Earnings Release • Aug 24, 2012
Earnings Release
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The board of directors of Compagnie d'Entreprises CFE examined and approved the first-half 2012 financial statements at its meeting on August 23, 2012.
Consolidated revenue totalled €906 million, an increase of 4% relative to the first half of 2011 (€870 million), resulting mainly from the increase with 10% of the turnover of DEME.
Operating income fell to €29.4 million (€39.1 million in the first half of 2011) as a result of the lack of activity in the construction division and the lower fleet utilization at DEME during the first quarter.
As a consequence, the net income attributable to the group amounted to €13.9 million (€26.2 million in the first half of 2011).
The increase of the net financial debt up to €420 million at the end of this first half year mainly results from the execution of the investment program of DEME and of an investment in a real estate project.
The order book grew (23%) to €2,935 million (€2,382 million at January 1, 2012). Almost 70% of the order book is related to works to be performed in 2013 and beyond.
In early 2012, CFE set up its new Rail-Road division. This division includes the activities of "ENGEMA" (installation of overhead contact lines and rail signalling) and "Louis Stevens & Co" (rail signalling) - previously included in the multitechnics division - along with the road business of "Aannemingen Van Wellen" - previously part of the construction division - and the activity of specialist railway-layer Remacom, which was acquired at the beginning of the year.
Through this new organisation, CFE intends to develop synergies between its rail and road businesses, in order to offer customers a comprehensive solution for the construction and maintenance of transport networks.
The water treatment business has been moved from the construction division to the multitechnics division.
The comments below are based on the new structure. Tables featuring financial data under the old structure are included in the appendix, to ensure comparability of data.
Revenue in the construction division fell by 2.6% year-on-year to €325 million (€333 million in the first half of 2011).
The decline in revenue was due to the civil engineering business in particular. Major contracts won almost four years ago are gradually coming to an end, and the company is struggling to replenish its civil engineering order book in the currently shrinking market.
Revenue in the building business grew strongly in Benelux, although it fell internationally.
After a growth over last years, business levels have been affected by the economic crisis in Central Europe and particularly in Poland. In the international area, there has been a temporary decline only resulting from decisions to delay the start of certain projects and from the time needed to start-up such projects.
The division made an operating income of €-1.7 million (versus €4.4 million at June 30, 2011).
In Benelux, the decline in income was mainly due to a lack of activity in civil engineering -leading to weaker coverage of overhead costs- and the costs of studies related to several major projects.
Negotiations are ongoing regarding compensation for costs arising from a customer's request for major changes to an important project in The Netherlands. This client has finally chosen for arbitration.
In Central Europe, there were losses in Poland. These were the result of lower business levels.
In the international area, delays with starting and ramping up major contracts also dragged down margins.
Difficulties in the construction division have already prompted CFE to take various reorganisation and restructuring measures:
Net income totalled €-1.7million compared with €3.7 million in June 2011.
The order book remained stable, despite tough economic conditions. At July 1, 2012, the order book amounted to €967 million (€983 million at January 1, 2012).
The real-estate business remained firm, although sales slowed in some projects. Commercialisation of projects - Lichttoren (Antwerp), Calevoet and Van Maerlant (Brussels) and Château de Beggen (Luxembourg) - are progressing normally.
Operating income rose to €5 million (€3.9 million in June 2011) and net income was €2.8 million (€2.7 million in June 2011).
CFE Immo, in partnership with another real-estate developer, acquired the very well located historic Solvay site in Brussels in the second quarter of 2012. The site will be renovated and will be the home of a major real-estate project in the next few years.
Revenue in the multitechnics division fell by 4% (12% at constant consolidation area) to €74 million, compared with €77 million in June 2011.
The fall in revenue mainly affected Nizet in the tertiary business and in the photovoltaic business.
The division generated an operating income of €-0.1 million, compared with operating income of €1.7 million in the first half of 2011.
This decline in operating income was mainly attributable to the Nizet companies, for reason mentioned above, and to water-treatment specialist CFE EcoTech, because of the delayed start and ramp-up of contracts obtained in Sri Lanka and, more recently, in Vietnam.
However, operating income at the division's main subsidiaries was satisfactory.
The division posted a net income of €-0.7 million compared with a profit of €0.8 million in June 2011.
The order book grew substantially, by 31% or 22% at constant consolidation area, to €148 million (€113 million at January 1, 2012).
Revenue in the rail-road division fell by 4% (8% at constant consolidation area) to €41 million, compared with €43 million in the first half of 2011. This decline is simply the result of project scheduling and is therefore not really meaningful.
Operating income amounts to €1.7 million, compared with €2.6 million in June 2011. In general, the division's various companies posted satisfactory earnings. The fall in operating income arose from a temporary decline in production volumes at coating plants in the roads business.
Net income totalled €1.0 million, compared with €2.0 million in June 2011.
CFE acquired Remacom in the first quarter of 2012. This company, which is based in the Ghent region, specialises in laying rail tracks. The acquisition expanded CFE's activities in the rail industry, joining ENGEMA and Louis Stevens & Co, which specialise in electrification (overhead contact lines) and signalling.
The order book grew substantially, by 13% (or 6% at constant consolidation area), reaching almost €86 million (€76 million at January 1, 2012).
(The amounts stated in this section relating to DEME are at 100%, whereas CFE owns 50% of the company).
DEME's revenue rose by 10% year-on-year to €904 million (€825 million in the first half of 2011).
EBITDA(*) increased by 4.6% to €144.6 million, as opposed to €138.2 million in June 2011. Operating income is reduced to €51.2 million versus €61.8 million in the first half of 2011. This evolution was due to a higher level of depreciation charges, along with lower fleet utilisation in the first quarter of 2012 - as announced in the May 2012 interim statement - since some dredgers were undergoing major maintenance or repairs.
Net income attributable to the group totalled €27.7 million versus €41.0 million at June 30, 2011.
The order book rose further during the period. It grew by 43% to €3,446 million (€2,404 million at January 1, 2011).
DEME won some major orders in the first half of 2012. In Australia, DEME won the contract to dredge the approach channel, the manoeuvring area and the berths for the Wheatstone LNG project. In Qatar, DEME's Medco subsidiary - in which it owns a 44% stake - won the contract to dredge the approach channel for the New Port project. The latter contract includes dredging the basin for the naval base, reclaiming 4.5km2 of land and building two breakwaters using rock placement techniques. At the end of the period, DEME signed a contract with Northwind to act as main contractor for the construction and installation of foundations for this wind-power project off the Belgian coast.
DEME continued its multi-year investment program. The Neptune jack-up vessel has been operational since March 2012. DEME's new rock-cutter suction dredger, the Ambiorix, was named in May 2012.The construction of the Innovation I platform vessel is nearing completion, and it should be operational in September 2012, bringing the aforementioned investment program to an end.
(*) EBITDA = EBIT + depreciations + other non cash items + share in the result of associated companies.
Operating income turned positive and amounted to 1.9€ million (a loss of €-1.4 million in June 2011). It was driven by 45%-owned subsidiary Rent-A-Port, whose activities in Vietnam are progressing well. Net income amounts to €0.8 million, compared with a loss of €-1.7 million in June 2011.
Net financial debt(*) at the end of June 2012 stood at €420 million, compared with €351 million at the end of 2011. This figure comprises €456 million of long-term debt and €36 million of net short-term debt.
Cash flow from investing activities amounted to €128 million for the half-year, compared with €84 million in the first half of 2011. Investments mainly arose from DEME's capital investment program.
The €7 million fall in the working capital was the result of measures relating to the management of the current cash position.
After payment of the dividend with respect to 2011 (€15.1 million), shareholders' equity totalled €505.5 million.
CFE has €65 million of confirmed medium-term credit facilities for its general financing needs, which were not utilized at June 30, 2012. DEME's purchases of dredgers and other maritime equipment are subject to separate financing arrangements linked to these assets.
In late May 2012, CFE issued a 6-year bonds amounting €100,000,000 maturing on June 21, 2018. The bond issue was a success, and was fully subscribed.
Given the high volume of the order book and the gradual start-up of major contracts mentioned above, business levels will gradually increase in the second half of 2012. Operating income is likely to improve in the second half in the contracting businesses (construction, multitechnics and rail-road), and at DEME. However, this improvement will not make up entirely for the year-on-year decline seen in June 2012. The outlook for 2013 and 2014 is positive, due to the quality of the dredging order book.
On August 16, 2012, VINCI Construction informed CFE, in accordance with Article 74 of the Belgian act of April 1, 2007, that there had been no change in the ownership of its capital since the previous notification on August 19, 2009, when it was 46.84%.
(*) Net financial debt does not include the fair value of derivative instruments, which amounts to a debt of €39.4 million.
On August 23, 2012, the board of directors decided to convene a special shareholders' meeting on October 10, 2012, to vote on the change-of-control clause contained in the prospectus relating to the May 29, 2012 bond issue.
| Order book (in € millions) |
July 1, 2012 | January 1,2012 | July 1, 2011 |
|---|---|---|---|
| Construction | 966.5 | 983.2 | 984.1 |
| Real estate and associated services | 11.7 | 8.3 | 9.1 |
| Sub-total | 978.2 | 991.6 | 993.2 |
| Dredging and environment Multitechnics Rail-Road PPP-Concessions |
1,723.0 148.1 85.8 |
1,202.0 112.7 76.0 |
1,211.0 93.7 81.5 |
| Total consolidated | 2,935.1 | 2,382.3 | 2,379.4 |
| Revenue | June 30, | June 30, | % change |
| (in € millions) | 2012 | 2011 | |
| Construction | 324.6 | 333.1 | -2.6% |
| Real estate and associated services | 16.8 | 13.8 | n.s. |
| Inventory effect | -6.8 | -2.7 | n.s. |
| Sub-total | 334.6 | 344.2 | -2.8% |
| Dredging and environment | 452.0 | 412.7 | 9.5% |
| Multitechnics | 74.2 | 76.9 | -3.5% |
| Rail-Road | 41.1 | 42.8 | -4.0% |
| Inter-divisions eliminations | -2.5 | -7.3 | n.s. | |
|---|---|---|---|---|
| Total consolidated | 905.9 | 870.4 | 4.1% |
PPP-Concessions 6.5 1.1 n.s.
| Contribution to operating profit (In € thousands) |
June 30, 2012 |
June 30, 2011 |
% change |
|---|---|---|---|
| Construction Real estate and associated services |
-1,698 5,003 |
4,439 3,898 |
n.s. 28.3% |
| Inventory effect Sub-total |
148 3,453 |
-374 7,963 |
n.s. -56.6% |
| Dredging and environment(*) | 24,866 | 30,372 | -18.1% |
| Multitechnics | -109 | 1,662 | n.s. |
| Rail-Road | 1,681 | 2,647 | -36.5% |
| PPP-Concessions Holding co. and misc. |
1,885 -2,446 |
-1,366 -1,575 |
n.s. n.s. |
| Inventory effect (other) | 52 | -573 | n.s. |
| Total consolidated | 29,382 | 39,130 | -24.9% |
| Contribution to net profit (In € thousands) |
June 30, 2012 |
June 30, 2011 |
% change |
| Construction | -1,725 | 3,738 | n.s. |
| Real estate and associated services | 2,778 | 2,728 | 1.8% |
| Inventory effect | 12 | -259 | n.s. |
| Sub-total | 1,065 | 6,207 | -82.8% |
| Dredging and environment(*) | 13,142 | 19,938 | -34.1% |
| Multitechnics | -727 | 780 | n.s. |
| Rail-Road | 1,034 | 1,981 | -47.8% |
| PPP-Concessions | 823 | -1,715 | n.s. |
| Holding | -1,493 | -383 | n.s. |
| Inventory effect (other) | 52 | -573 | n.s. |
(*) after allocation of corporate costs and other adjustments
| (In € thousands) | June 30, 2012 |
December 31, 2011 |
|---|---|---|
| Intangible assets | 10,950 | 9,839 |
| Goodwill | 32,992 | 28,725 |
| Property, plant and equipment | 970,714 | 899,618 |
| Property investments | 25,745 | 7,067 |
| Investments in associated companies | 15,189 | 15,128 |
| Other non-current financial assets | 46,534 | 30,631 |
| Non-current derivative instruments | 0 | 0 |
| Other non-current assets | 12,089 | 10,923 |
| Deferred tax assets | 18,854 | 11,412 |
| Total non-current assets | 1,133,067 | 1,013,343 |
Total consolidated 13,896 26,235 -47.0%
| (In € thousands) | June 30, 2012 |
December 31, 2011 |
|---|---|---|
| Inventories Trade and other operating receivables Other current assets Current derivative instruments Current financial assets Cash and cash equivalents |
162,410 849,240 72,261 147 4,208 206,126 |
158,850 761,407 60,242 148 1,759 208,347 |
| Total current assets | 1,294,392 | 1,190,753 |
| Total assets | 2,427,459 | 2,204,096 |
| Issued capital Share premium Gain on revaluation Hedging instrument reserves Retained earnings Currency translation differences Equity attributable to owners of the parent Non-controlling interests |
21,375 61,463 1,088 -16,115 424,839 6,209 498,859 6,644 |
21,375 61,463 1,088 -11,646 425,999 3,423 501,702 7,059 |
| Total equity | 505,503 | 508,761 |
| Pensions and other employee benefits Provisions Other non-current liabilities Financial debts Non-current derivative instruments Deferred tax liabilities |
14,285 10,221 108,185 455,804 30,559 13,608 |
14,720 10,613 82,833 434,896 24,694 12,630 |
| Total non-current liabilities | 632,662 | 580,386 |
| Provisions for termination losses Provisions for other current risks Trade and other operating payables Current tax liabilities Current financial debts Current derivative instruments Other current liabilities |
12,646 29,419 715,051 26,794 170,727 8,944 325,713 |
16,040 31,547 635,159 24,975 124,268 5,646 277,314 |
| Total current liabilities | 1,289,294 | 1,114,949 |
| Total equity and liabilities | 2,427,459 | 2,204,096 |
| (In € thousands) | June 30, 2012 |
June 30, 2011 |
|---|---|---|
| Revenue Revenue from auxiliary activities |
905,910 26,310 |
870,388 22,956 |
| Purchases Wages, salaries and social benefit charges Other operating expenses Depreciation and amortisation |
-547,210 -186,102 -115,890 -53,636 |
-522,541 -168,080 -114,144 -49,449 |
| Operating profit | 29,382 | 39,130 |
| Cost of gross financial debt Income from cash investments Other financial expense Other financial income |
-10,100 3,022 -11,109 7,621 |
-6,048 1,788 -13,775 7,974 |
| Financial income/(expense) | -10,566 | -10,061 |
| Profit for the period before tax | 18,816 | 29,069 |
| Income tax | -3,164 | -6,199 |
| Profit for the period | 15,652 | 22,870 |
| Profit/(loss) from associated companies | -1,384 | 245 |
| Profit (including share from non-controlling interests) for the period |
14,268 | 23,115 |
| Non-controlling interests | -372 | 3,120 |
| Net profit of the group |
13,896 | 26,235 |
| (in € thousands) | June 30, 2012 |
June 30, 2011 |
|---|---|---|
| Profit (including share from non-controlling interests) for the period |
14,268 | 23,115 |
| Financial instruments: changes in fair value | -5,919 | 2,823 |
| Currency translation differences | 2,791 | -2,832 |
| Deferred taxes | 1,450 | -1,151 |
| Change in consolidation method (net of deferred tax) |
- | - |
| Other elements of comprehensive income | -1,678 | -1,160 |
| Comprehensive income: | 12,590 | 21,955 |
| - Attributable to the group | 12,213 | 25,196 |
| - Attributable to non-controlling interests | 377 | -3,241 |
| Net profit of the group per share (€) (basic and diluted) |
1.06 | 2.00 |
| Comprehensive income of the group per share (€) (basic and diluted) |
0.93 | 1.92 |
| June 30, 2012 | June 30, 2011 | |
|---|---|---|
| Total number of shares | 13,092,260 | 13,092,260 |
| Operating income after deduction of net financial expense per share Earnings per share (attributable to owners of the parent) |
1.44 1.06 |
2.22 2.00 |
At June 30, 2012, there were 13,092,260 shares, each conferring one voting right. No convertible bonds or warrants had been issued.
The financial institutions through whom owners of financial instruments may exercise their financial rights are BNP Paribas Fortis, Banque Degroof and ING Belgique. Banque Degroof has been designated as the Main Paying Agent.
The notes to the condensed consolidated financial statements were prepared in accordance with IAS 34 and will be published on www.cfe.be after 17.40 CET on Friday, August 24, 2012.
The Auditor, Deloitte Reviseurs d'Entreprises, represented by Pierre-Hugues Bonnefoy, has confirmed that its limited review, now completed, revealed no material corrections to be made to the accounting information presented in this press release.
CFE is a multidisciplinary group of companies operating in construction and associated services. It is listed on Euronext Brussels and is 47% owned by VINCI. CFE is a major player in Belgium's construction industry, with a presence in the Netherlands, Luxembourg, Central Europe, the Middle East and Africa. CFE owns 50% of DEME, one of the world's leading dredging contractors.
The press release is available on our website at www.cfe.be
| Order book | July 1, 2012 | January 1, 2012 |
July 1, 2011 |
|---|---|---|---|
| (in € millions) Construction |
1,007.6 | 1,009.9 | 1,018.4 |
| Real estate and associated services Sub-total |
11.7 1,019.3 |
8.4 1,018.3 |
9.1 1,027.5 |
| Dredging and environment | 1,723.0 | 1,202.0 | 1,211.0 |
| Multitechnics PPP-Concessions |
192.8 0.0 |
162.0 0.0 |
140.9 0.0 |
| Total consolidated |
2,935.1 | 2,382.3 | 2,379.4 |
| Revenue | June 30, 2012 | June 30, 2011 | % change |
| (in € millions) | |||
| Construction Real estate and associated services |
349.7 16.8 |
363.5 13.8 |
-3.8% n.s. |
| Inventory effect | -6.8 | -2.7 | n.s. |
| Sub-total | 359.7 | 374.6 | -4.0% |
| Dredging and environment | 452.0 | 412.7 | 9.5% |
| Multitechnics | 90.2 | 87.8 | 2.7% |
| PPP-Concessions Inter-division eliminations |
6.5 -2.5 |
1.1 -5.8 |
n.s. n.s. |
| Total consolidated | 905.9 | 870.4 | 4.1% |
| Contribution to operating profit | June 30, 2012 | June 30, 2011 | % change |
| (in € thousands) Construction |
-2,271 | 5,103 | n.s. |
| Real estate and associated services | 5,003 | 3,898 | 28.3% |
| Inventory effect | 148 | -374 | n.s. |
| Sub-total | 2,880 | 8,627 | -66.6% |
| Dredging and environment(*) | 24,866 | 30,372 | -18.1% |
| Multitechnics | 2,145 | 3,645 | -41.1% |
| PPP-Concessions | 1,885 | -1,366 | n.s. |
| Holding co. and misc. Inventory effect (other) |
-2,446 52 |
-1,575 -573 |
n.s. n.s. |
| Total consolidated | 29,382 | 39,130 | -24.9% |
| Contribution to net profit (in € thousands) |
June 30, 2012 | June 30, 2011 | % change | |
|---|---|---|---|---|
| Construction | -2,369 | 4,377 | n.s. | |
| Real estate and associated services | 2,778 | 2,728 | 1.8% | |
| Inventory effect | 12 | -259 | n.s. | |
| Sub-total | 421 | 6,846 | -93.9% | |
| Dredging and environment (*) | 13,142 | 19,938 | -34.1% | |
| Multitechnics | 951 | 2,122 | -55.2% | |
| PPP-Concessions | 823 | -1,715 | n.s. | |
| Holding co. | -1,493 | -384 | n.s. | |
| Inventory effect (other) | 52 | -573 | n.s. | |
| Total consolidated | 13,896 | 26,235 | -47.0% |
(*) after allocation of corporate costs and other adjustments
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