Earnings Call: Q4 2019

Mar 18, 2020

Annual report

Welcome to the telephone conference of the OHBSE. On your customers' request, this conference will be recorded. May I now hand you over to Marco Fuchs. Yes. Thank you very much. Good morning here from Wehmann. Welcome to our Annual Report 2019 call. Of course, it's very unusual that we are doing this now via phone conference because usually, this is an event that we traditionally did in Frankfurt in a person person models. So of course, this is due to the overall situation with the corona crisis and the travel restrictions. But I hope that you all had an opportunity to download the documents and you had an opportunity to also look at our presentation that has been published this morning. And sorry, I missed the microphone here. As always, I would like to quickly walk you through the presentation, and then we have a Q and A session where we can discuss OHB's annual report and obviously other questions looking in the future. Starting on Page two. Just as a reminder, of course, our strategy is still aiming at the full value chain, development, integration and testing of satellites, access to space as an important topic and in orbit terrestrial services as a significant third line of activity currently building up. The expectation of data, the usefulness of space is driving the growth of our industry. This is the reason why we have recently announced that we will create a third business line, OHP Digital. But looking to Slide three, this year's last year's 2019 annual report, the numbers that I'm walking you through is based on the old corporate organization with the two divisions, Space Systems and Aerospace and Industrial Products, because that's the basis of the numbers and consolidation. Over the course of this year, we will create the OHB Digital division. Page four, shareholder structure, management unchanged. Nothing has changed in the course of last year with regard to that. So I can quickly move on. On Page five, this is now the slide with the results. As you have seen in our press release and in our annual report at the early in the morning, revenues in 2019 came out to €1,030,000,000 This is a 3% increase compared to last year. And EBITDA rose to 78 point let me check on the press release, 78,300,000,000.0 and EBIT was at €49,100,000 So this the hike in the EBITDA is still related to the introduction in 2019 of the so called IFRS 16 rules. That explains it a little bit. So overall, we are on target, a slight deviation in terms of we have guided for the revenues at 1.05. We're coming out at 1.03. And Kurt will explain later on in the Q and A session a few of the details. We made a slight difference. And same is with EBITDA and EBIT. But we see OHP overall on targets. The guided numbers were about one point something percent, 1.8% higher. So overall, we are happy with the annual report as it came through. What was surprisingly positive is overall that we ended the year with a positive operating cash flow of EUR 23,000,000. We even achieved an overall free cash flow of EUR 4,000,000. We were not certain. We were asked we were always aiming to a positive operating cash flow. The fact that we also ended up with a positive free cash flow overall is positive, and we are quite happy that, that ended up in the last weeks of 2019 in this way, but we'll discuss that later. If you break it down between Space Systems and Aerospace and Industrial Products, the old business divisions, obviously, no surprise, Space Systems did well with EBITDA at €65.42 So I think I'm now back in the conference call. I'm not aware exactly where the line broke. But maybe I restart with Slide five, the development of the financial ratios for the group. And sorry for this interruption, but something was wrong. I'm currently here on the phone. The total revenues came out at €1,030,000,000 compared to 1,000,000,000 from last year, so it's a 3% increase, slightly below the guidance that we had for January We will talk about that later. This was already when I talked about it a few minutes ago, it was already disconnected. The EBITDA came out at €78,000,000 and EBIT at €49,000,000 so also slightly one point something percent below. Overall, we see the company on target. The performance of the company last year was as expected. What is a significant point that was positive is we had a positive operating cash flow in 2019 of 2,000,000 to €3,000,000 And we had an overall free cash flow of plus €4,000,000 which we were not certain to achieve for a long period over the years. So we were a bit skeptical on the overall cash flow last year, but it turns out that even the free cash flow was positive and not just the operating cash flow. But we will come to that when we ask. If we look at the division between Space Systems and Aerospace and Industrial Products, obviously, it's not surprising that Space Systems with €65,000,000 EBIT and €42,000,000 EBITDA carried the big part of the results of last year. Aerospace and Industrial Products were weak with €7,000,000 EBIT and €14,000,000 EBITDA. This is due to the transition at MT Aerospace AG from the Ayaan five to the Ayaan six product, which we were talking about many times. And obviously, this will also be visible in this year in 2020, even stronger having an even stronger effect. On Page eight, we confirm the guidance for 2020 with total revenues anticipated to be at EUR 1,100,000,000.0 and the EBITDA at EUR 80,000,000, and our EBIT should come out at EUR 44,000,000 that we guided. And all these numbers we guided five weeks ago at the Capital Market Day in early February. Obviously, the last five weeks have developed in a way with the uncertainties around the corona situation that overall, of course, it becomes unpredictable how the year will unfold depending also on how long the special situation that we are all in now to carry on. Of course, being in the space industry with large projects, we are not at risk with regards to the overall contract values, with regards to the top line of our business. But the execution, of course, might be under a certain, let's say, delay risk because we are seeing around us, obviously, the first signs in our supply chain, especially actually in the factory in Auschwag or in other places where this obviously would suffer if this shutdown scenario goes on well beyond Easter, and we don't know if that will be the case. But if it's just a brief incident, then, of course, there will be no major impacts. But if this goes on into the summer, then we will see that there might be, obviously, especially in the production part of our business, also some. The major difference from the space industry to many other industries is that we are not at risk with regard to the revenues. There might be delays, but it's not a cancellation of the demand. It's not changing. But of course, I'm sure there will be some related questions coming in the Q and A session. If we look quickly through the numbers in the balance sheet on the asset side, well, not much surprise. I think the major change of the balance sheet December 3139 to the previous year is the IFRS 16 changes with leasing contracts being now on balance sheet. That has resulted in the margin to become bigger. That's about EUR 50,000,000 to 60,000,000 on both sides. But we have we had a strong cash position at year's end with EUR 85,000,000. Overall, current assets have increased significantly, mainly because of trade receivables, as you can see here. And so overall, this has been a continuation of the balance sheet as it was evolving also in the past. On the shareholders' equity side, one major effect is that you see the equity is only slightly increasing when we had a profitable year because we suffered from the provisions for pensions. This is the provisions for pensions have increased significantly mainly not mainly, only because the interest rate is again lower than it was in the previous years. And you know that this system, obviously, the discount of the pension provision is a significant number for our operations. The points on the liability side are basically just a continuation of the previous quarterly balance sheet or actually last year's balance sheet. Looking at the segments on Page 11, it just details what I said earlier that the Aerospace and Industrial Products division had a decrease in revenues and its profitability. We're more and more basing our success on the Space Systems. This will obviously be the situation until the IR transition will be successfully concluded. On Page 12, you see a number of financial ratios. So for the fiscal year 2019, you see our free cash flow, as I mentioned earlier, to be at plus 4%, which during the year and the quarters was quite significantly negative. So what this line really shows is how our cash profile over the year works. We start with a good position. And then during the year, over the quarters, it is then acquiring some financing. And then the year end, it's recovered. This was the same in 2019. Yes, I guess, where you see the other numbers. We had a very or we had a lower, much lower own capital own work capitalized, which was €17,000,000 in 2018, and it's now €10,000,000 in 2019. So a significant decrease there. CapEx was also slightly lower with 21,000,000 instead of €24,000,000 So something that might be of interest to some of you. On Page 13, you see the net debt evolution. The blue columns are the annual ones and the gray ones are the quarterly ones in between and the evolution during the year 2019. So we end the year with EUR 27,000,000 of net debt, excluding the pensions instead of what you see in the previous year at EUR 7,000,000 and previously EUR 36,000,000 and EUR 37,000,000. So this has been a pretty normal year. Moving on to Slide 14. You see what I said quickly earlier that own capital own work capitalized is over the last years continuously decreasing from the peak in 2016 with €29,000,000 It moved down to 19,000,000 and 17,000,000 in the year 2017 and 2018. Now at 10,000,000 So this is an intense development. Overall, other CapEx, slightly lower with 21% compared to the 2524% in the years 'seventeen and 'eighteen. Page 15, again, the free cash flow. The return on capital employed was weaker in 2019 than it was in 2018. This obviously has to do with the enlarged balance sheet. So there's simply more capital employed so that the return has decreased. Moving on to the next few slides. 16 shows the headcount, 2,933 total headcount. I think what is significant is that you see the prominence of the Space Systems division even stronger with 1980. The aerospace and industrial product part significantly smaller. And if you look at the geographic footprint, you see that with 2,400 people, it's a very strong combination of German operations up to about four twenty seven or, let's say, five thirty if you add it all up outside of Germany. So we're very much a German based space system company that is with the growth in the past years has been very strongly with OHP System. Now I'm turning to the future. The order intake starting at 2017, the history of the backlog currently at €1,800,000,000 And the next few slides, I just recap on Page eighteen and nineteen the ESA budgets, the decisions based on the Space nineteen plus conference a couple of months ago in CP have increased total budget, total funding that is spent by ESA to own capital budget €4,800,000,000 this year and including the income from the European Union, it's €6,680,000,000 Net spend, as you can see on Page 19, on a number of domains where we are very strongly represented, especially Earth observation, of course, is of high interest, but of course, space transportation, navigation, where we are also our share of the business. So overall, coming to the expected order intake, you see on Page 20, our opportunities where we expect that this year should have the opportunity of order intake. If you look at that list, Galileo and Compernicus, those are obviously very competitive situations where we need to win contracts against others, and it will be very exciting times ahead to see if we are able to be successful on Copernicus and Galileo. A number of other activities like Hera, FlyEye, but also Clariant share that is and also Elektra that is not competitive in the sense that we have already worked on these activities since a long time or we have won competitions like Conheira in the past. So this is a continuation of existing work. So that's those are smaller numbers, but not under competitive, let's say, uncertainty. Institutional and commercial customers that we put together in the last line are a number of activities that we are working currently on. So overall, we expect that's the conclusion or the summary of the slide. We expect order intake to be in the range of €2,000,000,000 So that should give a good basis for future development. On Page 21, you see a number of our company cost proposals that we have delivered in the past weeks and months. We are fine contractor, together with Tares Almenia, on LSTM, on CO2M and on Crystal. We have a significant role in time for the payload. We're still working on one more proposal. Those are now under evaluation. Those four already, and we hope that we will generate a significant share out of that. Just a few more points before we move to Q and A session on Page 22 as recent development. In a couple of weeks, since actually February 2018, have a satellite in French Guiyan to be launched on the next mega launch. It's the E sale satellite that we built in our Luxembourg MAX base operation. Unfortunately, now due to the corona crisis, the launch that was scheduled for next week has been postponed. So the launch date currently is uncertain. But obviously, this does not economically impact us, but it just shows that also the whole space industry is impacted by disruptions or delays coming from the corona situation. Page 23, an update from other activity. Our empty mechatronics project in Thailand had a big lift. The big lift is the moment when the reflector is put on steel substructure that has taken place recently and shows that this business is also operating with the global customer base, moving along and just in the course of restructuring the ground infrastructure activities around these projects. The last slide is 24, an update from our Belgium operation. Unsurf Space has strengthened its position in the navigation market. We acquired from Centrion, a small GNSS division that has been now completed. We also moved some work following Brexit activities from payload testing. The secured testing of the Galileo navigation payload has been moved from our friends and partners at SSTL in The U. K. To Antwerp. So that strengthens our Galileo activities there quite significantly. Also late last year, we have sold a small activity around low margin round product from AmpereSpace to Celestia. It has been already reported, but this shapes a little bit and I really believe it improves the business portfolio of AnthraSpace. Yes, looking now to our financial calendar ahead. Of course, we are in uncertain times. And when it says, as of March 18, we have our analyst conference in Frankfurt Am Main, it's not quite true. We're sitting here in German at a phone conference. And obviously, we are not completely sure if our Annual General Meeting will take place on May 26, the MPM. And as a public event, we'll see that will be decided most of the next weeks. We're still aiming for that. What is certain is that on May 12, we will have the three months quarterly results with our conference call. Of course, the same will be in the later course of the year in August and November. So I'm concluding my quick run through the slides. Again, with the thank you that you are spending your time on following OHP today. I would like to open now the session for questions to you. Thank you very much. Thank you very much. We will now begin the question and answer session. The first question comes from Alexander Hounstein from Diesis Bank. Line is open, Mr. Hounstein. You, Alexander Hounstein from Deutsche Hello. Can you hear me? Yes, very good. Thank you. Okay. Perfect. Sorry, I missed the fifteen minutes first of your call at the beginning. But could you give us a quick feeling where you are currently impacted in terms of your plant activities from the corona issue? And especially, where do you see the biggest risk regarding your $20.20 €44,000,000 EBIT outlook? That would be my first question, please. Yes. I think the answer is quite easy. The biggest risk is not that we lose contracts or that the demand is changing. It's just that potentially there might be delays occurring around project completion. So there might be, let's say, if the operations are more severely impacted than they are currently where we are operating and have significant home offers and have a very flexible response to all these boundary conditions. If this goes on for a very long period, obviously, there is a risk that delivery milestones are not met. And this obviously then could result in an impact on the numbers. Currently, we don't foresee this. But on the other hand, we don't know how long this severe restrictions are going on. At one point in time, especially for our factory operation in Ausbruck, that's not the case yet, but at a certain point in time, also the supply chain with material might be impacted, and that would also then have impacts on that side. So, summary is, I think our business model, way we work and also the activities where we are involved are not really impacted very strongly by this crisis. But of course, if it takes very long, of course, we cannot assure that there's nothing to be seen currently. As I said, there are a few launch delays. I talked about E sale. Last week, there was an announcement that the ExoMars mission will launch later, but this is all after our work. So but this might change over the next couple of weeks. I fully understand exactly what you asked, but I understood that you were asking about the contractual consequences, potential penalties and what that means. That obviously is a big question. But the crisis as it unfolds is for us clearly coming from the direction of a force majeure type story. So the launch operations are discontinued. For example, test facilities at ESA are potentially impacted. This is something that we believe will be excuses with regard to penalties and other contractual consequences. Of course, on the other hand, if things take longer, not enough to cut to pay penalties because if you spend more time and more efforts, you have still an impact on the economic results. So the overall risk is something that we are currently, like everybody else, is working on. This is why we are continuing to push the completion of the work on our project. But I cannot deny that there are risks if the impact on the operation is more severe than what we see these days as that intensifies over the next days and weeks. There might be significant delays also in the completion of projects coming. Again, I don't see this in the corner of penalties in these type of contracts, but it is clearly an uncertainty that also impacts our industry that is not impacted in a massive way, but it's obviously part of the overall economy. I'd also like to add that not starting being able to, I'd like to add that discussions have been started with customers already, not only in our initiative, but as well customers in particular, ESA has taken initiative to get together with the large LSIs and with Eurospace, the association of the European space industry. And as far as we can see it from the very first discussion, this goes beyond acceptance of force majeure. This goes more in the direction of the customer being ready to accept that the current prices create some additional cost on supplier side. And from the very initial discussions, I can say that there seems to be openness on customer side for some compensation of potential overcosts. Okay. Thank you. That's small. We got to build, of course, but not additional burdens potentially. That's the thing. Yes. With our understanding, so delays and no additional burden, right? Yes. Okay. And maybe another question. Could you give us or in a potential bottom line scenario? Yes. I think on the goodwill, which is at a very low level with CHF 7,000,000, there will be certainly no impairment. I understand I mean your question, if I understand it right, is what is, let's say, the worst case scenario in the sense of what's the book value, what's the downside, what is the value of the let's say, the asset value and so on. Again, I think the goodwill is not impacted. We do have, however, capitalized homework in the magnitude of about 110,000,000 or 115,000,000 whatever the amount was. So that is something that goes through an annual impairment review. So that would be something that people would look at. But again, looking at a business that is €1,100,000,000 the overall amount, if you put it all together, if you look at goodwill, the capitalized loan work together, we're at the range of 10 percent of annual revenues. So that is a comfortable low number. So basically, the overall volume is about €120,000,000 out of €1,100,000,000 We feel this is a quite comfortable portion. Yes. Then a question here, how are you progressing most recently with your efforts on the ramp down Arianes five and ramp up Arianes six and the related let's say, optimization and restructuring measures. Is this progressing? Or is that also impacted from the recent days? Or how do you feel about that? Or maybe an update if you could say what been going on within the last four weeks? Yes, I guess it's I mean, it is moving along. Of course, the red one of ION5 simply took place more or less, and it's in the last quarter, so that has been accomplished. What is going on in the last weeks is the implementation of the decisions at the ESA Conference in November. So we are implementing those measures contracts to improve the ION6 And the so called Fubos, what was called the copper stage, is moving along. So some of these contracts are in the finalization phase. We are reducing workforce. Yes, we are negotiating and reducing workforce. I think when we look into court, I think this has already been done, right? The contracts or it's not I think it's the last step. So we are adapting the factory. We're adapting the plant, our overall workload. And it's basically identical to what we discussed in February. So this plan is being implemented. I think this overall corona situation is not impacting that one way or another. Ramp down activities in MT are already established in the balance sheet for 2019 in all provisions are made, especially in the February and in this area. The substantial provisions already done in 2019, and this is one reason for the full result of the segment in 2019. And another reason for the small forecast in this 2020 in the segment. In fact, at the end of the day, expected in the EUR 44,000,000 guidance for 2020, not included, obviously, any implications from the corona disaster. But at the end of the day, this is, yes, Markus has already mentioned, the difficult implications for sure, but we are not in the position now to give details about that. It also depends on what will happen in the next weeks. Yes, fully understood. Okay. Thank you for that. Okay. Thanks. The next question is from Adrian Thiel from Kepler Cheuvreux. Your line is open. Yes. Hi, everybody. I hope you can hear me well. I know that lines are obviously all pretty bad. I'll keep trying for some questions. So first of all, as you were referring to the supply chain in Auschwitz, was just wondering whether you see any issues upcoming also for the satellite production or is the inventory that you currently have sufficient for a decent production to be kept up over the next couple of months? And a question related to Corona. Could you remind us actually on the financial crisis, whether you could see some project push outs from a budget perspective? Or has that not taken place at that time? That would be helpful. And then I have maybe some housekeeping follow-up questions. Yes. The last point you were mentioning, it was actually more the opposite because during the crisis, the government spending so the overall investment in technology and useful infrastructure was even increased as part of the, let's say, the measures to keep the economy going. So in that respect, I do not foresee that overall spending will go down. It's probably more a selective issue where the money will be spent. And obviously, Space has to explain why it's a useful activity and what the benefits for society are. So overall, no, do not expect that this will be cut down. In terms of the supply chain for Satellite, currently we don't foresee any significant points. But what is more critical is, for example, going to test houses and doing the external testing. This might be impacted. Maybe some logistics are impacted, launches might be delayed. There is an overall delay risk coming, but it's not that we are because the optimization of the supply chain in our industry is far less time critical than you have it on other industries. Other industries are doing this with daily stuff because they have a lot of work in progress and a lot of material that they want to optimize and not sit on their own books and in their own factory. That's not the case with us. Our staff sits here for months before we install it sometimes. So we have a very different risk assessment on the optimization of balance sheet and risks and current assets. In that respect now, we are lucky because it doesn't I think it doesn't backfire on us. So that's not really the issue. But on the other hand, it's just one little thing is missing and Satellite will also stand still. But again, we are not working on stuff in a daily production, but in a year, multiyear project mode. So it's not that critical than you see with many, many other industries. I agree. Actually, on the financial results in Q4 that has been pretty high at the same time. Minorities, obviously, due to the lower income from MTA Aerospace have been lower. But I was wondering, first of all, what's the background? And is there some link between those two items? And on Aerospace and Industrial Products in general, the EBIT has been slightly negative in Q4 already. I was just wondering whether it was already below your original expectation? Or is that more or less as you thought it would turn out to be? Financial result is poor mainly due to the fact that we have this equity result of minus seven minus €3,700,000 This comes from our minority participation in Ebertech Peisenberg and they clearly had a poor result and obviously, a poor result in 2019. That's the main reason for the comparable financial result in Q4. This is a big impact at the end of the day, very simple. What happened in the segments Aerospace and Industrial Products in Q4 or in total year 2019, 2019 was more or less in line with our expectations for this year. We see clearly in the segment reporting that we have a really good result in the main segment Space Systems with good increase of the EBIT amount and you see also substantially the substantial decrease of the EBIT result in Aerospace and Industrial Products. This was more or less expected. Results from the Aerospace itself, standalone in our book, was not worth unexpected. Now what is really important to understand that our Aerotek pipeline participation, which is around 30%, was significantly impacted by the restructuring program that is going on. So there have been reserves created at BTP for the restructuring hedge reduction. And that came as a little surprise for us because it again, it's not part of the consolidation parameter. It was more intense, so the result was more negative than what we expected in the fall of twenty nineteen. So that surprised us this result. Financial results that you see in overall and that had overall also an impact. There was some downgrading on some open loans between MT and RTP that impacted significantly. So that was one of the major effects that came during the actually, last couple of weeks, there were a negative impact. Actually, even after the Capital Markets Day, partially, we didn't see the full year at the Capital Markets Day how intense the restructuring is. But the bottom line at RTP's restructuring is that, of course, with every restructuring, you put the burden into the past and then you hope to improve the ongoing year. Okay. A few questions then. Well, first of all, what's to come at Aerotech, Peisendag? And what do you think strategically about it going forward? And secondly, on the group cash flow, both operating and free cash, let's leave out corona because, obviously, we don't know how that unfolds over the year. But on a current basis, what you can see, what should we think of operating and free cash flow for this year? Yes, that's a good question. I'm not so sure if we can leave a coupon out from this forever. But I guess the overall cash flow situation is what you see basically on Slide 13 that over the year, three months, six months, nine months, obviously, the debt was much, much higher. And always at year end, as you can see, at the year end of 2019, 2018, 2017, significantly lower. So obviously, the cycle, the curve will be similar. Where it will end in nine months, in ten months, it's not completely predictable. Actually, honestly, I was personally quite positively surprised that we had a positive operating cash flow of more than €20,000,000 and that the free cash flow also was positive. And if you remember carefully, we never announced that there will be a positive free cash flow. We always said there will be a free operating positive operating cash flow. There was also a positive free cash flow and something that we were not completely sure in the course of last fall. And it turned out to play out well. So what I'm trying to say is that you always have this uncertainty. The overall year 2020 will be difficult in terms of cash. I don't now if you ask me now, I cannot put aside corona. And including corona, I think it will be difficult. I don't know what is going on. I agree. And in at the end of the day, in 2019, the cash result was little better than expected. So the result of this weak cash flow, we never have expected that. And for 2020, the forecast for corona was also critical concerning to achieve positive operational cash flow. But now within context of corona, it's really not seriously predictable for us. It's not even necessarily negative because this corona thing will start a number of changes on because we are working substantially for institutional government related customers. So there might even be that there are complication measures. So I'm not even sure that this is all negative, negative, negative, but it's uncertain. This is what it really comes down to. And there are packages prepared, different advanced payments, partial payments and so on and so on and so on. So the overall institutional system will react to the prices in a more forthcoming, comforting way. So this might be better than you think. But currently, as we speak today, March 18, obviously, we are really not sure. Yes. It's completely right. It doesn't mean that worse than expected, but it's unclear. It's very simple, unclear. Ein, anything else? Yes. Additional remaining risk? Mean, Heisenberg went through a restructuring in last year, and this is I mean, if you remember and you are following OHP since a couple of years, this was the same five, six years ago when we moved into a minority position. The bottom line of Aerotech Heisenberg is, obviously, it's attached to the aero engine cycles. And that is that's also an industry that is in a difficult situation currently because the whole airlines are covering, aero engines are still doing okay. But obviously, it's impacted by the overall uncertainty coming from the July MAX situation. So my bottom line is, we have moved into a minority position because we regarded it six years ago as non strategic, but that has not changed yet. That's still the judgment. It's a non strategic minority participation. I'm not so sure what to do with it long term. I think now the restructuring should result in a better outcome for 2020, 2021. But it's not core business for the OHP Group. But this might change if the industry changes. I unfortunately, I'm really unable to foresee the aero engine or the aeronautical business. I think putting it all together also the changing in the travel habits that we would maybe see as something for coming out of traveling is changing dramatically. Our company doesn't travel at all. So I'm sure that many, many companies don't travel at all. I mean, all the airlines are basically shutting down. So what does that mean for a supplier into aero engines? My concern is if less aircraft fly less hours, there will be less aero engine parts maybe. I don't know. I mean this is just a momentary glimpse. I don't know, Lutz, if you have an idea on where you see the aero engine industry going? As far as you are, I would say, for sure, at the first time, air traffic will return. But for the time being, the combination of traffic being down, new engines will be taken. We still have seven Ks. The delivery rate of Amazon going for other aircraft types will go down. It's certainly a good time for maintenance because old engines will be used longer, but if backups don't fly, then your maintenance effort is very much reduced as well. So, it's difficult to predict at the moment. We're happy that it's not strategic. We are happy that it's not our core business. Yes. I mean, if you believe the executive board of Rolls Royce, I thought, we would have more headache than we have at the moment. Yes. Yes. Fully agree. So there has been sorry, just last question on that topic. Do I understand that you more or less have written off the asset completely then? Or is there some remaining book value to be written off as a potential risk going forward? I think currently, the book value is I mean, the equity balance sheet recognition is zero. Yes. It's zero. Okay. Could be an upside potential upside. You're right. And thanks for saying just a couple of years. It makes me feel younger a little bit. Actually, I think I'm following the company for sixteen years with probably six to seven years interruption. But anyway, so I wish you all the best in Corona, and thanks for answering the question. Thank you. Thank you. Yes. Many other questions? We still have two questions? Yes. The next question is from Iasco Tjasic from Bankhaus Lambert. Your question please. Yes. Thank you. My first question is again on paperback. So do you think those restructuring measures are enough? Or is there the risk that we, in the running fiscal year 2020, do also face a potential significant negative contribution? No. First of all, I think it is enough because it is a plan that was that plan, I'm certain, has been already agreed with the GBAT adjustment and fixed plan and so on. So there's a so called Gensholm tariff or an additional tariff agreement implemented. And it will not have any impact on the OHP balance sheet because it's debt equity and the equity is already written off. So that's equity participation at euro valuation. So there will be no impact coming from that. Okay. Thank you. And regarding your There will be no negative impact coming. Obviously, if there's a positive development, there's an upside. Okay. Thank you. Understood. And then on your Italian production, Milan. Any update here how it is progressing until recently? Yes. Of course, Milan is, of course, our most difficult location. It's in a location of about 200 people really in the city of Milan, so in the heart of the crisis area in Namibia. And they have a very reduced operation. So there are people at the company, a massive home office operation going on. Many, many people have been sent home with work. Some people are at home not working. So management is there every day. I'm having a daily call with Roberto Azzetti. But I can only say it's very intensive process there, much more than on our German side. So the number of people in the company is percentage wise lower. But it's still operating. So there's no restriction that you operate a company. I'm hearing from Roberto, even in Bombardier, they even stopped testing corona, people that are not having obvious sickness signs. So it's not even when I ask do we have corona cases in the company, he said I don't know. So it's different level of crisis in Lombardia than we have in other operations. So this will be something to follow. On the good side, obviously, this will also be the side where you see changes moving first. So if Lombardier moves out of the crisis, then we can anticipate Germany will also move out of the crisis according to those things. So but it's difficult in Milan. Okay. And maybe could you help us out? I guess you've run a scenario calculation. Could you give us an indication at what level of sales decline just hypothetically you would still be breakeven? Is there a figure you can share with us? I don't have that figure. No. Think this is a figure we have never calculated that figure. I do not expect that roughly a sales decrease. I think that again, all our contracts, our top line is robust. We have no cancellations. We have no, let's say, only be that turnover is moving from 2020 to 2021 due to schedule related programs. That is possible. But it's not possible to make a forecast up to now how much energy or something like this. We have the act up to now, we have no reason to not confirm our guidance. Mainly what we discussed earlier, we have basically no goodwill in the balance sheet. So there will be no extra write offs from that side. So again, there might obviously impact. But overall, our balance sheet, our business model and our customer structure makes us more robust in this crisis than most others. There could be the risk that there will be a significant reduction in mortality in Lehmann, for instance, which then, of course, will have some impact on the EBIT, right? Yes. I mean, at one point, it be the can be, but I'm not so sure about that. I'm really not so sure about that. I'm actually it's nobody knows what in the next weeks will happen. There will be for sure some delays in our supply chain. That will be for sure the case that we proceed at a later point of time some major milestones, maybe. But it's not correct to say today, it will be this will have a significant impact on our EBIT for sure. We cannot say that. Very simple. Okay. Because customers seem to show flexibility to recognize milestones even under other conditions than they were originally foreseen in the contracts. I mean, our customers are governmental customers. And European governments at the moment do everything. As you can see, they do everything to support industry. And of course, it's not only by the government themselves, but by government agencies and entities and their behavior. They obviously have got clear instructions as well to behave in a flexible way and the support of data industry. So from the very first talks, which have happened in the last two weeks, I would say, we see clearly an openness and even an initiative on customer side to come up with schemes which will support industry and suffering not significantly from the current crisis. If you compare it's a comparable. If you would like to compare it to two thousand and eight financial crisis, two thousand and eight, there was really no impact on our ecosystem of this financial crisis. No impact in terms of turnover and profitability. Maybe in another case, and I would not say that for in any case, we do achieve the guidance. But up to now, it's not fair to say to make an assumption that figures will be reduced for a certain number. We cannot use this. Do Okay, understood. So maybe one final one on a scenario type of question. When we assume that you have an interruption in Bremen of four to eight weeks, what will it represent in your sales as a delay for the running fiscal year into the next year, just as a rough figure? No, you can't I will again, we will not communicate anything about this. Cannot do it. It's not fair to do it. Cannot expect that we have in our forecast a delay of four to eight weeks or top of business if four to eight weeks or so or not. We can talk about that if it is the case. But up to now, we will not talk about that. And we are not prepared to talk about that. Our Our business model, as you know, is projects. So we are selling I mean, we have people working, hours booked. So obviously, if, let's say, I mean, very simple, if one month is onetwelve of the year, you have to take out the materials and stuff. So you basically can make your calculations around that. But we are not going into a situation where there's nothing nobody works. We are distributed over Germany. We are distributed over Europe. And there will be certainly operations at a certain level going on. So for example, when we now look at where we are operating now, we have the majority of the people are working in the factory and a big part of the people will always work at home office. So there are many activities here for engineers that do software writing, that do report reviews, that do work on computers that will continue to work no matter what. We are not the percentage of people who really stand in the integration facilities working on satellites is minor, very minor. The productive process of OHP mainly in the satellite domain and OHP system is engineers sitting in front of a computer and working on things, as I said, either doing design, reviewing engineering work or working on documents. So this will go on. This will definitely go on. We have quite positive experience with home office. And it's partially even the case that people in home office are even more productive than at the company because there's less interruption. And even if the I mean, so what is very important for us is to keep the IT network running. That's a core interest we have all. And even with limitations on the IT network, work can be done in a decentralized way. So again, we are an engineering company that will not simply stop like a production facility. Of course, Alstom will be different, but the fact that the engineering teams will go on will slow that downward. Again, I think it all depends how this crisis will evolve. If there is a more severe crisis that goes on for, I don't know, eight months, of course, there's a different impact than when it goes on for four weeks. Okay. Further questions? Yes. The next question is from Seve Roskar from Pareto Securities. Your question please. Good morning. Hi. And thank you for taking my questions. Three questions left from my side. First, yes, I understand that it's not easy to quantify the possible impact of coronavirus. But when do you expect to see the initial impact on your P and L? And would you or can you confirm that Q1 so far is a rather normal quarter in Q1 twenty twenty? And then two questions related to the financials, so maybe to put mention. First, maybe I missed it, but can you summarize the reasons for the slight miss of your guidance 2019? And finally, related to your guidance 2020, maybe you can provide some breakdown on segment level expectations for 2020. Thank you. Yes. Maybe I'll start. Overall, obviously, first quarter almost being completed. We do not expect any major surprises on Q1. But obviously, moving on, this depends on how April unfolds. But, Hurt, do you want to take the question on the detailed breakdown? Yes. For the guidance, 34,000,000 EBIT. We have a situation that share of aerospace and industrial products in this is around €5,000,000.6000000 roughly and the rest coming from Space Systems. Okay. Okay. And the miss of the 2019 guidance? Yes. Call it a miss. I mean we see this one point something percent. So this has taken place mainly when, let's say, in the auditing some conservative look has been done under intercompany with ATP where there has been a right of or conservative judgment on the intercompany loan. There have been a couple of smaller items here and there, a couple of 100,000 here and there. So overall, we are at €49,100,000 Of course, yes, we expect it to be at €50,000,000 So I guess this has been evolving over the last year. You have to understand also the overall view on auditing, of course, in the last days and weeks with regard to provision taking and sufficiency of provisions is more conservative, anticipating already the atmosphere of the year that is unfolding. So there has been a slight lower total revenues with 1,030,000,000.00 instead of the guided €1.05 That has to do basically with revenue recognition in last year of some projections that didn't take place in the way as it was looking at the beginning of this year. So but the bottom line of our view on that is that we see this to be on target since it's all less than 2% deviation. But I think for the current ordinary condition is on plan fine. Thank you. Yes, questions? No, there are no further questions. Good. So then I would like to thank you all for your time, for your attention. Of course, during these times, I appreciate very much that you're spending your time with OHP. We will certainly hear again on May 12 after Q1 results. It will be the same format. You're obviously all invited to that. But if you have any questions, of course, you feel to call Martina or Cord or any of our teams here. So I wish you a good week, and I hope that we stay in close contact also in the coming weeks. Thank you very much. With regards to Transform Bremen. Bye bye. We want to thank to Mr. Fuchs and to all the participants of this conference. Goodbye.