Morning, ladies and gentlemen, and welcome to the AFORN's Conference Call on the Results of the Fiscal Year 20 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, Stefan Ziskowitz.
Good morning, and welcome to the conference call on EVM's results for the 2019 2020 financial year. We are reporting sound results today with group net results for the financial year amounting to €199,800,000 This means that we reached the upper end of our full year forecast. To start with, I would like to provide an overview of the most important effects of the COVID-nineteen pandemic on our business development. As an operator of Critical Infrastructure, we are very well prepared to deal with the pandemic. Since 2,009, we have a group guideline on how to deal with COVID-nineteen.
In addition, we have emergency plans for various crisis situation, and we regularly hold training exercises for crisis scenarios. Therefore, I can say that our crisis plans work very well and supply activity was guaranteed at all times. We also paid particular attention to protecting the health and safety of our customers and the employees. The corona crisis had selective negative impacts on our operating results, but remained relatively moderate overall because our integrated business model and a widely diversified customer base worked well as stabilizing factors. Nevertheless, I would like to be transparent on those corona related effects, which had an impact on all year results.
Energy sales volumes to industrial and commercial customers declined during the lockdown in spring 2020. This has also had a negative effect on results contribution from Energia Llanes. Lower energy demand also led to lower network distribution volumes. However, this volume effect will be corrected in future tariff according to the Austrian regulatory methodology. According to EFS, we determine impairment losses for trade receivables based on historic regionally differentiated default incident.
Due to COVID-nineteen, calculated impairment losses for trade receivables were increased by €4,700,000 The market value of securities in the R138 fund also suffered from development of stock exchanges. The impact on our financial result was €5,600,000 Finally, progress on projects was delayed due to corona. In particular, this was an issue for our Kuwait project as the closing only occurred at the end of July, and the earnings contribution in the financial year was consequently lower. Investments are also delayed, but we are committed to realize them and catch up in the coming months. When you compare this year's result with last year, please be in mind that the previous year included positive one off effects of approximately €110,000,000 after tax.
This year also condensed effects from impairment testing, which I will elaborate on in a minute. For last year, it was our goal to evaluate our strategy, which has existed since 2010 and to update it for the next 10 years. We achieved this goal despite the restriction cost for COVID-nineteen. And in October, both the Executive Board and the Supervisory Board approved the Strategy 2013. The main driver for the strategy update was to reflect the changes in our operating environment, especially the climate and energy policies, which aim to slow and reduce global warming.
Within frameworks such as the Paris Climate Agreement, the European Union's Clean Energy Package and the energy and climate goals incurred in the program of the Austrian government, we want to play an active role in utilization. We aim for a substantial increase in our renewable generation capacity from wind power and photovoltaics. This will allow us to reduce the specific CO2 emissions from our electricity generation by half by 2,030 compared to 2,005. Another future oriented project by the European Union concerns the cyclical economy. In this area, we also plan to make a contribution in the coming years as an environmental service provider with innovative solutions.
The 3rd key goal of our strategy is to be more effectively utilize the opportunities created by digitalization. We want to make an all customer related process easier, faster and more efficient. In doing so, we plan to remain an attractive partner for our customers. To summarize these key points, the motto of our strategy 2,030 is to make EVM more sustainable, more digital, more efficient. We are already actively working on specific implementation measures, but we also develop further concrete measures during this financial year.
Now for the dividend proposal. The Executive Board will propose to the Annual General Meeting a higher ordinary dividend of €0.49 per share. In comparison with last year, this represents an increase of €0.02 per share in the ordinary dividend. With this dividend proposal, we want to confirm that the EVN share remains a reliable and stable investment despite the challenges created by the COVID-nineteen pandemic. In line with our dividend policy, this proposal also signals that we want to hold the ordinary dividend at least stable at such a new level of €0.49 in the coming years.
Let me now continue with the key financials for the financial year. The group's revenue declined by 4.4% year on year. The main reason for this development are the decline in thermal generation as well as volume and price effects in the networks segment. In contrast, energy revenue in Bulgaria and in the international project business showed a positive development. Other operating income declined to 40 5.4% due to the changes in inventory caused by the invoicing of customer projects.
The cost of electricity purchases from third parties and primary energy expenses reflected the development of energy revenues with a decline of 70.9%. This reduction was based, in double o, on the lower use of primary energy carriers due to the reduction in thermal generation, a decline in wholesale prices and lower electricity purchases. The share results from equity accounted in Mercedes was influenced by contract development and fell by 27.8% year on year. On the positive side, the earnings contribution from Ebank KA normalized and amounted to €39,500,000 following a loss of €36,200,000 the year before. This recovery resulted from the reduction of FX from the valuation of hedges and price increases, which has been implemented in the previous year.
In addition, there were positive one term effects in RAC and Energy Woodland. In contrast, however, impairment testing caused a strong decline at Verbund's income cycle. A reevaluation of €92,200,000 in the previous year was contrasted by an impairment loss of €20,700,000 This was mainly caused by an increase in the interest rate used for discounting. In addition, there were negative earning contributions from Energy Alliance as well as an impairment loss of €4,900,000 from our investment in the Ashta hydropower plant in Albania in the 2nd quarter due to the COVID-nineteen related increase in the country risk premiums. Based on this development, EBITDA declined by 6.5 percent to €590,400,000 Scheduled depreciation went up.
This was due to investment, the evaluations we had to do after impairment testing at the end of last financial year and the initial application of IFRS 16 for a leasing contract. Impairment testing as of the 30th September of 2020 resulted in an impairment loss of €22,100,000 The main effect of €16,800,000 was related to the Bison 10 power plant. When comparing effects of impairment testing, please be reminded that we had a positive effect of it in total €41,600,000 in the previous year. This had resulted from reevaluation of generation and heating assets, electricity procurement rights and customer base in Bulgarian Northern Macedonia. I would also like to inform you that the impairment losses, which we recognized through assets in Bulgarian assets in both the North Macedonia in the Q2 of 2019 2020 have not to be included in the full financial year anymore.
The reasons is that the country risk premiums, which had increased in spring due to COVID-nineteen, have declined in recent months and the framework conditions have improved. The group's EBIT amounted to EUR 273,100,000 which corresponds to a decline by 32.3% year on year. Financial results were up by 47.3%, in particular due to the higher dividend paid by Perfume. In total, we generated a group net result of kruals199,800,000. As already mentioned, please be in mind that the previous year included a positive one off effect of approximately €110,000,000 after tax.
Now I would like to move to the next slide, which provides some information regarding the group's balance sheet structure. Evian's net debt has remained constant at approximately €1,000,000,000 for 3 years with fluctuations as of the respective balance sheet date. Please note that the net debt included roughly €73,000,000 additional lease liabilities due to the initial application of IFRS 16. Gearing ratio was slightly up to 22.8%. Our financial flexibility is solid.
We benefit from low net debt and sufficient committed un drawn credit facilities, which amounted to US605 million dollars as of the end of September 20 20. Our strong balance sheet structure forms the basis for pursuing organic growth opportunities in our regulated and stable Austrian activity. 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. On the positive side, you can see improvements in the energy in the Southeastern European segment.
In contrast, performance of Generation, Environment and Network segment remained below the prior year. This is general overview. Let's move on to the next slide, which covers the generation segment in more detail. Electricity generation volumes in this segment were down by 36.4% year on year. Renewable generation volumes are 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 Junora last year and lower use of our gas fired plant in test for network stabilization. The usage of the Avastem power plant was below prior year's level 2. Segment revenue, while those operating expenses declined in line with these developments. The share of results from equity accounted in the seas fell to minus EUR 22,300,000 due to the impairment loss recognized by the investment in Sapunt Inkerfnet.
In addition, there was an impairment loss of €4,900,000 on our investment in the Ashta head of our plant in Albania in the Q2 due to the COVID-nineteen related increase in country risk premiums. Based on these developments, EBITDA in the Generation segment declined by 55.7%. Depreciation and amortization, including effects of impairment test, went up, the main reasons for investment in previous year's revaluation. In total, the generation segment generated a lower EBIT of EUR 42,900,000 Today, I would like to provide an outlook for each of the segments. In 20 nineteentwenty 20, results in the generation segments were negatively influenced by the impairment loss recorded to Verbund Interfert.
Therefore, assuming that wind and water flows reflect the long term average and excluding the impairment loss, we expect earnings of this segment to exceed the previous year. The COVID-nineteen pandemic is not expected to have an impact on our electricity production. However, the corona crisis could influence the development of energy prices in the short term. On the next slide, I will continue with the Energy segment. The development of revenue in the Energy segment depends primarily on the marketing of the electricity generated in Evian's power plant that is reported in this segment.
Therefore, due to the aforementioned decline in electricity generation as well as lower revenue from natural gas trading in heat supplies, revenue was down by 33.1%. The reduced usage of primary energy carriers and lower procurement prices led rising operating expenses down by 45.8%. Another reason for the reduction was the partial release of the previously created provision of an oil contract from the marketing of Evian's electricity production. The energy sales volume showed contracting development. Electricity sales volumes were up by 6.6%.
The overall positive development of sales comes from an extension of the customer base, and this was slowed by a corona related decline in sales to industrial customers. Natural gas sales volumes were down by 2.8% due to warm, bitter and increased competition. The share results from equity accounted indices with operational nature improved substantially to €39,400,000 This increase was supported by the return to EVA in Turkey to positive earnings contribution. Based on these developments, the Energy segment reported an EBITA of €83,800,000 and EBIT of €61,400,000 Our outlook for the segment anticipates results for 2021 to be lower than the previous year. The reason is that these results positively influenced above all by more favorable procurement prices to our heating business and the release of the previously created provision of Nora's contract from the marketing of events electricity production.
Please note that the further cause of the corona crisis could have a negative effect on energy sales. On the next slide, I will present the developments in our network segment. As already mentioned at the beginning of today's call, electricity consumption declined to COVID-nineteen, especially in the segment of industrial customers. Consequently, network sale volumes were down too. However, this volume effect will obviously offset in future tariffs in accordance with the Austrian gas The natural gas distribution volumes declined too.
The main reason for this was the reduced use of the thermal power plants in Lower Austria and the mild temperatures during the last winter. I would also like to remind you that the lower WACC electricity distribution network, which was implemented on the first January 2019, was for the first time applied for the full financial year. Based on this volume and price effect, revenue went down by 3%. Based on a stable development of operating expenses, EBITDA in the network segment declined by 4% and EBIT by 16.1%. The development of earnings in the network segment is determined by the osteoarthritis dermatology.
Earnings in this segment are therefore expected to remain stable at the prior year level. However, net sales volumes and in turn earnings could be influenced by various factors such as temperature related demand, usage of the gas via power plant pipes or the future development of the corona crisis. In the next slide, I will continue with the Southeast Europe segment. In Croatia, we were able to expand our activities. As you know, we already own 3 concessions to build and operate gas distribution networks in the counties of Sada, Sibyl Eklin and Split, Darmatia.
End of August, we signed another concession agreement for the Lithia Sena County, which is the neighboring county next to Zara. We plan to construct a gas distribution network for the cities of Dorsbych and OpEx Based on this agreement, it will invest roughly EUR 3,200,000 over the coming years. Energy demands in East Europe suffered from mild temperature and the corona crisis. Consequently, energy sales and vessel distribution volumes declined year on year. However, the financial performance in this segment was sound during the reporting period.
1 support effect there were lower procurement cost of network losses in Bulgaria and North Macedonia. Segment EBITDA amounted to EUR136,700,000, which was up by 4.3% year on year. Depreciation and amortization, including effects of impairment test went up. The main reasons for investments in previous years' evaluations, as already mentioned earlier. In total, segment EBIT stood at €66,100,000 which corresponds to a decline by 31.1 percent.
Regarding segment outlook, we expect that EBIT will be in the range between €40,000,000 to €60,000,000 subject to stable regulatory and energy sector framework conditions. I would like to conclude my presentation of this segment with the environment segment. Let me start with the developments in our international project business. I'm pleased that I can inform you about achievements in that area. In Kuwait, we were awarded the contract of the Unang Heiman Wastewater project in January, end of July.
The closing for this project took place. With this, all requirements were met that we were able to start with utilization of the project. Due to the percentage of completion method, we are now able to report results according to the project's progress. In Germany, we were successful in the acquisition of General and Contractor assignments for thermoslush utilization project. WZTE Water Technic was awarded a contract in Berlin.
The contract volume is about €190,000,000 EVN share will be roughly 50% of the contract value. Please note that the realization of the Berlin project will only start in autumn 2021. The summer sludge utilization, we are also active through our joint venture Sludge 2 Energy. Sludge 2 Energy received a contract of 2 new projects, 1 in Hannover with a contract value of about €40,000,000 and 1 in Straubing with a contract value of about €50,000,000 We see further potential for this project in Germany. Therefore, the project in Hannover, Straubing and Berlin will add well to our track record in this area.
In the International Project Business, WDE Auto Technik is currently working on 10 projects in Germany, Croatia, Lithuania, Poland, Romania, Bahrain and Kuwait. The order book was about 1.6 €1,000,000,000 at the end of September. This number includes our share in the Kuwait project. The financial performance of the segment is in line with the development in the international project business and was a corresponding rise of both revenue and operating expenses in the segment. The share results from our equity accounted indices with operational nature was below the previous year.
Please remember that the last year, the earnings from the wastewater project in Prague were included. In total, these developments led to a decline in EBITDA to €17,300,000 and then EBIT to €600,000 Our outlook for the environment segment is always subject to further realization of assignments in the international project business. Assuming progress as scheduled on our current projects, above all the large scale projects in Kuwait, we expect an increase in segment earnings in 2020 2021. An intensification of the corona crisis can influence the international project business through the economic development in these countries, where we are currently active and to negative effects on international suppliers. An estimate of the potential impact is not possible at the present time.
With this, I conclude the presentation of this segment. On the next slide, I will continue with the development of our group cash flows. Gross cash flows fell by 9.7% to EUR497 €100,000 during the financial year. The main factors for the decline included a reduction in the results before income tax and a higher noncash earnings contribution from equity accounted in this lease. The increase in depreciation and amortization was only able to partly offset these effects.
Due to development of working capital as of the end of December, cash flow from operating activities amounted to €412,000,000 Cash flow from investing activities reflected investments in property, plant and equipment, with investment of securities in one of our funds and guaranteed payments from the Republic of Montenegro for their wastewater project in Butuan. This was contrasted by the equity contribution for the Kuwait project and increased investments in cash funds. The cash flow from financing dividends reflected a scheduled repayment of loans and the dividend paid for the previous financial year. A contrary factor was the issue of a green promissory note loan. The net cash the change the net change in cash and cash equivalents amounted to minus €105,400,000 I would now like to conclude my presentation with the outlook for the group.
Plans the coming years to average up to EUR 450,000,000 depending on the project in progress. Roughly 3four of this investment volume will be directed to projects in Lower Austria in regular and stable business areas of network infrastructure, renewable generation and drinking water supply. This will protect our solid operating base and will drive continued growth. In line with our updated strategy, we aim to contribute actively to Austrian and European targets to expand renewable generation. Therefore, we will continue to build wind farms in Austria, but and this is new, we also start to develop wind and photovoltaic projects in our core markets outside Lower Austria.
As for the outlook, assuming average conditions in the Energy business environment, we expect that the group net result in 2021 will be in a range of approximately €200,000,000 to €230,000,000 However, the further cause of the corona crisis and the resulting macroeconomic effect would have a negative influence on individual business areas at EVAN and in turn on the development of earnings for the Empire Group. I'm now looking forward to answering your questions.
And the first question comes from Peter Krampton. Please go ahead. Mr. Crampton, your line is open.
Good morning. Peter Crampton here from Barclays. Firstly, very well done on decent results from what was a very difficult year. Three questions, if I may. The first one relates to your outlook for the 2020, 2021 financial year.
What kind of COVID-nineteen macroeconomic assumptions you're kind of making there? The second question relates to your environment business and it seems like a good number of kind of projects for WTE, a lot also happening in your kind of Austrian Water business. Is an assumption correct that we could expect them some quite good operating profit growth in the coming years? And could we maybe even go back to the very good levels of operating profit you had a few years ago? And then my third question would relate to, we've got a new government in Austria and lots of talk about kind of adding more renewables.
And I was just wondering your views on what kind of renewable policy we could maybe get next year and whether you are excited about potentially kind of stepping up investments and kind of the return potential? Thank you very much.
Thanks, Peter, for the questions. As always, they are pretty much to the point regarding the overall development, which are the basis for our planning and environment. As we have seen over the last years, of course, we are also exposed to macroeconomic trends. What was the good surprise was that at the end, the overall result was more stable than we would have expected in the summer period because we were able to realize some of our investments in time. We were able to reduce the outstanding invoices by the customers and so on.
We take this as a basis, of course, for our assumptions for the future. What we have seen and when we did the analysis also to the crisis 2018, 2009, we expect that there will be an overall process of speeding up growth again, yes? So in the sense, 3% to 5%, yes, we would expect in the outlook that the overall improvement of the economic situation will help also societies to get along. What we were doing, and maybe this is interesting for you, the National Bank is publishing a weekly comparison to the economic development in the year before. So on a weekly basis, you see the change.
And what we saw there was in March, April and relative to the year before, it went down to 23%. And then over the summer, the gap was more or less closed again. And then of course, now in October, November, once again, the gap was widening to 8%, yes? But this shows that the measures which has been taken in this autumn winter are not so impacting the industrial production as they did in this very strange period of March April. And on this basis, we come down to the conclusion there that the societies which we are working in might be making up with a stronger economic growth in the upcoming years.
Let's put it mildly, we are because I'm sure 2,001 will be a little bit weaker than we would have expected a couple of weeks in the month again. What we also have seen is that the consumption of household customers, yes, normal tariff customers is pretty well, yes? So in the sense, this is very stable. Also, the payment habits over the period have been quite strong, especially in Bulgaria. We had not a lot of problems regarding outstanding payments.
So therefore, it's very surprising lessons we draw from the development over the last couple of months, and this is the basis also for our expectation. Regarding the international project, of course, COVID the delay of COVID was painful for this year because we would have expected that we can already book a higher part of the results already. So this delay was hindering this year. But of course, this is now coming in the next year. Therefore, COVID from its size and regarding its percentage of completion method will be very important for the upcoming next 3 to 4 years.
And therefore, this will also stabilize the overall group. What we also checked and what is also important, of course, that in all these countries, you have COVID effects, yes? You have delays, yes? We have in the contracts this kind of force of mature clauses, yes? And so extension of time lines will be activated immediately.
So we will make sure, and I think there is quite an understanding that this is bigger than the normal customer client relationship. Regarding the renewables policy, I think we are a bit late. We would have expected that the new law, which is the basis for further project and further development of capacities, should have been voted in the parliament already at the end of 2020. They now confirm that they will try to put it into force in the Q1 of 2021. Of course, as an infrastructure company, we would definitely ask for clear guidance for the midterm because all our investments are long term investment.
Therefore, we need long term guidance. We also need a bigger debate what are the preferences in society. So we have still some doubts if the ambition in the renewable environmental field really backed up and shared by the overall majority of the electorate, even when we are discussing about the consequence of the costs coming from this. Therefore, from our point of view, as a stakeholder in this policy processes, we would really push for more transparency, open books and clearance of their preferences where the society should head. But maybe this is not so different in Austria than from other European countries.
What we see is the big ambition by the European Union, by the international community and by the Austrian government, yes? But to find a legal base for long term investment clearance, there is some steps have to be taken to do that.
Thank you for your answers.
The next question comes from Roland Fetter. Please go ahead. Your line is open.
Good morning. It's Roland Fetter from Brexit Partners. Could you please tell us what are your plans with your stake in Verbund? Because it's about more than 90% of your market cap at the moment, the value of the stake, and you contribute very little to net income. Would you consider, for example, the closing part of it Or the other possibility now it gives additional leverage capacity on the balance sheet because of a huge value, which is not reflected in the net debt?
Yes. Well, I won't comment on the share price. Please ask for Bhubon colleagues about this. As you know, this is a historic stake, which we took in the past. We have seen some volatility in the share price over the years.
It is part of our overall strategy to secure the energy sourcing in Perbund, it's the hydropower in Energibund, it's the wind power and in RAC, it will be the green gas of the future. So this is our understanding of the energy value chain. And from this point of view, I would rule out to increase, decrease the Probu stake as it is. But maybe it's an invitation for you to invest in EVAN shares because it's a cheap way in the stake.
Okay. Thanks a lot.
The next question comes from Ludger Schumacher. Please go ahead.
Interesting. Yes, good day. Three questions also from my side. First one is related to what Roland just referred to. If you take your market cap, deduct the value of your stake in Verbund, there isn't much left.
It's about EUR 170,000,000 which if you adjust for the Verbund dividend EPS means that EVN itself is trading at 1x PE, which arguably is a bit low.
Is that
something that concerns you? And could you do something about it maybe through the dividend? But then again, you do have a very low pay issue, and you say the dividend will be at least stable. Wouldn't this be a good way to boost the rating of EVN itself if you actually show some more ambitions as far as the dividend is concerned? That's my first question.
The second one is on your impairment loss. You booked on the bund in Kraftwerk. I just don't get it. You guys going through the group at an all time high. The bund itself, which presumably should be a good value indicator for your state there, is also at an all time high.
You mentioned a discount rate, but 10 year Austrian government bonds, they are also at an all time low and have been falling for most throughout most of the year. So I wonder what the basis for the impairment is? And last one is on QI. You mentioned that it could be quite important, the earnings contribution over the next 8 to 4 years. What kind of earnings contribution at a normalized level are we looking here?
Okay. First of all, I think the Verbund question I answered, yes? We are not speculate on the Verbund stake in any case, yes? I asked you about the Verbund stake. I
didn't ask you about the stake. I asked you about the rating of one times earnings, if that is something for EVN itself, if that is something that concerns you?
Well, as a board member of Verbund, I follow the electricity prices also on the long term and on their earnings very closely as everyone can do on the published results. I think talk to CFO Coleman what he's seeing in the share price because obviously, there's something going on, which is a secure haven for investment, which is not backed by development in this sense anymore. So this is very sensitive, and I will withdraw from that. What we think is that on the long term, this kind of backing up of the energy value chain and good dividends should be attractive for everyone. We increased on the basis of our operative performance now the basis dividend also for the future.
Let's see, especially in this COVID environment, how the future will turn out. You can also comment then on the to the expected dividend if the operating results are really showing this. And regarding the impairment, I think it's a very well taken point. Interestingly, we are also exposed there how interest rates are changing. And interest rates increased and also the better increased.
So at the end, this is more driven by IFRS and the methodology than anything else. But this is also paying into this kind of environment, which of expectations we live in. And we have seen this in the first half of the year when suddenly, the risk premium for countries was increasing suddenly, and we had to do these impairments. And over the following months, these risk premiums went down again. And therefore, we are exposed to this kind of macroeconomic expectation in the methodology as everyone else.
And regarding COVID, we expect in this kind of turnkey project, which is Kuwait mainly a turnkey project, We expect a 1 digit percentage over the next 4 years. This is what we are looking at normally. This time to rest the volume gives you some expectation what we will see over the next 4 years on average.
So in terms of EBITDA or EBIT?
EBIT, yes. So it's a middle single digit, middle single digit percentage, which we are aiming for in projects like that.
Okay. Thank you.
The next question comes from Theresa Shinward. Please go ahead.
Good morning and thanks for taking my questions. I still have a few remaining. And let me start with the Viasome power plant, which is almost beyond the exact spot in the results. According to my calculations, it accounted for about 1.4% of revenues, which is just above the 1% threshold required by an increasing number of investors to make a share company investable. How do you plan to address the issue of still having a share in the coal fired power plant that is also not very likely to be shut down due to its recent constructions.
What are the options on the table? This would be my first question. My second one is, I, of course, listened up when you mentioned renewables investments outside of the core region of Lower Austria. How can we think about that? Does this mean could this include teaming up with other regional utilities?
And could you elaborate a bit more on that one? And the last one is not only on the current Renewables Extension Act, but which developments and time lines can we expect some other important issues like the new network development plan? And also whether what's your view on the tighter EU targets of the 55% reduction in CO2? Do you believe that the Austrian targets need to be stepped up? Would it affect the energy sector?
What's your expectations on that? Or would this rather concern other industries? Thank you.
Okay. Thanks, Theresa. First of all, also, as you know, the German government made a decision in the law to step out of thermal power production there. Question mark is how can this be done effectively. The first auction brought a bigger share of capacity, which the energy companies are ready to take out.
Question mark is how will be the next auction organized. What is definitely for sure is that it will be not longer than 2,038 question mark is will it be and this is also affecting Viasome in the early 30s or not. And therefore, we are very cautious because we are not only the minority stakeholder in the power plant company. It's the AKA which is having the majority. Nevertheless, I would expect for them, it's also a question mark, what is the right timing and what are the incentives given by the public to maybe come to an earlier close on that, yes?
For us, there are different scenarios. None of them is in any way already so precise that we would be able to announce something about it. Definitely, there will be no milestone on the grid anymore coal fired in 2,038. And therefore, it is more or less a timing question. It's not a question if this power plant will go to its technical end anymore.
Therefore, I see this as a question mark of different options for the future. But at least we have now a law which has been published in August, and therefore, it's more clear on which end of little basis the government has to make their individual decisions as these capacity auctions were already showing it. What do we have in our in books, yes? So we have a residual book value net on net of €78,000,000 So this is what is in our books. And of course, we have the contract of the energy.
And therefore, we are on both sides interested on the future of the biosolme power plant. Regarding renewable, there are two sides of that. 1 is this Renewable Act in Austria, which has been postponed and which we addressed. It should be voted on and giving some guidance in the next year. What we decided also, and I mentioned it before, that we have tried to reduce our specific CO2 emissions till 2,030 to around 50% of the level we had in 2,005 in the world before these changes were happening.
We will drive down the specific CO2 emissions in the scope 1 regarding our production. And therefore, as you will see, this 2030 and you see, okay, there is device on steel on the grid, yes? If things are changing, there will be more dynamic using this path down of the specific CO2 emissions, targeting 2,040 and targeting 2,000 and 50 in a way to become also carbon neutral with all means and with respect to by the stakeholders. It is an open process driven by technology, driven by financing, driven by legal restrictions or possibilities. As we all know, hydrogen is now used as a symbol of technological change.
We know it's not about the technique, it's about the costs, yes? And therefore, every strategy, which is using hydrogen too early, is more wishful thinking than real market based projects. Therefore, we will look for the mix of electricity production, distribution and sales to ensure that our society has energy secured supply. But we need guidance, and we will need in certain areas even support to be able to make this transition. And therefore, I would say that the EAG as it is now drafted is helping for the next years.
It's not answering the 2,030 challenge and question mark. And I hope that more transparency on costs and possibilities on mix will help to boost the 2,030 target on a more reliable long term orientation because what we see now is pretty much driven by announcements for the next quarter and not for the long term. On this sense, I think it's good if Europe is having an ambition of the energy transition. As we know, the differences between the European member states are quite enormously regarding the overall energy production and and Q2 exposure. Austria is starting from a very good position in that.
A question mark of an economist is always what are the costs of the additional targets. And is the money would be the money somewhere else better spent than in their own field? And this has to be answered. I think only open book, only economic cost for society, only microeconomic evaluations can help us to find better agreement besides just individual members of governments and the commission regarding these targets. And therefore, for us, it's also interesting in these member states where we are active and are having operation and having already assets, which are members of the European Union like Croatia, with better sun hours, yes, it might be also more interesting to invest there if these technologies are already coming close to market price production so that the risk of tariffs are getting smaller and if these countries are getting more stable in the European Union regarding the country risk, yes, because this is what we have seen in the first half year of this business year that suddenly the country risk was driving down the value of the assets, not energy prices.
And therefore, we also have to see energy prices, we have to see the country risk, and of course, we have to see the specific generation conditions to make the case there. And of course, the escalation is there. What we are aiming for would be that we say, okay, if twothree of this additional renewable production can be done in Austria in lower Austria and onethree in this other European countries, which we call home markets, I think the business mix would be fine for us, and this is what we now try to pursue. But you also mentioned, do we have to do it alone? No.
It's sometimes good to team up to partner with other investor and energy companies, especially if they have special experience, I think could be also very smart to work in cooperation. Let's see what the future will bring. But and this is the change which we wanted to announce today that we will not only pursue renewable energy in Lower Austria mainly, but that we will also try to build a project pipeline in these countries where we are active in, but I really also restricted on these countries where we are already active in and where we have some experience and where we also have some stakeholder relationships to also balance the business risk here.
Thank you. At the moment, there are no further questions. There are no further questions.
So thank you for joining today's conference call. We will publish our Q1 results and for 2021 on Friday, 26 February. Please join us then again and stay healthy. And we all wish you happy holidays. Goodbye.