VERBUND AG — Earnings Release 2010

Oct 28, 2010

News Details

Ad-hoc | 28 October 2010 08:00

VERBUND AG: Q1-3/2010: Declining results – capital increase planned for November

VERBUND AG / Key word(s): Interim Report/Interim Report

28.10.2010 08:00

Dissemination of an Ad hoc announcement, transmitted by DGAP - a company of
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The issuer is solely responsible for the content of this announcement.

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Verbund Q1-3/2010: Declining results - capital increase planned for
November

VERBUND, Austria's leading electricity company presents declining results
for Q1-3/2010 as it did for Q1-2/2010. However, the operational business
has stabilised significantly in Q3/2010.

Ratios Unit Q1-3/2009 Q1-3/2010 Change
Sales EUR m 2,446.7 2,406.0 -1.7%
Operating Result EUR m 802.9 625.6 -22.1%
Group Result EUR m 551.8 334.0 -39.5%
Economic Value Added EUR m 302.7 88.8 -70.7%
Gearing % 143.6 151.9 5.8%
Operating Cash Flow EUR m 707.3 516.6 -27.0%

The key performance measures display the following development: the EBIT
margin decreased from 32.8 % to 26.0 %, gearing increased from 143.6 % to
151.9 % and operating cash flow declined from EUR 707.3 million to EUR
516.6 million. The economic value added, VERBUND's key performance measure
for value creation, declined by EUR 213.9 million to EUR 88.8 million.

Following a period of well below average water supply from rivers in the
first half of 2010, the hydro coefficient increased above the long-term
average in Q3/2010. Despite this recovery in water supply from rivers, the
hydro coefficient of 0.97 for Q1-3/2010 was 3 % points below the long-term
average and 10 %-points below the extraordinarily high figure of the
previous year.

This resulted in a considerable reduction of electricity production from
run-of-river power plants. Generation from annual storage power plants also
declined due to lower inflows in relation to the comparative period of the
previous year. However, VERBUND's reduced power generation from hydro power
was countervailed by the acquisition of the Bavarian Inn power plants in
August 2009. Therefore, total generation only declined by 4.5 % from 21,472
GWh to 20,513 GWh compared to the previous year.

In contrast, thermal generation rose by 95.5 % to 2,962 GWh compared to
2009. Approximately 50% of this increase is due to VERBUND's procurement
rights from the POWEO-power plant in Pont-sur-Sambre (France) which began
operations at the end of September 2009.

The relevant spot prices for the current fiscal year have recently shown a
stable development. In Q3/2010, electricity spot prices were on average 2
EUR/MWh above the prices of the first half 2010. Overall, wholesale prices
fluctuated unchanged at relatively low levels.

Due to the positive factors mentioned above, the operational business
stabilised in Q3/2010. While the operating result decreased by
approximately 28 % in the first half of 2010, the operating result after
the first three quarters of EUR 625.6 million was below the previous year's
level by 22.1 %.

In Q3/2010, the group result was negatively affected by one-off effects in
the financial result, especially due to the impairment of the participating
interest in Poweo S.A. based on a significant drop in Poweo S.A.'s share
price. This, however, was countervailed by positive exchange rate
developments at Enerjisa Enerji Üretim A. S. in Turkey as well as positive
tax effects from investment privileges relating to Sorgenia S.p.A. (Group)
in Italy. Therefore, the group result decreased by 39.5 % to EUR 334.0
million in relation to the previous year.

Capital increase approved by shareholders

In an Extraordinary General Meeting (EGM) on 24 September 2010, the
shareholders of VERBUND AG resolved on the creation of an authorised
capital for the planned capital increase of approximately EUR 1 billion.
The authorisation was accepted with a majority vote of 99.9 %. This
confirms the support of the shareholders of VERBUND for the capital
increase.

Based on the resolution of the Council of Ministers in August 2010, the
Austrian parliament enacted the enabling act for the participation of the
Republic of Austria in the capital increase in its meeting on 20 October
2010. Besides the Republic of Austria, which holds 51% of the shares of
VERBUND, the other major shareholders - EVN AG, Wiener Stadtwerke Holding
AG und TIWAG - have announced their participation in the capital increase
via full or significant exercise of their subscription rights.

The execution of the capital increase is planned for November 2010, with
the exact timing being dependent on the market environment. The capital
increase should provide VERBUND AG with additional flexibility to implement
its long-term investment plan as well as for further growth of the company.
The investments include large power plant projects such as the pumped
storage power plants Limberg II and Reißeck II but also the important
expansion of the high-voltage grid in Austria. At the same times the
capital increase will strengthen VERBUND's capital structure and secure a
solid rating in the 'A' area.

Outlook

Under the assumption of average water supply from rivers in Q4/2010 and
stable wholesale prices, VERBUND expects a decrease in the operating result
by a maximum of 25% compared to 2009. Due to negative one-off effects in
the financial result, the forecast for the group result 2010 had to be
lowered. VERBUND now expects a decline of approximately 35 %. The dividend
will be in line with the payout ratio of 45 to 50 %.

Please find further information and the interim report Q1-3/2010 on
www.verbund.at

'NOT FOR RELEASE; PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES
OF AMERICA, CANADA, JAPAN, AUSTRALIA OR TO U.S. PERSONS'

This document serves solely marketing purposes in Austria and does not
constitute an offer of securities for sale, a solicitation of an offer to
purchase or to subscribe for securities of VERBUND AG. A public offer of
securities of VERBUND AG may only be made in Austria after publication of a
prospectus prepared in accordance with the provisions of the Austrian
Capital Markets Act. Any orders for the purchase of securities of VERBUND
AG received prior to the commencement of a public offer in Austria will be
rejected. If a public offer of securities of VERBUND AG is made in
Austria, a prospectus prepared in accordance with the Austrian Capital
Markets Act will be published.

This information is not for release, publication or distribution in or into
the United States of America and may not be distributed to U.S. persons (as
defined in Regulation S under the U.S. Securities Act of 1933, as amended
(the 'Securities Act')) or publications with a general circulation in the
United States, except to persons reasonably believed to be qualified
institutional buyers ('QIBs') as defined in Rule 144A of the Securities
Act. This information does not constitute an offer of securities for sale,
a solicitation of an offer to purchase or to subscribe for securities of
VERBUND AG in the United States. The securities of VERBUND AG may not be
offered, sold or delivered in the United States or to or for the account or
benefit of U.S. persons, unless registered under the Securities Act or
pursuant to an exemption from such registration. The securities will not
be registered under the Securities Act. There will be no public offer of
securities of VERBUND AG in the United States.'

Contact:
Andreas Wollein
Head of Group Finance and Investor Relations
T.: +43 (0)5 03 13 - 52604
F.: +43 (0)5 03 13 - 52694
mailto:investor@verbund.at

28.10.2010 DGAP's Distribution Services include Regulatory Announcements,
Financial/Corporate News and Press Releases.
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Language: English
Company: VERBUND AG
Am Hof 6A
1010 Wien
Österreich
Phone: 0043-1-53113-52616
Fax: 0043-1-53113-52694
E-mail: andreas.wollein@verbund.at
Internet: www.verbund.at
ISIN: AT0000746409
WKN: 877738
Indices: ATX
Listed: Regulierter Markt in Frankfurt (General Standard);
Freiverkehr in Berlin, Stuttgart, Hamburg, München,
Düsseldorf; Foreign Exchange(s) Wien (Amtlicher Handel /
Official Market)

End of Announcement DGAP News-Service

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