Repower : 08-24-16 - Further steps to implement realigned corporate strategy dominate first half of 2016

Repower's results for the first six months of 2016 were better than the prior-year period, thanks in particular to impairment gains on power plants in Italy and Switzerland and the release of part of the group's provisions for long-term agreements. Total operating revenues for the first half came to CHF 881 million (down 4% on the first half of 2015). EBIT after exceptional items came to CHF 45 million, and net profit amounted to CHF 18 million. A change in shareholder structure announced at the end of June had a particularly dominant influence on developments in the first half, with Elektrizitätswerke des Kantons Zürich (EKZ) and UBS-CEIS joining Canton of Graubünden and Axpo as anchor shareholders as part of an increase in capital.

The increase in capital raised around CHF 171 million of additional equity for Repower, with EKZ subscribing to CHF 90 million and UBS-CEIS to CHF 60 million, and another CHF 21 million free float.

These new funds have enabled Repower to strengthen its capital base and reduce net debt, as well as helping implement the strategic realignment of the organisation. In conjunction with the increase in capital, an extraordinary general meeting (EGM) elected Dr Pierin Vincenz, Dr Urs Rengel, Roland Leuenberger and Peter Eugster as new members of the Board of Directors. Together with existing members Dr Martin Schmid, Claudio Lardi and Rolf W. Mathis, Repower's new Board of Directors now reflects the new shareholder structure. The Board of Directors elected Dr Pierin Vincenz as its chairman.
At the end of April Repower had its bearer shares and participation certificates delisted from the Swiss stock exchange, and following the corresponding resolution of the annual general meeting in May converted both securities into standard registered shares, which are now traded over the counter. These modifications have also made arrangements simpler in other respects.
Earnings up on half-year 2015
The market environment remained difficult in the first half of 2016 despite signs of a slight easing both in prices in international energy trading and the EUR/CHF exchange rate.
Total operating revenues came in at CHF 881 million in the first half of 2016, 4 per cent down on the prior-year period. The group's operating income (EBIT) was higher than the prior-year period at CHF 45 million (versus CHF −34 million in the first half of 2015). Positive contributory factors were impairment gains on tangible assets (the Teverola and Taschinas power plants) totalling around CHF 17 million and the release of provisions for long-term agreements amounting to some CHF 5 million. Impairment of around CHF 3 million on receivables at Sales in Italy had a negative impact on results. Net profit came to CHF 18 million for the first half of 2016. At the end of June the equity ratio was 35 per cent, a slight improvement versus the end of 2015 (33%). There was a very healthy development in cash flow from operating activities in the first half of 2016 thanks to a better operating performance.

Market Switzerland:Work in the Market Switzerland segment was dominated by the launch of electric vehicle charging offering Plug'n Roll, further investment in the grid, and mixed developments in energy trading. Added to this, the partial refurbishment of the Cavaglia power plant was completed to boost the installation's electricity generation and make it eligible for the feed-in remuneration at cost (Kostendeckende Einspeisevergütung, KEV) scheme. The rebuilding of Morteratsch power plant is running to schedule, and is due for completion in 2017. The plant is being funded and operated in collaboration with a private investor on the basis of a new model. Volumes of hydropower generated were slightly down on the first half of 2015, but the volumes generated at the wind farms in Germany were good. The Market Switzerland segment's contribution to EBIT came to around CHF 13 million in the first half of 2016 (versus CHF −5 million in the prior-year period).

Market Italy: Repower continued to expand its sales operations in Italy, with around 100 new sales consultants joining the organisation. Repower's consultants see themselves as 'personal trainers' who help their customers improve their fitness in terms of energy efficiency. They also have a range of attractive products at their disposal that are still selling well. Repower in Italy is also developing new, innovative offerings on an ongoing basis, all designed to further strengthen the company's position as a sales and service organisation. Trading in Milan made a larger contribution to earnings than in the first half of 2015, thanks in part to good volumes generated by the Teverola combined-cycle gas turbine plant and the Italian wind farms. The Market Italy segment's contribution to EBIT came to around CHF 28 million (versus CHF −23 million in the prior-year period).

Other segments and activities:Efforts to cut the costs and boost the efficiency of group functions continued. Repower was also able to make a number of unbudgeted sales of property, generating extraordinary income of around CHF 10 million. As part of the strategic realignment announced in December, in the first six months of 2016 Repower held comprehensive negotiations with a view to selling its market operations in Romania. On 25 July it announced that it would be selling this business to MET Group. Other segments and activities' contribution to EBIT came to around CHF 5 million in the first half of 2016 (versus CHF −5 million in the prior-year period).

Strategy and outlook
In December 2015 Repower announced a strategic realignment and its intention of stepping up efforts to continue evolving into a service and sales organisation and thus reduce its dependence on the absolute price of electricity. Work to implement this strategy, including open divestments, is proceeding apace. Added to this the group is strengthening its sales organisations in both Switzerland and Italy. Implementing the new strategy will remain one of the core tasks in the second half of the year. As things stand at present, provided market conditions remain unchanged, Repower looks set to post better operating income (before exceptional items) for 2016 as a whole than last year. However, the energy industry will continue to face substantial challenges and the overall environment will remain tough. With the new capital raised and a new strategy building on the company's core competencies, Repower believes it is well equipped to successfully position itself in the energy market of the future.

Notes:
The 2016 semi-annual report can be found at www.repower.com/investors and the online report at onlinereport.repower.com.

At www.repower.com/investors documentation containing additional information on the 2016 semi-annual results can also be found.

Analysts and representatives of the media have been invited separately to a telephone conference.

Contact

Kurt Bobst
CEO
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Stefan Kessler
CFOT [phone]
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stefan.kessler(at)repower.com

Werner Steinmann
Head of Media Relations
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werner.steinmann(at)repower.com

www.repower.com