Good morning, everyone, and welcome to our 3rd quarter results presentation. On this, I'm pleased to present a very solid 3rd quarter. The strong financial results in the period were primarily driven by very good performance in the Philippines. While the world continues to face turbulent times, both on geopolitical and economic level, driven by the global energy crisis, higher inflation, and also higher interest rates, the demand and the need for green energy and energy security is higher than ever before. I am proud of the Scatec team, which is navigating through these challenging but also opportunistic times. Our people are continuing to put in extraordinary efforts, always going the extra mile to contribute to our progress and delivering on our strategy. Our people and organization are the real basis for our continued success. Last week, we celebrated 10-year anniversary in South Africa.
The success we've had there is based on a long-term perspective and building, competitiveness and scale over time. This is also what we intend to do in the rest of our focus markets. The war in Ukraine continues and is impacting all of us. It is good to be able to stand here and say that our employees are all sound and safe, and 95% of our portfolio in Ukraine is continuing to generate energy for the benefit of the country and the citizens of Ukraine. That said, emission reduction targets set out in the Paris Agreement are increasingly difficult to achieve. As UN says in the last report that came out as late as last week, the window to achieve our Paris targets is closing. Hence, COP27, this year hosted by Egypt, is more important than ever.
It is expected that a just green transition is going to be at the center of that conference, at the center of the discussions in Egypt. We will be present in Sharm El-Sheikh and participate in discussions and showcase some of the initiatives that we are working on, both related to renewable energy as well as related to green hydrogen. Moving to the highlights of the quarter. Q3 was a good quarter with solid financial results, strong operational performance, and also very good progression on our projects under construction. Total proportionate revenues came in at NOK 1.8 billion with an all-time high EBITDA of NOK 850 million. This is driven by strong performance in the Philippines and also meaningful revenue recognition related to our D&C segment.
Construction of our projects in Brazil, South Africa, and Pakistan progressed all well in the quarter with high activity level on these sites. We also received an A rating on our reporting from Position Green, and we submitted our net zero climate targets for validation by the Science Based Targets initiative. ESG, as we have said many times, is part of our DNA, and setting ambitious climate targets is just the continuation of the work we do on a daily basis. We expect the validation process to be finalized by the end of this year. Last quarter, we also presented an updated strategy and growth targets at our capital markets update with clear strategic initiatives and continued focus on profitable growth. This is to ensure. Sorry, I forgot to go to the next page. Yeah.
This is to ensure that we continue to deliver strong results in the years to come. In the quarter, we had solid operating performance from our diversified portfolio, with a production increase of about 7% compared to same quarter last year. This was another quarter with high availability across all our power plants, a result of the excellent job done by our operations and maintenance teams, across all our sites. As you can see on the graph, production within solar and wind was basically in line with last year, while hydro in Laos and Uganda was down 15%. This is mainly driven by low inflows to our hydropower production units in Laos. This was, however, fully offset by the Philippines, where production ended 37% above the five-year average.
Production volumes were significantly above contracted sales volumes, which allowed us to capture high power prices by selling excess production volumes in the spot market. Average realized spot price remained high during the quarter, reflecting the general energy market as well as our capability to capture high prices in the market on the basis of our flexible generation base. The combination of high production and spot prices resulted in an EBITDA of NOK 375 million, which, as already mentioned, was a key contributor to the strong Q3 results.
This shows the attractiveness of our Philippine hydro assets, and I am impressed by our competent team in the Philippines who optimize our assets on a daily basis to ensure that we get the best possible prices from the water that we have available. We also expect a strong Q4, both in terms of prices and production volume, enabling us to catch up for the weaker first half of the year. I'm also excited to see the significant construction activities that we had during the quarter, which is visible on the slide that we're showing you here. We've had good development on our projects under construction, with site teams mobilized and work progressing very well. We are recognizing about 4% progress in our accounts this quarter, and that represents revenues of about NOK 400 million for the D&C segment.
In South Africa, groundworks have been carried out, access road preparations made, and piling work has started. In Brazil, activities such as clearance, leveling work for substation, and fencing are taking place. Pakistan has, as you know, experienced a significant flood. This is another reminder of the impact of climate change that we're seeing globally, and that is typically impacting emerging markets harder than any other places in the world. Despite the few weeks of delay due to this, the construction on our site has continued to ramp up during the quarter, and as you can see on this picture, we are progressing with piling across the whole site. For all projects, the majority of the CapEx has been locked in.
This is through closing of contracts, and the remaining contract value of the work that we have and the contracts we have on the EPC side is about NOK 9 billion. The recognized gross margin related to these contracts in the quarter is 10%. Let me recap and emphasize our updated strategy. We continue to develop, build, own, and operate renewable energy projects in emerging markets. We have built a track record and capabilities related to this in these regions over many, many years. The three pillars of this strategy is, firstly, grow traditional renewables. The main objective here is to focus on selected markets, take a long-term perspective, and build scale and more predictability in our business.
The focus markets, as we have discussed, have been selected based on having a clear and sizable green energy transition agenda with a significant growth potential for renewable energies. The second pillar is to take a leadership role in green hydrogen. Here, we utilize our integrated model and our positions in certain regions. We focus on developing the initial projects that we have talked about, where we already have offtake secured. We establish strong partnerships, and we drive further development in the most cost-effective regions, where green hydrogen is most natural to be developed. The third pillar is to optimize our portfolio. This is about consolidating our product portfolio, both our operating asset base as well as our pipeline. It is to capture higher energy prices in the markets where that is possible and launch Release as an independent growth platform.
Our integrated business model and partnership approach will continue to be at the core of what we do, whether it's in our traditional renewables business or whether it is related to green hydrogen. Our target is then to invest NOK 10 billion of equity towards 2027 at attractive returns. We believe that the target on equity investment is capturing well our multi-technology approach and our business model. Our investment hurdle rate is 1.2 times cost of equity. Obviously, over the last 6-12 months, we see increasing long-term interest rates and increasing uncertainty in the global economy, reflected in country risk premiums. This is obviously also being reflected in our cost of equity and thus in the hurdle rates that we use when we are making investment decisions and when we are negotiating PPAs or participating in tenders for securing PPAs.
At the same time, we also continue to see high and increasing power prices globally, not only in Europe, but around the world. Emerging markets are paying the high price for carbon-based imports and are also seeing the direct impact of climate change. In our focus markets, energy policies are being further developed with strong emphasis on adding renewables, stronger grid infrastructure, security of supply, and also fuel in-independence. We are convinced that this will further drive demand for renewables in emerging markets. Over time, we expect to see prices for new PPAs going up, reflecting the higher cost of components and the cost of capital. Keep in mind that renewable energy is still by far the most economic and available source of energy in these markets. For the avoidance of doubt, we will only do projects that meet our hurdle rates.
We will, as we have done historically, walk away from projects that are not meeting our hurdle rates. We will have focus and discipline to ensure that we only do projects that create value. We do have a strong and mature pipeline that gives us confidence that we will be able to continue to grow and realize attractive projects also going forward. Our 16 GW project backlog and pipeline is reflecting the significant development work that our team has been doing over many years. 80% of the pipeline is being held in our focus markets and in hydropower in Africa. We see good distribution of the pipeline across technologies, as well as across the focus markets that we are having.
We are developing larger projects than before to achieve more scale and more competitiveness of the projects that we are doing. In terms of the mature project backlog, totaling close to 900 MW. In South Africa, the Round 5 project portfolio is meeting our hurdle rates based on current CapEx and current interest rates levels. In Tunisia, we will need a higher PPA price to meet our hurdle rates, and we are currently in discussions with the authorities in Tunisia to address this. We aim to start these projects in terms of construction during 2023. In summary, we have had our best quarter ever, showing that we have a resilient operation, also in turbulent times.
A key priority for us now is to manage the construction of the large projects that we have in construction, ensuring that we deliver on time, schedule, on cost and quality, so that we can capture the related D&C margins. Finally, we are well positioned for growth in the selected emerging markets that we focus on, as demand for renewable energy continues to grow, but we will be disciplined related to our hurdle rates and only invest in projects that are value creating. With that, I will hand over to Mikkel for the financial review.
Thank you, Terje. I will go a bit more detail into the proportion finances and the segment results. Again, happy to report very good results for the quarter. Proportion revenues reached NOK 1.8 billion, up from NOK 1.2 billion in the same quarter last year. Power production continues to be the main contributor, as you can see in the table here, with revenues of NOK 1.3 billion, and I will provide some more details on that segment in a minute. EBITDA coming in at NOK 850 million, up 11% from the same period last year. This is again based on improved power production and also D&C segment now starting to pick up in activity.
Year to date, we generated revenues so close to NOK 4 billion and EBITDA of NOK 1.8 billion. EBIT ended at NOK 534 million, up 22% from last year. Due to low returns and the small size, we stopped the development of a 20-megawatt project in Lesotho in this quarter with an impairment of NOK 16 million impacting the EBIT. Last year we had further impairments of project rights back to us also then, stopping development of certain projects. Year to date, the EBIT was also impacted by close to NOK 800 million of impairment of the Ukraine assets that we did in the first quarter of this year. Now, moving a bit further into the power production segment. As already highlighted, the Philippines represented the main contributor to the increased EBITDA in the quarter.
With hydropower, we maximize the gross profit by utilizing the flexibility of the reservoirs to produce and sell power when the prices are highest. This also implies that we will buy power at certain times, even if production exceeds the committed contract sales volumes overall for a quarter. Now the purchase of power is captured then in cost of sales. In other words, high production, high prices, and asset optimization increase both revenues, cost of sales, and gross profit for the quarter. Also wanted to highlight that we did generate NOK 27 million of EBITDA in Ukraine in the 3rd quarter based on revenue recognition in line with the actual payments that we get for the power. That is an improvement from earlier in the year.
EBITDA came in at NOK 907 million, and year to date, NOK 2 billion of EBITDA. Cash conversion of EBITDA is also important for us. We converted 52% of the EBITDA to cash in the quarter. We generated NOK 469 million of cash flow to equity after debt service and tax payments at the project level. In these times of high inflation and high interest rates, also wanted to highlight that about 90% of our asset portfolio, we sell power in U.S. dollars or euros, or we have inflation protection in the tariffs. Also 84% of the interest rates at the project level is hedged. We have good protection in this environment. Then let me update you on our financial position.
At the end of the 3rd quarter, consolidated assets stood at NOK 39 billion, up from NOK 33 billion at the end of last year. This is mainly driven by the weakening of the NOK throughout the year against key currencies. NOK 1 billion and the proportionate net debt ended at NOK 18 billion. We've also added a table in the back of the presentation that gives a bit more details on the net debt movements in the quarter. Group book equity reached NOK 11.4 billion at the end of third quarter. We continue to seek very solid long-term cash flows supporting the debt at the group level. We generated one and a half billion from our operating power plants over the last year.
We have furthermore extended the $190 million bridge-to-bond to Q1 2024, and we have very strong relationship and support from our core banks at the group level, and they know our business well. With this extension, we have flexibility, and we have time, and we'll be proactive in our approach to refinancing in due time. Since we now have started construction of several projects, I would like also to explain how we manage working capital during the construction phase and how cash flow differs from revenue recognition. It's been a while since we went into construction, so I think it's prudent to cover this. In the third quarter, we received cash payments of 20% of the total contract value of NOK 9 billion of our contracts, construction contracts. We only recognized 4% as proportionate D&C revenues.
The construction revenues are recognized based on a percentage of completion basis following the S-curve that we have talked about before and you can see here on the graph, with slower progress in the beginning, and more progress in the middle of a project, and then it's flattening out at the end. That's IFRS revenue recognition. When it comes to cash flow, on the other hand, we structure ourselves so that we can have a positive working capital throughout the construction period. This is done through negotiating our EPC payment milestones, but also of course using supply credits and trade finance instruments on the supplier side to achieve a positive working capital through the construction phase. You can see a typical cash flow curve through a construction project at the bottom right of this graph.
Lastly, we optimize returns and cash flows also by the projects being funded by debt during the first 12 months of construction. In South Africa, we have a structure where this debt that are financing the construction, and then we bring in the equity last, at the end of the construction period. This is also of course both optimizing cash flows and returns for us in the projects. This is not always possible. In Pakistan, we inject equity first, and in Brazil, we will invest equity in tandem in drawing down on the debt throughout the construction period. We have different structures, but just wanted to highlight this as an important element to how we operate and structure ourselves. This is also making it easier to understand the cash movements at the group level in this quarter.
Received NOK 156 million of dividends from the operating power plants in the quarter. The key driver for operating cash flow is in fact EPC and working capital movements, as I just explained, NOK 1.5 billion net change in working capital. This is including the initial EPC payments for the South Africa project, but it's also netted off the first down payment that we did to PowerChina in the 3rd quarter. This is related to one of our projects in Ukraine. On the investment side, we capitalized NOK 143 million of expenses related to our backlog and pipeline, and we invested NOK 215 million of equity, mainly related to Brazil, Pakistan, but also to some of our Release projects.
Overall, we hold NOK 3.1 billion of cash at the group level, NOK 5.1 billion including the undrawn credit facilities. Our liquidity position is strong, and we generate solid cash flows, and we are well-funded for the investments that we have in front of us. Let me end this by recapping our short-term guidance. We expect to produce 4 terawatt hours on a proportionate basis and generate EBITDA of about NOK 2.8 billion in 2022. The EBITDA is up by NOK 200 million, reflecting the third quarter, but also better Q4 performance and currency movements. Currency is also impacting EBITDA as it's impacting the whole, P&L and balance sheet. This guidance now is very close to what we guided upon at the beginning of the year, despite the challenges we've seen in Ukraine. We've been catching up through the year.
In Q4, we expect production of 1,100 GWh and a proportionate EBITDA of around NOK 800 million. In the D&C segment, we see remaining contract value, as we touched upon, of around NOK 9 billion and a gross margin of 10%-12%. We are cautious in providing very specific quarterly guidance on D&C revenues, but please remember the S-curve. We are still slowly moving up that S-curve also into the fourth quarter. With this, I thank you for listening and we're open for questions, Terje.
Okay. We will start with questions from the audience, and then questions from the webcast. Any questions? No questions from the audience.
One at the back.
Oh, sorry.
Lars Ove Skorpen, Pareto. It seems like you are maybe increasing risk in the Philippines when trading more using the spot market. Is that correct, or is that a misunderstanding?
In terms of our position in the Philippines, in terms of risk, it has not changed during the year. We have the same level of contracted volumes being sold, and what we are currently doing is trading and selling energy on top of those contracted volumes. What we have said is that going into next year, we will reduce the contracted volume somewhat because we believe that that is a more robust position for us also carrying us through the first half of the year, where hydrology is typically a bit lower.
Maybe just, Terje, the historically, the contracted volume have represented around 80, 70%-80% of the production volume. It's a relatively high share of the production that we then sell forward on contracts. Now in the quarter, we had excess volumes available for sale, and then we of course shifted and optimized within the quarter. Any other questions from the audience? Actually we have no questions from the web.
Okay.
Well.
Yeah.
Okay. I think that's.
That was crystal clear, then.
Yeah.
Superb. Okay.
Okay.
Thanks.
Thank you. There's one in the back. No?