Holding & Services Segment

Business Development in the Holding & Services Segment

In the Holding & Services Segment, sales revenues rose by 11.0% to EUR 242.1 million year-on-year. This development is mainly attributable to higher sales revenues in plant engineering and construction and in the telecommunications business area.

In contrast to this, the operating result in this Segment showed a negative trend, falling by more than half from EUR 13.3 million in the previous year to EUR 5.7 million in the reporting period. The main reason for this is the decline in the share of earnings from at-equity consolidated investments from EUR 20.6 million in the the previous year to EUR 12.9 million in the 2017/2018 fiscal year, while the results of the service companies and the telecommunications business area remained largely stable.

Fibre-Optic Expansion is the Prerequisite for Upper Austria as a Business Location

Length of Fibre-Optic Network

km

Promoted by the good economic environment, and the growing digitalisation of Upper Austria as a business location associated with this, demand for speed-of-light broadband internet continued to grow in the 2017/2018 fiscal year.

Following the expansion of the Group's own fibre-optic network, which comprised around 5,550 km at the end of the reporting period, Energie AG is in a position to offer a range of forward-looking services in the telecommunications business area.

In the scope of the Fibre To The Home (FTTH) expansion, housing areas in 147 Upper Austrian communities have been connected thus far. This gives private households the ability to choose from Energie AG's “powerSPEEDprivat” product portfolio (internet with speeds up to 500 Mbps download plus a TV product and telephony). FTTH expansion has become far more dynamic in the reporting period, as was the case in previous years. The allocation of considerable funds from the subsidy programmes in the scope of “Breitband Austria 2020” (Broadband Austria 2020, Access 2nd Call, Backhaul 2nd Call, and 3rd Call) were also particularly gratifying. In addition, growth was driven by follow-up funding from the State of Upper Austria and the federal government for small and medium-sized enterprises (SMEs) and compulsory schools.

In addition to this, Energie AG Oberösterreich Telekom GmbH (Telekom GmbH) provides electricity metering services for the Upper Austrian grid. Following the redefinition of the roll-out schedule for smart metering devices (IME-VO Amendment 2017), Energie AG had achieved an installed basis of approx. 536,000 AMIS meters at the end of the fiscal year 2017/2018. This corresponds to a roll-out level of 82%.

Strategic Investments

The at-equity consolidated companies Wels Strom GmbH and Salzburg AG, as well as further minority holdings complete the business portfolio of Energie AG.

Wels Strom GmbH, in which Energie AG holds a 49% interest, is the integrated power supply company of the city of Wels. Other business areas include heat generation for the municipal district heating network and energy systems for key account customers.

The previous year saw the start of construction work on the new Traunleiten hydropower plant, originally built in 1901, which had already covered up to two thirds of electricity production from hydroelectric power to date. A new plant with an investment volume of EUR 48.0 million will be constructed by the end of 2019. This will double output to 18 MW with annual production of 90 GWh in the future.

In the last completed fiscal year (1 January 2017 to 31 December 2017), the electricity sales volume to customers was 675 GWh, slightly above the level of the previous year (2016: 653 GWh), 13.0% of which was covered by own production, mainly from hydroelectric power. More than 40% of the electricity sales volume was generated outside the grid area of Wels Strom GmbH.

Salzburg AG für Energie, Verkehr und Telekommunikation (Salzburg AG) is a regional infrastructure company with activities in the fields of electricity, natural gas, district heating, water, mobility and telecommunications. Energie AG holds a 26.13% stake in the company.

In the last completed fiscal year (1 January 2017 to 31 December 2017), the fields of digitalisation and innovation were further advanced in cooperation with internal and external experts. The expansion of renewable energies took priority in 2017 with an investment volume of around EUR 29.9 million in hydropower plants, photovoltaic, biomass and eco-energy plants. Salzburg AG is increasingly positioning itself as a full-service provider with its photovoltaic models including electric vehicle charging infrastructure provisioning packages tailored to various customer groups such as municipalities, commercial enterprises or private individuals in apartment buildings. With around 52 million passengers, it is also the largest mobility provider in local public transport services in the federal state of Salzburg.

Business in the 2017 fiscal year was characterised by significant volume growth in energy trading. At 3,295 GWh, the electricity sales volume to customers was roughly at the previous year's level with around 54% being covered by own production, 83.2% of which from renewable sources. Natural gas sales volumes rose by 1.7% to 1,764 GWh and district heating sales volumes by 3.4% to 812 GWh. As in the previous fiscal years, the customer base grew in terms of both telecommunications offerings and mobility.

Shared Services

The four Group-wide service companies

• Energie AG Oberösterreich Business Services GmbH (Business Services GmbH),
• Energie AG Oberösterreich Customer Services GmbH (Customer Services GmbH),
• Energie AG Oberösterreich Personalmanagement GmbH (Personalmanagement GmbH) and
• Energie AG Oberösterreich Tech Services GmbH (Tech Services GmbH)

are bundled in the Holding & Services Segment.

These service companies provide commercial and technical services for the entire Group on the common basis of precisely defined quality and safety standards. These services are guided by external market conditions for similar products and services.

Material activities at Business Services GmbH, which offers services in the areas of purchasing and logistics, real estate management, information technology, accounting, and insurance and legal services, were the implementation of lighthouse and innovation projects as part of the Group's digitalisation strategy as well as the implementation of the first major cloud projects.

The project launched in the 2014/2015 fiscal year to adapt the SAP system architecture for billing and customer services was continued. The new solution is scheduled to go live in the first customer segments for the 2018/2019 fiscal year.

In the area of real estate management, a strategy for the Timelkam power plant station was initialised in the reporting period, while the development of the Gmunden site continued.

Customer services in the Energie AG Group, as well as billing, provider switch management, receivables management and handling customer payments are all bundled in Customer Services GmbH. The 2017/2018 fiscal year was characterised by many projects, such as the implementation of the GDPR by internal customers or the establishment of the model for handling “joint generation plants” in the electricity sector for grid and plant operators. In the 2017/2018 fiscal year, employees provided services for around 1.56 million customer contracts.

The focus of Personalmanagement GmbH is both on governing matters related to human relations policy and human relations strategy for the Group, and on all agendas relating to personnel management, personnel accounting, training services and apprentice training.

In the 2017/2018 fiscal year, the work focus was on an employer branding campaign, and a preparation and acquisition phase for a scholarship and trainee programme specifically for women. In addition, the newly revised executive academy “Energie AG Future Lab” was launched and a conflict management system was elaborated.

Tech Services GmbH is the point of contact for all technical services within the Energie AG Group. From planning through implementation to maintenance, Tech Services GmbH offers these services not only to its affiliates but also to external customers. This ensures the marketability of pricing as well as year-round capacity utilisation of the teams necessary for trouble-free troubleshooting and the usual high quality standards. In the 2017/2018 fiscal year, the sharp rise in order volumes, due in part to FTTH expansion, posed a major challenge for Tech Services GmbH in terms of coordination and outsourcing.