VERBUND AG — Earnings Release 2011

Oct 27, 2011

News Details

Ad-hoc | 27 October 2011 08:00

VERBUND AG: VERBUND Q1-3/2011: Operating result up despite weak water supply

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

27.10.2011 08:00

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The issuer is solely responsible for the content of this announcement.

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VERBUND, Austria's leading utility, presents an improved operating result
for quarters 1-3/2011 despite weak water supply. The operating result was
influenced by impairment tests on VERBUND power plants, while the Group
result was impacted by negative measurement effects and foreign currency
losses.

Key figures
Unit Q1-3/ Q1-3/ Change
2011 2010
Revenue EURm 2,808.1 2,406.0 16.7%
Operating result before effects from
impairment tests EURm 645.3 625.8 3.1%
Operating result EURm 847.6 625.6 35.5%
Return on sales (EBIT margin) % 30.2 26.0 -
EBITDA EURm 821.0 795.8 3.2%
EBITDA margin % 29.2 33.1 -
Group result EURm 313.3 334.0 -6.2%
Earnings per share EUR 0.90 1.08 -16.8%
Cash flow from operating activities EURm 638.1 516.6 23.5%
Gearing % 81.4 151.9 -

Changes in the energy market environment led to special effects due to
impairment tests

The value of VERBUND's hydropower plants changed positively for the long
term after Germany's phase-out of nuclear energy. This is confirmed on the
one hand by the significant commitment of decision-makers to expand
renewable energy and on the other hand by the higher sales margins of
certified electricity generation from hydropower. In addition, VERBUND
currently presumes that a positive regulatory environment for renewable
energies will still be existent in the future. In order to account for this
operating environment, the Danube power plant Freudenau and the
run-of-river power plant chains Mittlere Salzach and Obere Drau were tested
for impairment. These power plants were written down by EUR480.9m in the
course of the deregulation of the European electricity industry in 1998.
The reversal of impairment losses (requirement to reverse impairment
losses) resulting from the current impairment test amounts to a total of
EUR312.6m. At the same time, the market conditions for gas power plants in
Europe have deteriorated. Therefore, the combined cycle gas turbine power
plant under construction in Mellach was tested for impairment as at 30
September 2011 due to the current difficult market situation for gas power
plants. The write-down resulting from the impairment test amounts to a
total of EUR110.3m.

Adjusted and unadjusted operating result improved despite weak water supply

The operating result is influenced by the effects of impairment tests
described above and at EUR847.6m is up 35.5% over the prior year's level.
Adjusted for the net positive effects from impairment tests, the operating
result is EUR19.4m or 3.1% over the prior year's amount, despite the
extraordinarily weak water supply. This can be attributed mainly to
internal cost-savings, increased generation from thermal power plants and
higher electricity prices on the spot market.
At 0.88, the water supply in quarters 1-3/2011 was 12% below the long-term
average and 9 percentage points below the previous year's level. Therefore,
the run-of-river power plants generated less electricity. Generation from
storage power plants was also 6.7% below the prior year's level. Overall,
VERBUND's electricity generation from hydropower fell 7.9% year-on-year to
18,883 GWh. In contrast, generation from thermal power increased by 17.4%
to 3,478 GWh.

Group result negatively impacted by result from equity interests

The Group result fell 6.2% to EUR313.3m in quarters 1-3/2011 year-on-year.
This development can be attributed mainly to negative effects from foreign
interests accounted for using the equity method. For instance, the existing
natural gas supply agreement for the Pont-sur-Sambre combined cycle gas
turbine power plant in particular had to be recognised at fair value
through profit or loss for the first time in quarter 3/2011. In addition,
above all non-cash-related foreign currency measurements as a result of the
further sharp depreciation of the Turkish lira against the euro impacted
the result from equity interests in Turkish joint ventures.

Outlook on the full year

For 2011 overall, VERBUND expects an operating result of around EUR1bn
(excluding effects from impairment tests: around EUR800m) and a Group
result of around EUR380m. The calculations were based on an average water
supply for the remaining year. Dividends will be oriented on a payout ratio
of 45% to 50%.

Please find further information and the interim report quarters 1-3/2011 at
www.verbund.com

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.com

27.10.2011 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
Austria
Phone: 0043-1-53113-52616
Fax: 0043-1-53113-52694
E-mail: investor@verbund.com
Internet: www.verbund.com
ISIN: AT0000746409
WKN: 877738
Indices: ATX
Listed: Regulierter Markt in Frankfurt (General Standard);
Freiverkehr in Berlin, Düsseldorf, Hamburg, München,
Stuttgart; Wien (Amtlicher Handel / Official Market)

End of Announcement DGAP News-Service

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