Good morning, ladies and gentlemen, and welcome to the conference call on EasyN's Results for the First Half of the twenty eighteen-twenty nineteen Financial Year. 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 Shiskowitz.
Good morning, and welcome to the conference call on EVN's results for the first half of the 2018 2019 financial year. The numbers which we are reporting today are in line with the development, which we have already seen during the Q1. And they are in line with the outlook, which we gave in December for this financial year. At that time, we informed the market that after 2 financial years, which we were influenced by positive nonrecurring effects, this year's group net results would return to levels with which we have seen 2015, 2016 and before. Despite the warm winter, I can confirm today our full year guidance.
We expect that group net result for 20 18, 2019 will range between EUR 160,000,000 EUR 180,000,000. When talking about our performance in the first half year twenty eighteen, twenty nineteen, I would like to remind you that wholesale prices increased sharply during the last financial year already. This increase resulted in a positive and noncash one off effect of about EUR 40,000,000 related to the valuation of hedges as of the 30th September 2018. As of the 31st March 2019, However, the valuation of hedges, which our supply company, EVA and Craig, did as part of their prerunning procurement strategy, resulted in a negative one off effect of about EUR 70,000,000 In addition, higher procurement costs negatively affected the supply margin such as that Ivenka G suffered from a loss of minus EUR 44,300,000 during the first half twenty eighteen-twenty 19. We always made the point that we closely monitor the development of wholesale prices and its impact on margins in our supply business.
Therefore, we just every recently decided to do another price increase on electricity and natural gas for our household customers, which will become effective as of the beginning of 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 the electricity working price and about 5% each on the natural gas working price. As next topic, I would like to remind you that the volume of our reserve capacity contracts declined.
Last year, we provided 10.90 megawatt. These were all of our Austrian thermal capacities as a contractual reserve capacity for the transmission grids in South Germany. Due to the split of the German Austrian electricity price soon, which became effective as the 1st October 2018, this is not possible anymore. We still have contractor reserve capacity, but the volume is lower at 430 megawatt for parts of our natural gas fired plant in Tice. Due to the lack of reserve capacity contracts, our remaining natural gas fired facilities in Konnoebrund and Tice are inactive and conserved in the current market environment.
Yesterday, we published our decision that we will terminate the coal fired electricity generation in our general power plant in autumn 2019. From a technical point of view, operation of the coal fired plant would have been possible until 2025 at the latest. But due to the lack of reserve capacity contract and the recent rise of prices for CO2 emission certificates, we took the decision for a premature termination. We will still use up the remaining coal on stock, which we will allow us for another 30 days of electricity generation. We did not order any new coal.
The assets related to the coal fired generation during are completely written off. Therefore, this decision will not have any impact on the result of the current financial year. The 3rd main driver for lower results are, as envisaged today, the reduced tariffs in our Austrian segment for networks, which reflect a lower regulatory cost of capital. Before moving on to the key financials, I would like to present some further highlights, which occurred during the 1st 6 months of our financial year. Wind conditions have been very favorable during the reporting period.
In combination with the continuous expansion of our generation capacities, our wind activities are contributing substantially to our results. As of now, our total installed wind capacity is 336 megawatts and we are currently working on the construction of another pre windpack, which a total capacity of 31 megawatt. Our midterm goal remains unchanged. Subject to market conditions we intend to grow our wind capacity up to 500 megawatt. On the 10th April, we finally received the decision of the exit court on our arbitration case against Bulgaria, which was continuing since 2013.
Please note that part of these claims are already settled out of court in 2017. This out of court settlement with the Belgan Steint owned electricity company, NECK, had resulted in a positive pretax one off effect of EUR 42,000,000 in 20 sixteen-twenty 17. According to the final decision received now, EVN has not been awarded any further compensation. Therefore, the decision will not have any further impact on our balance sheet or results. In other words, the whole exit topic is now finished.
Next, I have a positive news from Croatia on North Macedonia. In Croatia, we obtained the extension of 2 concessions for our natural gas business from 30 to 50 years. So the concessions now run until 2,060. As you know, we started to set up a natural gas distribution business in the Dunantin and Coast some years ago. The business is still small, but constantly growing also based on prosper and charisma in that region.
Based on the extended concessions, impairment testing triggered reversal of impairments of the Croatian natural gas business in the amount of EUR 2,100,000. In North Macedonia, we were successful in the tender and were awarded the license to act as a supplier of universal service. Based on such license, we will be able to exclusively supply all household customers and small sized businesses starting from the 1st July 2019 at a regulatory fixed price and a guaranteed supply margin. The initial term of the license is 5 years. In the International Project Business, we received 4 new contracts for general contractor assignments in Poland and Lithuania.
These new projects have been have a total contract volume of about €65,000,000 And finally, spring is always in the time when the rating agencies complete the annual review of their credit ratings of EVM. This year, the outcome is very satisfactory as we received upgrades from both agencies. Already in April, S and P upgraded EVM from A- to A with a stable outlook. And in May, Moody's upgraded EVM from A2 to A1 with a stable outlook, too. Our goal is to maintain such a solid A category ratings in the future.
Let me now continue with the key financials of the first half of our financial year. The group's revenue remained almost stable in the year to year at EUR 1,200,000,000. Positive valuation effects from hedges for the marketing of electricity generation as well as an increase in renewable generation and heat sales were contrasted by, among others, a price and volume related decline in the network segment. The already mentioned negative earnings contribution from EVA and Kake was the main reason for the decline in EBITDA by 29.9 percent to €330,300,000 Based on an almost stable development of depreciation and amortization, including effects from impairment testing, the group's EBIT was down by 41.8 percent at US198.1 million dollars The financial results showed a slight improvement. In total, we generated a group net result of US129 million dollars during the first half of the financial year, which corresponds to a decline by 43.8 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. Net debt, including non current personnel provisions, rose by 8% over the level on the 3rd September 2018 to about EUR 1,000,000,000 Clearing increased from 23.5 percent to 25% during the reporting period. Our strong balance sheet structure forms the basis of our pursuing organic growth opportunities in our regulated and stable Austrian activities. We plan to invest up to EUR 400,000,000 per year over the coming years. Therefore, roughly EUR 300,000,000 annually are dedicated towards 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. The already mentioned impacts of our sales company, EV and Kage, which is reported in the Energy segment, become clearly visible, as well as those factors which negatively affect the performance in the Generation Networks and Environment segments. On the positive side, we're reporting today slight improvement EBITDA in Southeast Europe segment. This is a very general overview.
Let me now move to the next slide, which covers the generation segment in more detail. Wind generation in the segment was up. We benefited from the operation of our additional wind capacity in favorable wind conditions. Hydrology was good, but still below the even better water flows we saw a year ago. Thermal generation volumes declined year on year given the decline in contractual reserve capacity, which I mentioned earlier.
Based on these developments, total electricity generation volumes in the segment declined by 13.2%. And comparing the profit and loss statement, please bear in mind that the generation segment now includes our thermal waste incineration plant in Switzerland, which resulted in a respective increase in revenue, operating expenses and depreciation. Apart from this, revenue also benefited from the increase in renewable electricity generation. Operating expenses in turn were also due to a year on year increase in primary energy expenses. In total, these developments resulted in a decline in EBITDA by 4.9% to €99,000,000 and EBIT by 15.8 percent to €67,700,000 On the next slide, I will continue with the Energy segment.
Energy sales in general suffered from the mild winter in Austria. However, we need to differentiate when looking at the development of sales volumes. Natural gas and heat sales volumes were down due to the warm temperatures. Electricity sales volumes, in contrast, increased due to new contracts with industrial customers. They were able to offset contrasting temperature related developments.
Both revenue and operating expenses in this segment increased based on the evaluation of hedges related to the marketing of own generation respectively, the procurement of primary energy carriers and emission certificates. The increase in operating expenses was additionally driven by the development of market prices. Our supply company, Evenkage, which is at equity consolidated with operational nature, suffered from the valuation of hedges and higher procurement cost as already explained earlier in this call. Based on these developments, the Energy segment reported EBITDA of minus €15,300,000 and EBIT of minus €25,000,000 On the next slide, I will present the developments in our network segment. Higher temperatures 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 Lova Austria. Apart from these volume effects, the decline in revenue also reflects a reduction in network terms for both electricity and natural gas, which became effective as of the 1st January 2019. These tariffs reflect the lower weighted average cost of capital, which applies for the new 5 year regulatory period. For electricity distribution, the new regulatory period starts this year for natural gas distribution already a year ago. Operating expenses were up due to higher upstream costs for network stabilization such.
In total, EBITDA was down by 18.8% €148,800,000 and EBIT was down by 29.4 percent at €87,400,000 On the next slide, I will continue with the Southeast Europe segment. To start with, I would like to briefly remind you of 3 topics concerning Southeast Europe, which I already mentioned in the beginning of the call, which are also described in more detail in our quarterly report. In North Macedonia, we received a license to exclusively supply households and small companies. In Croatia, we received the extension up to natural gas supply concession. Finally, for Bulgaria, we received the decision to exit.
Now for some more volume development in that region. Even though the temperature related energy demand was below the long term average in Bulgaria and Macedonia, network and specialty energy sales volumes were up in the segment. Higher electricity sales volumes were due to the growth in the Bulgarian liberalized market. In Bulgaria, the invoicing method of the so called green electricity markup was changed last July. In total, the change is neutral on the income line because revenue and procurement costs are reduced by the same amount.
However, the change is responsible for a 5.2% decline in revenue in spite of positive energy sector developments. Overall write offs of receivables and the change in the investing method for the green electricity markup were reflected in a decrease of 7.3 percent in operating expenses to EUR 27,900,000 Based on these developments, operating results improved with EBITDA of EUR 50 €4,000,000 and EBIT of €24,300,000 I would like to conclude my presentation of the segments with the Environment segment. I would like to start with the developments in the International Project Business. We received 4 new contracts for general contractor assignments in Poland and Lithuania. The new wastewater project has a total contract volume of €65,000,000 The order book was about €255,000,000 at mid April, so this number already includes the 4 new projects which received only then.
Our efforts to acquire the big wastewater project in Kuwait recently focused on negotiating the Envision project financing as well as establishing the project company, which will be the majority owned by the Kuwaiti state institutions. We expect the final awarding of the contracts will be given by the local authorities during the current financial year. Now I would like to move on to the financial performance of the environment segment during the reporting period. By comparison of this segment, please bear in mind that our thermal waste incineration plant in Lower Austria was reassigned to the generation segment is therefore no longer included. The positive development of the order book in the international project business is not yet reflected in the numbers of the segment.
Actually, project volume in progress was less dynamic than the previous year as the newly acquired project will only be reflected in revenue of future projects. Based on these developments, we are reporting both the decline in revenue as well in operating expenses. The share of results for equity accounted MSDs with operational nature in contrast increased. In total, these developments led to a decline in EBITDA by 20.6% to €13,200,000 EBIT totaled €7,500,000 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 was down by 11.2% to EUR 389.2 1,000,000 in the first half of this financial year, which reflects a decline in the results 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 100 and and $7,100,000 and as such was below prior year's level. Cash flow from investing activities reflects the reduction of investments in cash funds and securities in the R138 fund. Net investments slightly increased year on year. The focus remained on CapEx in wind parks, networks and drinking water supplies.
The cash flow from financing activities mainly reflects the dividend paid for the previous financial year and scheduled repayment of loans. The net change in cash and cash equivalents amounted to minus EUR 44,900,000. I would like to conclude today's call with an outlook for the group. As already mentioned at the beginning of this call, we confirm today our outlook for the current financial year. Assuming average conditions in the Energy business environment, group net result for 20 18, 20 19 is expected to range from EUR 160,000,000 to EUR 180,000,000 There are factors that could influence the group net result, including the future regulatory framework in Southeast Europe as well as the progress on activities in Moscow.
I have now reached the end of my presentation of Vivien's results for the first half of the twenty eighteen-twenty nineteen financial year. I'm now looking forward to answering your questions.
The first question is from Peter Crampton from Barclays.
Good morning. Just one question from me. If I look at your energy subdivision, you're kind of EBIT loss making this year, whereas in the past, you tended to have quite good EBIT contribution in this division. I was just wondering going forward kind of what to expect from this division, what you're kind of doing to get back to an EBIT profitable situation? Thank you.
Peter, you're right. The turn of the wholesale market has hit us in this year. But due to the 2 prices decisions we made with the 1st October and the 1st of June, yes, we will make up the wholesale increase, which we have seen in the last 2018 year. So we are always aiming on average on the long term for higher single digit gross margin. So this is what we are aiming for and which we try to achieve.
Okay. Thank you.
The next question is from Duncan Scott from Deutsche Bank.
Hi, good morning. Thanks for I just wanted to clarify firstly on the impact from the hedging valuation. I think you said it was a €70,000,000 impact at EVN KG. That €70,000,000 is that between the end of December the end of March? Or is that between the end of September March?
Just to clarify there. And then given that we've seen quite big impacts from the valuation of hedges in the last couple of sets of results, maybe you could talk a bit about your hedging strategy for the energy retail business?
Okay. Thanks. I can confirm it's €70,000,000 from end of September to the end of March, yes, just to have give you an understanding of the volume on this. And you're right, due to the change in the Austrian, German market, yes? We will, in the future, beginning from April on, try to have a hedge accounting on most of the volumes.
There's a lot of documentation necessary documentation necessary to do so, but it's better to decrease the volatility in markets which are getting more volatile anyway.
The next question is from Theresa Shinval from Raiffeisen Central Bank.
Hello, good morning. I would love to would love you to elaborate a bit on the new Renewables support law in Austria, if this helps changes anything regarding your renewable strategy?
Yes. Teresa, you know and maybe also for the other participants, we have a political crisis in Austria. So it's very hard to judge how all the projects in the legislation, which has been drafted and is now already filed in the parliament will be handled over the next 4 or 5 or 6 or even 6 months. What we have is that we have a more or less a consensus that the change of the energy system to a more renewable system with some targets to 2,030 is very ambitious. So if you have a very ambitious target, you need measures, yes, and you need a certain consensus in society how much money to spend to achieve this kind of target.
Therefore, I'm not so optimistic that any energy law will be voted in the parliament, which give us a sustainable framework for the next 4, 4 to 5 months. But I'm convinced that also regarding the political debate generally in Europe that there will be some ambitious legislation come up, but maybe not before the election in September.
Thank you very much. Mr. Shyskovitz, there are no further questions in the queue.
Thank you for joining today's conference call. I kindly invite you to dial in again on Wednesday, 2nd August, when we will present our results for the 1st 3 quarters. Goodbye.