.
- Group net profit slightly above last year’s level
- Network revenue declined due to the mild weather and reduction of gas network tariffs
- First-time consolidation of the Macedonian electricity distribution company ESM AD for an entire financial year
- Completion of the waste incineration facility in Moscow
- Conclusion of an agreement to acquire Bulgaria’s second largest district heating plant, imminent closing of the transaction
- Agreement to increase EVN’s indirect stake in Rohöl-Aufsuchungs AG, closing is expected on December 17
- District heating cooperation project with the Lower Austrian capital of St. Pölten
- Binding offer for the acquisition of a concession to construct three hydroelectric power plants in Albania
- Market entry for Environmental Services segment in Turkey
In the 2006/07 financial year, the EVN Group laid a solid groundwork for future growth by concluding or preparing cooperation projects and further acquisitions. Despite the weather-related decline in sales volume of the Energy segment and the completion of large-scale projects in the Environmental Services segment, total revenue of the EVN Group rose by 7.8%, to EUR 2,233.1m compared to the previous year, and the EBIT of the EVN Group climbed 7.0%, to EUR 197.3m. Group net profit was up 2.3% from the preceding year, to EUR 227.0m. Earnings per share amounted to EUR 5.55 (previous year: EUR 5.43).
Revenue increase despite mild weather and completion of large international projects
Total revenue of the EVN Group amounted to EUR 2,233.1m in the 2006/07 financial year, an increase of EUR 161.6m compared to the preceding year. Despite mild weather conditions, revenue of the Energy segment rose by 9.7%, or EUR 171.1m, which can be primarily attributed to the first-time consolidation of the Macedonian subsidiary ESM AD for an entire financial year. As a result of the completion of large international projects and the accompanying business fluctuations, revenue of the Environmental Services segment declined by 5.2%, or EUR 15.0m to EUR 275.1m. Revenue generated outside of EVN’s domestic market of Austria climbed by approximately 20.0%, to EUR 833.1m. As a result, the share of foreign revenue generated by the EVN Group rose to 37.3%.
Ongoing high energy prices
In the 2006/07 financial year, the ongoing prices for primary energy and electricity purchases, impacted by the forward market, had a negative effect on EVN’s results. In contrast, the significant decline in the prices of additional CO2-emission certificates reduced the required expenditure by more than half, to EUR 7.2m. The item "Electricity purchases and primary energy expenses" rose 12.9%, to EUR 1,176.1m.
Restructuring in South-eastern Europe
The average number of employees in the EVN Group totalled 9,535 people in the 2006/07 financial year, a decline of 4.4% compared to the previous year. This development is chiefly related to the successfully initiated restructuring programme in Bulgaria and Macedonia. Despite the lower employee headcount, personnel expenses rose by 9.6%, to EUR 288.9. EUR 19.2m of this increase can be attributed to EVN’s Macedonian subsidiary ESM AD, which also accounted for one-off restructuring expenses connected to the implementation of a voluntary social benefits programme totalling EUR 7.6m.
EBITDA below last year’s level – EBIT rise of 7.0%
The EBITDA of the EVN Group declined by 11.8%, to EUR 350.7m. This is chiefly related to the increase in operating expenses, which rose faster than total Group revenue. The depreciation and amortisation in the EVN Group amounting to EUR 153.3m included extraordinary depreciation of EUR 22.1m resulting from impairment tests, compared to impairment losses of EUR 34.4m in the previous year. Accordingly, extraordinary depreciation was 28.0%, or EUR 59.7m, below the level of the preceding financial year. All in all, this led to an improvement in the results from operating activities, which rose 7.0%, to EUR 197.3m. The EBIT of the Energy segment climbed by 21.6%, to EUR 172.3m, which was primarily due to a flexible marketing strategy for the electricity generated by the EVN Group, as well as the optimisation of energy trading activities. In the Environmental Services segment, the completion of large international projects led to a decline in EBIT of 17.2%, to EUR 38.1m.
Weaker financial results due to one-off effects in 2005/2006
The financial results of the EVN Group amounted to EUR 90.1m in the 2006/07 financial year, a decline of 25.2 % compared to the previous year’s financial results shaped by one-off effects. The income from investments in associates decreased by 14.0%, to EUR 127.0m. The share of profit from companies included at equity decreased by EUR 25.3m, to EUR 89.8m. However, adjusted for one-off effects of EUR 33.0m arising in the 2005/06 financial year, an increase of EUR 7.7m in the financial results of the EVN Group would be recognised, which underlines the ongoing positive development of the company. The main reason for the improved level of income from other investments totalling EUR 37.2m can be primarily attributed to higher dividends distributed by Verbundgesellschaft.
Group net profit slightly above last year’s level
Due to the weaker financial results, the profit before income tax of the EVN Group declined by 5.7%, or EUR 17.4m compared to the preceding year, to EUR 287.4m. The income tax expense fell by EUR 9.7m, to EUR 28.5m, as the result of a reduction in deferred tax liabilities relating to a decrease in corporate tax rates in Bulgaria and Macedonia. After taking account of minority interest, the Group net profit totalled EUR 227.0m, a rise of 2.3%, or EUR 5.1m, compared to the previous year.
Dividend proposal
The dividend policy of the EVN Group is oriented to ensuring sustainable development. Accordingly, EVN is striving to successively raise dividends. On the basis of earnings development, the Executive Boad of the EVN Group will propose a 7.1% increase in the dividend for the 2006/07 financial year, from EUR 1.40 to EUR 1.50, and define this as the basic dividend.
Milestones in the 2006/07 financial year as the basis for further growth
Implemenation of the energy concept for Lower Austria
On EVN’s domestic market of Austria, we concluded a cooperation agreement to supply district heat to the Lower Austrian capital city of St. Pölten. In order to carry out the project, the City of St. Pölten will spin off its district heating operations, establishing a new company in which EVN will acquire a 49% stake. Beginning with the heating season 2009/10, EVN will supply two-thirds of the heat requirement of Sankt Pölten from its power station complex in Dürnrohr via a 31km-long district heating pipeline. In the field of waste incineration, construction began as scheduled on the third waste incineration line at the waste incineration facility in Dürnrohr, which will increase capacity from the current level of 300,000t annually to 500,000t. Start-up of the new waste incineration line is expected in the year 2010. These projects represent part of a broad-based energy concept for the Lower Austrian Central Region, involving investments of about EUR 200m in the next few years.
Increase of indirect stake in RAG
EVN achieved further progress in its vertical integration, concluding a contractual agreement with its partners in RAG-Beteiligungs-AG (RBG) to acquire E&P Holding GmbH (EPH). EVN will establish a joint venture with the RBG-partners to acquire EPH. Consequently, EVN will increase its indirect interest in the RAG. Upon approval by responsible anti-trust authorities, the closing of the transaction is expected on December 17.
Expansion in Bulgaria’s heat generation sector
We achieved an important milestone in our further diversification efforts in South East Europe, concluding an agreement to acquire the Bulgarian district heating company TEZ Plovdiv. This acquisition, once the transaction has been approved, will provide EVN with its first significant own electricity and heat production capability in this region. Bulgaria’s second largest district heating plant supplies heat to about 40,000 customers, thus doubling the number of EVN’s heat customers.
Renewable energy projects in Albania
Following the signing of a Memorandum of Understanding with the Albanian Government in January 2007, we submitted an offer for three storage power stations with an annual capacity of more than 1,000 GWH, based on feasibility studies. In November 2007, EVN submitted a binding offer for the acquisition of a concession to construct three hydroelectric power plants in Albania.
Expansion in power generation
To further expand our own production capabilities, the ground-breaking ceremony for the construction of a state-of-the-art coal-fired power plant in Duisburg-Walsum, Germany took place in November 2006. The project is being carried out in cooperation with Evonik Steag GmbH, and is expected to be completed in 2010.
Environmental Services segment enters Turkish market
WTE, a 100% owned subsidiary of EVN, won an international tender in 2007 to construct a large turn-key wastewater treatment plant for the City of Istanbul. This project marks EVN’s entry in the Turkish market.
Outlook
According to Burkhard Hofer, Speaker of the Executive Board of the EVN Group, said: "In the 2006/07 financial year, EVN consistently pursued its strategy of positioning itself as a successful energy and environmental services company. Despite a challenging business environment, we managed to outperform the results posted in the previous year. We are convinced that the business results and expansion steps taken in the 2006/07 financial year have created a solid basis for the future growth of the EVN Group.
On EVN’s domestic market, Lower Austria the electricity and gas prices will remain stable for the coming heating season. Due to the expected decrease of electricity and gas network tariffs at the beginning of 2008 and lower surcharge on renewable energy in Lower Austria the end-customer prices may even slightly decrease."
The complete annual report of the EVN Group for the 2006/07 financial year can be downloaded at www.investor.evn.at.
- Group net profit slightly above last year’s level
- Network revenue declined due to the mild weather and reduction of gas network tariffs
- First-time consolidation of the Macedonian electricity distribution company ESM AD for an entire financial year
- Completion of the waste incineration facility in Moscow
- Conclusion of an agreement to acquire Bulgaria’s second largest district heating plant, imminent closing of the transaction
- Agreement to increase EVN’s indirect stake in Rohöl-Aufsuchungs AG, closing is expected on December 17
- District heating cooperation project with the Lower Austrian capital of St. Pölten
- Binding offer for the acquisition of a concession to construct three hydroelectric power plants in Albania
- Market entry for Environmental Services segment in Turkey
In the 2006/07 financial year, the EVN Group laid a solid groundwork for future growth by concluding or preparing cooperation projects and further acquisitions. Despite the weather-related decline in sales volume of the Energy segment and the completion of large-scale projects in the Environmental Services segment, total revenue of the EVN Group rose by 7.8%, to EUR 2,233.1m compared to the previous year, and the EBIT of the EVN Group climbed 7.0%, to EUR 197.3m. Group net profit was up 2.3% from the preceding year, to EUR 227.0m. Earnings per share amounted to EUR 5.55 (previous year: EUR 5.43).
Revenue increase despite mild weather and completion of large international projects
Total revenue of the EVN Group amounted to EUR 2,233.1m in the 2006/07 financial year, an increase of EUR 161.6m compared to the preceding year. Despite mild weather conditions, revenue of the Energy segment rose by 9.7%, or EUR 171.1m, which can be primarily attributed to the first-time consolidation of the Macedonian subsidiary ESM AD for an entire financial year. As a result of the completion of large international projects and the accompanying business fluctuations, revenue of the Environmental Services segment declined by 5.2%, or EUR 15.0m to EUR 275.1m. Revenue generated outside of EVN’s domestic market of Austria climbed by approximately 20.0%, to EUR 833.1m. As a result, the share of foreign revenue generated by the EVN Group rose to 37.3%.
Ongoing high energy prices
In the 2006/07 financial year, the ongoing prices for primary energy and electricity purchases, impacted by the forward market, had a negative effect on EVN’s results. In contrast, the significant decline in the prices of additional CO2-emission certificates reduced the required expenditure by more than half, to EUR 7.2m. The item "Electricity purchases and primary energy expenses" rose 12.9%, to EUR 1,176.1m.
Restructuring in South-eastern Europe
The average number of employees in the EVN Group totalled 9,535 people in the 2006/07 financial year, a decline of 4.4% compared to the previous year. This development is chiefly related to the successfully initiated restructuring programme in Bulgaria and Macedonia. Despite the lower employee headcount, personnel expenses rose by 9.6%, to EUR 288.9. EUR 19.2m of this increase can be attributed to EVN’s Macedonian subsidiary ESM AD, which also accounted for one-off restructuring expenses connected to the implementation of a voluntary social benefits programme totalling EUR 7.6m.
EBITDA below last year’s level – EBIT rise of 7.0%
The EBITDA of the EVN Group declined by 11.8%, to EUR 350.7m. This is chiefly related to the increase in operating expenses, which rose faster than total Group revenue. The depreciation and amortisation in the EVN Group amounting to EUR 153.3m included extraordinary depreciation of EUR 22.1m resulting from impairment tests, compared to impairment losses of EUR 34.4m in the previous year. Accordingly, extraordinary depreciation was 28.0%, or EUR 59.7m, below the level of the preceding financial year. All in all, this led to an improvement in the results from operating activities, which rose 7.0%, to EUR 197.3m. The EBIT of the Energy segment climbed by 21.6%, to EUR 172.3m, which was primarily due to a flexible marketing strategy for the electricity generated by the EVN Group, as well as the optimisation of energy trading activities. In the Environmental Services segment, the completion of large international projects led to a decline in EBIT of 17.2%, to EUR 38.1m.
Weaker financial results due to one-off effects in 2005/2006
The financial results of the EVN Group amounted to EUR 90.1m in the 2006/07 financial year, a decline of 25.2 % compared to the previous year’s financial results shaped by one-off effects. The income from investments in associates decreased by 14.0%, to EUR 127.0m. The share of profit from companies included at equity decreased by EUR 25.3m, to EUR 89.8m. However, adjusted for one-off effects of EUR 33.0m arising in the 2005/06 financial year, an increase of EUR 7.7m in the financial results of the EVN Group would be recognised, which underlines the ongoing positive development of the company. The main reason for the improved level of income from other investments totalling EUR 37.2m can be primarily attributed to higher dividends distributed by Verbundgesellschaft.
Group net profit slightly above last year’s level
Due to the weaker financial results, the profit before income tax of the EVN Group declined by 5.7%, or EUR 17.4m compared to the preceding year, to EUR 287.4m. The income tax expense fell by EUR 9.7m, to EUR 28.5m, as the result of a reduction in deferred tax liabilities relating to a decrease in corporate tax rates in Bulgaria and Macedonia. After taking account of minority interest, the Group net profit totalled EUR 227.0m, a rise of 2.3%, or EUR 5.1m, compared to the previous year.
Dividend proposal
The dividend policy of the EVN Group is oriented to ensuring sustainable development. Accordingly, EVN is striving to successively raise dividends. On the basis of earnings development, the Executive Boad of the EVN Group will propose a 7.1% increase in the dividend for the 2006/07 financial year, from EUR 1.40 to EUR 1.50, and define this as the basic dividend.
Milestones in the 2006/07 financial year as the basis for further growth
Implemenation of the energy concept for Lower Austria
On EVN’s domestic market of Austria, we concluded a cooperation agreement to supply district heat to the Lower Austrian capital city of St. Pölten. In order to carry out the project, the City of St. Pölten will spin off its district heating operations, establishing a new company in which EVN will acquire a 49% stake. Beginning with the heating season 2009/10, EVN will supply two-thirds of the heat requirement of Sankt Pölten from its power station complex in Dürnrohr via a 31km-long district heating pipeline. In the field of waste incineration, construction began as scheduled on the third waste incineration line at the waste incineration facility in Dürnrohr, which will increase capacity from the current level of 300,000t annually to 500,000t. Start-up of the new waste incineration line is expected in the year 2010. These projects represent part of a broad-based energy concept for the Lower Austrian Central Region, involving investments of about EUR 200m in the next few years.
Increase of indirect stake in RAG
EVN achieved further progress in its vertical integration, concluding a contractual agreement with its partners in RAG-Beteiligungs-AG (RBG) to acquire E&P Holding GmbH (EPH). EVN will establish a joint venture with the RBG-partners to acquire EPH. Consequently, EVN will increase its indirect interest in the RAG. Upon approval by responsible anti-trust authorities, the closing of the transaction is expected on December 17.
Expansion in Bulgaria’s heat generation sector
We achieved an important milestone in our further diversification efforts in South East Europe, concluding an agreement to acquire the Bulgarian district heating company TEZ Plovdiv. This acquisition, once the transaction has been approved, will provide EVN with its first significant own electricity and heat production capability in this region. Bulgaria’s second largest district heating plant supplies heat to about 40,000 customers, thus doubling the number of EVN’s heat customers.
Renewable energy projects in Albania
Following the signing of a Memorandum of Understanding with the Albanian Government in January 2007, we submitted an offer for three storage power stations with an annual capacity of more than 1,000 GWH, based on feasibility studies. In November 2007, EVN submitted a binding offer for the acquisition of a concession to construct three hydroelectric power plants in Albania.
Expansion in power generation
To further expand our own production capabilities, the ground-breaking ceremony for the construction of a state-of-the-art coal-fired power plant in Duisburg-Walsum, Germany took place in November 2006. The project is being carried out in cooperation with Evonik Steag GmbH, and is expected to be completed in 2010.
Environmental Services segment enters Turkish market
WTE, a 100% owned subsidiary of EVN, won an international tender in 2007 to construct a large turn-key wastewater treatment plant for the City of Istanbul. This project marks EVN’s entry in the Turkish market.
Outlook
According to Burkhard Hofer, Speaker of the Executive Board of the EVN Group, said: "In the 2006/07 financial year, EVN consistently pursued its strategy of positioning itself as a successful energy and environmental services company. Despite a challenging business environment, we managed to outperform the results posted in the previous year. We are convinced that the business results and expansion steps taken in the 2006/07 financial year have created a solid basis for the future growth of the EVN Group.
On EVN’s domestic market, Lower Austria the electricity and gas prices will remain stable for the coming heating season. Due to the expected decrease of electricity and gas network tariffs at the beginning of 2008 and lower surcharge on renewable energy in Lower Austria the end-customer prices may even slightly decrease."
The complete annual report of the EVN Group for the 2006/07 financial year can be downloaded at www.investor.evn.at.
