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Edited Transcript of STR.VA earnings conference call or presentation 30-Aug-19 9:30am GMT

Half Year 2019 STRABAG SE Earnings Call

Sep 11, 2019 (Thomson StreetEvents) -- Edited Transcript of Strabag SE earnings conference call or presentation Friday, August 30, 2019 at 9:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Thomas Birtel

Strabag SE - CEO & Member of Management Board

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Conference Call Participants

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* Daniel Lion

Erste Group Bank AG, Research Division - Analyst

* Markus Remis

Raiffeisen CENTROBANK AG, Research Division - Chief Analyst

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Presentation

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Thomas Birtel, Strabag SE - CEO & Member of Management Board [1]

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Thank you very much. This is Thomas Birtel calling from Vienna, and I welcome you very warmly with regard to the presentation of our first half year's figures 2019, which I trust do not disappoint too many of you in a negative sense.

Let's start with #3 of the slides, which should be in front of you of our presentation, giving you the key figures for output development and the order backlog.

As you can see from the top for graphics, we generated an output volume of over EUR 7.5 million in -- EUR 7.5 billion in the first half of 2019. This means an upward trend of 9%, which was driven in particular by Germany as a whole, by building construction in Austria, by the execution of the order backlog in Hungary and by a large-scale project in the United Kingdom.

The order backlog as of 30th June 2019 weakened slightly by 3% compared to the same period of the previous year. However, it increased by more than 8% if you compare this figure by the end of 2018.

Declines in the first half were recorded in Austria, Germany and on the whole, in the countries of Central and Eastern Europe. This development was partly offset by the substantial expansion of an existing contract in the United Kingdom.

Let's now come to a number for the earnings development. Our EBITDA increased by 47% to EUR 294.7 billion in the first -- EUR 294.7 million, sorry, in the first half of 2019. This figure included about EUR 28 million gain stemming from our first-time adoption of IFRS 16.

A 30% year-on-year increase in depreciation and amortization includes, among other things, an opposing effect, a gain, from the first-time adoption of IFRS 16 on the EBITDA. EBIT amounted to EUR 61 million after EUR 20 million in the same period of the previous year, which means that the EBIT figure tripled in the first half of 2019. This increase is attributable to the development of the International + Special Divisions segment in particular.

Let's now come to our net income shown on Page #5. Our net income by the end of the first half of 2019 stood at minus EUR 19.5 million. In the first 6 months of the previous year, it had amounted to minus EUR 7.44 million. The decline of net interest income can be attributed to negative exchange rate differences amounting to EUR 1.2 million in the same period of the previous year, exchange gains of almost EUR 7 million were reported, and to a small extent, to the above-mentioned impact from IFRS 16 adoption. Small extent means about EUR 3 million leasing interest.

Income taxes also increased to minus EUR 27.56 million. Earnings attributable to minority shareholders was barely unchanged at EUR 3.2 million. Overall, a net income after minorities of EUR 10.66 million was achieved. In the same period of the previous year, it was still slightly in negative territory. With our 102,600,000 outstanding shares, this corresponds to earnings per share of EUR 0.10, whilst in the first half of 2018, it was EUR 0.01 -- minus EUR 0.01.

Let's have a look on our balance sheet, the pictures given on Slide #6. Our balance sheet total, once again due to the first-time application of IFRS 16, increased to over EUR 11 billion compared to the 31st December 2018. The biggest increase on the asset side is shown on the PP&E, where we have plus of 19%, thereof about EUR 300 million stemming from the first-time adoption of IFRS 16.

The share of property, plant and equipment in the balance sheet total increased hence from 18% to 22%. The cash and cash equivalents decreased as is seasonally usual with us. At the same time, the equity ratio remained at a high level of around 30%. At the end of 2018, it had stood at a little bit over 31%.

As is usual for the season, our net cash position fell from EUR 1.2 billion at the end of 2018 to EUR 241 million at the end of the first half of -- sorry, at the end of 2018 to EUR 241 million. As at 30th of June 2019, lease liabilities amounting to EUR 340 million (sic) EUR 314 million were included for the first time.

A view on our cash flow development is given on Slide #7. STRABAG's cash flow from operating activities was 118% lower in negative territory at minus EUR 321 million due to a higher working capital increase compared to the previous year. Our cash flow from investing activities, in part due to generally higher capital expenditures, slipped by 8% and so was slightly more negative at minus EUR 299 million.

The repayment of a bond with a lower volume than the one in the previous year, this year, it was EUR 100 million, last year, it was EUR 175 million. And the fact that the dividend payment will not be paid -- made until the third quarter of 2019 led to cash flow from financing activities of minus EUR 183 million after minus EUR 363 million in the first half of the previous year.

Now we come to our 3 operational segments. Let's start with the biggest one, which is North + West, comprising our Building Construction, Civil Engineering and Transportation Infrastructures business in Germany and the Benelux states, in Scandinavia and in Poland. The picture is given on Slide #8.

This segment posted a 9% higher output volume of EUR 3.6 billion in the first half of 2019. This is due to the 2 largest countries in the segment, Germany and Poland, while the other markets, such as Benelux, Sweden and Denmark, showed small inconsistent deviations. The EBIT of the segment weakened slightly from minus EUR 23 million to minus EUR 29 million due, for example, to the strong cost inflation in Poland.

As seasonally usual, the earnings did not reach the profit zone in the first 6 months of the financial year. I might, however, underpin that the EBIT margin remained more or less stable as compared as to the first half of 2018.

The order backlog of North + West as of 30th June 2019 fell only slightly by minus 2% from a very high starting level. The decline in Benelux caused by the execution of large orders in Building Construction could not be fully compensated by the increases in Denmark and Germany.

Regarding the outlook of the segment, the output volume in North + West is expected to be slightly higher in 2019 than in the previous year. This upward trend remains unbroken, especially in Germany. There also is no slowdown in the construction industry inside in Benelux and Scandinavia.

The prices for subcontractors and suppliers in the German Building Construction business and for reinforcing steel are relaxing somewhat but remain at a relatively high level. We counteract the capacity risk and price increase risk already in the cost estimation phase through the early inclusion of partner companies. At the same time, we are strengthening our relationships with cost of contractors and suppliers.

There is also continuing demand in the regional business in the German Transportation Infrastructures sector. Both output volume and order backlog reached record levels by the middle of 2019 there. Given there's still limited capacity for executing projects, this is causing a continued rise in prices for subcontractors and suppliers.

The first half of this year confirmed the scenario that had been outlined for the Polish construction industry so far. A high order backlog, in combination with, among others, rising costs from labor shortages, is leading to a reduction in profitability. We are also observing an increase in the number of suspensions of public procurement procedures in 2019 in this country.

In Transportation Infrastructures, many projects are not being awarded because the bidding prices often exceed the clients' budgets.

Let's now come to the South + East segment, which is the second biggest, comprising our Building Construction, Civil Engineering and Transportation Infrastructures business in our core market of Austria, in Switzerland and in Central and Eastern Europe. It is given on Slide #9.

The output volume in this segment rose by 88% (sic) [8%] and amounted to EUR 2.1 billion in the first half of this year. Increases were recorded mainly in Austria, Hungary, the Czech Republic and Serbia. A decline in Slovakia, for example.

The EBIT of the segment by contrast fit further into negative territory at minus EUR 21 million after minus EUR 4 million last year. This is attributable, among other things, to provisions that were made as well as to the approach of the margins to the overall group level. The order backlog of South + East fell by 5% to EUR 4.7 billion compared to the 30th of June 2018. Compared to the 31st of December 2018, it was a plus of 9%, however.

As expected, the order backlog fell in 2 markets in particular. In Hungary, resources are currently being used primarily to execute the high order backlog. In Slovakia, bid evaluations on the client side are regularly delayed, sometimes for several years. Increases in the order backlog were noted, for example, in Romania, the Czech Republic and Switzerland.

In the Czech Republic, this is due to numerous motorway and railway construction contracts, including the construction of a section of the D35 motorway.

Regarding the overall outlook for the segment, the output volume is likely to continue the trend shown in the first half of 2019, which means that year-on-year, growth is expected for the full year.

Our home market of Austria, in particular, continues to be characterized by positive developments. The positive environment for Building Construction is no longer limited to the Vienna metropolitan area only, but can also be confirmed for the metropolitan areas of Graz and Linz. This applies to both residential construction as well as commercial and industrial construction. In the first quarter of this year, STRABAG, for example, was commissioned with the construction of the Austrian headquarters of an international technology group in Carinthia.

In Transportation Infrastructures, the development in Austria is also positive, albeit more subdued than in Building Construction, where the volume and order backlog could be moderately increased there. In Hungary, incoming orders for the industry as a whole fell by around 1/3 in the first half of 2019 following the large number of large-scale public sector projects that had been awarded until then due to the 2020 EU funding period.

As a result, construction growth in this country far outpaced overall economic growth. The extremely strong competition with some -- cost increase and staff shortages in the Czech Republic and Slovakia continues. At the same time, however, a number of railway construction contracts were won above all in the Czech Republic. In the Building Construction segments of both countries, we are working primarily on commercial projects for private clients such as the automotive industry.

Let's now come to the third and most diversified operation segment of the STRABAG Group, which is International + Special Divisions. The picture is given on #10 -- on Slide #10.

The segment comprises our tunneling business on a global level, our real estate development business, our PPP business, our raw materials business and our facility management business as well as our non-European construction business. This very heterogeneous segment generated an output volume of more than EUR 1.8 billion in the first half of 2019, which corresponds to an increase of 11%. The execution of large-scale projects and tunneling led to growth, primarily in the United Kingdom, Germany and Chile.

The EBIT of International + Special Divisions jumped from EUR 52 million to EUR 123 million attributable, among other things, to the continued favorable development in real estate development, the positive environment of construction projects in the international area and the gain from the sale of a facility management investment in Hungary, which led to a profit of about EUR 16 million.

The order backlog of the segment fell slightly compared to 30th June 2018, slipping by 3% to EUR 4.4 billion, which is, however, a plus of 12% as compared as to the end of 2018.

The numerous new large-scale projects were not fully able to compensate for the reduction in order backlog in the home markets of Germany and Austria. In Chile, for example, the contracts for the Candelaria open pit and underground mine were extended, and we received 2 new long-term contracts for the Nuevo Nivel Mina project at the El Teniente mine in Rancagua.

In Qatar, a wastewater pumping station plant is being designed and built by a group subsidiary, and our tolling specialist, EFKON, is expanding its presence on the Norwegian and Indian markets with further projects.

Regarding the outlook of International + Special Divisions, a slightly lower output volume than in the previous year is expected for the full 2019 fiscal year. Both the booming real estate markets and existing project pipeline make us, however, optimistic that the real estate development business will continue to contribute positively to our earnings.

Several properties were sold in Germany in the first half of 2019 such as, for example, the hotel in MesseCity Cologne. Numerous rental successes were also registered.

Our acquisition focus in Germany is also on B cities as well as some geographic markets such as Poland, Romania and individual projects in other Central and Eastern European countries. A number of milestones were also achieved in our field of property and facility services. The transfer of the Deutsche Telekom account to a competitor on 30th of June 2019 proceeded fully according to plan. And the further diversification of the customer portfolio was successful with new accounts.

In addition, we are focusing on acquisitions that round off the existing business. In April 2019, for example, we took over the property management business and employees of CORPUS SIREO Real Estate GmbH in Germany. This was followed in June by the purchase of Porreal Polska and Porreal Cesko, which provide both services in technical and infrastructural facility management.

Compared to real estate development and the property and facility services business, the current market conditions in infrastructure development are much more challenging. This applies especially to public-private partnerships, so-called PPPs, in our core European markets, which is why projects must be chosen very selectively.

Nevertheless, some successes were recorded in the first half of this year, such as the conclusion of the long-term financing for the Autopista al Mar 1 concession project in Colombia and the sale of investments in 2 highway projects in Ireland.

The environment in our tunneling business also remains a difficult one. Although there are numerous projects on the market, there's no end in sight to the extremely strong competition for the time being.

Let's now come to our overall outlook on Page #11. I think that all in all, we can be satisfied with the development of the STRABAG Group in the first 6 months of 2019. Our earnings grew even more strongly than the output volume, and the order backlog remained, once again, thanks to numerous large orders, on stable at a very high level, however, showing a plus of 8% over the year-end 2018. It is true that the output volume and earnings for the first half of the year are not an adequate measure for the full year's performance of a construction company, especially, as reported, a key account in our services sector was transferred to a competitor on the 3rd of June 2019.

In general, however, I believe that the picture meets well with our expectations, and we are therefore reaffirming our forecast for the full year 2019, an output volume above EUR 16 billion and an EBIT margin of at least 3.3%.

I would now like to enlarge a little bit on our special project, FASTER TOGETHER 2022. We have given you the slide there on Page #12. As you can see from there, this project, this program consists of 7 diverse elements. And in the beginning, I would like to underpin that it is not a cost-cutting project. Such cost-cutting and an efficiency improvement project has already been done with STRABAG under the name of STRABAG 2013ff in the years 2013 until 2016. That's why, today, we are better positioned than ever. But just now, when things are going well for our company, we are taking precautions so we can continue to achieve our goals in the long term, for example, our ambitious goal of achieving an EBIT margin of 4% by 2022. To keep our employees but also our processes and structures fit for the challenging future, we are working on that strategic agenda, FASTER TOGETHER 2022.

As part of this agenda, we are focusing on the 7 fields. Given in the chart, they comprise our STRABAG action plan.

People First. As a learning organization, we pay attention to respectful cooperation and safe working, promote a strong team culture and create attractive and future-proof jobs for our people.

teamconcept. This is the name of our partnering and early contract involvement model that has already added value for many project participants. By jointly setting the construction target and through transparent construction processes, the risk for all parties involved to the contract are minimized.

BIM 5D. BIM means building information modeling. This digital working method makes it possible today to better design, build and operate construction projects. The gain in transparency creates cost, planning and scheduling security at a much higher level than before.

SMART. Construction. New technologies, for instance, the use of sensors and GPS technology, enable future-proof construction and relieve our construction teams of unproductive routine activities. This creates more space for innovative solutions.

LEAN. Construction. Together with the construction teams, contracts and processes and such related activities are analyzed, shaped using LEAN principles and continuously improved so that projects can be realized in a more structured and efficient manner, thus avoiding waste.

SPS, our Strategic Procurement Solution. In order to create a stronger presence on the market and to make purchases more strategically, we define uniform purchasing standards for the group and are introducing a group-wide platform solution for working with our suppliers.

Last but not least, Project Risk Management. To reduce risks during the procurement and execution of construction projects, we continuously improve our analysis of cause and effect mechanisms through our conclusions and develop standards and systems with group-wide validity.

I would once again like to emphasize that this is explicitly not a cost reduction program. We have LEAN structures and a suitable organizational structure, but we want to constantly improve our processes, further educate and train our people and as the market leader in Austria and Germany, shape the industry throughout Europe as an innovation leader.

Examples include our Drone Competence Centre for surveying, our leading role in the German government's BIM competence center and in-house developments, such as our pollutant-reducing clear asphalt.

Ladies and gentlemen, I thank you very much for your attention, and I'm now eagerly waiting for your questions. Thank you very much.

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Questions and Answers

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Operator [1]

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Ladies and gentlemen, at this time, we will begin the question-and-answer session. (Operator Instructions) The first question is from the line of Markus Remis with RCB.

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Markus Remis, Raiffeisen CENTROBANK AG, Research Division - Chief Analyst [2]

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Congrats on the results. First question relates to your output guidance. I mean if I -- even if I assume no further growth in the second half and stripping out Deutsche Telekom Immobilien then, I mean, I should -- think you shouldn't be too far off of the, I don't know, EUR 16.5 billion to EUR 17 billion, is that a fair assumption? Or am I missing something?

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Thomas Birtel, Strabag SE - CEO & Member of Management Board [3]

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Well, of course, thank you, Mr. Remis, for the question. You should take...

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Markus Remis, Raiffeisen CENTROBANK AG, Research Division - Chief Analyst [4]

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Without, of course, the weather. Yes.

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Thomas Birtel, Strabag SE - CEO & Member of Management Board [5]

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Yes. But it is also true that in the first half of 2019, we saw still a full output volume for Deutsche Telekom, whilst in the second half, we have 0. So that is a factor which is quite considerable. And hence, until today, we are a little bit reluctant to increase the guidance, which we have already revised as you might recall after the first quarter. It is not excluded, but for the time being, we would like to stick with the guidance. It will be at least EUR 16 billion. And as you pointed out yourself, the all-decisive factor is the last quarter of this year, okay, as every year.

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Markus Remis, Raiffeisen CENTROBANK AG, Research Division - Chief Analyst [6]

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Sure. Okay. Can I ask you then about the order backlog and the order intake in the first half? Can you provide any granularity on the margin quality of the order backlog? Specifically, I would be interested to talk about Germany and Poland. How satisfied are you with the margin quality, how it compares kind of to maybe last year or the intake we've seen in the quarters before?

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Thomas Birtel, Strabag SE - CEO & Member of Management Board [7]

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Given the scarcity of resources, as we have already pointed out before, we are highly selective on the intake of new contracts. And that, of course, helps to improve the risk profile and hence, also the margin quality of the overall projects coming into our portfolio now.

Of course, we have to try to cope with the cost inflation on the sub-supplier and the subcontractor side, and hence, sometimes, all in all, we are quite satisfied with doing that. But sometimes, there are developments in special markets where we do not fully cope with the challenge. For instance, this had been the case, as we already have pointed out before, in Poland for quite some time. So all in all, I would underpin, it's a positively stable margin quality.

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Markus Remis, Raiffeisen CENTROBANK AG, Research Division - Chief Analyst [8]

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Okay. And then staying with Poland, on the cost side. Do you have any observations that would kind of support the assumption of a peaking cost pressure? Can it get worse from your point of view? Or are there maybe even any signs of a bit more relaxed cost situation?

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Thomas Birtel, Strabag SE - CEO & Member of Management Board [9]

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Well, as I had said, we see a sort of relaxation in some parts of Germany, not yet in Poland because especially on the infrastructure side, there still are many, many big and large-scale projects coming on the market that might have to do with the existing EU Cohesion Funds. And the wish of various governments to make as much use of the Brussels means as they can because they do not know how the Cohesion Funds will be financed in the future after an eventual Brexit. So the situation is still fierce in Poland than in Germany.

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Markus Remis, Raiffeisen CENTROBANK AG, Research Division - Chief Analyst [10]

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And last question from my side. On this FASTER TOGETHER program, specifically asking about the Project Risk Management. And we heard a lot about improving risk and cost control, not only from your side but also from one of your competitors. I mean how -- I mean what can still be improved? I mean this is a topic which is we always hear this headline statement about improving risk management. But maybe you can put some granularity on where specifically you still see upside or improvement potential.

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Thomas Birtel, Strabag SE - CEO & Member of Management Board [11]

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Yes. Thank you very much for the question. You often hear from representatives of our industry that we have a special problem because we are creating unique projects. And there is something in it. Construction projects tend to be more or less unique. Of course, there are some repetitions. But basically, we do mass-detailed projects, which tend to be unique. And hence, the risk profile also is a new one every time we commence a new project.

And that's why the library of lessons learned must be extended in an ongoing process. And I do believe that this exercise will never come to an end. But the more experience we master to document and to file in our, of course, today, in our IT files and to share with the successors and make available to the people who have to execute [those] projects, the better risk management will work out. And that is why, not only us but also others, I think to underpin that this is of the essence for the profitability and the margin quality of our business. And this is an ongoing process. The more lessons learned you make available for the -- you collect and you make available for the future, the better you will become in project-related risk management. So it's a process which will not come to an end as our efficiency program by the end of 2016. It is -- if you want to put it that way, it's an internal process.

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Markus Remis, Raiffeisen CENTROBANK AG, Research Division - Chief Analyst [12]

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But it's still quite an abstract topic from the outside if you allow me this comment.

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Thomas Birtel, Strabag SE - CEO & Member of Management Board [13]

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Yes. That might -- you should have a look at the data bank of eventual loss reasons. And that is the point that you collect those reasons and that you make lessons which you had learned in one project available to those who start a new project.

In the past, of course, in the absence of IT support, it means it was very difficult with conventional libraries to really proliferate the knowledge which you have gained in the group. Today, this is possible. With knowledge management, you can do that. But the, let's say, the concrete contents of such intent, of course, can only be evaluated. If you have a look at the actual factors we are talking of, and there, we have certain categories of risk that is technical risk, that is commercial risk, that is financial risk, we have certain phases of projects where risk may be created, that might be risk in the pre-contractual phase, that might be the contractual phase itself and that might be the project execution phase. So all that, today, is being systematically collected and allocated to various categories and hence, made available to the successors.

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Markus Remis, Raiffeisen CENTROBANK AG, Research Division - Chief Analyst [14]

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Okay. Well, last question from my side that refers to a comment made by the head of the Austrian antitrust authority. It was made in summer that he expects basically some initial applications for fines until the end of the year. Anything from your side you can add to this press comment which you certainly have read?

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Thomas Birtel, Strabag SE - CEO & Member of Management Board [15]

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Yes, of course, I did. Well, in our eyes, we are talking about a very, very complex case because we are talking about a very small-scale project pipeline, but a very big one. And we are talking about a very long-time spend starting from 2006, which means more than 10 years, hundreds of projects and basically, more or less, all relevant players of the construction industry. Hence, it is a very complex process, and we do not have any insight in the time horizon of the investigations.

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Operator [16]

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(Operator Instructions) The next question is from the line of Daniel Lion with Erste Group.

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Daniel Lion, Erste Group Bank AG, Research Division - Analyst [17]

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Just for clarifications -- clarification. You mentioned the EBITDA effect of IFRS 16 is EUR 28 million, right? 2-8?

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Thomas Birtel, Strabag SE - CEO & Member of Management Board [18]

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Yes. That's right.

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Daniel Lion, Erste Group Bank AG, Research Division - Analyst [19]

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Yes. Okay. Perfect. The impact of -- or the business volume of the property and facility management business, to what extent has this been compensated by the recent acquisitions? When we compare the acquisitions to the sale or the end of the Deutsche Telekom contract, where do we stand at the moment?

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Thomas Birtel, Strabag SE - CEO & Member of Management Board [20]

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Well, with regard to Deutsche Telekom, on a full year basis, we are talking about a middle-sized triple-digit million amount. And this has been a very, very big account. And I had already stated in previous calls that it will last several years to fully compensate that in facility management. However, I'm quite confident that you won't see the overall effect on group level this year. But that is an account with and it will last some years to compensate for that. For instance, if I give you a corresponding figure for the takeovers of the 2 Porreal activities, they are good for about EUR 6 million a year, and that's in relation to the figure I outlined for Deutsche Telekom that gives a certain relationship. So that will last some years.

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Daniel Lion, Erste Group Bank AG, Research Division - Analyst [21]

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Yes, yes. They were really small acquisitions, of course. So basically, are you planning to acquire further companies in this business segment? Or do you plan to grow it organically? So what's the strategy here?

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Thomas Birtel, Strabag SE - CEO & Member of Management Board [22]

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It is a mixture. As I pointed out before, besides the Porreal activities, we had also taken over CORPUS SIREO, which was a little bit bigger than the 2 Porreal activities, but we have also acquired quite a number of medium-sized accounts on our own. So when it comes to M&A, it depends on the targets, on the available targets and of course, on the price tags of the targets. But when I would be asked where do you see at all strategic M&A activities in the future, I would always underpin if then it would be in facility management, I don't see that really in our core business construction.

So we have an opportunistic approach. Definitely, the focus is on organic growth on the acquisition of new interesting additional FM accounts. But if and when interesting M&A targets come on the market, we will definitely have a very interested look on that.

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Daniel Lion, Erste Group Bank AG, Research Division - Analyst [23]

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Would you basically see the BIM concept as a chance to increase your business in facility management as you basically can offer the full range of services from planning on to then to the facility management? Is this a strategy or a development that could help building up scale?

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Thomas Birtel, Strabag SE - CEO & Member of Management Board [24]

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Yes, definitely. Thanks -- thank you, Mr. Lion. That's a very good question. It would definitely be an advantage also for a user of a building if you would avoid any battery limits or interfaces between construction and operation of a project. And digitalization is also a big subject in facility management. Augmented reality, for instance, in the maintenance of the infrastructure of a building is of big importance. And hence, that is the basic idea why we operate a rather considerable FM unit in the frame of STRABAG because we want to offer the whole value chain to our customers. That is the idea.

However, I have to admit that, so far, it's only a minority of our customer which really makes use of that offer. But we do have rather impressive examples for buildings which we have built and which we operate today. One prominent example for that, which I have visited only some weeks ago, is the Vodafone headquarters in Germany in Dusseldorf, for instance. That had been built by a -- in consortium, under the participation of STRABAG. And today, it's operated by STRABAG FM.

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Daniel Lion, Erste Group Bank AG, Research Division - Analyst [25]

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Yes. All right. Okay. And 2 more questions. One, on the margins in the International + Special Divisions, what's the part of this margin that is driven by one-offs? Or is -- yes, that's stated like this year.

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Thomas Birtel, Strabag SE - CEO & Member of Management Board [26]

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Well, basically, if we talk of, say, nonoperational one-offs, we are talking of a minor amount of EUR 16 million, 1-6, which is the profit we made once we sold a stake. It was not a 100% stake, but it was a stake, which we had in a Hungarian FM operation. This is a one-off which I could identify in the segment. All the rest is more or less operational building. Of course, we do only say -- sell a real estate project once because we only have it once, but it is not a one-off effect because it's our running business. So that is only a very minor effect.

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Daniel Lion, Erste Group Bank AG, Research Division - Analyst [27]

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Okay. Okay. And then last but not least, an update on your shareholder structure, your core shareholders. Any movements, any news?

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Thomas Birtel, Strabag SE - CEO & Member of Management Board [28]

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No. Neither, nor. Neither, nor. The situation is as stable as you know it. And one signal was that we had to pursue the same procedure with regard to the dividend of one of our shareholders as we had to do it already in the last year because of the U.S. sanctions of April 2018. So no alteration at all, which I would like to underpin, that the situation remains also the same on the operational level. We don't see any operational disadvantage out of that structure in our business, not at all.

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Operator [29]

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There are no further questions at this time. I hand back to Thomas Birtel for closing comments.

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Thomas Birtel, Strabag SE - CEO & Member of Management Board [30]

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Well, thank you very much, ladies and gentlemen, for your interest in our...

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Operator [31]

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I'm sorry, there's one last question from [Pierre Castella].

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Thomas Birtel, Strabag SE - CEO & Member of Management Board [32]

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No problem at all. Thank you very much.

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Unidentified Analyst, [33]

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Just could you shed some light on this very large increase in working capital requirements in the first half? Can you tell me what the main drivers for this increase are, please?

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Thomas Birtel, Strabag SE - CEO & Member of Management Board [34]

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Thank you, Mr. [Castella]. Well, we have always underpinned that we considered our working capital development as rather unusual in the recent past, and we would expect a normalization of that situation. And what we were seeing in the first half of this year is nothing else than such a normalization of our situation. All in all, as you have seen, the group is still working with a negative working capital, which is, in the long-term past, a rather unusual situation. If you take into consideration that the public side of our customers is always paying reliably but late, and hence, the public side of the group does usually have a positive working capital, that the overall group, although the public side is a little bit. The majority of our customers, that the overall group of STRABAG is in negative territory on working capital is a very unusual development, which we have seen only some years now, and hence, there is no extra -- it's just a normalization of the situation, which we had predicted also in the past.

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Operator [35]

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Now there are no final questions. I hand back to Thomas Birtel for closing comments.

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Thomas Birtel, Strabag SE - CEO & Member of Management Board [36]

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Thank you very much for your interest, and I'm very much looking forward to talking to you again the next time. Bye-bye.