VERBUND results for quarters 1-3 in 2014

VERBUND has successfully continued the restructuring of the thermal power plant in Austria and sold both French natural gas combined power plants in October 2014. The further decrease in the sales price for electricity, a lower channel flow than last year and the value adjustment of the wind farms in Romania are having negative impacts on results. The decline is particularly evident in comparison to results from the previous year during this period, which was characterized by an extensive positive non-recurring effect from the asset exchange with E.ON. In the first 3 quarters of 2014, the EBITDA sank by 42.8% to

633 million euros and the group earnings by 86.4% to 63.8 million euros. The EBITDA adjusted for non-recurring effects as well as group earnings sank by 25.4% to 688.1 million euros and by 48.5% to 174.2 million euros.

For the business year 2014, based on an average own generation of electricity from hydropower in the fourth quarter, the EBITDA of around 770 million euros and a group result of around 85 million euros is expected. The planned payout ratio for 2014 remains unchanged at around 50% of the group earnings adjusted to non-recurring effects, at around 190 million euros.

VERBUND continues to be active in a challenging environment. The economic growth stagnates, just as the electricity use. Additionally, negative energy-related economic effects make the situation for European energy suppliers even worse, as excess capacity and market distortions through public subsidies have an immediate effect on business development.

An important step in order to counter-act this situation is the successful restructuring of the thermal power plant production, which is quickly forging ahead. At the start of October, VERBUND came to an agreement with international investors KKR regarding the sale of the French natural gas combined power plants in Pont-Sur-Sambre and Toul. Thanks to this sale, the negative contribution to the results and the cash flow emanating from these power plants has now been stopped. Already at the end of July, the decision to withdraw from the Italian company Sorgenia was concluded. The company will be taken over by creditor banks. In this way VERBUND is relinquishing its 46% shares. In Austria, the oil-heated district power plant in Neudorf/Werndorf will be closed, as will the coal-fired power plant in Dürnrohr. The temporary closure of the natural gas combined power plant in Mellach is being held off due to a temporary order by a Styrian court.

The results for quarters 1-3 of 2014 were considerably lower than those for the previous year, but were nevertheless better than expected. The reason for the considerable reduction is mostly due to the results in 2013 being very positively influenced by the sale of Turkish activities and the simultaneous additional purchase of hydropower plants in Germany. The further decrease of the sales price for electricity, a lower channel flow than last year and the value adjustment of the wind farms in Romania were all further negative factors. A tax effect in relation to the sale of the French natural gas combined power plants had a positive impact. The EBITDA decreased by 42.8% to 633 million euros and the group earnings by 86.4% to 63.8 million euros. The EBITDA adjusted to non-recurring effects as well as the adjusted group earnings decreased by 25.4% to 688.1 million euros and by 48.5% to 174.2 million euros.

The VERBUND cost management programme is taking effect and is consistently followed. In this way, altogether over 130 million euros can be saved by 2015. Efficiency-increase measures at existing power plants will take priority regarding investment, as will the completion of the projects currently running. At the same time, the offer of energy-related services will be consistently upgraded; in October, the VERBUND GETEC Energiecontracting GmbH was introduced, which, subject to anti-trust approval, will begin with custom-made energy supply concepts for the industrial and manufacturing companies at the start of 2015.

VERBUND was able to increase its earnings forecast due to better than expected channel flow in the third quarter and margins from the electricity sector as well as additional cost decreases. For the business year of 2014, based on the average self-production of hydropower in the fourth quarter, an EBITDA of around 770 million euros and group earnings of around 85 million euros are expected. The forecasted payout ratio for 2014 remains unchanged at around 50% of the group earning adjusted to non-recurring effect, at round 190 million euros. Since 1.1.2014, the IFRS 11 "joint agreements" have replaced the IAS 31 "shares of joint ventures" rules which were in place up until then. The new rules lead to the shareholding in the Enns power plants limited company being classified as a joint venture. Due to this, reported figures have already been adjusted.

Although the results according to the IFRS 5 attributed to the French natural gas combined power plants can be shown separately from the activities to be pursued, the key figures more significantly relate to the summarised results from continuing and non-continuing activities undertaken by the group.

For more information and for the interim report for quarters 1-3/2014, please visit: www.verbund.com/investor-relations