Consolidated companies and consolidation methods  [Certified Content]

Österreichische Elektrizitätswirtschaft-Aktiengesellschaft (Verbundgesellschaft) is the parent company. All companies that are controlled by the parent company ("subsidiary") are included, through full consolidation, in the consolidated financial statements. A controlling influence exists when the parent company is in the position to influence, either directly or indirectly, the financial and business policies of the company. The inclusion of a subsidiary commences at the time at which the controlling influence is acquired and concludes when this is forfeited.

Companies that are controlled jointly with another company ("joint ventures") and companies over which the parent company, either directly or indirectly, has significant influence ("associated companies") are accounted for using the equity method.

The first-time inclusion of a subsidiary is carried out using the purchase method by allocating the acquisition costs to the identifiable assets and liabilities of the aquiree. Any excess of the cost of acquisition over the amount so allocated, i.e. the fair value of the net assets, represents goodwill.

Group-internal transactions, accounts receivable and payable and material inter-company profits are eliminated.

ÖVG-Leasinggesellschaft m.b.H., a non-consolidated company in 2002, merged with Verbundgesellschaft in fiscal 2003. Additions and disposals are shown below as changes in the companies consolidated.

As in fiscal 2002, the consolidated financial statements include the parent company Verbundgesellschaft, 10 subsidiaries and 7 associated companies.

Affiliated companies not included in the consolidated statements ("Group companies of Verbundgesellschaft") do not, as a whole, have any material influence on the consolidated financial statements.

Apart from the parent company, the following companies are consolidated:

On 11 June 2003, Verbund and the partner companies of EnergieAllianz (EVN, Viennastrom, BEWAG, Linz AG and Energie AG Oberösterreich) received the official approval of the European competition authorities to implement the Austrian Electricity Solution. The Austrian Electricity Solution aims at establishing a cooperation in the areas of electricity trading and sales to major customers. The cooperation will be further enhanced through joint plant utilization planning and plant management.

A number of conditions were attached to the approval granted by the European competition authorities. In particular, the share Verbund holds in the distribution subsidiary VERBUND-Austrian Power Vertriebs GmbH has to be sold to an independent third party within six months of the electricity solution being approved. At the end of 2003, the European competition authorities extended the deadline by a further four months. No steps towards implementing the solution may be taken prior to the fulfillment of these conditions.

In fiscal 2003, the group’s share in VERBUND-Austrian Power Vertriebs GmbH was reduced from 75 % to 55 % through dilution in connection with a capital increase for cash as well as through the divestment of shares.