Interim report Q2 2007

Civil Works Utility Services International Administrative Service Purchasing, Health, Safety & Quality Marketing Business Units Construction MT Højgaa...

0 downloads 43 Views 198KB Size
29 August 2007

Interim financial report – for the first half 2007 (1/1 – 30/6 2007) The Supervisory Board of MT Højgaard a/s has today discussed and approved the Company's interim financial report for the first half of 2007. Søborg, 29 August 2007 Supervisory Board and Executive Board

Per Møller Chairman of the Supervisory Board

Kristian May President and CEO

This announcement can also be viewed on MT Højgaard’s website: www.mthojgaard.com. Contacts Kristian May President and CEO Tel. +45 3954 4000

Per Møller Chairman of the Supervisory Board Tel. +45 4520 1503

This announcement is available in Danish and English. In case of doubt, the Danish version shall prevail.

MT Højgaard a/s Knud Højgaards Vej 9 DK-2860 Søborg Tel +45 3954 4000 Fax +45 3954 4900 [email protected] www.mth.dk Reg. No. 12 56 22 33 Interim financial report – First half 2007

Page 1 of 14

29 August 2007

Progress in the first half matching expectations •

The operating result for the first half of 2007 was a profit of DKK 111 million, up DKK 79 million on last year.



First-half revenue was DKK 5,934 million, up 19% on last year. The increase in revenue was mainly attributable to the Contracting business, the international activities of which are increasing.



Income tax expense for the period was 51 million, equivalent to an effective tax rate of 46%. The item was depressed by a DKK 23 million reduction in the value of the Group’s deferred net tax asset as a result of the reduction of the Danish income tax rate from 28% to 25%.



Cash flows from operating activities were affected by more funds tied up in working capital during the period and amounted to an outflow of DKK 110 million compared with an inflow of DKK 160 million in the first half of 2006. Cash generated from operations was an inflow of DKK 199 million, compared with an inflow of DKK 123 million in the first half of 2006.

Outlook for 2007 •

The order book increased by DKK 1,324 million in the first half, standing at DKK 12,076 million at the start of the second half. This corresponds to just over 12 months’ production.



Full-year 2007 revenue is expected to reach approx. DKK 11 billion. The previous forecast of full-year 2007 profit before tax in the region of DKK 225 million is reaffirmed.



The Group’s effective tax rate is expected to be higher than the Danish tax rate due to an adjustment of the Group's deferred net tax asset, see above.

The interim financial report contains forward-looking statements regarding management’s expectations concerning revenue and financial performance. By their nature, these expectations concerning the future financial performance are subject to uncertainties and risks that may cause the performance to differ from the expectations expressed in this report. For a description of risks, reference is made to the section ‘Risk factors’ in the 2006 annual report.

Interim financial report – First half 2007

Page 2 of 14

29 August 2007

Consolidated financial highlights Amounts in DKKm

Q2 2007

Q2 2006

2007 YTD

2006 YTD

2006 Year

3,093 68

2,659 21

5,934 103

5,002 38

11,083 59

12 80 38

(4) 17 12

8 111 60

(5) 32 23

(8) 51 37

220

220

220

1,082 1,082 4,725 263 382 1,221

1,017 1,035 4,556 389 403 1,051

1,024 1,048 4,833 354 301 1,015

Cash flows from operating activities Cash flows for investing activities Cash flows from financing activities

(110) (23) (42)

160 (124) 36

317 (240) (7)

Net increase (decrease) in cash and cash equivalents

(175)

72

70

4.8 1.7 1.9 9.2 5.6 22.9 5.4

4.3 0.8 0.6 3.5 2.3 22.7 1.9

4.0 0.5 0.5 5.6 3.6 21.7 2.6

12,076 6,016

9,776 5,689

10,752 5,889

Income statement Revenue Operating profit (EBIT) Net financing costs and profit (loss) of associates Profit before tax Profit after tax Balance sheet Share capital Equity attributable to equity holders of the parent Equity incl. minority interests Balance sheet total Interest-bearing assets Interest-bearing liabilities Invested capital Cash flows

Financial ratios (%) Gross margin Operating margin (EBIT margin) Pre-tax margin Return on invested capital (ROIC) * Return on equity (ROE) * Equity ratio Earnings per share (EPS), DKK **

5.2 2.2 2.6

4.3 0.8 0.6

3.3

0.9

Other information Order book, end of period Average number of employees

The interim financial report has been prepared in accordance with IAS 34 “Interim Financial Reporting” as adopted by the EU and additional Danish disclosure requirements for interim financial reports. The interim financial report has not been audited or reviewed by the company’s auditors. The accounting policies are unchanged from those set out in the 2006 annual report. The financial ratios have been calculated in accordance with the Danish Society of Financial Analysts’ ’Recommendations & Financial Ratios 2005’. The definitions of the financial ratios used appear from the 2006 annual report. *) Not converted to full-year figures. **) The calculation of EPS is based on share denominations of nominally DKK 20. In MT Højgaard the result of the measurement of earnings per share (EPS) is identical to diluted earnings per share (EPS-D). Interim financial report – First half 2007

Page 3 of 14

29 August 2007

Group diagram

Administrative Service

Business Development, Business Systems, HR, Communications

Purchasing, Health, Safety & Quality

Marketing

Business Areas

Business Units

Civil Works

Ajos (Plant & Equipment)

Construction

AV Andersen (Masonry)

Utility Services

MT Højgaard Joiners/Carpenters

Subsidiaries

Enemærke & Petersen a/s Lindpro a/s Promecon a/s Scandi Byg a/s

Refurbishment (Copenhagen) International

Design

Seth S.A.

(60 %)

BMS A/S

(50 %)

Greenland Contractors I/S (67 %)

Project Development

The Group’s financial performance Second-quarter 2007 consolidated revenue was DKK 3,093 million versus DKK 2,659 million in the same period last year. First-half revenue was DKK 5,934 million, up 19% on the same period last year. The increase in revenue was mainly attributable to the Contracting business (Business areas and Business units), the international activities of which are increasing. The second-quarter operating result was a profit of DKK 68 million compared with DKK 21 million in the second quarter of 2006. The first-half operating result was a profit of DKK 103 million, DKK 65 million ahead of last year. The performance was satisfactory, matching expectations. Net financing costs and share of profits/losses of associates totalled income of DKK 12 million net in the second quarter, and income of DKK 8 million in the first half compared with a charge of DKK 5 million in the same period last year. Net financing costs benefited from non-recurring income totalling DKK 4 million from the sale of shares. The first-half operating result was a profit of DKK 111 million, up DKK 79 million on last year. Income tax expense for the period was DKK 51 million, equivalent to an effective tax rate of 46%. Income tax expense is made up of a current tax charge of DKK 28 million for the period and a DKK 23 million tax charge due Interim financial report – First half 2007

Page 4 of 14

29 August 2007

to a reduction in the value of the Group’s deferred net tax asset in connection with the reduction of the Danish income tax rate from 28% to 25%. The result after tax was consequently a profit of DKK 60 million compared with a profit of DKK 23 million in the same period last year. Balance sheet The consolidated balance sheet stood at DKK 4,725 million at 30 June 2007, down DKK 108 million on the balance sheet total at the end of 2006. Equity including minority interests was DKK 1,082 million, corresponding to an equity ratio of 23% versus 22% at the end of 2006. Besides profit for the period, equity was affected by a DKK 25 million disposal of minority interests due to changed recognition of the Portuguese contracting business Seth. Interest-bearing net debt has increased by DKK 172 million in 2007, standing at DKK 119 million at the end of the first half. This reflects a periodic increase in funds tied up in working capital that exceeds the increase in cash operating profit, and the lower level of investment and capital expenditure than in the same period last year. Cash flows and financial resources Cash flows from operating activities were affected by more funds tied up in working capital during the period and amounted to an outflow of DKK 110 million compared with an inflow of DKK 160 million in the first half of 2006. Cash generated from operations was an inflow of DKK 199 million, compared with an inflow of DKK 123 million in the first half of 2006. Investing activities absorbed cash of DKK 23 million net compared with DKK 124 million in the same period last year. First-half cash flows for investing activities benefited from a DKK 68 million cash inflow, DKK 30 million net of which related to acquisitions and disposals of businesses and DKK 38 million to sale of securities. Net capital expenditure on property, plant and equipment amounted to DKK 61 million versus DKK 131 million in the same period last year and related primarily to replacement of and new investment in contractors’ plant and equipment and mobile cranes. Financing activities absorbed DKK 42 million compared with a cash inflow of DKK 36 million in the same period last year. Cash and cash equivalents decreased by DKK 175 million during the first half, compared with an increase of DKK 72 million last year. The Group’s financial resources, calculated as cash, including cash and cash equivalents in joint ventures, and securities and undrawn credit facilities, stood at DKK 778 million at 30 June 2007, which is considered to be satisfactory.

Interim financial report – First half 2007

Page 5 of 14

29 August 2007

The financial resources included cash and cash equivalents in joint ventures of DKK 179 million that are available exclusively to the joint ventures, compared with DKK 203 million in the same period in 2006. Order book The order book increased by DKK 1,324 million in the first half, standing at DKK 12,076 million at the start of the second half. Amounts in DKKm

Order book at start of period

2007 YTD

2006 YTD

2006 Year

10,752

8,352

8,352

7,258

6,426

13,483

Production during period

(5,934)

(5,002)

(11,083)

Order book at end of period

12,076

9,776

10,752

Order intake during period

The order book corresponds to on average just over 12 months' production based on the projected level of activity in 2007. The order book includes a number of large orders extending over several years.

Segment results The MT Højgaard Group’s primary format for reporting segment information, as can be seen from the financial statements, follows the overall internal business organisation of the Group’s activities and comprises the Contracting business, Other activities (subsidiaries) and Corporate functions, etc. Contracting business The Contracting business is organised into five business areas and five business units. The business areas Civil Works, Construction and Utility Services, which carries out cable works, are countrywide, while Refurbishment operates in Greater Copenhagen. International activities, primarily comprising civil works projects, are taken care of by the business area International. The business units Ajos, A.V. Andersen, MT Højgaard Joiners/Carpenters, Design and Project Development undertake projects for external clients and for the five business areas. The corporate staff functions in MT Højgaard feature, together with other non-allocated corporate items, under Corporate functions, etc., in the segment information in the financial statements. The Contracting business delivered first-half revenue of DKK 4,266 million, up DKK 22% on last year. Revenue can be broken down by activity as illustrated in the table below.

Interim financial report – First half 2007

Page 6 of 14

29 August 2007

Revenue, DKKm Activities

Q2 2007

YTD 2006

2007

2006

Business areas - Civil Works (Civil Works, Utility Services and International) - Construction (Construction and Refurbishment) Business units Eliminations/other Contracting business

980

749

1,875

1,338

1,260

1,087

2,401

2,143

275

290

511

605

(263)

(265)

(521)

(596)

2,252

1,861

4,266

3,490

The first-half operating result was a profit of DKK 28 million, up DKK 36 million on the same period last year. First-half operating profit was affected by revenue from previously written-down projects with low contribution margins. The civil works activities (Civil Works, Utility Services and International) delivered profit ahead of expectations, overall, while the results of the building activities (Construction and Refurbishment) were lower than expected. The business units delivered profit matching expectations. At the end of the first half, the order book in the Contracting business totalled DKK 9,114 million. Full-year 2007 revenue is expected to amount to approx. DKK 8 billion. Other activities - subsidiaries This segment comprises the MT Højgaard Group's subsidiaries and jointly controlled entities with separately profiled competencies within areas such as electrical installations (Lindpro), steel structures (Promecon) and crane and lift hire (BMS). The subsidiaries and the jointly controlled entities reported first-half revenue of DKK 1,668 million, up 10% on the same period last year. Operating profit was DKK 102 million, as forecast, DKK 31 million above the same period last year. The steel fabrication company Promecon and the crane company BMS performed better than expected during the period, whereas the contracting companies Enemærke & Petersen and Seth, the electrical installations business Lindpro, and Scandi Byg, which manufactures prefabricated wooden modular buildings, reported results slightly short of expectations. The other subsidiaries performed in line with expectations. At the end of the first half, the order book totalled DKK 2,948 million. Fullyear 2007 revenue is expected to reach approx. DKK 3 billion.

Interim financial report – First half 2007

Page 7 of 14

29 August 2007

Acquisitions and disposals of businesses In the second quarter of 2007 the local management of the Portuguese contracting business Seth acquired a further 15% of the company’s share capital, reducing MT Højgaard’s ownership interest to 60%. In accordance with the changed shareholders’ agreement, Seth is consequently recognised in the consolidated financial statements as a jointly controlled entity whereas it was previously recognised as a subsidiary. This transaction had no material impact on consolidated revenue or profit.

Outlook for 2007 The high level of activity in the Danish building and civil works market in the first half is expected to continue for the rest of the year, but with the possibility of a slight decline towards the end of the year as a result of the slowdown in the housing market. The upturn in the industrial construction market is expected to be able to partly make up for this. The order book and market outlook at the start of the second half hold out prospects of a sustained high level of activity, and full-year revenue is consequently expected to reach approx. DKK 11 billion. Full-year 2007 profit before tax is expected to be in the region of DKK 225 million, which is unchanged from the outlook at the start of the year, as most recently reaffirmed in the interim financial report for the first quarter of 2007. The Group’s effective tax rate is expected to be higher than the Danish tax rate due to an adjustment of the Group's deferred net tax asset.

Ownership MT Højgaard a/s is owned by Højgaard Holding a/s (54%) and Monberg & Thorsen A/S (46%), both of which are listed on the Copenhagen Stock Exchange.

Interim financial report – First half 2007

Page 8 of 14

29 August 2007

Statement by the Executive and Supervisory Boards The Executive and Supervisory Boards have today discussed and approved the interim financial report of MT Højgaard a/s for the period 1 January – 30 June 2007. The interim financial report has been prepared in accordance with IAS 34 “Interim Financial Reporting” as adopted by the EU and additional Danish disclosure requirements for interim financial reports. We consider the accounting policies applied to be appropriate. Accordingly, the interim financial report gives a true and fair view of the Group’s financial position at 30 June 2007 and of the results of the Group’s operations and the consolidated cash flows for the accounting period 1 January – 30 June 2007. Søborg, 29 August 2007 Executive Board Kristian May President and CEO

Jens Bak-Nyhus

Peter Kofoed

Johnny Rasmussen Supervisory Board

Per Møller Chairman

Jørgen Nicolajsen Deputy Chairman

Irene Chabior Employee representative

Jette Grabow Stefan Hansen Employee representative Employee representative

Morten Iversen

Erik D. Jensen

Bent Pedersen

Poul Lind

Lars Rasmussen

Interim financial report – First half 2007

Page 9 of 14

29 August 2007

Consolidated income statement Amounts in DKKm Revenue Production costs Gross profit

2007

2006

2007

2006

2006

Q2

Q2

YTD

YTD

Year

3,092.8

2,658.7

5,933.5

5,001.5

11,082.5

(2,932.6)

(2,545.2)

(5,648.9)

(4,784.7)

(10,640.8)

160.2

113.5

284.6

216.8

441.7

Distribution costs

(38.2)

(31.6)

(66.0)

(58.4)

(129.0)

Administrative expenses

(54.3)

(61.2)

(116.1)

(120.8)

(254.1)

67.7

20.7

102.5

37.6

58.6

0.0

0.0

0.0

0.0

0.0

11.8

(4.1)

8.0

(5.2)

(7.6)

Operating profit Share of profit (loss) after tax of associates Net financing costs Profit before tax Income tax expense Profit after tax

79.5

16.6

110.5

32.4

51.0

(42.0)

(4.7)

(50.6)

(9.1)

(14.3)

37.5

11.9

59.9

23.3

36.7

36.8

10.3

58.9

21.2

28.2

Attributable to Equity holders of MT Højgaard a/s Minority shareholders Total Earnings per share (EPS), DKK

Interim financial report – First half 2007

0.7

1.6

1.0

2.1

8.5

37.5

11.9

59.9

23.3

36.7

3.3

0.9

5.4

1.9

2.6

Page 10 of 14

29 August 2007

Consolidated balance sheet Amounts in DKKm

2007

2006

2006

30.06

30.06

31.12

Assets Fixed assets 74.5

73.2

73.6

Property, plant and equipment

914.5

880.9

908.5

Deferred tax assets

188.3

144.2

238.9

7.3

12.1

7.2

1,184.6

1,110.4

1,228.2

Intangible assets

Other investments Total fixed assets Current assets Inventories Trade receivables

266.9

389.5

277.3

2,164.8

1,889.5

2,192.1

Contract work in progress

689.6

647.4

603.7

Other receivables

156.6

130.3

179.6

49.9

51.7

87.9

Cash and cash equivalents Total current assets

213.0

337.6

263.8

3,540.8

3,446.0

3,604.4

Total assets

4,725.4

4,556.4

4,832.6

1,082.0

1,017.3

1,024.4

0.0

17.3

23.6

1,082.0

1,034.6

1,048.0

165.3

249.9

174.3

21.5

23.8

24.1

Securities

Equity and liabilities Equity attrib. to equity holders of the parent Minority interests Total equity Non-current liabilities Bank loans, etc. Deferred tax liabilities Provisions Total non-current liabilities

65.4

63.4

62.3

252.2

337.1

260.7

217.0

152.6

127.1

Current liabilities Bank loans, etc. Contract work in progress

1,160.1

1,000.8

1,216.8

Trade payables

1,283.8

1,264.1

1,282.6

730.3

767.2

897.4

Total current liabilities

3,391.2

3,184.7

3,523.9

Total liabilities

3,643.4

3,521.8

3,784.6

Total equity and liabilities

4,725.4

4,556.4

4,832.6

Other current liabilities

Interim financial report – First half 2007

Page 11 of 14

29 August 2007

Consolidated statement of changes in equity Amounts in DKKm Equity at start of period Foreign exchange adjustments, etc. Profit for the period Total income and expense for the period Adjustment of minority interests

2007

2006

2006

YTD

YTD

Year

1,048.0

1,016.3

1,016.3

(1.3)

(0.3)

(0.4)

59.9

23.3

36.7

58.6

23.0

36.3

(24.6)

(4.7)

(4.6)

Total changes in equity

34.0

18.3

31.7

Equity at end of period

1,082.0

1,034.6

1,048.0

2007

2006

2006

YTD

YTD

Year

102.5

37.6

58.6

96.4

85.0

179.7

198.9

122.6

238.3

Consolidated cash flow statement Amounts in DKKm Operating activities Operating profit Non-cash operating items Cash generated from operating activities before changes in working capital, etc. Working capital changes, etc.

(309.1)

37.7

78.8

Cash flows from operating activities

(110.2)

160.3

317.1

(61.1)

(130.5)

(208.1)

38.0

6.6

(31.7)

Cash flows for investing activities

(23.1)

(123.9)

(239.8)

Cash flows from financing activities

(42.0)

35.2

(7.5)

(175.3)

71.6

69.8

217.5

147.7

147.7

42.2

219.3

217.5

Net investments excl. securities Net investments in securities

Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at start of period Cash and cash equivalents at end of period

Interim financial report – First half 2007

Page 12 of 14

29 August 2007

Segment information 2007

2006

2007

2006

2006

Q2

Q2

YTD

YTD

Year

Contracting business Other activities – subsidiaries

2,251.8

1,860.9

4,265.7

3,490.2

7,770.1

841.0

797.8

1,667.8

1,511.3

3,312.4

MT Højgaard Group

3,092.8

2,658.7

5,933.5

5,001.5

11,082.5

Contracting business

18.8

(16.7)

27.9

(7.7)

(132.4)

Other activities – subsidiaries

60.9

48.0

101.7

70.1

243.1

(12.0)

(10.6)

(27.1)

(24.8)

(52.1)

67.7

20.7

102.5

37.6

58.6

Amounts in DKKm

Business segments Revenue

Operating profit (loss) (EBIT)

Corporate functions, etc. MT Højgaard Group Order book, end of period Contracting business

9,113.6

7,159.6

8,194.5

Other activities – subsidiaries

2,947.9

2,517.3

2,557.3

12,075.9

9,775.9

10,751.8

MT Højgaard Group

Geographical segments Revenue Denmark Rest of world MT Højgaard Group

Interim financial report – First half 2007

2,487.6

2,227.0

4,736.2

4,167.2

9,239.8

605.2

431.7

1,197.3

834.3

1,842.7

3,092.8

2,658.7

5,933.5

5,001.5

11,082.5

Page 13 of 14

29 August 2007

Consolidated income statement by quarter 2007 Amounts in DKKm Revenue Production costs

Q1

Q2

2,840.7

3,092.8

(2,716.3)

(2,932.6)

Gross profit

124.4

160.2

Distribution costs

(27.8)

(38.2)

Administrative expenses

(61.8)

(54.3)

34.8 0.0 (3.8)

67.7

Operating profit Share of profit after tax of associates Net financing costs

Q3

Q4

Total

0.0 11.8

Profit before tax

31.0

79.5

Income tax expense

(8.6)

(42.0)

Profit after tax

22.4

37.5

22.1

36.8

Attributable to Equity holders of MT Højgaard a/s Minority shareholders Total

0.3

0.7

22.4

37.5

2006 Amounts in DKKm Revenue Production costs

Q1

Q2

Q3

Q4

Total

2,342.8

2,658.7

2,946.0

3,135.0

11,082.5

(2,239.5)

(2,545.2)

(2,867.1)

(2,989.0) (10,640.8)

Gross profit

103.3

113.5

78.9

146.0

441.7

Distribution costs

(26.8)

(31.6)

(30.1)

(40.5)

(129.0)

Administrative expenses

(59.6)

(61.2)

(57.5)

(75.8)

(254.1)

16.9

20.7

(8.7)

29.7

58.6

Operating profit (loss)

0.0

0.0

0.0

0.0

0.0

Net financing costs

Share of profit after tax of associates

(1.1)

(4.1)

(2.3)

(0.1)

(7.6)

Profit (loss) before tax

15.8

16.6

(11.0)

29.6

51.0

Income tax expense

(4.4)

(4.7)

3.1

(8.3)

(14.3)

Profit (loss) after tax

11.4

11.9

(7.9)

21.3

36.7

10.9

10.3

(11.0)

18.0

28.2

0.5

1.6

3.1

3.3

8.5

11.4

11.9

(7.9)

21.3

36.7

Attributable to Equity holders of MT Højgaard a/s Minority shareholders Total

Interim financial report – First half 2007

Page 14 of 14