EVN AG

Good morning, ladies and gentlemen, and welcome to EVN's results for the first half of the 2025-2026 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 Alexander Wittmann.

Thank you. Good morning, everybody, to EVN's conference call on the results for the first half of our current financial year. Overall, EVN's performance has been sound and in line with expectations. The main deviation from our planning assumptions were the below average wind and hydro conditions in the first six months. However, on group level, our diversified business model helped to offset such effects. Our generation segments suffered from these weaker generation conditions. Price levels for the marketing of own production also declined year on year. The contributions from the equity consolidated companies RAK and Burgenland Energie were also lower. RAK'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 networks segments, which reflects the organic growth from growing investments into the electricity grids. In addition, our heating business in Austria and our operations in southeastern Europe delivered a very solid performance in the first six months. Regarding recent geopolitical events, especially the Iran conflict, Please note that our reporting period covers October through March. Therefore, any market volatility arising in March has not had a material impact on the results we are reporting today. I can confirm that we are fully on track to implement this year's investment program. We plan to invest up to €1 billion annually up to 2030. The majority, around 80%, will be invested regionally in Lower Austria. Key areas include network infrastructure, renewable generation, battery storage, e-charging infrastructure, and drinking water supply. We are also well on track to reach our renewable expansion targets, as is evident by the progress made until end of March. Total wind capacity increased to 561 megawatt installed capacity and we are working on further projects to reach our 2030 wind target of 770 megawatt. The same applies to PV. Capacity increased to 133 megawatt peak with a target of 300 megawatt peak. And our battery storage currently stands at 12 megawatt and shall increase to 300 by the end of the decade. Construction is underway on two large battery projects at former thermal power plant sites, one with a capacity of 70 megawatts and another with 16 megawatts. I would also like to update you on a new cooperation in e-mobility. Together with the petrol station operator Avia, we roll out and operate fast charging stations across all Austria. On March 2nd, we completed the closing of the sale of our international project business to Strabag. In this call, I will provide some details on the transactions as well as on the resulting deconsolidation effects. On the next slide, I will take you through the main financial developments in the reporting period. Revenue rose by 3.2% year-on-year to 1.8 billion 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 Fire Power Plant with the Austrian Transmission Grid Operation ended in September 2025. Last year, other operating income included the insurance compensation payments related to the damages from the flood in 2024. 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 flood-related repair costs. The rise in personal expenses reflects mainly the adjustments according to the collective bargaining agreements. The share of results from equity-accounted was down by 10% at 68 million euros, mainly due to the declines at RAK and Burgenland Energie. In year-on-year comparison, our supply company EVNKG reported a further improvement, which, however, was dampened by a new provision for the social tariffs required under Austria's new electricity law. In total, Group EBITDA improved by 8% year-on-year to €553 million. Scheduled depreciation and amortization increased by 9%, reflecting our high investment program. Group EBIT increased by 8% and amounted to €363 million. Financial results improved to minus €22 million. In total, we generated a group net result of 312 million euros in the reporting period, which represents an increase by 25%. Please note that the group net results includes 33 million euros from discontinued operations. This amount results from the deconsolidation of the international project business. This is a positive non-cash one-off effect, which includes the OCI recycling of foreign exchange effects and valuations previously recorded in equity. Apart from these P&L effects, the closing of the transaction resulted in cash proceeds of 100 million euros. In addition to payment of this purchase price, Strabag took over intragroup cash pooling receivables of 106 million euros. In total, this has a positive effect of 206 million euros on EVN's net debt. EVN and Strabag also agreed that guarantees for the two projects in Kuwait and Bahrain, as well as claims to future payment inflows in the form of an earn-out, will remain with EVN. The book value of these burnout receivables recorded by EVN is 128 million euros. Now, let's move on to the next slide, which provides information regarding the group's balance sheet structure. As just mentioned, the sale of the international project business had a positive effect of 206 million euros on EVN's net debt. It declined to 1.1 million euros with a gearing of 15.7% by end of March. However, due to our high investments, which will total 1 billion euros for the financial year, net debt will again increase by end of September. Our financial flexibility remains secured and solid. EVN holds contractually committed undrawn credit lines in the amount of 770 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. On the next slide, I will walk you through the development in our segments. The developments in our energy segment reflect the strong performance of our heating business during the winter half year. Due to the cold weather in Austria, temperature-related energy demand exceeded both the long-term average and the prior year. This resulted in higher heat sales volumes. In addition, the ongoing expansion of our heating network contributed to this overall growth. Overall, the heating business recorded an increase in both revenue and earnings. Segment revenue however declined due to the price effects in the marketing of own generation. The normalization of operating results at our equity consolidated supply company EVNKG continued during the reporting period. However, results that could have reached a double-digit level were dampened by the provision for the new social tariff for vulnerable customers in Austria, which amounted to approximately 13 million euros. Nevertheless, EVN KG's EBITDA contribution improved year-on-year reaching 1.7 million euros. Together, these developments led to an EBITDA of 81 million euros compared to 63 million in the previous year. EBIT came in at 65 million euros. For each of the segments, we are updating today the outlook originally published in December. For the energy segment, we take a more positive view on the heating business following its strong performance in the first six months. In contrast, the burden of the social tariffs will continue to weigh on EV and KG. Otherwise, the full year result of the segment will largely depend on the further development of the market prices. Now let's turn to our generation segment. Electricity generation volumes in this segment declined by 10% year-on-year, while the commissioning of new wind parks and repowerings helped to offset a substantial share of the lower volumes resulting from below average wind and water flows in Austria. The non-renewal of the reserve capacity contract for the Thais power plant by APG led to a significant decline in thermal generation. In addition to these volume effects, the lower prices for the marketing of generation resulted in declining revenue and earnings from electricity generation. 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 40% and stood at 58 million euros EBIT amounted to 33 million euros. I confirm the segment outlook, which we gave in December. We expect a decline in EBITDA, which was positively influenced in 24-25 by the insurance compensation payments under normal average market conditions generation typically accounts for 15 to 20 percent of our group EBITDA. Next is the network segment. To begin with, I would like to remind you that the network segment now also includes the drinking water business in Lower Austria, which was previously reported in the environment segment. This segment no longer exists following the sale of the international project business. The water business adds an annual and stable EBITDA contribution of about 15 million euros to the segment. The main activity in the segment is the operation of the electricity and gas distribution networks in Lower Austria. In line with the Austrian regulation, segment results are reflecting the ongoing high investments in the network infrastructure and related RAP growth. Due to the higher tariffs, EBITDA was up at 265 million euros and EBIT totaled 164 million euros. All in all, a solid first half year for our regulated business. The financials of this segment include a positive one-off effect, which was already recognized in Q1. It relates to the acquisition of a fiber infrastructure company and resulted in a positive effect of 10 million from Badwill. Based on the organic growth driven by our investments in the networks, the strong performance in the first six months and higher tariffs in line with the Austrian regulation, I confirm our segment outlook. We expect higher results for the current financial year. Finally, let's move on to the Southeast Europe segment. This segment had a strong first half year. This was supported by, among others, absence of previous year's regulatory compensation factors in the Bulgarian grid business, as well as higher energy demand in North Macedonia due to colder weather. Segment EBITDA was up by 31% and amounted to 104 million euros. Segment EBIT was 55 million euros in the first six months. In April, we commissioned our first large battery storage facility with a capacity of 10 megawatt and which is co-located with a PV plant. Around one third of our 300 megawatt battery storage target for 2030 is planned to be built in Bulgaria and North Macedonia. I confirm the segment outlook. Both EBITDA and EBIT are expected to remain broadly in line with the prior year. For your reference, EBIT in 2024-25 equals €88 million. Let me now continue with the development of our group cash flows. Gross cash flow rose by 1.7% year-on-year to €487 million. Positive factors were partly offset by the correction of non-cash earnings components related to the deconsolidation of international project business. Cash flow from operating activities totalled €268 million. Higher seasonal capital commitment resulted from an increase in trade receivables at EVN Werner and the South East Durham sales companies as well as in trade liabilities. Cash flow from investing activities amounted to minus 98 million euros. Higher investments were contrasted by the proceeds from the sale of the international project business. The cash flow from financing activities was minus 179 million euros and included scheduled repayment of loans as well as our dividend payment for the 24-25 financial year. In the previous year, a new promissory note loan of 100 million euros had been issued. The net change in cash and cash equivalents amounted to minus 9 million euros. Finally, let's come now to the outlook for the current financial year. I confirm our guidance for the financial year. We expect group net result to be within a 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 years. 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. Ladies and gentlemen, that's the end of our presentation and we are looking forward to answering your questions.

Thank you very much, dear ladies and gentlemen. We are looking forward to your questions. You can either click on the dial-in button if you joined via online. Please click on the button and then raise your hand to ask a question. Or if you're dialed in into the conference call, please press star, nine, and the pound key to raise a question. I repeat, the combination is star, nine, pound key. One moment for the first question, please. All right, the questions are incoming. The first one is from Emanuele Ogioni. Please, over to you.

Thank you, everybody. Thank you for the presentation and for taking my questions. the first one is on the 26 guidance you mentioned already by segment by business unit the confirmation or the improvement for the energy segment for example the outlook compared with what provided for in December my question is about the H2 moving parts considering that Apparently, compared with at least the BDA guidance, it seems a bit conservative after a good set of results in Q2 and so in H1. And apparently, if we assume a BDA stable, almost stable year on year, the weight of the H1BDA in this fiscal year is above 60% compared with lower numbers, for example, 56% was last year. So it's true that there is a seasonality skewed in H1, which favors H1 compared with H2. But in any case, it seems a bit more prudent. So I simply ask, what are the moving parts and probably the negative moving parts affecting H2, which will decrease the growth compared with H1? Thank you. This is a fair question. and the second question is an update on the regulatory framework in Oster in particular we know that there is a price cap in place since a few years for four years and until 2030 but my question is if there is a you feel the risk that there is something could happen further and additionally in terms of I don't know a special tax or utilities or something else could affect the profitability of your company. Thank you.

Thanks, Emanuele. Good to hear you. Thank you also for your analysis. I will tackle your first question, which was included with your analysis of the outlook being too conservative. As you know, in our business, there is a clear seasonal bias with significantly higher energy demand during our winter half year. Consequently, especially our fourth quarter results always differ from those of the rest of the year. And also, as a consequence, the EBITDA developments. In view of the below average hydro conditions in the first six months, we also amended planning assumptions for the rest of the year. I think that's the main drivers. In terms of your second question to further implications, I would say we We know that the electricity law was issued and I think we also discussed the implications and we are not aware of further result impacts as the legislation to the discussions is still missing.

Thank you. Thank you so much.

Welcome. Also from my side. The next question is from Peter Crampton, Barclays. Please, AVT.

Good morning. Peter Crampton here from Barclays. Thank you for taking my questions. My first one was relating to this financial year. There seemed to be quite a lot of positive one-offs. Can you quantify kind of the total one-offs And then kind of looking at your guidance for the full year, did you ever assume these one-offs in the guidance or is it kind of sensible to assume that at one point you update the guidance for this? And then the second question relates to your capital markets day on the 1st of October. Maybe very briefly what to kind of, you know, expect. This is simply kind of an update on 2030 targets or maybe even a more longer-term guidance. Thank you.

Peter, and thanks for your question. I think the total one-offs revolve around two incidents, the acquisition of a fiber infrastructure company with a badwill of 10 million and the deconsolidation effects of the sale of the international project business to Strabag of 32.5 million euros. These are the positive one-offs, but please also bear in mind that we already provided also in Q1 around 13 million for the social tariffs which came with the new electricity law. So having said that, our guidance is as we communicated that and we don't foresee any update to that. Second question, Peter, on the capital market day. I think we will update on the targets for 2030, and there will be also some other updates on trends, developments, also discussions within the EVN group. on what is our investments portfolio in the future, and also a view on electricity markets.

Okay, very clear. Thank you for that.

Thanks, Peter. The next question is from Patrick Steiner, ODWHF. Please, have it here.

Good morning, Patrick Steiner, ODWHF. Three questions from my side. firstly in the renewables generation segment how should we think about firstly volume development in terms of new capacities added but also with regards to seasonality and second about the pricing development for the rest of the year that would be the first one second question could you maybe walk us through what you believe to be the potential implications from the Iran war by segment from Q3 onwards and the third question would be on the drinking water business. You mentioned the 15 million EBTA contribution from drinking water. If you looked it up in my model and between 17, 18, 19, you already had 15 million of contribution. Was there no significant earnings growth over the years? Thanks.

Patrick, thanks for your questions. I will tackle the the wind and hydro conditions first. The decline in EBITDA of our own renewable generation in Austria was about €18 million. Thereof, €1 million were volume effects. The rest are really price effects. The price effect may seem high, but please bear in mind that we are comparing to the period October 24 to March 25. Based on our pre-running hedging strategy of 12 to 18 months, this means that we started to hedge the previous half year one back in 23. At that time, forward prices were still at substantially higher levels. I hope that answers the question. I will then hop to the second question, which is the Iran topic. I confirmed basically the full year guidance for the 2025-2026 financial year. The guidance has been reviewed and carefully assessed after the first six months of the financial year. Any impacts known so far are therefore already reflected in our outlook. Please bear in mind, that EVN has a diversified business model that means that volatility in energy prices can have contrasting effects in, for example, generation versus supply. The other aspect I see is that we have a pre-running hedging strategy for both marketing of our own generation and procurement, I guess, and I'm convinced that adds stability to our outlook. Last but not least, Your question to the drinking water, the 15 million mark, that's about 2% contribution to the group EBITDA. That's very stable. And we have continued high investment and also maintenance for that segment.

OK, thank you. Maybe on the second question. Should we expect, I mean, the last time when energy prices went up quite significantly in 22, we experienced some kind of cost overruns in the energy business. Afterwards, you've restructured contracts and you've done lots of constructive work. Should we not expect a negative result? effect again in energy or should this be less severe relatively? And secondly, maybe on generation we should see positive effects probably going forward for the next two, three quarters, right?

Thanks, Patrick. I think I would start with the situation now is not comparable with the situation in 22. So that's why I come back to the guidance I confirmed, and we don't see any other impacts at the moment.

Okay, perfect. Thank you.

Thank you very much, Mr. Steiner. At the moment, there are no more questions in the queue. So, dear ladies and gentlemen, a little reminder, if you're dialed in by phone, please press star nine and the pound key now. to raise a question or a follow-up question. If you're dialed in online, then please press on the dial-in button and then raise your hand. We'll wait a couple more moments, but everything seems to be quite clear. No more questions incoming. Perfect. Thank you very much, dear ladies and gentlemen. With that, I'm closing the Q&A session and handing the floor back to the hosts.

Thank you and thanks for joining today's conference call. We will publish the results for the first half of the current financial year on Thursday, 27th of August. And please save the date for our Capital Markets Day, which will be held on the 1st of October in London. Goodbye and have a great day.