Aalberts N.V. (AMS:AALB)

Earnings Call: H2 2017

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Feb 28, 2018

Welcome, people in the room, and welcome, people joining our webcast. Today's agenda for this afternoon is that we start to present the Ambers Way. Shortly, we will show you again the strategy and objectives, which we presented in December 2017, the highlights of 'seventeen and operational financial review outlook and hopefully a lot of questions and answers. First of all, I want to say that what you see in our presentation is our new company passport, also our new logo. We announced that in December 2017, that we would roll out that in 2018. And I think it's a great improvement, and it shows also the alignment of Albert's Industries more and more. And you can see it also on our website, which is updated today and which is live. Going to the agenda, the Albert's Way, it's which we presented already earlier to you. Our values, our core values, very important. More and more, we implement them in the organization. Our 5, let's say, real values: be an entrepreneur, take ownership, go for excellence, share and learn and, of course, act with integrity. We expect that from all our people, and we implement that more and more, as we said. Then our strategy shortly, which we presented in December 2017, our strategy of focused acceleration from 2018 to 2022. And I think what is also nice to mention is that when you look to the strategy which we had before, we also had for ourselves some objectives, but also financial objectives. And I think my colleague, John Hagenal, will show you how far we reached in our previous strategy to reach our goals from, let's say, 3, 4 years ago. This is our new strategy. It's an update of our old strategy, you could say. And our goal is to remain focused to improve our technology positions because we turned the company more to niche technologies, which we want to, let's say, pursue and also develop worldwide, improve our profitability continuously. I think it's very important to continue that even when you have a strong growth, which we had also in 'seventeen. You have continuously to improve your profitability. And when you don't do that, then you have the risk that you have more and more costs, but also especially inefficiencies. We do that through our program of operational excellence. We expanded that also further in 2017, and you could see it's a sort of culture we brought in the company, which, in my opinion, is a continuous continuously improvement of your operations. The first thing, very important, we changed to use our Albert strength, not only our group strength, but also the Albert strength. One big Albert strength is our brand. And to express the brand and also to present the brand, we also have to make it very visible, which we also do now in this presentation. Albert's mission critical technologies and actually everywhere, you have a special niche technology in 10 end markets, in 10 specialisms, we are there. And mostly very, very mission critical, not only with the technology, but also with the very knowledgeable people. The objectives we also updated in December, are 5 objectives. I can't say how important it is to not just only look to our financial ratios because to reach financial ratios businesses by having strong brand names serving a variety of global end markets, but especially have a very unique position. By having uniqueness, you can ask a high price. High price means high margin. And when you have an efficient operation, you normally have a good EBIT margin. Creating sustainable profitable growth, that means continuously improve your earnings per share with good spread of businesses, which we do already many, many years. And I think that's a very important one because it balanced out our company. That means you we have sometimes, we have good growth in a certain end market. Sometimes, we have a good growth in other end markets. We generate high added value margins. That's a goal for us. That means you give a lot of added value to your customers. That means innovations. That means game changing innovations. It means also that you have to have a leading niche position. And of course, you have to have a good margin because by having a good margin, you create a higher resale margin and of course, convert strong operational execution in free cash flow. I think we again proved in 2017 that our focus on cash, you see more and more, even after a very strong cash improvement year of the last 2, 3 years, in my opinion, even in 'seventeen, we created a free cash flow of €310,000,000 And we reinvest that in Businesses and Technologies, where we think we can have the best position, but also where we can realize and accelerate our organic growth combined with acquisitions. Our financial ratios, we presented that in December. Average organic revenue growth, more than 3% EBIT margin, more than 14% return on capital more than 18% free cash flow conversion ratio above 70%, and we reached above 73% in 'seventeen leverage ratio below 2.5% and solvability above 40%. So that's our goals and strategy for the coming years and objectives. Our businesses, nothing changed. We changed the names, as we presented last year: Installation Technology, Material Technology, Climate Technology, Industrial Technology. We are a technology company with leading niche positions where we share the technologies to create new innovations and create new business models. And this is working in many places in Alberts Industries. One example is a nice product we saw also last year, the new PowerPress valve and fitting, which we presented, but we have many other possibilities already now but also in the future. Next slide is about our revenue spread. And also here, you see our goal is to remain focused. Of course, we have a strategy to especially the end markets, to improve, let's say, the lower percentage end markets. And what you can see here a little bit is that we shift. Example, semicon and science, we made a big growth. It's now 4% of our revenue. But also, we put more focus on district energy and gas. And you see that we don't mention the name of the end market oil anymore because we see more opportunities in district energy and gas applications with a good margin than that we see opportunities in oil. It doesn't mean that we completely stop with oil, but I think the opportunities in these two areas are bigger than in oil. So here, you see step by step, our goal is to see a shift that we increase the percentages of beverage, increase the percentage of semicon and science, but also automotive, industrial installations and so also that we have a better spread. Coming to the highlights. Highlights 2017, I think 'seventeen was an excellent year. I think not only because of these numbers, as you see here, and which we will also present in detail the coming hour and also discuss hopefully with questions, But I want to express also is the almost last bullet point is many investments in organic growth and innovation initiatives. A company is driven in the end by new innovations, by new markets, by new customers. I think we spent a lot in 'seventeen to gain also growth for the coming years. Actually, when you decide to invest in something, in a new product or a new machinery or a new technology, they're mostly in 2 or 3 years, you see the effects, sometimes even 4 years. So it's very important that you invest in the right things to also keep the growth for the coming years. The organic growth we reached in 2017 of 6%, I can tell you is not because we did the right things in the beginning of 'seventeen. We did the right things probably in 'fifteen and 'fourteen. It's very important. A company and a very good company is managed long term and not short term. So the numbers you can see here, maybe also to highlight, is the added value margin. Despite very strong raw material increases, and probably we come to that more this afternoon, is that we still kept our margin, even improved it. I think that's, again, a proof that we have very good positions. We also worked on that with pricing, and I think it's a proof that we kept our margins and even could improve it with a small percentage. For the rest, EBIT, €336,000,000 EBIT margin, 12.5 percent and of course, earnings per share, €2.15 percent which is an increase of 12%. Maybe the most important number, also because we stressed that many years, is our return on capital. Your allocation of capital, also that is done the last years. It's not done the last months. It's done the last years, which now increased with 16.2%. Keep in mind that we did 2 very big acquisitions in 2014, which is Dutch just 3 years ago, where we had an EBIT margin that time of 7%. So we also had to overcome that to get this 16.2 percent. My colleagues will further present the operational review and the financial overview, and then I come back to you. Oliver? Thank you very much for the intro. I also would like to welcome here the present auditorium and as well the ladies and gentlemen on the webcast after Wim has presented a very positive overall picture of Albers Industries. We would like to dig into the business itself in a bit more detailed way. If we would start with installation technology, we do run 2 technologies, integrated piping system as well as plastic connection systems. So an integrated piping system is all about valve technologies and connection systems. We are very innovative in its field in integrated piping system. I guess a significant portion of you still remember the Capital Markets Day, where we have highlighted the development strengths by the presentation of our factory in Hilversum, which is a Volumeti fully automated production for push fittings. The brands we are running in that technology is Apollo stands for valves as well as VSH for connection system. If we're coming to plastic connection systems, it's all about piping, connection, with going products all made on plastics. Also where we make constantly improvements and innovations to aim best in class with our products and best market performance. The brands we're using here in this field is Henko and LESCO, each for different regions. Somehow logic, the end markets we are delivering our product into is commercial as well as residential buildings, industrial installations and water, gas as well as irrigation. If we would like now to swap over to the more operational values with the numbers that we have achieved in the course of 2017. So we made around €1,100,000 turnover, which represents a growth of some 6%. We made €39,000,000 of EBIT, which gives a margin of 12.2%, meaning a growth of close to 1% compared to the numbers of 2016. We invested around €43,000,000 in the course of this business year. And then it's all about related to product innovation, operational excellence projects and in our production sites. Commenting a bit on the numbers of HLC Technologies. If we then start again with the integrated piping systems. We have 2 main regions or markets, which is North America and Europe. We had a very good organic growth in more or less all of the countries in Europe. And in the U. S, where we suffered in 'fifteen and 'sixteen, a bit of the low industrial areas, we saw an increase of orders in H2 of 2017. If we come to innovations, which is a significant portion for today as well as for the future, as Wim laid out, so success of today is realized in 'fifteen and 'sixteen, that way we laid the ground for that. So we're continuously doing that. We have a connection system for high market and high market expectations that we start delivering that into North America, and that is going to be a world product. And we continuously work on our sales and distribution organization. We laid that out in the recent presentations of the year of during 2017 that we heavily work on the distribution and sales organization, especially in North America. If we come to the plastic connection systems, the growth is predominantly realized in Europe due to a focus on niche end markets. We constantly expanded our offering and our portfolio. And also there, we are in process to execute our long term innovation road map. For both sectors, as for Alberts Industries in principle, the current operational excellence projects, they are further executed. That was also part of the presentation of the Capital Market Day that this is one of our key topics to be further executed. We come now to the next ballpark of technologies, which is material technology that consists of 3 sub technology, which is heat treatment. What we do, we have a complete offering of all heat treatment technologies from a technical point of view. We are as well innovative in process development with our key customers. And the brand we are running that is the HAWK brand. If we come now to surface treatment, so it's all about technical coatings, such as hard anodizing, electroosmickel, corrosion protection systems and polymer coatings. So we act there with AHC and Impretlon. But due to the strong footprint we have in automotive industry with our technical coatings, there is more and more demand that we back our long term relationship, our long term agreements with customers with the Albert's name and brand. If we come now to specialized manufacturing, it's precision stamping, including deep growing and over molding and precision aluminum extrusion. So the end markets for all of those three technologies is the automotive market. It's the general industry and power generation and aerospace. If we then dig a bit deeper into that, what happened in 2017, so we achieved €333,000,000 of turnover, which represents a growth of 5%. We realized an EBITDA of 97.3 percent, which is a margin of 13.3%. I want to have to take a bit into consideration that we did a bit of restructuring and site closure in the course of this year, which is in the which you find as well in the EBIT margin. So if you would neutralize that, that might be then a invested in the course of 'seventeen some €51,000,000 that's in capacity and production side as well as in our operational excellence projects. If one would comment a bit on the details of each of the technology, if you look at heat treatment, that was a good performance all over the markets and regions we are into. We have done capacity investments in Eastern Europe as well as in North America. And we also worked in the course of our operational excellence programs of the consolidation of sites, which we have defined as not so efficient. Surface Treatment, good performance due to the very competitive products we have, especially in the automotive industry. And also there, I would like to comment that the greenfields we have invested in, in the recent year that we could start harvesting first fruits so that, that business starts leaving the path of being a hobby. If we then come over to specialized manufacturing, if you look at Precision Stamping, which is a French based company, one could say that the market in France supported the development that we get market share. So also there we have a positive picture as compared to the years 'fourteen and 'fifteen where that was always challenging. We have constantly developed products in the sector of electrical vehicles as well as autonomous driving vehicles. We work a lot of in the electronical end applications. So if you have there the right products and the right project, you could place yourself there with many with a lot of innovations. If we come to extrusion, which is heavily involved in the aerospace market, that's ongoing stable as it was also in the course of 2016. What remains challenging in that sector is the IGT market. And everybody heard about Siemens and GE that they are in process to have a bit of different view of last year and as well as next year. So this is a challenging environment. And what we also could see that we start having first project in the additive manufacturing, including post treatment processes, which are all related to heat treatment and surface treatment. And we are, as Ardent Industries, type of innovation partner in a lot of circles in that industry, which would offer future prospect in that field. I would like to close here with my overview on Material Technology, and I would be happy to hand over to Arne Mornings, my colleague. Thank you, Oliver. And welcome, everybody else, on my side, of course, also in the webcast. Climate Technology. Climate Technology, we have 2 niche technologies: the hydronic flow control technology and the thermal and sanitary efficiency technology, which are both active in residential building and commercial building. You see also the 2 strong brands that we have there and what we, of course, are still using, the Franco brand and the Como brand. But as we have are doing that in more business, we can use the Amaz brands when it is helpful in big projects, for instance. So the brands are still used. Flomco is a very well known brand like Coma, please. But when it's necessary in the market or when it can be helpful, we are using the hour spreads. Now coming back to the operational refill of climate technology, where we made a very, very good profit improvement, good organic growth in almost all regions. But as you can also see, the EBIT improved with 15%, which is much stronger than the revenue improvement. Profitability increased to 11.9%, so more than 1% improvement, and the CapEx was 6,500,000 euros The Hydraulic Flow Control business, we expanded the offerings to a lot of key accounts, which is really improving our business. And we continue to integrate and optimize the joint marketing and sales approach where, as I already said, we are also working really like a group and using here and there the Ambrecht brand when necessary. Long term business plans are made and implemented, including the innovation roadmaps. A lot of focus in that, like we also explained last December, in all our businesses and starting pilots to develop digital solutions, making our products and systems connected. That's a key point of, yes, let's say, attention in these particular businesses. And for hydronic flow control, we even started in separate digital center to give this the attention that it needs to really drive it forward. The thermosanitary efficiency, they performed well. A good growth in many regions, especially in France, with a very strong market, of course, also there. And also here, we implemented our long term business plan. We finalized that last year with a very strong focus on innovations, on product developments, which is now executed. Now we are also focusing in Thermo sanitary efficiency on the development of water treatment and dispense. So the tap business and the product portfolio and branding are much more aligned than in the history because more and more we are grouped, this whole group, really as a Comap company. And execution of the Innovation Roadmap also started with pilots to develop digital connections and data collection, really to create new business segments. In this particular area, the digitalization of products is very important so that we can optimize the climates in the residential buildings by communicating the products together as one system. The next business, Industrial Technology, where you see 3 niche technologies: fluid control, dispense technologies and Advanced Mechatronics. As you see that we are using the strong brands, Bruhn and Fentrex, in our Food Control business. But in Dispense and Advanced Mechatronics, we are really using the Amaz brand also to the market. This is our core brand where we do our business with our key customers because these are small technology companies where they can group together much stronger to the big key accounts that we have for instance, we are dealing with the large companies like AB InBev, Heineken, Pepsi and Coke. And then it's really an advantage that you can present yourself as ours. So it's it was also the decision of the management team of Dispense to really bring this forward and to do business under the Dispense brand name under the Alberts flag. At Pfauz Mechatronics, the same. Big customers, different technologies where we can play as one point of contact for the customer under the Abbots brand to the market. Now the end markets, semiconductor science, district energy and gas, beverage and expense, automotive and general industries. And then the operational update of this business, where we yes, where we can see a strong performance, I think, across the whole line. We have a very good revenue performance with also a yes, a good EBITA performance, a little increase of the percentage from $14,800,000 to $15,040,000 CapEx. In Food Control, of course, we still also face difficulties in the oil end markets. But as Wim already said, we have less focus on that because we see much more possibilities and long term opportunities in District Energy and Gas. And also in Asia, for instance, we made good progress with our setup and organization, in particular, in district energy, which is a growth market for the next years for sure. Now we launched our patented full flow valve, a complete new technology to produce a valve where we put a lot of effort, time, but also, of course, capital behind. We introduced that at the end of last year. And after ramping up our automated manufacturing in Denmark. A good year in Automotive and General Industries end markets, especially our CNG Gas business developed well. And we invested, of course, in additional engineering capacity to accelerate also here our innovation roadmaps because also for these businesses, we have long term business plans with very clear innovation roadmaps with the focus on the right product developments. Now dispense. In dispense, we faced some difficulties in the market. A lot has been going on in this market with big players getting together, mergers, but also, yes, some products were delayed on projects. So that we had to deal with. But we continue to align our businesses as a group under the Alberts brand and present ourselves to the big key accounts and to really present our business as a global business, where we, of course, also integrate the Finservice in this offer, which we acquired at the beginning of 'seventeen. Now with several key accounts, we are in discussion to offer more complete integrated And we strengthened our engineering team worldwide yet to further accelerate this organic growth for the future. And the 3rd technology, Advanced Mechatronics, they made an excellent year, And they realized exceptional organic growth. And despite that, they also invested a lot in the new projects also for the beginning of this year. The preparations and pre investments for the increased order book, as I said, and additional projects. And we further aligned also here the organization on the 1 Albert's flag to present themselves, yes, as a strong partner, strong co engineering partner because there, these businesses dispense and advance the controls look much alike. They are really acting as co development partners for their key accounts for the customers. So I think that was the story of Industrial Technology. And then we go to the next slide where we still have to where we have the overview of the 2 acquisitions of last year, which we already also, I think, presented to you after the half year one presentation. Finn Service, company in the beverage expense market, Italy and PENOTEK in the semicon, the science and general industries markets. And then I would like to give the word to Jean for the financial review. Well, thank you, Arnaud, for highlighting on the various segments, as Oliver did as well. I think on the financial review, we have definitely a few things to cover, maybe starting with revenue. I think Wim mentioned already the strong organic growth. And as you know, Wim likes to round it up to 6%. I just stay with 5.5%, but as we all know, that it also rounded up to 6%. Maybe more important, I think, is the impact of the currency. I think we highlighted already at the first half year that we were slightly positive on currency, about €4,000,000 positive on the revenue. That was flipped over, as you can see on the slide here, a €22,000,000 negative for the full year. So if you compare the first and the second half year and I already saw a few notes of you this morning, if you compare the first and the second half year, the impact was, let's say, €26,000,000 negative on revenue in the second half year, a plus of €4,000,000 in the first half makes the 22,000,000 mainly driven by British pound and U. S. Dollar. I think it's not uncommon if you know our numbers. I think that's important to understand. And there was about a 2.2% impact of acquisitions in this case. We have Finserv for the full year. We have Protech for about 6 months in the second half year, and there's about a 9 month additional revenue of Sure Joint, which we acquired 1st October 2016. Those were the main impact, which is about €60,000,000 addition to our revenue from that side. Our EBITDA, as you can see here, €422,000,000 I think depreciation is slightly lower than you may have expected looking at our first half year numbers. There were some prior period adjustments in that number. But if you look forward into 2018, which might be a question also for later on, we will go back to, let's say, the €95,000,000 to €100,000,000 let's say, normal depreciation going forward. So this is a more a one off impact included in this number, just to explain that. Our EBITA, already mentioned, 3.36%. I think a strong performance with the growth we had compared to 'sixteen. Net interest expense more or less at the same level. Other net finance costs, I think also in the first half year, we were impacted by transaction results of currency, which we cannot hedge. In that respect, it's something which is following us because of the volatile currency markets we have seen. So that impact was a bit higher in 'seventeen compared to 'sixteen, but we will continue to focus on that as well. Also on the tax side, I think important to mention the effective tax rate, as we call it here, 24.6 compared to 25.2 percent. You will say, well, that's maybe not that special. I think also going forward, the impact of the U. S. Tax reform will always be positive, at least for companies like us, making profits also in the U. S, which now will be taxed with a lower rate. So also going forward, we have always mentioned a sustainable tax rate between 27% 28% that will now be lowered with about 2% in that range. So that will be more in the 25% to 26% range, assuming, let's say, that the mix of our results will be more or less the same going forward. So just to mention that. So there were some one offs, pluses and minuses also here in 2017. I think, for sale, this is a realistic number, which we have around 25%. Earnings per share, €2.15 already mentioned in the highlights by Wim. And I think also important here, the flip on EBITA, as we explained for revenue. Also in EBITA, we had a slightly positive €600,000 on the first half, but it's now, let's say, the €1,700,000 negative for the full year. So it's €2,300,000 negative on EBITA. So if you normalize the results, more or less the first and second half year, we're pretty close in EBITDA performance if you take out the FX impact. But that's part of the translation, as we all know. If you look at the balance sheet, also here, I think not so many big changes we have seen looking into the various positions. The smaller acquisitions we did last year did not change that much on the goodwill or intangible side. I think the net debt came in pretty low compared to many of the estimates. And I have to admit, even below my own estimate. And so that's not unimportant maybe to mention that we were focusing more around the €600,000,000 or just below, I think, which we have expressed at the end of last year. But I think the very strong working capital management we did in the second half year helped us to improve working capital also as a percentage of revenue at 16.8%. And we haven't seen that for a number of years. I think a strong achievement there compared to the 18.8% in 2016. Where equity remains very strong, 52% of total assets. And I think we mentioned already the 16.2% on return on capital. This was more or less the last of the 5 financial targets we have set ourselves, which was the one maybe to be reached in 2018, but we have managed to reach it already in 2017. So I think also the changeover now as of 'eighteen to our accelerated strategy, 'eighteen to 'twenty two, yes, this fits in very well that we have achieved all those 5 ratios, which we planned a few years ago. And especially this one is the one we are always focusing on and then also a lot of investors looking at that return. Do we spend our money? Do we allocate our capital to the right resources? And that's what we try to do. And at least we see a further trend later on in some of the graphs on those main KPIs, what happened in the last 5 years. Now looking at the cash flow statement. Yes, maybe starting with the change in working capital, positive close to €8,000,000 So a bit better than the achievement in 2016, but definitely the achievement in the second half year. I think it's mentioning on the split of the 3 components. Inventories, which we have seen about €52,000,000 increase in inventories. I think 3 main items partly mentioned already. If you just take the inflation of raw materials, which is a big step, I think copper increased close to 30% year on year in dollars. So that has been one of the drivers, of course, of a higher valuation of our inventories. So that's at least a €15,000,000 to €20,000,000 impact out of that number. We introduced a lot of new products, as we have seen. So we built up stock for those products to make sure we were that they're ready to ship those products to our customers in the course of the year, but also going into 'eighteen. And the third one, of course, is because of the organic revenue growth. Normally, you would expect working capital to grow, especially on the inventory side. I think the receivables was about €12,000,000 increase. Yes, not so much to mention there. I think we are focusing on that as we've always done. And we have used, as you have seen, our payables with more than €70,000,000 to compensate more or less the increase in inventories and receivables. So I think that was the achievement of the full year, but mainly done in the second half, as you know from our seasonality. On the CapEx number in the cash out, dollars 117, where we have, let's say, invested €119,000,000 So the cash out was more or less in line with what we put on our balance sheet. The free cash flow was €310,000,000 a nice increase of 13% compared to 'sixteen. I think our finance cost tax, yes, that all goes up if we grow. Acquisitions, yes, we spent €41,000,000 That's mainly on the thin surface on Fanatec and some deferred and earn out payments we did on acquisitions from prior years. We refinanced some of our dollar financing in the Q1. We mentioned that already in the first half year results. So nothing special there to add. We did a big repayment to our banks on €30,000,000 So we continue to repay the debt we took on board mainly for acquisitions in the past. We can finance that from our own resources. Dividends, which we already paid in May this year, was part of the half year numbers. So a total net cash flow of €128,500,000 And it's a big improvement compared to 'sixteen. I think you have to take the refinancing into account. And if you take that out, it's still a positive number. But just to make sure you are comparing apples and apples. Also important here to mention that we put an asterisk behind the various colors. We have moved our precision technology activity, which was formerly within industrial technology. We moved that into Material Technology, and we changed because of that our first half year 'seventeen on that basis, but also full year 'sixteen and first half year 'sixteen. So if you make your own analysis, yes, please consider these adjustments so you also are really comparing the same apples on apples as we discussed briefly before the meeting, so that we have really the same comparison in those numbers. So the full year numbers, you have seen already in the press release and the first half year results have been stated here to make sure you have all the details available also to calculate the second half year. So you see the change in material technology, industrial technology and a little bit in the holding elimination line because the the consolidation is done slightly different. And so no big changes, but at least something you should be aware of. But also on the CapEx side, you see, of course, the same split. If you look at EBITA, other than, let's say, the swing we just explained, I think also here we can see nice improvements in all 4 business segments, already discussed when the operational review was done. But the total EBITA was $3.36 a nice improvement. I know there's always special attention for the line holding eliminations. I think also here, we said in the first half year results where we had 8,000,000 on that line that we would expect between €8,000,000 €10,000,000 also for the second half year because that's holding expenses. Some exceptional costs we took into account, it still includes for the last year all of our the start up costs of our Chinese facility. It will be the last time that we presented in this line. Oliver knows that. So it will be a better story going forward. But you may ask him that question later on, if you would. He's prepared for that, I can tell you. Looking at EBITA margins, I think we have always said that we're going above the 12%, one of the targets. I think 12.5% also compared to the first half year is a nice achievement. And I think even more important, that's also the improvement in each of the 4 segments took place with quite a nice improvement in each of the 4. I think climate and quality was mentioned already by R and O, the 1.1%, a very strong performance. And that is all done, let's say, on a like for like basis. So that's all organic improvements done in that activity. So in total, the improvement of 70 basis points on total EBITA margin. Looking at the 5 year development on the graph. Well, revenue, I think in the 1st few years of the 5 year overview, lower organic growth, a bit more contribution from acquisitions. I think 'seventeen is a nice example of high organic growth and some support also by acquisitions, which we have done. And its value margin highlighted before, so although maybe the increase of only 10 basis points doesn't look too impressive, But knowing that the raw material increase, which will continue in 2018, then we get the full impact of both the price increase but also on the purchase side. And that, of course, moves along the line and leave out mix effects and other organic developments, which will drive that margin also going forward with the innovations we have planned. Our EBITA, EBITA margin, also here we can see that after a few years between 'eleven and 'twelve, we now jumped over that hurdle of 12%, one of the 5 financial targets which we put ourselves ahead of the game in the Harbors Industries Linked strategy, 15% to 18%. Net profit earnings per share, I think, a nice development year on year, 10% to 12% on average growth in both those KPIs. CapEx, although we had a few stronger years before, it now jumped to $119,000,000 And I think that will be highlighted later on what the plans are for 'eighteen. Return on capital, and we see the let's say, the dip in 20 14 when we did the Famco and Impairholm acquisition with a rather low EBITA margin and a rather high capital employed. We improved a lot in especially those acquisitions and the rest of the group that we have now jumped also in the last ratio above the 16%. On the free cash flow, also here, we see a nice improvement year on year. Also, here, you can imagine that the stretch to get it done every year again on working capital remains. Everybody is doing the same game. It seems to be a sport of a lot of people in the group, but also from other companies to keep ourselves busy, especially at the end of December to see what we can still collect and what we don't pay. But that gain will continue, although we are much more aiming for a structural improvement in working capital and not these huge swings during the year, and we'll work on that going forward. Free cash flow conversion above 70% has been the target. We were very close in 2016, just below, but nicely jumped over the 70% or 73.4% on 2017. Well, dividends, important, I think, also for our shareholders that we continue to pay out dividends. It remains around 30% of our net profit per share before amortization. €0.65 is what we will propose to our general meeting on the 18th April this year to be decided and accepted by the shareholders to their discretion. So I think that's the summary of all the financials. Of course, any more questions we can cover later on. And then I'll hand over back to Wim for the outlook. Thank you, John. Yes, outlook, as it is written here, we will, of course, execute our updated strategy and the objectives. It's a 5 year plan. As we also said in December, we want to reach this as soon as possible, but we present it as a 5 year plan. And what is important that at the beginning of the we will drive forward our business plans and also our innovation road maps. This is a long term thing. So of course, we can talk about 'eighteen, but it's also you talk about the years ahead. That's what we also said is the 3rd bullet point. We expect further sustainable profitable growth in 'eighteen. So let's say we are not negative, but we just have 8 weeks in a year, and it's just started and but we are not negative. So I think with the outlook of we expect further sustainable profitable growth, we already say a lot. The next slide is the new head office location. Yes, we have decided already a few years ago to make a change, and we waited until the right moment and the right location. So during 2018, it's going to happen. And we must say that also as a team sitting here as a Board, but also, of course, our team at Mangrugg, it's two sides of the coin. We thought it was good to improve our group connectivity, also that we get more connected, let's say, to the infrastructure, trains, all kind of facilities. And also, the infrastructure in IT and all kind of reasons we had to do this, rationally, but of course, emotionally, we were also very linked to the location we had already for many years. But the market is not standing still. The world is not standing still. We have to continue, and we think it's a good step for us. So we will go to the World Trade Center in Utrecht. We were pretty early in the design of the building, so we could have a nice spot there, very modern, very modern building, all facilities. And we think we hope also it will be a magnet for our group management that we connect much faster also as an operational head office, as we are between the companies, very quick thinking, quick innovation. So we also have their the modern facilities. And now I hope and we hope that you all have a lot of questions and that we can all answer them. So I would say, who's going to start? Is it working now? The mic. If you go ahead. Henkveemann, Kempen and Co. First question is for John on the effect of raw materials. I think in the first half, you mentioned kind of the effect in the first half of raw materials and organic sales growth. When I did the math, the raw materials, the copper price increased 23% year on year in the first half. I think in the second half, it was around 30 plus percent, I think 33%. Could you give us an idea of to what extent that translated to your organic sales growth? Yes. If you look at the full year, because the first half year we covered, where we said that's between 0.5% and 1% was the impact in the first half year. Of course, we announced further price increases to the market, which was partly done in the course of the second half year and will still continue where needed also, of course, in 'eighteen. So I think the full year impact will be just over 1% for the total. That is more or less in line what we already predicted, not, of course, taking into account that copper would still continue to increase. I think it was close to 30% in dollars, we said, for the year on year comparison. And of course, that goes into both our purchase but also on the sales side gradually during the year because we are covered for many months on the raw material side where Arnaud is involved on the sales side. Of course, every company needs to push hard to get the price increases in. Also, WIM is on top of that. And of course, that takes some time and has some delays, of course, also here and there. So I think around 1% is a realistic percentage for 'seventeen. Yes. Because if you look at your added value and also the added value margin, also the second half versus the first half, Intuitively, it feels a bit like the second half was a bit more difficult to immediately transfer the price increase in your raw material to your clients. Could you provide a little bit more color on those developments in the second half of twenty seventeen? Well, I think in the second half, you get already, course, the impact. So mathematically, you have a lower margin because you have already partly the price increase in. But I think another big important impact there is the increase in our inventories. And there's always a huge increase in the inventories in the first half year. So leave out inflation, and so just building up inventories because of also the summer period, suppliers going in holidays, etcetera. So that is what you see, the seasonality in the second half year, a lower added value margin. I think also historically, that's more or less what we see, leave out some maybe mix effects. And we had a lot of additional start up expenses for some of the new products which we launched, both on the PowerPress side, but other new products which we launched for important customers where we put a lot of extra costs which go into the added value margin to get all those products shipped on time to our main customers. So that all impacted the number. One thing to add, maybe I think you also said it already in your note this morning that, of course, it's I think it's a combination of what John said, but also on top of that, it's always very difficult to time exactly when the price increase is net has a net effect because sometimes you have a little bit delay with the customer compared to the raw material increase. The second thing which really impacted was a start up of some new products, yes, where you maybe have some additional costs or whatever. And but we I can tell you, we really were on top of it. And you will see also the further effects in 2018 on the price increases. But it says also something. When you have these kind of increases, and you can even still, with 10 basis points, increase your added value margin during the year, you must have a very good position to push it through, which we did. But sometimes, we did 3 increases in the year. That's very helpful. On depreciation, John, you already mentioned that there is a one off effect in the second half. So depreciation is a little bit lower. But could you maybe share with us which division that was so we can maybe better compare also the operational margins on a more organic basis? Yes. Well, the main impact was within the installation technology. There was, let's say, the biggest impact of this one off. There was a benefit and a cost to it. So it's the net impact, which was having the impact on that activity plus the total group. Correct. And my question my last question for now is on the Industrials Technology division. A little bit of a mixed picture there, I would say, with mechatronics having a fantastic year and oil and gas and dispense still a bit difficult markets? Oil, not gas. Sorry. Oil, not gas. Yes, sorry. A bit different. Maybe first on Dispense. So I think the comments in the press release on Dispense Technology are a bit similar to what was said in the first half of the year. Could you provide a little bit more color on why exactly your clients are for now, I would say, for 12 months now, are delaying their orders or their projects? And what is driving that? One reason is that there happens a lot in that market, let's say, AB InBev making some big transactions, which has some effect, of course, to project because they are more internal focused than to get everything in the right place than scoring new projects with engineering. So that's one thing. And the second thing is that also some other bigger customers just delayed some projects. And that is the picture that we saw over the whole year 'seventeen, but we also see that, that is now coming back. So it's really a delay. It's not a cancellation. And we see this seasonality more in dispense business. We have seen that earlier also a few years ago. So it's not a structural thing? No. We expect a reversal of that effect in 2018 then. 'eighteen didn't start there. And I know you normally don't give the breakdown of the several sub lines or the subdivisions. But is it a correct conclusion that in 2017, the growth in Industrial Technology was primarily driven by Mechanical by Mechatronics? Because I think if you also look at the sector breakdown, the Mechatronics division explains as quite a ramp up year on year. No, I think we also were very I think what we said is that an exceptional growth for semicon and sine market did very well. But I think also the fluid control in automotive and general industry did very well. And especially, that is maybe good to know, that in gas applications, we make the electronic regulators for the CNG gas in cars, And that's fantastic business at the moment. You see a change there. And so we took also their lot of business. Yes, absolutely. Yes. Let's say you can see the trends in especially smaller cars where diesel engines are less used. And a good alternative for that segment of cars is CNG with a proven technology where you can immediately yes, improve the pollution or decrease the pollution with the same car. So we believe that we are in good positions there. But this is the strength of, in my opinion, Alberts Industries, but also the new setup. And we see that certain markets are lesser, and we think have a higher competitive competitive competitive competitive competitive competitive competitive competitive competitive more price pressure in oil. So what we see, Distributed Energy grows fast, CNG gas grows fast, advanced grows fast. So we put immediately resources and we move quickly. So that's the very big advantage of this structure we have now in place. So we adapt very quick. So that's also how you how we want to, yes, keep on growing and accelerating the growth. Our management teams are very close to the business. So that's a strong advantage. Maybe one last question, if I may. On your OpEx in the second half, but also in the first half and maybe also year on year, I think we discussed before, let's say, the organic operational gearing in your business model and also the comments were always, okay, but we also invest a lot via the OpEx base. Has that accelerated in the second half? Or is it more or less stable year over year? And have we seen the most of it now that, for example, if I don't know what your number of entities have seen? I hope we never saw the most of it because it's not about cost. It's about what you invest to get a higher return. And so you have to invest to get business. It's very simple. But I think in 'seventeen, we did tremendous amount of things. And now we discussed about it. How much is it? It's more than €10,000,000 what we put in, much more. Only for the advanced mechatronics, where we had 2 very big projects at the beginning of the year, which we announced, but also the additional ramp up we took in. I said, I think, here in August, we took in 50 people, but we took in 100 people with 0 revenue. The revenue comes this year and this. So these kind of things, we never did in a test like that. We took in 6 additional engineers in our food control business in automotive in Graz, just to push our innovation roadmap. We changed all distribution setup in North America, where we had 5 distribution centers. So we have to build up the teams, but we have double stock because we also have to keep the old structure in place. Now we are reducing that. So 'eighteen is the year of efficiency. We took in our own salespeople because we had reps. So we had 50, now we have 70. We had all had to train them. So 3 months, they were only training and not selling. And not everyone you take in is immediately good, so you have to change again. So we took in a tremendous amount of cost there, but all investments. So it's investments in the future of Alberts Industries, but also already in 'seventeen, but also in 'eighteen, 'nineteen. Otherwise, you don't grow. And so I think we did a lot in 'seventeen, also 'sixteen and 'seventeen more. But hopefully, we will continue. So basically, in 2018 'nineteen, we can expect, let's say, number of FTE and personnel etcetera, we can expect that also to increase further. You can't put a line a line a line on it. But let me say, when we see an opportunity and you think it's a good market position with a good margin and we can improve our margin, then you should also invest. And I think that was also the message we gave in December, that we have so many organic growth opportunities and exciting market dynamics, and we mentioned a list of them, that we are pursuing that in combination with bolt on acquisitions. And we are there on a very good track. We have the teams behind it. We have the plans behind it. We have innovation behind it. And we have the money for it. So that's what we are pushing. Okay. Thank you. Very clear. Martin Begier here. I still like to go get back to the depreciation because when I look at your tangible assets and also the what I see what you have been written down in the past half year, I'm more or less missing some €10,000,000 in depreciation in the second half of the year. So could you still give a bit more color on what happened? It's partly, let's say, currency. Of course, if you look at year on year, also here we have been impacted in the second half year by a lower depreciation on the currency side. So that's one of the effects if you compare it to the first half year. And let's say, the one off impact on depreciation in the second half because it was taken into, let's say, the second half results that impacted around, let's say, €5,000,000 €6,000,000 on total for the group and also impacting the Installation Technology segment, as we said to Henk before. And it's a one off, so we will return to normal depreciation going forward, as we said. And what was the reason to adjust that? Yes. More on accounting treatment of, let's say, how you depreciate your fixed assets and how you take that over the useful life. And that's also according to IFRS. That led, let's say, to an adjustment, which went back into time, which was taken into, let's say, a total adjustment in 'seventeen. So we are now, let's say, back on track for that and therefore continuing with a normal depreciation level going forward. Looking at your growth, it's also being boosted by your innovations. Can you have some kind of innovation ratio? So more or less, how much of your sales consist of products which are being launched in the past 2 years or 3 years or something like that to get some feel. Could you repeat that again? The last one, I didn't got that. If you monitor your innovation ratio and that's then being defined as products which are being launched in the past 2 years or whatever, how much that contributes to your revenue? We normally don't disclose you in a detailed number of that, but when we make a lot of innovation, where you've seen that in Hilmesen where we started, is that a huge amount of turnover in 2017? No, it's not. But it started much faster than we expected. And we think that in the years to come, 'eighteen, 'nineteen, 'twenty, that, that will be a type of world product, which we'll see firstly in North America and then also in Europe. And then lastly, to comment that also. We have these innovation ratios. We do that per business. It's a little bit difficult to do that. Obviously, obviously, it's global because you have to look at per business. But I think especially when you look also to the R and D expenditure and the amount of R and D people, we really increased it heavily. So and it will also continue coming years. The reason for that is also that we have clustered our teams. So for example, we have Hydronic Flow Control that are actually 5 to 6 companies. Now it's more treated as one business team. So we also create competent centers where you actually centralize for partly but also intensify your innovation roadmap. So that needs more people, like also in fluid control in automotive but also in Hydronic. So I think in general, our innovation rate goes up. And per business, you have we make the percentage. I must say we can do that much more properly in the coming years. And then what's most important is how quick what is the revenue percentage of a product, that's how we measure it, in over 3 years. So what's the percentage in 3 years of your revenue of the products you launched in last 3 years? These kind of things we are measuring more and more. Thank you. And then lastly, you talked about the shift from oil into more focus on gas and CNG. Can you give some kind of feel how much you still do in oil and how much then in gas and CNG? And I'd say in oil, we are not so big. That's also what I said, I think, in July. We are, of course, still active in gas. When you say oil and gas, we do the gas part. And there you see more and more shift to LNG, where we also believe that we that there are good opportunities. So we will put more focus on that. And the CNG, that is only in the specific part of the business of Automotive, where we deliver these valves and regulators for cars. Let's say, oil, we are not big. It's a small part of ours. And then lastly, could you say something about your biggest new greenfields you are setting up? Greenfields of e treatment? Yes, for example. E treatment Of the treatment, yes. We mentioned that by the half year numbers, and also I mentioned that this year. So the greenfields were especially referring, I guess, to the China project. I said that we are in process getting more and more orders. We have a good cooperation with at least 2 key accounts in automotive, which will boost that. And I said that it's going to leave the path of being a hobby. That will happen in 2018. If you look at the heat treatment greenfield, especially in Eastern Europe, they were more or less from day 1 a story of success due to the way how it was set up and how we had customer arrangements. And if you look into North America, there was one of the greenfields in the IGT market. So that is, let's say, below expectations. But one could also say this in principle also a story of success what we did over there. And by the way, to refer maybe to your question about oil, it is below 1%. So it's below the €25,000,000 Oil related. And then one other point to add. The oil price is not low only in 2017. That's already a couple of years. So the impact, let's say, if you wouldn't have said, well, even at that small division, the downswing, but that already happened in 'sixteen. So in 'seventeen, it went not worse. It's more the opposite. But what Wim said was It didn't get worse in 'seventeen. No. And what Wim said is that we have with our management team the ability to adjust our strategy. So we are not, so to say, bounded by that specific market. If you would like to make the focus more on something else, we could easily do that the way how we are organized. Jaapav Luis from Lucerne Capital. A quick question. Could you update us on the ramp up of the key account initiatives? I think a lot of them start in 'seventeen. And how will sort of 'eighteen look versus 'seventeen on those key account projects? Yes. Key accounts, we have in different business segments. We are busy with that. It's also let me say, it's a new phase for Alberts Industries because what you actually see is that we're coming from a lot of smaller decentralized companies, which we still have in many cases. But let's say we bundled them more and clustered them more where related to a customer group. So the moment you do that and we also put now the name a brand name with it, there's not a possibility that these teams can use the Albus name, and a lot of them are going to do that. That was not able in the old situation, so we managed that to do that, is that you suddenly are becoming another player. So the awareness of being another player is also how you present yourself. So what we see now is that in several business segments like Advanced Mechatronics, like Dispenser Technologies, but also like even fluid control. Now people talk about fluid control, not about Fintrex, for example. They mention it themselves. We talk about integrated piping systems. We talk about the hydraulic flow control, what I said, but also about the service treatment, heat treatment. That there comes an awareness that suddenly you don't talk with a company of 10,000,000 or 20,000,000, 30,000,000, 40,000,000. Hydronic Flow Control is more than 300,000,000. So the awareness becomes there. And so you see a sort of movement that people see now more opportunities towards these bigger key accounts. I think the initiatives we took in 'fifteen, because there it started a little bit. And we had some front runners. The front runners were Advanced Mechatronics. I think they are already completely working like that. I think this bench is a very good example. And only in these two activities, maybe we have 5 or 6 already really opened or are expanding to a bigger level. Now when we look to Hydronic, and that's a nice thing also as an executive team, we give ourselves targets as executive team to open at least or expand at least 30 key accounts worldwide. So that means the executive team has a responsibility with each of us. We open also key accounts. We expand them. So what you get that Ambus people come in at the top. We open doors. I just the last 8 weeks, I opened myself 2 new key cards. And so it's a movement. So I think we have now in the revenue, you see maybe now 5, 6, maybe 8, but I think they're coming more and more and more. So it's an additional business you generate besides the business you already have. So we want to have both. When you are a heat treatment company, you act regional or in a country. But then you can also make with a company like GKN or Volkswagen or whatever, Daimler or Airbus, you can make a European or worldwide deal, then you have both. Now that's the real strength. Electrification of cars, we are in a heart of it. But also in China I'm going to China in June to discuss a huge investment plan to also we're going to open there a technical center. We're going to make a second assembly location because they know us in France, they know us in Germany, they know us in America, they know us. So it's an awareness. So that will continue. And is it possible to quantify the impact of organic growth in 'seventeen and perhaps how that will impact 'eighteen? So the organic growth is a combination. So of course, also the markets are many markets are good. That helps. The second thing is we have certain key accounts, and we mentioned already the first half also. And the third thing is the focus in the sales. So by when the sales team and the business team knows what their business is, they're going to focus on it. So automatically, you get more share. And the 4th thing was the pricing, which is still at let's say, 1% what John said. Will probably be a little bit more in 'eighteen, but I expect because you have the full year effect of the price increases. So this is a combination. But these things will continue, yes? So it's and then, of course, on top of that, you get your innovations, which we launch now more and more. So yes, that's it's a snowball. It's an acceleration. So when some markets all markets will not be stay like this. We know that. But when you work on all the other initiatives, at least you still generate an average more than 3% organic growth. That's how we came to that KPI. Okay, perfect. And then on the balance sheet, you're pretty unlevered now at 1.7x. And I think last time on the Capital Markets Day, you sort of talked about that there was not like a huge outlook for acquisitions. Could you perhaps update us on that? Pardon? You said a huge No, that there was sort of that acquisitions were not a huge priority. It's 1.3 at the leverage, yes? Yes, it leaves you a lot of room. This is again dangerous. I'm now thinking if you said that, that acquisition is not a huge priority. Now I think what we expressed in December that we have a lot of organic growth opportunities and that the nicest growth to have and the best growth to capture is organic growth. So there's a lot of focus on it. But we will always do acquisition to strengthen our positions. And maybe I should give the word to my colleague who's also responsible for that. We have a very nice list, as always. You don't know when it's going to happen, but we will going to do acquisitions. Arnaud? Both on acquisitions. And sort of because the pace of acquisitions was a little bit slower in 'seventeen, is that just sort of a coincidence because the pipeline didn't materialize or What we also said in December is it should make, of course, a good fit with our business. It should really strengthen our business. It should give further acceleration to our growth. The team should be good of the company that we would like to buy. The price should be good. So there's a lot of things that should be good before we make the decision to buy it. And that can let's say, I think it's more coincidence than something else that we did only 2 maybe last year. But the year before, we did a lot. Yes, exactly. We have said that. We have said that. So it's not that we have said that 2017 will be the year to integrate also the 4 acquisitions we did in 'sixteen. And yes, sometimes that goes quick, sometimes it takes more time, sometimes you think it's done and it comes back, so you have to go again. So you have to be very careful. Acquisitions, you have to be very, very you have to be ready for that. But I think what we can say is that we really integrated the acquisitions pretty well. So yes, we you never know. But we will do acquisitions. Okay. And then one last question for John. If you look at the added value margin, which is up 10 bps year over year, is there anything that you can say what the increase would have been on underlying basis, excluding the raw materials impact? That's of course, it's very hard to calculate because it's included both in the sales and in the purchase side. So but what we have seen in the last few years that we have increased the added value margin between, let's say, 30 60 basis points, I think, on average, if you look back in the last 5 years, the graph which I showed before. So I don't think 'seventeen would have been much different of that, but the impact of raw materials is as hard to grab the exact number. So therefore, the 10 basis points, yes, may not look that impressive. But I think we discussed before, it's a good achievement on the pricing side. And we will continue to increase prices where needed. So also that margin will be impacted going forward, both positive by mix effects, innovations, etcetera. But on the pricing side, yes, we have to keep a very strong focus on that, and that will definitely impact the margin on the negative side, not just mathematically, as you know. Okay. That's very helpful. Yes. I have a question about the semiconductor segment that is running very well. I remember, correct me if I'm wrong, but back in the days, like in 1990s, that was also the explanation, I think, back then for like 20% EBIT margins for the Industrial Services division even. And am wondering is that I mean, obviously, the business has changed. I mean, there's different activities in there now than they were back then. But this is still a, let's say, clearly higher margin than average activity. And is the growth is it very much related to specific technologies? Is the because I think I mean, has the cycle been that strong for Semicon? The cycle is expected to continue to be strong this year. There might be I mean, I talked to my colleague who said that the semicon has probably some correction expected, but maybe you're immune to that because you're specifically involved in certain technologies. Can you shed some more light on the cycle, on the margins on that development? Yes. I think the margin is good. I think and I think we also even when we invested a lot, we even improved it during the year. We also did a lot of investments during 'seventeen, what I just explained. That is driven all over the different technologies. I think a very important thing to Nova Semicon is that we specialize ourselves in 3 and now 4 technologies. One is the large frames, and that's a big specialty where we produce and now also assemble and clean the large frames for the lithography machinery. And the second thing is high purity gas systems. It's a real specialty. So it's where the deposition, let's say, of the but it's a little bit simplified, I'd say, but for the wafer, there you need a certain gas environment, and we provide that. And the third thing is the vibration isolation, actually the motion control of the stage in machinery. And now we have a 4th technology in Panotec, where we also have the Panotec and also the hydraulic systems where you actually steer the stages. So our strength is that we have this specialism, and therefore, also we have, let's say, a very good margin. This margin is maybe not on a level you said, but in certain areas, it is. But I think we can further improve that also because using our global footprint. Then coming to the semiconductor markets. Yes, I think we are specialized on this. We don't want to be a contract manufacturer because you can take in tremendous revenue when you want at this moment. But we want to earn money. And earn money, you do to have a certain market position, to have a certain technology. So but we still think that I think 'eighteen will be a good year. How it's after that, we will see. And not an important is that we are in different stages of the whole process of semicon, but also on the front side, where it's mainly investment driven and not volume driven. So we're not negative about this year. I think also the Martin, the cycles you saw in the past, you will see much lesser because it's becoming more and more adult and also more a global business. And that's one of our strategic goals to also become a real global company in this business, basically in North America. The demand is also higher for semicons. The demand is also higher for semicons. Luke Van Beek, Grauch, Petercam. First, I have a question about the climate technology, where you mentioned that you are working on the digital solutions. Can you indicate to what extent your products are already, say, digital ready? And how long you expect to take to develop a full digital offering and if you can do this organically or that you have also to look at acquisitions to achieve that? I think you have to identify 2 things. We have connectivity of products. We show products that can communicate with each other, which, of course, then gives a lot of extra applications in the system. And then I don't really understand your question because I think you also mentioned, are you ready to sell digitally? Or Well, now you mentioned that you are investing in digital solutions. So can you explain what the step? And I assume they're already connectable. So what is the next step that you try to develop? And will you do that in house or also through acquisitions? Now what we said also in the presentation is that for hydromic flow control, we have set up a separate hub for digital business. So there, we will bring people together who really try to make products connected with each other. So that means a lot of R and D activities to get these extra features in the product. But of course, we are also looking at possibilities for acquisition always. If there's a new technology that we can acquire, we are looking to that, and that is also part of our scope. So we work with start ups? Yes. We started with that. So we I think we have looked at to at least 15 to 20 companies in this field if we could buy them. But most of them were not very good, let me put it like that, financially. So what we said 1 year ago, hey, maybe we should change our way of working. We're going to work with a startup. We invest in a certain product line to make it connectable, and that works very well. So we have now 3 pilots running, and we share that in our Harbors networks. And based on that, we created now a digital app in Holland, where we put in software engineers, which is supported by Albers ourselves. So we will see this as a pilot in the group. So we have now more and more connected with products, so which can communicate through a language with, yes, database or a cloud or whatever. This is, for us, very important that we push that. So because we have hardware, but we said we should add something in service and that it's also connectable with software plus service. And we get now really speed. I think we look for what is the right approach, but I think we have more and more the right speed now. Also a nice pilot in Paris. Yes, absolutely. And what we said in these networks, we bring R and D people from different businesses together because when a valve needs to communicate with another tool in the system, that can be a solution for dispense, but it can also be a good application for fluid control. So people exchange knowledge and ideas to really get, yes, new energy and ideas for the future. So what has fluid control to do with hydraulic flow control? You would say nothing. I disagree. The digital solutions for different business applications are exactly the same. So the strength of Alberts Industries is that you share this knowledge, and you apply it in different markets and different products. Huge strength. Alberts is 1 company. And that's why we do all these things. And that's the world where we live in. So the moment you have a digital solution for an air or dirt separator in your boiler room, hydraulic flow control, which has to communicate about the flow of the water through that valve, you can use the same technology sometimes for an automotive valve. Different applied, you understand? And that's what we share in these networks. And then you immediately innovate very fast. So you learn from somebody else, so you apply it for your own. That's new. And then you have start ups accelerating this, and that's how we now try to do it. And second question about the you mentioned that in a couple of segments, the margins were depressed by startup costs, but obviously, you will continue to launch new products given your pipeline. Can you give any indication to what extent, say, the additional profits of the new the old new products will outweigh start up. So what's the mix between start up costs for the new products that are coming in and the additional contribution from the old ones? Will it continue to will it will the impact increase before it improves? Or will it already start to improve in 2018? That's basically the question. What I was thinking, was it so simple that you could put that just on the paper like you ask it or say it? Let me explain the new products we have in Hilversum that you saw or also the new heating interface unit you also saw, some of you. This is a project of 3, 4 years where you spend costs and then you have the 1st launch. And the 1st product, when you produce it, it's inefficient, so you make more costs. And you have mostly low volumes, so you have a higher cost price. So the moment you improve your efficiency and you sell more, you have a better efficiency. So that's it's a scale, hopefully, like that. Yes, how that really in percentages is difficult to explain. But I think what is most important is that in these numbers which you see, we also put in a lot of investments already for the future. And studies right, then these products will have a good margin. Otherwise, we would not have invested in it. But it's impossible to put a percentage or exact lineal along that. And my final question for now is on the payables, which were responsible for quite a good improvement in the working capital. Are they now at a sustainable level? Or are they relatively high? And should we expect that to move to a more normalized level in 2018? They were on a rather high level at year end, as you have seen also in comparison to prior years. So we use that also to compensate the increased inventory. So our goal is to more normalize, both on the inventory side, by the way, and also on the payable side. So of course, it depends on organic growth and other elements, how things will develop. But yes, you would expect a slightly, let's say, more normalized levels on both sides, but yes, depends also on what raw material prices will do going forward because also that drives up the value of your payables as it does for inventories. So it's just not we are more looking at days payables, days sales outstanding deals inventories to look at that to manage that only in the best possible way. Do you have a number for the double inventory yet in the U. S. In due to the consolidation of the distribution? Yes. That's, of course, also an impact, right, because we used, let's say, the lesser warehouses where we still are, let's say, fine tuning on that side. So we still have, let's say, higher inventories than we would like to have, but it's also to make sure that we have our service levels right to our customers in the first place. That's always our main concern to drive that. And also, that should normalize. And if it all helps, of course, to get that ratio more healthy, I think that's the goal going forward. And we should see already some of that positive development in 'eighteen. But maybe to add what you also see, Luc, is that by clustering the business teams, we have much stronger supply chain organizations and supply chain managers that we never had in our business teams. And they collect also the different suppliers. So we also have already a structural improvement, in my opinion, on payment terms. That means, for example, consignment stocks. So when you have a stronger cluster of groups, you can also make better arrangements with your suppliers about consignment stocks. So we do that. And that is also an effect you see. I think the second thing is in North America. It's not only that you have to put double stock, and maybe it's not completely double, but you also have focus on changing your organization with reps. So you have less focus on sales. So the moment you get really focused on sales and you can make your supply chain efficient, then you get improvement in your working capital. And these effects, we still have to see in the coming years. Peter van der Zug from Kepler Cheuvreux. On the Installation Technology business, it seems that in Europe in 2017, the growth was rather broad based across the region. Could you shed some light what you see going into 2018 remained remains a growth rather broad based or do you see some regional differences? And then on the U. S, you talked about higher orders in H2 in on the industrial side. To what extent did it already translate into higher sales in the second half? Or is there some lagging effect? And is it only going to show in 2018? I think the regional difference is for Installation Technologies. No, 'eighteen will be a good year in installation technology in Europe. I think there are so many projects. And as long as people are transferring to other houses, more offices, apartment blocks, that will continue. And you know we are in the installation business, which is mostly 5 6 to 12 months behind. The only, let's say, unsecured country, I would say, is the U. K. Think U. K. Was pretty okay in 2017, but I think we are a little bit cautious, especially in the second half 'eighteen, how that will develop. But we are counter attacking that with local production, more local production, but also new products, the products we showed you, but also the growth. So and that's hopefully, we can compensate optimizing portfolio in the U. K. So I'm pretty positive about Europe. About America, industrial valves and mainly industrial products, that's normally a long longer order process than in the building. So you make also more to order. You have also lesser stock of these bigger valves, mostly are bigger valves. So it's an acceleration. We saw some in the second half, but we will see more. The biggest effect will be in 'eighteen and hopefully 'nineteen. What also helps, and I saw that we saw that in 'fourteen is the lower dollar, which stimulates export in the U. S, and that was also the explanation why we had only 1% to 3% organic growth in the period '50 'fourteen, 'fifteen, 'sixteen, because building was not so bad, but the industrial was low because the high door and the low oil price. So what happens now, lower dollar, oil price goes up, and that helps the investments in the country. When you do an investment in the U. S, and now it's probably also driven with the lower tax rate, it could be that there are more investments and they export more. You need more manufacturing locations, you need more machinery. This machinery has to be installed with connections and valves for industrial applications. So that's the explanation why I'm also there and pretty positive on the industrial side in America, which we didn't see for 2.5, 3 years. So 'fifteen, 'sixteen, 'seventeen, let's say, the half of 'seventeen was not very good, industrial wise. And that's a big chunk of our business, Reconciliation Technology, in North America, not in Europe. But let's see, we are just 8 weeks in the year. Don't forget that the dollar is already 10% lower than the average over last year, right? The translation impact, I explained that on the revenue side. That's the negative part. So hopefully, we will compensate that on the other side. We have a question from Heiko Yasarion. Given the negative British pound currency effect, affected by the impossibility of a Brexit outcome, but also the expected trade protection measures by the Trump administration. So how is Albus insists mitigating these kind of risks? I think this is a nice question for one of my colleagues. Just call the U. K, I guess. Yes. Well, we can comment, of course, on the currency side, but that's, of course, what we have seen already in the last few years that the pound sterling weakened. So we had, let's say, to increase also our prices in the U. K. Because of a lot of purchases we do in euros. But of course, we cannot predict exactly what the outcome is. I think we mentioned just on the U. K. Side for the first half, but also, yes, what's going to happen in the second half when also the Brexit gets maybe a clearer picture on what developments there will be. So I think we try to do a lot of, let's say, our production in the U. And sell in British pounds in the U. K. Also to have a more natural hedge on the currency side. And I think that's also on stimulating the exports from the U. K. To, well, Middle East and other countries in Europe, where, of course, you are being helped by the lower pounds. But I think more from a, let's say, currency perspective than what is going to happen in the U. K. Market, let's say, the home market itself. The second question is, in order to meet Grow and innovative targets, you are also hiring new talented people. In what way Grow could be restrained as the industry is scrambling to attract highly skilled people? Good question, I think. And what kind of incentives do you have that these talents will choose for Harbors as their employer? Okay. Let me I think that. We have started in the last year of being more visible to the outside world as an employer. To give you an example, we have launched a 20 program. Right now, it's the 2nd generation running where we pick specific people from the industry as young people to educate them via projects within our company. And that is very well received. So we're currently working with the 2nd generation. And that attracts just by a type of snowball effect, people to see us as an attractive employee in the industry and in the specific technologies we are working on. Yes. And maybe to add, I think we do we also started some initiatives internally to start up educations. We also are working on initiatives in Holland. And because I think that therefore is a very good question, the real constraint is not maybe the amount of people, but I think especially the right people. We just talked about digitalization, so we need complete different kind of people there. Combined with our, let's say, hardware people, you need also software people. And the other thing is, by automation of your equipment and also the supply chain expectations, you need also, yes, certain school people, but also the machine operators. They sometimes stand on the line, which is an investment of $5,000,000 $6,000,000 for one line. So this it's very technical, very high-tech. So we have to, yes, let's say, bring people in other levels instead of the old levels you may be needing. So you can do schooling, but also you need to attract people. I think also one of the reasons of the company Passport, my colleague said, is to also get more exposed as Alberts, so we get more visible and also attract there the right people in the many countries we are in. 3rd question on the things of working capital. I think we covered most of that in the presentation, but it's mainly on the inventories and receivables. As it states here, are piling up year on year. I think if you normally see organic growth and the impact, as we explained, on the raw material increase, let's say, it's at least in a number of days, but especially in percentage of revenue, it further improved in 'seventeen. The structural problem, of course, while you always have, well, let's say, too high inventory if you look at valuation, but it's more about the quality of your inventories and the days outstanding. And also the question here, what we wrote off during the year. I think by every year, we have a few million of, let's say, write offs, whether it's on slow moving off the stock or maybe on your receivable side, the part which may not have been insured, but limited amounts compared to the total group, I would say. But we are working on a structural improvement of working capital, not only in the end of the year, but in the full year as we have anticipated. Okay. Then the last question from Heiko. How does Arberts anticipating on the electrification, digitalization and autonomous driving developments in the automotive industry? I would say that we are not anticipating. We are working together with the T1 suppliers when we be part of that development. I said that in the part of my presentation that we are especially with the precision stamping company, with the surface treatment business as well as what Arno laid out in the valve business for automotive cars that we've been part of those new developments, whether it's the electrification of cars, whether it's Fermi's, further semicons you need for running cars autonomously. We're having a lot of projects running with the industry of doing that. So I would say when that comes further, for us, it's that is a winning path. So maybe good to add here also is that what we said also at December, in a new electrified, let's say, electrification of vehicles, electrical car, the amount of parts for us and also combined with hybrids could be 7x more than in a conventional car, when it's autonomous driving, could be 10x more. So we made a visit at the 1st February in our factory and our colleagues in France, where we had a business plan for especially Asia, where we're going to triple our R and D activities to coming years in this field. So many projects we have where we also have the right technology. So AC will be a big This is not the only part. Also in the business, we mentioned semicon. This is also up for the change of how to run a car with more digital autonomous. You need more semicons and chips to do that. And so we also part in that business even if you're on the more the front and then the last one because we don't produce chips. But that is so visible that we'll be in a significant portion of that development. Exciting market dynamics. As we explained in December, we are at the heart of it. Electrification of vehicles, autonomous driving, but also district energy, gas, we are all at the heart of it, making the chips for the semicon, which is again, has a relation with autonomous driving than Asia. China is tremendously ambitious in electrification of cars. We have to be there, and we are there, and we have to expand there. Maybe one last point of that. I mean, you all know in from 2019 onwards, there's an obligation for Chinese car manufacturer to have a 10% share of electrical cars. So if you look at the Chinese market, they're doing 30,000,000 cars a year. That means 3,000,000 that represents the entire buying rate of the German car population. That's just 1 year selling an electrical car over there. That means a development that will happen there because they have the legal framework in doing that. And with the presence we have in China, with a couple of technologies we are running, we will participate in that. And also as being a strong European company, we have very good hubs in China to follow-up that development and to be part of that development. More questions? Yes. Maybe to clarify, did I understood correctly that the greenfield in China will no longer be in the holding that will move into the segment? Correct. So as of 2018, Material Technology will include the Chinese facility of surface treatment. Correct. And that's because it's now becoming profitable. We are very happy he says this now. Took a while, Oliver, but there are no Maybe to explain it because some very long term agreements, high volumes, took a while because you have the prototype phase, but I think it looks now very prosperous. Always have to say, when you would deliver from today onwards into automotive industry, the amount of time you need to spend for being certified and approved as a supplier, that's significantly different than some 5 years ago. People are quite after recalls. You have to have 0 mistake products. You have to really make sure to the supply chain within Automotive that you're able to deliver on that path. So getting approved is much more complex, especially in China compared to some 5, 6 years ago, where people absorb capacity as soon as it's there. And they could live with some startup difficulties you have in a technical company. But this is totally different from the years 2014, 'fifteen onwards. I've been very critical with the supply chain. And I would say they're even more critical than the Europeans. So the time we spent there, that was not what we have expected and what we wanted. We are not so patient on that and converting investments into profits. But this is a matter of fact, and we are quite happy that we achieved that and that in 2018, having their contribution to something. Maybe one follow-up on this. The business that you're doing in China, is it mainly with European customers that you follow to there? Or do you also meaningfully, I mean, business with Chinese carmakers? That's also Chinese carmakers. To enable you, one, you may know the company NIO, which is one of the relatively new founded companies for high class electrical vehicles. Also, we're working with them with their supply chain together. As well as a company like Tesla, we do products. We do work with the Western T1 suppliers, which are present in China as well as its Chinese Tier 1 suppliers. And the biggest customer share we have is Chinese companies. And this is a very good development that was initially not anticipated because the Chinese market you produce what we are doing, we do that for the Chinese market. It's not for export or something like that. If you produce something, we call it and then they're exporting that it is for the Chinese market. And the Chinese T1 supply chain that is stronger and stronger, they're looking for quality, they're looking for quality suppliers. And if you have a good working relationship with them, which we have established in the last 2 to 3 years, so we are very positive on future development and making also next steps there in China. So this new structure gives us also the base because it's worldwide organized to go also to the other areas. So when you have a service treatment business team or heat treatment or precision stamping, it's a worldwide organization. So they go also in these kind of trends, these kind of regions. More questions? No more questions. Then I would like to thank everyone here in the room, but also everyone joining the webcast. And we wish you a very good day. Thank you. Thank you. Thank you.

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