Corporate news: VERBUND results for quarters 1–2/2016


Adjusted results improved despite challenging environment, earnings impacted by non-recurring effects

In quarter 2/2016, wholesale electricity prices experienced a slight recovery in the European markets
compared with quarter 1/2016. However, the underlying conditions in the market remain challenging
due to rising electricity generation capacities, above all for generation from subsidised renewable
energy sources, in addition to weak demand for electricity resulting from the soft economy and the
effects of energy efficiency measures. All of these factors continue to expose European electricity
producers to heavy pressure.

VERBUND therefore recently presented the Group’s new programme to reduce costs and increase
efficiency, which aims to strengthen free cash flow and additionally reduce debt. The new programme
calls for drastically reducing growth and maintenance capex to a level of around €1bn in the
2016–2019 period. In addition to reducing expenses and increasing efficiency, the measures
contained in the programme also involve a further reduction of approximately 175 jobs by 2020. With
regard to personnel expenses and other operating expenses, we will essentially maintain 2015 cost
levels until 2019. We have also decided to reduce the payout ratio for the financial year 2016 to 30%
of the adjusted Group result.

The income trend in quarters 1–2/2016 was weaker than in the previous year (which was impacted by
positive non-recurring effects), above all as a result of impairment losses. However, the adjusted
results improved in spite of the difficult market climate, mainly thanks to reduced losses from thermal
operations and an improvement in the adjusted result for the Grid segment. The hydro coefficient
representing the water supply from rivers was 0.99, which is 4 percentage points below the level of
quarters 1–2/2015 and 1% below the long-term average. Generation from hydropower therefore
decreased by 595 GWh. Due to the significantly lower level of thermal generation coupled with lower
generation from new renewable energy sources, VERBUND’s own generation decreased by 7.7%
year-on-year to a total of 15,886 GWh. The difficult operating environment in the energy market was
reflected in lower average sales prices. Therefore, EBITDA decreased by 8.0% to €450.2m. The
Group result amounted to €153.9m, a decrease of 21.6% on the prior-year comparative. However, the
result for the first half of 2015 had included non-recurring income, whereas the result for the first half
of 2016 was reduced by non-recurring expenses such as impairment losses on the Romanian wind
farms, the Mellach combined cycle gas turbine power plant and the Gössendorf and Kalsdorf run-ofriver
power plants. After adjustment for non-recurring effects, the Group result increased by 7.9% to
€173.9m and adjusted EBITDA was up slightly (+1.8%) to €450.2m.

Outlook for 2016
On the basis of an average water supply and average wind levels in the second half year, we expect
EBITDA for financial year 2016 to amount to approximately €840m and the Group result to
approximately €270m, as announced in our ad hoc disclosure of 18 July 2016. The planned payout
ratio for 2016 will amount to around 30% of the Group result of approximately €290m after adjustment
for non-recurring effects.

Key figure Unit Q1-2/2015 Q1-2/2016 Change in %
Revenue €m 1,405.4 1,460.7 3.9
EBITDA €m 489.1 450.2 -8.0
Operating result €m 303.7 190.8 -37.2
Group result €m 196.3 153.9 -21.6
Earnings per share 0.57 0.44 -21.6
EBIT margin % 21.6 13.1
EBITDA margin % 34.8 30.8
Cash flow from operating activities €m 421.8 476.6 13.0
Free cash flow before dividends €m 463.5 364.8 -21.3
Gearing % 71.9 64.2
Further information and the interim report for quarters 1–2/2016 is available at > Investor Relations > Latest financial results.


Andreas Wollein Andreas Wollein

Head of Group Finance, M&A and Investor Relations

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