EVN AG

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

2015-02-26 / 08:00

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Business development in the first quarter of the 2014/15 financial year (1 October 2014 - 31 December 2014)

Highlights

* Group net result exceeds first quarter of previous year * Increase in electricity generation based on the expansion of renewable energy production and full operations in the Duisburg-Walsum power plant * Reduction of energy prices for electricity by 10% for an average Lower Austrian household customer as of 1 October 2014 * Investment offensive: 1 billion euros into security of supply as well as renewable energy in Lower Austria in the coming four years * Sale of sodium hypochlorite plant to the Moscow city water supply and wastewater disposal company
* Outlook 2014/15: Group net result expected to exceed 2012/13  
Key figures

* Revenue: +8.7% to EUR 599.9m
* EBITDA: +32.3% to EUR 184.8m 
* Results from operating activities (EBIT): +53.5% to EUR 121.2m * Group net result: +66.1% to EUR 73.1m 
* Cash flow from operating activities: -50.4% to EUR 92.4m * Net debt: EUR 1,352.5m (30.09.2014: EUR 1,622.4m)
Energy sector environment

The first quarter of the 2014/15 financial year brought an increase in temperatures in Austria to a level that was significantly higher than the previous year and also above the long-term average. The warm weather was responsible for an 11.5% drop in the heating degree total compared with the previous year. South Eastern Europe saw different developments during the reporting period: the heating degree total in Macedonia was 6.8% below the prior year, while Bulgaria recorded an increase of 2.5%.
The continuing expansion of renewable energy generation capacity in Austria and Germany as well as the lower price of coal and - despite the recent increase - the still low price for CO2 emission certificates led to a further drop in the forward and spot market prices for base load and peak load electricity during the first quarter of 2014/15.
Increase in Group net result

The EVN Group generated revenue of EUR 599.9m in the first quarter of 2014/15, which represents an increase of 8.2%, over the comparable prior year period. Revenue development was positively influenced by full operations at the Duisburg-Walsum power plant and the related sale of electricity as well as the Group's natural gas marketing activities, effects from the recent price decisions in Bulgaria and Macedonia and higher revenue from thermal waste utilisation in Austria. These positive effects more than offset the decline in the network business that was caused by the reduction of the network tariff for electricity and a temperature-related decline in the natural gas business.
Other operating income rose by EUR 26.1m to EUR 47.8m. This increase resulted, above all, from the positive conclusion of the negotiations with the city of Moscow over the sodium hypochlorite plant project, which led to the sale of the shares in the project company during October 2014. The share of results from equity accounted investees with operational nature rose by 2.6%, to EUR 37.8m. The lower earnings contribution from EVN Energievertrieb GmbH & Co KG, which resulted from the mild winter 2014/15 and the 10% average reduction in end customer prices for electricity as of 1 October 2014, was more than offset by higher contributions, among others, from Rohöl-Aufsuchungs AG and Energie Burgenland AG.
In total, these developments led to an increase of 32.3%, in EBITDA to EUR 184.8m. Current depreciation and amortisation rose by 4.8%, to EUR 63.6m, primarily due to the commissioning of the Duisburg-Walsum power plant and the start of scheduled depreciation. Based on these developments the results from operating activities (EBIT) totalled EUR 121.2m, a year-on-year increase of 53.5%.

Financial results amounted to EUR -24.4m and were 33.2%, lower than in the previous year. On balance, Group net result equalled EUR 73.1m, which represents an increase of 66.1% over the first quarter of the previous year.

Reduced net debt; solid balance sheet structure 

Gross cash flow rose by 21.7% to EUR 166.6m in the first quarter of 2014/15, primarily due to the increase in the result before income tax as well as a decline in the non-cash earnings components from equity accounted investees and an increase in non-current provisions. The decline of EUR 93.9m in cash flow from operating activities to EUR 92.4m resulted from an increase in working capital. Cash flow from investing activities amounted to EUR 60.9m and was EUR 248.2m higher than in the first quarter of the previous year. This increase resulted, above all, from the sale of the sodium hypochlorite plant.

Net debt declined 20.5% below the level on 30 September 2014 to EUR 1,352.5m. Equity increased 1.4%, to EUR 2,669.8m based on the higher earnings recorded in the first quarter of 2014/15. As a consequence, the equity ratio improved to 40.0% as of 31 December 2014 (30 September 2014: 38.5%). Gearing fell to 50.7% (30 September 2014: 61.6%). The EUR 0.42 dividend per share for the business year 2013/14 that was approved by the 86th Annual General Meeting on 15 January 2015 was paid on 28 January 2015 and is therefore not yet reflected as a deduction from equity.
Developments in the energy and project business

Energy business

In the context of "EVN's investment offensive", EVN is investing 1 billion euros into security of supply, renewable energy as well as clean drinking water in Lower Austria in the coming four years.

In the first quarter 2014/15 in connection with EVN's investment strategy, network infrastructure investments were pursued in order to safeguard supply security in Lower Austria. Projects in the electricity network concentrated on infrastructure development to accommodate the steadily rising feed-in from the continued expansion of generation from renewable energy sources in the network area. The 110 kV network was strengthened, and the transformer stations were expanded to transport the increased feed-in of electricity generated by wind energy. Activities centred on the expansion and strengthening of the distribution grid to safeguard supply security for customers.

In the area of electricity and heat generation from renewable sources the focus was on the construction of the Prottes-Ollersdorf windpark as well as on the expansion of the district heating plants and networks.
As of 1 January 2015, the regulated network tariffs in Lower Austria were reduced by roughly 1% for electricity and roughly 3% for natural gas. The energy price for electricity was previously reduced as of 1 October 2014 within the framework of the EnergieAllianz. This lowered the energy price by 10% for an average household in Lower Austria with power consumption of 3,500 kWh per year.

Environmental service business

In the international project business, EVN is currently working on the realisation of eight projects. A contract was signed in November 2014 for the expansion of the local wastewater purification plant in the Romanian city of Zalau to service 85,000 inhabitants. This project covers the completion and expansion of the existing plant as well as the construction of a sludge treatment plant with biogas utilisation. Following the contracts in Gherla/Huedin and Silvaniei, Zalau represents the third environmental services project for EVN in Romania.
The commissioning process started for the waste water purification plant in Larnaca, Cyprus, that was completed in the previous year. The first steps were also taken for the commissioning of the Kujawy wastewater purification plant in Krakow, Poland, which is designed to service 370,000 inhabitants.
In the area of drinking water supplies for Lower Austria, EVN's activities during the reporting period included a number of projects to improve the quality of drinking water. The commissioning process for the natural filter plant in Drösing, Lower Austria, which will reduce the hardness of the water by natural means, started in December 2014. Plans also call for the commissioning of a similar plant in Obersiebenbrunn during spring 2015 and the start of construction on a further natural filter plant in Zwentendorf an der Zaya. These facilities will improve the water quality for the roughly 100,000 residents in the involved regions. EVN supplies drinking water for more than 500,000 residents in Lower Austria.
Outlook

The developments in the first quarter 2014/15 lead us to confirm our outlook for the 2014/15 financial year. The Group net result is expected to exceed the 2012/13 level. It could be significantly influenced by regulatory conditions, developments in the proceedings related to claims from the tariff decisions in Bulgaria and in connection with the Duisburg-Walsum power plant as well as the progress of the activities in Moscow.

For the complete Letter to Shareholders for the first quarter of 2014/15 see www.investor.evn.at.



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2015-02-26 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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