Hello, and welcome to the Analyst and Media Conference on Implenia's 2024 annual results. We are delighted to be able to present our results to you once again here in the Connect Hall and also welcome the stream at today's. My name is Silvan Merki. I'm Implenia's Chief Communications Officer here at Implenia, and I will be accompanying you throughout the event today. Our presentation will be held in German. You may also select the English translation in the stream. You can then ask your questions here in the room or in the chat of the stream in German or in English. Before we start, I would like to draw your attention to the disclaimer shown here. Today we will present as follows. First, CEO André Wyss will give you a business update on the annual results. Our CFO, Stefan Baumgärtner, will then guide you through the financial figures.
This is followed by André Wyss' outlook on strategy and on the market, and we will be happy to answer your questions afterwards. I will now hand over to André for the first part. André, the floor is yours. Thank you, Silvan. And hello to all of you. 2024 was another successful year. Implenia achieved its targets and also increased its profitability, and thus continues the positive business development of recent years. This emphasizes that we are excellently positioned with our clear strategic focus and our strong team, and for 2024, 2025, sorry, we are therefore once again setting ourselves a higher operating target. And now to the details, so at CHF 6.8 billion, the order book remained at a high level and is still of good quality. At CHF 3.6 billion, revenue was comparable to the previous year.
We achieved a strong EBIT of CHF 130.5 million, and we were able to increase the EBIT margin to 3.7%. We also improved the equity ratio to 21.2%. We have therefore achieved all targets for the 2024 financial year. With a comprehensive range of services, our divisions specialize in expertise for large and complex real estate and infrastructure projects, which cover the entire value chain. We, or I will now explain the results of the individual divisions. The real estate division achieved a solid EBIT of 32.2, sorry, 37.2 million, including the earnings contribution from Ina Invest. Due to the market situation, there were only a few project sales last year, as we sell projects at the ideal time in each case. At the same time, we have made above-average investments in our attractive property portfolio. With regard to Ina Invest, we welcome the announced merger with the Cham Group.
As a strategic partner, Implenia will continue to provide development and realization services for the merged company and will benefit from, sorry, from dividends. Real estate develops sustainable and pioneering projects, both from our own portfolio and on behalf of customers. A few examples for this are the development of Lokstadt in Winterthur or the emergence of new mixed neighborhoods such as in Baar and in Pratteln. Despite the challenging market situation, the buildings division's order book is at the same level as in the first half of the year, and at CHF 1.8 billion, revenue was at the previous year's level, and at the same time, the division improved EBIT to over CHF 55.5 million. Wincasa also made a strong contribution to this result.
In view of the building permit applications in Switzerland and in the investments in major projects in Germany, the division expects an overall positive order trend. Current projects demonstrate the balanced portfolio mix of the division. Our specialized skills are used, for example, at the Aarau Cantonal Hospital or using the TRON Research Building in Mainz. Civil Engineering achieved a continued high order book of CHF 4.3 billion. At CHF 1.8 billion, revenue was at the previous year's level. EBIT rose to around CHF 40 million, particularly due to strong contributions from the tunneling business in all our markets. Many years of experience and extensive expertise position the division optimally on the market. Implenia is making an important contribution to sustainable mobility and energy infrastructure in Europe. Examples therefore include the Sechshelden Viaduct in Germany or the Ligerz Tunnel here in Switzerland.
Implenia is also the only construction company involved in all four European Transalpine Rail Links currently under construction, including, of course, the second Gotthard Road Tunnel. These projects are technical masterpieces that confirm our experience and expertise in large, complex infrastructure projects. Specialties achieved an order book of CHF 197 million, increasing revenue to CHF 169 million, and at CHF 8.6 million, EBIT was even significantly higher than in the previous year. The division is further expanding its high margin areas with a focus on planning and consulting. It will continue to actively develop its portfolio in the future. The specialties business units provide innovative services on attractive projects, and for example, Implenia facades techniques work for the Heidekreis- Klinikum in Lower Saxony or the design of the building technology in the Schönbühl shopping center in Lucerne by Planovita.
Expertise in sustainable real estate and infrastructure is increasingly in demand from our customers. This year, we received limited assurance for all audited ESG indicators, a seal of quality for transparency and reliability. In addition, the relevant ESG ratings once again confirm our leading role in the construction and property sector. For further highlights on this topic, please refer to the sustainability report also published today. Now, before I hand over to Stefan Baumgärtner for the financial update, we would like to show you a short video with insights into our current projects in our divisions.
Through innovation, we are setting new standards for the industry.
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Implenia brings innovation to planning and to building sites. Our railway bridge project in Norway uses 4D modeling and AI to make the construction site more efficient. In Berlin, we're using a revolutionary technique to lay a new power line so the tunnel remains accessible for future cable renewals. The E02 Kvitsøy Tunnel in Norway is being built using state-of-the-art methods 230 meters below the sea's surface. For Implenia, innovation is a matter of mindset.
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Many existing buildings no longer meet today's requirements. Implenia's approach to modernizing buildings focuses on the long term and on sustainability.
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We can provide clients with consulting, planning, execution, and management expertise from a single source, right from the start of their renovation and conversion projects. It takes specific expertise and experience to successfully develop and build a successful modern leisure facility.
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Implenia can help clients with environmental protection matters, transport links, and dealing with the authorities.
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Bridges are masterpieces of engineering. The leading construction service provider combines expertise with cutting-edge methods and technologies to plan and realize these highly complex structures. Whether building a new bridge or working on an existing one, Implenia focuses on the specific requirements of each project. In Sweden, Implenia has built an impressive multi-use bridge for pedestrians, bicycles, and trams. In Norway, the company is building the country's longest railway bridge. In Germany, DEGES has commissioned Implenia to replace the most important north-south axis to and from Denmark with an impressive new bridge.
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Hello to everyone. All divisions were also successful last year. Accordingly, we were able to increase our profitability. For the past four years, we have consistently generated an EBIT of over CHF 40 million in every half year, even in the seasonally weaker first half years. It should also be emphasized that Implenia achieved strong positive free cash flows in the second half of the year. This last half year, this last period, was a positive free cash flow of CHF 227 million. In addition, we have doubled our equity ratio in the last four years. Implenia expects a sustainable positive financial performance thanks to its strong operating business. The foreign or currency effects in the past year were lower than in previous years. These effects had only a slight influence. There were barely any transaction effects due to natural hedging.
The income statement shows the reported results, including the currency effects. The strong EBIT of CHF 130.5 million was achieved by the profitable business of all divisions. EBIT includes a one-off effect due to the income of CHF 31 million recognized in the income statement as a result of the contract adjustment with Ina Invest. In relation to revenue of CHF 3.6 billion, this results in an EBIT margin of 3.7%, an increase of 0.3 percentage points compared to the previous year. The financial result was higher due to lower foreign currency gains and slightly higher interest expenses. The consolidated net income of CHF 93.4 million is not comparable with the previous year due to one-off tax effects. We generated a solid operating cash flow of CHF 43.2 million.
The adjusted free cash flow totaled CHF 58.2 million, excluding strategic growth investments such as the purchase price paid for Wincasa and the above-average net investments in the real estate portfolio. This year, free cash flow was influenced by one-off effects. This mainly included the second installment of the Wincasa purchase price and the substantially above-average net investments in our real estate portfolio. The Ina Invest income recognized in our profit or loss income statement, which is contractually guaranteed to be paid in 2025, and ultimately the lower advance payments from customers. The positive effect of falling interest rates on prepayments is not expected until 2025. So our goal remains to generate a sustainably positive free cash flow. For 2025, we expect a positive development influenced by our good pipeline as well as the incoming Ina Invest payment.
Cash and cash equivalents at the end of December totaled CHF 402 million. The balance sheet total increased for the following reasons, among others, the above-average investments in our real estate portfolio, as already mentioned, that led to an increase in the carrying amount of over CHF 40 million. Two, due to the acquisition of additional shares in a large existing joint venture in the tunneling business, and three, the outstanding receivable had an effect on the balance sheet total due to the Ina Invest contract amendment recognized in the income statement. Liabilities from services increased due to higher liabilities to joint ventures as we had more and larger joint ventures, which we include using the equity method. Contract liabilities decreased further down to a lower or due to lower advance payments from customers. As already mentioned, falling interest rates have a delayed impact on our business.
The payment of the second installment of the Wincasa purchase price has reduced financial liabilities. With the positive consolidated results, we were able to further strengthen equity to over CHF 650 million, which corresponds to a year-on-year improvement of 14%. The further strengthened equity-based results in an equity ratio of 21.2%. The board of directors wants the shareholders to continue participating in the company's increasing success. It will therefore propose to the annual general meeting on the 25th of March to distribute a dividend of CHF 0.90 per share. This represents an increase of 50% on the previous year and a dividend yield of 2.9%. The board of directors assumes that Implenia will continue to pay dividends in the future. We have set ourselves a high operating target for 2025 with an EBIT of approximately CHF 140 million.
In the medium term, we are still aiming for an EBIT margin of over 4.5%, as well as an equity ratio of 25%. And so, back to André for strategy and an outlook.
Thank you, Stefan. Having further strengthened our competitiveness in the Fit for Growth phase, Implenia is now entering the next phase called New Horizon. For New Horizon, we confirm our successful strategy. Accordingly, we are consistently pursuing our four strategic priorities: portfolio, profitable growth, innovation, and talent and organization. Particularly important are the improved margins with an optimized cash flow, the asset-light strategy, a broad positioning along the value chain, and our sector-oriented specialization. There are adjustments in our divisional structure. The divisions Real Estate and Buildings will be merged and managed by Adrian Wyss on an integrated basis. As a result, Jens Vollmar's position will not be filled, and the executive committee will be reduced from eight to seven members. The specialties division is now called Service Solutions and continues to develop, including Wincasa as a provider of modern and versatile services.
This adapted organization enables us to move forward and even more successfully. As a group, we are ideally positioned to benefit from social megatrends and help shape changes in the industry. Population growth, urbanization, and the energy transition continue to drive demand for complex property and infrastructure projects. Implenia's range of services and expertise are geared precisely towards making the best possible use of these opportunities, and we expect a positive trend in total construction output in Switzerland and all of Europe. Accordingly, we anticipate an increasing order trend, also supported by our strong pipeline. Only the German market for residential construction remains challenging. Our strategic focus on large and complex projects is paying off, so we are hardly affected by the low demand for small residential construction projects, as is the case in Germany. We aim to achieve a sustainable increase in profitability based on three building blocks.
Firstly, the optimization of our existing business, for example, through a consistent focus on operational excellence. Secondly, growth in the existing business and so scale effects of endless projects. And thirdly, the development of new business opportunities. We are therefore well on the way to increasing our profitability to over 4.5% in the medium term. Implenia achieved the targets that were set for 2024. This underlines the fact that our integrated offering and strong team are excellently positioned. After six and a half years, I have decided to retire from operational activities and Implenia. This is the ideal time for Implenia. The group has a strong strategic position and can grow profitably in the long term. Jens Vollmar will take over as CEO on the 1st of April.
As head of a large division, he has played a key role in shaping Implenia and will continue to consistently pursue our strategy together with the management team. I wish Jens and the entire management team much success, luck, and of course also fun in this task. My thanks go to Hans-Ulrich Meister, Chairman of the Board of Directors especially, and the Board of Directors and the Implenia Executive Committee and all my colleagues for the trust they have placed in me. I am proud of what we have been able to achieve together today. Implenia is a strong and financially healthy enterprise and made possible by the commitment of the entire team. And so, back to you, Silvan.
Thank you very much, Andrea. So, you've seen it in the video. Our impressive projects are all created outside, and we can't just bring them in here.
But we would be delighted to show you on site what our experts and specialists are enthusiastically committed to every day. We invite you to visit the Ligerz Tunnel or the new building for the Department of Biomedicine in Basel. Following this event, you will receive an email with the opportunity to register for a visit live. I would also like to draw your attention to the next dates. So, please save the next dates. We will be holding our annual general meeting on the 25th of March, and on the 20th of August, we will present the half-year results of 2025. If you have any further questions after this event, please get in touch with the contacts that you already know. And now we would like to move on to our questions and answers session. So, Stefan, if you could please come back here and André to this stage.
So, we will start with the first question. I'm very happy to see lots of hands. And then afterwards, we will then answer the questions that had been written in the chat from the Zurich Cantonal Bank . I've got three questions. So, you spoke about over or above-average investments and CHF 40 million adjustment for the free cash flow. At the same time, you said that you had less sales or under-average sales. So, what do you mean by under-average? So, what would be the average? Actually, that would be my first question, by the way. So, do you want me to answer directly? Yes, please. So, yes, we have invested, and we have CHF 40 million that have been disclosed, CHF 40 million gross. So, we sold less.
It doesn't mean that there's a clear line here, but we had, you know, diverse performances from the divisions during the last semester and also over the past year. So, they always were around the 40 million. And so, you also have to add that our 60 million that come from Ina Invest, so you can see more or less what the average is. Would you like to add something, Stefan? No. No. And then I'd have two other questions regarding Ina Invest. So, first of all, could you perhaps help me to understand better? So, the 31 million come from the cash flow from 2024, I believe. And then you've got the EBIT of 60 million. But Ina Invest said that the impact would be 34.7 million. And then you've got a loss of also around, I believe, six million or something.
Perhaps you could clarify this for me because I really don't understand it. No, so the payments of CHF 31 million that is guaranteed for the first semester 2025. And the second point, because of the EBIT influence or impact, so we had a participation. So it's more or less 4%. And then you've also got side effects. And the same thing applies then to Ina Invest. So we cannot divulge anything. And so but there is another impact then. But the net influence, because of these change of contracts, we delivered then CHF 60.4 million impact of EBIT. And so the second question regarding Ina Invest, I saw that the revenue has increased. What were the drivers for this significant increase? I'm sorry, could you repeat those figures? What figures are you based on? It's in your annual report.
So, did you say revenue, so that the turnover, well, the contract objects had a direct influence on the turnover, on the revenue? So, these changes of contracts, that is the main driver that explains why this increase. Yes. Very well. So, there's a part, so participants in the live stream can also write down or jot down their questions then in the chat. So, I have a question regarding the merger of the divisions. Aren't you afraid of perhaps losing some kind of transparency, a certain level of transparency? Because you've got two different businesses. You've got real estate and buildings. I mean also, let's say transparency for us, you know, the externals. No, of course we don't. Why did we want to have that separate? We wanted to push those divisions so that they could become successful in a focused manner.
But it is an integrated model, you know, the real estate and also the buildings. And because they are both very successful, we would like to merge them now. Regarding transparency, of course, the three divisions will be then disclosed as individual entities. And the transparency that is necessary for the analysts and also the externals will be able then to evaluate or be able to interpret correctly. So, any other questions here in the hall? Microphone for Johannes. Johannes Brinkmann from Nachrichtenagentur AWP. I have a question regarding the synergies of Wincasa. So, for 2027, you talked about CHF 10 million. And you had another figure then for 2024. Yes, we're very happy about the integration then of Wincasa. And we were able to obtain then the correct results with these CHF 20 million EBIT total rather than to the PPA subtractions. Yes, so we have achieved our goals.
For 2027, there's no reason, in my opinion, why we shouldn't achieve that goal as well. Thank you very much for this question. I see a hand here to the right. You can still, please do not forget that you can also ask questions via the chat. Regarding the takeover of these tunnel projects, what was the background reason? Or let's say, what were the reasons why you did that? You're talking about the 41. We took it over from Webuild. Webuild had a quick growth but decided then to leave, to retreat from the Austrian market. We thought it's a wonderful project. We know that project very well, by the way. We had a settlement agreement and we decided that it was decided that we would take over that project. Thank you very much here in the front. Another hand raised.
Thank you very much. Two questions. Martin Hüsler, Cantonal Bank. Could you once again just quickly explain what the new contractual negotiations with Ina Invest will have as an impact in the future? Will you have less than cash flows or EBIT contributions in the future? So, first of all, the contracts were dissolved, so to say, and were then replaced by strategic partnerships. So, we think that the asset portfolio management will probably decrease and the development and also the execution work will, on a strategic level, be pursued. But you have to imagine we're not talking about great figures. We're talking about single-digit figures. And so, in the first step, the first part will then decrease and the second part will then go into a strategic partnership. Thank you very much.
And perhaps here, if you take the CHF 130 million EBIT of 2024, and because of that one-off payment, perhaps you have to subtract. And then, so you have CHF 140 million you were talking about. Is that primarily due to the real estate or is there going to be an improvement across all divisions? So, well, one of our priorities is then to continue to optimize their business with operational excellence and to have an economies of scale. And so, we presume that all of the divisions will continue then to expand and also contribute to the margin, the expansion of the margin. And that belongs to real estate, but the other divisions will contribute as well. So, you'll have buildings according to the old system, but also civil engineering and specialties as well. Very well, thank you very much. Are there any further questions here in the room?
Otherwise, I have three questions I received in the chat. So, all three from Chaima Ferrandon, of ODDO. So, can you give us an idea at this stage of the split in terms of sales and profitability between the three new divisions? Well, I believe that I can answer in German. For the moment, there is no guidance or there are no details in this respect. So, we will continue then to guide in the future. But you can expect that if we calculate Wincasa for real estate and the division buildings, well, you get a result. You get the result and then civil engineering will state. There is no transition of real estate organizations towards the new buildings division or the new civil engineering. But there are no essential changes. So, that's how you can imagine the whole situation. Thank you very much. Another question from Oddo.
How are you seeing potential synergies thanks to this new reporting? Yes, I believe that there are synergies with, you know, the collaboration with the clients. There are very similar clients for the Buildings and Real Estate. And so, we can work in a more integrated manner. So, regarding cost synergies, don't expect too much. But if you, you know, reduce from four to three divisions, there's also going to be the possibility of a certain cost reduction. But that was not the major reason why we want to do that merge. The major reason is that we have two very strong divisions and we want to, let's say, bring them closer to the client. And that's why we're merging them. But for the other two divisions, there's not going to be much of a change for Civil Engineering, no.
And what we're going to have in the other division is Wincasa. And so, we have these services business that we want to continue to expand. Thank you very much. And the third question. Well, the M&A strategy, I believe I have already shown it implicitly. So, there's not much that's going to change. Such as we saw in one of the slides, we're going to have very strong, let's say, market activity fields then along the value chain. But there's not going to be construction activities and more services oriented. And so, that's why we have this division service solution. And so, during the planning or the realization, or it could also take place after realization. But actually, we're talking about services business all along the value chain. Thank you very much, André. Any other questions here in the room, perhaps?
Here to the left, Thomas Aebli from UBS. One question regarding the gross margin. I saw that it has increased significantly versus the year 2023. Is that due to the operational excellence or are there also one-off effects? Is it a big business mix related or is there another upside for the years to come? I will start and you can take over. Yes, actually, it's all of that that you have. So, all of the above. So, it's a mix of all of what you have mentioned. Now, I can support this. Yeah, it's a mix of all of the above, can we say. So, as we showed, we have always increased our margin over the years. We want to and need to continue over the next years to attain this 4.5% EBIT. So, it's a communication with all of the other divisions.
But we have to continue then to increase to obtain that result of the gross margin. So, and another regarding provisions, another question. So, you have another decrease, I believe you said. So, is this one-off related or what goes into the P&L or the income statement? Could you be perhaps more precise? So, latent reserves, I think he's meaning. So, provisions, it is always the case for all of our projects. So, we always launch lots of projects, great projects, and then others are added. So, in the past, we have been able to realize and conclude some projects. And so, it's a mixture of a new, let's say, build-up then of provisions and then dissolving the other ones. And it has to do also with the deadlines and of the projects. That's normal, you know. But what we are expecting is that it's not just going to decrease.
The longer the projects last, it's not, and the higher the provision, you can't calculate that way, but we don't have any extraordinary effects. So, a last question regarding the dividends with the increasing profitability. I believe that your dividends will also increase, but just before you said that the payout ratio is also increasing or should increase. Do you have a certain, let's say, expectation regarding these payout ratios or these ratios? No, we have a mixed approach for all aspects, whether it's the capital ratio, equity ratio, or other aspects. So, of course, we want to give back a fair amount then to our investors, but it's not a payout ratio day. There's not going to be a payout ratio day. It's just going to be the dividends that's going to be paid, and we want to continue to pay those to our investors.
So, you still have the possibility then to jot down your questions in the chat if you wish to ask any. Are there any other questions here in the room? Does anyone wish to speak up, ask a question? I believe everyone wants to move on to lunch. They're all hungry. Does anyone else have a question here in the room? Here in the front to the left. Yes, hello. Testing. So, one last question regarding the dividends or dividend policy. So, there's no payout ratio that you want or can define, but perhaps you could call it a progressive dividend according to the business activity. Is that what you want to support? That's exactly what I said two years ago. We started paying out dividends once again.
And so, we said we wanted to be a bit cautious, but we want to continuously then increase so that our investors can also benefit from that. And the KPIs is clear. The equity ratio, free cash flow belongs to that, and the equity ratio and. And because we believe also in the future of this company, and so this percentage increase to the 90-something teams is something that we can then continue to evaluate. It has been evaluated then by the board of directors as well. Martin has a question here in the front. Perhaps just a question regarding, you know, let's say from the Value Assurance program. Today, if you look at those projects, and I believe that it is quite a, you know, you've got X thousands of projects, and you compare these to the trend of last year.
What is the portfolio, the new portfolio you're going to hand over to the new CEO? Has everything improved or can you be a bit more specific? Well, a major part of the order book has to come because it comes from the new CEO, you know, especially in buildings. Now, the Value Assurance projects that we launched in the first of May 2019, or that we introduced then, was really the absolute correct decision, not only that we did it, but how we did it. And I'm very proud about its development. And it's not, you know, we're not talking just about an improvement from 2023 to 2024. It's over the years that there was a positive development. And thanks to the processes and also to the culture within our company, we have a different quality of discussions within the company. And everybody wants the same.
We want successful projects, and for the successful, you have to first have a client satisfaction. Planning also has to be satisfied, and you need a certain margin for that. So how we also evaluate the risks, and I don't think that is comparable to what we have done years ago. But the development of 2023 and 2024, it wasn't like a leap. It was a continuous increase. Are we at the end? No, of course not. We can always improve, and we still do a lot more now with artificial intelligence and also with the references. Specialties is a very optimal division for that. It's easier once you have already built, let's say, a hospital; it's easier to build another one because you already have a success with the first project.
That is a great reference then for a second one or other projects that are similar. For the future, if I can add something, what is essential is to continue to push this in a consistent and consequent way. Always have permanent improvements, but still, let's stay, remain steady. That is the basis for the success we had over the past years. We will continue to do so over the next years. Jens Vollmar was always one of the people who had designed and continued to implement and to develop this. Thank you very much for this answer. Are there any other questions in the room? Who would like to take over the microphone and pose a question? We would still have some time. I think that's it, isn't it?
Otherwise, well, there are then beverages outside, and so everything will be prepared for the lunchtime. Are there any questions in the room? I don't have any in the chat. Are there any other questions here in the room that we can answer? Well, if that's not the case, we will then conclude here. You may take your seats. So, we said other questions and the background. Well, we have then for further questions and background information, you can contact Investor Relations and media contacts at any time. And so, we would like then to invite you here for a small lunch afterwards. Thank you for your attention for attending and for attending the analyst and media conference. And I wish you all a wonderful day. Thank you very much.