Quarterly Report • Aug 11, 2014
Quarterly Report
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Q2 2014
2
Special items in Power business segment require forecast adjustment ___
Positive development anticipated for the second half of the year
The military conflicts in Ukraine and the Middle East are dampening expectations for economic development. This has caused the World Bank to downgrade its global growth forecast for 2014, despite the good economy in the United States. In Germany, the energy transformation is leading to considerable reticence to invest on the part of energy providers. German energy policy is having an unexpectedly strong negative impact on the investment climate in other countries of Central Europe. Furthermore, companies in the European oil and gas sector are taking measures to achieve substantial savings, with a negative impact on the repair and maintenance of their facilities, triggered by falling gas prices in the United States. Another factor is that the lack of power plant projects in Germany is causing scaffolding companies and other specialists
to seek work in other markets. This is putting increasing pressure on prices in the European industrial business.
Against this backdrop and as a result of additional project burdens, Bilfinger's business development did not meet expectations in the first half of 2014, as previously announced at the end of June. While output volume was at the prior-year level, adjusted EBITA for the first six months of the year was significantly lower than in the first half of 2013. We promptly initiated measures to adjust capacities and to further reduce costs, and we anticipate a significantly stronger second half of the year 2014. Nevertheless, the repeated reduction in earnings expectations in the Power business segment necessitates an adjustment to the forecast of June 30 for financial year 2014.
| KEY FIGURES FOR THE GROUP |
H1 | Q2 | |||||
|---|---|---|---|---|---|---|---|
| € million | 2014 | 2013 | ∆ in % | 2014 | 2013 | ∆ in % | 1-12 / 2013 |
| Output volume | 3,628 | 3,637 | 0 | 1,907 | 1,961 | -3 | 7,684 |
| Orders received | 3,516 | 3,728 | -6 | 1,639 | 1,929 | -15 | 7,543 |
| Order backlog | 6,392 | 6,539 | -2 | 6,392 | 6,539 | -2 | 6,506 |
| EBITA adjusted 1, 2 | 111 | 150 | -26 | 65 | 93 | -30 | 419 |
| EBITA | 80 | 150 | -47 | 63 | 93 | -32 | 353 |
| Adjusted net profit from continuing operations 3 |
71 | 84 | -15 | 47 | 55 | -15 | 255 |
| Net profit 4 | 55 | 68 | -19 | 47 | 47 | 0 | 173 |
| Adjusted earnings per share from continuing operation 2 (in €) |
1.61 | 1.90 | -15 | 1.06 | 1.25 | -15 | 5.78 |
| Investments | 89 | 169 | -47 | 49 | 76 | -36 | 401 |
| thereof in property, plant and equipment |
81 | 66 | +23 | 44 | 46 | -4 | 150 |
| thereof in financial assets | 8 | 103 | -92 | 5 | 30 | -83 | 251 |
| Employees | 70,016 | 66,359 | 5 | 70,016 | 66,359 | 5 | 71,256 |
1 Adjusted in H1 2014 for one-time expenses in connection with the Bilfinger Excellence efficiency-enhancing program of €31 million before taxes (H1 2013: €0 million) and €21 million after taxes (H1 2013: €0 million). 2 Adjusted in FY 2013 for one-time expenses in connection with the Bilfinger Excellence efficiency-enhancing program and for the capital gain on the reduction of our investment in Julius Berger Nigeria totaling €66 million before taxes and €40 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 2014: €15 million after taxes (H1 2013: €17 million after taxes); FY 2013: €35 million after taxes).
4 Includes continuing and discontinued operations.
4
Roland Koch, Chairman of the Executive Board at Bilfinger SE since 2011, has offered the Supervisory Board of the company to step down on mutually agreeable terms. The Supervisory Board will make a decision in this regard at its meeting on August 7, 2014. In addition, the Supervisory Board will also make a decision on the appointment of Herbert Bodner, Member of the Supervisory Board and former Chairman of the Executive Board, as Chairman of the Executive Board of Bilfinger SE with effect from August 11, 2014 to May 31, 2015 on an interim basis.
Due to the developments described above, Bilfinger will adjust its capacities at Power, the business segment particularly affected, and also in some areas of the Industrial business segment. This will lead to an additional restructuring expense in a probable magnitude of €30 million in the second half of the year. Furthermore, additional short-term costreduction programs were initiated immediately and measures were introduced to sustainably improve the profitability of the operating units.
Moreover, we will accelerate the implementation of Excellence, the efficiency-enhancing program already in place. The restructuring will lead to a reduction of approximately 1,250 employees in administrative areas worldwide in the years 2014 and 2015. The new shared service center in which standardized administrative tasks will be centrally concentrated will start operation in late summer 2014. As a first step, services that until now have been performed in Germany separately by the operating entities such as accounting, payroll processing and human resources management will be concentrated at two sites. Similar changes are being planned for our sites outside Germany. In addition, internal IT services will be largely centralized.
With an amount of approximately €115 million, most of the expenditure for Excellence has already been incurred; this amount primarily comprises costs for personnel reductions. Full implementation of the measures will lead to annual savings in personnel costs of €80-90 million and in non-personnel costs in the low to mid double-digit million range as of 2016. The savings effects will reach a magnitude of €50 million already this year and will contribute pro-rata to increased earnings in the second half of the year.
We acquired GVA, a British company, in early July 2014. GVA is market leader for real-estate consulting services in the United Kingdom; it aims to achieve an output volume of around €190 million this year. With the acquisition of GVA, we are adding to the range of services we offer in the important British market.
The structured process for the sale of major portions of our civil-engineering business with an output volume of approximately €800 million is running as planned. We assume that the sale process we started in May 2014 can be concluded within one year.
Already last year, Bilfinger sold most of its concession activities to the listed infrastructure fund BBGI. In this context, four more projects were transferred to the investment fund in the first half of 2014. The remaining sold concession project will be transferred in the second half of the year. In full-year 2014, we anticipate proceeds of approximately €100 million and a capital gain of about €15 million. In addition, we placed the shares we had held in the BBGI infrastructure fund with institutional investors in April 2014. The net proceeds from the sale of the 8.74 percent equity interest amounted to approximately €50 million and the capital gain was about €6 million.
The key figures of the activities of the former Construction and Concessions business segments that are now in the process of sale are no longer presented in our business segments, but under discontinued operations. All of the figures presented in this interim management report relate, unless otherwise stated, to the Group's continuing operations; the figures for the prior-year period have been adjusted accordingly.
Output volume for the first six months of this year was stable at €3,628 million. Orders received decreased due to the developments in the Industrial business segment by 6 percent to €3,516 million. The order backlog of €6,392 million was 2 percent lower than a year earlier.
Earnings significantly below prior-year period Adjusted EBITA for the first half of the year of €111 million was significantly lower than the figure of €150 million achieved in the prior-year period. This was primarily the result of the negative development at the Power business segment due to considerable reticence to invest on the part of the European energy providers and some weak project earnings. Also at Industrial, earnings decreased due to the lack of German powerplant projects and the situation in the European oil and gas sector. In the Building and Facility segment, however, EBITA increased as a result of acquisitions and organic growth. After considering further one-time expenses of €31 million relating to our Bilfinger Excellence efficiencyenhancing program, the Group's EBITA amounts to €80 million (H1 2013: €150 million).
After deducting amortization of intangible assets from acquisitions of €21 million (H1 2013: €25 million), EBIT amounts to €59 million (H1 2013: €125 million). Gross profit amounts to €446 million (H1 2014: €455 million) and the gross margin is 12.3 percent (H1 2013: 12.5 percent). Selling and administrative expenses increased to €397 million (H1 2013: €367 million). They include one-time expenses for Bilfinger Excellence of €12 million in the first half of this year; the rest of the increase is the result of first-time consolidation. Due to a lower organic output volume, the share of selling and administrative expenses adjusted for the one-time expenses was 10.6 percent (H1 2013: 10.1 percent).
Net interest expense decreased to €14 million (H1 2013: €24 million). This includes a gain of €6 million on the sale of our shares in the BBGI investment fund. An additional factor is that interest expenses fell due to the repayment of a promissory-note loan in the middle of last year. This results in earnings from continuing operations of €45 million before taxes (H1 2013: €101 million) and of €33 million after taxes (H1 2013: €70 million).
Earnings after taxes from discontinued operations of the former Concessions business segment and from the activities held for sale of the former Construction business segment amount to €20 million (H1 2013: €1 million). Earnings for the reporting period include a gain of €14 million from the sale of four more concession projects.
After taking into consideration the profit attributable to minority interest, net profit amounts to €55 million (H1 2013: €68 million). Net profit from continuing operations adjusted for amortization of intangible assets from acquisitions and for the one-time expenses for Bilfinger Excellence amounts to €71 million (H1 2013: €84 million); adjusted earnings per share from continuing operations amount to €1.61 (H1 2013: €1.90).
Sound financial position and cash flows
The net cash outflow from operating activities of €184 million (H1 2013: €169 million) was affected by the increase in working capital during the year, which is typical of our business. Working capital increased to plus €5 million at the end of June (end of 2013 for comparison: minus €285 million). This development reflects an increase in receivables accompanied by a decrease in provisions and payables.
Investing activities resulted in a net cash inflow of €42 million, compared with a net cash outflow of €162 million in the first half of last year. The cash inflow resulted from proceeds of €92 million from the disposal of concession projects (H1 2013: €0 million) and proceeds of €50 million from the sale of our interest in BBGI. Only €8 million was applied for the acquisition of companies and other financial assets in the first half of this year (H1 2013: €103 million). Investments in property, plant and equipment totaled €81 million (H1 2013: €66 million) while proceeds from disposals of property, plant and equipment amounted to €12 million (H1 2013: €6 million).
The net cash outflow from financing activities of €135 million (H1 2013: €141 million) primarily reflects the dividend payment for the previous year.
Discontinued operations resulted in a net cash outflow of €102 million (H1 2013: €92 million).
Cash and cash equivalents amounted to €299 million at June 30 (June 30, 2013: €493 million). Financial debt – excluding project credit on a non-recourse basis, for which Bilfinger is not liable – amounted to €540 million (June 30, 2013: €703 million). Net liquidity at June 30, 2014 was minus €241 million (June 30, 2013: minus €210 million).
At the end of June 2014, 70,016 people were employed at the Bilfinger Group (June 30, 2013: 66,359). This figure includes the newly-acquired company Europa Support Services with 3,300 employees. The number of people employed abroad increased to 45,231 (June 30, 2013: 43,219) while the number of people employed in countries outside Europe was 12,677 (June 30, 2013: 13,775). The Bilfinger Group employed 24,785 people in Germany at the end of June 2014 (June 30, 2013: 23,140). Compared with December 31, 2013, the Group's total workforce decreased by 1,240 people.
6
No significant changes have occurred with regard to opportunities and risks compared with the situation as described on pages 110 ff of the 2013 Annual Report. Provisions have been recognized for all discernible risks; in our assessment, no risks exist that would jeopardize the continuing existence of the Bilfinger Group.
Our company has continued to develop according to plan since the end of the interim reporting period. No events have occurred that are of particular significance for the Group's profitability, cash flows or financial position. The exceptions to this are the negative special items in the Power business segment. Our business and economic environment has not changed substantially.
For the second half of 2014, we anticipate unchanged difficult conditions in the European energy market and a rather worsening environment in parts of the European oil and gas sector, otherwise a generally stable development of economic conditions. Provided that our assessments are accurate and the global economy does not display any recessionary tendencies, we anticipate the following developments in 2014, without taking future acquisitions into consideration.
For 2014, Bilfinger anticipates output volume of approximately €7.8 billion (2013 for comparison, excluding discontinued operations: €7.7 billion). Due to the additional project burdens in the Power business segment – from a power plant project in South Africa among other things – and the continuing strained situation in the energy market, Bilfinger now anticipates an adjusted EBITA of between €340-360 million (2013 for comparison: €419 million). Adjusted net profit will likely amount to between €205-220 million (2013 for comparison: €255 million). The cost-reducing measures that have now been initiated will have a positive impact on earnings in the second half of this year.
| OVERVIEW OF OUTPUT VOLUME AND ORDER SITUATION * |
Output volume | Orders received | Order backlog | Output volume |
|||
|---|---|---|---|---|---|---|---|
| € million | H1 2014 | ∆ in % | H1 2014 | ∆ in % | 6 / 2014 | ∆ in % | FY 2013 |
| Industrial | 1,764 | -2 | 1,631 | -16 | 2,693 | -1 | 3,721 |
| Power | 695 | -15 | 806 | 15 | 1,547 | -1 | 1,709 |
| Building and Facility | 1,220 | 15 | 1,104 | -2 | 2,166 | -6 | 2,346 |
| Consolidation, other | -51 | -25 | -14 | -92 | |||
| Continuing operations | 3,628 | 0 | 3,516 | -6 | 6,392 | -2 | 7,684 |
| OVERVIEW OF OUTPUT VOLUME AND ORDER SITUATION * |
Output volume | Orders received | ||
|---|---|---|---|---|
| € million | Q2 2014 | ∆ in % | Q2 2014 | ∆ in % |
| Industrial | 931 | -5 | 797 | -21 |
| Power | 368 | -14 | 377 | 12 |
| Building and Facility | 636 | 11 | 468 | -23 |
| Consolidation, other | -28 | -3 | ||
| Continuing operations | 1,907 | -3 | 1,639 | -15 |
| ADJUSTED EBITA BY BUSINESS SEGMENT * € million |
H1 | Q2 | |||||
|---|---|---|---|---|---|---|---|
| 2014 | 2013 | ∆ in % | 2014 | 2013 | ∆ in % | FY 2013 | |
| Industrial | 76 | 87 | -13 | 45 | 54 | -17 | 214 |
| Power | 24 | 60 | -60 | 9 | 34 | -74 | 152 |
| Building and Facility | 41 | 32 | 28 | 29 | 22 | 32 | 116 |
| Consolidation, other | -30 | -29 | -18 | -17 | -63 | ||
| Continuing operations | 111 | 150 | -26 | 65 | 93 | -30 | 419 |
* With the introduction of the new organizational structure, the allocation of some operational Group companies to the business segments has changed. As a result, output volume from the year 2013 of €310 million, orders received of €331 million and order backlog of €221 million that were previously allocated to the Industrial business segment are allocated to the Power business segment as of the year 2014. Accordingly, EBITA of €24 million from the year 2013 that was previously allocated to the Industrial business segment is allocated to the Power business segment as of the year 2014.
The prior-year figures have been adjusted accordingly.
In addition, the units of the former Construction business segment that are not held for sale have been allocated to the Industrial and Power business segments. This increases output volume for 2013 at Industrial by €69 million and at Power by €143 million; EBITA increases at Industrial by €6 million and at Power by €5 million.
8
Oil and gas companies reduce investment and maintenance budgets in Europe ___
Unchanged strong demand in the United States ___
Output volume of €1,764 million in the Industrial business segment in the first half of the year was slightly lower than in the prior-year period. Orders received in the reporting period decreased significantly to €1,631 million. New business was impacted by the reticence of parts of the European oil and gas industry to invest as well as reductions in those companies' maintenance budgets, especially in Scandinavia. Another negative factor was the lack of follow-up orders in the German powerplant business. Furthermore, the lower orders received in the current year is also a consequence of typical volatility in the project business and in the inclusion of long-term framework agreements. This also impacts our activities in the oil and gas sector in the United States despite continued positive demand. In the previous year, these effects resulted in a very high orders received. Therefore, orders received are unlikely to reach the very high level of the previous year also in the full year.
The order backlog of €2,693 million at the end of June was at the level of a year earlier.
EBITA amounted to €76 million (H1 2013: €87 million). We are counteracting the partially challenging market environment and the ongoing pressure on prices by taking numerous measures to further enhance our efficiency.
In the Industrial business segment, we anticipate output volume of approximately €3.7 billion (2013 for comparison: €3.7 billion) and an increase in the EBITA margin to a good 6 percent (2013 for comparison: 5.7 percent). The cost-reducing programs that have now been initiated will make a significant contribution to those results.
In Norway, we concluded a full-service agreement with our longstanding client Yara, Scandinavia's biggest producer of fertilizer. At the company's sites in Porsgrunn and Glomfjord, we will be responsible for engineering, technical consulting and maintenance of the production plants. We will also provide logistical services and carry out various projects. The framework agreement has a volume of more than €60 million and runs for a period of five years.
We are increasingly expanding our range of industrial services to selected international markets where we see good development prospects. We were commissioned by plant engineers Rafako with the design of the new power plant block in Jaworzno, Poland. Bilfinger assumes responsibility for complete systems design, basic and detailed engineering, project management and the tendering of systems technology. The order has a volume of about €20 million. In the United Kingdom we recently received an order for insulation work at a power plant in Buckinghamshire. And our Spanish unit started work in July on the insulation of equipment at the solar-thermal power plant in Ouarzazate, Morocco.
As previously reported, the Power business segment is especially suffering from the consequences of the energy transformation in Germany and from the negative impact arising from the investment behavior in other Central European countries. Our Piping Systems division is primarily affected by these developments.
Output volume in the business segment declined significantly in the first half of the year to €695 million. Orders received rose to €806 million on the basis of development in the offshore business – formerly a component of the Construction business segment and now allocated to the Power business segment. Order backlog remained nearly unchanged at €1,547 million.
EBITA was at just €24 million (H1 2013: €60 million) due to currently lower utilization of capacities primarily in the Piping Systems division as well as burdens from projects – especially from a major project in South Africa.
The burdens mentioned above necessitate an adjustment of the forecast for financial year 2014. The EBITA margin in the Power business segment will decline considerably to the region of 4 to 5 percent (2013 for comparison: 8.9 percent). We anticipate an output volume of approximately €1.5 billion (2013 for comparison: €1.7 billion).
Bilfinger will adjust its capacities in piping construction to declining demand and will cut up to 300 jobs in this area. In addition, further cost reduction measures will be initiated in the short term.
Our broad range of services continues to open up strong prospects in many international markets. The need for clean and efficient power plants is unchanged in Europe. This places undiminished high demands on ongoing maintenance work and means that the tremendous need for modernization will continue. Our focus will also be on new markets when a decision is made on the future alignment of activities in the Power business segment.
We have taken an important step forward in the expansion of our position on the French power plant market: Bilfinger has won an order from French utility Electricité de France SA (EDF) for the modernization of the piping systems in a number of nuclear power plants. The framework agreement concluded after the balance sheet date has a term of five years and the total volume amounts to €50 million. The basis for this success is the close internal collaboration among the divisions in our Industrial and Power business segments. The Engineering, Automation and Control division supported contract negotiations with EDF and will also contribute design services to the project. The Piping Systems division is responsible for engineering, delivery, prefabrication, assembly and maintenance works for the piping systems.
10
The Building and Facility business segment continues to develop well. Output volume increased substantially to €1,220 million with a significant contribution coming from the acquisition of British real-estate services provider Europa Support Services at the end of 2013. Although development in the Facility division was positive, orders received nonetheless declined slightly to €1,104 million. The reasons behind this development lie in the Building division and the volatility that is typical in this business. Order backlog amounted to €2,166 million on the balance sheet date.
EBITA increased significantly to €41 million (H1 2013: €32 million).
Output volume in the business segment will grow organically and – particularly as a result of the acquisitions made – will increase substantially to approximately €2.7 billion (2013: €2.3 billion). The EBITA margin of approximately 5 percent (2013: 4.9 percent) will be at the upper end of the target corridor of 4.5 to 5 percent.
The situation on our markets in the Building and Facility business segment is stable. In Germany, demand is shaped by the continuously growing importance of energy efficiency in real estate – an area in which Bilfinger has an especially extensive range of services through the combination of its building construction and facility services competence.
In water technologies, which was significantly expanded in the prior year as a result of the acquisition of specialist supplier Johnson Screens, positive development of demand is being recorded in the Asian markets in particular.
With the acquisition of GVA in June 2014, we added complex consulting services for investors, companies and the public sector to our range of services in British markets. The focus of the company's business operations is in London. GVA is also represented throughout the country with a network of regional offices. GVA will be merged with asset and property management specialists Bilfinger Real Estate which is primarily active in Germany and in the Benelux countries and which is part of our Real Estate division. As a result of the acquisition of GVA, the output volume in this division will more than double from the current level of roughly €160 million.
In December 2013, Bilfinger acquired facility services provider Europa Support Services, a company specialized in technical and infrastructural services. With the two acquisitions we increase the annual output volume in our Building and Facility business segment in the United Kingdom from €35 million in financial year 2013 to approximately €400 million in the future.
| KEY FIGURES € million |
H1 | Q2 | |||||
|---|---|---|---|---|---|---|---|
| 2014 | 2013 ∆ in % | 2014 | 2013 ∆ in % | FY 2013 | |||
| Output volume | 342 | 392 | -13 | 180 | 211 | -15 | 826 |
| Orders received | 418 | 295 | 42 | 309 | 114 | 171 | 753 |
| Order backlog | 982 | 890 | 10 | 982 | 890 | 10 | 905 |
| Capital expenditure on P, P & E | 7 | 11 | -36 | 3 | 4 | -25 | 20 |
| EBITA / EBITA adjusted | 12 | -4 | 7 | 4 | 75 | -10 |
Output volume in the first six months of 2014 decreased due to the sharp decline in orders received in the previous year. Orders received in the reporting period increased significantly as a result of the major order for the construction of the Eiganes Tunnel in the Norwegian town of Stavanger. Earnings also improved considerably.
After a sharp decrease in output volume in the previous year to €826 million, we anticipate a similar result in 2014. Earnings will improve substantially due to the sale in 2013 of the loss-making road-construction activities in Germany and the turnaround in Poland.
| Interim consolidated financial statements | |
|---|---|
| CONSOLIDATED INCOME STATEMENT € million |
Jan. 1 - June 30 | Apr. 1 - June 30 | ||
|---|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 | |
| Output volume (for information only) | 3,628 | 3,637 | 1,907 | 1,961 |
| Revenue | 3,645 | 3,584 | 1,930 | 1,945 |
| Cost of sales | -3,199 | -3,129 | -1,689 | -1,689 |
| Gross profit | 446 | 455 | 241 | 256 |
| Selling and administrative expenses | -397 | -367 | -201 | -196 |
| Other operating income and expense | -10 | 8 | 0 | 3 |
| Income from investments accounted for using the equity method | 20 | 29 | 13 | 17 |
| Earnings before interest and taxes (EBIT) | 59 | 125 | 53 | 80 |
| Net interest result | -14 | -24 | -3 | -11 |
| Earnings before taxes | 45 | 101 | 50 | 69 |
| Income tax expense | -12 | -31 | -14 | -22 |
| Earnings after taxes from continuing operations | 33 | 70 | 36 | 47 |
| Earnings after taxes from discontinued operations | 20 | 1 | 9 | 2 |
| Earnings after taxes | 53 | 71 | 45 | 49 |
| thereof minority interest | -2 | 3 | -2 | 2 |
| Net profit | 55 | 68 | 47 | 47 |
| Average number of shares (in thousands) | 44,158 | 44,140 | 44,158 | 44,140 |
| Earnings per share (in €) 1 | 1.25 | 1.54 | 1.06 | 1.06 |
| thereof from continuing operations | 0.80 | 1.52 | 0.86 | 1.02 |
| thereof from discontinued operations | 0.45 | 0.02 | 0.20 | 0.04 |
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 | |||
|---|---|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 | ||
| Earnings after taxes | 53 | 71 | 45 | 49 | |
| Items that will not be reclassified to the income statement | |||||
| Gains / losses from remeasurement of net defined benefit liability (asset) | |||||
| Unrealized gains / losses | -41 | -4 | -20 | -3 | |
| Income taxes on unrealized gains / losses | 11 -30 |
1 | -3 | 6 -14 |
1 -2 |
| Items that may subsequently be reclassified to the income statement |
|||||
| Gains / losses on fair-value measurement of securities | |||||
| Unrealized gains / losses | -2 | 0 | -2 | -1 | |
| Reclassifications to the income statement | -6 | 0 | -6 | 0 | |
| -8 | 0 | -8 | -1 | ||
| Gains / losses on hedging instruments | |||||
| Unrealized gains / losses | -2 | 33 | -1 | 26 | |
| Reclassifications to the income statement | -2 | 2 | 0 | -1 | |
| Income taxes on unrealized gains / losses | 1 | -9 | 0 | -6 | |
| -3 | 26 | -1 | 19 | ||
| Currency translation differences | |||||
| Unrealized gains / losses | 12 | -25 | 11 | -49 | |
| Reclassifications to the income statement | 4 | 0 | 0 | 0 | |
| 16 | -25 | 11 | -49 | ||
| Gains / losses on investments accounted for using the equity method | |||||
| Gains / losses on hedging instruments | |||||
| Unrealized gains / losses | -2 | 27 | -1 | -1 | |
| Reclassifications to the income statement | 23 | 0 | -1 | 0 | |
| 21 | 27 | -2 | -1 | ||
| Currency translation differences | |||||
| Unrealized gains / losses | 1 | 0 | 0 1 |
||
| 22 | 27 | -1 | -1 | ||
| 27 | 28 | 1 -32 |
|||
| Other comprehensive income after taxes | -3 | 25 | -13 | -34 | |
| Total comprehensive income after taxes | 50 | 96 | 32 | 15 | |
| attributable to shareholders of Bilfinger SE | 51 | 93 | 33 | 13 | |
| attributable to minority interest | -1 | 3 | -1 | 2 |
| € million | June 30, 2014 | Dec. 31, 2013 | June 30, 2013 | |
|---|---|---|---|---|
| Assets | Non-current assets | |||
| Intangible assets | 1,999 | 2,023 | 1,948 | |
| Property, plant and equipment | 666 | 712 | 717 | |
| Investments accounted for using the equity method | 68 | 75 | 85 | |
| Other financial assets | 82 | 137 | 128 | |
| Deferred taxes | 168 | 187 | 167 | |
| 2,983 | 3,134 | 3,045 | ||
| Current assets | ||||
| Inventories | 206 | 224 | 216 | |
| Receivables and other financial assets | 1,933 | 2,008 | 2,078 | |
| Current tax assets | 52 | 52 | 29 | |
| Other assets | 112 | 89 | 107 | |
| Cash and cash equivalents | 299 | 669 | 493 | |
| Assets classified as held for sale | 426 | 356 | 688 | |
| 3,028 | 3,398 | 3,611 | ||
| 6,011 | 6,532 | 6,656 | ||
| Equity and liabilities | Equity | |||
| Equity attributable to shareholders of Bilfinger SE | 2,068 | 2,149 | 1,991 | |
| Minority interest | 9 | 16 | 12 | |
| 2,077 | 2,165 | 2,003 | ||
| Non-current liabilities | ||||
| Provisions for pensions and similar obligations | 455 | 423 | 431 | |
| Other provisions | 53 | 61 | 57 | |
| Financial debt, recourse | 516 | 517 | 521 | |
| Financial debt, non-recourse | 13 | 13 | 24 | |
| Other liabilities | 53 | 49 | 61 | |
| Deferred taxes | 60 | 150 | 143 | |
| 1,150 | 1,213 | 1,237 | ||
| Current liabilities | ||||
| Current tax liabilities | 84 | 117 | 113 | |
| Other provisions | 454 | 552 | 535 | |
| Financial debt, recourse | 24 | 28 | 182 | |
| Financial debt, non-recourse | 27 | 28 | 0 | |
| Trade and other payables | 1,451 | 1,749 | 1,689 | |
| Other liabilities | 309 | 365 | 326 | |
| Liabilities classified as held for sale | 435 | 315 | 571 | |
| 2,784 | 3,154 | 3,416 |
6,011 6,532 6,656
| 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, 2013 | 138 | 759 | 1,415 | 5 | -211 | 23 | -100 | 2,029 | 8 | 2,037 |
| Earnings after taxes | 0 | 0 | 68 | 0 | 0 | 0 | 0 | 68 | 3 | 71 |
| Other comprehensive income after taxes | 0 | 0 | -3 | 0 | 53 | -25 | 0 | 25 | 0 | 25 |
| Total comprehensive income after taxes | 0 | 0 | 65 | 0 | 53 | -25 | 0 | 93 | 3 | 96 |
| Dividends paid out | 0 | 0 | -132 | 0 | 0 | 0 | 0 | -132 | -3 | -135 |
| Employee share program | 0 | 0 | 1 | 0 | 0 | 0 | 0 | 1 | 0 | 1 |
| 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 | 4 | 4 |
| Balance at June 30, 2013 | 138 | 759 | 1,349 | 5 | -158 | -2 | -100 | 1,991 | 12 | 2,003 |
| 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 |
Equity attributable to the shareholders of Bilfinger SE Minority
Equity
| CONSOLIDATED STATEMENT OF CASH FLOWS € million |
Jan. 1 - June 30 | Apr. 1 - June 30 | ||
|---|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 | |
| Earnings after taxes from continuing operations | 33 | 70 | 36 | 47 |
| Depreciation, amortization and impairments | 77 | 79 | 41 | 42 |
| Decrease in non-current provisions and liabilities | -6 | -3 | -1 | -5 |
| Deferred tax benefit | -19 | -17 | -8 | -9 |
| Adjustment for non-cash income from equity-method investments | -10 | -11 | -9 | -8 |
| Cash earnings from continuing operations | 75 | 118 | 59 | 67 |
| Increase in inventories | -9 | -10 | -2 | -4 |
| Increase in receivables | -81 | -120 | 1 | -106 |
| Decrease in current provisions | -48 | -41 | -33 | -12 |
| Decrease / increase in liabilities | -114 | -114 | -7 | 59 |
| Change in working capital | -252 | -285 | -41 | -63 |
| Gains on disposals of non-current assets | -7 | -2 | -6 | -1 |
| Cash flow from operating activities of continuing operations | -184 | -169 | 12 | 3 |
| Proceeds from the disposal of property, plant and equipment | 12 | 6 | 3 | 4 |
| Proceeds from the disposal of subsidiaries net of cash and cash equivalents disposed of | 0 | 1 | 0 | 0 |
| Proceeds from the disposal of concession projects | 92 | 0 | 28 | 0 |
| Disposal of cash and cash equivalents classified as assets held for sale | -23 | 0 | -23 | 0 |
| Investments in property, plant and equipment and intangible assets | -81 | -66 | -44 | -46 |
| Acquisition of subsidiaries net of cash and cash equivalents acquired | -4 | -101 | -3 | -30 |
| Investments in other financial assets | -4 | -2 | -2 | 0 |
| Changes in marketable securities | 50 | 0 | 50 | 0 |
| Cash flow from investing activities of continuing operations | 42 | -162 | 9 | -72 |
| Dividends paid to the shareholders of Bilfinger SE | -132 | -132 | -132 | -132 |
| Dividends paid to minority interest | -7 | -3 | -6 | -3 |
| Borrowing | 17 | 20 | 11 | 16 |
| Repayment of financial debt | -13 | -26 | -1 | -16 |
| Cash flow from financing activities of continuing operations | -135 | -141 | -128 | -135 |
| Change in cash and cash equivalents of continuing operations | -277 | -472 | -107 | -204 |
| Cash flow from operating activities of discontinued operations | -98 | -59 | -49 | -4 |
| Cash flow from investing activities of discontinued operations | -4 | -33 | -3 | -4 |
| Change in cash and cash equivalents of discontinued operations | -102 | -92 | -52 | -8 |
| Change in value of cash and cash equivalents due to changes in foreign exchange rates | 3 | -2 | 2 | -2 |
| Cash and cash equivalents at January 1 / April 1 | 669 | 1,087 | 451 | 735 |
| Cash and cash equivalents classified as assets held for sale (Concessions) at January 1 / April 1 (+) |
22 | 0 | 21 | 0 |
| Cash and cash equivalents classified as assets held for sale (Concessions / Construction) at June 30 (-) |
16 | 28 | 16 | 28 |
| Cash and cash equivalents at June 30 | 299 | 493 | 299 | 493 |
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.
In the context of the Bilfinger Excellence efficiency-enhancing program, the previous subgroup organization was discontinued and has been replaced with a divisional structure since January 1, 2014. The 13 divisions are allocated to the three existing business segments. The number of divisions declined from 14 as of March 31, 2014 by two as result of the classification of the activities of the former Construction business segment as discontinued operations and at the same time increased by one as a result of the newly-created Offshore Systems and Grids division. With the implementation of the new organizational structure, the allocation of some operational Group companies to the business segments has changed. This means that from financial year 2014, output volume of approximately €310 million from 2013 with an EBITA of €24 million will be shifted from the Industrial business segment and presented in the Power business segment.
In the course of the planned sale of significant portions of the Construction business segment, the activities that have been put up for sale will be classified as discontinued operations. The Construction business segment is no longer presented in segment reporting. The activities that will remain with Bilfinger, including port construction, offshore and overhead power lines with an output volume in financial year 2013 of approximately €140 million and an EBITA of €5 million will be allocated to the newly-created Offshore Systems and Grids division in the Power business segment, the remaining steel construction activities with an output volume in financial year 2013 of approximately €70 million and an EBITA of €6 million will be reported in the Industrial Fabrication and Installation division in the Industrial business segment.
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 Amortization of intangible assets from acquisitions |
EBIT | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |
| Industrial | 1,764 | 1,807 | 1,765 | 1,781 | 40 | 36 | 76 | 87 | -11 | -14 | 65 | 73 |
| Power | 695 | 815 | 690 | 756 | 3 | 2 | 24 | 60 | -2 | -4 | 22 | 56 |
| Building and Facility | 1,220 | 1,057 | 1,190 | 1,034 | 12 | 15 | 41 | 32 | -8 | -7 | 33 | 25 |
| Consolidation, other | -51 | -42 | 0 | 13 | -55 | -53 | -61 | -29 | 0 | 0 | -61 | -29 |
| Continuing operations | 3,628 | 3,637 | 3,645 | 3,584 | 0 | 0 | 80 | 150 | -21 | -25 | 59 | 125 |
| SEGMENT REPORTING APRIL 1 - JUNE 30 € million |
Output volume |
External Internal revenue revenue |
EBITA Amortization of intangible assets from acquisitions |
EBIT | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |
| Industrial | 931 | 979 | 926 | 964 | 25 | 18 | 45 | 54 | -5 | -8 | 40 | 46 |
| Power | 368 | 429 | 369 | 405 | 2 | 2 | 9 | 34 | -1 | -1 | 8 | 33 |
| Building and Facility | 636 | 574 | 625 | 567 | 6 | 7 | 29 | 22 | -4 | -4 | 25 | 18 |
| Consolidation, other | -28 | -21 | 10 | 9 | -33 | -27 | -20 | -17 | 0 | 0 | -20 | -17 |
| Continuing operations | 1,907 | 1,961 | 1,930 | 1,945 | 0 | 0 | 63 | 93 | -10 | -13 | 53 | 80 |
The interim consolidated financial statements as of June 30, 2014 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 2013, 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, 2013. The accounting policies explained in the notes to the consolidated financial statements for the year 2013 have been applied unchanged – with the exception of the changes mentioned below.
As of January 1, 2014 the following new or amended IFRSs with relevance for Bilfinger are applied for the first time:
IFRS 10 harmonizes the currently valid consolidation principles of IAS 27 and SIC-12. The uniform consolidation model includes all entities that are controlled by the parent by means of voting rights or other contractual arrangements. The subsidiaries of Bilfinger are generally companies for which the voting-rights majority is the most important indicator of control and no other contractual arrangements exist. The new regulations therefore did not lead to any changes in Bilfinger's consolidated group and thus will have no significant impact on the Group's financial position, cash flows or profitability.
IFRS 11 replaces the currently valid principles on accounting for jointly controlled entities, jointly controlled assets and operations of IAS 31. The focus of IFRS 11 is no longer on the legal form of the joint arrangement, but on the way in which rights and obligations are shared among the parties to the arrangement on the basis of contracts, articles of incorporation and other agreements. Joint ventures were accounted for using the equity method, in accordance with IAS 31. In accordance with IFRS 11, consortia are classified as joint ventures and accounted for using the equity method. To date, earnings from joint ventures were disclosed under revenue. Earnings from consortia in the amount of €5 million (previous year: €12 million) will now be reported under income from investments accounted for using the equity method. The prior-year figures have been adjusted accordingly.
IFRS 12 brings the disclosure requirements concerning all interests in subsidiaries, joint arrangements and associates as well as unconsolidated structured entities into one standard, and extends the disclosures required in the notes to the consolidated financial statements.
No acquisitions were made during the interim reporting period.
The significant acquisitions during the prior-year period were Helmut Mauell GmbH in Velbert, Wuppertal, Germany, a company specializing in power-plant control systems; Johnson Screens Inc. in New Brighton, Minnesota, USA, a company that specializes in water technology; and GreyLogix GmbH in Flensburg, Germany, which specializes in automation equipment.
In the first half of 2013, the companies mentioned above as well as further smaller acquisitions affected the Group's assets and liabilities at the time of acquisition as follows:
| Goodwill Intangible assets from acquisitions Property, plant and equipment and other intangible assets Other non-current assets Receivables Other current assets Cash and cash equivalents Total assets Retirement benefit obligation Provisions Financial debt Other liabilities Total liabilities Total purchase price |
€ million | |
|---|---|---|
| June 30, 2013 | ||
| 43 | ||
| 15 | ||
| 43 | ||
| 9 | ||
| 69 | ||
| 43 | ||
| 33 | ||
| 255 | ||
| 36 | ||
| 27 | ||
| 9 | ||
| 66 | ||
| 138 | ||
| 117 |
Within the context of discontinuing the Concessions business segment, two concession projects accounted for using the equity method as well as two fully-consolidated concession projects were sold during the reporting period to the listed infrastructure investment fund BBGI.
The overall effects of the sale were as follows:
| EFFECTS AT THE TIME OF SALE | |
|---|---|
| € million | June 30, 2014 |
| Disposal of assets classified as held for sale | -289 |
| Disposal of liabilities classified as held for sale | 244 |
| Disposal of net assets | -45 |
| Derecognition of minority interest | 1 |
| Reclassification of other comprehensive income into the income statement | -26 |
| Other changes | -25 |
| Sale price | 84 |
| Capital gain | 14 |
No divestments took place during the prior-year period.
Discontinued operations comprise
On May 15, 2013, the Executive Board of Bilfinger SE decided to discontinue the activities in the Concessions business segment.
In addition, the Executive Board of Bilfinger SE decided on May 8, 2014 to sell significant portions of the former Construction business segment. The offshore wind business, power grids and steel construction are not affected.
In accordance with the provisions of IFRS 5, the investments held for sale were presented as discontinued operations as of the time of reclassification:
Since the dates of their respective 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 | ||
|---|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 | |
| Concessions | 11 | 4 | 4 | -1 |
| Construction | 9 | -3 | 5 | 3 |
| Earnings after taxes from discontinued operations | 20 | 1 | 9 | 2 |
Earnings after taxes from discontinued operations were fully attributable to the shareholders of Bilfinger SE.
| CONCESSIONS € million |
Jan. 1 - June 30 | Apr. 1 - June 30 | ||
|---|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 | |
| Output volume (for information only) | 7 | 24 | 2 | 10 |
| Revenue | 27 | 69 | 10 | 25 |
| Expenses / income | -30 | -64 | -14 | -26 |
| Gain on the sale of concession projects | 14 | 0 | 7 | 0 |
| EBIT | 11 | 5 | 3 | -1 |
| Net interest expense | 0 | 1 | 0 | 0 |
| Earnings before taxes | 11 | 6 | 3 | -1 |
| Income taxes | 0 | -2 | 1 | 0 |
| Earnings after taxes | 11 | 4 | 4 | -1 |
| CONSTRUCTION € million |
Jan. 1 - June 30 | Apr. 1 - June 30 | ||
|---|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 | |
| Output volume (for information only) | 342 | 392 | 180 | 211 |
| Revenue | 346 | 395 | 166 | 220 |
| Expenses / income | -334 | -399 | -159 | -216 |
| EBIT | 12 | -4 | 7 | 4 |
| Net interest expense | 0 | 0 | 0 | 0 |
| Earnings before taxes | 12 | -4 | 7 | 4 |
| Income taxes | -3 | 1 | -2 | -1 |
| Earnings after taxes | 9 | -3 | 5 | 3 |
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 €3,628 million (H1 2013: €3,637 million).
Scheduled amortization of €21 million was carried out on intangible assets from acquisitions (H1 2013: €25 million) and is included in cost of sales. Depreciation of property, plant and equipment and the amortization of other intangible assets amount to €57million (H1 2013: €54million).
| € million | Jan. 1 - June 30 | Apr. 1 - June 30 | ||
|---|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 | |
| Interest income | 2 | 3 | 1 | 1 |
| Current interest expense | -11 | -16 | -4 | -7 |
| Net interest expense from retirement benefit liability | -7 | -7 | -4 | -4 |
| Interest expense | -18 | -23 | -8 | -11 |
| Income on securities | 6 | 0 | 6 | 0 |
| Interest expense for minority interest | -4 | -4 | -2 | -1 |
| Other financial result | 2 | -4 | 4 | -1 |
| Total | -14 | -24 | -3 | -11 |
| € million | |||
|---|---|---|---|
| June 30, 2014 | Dec. 31, 2013 | June 30, 2013 | |
| Goodwill | 1,880 | 1,885 | 1,800 |
| Intangible assets from acquisitions | 87 | 106 | 113 |
| Other intangible assets | 32 | 32 | 35 |
| Total | 1,999 | 2,023 | 1,948 |
| € million | |||
|---|---|---|---|
| June 30, 2014 | Dec. 31, 2013 | June 30, 2013 | |
| Cash and cash equivalents | 299 | 669 | 493 |
| Financial debt, recourse – non-current | 516 | 517 | 521 |
| Financial debt, recourse – current | 24 | 28 | 182 |
| Financial debt, recourse | 540 | 545 | 703 |
| Net liquidity | -241 | 124 | -210 |
Assets and liabilities classified as held for sale are allocated as follows to the disposal groups Construction and Concessions:
| € million | |||
|---|---|---|---|
| June 30, 2014 | Dec. 31, 2013 | June 30, 2013 | |
| Concessions | 109 | 356 | 688 |
| Construction | 317 | 0 | 0 |
| Assets classified as held for sale | 426 | 356 | 688 |
| Concessions | 109 | 315 | 571 |
| Construction | 326 | 0 | 0 |
| Liabilities classified as held for sale | 435 | 315 | 571 |
The discontinued operations of the former business segment Concessions, which are presented as a disposal group, include one fully consolidated investment not yet transferred to the purchaser and one German highway project accounted for using the equity method.
The assets and liabilities classified as held for sale of the Concessions disposal group are comprised as follows:
| Dec. 31, 2013 | June 30, 2013 | |
|---|---|---|
| 525 | ||
| 2 | 29 | 118 |
| 14 | 20 | 17 |
| 9 | 22 | 28 |
| 109 | 356 | 688 |
| 95 | 284 | 469 |
| 14 | 31 | 102 |
| 109 | 315 | 571 |
| June 30, 2014 84 |
285 |
The Concessions disposal group's cumulative other comprehensive income after taxes as of the balance sheet date amounts to minus €1 million (December 31, 2013: minus €26 million).
The discontinued operations of the former business segment Construction, which are presented as a disposal group, are the activities put up for sale.
The assets and liabilities classified as held for sale of the Construction disposal group are comprised as follows:
| € million | |||
|---|---|---|---|
| June 30, 2014 | Dec. 31, 2013 | June 30, 2013 | |
| Non-current assets | 107 | 0 | 0 |
| Current assets | 203 | 0 | 0 |
| Cash and cash equivalents | 7 | 0 | 0 |
| Assets classified as held for sale Construction | 317 | 0 | 0 |
| Non-current liabilities | 66 | 0 | 0 |
| Current liabilities | 260 | 0 | 0 |
| Liabilities classified as held for sale Construction | 326 | 0 | 0 |
The Construction disposal group's cumulative other comprehensive income after taxes as of the balance sheet date amounts to €5 million (December 31, 2013: €0 million).
The classification of equity and changes in equity are presented in the interim consolidated financial statements in the table Consolidated statement of changes in equity.
Equity decreased by €88 million during the reporting period. Earnings after taxes increased equity by €53 million while dividend payments (€136 million ) and transactions recognized directly in equity (minus €5 million) reduced equity by a total of €141 million.
Transactions recognized directly in equity are primarily comprised of positive effects from the reduction in the negative hedging instruments reserve of €18 million, which primarily resulted from the disposal of a concession company. The hedging instruments relate primarily to interestrate derivatives used for the long-term financing of project companies. The non-recourse character of this project financing calls for long-term, predictable interest cash flows and thus requires long-term, static hedging against the risk of interest-rate fluctuations. Changes in market values occurring in this context must be reflected in the financial statements, but they have no impact on the development of the Group due to the closed project structure. The effects of currency translation increased equity by a further €16 million. The disposal-related change in the fair value measurement of securities reserve led to a reduction in equity of €8 million. Losses from the remeasurement of defined-benefit pension plans of €30 million, which resulted from the adjustment of the discount rate, led to a corresponding reduction in equity.
Bilfinger holds 1,866,365 treasury shares. They account for €5,599,095 or 4.1 percent of the share capital at June 30, 2014. No cancellation of the treasury shares is currently intended.
The increase in the provision for pensions and similar obligations of €32 million to €455 million reflects the adjustment of the discount rate as of June 30, 2014 (Euro countries: 3.5 percent to 3.0 percent) due to generally lower interest rates. The resulting losses from remeasurement are recognized in other comprehensive income.
The methods for the measurement of fair value remain fundamentally unchanged from December 31, 2013. Further explanations on the measurement methods can be found in the Annual Report 2013.
The financial assets and financial liabilities for which the fair values deviate significantly from the carrying amounts are as follows:
| IAS 39- category¹ |
Carrying amount |
Fair value |
Carrying amount |
Fair value |
|---|---|---|---|---|
| Dec. 31, 2013 | ||||
| FLAC | 500 | 529 | 500 | 507 |
| (IAS 17) | 14 | 20 | 17 | 24 |
| June 30, 2014 |
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, 2014 | ||||
| Assets | ||||
| Securities | AfS | 1 | 1 | 0 |
| Derivatives in hedging relationships | (Hedge) | 4 | 0 | 4 |
| Derivatives in non-hedging relationships | FAHfT | 4 | 0 | 4 |
| 9 | 1 | 8 | ||
| Liabilities | ||||
| Derivatives in hedging relationships | (Hedge) | 4 | 0 | 4 |
| Derivatives in non-hedging relationships | FLHfT | 8 | 0 | 8 |
| 12 | 0 | 12 | ||
| Dec. 31, 2013 | ||||
| Assets | ||||
| Securities | AfS | 53 | 53 | 0 |
| Derivatives in hedging relationships | (Hedge) | 7 | 0 | 7 |
| Derivatives in non-hedging relationships | FAHfT | 13 | 0 | 13 |
| 73 | 53 | 20 | ||
| Liabilities | ||||
| Derivatives in hedging relationships | (Hedge) | 4 | 0 | 4 |
| Derivatives in non-hedging relationships | FLHfT | 8 | 0 | 8 |
| 12 | 0 | 12 |
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 €25 million (December 31, 2013: €40 million) generally relate to guarantees provided for 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 | ||
|---|---|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 | 2013 | |
| Earnings before taxes | 45 | 101 | 50 | 69 | 257 |
| Special items in EBITA | 31 | 0 | 2 | 0 | 66 |
| Amortization of intangible assets from acquisitions | 21 | 25 | 10 | 13 | 51 |
| Adjusted earnings before taxes | 97 | 126 | 62 | 82 | 374 |
| Adjusted income tax expense | -28 | -39 | -17 | -25 | -116 |
| Adjusted earnings after taxes | 69 | 87 | 45 | 57 | 258 |
| thereof minority interest | -2 | 3 | -2 | 2 | 3 |
| Adjusted net profit | 71 | 84 | 47 | 55 | 255 |
| Average number of shares (in thousands) | 44,158 | 44,140 | 44,158 | 44,140 | 44,149 |
| Adjusted earnings per share (in €) | 1.61 | 1.90 | 1.06 | 1.25 | 5.78 |
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 2014, special items resulted from one-time expenses for our efficiency-enhancement program Bilfinger Excellence. These relate to consulting expenses included in the administration expenses in the amount of €12 million as well as restructuring costs in the amount of €19 million which are presented in other operating expense. In full-year 2013, one-time expenses in the amount of €85 million resulted from the Bilfinger Excellence program and were offset by one-time earnings in the amount of €19 million from the sale of shares in an associate.
Intangible assets result from purchase-price allocation following acquisitions. The amortization of these intangible assets is therefore of a temporary nature.
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 6, 2014
Bilfinger SE The Executive Board
Roland Koch Dr. Jochen Keysberg
Pieter Koolen
Joachim Enenkel
Joachim Müller
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, 2014, 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 6, 2014
Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft
Prof. Dr. Peter Wollmert Wirtschaftsprüfer [German Public Auditor]
Karen Somes Wirtschaftsprüferin
[German Public Auditor]
| ISIN / stock exchange symbol | DE0005909006 / GBF | |
|---|---|---|
| WKN | 590 900 | |
| Main listing | XETRA / Frankfurt | |
| Deutsche Börse segment | Prime Standard | |
| Share indices | MDAX, Prime Industrial Products & Services Idx., DivMSDAX, DJ STOXX 600, DJ EURO STOXX, STOXX EUROPE TMI Support Services, DJ EURO STOXX Select Dividend 30 |
|
| KEY FIGURES ON OUR SHARES € per share |
Apr. 1 - June 30 | |
|---|---|---|
| 2014 | ||
| Highest price | 93.05 | |
| Lowest price | 82.10 | |
| Closing price 1 | 83.26 | |
| Book value 2 | 46.83 | |
| Market value / book value 1, 2 | 1.8 | |
| Market capitalization 1, 3 | in € million | 3,832 |
| MDAX weighting 1 | 2.91% | |
| Number of shares 1, 3 | 46,024,127 | |
| Average XETRA daily volume | number of shares | 124,681 |
All price details refer to XETRA trading
1 Based on March 31, 2014
2 Balance sheet shareholder's equity excluding minority interest
3 Including treasury shares
November 12, 2014 Interim Report Q3 2014
February 12, 2015 Preliminary report on the 2014 financial year
March 18, 2015 Press conference on financial statements
May 7, 2015 Annual General Meeting* Interim Report Q1 2015
August 13, 2015 Interim Report Q2 2015
November 12, 2015 Interim Report Q3 2015
* Congress Centrum Rosengarten Mannheim, 10 a.m.
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.
Investor Relations Andreas Müller Phone +49-621-459-2312 Fax +49-621-459-2761 E-mail: [email protected]
Martin Büllesbach Phone +49-621-459-2475 Fax +49-621-459-2500 E-mail: [email protected]
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
© 2014 Bilfinger SE
Date of publication August 11, 2014
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