Quarterly Report • Aug 13, 2015
Quarterly Report
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Q2 2015
2
Interim consolidated financial statements
Output volume: 6 percent above prior year ___
Orders received: strong increase of 32 percent. Extension of important service agreements with longstanding clients in Industrial as well as Building and Facility ___
Adjusted EBITA: at €63 million in line with communicated expectations ___
Power business segment put up for sale: net loss of €439 million with one-time burden from non-cash goodwill impairment in the amount of €330 million as well as operating losses and restructuring expenses of €100 million ___
Cash flow from operating activities: improvement through reduced increase in working capital ___
Outlook 2015: output volume at prior-year level, adjusted EBITA between €150 and €170 million
| KEY FIGURES FOR THE GROUP* |
H1 | Q2 | |||||
|---|---|---|---|---|---|---|---|
| € million | 2015 | 2014 | ∆ in % | 2015 | 2014 | ∆ in % | 1-12 / 2014 |
| Output volume | 3,117 | 2,933 | 6 | 1,641 | 1,538 | 7 | 6,246 |
| Orders received | 3,586 | 2,710 | 32 | 1,865 | 1,262 | 48 | 5,510 |
| Order backlog | 5,005 | 4,845 | 3 | 5,005 | 4,845 | 3 | 4,401 |
| EBITA adjusted 1, 2 | 63 | 87 | -28 | 53 | 56 | -5 | 262 |
| EBITA | 91 | 56 | 63 | 82 | 53 | 55 | 207 |
| Adjusted net profit from continuing operations 3 |
33 | 54 | -39 | 31 | 40 | -23 | 160 |
| Adjusted earnings per share from continuing operations 3 (in €) |
0.75 | 1.23 | -39 | 0.71 | 0.90 | -21 | 3.62 |
| Net profit 4 | -439 | 55 | -423 | 47 | -71 | ||
| Cash flow from operating activities |
-139 | -168 | -13 | -3 | 34 | ||
| Investments | 43 | 67 | -36 | 16 | 35 | -54 | 258 |
| thereof in P, P & E | 41 | 60 | -32 | 15 | 31 | -52 | 117 |
| thereof in financial assets | 2 | 7 | -71 | 1 | 4 | -75 | 141 |
| Number of employees | 57,250 | 57,344 | 0 | 57,250 | 57,344 | 0 | 57,571 |
* The key figures for the Power business segment and Offshore Systems, which have been put up for sale, for the sold divisions Construction and Infrastructure as well as the sold activities of the former Concessions business segment are no longer presented in the business segments, but under 'Discontinued operations'. All of the figures presented in this interim group management report relate, unless otherwise stated, to the Group's continuing operations; the figures for the prior-year period have been adjusted accordingly.
1 Adjusted in the first half of 2015 for one-time expenses in connection with the Bilfinger Excellence efficiency-enhancing program, restructuring expenses and for the capital gain on the sale and revaluation of the investment in the Nigerian business totaling €28 million before taxes (previous year: minus €31 million) and €36 million after taxes (previous year: minus €22 million).
2 Adjusted in full-year 2014 for one-time expenses in connection with the Bilfinger Excellence efficiency-enhancing program, restructuring expenses and for the capital gain on the reduction of the investment in Julius Berger Nigeria totaling minus €55 million before taxes and minus €35 million after taxes.
3 Adjusted for the special effects on EBITA referred to under 1) and 2) and for the amortization of intangible assets from acquisitions (H1 2015: minus €11 million after taxes (previous year: minus €12 million after taxes); FY 2014: minus €25 million after taxes). In addition, with regard to income taxes in the first half of 2015, the effect from the write-off of previously deferred tax assets on the tax loss carryforwards of Bilfinger SE (minus €46 million) was adjusted and the effective tax rate was normalized to 31 percent (minus €23 million). In full-year 2014, the reduction of deferred tax assets on tax-loss carryforwards was adjusted (minus €12 million) as a result of Section 8c of the German Corporate Income Tax Act (KStG).
4 Includes continuing and discontinued operations.
In the future, Bilfinger will focus on business with clients in the industrial and real-estate sectors. In June 2015, we launched a structured selling process for the Power business segment, which in 2014 generated an output volume of €1.45 billion with approximately 11,000 employees. The sale is expected to be completed within one year. The former Power business segment will be presented as discontinued operations in these interim financial statements.
In June 2015, we sold the Infrastructure division to Austrian construction company Porr, thus completing the disposal of our civil engineering activities that was started in the previous year. Net proceeds from the sale of approximately €20 million, which will flow to Bilfinger in August, were slightly below the original carrying amount of just under €25 million. The Construction division was transferred to Swiss construction company Implenia already in the first quarter of 2015.
In addition, Bilfinger sold its remaining 30.3 percent investment in the publicly-listed Julius Berger Nigeria plc to Nigerian investors. The sale of 13.8 percent of the shares took effect in the second quarter of 2015, transfer of the remaining shares is expected to follow in the third quarter of 2015. Also in the second quarter of 2015, Bilfinger disposed of its 10 percent stake in Julius Berger International GmbH, Wiesbaden, a subsidiary of Julius Berger Nigeria.
Net proceeds from these transactions amount to a total of approximately €100 million, half of which flowed to the company in the second quarter. The remaining amount is expected to follow in the third quarter of 2015. At the end of the second quarter, a gain in the magnitude of €58 million in total was realized from the already sold shares as well as from the revaluation of the shares that will be transferred in the third quarter.
Per H. Utnegaard took office as Chairman of the Executive Board at Bilfinger SE on June 1, 2015. His predecessor, Herbert Bodner, had been appointed on an interim basis in August 2014.
On April 1, 2015, Axel Salzmann joined the company as Chief Financial Officer. He succeeds Joachim Müller, who left the company.
At its meeting on July 21, 2015, the Supervisory Board of Bilfinger SE decided to reduce the size of the Executive Board from five members to three and to effect the resignation of Pieter Koolen, previously responsible for the Industrial business segment, and Joachim Enenkel, previously responsible for the Power business segment, on amicable terms. The Industrial business segment and the discontinued operations of the former Power business segment will in future be headed by Per H. Utnegaard directly. Dr. Jochen Keysberg retains responsibility for the Building and Facility business segment.
Output volume and orders received above prior-year levels The Group's output volume in the first half of 2015 rose by 6 percent to €3,117 million. Orders received rose by 32 percent to €3,586 million. Among other things, the extension of important service agreements with longstanding clients in both business segments had a positive impact here. The order backlog of €5,005 million was 3 percent higher than a year earlier.
Due in particular to the disappointing first quarter of 2015, adjusted EBITA in the first half of the year of €63 million was, as expected, well below the prior-year figure of €87 million. This was primarily the result of the negative development in individual areas of the Industrial business segment. In the Building and Facility business segment, EBITA increased as a result of acquisitions.
Including special items, the Group's EBITA amounted to €91 million (previous year: €56 million). The special items relate to additional one-time expenses of €2 million for our Bilfinger Excellence efficiencyenhancing program and restructuring expenses of €28 million, especially in the Industrial business segment. This is offset by a gain in the amount of €58 million from the sale of 13.8 percent of the shares in Julius Berger Nigeria plc and from the revaluation of the remaining 16.5 percent of the shares, the sale of which will take effect in the third quarter.
Amortization of intangible assets from acquisitions amounted to minus €16 million (previous year: minus €19 million). Gross profit decreased to €350 million (previous year: €357 million) and the gross margin fell to 11.2 percent (previous year: 12.2 percent). The increase in selling and administrative expenses to €327 million (previous year: €323) million is exclusively the result of acquisitions. Overall, EBIT of €75 million was clearly above the prior-year figure of €37 million.
Net interest expense increased to €14 million (previous year: €10 million), the prior-year figure included a return of €6 million from the sale of securities. This results in earnings before taxes from continuing operations of €61 (previous year: €27 million). The tax expense amounted to €71 million (previous year: €6 million). In this context, it is necessary to consider that nearly no deferred taxes were capitalized for tax losses in the current year. In addition, previously capitalized deferred tax assets on the tax-loss carryforwards of Bilfinger SE, i.e. the German tax group, in the amount of €46 million were fully written off because a realization is no longer reasonably certain. Earnings after taxes from continuing operations thus amounts to minus €10 million (previous year: €21 million).
Earnings after taxes from discontinued operations relates to the former Power, Construction and Concessions business segments as well as Offshore Systems. It amounts to minus €434 million (previous year: €32 million). The significantly negative earnings result from the former Power business segment. In the course of the reclassification of the former business segment as discontinued operations, the disposal group was measured at fair value less costs to sell, which led to an impairment loss in the amount of €330 million. This is in addition to further burdens totaling €100 million from regular earnings (minus €87 million) as well as restructuring expenses (minus €13 million).
In the reporting year, a capital gain from the sale of the Construction division was also included which, after consideration of a risk provision, led to a positive earnings effect of €12 million.
After the deduction of minority interest, the Group's net profit was minus €439 million (previous year: €55 million). Adjusted net profit from continuing operations amounted to €33 million (previous year: €54 million); adjusted earnings per share from continuing operations amount to €0.75 (previous year: €1.23). The adjustments relate to the amortization of intangible assets from acquisitions, the aforementioned special items in EBITA, the effect form the non-capitalization of deferred tax assets on losses in the reporting period and the write-off of previously capitalized deferred tax assets on the tax-loss carryforwards of Bilfinger SE. The adjusted effective tax rate was 31 percent.
6
The increase in working capital during the year, which is typical of our business, declined in the first half of the year to €183 million (previous year: €211 million). This led to a corresponding improvement in cash flow from operating activities to minus €139 million (previous year: minus €168 million).
Investing activities resulted in a net cash inflow of €106 million (previous year: €62 million). The net cash inflow resulted from proceeds from the sale of the Construction division in the amount of €73 million, from the sale of investments in the Nigerian business of €49 million as well as €13 million from the sale of Power's office property in Oberhausen. In the prior-year quarter, proceeds from the disposal of concession projects and shares in the infrastructure fund BBGI in the amount of €142 million were recorded. Only €2 million was applied for the acquisition of companies and other financial assets in the first half of the year (previous year: €7 million). In the course of our restrictive expenditure policy, investments in property, plant and equipment were reduced to €41 million (previous year: €60 million). This was countered by proceeds in the amount of €15 million (previous year: €11 million). The net cash outflow from financing activities amounted to €6 million (previous year: €146 million). Dividends paid to the shareholders of Bilfinger accounted for €88 million and the partial utilization of the syndicated credit facility resulted in an inflow of €90 million.
Discontinued operations resulted in a net cash outflow of €80 million (previous year: €127 million), particularly from operating activities. Cash and cash equivalents amounted to €237 million at June 30 (previous year: €299 million). Financial debt – excluding project credit on a non-recourse basis, for which Bilfinger is not liable – amounted to €610 million (previous year: €540 million). Net debt on the balance sheet date was €373 million (previous year: minus €241 million).
The balance sheet total, due in particular to the sale of the Construction division and the goodwill impairment in the Power business segment, decreased to €5,441 million (end of 2014: €5,962 million). Equity declined to €1,478 million (end of 2014: €1,917 million) as a result of negative net profit. The equity ratio was 27 percent (previous year: 35 percent). Assets and liabilities classified as held for sale relate in particular to the Power business segment and Offshore Systems, which have been put up for sale, and the Polish construction activities, the sale of which will be concluded in the third quarter of 2015. Due to changes to the relevant discount rate – in the Euro zone an increase from 2.0 percent to 2.25 percent and in Switzerland a decrease from 1.5 percent to 1.0 percent – provisions for pensions and similar obligations declined slightly to €396 million (end of 2014 pro forma: €400 million).
At the end of the first half of 2015, 57,250 people were employed at the Bilfinger Group (previous year: 57,344). While the number of international employees increased to 37,210 (previous year: 36,796), primarily due to the acquisition of British real-estate consultants GVA, the number of employees in Germany decreased to 20,040 (previous year: 20,548).
For full-year 2015, Bilfinger anticipates an output volume at the magnitude of the previous year (2014: €6.246 billion) with an adjusted EBITA between €150 and €170 million (previous year: €262 million). The main reason for the decline is the weak development of the oil and gas business in the Industrial segment. The Building and Facility business segment will continue to develop positively.
Operating losses from discontinued operations in the Power business will have a significant impact on net profit, as will the following special effects:
__ One-time expenses in connection with Excellence, our efficiency-enhancing program, as well as restructuring expenses primarily in the Industrial business segment in the amount of at least €70 million (first half of 2015: €30 million)
__ Expectation of significant one-time expenses in connection with an adjustment of our administrative expenses to our new corporate structure
__ A capital gain from the sale and revaluation of our investment in the Nigerian business in the amount of €58 million (first half of 2015: €58 million)
__ A write-off of previously deferred tax assets on the tax-loss carryforwards of Bilfinger SE, i.e. the German tax group, in the amount of €46 million (first half of 2015: €46 million)
__ A capital gain from the sale of the Construction division; after consideration of a risk provision, a positive earnings effect of €12 million (first half of 2015: €12 million)
__ Restructuring expenses in the Power business in the amount of approximately €60 million (first half of 2015: €13 million)
__ Goodwill impairment in the Power business segment in the amount of €330 million (first half of 2015: €330 million)
These effects will lead to a clearly negative net profit but are, for the most part, non-cash.
No significant changes have occurred with regard to opportunities and risks compared with the situation as described on pages 102ff of the 2014 Annual Report. The negative impact from the low oil price on those divisions that are active in the oil and gas sector has, however, been significantly stronger than initially anticipated. And, in addition, the already difficult situation in the power plant business has worsened as compared to the beginning of the year. Provisions have been recognized for all discernible risks; in our assessment, no risks exist that would jeopardize the continuing existence of the Bilfinger Group.
After the balance sheet date, no events have occurred that are of particular significance for the Group's profitability, cash flows or financial position. Our business and economic environment has not changed substantially.
| OVERVIEW OF OUTPUT VOLUME AND ORDER SITUATION : H1 |
Output volume | Orders received | Order backlog | Output volume |
|||
|---|---|---|---|---|---|---|---|
| € million | H1 2015 | ∆ in % | H1 2015 | ∆ in % | 6 / 2015 | ∆ in % | FY 2014 |
| Industrial | 1,781 | 1 | 1,716 | 5 | 2,416 | -10 | 3,705 |
| Building and Facility | 1,372 | 12 | 1,922 | 74 | 2,606 | 20 | 2,659 |
| Consolidation / other | -36 | -52 | -17 | -118 | |||
| Continuing operations | 3,117 | 6 | 3,586 | 32 | 5,005 | 3 | 6,246 |
| OVERVIEW OF OUTPUT VOLUME AND ORDER SITUATION : Q2 |
Output volume | Orders received | |||
|---|---|---|---|---|---|
| € million | Q2 2015 | ∆ in % | Q2 2015 | ∆ in % | |
| Industrial | 946 | 2 | 876 | 10 | |
| Building and Facility | 714 | 12 | 1,005 | 115 | |
| Consolidation / other | -19 | -16 | |||
| Continuing operations | 1,641 | 7 | 1,865 | 48 |
| ADJUSTED EBITA BY BUSINESS SEGMENT € million |
H1 | Q2 | |||||
|---|---|---|---|---|---|---|---|
| 2015 | 2014 | ∆ in % | 2015 | 2014 | ∆ in % | FY 2014 | |
| Industrial | 49 | 76 | -36 | 40 | 45 | -11 | 190 |
| Building and Facility | 52 | 41 | 27 | 34 | 29 | 17 | 136 |
| Consolidation / other | -38 | -30 | -21 | -18 | -64 | ||
| Continuing operations | 63 | 87 | -28 | 53 | 56 | -5 | 262 |
Low oil price negatively impacts business in the USA and Scandinavia ___
| KEY FIGURES € million |
H1 | Q2 | TARGET OUTPUT VOLUME BY REGION IN 2015 | |||||
|---|---|---|---|---|---|---|---|---|
| 2015 | 2014 ∆ in % | 2015 | 2014 ∆ in % | FY 2014 | 3% Asia 18% Germany 17 % America |
|||
| Output volume | 1,781 1,764 | 1 | 946 | 931 | 2 | 3,705 | ||
| Orders received | 1,716 1,631 | 5 | 876 | 797 | 10 | 3,276 | ||
| Order backlog | 2,416 2,693 | -10 | 2,416 2,693 | -10 | 2,404 | |||
| Capital expenditure on P, P & E | 25 | 33 | -24 | 9 | 16 | -44 | 67 | |
| EBITA / EBITA adjusted | 49 | 76 | -36 | 40 | 45 | -11 | 190 | 62% Rest of Europe |
To date, economic development in the Euro zone has not suffered noticeably as a result of the crisis in Greece. For the European currency zone in 2015, the OECD expects a solid growth rate of 1.4 percent. The willingness to invest in the project business on the part of the process industry remains limited while the maintenance business for plants in the process industry, which is shaped by longer-term framework agreements, is showing stable development. In general, ongoing price pressure is being noted.
The strong investment restraint in the European and American oil and gas sectors caused by the low price of oil continues. In Scandinavia, maintenance budgets for production and processing were cut, sometimes drastically. In the United States, the number of active oil and gas wells fell by more than half as compared to the previous year. A substantial portion of the projects originally planned in the market sectors that are relevant for us – mid and downstream – are therefore currently not being carried out. In individual areas of our Industrial business segment, we are adjusting capacities as a result of the developments described.
Output volume in the Industrial business segment for the first six months of 2015 was stable at €1,781 million. Orders received rose by 5 percent to €1,716 million and the order backlog declined by 10 percent to €2,416 million. Exchange rate effects had a positive impact here.
Due to the development described above and the resulting underutilization of capacities, our divisions that are active in the oil and gas business and in the energy sector were not able to meet their earnings expectations. This was on top of worsened earnings in individual projects. Adjusted EBITA in the business segment thus decreased significantly to €49 million (previous year: €76 million).
In the Industrial business segment, Bilfinger expects a significant decrease in output volume in 2015 to a good €3.4 billion. In this context, we anticipate an adjusted EBITA margin significantly below the prioryear figure.
In the United States, we extended an important framework agreement with a longstanding major client in the consumer-goods industry. Over the next four years, Bilfinger will retain responsibility for the maintenance and modernization of production facilities at more than a dozen locations in the USA. The scope of activities ranges from maintenance and repairs through to major inspections as well as the design, construction and commissioning of new facilities. We were commissioned by another client, with which we have been working together for decades, with the expansion of production capacities for liquid gas at locations in three American states. Total volume for the two orders amounts to approximately €600 million.
Bilfinger signed a framework agreement covering the replacement and maintenance of control systems for 50 gas turbines with the Dutch utility company Gasunie. We will develop a new, standardized control system that can be used for gas turbine compressors from all manufacturers in Gasunie's Dutch transmission network. This is in addition to a long-term contract for maintenance and repair of this control technology. The order has a volume of approximately €20 million.
Bilfinger is the largest German provider of maintenance services for industrial facilities. This is according to the study published in July 2015 by the consulting company Lünendonk. The study showed that Bilfinger is not only the strongest provider in Germany, but that the company also has by far the highest international share in the German industrial services sector. About 80 percent of the output volume of €3.7 billion generated in the Industrial business segment in 2014 came from international markets.
Service agreements with longstanding major clients extended ___
| KEY FIGURES € million |
H1 | Q2 | TARGET OUTPUT VOLUME BY REGION IN 2015 | |||||
|---|---|---|---|---|---|---|---|---|
| 2015 | 2014 ∆ in % | 2015 | 2014 ∆ in % | FY 2014 | 2% Asia 1% Australia 9% America |
|||
| Output volume | 1,372 1,220 | 12 | 714 | 636 | 12 | 2,659 | ||
| Orders received | 1,922 1,104 | 74 | 1,005 | 468 | 115 | 2,298 | 57% Germany 31 % Rest of Europe |
|
| Order backlog | 2,606 2,166 | 20 | 2,606 2,166 | 20 | 2,004 | |||
| Capital expenditure on P, P & E | 14 | 12 | 17 | 6 | 4 | 50 | 32 | |
| EBITA / EBITA adjusted | 52 | 41 | 27 | 34 | 29 | 17 | 136 |
In light of current interest rates, real estate is an attractive investment. Increasing portfolio transactions from international real-estate funds lead to strong demand for consulting and management services. This is in addition to growing investments in commercial and residential construction. This means that construction-related services such as consulting, design, management and logistics are also in demand. On the European market for facility and real-estate services, the trend toward integrated and cross-national services for internationally active customers continues. In addition, requirements in relation to the energy efficiency of real-estate property are also increasing.
Output volume in the Building and Facility business segment increased as a result of acquisitions and currency effects by 12 percent to €1,372 million while orders received increased by 74 percent to €1,922 million. This substantial growth is primarily attributable to the extension of important facility management contracts. First-time consolidation effects also had a positive impact. Order backlog of €2,606 million surpassed the prior-year figure by 20 percent.
In the first half of 2015, EBITA was increased to €52 million (previous year: €41 million) due to acquisition effects.
Output volume of the Building and Facility business segment will grow significantly in 2015 primarily as a result of the acquisition last year of British real-estate services provider GVA to a good €2.8 billion. The adjusted EBITA margin is expected to be at the prior-year level.
In the second quarter of 2015, Bilfinger signed important service agreements for the management of the real-estate portfolios of two major European banks. The two agreements have a total volume of about €600 million. Bilfinger will in future be providing advisory services for all questions related to the entire real-estate portfolio of a well-known internationally active bank in the United Kingdom. The consulting order has an initial term of five years. In addition, we reached agreement with one of our largest existing clients on the early extension of a cooperation that has been in place for more than ten years. The new framework agreement takes effect retroactively from January 1, 2015 and has a term of five years. Bilfinger thus retains responsibility for the technical, commercial and infrastructural facility management for the bank's more than 1,000 properties. Already in the first quarter of the year, and earlier than expected, we were able to extend an important framework agreement with a longstanding client with a volume of €200 million.
Bilfinger is the largest provider of facility and real-estate services in Germany. In this year's industry rankings from consulting firm Lünendonk, the company was ranked first, as in the years before.
Particularly noteworthy among the new orders in the German building construction business is the erection of two administrative buildings with a total volume of more than €100 million. In Munich, Bilfinger is carrying out turnkey construction of two highly energy-efficient office towers, the 83-meter Sky Tower and the 46-meter Star Tower, part of the Bavaria Tower ensemble. In Cologne, Bilfinger is building an office complex with 14,500 square meters of gross floor space for the Bank für Sozialwirtschaft.
Discontinued operations include the former Power business segment, which has been put up for sale, Offshore Systems and the now sold divisions Construction and Infrastructure – transfer of shares in the third quarter – as well as the former Concessions business segment.
| KEY FIGURES € million |
H1 | Q2 | |||||
|---|---|---|---|---|---|---|---|
| 2015 | 2014 ∆ in % | 2015 | 2014 ∆ in % | FY 2014 | |||
| Output volume | 174 | 365 | -52 | 69 | 191 | -64 | 824 |
| Capital expenditure on P, P & E | 18 | 7 | 157 | 8 | 2 | 300 | 61 |
| EBITA | -17 | 24 | -6 | 12 | -25 |
| KEY FIGURES € million |
H1 | Q2 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| 2015 | 2014 ∆ in % | 2015 | 2014 ∆ in % | FY 2014 | |||||
| Output volume | 607 | 678 | -10 | 320 | 358 | -11 | 1,445 | ||
| Orders received | 586 | 669 | -12 | 261 | 247 | 6 | 1,090 | ||
| Order backlog | 1,050 1,397 | -25 | 1,050 1,397 | -25 | 1,060 | ||||
| Capital expenditure on P, P & E | 5 | 22 | -77 | 3 | 15 | -80 | 22 | ||
| EBITA adjusted | -75 | 24 | -57 | 8 | 8 |
The difficult situation on the German power plant market requires a further internationalization of the Power activities. The necessary expansion of the project business is no longer in line with the strategy and risk profile of Bilfinger as an engineering and services group. The objective is to find a suitable new owner who can take advantage of the future opportunities in the power plant business.
In the course of the reclassification of the former business segment as discontinued operations, the disposal group was measured at fair value less costs to sell, which led to an impairment loss in the amount of €330 million.
Output volume in the Power business segment decreased by 10 percent to €607 million. Orders received of €586 million and order backlog of €1,050 million were also well below the prior-year figures.
Against the backdrop of a market that continues to weaken, additional significant project losses as well as continuing burdens from
a lack of capacity utilization led to a significantly negative adjusted EBITA in the amount of minus €75 million (previous year: €24 million).
After the interim balance sheet date, we signed an agreement with Areva for the continuation of the work that began in 2009 on the Finnish nuclear power plant Olkiluoto 3. The order for the completion of the piping systems was expanded with an order for the manufacture and installation of an electrical measurement system.
In the Power business segment, Bilfinger expects a significant decrease in output volume in 2015 to about €1.2 billion as a result of restrained orders received. In terms of adjusted EBITA, we expect a loss of up to €100 million (previous year: +€8 million).
| Interim consolidated financial statements | ||
|---|---|---|
| CONSOLIDATED INCOME STATEMENT € million |
Jan. 1 - June 30 | Apr. 1 - June 30 | ||
|---|---|---|---|---|
| 2015 | 2014 | 2015 | 2014 | |
| Output volume (for information only) | 3,117 | 2,933 | 1,641 | 1,538 |
| Revenue | 3,116 | 2,952 | 1,641 | 1,565 |
| Cost of sales | -2,766 | -2,595 | -1,452 | -1,367 |
| Gross profit | 350 | 357 | 189 | 198 |
| Selling and administrative expenses | -327 | -323 | -164 | -160 |
| Other operating income and expense | 39 | -14 | 41 | -3 |
| Income from investments accounted for using the equity method | 13 | 17 | 8 | 10 |
| Earnings before interest and taxes (EBIT) | 75 | 37 | 74 | 45 |
| Net interest result | -14 | -10 | -7 | -2 |
| Earnings before taxes | 61 | 27 | 67 | 43 |
| Income tax expense | -71 | -6 | -73 | -11 |
| Earnings after taxes from continuing operations | -10 | 21 | -6 | 32 |
| Earnings after taxes from discontinued operations | -434 | 32 | -422 | 13 |
| Earnings after taxes | -444 | 53 | -428 | 45 |
| thereof minority interest | -5 | -2 | -5 | -2 |
| Net profit | -439 | 55 | -423 | 47 |
| Average number of shares (in thousands) | 44,189 | 44,158 | 44,189 | 44,158 |
| Earnings per share (in €) 1 | -9.93 | 1.25 | -9.57 | 1.06 |
| thereof from continuing operations | -0.11 | 0.52 | -0.02 | 0.77 |
| thereof from discontinued operations | -9.82 | 0.73 | -9.55 | 0.29 |
1 Basic earnings per share are equal to diluted earnings per share.
| CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME € million |
Jan. 1 - June 30 | Apr. 1 - June 30 | ||
|---|---|---|---|---|
| 2015 | 2014 | 2015 | 2014 | |
| Earnings after taxes | -444 | 53 | -428 | 45 |
| Items that will not be reclassified to the income statement | ||||
| Gains / losses from remeasurement of net defined benefit liability (asset) | ||||
| Unrealized gains / losses | 13 | -41 | 67 | -20 |
| Income taxes on unrealized gains / losses | -4 | 11 | -19 | 6 |
| Items that may subsequently be reclassified to the income statement |
9 | -30 | 48 | -14 |
| Gains / losses on fair-value measurement of securities | ||||
| Unrealized gains / losses | 0 | -2 | 0 | -2 |
| Reclassifications to the income statement | 0 | -6 | 0 | -6 |
| 0 | -8 | 0 | -8 | |
| Gains / losses on hedging instruments | ||||
| Unrealized gains / losses | -7 | -2 | 3 | -1 |
| Reclassifications to the income statement | 2 | -2 | -2 | 0 |
| Income taxes on unrealized gains / losses | 2 | 1 | 1 | 0 |
| -3 | -3 | 2 | -1 | |
| Currency translation differences | ||||
| Unrealized gains / losses | 87 | 12 | -15 | 11 |
| Reclassifications to the income statement | -1 | 4 | 0 | 0 |
| 86 | 16 | -15 | 11 | |
| Gains / losses on investments accounted for using the equity method | ||||
| Gains / losses on hedging instruments | ||||
| Unrealized gains / losses | 2 | -2 | 1 | -1 |
| Reclassifications to the income statement | 0 | 23 | 0 | -1 |
| 2 | 21 | 1 | -2 | |
| Currency translation differences | ||||
| Unrealized gains / losses | 2 | 1 | 0 | 1 |
| Reclassifications to the income statement | 1 | 0 | 1 | 0 |
| 3 | 1 | 1 | 1 | |
| 5 | 22 | 2 | -1 | |
| 88 | 27 | -11 | 1 | |
| Other comprehensive income after taxes | 97 | -3 | 37 | -13 |
| Total comprehensive income after taxes | -347 | 50 | -391 | 32 |
| attributable to shareholders of Bilfinger SE | -342 | 51 | -387 | 33 |
| attributable to minority interest | -5 | -1 | -4 | -1 |
| € million | June 30, 2015 | Dec. 31, 2014 | June 30, 2014 | |
|---|---|---|---|---|
| Assets | ||||
| Intangible assets | 1,682 | 2,015 | 1,999 | |
| Property, plant and equipment | 463 | 650 | 666 | |
| Investments accounted for using the equity method | 26 | 71 | 68 | |
| Other financial assets | 55 | 68 | 82 | |
| Deferred taxes | 187 | 223 | 168 | |
| 2,413 | 3,027 | 2,983 | ||
| Current assets | ||||
| Inventories | 103 | 182 | 206 | |
| Receivables and other financial assets | 1,607 | 1,876 | 1,933 | |
| Current tax assets | 43 | 60 | 52 | |
| Other assets | 98 | 98 | 112 | |
| Cash and cash equivalents | 237 | 403 | 299 | |
| Assets classified as held for sale | 940 | 316 | 426 | |
| 3,028 | 2,935 | 3,028 | ||
| 5,441 | 5,962 | 6,011 | ||
| Equity and liabilities | Equity | |||
| Non-current assets Equity attributable to shareholders of Bilfinger SE Minority interest Non-current liabilities Provisions for pensions and similar obligations Other provisions Financial debt, recourse Financial debt, non-recourse Other liabilities Deferred taxes Current liabilities Current tax liabilities Other provisions Financial debt, recourse Financial debt, non-recourse Trade and other payables Other liabilities Liabilities classified as held for sale |
1,507 | 1,938 | 2,068 | |
| -29 | -21 | 9 | ||
| 1,478 | 1,917 | 2,077 | ||
| 396 | 524 | 455 | ||
| 47 | 55 | 53 | ||
| 513 | 516 | 516 | ||
| 13 | 13 | 13 | ||
| 18 | 22 | 53 | ||
| 56 | 91 | 60 | ||
| 1,043 | 1,221 | 1,150 | ||
| 71 | 89 | 84 | ||
| 423 | 461 | 454 | ||
| 97 | 28 | 24 | ||
| 0 | 27 | 27 | ||
| 1,129 | 1,477 | 1,451 | ||
| 300 | 370 | 309 | ||
| 900 | 372 | 435 | ||
| 2,920 | 2,824 | 2,784 | ||
5,441 5,962 6,011
| interest | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Other reserves | ||||||||||
| Share capital |
Capital reserve |
Retained and dis tributable earnings |
Fair-value measurement of securities reserve |
Hedging instru ments reserve |
Currency trans lation reserve |
Treasury shares |
Total | |||
| Balance at January 1,2014 | 138 | 760 | 1,455 | 8 | -61 | -52 | -99 | 2,149 | 16 | 2,165 |
| Earnings after taxes | 0 | 0 | 55 | 0 | 0 | 0 | 0 | 55 | -2 | 53 |
| Other comprehensive income after taxes | 0 | 0 | -30 | -8 | 18 | 16 | 0 | -4 | 1 | -3 |
| Total comprehensive income after taxes | 0 | 0 | 25 | -8 | 18 | 16 | 0 | 51 | -1 | 50 |
| Dividends paid out | 0 | 0 | -132 | 0 | 0 | 0 | 0 | -132 | -4 | -136 |
| Employee share program | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Changes in ownership interest without change in control |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Other changes | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -2 | -2 |
| Balance at June 30, 2014 | 138 | 760 | 1,348 | 0 | -43 | -36 | -99 | 2,068 | 9 | 2,077 |
| Balance at January 1, 2015 | 138 | 760 | 1,171 | 0 | -44 | 10 | -97 | 1,938 | -21 | 1,917 |
| Earnings after taxes | 0 | 0 | -439 | 0 | 0 | 0 | 0 | -439 | -5 | -444 |
| Other comprehensive income after taxes | 0 | 0 | 9 | 0 | -1 | 89 | 0 | 97 | 0 | 97 |
| Total comprehensive income after taxes | 0 | 0 | -430 | 0 | -1 | 89 | 0 | -342 | -5 | -347 |
| Dividends paid out | 0 | 0 | -88 | 0 | 0 | 0 | 0 | -88 | -3 | -91 |
| Employee share program | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Changes in ownership interest without change in control |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Other changes | 0 | 0 | -1 | 0 | 0 | 0 | 0 | -1 | 0 | -1 |
| Balance at June 30, 2015 | 138 | 760 | 652 | 0 | -45 | 99 | -97 | 1,507 | -29 | 1,478 |
Equity attributable to the shareholders of Bilfinger SE Minority
Equity
| CONSOLIDATED STATEMENT OF CASH FLOWS € million |
Jan. 1 - June 30 | Apr. 1 - June 30 | ||
|---|---|---|---|---|
| 2015 | 2014 | 2015 | 2014 | |
| Earnings after taxes from continuing operations | -10 | 21 | -5 | 33 |
| Depreciation, amortization and impairments | 78 | 63 | 45 | 32 |
| Income from revaluation of equity investments | -30 | 0 | -30 | 0 |
| Decrease in non-current provisions and liabilities | -3 | -6 | -1 | -2 |
| Deferred tax expense / benefit | 51 | -18 | 65 | -6 |
| Adjustment for non-cash income from equity-method investments | -2 | -10 | 0 | -9 |
| Cash earnings from continuing operations | 84 | 50 | 74 | 48 |
| Increase in inventories | -5 | -3 | -2 | -3 |
| Increase in receivables | -59 | -78 | -38 | -15 |
| Decrease in current provisions | -39 | -20 | -13 | -21 |
| Decrease / increase in liabilities | -80 | -110 | 3 | -5 |
| Change in working capital | -183 | -211 | -50 | -44 |
| Gains on disposals of non-current assets | -40 | -7 | -37 | -7 |
| Cash flow from operating activities of continuing operations | -139 | -168 | -13 | -3 |
| Proceeds from the disposal of property, plant and equipment | 15 | 11 | 7 | 3 |
| Proceeds from the disposal of subsidiaries net of cash and cash equivalents disposed of | 84 | 0 | 8 | 0 |
| Proceeds from the disposal of concession projects | 0 | 92 | 0 | 28 |
| Disposal of cash and cash equivalents classified as assets held for sale | 0 | -24 | 0 | -24 |
| Proceeds from the disposal of other financial assets | 50 | 0 | 50 | 0 |
| Investments in property, plant and equipment and intangible assets | -41 | -60 | -15 | -31 |
| Acquisition of subsidiaries net of cash and cash equivalents acquired | -1 | -3 | -1 | -2 |
| Investments in other financial assets | -1 | -4 | 0 | -2 |
| Changes in marketable securities | 0 | 50 | 0 | 50 |
| Cash flow from investing activities of continuing operations | 106 | 62 | 49 | 22 |
| Dividends paid to the shareholders of Bilfinger SE | -88 | -132 | -88 | -132 |
| Dividends paid to minority interest | -5 | -5 | -5 | -5 |
| Borrowing | 91 | 2 | 91 | 0 |
| Repayment of financial debt | -4 | -11 | -2 | -1 |
| Cash flow from financing activities of continuing operations | -6 | -146 | -5 | -138 |
| Change in cash and cash equivalents of continuing operations | -39 | -252 | 31 | -119 |
| Cash flow from operating activities of discontinued operations | -70 | -115 | -52 | -36 |
| Cash flow from investing activities of discontinued operations | -21 | -23 | -10 | -15 |
| Cash flow from financing activities of discontinued operations | 11 | 11 | 11 | 10 |
| Change in cash and cash equivalents of discontinued operations | -80 | -127 | -51 | -41 |
| Change in value of cash and cash equivalents due to changes in foreign exchange rates | 4 | 3 | -3 | 3 |
| Cash and cash equivalents at January 1 / April 1 | 403 | 669 | 308 | 451 |
| Cash and cash equivalents classified as assets held for sale (Concessions / Construction) at January 1 / April 1 (+) |
13 | 22 | 16 | 20 |
| Cash and cash equivalents classified as assets held for sale (Concessions / Construction / Power) at June 30 (-) |
64 | 16 | 64 | 16 |
| Cash and cash equivalents at June 30 | 237 | 299 | 237 | 299 |
18
Segment reporting is prepared in accordance with IFRS 8. The reportable segments of the Bilfinger Group reflect the internal reporting structure. The definition of the segments is based on products and services.
The existing 10 divisions are allocated to two business segments. Compared to December 31, 2014, the number of business segments and divisions declined as a result of the classification of the former Power business segment with its two divisions as discontinued operations. The prior-year figures have been adjusted accordingly.
Earnings before interest, taxes and amortization of intangible assets from acquisitions (EBITA) is the key performance indicator for the business units and the Group, and thus the metric for earnings in our segment reporting. EBIT is also reported. The reconciliation of EBIT to earnings before taxes from continuing operations is derived from the consolidated income statement.
| SEGMENT REPORTING JANUARY 1 - JUNE 30 € million |
Output volume |
External revenue |
Internal revenue |
EBITA | intangible assets from acquisitions |
Amortization of and goodwill impairment |
EBIT | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | |
| Industrial | 1,782 | 1,764 | 1,757 | 1,762 | 31 | 43 | 49 | 76 | -7 | -11 | 42 | 65 |
| Building and Facility | 1,372 | 1,220 | 1,345 | 1,190 | 13 | 12 | 52 | 40 | -9 | -8 | 43 | 32 |
| Consolidation, other | -37 | -51 | 14 | 0 | -44 | -55 | -10 | -60 | 0 | 0 | -10 | -60 |
| Continuing operations | 3,117 | 2,933 | 3,116 | 2,952 | 0 | 0 | 91 | 56 | -16 | -19 | 75 | 37 |
| SEGMENT REPORTING APRIL 1 - JUNE 30 € million |
Output volume |
External revenue |
Internal revenue |
EBITA | intangible assets from acquisitions |
Amortization of and goodwill impairment |
EBIT | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | |
| Industrial | 947 | 931 | 933 | 941 | 17 | 26 | 40 | 45 | -3 | -5 | 37 | 40 |
| Building and Facility | 714 | 636 | 700 | 624 | 8 | 6 | 34 | 28 | -4 | -4 | 30 | 24 |
| Consolidation, other | -19 | -29 | 8 | 0 | -25 | -32 | 7 | -19 | 0 | 0 | 7 | -19 |
| Continuing operations | 1,642 | 1,538 | 1,641 | 1,565 | 0 | 0 | 81 | 54 | -7 | -9 | 74 | 45 |
The interim consolidated financial statements as of June 30, 2015, have been prepared in accordance with the International Financial Reporting Standards (IFRSs) as they are to be applied in the EU, as were the consolidated financial statements for the year 2014, and comply with the requirements of IAS 34. They do not provide all of the information and disclosures included in complete consolidated financial statements and are therefore to be read in conjunction with the consolidated financial statements as of December 31, 2014. The accounting policies explained in the notes to the consolidated financial statements for the year 2014 have been applied unchanged.
As was the case in the prior-year period, no acquisitions were made during the interim reporting period.
The former Construction division was sold to the Swiss construction and construction services company Implenia on March 2, 2015.
Within the context of discontinuing the Concessions business segment, two concession projects, accounted for using the equity method, and two fully consolidated concession projects were sold during the prior-year period to the listed company, Bilfinger Berger Global Infrastructure Fonds (BBGI).
The overall effects of the sales were as follows:
| EFFECTS AT THE TIME OF SALE | ||
|---|---|---|
| € million | June 30, 2015 | June 30, 2014 |
| Disposal of assets classified as held for sale | -256 | -289 |
| Disposal of liabilities classified as held for sale | 205 | 244 |
| Disposal of net assets | -51 | -45 |
| Disposal of intercompany receivables | -88 | |
| Derecognition of minority interest | 1 | |
| Reclassification of other comprehensive income to the income statement | 1 | -26 |
| Sale price less selling transaction expenses | 218 | 84 |
| Capital gain after selling transaction expenses | 80 | 14 |
| Income tax expense | -1 | 0 |
| Capital gain after taxes | 79 | 14 |
A risk provision in the amount of €67 million was made in the first quarter of 2015 for contractual guarantees and warranty obligations as well as follow-up costs and process risks from concluded projects retained in the context of selling the Construction activities.
Furthermore, the remaining investment of 30.3 percent in the publicly listed Julius Berger Nigeria plc, Abuja, as well as the investment of 10 percent in that company's subsidiary Julius Berger International GmbH, Wiesbaden, were sold. On the balance sheet date, the sale of 13.8 percent of the shares in Julius Berger Nigeria plc as well as all shares in Julius Berger International GmbH took effect; the transfer of the remaining 16.5 percent of shares in Julius Berger Nigeria plc is expected to follow in the third quarter of 2015. A net disposal gain of €28 million was realized from the completed sales transactions. A change of status occurred for the investment in Julius Berger Nigeria plc, which was previously accounted for using the equity method, because a significant influence no longer exists. The shares not transferred as of the balance sheet date were classified as held for sale and were remeasured at fair value less costs to sell. This resulted in a gain of €30 million. Fair value was measured on the basis of the contractually determined selling price.
Discontinued operations Discontinued operations comprise
The former Construction division put up for sale was sold to the Swiss construction and construction services company Implenia on March 2, 2015.
A contract for the sale of the former Infrastructure division was signed in June 2015 with the Austrian construction group Porr. The transaction will be completed in mid-August 2015.
In accordance with the provisions of IFRS 5, the investments put up for sale were presented as discontinued operations as of the time of reclassification:
In connection with the signing of the contract for the sale of the former Infrastructure division, the fair value less costs to sell of the disposal group was remeasured on the basis of the contractually determined selling price. This resulted in an impairment loss of €3 million.
In the course of the reclassification of the former Power business segment as discontinued operations, the disposal group was measured at fair value less costs to sell, which led to an impairment loss in the amount of €330 million. Using a two-stage process, the fair value was calculated as equity value. The equity value is the result of enterprise value plus net liquidity minus pension obligations as well as further purchase price relevant deducting items. The enterprise value corresponds to the discounted future cash flow calculated using a discount rate determined in accordance with the capital asset pricing model. The calculation of cash flows is based on the planning figures over a four-year period. Planning is based on past experience, current operating results, planned restructuring measures and the best possible assessment by the Group's management of future developments. Market assumptions are taken into consideration with the use of external macroeconomic and industry-specific sources. The enterprise value was also checked for plausibility by means of a measurement using market-based earnings multipliers.
Since the dates of their reclassification, non-current assets classified as held for sale have no longer been subject to systematic depreciation or amortization and subsequent measurement according to the equity method was ceased for the investments accounted for using the equity method.
The amounts in the consolidated income statement and the consolidated statement of cash flows for the prior-year period have been adjusted accordingly.
Earnings from discontinued operations are comprised as follows:
| € million | Jan. 1 - June 30 | Apr. 1 - June 30 | ||
|---|---|---|---|---|
| 2015 | 2014 | 2015 | 2014 | |
| Construction activities and Concessions | -4 | 21 | -9 | 11 |
| Power | -430 | 11 | -413 | 2 |
| Earnings after taxes from discontinued operations | -434 | 32 | -422 | 13 |
All discontinued operations with the exception of the former Power business segment are reported together under Construction activities and Concessions.
Minority interests account for a proportionate loss of €6 million (previous year: loss of €3 million) of earnings after taxes from discontinued operations.
| CONSTRUCTION ACTIVITIES AND CONCESSIONS € million |
Jan. 1 - June 30 | Apr. 1 - June 30 | ||
|---|---|---|---|---|
| 2015 | 2014 | 2015 | 2014 | |
| Output volume (for information only) | 174 | 365 | 69 | 191 |
| Revenue | 165 | 383 | 63 | 183 |
| Expenses / income | -259 | -373 | -66 | -178 |
| Impairment loss | -3 | 0 | -3 | 0 |
| Gain on disposal | 80 | 14 | 0 | 7 |
| EBIT | -17 | 24 | -6 | 12 |
| Net interest result | 0 | 0 | 0 | 0 |
| Earnings before taxes | -17 | 24 | -6 | 12 |
| Income tax income / expense | 13 | -3 | -3 | -1 |
| Earnings after taxes | -4 | 21 | -9 | 11 |
| POWER € million |
Jan. 1 - June 30 | Apr. 1 - June 30 | ||
|---|---|---|---|---|
| 2015 | 2014 | 2015 | 2014 | |
| Output volume (for information only) | 607 | 678 | 320 | 358 |
| Revenue | 608 | 681 | 321 | 360 |
| Expenses / income | -697 | -660 | -391 | -354 |
| Impairment loss | -330 | 0 | -330 | 0 |
| EBIT | -419 | 21 | -400 | 6 |
| Net interest result | -8 | -4 | -6 | -2 |
| Earnings before taxes | -427 | 17 | -406 | 4 |
| Income tax income / expense | -3 | -6 | -7 | -2 |
| Earnings after taxes | -430 | 11 | -413 | 2 |
In order to present the Group's entire output volume in the interest of more complete information, we disclose our output volume in the consolidated income statement. In addition to revenue, it includes the proportion of output volume generated by consortia and amounts to €3,117 million (previous year: €2,933 million).
Scheduled amortization of €16 million was carried out on intangible assets from acquisitions (previous year: €19 million) and is included in cost of sales. Depreciation of property, plant and equipment and the amortization of other intangible assets amount to €53 million (previous year: €43 million). In the reporting period, this includes impairment charges in the amount of €7 million. In addition, impairment losses on financial assets in the amount of €9 million (previous year: €0 million) were recognized.
| € million | Jan. 1 - June 30 | Apr. 1 - June 30 | ||
|---|---|---|---|---|
| 2015 | 2014 | 2015 | 2014 | |
| Interest income | 3 | 2 | 1 | 0 |
| Current interest expense | -12 | -9 | -6 | -4 |
| Net interest expense from retirement benefit liability | -4 | -5 | -2 | -2 |
| Interest expense | -16 | -14 | -8 | -6 |
| Income on securities | 0 | 6 | 0 | 6 |
| Interest expense for minority interest | -1 | -4 | 0 | -2 |
| Other financial expense | -1 | 2 | 0 | 4 |
| Total | -14 | -10 | -7 | -2 |
Deferred tax assets on tax-loss carryforwards are only recognized insofar as their realization is reasonably certain. Based on current assessments, this is not the case in particular for the losses incurred in the current financial year at Bilfinger SE and its tax-group companies, so that no deferred tax assets on tax-loss carryforwards were recognized regarding these losses as of June 30, 2015. In addition, previously recognized deferred tax assets on the tax-loss carryforwards of Bilfinger SE in the amount of €46 million were written off.
| € million | |||
|---|---|---|---|
| June 30, 2015 | Dec. 31, 2014 | June 30, 2014 | |
| Goodwill | 1,561 | 1,871 | 1,880 |
| Intangible assets from acquisitions | 93 | 108 | 87 |
| Other intangible assets | 28 | 36 | 32 |
| Total | 1,682 | 2,015 | 1,999 |
Changes to intangible assets resulted for the most part from the classification of the former Power business segment as discontinued operations (see Notes 3 and 10).
| June 30, 2015 Dec. 31, 2014 Cash and cash equivalents 237 403 |
|
|---|---|
| June 30, 2014 | |
| 299 | |
| Financial debt, recourse – non-current 513 |
516 516 |
| Financial debt, recourse – current 97 |
28 24 |
| Financial debt, recourse 610 544 |
540 |
| Net liquidity -373 -141 |
-241 |
As of the balance sheet date, assets classified as held for sale and liabilities classified as held for sale comprise the following disposal groups:
As of December 31, 2014, in addition to the disposal group Infrastructure and Offshore Systems, the disposal group Construction, which had been sold as of the balance sheet date, was also included. The presentation as of June 30, 2014 relates to the disposal groups Construction, Infrastructure and Concessions.
Assets and liabilities classified as held for sale are allocated as follows to the disposal groups Construction activities and Concessions and Power:
| June 30, 2015 | Dec. 31, 2014 | June 30, 2014 |
|---|---|---|
| 316 | 426 | |
| 738 | 0 | 0 |
| 940 | 316 | 426 |
| 168 | 372 | 435 |
| 732 | 0 | 0 |
| 900 | 372 | 435 |
| 202 |
All disposal groups with the exception of the former Power business segment are reported together under Construction activities and Concessions.
Accumulated other comprehensive income after taxes of the disposal groups as of the balance sheet date amounts to minus €91 million (December 31, 2014: minus €6 million; June 30, 2014: €4 million), of which minus €2 million (December 31, 2014: €0 million; June 30, 2014: €0 million) was attributable to minority interest.
Construction activities and Concessions
The assets and liabilities classified as held for sale of the disposal groups reported together under Construction activities and Concessions are comprised as follows:
| € million | |||
|---|---|---|---|
| June 30, 2015 | Dec. 31, 2014 | June 30, 2014 | |
| Goodwill | 1 | 4 | 4 |
| Other non-current assets | 116 | 134 | 189 |
| Current assets | 67 | 165 | 217 |
| Cash and cash equivalents | 18 | 13 | 16 |
| Assets classified as held for sale | 202 | 316 | 426 |
| Non-current liabilities | 12 | 48 | 161 |
| Current liabilities | 156 | 324 | 274 |
| Liabilities classified as held for sale | 168 | 372 | 435 |
The assets and liabilities classified as held for sale of the Power disposal group are comprised as follows:
| € million | |||
|---|---|---|---|
| June 30, 2015 | Dec. 31, 2014 | June 30, 2014 | |
| Goodwill | 31 | 0 | 0 |
| Other non-current assets | 208 | 0 | 0 |
| Current assets | 453 | 0 | 0 |
| Cash and cash equivalents | 46 | 0 | 0 |
| Assets classified as held for sale | 738 | 0 | 0 |
| Non-current liabilities | 202 | 0 | 0 |
| Current liabilities | 530 | 0 | 0 |
| Liabilities classified as held for sale | 732 | 0 | 0 |
The classification of equity and changes in equity are presented in the interim consolidated financial statements in the Consolidated statement of changes in equity.
Equity decreased by €439 million during the reporting period. Earnings after taxes (minus €444 million) and transactions recognized directly in equity (€97 million) led to a net decrease of equity by €347 million. In addition, dividend payments decreased equity by another €91 million.
The transactions recognized directly in equity primarily comprise the positive effects of currency translation at €89 million and gains from the remeasurement of defined-benefit pension plans at €9 million, which resulted from the adjustment of the discount rate. Hedging instruments resulted in losses of €1 million.
The company holds 1,835,318 treasury shares, equivalent to 3.99 percent of current voting rights. No cancellation of the treasury shares is currently intended.
There was a decrease in provisions for pensions and similar obligations of €128 million to €396 million, most of which – €124 million – was accounted for by the reclassification of the obligations from the former Power business segment to liabilities classified as held for sale. Adjustments to the discount rate as of June 30, 2015 – in Euro countries an increase from 2.0 percent to 2.25 percent and in Switzerland a decrease from 1.5 percent to 1.0 percent – due to the changed interest rates reduced pension provisions by a further €9 million, which is recognized in other comprehensive income.
The methods for the measurement of fair value remain fundamentally unchanged from December 31, 2014. Further explanations on the measurement methods can be found in the Annual Report 2014.
The financial assets and financial liabilities for which the fair values deviate significantly from the carrying amounts are as follows:
| € million | IAS 39 | Carrying | Fair | Carrying | Fair |
|---|---|---|---|---|---|
| category¹ | amount | value | amount | value | |
| June 30, 2015 | Dec. 31, 2014 | ||||
| Liabilities | |||||
| Financial debt recourse, bonds | FLAC | 500 | 471 | 500 | 533 |
| Finance leases, recourse | (IAS 17) | 13 | 19 | 14 | 20 |
1 FLAC: financial liabilities at amortized cost
The financial instruments that are recognized at fair value are categorized in the following fair value hierarchy levels in accordance with IFRS 13:
| € million | ||||
|---|---|---|---|---|
| IAS 39 category¹ | Total | Level 1 | Level 2 | |
| June 30, 2015 | ||||
| Assets | ||||
| Securities | AfS | 0 | 0 | 0 |
| Derivatives in hedging relationships | (Hedge) | 1 | 0 | 1 |
| Derivatives not in hedging relationships | FAHfT | 4 | 0 | 4 |
| 5 | 0 | 5 | ||
| Liabilities | ||||
| Derivatives in hedging relationships | (Hedge) | 4 | 0 | 4 |
| Derivatives not in hedging relationships | FLHfT | 11 | 0 | 11 |
| 15 | 0 | 15 | ||
| Dec 31, 2014 | ||||
| Assets | ||||
| Securities | AfS | 1 | 1 | 0 |
| Derivatives in hedging relationships | (Hedge) | 5 | 0 | 5 |
| Derivatives not in hedging relationships | FAHfT | 7 | 0 | 7 |
| 13 | 1 | 12 | ||
| Liabilities | ||||
| Derivatives in hedging relationships | (Hedge) | 3 | 0 | 3 |
| Derivatives not in hedging relationships | FLHfT | 15 | 0 | 15 |
| 18 | 0 | 18 |
1 AfS: available-for-sale financial assets
FAHfT: financial assets held for trading
FLHfT: financial liabilities held for trading
The measurement of fair value is conducted in level 1 on the basis of quoted (non-adjusted) prices in an active and accessible market for identical assets or liabilities. For level 2 the measurement of fair value is carried out on the basis of inputs for which either directly or indirectly observable market data is available (e.g., exchange rates, interest rates).
Most of the transactions between fully consolidated companies of the Group and related companies or persons involve associates and joint ventures.
Contingent liabilities of €28 million (December 31, 2014: €25 million) generally relate to guarantees provided for former Group companies that were sold and companies in which Bilfinger holds a minority interest. In addition, we are jointly and severally liable as partners in companies constituted under the German Civil Code and in connection with consortia and joint ventures.
| € million | Jan. 1 - June 30 | Apr. 1 - June 30 | Jan. 1 - Dec. 31 | |||
|---|---|---|---|---|---|---|
| 2015 | 2014 | 2015 | 2014 | 2014 | ||
| Earnings before taxes | 61 | 27 | 67 | 43 | 142 | |
| Special items in EBITA | -28 | 31 | -29 | 3 | 55 | |
| Amortization of intangible assets from acquisitions | 16 | 19 | 8 | 9 | 37 | |
| Adjusted earnings before taxes | 49 | 77 | 46 | 55 | 234 | |
| Adjusted income tax expense | -15 | -22 | -14 | -15 | -71 | |
| Adjusted earnings after income taxes from continuing operations | 34 | 55 | 32 | 40 | 163 | |
| thereof minority interest | 1 | 1 | 1 | 0 | 3 | |
| Adjusted net profit from continuing operations | 33 | 54 | 31 | 40 | 160 | |
| Average number of shares (in thousand) | 44,189 | 44,158 | 44,189 | 44,158 | 44,168 | |
| Adjusted earnings per share (in €) | 0.75 | 1.23 | 0.71 | 0.90 | 3.62 |
The calculation of earnings per share in accordance with IFRSs is presented in the income statement.
Earnings per share after adjusting for special items and the amortization and impairment of intangible assets is a metric that is suited to enabling comparability over time and forecasting future profitability.
In the reporting period, special items of €28 million (previous year: minus €31 million) resulted from one-time expenses for our efficiencyenhancing program Bilfinger Excellence as well as other restructuring expenses totaling €30 million (previous year: €31 million). These one-time expenses were countered in the reporting period by a one-time gain in the amount of €58 million form the sale and remeasurement of our investments in the Nigerian business. For full year 2014, €64 million was accounted for by Excellence and further restructuring measures; there was an opposing effect from a capital gain of €9 million.
Amortization of intangible assets from acquisitions and goodwill impairment totaling €16 million (previous year: €19 million) relates to the amortization of intangible assets resulting from purchase-price allocation following acquisitions and is therefore of a temporary nature.
The adjusted income taxes are calculated on the basis of a normalized tax rate of 31 percent. The deviation to the income taxes presented in the income statement is the result of the adjustment of tax effects from the special items in EBITA and the amortization of intangible assets from acquisitions. Also in the first half of 2015, effects from not recognizing deferred taxes on losses incurred in the reporting period and from the writedown of previously recognized deferred tax assets on the tax-loss carryforwards of Bilfinger SE were adjusted and, for full year 2014, the reduction of tax-loss carryforwards pursuant to Section 8c of the German Corporate Income Tax Act (KStG).
Adjusted earnings is a metric that is not defined under IFRSs. Its disclosure is to be regarded as supplementary information.
To the best of our knowledge, and in accordance with the applicable reporting principles for interim financial reporting, the interim consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group, and the interim management report of the Group includes a fair review of the development and performance of the business and position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the Group in the remaining months of the financial year.
Mannheim, August 10, 2015
Bilfinger SE The Executive Board
28
Per H. Utnegaard
Axel Salzmann Joachim Enenkel
All statements made in this report that relate to the future have been made in good faith and based on the best knowledge available. However, as those statements also depend on factors beyond our control, actual developments may differ from our forecasts.
We have reviewed the interim condensed consolidated financial statements, comprising the income statement, the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes, and the interim group management report of Bilfinger SE, Mannheim, for the period from January 1 to June 30, 2015, which are part of the six-monthly financial report pursuant to Sec. 37w WpHG ["Wertpapierhandelsgesetz": German Securities Trading Act]. The preparation of the interim condensed consolidated financial statements in accordance with IFRSs [International Financial Reporting Standards] on interim financial reporting as adopted by the EU and of the group management report in accordance with the requirements of the WpHG applicable to interim group management reports is the responsibility of the Company's management. Our responsibility is to issue a report on the interim condensed consolidated financial statements and the interim group management report based on our review.
We conducted our review of the interim condensed consolidated financial statements and the interim group management report in accordance with German generally accepted standards for the review of financial statements promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW). Those standards require that we plan and perform the review to obtain a certain level of assurance in our critical appraisal to preclude that the interim condensed consolidated financial statements are not prepared, in all material respects, in accordance with IFRSs on interim financial reporting as adopted by the EU and that the interim group management report is not prepared, in all material respects, in accordance with the provisions of the WpHG applicable to interim group management reports. A review is limited primarily to making inquiries of company personnel and applying analytical procedures and thus does not provide the assurance that we would obtain from an audit of financial statements. In accordance with our engagement, we have not performed an audit and, accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the interim condensed consolidated financial statements are not prepared, in all material respects, in accordance with IFRSs on interim financial reporting as adopted by the EU or that the interim group management report is not prepared, in all material respects, in accordance with the provisions of the WpHG applicable to interim group management reports.
Mannheim, August 10, 2015
Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft
Prof. Dr. Peter Wollmert Wirtschaftsprüfer [German Public Auditor]
Karen Somes Wirtschaftsprüferin [German Public Auditor]
WKN 590 900 Main listing XETRA / Frankfurt Deutsche Börse segment Prime Standard
ISIN / stock exchange symbol DE0005909006 / GBF
Share indices MDAX, DAXsubsector Industrial Products &
Services Idx., DivMSDAX, STOXX Europe 600, Euro STOXX, STOXX EUROPE TMI Support Services
| KEY FIGURES ON OUR SHARES € per share |
Apr. 1 - June 30 | ||
|---|---|---|---|
| 2015 | |||
| Highest price | 60.22 | ||
| Lowest price | 31.31 | ||
| Closing price 1 | 33.93 | ||
| Book value 2 | 33.45 | ||
| Market value / book value 1, 2 | 1.0 | ||
| Market capitalization 1, 3 | in € million | 1,561 | |
| MDAX weighting 1 | 0.73% | ||
| Number of shares 1, 3 | 46,024,127 | ||
| Average XETRA daily volume | number of shares | 525,587 | |
All price details refer to XETRA trading
1 Based on June 30, 2015
2 Balance sheet shareholder's equity excluding minority interest
3 Including treasury shares
October 15, 2015 Capital Markets Day
November 12, 2015 Interim Report Q3 2015
February 11, 2016 Preliminary report on the 2015 financial year
March 16, 2016 Press conference on financial statements
May 11, 2016 Annual General Meeting Interim Report Q1 2016
August 10, 2016 Interim Report Q2 2016
November 10, 2016 Interim Report Q3 2016
Investor Relations Andreas Müller Phone +49-621-459-2312 Fax +49-621-459-2761 E-mail: [email protected]
Corporate Communications Martin Büllesbach Phone +49-621-459-2475 Fax +49-621-459-2500 E-mail: [email protected]
Headquarters
Carl-Reiß-Platz 1-5 68165 Mannheim, Germany Phone +49-621-459-0 Fax +49-621-459-2366
You will find the addresses of our branches and affiliates in Germany and abroad in the Internet at www.bilfinger.com
© 2015 Bilfinger SE
Date of publication August 12, 2015
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