Editorial

Dear Shareholders,
Ladies and Gentlemen,

EVN faced numerous challenges during the 2013/14 financial year. The distortions on the wholesale markets continued throughout the reporting year and created constant pressure on electricity production from thermal power plants (see here). The profitable use of gas-fired power plants in Europe is virtually impossible at the present time. For this reason, a growing number of companies are decommissioning their conventional power plants. These events also had an effect on EVN: in the 4th quarter of 2013/14 a reduction in the estimated long-term development of electricity prices required an impairment of the Dürnrohr coal-fired power plant. These expectations also required an impairment on the participation interest in Verbund Innkraftwerke GmbH (see Generation).

Additional pressure was created by the recent temperature trends: the heating degree days, an important indicator for utility companies, declined further during the reporting year in Austria, Bulgaria and Macedonia after the mild winter in 2012/13. That had a negative effect on sales volumes and also reduced revenues (see Statement of operations).

Developments in Bulgaria and Macedonia necessitated the recognition of impairment losses to goodwill and customer bases during 2013/14. In earlier years we were generally able to offset tariff reductions in both markets with improvements in the operating area: corporate processes were continuously optimised and made even more economical, and key indicators like network losses and the collection rate showed steady progress over the years. By the tariff decisions of 30 June 2014, the respective regulatory authorities have changed the conditions in such a way that from today’s point of view the historic expectations are not likely to be achieved any more (see Energy Supply South East Europe).

In the international environmental services business, the 4^th quarter of 2013/14 brought reasonable doubts concerning the realisation of the thermal waste utilisation plant no. 1 in Moscow and led to the write-down of a receivable. An impairment loss was also recognised on the sewage sludge drying plant and on components of the co-generation plant in Lyuberzy, Moscow. On the other hand, a solution for the sodium hypochlorite plant was found by selling it to the city of Moscow in October 2014 (see Environmental Services).

The energy industry is currently undergoing a transformation process that will not only bring significant challenges, but also opportunities for all market participants. EVN has become one of the largest windpark operators in Austria and – with its extensive portfolio of windpower, hydropower and photovoltaic power plants – now generates 42.5% of its electricity from renewable energy sources. EVN is also the largest natural heat supplier in Austria with more than 60 plants.

The rapidly expanding use of renewable energy does, however, also represent a major challenge for supply security and, in turn, for the network infrastructure. We are therefore continuing to invest in our transmission and distribution networks, especially in our home market of Lower Austria, because an energy system in transition demands responsible and, above all, coordinated actions and sound judgment. The 2013/14 full report also shows how experts see this change and how EVN is preparing for this and even greater issues of the future (see here). As the reasonable balance between the increasing use of renewable energy and uncompromising supply security is so important, we have made it the focal point of this full report.

Peter Layr Spokesman of the Executive Board	Stefan Szyszkowitz Member of the Executive Board

• Detailed information on the members of the Executive Board and their responsibilities can be found in the corporate governance report starting here.