EVN AG

Hello and good morning, ladies and gentlemen, and welcome to EVN's call regarding the results for the first half of the 2024-25 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 Alexandra Wittmann.

Good morning everybody to EVN's conference call on the results for the first half of our current financial year. Our half-year results are solid and in line with expectations. Proof net profit came in at €250.6 million. That's an increase of 26% compared to last year. These results clearly show that EVN's diversified business model provides stability and resilience, especially when external factors deviate from long-term averages, as we have seen with wind conditions. As a result, our renewable generation volumes were lower, despite the continued expansion of our wind and photovoltaic parks. On top of that, market prices for our own electricity generation have declined year on year. In contrast to those factors, winter temperatures were in line with the long-term average. This led to stronger energy demand compared to the milder weather we experienced last year. As a result, we saw positive developments, particularly in our Austrian network and district heating businesses. Based on the overall sound performance in the first six months, I can confirm today that Our full year guidance. We expect group net results in a range between 400 and 440 million euros, subject to a stable regulatory and energy policy environment. I would like to remind you that only three to four years ago, a normal level for EEN's group net results were between 200 and 250 million euros. We now see such normal levels between 400 and 440 million euros, which means a substantial step up in the group earnings level. We are also on track in realizing our investment program. CapEx were up by 23% at 318 million euros during the reporting period. This is in line with our plan to invest annually about 900 million euros until 2030. The key investment areas remain unchanged, so about three-quarters of our capex will be made in Lower Austria in networks, renewable generation, e-charging infrastructure, and drinking water supplies. In our ambition to further position EVN as an attractive ESG stock, we have successfully taken the next important step. The internationally renowned science-based targets initiative has validated our new CO2 emission reduction targets and these are now fully aligned with the 1.5 degree goal of the Paris Agreement. This means our targets have once again been independently verified and they are now even more ambitious than our previous well below 2 degree goals. The cornerstone of our greenhouse gas reduction strategy is the expansion of our renewable generation feed. During the reporting period, we reached several important milestones. Our installed wind power capacity now stands at 500 megawatts, and our photovoltaic capacity has surpassed 100 megawatt peak. We are currently working on a number of new projects as we continue moving toward our 2030 expansion targets. Those are 770 megawatts for wind and 300 megawatts peak for photovoltaics. On the next slide, I will take you through the main financial development in the reporting period. Before I begin, I'd like to remind you that we are reporting the international project business which we plan to sell to Strabag in accordance with IFRS 5. Therefore, all P&L items for the previous half year have been restated to reflect the IFRS 5 disclosure. Revenue rose by 6.6% year-on-year to 1.7 billion euros. The main reasons were positive volume and price effects from all three network companies as well as from our supply companies in Bulgaria and North Macedonia. Colder temperatures during the winter months led to higher revenue at EDN Verne. In contrast, there was a drop in revenue from renewable generation and natural gas trading, mainly due to lower prices and volumes. On top of that, there were also negative impacts year on year from the valuation of hedges due to positive effects in the previous year. The increase in other operating income was due to insurance compensation we received to cover damages which were caused by the floods in Lower Austria during September 24. The cost of electricity purchases from third parties and primary energy expenses increased due to higher procurement costs in the regulated energy supply business in Southeast Europe. This increase was contrasted by lower procurement costs and reduced quantities of natural gas. The cost of materials and services were up due to the repair costs for the flood damages, which, as already mentioned, are largely covered by insurance. The rise in personnel expenses reflects the increase in workforce and adjustments according to the collective bargaining agreement as well. Other operating expenses declined. In the previous year, we had two one-offs, being the impairment loss on receivables in the international project business and the energy crisis contribution for electricity, which was still due in the previous year's Q1. The share of results from ad-equity-accounted investees improved substantially. Higher earnings contributions from RAC and the movement in EVN's KG's results were contrasted by a slight decline at the FWB in Kastwerke power plants. In total, Group EBITDA rose by 20% year-on-year and amounted to 513 million euros. Schedule depreciation and amortization increased by 7%, reflecting our high investment program. Hence, Group EBIT was up by 28% and totaled 335 million euros. Financial results amounted to minus 29 million euros. In total, we generated a group net result of 250.6 million euros in the reporting period, which represents an increase by 26%. Now, let's move on to the next slide, which provides information regarding the group balance sheet structures. As of the end of March, EVN's net debt amounted to 1.3 billion euros and was above the level as of end of September 24. Correspondingly, gearing ratios stood at 19.7%. Our indebtedness is increasing in line with our higher investment program. Our financial flexibility remains secure and solid. EVN holds contractually committed ungrown credit lines in the amount of 805 million euros. I can also inform you today that both credit ratings were confirmed recently. In April, Moody's reaffirmed its A1 rating with stable outlook and in May, Scope again awarded us an A-plus rating with stable outlook. Our declared goal is to maintain solid A category ratings in the future. To achieve such ratings, we are strictly monitoring the adjusted target wages of both of our rating agencies. Therefore, we use the net debt to SFO ratio as a KPI to manage our financial performance, investments, and capital structure. On the next slide, I will present the development of our segment in more detail. As always, after six months, I will also provide you with an update of our segment outlooks for the full year. I will start with the energy segment. Energy demand for natural gas and heat increased due to colder temperatures, whereas electricity sales volumes declined year on year. Such decline was due to declining electricity sales to industrial customers in Germany. In Austria, cooler weather, the increased use of heat pumps and the continuing trend towards e-mobility offset the effects from competition. Our equity consolidated supply company, EVN KG, is in charge of the electricity and natural gas sales, whereas the heating business is fully consolidated. Therefore, heating is one of the main drivers for the revenue of the energy segment. The other main factor for the development of revenue is the marketing of the electricity generated in our renewable power plants. In the first six months, revenue fell year on year to 372 million euros due to lower realizable prices in the marketing of our own generation, volume and price effects in natural gas trading, as well as reduced earnings effects from the valuation of hedges. In contrast, our heating business benefited from the colder temperatures. In line with declining market prices, operating expenses also decreased. For our equity accounts at supply company EDMKG, the expected operational turnaround continued as planned. However, during the report, the reversal of the cool from the previous year led to a one-off negative effect. As a result, EVNKG reported a loss of 11 million euros.

But that's still a significant improvement compared to the previous year.