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 EUR1bn 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 EUR450.2m. The Group result amounted to EUR153.9m, 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-of-river power plants. After adjustment for non-recurring effects, the Group result increased by 7.9% to EUR173.9m and adjusted EBITDA was up slightly (+1.8%) to EUR450.2m.

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 EUR840m and the Group result to approximately EUR270m, 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 EUR290m after adjustment for non-recurring effects.

KPIs
	Unit	Q1-2/2015	Q1-2/2016	Change
Revenue	EURm	1,405.4	1,460.7	3.9%
EBITDA	EURm	489.1	450.2	-8.0%
Operating result	EURm	303.7	190.8	-37.2%
Group result	EURm	196.3	153.9	-21.6%
Earnings per share	EUR	0.57	0.44	-21.6%
EBIT margin	%	21.6	13.1	-
EBITDA margin	%	34.8	30.8	-
Cash flow from operating activities	EURm	421.8	476.6	13.0%
Free cash flow before dividends	EURm	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 www.verbund.com > Investor Relations > Latest financial results.

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