Significant share of income from domestic regulated network and district heating. Competitive, low-cost hydropower generation asset base. Conservative use of financial leverage. Exposure to unregulated energy supply and volatile wholesale market in Central Europe. Weakening profitability of network business following regulatory period reset. Comparatively small size and limited geographic diversification. Prices have materially improved since early 2016, benefitting KELAG's earnings with some delay due to hedging tenors. Further increases in merchant prices for Austria are expected due to the Austrian-German price zone split. At the same time, we remain cautious about recovery prospects because we expect price volatility to increase due to the higher penetration of renewables and more frequent extreme weather conditions all over Europe. In addition, KELAG's large
