Verbund Ag Ord

Ladies and gentlemen, welcome to the Verbum Dei Gei full year 2024 conference call. I would like to remind you that all participants will be in this only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time, pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Peter Coleman. Please go ahead.

Thank you very much. I'm here with Andreas Wollein, Head of Investor Relations and Finance. We will do this presentation together. Ladies and gentlemen, welcome to the presentation of our 2024 results. And let me thank you for joining today's conference call. Before we move into the analysis of our business development, let me make a few general comments. In 2024, The verbund results were down compared to 23, but still high in a historic context due to normalizing conditions in the energy industry following the gas price shock after the outbreak of the Russia-Ukraine conflict. As you know, the past financial years proved to be challenging for the entire energy industry. with very little predictability and high volatility. In particular, geopolitical events, but also the weakening economy in Europe. In addition, the landmark elections in the EU, in many EU member states, and of course in the US, gave rise to intensive discussions about the future shape of the regulatory and political framework conditions. within the energy sector. These developments made it very clear that tensions between security of supply, climate protection, and competitiveness will remain intense over the next years. Now let's move on to the details of our 24 results. Average achieved contract prices decreased compared to 23. The hydro coefficient determining the generation from our run of river hydropower plants was significantly better compared to last year. The generation from the annual storage power plants rose due to higher inflow and reduced reservoir levels outweighing the lower generation from turbaning. Generation from wind and PV was also up. The increase in new renewables was mainly a result of the commissioning of new renewable power plants in Spain, but also in Austria and Germany. However, the overall result contribution declined due to lower achieved prices, higher other operating expenses, and valuation effects of energy derivatives. Generation from thermal power also rose due to the increased use of our CCGT in Mellach. The results contribution from the sales segment improved and was likely positive. However, the contribution from retail was still negative. Lower contributions from GasConnect Austria and Austrian Power Grid were recorded in the regulated grid segments. And finally, contributions from flexibility products decreased, mainly due to lower contributions from concession management. Now, let me go into more details, and let me start with the hedging volumes. Higher, relevant, highly relevant for FABON results, as you know, one euro per megawatt hour, plus or minus, has a sensitivity of approximately 25 million euros in our EBTA line. As of the 21st December, 24, we reached an average achieved contract price for hydro generation of 118 euros, dramatically below 23. As of the 31st December, 24, we have sold 66% of our own generation volumes for 25 at a price of 117.5. And for 26, we have sold 38% of the generation volumes at a price of 79.3. On a mark-to-market basis, with prices as of the 17th of March, 25, the average achieved contract price for 25 is at 108.9, and for 26, at 81.8 per megawatt-hour. On the next page, we talk about the hydro segment. At 109, the hydro coefficients, an index quantifying the hydropower generation of the Rannoch River power plants was 9 percentage points above the long-term average and 11 percentage points above the level of 23. The production from annual storage power plants increased by 4.2%. On production from hydropower, Therefore, overall increase by 2,940 gigawatt hours or 9.6% to 33,448 gigawatt hours compared to 23%. The increased volume, however, could not compensate for the lower achieved contract prices. Therefore, the EBITDA in the hydro segment decreased by 23% to 3 billion euros. Regarding capex, 24 marked the completion of very important projects. The 45 megawatt RISEX II pumped storage power plant as well as the 11-megawatt GradCon run-of-river power plant project. Activities on the 480-megawatt Limburg III pumped storage power plant project as well as the 14-megawatt Stegenwald run-of-river power plant project are progressing very well, and we are expecting them to open in 2025. Now, on the new renewable segment, The new renewables coefficient, which, similar to hydro, is an index quantifying the generation from wind power and PV, amounted to 0.91 in 24 compared to 1.06 in 23, so lower coefficient here as well. The generation from wind power increased by 30.2% or 422 gigawatt hours and amounted to 1,800 gigawatt hours in 24. More favorable wind conditions in Austria, in addition to new installations in Austria, Germany, and Spain, were the reasons for this development. Generation from PV amounted to 446 gigawatt hours, or plus 23 percent in the reporting period stemming from PV installations in Austria, that is seven gigawatt hours, and Spain, 439 gigawatt hours. In both countries, new solar farms went online. Now, taking a look at the EBDA development, In the new renewable segment, we see that the EBITDA decreased by 25%, to an EBITDA amounting to 170 million euros. Lower achieved prices were offset by increased generation volumes, as I mentioned before. However, higher other operating expenses and a lower effect from the valuation of energy derivatives in connection with future energy deliveries had an additional negative effect. The chart also provides an update on our activities in the renewable sector. The main focus is on the development of our large renewable portfolio in Spain, for which we got the approval to start construction of approximately 1.6 gigawatts. On the next slide, you see an update on our renewable activities. The chart outlines our new renewable assets in operation and in construction in our markets. It is split by technology as well as our targets for 2030. In addition, we are providing the EBTA contribution in 2024 and all the relevant CapEx figures. Now, on the next page, talking about the sales segment, Taking a look at the EBITDA development here, we see that it strongly increased to a slightly positive value of 7 million euros. The EBITDA in the retail business improved from minus 382 million in 2023 to a level of minus 77 million. So that is a big increase. The EBTA in the trading business amounted to plus 84 million. However, this figure includes negative valuation effects of 94 million. So the improvement in EBTA was mainly due to lower procurement costs for both electricity and gas in the end customer business, which was offset primarily by lower results from devaluation of energy derivatives in connection with future energy deliveries. In the grid segment, as you know, the grid segment consists of our regulated business Austrian Power Grid and our regulated business Gas Connect Austria. The EBITDA for 24 from the electricity grid business, according to IFRS, was approximately 284 million. which is a decrease of 89 million. The main effect for this decrease was the reduced contribution from earnings of our auctions. The EBITDA guidance for the electricity grid for 2025 is at approximately 210 million euros and can be characterized by two different effects. The regulatory compensation is rising because of higher WAC numbers compared to last year and because of the increase of the regulatory asset base reflecting the National Grid Development Plan. The company's strong growth, however, is leading to cost increases, which will be reimbursed by the regulator two years later. This time lag generally has a negative effect, as you can imagine. In addition, the movements in the regulatory account will have a significant negative impact on earnings of 76 million euros. The planned amount of the regulatory account at the end of 2025 will be approximately 480 million euros. I would also like to give you an update on the WAC development. APG receives a WAC of 4.2% for old assets with a commissioning date up to 22 and a WAC of 6.3% for new assets with a commissioning date in 24. And now most relevant, a WAC of 6.24 for new assets with a commissioning date in 25. So when you take it together, the total WAC for 25 is approximately 4.8%. As you might know, there will be a yearly update of the WAC for new assets for each tariff setting process until the end of the regulatory period, which is in 2028. Now, with regard to the results contribution of GasConnect Austria, we report an EBITDA of approximately 86 million for 24. The strong decrease compared to the very high results in 23 is mainly due to the elimination of the so-called commodity tariff and lower auction revenues in the gas network. DBDA guidance for 2025 is much lower. It's approximately $30 million under IFRS. What's the explanation? Well, it's the cessation of Russian natural gas transport through the Ukraine. As a consequence, we have a shortfall of approximately $40 million, which will directly reduce the 2025 results. But as we are in a new regulatory system, we'll be compensated with T plus 2 starting from 27. I will now hand over to Andreas Wollein, who is going to take us through the next few pages. Please, Andreas.

Yeah, thank you, Peter. So let me continue with the old other segments. So generation from thermal power plants was up by 622 gigawatt hours. We had lower revenues. The reason was mainly due to lower average prices achieved, which could not be offset by the higher production volumes. In addition, negative effects from the valuation of future energy deliveries were the main reasons for the decline in EBITDA. The contribution from flexibility products also decreased by around 15 million euros. The contribution from Cadillac, the provincial utility of Carinthia, increased from 78 million euros to about 100 million euros. This year-on-year increase in earnings is mainly due to the improved hydro availability, the higher trading result, and the efficient use and optimization of storage capacities. Now let me come on page 10 to the non-recurring effects. We recognized impairments in 2024 amounting to minus 291 million euros, and we had reversal of impairments of positive 114.3 million. The main reasons for the impairment losses concerning Mellach are lower clean spark spreads achievable in the medium term. The reason for impairment losses concerning GasConnect Austria are adjustments of the long-term business plan with respect to the new cost notice for the upcoming transmission regulatory period from 2025 onwards. The main reasons for impairment losses concerning the Spanish renewable assets are lower electricity prices for non-tariff projects and updated operating expenditures. The reversal of impairment losses are, among others, due to lower capital costs. The total effect of impairments in the EBIT line is minus 177 million euros. The non-recurring effects in the financial result amounted to minus 26 million in total and are mainly related to reversal of impairments related to TAC, the measurement of an obligation to return an interest in Donor Draftwerke Jochenstein and the PPR in TAC. The effect on taxes amounted to $47 million. The effect on minorities, $55 million. The overall impact of the non-recurring effects on the group-side level amounted to approximately $100 million. Now moving on to page 11, we show the development of the most important key figures of the bold So first, I think we mentioned that because of the aforementioned developments, EBITDA decreased by 22.5% to 3.48 billion. Depreciation increased by about 8% to 578 million due to the increased investment volume, especially in Austrian power grid, and the depreciation of the plants acquired in Spain in previous years. The financial results slightly deteriorated from €55 million to €52 million. On the one hand, an increase from Kellogg, but also an increase in interest income from money market transaction. In addition, interest expenses declined. This decline resulted in particular from the repayment of €500 million in November 2023. and from lower interest expenses from money market transactions. On the other hand, issuance of a green bond in May 2024 had an offsetting effect. The other financial result also had a negative effect. This resulted mainly from the measurement of an obligation to return an interest in Donaukraftwerke Jochenstein Power Plant. Taxes on income amounted to $639 million. The group result therefore decreased by 17% to $1.87 billion. The group result after adjustment for non-recurring effects was down by 24.5% and amounted to $1.96 billion. Finally, I would like to mention the decrease in additions to tangible assets in total from $1.45 to 1.16 billion, major investments mainly related to the hydropower plant Limburg III, various electricity grid investments, as well as investments into new renewables in Spain, Austria, Germany, and Italy. On page 12, you see a further development of key figures. First of all, the operating cash flow. decreased in line with the decrease in EBITDA to 3.25 billion euros. The change was mainly due to the significantly lower prices for electricity, lower inflows from margining payments for hedging transactions, and higher income tax payment. The free cash flow after dividends showed a negative development from $2.1 billion in 2023 to a level of $145 million in 2024. The lower operating cash flow as well as higher dividend payments were the most important influencing factors. An important key figure was at 0.6 as of December 31st. The slight increase primarily due to the lower EBITDA. Based on the results presented, we will propose an ordinary dividend of 2.8 euros per share for 2024 at the annual general meeting on April 29th, 2025. The payout ratio in relation to reported group result is 51.9% and 49.2% in relation to the group result adjusted for non-recurring effects. So let me pass on to Peter again for elaborating on the CAPEX plan and the outlook.