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2008 Interim Results of the Atel Group

Atel Holding Ltd (Atel Group), which operates throughout Europe, posted good results for the first half of 2008 despite difficult general conditions. Group profit rose by 11 % or CHF 36 million to CHF 374 million, while the consolidated operating profit (EBIT) was 7 % higher at CHF 478 million. Group revenue was 1 % lower at CHF 6.4 billion. With the aim of making an important contribution to Switzerland's future energy security, the Atel Group made sizeable investments in renewable energies and the promotion of energy efficiency, and in June 2008 submitted a general licence application for a new nuclear power station in Niederamt in the canton of Solothurn.

Higher net half-year profit

Olten-based energy services provider Atel Holding Ltd can look back on a successful first six months of business in 2008, in which Group profit reached a new high, rising by 11 % or CHF 36 million to CHF 374 million and consolidated operating profit (EBIT) climbed by 7 % or CHF 31 million to CHF 478 million. With the volume of energy sold down from 61.531 to 52.158 TWh (-15 %), Group revenue was roughly on a par with the previous year at CHF 6.4 billion (-1 %).

Energy Segment: Sound operating profit Operating profit generated by the Energy Segment remained sound, equalling the high level recorded in the previous year. Rising prices and stable production conditions had a positive impact on the results, while the ongoing decline in market value of the decommissioning and disposal fund for nuclear plants had a negative impact, as reflected in the company's holdings in Gösgen and Leibstadt nuclear power stations.

European market prices rose at the average rate for the half-year. Against this backdrop the Energy Segment generated sales in the first six months of 2008 of CHF 5,388 million (-4 %) and an operating profit of CHF 420 million (+1 %). The volume of energy sold dropped by 15 % to 52.2 TWh, primarily due to capacity restrictions for transits to Italy and regulatory constraints in Central Europe. Sales and revenue margins also fell as a result of adjustments to the product portfolio in Germany. In the Swiss market the segment succeeded in growing energy revenues compared to the previous-year period, largely on the back of higher average selling prices and a marked increase in the use of hydro power. Local sales were further expanded in Italy, driving revenue growth up.

The Trading, which was transferred to a new business division at the beginning of the year, had a difficult first six months in 2008, which mainly impacted trading in standard products. Staff shortages and the associated drop in proprietary trading activities have not yet been fully offset. While the requisite resources have largely been built up again, this will only impact standard product trading operations and volumes in the medium term. Asset Trading, the mainstay of the Trading unit, achieved good results in the traditional trading business. The volume of standard products traded with external counterparties amounted to 66 TWh, generating revenue of CHF 5.6 billion (previous year 103 TWh and CHF 8.2 billion respectively). Net income from trading in standard products with third parties amounted to CHF 12 million (2007: CHF 13 million) and, as in previous periods, is recorded under revenue.

Energy Services segment: best ever result Energy Services, comprising the Atel Installationstechnik Group (AIT) in Zurich and the GAH Group in Heidelberg, Germany, also put in another good performance, recording a sharp rise in sales and profit thanks to the sustained favourable order situation in Switzerland and Germany. Net revenue rose by 18 % in the first six months of 2008 from CHF 855 million to CHF 1,008 million. With an operating profit of CHF 58 million (+81 %), Energy Services achieved its best ever half-year result.

New nuclear power station in Niederamt/SO to ensure energy security In the interests of energy security in Switzerland, on 9 June 2008 the Atel Holding Ltd project company Kernkraftwerk Niederamt AG (KKN AG) submitted to the Swiss Federal Office of Energy (SFOE) a general licence application for a new nuclear power station in Niederamt, canton Solothurn. The move was prompted by the growing gap between supply and demand, which Atel estimates will reach around 25 TWh by 2035. Mindful of this problem, the Federal Council has aligned its energy policy to focus on energy efficiency, renewable energies, a foreign policy on energy, and large-scale power stations. Atel aims to make a major contribution to all four pillars of the government's energy policy. The Federal Council's attitude has encouraged Atel to draw up plans for a new nuclear power station. Atel has enjoyed a decades-long positive working relationship with the local authorities and population in Niederamt, in the canton of Solothurn. Niederamt also meets the technical criteria, particularly with regard to connectivity, cooling and space requirements. In terms of partners for the new nuclear power station, Atel is currently in talks with various interested parties, and in particular the current nuclear power station operators. Atel will develop the new-build project on its own until the definitive partner structure is in place for the new nuclear power station. Since the decision on the general licence application is subject to an optional referendum, Swiss voters may well have the last word on construction of the new facility.

Merger with EOS: Groundwork almost completed In the first half of 2008 further steps were taken and finalised ahead of the merger with EOS of Western Switzerland and possibly also the Swiss activities of the EDF Group. Completion of the share swap has simplified the shareholder structure while at the same time creating a single holding company. Shares in Aare-Tessin Ltd. for Electricity were delisted from the SIX Swiss Exchange on 28 June 2008, and on 30 June 2008 Atel Holding Ltd had 100 % control of Aare-Tessin Ltd. for Electricity. Spring 2008 saw the start of the mutual evaluation of assets. This process is scheduled for completion in the autumn, following which the operational activities and assets of EOS Holding and possibly also the Swiss activities of the EDF Group will be merged with the Atel Group and the resultant group will be renamed. Start of operations of the new group is foreseen for early 2009.

Outlook Atel expects the earnings trend to flatten off in the second half of 2008 compared with the same prior-year period. As things stand at present, Atel expects to close 2008 with Group profit slightly below the 2007 level and operating results on a par with the successful prior year. Net profit for the Atel Group is likely to be slightly lower, in view of the high income from financial participations and gains on foreign currencies which impacted the 2007 result.

Atel Holding Ltd Corporate Communications

Key figures of the Atel Group

 

Half-year
2007/1
Half-year
2008/1
Change
in %
Energy sales (TWh) *61.53152.158-15.2
Net revenue (CHF millions) *6 4426 379-1.0
Energy *5 5915 388-3.6
Energy Services8551 00817.9
Earnings before interest and tax (EBIT) (CHF millions)4474786.9
Group profit (CHF millions)33837410.7
As % of net turnover5.25.9-
Net investments (CHF millions) **103415302.9
Shareholders' equity (CHF millions)3 1524 01927.5
Number of employees ***8 7459 4918.5
* plus trading in standardised products
in TWh10366-
in CHF billions8.25.6-

** Excluding variance in time deposits and securities
*** Average number of full-time equivalent employees