Holding & Services segment

Business development in the Holding & Services segment

At EUR 249.4 million, sales revenues in the Holding & Services segment in the reporting period were slightly above the previous year's level of EUR 242.1 million.

The operating result of the Holding & Services segment also developed positively, rising by 54.4% from EUR 5.7 million in the previous year to EUR 8.8 million in the reporting period. In addition to several property sales, all service companies made a positive contribution to the development of earnings in this segment with EBIT increases in the 2018/2019 fiscal year. Besides higher expenses for restructuring measures within the Group and for digitalisation projects, lower profit/loss shares from at-equity consolidated investments in the Holding & Services segment amounting to EUR 10.6 million (previous year: EUR 12.9 million) had a negative impact on the operating result of the Holding & Services segment. The EBIT contribution of the telecommunications business area declined slightly due to an impairment on telecommunications equipment. However, the operating result of the telecommunications business area also developed positively in the reporting period.

Fibre-optic expansion is the basis for Upper Austria as a business location

Length of fibre-optic network

in km

As a result of the advancing digitalisation, the availability of speed-of-light broadband internet throughout the country is a key success factor for the future of Upper Austria as a business location. Energie AG supports this goal by expanding its fibre-optic network, the central component of the Telekom business area. At the end of the reporting period, the Group's own fibre-optic network comprised approx. 6,100 km (previous year: 5,550 km).

In the scope of the Fibre To The Home (FTTH) expansion, housing areas in 180 Upper Austrian communities have been connected so 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 telephone connection). FTTH expansion continued successfully in the reporting period, with more than 25,000 households now connected.

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), the Netz OÖ electricity grid achieved an installed basis of approx. 633,000 AMIS meters by the end of the fiscal year 2018/2019. This corresponds to a roll-out level of 94%.

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.

In September 2017, construction work on the new Traunleiten hydropower plant started. Originally built in 1901, it 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.

Wels Strom Business GmbH (a 100% subsidiary of Wels Strom GmbH) was founded in February 2019 and has served commercial and industrial customers since then. This means that the differing requirements of households and business customers can be taken into account.

In the last completed fiscal year (1 January 2018 to 31 December 2018), the electricity sales volume to customers was 630 GWh, slightly below the level of the previous year (2017: 675 GWh), 7.5% of which was covered by own production, mainly from hydroelectric power. Some 36% 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 2018 to 31 December 2018), the transition from a utility and infrastructure provider to a digital technology company moved forward with in-house projects and in cooperation with start-ups. The expansion of renewable energies took priority for the company in 2018 with an investment volume of around EUR 20 million in hydropower plants, photovoltaic, biomass and eco-energy plants. The Gries power plant saw Salzburg AG's 30th hydropower plant go on-grid in 2019. Innovative approaches were also taken in product development, for example in the field of photovoltaics for apartment buildings. Salzburg AG is also moving forward with broadband expansion in the province of Salzburg and investing in 5G technology. At the same time, the company is the largest mobility provider in the federal state of Salzburg with some 51 million passengers annually.

In economic terms, business events in the 2018 fiscal year were dominated by increasing prices on the energy markets. At 3,266 GWh, the electricity sales volume to customers was roughly at the previous year's level with around 51% being covered by own production, 85.8% of which from renewable sources. Natural gas sales volumes fell by 5.3% to 1,671 GWh, and district heating volumes by 7.4% to 751 GWh due to the milder winter. As in the previous fiscal years, the customer base was expanded in terms of cable TV, internet and telecommunications offerings.

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 combined 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.

Business Services GmbH bundles services for the Energie AG Group in the areas of purchasing and logistics, real estate management, information technology, accounting, and insurance and legal services. In the fiscal year 2018/2019, work focused on implementing projects in the scope of the Group's digitalisation strategy, on the acquisition of an internal real estate portfolio of around 90 properties, and on numerous services relating to restructuring the Sales and Procurement divisions. The project launched in the 2014/2015 fiscal year to adapt the SAP system architecture for billing and customer services was continued. It went live in the Electricity segment in the 2018/2019 fiscal year.

Customer Services GmbH is also strongly involved in the project to adapt the SAP system architecture in the area of billing and customer services. This company bundles the Group's customer services and data protection back office, billing, provider switch management, receivables management and payment processing in customer-facing operations. The 2018/2019 fiscal year was also marked by the implementation of market processes for joint generation plants and the development of the customer-consent management strategy for data transfer to third parties. In the 2018/2019 fiscal year, employees provided services for around 1.55 million customer contracts.

The focus of activities 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 apprenticeship programs. In the fiscal year 2018/2019, the work focus again was on several employer branding activities and the launch of a trainee program focusing on female trainees. In addition, the newly developed management academy “Energie AG Future Lab” was held for the first time during the reporting period and a “Central Arbitration Office” was installed.

For further information on the activities of Personalmanagement GmbH, see the Non-financial Report.

As the central expertise owner for all technical services at Energie AG, Tech Services GmbH is the expert point of contact for planning, implementation and maintenance. These services were primarily provided for affiliated companies in the Group in the 2018/2019 fiscal year. Orders from external customers were also accepted to balance capacity utilisation. The biggest challenge in the reporting period was the increasing order volume, especially for the expansion of the fibre optic network, and the implementation of the “Upper Austria Electricity Network Master Plan”.