Landis+Gyr Group AG (LAND) Earnings Call Transcript & Summary

What a punctual audience. Fantastic. Well, good morning. And welcome to Landis+Gyr's second Capital Markets Day. I'm Stan March from Corporate Communications and thank you for all of you joining us here at the Metropol in Zurich, and thanks, and welcome, and hello to those of you that are on the audio webcast. We've got a straightforward agenda for you today. We're going to have a number of presentations, and Richard will introduce the speakers in just a moment. We have a coffee break planned about the midpoint of the day. And then we wrap up with a series of time, plenty of time allotted to answer your questions, and we hope you take advantage of that. During the coffee break, we have the opportunity for you to see a number of our products and solutions, some of our sustainability efforts and work. And that will be in the room which is out the main door to the left and a quick right. If you got a cup of coffee there or a croissant this morning, you'll know exactly where it is. We'll go see some of our experts. We'll see Hans and Igor and learn a little bit more about some of the things that we're going to talk and some -- in detail about in these presentations that will offer a further opportunity for a deep dive. One piece of housekeeping information. You'll notice in the press release, which was issued earlier today as well as in the last page of your presentation book, we identify and list there dates of interest. You'll notice that we've moved forward the date of our unaudited full year 2019 financial results to May 6. We'll still publish our annual reports on May 8. But on May 6, we'll actually issue unaudited results and the associated activities around that. So please put that into your calendar. All right. With that bit of housekeeping under control and out of the way, what I'd like to do is introduce our first speaker, Landis+Gyr's Chief Executive Officer, Richard Mora. Richard, over to you.

Thank you, Stan, for that introduction. I, too, would like to welcome everybody this morning. Joining us here in Zurich, indeed our second Capital Markets Day as well as recognize those that may be on the webcast as well, welcome. Before we get into the day's presentation, I wanted to mention that earlier this morning, as Stan alluded to, we did release announcement ahead of our Capital Markets Day, and there are a few points that I would like to make. Operationally, we had made some really good progress on several fronts, reflecting in a profitable -- profitability improvement in both EMEA and the APAC regions. And yes, while we do see headwinds in the U.S., temporary in nature due to regulatory delays, and with this in mind, we did confirm -- reconfirmed our fiscal year '19 guidance with expected results likely to be around the lower end of the guidance ranges, again, due to the aforementioned regulatory delays. What's important here is our strategy. Our strategy remains unchanged, and the business remains solid and is well-positioned to deliver on our 3 growth platforms, specifically smart metering, grid edge intelligence and smart infrastructure. And I will talk a lot more about that in the coming minutes. Well, indeed, we have a lot to cover today, so let's begin. For those who may be new to Landis+Gyr, I'll offer a few quick comments about the company, followed by a quick introduction of the speakers who will present today. While we do have our headquarters here in Switzerland, we are truly global, having more offices in more than 30 countries worldwide, we indeed are the leading global provider in AMI solutions. And in 2019, we were selected by Frost & Sullivan as the global AMI company of the year, I'm very proud to say, for a fifth straight consecutive year. To know Landis+Gyr, you have to know that we have a broad portfolio of technology, underpinned by our R&D spend which since 2011 equates to just over USD 1 billion. We have a large utility customer base with more than 300, repeat that, 300 million devices installed globally, of which over 100 million of these are connected intelligent devices. And you may not know that we have a unique position in the industry where we have over 15 million meter points under long-term managed service contracts. And Prasanna will cover this in more details as a part of the Americas overview. We indeed have a very storied history going back more than 120 years where today we service more than 3,500 utilities and retailers across the globe. Lastly, we are organized in a regional structure. And if you look at the fiscal year '18 net revenues, and again in U.S. dollars, the Americas contribution $986 million representing 56% of the total. EMEA reported revenues of $632 million or 38% of the total. And closing out with Asia Pacific and 8% of the revenues equating to $147 million. Now moving on to the speakers today, many of them who you know in order of presentation: Prasanna Venkatesan, the EVP of the Americas, really leading the Americas team and will give an overview of the region; Susanne Seitz, the EVP of EMEA, doing a really nice job leading what I call the turnaround, the turnaround efforts in EMEA. She will talk about the efforts to position the region for continued success, including the need for continuing the profitability improvement. Steve Jeston, Head of Asia Pacific, leading a successful transition to profitability. He will give an overview of the region and the necessary steps again being taken to realize the necessary improvements. Jonathan Elmer, our CFO. Jonathan, 23 years with Landis+Gyr, and I must admit I feel a great deal of sadness when I reflect on the recent announcement of his retirement from the company over the next 12 months. Jonathan has been a significant contributor to Landis+Gyr's success over these 23 years, and he played a very key role in our 2017 IPO as the group CFO. We are fortunate to have found such a capable successor in Elodie Cingari, and we'll be announcing the exact date of the handover later in 2020. The next several slides, I'll touch on the industry dynamics, cover our strategy and performance. When I think about the industry dynamics, I'd like to leave you with really 3 numbers. First being 75 billion, that's with an B, 75 billion. The idea being by 2025, 75 billion IoT devices communicating and sharing data worldwide. This is from a current base of 25 billion. So it's a 50 billion number increase. Stop and think about the magnitude of this. It's really huge. The second number, greater than 50%. Remarkably by 2040, it's estimated that more than 50% of the total global electricity generation will be coming from low carbon sources primarily wind and solar. The next number being greater than 250%. I'm talking for the period 2019 through 2024. The increase -- the 250% increase is in distributed solar capacity reaching 530 gigawatts by 2024, again, quite a staggering number. So what does this mean? What are the implications? Well, from a utilities perspective, there's an increasing need for what we call a highly flexible, technically advanced solution to deal with this new reality, the new reality being the high intermittency of the supply, solar; a growing number of electric devices, the 75 billion, with changing demand patterns. Said another way, utilities need secure, scalable solutions with a high degree of automation, the need for intelligence down to the grid edge. Make no mistake, the digital energy revolution is certainly well underway. Last year, we talked about these 3 Ds: decarbonization, decentralization and digitalization, and it's safe to say the energy's grid transformation continues, underpinned by these 3 Ds. The 3 Ds create pressure on utilities globally. And let me paint a picture for you. Think about several decades ago when the architecture of the grid was being built. It was primarily built around a one-way flow of electricity. So we would bucket into generation, transmission, distribution and eventually would make its way into your home, designed to really keep the lights on at the lowest possible cost. Now there is a new reality compared to the grid as it was initially designed for. Take 1 example. Remember, this greater than 250% increase, 530 gigawatts by 2024, solar being intermittent. It's dispatchable, meaning it can enter into various points on the grid. And lastly, solar can be bidirectional, bidirectional flow of energy. Of course, the necessary changes to meet this new reality can be achieved, but it's an immense undertaking and not an undertaking that utilities get to do it voluntarily. They must comply with regulation. And this leads to my first point that I want to point out on the slide here called the redesign of the regulatory paradigm. I see this as unavoidable, leading to new regulation, driving changes that will encompass, amongst other things, integration of what we call distributed energy resources into markets, the real need to modernize the grid, and the use of price signals by redesigning rate structures to shift loads. This leads to what I call deploying the enabling infrastructure. If you've got regulatory requirements, how are you going to do it? What does that infrastructure look like? We believe that smart meters acting as grid edge sensors are key to this infrastructure necessary to modernize the grid. Think about these sensors and the data that they will be collecting. That moves me to the next area of discussion about the embracing the new business models. With the vast amounts of data being collected from these grid sensors, opportunities are created to shift business models towards data-driven outcomes from load forecasting to predictive customer retention analysis to home energy management. For us, this creates opportunities to offer data-driven services. This leads me to the next area of discussion, the new customer experience. This is a new reality of what we call the digitization of the customer, being a part of an interactive ecosystem. And utilities are really redefining what we call the customer experience to improve customer engagement and satisfaction. For us, this means partnerships and investments such as Sense as we talked about before. I'll remind you what -- Sense is a company that provides insights into your home energy consumption, allowing you to really manage your energy better and potentially lower your energy costs. I've created a position in terms of our situation. Okay, the grid historically is not meant to necessarily manage effectively these changes that we're seeing. So how are we as Landis+Gyr positioned to take advantage of these opportunities? First, we're #1 in global electricity, smart metering, certainly giving us what I call credibility. Second, more than 100 million of connected intelligent devices installed globally gives us an installed base from which to grow our revenues. And lastly, we have a clear plan. Underpinned by these 3 growth platforms I mentioned before now let me talk a little bit more about them. Smart metering. It's really what we do. It's our core offering today and often referred to as AMI, advanced metering infrastructure solutions. Our intent here is to grow our global share. Moving to the grid edge intelligence. Simply put, we're adding more intelligence at the grid edge. We accomplished this with what I call a next-generation smart meter where we're adding additional computing power with distributed intelligence capabilities, flexible communications, just to name a few of the requirements. The expanding grid edge intelligence enables us to create new use cases beyond just building in revenue assurance. Let's move on to smart infrastructure. And the way to think about this, it's really an extension of grid edge intelligence where we fully leverage what we call our IoT expertise, Internet of Things, adding further functionality through additional devices, sensors, applications, beyond just the next-generation smart meter. And on the next few slides, I'm going to describe in a little bit more detail each of the 3 platforms. Offer number one, smart metering. The first thing you see is a global market far from being monolithic. In fact, we think of it in 3 stages. The early stage, the far left, we see as -- we call that classic first time rollouts. Regulation is indeed in place which drives positive business cases. Some examples, Germany, where the market is evolving; in Switzerland, utilities are embracing AMI through new pilots; and in India, Tata Power is deploying towards mass rollout. Let's move to mass deployment, where we truly have a leading role in many of the largest national rollouts. In Europe, we're delivering to the country's largest utilities, specifically the U.K., British Gas; in France, Enedis; and outside of Europe, in Japan at TEPCO. Moving to the third wave, the replacement market, what I often call the technology refresh opportunity. And the way to think about that as the wave one, early stage smart meters are replaced. New use cases are often driving the need for grid edge intelligence, and this is happening in the U.S., more closely to home here in E.ON in Sweden. Now I've talked about the 3 stages in terms of definitions and geographic diversity. But I also want to mention the technology evolution, the migration from smart metering to AMI to grid edge ready to grid edge intelligence. And you can see here the evolution along the grid from the different stages. Allow me to make a few additional points regarding the market shares. First, our market positioning, very strong with a #1 or #2 global market positions in smart electricity, smart gas, heat metering and managed services. In summary, we are indeed in a growing market. However, the growth will not necessarily be a straight line. In our business, as many of you know, it can be quite lumpy due to the size and timing of some of these projects. Now moving into that second platform, the grid edge intelligence. As I said before, the grid edge intelligence is becoming a key enabler of the digital energy revolution. Put another way, these are the drivers, which lead to the need for grid edge intelligence. And on the slide here, you see a host of functionalities that are possible or expected. And let me give you a quick overview and expand on a few of them. Cybersecurity. Our own Gridstream Connect system offers a security package with increased protection against meter tampering. It allows for what we call downstream message authentication to further secure critical commands such as a remote to disconnect at a customer's home. It offers improved privacy and control through individualized data encryption down to every single endpoint. Today, customers that have entrusted us with -- in providing security to their assets include TEPCO in Japan; Light in Brazil; Hydro-Québec in Canada; JEA, which is Jacksonville Electric Authority, in the U.S.; and E.ON here in Sweden. Let me take another example, grid analytics. With Landis+Gyr's advanced grid analytics, utilities are able to really identify current issues, predict future problems and provide proactive strategies for improving the grid. We do that today. Let me end with smart metering and sensors. Today, sensor technology, when coupled with our smart metering solutions, provides utilities with real-time or near real-time data on the health of the grid. Examples of this are line sensors and capped bank sensors, just to name a few. Continuing on in that second platform, again, grid edge intelligence, I just mentioned the key enablers. I gave some examples. But I want to point out and emphasize, so what does that mean at the meter? What does it mean for the grid edge Intelligent meter? Here, I want to show a bit more granularity and speak to the increases in functionality as the utilities transition from that first wave through to the model that we call the grid edge intelligent model. In the traditional AMI first wave, the meter is helping utilities maintain what we call the primary charter, which is to deliver reliable, high-quality and cost-effective energy at any point in time. Some of the characteristics that you'll see on the first wave here, 15-minute interval data, outage detection and restoration. As you move to the thick part of the meter, so we talk about early stage apps and often that was around demand response, revenue protection for sure and getting down to the talk. This is where it's largely proprietary networks, and that's the push for standardization. Contrast this with a grid edge model: real-time data, not 15-minute intervals, real-time data; over-the-air upgrades, be able to send down and change profiles in real-time in the meter. I'm talking about more processing power, leading to an enhanced level of functionality. Moving into the think part, enhanced intelligent at the grid with apps at the meter, at the communication network and even in the cloud. And about the talk, a true utility IoT platform, allowing for an open ecosystem of apps and third-party developers, providing innovative steps directly benefiting the utility and the customers. It's really about smart connectivity, providing interoperability and interchangeability, improving the longevity and resilience of the utility assets. Second part of the grid edge intelligence. I want to cover the notion of the app, and Prasanna will go more into details and give some concrete examples, but I'm allowed to show the grid edge card. This is a fabulous, fabulous example of innovation. On this card, and we talk a lot about the app, so you can picture this. It's slotted into the meter, of which then you can download over the air different types of applications which gives the meter a lot of different types of functionality. That's the grid edge app. And think about it because it's very similar to the mobile industry's approach to apps. We've created a platform that I'll briefly describe. First, the app runs on what we call an open source operating system, which allows for a predictable and secure environment, very important. Ease of use. We wanted to make it easy for these third-party developers. So the second part is this app studio, which makes for configuring the app to the device quite simple. And lastly, the app marketplace. This is where we're going to build an open ecosystem of apps, partnered with these third-party developers whereby the innovative apps can directly benefit the utilities and the customers. And which, by the way, may not be obvious, but we see the connected app strategy as creating real stickiness with our customers as we would control on which products the apps would be compatible with. Let me move now to that third platform, smart infrastructure. It's all about leverage what I call our IoT expertise to add further devices, sensors and applications much beyond grid edge intelligence in the meter. For example, smart street lighting, offered through our partnership today with LED Roadway, offering streetlight management solutions. Smart water has made a lot of advances around leak detection, pipe network management, water quality monitoring, just to name a few. EV, electric vehicle, load management. Today, our advanced grid analytics, what we call our optimizer, application allows for the effective management of electric vehicles, signaling to the utility the necessary power needed at the feeder and/or substation to effectively manage the EV charging requirements. I'm going to pivot here, talk about the operation. We continue to make significant investments in the portfolio. You see on the far left there, USD 152 million was the spend in fiscal year 2018. And just 2 examples that make up part of the spend would be what I mentioned before the grid edge card. And Prasanna, in his discussion, talk -- will talk about the next-generation meter. And I won't steal his thunder. He will show that. We call that affectionately Revelo meter, next generation. We, in fact, did more work in terms of consolidating R&D sites down from 23 to 19 as we progress in building teams in low-cost countries while still maintaining our close proximity to our customers. Project Lightfoot, I think many of you have heard this before, ahead of plan and is expected to deliver USD 20 million in annual savings in fiscal year 2019, a further $5 million in annual savings will be delivered this next financial year. Let me continue the discussion around the investments in R&D and specifically about this what we call our innovation pipeline. I often get asked if we are investing sufficiently in R&D. And my answer is always the same, an emphatic yes. You saw there $152 million spend in fiscal year '18. It's a large amount of money. In fact, more than the revenues of some of our competitors. We want to make sure that we're getting the most out of every dollar spent. And as a result, our innovation pipeline has benefited from productivity gains, the result that meant our R&D sales ratio is decreasing. Let me just mention a few of the numbers. It was at 9.6% in the fiscal year 2016, moving down to 9.1% in fiscal '17. We closed out fiscal '18 at 8.6%. The main drivers of this productivity mainly in our investment in platforms, as I mentioned to you before, the R&D site consolidation. Lightfoot, another area of intense focus has been our manufacturing realignment, optimizing our manufacturing footprint. I think by now, all of you have made or are familiar with our Project Lightfoot, its initiative in shifting our assets to what we call an asset-light situation. What that means is outsourcing volumes to EMS manufacturers coupled with site ramp down and/or closures has led to $20 million of [ accepted ] savings in fiscal '19, again with an additional $5 million in '20. Really a job well done. A lot of drivers, drivers being the improvement in the profitability, primarily in the EMEA region. Now I'm making a big left turn. Corporate social responsibility priorities. Here, I want to really talk about our commitment. I strongly believe that sustainable success is closely linked to good corporate citizenship. At Landis+Gyr, we take our corporate social responsibility very seriously. And today, I will dig into some of the details about our sustainability program. What you see on the slide are the elements of our CSR program. We started with the concept of materiality, which is where we undertook what I'll call a very comprehensive analysis and considered current and future CSR priorities. From this, we developed 3 priorities which you see on the slide: environmental, social and governance. And within the 3 categories, we define 9 material topics, which makes up our program, which we affectionately call CSR 21, 21 being the objective on when we make considerable contributions, the year 2021. We strengthened our commitment around this program, CSR 21 by joining the UN Global Compact. The UNGC encourages businesses worldwide to adopt sustainable and socially responsible policies and to report on this framework on an annual basis. In conclusion, we are well on our way in delivering meaningful results regarding our corporate social responsibility. And the program I just talked about was really internally focused. The next slide I'm about to show you is really our commitments and our contributions to the CSR externally. Let's read the slide there. I want to briefly comment on our external efforts related to CSR, and specifically, the role we play in CO2 reduction that comes directly from our installed meter base. Remember, I talked about that 90 million connected devices. We have done this first CO2 impact calculation, focusing on reduced consumer electricity consumption, one of the positive impacts of smart metering. A couple of comments about the model. We assumed a 1% to 3% electricity reduction based on sources done in several countries. And just to be clear, this calculation does not include additional savings that one would get from peak load shifting, perhaps even from having to avoid sending a truck roll. The result, 7 million tons of CO2 reduced in 2019 from our installed meter base. This is equal to 7x the CO2 emissions in the city here in Zurich in 2018. We feel quite proud about the impacts that we are making from our connected intelligent devices called smart meters that they're having on the CO2 emission reductions around the globe. And really, just to round out the story. There are several other proven cases contributing to the overall CO2 reduction. First far left there, insights. This is the awareness that comes from our products and solutions, enabling consumers to truly manage their energy better. This is the driver that delivered on that previously mentioned 7 million tons of CO2 reduction. But that's not all. Moving to remote commands. The ability, for example, to remotely disconnect or reconnect to a meter, and thus avoiding, as I mentioned, a truck roll; proactive alarming of outages, allowing for faster restoration of services which positively impacts on CO2 emission. Moving to the far category, smart metering, which supports what we call peak load shifting through times of use tariffs leading again to enhanced efficiency and reduced CO2 emissions. Safe to say that we take it very seriously. Both internally and externally. You'll be hearing a lot more about our commitment to CSR going forward. No presentation would be complete without a few numbers. So I'm going to take you through a few slides. I'll leave the details during the financial presentation that Jonathan will cover, but a few things I do want to mention. You've seen these numbers before. These are the numbers that we announced at the end of our H1 release earnings. There are 3 categories here that we saw on a year-on-year increase from fiscal 2017 to fiscal year 2018. Specifically, net revenues, these are in U.S. dollars, at USD 1.765 million (sic) [ USD 1.765 billion ] in fiscal 2018; and USD 863 million in H1 fiscal year 2019. Adjusted EBITDA margin of 13.5% in fiscal year 2018 compared to 14.5% in H1 fiscal year 2019. Free cash flow of USD 123.5 million in fiscal year 2018 versus the first half of USD 33.2 million. And I remind you that the first half cash flow is heavily weighted to the H2. And again, Jonathan will comment more on that. More details from the financials from Jonathan. Well as I look upon the outlook on the business, I mentioned before, guidance. And let me mention that the fiscal year 2019 guidance, Jonathan will provide that guidance in greater details. We mentioned it in the press release today, but he'll cover that in the financials. But I do want to comment on the midterm, the midterm which you see on the slide through fiscal year 2022. I mentioned in my opening remarks how we made good progress on the operational front, reflecting the profitability improvements in both the EMEA and APAC regions. I mentioned the regulatory delays we are expecting in the U.S. I've just concluded in an overview about our strategy, and I'll remind you that it is unchanged. When I put all the elements together, I'm confident in saying our midterm guidance, again, through fiscal year '22 remains unchanged. Here again, Jonathan will go through the details. Well, let me stop here, pass the baton over to Prasanna, who will take you through the Americas regions. Prasanna?

Good morning, everyone. I met some of you last year, and welcome to the ones that I have not met yet, but welcome to Landis+Gyr's CMD. When we met the last time, we discussed the progress in Americas region. We discussed a very healthy pipeline. We've spent quite a bit of time talking about the first wave of benefits and how those deployments were going and also the early stages of the second wave that started in parts of Arizona and some parts in the Northeast. I'm pleased to say that those deployments are going exceedingly well. We continue to win in our market, and our pipeline remains healthy and robust. But there has been a change, and that will be discussed today. What has changed is that utilities are giving more scrutiny to the second wave of use case benefits and making sure that benefits and the investment case are matched appropriately. We see these delays as pressure in 2019, fiscal year 2019 and in fiscal year 2020, albeit, it is temporary in nature. But we view this as a very big opportunity for Landis, which will be discussed today. We're active in many bids and more and more of our customers are looking at the Landis+Gyr technology that Richard discussed, that provides significant more value to their use cases and they're appropriately waiting on their selection and discussing the merits of how second wave use cases can benefit from our technology. Let's have a look at the regional highlights. We are the leading advanced metering partner throughout our region. This includes North America, South America and Japan. Now some of you that's the first time in the CMD today, both here and on the call, you may be wondering why Japan. There's a historical reason as to why the Japan market reports into the U.S. About 8 years ago, give or take, when the Japan first wave of deployment started in 2012 and 2013 to a regulatory construct that Japan has that meters have to be replaced every 10 years, we took the North American portfolio to the Japanese market, and we serve the Japan market through our technology and services in Japan. And that's why Japan reports into the U.S. We have 65 million connected intelligent devices, quite a bit of them. And many service delivery models are used in Landis+Gyr, primarily two. One is an own-and-operate model that we provide with the customer, and the second one is the one that Richard referred to as our managed service model. In our managed service model, we have Landis+Gyr people co-located with our utility customers. And think of this as a complete outsourced model for the utility, and we're doing the service work with them in a given state. We have 14 such locations in the U.S., and we roughly read 10% of the U.S. population of meters. This kind of delivery model is second to none in the industry, and we are very proud of the service model. As mentioned, we have 14 of these locations within the U.S. We have 2 manufacturing centers, 1 located in Reynosa and the other 1 located in Curitiba, Brazil. At TEPCO in Japan, which is our largest utility customer there, we serve 24 million endpoints of the possible 27 million endpoints that will be deployed before the end of 2020. Now let's look at the highlights. We continue to win and grow backlog in our region. Our Gridstream Connect platform is second to none in the industry, and we provide a very flexible, scalable architecture, provide service from small customers all the way to the size of this customer like TEPCO with 27 million endpoints. We've had some major wins in 2019. And let me go through the 3 wins that we have. HECO. HECO is a new addition to the Landis+Gyr family. They're located in Hawaii. And the reason that they chose Landis+Gyr for the -- were for the following reasons: Hawaii is an island, and the nearest location is 6 hours from Los Angeles. They have to be self-dependent when it comes to resources. They have this ambitious plan of being clean renewables by the year 2045, 100% clean by the year 2045, and they wanted a technology provider that can provide flexible technology and take them into the second wave use cases of distributed energy resources. Let me give you an example. In 2007, when we first started our engagement in Hawaii, there were roughly 370 rooftop solar installations. Last year, when we went to sign the contract at Hawaii, Honolulu had 81,000 rooftop solar locations. This is a real challenge for them, and they are taking the challenge extremely very serious and Landis+Gyr is very proud to be their partner. At Ameren. Most of you know Ameren has been with us for the last 20 years. They selected Landis+Gyr, this is the Missouri location of Ameren, selected Landis+Gyr because they wanted a seamless conversion of their existing technology into the new generation. They were also looking for lot of savings around grid operations that Richard talked about, and they also needed a partner that will serve them well when decarbonizations efforts begin in the state of Missouri. Thirdly, Colorado Springs utility located in -- close to Denver. This is a very unique challenge. Colorado Springs has been with Landis+Gyr for the last 14 years. We're the only ones to provide water, electric, gas on a single platform in Colorado Springs, and they continue to choose Landis+Gyr for that reason alone. The second reason is they signed a 20-year service agreement with Landis+Gyr to provide managed services in their location which they have always had for the last 14 years. And this shows the trust and belief in Landis+Gyr of being a good partner. We're solving many use cases in the second wave. In Arizona, Tucson Electric Power. We mentioned Hawaii and HECO. The WEC group in Wisconsin are all looking to channel -- to solve second wave use cases related to distributed energy resources and consumer engagement, and we're very proud to do the early second movers in our region. We have a lot of industry recognition. The one that Richard mentioned, which was Frost & Sullivan, but we go beyond that. We provide a very standards-based solution in the industry and in HECO, our Wi-SUN network is fully certified and will be the first network in the U.S. We're solving new use cases. We have a very large installed base, and we're very laser-focused on our customers in our region. Now let's look at our strong financial performance over the last 4 years. We've had a very good run in our business so far. We've grown the business very nicely in the last 3 years. We hit a high of $986 million in fiscal year 2018 with an adjusted EBITDA of 19.6%. In 2019 H1, we finished with a revenue of $476 million, with an adjusted EBITDA of 19.3%, included in it is a one-off VAT related to Brazil. What I am very pleased to report to you is that our performance has been very resilient, and we compare to what was expected and communicated at the time of the IPO. Now let's look at backlog. We had an extremely strong finish in 2018. Most of you recall, at that time, I was talking about 3 customers that were waiting in the pipeline to be signed and delivered. And that did happen. And those customers were Long Island Power Authority, the WEC group in Wisconsin and Ameren Missouri. In the year 2019 H1, we completed 2 large projects that completed and rolled off, reflecting the backlog drop from $1.75 million to $1.63 million -- billion, sorry.. As explained last year, our business tends to be lumpy as large projects get completed, and we await new approvals from our regulators. We have a very healthy sales pipeline. My salespeople are engaged every week at every corner of our country, working with customers that are in the approval cycle but also helping them through the regulatory use cases. We remain very laser-focused on them. And our technology is perfectly positioned to drive the benefits not only in the first wave but also in the second wave of use cases. Now let's look at the market forecast. Our total available market grew from $1.5 billion in 2018 to $1.7 billion in 2022 for the complete region. This represents a roughly 2% CAGR growth across the region, but there's variabilities within the region. Now let's look at North America. It's a stable, growing market, and we actually see more opportunity come down the pipeline as more and more customers reflect the second wave use cases and look at Landis+Gyr's technology. We are still deploying many deployments in public power market as well as the investor-owned utility segment IOUs. The refresh cycle has begun in the U.S. Actually, we serve quite a bit of customers now in the second wave of use cases in Arizona, Central part of the U.S. and in the Northeast. We have a very strong leadership in the market. We have a 35% market share, and we are resolutely focused on improving it every year. In Latin America, Brazil continues to lead in AMI and smart meters. Although a very small market still struggling to grow because of the past, the market is expected to grow 20% because things in Brazil are changing. It's changing because they're looking at the U.S. and saying, there's a lot of benefits gleaned by the technology in AMI during the first wave, and customers and utilities in Brazil are looking for the same efficiency gains in operations and also look at revenue protection, which is a big issue for them and also managing distributed energy resources in their country. In Japan, you would see a decline of 9%. And let me pause and explain why you see the decline. Japan mandates that every 10 years, smart meters will have to be replaced. The 2013 cycle, if you recall, started some 7 years ago, and we're about to finish the first cycle of the 10-year deployment by the year 2023. The next cycle will start in 2023, 2024, again, thereby continuing a 10-year replacement cycle of every 10 years. So the decline is related to the fact that we are in our eighth and ninth year of deployments in the country, us and a couple other competitors, and you see the total market decline due to that reason. The market will go back up again when the cycle starts back up in 2023 and 2024. Now let's look at the investor-owned utility and public power segmentation in the Americas market. As mentioned, the market is only in 2 categories. The largest one of them is the investor-owned utility segment. There are typically 0.5 million endpoints in size on an average and can go all the way up to 3 million endpoints. In the U.S., we have 190 utilities that cover the spectrum of investor-owned utilities. However, they own a lion's share of the endpoints in the U.S., 75% approximately. These are highly-regulated utilities. The only thing that you need to think about investor-owned utilities is you need to think about them as highly regulated. And the regulated -- regulations vary from state to state. Every state is different. So every state has what's called as a Public Utility Commission, PUC, and it has -- it's governed by regulators for that state. In public power, the number of utility size is long -- large. Rural electric cooperatives is 1 segment of it and municipalities the other segment of it. The combined number of utilities in public power is about 3,000 with about 875 utilities in rural electric cooperatives, very small in size. And municipalities, which are big cities, and we roughly have 2,000 utilities in the U.S. that are small to big cities. Think about cities like Jacksonville, which is a customer of Landis+Gyr or Colorado Springs that I talked about or San Antonio in Texas. These are typical municipals in the country. Unlike the IOU segment that is mandated by the Public Utility Commission, the municipalities are governed by either state-appointed boards or City Council-appointed boards. So why am I explaining all of this stuff to you, you might wonder. Every investment case, be it investor-owned utility, which are highly regulated or even in the public power segment has to go through Board approvals and benefits to customers and the value of the investment that utilities stack up to drive investments in the smart grid space. For us, this could create delays in our market. But we are very laser-focused in these markets. We approach these markets through a very unique distribution system for the public power market. Imagine there are 3,000 of them. So we use a very good distribution cycle to go manage those customers. On the investor-owned utilities, it is our own direct sales force as to how we go-to-market with. The bottom line is, our technology is very well positioned for growth. We have very good relationships with our state regulators, constantly educating them, and we work very closely with these customers to grow and develop their use cases and also make sure that Landis+Gyr's technology meets those requirements. So we've talked about the 2 major segmentations in the market. I do want to spend some time because we -- both Richard and I mentioned that we are experiencing regulatory delays with some of our customers. So what exactly does this mean? So I'm going to direct your attention to the pie chart. So in the U.S., based on what was -- what I said about public power and the investor-owned utility market, there is no doubt in any one of these people's mind that smart grid technology is foundational for the future. If we have to have sound grid modernization happening in the U.S., there is no doubt in anyone's mind that smart grid technology is required. So the pie chart that you see over here is a snapshot of 14 utilities between the period Q1 2018 and Q1 2019. It represents roughly 15 million endpoints so that I can explain to you what exactly happens in the market. If you look at the 7 utilities in blue, those are approvals, and investor-owned utilities have already started deploying their technology. A very good example of this is Ameren Missouri. They received their rate case approval in February of 2019. In the red color is 5 utilities classified as resubmission required. What this basically reference to is the delay that Richard is talking about. Utilities follow a rule called rate case investment for investor-owned utilities. They can be $500 million to over billions. They could include our technology such as the AMI technology that we provide, but they can add in other things around grid modernization. For example, they can add in wind and solar and other transmission site requirements into their rate case. What typically regulators look for is making sure that the benefits provided to, to the rate case and to their customers equally match. And whenever they see that technology is needed for more benefits, they send it back for resubmission. I view this as an opportunity because, as I mentioned, Landis+Gyr is solving very critical use cases in the second wave, and they will find our technology that much more interesting and able to deploy them. In the bottom is 4 utilities where I've called it as pending. This is also an area where utilities are taking the -- where the regulators take their time to review every rate case that is presented to them so that they can make sure that benefits and investments are all stacked up. Here is how I want to leave you with. You might be wondering what are the regulators thinking about when there's a resubmission. And I'll quote you a word that just happened recently in one of the filings. One of the filings said that the utilities are not taking advantage of smart meters. We find this as an opportunity for Landis+Gyr. These delays are only temporary by nature, and we'll get right back into the approval cycle very soon as regulators keep approving these investments. So what does this mean for Landis+Gyr? So we roughly have 9 utilities. Some of my customers and potential pursuits are in these 9 utilities. So we are disproportionately affected, and that's what causes the temporary delay. We are educating stakeholders and public utility commissioners on the value of the smart grid. We strongly believe that the technologies that we're about to release provides immense benefits to utilities. However, we see these delays as pressure in fiscal year '19 and fiscal year '20. We're aggressively managing our costs in the meantime, and we are laser-focused on delivering the technologies that Richard talked about and having operational excellence in our business. Now let's examine the current deployments in North America. The total market in the U.S. is about 135 million meters. What you see on the left is the state of deployment in the U.S., 85 million of them have been completed. As mentioned before many are waiting and yet to be deployed, and that represents about 32 million. And we are very heavily engaged in these sales pipelines. And there's 35 million of them under contract, as explained, those that got approvals, and they're doing the deployments right now. That represents the 135 million endpoints in the country. But I want you to -- want your attention to the bar chart. Some of these deployments started in 2007. If you look at the number of endpoints available between the years 2007 and all the way to 2012, that's 46 million endpoints that are reaching the time period of 10 to 12 years old or greater, and these are the early movers of the second wave deployment that's happening in the country. Some of these early movers have already started like I mentioned in the state of Arizona and some parts of Central U.S. But I strongly believe the market is very robust and entering a new wave of adoption into the second wave use cases, mainly related to consumer engagement and how do they get them more involved and also helping in grid operations for utilities. We believe this is a great opportunity in the U.S. electric market going forward. I discussed this chart the last time we met, but there are some new people in the audience and some on the phone. So I really would like to take a bit of time and talk about the first wave and second wave that we've discussed several times today. Briefly stated, the first wave use cases in dark green mainly refer to customers that started in the period 2007, as I pointed out, and still going through there with their deployments. These first wave use cases were all related to grid operations. And let me give you a few examples of those. They were related to meter to cash, which is the holy grail of every utility; remote metering, the ability to read meters remotely; connecting and disconnecting customers in high traffic areas such as universities; move in/move-outs have the same example as universities, but it's also bill reconciliation when they move; and there were parts of it related to outage detection as well, the ability to manage outages during a storm. So these all basically form the first wave of use cases that we started out with, and many of these deployments are in progress. What is happening is in the light green are what we call is the second wave use cases. And these are related to mainly the adoption of distributed energy resources, so you will see a lot of things related to electric vehicles and also to rooftop solar that we discussed. But there is also an increasing focus on consumers. If you look at the top corner, most of these are related in engaging consumers. Let's take a look at an example, electric vehicles. Consumers want to -- sorry, utilities want to engage with consumers that have either EV or rooftop solar for many different reasons, but chiefly among them are to make sure that these customers have rate structures that are flexible so that they can charge their EVs or even charge their rooftops and give it back to the utility at right times of the day. This is very important going into the next wave of distributed energy resources, as market get adoption into solar very heavily in our country. We believe the Landis+Gyr technologies that we're about to introduce really meets these use cases very soundly. Richard spent quite a bit of time on grid edge intelligence. We discussed second-wave use cases, so I'm going to give you a different spin on how grid edge intelligence is going to enable second-wave use cases. So let's look at the left-hand side of this chart. Typically, smart meters performed a function of reading either daily, hourly or 15 minutes, as Richard mentioned. They have the ability to collect data at certain intervals. What we are introducing is something completely different. We believe in order to manage these very critical 2-way load flows, our quality and reliability, you need more than 15-minute interval data. Our new meter will be able to read subsecond intervals to look at granular information in the grid and pinpoint problems before they happen. That's the holy grail of what utilities want. They get enough information today with their 15-minute interval data, but at points of the grid they need more, and our new meter will be able to do that. When we do that, we accomplish a couple of things. For us, the value of the endpoint immediately increases, and so does for the utility. So we have created a bigger market, such that we can participate in. We can also go into markets, like Richard talked about, into smart cities. So we can actually take this technology because it's very portable and expand into additional markets with smart city use cases. Now Richard covered grid edge intelligence in terms of the OS, the app studio and the app marketplace. What we are doing with this meter is literally, the platform mimics an iPhone. We now have a solid OS where developers, including Landis+Gyr and utilities, can develop applications in the app studio, and we've also created an app marketplace where we can monetize this. So what does this mean for Landis+Gyr? It means a couple of things. These applications are immediate opportunities to expand our software revenue mode and also to provide services. We can create new revenue streams from third-party ecosystems. What do I mean by that? Imagine this in every important critical device at the grid edge, the Landis+Gyr grid intelligence card, so that they can actively communicate with Landis+Gyr meters and all the way to our Head End System. It gives us the breadth of scalability that is unimaginable in terms of use cases and all the products that a utility has at the grid edge. So we're really expanding using this to go into other devices as well. And finally, the marketplace. Today, we already have applications in the marketplace created by Landis+Gyr, in some cases, by our partners, and Richard mentioned Sense and Utilidata. We have -- we are looking at many partners like that to come into our app studio, develop very critical applications in front of the grid and in the home so that we can take these applications into the marketplace and further monetize the Landis+Gyr value proposition. We strongly believe that we're the only ones to do waveform data capture, the subsecond latency in the industry. Everybody else does 15-minute interval data. We can do subsecond, and this is a unique value proposition that only Landis+Gyr offers. So we talked about apps and how that helps the utilities going forward, especially very important apps that utilities can use to manage their grid and consumers also to be excited about applications to engage with utilities. Engaging with consumers in the first wave was already there. Utilities have a home energy portal that we could go and engage with. But what Landis+Gyr has done now with these valuable applications, we're able to do more. Let me give you a couple of example. If you look at the anomaly detection app, very simply stated, utilities really want to identify fault locations or potential fault locations that they can quickly identify and prevent mass outage. What the anomaly detection app does, imagine the situation, 3 branches in a rural area rubbing against the wires. In our meter, today, you can see these as momentary flickers that happen in our meter. But with new subsecond data, the waveform data in our meter, we can actually take a series of these disruptions that are happening and pinpoint it to the exact location in a rural place where 3 branches are touching the wires. Why is this important? The utilities, one of their biggest things that they worry about is vegetation management. They can quickly dispatch a crew to the exact location and say, "Let's trim those 3 branches before a major outage happens." This is valuable for the utility from improving service to their consumers and preventing large-scale outages in their territory. Similarly, if you look at the example of a high-energy usage app from a consumer point of view, consumers want a lower bill. And today, they do everything to engage with their portals to get their energy usage down. But our new technology will be able to do this automatically. You can set a threshold using our flexible billing ability and set a threshold to a certain amount per month. For example, you can set threshold as the bill should not exceed $100 a month. What the high-energy usage app would do because of waveform data, it will actually inform the consumer that, hey, you are reaching a point, and this is the eighth day of the month, and if you continue in this pattern, you are certain to exceed $100 budget you set. It actually pinpoints which appliances are the energy hogs in their home. And it will actually direct your attention saying, do something about it. And I think this is -- it does 2 things. It creates a very close-knit relationship between the utility and the consumer, but the consumers also now can take part in an energy revolution of reducing their carbon footprint. This is the future, using very time-sensitive, high-value data provided by our new meter. And the meters that we have today, by the way, will really increase the value proposition for Landis+Gyr, but it also solves very important use cases for the utilities in terms of grid modernization and for the consumers in terms of getting their engagement into the cycle. So I know I've said a lot about it, and you're probably saying, where is this meter, and Richard said, "I'm not going to steal his thunder." So this is the new meter, Revelo, which is introduced this week. Starting tomorrow, there's a big utility conference in San Antonio called DISTRIBUTECH where this will be unveiled. This is an add-on to the family. Think about it that way. Landis+Gyr has had a history of smart metering for many years and electric meters for over 100 years. We have the expertise. We have the knowledge. And what we have really done, if you look at the bottom, we've taken our FOCUS meter, which is our current residential meter; we've taken our Elite meter. Remember the examples that I used about substation and grid edge, we have elite meters there today that provide waveform data. We're the only ones to do it, by the way, in the AMI space. And the S4x represents commercial and industrial places, imagine a McDonald's. So we have 3 such metering families, and we're bringing the best of everything into this meter to be on the side of your home, imagine a small computer on the side of your home, and looking forward to solving many challenges for the utilities. Imagine these as sensors all over a city. We can triangulate exact pinpoints of grid problems, and being on the side of your home, you can also do creative things with the consumer. This is a sea change in the industry, and we're very, very proud to introduce this next week -- this week at the conference. The platform is streamlined, and we're really, really looking forward to working with our customers, many of them that I told you that are in the pipeline and awaiting approvals. They're part of this wave of technology adoption. So very excited about it. So what's happened in the North American market since the last time we met? When we met, we had roughly about 35 million, 34 million endpoints deployed last time. We're approaching 38 million endpoints now. We continue to serve over 800 utilities in our region, 300 of them are served in the cloud, especially the public power customers, 300 of the 800. Of the 300 customers we have in the cloud and the managed service customers of 15 that we have, we have 21 million endpoints that Landis+Gyr host in the cloud and services there. Between all of these, we transact 2 billion reads per day. This is one of the record -- it may not compare well to what somebody does in Spotify or Apple or some other place, but in the utility world, 2 billion reads is a lot. In addition to that, we have a meter data management platform that is used by the utilities for business process management in the back office, and this platform is global in nature, and we have 70 million endpoints in our MDMS platform across the globe. As I mentioned, the market is very dynamic. First-wave AMI rollouts are complete, and we are very busy on the second-wave stuff. We're not only focused on the second-wave benefits, but using our new technology and our new platform, we're addressing broader use cases in the market. We have customers with long history with Landis+Gyr. If you think about the 21 million meters hosted, and that represents about 300 customers, a cross-section of them have been with us for 25 years. We have seamlessly upgraded them over generations of technology, not stranding a single asset. We've also added new customers like HECO last year and Long Island Power Authority in the last couple of years. So we're very excited not only about the existing customers that we have, but we're also bringing on a whole bunch of new customers in the last few years. We will continue to win our -- more than our fair share in the AMI deals that are pending. We're very excited about that. And we truly believe our next-generation software, next-generation hardware and tools are well positioned to help us continue to win in this new world where edge intelligence is needed to service the complex utility devices. In Japan, big market for us, it's a very strategic market for us. The market size, give or take, is about 8 million endpoints. When we participated in the first wave back in 2013 when we won TEPCO, 27 million endpoints, we were not established as an entity to do business there in Japan. Now we are. The market size is $80 million, and we have a very good customer in TEPCO. And the sophistication of this technology is unbelievable. Here in TEPCO, Landis+Gyr provides flexible communications, 3 different kinds: PLC, cellular and RF, all on 1 platform and 1 Head End System software. We also provide the meter data management system in that country, but we don't provide any smart meters in that country. The smart meters are provided by local smart meters mandated by the regulatory body. So our niche, our edge card, in this case, was into every one of those meters in Japan. So today, we have TEPCO. Imagine this, there's 80 million more meters available in the new wave coming up in 2023, and using our edge card, we have a great relationship with meter vendors already established and we strongly believe that we can take a bigger share of the pie going into the year 2023. I want to leave you the following thoughts. We've had a lot of success in our marketplace. Between Brazil, the Americas and also Japan, we have a track record of success, and we're relentlessly focused on supporting these customers on their journey. Our service model, it's unparalleled in the industry. 300 people located in the cloud, 300 customers, along with 15 managed services locations, gives us proven process and technology that is well established. We have foundational software experience and services experience, and we strongly believe that we can continue this trend and win more customers into this business model. We talked a lot about grid edge intelligence today. We believe it is the future, and it's already here. As I mentioned, in the second wave, we're already doing grid edge intelligent cases in Arizona and parts of the central parts of the U.S. We have a strategic competitive advantage in Japan. TEPCO is the largest deployment, the largest IoT deployment in the world, bar none. And we are servicing them with great service quality and SLAs. Our SLAs are approaching 99.95% every day for the 1 billion reads that we read in that country every day. We're strategically well positioned with this grid edge intelligence, and we strongly believe that we can continue that journey into the second cycle that starts in 2023. Thank you very much for your attention. And over to Susanne to talk about EMEA.

Good morning, and [Foreign Language]. When I spoke to you last year at Capital Markets Day, I had been with Landis+Gyr for 9 weeks. So quite frankly, some of you probably knew more about the business than I did at that point in time. EMEA had been underperforming for quite some time, and the organization had just initiated a turnaround program. Today, I am very proud to stand here and present to you the huge amount of progress the organization has made and also share with you the number of opportunities we have to bring this business forward. For those of you who are not that familiar with the EMEA market, again, we make up 36% in 2018, 36% of the group revenue. We have offices in 18 countries across EMEA, and we also serve additional countries through qualified distributors. We serve more than 1,300 utilities across EMEA and we have 35 million connected devices. This is our installed base. This is an extremely important number to just understand because each one of those meters is a potential source for additional revenue going forward. We have 160 end-to-end solutions, and what does an end-to-end solution mean? It means that we not only sell the meters, but we also incorporate the communication technology, and on top of that, we also have the software, so the so-called Head End System. Also, we do manage service, not as big as what Prasanna does in the States. We have 1.6 million endpoints under contract, but we do see this as a growing business for us going forward. There is a whole lot to celebrate this year. We've consolidated our position in the U.K. and in France, where the huge rollouts are ongoing right now. We just launched our Gridstream Connect platform at the European Utility Week in Paris last year. We've won E.ON in Sweden, big win for us, an end-to-end solution incorporating our Gridstream Connect and won more than 1 million meters. And we've also won our first software-as-a-service contract outside of the Nordics and pretty close to here in Liechtenstein. But I suppose the really, really good news is the financial performance that the organization has now delivered. We see revenue growth, mainly driven out of the U.K., and we've seen a significant turnaround, an amazing return to profitability. The team has worked incredibly hard over the last year, and the numbers prove this. So we see -- we saw some revenue growth. Last year, we had $292 million. The first half year of this year, we're still at USD 306 million. We've come through quite a turnaround case in showing minus 1.9% adjusted EBITDA 2017 coming to 3.1%; and in the first half of '19, %7.6 Now this has been a major task, and it's built on product cost downs that we've done for some years. We've also completed the so-called Project Phoenix that we presented last year, where we took out 300 headcounts of the organization and we saved USD 20 million annually. We've also seen great track record on the Project Lightfoot that was around the manufacturing and supply chain setup that brought us -- that will bring us $20 million this year and additional $5 million annual savings next year. Now in spite of the turnaround activities, we have kept our focus on our customers and in bringing in new deals. So you can also see that we have a nice increase in our backlog of USD 755 million to USD 790 million, and this is on the back of contract wins in the Nordics and also in the U.K. We will continue on this journey to higher performance. And let me tell you how. Let's come back to the starting point again of the 3.1% in 2018, and to the 3 main levers: a, b and c, that will bring us to the 10%. The one I already mentioned is number -- a, which is improved margin quality on the product cost downs. And mind you, this is not something that stops. In our R&D budget, we also have earmarked investments to continue on these product cost downs. We always take the high-running products that still have a long life cycle ahead of them and invest in those. So this is not an exercise that is finished, but it has brought significant improvement this year. Then we have in b, the Lightfoot savings that bring us 2% to 2.5% increase. Again, there, we're ahead of plan to deliver the $25 million savings in 2020. And the biggest chunk is the operating leverage of 3.5% to 4.5%. And this is quite simply that the growth that we see in our plan is in countries where we already have a market presence and with portfolio that is already in development or has already been released. So there is not a significant additional investment required in SG&A or in R&D costs. However, our plan does incorporate focused investments, especially in the space of cybersecurity that we see as a big trend throughout EMEA, and also in further building up our competencies in the solutions space, in the software space and also in the managed service space. So we have a line of sight to reach the 10%, but we'll also need a little bit of luck to get there. And there was once a golf player who said, "The more we practice, the luckier we get." I'm assuming that is going to be the same case for us as well. Let me tell you a bit about the market. This representation is a bit different than what you saw before for the Americas. When we look at our market in EMEA, we look at it as electricity meters, gas meters and heat meters. And we have all of that in our own portfolio, so that's own developed products. You see here that we see about a growth of 5%. That is mainly driven out of the rollouts and of the European directive that was told in 2012 that basically said that each country will have to cover 80% of their consumers with so-called smart meters. And that is what is driving the main part of our market. And you see there that this covers, again, all of the European countries. But mind you, we also see that many countries outside of the EU, in Middle East and also in South Africa, are all introducing smart meters to focus on reducing their technical losses and their nontechnical losses. So it is not only that smart meters are introduced where we have the mandate from the European Union. I've also included here heat because heat is one of the upcoming markets going forward. There has just been a clean energy package that was released last year, and that will also push the introduction of smart meters into the heat space, so also covering then the thermal energy space. So we see that the replacements of meters will begin in 2023, which is right outside here of the time spend that we have until 2022. We're also extremely well positioned there because we have ultrasonic leading technology, and we see that the market will move from mechanical meters to ultrasonic meters. We see ourselves as being #2. So we are a leader in book smart electricity, smart gas and also in the heat meter space, and we're also considered a leader in the software and the service space. And let me tell you why the software and service space is so important. The more data that we have, and just imagine all the use cases that both Richard and Prasanna have spoken to before, that is enormous amount of data that will be collected and needs to be analyzed, processed and further reacted upon. That is going to require a significant amount of software and intelligence. So we see that, that space is going to grow significantly. Here, we see it's 6%. We also think we're very well positioned to attack that market. I will also say that there is a number here with a minus in front of it, which is the gas. And why is that? The so-called dual fuel countries in Europe, that is U.K., Holland, Italy and France, those incorporate both electricity and gas, and most of those rollouts are also rather far advanced already, so they are rolling off as we call. This also leads to a slight reduction in the market growth rates going forward. Now what we say in EMEA, and by the way, in Landis+Gyr overall, after the rollout is before the rollout. So this slide represents rather well where we stand within EMEA. And this is only a selection of countries, so we do not see all the countries on this map. On the right-hand side, you will see where each of the rollouts stand, and you will see there are different maturity levels. If we just look one now, Spain in the middle, dark color, they completed their rollout in 2019. And on the left-hand side, you will see the corresponding penetration rate, which is over the 80% that was regulated. We've also just heard that Spain is planning their next rollout, and we'll probably go into tendering in the next 2 years. On this slide, you can also see still many countries that are defining their so-called energy policy. Those are mainly the Eastern European countries. What that means is that they're looking at their cost-benefit analysis and deciding then what kind of rollout that they will plan to do. So a number of those, especially in the Eastern European countries, are in that phase right now. And then you will see the so-called second-wave countries, and you've heard about that before also from the Americas. It means that the already smart meters that have gone into the market will be placed with even smarter meters and also including those second-wave use cases that Prasanna showed you before. So these utilities, and you see here it's mainly the Nordic countries that have gone into second wave and also Italy is going into second wave, they have seen the benefits of these smart meters and think that the payoff for them is so high to also go into the second generation of technology. And these are especially the countries that are driving the whole energy transition reactively that we see as a growth rate. Now remember again that the European Union said that we would need a penetration of 80% by 2020. It is clear on this slide that we are not there. We are today, at about 48% at the end of 2019. There is still another 55 million meters to go in to reach that 80%. And on top of that, there's an additional 14 million to go in from the so-called second-wave countries. I would say that, that is still a significant market potential for us to tap into within the EMEA region. In the next few minutes, I would like to do a deep dive on some of our most important countries. I'd like to focus on U.K., on the Nordics, on France and some of the emerging countries. So let's start with the U.K. Many of you know that it is the most important market for us in EMEA. We're market leader there, and we are very proud of our position. The overall market shows 53 million smart electricity and gas meters, so this is a dual fuel country, that are to be deployed during the full rollout. That rollout has just been delayed officially now from 2020 to 2024. And by the way, that was incorporated into our business planning, so this did not come as a surprise. 15.6 million meters have been deployed by the end of November last year. We have 21 million under contract that have either already been supplied or will be supplied. And of the 15.6 million, we had 9 million. Today's success in the U.K. has been largely around that we were significantly involved in defining these requirements. And still today, we are one of the few suppliers that can meet all of the technical requirements, hence, the 9 million out of the 15.6 million that you see on this slide. We also have very successful program management in place. We were the first supplier to also build the customer forums. That is where various customers join us and discuss what their challenges are and what their opportunities are, so that gives us very keen insight into what the future requirements will be. And on top of the big 6 that are well-known in the U.K., you do know that is a retail-driven market. And we are constantly broadening our customer base. In 2019, we won Bulb, we won Ecotricity, and we won Just Energy, so we are increasing our market share in the U.K. Being in a retail-driven market, consumer-driven applications has been at the core of this SMETS rollout. SMETS is a technical standard for the U.K. This has been consumer-driven, has been at their focus the whole time. But we are now also closely engaged with many of our customers to also speak around operational efficiency. They are also under cost pressure. Some of them are also stock listed. So one of the topics that we're looking at, and Prasanna mentioned this before, is also the so-called anomaly detection that saves them from rolling the truck. So it's more or less a diagnostic log analysis that we're doing to do all the preventive maintenance and to, more or less, identify issues before they really happen. And this is something that is right now [Audio Gap] customers. We have a significant install base in the U.K., and we have very, very close customer relationships that we've built up over many years. We think that this is a great position to also further increase our business in the U.K. Let's talk about France. So what SMETS is for the U.K., Linky is for France, so that's their technical specification. There's an overall market of 35 million meters for the residential space. And it's an unbelievable number if you think that 30,000 meters go in a day. So the installers that are managed by Enedis, who is our customer, put in 30,000 meters a day. 25% of those are supplied by Landis+Gyr, and we have seen since the beginning of the rollout the overall suppliers, originally, they were 6 that were shortlisted and actually selected. They have now come down to 3, and we are 1 of those 3. One of the reasons that we are still in the game is around the high-quality standards that Enedis has and also our ability to deliver. We've produced significantly more Linky meters than we originally anticipated, so more have fallen to us. Enedis, as you may know, are investing heavily into the energy transition of France. There are many topics that are at the top of their agenda, one of them is e-vehicles, and they also want to further leverage their whole Linky technology. So they have a uniform implementation of all of this throughout France. And one of the topics they're looking at right now is the low-voltage distribution systems that they have, where they're thinking of putting in a so-called Pinky meter, which is based on the Linky technology and working with them as well. And just so you get a feeling for the market potential, we are looking at 750,000 low voltage distribution systems. So that is a significant business for us going forward. We're also closely involved in this energy electricity mobility topic that Enedis is looking at. What is interesting in France is because you also have a few car manufacturers there as well, so the group that we are working with on the future of electric mobility in France is very interesting for us. We see a number of opportunities working together with Enedis, and by the way, they have been our partner since 2007. Let's come to the Nordics, the 1 region where we see the so-called second-wave deployments. The second-wave deployments were kicked off by Sweden just recently. 5.4 million meters will be replaced with the new generation. Over 1 million of those have been contracted for Landis+Gyr. You all know that we have won E.ON Sweden. I mentioned this before. Right around the corner are Finland with 3.5 million and also Denmark. What is also specific to the Nordic countries is the so-called data hub setup. Now for those of you who are also knowledgeable on the U.K., it is very similar to the DCC or the Data Communication Center. What it actually is, is a centralized information exchange system. So each of the Nordic countries will have their own data hub where the information and the data will be collected and also shared with the relevant parties, so with the network companies and also with the retailers. This also enables additional companies to develop additional applications on top and to make this a more efficient trading platform as well. The value proposition that we have for the Nordic countries is rather broad. First of all, we were the first ones to bring the meters with NB, so narrowband, narrowband IoT technology to the market. This is something that we see with a high adoption rate in the Nordic market. We also see that this will cover the rest of EMEA quite soon. We also have very professional project execution capabilities with project management. Especially in countries where you are looking at the end-to-end solutions. This whole integration work that you're doing to these customers is extremely important. You need to understand their IT network. You need to understand their overall setup. And plus, there cannot be a hiccup in their overall operations. So our project management capabilities is a key success factor for the Nordic countries. And also, we have a very successful managed service business that we run out of our Finnish organization with 1.6 million meter points under contract. In general, the Nordics are leading-edge when it comes to outsourcing, so we see that they are very much focused on driving their strategy and their consumer engagement, and they really appreciate outsourcing topics that they feel is not core to their business. So we see this being a big trend and also a growing business for us, not only in the Nordics, but this will also come in the rest of Europe. Switzerland is one of the, let's say, newer countries or so-called early phase opportunities, as is also Germany and as are some of the Central and Eastern European countries. Switzerland is our home market, and we have been leader here for many, many, many years, and we are proud of it. It is a rather small market, so [indiscernible]. With 4-point (sic) [ 4.8 ] million meters installed base, it is a highly fragmented market. So for the size, we have over 600 utilities just in Switzerland. And each of these follow their own rollout strategy. So some of them are going very fast and plan to complete in 3 years, and others are going until 2027. The regulator expects Switzerland to have 80% covered by 2027. We are strong here, not just with the residential portfolio, but also with the commercial and industrial and grid portfolio that we have. And just recently, we won [indiscernible], and we'll announce another deal this week. It is an opportunity for us to also grow in managed service because many, especially the small- and medium-sized utilities, will fight hard to cope with the new requirements around security, with the handling of data, with deal at the overall software, so we're sure that this is also going to drive the managed service space. And mind you, while financial restraints are not really here in Switzerland, it is very difficult for our customers to find the talent and actually pull these people into their organizations. We plan to hold our leading position here in Switzerland. Germany is a completely different market. It's a very large market with 45 million meters, and they are delayed in their overall energy transition plan. They have chosen a rather complicated architecture where the meters communicate to so-called smart meter gateways. And their rule is that only households have to be connected that have over 6,000 kilowatt hours. But the rollout had been delayed because Germany needed 3 qualified, certified gateway providers. Now that has actually been the case now since December '19. And still we see that some of our customers, the utilities are stepping on the brakes. And why is this? It seems that some of the certifications and the regulations around the technical requirements don't fulfill all the requirements, especially around the tariff applications for residential metering. So the chances that these technical requirements will change are rather high. Nevertheless, we continue to ship a substantial amount of meters into the market that are very cost competitive and that actually make for an economically viable rollout. We're also now planning a pilot on a new offering around infrastructure-as-a-service where we're going to customers to actually package the software and meters, and together with financial partner, sell this as an infrastructure-as-a-service deal. This is something rather new. We will certainly represent next year again where -- what kind of success we've made in that space. Then Central and Eastern Europe, also a significant market made up of many countries of about 50 million meters. And that market incorporates both EU markets, but also non-EU markets. And mind you, even non-EU markets are going to roll out. So if you look at Bosnia and Montenegro, they are running smart meter rollouts. We have been in that region for more than 20 years. We also have a dedicated technical support team out of Prague. We actually believe that we have a very good market position there, and we are working together closely with many customers working on their specifications and their rollout schemes in that region. Also in this space, we are planning to win large market share. I've told you a lot about what we've accomplished in the last year. And let me tell you how we will take this forward to next year. First, we plan to win a large share of the upcoming rollouts. We will specifically address the small and medium utilities with our end-to-end solutions, and we will leverage our installed base of the 35 million connected intelligent devices with our grid edge intelligent applications. We will further strengthen these applications throughout all of EMEA and offering more and more beyond metering off -- beyond metering portfolio. Also, as mentioned before, we will grow our service business through adding portfolio but also through geographic expansion throughout EMEA. And last but not least, the personal focus of mine is around operational excellence. We have a number of projects in execution. It is very important that we professionally deliver these to the highest customer satisfaction. That will create recurring business for us. Last summer, we reorganized. We came to a functional organization that has brought a lot of traction, especially in the service space and in the customer execution -- customer project execution space. This has also improved our employee engagement, which has led to higher customer satisfaction. All in all, this translates into another year of hard week -- hard work, and I think with that, we will bring our 10% to the table next year. Thank you very much.

We've covered that portion of the program where it's our intermission. It's our break. We have 30 minutes. We'll return here at 10:45. There are refreshments in the demo room, which, again, is out the main door, to the left and you'll see it on your right. Thank you very much for your attention, and we look forward to continuing our program at 10:45. [Break]

Hello, ladies and gentlemen. If you could return to your seats, we'll begin momentarily. Very good. Well, thank you very much. I hope you had the opportunity to see some of the demonstrations in the demo room and see again some of our products and solutions, technical experts, and they'll be there during the lunchtime at the conclusion of the event. It's now time for us to pick back up on the presentations. And up next, we have Steve Jeston. Steve is the head of our Asia Pacific region, and I'll turn the stage over to Steve.

Thank you, Stan. And just bear with me while I synchronize all the screens. All right. Now they're synchronized. Good morning, everyone. Great to be here at Landis+Gyr's Second Capital Markets Day. I had the privilege of being here last year. And at that stage, I was also relatively new to my role although not at all new to Landis+Gyr. So I'm very pleased to talk about the progress in the Asia Pacific region in the last 12 months. Before I dive in, let me give you a little bit of perspective from my view. First of all, on the market itself, market perspective. We see this continuing shift to smart metering across many countries. That gives us confidence in our midterm. From an order perspective, we've had some important wins in the last 12 months. And thirdly, from a financial perspective, we've seen some tremendous improvement in our numbers. So let's talk about highlights. The slide says highlights but for those of you who are not so familiar with our business in Asia Pacific, let me first give you some background on our business. We serve the major Asia Pacific markets: Greater China, the Indian subcontinent, Australia and New Zealand and Southeast Asia. We even do a little bit of business in South Korea. It's an incredibly diverse region, in terms of geographies, cultures and the economic development across various countries. The supplier base is also very fragmented. We have the most significant footprint of any global company in our business. We have strong customer relationships. They're built on decades of presence in the region. We've been in Australia since the 1920s. We've been in India since the 1960s. We have 4 million smart devices connected across the region already. These comprise industrial, commercial and grid meters, load control devices and of course, more recently, our residential smart meters. We serve our customers through a mix of our own companies, in-country representatives and a network of distributors. We operate in over 25 countries in the region, and we serve over 180 utility customers. We work very closely with Prasanna and Susanne and their teams. Our market offering is built on technology and products from their regions. All right. Now to the highlights. In Hong Kong, China Light and Power has moved from a pilot phase of their project into a full rollout and we have been contracted to provide that. We will supply 900,000 meters to CLP over the next 3 years, there'll be more to come after that. Hong Kong Electricity (sic) [ Hong Kong Electric ] was in a similar position. They're in pilot phase. We've also won that project. They will deploy 600,000 meters over the next 5 to 6 years. We will deliver 120,000 meters over the next 2 years, and there'll be more to come. We have a great, great position in Hong Kong. In India, I spoke about our power project last year. That's moving forward. We now have 175,000 meters deployed there. It's actually the largest project of its kind in India. Now we've won a second AMI contract in India, [indiscernible], it's not as significant as TATA, but it's significant in terms of being another building block in our Indian business. In Australia, the power of choice regulatory environment is now driving the uptake in smart meters, and we are seeing growing market volumes. We've also made some small market share gains there as well. Overall, we've strengthened our leading position in the region. And as you will see, and as I mentioned, we've improved our revenues and our profitability. So let's indeed look at the numbers. We've been talking about recovery for a few years now, and we've certainly been working at it diligently. We've got a pretty solid base business in Asia Pacific region. And for those of you that are not again -- not so familiar with our business, just let me frame what that looks like. We sell grid meters into China and Southeast Asia. We sell heat meters into China. We sell commercial and residential meters into India, non-smart is the bulk of that volume. We sell gas meters across Australia and New Zealand, and we sell load control solutions also across Australia and New Zealand. On top of this, we have the Smart Electricity Metering business, the highlights of which I just spoke to. Together it has delivered us year-on-year revenue growth of over 30%. 32%, in fact, a pleasing result. We've taken big steps also, as I mentioned, on the order intake side, and what that means is our committed backlog has remained reasonably consistent despite the increase in revenues. I'm very pleased about that also. We've also been taking steps to reduce the cost base. I think last year, we spoke about some repositioning of a business, some restructuring that we had been doing. And over the last 12 months, we've been working very hard on changes within our supply chain. And that's all now paying dividends. Year-on-year, adjusted operating margins are up 5.1%. And if you look at it from an H1 perspective -- so H1 year-on-year operating margins are actually up 11.7%, something I'm really pleased of -- about. So a little bit about the market forecast. We're actually in a very dynamic region. We operate our business in Asia Pacific across 3 key geographies. In fact, 4 key geographies: China, India, Southeast Asia and Australia/New Zealand. And that's what I'll talk to today. Overall, annual growth rates are expected well above double digits, so 14%. So smart metering growth in our region is expected at 14% per year. And frankly, that's a very happy position to be in. It gives us great opportunities for continued growth. Now let's look a bit more closely at where we are active with smart metering, and that is Australia and New Zealand, it is Southeast Asia, and it is India. Australia and New Zealand is actually a high-value market for us. And up there, by the way, it says we're #2. Now I question that data at length. I'll accept it for now, but I guarantee you, when it says 2019, it will say #1. Anyway. All of the smart -- all of the meters, all of the electricity meters in Australia now have to be smart, all new meters or replacement meters. It's not a rollout. So it's not a big project-based transition. We don't have big projects like in North America, it's just every meter bought by our customers must be smart. So we have this sort of gradual transition over the next few years, where the meters will all eventually be smart. We expect perhaps around 500 -- well, we expect 500,000 smart meters to go into the Australian market every year. I think that the old meters will start to be replaced on a more regular basis, and I expect that annual volume to increase as well. It means a growing market for us in Australia and certainly if that #2 is true and there's definitely growth, market share opportunities for us as well. Look, in New Zealand, much smaller market. We refer to it as our eastern state. There, smart meter rollouts are nearing completion. So in the short term, certainly that's not a growth market for us, but we'll come back to that later. Southeast Asia. Look, the first movers in Southeast Asia are Singapore and Hong Kong. So Singapore Power in Singapore, obviously; and China Light and Power and Hong Kong Electricity (sic) [ Hong Kong Electric ] in Hong Kong. Next movers are acting now. Malaysia is probably the fastest follower; Thailand and Indonesia are moving forward as well. And pilot projects in place, tender activity has increased. Based on the short-term impact of our Hong Kong business, actually, we'd would expect that our market share position to improve in Southeast Asia as well. Again, it's a very fragmented market in terms of the supplier base. On the Indian subcontinent and for us, that is India, Bangladesh and Pakistan. We see a very similar theme to that in Southeast Asia. Tender activity is ramping up, and we are currently pursuing a number of targeted projects. India is a big market for us. We are #4 in residential metering in India today. We also happen to be #4 in residential smart metering in India today. I think my -- I'll be a happy person if we can get to #3. We've got good quality customers, we've got good margins and good payment cycles. These are very important things for us with respect to our Indian business. So to sum up. The shift to smart metering is happening and I can spend a few moments on the next slide talking a little bit more detail about some of those countries and what it means to our business more importantly. So the top of that slide, you see what we've called our growth markets. Well, really -- for us, that's our Australian business and our Hong Kong business. Importantly, the Australian deployments actually commenced over 10 years ago, so there are parts of the Australian market, and in fact, the New Zealand market, which we expect within the next 5 years would start to be looking at replacement cycles as well. And as I said earlier, this will drive our growth in the short to midterm, what's happening in those markets in particular. There are a number of countries in the early stages. Malaysia, I've mentioned, moving forward. In fact, we will deliver our first smart meters to Malaysia this year. India has a number of projects going on. I think the TATA power project and its significance to us has been mentioned more than once. And then Thailand, Bangladesh, Indonesia, Pakistan are all piloting, considering their rollouts and have -- and we are targeting specific opportunities across this base of countries. We were in Bangladesh last week as a result of recently submitting a significant -- a tender for a significant opportunity where we successfully demonstrated our Gridstream Connect RF solution. There are some countries here in the infancy stage, the Philippines and Vietnam is mentioned there. Philippines is a large market. I think that's something that should be of interest to us moving forward. And I haven't mentioned China, so I will mention China, hit the elephant in the room for us or for me, anyway. Look, China will actually commence basically a refresh of their metering base. This year, in fact, I think it will commence. The unfortunate thing about China for us it's just not an accessible market. There's no foreign companies playing in the mass market in China. We have business in some niches. We were not in the mass market, and it's not accessible to us. For 10 years on from the first smart meeting projects, as I stated earlier, and in particular, the experiences in North America and Europe are well-known across the Asia Pacific region. The complexities in this sector are continuing to grow, and we'll see that shortly. The need for smart metering is well understood, and there are a growing number of use cases. My colleagues this morning have talked about many of the use cases. And Prasanna, in particular, reminded us about the first and second wave use cases. What we see emerging in the Asia Pacific are tender requirements for use cases, both from first wave and second wave. And that's simply because we are 10 years further down the road, and the dynamics have changed, and we want both grid ops benefits and consumer engagement benefits to be considered. My approach to the large number of opportunities in such a diverse region is to focus on the ones where we have the best chance of winning. And frankly, the ones that also provide us the quality of business that we want. So let's turn our attention a little bit to Australia and New Zealand. And it was Australia Day yesterday, by the way. Today is our national holiday in Australia. But I'm here with you, and that's my pleasure. Okay. Smart meter penetration in Australia, it's nearing 30%. So actually, even after 10 years, there's still 7 million meters to go. What's also a little bit unique about Australia is it has a pretty sound population growth. So over the next 20 years, we'll see 2 million dwellings added into the country. So together, that provides us a nice, steady growth curve for our business in Australia. The electricity sector is facing unprecedented change. More than 20% of homes have rooftop solar, so 2 million out of 10 million homes. We have lots of sunshine, as most of you know. And recently, we've probably had too much, the truth be known, that's caused us some problems. 2 of my 5 direct reports in Sydney in the last 6 weeks put solar on that -- into their homes. It is prolific what's happening around solar in Australia. We also have an increasing use in battery storage. 30% of the global market for residential batteries went into Australia last year. It's anticipated that there'll be 1 million batteries installed in residential homes by 2025. The regulatory environment is actually changing and actually pushing the uptake of renewables, harder and harder. So what does it all mean? It means our customers and consumers need more information. They need more ability to control the use of renewables and storage at the grid edge. In Australia today, all meters must monitor 5-minute interval data. Now that used to be 30 minutes. That's a regulated change, and that is because of the impact of batteries as generators. It changes are dynamic on the grid. Our next-gen meters will also support Waveform Capture and are under development currently. This is the sub-second data that Prasanna mentioned. So we'll enable sub-second data capture, home waveform capture. That's not regulated, but it's what our customers are asking us to deliver so they can monitor and manage the grid dynamics far better. So in summary, the dynamics are significant and our Gridstream Connect solution enables this monitoring and control at the grid edge. Just recently, someone said, "Ah, so you guys bring order to the chaos." And I thought that was a nice way of putting it. Our plan for this market is to continue to execute our product roadmap, to deliver more cost-effective products, more feature-rich products. We will also continue to evolve the way our customers can access our solutions. We have recently implemented a software as a service solution. And through our managed service partner intelliHUB, our customers can take on the benefits of a fully managed service as well. Before I finish with Australia and New Zealand, it would be remiss of me not to mention just some early signs of movement to smart in both the gas and oil industries. We're starting to prepare for this, working with our colleagues inside Landis+Gyr and some partners. All right. I have -- I've been talking a lot about renewables and batteries, so I thought it useful to give you some details about one project that we've been involved with. This is Horizon Power's Sunsmart project in Broome, which is in Western Australia or Northwestern Australia. Simple enough. It's a tourist destination as it happens. So Horizon has provided a number of residential customers with subsidized solar panels and battery storage as well as a home energy management application. For Horizon, this has created a virtual power plant. We have provided the smart meters. And yes, with a grid age intelligence card. We've provided development versions of what Prasanna introduced earlier into this project. It runs a third-party application. So we've been working with a partner company, and they have put an application on that grid edge intelligence module. Our meters monitor the installation, the third-party application, controls the installation and provides information to the consumer. For Horizon, it means a reduced carbon footprint. Broome is supplied by diesel generators. Diesel generation in remote areas of Australia also comes at a huge cost. So there is a significant reduced cost to serve on the part of Horizon. In fact, nearing USD 2,000 per customer reduction in what it cost them to serve these particular customers. And they get a more engaged consumer, of course. For the consumer, they get more reliable supply, they get greater ability to manage their use -- energy use and thus, the costs. And I think with a reduced cost of supply -- to serve of USD 2,000 a year or near on it, that will be passed through to the consumers as well. So more broadly, what I see is that this uptake of renewables and battery really means a change. I think distribution business, in particular, will need to shift from being network providers if you like, asset providers, to network service managers where they are managing the complexities of the renewables and batteries and electric vehicles that are sitting on that network. I think this is a useful insight into the future of the energy landscape in Australia. So let's move on to India. There's a big number up there, $86.1 billion. The World Bank estimated that, that was the size of the inefficiencies in the energy sector in India report landed last year. It's the largest accessible market in terms of meter volume that we have. We have a great position there. I said we'd been in India since the 1960s. We shift or deliver into India today over 2.5 million meters. And with the nature of those inefficiencies in the energy sector and the huge cost to the economy, there's going to be a lot of focus on the energy sector. And there is a lot of focus on the energy sector in India. I don't think -- and I'm not saying we can help fix a $86.1 billion problem. A look at next bubble, 19%. We can certainly help with that one. That is the estimated losses across the distribution networks. This is losses due to the fact that the networks themselves are quite poor, there's theft and in fact, there's even in India a lot of unmetered supply. Like many other countries around my region and elsewhere in the world, there's also huge uptake in renewable energy in India. Fifth largest installed base globally. We have a program at the moment that will treble that installed base. So they've got losses. They've got the impact of renewables. I would say this is an energy sector with big challenges, with big changes coming as well. No surprise then that the central government, once smart meter is deployed, 240 million of them. And they certainly have a very ambitious plan. Now I don't believe in India's central government's ambitious plan of 2 years, but certainly, over the next 10 years, we will see that transition occur. We have the Delhi power project -- sorry, the TATA Power project in New Delhi. Now built out to 175,000 meters, as I mentioned. And in fact, we've got an order just Friday, from TATA, for an additional 50,000 meters. We've basically developed with -- by working closely with our U.S. colleagues and proven Gridstream Connect RF for the Indian market. It delivers to TATA, smart metering and network automation applications. This is great for us. It's a really good reference. And leveraging the learnings of that project, I feel very confident that we'll capture our share of the shift, as India moves across 2 smart meters. Now of course, India is a low-cost country. So it is very important that we continue our strong focus on lowering the cost of hardware that we are supplying into that market, and we're doing this. I'm also pleased to report that the outcomes of our R&D innovation program are helping us, and in particular, with some large-scale integration around our communications technology, which is driving costs down. Let's move on to Southeast Asia. Now for Southeast Asia, the way we look -- I'll put it differently. The way we look at Southeast Asia, we include Hong Kong. And actually, if it's not in China and not in India and not in Australia, it gets bundled into Southeast Asian business as well. I don't -- it's a little difficult to talk about Southeast Asia given there's many countries, it's very diverse, very fragmented in many respects. So I think best to focus on the big picture here. 215 million electricity meters across this region, and they're going to be replaced with smart meters. I can't tell you at what pace it will happen, I can tell you, and as I've mentioned earlier, the momentum is there, the shift is happening. I would anticipate next 10 years. Energy demand is expected to grow by 80% as many of these countries develop further increased economic development. And much of this increase in energy demand is going to be provided through renewable energy sources so that it will also change the landscape across many of these countries in the coming years. Last year, there were 6 million meters put out to tender in Southeast Asia. I think that shows the sort of momentum that is emerging. We contracted 1 million of them in Hong Kong as it happens. I mentioned that earlier. Important to understand also that Southeast Asia is actually a business transformation for Landis+Gyr. Our business in Southeast Asia, to date, has been a very niche product business. We have been selling grid meters to a number of countries. As these countries transition to smart metering, that is going to provide us a much broader business base in the countries that we have been serving so far. Now very importantly, of course, we have our Hong Kong projects. Why are these so important? Well, yes, they're going to provide some growth for me in the short term. But what they do, particularly for Southeast Asia, is they build our capability. Our Gridstream Connect solution and our delivery capability. So our market offering and our ability to deliver to customers is built off these 2 Hong Kong projects. I think also, they're a great example for others. These 2 projects are a component of Hong Kong government's smart city vision. They have a strong focus on the need for improving the customer -- the consumer experience, and they look at them also as foundations for additional smart infrastructure applications. And whilst -- and we are having innovation workshops with our customers to explore what else we can do with these networks. I think the one thing about Southeast Asia is also that customers want experienced international players involved with this transition. And of course, that's us. Okay. In wrapping up. I think I want to leave you with 3 key messages. I did it last year as well. I had 3 key messages as I wrap up, I have 3 key messages as a wrap-up also this year. One. Smart metering market is growing across the region. There are 500 million meters that are going to be upgraded in the coming decade or so. 500 million. I'm very pleased about that. Two. We are delivering some of the highest profile projects in the region. In fact, the COP project and the TATA projects are very, very high profile projects. They have a lot of government attention. They have a lot of attention from across the region in general. And of course, as I've said before, they give us their references for the future in terms of our market offering and in terms of our organizational capability to deliver. Third. Last point I'd like to make. We have the really strong focus on improved profitability. And I hope you could see at the outset that we've already delivered on some of this. We've got a lot more to do, and we'll continue to focus here, but over the last 12 months, I think we've turned a real corner. So with that, I thank you for your attention, and I'll hand over to Jonathan to talk through our financials.

Thank you, Steve. Good morning, everyone. So at the Capital Markets Day last year, I talked about a strong Americas business and expected recovery in EMEA and Asia Pacific and we provided mid-term guidance of mid-single-digit revenue growth and expanding margins. I think today, the key takeaways are that our Americas business remains on track. Yes, we have some temporary headwinds, driven by regulatory design, so that is not reflective of any structural changes to the market or the business opportunity for us, and our strategy in the Americas is intact. Secondly, we are delivering the recovery in EMEA and Asia Pacific, and we should expect to see more progress on that in the midterm. And finally, our midterm guidance remains consistent with the prior year, albeit with some lower near-term expectations given the temporary headwinds in the U.S. Let me start by talking about our grid performance in H1. So overall, we saw a solid revenue performance in H1 with good margin improvements coming through in EMEA and Asia Pacific. Revenue was up 3.4% in constant currency terms compared to the first half of last fiscal year. The regional detail comes later, but the main takeaway is that as expected, North America revenue was impacted by 2 customer projects rolling off, and the growth was driven by EMEA and Asia Pacific. Good adjusted EBITDA margin development, excluding the one-off Brazil effect, adjusted EBITDA was up 130 basis points compared to the first half of last year. And that reflects the good continued profitability in the Americas and the turnaround in profitability in EMEA and Asia Pacific. But let's dig into the Americas a little more detail. So in summary, in the first half of fiscal year '19, we saw pretty resilient margins despite some expected revenue headwinds in North America. Revenue actually declined by 4.1% in constant currency terms compared to the first half of fiscal year '18. And as we said when we gave the full year guidance for this year, 2 projects rolled off in the U.S. in the first half, as Prasanna mentioned, but -- so the decline was as expected. Lastly, a pretty tough comp in fiscal year '18. It stood in Japan, in the first half of last year, revenue grew by 14% in constant currency. That's when these 2 projects in North America were running at full speed. So the 4.1% decline in the first half of this year, needs to be put in the context of the 14% growth in the first half of last year. This is also the lumpy revenue streams which Richard mentioned. It is a part of our business. And particularly, as we see regulatory delays becoming more important in the U.S., it's likely that we'll see a lumpier revenue profile in the future. Adjusted EBITDA of 19.3% of revenue, that benefited from the $5.6 million Brazil VAT settlement. So without this, the impact of 18.2% of revenue. So overall, a continued strong performance in H1. That said, we do have some headwinds on the regulatory delays materializing in the U.S., which Prasanna mentioned. This will affect our results for the full year and our expectations for the near-term and it's the reason why we took our FY '19 revenue guidance range down by 1% when we announced our first half results this year, and also why we now expect to be the lower end of the guidance ranges for the full year, and it could lead to lower revenues in the Americas in FY '20. Coming to EMEA. Overall in H1, we saw a strong margin turnaround, combined with good revenue growth. Revenue was up by 10.5% in constant currency terms, albeit against a fairly weak comp in the first half of fiscal year '18. And that was driven by strong revenues in the U.K., expected Brexit destocking did not take place, and the transition to SMETS2 is fully completed. On the margin side, adjusted EBITDA margins increased from a loss of 0.1% of sales in the first half of fiscal year '18 to 7.6% in the first half of this fiscal year. These are the drivers that Susanne mentioned though the benefit of product cost downs coming into our large AMI projects, continuation of Project Lightfoot, the EMEA supply chain and outsourcing supply chain restructuring and outsourcing project, where we expect to capture $20 million of benefits by the end of fiscal year '19, and the completion of Project Phoenix in fiscal year '18, where we've reduced the OpEx of EMEA by just over $20 million. I talked about Brexit uncertainties last year. Unfortunately, it's pretty much the same slide this year. The U.K., obviously, exits from the European Union in a couple of days' time. So at one level with the transition agreement being in place, the short-term risks around Brexit have reduced. However, the future trade relationship between the U.K. and the European Union remains to be negotiated, which means that a no-deal scenario is still possible at the end of this calendar year. So what that means for us is that there are risks around the U.K. trading on WTO terms, which would give rise to import duties of 1% to 2% on the products that we bring into the U.K., so is the potential for supply chain disruption at the border, although we expect that would be very short term. And then we have some risks around FX fluctuations. We sell in pounds to our customers in the U.K. and ultimately, the supply chain is denominated in U.S. dollars. In terms of mitigations, obviously, we've worked hard with our outsourced providers, which are the big global contract manufacturers to mitigate supply chain risks. So I think we feel relatively comfortable on that side. And in terms of the FX exposure, we have over $160 million worth of FX hedging in place which covers a significant amount of our exposure for the next 24 months. Turning to Asia Pacific. In summary, we've seen a strong margin recovery in H1 as revenues grew and the cost base was lower. So as Steve mentioned, revenue was up 32% in constant currency terms. Three main drivers for that revenue growth: In Australia, our revenue to the intelliHub JV picked up significantly. This is -- and the JV is the -- where we transferred our intelliHub service business to the joint venture in fiscal year '18, and that's really helped us get access to the market. The CLP power contract in Hong Kong, it's a real flagship project for us and it also gives us the opportunity to drive other business in Southeast Asia. And as Steve mentioned, the TATA power contract in India, really important and also starting to see other opportunities emerge. On the margin side, a really strong recovery. We posted a loss of 5.6% of revenue in the first half of fiscal year '18 and a profit of 6.1% in the first half of fiscal year '19. And that's driven by the margin flow through from a higher revenue, combined with our lower cost base, the lower cost base being derived from the transfer of some of our service activities to intelliHub and the restructuring measures that we took in fiscal year '18 on both the OpEx and supply chain sides. And a moment about our asset-light business model. The shift continues towards an asset-light business model through further outsourcing, and this is increasing our operational flexibility. The chart on the left shows how our CapEx-to-revenue ratio has developed. So it's shown consistent declines and was at 1.5% of revenue in the first half of fiscal year '19. And that is -- some of our CapEx is now being funded by our outsourced partners. In terms of outsourced partners, Susanne mentioned the project life for the restructuring in EMEA is getting towards its end, $20 million of savings expected this fiscal year, $25 million by fiscal year '20. But the outsourcing brings other benefits as well, not just lower CapEx and product costs, but also greater flexibility in our production capacity and a variabilization of our fixed cost base. I'll just say a word on supply chain constraints because we had some quite significant impacts from supply chain constraints in fiscal year '18, mainly related to patented components that were in shortage at that time, and we incurred $12 million of incremental costs in the first half of last fiscal year. Now that is just now largely behind us. We have a few components remaining in shortage, and we incurred incremental costs associated with those constraints of $3 million in the first half of fiscal year '19. And we continue to work with our outsourced partners to leverage their supply chain capabilities and reduce the risk of recurrence. Cash flow remains on track as in previous years, a strong skew to second half. And historically, our second half will be much stronger than our first half. I will say a few words about warranty cash outs, it was always a significant issue for us. So warranty cash outs in fiscal year '18 were around $45 million. And in the first half of fiscal year '19, around $23 million. So running at the same rate of about $45 million per annum. There is some unpacking in that $45 million. There's 2 major amounts in there. The first is the legacy litigation settlement in EMEA. This is where we signed this litigation settlement in EMEA in January 2017, but with payments spread over several years. And the final payment of $20 million due under that litigation settlement goes out in fiscal year '19 and that is the end of the cash out. So we will have a $20 million tailwind in fiscal year '20, associated with lower warranty payments with that litigation settlement coming to its end. So that explains $20 million out of the $45 million. The majority -- the vast majority of the remainder of the $45 million relates to the legacy component issue in North America. That's where we booked an additional provision of $11 million in the first half of fiscal year '19. Despite the increase to the provision the in the first half going forward, we do not expect to see any increase in the levels of cash outs associated with that issue. Turning to our net debt position. We have low net debt, which gives us a solid balance sheet position, at September 2019 of $99 million of net debt. It was 10% down compared to the $110 million at September 2018, and 0.4x adjusted EBITDA September '19 compared to 0.5x September 2018. If you look at the movements since the year-end, since March 31, where it was at $17 million, so it increased from $17 million up to $99 million driven obviously by the dividend payment of $94 million that goes out in the first half; continuation of our share buyback program, where we cashed out $21 million in the first half; and offset by the cash generation of $33 million. So overall, the balance sheet remains in good shape. Coming to capital allocation. Our policy remains oriented to creating shareholder value. So our first priority is always to invest in the organic growth of the business. And the primary spend is in respect of our R&D. We spent $152 million, as Richard mentioned, in FY '18 to maintain our market leading portfolio. CapEx of $40 million, as I mentioned earlier on, reducing as a percentage of sales. Our dividend remain -- we remain strongly committed to the dividend, paid out CHF 94 million in July 2019. We announced today a minor revision to the policy wording, so that we will, in the future, the wording will be to pay out approximately 75% of free cash flow, thanks to the M&A rather than at least. This is just to give the company a little more discretion over the dividend. It doesn't signal any lessening of our strong commitment to the dividend. The new policy applies for the first time in fiscal year '20. In other words, the dividend to be paid in July 2021. The existing policy applies to the dividend to be paid for this year in July 2020. On the M&A side, we have significant debt capacity in our balance sheet. We're guiding for net debt to remain below 1.5x adjusted EBITDA, but compared to the 0.1x adjusted EBITDA at the year-end, that means we have around $350 million of debt capacity in the balance sheet. And the type of acquisition targets we're looking for would be a technology or a service play, aligned with our grid edge or smart infrastructure strategy. And finally, we continue with our share buyback program, which we announced at the Capital Markets Day last year, and we've now completed approximately CHF 35 million out of the CHF 100 million program. Coming to the fiscal year 2019 guidance. In summary, we maintain our fiscal year guidance, but we're now signaling we expect to come in around the lower end of the ranges for revenue, adjusted EBITDA and free cash flow. So on revenues, we've guided for growth in constant currency of 1% to 4%. However, we do see the regulatory delays materializing in the U.S., causing us some headwinds. And this is with some projects starting later than we expected. And this is pushing us to signal that we'll be around the lower end of the revenue range. Adjusted EBITDA, $240 million to $255 million. And again, the weaker revenue in the U.S. will push us to the -- around the lower end of that range as well. And likewise, on free cash flow, with a guidance range of $120 million to $135 million. Coming to the midterm guidance. The guidance now runs out to FY '22 as opposed to FY '21 last year. And overall, it's unchanged from last year with a positive outlook, that was temporary near-term challenges in the Americas. So we're guiding for mid-single-digit compound annual revenue growth. But this will be back-end loaded towards fiscal year '22, given the regulatory delays in the U.S. Adjusted EBITDA of 13.5% to 14.5%, an increase of up to 100 basis points; further margin expansion in EMEA and Asia Pacific; free cash flow above $150 million; and net debt remaining below 1.5x adjusted EBITDA. So let me just give a slightly more color from a regional perspective on that guidance. So in the Americas, I'd like to emphasize that we have a pretty solid pipeline in the Americas, and that will secure the mid-term growth of our business. Our grid edge story has real traction with customers. So the regulatory delays we're seeing, they are a real issue. They could cause lower revenues in the Americas in FY '20. And of course, if revenues do come down in FY '20, this could cause a temporary dip in margins in that year before recovery thereafter. And clearly, we'll take appropriate measures on managing our cost base through this phase. We do want to be absolutely clear, the pipeline in the Americas remain solid. There's no structural change to the market opportunity or our bids opportunity. And the midterm story for the Americas remains completely intact and our strategy is correct and being validated by the feedback we're getting from customers. In EMEA, net revenues are expected to grow based on targeted profitable contracts. The U.K., obviously, will remain very important throughout the midterm to us. And the commitment to achieving around 10% adjusted EBITDA in FY '20 remains. In Asia Pacific, we expect to see revenue and margin expansion primarily driven out of the markets of Australia and New Zealand, Southeast Asia, particularly Hong Kong and India. So in conclusion, just wanted to repeat, the Americas remains a profit engine of the business, mid-term grid edge story remains intact with some near-term headwinds materializing. EMEA and Asia Pacific, we've seen good delivery on the margin improvements in EMEA and Asia Pacific, and we expect to see revenue growth from these regions to drive further margin expansion. And with that, I'll hand back to Richard for wrap up.

Thank you, Jonathan, for that. And I'm going to end with a few comments and thoughts, and then we'll move right into the Q&A session. As we wind up today, I'd like to leave you with a few comments from my perspective. Yes, we are a part of an essential industry called energy, with a leading market position where the industry is going through a transformational change, the 3Ds I referenced before. Our corporate social responsibility initiative will continue as we play our part in improving the world we live in. We are in a growing market. However, as we've said before, the growth can be quite lumpy at times due to the size and timing of the projects. But I want to reiterate, particularly in the U.S. where we signaled a temporary delay in some of the regulatory discussions, that we do not see or anticipate a structural change to the U.S. business. We have the ability, and even more importantly, the conviction to invest in our leading-edge technologies. Regarding our financing, as Jonathan said, we have improving margins, a strong free cash flow, a solid balance sheet and attractive dividend policy. Lastly, our strategy is unchanged. We are committed to delivering on the 3 growth platforms: smart metering, grid as intelligence and smart infrastructure. With that, I'd invite the previous speakers to come on stage and join me, and we'll open up the Q&A session.

If we could -- okay. No problem. And just sit next to Prasanna because you guys are going to have to share the hand microphone. Okay. We've come to the -- we've come to the question-and-answer portion of our event. We've got the speakers that have microphones, and we would simply ask that those in the audience who will like to ask a question, wait for the microphone so that everyone present here can hear as well as the people who are on the audio webcast. So do we have any questions from the audience? Who would like to start? Right over here?

I'm interested to learn about your price power, especially being #1 and spending so much R&D and developing smart meters. How do the new generation compare in terms of gross margins and pricing?

Prasanna, maybe from your perspective and for me as well. [indiscernible] use the handset.

So we're participating in many of the pipelines today with our new generation technology. And we command a premium for it because the market is ready to pay for it, mainly because they see value in it. They see value on the grid edge side. They see value on the consumer side. They see that it solves many of the problems that they are faced with, as the grid gets more and more decentralized and the challenges that they face from a decarbonization point of view. So we see the same trend that we've seen in the Americas, as you've seen from our profitability, and we will continue to deliver those results.

Let me just add one perspective on there as we've talked a lot about the apps. And I think the challenge for us in terms of margin expansion on a group basis is, can we find a way to monetize that. And I can tell you that we're in the early stages with customers who've -- have a pension for wanting to grow these edge cards and develop the apps. What isn't clear yet is the model. The model in terms how we expect to monetize that. We've talked about things like a recurring revenue, whether pay a onetime fee and then as they use it on a per meter basis, on a per meter basis, get an annual -- an annual fee for that. But I think that's a big question is our ability and the timing in terms of being able to monetize the apps that we're talking about, in addition to the next-generation meter that PV mentioned.

Okay. Next question, please.

Patrick, Credit Suisse. Basically, we are seeing your share price, we're taking 10% plus mainly on the delays in America. Can you provide more insights why you believe that these delays are not driven by a structural change in the market? I mean, we need to gain confidence that it is a kind of nonstructural issue, but we lack the proof right now, just telling us that it is nonstructural. It is simply not enough to see the share price recovering. I mean, as, for example, the way how the public regulatory is approving the process change. I mean, this obviously is a technical reason. This would be interesting to know. And also has -- is it possible maybe also to get more numbers around this topic, just that we can model our forecast for 2020, 2021 because, currently, it remains very raked. Sorry for the very long question.

Thanks for the question. I'll go ahead to take it. I think, listen, from the structural perspective, I would emphasize an emphatic no with regarding the change in the U.S. business, and let me give you a couple of things to think about. Yes, we talked about the delays and hopefully, you got a better idea. I think, for the first time, we quantified the number of utilities that are going through this delay. We talked about some of the reasons for this. We have all seen this in the past. The problem is, for us, is sort of the aligning of the stars where we had a perfect storm, we had a couple of large utilities rolling off that we signaled to. Had we not seen these delays, we would have had the uptake. We would have had the uptake, and we would have moved forward. So the fact that there are 3- and 4-year, 5-year deployments, several hundred million dollars, when you have 6, even 12 months delay coming off the peak in the previous half, that is not immaterial. And that's what we're signaling to. I can also tell you that in these discussions with the regulators, they are, and as Prasanna said, they are bent on moving forward with the rollouts. The thing that we're seeing, however, is slightly more scrutiny on the benefits in the cases -- in the rate cases that they're putting in front. So when we talk about temporary in nature, I firmly believe that. The last thing I would leave you with is we have insights into the pipeline. And I can tell you, and as Prasanna said, it is extremely robust. We are in a good competitive position with regards to moving those from pipeline into rollout. Hopefully, in the very near future, we'll have more announcements around this, right? I know -- which will help. But I would just signal that, no, we don't -- we do not see it. Structurally, we do, in fact, see it as temporary nature. Maybe regarding some of the data and information?

In terms of the sort of the -- am I on mic?

You're on.

In terms of the sort of financial guidance, I think, obviously, we've guided for mid-single-digit revenue growth to the midterm. And then we've given some caution around FY '20, and signal that in the Americas, there's a -- it could be the case that the revenue might even be lower than this year. Just signing that as a possibility. But what I would say is that for us to achieve the mid-single-digit revenue growth, which we are absolutely committed to and we have line of sight to, but obviously, given the importance of the U.S. business, the Americas business in our total undertaking 56% of revenue last fiscal year, clearly indicates that we are very confident that what we're seeing in front of us is a temporary issue. We see solid pipeline, as Richard mentioned. And the numbers -- the mid-single digits that we're talking about is well supported by our pipeline view, and that's why we're confident that this is not a structural reset of the U.S. market. It is a temporary issue only.

Next question, please.

You mentioned the solid balance sheet you have, you're buying back all shares. Can you tell us something about your acquisition plans maybe?

Yes. As Jonathan mentioned, we have the firepower to potentially add more debt and stay within our covenants around the debt ratios. I've stated in the past, sort of a cadence to this. At the time of the IPO back in 2017, it was clear, fix the business, Richard. We're entering into 2 loss-making region, et cetera and I'm happy to say that we've made significant progress. So a lot more focus this last year has been on the M&A opportunity. What I would signal is that a couple of areas. One, we talked a lot about the growth being in software and services. Now as I look upon the globe that we work in, I don't see anything sort of transformational in nature. So out of the division, perhaps more of a regional bolt-on where we might have the ability to shore up a product offering, et cetera. So clearly, a technology that would help us grow software and services. Now at the same time, we spent a lot of time on this connected devices in the $90 million, $100 million range. That is a captive asset that we should be able to grow revenues with. So what I'm signaling as well is if there's an asset out there where we can grow our market share, perhaps, strengthen our portfolio, but at the same time, grow our market share, that would be attractive as well.

Next question.

Could you give us a little bit more light on what the timelines are likely to be for Germany? Because I've rather got the impression that you are sort of on ice waiting for the decisions, which came through in December, but it still seems to be that we're looking out quite far into the future as to how rollout might happen.

Susanne?

So we, ourselves, or as Landis+Gyr, we are not waiting, but I have to say, overall, the market has not taken off. For those of you who were here last year, the big, I would say, blocking point was around the certification of these so-called smart meter gateways. They took much longer than originally anticipated. Again, the last one has been certified in December. We are further selling our meters into the market to various utilities. But I would just say the big jump that everybody was expecting with this last certification has not really happened. There are, as I said, rumors out that this technical requirement will change on the gateway. So we believe we're actually well positioned and that we do not have a smart meter gateway in our own portfolio. I'm sure you're aware, if that is the question. We will look at this again once we are sure that the requirements are set. However, we believe that we have the right way to go-to-market today with our very competitive meter portfolio as well as our infrastructure-as-a-service business model that we're going to pilot in the next half year.

Okay. Work our way down that row.

Maybe just a follow-up question on Germany. There were just recent press articles kind of criticizing smart meters, those above 6,000 kilowatt per hour. They do not synchronize with loading stations of e-mobility at home. Is this also something that could delay or result in change of requirements? Is it just a matter of software updates? Or is it also a hardware issue with the current meters in Germany? And this is something -- issues that could also be faced in the U.S.? Or is it really -- or in other countries? Or is it isolated to Germany?

So the architecture that the German regulator has chosen is unique to Germany. We do not see that anywhere else, at least throughout EMEA. I am not -- I'm aware of those press articles. Honestly said, we are going to have to look at what exactly that means. From our point of view, the architecture that has been chosen leads to, I have to be careful now what I say, non-smart meters, in many cases, where the intelligence comes from the gateway. Again, looking at this, this would not be the architecture that we certainly as a company would be supporting, so I do think that there will be a rollout. I think they will be having a close look at exactly kind of use cases will be blocking today. It's not the e-vehicles that are blocking today. It's the tariff applications and the synchronization with the residentials, not specifically only out of the electric vehicle. I would just tell you that from what we've seen, many of our meters that we don't sell in Germany today would be able to fulfill that requirement. The ones that we are selling today or -- have less functionality. So I would say we are very comfortably set up, should market go in that direction, our knowledge and our more -- meter portfolio would be well positioned for the German market.

I'll just say from the global perspective, we do not see -- you see Germany as a unique situation, but the regulation in place and other -- yes, the global market is well aligned with the technology rollouts, et cetera. So we don't see the issues and delays that we're seeing in Germany from a global perspective.

Then another question on that. Yes. In France, you mentioned that the number of suppliers went down from 6 to 3 because of the quality amounts or kind of because the quality -- you mentioned something around the quality requirements. But we know that the margins are very thin in France. So could it also be that some suppliers just walked away from the second tender because it was not attractive enough? And do you think the consolidation in supply base can have a positive impact on your margin? Or did it impacted your pricing for the second tender?

So in general, we are very happy with our business that we are doing in France. You are correct in the 6 to 3, there were various reasons there. I don't know, I cannot see into the head of our competition. So I don't exactly know what that reason was, but the truth is that some of them were simply not able to keep up with this 30,000 meters a day. So you have to understand that the delivery reliability and your supply capacity is extremely important for that market. On top of this, they have very strict testing and quality tests, from the APs themselves. They are -- they have a very, very large engineering group. I've been at their testing facilities myself. It's extremely impressive. And I do know as a fact that some of them were simply not able to deliver for a while. And what you have to understand is that these installers, they work with 1 or 2 suppliers that they have in their cars, and it's not like they jump from week-to-week to one supplier. So we have certainly won some market share in that space. And what is also important is that we do not supply the whole range. We are focused on the so-called polyphase. There's also a single phase. And we find from our overall business strategy, a margin view, we have taken the right strategy there.

I have a couple of questions on the profitability and the EBITDA margin guidance longer term, the 13.5% to 14.5%. If I listen to you basically talk about Europe getting towards the 10% or above the 10% eventually, you want to recover in the U.S. again, longer term, if it was down a little bit. It looks like the 14.5% should be achievable based on what you say on the divisions. Maybe you could talk a little bit about what the 13.5% covers and why not the ambition to go above 14.5% for the group, given what you say about the 3 divisions. And maybe some comments around that. You've had 2 restructuring plans as well in the past. Do you need a new plan to get margins up or support them where they are? Or is the maintenance restructuring sufficient to offset the price pressure and so on, you have in your business?

Jonathan?

Yes, I mean, let me talk to the margin topic. I think you're right to point out that 13.5% to 14.5% is probably relatively cautious. I think if you look at the regional split, I mean, clearly, we're very committed to achieving the 10% -- around 10% by fiscal year '20, next fiscal year in EMEA. We've signaled that we think 10% is a longer-term aspiration for Asia Pacific is achievable. And that any dip we see in the Americas EBITDA is only going to be a temporary effect. So I think if you put that in context, obviously, the 13.5% to 14.5%, gives a little bit of buffer against something not fully materialized in all those 3 regions. So it is a relatively cautious view, I think, of where the margins could be, let me put it in those terms.

Regarding the restructuring, let me take that one. You're quite right, so we had announced $40 million in the Lightfoot and the Phoenix. And let's have a look at it. We are continually improving our cost basis. And so don't be surprised if, yes, we have a maintenance sort of a maintenance restructuring savings. I think we signaled in the U.S. that during this temporary dip -- what you do is you manage your costs. So we need to do that. We need to do that as these delays are effective -- to effectively manage our costs. So I would call it, just what you said, maintenance restructuring, but we have -- don't have any plans of a large scale, Phoenix-like or like-for-like program.

If you could get the microphone to the middle. Thank you.

From your presentation, I took the hint that you want to increase market share. At the same time, I'm looking at Itron, and they expect the markets to grow 5% to 6% over the next few years. Given your mid-single-digit growth guidance, that would mean keep your market share. Can you explain that a little bit?

Yes, I think we're all just trying to err a little bit on the side of caution. And we accept that those market surveys are out there in terms and where I -- what I have tried and said around the market growth. I think the view we take is that we would sometimes have seen that some of those markets surveys have been a little bit too optimistic. So obviously, we're always looking to err a little bit on the side of caution relative to our own expectations for our growth. So it certainly isn't the case that we're looking to lose market share at all, and if anything, I think we've got some pretty good reasons why we might win market share in 1 or 2 markets. But overall, I think we're comfortable with the guidance we've given today.

Yes. Let me just address your point because you made a comparable to Itron and they may have signaled 5% to 6%, and we're mid-single digits, but you have to keep in mind, Itron works in 2 markets, gas and water, and 90-plus percent of our business is on the electricity side. So be a little bit careful. You have to break it down into their respective 3 markets: gas, water and electricity. I know from electricity perspective, I'll just say we compete very nicely, obviously, very aggressively with Itron. As Jonathan said, we have expectations to actually grow market share for sure. And in -- the midterm guidance should reflect that across the globe.

Okay. Any other questions? I'll pause because I know there's 1 or 2 still in there.

A question on your commercial opportunities in water. I mean, you don't provide hardware there, but you've got the sensors that you attach to them. And you mentioned in the U.S. that there is one customer that does with your gas, water and electricity. Is there any realistic opportunity outside of that customer or in other regions just with the sensors? I know there's some corporations with water meter -- with one water meter manufactured least. Can you elaborate a bit on that?

Water in the U.S.

So I'll speak for the water in the U.S. situation, and I know I gave the example of Colorado Springs that we recently signed. So if you look at the top municipals in the U.S., they all tend to be skewed towards electric and water, although there's some municipals with only -- electric only. All of those electrical combos are served by Landis+Gyr. I'll use Jacksonville as an example. And there's a few more that we service. Anaheim is another good example. In the public power space, there are some opportunities with smaller municipals with electric and water. And we continue to win our fair share in that space as well. We don't publicize it as much, mainly because they are much smaller endpoint sizes. Large cities tend to be 1 million endpoints. The smaller one tends to be between 10,000 and 20,000. But there's a good amount of small cities that have electric water combo from Landis+Gyr. And much like you said, it's the -- it's our intelligence in the water endpoint. Just to make a point very clear is we support the largest fleet of water meters with our technology inside it.

I know there's some activities going on in your neck of the woods.

Let me add to that. In fact, we're talking to CLP in Hong Kong about building out our capabilities to support water metering in Hong Kong. CLP has an interest to be a service provider for smart water. So that's one area. So there is some overlap, certainly. In Australia, pretty much the industry is moving smart. It's in its very, very infant stages. And I did mention that we are working to see what solutions we can bring into the Australian market by working with our own technologies and partners as well. There is some movement.

I think the other thing just like last comp would be, it's not inconceivable to think about that grid edge card I showed you, embedding it in a water meter. It doesn't have to be our own water meter. If you think about that, you open up a number of potential use cases. Again, very early, very early, but when we talk about this grid edge card, it isn't just meant for, although the primary initial advances will be in our meter, it can go into other types of products as well, enabling a whole number of use cases, et cetera. Again, potential revenues for us down the road.

Okay. Is there a last question out there? Over here, [Gunnar].

Can you please clarify what you mean by approximately in terms of your dividend policy? What sort of range are you thinking of? And it's got me confused. And I don't quite understand why you're tinkering with the dividend policy when you have such a strong balance sheet. And you've already said that there's no big transformational M&A coming. You could quite easily have just left it alone. Why make the change?

Yes, I think -- I mean, we certainly remain strongly committed to the dividend. So I wouldn't want any other impression to be left. I think we're just conscious that the cash flow can be somewhat uneven metric. And therefore, we'll just give a little bit more discretion to ourselves and to the Board around that. I certainly don't think that it's -- my expectation is that we'll keep paying it at 75% level. So this is more around giving the Board a little bit more discretion rather than signal that we're going to come off of 75%. I think on the M&A side, although, we are seriously looking at that possibility. So again, I wouldn't want to give the impression that M&A is off the cards for us. It absolutely isn't.

Okay. I think it appears that all the questions have been asked and answered. And -- but there's opportunities to engage with management still remain. It's now time to adjourn for lunch, which is being provided in the demonstration room. And so we want to thank all of you for your attention and your participation today, both here and on the audio webcast. And with that, we'll conclude the formal portion of the presentation. Please enjoy lunch before you go and get the question -- any questions you didn't ask in here answered with the executive team over there. Thank you, and have a good day.