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Business development

The scope of consolidation and changes in comparison with the previous year are explained in the notes.

Statement of operations

Highlights 2015/16

  • 20.1% increase in electricity generation
    • Increase in thermal electricity production due to higher demand for network stabilisation in Austria and Germany
    • Decline in renewable electricity production due to lower wind and water flows
  • Decrease in EBIT, increase in Group net result
    • Improvement in operating earnings for the Network Infrastructure Austria Segment
    • Weaker demand for energy in South Eastern Europe due to mild winter and growing liberalisation based on lower energy procurement costs and operating expenses
    • Less favourable estimates for the long-term development of electricity prices led to impairment losses in generation
Condensed consolidated statement of operations2015/16
EURm
2014/15
EURm
+/-
nominal %
2013/14
EURm
Revenue2,046.62,135.8–89.3–4.21,974.8
Other operating income97.0108.4–11.4–10.571.1
Electricity purchases and primary energy expenses–930.6–1,066.5135.912.7–1,032.2
Cost of materials and services–246.7–254.07.22.8–251.9
Personnel expenses–313.7–313.5–0.2–0.1–313.0
Other operating expenses–141.6–168.126.515.8–359.0
Share of results from equity accounted
investees with operational nature
93.5141.1–47.5–33.794.0
EBITDA1)604.4583.221.23.6184.1
Depreciation and amortisation–266.1–260.3–5.9–2.3–256.0
Effects from impairment tests–77.9–54.7–23.1–42.3–269.5
Results from operating activities (EBIT)260.4268.2–7.8–2.9–341.4
Financial results–61.6–60.3–1.3–2.1–31.9
Result before income tax198.9207.9–9.1–4.4–373.3
Income tax–16.0–17.31.27.1102.8
Result for the period182.8190.7–7.8–4.1–270.5
thereof result attributable to EVN AG
shareholders (Group net result)
156.4148.18.45.6–299.0
thereof result attributable to non-controlling interests26.442.6–16.2–38.028.5
Earnings per share in EUR1)0.880.830.055.7–1.68

Results of operations

Revenue recorded by the EVN Group declined by EUR 89.3m, or 4.2%, to EUR 2,046.6m in 2015/16. Higher revenue was recorded from thermal generation due to the increased use of the thermal power plants to support network stability and from the network business in Lower Austria. However, this increase was unable to offset the lower revenue from the reduction in natural gas trading activities and the revenue decline in South Eastern Europe which resulted, above all, from the increasing liberalisation and the mild winter.

The revenue generated outside Austria fell by EUR 84.5m, or 7.6%, to EUR 1,026.9m. This represents a decrease in the share of Group revenue from 52.0% in the previous year to 50.2% in 2015/16.

Other operating income declined by EUR 11.4m, or 10.5%, in the reporting period. This development reflected the sale of the shares in the project company for the sodium hypochlorite plant in Moscow during the previous year, which led to a positive one-off effect and was recorded under this position. A contrary one-off effect in 2015/16 was provided by insurance compensation received as reimbursement for winter damages in Bulgaria.

The cost of electricity purchases from third parties and primary energy expenses totalled EUR 930.6m, which represents a year-on-year decline of EUR 135.9m or 12.7%. This development corresponds, above all, to the decline in natural gas sales volumes and lower energy sales volumes in South Eastern Europe. The cost of materials and services was also lower than the previous year at EUR 246.7m in 2015/16, a decline of EUR 7.2m or 2.8%.

Personnel expenses remained stable and, at EUR 313.7m, matched the prior year level (previous year: EUR 313.5m). The increase in personnel costs due the wage and salary adjustments required by collective bargaining agreements was offset by the absence of prior year one-off effects from restructuring measures in the South Eastern European companies. Continuous reorganisation and optimisation measures led to a decline of 143 in the average number of employees to 6,830 during the reporting year.

Other operating expenses fell by EUR 26.5m, or 15.8%, to EUR 141.6m. This significant decline resulted primarily from a further improvement in the collection rate in South Eastern Europe and parallel cost reductions throughout the EVN Group.

The share of results from equity accounted investees with operational nature was EUR 47.5m, or 33.7%, lower at EUR 93.5m. The decline is attributable, above all, to Rohöl-Aufsuchungs Aktiengesellschaft and to the recognition of impairment losses to the investments in Verbund Innkraftwerke GmbH and Shkodra Region Beteiligungsholding GmbH – both to reflect less favourable estimates for the long-term development of electricity prices. An increase in the share of profit from the other companies included at equity was unable to offset this decline. In total, these developments led to an increase of EUR 21.2m, or 3.6%, in EBITDA to EUR 604.4m. The EBITDA margin also improved from 27.3% to 29.5%.

Revenue by region

EBITDA by region

Scheduled depreciation and amortisation rose by EUR 5.9m, or 2.3%, to EUR 266.1m in 2015/16 due to the ongoing investments. The effects of impairment testing were EUR 23.1m, or 42.3%, higher at EUR 77.9m. These impairment losses included EUR 32.6m for the proportionate Duisburg-Walsum power plant, EUR 12.4m for various windpower and hydropower plants and were recognised to reflect less favourable estimates for the long-term development of electricity prices. In addition, an impairment loss of EUR 31.3m was recognised to the heating company TEZ Plovdiv to reflect the continued adverse rulings by the Bulgarian regulatory authority in the heating sector. The results from operating activities (EBIT) fell by EUR 7.8m, or 2.9%, year-on-year to EUR 260.4m.

Financial results amounted to EUR –61.6m and were EUR 1.3m, or 2.1%, lower than the previous year. Positive effects were provided by the absence of costs recognised in the previous year for the termination of the investment guarantee issued by the Federal Republic of Germany and the hedge for the financing of the sodium hypochlorite plant project in Moscow. In contrast, WEEV Beteiligungs GmbH made a negative contribution to earnings in 2015/16. It was based on the continuing negative difference between the current price of the Verbund AG shares held by this company and the balance sheet value.

Result before income tax for the 2015/16 financial year totalled EUR 198.9m (previous year: EUR 207.9m). After the deduction of EUR 16.0m in income tax expense and the earnings attributable to non-controlling interests, result for the period amounted to EUR 156.4m. This represents a year-on-year decline of EUR 8.4m or 5.6%.

Statement of financial position

Asset and financial position

EVN’s balance sheet total rose by EUR 55.3m, or 0.9%, year-onyear to EUR 6,556.5m as of 30 September 2016.

Balance sheet structure

Non-current assets increased by EUR 156.6m, or 2.8%, to EUR 5,685.8m and rose to 86.7% of total assets (previous year: 85.0%). A slight decline of EUR 2.8m, or 0.1%, to EUR 3,733.7m was recorded in intangible assets and property, plant and equipment. The carrying amount of equity accounted investees and other investments was EUR 140.1m, or 10.0%, higher than the previous year at EUR 1,537.8m, primarily due to the higher market valuation of the Verbund shares held directly by EVN AG. Other non-current assets rose by EUR 19.3m, or 4.9%, to EUR 414.2m, in particular due to a change in deferred tax assets and non-current receivables from derivative transactions.

Condensed consolidated statement of
financial position Assets
30.09.2016
EURm
30.09.2015
EURm
+/-

nominal              %
30.09.2014
EURm
Assets
Non-current assets  
Intangible assets and property, plant and equipment3,733.73,736.6–2.8–0.13,738.7
Investments in equity accounted investees and
other investments
1,537.81,397.8140.110.01,553.8
Other non-current assets414.2394.919.34.9485.2
5,685.85,529.2156.62.85,777.7
Current assets866.9972.0–105.1–10.8840.4
Non current assets held for sale3.80.03.8223.7
Total assets6,556.56,501.255.30.96,841.8
 
Equity and liabilities
Equity
Issued capital and reserves attributable to
shareholders of EVN AG
2,510.82,334.8176.17.52,395.2
Non-controlling interests259.8255.44.51.7237.5
2,770.72,590.1180.57.02,632.7
Non-current liabilities
Non-current loans and borrowings1,314.51,535.7–221.2–14.41,747.7
Deferred tax liabilities and non-current provisions601.2492.3108.922.1545.5
Deferred income from network subsidies and other
non-current liabilities
625.0583.142.07.2609.4
2,540.72,611.0–70.3–2.72,902.6
Current liabilities
Current loans and borrowings239.1140.199.070.7194.2
Other current liabilities1,006.11,160.0–153.9–13.31,112.3
1,245.11,300.0–54.9–4.21,306.5
Total equity and liabilities6,556.56,501.255.30.96,841.8

Current assets fell by EUR 105.1m, or 10.8%, to EUR 866.9m, largely due to a revenue-based decline in trade receivables.

Equity totalled EUR 2,770.7m as of 30 September 2016 and was EUR 180.5m, or 7.0%, higher than the previous year. The equity ratio rose from 39.8% in the previous year to 42.3%.

Non-current liabilities decreased by EUR 70.3m, or 2.7%, to EUR 2,540.7m in the reporting period. The reclassification of noncurrent loans and borrowings as short-term offset an increase in provisions, non-current tax liabilities and deferred income from network subsidies.

A decline was also recorded in current liabilities, which were EUR 54.9m, or 4.2%, lower at EUR 1,245.1m. This development resulted chiefly from a decrease in trade payables, current provisions and other current liabilities. A contrary effect was provided by the increase in current financial liabilities following the reclassification of a EUR 150.0m bond that is scheduled to mature in June 2017.

Value analysis

For the purpose of corporate management the weighted average cost of capital (WACC) after tax, taking into consideration EVN’s specific company and country risks, was set at 6.5%. The return on equity (ROE) equalled 6.8% in 2015/16 (previous year: 7.3%), and the Economic Value Added (EVA®) totalled EUR 48.5m (previous year: EUR 47.0m). The operating return on capital employed (OpROCE) amounted to 7.6% for the reporting year (previous year:7.5%).

Value analysis 2015/162014/15+/–
%
       2013/14
ROE1)%6.87.3–0.5–9.5
Average equityEURm2,680.42,611.42.62,856.0
WACC after income tax1) 2)%6.56.50.06.5
Operating ROCE (OpROCE)1) 3)%7.67.50.12.9
Average capital employed3)EURm4,290.74,523.1–5.14,900.5
Net operating profit after tax (NOPAT)3)EURm327.4341.0–4.0144.5
EVA®EURm48.547.03.2–174.1

Liquidity position

The strong cash flow from operating activities allowed EVN to reduce net debt by EUR 109.4m, or 8.9%, to EUR 1,121.5m during the reporting year. This reduction combined with the increase in equity led to a decrease in the gearing ratio from 47.5% to 40.5%.

Net debt30.09.2016
EURm
30.09.2015
EURm
+/-
nominal%
30.09.2014
EURm
Non-current loans and borrowings1,314.51,535.7–221.2–14.41,747.7
Current loans and borrowings1)225.4129.995.573.5173.8
Cash and cash equivalents–223.5–244.921.48.7–197.2
Non-current and current securities–158.4–154.5–3.8–2.5–62.9
Non-current and current loans receivable–36.5–35.3–1.2–3.5–38.9
Net debt1,121.51,230.9–109.4–8.91,622.4
Equity2,770.72,590.1180.57.02,632.7
Gearing (%)40.547.5–14.861.6

In order to safeguard its financial flexibility, the EVN Group holds a syndicated credit line of EUR 400.0m as well as bilateral credit commitments of EUR 122.0m that were not drawn as of 30 September 2016 and therefore were available in full. The second one-year extension option included in the agreement for the syndicated credit line was exercised during the reporting year, which rescheduled the maturity date from July 2020 to July 2021. The remaining terms of the bilateral credit lines concluded with five banks range up to three years. These solid liquidity reserves underscore the EVN Group’s financial stability and flexibility.

Net debt and Gearing

Statement of cash flows

Gross cash flow rose by EUR 99.8m, or 22.8%, to EUR 537.9m in 2015/16. This growth was supported by the following factors which, in total, offset the decline in the result before income tax: an increase in non-cash earnings components as the result of higher depreciation and amortisation and a lower share of results from equity-accounted investees, and a change in non-current provisions. Cash flow from operating activities, including the changes in working capital, amounted to EUR 463.0m and was EUR 15.2m, or 3.2% below the previous year.

Cash flow from investing activities was EUR 157.9m lower yearon- year at EUR –230.6m. This decline resulted primarily from the sale of the sodium hypochlorite plant project in Moscow in the previous year.

Cash flow from financing activities equalled EUR –253.9m (previous year: EUR –357.3m). In the previous year, this position was influenced primarily by the repayment of financing for the sodium hypochlorite plant project. The development in 2015/16 included the dividend payment to the shareholders of EVN AG and to minority shareholders as well as the scheduled repayment of financial liabilities.

In total, cash flow amounted to EUR –21.5m in 2015/16. Cash and cash equivalents totalled EUR 223.5m as of 30 September 2016. The EVN Group also had undrawn credit lines of EUR 522.0m at its disposal to service potential short-term financing requirements.

Condensed consolidated statement of cash flows2015/16
EURm
2014/15
EURm
+/–
nominal                 %
2013/14
EURm
Result before income tax198.9207.9–9.1–4.4–373.3
Non-cash items339.0230.1108.947.3710.8
Gross cash flow537.9438.199.822.8337.4
Changes in current and non-current balance sheet items–75.435.5–110.9228.1
Income tax paid0.64.6–4.0–86.6–19.6
Net cash flow from operating activities463.0478.3–15.2–3.2546.0
Changes in intangible assets and property, plant and equipment incl. deferred income from network subsidies–239.1–242.53.31.4–300.5
Changes in financial assets and other non-current assets2.6250.4–247.7–98.914.2
Changes in current securities5.9–80.586.443.1
Net cash flow from investing activities–230.6–72.7–157.9–243.3
Net cash flow from financing activities–253.9–357.3103.428.9–335.0
Net change in cash and cash equivalents–21.548.3–69.8–32.3
Cash and cash equivalents at the beginning of the period244.9197.247.724.2229.5
Currency translation differences on cash and cash equivalents0.1–0.60.70.0
Cash and cash equivalents at the end of the period223.5244.9–21.4–8.7197.2

Investments

Capital expenditure was EUR 7.2m, or 2.2%, lower year-on-year at EUR 315.4m in 2015/16.

In the Generation Segment, investments continued to focus on the expansion of windpower capacity in Lower Austria. The completion and commissioning of the Paasdorf-Lanzendorf windpark raised the available windpower capacity by roughly 19 MW during the reporting year and increased EVN’s total windpower generation capacity to approximately 268 MW. However, investments in the Generation Segment were lower in 2015/16 due to the scheduling of individual projects.

Investment priorities at EVN1)2015/16
EURm
2014/15
EURm
+/–
nominal%
2013/14
EURm
Generation31.247.8–16.7–34.884.1
thereof renewable energy Lower Austria25.939.9–13.9–34.936.1
thereof thermal power stations5.05.8–0.8–13.547.6
thereof renewable energy South Eastern Europe0.01.5–1.50.0
Energy Trade and Supply26.022.73.314.732.3
thereof district heating plants26.022.43.716.330.7
Network Infrastructure Austria154.7160.2–5.5–3.4186.8
thereof electricity networks105.1113.4–8.2–7.3135.4
thereof natural gas networks35.233.91.33.838.6
thereof cable TV and telecommunications networks14.513.01.511.511.8
Energy Supply South East Europe93.578.514.919.077.5
Environmental Services8.110.9–2.8–25.613.3
thereof supra-regional power lines and local networks for drinking water7.39.4–2.1–22.19.4
Strategic Investments and Other Business1.92.5–0.6–23.32.5
Total315.4322.7–7.2–2.2396.3

Investments in the Energy Trade and Supply Segment were directed primarily to the expansion of EVN’s district heating network as well as the construction of local heating plants and biomass heating plants.

The Network Infrastructure Austria Segment continued its high level of investments, but the volume was lower than the previous year. The focus remained on the new construction or expansion of transformer stations and the expansion of the 110 kV power lines.

In the Energy Supply South East Europe Segment, investments concentrated on the further reduction of network losses. The expansion of natural gas supplies along the Dalmatian coast in Croatia also continued. Investments in this segment increased in comparison with the previous year.

The Environmental Services Segment concentrated primarily on investments in drinking water supplies, in particular on the construction of natural filter plants to improve the quality of the drinking water in Lower Austria by natural means. Another focal point involved investments to improve the performance capability of the pipeline networks.

The table shown above provides an overview of the most important investments.

Structure of investments

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