Adhoc: VERBUND 2013 results: income trend impacted by non-recurring effects

3/5/2014Vienna

In 2013, VERBUND was confronted with a difficult market environment. This was characterised by falling wholesale electricity prices – the result of massive overcapacity in electricity generation, an oversubsidisation of renewable energy and a non-functioning CO2 market. Unprofitable gas power plants also had an adverse effect on performance.

The operating business was impacted by the good water supply in rivers in 2013. At 1.07, the hydro coefficient was 7.0% above the long-term average, but 4 percentage points below the prior-year comparative. Generation from hydropower nonetheless rose by 458 GWh as a result of the acquisition of shares in German hydropower plants on the Inn River. At 35,539 GWh, VERBUND’s total own generation in 2013 was 311 GWh higher than in the previous year.

The decline in wholesale electricity prices and the difficult economic environment for gas power plants put pressure on operating activities. In addition, the income trend was also influenced by significant non-recurring effects. Successful completion of the asset swap with German utility E.ON had a positive effect, while impairment losses resulting from impairment tests – particularly for gas power plants and the minority interest in the Italian company Sorgenia S.p.A. – had a negative effect.

EBITDA improved year-on-year by 4.9% to €1,296.4m. EBITDA adjusted for non-recurring effects declined to €1,154.5m (–9.7%).

The Group result increased by 49.0% to €579.9m. At €384.5m, the Group result adjusted for non-recurring effects was 38.5% lower than in 2012.

Discontinued operations
Effective 11 December 2013, the two French combined cycle gas turbine power plants in Pont-sur-Sambre and Toul were classified as “held for sale”, including the intangible assets and other receivables closely associated with them. Since the French combined cycle gas turbine power plants also represent a geographical area of operation, the results attributable to them must be presented separately from continuing operations. Result after tax from discontinued operations amounted to €–351.4m (2012: €0.2m).

Dividend for 2013
As announced, a dividend of €1 per share will be proposed for financial year 2013 at the Annual General Meeting on 9 April 2014. This dividend will be made up of a basic dividend of €0.55 per share plus a special dividend of €0.45 per share. The reason for distributing a special dividend is the successful completion of the asset swap with E.ON in 2013.

Outlook for 2014
Based on average own generation from hydropower, we expect EBITDA for financial year 2014 to be approximately €850m and the Group result to be approximately €150m. For 2014, we are planning a payout ratio of around 50% of the Group result adjusted for non-recurring effects.

Key figures Unit 2012 2013 Change in %
Revenue €m 3,174.3 3,269.9 3.0
EBITDA €m 1,235.4 1,296.4 4.9
Operating result €m 900.2 147.1 –83,7%
Group result €m 389.3 579.9 49.0
Earnings per share 1.12 1.67 49.0
EBIT margin % 28.4 4.5
EBITDA margin % 38.9 39.6
Cash flow from operating activities €m 1,034.7 837.4 –19,1%
Free cash flow €m –164,4 546.7
Gearing % 64.9 66.1
(Proposed) dividend per share 0.60 1.00 66.7

Although the result attributable to the French CCGTs is to be presented separately from continuing operations in accordance with IFRS 5, the key figures relate to the combined result from the Group’s continuing and discontinued operations in order to provide better informative value.

Contact

Andreas Wollein Andreas Wollein

Head of Group Finance, M&A and Investor Relations

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