Dear ladies and gentlemen, welcome to the conference call of will be recorded. As a reminder, all participants will be in a listen only mode. After the presentation, there will be an opportunity to ask questions. Will be recorded. May now hand you over to Peter Kollmann, who will lead you through this conference.
Please go ahead, sir.
Thank you. Ladies and gentlemen, Andreas Wallen and I would like to welcome you to our presentation for the Q1 2021, and I would like to thank you for joining today's conference call. Before we move into analysis of our business development, I'd like to make a few general comments about the Q1. The year 2021 started well for Verbund with relevant energy market conditions improving Despite COVID-nineteen, electricity wholesale prices improved above all due to rising prices for CO2 certificates and, of course, the strong commitment from EU member states is a very important step towards a comprehensive decarbonization of our energy system. As I said, COVID-nineteen had no detrimental effect on our strategy and on the execution of our strategy.
In addition, we have reached 2 important milestones. Number 1, we decided to go ahead with Lindbergh 3, which is a very large pump storage power plant with a capacity of 4 80 megawatts in the Alps and investment cost of approximately EUR 500,000,000. And the 2nd milestone is to support our very strong sustainable track record, we placed a very innovative EU taxonomy alliance green and sustainability linked bond with a 20 year maturity, senior unsecured with an amount of EUR 500,000,000. We had very, very high demand of an oversubscription of 4.4x, and we had a very positive echo across the world for this global innovation. Against this background, let me now present the figures for the Q1 2021.
At the beginning, let me highlight has the most important influencing factors. Based on our hedging strategy for our own electricity generation from hydropower, The average achieved contract price was higher compared to the Q1 2020. It increased by €1,700,000 to €47,600,000 The hydro coefficient, as you know, determining the generation from Ruhan River hydropower plants was lower than the long term average and considerably lower than in the Q1 2020. We also saw slightly lower contributions from flexibility products in all categories of those products except intraday trading and the results development was also negatively influenced by lower contributions from the grid segments. Now the impact of these influencing factors on the key figures is as follows.
EBITDA decreased by 8.6 percent to EUR 302 EUR 1,000,000, the group result decreased by 7.6 percent to EUR 144,700,000. The operating cash flow was at a level of EUR 203,000,000 and the free cash flow was positive at a level of EUR 35,300,000. That allowed us to reduce the debt level further. Net debt decreased by 2.3% to a level of SEK 8 point is €838,000,000,000. Let me now give you our adjusted outlook for the business year 2021.
The adjustments caused by higher expected average achieved contract prices. We now expect an EBITDA between is approximately SEK 1,130,000,000 to SEK 1,300,000,000 and a group result between approximately EUR 480,000,000 to EUR 590,000,000. The payout ratio will be between 45% 55% of the adjusted group results. As always, the guidance is under the assumption of average hydro and wind generation for the remaining quarters as well as the chances and the risks, which we incur in our business model. On the next page, a few charts which will explain how the implanting factors on the results development in slightly more detail.
With regard to the hydro coefficient, we saw slightly higher levels in January compared to last year, but much lower levels in February March. At 0.99, the hydro coefficient, which, as you know, is an index quantifying the hydropower generation of the Ronald River power plants was 1 percentage point below the long term average, but and that is a huge number, 10 percentage points below the level of the Q1 2020. In addition, the production from annual storage power plants also decreased by approximately 15% due to less turbanim. Own production from hydropower, therefore, decreased by is 7 60 gigawatt hours or 11% compared to the Q1 2020. Generation from thermal power plants was down by 77% or 4 44 gigawatt hours, is stemming from decreased use of our CCGT Mella for concession management.
Generation from wind power also decreased by 62 gigawatt hours or close to 20% due to less favorable wind conditions is in Austria, Germany and Romania. A second important influencing factor on our results
are, of
course, the average achieved contract prices. At the end of the Q1 2021, based on our hedging strategy, we achieved an average contract price of €44,900,000 for 2021, Whereas for the full year 2020, we achieved EUR 44.6. Please note that we have already hedged approximately 77% of the volumes for 2021 in the Q1. On a mark to market basis, and this is important. As of 26th April 21, we calculate with a price of close to €49.
You know that EUR 1 plus or minus has a sensitivity of approximately EUR 25,000,000 is in our EBITDA line. On the next page, on our flexibility products, As you know, this is a major trend in the new energy world with increasing volatility in the European grid system, that comes from the massive development of renewables and will continue with our very flexible asset base consisting of CO2 free, low cost pump storage power plants and the most modern CPG in Austria, I think we are very well positioned to benefit from this trend through the sale of flexibility products. After a result of approximately $32,000,000 in the Q1 2020, we registered a value of was approximately SEK 31,000,000 in the Q1 of 2021, so almost the same level. The slight decrease results from lower contributions, literally in all flexibility products except for intravid trading. Please also note that since October 2018, our MELA CCGT has been put into a is a strategic reserve mechanism under which we received a fixed capacity payment and a payment for the generation.
As a consequence, we were able to change an unpredictable volatile cash flow against a quasi regulated secured stable cash flow for a period of 3 years. For 2021, we maintain our previous guidance for all flexibility products of approximately €90,000,000 On the next page on APG, also in Power Grid, You know that APG is of very high importance for the group. It has a growing importance in the European grid system. It's also important because of its regulated character. We have shown you here on the chart on the left hand side the comparison Between the EBITDA according to local GAAP and the EBITDA according to IFRS, we have discussed many times before that Because of IFRS, there is an increased volatility, which we would like to bring back To the kind of local GAAP numbers which we have, we are in discussions or we have been in discussions with the IFRS Board for many, many years to basically accept a regulatory account, which we have in local GAAP, also in IFRS.
Things are moving in the right direction. And maybe within the next 2 years, we are going to have a regulatory account in IFRS as well, which takes out the volatility of the numbers. In terms of the grid guidance, again, same as with the flexibility products, we maintain our guidance of approximately EUR 180,000,000 for 2021. Please note that the current regulatory period, which started at the beginning of 2018 with a WACC of average 5%, will end in 2022. And from that point onwards, we will have a new regulatory period.
The regulatory asset base for 2021 is approximately SEK 1,900,000,000, but we have a very strong growth in the regulatory asset base over the next few years. Andreas Wallen will take us through the key financial figures and through our financial liability situation. Stephen Graf?
Thank you, Peter. So going to Slide 7. You see again the development of our most relevant financial key figures. So EBITDA decreased by 20 €8,400,000 or 8.6 percent. The decrease is attributable to the hydro segment, which was €25,000,000 lower compared to Q1 2020, mainly because of lower hydro volumes coming from our Rangal River power plants.
New renewables and the grid segment were also down by is around €9,000,000,000 3,000,000, mainly due to less favorable wind conditions management and of course, for the capacity options in the Greed segment. All other segments and the sales segments were higher by around €400,000 or €8,300,000 compared to quarter 1 2020. The increase in the sales segment is coming from higher contributions from sales to end customers is due to lower purchasing costs. Depreciation remained equal, but the financial result improved significantly from minus €10,000,000 to plus €3,000,000 This was mainly attributable to the other financial result is due to the positive measurement of securities according to IFRS 9. The lower earnings contributions from interest accounted for using the equity method had a negative effect.
Lower interest expenses because of the bond repayments in 2020 showed a clear positive effect. The group result, therefore, decreased by around €12,000,000 to 7 or 7.6%. The EBITDA margin increased strongly to a level of around 45%. EBIT margin also increased from a level of around 19% to around 31%. The reason for this was mainly a strong decline in will be recorded in the Q3 of 2019.
This effect can be attributed primarily to the recognition of changes in the value of electricity derivatives is in profit or loss in accordance with IFRS 9. The offsetting measurement effects are presented under the procurement costs. So the valuation doesn't have any impact on the results development. Finally, I would like to mention the additions to tangible assets, which were based on our CapEx plan above the previous year's level at around €100,000,000 The additions concerned mainly the hydropower plant, Turkey, in Bavaria and Germany as well is our major Greek investments. Moving on to Slide 8.
You see the development of the operating cash flow, which was down compared to the Q1 2020, showed a decrease of 31.7% to EUR 203,000,000 mainly due to marginal payments in our electricity trading business. The free cash flow showed a decrease from €150,200,000 to a level of €35,000,000 caused a lower the aforementioned lower operating cash flow, as described before, and increased investment activities. Net debt decreased slightly to around EUR 1.839 €1,000,000 The gearing decreased from 27% at the end of 2020 to 26% at the end of the first quarter 2021. Moving on to Slide 9, mentioning a few words about the development of the financial liabilities. You see here the debt maturity profile, which shows a total repayment of only €30,000,000 in 2021, with a peak in 2024, which is based on the repayment of fixed interest from in the amount of EUR 500,000,000.
We also see that we have, of course, sufficient financial flexibility granted by our EUR 500,000,000 syndicated will have a loan facility, which is undrawn and is available until 2023. The total amount of our financial liabilities is currently around €826,000,000 The average interest rate on our debt is around 2.3%. 95% of our debt is subject to fixed interest rates. In 2021, the development of the external ratings of FOBHEN AG was stable so far. So S and P rating of the BUM AG remained unchanged at seeing a flat stable outlook.
Of Moody's rating also remained unchanged at the level of APE's stable outlook. The rating development is a result of the numerous measures for Punta's taking the past to increase cash flows and the improving market environment for our business model. Now let me hand over to BJ then for presenting the CapEx plan.
Thank you, Andreas. Yes. The total CapEx for the 3 year period from 2021 to 2023 is EUR 2,250,000,000 split into growth CapEx of $1,370,000,000 and maintenance CapEx of $884,000,000 The main part of the growth CapEx, approximately $728,000,000 will be invested into the regulated grid business, especially into the 380 kilobytes sales growth line in order to increase the capacity to integrate new renewables and better address the volatility and congestion in the grid system. In addition, Verbund is also investing into new renewable projects and selected hydrocower plants. The investments relate to Austria and Germany.
In addition to the growth CapEx, we are planning to invest around EUR 884,000,000 will commence between 20212023. Please note that the CapEx plan does not include the acquisition of Gasconet Austria nor the hydropower plant, Lindbergh 3, as those 2 were based on our midterm planning. Now on the next page, The outlook, as you know, key parameters for the development of our operational business are prices and hydro volumes. At the end of the Q1 2021, we attached approximately 29% of our hydro generation at an average price of 49.2 for 2022, which is approximately EUR 4.6 above the level of the full year 2020. On a mark to market basis, as of 26th April, the average achieved price for 22 would be at the level of EUR 56.9, which is approximately EUR 12.3 above the 2020 level.
We have also hedged approximately 13% of our hydro generation for €23,000,000 at an average price of €55, the mark to market valuation shows a level of €58,400,000 for 20 23. And with regard to the year to date hydro situation, we have to report a hydro coefficient of 0.91, which is is 9% below the long term average. Now on the basis of the aforementioned developments, The guidance for the full year 2021 is now an EBITDA of approximately between EUR 1,130,000,000 SEK 1,300,000,000 and the group result is approximately between SEK 480,000,000 to SEK 590,000,000. Is, of course, under the assumption of average hydro and wind generation for the remaining quarters of the year. For The entire year 2021, Verbum plans to pay off between 45% 55% of the group results has the adjustment for nonrecurring effects.
Now as always, at this point, I would like to highlight the sensitivities. A deviation of plusminus1 percent in the generation from hydropower has an impact of plusminus7000000. In the results, a deviation of plusminus1 percent in the generation from wind power has an impact of €400,000 in the group results and a deviation of plusminus €1,000,000 in the wholesale price has an impact of €3,600,000 in the group results has already had a very high hedging level for 2021. Now with that, we have come to the end of our presentation, and Andreas and I will be ready to receive your questions. Please.
If you find your questions answered before the turn to speak, you can dial 0 2 to cancel your question. If you're using speaker equipment today, please lift And first question we received is from Lueder Schumacher of Societe Generale. Your line is now open, sir. Please go ahead.
Good afternoon. Two quite specific questions on my side and one general one. The first one is you mentioned, Peter, that the hydro coefficient year to date is 0.91, quite low, obviously. Is that mainly due to a delayed snow melt, freezing temperatures or seasonally low temperatures lasting longer than usual, I. E, it's very likely to normalize going forward.
The second one is on new renewables. Are you making any progress in terms of capacity additions, are you currently participating in any auctions for solar or wind? And the more general question is on see general market development, you're probably just leaning back. I can almost see the champagne corks topping. I mean carbon at €55 German CAL 22 is trading at €68, and we had very cold well, we had cold weather conditions, some strange things going on in the German market as well, gas plants not available, coal becoming a swing producer.
So what do you make out of all of this? Can European Energy Markets still deal with the winter that is will be winterized, I. E, cold, unlike the previous 3 winters. And how do you see few commodities in power prices going forward?
Well, Liza, first of all, I have to say that my personal profit and loss, I. E. Peter Coleman's profit and loss, is going to go down because on the last conference call, I said that I would pay for a nice lunch in Paris if CO2 prices would go And for where they went now, I must say that I have been wrong in terms of my predictions. However, that is, of course, very, very good news for the Wound. Now I will comment on the more general question, which you asked.
But before that, I would like to comment on your other two questions. First of all, on the 0.91, yes, it is low. And yes, you're right, it is a result of delayed melting of snow that would have been great for the tourist season Because of COVID-nineteen, all the skiing facilities in Austria were closed. So nobody really took advantage of the cold weather and the snow which lasted much, much longer than in previous years. You're right that it will normalize because it will get warmer and the snow will come down.
So we just have a delayed effect. But then again, Climate is extremely difficult to predict. Are we going to have a very dry fall or very wet fall? We just don't know. If we take everything into consideration, obviously, we calculate on the basis of average hydro conditions for the rest of the year.
In terms of the new renewables, as you know, we have been quite active in terms of participating in M and A processes. We also have looked at some potential development projects. On the inorganic is successful. The main reason is that we have not deviated from our discipline, I. E, it is always possible to justify an investment by simply changing the power curve or by changing the duration of the asset or discount rate.
All that, as you know, has a huge impact on the IR calculation, that is something we have not done. As a result of that, we have not been successful in winning on any of those M and A processes, although we continue to focus on that area. What we have done is we have gone into a joint venture with a very large landowner in Germany. And there, we are planning to develop approximately 1500 megawatts of solar in Germany, but that is sort of like a medium term project. Now On the more general question, I am quite surprised about the large increase of CO2 prices.
The power price, of course, is a function of the large increase in CO2 prices and in commodity prices, we see a situation that is currently very hard to predict. We are going to have some EU action in June, which is going to be interesting to observe. I give you my personal opinion. As always on this conference call, I think that there is a lot of speculative activity in the CO2 price because traders and hedge funds think that the CO2 price has just more momentum on the upside than on the downside given the political framework. Some people comment that it will be very difficult for politicians now to argue for lower CO2 price.
Therefore, people think that it might well go up to 60. We are cautious, yes? Why? Because if the CO2 price and if power prices go up, we have a very, very positive impact in terms of our business. However, if the CO2 price goes down from where it is today, we are well prepared, which I think is important from a business point of view.
Longer term predictions of power prices, by definition very hard, but I would like to make a comment which I have made before and which I think is getting more valid. We have now not only seen from German industry, but also from the also from the Federation of the French Industry that they have seen and written and discussed with the political leadership in those countries that it is very hard for an industry which is already suffering from COVID-nineteen to deal with the very high power prices, they basically argue that the power price and the entire climate action should not be solely focused on that specific area, but it should take a broader perspective what do they mean basically means that it is not just the energy production, which is responsible for CO2 emissions, But it is agriculture, it is traffic, it is buildings, it is heating, it is many, many other aspects. And they feel that all those other aspects need to be taken into consideration as well. And the focus purely on CO2 should be decreased in order to get to a more competitive level and power prices for the industry. I think that is a very valid argument.
This is something that is going to be discussed a lot within the next 6 to 12 months and certainly a place which we need to observe.
Very interesting. Thank you.
Concludes. And the next question is from Wanda Farynowski of Credit Suisse. Your line is now open, Madam. Please go ahead.
Hi, good afternoon, Linda, Selinovka, Credit Suisse. As Luda asked So my question, I got only one. So I would like to ask about the pipeline, because you are growing the renewables outside Austria, you mentioned 1.5 gigawatts to be built. Can you share more details? Can you share the time line, How much money do you want to spend?
I assume it's not included in your CapEx program so far. What returns are you looking for? If If you could give us the work number, IR number of work plus spread, what is the EBITDA contribution? And do you really expect will be 100% of the pipeline. So NAB close would be much, much appreciated.
Thank you.
Well, today, when you go to the area where we have entered this joint venture with the landowners, what you will see is agricultural fields and nothing else. So we are at the very beginning of the project there. We still need to get access to the grid. We need to build. We need to develop.
But I'm more than happy to give you a number in terms of sort of like the framework which we're looking at. We have announced that we would be developing approximately 1.5 gigawatts, as you have mentioned. I give you a very rough framework in terms of CapEx. It would be around €500,000,000 in CapEx. It's actually below that, but I just want to give you a round figure.
The returns which we're looking at is we're looking at returns which are above obviously, above our WACC in order to generate EVA. The WACC, which we are currently using, is around 4%, and we have a hurdle rate for this project above the 4%. I will not give you a detailed figure for reasons of competitiveness and for reasons of still being at the very early stages of this, If we can develop more in that region, the landowners, which we have entered The agreement with much, much more land than the 1500. And if this cooperation works well, which I'm currently assuming, there would be the potential to do much more. The one thing which we should not forget is that in Germany, we have 1,000 hours of some, Whereas in other regions of Europe, we have 2,000, like in Spain.
However, the Spanish market has is proven to be very expensive at the moment, which is the reason why we have not been successful yet because we were not willing to what I would consider overpaying for pipeline or existing projects.
Okay. Thank you very much. Very, very quick follow-up. You said €500,000,000 of CapEx Per gigawatt or for 1.5 gigawatts? Because I think
For 1.5.
Oh, okay. So it's a bit lower. Okay. So And then is it fair to assume that you can put the 1st megawatts in a 2 year time given that you are at the very beginning Of the journey. And are you willing to sign any PPAs given that the PPMR that has started to develop in Europe?
Yes.
Well, that's a very interesting one. We are observing the PPA market, I mean, in Central Europe very, very carefully. As you know, Central Europe is much slower in the development of a PPA market than Spain. Spain has a very well established PPA market, and in Germany, it's only starting. If we are If we were able to enter interesting long term PPAs in Germany, that is something we would definitely look at.
And the very last thing, do you expect more upside on the capacity in Germany given The target announced by the German government to accelerate an ad 0 target? Or is it still too early to say?
You mean the target for the renewable build out or the CO2 reduction target?
The CO2 reduction because if Germany wants to become carbon neutral by 2,045, I mean, they need to double or triple or we need to really, really increase the renewables build out in Germany. So do you see much more upside there? Or is it is
too early to say. Me personally, I'm critical about those numbers. I still see huge challenges.
Okay. Thank you very much.
Thank you.
Concludes. As we receive no further questions, I hand back to Mr. Kahlmann.
Yes. I would like to thank you, as always, for very interesting discussions. And Andreas and I will always be available should you have any further questions or is there any additional points which you would like to discuss. With that, please stay healthy, get vaccinated, hopefully quicker than we here in Austria, and very much look forward to seeing you all hopefully in person over the next 6 months. All the best.
Bye.