DGAP-News: EVN AG: Business development in the first three quarters of 2015/16


DGAP-News: EVN AG / Key word(s): Quarter Results
EVN AG: Business development in the first three quarters of 2015/16

25.08.2016 / 08:00
The issuer is solely responsible for the content of this announcement.

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(1 October 2015 - 30 June 2016)

Highlights

  - Higher demand for network stability leads to increase in thermal
    electricity production

  - Operational improvements across the entire value chain in the energy
    business

  - Reduction of 7% in the natural gas working price for household
    customers as of 1 May 2016 within the framework of EnergieAllianz   
    Austria; reduction of 5% in the electricity working prices for       
    households as of 1 October 2016

  - Investments related to drinking water supplies in Lower Austria

  - New contract for sewage treatment plant in Croatia

  - Group net profit above previous year

  - Outlook for 2015/16: generally stable Group net profit expected

Key results

  - Revenue: -2.9% to EUR 1,616.6m

  - EBITDA: +5.7% to EUR 525.4m

  - EBIT: +4.5% to EUR 299.3m

  - Group net result: +6.3% to EUR 198.8m

  - Net debt: EUR 1,098.8m (30.09.2015: EUR 1,230.9m)

Energy sector environment

The temperatures in EVN's relevant markets remained mild throughout the
first three quarters of 2015/16. In particular, the winter months brought
temperatures that exceeded the long-term average in all of the Group's
three core markets. The heating degree total in Austria was 2.0 percentage
points higher than the previous year, but still remained below the long-
term average. Bulgaria recorded unusually mild temperatures during the
reporting period, with a heating degree total that was 21.5 percentage
points under the previous year's low level. The temperatures in Macedonia
were also warmer, and the heating degree total was 7.0 percentage points
below the previous year.

The reporting period brought a year-on-year decline not only in the price
for primary energy carriers (crude oil, natural gas and hard coal), but
also in the forward and spot market prices for base load and peak load
electricity. The forward prices applicable to the reporting period fell to
EUR 31.6 per MWh for base load electricity and to EUR 40.1 per MWh for peak
load electricity. In comparison with the first nine months of 2014/15, the
spot market prices declined to EUR 27.7 per MWh for base load electricity
and to EUR 34.8 per MWh for peak load electricity.

Higher EBIT and EBITDA in spite of decline in revenue; Group net result
above prior year

Revenue declined by EUR 47.5m, or 2.9%, year-on-year to EUR 1,616.6m in the
first three quarters of 2015/16. Higher revenue was recorded from the
marketing of the electricity generated in EVN's power plants and from the
network business in Lower Austria. However, this increase was unable to
fully offset the decline resulting from a reduction in the Group's natural
gas trading activities and the volume- and price-related revenue decrease
that followed the mild winter and the liberalisation steps in South Eastern
Europe.

Operating expenses were lower, above all due to a decrease in the cost of
electricity purchased from third parties and primary energy expenses as
well as further improvements in collection and a parallel cost reduction in
South Eastern Europe. These developments supported an increase of EUR
28.2m, or 5.7%, in EBITDA to EUR 525.4m.

Depreciation and amortisation rose by EUR 7.6m, or 4.0%, to EUR 199.3m as a
result of the Group's ongoing investment activity. The effects of
impairment testing also increased by EUR 7.8m, or 41.1%, to EUR 26.8m. The
major component of the impairment losses was related to the Bulgarian
heating company TEZ Plovdiv and reflected the continued adverse rulings of
the regulatory authority in the heating sector. In spite of these
developments, results from operating activities (EBIT) totalled EUR 299.3m
and were EUR 12.8m, or 4.5%, higher than the first three quarters of the
previous year.

Financial results amounted to EUR -39.5m and were EUR 1.7m, or 4.2%, higher
than the previous year. Group net result rose by EUR 11.7m, or 6.3% to EUR
198.8m.

Sound balance sheet structure; reduction of net debt

EVN's positive operating results create the foundation for a solid balance
sheet structure. The equity ratio rose to 41.7% as of 30 June 2016 (30
September 2015: 39.8%). Net debt declined by EUR 132.1m, or 10.7%, below
the level on 30 September 2015 to EUR 1,098.8m, and gearing fell to 40.2%
(30 September 2015: 47.5%).

Developments in the energy and project business

Energy business

EVN recorded a substantial increase in electricity generation during the
first three quarters of 2015/16. The generation from renewable sources
declined year-on-year, despite the expansion of renewable electricity
production capacity, due to lower wind and water flows. In contrast, there
was a sizeable increase in the use of EVN's thermal power plants to supply
balancing energy and manage shortages in Austria and Germany. The use of
the company's thermal power plants to supply balancing energy and manage
shortages played an important role in this process and, accordingly, helped
to protect supply security and support the system transformation towards
renewable energy. EVN also intends to make its thermal power plants
available for these key duties in the future. For example: these thermal
power plants will be used as required during the summer months in 2016 and
2017, in particular to stabilise the networks in Austria based on
contractual agreements. The contract for the provision of reserve capacity
for southern Germany also covers the next two winter half-years.

The capital expenditure programme announced by EVN in the 2013/14 financial
year, which calls for investments of EUR 1bn in Lower Austria over a period
of four years, entered its third year as planned during the first three
quarters of 2015/16. Roughly 70% of the total programme will be directed to
the expansion or new construction of the network infrastructure, in
particular to transport the increased feed-in of windpower-generated
electricity. Renewable electricity generation capacity was further expanded
by the commissioning of the Paasdorf-Lanzendorf windpark, as planned, in
July 2016. The six wind turbines with an installed capacity of 19 MW can
supply nearly 13,500 households with electricity from renewable sources.
This facility raises EVN's wind generation capacity to 269 MW, and moves
the company significantly closer to its medium-term goal of over 300 MW.

EVN's distribution company is continuing to pass on purchasing advantages
from price developments on the energy market to its household customers.
After a 5% decrease in energy prices for both electricity and natural gas
last October, EVN's distribution company reduced the natural gas working
prices for households by a further 7% on average as of 1 May 2016 within
the framework of EnergieAllianz Austria. An additional reduction of 5% on
average in the electricity working prices for households will follow on 1
October 2016.

Environmental business

Investments in the environmental services business focused primarily on
drinking water, in particular the further strengthening of supply security
and an improvement in quality. Two strategically important projects related
to drinking water supplies in Lower Austria were completed by EVN in the
third quarter of 2015/16 and will further improve supply quality for EVN's
customers. EVN's third natural filter plant in Lower Austria, which will
reduce the hardness of the water by natural means, was commissioned in
Zwentendorf an der Zaya. EVN also increased the performance capability of
the pumping stations in the Waldviertel region by roughly 25% in order to
supply sufficient drinking water during peak periods in the traditionally
dry months.

EVN's international project business was awarded another contract in South
Eastern Europe during the reporting period: After EVN was selected to plan
and build three wastewater treatment plants in Macedonia - as reported at
the half-year - EVN received a contract in June 2016 for the construction
of a sewage treatment plant in Vodice, Croatia. EVN is serving as the
general contractor on both projects, and financing for the projects with a
contract value of approximately EUR 20.0m (Macedonia) and EUR 6.0m
(Croatia) will be provided by the customers, both using EU subsidies.


Outlook

Under the assumption of average conditions in the energy environment, the
Group net result for 2015/16 is expected to remain largely stable. The
factors that could significantly influence this net result 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 activities in Moscow.

The complete Letter to Shareholders for the first three quarters of 2015/16
is available under: www.investor.evn.at.


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25.08.2016 Dissemination of a Corporate News, transmitted by DGAP - a
service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

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   Language:    English                                                
   Company:     EVN AG                                                 
                EVN Platz                                              
                2344 Maria Enzersdorf                                  
                Austria                                                
   Phone:       +43-2236-200-12294                                     
   E-mail:      info@evn.at                                            
   Internet:    www.evn.at                                             
   ISIN:        AT0000741053                                           
   WKN:         074105                                                 
   Indices:     ATX                                                    
   Listed:      Foreign Exchange(s) Wien (Amtlicher Handel / Official  
                Market)                                                
 
 
   End of News    DGAP News Service  
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495549 25.08.2016