Wim Pelsma: Yes. Welcome people in the room and people joining our webcast. The agenda for today is that we go through our full year results but also we want to touch a little bit about Aalberts first. So, Aalberts is -- actually what is very important is the first sentence, and it is that you will find Aalberts where technology really matters and where we can really make progress. It sounds like a simple sentence, but there is a lot in it.

Because everywhere where we can make an innovation or can really make progress humanly, environmentally or financially, we want to be there in our selected end markets. The essential thing of Aalberts is that we engineer mission-critical technologies for several selected industries, combined with a culture where good is never good enough and also where we continue to try to exchange knowledge, because greatness is made of shared knowledge. Continuously, we are pursuing that excellence. Our way of value creation is based on these three pillars, so that we strive for leading niche technology positions; high entry barriers in our markets, pricing power; and also high added-value margins, and sustainable profitable growth, continuously looking for uniqueness. Good is never good enough.

Operational excellence, a continuous driver of results in our success; continuously working on improving our EBITA margins, focusing on cash conversion; and allocate our capital on the best disciplined way where we can get the highest returns. Greatness is made of share knowledge continuously technology exchange, innovation speed, fast learning and adaptation to the market changes because there's a lot of change at the moment in the world, and I think our business model is very, very suitable for that. The Aalberts playbook. We look to how can we create a compelling competitive advantage, what are the growth driver, so every time trying to leverage operationally our companies but also our businesses, and look for margin expansion. When we look for margin expansion, we continually strive for a better cash flow, for a better margin, and also the investments we do, we try to do in a disciplined way there where we can allocate our money the best.

It means also that you have continuously optimized your portfolio, which is a continuing process. And by doing that, you create long-term shareholder value. Compounding returns. Investing the money where you have the highest returns, and that's a continuous long-term process. Our track record on this, we do that already 40 years of sustainable profitable growth.

You can see what is the Aalberts’ playbook, a proven, sustainable business model. Our shareholder value creation, where you can see the share price over the years and also the earnings per share, dividend per share, and also the long-term shareholders. Nice to mention and we also did that in December, is that our long-term shareholders, more than 3% holdings is more than 50% of our shareholder base. Our relentless pursuit for excellence drives true shareholder value. It's not that you run a company on a quarter.

It's not that you run a company on a half year. It's the long-term strategy, which we have to pursue. And that's what we do. Our key strengths are our people, mission-critical people. The Aalberts way, winning with people is the biggest asset

we have: Being an entrepreneur; take ownership; go for excellence; share and learn; act with integrity, winning with people.

Our strategic objectives, as again explained how we want to reach them in December last year are here also presented. Important is that these financial objectives are presented in 2017 before the IFRS 16. So, to be very clear, it’s before IFRS 16. So also, when you look to return on capital or the other objectives is before IFRS 16. Innovation is driving our organic growth.

Innovation takes time. Innovation is very important to create uniqueness in your markets. The moment you don't innovate, the moment you don't invest anymore in your markets, you can better step out. So, innovation for us is a key thing to become mission-critical, but also to create unique market positions where you have pricing power. So, we will continue with doing that.

The situation now is that more than 4% of our total revenue is invested in R&D, which is more than €120 million. I think when we look four, five years ago, it was roughly between 2% and 3%, or closer to 3%. Mega trends are shaping our future, rapid urbanization, climate change and also Internet of Things are very important for the future markets, because these markets will also adapt these kind of trends as also presented during our capital markets day. There are two things which are very important to be successful in these trends which in our opinion is globalization and codevelopment, and connectivity and integration. So, we have to adapt our organization and Company to these two very important drivers for growth.

We made choices, the last year to focus ourselves on five, you could say, niche technologies and four selective end markets, embracing the SDGs, Sustainable Development Goals, which we support. By doing that, we see more and more Aalberts growing to less activities and we also want to allocate the capital to these lesser activities, achieving unique market position with sustainable impact. The highlights of 2019. We reached the revenue which was 3% higher than last year of €2.8 billion. Very important and also my colleague will come back to this is our added value stays roughly in the same base as '18, despite the lower activity in especially material technology.

As you probably know, we have a high resilience. Organically, we were still able to grow, despite more difficult market circumstances. As I also said, last year, especially after summer is that also Aalberts is not immune for the developments in certain markets. Also, we have to send an invoice to our customer. And in the end, when a customer has lesser volume, we will also see that in certain businesses, despite we were able, in our opinion, to deliver a solid and resilient performance in a more difficult market.

Operating profit was €363 million with a margin of 0.8. Net profit €267.4 million with an earnings per share of €2.42. It’s important that only the tax rate and the IFRS impact was already €0.05 compared to ‘18. When we also see the operating profits, where we had most the benefit of ‘18 of roughly 10.6, then you could say that operationally, the Company did even better than ‘18. In the CapEx, I think it is very important to notice that roughly 10 or €15 million of the CapEx of material technology was used to replace the equipment because of the fires.

So, when you get a real picture, you should also look really like-for-like. The return on capital before IFRS is 15.1, and of course is affected by a lower performance of our existing business, especially material technology, and of course a higher capital employed because we did also two acquisitions by your goodwill. But don’t forget that material technology business will come back because also we had this period on the slightly different way in the past, and we have a strong position. And we think this business will recover gradually during this year. Operational developments.

It's a nice sheet because it gives a total overview of let's say all the segments, what has really happened within Aalberts. You could say -- and that's only important for the background, that when you look to the right side of the sheet, to the marker, that 44% of the business of ours was in some way affected by the situation in the market environment. Eco-friendly buildings was not affected, was very good level. But the other markets, industrial niches, but also sustainable transportation, but also semicon efficiency faced all inventory reductions; they faced all postponement of orders. They faced all uncertainty.

Do not forget that the fantastic market of semicon efficiency, we had a few years where we grew almost 20% and last year, we also grew but it was roughly 4%. And of course, it is still not so bad but it's less than 20%. So, in eco-friendly buildings market, we saw a nice growth, also in climate, also in industrial technology, despite the developments which were also taking place in that market. I must say and that’s also what I tried to say at midyear, most of the growth was driven by own initiatives, new products, better sales, because also in certain markets in installation technology, America, we also saw a softening after the summer, which we did not expect as it came. Organic revenue decline in material technology Europe.

As I said already, market uncertainty, postponement of orders, inventory reduction, important is that it also stabilized after certain period. So, we should now a stabilize situation in that business. We initiated efficiency and restructuring actions, additional cost we made, roughly but also my colleague will guide it little bit more, we made roughly €3 million, maybe a little bit more, a little bit less of restructuring costs in material technology, which is included in the bridge. And North American aerospace did very well. So, they compensated partly the downturn recession in Europe, which was mainly in Germany and France, but also in Benelux, and it has to do with the uncertainty in the markets, people reduce their inventories, postpone ordering.

That's there, in the end, also inventory reduction and postponement, you cannot do forever. We reached a solid and resilient EBITDA performance. It's showed therefore a mixed picture. Three business segments, we were able to grow organically in EBIT. And our European service technology activity, we saw an organic EBIT decline.

As that more in Europe, partly compensated in service technology in the U.S. with our aerospace activities. The less incidental benefits compared to ‘18 was a difference of roughly €10.5 million compared to the EBIT of 18. As always, we have a roughly holding correction between €10 million and €12 million, last year we had zero. Now, we have again, a small 12.

CapEx increased to €148 million. You should include here or exclude, however you want to calculate, the €10 million to €15 million of fire CapEx related to the equipment which we installed to replaced, and that is in a real number, so roughly 133, which we added to that. We facilitated mainly with the CapEx organic growth and innovations, also a lot of efficiency because this goes mostly hand in hand. But also, we launched more than 50 new product lines. Most of them were in climate technology, but also industrial technology.

We launched some very nice full flow valves, also other valves, regulators, and in installation technology, we launched some nice connection systems in combination with valves, only to have the right service for new product line. And there's only one product line in Installation technology which we launched or launched in a bigger way cost us, or was an investment also of $10 million in stock. So, also that is important to know when we look to the financial numbers. In the end, our opinion is that we made a solid and resilient performance in a more difficult market environment, which was actually in the course of the year deteriorated further through uncertainty. I said here in the same room that we expect, for example, that the American industrial markets had a good quote offering.

And we expected the second half -- that when these quotes could become order, it could be a nice half year. What happened? In August, we saw a lot of uncertainty through the China and the U.S. trade disputes and a lot of orders were postponed. Okay. We did not see that.

And that was also one of the things where you saw that we saw more deterioration than we expected. What we also tried to guide in September, but also during our capital markets day where we said that we can also have this or we have also a market environment, which is maybe less where you are not immune for. Let me look to installation technology. We have here a nice example of our new distribution center in Belgium, which we are now -- it's not standing there yet because this is a drawing but we are expanding in Belgium. A fantastic business we have there.

And also, there you see a lot of growth potential. It’s just one example. So, we are actually expanding a lot of buildings at the moment. So, it will also mean that this year, we will have a pretty high CapEx, I think probably in the range of this year -- of last year, because we see a lot of growth potential, especially organically. So, despite some headwinds, you still have a good future.

Installation technology, good organic growth, Europe, America, commercial, good level; UK, America, industrial challenging. UK, very volatile, building up stocks, reducing stocks building up, reducing stocks. Why? Don't ask me because the customers ordered and then they don't order. It has to do something like Brexit. The portfolio we further optimize.

We improved the quality of the inventory. And I think we made very big steps also in cash generation with the new management, which we installed in America. And a successful launch of innovation in the press portfolio and new innovations are coming to be launched this year. We gained several logic incomes [ph] and I must say this, we are really positive about the future effects of these changes we made. I think we get really the business together.

A big headache, as I told you many half year and years, was our distribution set-up in America but it’s really streamlined. We could now as we also promised in ‘19, streamline also the setup. We could reduce inventories and costs because we knew now what's the customer need is in which region. And we will of course continue that. As said, our American organization, streamlined the organization, overhead was reduced, but also we made their additional redundancy costs, which we did of course on purpose because we want to improve the business.

Our new European assembly and distribution center is constructed. We are now implementing the operational, let’s say, phase. We think we have to move equipment around that we have all the equipment end of first quarter; we start up second quarter and hopefully we have it fully operational in second of ‘20. And I said, we will integrate roughly seven to eight warehouses in that period also to streamline the complete setup in Europe, what we did already in America. Efficiency improvements in manufacturing combined with capacity expansion, especially in one specific product line, we really expanded heavily.

We can't even fulfill complete demand. So, we had to invest heavily to facilitate the growth in combination with efficiency. I said, UK, we streamlined the organization because we had a volatile situation. It's also that we want to invest more in our local manufacturing because we really think that UK made this an advantage. But, we want to of course, also to streamline the organization, reduce the costs to be in line with the market developments.

And also, we have heard of plans to optimize the factory in combination with other locations in Europe. For the consolidation, we will initiate the coming periods. Capital allocation in installation technology. We increased the capacity of the fast-growing product lines combined with higher efficiency. Our European assembly and distribution centers, one is already constructed, the other one we are constructing now in Belgium.

Operational excellence and our innovation projects, we spend a lot of money on and we will continue in doing this. And as we already said, and as already my colleague André in het Veld said in December. We have a huge potential in growth and operational leverage and excellence in this business segment. Material technology, a nice example of new technology we added. It's related to additive manufacturing.

It's a specialized thermal processing, equipment, which we added in accurate raising in our Company there, a very nice business. And also here you first have to invest and then you get the revenue. Material technology, organic growth, innovation, the European business deteriorated gradually. We saw that a little bit in summer but is really graduated further after summer. I already said what was the reason for that uncertainty, postponement of orders.

Also, what you see is that due to the new emission ruling that company, the OEMs are looking more what is the right portfolio for their automotive. What we also saw, and it also what we said in July, there comes maybe a little bit of tick up at the end of the year we saw this tick up. Also because the inventory stabilized, so that really happened. But the tick up was at a small rate, let's say, than we hoped for or expected. But I'm sure, it will come -- the tick-up will come, and we think it will come already during this year, probably in the second half.

But, it's very difficult to predict the speed of this recovery. But one thing is for sure, that business will recover, because we're in fantastic position. Last months, our order intake and inventories already stabilized. But overall, over the year, we faced an organic decline, especially in the second half -- and mostly in the second half, I should say. Revenue partly compensated, as already said.

Many new developments in service treatment, it’s very good to see and electrification of vehicles. We have very, very nice offers, where we are in the process to come to close and to start a production. What you see in our opinion is that the automotive industry in Germany is more and more making a new models, electrical models, close to their base and also shifting production to other countries where we will follow. And also precision execution in combination with the surface treatment did a very nice job. Good progress of the integration of the previous acquisitions, and we acquired PPC and Applied.

Important that we also said, we should really now leverage also the acquisitions and the business plans, which we made for all these companies and also for North America. So, that's also why we were in December a little more cautious with acquisitions for the coming three years, because we have so much to gain with our existing business. Eastern Europe performed well, and operational excellence and leverage, we took really a lot of actions to reduce the costs already during the year in service locations but you can only compensate in this business the low volume partly. Because when you have a furnace or a surface treatment line, you still have the energy costs and you still have the personal expense, even when the furnace order service treatment facility is working for 60% to 70%. So, you need volume and then of course you can reduce course but you can only compensate partly.

But, a very nice business, as I said and it will recover. Additional actions to restructure and streamline the overhead and the group structure, we completely streamlined it. We took out a lot of overhead. And also, based on the merger of the former two companies and the acquisition of Impreglon, we took additional steps to do that. In the end, still we made a margin of 12.6, which I think in these kind of circumstances, is actually pretty good when you look what happened in the market.

Capital allocation is invested mainly in growth areas, Eastern Europe and America, new technologies added its manufacturing and again, it's also fire-related CapEx of $10 million to $15 million, let’s say close to $15 million. And of course you always have your maintenance. And we are looking, also based on what we said in December, to further optimize our service network and footprint because we still have some businesses where we may be can better say we should digest, but as part of our strategic plan. A solid performance, in our opinion, despite lower order level in Europe. Climate technology, a very nice example again of a new digitalized product, it's -- which we also developed together with our digital apps in the Netherlands and France, realizing a saving of 30% on energy.

Climate technology good level, in all regions, many new product lines. In the end, maybe you could say, maybe even a little bit too many product lines, because when you launch a product line, in the beginning, you have a minor sales impact, but you have a lot of costs. Because you have to manufacture it for the first time, you have to put it on stock, you have services issues, and we have in the beginning of the year '19, really some service issues because we were overwhelmed also with the orders of got. And we didn't have the equipment in time and you -- that is also what manufacturing is. But, we solved it towards the end of the year.

So, we could have reached also very higher organic growth when we wouldn't have faced these issues, but that's also part of launching new products. The point is, you have to solve it as quick as possible what we tried to do. Connected products, gaining data, new business models, we -- it's starting, it's coming more and more. Talking to the building owner, how can you reduce the efficiency -- how can you increase the efficiency of your energy use? How can you connect products to gain data? It will become a nice business model more and more, combined with the products we have. That's what we want to do.

We have products, we are a manufacturer, we are an innovator, but you have to combine it with digital models. That is our thinking about the future. Additional costs in sales and marketing, as already said. And we have to streamline further also our manufacturing footprint and supply chain in this segment. And there are also possibilities for that also after the transformation to go to one cluster in this sector.

Capital allocation, we started construction of the new facility in Almere, where we will have a production plant for one of our product lines because we need to expand in capacity. And we will combine it also with a distribution center where we will again integrate existing centers which we have in Europe. It will not be 7 or 8 but probably it will be 4 or 5. And of course, we can also grow there. So, it will also be an efficiency improvement in distribution.

It will become our new head office of climate technology of hydronic flow control with a fantastic demonstration center. And we hope it will be ready end of this year. We have to facilitate several product lines and we optimize the portfolio by divesting the Company stock. We did that in the last quarter, in actually last month. It is a manufacturing location in Germany, which was a non-core location but we need further portfolio optimization here.

Because a big part of our business is doing very nicely in high margins and other party is doing low margins. But, we think it’s also not our core business, but also we think it -- we can better focus on the smaller portfolio as also already presented last year. Good organic growth, many new product lines, further portfolio optimization is the key thing here, but a nice business. Then, industrial technology. We launched a new dispensing bar gun.

And we can say now, we are almost two months in the year '20 that is successful. It’s a new bar gun, which we redesigned. It is compatible also with other products, retrofittable and it looks like a nice success. Industrial technology, organic growth, innovation, semicon efficiency, solid organic growth. A lot of people ask me semicon will go down.

No, it didn't go down for us. Only our growth pace was lower, at a lower level than the years before. But we are ready because we used the time to streamline our organization. We are ready for the next strong ramp up, which will come in 2020 and 2021. And let's see how it goes after that.

Fluid control, market uncertainty, postponement of orders in the industrial area, and inventory reductions in the same end markets as already mentioned. Last month of the year, we saw the inventory reduction stabilized in the order intake and also for this year, it's still an uncertain situation, but also innovations will bring us further. And I think, when the situation stabilizes more, especially also in niches, then we also see a recovery year probably during this year. Operational leverage and excellence. We streamlined advanced mechatronics.

So, we took advantage of a little bit lower growth here. Actually you could say, it's also good that that maybe sometimes happens because you can really optimize your organization, be ready for the next ramp up. And flow control -- fluid control, we aligned the cost structure in organization. We did it very thorough, quick. And of course, we had to add on also the full year sales effect of the acquisition.

All-in-all, we made a nice EBIT improvement. We went to 16.7% EBIT and we had the same capital expenditure. The capital was spent on the new R&D center in Graz, Austria for our company VENTREX. We further expand the capacity in semicon. We are also looking for a plan now for this year again to further expand also this year for the coming years.

And our innovations and related manufacturing assembly equipment before our new innovations. Therefore, also we spend capital besides the operational excellence initiative. So, that is roughly industrial technology where innovation is driving our growth. And we also took advantage of early investments, especially one or two years ago in our advanced mechatronics business, but also in certain fluid control parts. So, I give now the word to my colleague, Mr.

Monincx.

Arno Monincx: Thank you, Wim. And welcome everybody also from my side, also the people in the webcast. And I want to take you through the revenue bridge that we presented where we explain the improvement of €83 million from '18 to '19 in different items of course. First of all, the acquisitions costs and the positive revenue effect of €38 million, the divestments that we did in 2018 and 2019 cost a negative revenue effect of €59 million, and the currency impact of the translation of the foreign exchange cost an impact of €34.5 million positive this year, instead of negative last year.

The organic growth of €29.1 million four Aalberts total can be split off as we've already explained in two parts. Important that we focus on that big difference because as said, we faced stronger organic decline in our European surface technology businesses causing a negative revenue effect of €21.2 million. And in all the other Aalberts businesses together, we realized an organic revenue growth for €50 million positive. And also in that area of course, there were markets like already touched, the industrial markets that we’re not running full speed. At the end, we ended the revenue line with €2.841 billion in 2019.

Now, the related EBITA bridge from 2018 €365 millions, 65 million 0.5. Of course, the first step is to make -- to take you back in the memories of the presentation of last year where we explained that we faced an yes incidental benefit of 10.6 million of which one of the bigger items was, for instance, the property insurance claim that was compensated by the insurance companies to Aalberts, and where you make a book profit, so that is really not operational. But that came into our P&L and that’s also the reason why this all the elimination line for full year ‘18 was generally around zero and minus 0.4, where the first half year was still the normal level of around minus 6 million. I will come back to that later in the segment reporting to give you also some more let's say insight in the half year one, half year two situation. But for the school year comparison, it's very important that everybody understands that this is in our numbers and that is something that should bring the start [ph] point at a lower level.

Now, the acquisitions EBITA, the acquisitions of ‘18 and ‘19, they drove to EBITA with 14.8 million. The divestments of ‘18 and ‘19 that cost negative impact in EBITA of 6.3 million. The currency translation differences for EBITA 2.8 positive. And then, again, the organic impact of our revenue, it relates to the EBITA, negative for surface technology, Europe, €17.1 [ph] million and part of that -- as a part of that of course also some restructuring cost because we took a lot of actions also to adapt to the market situation. So, about €3 million of one-off costs is included into debts.

And on the other side the organic growth of the Aalberts business together that cost positive EBITA impact of €13.5 million, which is more than 26% drop through, which looks quite normal and as expected from our businesses as we also presented in the capital markets day, how we see that with the future organic growth, what the possible impact it will be. At the end, we ended up the year with an EBITA of €362,600,000. The condensed consolidated income statement. First, of course, revenue line already explained, then operating profit. What is not mentioned here but what I would like to also to stipulate a little bit is the added value that took -- that grew from 62.6% to 62.8%.

And that describes, I think a good performance because first of all, maybe you can remember from the first half year figure, we built up, let’s say much more stocks in 2018 than we did in 2019. At the end, we ended 19 with let's say 63 million less stock built as we did in ‘18. So, the positive impact of that we did not have that advantage this year. And secondly, as you know and also Wim explained that the decline -- organic revenue decline of surface technology Europe is a high margin business with a very high added value, actually in the highest area of our business. So, also that decline is going through added value of average total.

And despite these two big effects, the added value increased with 0.2%, which proves that the portfolio is further improving and getting stronger and also the project position of the business that we have with the innovation that we bring to the market is of course stimulating that. Now, IFRS impact also here adds to depreciations for instance but also for the net finance cost also have an IFRS impact. The income tax expense, also already touched, an EPR, going up from 21.4% as expected because that is also what we guided last year that we expect an EPR of between 24% and 25%, but it was a little bit less than expected, but it went up already to 22.9%, 1% [ph] in asset. Also that impacted our EPS with about €0.04 -- not with about, with exactly €0.04. The non-controlling interest a little bit higher and that's at the end comes to -- and net profit before amortization of 267.4 million versus let's say $234.9 million last year.

EPS, asset 2.42 versus 2.49 of which €0.04, the EPR impact and another €0.01 for IFRS, so the total let's say operational decline of EPS is €0.02. We believe it's a very solid and resilient performance in more difficult market environment. The condensed consolidated balance sheet, there you see some small change for instance in the working capital, I'm sorry I'm on the wrong page. The balance sheet where we see that the equity is remaining strong at 53% and net debt is going up quite large here with €167 million -- with €165 million but big part of that is IFRS as already mentioned and the net debt excluding the IFRS went up with only €2 million. Despite two acquisitions, despite the increased CapEx, that is of course also into debt number.

The leverage ratio net debt divided by EBITA from 1.3, it went up to 1.5, including IFRS. Excluding IFRS, it remained on the same level. And net working capital increased but also there we believe that the balance is much better than last year, and that is also already strong in the first half year. We built up much less stocks which of course had an positive impacts on the cash. On the other side, we also received loss in the same period and we paid more to our suppliers.

So the net effect of the [mutation] of working capital is quite small, but the balance we believe is much better than last year. Days working capital went up with one day at the end and the big takeaway, I believe also from this slide is that IFRS 16 has a big impact, mainly on net debt and royalty of course, which is an going forward KPI for us. The condensed cash flow statements, consolidated cash flow statement, where you see the differences in working capital. I already mentioned only 0.9, let's say, difference between '18 and '19, but in a very difference substance. We paid less income tax than last year, because we had to take compensation within the tax obligation in '18 and '19.

So it's small this year and acquisition and the disposal of subsidiaries is €10 million versus €131 million last year. At the end the net increase in cash or decreasing cash is about €9.5 million, and the strong cash flow from ops with net working capital more in balance. Revenue and CapEx, now the segment reporting as you are used to get from our side and also here you see of course the different developments per segment again, like already also was taken care of by per segment. I believe that what is interesting to see is that you see that we are really investing in our organic growth plans and equipment if need to realize this and as you of course also see a big one, a big plus in material technology. Although, the market was of course lower but for a big part about €50 million that has to do with the replacement of lost equivalents from the fires of last year.

Total CapEx 148 million versus 133.9 last year, an increase of 11%. Operating profit and EBITDA margin, here's the splits you can see the split for, let’s say per segment where you can see of course the increase of the three segments that are also growing organically and the decrease in material technology. Now that there is I think what we already have discussed. But what is very important in this overview is the holding elimination line, because there you see what happened last year we had 0.4 full year holding elimination line where a normal level as we have already -- always guided is between 11 million and 12 million negatives, because that is the holding cost and some other costs that are booked into that line. And last year in 2018, the first half showed a normal fixture and then we had these fires and we had a lot of incidental topics and at the end, full year effect was 0.4 negative.

And that meant that we had about 11 million incidental benefits what was booked in that line. Now for a big part again, that was done, because we had this property insurance return, which was cost a booked profit. So we had to administrate that in that line. If you see going little bit more into the depth also maybe later for the questions, what impact that has on the second half year, there's also prior to big impact, because the first half year, as I said was minus 6.1, a normal level but the second half of '18, it was booked as a positive of 5.7. In this year, we presented already to you the holding elimination, the first half year '19 as a minus 3.9, because we had some benefit from divestments, a smaller divestment.

The full year is minus 11.7. So the second half year correction is minus 7.8. The minus 7.8 in relation to the plus 5.7 of '18 is a difference of 13.5 million entering in our second half year numbers. So you should take that into account when you look into our performance of '19 and in particular second half year. At the end, the main takeaway of course is that we increased the EBITDA margin in three segments and that there’s a decline in material technology.

Now we have a complete table as also in the press announcement, which the adaptations impact of IFRS 16, which is we are also not really happy with it of course, it's confusing a lot, but at the end we have to deal with it. So this is the table and for next year at least in comparison it becomes a little bit more easier, but for EBITDA, it has quite a substantial impact, EBITA only a little 0.7 million. Now you know the table of course big impact in net debt, capital employed and that has impact again on the ROCE. So that is what we should take into account analyzing our figures. The dividend proposal, as it was also communicated, we propose a cash dividend of $0.80 per share, which is 7% increase and also there we believe we invest a lot in our organic growth plans that brings us to the -- it's a nice increase of course 7% increase and it brings us to the review of the financial objectives 2018, 2022 and that is all presented, if applicable, before IFRS 16, because that is where we set our goals at and that is also where we are focusing on.

The organic revenue growth overview of an effort of five years, you see that of 2009 and it is then including the four years before 2009, '14, including the four years before '14, et cetera. And '19, where you see that, including the four years before '19, we are on efforts now of 3% and our objective is for the full period of '18 to '22 these five years more than 3%. EBITA margin in the same way, let's say, in '19 it was 7%, in 2014 it was 11.2%, in 2019 12.8%. And there the objective is, as communicated also many, many times, of course, but also confirmed in the Capital Markets Day more than 40%. And in the Capital Markets Day, I think we have already shown where we believe the approvals can be made and where we believe how we believe we can realize these goals.

ROCE, return on capital employed, also increased over the last years, you see a nice let’s say trend. Of course it's not impacted this year when you have low performance, the projects and also you keep on investing and also acquiring companies. It has impact but we still see a lot of potential to improve that. We have already announced our divestment program that we will accelerate and that we also supported but of course especially to self help of our internal business but also the organic growth plans to create more profit for the future. And at the end, we should realize this objective of more than 80% in 2022.

And the free cash flow conversion ratio at this moment 60.5%, the leverage ratio of 1.3 at the same level of last year and the [solvability] percentage of over 53%. And that is already above of course the goal that we have set. Aalberts accelerates and we will achieve our strategic objectives, as said in the Capital Markets Day. Looking forward and I think what you see here is the key takeaway on the next slide, that's what we said in December. So of course, three months later, its only three months later than the beginning December, we still have the same key takeaway.

We allocate our capital in the most efficient way. We further narrow our focus so we are very busy with that achieving uniquely the market position with sustainable impact, building an even stronger and better Aalberts, accelerate organic revenue growth, so we are doing that. And our goal is to realize an operational leverage drop through 25% and accelerate the portfolio optimization with €300 million to €350 million of let's say revenue where are we now did the first thing in December, small thing roughly €20 million. And further focus and clustering and simplification of the organization where we already made a lot of actions the last month and the last six months. The driver of the EBITDA percentage increase is the operational leverage and excellence mainly and in an efficient capital allocation drives return on capital employed increased to evolve into a stronger and better Aalberts.

And of course when you have a dip or some headwinds during a certain period, it doesn't mean that you will also going to change your strategy. We will pursue and be relentless in our execution. Aalberts is this looking forward in the segments. We try to give you here a little bit guidance about our thoughts. Of course it's not in number we will not do that in 20 as we do that not in any year.

We give guidance over our strategic objectives on the long term. That's installation technologies in technology, many field innovation and efficiency initiatives. We did change the management one and half year ago. We have strong for strong team and we see the efforts of that also in '19 where we have really better inventory position, much better, we generated much more cash and we’re also improving despite these cash initiatives our margins. We have a great sales force in Europe and America, which gets more and more traction and that, all will have a positive asset.

We see that every day now we feel that it's only very difficult to predict when everything comes together more and more but it is coming together more and more. There's so much to get here as you also hear in December. Material technology, the European business will recover. Cars will be sold, machines will be built, planes will be built, I think 40,000 in the coming 10 or 15 years. Gentlemen and ladies, this will not stop.

So when people are uncertain, look to yourself, you stop investing little bit, you are a little more careful but it doesn't mean that the world will going to stop, it will recover. And let’s see, first half, let’s see second half, could be a little bit better and then it will continue that’s our expectation based on our management but also based on what we learned from the best. In the meantime, we take the initiative to streamline our organization in a very rigorous way to be much more and also realize the business plans of the acquisitions we did in the past. So we will continue and we will pursue mainly here organic growth and optimization. Also here acquisition will be on lower pace for the coming three years as already mentioned in December.

We guided between 100 million and 200 million over this three year period and that is also what we are doing. We are focusing on improvements, leverage, excellence, organic revenue growth, creating unique position with innovations. We are exactly doing what we say. Climate technology, leverage the newly launched product line, it's nice to launch product lines at least 15 or more. But in the end, we need sales, we need margin.

So we have to pursue all these investments and get the returns out of these investments. We have to get the leverage of all the things we did and accelerate that revenue growth. In the meantime, especially climate technology needs portfolio improvement. We need to divest certain activities as quick as possible as already mentioned earlier. Industrial technology, strong growth in semicon efficiency, we are preparing ourselves at the moment.

I'm very happy that we did the investments two years ago, because otherwise we could never have gained that position, which we have now. So we did it again last year and we do it again this year, because we believe in this business. We are able to double this business in semicon efficiency, as we said, but you need to invest and you need to be ready to deliver. Further capacity and footprint expansions, Europe, Asia, we’re working on and very, very nice position we have there with unique IPs, unique patents where we are a pretty unique player in that industry. Fluid control innovations will accelerate organic growth, the full flow valves, the regulators, compressors, high pressure valves, a lot is going on in Germany in our company, a lot is going on in Denmark and we will see there some nice innovations coming in the market more and more.

On the other hand there is still also some uncertainty, especially in automotive. You still see that here and there what is going to be developed, is it hydrogen, is it LNG for trucks, but we are here, we are talking to the OEMs. It is a very interesting time, because a lot of new developments are in the things and efforts of the OEMs, and also the automotive will recover. And also there will be combustion engines also in 10 years. It is impossible to have all electric cars on the road for 100%, it's impossible that's our opinion.

You still need hybrids, you still need combustion engines. So we have the whole portfolio and we are in investing and also innovating in the new segments, like hydrogen, like LNG, like CNG but also fuel reductions for marine, new legislation, so this is how we see the segments. Our outlook, Aalberts outlook is the Aalberts outlook. We do what we said in December. We will accelerate our actions as presented and we remain confidence in all these plans and all these plans need investments and we achieve our strategic objective, that's our goal on the long term and as we always said as soon as possible.

One remark I want to make, when you look to our material technology business, when you've lesser volume in your factories, you'll get hit hard as you could see. What is also there, you have a lack of cost reductions that always go slower than when the revenue goes down. The same effect but then the opposite, you get when the business goes up. And when the business goes up, you have the same effect but then on the positive side. So don't forget that we have roughly 90 locations in the world.

We have a number one position in service treatment with fantastic projects in electrification of cars, aerospace but those who need treatment, we have great position in America, Europe, and it's not so easy to copy that business, because you need a lot of capital, as you know. So we got confident in the recovery and then you will probably also see another picture. So thank you very much for listening to me and my colleague. And I hope we have a lot of questions, because we are very anxious and motivated to answer them to get a wide picture of our performance of ‘19. Q - Martijn

den Drijver: Martijn den Drijver, ABN Amro.

To start off with installation technology, I actually need a bit of your help. The reported growth is 0.3%. I think you've had some tailwind from the U. S. dollar and the British pound.

By my calculations given the proportion of the UK and the U. S. business, 1.6%, there was no M&A impact. So if I come to a negative organic growth, while you're saying that it's positive and actually it's good. So maybe you can help me out here, that's one with regards to installation technology.

Then if the organic growth is good, I don't know exactly what that means, 1%, 3%, but you may actually provide some color there. I was wondering, given what you said last year, also what you said during the year, the finalization of the D. C.'s, global alignment of integrated piping, many optimization and efficiency initiatives, growing sales from innovations. Isn't the 20 basis points margin improvement a little meager? That's the second question on installation. And then the third one on the installation is what was the fast selling product lines? And then you mentioned in your presentation, and I would like to know which one was the fast selling product line? And then on material technology, you have said now at several occasions that you expect a gradual recovery during the year.

Is that based on RFQs, RFPs, orders, just discussions or maybe a little bit of color on that? And then the second question, I'm almost finished here. Even if you adjust the CapEx in material technology, €40 million to €50 million from the fire, it's still high. What have you invested that in? And then my final one, if you look at the cash out from acquisitions, how much of that was actually earn-outs, so we can calculate roughly what you actually paid for those acquisitions. Thank you.

Wim Pelsma: Now starting with your first question on, let's say, the organic growth of industrial technology here, because you said there is no impact of acquisition in the assessments.

Now there is still, because we divested our retail business in 2018 for the 1st of July. So there's still healthy impact in 2019, negative plus we shifted some business, and we shifted some business between installation technology and climate technology. Martijn

den Drijver: I seem to recall that you also -- you sold to business, which you kept on selling to the actual buyer. So it shouldn't have a sales impact?

Wim Pelsma: That's correct. Let's say the sales that we have to the outside groups, we don't have them, so the sales to the retail customer is up…

Arno Monincx: But the total impact was €40 million on annual revenue and we did at 1st of July and it was €20 million impact.

I think the organic growth of roughly the second was of course and material technology was minus, but actually minus two, minus three, you could say minus three, because we’re compensated by the U. S. and also aerospace. Installation climate, we did pretty well in our opinion, because we don't forget in installation technology, we have also in the industrial components in America which is pretty big where we -- and actually the only thing what I had expected it would be better, but due to the uncertainty, which happened in August, we showed a loss of course to the postponed. So there also we did roughly three installation climate, would be the three plus and then U.

S. roughly, so I mean industrial technology we did also small organic growth despite the much low semi-con despite all the headwinds we have there also. So, yes, it is roughly the picture. And then your question I forget…

Wim Pelsma: I believe your second question was about the margin and installation technology that you expected that to improve bigger, faster or higher. As I said, we have really a big difference with last year where we built up a lot of stocks and mainly also in the area of installation technology, where this year we didn't have that effect.

So that is really in a big, big, let's say, impact for that and nevertheless, we improved it. So there is margin improvement but we are convinced that also therefore that in the next years, there's further margin improvement possible, because that will come out at the end because we don't have that effect. We are focused in America mainly on stock reduction. And partly it would also be this year and it has to do, the moment U. S.

distribution set is ready, but it's just a set ready. And the reason why it took in our opinion also long but let’s agree I believe we also want margin as soon as possible is that you first have to set, the inventory we had but we didn't know what was the read you need of every skew. We didn't have that knowledge. So in the beginning we put a lot of inventory and I tried to explain it also one year ago or two years ago. So now we had this information more and more so we can optimize the stock.

So we looked really -- we focused mainly on cash and on cost reduction streamlining, but we are not done yet. In the press release you read there as a first step. We see more cost optimizations possibility. We see also better inventories possibility. And I fully agree, we should be able to increase further the EBIT margin and it has also to do with the leverage of your factory.

So the moment, of course, lessen absorption, which we have because we reduced the production, you already start negative. But I think we are in a better and better position. We are now in Europe actually busy with also the centers are there essentially all of them. So we are now moving the equipment from Amersfoort to Zeewolde at the moment. And also there the warehouse that we would integrate the other warehouses, it should be operational in second half.

And so also there we made big progress but yes, we do a lot to optimize the business still in that segment. UK didn't help, don't forget the UK, it's not that the business was so bad that was not even the projects were there. They were the lower level and they will also be at the low level coming years. So our expectations maybe the government can help, but we’re also winning market share. So that was that, but what didn't help is that end of March everybody ordered, we had very high stocks, our wholesalers.

And so you have to produce, you have to take in people. And then they don't need to, you can stop your production again and that is so bad for a factory. So that did really not help, difficult situation for the time but we managed that but it didn't help. So that's roughly installation technology. Fast moving product line is a very nice product line, we are very happy with it and there's a certain color.

But I don't want to say too much about it. And that's also we write it like we write it in the press release. But when you read well this book then you can -- it has to do with an integrated piping system where you try to get the connections on valves and on the product we also making new systems, so the connections with valves and there we see really attraction in the market, we’re also getting some very nice big key accounts in Europe but also in America, where we actually have the hands full to produce everything. And so that's -- but we have to get it more efficient also. So that situation that I fully agree the potential of that segment is still the same as we always say but also had some headwinds there in industrial.

Material technology, why do you think it will recover the U. S. science for that. Now the science for us of course our possible orders and possible orders are our customers, but also our experience and also our management. So the opinion is based on that.

So what is the order intake of the last month, what do the customers say and what is normally happening when inventory reduction is over? And there you have also some differences, the region but that's why we also guided in this, it’s difficult to predict the speed of the recovery, some also canceled. So for the first half, let's say it stays little bit like it stays but it could be that’s going through the second half, you see some improvement but it’s difficult to predict but it will recover. And we see already some signs for this but also some nice projects. High CapEx where did invested, I tried to explain it, the most CapEx went to Eastern Europe and North America. And we on purpose, because we were in quarter three, four, especially quarter three, we also already said to each other, should we look at CapEx, because you can’t do things where you want that we see opportunity in Eastern Europe and North America, and we think it's that which will not last forever.

So when you cut off investments then it's very difficult to start them up again. So we believe in investing and also because Eastern Europe and North America we have very nice positions to grow. So there the CapEx went, the other thing went the new technology. We invested in North America and additional technology for additive manufacturing. That's a certain process and the pressure and also high temperature treat the parts.

And yes, actually there is almost no competition besides one company. So we see a big opportunity somewhere in the South Carolina and North Carolina. And what we get now back from the market is very promising. So we will even go more invest in that area. We should not stop that is actually what we said, because we will overcome this and I think we will even come better out of it, because we also streamline the who organization.

And based on the Capital Markets Day, we also looked at the portfolio, the locations where we'll, and it’s part of the divestment program, but we also cash out of the acquisition. Let's say we did two acquisitions. We had some deferred payments and we had some earn out payments that we have to do. So at the end that total number is included all in these lines. So it’s about six, seven items.

Martijn

den Drijver: And would you be able to provide the components for the deferred payments and the earn out, so we can get to the underlying cash out for the acquisitions?

Wim Pelsma: No, we don’t disclose that. Luuk

Van Beek: Luuk Van Beek, Degroof Petercam. Well, first you mentioned that towards the end of the year the markets were under some pressure stabilized so we see after that…

Wim Pelsma: Order intake inventory reduction stabilized. Luuk

Van Beek: But after that the market, it will continue with Brexit, the corona virus and other elements. So do you see the pattern continuing in the first two months of this year?

Wim Pelsma: Yes, these are two things.

I think when you talk to the UK, look to the UK. I think the UK we took the decision to retake cost reduction actions with last year already, which will continue. And we also wrote that a little bit more in the press release that it will continue this year and that will have effect probably end of this year but also next year. The second thing we're going to do in UK installation technology is we have accelerated our innovations, but we do have already last year to get more market share, because UK becomes really an asset that was already the last year so we really accelerating that. But also the innovations we have now more and more globally launched that’s also explained in the press release.

And we have a much more efficient way of launching new product lines because of our global management structure, which is really getting more and more traction, which we changed two or three years ago. And we will do further consolidations in Europe that means that in UK we will probably consolidate some locations inside the UK. So we get more added value, that are the actions we going to do in the UK. The total market had a lot of time uncertainty, I think we caught well with it but the volatility hurt us. So hopefully we get in more less volatile situation, because there is now a decision.

I'm very happy with that that there is a decision and now you can really become also more efficient in your manufacturing. But you can almost say every week unforeseen circumstances. I'm not accountable for it, because tomorrow is corona, the day after tomorrow it is trade wars. And so I don't know what happens in the political environment. We do our thing and we focus on our business and we’re going to execute our strategy.

Regarding corona, it seems to be a virus, corona and it’s in China, we have not a big direct impact, because we are not so -- we have a very small position in China, we have only three, four factories. And the factories we have there are for half roughly based in the south. And there you see that roughly, may be not, it's already increased again. But the last weeks because we did some tracking, of course, with our people is that 60%, 70% of the people are working again. And in the area of Shanghai, it was more like 50%, which was working again but I think more and more people are beginning work.

So I think directly it will hit it a little bit, but it is very numbers. What is more of the thing but I think then although there's an issue is then of course this is a ratio in corona takes longer than in our opinion eight to 10 weeks longer and the supply chains of our customers, especially in the industrial arena where they can’t deliver their our own OEM products anymore then of course, their sales will go down and then they also will need as lesser, so that's a sort of indirect effect. It's very difficult to predict. At the moment, it’s not the case, so we have not real issues at the moment. I think the coming six to eight weeks, I think is also okay.

But when it takes longer, when it takes three months still, but then we will not be the only one but our sales in China in that area is very small. So the other thing is ours is as always said, is producing in that part is very local. In America, we make almost 95% our sales for the local market and also in Europe, and also in the UK. So that it can also be an advantage. We see here in there some advantages already that they want our products, especially in certain piping systems, we see that at the moment.

But I'm careful and therefore, I don't know exactly, it's too early. And therefore, we didn't wrote anything in our press release. But of course we living in the world we live in. We have to be alert. We have to react.

We also react now on the new electrification of vehicles, but there is also a lot of opportunities, so that would be my answer. Luuk

Van Beek: And then lastly, you had quite some positive one offs, this year you had restructuring costs. Would you consider them…

Wim Pelsma: You mean '18?
Luuk

Van Beek: Yes, it’s…

Wim Pelsma: Last year was ’19…
Luuk

Van Beek: I mean '18 and '19. So the restructuring cost in 2019, do you consider them to be at a normal level as we see also going forward, or should there be a positive comparison base effect?

Arno Monincx: So we have always said that between €11 million €12 million on the elimination line is a normal level. And that's also what we foresee for the coming year.

Unless we will do in the divestments, because as we also always explained, is that we, of course, when we do our assessments, and when we make some money on these, which is, of course, also our goal and when we do investment so we can really try to do the best possible deals, and if you can finance with that money the improvements of the Company and that's how we always have worked. And it's very important. And that's a that is different that therefore the difference in 2008 was really that we have of course also there we did divestments and also there, we did some restructurings and these kind of things looking at one big thing that was really exceptional related to the fire and it was this property insurance claim and that's the reason that is why that shows a different picture in 2018. With right, I would say, it was the right way to show it because it was an incident. And that's also what he tried to explain to everybody but maybe not always clear what we are doing is we as a divestment portfolio of three owners of €350 million.

We can't divest that in the coming three years. We try to do with it at the best way. So, you optimize where you can and then try to diverse it. But of course when you can make money on it, we are not in a hurry. We're going to do that.

When you're having money you sometimes use it for restructuring or other things. as we always do the last few years to optimize our core now when you look to the amount of operational excellence and leverage things you still can do that depends on maybe if you are successful with a divestment or not. We know exactly wrong what we want to do internal, so it's very difficult to guys. What is the exact number of if you have any holding corrections? And but in principle, we have always said also in the past is between 11 and 12 and 10 and 12 million because we have holding costs of 8 or 9 and we have always 2 to 3 million redundancy costs. So, then you come to the normal level, that's a normal level.

But when we do additional things, you read that there's a lot of folks who into further have. We try parking goes into finance that with our divestments to optimize, to narrow the focus of the portfolio. So, that's the just continuing what we are already doing for the last four or five years. We are going to reduce the number of locations. That's what we also said in the.

Wim Pelsma: Tax rate is same. Tax rate is by my former colleague always guided between 24 and 25. That we have now 22.9, yes, this is you could say, yes. This came out better than we thought. Yes, it is between 24 to 25.

Arno Monincx: Yes, there's also expectation for 2020.

Wim Pelsma: So, especially when you put that in and when it's better, it is better, but it's also difficult to carry the exact number. It's impossible. Luuk

Van Beek: Then my final question for now is on the drop-down at the Capital Markets Day you guided for number of 25% drop through, but if I now assume into service technology rate, if the revenue is in the EBITDA impact then I get to 67% at the same time, you mentioned that obviously a lagging impacts to cost reductions. Is it -- when revenues go down also fair to expect with sometime lag to have 25% drop-down? Or is it asymmetrical? Or is it difficult for business where there's higher percentage?

Arno Monincx: Let's say the numbers 25 per year for the souls of those Aalberts.

So, that is what we gave a direction and what we see in the organic growth of the other Aalberts, businesses that you see that at least a better number than 25%. You may expect with all the approvals that we makes in the Company coming here, there's also get normal will go up. But in the decrease of this specific area of surface technology, within very high at its value because they make any surface treatments or a heat treatments, there's no raw material in many cases involves or only a little. So, the added value is slightly big, so when you go down in that particular area, of course, your dropped down is higher. You compensate that with cost, but you cannot compensate everything in the same pace.

And besides that when we face that situation, if you have it today, and we also make some extra cost to further decrease the costs.

Wim Pelsma: Roughly on the 21 million, which was mainly happened in the second half, meaning, we lost an EBIT of roughly 14 million where you have 3 million roughly, 3 million redundancies. So that means when we have 21 million growing up again, you have also higher drop through, then the average, that's how their business works. And the reason why the business work like that that you have an installed base over which you have to fulfill with volume, certain volume. You have the certain break even points what is relatively high.

So because you still have to function these equipment. So when this equipment is not fully full, still the energy costs and the personal cost, so you can’t save more money. So your leverage goes down. But the other way around is the same story. And when you wrap again, what is very important is recovery of the volume and in the mean time what we do immediate and we did it very quickly.

We've reduced the cost of that possible, we have temps, we streamline, we further optimized And what we did additionally, and that is really new, was that we change the whole group structure and we really took out a lot of overlap because we merged, AHC in Impreglon. We merged the two companies after the acquisition in 2018 so it was really one organization now. So we could also now take the step to reduce further overhead. So these things will have an effect also in the coming years and when the business comes back you have a nice leverage for any other way around and there is higher than its filed. But in average, our goal is to have a drop 25 to all the business.

Henk Veerman: Henk Veerman on Kempen & Co. My first question is also on the material technology. I'm still trying to wrap my head around the operational leverage in the second half of the year. According to my calculations minus 5% organic seals growth and minus 15% to 20% organic EBITA decline.

Wim Pelsma: Do you mean from material technology or?

Henk Veerman: Yes, materials technology in the second half of the year? Could you maybe, because you also get these graphs and I think that the drop through as you make it visible, it's almost like it's very significant as my colleague mentioned.

If you include this restructuring efforts you did like, how was it structured look like? Can you maybe give us a little bit of a guidance?

Wim Pelsma: For material technology.

Henk Veerman: Yes, exactly.

Wim Pelsma: About 3 million is what we say. 3 million, so you should have, so the business -- when the business goes down 21 million, which was the EBIT, that's a new bridge, which is mainly has taken place in the second half. Then we lost their roughly 14 million of EBIT because €3 million is restructuring.

That's in the service technology activity in Europe.

Henk Veerman: Okay.

Wim Pelsma: That's what standing in the bridge.

Henk Veerman: Okay. And I think, secondly related to that, regarding your CapEx spending in the decision.

Wim Pelsma: Yes.

Henk Veerman: If you, I mean, it's one of the most capital intensive business. If the market would remain a bit muted in upcoming years as some people expect.

Wim Pelsma: What is in muted?

Henk Veerman: Low growth to no growth. Would you consider, let's say, delaying your investments in that division? Because I think this is also the main strategy return on capital, KPI.

You spent more of the CapEx here, if we have to take in the account operational leverage in case you know the business decline. It could be expensive in KPI.

Wim Pelsma: It's not only CapEx, it's goodwill of acquisitions. In general, the comment on material technology, it is high CapEx business. We did also acquisitions there for the last few years, yes, pretty amount of acquisitions.

But we also pay goodwill and of course in your existing business in Europe as a lesser EBIT, you still spend the CapEx and also the 2 acquisitions, PPC and Applied. Now, it's a simple math than return on capital does down very quick. So, that's the case where we are in. What we say, this business will recover and soon recover. So, we are very happy with that business, also to be clear.

I am very happy with the business. It's a great business, but it has also has own characteristics and so you get the other side again as you see it goes down. When of course the market, it is as simple as that mute for the coming years slow or no growth, yes, of course. When we see no opportunities for growth and that comes, no return out of it, we will also reduce the CapEx. Therefore, so, we have reallocated to CapEx mid-year and when you read press release thoroughly.

We reallocated to Eastern Europe and America mainly and American meaning to this new technology because there it can be pretty unique. But, also here as you have first equipment and it can take two years before you have these furnaces filled, and we invested in much less in Europe. So, there we already acted very quickly in the mid year. What I tried to say that of course, it's our opinion is must not become nervous due to the immature technology due to very, very clear reasons. The reasons are very clear.

The automotive was in turmoil because of all the emission things -- because of the lack of capacity for testing, which is also the emission ruling is more and more clear. And when they are insecure and then they are going to reduce the inventories and parallel, we see also a move as certain sense away to low cost countries? But we do, that's Aalberts, we followed them. We changed also and we invest in the right technology, but the total business is not gone. We are coating and treating 1 billion parts a year. That is not gone.

It is a little bit less that is what we say. And then also return on capital improve. Of course, you are right, we have to be careful with investing our capital when there is not growth and the first one I can tell you, when and I don't see the return on growth, I will immediately allocate my money somewhere else. And that is also part of the strategy. When I want to bring your product lines, and we didn't have 15, I first had to develop them.

So I think R&D people, and I need to buy the equipment, then I need to produce, then I need to build stock. And I feel like no zero, not €1 revenue. That's where you see in all this, but last year that's also why we got our focus on R&D and we have no headwinds in certain international markets yet, but it doesn't say anything about our strategic goal. Because, let's see -- this up, of course, we will take action, when there's no growth and maybe more action than just only introducing CapEx.

Henk Veerman: Question to Mr.

Monincx. Could you maybe explain why D&A has been stable for the last 4 years? Despite quite a sharp increase in global assets on your balance sheet, as well as obviously driven by the high CapEx, so that's to do with the time as you discounted assets?

Arno Monincx: Now, let's say the D&A for this year was impacted by let's say correction in depreciation in a building. So that is an impact for a few millions. So normally, the depreciation would be higher for 3 million, 3.5 million. But besides that, the picture is normal?

Henk Veerman: So, you're saying a 3.5 million, 4 million.

Arno Monincx: 3.5, yes.

Henk Veerman: On your D&A?

Arno Monincx: And the rest is normal. So, we still expect that also for next year because we continue to invest of course, and to over the next year, the depreciation will go up. So, actually, this may be dying. Actually, this year it's already expected to go up.

There was one correction, which brought it more or less equal to the previous year. And then next year, we expect that that mutation at least plus now of course new CapEx will start to depreciate also to cut off. So as we expected to increase.

Henk Veerman: So, it's clear there's been no change in the lifetime of the…

Arno Monincx: No, no. Okay.

CapEx will go up. Of course, when you invest more, it will go up.

Henk Veerman: Okay. It's correct.

Arno Monincx: As we and when we don't grow, we have an issue, of course.

But we don't do it any, we do not do investments when we don't have plans behind it.

Peter Olofsen: Peter Olofsen, Kepler Cheuvreux. To come back on the holding costs, do you still get it clear in H2, so you booked 3 million restructuring in material technology and there was there…

Wim Pelsma: It was in the holding cost.

Peter Olofsen: In material, and then, in holding you had a difficult small cost as well?

Wim Pelsma: In the holding, like we must says, we have a normal picture of let's say 8, 8.5 million holding costs and about 3 million of let's say restructuring costs of the more or less has every year and these are plans that will always work on execute just a normal picture. So we always have between 11 and 12 million negative line in the all at elimination nine, because we say that we take the, I would say this exit stage was taken overnight.

The thing in material technology has not to do with all 9, because these costs are booked in material technology EBIT.

Peter Olofsen: But the costs that you booked in holding these are actually measures that you take into…

Wim Pelsma: There is more than this the material technology things, they're more comfortable there. So let's say it's -- we haven't, let's say a normal stable, let's say recurring, it's not recurring but we are planning our plans like that that we have stable, recurring holding kind of the same restructuring of costs about €3 million every year.

Peter Olofsen: But why then, usually booking these costs in the holding. But then this time booking to 3 million in material, I don't…

Wim Pelsma: But we have also redundancy costs in installation technology in North America.

When you lay off people or you streamline, but this is very difficult to get there in a month or. So you have business related costs which are probably there but they always have 2 million or 3 million the edited in pass all the time. So then all the elimination line is routine tenants well this is normal things, we have always small things on the head office, you have whatever you have, a company of €3 billion. There's always something, that's more how you should see that.

Peter Olofsen: To me it sounds like a little bit you can play around with it.

Wim Pelsma: We don't play around the numbers.

Peter Olofsen: Because you booked some costs in the holding while these are measures that you take in the segment. And then for the material technology, you book the amount in the second.

Wim Pelsma: No but also inflation technology we have, it is not book, you just have cost which remains because you lay off people. So that happens every day.

We maybe lay off people now at the moment. So you, we just try to give you some color on the number of '17. That's why I say this is roughly €3 million.

Peter Olofsen: And then and the holding costs in H2…

Wim Pelsma: Because we laid off hundreds of people in the service frequency, service technology locations in Germany and France, maybe we laid off hundreds of people during '19. So that cost you some money.

That's also I give you a roughly finger because you don't have these numbers completely ourselves. Between that's also happens when you streamline the organization in America, with the distribution setup and the overhead. Yes, we change 10s of people in the organization. We change management. We just get some guidance that that our additional redundancy cost in North America which we all we also have this year a little bit but it will be lower.

And we are working on operational excellence and leverage. But the normal pattern in the head office is always between 7 and 12 as are some things which you have also head office. At the moment, almost most of all these things, you book in, of course, in the business, but we also don't know these in detail. We don't follow them in detail because then we have control these people every day.

Peter Olofsen: Then maybe to clarify on divestment, so you had 85, which is already done in the first half? And then I think it's called STAG?

Wim Pelsma: STAG.

That was late in December, very late.

Peter Olofsen: And is it correct that this business has something like €18 million in annual sales?

Wim Pelsma: Yes. But it has no impact in the correction of M&A revenue this year. But for next year it has.

Peter Olofsen: So, that we'll start to the very end of December.

Wim Pelsma: Yes.

Peter Olofsen: And was it cash proceed that was included in this minus 10 million M&A, which we see in the cash? Okay, that's already done. It's over concluded.

Wim Pelsma: Yes.

Peter Olofsen: And then in the holding cost in H2

Wim Pelsma: In H2, there was also a book gain.

Yes, it's a small, it's a fairly small company.

Peter Olofsen: Yes. And then maybe on price -- then maybe on pricing, what was the contribution to the top-line growth for the full year? I think it was somewhere between 50-100 bps in the first half. Was it something similar?

Wim Pelsma: Raw material was pretty stable? So I think that what we already said much earlier is that really the personal costs? There were a lot of people had the idea during there are personal or the salaries are not going up. But you see, really in the second half, but especially in 2020, and not only in Holland, but also in Eastern Europe and a lot of countries.

So I think the main price increase was based on that that topic. I think raw materials we didn't have the big swings we have -- which we had also last year. So I think the effects '19 is not so big actually roughly the same as what we guided in the mid year, I think that could be for the whole year. And it's mainly related to personnel that we really pushed the management and also in the budget meetings in November to take more actions for '20.And because these personalized expenses due to the whole kind of increases. There is sort of where you don't take action, it can be nasty, but we took our actions, because raw material was flat.

Peter Olofsen: Okay. And then own portfolio optimization, which is something you touched on for more than one segment. Was a debt material that product rolling at a noticeable impact on your organic growth for the year? Or is there, is it something that happens each year and it's not really something to that stood out this year compared to earlier years.

Wim Pelsma: In capital markets day we gave a clear guidance for the coming three years. And that's not only divestment, this is optimization of your portfolio, I think we still have a lot of gain there especially in insulation technology, because we have a lot of skews, which we can optimize.

And in material technology, also in location, this also why we guided in December, and we go from 55 122, 54 to 122, so that's all for all portfolio optimizations. Yes, it's difficult to put a number on, but that's ongoing. That also that when you have all the product lines, and you are unless EBIT you said now I rather have lesser revenue but more margin. So I'll reduce the amount of skews, which we for example did in the U.S. and the UK.

So it's a continuous operation where we still have a lot to gain.

Peter Olofsen: You have a digital something at a much bigger impact in much bigger impact…

Wim Pelsma: Not much bigger but all small things help. Especially it's focused, intentional -- when you see the big issue and you see service technology, how the business works. And actually, the word towards what is in the ratio of my colleague mentioned, there's all this other. When you do the €50 million and you do there, this organic EBIT growth, that's a very good performance.

So that's also why we believe. Okay, we have this market environment. We don't know what happens with all, the corona, and as usual, of course, but it says also something about the resilience of the Company. When we are able, even less benefits of '18, we have almost the same operating profits. And of course per percent is going down which we don't like.

There is a very good explanation for it then there is a very solid and resilient performance meaning and as also says that our management x acted very quickly also to reduce costs to optimize medicine. There's also something about the much stronger portfolio we as compared, in my opinion compared to the last few years, despite the fact that service technology go down. Yes, we know that, that business. It also happened but then much deeper in 2008, and '09, and now it's much more going gradually, but it's longer but it's a bit the same situation, much less deep. But I also know you come out of this is how it is because everybody needs spontaneity.

So it's a temporary scene and then when you look at the whole situation, it's a solid and resilient performance because that's our routine. Also due to all the small things for folio, better pricing, management gets stronger. And second by we believe that we believe we reach our strategic alternatives. That is a long, long term thing, and it's not a short term thing to learn to.

Peter Olofsen: Then the final question on the setup of your distribution in North America, when you were still streamlining that set up, you had somewhat higher stock levels, so inefficiency in that some additional costs.

Wim Pelsma: We still have. We still monitor it.

Peter Olofsen: It's not that in HQ that was already at the...

Wim Pelsma: What we did is we try to -- it's a big mammoet tanker and we try to turn that. I think that so the buildup of stocks has stopped.

This is what we see. So, of course, the essentially it is a little bit higher. It's only until million. So, and let's say at the end, we built up 63 million less stocks, within our, our core business. So, that has been known and we have, we have a big part was and also a big part of that was North American, and we have made as we also said and plan to further optimize our over the next three years of 2222, which we are executing with our business teams, yes, who has an opportunity to improve.

Arno Monincx: And all these investments that we make, but as with all these business, like we've already said, with distribution centers, et cetera, that we all do at the end, to come to a better level also of our inventories because we have a better and smoother supply-chain. That is different of course what you need to optimize. You can just get stock and kill your business, but that's not what we want. We want to have a more efficient usage of inventories that we use for our business.

Wim Pelsma: So America situation, we set up the distribution center sort of countries roughly three years ago, the step by step leaders then we put in stock we knew that.

Now, we saw, now we can really learn from the regions. So, we last year also after the change of the management, we got more insight into real stock we need. In the meantime, we did an acquisition is called Shurjoint, which we had to integrate in 18, which is now 17, 18, which is one or two years ago, which also led to rouses but because of the integrate them also or maybe another vitality but very nice borderline. So, now that was all ready for the physical thing was ready and last year we stream line is the third step. It's written also in the press release.

We streamlined the inventories, but also the cost structure is the first step. So we can still optimize further. The amount of skews, the service rate, in the mean time also the over rates but it's made a nice way in the meantime we build up much lesser stroking out factories, which of course hurt your added value. So that’s the situation. So it goes in a right direction, get normal traction, but father improvements to gain.

It's not ready yet. And again, the negative impacts on the added value for 19, you should not under estimate that it’s a big number 63 million and on top of that the high value business of services technology Europe that declines. So then still performing, with an added value that is even a little bit better than last year, at least the confirmation that the wishes that we have is resilience and also very strong price precision. What we do now for example in the factories is next step, some of you have seen the technology we have in insulation technology. Now we have roughly three or four factories who will make the same products.

So were coping now just technology to America and to other places in Europe. That's also why we spend the CapEx because we can reduce your cost price heavily, really heavily and take out a lot of people. So this will be a next step for example in combinations, major technology. For a distribution in Europe also to guide that a little bit because it's the difference each division in America, in America, we have to change the whole sales structure. In Europe, we just need to integrate into rounds and because we have already all external sales, so there's a much easier process building is built, it's not field and then the other round will be integrated and we hopefully to be fully operational as a second half of 20.

So, that is all part of improving to come to as I always said, this segment has the potential to do at least 14%, EBIT maybe even more, but let's first stands there. Like you have to get it structured and integrated and actually that is getting more and more shaped also with the name of Aalberts Piping Systems. And therefore it was also good that in December that presentation was given where the persons who were really are in France to get realized together with that of course.

Peter Olofsen: Maybe a follow-up on the earlier question on the muted growth outlook, assuming that car production will be stable, but the mix shift from internal combustion engines towards EVs?

Wim Pelsma: It will shift.

Peter Olofsen: Yes, it will shift, but assuming that the overall volumes are stable.

How will your business then develop? Will it also be stable? Will grow or will even contract a bit because you're maybe more exposed to internal combustion engine?

Wim Pelsma: This is very good question and this is exactly what we also did in the preparation of the capital markets day and the hour and then also as you know budget period. Our expectation is that that's what you hear from the most of our customers. And also when you look to the studies, is that in 10 years, that's okay. That's an assumption roughly 13% of the population of the cars will meet electrically. 30% will still be fully combustion because some cars they thing for a long distances.

They need power. For example, SUVs, they could drive with the diesel engine, but then, you're still at 40%, which will probably be hybrid because hybrid is a combination. You have electrical. You have combustion. Now when you look to that situation and it is nothing new, because I explained this in many times, it's that 70% still has combustion engine, 70%.

The other trend is in our opinion that the amount of cars would grow because we get more people. So, they expect the demand of cars to produce will be from roughly €100 million to €130 million in the second year period. So, when you've taken 70 of 130, you come out with the same amount because you have 19 million cars, which still need to combustion engine, but it could be different cars, could be small cars could be bigger cars. And then, maybe you have more smaller electrical of cars in China than you have in Europe or in U.S. So, there's also differences in the usage of the car.

Now what we -- so you have to look very carefully what do you really need in the countries where you are active. So, what we see and I guess due to talks with customers also is that. For example, in Germany, that combustion related production is also step-by-step, but that goes gradually move to other places. So what we are doing. We're adapting our model to that situation.

Now, what is situation in Eastern Europe is growing. So, that's why we are investing there. And North America goes more to own fabricated products like the bigger trucks, SUVs so also you have to put your technologies like -- for example, like we do all the brake systems, you have to, let's say adept your position to that new market trend. So, we did that. So to answer your question, yes, it could be that here we have volumes changed.

We still think that service technologies will be a big needed technology, because there is the other trend you see. Big OEMs have a difficulty to develop all the new models and they are looking for partners, who are on a global scale active, who can also help them with co-development. And then there are not so many parties, who can do that. So think we have a proposition there to also and we see that in the amount of projects we get, especially in service treatment and aligned coatings there we have a very nice position. So, these technologies will be needed, but it could be that we're needed in different way, but also a different little bit different region.

So, we are adapting to that. So, it could be for example that we, yes, maybe get rid of certain countries. We get smaller in certain regions. We add certain technologies in certain regions to adapt to the situation. Of course, that's why you are an entrepreneur.

But in general that there is still the market is really interesting in my opinion, especially for us and because the biggest part seem to be hybrid there we have to move a lot of different parts related to data with hybrid cars. But it could be the certain treatments for growing. So, then you have to reduce your volume there or don't invest anymore, what we do. And then other treatments come up and then we invested. So, it's not only a question of market, it is also what happens within the markets.

But still we made 12.6%. I can't remember the time, I was even in the board shortly, because we've made much less than margins in 2009.

Unidentified Analyst: [indiscernible]. Firstly in cash flow statement in the past, you always used to make a split between acquisitions of subsidiaries and disposals for subsidiaries. Now, you have to combine this number two or one number.

Could you still break it out, because it will give a little bit more transparency about what you have paid for acquisitions?

Arno Monincx: That's also about.

Unidentified Analyst: That's more asking about earn out here, but this is more on excluding those?

Arno Monincx: But we did, in this line, I can tell you are two acquisitions, two divestments and two disposals and one are enough, sorry two different payments and one enough, that's what is. So it's seven items, calculate together to this 10.6. If you would just break it up into two, I think everybody would be helpful.

Unidentified Analyst: But then going forward and looking into 2020, could you provide what at this moment what you do know and what have communicated, the spillover impact will be acquisitions and of divestments?

Arno Monincx: It is in the press release.

Wim Pelsma: Still overlooking what is overall impact.

Unidentified Analyst: What is still the impact will be in 2020 in acquisitions and of divestments?

Arno Monincx: Revenue wise, let's say not so much and actually EBIT-wise also not so much. It's more and less in Dallas, as it will fly now.

Unidentified Analyst: And then when looking at your European services technology, you have provided the absolute numbers. But could you also give some indication about the total revenue of the business because it can be also related to material technology as much as 3%? And I can imagine it for other businesses within Aalberts, on which also might have a few percent of downturn.

So if you could provide a bit more color on what we're talking about this European service technology business?

Arno Monincx: You mean on the organic decline?

Arno Monincx: Yes. Organic decline or the absolute sales level of that business more or less?

Arno Monincx: No, I will not tell that because I think it's a pretty confidential. The second thing is what I can and tell you is that the service technology decline which is of course a higher decline than in other areas. So, when I say it's minus 3, minus 2 for total maturity volume that is, it will be higher in service technology Europe for the set. That means mainly Germany and France.

That answer I can give, but not more. More questions. Martijn

den Drijver: Martijn den Drijver, ABN Amro. On page 3 of the press release you mentioned closures?

Wim Pelsma: Which page?
Martijn

den Drijver: Page 3.

Wim Pelsma: 3.

Martijn

den Drijver: There you've mentioned closures 3. What has been the impact of disclosures in terms of sales at it a bit more color there? And then a clarification on the CapEx guidance, and you said I think, I know 2020 would be similar to 2019, but that included the 15 million from the fire. So should be take out to 15 and then that numbers should be applicable to 2020? And then my final question, again, I need a bit more help. In the cash flow statements, you show change in trade and other payables at cash outflow 61.2. You've already mentioned that you pay to suppliers a bit faster than normal, which you already guided for the half year fingers.

However, the delta in your balance sheet for those exact outlines is just 14 points. Normally, I wouldn't bother you with a small difference, but the difference between the delta in the balance sheet and what you've reported and the cash flow is quite significant, so a bit more clarity there please?

Arno Monincx: I can let say started with that one. I think that has to do with acquisitions because the delta is organic, the organic cash developments between the two years. The CapEx for 2020, we guide the same as we did in, like Wim said, for the Capital Markets Day between almost 14 million almost 16 million this including everything. And what was the third one.

Martijn

den Drijver: The one of the closures to three.

Arno Monincx: The three year technology that is material technology, so close some smaller locations integrated in, already we took action you could say.

Unidentified Analyst: But not a material amount of revenue or EBITA that got impacted because of disclosures?

Arno Monincx: Yes, what you also do, when you have some customers you move it in all location. So, it will not have a major impact now from a revenue point of view, just optimization.

Wim Pelsma: No questions.

No questions, any more. Are there questions from the webcast or no questions by our webcast? So, then I would like to thank you people in the room for all the questions and all the attention and also people joining the webcast. So thank you very much.

Arno Monincx: Thank you.