PresseBox
Press release BoxID: 266274 (EVN AG)
  • EVN AG
  • EVN Platz
  • 2344 Maria Enzersdorf
  • http://www.evn.at
  • Contact person
  • Stefan Zach
  • +43 (2236) 200-12294

Development of business in the first half-year of 2008/09

(October 1, 2008 - March 31, 2009)

(PresseBox) (Maria Enzersdorf, ) .
- EVN continues to invest despite the economic crisis
- Positive revenue and EBIT development despite earnings decline in Energy segment sales
- Lower income from investments in associates as the result of the price decline for primary energy
- Group net profit on balance below the previous year's level
- Successful corporate bond issue, optimisation of financial structure
- Outlook for the current financial year confirmed
- Ratification of concession agreement for constructing three hydropower storage plants in Albania

In the period October 2008 - March 2009, the energy sector environment was characterised by consistent temperatures compared to the previous year, even higher import prices for gas and a strong decline in the prices for crude oil and coal as a result of the economic crisis. The business environment in Austria remained more favourable than in other industrialised nations. Economic growth in South East Europe eased in the period under review.

Against the backdrop of these conditions, EVN raised total revenue in the 1st half of the 2008/09 financial year (October 1, 2008 - March 31, 2009) by 18.4%, or EUR 250.6m, to EUR 1,615.6m. This development is primarily related to the revenue increase in the Energy segment of 17.8%, or EUR 227.0m, to EUR 1,503.5m. Thanks to several new projects, revenue in the Environmental Services segment climbed 33.5%, or EUR 25.4m, to EUR 101.2m.

Despite massive price increases for electricity purchases and primary energy expenses, as well as the higher personnel expenses, other materials and operating expenses, results from operating activities(EBIT) were up 7.8% from the previous year, to EUR 184.0m. The lower EBIT rise in comparison to increased revenue, which resulted in an earnings decline in energy sales in the face of a positive development of all other business segments, led to a decline in the EBIT margin from 12.5% to 11.4%.The financial results decreased significantly by EUR 30.7m, to EUR 31.3m, which can be mainly attributed to the decline in income from associates by EUR 24.4m, to EUR 69.6m.

The profit before income tax in the 1st half of 2008/09 amounted to EUR 215.2m, down 7.4% from the preceding year. Income tax rose 43.9%, or EUR 10.4m, to EUR 34.1m, which is related to the lower share of tax-free income from investments in associates. In turn, this resulted in a decrease in the Group net profit of 10.0%, or EUR 18.6m, to EUR 168.8m.

Since the last balance sheet date on September 30, 2008, the balance sheet total of the EVN Group fell by 1.9%, or EUR 124.9m, to EUR 6,511.4m. Equity dropped 11.8%, or EUR 380.0m, to EUR 2,828.4m, which is due to the lower profit before income tax in the 1st half-year 2009/09, the change in the market valuation of EVN's shareholding in Verbundgesellschaft without recognition to profit or loss, and the distribution of the dividend totaling EUR 60.3m to shareholders of EVN AG for the 2007/08 financial year. Accordingly, the equity ratio was 43.4% as of March 31, 2009.

In the 2nd quarter 2008/09, EVN issued four corporate bonds to the amount of EUR 327.0m. The proceeds from the corporate bonds will be used to finance planned investment projects as well as for the redemption of loans and borrowings which are falling due. Gearing totaled 54.0% as at the end of the 2nd quarter 2008/09 (March 31, 2009), based on the increase in net debt, which climbed to EUR 1,526.2m, up from EUR 1,131.3m as at September 20, 2008.

Focus on renewable energies in South East Europe

Further expansion steps were taken in the 1st half-year 2008/09 to promote the increased use of renewable energy sources in South East Europe.

The concession agreement for the construction of three peak load storage power plants on the Devoll River in Albania, which EVN will build together with its Norwegian joint venture partner Statkraft, was signed in December 2008. On February 23, 2009, the concession agreement was ratified by the Albanian Parliament.

evn naturkraft commenced construction on a wind park project featuring 25 wind turbines and a total capacity of 50 MW in October 2008 in Kavarna, in northeastern Bulgaria, together with its German partner Enertrag AG. Total investments amount to approximately EUR 95m, with completion expected at the end of 2009.

Growth spurt in the telecommunications sector

In December 2008, an agreement was signed for the acquisition of the Burgenland-based cable network operator B.net Burgenland Telekom GmbH as well as Dataservice GmbH by the EVN subsidiary kabelsignal AG. The closing of the transaction took place on February 25, 2009.

Project completion and new contracts in the Environmental Services segment

During the period under review, four combined cycle heat and power plants were put into operation on the premises of the wastewater purification facility completed by WTE at the Kurjanovo site in Moscow.

In November 2008, WTE was awarded a contract to construct a sludge treatment plant in the Lithuanian capital city of Vilnius, with investments totaling EUR 45.0m. At the end of December 2008, WTE acquired its second project on the island of Cyprus, winning a tender to plan, construct, finance and operate a seawater desalination plant near Limassol. WTE will operate the facility for 20 years following a construction period of two years.

Outlook

The business development of EVN in the 2008/09 financial year will be negatively impacted by financial and economic crisis as well as potential political and regulatory risks. Despite a significant improvement in the operational performance of EVN Macedonia AD, EVN is being continually confronted with discriminatory measures being imposed by the Republic of Macedonia and state-owned companies, which target our involvement in the country. EVN is using all the legal means at its disposal to protect its investments in Macedonia, and has already initiated international arbitration proceedings.

In addition to a weaker development in the Energy segment, the associated companies operating in the field of primary energy have been strongly affected by the falling energy prices, and will thus generate considerably lower earnings contributions. We also anticipate a negative value development in respect to our financial assets. Even if the economic recession has corresponding effects on the Group net profit, from today's point of view EVN will likely be able to maintain the results from operating activities achieved in the previous year, aside from any potential negative consequences arising as the result of political and regulatory risks.

The complete Letter to Shareholders HY. 1 2008/09 is available at www.investor.evn.at.