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Dear ladies and gentlemen, welcome to the analyst and investor conference call of UNITA. As our customers request, this conference will be recorded. As a reminder, all participants will be in listen-only mode. After the presentation, there will be an opportunity to ask questions. If any participant has difficulty seeing the conference, please press start key followed by zero on your telephone for greater assistance. May I now hand you over to Stefan Jost, who will start today's meeting. Please bear heart.

Good morning, dear analysts and ambassadors. A warm welcome to the Uniper Interim Results Call for the first half of fiscal year 2021. Thank you for participating in our conference call today. Our CEO, Klaus-Dieter Maubach, and our CFO, Tina Tuomela, will lead you through the Interim Results presentation today and answer all of your questions. Klaus-Dieter will start with the key highlights, and Tina will then focus on the financial data. Klaus-Dieter, please.

Thank you very much, Stefan. Good morning, everyone, and a warm welcome also from our side. I would like to briefly outline the key highlights of the first half of 2021 and shed some light on our major developments. The portfolio before Tina will go into the details of our financials. What are the highlights of the first half of the fiscal year? As you can see on the slide, the half-year results are under the heading sound results. Operationally, business at the half-year point fully met our expectations. Already with the Q1 call in mid-May, we had communicated that the isolated adjusted EBIT in Q2 would carry a negative sign. In the end, the well-known carbon Accordingly, adjusted group EBIT in 8-1, half year 1, 2021 decreased from €691 million to €580 million compared to previous year. For the full year, we confirm our previous outlook, which we raised in the first quarter. Turning towards our strategy and portfolio development. When I entered office more than 100 days ago, I made clear that accelerating universe decarbonization strategy would be at the top of my agenda. Back then, I did not expect how strongly the upcoming weeks would further highlight the urgency in this regard. Governments and courts are increasing the pace. 30 from 55 to 65%. The recent extreme weather phenomena inside and outside of Europe make one thing very clear. Whatever the costs of decarbonization are, not transitioning will lead to even higher costs for society. With regard to the recent floods in Germany, luckily, Uniper employs, our activities have not been affected. We are supporting the people who are affected both financially and directly at the locations of our customers and partners. Long term, it is our portfolio transformation that contributes the most in the fight against climate change, which brings me to the next slide. most visible sign of how we at Unifer are moving forward with our decarbonization strategy. At the beginning of 2020, we set for the first time a concrete phase-out schedule for coal-fired power generation in Europe. As you can see on the slide, by now we are making even faster progress than originally planned. operation at four of the five sites by the end of 2025. We have now been awarded in all of the first three German hardcore exit tenders. The Heiden power plant involved in the first auction sees commercial operation at the beginning of 2021. However, this power plant was declared system relevant by the TSO. After approval by the Federal Network Agency, the power plant is now to be kept ready as a backup solution for two years until September 2022. Since going into the reserve scheme, Haydn has been requested several times by the TSO, which highlights the issue of security of supply and system stability. in December 2021. Given its port access to the North Sea, we are working intensively on solutions to establish a commercial hydrogen hub there in the medium term. Now, in the most recent auction, Scholzen Power Plant Unit C was selected. Accordingly, it will cease commercial operation at the end of October 2022. We want to push ahead with the coal phase out, not only in Germany. We also fully support the ambitious national cold phase-out plan abroad and even deliver above those in the case of the UK. We announced just last week that we'll bring forward the closure of one of the four Redcliffe coal units to the end of September 2022, two years ahead of the date announced by the UK government for the coal phase-out. Power generation in the remaining three units of the two gigawatts latest after the power plant has fulfilled its obligations under the UK capacity market scheme. With respect to the retro site, Juniper is making progress in the development of an energy recovery facility to be known as the East Midlands Energy Regeneration Emerge Center, an anchor project for a zero carbon technology and energy hub for the site. Latin floor will be the last of our European coal-fired power plants to be taken. If a new German government wants to talk about a coal phase-out again in this context, then we are prepared to talk. Of course, such talks need to cover the question of compensation as well. The second lever for decarbonizing the portfolio is getting the growth projects on the road more quickly. As you know we have earmarked 1.5 billion euro to spend on growth investments over three years. Renewables will be a key element in improving Uniper's energy mix. At the same time we will leverage Uniper's existing expertise and platform in many areas of the gas value chain to offer lower carbon products and services. Green gases are therefore the second pillar I would like to share with you a few examples of how we have been ramping up new business areas in 2021. As part of our 5 and 2 gigawatts of new capacity in the most attractive European markets by 2025. I am optimistic that we will be able to be more specific on first promising projects towards the end of the year. Moreover, we have expanded our renewables PPA portfolio. On the one hand, we use our experience from the trading and optimization business and act as an enabler for development. On the other hand, we will increasingly address medium-sized and small commercial customers in order to structure long-term carbon-free energy supplies according to the individual needs of our B2B customers. New contracts signed in Spain and the USA have reasonably further increased our PVA portfolio. At the top of our agenda is also to leverage the gas business for the opportunities that arise in the transition of the energy industry. More specifically, this involves the further build out of our already existing green gas portfolio. From a mid-term perspective, we will continue to utilize photons and universe joint capabilities to position ourselves as a major player in the rapidly increasing hydrogen economy. The initial focus here is on launching major pilot projects which need to be supported by public funding and developing concepts through cooperation agreements. The Green Methanol Project AIR in Sweden Innovation Fund, the project recently received financial support of 30 million Euro from the Swedish Energy Agency. Moreover, further cooperation agreements were concluded to improve our market entry opportunities. Uniper and Shell Gas and Power Developments recently signed a MOU not by Australia. For Uniper, as a major European gas midstream supplier, creating import channels for green hydrogen or alternative fuels such as green ammonia for Europe is a core story. A few days ago, Uniper signed a cooperation agreement The project foresees building both an electrolysis plant for 250 to 500 megawatts and the corresponding renewable power assets by 2026. Unibail will provide technical services. However, the main focus is on drawing up an exclusive off-take agreement for green ammonia, which we intend to import via our planned Willemshaven hub. and not to forget Uniper's commitment to expand mobility solutions for heavy-duty transport. Uniper, with its subsidiary Liquis, has been in the process of establishing a liquefied natural gas filling station network for long-haul transport in Germany since 2017. The small energy station network in Germany the successful completion of a trial run of BioLNG with a major logistic company in the truck manufacturer IVECO, Liquis will now also offer a carbon-neutral product at an attractive price for the first time from 2022 onwards. The use of BioLNG results in greenhouse gas savings of around 96% compared with conventional diesel fuel. in the first half of fiscal year 2021. Starting with the global commodities business, storages have been close to their peak in half year one 2020, following a mild winter and decreased demand due to COVID-19. Meanwhile, a colder winter In light of this market environment, European gas prices showed a volatile development and have more than doubled since the beginning of 2021. These combined factors brought our storage levels to around 66%, which is still above the currently observable market average. As recently announced, the upcoming COD of North Stream 2 help to ease the current tightness on the gas markets. Building up on our first quarter, the European generation segment achieved again a remarkable increase in power generation volumes of 19%. Hydro volumes decreased by 9% year on year. This development is mainly related to a normalization in Nordic generation volumes precipitation. Nuclear output declined by around 2%, which mostly resulted from the closure of the minority-owned Ringhals 1 power plant by the end of last year. Gas and coal-fired power generation continued the Q1 trend and has risen by almost 50% year-on-year, which can be explained by several interconnected due to colder weather across Central Europe and UK. Secondly, the higher volumes are also driven by the COD of Dachshund 4, which has only been producing since June 2020, and the gas-fired power plants Irchings 4 and 5 being back in the virtual market since October 2020. development can be mainly explained with a withdrawal of COVID-19 related restrictions for businesses, higher demand on the Russian market, and also beneficial weather conditions compared to the very warm winter in 2019-2020. As can be expected from the roof-wide rise in fossil generation volumes, carbon emissions show a plus of about 19%. This development is in line with the overall market this year and highlights today's relevance of fossil fuels to ensure security of supply and the need to change that going forward. From Uniper's perspective, given the broader fossil asset base, we expect this trend to continue for the full year 2021 and even 2022 as already highlighted back in May. in our decarbonization process progress. Our specific carbon intensity remained at prior year's level with approximately 440,000 CO2 per kilowatt hour produced after the first six months. Even though the percentage of fossil volumes increased, this is mainly attributable to the high efficiency at Yersin four and five. Looking forward, we will drive the emissions across the organization and along our entire value chain. Throughout next month, we will be more specific when it comes to providing proof points on our strategy execution. Having said that, I'm handing over to Tina, who will lead you through our key financials.

Thank you very much, Klaus Fischer. Overall, looking at Juniper's financials after the first six months, we can see, as expected, mostly a decrease in the relevant matrix compared to the prior year. However, there are three key messages around those numbers that put the development in perspective. While we see a decrease compared to prior year, the absolute level of our matrix are 30. Second. The negative earnings development year on year is driven by facing effects which reflects the recent carbon price rally. The underlying business development is actually stable and solid. Third. We are fully on track to reach our communicative full year guidance. Having said that, let's go through the KPIs on this chart. Both adjusted EBIT and EBITDA are down by around 112 million euros compared to the previous year. Accordingly, economic DNA remains stable at around 320 million euros in the first half of the year. In comparison, the adjusted net income decreased only by 42 million euros year on year. As taxes and minorities remain stable at about 25 million euros and 150 million euros, the reason for the comparatively better development of the adjusted net income is the improvement improved economic interest results. Here we have a positive impact from revaluation of our hydro provision to the higher interest rates. The unadjusted or reported net income shows a very strong decline compared to prior year. This results mainly from mark-to-market effects on unrealized derivatives. The main driver here, or our powerhead sees, i.e. short deals at the exchange that lost in value as prices increased. Economically, this is offset by a higher value of our assets. However, those assets are not accounted for on a mark-to-market basis in the net income. This mismatch highlights the usefulness of adjusted earnings matrix to assess our actual performance. Economic net debt increased somewhat compared to the end of last year, in line with the usual seasonal pattern. Finally, on the operating cash flow, we actually see an improvement year on year. As usual, I will now get into details of those KPIs, starting with the underlying earnings drivers on the next slide. This slide breaks down the year-on-year development on the adjusted EBIT into main effects. The overall negative delta of 111 million euros can be fully explained by carbon spacing. This means that in the first six months of 2021, we had more than 100 million euros of additional carbon facing compared to prior year. Like in the past, this effect will fully revert in Q4 and will therefore have no impact on the full year result. It stems from the fact that we hedge our carbon exposures with products that settle at year end. Accordingly, in times of increasing CO2 prices, We record higher expenditure within the year for higher CO2 provision, while the offsetting gains on the hedges are not yet realized in adjusted EBIT until they settle in Q4. The magnitude of the carbon station effects can be explained by the CO2 price increase of more than 20 euros since the beginning of 2021. Looking at the underlying business performance, we actually see overall a flat development year on year. European phosphate generation is up almost 100 million euros compared to the already strong prior year. Here we see additional contributions from Datel 4 and the gas-fired Irving power plants, all of which were not in commercial operation for the most part of the last year's a half year. Additionally, we received higher UK capacity payments in 2021. Our ultra generation business is down by about 30 million euros due to the lower volumes and prices. On the volume side, it is mostly due to the normalization from high water levels last year Price-wise, the decrease is mainly driven by lower access prices for the nuclear side. Moving over to global commodities, which shows a higher double-digit decrease year-on-year primarily to the gas midstream business. As mentioned in the last call, we see here a normalization of earnings after an extraordinary result in half year last year this swing in gas is only partly compensated by the positive development in the international commodity portfolio which benefited from the market environment in q1 2021 our russian power generation business showed a decrease of roughly 10 million euros mainly driven by effect development. Business-wise, the negative impact from Sarluškaja and Javinskaja moving from the CSA to the conch sheen has been compensated by additional contribution from Pere Soskaja III. Category Other sums up all remaining effects, adding up to a single digit positive number that is mostly reflecting a lapse of expenses in the outright generation area. On slide eight, you can follow the reconciliation from the group's adjusted EBIT to operating cash flow. Even though adjusted EBITDA decreased by €112 million compared to prior year, we see the operating cash flow before interest and taxes actually increased by roughly the same amount. Accordingly, the cash conversion rate improved from 35% to 50% year-on-year. Then let's go to the waterfall. starting with the EPDA on the left side and moving to the right. The EPDA is adapted for non-CAT-effective items. Those are primary additions and revaluation of provision, in this case mostly workforce-related provisions. In the next, effects reflects the provision utilization i.e. the actual payout of provisions that have been built up in the past. As usual, this considers primarily three categories of provisions. Nuclear decommissioning, workforce and onerous contracts. Mostly related to our global commodities business. Next, change in working capital. And here is one of the main reasons why the gas conversion is significantly higher compared to last year. As Klaus-Dieter mentioned, our current gas inventory levels are significantly lower compared to prior year due to the colder winter and the current market environment. Accordingly, our net increase in working capital is about 170 million euros lower compared to prior year, which explains the swing on the OSC side. The next element called Other includes mainly the net effect from CO2-related provisions and working capital movement. Here, we also see a significant positive driver due to the higher correction for non-gas-effective additions to CO2 provisions. Then let's go over to the development of the economic net debt on the next slide. After hitting a low in Q1 at 2.5 billion euros, the economic net debt amounted to 3.2 billion euros at the end of June 2021. Compared to the beginning of the year, in an increase of roughly 100 million euros. Looking at the underlying drivers from the left to right, we see that the OCF fully covers our group investments. The dividend of 501 million euros was paid out in May after our virtual AGM. All else equal, this would have pushed the economic net debt significantly higher. However, on the provision side, we see a relief of more than 400 billion euros due to higher interest rates and therefore lower pension and asset retirement obligations. When it comes to pension, interest rates increase for Germany from 0.8% to 1.2% and for UK from 1.5% to 2%. Overall, when it comes to our credit rating, we remain in a very comfortable position. This is further underlined by the recent S&P decision to change the outlook of our PPP rating from negative to stable. When it comes to our full year outlook on our financial KPI, the outlook which we raised following strong Q1 results is left unchanged. We expect adjusted EBIT to end up between 800 billion euros and 1050 million euros at the year end. For adjusted net income, we see a range of 650 million to 850 million euros on a full year basis. While Q2 turned out somewhat lower than indicated during our first quarter analyst call, we remained fully confident in our guidance for the full year. Mostly for two reasons. First, The lower earnings in Q2 were primarily driven by phasing effects, which, by definition, will reverse in Q4 and have therefore no impact on our full-year results. Second, looking at the business forecast over the next six months, we see already significant contributions materializing, especially in the global commodities area. Looking at the remaining two quarters individually, you can, as usual, expect a negative adjusted EBIT in Q3 and a strong positive contribution in the last quarter. As of today, we expect a negative isolated third quarter, but better than previous year's Q3. However, please note that the earnings split between Q3 and Q4 depends on the further development of commodity prices, especially carbon and gas, as just witnessed in Q2. This brings me to the end of my presentation today, so Stetson, back to you.

Thank you, Tina. Speaking of commodity price development, may I remind you that our IR app, Energy.Universe, is the perfect tool to stay up to date on all relevant commodity prices. This is underlined by the very positive feedback we received since its release last summer. The recent update now includes the daily European utility newsletter provided by Bloomberg. And of course, it's free of charge. We neither take your money nor your data. And if you have any questions on this app, please go to our IRG. For questions related to Q2 and today's presentation, however, I'm happy to open the Q&A right now. So, operator, please.

Thank you very much. Ladies and gentlemen, if you have a question for a speaker, please dial 021 on your telephone keypad now sent to the queue. Once your name has been announced, you can ask a question. If you find your question is answered before it is your turn to speak, you can dial 02 to answer your question. If you're using speaker equipment today, please lift your hands up before making your selection. Remembering, please, for the first question. And the first question is from Lulea Schumacher, Société Générale. Your line is now open.

Yes, good morning. Two or three questions on my side, or many related to gas prices. Normally, you tend to benefit in a strong environment for fuel commodities, and Q2 has been extremely strong. You know, gas optimization, there was a lot of optimizing to be done. Why can't we see this in the numbers? You actually showed a negative impact there. Were you self-positioned the wrong way, or can you maybe explain why you, unlike other big trading houses, Vattenfall, RWE, they had an absolute storming due to. Why did it not quite work in your favor? The second one is just your general view on gas prices. We are now 25%. for the TDF front month above the previous high in 2008. There's, of course, a big squeeze. You referred to Nord Stream 2 in your presentation. Do you think that this coming online will ease the squeeze and the tightness we're seeing in European gas markets at the moment or Could there be a prolonged squeeze simply because gas storage can't be filled up in time for the winter with prices and supplies being like it is? And the last one is just technical. When you mentioned your carbon intensity on page five, does this refer to all of UNIPA or is this just Europe?

Thank you for your question. I think the general one on gas prices, that's one that will answer and then Tina will comment on the gas optimization. On the carbon intensity, we're checking that quickly and refer to it.

Yeah, maybe I start with your second question on the kind of general outlook of gas prices about speculating for the future. What we see is that a number of factors, or I would better say, we monitor a number of factors. One of the factors we've mentioned in our presentation, this is the filling of the gas storage facilities across Europe. We mentioned that I think it's 50-something percent, which is, again, if you compare it to previous years, rather on the lower end of the averages that we have seen so far. So that is one factor clearly going forward. The second factor, as you rightfully pointed out, is about kind of gas import infrastructure, the availability of gas import infrastructure. in Russia, which is still unclear how the mid to long-term effect would look like. So I think we can speculate on this one. And the main driver for that would be simply what kind of winter do we have to anticipate? If it was a winter like the last one from 2020 to 2021, to support high gas prices, gas prices if it was

Thank you. I continue. So, as mentioned, of course, very significant increase in the gas prices. But in our operations, we would say that there is no direct impact on our profitability, as we do not have a pure long position here. I think for us, it's more a question about the volatility and summer-winter spreads, And as usual, our margins are mainly made during winter, so to say, last quarter of the year, first quarter of the year, when we withdraw from our storages. Then what comes to the relevant spread, so we can say that the gas have not improved so much. What comes to our... in a way performance. So however, we can see that the first half year overall for gas is on the stronger side. So maybe impact a bit more than 200 billion euros EBIT. And we expect it also to be a good full year.

Last question on the carbon emissions.

Excellent. Thank you.

The next question is from Alberto Gandolfi, Goldman Sachs. Your line is now open.

Thank you and good morning. I want to ask a couple of questions, if I may. The first one is, if you can share, please, your thinking regarding... the gap between German power prices and Nordic power prices, and if you expect the gap to widen, narrow, or remain stable, and if you maybe can tell us why, that would be great. The second question is if you can give us an update on your new businesses. You basically are, you know, you eloquently explained on slide four the ramp-up you expect in renewables and in green gas. I was wondering if you can give us an update as to potentially what uplift to EBITDA you would expect from these given changes in cost of raw materials, given the change in commodities, or perhaps if you can tell us maybe the invested capital and the return that you are targeting in light of the new scenario that we're living in. Thank you.

Yeah, good morning, Alberto. Great questions. good to have you on the call. The first one on the German and Nordic oil prices, that goes to Tina, and the second one on the new business will be tackled by Klaus-Peter. Tina, over to you.

Okay, thank you. Thank you for the question. So, we agreed there is a massive gap in a way between the Nordic and German prices, but in our view, it could come down over the time. And the reasoning why we believe that's possible is that there are new interconnections between the different marketplaces. So already last year, there was a lot of links between Norway, Denmark, At the end of this year, not the link, this is planned to go online at the end of this year. And then further, we can link 2024 and more to come even following years. Also, what we have seen in the Nordic, so they have also some restrictions between the different areas, particularly between the Swedish Area 2 and Area 3, which are are easing up. At the end of the day, I think it's also a question about the supply and demand pattern. And as there is a strong need for decarbonisation and electrification is the one key, so we expect industries, heavy users of electricity to use and in a way take the also the demand side up and in a way balancing the very big differences what we currently see. Then over to you class teacher to respond to the question.

Yes, thank you. I mean I'm building on what Tina said clearly. very difficult to predict. We've seen that also in companies in Europe. But back to your second question on our growth ambitions. Number one, I would say we have two areas as we try to highlight, renewables and green gas, hydrogen. Now, if we look short term, which means one, two, three years, then I would rather expect us to spend most of the money that we have years, I would expect more money to be spent on the renewable side and not on the green gas side, since we have more, I would say, tangible and large projects already in our pipeline on the renewable side. That's number one. Number two, difficult to predict how the return It's the technology, wind or solar, because wind is more volatile than solar. It's about the maturity of the project that we are embarking on, is it an existing or already producing wind farm that we're looking at, or is it a greenfield investment, which would carry then If I wanted to disclose that number, it would be difficult to do that.

Got that. Thank you for your answer.

The next question is from James Brandt, Deutsche Bank. Your line is now open.

Hi, good morning. Thanks for the presentation. I have three, and I have three questions, or is it two? Some people have been going for three. So I'll try for three. And if you only want to answer two, that's fine. So the first question is, you still haven't outlined a kind of updated dividend policy. When should we expect one? Will we have one before year end or should we anticipate waiting until the end of the year? The second question is on hedging which I know you don't disclose the hedging after 2023 but you obviously have a very high level of German forward hedging out to 2022 at almost 100% how should we and obviously at levels quite way below where the current forward curve is so when we're thinking about the upside potential for your earnings from that business and thinking ahead to 2024 it's useful to have some kind of indication as to how much you might have hedged. But I'm sure you don't want to disclose an exact percentage, seeing as you haven't formally disclosed that. But when we're thinking about 2024, have you hedged very little or a moderate amount, or you're pretty hedged for 2024 as well on German power? And then the final question, Dr. Klaus-Dieter, you made some quite strong comments comments at the beginning around the green transition and that we need to kind of pursue alignment with that kind of whatever the cost or I know you didn't quite say it in that exact way and I was wondering whether you could just elaborate a bit on that how we should think about that is it when you say whatever the cost should we expect you to kind of close profitable stations or you know make disposals of assets below what you think they might be worth, just because it kind of aligns with the green agenda. How should you think about the kind of trade-off there between pursuing that, whatever the cost, and maximizing shareholder value? Well, maybe this do go hand in hand. Thank you very much.

Good morning, James, and thank you. And I think I didn't mention this time the two question rules, so I think it's totally fine if you ask. The first one on dividend and also the last one on green transition, that will be two for Klaus-Peter and then Kino will take the answering question afterwards.

I would like to say thank you for I'm grateful for your last question. We'll come back to that in a second. On dividends, I have to admit that we're not ready to comment, even not ready to give any kind of outlook on when to come back to these dividend questions. We're working on this. Clearly, the number of things that we have to figure out going forward, some are kind of clearly... connected to our business, to the volatility of our business. Some are also connected to the growth story that we're trying to outline since there are obviously a number of things that we have in our pipeline which could have also an impact on that one. So no, we can't say anything on dividend today. And unfortunately, no, we cannot even do any outlook on when we're going to come back to this. It's very concrete whenever we have our internal discussions and decisions, for example, to participate in German coal exit tenders, because we have to submit a certain price level, that price that we know, the cap, the maximum cap, for example, when we kind of discuss that in the boardroom, and then we make a decision on how to position ourselves. and to do that in a way that on one end, we are not kind of leaving money on the table, if you like, and on the other hand, that we're also pursuing our decarbonization strategy. Radcliffe is another good example for that. We made a decision to earlier close one unit as of end of September 2022, as I mentioned, so that it's two years earlier than originally planned, and clearly that, again, was also a discussion that we have to what extent are we not capturing maybe a remaining value with that unit, and to what extent is it supporting our decarbonization strategy. And finally, we made the decision to announce this earlier closure of Unit 1. I think it will continue to be a debate that we will internally have on this kind of trade-off between our ambitious plan to decarbonize our portfolio in one end and at the very same time also creating shareholder value for our investors and shareholders.

Then moving to the other question about our hedging. In overall, we could say that our portfolio is not very sensitive to the price changes for the reminder of this year, next year, 2023. And the reason being that when we look at our position at the year beginning, we were widely heads. Also, the Overall, we could say that the price level is the one thing. The other thing is that what is the liquidity in the market. And in our view, the summer liquidity has been also fairly low. So what has also impacted our hedging possibilities. Then what comes to the further years, so of course the direction is very, very At the moment, we will not disclose our hedging levels at 2024, but we are coming later to that in the quarterly report.

Great, thank you very much.

The next question is from Sam Ari, UBS. Your line is now open.

Hello, thank you. Good morning everybody. Very helpful presentation as always. Listen, I wanted to ask a question, if I may, on the bigger picture around carbon prices. I think the way I'd put the question is as follows. Correct me if you see it differently, but a few years ago I think it was consensus that If the carbon price went above a level of about 30 euros then there would start to be some fairly intense lobbying from industrial groups, consumer groups and so on because of the impact of that on power bills. But now we've been at a carbon price over 50 for a while and I don't know what surprises me is that we don't seem to hear a lot of complaining so far from the people paying the power bills. So I suppose my question on carbon is, given your position in the market and what you see, do you think carbon at this level is politically sustainable? And specifically with reference to Germany and Sweden that you don't know very well, do you pick up any discussion of potential or clawback measures similar to what we've seen in Spain this year or anything equivalent? And then I do have a second question, if you forgive me, on Russia, but perhaps I'll let you answer on carbon and I'll come back on Russia in a moment.

Okay. Thank you, Sven.

Good question. Well, indeed, I mean, I agree with you that we had a totally different discussion on carbon pricing a few years ago. Now we are constantly above 50. We've seen pretty high prices for the wholesale market for the next winter. What I would say is that when you were kind of coming to this topic of power bills, I think my major concern that I would have is in particular how that led to not so much the knowledge because they have different price levels, how industrial customers can digest this price peak. I mean, what we know from our customers, industrial customers, When it comes to retail customers, I mean, let's wait and see how the price development will look like mid to long term. That will depend on the number of factors. We should acknowledge that, for example, in Germany, higher wholesale prices would have a compensating effect on the, what we call EEG, EEG Zoolager, which is kind of the compensation Carbon pricing, I think, obviously is very much driven also by political agendas that we should also expect. You know that we have elections coming in Germany. We have an election coming in France, which is also very important for Europe. So I don't see that there is any appetite to intervene from the political side. governments will even push it into a direction in which they still rise. So that's somewhat difficult. But in a nutshell, my main concern would be with our industrial customers that are exposed to very high power prices meanwhile.

Thank you. Well, sorry, just a quick follow-up on carbon, but just on the specific point about We get this question all the time if we think there's a risk that other countries might introduce some kind of clawback being similar to the one that the Spanish government is putting through at the moment. Have you heard any discussion of that that we should be aware of or do you think we can rule that out in other countries outside of Spain?

I think I would be careful in ruling that out but at least what I can say honestly is that I've not seeing any debate that we actually had so far for the time being around that or any risk that we would have identified in that sense. I'm not aware of that.

Okay. Okay, very clear. So just quickly, my other question was on Russia, and it's very simple, but I suppose it wouldn't be a Uniper results call if I didn't ask you guys a question on Russia. But can I just ask, is there any update on your thinking about Unipro? whether this remains a core asset in your planning, or if we should be thinking of the holding in Unipro as more of a financial asset now, which could be up for disposal at some point.

Now, on Russia, the situation is unchanged. Now, first of all, I'll come back to what we've said earlier. When we look at Russia and our activities there, it's more that we also kind of see this as an element or part of our portfolio. And as I said before, also Russia, we look at Russia and ask ourselves how can also our Russian business contribute to our decarbonization strategy, which is clearly something that is very challenging also for this Russian power business. or things that are speculated in the media around our kind of future direction or something like that.

Okay, very clear. Well, forgive me for asking, but thanks for your very helpful explanation there.

The next question is from Vincent Ario, JP Morgan. Your line is now open.

Yes, hi, good morning. We'll come back a bit to the beginning of the call regarding the commodity price and what's been said in the missed opportunity potentially. So I'd like to jump into that. So you're saying like 66% of gas storage in June, that's more than market average. So that begs the question, why do you have a high gas storage percentage? When gas prices are high, did you have an opportunity to sell at a higher price and a lot more profit in Q2? Or you're talking about Nord Stream 2 coming in Q4. Is it that you've sold forward some gas volume to not send a winter spread towards the end of the year? So on the gas storage side of things, Is it that actually you had an opportunity and you locked it and we just don't see it in Q2, but we'll see it towards the end of the year? It will be interesting for us to understand that. The second thing is on the power generation. So I'll say, like usual, I say this before I speak for everyone, it's almost impossible for us to assess the trajectory because of the costly market of the CO2 provision and release. And Unibro is the only one to do that, and it makes things very difficult for either sell-side or investors to get a clear assessment. So hopefully one day we'll get obligations like peers in this respect. But coming to the outright, in fact you're seeing the price slightly down. You are hedged a lot out, and that was a point raised by a competitor a bit earlier, I think, So what was the reason to be hedged that much is question number one. And question number two is, when you start the year, normally you still got five to five, usually we'd say 10 to 20, but maybe in this case, five to 10% list of open position. And the ball price went up 50%. So why weren't you able to capture this opportunity? If I were to put things, just two questions. You're saying you're not long, Gaz, I absolutely understand, but that's physical. You have a trading desk like competitors, so you don't have to be physically long, it's a trading position. So what is different in your trading department from peers? I do not mind having lower volatility and profitability, to be very honest, but it's something we need to understand. Thank you.

Maybe, I don't know, hopefully Tina gets this question around CO2 trajectory and also all the hedging strategies she may then kind of try to answer the questions that you had on this one. But let me start with this gas and filling. Well, number one, I don't know why our kind of competitors But what we do see, it's just a fact that the average filling in our sector is lower than our gas storage filling. And clearly we are trying to kind of try to understand that and also the rationale behind that. As Tina already said, we are in particular also after kind of understanding and hence also kind of trying to make the right decisions on our gas position. And I would add, there are a number of things in our long-term gas purchase strategy and also in our long-term contracts that I would not like to disclose, honestly, that have an impact on the way we are trying to kind of hedge our position, but also trying to purchase and also fill our gas storages. So that may also be different, be a factor that distinguishes us and our strategy from the position that our competitors do take. So it's a little bit of speculation. I don't want to go so

If I continue about the hedging and the outright hedge percentages, so it is very true that the percentages are high. It's always easy to, in a way, look backwards and see that that's what could be the optimal position. But I think that if we think about last year, we were in the middle of the COVID COVID situation, we didn't know how to, how the demand and the economy will develop. So I think, okay, in hedging, we in a way that's also risk management, but also securing our cash flow. So I would say that this is probably the one background reason for the, if we look at from the past, from the past and the reasons why the hedges are fairly big. Then about our commodity business and how we are doing. So I think it's good to, in a way, see the overall profitability of our commodity business and just thinking about our last year cash results. So it was the around the 600 million EBIT, with a very, very difficult winter. And this year, we see more kind of the normalization, and after six months, so we have already gained 200 million euros, so this is significant result. Also, I think one reason, kind of the parameter is the timing, when the result will realize when we take our position, usually we also hedge and these are how they turn to our accounts so it might have some swings.

Okay.

Thank you very much. So the next question is then from . Your line is now open.

Thank you. I think some of my questions have already been asked. I'm going to have a go at the Russia question again, but in a slightly different way, which is that currently you're not dominated by Fortin. Do you think that if Fortin were to dominate you, that is what is needed for clarity on how you would look at Russia? Or do you think that the outcome is completely independent of Fortin's ownership on what you do with your approach?

Peter, good morning. Good to have you on the call. Is that your only question? Then we close Peter.

Yes, we are not dominated by Fortum. Yes, we don't. We still don't know how Fortum is going to kind of take any decision, if at all. I think I cannot comment. I will continue to not comment and speculate on what Fortum is going to do with their shareholders. And hence, we are discussing our Russian power business activities totally independent from the discussion that Fortum might have. So I don't see any kind of connection between kind of Fortum's ambition or ambitions around the Russian business and our ambitions. We have to take our decisions and our strategy implementation clearly independent from that. What I would stress though is, and that is important and I can kind of confirm that again, that the strategy that we have defined and that was defined in early 2020 was confirmed by end of last year. It's still the strategy that we are implementing and that is still clearly supported by four with our strategy implementation path, clearly supported by our main shareholder.

Okay, thank you. The next question is from Pierre Giotis. Your line is now open.

Hi, good morning, everybody. Thank you for letting me ask the questions. I have two maybe small ones. First, can you maybe tell us what's the impact of the CO2 hedging provisions on your cash flow cycle throughout the year? Do you build the cash up front and then you release it in the April? And then what's the, based on the current carbon pricing, what's the kind of magnitude of the annual cash flow difference if it is a swing like this? And second, I'd like to ask you about the Asian 4 and 5, which you brought in the fourth quarter last year online. And clearly the market condition has changed somewhat. So I just wanted to ask you, what is the position now? Are they in the money? And, you know, what's the margin there? What's the kind of contribution you would expect from these two plants on a forward basis? Thank you.

Good morning, Pierre. And thanks for your question. Good to have you on the call. The first one on the CO2 provision, that will be answered by Tina. And the second one on the issue in point five, that's the one for you. Yeah.

Yep, all right, so what comes to the CO2, in a way, cash flow and also in accounts, so basically we are building the provision during the year and we are hedging our CO2 position and using the yearly products what's available at the year end and settled then, so then the cash flow impact comes in a way later, usually working capital release in May time. Then the – what was the other question?

I can take that. I mean, what we have disclosed, you know that because you will follow – Also, the market developments, clean spark spreads are, in my view, positive. So we have seen a number of months in positive territory. We have clearly hedged our position on Iershing back then. So that was very helpful for us. Clearly, I would see for the time, the months ahead of us, that Iershing 4 and 5 will obviously be key to the German power market and the continental European power market. I mean, what we have to acknowledge that we have very, very high CO2 prices and high gas prices now. If that continues to be on that kind of level, then we have to see how prices will kind of develop over time because obviously Rather, the coal units would then benefit from that. So recent developments have shown that, for example, dark spreads have made quite a turn, and that is something that we're trying to follow, trying to understand whether this is something that is only a short-term development or whether we should anticipate that bring Irching 4 and 5 back on stream was the right decision to take and we're kind of producing on site nicely, I would say.

Okay. Thank you very much.

The last question is from Jesta Staden, Bloomberg News. Your line is now open. At the moment, you are the only one in the Q&A. Maybe you put yourself on mute. Your line is now open. You can ask a question. Okay. So far, then, no one is answering. We have no further questions. I would like to hand back to the speakers for some closing remarks.

Thank you very much. And, yeah, then... Thanks everyone for participating in today's call. We can close the call now and wish you all a nice day. Thank you very much.

Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.