Full of Energy - Energie AG Oberösterreich

ANNUAL REPORT2007/2008THE GROUPGROUP MANAGEMENT REPORTTHE ENERGY SEGMENTTHE WASTE MANAGEMENT SEGMENTTHE WATER SEGMENTCONSOLIDATED FINANCIAL STATEMENTSAt V.O.D.S., a.s. the personnel and infrastructure re -sources were created for pro-active activities handlingthe municipal, commercial and industrial segmentsin eastern Slovakia. Thanks to the company’s ownvehicle fleet and infrastructure, its own locations forprocessing recycling materials and its own landfill, ithas provided waste-management activities for morethan 20 municipalities with about 30,000 inhabitants,as well as numerous key accounts in industry andcommerce, already in the first months of marketingefforts.V.O.D.S., a.s was consolidated into the Group for thefirst time as of the 2007/2008 business year, togetherwith the country holding company AVE SK. In thearea of processing used tires, more than 9,000 tonsof rubber granulates were produced in the truncatedbusiness year, which is clearly above the value of theprevious year.The exchange rate has already been established for theintroduction of the euro, scheduled for 01 January2009.RomaniaWe also succeeded in further developing activities onthe Romanian market during the period under re -view. The three main AVE operating companies inRomania, i.e. AVE Salaj, AVE Harghita and AVE Huron(acquired in April 2008) each have shown a gratifyingdevelopment. It was possible, both among house holdand commercial customers, with a focus on buildingup a collection system for recycling materials, to gaincustomers, to obtain price hikes and to improve thecost structures.In addition to continuously modernizing the vehiclefleet, it was possible to successfully complete the mostimportant investment project in Romania, i.e. thecon struction of the most modern regional landfill inRomania at Harghita, which conforms to EU stand -ards and will have a capacity of 1.45 million m³when completed.With respect to organization, one should mentionthat two companies were founded – AVE Ardeal andAVE Bihor – which will provide further organic growthin the strong economic districts of Cluj and Bihor.UkraineThe AVE group has expanded its activities in Ukraine,beginning with the Transcarpathian region (1.3 millioninhabitants) and expanding into the neighboringareas of Lviv (2.6 million inhabitants) and Ivano-Frankivsk (1.4 million inhabitants). After setting up thecountry company AVE Ukraine with head offices inLviv in early August 2008 and establishing AVE Kolomyja,as an associated company of AVE Ukraine, inthe Ivano-Frankivsk region, the staff level has risen to46 as of 30 September 2008. During the expired businessyear, AVE Vinogradovo succeeded in increasingthe number of household customer contracts to11,736 and that of commercial customer contractsto 398, which marks the successful intensification ofactivities in the town of Vinogradovo and the Transcarpathianregion.MoldovaFor the market entry in Moldova, AVE Ungheni SRLwas founded as a joint venture in the town ofUngheni (40,000 inhabitants), located near theborder. In the meantime it has begun to implementthe collection of household waste and, after settingup new containers, it has already signed contractswith 1,200 households.OUTLOOKGenerally speaking, the waste-management sectorin Austria and Germany can expect a challengingsituation in the coming years. On the one hand, theclassical waste volumes are shrinking, on account ofmore intensive processing and obtaining recycledmaterials, as well as due to the increase of approvedexports abroad on the basis of notifications. On theother hand, the capacities for the thermal processingof waste from municipal, commercial and industrialsources are growing. Several projects are in the processof construction or approval. This developmentleads to more competition over the available wastevolumes in order to utilize the existing and futureincineration plants. This already had an impact onwaste-material prices during the last months of theexpired business year, and current tenders for municipalwaste quantities show that this trend is contin -uing during the 2008/2009 business year. Althoughit is currently not possible to assess in figures andquantities the real-term economic consequences ofthe current instability on financial markets, on productionand thus waste volumes of commercial andindustrial customers and the specific behavior of privatehouseholds, they will certainly be noticed.AVE will continue to keep its organizational struc -tures as lean as possible. For the 2008/2009 businessyear, we plan further mergers of subsidiary companies,the continuous optimizing of location densitiesand the corresponding ongoing adjustments of staffin order to use synergy potentials optimally. It is plannedto discontinue the activities of one business fieldon a medium-term basis. This is due to the currentmarket development and the requirements imposedby the authorities, which can only be met under un -economic conditions. Drawing on the experience withinstalled SAP solutions in Austria, the Czech Republicand Hungary, AVE will be the first waste-managementcompany to further expand the use of specificSAP software of the waste-management sector, i.e.SAP Waste&Recycling, by gradually rolling out itsapplication to the main subsidiary companies in thecountries under review.The primary goals of an offensive market and growthstrategy, which will continue to be accompanied byvigorous growth by way of acquisitions, are to secureand expand the leadership position in Austria andHungary, as well as to obtain additional shares in theother countries. To cover and master the entire valueaddedchain and the concentric expansion from existinglocations continue to be the key factors for successin the progressive concentration process of thestill highly fragmented waste-management marketin Central and Eastern Europe.AVE can point to the following technical projects tobe implemented during the 2008/2009 business year:In Austria, the production start-up of the pelletizingplant and the start-up of the heat extraction fromWAV (both at Wels); in Bavaria, the optimization ofthe processing plant for commercial waste materials atPenning; in the Czech Republic, the construction of thetwo new sorting facilities at Benátky nad Jizerou andat Čáslav, as well as the thermal project at Pardu bice;in Hungary, Slovakia, Romania and Moldova, the startupof further new landfills that conform to EU standardsand the continuous optimizing of existing plants,as well as of vehicle fleets.With these activities, the AVE group will furtherstrengthen and expand its position as a fully integratedwaste-management company in Central Europe.6263