Earnings Call: H1 2021

Aug 17, 2021

Good morning, and welcome to Inflinia's Media and Analyst Conference regarding our 20 21 Half Year Results. We are happy to have you here in our call. My name is Silvan Merki, Chief Communications Officer of Implenia. We will hold our presentation in English, and you are kindly invited to ask your questions via chat function already now and also after our presentation during the Q and where we are happy then to answer your questions. Before we start, I would like to first draw your attention to our disclaimer that you find presented here. One second remark, you will find our media release and the slides we are going to present today already published on our website, implinja.com. And now let us begin with our presentation. Let me hand over to implinja's CEO, Andre Wiese. Andre? Thank you, Sylvain. Also welcome from my side. As you know, we are transforming our company with an increased focus on complex projects and therefore, create and build how we live, work and move. Our goal is to achieve highest value for our customers with sustainable profitability levels for Inplania and by applying our deep construction and real estate expertise. The results of the first half year in twenty twenty one clearly confirm that the transformation is on track with positive effects on the operating results. We achieved an EBIT of CHF 40,000,000. All divisions are contributing positively to this result. The order book increased to CHF6.6 billion and is of better quality and improved risk profile, thanks to our value assurance framework. The restructuring measures and ramp downs, especially in business unit civil, are well on track and have mostly been completed already. Implania will continue with portfolio adjustments and externalization of asset heavy activities in the second half of the year and beyond. The equity ratio increased versus full year 2020 despite seasonality. Both cash and equity is expected to show a positive trend for the second half year of twenty twenty one. Last but not least, we confirm our guidance. Now looking at the structure of today's presentation. I will start with a business update. Our CFO, Marco Diren, will then walk you through the details of our financials. Afterwards, I will show you our outlook. Marco and I will be happy to answer your questions at the end of the presentation. So let's first have a look at our business update. Implania achieved a solid operating profit in the first half year with a reported EBIT of CHF 40,000,000. This result was like previous year impacted by onetime effects. More details will be given during the finance update. Underlying performance is in line with expectations amounting to EUR 22,900,000. The revenue slightly decreased versus last year to almost CHF 1,900,000,000. Strict adherence to the value assurance framework leads to a more selective project acquisition with improved margins and the better quality of our order book, which increased to CHF 6,600,000,000 due to significant project wins in the first half year as well as the acquisition of Bam Swiss. We continue with a strong and integrated offering based on which we aim to achieve our vision to become a multinational integrated construction and real estate services provider. Now let's have a look at the performance of each of our divisions. Our division Real Estate achieved a solid EBIT of €22,300,000 driven by the diversified project portfolio and participation in INA Invest. This good result is in line with years prior 2020, which was an extraordinary year for real estate due to the INA Invest transaction. The division continues to invest in and develop an attractive portfolio with a market value of over CHF 350,000,000 as a traded developer in Switzerland and Germany. Together with an external partner, the division realizes its aspiration for standardized, industrially manufactured real estate products. Lastly, the collaboration with E9 Invest is well established in the areas of acquisition and real estate services. The participation in E9 Invest has a book value of CHF 144,800,000. Also, our division Buildings delivered a solid performance with an EBIT of CHF16,200,000 and increased profitability from its underlying business. Due to the focus on profitability and the strategic shift towards large scale complex projects, the revenue decreased to €854,000,000 The order book increased to €3,100,000,000 which was mainly influenced by the acquisition of Palmswiss. With this acquisition, we are strengthening our expertise for complex projects, mainly in healthcare. Coming now to civil engineering, which reports an EBIT of €10,200,000 a significant improvement versus last year. The business units tunneling and special foundations are delivering good results for the division. In civil, the restructuring measures and ramp downs are well advanced and have already been partially completed. Overall, the division Civil Engineering is now well positioned for future success, albeit still with a fairly low margin. Revenue increased to over €1,000,000,000 based on a strong second quarter, especially in June and the strategic focus on large projects. The order book remained at previous year level of €3,300,000,000 Lastly, our division, Specialties, achieved an EBIT of EUR 500,000 versus a negative result of previous first half year. Revenues decreased slightly to EUR 96,000,000. The order book remained stable at over €166,000,000 despite the sale of 2 non strategic businesses, Tuflerausbau and Bedrock. Specialties will continue to develop and scale businesses with high potential and active risk out acquisition prospects in order to expand its planning and engineering capabilities. Further, the division continues to align its portfolio. And finally, our innovation hub is developing more than 70 promising innovations at various stages of maturity. Now, I would like to show you some details on our organization, strategy execution and sustainability. The strategy we defined in 2019 with our 4 strategic priorities remains valid. Because of the necessary write downs, we decided to sharpen and accelerate our strategic priorities, portfolio and profitable growth. With regards to portfolio, I would like to give you a bit more insight on how we apply our strategy consequently to our business portfolio. In other words, which activities are continued and accelerated and which are stopped. Our division Real Estate remains a traded developer and expands its offering to scalable products and services. The division Buildings focuses on complex projects in margin attractive segments and establishes new partnership based models. Civil Engineering remained successful in tunneling with strong project wins and continued presence in all our markets, whereas subunit civil and special foundation focus on Switzerland and Germany. Division Specialties is in the process to become an incubator for profitable niche businesses and drives the innovation hub for the group. Other areas that are not performing and have been unprofitable in the past with limited positive outlook have already or will be stopped. We made really good progress in selling and ramping down non performing and non core businesses. In buildings, we have closed down the Unit Sudbaten and are transferring our activities in Austria to a better suited owner. In civil engineering, we have sold ferry docks in Norway, in Stansatzung in Germany and closed unprofitable locations in the Canton of Cressant here in Switzerland. In the division Specialties, we have completed the divestment of Petrok. Having said this, we are moving full speed ahead to execute on our transformation strategy. In Civil and Special Foundations, almost all market exits have been completed and ongoing projects are being finalized or handed over to the new owners. Based on the win of the tunneling project, held Lot 3 France will remain an important market for tunneling and related infrastructure projects. All in all, we made great progress on the adoption of our geographical footprint in a short amount of time and in line with our strategy. The second pillar of our strategic priorities is profitable growth. While our order book is of better quality, we improved risk management and transparency also during project execution. These are crucial to increase the operating performance sustainably and drive profitable growth in the future. We have seen first indications for their effectiveness already in the half year results. The process starts in the pre project phase where we have today evidence that our pre calculated gross margin improved by around 1 percentage point, respectively 20%. Further, we applied DORO cost estimates and risk assessments jointly with legal, finance and the business. During the project execution phase, we have implemented ongoing project reviews with tight cost control and continuous feedback. Additionally, early warning indicators have been defined to spot irregularities on projects early. Claims and litigations are managed proactively throughout the realization phase. Last but not least, we launched a leadership development program with mbaix, HRSK and Detihar to further improve the way we collaborate internally and externally. Before we go into the details of our financials, I would like to take the opportunity to highlight our USP in sustainability. Recent ratings from Sustainalytics, MSCI and EcoVardis show an ongoing improvement of Implania in this area. We are very proud that Implania has been recognized as long lasting industry leader in ESG ratings, and our continued effort in the last 10 years is getting rewarded. We are taking ESG very seriously and focus on safety culture, environmental protection and social commitment. All of our development projects are evaluated with our proven sustainability tool. One example of a sustainable real estate and buildings project is Green Village in Geneva. It consists of 6 new buildings and one modernization, all based on the philosophy of One Planet Living, developed with WWF and in Plenia. Let's have a look at the short video which shows the project in more detail. My name is Green Village. I am a project, a philosophy, a smart way of understanding the world, where technology converges with nature, where organization and business challenges meet sustainability. In the heart of Geneva's international district, near the UN, the ILO and the Global Fund, my habitat is plants, trees and birds. And I am part of the Jardin de Nacional. When fully formed, I will consist of 6 new renovated buildings offering offices, apartments and a hotel arranged around the ecumenical center. I am the 1st property developer aiming to achieve the one planet living standards in Geneva. In the past, I received champions of human rights, and I follow the same humanistic spirit. I share the same values focused on the world of tomorrow, where green is about future. This is why I found a symbiosis between renewal and preservation, between innovative community and environmental integrity, efficiency and sustainability to lead on towards a better future. Because we believe we can continue to be at the forefront of change towards a more sustainable industry, we have set ourselves ambitious goals for the future. For example, we aim for a net zero emissions by 2,050 and a reduction in our group wide CO2 emissions by 15% until 2025. But also on our construction sites and with our customers, we are spearheading. Our latest innovation is a pilot for a hydrogen fuel cell solution that can replace diesel engines and generators on construction sites to become completely emission free. This would be a major step for the construction industry to contribute to a more sustainable future. Now I would like to hand over to Marco Diren, our CFO, who will walk you through the financials and guidance. Thank you, Andre. Let me walk you through the financials of Impleenia in the first half year of twenty twenty one. On the left column, we present half year 1 twenty twenty one results, comparing them with half year 1 twenty twenty in the middle column and half year one twenty twenty without the INA Invest transaction effects on the right column. Top down, I'll start from the EBITDA to the net result. EBITDA was €96,200,000 Due to increased activity in the first half year of twenty twenty one, depreciation, including IFRS 16, is back on pre COVID-nineteen levels. As mentioned by Andre, EBIT was €40,000,000 for the first half year, which is within our expectations and a mix of improved profitability and onetime effects. The results of last year were heavily affected by both the INA Invest transaction and COVID-nineteen. The financial result is in line with previous years. The corporate tax rate is back on normal levels before 2020. The reported positive tax result of last year was based on deferred income tax recognized based on the operating results of the first half year of twenty twenty. Net result came in at €22,400,000 Excluding the INA Invest transaction of last year, this is a significant increase. Let me share with you the reported and the underlying EBIT performance of the divisions by presenting the reported EBIT on the left section of this slide, the onetime effect in the middle section and the underlying performance on the right section. Thanks to improved profitability and onetime effects, all divisions contributed positively to the reported EBIT of €40,000,000 The underlying result of the division Real Estate is on expected level. Last year, the result of the division real estate was impacted by the INA Invest transaction and the related shift of the underlying profit into the first half year. In terms in absolute terms, the division Buildings is on pre-twenty 20 level and has increased its profitability. The division Civil Engineering shows a strong improvement of the underlying performance. Civil Engineering is executing the streamlining of its portfolio and the restructuring, which results in positive onetime effects of €15,000,000 for the first half year of twenty twenty one. These results underpin the sustainable improvements of the underlying performance and successful execution of our transformation. On this slide, I would like to walk you through the most important items of the asset side of our balance sheet. Here, we compare half year 1 twenty twenty one with full year 2020 half year 1 of 2020. In the first half year of twenty twenty one, total assets further reduced to a level of CHF2.9 billion compared to December 2020. The currently low level of cash and cash equivalents is due to seasonality effects and the ongoing transformation. Compared to full year 2020, real estate transactions remained stable. Other current assets, which include accounts receivables and work in progress, increased compared to half year 1 twenty twenty due to a stronger Q2 of 2021. Goodwill was primarily impacted by the acquisition of Baum Swiss in May. Overall, noncurrent assets are at half year one twenty twenty level. Here, we show the equity and liability side of the balance sheet following the same structure as on the previous slide. Lower prepayments due to the revenue decrease in the division buildings reduced trade payables to 758,000,000. Current liabilities by around 10%, mainly driven by the reclassification of the convertible bond from non current liabilities to current liabilities. All in all, total liabilities add up to around CHF2.6 billion. Our equity increased by CHF21 1,000,000 since the beginning of this year, and we expect the ratio to further improve in the following month. The equity ratio as per half year one twenty twenty one is 11.1%. Looking at the development of the equity in the past, there was a pattern of a clear decrease in the 1st 6 months of any year. In 2021, we were able to break that trend with the increase in equity by 7% compared to December 2020 or if looking at the equity ratio by 80 basis points. Action to strengthen our equity have been and are a top priority. All actions to improve the equity shall ensure sustainable growth for the company and therefore are taken with the required patience. With our strong underlying business and the execution of our asset light strategy, we aim for a sustainable increase of the equity ratio to a level of more than 20% in the midterm. As previously communicated, there is an upside potential from our real estate portfolio, which is accounted for at book value instead of the significantly higher market value and the INA Invest participation. Let's have a look at the consolidated cash flow statement comparing half year 1 twenty twenty one with half year one twenty twenty. As expected, free cash flow is temporary at low levels, impacted by the seasonality effect of any first half year and the ongoing strategy execution. The usual seasonality effect is around minus €200,000,000 to €250,000,000 Additionally, there was the related cash outflow of restructuring and legacy projects announced last year. Write downs and provisions accounted for in 2020 led to a subsequent cash out caused by 0 margin legacy projects and severance payments. Moreover, due to last year's partial transfer of our development portfolio to INA Invest, the division Real Estate temporary contributes with a reduced cash inflow. Based on the temporary nature of these factors, we expect a positive cash flow development for half year 2, twenty twenty one. Impleena is sufficiently financed to support its operational targets. As you are well aware, most industries have seen a substantial increase of material costs and encountered supply chain challenges. Let me share with you how we manage these challenges. We manage these challenges jointly by our project experts, the legal and the procurement departments who execute mitigation measures with the highest possible impact. This is part of our integrated operating model, which is applied to all project phases from offering and negotiation up to the realization and warranty phase. Looking at the nature of our contracts, public clients contracts normally include inflation clauses based on the long duration. Private client contracts have a different nature, and here, we continue to work with framework contracts and hedging in order to act in the best interest of our clients. Further, we aim for dual sourcing and or price index closes. The material cost increase has only had a minor impact on half year one twenty twenty one results. We will continue our mitigation efforts, taking advantage of the integrated operating model of Implania. This leads us to the restructuring program announced last October and the key metrics to be achieved by 2023. The restructuring program way forward with the clear goal to achieve annual savings of more than CHF 50,000,000 by the end of 2023 is well on track. Respecting our social responsibility, the FTE reduction towards the target organization has advanced according to plan. To achieve the target level of total assets, we see 2 key drivers: the cash conversion cycle in order to reduce accounts receivables and work in progress as well as the externalization of asset heavy activities. To reach our target, the implemented measures will increasingly show the expected effects. Based on the solid result of our underlying business, progress of the sharpened and accelerated strategy implementation and the current assessment of the material cost inflation, Impleina confirms its EBIT guidance. For 2021, we expect an EBIT of more than CHF 100,000,000 and our midterm target is an EBIT margin of 4.5%. And with this, I hand back to Andre for the market outlook. Thank you, Marco. Before we move to our Q and A session, I would like to briefly provide you an overview of our outlook. The outlook remains positive for all in plania relevant markets despite the COVID-nineteen pandemic. Total construction output is expected to stabilize in Western European countries with annual growth rates of +2.2 percent for buildings. In Implania's 2 large markets, Switzerland and Germany, especially Germany, offer still significant untapped potential for Implania. Also, the market outlook for civil engineering is positive with an annual growth rate of +3.3 percent until 2023, partially driven by economic stimulus packages and an investment backlog in infrastructure. Now I would like to briefly show you some highlights of our recent project wins of our divisions. Real Estate signed the purchase contract for the Marienplatz site in Darmstadt, which marks Simplania's entry into the German real estate development market. Marienplatz is currently used as a car park and will be developed to an attractive and sustainable urban living space. Buildings won several large and complex projects. With the acquisition of Palm Swiss, Implenia is now the sole total contractor for the Cantonal Hospital Arau, the future largest hospital in Switzerland. Civil Engineering won large flagship project with tunneling in international markets such as the high speed railway line at the southern end of the Brenna Base Tunnel for Tezza, Bonte Gardina along the Munich Verona railway axis. And lastly, Specialties recently won projects by targeting solutions in industry niches such as facades. As part of the reconstruction of the Westeutsche Rundfunk film house in Kolonie, in Plenia, Versaaten Teknik is realizing the complex new building. With our transformation on track, the expertise to manage complex projects and our long standing focus on sustainability, Implania is well positioned to become a strong and profitable company with a substantially improved risk profile. The operational measures have a first impact on results and our order book is at the high level and of improved quality, thanks to the group wide application of value assurance. With this, I hand back to Sylvain. Thank you, Andre. Before we answer your questions, a quick note that we will present our full year results on March 1 in 2022, and we will have our Annual General Meeting on March 29. If you have any questions after this event, please do not hesitate to get in touch through the usual channels. Thank you very much for your attention during our presentation. So with this, I can open our conference call for your questions. You are kindly invited to still ask your questions via chat function that you find in your call. We will answer them upon their arrival in the chat. The first question we have from Martin Husler, Chat CapEx. What is your best guess for the free cash flow for the full year? Thank you. Thank you, Martin Husler. I think I give that question directly to the CFO, Marco Deeren. Marco? Thank you, Andre. And Martin for the question, as you as mentioned, we have been able to break the pattern of a negative free cash flow in the first half year. This year, usually, it's around €200,000,000 to €250,000,000 in the first half year. And we have and we expect a positive development in the second half year, again, based on the normal seasonality. And we do expect that because of the underlying performance of the business, which has significantly improved, as we have mentioned, and the majority of the cash drain from restructurings or legacy projects has already happened, and but there will still be a slight impact going forward. The second question by Martin Husler. You state that ongoing strategy execution is a reason for the cash drain. Can you please elaborate on that? Yes. Maybe I can say a few things. Certainly, the cash position is not satisfying, but it's temporary at the result of the transformation process of the company, and it is as expected. As Marco already said, the seasonality in the first half year is negative always in companies like ours is €200,000,000 to €250,000,000 seasonality. The outflow from restructuring and legacy project expenses is around €100,000,000 in the first half year twenty twenty one from these provisioned activities. We also have a fairly low cash inflow as expected from real estate following the InaInvest transaction in 2020. This will change now over time again. So also this is going to change the pattern then in the future. Additional outflow not from underlying business, but extraordinary cash out like restructuring, write downs up to €200,000,000 in 2020 for projects that have started before 2019 were particularly, as you remember, in the subunit civil and especially in Sweden. However, we expect a positive development now in the second half and we slowly come out of this situation. The third question by Martin Hisle. In half year 1, you profited from positive one offs of CHF 17,000,000. What is your best guess for the full year? Is twice this amount a good estimate? So the positive onetime effects, mostly from divestments, are part of the transformation and also to some extent related to restructuring provisions. And it's almost entirely in civil engineering. You can expect in the second half also some of those transaction, but the split, we cannot yet assume because we don't know how this transaction all fall into place. And question number 4 by Martin Hisler. Do you see any deterioration on payment terms of your customers? Marco? Thank you, Martin and Andre. No, we don't see any significant change in payment behavior so far and which would be above and beyond our norm the normal deviation. So we don't see that at this time. We have a question by Thorsten Sauter, Kepler Cheuvreux. In our full year 2021 EBIT guidance of more than €100,000,000 can you quantify the split we should assume between recurring and nonrecurring elements, please? Yes. Continued strategy execution will continue in the second half and maybe beyond, as we said, till 2023. We will also have onetime effects in H2 as part of the €100,000,000 guidance or larger than €100,000,000 guidance. It's not going to be necessarily the same split, as I mentioned before. It depends a bit how the execution of these divestments are going in the second half. And we can never really completely assume when they fall into place. We follow logic, negotiations and not necessarily under pressure. We have a second question by Torsten Sauter. Is it fair to assume that with respect to your cash flow performance in half year 2, seasonality should reverse CHF200 1,000,000 to CHF250 1,000,000 or more of half year 1 cash drain, while the advance payments on the €1,070,000,000 for debts upon the Gardena railway tunnel project in Italy should add a high double digit cash figure? I think that's a question for you, Marco. Thank you, Andre. So we expect a positive development as in the second half year of twenty twenty one, as we already mentioned. That follows a normal seasonality pattern, the improved underlying business. And we've had those impacts in the first half year as you as we mentioned before. So advanced payments certainly do help to improve the cash flow. And we do expect again for Tezza Ponte Gardena is part of our underlying business. Certainly, such big projects help to improve the cash flow in the second half year. And the majority remember, the majority of the cash drain from restructuring and legacy projects has already been happened. And therefore, we expect an improvement in the second half year. Then Thorsten Sauter asked, when do you expect to sustainably generate cash? Is the low point behind and why? Marco? Yes. Again, here it's almost the same answer. So we improve our operating performance that will help to generate cash and that is not only following the normal seasonality. The cash drain from restructuring legacy projects has will still happen, but has happened over the majority. So and that will be overcompensated by the inflow from the operating business. And we see a positive trend for the second half year, but as well a sustainable positive trend in generating cash flow. Thorsten is out there. Will there be further one off gains in full year 2022 following from divestments and release of provisions? Yes. As I mentioned before, we expect positive onetime effects from further divestments in 2020 to in line with our strategy and what you also have seen on the chart, but probably to a lower extent as in the first half year. But we will see the split during the course of the year. We have Walgoth Rysz from Telkab. In your cash flow statement, you made an adjustment for result from sale of noncurrent assets of CHF 37,000,000. Where did this come from? Can you give some details on this? And where did you book these in the income statement? Marco? Thank you, Andre. So we have reported our M and A transactions over the first half year, so without giving any details. So the reported divestment is part of our strategy execution, which is well underway. And we do have in our ordinary course of the business, we do still we always have smaller transactions, which are not considered to be one off effects and therefore have cash and the P and L impact. So in the P and L, you will see this in revenue, but also in income from our associates. We have Christian Arnold from Stifel. Could you give us an update on your thoughts about the refinancing of the convertible bond due next year? Marco? Yes. We are looking certainly into different options as it's now falling into current liabilities and not the non current liabilities. So we do consider different options, and we are confident with our improvement of the underlying business that we can successfully refinance our bond next year. Then Matthias Heim from Freitas Radio SF. How big is the problem of missing raw materials or building materials? Yes. Maybe I start and then I hand over to you, Marco. In Plenia, I was able to take immediate actions and reach agreement with our clients. So, so far, we have limited financial impact. We have not yet seen major changes except some minor supply chain challenges in the first half year. But you can imagine that we intensified our planning process as probably others do, and we work very closely across the organization with finance, procurement, the businesses and so on. Maybe you want to say a few words to this? So as Andre mentioned, we haven't seen any major impact in the first half year, and we are very confident that we can avoid any major impacts in the second half year. But that's according to the development of our planning process and the client behavior. So So far, our procurement department, the business, we are working very heavily to intensify our planning process, which means that we are better prepared that we need to look more into the future. We have dual source strategy with our suppliers and so that we are not falling into a shortage in our supply chain. Yes. Can Matthiasheim, in which areas is Plinya affected by delivery delays? Yes. As I said, we already have not yet seen big delays. We have some small delays, and we certainly expect some exposure to material prices increases in 2022. Most affected is division buildings. Public contracts are a bit less affected, so civil engineering to a lesser extent. Public clients normally includes inflation clauses and therefore are way less affected. By far, most impacted material is steel metal with an increase of over 50%, but also plastic to a lesser extent and as you know some others like timber and others. But the biggest one is clearly steel and metal by 50% and in the area of buildings. Matthias Heim again. How are the consequences, cost consequences, cautioned? Yes. I believe we have discussed this already. There is some impact, but we have not yet seen significant impact, and we will carefully watch the situation and manage the situation in the second half of this year and beyond. A question by Andreas Bruhn, yes. Looking at Page 16, how do you see the timing for further divestments? Yes. I think we said it already. We continue with our strategy execution very fast, very quick and very intense, and we will see some onetime effect in the second part of this year. It's not going to be necessarily the same split as we had in the first half. Again, it heavily depends on both parties, and we will certainly work with our potential bias on the terms, the timing, but we aim for the best possible outcome for Implegnion. Therefore, the timing may vary a bit. Thank you. Aleksandra Bossert from UBS. The equity ratio is still too low for a company active in a sector with high risk. Yes. I say a few words, but I think that's a question for Marco. Yes, we also agree that this equity ratio is too low. Our aim is to go above and beyond 20% in the midterm, but we also were able to break a trend now in the first half because normally the equity ratio would decrease quite a bit in the first half just due to seasonality, and we were now able to increase, which gives us some indication that we do the right thing. But we are not there. And as I said, we want to go above and beyond 20%. Marco? Thank you. Yes. As mentioned, we are on track with our transformation, and we do see, first, positive results. We are very positive that we can continue this trend, and we will continuously push as well for a sustainable increase of the equity. We don't do any unnecessary deals at a non confirming time. So that's certainly we're going to increase that by the underlying business And our aim our midterm aim is to be above 20%. So that's our strategy for the equity ratio. How quickly do you intend to reach above 20% defined midterm? So clearly, we were able now to turn around the business in by the divisions, and we are very satisfied with the operational performance of our divisions. We are not yet there. There is still a way to go. But we also said that we focus on the balance sheet and on the cash. So equity ratio and cash is clearly a priority for us, and we aim to go as quickly as we announced. So in the midterm, we want to go above the 20%. Marco, any additional comments? Yes. Probably that for all actions we perform, we do actually act in the best interest of our company. So we do sometimes the company needs patience to do deals to actually to be able to strengthen the equity, but the underlying performance will help us certainly in the midterm if we look at 2023 where we've already mentioned that we will have increased service fee income from INA Invest. So all this would fall into part and are considering our plans to be midterm of more than 20%. And I think we can also say on top of this that we still have our land bank with a significant market value of €350,000,000 and also the participation in ENA Invest with almost €150,000,000 So we are actually quite confident that on the cash side, on the equity ratio side, we will now really move into the right direction. Where do you stand with regards of financing of the subordinated convertible? Would adding hard equity rather than relying on asset disposals be more effective? I think for the thank you, Andre. I think for the refinancing of the bond, we've already answered the question and we are confident with the improvement of our underlying performance that we can successfully refinance. As we've mentioned already, we have currently no plans for a capital increase. Whether it be more effective or not, it's our plans are not to have a capital increase. And we are sufficiently financed actually to support our operational targets and that's why we are looking into different options as mentioned before. Thank you, Marco. Martin Husell, Zechabe. You state that pre calculated gross margins is up by 100 basis points. What share of order book of SEK6.6 billion was undergoing the value assurance process? Yes. We are really happy to see first results of the application of our value assurance process, which we strictly apply to all our projects. And we were able to increase the pre calculated margin by 1% or, as you mentioned, 100 basis points. And also, at the same time, we were able to reduce the risk profile. We did this go into details and looked at it. So we actually improved the risk profile, which is a good thing as well. A significant part of the order book is now captured by the value process because a normal duration or an average duration of our project is 3 to 5 years, and we started to apply the value assurance process for the largest projects already in 2019. So you can see that more and more a larger part of the order book has gone through our value assurance process. And I must say, it's really well established and it's now really good to also see the results and the results go in all divisions into the right direction. And this is also reflected in our midterm profitability target of 4.5 percent EBIT Pickering. Some quarters ago, relevant credit analysts have downgraded the unsecured bonds to BB BBBB. Could you give an update to the rating profile you want to achieve in short and midterm? Is there a goal in the ESG framework related to the credit profile? Marco? Yes. Thank you, Andre. So we do focus primarily on improving our underlying business, and we do not comment on the assessment process of the banks. But we are 100% positive if we improve our underlying business, if we deliver the results, the ratings of the banks will follow. And as you are well aware that we need to continuously demonstrate that we improve our underlying business. The transformation is on track. So the margin the pre calculated margin or the order book has improved. The execution is done by value assurance. We have lean methods and all those measures are now in place. And therefore, we are very confident that we improve our underlying business, which then leads to a better rating. So sustainable finance is as well part of our ESG goals. We have which you can find on our web page. We have a very good section there. We've been rated very well by external institutions. And sustainable finance is part of our 12 ESG goals we have committed to. Thank you, Marco. Holger Friis, despite the slightly lower revenue, trade receivables increased by around 37%. Where does this strong increase come from? Marco, again, I think that's your Thank you. Yes. So there are 2 main factors. A few larger projects are in the finalization phase. So final invoices and claims invoices have been issued to the client. But then on top of that, we have seen a very strong second quarter, especially month of June, where we have had a proportional high amount of invoices sent out to clients in May June, and that's the reason why. Thorsten Sauter. How big is the order book in July following the recognition of the €1,070,000,000 for Tezzaponte Gardena railway tunnel project in Italy? How can you reconcile such a major project with your new risk framework, new international market, cluster risk exposure, big size of the project, etcetera? Yes. So first, Telt, Lot 3 and Fortezza Ponta Cantina are not yet included in the order book of the SEK 6.6 1,000,000,000 we recorded. Do remember these are large tunneling projects. And large tunneling projects, we are a specialist in. We had no significant problems in the tunneling business in the past and shouldn't have in the future. They all followed our value assurance process very strictly. And some projects we win, we are not even price wise at the 1st place, but we win it with qualitative measures. As I said, the value assurance framework has to be applied strictly to all of them, and we are very satisfied with winning these lots and again are confident that we will have a good outcome of those projects. Thank you. Christian Mael with a question we already had. How do you feel with increases in the cost of raw materials and supply bottlenecks? Yes. I think we have answered that question before. As I said, it's a cross divisional team who works very closely. We should also see that these price increases go not straight into our business. We have existing contracts. We have certain clauses which define this for that. Expect do not expect that the whole business is exposed to this. But certainly, we watch this very closely. We're managing very actively. We're hedging aim for dual sourcing, as Marco mentioned already. We have price index clauses. And then, then, we will see how this will turn out. So far, we were able to manage it quite well. But certainly, that's a topic where the whole industry and also above and beyond the industry is looking into this. We have two last questions in the line. Holger Frisch. The improvement in the equity ratio is solely due to waiver of dividends and the gains of sale of assets. Otherwise, the ratio would have fallen again. Can the equity ratio be increased at all from the underlying operating business to a level of 20% in the next 3 to 5 years? So yes. Also remember that the first half year in a construction company is normally not the year with the highest profits. So the second half tends to be generating more profit than the first half year because the winter, the seasonality. So yes, with the underlying business, we will increase equity ratio, but we'll not only work on the underlying business, we also work on the balance sheet side and on top of this, certainly some divestments of non selected core activities. We also get over time, and this is going to increase significantly as of 2023, the income from Inno Invest, earnings and dividends. So we are actually quite confident that also with the project of the improved cash conversion cycle, we will continuously improve our equity ratio. Anything to add, Marco? No. You've mentioned everything perfectly, Andre. A question by Ben Pomerlein. You previously stated that you will publish Implenia CO2 emissions for 2020 in summer 2021. When are we going to get this important sustainability KPI? So the topic is certainly very important for us and sustainability is one of our company values. We have five values. We have shifted sustainability report to March in 2021 for the first time, was summer in the past and the CO2 disclosure will follow this year. Thank you for the question, Ben. And the last question by then, Pomeran, that will be the very last of the Q and A session. Where are you with your stated target to install solar panels on top of all your workshops in the German speaking part of Switzerland? Yes. Certainly, it is as I said, ESG is one of our key goals. Team is working on this. But also remember that we also move. We also move our headquarter. So the company will or the headquarter will move at the end of this month, beginning of September, to a new headquarter in Opicon where we are all together. And therefore, some of our offices we are now in and rented would not make a lot of sense to install them with solar panel. But be rest assured that this is a top priority for us and we're working on it. And thank you very much for the question and also reminding us that ESG and sustainability is key. We take this very serious. Thank you, Andrew. Thank you, Marco. And with this, we are at the end with our question and answer session. And I can hand back to Andre for the closing of the session. Yes. Thank you, Sylvain. I would like to thank everybody for participating in today's media and analyst conference. Now I wish you all a very nice day and goodbye. Thank you.