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

11.12.2014 / 08:31

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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.


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11.12.2014 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 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)  
 
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