Quarterly Report • May 17, 2010
Quarterly Report
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Interim Financial Report January to March 2010
| Overview January to March 2010 | January - March | |
|---|---|---|
| EURm | 2009 | 2010 |
| Turnover | 2,359 | 2,180 |
| Operating income before depreciation (OIBD) in % of turnover |
202 8.5 % |
171 7.9 % |
| Operating income | 11 | -18 |
| Additional ordinary result | 3 | -15 |
| Result from participations | -6 | -2 |
| Earnings before interest and income taxes (EBIT) | 8 | -35 |
| Loss before tax | -195 | -218 |
| Net loss from continuing operations | -39 | -157 |
| Net loss from discontinued operations | -7 | -5 |
| Loss for the financial year | -46 | -162 |
| Group share of loss | -63 | -199 |
| Investments | 149 | 123 |
| Interim Group management report | 4 |
|---|---|
| Business trend January to March 2010 | 4 |
| Prospects | 9 |
| Risk report | 10 |
| HeidelbergCement interim accounts | 11 |
| Group profit and loss accounts | 11 |
| Group statement of comprehensive income | 12 |
| Group cash flow statement | 13 |
| Group balance sheet | 14 |
| Group statement of changes in equity | 16 |
| Segment reporting / Notes | 18 |
| Notes to the interim Group accounts | 20 |
The global economy develops better than expected, but the recovery from the financial and economic crisis proceeds very unevenly. While the emerging markets in Asia, particularly China and India, already enjoy high growth rates again, the economy in the industrial countries, and with it the development of the construction sector, still remains restrained.
HeidelbergCement's development in the first quarter of 2010 was not only affected by economic influences, but also to a considerable degree by seasonal factors. Long-lasting wintery conditions were experienced both in large parts of North America and in Europe and had a further negative impact on sales development. To which extent the sales volumes decline is caused by the bad weather conditions or the economic development can not be judged reliably.
In the cement business line, the increasing demand in the growth regions of Asia-Pacific and Africa-Mediterranean Basin could partly make up for the downturn recorded in the other Group areas. In total, the HeidelbergCement Group's cement and clinker sales volumes decreased by 5.4 % to 15.2 million tonnes (previous year: 16.0). Deliveries of aggregates reported a decrease of 9.5 % with 40.3 million tonnes (previous year: 44.5). The sales volumes of readymixed concrete fell by 8.8 % to 6.9 million cubic metres (previous year: 7.6). Asphalt deliveries decreased by 21.7 % to 1.4 million tonnes (previous year: 1.8).
4
Group turnover fell by 7.6 % to EUR 2,180 million (previous year: 2,359) in the first quarter. Excluding exchange rate and consolidation effects, turnover decreased by 9.9 %. Double-digit gains in turnover in Asia-Pacific were offset by losses in the Group areas of Western and Northern Europe, Eastern Europe-Central Asia, and North America. In the Africa-Mediterranean Basin Group area, turnover reached the previous year's level. The operating income before depreciation (OIBD) decreased by 15.0 % to EUR 171 million (previous year: 202). Operating income declined to EUR -18 million (previous year: 11). In connection with the "FitnessPlus 2010" programme, savings of EUR 63 million were achieved in the first quarter.
Financial results improved by EUR 19.4 million to EUR -183.2 million (previous year: -202.6). This is mostly due to a year-on-year reduction in currency devaluations in the amount of EUR 27.0 million.
The loss before tax from continuing operations amounts to EUR -217.8 million (previous year: -195.0). Results from taxes on income declined by EUR 95.2 million to EUR 60.7 million (previous year: 155.9). This change is primarily the result of a provision for tax risks in Australia that was released in the previous year. The loss after tax from continuing operations thus totals EUR -157.1 million (previous year: -39.0).
Overall, the loss for the reporting period amounts to EUR -161.9 million (previous year: -45.9). The increase in profit attributable to minority interests by EUR 20 million to EUR 37.0 million (previous year: 17.0) is largely a consequence of the improvement in results and the changed participation in Indocement. The Group share therefore amounts to EUR -198.9 million (previous year: -63.0).
HeidelbergCement interim accounts
Notes
In the first quarter of 2010, the balance sheet total rose by EUR 1.0 billion to EUR 26.5 billion (previous year: 25.5). The increase in fixed assets by EUR 0.8 billion to EUR 21.6 billion (previous year: 20.8) is mainly due to exchange rate effects. Trade receivables rose by EUR 0.2 billion to EUR 1.5 billion (previous year: 1.3). The changes on the liabilities side of the Group balance sheet with regard to equity are mainly caused by exchange rate changes amounting to EUR 0.8 billion and the loss of EUR 0.3 billion for the period under review. A particular impact on liabilities was exerted by the increase in interest-bearing liabilities by EUR 0.4 billion to EUR 9.8 billion (previous year: 9.4) as well as the rise in provisions for pensions by EUR 0.2 billion to EUR 1.1 billion (previous year: 0.9).
On 19 January 2010, we issued two Eurobonds to national and foreign institutional investors with a total issue volume of EUR 1.4 billion: one bond of EUR 650 million with a term of 5 years and a second of EUR 750 million with a term of 10 years. The bonds have fixed interest rates of 6.5 % p.a. for the 5-year term and 7.5 % p.a. for the 10-year term. The issue prices were 98.8561 % and 98.2192 %, giving yields to maturity of 6.75 % and 7.75 % respectively. The bonds are unsecured and rank pari passu with all other capital market debts. The proceeds from the issue were exclusively used for the repayment of the syndicated loan from June 2009.
According to the terms and conditions of the aforementioned bonds and of the three Eurobonds issued on 21 October 2009 with a total issue volume of EUR 2.5 billion there is a limitation on incurring additional debt if the consolidated coverage ratio (i.e. the ratio of the aggregate amount of the consolidated EBITDA to the aggregate amount of the consolidated interest expense) of HeidelbergCement Group is below 2. The consolidated EBITDA of EUR 2,062 million and the consolidated interest expense of EUR 836 million are calculated in accordance with the terms and conditions of the bonds. As of 31 March 2010, the consolidated coverage ratio amounted to 2.47.
On 27 April 2010, HeidelbergCement signed a new, self-arranged EUR 3 billion syndicated credit facility with a group of 17 banks for the long-term securing of our liquidity. The new credit facility has been used for repaying bank debt remaining under the old credit facility that had been agreed with 60 banks in June 2009 with a maturity in December 2011. The new credit facility is mainly intended as liquidity back-up and has a maturity date of 31 December 2013. HeidelbergCement thereby strengthens its financial and operational flexibility. At the same time, the security package granted to the creditors could be reduced significantly compared with the old credit facility.
In the first quarter, cash flow investments were reduced to EUR 123 million (previous year: 149). Investments in tangible fixed assets, which primarily related to optimisation and environmental protection measures at our production sites, accounted for EUR 119 million (previous year: 139) of this total. Investments in financial fixed assets reached EUR 4 million (previous year 10); these relate to smaller acquisitions of participations to round off our activities.
With effect from the beginning of the 2010 financial year, HeidelbergCement has reorganised its reporting structure. It is now geographically divided into six Group areas: Western and Northern Europe, Eastern Europe-Central Asia, North America, Asia-Pacific, Africa-Mediterranean Basin, and Group Services. The Western and Northern Europe area includes the Benelux countries, Denmark, Germany, the United Kingdom, Norway, Sweden, and the Baltic States. Bosnia-Herzegovina, Georgia, Kazakhstan, Croatia, Poland, Romania, Russia, the Czech Republic, Slovakia, the Ukraine, and Hungary are part of the Eastern Europe-Central Asia Group area. North America remains unchanged and is made up of the United States and Canada. Asia-Pacific consists of Bangladesh, Brunei, China, India, Indonesia, Malaysia, Singapore, as well as Australia, and the Africa-Mediterranean Basin Group area comprises our activities in Africa, Israel, Spain, and Turkey. As in the past, our trading activities are bundled within the Group Services unit.
Our main activities, cement and aggregates, are reflected separately in the reporting segments. The building products business line remains unchanged, and in the Concrete, Service and Other business line we mainly report on downstream activities, such as ready-mixed concrete and asphalt.
The pace of the general economic recovery in the euro zone is slower than in many other regions of the world. In Germany, the United Kingdom and Northern Europe the construction industry was severely hit by the harsh winter in the first quarter.
In the cement business line, our deliveries declined in all countries, generally to a considerable extent. The greatest losses were recorded in Denmark, the Baltic States, and Norway. In Sweden, however, the previous year's levels were nearly maintained, as lower domestic shipments were largely offset by increased clinker exports. Sales volumes of our plants in Germany and the Benelux countries also suffered from weak domestic demand. While the decrease in cement shipments in the United Kingdom remained limited, a significant drop was recorded in blast furnace slag deliveries. Overall, our cement and clinker sales volumes in Western and Northern Europe fell by 19.5 % to 3.6 million tonnes (previous year: 4.4).
Aggregates deliveries clearly declined in all countries except the United Kingdom, where they remained at the previous year's level. Altogether, sales volumes decreased in the first quarter by 12.4 % to 12.1 million tonnes (previous year: 13.8).
Sales volumes for ready-mixed concrete reported a minus of 16.0 % with 2.2 million cubic metres (previous year: 2.6). The asphalt operating line experienced a rise in sales volumes by 2.8 % thanks to the British Government's economic stimulus programme and the repair of winter-related road damage.
In the building products business line, that mainly comprises Hanson's building products in the United Kingdom, sales volumes of all operating lines declined, with the exception of lightweight blocks. Nevertheless, a significant increase in results was achieved due to the capacity adjustments and cost-cutting measures initiated at an early stage.
Turnover of the Western and Northern Europe Group area dropped by 13.8 % to EUR 715 million (previous year: 830); excluding currency effects, the decline amounted to 16.0 %.
The national economies in the Eastern Europe-Central Asia Group area are only slowly moving towards recovery. In this Group area, as well, very adverse weather conditions negatively impacted on construction activity.
In the cement business line, sales volumes declined in almost all countries, for the most part to a considerable extent; only Kazakhstan and Georgia recorded moderate growth. A slight tendency towards improvement was discernible in the month of March; in Russia and Kazakhstan, it was even possible to achieve a noticeable increase in volumes. Overall, cement and clinker sales volumes in the first quarter were 34.6 % below the previous year at 1.7 million tonnes (previous year: 2.6). Excluding consolidation effects, the decline amounted to 30.7 %.
Deliveries of aggregates decreased by 26.4 % to 1.7 million tonnes (previous year: 2.3); excluding consolidation effects, they declined by 28.3 %. Ready-mixed concrete sales volumes fell by 18.2 % to 0.5 million cubic metres (previous year: 0.6); excluding consolidation effects, the decrease totalled 11.5 %.
Turnover of the Eastern Europe-Central Asia Group area dropped by 32.1 % to EUR 139 million (previous year: 205); excluding consolidation and exchange rate effects, the decline amounted to 32.5 %.
In North America, HeidelbergCement is represented in the US and Canada. In the US, the figures for the month of March point to a continuation of the economic recovery: the number of employees increased by 162,000 in the course of March, while the unemployment rate remained constant at 9.7 %. In comparison with the previous month, residential construction displayed a stronger rise in the number of construction starts and planning permissions than expected, with an increase of 1.6 % and 7.5 %, respectively. In Canada, the economy is benefiting from the strong demand in raw materials and the recovery of the construction industry.
Cement sales volumes of our North American plants fell by 14.6 % to 1.8 million tonnes (previous year: 2.1) in the first quarter. Apart from the weak demand caused by economic factors, the strong winter particularly in the northeastern part as well as heavy rain fall in the western part of the US affected the sales development. In the Canadian market region, our cement deliveries clearly increased as a result of infrastructural projects and intensified activities of the petroleum industry.
Deliveries of aggregates decreased by 5.1 % to 15.9 million tonnes (previous year: 16.8). Here, as well, the downswing was particularly strong in the north-east of the United States due to adverse weather conditions, whereas Canada recorded an increase. Ready-mixed concrete sales volumes declined by 17.1 % to 1.1 million cubic metres (previous years: 1.3). Asphalt sales volumes also saw a significant decrease. In March, deliveries of aggregates and ready-mixed concrete exceeded the previous year's level.
In the building products business line, which is highly dependent on residential construction, first signs of a positive development can be observed for bricks and roof tiles, where sales volumes even exceeded last year's levels. By contrast, deliveries in the other operating lines, such as pipes, precast concrete parts, and concrete paving blocks, continued their downward trend.
Total turnover in North America decreased by 19.9 % to EUR 497 million (previous year: 621). Excluding currency effects, the decline amounted to 15.1 %.
The emerging markets in Asia show a brisk recovery: Driven by the massive government economic stimulus programmes, the Chinese economy grew by 11.9 % in the first quarter of 2010. The general economic conditions are also gaining momentum in Indonesia, India, and Bangladesh. The Australian economy benefits from the strong demand for raw materials from China and the robust level of domestic demand.
During the first quarter, cement and clinker deliveries of the Asia-Pacific Group area grew by a total of 17.2 % to 6.1 million tonnes (previous year: 5.2). Excluding consolidation effects, sales volumes increased by 12.5 %. In Indonesia, our subsidiary Indocement profited from a clear upward trend in construction activity. As a result of the strong domestic demand, Indocement considerably reduced its export deliveries; all in all, cement and clinker sales volumes rose by 17.9 %. At the Cirebon plant, two new cement mills with a total grinding capacity of 1.5 million tonnes were installed; they will be commissioned in the course of the second quarter of 2010. Indocement will then have a cement capacity of 18.6 million tonnes. In China, our joint ventures in the provinces of Guangdong and Shaanxi were able to expand sales volumes by 8.3 % due to strong demand. Deliveries of our cement plants in India almost matched the previous year's level; there was a marked improvement in results. In Bangladesh, both the sales volumes and the results increased satisfactorily. Since the takeover of Hanson in 2007, we hold a 25 %- participation in the Australian cement company Cement Australia. Aggregates sales volumes dropped by 9.1 % to 7.3 million tonnes (previous year: 8.0). The asphalt business also showed decline. Deliveries of ready-mixed concrete nearly reached the previous year's levels with 2.0 million cubic metres (previous year: 2.0).
Turnover of the Asia-Pacific Group area improved by 19.1 % to EUR 568 million (previous year: 477); excluding consolidation and exchange rate effects, the growth amounted to 2.7 %.
The majority of African countries are experiencing an acceleration of economic development and lively construction activity. While the Turkish economy once again exhibited strong growth in the first quarter, Spain has still not overcome the crisis.
In Africa, our cement sales volumes showed an encouraging overall growth by 7.8 %. This was in particular attributable to Ghana, Togo, Sierra Leone, as well as Tanzania. In Turkey, cement and clinker sales volumes of our joint venture Akçansa grew by 50.8 % due to higher domestic demand and increased exports. Overall, the cement and clinker sales volumes of the Africa-Mediterranean Basin Group area increased by 19.7 % to 2.0 million tonnes (previous year: 1.6).
Aggregates sales volumes dropped by 9.2 % to 3.3 million tonnes (previous year: 3.6). The asphalt business also showed decline. By contrast, ready-mixed concrete deliveries rose by 9.7 % to approximately 1.2 million cubic metres (previous year: 1.0).
The turnover of the Africa-Mediterranean Basin Group area nearly reached the previous year's level, at EUR 216 million (previous year: 217); in operational terms, this represents a slight growth of 1.0 %.
The trade volume of our subsidiary HC Trading rose by 26.9 % in the first quarter to 2.3 million tonnes (previous year: 1.8). This was due both to a slight increase in cement deliveries and a substantial growth in clinker trade volume.
The Group Services business line also comprises our subsidiary HC Fuels, which is responsible for the purchase of fossil fuels. Overall, turnover of Group Services increased by 20.5 % to EUR 143 million (previous year: 119); excluding currency effects, the improvement amounted to 26.3 %.
At the end of the first quarter of 2010, the number of employees at HeidelbergCement was 52,770 (previous year: 58,851). This decrease by 6,081 employees results essentially from the location optimisations and capacity adjustments, particularly in North America and the United Kingdom, which were linked with job cuts.
In January 2010, following an application of the company, the Local Court (Amtsgericht) of Mannheim/Germany supplemented the Supervisory Board of HeidelbergCement AG and appointed Dr.-Ing. Herbert Lütkestratkötter and Alan Murray as members of the Supervisory Board to represent the shareholders. They replace the former Supervisory Board members Eduard Schleicher and Gerhard Hirth, who resigned from their positions at the end of 2009 in response to the changes in the shareholder structure of HeidelbergCement. Their terms of appointment will expire on occasion of the by-election held at the next Annual General Meeting of HeidelbergCement AG on 6 May 2010.
Notes
No reportable transactions with related companies or persons took place in the reporting period beyond normal business relations.
The global economy is still expected – according to forecasts from OECD and IMF – to recover this year. Development dynamics clearly differ from region to region. Accelerated growth is again anticipated in Asia. As expected, the return to economic growth in Europe and North America proceeds rather slowly and was adversely affected by the severe and long winter in the months of January and February. The noticeable economic upturn in March can be seen as a first positive signal regarding the further development. Nevertheless, there are still considerable forecast-uncertainties as regards the strength and timescale of the economic recovery. Early cutbacks to the economic stimulus programmes, cost-saving measures by some governments on account of the high level of debt, and persistently high unemployment may slow down the impending economic recovery.
HeidelbergCement continues to expect a noticeable positive business development in the Asia-Pacific and Africa-Mediterranean Basin Group areas. For North America and Europe, HeidelbergCement anticipates overall declines in sales volumes in the first half of the year, partly because of the weak first quarter. After a significant increase in promotional funding for road construction in the US in the month of March, a continued recovery of the business development is expected in the second quarter of 2010. The extent and rate will depend on the further development in the residential construction sector, the spending behaviour in the US states, as well as on the still pending decisions of the US Congress on future funding for road construction. In Europe, HeidelbergCement expects a stabilisation of residential construction, a noticeable decline in the commercial construction sector, and positive development in infrastructure for the rest of 2010.
Due to the currently still prevailing weak economic situation in the industrial countries, HeidelbergCement consist ently proceeds with its "FitnessPlus 2010" cost-saving programme and steadfastly pursues its goal of EUR 300 million in savings in 2010. At the same time, targeted investments are being made concerning projects in Asia, Africa, and Eastern Europe to lay the foundation for future growth. In the first quarter of 2010, HeidelbergCement increased the cement capacity expansion programme 2012 to 20 million tonnes. With its improved cost structures, its high operational strength, and world-wide leading market positions, HeidelbergCement believes it is well-equipped to benefit above average from an economic upturn in the course of this year and the next year.
The Managing Board of HeidelbergCement has not seen evidence of developments that would suggest changes for the business year 2010 regarding the forecasts and other statements made in the 2009 Annual Report on the expected development of HeidelbergCement and its business environment.
The expected future development of HeidelbergCement and the business environment over the course of 2010 is described in the prospects. As such, please note that this interim financial report contains forward-looking statements based on the information currently available and the current assumptions and forecasts of the Managing Board of HeidelbergCement. Such statements are naturally subject to risks and uncertainties and may therefore deviate significantly from the actual development. HeidelbergCement undertakes no obligation and furthermore has no intention to update the forward-looking statements made in this interim financial report.
Business activities are always future-oriented and therefore involve risks. HeidelbergCement is likewise subject to various risks in its business activities that are not fundamentally avoided, but instead accepted, provided they are well balanced by the opportunities they present. Identifying risks, understanding them and reducing them systematically is the responsibility of the Managing Board and a key task for all managers. The Managing Board of Heidelberg Cement AG is obliged to set up and supervise an internal control and risk management system. The Managing Board also has overall responsibility for the scope and organisation of the established systems. The internal control and risk management system, standardised across the Group, comprises several components that are carefully co-ordinated and systematically incorporated into the structure and workflow organisation. It is based on the financial resources, operational planning, and the risk management strategy established by the Managing Board.
After evaluation of the overall risk situation, there are, from today's perspective, deemed to be no identifiable risks, either at present or for the foreseeable future, that could threaten the existence of the Group or other significant risks whose occurrence would lead to a considerable deterioration of the Group's economic position.
Risks that may have a significant impact on our assets, financial and earnings position in the 2010 financial year and in the foreseeable future are described in detail in the 2009 Annual Report. For remarks on the syndicated credit agreement of 16 June 2009, which matures in December 2011, in the context of financial risks, see the information included in this interim Group management report under the section "Long-term financing secured". With the new syndicated credit line established on 27 April 2010, the remaining liabilities under the credit agreement entered into in June 2009 were replaced. The risks arising from volatile energy and raw material prices as well as from exchange rate effects continue to be high. The development of the global economy is better than expected, but the recovery is still laden with risk. In the industrial countries, the most challenging aspect will be the consolidation of the state finances.
HeidelbergCement interim accounts
Notes
| Group profit and loss accounts | January - March | |
|---|---|---|
| EUR '000s | 2009 | 2010 |
| Turnover | 2,359,396 | 2,179,653 |
| Change in stock and work in progress | -45,869 | 19,416 |
| Own work capitalised | 1,656 | 1,513 |
| Operating revenue | 2,315,183 | 2,200,582 |
| Other operating income | 63,696 | 67,215 |
| Material costs | -985,530 | -953,241 |
| Employee and personnel costs | -516,857 | -486,184 |
| Other operating expenses | -674,874 | -656,968 |
| Operating income before depreciation (OIBD) | 201,618 | 171,404 |
| Depreciation of tangible fixed assets | -183,743 | -182,942 |
| Amortisation of intangible assets | -6,598 | -6,625 |
| Operating income | 11,277 | -18,163 |
| Additional ordinary income | 21,730 | 4,104 |
| Additional ordinary expenses | -19,485 | -18,674 |
| Additional ordinary result | 2,245 | -14,570 |
| Result from associated companies 1) | -5,716 | -922 |
| Result from other participations | -150 | -914 |
| Earnings before interest and taxes (EBIT) | 7,656 | -34,569 |
| Interest income | 11,123 | 25,514 |
| Interest expenses | -147,892 | -170,080 |
| Foreign exchange losses | -29,683 | -2,723 |
| Other financial result | -36,175 | -35,899 |
| Financial result | -202,627 | -183,188 |
| Loss before tax from continuing operations | -194,971 | -217,757 |
| Taxes on income | 155,925 | 60,701 |
| Net loss from continuing operations | -39,046 | -157,056 |
| Net loss from discontinued operations | -6,871 | -4,855 |
| Loss for the financial year | -45,917 | -161,911 |
| Thereof minority interests | 17,046 | 36,965 |
| Thereof Group share of loss | -62,963 | -198,876 |
| Loss per share attributable to the parent entity | -0.50 | -1.06 |
|---|---|---|
| Loss per share - continuing operations | -0.45 | -1.03 |
| Loss per share - discontinued operations | -0.05 | -0.03 |
| Group statement of comprehensive income | January - March | January - March | |||
|---|---|---|---|---|---|
| EUR '000s | 2009 | 2009 | 2010 | 2010 | |
| Loss for the financial year | -45,917 | -161,911 | |||
| IAS 19 Actuarial gains and losses | 41,680 | -162,900 | |||
| Income taxes | -12,479 | 46,918 | |||
| 29,201 | -115,982 | ||||
| IAS 39 Cash flow hedges | -9,002 | 1,685 | |||
| Income taxes | 2,440 | -421 | |||
| -6,562 | 1,264 | ||||
| IAS 39 Available for sale assets | -2,830 | 1,108 | |||
| Income taxes | 1,247 | 225 | |||
| -1,583 | 1,333 | ||||
| IFRS 3 Business combinations | 7,944 | -1,438 | |||
| Income taxes | -2,700 | ||||
| 5,244 | -1,438 | ||||
| Other | -512 | 1,428 | |||
| Income taxes | 630 | ||||
| 118 | 1,428 | ||||
| Currency translation | 356,997 | 795,566 | |||
| Income taxes | 6,576 | ||||
| 356,997 | 802,142 | ||||
| Other comprehensive income | 383,415 | 688,747 | |||
| Total comprehensive income | 337,498 | 526,836 | |||
| Relating to minority interests | 6,895 | 83,076 | |||
| Relating to HeidelbergCement AG shareholders | 330,603 | 443,760 |
HeidelbergCement interim accounts
Notes
| Group cash flow statement | January - March | |
|---|---|---|
| EUR '000s | 2009 | 2010 |
| Net loss from continuing operations | -39,046 | -157,056 |
| Taxes on income | -155,925 | -60,701 |
| Interest income/expenses | 136,769 | 144,566 |
| Dividends received | 2,887 | 2,192 |
| Interest paid | -197,395 | -269,415 |
| Taxes paid/received | -45,271 | 40,111 |
| Elimination of non-cash items | 338,121 | 331,179 |
| Cash flow | 40,140 | 30,876 |
| Changes in operating assets | 28,678 | -189,089 |
| Changes in operating liabilities | -198,681 | -177,489 |
| Changes in working capital | -170,003 | -366,578 |
| Decrease in provisions through cash payments | -66,304 | -63,972 |
| Cash flow from operating activities - continuing operations | -196,167 | -399,674 |
| Intangible assets | -6,242 | -1,373 |
| Tangible fixed assets | -132,809 | -117,369 |
| Financial fixed assets | -9,907 | -3,763 |
| Investments (cash outflow) | -148,958 | -122,505 |
| Proceeds from fixed asset disposals | 8,104 | 29,869 |
| Cash from changes in consolidation scope | 789 | |
| Cash flow from investing activities - continuing operations | -140,065 | -92,636 |
| Dividend payments - minority shareholders | -2,451 | -3,128 |
| Proceeds from bond issuance and loans | 1,528,921 | 1,770,624 |
| Repayment of bonds and loans | -61,832 | -1,415,006 |
| Cash flow from financing activities - continuing operations | 1,464,638 | 352,490 |
| Net change in cash and cash equivalents - continuing operations | 1,128,406 | -139,820 |
| Effect of exchange rate changes | 13,431 | 47,506 |
| Cash and cash equivalents at 1 January | 843,646 | 854,368 |
| Cash and cash equivalents at 31 March | 1,985,483 | 762,054 |
| Reclassification of cash and cash equivalents according to IFRS 5 | -3,348 | |
| Cash and cash equivalents presented in the balance sheet at 31 March | 1,982,135 | 762,054 |
| Assets | ||
|---|---|---|
| EUR '000s | 31 Dec. 2009 | 31 Mar. 2010 |
| Non-current assets | ||
| Intangible assets | ||
| Goodwill | 9,804,195 | 10,196,024 |
| Other intangible assets | 264,627 | 278,990 |
| 10,068,822 | 10,475,014 | |
| Tangible fixed assets | ||
| Land and buildings | 4,904,125 | 5,079,836 |
| Plant and machinery | 4,412,359 | 4,536,603 |
| Fixtures, fittings, tools and equipment | 236,280 | 241,629 |
| Payments on account and assets under construction | 667,271 | 731,247 |
| 10,220,035 | 10,589,315 | |
| Financial fixed assets | ||
| Investments in associates | 349,361 | 359,437 |
| Financial investments | 79,346 | 71,266 |
| Loans to participations | 19,020 | 19,649 |
| Other loans and derivative financial instruments | 45,781 | 93,907 |
| 493,508 | 544,259 | |
| Fixed assets | 20,782,365 | 21,608,588 |
| Deferred taxes | 268,771 | 333,913 |
| Other long-term receivables | 183,262 | 190,236 |
| Long-term tax assets | 16,570 | 16,574 |
| Total non-current assets | 21,250,968 | 22,149,311 |
| Current assets | ||
| Stock | ||
| Raw materials and consumables | 595,331 | 617,358 |
| Work in progress | 147,254 | 171,122 |
| Finished goods and goods for resale | 601,002 | 632,686 |
| Payments on account | 12,499 | 18,654 |
| 1,356,086 | 1,439,820 | |
| Receivables and other assets | ||
| Short-term financial receivables | 99,671 | 100,432 |
| Trade receivables | 1,298,770 | 1,464,681 |
| Other short-term operating receivables | 361,928 | 433,417 |
| Current tax assets | 238,380 | 103,187 |
| 1,998,749 | 2,101,717 | |
| Financial investments and derivative financial instruments | 47,914 | 58,331 |
| Cash and cash equivalents | 854,368 | 762,054 |
| Total current assets | 4,257,117 | 4,361,922 |
| Balance sheet total | 25,508,085 | 26,511,233 |
HeidelbergCement interim accounts
Notes
| Liabilities | ||
|---|---|---|
| EUR '000s | 31 Dec. 2009 | 31 Mar. 2010 |
| Shareholders' equity and minority interests | ||
| Subscribed share capital | 562,500 | 562,500 |
| Share premium | 5,539,377 | 5,539,377 |
| Retained earnings | 6,166,476 | 5,853,046 |
| Other components of equity | -1,867,366 | -1,110,176 |
| Equity attributable to shareholders | 10,400,987 | 10,844,747 |
| Minority interests | 602,029 | 687,522 |
| Total equity | 11,003,016 | 11,532,269 |
| Non-current liabilities | ||
| Debenture loans | 4,898,865 | 6,373,372 |
| Bank loans | 2,981,880 | 1,980,756 |
| Other long-term financial liabilities | 300,317 | 308,500 1) |
| 8,181,062 | 8,662,628 | |
| Provisions for pensions | 756,712 | 937,470 |
| Deferred taxes | 892,367 | 841,133 |
| Other long-term provisions | 1,023,818 | 1,065,912 |
| Other long-term operating liabilities | 204,388 | 224,420 |
| Long-term tax liabilities | 79,798 | 83,037 |
| 2,957,083 | 3,151,972 | |
| Total non-current liabilities | 11,138,145 | 11,814,600 |
| Current liabilities | ||
| Debenture loans (current portion) | 699,467 | 671,347 |
| Bank loans (current portion) | 196,220 | 186,230 |
| Other short-term financial liabilities | 285,629 | 299,423 1) |
| 1,181,316 | 1,157,000 | |
| Provisions for pensions (current portion) | 115,139 | 115,433 |
| Other short-term provisions | 176,331 | 188,060 |
| Trade payables | 931,560 | 795,412 |
| Other short-term operating liabilities | 763,112 | 780,484 |
| Current income taxes payables | 199,466 | 127,975 |
| 2,185,608 | 2,007,364 | |
| Total current liabilities | 3,366,924 | 3,164,364 |
| Total liabilities | 14,505,069 | 14,978,964 |
| Balance sheet total | 25,508,085 | 26,511,233 |
1) Includes puttable minorities with an amount of EUR '000s 34,899 (previous year: 36,938)
| Group statement of changes in equity | |||||
|---|---|---|---|---|---|
| Subscribed | Share | Retained | Cash flow hedge | ||
| share capital | premium | earnings | reserve | ||
| EUR '000s | |||||
| 1 January 2009 | 375,000 | 3,470,892 | 6,316,964 | -14,234 | |
| Loss for the financial year | -62,963 | ||||
| Other comprehensive income | 29,319 | -6,317 | |||
| Total comprehensive income | -33,644 | -6,317 | |||
| Changes in consolidation scope | |||||
| Dividends | |||||
| 31 March 2009 | 375,000 | 3,470,892 | 6,283,320 | -20,551 | |
| 1 January 2010 | 562,500 | 5,539,377 | 6,166,476 | -13,339 | |
| Loss for the financial year | -198,876 | ||||
| Other comprehensive income | -114,554 | 1,264 | |||
| Total comprehensive income | -313,430 | 1,264 | |||
| Changes in consolidation scope | |||||
| Dividends | |||||
| 31 March 2010 | 562,500 | 5,539,377 | 5,853,046 | -12,075 |
HeidelbergCement interim accounts
Notes
| Other components of equity | |||||||
|---|---|---|---|---|---|---|---|
| Total equity |
Minority interests |
Equity attributable to shareholders |
Total other components of equity |
Currency translation |
Asset revaluation reserve |
Available for sale reserve |
|
| 8,260,844 | 540,703 | 7,720,141 | -2,442,715 | -2,442,548 | 4,901 | 9,166 | |
| -45,917 | 17,046 | -62,963 | |||||
| 383,415 | -10,151 | 393,566 | 364,247 | 366,903 | 5,244 | -1,583 | |
| 337,498 | 6,895 | 330,603 | 364,247 | 366,903 | 5,244 | -1,583 | |
| -669 | -669 | ||||||
| -2,451 | -2,451 | ||||||
| 8,595,222 | 544,478 | 8,050,744 | -2,078,468 | -2,075,645 | 10,145 | 7,583 | |
| 11,003,016 | 602,029 | 10,400,987 | -1,867,366 | -1,906,541 | 39,585 | 12,929 | |
| -161,911 | 36,965 | -198,876 | |||||
| 688,747 | 46,111 | 642,636 | 757,190 | 756,031 | -1,438 | 1,333 | |
| 526,836 | 83,076 | 443,760 | 757,190 | 756,031 | -1,438 | 1,333 | |
| 5,545 | 5,545 | ||||||
| -3,128 | -3,128 | ||||||
| 11,532,269 | 687,522 | 10,844,747 | -1,110,176 | -1,150,510 | 38,147 | 14,262 | |
| Eastern Europe Central Asia |
||||
|---|---|---|---|---|
| 2009 | 2010 | 2009 | 2010 | |
| 815 | 703 | 204 | 139 | |
| 15 | 12 | 1 | 0 | |
| 830 | 715 -13.8 % |
205 | 139 -32.1 % |
|
| 52 6.3 % |
8 1.1 % |
8 3.8 % |
-7 -5.3 % |
|
| -61 | -65 | -23 | -23 | |
| -9 -1.1 % |
-58 -8.1 % |
-15 -7.3 % |
-30 -21.8 % |
|
| -3 | -1 | -3 | 0 | |
| -12 | -58 | -18 | -31 | |
| 38 | 23 | 57 | 42 | |
| 6,726 0.8 % |
6,795 0.1 % |
1,682 0.5 % |
1,919 -0.4 % |
|
| 15,464 | 14,061 | 10,811 | 9,344 | |
| 15,507 | 14,123 | 10,775 | 9,291 | |
| Western-Northern Europe |
1) Capital expenditures = in the segment columns: tangible fixed assets and intangible assets investments; in the reconciliation column: financial fixed assets investments
2) Segments assets = tangible fixed assets and intangible assets
HeidelbergCement interim accounts
Notes
| North America | Asia-Pacific | Africa-Med. Basin | Group Services | Reconciliation Overhead-Other |
Continuing operations |
||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 |
| 621 | 497 | 473 | 566 | 210 | 206 | 36 | 68 | 2,359 | 2,180 | ||
| 0 | 0 | 4 | 3 | 6 | 10 | 83 | 75 | -109 | -100 | 0 | 0 |
| 621 | 497 -19.9 % |
477 | 568 19.1 % |
217 | 216 -0.3 % |
119 | 143 20.5 % |
-109 | -100 | 2,359 | 2,180 -7.6 % |
| -2 -0.4 % |
-12 -2.4 % |
112 23.5 % |
161 28.3 % |
37 17.0 % |
37 17.2 % |
18 15.2 % |
4 2.7 % |
-23 21.0 % |
-18 18.5 % |
202 8.5 % |
171 7.9 % |
| -67 | -60 | -26 | -31 | -8 | -8 | 0 | 0 | -5 | -2 | -190 | -190 |
| -70 -11.2 % |
-72 -14.5 % |
86 18.0 % |
130 22.8 % |
29 13.5 % |
29 13.4 % |
18 15.1 % |
4 2.6 % |
-28 25.4 % |
-20 20.4 % |
11 0.5 % |
-18 -0.8 % |
| -2 | -2 | 2 | 1 | 0 | 0 | 0 | 0 | -6 | -2 | ||
| 3 | -15 | 3 | -15 | ||||||||
| -72 | -74 | 88 | 131 | 29 | 29 | 18 | 3 | 3 | -15 | 8 | -35 |
| 24 | 30 | 16 | 22 | 5 | 2 | 10 | 4 | 149 | 123 | ||
| 8,673 0.0 % |
8,180 -0.1 % |
2,681 4.2 % |
3,475 4.6 % |
709 5.2 % |
658 5.6 % |
34 52.6 % |
37 10.1 % |
20,505 1.0 % |
21,064 0.8 % |
||
| 15,293 | 13,261 | 14,668 | 13,605 | 2,564 | 2,449 | 51 | 50 | 58,851 | 52,770 | ||
| 15,293 | 13,914 | 14,682 | 13,616 | 2,572 | 2,449 | 51 | 50 | 58,879 | 53,444 | ||
The interim Group accounts for HeidelbergCement AG as of 31 March 2010 were prepared according to the International Financial Reporting Standards (IFRS) for interim reporting as applicable in the European Union. The same accounting and valuation methods were principally applied as in the preparation of the Group annual accounts as of 31 December 2009, as well as IAS 34 "Interim Financial Reporting".
None of the following IASB pronouncements or amendments to such pronouncements that are applicable in the 2010 financial year for the first time had any material impact on the financial position and performance of the Group.
The interim Group accounts as of 31 March 2010 were not subject to any audits or reviews.
The production and sales of building materials are seasonal due to the regional weather patterns. Particularly in our important markets in Europe and North America, business figures of the first and fourth quarters are adversely affected by the winter months, whereas the warmer months contribute to higher sales and profit numbers in the second and third quarters.
With effect from the beginning of the 2010 financial year, HeidelbergCement has reorganised its reporting structure. It is now geographically divided into six Group areas: Western and Northern Europe, Eastern Europe-Central Asia, North America, Asia-Pacific, Africa-Mediterranean Basin, and Group Services. The Western and Northern Europe area includes the Benelux countries, Denmark, Germany, the United Kingdom, Norway, Sweden, and the Baltic States. Bosnia-Herzegovina, Georgia, Kazakhstan, Croatia, Poland, Romania, Russia, the Czech Republic, Slovakia, the Ukraine, and Hungary are part of the Eastern Europe-Central Asia Group area. North America remains unchanged and is made up of the United States and Canada. Asia-Pacific consists of Bangladesh, Brunei, China, India, Indonesia, Malaysia, Singapore, as well as Australia, and the Africa-Mediterranean Basin Group area comprises our activities in Africa, Israel, Spain, and Turkey. As in the past, our trading activities are bundled within the Group Services unit.
Our main activities, cement and aggregates, are reflected separately in the reporting segments. The building products business line remains unchanged, and in the Concrete, Service and Other business line we mainly report on downstream activities, such as ready-mixed concrete and asphalt. The previous year's values have been restated accordingly.
An impairment test on goodwill is performed annually within the HeidelbergCement Group in the fourth quarter once the operating three-year plan has been prepared, or if there are reasons to suspect impairment. On 31 March 2010, management conducted sensitivity analyses with respect to the discount rates for those units that, as already indicated in the 2009 Annual Report, exhibit a less extensive scope for assessment.
HeidelbergCement interim accounts
Notes
There were no major changes in the consolidation scope in the current financial year.
| Turnover development by Group areas and business lines January to March 2010 |
Cement | Aggregates | Building products |
Concrete Service Other |
Group eliminations |
Intra | Total | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| EURm | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 |
| Western-Northern Europe | 323 | 295 | 151 | 146 | 115 | 85 | 348 | 308 | -107 | -119 | 830 | 715 |
| Eastern Europe-Central Asia | 167 | 108 | 13 | 10 | 0 | 0 | 40 | 34 | -15 | -13 | 205 | 139 |
| North America | 190 | 158 | 148 | 135 | 178 | 131 | 159 | 126 | -53 | -52 | 621 | 497 |
| Asia-Pacific | 245 | 344 | 78 | 91 | 8 | 6 | 187 | 190 | -41 | -62 | 477 | 568 |
| Africa-Med. Basin | 147 | 150 | 22 | 19 | 0 | 0 | 63 | 62 | -16 | -16 | 217 | 216 |
| Total | 1,072 | 1,055 | 412 | 401 | 300 | 222 | 797 | 720 | -232 | -262 | 2,350 | 2,136 |
| Group Services | 119 | 143 | ||||||||||
| Inter-area turnover | -109 | -100 | ||||||||||
| Continuing operations | 2,359 | 2,180 |
| Exchange rates | Exchange rates at reporting day | Average exchange rates | ||||
|---|---|---|---|---|---|---|
| EUR | 31 Dec. 2009 | 31 Mar. 2010 | 01- 03 / 2009 | 01- 03 / 2010 | ||
| USD | US | 1.4316 | 1.3510 | 1.3059 | 1.3836 | |
| AUD | Australia | 1.5956 | 1.4739 | 1.9642 | 1.5300 | |
| CAD | Canada | 1.5058 | 1.3715 | 1.6247 | 1.4391 | |
| CNY | China | 9.7720 | 9.2217 | 8.9266 | 9.4464 | |
| GBP | Great Britain | 0.8862 | 0.8899 | 0.9091 | 0.8872 | |
| GEL | Georgia | 2.3846 | 2.3591 | 2.1739 | 2.3728 | |
| GHC | Ghana | 2.0674 | 1.9364 | 1.7280 | 1.9902 | |
| HKD | Hong Kong | 11.0995 | 10.4892 | 10.1256 | 10.7415 | |
| IDR | Indonesia | 13,457.04 | 12,314.37 | 15,196.36 | 12,828.68 | |
| INR | India | 66.4262 | 60.5248 | 64.8495 | 63.4210 | |
| KZT | Kazakhstan | 212.5497 | 198.5970 | 181.9962 | 204.2801 | |
| MYR | Malaysia | 4.8989 | 4.4029 | 4.7319 | 4.6593 | |
| NOK | Norway | 8.2938 | 8.0209 | 8.9637 | 8.1041 | |
| PLN | Poland | 4.0955 | 3.8509 | 4.4968 | 3.9816 | |
| RON | Romania | 4.2327 | 4.0860 | 4.2625 | 4.1122 | |
| RUB | Russia | 43.3932 | 39.7626 | 44.3699 | 41.2958 | |
| SEK | Sweden | 10.2505 | 9.7241 | 10.9492 | 9.9422 | |
| CZK | Czech Republic | 26.3085 | 25.4015 | 27.5829 | 25.8371 | |
| HUF | Hungary | 269.0835 | 265.0257 | 293.5042 | 268.2658 | |
| TZS | Tanzania | 1,899.49 | 1,817.62 | 1,711.73 | 1,851.14 | |
| TRY | Turkey | 2.1402 | 2.0512 | 2.1660 | 2.0859 |
On 19 January 2010, HeidelbergCement issued two Eurobonds to national and foreign institutional investors with a total issue volume of EUR 1.4 billion: one bond of EUR 650 million with a term of 5 years and a second of EUR 750 million with a term of 10 years. The bonds have fixed interest rates of 6.5 % p.a. for the 5-year term and 7.5 % p.a. for the 10-year term. The issue prices were 98.8561 % and 98.2192 %, giving yields to maturity of 6.75 % and 7.75 % respectively. The bonds are unsecured and rank pari passu with all other capital market debts. The proceeds from the issue were exclusively used for the repayment of the syndicated loan from June 2009.
The actuarial gains and losses were adjusted for the material countries based on the discount rates applicable as at the closing date.
No reportable transactions with related parties took place in the reporting period beyond normal business relations.
At the reporting date, there are contingent liabilities of EUR 525.0 million (31 December 2009: 366.4). These include obligations of EUR 454.2 million (31 December 2009: 330.7) for which the probability of outflow is remote.
On 27 April 2010, HeidelbergCement signed a new, self-arranged EUR 3 billion syndicated credit facility with a group of 17 banks. The new credit facility has been used for repaying bank debt remaining under the old credit facility that had been agreed with 60 banks in June 2009 with a maturity in December 2011. The new credit facility is mainly intended as liquidity back-up and has a maturity date of 31 December 2013. HeidelbergCement thereby strengthens its financial and operational flexibility. At the same time, the security package granted to the creditors could be reduced significantly compared with the old credit facility. The syndicated credit facility can be used for cash drawdowns as well as for letters of credit and guarantees. For cash drawdowns, the initial credit margin amounts to 3.0 % and is clearly lower than for the existing syndicated credit facility and would improve further with a declining ratio of net debt to EBITDA. For letter of credits and guarantees, the margin is at 75 % of the applicable margin for cash drawdowns. The commitment fee is 35 % of the applicable margin. The upfront fee amounts to 100 basis points. Accrued transaction costs from the 2009 credit facility amounting to EUR 57.8 million will be recognised in profit or loss in the second quarter of 2010.
Heidelberg, 6 May 2010
HeidelbergCement AG
The Managing Board
The Company has its registered office in Heidelberg, Germany. It is registered with the Commercial Register at the Local Court of Mannheim (Amtsgericht Mannheim) under HRB 330082.
Contact:
Group Communication
Phone: + 49 6221 481- 227 Fax: + 49 6221 481- 217 E-mail: [email protected]
Phone: Institutional investors: + 49 6221 481-925 Private investors: + 49 6221 481-256 Fax: + 49 6221 481-217 E-mail: [email protected]
Financial calendar
Half-Year Financial Report January to June 2010 30 July 2010
Interim Financial Report January to September 2010 4 November 2010
Annual General Meeting 2011 5 May 2011
Berliner Strasse 6 69120 Heidelberg, Germany www.heidelbergcement.com
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