Dear ladies and gentlemen, welcome to the conference call of VERBUND AG. At our customers' request, this conference will be recorded. As a reminder, all participants will be in the listen-only mode. After the presentation, there will be an opportunity to ask questions. If any participant has difficulties hearing the conference, please press the star key followed by zero on your telephone for operator assistance. I will now hand you over to Peter Kollmann, who will lead you through this conference. Please go ahead, sir.
Yeah. Good morning. Ladies and gentlemen, let me welcome you to the presentation of VERBUND for the first half year 2020, and let me thank you for joining today's conference call. I hope you're all well and healthy. I'm here with Andreas Wollein, 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. VERBUND's business model resisted the challenges of the changed energy market environment as a result of COVID-19. Our focus on electricity production from renewable energy sources and expansion of the high voltage grid in Austria proved successful.
Our strong financial discipline and measures taken in the past resulted in a stronger resilience of the business model, enabling VERBUND to enjoy 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 one, 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 2019, despite much lower market price for electricity on the spot markets. The hydro coefficients determining the generation from our run-of-river hydropower plants was lower than the long-term average and considerably lower than in the first half year 2019.
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 VERBUND are as follows. EBITDA decreased slightly by 6.8% to EUR 639 million, and the group results decreased by 8.2% to EUR 310 million. The operating cash flow was lower at a level of EUR 584 million. The free cash flow was positive at a level of EUR 261 million and allowed us to reduce the debt level further. Net debt decreased by 5.6% to a level of EUR 2.1 billion. 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. VERBUND now expects for 2020 an EBITDA between approximately EUR 1.15 billion-EUR 1.25 billion and a group result between approximately EUR 510 million-EUR 570 million. The payout ratio will be between 40% and 50% of the adjusted group results between EUR 500 million and EUR 560 million. On the next page, I will explain the influencing factors on the results development in more detail. Let me start with the analysis of the own generation volumes. With regard to the hydro coefficients, we saw lower levels in all months of the first half year, except in February, compared to last year.
At 0.95, the hydro coefficients, as you know, an index quantifying the hydropower generation of the run-of-river power plants, was five percentage points below the long-term average, and that's a high number, 16 percentage points below the level of the first half year 2019. However, production from annual storage power plants increased by 11.6%. Own production from hydropower overall decreased by 1,697 GWh , or -10.2% compared to the first half year 2019. Output and generation from the thermal power, here we were up by 36% or 179 GWh . That is a result of increased use of our Mellach CCGT for congestion management. Generation from wind power remains more or less equal at 515 GWh .
More favorable wind conditions in Germany and Romania compensated for less favorable Austria. A second important influencing factor for VERBUND's results are the average achieved contract prices at the end of the first half year 2020. 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 first 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 the 16th of July, we calculated with the price of EUR 44.9. As you know, the sensitivity for our entire generation is EUR 1 results in approximately EUR 25 million 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. For VERBUND with our very flexible asset base, consisting of CO2- free, low cost pumped storage power plants and the most modern CCGT in Austria, we're very well positioned to benefit from this trend through the sale of our flexibility products. After results of EUR 47 million in the first half year 2019, we registered a value of EUR 58 million in the first half year 2020. The increase results mainly from higher contribution from congestion management. Please also note that since October 2018, our Mellach plant has been put into a strategic reserve mechanism in Austria, under which we receive 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 a secure, stable cash flow for a period of three years. For 2020, we increase our guidance for flexibility products to approximately EUR 110 million. On the next page on our high voltage grid, the Austrian high voltage grid, with interconnected capacities into seven neighboring countries, is strategically of very high importance for the group, because of number one, its growing importance in the 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 a 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 million to EUR 122 million.
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 million 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 of January 2018 with a WACC of 4.88% for existing assets and 5.2% for new assets, with an average of approximately 5%, will end in 2022. The regulatory asset base for 2020 is approximately EUR 1.7 billion. The next slide shows the non-recurring effects in the first half year 2020. We encountered impairments of EUR 14.6 million. That stemming from an impairment in our Mellach CCGT, our hydropower plant in Graz and the hydropower plant in Gries. 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 Jochenstein that is amounting to EUR 26.1 million and had a positive effect on the other financial result. Moreover, we had a small impairment regarding our hydropower plant in Albania amounting to EUR 0.8 million. It's a relatively small amount. Overall, the financial results showed non-recurring effects amounting to EUR 25.3 million in total. After considering the impact from the non-recurring effects above on taxes and minorities, the non-recurring effects on a group result level amounted to EUR 9.5 million. We also show you the 2019 non-recurring effects so that you have a comparison between the two. On the next slide, we show the key financial figures. EBITDA decreased by EUR 46.8 million or 6.8% to EUR 639 million. The key reason is a decrease in the Grid segment, which was EUR 34 million lower than in the first half of 2019.
The Hydro segment was down by EUR 11.7 million. 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. EBITDA contributions of the other segments were more or less unchanged compared to last year. The financial results strongly improved to EUR 19.3 million from EUR -11.3 million. That was caused by lower interest expenses because of high repayments in 2019 and the one-off effect which I mentioned before. The group results, it decreased by EUR 27.8 million or 8.2% to EUR 310 million. As outlined in the slide before, there were also non-recurring effects in the first half year, leading to a group result on an adjusted basis of EUR 301 million. 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 Töging, in Bavaria, as well as investments into our high voltage grid. On the next page on our cash flow, our operating cash flow decreased. It shows a decrease of 15.4% to EUR 584.6 million 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 show the positive level of EUR 268 million, and as I mentioned before, allowed us to reduce our net debt level further to around EUR 2.1 billion from previously EUR 2.3 billion. 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.
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 million in 2020. The debt maturity profile for the following years shows another peak in 2024 with a repayment of EUR 525 million. That consists mainly of our green bond in the amount of EUR 500 million. We have a liquidity backup with access to EUR 500 million in syndicated loan facility, which is undrawn, has no MAC clause, and is available until 2023 with two extension options. We also have access to uncommitted lines with a large number of banks, up to an amount of EUR 745 million. The total amount of our financial liabilities per today is approximately EUR 862 million. That is the lowest level for the last 15 years. The average interest rate on our debt is approximately 2.3%.
92% of our debt are fixed. 100% of our financial debt is denominated in EUR, so we have no forex risk whatsoever. In the second quarter 2020, the external ratings for VERBUND remained unchanged. VERBUND has a single A, stable outlook rating from S&P. 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 VERBUND. That very stable business model gives us a lot of confidence to have, on the one hand, strategic flexibility going forward. As I mentioned before, resilience for whatever crisis might hit us in the future. Before we move to the outlook for 2020, I would quickly make a few comments on our CapEx plan, which we are now splitting between Hydro and the New Renewables segment for your convenience and transparency. Overall figures are unchanged.
The total CapEx for the three-year period between 2020 and 2022 is still slightly above EUR 2 billion. The main part of the growth CapEx, more than EUR 700 million, will be invested into the regulated grid business, especially into our so-called Salzburg 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 congestion in the European grid system. Our biggest project in the Hydro segment is the construction of the run-of-river power plant in Töging, in Bavaria. A project which we acquired in 2009, when we bought the hydropower plant on the river Inn. In addition to the growth CapEx, we are planning to invest around EUR 800 million into maintenance. It's approximately EUR 265 million per year.
As I mentioned in previous conference calls, substance and the high quality of our asset base is very important to us, as are 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 second quarter, we have hedged approximately 43% of our hydro generation at an average price of EUR 44.8 for 2021, which is slightly below the average achieved contract price for 2020, which is at a level of EUR 45.4. On a mark-to-market basis, as of July 16, the average achieved price would be at a level of EUR 45. We have also hedged approximately 7% of our hydro generation at an average price of EUR 42.7 for 2022. The mark-to-market valuation shows a level of EUR 48 for 2022.
Now, with regard to the year-to-date hydro situation, we have to report a hydro coefficient of 0.96, which is four 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 1.15 billion and EUR 1.25 billion, and a group result of between EUR 510 million and EUR 570 million, under the assumption of average hydro for the second half of 2020. For the financial year 2020, we are planning to pay out between 40% and 50% of the group result after adjustments between EUR 500 million and EUR 560 million. As always at this point, I would like to highlight the sensitivities.
A deviation of ±1% in the generation from hydropower has an impact of EUR ± 3.2 million in the group result. A deviation of ±1% in the generation from wind power has a much lower impact of EUR 4.3 million, and a deviation of EUR ± 1 in the wholesale price has an impact of EUR 2.1 million, because we have already hedged, as I mentioned, 88% for 2020. Now with this, I would like to start our Q&A session.
Ladies and gentlemen, we will now begin our question-and-answer session. If you have a question for our speakers, please dial zero one on your telephone keypad now to enter the queue. Once your name has been announced, you can ask a question. If you find your question has answered before it's your turn to speak, you can dial zero two to cancel your question. If you're using speaker equipment today, please lift the handset before making your selection. One moment, please, for the first question. The first question received is from Lueder Schumacher of Société Générale . 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 Gas Connect 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 RAB is for Gas Connect 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. Lastly, you increased the guidance, the full-year guidance for flexibility products and the grid by EUR 10 million. Are these two separate items, or is this one item that is showing up in the Grid division?
Thank you, Lueder. Yeah, first of all, on Gas Connect 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 a result which we can report, we will do so immediately. I think you asked about the Regulatory Asset Base on Gas Connect Austria as well. That is approximately EUR 900 million. On the hydro coefficient, yes, per today, the hydro coefficient is 0.96. For the remainder of the year, we always use the long-term average of one, obviously that has gone into our guidance in terms of the volume. On the grid and the flexibility products, yes, you're right.
On the Grid segment, and the two are separate by the way, on the Grid segment, we have seen slightly lower expenses for congestion management and for Regelenergie. On the flexibility products, we have seen higher revenues, which have really come from Regelenergie, which is our controlled energy. We have also contribution from congestion management, and we have a contribution from pumping and turbining. Those are the two EUR 10 million components which you have asked about.
Excellent. Very clear. Thank you.
Ladies and gentlemen, as a reminder, if you would like to ask a question, please press zero one on your telephone keypad now. The next question received is from Teresa Schinwald of Raiffeisen Centrobank. 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? The second one is, if you could provide us your view on the current volatility in CO2 emission allowance prices. Thank you.
Yeah. Thank you, Teresa. 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 the peak of the corona crisis, I would say CO2 prices have moved in sympathy with all asset classes. Everything has really come down. We have seen a very strong recovery in CO2 prices. The key question for everybody in the market now is, are we going to stabilize around the current level, let's say at EUR 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 EUR 10.
Of course, we have a school that is saying that CO2 prices should actually go up to EUR 40, EUR 50. You know from the past that I've 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 EUR 15 and EUR 35. In the short term, there seems to be a lot of speculation in CO2 prices. 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 EUR 30 or even beyond EUR 30. At the same time, we should not forget that thermal power is leaving the market, particularly coal.
With that and the fact that a lot of people already hedged and have already bought a lot of CO2 certificates in the past to basically hedge 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 many 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. Those projects with our partners are going very well.
Thank you very much. Maybe one follow-up, if I may?
Sure.
As you mentioned, coal exiting the market, obviously, I cannot miss a question on the German fossil fuel phase-out, 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?
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 from nuclear power. France has been exporting a lot, for example, in 2020. That baseload is obviously stabilizing the European energy system to a certain extent. At the same time, coal, gas, and our hydropower 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 leaving the market. In Germany, it is not just the coal, but it is also nuclear power.
As a result of that, 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 at competitive prices. That development, and hydrogen is very often mentioned in that respect, is very, very important and key to the energy transformation.
Thank you.
Ladies and gentlemen, before we take the next question, just a reminder, if you would like to ask a question, please press zero one on your telephone keypad. The next question received is from Wanda Serwinowska of Credit Suisse. The line is now open, madam. Please go ahead.
Hi, it's Wanda Serwinowska 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? 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-19? Thanks a lot.
Thank you, Wanda. Wanda, would you be so kind as to repeat your first question, because we had acoustic problems to hear you?
Yeah, sure. The first question was on the surplus in your regulatory accounts in grid.
Oh, okay.
What is the latest number?
Yes.
Thanks.
Yes. Okay, very good. Yeah. Let me start with the surplus. The surplus is currently EUR 290 million. As I mentioned in previous conference calls, we are negotiating with E-Control, our regulator, to decrease the regulatory accounts over the next years in a linear fashion. We have no specific results on that. As soon as we know by how much we are going to reduce the regulatory account when, we will certainly inform you. Wanda, 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 -10%, -11%, in Italy more, which is a very interesting indication, which 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 received no further questions, I hand back to Mr. Kollmann for closing remarks.
Yes. Andreas Wollein and I, we would like to thank you for your participation. We would also like to thank you for your important and interesting questions. We wish you a great summer holiday. Stay healthy, relaxed, 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.