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Environmental Services

The activities of the Environmental Services Segment cover drinking water supplies, wastewater treatment and thermal waste utilisation in Austria; the international project business in Central, Eastern and South Eastern Europe; and the operation of two combined cycle heat and power co-generation plants in Moscow. The share of results from the wastewater purification projects in Zagreb (ZOV and ZOV UIP) and Prague are reported in EBITDA under the share of equity accounted investees with operational nature.

Highlights 2015/16

  • New contracts for four wastewater treatment projects in Croatia and Macedonia
  • Decline in EBITDA and EBIT due to absence of positive one-off effects from prior year
  • Improvement in result before income tax

Revenue development

The Environmental Services Segment recorded an increase of EUR 4.2m, or 2.4%, in revenue to EUR 176.8m in 2015/16. This growth was supported by higher revenue from thermal waste utilisation in Lower Austria and the positive development of revenue from the international project business. In contrast, revenue from drinking water supplies in Lower Austria was slightly lower year-on-year. This was the result of the unusually dry summer weather in the previous year and the corresponding higher sales volumes, which were not entirely matched in 2016.

Key financial indicators –
Environmental Services
EURm2015/162014/15
+/-
nominal%
2013/14
External revenue 158.4152.36.14.0168.9
Internal revenue 18.320.3–2.0–9.822.2
Total revenue 176.8172.64.22.4191.1
Operating expenses –137.0–129.5–7.5–5.8–347.5
Share of results from equity accounted
investees with operational nature
 13.311.91.411.611.7
EBITDA 53.155.1–1.9–3.5–144.6
Depreciation and amortisation including
effects from impairment tests
 –25.8–26.40.62.4–70.2
Results from operating activities (EBIT) 27.328.6–1.3–4.6–214.9
Financial results –2.5–7.65.167.3–4.0
Result before income tax 24.821.03.818.0–218.8
Total assets 895.1940.6–45.5–4.81,197.6
Total liabilities 687.1751.1–64.0–8.51,004.8
Investments1) 8.411.1–2.6–23.613.5

Operating expenses

Operating expenses totalled EUR 137.0m in 2015/16 (previous year: EUR 129.5m). This increase was related primarily to the absence of the positive non-recurring effects recorded in the previous year from the sale of the shares in the property company that holds the sodium hypochlorite plant project in Moscow. These items were recognised under other operating income and therefore included in operating expenses in 2014/15. Contrary effects in 2015/16 were provided by the absence of a valuation allowance recognised in the previous year to the flue gas cleaning aggregate of the former thermal waste utilisation plant project no. 1 in Moscow.

Share of results from equity accounted investees

The share of results from equity accounted investees with operational nature rose by EUR 1.4m, or 11.6%, to EUR 13.3m.

Operating results

The development of revenue and expenses in the Environmental Services Segment led, in total, to EBITDA of EUR 53.1m, which represents a decline of EUR 1.9m or 3.5%. Depreciation and amortisation were slightly lower at EUR 25.8m (previous year: EUR 26.4m), and the results from operating activities (EBIT) fell by EUR 1.3m, or 4.6%, year-on-year to EUR 27.3m.

Financial results and result before income tax

Financial results improved by EUR 5.1m, or 67.3%, to EUR –2.5m, primarily due to the absence of the one-off effects recorded in the previous year in connection with the termination of the hedge and federal guarantee for the sodium hypochlorite project in Moscow. The Environmental Services Segment generated result before income tax of EUR 24.8m in 2015/16 (previous year: EUR 21.0m).

Investments

The Environmental Services Segment invested a total of EUR 8.4m in 2015/16, which represents a year-on-year decline of EUR 2.6m or 23.6%. The focus of investments on drinking water supplies in Lower Austria continued during 2015/16: EVN’s third natural filter plant in this province was commissioned in Zwentendorf an der Zaya. It will supply roughly 50,000 residents in the north-eastern Weinviertel region with water that is softened by natural means, which will help to reduce the use of detergents and descaling agents in the households. In the Waldviertel region, the performance capability of the pumping stations for the drinking water network was increased by approximately 25% to better cover peak periods during the dry months and further improve supply security. EVN also took over the management of the local water supplies for the community of Litschau (approximately 2,500 residents) as of 1 January 2016 and the community of Schwadorf (approximately 2,000 residents) as of 1 October 2016.

International project business

In the international project business, EVN successfully completed two wastewater projects each in Poland and Romania and a wastewater treatment project in Kotor-Tivat, Montenegro, with the transfer of the plants to the customers in 2015/16. One-year test operations at the wastewater treatment plant built by EVN in the Cypriot city of Larnaca also started during the first quarter of 2015/16.

EVN was working on the realisation of six projects in Croatia, Macedonia, Montenegro and the Czech Republic as of 30 September 2016. Four of these projects – all involving wastewater treatment in South Eastern Europe – represented new contracts for EVN in 2015/16: In Macedonia, EVN is serving as the general contractor for the construction of three wastewater treatment plants in the cities of Kičevo, Radoviš and Strumica; these contracts have a total value of approximately EUR 20.0m. The fourth new project covers the construction of a sewage treatment plant in Vodice on the Croatian Adriatic Coast (contract value: approximately EUR 6.0m). The financing for these projects will be provided by the respective contracting authority with the support of EU subsidies. Preparations are currently underway for the start of construction on all projects, which should take place in 2016/17.

In the Czech Republic, the receipt of the building permit was followed by the start of construction for the renovation and expansion of the wastewater purification plant in Prague. The expanded plant will have a capacity to service 1.2m residents. This project, which EVN is realising in a consortium with partners, is proceeding as planned and completion is scheduled for the second half of 2017/18.

The wastewater treatment plant built by EVN in Budva, Montenegro, is also operated by the company. The start of construction on a second wastewater treatment plant in the Buljarica district is currently being coordinated with the city authorities in Budva.

Outlook

Earnings in the Environmental Services Segment contain a stable contribution from the areas of drinking water supply and thermal waste utilisation in Lower Austria. The development of the earnings contribution by international project business is, however, dependent on the progress of the respective project and on the acquisition of further projects. Business in the segment is expected to remain stable or decrease slightly in 2016/17.

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