Operating result up despite extraordinarily weak water supply

The Group succeeded in increasing its operating result in quarters 1–2/2011, despite the far below-average water supply in quarter 2/2011. At 0.86, the hydro coefficient in the first half of 2011 was 14% below the long-term average (6 percentage points below the previous year’s level). This had a negative impact of €82.5m on the operating result. Generation from annual storage power plants was also below the previous year’s level. Thus, VERBUND’s own generation from hydropower fell 6.0% year-on-year to 11,752 GWh. In contrast, generation from thermal power rose 34.1% year-on-year to 2,454 GWh. Overall, VERBUND’s own generation decreased by slightly less than 1%.The Group result was impacted in particular by the negative result from equity interests. Foreign exchange losses from the measurement of liabilities denominated in foreign currency on the part of the Turkish joint venture, the lack of positive effects on earnings from tax benefits for investments at the Italian company Sorgenia Holding S.p.A. (Group) and the difficult market situation as well as restructuring at the French company POWEO S.A. (Group) and its subsidiaries resulted in a significant decrease in the contribution to the result of foreign equity interests.

European wholesale prices rose following the nuclear crisis in Japan and the German moratorium on nuclear power. VERBUND sells the majority of its annual own generation one year in advance as part of its hedging strategy. Thus, the development of wholesale prices is not directly reflected in the 2011 half-year result, but rather in the 2012 results.

Gradual pullout from the French market
In July VERBUND signed agreements to sell the French renewables portfolio. The closing is expected in the second half of 2011.

Interest in power plants on the Inn River sold
The sale of shares of the Bavarian power plants on the Inn River, which had already been announced at the time of acquisition, was completed at the beginning of July 2011. The Austrian energy providers WIEN ENERGIE and EVN together now hold a 26% interest. VERBUND’s original acquisition price plus a reasonable interest rate was agreed as the purchase price.

Outlook on the full year
Assuming an average supply of water in the second half of 2011, we expect our operating result as well as the Group result for 2011 to remain at nearly the same level as in the previous year. Dividends will be oriented on a payout ratio of 45% to 50%.