Bilfinger SE (ETR:GBF)

Earnings Call: Q4 2018

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Feb 14, 2019

Good afternoon, ladies and gentlemen, and welcome to the 2019 Billfinger Capital Markets Day in Frankfurt. We highly appreciate that you take the time to meet the Bilfinger team today and to spend this afternoon discussing the progress in our turnaround strategy. Safety first. As we are on the top floor in this building, we would like to point out that in case of an emergency, please use the emergency exits to the terrace here and there and use the staircase downwards, the assembly point is in front of the hotel. We will start now with the presentations, which will be recorded and also streamed via Internet. Later on, we will have a replay just for the presentations on the Internet available for everybody. But now let's start with the presentation of Tom Blades and afterwards we will have the Q and A session. Thank you, Bettina. Good afternoon, ladies and gentlemen. Also, I think on my behalf but also the whole team. And as you can see, the team is larger than last time. Michael and I feel the same, but we're very pleased and honored to be joined now by Kristina Johansen, our new CFO, who I'm sure you've read about, but many of you probably haven't yet met. And this is a chance not only during the presentation, but of course, obviously afterwards. And then also Duncan. Duncan, a lot of you met, I think, last year in June when we had the Capital Market Day here in Frankfurt at the Trade Fair. He'll explain a bit more about himself, but we're also very proud now that by having added another member and by also us having added another year to our experience curve, we now have over 100 years of competence in the industry. So I think a good thing, not only 100 years of competence, but 100 years of experience. We've been through a lot of what we have ahead of us, and I think that makes us really well prepared for the future. It's my pleasure to walk you through the headlines, and then, of course, Cristina is going to dive into the details. But I think our single biggest headline of 2018, and I know the financial community may look at it differently, but for us it was definitely the fact that we completed our DPA or to be more exact our extended DPA. So you will have read, when we proudly announced early December that the monitor had certified us. And what does the monitor certify? It certifies that the company is on an irreversible course to self sustaining compliance. Doesn't say we're perfect, but he says we've got systems in place that we're unable to deal with compliance ourselves. And why do I say that? Because compliance is a journey that really never ends. It's like health and safety. The day you say, okay, we're there, that's the day you have your accidents or your incidents. And that's why for us, compliance has become part of the culture of Billfinger. And I think it's not only the culture, but it also has given the self confidence. Some years ago, people doubted whether we could make it. We've shown we can. We made it by ourselves. Yes, we had some outside help. We had a lot of guidance from Doctor. Lifchitz. But in the end, it was our team that took us there. And our team was led by Olaf Schneider. Olaf, raise your hand again. There he is, okay, our Chief Legal Counsel. For those of you that want to learn more about compliance later on, he's the go to guy. It also means, of course, that with our systems now in place and our newfound confidence, we feel prepared to go back into places that we left before. One of those is China. You will have read about our intents on China that we're establishing an office in Guangzhou to support our biotech market. Biopharma units are selling into China. And as we sell more, we need to support those sales. You've also read about scrubbers, which we'll go into a little bit more later. Scrubbers are the cat Lizator, the cleaning mechanisms used in the marine environment to clean up the environmental act. And a lot of those will be installed on ships in Chinese dry docks. Now we wouldn't have trusted ourselves to do that some years ago, but now of course with compliance in hand, our newfound confidence in systems, we feel ready to do that and ready to go east again. Of course, the financial highlights, again, no surprise. You saw the numbers this morning. Very pleasing, I would say, but I use the word pleasing, not yet satisfied. We have a way to go. We're roughly at the halfway mark on our 2020 strategy that in fact we unveiled 2 years ago to the day, February 14, 2017, we came out with our strategy. And as you'll see as we go through this, we really haven't changed our aspirations or our own expectations. But for 2018, the highlights, of course, orders received. We beat our own expectations. You recall the outlook there in the middle of the page, mid single digit. We topped it actually 12.5 if we go to the decimal. So that's why we give ourselves 2 green check marks there. Revenue, also a group. You recall in our 2020 strategy, our CAGR for the whole period was 5% CAGR. We did 6% organic growth in 2018. So again, we give ourselves one check mark. EBITDA adjusted, we kept it in the as we say here, significant increase, mid to high double digit €1,000,000 amount. And then in Q3 at the end of Q3 rather, we became a little bit more precise and said it's going to be in the range of €50,000,000 to €75,000,000 and we're right bang in the middle of that with our 65 another check mark. The final box was free cash flow adjusted. And our target at the beginning of the year was to get to a breakeven. So if we'd seen a 4, 5, 6 there, we would have been happy. We see a 5 and a 6, 56. So I think we did well. And it wasn't just by not paying people. We did well in efficiency, in driving our collections, reducing DSO. And Cristina will show you more details on that. So I think overall, it was a year where we were able to achieve our expectations. We're able to check the boxes, not only the large ones here, but also a lot of the small ones along the way and make good progress. If I drop down a level now into Q4 performance and how that translates going forward, I think some of you didn't expect that we would do as well in Q4 on orders received. To be honest, neither do we. You recall at the outset of the year, we expected Hinkley Point to feature in our order intake in 2018. That was shifted into 2019. So then we were also holding our breath a little bit. And the fact is that both Q3 and Q4 in 2017 were very strong quarters. So when we were able to show that in this year or rather the end of last year Q4 2018, we had an organic increase of 3% over the relatively strong quarter. In the year before, we are very pleased with our sales team. And I think it shows that our strategy, our focus on the industries, but also our investments into business development is really beginning to pay off. On the revenue side, it translates into revenue with some time delay. Obviously, we take in long term service contracts, we take in projects. And of course, for that to filter through to revenue does take a while. But with a book to bill ratio of 1.07 on the year, we're confident that not only does that fuel our revenue growth for 2018, but it puts us in a very good position for 2019. When you look at our backlog, organic increase of 12% at year end 2018, again, it gives us confidence and therefore, we continue our momentum. We're not going to go crazy and accelerate out of control. We're going to continue at our pace and deliver on what we said we would deliver. The adjusted EBITDA, significant increase. Okay, that's not difficult because you recall in 2017, we were at €3,000,000 You recall why. We have our project management to 99% under control. You never have it completely under control, so we don't dare say 100, but we've installed the system to make sure that we deliver our projects as predicted. And therefore, the pickup in EBITDA is to a large extent result of not having those kind of mistakes and actually delivering what we said we would do. And once again, in Q4, it was our strongest quarter, not quite EBITDA adjusted as high as the prior year, but the prior year had some adjustments. When we look kind of beneath the effects, it was a good quarter and we were pleased, but also not yet satisfied. Now finally net profit, I think the 4th quarter net profit adjusted was the first time that we actually got through the zero line since 2014. But for the year, still negative on the net profit unadjusted line. We think we're on the way to that. And of course, we've also significantly improved over what we did in 2017. Moving on to liquidity. And as already mentioned, our cash flow improved significantly, £56,000,000 for adjusted free cash flow. A large part of that was the Q4 performance. As in many other previous years, the Q4 is outstanding. We always hold our breath between Christmas and New Year. And I think all of us were looking at our e mails daily to get the cash report. And then when it came in, it was really Happy New Year, we're on the way. Christina will show you more details. But as I mentioned, 14 days of DSO improvement went a long way to driving that number. Our balance sheet remains relatively solid. It's performing again as expected. We concluded our share buyback last year. That was €150,000,000 which ran out in October, again as planned. We've also on the basis of the numbers you've seen and on the basis of our balance sheet, we proposed to the supervisory board, euros 1. They will propose that to the AGM to be held on the 8th May in Mannheim. And that would then be the 3rd year in a row that we've paid the 1 euros kind of basis. Going forward, of course, we expect to do better than that. But I think again, it reflects the fact that we have confidence in our balance sheet. We have confidence in our planning and that we return some of the money, especially some money that we took in late 2016 with the sale of Apionna, we return that back to the shareholders. Our outlook for 2019, as I said a few times in the meantime, is fueled by the strong order book. It's fueled by the progress on our strategy and our improved operating performance and more of that later. But in a single number, we expect to have a baseline, if you like. We expect to do better than €100,000,000 adjusted EBITDA in 2019. And with that, I would pause and ask Cristina to get into the details on the numbers. Thank you. Thank you very much, Tom. It's a pleasure for me to present the numbers for Bill Finger for the first time. I started off December 1. I don't think it's the best time for a CFO to start off. You come in and you feel that you would like to change one or another thing, but you can't really change much going into the past year. And I was focusing on the cash side, because that was where we saw at the end of November here, we need to strengthen whatever we can in December to improve it. And I will come back to the good and the bad sides of me also pushing the cash in December. But let us start off on the order book side. I think here, we exceeded the expectations. And as Tom was saying, we closed 2018 having a 10% increase versus last year, organically even above 12%, so 12.5%, extremely good and also motivating now going into 2019, having a very solid base load for 2019 and a lot of the work that we need for 2019 already in our books. Especially worth mentioning that we had a strong order intake from both sides, from both our segments, but especially on the E and T side coming in. Book to bill, we closed the year 2018 with 1.1 percent. And our order backlog at the end of 2018 was 11%, 12% organic. So very, very good start of the New Year 2019 then. If we look at the revenue side, we also here managed to achieve the expectation of the 5% increase in revenue year by year. We even organically closed at 5.7%, so very strong performance. On the EBITDA side, we closed the adjusted EBITDA at €65,000,000 1.6 percent margin, which was a good step forward. And as mentioned by Tom, the last quarter, which belongs to the strongest ones year by year as we have some seasonality, was also very good performance with 3.3% profitability adjusted EBITDA, slightly below what we had in the quarter, the same quarter 2017. However, in 2017, we had some projects that were closed and generated, I wouldn't say a special profit, but an upside in the very end of these projects. Looking then at the reported EBITDA, we are closing at minus €7,000,000 So we have €72,000,000 special items or adjustments included here. That is to compare with previous year where we had EUR 121,000,000 as adjustments. So we are going in the right direction here clearly. Most of these items are continued to be related to the sale of some of our legal entities. The effect of that, we are showing it here, EUR 17,000,000. The rest related to compliance, to IT system that we are rolling out over the last years and also restructuring cost. And obviously, it's a clear target here to reduce this amount year by year to get closer between the adjusted and the reported EBITDA. So a big step forward here. And if we then continue to look into the 2 main areas on the cost side. We are looking into the gross profit where we in our 2020 strategy have said that we would like to improve our gross profit with 2%. We managed to close with a margin level in 2018 of 9.4%. Previous year, we had 8.4%, so 1% improvement, which is good. But we also have to be honest and say that this is an area where we will need to get more out of this going forward in the next 2 years. And that's a lot of the focus for our COO, Duncan Hall, to make sure that we are getting more out of the existing contracts and projects that we have. So here, we haven't made the progress that we would like to and but there is more to come. And I think there are a lot of activities in many of our entities to improve this. This is obviously a combination of executing what we have in the order books in a better and more solid way, looking for more profit on these contracts, but also to pick the development areas that are more attractive, those that are generating growth, but also those that are generating a stronger margin than the average year. And we will hear more about that from Tom in a minute. So it's a combination of this. And obviously, also, as we have a strong order intake to, in some cases, also train our people to get a bit more picky when they are taking up new contracts, to be more selective. So it's nice to be in the position that you can allow yourself to do that. Then looking into the next area beside the gross profit, we are also looking at the SG and A, where we have said in our strategy that we want to get 3% EBITA improvement out of this. And looking what we managed to perform in 2018 from an absolute number, we are the same level. However, we need to keep in mind that we had a growth. So we didn't increase our SG and A with anything due to the growth. And we also had, if we compare year by year in 2018, €20,000,000 included for further business development and digital next. So we managed to do more out of this money. But this is an area that I will focus on a going forward because I definitely see that there is potential to get more out of this. And if I remember from the strategy that was presented in 2017, we would like to get down to the level of 7 point 5%. So there is at least another percent to get out of this. Then looking into the 2 areas. Starting with E and T, which made a good progress last year in regard of getting order intake up, increasing the order books. So we are talking about an organic increase in orders received of 34%, and we are talking about 33% organically in the order backlog. Also on the revenue side, last year, we had an organic growth of 8%, significant contribution from North America. And also in regard of the margin, we were then ending up at a level of 2.2% in the adjusted EBITDA here, a very I think a good step forward, and we will also compare this obviously when we are coming to the point later on, on the new changes to our organizational structure. Then looking into the larger segment, which would be the MMO. Here, we had an increase in the order books organically of 9%, order backlog with 6% and the revenue also with 6%. EBITA adjusted margin, we closed at 4%, and we had especially here a very strong performance coming from the region Northwest that Duncan Hall just then left at the end of 2018. So a very strong performance. And especially in the last quarter, this division performed extremely well. Last but not least, to make the calculation work, we also have the area OOP. Here a lot is legacy. The legacy is getting less and less, which means that 13 legal entities have now been disposed or terminated until the end of 2018. We have 4 left that we hopefully will be able also to close in 2019. 2 of them have already been solved in the sense that one is signed and one is closed. So we are quite hopeful that this work will be finalized until the end of 2019. We also have then the performance of these entities here. And here, you see obviously that getting less and less entity into this division, you see that we are moving down on the profitability, but also on the revenue line and order books. The profitability was a little bit burdened here this year and not improving because we have one legal entity that belongs to the remaining 4 this year, which has not performed very well and that is South Africa. But that's a structural problem in the utility business in South Africa, and it will be solved, we hope, until the end of 2019 as we are trying to sell off this entity. Then going into cash and the cash generation. We have also here a strong performance, a lot related to the last quarter. So the voice was heard in December. We need to get more cash. Some did it in the right way, worked a lot in December also on reducing the work in progress and the DSO. Some of our divisions, however, also took a part of that improvement by using the suppliers a bit more than they had before. So we have an improvement if we look at quarter 3 versus quarter 4 on the DSO side. But if we look at comparing 2017 to 2018, we are more or less at the similar level. And we are, of course, here in the DSO, including also the prepayments and also the Vipp. So it's not only the accounts receivable. This is also something that I'm sure that we can further improve our developments on the DSO and get more cash out of the working capital. But as we are showing also on this slide, you see the development of the accounts payables. And also here in December, we had more accounts payable hold back at the end of December. So it's a combination. If we look at the development of the cash flow, you see it on the left hand on the corner, you see the improvement. The adjusted operational cash flow moving up to €110,000,000 compared to previous year with minus EUR7 1,000,000, which is a step in the right direction, but also here more to come and more to get. On the cash side, extremely important, improving this further quarter by quarter as we proceed in 2019. And if we look at the reported and the adjusted net profit, we see the reported numbers minus €24,000,000 previous year minus €89,000,000 Adjusted net profit moving up to €36,000,000 versus minus €9,000,000 last year. And the free cash flow, almost reached breakeven. We ended up at minus €4,000,000 Last but not least, looking into activities that will bring us further improvement. Nothing new here. It's ongoing and we have benefited from these activities already, but there is also more to come. So we have the IT projects. Most important part here is the harmonized standardized ERP system that we started to roll out in 2017. We have by now, by the end of 2018, a degree of completion of around 40%, targeting to get to 70% by the end of this year. Extremely important to also reduce our cost, but also to improve the transparency. We have seen in those entities that have the implementation that, for example, transparency on the working capital has improved a lot and helped us also to, in reality, get the cash in earlier or get more cash in. Then looking on the procurement side, continuous improvement here. We see increasing number of e auctions. We are also trying to bundle the procurement more and more bigger is better in the sense of better pricing, and we will continue to drive this a lot on the operational side. In some cases, we're obviously also buying for our clients. This is an area where we also, with the increasing activity need to get more margin out. Merger of operating units. Since 2016 has been a strong drive to reduce the number of legal entity, to reduce complexity in the Billfinger Group, but also to, of course, make savings and getting less units with a more clear and larger size, all to make sure that we have a good offering to our clients, but also on the HR side to make sure that we are able to be attractive for managers that would like to join us, having a clearer, bigger size, it will make it easier for them to also drive the business. And as you can see on the right hand side at the bottom, we started off in March 2016 with 279 legal entities. We were at the end of 2018 down to 168, but the drive down will continue. One very good example that just went live is Austria, where 5 legal entity at the beginning of 2019 were merged into 1, which gives us a completely different size in the Austrian market, but also helps us then, of course, to be more efficient in all our processes. So this work will continue. And these activities here and initiatives will continue through 2019, 2020 as fast as possible to also support the development and the turnaround of the Irfina. Then I would like to pass on pass back to Tom. And it's my pleasure to share with you a little bit more insight into the way forward. We stick to our strategy. I mean, say that at the outset 246, but we did take the opportunity in 2018 to look a little bit deeper into a number of companies. And if you recall our initial slide in February 2017, 2 years ago, it's really the detail on the left there. At that time, we said that we spent quite a lot of time going deep into the company analyzing. We shared with you what we found and our way forward, in other words, the roadmap of Strategy 2020. That allowed us to work on the biggest areas, most significant areas first with a sense of priority. And then as they became under control and we kind of exited the stabilization phase that we had talked about early last year, We then said, okay, now let's go to the next level of detail or granularity, if you like. And we began to select certain entities. We this time took outside help. We didn't do that when we created the strategy. And we then dispatched teams to key entities around the building world to look a little bit deeper. We didn't always like what we found, but it certainly gave us a lot more clarity and granularity. And as a consequence, we were able to set targets for those companies that will take them from where they are to where we think they should be by 2020 beyond. Not all of those companies were happy with our approach, but at the end, numbers speak for themselves and they were kind of hard to argue with. One of the other things we discovered in digging a lot deeper is that we're very customer friendly, which is kind of nice. But we are finding that if the employees had to choose between customer and Bill Finger, they often chose customer, which of course you tell to the customer when you're in front of them, but you don't tell to the board when you're trying to explain your results. I'll give you an example. In Germany, we have well over 1300 customers in maintenance alone. And several 100 of those customers have annual revenues of less than €1500 annual revenue less than €1500 right? So it's obvious what you do. You say, okay, that's very nice. But the maintenance costs just of writing invoices, we made that analysis in 17. It takes us costs us €12 to write an invoice. So you do that 12 times a year, €144,000,000 and not much of your profit on €1500 is left. In fact, it's quite negative. So we're using our backlog momentum to be more selective on customers or to use a financial technical term, I believe picky is the right word, okay? These plans that we developed with these key entities, they're not just you're here and you should be there. They're execution plans, the way that you've got to know us. So we use BTOP for that. We set degrees of implementation and then we follow through very rigorously to make sure that the delivery goes all the way to the bottom line. That's new for some of our colleagues, but it was highly necessary. We looked also at our projects and our products. And one of the things we did like is that we have high margin, high growth opportunities around 3 areas, biopharma and pharma around energy, which is mainly nuclear and emissions around the scrubbers opportunity. And we have opportunities around digitization and automation. So all of those areas are growth areas within Bilfinger. And they're not only growing at a double digit rate, they also deliver higher significantly higher than average margins. And some of them especially scrubbers also deliver good upfront cash payments. So we wanted to get more focus on that group and this is part of the story leading up to why we did some fine tuning in our structure. I mentioned what we found in Block 1 in the procedure and deep dives. Not all of our managers survived those deep dives. And in the last 2 years, Michael and I and Claus, we changed out of 200 top managers, we changed out 70%, 35%. And of those 70%, 35% were internal promotions, one of whom is sitting on the left, and 35 were additional expertise we brought in from the outside. And of course, bringing in outsiders is always good because they bring new ideas, they challenge the status quo. And therefore, we term it management upgrades, I guess, in English will be the other definition of change management, but very necessary and we continue to do so. We added to business development. We mentioned that at the outset of last year that we invested in expertise in each of the 6 focus verticals we have, the 6 industries, and that it's an additional cost. But I think you'd agree that our momentum, our development and growth on the order intake line justifies that. So it's the right thing to do. And going forward, we're going to be doing that even more. And then finally, to support the execution phase of what I've just described in the other two blocks, we decided it was time to appoint a Chief Operating Officer. When I say we, this is something that Michael, myself, the Board talked about for a while and we're very happy to find an insider. And I think after Duncan's given his presentation, you'll agree why. Finally, on our structure, what we've put in place is very strong governance, especially around project management. We've talked a lot about that in 2017 2018, and we're never going to give up talking about it because delivering project execution excellence is a key part to our story. We're doing it. We expect to be able to continue to do so. And therefore, that's an essential ingredient that a company like Billfinger just cannot do without. It's an imperative. We've been consolidating in country. Christina mentioned that. We have a good example in Austria. We're looking at other countries where it's not just a question of saving SG and A costs because obviously if you have 5 companies merging into 1, you only have one set of books to attest at the end of the year to put through the audit partners. But what it does give you is a much stronger management team. So 5 companies doing €60,000,000,000 a year is very different than 1 company doing €300,000,000 And as we consolidate those companies, we will put in place newer and stronger management, again, to drive our plan going forward. Something else I liked, which we began in 2018 and continue to take forward is working in teams. We are working in teams to generate integrated projects. Duncan will touch on one of those. But also we work in teams cross border. What does that mean? We formed Bilfinger turnaround concept. This is driven mainly by our teams in Germany and in Austria. But these teams work throughout Europe. So they are based in Germany and Austria, but they will equally work in the Netherlands. They work in Scandinavia. And we work very closely with our customers, so we can actually dovetail, do end to end planning. And already today, our order book is full for 2019 for turnarounds. It's almost full for 2020. And the first customers have already secured our teams for 2021. So I think what I've described there is a continuing strengthening our sense of purpose and it's something that we will drive forward what we committed to, but in a very tangible, measurable and quantifiable way, not just we're here, we want to get there, not sure how to do it. We know what we're doing. As I mentioned, we haven't gone away or detracted from our strategy, our 2, 4, 6 strategy. It's nice to be able to explain that left to right or right to left, our industries, our regions, our service lines. What we have done is we put the technologies part, these are the producing companies I just described, we put them into one basket. We now call that service line technology. And we took the engineering part out and moved it into maintenance. And as such, essentially it's EMC. We've moved the E and the C into the M. And let me show you why we did that. And this is a slide actually used internally when the colleagues asked the same question. So what you're looking at here is European Engineering Resources. You recall that we have a number of companies, the largest of which is called Teberdine based in Holland. Teberdine focuses on the European market, but of course, one of their strong customers was NAM, the oil and gas company, JV, Shell, Exxon. And NAM, as you probably have read, scaled back their production significantly because of so called mini earthquakes under the ground on account of fracking in the Groningen gas field. So we have a changing business there. And the PMC work, the project management consulting work that Tevarden was focusing on has actually began to shrink from 2017 to 2018. You see here that the proportion of the other side of our engineering, that's the maintenance and modification engineering, is increasing. So the order intake, it's gone from being 26% of our 2017 orders to 30% in 2018, mainly because it's growing, not because the other one is shrinking. The revenue even a stronger position, but I think the one that's really telling is the last one and that's gross profit. So 32% of our gross profits in engineering came from modifications in 2017 that grew to 41% in 2018. And on a year over year basis, you'll see bottom right hand corner there that the change in gross margin was roughly 2.5%, 2.50 basis points in modifications and it deteriorated by almost the same amount in project management consulting. So we dive down very deeply. That's the message of this chart and we take action. And the action was that we're going to get more bang for our buck, again, to use a technical term, by moving this business into the maintenance area, having it work closer with our modifications team and essentially giving the customer an end to end solution. We can engineer the modification and we can execute it. That's what many of our competitors do. They call it EMC. We chose the title modification sorry, engineering and Maintenance just to keep it short or E and M is our new abbreviation. So going forward, I know it's not easy because you have to jiggle your spreadsheets and I apologize for that, but it's the right thing to do for the business. And effective January 1, as I said, we've taken 2 service lines. So we took the engineering out of E and T, moved it into maintenance, so that became E and M. And when you look then backwards at what would those service lines have yielded in terms of EBITDA in 2018, I think it's quite a telling picture. So on the left, let's get the bad news out of the way first, just shy of €500,000,000 in revenue, but a negative adjusted EBITDA of €24,000,000 I think that tells the story. Engineering is profitable and when it slides over, it makes the right hand side look very attractive. However, we did that not because we like to beat ourselves with negative numbers, but we said we've got to focus on the producing element. This part of the company produces package units modules. The reason why their numbers are negative, there are 2 primary reasons. 1 is the fact that we have overcapacity in BET. BET is the entity that would ultimately service Hinkley Point. It's the entity that does work on Oki Lotto. And that overcapacity, we kept intentionally, as a customer kept delaying the Hinkley Point project. So that has a consequence. We did reduce headcount to some extent, but we kept a core team in place and we knowingly went through the year with underutilization, overcapacity, if you like, and negative numbers that will change in 2019. The other major component of this is a company working in France where we had a lot of management change. Some of it was intentional, some of it's not expected. And we've now put in place new management. That company turned in a loss and it will be turning in a profit in 2019. The other elements are solid. Some of you have followed our developments in biopharma, going great. Automation around the digitalization theme, also going good. What we also did was change the management in this division. They're part of the 70 that I mentioned. Michael stepped in to be a placeholder and interim manager. We have a shortlist now and we'll be putting a manager into T end of Q1, maybe beginning Q2. That manager, of course, then reports to Duncan in his capacity as Chief Operating Officer. On the right, we have our 4 regions, in the service line, engineering and maintenance. In 2018, they would have added up to just under €3,500,000,000 good EBITDA133. As we go forward, of course, we will repurpose more of the engineering to maintenance. We will drive the margins. We will deliver on the improvements we talked about. We will also have a good year in 2019, 2020 and probably in 2021 in turnarounds. So I think also that's the right thing to do. Again, through merging of entities, we're able to reduce SG and A and put in place stronger management to again take the business forward. I would pause there and hand it over to Duncan, who's going to show you how some of these things hit the bottom line. Great. Thank you very much. Thank you, my colleagues. Other than improving the margin and giving a sparkling presentation now, I feel no pressure at all. So thanks very much for that. Good afternoon, everybody. And could I also just say good morning, good afternoon, and good evening to all of our employees who hopefully are watching this today I hope you're having a safe day. So just a bit of background before I get into the main bulk of the presentation about myself. I've been with Bill Finger for 12 years, worked mainly in the industrial services line and looked after Northwest Europe for the latter years. So I've been here throughout quite a journey, as I'm sure some of you have as well. I was speaking earlier to one of you about an analogy about a train. So I was here before the train entered the tunnel. I was here when the light at the end of the tunnel was a pinprick. Now the light has come really into focus, and we are nearly out of the tunnel. We are nearly back into the light. Confidence is back in the business. Delivery is there. Orders are up. Profit is back. Our people are confident again, and we will deliver the future. So let me tell you how we do it because this is where we make the money, yes? This is what we do. And this is how I'm going to try and help make a difference with the rest of the team, the 35,000 people that we have working for us. And what do we do? We make incremental margin improvement. So the bulk of our business is framework contracts, engineering and maintenance. And we've been working on these sites for 25 years, some of them 75 years. Yes, so we know what we're doing. And we can gradually improve performance year on year on year. That's what it's about in E and M. In the project area, as Tom talked about, it's about project delivery. And we've really strengthened our governance, So we go into the right projects. We make the right choices at the right time. We then manage the risk as we go in. And when we're executing, we do short interval project management. So we see the weak signals. Strong signals, we've lost money, are a waste of time. We've got to see the weak ones before it happens. That's what we're getting good at. North America especially, they are really moving forward on seeing those weak signals. It's a very positive environment. Then we're going to look at a little bit more about what we're going to do in the future and higher margin work, where we're securing better portfolios, both in E and M and in technologies. The technology area has really moved on quickly. And that's also part of why we have the separation, so we can really see those products and we can engineer those products correctly and get them out to the markets because it is a little bit different from E and M. We talked a little bit about cross border, and this is where Bill Finger is quite unique. We work right across the world. So we've got our 4 regions, Middle East, North America, the 2 in Europe, so Northwest Europe and Central Europe. And that's quite unique. So we can go with customers to various parts of the world and deliver the same services in the same areas and build on those strengths and reduce the risks for ourselves and those customers. So very important, we both reduce risk. It's a mutual journey that we're going through. And then as Christina was talking about, we've got to get more efficient on SG and A. And that's throughout the whole loop, yes, from start to finish in headquarters and in our operations. And there's more to go out there. And that sense of purpose that we do things for a reason, we do things for a purpose, which is to create money is coming back into Bill Finger. And that is what we're going to carry on doing more of. But what's most important for us? Safety. We have people out there seeing will have been surprised it took me so long to get on to talking about safety, but operations is all about safety. Yet it is why we win work. We have to be world class. We are world class. We have to continue to be excellent. We don't work for Shell. We don't work for Exxon. We don't work for EDF without being safe. And that's what we need to continue to be, alongside very compliant culture, which helps in our discipline around project management as well, the compliance journey we've been on. So let's get into some examples, if I can get it going. There we go. Just going to pick on some examples in technologies and then into E and M and then some other areas we've done. And Tom's talked about some of these, so I'll only focus on certain areas. The scrubbers, what's the background to it? There's legislation in around reducing emissions that comes into play in 2020, middle of 2020. So we've got a good order book approaching there. So we'll have a lot of retrofits coming up to that where we need to get it on the old chips. And then after that, we're going to concentrate on the new build market, which is a nice consistent theme coming through. Yes, so it's a there will be an increase. Then it will steady down into a nice steady level about that. We've got proven technology, yes, which we transferred actually from our old desulfurization on power plants over into ships, which is great. And for customers, it's actually very good. It's quite a short payback against using expensive fuel over to the scrubber systems. But what are we doing? We've been quite cautious. We've got a good order book, 100,000,000, 70 ships, and there's more options there. And we could already accept more orders, but we've got to get our production right. Ships come into a dry dock. You've got to be there. You've got to get the scrubbers on. You have a 2 week window. You sail out with it to commission it, yes? And if we're not ready, there's liquidated damages. So we are going to make sure our production is right before we start increasing our order book, and we will. And we're doing that to reduce costs as well, so we're doing it in different areas across the world and where the ships come into drydock into China more often. So that's one area, good high margin work, a seller's market, a seller's market. Pharma and biopharma, an increase in market there that we see throughout with what's happening across the world with society and the products that are going in there. It's a global market with global players, and they buy on a global basis as well. And we supply on a global basis. Our facilities that we produce, so the production units are skids. We make a lot of them in Austria, and then we ship them around the world. We've just got orders in China. We've got orders in Russia. We are already the number 1 pharma and biopharma maintenance and technology provider within Europe, 22% or 20, roughly 20% revenue growth over the last 4 years a good strong platform to continue to grow. And we'll look at how we can take that onto a wider basis because there's again very good margin within those areas. Nuclear, Tom talked about it. In Germany, it's a different outlook. But across the world, there's a program on average for the next 20 years of 25 reactors being in construction at any one time for the next 20 years. There's still 450 roughly in the U. S. And Europe that require maintenance, that require retrofits and upgrades to extend their lives. This is an area we've worked in for many, many years with Babcock, Noel and our BET as it is now. Right now, there's 3 new builds in Europe, and we're on all of them. Hinkley Point, we've talked about that. We've been on that project now for getting on for 12 months. We've got 20 odd people already down there, fronted by a U. K. Business supported with BET. So we set up a special company to do that. This is where we see, again, combined strength, German know how, U. K. Delivery. So it's through a U. K. Company into the U. K. That's the Brexit question out of the way. Thank you. And K. And where are we at the moment in that? We will be getting that order sometime in 2019 as long as everything continues as it is. We've already been nominated as the strategic supplier for the NSS pipework within there. So we have a letter of intent. It is just now a matter of we are agreeing the scope that we do with that and how much other work we may do in that area as well. But not only do we do the Hinkley Point, we also do engineering for Framatome. Our Peter's business has been working in there for many, many years. Yes, we do decommissioning and we do handling systems as well. So it isn't just the specialist pipe work that we do. We do a variety of elements within that. And we wouldn't be winning that work if we weren't safe, if we weren't giving high quality and we weren't delivering on time because you cannot get away with that in the nuclear industry. And that's what we do. Let's talk a bit about engineering and maintenance. The Fluxus project, €36,000,000 project, very good example. This is about odorization, deodorization of gas, about when you take gas cross border from Germany. So you take in odors and take out odors because of the different legislation that you have in different countries. And we've got very, very good technology in that and very good experience in gas. And we brought together here 4 companies from the engineering people, the fabrication people, the installation people to installation company to bring that together and deliver it. Now a few years ago, we probably wouldn't have done that, But we're working together because we are far better family, far better cooperation and approaching this 1 Bill Finger mentality where 1 +1 equals far more than 2 because that's what, again, we need to do to grow. Tom already touched upon the Bill Singer turnaround concept. It is my background and a lot of our colleagues work in this. And this is one thing we can transfer across. It's the biggest single risk for the bulk of our customers every year. We'll be doing the largest turnaround in Europe at Shell Moerdijk, which will be starting later on this year, and we'll have 700, 800 people on that turnaround. And we need to deliver. The profitability of that site is exceptionally good. It shut down for 5 to 6 weeks. I can tell you exactly when we finish the schedule. And if we do not deliver that with the customer on time, their profitability is hit. And they rely on us and they've relied on us on that site for 25 years to do that with them, yes, because we're reliable, we're safe. And that's what we're going to deliver again. 1 of the other areas, corrosion under insulation. We do a lot of insulation. We do a lot of scaffold. It's a big part of our business. It's a profitable part of our business. This particular area where you get scabbing, corrosion under the insulation of pipe work, especially on oil rigs and in the petrochemical refineries, This accounts for 60% of the hydrocarbon leaks across the world. So when we have big process safety issues, this has caused a lot of that. So this is why there's an investment program across the U. S. And Europe where you've got about 250 refineries of about €2,000,000,000 And we're getting access to that market because we've got some all the services able to bring that together and do it very efficiently and save the customer between 60% 75% of their cost through putting rope access technician teams together. So we'll have a rope access inspector doing MDT. We'll have an insulator. And we'll have a painter and blaster, all in one team working off roads. So they'll go, they'll do the inspection without taking the insulation off. If we find a problem, we'll take the insulation off there and then. And we'll correct the problem, find and fix. And it removes a massive amount of the cost. You don't have to put up scaffolds. You don't have to go back, get other people in and do different elements. And this is providing real value. And hence, we can do more and more and more, save the customer money and give them our higher value services. So we're shifting it around, which is what we need to do, provide these solutions to customers to deliver higher margin services. The last one I've got is people may not remember, this was one I showed I can't remember back in October 2017 or whenever it was. I thought we were at a worse time, but whatever. This was a contract we did. Not all contracts start off brilliantly. We won this contract on an offshore rig just checking there's nothing there back in January 2017. And it didn't start off very well. Yet it was at the time the market was tight. Our Norwegian business needed to win work, and we went in a bit tight. But we worked very hard to bring it back. I remember we talked about here, and we started to bring that back. And we maintained this profitability throughout. And now this contract is very profitable. How did this happen? Measuring our performance. So here, this is all about the norms, so how quickly we do work. That's how we get paid on the bulk of our contracts, yes? We get paid for what we do, not how long it takes. So we've got to drive that efficiency, yes. Our people, it's a lovely day today. Our people are out there working when it's raining. They're turning up at 5 o'clock in the morning. They're walking down to the site. They're getting wet through. They're getting changed. They're getting out there. They're getting briefed for their work. They're getting their permit. They're going to the job site. They're checking their PPE. They're doing their last minute risk assessment. And then they're starting and delivering work. That is our lives, and that's what we do well. And that's what we look at making more and more efficient. And it's getting down to this incremental level of that bit of performance improvement every day that we can do to make a turnaround like this. This was done with only Billfinger people. No consultants, just Billfinger people because we're the experts in delivering this production improvement, productivity improvement. So at the end of that now, how are we going to go forward on this? A lot of what I do is about what we do as strategy and transferring that to how we deliver it in the field because that's the key. What we do, we've been doing it right. We need to get better at converting that how. And how we do that in North America can be very different to how we do it in the Middle East or how we do it in Central Europe or Northwest Europe and on different sites. And that's what I need to do with my people that we're working together as a team and doing this better and better and better. What do we do to make sure we're doing it well? We measure it. The facts don't lie. Measure it, put a plan in place to improve it and deliver that plan and then go back and check it and check it and check it and check it because the facts don't lie. And that's how we're moving on. And behind that as well, we've got a very good product portfolio now. We've got high margin services. We've got high margin products that we're bringing through to the customers with a good order book behind that to deliver it. So from a delivery perspective, from what's happening out there where we're earning the money, we've got a very positive environment. We're a safe business. We've got all the tools and techniques to deliver efficiently. And we manage our risks get ahead of them by looking for those weak signals. That's what we need to do. With that, I'll finish. Tom? Good job. Thank you. Thank you, Duncan. So it's up to me to try to round up with a look ahead and how we're going to do in 2019 beyond. It's interesting because from the beginning of the year, already at the end of last year, but certainly beginning of this year, we've done quite a lot of conferences. And we're always asked, do you see shakiness in your industries and your customers? And the answer is no. No, we don't. And why is that? Well, our 3 key industries are oil and gas, chemicals and petrochem and energy and utilities. They make up, as you recall, 80% of our revenue. All of these are right now very robust. They're long cycles. They're late cycles. So if something were to materialize, we will get plenty of warning. And then of course, we would have to adapt and adjust. That's not the case. If we go very briefly through our 4 regions, you recall that Northwest Europe on the bottom, this is mainly the activity around the North Sea. So UK on one side, Norway, Scandinavia on the other and then Holland in the south. The northern part contained in the Europe is therefore mainly about downstream oil and gas. And here we see people investing in maintenance and field life extensions. So investments are sunk and assets are run for cash flow. We see upgrades along the European gas network. And the gas network, you follow it the same way everyone else does, is in some cases aging, in some cases being expanded. So Nord Stream comes into Lubmin, it has to go on to the rest of Germany. NNG plants are being talked about not in terms of liquefying the gas, but in regassing the liquid. So we expect in this year and exit, there'll be an enhancement to 1 of the 3 locations. And then again, gas infrastructure comes into play to bring that imported gas into the structure. So we think oil and gas content in Europe is mainly around infrastructure and we're well positioned. And you saw I think the Fluxus project is evidence of that. In Chemicals and Petrochemicals, our customers are doing well. I would say ammonium fertilizer is the weak area, but all other chemicals, specialty chemicals, base chemicals, these are good business lines and the customers are continuing to put money into their plants to drive performance and productivity. There's not so much expansion, at least in Continental Europe as we know it, but people are investing their money and driving performance. Energy and utilities, Germany is interesting. You read about the coal fired power stations that will be turned off. They produce not only electricity or energy, but also they produce hot water. So the combined heating, as it's called, then leaves consumers without a source of hot water. That's where district heating comes in. And these are projects that are well within the scope of Bilfinger within the BET organization, as we mentioned. And we're actually executing a project in Mannheim where we do exactly that. We replace the warm water from the coal fired power station that's being shut down with a separate generation process that then delivers heating to the homes around Manheim. Think on the far right, Pharma and Biopharma, I've talked a lot about. This is a good business. We're taking it to China. We're opening our office in Guangzhou to support business there. And I think you will also read our first move into Russia, where we've sold quite a large skid towards building a new biopharma plant in Russia itself. Northwest Europe, so North Sea, this is the oil and gas part of Bilfinger. And again, we're asked often because the people see a very strong correlation of our share price to the oil price, how much of your business is actually true oil and gas related? And it's around 15% on the upstream side, maybe another 5% downstream. So we're at 20%, maybe a little bit more depending on the seasonality and on the cycles. But here definitely it's our upstream business. The North Sea is good. Customers are making money. Last year, customers oil and gas customers typically budgeted for an oil price for around $45 to $50 That's the same this year. These customers are not changing their plans when the price of oil moves from $65 to $55 and back to $60 They just record a high windfall profit. And I think you saw that in the numbers from Shell and BP just a few days ago. Chemicals and Petrochemicals, all the downstream business is also prevalent in Northwest Europe. This is the metropole, if you like, the chemical metropole between Antwerp and Rotterdam. That is actually the 3rd largest chemical complex in the world. Number 1 is in China. Number 2 is in Houston. Number 3 is in Antwerp, Rotterdam. And you will have read that INEOS is investing there in 2,000 well beginning 2019, a EUR 3,000,000,000 investment to build out a new facility there. So there are things happening even in mature markets. Hinkley Point, Duncan touched on it. I won't dwell on that. We're there. We're working there. So our people are inside the customer's organization. We're working on our project on an hourly basis, which is very nice because that's guarantee profits. But as we go forward, we will sign the larger contract. It's going to be €250,000,000 It was supposed to be last year. The customer changed some structures. They asked us to be patient. They gave us time and material contract. And somewhere this year, we will sign that contract and then record a one off lumpy order, but that will turn into revenue over successive years. So again, it gives us strength, visibility and improving margins. If I jump to what we call the developing or international, because the other 2 there I just reported on were Europe. In North America, things are also good. In North America, we have a strong C component, the EMC, Engineering Modifications and Construction. Our business in North America is very construction heavy, but it's constructing mainly in the midstream. And what is midstream? Oil and gas comes out of the ground at the well site. It's got to get to the refinery. So midstream is all the technology gets there. It can be pipelines, it can be LNG, but it can also be cryo units. And the cryo unit is the refrigeration process where gas comes out through refrigeration, you separate the liquid component from the dry component and that liquid component is what then goes into the crackers to create base chemicals, polyolefins, polypropylene and so on and so forth. That is a good business. A lot of investments still yet to come in Texas and Louisiana. We were there with the press a couple of weeks ago and people talk about €200,000,000,000 investment dollars not euros, but it's probably very similar, of which only €80,000,000,000 have been made so far. So another €100,000,000,000 to go. We like that. Even a small part of that is a lot of money. And so we think we're in the right place at the right time. In the Middle East, oil and gas companies are picking up. The national oil companies, the NOCs are investing again. Not only are they investing, they're making announcements. And you know the mentality there, they don't announce unless they intend to do it. So we've seen really good opportunity in Abu Dhabi. We've been working with ADNOC for a long time. They want to invest in the build out of their refinery in Borouge. They talk of a number of EUR 42,000,000,000. What's going to be at the end of the day is something close to that, but it's going to be big. And we're already there working with ADNOC in Berouge. So we're ideally placed. They've also mentioned increasing their oil production. So the OPEC, non OPEC play continues. But at the end of the day, depletion, reducing pressures, drives the need to replace reserves. So we're not talking about increasing production, but mainly replacing what has disappeared during the course of the year. And there, their aspirations have gone from the 3,000,000 barrels a day to 5,000,000 barrels a day. It's another 120 $1,000,000,000 required to do that. So money is flowing and why? Because again, they're making a lot of cash even at oil prices in the range $55,000,000 to 60,000,000 I think we're in good markets. We are in robust markets. We have solid customers. And therefore, although we can read about recession in other industries, we don't feel that. We don't feel it yet, okay. We don't feel it in 2019 either. Now that might change, but we're confident. And that confidence allows us to then stick our neck out just a little bit, not too far. The numbers you're familiar with right now, so in 2019, we think we can continue to grow. We've got good backlog, 12% increase in backlog year over year. We still expect to be book to bill greater than 1. There may be some quarters where it dips because we're showing some very good track record. But overall, we expect mid to single digit organic growth in 2019 over 2018. Our EBITDA will grow also for all the reasons you've heard. We're driving performance. We're driving productivity. We continue to take down SG and A. And therefore, we set ourselves, if you like, a baseline at €100,000,000 EBITDA, we're going to do better than that. So a significant increase to more than €100,000,000 EBITDA adjusted. Finally, free cash flow, it's reported now, not adjusted. We were close to breakeven in 2018. I'm glad we weren't in some ways because we want to put that check mark next year. But of course, free cash flow is important. It's what drives the business. And I think it's also, I think, number one priority of Cristina, as you heard during her presentation. So we have good momentum. We see ourselves going forward, and there's no reason why we should retract or change our aspirations that we shared with you in 2017 with the Billfinger 2020 strategy. We said at the time, it's a long way. It's hard work. And yes, definitely is hard work. I think the whole team is nodding yet. We set ourselves many small successes along the way. That's important to record these successes. And in Q4, we added one more green tick mark on the adjusted free cash flow positive latest in 2018. We deliver. We haven't changed this slide to meet our results. So going forward, I think you've seen our aspirations. We're on track, and we will do that. The refinancing, that will happen very soon. And of course, the refinancing is going to be our target, our next check mark and the cash flow development obviously helps in that regard. We did make one adjustment in our slides. Again, this is an old slide from 2017. So we said taking 2017 as the base year, we would grow the top line, 5% CAGR, check mark, we're on track, good book to bill, good order intake and a strong development in the backlog. We said that we would increase profit from a 0 effectively in 2017 to an adjusted EBITDA of roughly 5%, of which 2% or 200 bps would come out of gross margin, 300 bps out of SG and A. You've seen we're well on the way. But going forward, if you ask me what is my measure of success going forward, and I think Duncan's too, it's driving that gross margin, driving it forward through all the things that we discussed, not only performance, but also the fact that we have good products with higher margins where the market is demanding those products. We have to execute, deliver on time and then make sure those higher gross margins come all the way through to the EBITDA line. On the cash side, I think we've said enough. I'm sorry, I should add one more point. I said we added a line here. It's including portfolio rotation. What is that? Something we began talking about at the end of last year, and you recall my slide where I talked about the analysis. When we went deeper into companies that were in our view underperforming, we found improvements, we found fixes, we set timelines people. But even then, they will only get as good as their peer group. We don't see them going above a 3% to 4% EBITDA. And for that reason, we said once we've got to what we think is a good benchmark and peer group comparison, we will then sell them. And from the proceeds, we will buy other companies that do fit our margin profile. And that is why we did introduce here on the profit box, it's the only line I assure you can go back to 2017 and check. It's the only line where we said we now include portfolio rotation and that's going to be small things. It's not game changers, but we do want to spend the money we get from selling the accretive entities, the 4 that Cristina mentioned, and a few other fine tuning in our portfolio. Okay. Cash, we talked about, return, we talked about. So I think we're on track. We showed in 20 17 that we've turned around the top line. Yes, so inflection point achieved, orders taken in, revenue taken in. In 2018, we have the inflection point on EBITDA and on cash flow. And as I mentioned, a solid backlog going to 2018. We're confident. We think we're able to deliver, and we think we will meet our 2020 ambitions. So with that, I would say thank you. Pass it back to Bettina and I guess open the floor. Yes. Thank you very much. We now start our Q and A session. For those in the webcast, you can push your question via the chat function and I will read out loud later on when we're done within the room. So we start with questions in the room. First question, Christian Kort, HSBC then Norbert Cretelon. Thank you very much also for the delightful presentation. I have a couple of questions with regards to some of the points you already spoke about. The first one is on the scrubber capacity and the technology that you have. Can you talk a little bit about your annual capacity that you have in there? And then I'm also very much interested in one of the smaller parts where you said you have 100,000,000 orders on 70 ships. Is that the goal? Or is that what you currently already have? And secondly, can you elaborate a little bit on your refinancing plans going into the year 2019 with the bond expiring? And then the last point would be any status on A PLAY ONA? What's the current where are we in the process? I mean, the business was sold a couple of years ago. Private equity tends to hold on to these assets for some years. Just if you could get us some idea, if you have any conversation with the other owner? Thank you very much. Well, thank you for the questions. I'll go with the easy one and then hand it over to Cristina for the refinancing and also Apliono. In terms of scrubbers, it's an exciting market. As you followed, your own house writes a lot about it and reports. I think the views haven't changed. Between 5,101,000 ships need a change in approach, right? And what does a change in approach mean? They're either they pay the higher price for the low sulfur diesel or they change out their engines from being diesel burning to being gas burning, they use LNG. So we still have a very large market target. That's the demand side. On the supply side, we think the supply is between 1200 to 1500 scrubbers coming from about 12 companies. The larger ones delivering in the order of 300, the smaller ones, of course, tailing off on that. And within that supply market, yes, we have orders in hand, so sign orders, delivery programs on 71 scrubbers to be exact and just a little over 100,000,000 euros in orders. Now what is our capacity? This has been an interesting challenge, but a positive one where we also took in help from the automotive industry converting project technology into a series and modular production technology. We began with the plan and we still stick to that to keep the engineering in house, keep the commissioning in house and of course the spare parts business after that, but to outsource fully the manufacturing. We began with a manufacturing partner in Monchengladbach in North Germany, who initially said they could manage about 30 to 40 units a year. It was important to get them going. It was important to deploy quality managers to them. And then we took on a second manufacturing partner also with 30 to 40 per year, also in Germany by the way. So that gives us immediately 60 to 80 units. We then began manufacturing some key components ourselves. So that lifts us up to close to 100. And we've now been, I guess, auditing 4 companies in China, which will be the next step. And of course, that's a bigger step, But that step is necessary out of a number of reasons. One is that a lot of the shipyards that do the conversions or the modifications are in China. So that's kind of obvious. Produce it close to the source where it's required. That gives us better visibility on delivery realty, takes out the transport question mark, but it also reduces our costs tremendously. When you look at the numbers, it's hard to believe, but yes, we like numbers. And therefore, we think going forward, we can take the margins up quite a few notches even if the pricing per unit goes down. So that would then take us to well over 100 capacity. We're targeting something even larger than that. So the capacity buildup is underway. Engineering is done. Standard products are done. Modular production is in place. So I think we're on the right track to deliver exactly what we said. Kristina? I'll take up the question first around the funding and the financing. Yes, it was a target last year in autumn before it started to refund Bilfinger. For various reasons, this was then postponed. So the target is in the first half year to find a solution for the refunding. In December, we need to repay €500,000,000 and we are here now planning to find a refunding of €300,000,000 That's what we are targeting. Depending on the quality or depending on the price, we will we might also exceed the €300,000,000 to be flexible going forward. But €300,000,000 is what we are looking for. And we are working hard right now in this process, different tools, different ways of getting the €300,000,000. I think, unfortunately, the bonding market has changed during the last 6 months quite a lot, The documentation demands, but also the interest coupon has changed significantly. So we are well aware of the fact that whatever we now decide to do, we will not be able, of course, to be at the level of the present funding, which is 2.375. Percent, but we are well on our way and looking at different opportunities here. So we are convinced that until the end of the first half year, this issue will be solved. Coming to the questions around Appiona. Yes, I think given that there is a private equity company behind, at some point in time, you have to expect that there will be an exit. Presently, we have the preferred participation note, which has now been put in the books at the end of December at the value of €237,000,000 €237,000,000 So it was an increase of €26,000,000 However, we have to say that this valuation, we still regard to be a bit conservative, and it's also below what Apliona themselves would judge. We also then have the vendor note, which is at a very good interest rate of 10%. And we had now at the end of 2018. If we look at the value, the nominal value with the accrued interest, €125,000,000 However, with the IFRS 9, it is then valued at €117,000,000 So I think both cases, these items are giving solid values in our balance sheet. And then, of course, we need to continue to stay in touch with Aplona about what next steps they will take. But given the time frame that their ownership has been with a private equity company, I think we do not expect or we haven't heard that there will be a significant change here. Thank you. Norbert Creflo. Two questions, if I may. The first one would be on the gross margin. In the presentation, we heard that you feel you're behind schedule here with regards to gross margin improvements in 2018. Maybe you can give us an idea about the quantity and maybe you could also give us an idea about how to think how countermeasures should phase into the gross margin over time, say, in the next couple of quarters? And the second question would be on Hinkley Point. We heard a lot about this project before. And I wonder how big is the strategic importance for Bilfinger in Hinkley Point? Let's assume that there would be further delays. Let's assume that maybe we won't see any meaningful sales contributions in 2019, in particular 2020. Is there an idea you can give us about the potential impact on the P and L? Okay. Again, thank you for very good and very deep questions. On the gross margin side, it's quite easy. We said we would get to a total of our target is 5% for 2020. You saw that we're at 1.6%. So we know what we have ahead of us. We know that we want to drive another 1% out of SG and A. So the rest has got to come out of gross margins. So I think it's really just staying very dogmatically to our original plan that that's the key. Where would you be looking for improvements in that? Our 2 service lines that we report, we report total Billfinger, we report the 2 service lines and then we drop down and we report the 3 segments. Bettina will be leading you through that more. And full transparency. So I think the single biggest step forward you will expect to see that I expect to see and my colleagues too is of course in turning the EBITDA of the technologies service line profitable. And we think that one of the components of doing that, it's taking out the underperformance in one of the entities. It's under capacity in BET. So there definitely Hinkley Point comes in. But then of course delivering what I just described on the scrubbers. I think we know exactly what needs to be done. And more than that, I would say stay tuned. It's going to be a good talking point in the coming quarters, but we think it's in hand and we will deliver. Now if Hinkley Point should delay beyond 20 19 in terms of receiving the order, what does that mean for the project? The project will be delayed, first of all. That's in the hands of EDF. It's not in our hands. If you were to visit Hinkley Point, it's just south of Bristol, on the Bristol Channel. It's a huge site. Today in the Feet, there was a good picture, I think, of Hinkley Point. If you haven't seen it, take a look. It gives you a real taste of the size of the project. So it's £15,000,000,000 initially. Maybe there'll be some inflation as these projects have. And they're roughly £6,000,000,000 into it. So if there are delays, it's customer and the customer probably will end up losing quite significant money because these feed in tariffs are of course tied very strictly to completion dates and they then in turn translate into acceleration. So could something happen? Yes, something could always happen. If it does, we're going to fall over. No, we're not. We have other industries. We have other fields. And just like you saw, it didn't materialize in 2018 and we delivered, we compensated. We'll do the same going forward. We're quite careful in our forecasts. Thanks. I'll just add a little bit to that in terms of the gross margin performance just to get it very focused. We've got 4 businesses that we need to turn around. They're well in process of what's happening. There's a couple in technology, a couple in the E and M. And if we do that, our gross margin will be where we need it to be. On Hinkley Point, they're 30% through the project. They're not stopping. They're placing orders. There's yes, something could happen, but they are continuing on the program and they're looking to accelerate the program to ensure that they meet their targets of coming online at the right time. And then they're going to move on to Albury and do the next plant at Albury. So that's what the EDF objectives are. Okay. Next question comes from Patrick Hoag, then Mr. Thunweit. Yes. Two questions from my side. So first of all, can you provide us kind of target range for your margins in your new divisions? That would be good to know, especially looking to 2020. And my second question is regarding the lawsuit or the potential lawsuit against the former Billfinger Management. Any update here? Thanks. Yes. Our overall EBITDA target hasn't changed, right? So if you back out the numbers, high single digit is what where we'd like to be. Could we do better? Perhaps. But if we achieve the high single digit, which is a way to go from what you've seen, then we'll be approaching our 2020 target. So I would kind of leave it there. Yes, the lawsuit, potential lawsuit against former Executive Directors, Vorstland, Interesting. A year ago, again, almost to the day, we had the Board meeting, supervisory board meeting. They had the final presentation of the first legal opinion. That was well over 300 pages. And the meeting, the discussion meeting around that took quite a long time. We ran that meeting well into overtime. It then also raised questions, but because of the magnitude of the potential, I'd say potential number, which we attached a 3 figure million digit to that and the press did the rest, we felt we had to go ad hoc, which we did. Nevertheless, in the course of those discussions, it also raised some questions, which remained unanswered even through further discussions inside of the Supervisory Board whose job it is to do this kind of things. It's not us, but of course we're very attentive bystanders and we're party to the discussions. So it was decided to commission a second legal opinion, which we received somewhere after the summer. And again, intensive discussions, still some gaps open and even some contradictory points of view on certain parts. And for that reason, we went for the 3rd legal opinion. I say we, the Supervisory Board. And that third one was discussed at the Supervisory Board meeting on Tuesday this week. So we've had 3 opinions. We're done with opinions. Number 1, well over 300 pages. The last one also was well over 100 pages. I think no secrets that the first one was done by Linklater's. The second one was done by Professor Hoffmann Bekking and the third one by Professor Habersak. And all of them very deep, very founded. But with that last one, all of the remaining questions of the discussions out of the many hours of discussions of the Supervisory Board were answered and they decided then to proceed. Now then the next question is, what does proceed mean? It means the following is that we will now advise. When I say again we, that will be the Supervisory Board and their legal counsel will advise the former 12 Executive Directors of Birfinger of our intent. They, of course, will then talk to their legal counsel. Their legal counsel will ask us to show calls. And we will open an electronic data room where they can access the data that we have. And then of course that is the preemptive phase and then it goes into discussions. They will then also then share information with us. And then, of course, we evaluate and the process goes on. It's a lengthy process. It's not taken lightly, as you can tell. And the decision was reached at the Board unanimously to do what we're doing. And now we go to the next step, and we wait to see what develops. Okay. Mr. Thunwald and then Craig and then Mr. Kuglitsch. Yes. Good afternoon. Just two questions, please, regarding the gross margin again. I mean, the book to bill was pretty outstanding again for 2018. Can we also see some gross margin improvement out of the price quality, out of the order backlog? So do you feel more comfortable looking at your order backlog quality? And the second question is regarding again the gross margin. I mean, you were adding to the 2020 targets the portfolio adjustments and then we learned that it's 4 units which are under delivering, so to speak. I mean, you could also improve the gross margins and achieve your full year your midterm targets by portfolio adjustments and selling down for those companies? I mean, is this part of also your strategy how to achieve the 5% margin target? Thanks. Maybe I'll begin and then pass it to Duncan. I know he's dying to jump in there before I commit him to high numbers. We do track gross margin at the order intake level. So on a quarterly basis and even on a monthly basis, our regions, our segments report. And we are trending upwards. And we're trending upwards in our backlog because some of the lower margin business is coming out, because higher margin business is coming in. But that is the first step. So we look very carefully at what is coming in. We also give instructions to our salespeople where we think they should be targeting gross margin in their sales contracts, especially around scrubbers, where that's a little bit easier to do. And then, of course, the challenge goes not only from bringing the order in with a theoretical gross margin, but delivering it to the bottom line. And that's where Duncan comes in. Thanks. Christina said earlier about being picky, which is a financial term, as we all know. And we are more selective now in what we do in both ways, how we renew contracts and the ones that we win. So yes, the margin quality in the order book is good. And where those are renewals in the engineering and maintenance sector as well, we are being tough with our customers. That means we sometimes we lose contracts and move on to others because in the engineering and maintenance element, there is a resource shortage. And we have 35,000 of those resources. And we are going to put those onto the work where we get best value from them. And that will mean a little bit of a change sometimes in the customer portfolio that we have, which is positive. When we look at and it's come forward as selling underperforming companies, we're turning those around now. They're in a position now where they're going to start contributing. Does it mean we're not going to sell companies in the future? No. We'll always look at what the portfolio looks like and the value that it brings. But the 4 that I'm talking about now, they're well on the track. There were some isolated issues in some of them, which can be solved. There's others that have had a restructuring, and we're through that, and we're confident that we're going to be delivering those successes into the future. Yes. The number 4 appears a number of times, so just to avoid confusion. Again, going back to 2017 February, when we began to share our 246 strategy, we said there were a number of entities that didn't fit perfectly into that strategy for various reasons. EZbomb being South Africa is outside of our geography geographic target. Others were loss making. So we had at the time 13 loss making entities. We have 5 that were accretive, but outside the strategy. And then the loss making, we sold with sense of urgency because they were bleeding cash. The last one was a JV that we terminated beginning of last year and that went into liquidation end of last year without further financial consequence. So the 13 got a check mark. Of the 5 accretive other operating entities, as we call them, 1, we reversed back into the fold, and it's become the cornerstone of our cross border maintenance concept in Europe. So that one is reintegrated into the fold. And the 4 companies that Cristina mentioned are the remaining accretive companies that 2 have signed. 1 of those 2 has closed and there are 2 remaining including our operation in South Africa, which we expect to sell during the course of 2019. And they will also bring in some funds. Now the ones that Duncan refers to in the 4, this is ones that we intend to keep within the Technologies division. So we mentioned the under capacity. We know why they were underperforming. And yes, they are working on Hinkley Point. They're also working on Corotus. They're also working on Flamanville in France. So there's business in the nuclear outside of Hinkley Point that's taking us forward, that's using the idle capacity. And finally, some of the companies that I mentioned, when we did the deeper dive, we saw that we looked not only at our companies and what they were doing, but we also looked at the competitive landscape. And the competitors were doing 2%. We think we can do twice as good, that's 4%. But then when you take out our salaries or at 1% for headquarters, that 4% turns into a 3%. And that's quite a long way from the 5% target we have. So Therefore, we said, look, we may not be the best owner for that kind of business. It's something that we didn't have on our screens in 20 16 'seventeen. But having gone in deeper now, we say they're great and the people there are good people because they're better than their competitors, but they just don't match our long term aspirations. And therefore, given the right owner, we would sell those companies, rotate that money together with the sale of the 4 accretives into small opportunities, higher margins. And then what do you say what is higher margin business? We like our footprint. We're in the customers' process facilities. They come to us and talk about digitalization. They talk about overall equipment efficiency, we speak the same language. We'd like to do more for those customers. So taking that money, putting it into the same footprint, industrial footprint, yet at a higher margin, let's say, we're taking equipment for one example, then that will be, I would say, germane to us achieving our 20 25 percent aspirations. So there are no overlaps between yours and Duncan's? No. Hopefully, I took apart all those numbers, yes. But no, we're very well synchronized. Okay. Craig Ebbett. Yes. Thank you. I actually have 3 questions now because one of them is a follow-up from your one of your answers from now. But the first one is, I just wondered if there are measures you can take, particularly given the high share of MMO of your business to finally reduce somewhat the high seasonality of your particularly your cash flow? Secondly, I just wondered if you could update us on your targets for the central costs by 2020? And second and thirdly, excuse me, the follow-up. Duncan, you just mentioned that you can afford to be tougher now in your negotiations with customers given tightness in the market you mentioned. That's the first time I think we've heard that in quite some time. Is it fair to assume then that maybe the pricing power is shifting a little bit back to the supplier side? I'll take that one first. Yes, we see that it is. It is different in different regions. North America is very, very strong at the moment. There's a lot of growth there. Some good projects, good investment happening and of that very much a seller's market. We've seen it again in Europe around the refineries when it comes to the turnarounds. If you get a good run-in those turnarounds as you go through generally the spring months and the October months and you can move your resources from one event to another and get continuity through that, you can look to then secure very good teams and deliver those to customers on a rolling basis. And they come back to us year after year after year. But there's other people who would happily have those resources, yes, would happily come in and say, okay, we'll take those. So where some of our customers are maybe being a bit tougher, their markets are a little bit tougher, we maybe shift those around to other areas that are a little bit stronger for our perspective. It's something different. We haven't done a lot of that in the past. We've been very loyal to our customers. But we want to see that loyalty come back. People have seen our business performance. They're seeing that we do some of these things for free literally for them. So they've now actually got to start recognizing we are an efficient business, and we want to see our profits recognize that efficiency in delivery that we do. And we're seeing that. I can take the question on seasonality. It is a fact of life. I mean, the weather does play a role. And so the demand, of course, goes with the temperature, if you like. Where we are successful, we have a good model. We have, for example, a very strong company in Poland that has over 4,000 employees. And at any one time, more than 2,000 are working outside of Poland. So we kind of have, if you like, a wage arbitrage going from East to West. We'd like to have more of that. But we do have a lot of legacy companies, a lot of people that have been with their companies for a long time. And just terminating them and replacing with temporary workers or seasonal workers is not really something we would be looking at doing. So we'd rather rely on attrition. And as those people come off the payroll, then we'll kind of propagate our arbitration role model. Now there are things in place in Europe where various countries are saying, well, you must pay the temporary work is the same. That's true. But what we find also is that it's not just the hourly wage, but also the enthusiasm and appetite to work long hours, to work weekends and turnarounds is higher in the East than it is in the West. So it's not just about hourly rates, it's also about how these people behave and drive productivity. So yes, we are aware of that. It will take time to iron out. But we think we have a good model, and we think that given time, we'll be able to reduce those overcapacity in the low season. Greg, we were not 100% sure. You were asking for the central cost target, the 1%? Yes. Yes. It's a bit difficult going forward with that target. This was part of the 7.5% SG and A target. And the SG and A target is absolutely valid. The 1% was related to the old allocation of the headquarter costs. And we will have a more accurate allocation of these headquarter costs or corporate charges going forward. In the new figures, we have provided you with the new way of allocating it, the more accurate way is reflected. But so the 1% does not fit anymore. We do not have a new sub target in that, but the 7.5 percent SG and A is confirmed. And in the end, this is what matters overall. The rest is more an allocation issue. Okay. Thank you. Gregor Kuklitsch, please. Thanks. So a few questions from my side, please. Just coming back to those 2020 margins, is there any way you can kind of give us some kind of sense what you think you can simply get from the starting point, which I think is 1.6% what you aim to achieve from portfolio rotation? I just want to get a sense if we're talking 50 basis points or 100 basis points or whether that's completely off the mark. Because obviously, we can get the OOP that's an easy one. But how much else are you thinking about churning? You said it was not going to be massive, but just if you can give us some kind of ballpark figure. And then the cash flow, just perhaps, can you I think you mentioned in your presentation, Ms. Janssen, on the supplier payments in the Q4. Can you just give us a sense whether you think there was something that was a little bit kind of abnormal? And then I suppose more structurally, I think your working capital trade working capital is like $500,000,000 for business making $4,500,000,000 of sales. Do you think that's the right level? Do you think this makes sense in the contracting operation that you effectively have to fund your suppliers? And then finally, and I don't think you do, but can you confirm to us you're not using any supply chain financing in terms of any sort of credit facilities for your suppliers? Thanks. Okay. Maybe I would start with the margins question. I can do back of the envelope as probably you can too. The key number there is 300,000,000 So we think there's roughly 300,000,000 in revenue in the companies that we would either dispose of inside of accretive OOP and positive but dilutive portfolio rotation. So if you take 300,000,000 and they're doing 3%, that's €9,000,000 right? If we were lucky to buy 300,000,000 worth of new companies doing 7%, that's a 5% spread. So if we can squeeze another $15,000,000 to $20,000,000 out, we would have done a really, really good job. But it's in that order. It's not a lot more than that. That's back of the envelope calculation based on the expectation that we will be selling roughly €300,000,000 in revenue. Coming back to the question first on the supply chain financing. No, we don't have any supply chain financing. And then on the working capital, the effect at the end of 2018, that is related to a delay in making supplier payments. Maybe it assists you if I say that the amount that we're talking about is around €30,000,000 that was delayed from obviously paying instead of paying in December, paying it in January. Thank you. Next question come from Mrs. Yepp. Hi. I was just wanting to ask a basic question on the outlook for 2019 and that's if there are any specific adjustments or considerations on the IFRS changes for this year? Yes. So generally, the outlook is given on a like for like basis. The major effect on the IFRS change will be visible in the cash flow. And there we also made a little mark on the slide that like for like free cash flow reported, we say we will get the breakeven. But the IFRS 16 changes will have a positive impact on that number in addition. So this is the major impact. On the earnings, it's not so significant most probably on the EBITDA. But anyhow, there we have been more qualitatively. So it will support EBITA adjusted, but only to a minor degree. Mr. Tasig? Yes. Thank you. My first question is just a clarification one. You mentioned the book to bill should be above 1 across the year. Do you mean do you refer this to 2018? Or do you meant 2019? In 2018, it was 1.07, so check mark done. In 2019, if we are to continue growing, which we expect, then again we have to be above 1%, our 5% CAGR, and we have a little bit of a head start with a 1 point 7% in 2018, but we still need to be close to 1.05%. That's the challenge. So that's the guidance then for 2019? It's the same guidance we gave in 2017, unchanged 5% CAGR through 2020. Second question is, could you give us a rough ballpark figure? How much nuclear, biopharma and scrubber sales you have in your Technologies division? As we showed, we are around 450,000,000 last year, it's going to be €500,000,000 this year in revenue. I would say it's going to be close to a third, a third, a third. Yes, a third biopharma, a third nuclear, assuming, of course, we kick start Hinkley Point and a third will be the scrubbers. The year afterwards, I think the scrubbers would outpace the others. And of course, automation, which we also have in that group, feeds into those because they're part of the subsystems. Yes. Never say something different than your CEO, but I would like to market a little bit our new fact book where we also did the industry split for the new segments. And there we have a split of the technologies revenues in 40% energy and utilities. This does include nuclear, but it's not only nuclear. 40% pharma and biopharma, 10% chemical petrochem and 10% oil and gas. But you find that on your stick. Okay. Thank you. And then the next one is on your guidance. You roughly guide for the same growth you achieved in 2018. Then when I assume you are capable of doing €60,000,000 improvements in EBITA like you did in 2018, you would arrive at €130,000,000 if I'm doing my math correctly. Is there any risk to this assumption? €35,000,000 Yes. But is there any caution you take which can go wrong in 2019? We've seen so much in the past, right? We've been burned by stuff coming out of the woodwork. Even this year, we had a minor hiccup, which you don't see because our stability is enough to cover minor hiccups. But we had a hiccup out of 2,007, right? Yes. So things can always happen, right? But your back of the envelope mathematics, as a school teacher, I would say, yes, check the box. And what's the risk? We said more than 100. You have a higher number. That delta is the risk. But we're it's early on the year, right? So give us a chance. Okay. And the final one is on your risk for 2019 regarding Nord Stream and the coal exit. Is there any immediate impact that might come? No. North Stream, we did North Stream 1 and number 2. We provided the SCADA system or SCADA depending which side of the Atlantic you're on. That stands for Supervisory Control and Data Acquisition. So the monitoring systems if you would like to be more specific, roughly €15,000,000 one time project work, delivered on 1 that qualified us for 2, also now delivered. So we've done our part, so to speak. We've had no approaches from Ambassador Grammer. He's written to the owners of the pipeline, but I don't think he's written to the smaller companies that deliver components into that. Okay. Any further questions? Yes. Can I just follow-up on this IFRS point? So am I correct why it affects cash flows because basically the finance element you book below? Is that right? Why is the cash flow difference? Because obviously to us nothing has changed economically. You're just accounting for the leases differently. A little bit of a detailed question, if you want to take it offline, it's fine. You mean because of IFRS? Yes. Is it the interest expense structure? Because it's then interest component moving to the financial cash flow. And how much lease liability do you actually have put on the balance sheet? We do not have yet the number. We will have a rough or a more detailed estimate in March when we publish the annual report. Okay. Thank you. Okay. So any more is there anybody wanting to post a question in the room? No. There is none either from the webcast, maybe because you are all here, which we highly appreciate. So I would conclude the Q and A session. And yes, handing over to Tom maybe, and we will have a get together afterwards. Again, thank you very much for your interest. Thank you very much in following us. And yes, look forward to the next time and look forward to being able to chat with you individually at the where, at the end of the room or somewhere else? Sorry. We put away the chairs and then it's inside the room. So if you have time, yes, welcome.

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