Austrian utility group EVN said on Wednesday the aggregate effect on its earnings before interest and tax (EBIT) from impairments in Bulgaria and Macedonia will amount to 260.9 million euro ($356.6 million).
New tariffs in Bulgaria and Macedonia will lead to impairments and negative group result, EVN said in a press release, adding that 210.1 million euro of the effect on the EBIT will be attributable to Bulgaria and 50.8 million euro to Macedonia.
Due to these effects, the group's management expects a negative group net result for EVN Group’s financial year 2013/14.
"In Bulgaria, the tariff for the period 1 July 2014 to 30 June 2015 foresees a significant increase for EVN Group's purchase price for electricity," EVN said in a press release. "In parallel end customer prices were only marginally increased by not fully reflecting the effective cost base of the respective EVN companies as well as by introducing a new tariff element the economic effect of which is to retransfer revenues incurred by EVN Group during previous regulatory periods."
According to EVN, in Macedonia the tariffs for network usage, effective from July 1, will only marginally increase and end customer prices will increase below expected levels. Cost elements associated with the next step in the market liberalization starting with January 1, 2015 were not reflected in the decision on June 30.
"As a result of such tariff decisions, in combination with the current economic situation and outlook, mid term expectations for EVN Group’s operations in Bulgaria and Macedonia had to be reevaluated resulting in impairments of goodwill and customer base in full (148.9 million euro and 43.0 million euro), a partial impairment of other assets (15 million euro) as well as a negative net effect resulting from an initial recognition of a regulatory liability in Bulgaria (54 million euro)," EVN said.