Energy. Water. Life.

Full Report 2019/20

More sustainable,

    more digital,

more Efficient

Stefan Szyszkowitz

and Franz Mittermayer

EVN Executive Board

We want to make real contributions in all our markets in the interests of our stakeholders. Our corporate values and comprehensive sustainability principles give us the tools to do this.
Stefan Szyszkowitz,
spokesman of the Executive Board

A very unusual year with Covid-19 as the dominating theme will soon be ending. How has EVN been doing so far with the corona pandemic?

Stefan Szyszkowitz: In line with our responsibility as a critical infrastructure provider, EVN has prepared workable emergency plans for various crisis situations. For example: As early as 2009, we issued a Group guideline to deal with pandemics. Of course, we also hold training exercises on a regular basis so we can act quickly and professionally in case of an emergency. Our crisis plans have proven to be highly effective ever since the beginning of the corona pandemic, and supply security was guaranteed 24/7 – also in this extraordinary situation!

Our central goals not only included protecting supply security, but also protection of the health and well-being of our employees and customers. On behalf of management, we want to thank the many men and women whose commitment and flexibility helped us react to these wide-ranging challenges. Supply security was guaranteed at all times and our customers were given the best possible support, but we were also quickly able to turn our attention to other areas and to the many different projects currently in progress.

In addition to all these challenges, you recently completed a process to update your strategy. Why now?

Stefan Szyszkowitz: The last few years have seen an increasingly intensive social and political discourse over climate change. The Paris Climate Agreement, the European Union‘s Clean Energy Package and the energy and climate goals anchored in the programme announced by Austria’s government are only a few examples of the many concrete measures to reach an overriding goal: to slow and reduce global warming. And at EVN, we want to contribute to reaching these goals. Our assessment of the past ten years is positive, but we decided it was time to update our strategy and focus on the years up to 2030. We are extremely pleased that we were able to complete this strategy process during the past weeks despite the restrictions caused by Covid-19.

Willingness to change and move forward has always been    one of EVN's  key strengths.
Franz Mittermayer,
member of the Executive Board

What perspectives are created by EVN’s Strategy 2030?

Franz Mittermayer: Investments in energy supply and environmental services have, by nature, a very longterm horizon. In order to achieve sustainable, value-increasing growth in these business areas, we must plan for the long term – and, if at all possible, look very far ahead. We need to analyse the longer term trends and draw the right conclusions – that is the only way to correctly identify opportunities, select the options that are attractive for EVN and set the right course for the future.

When we take a ten-year planning horizon, it‘s clear that we need to work with assumptions and scenarios. In the end, it’s important to set realistic interim goals and regularly review the underlying parameters. That helps us to fine-tune our core strategies and adjust them, if necessary, to deal with the changes in our operating environment. The willingness to change and move forward has always been one of EVN’s key strengths!

Let’s take a look into the future – where do you see EVN?

Stefan Szyszkowitz: EVN will become more sustainable, more digital and more efficient! Our fundamental strengths and inherent character will be retained, but also move in step with the times. We will continue to operate in our stable regulated business areas with a maximum of efficiency and, of course, profitability. However, we are also concentrating on sustainable growth and performance improvements. Here, we plan to introduce a variety of measures – and I now want to emphasise three main changes: First, a substantial increase in our renewable generation capacity from wind power and photovoltaics.
That will allow us to reduce the specific CO₂ emissions from our electricity generation 50% below the 2005 level by 2030.
Our second strategic goal is to more effectively utilise the opportunities created by digitalisation. In this connection, we want to make all customer-related processes easier, faster and more efficient over the coming years through the use of smart applications and software: keyword “digital quality sales“. In this way, we plan to improve our competitive ability and remain an attractive partner for our customers.

The third major change that we intend to dynamically pursue involves our positioning as an innovative provider of solutions to support the circular economy in our business areas – and also make a proactive contribution to a future-oriented project by the European Union. The pent-up demand for supply security and critical infrastructure has reached historic proportions, especially in the new EU countries. We therefore expect to use our experience and know-how to contribute to and participate in the catchup process in the markets where we are active.

How do you plan to realise this future vision?

Franz Mittermayer: Let me give you a few concrete examples: One key point for the expansion of our renewable generation capacity is to extend the radius of our operations over the coming years from the previous concentration on wind power in Lower Austria to wind power and, increasingly, also to photovoltaic plants outside Lower Austria.

In view of the substantial expansion of renewable generation that will be needed to meet Austria’s climate targets, investments in the networks will represent another central anchor point. The creation of additional wind power and photovoltaic capacity will also require the extensive expansion and adaptation of our network infrastructure to guarantee the feed-in and transport of the growing CO2-free volumes of electricity. And we intend to meet this important responsibility, which goes hand in hand with our commitment to supply security.

And what about environmental services?

Franz Mittermayer: Here I see interesting opportunities, on the one hand, in the area of drinking water supplies. “Energy. Water. Life.“ makes it clear that our activities as a supplier of public services mean responsibility for energy and, increasingly, also for water. This notion is important for our strategy in two respects: In Lower Austria, we see it as an obligation in the sense of supply security to make sure water can always be distributed throughout the entire region. Water will be available in sufficient quantities in our province over the long-term, but it is not distributed evenly. We are working to counter this with concrete expansion plans, for example the construction of a 60 km transport pipeline from Krems to Zwettl. This project will support the development of a crossregional circular pipeline in Austria’s Waldviertel.

On the other hand, the previously mentioned keyword “circular economy“ has opened up a new and very attractive business area over the past two years. It involves taking our solution expertise in wastewater treatment one – logical – step further: With our German subsidiary WTE Wassertechnik, we can rely on the know-how from more than 100 projects in the wastewater treatment area. Our Group also has proven experience in thermal waste utilisation, in part from our own plant in Lower Austria. The next step was obvious: to extend our activities and, as a general contractor, design and construct plants for the thermal utilisation of sewage sludge. We are particularly pleased over the acquisition of three major projects in Germany during the past financial year, namely in Berlin, Hanover and Straubing. We see further opportunities for growth in this form of sustainable wastewater management over the near term, especially in Germany. And we also plan to build and operate a thermal sewage sludge utilisation plant at our own Dürnrohr energy location in Lower Austria.

EVN recorded another success in the international project business during 2019/20, namely the contract for a major project in Kuwait.

Franz Mittermayer: That was, in fact, a major achievement because we have been working intensively to acquire this project for several years. To be specific, the Umm Al Hayman project involves the planning and construction of a wastewater treatment plant and – together with partners – a 450 km sewage network with pumping stations. Infrastructure projects of this size have a very long lead time for all participants. The long-awaited date finally arrived this past summer: After the contract was awarded to our consortium in January 2020, all requirements for the project start were ultimately completed at the end of July. An interesting fact – apart from the signal effect as a reference project – is the long-term perspective because we will be responsible for plant operations for 25 years. And this project also meets an important criterion for the circular economy because the treated wastewater will be used to irrigate agricultural land in Kuwait.

And what expectations can shareholders have for EVN in the future?

Stefan Szyszkowitz: Our Strategy 2030 has a clear message for the capital market: The core of EVN’s inherent character will not change. Our shareholders can rely on the fact that we will continue to generate the major share of our earnings through regulated and stable activities because these cash flows form the basis for our ambitious investment plans – and also for our dividends.

Our investments will increase up to EUR 450m annually over the coming years, with roughly three-fourths of this amount directed to Lower Austria. There the focus will also be placed on renewable generation, the networks and drinking water supplies in the future. With this ambitious programme, we intend to meet the high demands on a reliable infrastructure.

Our solid financial policy will not change at all under the Strategy 2030 because we want to retain EVN’s good external credit rating in the future. Ratings in the solid A range remain our goal, and the necessary relation between earning power and stable net debt will therefore represent a benchmark for the realisation of our strategic goals.

We plan to ask the Annual General Meeting to approve an ordinary dividend of EUR 0.49 per share for the 2019/20 financial year. That represents a year-on-year increase of EUR 0.02 per share and sends a clear signal that the EVN share remains a reliable and stable investment despite the challenges created by the Covid-19 pandemic. Our shareholders are also interested in planning their cash flows and, to make their work easier, we will work to hold this ordinary annual dividend at least constant in the future.