Financial Report 1 October 2015 to 30 September 2016 Investor relations presentation Q4

Transcription

1 Financial Report 1 October 2015 to 30 September 2016 Investor relations presentation Q4

2 Q4 2 Aarsleff Group 2015/2016 Contents Aarsleff Group 2015/16 3 Group Revenue Results Investments, solvency ratio, cash flows and financial resources Construction Pipe Technologies Ground Engineering Building activities of the Aarsleff Group 12 Activities of the Aarsleff Group 16 The future financial year 2016/ Group Construction Pipe Technologies Ground Engineering Strategic focus areas 24 Group Construction Pipe Technologies Ground Engineering Long-term financial targets 29 Attractive and stable rate of return, significant financial resources and a high solvency Growth and development Profit and return on investment Sound financial resources Dividend 34 Financial calendar 36

3 Q4 3 Aarsleff Group 2015/2016 Financial Report 1 October 2015 to 30 September 2016

4 Q4 4 Aarsleff Group 2015/2016 Group DKK million 2014/ / / /2016 Revenue 10,254 10,420 EBIT EBIT% 4.7% 4.0% 31% 10,254 10,420 27% Number of employees 4,932 5,906 69% 73% Abroad Denmark Total growth of the Group came to 2% Our Danish operations reported growth of 7%, and our foreign operations reported a 10% revenue decline The Board of Directors will propose a dividend of DKK 4 per share of a nominal value of DKK 2, corresponding to DKK 82 million The profit for the year was DKK 304 million after tax compared with DKK 366 million last financial year

5 Q4 5 Aarsleff Group 2015/2016 Revenue Revenue in DKK million, total and per segment 2% 7,122 3% 7,348 10,254 10,420-9% 1,512 1,372 4% 1,630 1, /2015 Construction Pipe Technologies Ground Engineering Aarsleff 2015/2016 Revenue in the acquired companies Istak hf. and Hansson & Knudsen A/S came to DKK 925 million in the financial year and the company was included with DKK 126 million last financial year Revenue exclusive of acquired companies decreased by 6% Revenue in the Construction segment exclusive of acquired companies decreased by 8% Revenue of the Pipe Technologies segment is affected by the difficult market conditions in Eastern Europe, Russia and Ukraine

6 Q4 6 Aarsleff Group 2015/2016 Revenue EBIT in DKK million and EBIT% % 4.0% 4.3% % % 7.5% 4.6% 3.0% Construction Pipe Technologies Ground Engineering Aarsleff 2014/ /2016 Profit before tax came to DKK 399 million against DKK 455 million last financial year Earnings expectations were DKK 430 million before tax at the beginning of the financial year and were adjusted downwards to DKK 400 million before tax after the second quarter of the financial year Profit ratio (before tax) of the Group was 3.8% compared to 4.4% last financial year Administrative expenses and selling costs now constitute 8% of revenue compared with 7.3% last financial year, corresponding to an increase of 11%. The increase exclusive of acquired companies constitutes 6%

7 Q4 7 Aarsleff Group 2015/2016 Investments, solvency ratio, cash flows and financial resources 50 Solvency ratio, % 1,200 Net interest-bearing debt in DKK million 1, / / / / /2016 Long-term target Realised / / / / / % of equity, beginning of FY Net interestbearing debt, year-end Target Total investments in property, plant and equipment as well as subsidiaries amounted to DKK 782 million against DKK 433 million last financial year. Acquisition of Hansson & Knudsen A/S, construction of new office building and acquisition of equipment for electrification project are included in the financial year Cash flows from operating activities are affected by an increased working capital from DKK 433 million at the beginning of the financial year, which constituted a low level, to DKK 710 million at the end of the financial year. The increase is mainly attributable to increasing receivables Cash flows from operating activities with deduction of investments came to a negative liquidity flow of DKK 352 million against a positive liquidity flow of DKK 498 million last financial year

8 Q4 8 Aarsleff Group 2015/2016 The Construction segment DKK million 2014/ / / /2016 Revenue 7,112 7,348 15% 13% EBIT EBIT% 4.3% 3.4% 7,112 7,348 Number of employees 3,293 4,160 85% 87% Abroad Denmark Total growth of 3%: 5% increase in the Danish operations and 9% decline in the foreign operations. The development in revenue exclusive of acquisitions constitute an 8% decrease At the beginning of the financial year, EBIT% was expected to constitute 4%, but in the middle of the financial year it was adjusted downwards to 3.5% Major tenders have been postponed or not won to the expected degree Increased tender costs due to exceptionally large tenders with extended preparation periods The segment s building activities develop positively in a market with many projects As a partner of Femern Link Contractors, Aarsleff signed conditional contracts for three out of the four large tunnel contracts for the Fehmarnbelt Link, but the start date is still unknown At the end of the financial year, the volume of orders is in line with last year s level

9 Q4 9 Aarsleff Group 2015/2016 The Construction segment An increasing number of projects are carried out in One Company collaboration between the companies of the Group. Construction has a special coordinative and leading role Per Aarsleff A/S Results exceeded expectations. The foreign operations reported a revenue decline compared with last financial year which was characterised by a high activity on Värtahamnen in Stockholm Wicotec Kirkebjerg A/S The performance of Wicotec Kirkebjerg A/S deviates significantly from expectations due to impairment of some projects and there was a small positive contribution to results. Generally, there is a high level of activity within technical contracts, and the order intake is satisfactory Hansson & Knudsen A/S Results were below expectations. The integration of the company takes longer than expected Aarsleff Rail A/S The railway activities fell short of expectations. The order intake did not reach the expected level, however order opportunities are good, and the tender activity is high Istak hf. The activities are loss-making and fell short of expectations. Action plans to strengthen the company have been implemented. The order intake was good in a positive market Dan Jord A/S Results are in line with expectations. Generally, there was a high level of activity in the Aarhus area, e.g. with establishment of sports facilities Petri & Haugsted A/S Results fell short of expectations. Adjustments and action plans have been initiated Entreprenørfirmaet Østergaard A/S Results are in line with expectations. The company is positioning itself for execution of complex tunnelling projects in connection with future climate adaptation projects VG Entreprenør A/S Results were significantly above expectations. There was a high level of activity, e.g. in connection with the enlargement of Port of Frederikshavn

10 Q4 10 Aarsleff Group 2015/2016 The Pipe Technologies segment DKK million 2014/ / / /2016 Revenue 1,512 1,372 EBIT EBIT% 4.6% 3.0% Number of employees % 1,512 1,372 73% 34% 66% Abroad Denmark Total revenue decline of 3%: 12% increase in the Danish operations and 17% decline in the foreign operations At the beginning of the financial year, EBIT% was expected to constitute 4%, but in the middle of the financial year it was adjusted downwards to 3% and to 2.5% after the third quarter of the financial year. The market conditions in Poland and Russia are very difficult. Last financial year, the Russian company performed extraordinarily well More than ever, the challenge is a race to improve efficiency in a market with keen competition A growing share of installations is carried out with our internally developed LED curing system and our internally developed glass liner. An agreement with Uponor was made for the acquisition of the Omega-Liner In Denmark, the level of activity of the municipal utility companies and the housing and industry segments exceeded expectations, and earnings are in line with expectations Export projects within drinking water supply and wastewater performed below expectations due to the difficult market conditions. Capacity adjustments have been initiated The companies in Germany, Sweden and Finland performed in line with expectations and are developing positively The companies in Poland, Russia and Lithuania were loss-making. In Ukraine, the activities have been discontinued. However, we are now seeing the first EU financed tenders in the Baltic countries and in Poland

11 Q4 11 Aarsleff Group 2015/2016 The Ground Engineering segment DKK million 2014/ / / /2016 Revenue 1,630 1,700 EBIT EBIT% 6.4% 7.5% 41% 45% 1,630 1,700 59% 55% Number of employees Abroad Denmark Total growth of 4%: 13% increase in the Danish operations and 2% decline in the foreign operations At the beginning of the financial year, EBIT% was expected to constitute 6%, but in the middle of the financial year it was adjusted upwards to 7% and to 7.5% after the third quarter of the financial year The production in the newly established pile factory in Southern Germany has now begun. Ground Engineering is now pile contractor as well as concrete pile producer in Denmark, Sweden, the UK and Germany Continued efficiency improvements and standardisation of the central pile system across country borders Other piling methods will be introduced with a view to meeting requests for complete supplies adjusted to the needs of the individual markets The results of the activities in Denmark were significantly above expectations driven by exceptionally high levels of demand The companies in the UK and Sweden performed in line with expectations Results in Germany exceeded expectations The Polish company performed below expectations, and the market conditions are difficult

12 Q4 12 Building activities in the Aarsleff Group Financial Report 1 October 2015 to 30 September 2016

13 Q4 13 Building activities in the Aarsleff Group The Aarsleff Group undertakes building and renovation projects and enters into contracts for the operation and maintenance of buildings It is a basic principle for the Aarsleff Group s development that earnings requirements take priority over growth There is a high level of activity within new construction as well as building renovation in Denmark The Group focuses on exploiting the positive market opportunities within commercial, office and residential construction as well as building renovation The Group has now established a strong level of activity within commercial and office construction east of the Great Belt A new organisation west of the Great Belt is being set up to exploit the market opportunities Large building projects are typically carried out in One Company collaboration with a high degree of own production and with the participation of the Group companies that carry out cofferdams, piling work, underground structures, buildings and total technical contracts, and preferably with early involvement in the design phase The Group prioritises a high degree of application of digital tools within design, planning and project execution. The implementation of Virtual Design and Construction (VDC) is now increasingly contributing to efficiency improvement and industrialisation in the projects as well as value creation for our customers

14 Q4 14 Building activities in the Aarsleff Group Looking back (1) September 2016 Centre of Rødovre, extension of shopping mall in trade contract and early tender. The area is 12,000 square metres of underground parking and 7,000 square metres of basement. Carried out by the Aarsleff Group. The work is in progress July 2016 Construction of a new laboratory and logistics building at Bispebjerg Hospital in Copenhagen with a total area of 7,700 square metres plus a basement of 2,800 square metres July 2016 Construction of 28,000 square metres of combined residential and commercial construction at Thomas B. Thriges Gade in Odense. The work will begin in 2018 March 2016 Uptown Nørreport, 40,000 square metres of student accommodation in 29 storeys and an underground car park. The shell structure contract is carried out by the Aarsleff Group for KPC and Danica Pension. The work is in progress January 2016 The Aarsleff Group takes over the shares in Hansson & Knudsen A/S which carries out new construction, renovation and building maintenance primarily on Funen, in the Triangle Region and in Southern Jutland. Hansson & Knudsen and Per Aarsleff A/S collaborate on the renovation of Rømerhus in the centre of Aarhus for Bestseller United A/S. A comprehensive and complex total renovation of an approx. 100 year old building of about 4,500 square metres November 2015 Cooperation with the real estate company Project Nord P/S on design, building plans and budgets for development of the area near Bernstorffsgade and Tietgens Bridge in Copenhagen with a total area of approx. 39,000 square metres September 2015 Office building for Maersk Group at Amerika Plads in Copenhagen in a design and build contract. The Aarsleff Group carries out earthwork, sewer work, pile driving, concrete and element work as well as technical installations in own production. The area is 13,000 square metres as well as 3,000 square metres of basement

15 Q4 15 Building activities in the Aarsleff Group Looking back (2) August 2015 Istak hf. is to rebuild an existing domicile construction into a new United States embassy in Reykjavik December ,000 square metres of teaching facilities in a shell structure contract for Ejendomsfonden Copenhagen International School and project management contract for the fitting out work The work was carried out by Per Aarsleff A/S and Hansson & Knudsen A/S, handed over in December 2016 December 2014 Laboratory building for Novo Nordisk A/S with a total gross area of 15,000 square metres. Per Aarsleff A/S carries out earthwork, construction pit and shell structure inclusive of fitting out work. Wicotec Kirkebjerg A/S carries out the technical contract. The contract is carried out in a coordinated partnering collaboration. Per Aarsleff A/S and Wicotec Kirkebjerg A/S were selected after an initial value-creating first phase July 2014 Shell structure construction at the Niels Bohr Institute, North Campus, in Copenhagen. The Aarsleff Group establishes and operates the construction site, carries out the construction pit and the shell structure with a total gross area of almost 52,000 square metres. Two buildings will be linked by a tunnel beneath the road of Jagtvej and a skywalk at the third-floor level July 2014 New workshop and storage facilities of 4,900 square metres in Thule for Thule Airbase in Greenland June 2014 Technical contract at at the Psychiatric Center in Aarhus in a PPP project. Wicotec Kirkebjerg A/S will operate the facility management contract during the next 25 years September 2013 ATP Langelinie, 28,000 square metres of office building inclusive of basement and project management contract, completed in November 2016 September 2013 Copenhagen Towers II, 7-storey office building and 22-storey office tower for Capital Solstra. 34,000 square metres of shell structure contract inclusive of basement completed in January 2015

16 Q4 16 Aarsleff Group activities Financial Report 1 October 2015 to 30 September 2016

17 Q4 17 Aarsleff Group activities GENERAL LEVEL Project foundation Construction Denmark Construction Mega Construction International projects Ístak hf. ACTIVITY-BASED LEVEL Tunnels Østergaard A/S Marine construction VG Entreprenør A/S Rail Aarsleff Rail A/S Shell structures and buildings Hansson & Knudsen A/S Technical contractor Wicotec Kirkebjerg A/S Service Per Aarsleff A/S Brødrene Hedegaard Petri & Haugsted A/S Dan Jord A/S INDUSTRIAL LEVEL Ground Engineering Northern Europe Ground Engineering Denmark Pipe Tech. East. Eur. Pipe Technologies Europe Pipe Technologies Denmark

18 Q4 The future financial year 2016/2017 Financial Report 1 October 2015 to 30 September

19 Q4 19 The future financial year 2016/2017 Group 500 EBIT in DKK million / / / / /2017 Outlook Realised The Group as a whole expects the level of activity to be approx. 5% higher compared with 2015/2016 EBIT is expected to amount to DKK 430 million

20 Q4 20 The future financial year 2016/2017 Group Investments in property, plant and equipment and subsidiaries. DKK million / / / / /2017 Outlook Acquisition of subsidiaries Property, plant and equipment Investments are expected to amount to approx. DKK 500 million and are inclusive of Aarsleff s new office building in the southern part of Aarhus and acquisition of equipment for the project concerning electrification of the Danish railway, a total of approx. DKK 120 million On the threshold of the new financial year, the Group s volume of orders is in line with last year s level.

21 Q4 21 The future financial year 2016/2017 Construction 10 EBIT% % 4.3% 4.3% 3.4% 3.5% Outlook Long-term target 0 Realised 2012/ / / / /2017 A level of activity which is 5% higher The civil engineering market in Denmark is still stable, even though there is a small setback in some areas There is a high level of activity within new construction as well as building renovation in Denmark Even though activities will still be affected by the delay of major infrastructure projects, the level of activity is still expected to increase, among other things due to a full inclusion in the financial year of Hansson & Knudsen A/S EBIT will continue to be affected by high tender costs for exceptionally large tenders with extended preparation periods The integration of the acquired companies will continue to increase the earnings contribution Level of activity and earnings in connection with large projects abroad are expected to be relatively low due to a reduced number of ongoing projects

22 Q4 22 The future financial year 2016/2017 Pipe Technologies 10 EBIT% % 2.3% 4.6% 3.0% 3.0% Outlook Long-term target / / / / /2017 Realised A level of activity which is 5% higher Pipe Technologies market potential in Denmark is closely connected to the utility companies investment level which is expected to be unchanged The difficult market conditions in Poland, the Baltic countries and Russia are expected to continue, and the companies are not expected to contribute significantly to results in spite of the initiated capacity adjustments The implementation of sewer pipe renewal with our internally developed glass liner is continued gradually and expected to contribute to increased earnings over time

23 Q4 23 The future financial year 2016/2017 Ground Engineering 10 EBIT% % 5.4% 6.4% 7.5% 6.5% Outlook Long-term target 0 Realised 2012/ / / / /2017 A level of activity which is 10% higher Ground Engineering has good market potential in a stable civil engineering market in Denmark, e.g. in One Company projects with Construction The potential on the segment s foreign markets in Sweden, the UK, Poland and Germany is expected to be positive In 2015/2016, the segment benefitted from an exceptionally high level of demand on the Danish market. However, in the future financial year, we expect the demand to normalise, but to remain at a high level The production launch in the new pile factory in Germany and the integration of the activities into the Ground Engineering segment s total activities will continue in the future financial year with an expected earnings growth in the future years

24 Q4 24 Strategic focus areas Financial Report 1 October 2015 to 30 September 2016

25 Q4 25 Strategic focus areas Group Aarsleff is an integrated Group with joint values, vision and mission and common basic principles of management The Aarsleff Group has developed expertise on an international scale, allowing us to participate in large infrastructure projects in Denmark, often in collaboration with international contracting companies Aarsleff combines specialist contracting expertise into turnkey solutions with a high degree of own production. We refer to this as One Company, meaning that we exploit synergies across the Group. Our strategy as a contracting group is underpinned by this principle Aarsleff undertakes building and renovation projects and enters into contracts for the operation and maintenance of buildings. Large building projects are typically carried out in One Company collaboration with a high degree of own production and with the participation of the Group companies that carry out cofferdams, piling work, underground structures, buildings and total technical contracts

26 Q4 26 Strategic focus areas Construction Construction will focus on positioning for future years important traffic infrastructure projects, and the climate and environmental challenges facing the Danish utility companies Increased involvement in general building activities The number of design & build contracts put out to tender is increasing. This calls for combinations of specialist contracting expertise and early contractor involvement in the design phase. Construction has a coordinative role in the establishment of One Company working relationships and is in a strong position to carry out such projects Service and maintenance work in multi-annual framework agreements The implementation of Virtual Design and Construction (VDC) is to contribute to efficiency improvement and industrialisation in the projects as well as increased value creation for our customers

27 Q4 27 Strategic focus areas Pipe Technologies In Pipe Technologies, the challenge is to constantly industrialise and streamline the installation and production processes. The demands for competitive prices in the market must be met Cost reductions in the value chain from manufacturing to installation of Aarsleff s standard products Competitiveness is vital for growth on new markets and for maintaining the leading position on existing markets Current development of a broad product portfolio and a strong technological foundation from the international centre of expertise in Hasselager

28 Q4 28 Strategic focus areas Ground Engineering Ground Engineering focuses on the incorporation of common standards as well as product and method development. This is done to increase productivity and competitiveness in manufacturing and installation on all markets Ground Engineering aims at becoming a market leader in Denmark and taking up a leading position in Germany, the UK, Poland and Sweden Supply and installation of precast concrete piles have a high priority on all markets Other piling skills and methods are developed on the individual markets to exploit the earnings opportunities Experience, methods and expertise are shared across country borders

29 Q4 29 Long-term financial targets Financial Report 1 October 2015 to 30 September 2016

30 Q4 30 Long-term financial targets Attractive and stable return on equity, significant financial resources and a high solvency ratio Financial year 2015/2016 Outlook for 2016/2017 Long-term financial targets EBIT% Construction Pipe Technologies Ground Engineering The Aarsleff Group 3.4% 3.0% 7.5% 4.0% 3.5% 3.0% 6.5% 4.0% 4.5% 5.0% 7.0% Approx. 5% Profit share (Payout ratio) 27% % Equity ratio of the balance sheet (solvency ratio) 38.3% - Approx. 40% Net interest-bearing debt (measured as average per quarter) DKK 90 million net deposit - DKK 0 million net debt Return on equity (ROE) 12.7% - Minimum 12% per year

31 Q4 31 Long-term financial targets Growth and development Growth takes place through a combination of organic growth, acquisition of specialist contracting expertise and with a focus on profitability In Construction, we are making the most of the current market potential while considering our policy of selective order intake Within the industrial segments Pipe Technologies and Ground Engineering, our growth target is between 5% and 10% per year with the focus on international growth

32 Q4 32 Long-term financial targets Profit and return on equity 10 EBIT% Construction 10 EBIT% Pipe Technologies 10 EBIT% Ground Engineering % 4.3% 4.3% 3.4% 3.5% % 2.3% 4.6% 3.0% 3.0% % 5.4% 6.4% 7.5% 6.5% / / / / / / / / / / / / / / /2017 Outlook Long-term target Realised

33 Q4 33 Long-term financial targets Sound financial resources Net interest-bearing debt in DKK million Solvency ratio 600 Net interest-bearing debt, year-end 50% Target /15 Q1 2014/15 Q2 2014/15 Q3 2014/15 Q4 2015/16 Q1 2015/16 Q2 45% 40% 35% 30% / / / /16 Q3 2015/16 Q4 25% 20% 2011/ / / / /16 Long-term target Aarsleff carries out construction projects where a high solvency ratio is vital A sound financial position allows us to strategically position ourselves for development of the Group During growth periods, the company may require new borrowing up to a certain level. However, net interest-bearing debt must not exceed 50% of equity at the beginning of the financial year

34 Q4 34 Dividend Financial Report 1 October 2015 to 30 September 2016

35 Q4 35 Dividend For the financial year 2015/2016, the proposed dividend per share of a nominal value of DKK 2 is DKK 4 against DKK 3 per share last year. This corresponds to 27% of the profit of the company Achievement of the targeted return on equity will imply that the expected growth can be financed by future earnings and that liquidity is generated for payment of dividend which is assessed at 20-30% of the annual profit subject to growth The decision as to the annual dividend distribution is made on the basis of the company s actual financial situation, comprising net interest-bearing debt, solvency ratio and outlook for the future financial year The holding of treasury shares amounts to 10%. At the Annual General Meeting in January 2017, the Board of Directors will ask the shareholders for authorisation for the next five years to allow the company to acquire treasury shares within a total nominal value of 20% of the share capital of the company. The authorisation to acquire another 10% will only come into effect in case of a special situation. Distribution to shareholders is expected to take place only in the form of dividend

36 Q4 36 Financial calendar Financial Report 1 October 2015 to 30 September 2016

37 Q4 37 Financial calendar 31 January 2017 Annual general meeting at the Group headquarters, Hasselager Allé 5, Viby J 3 February 2017 Dividend paid to shareholders for the financial year 2015/ February 2017 Interim financial report for the period 1 October December 2016