Yes. So, dear ladies and gentlemen, welcome to the conference call of the Bund AG. At our customer's request, this conference will be recorded. As a reminder, all participants will be in a listen only mode. After the presentation, there is an opportunity to ask questions.
I now hand you over to Peter Kollmann, CFO for the release of this conference.
Please go ahead, sir.
Good morning, and welcome to our presentation. I'm here with Andreas Wallerlein, our Head of Finance and Head of Investor Relations. Let me make a few comments how we are dealing with the coronavirus. This is very important as we are critical infrastructure and have a high degree of responsibility. We have started early to mobilize and make all necessary adjustments using action plans, which we had developed in the past for such situations.
We fully support the very stringent measures taken by the Austrian government, which some of you might have followed. In other words, we are working for the best and preparing for the worst. I can tell you with a high degree of confidence that we will produce and sell as much electricity as always, of course, depending on hydrological levels. I can also assure you that APG, our grid operator, is highly experienced and prepared for any crisis situation, including the current one. With that, over to Page 3 and our 2019 business development.
At the beginning, the most important influencing factors for the results development. The water supply was not only considerably above the level of business year 2018 but also slightly higher than the long term average. Following the development of long term futures prices and based on our long term hedging strategy for our own electricity generation, the average achieved contract price was much higher than in 2018. The contributions from the Grid segment were higher than in 2018, mainly due to higher contribution margins from congestion management. The last influencing factor are lower contributions from flexibility products.
The impact of these influencing factors on the key figures of Vaubund in 2019 are as follows: reported and adjusted EBITDA increased by 37% to 1,180,000,000 The reported group result increased by 28 percent to EUR 555,000,000 as did the adjusted group result, which increased by 60.4% to EUR 549,000,000. The operating cash flow was very strong at a level of EUR 1,200,000,000, that's +-81%. The free cash flow after dividend was excellent at a level of EUR 640,000,000 and allowed us to reduce the debt level further. Net debt decreased by 11.9 percent to a level of EUR 2,250,000,000. Based on our strong results, we will propose a dividend of $0.69 a share in our AGM on April 28, which reflects a payout ratio of 43.2% on our reported group results and 43.7% on the adjusted group results.
Now next page. In the following charts, I will explain the influencing factors on the results development in more detail. After a very good first half in 2019, we saw again low hydro volumes in the second half of the year, especially in the Q3. Nevertheless, 1.01, the hydro coefficient, was 7% was 7 percentage points above the level of 2018 and 1 percentage point above the long term average. Thus, our own production from hydropower increased by 19.76 gigawatt hours or 6.9 percent compared to 2018.
Generation from thermal power plants was down by 2.6% or 42 gigawatt hours, stemming from the decreased use of the CCGT Mellach for flexibility services. Generation from wind power, however, increased by 95 gigawatt hours or 11.4% due to more favorable wind conditions in all markets. A second important influencing factor on our results are, as you know, the average achieved contract prices. In 2019, based on our hedging strategy, we achieved an average contract price of €39 per megawatt hour, and this compares to €29.3 for 2018. Please note that we priced the majority of the volumes up to 1.5 years in advance.
And €1 per megawatt hour, plus or minus, has a sensitivity of €25,000,000 on our EBITDA line. Now next page, one of the major trends in the new energy world is, of course, increased volatility in the entire European grid system coming from the massive development of renewables. With our very flexible asset base consisting of CO2 free, low cost pump storage power plants and the most modern CCGT in Austria, we're very well positioned to benefit from this trend. However, 2019 ended lower than 2018 in terms of Flexibility Products with the result contribution amounting to EUR 1 119,000,000 with lower contributions from congestion management, pumping and control energy. The reduction, however, was partly expected because since October 2018, the CCG Meller has been put into a strategic reserve mechanism in Austria, under which we'll receive a fixed capacity payment and a payment for the generation.
As a consequence, we have changed an unpredictable volatile cash flow against the secure quasi regulated cash flow for a period of 3 years. In addition, a good hydro situation is often inimical to the development of flexibility products. For 2020, we see an EBITDA contribution of approximately EUR 100,000,000 from Flexibility Products. On the next page, we talk about the grid. The Austrian high voltage grid with a system length of approximately 7,000 kilometers and interconnected capabilities into 7 neighboring countries is strategically of very high importance for the group because of its growing importance in the entire European grid system and its regulated character.
However, under IFRS, in contrast to local GAAP, volatilities in the results contribution cannot be avoided. The chart on the left hand side provides you with a comparison between the EBITDA according to local GAAP and the EBITDA according to IFRS for 2018, 2019 and our guidance for 2020. EBITDA from the grid business according to IFRS slightly increased from $242,000,000 to $258,000,000 The reason for the increase is mainly higher contribution margins from concession management. Please also note that the current regulatory period started on the 1st January 2018 with a WACC of 4 point 88% pretax for existing assets and 5.2% pretax, including an investment marker for new assets, thus, on average, approximately 5%. The regulatory period lasts from 2018 to 2022.
The regulatory asset base for 2020 is approximately SEK 1,700,000,000. The next slide shows the nonrecurring effects in 2019 compared to 2018. Compared to 2018, there were no one off effects in the EBITDA section. We had positive nonrecurring effects related to reversal of impairments amounting to €47,800,000 Those reversal of impairments were mainly related to some of our hydro power plants in Austria and our wind power plants in Romania due to lower cost of capital and higher wholesale prices for electricity. In total, the operating results showed nonrecurring effects of SEK 46,600,000.
In the other financial results, we had a negative effect due to the measurement of an obligation to return an interest in the hydropower plant, Jokenstein, amounting to €55,600,000 We also had a reversal of impairment for our hydropower plant, Asda, in Albania, amounting to $16,400,000 In total, the financial results showed nonrecurring effects of SEK 39,200,000. After considering the impact from the nonrecurring effects on tax minorities, the nonrecurring effects on the group result level amounted to EUR 5,800,000. We'll just show you the amount of the nonrecurring effects in 2018 just to give you a comparison. Now on the next page, I will present how the effects, which I have described before, influenced our financial performance in 2019. Reported EBITDA increased by 37% to EUR 1,180,000,000.
The reported group result increased by 28 percent to EUR 555,000,000. The results development, especially the group results in 2018, was positively influenced by one off effects. In 2019, these effects stem primarily from the reversal of impairments on some of our hydro power plants in Austria and Albania as well as on our wind power assets in Romania. The obligation to return on interest contributed negatively. Now adjusted for these one off effects, EBITDA increased by 37.1 percent to EUR 1,180,000,000.
The adjusted group result increased by 60.4% to $549,000,000 The very positive overall results development is mainly a result of the higher achieved contract prices. In addition, the increased production from hydropower contributed positively, especially in the Q1 and Q2. Positive influencing factors were also increased contribution from the grid segments, whereas reduced contributions from flexibility products had a negative effect. The EBITDA margin slightly decreased from 32.4% to 30.4%. The EBIT margin decreased from 24.5% percent to 22.2 percent.
The declines are due to changes in the accounting policy according to IFRS 9, which led to a reduction in revenues in 2018 and an increase in 2019. Now we will propose to the shareholders in our AGM on April 28 a dividend per share of $0.69 which corresponds to a payout ratio of 43.2 percent on the reported group results and a payout ratio of 43.7% on the adjusted group results. Now let's turn to the development of the cash flow, which I think is very important. The operating cash flow 2019 increased strongly to a level of EUR 1,200,000,000 being far higher than in 2017 and in 2018. The two key reasons for the strong increase were, of course, higher achieved contract prices for electricity and a favorable hydro situation compared to last year.
Furthermore, lower tax payments as well as a higher operating cash flow from the Greek segment contributed positively. The additions to tangible assets of EUR 439,000,000 were higher than in 2018 and derived from CapEx for grid projects and maintenance CapEx related to hydropower plants. Main projects are the hydropower plant in Turgen in Germany and the 380 kV line in Austria. The free cash flow before dividend was very strong at EUR 817,400,000 after dividends at a record level of EUR 640,000,000. Now based on the strong free cash flow, net debt decreased further from €2,600,000,000 to €2,300,000,000 Net debt EBITDA also decreased strongly to SEK 1,900,000,000 after SEK 3,000,000,000 at the end of 2018.
Now let me take you through Verbund's financial liabilities and the debt maturity profile. Debt maturity profile shows a repayment of SEK 234,000,000 in 2020, mainly consisting of a fixed interest bond in the amount of $200,000,000 The debt maturity profile for the following years shows another peak in 2024 with repayments of EUR524,000,000 mainly consisting of a fixed interest bond in the amount of €500,000,000 As liquidity backup, Verborn has access to €500,000,000 syndicated loan facility, which is undrawn, has no MAC clause and is available until 2023 with 2 extension options. Verbund has also access to uncommitted lines with a large number of banks up to an amount of approximately €500,000,000 as well. Total amount of our financial liabilities is approximately €1,100,000,000 The average interest rate on our debt is approximately 2.79%. 91% of our debt are subject to fixed interest.
100% of the financial liabilities are denominated in Europe. In the 4th quarter, we had an ongoing positive trends on our external ratings. Our S and P rating was upgraded by 1 notch to single A stable outlook. Moody's followed in January 2020 with an upgrade to A3 stable outlook. The rating development is, of course, a result of the numerous measures Dagoon has taken in the past to increase our cash flow and to improve our business model in every respect.
Now before we move to the outlook for 2020, let me quickly comment on the updated CapEx plan. The volume of our CapEx plan has increased compared to the previous one, reflecting the better market environment. In addition, the Austrian government has shown strong support regarding the target to reduce greenhouse gas emissions. The total CapEx for the 3 year period between 202020 22 is $2,000,000,000 split into growth CapEx of 1.28 and maintenance CapEx of SEK 790,000,000. The main part of the growth CapEx, approximately SEK 700,000,000 to SEK 800,000,000 will be invested into the regulated grid business, especially into the 380 kV Salzburg line in order to increase capacity to integrate new renewables and better address the volatility and the congestions in our grid system.
About EUR 520,000,000 will be invested into renewables, the biggest project being the construction of the Runoff River plant, Tugging in Bavaria, a project which we acquired in 2009 when we bought the hydropower plants on the River Inn. In addition to the growth CapEx, we are planning to invest around $790,000,000 into maintenance CapEx and efficiency increases between 2020 2022. There we're talking about EUR 265,000,000 per year. Now on the next page and at the end of our results presentation, the outlook for 2020. As you know, key parameters for development of our operational business are mainly prices in hydro volumes.
At the end of 2019, we attached approximately 65% of our hydro generation at an average price of €49,500,000 For 2020, which is approximately €10,500,000 above the level of the full year 2019. Now important on a mark to market basis as of February 27, the average achieved price would be at a level of €45,100,000 per megawatt hour, which is approximately €6 above the 2019 level. We have also hedged 16% of our hydro generation at an average price of $49 for 2021. The mark to market valuation shows a level of 44.4 for 2021. With regard to the year to date hydro situation, we have to report a hydro coefficient of 1.13.
This is as of 11 March 2020, and that is, of course, 13% above the long term average. Now on the basis of the aforementioned developments, the guidance for the full year 2020 is an EBITDA of approximately between EUR 1,150,000,000 and EUR 1,340,000,000 and a group result of approximately between €510,000,000 €630,000,000 under the assumption of average hydro and wind generation for 2020 as well as the chances and the risk situation of the group. For the financial year 2020, Verbund plans to pay out between 40% 50% of the group result after adjustment for nonrecurring effects of between approximately EUR 510,000,000 EUR 630,000,000 As always, at this point, we want to highlight the sensitivities, a deviation of plusminus 1% in the generation from hydropower has an impact of plusminus 6,800,000 in the group results, A deviation of plusminus 1% in the generation from wind power has an impact of plusminus €0.66,000 in the group results. And a deviation of plusminus 1% sorry, a deviation of plusminus €1 per megawatt hour and the wholesale price has an impact of plusminus €5,900,000 in the group results. Now with that, I would like to hand over to you for any questions you might have.
Question is from Vandas Evinovka of Credit Suisse. Your line is now open.
Good morning. Randolf Semenovsk of Credit Suisse. Three questions for me. The first one, could you please update us on the regulatory
Sorry for interrupting you. It's a very bad connection. I have a very bad well, let's just try.
Okay. So maybe I will speak slower here. The first question is on the regulatory surplus. What was the surplus at the end of last year? Is there any update on the repayment?
Do you still expect to repay the surplus over the next 5, 7 or 10 years?
Okay. That was sorry, let me just repeat if I understood correctly. You were talking about the regulatory account, the repayments on the regulatory account, okay?
Yes.
Yes. Okay. Understood.
Okay. The second question is on the potential acquisition of the stake in the Gasconic Austria. Could you disclose the 2019 EBITDA and net income? And what are the rationale behind the deal? Because I think you are not active in gas in the gas business.
Is this the lag of the organic growth, but at the same time, you increase your CapEx? I'm trying to understand why do you want to invest in that? And last question is on the power price. Can you comment what you see on the market? Do you expect the current weak power price market to prevail?
Do you still see a €3 per megawatt hour premium in Austria versus Germany? And would you be able to disclose the latest hedging? Because the hedging as of last year is helpful, but I would say hedging itself and February would be much more helpful. Thank you very much.
Yes. Okay. Now let me start with the power price. As I can imagine that all the participants on the conference call are very much focused on that. We feel that the power price in our region, which is, of course, Germany or Austria, is going to decrease.
The coronavirus has an impact. We feel that Germany will go into recession. We also feel that the demand for electricity will go down. At the same time, we see that commodity prices are not only low, but will continue to be low. I'm talking about the gas price.
I'm talking about the coal price. But I'm also talking about CO2 prices, which are now below 20. We don't see either commodity prices nor the CO2 price increase. At the same time, with the demand for electricity going down, we think that there is pressure on the power price for the foreseeable future. In terms of our latest hedging figures, for 2020, we have hedged 75%.
The mark to market on those 75% hedged, 25% unhedged is 44.5 percent. For 2021, we have hedged, to be exact, 27%. There, the mark to market figure currently is 44.1%. Now it is very difficult to predict how power prices are going to evolve. What I've given you before is our judgment.
There are different schools of thought. I think given the current situation within the economy, this is something that is very hard to predict. But as you have seen in our guidance, we are being cautious. And we are already anticipating in our business planning that power prices might come down from here. At the same time, I would like you to think back.
We had power prices at the beginning of 2016 that were just slightly above 20. Even during that period, we have been very resilient. As you know, within the last 5, 6 years, we have worked extremely hard to eliminate any sources of losses, which we have had that we have either sold or closed our thermal power plants. We have dramatically reduced our debt. So I say with complete confidence that today, we are positioned extremely well, and I would like to underline extremely well, for any situation which we're going to have in the power market within the next years.
If the economic situation continues to worsen, which is a possibility, in fact, I think it is likely. Now coming to your second question, Gasconnex Austria. Gasconnex Austria is a regulated business. It is exactly the same as APG. It is a transport business of energy, APG, electricity, Gasconnecht Austria Gas.
You're right that we don't have an elaborate experience as far as gas is concerned. However, we have a deep understanding and a deep knowledge in any kind of regulated business. As a result of that, we feel that we can develop this business extremely well. At the same time, from a strategic point of view, we feel that hydrogen and green gas is going to evolve over the next 10 years as a very important factor within the electricity world. We feel that we are also experts in terms of electricity storage, and there is a close link between hydrogen transportation and storage, where we think that there is a strategic aspect.
At the same time, it is a regulated business. You know that I have, for many, many years, always been a big fan of APG. I have supported the growth of APG as much as possible because I think the regulated business is a very good additional component to a more volatile generation business. As a result of that, we take a favorable look at Gasconet Austria. We now have an exclusive agreement with OMV.
I'm not going to discuss any numbers. The reason is not that I don't want to be transparent with you. The only reason is that we haven't even had our kickoff meeting yet, which basically means that we have not even started with our due diligence. And as you know for Bond, we have a very good team, both on the financial side and on the operational and strategic side, which is going to turn every stone, and we are going to look at this business with the greatest care and diligence. Coming back to your first question, the regulatory account has increased slightly.
So we currently stand at around €300,000,000 In 2020, we're not going to see a reduction of the regulatory account. We are in discussions with the regulator. As I said on the last conference call, our objective would be to have a linear decrease of the regulatory account over the next 10 years. We're always trying to be as predictable as possible. And we think that if we increase it by, let's say, euros 20,000,000 €25,000,000 every year over the next 10 years.
That would be something that would be in our interest and obviously in your interest. But as I've mentioned, we are still in discussions with the regulator.
That's super helpful. Can I have just a very, very quick one, to your work? You mentioned a decline in the electricity demand. Any number that you can share with us? I know it's very hard to estimate it, but any thoughts on that one would be very helpful.
Yes. I fully understand, and I think that you and the other 100 people on the conference call would be interested. I don't have reliable figures. I mean, I could give you a personal estimate. And as you know, I'm not shy to give personal estimates.
I think the demand is going to go down by anything between 5% to 8%. I would be very surprised if it were 10%. But please be cautious. That is my personal opinion. There is no specific data as of yet.
Obviously, we will get data in the future. But overall, we think it is fair to say that not just in Germany, across Europe, electricity demand will come down.
And do you know by any chance, was it declining the consumption back in 2008, 2009 during the financial crisis?
Yes. Madeline, so with an ambulance in the background, I haven't heard what you've
said. Sorry. Do you know what was the decline in the demand consumption back in 2,008, 2009? Because it's the kind of flavor. I know the situation that is comparable, but do you know the number by any chance?
Yes. I mean, the one thing I know there are many comparisons now, and that is perfectly understandable between our current crisis and the financial crisis. However, the big difference, which we are currently seeing is that we have a real impact on the real economy. We have a real impact on production. I mean, you will see within the next few weeks that in many sectors of the industry, production will decrease significantly.
And when production decreases, obviously, you have less energy demand. That is something that you will see across Europe, maybe even on the global scale. That kind of production decrease in the real economy, and I cannot give you specific numbers, we have not seen during the financial crisis. So I think the comparable number of less demands during 2,008, 2,009 202021 will not be leading towards a very specific result.
Thank you very much for your help and answers. You're welcome.
Next question is from Tania Marklof of Commerzbank. Your line is now open.
Yes, good morning. Thank you for taking my question. I would be interested whether you could share us with us your view on the sales and grid division to what extent these two divisions could be impacted by the lower demand. So how much of the sales, for instance, goes into retail and how much into industrial customers? And if demand predominantly from industrial customers drops, what this could mean to your sales volumes and margins?
And also for the grid business, whether this be temporarily impacted?
Yes. I will start with the grid business. In the grid business, there will be no changes. If there is less expenses for concession management because the volatility decreases in the European grid system, which is a possibility if there is less demand, that would actually increase the results at the grid business. However, that is extremely hard to predict.
It's as we have discussed on many conference calls before, there are so many influencing factors on the volatility. The flexibility products are very, very hard to predict. But I think that with our EUR 100,000,000 in terms of flexibility products and with our guidance on the grid business, we are we have a very sound guidance there. On the demand, I mean, even if the demand comes down, it doesn't mean that we are going to sell less. We will always sell our entire production.
The only impact would be on the price, yes? So that is exactly what I said before, that we think that there might be a decrease in power prices. Again, difficult to predict. But if demand comes down, we will obviously still sell our entire volume, but at potentially lower power prices. But don't forget that for 2020, we're already 75% hedged at a level of EUR 47.
And the 25% that are unhedged obviously will depend on power price developments going forward.
Thank you. And within the sales division, what would be the impact?
Yes. Within the sales division, we don't see an impact on the there are a lot of people like in Austria, a lot of people are at home. People are working from home. People obviously use more electricity at home as if they are away from home. At the same time, offices are partly empty.
So there is less electricity used in offices. But at the end of the day, currently, we don't think that we have a big impact on our retail business.
Thank you.
The next question is from Lueder Schumacher of SocGen.
A A
couple of questions from me, both in the direction of power prices. Your outlook wasn't the most optimistic in terms of power prices. I take it that this is versus the rather depressed levels we're seeing in the market already. Now in terms of your EBITDA guidance range, what numbers were you using for the bottom and the top of the range? I know the hydro coefficient will be a big influencing factor.
But just on power prices, for the bottom of the range, did you use prices from a week ago, 2 weeks ago, beginning of the month or even maybe perhaps a number that is below the current forward? The second question is kind of also related to the same statement. If you are really so bearish on power prices and you think they will continue to go down, that would be somewhat consistent with having a hedge level of only 27% for 2021. I mean that would suggest that you really think if you're so open still for 2021, that would suggest that you perhaps see some of the sell off in power prices as maybe a bit overdone?
Yes. First of all, on your first question, what we have done in terms of our guidance, we are simulating potential outcomes. And we're not only looking at power prices, but we're looking at a lot of different influencing factors. And we run those simulations by changing those variables, coming up with a lot of different results. And then we give you a guidance.
So it is not just the power price. As we're running different power price scenarios for the 25%, which are currently unhedged, I don't want to give you a specific number as it would be misguiding you because we don't have one specific number, but we are running a lot of different numbers in a lot of different scenarios. At the same time, we're obviously trying to optimize. We have our pump storage. We are calculating optimization of when we sell our power, which we have in our reservoirs.
So there are many different aspects how we come up with our guidance. What I can say is that, yes, our guidance is conservative. But I think it makes a lot of sense to be conservative. When you look at the current environment, I'm rather surprised on the upside than being surprised on the downside. That has always been my approach, which I have taken, and I think that we should continue with that approach as it has served us extremely well in the past.
Now coming to hedging levels. What you could see, you could see a decrease in demand now as a direct result of the recession, which we're going to see in Europe, which we are predicting. However, and this is a discussion which many of you are probably having internally as well, some people talk about the V shaped recovery, which we have seen in the past. Some people are talking about the slow recovery. In a V shaped recovery, obviously, power prices would go up very quickly.
If we have a slow recovery, power prices would probably go up not as fast as if we had a quick recovery. Now we are basically trying to be prepared for both scenarios. As a result of that, we are constantly looking at our hedging levels. And we think that our the combination of our 2020 2021 hedging levels, given the current situation, make a lot of sense.
Okay. Can I just go back on your first I wasn't really I'm sure your process for coming up with the guidance is very complicated and there are a lot of data inputs? Can you perhaps share with us when was the cutoff point for taking data on board when you made this guidance range?
No, the day before yesterday. So we are constantly evaluating. We are, as you can imagine, in full operations. And we are constantly evaluating. As a result of that, we have looked at our numbers even shortly before we have come up with our guidance.
Okay. So is there a question answered?
Yes. Thank you very much.
Okay. Then the next question is from Bartek of Erste Group. Your line is now open.
Good morning. Three questions, one in my head. First, the outlook or the guidance for the Grid segment EBITDA, if you can explain the differences between the guided IFRS EBITDA and guided local GAAP EBITDA, which is quite right, €70,000,000 2nd, the reported Abra Financial cost, the one off €56,000,000 Did it affect your cash flows in 2019 already? Or it will affect cash flow in 2020? Or it will not affect the cash flows?
And if you can share your view on the future development of spreads between Austrian and German electricity prices? Thank you.
Yes. I will start with the third one. We don't see any changes in the spread between Austria and Germany. We have originally, even before the quarter came into action, we have predicted €3 The past experience since the border has been in place has confirmed that the €3 are about the right number. And in our internal calculations, we continue to use the EUR 3 difference between Germany and Austria.
In terms of the difference between local GAAP and IFRS, the main difference is that in IFRS, we don't have the regulatory account, which basically means that whenever we have changes in the auction results, we have changes in the cost for control energy or we have changes in congestion management, all that feeds directly into our results numbers on the grid, directly into our EBITDA. In local GAAP, as we have a regulatory account that basically always absorbs those changes, we have the regulated return, which is basically the percentage of our regulatory asset base. The key drivers, as I've just mentioned, auction results, the concession management and the controlled energy and then, of course, the changes in the repayment or in the increase of the regulatory account. In the past, the key differences between a local GAAP and IFRS, just looking at the last 3 years, were mainly congestion management. Now on the second question, I didn't quite acoustically understand it.
You mentioned something what has an impact on the cash flow
or the one off?
No, the one off. No impact on the cash flow.
So this is only a revaluation and with no effect on cash flows in future?
Correct, correct. No cash flow impact.
Maybe a follow-up question on the grid EBITDA. If I look at the chart for the last 3 years and prediction for this year, it seems that the difference between IFRS and local GAAP is actually sustainable. So the extra income from Control and Energy Commission Management options is something what you would treat as a sustainable, this $60,000,000 $70,000,000 plus above the local gap?
No. The safe way of how to look into the grid return is the regulated return. So over the long run, it is a regulated return. And only over the short to medium term, it is basically all the IFRS effects, which I've described before. So to be on the safe side, on your modeling, it is the regulated return, which is the 5% from the regulatory asset base.
So the increase of the regulatory asset base and from that, the 5% until the end of the period, which is 2022, is the best way to model the grid business long term. In the meantime, of course, we have on the IFRS, we have those effects which we have described before. Thank you.
As there are no further questions, I hand back to the speakers for the conclusion.
Yes. I would like to thank you for the very active participation. We have the highest number of participants today, which we have had over the last 5 years. I would like to reiterate again 3 aspects. Number 1, both our grid business and Verbund is extremely well prepared for any kind of crisis situation.
I would like to reiterate that both in our grid business and on our electricity production, we will produce as much in the crisis as we always produce, and we will transport as efficiently and as effectively as we always do. Number 3, that we have worked in a difficult period in 2014, 2015 2016 to make our business model as resilient as it can possibly be for any outsider shock, either through a short term crisis or even a medium term development in terms of a recession and negative impact of the economy. We have reduced our debt. We have increased our cash flow. And the last point, which I think is very important, we continue to be one of the most cost effective producer of green energy in Europe, if not the most cost effective.
I would like to remind you that our production costs, if we take everything into consideration, is around €20. As a result of that, we feel very confident that whatever happens, we are extremely well prepared. With that, I would like to thank you for your participation and look forward to talking to you in our next conference call. Thank you, and have a good day.
Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect now.