Good morning, ladies and gentlemen, and welcome to the EVM's Conference Call for the Q1, 2Q, Q3 20 eighteen-twenty 19 Results. At this time, all participants have been placed on a listen only mode. The floor will be open for questions following the presentation. Let me now turn the floor over to your host, Mr. Stefan Kruskkowitz.
Good morning, and welcome to the conference call on Evian's results for the 1st 3 quarters of the 2018 2019 financial year. Our performance during the 1st 9 months is pretty much in line with the development during the first half year, And it corresponds well with the outlook which we gave in December or for this financial year. Actually, on the positive side, I can't today confirm and even specify our full year guidance. We expect group net result for 20 eighteentwenty 19 to reflect the upper end of the assumed range of €160,000,000 to €180,000,000 For a year on year comparison of today's results, please bear in mind that in the last year, our Q3 results had already been influenced by a positive one off effect in the amount of €38,000,000 which resulted from the valuation of hedges. The main drivers for our performance during the reporting period were the same, which we had already seen during the 1st two quarters.
Rising wholesale prices led to a decline in the results of our supply company, Evencage. In addition, the absence of network stabilization contracts with South of Germany show an impact on the performance of the generation segment, whereas our Network segment suffered from volume and price effects. On the positive side, 3rd quarter earnings were supported by sound contributions from wind power and cooler temperatures in May 2019. Actually, due to the weather in May, the temperature related energy demand in Austria returns to an average level after the mild winter half year. As already mentioned in our last call, we took the decision to exit from coal fired generation in Lower Austria.
Earlier this August, electricity generation from hard coal finally ended in our Duenor power plant. Our focus is now on the future development of Duenor as an energy location. The installation of an additional gas boiler to generate steam by industrial customers is already in progress. In addition, we have specific plans for the construction of a sewage sludge incineration plant in a large scale photovoltaic plant at our site in Duenor. The termination of coal fired generation in Dunua is only 1 bit in how EVN contributes to the transition of the energy system.
This year, we have been pushing hard on the expansion of our wind portfolio. At the beginning of the financial year, we stood at installed capacity of 3 18 megawatt. By the end of September, we will stand at approximately 3 70 megawatt. May remember that we always define 3 70 megawatt as a midterm target on our growth path towards 500 megawatt wind capacity. Our plan was to reach 3 70 Megawatt by the end of 2020, so we will outperform this target and reach these milestones already 1 year earlier.
Our plan is to reach 500 megawatt by the end of 2023, which is, however, subject to appropriate framework conditions. We have a sound project pipeline of developed and approved wind project in Lower Austria, but the Austrian system of feed in tariffs and new wind parks currently has to deal with a waiting list of already approved projects. And the next Austrian government to be formed after the general election in September the need to implement a new legal framework for renewals. I know that in the international projects business, everybody is waiting for news on the Kuwait project. Progress has been made on the founding of project companies, which is complex as it involves state owned Kuwait institutions as majority shareholders.
In addition, negotiations continued on the Envision project financing during the past month. Still, the final awarding of the contract is Our our German subsidiary, WTE, acquired 5 new general contractor assignments so far. Let me now continue with the key financials of the reporting period. The group's revenue was slightly above the level of last year and stood at EUR 1,700,000,000 Postpaid valuation effects from hedges for the marketing of electricity generation as well as an increase in renewable generation and heating business were contrasted by, among others, a price volume related decline in the network segment. The negative earnings contribution from IV and CAGR was the main reason for the decline in EBITDA.
It fell by 25.5 percent to €435,700,000 Depreciation and amortization, including effects from impairment testing, was slightly up due to ongoing investments. Therefore, the group's EBIT fell by 39% to €236,400,000 Financial results remained nearly stable at minus 14.4 €1,000,000 In total, we generated a group net result of €168,200,000 during the first three quarters of this financial year, which corresponds to a decline by 38.4 percent 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 you know, we managed to bring down our financial indebtedness over the past couple of years. At the end of last financial year, we stood at a net debt level of about EUR 1,000,000,000.
And by some seasonal fluctuations, we believe that the net debt will remain at this level for the time being. P and L as of the 30th June was 23.4%. Our strong balance sheet structure forms the basis for pursuing organic growth opportunities in our regulated and stable Austin activities. We plan to invest up to EUR 400,000,000 per annum over the coming years. Thereof, roughly EUR 300,000,000 annually are dedicated to our networks, renewables and drinking water in lower Austria.
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. It may be interesting for you to compare this chart with the ones we had in Q1 and Q2. You will see that after 3 quarters, EBITDA of the Generation and the Environment segment now show a positive trend. In contrast, the Energy and the Networks segment clearly suffer from the already mentioned negative impacts this year.
EBITDA in Southeast Europe segment continues to show a positive development. With this very general overview, let's move on now to the next slide, which covers the generation segment in more detail. Wind generation was very strong. We benefited from the operation of our additional wind capacities in favorable wind conditions. Hydrology exceeded the long term average, but was unable to match the very good prior year level.
Thermal generation wind volumes declined year on year given the decline in contractual reserve capacity. I would like to remind you that last year, we provided 10 19 megawatt as contractual reserve capacity for the transmission grids in South Germany. Now following the split of the German Austrian electricity price soon, we only have 430 megawatts for parts of our natural gas fire plants in Thijs under contract with ABTG. Due to the lack of reserve capacity contract, our remaining natural gas fired facilities in Duenor, Konarkburg and Thijs are inactive and conserved in the current market environment. In total, electricity generation volumes in the segments were up by 1% year on year.
Segment revenue benefited substantially from the increase in renewable electricity generation. When comparing the profit and loss statement, please be in mind that the Generation segment now includes our thermal waste incineration plant in Fenton Dorteunle, which resulted in a respective increase in revenue as well as operating expenses and depreciation. In total, this development resulted in an increase in EBITDA by 9.7 percent to €137,000,000 and in EBIT by 5.3 percent to €89,800,000 On the next slide, I will continue with the Energy segment. Our Energy sales were influenced by different factors. Demand was lower due to the mild winter half year, which was partly offset by the very cold temperatures in May.
Whereas natural gas and heat sales volumes were below the previous year due to these weather effects, electricity sales volumes rose based on growth in the industrial customer segment, which helped to offset contrasting temperature related developments. Both revenue and operating expenses in this segment increased based on the valuation of hedges related to the marketing of own generation, respectively, procurement of primary energy carriers and emission certificates. The increase in operating expenses was additionally driven by the development of market prices. The deterioration in the energy segment is, however, mainly due to the performance of IVANKAGI, which is at the equity consolidated with operational nature. As in Q1 and Q2, Evencargy suffered from the violation of hedges that the company did as part of its free running procurement strategy.
The resulting negative impact as of June 30, 2019 was about €100,000,000 In addition, higher procurement costs negatively affected the supply margins of IVANKA, which resulted in an additional negative effect in the amount of €40,000,000 during the 1st 9 months. As you know, we did another price increase on electricity and natural gas for our household customers as the 1st June. This is the 2nd price increase in our current financial year. The first price increase was done last October. Both increases were about 13% each on electricity working price and about 5% each on the natural gas working price.
Based on these developments, the Energy segment reported EBITDA of minus €23,700,000 and EBIT of €37,900,000,000 In the next slide, I will present the developments in our network segment. Higher temperatures during winter also slowed the development of the network volumes. The natural gas distribution volumes were additionally affected from the reduced use of the thermal power plants in Lower Austria. Apart from this volume effect, the decline in revenue also reflects a reduction in network tariffs for both electricity and natural gas, which became effective as the 1st January 2019. These tariffs reflect the lower weighted average cost of capital, which applies for the new 5 year general regulatory periods.
Producticity distribution, the new regulatory period started this year for natural gas distribution already a year ago. Operating expenses were up due to higher upstream costs and expenses for third party services. In total, EBITDA was down by 16.2% at €187,000,000 and EBIT was down by 29.8% at €94,900,000 On the next slide, I will continue with the Southeast Europe segment. To start with, Degrotra Authorities made the following tariff decisions, which should affect the 1st July 2019. In Bulgaria, the end customer price for electricity for household customers in EVN supply area was increased by an average of 3.5%, following an increase by 1.4% in July 2018.
In North Macedonia, the latest tariff decision did not result in any changes to the electricity prices for end customers, following an average reduction by 0.2% last year. In North Macedonia, we started to act as a supplier of universal service as of the beginning of July based on a license which we received earlier this year. Based on this license, we exclusively supply households and small companies, which should add stability to our results in North Macedonia. The license has an initial term of 5 years. Now for some volume development in this segment.
Temperature related energy demand was slightly higher than previous year, but below long term average. In Bulgaria, we benefited from growth in the leveraged market. Based on these developments, we saw an increase in network and especially energy sales volumes. In Bulgaria, the invoicing method for the so called green electricity markup was changed last July. In total, the change is neutral in results because revenue and procurement costs were reduced by the same amount.
However, the change is responsible for a 3.9% decline in revenue in spite of positive energy sector developments. Lower write offs of receivables and the change in the invoicing method for the green electricity markup are reflected in a decrease of 6.4% and operating expenses to 597 €100,000 Based on these developments, EBITDA was up €83,000,000 and EBIT at €37,500,000 I would like to conclude my presentation of the segments with the Environment segment. As already mentioned at the beginning of the call, we were successful in the acquisition of 5 new projects in the current calendar year only. And during Q3, we completed our 4th project in North Macedonia. This means that as of July, we are working on 7 general contractor assignments in 4 countries Lithuania, Poland, Romania and Bahrain.
The order book was about €252,000,000 as of July. Now I would like to move on the financial performance of the during the reporting period. For a comparison of this segment, please be in mind that our thermal waste incineration plant in Lower Austria was reassigned to the generation segment and therefore no longer included. This clearly has an impact of Q3 numbers in comparison to the previous period. We are reporting both a decline in revenue as well as operating expenses.
The share of results from equity accounted indices with operational nature increased. In total, this development led to an increase in EBITDA, EUR 22,200,000 EBIT was up EUR 13,500,000 With this, I conclude the presentation of the segment. On the next slide, I will continue with the development of our good cash flows. Gross cash flow fell by 6.5 percent to €474,100,000 in the 1st 9 months of this financial year, which reflects the decline in the result before income tax, though partly offset by some contrasting developments. Due to the negative development of working capital as of the balance sheet date, cash flow from operating activities amounted to EUR 238.8 million, which corresponds to a decline compared to last year.
Cash flow from investing activities reflect the reduction of investments in cash funds and in securities in the R-thirty eight fund. Net investments slightly increased year on year. The focus remain on CapEx in wind parks, networks and drinking water supplies. The cash flow from financing activities mainly reflect the dividend payment to the shareholders of Evin IG, and minority shareholders as well as scheduled repayment of loans. The net change in cash and cash equivalents amounts to minus €3,200,000 I would like to conclude today's call with the outlook of the group.
As already mentioned at the beginning of this call, we confirm and specify our full year guidance. We expect group net result 2018, 2019 to reflect the upper end of the assumed range of €160,000,000 to €180,000,000 Finally, I would like to inform you that based on the information provided in BW Trust of the 30th June 2019, we note that their stake has decreased further from previously 29.7% to 29.4%. Taking into consideration that we transferred 73,528 treasury shares to employees on the 9th August, our free float is now 18.6%. I have now reached the end of my presentation of event results for the 1st 3 quarters of the 20 eighteen-twenty 19 financial year. I'm now looking forward to answering your questions.
And the first question comes from Peter Krampton from Barclays. Please go ahead with your question.
Good morning. Peter Crampton from Barclays here. Two questions, if I may. In your guidance for this year, what kind of impact of 1 off charges are you reflecting, particularly relating to this valuation of hedges? And then the second question is on your energy division.
What would be kind of a stable state EBITDA without one charges that one could assume from next financial year and beyond? Thank you.
Well, regarding the valuation of hedges, it's always defined by the balance sheet dates. Therefore, I cannot comment on this. We will follow the development very closely. What I can confirm is that on the 3rd quarter, it's around EUR 100,000,000 the difference between last year's Q3 results. Therefore, we also changed the policy of accounting of these hedges.
So over a period, it's from April 2019, over the next 18 months, this exposure to balance sheet dates valuations will decrease step by step corresponding to the reduced volumes, which are then have to be shown on this old accounting policy.
Perfect. Thank you.
At the moment, there seem to be no further questions. Next question comes from Theresa Schindwald from Rifeiessen Central Bank. Please go ahead with your question.
Hi, good morning. My question is revolving around the reduction of the CO2 exposure after the closing of Bernal. Do you already have figures for us on that?
Yes. As you know, over the last 33 years, the power plant was a backbone of production of electricity in lower Austria and the east of Austria. Of course, over the last years, it was only as a reserve capacity and therefore used only on certain days. On average, over the last couple of years, it was around 600,000 pounds CO2 emissions a year. So for the Austrian balance of the CO2 emission regarding the target, this earlier exit from the production of thermal coal production, electricity production will be an amount of 3,200,000, 3,300,000 tons of CO2 emission, which have to be not booked on the national balance and therefore will help to reach goals in the future.
The next question comes from Martin Brauch from Macquarie. Please go ahead with your question.
Hello.
We can hear you.
Okay. Thank you. You've obviously done very well in rolling out the wind developments so far and met your interim target early. And I appreciate that we're now waiting for the results of the Austrian election at the end of next month to see what the underlying government framework might be going forward. But is there any additional work you can do in the meantime to prepare sort of a pipeline of projects to put you in the best position should a future government put in place opportunities to actually bring more projects to financial close?
We are working off additional project. I think you're completely right. There is nothing to wait for. Of course, you need approvals by the authorities and you need this guidance of the framework. We all expect that the government will take efforts to further change their production profile of Austria on a very high level.
Please don't forget that Austria is one of the European Union countries with the highest percentage of electricity on our own home territory of Lower Austria. So we think it makes a lot of sense that as much as possible, wind power capacity should be installed in Lower Austria where the wind gains are good. And we are also the grid operator. And therefore, this 500 Megawatt with the end of 2023 or will be not the end of wind power development in lower Austria.
Okay. Thank you.
There are no further questions.
Thank you for joining today's conference call. We will publish our full year results for 2018 2019 on Thursday 12th of December. Please join us then again. Goodbye.