EVN AG
EVN AG: Development of business in the first three quarters of 2006/07
EVN AG / Quarter Results/Quarter Results Release of a Corporate News, transmitted by DGAP - a company of EquityStory AG. The issuer / publisher is solely responsible for the content of this announcement. ---------------------------------------------------------------------- August 28, 2007 Press Release Development of business in the first three quarters of 2006/07 (October 1 2006 – June 30, 2007) - Initial consolidation of the Macedonian subsidiary ESM AD for an entire financial year - Lower primary energy prices for gas passed on to consumers - Conclusion of a contract to acquire Bulgaria´s 2nd largest district heating plant - Agreement to increase EVN´s indirect shareholding in Rohöl-Aufsuchungs-AG - Hydroelectric power plant projects in Albania recognised as being in the public interest2006/07 Q. 1-3 Change EUR m in % Sales revenues 1,701.7 + 6.5 EBITDA 311.1 - 4.7 Operating result (EBIT) 186.9 - 6.0 Group net profit 221.8 +7.0Despite a challenging business environment, we are able to report an improvement in EVN Group results for the first three quarters 2006/07. The revenue of the Energy segment rose by 10.2%, primarily due to the first-time integration of our Macedonian subsidiary ESM AD for the entire financial year. In the Environmental Services segment, the completion of a large drinking water project in Moscow led to a decline in revenue below last year´s level, in spite of numerous but smaller new projects. All in all, EVN Group revenue climbed by 6.5%, to EUR 1,701.7m. Whereas the results from operating activities were down only 6.0% compared to last year’s level in spite of the unfavourable business environment prevailing in the energy industry, Group net profit climbed 7.0%, to EUR 221.8m, primarily as a consequence of the good development of EVN’s financial results. Consolidation effects in electricity, decline in gas and heating sales volumes Due to the initial consolidation of our Macedonian subsidiary for the entire financial year, EVN more than compensated for the weather-related decline in electricity sales volumes on the Austrian and Bulgarian markets. As a result, total electricity sales volumes of the EVN Group rose by close to 21% year on year. In contrast, gas sales volumes to end customers dropped by 27%, whereas heating sales volumes decreased by about 13%. Lower primary energy prices for gas passed on to consumers Due to the extremely mild temperatures, primary energy prices and wholesale prices for electricity started to decline at the beginning of October 2006. Gas procurement costs, linked to the price of crude oil, also significantly dropped during the first three months of 2007. Taking account of this trend, effective July 1, EVN cut gas prices for its end customers, by an average of 8%. Expansion in the Bulgarian heating business As a result of the acquisition of the district heating company TEZ Plovdiv, EVN entered the heating market in Bulgaria, where EVN is already active in the electricity supply market. The purchase price for TEZ Plovdiv totalled EUR 32.1m. The company supplies heating to about 40,000 customers, thus effectively doubling the number of EVN’s heating customers. This acquisition also provides EVN with its first own generation facilities in South East Europe. Renewable energy projects in Albania Following the signing of a Memorandum of Understanding with the Albanian government in January 2007, we presented project proposals on the basis of feasibility studies for three peak load, storage power stations on the Devol River with an annual capacity of more than 1,000 GWh. After a positive assessment by the responsible state commission, the Albanian government approved the projects and declared them to be in the public interest. As a result, EVN has received a bonus of ten evaluation points (from a possible 100) for the definitive tendering process, which is due to commence shortly. Expansion in energy production After the ground-breaking ceremony in November 2006 for the coal-fired power plant in Duisburg, Germany, in cooperation with STEAG, construction is proceeding on schedule. The installation of the technical components will begin in the autumn of 2007. Construction of a biomass-fired pilot plant at the Dürnrohr power station was completed in July 2007. The facility is scheduled to commence operations by the end of this year. The biomass-fired plant will generate biogas for the power station Dürnrohr, which will substitute coal and gas to production of electricity and heating. The pilot plant will be able to produce electricity for 2,500 households using straw of 6,000 tons. Increase in EVN´s indirect stake in RAG Further progress in the vertical integration of EVN was made by means of the contractual agreement on the part of the partners holding stakes in RAG Beteiligungs AG (RBG) to acquire E&P Holding GmbH, a subsidiary of the Shell Group. E&P Holding GmbH has a 25% stake in Rohöl-Aufsuchungs-AG (RAG), with a 75% shareholding in the hands of RBG, in which EVN has a stake. As a consequence of the transaction, which is still subject to normal provisos, in particular the approval of the responsible anti-trust authorities, EVN will increase its indirect stake in RAG. Environmental Services segment – regional expansion EVN also made considerable progress in the Environmental Services segment in the period under review. After the transfer of our newly completed large drinking water facility to the municipal authorities of Moscow in November 2006, the waste incineration installation for the Russian capital entered its final construction phase. Trial operations for parts of the facility have already begun, ensuring that the plant will commence operations in the autumn of 2007, as originally planned. After the required licenses were granted, EVN began to expand capacity at the waste incineration installation in Dürnrohr (third waste incineration line) in June 2007, as scheduled. The planned construction time will be about two years, increasing the facility’s capacity by about one-third to an annual volume of 500,000 t. Our fully-owned subsidiary WTE commenced operations for the fourth and final biological phase of the central municipal wastewater treatment plant in Zagreb, as well as the sludge treatment facility designed to produce biogas for two combined cycle heat and power plants. In Moscow, the ground-breaking ceremony for construction of a combined cycle heat and power facility located next to the Kurjanovo wastewater purification plant will take place in the near future. EVN is on the verge of concluding additional contracts for large projects, for example in Cyprus, the Baltic States and in large cities of the Russian Federation. During the period under review, EVN Wasser doubled the number of end customers it directly supplies with water to 30,000, due to intensified partnerships with municipalities in Lower Austria. Moreover, EVN Wasser and WTE were contracted to construct a new municipal wastewater treatment plant in Tulln, Lower Austria. Total investment volume amounts to EUR 11.5m. Outlook In the light of the extremely mild winter, EVN expects a slight decline in earnings for the 2006/07 financial year. EVN is confronted with declining sales volumes in the Energy segment, and the numerous but smaller new projects of the Environmental Services segment can not fully compensate for the decrease in revenue resulting from the conclusion of large projects. The network tariff cuts effective January 1, 2007, as stipulated by the Austrian regulatory authorities, also put downward pressure on EVN´s margins. In particular, the prescribed reduction in gas network tariffs leads to a corresponding loss in revenue. EVN continues to expect strong financial results for 2006/07 as a whole. However, these will be below the particularly good results in the previous financial year, which were positively impacted by one-off effects from investments in associates. Subsequently, the Group net profit is expected to remain below the record level achieved in the past financial year. EVN’s Letter to Shareholders for the first three quarters 2006/07 can be downloaded from http://www.investor.evn.at. 28.08.2007 Financial News transmitted by DGAP ---------------------------------------------------------------------- Language: English Issuer: EVN AG EVN Platz 2344 Maria Enzersdorf Österreich Phone: +43-2236-200-12294 Fax: +43-2236-200-82294 E-mail: info@evn.at Internet: www.evn.at ISIN: DE0002494200, AT0000741053 WKN: 249420, 878279 Indices: Listed: Amtlicher Markt in Frankfurt (General Standard); Freiverkehr in Berlin, Stuttgart, München End of News DGAP News-Service ---------------------------------------------------------------------------
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