EVN AG

Good morning, ladies and gentlemen, and welcome to EVN's conference call for the first quarter 2025-26 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 quarter of our current financial year.

At first glance, today's results are fully in line with expectations, but they also show how important EVN's diversification is. Our diversified business model helped to offset challenges caused by difficult framework conditions. Our generation segment suffers from below average wind and hydro conditions. Price levels for the marketing of own production also declined year on year. The contributions from the equity consolidated companies, RAC and Burgenland Energy, were also lower. RAC's results returned to a normalized level after last year's exceptional performance. These negative developments were contrasted by, above all, a substantially better performance of the network segment, which reflects the organic growth from growing investments into the electricity grid. The implementation of our CAPEX program is in full swing. I confirm that we are committed to invest about a billion euros per annum until 2030. We are also well on track to reach our expansion targets as is evidenced by the progress made during Q1. As of end December, total wind capacity increased to 561 MW installed capacity. Our 2030 target is 770 MW. PV increased to 133 MWp. Here, the target is 300 MW. And our battery storage is currently at 12 MW and shall increase to 300 by the end of the decade. We just completed the procurement for a 70 megawatt battery storage facility, which we aim to commission by year end 27, and we then operate for flexibility management with our own in-house software. Concerning the WTE sale, I can confirm AG AG AG AG the environment segment no longer exists. Until closing of the sale, the discontinued operations are subject to IFRS 5 disclosure and are included in all other segments. Our Austrian drinking water supply business, which concerns pipeline infrastructure, has been assigned to the network segment. It accounts for 1.6% of Group EBITDA. Today, In about an hour, the annual general meeting for the previous financial year will take place. As you know, we will propose to the AGM the payment of a dividend of 90 cents per share. Ex-dividend date is the 2nd of March and dividend payment date is the 5th of March. On the next slide, I will take you through the main financial developments in the reporting period. Revenue rose by 3.3% year-on-year to 831 million euros. The main reasons were positive regulatory price effects from the network companies in Lower Austria and Bulgaria. In contrast, there was a drop in revenue from renewable generation due to price and volume effects. In addition, the reserve capacity contract for the Thais gas-fired power plants with the Austrian Transmission Grid operation APG was not extended. Last year, other operating income included the insurance compensation payments related to the slot damages. This year, there is a positive effect of 10 million euros from the badwill associated with the acquisition of a fiber infrastructure company. This acquisition will further strengthen our internet and telecommunication business. The cost of electricity purchases from third parties and primary energy expenses increased due to higher upstream network costs and higher procurement costs in the heating business. This increase was contrasted by lower procurement costs and reduced quantities of natural gas. The cost of materials and services declined as last year was impacted by slot-related repair costs. The rise in personnel expenses reflects the increase in workforce and adjustment according to the collective bargaining agreements. Other operating expenses rose due to an increase in receivables write-offs. The share of results from ad equity accounted investees dropped by about half, mainly due to the declines at RAC and Bunland Energy that I already mentioned. The further improvement in EVN KG's supply business was strengthened by a new provision for the social tariffs required under Austria's new electricity laws. In total, group EVDA was down by 2% year-on-year to 247 million euros. Scheduled depreciation and amortization increased by 8%, reflecting our high investment programs. Group EBIT declined by 8% and totaled 153 million euros. Financial results improved to minus 11 million euros. The reversal of the tax provision, which was made after the termination of a tax audit, led to a positive tax effect. In total, we generated a group net result of 127 million euros in the reporting period, which represents an increase by 10%. Now let's move on to the next slide, which provides information regarding the group's balance sheet structure. As of the end of December, EVN's net debt increased to 1.3 billion euros with a gearing of 19.7%. This comes mainly from effects at quarter end due to higher energy bill receivables during the heating season. Our financial flexibility remains secure and solid. EVN holds contractually committed ungrown credit lines in the amount of 770 million euros. Now, on the next slide, I will walk you through the developments in our segments. For the energy segment, please keep in mind that last year we had a positive one-off in our heating business. Against this backdrop, there are three main developments in this segment. 1. The operating results of our heating business were on the same level as in the previous year. The decline is due to the absence of the positive one-off. 2. The decline could not be offset by the marketing of own generation as both volumes and prices were lower. 3. and our equity consolidated supply company EVNKT was expected to continue its positive trend from last year. But the upside was strengthened by the provision for the new social service for vulnerable customers in Austria. The provision was roughly 12 million euros. Still, EVNKT's EBITDA contribution was 7.2 million euros. Together, these developments led to an EBITDA of 45 million euros compared to 51 million in the previous year. EBIT came in at 37 million euros. Now let's move on to our generation segment. Electricity generation volumes in this segment declined by 13% year-on-year, mainly due to lower wind and water flows in Austria. Combined with declining market prices, This led to lower revenue and earnings from electricity generation. The new wind paths and repowerings commissioned over the past year could not fully offset these price and volume effects. Thermal generation volumes declined too, as the contract for the supply of reserve capacity from the child power plant ended in September 2025 and was not renewed by APT. We will keep the price plant operational for the time being, but it is not producing for the market either. We plan to apply again for the upcoming period starting on 1st October. Our equity-accounted Investeeverbund Inkraftwerke contributed lower earnings compared to the previous year due to weaker water flows and lower market prices. In total, the segment EBITDA was down by half and stood at 26 million euros. EBIT amounted to 40 million euros. Next is the network segment. The network segment comprises the regulated electricity and gas distribution business in Lower Austria, the internet and telecommunication business in our domestic supply area. As of this financial year, the segment also includes the drinking water business in Lower Austria. It is an unregulated infrastructure business which will see organic growth over the coming years. The internet and telecommunications business acquired a fiber infrastructure company in Q1. The acquisition had a positive effect of 10 million euros in the P&L related to a bad rate. Apart from these factors, segment results are reflecting the ongoing high investments in the network infrastructure business and related rough growth. Due to the higher tariff, EBITDA was up at 127 million euros and EBIT totaled 77 million euros. All in all, a solid first quarter of our regulated business. In line with our strategy 2030 and our CapEx plan, investments in the electricity grid will remain high and will support further rough growth. In recent meetings with investors and the sell side, we received many questions regarding details of our grid investment. Therefore, I would like to share the following slide with you. Until 2030, we will invest up to 470 million euros annually into our electricity networks infrastructure. The split is as follows, based on total grid investments until 2030. 65% will be invested in substations. 20% in the low and medium voltage grid, 5% in high voltage, which means 110 kV, and about 10% in transformer stations. Or in other words, each year we will install 1,000 kilometers of medium and low voltage cables and we will construct 700 new transformer stations until 2030. We will newly construct or expand about 55 substations. All these investments are required to increase our network capacity in order to be able to integrate the growing and volatile renewable generation from wind and TV. Finally, let's move on to the Southeast Europe segment. This segment had a strong Q1. This was supported by, among others, positive regulatory effects in the Bulgarian grid business, as well as higher energy demand in North Macedonia due to colder weather. Segment EBITDA was up by 8 million euros and reached 39 million euros. Segment EBIT was 15 million euros in Q1. As in Lower Austria, we also started constructing large battery storage facilities that are co-located with large PV plants. Around one-third of our 3,300 MW battery storage target for 2030 will be built in Bulgaria and North Macedonia. Let me now continue with the development of our group cash flows. Gross cash flow rose by 9.5% year-on-year to €181 million. The main reason was the lower correction of non-cash earnings components. Cash flow from operating activities totalled €-51 million and was influenced by a seasonal increase in short-term receivables. Cash flow from investing activities amounted to €36. and reflected a substantial increase in investments and a reduction of investments in cash funds. The cash flow from financing activities was minus 6.4 million euros and included schedule repayments. In the previous year, a new bank loan of 50 million euros had been closed. The next change in cash and cash equivalents amounted to minus 21 million euros. Finally, let's come now to the outlook for this current financial year. I confirm our guidance for this financial year. We expect group net results to be within the range of 430 million to 480 million euros. This is under the assumption of a stable regulatory and energy policy environment. Based on our massive investment program of around 1 billion euros per year, We aim for an organic growth of results over the next year. I therefore reiterate our financial ambition for 2030. EBITDA will range between 1.1 and 1.2 billion euros. Based on EBITDA of 900 million euros in the last financial year, this implies an annual growth rate of 8% per annum.