Implenia AG (IMPN) Earnings Call Transcript & Summary

Good morning, and welcome to our recently announced Implenia Media and Analyst Conference. We are happy to have you here. My name is Silvan Merki, Chief Communications Officer of Implenia. We will hold our presentation in English. [Operator Instructions] Before we start, I would like to first draw your attention to our disclaimer that you find presented at the end of the presentation. One second remark, you will also find already the slides shown today already published on our website. And now let me hand over to Implenia's CEO, André Wyss. André?

Thank you, Silvan, and also a very warm welcome from my side. Before I go into the details, I would like to start by showing an overview of our key messages for today's media and analyst conference on the topic Implenia Way Forward. Over the last months, we have finalized the strategy implementation review for all our 4 divisions. We reevaluated all opportunities and risks, including claims and litigations we have in our projects. This reinforced the need for us to sharpen and accelerate our strategy execution. It became evident that we have to improve our risk profile. In order to do that, we will rigorously concentrate on our core competencies and businesses with solid margins. That means we will focus on integrated construction and real estate services in Switzerland and Germany. In other markets, we will continue to offer also tunneling and related infrastructure only. As a consequence, we have decided that we need to take unavoidable and painful actions, such as portfolio adjustments, restructuring, including layoffs, write-downs and rightsizing of our businesses and functions. The planned restructuring will affect up to 2,000 FTEs in our organization until 2023. We cannot avoid layoffs of around 750 people, and we expect thereof roughly 250 layoffs in Switzerland. About 1,250 FTE will be transferred to new owners by selling or outsourcing parts of our business. At the same time, we expect yearly recurring savings of at least CHF 50 million. Further, we plan to reduce our asset base by about 20% until 2023. This restructuring effort will cost us, all in all, about CHF 60 million. In addition to this restructuring, we have already executed a more conservative risk assessment of claims and litigations for all projects as part of the divisional strategy implementation reviews. Unfortunately, this work revealed the need for extraordinary write-downs of about CHF 200 million. The projects concerned all started before 2019, and a significant part of them are in subunit Civil and there in Sweden. As previously announced, COVID-19 continues to have a substantial impact on our business. From today's perspective, we anticipate a negative impact of CHF 50 million for the full year 2020. All in all, we expect that our EBITDA will come in at approximately minus CHF 70 million for the full year 2020. Following our asset-light strategy, we will report in EBIT going forward. For 2021, we expect an EBIT of more than CHF 100 million, respectively, more than 3% EBIT margin. Compared to our previous guiding method, this is an equivalent of approximately CHF 200 million EBITDA or 5.5%. It is important to emphasize that Implenia is solidly financed to achieve these targets. The Board of Directors and management are fully convinced that Implenia is well positioned to become a strong and sustainably profitable company with substantially improved risk profile. We are firmly on our way to realizing our vision of becoming an integrated, multinational leader in construction and real estate services. Now going into details, let's first have a look at our sharpened and accelerated strategy execution. Since Implenia announced its new group strategy in March 2019, many strategic initiatives were successfully executed and are proving to be effective. Along with the implementation of the new operating model under the leadership of a new management team, we started the execution of a comprehensive operational excellence program, a newly established innovation stage-gate process and defined new corporate values. Furthermore, we began systematic reviews of strategy implementation, portfolio and performance of our 4 divisions, including a reevaluation of opportunities and risks for all projects. The strategy implementation reviews were conducted sequentially. With Civil Engineering being the last of the 4 divisions, this process has been completed recently. These reviews clearly revealed the need to sharpen and accelerate strategy implementation, particularly for the strategic priorities: portfolio and profitable growth. With this sharpened and accelerated strategy execution, we will, in the future, focus on core competencies and businesses with solid margins. Our ultimate goal is to become an integrated construction and real estate services provider in Switzerland and Germany. As a consequence, we must take unavoidable and painful measures. We will restructure our portfolio and therefore, plan to reduce our workforce significantly. Additionally, reevaluation of opportunities and risk disclosed the need for extraordinary project write-downs and partial goodwill impairment. Last but not least, we will conduct a rightsizing in divisions and functions. Within the strategic priority portfolio, we are sharpening and accelerating 4 areas. First, we will focus on core strategic and performing businesses in Germany and Switzerland. In other markets, because of continued challenges in the business of subunit Civil, only tunneling and related infrastructure will be offered. Further, various nonstrategic, nonperforming and noncore businesses will be divested or closed. Restructuring, mainly in international businesses, is estimated to affect up to 2,000 FTE by 2023. Thereof, we expect roughly 750 layoffs, of which approximately 250 are planned in Switzerland. A total of about 1,250 FTE are planned to be transferred to new owners by selling or outsourcing parts of our business. Lastly, we intend to increasingly source project-related third-party services instead of owning them. For example, for yards and equipment, this will strengthen our role as a service provider and will lead to a reduction in assets of up to 20% by 2023, and therefore, significantly improve our equity ratio. Overall, Implenia's portfolio will strongly focus on real estate, large-scale buildings and infrastructure in Switzerland and Germany. Because of continued challenges in other markets of our subunit Civil, Division Civil Engineering will only offer tunneling and related infrastructure beyond Switzerland and Germany going forward. Reasons for this are better margin profiles, a strong track record and international tendering practices within tunneling. In addition, we are conducting a rightsizing of our businesses and functions to reflect the announced portfolio changes. Now let's have a look at the future setup of our divisions in more details. The Division Real Estate, previously named Division Development, will continue to grow its business with an attractive development portfolio called Landbank, in Switzerland and further expand in Germany. It will extend the value chain and deliver portfolio and asset management services as well as create scalable real estate products for international markets. The Division Real Estate also plans to develop prefabrication competencies. It will benefit from recurring earnings of services for Ina Invest and dividends from Implenia's significant minority participation of 42.5%. The Division Buildings will concentrate on a strong market presence in Switzerland and Germany. As an owner-centric end-to-end provider of construction services, Buildings uses its proven track record and competencies to be a general and total contractor in novel contract models for its clients. Nonperforming businesses are planned to be closed, such as Bau GmbH in South Baden, which is already ongoing. Further, realization capacities at the lower end of the value chain are planned to be reduced. Activities in Austria are intended to be transferred to a new owner. The Division Civil Engineering will focus on planning, engineering and realization of complex infrastructure in Switzerland and Germany. In further markets, only tunneling and related infrastructure projects shall be conducted. The activities of the subunit Civil in Sweden, Norway, Austria and Romania are planned to be sold or ramped down, while the tunneling business in France is currently being observed. In Switzerland, we intend to focus activities of subunit Civil in selected areas and plan to reduce realization capacities at the lower end of our value chain. In addition, a reduction in the ownership of yards and equipment in Switzerland, Germany and Austria is planned. The Division Specialties will develop scalable business as general contractor in construction and engineering. It transforms selected offerings, for example, Timber Construction and Formworks, to differentiate from our competitors. Further, Specialties screens for innovative solutions and identifies existing and new investment opportunities such as facade solutions or building technology services that are supporting our strategy. The division is also testing opportunities of the newly established Innovation Hub. Several nonstrategic or nonperforming businesses are planned to be divested or closed, such as Modernbau in Saarbrücken, which is already ongoing. Concerning our strategic priority, profitable growth, we want to achieve our ambitious future targets based on a sound underlying business, and therefore, focus on 2 areas. First, we minimize extraordinary project write-downs by an increased transparency, resulting from the new operating model under the new management team and our risk management, including our established Value Assurance framework in all project phases. Part of this is our governance and internal control system to further reduce project risks and sustainably improve realized profitability. Second, we will continue to execute our operational excellence program in order to benefit from improvements, for example, in procurement, and digitalization, such as our new ERP platform, BIM and process automation. Additionally, we are rolling out lean construction methods to all complex projects and are working on a further strengthened cash conversion cycle. Now let me share some details on project risk assessments and extraordinary write-downs. As part of the divisional strategy implementation reviews, we consequently conducted rigorous assessments for the entire project portfolio. This included a re-evaluation of all claims and litigations that had been estimated too optimistically in the past, all of them for projects that started before 2019. This revealed the need for unavoidable extraordinary write-downs of approximately CHF 200 million in 2020, particularly in the subunit Civil and there in Sweden as well as in some other markets. As a result, we changed the Swedish management and the consequences in Sweden are currently being further assessed. Now this is the second time within 2 years Implenia has to make extraordinary write-downs. The first time was in December 2018, where we reported value adjustments of up to CHF 90 million, after a risk assessment conducted by internal and external experts. The progress of the last 2 years with the new strategy announced, including the new operating models and values as well as the rollout of Value Assurance to all of our projects, enabled us now to detect misdevelopments much earlier and much better. Key reasons for the write-downs in this year are weaknesses in operational leadership and processes as well as a low group-wide transparency in the past. Before 2019, there was a strong focus on volume and growth rather than margin, weak cross-country controls, no integrated operating model --leading, for example, to nonstandardized controlling and reporting -- and cultural hurdles. When it comes to processes and transparency, there existed very limited escalation mechanisms. There was a tendency to overestimate opportunities and underestimate risks and further flaws were made in project and performance tracking, review and cost management. From March 2019 onwards, the new operating model was set up, the new management team and new processes were installed, which improved the organizational and cultural foundation. A revised risk governance, including a Value Assurance framework for all project phases, with margin as a key selection criteria, was effective by the end of 2019. We are fully aware that these changes take time to manifest in the organization and we are keen to ensure its rigorous execution. As mentioned, Value Assurance is a key element of our opportunity and risk management. Hence, let me share some details. We have set up a Value Assurance governance where all projects get classified in 4 groups. The groups range from class 1, which represents the highest project complexity, to class 4, which stands for the lowest complexity projects. Depending on the project classes, we have assigned a dedicated committee for decision-making and escalation. Within Value Assurance, each projects runs through a standardized process to rigorously assess opportunities and risks along the entire project time line. Key milestones are project selection, tender approval and project reviews. As part of the project selection, we ensure that we focus our attention and energy on strategically and financially attractive tenders. Within tender approval, we focus on reviewing and adjusting opportunities and risks before we approve or decline a submission. Last but not least, we started to regularly review the status of our projects as part of Value Assurance to identify potential issues as early as possible and in a standardized manner. The entire management strongly believes in Value Assurance. Due to long project time lines for complex projects, on an average more than 5 years, the quantitative impact on our margin will only be visible in near future. As you are all aware, another factor that has an impact on our business is COVID-19. We expect that the pandemic will continue to negatively impact Implenia's performance for the full year of 2020. In the beginning of the year, this was driven particularly by closed sites in France, Austria and a few Swiss cantons as well as forced closures by some clients. As of now, hygienic and other measures on construction sites still lead to decreases in productivity. On top of this, we experienced delays or cancellations of orders and partly interrupted supply chains. Implenia is in close contact with all clients and suppliers in order to minimize negative effects such as contract penalties. As of today, we anticipate that COVID-19 will hit our full year 2020 result by approximately CHF 50 million. I will now hand over to our CFO, Marco Dirren, to provide an update on the financials. Marco?

Thank you, André. Having heard what André just said, what's the impact on our financials for 2020 and thereafter? I start with 5 key metrics. The sharpened, accelerated and already launched strategy implementation will have a significant impact on our workforce and our asset baseline. To deliver our adjusted value proposition with regards to services and geographies, Implenia needs its own FTE baseline of around 7,700 FTEs, which is around 2,000 FTEs less than the year-end estimate of 2020. We will massively reduce our asset baseline. We will focus on reducing our fixed assets through outsourcing and by rigorously managing our work in progress and thereby improving our cash conversion cycle. Our already implemented Value Assurance process and our policies on how to manage claims will help us to reach our targets. By implementing our sharpened and accelerated strategy, we expect to realize annual recurring savings of more than CHF 50 million latest by 2023, aiming for a front-loaded realization curve. As a result of our strategy implementation, we expect the goodwill impairment to be approximately CHF 30 million and onetime restructuring costs of approximately CHF 60 million. Yet another important metric is our equity ratio. As already communicated on our half year results, in June, our equity ratio was 16.7%. As stated back then, our equity ratio was impacted by extraordinary effects like COVID-19, FX effects and the noncash Ina Invest transaction, where we issued a dividend in kind. In addition, the planned extraordinary project write-downs and the onetime restructuring cost will temporarily weaken our equity ratio. We expect the ratio to be over 10% at the end of 2020, which is an equivalent of around CHF 300 million. Please keep in mind that Implenia has its own real estate portfolio with a market value of approximately CHF 300 million. This evaluation is supported by external sources. By realizing such an upside potential, Implenia's equity ratio would be clearly above 15%. Furthermore, with the Ina Invest transaction, Implenia has created new earnings streams by offering not only development and construction services, but as well real estate services for Ina Invest and third-party real estate companies. In addition, Implenia profits off being a significant minority shareholder of Ina Invest Limited. As always, in our calculations, we do not reflect our subordinated convertible bond, which would count for over 5 percentage points. By implementing the earlier mentioned initiatives and by divesting or outsourcing selected asset-heavy, nonstrategic and nonperforming activities, we expect the equity ratio to be over 20% within the next 2 years. After all, Implenia currently is solidly financed to achieve its targets. After taking into account all mentioned write-downs and restructuring costs for 2020, we expect an EBITDA of approximately minus CHF 70 million, which is an equivalent of approximately minus CHF 200 million EBIT. The COVID-19 impact amounts to approximately CHF 50 million, the extraordinary write-downs to approximately CHF 200 million and the restructuring costs to approximately CHF 60 million. In order to test if we will be able to deliver the 2021 results, we've compared them to the reported 2019 figures and to the 2020 figures adjusted by the extraordinary effects. The underlying business plans are robust and we are confident that we will achieve an EBIT of over CHF 100 million in 2021. As you will notice, as a result of our asset-light strategy in future, we will guide our results in EBIT level instead of EBITDA. At over CHF 6 billion, our order book remains at a high level. Due to our already implemented Value Assurance processes and our operating model, the quality of our order book has improved. As already communicated over the last month, we are not focusing on volume, but on profitable business. Therefore, the revenue will decline short-term compared to the previous year. But given the orders at hand, we are confident to achieve our planned 2020 revenues and we've secured over 65% of our planned 2021 revenues. As a result of the earlier mentioned, our 2020 EBITDA will be approximately minus CHF 70 million. For 2021, we expect an EBIT of over CHF 100 million which is an equivalent of over CHF 200 million EBITDA. Our targeted midterm EBIT margin is expected to be 4.5%, which is broadly in line with our previous EBITDA margin of 6.5%. And with that, I hand over to André.

Thank you, Marco. Now let me share an update on our outlook. The Board of Directors and management are fully convinced that Implenia is well positioned to become a strong and sustainably profitable company with a substantially improved risk profile. Recent market predictions remained positive despite COVID-19 impact for all Implenia markets. Total construction output is expected to recover in 2021 and continue to grow in 2022 and beyond. We are confident on the identification and disclosure of all significant extraordinary write-downs from projects that started before 2019. Risk management procedures are proving their effectiveness, and we will further increase predictability of positive value creation. Recent wins of new lighthouse projects, such as Kantonsspital Aarau, Alto Pont Rouge in Geneva or Südcampus in Bad Homburg in our Division Buildings, and the modernization of Waldenburgerbahn in Basel-Land in our Division Civil Engineering, stand for our strong and integrated planning and realization competencies, and are fully in line with our strategy. We are convinced to deliver strong financial performance in all divisions in the financial year 2021, and that we are firmly on our way to realizing our unchanged vision and strategy of becoming a leading multinational integrated construction and real estate services provider. Now before we answer your questions, a quick note that we will present our 2020 annual results on March 3, 2021. If you have any questions after this event, please do not hesitate to get in touch through the usual channels. Thank you very much for your attention. I now hand over to Silvan to facilitate the Q&A session. Silvan?

Thank you, André. So now I can open the conference call for your questions. [Operator Instructions] So we are happy to answer the first question. We got some question that's covering on a raise of the equity. I will read one of it, we collect them. Implenia has, in recent years, incurred significant write-downs in the context of these track records. Why does the Board believe Implenia should not raise equity? André?

Yes, thank you for that question. Yes, we, at the moment, see a temporary decrease of our equity ratio in 2020 due to this mentioned extraordinary effects. But on the other hand, we also see already the potential for short-term upside, and therefore, we don't see this as a need right now. Marco, some more details, please?

Yes. Especially -- we have especially some upside potential regarding our real estate portfolio, which is still in our books. And including that upside potential of the real estate portfolio, we will be clearly above 15%. And then we've got a further upside potential from earning streams we expect from Ina Invest from -- starting in 2021, 2022, and as well our participation in Ina Invest, which is 42.5%, which is a major minority invest we have. Usually, and as always, we do not count our subordinated convertible bond to the equity ratio. That would lift the equity ratio by another 5 percentage point. And last but not least, not to forget that the short-term and planned strategic initiatives we have now sharpened and accelerated, will increase our equity ratio, not only because of the divestments we do, but as well because of the shortening of the asset sum of our balance sheet within the next 2 years. So all -- overall, we do believe that Implenia is solidly financed to achieve the targets in the near term.

Thank you, Marco. The next question, why are the measures only triggering an impairment of 10% of the total goodwill? Which are the biggest CGU in the remaining goodwill?

So the goodwill impairment of CHF 30 million is mainly in the Division Civil Engineering. And the remaining goodwill is mainly in our well-performing core business and validated by our auditors. Therefore, we don't see any further changes. Thank you.

Thank you, André. What is the strategy with respect to the repayment of the 2022 subordinated convertible bond?

So I just start, and then Marco, you may complement. Just to reinforce, Implenia is solidly financed. We have currently no plans for a capital increase, and we do not have a cash problem at this time -- point in time.

Yes. And furthermore, we have now worked out our financial planning for 2020 and 2021. And we strongly believe that we achieve our targets. And therefore, we don't see a problem to refinance in 2022.

Thank you, Marco. Does the guided 10% equity ratio include the equity component from this convertible instrument? And how big is this component?

Marco, maybe an answer for you?

Yes. So as mentioned before, the subordinated convertible bond is not reflected. But that would account for about -- over 55 percentage point.

Thank you, Marco. What went wrong in Sweden?

So in the context of this divisional strategy implementation reviews, we did rigorous and systematic risk assessments, including all claims, litigations, and the re-evaluation of all the projects. These assessments [ unveiled ] write-downs all -- for projects started before 2019, and as I said, particularly in the subunit Civil and there, especially in Sweden. Key reasons are weaknesses in operational leadership, processes, and risk management as well as in low group-wide transparency prior 2019. Since 2019, we implemented not only new operating model, but profound risk management framework, including Value Assurance in all project phases. Furthermore, new values are leading to a more transparent and open speak-up culture. Write-downs, mainly revealed in Sweden, but we do not disclose write-downs on individual projects going forward.

In which positions in the balance sheet will the write-downs occur?

Marco?

So most of it is in work in progress, obviously, because that's where the project lies. And then we did end cost assessments and for cost which are more likely than not in the future.

How much cash do you expect to receive with the divestments? When can we expect first cash flows? And would this not have contributed to a better risk profile?

Thank you. At this moment, we do not comment on divestments and specific timing, but I can tell you that certainly, discussions have started already.

Thank you. What about the situation in France? What does observe mean? How is the performance in France at the moment?

So the situation in France is stable and we are quite satisfied with the performance. We conduct very good lighthouse projects in France. We just need to get more confidence in the market and see how things are developing there. That's why we call these observe. We haven't been there for too long, but most of those projects are joint ventures where we are a minority partner or an equal partner of others, and this experience we want to see for the next 2 to 3 years. By then, we close many of those lighthouse projects, and we may then consider on how much of growth we want to put into France.

Thank you. Is the goodwill impairment part of the write-downs or are they additional?

Marco?

No, the goodwill is not included in the CHF 200 million write-downs.

What is the number of employees in Switzerland before the cuts? And will there be personal consequences either in the group management or the Board?

So approximately half of the people are in Switzerland. 250 people need to go through layoff, which is roughly 5% of our employees here in Switzerland. The other 500 are in all other markets. So a significant part of the layoffs and the rightsizing certainly takes place outside of Switzerland. The new operating model, including the new management and the new risk management framework, including the Value Assurance, have been implemented only as of mid-2019, and the latest additions to the Executive Board took place in the fall of 2019. All these announced changes will be undertaken with this new management team in place.

You mentioned that Civil Sweden has to be further assessed. What does that mean? Could that have procurement of further restructuring costs there?

So we certainly did our detailed deep dives in Sweden, as we communicated already. We have a good understanding of the situation by now, so we do not expect any further restructuring costs. But we want to better understand what exactly happened when.

Has the reorganization any impact on the composition of group management?

We do not plan any changes in the composition of the management right now.

On the so announced measures, will you do a dividend?

The dividend proposal is subject to the Board of Directors, and the decision is and will be subject to the general assembly next year.

Why do you think that you covered all of -- all things on COVID-19 with the millions you announced today, if the situation in Europe is going to be changing just now?

Until today, we have a good picture of the COVID impact. We also announced this in the half year result. If the situation does not significantly change, our estimation should be fairly accurate. We develop, plan and deliver complex real estate buildings and infrastructure projects more and more owner-centric, and as an end-to-end with an involvement already in early project phase, which means we know fairly well we are going.

What role will a reducing asset base and future profits play?

Maybe, Marco?

So the reduced asset base will be of about 20% by 2023. That will increase our flexibility. So we do plan to have more flexibility on our cost base, and we will for -- therefore, let play the market for decentralized services.

Will the write-offs breach any covenants?

Marco?

Yes. But since it's temporary, we are confident that we can reach an agreement with our lending banks, which we are in close contact already.

What triggered your decision to pull out of Austria?

So we remain active in Austria where we see opportunities in tunneling and related infrastructure. Other projects and businesses, we plan to finish or ramp down or transfer it to best possible owner. We just simply don't see the critical mass and the possibility of mid- to long-term success.

How much of the CHF 60 million restructuring costs will be cash relevant?

Most of the restructuring cost will occur in 2021.

May you give an indication on how quickly the equity ratio will recover to a more adequate level? How do you intend to refinance your subordinated convertible? And why are you not doing a capital increase to have the necessary financial flexibility during the restructuring?

So planned strategic initiatives, sharpen and accelerated, such as divestments, selected noncore activities and externalization of asset-heavy activities, certainly will lead to an expected equity ratio which goes quickly above 20% within the next 2 years. We have already started with many of those activities. We announced already the closure of Saarbrücken, Modernbau, but also the South Baden business. So many of these initiatives are ongoing, and that gives us confidence that we will achieve this target. Marco?

Yes and achieving the targets, please don't forget that over 65% of the order book for -- or the revenue for 2021 is already in our order book. So if we achieve the targets for 2021, we don't see a problem to refinance in 2022. Currently, Implenia is solidly financed, and we don't see any need for any capital increase today.

Can you please comment on your actual liquidity situation?

Yes. As mentioned before, our liquidity situation is positive. So we do not have any cash problems, but we do not guide right now on the detailed numbers on this.

What cash ins do you expect from a sale of the noncore business?

As mentioned before, we do not comment on this right now, but it -- we'll inform you in due time.

What are your assumptions regarding the disposal prices when you state that divestments will increase your equity ratio?

Marco?

So first of all, we -- with the talks we already have, we think that the price will be more than our book value right now. So that will increase our equity ratio. And then on that, furthermore, we don't do comment on timing. But certainly, we will not divest in a moment -- in a weak moment. So we are confident that we will get more than we have in our books.

Have the performance in Switzerland already improved? There was a big problem once again in half year one. Do you address this?

So Switzerland and Germany, Civil has gone through a strategy review as well which we call Civil [ up ], and the plans are well underway to be addressed. But also Civil Switzerland goes through changes.

Is the full year '21 EBIT guidance ahead of any COVID-19 extra costs?

Marco?

It is. As stated before, if the situation does not dramatically change, we have factored in COVID costs as per today. If -- and if the situation doesn't worsen, actually, over the next few months.

Don't you expect negative reaction from customers due to weak equity ratio?

We certainly are in close contact with our customers and our suppliers, and I believe the very positive cash position and the still solid equity position should lead to a good collaboration -- continued good collaboration.

Is 20% the new target for the equity ratio mid to long term?

As we said, the 20% is short to midterm versus the 25% is mid- to long term.

What is your best case for free cash flow and net cash position for the end of 2020?

We do not guide on these measures. But as I said, we have a good net cash position.

Which types of projects in Sweden are written down? Tunnels, bridges, streets, train tracks, et cetera, similar to Kongsberg in Norway?

So as I said, mainly in Civil, which is not necessarily tunneling, but everything else.

We have the possibility for more questions. We got one more. What's the underlying recurring EBITDA for full year 2020?

Marco?

Yes. As we mentioned before in our presentation, if we would look at the underlying performance only, we have negative, but as well positive factors. If we would neutralize them, our underlying EBITDA performance will be around CHF 200 million.

What makes you sure that 10% equity ratio is sufficient in competing for bigger projects like tunnels?

As I said before, we are confident that we can also convince our clients from the upside potential and that Implenia will become an asset-light company with a reduced risk profile and thus, the equity ratio will be coherent again. Again, we are solidly financed and we do not have any cash problems.

We have the possibility for more questions. We got the question to repeat everything in German for a radio statement. We would like to ask you to do so in calling our communications department. So we are happy to do so after our conference here. We still have time for other questions. Possibility for other questions still. We got more questions. Does Implenia become a takeover target again?

We aim to be a strong and profitable company with substantially improved risk profile that should attract long-term shareholders. In addition, we do not comment on the share price. Our real estate portfolio protects us, however, also partially from -- due to Lex Koller -- from a foreign takeover.

Until when do you expect to reach an agreement with your banks?

Marco?

As I said before, we are in close contact. We cannot -- the time line has to be defined jointly and this -- and in the near future of today and in the coming days, we will discuss on that.

One more question, how much revenue you're going to lose compared to the 20% assets?

So substantially less, relative to this. So we do see a decline of revenues short term, but this will be way less significant than the loss in assets, and then we will increase again as of 2022.

Thank you. How much of the restructuring costs will be cash?

So almost all of it will be cash relevant, but not in 2020. It will be from 2021 onwards to 2023. As we said, this is a restructuring, which takes place over 2 years.

Are there changes in the workforce at your location in Dietikon?

So we do not give very specific data by when and where. And the reason for this, we want to respect also the discussions with our personnel, organization and also with the unions. So therefore, no specific information on this.

Thank you. We have possibility for more questions. On the write-downs in Sweden, are these ex-Bilfinger or Implenia project?

These are mainly projects which got acquired in the time 2015 to 2017, and therefore, Implenia.

Thank you. Do you have a target for return on equity?

Marco?

So we don't have a specific target for return on equity. We certainly do calculate those metrics. But as you know, we do guide today in EBITDA and from 2021 onwards in EBIT.

It is still possible to ask questions. We have some time for 1, 2 last questions. What is the cash impact of the CHF 60 million restructuring?

Marco?

Yes. As I said before, most of it is cash relevant, which will be cash relevant from 2021 onwards, a small proportion will be in 2020.

Why have the various weaknesses in Sweden not been discovered in the intense portfolio review in 2018?

Yes, that's -- certainly has a lot to do -- think about in 2018, we did not had the situation we have right now. From today's perspective, we must admit that not all problems had been identified at the time of our announcement in 2018. At that time, processes, operating model and people hadn't changed yet, and we only had some weeks to conduct the assessment with some internal people as well as -- as well with some external support. The new operating model and new risk management framework, including Value Assurance and the culture of transparency, have been implemented as of mid-2019 until end of 2019. Reviews have been done rigorously and systematically under this framework in divisions and for all projects. Finalization now has unveiled the need for these extraordinary write-downs on projects that were all started before 2019, and our -- sharpen and accelerate the execution of our strategy.

Thank you very much. What triggered your decision to pull out of Austria?

I think this answer I have given already. We are not pulled out of Austria completely. We will remain with tunneling and infrastructure, but we do not see critical mass and high probability of success mid to long term in these other businesses, except tunneling and infrastructure. And therefore, we pulled out of Austria.

You are continuing to observe the tunneling market in France. Does your situation or measures have consequences on your development in that market?

Right now, no. We observe the market, as we said. We're working on many projects in parallel, which are on track, and we will then take a decision in the next 1 to 2 years on how continue in this market.

The next question is referring to Page 23 in the presentation. The gray shaded columns, which parts are cash flow relevant?

As you would imagine, the write-downs of projects are not fully cash relevant because the cash has already been spent, and part of it is that we don't get the claims back from our client. So it's not the full amount. Restructuring, I've already explained. COVID-19, CHF 37 million we've announced in the half year report. So that has already been spent, and we do expect another CHF 13 million, roughly, for the second half of 2020. And as you all know, the Ina Invest transaction, which positively contributed, has not been a cash relevant -- or it has been a cash-free transaction. So that's where -- how it composes.

Thank you, Marco. We have time for some last questions. Okay. One more question. You mentioned that you do not have the critical mass required in Austria. Do you believe to have the critical mass in Germany? What is your market share in Germany?

So Germany, yes, we are very well positioned and this has certainly to do with the acquisition of Bilfinger construction, but also Bilfinger buildings in 15 -- 2015 and 2017. So we are well established there. We have also a good headquarter and we have good regions. So very confident. And the past has shown that we can be successful in Germany. It's a huge market. We are still a minor player. But we have the capabilities. We have the right setup. So we are confident that we can be successful in Germany.

Thank you very much. I'm astonished that you still call your balance sheet solidly financed. On what grounds?

Marco?

Yes. While we experienced this temporary decrease of the equity ratio in 2020 due to the all mentioned effects. There is, on the other hand, the upside potential from our remaining real estate portfolio, which would lead clearly -- to an equity ratio clearly above 15%. So that's one reason why we call it solidly financed. And then we've got this upside potential from the Ina Invest transaction. We have explained that multiple times for the new earnings streams and the dividends we expect from the 42.5% shareholder-ship in Ina Invest. And then last but not least, we do believe that we are successful in sharpening and accelerating all these initiatives and measures now, and that will further strengthen our equity, and therefore, the equity ratio.

Thank you very much. We have time for the very last question now. As usual, you can refer to the communications team for further questions, and we are happy to answer them throughout the day. Our last question, why continue property development if you want to become an asset-light company?

Yes, thank you for this question as well. So we are very happy with the development of our real estate division, previously called Development division. And as you know, we also decided to partially -- half of it, spin-off in a company, Ina Invest. Ina Invest is here to develop a real estate portfolio. And the reason why we did this was exactly to become asset-light because we cannot afford that Implenia to have this kind of real estate portfolio on our balance sheet. That's why we have a minority -- or significant minority shareholder partnership with Ina Invest. So it's a close collaboration with Ina Invest. We don't have this real estate portfolio on our books, but we benefit from the close collaboration and especially from dividends and recurring fees. On the other side, Implenia still has a significant large portfolio, the so-called Landbank, of a market value which is half of what we used to have, which means equally to Ina Invest. There, we will not go in the real estate portfolio, we will keep our traded development approach, which means we acquire land, we develop it and we sell it. So we have now both opportunities. Whenever we go for a real estate portfolio, we may have a possibility to work with Ina Invest, and if we do a trader portfolio, it will remain in Implenia.

Thank you, André. And with this, we end our question-and-answer session and this conference as well. Thank you very much for your attention, and I wish you a very nice day. Thank you.