Good morning and welcome to the Analysts and Media Conference on Implenia's half-year results for 2025. We are delighted to present our results to you once again here at our headquarters Implenia Connect and would like to welcome those attending in live stream. My name is Silvan Merki. I'm the Chief Communications Officer at Implenia. Our presentation will be in German. You may also select the English translation in the stream, and you may ask your questions here in the room or in the stream chat in German or in English. Today, we shall present the following. First, our CEO, Jens Vollmar, will give you a business update on the half-year results, followed by our CFO, Stefan Baumgärtner, who will then guide you through the financial figures. This will be followed by the key investment highlights and an outlook by Jens Vollmar.
Finally, we will be happy to answer your questions in the Q&A session. Now I hand over to Jens Vollmar. Jens, the floor is yours.
Thank you, Silvan.
Thank you very much, Silvan. Can you hear me, everyone? Yes. I would like to welcome you here to our headquarters in Implenia. I'm very happy to see you because I saw that a lot of people do not attend physically because it's also a sign of appreciation. We really appreciate that. I think six months in the first half year, we had a lot of, let's say, challenges and also a lot of highlights. I must say it's our employees who have contributed to this. Now let's start with our operative highlights. What has preoccupied us? First of all, there was the market. The market has developed in a very positive manner. Also, let's say that the framework conditions have always worked well to us.
We also had investment hunger, so to say, in all divisions, were then able then to gain a lot and acquire a lot of very good projects. We also had many mandates. What was ideal was the timing of the refinancing of our bonds. I think just a few days, Donald Trump had then communicated his new tariffs or his new rates, and that would have been less beneficial. We are happy that we were able to have a head start and do it in advance because that also then strengthened our financial structure. I think it is the case to say that the construction industry is quite unproductive and inefficient. Digitalization and artificial intelligence will help us in more and more projects, not only in the back office, but also where we have had a lot of AI applications already ongoing. This will help us in the long run.
Another highlight was for sure then also the role of the CEO at Wincasa with Philipp Schoch. We have found someone who has the know-how, necessary know-how, and who was able to take over that role. Not to forget also our operating model has been reduced from four to three divisions. That also required a lot of work, and we were able to do that. Last but not least, also the Cham Swiss Properties was created. That was very important for Implenia because Ina Invest and the CHAM Group were able to merge into a hopefully bright future. At the financial ledger, I think this is what interests most of you. The EBIT was then or has been increased then to 57 by almost 13%. That's also the result of the good work that you have performed. Also our revenue has increased by 6.6%.
The highlight in these results that also showed the dynamic is also the order book with CHF 7.8 billion. That's a new record that we have. If we compare to last year, then we have almost not only a 10% but even an almost 14% increase. Also, the EBIT target, the EBIT guidance of CHF 114 million confirmed for the full year 2025. I will now move on to these results along the three divisions. Buildings is the real estate sector of Implenia and also civil engineering has to do with everything that has to do with civil engineering. Tunneling, engineering, and also just streets, roads, and Service Solutions, which comprises engineering, planning, logistics, and property services for efficient and sustainable real estate and urban centers. We have made a comparison to the previous period, to the figures of the previous period.
What is interesting here was very positive because since 2022, we had a lot of private clients. We didn't have, or we had, let's say, a decrease of the orders. Now everything is going up. It's very good with respect to the KPIs. We had negative prefinanced capital, and that also helped us. What was also positive was the development of the EBIT. You can see the significant increase, which is thanks to the completed real estate transactions. We were able to improve the margins. Also, during the first half year, we also had real estate transactions that have also contributed to this result. Because there were also questions in this respect, it was also thanks to the participation in earnings from CHAM Swiss Properties. What does the division do at all? A lot of people think just real estate or the flats, apartment buildings, etc.
That's only a minor part. It makes about 20% of our business activities. We have a lot of greater projects. Here at the top left, you can see it's the Cantonal Hospital of Argyle. Why is it still there? It is the greatest project that we have that has been executed and will be handed over next year to the owners. We have here a dedicated unit for health and also lab and also one for data center. You will see the newest data center for a new client in Schaffhausen in Beddingen. This is also a part, or let's say a mandate or a project of our order backlog. Why is the data center very important for Implenia? During the history of the company, we have made about eight such data centers in the last year. That shows a bit the trend for the future years to come.
We have a dedicated team who takes care of, who deals solely then with data centers and with the planning of the whole project. Civil engineering. For the first time, we have reached then an order book record high of CHF 5.2 billion. Why is this important? Because this volume is, let's say, disclosed then in the sectors where we then focus. For example, tunneling and also bridge construction. Infrastructure and the revenue was also higher than in previous years' level. We were expecting a higher margin, of course, but I believe that we will then obtain or we will achieve then all of our goals that we have set. Here also certain highlight projects that prove then our competencies or underline then our specialties. There's a great demand already in the markets we can and that is pushed by these great infrastructure projects.
As an example, we have the so-called Cable Diagonal in Berlin. That is one example. We were able to do that thanks to innovative then and progressive then technology. We were able to advance and do this project thanks to that. Just like for infrastructure, we really have a lot of demand for greater projects, especially for renovation or for new constructions, for cable infrastructure, and for example, the electricity that needs to come from the northern part of Germany to the southern part. Also smaller, or let's say, tunnels with smaller diameters. Everything is very interesting. What also shows us that how good we are then in tunneling is these projects. We have one in Norway. You have here projects. We have a tunnel above the sea level and also with all kinds of shafts, as you can see here and the connections.
You can see this is in Stavanger in Norway in Northwestern. If you look at the whole West Coast, all the infrastructure that goes all the way to Kontind, you can see that these projects seem very big, but they are just a small part of what is still to be expected. You can see also the other bridges that are constructed. For example, this one at the lower bottom here, the lower corner to the right in Germany. There are a lot of bridges that need to be renovated and there's a great demand for a new one. We are there. Let's come to the third part, service solutions. That also generates higher margins and bears less risks. That's where we want to grow. We can see here that WinCasa makes a great part of that.
Compared to the other sectors or the other divisions, here we've got the assets under management. In the first half year, what is interesting for you probably is that we were able to then gain CHF 83 billion in assets under management, and through recently acquired mandates that are not yet reflected in this figure, meaning another CHF 3 billion. That just marks and emphasizes all our activities. Just as we have invested in Wincasa, we also want to verify if there is any other than growth to be done in other sectors or with other perhaps then new units. Here are other projects that show you why all of this is very relevant. Why do we try to compensate or to add services to these divisions? Because we can use or benefit from the synergies.
Here, for example, the shopping mall in Schönbühl, Lucerne that belongs to the Swiss Prime Site. Wincasa is the one who administers this. Shopping Arena is the building technical building agency, or let's say, company that takes over all the planning and division of buildings, is modernizing this whole building. Stefan, before I hand over the microphone to you for the finance, I have summarized these highlights in a video. Let the film roll.
Structure needs to be expanded and modernized. Modern real estate has to meet high standards in terms of usability, financial viability, and sustainability. Urbanization, population growth, and demographic change are putting new demands on real estate. Implenia offers solutions. Division Buildings uses its broad and deep expertise to develop, plan, and build challenging real estate projects. For example, buildings for healthcare and research. Cloud solutions and artificial intelligence require more and more data centers. Leisure properties, e.g., hotels, cultural buildings, and sports facilities bring people together and help them recharge their batteries.
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With its wide range of capabilities, Division Civil Engineering plans and implements large and demanding infrastructure projects. In big cities, as well as in remote mountain areas, where its experience is needed for hydropower projects. Bridges are central elements of transport infrastructure. Implenia plans, builds, and renovates bridges of all sizes and degrees of complexity. In Toulouse, Implenia is building a new metro line with four underground stations.
We are building an almost four-kilometer-long tunnel along with four underground meter stations. From the initial studies to the execution of the work, all planned using BIM, every step requires precision and foresight. We are working in close partnership with the client to achieve this together.
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The Division Service Solutions offers client-focused services for engineering, planning, logistics, and real estate management. Wincasa, for example, handles over 2,200 requests on average from tenants and owners every day. Being available and sorting things out quickly are crucial attributes in this business. Commercial property owners also want to see their properties being fully utilized. Specially trained teams actively market any space that becomes available.
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Hello everyone.
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All divisions performed well in the first half of the year, and that enabled us to further improve our results.
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In the first half year alone, we were able to increase our order backlog by CHF 990 million to a total of CHF 7.8 billion. This corresponds to an increase of 14.6% compared to the end of 2024. We have increased revenue to CHF 1.9 billion in the first half year, representing an increase of 6.6% compared with the previous year. Due to the acquisition of additional shares in the H41 consortium in the second half of 2024, the change to full consolidation took effect. Real estate sales also had a very positive impact on our earnings.
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The foreign currency effects were negligible in the first half of the year. Natural hedging takes place in the operating units.
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In the first half year of 2025, we generated a very strong EBIT of CHF 57 million, which represents an increase of CHF 6.5 million, or 13% compared to the same period of the previous year. This was achieved through more profitable business across all three divisions. In relation to the sales of CHF 1.9 billion, this results in an EBIT margin of 3.1%, which corresponds to an increase of 0.2 percentage points compared to the previous year. The financial result has improved slightly due to lower foreign currency losses, which were partially offset by slightly higher interest expenses. The consolidated net profit increased by 26.1% to CHF 33.3 million, which is a strong result considering the seasonal nature of the business.
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In the first half year of 2025, we had a free cash flow that amounted to -CHF 168 million. The free cash flow was significantly influenced this half year by a higher operating result, the negative development of the net working capital due to lower trade payables, and, third point, the successful completion of real estate transactions. Our goal remains to generate a sustainable positive free cash flow through profitable operating business in all divisions. At the end of June, the cash and cash equivalents amounted to CHF 272 million, which was lower than usual for the season. However, still significantly above the previous year's level of CHF 218 million, corresponding to an increase of CHF 54 million. Other current assets increased, mainly due to higher contract assets. We have taken the appropriate measures and expect that additional receivables can be settled more quickly as a result.
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Liabilities from services increased compared with the previous year due to additional advanced payments for new projects with working groups. In spring, we were able to refinance the CHF 175 million bond maturing in autumn 2025 ahead of schedule and on attractive terms with a new CHF 220 million bond with a four-year term and an interest rate of 2.5%. We also repaid a promissory note in the amount of EUR 30 million. As at June 30, 2025, the company had all syndicated credit facilities of CHF 200 million at its disposal, as well as additional bilateral credit lines. Other short-term liabilities increased due to the bond maturing in March 2026. Despite the dividend payment, equity increased to CHF 661 million, corresponding to an increase of CHF 59.5 million compared to the previous year. The equity ratio adjusted for the fixed-term deposit from the bond was, at the 30th of June , 2025, 21.3%.
For more than four years, we have generated a consistent operating result in every half year, even in the first six months, which are seasonally weaker due to the nature of the industry. It should also be noted that Implenia generated strong positive free cash flows in each of the second half years. The free cash flow, which was seasonally negative in the first half of the year due to industry factors, improved to - CHF 168 million. That is an improvement of CHF 40 million compared to the same period last year. In addition, we have steadily increased our equity ratio over the last four years. Implenia expects its strong operating business to result in a positive financial development in the long run. Implenia increased its EBIT by 13%. The financial year 2025 guidance anticipates an increase of 7%.
Based on this business performance and the outlook for the second half of the year, we confirm our guidance for the financial year 2025. In the medium term, we continue to aim for an EBIT margin of more than 4.5% and an equity ratio of 25%. Now back to Jens for the key investment highlights and the outlook.
Stefan.
Thank you, Stefan.
Now I will explain why Implenia is still an attractive investment opportunity, and for six reasons. First of all, the markets. I have already mentioned that we expect sustained growth in our target markets, driven by the structural trends and rising demands. There's urbanization, renovation, also an expansion of renewable energies, and also high demand for residential possibilities, etc. Second point, we are a leader in specialized profitable segments such as tunneling, healthcare, and property management. Also in the data centers, we are one of the leaders, just to mention a few examples. That gives us a clear advantage in a fragmented market. Third of all, I believe it is safe to say that with our risk management approach, with our value assurance, which we master quite well, I could say that our business model is diversified in terms of offerings, customers, contract types, and markets.
This ensures resilience and stability. Fourth point, thanks to our value assurance approach, we have become very resilient versus the volatility of the market. We have a robust project pipeline with attractive return potential, which minimizes the risks and improves our margins. We have always had this situation in the past, and in our domestic markets, we have always invested in our domestic market. When you want conjecture projects, you want conjecture projects to invest in there. We also have various types of contracts and also diversity, and also because we are not only active in one country, but geographically spread. That makes us very resilient and strong. The fifth point, also our management team, which is worth mentioning. We have been working with them for years now and in a very successful manner.
They have a different background than we have, but this all leads, or let's say that this cooperation leads to a very good decision taking. We also have a focused growth energy. This is designed to deliver long-term value for our investors. I will come back to this point later. The outlook, good news. We have a very good Euroconstruct with that infrastructure in Germany. That is very good news. The markets are really gigantic compared to our market share here in this enormous market. 1% is a lot of volume. Nevertheless, we don't want to just have a growth of 1%, but we want to become significantly greater or grow, have a significant growth. We do not, or it's not the price, but a clear differentiation that will continue to drive our growth. It's important that we can do this differentiation over the next years.
How can we do it? We don't want to just focus once that someone has then planned his project and someone wants to be the cheapest. That is not our goal. What we want is to focus on complex, large-scale projects, partnership-based contract execution models, and also our design and business institute has been banded as well. We have in the design, and we can then include our execution know-how, and then we have less bad surprises then. Another tendency that we say not only in Germany, but also in Switzerland, we can also differentiate ourselves not just with the costs of the construction, but also with our, but especially with our specialization and our know-how. People have, our employees have to show that they are competent, that they also act in a very cooperative manner.
They go on to the project, and that is when then the cost of constructions are established. That's our approach. We also have a new standard from the SIA in Switzerland here that was published then last year. That is the model that we follow. Second of all, we also have a specialization in building construction and civil engineering. That's how we want to be perceived, for example, then with healthcare and also research labs. How do the patients move, or what are then the needs? That is a completely different, let's say, initial situation than someone who just wants to negotiate the price. We've also got then defense. Why? Because we have had a high demand. We have a certain expertise in that area because we have done some projects like Emmen and Dornhoff, the airport of Emmen.
Also this billion package has been used, and they have also invested then for additional defense measures by our government. Now we have started to be prepared, to get prepared then for this, and we have recruited specialists in this area. We are expecting to do more in this sector. Also in tunneling, I don't think that anyone can come and say that you are not a specialist then for tunneling after everything that we have done. We are in high demand at the international level. There is another area in Europe. We are also the leader in the pump hydraulic plants because we have the know-how for that. With all of these competencies, we also want to grow in a selective manner and geographically. Last but not least, I said it, we understand the buildings in the infrastructure because we also do the administration.
We know what is needed for life cycle costs, whether managing those. Everything comes in at a very early stage and into the planning, all this know-how that we have. That is why everything is still very relevant. We want to see, besides the organic growth, if we have other further opportunities organically and inorganically. I would like to come back to the next group. Implenia is growing, but we grow with differentiated offers. Next year, we will focus on our growth with this differentiation in order to achieve our higher margin expectations. I would like to come to the conclusion of my part. Silvan, the word or the floor is yours.
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Thank you very much, Jens. We have some dates here for our calendars. We have the year-end results in 2025 on March 4, 2026, and also our General Assembly on March 31, 2026. Here are the contact data for the people if you wish to contact them for questions. Now we'd like to move on to the Q&A. Jens and Stefan, could you please meet me here, come to me here on the stage? Whether you would like to pose your questions in German or in English, it doesn't matter. You can do it here in the room and on the chat. It's possible. Just please enter your questions in the chat, and we will then have someone who will give us a sign when there is a question to answer. Who would like to take the initiative? Who would like to pose the first question here in the audience?
Here I see a hand that is raised on the left. Please just say who you are and please ask your question.
Alexandra Bartsch from UBS. I have a question regarding Service Solutions. Mr. Vollmar, you said that you endeavor growth in the reordered parts and also in Wincasa. Is there going to be another M&A? If so, what is the financial, or what is the financial framework? That's one of the possibilities for growth. We also have inorganic growth activities. We have in Syria, I don't know if you know that. We have certain buildings for, you know, that have to do with physics and acoustics, and we have a great demand here. That is actually the organic. Of course, if there are other possibilities, we will have a look into it. They have to match our level of know-how, of course, and also match our portfolio.
If we have opportunities, we will have a look at these projects for sure. Yes, but for the investment grade rating, in order to defend that, would you be also ready to increase the capital for an M&A? No, that is not a topic at the moment. Absolutely not.
Thank you very much, Mrs. Bartsch. Are there any other questions? Of course, you may ask questions also in the chat. To whom may I hand over the microphone? The Fritz of the Zurich Cantonal Bank. A question to civil engineering. You have had very good proportional growth and also very good turnover sales. My question is, what role does civil engineering play relating to those 4% of margin? Thank you very much. That's a very good question. First of all, the margins, the reduction of the margins is really in a minimal area, and it was only for the first half year because we always have these, because of the seasonality. Are we happy with these margins? No, but we're not dissatisfied in every area. We still have growth in tunneling and also with bridges. Those are very attractive business activities for margins.
We have a certain potential for improvement. We're working on that. Civil engineering is still one of the very important significant drivers of Implenia over the next years in Europe and also in our domestic markets. We will have infrastructure construction. We are convinced that we will be able to improve our margins in that area because of the higher volume. You see it in the order backlog and also the pre-calculated margins. All the projects we were able to gain or to acquire have a higher margin than in the past. You probably noticed this. We have a record, or let's say, a highest value for the first half year. That is thanks to the new projects that we have acquired. Civil engineering will remain or continue to remain a very important part.
To add something, it's important that the new projects that we are acquiring are more in specialized areas. They're more like "me too" projects. The "me too" projects are the ones that we want to reduce. The development of the margin will be predictable in the midterm. Thank you very much. To whom can I hand over the microphone? Thomas Bommé, VVHE. I have a question to civil engineering. If you have a look at 2023, you had 2%. In 2024, 2.2%. Is it safe then to deduct or to interpret this that all projects are still included with a very low margin? You are the absolute specialist when it comes to tunneling or also urbanization or even the construction of bridges. That is something that needs to be verified in the future. There are not very many, let's say, companies who are capable of doing what you do.
If you can tell me in the midterm what your margin, what is the margin you're endeavoring or do you want then in civil engineering in the midterm? The 7.5% is the margin of the projects, Thomas. That is before we then charge the functional cost. Of course, we won't have 7.5%. Last but not least, we don't guide our divisions with margins. Of course, as you said, Implenia is specialized in tunneling. We also have higher margins. At the end of the year, we will also see an increase of margins. There's my colleague here in the front row who is nodding with his head. Otherwise, the growth would not be pushed if we thought that we wouldn't be able to achieve this. Please do not forget that the first half year cannot be compared to the entire year because of the seasonality.
There are certain prescriptions and there are a lot of things to take into consideration. We just have to follow up on the rest of the year to have a concrete picture. Okay, another question here in the audience. I have a question regarding the Buildings division. There you had a very good EBIT. Could you perhaps do a breakdown of that EBIT? How much has come from the transactions, perhaps also comparison to the previous year? How much was the inner transaction or how much is allocated to the inner transaction? How were the margins? Yes, the Swiss properties that was mentioned by Stefan, that is a very low, let's say, million figure. That was not a great driver of the change. The rest of the result is composed of more than half of the result comes from infrastructure and another part from real estate transactions.
If I'm just to talk about infrastructure, that made about 10% without the real estate part. Is that correct? Yes, yeah, absolutely. Perfect. Okay, to the right at the back of the room. I have a question to Mr. Vollmar if I can pose my question directly. What would you do or what will you do differently than what your predecessor did? What I notice is that there has been less staff now or there's. I don't think it's about differentiation to history or what we have done in the past. We just look at the next phase, what is right for Implenia and the topics that we have. Like I said, we want, we emphasize on differentiation. It is also due to the history because we went through a phase where we went through a transformation phase. In the future, we want to grow.
How we go about this, that's what I try to explain. Yes, of course, we have also lost certain employees. What we want to do and what we need to do is we have to make sure that we become or that we work in a more cost-effective manner. It's very important that at the levels of the functions that we can have a very cost-efficient support for all of our operative tasks and activities. That is one of the drivers or one of the reasons why the number of employees in the first half year has been reduced. That was a simple outcome then. We will see what the future outcome will be. As I said, it's not a question about doing something completely different than what we have done in the past, but we want to know what is decisive or what is very important for Implenia.
Who else would like to pose a question? Here at the front, Christian. Christian, you mentioned the example in Scotland with a nuclear plant. We haven't spoken much about Scotland. We have spoken about Switzerland and Germany, and you also have Austria and the Nordic countries. Will Implenia expand more in the future? Geographically speaking, will you have, will we be able to see more activities in other countries where you are not present, be it with buildings or civil engineering? I know that buildings are concentrated more in Switzerland and Germany, but is that also something that you might consider? That's what was mentioned, yes, on the last slide. Geographically, we want to grow in our lines of specialty. It is okay. You can say that 99% of certain projects just are not interesting for us.
If we can have, we go about it selectively, you know, and we verify, is it something that we can do with a partnership, for example? If we think or believe that we are successful, then we will do it. Why not infrastructure? In infrastructure, and from the past, we know that we have a lot of experience. Organic growth in infrastructure is difficult because you rely on local partners, subcontractors. You have different materials and also companies. You cannot offer that as, let's say, a general total contractor. You can't say, "I will construct that anywhere." You need the know-how. You need local partners. You also need subcontractors. You have to also better understand all the regulatory instances or organs. In real estate, it's easier. They have a lot of practice. You don't have thousands of suppliers.
You just have, you need a very good team who can then lead the projects. You have a bit of administration to do also. It's geographically much easier with civil engineering, not real estate he was talking about, than in infrastructure. Of course, we want to open up for civil engineering, but it doesn't mean that we are completely shutting the doors. No, we are still open. Let's just say that for the moment, we don't have any other countries in view, only the ones in which we are working for the moment. A last question. Perspective, you were speaking about the infrastructure in Germany and also about defense. You said that you all want to benefit those activities. I'm sure you're not the only one. What is your concrete strategy? What are the measures that Implenia wants to implement to have their share of the pie?
We need to see what are the capacities in Germany and what are the expenses because the public or the government has a lot of demand there. We will, of course, be able to benefit with an increase of our revenue. We are recruiting teams and also staff that are capable of leading these projects. It will have a great impact also on the level of the price because we don't have the capacities today to be able to execute all projects quickly. We have two effects. We are an attractive employer or an employer of choice. Our image in Germany is different than five years ago. We have invested a lot in the markets and for building up the markets in Germany. Today, we are able through cooperations with universities, we are able to recruit a lot of engineers.
Besides our infrastructure, we also have something we are building up for these special utilities. I think we have about 10 years of modernization experience. Today, we have a network of branches who work in their own markets. They work on other projects. Of course, they have their markets. In Switzerland, we have had a modernization that has been built up parallel to this. It didn't have any impact on the other projects. We are going to do that. Just as I said, for the data centers, for example, we are constructing healthcare and labs and also an organization unit for defense. These projects are going to increase. We're doing various things. The market is very big, and 70% more or less, I believe, are projects where the prices or let's say the costs will increase.
We hope that by entering these markets or perhaps winning these tenders or these projects, we will be able to increase our margins among other things. Another question from Lukas Baum from Kadens Capital. After a growth of 6.6% in the first half year, based on these growth expectations, what are your expectations actually for the entire year? We don't give any forecasts for the growth. We have our guidance that I mentioned today, and we can confirm that. What is also to be said, in the midterm, we will also increase our revenues. I think that is a clear thing. I don't want to make any forecasts for the concrete, let's say, growth expectations for the entire year. Do you see in the market based on very attractive volumes a general improvement pricing margin situation? Can Implenia now do more cherry picking?
That's what we are trying to say or to convey, actually, because of all this. That's why the environment is so, let's say, agreeable. We can focus on the partners where we can say these are partnership contractual models. In Switzerland, we call it a flat run or a race. It's not just we are being called upon for an execution of a project, and it's just all a question of negotiating the price. You can see it in the past. You have lose-lose and win-lose constellations or bad quality or that all of that that had led to projects. What we want, we want to create added value also for the owner. We want the owner to be happy in the end. We also want to be happy. Empirical data shows us that these kinds of contractual models are beneficial for all the involved parties.
We don't want to have, let's say, a side contract just to cover some risks. We have become more selective, and we see that despite the very, let's say, selective choice that we do, we can see that we still have a potential for growth. Mrs. Strassburger from Ananda asks a question in English.
Intake for half year two and 2026. By how much can you expand capacity going into 2026?
We're not going to give any guidance on the order backlog. What is clear is that once again, almost three months have passed, we have had a very positive order backlog, also in infrastructure. It's important to emphasize this because infrastructure is also a very important part of the group, and it has shown some growth. It will be able then also to continue on this growth path in the second half year. That's a positive development. Also, infrastructure in Germany, that's the good part about it. We have not only growth in Switzerland, we also have some in Germany, although they are somewhat behind. We think that our competence offers are still attractive. If I can add my two cents, do we have the resources? That is the question. What is also important to mention is that it's also very scalable, then projects.
We have our core competencies then for certain projects, but we also have subcontractors in our partnership network. They have worked for years with us, and they have a lot of experience. We can do, it's also scalable, the projects that we do, and that is beneficial.
are the drivers for the margin expansion to 4.5% and beyond? Is that likely to be linear, or is it going to be back-end loaded to 2027, 2028 and beyond?
Those drivers, it's nothing new. It's nothing surprising, actually. What we have to do is to improve our contemporary business, our present business. It has to do with value assurance. It means that we want to select projects that bring in a higher margin and new models organically, non-organically. Wincasa was also a very important part of that with Wincasa, Plano Vita, building construction, logistics. We have been able to do activities with a higher margin. We are building up or setting up this organic growth. It could also happen unorganically or inorganically. Anyways, we're on the right path. Perhaps with an M&A, it would last. It took a bit longer. Perhaps with an M&A, it would accelerate things. Can you perhaps be a bit more explicit about the measures for the improvement of the net working capital? We have already taken certain measures.
I think the first one is for projects that have to do with tunneling, where we have geological changes with, for example, leaks of water or something. That's a very good example because I think that's one that everyone will understand. For example, with the bore machine at the front, when you see them churning the rocks, sometimes you have greater rock particles. You have to have additional costs because you know that the borehead will then be used much quicker. That is something that we have developed ourselves. We have a camera technical technique that measures the rock particles. If it is bigger than what we usually encounter, in that case, it already starts recalculating. That is something that we can reinvoice. Intelligent artificial intelligence has noticed that the rock particles are much greater than usual, and so it recalculates the costs.
As of next year, what we are going to introduce is also an internal interest rate. For the incentivization of projects, we are of the opinion that we can emphasize this. We also had incentive structures within the net working capital. What we want to do is, for example, there are quite a lot of measures we could do. One is that we can, for example, change or adjust or charge the interest rate internally because that is when the employees will notice the capital costs something and that Implenia cannot do everything for free. Martin Hüsler has another question regarding buildings.
Will there be more?
The question to Buildings: during the second semester, will there be more purchases of land? What are your expectations for the EBIT for the redevelopment for the whole year? We have purchased a new plot. Real estate is going to remain a very important part of our strategy. We have CHF 30- CHF 40 million of EBIT on a very sustainable basis, and we have to continue to invest in real estate. We had a discussion on strategy lately. Perhaps we will not do much in greater areas because there aren't that many existing anymore, but there are a lot of opportunities in residential buildings, for example, where Implenia can use their local footprints. A very good example that we had, the sales that we had done, was a real estate transaction that we had done two years before.
It worked so well that we were able to conclude this, and I think that everyone agrees. In the earlier days, we wanted to know a question: is living in Winterthur something interesting? People were not quite secure. No one really knew what the market in Winterthur would be like. For example, this huge industrial building that we had, we were successful. I believe that what we do, we try and verify if we can also have a look in the peripheral areas. Is there something to do? Is there perhaps a potential project? What does it look like? We assume that we will do something smaller perhaps also in the future, be it on the purchase side or on the buy side or on the selling side. Thank you very much.
We have a question from which external and internal factors of the company do you base the significant increase of order backlogs? Which indicators do you use internally for your order backlog for the next quarters? You need a client who says that Implenia is the right partner for this project. That's what we need. We have an increase in the public sector. It has nothing to do with politics or environment, but it has to do with technical competence and the IPA projects we were able to gain and to win, for example. Otherwise, it's just the typical economic drivers that are important or relevant. Urbanization and also infrastructure within the cities and all that from which we could also benefit. What we do is, of course, we also have a look at the backlog from month to month to see, and that's where we get our transparency.
We know what are the projects that are being tendered, which ones are being executed in the value insurance. That's the ones where we see then from the tenders have we won or have we gained a project or not. Thank you very much. Cairo Capital asks.
The organic growth of the civil engineering business, excluding the consolidation of H41 Brenner Base Tunnel, Brenner Base Tunnel project.
In the order book, or are you talking about revenue? It's not specified. Okay, because otherwise it wouldn't make sense, would it? The $100 million are majorly from the H41 Brenner Base Tunnel activities, and there's a slight increase for the rest.
Explain the increase in contract assets and when do you expect it to normalize.
Contract assets?
Contract assets? Oh, I need your help on that. What does that mean? In German? Oh, you mean the positions in the balance sheet? Active assets or passive liabilities or what? What do you mean? The interpreter cannot hear the person in the audience, unfortunately, not using the microphone. You mean invoiced? As I said, our net working capital in the first half year has increased slightly. We need to improve that. That is driven by the claims, especially, and also the geological changes. It takes a certain time then to invoice that. That is the main driver. Let's say the main driver are these additional, let's say, orders that need time then to be invoiced. It depends also on the volume. That is the main driver. We are focusing and making sure that in the next half year that will decrease.
We have time for a few last questions here in the audience. I see a hand at the very back of the audience. Roland Arnold, Enfield Pension Fund.
Do you already know in advance what you are not going to do yourself but subcontract? In general, what percentage of the work do you subcontract and what margin is left when you do so? Thank you.
I think you have to differentiate between infrastructure and civil engineering. Thank you for the question. How big is the... The owners in infrastructure, it's lower because we have, so to say, ready parts that are already done or pre-construction. In subcontracts, you have others who work with metals, and they come afterwards. It's also a very low, let's say, figure where we are able to execute. In civil engineering, we have a higher...
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Value creation because we have a lot of blue collars. When we come to the tenders, we first verify the parameters. You have a demand for planning. Sometimes we also have a draft of the construction contract. Do we have the right person for the treatment of the tenders and for the execution? Are there any no-goes in that contract where we will say, "Very sorry, you cannot sign such a contract." We do not even start with planning or calculation. What are the subcontractors who are available? Do they exist? Do they have the right know-how that we want? There are certain that are able to execute this task or not, or is there a certain competency with certain subcontractors? Those are the typical questions. How high is the percentage, the share and percentages? It depends. Sometimes we do things ourselves.
Sometimes we find someone who can execute the work for us. We know what we are able to do at that moment, but it can also change. It is not the greatest question that preoccupies us in the tender or during the project selection meeting. The first questions that we ask are, do we have the competencies? Who is the client who is demanding this project? Those are the standard questions that we respond to. The margin that remains, you will see it in the results, won't you? Yes, sir. Are there any more urgent questions? Otherwise, we will remain at your disposal out there because we are about to close this Q&A conference. Thank you very much for your questions. Jens and Stefan, thank you for the answers. We are somewhat coming to the closure of our conference. We will expect you for our lunch outside the room.
Thank you very much for having been here. Thank you very much for your trust in Implenia. We wish you a lovely day. Thank you very much and all the best.