Implenia AG (IMPN) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and a warm welcome to the Implenia 2022 Capital Markets Day. My name is Franziska Stein, I'm Head of Investor Relations, and I'm your host for today's event. Before we proceed, please allow me to start with some housekeeping items. This morning, we published a press release and just recently also the Capital Markets Day presentation. Please note that this event will be recorded, and a replay will be available on our website later. Today's presentation will be held in English and German, all German parts of the presentation will be simultaneously translated into English. Headsets are still available if anyone requires. To conclude my opening remarks, I would like to draw your attention to our disclaimer. And now I would like to walk you through the agenda of today. We will start the presentations with a strategy update by the CEO, Andre Wyss. He will talk about the current position of the company, achievements from the transformation and an outlook into the next phases for Implenia, Fit for Growth and New Horizon. Thereafter, the 4 division heads will give you an in-depth view on their respective divisions. They will talk about their capabilities, their competencies, the opportunities in their business and how they aim to achieve their increased profitability. After a short break, Stefan Baumgartner, the CFO, will give an update on the financial development of the company, including divisional expectations on both revenue and EBIT, and of course, the financial targets of the group. Andre Wyss will close the presentation, and we will open the Q&A session. We will be available, all the presenters will be available for your questions. After the Q&A, we would like to invite you to visit our dedicated topic corners outside in the open space area. Our Implenia expert at the topic corners will be available to answer all questions you never dare to ask on innovation, operational excellence, value assurance and sustainability. Please have a look after the presentations. We prepared some very interesting topics for you. I'm honored to introduce the Implenia Executive Committee members that will present today, and it's my pleasure to also welcome Hans-Ulrich Meister, the Chairman of Implenia, who is joining us for today's event. And I will now hand over to Andre Wyss, the CEO, for the strategy update.

Thank you, Franziska. Good morning, everybody. Also a very warm welcome from my side here in our let's call it, new offices, although we're already here since September last year, called Connect. I believe we have prepared very interesting topics for you today and a variety of people will look forward to present you their insights. We believe after the completion of this transformation, it's now the right time to hold the Capital Markets Day, during which we'll present how we achieve our ambitious targets going forward in the 2 phases, Franziska already mentioned, Fit for Growth and New Horizon. Let me start with the strategy update, an overview of our current position, accomplishments and also the outlook. In the financial year 2021, we generated revenue of CHF 3.7 billion and an EBIT of almost CHF 115 million. By half year 2022, the order book stood now at a record level of over CHF 7 billion. All our 4 divisions contributed to this positive result. Our division's profit and contribute from the integrated business model and thereby creating significant value for the entire group. Our customers benefit from our almost 8,000 talented employees across our countries who develop and build mainly large and complex projects based on our culture on 5 values. Let's have a look where we stand today. In the past years, the group has successfully completed a really comprehensive transformation. Now we are ready to build on our expertise to manage large and complex projects and further strengthen our competitive position during the short- to mid-term phase, which we call Fit for Growth, but also mid- to long-term with New Horizon. The group envisions to be an integrated leading multinational construction and real estate provider. The achievements of our comprehensive transformation from the past years are significant. The implementation of a new strategy and operating model started in March 2019. We set the basis for a new culture and new leadership. An increased order book with significantly improved risk and margin profiles. Refined risk management and profitable growth through our Value Assurance process and adjusted the business portfolio. Sale or ramp down, loss-making and nonstrategic businesses, sharpened geographical market presence and also the adoption of new technologies, as well as scalable businesses. The strategy has proven to be effective and result in positive operating performance of all our divisions. We improved our financial KPIs and strengthened our balance sheet. We can now say the transformation was successful on all dimensions. The company has experienced no major surprises for more than 2 years, and the performance is improving steadily. Our mission and core strength is enabled by our strategy. We have still, still I must say, since first of March 2019, the same 4 strategic priorities: portfolio, profitable growth, innovation, talent and organization. For every of those strategic priorities, we have defined clear measures to reach our ambitious financial targets in the coming years. It's a bit of a more complicated chart, but I will walk you through. In full year 2022, we expect a significant performance improvement and confirm our EBIT guidance of over CHF 130 million. The result is based on operational improvements by all divisions and also an above-average earnings from the sale of large real estate projects in the first half of this year. Through this extraordinary result, we will already reach our former midterm EBIT margin target of over 3.5% by the end of this year. To achieve our targets, we have defined 4 focus areas which we are continuously driving existing and new businesses to achieve profitable growth. Short- to mid-term profitability will be sustained at an EBIT margin of approximately 3.5% per year, mainly through improving, growing and specializing existing business, as well as starting to develop new business and small acquisitions. Mid- to long-term EBIT margin target of over 4.5% will be achieved through focusing mainly on scaling new businesses and target small to midsized acquisitions while certainly still continuing to improve our existing business. During this half day, we will guide you through our strategic priorities and explain how they are driving Implenia to be a sustainably successful company. I will now elaborate the measures on a group level and walk you through the details on how we drive profitability towards our midterm EBIT target, mid- to long-term EBIT target of over 4.5%. Afterwards, the division heads will explain how they shape their divisional strategies to contribute to our group success. I will start with the strategic priority portfolio. The following measures allow us to drive our existing and develop new business, aiming to benefit from differentiations, higher margins and increased resilience. There is a clear market demand on -- based on megatrends, industry shifts and also positive forecasts, still positive forecast for the European construction industry. Even though they are known macro-economical challenge, we all are very familiar with them. External environment remains still promising. Construction output in all our relevant markets remain positive. Implenia is a leading construction and real estate service provider offering its integrated portfolio in Switzerland and Germany, while clearly being the market leader in Switzerland. And this offering of the integrated model is about 3/4 of the group revenues. Furthermore, the group has a strong position in tunneling and related infrastructure services in selected European markets, such as the Nordics, Austria or France, representing approximately 1/4 of the total revenue. Cost demand leads the way for business development. I will elaborate our integrated model with our 4 divisions a bit later in another slide. We will develop new competencies through sector-specific specialization with which we differentiate our offering. The division heads will explain them in more details. Additionally, we develop new competencies along the value chain through backward and forward integration. I will now go into more details on these measures. It's clear megatrends offer attractive opportunities for us. Population growth leads to an increased demand for living space and sustainable use of resources across Europe. Our response is offering real estate and construction services to meet evolving additional living, working and also mobility needs. Urbanization leads to densification in urban areas, interconnected smart cities and sharing economies. We profit directly with our extensive know-how for large complex projects in dense demanding urban environment and also high customer requirements. Additionally, our own Real Estate portfolio is attractive and strategically very well positioned in urban areas where demand is still raising. Today's required investments in infrastructure and renewable energies are huge. Our response is the expertise for large and complex infrastructure and the flexibility to incorporate new customer demands such as energy. We believe that Implenia is excellent positioned to benefit from those 3 megatrends. We are successfully set up with 4 differentiated and entrepreneurial divisions who have market-leading competencies for our clients in their respective markets. I would like to highlight that Implenia is one of the few construction companies with both an integrated offering, including real estate, building, civil engineering and construction niches, as well as a comprehensive coverage of the entire value chain from project initiation to execution to use. This allows us to benefit from synergies between the businesses. And for our customers, it means a more seamless experience through our end-to-end planning and construction competencies. These models offers high flexibility to integrate strategic internal as well as external capabilities and thereby minimize our asset needs. So we source what we need and don't want to offer ourselves. In the past years where the construction industry, alongside many other industries, has been impacted by COVID but also the Ukraine conflict, our integrated model has proven to be very resilient. With our central procurement, together with our operating units and back-to-back contract losses, we were able to react quickly and mitigate the situation as best as possible. We developed new competencies along the value chain and will expand our integrated model even further in areas where we can benefit from attractive and certainly increased margins. With the sector-oriented specialization, there are opportunities to create USPs in existing business models with specialized service offering. Hence, we will strengthen our competitive market position. As mentioned before, the division heads to go in more details on this. Through backward and forward integration, we will use opportunities to enter higher-margin businesses and benefit from early-stage client interaction and use data and exploit reuse and recycle potential to realize recurring fees through operations. Also the recurring fees model will be more explained by our division heads and the CFO. We are convinced that with this setup, we are the best partner for large and complex projects for our customers in our markets. While we mainly drive profitability growth organically through Fit for Growth in the medium-term, we also consider inorganic growth options with selective successful small acquisitions up to CHF 50 million. Acquisitions will become even more relevant with the larger size at the later stage during New Horizon. Any acquisition we plan has to meet specific criteria. To ensure we actually realize and maximize the value creation of acquisitions, especially through leveraging synergies, we implement systematic post-deal integration concepts. Moving to our second strategic priority, profitable growth. To strengthen our strategic priority, profitable growth, we define 4 main areas. Ongoing risk and performance monitoring through the group's Value Assurance process, which leads to more stable and reliable forecasts. More on this, on the next slide. Additionally, this topic will be addressed at Topic Corner after the Q&A session. We continue to improve existing business through operational excellence, mainly in the areas of digitalization, industrialization, lean construction, procurement and also contract management. The topic under about Lean Construction, BIM will further elaborate on how we implement our digital construction skills on our construction sites. Our experts from Buildings and Civil Engineering will then give you further details, again, during lunch. The next measure is continuous performance improvements of all units to strengthen the sustainable underlying performance of the entire group. Stefan Baumgartner, our CFO, will focus on performance improvement and also net working capital management. So I will not elaborate on this. All efforts we take in these areas is improve, develop existing business, making it more efficient, more effective, and also, at the same time, decrease the risk of the company. Improved risk profile and increased margin are the result of our efforts. Projects have been developed in a much more stable manner. The organization, culture and strict application of Value Assurance in all projects led to an improved risk and margin profile with the precalculated gross margin improving by 1.5% since the introduction of the Value Assurance process. With this, we not only have evidence, but it's now proven this process works. The Value Assurance process is an integrated process from project selection all the way to completion. In the future, we aim here for continuous optimization. After the Q&A session, again, you have the opportunity to discuss this process in more detail with our Head of Value Assurance, and also our General Counsel in the respective topic corner. Moving to our third strategic priority, innovation. Fundamental changes in the construction and real estate industry, as well as the needs of our customers, help us driving innovation forward in a targeted manner. Our threefold innovation strategy is based on entrepreneurship, innovation, M&A and also open innovation. The innovation hub is an incubation platform with a standardized innovation process, fostering entrepreneurship where new business models and technology are developed and scaled. Based on the industry shifts, we defined main innovation opportunities where we prioritize partnerships and investments to scale new offerings. In industrialization, we develop scalable solutions through modular capabilities and also products. Additionally, the construction industry clearly has an increasing need for optimized systems, digital solutions and also BIM. We integrate cutting-edge technologies and digitalize ahead of the crowd. The group applies BIM throughout the entire project life cycle with an integrative, collaborative approach and planning and managing projects. Our intense network allows us to research and innovation partnerships, which are essential to the company. In the topic on renovation, our Head of Innovation Hub, together with the Division Head Specialties, will go into much more details, all of our innovation efforts and also give you their further insights. The first promising product out of the Innovation Hub is our high-strength EPS tunnel element. It was developed bottom up by one of our employees, [indiscernible]. A patent is pending and a market introduction already has been successful. Let's play the video, which briefly explains this idea. [Presentation]

Sustainability is one of our 5 values. It's meanwhile part of our DNA. For many years, we have built up relevant know-how and can clearly say sustainability is one of Implenia's USPs. Construction industry has a huge impact on sustainability, especially on the use of resources. There is also an increasing market demand for environmentally and socially sustainable solutions, driven by government and also ESG regulations, as well as a changing mindset of the population. Implenia differentiates from competition with sustainable development and construction services, including a defined decarbonization strategy, and is the preferred partner for the implementation of customer-driven sustainable developments. The group's leading position for sustainable development and construction has been confirmed by various ESG ratings, such as the MSCI AAA or EcoVadis Gold but also the industry top rating by Sustainalytics. In the respective topic owner, our Head Sustainability, our experts in the fields of Circular Economy and our Head Development Switzerland will show you our response to today's opportunities in the ESG. A good example of sustainable site development is our green village in Geneva, which we'll now see, a second video. [Presentation]

So Implenia remains committed to shift towards a more sustainable industry with a holistic view on the topic and our 12 sustainable goals we have till 2025. Last but not least, our strategic priority, talent and organization. We defined 3 key areas to attract, manage and retain talents. Collaboration and employee engagement is based on the 5 corporate values. To foster our culture and values, we improve the employee experience with, for example, the rollout of new workplace concept to all countries and locations like you see here in our new Connect and certainly, the manage of change. Concerning talent management, we focus on continuous learning, career opportunities, leadership development, sound succession planning and the culture of open and transparent communication and feedback. Certainly, in times of shortage of skilled employees, recruitment excellence is crucial to position Implenia as an attractive employer in the labor market. Our efforts in the past years were recognized by employee ratings such as Universum, who ranked us amongst the top professionals in engineering. But there is more to come. The divisions will now open the deep dive for the 4 strategic priorities on a divisional level and explain how they will contribute to a sustainable EBIT in the coming years. With this, I hand over to Christian Spath, our Division Head of Civil Engineering. Christian?

[Interpreted] [indiscernible] working companies to surface. Let's start with an overview of our market. You can see them in dark orange and they have 1 curve point. And they have a big need of infrastructure projects. And the authorities are giving these mandates. Public investments are letting develop this segment. And then all this is supported by public financing. And we expect in Germany, higher investment in projects. Scandinavia was one of the biggest markets which has stabilized but which will keep high level. Growth in France with the conjuncture packages of the government is positive. So in total we expect in all countries, stable or high development in Tunnels, in Civil Engineering and the Special Foundations segment. The corona price had hardly had an impact on our markets. The prices and inflation are managed well by us. We can agree with our agreement that higher prices will be covered. Our markets are good, our clients are good. And of course, we had a challenging transformation, but this was our -- but we manage this as well. So you can see the metrics, Civil and Special Foundation. So all this is in all countries, the countries where we have our roads. And we have lowered our investments and make the transformation. So we have new megatrends like population growth urbanization, higher mobility, but also tendency towards renewable energy. So this is giving us a new potential. We participate to the growth and the development of our population and raise -- ensuring good infrastructure. And they assure mobility and a basic need of the population. The planification and construction of this infrastructure with a good functionality on high safety levels, taking into consideration economical aspect and our sustainability objectives are a challenge, but we are well positioned for this. Our Tunneling segment offers all kind of constructions. So we can build tunnels in the alps and underneath the houses. So also for Tunnels, we are leading in Europe. Civil focuses on technical constructions like streets. And we are proud that with this business unit, we can participate in Germany and Switzerland. And finally we have Special Foundations. And we will [indiscernible] we work with other units. So in Berlin, we would like to have a tube station. So here, we have a representation in our slides, where you can see that we've got the 2 units tunnel and underground construction. And 2 years ago, we were the ones who are responsible in the North portal in the underground tunnel. We were the responsible on the 12th of March 2021. We had additional payments for the customers, as well in the North portal. Here, we can see the machines, the tunnel machines before it entered the tunnel. And on the 16th of August this year, we could see the main place north in our community with the guidance of Implenia. I think that we now can actually say that we are back. [Presentation]

[Interpreted] Yes, so Gotthard gives us light in Switzerland, as you can see our new project that we have now for the alpine-based tunnels. We are the only construction company that's in Europe is responsible and working on the 4 alpine-based tunnels. And this is not a coincidence because we have a high measure of network within our division. So we are capable of having the entire knowledge of the tunnel construction with our projects so as to convince our customers. The strongest, however, are that our project works together. So then the customer gets our -- from firsthand access. For example, in Hamburg, we work with all 3 business units together on a project. We're responsible for the planification, the construction and the technical sites. We are responsible to this. We can plan our technical office, which we have in Germany. We can now put it into place also and this is specialized in the tunneling and the bridges and with our 100 collaborators, it is an important support for our projects. So we are going to have a look at the Hamburg port, where we have a tunnel machine, and you can see here the performance of the special underground serving the civil engineering. And you can see a 3D model where we have a digital twin, where we can access the digital representation so that we can start planning. So we have a big wall, big specific congestion walls, which are part of our project, and we've got the company [indiscernible] which is going to replace the old wall and with the new wall, and we cannot reform the old wall, but it is then going to the Maintenance, really spectacular project. Have a look at it yourselves. [Presentation]

[Interpreted] Do believe me. Absolutely, this is an absolutely spectacular project and I get goosebumps when I see this when I'm at the dam. So if you see the possibilities, this is absolutely amazing. So here 4 further highlight projects from our division. So here, we've got the boat lifting system in Brandenburg. We've got a really horrendous system. So with 36 meters going upwards of the lift, on the 4th of October, we started this project, we finished. We passed it on to a client, and we initiated it. On the right-hand side, we can see the 4 stations in Stockholm, the lowest tube station that we actually have. We have [ 8 ] people going back and forth, which have to bring it down to the depth. And that's in the heart of Stockholm, a project that is made for us. And in front of these doors of Zurich, we've got special tunnels and what is absolutely amazing here is that we don't have much space for the logistics for Lean Management, which we can see here and is there for optimization of the construction. On the right-hand side, we can have a look at Scandinavia. We've got the biggest railway bridge of Norway and the planification and the realization of the project is completely digitalized with the BIM model. And contracts, as such, we don't get it just by our price, but via a combination between quality and technically intelligent solutions and also the price, obviously. Operational excellence is a main part of our success in our division. So due to the introduction of a continuous and gap-free value insurance process, we have the entire transparency in the selection and putting into place of our project. And therefore, we were able to get the project portfolio within our portfolio and reduce all risks. Lean Management helps us not only on big complex projects to be able to keep up an overview, but all the project aims should be all on a common aim, but this is also a cultural change in a continuous change and improvement of our processes. And as we've already seen, and you can see this later from Anita, my colleague, been for us, is now absolutely important and essential, which of a common database communication level for all project people, and this makes it easier. And of course, all of these measures are strengthening and to bring up the profitability of our projects. Here, we still see different cases, practical cases with a tunnel project that we have in Oslo like the digitalization, which we have put into place on our daily work. So now we have the possibility to have 3D [ BIM ] models that we can realize in the augmented reality on a daily basis where we can take complex situations, for example, if we have a collision proof or collection trials, we can see here on the left-hand side of the picture, that we can recognize here, intuitively how we can actually solve the situation or in the lower picture, we can also see an overview on the status of the work from wherever. And we could just see how the work is going on from wherever in the world. Due to the insurance start, we can see the profitability growth. We can see the combined extensive track record and expertise with operational excellence, innovation. Thanks to the specialization as we've seen before, we have very big and complex infrastructure projects, but we also have new contract models. And also, we have an enlargement of our project portfolio, for example, for new buildings or in the raw construction with our EBIT margins, which are constantly growing. We also keep observing the market and due to buying additional markets, we try and improve. I hope I managed to convince you that we have the right expertise, the right knowledge and the right way to go about it to be successful in our work. I think that we are there for the upcoming challenges, and I think we can grow profitability, and I think we can really have a big success in Implenia. So thank you very much for your attention. And as we like to say it, from the tunnel construction, thumbs up. And I'm going to pass on the word to Anita. The floor is yours. Thank you.

Thank you, Christian. I will shift back to English here, and try to explain you a little bit about the Division Specialties. Over the past 3 years, we have worked to develop the portfolio of businesses in the Division Specialties into a portfolio with competencies and solutions for some of the major challenges in the construction industry. With value engineering, sustainable materials, prefabrication and lean working methods, we do our utmost to contribute to more sustainable and more efficient and a more collaborative industry. Businesses that did not have a good fit with this strategy, we divested. Businesses with potential but not the desired performance, we improved. And businesses with the right competencies and solutions, we worked to scale. Most of the businesses in the division are active in Germany and/or in Switzerland. We founded construction logistics in Germany 12 years ago due to an untapped market potential. Since then, the market demand matured and kept growing year-on-year. Three years ago, we entered Switzerland. While Switzerland as a market is attractive but less mature, nearly all large urban projects in Germany have specialized construction logistics competencies on site. With Building Technology Planning, we are currently only active in Switzerland. The demand, especially for energy-efficient solutions and energy renovation, is growing fast, as also the demand for integrated digital solutions and end-to-end BIM competencies using BIM to optimize the construction process. We call that BIM To Field, and also the operation of the building once built, we call that BIM To Facility Management. To become more sustainable, maybe the biggest challenge of the construction industry today. More sustainable construction material is 1 solution. And a main reason why the request for construction with timber is booming. Another important topic for construction is to become more efficient, which we can do with prefabrication construction or construction in a controlled environment and which is exactly what we do with timber constructions. The demand for Post-tensioning & Geotechnical Solutions is not limited by borders. And with the right certifications of the products and solutions, we can sell them in many markets. The market demand is growing. And if you look at Germany alone, there are 13,000 highway bridges in a bad shape. Currently, only 100 bridges are renovated or renewed per year. Recession or not, the German Bundesländer governments must invest in their infrastructure if they want to avoid having to close highways. For Germany, we have the most accurate information. However, the situation is not much different in the other European markets. The market demand for engineered and functionalized facade modules using the facade for more than just wrapping the building is also on a rise. All the Specialties businesses work together with our colleagues in Real Estate development, in Buildings and in Civil Engineering. And all businesses work for external customers as well. I'll try to explain to you very briefly what it is that they actually do. BCL is a construction logistics service provider. They plan and execute everything that is not construction itself on a construction site. Most importantly, BCL increases productivity, managing supply and waste logistics, construction site equipment and site security, just to mention some of the core services. Our customers also have access to live data on our digital platform. For example, on the achieved recycling rate of construction waste where we achieve up to 98% recycling. Planovita is a classical building technology planning company. However, fully digitized and pushing BIM to the next level, ensuring accurate material volume and time planning directly from BIM model. Controlling possible collisions in the virtual reality, as we have also seen with Christian's projects, and creating the as-built model with the help of augmented reality. Timber Construction is specialized in large-scale timber construction projects. It has built the largest timber apartment -- buildings in Switzerland and is soon to build probably the highest timber building in the world, with prefabrication and full-fledged elements enabling better planning and faster construction. The core solutions of BBV are post-tensioning for bridges, for slabs in buildings and also vertical post-tensioning, for example, for large concrete wind towers. And also Geotechnical Solutions, as well as engineering inspection and strengthening solutions for concrete structures. Facade technology develops, plans and realizes demanding large-scale facades and renovates landmark facades and complete building shells. As for example, the Alster-Schwimmhalle in Hamburg, maybe some of you know that building, and the Charité Hospital in Berlin. I would like to show you a couple of current project examples. Having profound experience with managing logistics for hospital construction, it is very cool for BCL that our colleagues from the Division Buildings won this impressive project, the Cantonal Hospital in Aarau. And that BCL can join to optimize logistics management. BCL is active here with this project with a full range of services, including a recycling center, optimizing sustainability during construction. We use the data from the BIM model flowing directly into building logistics planning and helping us optimize the planning for deliveries of materials as well as of space on the construction site. The new hospital is being constructed in direct vicinity of the existing hospital. And the existing hospital is in operation during the construction work, which is typical for hospital projects. And this is where we have to be more careful with noise emission, access roads, et cetera. Real estate development developed this world breaking -- a world record-breaking 100-meter tall timber building for Ina Invest. Our own developed timber-concrete slab and tube-in-tube load-bearing structure was specified as a construction kit for the project. We are right now in the pre-project phase, and as a team consisting of colleagues from the Division Buildings, Real Estate and Specialties, we prepare the construction phase. We work hard to reach the SNBS Gold standard important to Ina Invest, who wants to build the most sustainable Real Estate portfolio in Switzerland. Last project example which I brought today is this IT campus in Bad Friedrichshall in Germany. The building shell is often quite complex to realize, and it takes between 10% and sometimes up to 25% of the total construction volume. Having the right competencies is key to build quality facades in the agreed time. We experienced that building owners are a little less sensitive to price and a lot more to quality concerning the building show. For this specific project, the building owner, Schwarz Immobilien knows Implenia facade technology, as do also the architect and the engineers involved in the project. [Presentation]

A small film about innovation. And I've brought an overview of just a couple of innovations in development in the division here. Starting top left. You see the tube-in-tube system developed in cooperation with the ETH and WaltGalmarini Engineers for timber high-rise buildings. With this system, an inner and an outer tube out of timber in combination with our timber-concrete slab, we can efficiently build a timber high-rise without a concrete structural core. The timber-concrete slab is one of a kind, with a thickness of only 32 centimeters and a span of up to 11 meters, enabling high square meter efficiency in the building. And we filed 3 patents for this solution. And you actually see a small sample of the timber-concrete slab afterwards outside. Another innovation I would like to mention also, the fiber-optic sensors, top right, which we can incorporate into post-tensioning cables, and which give us live data about the health of the construction, an important solution for recurring income with predictive asset management of infrastructure. And another innovation is the energy autonomous facade which we developed in cooperation with Fraunhofer Institute for Building Physics. The facade supplies the needed energy to the building and thus has a broader functionality than a conventional facade. The multi-chamber container is an idea from our Construction Logistics team as 1 step towards a more sustainable construction site. For urban constructions, one main challenge is trucks driving through the cities. With the multi-chamber container, we can significantly reduce the number of trucks needed for waste collection. And this is 1 idea out of several to make construction sites more sustainable. We experienced high customer interest and willingness to pay for solutions that reduce CO2 emissions. We were able to achieve more than 4% EBIT last year in the division. However, the result was positively influenced by the sale of profitable but nonstrategic businesses. Despite the very good performance of several businesses, others in the middle of a turnaround achieved negative results. And the overall result without these positive onetime effects was negative. Our half year result this year has significantly improved and shows plus 1.6% EBIT. Our ambition is an elevated EBIT result, which we achieved with some businesses today and which is where we are going with the full portfolio in the future. Crucial to improving our profitability are 3 factors: continued to improve the strategic businesses where the performance is not yet according to our expectations; continue to develop and scale the strategic businesses that are successful and develop and acquire new -- develop or acquire new businesses, adding value to the industry. We have specialized and deep competencies in the division with which we can contribute to a more efficient, a more collaborative and a more sustainable industry. With BIM, value engineering, prefabrication and efficient construction sites, we make construction more efficient. With , data and platform solutions, we create more transparency and with Lean Construction, we improve collaboration. And with renewable construction material, by minimizing waste, and optimizing processes, we make construction more sustainable. I hope I could convince you that after reshaping the portfolio, we are well positioned to achieve sustainable good results. Thank you very much for listening. And now I would like to hand over to Jens Vollmar, Head of Division Buildings. Jens, the stage is yours.

[Interpreted] Thank you so much, Anita I would like to present to you the Division Buildings. So we are in building construction. We work on top of the earth and not underneath the earth. So the market, Division Buildings works in Germany and in Switzerland, and we are the leaders in Switzerland and in Germany, we are among the top 10. So -- and our clients want, first of all, consulting. Clients ask how they can exploit better their services, how they can improve their footprint, how they can match with the legal aspects and all this contributed to the development of this market. So we have small shifts in construction of houses to complex building construction in cities. So New Buildings -- corona has changed our perception. The energy problems have an impact. And we have here a stable business. So what is our position? How did we positioned ourselves with regard to the needs? On the left side, you see Consulting & Planning. It's a new branch, working together with New Buildings, Modernization, working also with Production. They serve themselves from the know-how Lean Construction for the consulting of clients. Number of clients is small, but it's improving and next year, we expect to see good results. New Buildings represents more than 50% turnover, and we have a different contract models from simple construction management, general construction, but also multiple-party contracts, partnering and models, alliancing models, especially for Germany. Here it is very important to participate early in the project and the preconstruction basis in order to manage better the finishing. So modernization is growing and we also have a similar contract models, but with special expertise because expectations toward Logistics are special. And I'll come back to it and show you some projects. And we have now the Master Builder in the past that was a business for all units, and here, we have specialized and we differentiate today with our technical expertise. All 4 units are working profitable. So I would like to share you some examples. Here, you see a project for Swiss Life in the center of Zurich. It's a complex building, and this is why we decided for a construction management model. And we also did the consulting here together with specialists from Logistics, we were able to tackle questions with regard to security and with regard to the preservation of historical monuments. Another example, showing, well, how large our business is. This is a University Hospital in Basel, and this is a logistic centers. So we've already counseling during the operational phases, they were asking how they can explore better surfaces in the center. And if they can outsource certain units and here, you need to have a big understanding of sanitary problems, for example. So here we were able to give consulting in the operational phases. And then we planned together with Andre Wyss, we were looking for investors and starting from next year, we will start with the construction. University Hospital was very enthusiastic and authorized the construction. New Buildings also trend towards specialization. This is a laboratory complex project for the University of Basel. Here, we were also able to differentiate us with the laboratory expertise we gained last year. So the price was not really important. This was a public tender. We were able to offer this price and we were the ideal partner, thanks to our expertise. So here, we work together with specialists from Construction Logistics from Anita or with the Civil Engineering unit. Another project, Anita already mentioned it. It's the Cantonal Hospital in Aarau. This is the biggest project Implenia has ever had. Very high demanding project. And this project was planned with us. The client needed high competence with regard to operational procedures. So we were able to convince the client and we are very well with regard to the time table in the realization of this project. Another project here showing the importance of this sustainability, sustainability team. This is the EUREF-Campus in Dusseldorf. Implenia was participating in the preconstruction phases. This is the biggest project in Germany. And this building will match the legal prescriptions for 2025 with regard to the ecological footprint. Implenia wants to participate early in order to understand better the construction in order to optimize the construction and understand the risks. Here another example from Geneva showing how close we work with Real Estate, Adrian, [ Ina Invest ], this building was planned together and is in execution. So let's go to Modernization. This building, you might know is, UBS in Paradeplatz in Zurich. And together with [indiscernible],we planned the modernization of this building. Here as well, with the central logistics of the city, we were able to convince UBS that we are the right partner, and we are happy to execute the project next year, we are still planning the execution now. So Master Builder. So this Master Builder business was very large in the past, and we have now tried to specialize in this unit. And expertise is very important for the client. And here, we have an example, the Cantonal Hospital in Baden, which is now finished. But we work already on the next hospital. It's the hospital in Lucerne, and we also constructed other hospitals. So here, we are well positioned. And another example of specialization is the data center. And due to regulative changes, new data centers will be built in the next year. So Implenia was participating in all projects in Zurich, [indiscernible] Dusseldorf, we also participated, and we planned the new data centers here we are well positioned as a execution must be quick. Now I would like to show you something. Christian and Anita talked about BIM and the visualization of [ 3 5D ] models. How do you bring this to the construction? Here is an example of how we do it in the clip. You see an example for application of our planning house, which has been developed with the Innovation Hub. And this house is mobile or portable. And what are the advantages of this movable house? So you can connect with all the other participants. You know immediately what kind of quantities you have to order. You can also connect with drones to control the site. And you always have the up-to-date plans in your hands. And any information with regards to replanning, new planning, you always have it at your disposal at any moment. And this avoids problems and additional costs. And the staff is accepting extremely well this mobile data houses. And in Aarau, we construct without any piece of paper. Another example for this 3D models is Alto Pont-Rouge. This is a project we executed for Swisscom. Here, you see the construction and with virtual reality, you can walk through the site through the shell of the building and you can make measurements. And this is always the problem. It's only then the installation starts that you realize that you have a problem. This is how you can avoid them. And this brings many advantages. Both problems and additional costs can also be avoided. So on the title of operative excellence, we use these possibilities, among others. These are just 2 examples showing you what the advantages are. And also for the owners, it's much easier. They can manage easier their buildings, knowing what kind of materials they have to face, out of what materials they have or the building is built. Profitable growth. On the left side, you can see what Anita has mentioned. We will make incremental improvements in the existing business. We will continue the Value Assurance to ensure future profitability. We will use advantages from Lean Construction, digitalization and very important specialization of our business. The examples I have shown to you, among many others, are really key. We must have deficient with -- expertise and not with the price. And we manage this with the steps we have brought to life, and we have a big growth in Germany. We push organically with a lot of expertise, and this is big fun. So we will have a moderate growth, if you got the turnover, but we expect growth in the EBIT and also the EBITDA margin. So in a nutshell, we are leaders in Switzerland, growth in Germany, specialization in complex projects with the competencies from all the other units of Implenia. Then improvement of risk return profiles and increasing margins, early value creation, consulting, innovation and partnerships. And I hope that with this, I was able to give you a good overview over the Division Buildings. And I hand over to Adrian Wyss for real estate.

Thank you so much, Jens. So I'm happy to present to you the Division Real Estate before the pause. The Division Real Estate stands for future-oriented real estate solutions. And with the service offer, we will ensure our position. The actual situation in the real estate market in Switzerland and Germany is very challenging. And here, we have many factors, especially in Switzerland, we have good development. There is a high demand for houses, big immigration, and the economy is well. We have scarce offer. We have high interest and inflation. And we will have a stable demand for real estate with our buildings and our development. We are well positioned. In Germany, we have similar tendencies with higher volatility though. But the demand for real estate is higher. So create new houses is important. We would like to match this demand. And at same time manage the scarcity of resources, and bring our partnerships into the business and our competencies and avoid risk. I think it's really important that we extend our stable business and that we have an equilibrated risk profile. So a difficult market offers always opportunities we can execute with partners. Our profile comprises real estate development, real estate investment, real estate management, Real Estate Products. In the field of development, we have the classic development like trade development, then investment development and service development. In total, we have a volume of a market value of more than CHF 5.2 billion. In the field of investment, we have the Transaction Management purchase and selling of projects. And we work for Ina Invest and the Pension Fund. And furthermore, we develop here new investment solutions or cooperation partnerships. And the volume is here, CHF 1.6 billion. In the field of real estate management since the foundation of Ina Invest, we offer portfolio management, asset management, together with the portfolio of the -- provision with Implenia, we have a volume of CHF 1.1 billion. In the field of Real Estate Products, we have -- Real Estate Products, for the future, we have green hospitality, subsidized housing, best living for German markets, but scalable actually. And with the extension of the services, we want to create synergy creating more business. And we also want to -- this should bring also higher volumes for the other divisions, like the Division Buildings. The portfolio of Implenia has good project pipeline in Switzerland, especially in the region of Geneva, Zurich and Basel, and 2 projects in the region of [indiscernible]. And here is concentrated, especially on housing, the projects were worth [ CHF 10 million ]. So the -- if the projects are realized, they are worth CHF 2.3 billion. The selling of condominium houses was a part of our work, an important part. And here, we expect positive growth due to the high demand. And we will also continue to invest in our own land bank in new areas and new projects in order to improve trade development or find new investment solutions. The Ina Invest founded 2.5 years ago has the objective to have in the future, the most innovative real estate portfolio. Ina Invest is a growth story. The portfolio has grown to CHF 820 million. Services -- Transaction portfolio, Asset Management development, are realized with Implenia, and the growth of Ina Invest is important. The good work on the projects will bring a performance fee. And thanks to the 42.5% equity participation, it will contribute to the good result of Implenia. This partnership is already bringing added value for Implenia and Ina Invest. Our position as one of the leading building developers is shown by Rocket, this new building. And because we were able to bring our expertise in all phases of the realization, the planning process is digitalized and -- we also work here. If configurate, the whole area has been realized, matching the newest demands. The hybrid roof consisting in a wood construction was only realized. We were only able to realize this with our great partners. Shift of the franchise of the building industry is a challenging as prefabrication, industrialization, we would like to use it more. Well, the field of real estate investment, here, we talk about high professional Transaction Management, investment and financial structuring. So risk profile, geographical position, all these points are important. And here, we also work together with all the other units in Implenia. And we have greenfields, but also brownfields with transformation potential. Our objective is to develop this unit and to find new investment solution and cooperation models, especially in Germany. We think that at the moment, on a corrected price level is possible. But we do not want to finance this ourselves. This is why we have a cooperation with a German market leader. And with this partner, we would like to use the opportunities of the market. With the purchase of Bredella through Ina Invest, the asset value -- now the Asset Management has grown in this area. We have 100 tenant contracts, which must be managed of cost transformation. The transformation in this area is the most interesting point. A good mix of different tenants, just closer to the station of Pratteln. So the classic development work is done in the team development. And then the Asset Management represents also the owner for Ina Invest and they agree together with the owner on the development of the area. Real Estate Products -- with scalable real estate product, we would like to realize different objectives. The risks and the various situations, I would like to just put them down and make sure that these situations can be put up more than once, even without having to renew everything. On the second hand, we want a complete configuration, which is digitalized for automated programs, also an interface with the prior rotation is what we'd like to develop and build. Thirdly, the Real Estate Products do not fit into the physical room. They are put into place virtually. This makes everything very intelligent, especially for the control of energy, delivery of building data or additional services. The constructive services and the material need to be circular and have an advantage on the CO2 balance. We are building our own portfolio, the development of the hotel product screen hospitality for the European market is really advanced. Furthermore, we would like to develop more products, for example, for payments and for living for an older generation of people, Best Age Living. This is what we call it. We see a big demand for scalable Real Estate Products, and we would like to put them into life with other projects. The way we would like to have this development and thinking of sustainability makes us the real estate leader. What is really important is that the life cycle of real estate should be really put into the center, and to be able to have net zero in 2041 also with our own portfolio. This reduces the gray emissions through the raw material, for example, woods. And then we would like also to reduce the emissions for the energy. And then we would like also to measure the use up. The second is the making use of circular products in the development here. We have closed cycles, which are our priority. What we would like in sustainability is to have the right mindset for the various systems so that we can differentiate ourselves on the competitive market. Our business model is more diversified, and from these various areas, we want to generate more operative facts and figures that will give us an EBIT of CHF 40 million. Now the recurring incomes of the various services and performance fees has also -- the collaboration should also be part of the payments. And then we also have various variations, but the growth of Ina Invest and various businesses, with this we should have the EBIT structures and be able to augment them. Everything we do has to have a positive influence. Also the project volumes of the Buildings, Specialties and Civil Engineering, and that should also be augmented. I think that we are highly motivated, and we have ambition -- ideas, ambitions, goals. And I'm going to pass the word on to Franziska.

Thank you, Adrian. Thank you all for your attention. We will now take a short break. There is coffee, there are refreshments outside. We will continue at 10:50 with the financial development. Please be back at 10:50. [Break]

Welcome back. We are well on time. We're ready for the financial development of the group, the presentation. Mr. Stefan Baumgartner, the stage is yours.

Thank you, Franziska. Now I would like to give you more precise input about our financial development. In the first -- looking ahead, there's a clear road map to sustainably improve our financial position during our Fit for Growth phase. In the first year, half year of 2022, a record order book of CHF 7.1 billion was reported with a significantly improved risk and margin profile. The order book is also well selected, and diversified with structural improvements become visible. This will lead into increased transparency and predictability and future revenues of increased profitability. A slight revenue decline in full year 2022 is expected to strategic decisions. The short- to mid-term focus lies on stabilizing to increasing revenue, mainly through organic growth. Following the successful transformation, the EBIT margin significantly improved. The EBIT guidance of more than CHF 130 million for the full year '22 is confirmed. Future group EBIT will be driven by the stronger performance of all 4 divisions, with a short- to mid-term EBIT margin target of approximately 3.5%. As shown by André, we plan to achieve the 3.5% EBIT margin plateau from this year onwards during our Fit for Growth phase. By realizing the opportunities, as shown by the divisions, we expect to achieve a mid- to long-term EBIT margin of more than 4.5%. Equity ratio improved to 16%, as we have shown you, but the half year result. And will be further strengthened to improve net profit for this year. The midterm target to achieve an equity ratio of above 20% is expected by 2023. Therefore, the new target for equity ratio in the mid- to long-term is 25%. We are well financed to support our operational targets and continue to improve the cash flow generation. Also, we strive to generate sustainable positive cash flows through profitable operations, active net working capital management and supported by the well-balanced maturity profile of the financing instruments. In the past years, the construction industry alongside many other industries has been impacted by COVID and the Ukraine crisis. This challenging macro environment including uncertainties and inflation needs close attention and mitigation. In playing a strategic positioning in urban areas in public infrastructure proves robust in a volatile economic environment we are in. With our central procurement together with the operating units and back-to-back contract clauses, we are able to react quickly and mitigate the situation. Therefore, we currently have a manageable impact of increased material prices and we are committed to continue to mitigate the impact going forward. Next, I'd like to provide more transparency on our order book. The order book shows a balanced composition. The divisional split is around 50/50 between Buildings and Civil Engineering. The Division Specialties is stable and accounts for around 2% of the order book; 2/3 of the group's order book comes from public customers with strong financials. Specialty complex and long-lasting projects for public customers with high financial reliability. The balanced composition of the order book shows our resilience to economic fluctuations and low exposure of payment defaults. The maturity profile of our order book is balanced and reflects our strategy of larger and more complex projects. As of June 30, this year, 75% of our order book is scheduled for revenue recognition in 2023 and beyond, which secures future production output and proves our strategic focus on larger and more complex projects. The constant execution of the Value Assurance as you have seen before, which other division heads have previously shown in detail, has driven the increase of the precalculated margin by approximately 1.5 percentage points during the past years. Today, more than half of the order book consists of projects in Value Assurance Class 1 and 2, which are projects with the highest size and complexity. We expect future enhancements to our Value Assurance process, especially from data-driven continuous improvement process across all divisions and countries. As a part of Value Assurance, we carry out a quarterly in-depth review of all major projects. This is so-called Result Delivery Assessment or RDA. It is a structured process to closely monitor the performance of all projects. It includes monitoring of early warning KPIs and the sensitivity analysis of the gross margin development. An important part is also the latest estimate and claims as litigations. Applying this process has enabled us to achieve a significant reduction of open claims by key projects. In the second half of 2021, we have reduced open claims by 73% and achieved a further reduction by 53% in the first half of 2022. This reduces risks in our current projects significantly. The entire Value Assurance process has been a proven and effective risk management tool. Since its full implementation 2 years ago, there have been no major surprises. Transparency is increased and claims have to be assessed jointly by Operations, Legal and Finance. For the full year 2022, we still expect a slight decline in revenue due to strategic focus, selective project tendering and exchange rates, mainly euro-Swiss franc translation effect. The integrated model of the group with its 4 divisions proves effective, as you can see, an increase in intercompany revenues also. The short- to mid-term focus on profitable growth aims to stabilizing to increasing revenue, mainly by organic growth, as well as specialization in the divisions and backward forward integration. In the mid- to long-term, we are aiming to further increase revenue by organic and inorganic growth. I'm going to continue with the profitability or EBIT. The future group EBIT is primarily driven by the improved performance of the large divisions. The EBIT margin target of approximately 3.5% reflects a sustainable short- to mid-term level. We expect a sustainable improved performance, particularly from specialization, backward and forward integration and operational excellence in the divisions. As a result, our mid- to long-term EBIT target is more than 4.5%. We expect to achieve the savings target of CHF 50 million annually, recurring savings ahead of the initial target by end of 2022. Recognized operational excellence and lean methodologies tools have been implemented in financial and administrative processes to ensure potential of further savings. The consistently implemented Value Assurance process also contributes significantly to the profitability of the project and secures the group EBIT improvements. As shown before, we have achieved a significant improvement in equity ratio from 12.3% to 16% by half year. This was driven by a considerable improvement in equity and progress made in reducing total assets. Further ups the potential from the difference between the current market value to the book value of the real estate portfolio or so-called land bank, would actually even lead to an equity ratio of over 20%. The midterm target to achieve an equity ratio of over 20% is expected by 2023. Based on the strong underlying performance, the expected earnings of Ina Invest and a reduction of total assets. The new midterm target is to enhance the equity ratio to 25%. We are actively pursuing a sustainable reduction of the net working capital. This is supported by 5 pillars. That's, for example, contract negotiations, documentation and processes and transparency and visibility. Today, we already brought a number of achievements. Visibility of net working capital has already been significantly improved. There is a high level of transparency at global, divisional and project level. Also, collecting receivables, the invoicing of Work In Progress, called WIP, and the optimization of payment terms is done with increased consistency. A major milestone was the reduction of net working capital by CHF 200 million in the first half year of 2022 compared with the first half year of 2021. A significant increase in operating cash flow was reported since the first half year 2022. This is in line with the strong profitability, the improved cash conversion cycle and optimized net working capital management. Moving forward, we expect sustained positive cash flows in the future. Commenting on investments. We will continue to invest in our own attractive Real Estate portfolio, our land bank. CapEx is estimated between CHF 35 million to CHF 45 million annually in the coming years. Our clear target is to achieve positive operating and free cash flows in the future. We are well financed to support the business and profitable growth. The existing financing instruments are a balanced or are off balanced maturity profile. In addition, sufficient guaranteed credit lines are available to support operating business in the future. The committed Syndicated Facility Agreement accounts to CHF 650 million. During the transformation, a debt position was reported. Going forward, the clear target is returning to a net cash position, driven by a profitable operating business, positive cash flow generation and reduced financing. At this stage, it is important to me to summarize the divisional short- to mid-term targets, which were presented by my colleagues earlier. Civil Engineering with the longest lead times in their projects expect a moderate organic revenue growth. Also substantial EBIT and EBIT margin improvements are expected. The Division Specialties expects promising revenue growth potential and elevated EBIT and EBIT margins in the future. As earlier presented, Buildings expect moderate organic revenue growth and substantial EBIT and as well EBIT margins improved. The Division Real Estate expect growing revenue from the service business and as a consequence, a gradual reduction of volatility in the business as shown before. The contribution from Real Estate development depends on the realization of the projects. The EBIT contribution of the Division Real Estate is expected to be above CHF 40 million per year. And in the midterm, we expect the share of recurring income of the annual EBIT contribution to be more than 50%. Concluding, I would like to summarize the group financial targets presented today. We anticipate stabilizing to increasing revenue, mainly through organic growth in the short- to mid-term. And further increasing revenue through organic and potential inorganic growth in the mid- to long-term. Short- to mid-term, an EBIT margin of approximately 3.5% is target. We expect to achieve this target already this year and we'll keep this level in the short- to mid-term. In the mid- to long-term, the EBIT margin target is more than 4.5%. An equity ratio of above 20% is expected by 2023. The midterm target is an equity ratio of 25%. Implenia intends to propose to the AGM to cautiously resume dividend distributions as of spring 2023. Furthermore, our focus lies on generating positive operating and free cash flows and to return to a net cash position again. Many thanks for your attention. With that, I hand back to Andre for his closing remarks. Thank you very much.

Thank you to the CFO, Stefan Baumgartner; thank you to the division heads for their insights into their business. Before we start the Q&A, let me wrap up this round of presentation. Fit for Growth phase will further strengthen the competitive position of Implenia. Based on our 4 strategic priorities, we have shown you how we are aiming to reach our financial short- to mid-term, but also the mid- to long-term targets. All divisions contribute and will existing business grow -- grow existing business, develop new business and execute selected acquisitions in a smaller piece at the beginning. After I will complete the transformation, successful transformation, I must say, and comprehensive and with our expertise as a substantially improved risk profile, we're in a much stronger position. At this point in time, I also want to thank all those people who contributed to this success story and this very comprehensive transformation, mainly the executive committee, all employees and certainly, the Board of Directors, Hans Ulrich Meister is here, which guaranteed for such, I would say, exceptional collaboration. So thank you, all those who contributed to this. Megatrends such as urbanization and investments in mobility infrastructure support our growing markets. So the strategy is right. Megatrends support it. Implenia is the market leader in Switzerland, has a strong position in Germany and in an excellent position in Tunneling in selected European markets. We are market leading with focused competencies in all divisions undermine this even further. An increased earnings potential through further specialization, as well as backward and forward integration, as explained before, is planned, and we are fully convinced to reach our ambitious targets. The strong foundation of our culture and leadership which is also illustrated here in our new offices, is attracting the right people in the right roles to accomplish our vision, mission and strategy. Implenia is excellently positioned for a sustainable and profitable growth. Thank you very much for your attention. I now hand over back to Franziska, and we are happy to answer your questions. Can I also ask the presenters to come up. Franziska?

Thank you very much. Yes, we would like to ask all presenters on stage as we now open the Q&A session. Please note that you can ask your questions in German or English. To everyone in the room, please use the microphones as distributed. To everyone in the live stream, please use the chat function to type your questions, I will then read them out. And we will start with questions in the room. Andrea is in the back.

Thanks. I have a couple of questions on the financials update. You cautiously resumed dividend payments from spring '23. How should we think about it? Is it to reinstate and provide a positive sign to the market, or will you introduce like a payout ratio from now on?

I think I can start cautiously, means cautiously. And yes, it's more seen as a signal. But Stefan, do you want to say something more?

Yes, from the process, it's clear that the Board of Directors had to propose to the [indiscernible] payment for the dividends. But of course, we have -- or they have to consider where we are into. How are we financed, how strong will it be our operating profit and so forth. So this will be a very balanced decision in the future.

Okay, another one on growth. Implenia had like, I call it bad luck, with kind of low-quality growth in the past. Now you talk about growing by acquisitions again, how sure can we think about that?

So yes, growth can be profitable. It can also be unprofitable. And it certainly depends on the strengths and the organization and how you're growing. There are a couple of things I want to illustrate, and I hope you also saw that from the presentations of the division heads and also from the CFO. The idea certainly is with the Value Assurance process to make sure that everything we acquire organically is done in a professional and in a profitable way. And the specialization and the recurring fees certainly helped to that. If you are afraid of or if you consider acquisitions, we said we start very small. And we already have proven that we can acquire companies. We acquired BAM Swiss. Maybe, Jens, you can say a few words afterwards to that acquisition, which was in hindsight, now proven to be very successful, was a very comprehensive and in-depth process we went through, very disciplined. We have done 1 or 2 smaller ones as well, also successful. So we will go step by step and we will not rock the market, if you like. Jens?

Mentioned anything, yes, can you confirm that the BAM Swiss part is fully integrated and is operating very efficiently within Buildings. So nothing to add here.

I think we can say that you in the division had a tremendous workload.

Definitely, yes, it's hard to acquire projects because you need to go in depth in the projects. Building projects are complex, especially if they are in the turnkey business. So you need to do a very, very smart and in-depth due diligence. So that's why I think it was very complex and time-intensive.

So what acquisition really means is you need a good organization, a capable organization. In absorbing that organization, that new organization, you need processes, which work. We have also a strategy and deal-making organization under the leadership of Thomas Zweifel, who set up this capability within the organization. And finally, you need a finance and legal organization who support the process accordingly. And I think we're already well trained. We know how to do it. But as I said, we will not rock the boat. We will go step by step. The main focus is very clear, organic growth in the field of specialization, backward, forward and operational excellence.

Okay, 1 more. Maybe if you could switch to Slide 81. You show different Value Assurance risk classes on that slide. What does it mean if almost half of the portfolio is in the lower classes of that Value Assurance process?

Yes, we need to be careful, we have Class 1, right? That's the big one. Class 2, and Class 3 and 4, they follow the same procedures. So this is also a Value Assurance process, which is established within the divisions. Maybe, Christian, you can say a few words, how that works in your organization.

[Interpreted] I'll do this in German. So what I would like to say that we have to rethink and due to this Value Assurance risk process, we can move people to rethink, I mean, so that people stop chasing projects and start thinking about having a qualitatively high project where we don't just have to decide upon the price. But this culture has to be thought about. And then we can also go very well down to the project Value Assurance one. We have a committee, and for 2 and 3, we've got within the divisions also independent Value Assurance organizations.

Really covered every single project in the Value Assurance program. So as well in those as before mentioned, deep dives of the projects, does not depend on the class. So that all our running projects are covered in there and all the selective process for new projects also. So that said, that has no impact on if it's covered in that or not.

I think the most important one is even in the Class 3 and 4 projects, the decision to tender and the conditions of a tender are decided not only by the business, but it's an interdisciplinary committee who decides. It's also included by Finance and Legal. So on every level, we have this committees and the conditions for a tender are approved by a committee, not longer by a single businessman or woman...

Maybe a last 1 for Mr. Baumgartner. You elaborated that you expect to generate 3.5% EBIT margin from this year onwards. Does this mean that you expect this margin like consistently every single year without any slips from now on?

Now we expect approximately 3.5%, as mentioned before, to generate every year from next year on, yes. and even this year. As this year on, but this is our guidance, but as well from next year on, yes.

Yes, we confirm we want to have around 3.5% from now on.

Every year.

Martin, please.

[Interpreted] Okay, I switch to German. So the claim management page was interesting, 50%. Could you give us a bit more information? How much money or project volume I'll be talking about? And with regard to the procedure, what do we have -- how do we have to imagine this, the claims situation? Is it the end of a project, or is it -- do you always -- are you always delayed with regard to the milestones?

[indiscernible] General Counsel, so I want to introduce you to German Grüniger, and our General Counsel, maybe in combination with Stefan can answer that perfectly.

[Interpreted] So we have to check the supplements or tenders we have ongoing. So for this, we have installed the process, Legal and Finance are together. And they evaluated these differences and the tenders and the evaluation internally. How do you evaluate these requests? And we can really say that in the last 3 years, since we have really observed that this process, we have no more surprises. Of course, you will always have small problems and differences, but how we manage these discrepancies. We really do have an improvement there. And in this project -- and these projects are realized every 3 months, and the review of the claims and litigations is very structured in order to avoid surprises after 3 years in a project. We do this for every project every 3 months, and even every month, so for each project.

[Interpreted] So we have a lawyer, a financer and a business person around the table. And if they do not agree, it's escalated to the next level. So maybe you would like to complete me.

[Interpreted] Yes. If we have a big project, we also do have our own staff concentrating on these areas and together in collaboration with Legal, we try to train our people with regard to the contracts, interpretation of the contracts and recognizing certain points in the contract. This is very important. So we would like really to work with our trained staff here.

[Interpreted] Yes, we have introduced same process. So we do not want to start with the claim management in the Building Construction at the end of the project. But we wanted to involve in early stage contract managers analyzing problems, possible problems. And I think we are much more prudent and together with other disciplines. We evaluate possible claims in order to avoid surprises. And Anita in your smaller projects, how do you proceed?

[Interpreted] Well, in the same way, more or less at different level. With Legal, Finance and Business, we meet and we evaluate small projects in the same way. And of course, we also need to know the content of the contracts. We also have our contract managers who understand the content of the contracts. And it's only then that Claim Management can really have a successor.

So how new and Value Assurance claim litigation, this is really something Implenia lives every day. This is not something which is just written down on a piece of paper. No, this is really lived every day, and this has really impressed me and it works very well.

[Interpreted] Well, afterwards, we have a topic corner, and I will be there with the team Value Assurance. And you can ask by. Yes, I just recommend you to go to this topic corner. You can eat and talk to the experts. It's really important what has been said. The process alone is not enough. You need a good organization, and it's this divisional organization with the functional excellence, and you also need the culture. And if we say one knows something, it's not saying, then this is a punishment and not if someone turns up with a bad news. And now we want to have news on the table regardless if they are positive or negative. Another question?

[Interpreted] Do you have bottlenecks or shortages of capacity? So order books are fuller, but you certainly have a limit. So where can you grow?

[Interpreted] Well, I'll start and then I hand over to the divisions. In the Value Assurance process, this resource discussion has already started. We have 3 processes. First is selection where we discuss whether we start with an offer, then where resources already discussed. And if we find out that it's not working, we do not continue, we stop. But we are not writing an offer without having security resources, the necessary resources. But yes, it's clear, our order books are full, but I would that all our divisions still have resources.

[Interpreted] In the Building Construction, we have long-term projects. So the volume per year, it's not a small step to bringing the volume. The volume is created over many years, but it's a key element to have the right experts. And this is a difficult -- it's difficult to find these experts, but thanks to strategic measurements, talent organization. For example, we feel that it's much easier for us to find these people in the Connect with the offices, we attract good new talents and this helps a lot. And more success, we have this year it is to find good people. But of course, this is key and grow only with the right experts. And if -- we have it's difficult for us to realize projects if we do not have the necessary talent.

Yes, I totally agree. In Switzerland and Germany, we have a scarcity of experts. So that's why newer talents are so important in Switzerland. We have a big potential with regard to female experts -- this is a potential we can still exploit, and we work together with HR to exploit it. Then what construction we produce, we go over our production capacities as there, we work with partners. And as long as we can manage well the project, we can also work with external partners.

[Interpreted] Okay, Claudia, we pass to the other divisions. So maybe we can also talk about the scarcity of the experts.

[Interpreted] Not a point with regard to what has been said, we must make a difference. We have 2 processes, one is the acquisition process, the other is the execution process. We talked mainly here about execution, but we also think about the acquisitions. So we must make sure that we have enough experts there. So it's really difficult to find the experts externally because acquisitions also needs a bigger know-how and bigger trust and such a contract covers several years. So we also try to train the people with regard to these challenges. And we wanted to have performance teams in order to find new talents.

[Interpreted] A scarcity of experts in Germany, we have another situation. And in Switzerland, the demand is higher. So our key factor is to have growth and industrial prefabrication is one answer, just one answer, not the Answer, in order to tackle the scarcity of experts.

Claudia?

So I think we have 2 kind of -- we have 2 areas that we focus on. One is obviously the existing employees, right? And as Andre also said earlier, training, development, et cetera. We've also gone through a big culture change, as he also said, which is about if there's a problem, bring it up, don't hide it, right, then we can address it. So that's a big piece of it. And you can now see the people who've joined us, also the environment, et cetera. You can tell that people -- it's been a hard couple of years, but people are really kind of understanding the way we're going, the strategy, the new culture and the behaviors, the leadership, the values that we want. So those are the existing employees. And then, of course, as we all said, the [indiscernible] is significant in every industry nowadays. So we're looking at, also Anita mentioned it, there are the females in the workforce, which, again, the construction industry hasn't necessarily or had a lot of. So we're looking at that. It's an untapped pool we can use. But we're also looking at bringing in a lot more younger people. We're looking at universities, colleges, et cetera, and doing that. much more. And also at the other end of the spectrum, the more experienced people, people who may be are near retirement, but actually want to continue working in some way. They have huge amounts of knowledge. So for example, in Germany, we have a program where we keep them on, if they want to be kept on in a part-time capacity or something like that. So we're kind of looking at all the different ways of looking at it across all the different countries. We also have quite a lot of people now moving between projects, particularly, I think, in your area, between tunneling, going from Germany to Norway or Sweden or to France or back because the expertise for big complex projects is a particular niche. So we're having people move across, which is wonderful to see, too.

I think that the ingredients to find new talent and also to keep them as a question of organization. People want to understand what their tasks are, and people saw our projects, good engineer, good architect, project manager wants to participate if the projects are good, you need simple processes, lean processes, quick processes, you must be innovative for today's talent want to have innovative procedures and innovative culture. And this is why we are here. I think our culture is a modern culture, not the classic culture. And at the end of the day, compensation must also be correct. And I think we are leaders with regard to this. Long answer, yes, but this is a very important topic. If you are too long, you can interrupt us.

Three topics from my side, on one hand with regard -- dividend, I was surprised when I heard that you want to pay a dividend next year. So I would say you should do this cautiously, what's that payout ratio strategy going forward? I mean, your capital objective 20%, 25%. What's included in this and what's behind it?

Three. You had 3 questions.

Okay. No, that was the first Second question was concerning the divisions and the EBITDA objective, CHF 40 million plus in real estate, 3.5% up to 4%. That's the objective. Give you -- us a range with regard to the expectation of the other divisions. And the last topic, division specialties, what volume most one of the specialties achieve in order to become a non division and is this possible? And in which area?

Okay, let's start with dividend. Yes, it's clear. Our profitability has improved. We will have on capital of more than 20 and -- we will achieve this next year, as I said. And hence, the administrator -- Board will propose because it was a successful year to pay a small dividend. So it will be requested, we will discuss it. And if the performance maintains the dividend will -- with regard to EBITDA objective, so we said what the ranges are. We talked about the details. We will not give any other ranges. We said where we will start and where we want to go. And we will not give more details with regards to this point but you can be sure that each division within their strategy and their environment, they want to be the leaders like in Building Construction, Jens wants to bring the highest quality and the same for Civil Engineering. So -- and real estate where we have given you all the details. Specialties, I start -- we are trying to acquire certain situations. I mean, acquisition is always quite complex and what kind of visions actually do? What's their core competence, if it's not their core competency, then these divisions are often put into place and then they disappear and they're taken up from the entire organization. I mean, in specialty, it's quite simple because they are a unity and they can go directly into the company. So can a unit become so big that it can have their own division? Yes. Can it be possible that one unit is so big and stable that we pass it on to another division? Yes, that is also feasible. Can it also be that it stays where it is, that is also a possibility. And the fourth option is that it has developed quite well. But we don't see it as core and sell it, but these are the four options that we have, and they are all possible.

Great. Now I have got no more to say. I mean you said it so beautifully but what I can do and add is that the portfolio is going to be evaluated and where the businesses fit at the moment, the portfolio is okay, the way it's positioned the business developed well. And the portfolio is probably going to develop via the years. And they will be surprising if they weren't the case. So all possibilities that you have mentioned -- yes, we have them. And yes, maybe I could formulate it in a different way. I mean we are amongst ourselves. So with this unity, we do have had units that have created problems. And the task of our team leader was to transform this. Some were in not such a good positioning and not such a good situation. And our idea is to take all the units and make them fit perfectly, one place doesn't mean always the same place in the division to last year operationally a bit negative, and that comes from the same situation because there are certain turnaround situations, but now we've got a good development, and we are expecting quite a lot in the years to come.

I'm from the Regional Bank, and I've got a question concerning the balance. And you said that balance is also a topic here. So in the last restructuring program, the balances were CHF 2.3 billion and to go down to CHF 2.3 billion. So my question is where are we now, where are we situated now? And where can we position ourselves? Yes, that's quite important question. Thank you, very much for that one. So medium term, short term and long term, what -- can we imagine mean term? Is it 3 years, 5 years? Can you maybe say something to that, please? And I also have a question M&A with what sizes -- what size can we expect? I mean, more than CHF 50 million, that's a smaller M&A story. What is maximum feasible side 2 or 3 and then you can answer question #1.

Thank you very much. So medium term, long term is a definition of 3 to 5 years, whereas we are quite impatient. So often, we are not happy with the long-term, we always try to make the company profile in a short time. M&A, yes, that is a limit, so up to CHF 50 million, that's what we said. And for the moment, we're not a lot further than that. So if we look at long over [indiscernible], yes, balance, to the balance, I mean, it's central to say that we continue the same strategy. The strategy has not changed. So what is important, it has to be say in relation to the business to the projects that we have. And since it was CHF 3.2 billion at the point and the business does continue to develop, and it was important is to be able to say that the strategy is always the same asset light. And the CHF 2.3 billion, if we want to grow again organically and maybe also a bit inorganically and CHF 2.3 billion isn't probably the correct size. It really depends upon the whole business and how it develops. We're going to intensively continue working on the network capital optimization. And then we're going to continue assets, but CHF 2.3 billion, it does not end here. It does end the whole business.

My name is [indiscernible] and I have a question to real estate, and we talked about recurring income. I don't know if I didn't pay attention, but how do -- how do you define the term recurring income within real estate? Could you explain that? Who would like to start and explain this terminology. Second question that I have, generally to the German market. You sounded quite positive upon that. And Mr. Hans said that in the last trimester that we're going backwards. And in the residential area, we see that projects are being closed down due to financial costs, due to material costs and German family has -- German -- sorry, German -- yes, families and turnover, et cetera, is lowering down due to corona and Ukraine helps and inflation -- high inflation in Germany. So what do you think that in Germany we're going to have to invest more money in the civil engineering? Or what do you think in the building construction?

Yes, we'll going to answer first question number one. Stefan, please.

So recurring income, well, I explained it in such a way that I put fees, the fees, the recurring fees, we will have performance fees, transaction fees, which go under this terminology and these companies have a certain volume that you got to cover and this is quite stable from the size point of view, they grow, they grow, they grow and invest. Additionally, we have the equity with vast which is part of the results.

I don't think there's any more to say to that or to add to that. Now come to Germany and also to Switzerland. I would like to broaden the answer here. So if you read the statistics, then median or other hurdles, it's mainly average, and we have certain segments. And of course, we do have segments that are not growing, which are actually falling apart. And as we're focus on your own area, higher, more complex projects that are financed differentially. Up to now, we have not had any of these situations. So on the contrary. So we can keep this like this and from there, we've got this massive situation, as you described that we keep reading and hearing it. In our segments, we have not seen that. On the contrary, I mean, we are growing. And I think that shows that our strategy is probably the right strategy, but it's important that you too have something to add here. Yes, I can only agree with that. I mean the fundamental to have a cost-efficient system is also a political theme. So of course, we've got the different partners, the different models and also the classical competence model. And I mean we're going to ask everywhere. I mean, we cannot be selective with the contracts. And we can see this in our market. And yes, so in Germany, it doesn't -- it's not really shown. So I think the competency that we have in Germany and the services on demand, and we have got -- we've got many steady customers. So we're quite optimistic about that and so medium and long term, we are quite good. And now I can add, if I look at the Internet. And so here, we've got the -- we don't have that many measures that in the end. We've got so much potential that we've got to catch up. And we often -- you probably know this, the A45 and the [indiscernible] Germany is the main connection in Germany, and that's been disconnected because the bridge is a falling apart in Germany. And so in Kolon, we only have one bridge that we can actually drive over, and we've got used to that, and that cannot be normal. And there is so much to do still, I mean this is a potential for us also in the future, especially maybe if we feel the recession, it's going -- the infrastructure is also a good stimulus and maybe the market can then be activated again. So -- this is my comment.

So what about the perspective of real estate and the market real estate -- estate.

So as Implenia, we're not that strongly placed in Germany. And if we look at the balance, it's a solid calculation. And we mainly auto finance ourselves. It's not the classical German model where we have 90% foreign financing. The real estate business is going to change. We see opportunities, we see objects, and we see development of real estate where there are new opportunities right to open up and see what the group can do. And here, we also see partnerships that we don't have to do everything ourselves, they take on the risks ourselves. This market situation also gives us opportunities for real estate. And I think the big trends that are absolutely optimal. And I think also with the population growth at these populations grow also in towns where we have a sustainable real estate business and better projects so that we're positioned in an optimal way. Maybe other companies are not the same.

So I have a question on the infrastructure projects, which are from finance by public financing, the public financing. Of course, when we talk about money, how do you see the development with the payment limits. I mean are they can during -- due to the network capital, what is the deadline, the payment deadline? I mean, for example, you get a contract, but you still got to make sure that we have the financing. What's the tendency here? I mean, the investors say, okay, I'm going to give you this contract, you've got to make sure that the financing is here. That's the first question. The second question is, do you also have customers or steps where we have the return capital employed.

I'm going to start by answering the question in a macro environment, then I pass on the question to Stefan and the other colleagues -- so the whole financial situation is discussed in the flow. And we have a prefinancing. And that's decided and how would going to be continued and not continue. So the terminology is clear. So in the contract situation, it's very, very clear, and we wouldn't accept projects where this is not an advantage for us where it's not fair upon us. But here, we really have to say, and I think Mr. [indiscernible] and Stefan Baumgärtner have said this with the claims situation that here, we can go into a different story. Also discuss what -- how these claims can be explained and where we get cash flow from, but here has gone backwards and that we need to be proactive. Maybe you'd like to say something to financing. And then from your side. Yes. So talk about the project and we're still looking at the cash flow of the project. And we still would like a positive cash flow. We still have a positive cash flow. And we'd like to put it into place. And the problem is that, as we've already said, that it's not the payment conditions, they're good. They are fair and they've been well negotiated. We need -- it's not the beginning of the negotiation. The problem comes when we have a dispute, a technical or a legal dispute. And then we do need public institutions. And then in the end of the year, we have the -- I mean, then we need that they actually have the will to pay, and this is a profit topic at the end. But otherwise, we would like to have a good -- keep our good conditions and optimization of network capital. Christian, public place. It's not very clear. And the problem is that we go beyond the budget, but once we can continue -- and then our public customers, do they really stick to the public payments or not? And especially with the prepayment we have different models with different situations. And then we've got certain prepayments that we have at our disposition, and with some it's different. And we can also structure our offers. And it's important that we have -- that we're positioned in a wider way. So please come on stage. I just wanted to add. I thought maybe this question has the aim to go into a different business model, which is the public-private partnership business model, maybe there. I mean there are certain structures, projects that we have had to look at. And Christian, we've thought about going into this business. And it's quite a different business model with different financial means and different setup. And in Europe, we -- it's coming more and more. I mean, it's public business, which is not being financed publicly, but the company is financing. It's an object they keep it 20, 25 years, but it is a different model. And I wanted to say that. So questions to French construction companies, we don't have an active project. Good. Sorry, what was the question?

The question was -- what about the cash flow project very central. So every single project has to have a positive cash flow and network capital per division, capital employed especially passed via network capital division and improvements and they're also underneath the business units. So the divisions are incentivized and then we have network capital.

So both is included.

I've got 3 more questions on the divisions, if I may. First, on the real estate. When do you actually plan to reach the 50% recurring income? Second, an add-on on the question on the EBIT ambitions. On Slide 60 on the -- in the Buildings division, you show the EBIT bridge. It gave me the impression that the EBIT margin will not grow that much anymore from 1.9% to the 3.5%. Yes. Is it a wrong impression? Or does it mean that it is not possible to grow Buildings that much? And then thirdly, we -- on Specialties, we saw in the presentation that there is a very high demand in timber and building construction logistics. But like most recently Specialties delivered kind of under average margin contributions, which percentage of the whole business is still in turnaround. And by when will kind of everything get through that turnaround process.

Maybe to the first, I think you said midterm, right? With the 50%. Anything to add?

Would then mean 3 to 5 years.

It depends how aggressive you are.

And our plan is 3 years.

But I can reassure you that these fees are really growing and already on a significant level. Then the EBIT of buildings, maybe I start and then certainly, Jens, you should give the answer. EPO, and I need to say that because you probably don't want to say that yourself, is in a turnaround for a longer time -- out of the turnaround for a longer time. So they have already consistently delivered a good, reasonable EBIT in the past couple of semesters. So we are probably a little bit of ahead in the transformation confirmed to what we had in the Civil business, where the problem were even deeper and more severe. And we exited those markets where we had big problems relatively quickly in EPO. That's why their -- their starting point is already at 1.9%, as you could have seen on the chart by the end of 2021. So the uplook is that...

Yes. I mean, as I mentioned, the 3.5 -- as it was mentioned by André and Stefan, the 3.5% margin target is on group level, not on Buildings. But of course, we will try to improve the margin, and we are seeing that on several projects, which we are specialized service provider, we see even higher margins than the 3.5%. So it's possible to do and to generate higher margins than the 3.5% on single projects. So if we can -- and this is the target, increase the percentage of specialized and large complex projects, we will see significant higher margins than the 1.9%. And I think we have a target to deliver already this year a higher EBIT margin than the 1.9%. So -- but the 3.5% is a group level target, not an Buildings target.

And so the last one, this minus percentage you saw was 2021. So already contributed in the first half is a positive EBITDA, as you said, I would say, if you would have significant turnarounds in our business, we would not have called the group transformation is completed. So also these businesses are now out of the turnaround. They just start -- some of them on a lower level, and they start to grow. But it's very impressive. Some of those businesses grow 25% on top line, but they're just to a certain extent, tinier than some of those who were in the turnaround. So there's a bit of a mix effect to what you can see on the chart.

Yes. Yes. No, yes, because then I would go into detail, but maybe a little bit to the history. The portfolio was a bit larger 3 years ago, we sold 4 companies -- 4 businesses and we closed 1 business. And now we have a portfolio of businesses where exactly, as you say. André, we are out of the turnaround businesses now. Some can still become and sells still become more profitable, but we are profitable.

That's not politically meant hopefully.

[Operator Instructions]

Okay. There seem not to be any further questions. We are prepared to finish earlier and have launched earlier. And certainly, the topic corners before you close, I want to really emphasize that the topic ones are relevant. These people are looking forward to hear questions from you and go into debates with you. But once again, I want to thank everybody who presented today, who prepared this whole show, thank you very much. And with this, I hand back to Franziska.

Yes. Thank you. So we're closing officially the Q&A session. Please note that Implenia will report full year 2022 results on the 1st of March next year. Our Annual General Meeting of Shareholders will take place on the 23rd -- on the 28th of March, apologies. For any questions and queries, please reach out by the usual channels. So thank you again for joining us today to all the participants in the live stream. We wish you a pleasant day, and goodbye. [Statements in English on this transcript were spoken by an interpreter present on the live call.]