Considerable Increase of EGL Group's Profit

EGL kept to its strategy as an asset-based energy trader in the financial year 2006/07. EGL’s first gas-fired combined-cycle power plant in Italy went on stream at the end of May this year, thus marking further significant progress with building up proprietary assets and adding them to its portfolio. The shift from traditional physical electricity sales to energy derivatives trading resulted in a 2% decline
in physical energy sales to 76.0 TWh and a reduction of 8% in consolidated net sales to CHF 5,890.4 million. Revenues from trading energy derivatives and emission certificates rose 23% to CHF 89.4 million, while energy procurement and the cost of goods dropped by 10% to CHF 5,339.3 million, driving the gross margin up 26% to CHF 551.1 million.

Expenditures with personnel rose in line with expectations to CHF 107.5 million (+29%) on the back of a 31% increase in average headcount to 477 FTEs. Other operating expenditures saw a 46% increase as a result of EGL’s expansion as well as the costs of various other projects. After depreciation and amortization of CHF 34.6 million (+7%), primarily with respect of grid installations as well as fixtures and fittings, the EGL Group posted an increase of 7%, or CHF 22 million, in operating profit before interest, tax, depreciation and amortization (EBITDA) to CHF 330.7 million. Operating profit before interest and tax (EBIT) was also 7% higher at CHF 296.1 million. The result from associates was up 13% at CHF 22.2 million.

Highest net profit in EGL history

Three special factors, adding up to CHF 353.1 million, had a positive impact on earnings before tax (EBT), which rose 92% to CHF 566.5 million. Firstly, in September 2007, EGL AG sold its 13.78% investment in French energy supplier Electricité de Strasbourg to Electricité de France Group, thereby creating a value of CHF 243.6 million. Secondly, provisions, or money set aside for would-be onerous energy procurement contracts were released in the amount of CHF 85.0 million. And thirdly, a provision of CHF 24.5 million for green certificates was also released.

Such earnings resulted in consolidated income tax of CHF 117.1 million (previous year: CHF 48.1 million) allowing for an after-tax profit of CHF 449.4 million (+82%) for the financial year 2006/07.

Higher assets due to investments

EGL's total assets rose by CHF 1,034.5 million to CHF 5,453.9 million since the end of the last financial year. The company’s non-current assets were at CHF 2,285.0 million, mainly due to robust
and sustained investments in gas-fired combined-cycle power plants in Italy. Positive replacement values grew by CHF 408.7 million to CHF 888.1 million following stronger trading.

Cash flow from operating activities in line with expectations

At CHF 157.0 million, cash flow from EGL Group’s operating activities was higher by CHF 7.5 million, year-on-year. Cash flow from investments dropped to CHF 176.4 million (previous year CHF 509.5 million). Investments mainly concerned the gas-fired combined-cycle power plants under construction in Italy. Cash flow from finance activities amounted to CHF 196.2 million (previous year CHF 594.0 million) resulting in free cash flow of some CHF -9.1 million (previous year CHF -311.8 million.) Cash and cash equivalents were up 38%, or CHF 187.9 million, to CHF 683.8 million.

Equity ratio remains solid

Equity capital including minority interests rose 15% to CHF 1,928.3 million from the end of the previous financial year. At 35.4%, (previous year 37.8%) the equity ratio remains solid.

Dividend seen unchanged

Robust and sustained investments remain necessary to enable EGL build up and expand its assets, while also develop new business areas. Under such circumstances, the Board of Directors shall propose the Shareholders’ Annual General Meeting an unchanged dividend at CHF 18 per share.

Organisational changes

Jean-Claude Scheurer, the head of the Markets South division, has decided to pass on his operational responsibilities and take early retirement at the end of 2007. The departments bundled together as the Markets South division will now be redistributed internally. Jean-Claude Scheurer has worked for EGL for the past 14 years and was appointed one of its directors in 2004. Under his long-term stewardship, the Markets South division has contributed a considerable sum towards our overall results. The Board of Directors and the Executive Management of EGL would like to thank Jean-Claude Scheurer for his many years of service and great dedication, and wish him all the best in the future.

Future high investment levels foreseen

EGL expects European energy markets to remain challenging in the 2007/08 financial year, whereas trading business to remain volatile. Consistent with its strategy, the Group will continue to invest in building up and expanding its business fields. The main areas of focus will be on commissioning the Rizziconi and Ferrara gas-fired combined-cycle power plants in Italy, further development of the Trans Adriatic Pipeline project, and other forward-looking, asset-related projects. EGL expects to close the current financial year with annual profit on a par with the 2006/07 profit, adjusted for the aforementioned positive extraordinary factors.


Further Information

Media:
Lilly Frei, Head Corporate Communication
Tel.: +41 44 749 40 10; media.ch@egl.eu

Investors:
Dominik Anderhalden, Head Investor Relations
Tel.: +41 44 749 46 15; investor.ch@egl.eu

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