Good morning, ladies and gentlemen, and welcome to the conference call on EVM's results for the 1st 3 quarters of the 2019 2020 Financial Year. At this time, all participants have been placed on a listen only mode.
Good morning, and welcome to the conference call on Evian's results for the 1st 3 quarters of the 2019 2020 financial year. We are reporting sound results today. Group net result for the period is up by 25.2%. EBITA and EBIT also exceed prior year's level. This positive development was mainly supported by the recovery of our supply company, EVN KG.
After implementing 2 price increases in 20 eighteentwenty 19 and changing the methodology for accounting of hedges, we managed to bring the operational result of the equity consolidated company, Yves Henriques back to a normalized level. Therefore, I can confirm our full year guidance. We expect group net result for the 20 nineteentwenty twenty financial year to range between €180,000,000 €200,000,000 Such outlook is made under the assumption of the average conditions in the energy business environment and a stable situation in connection with the corona crisis during the Q4 of this financial year. Our integrated business model and broad customer diversification proved the resilience so far and served as establishing a stabilizing factor during the corona crisis. During the Q3, there were only some limited negative impacts of the pandemic.
In particular, lower electricity demand, especially from industrial customers, is visible in energy demand and network distribution volumes. However, the volume effects in the network will be offset in future tariffs in accordance with the Austrian regulatory method. Another negative impact related to the pandemic are impairment losses, which already became necessary in the Q2 due to increased country risk premiums. In total, these negative noncash effects amounted to roughly EUR 50,000,000 I would like to stress that we are highly committed to fulfill our investment program as previously planned and announced, irrespective of the corona crisis. We aim for an annual investment level of about €400,000,000 thereof EUR 300,000,000 dedicated to Lower Austria.
The focus here is on the regulated network business, the expansion of renewable energy and growth of our drinking water business. There have been sporadic delays in some projects due to the bit lockdown, but this shall be recovered as soon as possible. We are currently working on the construction of a new wind park with an installed capacity of 8.4 Megawatt. Commissioning is scheduled for the end of this calendar year. Our past efforts to expand our renewable generation capacity are visible when looking at the share of renewable generation, which was almost 60% in the reporting period as compared to 43% a year ago.
This progress to reduce our CO2 footprint was, of course, also supported by the termination of coal fired generation during the last summer. In the international project business, I'm highly pleased by the success achieved in the area of thermal sludge incineration. Based on the group's excellent experience in wastewater treatment and thermal based incineration, it was just a logical step to further develop the project business. We anticipated a window of opportunity for thermal slush incineration at an early stage when Germany changed the laws with the aim to restrict the spreading of sewage sludge on field and at a later stage, call for phosphorus recycling. Today, I can inform you that we received 3 new general contract assignments for thermoslage and generation projects in Germany, Berlin, Hanover and Straubing.
I will provide you with further information details later in the call. Further good news for the future development of our international project business is closing of the wastewater treatment project in Kuwait by the end of July. Now all requirements are met to start the stabilization of the project. The construction of the wastewater treatment plant will take 2.5 years. In parallel, we will be responsible for the construction of a new canal infrastructure, which will take up to 4 years.
On the shareholder level, on the 5th August, the closing took place for the transaction increase between Vienna Staatwacker and EMBW. Vienna Staatwacker acquired 51,000,000 EVN shares previously owned by ENBW, which corresponds to a stake of 28.4% in EVN. This makes the V and A's utility company our 2nd largest shareholder after the province of lower Austria with owns a majority stake of 51%. The remaining 20.6%, 3% free float, including 1% treasury shares. Let me now continue with the key financials in the reporting period.
The group's revenue declined by 6.8% year on year. The main reason for this development are the decline in thermal generation as well volume and price effects in the network segment. In contrast, energy revenue in Bulgaria and the international project business showed a positive development. The recovery of AVN KG supported the improvement of the share of results from equity accounted investees. In addition, there were positive one time effects in RAC and Energirland.
In contrast, there were negative earnings contributions from Energia Land as well as an impairment loss on our investment in Ashta hydropower plant in Albania in the 2nd quarter due to the higher country risk premiums. EBITDA was up by 70.9% at EUR 513,600,000. Schedule depreciation went up. This was due to investments, regulations we had to do after impairment testing at the end of last financial year and the initial application of EFIS 16. In turn, higher country risk premiums of Southeast European countries due to the COVID triggered impairment losses on assets in Bulgaria and North Macedonia in the second quarter.
The group's EBIT increased by 20.3% to €284,500,000 In total, we generated a group net result of 210 point million during the first three quarters of this financial year, which corresponds to an increase by 25.2% year on year. Now I would like to move to the next slide, which provides some information regarding the group's balance sheet structure. As of the end of June 2020, net debt stood by around €1,100,000,000 Please note that the increase of net debt was also due to the recognition of non current lease liabilities in connection with the initial application of EFS16. This had an effect of about €70,000,000 Our financial flexibility is very solid. We benefit from low net debt and sufficient committed undrawn credit facilities, which amounted to €595,000,000 as of the 1st July.
Gearing was up from 20% to 25 point 1% in the 1st 9 months of the financial year. Our strong balance sheet structure forms the basis for pursuing organic growth opportunities in our regulated and stable Austrian activities. Before I will go through each of the segments in detail, I would like to give you a general overview on the EBITDA development of our business segments. The overview of the EBITDA development per segment illustrates the key drivers of our performance during the reporting period, which are well in line with our segment forecast. On the positive side, you can see improvement in the Energy and Southeast Europe segment.
In contrast, performance of the Generation, Environment and Network segments remained below the prior year. With this very general overview, let's now move on to the next slide, which covers the generation segment in more detail. Electricity generation volumes in the segment were down by 38.5% year on year. Renewable generation volumes were slightly below the previous year, whereas last year's commissioning of new windpack supported an increase in wind production, water flows declined. Thermal generation dropped.
This was due to the closure of our coal fired plant in June last year and lower use of our gas fired plants in place for network stabilization. The usage of the Evoluson power plant was below previous year level 2. Segment revenue declined in line with these developments. The Generation segment includes impairment losses, which I mentioned earlier, the Astra Hydro Power Plant, which is at equity consolidated in the Karana Windpark in Bulgaria. Scattered depreciation went up due to the investment in previous year's 3 valuations.
In total, the Generation segment generated a lower EBIT of €49,400,000 On the next slide, I will continue with the Energy segment. Revenue in this segment was by 33.7% below the previous year. This was primarily due to the decline in the marketing of our own electricity generation and the reduction in natural gas trading. The reduced usage of primary energy carriers and lower procurement prices were driving operating expenses down by 39.7%. The energy sales volumes showed contrasting developments.
Electricity sales volumes were up by 6.4%. The overall positive development of sales to industrial customers was, however, slowed by a corona related temporary decline in sales to industrial customers. Natural gas sales volumes were down by 3.8% due to a warmer winter and an increased competition. Our electricity and natural gas supply business, which is handled by EVA and KG, recovered and returned to normalized earnings levels. EVN KG's contribution to an equity result was €35,000,000 in the 1st 3 quarters after a loss of €41,800,000 last year.
You will remember this was caused by a higher procurement cost and negative effects from the valuation of hedges at that time. Based on these developments in the Energy segment, reported EBITDA of €72,900,000 and EBIT of €57,400,000 On the next slide, I will present the developments in our Network segment. As I already mentioned at the beginning of today's call, electricity consumption declined due to COVID-nineteen, especially in this segment of industrial customers. Consequently, network sales volumes were down too. However, this volume effect will be offset in future tariffs in accordance with the Austrian regulatory method.
The natural gas distribution volumes declined too. The main reason for this was the reduced use of thermal power plants in lower Austria. I would also like to remind you that the lower WACC electricity distribution network, which was implemented on the 1st January 2019, is for the first time applied for the full financial year. Based on this volume and price effect, revenue went down by 4%. Based on the stable development of operating expenses, EBITDA in the Network segment declined by 8.5% and EBIT by 21.5%.
On the next slide, I will continue with the Southeast Europe segment. Energy demand in Southeast Europe suffered from mild temperatures and more recently the corona crisis. Consequently, energy sales and network distribution volumes declined year on year. However, the financial performance in this segment was sound during the reporting period. One supportive factor were lower procurement costs of network losses in Bulgaria.
This segment includes the other 2 impairment losses, which were triggered in the Q2 by higher country risk premiums due to the COVID-nineteen. The one was for our district hitting in Bulgaria at TES Vlostev and the other for the customer base in North Macedonia. The total segment EBIT stood at €39,100,000 As always in summer, the regulatory authorities decided a new regulatory electricity prices for household customers. In Bulgaria, which affects of the 1st July 2020, the prices for household customers in EVN supply area were increased by an average of 4.2%, following an increase by 3.5% in July 2019. In orthomacetonia, the tariff decision became effective of the 1st August 2020.
It provided it provides for an increase of roughly 7.4% for customers of our supply company, EVN Home. In last year's tariff decision, there was no price adjustment. But please note that these price increases are contrasted by higher procurement costs. I would like to conclude my presentation of the segments is the environment segment. I already mentioned some success in our international project business in the beginning of today's call.
So let me briefly repeat. In Kuwait, the closing of the wastewater treatment project took place at the end of July. Now all requirements are met such that we can start with utilization of the project. Due to the percentage of completion method, we will now be able to report results according to project progress. We were very successful in the acquisition of general contractor assignments for a thermal sludge utilization project in Germany.
WTE Water Tesmic was awarded a contract in Berlin. The contract volume is about €190,000,000 EVN share will be roughly 50% of the contract volume. Please note that the realization of the Valene project will start only in autumn 2021. In the thermal sludge utilization, we're also active through our joint venture Sludge to Energy. WTE Water Technique partnered with German company, HUBA.
Sludge to energy receives contracts for 2 new projects, 1 in Hannover with a contract volume of around €40,000,000 1 in Straubing with a contract volume of about €50,000,000 We see further potential for these projects in Germany. Therefore, the projects in Hannover, Straubel and Berlin will add well to our track record in this area. In the International Project Business, WTE Watertechnik is currently working on 10 projects in Germany, Croatia, Lithuania, Poland, Romania, Bahrain and Kuwait. The order book was about €445,000,000 at the end of June. This number does not yet include the Kuwait project as the closing only occurred at the end of July.
Finally, I would like to inform you that the contract for the operation of the thermal waste incineration plant number 3 in Moscow expired at the end of June and that the plan was concerted in accordance with the contract. The financial performance of the segment is in line with the development in the international project business. There was a corresponding rise of both revenue and operating expenses in the segment. The share results from equity accounted in these deals with operational in nature was below the previous year. Please remember that last year's earnings from the wastewater purchase in Parag were included.
In total, these developments led to a decline by EBITDA to €14,100,000 and in EBIT to €5,300,000 This concludes the presentation of this segment. On the next slide, I will continue with the development of our group cash flows. Gross cash flow fell by 70.3 percent to €392,300,000 in the 1st 3 quarters of this financial year. It was caused by lower dividend payments from equity accounted investees. In addition, gross cash flow was corrected by the dividend from Fabun, which was paid in July after the balance sheet closing date, but was approved in June and therefore already included in EVN's financial results.
Due to the development of working capital as of the end of June, cash flow from operating activities amounted to EUR 205,800,000 Cash flow from investing activities reflected a partial delay of investments due to the COVID-nineteen disinvestment of securities in one of our funds and the guarantee payment from the Republic of Montenegro for the wastewater project in Budva. This was contrasted by the equity contribution for the Kuwait project and increased investments in cash funds. The cash flow from financing activities reflected the scheduled repayment of loans and the dividend paid for the previous financial year. The counter effect there was the issue of a Queen promissory note loan. The net change in cash and cash in the equivalents amounted to minus €75,800,000 With that, I would like to conclude my presentation.
We are ready to take our question your questions.
And the first question comes from Mr. Peter Crampton for Barclays. Please go ahead.
Good morning. Peter Crampton here from Barclays. Two questions, if I may. Firstly, looking at your group net results, it's $211,000,000 and kind of looking at your guidance, you're now already above that guidance. Were there any kind of particular reason you didn't adjust your full year outlook?
And then the second question is now where we have the Wiener Stasse Vacker transaction closed, is there the potential of an AGX inclusion for EVN? And what would be kind of the co requisite for that to happen and when? Thank you.
Okay. Thank you for your questions, Peter. Our financial year is following also the year regarding summer and winter. Therefore, we are now in the real summer quarter. So traditional, this is the weakest quarter of events performance.
You have the fixed costs and you have especially also the depreciation. On this basis, yes, you cannot draw a conclusion out of the Q3 results to the guidance for the financial year. We will have a lot of end of the year balance sheet date, approvals of hedges and so on. And on this basis, I cannot change the outlook we were giving for the financial year. More or less, we confirm all trends are in line with this EUR 180,000,000 to EUR 200,000,000 net result, which we are expecting.
And the second question, which we are raising, it is right after this kind of completion of the transaction, the Vienna Stock Exchange is informed by the new owners about the new shareholder structure. Therefore, our free float is actually above 20% following their regulation. But you know there's also committees which have to evaluate this. And secondly, of course, the volumes, which are traded in comparison to other competitors are defining then our chances. But I'm confident that on the midterm, we will get back into the attics.
Perfect. Thank you for your answers.
The next question comes from Ms. Theresa Schindel from Raiffeisen Central Bank AG. Please go ahead.
Good morning and thanks for taking my question. I have 2. The first, the hedge valuation effect and pardon if I missed it during the presentation, but could you remind us on the remaining hedge valuation effect in the 1st 9 months of this year? And the second one is if you could provide us with an update on the renewables energy law in Austria that is still outstanding, has been outstanding for a very long time? If there has been any progress in the past 3 months and what's ahead?
Okay. I think some help to do your evaluation is if you go to our notes and look on the equity investees and then you see EVA and KG for the 1st 3 quarters last year and this year, how this has changed from minus 41 to plus 45. The main result for the group is coming from these changes from AVEN KG. And from these results, 2 thirds are coming more or less, yes, as a rule of thumb from the hedges. The rest is the improved operating result, yes?
So this is, I think, gives you some guidance how important the influenza we weigh in KG's results for the group's results. We are very careful regarding expectation because it's the end of September who will decide how big this effect will be on a full year's basis. But if you look on the comparison for the 1st 2 quarters in EVA in KELCHI, you see the difference in the turnaround which was taking place. Operational, onethree twothree by the changes of the market prices.
Great. That's
helpful. The second is the new law. The new law is late because I remember when we were discussing the half year's result, yes, we were expecting that the draft for the new energy law will be submitted to the parliament before December. Then there were some news in the summer. Now we're coming at least at the end of the holiday season.
The latest information is to expect it somewhere in September because we need in a couple of issues, we need also clear decisions to submit them for approval to Brussels. What has not changed, and this is maybe the most important for us, there's no indication that state institutions are ready to provide more than billion on subsidies per year. So this is the level of support which the public will give for the transition of the energy system on this basis because this is in a way in compliance also with the levels of the recent past and the system itself got in the past the approval of Brussels. So on this level, it's too early to say what kind of further details will define our framework for further transformation of the renewable production, not only for Austria but also for EVN Group. The project which we mentioned before and which we are pursuing are based on the old system of oxidation where there are permits for this project.
It's more about additional projects in the near future, which we would be able then to pursue. This is especially true for photovoltaic. There is no clear guidance till now what kind of support for the realization of big photovoltaic industrial parks will be given. There is a certain tendency that will be a tender system, but not on which basis the support will be.
There are no further questions in the queue. Therefore, I will repeat. Ladies and gentlemen, in Yes. And we have Ms. Theresa Schindold once again.
Please go ahead.
Sorry, I have a follow-up. Also in the renewables here, and I know the conditions in Austria are not the best for PV, but there has been an increasing push for also PPA agreements in the southern parts of Europe and with your operations in Bulgaria. Would you see a potential for solar developments under PPA contracts in Bulgaria or even Northern Macedonia?
Yes, but we not have seen so far big scale photovoltaicspa, which would be the basis for these PPAs on the midterm. We are following this trend. We see also the publication, but we cannot confirm that in our core countries till now that this is a big change customer investor structure so far. It's still pretty much defined by subsidized tariffs and thrust phase of support for building up renewable capacity. It's more in Spain and then in this Western European Southern countries.
Okay. Thank you.
There are no further questions in the queue. Therefore, I would like to hand over back to you, Mr. Shyskovitz.
Yes. Thank you for joining today's conference call. We will publish our full year results on Wednesday, 16th December. Please join us then again, and goodbye.