Good morning, ladies and gentlemen, and welcome to the conference call on ABN's results for the 1st 3 quarters of the 20 sixteen-seventeen 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. Jeff from Syskowitz.
Good morning, and welcome to the conference call on EVM's results for the 1st 3 quarters of the 2016 2017 financial year. I would like to start today's conference call by informing you, as we have announced at Hock on the 7th June, that my valid colleague, Peter Laiyer, spokesman of the Executive Board, asked the Personnel Committee of the Supervisory Board to earlier terminate his appointment as member of the Executive Board with the effect from the 30th September 2017 as he has reached the legal retirement age. Now let me turn to the contents of the presentation of this conference call. Having finished the Q1 2016 2017 financial year, we note that our financial performance so far has been influenced by certain positive framework conditions as well as some one off effects, which occurred in the course of the reporting period. In the Energy business, our operating performance was influenced by 2 main factors.
Firstly, the temperatures were substantially colder in our core markets, Austria, Bulgaria and Macedonia compared with both the previous year and the long term average. This had particularly positive impacts on network distribution and energy sales volumes. Secondly, the demand for super regional services related to the management of shortages in the delivery of balancing energy has increased again and has reached new record levels. Our thermal power plants were called on 142 days as compared to 89 days during last year to supply balancing energy, thereby ensuring network stability in Austria and Southern Germany. And talking about reserve capacity, I also would like to inform you that we just received additional contract for the supply of reserve capacity for the next winter period.
Therefore, the supply of reserve capacity for the winter 2017 2018 increased from 4 50 megawatt to 10 19 megawatt. So for the first time, all of our thermal generation asset in Lower Austria are under contract. Our main one off effects were announced at HOG, and we have also discussed them in course of our recent quarterly results presentations. However, I would like to briefly summarize them again in chronicle order. In November 2016, we received the arbitration decision on the Walsall Power Plant project, which was taken in favor of the project company.
Depreciation Corp awarded the project company compensation of approximately €200,000,000 This compensation primarily led to reduction of the construction costs. This was counterbalanced by a corresponding reduction of current liabilities against the general contractor, Hitachi. Therefore, the arbitration decision did not have a material liquidity effect. In February 2017, our Bulgarian supply company achieved the settlement with the state owned Bulgarian electricity provider, Nick. The agreement involved the offset of outstanding receivables for the additional cost of renewable electricity, which we have financed in advance by our Bulgarian supply company.
The reversal of valuation allowances to these receivables, together with default interest, resulted in a positive nonrecurring effect of approximately €38,000,000 on group net result. In this connection and also on the positive side, the Bulgarian regulatory took their decision on the 4th August 2017 to formally terminate the legal proceedings against our propane supply company, which was intended to withdraw its license. 2 respective of these developments, the international arbitration proceedings initiated by EVN against Republic of Bulgaria, the World Bank's International Center of the Settlement of Investment Disputes are still active. The reason is that some of other important issues are still unsolved in Bulgaria, such as past negative regulatory decisions. We expect that an arbitration decision may still be made in the course of the 2017 calendar year, but we do not have any certain clarity about that accurate timeline regarding such decision.
In Lower Austria, we focus on the further expansion of our wind power activities. Currently, 2 projects are under construction, 1 in Oberweilpelsdorf with 10 megawatt and 1 in Samarend with 33 megawatt installed capacity. Commissioning of both wind parks is scheduled for the next financial year, which will increase our installed wind generation capacity for the present level of 269 megawatt to over 300 megawatt. Subject to a continued appropriate legal framework, we have defined a medium term goal of expanding our wind generation capacity to approximately 500 megawatt over the next few years in Lower Austria. Let me now continue with the key financials for the reporting period.
Supported by the already mentioned temperature related volume effects in network distribution energy sales volumes, the group total revenue increased by 9.2% to €1,800,000,000 In addition, a positive contribution to development of revenue was also provided by the increased use of the thermal power plants for network stabilization as well as the international project business. On EBITDA level, we are reporting a steady improvement by 14.8 percent to €603,000,000 This increase is reflected improvements in the energy business results as well as the positive one off effect from the agreement with NEC in Bulgaria. Please note that operating expenses increased in line with the well related higher demand for energy and the increased use of energy carriers for the thermal electricity generation to stabilize networks. In addition, there was a negative one off non cash effect on operating results from a valuation allowance on inventories in the international project business, which we already reported in our half year results. The improvement in operating results is, however, not fully reflected in the EBIT.
This is due to an increase in impairment losses, which had to be recognized during the reporting period. In addition to an impairment loss of €28,900,000 which was recognized to the Kona Adar hydro project in Bulgaria during the Q1 already, further impairment losses became necessary in the Q3 due to the less favorable estimates for the long term development of electricity prices and higher discount rates, therefore. EUR 19,100,000 on our investment in Wiesem 10 power plant, €19,900,000 on electricity procurement rights as well as renewable and thermal generation assets and €26,600,000 on the Bulgarian district keeping company, that's productive. In total, EBIT was still up 0.6% and amounted to €301,200,000 The development of financial results was influenced by the restructuring of WEEV, the Televensky in Behar and its investment in FAWEN shares. WEEV was founded in 2010 together with me and in Stadtverke Rotinacker in order to hold shares which were issued by Verbund in cost of its capital increase at that point of time.
In order to simplify such structure, we decided together with Stadtverke Holding AG to transfer the Farbun shares previously held by WEEV and Wiener Staapke Holding, due WEEV and Wiena Stadtberg Holding. Due to the positive valuation effect resulted in such a transfer and other positive nonrecurring effects, the financial results improved by 80.3% year to year to minus €70,800,000 The group net result increased by 21.7% and amounted to €242,000,000 Now I would like to move to next slide, which provides some information regarding the group's balance sheet structure. Our strong operating performance supported further improvements of our key balance sheet indicators, each in comparison with the 30th September 2016. The equity ratio increased to 47.5 percent and financial net debt was reduced by €221,900,000 due to €289,600,000 Our strong balance sheet is also positively reflected in recent assessments of the rating agencies. In last April, we received upgrades from both rating agencies.
Moody's raised our rating from A3 to A2 with a stable outlook. And Standard and Poor's increased the rating from BBB plus to A- also with a stable outlook. Before I report on each of these segments in detail, I would like to note that we have renamed several of these segments, however, without any changes in their content. The new designations of our segments are also stated in our letter to shareholders. The name of the Generation segment remains unchanged.
The former Energy Trade and Supply segment is now called Energy. The new name of our former Network Infrastructure Altice segment is Networks. The segments formerly called Energy Supply Southeast Europe has been renamed to Southeast Europe, and the Environmental Service segment is now called Environment. And finally, strategic investments and other business, now be it the name old other segment, which is an IFRS standard denomination. I would like to provide an overview on the EBITDA developments of our business segments.
The overall picture of our good operational performance as well as the impact from certain one off effects is also reflected in the EBITDA development segments. In the energy business, only generation is below the previous year due to higher expenses for energy carriers and inspections of power plants, both linked to the more frequent use of our thermal power plants for network stabilization. Furthermore, the illustration on Slide 5 shows the impact from the temperature related volume effects and the positive one off effects in Southeastern European Business. In the environment segment, we would like to make the point that from a purely operational point of view, the segment EBITDA improved due to a sound performance the international project business. In order to evidence this development, we have adjusted the EBITDA on this slide by the valuation allowance of 40 €5,500,000 on inventories, which had to be recognized in the 2nd quarter already and which is a nonrecurring noncash effect.
Our adjusted Basel Tiber EBITDA in the environment segment is negative at €6,900,000 Let's move on now on the next slide, which covers the Generation segment in more detail. In the In the generation segment, the development of revenue was influenced by an increase of both renewable and thermal generation, whereas the later was due to the already mentioned frequent use of our thermal plants to sterilize the networks in Austria and France and Germany. The renewable generation benefited from better wind flows and the commissioning of the 19 megawatt Bastoglandseldorfink Park last summer. Based on this development, revenues was up by 11%. The higher use of primary energy tariffs for thermal generation as well as expenses for power plant inspections led to higher operating expenses, resulting in a decline of EBITDA by 4.5 percent to €84,400,000 Negative effects from impairment testing are largely included in the Generation segment, resulting in segment EBIT of minus €8,400,000 On the next slide, I will continue with the development in segment, which was renamed into energy.
Energy sales to end customers were substantially higher due to the cold winter temperatures, resulting in an increase in revenues by 13.4%. The operating expenses increased primarily from higher energy purchases from 3rd parties to the greater use of the thermal power plants to protect network stability and intensive natural gas trading. The share results from equity accounted indices, which were operational in nature, increased by 16.3%, reflecting a higher earnings contribution from the electricity and natural gas sales of EV and H. Kage. In total, these developments led to a raise in EBITDA by 3.1 percent to €94,800,000 whereas EBIT was down by 3.3 percent to €76,400,000 due to negative impact from impairment testing.
On the next slide, I will present the developments in our Austrian grid business, the segment which is now called Networks. The cold winter resulted in higher network distribution volumes. Additional positive volume effects in natural gas distribution were due to the increased use of the thermal power plants in Lower Austria. In combination with positive price effects due to tariff increases approved by the eCond Oil Commission at the beginning of the calendar year, revenue was up by 16%. Please note that the annual tariff changes correspond to the investment carried out in recent years into the comparison of network distribution volumes with the respective reference periods.
As we have been benefiting from lower volumes in the past, I would like to highlight the fact that this year's positive volume effect will negatively impact the tariffs in 2 years' time. The operating expenses increased in comparison to the previous year, primarily due to the higher expenses for our upstream network. Segment EBITDA was up by 31.4 percent at €252,400,000 After deduction of investment related rise in depreciation, EBIT was amounted to €166,500,000 which corresponds to an increase by 51.2%. On the next slide, I will continue with the Southeast Europe segment. To start with, regulatory authorities made the voluntary decision with effects of the 1 July 2017.
In Bulgaria, the end customer price for electricity for household customers in EVN supply area increased by an average of 1 0.7%. The Macedon, the tariff decision reduced the end customer price for electricity by an average of 0.3%. I would like to talk about the business development in Southeast Europe. Low temperatures during the past winter led to a raise in network and energy sales volumes. This environment was, however, constricted by a decline in sales to business customers as a result of the continuing liberalization.
Based on these developments, revenues increased by 0.8 percent to EUR 741,800,000 The improvement of operating expenses reflects the positive one off effect from the settlement with NEG. Therefore, EBITDA was up by 53.9 percent to €133,200,000 In the 3rd quarter, impairment testing triggered an impairment loss of €26,600,000 with respect to the Bulgarian District Leading Company Desk Procter. Still EBIT was €48,300,000 higher than the previous year and amounted to €59,600,000 Let's move on to the last slide on our segment, which speaks with the segment we now call environment. Segment revenues was 14.4 percent, up €151,400,000 due to a positive performance of the International Project Business. The operating expenses increased in line with the development of the International Project Business.
In addition, included the negative nonrecurring noncash effect from a valuation allowance on inventories, which was recognized during the Q2 already. Based on this negative one off, EBITDA amounted to minus €6,900,000 and EBIT stood at €25,900,000 Financial results improved by 13 point 1% to minus €1,400,000 In the International Project Business, we are still expecting that the tender of the large wastewater in Kuwait will be concluded during the current calendar year. As a result, I talked in March a bitter consortium formed by our German subsidiary, WTE, Votrotechnik and Kuwait Financial Investor emerged as best bidder, and the tendering authorities in Kuwait opened the bids. However, the contract for these projects has not been formally awarded yet. As of the end of June 2017, our international activities include the realization of 7 wastewater projects, such as 1 in Prague and projects in Southeast Europe.
The order book was about €65,000,000 at the end of June 2017. With this, I conclude the presentation of this segment. On the next slide, I will continue with the development of our accrued cash flow. Due to the sound operating performance, the gross cash flow improved by 12.8 percent to EUR508,400,000 Cash flow from operating activities was 4.4% lower than the previous year at EUR 380,600,000 This was due to, above all, the reduction of liabilities following the Walsam arbitration decision. The Walsam decision had, in terms of amount, had similar positive effect on cash flow from investing activities.
The cash flow from financing activities includes the dividend payment to shareholders of EV Energy and minority shareholders as well as the scheduled repayments of loans. The net change in cash and cash equivalents amounted to €66,100,000 I would like to conclude today's call with a brief update on the outlook on the investment strategy. The group net result is expected to increase over the previous year on the order of the nonrecurring effect from the settlement in Bulgaria. In this connection, the reversal of valuation allowance of receivables recorded in previous years and default interest totally ex approximately €38,000,000 after tax were recognized, the statement is made under the assumption of average conditions in the energy business environment. There are factors that could still influence the group net result, including regulatory background, especially in Southeast Europe developments in the proceedings in Bulgaria the remaining proceedings related to Wilsom Chem Power Plant Project as well as the progress on activities in Moscow.
Our investment strategy remains unchanged, and our focus remains on network infrastructure, renewable generation and the drinking water business. Thereby, we will further strengthen our stable and regulated activities in Lower Austria, which remain the basis of sustainability and stable earnings. In line with such investment strategy, we remain committed to our integrated business model along the value chain of the energy business. We believe that our integrated business model proves to be particularly silent in the current uncertain and challenging market environment. I have now reached the end of my presentation of the event's results for the 1st 3 quarters of 'sixteen-seventeen financial year.
I'm now looking forward to answering your questions.
And the first question comes from Peter McCreery. Please go ahead with your question.
Good morning. Two questions, if I may. Firstly, you did around €100,000,000 of impairments in the 1st kind of 9 months. What's the view going forward? Can we expect more impairments?
Or have they come to an end? And then the second question relates to your dividend, which hasn't been raised in quite some time and kind of looking at a strong balance sheet, good outlook for EBITDA. Can we expect growth in the dividend at one point in the future? Thank you very much.
Thanks, Peter, for the question. First of all, as you know, regarding the impairments, we are currently monitoring all parameters which can influence the value of our assets. And from this point of time, I cannot give you another answer to your question as we did when we were doing our impairments in the Q3. I think this is reflecting our permanent reviewing on the energy prices also on the long term. And as you know, we are working there with studies from very well known international institutions regarding market price development over the next years.
And the second thing is also regarding the dividend policy. As you know, we have 2 parameters which we monitor. 1 is the accurate amount of past dividends, so the $0.42 per share and of course, the midterm, which we are having on this regarding the 40% on the group's results, both the things which we always communicated to the investment community, which we will also regard highly when we are finalizing our accounts for this year.
Okay. Thank you for your answers.
At the moment, there seem to be no further questions. And the next question comes from Theresa Schimmel, Raiffeisen Central Bank. Please go ahead with your question.
Thank you very much. I have one clarification question. The procurement rights impairments, do they concern the Frodenal power plant? And what else? Second one is, if you could provide us with a rough time line for the new gas distribution regulation, when we can expect a final wording?
And my usual, what's the order backlog for the environment segment?
Okay. So your first question is mostly Friday now. Regarding your second question, we are in the process of the regulatory authorities for now really fixing the framework for the 1st January 2018. We are quite confident so far with the results of this reviewing, but we will make and publish this process on the authority finally closed and the result is announced. And regards having the order book, it's €65,000,000 as I stated before in the presentation.
Sorry, my bad. Thank you very much.
Mr. Vishkowitz, there are no further questions from the audience.
Okay. Thank you for your interest in today's conference call. I hope that you will join us again on Thursday, 14th December, 2017, when we will publish the results of the 2016, 2017 international year. Goodbye.