Development of business Q1-3 2009/10

8/26/2010

(October 1, 2009 – June 30, 2010)

• Positive sales development in the energy business
• Opening of a photovoltaic park in Bulgaria
• Project development at the hydropower plant on the Arda River in Bulgaria
• Wastewater purification plant in Stettin in operation
• Completion and start of operational management of the wastewater purification plant in Istanbul
• Capital increase planned in the second half of 2010 for up to 10.0% of share capital
• Positive outlook confirmed for the 2009/10 financial year

	2009/10 Q1-3 EUR m	Change in %
Revenue	2,182.8	+1.5
EBITDA	365.7	+12.6
EBIT	194.1	+8.3
Group net profit	204.9	+16.7

Compared to the same period in the previous year, the energy sector environment in the first three quarters of 2009/10 (October 1, 2009 – June 30, 2010) was characterised by cold weather conditions in Austria and Macedonia and higher temperatures in Bulgaria. Primary energy and wholesale electricity prices as well as the costs of CO2 emission certificates remained below the previous year’s level.

Slight increase in revenues, markedly improvement in EBIT and a strong growth of Group net profit

In the first three quarters 2009/10, EVN’s total revenue rose by 1.5% to EUR 2,182.8m. Whereas in Lower Austria electricity prices for end customers remained stable in the reporting period, gas prices for end customers could be reduced by about 7.0% on December 1, 2009, following previous selling price decreases in January and March 2009. In Bulgaria, electricity prices for end customers declined by 1.0% as of July 1, 2009. In comparison electricity prices in Macedonia increased by 10.0% as of January 2010. The comparatively cold weather condition led to greater energy demand in Lower Austria, whereas in South East Europe sales volumes for electricity and heat were slightly below the previous year’s level. All business areas within the energy business contributed to the positive revenue development with the exception of the Generation Segment. Due to the declining market prices and the lower volume of electricity generated by renewable energy sources revenues in this segment decreased slightly. Revenues in the Environmental Services Segment slightly increased as a result of the ongoing operation of the waste incineration plant in Dürnrohr and the completion of the expansion project involving a third line in December 2009.

 

Despite higher sales volumes in the energy business, the item „Electricity purchases and primary energy expenses“ decreased. This can be attributed to the declining wholesale prices for electricity and primary energy. The item “Cost of materials and services” rose slightly due to the start-up of the third waste incineration line in Dürnrohr and the first full year consolidation of the cable network operator B.net in Burgenland. Despite a slight increase in personnel expenses, the rise in depreciation and amortisation and despite of slightly higher other operating expenses, EBIT rose by 8.3% to EUR 194.1m compared to the previous year’s level.

The financial results developed very positively and amounted to EUR 72.0m, up 59.8% compared to the prior-year figure. Income from investments in associates included at equity rose and income from other investments was above the previous year’s level, due to the higher dividend distributed by Verbund AG. Interest income improved and the item “Other financial results”, which had been negatively affected in the previous year by the financial and economic crisis, also made a positive contribution.

Accordingly, the profit before income tax totalled EUR 266.2m, a rise of 18.7% from the previous year’s level. Hence, Group net profit amounted to EUR 204.9m, an increase of 16.7%.

The gross cash value rose in the first three quarters 2009/10 by 5.5% to EUR 422.5m. Since the balance sheet date on September 30, 2009, the balance sheet total of EVN decreased by 1.9% to EUR 6,570.0m. Equity declined by 4.0% to EUR 3,002.3m. The equity ratio at the quarterly balance sheet date amounted to 45.7%. Taking account of the net debt of EUR 1,415.9m, the gearing at the reporting date of June 30, 2010 was 47.2%.

Project completions and new projects for the Environmental Services Segment

On May 14, 2010, the Pomorzany wastewater purification plant in Stettin, Poland, was put into operation. The turn-key installation is conceived for 400,000 inhabitants and also includes a sludge drying and incineration facility. EVN was the lead manager in the consortium with responsibility for the planning, implementation and start-up of the turn-key installation. Furthermore, EVN, in the role as the head of a consortium, completed a wastewater treatment plant for two million inhabitants in Istanbul, Turkey, at an investment volume of EUR 108.6m, and assumed responsibility for operating the plant in June 2010 for a period of five years. In December 2009, EVN was awarded a contract to construct a waste treatment plant in Moscow, and in August 2010, the annual capacity of 700,000 tonnes was stipulated with the City of Moscow. The project is being realised as a BOOT model at an investment volume of EUR 575m.

Criteria and time framework defined to reach agreement with Macedonian government

Against the backdrop of the arbitration proceedings against the Republic of Macedonia initiated by EVN AG on May 8, 2010, to protect its investments, the Macedonian government and EVN agreed on July 28, 2010, to sys-tematically seek a joint solution to all open issues and problems between the two parties. The definition of criteria and a time framework for implementation of this agreement should enable intensive bilateral negotiations be-tween the two parties in the next few months to create a win-win situation for the government, the citizens as well as EVN and thus create greater trust.

 

Preparations underway for planned capital increase to strengthen company’s financial resources

On June 23, 2010, the Executive Board of EVN announced to take the steps necessary to carry out a capital increase of up to 10% of the share capital in the second half of 2010, as authorized by the Annual General Meeting held on January 21, 2010. The aim of the intended capital increase is to strengthen EVN’s capital resources. For this purpose Deutsche Bank, Raiffeisen Controbank and Société Générale have been appointed to review the feasibility of such transaction. Such a capital increase is contemplated still within this year and is subject to approval by the Supervisory Board of EVN AG and requires the approval of a prospectus by the Austrian Financial Market Authority, as well as a favourable capital market environment.

Outlook

After the first three quarters 2009/10, we expect – from today’s perspective – a Group net profit for 2009/10 as a whole exceeding the comparable figure for the previous business year, despite difficult and the continuous uncer-tain development of overall economic conditions and high price volatility in the energy sector.

The complete Letter to Shareholders Q1–3 2009/10 is available at www.investor.evn.at.

Disclaimer

This information does not constitute or form part of any prospectus or offer document or solicitation or invitation of any offer to exchange for or to buy any securities nor shall it or any part of it form the basis of or be relied on in connection with any contract or commitment whatsoever. A public offer may only be made in Austria after publication of a prospectus prepared in accordance with the provisions of the Austrian Capital Markets Act and approved by the Austrian Financial Market Authority. Any securities orders received prior to the commencement of a public offer will be rejected. If a public offer is made in Austria, a prospectus prepared in accordance with the provisions of the Austrian Capital Mar-kets Act and the Stock Exchange Act will be published and will be available free of charge at EVN AG, 2344 Maria Enzersdorf.