www.cfe.be
Report Annual report 2012
- Year 2012 - 132e corporate financial year
Despite tough economic conditions in 2012, CFE’s net profit of the group was almost €50 million
Renaud
Philippe
Bentégeat
Delaunois
Editorial
Despite tough economic conditions in 2012, CFE’s net profit of the group was almost €50 million, while operating income was similar to the 2011 figure. CFE bolstered its financial position with a €100 million bond issue, which was fully subscribed in less than an hour, showing the level of investor confidence in the group. The order book remains strong and grew substantially in international markets, offsetting declines in both Western and Eastern Europe. This bodes well for performance in 2013. The Rail & Road division (created in 2012 following the acquisition of REMACOM) and the Real Estate & Management Services division performed particularly well. The Multitechnics division added a new skill with the acquisition of Ariadne in Limburg.
Renaud Bentégeat
Philippe Delaunois
Managing Director
President of the Board of Directors
The synergies between the CFE group’s divisions and the good fit between its various activities proved their worth more than ever in 2012. This also shows the wisdom of the group’s structure and its operating methods, which involve paying particular attention to its staff. It was no accident that the CFE group won two awards for its human resources policy in 2012. It was awarded Diversity accreditation by the Brussels Capital region, and won the 2012 Top Employer award for its conscientious, committed approach to its staff. This same conscientious, committed mindset also forms the basis of all the work CFE does for its customers, along with its desire to meet their requirements as effectively as possible at all times. By taking this approach, CFE was able to ensure customer satisfaction in 2012, and will be able to continue doing so in future. This approach has also sustained long-term business relations and will continue to do so, and is leading to new relationships of trust between CFE and clients all around the world.
The Dredging & Environment division considerably increased its order book. DEME also carried out a significant financial transaction in early 2013, successfully issuing €200 million of 6-year bonds.
Annual report 2012
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Table of content
Report Annual report 2012
Year 2012 - 132th corporate financial year
6
Strategy
10
CFE’s expertise increasingly valued around the world
2012 highlights
14
Board of Directors
18
Management Team
4
16
Operational chart of the group CFE
18 Real estate development
Multitechn.
Rail&Road
Dredging
PPP-Conc.
Key figures 2012
24
The group CFE worldwide
27
Financial report
Annual report 2012
5
Strategy
CFE’s expertise increasingly valued around the world In 2012, the CFE group pursued its policy of international expansion in all its businesses. It not only strengthened its presence in countries in which it has been operating for several years, but also substantially expanded its range of activities by winning several large contracts in new countries. The group is now aiming to establish a long-term presence in these countries. Its efforts will be supported by the excellent quality of its work, stemming from its commitment to customer satisfaction.
6
Artist impression of the new port in Doha, Qatar
of high-potential business areas such as dredging, renewable energies and sustainable construction techniques. It also has cutting-edge equipment with which to put innovation into practice, and is generating increasing synergies between its various entities. In this way, CFE remains a harmonious, balanced group generating top-level performance, and it is constantly growing and diversifying. In addition, its wide range of skills and activities enable it to provide comprehensive, co-ordinated solutions in-house. This is a considerable benefit for customers, particularly given that customers in CFE’s business areas often require comprehensive solutions.
Dredging: conquering new markets Customer satisfaction is a key part of the CFE group’s business model and identity. It is one of the group’s core values, and one that it does not intend to let slip. It is this focus on customer satisfaction that has enabled the group to gain a strong image as a serious, credible and trustworthy company. This image is fully justified and generates future opportunities by promoting customer loyalty and supporting efforts to win new business all around the world. The group’s structure and operating methods ensure that each entity develops leading-edge expertise, and that its various business areas complement each other. Crucially, the group has great capacity for innovation in a diverse range
As regards DEME’s dredging business, the aim is to be present in new markets. In the fast-growing Australian market, for example, DEME won a prestigious contract from Wheatstone in 2012. As a result, Australia will represent 30% of DEME’s revenue in 2013. With this contract and the contract for the new port in Doha, Qatar, DEME won the two largest dredging contracts in the world last year. This success bodes well for the future, and means that DEME can look forward with confidence. The group’s innovation strategy, which was already showcased by its research into offshore wind power and the C-Power project off the coast of Belgium, also resulted in
remarkable progress in tidal power in 2012, along with research into rare metals buried in the oceans. These advances mean that the group is able to win new contracts in niche areas that it has created, using the highly sophisticated tools and vessels at its disposal. DEME’s considerable investments in ultra-modern vessels and dredgers between 2008 and 2012 went entirely to schedule. As a result, the dredging business has caught up with its rivals and is now very well equipped to bid for all contracts in the market. Accordingly, DEME’s investments will pause in 2013.
Ongoing international expansion efforts in construction and special techniques The international expansion of the group’s construction activities was clearly confirmed by its successful moves into Africa and Asia. This process will continue as CFE seeks to transform contracts into a longterm presence, taking advantage of the excellence it has shown when performing work. The Multitechnics division pursued its expansion strategy, and its electricity, heating and ventilation activities now cover all of Belgium. The group’s latest acquisition, Ariadne, enhances this good geographical coverage. Efforts are now focusing abroad, with VMA already operating in Hungary, Poland and Turkey. The Multitechnics division may increase its presence further in these
Annual report 2012
7
Strategy Rail tracklaying works
countries and could also expand into countries like Chad and Nigeria, not to mention Asia, where CFE EcoTech is already operating in Sri Lanka and Vietnam.
The right project in the right place In Belgium, as elsewhere, location remains crucial in the real estate market, and the CFE group’s operations are exemplary in this respect. All of its real-estate projects have excellent locations. Examples are the Belview project at the bottom of Rue Belliard in the centre of Brussels, the residential conversion of Solvay’s former head office on Chaussée d’Ixelles, a stone’s throw from the Avenue de la Toison d’Or, and the office project on land close to the Gare du Midi in Brussels, which is a particularly attractive site, including from the sustainable development point of view. In general, all land on which the group is developing projects is excellently located, whether in Belgium, Luxembourg or Poland.
8
A new division focusing on transport infrastructure In 2012, the group set up its new Rail & Road division, combining businesses relating to the construction and equipment of railways and roads. Alongside ENGEMA and Louis Stevens & Co, which are two growing companies operating in rail electrification, and the roads business of Aannemingen Van Wellen, the CFE group acquired Remacom, which specialises in laying rail tracks, in order to offer a comprehensive solution. The group is planning to expand the Rail & Road division internationally, enabling it to export its expertise in the medium term.
Further international expansion in public-private partnerships The group is also taking an international approach to public-private partnerships, in which the PPP-Concessions division is
currently working on projects such as the Liefkenshoek railway tunnel in Antwerp, the Turnhout car park, the Charleroi police station and the Eupen schools project. This international focus is shown by the Coentunnel project in the Netherlands and the Bizerte concession in Tunisia. However, Rent-A-Port has seen the greatest international development. In Vietnam, RentA-Port is handling the extension of Hai Phong port, and is working on expanding its activities in the region. Rent-A-Port also operates in Nigeria, and is involved in the Duqm concession in Oman, which is likely to see significant growth in future. More generally, the PPP-Concessions division is aiming to achieve gradual international expansion in its activities. Since this division shows major synergies with many of the group’s other operations, this expansion will support CFE’s efforts to export its expertise in the next few years.
CFE’s values The CFE group is an international group of contractors working in various disciplines, and customer satisfaction is its main objective. Everywhere in the world, the group’s primary aim is to offer the best solutions in order to build for the future. To achieve this, the group relies on certain values: Safety first
Proud of our achievements
VSafety is the group’s key priority. The quest for profit will never take precedence over the quest for safety.
In businesses where people can see and touch what the group has created, each employee, regardless of their position in the group, is proud of his or her achievements.
Generating sustained profits By adopting the mission of building for the future, the group inevitably takes a long-term view of profits, with all that implies in terms of quality and customer satisfaction.
Passionate about what we do Expertise is vital, but not sufficient. Commitment to individual projects and a passion for our business is needed.
Meeting commitments When CFE gives its word to a customer, partner or subcontractor, it keeps it. In particular, the group complies with agreed deadlines.
Promoting diversity All employees, whether they be male or female, from Belgium or elsewhere, have the same opportunities in terms of recruitment and promotion, and receive equal pay for equal work. The group supports cultural diversity in its teams.
Open, transparent and integrated The group is organised in a decentralised way, and each company retains a degree of autonomy. As a logical consequence, the group shows a high degree of openness, transparency and integrity.
Stronger together The good fit between the group’s various businesses and synergies between divisions and companies strengthen not only the group’s position, but also that of each entity.
Annual report 2012
9
Highlights
2012 highlights
February A new Rail & Road division is created, following the acquisition of Remacom, which specialises in laying rail tracks. The CFE group signs its first contract in Algeria: an office building designed by architecture firm ASTP for BNP Paribas, in the fast developing new administrative district of the Algerian capital.
January
Dredging International Australia wins the dredging contract for the Wheatstone LNG project on the west coast of Australia.
A new backhoe dredger, the Peter the Great, is launched.
May CFE Immo, in partnership with another real-estate developer, acquires the very well located Solvay site in Brussels. The site will be redeveloped and will be the home of a major real-estate project in the next few years. DEME launches its new rock-cutter suction dredger, the Ambiorix. In late May 2012, CFE issues â‚Ź100,000,000 of 6-year bonds maturing on 21 June 2018. The issue is a big success, and is fully subscribed.
10
March
April
MEDCO (Middle East Dredging Company Q.S.C.) wins the contract to dredge the approach channel as part of the New Port project commissioned by the Qatari government’s New Port Project Steering Committee.
In Sri Lanka, CFE EcoTech - in conjunction with CFE International wins the contract for a water treatment and supply project, involving the installation of two drinking water stations in the mountains.
A DP2 jack-up vessel, the Neptune, is launched. This vessel is particularly well suited to transporting and installing wind turbines at sea, and all other types of heavy offshore constructions.
June King Albert II of Belgium officially opens the new Diabolo rail complex in the presence of various Belgian ministers. Two major wastewater treatment plants are opened at Sclessin (150,000 population equivalent) and Vallée du Hain (90,000 population equivalent).
August Aquapark Duinenwater in Knokke-Heist opens to the public. This is the country’s most sustainable and environmentally friendly swimming complex in Belgium, featuring solar panels, heat recovery and passive cooling.
GeoSea, DEME’s Belgian subsidiary specialising in offshore construction, signs a contract with Northwind NV for the construction and installation of foundations for a wind power project off the Belgian coast.
Annual report 2012
11
Highlights
September
October
The foundation stone of the new Charleroi police station - which won a MIPIM Award in March 2012 - is laid.
CFE’s Multitechnics division acquires Ariadne, based in Limburg and specialising in automation.
The Gouden Boom project is inaugurated in Bruges.
CFE and its partners complete the construction, as general contractors, of Chad’s future Finance and Budget Ministry building in N’Djamena.
DEME launches its most powerful heavy-lift jack-up vessel, the Innovation I.
CFE wins the contract to build a children’s hospital in Bucharest, Romania.
November
December
DEME launches its new rock-cutter dredger, the Amazone.
CLi, in partnership, signs a contract for the redevelopment of Galérie Kons, opposite the main train station in Luxembourg.
Offshore & Wind Assistance launches two vessels for maintaining offshore wind farms and other offshore installations.
12
Board of Directors
1
6
2
7
jaarverslag 2012
3
8
4
9
5
10 1. Renaud BentĂŠgeat Managing director 2. C.G.O. SA, represented by Philippe Delaunois Chairman of the Board of Directors 3. SA Consuco, represented by Alfred Bouckaert Independent director, Member of the Remuneration and Nomination Committee 4. Richard Francioli Director, Member of the Remuneration and Nomination Committee 5. Bvba Ciska Servais, represented by Ciska Servais, Independent director, Chair of the Nomination and Remuneration Committee 6. Philippe Delusinne Independent director, Member of the Audit Committee 7. Jan Steyaert Independent director, Chair of the Audit Committee 8. Christian Labeyrie Director, Member of the Audit Committee 9. Bernard Huvelin Director 10. Jean Rossi Director
Annual report 2012
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1
14
Management Team 1.Gabriel Marijsse Director Human Resources 2. Michel Guillaume Director Sustainable Development Chairman Sogesmaint-CBRE 3. Lode Franken Deputy General Manager construction division Director DEME General Manager CFE Nederland 4. Frédéric Claes Managing Director BPC Director Amart 5. Youssef Merdassi General Manager CFE International (including CFE Hungary, CFE Slovakia, CFE România*, CFE Middle East, CFE Tchad, CFE Algérie and COBEL Contracting Nigeria Ltd). 6. Jacques Ninanne Deputy General Manager Corporate – Chief Financial Officer Chairman of Terryn group 7. Patrick Van Craen Managing Director CLE Director Tunisia and Morocco Director and General Manager CLi 8. Christophe Van Ophem General Manager CFE Brabant 9. Jacques Lefèvre Managing Director BPI General Manager CFE Immo 10. Renaud Bentégeat Managing Director of the CFE group Chairman of the management committee of DEME 11. Bernard Cols General Manager of the multitechnics division Director CFE Polska 12. Diane Zygas General Manager of the PPP-Consessions division 13. Yves Weyts General Manager of the Rail & Road division Managing Director Aannemingen Van Wellen Director synergies and communication 14. patrick Verswijvel General Manager MBG Manager Civil Engineering Belgium and Luxembourg
Annual report 2012
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Operational chart PPP & Concessions
Real estate & Management services
Rail & Road
Multitechnics
45%
*
polska
45%
65%
*
*
pa r t i c i pat i o n s
18% 20%
25%
parki ng turnhou t
66% 50% 25%
luxembourg
19%
H么te l de Poli ce C ha rle roi
100%
23 ja nua ry, 2013 on ly t he m a in c o m pa nies a n d b ra nches a re show n * b ra n ches
16
International Finance Center CFE
Construction
Dredging & environment 50% dredging
&
land
r e c l a m at i o n
e n v i r o n m e n ta l services
m a r i n e a g g r e g at e s
*
belgium the netherlands uk
belgium asia
australia
*
*
india mexico
55%
middle east nigeria
*
the netherlands philippines
renewable energy
s pa i n
sources
uk
hydraulic engineering and marine works
49% Middle East
Tchad
50%
terminal and marine services deep sea mining
Tunisie
logo OCEANFLORE CMYK 100c/72m/0y/32k 0c/100m/100y/0k 69c/0m/100y/0k
Annual report 2012
17
Key figures Consolidated statement of comprenhensive income in millions of EUR IFRS
Revenue
2008
2009
2010
2011
2012 1,898.3
1,728.4
1,602.6
1,774.4
1,793.8
Operating result (EBIT)
112.4
88.6
99.1
84.9
81.4
Profit before tax Net profit of the group Gross self-financing (1) EBITDA (2) Equity – part of the group (before distribution)
95.4 69.9 185.4 196.2
76.8 61.7 174.0 184.2
85.2 63.3 195.0 197.3
69.2 59.1 171.5 181.6
52.2 49.1 184.6 199.1
357.7
413.3
466.1
501.7
532.4
(1) Gross self-financing margin: see consolidated cash flow statement on page 75 of the consolidated financial report. (2) EBITDA: EBIT + depreciation and impairements + other noncash items (under IFRS)
Consolidated statement of financial position in millions of EUR IFRS 2008
2009
2010
2011
2012
Equity
368.2
423.8
475.5
508.8
538.6
Working Capital
133.5
152.3
248.0
350.8
400.0
Investments in tangible and intangible assets
156.8
190.2
223.3
217.6
205.9
73.4
82.1
98.3
100.6
119.7
Depreciation
Annual growth IFRS 2008
2009
2010
2011
2012
Revenue
17.8%
-7.3%
10.7%
1.1%
5.8%
EBIT
12.9%
-19.8%
8.4%
-14.2%
-4.1%
Result of the year
12.0%
-11.7%
2.5%
-6.7%
-16.9%
18
Key figures Data by division Evolution of the order book Real estate development
Important comment :
Dredging
Rail&Road
PPP-Conc.
Construction
3500
Multitechn.
In early 2012. CFE set up its new rail & road division. This division includes the activities of ENGEMA (installation of overhead contact lines and rail signalling) and Louis Stevens & Co (rail signalling)- previously included in the multitechnics division- along with the road business of Aannemingen Van Wellen. and the activities of specialist track-layer Remacom. which was acquired at the start of the year. The environmental activities of CFE (CFE EcoTech) have been transferred to the multitechnics division.
3000 2500 1096
1202
1202
1659
162 8
76 113 8
66 166 14
1010
983
2000 968
1061
1500 112 9
1000 500
109 9
128 17
845
826
1110
0
2008
2009
2010
2011
2011
previous segments
new segments
964
2012
Evolution of the revenue Real estate development 2000 1900 1800 1700 1600 1500 1400 1300 1200 1100 1000 900 800 700 600 500 400 300 200 100 0
Evolution of the operating result Multitechn.
PPP-Conc.
Construction
Real estate development
Rail&Road Dredging 11.7
3.6
3.4
2.9
2.9
Rail&Road Dredging
120 1
110
7.5
Multitechn.
PPP-Conc.
Construction
100 90
754.4
701.3
900.3
882.9
882.9
957.5
3.7 86.5
80 70 60
135.2 37.4
140.7 27.1
148.6 19.8
175.6 26.0
99.3 156.3 35.0
91.8 149.8 26.0
742.5
707.8
717.8
645.2
655.5
86.5
67.6
67.6
6.0
6.3
7.4
7.4
7.2
4.6 4.7
9.4
9.4
40 9.0
20
10.0
10
11.5
10.1
0
10.2
-1.9 2008
2009
2010
2011 previous segments
2011 new segments
2012
69.1
50
30 800.0
72.8
2008
2009
10.4
5.1 -2.2
-3.7 2010
5.7 1.8
2011 previous segments
3.2 -2.2 2011 new segments
-2.5 2012
Annual report 2012
19
Key figures
Ratios IFRS
EBIT/ revenue
2008
2009
2010
2011
2012
6.6%
5.7%
5.6%
4.7%
4.3%
EBIT/ cashflow
61.3%
54.4%
50.7%
49.5%
44.1%
EBITDA/ revenue
11.4%
11.5%
11.1%
10.1%
10.5%
Net profit of the group / equity – part of the group
19.5%
14.9%
13.6%
11.8%
9.2%
4.0%
3.9%
3.6%
3.3%
2.6%
2008
2009
2010
2011
2012
13,092,260
13,092,260
13,092,260
13,092,260
13,092,260
Net profit of the group / revenue
Data in EUR per share
Number of shares at 31/12 Operating result Gross self-financing margin Net profit of the group
8.59
6.77
7.57
6.49
6.22
14.16
13.3
14.89
13.10
14.10
5.34
4.17
4.83
4.51
3.75
Gross dividend
1.2
1.2
1.25
1.15
1.15
Net dividend
0.9
0.9
0.9375
0.8625
0.8625
27.3
31.6
35.6
38.3
40.7
2008
2009
2010
2011
2012
22.90
16.00
32.10
35.03
36.25
Equity – part of the group
The stock exchange
Lowest price
EUR
Highest price
EUR
72.50
42.00
54.84
59.78
49.49
Price at the close of the FY
EUR
29.25
35.50
53.71
37.99
43.84
Average volume per day
shares
17,240
24,035
17,412
15,219
11,672
Market capitalisation at 31/12
Mio EUR
382.95
464.78
703.19
497.4
573.96
20
Key figures
Trend comparing the CFE price with the Bel 20 index For the year 2012
CFE
Over the last five year
BEL20
100
5,000
90
CFE
BEL20
100
5,000
90 4,500
80
4,500 80
4,000
70 60
3,500
50
4,000
70 60
3,500
50 3,000
40 30
2,500
20
3,000
40 30
2,500
20 2,000
10
2,000 10
0
1,500
11
20
2/
1 1/
12
20
1/
0 1/
12
20
2/
0 1/
12
20
3/
0 1/
12
20
4/
0 1/
12
20
5/
0 1/
12
20
6/
0 1/
12
20
7/
0 1/
12
20
8/
0 1/
12
20
9/
0 1/
12
20
0/
1 1/
12
20
1/
1 1/
1,500
12
20
2/
1 1/
0
3
07
20
2/
1 1/
08
20
2/
1 1/
3
3
09
20
2/
1 1/
3
10
20
2/
1 1/
11
20
2/
1 1/
3
12
20
2/
1 1/
31
Some information on the share and exercise of the rights As of December 31, 2011, CFE’s capital is made up of 13,092,260 shares. On October 8, 2007, the extraordinary shareholders meeting approved: - the proposal of the Board of Directors to dematerialise the company’s shares at January 1, 2008; - the proposal of the Board of Directors to divide by 20 the six hundred and fifty four thousand six hundred and thirteen (654,613) shares – without nominal value, fully paid up and representing the company’s total capital of twenty one million
three hundred and seventy four thousand nine hundred and seventy one euros and forty three centimes (€21,374,971.43) at January 1, 2008. Accordingly, since that date, the company’s capital is represented by thirteen million and ninety two thousand two hundred and sixty (13,092,260) shares. The share dematerialisation and splitting process is still under way. The split of the registered shares has been carried out automatically and shareholders
have been automatically recognised as the owners of the appropriate number of split shares in the shareholders’ register. The split of bearer shares recorded in the share register at January 1, 2008 has been carried out automatically and shareholders have been allocated the appropriate number of split shares. For the exchange and split of bearer shares still physically held, shareholders must either hand these in to a financial institution of their choice for registration in a stock
Annual report 2012
21
account or to the company’s registered offices for recording in the shareholders’ register. The number of split shares will be recorded in the stock account or in the shareholders’ register. Since January 1, 2008, the exercise of any rights attached to bearer shares has been suspended for as long as they are physically held. Since that date, to participate in a shareholders meeting, the holders of such bearer shares must apply to have the shares exchanged for registered shares or have them dematerialised. Bearer shares issued by the company that have been neither registered nor recorded in the shareholders’ register will be converted legally into dematerialised shares on December 31, 2013. Euroclear Belgium has been appointed as the executor. Registered shares are held in electronic form and Euroclear Belgium (CIK SA) is in charge of managing them. There has been no issue of convertible bonds or warrants. Degroof bank has been appointed as the Main Paying Agent. Financial institutions with whom holders of financial instruments may exercise their financial rights are Banque Degroof, BNP Paribas Fortis and ING Belgique.
Voting rights On October 16, 2007, CFE was informed by VINCI Construction, by virtue of the clauses of article 74, paragraph 7 of the Belgian law dated April 1, 2007 relating to takeover bids, about the following notification being made to the Bank, Financial and Insurance Commission: Disclosure to the CBFA, pursuant to Article 74, § 6, of the Law of April 1, 2007, by a person who, at September 1, 2007, individually holds more than 30% of the securities with voting rights in a company listed on Eurolist, Alternext by Euronext or the Free Market (Marché libre/Vrije Markt) 1. Name of the issuer of the securities with voting rights that are held Compagnie d’Entreprises CFE 2. Full identity of the natural or legal person who, at September 1, 2007, individually holds more than 30% of the securities with voting rights issued by the company named under point 1 Legal person: VINCI CONSTRUCTION société par actions simplifiée 5 cours Ferdinand-de-Lesseps F-92500 Rueil-Malmaison (France) Telephone : 33 1 47 16 39 00 Contact person: Mr. François Ravery 3. Full identity of the natureal and/or legal person(s) ultimately controlling the legal person named under point 2 Legal person : VINCI - société anonyme 1 cours Ferdinand-de-Lesseps
22
F-92500 Rueil-Malmaison (France) Telephone : 33 1 47 16 35 00 Contact person : Mr. Christian Labeyrie 4. Chain of control VINCI, owning 86.64% of the voting rights of VINCI CONSTRUCTION, holds the exclusive control of this last one. The remaining balance 13.36% of voting rights is in the hands of SOCOFREG, 100% owned by VINCI. VINCI is a private limited company listed on the stock exchange of Paris. As a result of the fragmented shareholderscompositition of VINCI, no one exercises control on the company. 5. Number and percentage of securities with voting rights held by the person named under point 2 Number of securities with voting rights held 306,644 securities Percentage 46.84% 6. Date and signature of the person named under point 2 October 11, 2007 - François Ravery
7. Date and signature of the person named under point 3 October 11, 2007 - Christian Labeyrie. On July 28, 2008, VINCI Construction informed CFE about the information transmitted to the Belgian Banking, Finance and Insurance Commission (CBFA) by VINCI Construction. According to this information, VINCI Construction owns 46.84 % of the capital of CFE. This percentage has remained unchanged since the last declaration on October 11, 2007. Furthermore, VINCI Construction does not own any other shares in a similar construction company owning shares in CFE.
Belgian regulations regarding transparency The shareholder structure that is reported below can be found in the notifications that CFE has received on the date on which the annual accounts were closed, and in conformity with the regulations regarding transparency (Title II of the law of the May 2, 2007 on the publication of important participations in issuers, whose shares are listed for trading on a regulated market, and in conformity with various other regulations). VINCI Construction S.A.S., with registered headquarters in the Cours Ferdinand-de-Lesseps 5 at F-92500 Rueil Malmaison (France), was on September 1,
On August 19, 2009, VINCI Construction informed CFE that the participation of VINCI Construction into CFE remained unchanged since the last declaration on September 1, 2008, wereby VINCI Construction owns 46.84 % of the capital of CFE. On August 19, 2010, CFE received a copy of the new change notification submitted by VINCI Construction to CBFA, the banking, finance and insurance commission of Belgium. Although VINCI Construction continues to hold 46.84% of CFE’s share capital, the share capital of VINCI Construction, previously held 86.64% by VINCI and 13.36% by SOCOFREG, a wholly owned subsidiary of VINCI, is held 100% directly by VINCI since March 22, 2010. On August 16, 2012, VINCI Construction informed CFE, in accordance with Article 74 of the Belgian act of April 1, 2007, that there had been no change in the ownership of its capital since the previous notification on August 19, 2011, when it was 46.84%.
2008 the owner of 6,132,880 shares with voting rights in the Compagnie d’Entreprises CFE SA, or 46.84 % of the voting rights of the company. VINCI SA, which exercises exclusive control over VINCI Construction, is the ultimate controlling shareholder of Compagnie d’Entreprises CFE SA.
vinci Company listed on the Paris stock exchange (CAC 40) 100% directly
vinci construction
4 6 .84%
cfe
Annual report 2012
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The group CFE worldwide
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Annual report 2012
25
26
Financial report management report of the board of directors consolidated financial statements
Financial report 2012 27
Table of content MANAGEMENT REPORT OF THE BOARD OF DIRECTORS A. 1.
28
2. 3.
Report on the accounts of the financial year Overview of the year Consolidated revenue by division Operating income by division Net result part of the group consolidated by division Consolidated order book by division Analysis of the order book and results by division Parent company financial statements Capital remuneration
30 30 30 30 31 31 32 37 37
B. 1. 2. 2.1 2.2 2.3 2.4 2.4.1 2.4.2 2.5 2.5.1 2.5.2 3. 3.1 3.2 3.3 4. 4.1 4.2 4.3 4.4. 5. 5A 5A.1 5A.1.1 5A.1.2 5A.2 5A.2.1 5A.2.2 5A.3 5A.4 5A.4.1 5A.4.2 5A.4.3 5A.4.4 5A.4.5 5A.5 5B 5B.1
Corporate governance declaration Corporate governance Composition of the Board of Directors Mandates and duties of Board members Evaluation of the independence of Board directors Legal situation of Board directors Conflict of interest Rules of conduct Application of procedures Assessment of the Board of Directors, its committees and members Method of assessment Assessment of performance in 2012 Operation of the Board of Directors and its committees The Board of Directors The Remuneration and Nomination Committee The Audit Committee Shareholder base Equity and shareholder base Shares including special rights of control Voting rights Exercise of shareholder rights Internal control Internal control and risk management Introduction Definition – frame of reference Scope of application of internal control Organisation of internal control Principles of action and behaviour Internal control players Identification of risk and risk management system Main internal control procedures Compliance with laws and regulations Application of the general directive Procedures relating to commitments – risk committees Procedures relating to monitoring of operations Procedures relating to the production and processing of accounting information Actions carried out to strengthen internal control and risk management Risk factors Risks common to the segments in which the CFE group is active
38 38 38 39 44 44 44 44 45 45 45 45 46 46 49 50 51 51 51 51 52 52 52 52 52 52 53 53 53 54 54 54 54 54 55 55 56 56 56
5B.1.1 5B.1.1.1 5B.1.1.2 5B.1.1.3 5B.1.1.4 5B.1.2 5B.1.3 5B.2 5B.2.1 5B.2.2 5B.2.3 5B.2.4 5B.3 5B.4 5B.5 5B.6 5B.7 5B.7.1 5B.7.2
Operational risks The act of construction Real estate PPP-Concessions business Dredging The economic climate Management and workforce Market risks (interest rates, exchange rates, insolvency) Interest rates Exchange rates Credit Liquidity Raw material risks Dependence on customers/suppliers Environmental risks Legal risks Risks specific to the CFE group Special Purpose Companies Stake in DEME
56 56 57 57 57 58 58 58 58 58 58 58 59 59 59 59 59 59 59
6.
Evaluation of measures taken by the Company in response to the directive on insider trading and market manipulation
60
7. 8. 9.
Transactions and other contractual relationships between the Company, including related companies, and the Board directors and company directors Assistance agreement Corporate controls
C. 1.1 1.1.1 1.1.2 1.1.3 1.1.4 1.2 1.2.1 1.2.2
Remuneration report Remuneration of the Board and committee members Directors' fees Remuneration of Audit Committee members Remuneration of Remuneration and Nomination Committee members Remuneration of the managing director Remuneration of senior management CFE management Level of remuneration
62 64 64 65 65 65 65 65 66
D. E. F. G. H. I. J. K. L. M.
Insurance policy Special reports Takeover bid Acquisitions Creation of branches Post-balance sheet events Research and Development Outlook Audit Committee Notice of the Annual General Meeting of May 2, 2013
66 66 66 66 66 67 67 67 67 67
60 60 61
Financial report 2012 29
MANAGEMENT REPORT OF THE BOARD OF DIRECTORS
A. Report on the accounts of the financial year CFE’s Board of Directors met on 27 February 2013. The board finalised the financial statements for the year ended 31 December 2012, which will be submitted to shareholders for approval in the 2 May 2013 shareholders’ meeting.
1. Overview of the year Consolidated revenue by division As of December 31
% variation
In millions €
2012
2011
Contracting • Construction • Rail & Road • Multitechnics
900.8 645.2 99.3 156.3
897.1 655.5 91.8 149.8
+0.4% -1.6% +8.2% +4.3%
35.0 957.5 11.7 -6.7 1,898.3
26.0 882.9 2.9 -15.2 1,793.8
n.s. +8.4% n.s. n.s. +5.8%
Real Estate & Management Services Dredging & Environment PPP-Concessions Holding and consolidation adjustments Total
Operating income by division As of December 31 2012
2011
Contracting • Construction • Rail & Road • Multitechnics
+5.0 -2.5 +5.7 +1.8
+12.5 +3.2 +4.6 +4.7
-60.0% +23.9% -61.7%
+10.4 +69.1 +3.7 -6.8 +81.4
+9.4 +67.6 -2.2 -2.3 +84.9
+10.6% +2.1% -4.1%
Real Estate & Management Services Dredging & Environment PPP-Concessions Holding and consolidation adjustments Total
30
% variation
In millions €
Net result part of the group consolidated by division As of December 31
% variation
In millions €
2012
2011
Contracting • Construction • Rail & Road • Multitechnics
+3.6 -1.3 +4.0 +0.9
+5.2 -0.6 +3.6 +2.2
-30.8% +11.1% -59.1%
+5.7 +43.3 +3.1 -6.6 +49.1
+6.3 +51.0 -1.9 -1.6 +59.1
-9.5% -15.1% -16.9%
As of December 31
% variation
Real Estate & Management Services Dredging & Environment PPP-Concessions Holding and consolidation adjustments Total
Consolidated order book by division
In millions €
2012
2011
Contracting • Construction • Rail & Road • Multitechnics
1,195.6 964.2 65.8 165.6
1,171.9 983.2 76.0 112.7
+2.0% -1.9% -13.4% +46.9%
Real Estate & Management Services Dredging & Environment PPP-Concessions Holding and consolidation adjustments Total
14.1 1,658.5 2,868.2
8.4 1,202.0 2,382.3
n.s. +38.0% +20.4%
Consolidated revenue was €1,898 million on 31 December 2012 representing a 5.8% increase relative to 31 December 2011 (4.9% on a comparable structure basis). Contracting revenue rose by 0.4% (-1.6% on a comparable structure basis) to €900.8 million, with €645.2 million from construction, €99.3 million from rail & road and €156.3 million from multitechnics. Revenue from real estate & management services increased, with ongoing firm performance in terms of both business activity and sales. Dredging & environment revenue rose by 8.4% to €957.5 million (CFE share). Order intake on 31 December 2012 totalled €2,385 million, including €925 million in contracting and €1,414 million in dredging & environment. The order book ended the year at €2,868.2 million, up 20.4% relative to 31 December 2011. This growth was driven mainly by dredging & environment, which posted a 38% increase. Operating income amounted to €81.4 million, down 4.1% relative to 31 December 2011. This decrease was mainly the result of the construction and multitechnics activities. Real estate & management services, PPP-concessions and rail & road posted good earnings, higher than in 2011. The dredging business had a difficult first half impacted by depreciation charges but improved as the year progressed. Net income part of the group amounted to €49.1 million versus €59.1 million on 31 December 2011.
Financial report 2012 31
Analysis of the order book and results by division Construction division Revenue In millions €
2012
2011
% variation
Civil Engineering Buildings, Benelux Buildings, International Total
138.5 432.7 74.0 645.2
192.2 354.1 109.2 655.5
-27.9 % +22.2 % -32.2 % -1.6%
Revenue fell slightly in 2012. However, evolutions are quite different within the division: • Contraction in the Civil Engineering business. Major contracts won four years ago are gradually coming to an end. • Growth in the Buildings business in Belgium. This growth was driven mainly by CFE Brabant, BPC and Aannemingen Van Wellen. • Reduced Buildings activity in Central Europe. Most of the decline happened in Poland, where 2012 revenue was only a quarter of the 2011 level. • Limited, temporary decrease in buildings activity in major export markets. This decline was due to delayed starts and longer-than-expected build-up periods in the group’s projects
Order book In millions € Civil Engineering Buildings, Benelux Buildings, International Total
As of December 31 2012 190.6 527.8 245.8 964.2
As of December 31 2011 233.5 607.9 141.8 983.2
% variation -18.4% -13.2% +73.3% -1.9%
The main trends were as follows: • Difficulty replenishing the order book in civil engineering due to a contracting market • Reduction in the buildings, Benelux order book • Strong growth in the buildings, International order book
Operating income The division’s operating income turned negative (€-2.5 million). There were losses totalling €13 million at BAGECI and CFE Poland as well as in Qatar. Problems with various projects and business levels that were too low to cover overheads prompted CFE to implement major restructuring measures in these entities at the end of the first halfyear. Results from other companies were generally satisfactory following positive developments in certain matters. Arbitration proceedings initiated at the request of a client in relation to a major Dutch project, came to an end. The parties adopted a new deadline to reach a balanced, definitive agreement in the first halfyear of 2013.
Net income part of the group The division made a net loss of €-1.3 million versus €-0.6 million in 2011.
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Rail & Road division In early 2012, CFE set up its new rail & road division. This division includes the activities of ENGEMA (installation of overhead contact lines and rail signalling) and Louis Stevens & Co (rail signalling)- previously included in the multitechnics division- along with the road business of Aannemingen Van Wellen, and the activities of specialist track-layer Remacom, which was acquired at the start of the year.
Revenue The Rail & Road division’s revenue grew by 8.2% (2.4% at constant scope) to €99.3 million. There was organic growth at ENGEMA and Louis Stevens & Co, while revenue in the Road business was comparable to the 2011 figure.
Order book The order book ended the year at €65.8 million, down 13.4% relative to 31 December 2011 (-18.8% at constant scope). The outlook remains positive, since some large contracts are currently out to tender.
Operating income Operating income was €5.7 million versus €4.6 million in 2011 due to Remacom entering the scope of consolidation. In general, all of the division’s companies posted satisfactory earnings.
Net income part of the group Net income was €4 million, slightly higher than the 2011 despite a higher tax charge.
Multitechnics division Revenue The multitechnics division generated revenue of €156.3 million, up 4.3% relative to the previous year (-4% at constant scope). International revenue increased -supported by VMA, which won contracts from major carmakers in Turkey, Poland and Hungary- while revenue fell slightly in Belgium.
Order book The order book totalled €165.6 at end 2012, up 46.9% relative to 31 December 2011. The order book grew strongly at almost all subsidiaries, particularly CFE EcoTech due to orders in Vietnam and Sri Lanka, VMA -following further international expansion- Nizet Entreprise and Druart.
Operating income Although most subsidiaries posted satisfactory operating income, the divisional total fell to €1.8 million from €4.7 million in 2011. This temporary decline was due solely to a one-off loss at a subsidiary in western Flanders. The necessary restructuring measures have been taken.
Net income part of the group Taking into account the financial result, tax and non-controlling interests, net income was €0.9 million, versus €2.2 million in 2011.
Financial report 2012 33
Real Estate & Management Services division Despite a temporary dip in sales at the end of the first quarter, 2012 was an excellent year in terms of property sales and revenue amounted to €35 million (€26 million in 2011). The value of real estate projects developed as follows:
Value of real estate projects In millions €
As of December 31, 2012
As of December 31, 2011
19 45 102 166
9 54 68 131
Properties at the marketing stage Properties at the construction stage Properties at the development stage Total
Although the value of properties at the marketing stage was boosted by the completion of a building at the end of the year, the total remains low (11%), reflecting the group’s successful marketing policy. The value of properties at the construction stage fell because of the aforementioned completion. Construction is fully underway on the Brusilia and Van Maerlant residential projects. Properties at the development stage increased substantially due to the acquisition, in partnership with another developer, of the very well located Solvay site in Brussels, along with the acquisition of a stake in the Bavière project in Liège.
Operating income Operating income increased in 2012 to €10.4 million (€9.4 million in 2011).
Net income part of the group Net income fell slightly because of heavier financial expenses caused by the higher level of properties at the construction and development stages. It totalled €5.7 million, versus €6.3 million in 2011.
Dredging & Environment division (The amounts stated in this section relating to DEME are at 100%, whereas CFE owns 50% of the company).
Revenue DEME generated revenue of €1,915 million, up 8.4% relative to the previous year (€1,766 million).
Revenue by business area
34
%
2012
2011
Capital dredging Maintenance dredging Fallpipe et landfalls Environment Marine works Total (in million €)
51% 14% 11% 10% 14% 1,915
44% 20% 12% 12% 12% 1,766
Revenue by geographical area %
2012
2011
Europe (EU)
45%
52%
4% 12% 9% 20% 8% 2% 1,915
8% 11% 10% 11% 5% 3% 1,766
Europe (non-EU) Africa Americas Asia-Pacific Middle East India and Pakistan Total (in million €)
Order book DEME’s order book grew strongly (by 38%) to €3,317 million versus €2,404 million at 31 December 2011. The increase was the result of winning three large contracts in the first half of the year. In Australia, DEME won the contract to dredge the approach channel, the manoeuvring area and the berths for the Wheatstone LNG project. In Qatar, DEME’s MEDCO subsidiary -in which it owns a 44% stake- won the contract of the new port, reclaim 4.5km² of land and build two breakwaters using rock placement techniques. In the North Sea, DEME signed a contract with Northwind for the construction and installation of foundations for a wind-power project off the Belgian coast.
Operating income Fleet utilisation fell in the first part of 2012, with some dredgers undergoing major maintenance and repair work, while depreciation was higher following the delivery of new dredgers. However, business in the second part of the year enabled DEME to achieve firm operating income, higher than the 2011 figure, due to a satisfactory fleet utilization rate. EBITDA rose by 17.4% to €350.1 million versus €298.3 million in 2011. Operating income was €140.4 million (€137.3 million in 2011).
Net income part of the group Net income fell as a result of higher financial expenses and totalled €89.4 million (€104.2 million in 2011).
Investment In 2012, DEME completed its 2008-2012 investment plan by launching seven large new vessels: • Backhoe dredger “Peter the Great” • Sea-going rock-cutter dredger “Ambiorix” • Sea-going dredger “Amazone” • DP2 jack-up vessel “Neptune” • High-tech jack-up vessel “Innovation” • Two rapid auxiliary vessels DEME’s net financial debt at end 2012 was €742 million after the aforementioned investment plan, versus €651 million at end 2011. In early 2013, DEME carried out a €200 million bond issue. The proceeds are intended to refinance some of DEME’s existing debt, while diversifying the company’s financing sources. The issue was fully subscribed.
Developments Through one of its subsidiaries and in conjunction with other Otary shareholders, DEME won new concessions for three North Sea windpower projects off the coast of Belgium (Rentel, Seastar and Mermaid) with combined capacity of 900MW.
Financial report 2012 35
PPP-Concessions division Revenue Revenue totalled €11.7 million (€2.9 million in 2011), supported by 45% -owned subsidiary Rent-A-Port, whose Vietnam project saw good progress. CFE’s own business still consists partly of studies. Projects relating to the Liefkenshoekspoortunnel (Antwerp), Coentunnel (Amsterdam), schools in Belgium’s German-speaking community (Eupen) and the Charleroi police station are still in the construction phase. CFE was selected or pre-selected for projects relating to the new prison in Haren and the Liège tram line.
Operating income Operating income turned positive as a result of Rent-A-Port, totalling €3.7 million in 2012 (€-2.2 million in 2011), with CFE’s study-related costs remaining well under control.
Net income part of the group Net income part of the group was €3.1 million versus €-1.9 million in 2011
Holding company and consolidation adjustments Net income part of the group was negative (€-6.6 million) due to revenue levels that did not cover overheads, the cost of developing the new management system, and the fall in fair value of hedging instruments..
Notes to the consolidated financial statements, cash flow and CAPEX tables Net financial debt(*) was €400 million at end 2012 versus €420 million at 30 June 2012 and €351 million at 31 December 2011. This figure breaks down into long-term debt of €479 million, offset by net cash of €79 million. Cash flows relating to investing activities amounted to €197 million, compared with €179 million in 2011. Investments mainly arose from DEME’s capital expenditure program. The need for working capital remains stable. After payment of the dividend with respect to 2011 (€15.1 million), shareholders’ equity totalled €539 million. CFE has €100 million of confirmed long-term credit facilities for its general financing needs, of which €65 million were unused at 31 December 2012. DEME’s investments in dredgers and other marine equipment are subject to separate financing arrangements secured on those assets. In late May 2012, CFE issued €100 million of 6-year bonds maturing on 21 June 2018. The issue was a success, and was fully subscribed. (*) Net financial debt at 31 December 2012 does not include the fair value of derivative instruments, which represented a liability of €37.1 million at 31 December 2012.
Year ended 31 December (in thousands €)
2011
Cash flows relating to operating activities
150,008
102,592
Cash flows relating to investing activities
-196,951
-179,124
Cash flows relating to financing activities
95,152
111,450
48,189 501,702 532,419 49,069 9.8%
34,918 466,061 501,702 59,081 12.7%
Net increase/(decrease) in cash position Shareholders' equity (excluding non-controlling interests) at start of period Shareholders' equity (excluding non-controlling interests) at end of period Net income part of the group for the period ROE
36
2012
2. Parent company financial statements CFE SA’s revenues fell slightly. The decline was due to lower business levels in civil engineering. Major contracts won four years ago are gradually coming to an end. Operating profit, was affected by the difficulties encountered by the branch BAGECI, is decreasing and becomes negative. It amounted to €-0.7 million. Income from financial assets fell because of a reduction in dividends paid by subsidiaries, while the cost of debt increased. Net profit after tax decreased by almost 38% to €23.3 million. Profit and loss account CFE SA (Belgian accounting standards): (in thousands €) Sales and other income Revenue Operating profit/(loss) Financial result Profit from ordinary activities Exceptional income Exceptional expenses Profit/(loss) before tax Income tax Profit for the year
2012 407,806 349,506 -721 24,294 23,574 44 -273 23,345 -5 23,341
2011 431,649 361,506 663 30,762 31.425 696 -175 31,946 190 32,136
3. Capital remuneration At the Shareholders Meeting of 2 May 2013, CFE SA’s Board of Directors will show its confidence in the future by proposing to maintain a gross dividend per share of €1.15, the same as the dividend paid in 2011, corresponding to a net dividend of €0.8625 per share and a total pay-out of €15,056,099. Retained earnings after the dividend payment will amount to €54,422,043.
Financial report 2012 37
B. Corporate governance declaration 1. Corporate governance The Company has adopted the Belgian Company Code (2009) as its reference code. CFE’s corporate governance charter, established on the basis of the reference code, may be consulted on the Company’s website www.cfe.be. In its corporate governance charter, CFE applies the principles of the Belgian Company Code (2009). Furthermore, CFE construes corporate governance as going beyond compliance with the code in the belief that it is essential to base the conduct of its activities on behavioural and decision-making ethics and a strongly grounded culture of corporate governance.
2. Composition of the Board of Directors On December 31, 2012, CFE’s Board of Directors consisted of 10 members, whose terms of office began on the dates listed below and will expire immediately after the Annual General Meetings of the years listed below: C.G.O. SA, represented by Philippe Delaunois ** Renaud Bentégeat * Philippe Delusinne Richard Francioli Bernard Huvelin Christian Labeyrie Jean Rossi Consuco SA, represented by Alfred Bouckaert BVBA Ciska Servais, represented by Ciska Servais Jan Steyaert
Start of term 06.05.2010 18.09.2003 07.05.2009 13.09.2006 23.06.2005 06.03.2002 06.05.2010 06.05.2010 03.05.2007 07.05.2009
Expiry of term 2014 2013 2013 2013 2014 2013 2014 2014 2015 2013
* Managing director responsible for day-to-day operation ** Mr Philippe Delaunois has been a member of CFE’s Board of Directors in a personal capacity since May 5, 1994 The term of office of Board directors is four years for those appointed or whose mandates were renewed after January 1, 2005. During the general meeting of 2 May 2013, the Board of Directors will propose the shareholders to renew the mandate of four directors for a limited period of three years (instead of four). This limited period of the new mandates is justified by the obligation the company will have in 2016 to appoint one third women in the board of directors, according to the law of 28 July 2011 aiming to guarantee the presence of women in the Board of Directors of quoted companies.
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2.1 Mandates and duties of Board members Board directors The table below summarises the mandates and duties of the 10 Board members as of December 31, 2012. C.G.O. SA, represented by Philippe Delaunois CFE Avenue Herrmann-Debroux, 40-42 B-1160 Brussels
Chairman of the Board of Directors Independent director
Born in 1941, Philippe Delaunois graduated as a civil engineer-steel from the Mons Polytechnic University and as a commercial engineer from the Mons State University. He is also a graduate of Harvard Business School. He spent most of his career in the steel industry, and until 1999, was managing director and general manager of Cockerill-Sambre. An Officer of the Order of Léopold and Chevalier of the Légion d’Honneur, he was chosen Manager of the Year in 1989, was chairman of the Union Wallonne des Entreprises (Walloon Business Association) from 1990 to 1993, and has been honorary consul of Austria for Hainaut and Namur since 1990. Directorships: a- listed companies: Director of Mobistar SA Director of SABCA SA b- non-listed companies: Director of mutual pension insurance company Intégrale Director of CLi, CLE SA, DEME NV and ETEC SA (Entities of CFE Group) c- associations: Director of Europalia ASBL Director of the ASBL Ordre de Léopold Director of the Chapelle Musicale Reine Elisabeth
Renaud Bentégeat
Managing director
CFE Avenue Herrmann-Debroux, 40-42 B-1160 Brussels
Born in 1953, Renaud Bentégeat holds a bachelor’s degree in public law, a master’s (DEA) in public law, a master’s (DEA) in political analysis and a diploma from the Political Studies Institute of Bordeaux. He began his career in 1978 at Campenon Bernard. He was then successively named head of legal services, director of communication, administrative director and secretary general responsible for legal services, communication, administration and human resources for Compagnie Générale de Bâtiment et de Construction (CBC). From 1998 to 2000, he was regional director of building construction for Campenon Bernard SGE’s Greater Paris region, before being promoted to deputy general manager of VINCI Construction in Central Europe, and managing director of Buildings et Ponts Construction and Bâtipont Immobilier in Belgium. Since 2003, he has been the managing director of CFE. He is also a member of VINCI’s Management and Coordination Committee. Renaud Bentégeat is an Officer of the Order of Léopold and Chevalier of the Ordre National du Mérite (France). Directorships: a- listed companies: Managing director of CFE SA b- non-listed companies: Director and Chairman of the Management Committee of DEME NV Director of various companies within the CFE group Chairman and CEO of Compagnie Générale de Bâtiment et de Construction (CBC) Chairman and CEO of Ufimmo c- associations: President of the Chambre Française de Commerce et d’Industrie de Belgique (French Chamber of Commerce and Industry of Belgium), Vice-President of the Association des Entrepreneurs Belges de Grands Travaux (ADEB-VBA) (Association of Belgian Construction Contractors) Foreign Trade Adviser for France
Financial report 2012 39
Philippe Delusinne
Independent director
RTL Belgium Avenue Jacques Georgin, 2 B-1030 Brussels
Philippe Delusinne was born in 1957 and is the holder of a diploma in marketing and distribution from ISEC in Brussels and a Short MBA from the Sterling Institute of Harvard University. He started his career at Ted Bates as an account executive. He subsequently held the positions of account manager at Publicis, client services director at Impact FCB, deputy general manager at McCann Erikson and chief executive officer of Young & Rubicam in 1993. He has been chief executive officer of RTL Belgium since March 2002.
Member of the Audit Committee
Directorships: a- listed companies: Member of the Supervisory Board of Métropole Télévision (M6), Paris b- non-listed companies: Managing director of RTL Belgium SA Managing director of Radio H SA Managing director of RTL Belux SA Chairman and managing director of IP Plurimedia SA Representative of CLT-UFA, Managing director of Cobelfra SA Representative of CLT-UFA, Managing director of New Contact SA Managing director of INADI SA Managing director of New Contact SA Director of CLT-UFA SA Director of BEWEB SA Chairman of HOME SHOPPING SERVICE BELGIUM SA Director of FRONT SA c- associations: Member of the High Council for the Audiovisual Sector Vice-President of the Théâtre Royal de La Monnaie Chairman of les Amis des Musées Royaux des Beaux-Arts de Belgique (Friends of the Royal Museums of Fine Arts of Belgium) Chairman of the Association of Commercial Television in Europe (A.C.T.) Director of the Association for Self-Regulation of Journalistic Ethics (ASBL) Richard Francioli
Director
VINCI Construction 1, cours Ferdinand-de-Lesseps F-92851 Rueil-Malmaison Cedex
Richard Francioli was born in Dole (France) in 1959. After graduating from the Ecole Supérieure de Commerce d’Angers, he started his career with the VINCI group in 1983 with a traineeship as a corporate volunteer (VSNE) on the Ain Shams hospital project in Cairo. He subsequently held the following positions within the group: regional manager for the North for Sogea Construction, provincial manager for Sogea Construction and chairman of VINCI Construction Filiales Internationales. He was appointed chairman of VINCI Construction in March 2006 and, as from January 1, 2010, is head of VINCI’s Contracting business.
Member of the Remuneration and Nomination Committee
Directorships: a- listed companies: Member of the Executive Committee, member of the Management and Co-ordination Committee and Executive Vice-President of VINCI Director of Entrepose Contracting (France) b- non-listed companies: Member of the Supervisory Board of VINCI Deutschland GmbH (Germany) Director of VINCI Plc (England) Representative of VINCI Construction on the Board of Directors of Doris Engineering (France) Representative of VINCI Construction on the Board of Directors of Cofiroute (France) Director of VINCI Energies (France) Director of Soletanche Freyssinet SA (France)
40
Bernard Huvelin
Director
VINCI 1, cours Ferdinand-de-Lesseps F-92851 Rueil-Malmaison Cedex
Born in 1937, Bernard Huvelin is an HEC graduate. He joined SGE (which later became VINCI) in 1962. He became secretary general in 1974, deputy general manager from 1982 to 1988, member of the Management Board from 1988 to 1990, deputy general manager from 1991 to 1997, chief executive officer from 1997 to 1999, and director and chief executive officer from 1999 to 2005. Bernard Huvelin is an Officer of the Légion d’Honneur and Chevalier of the Ordre National du Mérite. Directorships: b- non-listed companies: Director of Soficot Director of the Stade de France consortium Chairman of VFI c- associations: Vice-President of the European Construction Industry Federation Adviser to the European Economic and Social Committee
Christian Labeyrie VINCI 1, cours Ferdinand-de-Lesseps F-92851 Rueil-Malmaison Cedex Member of the Audit Committee
Director Born in 1956, Christian Labeyrie is executive vice-president and chief financial officer of the VINCI group, and a member of its Executive Committee. Before joining VINCI in 1990, he held various positions in the Rhône-Poulenc and Schlumberger groups. He started his career in the banking industry. Christian Labeyrie is a graduate of HEC, the Escuela Superior de Administración de Empresas (Barcelona) and McGill University (Canada), and holds a DECS diploma (advanced accounting degree). He is a Chevalier of the Légion d’Honneur and a Chevalier of the Ordre National du Mérite. Directorships: a- listed companies: Member of the Executive Committee of the VINCI group b- non-listed companies: Director of Eurovia Director of VINCI Park Director of VINCI Deutschland Director of ASF Director of Escota Director of Arcour Director of the Stade de France consortium Director of VFI Director of the company LCL Actions Euro, part of Crédit Agricole Asset Management Board Member of the Banque de France – Hauts-de-Seine branch
Financial report 2012 41
Jean Rossi
Director
VINCI Construction 5, cours Ferdinand-de-Lesseps F-92851 Rueil-Malmaison Cedex
Born on 6 November, 1949, Jean Rossi has an engineering degree from the Ecole Spéciale des Travaux Publics de Paris (ESTP). He started his career as a works engineer at Pradeau et Morin. He moved to become operations director and then managing director of SNEG. After that, he held several positions at SOGEA, a VINCI group subsidiary, including director of building and civil engineering, regional director, director in charge of Northern France, director in charge of France excluding the Paris region, and chief operating officer, before becoming the company’s chairman in 2001. In 2007, he is chairman of VINCI Construction France and become chief operating officer of VINCI Construction in June 2007. In 2008, he became a member of VINCI’s Executive Committee and was appointed chairman of VINCI Construction in 2010. Directorships a- listed companies: Member of the Executive Committee of VINCI Director of Entrepose Contracting SA b- non-listed companies: Chairman of VINCI Construction Chairman of Société Générale de Travaux Director of Soletanche Freyssinet SA Director of VINCI Energies SA Vice-President of FNTP (Fédération Nationale Travaux Publics) c- associations: Honorary Chairman of EGF-BTP
SA Consuco, represented by Alfred Bouckaert Avenue de Foestraets, 33A B-1180 Brussels Member of the Remuneration and Nomination Committee
Independent director Born in 1946, Alfred Bouckaert has a degree in economics from KUL (the Catholic University of Louvain). He started his career in 1968 as a stockbroker at JM Finn & Co in London. In 1972, he joined Chase Manhattan Bank where he held various commercial and credit posts before becoming commercial banking manager for Belgium. He was appointed general manager for Chase in Copenhagen (Denmark) in 1984. Two years later, be became general manager and country manager for Chase in Belgium. In 1989, Chase Manhattan Bank sold its Belgian business to Crédit Lyonnais and Alfred Bouckaert was made responsible for merging the two banks’ operating activities in Belgium. In 1994, Crédit Lyonnais asked Alfred Bouckaert to head the bank’s European operations. In 1999, he took over the management of AXA Royale Belge and was also appointed country manager for the Benelux countries. He became general manager for Northern Europe (Belgium, Netherlands, Luxembourg, Germany and Switzerland) in 2005 and was appointed to AXA’s Management Board in October 2006 with responsibility for Northern, Central and Eastern Europe business. In April 2007, he was appointed chairman of the Board of Directors of AXA Belgium, retaining this position until 27 April 2010. In 2011, he was appointed Chairman of the Board of Directors of Dexia Bank Belgium. Directorships: a- listed companies: Director of Leasinvest Real Estate b- non-listed companies: President of Belfius Bank & Insurance Belgium Director of Vandemoortele SA Director of Bank van Breda Director of Finaxis Director of Ventosia (sicav of the notaries) Director of Vesalius Sicar (Luxemburg) Director of Vesalius Biocapital II Arkiv c- associations: Director of French Chamber of Commerce and Industry of Belgium Director of the Institut de Duve (ICP)
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BVBA Ciska Servais, represented by Ciska Servais Boerenlegerstraat, 204 B-2650 Edegem Chair of the Nomination and Remuneration Committee
Independent director Ciska Servais is a partner in legal firm Astrea. She is active in the field of administrative law, focusing in particular on environmental and town planning law, real estate law and construction law. She has extensive experience as a consultant in judicial procedures and negotiations; she teaches university courses and is a regular speaker at seminars. She graduated with a bachelor’s degree in law from the University of Antwerp (1989), and a complementary master’s (LL.M) in international legal cooperation at the Free University Brussels (V.U.B.) in 1990. She also graduated with a special diploma in ecology from the University of Antwerp (1991). She started her traineeship in 1990 at the legal firm Van Passel & Greeve. She became a partner in Van Passel & Vennoten in 1994 and, subsequently, in Lawfort in 2004. In 2006, she co-founded the legal firm Astrea. Ciska Servais publishes mainly on the subject of environmental law, including on the wastewater treatment decree, environmental liability and regulations regarding the movement of soil. She is a member of the Antwerp Bar. Directorships: b Non-listed companies: Astrea bv cvba
Jan Steyaert
Independent director
Mobistar Boulevard Reyers, 70 B-1030 Brussels
Born in 1945, Jan Steyaert has been active for the greater part of his career in the telecom sector. He started his career as a company auditor. In 1970, he joined Telindus (a company listed on the stock market) where he successively held the positions of chief financial officer, chief executive officer and chairman of the Management Board of the Telindus Group and its affiliated companies until 2006. He has been a member of the Board of Directors of Mobistar since its creation in 1995 and has been its chairman since 2003. He is an Officer of the Order of Léopold II and has been appointed a Chevalier in the Order of the Crown.
Chair of the Audit Committee
Directorships: a- listed companies: Chairman of Mobistar SA b- non-listed companies: Director of Credoc SA Director of Portolani SA Director of Automation SA Chairman of Advisory Board of Front SA Director of e-Novates NV Director of Blue Corner NV Director of 4iS NV c- associations: Director of Anima Eterna ASBL Director of VVW ASBL Chairman of the Dhondt-Dhaenens Foundation and Museum in Deurle
Financial report 2012 43
Proposed reappointment of directors in the ordinary shareholders’ general meeting Renaud Bentégeat’s term of office as a director will expire at the end of the ordinary general meeting of shareholders of May 2, 2013. A proposal will be made to the general meeting of shareholders of May 2, 2013 to reappoint Renaud Bentégeat as director for a four-year term expiring at the end of the ordinary general meeting of shareholders held in 2017. Renaud Bentégeat is not an independent director according to the independence criteria defined in Article 526c of Belgium’s Company Code and in the country’s Corporate Governance Code. Richard Francioli’s term of office as a director will expire at the end of the ordinary general meeting of shareholders of May 2, 2013. A proposal will be made to the general meeting of shareholders of May 2, 2013 to reappoint Richard Francioli as director for a three-year term expiring at the end of the ordinary general meeting of shareholders held in 2016. Richard Francioli is not an independent director according to the independence criteria defined in Article 526c of Belgium’s Company Code and in the country’s Corporate Governance Code. Christian Labeyrie’s term of office as a director will expire at the end of the ordinary general meeting of shareholders of May 2, 2013. A proposal will be made to the general meeting of shareholders of May 2, 2013 to reappoint Christian Labeyrie as director for a three-year term expiring at the end of the ordinary general meeting of shareholders held in 2016. Christian Labeyrie is not an independent director according to the independence criteria defined in Article 526c of Belgium’s Company Code and in the country’s Corporate Governance Code. Philippe Delusinne’s term of office as a director will expire at the end of the ordinary general meeting of shareholders of May 2, 2013. A proposal will be made to the general meeting of shareholders of May 2, 2013 to reappoint Philippe Delusinne as director for a three-year term expiring at the end of the ordinary general meeting of shareholders held in 2016. Philippe Delusinne is an independent director according to the independence criteria defined in Article 526c of Belgium’s Company Code and in the country’s Corporate Governance Code. Jan Steyaert’s term of office as a director will expire at the end of the ordinary general meeting of shareholders of May 2, 2013. A proposal will be made to the general meeting of shareholders of May 2, 2013 to reappoint Jan Steyaert as director for a three-year term expiring at the end of the ordinary general meeting of shareholders held in 2016. Jan Steyaert is an independent director according to the independence criteria defined in Article 526c of Belgium’s Company Code and in the country’s Corporate Governance Code.
2.2 Evaluation of the independence of Board directors Of the 10 members of the Board of Directors on December 31, 2012, six may not be considered as independent under the terms of Article 526 ter of the Belgian Company Code and the Corporate Governance Code: • Renaud Bentégeat, who is the managing director of the Company; • Christian Labeyrie, Richard Francioli, Bernard Huvelin and Jean Rossi, who represent the controlling shareholder, VINCI Construction; • C.G.O. SA, represented by Philippe Delaunois, who has held more than two consecutive mandates. According to rulings made at the Annual General Meetings of May 7, 2009, May 6, 2010 and May 5, 2011, the independent directors are Philippe Delusinne, BVBA Ciska Servais, represented by Ciska Servais, Jan Steyaert and Consuco SA, represented by Alfred Bouckaert. It should be noted that all CFE’s independent directors were able to carry out their mission with complete independence in 2012.
2.3 Legal situation of Board directors None of the Board directors of CFE (i) has been found guilty of fraud or any other infraction or public sanction by the regulatory authorities, (ii) has been associated with a bankruptcy, receivership or liquidation or (iii) has been prevented by a Court from acting as a member of an administration, management or supervisory board of a public company or from participating in the management or business decisions of a public company.
2.4 Conflict of interest 2.4.1 Rules of conduct All directors are required to show independence of judgment, whether they are executive directors or not, and in the case of non-executive directors, whether they are independent or not. Every director must organise his or her personal and professional affairs in such a way as to avoid any direct or indirect conflict of interest with the company.
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Directors must inform the Board of Directors when a conflict of interest arises, and must refrain from taking part in discussions and abstain from voting on the point concerned, in accordance with the provisions of the Companies Code on the subject. Any abstention due to a conflict of interest must be published in accordance with the provisions of the Companies Code. The Board of Directors is particularly mindful of potential conflicts of interest with a shareholder or group company, and takes particular care to apply the special procedures provided for in Articles 523 and 524 of the Companies Code. Transactions or other contractual relationships between the company, including its associated companies, and the directors must be concluded on normal market terms. Non-executive directors are not authorised to conclude agreements with the company, whether directly or indirectly, relating to the supply of paid services, without the express consent of the Board of Directors. They must consult the Chairman, who decides whether or not to submit the request for a derogation to the Board of Directors.
2.4.2. Application of procedures As far as CFE is aware, no director has found himself in a situation of conflict of interest this year, and the applicable rules of conduct have been observed. Certain directors hold offices in other companies whose businesses sometimes compete with those of CFE. Four directors were also appointed on a proposal of the VINCI Group, CFE’s controlling shareholder.
2.5. Assessment of the Board of Directors, its committees and members 2.5.1. Method of assessment
With the assistance of the Appointments and Remuneration Committee, and potentially that of outside experts, the Board of Directors, under the direction of its Chairman, regularly assesses its composition, its size and the way it functions, as well as the composition, size and operation of its specialist committees. The purpose of these assessments is to contribute to the continuous improvement of the company’s governance while taking changes of circumstances into account. During these assessments, the Board of Directors checks, among other things, whether important matters are adequately prepared and discussed both by the Board itself and by its specialist committees. It checks whether every director makes an effective contribution having regard to his skills, his attendance at meetings and his constructive involvement in discussions and decision-making, and also whether the current composition of the Board of Directors and its specialist committees is desirable. Special attention is also paid to the assessment of the Chairman of the Board of Directors. The Board of Directors learns the lessons of this assessment of its performance by acknowledging its strong points and correcting its weaknesses. If necessary, this may involve a proposal to appoint new members, a proposal not to re-elect existing members or the adoption of any measure considered appropriate to ensure that the Board of Directors functions effectively. The same applies to the specialist committees. Once a year, the non-executive directors carry out an assessment of their interaction with executive management. For this purpose, they meet once a year without the CEO or any other executive directors attending.
2.5.2. Assessment of performance in 2012 In November 2012 and in their December 4, 2012 meeting, members of the Board of Directors discussed the operating methods of the Board and its committees, with the aim of making them more effective. In the December 4, 2012 Board meeting, a decision was taken to carry out a more formal and comprehensive appraisal. This will take place in 2013.
Financial report 2012 45
3. Operation of the Board of Directors and its committees 3.1 The Board of Directors
Role and jurisdiction of the Board of Directors Role of the Board of Directors The mission of the Board of Directors is carried out in the interest of the Company. The Board of Directors determines the orientations and values, the strategy and the key policies of the Company; it examines and approves related significant operations; it ensures that they are well executed and defines any measures needed to carry out its policies. It decides on the level of risk it agrees to take. The Board of Directors focuses on the long-term success of the Company by providing entrepreneurial leadership and by conducting risk evaluation and management. The Board of Directors ensures that the financial and human resources needed by the Company to achieve its objectives are available, and it puts in place the structures and means required to achieve these objectives. The Board of Directors pays special attention to social responsibility, a good gender balance and diversity in general within the Company. The Board of Directors approves the budget and examines and closes the accounts. The Board of Directors: • verifies that management has put in place a global internal control and risk management system and that this system is correctly implemented; • takes all measures needed to ensure the integrity of the financial statements; • supervises the activities of the Statutory Auditor; • reviews the performance of the managing director and senior management; • ensures that the specialised committees of the Board of Directors function well and efficiently. Jurisdiction of the Board of Directors 1. General powers of the Board of Directors With the exception of powers expressly reserved for the Annual General Meeting and within the limits of the Company’s objectives, the Board of Directors has the power to carry out all actions that are needed or useful to meet the Company’s objectives. The Board of Directors reports on the exercise of its responsibilities and management to the Annual General Meeting. It prepares the proposed resolutions to be considered by the Annual General Meeting. 2. Powers of the Board of Directors with regard to capital increases (authorised capital) Following the authorisation given by the Annual General Meeting, the Board of Directors is authorised to increase the Company’s capital – in one or more operations – within a maximum amount of €2,500,000, excluding issue premiums, by means of cash or non-cash contributions, by incorporation of reserves and with or without the issue of new shares. In the framework of authorised capital, the Board of Directors decides on the issue of shares, determines the terms of issue of the new shares and, in particular, the issue price. The authorised capital of CFE allows issue of 1,531,260 additional shares in the event of a capital increase with issue of shares on the basis of their par value. This authorisation expires on May 21, 2015, but can be renewed one or more times, in accordance with the relevant legal provisions.
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3. Powers of the Board of Directors with regard to acquisition of treasury shares The Annual General Meeting of May 7, 2009 authorised CFE’s Board of Directors to acquire a maximum of 1,309,226 CFE treasury shares. The acquisition can be made at a price equal to the average of the closing price of the last 20 days of trading of CFE shares on Euronext Brussels immediately preceding the acquisition, plus a maximum of ten per cent (10%) or minus a maximum of fifteen per cent (15%). This authorisation expires on May 25, 2014, but can be renewed one or more times, in accordance with the relevant legal provisions. The agreement of the Annual General Meeting is not required for the acquisition of treasury shares by CFE with a view to distributing them to employees. By virtue of an express statutory provision, treasury shares held by CFE that are quoted on the primary market of a stock exchange or officially listed on a stock exchange located in a member state of the European Union may be transferred without the prior authorisation of the Annual General Meeting.
4. Powers of the Board of Directors with regard to the issue of bonds Subject to the application of the relevant legal provisions, the Board of Directors may decide on the creation and issue of bonds, which may be bonds convertible into shares. “On May 22, 2012, the Board of Directors decided to carry out a bond issue. The bonds were issued on June 21, 2012. The issue was very successful, with all of the bonds on offer being subscribed. The bonds were listed for trading on Euronext Brussels on June 21, 2012.
The full terms and conditions of the bond issue are set out in the bond issue prospectus of May 29, 2012, which is available on the company’s website (www.cfe.be).
The special general meeting of shareholders that took place on October 10, 2012 approved the change-of-control clause in the bond issue prospectus”.
Financial report 2012 47
Operation of the Board of Directors The Board of Directors is organised so as to ensure that decisions are taken in the interest of the Company and that its work is executed efficiently. Meetings of the Board of Directors The Board of Directors meets regularly and with sufficient frequency to perform its obligations effectively. It also meets whenever required in the interest of the Company. The Board has increased the number and duration of its meetings, some of which include visits to ongoing projects. In 2012, the Board of Directors ruled on all major issues concerning the Company. It met six times. In particular, the Board of Directors performed the following tasks: • approved the financial statements for the year 2011 and the interim financial statements for 2012; • examined the 2012 budget and its updates; • examined the 2013 budget • examined the CFE group’s five-year plan, and defined strategic guidelines • examined the group’s financial position and changes in its debt levels; • decided to carry out a €100 million bond issue • discussed major acquisition projects and decided to acquire Remacom NV and Ariadne NV • decided, on the basis of proposals made by the Remuneration and Nomination Committee, on the terms of remuneration and bonuses for the managing director and senior management; • decided on the fees payable to Audit Committee and Remuneration and Nomination Committee members; • decided to put the change-of-control clause accepted as part of the May 29, 2012 bond issue to the special general meeting of shareholders of October 10, 2012 for approval. The table below indicates the individual attendance rate of directors at Board meetings in 2012.
Board directors
Attendance/Total number of meetings
C.G.O. SA, represented by Philippe Delaunois
6/6
Renaud Bentégeat
6/6
Philippe Delusinne
6/6
Richard Francioli Bernard Huvelin Christian Labeyrie Jean Rossi Consuco SA, represented by Alfred Bouckaert BVBA Ciska Servais, represented by Ciska Servais Jan Steyaert
5/6 6/6 5/6 5/6 5/6 6/6 6/6
Mr Jacques Ninanne was appointed Secretary of the Board of Directors. Therefore, he participated in 2012 in Board meetings. The decision-making process within the Board of Directors Except in the case of force majeure resulting from wars, uprisings or other public disturbances, the Board of Directors can only validly deliberate if at least half of the members are present or represented. Board members who are unable to attend a meeting may be represented by another Board member. In accordance with legal and regulatory provisions, each member can have only one proxy vote. Letters, telegrams, telexes, faxes or e-mail messages conveying the proxy vote are attached to the minutes of the Board meeting at which they are used.
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If so decided by the chairman of the Board, meetings may be attended by all or some of the members via audio or video conference. These members are deemed to be present for the purpose of calculating quorum and majority. The company secretary takes the necessary steps to organise any such audio or video conference. Resolutions are passed by majority vote of the members present or represented. In the event that members need to abstain from taking part in deliberations as a result of legal considerations, the said resolutions will be passed by majority vote of the other members present or represented. In the event of a tie, the chairman of the Board of Directors will cast the deciding vote. After each meeting, the deliberations are recorded in minutes signed by the chairman of the Board of Directors and by a majority of the Board members who took part in the deliberations. The minutes summarise the discussions, specify the decisions taken and, if applicable, any reservations raised by the board members. They are recorded in a special register kept at the Company’s head office. The main characteristics of the evaluation process of the Board of Directors are stipulated in the internal regulations published in the Company’s Corporate Governance Charter.
3.2 The Remuneration and Nomination Committee At December 31, 2012, this committee comprised: • BVBA Ciska Servais, represented by Ciska Servais, chair (*) • Richard Francioli • Consuco SA, represented by Alfred Bouckaert (*) (*) independant directors The committee met three times in 2012. Over the course of the financial year, the committee examined, notably: • the fixed and variable remuneration paid to the managing director; • the fixed and variable remuneration paid to senior management; • the annual remuneration report (under the Belgian Law of 6 April 2010); • the group directors insurance policy; • the remuneration of the directors; • the analysis of the succession plan for CFE’s chief financial officer; • CFE’s general organization chart. The table below indicates the individual attendance rate of the members of the Remuneration and Nomination Committee at meetings in 2012. Members
Attendance/Total number of meetings
BVBA Ciska Servais, represented by Ciska Servais, chair (*) Richard Francioli Consuco SA, represented by Alfred Bouckaert (*)
3/3 3/3 3/3
(*) independent directors
Members of the Remuneration and Nomination Committee are paid €1,000 per session; the chair is paid €2,000 per session. The main characteristics of the evaluation process of the Remuneration and Nomination Committee are stipulated in the internal regulations published in the Company’s corporate governance charter.
Financial report 2012 49
3.3 The Audit Committee At December 31, 2012, this committee comprised: • Jan Steyaert, chair (*) • Philippe Delusinne (*) • Christian Labeyrie (*) independent directors CFE’s Board of Directors pays particular attention to ensuring that Audit Committee members have financial, accounting and risk management skills. Mr Jan Steyaert chairs the Audit Committee. He meets the independence criteria defined in Article 526 ter of the Belgian Company Code. Mr Jan Steyaert has a degree in economics and finance. He has held various posts, including working for an auditing firm and for Telindus, a listed company, where he was initially CFO, then CEO and then chairman of the Board of Directors. The foregoing bears out Mr. Steyaert’s competence in terms of accounting and auditing. The Statutory Auditor participates in the work of the Audit Committee when the committee so requests. This committee met four times during the financial year. It performed the following tasks: • examined the financial statements for the year 2011 and the interim financial statements for 2012; • examined the draft 2013 budget before it was presented to the Board of Directors; • examined both the operational and financial aspects of the five-year plan; • assessed the tasks of the Statutory Auditor and, together with him, redefined the content of these tasks, taking into account known changes arising during the financial year; • examined the organisation of the finance department; • undertook a review of the principal risks; • reviewed the tax situation; • monitored the development and implementation of the ERP project adopted in 2010. The Audit Committee paid particular attention to the Company’s internal control and monitored the procedures initiated by CFE to improve this control. The table below indicates the individual attendance rate of the members of the Audit Committee at meetings in 2011. Members
Attendance/Total number of meetings
Jan Steyaert (*) Philippe Delusinne (*) Christian Labeyrie
4/4 4/4 3/4
(*) independent directors
Members of the Audit Committee are paid €1,000 per session; the chair is paid €2,000 per session. The main characteristics of the evaluation process of the Audit Committee are stipulated in the internal regulations published in the Company’s Corporate Governance Charter.
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4. Shareholder base
4.1 Equity and shareholder base At the close of the financial year, CFE’s share capital amounted to €21,374,971, represented by 13,092,260 shares, with no declared par value. The Company’s shares are registered or dematerialised securities. The shares are registered until fully paid up. Once fully paid up, they may be converted into dematerialised securities, at the choice and expense of the shareholder. The registry of registered shares is held in electronic form. Management of the registry has been entrusted to Euroclear Belgium (CIK SA). Registered shares may be converted into dematerialised shares and vice-versa on request by their holder and at their expense. Dematerialised shares are converted into registered shares by making the corresponding entry in the register of CFE shareholders. Registered shares are converted into dematerialised shares by entry into an account in the name of their owner or holder opened with an approved account-holder or a body responsible for cancellation and removal of the entry in the register of shareholders. Bearer shares in the Company already registered in a securities account as of January 1, 2008 automatically exist in dematerialised form as of this date. Bearer shares not registered in a securities account as of January 1, 2008 are converted into dematerialised securities at the time of their registration in a securities account or later, as the case may be. Bearer shares that are not registered in a securities account as of December 31, 2013, will be automatically converted into dematerialised securities on that date. CFE’s shareholder base as of December 31, 2012 is shown below: Number of shares without declaration of par value • registered shares • dematerialised shares • bearer shares
13,092,260 6,185,480 6,866,500 40,280
Shareholders owning 3% or more of the voting rights attached to the shares they hold: VINCI Construction SAS 5, cours Ferdinand-de-Lesseps F-92851 Rueil-Malmaison Cedex (France) 46.84%, or 6,132,880 shares
4.2 Shares including special rights of control At the close of the financial year, no shareholder owned shares with special rights of control.
4.3 Voting rights Ownership of a CFE share entitles the owner to vote in CFE’s Annual General Meeting and automatically assumes approval of CFE’s Articles of Association and the decisions of CFE’s Annual General Meeting. Shareholders can only be held liable for the commitments of the Company up to the amount of the shares held. The Company recognises only one owner per share as concerns the exercise of rights granted to shareholders. The Company may suspend the exercise of the rights attached to shares held in co-ownership, usufruct or under pledge, until a single person is designated as beneficiary of these rights in respect of the Company. Since January 1, 2008, the exercise of any rights attached to physical bearer shares is suspended until they are registered in a securities account or in the register of shareholders.
Financial report 2012 51
4.4 Exercise of shareholder rights “The company’s shareholders have rights conferred by the Belgian Company Code and by the articles of association. They have the right to attend any of the company’s general meetings of shareholders and to vote in them. Each share gives the right to one vote in a general meeting of shareholders. The conditions for being admitted to a general meeting of shareholders are set out in the company’s articles of association and are also stated in the notice of meeting. In 2012, there were two general meetings of shareholders. The ordinary general meeting of shareholders was held, in accordance with the articles of association, on 3 May 2012. In this meeting, shareholders approved the company’s financial statements for the period ended 31 December 2011”. The special general meeting of shareholders that took place on October 10, 2012 approved the change-of-control clause in the bond issue prospectus».
5. Internal control 5.A Internal control and risk management 5A.1 Introduction 5A.1.1 Definition – frame of reference “Internal control may be defined as a system developed by the management body and implemented under its responsibility by executive management. It contributes to good management of the company’s activities, the effectiveness of its operations and the efficient use of its resources, as a function of the goals, size and complexity of the company’s activities. More particularly, the internal control system aims to ensure: • the application (execution and optimisation) of the policies and goals set by the management body (e.g. performance, profitability, protection of resources, etc.); • the reliability of financial and non-financial information (e.g. preparation of the financial statements, the management report, etc. ; • compliance with laws, regulations and other legal texts (e.g. the Articles of Association, etc.)”. (Excerpt from the guidelines in the framework of the Law of April 6, 2010 and the Belgian Code of Corporate Governance (2009) published by the Corporate Governance Commission - version 10/01/2011, page 8). Like any other control system however, the internal control system, no matter how well designed and applied, cannot guarantee the absolute elimination of such risks.
5A.1.2 Scope of application of internal control The internal control system applies to CFE and the subsidiaries included in its scope of consolidation. In the specific case of DEME, RentA-Port, Groep Terryn, Van De Maele Multi-Techniek, Sogesmaint-CBRE, Remacom, Ariadne and ETEC, internal control is the responsibility of their Boards of Directors. However, CFE seeks to encourage the application of its own best practices through its representatives on these boards.
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5A.2. Organisation of internal control 5A.2.1 Principles of action and behaviour CFE’s business activities require the teams exercising them to be close to their clients. To enable each profit centre manager to rapidly take the appropriate operating decisions, a decentralised organisation has been set up in the construction, real estate development and management services, multitechnics and PPP–Concessions divisions. CFE’s organisational structure necessitates delegating authority and responsibility to operational and functional players at every level of the organisation. Delegation is exercised in the framework of a general directive and in compliance with CFE’s principles of action and operation: • strict compliance with the rules common to the entire group in terms of entering into commitments, risk taking, acceptance of new business, and reporting of financial, accounting and management information; • transparency and loyalty of managers to their line management and functional departments; • compliance with all the laws and regulations applicable in countries where the group operates, regardless of the particular subject; • communicating the group’s rules and guidelines to all employees; • safety of people (employees, service providers, subcontractors, etc.); • the search for financial performance.
5A.2.2 Internal control players The Board of Directors of CFE is a collegial body responsible for controlling management of the Company, setting strategic guidelines for it and ensuring satisfactory operation of the Company. It rules on all major questions pertaining to the group. The Board of Directors has set up specialised committees for auditing the accounts and for remuneration and nominations.
The Steering Committee, also known as the “Committee of 15” consisted on December 31st, 2012 of: • The managing director responsible for day-to-day management of the group; • The corporate deputy general manager and finance and administration manager of the group; • The deputy general manager of the Construction division; manager of CFE Netherlands; • The managing director of BPC, who is also responsible for the supervision of Amart; • The manager of CFE Brabant; • The manager of MBG; • The general manager of the Rail & Road division, managing director of Aannemingen Van Wellen, also manager of communication and group synergies; • The manager of CFE International; • The manager of CFE Qatar; • The manager of CLE and the Luxembourg real-estate subsidiaries; • The manager of CFE Real Estate and managing director of BPI; • The general manager of the Multitechnics division; • The manager of PPP-Concessions division; • The group human resources manager; • The group sustainable development manager. The Steering Committee is responsible for implementing group strategy, application of policies related to management of the group and the general directive mentioned above. The holding company has a limited structure appropriate to the group’s decentralised organisation. The functional departments of the holding company are tasked with establishing and ensuring correct application of group rules and procedures and decisions made by the managing director. On the financial level, cash management is centralised at the level of the holding company. As concerns the subsidiaries, the express approval of the holding company’s finance department is required before entering into relations with a banking organisation. The holding company also directly manages specific project financing. CFE does not have an audit department.
Financial report 2012 53
5A.3. Identification of risk and risk management system As of 2006, CFE set up a system for identifying the main risks to which it is exposed. The identification of risks is regularly updated. The risks are described in point 5B. The identification process reveals that the main risks are at operational level. This is because the main characteristic of the sector lies in the commitment made on submission of a proposal to build a structure that is by its nature unique, for a price with predetermined terms and within an agreed time schedule.
5A.4. Main internal control procedures The procedures covered by this section are common to the whole group in accordance with the preceding definition of scope.
5A.4.1 Compliance with laws and regulations The applicable laws and regulations set behavioural standards and are an integral part of the control process. The legal department of the holding company monitors developments in the legal field in order to identify the different rules applicable to the group and passes this information on to the members of the Steering Committee and employees concerned.
5A.4.2 Application of the general directive The general directive issued by CFE’s managing director to Executive Committee members defines the operations requiring prior information or approval by CFE’s senior management or functional departments. The directive covers the following areas: • risks taken in contracts; • the acquisition or sale of real estate assets; • the acquisition or sale of other tangible assets; • the acquisition of companies; • human resources; • administrative and legal management; • banking relations and financial undertakings; • financial information; • internal and external communication; • ethical behaviour; • social and civic engagement responsibility. These operating rules must be respected by all CFE senior managers. This general directive is transmitted by each senior manager to subsidiary and branch office managers. Additional directives covering more restrictive rules may be formulated by CFE senior managers for their sphere of jurisdiction and addressed to employees with the requisite authority at the head of a profit centre. However, additional directives may not, under any circumstances, constitute an exception to CFE’s operating rules.
5A.4.3 Procedures relating to commitments – Risk Committees Given the specific nature of the business activities, strict upstream control procedures are applied. CFE’s Risk Committee reviews:
• the terms and conditions of submission of works proposals which, by virtue of their size, implementation of new technology, the specific financial engineering features, inclusion of specific social obligations or their location, carry a specific risk, whether technical, legal, financial, social or other. The general directive sets thresholds for automatic examination prior to submission of such proposals; • all public-private partnership and concession operations.
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The Risk Committee comprises the following members: • the managing director of CFE; • the director and member of the Steering Committee responsible for the subsidiary or the branch; • the operational or functional representatives of the company; • and, depending on the specific nature of the risk, the finance and administration director, the human resources director, and the deputy general manager of the construction division, who are members of the Steering Committee. The real estate committee No acquisition of land or any commitment to acquire or develop real estate can be carried out without the prior approval of the real estate committee. This committee comprises: • the managing director of CFE; • the finance and administration director, member of the Steering Committee; • the director and member of the Steering Committee concerned by the operation; • the operational representatives of the project concerned; • the general secretary of the real estate division; • the finance and administration manager of the real estate division. Furthermore, any real estate investment for an amount exceeding €5 million must receive the prior approval of CFE’s Board of Directors. With regard acquisition projects, any acquisition of a majority or minority stake falls within the responsibility of the managing director after authorisation of the Board of Directors.
5A.4.4 Procedures relating to monitoring of operations The divisions have their own operations control systems adapted to the specific features of their activity. A dashboard report of sales, order intake, the order book and net financial debt is drawn up every month by the finance department on the basis of information forwarded by the various operational entities. The managers of the various entities prepare a monthly report on key facts. The budgetary procedure is common to all the group’s divisions and their subsidiaries. It includes five annual meetings: • the initial budget presented in November of year Y-1; and subjet to an in-depth review in February of year Y • the first budget update presented in April of year Y; • the second budget update presented in July/August of year Y; • the third update presented in November of year Y. These meetings, which are attended by the managing director, the finance and administration director, the consolidation director, the director of the subsidiary or branch concerned and its finance director, review: • the volume of business for the financial year in progress, the status of the order book; • the forecast profit margin of the profit centre, with details of profit margins per project (or by department for the multitechnics division); • analysis of current risks including, notably, an exhaustive presentation of legal disputes whether as plaintiff or defendant; • the status of guarantees given; • investment or disinvestment requirements; • cash flow and forecast over 12 months.
5A.4.5 Procedures relating to the production and processing of accounting information The consolidation department, which reports to the group’s finance department, is responsible for producing and analysing CFE’s financial and accounting information for dissemination both inside and outside the group and for ensuring its reliability.
Financial report 2012 55
In particular, it is responsible for the: • production, validation and analysis of the interim and annual consolidated financial statements and provisional data (consolidation of budgets and budget updates); • definition and monitoring of accounting procedures in the group and application of IFRS standards. The consolidation department sets the closing timetable for preparation of the interim and annual financial statements. These instructions are forwarded to the finance departments of the different entities concerned and accompanied by information or training sessions. The consolidation department is responsible for the accounting treatment of complex operations and ensures that they are validated by the Statutory Auditor. At the end of each accounting period, the finance managers of the principal entities present the accounts of the subsidiary or the branch to the group’s finance and administration director and the consolidation director. The consolidation director is a member of the Audit Committee of DEME and Rent-A-Port and attends the meetings held on closing of each accounting period for these entities. The DEME Audit Committee regularly presents a specific subject (analysis of a subsidiary) and carries out an assignment on site. The Statutory Auditor informs the Audit Committee of any remarks concerning the interim and annual financial statements before they are presented to the Board of Directors. Before signing its reports, the Statutory Auditor requests representation letters from group management and senior management of the subsidiaries. In these representations, group management and senior management of the various subsidiaries confirm, in particular, that all the elements at their disposal have been submitted to the Statutory Auditor to enable him to carry out his assignment and that the effects of any anomalies observed by him and still unresolved at the date of those representations do not have a material impact on the consolidated and parent company accounts.
5A.5. Actions carried out to strengthen internal control and risk management At the end of 2009, CFE decided on a radical overhaul of its management tools and chose an integrated management system (ERP). This system integrates the management of progress reports, purchasing, accounting, management control and management of everyday cash flow. Work carried out in 2010 was devoted to drafting specifications. This work was carried out by a project team comprising operational and functional managers (project managers, buyers, management controllers, accounts and finance managers) from the various divisions and companies. A skills centre was set up to provide logistical support for the application, and it began operations in 2011. The system was set up in a pilot company within the multitechnics division in 2011. The application was launched on a trial basis in three companies in 2012. In February 2013, the application was operational in most entities in the construction, real-estate, PPP-Concessions divisions as well as in the holding. The Audit Committee is paying close attention to the security of the application and authorisation management. The implementation of this application will bolster the company’s internal control.
5.B Risk factors 5B.1 Risks common to the segments in which the CFE group is active 5B.1.1 Operational risks 5B.1.1.1 The act of construction The main characteristic of the sector lies in the commitment made on submission of a proposal to build a structure (building, infrastructure, quay, etc.) that is by its nature unique, for a price with predetermined terms and within an agreed time schedule.
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The risk factors therefore concern: • establishment of the price of the structure to be built and, in the event of divergence between the anticipated price and the actual price, the possibility (or not) of obtaining coverage for additional costs and price increases; • design, if this is the contractor’s responsibility; • the actual construction and, in particular, the risks concerning the subsoil and the stability of the structure; • control of the elements included in the cost price; • project time schedule and deadlines; • performance obligations (quality, schedule) and the related direct and indirect consequences; • warranty obligations (10-year guarantee, maintenance); • compliance with safety and other corporate law obligations that are, moreover extended to service providers. Since CFE works in export markets outside Europe, it is exposed to political risk.
5B.1.1.2 Real estate Overall, real estate activity is directly or indirectly governed by certain macroeconomic factors (interest rates, propensity to invest, savings, etc.), political (development of supra-national institutions, development plans, etc.) that influence the behaviour of players in the market, in terms of both supply and demand. This activity is also characterised by long operating cycles, which implies the need to anticipate decisions and make long-term commitments. In addition to general sector risks, each project has its own specific risks: • choice of land for investment; • definition of the project and its feasibility; • obtaining the various permits and authorisations; • control of construction costs, fees and financing; • marketing.
5B.1.1.3 PPP-Concessions business In addition to operational risks relating to construction activities (5B.1.1.1), the division’s activities are characterised by the long-term nature of operations (20 years or more) and the ability to generate recurrent cash flows during the maintenance and operational phases of projects, enabling the relevant companies to repay loans.
5B.1.1.4 Dredging Dredging activities are performed by DEME (in which the Group owns a 50% interest) and its subsidiaries. DEME group is one of the world’s leading players in dredging. Its market includes both maintenance dredging and capital (infrastructure) dredging. The latter is particularly related to growth in world trade and decisions on the part of governments to invest in major infrastructure projects. DEME is also active in the environmental sector through its 75% owned subsidiary Ecoterres, a company specialising in the treatment of sludge and polluted soils. Through DMB (DEME Building Materials), DEME is also active in the gravel supply market. Apart from the fact that dredging is primarily a maritime activity, it is also characterised by its capital-intensive nature due to high levels of investment in the sector. For this reason, DEME is faced with complex investment decisions. In addition to the risks specific to marine work and the execution of projects (see 1.1), dredging is also exposed to specific risks: • technical design of the investment (type of dredger, capacity, power, etc.) and command of new technologies; • time between the investment decision and commissioning of the vessel, and anticipation of the future market; • control over construction by the shipyard once the investment decision has been made (cost, performance, conformity, etc.); • occupancy of the fleet and scheduling of activities; • financing. Lastly, since DEME works in export markets beyond Europe, it is exposed to political risk. DEME has qualified staff with the capacity to design dredgers and design and execute large-scale projects. Given the very nature of the activity and the many external factors to be taken into account, the risks inherent in this business cannot be completely eliminated.
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5B.1.2 The economic climate The construction sector is, by its very nature, perceived as being subject to strong cyclical fluctuations. Nevertheless, this observation must be qualified by segment or sub-segment of activity, as the key factors can be different in each. By way of example: • Civil engineering activities are strongly linked to government investment in large infrastructure programmes. These programmes have been reduced considerably by the crisis. • Construction activities for the public sector are linked to national and regional investment programmes. • Construction activities and real estate development activities related to the office property market evolve in line with the traditional economic cycle, while private housing-related activities react more directly to general economic conditions, levels of confidence and interest rates. • Dredging activities are more sensitive to the international economic climate, trends in world trade and government investment policy as concerns major infrastructure and sustainable development works.
5B.1.3 Management and workforce The construction sector is still hampered by a lack of supervisory staff and skilled workers. Successful completion of projects, whether in terms of studies and project preparation phases, or management and execution of projects, depends both on the skills of employees and their availability on the job market.
5B.2 Market risks (interest rates, exchange rates, insolvency) 5B.2.1 Interest rates The CFE group is faced with major investments extending over long periods of time. In this context and in terms of the availability of longterm credit, project finance or major capital expenditure (dredgers), CFE (directly) or its subsidiaries (DEME) practice, where necessary, a policy of interest rate hedging. Nevertheless, interest rate risk cannot be entirely eliminated. The CFE group was not directly hit by the financial crisis. However, the scale and persistence of the financial and economic crisis has had a negative impact on the cost of financing for major PPP-type or real estate projects.
5B.2.2 Exchange rates CFE and its subsidiaries do not hedge exchange rates for their construction, real estate and multitechnics activities, since they are primarily located in the euro zone. As regards the international activities of CFE’s construction division, CFE has hedged the USD exposure of the residential construction project in Nigeria through forward currency sales. However, given the international nature of its activities and the fact that contracts are entered into in foreign currencies, DEME engages in exchange rate hedging or forward exchange contracts. Nevertheless, exchange rate risk cannot be entirely eliminated.
5B.2.3 Credit Given the nature of its clients, who are primarily public-sector or equivalent operators or well-known investors, the CFE group does not use credit insurance. In markets outside Europe, if a country is eligible and the risk can be covered by credit insurance, CFE and DEME obtain coverage from organisations specialising in this area (Office National du Ducroire). CFE’s contracts in Chad are not covered by credit insurance, but advances are requested. CFE has hedged its exposure to the residential construction project in Nigeria, and to contracts underway in Sri Lanka and Vietnam. To reduce underlying solvency risk, CFE checks on the solvency of its clients when submitting its proposal, regularly monitors accounts receivable and adjusts its positions with them where necessary. Nevertheless, credit risk cannot be entirely eliminated.
5B.2.4 Liquidity Tighter liquidity and the difficulty of obtaining credit under economically acceptable conditions remain a concern. CFE succeeded in preserving its positions during the year through strict cash management techniques. The subjects of liquidity and cash management in everyday business were addressed in regular information briefings aimed at the group’s top managers. Directors of subsidiaries and branches contribute to cash flow forecasts and ensuring that targets are met.
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In May 2012, CFE issued €100 million of bonds. The proceeds enabled CFE to buy land (€26.5 million), repay bank debt and set aside €26.7 million for investment in the Coentunnel project in Amsterdam, the Liefkenshoek Spoortunnel project in Antwerp and Schools in Belgium’s German-speaking community. CFE also has €100 million of medium-term credit facilities expiring in June 2016.
5B.3 Raw material risks CFE is potentially exposed to increases in the prices of certain raw materials used in its works activities. Nevertheless, CFE believes that such increases are not likely to have a significantly negative impact on its results. This is because a substantial portion of the CFE group’s works contracts include price revision formulae that enable prices for projects under construction to vary according to trends in raw material prices. Furthermore, CFE’s works activities are carried out through a large number of contracts, many of them of short or medium duration which, even in the absence of a price revision formula, limits the impact of a rise in raw material prices. In the framework of largescale projects, CFE has negotiated firm, long-term contracts, in particular for steel. Lastly, and more specifically at DEME, the group hedges against the price of certain supplies (e.g. fuel oil).
5B.4 Dependence on customers/suppliers Given the group’s activities and its organisational structure, which reflects the local nature of its contracts, CFE considers that, overall, it is not dependent on a small number of clients, suppliers or subcontractors. Furthermore, the operational organisation of the group is characterised by a high degree of decentralisation, which generally translates into greater autonomy of decision-making by local managers within the scope of the powers delegated to them, particularly as regards purchasing.
5B.5 Environmental risks In view of the type of work it is called on to execute and notably renovation work, CFE may be involved in handling unhealthy or hazardous materials. CFE takes all possible safety and health precautions for its workers and is particularly attentive to this point, although this risk cannot be entirely eliminated. Due to the nature of its work, DEC-Ecoterres is exposed to environmental risks. While all precautions and control measures are taken by the company, these risks cannot be totally eliminated.
5B.6 Legal risks Given the diversity of its activities and geographical locations, CFE is exposed to a complex regulatory environment as concerns the place of execution of services and the fields of activity involved. In particular, it is subject to rules concerning administrative contracts, public and private works contracts and civil liability, especially builder’s liability, both in Belgium and abroad. The construction sector is also confronted by a wide interpretation of concepts relating to builder’s liability in the fields of the 10-year construction guarantee, liability for minor hidden defects and the emergence of the concept of liability for indirect consequential damage. The CFE group is confronted with few disputes at law. In most cases, CFE attempts to reach out-of-court settlements with the opposing party, which substantially reduces the number of court cases.
5B.7 Risks specific to the CFE group 5B.7.1 Special Purpose Companies To carry out some of its real estate operations or in public-private partnerships, CFE participates and will continue to participate in special purpose companies which provide real guarantees in support of their credit facilities. The risk, in the event of the failure of this type of company and exercise of the guarantee, is that the proceeds from such exercise are not sufficient to cover in whole or in part the amount of shareholders’ equity or equivalent used as collateral for setting up the credit facility. At December 31, 2012, collateral amounted to €59 million, the limit being set internally at 30% of consolidated shareholders’ equity. The company has €27.1 million of additional commitments to provide capital, relating to the Liefkenshoek rail tunnel, Coentunnel and the project to build schools in Eupen’s German-speaking community.
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5B.7.2 Stake in DEME The company owns 50% in DEME, a company controlled jointly with Ackermans & van Haaren, which also owns 50% of DEME’s capital. In 2011 for a period of five years, Ackermans & van Haaren and CFE extended the cooperation agreement consolidating the collaboration between them, the objective being to manage the DEME group as equal partners. The DEME group benefits from autonomous management powers. The partners are equally represented on its Board of Directors and on the Executive and Audit Committees. The group is autonomous financially and CFE has never made any advance or financial commitment in favour of this subsidiary. The profitability of CFE’s stake in DEME depends in part on continued good relations between its shareholders. The holding risk related to this stake is inherent in the joint control structure under which it is held, as indicated above.
6. Evaluation of measures taken by the Company in response to the directive on insider trading and market manipulation CFE’s policy on this matter is specified in its corporate governance charter. In 2006, a compliance officer (Jacques Ninanne) was appointed and an information programme established aimed at senior management and employees who, through their job, have access to privileged information. The Company systematically informs this population of closed periods and issues regular reminders of the general directives.
7. Transactions and other contractual relationships between the Company, including related companies, and the Board directors and company directors The policy on this matter is specified in the corporate governance charter. There is no service contract binding the Board members with CFE or with any of its subsidiaries.
8. Assistance agreement CFE entered into a service contract with its reference shareholder, VINCI Construction, on October 24, 2001. The fees payable by CFE for financial year 2012 amount to €1,190,000. This agreement enables CFE to access VINCI’s databases, and to receive support from VINCI in various areas such as safety, construction methods, sustainable development and risk management.
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9. Corporate controls The Statutory Auditor is Deloitte Réviseurs d’Entreprises, represented by Pierre-Hugues Bonnefoy. The Annual General Meeting of May 6, 2010 renewed the appointment of the Statutory Auditor, Deloitte Réviseurs d’Entreprises, represented by Pierre-Hugues Bonnefoy, for a period of three years, ending at the close of the Annual General Meeting of May 2013. The fees paid by CFE SA amounted to €138,500. In the 2013 Annual General Meeting, a proposal will be made to shareholders to renew the Statutory Auditor’s term of office. During the financial year, the Audit Committee agreed that the Statutory Auditor should write a detailed report on operations in 2012 for an amount of €41,200. Other costs for different missions invoiced by Deloitte Réviseurs d’Entreprises amounted to €116,050. In addition, during financial year 2012, the costs invoiced by Deloitte Conseillers Fiscaux concerning tax advice amounted to €18,450. Deloitte audited the accounts of most of the companies within the CFE group. For the other main groups and subsidiaries, the Statutory Auditor generally obtained the certification reports of those entities’ auditors and/ or interviewed them, and also performed certain additional checks. In CFE’s next ordinary general meeting of shareholders on May 2, 2013, a proposal will be made to re-appoint Deloitte, Reviseurs d’Entreprises, SC s.f.d. SCRL, as statutory auditor for a three-year term expiring at the end of the ordinary general meeting of shareholders in 2016. Remuneration of the auditors of the group, including CFE SA (financial year 2012) (in € thousands)
Deloitte
Other
Amount
%
Amount
%
Auditing of accounts, certification, examination of individual and consolidated accounts
736.0
77.2%
402.1
50.8%
Other auxiliary missions and other auditing missions
159.2
16.7%
40.1
5.1%
Audit subtotal Other services Legal, tax, corporate Other Subtotal other Total auditors’ fees
895.2
93.9%
442.2
55.9%
28.8 29.2 57.9 953.3
3.0% 3.1% 6.1% 100%
296.6 52.6 349.2 791.4
37.5% 6.6% 44.1% 100%
Audit
Financial report 2012 61
C. Remuneration report CFE’s remuneration policy is designed to attract, retain and motivate staff in the office, technical, manual and managerial categories. To help the Appointments and Remuneration Committee to analyse the competitive situation, along with other factors involved in assessing remuneration, the Committee may use the services of internationally renowned remuneration consultants. No changes were made to CFE’s remuneration policy in 2012. No changes to CFE’s remuneration policy are currently being contemplated for the following two financial years. Remuneration of directors The remuneration policy for directors is set out in detail in section 1.1.1. above. Remuneration paid to members of the Audit Committee and the Appointments and Remuneration Committee is set out in sections 1.1.2. and 1.1.3. The Appointments and Remuneration Committee consists of non-executive directors, most of whom are independent directors. Remuneration of the CEO There was no change in the remuneration policy in 2012. Fixed and variable remuneration and other benefits were examined by the Appointments and Remuneration Committee. After discussions, and specifically an assessment of performance relating to variable remuneration, the Appointments and Remuneration Committee made recommendations to the Board of Directors, which takes decisions on this matter. For more details about remuneration and benefits, please refer to section 1.1.4. CFE has not awarded any shares, options or other rights to acquire shares in the company to the CEO. Remuneration of other members of the executive management team The members of the executive management team, aside from the CEO, and the operating procedures of this team within the CFE Group are set out in section 1.2.1. The remuneration policy remained unchanged from previous years. It is designed to enable CFE to: • attract, motivate and retain high-level and high-potential executive talent, • foster and reward personal performance. The proposed fixed and variable remuneration for members of the executive management team are scrutinised by the CEO and the Group’s head of HR, who sit on the Nominations and Remuneration Committee. The Committee listens to explanations and, after discussions between its members, submits definitive proposals to the Board of Directors, which takes decisions on the matter. The basic annual salary constitutes fixed remuneration and is based on a scale defined by the CFE Group’s wage structure. There is a margin of appreciation as regards matters such as experience, duties, scarcity of technical skills and performance. For operational managers, i.e. those responsible for profit centres (subsidiaries and branches), variable remuneration depends on individual performance. • It is directly related to the financial performance of their area of responsibility, i.e. the relationship between net profit before tax and revenue for the period. This margin is compared with a pay scale featuring multiples of fixed annual remuneration (up to 100%), known as the “basic amount”. • If the target accident frequency rate set at the beginning of the year in the relevant business area is not achieved, the basic amount is reduced by 20%. • Compliance with the CFE Group’s values also has a 20% impact on the basic amount. This has several aspects: - customer retention and satisfaction; - sharing commercial information within the CFE Group; - solidarity between executive managers through the encouragement of staff mobility and the management of human resources (staff retention, appraisals, training etc.).
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• Variable remuneration can therefore range between zero to 12 months of annual fixed remuneration. For functional managers, variable remuneration takes into several factors: • the CFE Group’s comprehensive income, • the operational performance of their department, • attainment of specific targets assigned to them at the start of the year by the CEO, • compliance with CFE Group values. • variable remuneration may be zero if performance is unsatisfactory. CFE has not awarded any shares, options or other rights to acquire shares in the company to other members of the executive management team. The overall remuneration of executive managers other than the CEO is set out in section 1.2.2. Variable remuneration of the CEO and executive managers The reference period for the variable remuneration of the CEO and all managers runs from January 1 to December 31. Any payments are made in April of the following year. As regards variable remuneration rules, in accordance with the Belgian corporate governance act of April 6, 2010, the shareholders’ meeting of May 5, 2011 passed the following resolution applying to periods beginning after December 31, 2010: “for the CEO and executive managers, the existing award terms and criteria, i.e. variable remuneration based on financial performance, attention paid to employee safety and compliance with Group values, will be maintained for a period of three years. The current legislation, which requires variable remuneration to be spread over three years, and its related criteria are not appropriate (and therefore cannot be easily applied) to a management committee in which some members are close to retirement and pension age.” Information on the right to recover the variable compensation based on erroneous financial information “There exists no specific right to recover the variable compensation based on erroneous financial information as the variable compensation will only be assigned after the annual audit. When afterwards the information turns out to be incorrect, then the ordinary law rules relating to the erroneous payment will be applied.” Termination benefits As regards termination benefit rules, in accordance with the Belgian corporate governance act of April 6, 2010, applying as of May 3, 2010 and as agreed with the CEO and executive managers, the shareholders’ meeting of May 5, 2011 passed the following resolution: 1. The law relating to employment contracts shall apply to persons with “employee” status, and all other existing agreements shall remain in force. For employees who are members of the company’s executive management and with whom there was no existing agreement relating to termination benefits before May 3, 2010, the period of notice to be given or the amount of severance pay that will be paid in the event of termination of the employment contract (for reasons other than serious misconduct) by the employer shall be determined, in accordance with the act of July 3, 1978 relating to employment contracts, on the basis of criteria typically used by Belgian courts to determine a reasonable period of notice or a reasonable amount of termination benefit, which may not exceed that resulting from the Claeys scale. Patrick de Caters Lode Franken Michel Guillaume Gabriel Marijsse Jacques Ninanne Patrick Van Craen Christophe Van Ophem Patrick Verswijvel Yves Weyts Diane Zygas One other director, of foreign nationality, is not covered by Belgian legislation.
2. As regards termination benefits applying after May 3, 2010 and agreed with the CEO and executive managers, an agreement came into force on November 18, 2011 relating to Diane Zygas (maiden name Rosen). This agreement was approved by the Board of Directors as proposed by the Appointments and Remuneration Committee on September 28, 2011. A notional period of service of 12 years was applied, without exceeding the result of the Claeys scale (see above).
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3. Agreements existing before May 3, 2010 were as follows: • Frédéric Claes, Société de Management SA, represented by Frédéric Claes: The amount provided for in the event of contractual relations being terminated is consistent with common market practice. • Artist Valley SA, represented by Jacques Lefèvre: The amount provided for in the event of contractual relations being terminated is consistent with common market practice. 4. Agreements made in 2012 are as follows: • Kerhelco SPRL, represented by Bernard Cols: The amount provided for in the event of contractual relations being terminated is consistent with common market practice.
1.1 Remuneration of the Board and committee members 1.1.1 Directors’ fees CFE SA’s ordinary general meeting of shareholders of May 3, 2012 approved the payment of a fixed amount of fees to Board members in their capacity as directors. This amount was set at €382,000 for the Board as a whole. Part of this amount, i.e. €180,000, was split equally between each Board member (excluding the Chairman), resulting in a fee of €20,000 per director (reduced proportionally if the director was not in office for the full year). A fee of €77,000 was allocated to the Chairman of the Board. The other part, amounting to €125,000, was divided according to the attendance rate at meetings of the Board of Directors. Board directors are also reimbursed for expenses incurred during the execution of their duties, according to conditions set by the Board of Directors. The amount of fees paid directly or indirectly to the Board members for carrying out their duties within the group: (in €)
Fees CFE SA
Philippe Delaunois, SA C.G.O., represented by Philippe Delaunois
90,393
Renaud Bentégeat
33,393
Philippe Delusinne
33,393
Richard Francioli Bernard Huvelin Christian Labeyrie Jean Rossi SA Consuco, represented by Alfred Bouckaert BVBA Ciska Servais, represented by Ciska Servais Jan Steyaert Total
31,161 24,464 31,161 31,161 31,161 33,393 33,393 382,000
Fees subsidiaries
0
No agreement with any Board director providing for severance pay amounting to over 12 months’ remuneration came into force or has been extended since May 3, 2010 (date on which the Law of April 6, 2010 came into force). Furthermore, no independent director benefits from variable remuneration.
1.1.2 Remuneration of Audit Committee members
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Philippe Delusinne
3,000
Christian Labeyrie Jan Steyaert Total
4,000 8,000 15,000
1.1.3 Remuneration of Remuneration and Nomination Committee members Richard Francioli SA Consuco, represented by Alfred Bouckaert BVBA Ciska Servais, represented by Ciska Servais Total
3,000 3,000 6,000 12,000
1.1.4 Remuneration of the managing director In addition to his fee as a Board member, i.e. €33,393 the managing director received gross annual remuneration of €191,830 in respect of his executive functions within the CFE group, together with a variable component amounting to €210,000 in respect of 2012, payable in 2013. The managing director also benefitted from the use of company housing and a company car, representing €49,278 in 2012. He does not benefit from a pension plan with CFE.
1.2 Remuneration of senior management 1.2.1 CFE management CFE’s corporate structures are suited, on the one hand, to the prerogatives must be met following the creation of a holding company, and, on the other, to the requirements related to its organisation by division. Each division, representing a portfolio of activities, consists of several subsidiaries and, in some cases, branches, that constitute a profit centre and, in general, represent a specific business in a defined geographical area. Each subsidiary is managed by a Board of Directors and a company director; each branch is managed by a company director. This unique organisation of management of subsidiaries and branches therefore consists of a specific delegation of powers to a group of persons, the company directors, which guarantees active, front-line management and the satisfactory operational organisation of each division. Since these corporate structures ensure a balanced distribution of powers and the smooth operation of CFE, the Company has decided that the «Steering Committee», called «comité des 15» is not established as Management Board within the meaning of the law defined in Article 526c in the country’s Corporate Governance Code, but has nonetheless anticipated future needs by providing for this possibility in its Articles of Association. The persons responsible for the actual management of activities are thus the managing director first and then the company directors. For the 2012 financial year, the company directors were: Frédéric Claes SA, represented by Frédéric Claes Artist Valley SA, represented by Jacques Lefèvre Kerhelco SPRL, represented by Bernard Cols Patrick de Caters André de Koning Lode Franken Michel Guillaume Gabriel Marijsse Youssef Merdassi Jacques Ninanne Patrick Van Craen Christophe Van Ophem Patrick Verswijvel Diane Zygas Yves Weyts
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1.2.2 Level of remuneration Remuneration of directors The company directors listed in point 1.2.1 of this report received: Fixed remuneration and fees Variable remuneration Payments to insurance schemes (pension plans, health and accident insurance) Company vehicle expenses Total
2,695,843 795,963 738,530 234,343 4,464,679
Executive managers are members of various types of pension plan. Some are members of defined-benefit plans, which vary according to whether they joined before or after July 1, 1986, and others are members of a defined-contribution plan dating back to before the merger between CFE and Entreprises François et Fils. In order to harmonise the treatment of these executive managers, a supplementary defined-benefit plan was set up in 2007. The employer’s contribution to the defined-contribution plan and the IFRS service cost for defined-benefit plans amounted to €522,286 in 2012. CFE did not grant any stock options or other rights to acquire shares in the Company to these directors.
D. Insurance policy The CFE group systematically takes out a contractor all risk policy for all construction sites, the policy giving sufficient cover for operating and post-construction civil liability. The risk of terrorism is not included in this policy. Given the upsurge in terrorism, CFE and its real estate subsidiaries may occasionally be obliged to seek cover against this risk for real estate projects provided the insurance market is willing to offer such cover at economically acceptable rates.
E. Special reports No special report was established during the course of the financial year.
F. Takeover bid Pursuant to Article 34 of the Belgian Law of 14.11.2007 concerning the obligations of issuers of financial instruments admitted to trading on a regulated market, the Compagnie d’Entreprises CFE SA notes that: • the Board of Directors is empowered to increase the authorised capital by a maximum amount of €2,500,000 (Article 4 of the Articles of Association), it being noted that exercise of this power is limited, in the event of a takeover bid, by Article 607 of the Company Code; • the Board of Directors is entitled to acquire up to 10% of CFE’s shares (Article 14 bis of the Articles of Association).
G. Acquisitions In February 2012, CFE acquired 100% of Remacom NV for €4.5 million, and in December, it acquired 100% of Ariadne NV for €700,000.
H. Creation of branches After winning contracts in Algeria and Sri Lanka, CFE set up branches in these countries in 2012.
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I. Post-balance sheet events In January 2013, DEME issued €200 million (amounts at 100%) of 6-year bonds. This enabled it to restructure some of its existing debt and diversify its sources of financing. In January 2013, CFE acquired the remaining shares in Van De Maele Multi-techniek that it did not already own for €1.4 million.
J. Research and Development In 2012, the Group carried out studies on the following major projects: the Antwerp university hospital, the Missing Links motorway project (Bruges) and the tram line between Deurne and Mortsel. CFE continued its policy of recognising R&D costs directly in expenses. DEME carried out research to increase the efficiency of its fleet. In addition, in partnership with universities and the Flanders region of Belgium, it carried out research into the production of sustainable marine energy. In partnership with private-sector companies, it carried out research into techniques to extract rare materials from the sea.
K. Outlook In a difficult economic environment the well filled order book enables us to consider a growth of the turnover in 2013.
L. Audit Committee The Audit Committee is chaired by Jan Steyaert, who meets the independence criteria defined by Article 526 ter of the Belgian Company Code. Jan Steyaert has a degree in economics and finance. He has held various professional posts, including working for an auditing firm and for Telindus, a listed company, where he was CFO before becoming CEO and then chairman of the Board of Directors. The foregoing bears out Mr Steyaert’s competence in terms of accounting and auditing.
M. Notice of the Annual General Meeting of May 2, 2013 The Board of Directors hereby invite all shareholders to attend the ordinary general meeting which shall take place at the registered office of the company, avenue Herrmann-Debroux, 40-42, in 1160 Brussels, on Thursday 2 May 2013 at 3pm. The agenda is as follows:
1. Board of Directors’ and auditor’s reports for the financial year ended on 31 December 2012 2. Approval of financial statements for the financial year ended on 31 December 2012 Proposed resolution: It is hereby proposed to the general meeting of shareholders to approve the financial statements for the financial year ended on 31 December 2012 as presented by the Board of Directors.
Financial report 2012 67
3. Approval of consolidated financial statements for the financial year ended on 31 December 2012 Proposed resolution: It is hereby proposed to the general meeting of shareholders to approve the consolidated financial statements for the financial year ended on 31 December 2012 as presented by the Board of Directors. 4. Appropriation of profit Proposed resolution: It is hereby proposed to the general meeting of shareholders to approve the Board of Directors’ proposal to distribute a gross dividend of € 1.15 per share, corresponding to a net dividend of € 0.8625 per share. After distribution, the profit to be carried forward equals € 54,422,043 5. Approval of remuneration report Proposed resolution: It is hereby proposed to the general meeting of shareholders to approve the remuneration report as prepared by the Board of Directors. 6. Discharge to directors Proposed resolution: It is hereby proposed to the general meeting of shareholders to grant discharge to the directors for and in connection with their duties during the financial year ended on 31 December 2012 7. Discharge to auditor Proposed resolution: It is hereby proposed to the general meeting of shareholders to grant discharge to the auditor for and in connection with his duties during the financial year ended on 31 December 2012. 8. Appointments a) The mandate of director of Mr. Richard Francioli expires at the general meeting of 2 May 2013. Proposed resolution: It is hereby proposed to the general meeting of the shareholders to renew the director’s mandate of Mr. Richard Francioli for a period of three years, ending after the annual general meeting to be held in 2016. In accordance with article 526 ter of the Company code and in accordance with the Belgian Corporate Governance Code 2009, Mr. Richard Francioli is not an independent director. b) The mandate of director of Mr. Christian Labeyrie expires at the general meeting of 2 May 2013. Proposed resolution: It is hereby proposed to the general meeting of the shareholders to renew the director’s mandate of Mr. Christian Labeyrie for a period of three years, ending after the annual general meeting to be held in 2016. In accordance with article 526 ter of the Company code and in accordance with the Belgian Corporate Governance Code 2009, Mr. Christian Labeyrie is not an independent director. c) The mandate of director of Mr. Renaud Bentégeat expires at the general meeting of 2 May 2013. Proposed resolution: It is hereby proposed to the general meeting of the shareholders to renew the director’s mandate of Mr. Renaud Bentégeat for a period of four years, ending after the annual general meeting to be held in 2017. In accordance with article 526 ter of the Company code and in accordance with the Belgian Corporate Governance Code 2009, Mr. Renaud Bentégeat is not an independent director. d) The mandate of director of Mr. Philippe Delusinne expires at the general meeting of 2 May 2013. Proposed resolution: It is hereby proposed to the general meeting of the shareholders to renew the director’s mandate of Mr. Philippe Delusinne for a period of three years, ending after the annual general meeting to be held in 2016. In accordance with article 526 ter of the Company code and in accordance with the Belgian Corporate Governance Code 2009, Mr. Philippe Delusinne is an independent director. e) The mandate of director of Mr. Jan Steyaert expires at the general meeting of 2 May 2013. Proposed resolution: It is hereby proposed to the general meeting of the shareholders to renew the director’s mandate of Mr. Jan Steyaert for a period of three years, ending after the annual general meeting to be held in 2016. In accordance with article 526 ter of the Company code and in accordance with the Belgian Corporate Governance Code 2009, Mr. Jan Steyaert is an independent director. f) The mandate of the auditor, Deloitte, Réviseurs d’Entertprises/Bebrijfsrevisros, SC s.f.d. SCRL, represtented by Mr. Pierre-Hugues Bonnefoy expires at the general meeting of 2 May 2013.
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Proposed resolution: Under the condition of the approval by the work council, it is hereby proposed to the general meeting of the shareholders to renew the mandate of the auditor Deloitte, Réviseurs d’Entertprises SC s.f.d. SCRL, represented by Mr. Pierre-Hugues Bonnefoy, for a period of three years, ending after the annual general meeting to be held in 2016. 9. Annual remuneration of the directors and the auditor Proposed resolution: In accordance with article seventeen of the articles of association of the company, it is hereby proposed to the general meeting of the shareholders, to set, with effect from 1 January 2013, the fixed amount of the annual emoluments awarded to the directors at € 382,000. Moreover, it is hereby proposed to the general meeting of the shareholders to grant the auditor an annual remuneration of € 174,500 during his mandate of auditor of the company. Description of formalities to be satisfied by the shareholders to gain admission to the general meeting Only shareholders who hold CFE shares at the latest on the 14th day prior to the general meeting, namely 18 april 2013 (the “Registration date”) shall be permitted to participate in the general meeting, either in person or via proxy • For holders of registered shares, proof of share ownership on the Registration date shall be evidenced by registration in the CFE register of registered shares on the Registration date. • For holders of dematerialised shares, proof of share ownership shall be evidenced by their registration in a share account maintained by an accredited account holder or clearing house on the Registration date. • Holders of bearer shares shall be required, in order to gain admission to the general meeting of shareholders, to produce their printed bearer shares at a financial intermediary at the latest on the Registration date. The financial intermediary will issue them with a certificate stating the number of bearer shares produced on the Registration date and for which the shareholder states to want to participate in the general meeting of shareholders. The shares registered in this way shall be automatically converted into dematerialised shares. Furthermore, in order to gain admission to the general meeting of shareholders, each shareholder shall be required to confirm to the company its intention to participate in the general meeting as well as confirm the number of shares for which it intends to cast a vote, at the latest, on the 6th day prior to the general meeting, namely 26 April 2013. To this effect, each shareholder must send by post the completed form “Intention de participler à l’assemblée générale”/ “Intentie tot deelneming aan de algemene vergadering”, available on the website op the company, at no later than 26 April 2013, for the attention of Mr. Jacques Ninanne, Chief Financial Officer, avenue Herrmann-Debroux 40-42 in 1160 Auderghem or or by e-mail to the following address: general_meeting@cfe.be. Holders of registered shares must only send the above-mentioned form, as the proof of share ownership shall be evidenced by registration in the register of registered shares of CFE on the Registration date. Holders of dematerialised shares must send the above-mentioned form together with the certificate delivered by an accredited account holder or clearing house stating the number of shares registered at the name of the shareholder in the accounts held by the accredited account holder or the clearing house at the Registration date. Holders of bearer shares must send the above-mentioned form together with the certificate issued by a financial intermediary stating the number of bearer shares produced on the Registration date. Voting by proxy When publishing this invitation to attend, CFE shall also, at the same time, make available to shareholders on its website the proxy form to be used. Shareholders who wish to nominate a representative to represent them at the general meeting of shareholders shall be required to send, exclusively by post for the attention of Mr. Jacques Ninanne, Chief Financial Officer, avenue Herrmann-Debroux, 40-42 in 1160 Auderghem, at the latest by 26 April 2013, the signed proxy voting form. Postal voting When publishing this invitation to attend, CFE shall also at the same time make available to shareholders on its website the form to be used for postal voting.
Financial report 2012 69
Shareholders who wish to vote by post shall be required to send, exclusively by post for the attention of Mr. Jacques Ninanne, Chief Financial Officer, avenue Herrmann-Debroux, 40-42 in 1160 Auderghem, at the latest by 26 April 2013, the signed postal voting form. The postal voting form shall be required to indicate the voting preference. Only the votes of shareholders who satisfy the formalities for admission to the general meeting of shareholders shall be taken into account. Inclusion of items on the agenda One or more shareholders who together hold at least 3% of the share capital may, at the latest by the 22nd day prior to the general meeting of shareholders, request the inclusion of topics on the agenda for the general meeting of shareholders as well as register proposed resolutions concerning the items to be dealt with already included or to be included on the agenda. To this effect, the shareholder or shareholders shall send to the company, at the latest by 10 April 2013, a written request either by registered letter, for the attention of Mr. Jacques Ninanne, Chief Financial Officer, avenue Herrmann-Debroux, 40-42 in 1160 Auderghem, or by e-mail to the following address: general_meeting@cfe.be. Their request shall be accompanied by proof that on the date of their request they do in fact hold, separately or jointly, 3% of all shares. They shall, for this purpose, enclose with their letter either a certificate attesting to the registration of corresponding shares in the register of registered shares which they will have previously requested from the company, or a declaration drawn up by a financial intermediary certifying the number of corresponding bearer shares which were produced, or a declaration drawn up by the accredited account holder or the clearing house, certifying the registration in an account, in their name, of the number of corresponding dematerialised shares. If one or more shareholders has requested the inclusion of items and/or proposed resolutions on the agenda, CFE shall publish at the latest by 17 April 2013 an agenda prepared according to the same procedure as this agenda. CFE shall also publish at the same time on its website the proxy voting and postal voting forms with any additional topics and related proposals and/or any standalone proposed resolutions added. Any proxy forms and postal voting forms sent to the company before 17 April 2013 shall remain valid for the items on the agenda to which they relate. Furthermore, within the context of proxy voting, the representative shall be authorised to vote on the new topics on the agenda and/or on the new proposed resolutions, without the need for any new proxy, if the proxy form expressly permits it. The proxy form may also specify that in such cases, the representative is obliged to abstain.
Right to ask questions Each shareholder has the right to ask questions of the directors and/or the auditor during the general meeting of shareholders. The questions may be asked orally during the meeting or in writing before the meeting. Shareholders who wish to ask questions in writing before the meeting shall be required to send an e-mail to the company at the latest by 26 April 2013 to the following address general_meeting@cfe.be. Only written questions asked by shareholders who will have satisfied the formalities for admission to the meeting and who will consequently have established their status as shareholder on the Registration date, shall receive a response during the meeting.
Provision of documents Each shareholder may obtain free of charge at the registered office of the company (avenue Herrmann-Debroux, 40-42 in 1160 Brussels) a complete copy of the financial statements, consolidated financial statements as well as the directors’ report which includes the remuneration report. The shareholder shall send, before calling to the company, an e-mail to the address general_meeting@cfe.be, in which the shareholder shall mention his or her name, address, the number of shares held as well as the documents for which he or she wishes to receive copies. The shareholder shall attach to the e-mail proof of his or her status as shareholder. The shareholder will be able to travel to the registered office to obtain the documents requested within the time period which will be indicated in the response e-mail which will be sent to the shareholder by the company as soon as possible.
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Website All information relating to the general meeting of shareholders of 2 May 2013, including the financial statements, the consolidated financial statements, the directors’ report and the proxy voting and postal voting forms are available from today’s date on the company’s website at the address http://www.cfe.be.
Financial report 2012 71
CONSOLIDATED FINANCIAL STATEMENTS
Table of contents Definitions Consolidated financial statements Consolidated statement of comprehensive income Consolidated statement of financial position Consolidated statement of cash flows Consolidated statement of changes in equity Notes to the consolidated financial statements Group auditor’s report
Parent-company financial statements Parent-company statements of financial position and comprehensive income Analysis of statements of financial position and comprehensive income
Definitions
72
Associated companies
Entities over which the group CFE has a significant influence and that are accounted for under the equity method
Capital employed
Intangible assets + goodwill + property, plant and equipment + working capital
Working capital
Inventories + trade receivables and other operating receivables + other current assets + non-current assets held for sale - other current provisions - trade payables and other operating liabilities - tax payables - other current liabilities
EBIT
Operating income
EBITDA
EBIT + depreciation, amortisation and impairment + other non-cash items + share in the income of Investments in associated companies
Consolidated statement of comprehensive income Year ended 31 December (in € thousands)
Notes
2012
2011
Revenue
4
1,898,302
1,793,834
Revenue from auxiliary activities Purchases Remuneration and social security payments Other operating expenses Depreciation and amortisation Goodwill impairment Operating income Cost of gross financial debt Financial income from cash investments Other financial expenses Other financial income Net financial income/expense Pre-tax income for the period Income tax Net income for the period Share in income of Investments in associated companies Net income (including income attributable to owners of noncontrolling interests) Attributable to owners of non-controlling interests Net income attributable to owners of the parent Net income (including income attributable to owners of noncontrolling interests)
6
72,155 (1,132,066) (371,938) (265,374) (119,683) 0 81,396 (24,134) 5,193 (19,174) 8,966 (29,149) 52,247 (3,505) 48,742 489
72,078 (1,072,616) (338,479) (268,536) (101,350) 0 84,931 (16,301) 4,299 (18,569) 14,838 (15,733) 69,198 (13,056) 56,142 868
49,231
57,010
(162) 49,069
2,071 59,081
49,231
57,010
(10,045)
(14,462)
2,639
1,812
10
4,018 0 (3,388) 45,843 45,773 70
5,785 0 (6,865) 50,145 52,006 (1,861)
11
3.75
4.51
3.50
3.97
7 6 12-14-15
8 8 8 8
10 16
9
Financial instruments: changes in fair value Currency translation differences (of which -€92 thousand relating to non-controlling interests) Deferred tax Change in consolidation method (net of deferred tax) Other comprehensive income Total comprehensive income - Attributable to owners of the parent - Attributable to owners of non-controlling interests Net income attributable to owners of the parent per share (basic and diluted, in €) Comprehensive income attributable to owners of the parent per share (basic and diluted, in €)
Financial report 2012 73
Consolidated statement of financial position Year ended 31 December (in â‚Ź thousands)
74
Notes
2012
2011
Intangible assets
12
12,651
9,839
Goodwill Property, plant and equipment Investment property Investments in associated companies Other non-current financial assets Derivative instruments - non-current assets Other non-current assets Deferred tax assets Total non-current assets Inventories Trade and other operating receivables Other current assets Derivative instruments - current assets Current financial assets Cash and cash equivalents Total current assets Total assets Share capital Share premium Revaluation surplus Consolidated reserves and reserve related to hedging instruments Retained earnings Currency translation differences Equity attributable to owners of the parent Equity attributable to non-controlling interests Equity Retirement benefit obligations and employee benefits Provisions Other non-current liabilities Financial liabilities Derivative instruments - non-current liabilities Deferred tax liabilities Total non-current liabilities Provisions for onerous contracts Provisions for other current risks Trade and other operating payables Income tax payable Financial liabilities Derivative instruments - current liabilities Other current liabilities Total current liabilities Total equity and liabilities
13 14 15 16 17 28 18 10
33,401 980,434 2,056 18,364 56,586 0 9,283 22,787 1,135,562 186,534 732,466 84,240 0 153 260,602 1,263,995 2,399,557 21,375 61,463 1,088
28,725 899,618 7,067 15,128 30,631 0 10,923 11,412 1,013,343 158,850 761,407 60,242 148 1,759 208,347 1,190,753 2,204,096 21,375 61,463 1,088
(17,673)
(11,646)
460,012 6,154 532,419 6,227 538,646 13,432 10,679 70,745 479,120 32,853 13,789 620,618 11,652 24,168 689,475 21,579 181,474 4,201 307,744 1,240,293 2,399,557
425,999 3,423 501,702 7,059 508,761 14,720 10,613 82,833 434,896 24,694 12,630 580,386 16,040 31,547 635,159 24,975 124,268 5,646 277,314 1,114,949 2,204,096
20 21 21 28 22
9 24 25 27 28 10 25 25 21 27 28 21
Consolidated statement of cash flows Year ended 31 December (in â‚Ź thousands)
Notes
2012
2011
49,069
59,081
Operating activities Net income attributable to owners of the parent Correction for non-operational items or items with no effect on cash flow Depreciation and amortisation on property, plant and equipment, intangible assets and investment property Net provision expense Impairment of current and non-current assets Unrealised foreign exchange (gains)/losses Interest income and income from financial assets Interest expenses Change in fair value of derivative instruments Income/(loss) from sales of property, plant and equipment Tax expense for the year Income attributable to non-controlling interests Share in income of Investments in associated companies Cash flow from operating activities before changes in working capital Decrease/(increase) in trade receivables and other current and non-current receivables Decrease/(increase) in inventories Increase/(decrease) in trade payables and other current payables Cash flow from operating activities Interest paid Interest received Income tax paid/received Net cash flow from operating activities Investing activities Sales of non-current assets Purchases of non-current assets Acquisitions of subsidiaries minus cash acquired Business combinations by joint ventures minus cash acquired Change in percentage holdings in controlled companies Increase in share capital of investments in associated companies Cash flow from investing activities Financing activities Borrowings Repayment of borrowings Dividends paid Cash flow from financing activities Net increase/(decrease) in cash position Cash and cash equivalents at start of period Exchange-rate effects Cash and cash equivalents at end of period
5
16
22 22
119,683
101,350
(13,012) 10,559 685 (5,193) 22,439 680 (3,489) 3,505 162 (489)
(2,763) (2,510) (1,925) (4,299) 16,499 (1,840) (2,227) 13,056 (2,071) (868)
184,599
171,483
(32,449)
(124,819)
(25,936) 56,928 183,142 (22,439) 5,193 (15,888) 150,008
4,409 82,560 133,633 (16,499) 4,299 (18,841) 102,592
13,626 (203,930) (4,431) 0 0 (2,236) (196,971)
21,329 (189,681) (10,772) 0 0 0 (179,124)
207,483 (97,275) (15,056) 95,152 48,189 208,347 4,066 260,602
159,534 (31,719) (16,365) 111,450 34,918 175,518 (2,089) 208,347
Financial report 2012 75
Consolidated statement of changes in equity For the period ended 31 December 2011
(in â‚Ź thousands)
Share capital
Share premium
Retained earnings
Reserve related to hedging instruments
At 31 December 2010
21,375
61,463
383,283
(2,968)
59,081
(8,678)
Comprehensive income for the period Dividends paid to shareholders Dividends paid to noncontrolling interests
Revaluation surplus
Currency translation differences
Equity attributable to owners of the parent
Equity attributable to noncontrolling interests
Total
1,088
1,820
466,061
9,385
475,446
1,603
52,006
(1,861)
50,145
(16,365)
31 December 2011
21,375
61,463
425,999
(16,365)
(11,646)
501,702
(16,365) (465)
(465)
7,059
508,761
1,088
3,423
Revaluation surplus
Currency translation differences
Equity attributable to owners of the parent
Equity attributable to noncontrolling interests
Total
1,088
3,423
501,702
7,059
508,761
2,731
45,773
70
45,843
For the period ended 31 December 2012
(in â‚Ź thousands)
Share capital
Share premium
Retained earnings
Reserve related to hedging instruments
31 December 2011
21,375
61,463
425,999
(11,646)
49,069
(6,027)
Comprehensive income for the period Dividends paid to shareholders Dividends paid to noncontrolling interests At 31 December 2012
76
(15,056)
21,375
61,463
460,012
(15,056)
(17,673)
1,088
6,154
532,419
(15,056) (902)
(902)
6,227
538,646
Share capital and reserves The share capital on 31 December 2012 was composed of 13,092,260 ordinary shares. These shares are without any nominal value. The owners of ordinary shares have the right to receive dividends and have one vote per share in Shareholders’ General Meetings. The increase in the currency translation effect was mainly due to some DEME subsidiaries, whose functional currencies (SGD, QAR) rose significantly during the period. On 27 February 2013, the board of directors proposed a dividend of €15,056 thousand, corresponding to €1.15 gross per share. The final dividend is subject to shareholder approval in the Shareholders’ General Meeting. The appropriation of income was not included in the financial statements at 31 December 2012. The final dividend for the year ended 31 December 2011 was €1.15 gross per share.
Financial report 2012 77
Notes to the consolidated financial statements for the year ended 31 December 2012 1. General policies 2. Significant accounting policies 3. Consolidation methods Scope of consolidation Intragroup transactions Translation of the financial statements of foreign companies and establishments Foreign currency transactions 4. Segment reporting Operating segments Consolidated statement of comprehensive income highlights Revenue Breakdown of revenue in the construction division Breakdown of revenue in the dredging division Order book Consolidated statement of financial position Condensed consolidated statement of cash flows Other information Geographical information 5. Acquisitions and disposals of subsidiaries Acquisitions in the period ended 31 December 2012 Disposals in the period ended 31 December 2012 Post-balance sheet events 6. Revenue from auxiliary activities and other operating expenses 7. Remuneration and social security payments 8. Net financial income/expense 9. Non-controlling interests 10. Income tax Recognised in comprehensive income Reconciliation of the effective tax rate Recognised deferred tax assets and liabilities Temporary differences or tax losses for which no deferred tax assets are recognised Deferred tax income (expense) recognised in other comprehensive income 11. Earnings per share 12. Intangible assets other than goodwill 13. Goodwill 14. Property, plant and equipment 15. Investment property 16. Investments in associates and jointly controlled entities Associates Jointly controlled entities 17. Other non-current financial assets 18. Other non-current assets 19. Construction contracts 20. Inventories 21. Change in trade receivables and payables and other operating receivables and payables 22. Cash and cash equivalents 23. Grants 24. Employee benefits 25. Provisions other than those relating to retirement benefit obligations and non-current employee benefits 26. Contingent assets and liabilities 27. Net financial debt 28. Financial risk management 29. Operating leases 30. Other commitments given 31. Other commitments received 32. Litigation 33. Related parties 34. Statutory auditors’ fees 35. Material post-balance sheet events 36. Companies owned by the CFE group
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Introduction Consolidated financial statements and notes The Board of Directors authorised the publication of the CFE group’s consolidated financial statements on 27 February 2013. The consolidated financial statements should be read in conjunction with the Board of Directors’ management report.
Main transactions in 2012 and 2011 affecting the CFE group’s scope of consolidation TRANSACTIONS IN 2012 1. Construction division At the start of 2012, Aannemingen Van Wellen NV transferred its road business to the new Rail & Road division. Although the Buildings and Rail & Road activities are still being pursued within the same legal entity (Aannemingen Van Wellen NV), they are now presented within the Construction and Rail & Road divisions. CFE’s environmental business, which is carried out through CFE EcoTech and has historically been presented as part of the Construction division, is now presented as part of the Multitechnics division.
2. Multitechnics division At the start of 2012, CFE EcoTech, which operates in the water treatment business, joined the Multitechnics division. Its activities are closely related to certain electro-mechanical activities performed by entities in the Multitechnics division. As part of the same divisional reorganisation, Engema and Louis Stevens & Co were transferred from the Multitechnics division to the new Rail & Road division at the start of 2012. In early October 2012, the CFE group acquired all shares in Ariadne NV. This company, based in Limburg, Belgium, specialises in the automation of industrial processes.
3. Real Estate & Management Services division On 15 February 2012, the CFE group acquired a 47% stake in Immomax2 Sp.z.o.o. via its Polish subsidiary. This company is developing a residential real-estate project in Gdansk. Immomax2 is consolidated proportionally. On 23 February 2012, CFE group subsidiary BPI acquired a 50% stake in Les Jardins de Oisquercq SPRL, with a view to carrying out realestate development on land in Oisquercq (Tubize). This entity is consolidated proportionally. In the first quarter of 2012, VM Property I SA and VM Property II SPRL, in which the CFE group owns a 40% stake, created a company called VM Office SA to develop the office component of the Van Maerlant real-estate project in Brussels. This entity is accounted for under the equity method in CFE’s consolidated financial statements. On 27 April 2012, CFE group subsidiary CFE Immo acquired a 50% stake in Immo Keyenveld 1 SA, Immo Keyenveld 2 SA, Immo PA33 1 SA, Immo PA33 2 SA, Immo PA44 1 SA and Immo PA44 2 SA, which are companies that have been newly created as part of the Solvay project. This project involves the redevelopment of the site of Solvay’s former head office in Ixelles. These entities are consolidated proportionally. On 29 May 2012, the CFE group, through its Sogesmaint-CBRE subsidiary, acquired a 32.34% stake in Sogesmaint-CBRE Company Management, a newly created limited-liability company. This company is consolidated proportionally.
Financial report 2012 79
On 27 August 2012, CFE acquired a 30% stake in newly created company Foncière de Bavière SA, and on 12 December a 30% stake in newly created company Bavière Développement SA. The purpose of these two companies is to develop a real-estate project in the Bavière district of Liège. These entities are consolidated proportionally. On 1 October 2012, CFE acquired a 50% stake in Les Deux Princes Development SA, a company newly created as part of the project to redevelop the site of Solvay’s former head office in Ixelles. This company is consolidated proportionally.
4. Dredging & Environment division In 2012, the DEME joint venture acquired the following interests via its subsidiaries: • 50% in newly created company Oceanflore BV, which is consolidated proportionally; • 50% in newly created company Flidar NV, which is consolidated proportionally; • 100% in newly created company DI Ukraine LLC, which is fully consolidated; • 100% in Paes Maritiem BV, which is fully consolidated; • 60% in Highwind NV, which is fully consolidated; and • 100% in Société de Dragage Luxembourg, which is fully consolidated.
5. PPP - Concessions division No transactions to report.
6. Rail & Road division On 22 February 2012, the CFE group acquired all shares in Remacom NV, which is based in the Ghent region. This company specialises in laying rail tracks.
Transactions in 2011 1. Construction division No transactions to report.
2. Multitechnics division On 14 October 2011, the CFE group acquired all shares in Entreprise de Travaux d’Electricité et de Canalisations SA (ETEC) and Société de Gestion de Chantiers SA (SOGECH) for €1,000 thousand. These companies, based in Manage (Hainaut), employ 20 office and managerial staff and 160 manual workers. They specialise in public lighting and the laying of underground networks. This acquisition expands the range of activities undertaken by CFE’s Multitechnics division and gives it a position in the public lighting market, while strengthening its underground networks business.
3. Real Estate & Management Services division On 31 January 2011, CFE group subsidiary SFE acquired a 20% stake in newly created Moroccan company CME (Compagnie Marocaine des Energies Eoliennes Solaires et Biomasses). On 17 March 2011, CFE group subsidiary BPI acquired a 45% stake in newly created Polish company Athoria, whose purpose is to develop a real-estate project in Poland. On 4 January 2011, CFE group subsidiary SFE Immo acquired a 25% stake in Belgian company Grand Poste with the aim of developing a shopping centre in Liège. On 11 April 2011, the CFE group acquired the remaining 50% stake in Brusilia Building SA that it did not already own. This company is therefore now 100% owned by the CFE group and is fully consolidated.
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On 6 June 2011, CFE group subsidiary CFE Immo acquired a 40% stake in Luxembourg companies Bayside Finance SARL and Bedford Finance SARL, which jointly own 100% of the shares in Belgian companies VM Property I SA, VM Property II SPRL and Van Maerlant Residential SA. On 7 December 2011, Belgian companies VM Property I SA and VM Property II SPRL set up VM Office SA, in which they own 66.6% and 33.3% respectively. These stakes were acquired in connection with an office and residential development project in Brussels. In the first half of 2011, the CFE group also acquired a 50% stake in Cypriot companies Lockside Ltd and Liveway Ltd, and Nigerian company Cobel Contracting Nigeria Ltd. These stakes were acquired in connection with a construction project in Nigeria. On 31 March 2011, CFE group subsidiary CFE Immo sold its entire 28% stake in Administratief en Maritiem Centrum Antwerpen SA (AMCA). On 30 June 2011, CFE group subsidiary Construction Management sold its entire 39% stake in Société de Développement du Bois de Péronne SA. On 30 November 2011, CFE Hungary sold its entire stakes in Hungarian companies The Gallery and GreanOceans. On 21 December 2011, CFE group subsidiary CLI acquired an additional 25% stake in Luxembourg company Château de Beggen, taking its total stake to 50%. This company is developing various residential projects (14 residences including around 170 apartments and 191 parking spaces) on the land that it owns.
4. Dredging & Environment division In 2011, the DEME joint venture acquired the following interests via its subsidiaries: • a 50% stake in newly created Belgian company Terranova SA, whose purpose is to carry out studies in the field of waste reprocessing; • a 51% stake in newly created company Mineracoes Sustentaveis do Brasil SA (MSB SA), which owns a mining concession in Brazil; • a 19% stake in newly created Belgian company Otary SA, whose purpose is to develop and operate wind farms; • a 100% stake in US companies Geowind Holding LLC and Geowing LLC, whose purpose is to develop and operate wind farms; • a 100% stake in newly created company Soyo Dragagem; • a 100% stake in newly created company DI Bulgaria; • a 37.45% stake in US company Terrasea Environmental Solutions; and • a 50% stake in HGO InfraSea Solutions GmbH, whose purpose is to build and operate vessels used to install offshore wind turbines. In addition, Ecoterres Holding SA, a 74.9%-owned subsidiary of DEME, acquired from Dredging International SA and DEME SA all shares in Agroviro, which specialises in sludge decontamination. At 31 December 2011, this company was fully consolidated, subject to the recognition of non-controlling interests (25.1%).
5. PPP - Concessions division On 23 August 2011, the CFE group acquired 100% of newly created Belgian company HDP Charleroi, whose purpose is to carry out the PPP project for the design, construction and maintenance of a police station in Charleroi.
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1. General policies Ifrs as adopted by the European Union Standards and interpretations applicable in the period beginning on 1 January 2012 • Amendment to IFRS 7 Financial Instruments: Disclosures – Transfers of Financial Assets (effective for annual periods beginning on or after 1 July 2011) The application of these standards and interpretation did not have any significant effect on the group’s consolidated financial statements..
Standards and interpretations published but not yet applicable in the period beginning on 1 January 2012 • IFRS 9 Financial Instruments and related amendments (effective for annual periods beginning on or after 1 January 2015) • IFRS 10 Consolidated Financial Statements (effective for annual periods beginning on or after 1 January 2014) • IFRS 11 Joint Arrangements (effective for annual periods beginning on or after 1 January 2014) • IFRS 12 Disclosures of Interests in Other Entities (effective for annual periods beginning on or after 1 January 2014) • IFRS 13 Fair Value Measurement (effective for annual periods beginning on or after 1 January 2013) • IFRS 27 Consolidated and Separate Financial Statements (effective for annual periods beginning on or after 1 January 2014) • IFRS 28 Investments in Associates and Joint Ventures (effective for annual periods beginning on or after 1 January 2014) • Improvements to IFRS (2009-2011) (effective for periods beginning on or after 1 January 2013) • Amendment to IFRS 1 First Time Adoption of International Financial Reporting Standards – Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters (effective for annual periods beginning on or after 1 January 2013) • Amendment to IFRS 1 First Time Adoption of International Financial Reporting Standards – Government Loans (effective for annual periods beginning on or after 1 January 2013) • Amendment to IFRS 7 Financial Instruments: Disclosures – Offsetting Financial Assets and Financial Liabilities (effective for annual periods beginning on or after 1 January 2013) • Amendments to IFRS 10 (Consolidated Financial Statements), IFRS 11 (Joint Arrangements) and IFRS 12 (Disclosure of Interests in Other Entities) - Transition Guidance (effective for annual periods beginning on or after 1 January 2014) • Amendments to IFRS 10 (Consolidated Financial Statements), IFRS 12 (Disclosure of Interests in Other Entities) and IAS 27 (Investments in Associates) - Investment Entities (effective for annual periods beginning on or after 1 January 2014) • Amendments to IAS 1 Presentation of Financial Statements - Presentation of Items of Other Comprehensive Income (effective for annual periods beginning on or after 1 January 2012) • Amendment to IAS 12 Income Taxes – Deferred Tax: Recovery of Underlying Assets (effective for annual periods beginning on or after 1 January 2013) • Amendments to IAS 19 Employee Benefits (effective for annual periods beginning on or after 1 January 2013). • Amendments to IAS 32 Financial Instruments - Presentation - Offsetting Financial Assets and Financial Liabilities (effective for annual periods beginning on or after 1 January 2014) • FRIC 20 Stripping Costs in the Production Phase of a Surface Mine (effective for annual periods beginning on or after 1 January 2013) The potential impacts of these standards and interpretations on the group’s consolidated financial statements are being determined. The group does not expect any material changes other than those arising from the application of • IFRS 10 and 11, which redefine the notion of control and the criteria for selecting the method for consolidating entities. From 2014, a larger number of subsidiaries will be accounted for under the equity method. This will affect the presentation of the financial statements, but the group’s net income and net assets will not be affected. These new standards mean that it will no longer be possible to account for DEME using the proportional method. DEME will have to be accounted for under the equity method. DEME’s contribution to the current balance sheet and income statement is presented in Note 4. Segment reporting • IAS 19 requires actuarial gains and losses related to defined-benefit pension plans to be recognised in comprehensive income.
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2. Significant accounting policies Compagnie d’Entreprises CFE SA (hereinafter referred to as the “Company” or “CFE”) is a company incorporated and headquartered in Belgium. The consolidated financial statements for the year ended 31 December 2012 include the financial statements of the Company, its subsidiaries, its interests in jointly controlled entities (the “CFE group”) and interests in Investments in associated companies.
(A) STATEMENT OF COMPLIANCE The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) approved by the European Union.
(B) BASIS OF PRESENTATION The financial statements are stated in thousands of euros, rounded to the nearest thousand. Equity instruments and equity derivatives are stated at cost where they do not have a quoted market price in an active market and where other methods of reasonably estimating fair value are clearly inappropriate and/or inapplicable. Accounting policies are applied consistently. The financial statements are presented before the appropriation of parent-company income proposed to the Shareholders’ General Meeting. The preparation of financial statements under IFRSs requires estimates to be used and assumptions to be made that affect the amounts shown in those financial statements, particularly as regards the following items: • the period over which non-current assets are depreciated or amortised; • the measurement of provisions and pensions obligations; • the measurement of income or losses on construction contracts using the percentage of completion method; • estimates used in impairment tests; • the measurement of financial instruments at fair value; • the measurement of share-based payments (IFRS 2 expense); • the appreciation of the power of control; • the qualification, in case of acquisition of a company, of the transaction as business combination or acquisition of assets. These estimates assume the operation is a going concern and are made on the basis of the information available at the time. Estimates may be revised if the circumstances on which they were based alter or if new information becomes available. Actual results may be different from these estimates.
(C) CONSOLIDATION PRINCIPLES Subsidiaries are fully consolidated. Subsidiaries are companies controlled by the parent company. This is presumed where the parent company holds, directly or indirectly, more than half of the subsidiary’s voting rights. The financial statements of subsidiaries are included in the consolidated financial statements from the date control starts until the date control ends. Changes in the group’s interest in a subsidiary that do not result in a loss of control are recognised as equity transactions. The carrying amounts of the group’s interests and non-controlling interests are adjusted to reflect changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity. When the Group grants a option to sell to the non-controlling interests of a subsidiary (i.e. where the non-controlling interests have a “put”), the related financial liability is deducted initially from non-controlling interests in equity. Jointly controlled entities are consolidated proportionally. Investments in associated companies are those in which the group CFE has significant influence over financial and operating policies, but which it does not control. Significant influence is presumed where the CFE group owns 20-50% of the company’s voting rights.
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The equity method is used from the date that significant influence starts until the date that significant influence ceases. When the CFE group’s share of losses from Investments in associated companies exceeds the carrying amount of its interest in such companies, the carrying amount is reduced to nil. Recognition of further losses is discontinued except to the extent that the CFE group has incurred obligations in respect of the associated companies. All transactions, balances and unrealised gains and losses on transactions between group companies have been eliminated.
(D) FOREIGN CURRENCIES (1) Transactions in foreign currencies Transactions in currencies other than the euro are recognised at the exchange rate on the transaction date. Monetary assets and liabilities denominated in foreign currencies are translated at the closing rate. Gains and losses resulting from the creation of foreign currency transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. Non-monetary assets and liabilities denominated in foreign currencies are translated at the foreign exchange rate on the transaction date.
(2) Financial statements of foreign entities The assets and liabilities of CFE group companies whose functional currencies are other than the euro are translated into euros at the exchange rate on the balance sheet date. Income statements of foreign entities, excluding foreign entities in hyperinflationary economies, are translated into euros at an average exchange rate for the year (approximating the foreign exchange rates prevailing at the dates of the transactions). Components of shareholders’ equity are translated at historical rates. Translation differences arising from this translation are recognised under a separate item under equity (“Currency translation differences”). These differences are recognised in the income statement in the year during which the entity is sold or liquidated.
(3) Exchange rates Currencies Polish zloty Hungarian forint US dollar Singapore dollar Qatari rial Romanian leu Tunisian dinar CFA franc Australian dollar
2012 closing rate
2012 average rate
2011 closing rate
2011 average rate
4,091
4,169
4,471
4,141
292,549 1,320 1,614 4,806 4,449 2,048 655,957 1,271
288,358 1,291 1,606 4,701 4,462 2,015 655,957 1,244
315,169 1,296 1,683 4,719 4,326 1,942 655,957 1,264
280,243 1,399 1,753 5,096 4,239 1,964 655,957 1,340
Units of foreign currency per euro
(E) INTANGIBLE ASSETS (1) Research and development costs Expenditures on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding are recognised in the income statement as an expense as incurred.
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Expenditures on development activities, whereby research findings are applied to a plan or design for the production of new or substantially improved products and processes, are capitalised if the product or process is technically and commercially feasible, the company has sufficient resources to complete development and the expenses can be reliably identified. Capitalised expenditure includes all costs directly attributable to the asset necessary for its creation, production and preparation in view of its intended use. Other development expenditures are recognised as an expense as incurred. Capitalised development expenditures are stated at cost less accumulated amortisation (see below) and impairment.
(2) Other intangible assets Other intangible assets acquired by the company are stated at cost less accumulated amortisation (see below) and impairment. Expenditure on internally generated goodwill and brands is recognised as an expense as incurred.
(3) Subsequent expenditure Subsequent expenditure on capitalised intangible assets is capitalised only when it enables the assets to generate future economic benefits over an above the performance level defined at the outset. All other expenditures are expensed as incurred.
(4) Amortisation Intangible assets are amortised using the straight-line method over their estimated useful lives at the following rates: Minimum 5% 33.33%
Operating concessions Software applications
(F) BUSINESS COMBINATIONS Acquisitions of subsidiaries and companies are accounted for using the acquisition method. The consideration transferred in relation to a business combination is measured at fair value, and expenses related to the acquisition are generally taken to income when incurred. When consideration transferred by the group in relation to a business combination includes contingent consideration, this contingent consideration is measured at its fair value on the acquisition date. Changes in the fair value of contingent consideration that relate to adjustments in the measurement period (see below) are recognised retrospectively; other changes in the fair value of the contingent consideration are recognised in the income statement. In a business combination that takes place in stages, the group must remeasure the stake it previously held in the acquired company at fair value on the date of acquisition (i.e. the date on which the group obtained control) and recognise any gain or loss in net income.
On the date of acquisition, identifiable assets acquired and liabilities assumed are recognised at fair value on that date with the exception of: • deferred tax assets or liabilities and assets and liabilities related to employee benefit arrangements, which are recognised and measured in accordance with IAS 12 (Income Taxes) and IAS 19 (Employee benefits) respectively; • liabilities or equity instruments related to share-based payment agreement in the acquired company or share-based payment agreement in the group formed to replace payment agreements based on shares in the acquired company, which are measured in accordance with IFRS 2 (Share-based Payment) on the date of acquisition; • assets (or disposals group) classified as held-for-sale under IFRS 5 (Non-current Assets Held for Sale and Discontinued Operations), which are measured in accordance with this standard. If the initial recognition of a business combination is unfinished at the end of the financial reporting period during which the business combination occurs, the group must present provisional amounts relating to the items for which recognition is unfinished. These provisional amounts are adjusted during the measurement period (see below), or the additional assets or liabilities are recognised to take into account new information obtained about the facts and circumstances prevailing at the acquisition date and which, if they had been known, would have had an impact on the amounts recognised at that date. Adjustments in the measurement period are a consequence of additional information about the facts and circumstances prevailing at the date of acquisition obtained during the “measurement period” (maximum of one year from the acquisition date).
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(1) Goodwill Goodwill arising from a business combination is recognised as an asset on the date on which control was obtained (the acquisition date). Goodwill is measured as the excess of consideration transferred, non-controlling interests in the acquired company and the fair value of the stake already owned by the group in the acquired company (if any) over the net amount of identifiable assets acquired and liabilities assumed on the acquisition date. Non-controlling interests are initially measured either at fair value, or at the non-controlling interests’ share of the acquiree’s recognised identifiable net assets. The basis of measurement is selected on a transaction-by-transaction basis. Goodwill is not amortised, but is subject to impairment tests taking place annually or more frequently if there is an indication that the cashgenerating unit to which it is allocated (generally a subsidiary) could have suffered a loss of value. Goodwill is expressed in the currency of the subsidiary to which it relates. If the recoverable amount of the cash-generating unit is less than its carrying amount, the loss of value is first charged against any goodwill allocated to this unit, and then to any other assets of the unit in proportion to the carrying amount of each of the assets included in the unit. Goodwill is stated on the balance sheet at cost less impairment. Impairment of goodwill is not reversed in future periods. When a subsidiary is disposed the group, the resulting goodwill and other comprehensive income relating to the subsidiary are taken into account in determining the net gain or loss on disposal. For Investments in associated companies, the carrying amount of goodwill is included in the carrying amount of the investment in such companies.
(2) Negative goodwill If the net balance, at the acquisition date, of identifiable assets acquired and liabilities assumed is higher than the sum of the consideration transferred, non-controlling interests in the acquiree and the fair value of the stake in the acquiree previously owned by the group (if any), the surplus is recognised immediately in the income statement as a gain from a bargain purchase.
(G) PROPERTY, PLANT AND EQUIPMENT (1) Recognition and measurement All property, plant and equipment are recorded in assets only when it is probable that future economic benefits will accrue to the entity and if its cost can be measured reliably. These criteria are applicable at initial recognition and in relation to subsequent expenditure. All property, plant and equipment are recorded at historical cost less accumulated depreciation and impairment losses. Historical cost includes the original purchase price, borrowing costs incurred during the construction period, and related direct costs (e.g. non recoverable taxes and transport costs). The cost of self-constructed assets includes the cost of materials, direct labour costs and an appropriate proportion of production overheads.
(2) Subsequent expenditure Subsequent expenditure is capitalised only when it increases the future economic benefits resulting from the item of property, plant and equipment. Repairs and maintenance costs that do not increase the future economic benefits of the asset to which they relate, are expensed as incurred.
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(3) Depreciation Depreciation is calculated from the date the asset is available for use, according to the straight-line method and over the estimated economic useful life of the asset: trucks other vehicles other equipment IT hardware office equipment office furniture buildings
3 years 3-5 years 5 years 3 years 5 years 10 years 25-33 years
cutter dredgers and suction dredgers
18 years with residual value of 5%
floating dredgers and navigator boats landing stages, boats, ferries and boosters cranes: excavators pipes chains and site installations various site equipment
25 years with residual value of 5% 18 years without residual value 12 years with residual value of 5% 7 years without residual value 3 years without residual value 5 years 5 years
Land is not depreciated as it is deemed to have an indefinite life. Borrowing costs directly linked to the acquisition, construction or production of an asset that requires a long time of preparation are included in the cost of the asset.
(4) Recognition of the dredger fleet The acquisition cost is divided into two parts: a vessel component (92% of the acquisition cost), which is depreciated using the straightline method and a depreciation rate that depends on the kind of vessel, and a maintenance component (8% of the purchase), which is depreciated over 4 years using the straight-line method. When a vessel is acquired, spare parts are capitalised as a proportion of the purchase up to a maximum of 8% of the total vessel acquisition cost (100%), and are depreciated using the straight-line method over the remaining useful life from the date the asset is available for use. Certain repairs are capitalised and depreciated using the straight-line method over 4 years from the time the vessel starts sailing again.
(H) INVESTMENT PROPERTY An investment property is a property held to generate rent, to achieve capital appreciation or both. An investment property is different from an owner- or tenant-occupied property since it generates cash flows that are independent of the company’s other assets. Investment properties are measured on the balance sheet at cost, including borrowing costs incurred during the construction period, less depreciation and impairment. Depreciation is calculated from the date the asset is available for use, according to the straight-line method and at a rate corresponding to the estimated economic useful life of the asset. Land is not depreciated as it is deemed to have an indefinite life.
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(I) LEASES Where a lease transfers substantially all of the benefits and risks inherent in the ownership of an asset, it is regarded as a finance lease. Assets held through finance leases are recognised at the lower of the present value of the minimum lease payments estimated at inception of the lease, or the fair value of the assets less accumulated depreciation and impairment losses. Each lease payment is allocated between repayment of the debt and an interest charge, so as to achieve a constant rate of interest on the debt throughout the lease period. The corresponding obligations, net of finance charges, are recognised under financial debts. The interest element is expensed over the lease period. Property, plant and equipment acquired under finance leases are depreciated over their useful lives or the term of the lease if the lease does not specify transfer of ownership at the end of the lease period. Leases where the lessor retains all the benefits and risks inherent in owning the asset are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over the term of the lease. When an operating lease is terminated before the lease period has expired, any compensation paid to the lessor is recognised as an expense in the period in which termination takes place.
(J) INVESTMENTS Each category of investment is recognised at its acquisition date.
(1) Financial instruments available for sale This category includes available-for-sale shares in companies over which the CFE group has neither significant influence nor control. This is generally the case where the group owns fewer than 20% of the voting rights. Such investments are recognised at their fair value unless fair value cannot be reliably determined, in which case they are recognised at cost less impairment losses. Impairment losses are taken to income. Changes in fair value are taken to equity. When an investment is sold, the difference between the net disposal proceeds and the carrying amount is taken to income.
(2) Loans and receivables (2.1) Investments in debt securities and other investments Investments in debt securities are classified as held-for-trading financial assets and are measured at their amortised cost, determined on basis of the “effective interest rate method�. The method of effective interest rate is a method of calculating the interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the future expected life of the financial instruments or, where appropriate, a shorter period to obtain the net book value of asset or financial liability. Gains or losses are recognised in the income statement. Impairment losses are taken to income. Other investments held by the company are classified as being available-for-sale and are recognised at fair value. Gains or losses resulting from a change in the fair value of these financial assets are taken to equity. Impairment losses are taken to income.
(2.2) Trade receivables We refer to the paragraph (L).
(3) Financial assets designated as being at fair value through the profit and losses account Financial instruments are recorded at fair value through the profit and losses account unless if they are supported by documentation for hedge accounting (paragraph X).
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(K) INVENTORIES Inventories are measured at the lower of weighted average cost and net realisable value. The cost of finished products and work in progress comprises raw materials, other production materials, direct labour, other direct costs, borrowing costs incurred where the asset involves a long period of construction, and an allocation of fixed and variable production overheads based on the normal capacity of production facilities. Net realisable value is the estimated selling price in the ordinary course of business, less estimated completion costs and costs to sell.
(L) TRADE RECEIVABLES Trade receivables are carried at cost less impairment losses. At the end of the accounting period, impairment losses are recognised on receivables where settlement is uncertain.
(M) CONSTRUCTION CONTRACTS Where the profit or loss of a construction contract can be estimated reliably, contract revenue and expenses, including borrowing costs incurred where the contract exceeds the accounting period, are recognised in the income statement in proportion to the contract’s percentage of completion at the closing date. The percentage of completion is calculated using the “cost to cost” method. An expected loss on the construction contract is immediately expensed. Under the percentage of completion method, contract revenue is recognised as revenue in the income statement in the accounting periods in which the work is performed. Contract costs are recognised as an expense in the income statement in the accounting periods in which the work to which they relate is performed. Costs incurred that relate to future activities on the contract are capitalised if it is probable that they will be recovered. The CFE group has taken the option to present information related to construction contracts separately in the notes, but not on the balance sheet.
(N) CASH AND CASH EQUIVALENTS Cash and cash equivalents include cash and time deposits with an original maturity date of less than three months.
(O) IMPAIRMENT The carrying amounts of non-current assets - other than financial assets that fall within the scope of IAS 39, deferred tax assets and noncurrent assets held for sale - are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. For intangible assets with an indefinite useful life and goodwill, the recoverable amount is estimated at each balance sheet date. An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are taken to income.
(1) Estimates of recoverable amounts The recoverable amount of receivables and held-to-maturity investments is the present value of future cash flows, discounted at the original effective interest rate applicable to these assets. The recoverable amount of other assets is the greater of fair value less costs to sell and value in use. Value in use is the present value of estimated future cash flows. In assessing value in use, estimated future cash flows are discounted using a pre-tax interest rate that reflects both current market interest rates and risks specific to the asset. For assets that do not generate cash flows themselves, the recoverable amount is determined for the cash-generating units to which the assets belong.
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(2) Reversal of impairment An impairment loss in respect of receivables or held-to-maturity investments is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the impairment loss was recognised. Impairment losses in respect of goodwill are never reversed. Impairment losses on other assets are only reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss can only be reversed to the extent that the asset’s carrying amount, which has increased subsequent to the impairment, does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
(P) SHARE CAPITAL Purchases of own shares When CFE shares are bought by the company or a CFE group company, the amount paid, including costs directly attributable to the purchase, is deducted from equity. Proceeds from selling shares are directly included in equity, with no impact on the income statement.
(Q) PROVISIONS Provisions are recognised when the company has a present legal or constructive obligation as a result of past events, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. The amount recognised as provisions corresponds to the best estimate of the necessary expenditure to settle the current obligation at the balance sheet date. This estimate is obtained by using a pre-tax interest rate that reflects current market rates and the risks specific to the liability. Provisions for restructuring are recognised when the company has approved a detailed and formal restructuring plan, and the restructuring has either commenced or has been announced publicly. Provisions are not set aside for costs relating to the company’s normal continuing activities. Current provisions are provisions directly linked to each business line’s own operating cycle, whatever the expected time of settlement of the obligation. Provisions for after-sales service cover CFE group entities’ commitments under statutory warranties relating to completed projects. They are estimated statistically on the basis of expenses incurred in previous years or individually on the basis of specifically identified problems. Provisions for after-sales services are recognised from the time that works begin. A provision for onerous contracts is recognised when the expected benefits to be derived by the company from a contract are lower than the unavoidable cost of meeting its obligations under the contract. Provisions for disputes connected with operations mainly relate to disputes with customers, subcontractors, joint contractors or suppliers. Provisions for other current liabilities mainly comprise provisions for late delivery penalties and for other risks related to operations. Non-current provisions correspond to provisions not directly linked to the operating cycle and whose maturity is generally greater than one year.
(R) EMPLOYEE BENEFITS (1) Post-employment benefits Post-employment benefits include pension plans and life insurance. The company operates a number of defined-benefit and defined-contribution plans throughout the world. The assets of these plans are generally held by separate institutions and are generally financed through contributions from the subsidiaries concerned and from employees. These contributions are determined on basis of independent actuarial recommendations.
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The CFE group’s retirement-benefit obligations are either funded or non-funded. a) Defined-contribution pension plans Contributions to these pension plans are recognised as an expense in the income statement when incurred. b) Defined-benefit pension plans For these pension plans, costs are estimated separately for each plan using the projected unit credit method. The projected unit credit method considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately. Under this method, the cost of providing pensions is charged to the income statement so as to spread the cost evenly over the remaining careers of employees covered by the plan, in accordance with the advice of actuaries who carry out a full assessment of these plans every year. The amounts charged to the income statement consist of current service cost, interest cost, the expected return on plan assets, actuarial gains or losses and past service cost. The pension obligations recognised on the balance sheet are measured as the present value of the estimated future cash outflows, discounted at a rate corresponding to the yield on high-quality corporate bonds with a maturity similar to that of the pension obligations, adjusted for unrecognised actuarial gains and losses and less any unrecognised past service costs and the fair value of any plan assets. Actuarial gains and losses are calculated separately for each defined-benefit plan. Actuarial gains and losses comprise the effects of differences between actuarial assumptions and actual experience, and the effects of changes in actuarial assumptions. All actuarial gains and losses falling outside a corridor of +/-10% of the funds or fair value of plan assets or the present value of plan obligations are recognised in the income statement over the average remaining service lives of employees participating in the plan. Otherwise, actuarial gains or losses are not recognised. Past service costs are recognised as an expense over the average period until the benefits become vested, unless they are already vested before the defined-benefit plan is changed. In this case, the past service costs are recognised as an expense immediately. Where the calculation results in a benefit to the company, the recognised asset is limited to the net total of any unrecognised actuarial losses, past service costs and the present value of any future repayments or future contributions to the plan. The expected charges arising from these benefits are provisioned during the active career of the employees concerned by applying similar accounting methods to the ones used for defined-benefit pension plans. These obligations are calculated by independent qualified actuaries.
(2) Bonuses Bonuses granted to company employees and senior executives are based on targets relating to key financial indicators. The estimated amount of bonuses is recognised as an expense in the year to which they relate
(S) INTEREST-BEARING BORROWINGS (1) Liabilities at amortised costs Interest-bearing borrowings are recognised at their initial amount less attributable transaction costs. Any difference between this net amount (after transaction costs) and repayment value is recognised in the income statement over the life of the loan, using the effective interest-rate method.
(2) Financial liabilities designated as being at fair value through the profit and losses account Financial instruments are recorded at fair value through the profit and losses account unless if they are supported by documentation for hedge accounting (paragraph X).
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(T) TRADE AND OTHER PAYABLES Trade and other current payables are measured at nominal value.
(U) INCOME TAX Income tax for the period comprises current and deferred tax. Income tax is recognised on the income statement except to the extent that it relates to items recognised in comprehensive income, in which case, the deferred tax is also taken in comprehensive income. Current tax is the expected tax payable on the taxable income for the period and any adjustment to tax paid or payable in respect of previous years. It is calculated using tax rates in force at the balance sheet date. Deferred tax is calculated using the liability method for all temporary differences arising between the tax bases of assets and liabilities and their carrying values. Tax rates in force at the closing date are used to calculate deferred tax assets and liabilities. Under this method, in the event of a business combination, the company is required to make a provision for deferred tax on the difference between the fair value of net assets acquired and their tax base. The following temporary differences are not provided for: goodwill that is not deductible for tax purposes, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. A deferred tax asset is reduced to the extent that it is no longer probable that the related tax benefit will be realised.
(V) REVENUE (1) Revenue from construction contracts Revenue from a construction contract includes the initial amount of revenue defined in the contract and variations in the work specified by the contract, claims and performance bonuses to the extent that it is probable that these will generate revenue and that they can be reliably measured. Contract revenue is measured at the fair value of the consideration received or receivable. A variation may lead to an increase or a decrease in contract revenue. A variation is an instruction by the customer for a change in the scope of the work to be performed under the contract. A variation is included in contract revenue when it is probable that the client will approve the variation and that amount of revenue resulting from this variation can be reliably measured. Performance bonuses form part of contract revenue when the contract’s percentage of completion is such that it is probable that the specified performance level will be reached or exceeded and that the amount of the performance bonus can be reliably measured. Contract revenue is recognised according to the percentage of completion of the contract activity at the closing date (calculated as the proportion of contract costs at the closing date and the estimated total contract costs). An expected loss on a construction contract is immediately recognised. (2) Goods sold, properties sold and services provided In relation to the sale of goods and property, revenue is recognised when the material risks and rewards of ownership have been transferred to the buyer in substance, and no uncertainty remains regarding the recovery of the amounts due, associated costs or the possible return of goods. (3) Rental income and fees Rental income and fees are recognised on a straight-line basis over the term of the lease.
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(4) Financial income Financial income comprises interest receivable on investments, dividends, royalties, foreign exchange gains and gains on hedging instruments that are recognised on the income statement. Interest, royalties and dividends arising from the use of the company’s resources by third parties are recognised when it is probable that the economic benefits associated with the transaction will flow to the company and the revenue can be measured reliably. Interest income is recognised as it accrues (taking into account the passing of time and the effective return on the asset) unless collectability is in doubt. Royalty income is recognised on an accrual basis in accordance with the substance of the relevant agreement. Dividend income is recognised on the income statement on the date that the dividend is declared. (5) Government grants A government grant is recognised in the balance sheet initially as deferred income where there is reasonable assurance that it will be received and that the company will comply with the conditions attached to it. Grants that compensate the company for expenses incurred are systematically recognised as revenue on the income statement during the period in which the corresponding expenses are incurred. Grants that compensate the company for the cost of an asset are systematically recognised on the income statement as revenue over the useful economic life of the asset. These grants are deducted from the value of the related asset.
(W) EXPENSES (1) Financial expenses Financial expenses comprise interest payable on borrowings, foreign exchange losses, and losses on hedging instruments that are recognised on the income statement. All interest and other costs incurred in connection with borrowings, except those which were eligible to be capitalised, are taken to income as financial expenses. The interest expense component of finance lease payments is recognised in the income statement using the effective interest rate method.
(2) Research and development, advertising and promotional costs and IT systems development costs Research, advertising and promotional costs are expensed in the year in which they are incurred. Development costs and IT systems development costs are expensed in the year in which they are incurred if they do not meet the criteria for capitalisation.
(X) HEDGE ACCOUNTING The company uses derivative financial instruments primarily to reduce exposure to adverse fluctuations in interest rates, foreign exchange rates, commodity prices and other market risks. The company’s policy prohibits the use of derivatives for speculation. The company does not hold or issue derivative financial instruments for trading purposes. However, derivatives which do not qualify as hedging instruments are presented as instruments held for trading. Derivative financial instruments are recognised initially at cost. Subsequent to initial recognition, derivative financial instruments are measured at fair value. Recognition of any resulting unrealised gain or loss depends on the nature of the derivative and the effectiveness of the hedge. The fair value of interest-rate swaps is the estimated amount that the company would receive or pay when exercising the swaps at the closing date, taking into account current interest rates and the solvency of the swap counterparty. The fair value of a forward exchange contract is the quoted value at the closing date, and therefore the present value of the quoted forward price.
Financial report 2012 93
(1) Cash flow hedges Where a derivative financial instrument hedges variations in cash flows relating to a recognised liability, a firm commitment or an expected transaction, the effective part of any gain or loss resulting from the derivative financial instrument is recognised in comprehensive income. When the firm commitment or the expected transaction results in the recognition of an asset or liability, the cumulative gain or loss is removed from equity and included in the initial measurement of the asset or liability. Otherwise, the cumulative gain or loss is removed from equity and recognised in the income statement at the same time as the hedged transaction. The ineffective part of any gain or loss on the financial instrument is taken to income. Gains or losses resulting from the time value of financial derivative instruments are recognised in the income statement. When a hedging instrument or hedge relationship expires but the hedged transaction is still expected to occur, the cumulative unrealised gain or loss (at that point) remains in equity and is recognised in accordance with the above policy when the transaction occurs. If the hedged transaction is expected not to occur, the cumulative unrealised gain or loss recognised in equity is immediately taken to income.
(2) Fair value hedges Where a derivative financial instrument hedges variations in fair value of a recognised receivable or payable, any gain or loss resulting from the remeasurement of the hedging instrument is recognised in the income statement. The hedged item is also stated at the fair value attributable to the risk hedged, with any gain or loss being recognised in the income statement. The fair value of hedged items, in respect of the risk hedged, is their carrying amount at the balance-sheet date translated into euro at the exchange rate at that date.
(3) Hedging of net investment in a foreign country Where a foreign currency liability hedges a net investment in a foreign entity, translation differences arising on the translation of the liability into euro are recognised directly in “currency translation differences” under shareholders’ equity. Where a derivative financial instrument hedges a net investment in a foreign operation, the effective portion of the gain or the loss on the hedging instrument is recognised directly in “currency translation differences” under shareholders’ equity, and the ineffective portion is taken to income.
(Y) SEGMENT REPORTING A segment is a distinguishable component of the CFE group that generates revenues and incurs expenses and whose operating income and losses are regularly reviewed by management in order to take decisions or determine its performance. The CFE group consists of six operating segments: Construction, Real Estate & Management Services, Multitechnics, Rail & Road, Dredging & Environment and PPPConcessions.
(Z) STOCK OPTIONS Stock options are measured at fair value on the grant date. This fair value is expensed using the straight-line method over the options’ vesting period, based on an estimate of the number of options that will finally vest.
94
3. Consolidation methods Scope of consolidation
Companies in which the Group holds, whether directly or indirectly, the majority of voting rights enabling control to be exercised, are fully consolidated. Companies over which the Group exercises joint control with another entity are proportionally consolidated. This relates in particular to DEME, Rent-A-Port and some entities in the Real Estate & Management Services division. Companies over which the Group exercises significant influence are accounted for under the equity method. This mainly concerns Locorail SA, Coentunnel Company BV, PPP Schulen Eupen SA, Van Maerlant Offices SA, Van Maerlant Property I SA & II SPRL and Van Maerlant Residential SA.
Changes in the scope of consolidation Number of entities Full consolidation Proportional consolidation Equity method Total
2012
2011
59
52
160 29 248
153 18 223
Intragroup transactions Reciprocal operations and transactions relating to assets and liabilities and income and expenses between companies that are consolidated or accounted for under the equity method are eliminated in the consolidated financial statements. This is done: • for the full amount if the transaction is between two controlled subsidiaries; • in proportion to the consolidation percentage for a proportionally consolidated company if the operation is between a fully consolidated company and a proportionally consolidated company; • applying the percentage owned of a company accounted for under the equity method with respect to internal profits or losses between a fully consolidated company and a company accounted for under the equity method.
Translation of the financial statements of foreign companies and establishments In most cases, the functional currency of companies and establishments is their local currency. The financial statements of foreign companies of which the functional currency is different from that used in preparing the Group’s consolidated financial statements are translated at the closing rate for balance-sheet items and at the average rate for the period for income-statement items. Any resulting translation differences are recognised under translation differences in consolidated reserves. Goodwill relating to foreign entities is considered as comprising part of the assets and liabilities acquired and is therefore translated at the exchange rate in force at the balance sheet date.
Foreign currency transactions Transactions in foreign currency are translated into euros at the exchange rate on the transaction date. At the balance sheet date, financial assets and monetary liabilities denominated in foreign currencies are translated at the closing rate. Resulting exchange gains and losses are recognised under foreign exchange gains and losses and are shown under other financial income and other financial expense in the income statement. Foreign exchange gains and losses arising on loans denominated in foreign currency or on foreign exchange derivatives used to hedge stakes in foreign subsidiaries are recorded in currency translation differences under equity.
Financial report 2012 95
4. Segment reporting Operating segments
Segment reporting is presented in respect of the group’s operating segments. Segment profits, losses, assets and liabilities include items that can be attributed directly to a segment or allocated on a reasonable basis. In early 2012, CFE set up its new Rail & Road division. This division includes the activities of Engema (installation of overhead contact lines and rail signalling) and Louis Stevens & Co (rail signalling) - previously included in the Multitechnics division - along with the road business of Aannemingen Van Wellen - previously part of the Construction division - and the activities of specialist track-layer Remacom, which was acquired at the start of the year. The environmental business has been moved from the Construction division to the Multitechnics division. The comments below are based on the new structure.
The CFE group now consists of six operating segments: Construction, Real Estate & Management Services, Rail & Road, Multitechnics, Dredging & Environment and PPP-Concessions.
Construction The Construction segment operates in civil engineering (major infrastructure works: tunnels, bridges, quay walls, gas terminals etc.) and buildings (offices, industrial buildings, housing, renovation and refurbishment work).
Real Estate & Management Services The Real Estate & Management Services segment develops real estate projects by taking a “developer-builder” approach, in association with the Construction division. In addition, through specific subsidiaries, the division provides services related to its core business, i.e. project management and buildings management and maintenance.
Multitechnics The Multitechnics segment, through its specific subsidiaries, specialises in electricity projects in the service sector (offices, hospitals, car parks etc.). In 2007, this segment also became active in air-conditioning following the acquisition of a 25% stake in Druart SA (stake increased to 100% in 2010), and in industrial process automation through the acquisition of VMA NV. In 2009, the division diversified geographically by acquiring 64.95% of Van De Maele Multi-techniek NV and in 2010 by buying a 65.04% stake in Brantegem NV. In 2012, the CFE group strengthened its position in the industrial process automation sector by acquiring all shares in Ariadne NV. At the start of 2012, EcoTech, which operates in the water treatment business, joined the Multitechnics division. Its activities are closely related to certain electro-mechanical activities performed by entities in the Multitechnics division. As part of the same divisional reorganisation, Engema SA and Louis Stevens & Co NV were transferred from the Multitechnics division to the new Rail & Road division at the start of 2012.
Rail & Road In early 2012, CFE set up its new Rail & Road division. This division includes the activities of Engema SA (installation of overhead contact lines and rail signalling) and Louis Stevens & Co NV (rail signalling) - previously included in the Multitechnics division - along with the road business of Aannemingen Van Wellen NV - previously part of the Construction division - and the activities of specialist track-layer Remacom NV, which was acquired at the start of the year.
PPP-Concessions The PPP-Concessions division was set up to handle the emergence of major public-private partnership (PPP) contracts.
96
Dredging & Environment The Dredging & Environment division, through the group’s 50%-owned subsidiary DEME, operates in dredging (investment dredging and maintenance dredging), the treatment of polluted earth and sludge, and marine engineering.
The accounting principles used in segment reporting are the same as these used in the preparation of the consolidated financial statements (see note 2).
Consolidated statement of comprehensive income highlights Revenue 2012
Net financial income/ expense
EBIT
Tax
2011
2012
%CA
2011
%CA
2012
2011
2012
Taux
2011
Taux
Construction 645,226 655,494 Real Estate & Management 35,029 26,046 Services Multitechnics 156,304 149,842 Rail & Road 99,323 91,816 PPP-Concessions 11,697 2,911 Dredging & Environment 957,460 882,906 Adjustments for DEME Holding company Eliminations between (6,737) (15,181) divisions Consolidated total 1,898,302 1,793,834
(2,541)
(0.39%)
3,169
0.5%
(980)
(1,958)
2,336
66.34%
(2,623)
213.1%
10,389
29.66%
9,391
36.1%
(3,271)
(2,372)
(830)
11.66%
(786)
11.2%
1,786 5,690 3,669 70,209 (1,158) (7,444)
1.14% 5.73% 31.37% 7.33%
4,734 4,564 (2,150) 68,665 (1,100) (458)
3.2% 5.0% (73.9%) 7.8%
(556) (473) (1,510) (22,497)
(711) (249) (374) (10,536)
(880) (1,204) (41) (2,693)
71.54% 23.08% 1.90% 5.64%
(1,438) (764) (48) (7,714)
35.7% 17.7% (1.9%) 13.3%
138
447
(14)
(0.19%)
(16)
(145.5%)
(29,149)
(15,733)
(3,505)
(6.71%)
(13,056)
Share of income/ loss of investments in associated companies
Construction Real Estate & Management Services Multitechnics Rail & Road PPP-Concessions Dredging & Environment Adjustments for DEME Holding company Eliminations between divisions Consolidated total
796 81,396
(1,884) 4.29%
84,931
(179) 4.7%
Net profit attributable to owners of the parent
(18.9%)
EBITDA
2012
2011
%CA
2011
%CA
2012
2011
2012
%CA
2011
%CA
0
0
(1,323) (0.21%)
(556)
(0.1%)
4,100
10,306
1,559
0.2%
13,475
2.1%
(342)
54
5,676 16.20%
6,276
24.1%
(339)
1,372
9,708
27.7%
10,743
41.3%
0 0 848 (17)
0 0 535 279
0.55% 2,231 4.07% 3,551 26% (1,877) 4.64% 52,131 (1,100) (16)
1.5% 3.9% (64.5%) 5.9%
3,093 3,867 104 104,999
1,914 3,291 592 80,486
3.12% 9.6% 40% 18.3%
(1,238)
6,648 7,855 (1,558) 149,151 (1,100) (1,696)
4.4% 8.6% (53.5%) 16.9%
1,431
4,879 9,557 4,621 175,191 (1,158) (6,013)
117,255
96,723
199,140
10.5%
181,654
489
868
2012
Non-cash items
333
858 4,040 3,069 44,472 (1,158) (7,181) 616
(1,559)
49,069
2.58% 59,081
796 3.3%
(1,884)
Financial report 2012 97
10.1%
Revenue (in € thousands) Belgium Other Europe Middle East Other Asia Asia-Pacific Africa Americas Consolidated total
2012
2011
915,068
923,069
426,530 80,900 49,511 177,531 166,350 82,412 1,898,302
459,779 60,274 57,713 63,877 143,651 85,471 1,793,834
The breakdown of revenue by country is based on the countries in which services are provided. In 2012, no customer accounted for more than 10% of group revenue. Revenue from the sale of goods amounted to €9,950 thousand in 2012 (2011: €10,401 thousand). These sales were performed by the Voltis and Terryn Hout subsidiaries.
Breakdown of revenue in the construction division (in € thousands) Buildings, Benelux Civil Engineering Buildings, International Total
2012
2011
432,739 138,462 74,025 645,226
354,109 192,150 109,235 655,494
The CFE group’s Construction revenue includes that generated through the Real Estate & Management Services division. Real Estate & Management Services revenue is stated after the deduction of Construction revenue. Since the construction and selling activities of the Real Estate & Management Services division do not take place simultaneously, internally generated revenue is added to assets under construction and removed at the time of sale. In 2012, some companies left the Construction division: CFE Ecotech was transferred to the Multitechnics division, while Aanneming Van Wellen was split into two entities, one remaining within the Construction division and the other joining the new Rail & Road division. 2011 figures have been adjusted to reflect these changes in divisional organisation.
98
Breakdown of revenue in the dredging division (in â‚Ź thousands)
2012
2011
629,104 108,420 90,915 112,762 16,259 957,460
573,764 104,393 101,821 78,205 24,723 882,906
2012
2011
% change
Contracting
1,195.6
1,171.9
+2.0%
Construction Rail & Road Multitechnics Real Estate & Management Services Dredging & Environment PPP-Concessions Holding company and consolidation adjustments Total
964.2 65.8 165.6 14.1 1,658.5 0 0 2,868.2
983.2 76.0 112.7 8.4 1,202.0 0 0 2,382.3
(1.9%) (13.4%) +46.9% nm +38.0% 0 0 +20.4%
Dredging Oil and gas Environment Civil engineering Other Total
Order book (in â‚Ź millions)
Financial report 2012 99
Consolidated statement of financial position at 31 December 2012 (in â‚Ź thousands)
Construction
Real Estate & management Services
Multitechnics
Dredging & environment
Holding company & eliminations
Eliminations between divisions
Consolidated total
911
11
16,834
5,677
0
9,968
0
0
33,401
43,542
5,054
7,493
10,161
15,754
895,156
3,274
0
980,434
19,290
0
0
0
(12,741)
0
106,256
(112,805)
0
16,521
20,741
48
647
5,604
9,916
3,109
0
56,586
9,145 11,877 64,853
2,517 147,960 10,847
3,810 7,225 4,771
826 2,119 (1,077)
8,254 0 2,674
31,537 16,706 97,220
187,316 647 81,314
(178,264) 0 0
65,141 186,534 260,602
86,882
616
5,774
5,889
0
0
117,715
(216,876)
0
351,286 604,307
46,312 234,058
69,556 115,511
56,326 80,568
9,202 28,747
291,712 1,352,215
19,066 518,697
(26,601) (534,546)
816,859 2,399,557
26,059
12,422
43,327
27,680
3,897
375,294
228,091
(178,124)
538,646
18,856
56,148
5,000
0
1,202
0
29,408
(110,614)
0
2,540
25,803
2,267
2,959
10,511
300,070
135,000
(30)
479,120
52,025 1,427
26,910 (1)
787 3,489
1,245 796
4,620 2,191
50,631 168,130
7,581 5,442
(2,301) 0
141,498 181,474
30,896
71,828
4,508
6,766
5,881
0
98,408
(218,287)
0
472,504 604,307
40,948 234,058
56,133 115,511
41,122 80,568
445 28,747
458,090 1,352,215
14,767 518,697
(25,190) (534,546)
1,058,819 2,399,557
Rail & Road
PPSConcessions
ASSETS Goodwill Property, plant and equipment Non-current loans to consolidated group companies Other non-current financial assets Other non-current assets Inventories Cash and cash equivalents Internal cash position cash pooling - assets Other current financial assets - group companies Other current assets Total assets EQUITY AND LIABILITIES Equity Non-current borrowings from consolidated group companies Non-current financial liabilities Other non-current liabilities Current financial liabilities Internal cash position cash pooling - liabilities Other current liabilities Total equity and liabilities
100
Consolidated statement of financial position at 31 December 2011 (in â‚Ź thousands)
Construction
Real Estate & management Services
Multitechnics
911
19
15,144
41,887
5,078
16,737
PPSConcessions
Dredging & environment
Holding company & eliminations
Eliminations between divisions
Consolidated total
2,682
0
9,969
0
0
28,725
7,323
10,375
8,160
823,778
3,017
0
899,618
0
0
0
0
0
71,173
(87,910)
0
280
10,527
1,319
483
4,991
9,922
3,109
0
30,631
5,616
2,955
3,666
240
12,492
20,577
173,122
(164,299)
54,369
Rail & Road
ASSETS Goodwill Property, plant and equipment Non-current loans to consolidated group companies Other non-current financial assets Other non-current assets Inventories Cash and cash equivalents Internal cash position cash pooling - assets Other current financial assets - group companies Other current assets Total assets EQUITY AND LIABILITIES Equity Non-current borrowings from consolidated group companies Non-current financial liabilities Other non-current liabilities Current financial liabilities Internal cash position cash pooling - liabilities Other current liabilities Total equity and liabilities
7,643
136,886
5,775
2,091
420
5,389
646
0
158,850
62,076
10,351
5,005
4,093
2,177
80,853
43,792
0
208,347
68,654
661
4,289
1,892
0
0
122,593
(198,089)
0
380,380 584,184
42,265 208,742
66,004 108,525
50,369 72,225
7,610 35,850
287,999 1,238,487
14,152 431,604
(25,223) (475,521)
823,556 2,204,096
26,927
39,835
41,301
22,355
1,213
350,608
186,696
(160,174)
508,761
48,923
21,470
800
0
50
0
16,667
(87,910)
0
3,681
17,223
2,385
2,717
3,730
305,660
99,500
0
434,896
56,765
26,330
817
790
0
59,599
5,314
(4,125)
145,490
6,226
0
2,443
736
7,093
97,270
10,500
0
124,268
26,073
74,058
7,708
4,749
10,005
0
75,496
(198,089)
0
415,589
29,826
53,071
40,878
13,759
425,350
37,431
(25,223)
990,681
584,184
208,742
108,525
72,225
35,850
1,238,487
431,604
(475,521)
2,204,096
Financial report 2012 101
Condensed consolidated statement of cash flows At 31 December 2012 (in â‚Ź thousands)
Cash flow from operating activities before change in working capital Net cash flow from (used in) operating activities Cash flow from (used in) investing activities Cash flow from (used in) financing activities Net increase/(decrease) in cash position
At 31 December 2011 (in â‚Ź thousands)
Cash flow from operating activities before change in working capital Net cash flow from (used in) operating activities Cash flow from (used in) investing activities Cash flow from (used in) financing activities Net increase/(decrease) in cash position
Construction
Real Estate & management Services
(1,366)
7,071
4,664
9,048
39,990
(31,138)
475
(6,458)
880
(31,176)
Dredging & environment
Holding company & eliminations
1,031
168,245
(4,094)
184,599
465
(19,114)
145,168
14,162
150,008
(2,580)
(2,458)
(740)
(177,909)
(7,706)
(196,971)
30,823
1,920
(3,162)
20,355
45,268
31,124
95,152
2,356
565
(185)
(5,155)
501
12,527
37,580
48,189
Construction
Real Estate & management Services
PPSConcessions
Dredging & environment
Holding company & eliminations
10,875
8,603
5,686
7,525
(2,242)
143,439
(2,403)
171,483
9,082
(19,247)
4,224
2,839
(6,908)
96,521
16,081
102,592
(9,774)
(77)
(1,705)
(2,374)
(2,373)
(157,792)
(5,029)
(179,124)
11,846
19,138
(141)
(448)
9,529
48,771
22,755
111,450
11,154
(186)
2,378
17
248
(12,500)
33,807
34,918
Multitechnics
Multitechnics
Rail & Road
Rail & Road
PPSConcessions
Consolidated total
Consolidated total
Cash flows from financing activities include cash pooling loans from other segments. A positive amount means a use of pooled cash. This item is also influenced by external financing, mainly in the Real Estate & Management Services division, the holding company and the Dredging & Environment division. The Dredging & Environment division is not part of the CFE cash pooling arrangement.
102
Other information Construction
Real Estate & management Services
Depreciation and amortisation
(6,527)
(250)
(2,834)
(105,012)
Investments
(8,913)
(340)
(3,493)
Impairment
0
0
0
Real Estate & management Services
Multitechnics
at 31 December 2012 (in € thousands)
at 31 December 2011 (in € thousands)
Construction
Multitechnics
Dredging & environment
Holding company & eliminations
Consolidated total
(204)
(3,626)
(1,152)
(119,605)
(184,592)
(2,928)
(3,143)
(2,506)
(205,915)
(78)
0
0
0
(78)
Dredging & environment
Holding company & eliminations
Consolidated total
Rail & Road
Rail & Road
PPSConcessions
PPSConcessions
Depreciation and amortisation
(13,690)
(1,032)
(1,706)
(81,366)
(480)
(1,723)
(1,233)
(101,230)
Investments
(13,544)
(7,423)
(2,357)
(185,900)
(6,864)
(1,023)
(5,029)
(222,140)
Impairment
0
0
0
(120)
0
0
0
(120)
Geographical information The operations of the CFE group (excluding DEME) are mainly based in Benelux and Central Europe. The CFE group’s property, plant and equipment (excluding DEME) is located mainly in Belgium and Luxembourg. Most of DEME’s activities are performed by its fleet of vessels, which are owned by various companies, but their legal location does not reflect the economic reality of the business carried out by this fleet for the same companies. As a result, details of property, plant and equipment by company are not presented, since it is not possible to give a presentation that reflects the geographical areas where the activity was performed.
Financial report 2012 103
5. Acquisitions and disposals of subsidiaries Acquisitions in the period ended 31 December 2012
• On 22 February 2012, the CFE group acquired all shares in Remacom NV for €4,500 thousand. This company is based in Ghent and specialises in laying rail tracks. The unallocated goodwill of €2,995 thousand reflects the fact that the CFE group is still carrying out its analysis of the rail business, including the track-laying activity. This acquisition contributed for €521 thousand to group income in 2012. • On 4 October 2012, the CFE group acquired all shares in Ariadne SA, which specialises in automating production lines in the auto and food processing industries. This acquisition cost €700 thousand. Ariadne strengthens the services and client portfolio of VMA NV, which is a subsidiary in the Multitechnics division. Unallocated goodwill of €416 thousand reflects the expected synergies from the acquisition. This acquisition’s contribution to group income in 2012 was a loss of €316 thousand. • Acquisitions in the Real Estate & Management Services were not business combinations and so all consideration paid was allocated to land and buildings. On 23 February 2012, CFE group subsidiary BPI acquired a 50% stake in Les Jardins de Oisquercq SPRL at the acquisition price of €105 thousand after deduction of the acquired cash. This acquisition is directly recognised in the cash flow from operating activities.
Fair value of the assets and liabilities of subsidiaries acquired in the period (in € thousands) Intangible assets Property, plant and equipment Inventories Trade and other operating receivables Other current assets Non-current financial liabilities Other non-current liabilities Trade and other operating payables Current financial liabilities Other current liabilities Cash Fair value of assets and liabilities Purchase price Goodwill Purchase price Cash acquired Cash flows
Fair value 20 964 3,813 3,663 33 (1,207) (142) (1,224) (990) (3,910) 769 1,789 5,200 3,411 (5,200) 769 (4,431)
Disposals in the period ended 31 December 2012 Disposals of subsidiaries in the Real Estate & Management Services segment, mentioned above in the preamble, are treated as output of stock.
Post-balance sheet events No transactions to report.
104
Comprehensive income 6. Revenue from auxiliary activities and other operating expenses Revenue from auxiliary activities totalled €72,155 thousand (2011: €72,078 thousand) and included €3,940 thousand of capital gains on non-current assets (2011: €4,065 thousand) and rental income, compensation and income from the onward invoicing of various expenses totalling €68,215 thousand (2011: €68,013 thousand). Revenue from auxiliary activities was stable relative to 2011.
(in € thousands) Miscellaneous goods and services Impairment of assets - Inventories - Trade and other receivables Net additions to provisions (excluding provisions for retirement benefit obligations) Other operating expenses Consolidated total
2012
2011
(262,111)
(264,443)
570 (11,129)
248 2,173
11,699
(301)
(4,403) (265,374)
(6,213) (268,536)
The increase in impairment of trade receivables related mainly to the impairment of a €12 million receivable recognised in 2012, for which provisions had been set aside in 2011.
7. Remuneration and social security payments (in € thousands) Remuneration
2012
2011
(273,915)
(254,383)
Mandatory social security contributions Other wage costs Contributions to defined-contribution pension plans
(77,197) (18,135) (47)
(65,900) (15,481) (40)
Service cost related to defined-benefit pension plans
(2,644)
(2,675)
(4.403) (371,938)
(6.213) (338,479)
Andere operationele kosten Consolidated total
The average full-time equivalent number of staff in 2012 was 5,582 (2011: 5,442). Full-time equivalent headcount was 5,731 at 1 January 2012 and 5,773 at 31 December 2012.
Financial report 2012 105
8. Net financial income/expense (in € thousands) Cost of financial debt Derivative instruments - fair value adjustments through profit and loss Derivative instruments used as hedging instruments Assets measured at fair value Available-for-sale financial instruments Assets and liabilities at amortised cost - income from availabilities Assets and liabilities at amortised cost - interest charges Other financial income and expense Realised / unrealised translation gains/(losses) Dividends received from non-consolidated companies Impairment of financial assets Other Net financial income/expense
2012
2011
(18,941)
(12,002)
(519)
20
0 0 0 5,193 (23,615) (10,208) (3,446) 0 (19) (6,743) (29,149)
0 0 0 4,299 (16,321) (3,731) 1,936 (0) (139) (5,528) (15,733)
The change in realised (unrealised) translation gains/(losses) compared to 2011 is mainly explained by movements in the euro against the functional currencies of DEME subsidiaries.
9. Non-controlling interests
In 2012, non-controlling interests in income represented a loss of €162 thousand (2011: profit of €2,071 thousand) and related mainly to DEME (loss of €530 thousand), Van De Maele Multitechnik NV in the Multitechnics division (profit of €591 thousand) and Terryn (loss of €138 thousand).
106
10. Income tax
Recognised in comprehensive income (in € thousands) Current tax Tax expense for the period Additions to/(releases from) provisions in previous periods Total current tax expense Deferred tax Additions to and releases from temporary differences Use of losses from previous periods Deferred tax recognised on losses for the period Deferred tax recognised on definitively taxed revenue Total deferred tax expense/(income) Total tax expense recognised in comprehensive income
2012
2011
11,953 (306) 11,647
11,571 11 11,582
(3,301) (435) (4,406) 0 (8,142) 3,505
956 539 (21) 0 1,474 13,056
2012
2011
52,247 17,759 8,817 (870) (19,337) -
69,198 23,520 1,997 (1,184) (10,433) 1,355
(309)
(4,740)
(4,380)
(3,992)
(1,688)
(1,095)
3,513
7,628
3,505 6.71%
13,056 18.90%
Reconciliation of the effective tax rate (in € thousands) Pre-tax income for the period Income tax at 33.99% Tax effect of non-deductible expenses Tax effect of non-taxable revenue Tax credits and impact of notional interest Other taxable revenue Effect of different tax rates applicable to subsidiaries operating in other jurisdictions Tax impact of using previously unrecognised losses Tax impact of adjustments to current and deferred tax relating to previous periods Tax impact of deferred tax assets on unrecognised losses for the period Tax expense and effective tax rate for the period
The tax expense amounts to €3,505 thousand in 2012, versus €13,056 thousand in 2011. The effective tax rate is 6.71% versus 18.9% in 2011. This rate is lower than the theoretical Belgian tax rate of 33.99%, mainly because of the use of previously unrecognised losses, tax credits and the impact of notional interest.
Financial report 2012 107
Recognised deferred tax assets and liabilities Assets
(in € thousands)
2012
2011
2012
28,164
223
(69,250)
(34,568)
3,744 3,920 6,849 19,283 82,149 144,109 (43,547) (77,775) 22,787
4,447 53 4,715 45,365 64,745 119,548 (36,233) (71,903) 11,412
(38) (9,967) (36) (12,273) 0 (91,564) 0 77,775 13,789
(38) (9,775) 0 (40,152) 0 (84,533) 0 71,903 (12,630)
Property, plant and equipment and intangible assets Employee benefits Provisions Fair value of derivative instruments Other items Tax losses Gross deferred tax assets/(liabilities) Unrecognized deferred tax assets Tax netting Net deferred tax assets/(liabilities)
Liabilities
2011
Tax loss carryforwards and other temporary differences for which no deferred tax assets are recognised led to a €43,547 thousand impairment of deferred tax assets. The “tax netting” item reflects the netting of deferred tax assets and liabilities per entity.
Temporary differences or tax losses for which no deferred tax assets are recognised Deferred tax assets are not recognised where it is not probable that a future taxable profit will be sufficient to allow the subsidiaries to recover their tax losses.
Deferred tax income (expense) recognised in other comprehensive income (in € thousands)
2012
2011
Deferred tax on the effective portion of changes in the fair value of cash flow hedges
4,018
5,785
Total
4,018
5,785
11. Earnings per share
Basic earnings per share are the same as diluted earnings per share due to the absence of any potential dilution in terms of ordinary shares in issue. Earnings per share is calculated as follows:
(in € thousands) Net income attributable to shareholders Comprehensive income attributable to owners of the parent Number of ordinary shares at the balance sheet date Weighted average number of ordinary shares Basic (diluted) earnings per share (€) Comprehensive income attributable to owners of the parent per share (€)
108
2012
2011
49,069 45,773 13,092,260 13,092,260 3.75
59,081 52,006 13,092,260 13,092,260 4.51
3.50
3.97
FINANCIAL POSITION 12. Intangible assets other than goodwill 2012 (in â‚Ź thousands) Acquisition costs Balance at the end of the previous period Effects of changes in foreign exchange rates Acquisitions through business combinations Acquisitions Disposals Transfers between asset items Change in scope of consolidation Balance at the end of the period Amortisation and impairment Balance at the end of the previous period Effects of changes in foreign exchange rates Amortisation during the period Impairment losses Acquisitions through business combinations Disposals Transfers between asset items Change in scope of consolidation Balance at the end of the period Net carrying amount At 1 January 2012 At 31 December 2012
Concessions, patents and licences 16,079 (28) 20 2,656 (113) 1,958
Development costs
Total
445
16,524 (28) 20 2,700 (294) 1,958
44 (181)
20,572
308
20,880
(6,390) 2 (1,549)
(295)
(6,685) 2 (1,555)
(6)
(4) 9 4
(4) 9 4
(7,928)
(301)
(8,229)
9,689 12,644
150 7
9,839 12,651
Financial report 2012 109
2011 (in € thousands) Acquisition costs Balance at the end of the previous period Effects of changes in foreign exchange rates Acquisitions through business combinations Acquisitions Disposals Transfers between asset items Change in scope of consolidation Balance at the end of the period Amortisation and impairment Balance at the end of the previous period Effects of changes in foreign exchange rates Amortisation during the period Impairment losses Acquisitions through business combinations Disposals Transfers between asset items Change in scope of consolidation Balance at the end of the period Net carrying amount At 1 January 2011 At 31 December 2011
Concessions, patents and licences
Development costs
Total
12,263 56 19 3,875 (134) 0 0 16,079
1,388 0 0 143 (2) (1,084) 0 445
13,651 56 19 4,018 (136) (1,084) 0 16,524
(4,607) 6 (1,867) 0 (13) 91 0 0 (6,390)
(292) 0 (6) 0 0 2 1 0 (295)
(4,899) 6 (1,873) 0 (13) 93 1 0 (6,685)
7,656 9,689
1,096 150
8,752 9,839
Total acquired intangible assets amount to €2,700 thousand and consist mainly of software licences and concession rights. Amortisation of intangible assets is recognised in under “amortisation” in the statement of comprehensive income and amounts to €1,555 thousand. Intangible assets meeting the definition in IAS 38 (Intangible Assets) are only recognised to the extent that future economic benefits are probable.
110
13. Goodwill (in € thousands) Acquisition costs Balance at the end of the previous period Acquisitions as part of business combinations Disposals Other changes Balance at the end of the period Impairment Balance at the end of the previous period Impairment during the period Balance at the end of the period Net carrying amount At 31 December
2012
2011
34,417 3,411 (8) 1,273 39,093
33,585 890 (58) 0 34,417
(5,692) 0 (5,692)
(5,692) 0 (5,692)
33,401
28,725
Goodwill generated through business combinations relates to the acquisitions of Remacom NV (€2,995 thousand) and Ariadne NV (€416 thousand). Other changes relate solely to the adjustment of goodwill on ETEC SA and SOGECH SA following the end of the initial recognition process relating to these two companies. In accordance with IAS 36 (Impairment of Assets), this goodwill was tested for impairment at 31 December 2012. The following assumptions were used in the impairment tests:
Business
(in € thousands)
VMA DEME subgroup Remacom Stevens ETEC EVDM Druart Amart Ariadne Other Total
Net value of goodwill
Parameters of the model applied to cash flow projections
Impairment losses recognised in the period
2012
2011
Growth rate
Growth rate (terminal value)
Discount rate
Sensitivity rate
11,115
11,115
0%
0%
9.2%
5%
-
9,968
9,969
0%
0%
9.2%
5%
-
2,995 2,682 2,135 1,660 1,292 911 416 227 33,401
0 2,682 862 1,660 1,292 911 0 234 28,725
0% 0% 0% 0% 0% 0% 0% 0%
0% 0% 0% 0% 0% 0% 0% 0%
9.2% 9.2% 9.2% 9.2% 9.2% 9.2% 9.2% 9.2%
5% 5% 5% 5% 5% 5% 5% 5%
-
Financial report 2012 111
Cash flow figures used in the impairment tests were taken from five-year budgets presented to the Executive Committee. For the sake of caution, zero growth was assumed for future years or in determining terminal value. A sensitivity analysis was carried out by varying cash flow and WACC figures by 5%. Since the value of entities is still higher than their carrying amount including goodwill, there was no indication of impairment. The DEME group, a joint venture 50%-owned by CFE, is considered as a cash generating unit. No impairment loss was identified in relation to DEME. The DEME group also carries out its own impairment tests, which did not give any indication of impairment.
14. Property, plant and equipment 2012 (in € thousands) Acquisition costs Balance at the end of the previous period Effects of changes in foreign exchange rates Acquisitions through business combinations Acquisitions Transfers between asset items Disposals Change in scope of consolidation Balance at the end of the period Depreciation and impairment Balance at the end of the previous period Effects of changes in foreign exchange rates Acquisitions as part of business combinations Depreciation Transfers between asset items Disposals Change in scope of consolidation Balance at the end of the period Net carrying amount At 1 January 2012 At 31 December 2012
Land and buildings
Fixtures and equipment
Furniture, fittings and vehicles
Other property, plant and equipment
Under construction
Total
72,416
1,326,661
48,974
0
135,904
1,583,955
18
(1,590)
0
0
(291)
(1,863)
881
2,198
1,032
0
0
4,111
4,172 1,697 (3) (853) 78,328
93,956 211,061 (50,810) 0 1,581,476
7,437 (137) (4,337) 0 52,969
0 0 0 0 0
97,663 (209,053) (6,068) 0 18,155
203,228 3,568 (61,218) (853) 1,730,928
(24,546)
(620,121)
(38,425)
0
(1,245)
(684,337)
(12)
719
(17)
0
64
754
(213)
(2,056)
(878)
0
0
(3,147)
(2,398) 680 24 204 (26,261)
(111,139) 749 49,107 39 (682,702)
(4,595) 171 3,389 7 (40,348)
0 0 0 0 0
(2) 0 0 0 (1,183)
(118,134) 1,600 52,520 250 (750,494)
47,870 52,067
706,540 898,774
10,549 12,621
0 0
134,659 16,972
899,618 980,434
At 31 December 2012, acquisitions of property, plant and equipment totalled €203,228 thousand and mainly related to DEME, forming part of the multi-year plan that was completed in 2012. The main capitalised investments were the backhoe dredger “Peter the Great”, the sea-going rock-cutter dredger “Ambiorix”, the sea-going dredger “Amazone”, the jack-up vessel “Neptune”, a high-tech jack-up vessel “Innovation” and two rapid auxiliary vessels. Investments fell by €10,340 thousand in 2012 in comparison with 2011, mainly at DEME. The net carrying amount of finance lease assets amounts to €18,859 thousand (2011: €19.344 thousand). These finance leases mainly relate to DEME, the premises of the Louis Stevens & Co NV subsidiary and the buildings and machinery of Groep Terryn NV and its subsidiaries. Depreciation on property, plant and equipment totalled €118,134 thousand (2011: €98,681 thousand). Property, plant and equipment used as collateral for certain loans totalled €318,943 thousand (2011: €274,418 thousand).
112
2011 (in â‚Ź thousands) Acquisition costs Balance at the end of the previous period Effects of changes in foreign exchange rates Acquisitions through business combinations Acquisitions Transfers between asset items Disposals Change in scope of consolidation Balance at the end of the period Depreciation and impairment Balance at the end of the previous period Effects of changes in foreign exchange rates Acquisitions as part of business combinations Depreciation Transfers between asset items Disposals Change in scope of consolidation Balance at the end of the period Net carrying amount At 1 January 2011 31 December 2011
Land and buildings
Fixtures and equipment
Furniture, fittings and vehicles
Other property, plant and equipment
Under construction
Total
55,803
1,089,104
40,786
0
209,251
1,394,944
(73)
1,594
(114)
0
22
1,429
1,321
3,785
7,555
0
41,631
54,292
15,296 721 (652) 0 72,416
63,372 239,114 (70,308) 0 1,326,661
4,963 (406) (3,810) 0 48,974
0 0 0 0 0
129,937 (239,765) (5,172) 0 135,904
213,568 (336) (79,942) 0 1,583,955
(21,250)
(589,094)
(32,395)
0
(1,735)
(644,474)
(3)
(412)
79
0
14
(322)
(1,170)
(2,846)
(6,002)
0
0
(10,018)
(2,551) 154 274 0 (24,546)
(92,714) 707 64,238 0 (620,121)
(3,785) 301 3,377 0 (38,425)
0 0 0 0 0
369 14 93 0 (1,245)
(98,681) 1,176 67,982 0 (684,337)
34,553 47,870
500,010 706,540
8,391 10,549
0 0
207,516 134,659
750,470 899,618
Financial report 2012 113
15. Investment property (in € thousands) Net carrying amount at 1 January 2012 Effects of changes in foreign exchange rates Depreciation Acquisitions Disposals Transfers between investment properties, buildings held in inventory and buildings used by the owner Net carrying amount at 31 December 2012
Gross 20,226 (189) 0 62 (1,334)
Depreciation (13,159) 0 (20) 0 51
Net 7,067 (189) (20) 62 (1,283)
(3,583)
2
(3,581)
15,182
(13,126)
2,056
At 31 December 2012, the amount of investment properties on the balance sheet was €2,056 thousand (2011: €7,067 thousand) and their estimated market value was equal to their carrying value, i.e. €2,056 thousand (2011: €7,067 thousand).
(in € thousands) Net carrying amount at 1 January 2011 Effects of changes in foreign exchange rates Depreciation Acquisitions Disposals Transfers between investment properties, buildings held in inventory and buildings used by the owner Net carrying amount at 31 December 2011
Gross 21,998 (328)
Depreciation (11,321) 17 (822) 155
Net 10,677 (311) (822) 4,554 (2,288)
(3,555)
(1,188)
(4,743)
20,226
(13,159)
7,067
4,554 (2,443)
16. Investments in associates and jointly controlled entities Associates Details of interests in Investments in associated companies are set out below: (in € thousands) Balance at the end of the previous period Changes in accounting policies Adjusted balance at the end of the previous period Acquisitions and transfers CFE group share of pre-tax income and non-controlling interests Capital increase / (decrease) Dividends Impairment Balance at the end of the period Including goodwill in Investments in associated companies
2012
2011
15,128 0 15,128 723 489 2,236 (212) 0 18,364 61
14,100 0 14,100 589 868 (248) (181) 0 15,128 61
All the entities over which the CFE group has significant influence are accounted for under the equity method. The CFE group does not have an interest in any associates whose shares are traded on a public market. The list of the most significant associates is set out in note 36.
114
The amount stated under capital increases mainly relates to contributions of capital by the DEME group and Rent-A-Port to Rentel, Otary, de Vries & van de Wiel and C-Power. The condensed financial statements of these entities are as follows:
(in € thousands) Total assets Total liabilities Net assets CFE group's share of net assets Revenue Net income for the period CFE group's share of net income for the period
2012
2011
2,132,454 2,218,889 (86,435) (18,216) 352,552 2,738 489
1,546,533 1,594,287 (47,754) (12,957) 401,097 1,951 868
As described in the accounting policies, when the CFE group’s share of losses from Investments in associated companies exceeds the carrying amount of its interest in such companies, the carrying amount is reduced to nil. Recognition of further losses is discontinued except to the extent that the CFE group has incurred obligations in respect of the associated companies.
Jointly controlled entities The CFE group accounts for jointly controlled entities (including temporary companies) using the proportional method of consolidation, and reports its interests on a line-by-line basis. The total amounts of the CFE group’s interests as included in the consolidated financial statements are as follows: (in € thousands) Total non-current assets Total current assets Total non-current liabilities Total current liabilities Operating revenue Operating expenses
2012
2011
880,426 577,132 715,311 742,247 1,215,325 (1,129,272)
795,148 515,795 665,300 645,643 1,128,694 (1,012,358)
The equity of these entities is included in the “total non-current liabilities” item and amounts to €311,916 thousand. For the execution of some contracts, the CFE group sets up temporary companies with partners. The most significant of these are THV Locobouw, Coentunnel Construction VOF, Combinatie Crommelijn VOF and SM Up-site.
Financial report 2012 115
17. Other non-current financial assets Other non-current financial assets amounts to €56,586 thousand at 31 December 2012 (2011: €30,631 thousand). They include the non-eliminated portion of project-related subordinated loans (€41,914 thousand), available for sale investments (€1,150 thousand) and receivables recognised in relation to concession projects (€13,522 thousand).
(in € thousands) Balance at the end of the previous period Change in consolidation method Acquisitions Disposals and transfers Impairment / reversals of impairment Changes in scope Effects of changes in foreign exchange rates Balance at the end of the period
2012
2011
30,631 0 29,662 (3,748) (19) 0 60 56,586
25,324 (1,090) 11,361 (4,808) (139) 0 (17) 30,631
Non-current financial assets increased by €25,955 thousand relative to 31 December 2011. This change mainly reflects a substantial increase in other non-current financial assets in the Real Estate division, such as current-account assets relating to the renovation of Solvay’s former head office (€6,770 thousand) and the development of the Van Maerlant residential complex (€10,130 thousand), along with the recognition of €13,522 thousand of receivables relating to a concession project. At 31 December 2012, the market value of other financial assets was the same as their carrying amount, i.e. €56,586 thousand. The CFE group does not hold available-for-sale investments listed on a public market. For unlisted investments, fair value is regarded as equal to acquisition cost
18. Other non-current assets At 31 December 2012 other non-current assets amounts to €9,283 thousand and included the non-current receivables detailed below:
116
(in € thousands)
2012
2011
Non-current receivables - Forem Non-current receivables - DEME current accounts Other non-current receivables (including bank guarantees) Consolidated total
718 3,223 5,342 9,283
1,312 2,213 7,398 10,923
19. Construction contracts Costs incurred added to profits less losses, along with progress billing, are determined on a contract-by-contract basis. The net amount due by or to customers is determined on a contract-by-contract basis as the difference between these two items. As described in paragraphs (M) and (V) of the section relating to material accounting policies, the costs and revenues of construction contracts are recognised in expenses and revenue respectively based on the percentage of completion of the contract activity at the closing date. The percentage of completion is calculated using the “cost to cost” method. An expected loss on a construction contract is recognised as an expense immediately. (in € thousands) Balance sheet data Advances and payments on account received Construction contracts in progress – assets Construction contracts in progress – liabilities Construction contracts in progress – net Total income and expenses to date recognised on contracts in progress Costs incurred plus profits recognised less losses recognised to date Less invoices issued Construction contracts in progress – net
2012
2011
2010
(80,849) 58,867 (23,237) 35,630
(47,298) 77,299 (58,834) 18,465
(58,685) 44,939 (30,295) 14,643
2,472,895 (2,437,265) 35,630
2,597,186 (2,578,721) 18,465
2,009,678 (1,995,035) 14,643
The excess of costs incurred over recognised losses and profits on progress billing include on the one hand, the portion of unbilled contract costs under “Trade receivables and other operating receivables” in the statement of financial position, and on the other hand, the surplus relating to construction work in progress is included in “other current assets”. The excess of progress billing over incurred costs and recognised profits and losses include on the one hand, the unbilled portion of contract costs under “Trade payables and other operating liabilities” in the statement of financial position, and on the other hand, the surplus relating to construction work in progress included in “other current liabilities”. Advances are amounts received by the contractor before the related work is performed. The amount of customer retention payments is €3,706 thousand, and is included in “Trade and other operating receivables” (see note 28.6).
20. Inventories At 31 December 2012, inventories amounted to €186,534 thousand (2011: €158,850 thousand) and broke down as follows: (in € thousands) Raw materials and auxiliary products Impairment on inventories of raw materials and auxiliary products Finished products and properties held for sale Impairment on inventories of finished products Inventories
2012
2011
27,534 (725) 162,074 (2,349) 186,534
14,423 (725) 148,071 (2,919) 158,850
The change in “raw materials and auxiliary products” resulted from an increase in inventories relating to construction projects and an increase in inventories relating to the dredging business. At 31 December 2012, no impairment was carried out on raw materials and auxiliary products. The increase in “finished products and properties held for sale” was mainly due to the acquisition, in partnership with another property developer, of the site of Solvay’s former head office in Brussels and the acquisition of a stake in the Bavière project in Liège. At 31 December 2012, impairment on properties held for sale (€570 thousand) was reversed to the income statement (see note 6) on the completion of projects.
Financial report 2012 117
21. Change in trade receivables and payables and other operating receivables and payables (in â‚Ź thousands) Trade receivables Less: provision for impairment of receivables Net trade receivables Other current receivables Consolidated total Other current assets Trade and other operating payables Other current liabilities Consolidated total Commercial and operating liabilities net of receivables
2012
2011
553,137 (15,630) 537,507 194,959 732,466 84,240 689,475 307,744 997,219 (180,513)
546,689 (7,038) 539,651 221,756 761,407 60,242 635,159 277,314 912,473 (94,594)
2012
2011
59,280 201,322 260,602
71,952 136,395 208,347
Please see note 28 for an analysis of credit risk.
22. Cash and cash equivalents (in â‚Ź thousands) Short-term bank deposits Cash in hand and at bank Cash and cash equivalents
Short-term bank deposits consist of money placed with financial institutions with a maturity originally of less than three months. This money pays interest at a floating rate, usually linked to Euribor or Eonia.
23. Grants
The CFE group did not receive any grants in 2012.
118
24. Employee benefits The CFE group contributes to pension and early retirement plans in several of the countries in which it operates. These benefits are recognised in accordance with IAS 19 and are regarded as “post-employment” and “long-term benefit plans”. At 31 December 2012, the CFE group’s net liability relating to obligations under pension and early-retirement post-employment benefits amounted to €11,953 thousand (2011: €13,028 thousand). These amounts are included in “Retirement benefit obligations and employee benefits”. This item also includes a €1,479 thousand provision (2011: €1,694 thousand) relating to share-based payments at DEME. These plans are regarded as cash-based.
Liabilities relating to obligations arising under defined-benefit pension and early retirement plans (in € thousands) Present value of funded pension obligations Fair value of plan assets Present value of funded net obligations Present value of unfunded pension obligations Present value of net obligations Unrecognised actuarial gains/(losses) Net assets/(liabilities) recognised on the balance sheet Liabilities recognised on the balance sheet
Defined-benefit 2012 (78,158) 60,863 (17,295) (1,737) (19,032) 7,645
Early retirement 2012
Defined-benefit 2011 (70,189) 56,655 (13,532) (1,716) (15,248) 2,799
(566) (566)
Early retirement 2011
(577) (577)
(11,387)
(566)
(12,449)
(577)
(11,387)
(566)
(12,449)
(577)
Change in net liabilities recognised on the balance sheet for defined-benefit pension and early retirement plans (in € thousands) Net assets/(liabilities) at 1 January Combination/acquisition of plans Changes in scope Contributions paid Expense recognised in the statement of comprehensive income Unrecognised actuarial gains/(losses) Net assets/(liabilities) at 31 December
Defined-benefit 2012
Early retirement 2012
Defined-benefit 2011
Early retirement 2011
(12,449)
(577)
(13,294)
(806)
4,805
115
3,700
367
(4,361)
(104)
(3,951)
(138)
618 (11,387)
(566)
1,096 (12,449)
(577)
Expenses recognised in other comprehensive income relating to defined-benefit pension and early retirement plans (in € thousands) Current service cost Interest expense relating to obligations Expected return on plan assets Actuarial gains/(losses) Other Total
2012
2011
2,644 3,564 (2,088) 120 121 4,361
2,675 3,092 (2,143) 89 238 3,951
The cost of pension plans in the period is included under “Remuneration and social security payments” and under net financial items. Plan assets neither include financial instruments of the group CFE nor any real estate used by the fund or occupied by the group CFE.
Financial report 2012 119
Changes in the present value of obligations related to defined-benefit pension plans (in € thousands) Present value of obligations at 1 January Current service cost Interest expense relating to obligations Amounts paid Actuarial gains/(losses) Employee contributions Transfers in/out Present value of obligations at 31 December
2012
2011
71,905 2,644 3,564 (5,643) 7,197 727 (499) 79,895
61,264 2,675 3,092 (5,409) (1,114) 696 10,701 71,905
2012
2011
56,655 4,319 4,564 727 (5,402) 0 0 60,863
49,052 (84) 4,341 696 (5,409) 8,059 0 56,655
Changes in the fair value of plan assets (in € thousands) Fair value of plan assets at 1 January Expected return on plan assets Employer contributions Employee contributions Amounts paid Transfers in/out Actuarial gains/(losses) Fair value of plan assets at 31 December
Main actuarial assumptions at the end of the period (expressed as weighted averages) (in € thousands) Discount rate at 31 December Expected return on plan assets at 31 December Expected rate of salary increases Inflation rate
2012
2011
3.50% 3.75% 3.00% < 60 years and 2.00% > 60 years 2.00%
5.00% 4.00% 3.70% < 60 years and 2.20% > 60 years 2.20%
The sensitivity analysis shows that a 25bp increase in the discount rate would reduce the present value of the obligations by 2.4% and the current service cost by 3.8%. The same sensitivity analysis shows that a 25bp increase in the inflation rate would increase the present value of the obligations by 1.3% and the current service cost by 2.1%.
120
25. Provisions other than those relating to retirement benefit obligations and non-current employee benefits At 31 December 2012, these provisions amounted to €46,499 thousand, a decrease of €11,701 thousand relative to end-2011 (€58,200 thousand). (in € thousands) Balance at the end of the previous period Effects of changes in foreign exchange rates Transfers between items Additions to provisions Used provisions Provisions reversed unused Balance at the end of the period
Onerous contracts
After-sales service
Other current liabilities
Other noncurrent liabilities
Total
16,040 76 (169) 6,925 (9,469) (1,751) 11,652
10,117 105 0 2,951 (1,315) (131) 11,727
21,430 79 (329) 1,869 (6,673) (3,935) 12,441
10,613 15 498 1,957 (1,480) (924) 10,679
58,200 275 0 13,702 (18,937) (6,741) 46,499
of which: current: 35,820 non-current: 10,679 Provisions for onerous contracts fell by €4,388 thousand to €11,652 thousand at end-2012. Provisions for onerous contracts are recognised when the expected economic benefits of certain contracts are lower than the inevitable costs attendant on compliance with obligations under those contracts. Provisions for onerous contracts are used up when the related contracts are performed. Provisions for after-sales service increased, by €1,610 thousand to €11,727 thousand, at end-2012. The change in 2012 was the result of additions to and/or releases from provisions recognised in relation to 10-year warranties. Provisions for other current liabilities fell by €8,989 thousand to €12,441 thousand at end-2012. These include provisions for current litigation (€5,251 thousand), provisions for work still to be performed (€931 thousand), provisions for social security liabilities (€99 thousand) and provisions for other current liabilities (€6,159 thousand). As regards other current liabilities, given that talks with customers are ongoing, we cannot provide more information on the assumptions made or on when the outflow of funds is likely to happen. Provisions for other non-current liabilities include the provisions for liabilities not directly related to site operations in progress.
26. Contingent assets and liabilities Based on available information, we are not aware of any contingent assets or liabilities arising between the closing date and the date on which the financial statements were approved by the Board, with the exception of contingent assets or liabilities related to construction contracts (for example, the group’s claims against customers or claims by subcontractors) that can be described as normal in the construction sector and which are processed by applying the method of the percentage of completion during the recognition of revenue.
Financial report 2012 121
27. Net financial debt
27.1. Net financial debt, as defined by the group, breaks down as follows: 31/12/2012
(in € thousands)
Bank loans and other financial debt Bonds Drawings on credit facilities Borrowings under finance leases Total long-term financial debt Short-term financial debt Cash equivalents Cash Net short-term financial debt/(cash) Total net financial debt Derivative instruments used as interest-rate hedges
31/12/2011
Noncurrent
Current
Total
Noncurrent
Current
Total
(331,016) (100,000) (35,000) (13,104) (479,120) (479,120)
(76,807) (2,519) (3,000) (3,482) (85,808) (95,665) 59,280 201,322 164,937 79,129
(407,823) (102,519) (38,000) (16,586) (564,928) (95,665) 59,280 201,322 164,937 (399,991)
(319,801) (99,500) (15,595) (434,896) (434,896)
(62,718) (9,500) (4,257) (76,475) (47,793) 71,952 136,395 160,554 84,079
(382,519) (109,000) (19,852) (511,371) (47,793) 71,952 136,395 160,554 (350,817)
(23,070)
(3,375)
(26,445)
(14,764)
(1,760)
(16,524)
€141 million of long-term financial debt was not guaranteed by security or mortgages. 27.2. Debt maturity schedule Less than 1 year
Between 1 and 2 years
Between 2 and 3 years
Between 3 and 5 years
Between 5 and 10 years
More than 10 years
Total
(76,807)
(105,319)
(79,376)
(90,839)
(55,482)
0
(407,823)
Bonds Drawings on credit facilities
(2,519) (3,000)
0 0
0 0
0 (35,000)
(100,000) 0
0 0
(102,519) (38,000)
Borrowings under finance leases
(3,482)
(3,183)
(2,119)
(2,601)
(5,098)
(103)
(16,586)
Total long-term financial debt
(85,808)
(108,502)
(81,495)
(128,440)
(160,580)
(103)
(564,928)
Short-term financial debt Cash equivalents Cash
(95,665) 59,280 201,322
-
-
-
-
-
(95,665) 59,280 201,322
Net short-term financial debt
164,937
-
-
-
-
-
164,937
Change in net financial debt
79,129
(108,502)
(81,495)
(128,440)
(160,580)
(103)
(399,991)
(in € thousands)
Bank loans and other financial debt
The present value of finance lease obligations amounts to €3,482 thousand (2011: €4,257 thousand). These finance leases mainly relate to DEME, the premises of the Louis Stevens & Co NV subsidiary and the buildings and machinery of Groep Terryn NV and its subsidiaries.
122
27.3. Credit facilities and bank term loans At 31 December 2012, the CFE group had confirmed long-term bank credit facilities of €100 million, of which €35 million were drawn at end-2012. On 21 June 2012, CFE issued €100 million of bonds maturing on 21 June 2018 and paying a coupon of 4.75%. Bank loans and other financial debts mainly concern DEME and loans relating to real-estate projects, and are without recourse against CFE.
27.4. Financial covenants Bilateral loans are subject to specific covenants that take into account factors such as financial debt and the ratio of debt to equity or noncurrent assets, as well as cash flow. The group complied with all these covenants at end-2012.
28. financial risk management 28.1. Interest rate risk
The interest rate risk management is insured within the group by making a distinction between concessions, property management, holding, construction activities, multitechnical activities and dredging (DEME). As far as the concessions is concerned, the interest rate risk management is performed considering two horizons: On the one hand, a long-term horizon to secure and optimize the economic balance of the concession, and on the other hand, a short term horizon to optimize the average cost of debt. Derivative products are used such as interest rate swaps in order to hedge the interest rate risk. These hedging instruments equal at maximum the same notional amounts and the same due dates as the hedged debts. From an accounting point of view, these products are qualified as hedging operations. As far as dredging is concerned, the group CFE, through its subsidiary DEME, has to face important financings in the context of the dredges investments. The objective is to reach an optimal balance between the financing cost and the volatility of the financial results. DEME uses derivative instruments as interest rate swaps in order to hedge the interest rate risk. These hedging instruments equal generally the same notional amounts and generally have the same due dates as the hedged debts. From an accounting point of view, these products will not always be qualified as hedging operations. The construction, multitechnical and holding activities are characterized by an excess of cash which partially compensate the property commitments. The management is mainly centralized through the cash pooling. Effective average interest rate before considering derivative products (in € thousands)
Fixed rate
Floating rate
Total
Type of debts
Amounts
Quota
Rate
Amounts
Quota
Rate
Amounts
Quota
Rate
Bank loans and other financial debts Bonds Credit line used
15,516 100,000
11.75% 75.70%
4.57% 4.75%
394,826
91.22%
2.16%
38,000
8.78%
2.25%
410,342 100,000 38,000
72.64% 17.70% 6.72%
2.25% 4.75% 2.25%
16,586
2.94%
2.51%
564,928
100%
2.70%
Loans related to finance lease Total
16.586
12.55%
2.51%
132.102
100%
4.45%
432,826
100%
2.17%
Financial report 2012 123
Effective average interest rate after considering floating derivative products Floating rate capped + Floating rate inflation
(in € thousands) Type of debts
Amounts
Quota
Rate
Amounts
Quota
Rate
Bank loans and other financial debts
341.150
70.66%
4.18%
69.192
87.37%
2,07%
Bonds
100,000
20.72%
4.75%
Credit line used
25.000
5.18%
2.33%
Loans related to finance lease
16,586
3.44%
4.89%
482,736
100%
3.24%
Total
Total
Fixed rate
10.000
79,192
12.63%
100%
2,33%
2.10%
Amounts
3.000
3,000
Quota
100%
100%
Rate
1.33%
1.33%
Amounts
Quota
Rate
410.342
72.64%
3.82%
100,000
17.70%
4.75%
38.000
6.72%
2.25%
16,586
2.94%
4.89%
564,928
100%
3.07%
28.2. Sensibility to the interest rate risk The group CFE is subject to the risk of interest rates fluctuation on its result considering: • cash flows relative to financial instruments at floating rate after hedging ; • financial instruments at fixed rate, recognized at fair value in the statement of financial position through the result ; • derivative instruments non qualified as hedge. Nevertheless, the variation in the value of derivatives qualified as cash flow hedges does not impact directly the profit& loss accounts and is accounted for in equity. The following analysis is performed by supposing that the amount of financial debts and derivatives as per December 31, 2012 is constant over the year. A variation of 50 basis points in interest rate at the closing date would have had as consequence an increase or a decrease of the equity and result for the amounts indicated here below. For the needs of the analysis, the other parameters have been supposed constant. 31/12/2012 (in € thousands)
Non current debts (+portion due within the year) with variable rate after accounting hedge Net short term Financial debt (*) Derivatives not qualified as hedge Derivatives qualified as highly potential or certain cash flow (*) excluding cash at bank and in hand
124
Result Impact of the sensitivity calculation +50bp
Impact of the sensitivity calculation -50bp
346
-346
478 479
-478 -214
Equity Impact of the sensitivity calculation +50bp
5,905
Impact of the sensitivity calculation -50bp
-3,445
28.3. Description of cash flow hedge operations Instruments qualified as cash flow hedges at the closing date have the following characteristics: For construction, multitechnical, property and holding activities: 31/12/2012 (in â&#x201A;Ź thousands)
<1 year
Between 1 and 2 years
Between 3 and 5 years
> 5 years
Fair value asset
Notional
Fair value liability
Swap of interest rate receive floating rate and pay fixed rate Interest rate options (cap, collar) Interest rate derivatives hedge of highly probable : estimated cash flow Swap of interest rate receive floating rate and pay fixed rate
50,000
50,000
(747)
50,000
50,000
(747)
Interest rate options (cap, collar) Interest rate derivatives: hedge of certain cash flow
31/12/2011 (in â&#x201A;Ź thousands)
Swap of interest rate receive floating rate and pay fixed rate Interest rate options (cap, collar) Interest rate derivatives hedge of highly probable : estimated cash flow Swap of interest rate receive floating rate and pay fixed rate
Fair value asset
Fair value liability
<1 year
Between 1 and 2 years
Between 3 and 5 years
> 5 years
-
45,000
20,000
-
65,000
-
(562)
-
45,000
20,000
-
65,000
-
(562)
14,500
3,000
57,000
-
74,500
-
(488)
14,500
3,000
57,000
-
74,500
-
(488)
Notional
Interest rate options (cap, collar) Interest rate derivatives : hedge of certain cash flow
Financial report 2012 125
For dredging activities 31/12/2012 (in â&#x201A;Ź thousands) Swap of interest rate receive floating rate and pay fixed rate Interest rate options (cap, collar) Interest rate derivatives hedge of highly probable : estimated cash flow Swap of interest rate receive floating rate and pay fixed rate Interest rate options (cap, collar) Interest rate derivatives : hedge of certain cash flow
Between 3 and 5 years
Fair value asset
Fair value liability
<1 year
Between 1 and 2 years
10,273
273
10,547
(1,031)
10,273
273
10,547
(1,031)
71,526
150,554
122,577
27,391
372,048
(22,335)
71,526
150,554
122,577
27,391
372,048
(22,335)
> 5 years
Notional
31/12/2011 (in â&#x201A;Ź thousands) Swap of interest rate receive floating rate and pay fixed rate Interest rate options (cap, collar) Interest rate derivatives hedge of highly probable: estimated cash flow Swap of interest rate receive floating rate and pay fixed rate Interest rate options (cap, collar) Interest rate derivatives : hedge of certain cash flow
Fair value asset
Fair value liability
58,643
-
(682)
-
58,643
-
(682)
69,257
252,823
326,330
-
(14,937)
69,257
252,823
326,330
-
(14,937)
<1 year
Between 1 and 2 years
Between 3 and 5 years
> 5 years
10,250
10,000
38,393
-
10,250
10,000
38,393
2,000
2,250
2,000
2,250
Notional
28.4. Exchange rate risks Nature of the risks at which the group is exposed The group CFE and its subsidiaries does not practice a hedge on foreign exchange rates for its construction, property and multitechnical activities as their markets are mainly situated within the euro zone. DEME practices exchange rate hedges taking into account the international character of the activity and the execution of markets in foreign currency.Currencies subjected to exchange risk are listed in note 2. When exchange rate risk related to a risk exposure at operational level would occur, the group policy consists in limiting the exposure to the fluctuation of foreign currencies.
126
Repartition of the long term financial debts by currency The outstanding debts (without considering finance lease debts which are mainly in Euro) by currency are: (in € thousands) Euro US Dollar Other currencies Total long term debts
2012
2011
557,582 2,511 4,835 564,928
508,717 2,654 0 511,371
The following table discloses the fair value and the notional amount of exchange rate instrument issued (forward sales/purchase agreements) (+: asset / - liability): Notional (in € thousands) Forward purchase Forward sale
Fair value
USD US Dollar
Other related to USD
GBP Pound
Other
Total
USD US Dollar
Other related to USD
GBP Pound
Other
Total
54,682
625
8,255
2,150
65,712
(171)
4
146
2
(21)
53,163
55
4,975
129,104
187,298
(2,156)
0
926
(211)
(1,442)
The fair value variation of exchange rate instruments is considered as a construction costs. This variation is presented as an operational result. The group CFE, in particular through its subsidiary DEME, is exposed to exchange rate fluctuation risk on its result. The following analysis is performed supposing that the amount of financial assets/liabilities and derivatives as per December, 31 2012 is constant over the year. A variation of 5% of exchange rate (appreciation of the EUR) at closing date would have as a consequence an increase or a decrease of the equity and the result for the amounts disclosed here below. For the needs of the analysis, the other parameters have been supposed constant. 31/12/2012 Result (in € thousands)
Non current debts (+portion due within the year) with variable rate after accounting hedge Net short term Financial debt Working Capital
Impact of sensitivity calculation depreciation of 5% of the EUR
Impact of sensitivity calculation appreciation of 5% of the EUR
319
(-303)
(-464) (-1,171)
434 1,115
28.5. Risk related to raw materials Raw materials and furniture incorporated into the works constitute an essential element of the cost price. Although some markets include price revisions clauses or revision formulas and that the group CFE sets up, in some cases, hedges of furniture prices (gas-oil), the risk of price fluctuation of raw materials can not be completely excluded.
Financial report 2012 127
DEME is hedged against gas-oil fluctuations through the purchase of options or forward agreement on fuel. The fair value variation of these instruments is considered as construction costs. This variation is presented as an operating result. The fair value of these instruments amounts to -887 thousand Euro at the end of 2012 (in comparison with -221 thousand Euro in 2011).
28.6. Credit and counterparty risk The group CFE is exposed to credit risk in case of insolvency of its clients. It is exposed to the counterparty risk in the context of cash deposits, subscription of negotiable share receivables, financial receivables and derivative products. In addition, the group CFE set up procedures in order to avoid and limit the concentration of credit risk. For large-scale export, if the country is eligible and the risk covered by credit insurance, DEME and CFE cover themselves regularly through competent bodies in this matter (Office National du Ducroire). Financial instruments The group has defined a system of investment limits in order to monitor the counterparty risk. This system determines maximum amounts eligible for investment by counterparty defined according to their credit notations published by Standard & Poor’s and Moody’s. These limits are regularly monitored and updated.
Customers Regarding the risk on trade receivables, the group defined procedures in order to limit the risk. It should be noted that a large part of the consolidated sales is realized with public or para-public clients. In addition, CFE considers that the concentration of the counterparty risk for clients is limited due to the large number of clients. In order to reduce the current risk, the group CFE monitors regularly its outstanding clients and adapts its position towards them. The credit risk is however not totally eliminated, but is limited. The analysis of the delay of payment at the end of 2012 and 2011 arises as follows:
As per December, 31 2012 (in € thousands) Customers – Invoiced incomes Customers – Deduction of guarantee Gross total Prov. – Customers – Invoiced incomes Prov. – Customers – Deduction of guarantee Total provisions Total net amounts
128
Closing
Not past due
< 3 months
> 3 months &<6 months
> 6 months & < 12 months
> 1 year
537,817
296,629
116,208
36,210
42,094
46,676
3,706
1,955
1,705
0
1
45
541,523
298,584
117,913
36,210
42,095
46,721
(15,587)
(14,848)
(748)
(532)
(320)
861
(44)
0
0
0
0
(44)
(15,631) 525,892
(14,848) 283,736
(748) 117,165
(532) 35,678
(320) 41,775
817 47,538
As per December, 31 2011 (in € thousands) Customers – Invoiced incomes Customers – Deduction of guarantee Gross total Prov. – Customers – Invoiced incomes Prov. – Customers – Deduction of guarantee Total provisions Total net amounts
Closing
Not past due
< 3 months
> 3 months &<6 months
> 6 months & < 12 months
> 1 year
533,090
314,143
78,882
65,782
18,343
55,940
5,190
3,736
242
25
415
772
538,280
317,879
79,124
65,807
18,758
56,712
(6,974)
(573)
(6)
(50)
(397)
(5,948)
(64)
0
0
(23)
0
(41)
(7,038) 531,242
(573) 317,306
(6) 79,118
(73) 65,734
(397) 18,361
(5,989) 50,723
The overdue amounts mainly relate to additional works and subsequent contracts modifications accepted by the customers, but that are still subject to budgetary inscriptions or that are part of a broader negotiations process. 28.7. Liquidity risk The liquidity crunch and the difficulties to obtain credit at acceptable economical conditions are still actual concerns. CFE could keep its positions during the exercise by managing its treasury in an intransigent way. Information sessions designated for the 150 leading executives have been organised with the topics of the liquidity and the daily management of the treasury. Procedures for the treasury management have been updated and the managers of subsidiaries or branches are implicated in the treasury forecasts plan and in its good achievement.
Financial report 2012 129
28.8. Carrying amounts and fair value by accounting category The following table indicates the carrying amounts and the fair value in the balance sheet for assets and liabilities by accounting categories defined following IAS 39: Financial instruments available for sales
Loans and trade receivables at amortised costs
Total of carrying amount
Non current financial assets
1,150
56,437
57,587
57,587
Investments (1) Financial loans and trade receivables (1) Interest rate derivatives – cash flow hedges Current financial assets Interest rate derivatives – non hedge Trade and other receivables Cash management financial assets Cash equivalents (2) Cash at bank and in hand (2) Total assets Non current financial debts Bonds Financial debts Interest rate derivatives – cash flow hedges Other derivatives instruments Current financial liabilities
1,150
1,150
1,150
56,437
56,437
56,437
993,068
993,221
993,221
732,466
732,466
732,466
153
153
52,280 201,322 1,050,808 611,973 100,000 479,120
52,280 201,322 1,050,808 618,473 106,500 479,120
December, 31 2012 (in € thousands)
Interest rate derivatives – highly probable projected cash flow hedges Interest rate derivatives – cash flow hedges Exchange rate derivatives – non cash flow hedges Other derivatives instruments – non hedge Trade payables and other operating debts Financial debts Total liabilities
Financial instruments not designated as hedging instruments
Derivatives designated as hedging instruments
153
153
153 9,783
1,150 23,070
52,280 201,322 1,049,505 579,120 100,000 479,120
Reële waarde van de categorie
23,070
Niveau 2
23,070
9,783 875,149
Niveau 3
9,783 875,149
1,031
1,031
Niveau 2
1,031
1,581
1,581
Niveau 2
1,581
1,589
1,589
Niveau 2
1,589
23,070 9,783 4,201
13,984
870,948
23,070
689,475
689,475
689,475
181,473 1,450,068
181,473 1,487,122
181,473 1,493,622
(1) Include in the headings “other non current financial assets” and “other non current assets” (2) Include in the heading “cash and cash equivalents”
130
Fair value measurements of financial assets by level
29. Operating leases The CFE group’s obligations relating to non-cancellable operating leases are as follows: (in € thousands) Expiring in less than 1 year Expiring in more than 1 year and up to 5 years Expiring in more than 5 years Total
2012
2011
5,732 8,847 12,543 27,122
5,288 8,770 12,835 26,893
30. Other commitments given Total commitments given by the CFE group at 31 December 2012, other than real security interests, totalled €743,636 thousand (2011: €592,021 thousand) and break down as follows: (in € thousands) Performance guarantees and performance bonds (a) Bid bonds (b) Repayment of advance payments (c) Retentions (d) Deferred payments to subcontractors and suppliers (e) Other commitments given - including €55,234 thousand of corporate guarantees at DEME Total
2012
2011
523,470 7,303 11,227 74,094 17,909
312,075 13,830 15,057 30,840 27,784
109,633
192,435
743,636
592,021
a) Guarantees given in relation to the performance of works contracts. If the construction entity fails to perform, the bank (or insurance company) undertakes to compensate the customer to the extent of the guarantee. b) Guarantees provided as part of tenders relating to works contracts. c) Guarantees provided by a bank to a customer guaranteeing the repayment of advance payments in relation to contracts (mainly at DEME). d) Security provided by a bank to a client to replace the use of retention money. e) Guarantee covering the settlement of a liability to a supplier or subcontractor.
31. Other commitments received (in € thousands) Performance guarantees and performance bonds Other commitments received Total
2012
2011
47,061 13,406 60,467
35,930 63,629 99,559
Financial report 2012 131
32. Litigation The group CFE is exposed to a number of claims that may be regarded as normal in the construction industry. In most cases, the CFE group seeks to settle with the other party, and this substantially reduced the number of legal proceedings in 2012. The CFE group also tries to recover amounts from its customers. However, it is not possible to estimate these potential assets. Arbitration proceedings initiated at the request of a client in relation to a major Dutch project came to an end. The parties adopted a new deadline to reach a balanced, definitive agreement in the first half year 2013.
33. Related parties -- VINCI Construction, a simplified limited company incorporated in France, is the main shareholder in the CFE group and owns 6,132,880 shares, equal to 46.84% of the CFE group’s capital. -- Key personnel consist of the executives of CFE and the Managing Director. The amount recognised as an expense relating to definedcontribution pension plans and other benefits for key personnel amounted to €4,464.7 thousand for 2012 (2011: €3,866.2 thousand). This amount includes fixed remuneration (€2,695.8 thousand, 2011: €2,343.6 thousand), variable remuneration (€796.1 thousand, 2011: €785.9 thousands), various insurance payments (supplementary pension plan, hospitalisation, workplace accidents, accidents outside work, home-based nursing care - €738.5 thousand, 2011: €520.6 thousand) and company car expenses (€234.3 thousand, 2011: €216.1 thousand). -- CFE entered into a service contract with its main shareholder VINCI Construction on 24 October 2001. Remuneration due by CFE under this contract amounted to €1,190 thousand in 2012 and has been paid in full. -- There are no transactions with the Managing Director other than relating to remuneration. There are no transactions with Frédéric Claes SA, Artist Valley SA or Kerhelco SPRL other than relating to the remuneration of the executives representing these companies. The services billed by the company Artist Valley SA for the organisation of events have been established at the current price of market. -- For the performance of some contracts, the CFE group sets up temporary companies with partners. The CFE group also provides staff and equipment to these entities and carries out onward invoicing of expenses. Other amounts invoiced to these entities totalled €26,605 thousand in 2012 and are included in the “Revenue from auxiliary activities” item. -- At 31 December 2012, the CFE group had joint control over DEME NV and Rent-A-Port NV and their subsidiaries. Please see note 36 for a list of the main jointly controlled entities. These entities are consolidated proportionally. -- In 2011, Ackermans & van Haaren and CFE extended their shareholder co-operation agreement for a five-year period. The aim of this agreement is to manage DEME as equal partners. The DEME group has from autonomous management powers. The shareholders are equally represented on its Board of Directors and on its Executive and Audit Committees. DEME is financially autonomous and CFE has not made any advance or financial commitment to this subsidiary.
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34. Statutory auditors’ fees
The remuneration paid to statutory auditors in respect of the whole group in 2012, including CFE SA, amounted to: Deloitte (in € thousands) Audit Statutory audit certification and examination of individual company and consolidated accounts Related work and other audits Subtotal, audit Other services Legal, tax and employment Other Subtotal, other services Total statutory auditors' fees:
Amount
Other %
Amount
%
736.0
77.22%
402.1
50.81%
159.2
16.71%
40.1
5.07%
895.2
93.92%
442.2
55.88%
28.8 29.1 57.9 953.1
3.02% 3.06% 6.08% 100%
296.7 52.6 349.3 791.5
37.48% 6.64% 44.12% 100%
35. Material post-balance sheet events In January 2013, DEME issued €200 million of 6-year bonds (at 100%). This enabled it to restructure some of its existing debt and diversify its sources of financing. In January 2013, CFE acquired the remaining shares in Van De Maele Multi-techniek NV that it did not already own for €1.4 million.
Financial report 2012 133
36. Companies owned by the CFE group List of the largest fully consolidated subsidiaries Name Belgium AANNEMINGEN VAN WELLEN NV ABEB NV AMART SA ARIADNE NV BATIMENTS ET PONTS CONSTRUCTION SA BATIPONT IMMOBILIER SA BE.MAINTENANCE SA BENELMAT SA BRANTEGEM NV BRUSILIA BUILDING NV CONSTRUCTION MANAGEMENT SA ENGEMA SA ETABLISSEMENTS DRUART SA ETEC SA GROEP TERRYN NV HDP CHARLEROI SA INTERNATIONAL FINANCE CENTER CFE SA LOUIS STEVENS NV NIZET ENTREPRISES SA PRE DE LA PERCHE SA REMACOM NV SOGESMAINT – CBRE SA SOGECH SA VAN DE MAELE MULTI-TECHNIEK NV VAN MAERLANT SA VANDERHOYDONCKS NV VMA NV VOLTIS SA Luxembourg COMPAGNIE LUXEMBOURGEOISE D’ENTREPRISES CLE SA COMPAGNIE LUXEMBOURGEOISE IMMOBILIERE CLİ SA COMPAGNIE IMMOBILIERE DE WEIMERSKIRCH SA SOCIETE FINANCIERE D’ENTREPRISES SFE SA SOGESMAINT CBRE LUXEMBOURG SA Hungary CFE HUNGARY CONSTRUCTION LLC VMA HUNGARY Netherlands CFE NEDERLAND BV GEKA BV Poland CFE POLSKA S.P. ZOO BPI OBOZOWA VMA POLSKA Qatar CFE MIDDLE EAST CO. WLL Romania CFE CONTRACTING AND ENGINEERING SRL Slovakia CFE SLOVAKIA STAVEBNA FIRMA VMA SLOVAKIA SRO Chad CFE TCHAD Tunisia CONSTRUCTION MANAGEMENT TUNISIE SA
Head office
GROUP INTEREST (ECONOMIC INTEREST)
Kapellen Antwerp Brussels Opglabbeek Brussels Brussels Brussels Limelette Alost Brussels Brussels Brussels Péronne-lez-Binche Manage Moorslede Brussels Brussels Halen Louvain-la-Neuve Brussels Beervelde (Ghent) Brussels Manage Meulebeke Brussels Alken Sint-Martens-Latem Louvain-la-Neuve
100% 100% 100% 100% 100% 100% 100% 100% 65.04% 100% 100% 100% 100% 100% 55.04% 100% 100% 100% 100% 100% 100% 66.014% 100% 64.95% 100% 100% 100% 100%
Strassen Strassen Strassen Strassen Strassen
100% 100% 100% 100% 66.014%
Boedapest Boedapest
100% 100%
Dordrecht Dordrecht
100% 100%
Warsaw Warsaw Warsaw
100% 98% 100%
Doha
100%
Bucharest
100%
Bratislava Trencin
100% 100%
Ndjamena
100%
Tunis
99.96%
With the exception of Aannemingen Van Wellen NV, which has a 30 November year end, and Van De Maele Multi-techniek NV, which has a 30 June year end, all subsidiaries have a 31 December year end.
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List of the largest proportionally consolidated, jointly controlled entities Name Belgium BARBARAHOF NV FONCIERE DE BAVIERE SA BAVIERE DEVELOPPEMENT SA DREDGING, ENVIRONMENTAL AND MARINE ENGINEERING NV and its subsidiaries ESPACE MIDI SA ESPACE ROLIN SA IMMOANGE SA IMMOMAX SA IMMOMAX II SA IMMO KEYENVELD I SA IMMO KEYENVELD II SA IMMO PA 33 1 SA IMMO PA 33 2 SA IMMO PA 44 1 SA IMMO PA 44 2 SA IMMOBILIERE DU BERREVELD SA LA RESERVE PROMOTION NV LES JARDINS DE OISQUERCQ SPRL LES 2 PRINCES DEVELOPMENT SA PROJECT RK BRUGMANN NV RENT-A-PORT NV and its subsidiaries SOGESMAINT COMPANY MANAGEMENT SPRL SOUTH CITY HOTEL SA VICTORESTATE SA VICTORPROPERTIES SA Luxembourg ELINVEST SA CHATEAU DE BEGGEN SA Hungary BETON PLATFORM KFT Nigeria COBEL CONTRACTING NIGERIA Ltd Tunisia BIZERTE CAP 3000 SA and its subsidiary
HEAD OFFICE
GROUP INTEREST (ECONOMIC INTEREST)
Louvain Liège Liège
40% 30% 30%
Zwijndrecht
50%
Brussels Brussels Brussels Brussels Brussels Brussels Brussels Brussels Brussels Brussels Brussels Brussels Kapellen Brussels Brussels Antwerp Antwerp Brussels Brussels Brussels Brussels
20% 33.33% 50% 47% 47% 50% 50% 50% 50% 50% 50% 50% 33% 50% 50% 50% 45% 32.34% 20% 50% 50%
Strassen Strassen
50% 50%
Budapest
50%
Lagos
50%
Tunis
25%
Financial report 2012 135
List of the largest entities accounted for under the equity method Name Belgium INVESTISSEMENT LEOPOLD LOCORAIL NV PPP BETRIEB SCHULEN EUPEN SA PPP SCHULEN EUPEN SA VM PROPERTY I SA VM PROPERTY II SPRL VAN MAERLANT RESIDENTIAL SA VM OFFICE SA TZZ NV Netherlands COENTUNNEL COMPANY BV
HEAD OFFICE
GROUP INTEREST (ECONOMIC INTEREST)
Brussels Wilrijk Eupen Eupen Brussels Brussels Brussels Brussels Bruges
24.14% 25.00% 25.00% 19.00% 40.00% 40.00% 40.00% 40.00% 38.90%
Amsterdam
20.50%
Statement of the true and fair nature of the financial statements and the true and fair nature of the presentation in the management report (Article 12(2) and 12(3) of Belgium’s royal decree of 14/11/2007 relating to the obligations of issuers of financial instruments listed for trading on a regulated market) We verklaren, namens en voor rekening van Aannemingsmaatschappij CFE NV en onder verantwoordelijkheid van de maatschappij dat, We attest, in the name and on behalf of Compagnie d’Entreprises CFE SA and under that company’s responsibility, that, to our knowledge, 1. the financial statements, prepared in accordance with the applicable accounting standards, give a true and fair view of the assets, financial position and results of Compagnie d’Entreprises CFE SA and of the companies included in its scope of consolidation; 2. the management report contains a true and fair presentation of the business, results and position of Compagnie d’Entreprises CFE SA and of the companies included in its scope of consolidation, along with a description of the main risks and uncertainties to which they are exposed.
Signatures
Name: Function:
Jacques Ninanne Renaud Bentégeat Executive Corportate Vice President Managing Director Administrative and Financial Director
Date: 27 February 2013
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General information about the company and its capital Company: Compagnie d’Entreprises CFE Head office: avenue Herrmann-Debroux 40-42, 1160 Brussels Telephone: +32 2 661 12 11 Legal form: public limited company (société anonyme) Incorporated under Belgian law Date of incorporation: 21 June 1880 Duration: indefinite Accounting period: from 1 January to 31 December Commercial register entry: RPM Brussels 0400 464 795 – VAT 400.464.795 Place where legal documentation can be consulted: head office.
Corporate purpose (article 2 of the articles of association) “ The purpose of the company is to study and execute any work or construction within each and every of its specialist areas, in particular electricity and the environment, in Belgium or abroad, singly or jointly with other natural or legal persons, for its own account or on behalf of third parties belonging to the public or private sector.
I t may also perform services related to these activities, directly or indirectly operate them or license them out or carry out any purchase, sale, rent or lease operation whatsoever in respect of such undertakings.
I t may directly or indirectly acquire, hold or sell equity interests in any company or undertaking existing now or in the future by way of acquisition, merger, spin-off or any other means.
I t may carry out any commercial, industrial, administrative or financial operations or operations involving movable or immovable property that are directly or indirectly related to its purpose, even partially, or that could facilitate or develop that purpose, either for itself or for its subsidiaries.
T he shareholders’ meeting may change the corporate purpose subject to the conditions specified in Article five hundred and fifty-nine of the Belgian Companies Code.”
Financial report 2012 137
Statutory auditor’s report to the shareholders’ meeting on the consolidated financial statements for the year ended 31 December 2012 To the shareholders As required by law, we report to you on the statutory audit mandate which you have entrusted to us. This report includes our report on the consolidated financial statements as defined below together with our report on other legal and regulatory requirements.
Report on the consolidated financial statements – unqualified opinion We have audited the accompanying consolidated financial statements of Compagnie d’Entreprises CFE SA (“the company”) and its subsidiaries (jointly “the group”), prepared in accordance with International Financial Reporting Standards as adopted by the European Union and with the legal and regulatory requirements applicable in Belgium. These consolidated financial statements comprise the consolidated statement of financial position as at 31 December 2012, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, as well as the summary of significant accounting policies and other explanatory notes. The consolidated statement of financial position shows total assets of 2,400 million EUR and the consolidated income statement shows a consolidated profit (group share) for the year then ended of 49 million EUR. Responsibility of the board of directors for the preparation of the consolidated financial statements DThe board of directors is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union and with the legal and regulatory requirements applicable in Belgium, and for such internal control as the board of directors determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Statutory auditor’s responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the statutory auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the group’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the group’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the board of directors, as well as evaluating the overall presentation of the consolidated financial statements. We have obtained from the company’s officials and the board of directors the explanations and information necessary for performing our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Unqualified opinion In our opinion, the consolidated financial statements of Compagnie d’Entreprises CFE SA give a true and fair view of the group’s net equity and financial position as of 31 December 2012, and of its results and its cash flows for the year then ended, in accordance with International Financial Reporting Standards as adopted by the European Union and with the legal and regulatory requirements applicable in Belgium.
Report on other legal and regulatory requirements The board of directors is responsible for the preparation and the content of the directors’ report on the consolidated financial statements. In the framework of our mandate, our responsibility is to verify, for all significant aspects, the compliance with some legal and regulatory requirements. On this basis, we provide the following additional comment which does not modify the scope of our audit opinion on the consolidated financial statements: The directors’ report on the consolidated financial statements includes the information required by law, is, for all significant aspects, in agreement with the consolidated financial statements and is not in obvious contradiction with any information obtained in the performance of our mandate. Diegem, 28 February 2013 The statutory auditor
________________________________
DELOITTE Bedrijfsrevisoren / Reviseurs d’Entreprises BV o.v.v.e. CVBA / SC s.f.d. SCRL Represented by Pierre-Hugues Bonnefoy
138
Parent-company financial statements
Parent-company statements of financial position and comprehensive income Year ended 31 December (in â&#x201A;Ź thousands) Non-current assets Start-up costs Intangible assets Property, plant and equipment Financial assets Related parties Other Current assets Receivables at more than 1 year Inventories and work in progress Receivables at up to 1 year - Trade receivables - Other receivables Cash investments Cash equivalents Accrued expense & income Total assets Equity Share capital Share premium Revaluation surplus Reserves Retained earnings/(losses) Provisions and deferred tax Liabilities Liabilities at more than 1 year Liabilities at up to 1 year - Financial debt - Trade payables - Tax liabilities and downpayments on orders - Other payables Deferred expense & income Total equity and liabilities
2012
2011
371,723 178 3,072 6,232 362,241 358,247 3,994 284,942 3,203 102,762 153,511 115,639 37,872 5,583 15,080 4,803 656,665 172,275 21,375 62,606 12,395 21,477 54,422 46,257 438,113 117,577 319,406 6,221 128,723 94,154 90,308 1,150 656,665
306,139 156 3,052 6,547 296,384 294,900 1,484 316,370 380 91,371 193,897 155,627 38,270 3,980 23,838 2,904 622,509 163,991 21,375 62,606 12,395 21,477 46,138 53,020 405,498 42,945 359,078 9,500 128,776 95,671 125,131 3,475 622,509
Financial report 2012 139
Year ended 31 December (in € thousands) NET INCOME Sales of goods and services Cost of goods sold and services provided - Merchandise - Services and other goods - Remuneration and social security payments - Depreciation, amortisation, impairment and provisions - Other Operating income Financial income Financial expense Recurring pre-tax income Non-recurring income Non-recurring expenses Pre-tax income Tax (current and adjustments) Net income APPROPRIATION OF INCOME Net income Retained earnings Dividend Legal reserve Retained earnings carried forward
2012
2011
407,806 (408,527) (302,840) (37,562) (66,864) 3,415 (4,676) (721) 31,660 (7,366) 23,574 44 (273) 23,345 (4) 23,341
431,649 (430,986) (304,580) (38,876) (73,193) (3,628) (10,709) 663 37,134 (6,372) 31,425 696 (175) 31,946 190 32,136
23,340 46,138 (15,056)
32,136 29,058 (15,056) 0 46,138
54,422
Analysis of statements of financial position and comprehensive income CFE SA’s revenues fell slightly in 2012. This was mainly due to lower business levels in civil engineering. Major infrastructure contracts won four years ago will gradually come to an end. Operating income was affected by difficulties experienced by BAGECI, and turned negative. The company made an operating loss of €0.7 million. Income from financial assets fell because of a reduction in dividends paid by subsidiaries, while the cost of debt increased. Net income fell by almost 38% to €23.3 million.
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Colophon COMPAGNIE Dâ&#x20AC;&#x2122;ENTREPRISES CFE SA Founded in Brussels on June 21, 1880 Headquarters : 42, avenue Herrmann-Debroux, 1160 Brussels - Belgium Company number 0400.464.795 RPM Brussels Telephone: +32 2 661 12 11 Fax: +32 2 660 77 10 E-mail: info@cfe.be Editor : Yves Weyts Editorial Contact : Ann Vansumere Tel. +32.2.661.13.97 ann_vansumere@cfe.be Copyright for the photos and images, in alphabetical order DEME Govin Sorel Mathieu Paternoster m3 Architectes Yvan Glavie Philippe van Gelooven Tom Dâ&#x20AC;&#x2122;Haenens Design and realisation Antenno Marketing & Communicatie Cogels Osylei 19 BE 2600 Berchem This annual report is available in French, Dutch and English.
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