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So good morning, ladies and gentlemen, and thank you for attending SPIE's First Quarter 2019 Information Conference Call. By way of introduction, I would like to first stress that we did have a good start to the year with a solid performance. We enjoyed a strong growth momentum, particularly in France, where we are gaining efficiencies thanks to our new organization. We did continue to trade at a very high level in Germany where the technical services market is going full steam. And we also strengthened our footprint in Germany and Central Europe with 2 acquisitions since the beginning of this year.In the U.K., uncertainty related to the Brexit led to a certain wait-and-see attitude from our customers. And lastly, we are very pleased with the growth in our Oil & Gas Services business in the wake of the recovery at the end of 2018. So overall, this first quarter is a good start indeed, and we confirm our full year outlook.Now looking at our highlights for Q1 2019 on Slide 4. So as you see, we posted a solid growth, 4.1%, at constant FX, of which 3.3% organic. Our EBITA grew 4.7% compared to Q1 2018. And we have a sound EBITA margin at 3.7%, stable compared to 2018. We confirm our full year outlook for 2019.As you know, bolt-on M&A is an important part of our growth, and we managed to acquire 2 companies totaling EUR 103 million for the beginning of the year. Both of them are in Germany and central Europe segment, so it's very much in line with our strategy to strengthen this segment. And one of them also is -- ticks the box of being in the ICT services area, which again is core to our strategy going forward. So really also an encouraging start on the front of bolt-on M&A and we have a good pipeline going forward in several geographies.I will now turn over to Michel for a review of the financials.
Thank you, Gauthier. Good morning, everybody. I'm pleased to review with you the key numbers of the Q1 income statement. As stated by Gauthier, Q1 performance was quite positive with first revenue increasing 5.3% (sic) [ 4.3% ] to Q1 2018. I will detail this growth in revenue in a minute.Second, EBITA at EUR 57.7 million grew by 4.7% versus Q1 2018. Then EBITA margin remained stable at 3.7%, same level as in last year.One word about IFRS 16 new accounting standard for leases contract. The numbers here are shown excluding IFRS 16 as they are comparable with last year. The impact of IFRS 16 is not material. It is given in the footnote for the Q1. Including IFRS 16, EBITA margin is EUR 56.9 million, and EBITA margin is still 3.7%. We will provide the full picture of IFRS 16 impact on P&L and balance sheet in July when we publish our half-year results.Let's look now at the revenue detail. You can see on this chart the evolution of the revenue from the first quarter of 2018 to the first quarter of 2019. On the left side, you see the strong organic growth at 3.3%, thanks to very positive activity in France in Oil & Gas that Gauthier will detail the business elements in a minute. The acquisitions, 1.3%, is due to the full impact in Q1 2019 of the acquisition made last year, Systemat in Belgium for EUR 12 million and a small acquisition in France for EUR 7 million. You have the impact 0.5% for the disposal of the U.K. overhead lines service that was completed in June 2019, so perimeter, you add both the columns and you have 0.8%. And then you add the exchange rate impact, which is positive, mostly due to the strengthening of the U.S. dollar versus the euro in our Oil & Gas activity. So that gives you this growth of 4.3% overall for the quarter.Concerning EBITA margin, it's stable year-on-year. That said, you can see on this graph as a reminder that the usual pattern of SPIE EBITA margin consistently building up the margin throughout the year, so you see here last year, we had -- we were at 3.7% in Q1, 4.8% in H1, 5.3% end of September and finally, 6% for the full year. So this is just to highlight you that with this 3.7% achieved in Q1 2019, we are able to confirm our full year outlook of a group EBITA margin of at least 6%.Gauthier will now comment on the business elements.
Thank you, Michel. So just an example of how we are involved in the digital transformation of our customers. And again, we have a wide base of customers of all sorts and we are also able to support small and mid-sized customers. So in this example of Crystal Cloud solution, it's really supporting our customers in the digital transformation and also services attached with the cloud solution. And obviously, one of them being the Cybersecurity, which is very, very important, and then, managed services, a lot of Internet of Things and analytics are now expected from our customers. We developed these services for customers like SEB, Artemis, Conforama, or the hospital in Versailles, so a wide range of customers. All very attracted and interested by this type of cloud-based solutions.And as an example in the field of Technical Facility Management, again, it's a business where we value long-term recurring relationship with our customers, but also innovation is also expected from them. So we have a 20-year collaboration with Daimler with 2 main sites being Bremen and Sindelfingen, close to Stuttgart. Since a few years, we are now a key supplier of Daimler. We're able to renew this contract with some scope extension. It's important because it involves roughly 200 employees of SPIE. And we are active in all the buildings linked with balance of plans compared to the actual manufacturing so it's the laboratories, the office, the test stands and in Sindelfingen, a very intricate wind-tunnel center.Other example in the area of smart industrial maintenance, where, again, our customers are very much looking at added value from in-depth understanding of their data. So we have developed Internet of Things-based solutions. We gather an enormous amount of data and we try to gather them safely to gather the right type of data and then to derive a proper type of information and learning together with our customer.Looking now to our French business. Again, our new organization has proved very effective in capturing opportunities, and the market momentum is very favorable. Our organization really fulfills our expectation, and we have a stronger organic growth at 3.3%. In terms of market trends, not dissimilar to what we saw last year. We see robust levels of activity in telecom infrastructure, local services doing well. There's some activity in industry and quite a respectable growth in the area of Information & Communication Services. With again, the acquisition of S-Cube from 2017 proving a real boost to our growth in this segment.Commercialization, not a lot of change and we remain selective. We had a -- as you know, we had quite a decrease last year. It seems to be stabilizing this year so maybe a bit of a drag on the organic growth but not so strong as last year and really focusing on the right type of pricing. So certainly, we are seeing a favorable market environment, yet we are not promising a 3.3% organic growth for the whole year.Looking at Germany and central Europe, again, it's a very favorable market for Technical Services, and we see no inflection in the trend. The market in Germany is very active, strong activity in Transmission & Distribution Services with all of our customers really strongly involved in the energy transition where we are a leader on that market. A good level of activity on Technical Facility Management. Overall a 0.7% organic growth compared to a very high trend at the same quarter last year.Worth mentioning the closing of our disposal of the German nearshore cabling activities. As you know, we have signed a deal with Boskalis in December and we closed the transaction in April this year.The other central European countries are also enjoying a good start, and it's worth mentioning a good momentum in Switzerland with a solid profitable growth. As you know Switzerland has been a case of turnaround over the last years and is now proving very fruitful.Moving to North-Western Europe. So Netherlands and Belgium really in the same vein as our other geographies in continental Europe. A good start to the year in the Netherlands, a strong momentum in energy infrastructure. Very high levels of activity in the industry area.Regarding U.K., it is a deteriorated market environment where we see a sluggish decision-making process at our customers. It's been very slow. The Brexit uncertainty has really hampered a lot of decision to come through and it translates into a significant revenue decline for Q1 2019. It is yet to see whether or not this Brexit delay will create a window of opportunity for certain decisions to happen.And regarding Belgium, a strong revenue growth with the full year consolidation of Systemat, the creation of the ICS division end of 2018. Good organic growth on Q1. And again, similar to the Netherlands, industry and infrastructure on the high level of activity.And then moving to Oil & Gas and Nuclear. While Oil & Gas Oil clearly continued recovery, we had a double-digit organic growth in Q1 2019. Very high activity in North Africa with customers like Chevron, Total, Exxon, ENI in Angola, in Ghana, and in Nigeria. Of course, we expect this growth to moderate throughout the year, but we're really encouraged by the start of this year and we're really pleased to see that our Oil & Gas business is definitely back to growth.Nuclear activity, as a start, quite a high level of [ ad hoc ] projects on top of the usual framework agreements. And I think I've mentioned that a few times that yet again this year, as the activity on the Flamanville EPR is higher than what we have originally planned. And now with the involvement -- with the decision of EDF regarding repair of certain critical welds, it will entail additional work for us to dismantle a number of equipment, make space in order that the weld can be repaired. So good prospect for the Nuclear activity for this year as well.So as a conclusion, I would like to wrap up this presentation, but saying that Q1 is definitely a good start for the year. Our 2 major markets, France and Germany, are in good shape, and we are also pleased with the recovery of our Oil & Gas segment. So it confirms that we are well on track to meet our new objective for 2019 as detailed on the slide for the guidance.And before handing you the floor for questions, I would like to invite you to meet us all on our Investor Day on May 15th in Paris, and we intend to show you that it's definitely a good time to be an electrical engineer.Thank you for your attention, and we are pleased to take your questions.
[Operator Instructions] And the first question comes from the line of Sylvia Barker from JPMorgan London.
Obviously, very good organic growth across the board. I'm just going to focus on margin for a second. So could you maybe just talk about why the margin was flat in the quarter? I know that you're not giving the divisional margins, but just to give us a little bit of an idea. With Oil & Gas performing so strongly, I would have expected a little bit of operating leverage to help, and then maybe the French reorganization benefits helping and clearly, the U.K. being down significantly, that's quite a low-margin business as well. So maybe just how do we square these out with the margin being flat is the first question please.
Right. Yes, we have good elements from that side but again, it's Q1, so we don't want to overdo it. And we have -- on the other side, we have -- compared to positive elements you are mentioning, we have a bit of a drag for the U.K. And so altogether, it's EUR 1 million more or less, and compared to the 10 bps that some of you might have been expecting, but nothing really very important at this stage. And we see how the growth helps for the balance of the year and also how the U.K. market evolves as well.
Okay. We'll see how that goes, I guess, during the -- but could you just talk about whether you are actually seeing positive operating leverage in Oil & Gas? And whether you are seeing any positive kind of margin momentum in France? Or if you can comment at this point.
Well, I think, yes we -- and again, we will -- in the course of the year, we will see whether we are good to confirm that. But definitely at some stage, the growth in Oil & Gas should happen. And regarding France, no, we have plans for this year, we have some improvement on the French segment. So altogether, our guidance for the year is 6% at least. And as we said, we are quite confident to maintain this guidance.
Okay. Great. And then just a quick one on IFRS 16. So could you just explain why that's actually a negative to your EBITA in the quarter?
Sylvia, I like a quick one. I don't know if it's really a quick one, IFRS 16. Let me just maybe take this opportunity to remind exactly what we have chosen to do for IFRS 16. It's the accounting standard for lease contract that came to force this year on January 1. So the standard leads to account for in the balance sheet of the lessee most of the leasing contract. So [ both ] -- the contractor [ both ] 1 year in the form of right of use as an asset and a financier's obligation as a debt, okay? So the company has no choice to make the full retrospective method or the retrospective method. The full retrospective means that you start from the beginning of each contract and you restate the past as if the whole has always existed. By doing this, you are able to restate prior years, so this is new norm, and then you compare 2019, for instance, with the prior 2018.So we have more than 11,000 contracts to analyze. So we did not choose this heavy and time-consuming solution. We chose the retrospective method. This means that we start from the contract as they are on January 1 and we apply the rule for the remaining duration of this contract. So we will not reconsider the past. So this is why I said earlier that we are comparing apples and apples when we show our numbers in Q1 compared with 2018 that we show the IFRS 16 impact in the footnotes. So it will be a bit long here but I think it's hard to understand exactly what we are talking about. Now this famous right of use, what it is? It's simply the sum of the remaining payments committed until the current contract, until the end of this contract discounted as the 2% discount rate, but I won't go into the details. So in fact, you amortize this amount and you take this as a charge instead of the rent. So if your amortization charge, which is linear, is higher than the rent you are paying, for insurance, because you have contract indexes -- indexed year after year with a progressive payment, then you have a negative impact, and the other way around. So you have an impact which is limited in Q1 of EUR 800,000. I think it's a bit too early to tell what will be the full impact for the year at this moment because we are still working on this 11,000 contracts and we will be able to provide the full detail, as I said, in July, when we publish our half-year results. So I don't think this is significant at this stage, and we will get all details in July. I hope this helps and answer your questions.
Yes. That's very helpful. I was just asking because obviously for the full year, you said that it will be a EUR 3 million benefit. So I was just kind of squaring it off with the Q1.
Yes. This was an estimation made last year. It was an estimation. As I said, now, we are working on this and we will audit this as well. So I cannot tell you exactly what it will be, but I don't expect to have a significant impact.
Okay. Great. And then just finally, on Germany, so you -- obviously, the market dynamics are really good and you are seeing some of the kind of energy transition work start to actually come to fruition. But you mentioned a bit of a lack of employee bottleneck. Is that holding back growth at all? Or could you just give us a little bit of color around it.
You mean the -- sorry, I didn't understand you, bottleneck on what?
So if I read out from your Germany section, you're saying that there is a high level of resources utilization across the sector. I presumed that, that means maybe not enough employees who are trained for the work.
Well, it's not a bottleneck yet, and we are coping with the demand of the customers at the moment. But it also means that we have to be aware of the fact that we don't want to sell our resources for cheap because they are not so easy to find. So -- and that clearly makes sense, which is widely spread within our organization in Germany, and it helps maintain the margins at the very good level that they have reached.
The next question comes from the line of Rajesh Kumar from HSBC.
Two, if I may. First on Germany. You had a very reasonable organic growth of about 1.9%. Can you give us some color on how much wage inflation you are passing through, especially given the deal you've done with the labor unions there. Second, on the IFRS 16, I appreciate the color you provided earlier. Just from the balance sheet side, when you're saying you're going to de-gear the balance sheet this year due to tax generation, that's on a pro forma basis and IFRS 16 will add something to it? Or are you talking including IFRS 16?
Right. So regarding the increase in pass-through in Germany, this is something that we have discussed in the past. Obviously, there was a deal with IG Metall last year, which -- and our Transmission & Distribution Services is under the collective labor agreement of IG Metall so we did implement the wage increases and a number of our contracts have indexation clauses. Other contracts we had to try and renegotiate, sometimes successfully, sometimes not, but usually due to the demand at the moment, we are in a more favorable position to renegotiate. And then we have a lot of work, which are revolving fast so you see we had budgeted something and -- for the year in the rates we use in our tenders and we adapted then the rates in the close of the year. And for this year, as well -- so it's something that is not hampering our level of margin. And especially after 1.5 years now, it will normalize. And similarly, we have a collective labor agreement with IG BAU for the technical FM part of the business, and we are to apply the same sort of measures. So altogether, we are coping with the wage increases and it doesn't affect our margins.
No. I appreciate that, but I'm assuming the wage inflation in Q1 should be close to 1.5% to 1.6%. Is that a fair level to assume?
Not sure I understand the wage inflation for 1 quarter.
For Germany? Given the deal over 3 years, if you are running a wage inflation for 2019, I'm assuming the run rate of wage inflation is 1.5%, 1.6%, about that, this year?
The wage increases, they happen on January 1 then is spread over the whole year. So we have to deal with what was agreed last year since the first day of the year.
Yes. So net-net you should have better growth. You are -- you have reported better organic growth in Q1 than the wage increase?
Yes. No, the wage -- first, our cost base is not only salary, it's not so. So clearly the -- and especially in Transmission & Distribution, the high amount of supply and of subcontracting, so you see the wage proportion itself is only a part of our cost base.
Do you see the subcontracting or supply is rising as well? Or is it just the wages?
Well, you have to deal with your supply chain and clearly, if the level of activity is high, it means it is also high for subcontractors, so you have to diversify your sources of subcontractors and look for other areas, sometimes other countries, to come up with a reasonable price level of your subcontracting base, and to come up with a demand as well.
The next question comes from the line of Paul Checketts from Barclays Capital.
I've got 3 questions, please. The first is just thinking about organic growth at the group level for the full year. You just posted just over 3% in Q1 against a tough comparative. How do you -- but you are quite clear about saying you didn't think it would run at 3% for the rest of the year. The comps are a little easier in the second half. Can you elaborate on why it is that you think it would slow, what the factors are? That's the first one. The second is could you give us a bit more detail on the TELBA acquisition, please. Thinking about the level of growth it delivered in 2018, the margins it's making and working capital position. And then, the last one, I'd just like some technical guidance on what you expect tax and interest to be for the full year?
Regarding France, we see a good momentum in our books as 3% and 3.3% is fairly high, so I'm not saying that we're going to do that for the whole year, and the comps for the second half of the year in France are not that easier either. So we'll see what it gives. We certainly see a good trend at the moment. Regarding TELBA. So it's a company in the area of information and communication services in -- spread over the western and the south part of Germany. It's a company that since 2016 has enjoyed a growth of about 6%, [ CGA ] growth, and they're trading at margins similar to the ones that we have in Germany at the moment and similar, especially, to the one we have in our ICS segment in Germany, which is slightly relative compared to the [ whole of ] Germany. And so in that sense, it's quite a good level of margin. On -- it has a -- it tends to have a good reputation. It's very well known by our managers in this ICS segment in Germany. And regarding working capital, obviously, as you know, we have the type of best level of working capital in our sector. So clearly, we do expect that to be able to improve the level of working capital at TELBA, which is not abysmal, but which is not as good as it is within SPIE. So while -- so altogether it's really an acquisition strengthening our ICS segment, and it's very important for the future in Germany.
Concerning your question on tax and interest. So we advise that our tax rate there should be around 30%. P&L -- the P&L. And in terms of cash, we should have an increase of EUR 20 million versus last year what we have exceptional positive element that are not re-conducted in 2019. In terms of the cost of the debt, we said that we would be at 2.1%, down from 2.3% last year. And this would translate into around a EUR 60 million interest cost compared with EUR 66 million last year. And last year, by the way, we had some one-off write-down linked to refinancing included in this EUR 66 million.
The next question comes from the line of Rory McKenzie from UBS.
Just 2 from me, please. First to Gauthier in France. Can you give us some examples of how the new structure is helping growth? Or details of how you're now working in the field? And again, on Paul's question, given the easier prior year comps, is there any reason not to expect France to accelerate further in Q2 and Q3? And then secondly, you mentioned margin drags in the weak U.K. I guess that's yet more price pressure and so would you be thinking about any more restructuring in that weak market in the U.K.?
So regarding France, an example of obviously new organization is for instance what we do in the Smart FM activity. And so in technical FM, we have developed a new offering called the Smart FM, which is really bringing a lot of digital monitoring of the various buildings, gathering data and giving real-time reporting to the customers on the assets and deriving also opportunities for improvement of the asset. So we will gain -- issued contracts last year for the whole of the territory for customers who have sites all across France and clearly, the fact that this solution was developed centrally for the whole of our Tech FM business in France as we have to -- spreading it over all our regions. It would have been more difficult in the previous regional-based organization. So this is an example. By the way, this Smart FM solution was implemented in France [ soon have been ] tried and is now used by our teams in Germany. And again, the fact that we have a Tech FM business in France, very similar to the Tech FM business in Germany, it really helps also cross-European collaboration. So again, it's something that we have for the future.Regarding the organic growth in France, again, as you know, our focus remains on margin so we see whether we're able to maintain a good level of -- or any growth with our aspirations on margins for the second half of the year. Again, to accelerate further is not what I am advertising right now. Let us see how it develops during the year.Regarding U.K., yes, the top line is under pressure at the moment. A lot of customers are holding decisions on investment of various nature, including [ churn ] work on maintenance. And we have also contracts with traditional customers, who we assume will have a good level of revenue over the years, be it in the data center market or being in the industrial market and these customers have really hold up on decisions because of the uncertainty around customs mainly. If you want to bring some equipment from Continental Europe or elsewhere and you don't know how they are going to be taxed, you see it has an impact on the cost of your project. So these customers have been very, very slow right now. So we have to see whether now they are able to push a button and try and get the project down before the -- within this window of opportunity and before the final decision on Brexit. But it might have an impact in terms of headcount and clearly, if we do not have enough work for our people, as you know, it can be done fast and at very low cost in the U.K. if ever we're to face these sort of decisions.
The next question in the queue is James Winckler from Jefferies.
Most of my main questions are actually answered through the other people, but if you are able to give similar color on Christof last year that you gave to TELBA, that would be useful as well. And any sort of context and sort of further information or maybe just whether any update to the strategy or guidance or anything else maybe discussed at the May Investor Day? Anything like that in terms of context would be useful also.
So regarding Christof, it's a company again that we have come across in the past and because they had good collaboration with SAG. And so part of the business is very similar to what we do in Germany for distribution, on the distribution service operators for mid-voltage lines. And also there's a work in the area of infrastructure, part of what they do is maintenance work on the subway in Vienna. So we're very, very similar in terms of [ skews ] to what we do and a good reputation and a good base to -- in Austria, very close obviously to our German team and the levels of margins, which are not dissimilar to the one we enjoy elsewhere in the group. You'll see that it's smaller so we are slightly lower than the usual German margin. And they enjoy quite a decent level of growth. So it's -- we are already slightly present in Austria. So it does strengthen our presence there.And regarding our Investor Day. Again, for us, the aim of this Investor Day is mainly to help you understand better what we do for a living, so we try and come up with examples showing what sort of customers we have, what sort of services do, how they are contractually strengthened -- structured for this customer, give some understanding of the growth of this -- of our various end markets like education, data center, health, et cetera. And then really give you to understand how does the SPIE model work and what we do with acquisitions, et cetera. So we're not planning to give a long-term guidance. The aim is really focused on what we do for a living and why it's a good time to be an electrical engineer.
The next question comes from the line of Nicolas Tabor from MainFirst Bank.
First question would be on the Oil & Gas growth? If I remember correctly, in London, you said that you were expecting a mid-single digit for the full year. However, with the very strong performance in Q1, wouldn't that mean that there would be a strong deceleration in H2 or is it that your guidance was a bit too conservative, what can we expect? And also, if I remember correctly, you had a high concentration in terms of revenue in the past in Oil & Gas. Is this growth coming from a pickup in volume with this historical client or is it more new clients and additional volumes that helped you this quarter? And then the second head of the questions would be could you give us an update on the rest of the divestment of SAG offshore, the pipeline activity and on [indiscernible] in U.K.?
So regarding the Oil & Gas growth, obviously, it's been very strong in the first quarter, the comparison basis was weak. And as you know, we have a stronger base for the second half of the year. To date, mid-single digit towards high single digit is what we see for this segment. So growth for this Oil & Gas business. The growth stems from several customers. I mentioned earlier this morning, contracts with Chevron; in Nigeria with Exxon, with ENI; in Ghana and we see with Total who accounts for roughly 20% of our revenue. So the share of Total has shrunk, in fact, in the last years and we managed to diversify our customer portfolio. And also thanks to our diversification in the Middle East, where we still enjoy good level of activity on the downstream partner with training and assistance from the refineries and petrochemicals. So together, growth with several different customers and a portfolio, which is more diversified and increasingly so than in the past. And regarding the balance of disposals in Germany. So we have now [ renamed, ] in fact, the balance activity to go to Bohlen & Doyen construction. And so this business is not burning cash. It's mainly involved in the construction of pipeline, of gas terminals, the small gas terminals. And it's also involved in the construction of underground high-voltage with a high amount of field works involved. So again, not burning cash, but the prospects in the construction world, which are interesting. And so we are -- we're working on the process now that we have our minds clear of the nearshore disposal.And regarding U.K., similarly, we have a small, very small activity in [ PFI. ] And also, it makes more sense that it's gathered with more important players in this field. Again, it's not burning cash. And this disposal process is being revisited right now in order to accelerate again.
And could you give us there also if you have any indication for H1 net debt and net working capital effect will be in the same line as last year? You already have some visibility in order for market not to be surprised?
No. We don't give any element of balance sheet at quarters nor any forecast for the debt. So I'm afraid you will have to wait until July to have the full information that we will provide at that time, including IFRS elements, IFRS 16, I mean.
The next question comes from the line of Charles Scotti from Kepler.
Two quick questions, please. The first question in the U.K. market. In light of the current weakness and the little prospect for improved margin, do you mind starting a review of this activity and eventually pulling out from this market? And my second question is on the ongoing turnaround of Ziut. Can you give us more color, and if it's actually going as asked earlier?
So regarding U.K., obviously, it's not -- I don't think is the right timing to discuss major strategic decision of the kind. And regarding Ziut. It's our acquisition in infrastructure and public lighting in the Netherlands. It's progressing, but it's not progressing as fast as we would like. And in fact, we have just changed the manager in charge because I do feel that we need a step up in terms of the speed with which we want to make this business progress.
The next question comes from the line of Ann Patrice from Berenberg.
A couple of questions, please, from my side. First, you mentioned about this possible disposal of certain activities. How much could it be in terms of their annual sales contribution? So what could be the possible headwinds to the top line? Second question, probably I missed it, if you can give some indications on the multiples or how much the M&A activity has -- should cost you with those 2 acquisitions, 1 in Germany, 1 in Austria. And if there will be any integration or restructuring costs? You mentioned that the German will be slightly accretive, while Austria will be slightly dilutive to the margins, but if there are some one-offs linked to those acquisitions? And then, yes...
Sorry, Anna, the line is not very good so we didn't understand the first part of your questions. One, is...
The first one was on the divestment. Because you mentioned that you will, again, try to accelerate the divestment of some businesses in Germany. So what should be the total annual sales of the divested companies?
Well, so the divestment in Germany, it's already part of -- it's already reporting in IFRS 5, so it's not in our revenue. It's the balance part of what we used to call Gas & Offshore. And we have sold the offshore bit and to Boskalis, and so the balance, which is, in fact, more construction than gas, we are renaming it construction. And that's what remains to be sold. But it's already part -- it was already part of IFRS 5, okay?And regarding the acquisition. The multiples are not very different from what we usually do. So no change there. And no restructuring cost envisaged. It's a small company compared to the group in Germany. About industrial, you see we had no -- hardly any presence. So no, there is no such thing as a restructuring needed. And in -- for TELBA, I think we have a high demand for the services now. So the technicians, the workforce is a welcome addition. And from the administrative point of view, it's minimal what we would have for synergies, if at all.
Okay. Understood. And then maybe 2 more questions. One is on Germany and one is on Oil & Gas. On Germany, there's a bit of a slowdown. And obviously, you highlight there the high comparison basis and also that you want to optimize your workforce, so to sell them as highly -- as expensive as possible. In the next couple of months, you still have high comparison basis. So in terms of the current trading, should we expect similar trends as in Q1? And I don't know if there has been any impact on your trading. So the fact that if they will be in Q2 this year, does it have positive impact from Q1 and slightly negative in Q2? Or that's something that doesn't really affect your revenues? And on Oil & Gas, there was a question if you see operating leverage, are you improving margins in your Oil & Gas, is this the case or not yet?
So regarding Germany, we -- as I said, we see a strong underlying market. So no deceleration as such. And we expect the trend to remain positive in terms of top line. But again, it can vary from 1 quarter to the next, and you see 1 quarter is not that significant, as you know. So let's see how the year is going to shape.And regarding Oil & Gas. Well, it arguably is the volume because we have a quite strong structural cost in Oil & Gas because we have this basis in various countries; clearly, the top line growth should end up contributing to the level of margin in this segment.
The next person on the queue is Chirag Vadhia from HSBC.
Just one quick question. Will the de-gearing of the balance sheet be applied to the leverage post- or pre-IFRS 16?
Both, I would say. When -- last year, the company made an estimation and we stated that it is true that -- the ratio -- we said that the ratio shouldn't be impacted by IFRS 16. So it's true that the estimation that -- about the EUR 300 million would be added to the debt, which will -- and with a counterpart that is active, so the right of use as an asset and the debt, the equivalent of debt is about EUR 300 million. And then the ratio would stay the same. So we will know more at the end of June when the exercise will be finished and audited because as I said, we have 11,000 contracts to review. So -- but to come back to what the company said last year, the impact should be neutral. Or I would add, maybe minimal if there is some, and we will know this in July. But deleveraging, of course, will happen with or without IFRS 16.
Okay. So just to confirm. The 2.5x year-end target will be applied to post-IFRS 16, but the impact should be negligible.
Let me be -- yes, exactly. Because when we applied IFRS 16 to the debt of last year, we said that the ratio would still be 3x. So if it's 2.5x -- if it's 3x, I guess it will be 2x, 2.5x. If it's 2.6x or 2.4x, I'm not sure 100% now. I will know more in July. But I think it should we neutral or minimal.
The next and last question is from Sylvia Barker from JPMorgan London.
Sorry, just one final question. You said that the part of the German business that you're looking to potentially divest of involves the underground high-voltage kind of construction. So just wondering, because some of the energy transition work is said to be based around underground high-voltage lines, is it part of your strategy not to go for that kind of contract? And would you be focusing on the overground and then on the distribution side as well?
Yes. Yes. Clearly, in terms of nature of work, the underground cabling, I think the stress is on underground. So it's a lot of steelwork and not a lot of electrical work. And in terms of proportion for given contract and the amount of steelworks that is used, because the cable has to be spaced really widely. So you're talking of trenches which are 15, 20 meters wide. That's also why it's not easy to get permission for this type of work. And in fact, when you look at the pipeline of this sort of projects, it's clearly not a lot compared to the high-voltage. So the forte of SPIE is in electrical works, and we're not too much inclined towards steelwork. So that's why we consider that this is not part of our strategy.
We have no further questions. I'll turn the call back to your host.
So thank you very much for attending this presentation this morning. As you've seen, we have a good start for the year, and we'd be really looking forward to welcome you on May 15 for our Investor Day and to try and convince you again that it's a good time to be an electrical engineer. Thanks a lot. Have a good day.
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