Financial strategy

As a utility company with a high sense of responsibility toward all its stakeholders, EVN is also committed to maintaining a sound financial position and minimising risk in its financing activities.

EVN’s management uses the following financial indicators for evaluating the attainment of financial goals:

EVN’s debt structure is designed to maximise the long-term nature of the company’s financing instruments, achieve a balanced maturity structure and diversify the financing partners while also optimising financing costs. Capital market financing plays an important role in this process because it provides access to longer maturities at attractive conditions as well as greater independence from the loan markets. Approximately 42.9% of the financial liabilities outstanding as of 30 September 2014 represented bonds, private placements and promissory note loans. The key requirements for access to the capital market are the external ratings and the framework documentation for capital market financing (debt issuance programme).

Other goals for financial management include maximising the planning ability of future debt service and minimising financial risks. Accordingly, all foreign currency financing is hedged against foreign exchange risks when the related contracts are concluded. The predictability of future debt service is allowed for by a high share of fixed interest financing.

In the lending area, EVN works together with Austrian and international banks as well as multilateral financial institutions. For example, a EUR 150.0m loan agreement with a tenor of 25 years was concluded with the European Investment Bank in November 2013 for the expansion of network infrastructure in Lower Austria.

EVN’s short-term financing requirements were secured by credit commitments totalling EUR 575.0m as of 30 September 2014. These commitments serve primarily as a liquidity reserve to protect the company‘s financial flexibility and were not used during the 2013/14 financial year. They include bilateral commitments by six banks for a total volume of EUR 175.0m with remaining terms of up to five years as well as a syndicated, revolving credit line of EUR 400.0m. In view of the attractive market environment, EVN refinanced the syndicated credit line prematurely in July 2014 through an agreement with a consortium of twelve international banks. The new loan agreement has a five-year term with two one-year extension options. This refinancing also involved a reduction in the original loan volume from EUR 500.0m to EUR 400.0m in line with EVN’s lower financing requirements.

The borrowing and investment of liquid funds is carried out centrally by EVN AG for all corporate units. Two financing subsidiaries, EVN Finanzservice GmbH and EVN Projektmanagement GmbH, serve as management companies for intragroup cash pooling and loans. Loans are also concluded directly by the Group companies in exceptional cases, for example to manage risk or improve the use of hedges against political risks, but these transactions always take place in close coordination with the Group Finance Department.

• A description of the financial transactions carried out during the reporting year and the balance sheet structure is provided in this full report beginning here.

• An overview of the longterm financial liabilities can be found here.