Interim report quarters 1-3/2021

Creating sustainable value. Renewable energy powered

by VERBUND.

Interim report quarters 1-3/2021

INTERIM FINANCIAL REPORT Contents

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Contents

At a glance ..................................................................................................................................................................	4
Report of the Executive Board ............................................................................................................................	5
Investor relations .....................................................................................................................................................	7
Interim Group management report .................................................................................................................	9
Business performance ...................................................................................................................................	9
Opportunity and risk management .......................................................................................................	17
Segment report ...............................................................................................................................................	18
Events after the reporting date .................................................................................................................	26
Consolidated interim financial statements ................................................................................................	27
Income statement ..........................................................................................................................................	27
Statement of comprehensive income ....................................................................................................	28
Balance sheet ..................................................................................................................................................	29
Statement of changes in equity ................................................................................................................	30
Cash flow statement .....................................................................................................................................	32
Selected explanatory notes ........................................................................................................................	34
Responsibility statement of the legal representatives ............................................................................	53

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At a glance

• At 0.99, the hydro coefficient (water supply, run-of-river) was 1 percentage point below the long-term average in quarters 1- 3/2021 but 1 percentage point above the prior-year figure.
• Average sales prices obtained for own generation from hydropower up €7.4/MWh to €51.3/MWh.
• Results for the quarters improved: EBITDA (+ 16.3%) and Group result (+23.0%) up.
• Strong performance by VERBUND shares in quarters 1- 3/2021 (+25.6%) - significantly better than the STOXX Europe 600 Utilities (-6.4%) but below the ATX (+31.6%). New record of €95.6 for VERBUND shares on 14 September 2021.
• Earnings forecast for 2021 increased due to strong energy market environment as at 12 October 2021: EBITDA to reach between around €1,490m and €1,590m and Group result to reach between around €740m and €810m based on expectations of average levels of own generation from hydropower and wind power in quarter 4/2021 as well as the opportunities and risks identified.

KPIs

		Unit		Q1- 3/2020		Q1- 3/2021		Change
Revenue		€m		2,522.7		1,790.6		- 29.0%
EBITDA		€m		989.5		1,150.6		16.3%
EBITDA adjusted		€m		989.5		1,150.6		16.3%
Operating result		€m		692.9		843.6		21.8%
Group result		€m		477.7		587.4		23.0%
Group result adjusted		€m		468.3		566.2		20.9%
Earnings per share		€		1.38		1.69		23.0%
EBIT margin		%		27.5		47.1		-
EBITDA margin		%		39.2		64.3		-
Cash flow from operating activities		€m		852.3		510.6		- 40.1%
Additions to property, plant and equipment		€m		362.1		430.0		18.8%
Free cash flow before dividends		€m		427.1		- 264.1		-
Free cash flow after dividends		€m		135.8		- 595.8		-
Average number of employees				2,858		3,110		8.8%
Electricity sales volume		GWh		47,344		44,194		- 6.7%
Hydro coefficient				0.98		0.99		-
New renewables coefficient				1.02		0.88
		Unit		31/12/2020		30/9/2021		Change
Total assets		€m		12,054.2		15,140.5		25.6%
Equity		€m		6,873.9		6,631.7		- 3.5%
Equity ratio (adjusted)		%		59.1		45.1		-
Net debt		€m		1,881.2		2,776.3		47.6%
Gearing		%		27.4		41.9		-

INTERIM FINANCIAL REPORT Report of the Executive Board

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Report of the Executive Board

Dear Shareholders,

The energy market environment for the development of our business continued to present a very positive picture. Prices for primary energy sources in particular rose sharply in quarters 1-3/2021.Below-average gas storage inventories, unfavourable weather conditions and interruptions to supply in an environment in which demand was recovering from the COVID-19 lows were driving forces behind the substantial increase in natural gas and coal prices worldwide. China, too, was asking for more liquefied natural gas (LNG). Prices for European CO2 emission rights likewise increased significantly at the same time, thus also pushing up wholesale electricity prices in Europe, which are fuelled by primary energy prices and prices for CO2 emission rights. Wholesale electricity prices in Europe are a key value driver of VERBUND's business performance.

VERBUND's share price also benefited from this positive market environment, reaching a new all-time high of €95.55 on 14 September 2021. VERBUND's market capitalisation on this date thus amounted to around €33.2bn.

VERBUND is ideally positioned in this environment as a hydropower producer with an increasing share of new renewables. Our strategy envisages that by 2030 a total of 20- 25% of the electricity VERBUND generates will come from new renewable sources of energy in Europe. However, not only are we in a energy transition but also in a network transition. Our activities relating to the electricity grid (Austrian Power Grid (APG)) and gas network (Gas Connect Austria GmbH (GCA)), which need to be expanded on a large scale in order to achieve the ambitious climate targets, as well as our electricity trading and sales activities have moved us into new fields of application. These will play an important role in the successful implementation of the energy and network transition over the coming years. The secure power supply does, however, also provide the basis for a state-of-the-art, sustainable and digital society. APG, with its electricity infrastructure, is therefore a key factor for the integration of renewable energy in Austria. Here the aim is to generate 100% of electricity (national balance) from renewable energy sources by 2030. The Limberg III pumped storage power plant, the construction of which was kicked off in September, will also make a significant contribution to the achievement of the 100% target - specifically, to make electricity available as and when it is needed from forms of generation that are dependent on the weather and the time of day. VERBUND's investment of €480m in this project not only provides an economic stimulus that is vital right now, but also supports Austria's progression to achieving carbon-free electricity generation. The acquisition of the shares in Gas Connect Austria GmbH (GCA) as of 31May 2021 also improves VERBUND's business profile and puts it in an excellent position in terms of sector coupling and the development of a green hydrogen system.

VERBUND's results in quarters 1- 3/2021 were very encouraging. EBITDA increased by 16.3% to €1,150.6m, while the Group result rose by 23.0% to €587.4m. The adjusted Group result increased by 20.9% to €566.2m. At 0.99, the hydro coefficient for the run-of-river power plants was 1 percentage point below the long-term average and 1 percentage point above the comparative prior-year figure. Generation from annual storage power plants fell by as much as 10.7% in quarters 1- 3/2021 due to reduced turbining. Generation from hydropower thus decreased by a total of 589 GWh compared with the prior-year reporting period. However, the marked increase in wholesale electricity prices on the spot markets gave