Sorry for this legal interruptions. So here we go. I hope that you sit on the call as well. So let me go through quickly the the numbers on the highlight of the numbers. So the grew by 6% on the top line on a constant currency basis, of which 5.3% is organic growth the margin adjusted operating income margins has increased to 15.7 from 15.3 bps or 40 bps improvement.
The profit for the period stands at the 1,000,000 the free cash flow at CHF 796 1,000,000 and the return on invested capital has improved by 290 bps to 27.2 percent. The Board of Directors proposed an dividend of CHF78 per share. Let me try that. He works. So during the year, we made 8 acquisitions across 4 business lines, 4 of them is in a agricultural light, 2 of them in consumer retail solutions, 1 each in Transportation And Industrial.
In terms of geography, 3 of them 3 of those locations were made in the U. S. A key market focus that I'm expecting will have more acquisitions in 2019. So, a key focus for the team in terms of our divisions, in terms of geography. After a full year's closing, we are not an organization in Spain.
Is the one that you see on subsequent events here. Linksys productivity that, if my Spanish is correct, This is an important step. It's the 1st step of our strategic diversification of our CV portfolio into what we call the business alliance beyond the cell division activity we do. So the business and concern part of the CPEs include training and consultancy. So this is the first step and you should expect more aggressive approach to this connectivity from the CBA teams there.
So this is a great update. I will leave it to Carla to give you more details on those figures that back for now to please.
Okay. So very good afternoon, ladies and gentlemen. So, Frank, you mentioned already our 2018 results are in line with our expectations that were shared actually during the Capital Markets sales in Bordeaux. And there are clearly 2 standout performances. 1st, the strong cash flow and second, the increase in on invested capital.
So let me provide you with some greater insights on how we generated these strong results by taking you through our P and L. You will remember that the first and the third column that reflects the full year performance for 2018 and 17 and the middle column contains the performance of 17 at a constant currency. We delivered a strong revenue growth of 6% and our revenue growth is well ahead of last year. We improved of 1,000,501,000,000 and it is the first time that STS has exceeded the CHF 1,000,000,000 mark. The adjusted operating income margin increased by 40 basis points of the same uptick as the first half of the year.
And as it was impacting the margin and the 40 basis points is actually really an underlying improvement. It's important for me to clarify two points regarding the uptake of the margin. First, we delivered a strong profitability in the majority of the portfolio and the key contributors are GIS Minerals CBE, Environmental Health And Safety And the Industrial Businesses. And this was actually driven by strong market fundamentals as well as efficiency gains, which positively impacted the margins. So 2nd, we delivered a margin uptick resulted from the initiatives and the programs supporting the 2020 plan.
And this includes a continued review of the portfolio based on the dashboard principles. Operating income increased by 5.7 percent to 1,000,000 and was impacted firstly by the correction of the work in progress and unbilled revenue over statements in Brazil and related additional provision, both together amounting to 47,000,000 I can confirm that we have and that the million covers the cost related to the events. The second impact on the operating income is related to the cost amounting to 1,000,000. So considering both, this led to incremental nonrecurring costs amounting to 1000000 year on year. The profit for the period amounts to 1000000 increased by 8% while the profit attributable to equity holders increased by 3.4% as a result from the increased taxes.
The taxes increased by 1,000,000 and as a result of the increased taxable profit and the increase of the effective tax rate by 2 percentage points compared to last year. You will remember that last year's effective tax rate was favorably impacted by the reduction increased by CHF 2 up to CHF 84.54. So before sharing information about the bottom line results, I'd like to return to the top line growth and break it down in into the individual businesses. So looking at this slide, our top line growth at constant currency amounts to 6% of which 5.3% is organic and the organic growth is driven by the continued strong performance across the majority of the businesses. The gray part reflects the impact of the acquisitions made 20172018 as it's on a 12 month rolling basis.
The group acquired 8 companies in 2018. And we continue to focus on small to medium sized companies to expand into markets and create more diverse service offerings related to the focus areas of And as you can see on like unlike last year, when major currencies appreciated against the Swiss franc, Our revenue was negatively impacted during the first three quarters, this negative ForEx was offset by stronger euro and Chinese renminbi, but both currencies also weakened against the Swiss franc in the last quarter of there are several important points here to highlight. 1st, each of our businesses organic growth as indicated by the orange bar and the most significant acquisitive growth indicated by the Black has been achieved in the AFL, GIS and consumer retail businesses. Minerals retained its outstanding growth momentum on the back of a continued market development in the second half of the year. And this resulted in year's double digit growth treats saw a robust amount in energy Minerals.
Haochem saw a strong increase in sample volumes in both commercial and on-site labs. And the metallurgy business achieved a big performance particularly in Canada and Australia with a high demand for pilot plant testing. Similar to the Minerals business, OGC continued to grow momentum created in the second half of twenty seventeen and this resulted in an organic growth of seven point 2% for the full year and the growth is mainly driven by double digit growth in plant and terminal operations fueled by contract wins in the U. S. As well as volume increase of existing contracts.
Trade activities realized low single digit growth as a result of increased volatility in commodity trade. Our trade activities were particularly strong in Asia. We experienced also an improved growth in Europe, Africa and the Middle East. GIS continued its strong revenue growth grew its business by 7.5% of which 6.3% organic which is a significant improvement versus the breakeven position in prior year. And this growth is mainly driven by double digit growth border controlled services as transit, tracking and scanning services and solid growth in the single window operations supported by strong trade volume CBE continued its journey of solid growth, resulting in a growth of 7% of which 6.2% is organic and has achieved this high single double digit growth in the management system certification which was driven by the transition to the new 2015 standards during the 1st 3 quarters of the year.
And additionally, also, performance assessment improved its growth in the second half of the year. Looking at consumer retail services, they realized a growth of 6.2% of which 5.2% organic And similar to the first half of the year, the segment electronics and electrical continued really its this growth on the back of increased volumes, mainly restrictive substance testing by addition of new substances to the applicable regulations. We also continue to deliver double digit growth in the cosmetics, personal care and household And the overall consumer retail services growth has been impacted by the slowdown of the growth in soft lines as soft line market conditions remain challenging mainly in China. Environmental Health And Safety, they realized a strong growth of 5.7% mainly driven by mid single digit growth in health and safety services. This was complemented by high single digit in field monitoring services and a key contributor to the growth is regulation enforcement all around the world.
This is further accentuated by a new push in developing geographies, which is reflecting in the double digit growth in sustainable asset solutions. Another new revenue driver includes innovative packages I'm also happy to share that the industrial business continued its revenue growth during the second half and we achieved a growth of 4.8 percent of which 4% organic. And these results were driven by double digit growth in core areas in 2 core areas of the business. 1st in the oil and gas supervision and inspection services supervision achieved a strong growth in South And Central America while the growth in inspection services is mainly related to shutdowns in Asia, Europe and the Middle East. Second driver is in the area of infrastructure and construction activities.
Our continued development area of the material and construction lapped activity in the major regions is having really a positive impact on this growth. Aga Garcia Food And Life, they realized a growth of four point 4%. And this is a combination of 2 elements. Firstly, we achieved a double digit growth in the food activities and a high single digit growth in life science, including the clinical research, so fully in line with the strategy and fully in line with the expectations. Unfortunately, the strong growth was partially offset by the impact of weak market conditions in agriculture related mainly to climate conditions.
1st, the weather conditions impacted seed and crop and second, trade with exports were negatively impacted by the summer heat in Western And Southern Europe. And in addition, the prevailing market conditions remain also remain challenging for the contract research activities. It brings us to transportation. Transportation is close to breakeven, while organic revenue slightly declined, and this is fully in line with our expectations given the 2017 nonrecurring contracts in the U. S.
So our colleagues in transportation were successful in offsetting the 2017 impact of this contract as well as volume pressures related some specific vehicle inspection contracts by delivering high double digit growth in the components, the engine and the battery testing services across all geographies, but particularly in China. All 3 regions contributed positively to the group's revenue growth with the Asia Pacific and the Americas region being the real key drivers So the Asia Pacific region delivered the highest growth of 7.4% slightly below last year. And China's growth which is outside consumer retail services particularly strong in agriculture food and life OGC CBE and environmental health and safety and is driven by strong growth both in the domestic market and the international market. Australia continued nicely on the growth path, realized a high mid single digit growth, which was mainly driven by the double digit growth in their narrow business. Acquisitions made in industrial agriculture food and knife and consumer retail services helped the Americas region to achieve a growth of 7.5 percent of which 6.4 percent organic.
And the organic was actually growth was positive in both subregions and South America outperformed North America. And this was driven by a double digit growth in Minerals And Industrial. The organic growth in North America was mainly driven by the double digit growth in OTC and as culture, food and life. Total in organic growth relates to the North America region, which remains focus areas for future acquisitions. Europe, Africa and the Middle East achieved a good growth of 4.1% which is in line with last year and this growth is mainly fueled by double digit growth in Eastern Europe, Middle East region, and it's mainly driven by Minerals, Consumer Retail Services and OGC.
We concluded a year with 90,000 with 90 7368 FT Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Es, a 1.7% growth versus the end of last year. And our strategic object to make our count increased by 3.1% year on year, which is well below our revenue increase of 6% for the same period. Our aim of managing our FTE growth is ultimately to improve our bottom line Hence, I'd like to provide you with some details regarding the adjusted operating income growth during the past year. So year on year, our adjusted operating income increased by 8.4% at constant currency and this has been primarily driven by organic growth. So the inorganic growth of 7,000,000 included here in the gray box related to the 18x positions that I pointed out earlier.
And the blue box reflects the currency exchange impact on the adjusted operating income which is neutral and the gap between the negative ForEx impact on the top line and the neutral ForEx impact on the bottom line is driven by the different relative rate of the currencies in the revenue and in the adjusted operating income. So breaking down our uptick of the adjusted operating income by business Starting of course with the star performer GIS, I really believe that our GIS team member be recognized for this performance and uptick of 7 twenty basis points up to 28.7 percent. And this is this uptick is beyond the partial recovery of the bad debt provisions clearly in 2017. But instead the margin gate really relates to the strong top line growth, a sustainable operational efficiency improvement related to automation, digital inspection, in the mature activity of the PCA as well as the start of new profitable contracts around the world. Environmental Health And Safety improved percentage points up to 11.1%.
And these results are based on improved performance in the U. S. As well as increased volume in health and safety work in Europe. Moreover, ongoing operational efficiencies in Asia Pacific And Europe and a positive activity mix contributed to this improvement. Our middle notes business, they continued to deliver margin improvement by growing the top line double digits.
And the team continued to work really successfully on improved LEAP utilizations and LEAP operational efficiencies. In addition, they add a number of profitable contracts to the portfolio which are laying a good foundation for the future growth and further margin improvements. Despite the negative effect of the Brazilian event industrial increased its profitability by 80 basis points and the underlying profitability improved mainly as a result of prime restructuring, a better market outlook, expansion of the lab testing network, and portfolio rationalization focusing on profitable segments. Agriculture Food And Life, They recovered to margin in the second half of the year, mainly as a result of the margin improvement in food, life science, and clinical research, benefiting from past restructuring, business turnarounds and efficiency on the back of increased volumes. Consumer Retail Services remains by 4th the main contributor of adjusted operating income And given the importance of this business, I'm happy to share that in line with expectations, the margin recovered in the second half of the year, and it improved year on year with an addition of 40 basis points.
This has been mainly driven by the strong volume growth in the electric and the electronics and the productivity gains across the portfolio. Strong top line in the CBE enabled a further optimization of capacity use. And this together of course with the ongoing benefits related to the shared service center led to an improvement of the margin of So the pressure on the OGC margin is due to a combination, first of all, of the portfolio mix, driven by the double digit growth in plant and terminal operation and second, the continued investment in the U. S to adjust the business to the changing competitive environment in trade related services. Breezes to Transportation, a decrease of the margin by 60 basis points, which is actually a result of a couple of elements.
1st, the testing and field services margin in prior year was positively affected by the nonrecurring contracts in the U. S. 2nd, rate freeze in Argentina has not allowed us to compensate for cost inflation till the middle of the year. And third, we experienced a slow start of the Uganda road safety in program, which impacted the profitability of the statutory services. Finally, we also experienced resulting from the liberalization of regulated markets in certain geographies.
But as said, the testing services which are now representing 1 third of the portfolio improved its margin year on year due to improved utilization the lab network, which was fueled by the strong global demand. Folix to the business improvement, I'm of course happy to share the 2018 savings of procurement which are exceeding the targets. And of course they remain a very important contributor to the margin development of the group. And the split of the savings by nature is in line with the projections that I gave during the Capital Markets Day. So capital savings amounting to approximately 30 presentation.
It brings us to the balance sheet. And so of course, the balance sheet remains one of our strengths and we would definitely like to keep it like that. So I just throw your attention to four key points here. First, our net debt of $738,000,000 slightly increased as a result of the finalization partly as a result of the finalization of the 2 year share buyback program that started in 2017. So we completed the program in 2018 And during that program, we purchased approximately 106,000 shares for an amount of 250,000,000 of which 1,000,000 in 'eighteen.
So it's our intention to open a new 12 months share buyback program for an identical amount. 2nd, the decrease in trade receivables and unbilled revenue and working progress is partly related to the application of IFRS 9 retrospectively from January 2018 onwards. And the adjustment to the carrying value amounting to 1,000,000 has been reflected as an adjustment to the opening equity. In addition, unbuilt and with balances next to the continued focus on reducing our accounts receivable under the networking initiatives. 1st, the increase in the long term loans is a net effect of 2 factors: 1st, the reclass of 375,000,000 bonds that will expire in March 2019.
And second, the issuance of the 400,000,000 in new bonds that happened in the fourth quarter of 2018. The effective tax rate of the current bond portfolio amount to 1.26% and the average bond maturity is 5.2 years And after the redemption of which is a great interest rate, average interest rate. 4th, we generated a mark leading return on invested capital of 24.2 percent well above last year and this increase is mainly related to the increased profit decreased net working capital as well as the effect of the IFRS 9 and ForEx on the assets. Brings us to the cash flow. Most of you will know that we have a track record of generating a strong cash flow at least based on the past few years.
And also this year, we generated an operating cash flow amounting to 1,074,000,000. And this is only the second time in the history of the company that we exceeded to 1,000,000,000 mark. The increase versus last year is mainly related to the increased profits and decrease networking capital despite the solid uptake of our revenue. Free cash flow amounts to $796,000,000, an increase of $91,000,000 resulting from the increase of the operational cash flow and partly offset by slight increased investments in CapEx and acquisitions. CapEx as a percentage of revenue amounts to 4.5%, which is slight below last year.
And the increase in the cash outflow from the financing activities is actually the net of 3 movements 1st, the dividends increased by 1,000,000 compared to 2017. 2nd, the net of the share buyback and the treasury shares led to an increased cash outflow of 1,000,000 and finally, group placed a bond of 1,000,000 in September 2018 versus 3 75 the year before. As you can see from the slide, we really continue to manage our net working capital in very disciplined manner. And our performance is clearly ahead of our expectations, but resulting in a positive cash movement of 1,000,000. And this is a significant achievement given our top line growth And net working capital as a percentage of sales amounts to 0.6%, which is a new historical low.
One of our capital allocation priorities is to invest also in organic growth through CapEx And our CapEx investment for the year amounts to $304,000,000. So that represents 4.5% of sales And this percentage is slightly below last year. And there are some positive reasons behind this The decrease is in the CapEx intensity is partly related to the attractive pricing and asset redeployment driven by our procurement initiatives as well as business mix. The majority of the businesses had a stable CapEx intensity with the exception of minerals, but there the increase is directly related to the strong development of the global LAP network. 2 thirds of our CapEx investments are related to growth And our primary CapEx investments, they were made in Consumer Retail Services, OGC And Agriculture Foods And Life.
Together with Minerals, these 4 were the most capital intense business and they represent actually 2 thirds of the of the group's CapEx investments. As I mentioned already, the 2nd standout performance of our financial performance relates to the improvement in combination with a decrease of networking capital, the impact of the IFRS application on the receivables and built revenue and with. And you also see that it has a positive effect of Frisbee on the uptake of the asset turnover. So I highlighted our strong cash flow position, which actually allows us to fund the organic growth as well as our acquisitions, but at the same time reward our shareholders. And this gives you a bit of a perspective on how we used the funds that were generated.
70% of the funds were used. So to finance the dividend payments and the share buyback program and the remaining 30% was focused on the CapEx and the acquisitions but I make it clear that our aim is to continue to find a balance between investing in the long term growth of the business while also of course continue to recognize our shareholders. Brings us to an overview of the performance in the second half of the year. Four key points here to highlight. 1st of all, solid revenue growth off while the organic growth amounts to 4.9% equal to a year ago.
And it's mainly driven by an improved growth in the consumer retail services and industrial, at least when you compare it to the first half of the year And the ForEx impact is slightly more significantly, sorry, negative more negative what we experienced in the its Renee towards the end of the year. The adjusted operating income increased percent compared to a year ago and the adjusted operating income margin amounts to 16.7 percent, so same uptick as in the first half. And the biggest uptick of margins between the first half and the second half has been realized by our agriculture future life Industrial, CBE And Consumer Retail Services business. 1st, the 13.1% increase our operating income, mainly related to the fall through of the incremental adjusted operating income partly net of by the restructuring costs amounting to 1,000,000 in the second half of the year. And then finally, the increase in the net profit after tax by 8.8% is the net effect of the increase in the operating income and increase of the effective tax rate by 2 percentage points versus the second half of last year.
So the slightly decreased growth in the second half is partly related to the tougher comparables of last year is also related to some specific business related reasons and that was most noticeable in transportation and GIS, which was partially offset by accelerated growth in Consumer Retail Services And Industrial. Brings us to the margin by business for the second half. And I'm happy to share that 4 out of the 9 businesses improved their margin in the second half of the year compared to the second half of last year. And I'd like to recognize 3 businesses in particular, agricultural future life consumer retail services and industrial as they grew their margin with by a minimum of 110 basis points. So the profitability improvement is the net effect 1st, the operational efficiencies second, the restructuring benefits, 1st, the measures resulting from the review and finally also the procurement savings.
Transport, OGC, CDE and GIS had a lower margin in the second half of twenty eighteen compared to the second half of last year. And the decrease in the OTC margins mainly related to the change in business mix and the investments in the North America trade business to adapt to that competitive climate the decrease in GIS margin is mainly related to the positive impact of the collection of long outstanding receivables in the second half of twenty seventeen. So bringing that's to my conclusion. So just leaving you with some key financial highlights that my OC colleagues but also the worldwide team helped us to deliver. And I'm actually very happy to be able to conclude with these results, revenue growth of 6% of which 5.3 percent organic, fully in line with the guidance, an increase in the adjusted operating income of 8.4 percent reaching a historical mark of an adjusted operating income beyond 1,000,000,000.
Profit for the period increased by 3.9% up to 1,000,000 investments of 1,000,000 in CapEx and acquisitions and an operating cash flow beyond the billion mark brings us to a return on invested capital of 24.2 percent and based on this good results. The board proposed a dividend of CHF 78. So I'd like to pass back to Franky who will give an overview of the individual businesses.
Scenario. Yes, a quick overview of 2019 outlook. I mean, Kala has given you a qualitative details about 2018, so I will not go through. So the slide shows for web into the 'eighteen, but I'm more focused on 2019 to save a little bit of time as well. So if I start with, I think we're good for the live, The trading condition remained difficult in H2 2018 due to weather and overall market conditions.
So For the first half of next twenty nineteen this year, the market condition will remain difficult. So we're looking at the similar conditions for H4 H2 last year, but with the improvement of the conditions, possibly recover in the second half of the year, depending on their crop condition and so on. For the food or life, everything is according to the plan. The expectation we're looking at to the 2019 is similar to 2018. So, strong top line growth strong bottom line margin improvement as well, especially that we have new operation coming online in North America and in China.
So we'll enhance our network of laboratories for the licenses and food sectors as well. If I go into the MENOS sectors, I just expect another strong a good year for the Minerals, but just as a comparative compared to 2018 will be tougher. Additional volume in our commercial lab and the start of some of the on-site lab that we have started to build in 2018 will help to support the growth on the margin throughout the year. [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Look at Oil Gas And Chemicals, we secure quantitative contract the field integrity, PTO businesses as well as upstream activities. So these new contract will support the growth for 2019.
On the volatility of the oil price, it certainly creates some uncertainty, but it's not much different than we'll see in 2018. So I would say on that aspect, I don't see any significant differences from what I've seen in 2018 versus 2019. So all in all, the margin should should improve with the efficiency that we've been implemented to do into the 'eighteen and the total growth will be similar to what we've seen seen in, in 2018. On the consumer activities, so in fact, the consumer business is the one that is most affected by the the Chinese U. S.
Trade disputes currently. We've seen an impact towards the end of quarter 4. While we were quite strong in moving to the 2nd half, we've seen a more, more clear impact on the towards the end of quarter 4. So moving into the first half of next year, I'll take 2019. So it's subject to some resolution by March.
See some impact on the first half and with the good recovery and back on track in the second half. This is, again, subject to some kind of positive resolution of the dispute by the March deadline. But on the other hand, besides China that's looking at this top arrears slowdown, The remainder of the network, please just remind that the CRS to consumer network is composed of 70 affiliates and not just China. The regular network has had a very growth during 2018. And we expect that to carry on in 2019.
The countries I'm talking about is Turkey, India, Bangladesh, Vietnam and even in some of the European countries like France and Spain, we had quite solid growth during 2018. CLOS to grow organically. The optimization ratio that Kala mentioned earlier will keep taking effect in 2019 to support the margins. For CPE, as expected to post transitions of the ISO standard by stepped on the deadline, and led to a kind of slowdown toward the last quarter of the year, which was already flexible times during the different discussion in the past. And then I expect this trend to carry on into the beginning of 2019.
This is still this hang on effect on these transitions of the new standard But on the other hand, as Carlos also mentioned, the performance assessment, the training, the consultancy business that we have started has a very strong pipeline. So all all combined CB's targeted moderate growth in 2019 with broadly similar margins, I would say. International Services, well, Industrial should continue to focus on the high margin segments during 2019. The focus on those high margin segments are testing, supervisions and supply chain inspection activities. And we will we are looking at discontinuing some of the lower margin activities such as maintenance work that we do in some of the countries in our North And South America.
So this is of segment that we decided to resolve the dashboard, but it's not contributing much to the broadband. We're looking at the these current activities. So later might be impacting between the growth new growth in the short term. But all we know the focus of key of interest show for 2019 is the improvement of the margins. When I looked at Aramon having safety.
Multi conditions remain favorable with increased precision and demand from the private sectors as well for industrial hygiene and haven't said these services. So I expect both need to grow as we continue to grow and the margin to improve, to 2019. So, no more change in the same kind of development of vaccine in 2018. Transportation. I we flagged I flagged the fact that we had the lack of diversification during our Capital Market Day in Bordeaux last year and These are lack of diversification, indeed, putting some pressure on our transportation activities.
During 2018, towards the end of 2018, we've seen an a couple of additional contract in the regulated field activities has been handed. So, this would put some negative pressures on on these activities in 2019. But on the other hand, the testing for the photo that we have into the automotive part material testing on bone air training and battery has been growing very strongly and this will support growth. So, the 2 combined, I'm also expecting a moderate growth in 2019 with March change to the expectation of margin to improve because of mix on the activities between testing, which is high margin as some of the older activities that we've seen in the past. And then I will conclude with, Orange Insurance Services, a similar market condition, which support the growth of our PCA and single window services.
A new mandate on larger market share will help us to accelerate the growth in the transient net and scanning activities. Then to finish our Renable E waste services, which runs our portfolio. So as a result, I'm really expecting Jeez to go to the high single double digit for 2019. So, with that, I think it will give you a good idea we're looking at per business line. So, the guidance for the interest group for 20 nineteen's solid organic growth higher adjusted operating income on the brokerage cash flow, which is similarly to what we've seen in the last year as well.
Just a reminder on before I conclude, a reminder about the Chinese U. S. Trade dispute. One that around 4% of global revenue is linked to this U. S.
Chinese trade link on the any further escalations beyond March will have a negative impact on our operations. This is what we also flagged during the Capital Market Day in in Bordeaux. For the moment, this escalation is not our base case. We have we're waiting for the outcome of those discussion by March. In any case, these contingencies plan that the government has put in place in case of a really negative outcome of those discussions, but again, it's not the best case in which and based our assumptions for NexSys guidance.
Then to finalize the presentation and go through Q and A. Just to remind you about the outlook 2020 that we have set during the Capital Market Day in Bordeaux is mid single digit organic growth, actuator M and A activities and remaining discipline on returns. Our adjusted operating margins are both 17% by end of the period, strong cash flow conversions, solid return on invested capital and the dividend distribution are lease maintained or in line with the improvement of net earnings.
Your name and institution. And let's keep those two questions. And if
we've got time at the end, we'll have some more.
Yes. Ed from Morgan Stanley. 2 then, procurement savings, you say the mix was in line with what you said at the Capital Markets day, but your forecast for the Capital Markets Day was about $65,000,000 and it came in at $75,000,000. On a way you were positively surprised in getting those savings and where you think they
Hello, everyone. Thank you for joining our call. I just wanted to state that If you do not have a question, please hang up from the line and go directly to the webcast and
Did you want me to stop this?
I would stop it. I think mine is shorter. On the procurements, savings. The upside was mainly, I would say, in the cost avoidance and the CapEx. So it's also that it changed to slightly, I would say, in the mix and it came from some initiatives that were running and that gave additional clearly I would say benefits beyond the initial expectations?
For the
CB, in fact, The business we look at with the consultancy on operational consultancy that have some of the SMEs to improve their quality control and positivity and so on. The reason for this push is, is a priority for CBU and C's on the group level. We have different priorities that I mentioned during the board meetings about and so on. CB, because the service vision business is the steady business, we have the chance in 2018 to have the transition back road. Driven the market even faster than expected.
But in terms of diversification report of Peru, it is important for each of the assigned to have a balanced portfolio, it's own. So if you look at the services business that we've been running for quite some years, it is important for the CB's teams to start it obviously for into 20 activities that we have developed over the past 3 years. The consultancy activities, which is quite interlinked with the training as well as some of the services business that we do will be the extension of what the business evolution is going to be for this business line. So, the market entry is a question of getting the white people on board. So, we can, in some country, we're doing that Windfield, when we have the expertise in some of the country, we're just buying the right expertise.
So it's a combination of both greenfield and, and activity. Obviously, the acquisition path at this point in time would be faster on the multiples that we're looking at on discount sectors. So what we want to do is, with reasonable, let's say. Going back to my discipline returns. I agree I'm diversified.
We'll probably
be looking at growth next year.
If we haven't diversified over a period
of time.
Absolutely. We're still looking at, as I mentioned, we're still looking at growth for the year next year, but the possible need to evolve. As well.
Could you just give us
an update on your current thinking about disposals? And how should we think about this year's margins in light of that? And when you look at the group and underlying margin development, what do you
think is feasible this year?
First of all, starting with the end of your question, I mean, we guide for an improved margin. So we will not be more specific than that. Secondly, where do we stand? You will remember that we were targeting this 350,000,000 of of divestments. There is one major part that is advancing in line, I would say, with the timeline.
And we are very active on that one and we expect to bring more news by the first half of twenty nineteen. Yeah. So it's progressing according to plan. And that will definitely, of course, lead to an improvement have an effect on the margin. Yeah.
It's Alex Smit here from J. P. Morgan. Two questions just on OGC to start with. You talk about confidence having improved over the course of the year, but obviously uncertainty arising towards the end of the year with the decline crude price.
I wonder if you are seeing any project cancellations or delays, which might suggest that growth could stall in 2019. And secondly, Carla, just on the working capital movement, which was very impressive in the course of the year. Should we expect any sort of bound in 2019, which would mean that that ratio would increase again?
Yes, yes. Because just to clarify, there are actually 3 buckets that are driving that improvement. First one, there is an, I would say, representing, you can say, each bucket 1 third of of the improvement. The first one is related to a real improvement of our payables. So we have been working very very actively on standardizing the payment terms.
So that led to a further improvement blue, but the second bucket is actually related to the write off of the unbilled and the written Brazil. So that is a nonrecurring one And then the 3rd bucket is more related to non operating items. And so you definitely should should forecast an uptake of the net working capital in 2019. I would say in line with what we have seen more the year before, I would say operating approximately max 2% of sales and then take into consideration of course, also the projected growth.
Yes. For the oil and gas, in fact, no, the trade activities has been quite stable closed the year. I know the price has dropped toward the end of the year, but we have not seen a major dip into our activities, I would say. The rental of auto flow is just one part of auto flow. The rental of auto flow like PTO Activities and Moafieu, but it's cheap natural gas that you see in law firm recast, so it's leading to a more activity into physical, sectors, affiliated land and so on.
There will also see some increased activities on the upstream, especially for the national oil companies, those with international oil companies. So the market landscape is pretty much the same we've seen towards the end of the year and earlier during the year and expecting that to move to similar connectivities in 2019. Tom?
Good afternoon. Tom Sykes from Deutsche Bank. Just on the ROIC, firstly, do you think you're a little bit ROIC obsessed at all? I mean, I know that it is strong, but Your PPE is essentially the same as 2015 and you used to be able to grow the top line and grow the invested capital and now you're growing the top line, but not growing invested capital. So I know there's a lot that goes into that and that's been part of this structure, part of the shift down in CapEx and the lowering the intensity, but are we going to see that pick up at all And then just a 2 part I made on China.
Could you just explain what's happening to your domestic, orientated Chinese business? Given people's views on what might be happening to Chinese GDP growth. The market seems a bit more relaxed on trade. Now and you're not. So why are you so sure that your activity will slow down and consume please.
Okay. I think the first one, I don't think there is to discuss China Chinese next week. The return on this, I don't think we are obsessed with it. It's also of course, you know, a combination of elements First one, of course, the uptake in the profit, you know, it's very sensitive to the profit that this one and then you have a combination of these elements net working capital. As I just explained, you have the impact of the application of the IFRS 9 which is coming and you have also provided our Brazil events, which we are less proud of, but it has a positive effect on the asset.
So it's not a question of question. It's a good question of combination. Yes.
For China, you're right. The the news comes out every day or every 2 days about the change of directions. I think beyond the headline of the news, the reason why I'm looking at the more slowdown that we've seen towards the end of Q4 is they will feel out there in terms of operations, supply chain and so on. When the news is all news, then the operation has to restart. So, there's always a time lag from the moment where people say there's no more crisis, there's no more dispute from the factories.
They say, oh, great. Now, we can do inference, we can get the people, we can get the machine running. We can start to order the materials to start on the prediction, there is a delay. This is what I'm saying in H1 is a concern because there is certain gas credit up to now. Even so if they're all happy with saying that everything is fine back to order, there will be a certain delay for everything till we start for for ourselves to get the orders in orders and for factories to get the projects running.
So, this is one aspect. If everything goes back on schedule by March, second half of the year should be back in order versus the first half where we'll be seeing some of those impact toward the end of the year that will be dragged on. On top of that, we have a Chinese New Year coming end of this month, again, next month. So we'll be having a feeling impact on the totality of the trade. So, see what we've seen on the field.
The domestic market, I'm still comfortable with this market. I've mentioned that we're doing more or less fifty-fifty about what we do in China, 50% linked to domestic market over the 50s into the trade.
So we'll be having a feeling impact on the totality of the trade. So we've already seen in the field. On the domestic market, I'm still comfortable with this market, I mentioned that we're doing more or less a fifty-fifty about what we do in China, 50% linked to domestic market or the 50s into the great international businesses, all business combined. While there's a lot of discussion about the slowdown. So in terms of the economy in China, the reality is, compared to size of the TIC sectors in China where we do currently is what is small.
And the the Chinese market, the government still having schedules to open up some of those segments and we're seeing opportunities every day for us to get into just mentioned about the expansion of our life sciences lab in China, which is one good example of what we're being able to join achieve as well as some of those calibration activities to also do insurance and so on. So the market itself indeed, the total may be swing down, but because of the size of the market, which is what we do, we still see a lot of opportunity for us to take advantage of this market that we're not tapping into.
Yes, it's Amit Brunard from Kepler Cheuvreux. 2 follow-up question to Tom's questions. So actually, if what the economy was to slow faster than your base case, what flexibility do you have in your cost base? Mention some productivity initiatives, but also you reinvest a lot of that. The staff growth of 3%.
In fact, it's translating to 6% salary increase. So, I'm just wondering how flexible your P and L is to absorb a bigger shock in economy is really in trouble this this year. And then on the capital investment side, M and A, you alluded to M and A said to accelerate, we have this disposal program that is likely to be proving the margin but potentially dilutive to the net earnings. So, how big the M and A pipeline is for this year in particular?
Do you
want to do that though? Okay. For the first questions about China, we do have contingency plan. Obviously, one of the key aspects is, is restructuring. I mean, I don't want to to preempt this, for the sake of respect to my colleagues in China.
We have contingency plan, but, certainly, if the market global economic situation is deteriorating significantly, one of the key aspects of our contingencies. You need to look at the size of operation in China and start to to design some of those activities and scale back in terms of volume and, operational, capacities. So this is a feasible because we have a timeline. Typically after Chinese New Year, there's always a quite high turnover and this is pretty much a good timing for us to to look into that in the deeper in the deeper ways to, to ensure that we have already, restructuring of the activities. But forthcoming is not our base case.
So I'm just giving a hypothetical answers here, but we do have a contingency plan. For for the for the acquisitions, so we do have a strong pipeline acquisitions. The focus is not different than the focus of our activities which is uh-uhafl. Life sciences particularly in food as well in different geographies CB in the less extent to the consulting sectors, transportation and aerospace sectors, consumer goods into cosmetic and personal care sectors. Do I miss a few?
So these are quite strong pipelines. So I I don't have everything in mind, but we do have a strong pipeline and this is a question we're executing data and ensuring that we get the right price for the right return. So we're working on that.
K. If there's no more questions in the room, should we go over to the call, please?
Yes. Before we take phone questions, we have received a question here via the webcast from George Gregory from BNP Paribas. So I'm just gonna read the question. Could you please reconcile the cash flow from adjusted EBITDA to net operating cash flow? And the second question from the same person is, could you quantify the likely impact of contract exits in industrial?
The first one, I if okay for you, George, I will take that one offline. And the second one, the impact of, contracts existing in industrial, you mean, on the cash flow or on on the total?
Not on the property, because I mentioned this as
well.
Those are many contractor we have in, in, in a South African, North America, in term of maintenance work. I don't have the exact numbers here, and I'm not sure whether we should be giving these numbers. But I will have a look. Maybe we can address that with very afterwards. I don't have the exact numbers here.
George, I'll get back to you after the call. And should we go on to the webcast, or or have you got
any on the dial in?
Yes. We should have a phone question right now. So we'll put the caller through. Might take a few seconds.
You
are entering the sub conference.
A few more seconds, apparently. Okay. Well, I guess I'll ask you another questions that were received in writing from David from Bank of America Merrill Lynch. Here is his first question. Can you please comment on CapEx inspection activity within your Minerals division?
Was there a volume recovery in the second half of twenty eighteen.
CapEx inspections, to understand an inspection link to the capital expenditure of, of the minimum amount side, I would assume. I would say not the big segment for us. We are more focused in the past from our international services into the oil and gas where when the CapEx has kind of slowed down, we had a lot of, problems, but we have resolved this, these issues in the oil and gas sectors. The middle sector is a rather small sectors for us in terms of capital CapEx inspection, I would say. The mineral business itself is mainly focused on the on the natural resources coming out of the mine, but the inspection for for the mining related activities is not the big activities of us.
Whether we have seen a pickup, I'm looking at, in, in, my my colleagues, VIM, the head of industrial is telling me, we've seen a pickup in, in South America from the other model version we're doing. So, yes, in South Africa, mainly.
Thank you, Frankly. There was a second question from, the same person. Do you expect any adverse impact from the US government shut down in the first quarter of 2019?
Not from what we've seen so far. We're not really linked to to, to what's going on there now.
K. Could we move to the call again? Could you try and get me to this call?
It seems that we are having some, technical issues, but we'll try one more time. Okay. Thank you.
Any more questions on email?
No. That was the last question we received. Okay.
Would would would anyone like to ask another question in the in the room? Okay.
Just interested because there's been a few months since the Brazilian accounting problems came out, but have you put any incremental safety measures in place to assure that doesn't happen again? What what kind of
Yeah. I mean, we have definitely put a number of, measures in place. This measure, they really vary, you know, from strengthening the internal control. Maybe first starting with complete change of management. So quite some senior positions have, have, have new people there.
Secondly, really strengthening the internal controls. We also I would say reviewed, you know, the complete ERP platform. There are also strong, I would say, red flag, red flag scorecards or reports, you know, that we have set up. There's a much stronger link between finance and the operational businesses. So all actually to avoid, you know, that, that such a story would repeat itself in Brazil or somewhere else.
So it's across, I would say, the functions and the businesses that we have taken measures.
Okay. I think most of the people I would have expected to ask a question of email, if anyone is on the call and would like to ask a question, feel free to email me afterwards I will get those questions answered. And I think with that, we'll bring the meeting to a close and we'll go upstairs and have a drink.
Thank you.
Thank you very much.