Morning, ladies and gentlemen, and welcome to the conference call on EVM's results for the 2018 2019 financial year. Let me now turn the floor over to your host, Mr. Stefan Schiskowitz.
Good morning, and welcome to the conference call on EVM's results for the 20 eighteen-nineteen financial year. Today, we are reporting a group net result of €302,400,000 This number includes a positive one off effect of approximately €110,000,000 after tax. As reported ad hoc on the 21st October, impairment testing triggered revaluations due to lower market interest rates and higher electricity prices. These revaluations are related to previously impaired renewable generation assets, electricity procurement rights and district heating assets as well as the customer base in Bulgaria and North Macedonia. Today's presentation contains an overview of the main reevaluation.
Please note that there was also reevaluation of our investment in Karpund Ingraf Werke, which is at the equity consolidated with operational nature. Apart from the effects from impairment testing, our full year's results are well in line with the developments which we have been reporting throughout the year. On the positive side, I would like to highlight the sound earnings contribution from Wind Power and our Southeast Europe segment. On the other hand, earnings development was negatively influenced, as expected and predicted, by higher wholesale prices, the reduced volume of network stabilization contracts as well as price and volume effects in the networks segment. I'm very pleased to report today that we reached our mid term target in connecting with our wind expansion strategy 1 year earlier than originally planned.
As of the end of September 2019, we already had an installed wind capacity of 3.67 Megawatt. Our aim now is to grow this number further to 500 Megawatt until the end of 2023. 2018 2019 financial year brought significant changes of our thermal power plant. I would like to remind you that the separation of the German Austrian electricity price soon at the 1st October 2018 ended the use of our thermal power plants for network stabilization in Southern Germany. This is also substantially reduced reserve capacity to 430 megawatts coming from our Tejas Gas Fire power plant, which is contracted by the Austrian transition network operator.
This means that in view of the current market environment, all our remaining gas fired capacities in Lower Austria have been deactivated and conserved. In sharp increase in the prices of CO2 emission certificates, we also took the decision to exit from coal fired generation in Lower Austria. Therefore, in early August, electricity generation from hard coal finally ended at our Duenor power plant. Through the massive expansion of our renewable generation and the shutdown of our hard coal fired production in Doerner, we will have reduced our CO2 footprint in lower Austria 2020 by roughly 2 thirds in comparison with RENCO 2,005. In line with our strategy, our investments focused on the electricity and gas networks, renewable generation, natural heat and drinking water in lower Austria.
In other words, our investments aim to strengthen our domestic regulated and stable activities. In total, cost investments were up 9.8% and amounted to €391,400,000 Now for the dividend proposal. The Executive Board will propose to the Annual General Meeting a higher ordinary dividend of now $0.47 per share plus a bonus of $0.03 per share. The bonus dividend is also a signal to our shareholders to celebrate with us the 30th anniversary of EVM listening to the Vienna Stock Exchange, which took place on the 27th November 2019. On the basis of our planning parameters, our future dividend policy is to hold the absolute amount of the ordinary dividend at least constant at the level of $0.47 per share.
Me now continue with the key financials of our 2018 2019 financial year. In 20 eighteentwenty nineteen, the group's revenue rose 6% year on year to €2,200,000,000 This increase was supported, above all, by the substantial growth in renewable generation, Further positive impulses, for example, from hedges for the marketing of electricity generation, were contrasted by, among others, lower revenue from thermal generation in the network segment. Other operating income was up due to positive changes in inventories, especially in the international project business. The cost of electricity purchases from third parties and primary energy expenses increased by 12.5%. This was partly due to a higher variation of hedges for primary energy carriers in the mission certificate as well as the higher upstream network costs.
Results from equity accounted in the Steel's operation nature were down by 30.6% at €130,500,000,000 This development was mainly driven by 2 contrasting developments. EBay and CAGAY contributed negatively due to the higher procurement costs and negative effects from valuation of the hedges. Positive contrasting factors included the higher earnings contribution from Verbunde Ingraflare, which was supported by an improvement in its operating business and the already mentioned evaluation of the investment. Based on these developments, we are reporting today a decline in EBITDA by 6% to €631,700,000 As already explained, the effects from impairment testing were substantially positive this year. Therefore, the group EBIT improved by 2.7% year on year to €403,500,000 Financial results improved by 19.5 percent to minus €29,900,000 in particular due to an increase in devaluation of the R 138 fund and to improved results from other investments.
In total, group net result was by 18.8 percent higher at 300 2,400,000 Now I would like to go to the next slide, which provides some information regarding the group's balance sheet structure. We managed to steadily reduce our financial indebtedness over the past couple of years. Meanwhile, net debt approximates EUR 1,000,000,000 however, it's subject to mere minor seasonal fluctuations. Clearing at September 30 was 22%. Please note that the further increase in equity was mainly due to the higher price of the Verbund shares.
Our strong balance sheet structure forms the basis for pursuing organic growth opportunities in our regulated and stable Austin activities. Over the next 4 years, our investment will be in the range of €400,000,000 per year, roughly €200,000,000 annually will be dedicated towards networks, renewable and drinking water in Lower Austria. In the Networks business, there are already very high levels of investment will increase even further. Here, the rollout of smart meters in lower Austria marks the start of an additional investment cycle. However, these investments reflect the goal to generate higher earnings contribution from regulated and stable business areas in the lower Austrian home market.
For Renewables, we intend to evaluate the feasibility of large scale photovoltaic plants in our supply areas. For photovoltaic, we currently see a potential up to 100 megawatt mingling in Lower Austria. When talking about our investment strategy, I would also like to highlight our focus on the drinking water business. Here, we take a long term view to fulfill our promise to our customers in Lower Austria to oversupply sufficient drinking water and best quality. Austria as a country fortunately has sufficient high quality water reserves, but as a supplier, we need to take a proactive approach.
In view of long, hot and dry periods in population growth in their areas around Vienna, we need to ensure cross regional transportation. That's why we are building new pipelines, and we are also investing in natural filter plants to reduce the hardness of water by natural means. 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. One obvious development is that EBITDA of the generation and the energy segments include some of this year's positive and negative one offs as they were realized by companies which are at equity consolidated with operational nature.
The revaluations of the investment in Katund in Kraftwerkke and the negative valuation effects of hedges at EV and Kage. EBITDA in the network segment reflects negative price and volume effects. On the positive side, I would like to highlight the sound performance of the Southeast Europe segment. With this very general overview, let's move on now to the next slide, which covers the generation segment in more detail. Renewable generation in the segment was up to 9.6%.
We benefited from the operation of our additional wind capacities and favorable wind conditions. Thermal generation volumes declined year on year due to the reduction in reserve capacity. In total, electricity generation volumes in these segments were up by 1.2% year on year. Segment revenue benefited substantially from the increase in renewable electricity generation. When comparing this year's profit and loss statement to previous year, please bear in mind that the Generation segment now includes our thermal waste incineration plant in Sventeen, Tafjuna, which resulted in the respective increase in revenue as well as operating expenses and depreciation.
Results from equity accounted in Westies were substantially up due to a higher earnings contribution from Verbund Ingraafwerke. This company reported a better performance, and impairment testing led to revaluation in the amount of €92,200,000 which reflects lower market interest rates and higher electricity prices. In total, this development resulted in EBITDA of €260,600,000 and an EBIT of €218,400,000 Today, I will also provide an outlook for each of the segments. For the Generation segment, we need to differentiate between Renewables and Thermal. Renewables should benefit from the higher wind capacity.
In 2018, 2019, we added a capacity of 49 megawatt, which for the first time will now contribute for the whole financial year. On the other hand, earnings from renewable depends on wind and water conditions, which can't be predicted. And please also bear in mind that roughly onethree of our total capacity of 3 67 megawatts does no longer produce a subsidized feed in terms as the 13 year term has already expired. For thermal, we expect a lower earnings contribution in 'nineteen, 'twenty as our activities in Austria are currently limited to providing 4.30 megawatts of our gas fired power plant in Tijs as a reserve capacity for the Austrian power grid. In view of all this, I expect we expect earnings in this segment to decline in 'nineteen 'twenty.
For the next slide, I will continue with the Energy segment. Our Energy sales showed contrasting developments. Electricity sales volumes rose based on higher demand by industrial customer segment. In contrast, natural gas and heat sales volumes declined mainly due to the milder temperatures. The main driver of revenue development in the Energy segment is the marketing of electricity produced in our thermal power plant.
Lower production there was, however, offset by a variation of hedges for electricity production as well as an increase in heat supplies and natural gas trading. And total revenue was up 18.9% year on year. Operating expenses also increased due to the devaluation of hedges for the procurement of primary energy carriers and emission certificates. The deterioration in the Energy segment is mainly due to the performance of Ivencage, which is at equity consolidated its operational nature. Our supply company suffered from higher energy procurement costs, which had a negative impact on its results in the amount of EUR 53,000,000 compared to previous year.
An additional negative effect resulted from the valuation of hedges, which is the company did as part of its free running procurement strategy. The resulting negative impact of the 30 September 2019 was about €96,000,000 compared to 20 seventeentwenty 18. Based on these developments, the Energy segment reported an EBITDA of minus €85,000,000 and an EBIT of minus €97,200,000 Our outlook activities positive earnings Our outlook anticipates positive earnings again in this segment. This is based on the lower effects from the evaluation of hedges and the normalization in the operating business. As you know, we did 2 price increases, 1 in October 2018 and 1 in June this year.
On the next slide, I will present the developments in our Network segment. The development in our Austrian regulatory business were in line with our expectations. Revenue was down by 3.7% due to price and volume effects. Regulatory determined lower network curves in the beginning of the calendar year, which reflected the lower weighted average cost of capital, which applied for the new 5 year regulatory period. For a full city distribution, the new regulatory period started this year for natural gas distribution already a year ago.
Net debt volumes fell substantially for natural gas distribution. This was due to the warm weather and the reduced use of the gas fired power plants. Operating expenses were up due to higher upstream costs and expenses for 3rd party services. In total, EBITDA was down by 17.8 percent at 208.2 €1,000,000 and EBIT was down by 41.9 percent at €82,900,000 Lower cost of capital rates and the subsequent volume correction for prior periods required by the calculation methodology will influence netback tariffs in 2020. For this reason, we expect segment results to be lower in 'nineteen, 'twenty than in the previous year.
Please be also in mind that the new 5 year regulatory period for electricity distribution, which started in January 2019, will now apply for 12 months. Finally, our high investment in net sales will lead to an increase in scheduled depreciation. On the next slide, I will continue with the Southeast Europe segment. Temperature related energy demand in Bulgaria and North Macedonia was slightly higher than in the previous year but below long term average. In Bulgaria, sales volumes benefited from growth in the liberalized market.
Based on these developments, we saw an increase in network and especially energy sales volumes. In Bulgaria, the invoicing methods for the so called green electricity markup was changed in July 2018. In total, the change is neutral in results because revenue and perfuming costs are reduced by the same amount. Despite this change, revenue rose slightly by 0.9% due to the overall positive energy sector developments. Lower write offs of receivables and the change in the invoicing method for the green electricity markup were reflected in a decrease of 2.3% in operating expenses to €779,600,000 Based on these developments, EBITDA increased by 25 point 3% to €131,100,000 As already mentioned in the beginning of the call, impairment testing led to an increase in the value of customer bases in Bulgaria and North Macedonia, which has been impaired in 2013, 2014.
Additional revaluations were related to our Bulgarian district heating company, Detle Optiv, and our natural gas activities in Croatia. In total, this development resulted in an EBITDA of €95,900,000 Subject to the stable regulatory and energy sector framework condition, we expect EBIT to range from €40,000,000 to €60,000,000 I will conclude my presentation of the segments with the environment segment. I would like to start with an update on developments in our international project business. During 'eighteen-'nineteen, our German subsidiary, WTE, successfully commissioned 1 wastewater treatment plant each in Croatia and North Macedonia. VTA was also successful in acquiring 6 new general contractor assignments during the important year.
These new projects have a combined value of about €86,000,000 This means by the end of September, WTE was working on 8 general contractor assignments in the wastewater sector in Lithuania, Poland, Romania, Croatia and Bahrain. Our order book stood at €268,000,000 at the end of September. In Quebec, progress was made during the past financial year on the preparations and exclusive negotiations for the major wastewater project. In April 2019, WTE received a contract to handle the operation of the existing wastewater treatment plant, which shall later be replaced by the new plant. More recently, the required project company was founded and the first equity contribution was already paid in by all state shareholders.
WTE is a minority shareholder there and state owned Kuwait institutions are the majority shareholders. However, the final rewarding of the contract is still outstanding. From a strategic point of view, a new type of project is becoming increasingly important for the International Project Business, the planning and construction of plants for thermal sludge utilization. This is the next logical step after wastewater treatment. With our long standing expertise and know how in the treatment of drinking water and wastewater, we are predestinated to engage in this field in which we see a lot of future potential.
We are already working on such projects in Germany, Lithuania and Bahrain. And due to legal changes in Germany and growing interest in other European Union states, we expect more tenders for such projects soon. For a comparison of the financial performance of the environment segment with the previous year, please be in mind that our thermal waste generation plant in Lower Austria was reassigned with the generation segment and is therefore no longer included. We are therefore reporting a decline in revenue as well as in operating expenses. The shares of results from equity accounted in the thesis operation nature increased.
This was supported by the earnings contribution from the wastewater treatment project in SACET. I would also like to point out that the results from equity accounted in the CEC also included the final share of result contribution from the wastewater project impact. The plant was already commissioned in September 2018, but we had to contact to operate the plant for the 1st 12 months. In total, this development led to a decrease in EBITDA by 11% to EUR 26,800,000 EBIT was up at €15,200,000 due to the change segment reporting for our wastewater treatment plant in Lower Austria. Our outlook for the Environment segment is always subject to the further acquisition and realization of assignment in the international project business.
Assuming the contract for the Kuwait project would be signed within the next week, segment earnings in 'nineteen, 'twenty are expected to exceed the previous year. With this, I conclude the presentation of the segments. On the next slide, I will continue with the development of our group cash flows. Gross cash flow declined by 1.8 percent to €550,500,000 Positive developments such as the improvement in the result before income tax were offset by lower depreciation due to the revaluation after impairment testing. Due to the negative development of working capital as of the balance sheet date, cash flow from operating activities amounted to €429,700,000 which corresponds to a decline compared to last year.
Cash flow from investing activities reflected a reduction of investments in cash funds and securities in the R138 fund. Net investments slightly increased year on year. The focus remains on CapEx in wind parks, networks and drinking water supply. The cash flow from financing activities mainly reflects dividend payments to the shareholder of AVN Energy and minority shareholders as well as scheduled repayment of loans. The net change in cash and cash equivalents amounted to €31,500,000 The cash position stood at 246.2 €1,000,000 at the end of September.
I would like to conclude the call with the outlook for the group. Today's group net results include positive evaluation effects from impairment tests and impairments of roughly €110,000,000 after tax As human average conditions in the Energy business environment, we expect that the operating results will remain constant. This brings us to the expect that the group net result for 'nineteen, 'twenty will be in the range of €200,000,000 to €230,000,000 Finally, I would like to inform you that based on the information provided by MBW Trust on the 30th September 2019, we note that the stake has decreased further from previously 29.4% to 28.6%. This brings us to a free float of 20.5%, including our treasury shares of 1.1%. I've now reached the end of my presentation of events results for 20 eighteen-nineteen financial year.
I'm now looking forward to answering your questions.
And the first question comes from Mr. Peter Krampton from Barclays.
Good morning. Peter Krampton from Barclays here. One quick question on your guidance for next financial year. Does this reflect any one off charges relating to the valuation impact of hedges? Or is that effect kind of fully washed through the accounts with kind of the 2018 2019 financial year?
Thank you. You're right. There is a certain delay since all this procurement is with the new hedging policy is coming to a neutral position, but it's not relevant anymore as it has been in the past. Therefore, you can more or less expect that this is what we're expecting from the ordinary performance. Okay, perfect.
Thank you for your answer.
And the next question comes from Ms. Theresa Shinwalt.
Hi, good morning. One question also regarding the guidance. Where does the variation come from between the $200,000,000 and the $230,000,000 if you could give us a hint? That's my first question. And the second one is regarding the network results.
The draft tariffs have not yet been confirmed, but it seems that there is a reduction in transmission costs. If you have any signal for us what the effect could be and why the network guidance is still negative despite the kind of positive draft for EVM's distribution tariffs and electricity?
So either regarding your first question, this range which we give with the €200,000,000 to the €230,000,000 this is exactly reflecting on the basis of our planning also the variations of the weather effects and other effects. So this is where we live in, yes, in a certain range of expectations, how the weather can develop. And if you see the Vienna weather, yes, we had a couple of weeks, which were too warm. Since last week, the temperatures went down. So hopefully, the winter will develop as a real winter, and it's easier later on in the half year maybe to further reduce the range, which we are giving today.
You also know that in the past, we were very cautious because the weather effect always have been quite a tricky estimation. Therefore, please accept that this is what we see from a base point of view as a relevant range for our yearly guidance on this. And regarding the description of the different business segments, which we are giving also in our annual report, we try to give a clear guidance on the different business segments. And you're right, with the new 5 year period, which the 1st year, 12 year period now for electricity will be included in this year. And the volume adjustments together, we are expecting that the result of the grids in the grid division will go down in the ongoing year.
And the later on adjustments will be in the years to come. As you know, we have quite a track record as being an efficient, quick operator, and we will try to outperform the guidance of the retro operators. But it is as it is. The WACCs came down, and this is what we feel now regarding the ongoing business.
Okay. Thank you very much. And at least it's snowing outside right now, so there's that.
Well, you can imagine I was not so aware about this snow outside, but we'll still have a lot later.
Thank There are no more questions.
Okay. Thank you. We will always wish a nice season's greetings, and we will publish our first quarterly results on the 27th February. Please join us there again. So goodbye.