax factors from measures to enhance MVV Energie's competitiveness during the fiscal year reported here and from the net income from GVS as a participation last year
Business Developments – 3rd Quarter and 1st – 3rd Quarters 2002/2003 October 1, 2002–June 30, 2003
Adjusted earnings before interest and taxes (EBIT) up 24 % in the 1st-3rd quarters of 2002/03 despite higher investments in renewable energy
Highlights of the 1st-3rd Quarters 2002/2003
Proceeds from sale of GVS shares used for strengthening equity, retiring debt and for measures to enhance MVV Energie's competitiveness
EBIT forecast confirmed for the entire fiscal year
Investments undertaken for organic growth in future
Earnings of the MVV Energie Group
Compared to last year, the MVV Energie Group more than doubled its earnings before interest and taxes (EBIT) from Euro 124 million to Euro 252 million in the first three quarters of fiscal year 2002/03. Nevertheless, this development in EBIT was largely caused by one-off factors that would first have to be adjusted for a viable comparison with last year.
Positive Developments in EBIT in the 1st-3rd Quarters of 2002/2003
| Adjusted EBIT for the 1st-3rd Quarters In Euro Mill. | 2002/2003 1/10-30/6 |
2001/2002 1/10-30/6 |
|---|---|---|
| EBIT of the MVV Energie Group (unadjusted) | 252 | 124 |
| - Proceeds from the sale of GVS shares | -140 | _ |
| (after deducting the book value and | ||
| transaction costs) | ||
| - Net income from GVS as a participation | -1 | -25 |
| + Measures to enhance | ||
| MVV Energie's competitiveness | +12 | _ |
| EBIT (adjusted) | 123 | 99 |
EBIT Adjusted
Thanks to the successful sale of our shares in GVS completed in the 1st quarter of 2002/03, we realised a profit of Euro 141 million for the first three quarters of 2002/03, after deducting the book value and finally the dividend for 2002/03. Last year there was a total of Euro 25 million in net income from GVS as a participation for the first three quarters of 2001/02. On balance, this development in EBIT was a profitable, one-off factor of Euro 116 million thanks to GVS as applied to the first three quarters of 2002/03.
Positive One-off Factors through Sale of GVS Shares
As previously announced, we intend to use part of the one-off profit from the sale of GVS shares for sustainable measures to enhance our competitiveness. The following are included among these measures, which we comprehensively described in our financial report for the 2nd quarter of fiscal year 2002/03: bundling our industrial facility-management capacities at our energy from waste plants and Germany-wide biomass powerplants in a new company as well as restructuring the technical divisions at our subsidiary,
Improving Our Cost Structures through Measures to Enhance Competitiveness Energieversorgung Offenbach AG (EVO). At EVO, an adjustment of approx. Euro 2 million in the $3^{rd}$ quarter of 2002/03 has been set against provisions of approx. Euro 14 million that we allocated for obligations in this regard during the $2^{nd}$ quarter of 2002/03.
Adjusted EBIT up 24% in the 1st-3rd Quarters of 2002/03
Without the one-off factors indicated above, EBIT rose by 24% from Euro 99 million to Euro 123 million for the first three quarters of 2002/03.
3rd Quarter 2002/2003
EBIT adjusted for One-off Factors rose Euro 10 Million in the 3rd Quarter of 2002/03 In the $3^{rd}$ quarter of 2002/03 (April to June 2003), EBIT improved from Euro 17 million to Euro 20 million in comparison to the same quarter last year. If EBIT for the $3^{rd}$ quarter of 2002/03 is adjusted for the proceeds indicated above from the release of provisions (Euro 2 million) as well as the EBIT for the $3^{rd}$ quarter of last year for the proportional GVS dividend for 2001/02 included here (Euro 9 million), then EBIT has improved from Euro 8 million to Euro 18 million in a comparison of quarters.
Key factors for this were improvements in EBIT in our electric power, energy from waste plants (MHKW), water and value-added services segments. As a consequence, we were more than able to offset drops in sales in our district-heating and gas segments caused by milder weather conditions in the 3rd quarter and the cost of build-up measures in our renewable energy segment.
Sales Growth Up 3 % in the 1st-3rd Quarters of 2002/03
Altogether sales at the MVV Energie Group increased by 3 % to Euro 1346 million in the first 3 quarters of fiscal year 2002/03. This growth mainly resulted from sales successes in our interregional electric power business with end-consumers and in our business with multi-utility services. It also resulted from higher sales in our district-heating, gas and water segments, which were partially attributable to sales from participations that were included for the first time for the entire year. In our electric power segment, developments were affected to a large extent by continued lower power-trading volume brought about by adverse market conditions (see the report on the electric power segment for further information). Sales abroad rose 39 % to Euro 135 million in the first 3 quarters of 2002/03.
Developments in EBIT by Quarter (Adjusted)1
1 Figures for the 3rd and 4th quarters of last year have been corrected compared to the same chart as shown in the financial report for the 1st and 2rd quarters of 2002/03
Developments in Sales by Quarter
In the first 3 quarters of 2002/03, interest expenses increased primarily because of scheduled investments in biomass powerplants, payments made last year to acquire participations as well as initial consolidations. Consequently, the interest-saving effect was offset in the 2nd and 3rd quarters of 2002/03 that was brought about by retiring debt with the proceeds from the sale of our GVS shares.
Interest Expenditures
Up due to Higher
Investments
Compared to last year, net earnings after taxes for this period after deducting minority interests increased by Euro 53 million to Euro 168 million. When adjusted for the one-off factors from the sale of GVS shares and the measures to enhance competitiveness, net earnings after taxes for this period after deducting minority interests went up from Euro 31 million to Euro 37 million (+19 %) in comparison to last year.
Compared to last year, earnings per share in accordance with IAS more than tripled from Euro 1.04 to Euro 3.32. Adjusted earnings per share rose in comparison to the adjusted results of last year from Euro 0.61 to Euro 0.73 (+20%).
Earnings per Share Rise
Corporate Situation
Market Climate and Conditions
During the period reported here, overall economic developments continued to be marked by weak economic growth, which caused the Institute for the World Economy (IfW) in Kiel to revise its growth forecast downwards to o percent for 2003. In our sector, the economic climate during the period reported here was marked by persistent competition on liberalised electric power markets and mounting competition on gas markets.
Economic Growth
Continues to be Weak
Significant Occurrences in the 3rd Quarter of 2002/2003
In April 2003, our participation, Energieversorgung Offenbach AG (EVO), won a Europe-wide bidding procedure to supply electric power service to five counties and more than 100 municipalities in Hesse and Rhineland-Palatinate. With this major commission, which is limited to a period of two years and which covers a volume of 74 million kWh per year, EVO has become one of the leading energy suppliers in the Rhine-Main region.
Major Commission for EVO
Biomass Heat-only Plant Begins Operation In June 2003, MVV Energie opened a new biomass heat-only plant in Finnentrop in Sauerland to supply group-heating schemes. This plant will supply heating to a school complex, two gymnasiums, city hall, an aquadrome as well as a residential and commercial centre for 20 years within the framework of a contracting agreement. With this project, MVV Energie has succeeded in gaining a foothold as a contracting-service provider supplying municipal energy service in North Rhine-Westphalia.
International
Consulting Activities
Bundled into One
Company
By merging three consulting firms, MVV Consultants and Engineers GmbH, Deutsche Energie Consult GmbH (DECON) and MVV Consultants and Water Engineers GmbH, into its new MVV Consulting GmbH, MVV Energie has bundled its international consulting division into one company.
MVV Energie's Stock
MVV Energie's Stock Outperforms Comparable Indices Compared to last year (June 30, 2002), our share price dropped 5% to Euro 14.65. It thus continued once again to perform significantly better than comparable indices for the same period (SDAX: -8%; Prime Utilities: -23%). The drop in the share price following the general meeting on March 14, 2003 coincided with payment of the dividend. Finally, our share price temporarily came under pressure due to the uncertainty surrounding a possible acquisition of a share in Gelsenwasser AG, but this pressure has now passed.
MVV Energie Is Focus of Greater Attention
With Santander Central Hispano and Cazenove, an additional two, prominent, foreign financial institutions have published research reports on MVV Energie.
Investor Relations (IR) Honoured The IR work of MVV Energie has recently been honoured with several awards: 2nd place in SDAX in a contest held by Börse Online for private investors and 6th place in one sponsored by Capital for institutional investors. Moreover, our online annual report achieved the "Gold Award" of the League of American Communications Professionals (LACP) in San Diego, California.
Capital Increase Probable in 2004 At the current share-price level, we still do not consider the measure planned and authorised for the capital market to be advisable. As MVV Energie does not urgently need additional equity at the present time, there is also no time pressure.
MVV Energie's Stock
Segment Reporting
| 1st–3rd Quarters | 2002/2003 | 2001/2002 | |
|---|---|---|---|
| In Euro Mill. | 1/10—30/6 | 1/10—30/6 | ± % |
| Power1 | 706 | 746 | -5 |
| Heating | 217 | 183 | +19 |
| Gas2 | 208 | 199 | +5 |
| Water | 54 | 50 | +8 |
| Energy from waste plants (MHKW) | 69 | 68 | +1 |
| Multi-utility services | 83 | 62 | +34 |
| Renewable energy | – | – | – |
| Other | 9 | 4 | +12 5 |
| Totals | 1346 | 1 312 | +3 |
1 Including Euro 57 million for the electricity tax
In our electric power segment, we succeeded in raising our retail sales with small businesses and households as well as with industrial and commercial customers by 36%. This significant growth primarily resulted from heavier volumes related to acquisitions in our nation-wide power business with industrial and commercial customers.
On power-wholesaling markets, trading volumes have declined because several international trading companies have left the market. This had an impact on our wholesale volume, where profit margins are relatively narrow, but which remained at a relatively high level at 11 billion kWh during the first 3quarters of fiscal year 2002/03.
Higher district-heating sales mainly stemmed from our business abroad. Of total district-heating sales in the first three quarters of 2002/03, our corporate groups in the Czech Republic (Euro 87 million) and Poland (Euro 36 million) accounted for a total of Euro 123 million (57%).
In our gas business, sales growth was largely attributable to our participations in the Solingen and Ingolstadt public utilities that have been proportionately consolidated for the first time since the beginning of this fiscal year (as of 1/1/2002) as well as to regaining a major industrial customer via competition. As a consequence, we were more than able to offset losses in sales in our business with secondary distributors.
Higher water sales were mainly attributable to adjustments in rates and weather-related increases in volume, especially in June 2003.
In the first 3 quarters of 2002/03, sales in our multi-utility services business grew 34% and now account for 6% of total sales. For the entire fiscal year, we are expecting 9-figure sales in multi-utility services for the first time.
Developments in Sales by Segment
Electric Power Segment Sales Up with Retail
Customers
Trading Strategy Adapted to Changing Market Conditions
District-Heating Segment Healthy Growth Thanks to Foreign Participations
Gas Segment Sale Increase Despite Mounting Competition
Water Segment Rising Sales Multi-Utility Services Segment Healthy Growth in
Sales
(Euro 35 million last year) 2 Including Euro 23 million for the gas tax (Euro 19 million last year)
Developments in EBIT by Segment
| 1 st –3 rd Quarters | 2002/2003 | 2001/2002 | |
|---|---|---|---|
| In Euro Mill. | 1/10-30/6 | 1/10-30/6 | ± % |
| Power | 24 | 23 | +4 |
| Heating | 48 | 43 | +12 |
| Gas | 167 | 42 | +298 |
| Water | 9 | 6 | +50 |
| Energy from waste plants (MHK) | N) 15 | 21 | - 29 |
| Multi-utility services | - 5 | - 10 | +50 |
| Renewable energy | - 6 | _ | _ |
| Other | _ | - 1 | _ |
| Totals | 252 | 124 | +103 |
Earnings before interest and taxes (EBIT) have developed differently in individual segments as a result of a number of one-off factors.
In our electric power segment, we have succeeded in absorbing the drop in
EBIT during the 1st & 2nd quarters of 2002/03 caused by one-off factors at
Energieversorgung Offenbach AG (EVO). Contributing factors were partic-
In the first 3 quarters of 2002/03, the Euro 5 million growth in our district-
ularly provided by improvements in EBIT at the parent company,
MVV Energie, and at EVO during the 3rd quarter.
Electric Power Segment Developments in EBIT
Affected by Measures to Enhance Competitiveness
District-Heating Segment
Rise in EBIT Determined by Foreign Participations heating EBIT compared to last year stemmed from the 1st and 2nd quarters of 2002/03. Of total district-heating EBIT for the first 3 quarters of 2002/03, our Czech and Polish participations accounted for 46%; however, their 3rd quarter 2002/03 results were lower due to seasonal conditions than in the more lucrative winter months. Our district-heating segment has developed into a sound pillar for EBIT thanks to the success of our long-term internationalisation strategy.
Gas Segment EBIT Marked by GVS Sale The high earnings before interest and taxes (EBIT) in our gas segment for the first 3 quarters of 2002/03 was primarily based on the one-off profit from the sale of our GVS shares. Without taking this profit as well as the GVS dividends for this year and last year into account, our gas EBIT improved by Euro 9 million compared to last year. This growth mainly resulted from the first-time consolidation of the Solingen and Ingolstadt public utilities for the entire year.
Water Segment
EBIT Increases
by a Third
In our water segment, EBIT rose by Euro 3 million in the first 3 quarters of 2002/03. This improvement is largely attributable to volume- and rates-related higher sales as well as cost-cutting at the parent company, MVV Energie, and at EVO. In the $3^{rd}$ quarter of 2002/03, we had 7% growth in sales compared to last year due to the dry, hot summer weather in June.
| 1st–3rd Quarters | 2002/2003 1/10—30/6 |
2001/2002 1/10—30/6 |
± % |
|---|---|---|---|
| Power1 in Mill. kWh | 17753 | 22 332 | -21 |
| thereof power trading | 10750 | 17 259 | -38 |
| thereof other power volume | 7003 | 5 073 | +38 |
| Heating1,2 in Mill. kWh | 6720 | 6 093 | +10 |
| Gas1 in Mill. kWh | 7404 | 7 345 | +1 |
| Water1 in Mill. m3 | 30.5 | 29.2 | +4 |
| Incinerated waste in 1 000 tonnes |
355 | 341 | +4 |
Developments in Volume by Division
Earnings before interest and taxes (EBIT) in our energy from waste segment (MHKW) were largely affected by provisions in the 2nd quarter of 2002/03 that we have allocated in order to take over obligations with respect to personnel from the Mannheim central powerplant (GKM) employed at the MHKW in Mannheim. When adjusted for this one-off charge of Euro 7 million, EBIT improved compared to last year despite higher costs for gas to fuel incineration. In addition to higher sales from our energy and waste-management business, this positive development is mainly attributable to cost-cutting measures.
In our multi-utility services segment, we were able to cut the negative EBIT in half compared to last year. This positive development is largely attributable to the growing business in multi-utility services of the parent company, MVV Energie, as well as to improvements in results at AWATECH GmbH and our participations in Ludwigshafen and Solingen engaged in supplying decentralised energy and media service to industry. Nevertheless, the buildup phase has still not been completed despite clearly recognisable progress. This applies especially for the investments to expand our fibre-optic network for the telecommunications sector in Mannheim.
The negative results in our new renewable energy segment reflect the heavy investments in biomass powerplants. As things now stand, the biomass powerplants in Königs Wusterhausen, Mannheim and Flörsheim-Wicker are still expected to go into operation in 2003 as scheduled.
Investments & Financing
In the first 3 quarters of 2002/03, the MVV Energie Group invested Euro 133 million (Euro 433 million last year). As in 2001/02, Euro 115 million went into fixed assets and Euro 18 million (Euro 318 million last year) into financial assets.
Energy from Waste Segment
Restructuring Costs of the 2nd Quarter Impede Developments in EBIT
Multi-Utility Services Segment Negative EBIT Cut in Half
Renewable Energy Segment EBIT Marked by High Investments
1 Total volume from all divisions
2 Subsequent corrections in volume for the year reported here and last year
Investments in Future Organic Growth Of the investments in fixed assets, MVV Energie accounted for Euro 45 million and its participations for Euro 70 million. At MVV Energie, investments were mainly focused on replacement and expansion measures in our distribution grids to supply energy and water service as well as on building a new incinerator. The focus of investments in our renewable energy segment was on building biomass powerplants.
Investments in financial assets primarily included acquiring shares in other enterprises, incorporating new companies and implementing capital increases at existing participations. The figures for last year include the acquisitions in Solingen and Ingolstadt.
Adjusted Cash Flow Up Euro 20 million for the First 3 Quarters 2002/03
The comparability of the cash-flow statement has been limited by the high dividends at GVS last year. Cash flow in accordance with DVFA/SG for the first 3 quarters of 2002/03, which does not include any proceeds from the sale of our GVS shares, decreased by Euro 4 million compared to last year to Euro 135 million. Without GVS's dividends, adjusted cash flow for the first 3 quarters of 2002/03 was Euro 134 million compared to Euro 114 million last year. The Cash-Flow Statement can be found on p. 13 of this report.
Equity to Total Capital Ratio now 30% We have used the proceeds from the sale of our GVS shares, inter alia, to retire financial liabilities. As a consequence, our equity to total capital ratio rose to 30% as of June 30, 2003.
Research & Development
Telemetering Project Successfully Concluded MVV Energie has successfully concluded a telemetering project funded by the European Commission to conserve energy and to reduce harmful emissions in companies. The project was conducted with a consortium that also included Iberdrola in Spain and the Portuguese Universidade de Coimbra as well as Electricidade de Portugal. The objective of this project, which had been in progress since April 2001, was to develop and to implement an improved system to aid customers in managing their own data. For this purpose, energy-load curves were to be made available to major commercial and industrial customers via the Internet. Evaluation of these consumption analyses was intended to point out the possibilities for conserving energy and cutting costs. MVV Energie is now in the process of implementing the findings of this project in that it will begin making telemetering data available to these customer groups in timely fashion via the Internet as of September 2003.
Detecting Leaks in District-Heating Networks Proves Effective in Practise Our project on economical assessment of the current status of district-heating distribution grids by means of innovative aerial-thermography technology has proven very effective. By utilising infrared cameras in small aeroplanes, we can achieve our objective of minimising our operating costs for district-heating grids by reducing water losses, thereby ensuring the reliability of the distribution networks. This technological solution will save both time in conducting operational surveys to ascertain the current status of district-heating distribution grids and money in eliminating damage.
Generating Electric Power by Renovating Façades We are currently examining whether the use of photovoltaic modules in renovating façades could open new windows of opportunity. Visually attractive photovoltaic modules could contribute to brightening up buildings and to reducing the adverse impact on the environment by generating electric power with the greatest of all energy sources, the sun.
Employees
| Personnel | 2002/2003 30/6/2003 |
2001/2002 1 30/6/2002 |
± |
|---|---|---|---|
| MVV Energie AG 2 Fully consolidated participations |
1 783 2 165 |
1712 2028 |
+71 +137 |
| MVV Energie AG with fully consolidated participation | ns 3948 | 3 740 | +208 |
| Proportionately consolidated participations | 1 720 | 1 246 | +474 |
| MVV Energie Group 3 Non-MVV personnel at MHKW |
5 668 | 4986 | +682 |
| in Mannheim | 84 | 86 | - 2 |
| Totals | 5752 | 5072 | +680 |
Personnel Figures Substantially Increased by the End of the 3rd Quarter
The increase in personnel came primarily from the newly acquired participation in Szczecin in Poland, which has been proportionally consolidated since October 1, 2002.
Significant Occurrences after the End of this Quarter
At its meeting on July 21, 2003, the Supervisory Board at Energieversorgung Offenbach (EVO) unanimously named Matthias Brückmann as the Chief Executive Officer (CEO) and Commercial Director of this energy-distribution utility and value-added services provider. As of October 1, Matthias Brückmann will succeed Karl-Heinz Trautmann, who at the same time will be moving on to MVV Energie, the majority shareholder, as the Director of the newly created Division for Marketing and Sales/Energy Services.
New CEO at Energieversorgung Offenbach
1 Subsequent correction
2 Including 96 employees of MVV RHE AG (99 last year)
3 Including 162 trainees (155 last year)
Outlook
Profit from GVS Sale Strengthens Equity In fiscal year 2002/03, our results will to a large extent be shaped by the sale of our participation in GVS. We will use a part of the tax-free profit of Euro 140 million for measures to enhance competitiveness within our corporate group. We have thus allocated provisions of Euro 12 million for a partial retirement plan at EVO and for payments of a settlement in conjunction with incorporating a facility-management firm. We also intend to pass a resolution for restructuring measures for our participations in Solingen and Ingolstadt amounting to Euro 3 to 4 million. These measures should also have a positive impact on improving earnings during the course of fiscal year 2003/04. The main part of the GVS profit has been used to retire short-term corporate debt. Thanks to an equity to total capital ratio of 30%, we have a sound financial basis for possible investments in additional participations in municipal public utilities (e.g., in Kiel) and in value-added services providers, for further expansion of renewable energy or for multi-utility projects in Germany and abroad.
Form of a Future Competition Authority Still Open The Federal Ministry for the Economy is currently preparing a monitoring report on the status of the German electric power and gas markets, which should be completed by the end of August. The federal government will make the concept for a future competition authority dependent on the results of this report as well as on negotiations for the further development of the agreements of associations. Instituting a State authority responsible for competition will mean both opportunities and risks for MVV Energie AG. Competitive measures to strengthen market forces, such as bundling the four energy-balancing markets that have existed until now or eliminating existing restrictions on cross-border electric power trading, would have a positive impact on our business. A possible mandatory decrease in access fees for distribution grids could, however, negatively affect our results.
Biomass Powerplants: Investments in Future Organic Growth By the end of 2003, the three biomass powerplants currently under construction are expected to begin operation. As things now stand, we will thus become the national market leader in this sector. Based on the Renewable Energy Act (REA), these powerplants should provide sustainable, positive results after the start-up phase.
Break-even Point in Our Services Business Expected Soon Based on the significantly lower losses at present, we assume that we will reach the break-even point in our growth business with energy services in fiscal year 2003/04.
EBIT Targets Confirmed
Based on the figures for the first 3 quarters of 2002/03, we are still expecting the targeted 5% growth in earnings before interest and taxes (EBIT) for the entire fiscal year reported here — without taking the GVS profit and the measures to enhance competitiveness into account — compared to last year's EBIT that was adjusted for the GVS profit (114 million). In the 4th quarter of 2002/03, however, we are expecting a lower EBIT figure in comparison to the previous quarters of 2002/03, mainly because of seasonal factors. We are also counting on growth in total sales compared to last year; however, as things now stand, we assume that we will probably not achieve the figure of Euro 2 billion in sales originally targeted for this fiscal year, inter alia, because of the decreasing market-related volume in power trading. Positive developments in our volume figures in our retail business as well as the successfully proceeding integration of the various companies in our corporate group have nevertheless formed a basis for additional profit-oriented growth for the MVV Energie Group.
Interim Financial Statements $1^{st} - 3^{rd}$ Quarters 2002/2003 As of June 30, 2003
| Balance Sheet In Euro 1000 |
30/6/2003 | 30/9/2002 |
|---|---|---|
| Assets | ||
| Fixed assets | ||
| Intangible assets | 251 671 | 264377 |
| Tangible assets | 1 635 665 | 1 609 758 |
| Financial assets | 141 324 | 227 682 |
| 2028660 | 2 101 817 | |
| Current assets | ||
| Inventories | 56986 | 42 091 |
| Receivables and other assets | 607 696 | 528883 |
| Cash and cash equivalents | 64 932 | 92930 |
| 729 614 | 663 904 | |
| 2758274 | 2765721 | |
| Liabilities | ||
| Equity | ||
| Share capital of MVV Energie AG | 129 797 | 129797 |
| Capital reserves of MVV Energie AG | 178270 | 178270 |
| Retained earnings | 221 693 | 235 890 |
| Total net earnings of the MVV Energie G | roup | |
| for this period | 183 948 | 46 086 |
| Capital of the MVV Energie Group | 713 708 | 590043 |
| Minority Interests | 109 142 | 109398 |
| 822850 | 699 441 | |
| Customers' Contributions | 181 536 | 180781 |
| Provisions | ||
| Provisions for pensions and other | ||
| obligations | 19 193 | 18308 |
| Provisions for taxes | 24 247 | 26 225 |
| Other provisions | 116651 | 111524 |
| Liabilities | 160 09 1 | 156057 |
| Corporate debt | 1 008 058 | 1111565 |
| Trade payables | 95 062 | 136974 |
| Advance payments for orders | 229 449 | 228272 |
| Other liabilities | 127 113 | 112769 |
| 1 459 682 | 1 589 580 | |
| Deferred Taxes | 134115 | 139862 |
| 2758274 | 2765721 |
Balance Sheet of the MVV Energie Group in Accordance with IAS/IFRS
Cumulative Profit and Loss Statement of the MVV Energie Group in Accordance with IAS/IFRS 1st – 3rd Quarters 2002/2003
| Profit and Loss Statement | 2002/2003 | 2001/2002 |
|---|---|---|
| In Euro 1 000 | 1/10—30/6 | 1/10—30/6 |
| Sales | 1345679 | 1 311 833 |
| Capital. assets f. int. serv. rendered/Fluct. in inv. | 34949 | 18 224 |
| Other operating income | 170785 | 34 209 |
| Cost of materials | 892396 | 920 889 |
| Personnel costs | 162637 | 135 622 |
| Other operating expenses | 158011 | 129 325 |
| Net income from subsidiaries | 4984 | 28 159 |
| Other participations' earnings | 748 | 730 |
| EBITDA | 344101 | 207 319 |
| Depreciation | 82109 | 75 120 |
| EBITA | 261992 | 132199 |
| Goodwill amortisation | 10160 | 8 015 |
| Earnings before interest and taxes (EBIT) Net interest expenses |
251832 -40389 |
124 184 -31 212 |
| Net earnings before income taxes (EBT) | 211443 | 92972 |
| Income taxes | 36047 | 31 795 |
| Net earnings after taxes for this period | 175396 | 61 177 |
| Minority interests | 6934 | 8239 |
| Net Earnings for this period after ded. min. int. | 168462 | 52938 |
Profit and Loss Statement of the MVV Energie Group in Accordance with IAS/IFRS 3rd Quarter 2002/2003
| Profit and Loss Statement | 2002/2003 | 2001/2002 |
|---|---|---|
| In Euro 1 000 | 1/4—30/6 | 1/4—30/6 |
| Sales | 369805 | 371 504 |
| Capital. assets f. int. serv. rendered/Fluct. in inv. | 12 185 | 7 002 |
| Other operating income | 9293 | 12946 |
| Cost of materials | 235274 | 265 232 |
| Personnel costs | 55981 | 46 661 |
| Other operating expenses | 52836 | 44 259 |
| Net income from subsidiaries | 2 361 | 11 589 |
| Other participations' earnings | 638 | 121 |
| EBITDA | 50191 | 47 010 |
| Depreciation | 27339 | 26 915 |
| EBITA | 22852 | 20 095 |
| Goodwill amortisation | 3379 | 3 359 |
| Earnings before interest and taxes (EBIT) | 19473 | 16 736 |
| Net interest expenses | -12812 | -11 753 |
| Net earnings before income taxes (EBT) | 6 661 | 4 983 |
| Income taxes | 5635 | 91 |
| Net earnings after taxes for this period | 1026 | 4 892 |
| Minority interests | 1381 | -434 |
| Net Earnings for this period after ded. min. int. | -355 | 5326 |
| Cash-Flow Statement | 2002/2003 | 2001/2002 |
|---|---|---|
| In Euro 1 000 | 1/10-30/6 | 1/10-30/6 |
| Net earnings after taxes of MVV Energie AG | 175 206 | 61 177 |
| for the period | 175396 | 61 177 83 512 |
| Depreciation of fixed assets Changes in long-term provisions | 93 965 | 83 312 |
| and customers' contributions received | 5 288 | - 1 605 |
| Other income and expenses affecting | 3 200 | -1003 |
| cash flow | _ | -4343 |
| Proceeds from selling participations | - 139 687 | - |
| Subtotal for cash flow | ||
| in accordance with DVFA/SG | 134962 | 138741 |
| Changes in short-term provisions | -6978 | - 25 847 |
| Profits (Losses last year) from | 1.020 | 1.561 |
| disposals of tangible assets Profits (Losses last year) from | - 1 039 | 1 561 |
| disposals of financial assets | _ | 1110 |
| Changes in other assets | - 52 289 | -43 403 |
| Changes in other liabilities | -43 639 | - 24 124 |
| Cash flow from operating activities | 31017 | 48038 |
| • - | ||
| Proceeds from disposals of tangible assets | 22 949 | 357 |
| Proceeds from disposals of financial assets | 209 546 | 11 002 |
| Investments in tangible assets/\nintangible assets | -115349 | -114925 |
| Investments in acquisitions, subsidiaries | -113343 | -114923 |
| and loans | - 17 681 | -318462 |
| + Cash flow (- Cash flow last year) | ||
| from investment activities | 99 465 | -422028 |
| Proceeds from subsidy payments Proceeds from new corporate loans | 1 280 | 912 |
| and leasing debt | 83 773 | 174 280 |
| Expenditures to retire corporate debt | -76327 | -37 292 |
| Changes in financial debt from | 0, 202 | |
| cash-pooling | - 125 634 | 303 651 |
| Dividend payments | - 46 275 | -45334 |
| - Cash flow (+ Cash flow last year) | ||
| from financial activities | - 163 183 | 396217 |
| Changes in cash and cash equivalents | -32701 | 22 227 |
| Changes in cash and cash equivalents from | -32701 | 22221 |
| changes in the scope of consolidation | 4703 | 44 690 |
| Changes in cash and cash equivalents | 4703 | 11050 |
| as of 1/10/2002 (and/or 2001) | 92930 | 52124 |
| Changes in cash and cash equivalents | ||
| as of 30/6/2003 (and/or 2002) | 64932 | 119041 |
| as of 30/ 0/ 2003 (alla/ 01 2002) | 07332 | 113041 |
Cash-Flow Statement of the MVV Energie Group in Accordance with IAS/IFRS 1st – 3rd Quarters 2002/2003
Statement of Changes in Equity (Including Minority Interests) of the MVV Energie Group in Accordance with IAS/IFRS 1st – 3rd Quarters 2002/2003
Statement of Changes in Equity
| Capital | |||
|---|---|---|---|
| Share Capital | Reserves | ||
| In Euro 1 000 | MVV Energie AG | MVV Energie AG | |
| Status as of 1/10/2002 | 129797 | 178270 | |
| Dividend yield | — | — | |
| Net earnings after taxes for this period | — | — | |
| Changes in retained earnings from previous years | — | — | |
| Currency adjustments | — | — | |
| Changes in the scope of consolidation | — | — | |
| Adjustments not affecting earnings (IAS 39) | — | — | |
| Status as of 30/6/2003 | 129797 | 178270 |
Supplemental Information
Principles and Methods The accounting standards of the International Accounting Standards Board (IASB) that were in effect on the balance sheet date have been used for the interim financial statements of the MVV Energie Group in accordance with IAS/IFRS.
The financial statements of the fully and proportionally consolidated subsidiaries included in the financial statements of the MVV Energie Group are subject to uniform principles for accounting and valuation.
In addition to the balance sheet and the profit and loss statement, the statement of changes in equity according to IAS 1 and the cash-flow statement according to IAS 7 are also presented in this interim financial report.
Reporting financial information by segments of the MVV Energie Group corresponds to our internal reporting. A renewable energy division has been added to the segmental reporting of the MVV Energie Group for the first time in this fiscal year, owing to our increased commitment to renewable energy.
Scope of Consolidation In addition to MVV Energie AG, thirty-five subsidiaries, in which MVV Energie AG has a majority of the voting rights either directly or indirectly, have been fully consolidated in the financial statements of the MVV Energie Group. The determining control concept for full consolidation in accordance with IAS 27 calls for the parent company to exercise the power to govern financial and operating policies. Six enterprises have been proportionally consolidated. Six additional associates have been assessed according to the equity method.
In the current fiscal year, four enterprises have been fully consolidated for the first time, namely Eternegy GmbH and MVV Erneuerbare Energien GmbH, both in Mannheim, as well as biomass project companies MVV BioPower GmbH in Königs Wusterhausen and MVV BMKW Mannheim GmbH in Mannheim. The 26% participation in the Polish district-heating utility, Szczecinska Energetyka Cieplna in the city of Szczecin, which we took over together with Ruhrgas Energie Beteiligungs-AG at the end of August
| Retained Earnings |
Net Earnings for this period of MVV Energie AG |
Capital of the MVV Energie Group |
Minority Interests |
Totals |
|---|---|---|---|---|
| 235 890 | 46 086 | 590 043 | 109398 | 699441 |
| _ | - 38027 | - 38027 | -8248 | - 46 275 |
| _ | 168462 | 168462 | 6934 | 175396 |
| - 7 427 | 7 4 2 7 | _ | _ | _ |
| -4911 | _ | -4911 | - 50 | - 4961 |
| - 2087 | _ | - 2087 | 1 533 | - 554 |
| 228 | _ | 228 | - 425 | - 197 |
| 221 693 | 183 948 | 713 708 | 109 142 | 822850 |
2002, has been proportionally consolidated for the first time since the beginning of fiscal year 2002/03. Gasversorgung Süddeutschland GmbH (GVS), which has been sold in the meantime, was assessed according to the equity method.
The participations that were initially consolidated during the course of fiscal year 2001/02 and that thus could not contribute to sales and EBIT for the entire fiscal year included the fully consolidated (as of December 1, 2001) district-heating utility in Brno (Czech Republic), the proportionally consolidated (as of January 1, 2002) district-heating utility in Bydgoszcz (Poland) and the proportionally consolidated (also as of January 1, 2002) participations in Solingen and Ingolstadt.
Fully and proportionally consolidated subsidiaries and joint venture enterprises that were included in the consolidated financial statements of the MVV Energie Group have prepared interim financial statements for the quarterly financial reports as of their respective balance sheet dates. When shares in subsidiaries or joint ventures are as a whole of negligible importance from the standpoint of the Group, they are carried as financial assets on the consolidated balance sheet.
Financial statements included in the consolidation of the MVV Energie Group have been translated from the accounting systems of the respective countries to IAS/IFRS on the basis of uniform principles.
In consolidating capital, the book value of subsidiaries has been set off against the proportional equity of said subsidiaries at the time of acquisition. A positive balance is carried as goodwill under Fixed assets and amortised in accordance with IAS 22; conversely, a negative balance with regard to the sale price is carried in the profit and loss statement and reflects commensurate potential losses forecast for the future.
Intercompany sales, expenses and earnings as well as receivables and payables among consolidated enterprises have been eliminated.
Consolidation Methods
Earnings per share have been calculated as follows: Earnings per Share
| 2002/2003 1/10—30/6 |
2001/2002 1/10—30/6 |
|
|---|---|---|
| Net earnings after taxes for this period | ||
| after deducting minority interests | ||
| in Euro 1 000 | 168462 | 52938 |
| Adjusted1,2 net earnings after taxes for | ||
| this period after deducting minority | ||
| interests in Euro 1 000 | 37063 | 31323 |
| No. of shares in 1 000 | ||
| (weighted annual average) | 50702 | 50 702 |
| Earnings per share in Euro | ||
| in accordance with IAS 33 | 3.32 | 1.04 |
| Adjusted1,2 earnings per share in Euro | ||
| in accordance with IAS 33 | 0.73 | 0.61 |
1 Without the proceeds from the sale of GVS shares, net income from GVS as a participation and the cost of measures to enhance MVV Energie AG's competitiveness
Foreign Currency
As the foreign subsidiaries included in the consolidated financial statements conduct business independently in their own national currencies, they are treated as foreign entities in accordance with IAS 21. Assets and debt items on balance sheets are translated from the respective currency to Euro at the exchange rate in effect on the balance sheet date. Goodwill of consolidated foreign companies is translated at the official mean exchange rates in effect on a given date. Differences resulting from currency from translation are set off against retained earnings without affecting balances.
Comparability of Figures
The key economic indicators of the MVV Energie Group were positively affected by the profits from the sale of GVS stock in the 1st quarter of 2002/03. These indicators have been made comparable by means of an adjustment and are shown on the inside of the cover and in the section on Earnings; this adjustment has reduced the figures for comparable quarters for the profits from the sale of MVV Energie AG's GVS stock and for the net income from GVS as a participation both in 2002/03 and 2001/02 as well as the cost of measures to enhance MVV Energie AG's competitiveness.
2 Adjusted for accounting tax factors from measures to enhance MVV Energie AG's competitiveness during the fiscal year reported here and from the proceeds from the GVS sale last year
Timetable
3/12/2003
Announcement of tentative figures from the financial statements for fiscal year 2002/2003
28/1/2004
Press conference and financial analysts' conference
16/2/2004
Financial report 1 stQuarter 2003/2004
12/3/2004
General Shareholders' Meeting
15/3/2004
Payment of dividends