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.