Dear, ladies and gentlemen, welcome to the conference call of Verbunde AG. At our customers' request, this conference 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. I now hand you over to Peter Kaulman, who will lead you through this conference.
Please go ahead, sir.
Yes. Good morning. Ladies and gentlemen, let me welcome you to the presentation of Verbum for the first half year twenty twenty. And let me thank you for joining today's conference call. I hope you're all well and healthy.
I'm here with Andreas Wallerin, our Head of Finance and Investor Relations. Before we move into the analysis of the business development of Verbund, let me make a few general comments about this first half. Fabol's business model resisted the challenges of the changed energy market environment as a result of COVID-nineteen. Our focus on electricity production from renewable energy sources and expansion of the high voltage grid in Austria proved the festival. Our strong financial discipline and measures taken in the past resulted in stronger resilience of the business model, enabling for BUNTO and Choi a very high strategic flexibility while delivering a solid but slightly lower performance in a weaker energy market environment.
Against this background, let me now present the figures for the first half year. On Page 1, at the beginning, let me highlight the most important influencing factors. The consequences of the corona crisis were mainly lower demand for electricity and lower spot market prices. The average achieved contract price was higher compared to the first half year twenty nineteen despite much lower market price for electricity on the spot market. The hydro coefficient determining the generation from our Glen of River hydropower plants was lower than the long term average and considerably lower than in the first half year twenty nineteen.
Contribution from flexibility products, especially from congestion management, increased compared to last year. On the other hand, the results development was negatively influenced by lower contributions from the grid segment. The financial results contributed positively. Now the impact of these influencing factors on the key figures of Evolent are as follows. EBITDA decreased slightly by 6.8 percent to EUR 6 39,000,000, and the group result decreased by 8.2% to SEK 310,000,000.
The operating cash flow was lower at the level of EUR 584,000,000. The free cash flow was positive at the level of EUR 261,000,000 and allowed us to reduce the debt level further. Net debt decreased by 5.6 percent to a level of EUR 2,100,000,000. Because of the slightly improving market environment for the rest of the year, we decided to change the outlook for 2020. We increased the lower end of our guidance band and, at the same time, narrowed the band because of our advanced hedging status.
For whom I expect for 2020 an EBITDA between approximately $1,150,000,000 to $1,250,000,000 and the group result between approximately €510,000,000 to €570,000,000 The payout ratio will be between 40% 50% of the adjusted group results between €500,000,000 €560,000,000 On the next page, I will explain the influencing factors on the results development in more detail. Now let me start with the analysis of the own generation volumes. With regard to the hydro coefficient, we saw lower levels in all months of the first half year, except in February compared to last year. At 0.95, the hydro coefficient, as you know, an index quantifying the hydropower generation of the run of river power plants was 5 percentage points below the long term average and, and that's a high number, 16 percentage points below the level of the first half year twenty nineteen. However, production from annual storage power plants increased by 11.6%.
Own production from hydropower overall decreased by 16 97 gigawatt hours or minus 10.2% compared to the first half year twenty nineteen. Award and generation from thermal power, here, we were up by 36% or 179 gigawatt hours. That is a result of increased use of our MENACCT for concession management. Generation from wind car remains more or less equal at 5.50 sorry, 5.15 gigawatt hours, more favorable wind conditions in Germany and Romania compensated for less favorable Austria. A second important influencing factor for Wound's results are the average achieved contract prices at the end of the first half year twenty twenty.
Based on our hedging strategy, we achieved an average achieved contract price for our hydro generation of EUR 45.4 per megawatt hour. For the 1st full year 2019, as you know, we achieved EUR 39. Please note that we have already hedged approximately 88% of the volume for 2020. On a mark to market basis as of 16th July, we calculate with a price of EUR 44.9. As you know, the sensitivity for our entire generation is €1,000,000 results in approximately €25,000,000 on our EBITDA line.
On the next page, on the flexibility products, you know that is one of the major trends in the new energy world. We have increased volatility across Europe as a result of the massive development of renewables. So bond with our very flexible asset base consisting of CO2, free low cost pump storage power plants and the most modern CPG in Austria, we're very well positioned to benefit from this trend through the sale of our flexibility products. After a result of EUR 47,000,000 in the first half year twenty nineteen, we registered a value of €58,000,000 in the first half year twenty twenty. The increase results mainly from higher contribution from concession management.
Please also note that since October 2018, our Mellor plant has been put into a strategic reserve mechanism in Austria under which we received a fixed capacity payment and a payment for the generation. As a consequence, we have changed what was before an unpredictable, relatively volatile cash flow against the secure, stable cash flow for a period of 3 years. For 2020, we increased our guidance for flexibility products to approximately EUR 110,000,000. Euros On the next page on our high voltage grid, the Austrian high voltage grid with interconnects the capacities into 7 neighboring countries is strategically of very high importance for the group because of, number 1, its growing importance in European grid system and secondly, because of its regulated character. Under IFRS, in contrast to local GAAP, volatilities in the results contribution cannot be avoided because of so called regulatory account, which we have in local GAAP, cannot be applied.
That is something we have discussed many times in the past. The EBITDA from the grid business, according to IFRS, decreased from EUR 156,000,000 to EUR 122,000,000. Dollars The reason for this decrease is mainly lower contributions from congestion management and auctioning of cross border grid capacities. The EBITDA guidance for the Grid segment is approximately EUR 200,000,000 for the full year, which is a slight increase compared to our previous guidance. Please also note that the current regulatory period, which started on the 1st January 2018 with a WACC of 4.88 percent for existing assets and 5.2% for new assets with an average of approximately 5% will end in 20 2.
The regulatory asset base for 2020 is approximately EUR 1 point 7,000,000,000. The next slide shows the nonrecurring effects in the first half year twenty twenty. We encountered impairments of 14 point $6,000,000 That's stemming from an impairment in our Maela facility, our hydropower plant in Graz and the hydropower plant in Greece. The higher cost of capital was the reason for that impairment. In addition, we have an obligation to return an interest in the hydropower plant in Jokulshein that is amounting to $26,100,000 and had a positive effect on the other financial results.
Moreover, we had a small impairment regarding our hydropower plant in Albania amounting to EUR 0.8 million to a relatively slow amount. Overall, the financial results showed nonrecurring effects amounting to €25,300,000 in total. Now after considering the impacts from the nonrecurring effects above on taxes and minorities, the nonrecurring effects on a group result level amounted to 9,500,000 euros We also show you the 2019 nonrecurring effects so that you have a comparison between the 2. On the next slide, we show the key financial figures. EBITDA decreased by $46,800,000 or 6.8 percent to 639,000,000 The key reason is a decrease in the grid segment, which was EUR 34 $1,000,000 lower than in the first half twenty nineteen.
The Hydro segment was down by 11,700,000 dollars At the same time, we had higher average achieved contract prices, which compensated for the lower own generation. The increase in expenses for maintenance had a negative effect, and the EBITDA contributions of the other segments were more or less unchanged compared to last year. The financial results strongly improved to $19,300,000 from minus $11,300,000 That was caused by lower interest expenses because of high repayments in 2019 and the one off effect, which I mentioned before. Now on the group results, it decreased by €27,800,000 or 8.2 percent to €310,000,000 As outlined on the slide before, there were also nonrecurring effects in the first half year, leading to a group result on an adjusted basis of SEK 301,000,000. Finally, I would like to mention the additions to tangible assets, which were based on our CapEx plan above the previous year's level.
The additions concerned mainly the hydropower plant in Turgene, in Bavaria as well as investments into our high voltage grid. Now on the next page on our cash flow, our operating cash flow decreased. It shows a decrease of 15.4 percent to EUR 584,600,000 as a result of lower grid revenues and margining payments for the Energy Trading business. Considering the increase in investments in hydropower plants and the Austrian grid, the free cash flow after dividends showed a positive level of EUR 268,000,000 and as I mentioned before, allowed us to reduce our net debt level further to around EUR 2,100,000,000 from previously EUR 2,300,000,000. Our gearing decreased.
And overall, when you look at those financial figures, we have come very well through the corona crisis, and we are extremely well positioned for the years to come in terms of our resilience of the business model. Now on the next page, let me quickly take you through Verbund's financial liabilities and our maturity profile. You see here a remaining repayment of EUR 11,000,000 in 2020. The debt maturity profile for the following years shows another peak in 2024 with the repayment of EUR 525,000,000 that consists mainly of a green bond in the amount of EUR 500,000,000. We have a liquidity backup with access to EUR 500,000,000 in syndicated loan facility, which is undrawn, has no MAC clause and is available until 2023 with 2 extension options.
We also have access to uncommitted lines with a large number of banks, up to an amount of EUR 745,000,000. The total amount of our financial liabilities per day is approximately 862 1,000,000. That is the lowest level since the last for the last 15 years. The average interest rate on our debt is approximately 2.3%. 92% of our debt are fixed and 100% of our financial debt is denominated in euros.
So we have no ForEx risk whatsoever. In the Q2 2020, the external ratings for Verbund remained unchanged. Verbund has a single A stable outlook rating from S and P, and we have an A3 stable outlook rating from Moody's. The rating clearly reflects the very sound financial figures and the very strong liquidity situation of the bonds. That very stable business model gives us a lot of confidence to have, on the one hand, strategic flexibility going forward and, as I mentioned before, resilience for whatever crisis might hit us in the future.
Now before we move to the outlook for 2020, I would quickly make a few comments on our CapEx plan, which we're now splitting between hydro and the new Renewables segment for your convenience and transparency. Overall figures are unchanged. The total CapEx for the 3 year period between 2020 2022 is still slightly above EUR 2 €1,000,000,000 The main part of the growth CapEx, more than EUR 700,000,000 will be invested into the regulated grid business, especially into our so called sales spot line. Those investments are very important to us because they are important for the integration of new renewables. And obviously, it's very important to address the volatility and the concession in the European grid system.
Our biggest project in the hydro segment is the construction of the Runoff River power plant in Turgene in Bavaria, a project which we acquired in 2009 when we bought the hydro power plants on the River Inn. In addition to the growth CapEx, we are planning to invest around €800,000,000 into maintenance. It's approximately €265,000,000 per year. As I mentioned in previous conference calls, substance and the high quality of our asset base is very important to us as our hydropower plants long term assets, which we want to keep at a very sound and high quality level. Now on the outlook.
You know that the key parameters for the development of the operational business are prices and hydro volumes. At the end of the Q2, we have hedged approximately 43% of our hydro generation at an average price of 44.8 dollars for 2021, which is slightly below the average achieved contract price for 2020, which is at a level of $45,400,000 On a mark to market basis, as of July 16, the average achieved price would be at a level of €45. We've also hedged approximately 7% of our hydro generation at an average price of $42,700,000 for 20 22. The mark to market valuation shows a level of €48 for 'twenty two. Now with regard to the year to date hydro situation, we have to report a hydro coefficient of 0.96, which is 4 percentage points below the long term average.
On the basis of the aforementioned developments, we increased the lower end of our guidance range, and we also narrowed the guidance range for the full year 2020. We are now at an EBITDA of approximately between EUR 1,150,000,000 and EUR 1,250,000,000 and the group results of between $510,000,000 $570,000,000 under the assumption of average hydro for the second half of twenty twenty. For the financial year 2020, we are planning to pay out between 40% 50% of the group results after adjustments between EUR 500,000,000 EUR 560,000,000 euros As always at this point, I would like to highlight the sensitivity, A deviation of plusminus 1% in the generation from hydropower has an impact of plusminus 3,200,000 in the group results, a deviation of plusminus 1% in the generation from wind power has a much lower impact of 0,300,000 and a deviation of plusminus €1 in the wholesale price has an impact of €2,100,000 because we have already hedged, as I mentioned, 88% for 2020. Now with this, I would like to start our Q and A session.
And the first question received is from Lueder Schumacher of Societe Generale. Your line is now open, sir. Please go ahead.
Good morning. A few questions on my side. The first one is on the subject that has not been mentioned so far, which is Gasconet Austria. It's been a month and a half since you submitted the offer. What's going on there?
And when can we expect to see some news flow? If you could also remind us what the wrap is for Gasconnex Austria, that would be great. The next two ones are really quick ones. One is the hydro coefficient you mentioned as of now, the 0.96. Is this as of today?
Is it mid July? Just if you could put a date on that. And lastly, you increased the guidance, the full year guidance for Flexibility Products and the Grid by €10,000,000 Are these 2 separate items? Or is this one item that is showing up in the Grid division?
Thank you, Leland. Yes, first of all, on Gasconet Austria, we are still in negotiations with the seller. As we are still in negotiations, I can't give you any more details. As I mentioned on the last conference call, as soon as we have results which we can report, we will do so immediately. I think you asked about the regulatory asset base on Gasconet Austria as well.
That is approximately €900,000,000 On the hydro coefficient, yes, for today, the hydro coefficient is 0.96. For the remainder of the year, we always use the long term average of 1, And that has gone into obviously, that has gone into our guidance in terms of the volume. And then on the Grid and the Flexibility products, yes, you're right. On the Grid segment and the 2 are separate, by the way. On the grid segment, we have seen a slight lower expenses for concession management and for Regie Energy.
And on the flexibility products, we have seen higher revenues, which have really come from Regie and Nagy, which is Control Energy. We have also contribution from congestion management, and we have a contribution from pumping and turbining. So those are the 210,000,000 components which you have asked about.
Excellent. Very clear. Thank you.
And the next question we received is from Theresa Schindler of Wafer Eisen Central Bank. Your line is now open madam. Please go ahead.
Thank you. Good morning. I have two questions. First, if you could provide us with an update on the green hydrogen project together with your partners, what's going on right now and is there anything new? And the second one is if you could provide us your view on the current volatility in CO2 emission allowance prices?
Thank you.
Yes. Thank you, Theresa. I will start with your second question, which is a very important one. Yes, indeed, we have seen a lot of volatility in CO2 prices During the corona crisis and at the peak of the corona crisis, I would say CO2 prices have moved in sympathy with all asset classes. Everything has really come down.
Then we have seen a very strong recovery in CO2 prices. And the key question for everybody in the market now is, are we going to stabilize around the current level, let's say, €25 Are we going to see an increase from here? You know that there is a very wide bandwidth in opinions. We see anything from people who think that the CO2 prices could crash and could go down to €10. And then, of course, we have a school that is saying that CO2 prices should actually go up to €40, €50.
You know from the past that I have always seen CO2 price developments in a narrow range. I'm not changing my opinion on that. I think that we are going to see CO2 prices. I said last time, if I remember correctly, between 15% 35%. In the short term, there seems to be a lot of speculation in CO2 prices.
So I see more of not strategic CO2 buyers but speculative CO2 buyers. If that continues, we could probably see an increase of the CO2 price up to 30 or even beyond 30. At the same time, we should not forget that thermal power is leading the market, particularly coal. And with that and the fact that a lot of people already hedged and have already bought a lot of CSO certificates in the past to basically hedge for the production, for the coal production, and that production is now not happening. At the same extent, there could be some CO2 certificates entering the market, which is going to change supply and demand.
On your first question, update on green hydrogen, we have a number of partnerships. As you know, we view green hydrogen as a very important technology. There, we're in very good company with the EU Commission, which has recently come up with very forceful guidelines in terms of green hydrogen development over the next 10, 15 years. We have mainly research projects where we are testing a lot of different aspects of green hydrogen, both for the production, but also for the utilization, for example, in the steel production and in the chemical production. And those projects with our partners are going very well.
Thank you very much. Maybe one follow-up, if I may.
Sure.
Yes. As you mentioned, coal exiting the market, obviously, I cannot miss a question on the German fossil fuel phase, where some market participants are afraid that too much coal exiting the market might create turmoil on the market. What's your view on that?
Yes. I think one of the key questions in the energy world, which quite frankly is not discussed enough, is the lack of baseload. We have huge baseload production in France Through nuclear power, France has been exporting a lot, for example, in 2020. And that baseload is obviously stabilizing the European energy system to a certain extent. At the same time, coal, gas and our hydro power is very important as it is baseload as well and therefore stabilizing the market.
The more volatility we have through wind and solar, the more we need to be aware of how we are going to substitute the baseload, which is leading the market in Germany. It is not just a coal, but it is also nuclear power. As a result of that, the particularly the German energy system needs to find ways to use gas as a bridge technology in order to compensate for the exit of coal. This obviously is short- to medium term. Longer term, we need to think about storage.
We need to think about seasonal storage that we need on an industrial scale, that we need competitive prices. So that development and hydrogen is very often mentioned in that respect is very, very important and key to the energy transformation.
Thank you.
And the next question we received is from Anna Zarypnovka of Credit Suisse. Your line is now open, madam. Please go ahead.
Hi, it's Vanda Salinaska from Credit Suisse. Just two questions. The first one is a technical one. Could you please give us the latest surplus in your regulatory accounts? And the second one, can you talk about the market environment?
What you see on the power price market? Do you still see any material impact from COVID-nineteen? Thanks a lot.
Thank you, Anna. Anna, would you be so kind as to repeat your first question because we had acoustic problems to hear you?
Yes, sure. So the question the first question was on the surplus in your regulatory accounts in Greece, the latest number. Yes.
Yes. Okay, very good. Yes. Let me start with the surplus. The surplus is currently €290,000,000 As I mentioned in previous conference calls, we are negotiating with eControl, our regulator, to decrease the regulatory count over the next years.
In a linear fashion, we have no specific results on that. But as soon as we know by how much we are going to reduce the regulatory account when, we will certainly inform you. And your second question was on the market environment. If I understood you correctly, you were also asking about the demand side. That is an important question because during the COVID crisis, we have seen demand for electricity coming down in an amount which we haven't seen before within a very short period of time.
That is something we've seen across Europe, particularly hard in Italy, where we have seen more than 20%, also in Spain. Now in the meantime, we have not seen a full recovery. We are still across Europe at a level of approximately minus 10%, minus 11%, in Italy more, which is a very interesting indication. It shows that despite the opening up and despite the fact that we have no lockdown anymore, the industrial production has not come back to the level which we have seen before. That shows that demand in the economy is lower.
That is a very interesting indicator. It's very difficult to make prediction as of today, but I personally could imagine that we see lower demand until the end of the year.
Thank you very much.
As we receive no further questions, I hand back to Mr. Koilman for closing remarks.
Yes. Andreas, Wallen and I would like to thank you for your participation. We would also like to thank you for your important and interesting questions. And we wish you a great summer holiday. Stay healthy, relax, and we look forward to seeing you in our next conference call.
Thank you very much. Bye bye.
Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.