EVN AG

Good morning, ladies and gentlemen, and welcome to EVN's results for the first three quarters of 2023-2024 financial year. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions following the presentation. Let me now turn the floor over to Jean-Ancien Spovitz.

Welcome, everybody, to EVN's conference call on the results for the first three quarters of this current financial year. The first nine months of our financial year were influenced by mild temperatures in all three markets and therefore low energy demand. We are also still observing changes in customer behavior towards a reduction in energy consumption through energy saving measures and increasing own generation volume from customer-operated photovoltaic equipment as well. Also, prices for electricity and energy carriers stabilized again at substantially lower levels as compared to the historic peaks we have seen in the previous year. Chamber conditions for renewable generation were favorable. Wind conditions improved year on year, but were slightly below average. Water flows were above the long-term average. The expansion of our renewable generation capacities is well on track. We completed the repowering of an 8 MW wind park. The construction of a new 22 MW wind park in Pastorf is still progressing as planned and will be completed by the end of this calendar year. And we started a large repowering project in Vellenkirchen, which will increase its capacity from 14 to 48 MW once commissioned in the second half of next year. I confirm our 2030 expansion target for wind, which is 770 MW. Currently, we stand at 478 MW. By the end of this calendar year, we will reach the historic 500 MW milestone. With this, we will reach a scheduled average annual wind generation of 1.3 TWh. The additional renewable capacities have a positive impact on our share of renewable generation, which was up from 76% to 84% during this reporting period. I also confirm our total annual investment, which will remain within the level of 700 to 900 million euros. Lower Austria will account for around three quarters of this, which is almost half earmarked for the network infrastructure. Let me now continue with the key financials on the first three quarters. Group's revenue was down by 13.9% in a year-on-year to 2.5 billion euros. The main reasons were the decline in wholesale prices, which reduced revenue from electricity generation in the Southeast Europe segment. Other reasons include price and volume effects in the gas network, as well as a reduction in grid network tariffs in Bulgaria, which reflects a regulatory adjustment of the overcompensation for additional costs of covering network losses in the prior year. at the international project business also declined year on year because they already largely completed waste water treatment plant in Kuwait. In line with the development of project prices, the cost of electricity purchases from third parties and primary energy expenses were down only year on year. The cost of materials and service also decreased and reflected development of revenue in the international project business. Personal expenses increased by 16.8% compared to prior year, which reflects the necessary increase in workforce and adjustments according to the collective bargaining agreement as well. Other operating expenses went up due to the impairment loss on the outstanding receivables for a wastewater project in Montenegro. This impairment loss was already recognized in the first quarter, following the arbitration judgment. The share of the cloud format equity accounted indices improved to 4.2 million euros after minus 157.7 million euros in the previous year. Despite an overall year-on-year improvement in E-frame KG, our energy supply business is still under pressure and EV and KG is reporting a loss. This was partly due to an impairment of natural gas inventories, which were produced in the past as a strategic attempt to ensure supply and security of our customers. Other challenging factors include strong competition, energy savings, and increasing electricity generation from customers' own photovoltaic systems. All of these developments made the planning of sales volumes more difficult. In total, group every day amounted to 657.9 million euros. Schedule of depreciation and amortization increased by 5.4% year-on-year, deflecting our higher investment programs. 399.9 million euros, which means an improvement by 11.3%. Financial results improved to 162.3 million euros, mainly due to the higher dividend from Fortunes and the better performance of our fund for pension obligations. In addition, last year was negatively affected by foreign exchange effects. In total, it generated a solid group net result of 479.6 million euros in the first nine months of this financial year. Now let's move on to the next slide, which provides information regarding the group's balance sheet structure. Balance sheet totally decreased by 2.7% compared to the financial end 2022-2023, whereas non-current assets were relatively stable in total, The decline in current assets were caused by a reduction in freight receivables, receivables from EVN KG, from liquidity settlement by EVN Group and receivables from Hatches. Declines were also recorded in cash fund investments and in cash-in-cash agreements. As of the end of June, EVN's net debt amounted to 1.1 billion euros and was below the level as of the end of September 23. Our financial flexibility remains solid, as at the end of June, EVN has contractually committed undrawn credit limits in the amount of €835 million. Our declared goal is to maintain a solid A category of ratings in the future. To achieve such things, we are strictly monitoring the adjusted target ratios of both of our rating agencies. Therefore, we use the net debt to FFO ratio as a KPI to manage our financial performance, investments, and capital structure. Currently, the ratio is about 1.4. With growth in investments over the coming years, the ratio will increase. However, our aim is to keep the net debt to FFO within the range of 1.5 to 2.0. On the next slide, I will present the developments of our segments in more detail, plus the energy segments. Energy demand in this segment was negatively influenced by the mild temperatures. Hence, energy sales volume to end customers dropped year on year. This development was intensified by the challenging framework conditions they are currently facing in our supply companies EVENKAG, increasing competition as well as energy saving efforts of our customers and their growing own generation from their photovoltaic systems have further intensified the decline in energy sales. Hence volume forecasts are becoming more and more difficult. Revenue dropped to 626.7 million euros. The main factors of this development are on one hand lower wholesale prices and the resulting lower variation effects from hedges. On the other hand, the reduced use of the power plant has. Operating expenses decreased year-on-year by 16.9%, which mainly reflects lower primary energy cost by electricity and heat generation. The earnings contribution from the equity accounted in the season amounted to minus 107.4 million euros after a block of minus 264 million euros in the previous year. This is the main result from the supply business in INKG. The loss recorded by INKG was partly due to an impairment loss of natural gas inventories purchased in the past as a strategic reserve to protect supply security. The impairment equaled 37.3 million euros at the end of the third quarter. EVEN is Austria's leading provider for e-charging infrastructure. We currently operate about 2,900 charging points. Based on these charging points and running agreements with other operators of e-charging stations, we have issued 19,500 e-charging cards. In total, segment EVDA amounted to minus 19.1 million euros and EV total to minus 39 million euros. Data has now turned to our generation segment, which has shifted almost entirely to renewable energy over the years. Electricity generation volumes in this segment increased by 14.3% year to year due to the rise in renewable generation volumes. The main reasons for this positive development are the year-on-year increase in wind and water flows and the expansion of renewable energy capacity. Volumes from thermal energy sources further declined year-on-year due to a further reduced use of our site's power plant by the Austrian network transmission operator for network stabilization. Revenue decreased despite higher production goals by 9.1% to 334.5 million euros. The main reasons for this development were the declining market prices. Operating expenses were year-on-year lower due to the decline in the energy crisis contribution for electricity. This Austrian windfall levy was 10.6 million euros in the first quarter of our financial year. Thereafter, in line with the new legal resolution which became effective in January, no further payments were required. The earnings contribution from the ad equity account at the Verbund in Germany had also declined year-on-year due to lower market prices. All in all, EBITDA amounted to 193.6 million euros based on higher scale of depreciation and amortization because of our Investment Procurement Statement EBIT stood at 159.3 million euros.

Let's continue with the network segment.