Implenia AG (IMPN) Earnings Call Transcript & Summary

Good morning, and welcome to the Analyst and Media Conference on Implenia's Half-Year Results for 2025. We are delighted to present our results to you once again here at our headquarters, Implenia Connect. I would like to welcome those attending in live stream. My name is Silvan Merki. I'm the Chief Communications Officer at Implenia. Our presentation will be in German. You may also select the German -- sorry, the English translation in the stream. And you may ask your questions here in the room or in the stream chat in German or in English. Today, we shall present the following: First, our CEO, Jens Vollmar, will give you a business update on the half-year results, followed by our CFO, Stefan Baumgartner, who will then guide you through the financial figures. And this will be followed by the key investment highlights and an outlook by Jens Vollmar. And finally, we will be happy to answer your questions in the Q&A session. And now I hand over to Jens Vollmar. Jens, the floor is yours.

Thank you very much, Silvan. Can you hear me, everyone? Yes. So I would like to welcome you here to our headquarters of Implenia. I'm very happy to see you because I saw that a lot of people do not attend physically because it's also a sign of appreciation. So we really appreciate that. And I think, 6 months in the -- first half year, we had a lot of, say, challenges and also a lot of highlights. And I must say, it's our employees who have contributed to this. So now let's start with our operative highlights. And so what has preoccupied us? So first of all, it was the market. So the market has developed in a very positive manner. And so also, let's say that the framework conditions have always worked well. So we also had investment hunger, so to say, in all divisions, we were then able to gain a lot and acquire a lot of very good projects, and we also had many mandates. And what was -- ideal was the timing of the refinancing of our bonds. So I think just a few days, Donald Trump had then communicated his new tariffs or his new rates, and that would have been less beneficial. And so we are happy that we were able to have a head start and do it in advance because that also then strengthened our financial structure. And so I think it is the case to say that the construction industry is quite unproductive and inefficient. And so digitalization and artificial intelligence will help us in more and more projects, not only in the back office, but also where we have had a lot of AIs, applications already ongoing, but this will help us in the long run. Another highlight was for sure also the role of the CEO at Wincasa with Philipp Schoch. We have found someone who is -- who has the know-how -- necessary know-how and who was able to take over that role. And not to forget also our operating model has been reduced from 4 to 3 divisions. And so that also required a lot of work, and we were able to do that. And last but not least, also the Cham Swiss Properties was created that was very important for Implenia because Ina Invest and the Cham Group were able to merge into a hopefully bright future. So at the financial ledger. I think, this is what interests most of you. The EBIT was -- or has been increased to CHF 57 million by almost 13%. That's also the result of the good work that you have performed and also our revenue has increased by 6.6%. And so the highlight in these results that also show the dynamic is also the order book with CHF 7.8 billion. That's a new record that we have. If we compare to last year, then we have almost -- not only 10%, but even almost 14% increase. And also the EBIT target -- the EBIT guidance of CHF 140 million confirmed for the full year 2025. I will now then move on to these results along the 3 divisions. Buildings is the real estate sector of Implenia. And also civil engineering has to do with everything that has to do with civil engineering, so tunneling, engineering and also just streets, roads. And service solutions, which comprises engineering, planning, logistics and property services for efficient and sustainable real estate in urban centers. So we have made a comparison to the previous period -- to the figures of the previous period. And so what is interesting here was very positive because since 2022, we had a lot of private clients. And so we didn't have -- or we had, let's say, a decrease of the orders. And so now everything is going up. It's very good with respect to the KPIs. And so we had negative prefinanced capital, and that also helped us. So what was also positive was the development of the EBIT. You can see then the significant increase, which is -- thanks to the completed real estate transactions, we were able to improve the margins. And also during the first half year, we also had real estate transactions that have also contributed to this result. And because there was also questions in this respect, well, it was also thanks to the participation in earnings from Cham Swiss Properties. So what does the division do at all? A lot of people think just real estate or the flats, apartment, buildings, et cetera. Well, that's only a minor part. It makes about 20% of our activities -- business activities. We have a lot of greater projects. So here at the left -- top left, you can see it's the Kantonsspital Aargau why is it still there? Because it is the greatest project that we have that is being executed and that will be handed over next year to the owners. And we have here a dedicated unit for health and also lab and also one for data center. And you will see the newest data center for a new client in Schaffhausen and Beringen. This is also a part or, let's say, a mandate or a project of our order backlog. And why is the data center very important for Implenia? Well, during the history of the company, we have made about 8 such data centers in the last year. And so that shows a bit the trend for the future years to come. And so we have a dedicated team who takes care or who deals solely with data centers and with the planning of the whole project. Civil engineering. So for the first time, we have reached an order book record high of CHF 5.2 billion. Why is this important? Because this volume is, let's say, disclosed in the sectors where we focus. So for example, tunneling and also bridge construction. And so infrastructure and the revenue was also higher than in previous year's level. So we were expecting a higher margin, of course, but I believe that we will obtain, or we will achieve all of our goals that we have set. And here, also certain highlight projects that prove our competencies or underline our specialties. There's a great demand already in the markets and that is pushed by these great infrastructure projects. So as an example, we have the so-called Kabeldiagonale in Berlin. That is one example, and we were able to do that. Thanks to innovative and progressive in technology, we were able to advance and do this project, thanks to that. And just like for infrastructure, we really have a lot of demand for greater projects, especially for renovation or for new constructions for cable infrastructure. And for example, the electricity that needs to come from the northern part of Germany to the southern part and also smaller -- or let's say, tunnels with smaller diameters, everything is very interesting. What also shows us that how good we are in tunneling is these projects. So we have one in Norway. So you have here projects. So we have a tunnel above the sea level and also with all kinds of shafts, as you can see here and the connections. You can see -- this is in Stavanger in Norway, in Northwestern. So if you look the whole West Coast, all the infrastructure that goes all the way to [indiscernible], you can see that these projects seem very big, but they are just a small part of what is still to be expected. And so you can see also the other bridges that are constructed. For example, this one at the lower bottom here, the lower corner to the right in Germany. And there are a lot of bridges that need to be renovated and there are -- there's a great demand for new ones. So we are there. Let's come to the third part, service solutions that also generates higher margins and bears less risks, and that's where we want to grow. And we say -- we can see here that Wincasa makes a great part of that. And compared to the other sectors or the other divisions, well, here, we've got the assets under management. So in the first half year, what is interesting for you probably is that we were able to gain CHF 83 billion in assets under management and through recently acquired mandates that are not yet reflected in this figure, meaning another CHF 3 billion. And that just marks and emphasizes all our activities. Just as we have invested in Wincasa, we also want to verify if there is any other growth to be done in other sectors or with other perhaps new units. And so here, other projects that show you why is all of this very relevant? Why do we try to compensate or to add services to these divisions because we can use or benefit from the synergies. Here, for example, the shopping mall in Schonbuhl, Lucerne that belongs to the Swiss Prime Site. Wincasa is the one who administers this. And then Planovita is the building -- technical building agency -- or let's say, company that takes over all the planning and division of buildings is modernizing this whole building here. So Stefan, before I hand over the microphone to you for the finance, I have summarized these highlights in a video. So let the film rolled. [Presentation]

Well, hello, everyone. So all divisions performed well in the first half of the year, and that enabled us to further improve our results. So in the first half year alone, we were able to increase our order backlog by CHF 990 million, to a total of CHF 7.8 billion. This corresponds to an increase of 14.6% compared to the end of -- or with the end of 2024. So we have increased revenue to CHF 1.9 billion in the first half year here, representing an increase of 6.6% compared with the previous year. And due to the acquisition of additional shares in the H41 consortium in the second half of 2024, the change to full consolidation took effect. And real estate sales also had a very positive impact on our earnings. The foreign currency effects were negligible in the first half of the year. Natural hedging takes place in the operating units. In the first half year of 2025, we generated a very strong EBIT of CHF 57 million, which represents an increase of CHF 6.5 million or 13% compared to the same period of the previous year. This was achieved through more profitable business across all 3 divisions. In relation to the sales of CHF 1.9 billion, this results in an EBIT margin of 3.1%, which corresponds to an increase of 0.2 percentage points compared to the previous year. The financial result has improved slightly due to lower foreign currency losses, which were partially offset by slightly higher interest expenses. The consolidated net profit increased by 26.1% to CHF 33.3 million, which is a strong result considering the seasonal nature of the business. In the first half year of 2025, we had a free cash flow that amounted to minus CHF 168 million. The free cash flow was significantly influenced this half year by a higher operating result, the negative development of the net working capital due to lower trade payables. And third point, the successful completion of real estate transaction. Well, our goal remains to generate a sustainable positive free cash flow through profitable operating business in all divisions. At the end of June, the cash and cash equivalents amounted to CHF 272 million, which was lower than usual for the season. However, still significantly above the previous year's level of CHF 218 million, corresponding to an increase of CHF 54 million. Other current assets increased mainly due to higher contract assets. We have taken the appropriate measures and expect that additional receivables can be settled more quickly as a result. So we have liabilities then from services increased, compared with the previous year due to additional advanced payments for new projects with working groups. And in spring, we were able to refinance the CHF 175 million bond maturing in autumn 2025, ahead of schedule. And on attractive terms with a new 222 -- sorry, CHF 220 million bond with a 4-year term at an interest rate of 2.5%. We also repaid a promissory note in the amount of EUR 30 million -- sorry. As at the 30th of June 2025, the company had all syndicated credit facilities of CHF 200 million at its disposal as well as additional bilateral credit lines. Other short-term liabilities increased due to the bond maturing in March 2026. Despite the dividend payment, equity increased to CHF 661 million, corresponding to an increase of CHF 59.5 million, compared to the previous year. And the equity ratio adjusted for the fixed term deposit from the bond was at the 30th of June 2025, 21.3%. For more than 4 years, we have generated a consistent operating result in every half year, even in the first 6 months, which are seasonally weaker due to the nature of the industry. It should also be noted that Implenia generated a strong positive free cash flows in each of the second half years. The free cash flow, which was seasonally negative in the first half of the year due to industry factors, improved to minus CHF 168 million. That is an improvement of CHF 40 million compared to the same period last year. In addition, we have steadily increased our equity ratio over the last 4 years. Implenia expects its strong operating business to result in a positive financial development in the long run. Implenia increased its EBIT by 13%. The financial year '25 guidance anticipates an increase of 7%. Based on this business performance and the outlook for the second half of the year, we confirm our guidance for the year -- financial year 2025. In the medium term, we continue to aim for an EBIT margin of more than 4.5% and an equity ratio of 25%. And now back to Jens for the key investment highlights and the outlook.

Thank you, Stefan. So now I will explain why Implenia is still an attractive investment opportunity and for 6 reasons. First of all, the markets. I have already mentioned that we expect sustained growth in our target markets, driven by the structural trends and rising demand. So there's urbanization, renovation, also an expansion of renewable energies and also high demand of residential possibilities, et cetera. Second point, we are a leader in specialized profitable segments, such as tunneling, healthcare and property management. Also in the data centers, we are one of the leaders and to mention -- just to mention a few examples, and that gives us a clear advantage in a fragmented market. And third of all, I believe it is safe to say that with our risk-management approach, with our value assurance, which we master quite well, I can say that our business model is diversified in terms of offerings, customers, contract types and markets, and this ensures resilience and stability. And fourth point, thanks to our value-assurance approach, we have become very resilient versus, let's say, the volatility of the market. So we have a robust project pipeline with attractive return potential, which minimizes the risks and improves our margins. We have always had this situation in the past and in our domestic markets, we have always been invested in our domestic market. And when you want [ construction ] projects to invest in there. We also have various types of contracts and also diversity and also -- because we are not only active in one country, but geographically spread, and that makes us very resilient and strong. The fifth point, also our management team, which is worth mentioning. So we have been working with them for years now and in a very successful manner. So they have a different background that we have, but this all leads -- or let's say that this cooperation leads to a very good decision taking, and we also have a focused growth energy. This is designed to deliver long-term value for our investors. And I will come back to this point later. So the outlook. Well, good news. We have a very good euro construct with that infrastructure in Germany. That is a very good news. And the markets are really gigantic, compared to our market share here in this enormous market. So 1% is a lot of volume. But nevertheless, we don't want to just have a growth of 1%, but we want to become significantly greater or grow -- have a significant growth. And so we do not -- it's not the price, but a clear differentiation that will continue to drive our growth. And so it's important that we can do this differentiation over the next years. How can we do it? Well, we don't want to just focus once that someone has planned his project, and someone wants to be the cheapest. That is not our goal. What we want is to focus on complex large-scale projects, a partnership-based contract, execution models and also our design and business institute has been expanded as well. And we have -- in the design, and we can then include our execution know-how, and then we have less bad surprises. And another tendency that we say, not only in Germany, but also in Switzerland, we can also differentiate ourselves, not just with the cost of the construction, but also with our -- but especially with our specialization and our know-how. So people have -- our employees have to show that they are competent, that they also act in a very cooperative manner. And then they go on to the project, and then that is when then the cost of constructions are established. And that's our approach. And we also have a new standard from the SIA in Switzerland here that was published last year. And that is the model that we follow. And second of all, we also have a specialization in building construction and civil engineering. That's how we want to be perceived, for example, with healthcare and also research labs. So how can -- how do the patients move or what are the needs that is a completely different, let's say, initial situation than someone who just wants to negotiate the price? And then we've also got defense. Why? Because we have had a high demand. We have a certain expertise in that area because we have done some projects like Emmen [indiscernible], the airport of Emmen. And also this billion package has been used, and they have also invested for additional defense measures by our government. And so now we have started to be prepared. To get prepared for this, we have recruited specialists in this area. And so we are expecting to do more in this sector. And also internally, I don't think that anyone can come and say that you are not a specialist for tunneling. After everything that we have done, we are in high demand at the international level. And there's another area in Europe. We are also the leader in the pump hydraulic plants and -- because we have the know-how for that. And with all of these competencies, we also want to grow in a selective manner geographically. And last but not least, I said it, we understand buildings in the infrastructure because we also do the administration. We know what is needed for life-cycle costs. We're managing those and everything comes into, at a very early stage and into the planning, all this know-how that we have. And so that is why everything is still very relevant. And we want to see, besides the organic growth, if we have other further opportunities organically and inorganically. And then I would like to come back to the next group. Implenia is growing, but we grow with differentiated offers. And next year, we will focus on our growth with this differentiation in order to achieve our higher margin expectations. So I would like to come to the conclusion of my part. Silvan, the word -- or the floor is yours.

Thank you very much, Jens. So we have some dates here for -- in our calendar. So we have the year-end results in 2025 on the 4th of March, 2026 and investors -- I'm sorry, and also our general assembly on the 31st of March, 2026. And here are the contact data for the people if you wish to contact them for questions. And now we'd like to move on to the Q&A.

And now we'd like to move on to the Q&A Jens and Stefan, could you please meet me here come to me here on the stage. So whether you would like to post your questions in German or in English, it doesn't matter. You can do it here in the room. And on the chat, it's possible. Just please -- and to your questions in the chat, and we will then have someone who will give us a sign when there is a question then to answer. So who would like to take the initiative, who would like to post the first question here in the audience. Here I see a hand that is raised on the left, please just say who you are and please ask your question.

Alexandra Bossert from UBS. I have a question regarding Surface Solutions. So Mr. Vollmar, you said that you endeavor growth in the preaudit parts and also in Wincasa. Is there going to be another mergers and acquisition. If so, and what are the financial or what is the financial framework?

Well, that's one of the possibilities for growth. We also have an organic or inorganic growth activities. We have in [indiscernible] I don't know if you know that. We have certain buildings for -- that have to do with physics and acoustics, and we have a great demand here. So that is the -- that is actually the organic. And of course, if there are other possibilities, of course, we will have a look into it. They have to match then our level of know-how, of course, and also match our portfolio. And if we have opportunities, of course, then we will have a look at these projects for sure.

Yes. But for the investment-grade rating, in order to defend that, would you be also ready to increase the capital for an M&A?

No, that is not a topic at the moment. Absolutely not.

Are there any other questions? Of course, you may ask questions also in the chat. So to whom may I hand over the microphone. Holger Frisch of the Zurcher Kantonalbank.

So question to Civil engineering. You have had a very good proportional growth and also a very good turnover sales. My question is, what role does civil engineering play relating to those 4% of margin?

Thank you very much. That's a very good question. So first of all, the margins, the reduction of the margin is really in a minimal area, and it was only then for the first half year because we always have these -- because of the seasonality. Are we happy with these margins? No, but not -- we're not dissatisfied in every area. So we still have growth in tunneling and also with bridges. Those are very attractive business activities for margins. Of course, we have a certain potential for improvement. We're working on that. And civil engineering is still one of the very important significant drivers of Implenia. Over the next years in Europe and also in our domestic markets, we will have infrastructure construction. So we are convinced that we will be able to improve our margins in that area because of the higher volume, and you see it in the order book and also the precalculated margins. All the projects we were able to gain or to acquire have a higher margin than in the past. You probably noticed this. We have a record or let's say, a highest value for the first half year, and that is thanks to the new projects that we have acquired. And so Civil Engineering will remain or continue to remain a very important part to add something, it's important that the new projects that we are acquiring are more in specialized areas. And so -- and they're more like Me Too projects, the Me Too projects are the ones that we want to reduce. And so the development of the margin will be predictable in the midterm.

Thank you very much. To whom can I hand over the microphone?

So, [ Thomas Bommey, VVAG ]. So I have a question to Civil and Engineer. If you have a look at 2023, you had 2% in 2024, 2.2%. Is it safe then to deduct or to interpret this that all projects are still included with a very low margin because you are the absolute specialist when it comes to tunneling or also urbanization or even the construction of bridges. I mean, that is something that needs to be verified in the future. There are not very many, let's say, companies who are capable of doing what you do. And so if you can tell me in the midterm, what your margin -- what is the margin you're endeavoring or do you want then in civil engineering in the midterm?

The 7.5% is the margin of the projects, Thomas, that is before we then charge then the functional costs. So because, of course, we won't have 7.5%. So -- and last but not least, we don't guide our divisions with margins. But of course, as you said, Implenia is specialized in tunneling and so we also have higher margins. And then per end of the year, we will also see an increase then of margins. There's my colleague here in the front row who is then noddy with his head. And so otherwise, the growth would not be pushed if we thought that we wouldn't be able to achieve this. And please do not forget that for the fast -- the first half year cannot be compared then to the entire year because of the seasonality. There are certain prescriptions, and there are a lot of things then to take into consideration. So we just have to follow up on the rest of the year to have a concrete picture.

Okay. Another question here in the audience.

I have a question regarding the Buildings division. So there, you had a very good EBIT. Could you perhaps do a breakdown of that EBIT. How much has come from the transaction, perhaps also in comparison to the previous year? And how much was the Ina transaction or how much is allocated to the Ina transaction, how were the margins?

Yes. So the Swiss properties that was mentioned by Stefan, that is very low, let's say, million figure. And so that was not a great driver of the change. But the rest of the result is composed of -- is more of half of the result comes from the infrastructure and another part from real estate transactions. But if I'm just to talk about infrastructure that made about 10% without the Real Estate part. Is that correct?

Yes. Yes, absolutely perfect.

Okay, to the right at the back of the room.

Torsten Sauter, Kepler Cheuvreux. I have a question to Mr. Vollmar, if I can pose my question directly. What would you do -- or what will you do differently than what your predecessor did what I noticed is that there has been then say, less staff now...

I don't think it's about differentiation to history of what we have done in the past. We just look at the next phase, what is right for Implenia and the topics that we have, like I said, we want -- we emphasize and on differentiation. It is also due then to the history because, while we went through a phase where we went through a transformation phase. And in the future, we want to grow. And how we go about this? Well, that's what I tried to explain. And yes, of course, we have also lost certain employees, what we want to do and what we need to do is we have to make sure that we become -- or that we work in a more cost-effective manner. It's very important that at the levels of the functions that we can have a very cost-efficient support for all of our operative tasks and activities. And that is one of the drivers or one of the reasons why the number of employees in the first half year has been reduced. That was a simple outcome, and we will see what the future outcome will be. But as I said, it's not a question about doing something completely different than what we have done in the past, but we want to know what is decisive of what is very important for Implenia.

Who else would like to pose a question. Here at the front, Christian.

[indiscernible] You mentioned the example in Scotland then with nuclear plant. We haven't spoken much about Scotland. We have spoken about Switzerland and Germany. And you also have Austria and the Nordic countries. Will Implenia expand more in the future? Geographically speaking, will we be able to see more activities in other countries where you are not present, be it with buildings or civil engineers? Well, I know that buildings are concentrated more in Switzerland and Germany. But is that also something that you might consider?

Well, that's what was mentioned, yes, on the last slide. Yes, geographically, we want to grow in our lines of specialty. I mean, it is -- okay, you can say that 99% of certain projects than just are not interesting for us. But if we can have -- we go about it selectively, and we verify, is it something that we can do with the partnership, for example, and if we think or believe that we are successful, then we will do it. Why not infrastructure? Well, in infrastructure and from the past, we know that we have a lot of experience. Organic growth in infrastructure is difficult because you rely on local partners, subcontractors. And so you have different materials and also companies. And you cannot offer that as, let's say, a general total contractor. You can't say, I will construct that anyway, so you need to know how you need local partners. You also need subcontractors. And you have to also better understand then all the regulatory instances or [indiscernible]. In Real Estate, it's easier. They have a lot of practice. You don't have thousands of suppliers. You just have -- you need a very good team who can then lead the projects and you have a bit of administration to do also. But is geographically much easier with civil engineering. So it was Civil Engineering, not Real Estate, I was talking about then in infrastructure. And so of course, we want to open up then for civil engineering, but it doesn't mean that we are completely shutting the doors. Now we are still open -- but let's just say that for the moment, we don't have any other countries in view only the ones in which we are working for the moment.

So last question, so perspective. You were speaking about the infrastructure in Germany and also about defense. You said that you all want to benefit those activities. I'm sure you're not the only one. But what is your concrete strategy? What are the measures that Implenia wants to implement to have their share of the pie?

Well, we need to see what are the capacities in Germany and what are the expenses because we have the public -- the government has a lot event of demand there, but we will, of course, be able to benefit with an increase of our revenue, and we are recruiting teams and also staff that are capable then of leading these projects, but it will have a great impact also on the level of the price because we don't have the capacity today to be able to execute all projects quickly. So we have two effects. We are an attractive employer and employee of choice. Our image in Germany is different than 5 years ago, we have invested a lot in the markets and for the building up the markets in Germany. And today, we are able, through cooperations with high schools -- sorry, with universities, we are able then to recruit a lot of engineers. And besides our infrastructure, we also have something we are building up for these special utilities. I mean I think -- we have about 10 years of modernization experience. And today, we have a network then of branches who work in their own markets, and they work on other projects. Of course, they have their markets. And in Switzerland, we have -- in Switzerland, we have had the modernization that has been built up parallel to this, and it didn't have any impact on the other projects. And so we are going to do that. And just as I said, for the data centers, for example, we are constructing health care and labs and also an organization unit then for defense. And these projects are going to increase. So we are doing various things. The market is very big and 70% more or less, I believe, are projects where the prices or let's say, the cost will increase. And so we hope that by entering in these markets or perhaps and winning these tenders or these projects, we will be able to increase our margins, among other things.

Another question from [ Lukas Baum from Tigris Capital ].

So after a growth of 6.6% in the first half year, based on these growth expectations, what are your expectations actually for the entire year?

So we don't give any forecast for the growth. We have our guidance of that I mentioned today, and we can confirm that. And what is also to be said, well, in the midterm, we will also increase our revenues. I think that is a clear thing, but I don't want to make any forecast then for the concrete, let's say growth expectations for the entire year. You see in the market based on very attractive volumes, a general improvement, pricing margin situation and can Implenia now do more cherry picking. Well, that's what we are trying to say or to convey actually because of all this, that's why the environment is so, let's say, agreeable, we can focus on the partners where we can say, well, these are partnership contractual models in Switzerland, we call it, a flat run or a race. And so it's not just we are being called upon them for an execution of a project and they -- it's just all the question of negotiating the price. You can see it in the -- in the past, you have lose-lose and win lose constellations or bad quality or all of that, that had led to projects. So what we want we want to create added value also for the owner. We want the owner to be happy in the end, and we also want to be happy. And empirical data shows us that these kind of contractual models is beneficial for all the involved parties, and we don't want to have, let's say, a side contract just to cover some risks. So we have become more selective. And we see that despite the very, let's say, selective choice that we do, we can see that we still have a potential then for growth.

Mrs. Strasbourger von Ananda asks question in English.

[indiscernible] in 2026. And by how much can you expand capacity going into 2026?

Well, also, we're not going to give any guidance on the order backlog. But what is clear is that once again. And we have -- there's almost 3 months that have passed. We have had a very positive order backlog also in infrastructure and it's important to emphasize this because infrastructure is also a very important part of the group and it has shown some growth, and it will be able then also to continue on this growth path in the second half year. That's a positive development and also infrastructure in Germany, that's the good part about it. We have not only growth in Switzerland. We also have some in Germany, although they are sort of behind -- somewhat behind but we think that our competence offers are still attractive.

If I can add my 2 cents. So do we have the resources? That is the question. What is also important to mention is that -- it's also very scalable than projects. So we have our core competencies then for certain projects, but we also have subcontractors in our partnership network and they have worked for years with us, and they have a lot of experience. And so we can do -- it's also scalable the projects that we do and that's beneficial.

Drivers for the margin expansion to 4.5% and beyond? And is that likely to be linear? Or is it going to be back-end loaded to '27, '28 and beyond?

Well, those drivers, it's nothing new. It's nothing surprising actually. What we have to do is then to improve our contemporary business, our present business. It has to do with value assurance. So it means that we want to select the projects that bring in a higher margin and new models organically, non-organically, Wincasa was also a very important part of that with Wincasa, Plano Vita, building construction, logistics and so we have been able to do activities with a higher margin. And we are then building up or setting up then this organic growth, and it could also happen organically or inorganically. But anyways, we're on the right path, perhaps with an M&A, it would last -- it took a bit longer, perhaps within M&A, it would accelerate things.

Can you perhaps be a bit more explicit about the measures for the improvement of the net working capital?

So we have already taken certain measures. I say the first one is for projects that have to do with tunneling, where we have geological changes with, for example, leaks of water, something that a very good example because I think that's one that everyone will understand is, for example, with the bore machine at the front, when you see them turning the rocks, sometimes you have greater rock particles. And you have -- you have additional cost because you know that the bore head will then be used much quicker. And that is something that we have developed ourselves. So we have a camera technique that measures the rock particles. And then if it is bigger than what we usually encounter in that case, it already starts recalculate and that is something that we can re-invoice okay. So intelligent [indiscernible] have noticed that the rock particles are much greater than usual, and so it recalculates the costs. As of next year, what we are going to introduce is also an internal interest rates for the incentivation then of projects or I think that we are of the opinion that we can emphasize this. We've had incentive structures within the net working capital. But what we want to do is, for example, there are quite a lot of measures we could do. But one is that we can for example, change or just -- or charge then the interest rate then internally because that is when the employees will notice the capital cost something and that Implenia cannot do everything for free.

Martin Husler has another question regarding Buildings.

Will there be more -- so the question to buildings. So during the second semester, will there be more purchases of land? And what are your expectations for the redevelopment for the whole year?

So we have purchased a new plot. So real estate is going to remain a very important part of our strategies. So we have CHF 30 million to CHF 40 million of EBIT in a very sustainable basis. And so we have to continue then to invest in real estate. So we had a discussion on strategy lately. So perhaps we will not do much in greater areas because there aren't that many existing anymore. But there are a lot of opportunities in residential buildings for example, where Implenia can use their local footprint, a very good example that we had, the sales that we had done was a real estate transaction that we had done 2 years before, but it worked so well that we were able to conclude this. And I think that everyone agrees the earlier days, we wanted to know a question, is living in Winterthur something interesting. And we -- people were not -- were quite insecure. No one really knew what the market in Winterthur would be like, for example, this huge industrial building that we had, well, we were successful. And so I believe what we do, we try and verify if we can also have a look in the peripheral areas. Is there something to do? Is there perhaps a potential project? What does it look like? And we assume that we will do something smaller perhaps also in the future be it on the purchase side or on the buy side or on the selling side.

Thank you very much. And so we have a question then from -- which external and internal factors of the company do you base then the significant increase of order backlogs and which indicators do you use internally then for your order backlog for the next quarters?

Well, you need a client who says that Implenia is the right partner for this project. That's what we need. So we have an increase in the public sector. It has nothing to do then with politics of environment, but it has to do with technical competence. And the IPAA projects, we were able to gain and to win for example, otherwise, it's just the typical economic drivers that are important or relevant. And so urbanization and also infrastructure within the cities and all that -- from which we could also benefit. And so what we do is, of course, we also have a look at the backlog from months to months and to see -- and that's where we get our transparency. We know so which are the -- what are the projects that are being tendered, which ones are being executed in the value insurance. And so that's the ones where we see then from the tenders? Have we won or have we gained a project or not?

So thank you very much. [ Cairo Capital ] asks the organic growth of the Civil Engineering business excluding the consolidation of H41-Brenner to Brenner based tunnel project?

The order book or are you talking about revenue?

It's not specified.

Okay. Well, well, because otherwise, it wouldn't make sense, would it -- the CHF 100 million are majorly from the H41 tunnel activities, and there's a slight increase for the rest.

Can you explain the increase in contract assets? And when do you expect it to normalize?

Contract assets. Oh, I need your help on that. What does that mean? In German, oh, you mean the positions in the balance sheet, active assets or passive liabilities or what do you mean? The interpreter cannot hear the person in the audience, unfortunately, not using the microphone. So you mean invoiced. As I said, well, our net working capital in the first half year has increased slightly. We need to improve that, and that is driven by the claims especially and also the geological changes. And so it takes a certain time to invoice that and that is the main driver or let's say, the main driver of these additional let's say, orders that we -- that need time then to be invoiced and it depends also on the volume. And so that is the main driver. And we are focusing and making sure that in the next half year, that will decrease.

We have questions -- for a few last questions. We have time. Sorry, for a few last questions here in the audience. I see a hand at the very back of the audience, [ Blaisehub Arnold, Infill Pension Fund ].

To a call for tender, do you already know in advance what you are not doing to do yourself, but subcontract. And in general, what percentage of the work do you subcontract and what margin is left when you do so?

I think you have to differentiate between Infrastructure and Civil Engineering. Thank you for the question. So how big is the -- so the own in Infrastructure, well, it's lower because we have so to say, ready parts that are already done or preconstructed in subcontracts. So you have others who works with metals and then they come then afterwards. It's also a very low, let's say, a figure that -- where we are able to execute. In Civil Engineering, we have a higher value creation because we have a lot of blue collars. And so when we come to the tenders, we first verify the parameters. So you have a demand then for planning, then sometimes we also have a draft and of the construction contract and do we have the right person then for the treatment then of the tenders and for the execution. Are there any no-gos in that contract where we will say very sorry we cannot sign such a contract, so we don't even start with pine in our calculation. So what are these subcontractors who are then available? Do they exist? Do they have the right know-how that we want? There are certain that are able to execute this task or not? Or is there a certain competency with certain subcontractors? So those are the typical questions. How high the percentage is the -- sharing percentage is? Well, it depends. Sometimes we do things ourselves. Sometimes, we find something who can execute the work for us. So we know what we are able to do at that moment, but it can also change. And so it's not the greatest question that preoccupies us then in the tender, let's say, during the project selection meeting. The first question that we ask is, do we have the competencies, who is the client who is demanding this project. So those are the standard questions that we respond to. And the margin that remains, well, you will see it in the results, won't you.

Are there any more urgent questions? Otherwise, we will remain at your disposal out there because we are about to close this Q&A conference. So thank you very much for your questions, and Jens and Stefan, thank you for the answers. And we are somewhat coming to the closure of our conference, and we will expect you for our lunch outside the room. And so thank you very much for having been here. Thank you very much for your trust in Implenia. [Statements in English on this transcript were spoken by an interpreter present on the live call.]