Implenia AG (IMPN) Earnings Call Transcript & Summary

[Interpreted] Good afternoon, and welcome to the Analysts and Media Conference on Implenia's 2023 Half Year Results. We look forward to welcoming you here in the live stream for the presentation. My name is Silvan Merki, I am the Chief Communications Officer, and I have the pleasure of accompanying you throughout this event today. We shall present our results in German. You may also select the English translation in the live stream. Following this presentation, you are welcome to ask your questions in the chat of the live stream in German or English. But before we start, I would like to draw your attention to the disclaimer shown here. For the agenda today, our CEO, André Wyss; and our CFO, Stefan Baumgärtner, will present the following. First, the business and financial update and the market outlook. Afterwards, we will be happy to answer your questions. I now hand over the floor for the first part to our CEO, André.

[Interpreted] Thank you. Many thanks, Silvan. Hello to all of you. I'm pleased to present our half year results to you today. The first half of 2023 was again successful for Implenia. We were able to increase both turnover and order backlog above the previous year's level in currency adjusted terms and to achieve a strong EBIT in the process. We also further improved the equity ratio. The acquisition of Wincasa was successfully completed. Following the transformation/transition, all divisions were excellently positioned in the market to ensure sustainable success. The very good group result and the result of all divisions confirmed this impressively. We see that Implenia is on track to achieve the targets set out for 2023. And now for the details, I shall comment on the results adjusted for foreign currency effects. You may find these figures highlighted in dark yellow. And so these foreign currency effects will then be explained later in the financial update by our CFO. We were very pleased to increase the group's order book to a record level of CHF 7.5 billion in a challenging market environment. We assure the high quality of our order book to the continuous and strict application of value assurance. The group's turnover of CHF 1.8 billion is also above the previous year's level. Implenia achieved a strong group EBIT of CHF 52.5 million. All 4 divisions made a significant contribution to this through their profitability and further improved their operating business. The result is not directly comparable due to above-average earnings in the Real Estate division in the previous year. I will now go into the results and project highlights of the individual divisions. The Real Estate division achieved an EBIT of approximately CHF 16 million. This year's EBIT is in line with our expectations. But as already mentioned, not directly comparable with the previous year's period. The division is on track to achieve its 2023 EBIT target of over CHF 40 million through planned transactions. We continue to invest in our own attractive real estate portfolio. It is well structured, diversified and optimally positioned geographically in urban locations, mainly in Switzerland and also in Germany. As a result, the book value of our real estate portfolio increased to CHF 159 million at the end of the first half of the year. The market value at the end of 2022 was CHF 351 million. The partnership with Ina Invest is consolidated and continues to develop successfully. The division's project highlights are manifold with the acquisition of an attractive development site in Nyon in a prime time location. The division strengthened its presence in the Lake region or the Lake Geneva region and demonstrates its comprehensive expertise and sophisticated developments. In order to become massively more efficient in project planning and realization, Real estate [ projects ] thinks of real estate not only as individual projects, but the designs them as sustainable, standardized and scalable real estate projects. One example is the hotel real estate project, Green Hospitality. The sustainable, Lokstadt district in Winterthur developed by Implenia continues to take shape. All of Implenia's divisions are working together intensively and in an integrated manner, hand-in-hand in Lokstadt. Tender is already the fourth building to be successfully completed. The division is developing a mixed use neighborhood on the current Baar Süd site in the county of Zug. Together with the Buildings division, the projects are planned and realized according to the latest applications of BIM and Lean from the very beginning. The Buildings division increased its operating performance to around CHF 20 million, excluding the newly acquired Wincasa. On the one hand, Wincasa already made a positive operating EBIT contribution, but this was offset by transaction and integration costs as well as PPA amortization. Taking these effects into account, the division's EBIT amounted to CHF 18.6 million. For the year as a whole, we already expect a positive contribution from the Wincasa transaction. The division sales rose to over CHF 900 million, above the previous year's level. And the order book stands at a high CHF 2.8 billion despite the challenging market environment. We successfully completed the acquisition of Wincasa, the leading real estate service provider in property, construction and sustainability management at the beginning of May and welcome the new employees to our company. Implenia has thus extended the value change in the utilization phase for both existing and new customers. We offer a unique integrated range of services across the entire real estate life cycle. Implenia is thus further expanding its excellent position as an integrated construction and real estate service provider. The integration of Wincasa as a legally and operationally independent entity is proceeding according to plan. The group expects the acquisition to generate stable recurring revenues and higher-margin business. Wincasa's current EBIT margin of approximately 10% is an important step towards achieving its medium- to long-term EBIT margin target of over 4.5%. We expect considerable synergy and growth potential in the short to medium term. The Buildings division plans, builds and manages numerous attractive residential office and commercial projects. In Vernier, near Geneva, for example, where we are building the Quartier de l'Etang, a completely new urban district with residential, hotel and commercial space on a large former industrial site. This summer, Implenia will complete the comprehensive work on this challenging major project. And the new building for the Department of Biomedicine at the University of Basel, Implenia is demonstrating its combined expertise from various service areas for challenging projects in research and development, its experience in sustainability and its internal know-how in Lean cycle planning and BIM models. In the shopping arena, St. Gallen, Wincasa successfully manages the entire center and is thus significantly responsible for its positioning and success. During the modernization of the department stores, which was built over 100 years ago, the Brannhof, the former Manor building on Zurich's Bahnhofstrasse, the client benefits from the know-how and interaction of our planning and construction units in dealing with historic building fabric in inner city locations. The property is made fit for its new use and equipped with the latest building technology. The Civil Engineering division also had a successful half year. Despite the usual seasonality, EBIT increased significantly to about CHF 14 million due to improved operations through a strategic focus on a profitable project portfolio and a correspondingly selective choice of projects. Sales increased to around CHF 960 million compared to the same period of the previous year, while the order book reached another record level of CHF 4.5 billion. The division consolidates its market position for large and complex infrastructure projects with a combination of experience, expertise, quality and technically intelligent solutions. Implenia is thus making an important contribution to sustainable mobility and energy infrastructure in Europe; for example, the new imposing Grimsel dam wall which replaces the function of the old dam wall. Thanks to the double curvature and the focus on circular economy, the wall will be built much more slenderly and in a resource-saving manner. With the Gotthard-, Semmering-, Lyon-Turin- and Brenner-based tunnels, we are the only company involved in all 4 of the current European trans-Alpine routes. Each of the projects is a technical masterpiece and confirms Implenia's position as a specialist for large, complex projects. All disciplines of the division are involved in the construction of the new district heating tunnel under the Elbe in Hamburg. Our tunneling, special civil engineering and structural engineering does make it possible to supply district heating to the north of the city. For topicality reasons, I would like to mention the agreement signed yesterday with the Norwegian WindWorks Jelsa, which positions us optimally for growing, flowing -- floating offshore wind industry throughout Europe. The Specialties division improves its profitability and increased EBIT to CHF 1.7 million. At CHF 77 million, revenue is slightly below the previous year's level due to the streamlining of the portfolio; for example, through the sale of the nonstrategic former construction units. Even with the portfolio adjustments, the order book continued to perform well and stands at CHF 170 million. The division's multiyear transformation is well underway. It plans to further sharpen its offering and is focusing on profitable growth, including through activities and consulting and engineering. This provides added value for customers and an attractive margin for Implenia. The projects of Specialties division in the areas of timber construction, construction logistics, post-tensioning and geotechnical engineering, building and facade technology increasingly consists of services that make construction more efficient as well as more sustainable. With the Alster Schwimmhalle, the division has an attractive project in the area of facade technology. BCL is providing all logistics services for the new building for Cellforce battery production, which has to be completed in a very short time. In this way, BCL is making a significant contribution to ensuring that the tight deadlines and high-quality specifications can be met. BBV Systems is providing the geotechnical engineering for a large inner-city railway station extension. Through their projects, they have contributed significantly to reducing both the cost and the CO2 emissions of the construction project. To give you a brief insight into our work, we will now show you some of our strategic topics and services in a video based on current projects together with our clients. Afterwards, our CFO, will guide you through the financial figures. [Presentation]

[Interpreted] The solution, standardized and scalable real estate products. As in the clothing industry, cleverly designed and efficiently produced ready-to-wear off-the-shelf, is now replacing expensive customization in the real estate sector.

Each product consists of a reference design, including a kit of pre-engineered components, a digital layer that streamlines every process for the operator and improves the overall guest experience, a configurator that performs location-specific feasibility studies and corporate quantities and circulate indicators within minutes.

Globally, the importance of standardized real estate products for different uses is growing strongly, and heralds a new era in the design and construction industry.

[Interpreted] With listed buildings and construction sites in the city center, modernization requires not only technical know-how, but also a great deal of tact and sensitivity. Therefore, the team works closely with the owners, the architects and the authorities involved. On complex large-scale construction sites, a wide variety of trades work simultaneously in a confined space and under time pressure. Ambitious schedules, cost and quality targets can only be met if everything runs smoothly.

[Interpreted] Large dams are no longer built all that often in Switzerland. The dam on the Grimsel is one of those few. It will replace the existing 90-year-old dam. Located at nearly 2,000 meters above sea level, the construction season for this project is short. In the winter months, meticulous planning is carried out. This is how the gravel and concrete for the dam wall are produced on-site.

[Interpreted] Hamburg is also building its energy infrastructure. In the future, a decentralized heating network will be using climate-neutral waste heat from various sources. To reach consumers north of the river, Implenia is building a tunnel under the Elbe.

[Foreign Language]

[Interpreted] Hello, everyone. I am very pleased to present the figures for the first half of 2023. I shall start with the income statement, which shows the reported results, including the foreign currency effects. In the first half of 2023, we achieved an EBIT of CHF 49.9 million. This is a strong result for the first half of the year and was generated by the profitable business of all divisions. In relation to the turnover of CHF 1.7 billion, this results an EBIT margin of 2.9%. The financial result improved compared to the previous year. This was due, among other things, to the repayment of the convertible bond in June '22, resulting in lower financial expenses. The tax expense was lower in the first half of 2023 due to the capitalization of loss carryforwards. In the future, we expect to return to normality -- to normalization. And taking into account the seasonal nature of the business as well as the current market environment, Implenia achieved a very good consolidated result of CHF 32.7 million. Both in the order book turnover and EBIT was affected by translation effects of 3% to 5% in the first half of the year. One of the main drivers here is the appreciation of the Swiss franc against the Norwegian krone. Reported order book for the Implenia Group was CHF 7.3 billion. Adjusted for currency effects, the increase was 5% compared to the previous year, which is a record level for the group. It shows that Implenia is excellently positioned to benefit from the opportunities presented by megatrends and industry changes. At around CHF 1.8 billion, the turnover adjusted for foreign currency effects was 2% above the previous year. The reported turnover was EUR 1.7 billion (sic) [ CHF 1.7 billion ]. The reported EBIT of CHF 49.9 million as well as the currency adjusted EBITDA of CHF 52.5 million show the continuous improvement of the operating business. And thanks to the natural hedging, we didn't have any transaction effects or hardly any were noted. Next, I would like to go on to the balance sheet. The asset side shows that the cash and cash equivalents at the end of June amounted to CHF 230 million, which is a decrease compared to year-end and as usual, seasonally lower. The cash flow was also influenced by expected special effects, which I will discuss in detail later. Goodwill and the rights of use from leasing increased in the first half year due to the acquisition of Wincasa. Based on the provisional purchase price allocation, a goodwill of CHF 119 million rose. We also currently assume a PPA amortization of a low single-digit million amount per year. I would like to point out in particular that we have increased the balance sheet total, despite the acquisition of Wincasa and we were able to maintain the same level. This impressively shows that we continue to consistently pursue and implement the asset-light strategy. Current liabilities remained mostly stable in the first half of the year, while noncurrent financial liabilities increased slightly compared to the same period last year. This was mainly due to the assumption of leasing obligations from Wincasa. Equity was further increased to CHF 501.4 million due to the positive consolidated results. Consequently, this results in an improved equity ratio of 18%. Implenia was able, even with the dividend payment in March, to strengthen equity by CHF 18.7 million due to the positive group results. The equity ratio of 18% represents the highest value since the end of 2019 despite the acquisition of Wincasa and the distribution of the dividend and negative foreign currency effect in equity. Moreover, taking into account the current market value of our real estate portfolio, the equity ratio would already be well above 20%. Improvement in the operating business is also reflected in the balance sheet structure. And Implenia is still on course to sustainably increase its equity ratio to over 20%. The change in cash and cash equivalents in the first half of the year was influenced by seasonal and expected special effects. The special effects can be seen in this graph. The first tranche of the Wincasa purchase price of CHF 100 million was during the first half year '23, paid with own liquidity from the profitable business. The still outstanding tranche, or suffice to say of CHF 71.6 million is due at the beginning of 2024 according to the agreement. Acquisitions into the Landbank amounted to over CHF 30 million. And cash flow from financing activities was boosted by the repayment of a promissory note and the dividend payment. The cash flow also reflects the change in net working capital. This includes the lower advance payments from our customers due to the sharp rise in interest rates. The graph on the bottom left shows the change in cash and cash equivalents during the first half of the year, which is always negative for seasonal reasons. Last year, this was cushioned by the sales of major projects in the Real Estate division. In this historical context, the cash flow in the first half of the year was within a normal range. Free cash flow, excluding special effects, was minus CHF 180 million. Our objective remains unchanged: to generate a sustainable and positive cash flow driven by the operating business. To conclude the financial section, I now turn to the guidance. We confirm the EBIT expectation for 2023 of approximately CHF 120 million supported by a strong operating business. Implenia continues to expect an EBIT margin of around 3.5% in the short to medium term. In the medium to long term, we continue to strive for an EBIT margin of over 4.5%. For 2023, the group expects an equity ratio of over 20%. The medium-term goal is an equity ratio of 25%. And with that, I would like to give back the floor to you, André, for the market outlook.

Thank you, Stefan. Before we start with the Q&A session, I would like to give you an overview of the current market outlook, the environment, the trends and Implenia's positioning. Last year -- as well as in the last year, the construction industry, like many other industries, has been affected by the challenging macroeconomic market environment. Higher commodity and energy prices have driven inflation in the construction sector and rising interest rates have made financing more expensive. Construction and development activity has fallen in some areas, while others are proving to be more resilient. The latest forecast for total building construction output in Switzerland remains slightly positive, while Germany is showing a negative growth rate. The residential construction subsector in particular, and especially new construction, is currently in sharp decline in Germany. Government incentives, subsidies and new climate and energy targets continue to have a positive impact on construction output, especially in the nonresidential construction subsector and general modernization activities. In civil engineering, demand for infrastructure construction for mobility and energy remains high in Europe. The latest forecasts are positive. So far, we have been able to largely cushion the effects of construction price increases by bundling procurement at the central purchasing department and through contract management. The market environment remains challenging. We continue to actively monitor it in all relative -- in all relevant markets and take appropriate measures. The external environment offers attractive opportunities through mega trends and industry changes. Population growth, urbanization and the energy transition are major demand drivers, and the industry is developing further and becoming increasingly efficient through digitalization and industrialization such as Lean construction. With our strategic portfolio focused on large complex real estate and construction buildings in dense urban environments, as well as our know-how specialized in modern, sustainable working and mobility needs, we operate precisely in these markets with high demand. We are, therefore, in an excellent strategic position to benefit from this and thus, also more robust and resilient in the event of fluctuating economic development. We have laid the foundation for achieving our goals with the first half of the year, in which all divisions made a positive contribution to the group results. With our services, strategic focus on large complex projects, value assurance and focus on sustainability, we are well positioned to further increase our profitability even in a challenging market environment. Implenia is therefore on course to achieve the targets that it set itself. The results presented today and the market outlook confirm this. Thank you for your attention. I now hand over to Silvan for moderating the Q&A session.

[Interpreted] Thank you very much, André. Before we answer your questions, a note on the presentation of our Annual Results on 28th of February as well as our Annual General Meeting on the 26th of March 2024. Should you have any questions following our event, please do not hesitate to contact us via the usual contacts.

[Interpreted] And we're now looking forward to answering the first question. We have received quite a few questions. Of course, you may continue then to include your questions on the chat. So the first question from Credit Suisse, Patrick Laager. Why is your EBIT guidance of CHF 126 million (sic) [ CHF 120 million ] unchanged in 2023?

[Interpreted] Thank you very much for this question. Once again, the first half year was a very strong half year, but that also met our expectations. So the real estate and also the market environment is very challenging, but we focus on our -- on the development of further projects on our activities and construction on very good sites and also specialization on very bigger projects or major projects. Well, we are quite well positioned in this environment. So we still expect another continuous EBIT of CHF 120 million for the second half year; this, based on the strong operating business activities of all 4 divisions.

[Interpreted] Thank you very much, André. Second question from Torsten Sauter from Kepler Cheuvreux. Can you quantify the PPA schedule for Wincasa in half year 2 and beyond, please? And do you expect any further Wincasa-related one-off effects?

[Interpreted] I would like to give this question to Stefan, our CFO.

So -- let's say, all identified -- so we have not finished our evaluation yet. So we calculate with the PPA amortization with a lower million digit amount and so the transaction costs for Wincasa have already been booked then in the first half year of 2023.

[Interpreted] Thank you very much, Stefan. Martin Hüsler of the Zürcher Kantonalbank would like to ask the next question. How do you assess or estimate the real estate market for sellers and purchases?

[Interpreted] Thank you very much. So of course, we are always actively then observing the market, and we always verify to see if there are any opportunities at hand. Of course, one needs to bear in mind that the mega trends, such as growth of the population, urbanization and also -- well, especially then in the cities, well, they also push up the investments then in infrastructure and sustainable infrastructure and make everything much more attractive. We, here at Implenia, are very well positioned in order to take advantage of these opportunities. You can see it in the order book that, that is also signed for a very strong positioning in the market. So if you have a look at the correct markets, then we are really well positioned.

[Interpreted] Thank you very much, André. Second question from Martin Hüsler, also from the Zürcher Kantonalbank. How many factories are still in the historic cost of the books?

[Interpreted] That's probably another question for our CFO, Stefan.

[Interpreted] Thank you very much. So all of these factories that we have are of strategic importance and have been evaluated correspondingly.

[Interpreted] Thank you, Stefan. Another question from Martin Hüsler from Zürcher Kantonalbank. Can you tell us about the operating influence on the cash flow from Wincasa?

[Interpreted] Well, CHF 160 million of cash flow have been taken over, then with Wincasa by Implenia and that has been disclosed. So the CHF 160 million were especially linked then to creditors and this has been then adjusted then until the end of June, and so this had a slightly negative influence on the cash flow.

[Interpreted] Christian Arnold from Stifel. He is asking regarding the real estate. Is the EBIT goal of over CHF 140 million for the current year, is that going to be the run rate for the years to come?

[Interpreted] As we said at Capital Day, for Real Estate division, we are expecting a sustainable EBIT contribution of at least CHF 40 million. And with the planned transactions and also with the development of the activities, one needs to bear in mind that we are continuing to invest also in the Landbank. But our division over the last years has also been able then to develop a lot of other demand. So the division had lots of revenues from the service activities and also from other partnerships such as Ina Invest.

Torsten Sauter from Kepler Cheuvreux. Can you please provide guidance about the tax rate in full year 2023 and beyond?

[Interpreted] Stefan, I think that's a question for you.

[Interpreted] As we already disclosed it in the financial presentation, the capitalized carryforwards in '23 were then taken into account. And we expect now that the tax impact will come to a normalization or to normality for the future.

[Interpreted] Thank you very much, Stefan. You can continue then to pose your questions in the chat if you wish to do so. We have another question from Holger Frisch from Zürcher Kantonalbank. For the entire year, do you expect a positive EBIT contribution from Wincasa?

[Interpreted] That's a question we have answered. Does that include the transaction and other costs and the PPA amortization? And how high are these PPA? Stefan, I think that I should answer the first part and you can then answer the second one. So for the entire year, we expect a very positive EBIT contribution from Wincasa, including the transactions and integration costs as well as the PPA amortization. So net-net, a positive EBIT contribution. Second part for you, Stefan?

[Interpreted] As we mentioned before, the fair value, we have already identified then. The whole is not yet concluded. So with the PPA amortization, we are talking about a lower amount in the millions for this year.

[Interpreted] Torsten Sauter of Kepler Cheuvreux has another question. How was Wincasa and its properties affected by the weakness of the brick-and-mortar retail business in Switzerland and the integration of Credit Suisse by UBS?

[Interpreted] Well, Wincasa and Implenia is observing the concrete situation right now. We are very close to our customers. Wincasa knows the real estate domain very well and can also -- and is also supported by long-term contracts. Regarding the questions to Credit Suisse and UBS, after assessing the situation, we don't have any -- identified any further integration of the 2, and we did that before that we came to the final signature of the contracts.

[Interpreted] Holger Frisch from the Zürcher Kantonalbank asks: So the free cash flow is then disclosed with minus [ CHF 10.3 million ] and without the effects, then you would have minus [ CHF 18 million ]. Wincasa, Landbank and [ paid elements ] and dividends have also been mentioned. But the last are not contained in the free -- or shouldn't be contained in the free cash flow. How is -- what is the difference from the CHF 130 million versus to -- how is this to be understood? Because Wincasa had a positive cash effect and paid CHF 100 million but CHF 160 million of cash have been taken over?

[Interpreted] Stefan, I believe that is a rather complicated question for you. So I think it will take time for you to answer this one.

[Interpreted] As we have already discussed, the free cash flow is CHF 310 million negative in the first half year. And so we had the CHF 100 million of the first tranche that contains the Wincasa purchase acquisition and other investments also in our Landbank. And as we have already mentioned previously, with Wincasa, we also had then cash and cash equivalents that we had taken over that were related or linked then to creditors, especially. And so as I said, per end of June, we have paid that back. And so this million amount doesn't have any impact on the free cash flow anymore or any longer.

[Interpreted] Thank you very much, Stefan. We can continue to answer other questions. Of course, you may pose your questions any time you wish to do so in the chat. We have another question from Holger Frisch from Zürcher Kantonalbank. Can you -- On the operating cash flow, can you explain the impact on the operating cash flow? We're talking about a cash flow of CHF 348 million minus, especially regarding the liabilities?

The interpreter is sorry but she does not see the questions. They're too quick.

[Interpreted] So I tried to show you the operative cash flow before, but I would like to mention that we have financed the acquisition from our own business activities and the group also disposes of a contract in the amount of CHF 550 million, with over CHF 200 million then of our own cash and so we had the money at this position. And we also had certain credit limits that we took into account. To answer the second part, because of the second purchase price in the second tranche, we were able to do this.

[Interpreted] Regarding the civil engineering, can you perhaps give more background info regarding the improvements? And are there also successful finalized projects? Or are they percentage of completion progression?

[Interpreted] Thank you very much for this question. The division over the last years has continued to improve from a very negative to a very positive result for the second time, by the way. And so we are very happy with this performance. So the significant increase this year is based on our improved operating business. And the division is always still on course and we are making improvements there, too. Of course, we are focusing more on larger, more complex projects, infrastructure projects, and that also means that we have a lot of successful greater or major projects. And that is clearly a sign for value assurance and management claim processes showing or proving that everything is working very well, so very good performance overall.

[Interpreted] Thank you, André. Martin Hüsler of the Zürcher Kantonalbank with us. How do you evaluate regarding the higher construction costs?

I'm sorry, the interpreter does not understand the question because it's read a bit too fast.

[Interpreter] Well, you always have to take into consideration the entire market and then look at our specific market where we are active. So Implenia focuses on very high-end major projects, complex projects and the portfolio especially is oriented towards all urban areas. And so for infrastructure projects, the demand is still great, and the order book for higher construction is also very high. But one also needs to bear mind that we are less active in smaller residential projects. So the inflation of -- in the construction domain, we were able to circumvent this with bundling, but also because of our very active management of contracts.

[Interpreted] Thank you very much, André. From the [indiscernible], how does Implenia react to the weaknesses of the construction domain in Germany? Are we going to be more prudent or cautious regarding the project or perhaps postpone certain…

[Interpreted] Well, the situation in Germany is actually quite well known. There are quite a few problems over there. So we are active in both domains, not only in architectural construction but also civil engineering, for example, maintenance or renovation then of motorways. If you're talking about our portfolio in Germany, well, our exposure is actually very small. We have also taken measures in order to correct this. But you can see that in Germany perhaps we will also know certain opportunities. There are some that will have problems. So maybe those will be opportunities for us. So we are evaluating the market regularly, and we always verify if there are any opportunities. And so when we're talking about real estate in Germany, we have always been very cautious and we continue to be so.

[Interpreted] Thank you very much, André. So Christian Arnold from Stifel. Yesterday, you declared or it was heard that Implenia and North Sea are then shareholders of WindWorks in Norway. What is the contribution in the midterm? And how high are the investments to be made in general? Did the wind turbine energy domain have many challenges? What makes you so sure that this joint venture will be profitable?

[Interpreted] Thank you very much for this question. I think offshore wind industry in Europe is a growing market and the signing of the contracts have positioned us in an optimal manner in order to take advantage of these opportunities. Of course, this is also in line with our strategy where we focus on very high and complex projects in energy. But we also think that this will play a very big role, the wind turbine energy in Europe. And as we said in our press communiqué, we have -- for '23 and '24, let's say that our participation is still a bit limited. So we have time to look into the projects and the business plans to continue to develop them. And next year, we will decide how we want to move forward. I think that is incontested or uncontested that the market is quite great. And so we will decide how we want to move forward over the next months.

[Interpreted] Corporate and other disclose a positive EBIT contribution in the first half year of 2023. Normally, this domain has a negative EBIT. Where does the positive EBIT come from? And is there a guidance for the entire year in this domain?

[Interpreted] So the variations are in a total normal range. And for the first half year, they have been driven also by the IAS and 2019 pension fund liabilities. At the same time, we, for the future, are expecting a comparable level, taking into account that we won't have any particular effects limiting us such as the [ IAS ] 2019. So we want to have optimization of sales costs over the next months and years. And besides the real estate, we don't have any EBIT guidance for the other divisions or group.

[Interpreted] Thank you, Stefan. Coming from [ Andrew Barrowman, Helvetica Insurance ]. For the margins of the new orders, were they able to be raised just as the previous years?

[Interpreted] So the precalculated margin has stabilized at a very high level. And our main focus is more -- we focus more on increasing the margin. You can see that in the books. So we see the improvements of profitability. And we have also set clear objectives for the future. So short term, midterm, 3.5% and otherwise, 4.5%. And we see that our strategy has brought fruit.

[Interpreted] So Martin Hüsler from the Zürcher Kantonalbank says do you think that the negative free cash flow in the second semester before or prior to Wincasa can be recuperated?

[Interpreted] And so I think the cash flow, such as a big company, Implenia, well, we are, let's say, vulnerable to volatility. And so because there are a lot of payments that come in and that usually come in around the end of the year, what's important here is that we keep a positive and sustainable free cash flow and that we maintain that level.

[Interpreted] Thank you. Stefan, you can continue to answer to [indiscernible] questions if you wish to do so. Then [ Polman ] asks from Vontobel, intangible assets in the first half year are below CHF 18 million or they have grown to CHF 18 million, but only we have CHF 119 million then resulting from Wincasa only. So where does the rest of this positive result come from?

[Interpreted] Regarding the CHF 119 million, it's the goodwill for Wincasa. And together with the acquisition of Wincasa, we also had intangible assets such as markets or client relationships for a total of CHF 65 million.

[Interpreted] Someone from the [indiscernible] again. So regarding the construction domain in Switzerland, the mortgage interest achieved or reached a certain plateau. Is it the right moment to purchase an apartment or build a house? Does Implenia expect something in that domain?

[Interpreted] So I think that investments in general in Switzerland are always long term. I think that the land is scarce, but the demand in construction is high and the prices for very attractive areas and sites is very high. But I think that for Implenia, it's still very attractive. At the long term for greater investors, yes, I think it's -- we want to say clearly that it is a very attractive investment. So let's not think short term.

[Interpreted] Thank you, André. From [ Baader Avia ] [indiscernible], for the share course of Ina Invest, which is under the book value, wouldn't it be sensible for Implenia to increase its participation of share in Ina Invest?

[Interpreted] Yes. We are convinced of Ina Invest's potential based on the portfolio. We are still convinced of that. But currently, we don't have any intention to increase our participation. We are already at a high level with over 52%.

[Interpreted] You can continue then to pose your questions in the chat. There is someone open. Alexandra Bossert from UBS. There are a lot of complex, more and more complex projects that are acquired then. For example, the wind platform. How are the risk management? And in the past, you had a lot of impairments.

[Interpreted] So regarding the swimming wind platforms, we don't have -- we have not acquired such platforms. We participated in a joint venture with, currently, a very small, low-risk financial risk. And we are having a closer look to the business case. And we are taking 2 years' time to do this, and then we will think of the further steps. Impairments, well, we don't expect any for the moment. We did not have any, let's say, compensated impairments. We are very happy with our value assurance processes, and we'll continue to expand these. And we can say that with a very good risk controlling that we applied to our projects and assessments have been very successful. And we will continue to move on that way.

[Interpreted] [ Johannes Brinkmann from RBP ]. The synergy potential with Wincasa, can you quantify this?

[Interpreted] So we have the contribution of the margin profile and the turnover margin. We're focusing on that. In the year '22, we had CHF 60 million of turnover and also with synergies, with canceling a modernization and also with management projects. The increase of margin profile, we had an EBIT margin of 10%. And so we expect group EBIT margin of 30 basis points then next year. The increase of EBIT in 2020, we're expecting of a weighting and the synergy effects. And as I mentioned before, we also have a first positive EBIT contribution this year, and so including also the acquisition and the PPI amortization. As of next year, we expect CHF 50 million of EBIT contribution and also with PPA and also potential of synergy of CHF 5 million expected in 2024, respectively, of CHF 10 million as of 2027. Regarding our own capital ratio, well, the Wincasa active is also oriented asset light as we said. So the acquisition, as we mentioned, leads to a more sustainable EPS growth and already as of the first year of activity, meaning 2024.

[Interpreted] So [ Johannes Brinkmann of RBP ] would like to ask a few questions. So the first question, was Implenia, following the damage of the Gottard base tunnel. Was Implenia able to receive more orders?

[Interpreted] Well, we are not involved in the [ shafts ] of the current projects now, but we are active for the second tunnel. And so regarding the repairs then of all the damages, we are not involved in that.

[Interpreted] Another question. In 2023, are there dividends? And if so, how many?

[Interpreted] The previous year, in '22, we had paid first dividends, and we said that it is our endeavor to continue to pay dividends provided, of course, the activity -- the business activities allow for this. So I cannot then make a forecast for 2024. That will be decided then by the BOD.

[Interpreted] Another question. How strong has Implenia been impacted by the rates -- the interest rates?

[Interpreted] I believe I have already direct or indirectly answered this question. Yes, our market environment is challenging, but we at Implenia, with our attractive portfolio mix and divisions, we are very well positioned on the market. And one needs to bear in mind that the prices of the raw materials for construction have decreased. And so with our mix of centralized purchasing and the divisions directly on the projects well, we are well on course. And so according to the contract with -- we have contracts then with the suppliers and then also with the subcontractors and also with the client that also needs to be mentioned.

[Interpreted] From the [ Inset Search ] a question. How have the profitable prospects increased with this reference interest rate? How big is the part of share of the rents?

[Interpreted] So of course, adjustments of rents is optimal levels. So Wincasa is on the site, of course, or is always speaking then together with the owners. And we have a proactive management that's taking care of this whole domain regarding the reference interest rates.

[Interpreted] Alexandra Bossert of UBS asks why are guarantees or warranties in your report no longer reported since 2022, contingent liabilities? And why per end of '22 and June 2023? I presume that they have continued to increase due to the orders and also with [indiscernible], so meaning solidarity liability?

[Interpreted] So we're talking about warranties for [ government ] or also for group guarantees and for current projects. The possibility -- so all this depends on future activities that are not under our control or control of Implenia. But -- And according to today, we don't consider that sort of things will occur.

[Interpreted] [ Nick Andrew Bavire of Helvetic Trust ] has a question. Can you please give us an update regarding the invoicing? Is an improvement to be expected or is expected? Has it occurred in 2023?

[Interpreted] So the whole topic of invoicing, it's a continuous improvement process. We always need to take measures for improvement. And the entire industry has to improve as well, not just Implenia. But here in Implenia, for the first half year, we have made some improvements, and we will continue to do so in the second half year and also in the near future.

[Interpreted] We have one last question that we would like to answer. It is already half past 10. So the turnover, the 2022, compared to 2022 in the first half year, slightly increased. And what are your expectations for the second half year 2024, et cetera?

[Interpreted] So the adjusted turnover has increased. That was a positive effect. We were thinking more or we were expecting more 0 per spend. We would like to continue to develop our turnover, but organically. And we hope to be able to increase a fair bit. Perhaps one final comment. What is important to us is profitability prior to turnover. When we talk about profitability or turnover, well, the first priority at group level is always profitability and not the turnover.

[Interpreted] Thank you very much, Stefan and André. I would like to conclude our Q&A session. So of course, you can ask further questions to the usual contacts. And now, André, the floor is yours.

[Interpreted] Thank you, Silvan. I would like thank everyone for attending today's media and analyst conference. I wish you all a nice day, and goodbye. Thank you very much. [Statements in English on this transcript were spoken by an interpreter present on the live call.]