Good morning. Welcome to OHB's Nine Months Conference Call Presenting The Results of the First Nine Months of 2021. I welcome you here in Bremen together with Kurt Melching and Lutz Bertling. I will present our news flow, our numbers, and obviously also will answering your questions. We are here in Bremen together with Martina and the rest of the team. As always, I'd like to remind you that this conference call will be recorded, will be available also on our website. I hope you have been able to download the materials that we have published this morning. As always, I quickly walk you through the slides, and then, of course, we will have time to discuss and to answer questions.
First, we had a strategic review this fall, and it was anticipated that it would take place in September after the COVID and of course, after the developments we had in 2020. We looked two years later at the strategy OHB 2025. Overall, this slide summarizes where we stand, and there have been rather minor changes. The major message is that we basically confirmed our strategy. What you see here, only the green text is where it has slightly changed.
The scope has been confirmed in our strategic review of being an end-to-end space system provider, developing a downstream portfolio, extending our satellite and system portfolio, and also, on the aerospace side, the rocket side, become a full launch provider with our investment in Rocket Factory Augsburg. Of course, performance improvements are still on our to-do list, and we're working very hard on that. In terms of culture and people, build on the OHB culture of getting things done, also fostering our entrepreneurial spirit. What is new is a focus on environmentally and socially responsible acting, which is something that we are now more highlighting, and we're adding as a core part to our strategy more visibly.
In terms of the growth perspective, still organic and inorganic growth, we confirmed that. M&A focus on downstream applications, but also an extended footprint in commercial space system markets. Of course, we will talk about that after the big success we had recently with SpaceLink. Financially, slight changes. Total revenues bigger than EUR 1.5 billion a year. Before that was EUR 1.5 billion, so what has changed is that we just slightly changed this little sign. What else has changed is that the free cash flow we see now at level of net profit, which is also not a major change.
Overall, we basically confirmed our strategy, and it was a pretty elaborate process over a couple of months that just ended, actually it just ended a couple of days ago. We also had some external checks on that and some discussions with potential partners. A major highlight of this quarter, actually of the last weeks, has been the win of the SpaceLink contract. We signed our first term sheet in September and have in October signed an authorization to proceed and working to finalize the contracts in the upcoming weeks.
It has been a major success, first of all, of course, because it's a commercially competitive satellite constellation that was out in the market and where we were bidding for, but also because of what SpaceLink is about. It's a very exciting project. It's a high bandwidth constellation in MEO as a relay system to connect other satellites and other space assets. It is aiming for commercial and government markets because at an equatorial orbit, it connects ideally satellites that circle the Earth, and it increases responsiveness and, of course, it saves significantly also CapEx on those satellite constellations using that.
In terms of our contract, it's more than $300 million. We are very excited about that. It builds on experience we have in our MEO product range. Of course, it also builds on experience we had with laser-linked satellites, where we worked on a project in GEO and successfully completed that project, which is operating since more than two years. We have also decided that we are going to invest ourselves in SpaceLink $25 million because we believe very much in this constellation.
Of course, constellations are very en vogue these days, but you have to take a very careful look which application really makes sense and which of those investments eventually will then also succeed. Because as we all know, we have seen over the last years and decades that this is a very tough selection process, and you have to make very early on investment decisions, and then later on, many years later, it will prove to be either successful or not. In the past, this has not been so easy to predict that. So that has been really, in terms of order intake, the most important success we had at OHB in the recent months.
If we look to space systems, other progress and successes we had, of course, on our big Heinrich Hertz satellite, we're making good progress. We will launch in early 2023. It's a satellite for DLR and German military. Successful integration of platform and payload was completed in August, so the so-called mating. That was very important. OHB Sweden had another sale of their InnoSat platform, the fourth mission. It proves now to be a very attractive product, the InnoSat platform of OHB Sweden. We're very happy about that, and it confirms our strategy to be active in this very small satellite domain with the offering we have in Stockholm.
That has been very promising, and it continues to be, we feel, the right product after we succeeded with the space qualification of that mission earlier in the year. We are offering the Lunar Surface Access Service. That's a project we're excited about. This has been evolving quite nicely in the past weeks, so this is something we're pursuing very actively with our Israeli partners. In terms of the aerospace segment, overall, we can say that when you looked at the numbers that our development was good there. We stabilized the situation, and that has to do obviously with an improved outlook for the Ariane 6 program.
There have been positive decisions made at ESA Ministerial Council for the framework of the European Space Transport. The importance of independent European access to space has been underlined and has been, let's say, substantiated. Support for the Ariane 6 consortium during the so-called exploitation phase was agreed upon, and that also significantly increases the outlook for our MT Aerospace subsidiary. That obviously has still a very large part of their revenues in Ariane business. Not as much as years ago, so we are very successfully changing the mix of business away from only being an Ariane supplier to a couple of other activities, and that also helps.
We're quite optimistic in that respect. Unfortunately, of course, we're still in a difficult phase in terms of reducing headcount. We have reduced significantly the headcount at MT Aerospace. And if you look at the overall headcount of the OHB group also there, compared to a year ago, it's about 100 people less. And that has substantially to do with what's going on in the MT Aerospace optimization. But obviously having lower prices and some delays in Ariane 6 first launch and then the production ramp up, that obviously created a necessity to adjust capacity.
In terms of the micro launchers, our Rocket Factory Augsburg initiative where we are a significant investor is moving along quite successfully. We had successful tests of the engine. We had the first stage structure test that was successful. It was a test to the so-called test to failure, so until it really bursts. We're quite excited about the evolution there, the development there. Obviously, it's a risky industry, it's a risky business, and it's rocket science and we need to prove that we will be capable of completing that.
We're going quite optimistically into 2022 with regard to our technical advances, and then obviously soon coming the full engine test, proving the core of our idea that is a very, very cost attractive, reliable, very performant engine. In the digital sector, overall the digital sector performs quite well. I think it proves now after three quarters that it was a good idea to have this segment reported separately. I think the whole idea of not just doing these activities in the group, but having it in a visible, concentrated division proves to be very timely and right. A significant contract that we recently won in a competitive competition was the ground operations for the LUXEOSys.
That is a satellite where OHB Italia is the prime contractor building. It was known as NAOS and in a consortium with other companies, OHB Digital Connect and LuxSpace, the other companies being RHEA Group and also HITEC from Luxembourg. OHB Digital Connect and LuxSpace won that competition and signed the agreement, and it's an operating contract in the first phase for five years. There will be hopefully also extensions for additional five years and maybe beyond that. That has been quite successful. We're proving that we are capable also outside of Germany, winning these satellite operation contracts. Those were the significant highlights from the three segments. A quick update on our share buyback program.
This is going on since the summer. So far we have acquired 77,000 shares, about EUR 3 million, about EUR 38.6 average price. Not very spectacular so far, but I think it is a very important move for us also to create the portfolio that we can then use those shares for employee and management compensation. The backlog, still strong, EUR 2.3 billion. We do expect this year a book-to-bill bigger than 1, which is good. We feel quite comfortable with the backlog. Of course, the biggest part of that is in the system business with OHB System here in Germany.
Overall, we're quite happy with when you look at EUR 2.3 billion backlog in a company that is about EUR 1 billion revenue, that's quite comforting. At a high level, as you can see on that chart, looking back to the last 13, 14 years, it's a very solid level of backlog. Quickly looking at the numbers that we have been put out. You see that the order backlog, as I just said, is higher than it was a year ago. Total revenues went up 2% after three quarters to EUR 615 million. EBITDA was up 7% to EUR 59.4 million. EBIT was up 9% to EUR 32.7 million.
The EBT pre-tax profits up 20% to EUR 29 million. You see in this numbers that we had a very good year so far compared to where we were last year. Of course, like a lot that especially the profitability is over proportionally increasing compared to where we were. That EBT is up 20% on total revenues only being up 2%, obviously is a big success. That all results in an earnings per share up 14% to 1.09 EUR. What is down is the headcount. I mentioned it from about 3,000 to about 2,900.
That's slightly down and has mainly to do with the reductions as I mentioned it before in MT Aerospace, but also minor reductions on other places. Also, OHB System has reduced a little by a couple of dozen people. That has to do, I think, with the overall evolution after the pandemic. I think I see this as a stabilization. That has also its advantages. Comparing our numbers to where we were last year, those are basically in charts what I just went through there. Compared to that, I think we're on a good way. The EBIT margin here as you can see, nine months 15.3%.
I think it should read 5.3%, by the way. I'm just looking at Martina, and she's nodding at this. It's not 15.3%, but 5.3%. I'm just quickly doing that math off the top of my head, which is basically where we were over the last years. Space Systems is a little bit suffering in terms of its profitability. First of all, because the restructuring of the third OHB Digital division has taken out some volume there. This is a number here, the 19.6 at EBIT level, 3.9% EBIT margin, which is a rather weak number compared to where we were before.
I'm sure we will be discussing that. It had to do with regrouping. If you look at the other numbers coming, I think it explains a little bit what has happened. But again, this is something we should a little bit explore in the Q&A. I'm sure Kurt knows good answers to the EBIT development of Space Systems. He's laughing. Aerospace is good because even though the total revenues are significantly lower than where they were last year with EUR 67 million compared to the EUR 81 million, we see EBITDA is slightly up, and even EBIT is balanced.
We have a slight black number on EBIT level, which is actually better than some of us expected. We look at this as a positive development showing that we're bottoming out at the development with Ariane. Our digital segment, and here we're just comparing to pro forma numbers from last year because obviously it's the first Q3 numbers reporting this new segment. What you can see here is a very strong development, almost doubling the size and coming from low profitability to a very significant EBIT of EUR 12.7. What you see there is very little amortization here. EBITDA EUR 14.3 creates an EBIT of EUR 12.7.
EBIT margin 16.8%, so that's very good, and I think it proves that this is a successful part of our business, growing fast and we are very happy to see that. I'm sure also here we will have a few questions and opportunities to talk about it, and Lutz will give you some more insights into what we are planning and what we're currently doing in digital. Overall, financial guidance, we're confirming our financial guidance for 2021, which was released in February this year at the Capital Market Day. In that respect, you can see here the development of total revenues over the last couple of years.
We had in 2020, EUR 900 million, that was partially also attributable to the pandemic, but we're on this way. Overall total revenues is not the key number here and actually, I'm missing on that chart the financial guidance for the EBIT and EBITDA. We're confirming the EUR 80 million EBITDA and the EUR 45 million EBIT number, even though I'm not seeing it on this chart and not on the next chart. I guess Martina is nodding and it's just missing here in this. This is a confirmation not only of total revenues, but also of and especially of profitability numbers. Looking to the balance sheet, actually, what you can see is that the non-current assets are slightly decreasing. That's not a surprise.
The slow amortization is going on, and we are investing a little bit less than we're amortizing, which is what we had planned. We're a little bit cautious and conservative here following the uncertainty of the pandemic. We did make a couple of decisions in terms of investments a year ago, a year and a half ago, that was slowing down, and that's basically what you can see here in non-current assets. Current assets are hard to compare on September 30th of a year compared to year's beginning. Obviously the current assets are up because mainly contract assets are up and receivables are up.
We will watch by the end of the year how this is playing out. Obviously we have an intent of optimizing the volume of current assets. That's a bit uncertain as always. Even now we're on November 10th, we're not completely sure how this will play out in terms of cash in and transformation to cash. That's something that Kurt will give you an update a little bit in our Q&A session. Shareholders' equity, you see a significant increase in equity from EUR 223 million to EUR 245 million, so a 10% over the course of this year. That's very nice.
Keeping in mind that we even paid a dividend this year, that was an outflow here. The other numbers on that chart, I think, are not extremely important. What is important is that the current short-term financial liabilities are significantly up at this stage compared to year's end. This is a number obviously around this time of the year that we're working very hard on, that is also concerning us. We have to make sure that we are optimizing that. Free cash flow, as I said, so far weak compared to last year at this point in time. Instead of EUR -47, we're at EUR -83.
Net debt, which is obviously related to that, increased from EUR 194 million to EUR 227 million. Also the net debt excluding the pension provision, you can see the increase from EUR 88 million last year to EUR 122 million. This leaves us with some work in the next couple of weeks. CapEx slightly down from EUR 16 million-EUR 14 million. That's what I mentioned before. Own work capitalized similar level from EUR 5 million-EUR 6 million. This results currently at this moment at a return on capital employed at 10% compared to 11% where we were last year. This is just again basically making that set of numbers and yeah.
I don't want to spend too much time on that. Here again, you can see the CapEx compared to last year a little bit lower. Last year, we had a very significant CapEx also on IT-related stuff, software, computer, and I think this is a bit lower. Overall, you can see that we're very restrictive on investment. That's something that we decided, as I mentioned, a year and a half ago, to be most restrictive on that because of the uncertainties of the pandemic. Actually, also after the loss of the Galileo Second Generation, we were tightening a little bit CapEx spending, and you can see that here.
This just explains the free cash flow development and the current non-CapEx employed. No major changes. I'm concluding with an outlook of what is going to happen in the next actually couple of weeks, the remaining this year, but also our financial calendar going forward in 2022. We will participate virtually in the Eigenkapitalforum end of November, the Deutsche Bank late November, early January, the ODDO BHF forum. This is all virtual. Then hopefully the Capital Market Day at OHB should not be virtual. Hopefully we expect this to be in person.
This is a little bit advanced compared to previous years, so it used to be in early February, and we now moved it into mid-January, as you can see here, January 18. The plan is to do that here in Bremen again. We hope by that time the pandemic travel environment allows an in-person event, but I guess this is very firmly on our agenda to do that in person. We will then, of course, present an outlook of the numbers of 2022. We will obviously talk about the advances in the projects and the prospects and space in general.
Of course, going into the rest of the year, 2022, it should read March 23, 2022, and to May 11, 2022, the regular annual report and 3 months report. The annual meeting in person on June 1 here in Bremen. This concludes my quick overview, and now I'm opening the floor for questions. Thank you very much.
Good morning. We will now start the Q&A session. If you would like to address a topic, please raise your hand, and I will allow you then as a panelist, so you have the opportunity to ask the question yourself. The first questioner is Zafer Rüzgar from Pareto Securities. One moment. I will let you ask your question now. Okay. I'm trying to summarize a bit because I don't know if everybody has understood it. The question was about our investment in SpaceLink and our share in that company in the future and our expectation from that investment. I think Lutz Bertling is prepared to answer that. Lutz.
Do you hear me? Perfect. Actually, this is very much in line with what we did in the past and intend to do in the future. We are, and we have already participated very selectively in such constellation projects. ORBCOMM was one, in which we had been involved, again, with a minority stake, and it turned out to be very well value creating for us. This particular constellation is one where we believe that we will see very significant positive movement in the valuation of the company. SpaceLink will be the first enabler for the very high data volumes that we will see in future to be transferred from LEO constellations to ground. A satellite in the LEO constellations sees the ground station only for a few minutes.
Through the connection via relay satellites in MEO, there's much better visibility of ground stations. You can have ground stations only in trusted countries, and so on. We see a very, very significant business potential here. Through that, by the way, I should put my video on. Through that, we believe as well that the value will significantly go up. If you see the amount of investment compared to the contractual volume, then it's a minor amount. It's not that we are buying a contract here or so because the contract value will be significantly above $300 million, and we are investing $25 million. It's not that we, through this investment, through vendor financing, we somehow bought the contract. I'm seeing question marks in the faces of some people here. Am I still hearable?
Yeah, yeah.
Yeah? Okay.
I'm just wondering if you can be seen because.
Okay.
I don't see you.
I actually started my video, but it seems that it doesn't come. Anyhow, it's an equity investment, which is, if you want, a financial investment because we believe in this constellation. We did such investments in the past. We might do such investments in other constellations in the future as well when we see a real potential to create values there. By the way, SpaceLink, if I may add a few words, as Mr. Fuchs said, we were selected because we have heritage, because we have the low-risk solution. We use our SmartMEO bus, which has been produced close to 30 times and has experienced many years of heritage in space. We know about optical communication.
We have done it already on EDRS-C. So it was, let's say, lowest risk, good capability combination, I would say, which led as well to shortest delivery time possible on the market. Why are we working on an ATP basis at the moment? This is because we have a co-engineering phase right now, together with SpaceLink and with a few of the major payload equipment providers. Only at-
Can you hear anymore?
Mr. Rüzgar sorry. I don't know if everything from Lutz Bertling was well understood. I had a problem just with the last two sentences, I think. Okay. Yes. Mr. Rüzgar do you have a follow-on question?
I can continue with my question maybe on space and on the development here in that segment. What are the reasons for the declining trend in Q3, and what should we expect for Q4? What would be a fair assumption for a full year EBIT margin target here? Also, what would be the EBIT in Q3 without these probably one-time effects?
Yes. For space system segment, we have still a relatively poor result compared to last year, but it has certain reasons. First reason is that we have as already mentioned, a move from business, some business from the space systems segment to the digital segment. This is one of the main reasons. The other one is that in some daughter companies, we have poorer results than expected due to some cost overrun in one or two major programs of them. In our core company, OHB System, we have still a good result. In the first nine months, EBIT margin is higher than 5%, and it's more or less in line with our expectations. For the fourth quarter, we hope that we can achieve an improvement of the EBIT result and the EBIT margin in the segment.
It's still possible that we can achieve major improvements of the result in the fourth quarter.
Okay. A fair assumption for your margin target here for the full year?
The margin target should be then hopefully at the end of the year, around 5%.
Maybe one final question before I jump back to the line. On the Digital segment, very, very strong performance here as well, and also a tremendous earnings swing. Can you give some color about the drivers here, in particular on the revenues? Seems that there's also some new business. Is that correct? What is the annual amount of the new business you have acquired here?
I hope I'm better hearable now. Actually, my device here swapped the Wi-Fi network when I was speaking last, and therefore the last two sentences were perhaps not there. Coming to this question, yes, there is some new business. That's true. I would say that there are four elements from my point of view why digital is doing as well as it does. One is, that's really something new, we have first services which we are offering from space, which means we have first satellites in space which are owned by OHB Digital, and we are selling services from space. These are satellites which OHB Digital has bought. Platform, by the way, is from OHB Sweden. Payload is external. We have a service offering.
For this service offering, we were able to achieve, let's call it a value pricing, which means the service, I unfortunately cannot be specific here, but the service which we can provide has a very high value for the customer. This became part of the pricing. The main point here is agility. We simply were much faster in being able to offer the service than obviously other providers on the market. Therefore, this is totally new, never done before by OHB, and good business, good margin. The second, growth in terrestrial business, which we derive from space capabilities and where we have often a data fusion between space-based data and terrestrial data. I'm taking as one example a digital twin for logistical operations and applications.
The third element is simply more management focus. The activities which we have taken over from other parts of OHB were often a bit, let's say, side activities, which were not really in the focus of the top management. This has changed now, which leads to number four, which is a turnaround in some problematic business. This is not fully completed yet, but we were able to Complete or to better some problematic orders. All this together brings us to where we are in OHB Digital.
Okay, perfect. Thank you. Thank you very much. I will jump then with this one.
Okay. I will now allow Alexander Hauenstein from DZ Bank as a panelist. Mr. Hauenstein, you should be able to ask your question now.
Can you actually hear me?
Yes. Very good.
Yeah. Okay, perfect. Thanks for taking my questions. Gentlemen, I've got a few questions. First of all, coming back to the issues here in Space Systems, I was wondering whether you will take these issues into the next year as well, or will there be kind of a solution until year-end? Or is there potentially even some kind of a catch-up? I mean, a cost run does not sound like having the potential for a catch-up, but maybe there are some other things included here. Maybe you can shed some light here on the development going further maybe beyond the year as well. The next question is about Aerospace. I understand that you're progressing much better than expected before. That sounds good.
That sounds also promising for next year, and I was wondering what that really means in terms of profitability in 2022. Whether you could give us some kind of a sneak preview into what has changed here compared to what we have talked about in the recent past or what we might have expected so far. Lastly, coming back on SpaceLink, I'm interested about further opportunities beyond this project, not necessarily due to your investment, but more generally, are there more telecommunication projects potentially in the pipeline? Is that fair to assume, or is that some kind of a one-time, quite big thing where you build upon going further? Lastly, about your guidance.
You made some comments about the Space System outlook for this year, and I was wondering, either in Digital, but also on Aerospace, what should be our way of thinking for Q4? I would suggest that Q4 in Digital is becoming, yeah, a bit weaker due to the investment that you have envisaged before. Is that still the case? Maybe you can shed some light on that. Also on Aerospace Q4, I'm wondering whether the trend is accelerating, on the positive side and what could be the final outcome until year-end here. Thank you.
Okay. I will start answering. Coming back again to the Space Systems segment. What we expect in Q4 is that we hopefully can achieve in some projects improvements, not in this. On the other hand, as you are right, it's difficult to catch up some cost overruns which already exist and which may also increase in the first quarter for our daughter companies. That may be impossible, but at the end of the day, as I mentioned, I believe we have some potential there in to improve the result in Q4, coming to a higher margin, coming to a better result for the full year. For Aerospace profitability, as we just remind perhaps that we have in the six months result, really a weak result in Aerospace of around -EUR 4 million EBIT.
I have announced already at that time that there will be an improvement in Q3 and Q4. We have already achieved this improvement in Q3. It's a little bit. That's really a good result in the segment. But up to year's end, we see that they will be in line with our expectations for the full year for the segment to have a result at the end of the year between EUR 500 million and EUR 1 million, roughly, EBIT. This is then fully in line with our expectations. For the next year, for the next years, let's say, we really believe that the phase of weak results in the segment are over and we will stabilize the total revenues on a lower level than in the past.
We expect positive results also in the next year, positive EBIT results, positive EBITDA results on a stable and good level. In principle, that's a really positive development in the segment. In the Digital segment, you are right. Our assumption was, as already mentioned in the previous months, that EBIT margin will decrease in the fourth quarter. But nevertheless, at the end of the year, in total, we have a good result for sure in Digital with for sure a two double-digit EBIT result. And this is in principle a little bit more than we have expected in the segment. And it's
I don't want to say too much about the guidance and our development or potential developments for 2022 and 2023, since we are still in the phase of providing the business plans for this year. This will then come out with the guidance for 2022 in the Capital Market Day in January next year.
Okay, thank you. If I do the math and try to assume a bit what you have said and guided for, so I would expect you to easily achieve your guidance for the full year of EUR 45 million. Is that correct interpretation?
Yeah. Normally, your assumptions are completely right, and I don't want to say anything against this.
Okay. Thank you. The question with regard to SpaceLink and telecommunications projects going forward.
Yeah, this will come from Lutz, the answer.
Yeah, I can answer that one. So we should distinguish between two major market segments. One is institutional telecom, and the other one is commercial telecom. Let us start with institutional telecom. There's one very big upcoming opportunity. This is the so-called ESSCS, European Sovereign Secure Communications System, which is a constellation planned by the European Commission, investment volume of minimum EUR 6 billion. We are part of the ongoing pre-studies for this, and of course, we expect to be part of that. Beyond this, there are national programs, in particular in defense for telecom capabilities related to defense. One big one, which is upcoming very soon, is the next generation of German defense telecom satellites.
On the institutional side, as well, on the more constellation side, that's a European approach, as on the geostationary side, that's more the institutional approach of nations. We see additional business coming. On the commercial side, the geostationary projects or the market remains to be very weak. We have telecom operators where the boards are simply deciding even against replacement investments. The market is weak. We see, let's say, opportunities which might lead us to sell 1 or 2 satellites in the next 18 months or so, but not more, simply because the market is very weak for geostationaries, and that's the same for everybody. Constellations, I mean, you all see the hype around telecom constellations. There's many opportunities, but one need to be cautious, and we are cautious.
We are working on some, but we are very selective because what you can see as well is that most of these constellation operators, those who are still existing are either at very early stage or they are beyond Chapter 11, which means they have a difficult time behind them. Therefore, we are very cautious and very selective in which constellations we want to be potentially engaged. Nevertheless, as I said, we are working on some on the commercial side beyond SpaceLink. I would not expect us to be in more than 1 or maximum 2 additional constellation works. One part of this is that in particular, U.S. constellation operators are very often going for vertical integration and building their satellites themselves, like SpaceLink, for example.
Number of opportunities is a bit limited, and one needs to be selective not to end up this high pre-investment in constellations, which at the end are running out of money or never getting the funding, or it takes years for them to get it. Take Telesat in Canada. I mean, our colleagues in TAS, I don't know how many millions they've spent already on it, and still the constellation is not financed. As I said, selective cautious approach.
Okay. Thank you for the clarification here. That was helpful. Thanks.
I will now hand over to Harry Breach from Stifel. Harry, you can ask your question now.
Great. Thanks, Marianne. Can you hear me?
Yes, very well.
Perfect. Great. Thanks for taking my question, and good morning, everyone. Maybe I can just maybe clarify a couple of things? Just on aerospace, Kurt, I think you mentioned, if I heard you well, that for the full year this year, aerospace would be in line with, I think if I heard you well, about EUR 1 million positive of EBIT, and then stabilized positive EBIT results going forward. Should we think about the third quarter performance at aerospace as being around a normalized level or sort of minimum normalized level going forward, depending on how the revenue line can grow?
Maybe my second question was just trying to understand just a tiny bit more about the cost overruns at some of the subsidiaries in space systems. I guess, like, is there any light perhaps you can throw on this in terms of the two projects where I think you referred to the cost overruns? Maybe how far, what percentage of completion they have reached so that we can have maybe a better feeling for the remaining risk on those programs.
Maybe finally, Kurt, this is always a difficult question to ask given, you know, given how hard it is to forecast working capital elements, but when we look at the end of this year, can you give us maybe your best feeling about where we could end up in free cash flow terms, please?
Yes, Harry. I will give you some answers for these questions. The answers are sometimes not so easy, as you mentioned. Some partly they are easy. Concerning aerospace, yes, we have this improvement in the third quarter. We have an extremely good result comparable to the first six months in the third quarter. This will not continue until year's end. As I mentioned, you are right, expectation is close to EUR 1 million EBIT at year-end, since it shows obviously that the profitability in Q4 will be a little bit lower than in the third quarter. That is absolutely the case. You are right.
In the space system area, the cost overruns are related to 2 projects in the telecommunication area, and there will be, as I mentioned, no major improvements on this, but there will be also no major risk on that due to the fact that these programs are close to the end of the actual phases of these programs. There'll be no major other issues, I expect and I'm hopeful in the next 2 quarters so that hopefully the major risk over. As you know, really major risks. I see only smaller risks. Let's say maybe some more cost overruns can happen in the fourth quarter, but not so substantially that say we really substantially will have a substantial impact on our year's end result.
Forecast working capital elements of free cash flow, it's really quite difficult for me. Usually, we had in the past, in the past years or in the history of OHB, or always in the fourth quarter, extremely good cash results compared to the first nine months. That's correct. This will be, for this year in Q4, there are some uncertainties concerning some, in some cash in areas especially. It's not absolutely clear whether we receive some expected order intakes in Q4 or we expect it later in Q1 next year. The advance payments resulting from such order intakes may be substantial, so that there will be hopefully some improvements in Q4.
I do not expect at the end, year's end for this year, a positive free cash flow, and I also do not expect a positive operational, operative cash flow for this year. This has to do with substantial pre-financing performance in some bigger programs. For example, we have the SARah program for the German Defense Department, which we are launching of these satellites next year. We have then in this case, in this project phases, we have substantial pre-finances since the final settlement payment in this program is pretty high. It's around 10% of the total contract value. On our expenditure level is around 95%-98% already costs incurred up to now. We have obviously only in this program a pre-financing amount around EUR 80-90 million.
This will lead then in cash, if you get this final settlement next year, then it, there will be an event with a substantial improvement of our cash flow in Q3 or Q4 next year. For this year, we have not only in this program, also in other programs, substantial pre-finances in these projects and this is the nature of our business model and concept that sometimes we have or on a normal regular basis, we have no stable cash flows. Usually, if you look at the last year, for example, in 2020, we have an extremely good positive cash flow in the Q4 with extremely low level, resulting in an extremely low level of net debt at until year's end. For this year, this is due to the reasons I just mentioned, not achievable.
Yeah. Just to clarify, when we think about free cash flow this year, I think you said a minute ago you did not expect positive free cash flow at the year-end. Should we think more or less break even free cash flow for the full year? Is that a reasonable thing to expect?
No, I think as I mentioned, there are some uncertainties. Nevertheless, at the end of the day, to be very clear, I do not expect positive free cash flow at year's end for us, the free cash flow. This is my expectation now. There may change something in the next six, seven weeks. Since there are, as I mentioned, some uncertainties, and it's not very easy to say, as you already mentioned too. This is my assumption for this year.
I understand. Thank you.
Harry Breach, Harry, has everything been covered, what you would like to address?
Yeah. Thank you, everyone. Thank you, Kurt.
Okay. I would like to ask Mr. Hauenstein if his raised hand is still valid or is it from the former session?
It's from the former session. Sorry about that.
Okay. That's fine then. I don't see any raised hands for the moment, and I don't see any questions in the chat. I think we should just wait half a minute, and if nothing comes up by then, I think then we should conclude the call.
Yes, I think we have no further questions. Looking at the time, it's about an hour has passed by. From our side, we would just like to thank you and obviously we hope to see you all back at the Capital Markets Day on January 18 in Bremen. In the meantime, if you have any further questions, obviously Marianne, Kurt, Lutz, and myself were available. I can only conclude this call with wishing you all the best for the holiday season and the upcoming new year. From OHB in Bremen, thank you for the support and your interest, and we're concluding this call now. Thank you. Bye-bye.