Half-Year Report
2007
Contacts CEO Christian Bubb Phone +41 (0)44 805 45 55 Fax +41 (0)44 805 45 56 E-mail christian.bubb@implenia.com CFO Roger Merlo Phone +41 (0)22 787 03 16 Fax +41 (0)22 787 02 21 E-mail roger.merlo@implenia.com Media and Communication Claude Vollenweider Phone +41 (0)44 805 45 43 Fax +41 (0)44 805 45 20 E-mail claude.vollenweider@implenia.com Schedule 2007 “Balance Sheet” Press conference 11 March 2008 2007 Presentation to Financial Analysts 11 March 2008 2008 General Meeting 8 April 2008 (Possible to request inclusion of a point on the agenda up to 22 February 2008) Unofficial translation for information purpose only. Official version is available in German.
Introduction
Fields of Activity
Financial Statements 3
06 Message
14 Condensed Consolidated Interim Income Statement 15 Condensed Consolidated Interim Balance Sheet 16 Condensed Consolidated Interim Cash Flow Statement 17 Condensed Consolidated Interim Statement of Changes In Equity 19 Notes to the Consolidated Interim Financial Statements
10 Development of Our Activities
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2
3
1
Introduction
6
Dear Ladies, Gentlemen and Shareholders We are proud to present to you the half-year report for 2007 of the Implenia Group. This is the Group‘s first report covering a full half year. It is therefore only partially comparable to the half-year report for 2006, as that report covered only the period starting from the creation of the Group and ending on 30 June 2006. You will recall that, on 2 March 2006, you approved by an overwhelming majority the merger of the two leaders of the Swiss construction industry, Zschokke and Batigroup, to form the Implenia Group. This merger, prompted by strong economic reasons, put us in a position of strength and therefore won massive support. Your approval confirmed our conviction that the best way to face market challenges, both present and future, was to combine our forces, thus establishing ourselves as the undisputed industry leader. The Implenia Group: on the right road Developments since this decision have confirmed our expectations: – the merger has projected our Group into a new dimension; Implenia is now able to consolidate its position as undisputed leader in all of its fields of activity in Switzerland: construction, industrial construction, as general/total contractor or in real estate; – having achieved this critical mass, the Group now has the capability to prevail over increasingly strong foreign competition; this new dimension is also a major prerequisite for maintaining its independence; – the merger has considerably strengthened our technical competence, as well as our financial flexibility and our capacity to take risks; it is a decisive asset in the area of project development; – our critical mass allows us to adopt a balanced strategy; Implenia now has the know-how and financial power needed to actively develop the provision of services upstream and downstream of the actual construction process; we are also implementing industrial processes that will enable us to benefit henceforth from major economies of scale; – the synergy effects resulting from this increased productivity should also translate into an improvement of the results of the low margin segments;
Increasing productivity in the construction industry
– our new dimensions and strengths at national level also give us targeted access to attractive foreign markets (selected construction or services). The Implenia Group, fully aware that its organisation needs to be aligned with the needs of the market, is today structured in four operating divisions: 1. Real Estate division, grouping services provided upstream and downstream of actual construction activity – and, secondarily, work done as general contractor – such as the development of projects, engineering and real estate management; 2. Infra division, grouping traditional works, i.e. building, civil engineering, roads and special construction works; 3. Tunnels and total contractor division, specialised in major infrastructure projects, in particular tunnels and railway engineering; 4. Global Solutions division, which organises and groups all our activities abroad. This range of services allows the Implenia Group to cover the entire life cycle of a building. Of course, we continue to be exposed to market forces in the various segments, but we now have the advantage of being able to offer our customers customised, global or specific solutions, by drawing on the broad range of services that we can offer. Moreover, the structure of our services makes us relatively less subject to the ups and downs of construction cycles compared to a classic contractor. This advantage clearly differentiates the Implenia Group from the other market actors. Strong order book and good prospects The financial situation in the construction industry, which on the whole is now satisfactory, is due mainly to a growth of activity with which the companies operating in the industry have been able to cope without increasing their workforces and without intensifying their capital investments. Overall productivity has therefore increased.
Introduction Message
In the first quarter of 2007, the turnover of the Swiss construction industry amounted to about CHF 3.3 billion, with an increase of 14.6% over the first quarter of last year. This growth can be explained by a positive economic climate, but also – and above all – by favourable weather conditions. Despite the globally satisfactory order volume, construction continues to be plagued by a price war similar to that observed during the recession of the 1990‘s. Because of these prices, which often do not reflect healthy management choices, our increased costs, for both materials or wages, can be offset only in part by an improvement of productivity. The private sector has been the main driver of this increased turnover. The construction of homes, especially, remains very dynamic. Private investments in civil engineering also increased in the first quarter. However, the progression of the order volume for homes is more modest, standing at 2.5%. The limited inflow of orders at the end of March 2007 indicates that the construction of homes has presumably reached its peak. The turnover for the construction of offices and industrial buildings reflects the present positive economic climate. It reached about CHF 540 million in the first quarter of 2007, which is a level unmatched since 2002. On the other hand, the order book shows a decrease of more than 19%. It is therefore necessary to expect a drop in activity in this field between now and the end of the year. The civil engineering turnover depends essentially on a small number of major projects. It was thus strongly influenced by the renovation works on the A2 motorway. The award of the Erstfeld lot of the alpine crossing projects has also influenced the order book and the quantity of work. In relation to the high turnover level, the decreased work volume (– 8%) is hardly surprising. However, thanks to the increase in private civil engineering works (close to CHF 420 million), the volume of work in this field remains at the same level as last year. The announced construction projects lead us to expect a continuation of this favourable economic climate for some time still. A sudden market collapse is not likely. The average volume of the companies‘ order books stands at a level comparable to that of last year.
Good half-year result In the first half of 2007, the Implenia Group achieved results in line with its high expectations. The turnover, including the working partnerships (not consolidated), reached about CHF 1 444 million, which is an increase of 5% over its level last year in the same period. The overall Group result stands at CHF 3.5 million, after deducting CHF 6.7 million for integration costs, exceptional fees and depreciation of intangible assets. A good result for the year is forecast This result is in line with our expectations and – keeping in mind the seasonal nature of our business – gives us a strong base for achieving a good result for the year. Thanks to the impressive order books on which all divisions of the Group can currently count, we estimate that the annual turnover of Implenia should reach CHF 3 000 million, after deducting the extraordinary costs for the year. For the year 2007, the balance of the integration costs, exceptional fees and depreciation of intangible assets should amount to about CHF 19.5 million. At the end of July 2007, the Group‘s order book amounted to CHF 2 696 million, spread over a number of years. The Group‘s equity, as at 30 June 2007, amounted to CHF 369.8 million. The cash-flow before financing activities amounted to CHF (190.8) million. Still no agreement with Laxey The intentions of the UK-based investment fund Laxey Partners which, at the beginning of the year, secretly acquired a block of shares representing 22.9% of the capital of Implenia, still remain rather unclear. Based on the articles of association and the registration regulations, the Board of Directors rejects the request for registration by Laxey,
7
8
which has increased its attempts to put pressure on our Board of Directors and our Management to obtain the registration of its shares, with the exception of the 4.9% of the capital already registered. Given the legislation currently in force (Lex Koller), the level of holding demanded by Laxey would entail the destruction of the values created so far and would threaten, or prevent the development of the Implenia Group in line with the strategy adopted, which has now demonstrated its worth. Your Board of directors remains determined to uphold its decision not to register any other shares held by Laxey and, thereby, to protect the interests of the majority of our shareholders against the private interests of a single investor seeking only short-term profit. Just a little more than one year after the creation of the Implenia Group, the results achieved in the first half of 2007 are evident. They would not have been possible without the efforts and commitment of our employees, at all levels. We take this opportunity to thank them all. As for you, shareholders, but also partners, we thank you for the confidence that you show in our Group, its Board of directors and its management. For us, this is a confirmation of the validity of our strategy and an encouragement to continue along this road.
Our best regards
Key Figures for the Group (in 1000 CHF unless otherwise indicated)
Turnover* Order book1 EBIT without real estate Real estate Operating Result EBIT 2 Reversal of EBIT Batigroup 3 Integration costs Depr. of intangible assets Exceptional fees EBIT IFRS EBITDA Group result Equity Total employees1
Anton Affentranger Chairman of the Board of Directors Dietlikon, September 2007
Christian Bubb CEO
Restated fi gures
Restated fi gures
06/2007
06/2006
12/2006
1 312 412 2 695 760
1 308 961 2 726 655
2 810 127 2 303 646
6 411 6 418 12 829 0 (4 457) (1 652) (555) 6 165
(2 144) (3 506) (5 650) 14 766 (15 180) (2 286) 0 (8 350)
41 522 5 980 47 502 14 766 (39 953) (5 271) 0 17 044
25 167 3 495 369 800
10 771 (11 894) 352 246
54 370 6 142 369 519
6 074
6 157
5 942
* Total turnover (2006 figures including Batigroup starting from 1.1.06) including share in work partnerships. 1 as at 31.7. / 31.12. respectively 2 2006 figures including Batigroup starting from 1.1.06 3 EBIT Batigroup 1.1.–2.3.06
2
Fields of Activity
10
Key Figures – Real Estate
Real Estate Creation of an innovation pole For the current year, the Real Estate division (real estate, engineering and work as general contractor) expects a turnover of about CHF 1 305 million and an EBIT result before extraordinary charges of about CHF 33.2 million. At the end of July 2007, its order book amounted to CHF 1 196 million. The Real Estate division is positioned as an innovation pole. Its objective is to win orders for global or partial services through the development of innovative solutions rather than through a price war. Its excellent reputation, its close ties with our customers, through its 30 branches, the strong support it receives from the Group and its first-class references should all make the Real Estate division the ideal partner for real estate investors, both private and institutional.
(in 1000 CHF) 06/2007 Turnover* Order book1 Operating Result EBIT 2 Reversal of EBIT Batigroup 3 Integration costs Depr. of intangible assets EBIT IFRS Total employees1
06/2006
12/2006
620 371 577 480 1 338 694 1 196 041 1 400 339 1 227 310 11 066 0 (525) (767) 9 774
3 545 159 (2 854) (930) (80)
21 085 159 (16 921) (1 851) 2 472
1 053
1 091
1 092
* Total turnover (2006 figures including Batigroup starting from 1.1.06) including intra-group turnover. 1 as at 31.7. / 31.12. respectively 2 2006 figures including Batigroup starting from 1.1.06 3 EBIT Batigroup 1.1.–2.3.06
Fields of Activity Development of Our Activities
Key Figures Infra (in 1000 CHF) 06/2007
06/2006
Turnover* Order book1
615 057 673 253
555 918 1 204 243 634 763 396 760
Operating Result EBIT 2 Reversal of EBIT Batigroup 3 Integration costs Depr. of intangible assets EBIT IFRS
(6 372) 0 (3 932) 0 (10 304)
(16 632) 15 428 (3 269) (884) (5 357)
8 837 15 430 (18 817) (2 361) 3 089
4 331
4 300
4 113
06/2007
06/2006
12/2006
190 373 826 466
222 723 691 553
402 630 679 576
12 009 0 0 (426) 11 583
9 756 (1 147) (660) (472) 7 477
20 723 (1 147) (137) (0) 19 439
607
693
655
Total employees 1
12/2006
Key Figures Tunnel and Total Contracting (in 1000 CHF)
Turnover* Order book1
Construction Clear improvement Over the whole year, the turnover of our Construction division, consisting of two units Infra and tunnels and works as total contractor, should reach about CHF 1 682 million. Based on the present figures, the annual EBIT result should amount to CHF 40 million, before extraordinary charges. At the end of July 2007, the order book amounted to CHF 1 499 million, distributed over several years, above all in tunnels and special construction works. The great increase compared to last year is mainly due to the synergies achieved, which have begun to bear their fruits.
Operating Result EBIT 2 Reversal Result EBIT Batigroup 3 Integration costs Depr. of intangible assets EBIT IFRS Total employees1
* Total turnover (2006 figures including Batigroup starting from 1.1.06) including intra-group turnover / including share in work partnerships. 1 as at 31.7. / 31.12. respectively 2 2006 figures including Batigroup starting from 1.1.06 3 EBIT Batigroup 1.1.–2.3.06
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Global Solutions First successes abroad The Global Solutions division groups, executes and coordinates all of our activities abroad. It brings together all the competence and potential of the Group and is thus positioned as the partner of choice for an international clientele in a number of geographical areas and particular segments. The division concentrates on two key areas of competence: solutions for infrastructures and provision of services to the High Quality Buildings segment. Depending on the problems to be solved, customised solutions are found working in collaboration with the other divisions of the Group. Implenia Global Solutions can therefore count on its own internal resources, but also on a network of partners, both national and international. In the area of infrastructures, Implenia concentrates on bridges, roads, tunnels and special construction works. The ďŹ eld of High Quality Buildings includes design, planning, engineering and project implementation management. Along these two lines, we proďŹ le ourselves as providers of solutions for ambitious projects in terms of quality. On the geographical level, strong growth markets, like Russia, other countries of Eastern Europe and the Middle East, are our priority targets. To implement
our strategy effectively, we are currently studying the possibility of entering into joint ventures with reputed local partners. In Russia and the Middle East, the ďŹ rst projects have already been booked or developed, notably a draft project including the design of two stadiums for the city of Sotchi, which will host the 2014 Winter Olympics. These two stadiums will form the heart of the Olympic village: the stadium seating 40,000 spectators will be used for the opening ceremony, while the icehockey stadium seating 12,000 spectators will be used as a multi-purpose facility. Implenia Global Solutions has taken on the functions of general planning, value design and engineering.
3
Financial Statements
14
Condensed Consolidated Interim Income Statement
Restated fi gures 1
Notes
January to June 2007
January to June 2006
4
1 100 148
1 014 296
(649 047) (356 915) (70 319) (19 002) 1 300 –
(618 882) (321 508) (65 273) (19 121) 1 655 483
6 165
(8 350)
Financial charges Financial income Earnings before tax
(4 131) 3 074 5 108
(3 481) 2 537 (9 294)
Income tax expense
(1 613)
(2 600)
Consolidated Group result
3 495
(11 894)
Attributable to: Shareholders of Implenia SA Minority interests Consolidated Group result
3 215 280 3 495
(12 390) 496 (11 894)
CHF 0.18 CHF 0.18
CHF (0.77) CHF (0.77)
(in 1000 CHF) Group turnover Materials and sub-contractors Personnel Other operating expenses Depreciation Income from associated companies Income from other investments Operating result (EBIT)
The notes on pages 19 to 30 are an integral part of these consolidated financial statements. 1
Discounts (amounting to KCHF 1189 in 2006 in the fi nancial result) have been reclassifi ed in the Income Statement (materials and subcontractors). The results on other fi nancial investments (KCHF 617) have been reclassified as financial income.
Earnings per share (undiluted) Earnings per share (diluted)
Condensed Consolidated Interim Income Statement
4
5 5
Financial Statements Condensed Consolidated Interim Income Statement | Condensed Consolidated Interim Balance Sheet Restated fi gures
Condensed Consolidated Interim Balance Sheet (in 1000 CHF)
Notes
30.6.2007
31.12.2006
52 645 822 365 839 318 316 78 022 39 955 17 542 176 550 31 034 1 080 725
107 346 686 313 670 172 168 72 615 29 984 18 310 165 077 22 994 902 850
220 262 22 317 38 500 8 258 91 436 8 271 389 044 1 469 769
212 812 22 354 40 823 8 258 93 416 4 953 382 616 1 285 466
8
232 181 191 028 487 447 15 191 28 648 3 194 101 836 1 059 525
81 096 134 030 511 434 9 103 36 885 4 883 89 408 866 839
8
5 010 15 188 20 246 40 444
15 718 11 691 21 699 49 108
89 589 131 937 159 742 (18 979) 3 215 365 504
89 589 123 315 154 465 (7 319) 5 277 365 327
4 296 369 800 1 469 769
4 192 369 519 1 285 466
ASSETS Cash and cash equivalents Securities Trade debtors Work in progress Work partnerships Other debtors Inventories Real estate operations Prepayments and accrued income Current assets Tangible fi xed assets Investments in associated companies Other financial investments Benefit plan surplus Intangible assets Deferred tax assets Non-current assets TOTAL EQUITY AND LIABILITIES Current portion of long-term borrowings, banks Trade payables Work in progress Work partnerships Other payables Current tax liabilities Accruals and deferred income Current liabilities Long-term borrowings Provision for deferred tax liabilities Provisions Non-current liabilities Implenia SA share capital Reserves Retained earnings Treasury shares Result attributable to shareholders of Implenia
Minority interests Equity TOTAL
6
7
9
10
Condensed Consolidated Interim Balance Sheet
The notes on pages 19 to 30 are an integral part of these consolidated fi nancial statements.
15
16
Restated fi gures
Condensed Consolidated Interim Cash Flow Statement (in 1000 CHF)
Notes
Operating activities Net profi t before taxes Depreciation Changes in provisions Changes in value adjustment in real estate operations Profit on sale of fi xed assets Changes in benefit plan adjustments Other adjustments not effecting cash and cash equivalents Changes in trade and other debtors Changes in trade and other payables Changes in work in progress/inventories Changes in work partnerships Investments in real estate operations Disposals of real estate operations Other short-term assets and liabilities Interest paid Interest received Taxes paid Net cash from operating activities Investment activities Investments in tangible fi xed assets Disposals of tangible fi xed assets Purchase/sale of subsidiaries Other investments in financial assets Other disposals of financial assets Investments in intangible assets Net cash from investment activities
Transactions with no effect on cash and cash equivalents: acquisition of installations held on leases amounting to CHF Mio 0.0 (CHF Mio. 1.7 in 2006). The notes on pages 19 to 30 are an integral part of these consolidated fi nancial statements.
Financing activities Increase in borrowings Repayment of borrowings Minority interests (dividends paid) Dividends paid Nominal value refund Purchase of treasury shares Sale of treasury shares Net cash from financing activities Net increase / (decrease) in cash and cash equivalents (a+b+c) Foreign currency translation Increase / (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at the end of the half year
Condensed Consolidated Interim Cash Flow Statement
9
a)
6 6
7 b)
8
c)
January to june 2007
January to june 2006
5 108
(9 294)
19 002 (2 270) (1 721) ( 156) – 1 968 (63 187) 48 761 (169 367) 681 (16 689) 10 262 2 126 (1 925) 1 277 (1 890) (168 020)
19 121 5 379 (150) 98 – (1 621) (116 462) 90 951 (23 484) (25 509) (31 750) 8 744 9 108 (2 782) 2 113 ( 966) (76 504)
(24 876) 669 – (887) 2 413 (150) (22 831)
(9 953) 743 20 792 (311) 5 882 (207) 16 946
222 000 (81 623) ( 176) – – (17 711) 13 761 136 251
103 324 (64 720) (104) (6 827) – – 1 585 33 258
(54 600) ( 101) (54 701) 107 346 52 645
(26 300) 20 (26 280) 99 437 73 157
Financial Statements Condensed Consolidated Interim Cash Flow Statement | Condensed Consolidated Interim Statement of Changes in Equity
Restated figures
Condensed Consolidated Interim Statement of Changes in Equity Implenia Ltd. Shareholders Consolidated Revaluation Reserves Reserves
Foreign Currency Translation
Retained Earnings
Sub-total
Minority Interests
Total Equity
–
486
162 057
205 272
1 286
206 558
–
–
381
–
381
–
381
– –
– –
– –
381
– (12 390)
381 ( 12 390)
– 496
381 (11 894)
–
–
–
–
381
(12 390)
( 12 009)
496
(11 513)
64 089 –
(4 905) –
100 390 (1 214)
– –
– –
– –
159 574 ( 1 214)
6 –
159 580 ( 1 214)
(in 1000 CHF)
Share Capital
Treasury Shares
Balance as at 1.1.2006
25 500
(1 923)
19 152
–
–
– –
Foreign currency translation Gain/Loss recognised directly in equity (sub-total) Loss for the period Gain/Loss recognised for the period Capital increase as at 6.03.06 (and share exchange) Transaction costs Reverse 2005 capital gain on Batigroup shares Value adjustment of newly consolidated companies Change in treasury shares Dividends paid Balance as at 30.06.2006
–
–
–
–
–
(765)
(765)
–
(765)
– – – 89 589
– 729 – (6 099)
– 856 – 119 184
2 807 – – 2 807
– – – 867
– – (6 827) 142 075
2 807 1 585 (6 827) 348 423
2 139 – (104) 3 823
4 946 1 585 (6 931) 352 246
Balance as at 1.1.2007
89 589
(7 319)
120 049
2 906
360
159 742
365 327
4 192
369 519
–
–
–
–
912
–
912
–
912
– –
– –
– –
– –
912 –
– 3 215
912 3 215
– 280
912 3 495
–
–
–
–
912
3 215
4 127
280
4 407
– – 89 589
(11 660) – (18 979)
7 7101 P18 – 127 759
– – 2 906
– – 1 272
– – 162 957
(3 950) – 365 504
– (176) 4 296
(3 950) (176) 369 800
Foreign currency translation Gain/Loss recognised directly in equity (sub-total) Profit for the period Gain/Loss recognised for the period Change in treasury shares Dividends paid Balance as at 30.06.2007
Condensed Consolidated Interim Statement of Changes in Equity
17
18
Change in Treasury Shares
Number
Average unit cost price (in CHF)
Total
5 110 (1 937)
376 376
1 923 (729)
3 173
376
1 194
Exchanged for Implenia shares 1
126 920
9
1 194
Implenia SA shares held by Zschokke Holding 2 Implenia SA shares Implenia SA shares held by Batigroup Holding 3 Balance as at 30.06.2006
259 681 20 700 6 573 413 874
18 5 21 15
4 665 100 140 6 099
465 074 (77 480) (307 048) 412 300 492 846
16 16 16 43 39
7 319 (1 219) (4 833) 17 712 18 979
Balance as at 1.1.2006 Disposals (profit-sharing plan) Balance as at 2.03.2006
1
Profi t resulting from the disposal of treasury shares in the fi rst semester of 2007 (average selling price = CHF 35.80). As required by IFRS the profit was recorded directly to equity. 2 Implenia/Zschokke exchange ratio = 40:1 3
Implenia/Batigroup exchange ratio = 1:1
Balance as at 1.1.2007 Disposals (profi t-sharing plan) Disposals Purchases Balance as at 30.06.2007
Financial Statements Condensed Consolidated Interim Statement of Changes in Equity | Notes to the Consolidated Interim Financial Statements
1 General information This Half-year Report containing the consolidated interim financial statements has been prepared in accordance with the «Interim Financial Information» standard (IAS 34) and does not include all the information and comments required in the Annual Report. This report must be read in relation to the Annual Report dated 31 December 2006. Comparative information relating to the period from 1 January to 30 June 2006 is restricted to the activity of the former Zschokke Group up to 2 March 2006. The business combination of Zschokke and Batigroup within Implenia is effective as of 3 March 2006. This report for the 1st half year of 2007 containing the consolidated interim financial statements of the Implenia group was approved by the Board of Directors of Implenia Ltd. in its meeting held on 11 September 2007. All figures are presented in thousands of Swiss francs, unless indicated otherwise. Implenia Ltd. is a Swiss company based in Dietlikon (Zürich). Its shares are traded on the Swiss stock exchange. The group’s main business activities are presented in note 4 – Segment Information.
2 Accounting policies The consolidated financial statements of the Implenia group are prepared in accordance with the Internal Financial Reporting Standards (IFRS) issued by the «International Accounting Standards Board» (IASB). The distribution of the segments has been adapted to reflect the new distribution of activities in the various sectors. The description of the new segments, which form part of the accounting policies, are indicated below. The comparative figures for 2006 of the segment information have been restated accordingly. General Contracting (forms part of the Real Estate division) The activities of this segment include the general planning of projects, as well as work done as general and total contractor in the construction field. Real Estate activities (form part of the Real Estate division) Real estate activities include real estate promotion and the implementation of projects in the real estate field. Services (forms part of the Real Estate division) Service activities include studies, the management and running of buildings, the coordination, engineering and planning of projects related to real estate, as well as Facility Management. Tunnel construction works and Total Contracting Activities in this sector include underground works, tunnels and total contracting in railway engineering. Infra construction works This segment is active in the construction and maintenance of roads and buildings, civil engineering infrastructures and special construction works. Global Solutions This new segment offers engineering and project management services mainly abroad. Head office overheads and sundry expenses This category includes the costs of the parent company (Holding) that cannot be assigned to any segment and of the affiliated companies not engaged in activities. At the reporting by segment level, this category includes notably the financial commitments of the Group (consortium loan).
Notes to the Consolidated Interim Financial Statements
19
20
The accounting policies applied in the preparation of the consolidated financial statements as at 30 June 2007 are identical to those published in the report dated 31 December 2006, but also take into account the new standards that have come into force since then and are indicated below. The following new standards, amendments and interpretations have been adopted starting from the accounting period beginning on 1st January 2007: – IFRS 7 – Financial Instruments: Disclosures The new standard requires a significant increase of disclosures on the impact of financial instruments on the financial statements. It will be reflected in annual financial statements. – IFRIC 7 – Applying the Restatement Approach under IAS 29 standard – Financial Reporting in Hyperinflationary Economies – IFRIC 8 – Scope of IFRS 2 – IFRIC 9 – Reassessment of Embedded Derivatives – IFRIC 10 – Interim Financial Reporting and Impairment Any impairment of goodwill reported and recognised in the interim report can no longer be reversed in the second half year for presentation in the annual report. With the exception of the specific comments made, these new standards or amendments have no significant impact on the interim financial statements of Implenia. New standards, interpretations and amendments to standards that have already been published, but are not yet obligatory: – IFRS 8 – Operating Segments (for accounting periods starting from 1st January 2009). The application of IFRS 8 will influence reporting and presentation by segments, but it will not have any impact on the consolidated result. – IFRIC 11 – Group and Treasury Share Transactions according to IFRS 2 (for accounting periods starting from 1st March 2007) – IFRIC 12 – Service Concession Arrangements (for accounting periods starting from 1st January 2008) – IFRIC 13 – Customer Loyalty Programmes (for accounting periods starting from 1st July 2008) The Management has examined these new standards and interpretations and has come to the conclusion that, with the exception of the comment made on IFRS 8, they will not have a significant impact on the presentation of the financial statements of Implenia.
3 Consolidation scope Merger Following the acquisition of the Reuss group in 2006 and with the aim of a simplification of the legal structure, the following companies were merged with retroactive effect as of 1st January 2007. The company resulting from the merger bears the new name of Reuss Engineering AG. Merged companies: – B+B Engineering AG – Reuss Management AG – Reuss FM AG – Robert Aerni AG – Reuss Group Holding AG – S+P Haustechnik AG This merger of 6 wholly-owned subsidiaries (100%) of the Implenia group has no impact on the presentation of the consolidated financial statements. Name changes Implenia Real Estate SA has changed its name and is now called Implenia Development Ltd. Reuss Group International AG has changed its name and is now called Implenia Global Solutions Ltd. Batilabor AG has changed its name and is now called Implenia Investment Management Ltd. The position as at 30 June 2007 of the affiliated companies is reported on page 29 and 30 of this report.
Financial Statements Notes to the Consolidated Interim Financial Statements 21
4 Segment Information The new operational organisation of the Group is based on the following main sectors of activity: – general contractor (general planning, general and total contractor) – real estate (promotion, project development) – tunnel construction works + TC (undergroud works, total contracting in railway engineering) – infra construction works (roads and buildings, civil engineering, special construction) – services (building management, engineering and facility management) – global Solutions (engineering and project management abroad) Sectors ‹General contractor›, ‹Real estate› and ‹Services› are gathered within the global segment ‹Real Estate›. Because Implenia is presently essentially active in Switzerland, no secondary segment disclosure by geographical areas is reported. Inter-segment transactions are carried out at market conditions.
Real Estate
(in 1000 CHF)
January to June 2007 Turnover before elimination of internal sales ./. Inter-group services Turnover Operating profit/EBIT
General contracting
Real Estate activties
508 583 (39 850) 468 733 5 558
68 174 (2 879) 65 295 6 418
(in 1000 CHF)
1
43 579 (2 210) 41 369 (2 202)
68 623 (211) 68 412 11 583
523 796 (70 764) 453 032 (10 304)
Head office Global overheads and Solutions Miscellaneous
2 477 (10) 2 467 (945)
Group Total
16 746 (15 906) 840 (3 943)
1 231 978 (131 830) 1 100 148 6 165
Head office Global overheads and Solutions Miscellaneous
Group Total
Real Estate
Restated figures 1
January to June 2006 Turnover before elimination of internal sales ./. Inter-group services Turnover Operating profit/EBIT
Infra Tunnel construction construction works Services works + TC
General contracting
Real Estate activties
490 159 (118) 490 041 3 743
3 806 – 3 806 ( 4262)
Infra Tunnel construction construction works Services works + TC
52 297 (3 559) 48 738 439
147 492 (12 875) 134 617 7 477
368 142 (32 137) 336 005 (5 357)
– – – –
12 181 (11 092) 1 089 (10 390)
The operating result of the Construction segments has been restated to reflect the new organisation of the segments. The impact of the reclassifying of the discounts and the result on other financial investments is attributed to the Infra Construction Works segment. (See also the comment on the Income statement).
1 074 077 (59 781) 1 014 296 (8 350)
22
5 Earnings per share
Net earnings Weighted average number of shares in circulation Earnings per share 1 Number of shares in circulation as at 30.06.
Restated ďŹ gures
January to June 2007
January to June 2006
3 215 18 146 079 CHF 0.18 17 979 154
(12 390) 15 996 444 CHF (0.77) 18 058 126
6 Tangible assets Investments in tangible assets in the ďŹ rst half year of 2007 amounted to 24.9 mio and mainly concern the production units (4.3 mio) and machines and materials (19.4 mio). These investments were made essentially in the construction segments. 1
There is no dilution.
Disposals amounting to 0.67 mio concern machines and materials and were made mainly in the construction segments.
Financial Statements Notes to the Consolidated Interim Financial Statements 23
7 Intangible assets (in 1000 CHF) Licences IT Project and Software
January to June 2007 As at 1.1. after depreciation Change in consolidation scope Reclassification Net investments Depreciation As at 30.06.07 after depreciation of which pledged
2 903 – 604 150 (652) 3 005 –
1 054 – (784) – (186) 84 –
Customer Brands and List and Order Trademarks Book
Goodwill
Group Total
10 901 – 45 – (1 157) 9 789 –
77 557 – – – – 77 557 –
93 416 – (135) 150 (1 995) 91 436 –
Customer Brands and List and Order Trademarks Book
Goodwill
Group Total
4 834 72 723 – – 77 557 –
5 529 93 506 444 (6 063) 93 416 –
1 001 – – – – 1 001 –
(in 1000 CHF) Licences IT Project and Software
2006 As at 1.1. after depreciation Change in consolidation scope Net investments Depreciation As at 31.12.06 after depreciation of which pledged
– 3 812 150 (1 059) 2 903 –
695 857 294 (792) 1 054 –
– 2 884 – (1 883) 1 001 –
– 13 230 – (2 329) 10 901 –
The date of the goodwill impairment test is 31 December. No interim tests have been conducted, as no negative signs that could justify such tests have been noted by the Management. Consequently, the figure for goodwill has not been revalued.
24
8 Borrowings (in 1000 CHF)
2007
2006
As at 1.1. Change in consolidation scope Increase in borrowings Repayments As at 30.06.07/31.12.06.
96 814 – 222 000 (81 623) 237 191
1 535 99 836 310 664 (315 221) 96 814
Due dates: Within 12 months Between 1 and 5 years As at 30.06.07/31.12.06.
232 181 5 010 237 191
81 096 15 718 96 814
8 260
13 289
of which financial leases
The increase of borrowings during the first semester was required to finance the working capital (seasonality) and relates essentially to the construction works segment.
Financial Statements Notes to the Consolidated Interim Financial Statements 25
9 Provisions (in 1000 CHF)
2007 As at 1.1. Foreign currency translation difference Change in consolidation scope Reclassification Allocation Utilised Released As at 30.06.07
Warranty provisions
Onerous contracts
Integration costs
Others
Group Total
4 319 – – 138 – (254) – 4 203
3 962 – – – – – – 3 962
1 766 – – 474 – (698) (40) 1 502
11 652 88 – 117 233 (1 120) (391) 10 579
21 699 88 – 729 233 (2 072) (431) 20 246
Warranty provisions
Onerous contracts
Integration costs
Others
Group Total
– 4 696 – – (377) 4 319
– 2 692 1 270 – – 3 962
– 7 766 (6 000) – – 1 766
1 491 4 590 5 581 (10) – 11 652
1 491 19 744 851 (10) (377) 21 699
(in 1000 CHF)
2006 As at 1.1. Change in consolidation scope Allocation Utilised Released As at 31.12.06
Provisions for warranty relate to the residual risk on completed projects which, according to contracts, can be claimed within a period of usually 2 to 3 years, and possibly 5 years at the most. Onerous contracts relate to renting agreements. They usually expire within 2 to 3 years. The remaining balance of the provision for integration costs relates essentially to rebranding and other current costs not yet due. Other provisions cover risks related to foreign activities, ongoing litigation, ongoing claims for damages and site restoration.
26
10 Share capital Known shareholders holding more than 5% of share capital as at 30 June 2007 (31 December 2006): 30.6.2007
31.12.2006
22.9% 11.1% 6.5% –
0.0% 10.9% 0.0% 5.2%
Number of registered shares: Nominal value per share in CHF Total nominal value in CHF, as at
18 472 000 4.85 89 589 200
18 472 000 4.85 89 589 200
Number of shares in circulation, as at ISIN Code CH002 386 8554 (IMPN)
17 979 154
18 006 926
Laxey Group Parmino Holding AG Port Noir Investment Sàrl 3V Asset Management AG
The Annual General Meeting on 2 March 2006 decided on a conditional capital increase of up to a total of CHF 44 794 600 (9 236 000 shares with a nominal value of CHF 4.50 each) for the purpose of covering the potential conversion of future convertible bonds or similar financial instruments. As of 30 June 2007, no such financing instruments had been issued.
Financial Statements Notes to the Consolidated Interim Financial Statements 27
11 Related party disclosures January to june 2007
January to june 2006
Sales to related parties – associated companies – companies related to a key management executive – work partnerships – others
2 363 – 116 172 –
498 – 76 462 490
Purchases from related parties – associated companies – companies related to a key management executive – work partnerships – others
1 968 1 336 3 140 –
3 105 3 013 – 5 895
Credit claims on related parties (as at 30.06.) – associated companies – companies related to a key management executive – work partnerships – others
2 832 – 77 752 250
280 – 33 632 –
Debts to related parties (as at 30.06.) – associated companies – companies related to a key management executive – work partnerships – others
2 626 96 5 437 658
1 168 341 – –
(in 1000 CHF) Information on related party transactions
Transactions with related parties are dealt with at arm’s length. The term “key management executives” includes the members of the Board of Directors and the members of the Group Management. Short-term employee benefits Other post-employment benefits Long-term benefits Termination benefits Share-based payments Total remuneration of key management executives
2 778 183 – – 748 3 709
2 225 163 – – 405 2 793
Balance in favour of key management executives as at 30.06.
1 566
–
28
12 Contingent liabilities (in million CHF) Third party guarantees
30.6.2007
31.12.2006
178.0
228.6
The balance of outstanding guarantees relates essentially to ongoing own projects (submission, warranty and issued guarantees) as well as for work partnership projects.
13 Post-balance sheet events The Annual General Meeting of Shareholders held on 24 April 2007 decided to repay CHF 0.35 of the face value of each Implenia Ltd. share. As the legal requirements for repayment were met, the repayment was made as planned on 10 July 2007. Starting from that date, the share capital of Implenia Ltd. amounts to CHF 83 124 000.–. On 20 July 2007, Implenia Ltd. signed a rider to its credit agreement with a consortium of banks increasing the cash credit limit from CHF 50 mio to CHF 250 mio and reducing the guarantee limit by CHF 50 mio to CHF 250 mio. The total cash and guarantee limit remains unchanged at CHF 500 mio. The other terms of the initial contract also remain in effect. Up to the time of the approval of this report, there were no known events that might require an adjustment to the accounting values of the Group‘s assets and liabilities.
Financial Statements Notes to the Consolidated Interim Financial Statements 29
14 Subsidiaries Name
Shareholding
AG für manuelle Dienstleistungen Balduin Weisser AG
53.33% 100%
Registered office
Currency
Share capital
Neuenhof Basel
CHF CHF
150 000 1 750 000
Bâtiments industriels du Haut-Rhin Sàrl (Bâtirhin) Développements transfrontaliers SA
100%
Mulhouse (F)
EUR
195 000
100%
Lyon (F)
EUR
14 663 800
Gebr. Ulmer GmbH
100%
Bruchsal (D)
EUR
25 565
66.66% 100%
Savigny Bruchsal (D)
CHF EUR
1 500 000 1 533 876
Gust. Stumpf Verwaltungs GmbH & Co KG
100%
Bruchsal (D)
EUR
511 292
Implenia (Ticino) SA Implenia Bau AG
100% 100%
Lugano Genève
CHF CHF
150 000 40 000 000
Implenia Bau GmbH
100%
Rümmingen (D)
EUR
2 556 459
Implenia Generalunternehmung AG Implenia Development AG Implenia Global Solutions Ltd. Implenia Holding GmbH
100% 100% 100% 100%
Basel Dietlikon Dietlikon Rümmingen (D)
CHF CHF CHF EUR
20 000 000 30 000 000 100 000 3 067 751
Implenia Immobilien AG Implenia Investment Management AG Implenia Management AG
100% 100% 100%
Dietlikon Dietlikon Genève
CHF CHF CHF
30 600 000 100 000 500 000
M.F. Wachter Bauunternehmung GmbH
100%
Stuttgart (D)
EUR
1 000 000
Bern Bern Zürich Dietlikon Echallens Satigny
CHF CHF CHF CHF CHF CHF
4 000 000 1 000 000 100 000 100 000 120 000 500 000
100% 100% 100%
Abidjan (CI) Bamako (Mali) Rümmingen (D)
XOF XOF EUR
492 000 000 100 000 000 255 646
100%
Vaduz (FL)
CHF
50 000
Gravière de La Claie-aux-moines SA Gust. Stumpf GmbH
Privera AG Privera Services AG Reprojet AG Reuss Engineering AG Rocmouve SA SAPA, Société Anonyme de Produits Asphaltiques SISAG Socarco Sonnrain Wohnbau GmbH Strassen und Tiefbau AG
100% 100% 100% 100% 66.66% 75%
Segment
Active/ Inactive
Held By
Services Overheads Holding and Miscellaneous Real Estate
Active Inactive
Implenia AG Implenia Immobilien AG Implenia AG
Real Estate
Active
Overheads Holding and Miscellaneous Infra Construction Works Overheads Holding and Miscellaneous Overheads Holding and Miscellaneous Infra Construction Works Infra + Tunnel, TC Construction Works Infra Construction Works
Inactive
General Contractor Real Estate Global Solutions Overheads Holding and Miscellaneous Real Estate Real Estate Overheads Holding and Miscellaneous Overheads Holding and Miscellaneous Services Services Infra Construction Works Services Infra Construction Works Infra Construction Works Infra Construction Works Infra Construction Works Overheads Holding and Miscellaneous Overheads Holding and Miscellaneous
Inactive
Active Inactive
Implenia Real Estate AG Implenia AG
Inactive
Implenia AG Implenia Holding GmbH Implenia AG
Active Active
Implenia AG Implenia AG
Active
Implenia Holding GmbH Implenia AG Implenia AG Implenia AG Implenia Immobilien AG Implenia AG Implenia AG Implenia AG
Active Active Active Active Active Active Active Inactive Active Active Active Active Active Active Active Active Inactive Inactive
Implenia Holding GmbH Implenia AG Implenia AG Implenia AG Implenia AG Implenia AG Implenia AG Implenia AG SISAG Implenia Holding GmbH Implenia Immobilien AG
Financial Statements Notes to the Consolidated Interim Financial Statements
30
14 Subsidiaries Name
Shareholding
Registered office
Currency
Share capital
Stuag Bauunternehmung GmbH
100%
Rümmingen (D)
EUR
306 775
Swiss Overseas Engineering Company
100%
Genève
CHF
200 000
Tetrag AG Trachsel AG Zschokke Bratislava s.r.o. Zschokke Construction Sàrl
100% 100% 100% 100%
Gisikon Heimberg Bratislava (SLK) Lyon (F)
CHF CHF SKK EUR
100 000 100 000 2 225 000 76 225
Zschokke Développement SA
100%
Lyon (F)
EUR
457 347
Zschokke France SA
100%
Lyon (F)
EUR
914 694
Zschokke GmbH Leipzig
100%
Leipzig (D)
EUR
1 022 584
Zschokke Holding Deutschland GmbH
100%
Berlin (D)
EUR
3 067 751
Zschokke Österreich GmbH
100%
Wien (O)
EUR
35 000
Zschokke Procédés Spéciaux Sàrl
100%
Lyon (F)
EUR
457 347
All subsidiaries of the Group are fully consolidated.
Segment
Active/ Inactive
Held By
Overheads Holding and Miscellaneous Overheads Holding and Miscellaneous Services Infra Construction Works General Contractor Overheads Holding and Miscellaneous Overheads Holding and Miscellaneous Overheads Holding and Miscellaneous Overheads Holding and Miscellaneous Overheads Holding and Miscellaneous Tunnel + TC Construction Works Overheads Holding and Miscellaneous
Inactive Inactive
Implenia Holding GmbH Implenia AG
Active Active Inactive Inactive
Implenia AG Implenia AG Implenia AG Zschokke France SA
Inactive
Zschokke France SA
Inactive
Implenia AG
Inactive Inactive
Zschokke Holding Deutschland GmbH Implenia AG
Active
Implenia AG
Inactive
Zschokke France SA
Implenia Ltd. Industriestrasse 24 8305 Dietlikon Phone +41 44 805 45 55 Fax +41 44 805 45 56 www.implenia.com