Quarterly Report • Aug 30, 2017
Quarterly Report
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Half Yearly Report 2017
| in EUR m | 1–6/2017 | 1–6/2016 | Change |
|---|---|---|---|
| Operating data | |||
| Production output | 2,015 | 1,663 | 21.2% |
| Foreign share | 54.6% | 46.8% | 7.8PP |
| Revenue | 1,771 | 1,509 | 17.4% |
| Order backlog | 5,700 | 5,481 | 4.0% |
| Order intake | 2,911 | 2,564 | 13.5% |
| Average staffing levels | 16,589 | 14,473 | 14.6% |
| in EUR m | 1–6/2017 | 1–6/2016 | Change |
|---|---|---|---|
| Earnings indicators | |||
| EBITDA | 56.9 | 67.9 | -16.1% |
| EBIT | 8.4 | 28.2 | -70.1% |
| EBT | 4.0 | 21.4 | -81.5% |
| Profit for the period | 2.9 | 16.3 | -81.9% |
| Earnings per share (in EUR) | 0.05 | 0.53 | -90.6% |
| in EUR m | 30.6.2017 | 31.12.2016 | Change |
|---|---|---|---|
| Statement of financial position | |||
| Total assets | 2,597 | 2,362 | 9.9% |
| Equity (incl. non-controlling interests) | 537.1 | 440.9 | 21.8% |
| Equity ratio | 20.7% | 18.7% | 2.0PP |
| Cash and cash equivalents | 144 | 476 | -69.8% |
| Net debt/net cash | -375 | 53 | > -100.0% |
| Gearing ratio | 0.71 | -0.12 | > -100.0% |
| Capital employed | 856 | 331 | > -100.0% |
| in EUR m | 1–6/2017 | 1–6/2016 | Change |
|---|---|---|---|
| Cash flow and investments | |||
| Operating cash flow | 28 | 49 | -42.6% |
| Cash flow from operating activities | -339 | -186 | 81.8% |
| Cash flow from investing activities | -168 | -50 | > 100.0% |
| Cash flow from financing activities | 172 | -72 | > -100.0% |
| Investments | -77 | -63 | 23.0% |
| Depreciation/amortisation/impairment | -49 | -40 | 22.2% |
The figures have been rounded off using the compensated summation method. Absolute changes are calculated from the rounded values, relative changes (in percent) from the non-rounded values.
The year 2017 has been a year of shaping the future at PORR. In recent months opportunities arose to acquire a number of companies, which the Executive Board recognised as a chance to strengthen and complement PORR's core business, following comprehensive analysis. With the takeover of Franki Grundbau and Heijmans Oevermann in Germany, we are pursuing our objective of opening up the infrastructure market in Central and Northern Germany with our own qualified personnel to meet the needs of the permanent business using our own resources and to be able to cover large-scale projects ourselves.
In Austria we laid the cornerstone for the takeover of the longstanding Salzburg company Hinteregger & Söhne Baugesellschaft m.b.H. in May. The company focuses on industrial civil engineering, power plant construction and underground engineering – a good complement to our service range. The group currently employs around 890 people and production output in 2016 was around EUR 220m. Hinteregger will help to further enhance our market position.
An expansion of this kind cannot be purely organic and comes with initial costs. PORR has deliberately decided to undertake these investments in light of long-term considerations, even though this naturally has an impact on earnings. In addition, political turbulence in Qatar has led to an increase in costs because of more complex logistics and procurement processes, whereby all projects are progressing as planned. The earnings guidance has thereby been reduced. As long as frame conditions remain unchanged, the Executive Board expects earnings for the full year to be slightly below the previous year – despite a sharp increase in production output.
On the operating side, PORR managed to increase its production output once again by 21.2% to EUR 2,015m. In the first half the order intake was up by 13.5% year-on-year and stood at EUR 2,911m. On the one hand, the growth in the operating indicators was naturally caused by the acquisitions in the reporting period – the German construction companies Franki Grundbau and Heijmans Oevermann. On the other hand, it was also triggered by organic growth – particularly on our home markets of Germany, Poland and Switzerland, but also in Austria and Qatar. As the newly acquired companies primarily focus on the project business, the growth is not yet fully reflected in the order backlog. This amounted to EUR 5,700m and was up by 4.0% against the previous year. Overall, the PORR order backlog continues to be at a record high.
We are convinced that the medium and long-term benefits of the acquisitions justify the costs. Achieving a significant market position in Germany along with the further strengthening of the core Austrian business corresponds to our strategy of intelligent growth. PORR is in good shape today and is now making itself fit for the future.
Vienna, August 2017 The Executive Board
Karl-Heinz Strauss, MBA Chief Executive Officer
Christian B. Maier Executive Board Member
J. Johannes Wenkenbach Executive Board Member
The favourable performance in corporate profits, a positive economic backdrop and the ongoing expansive monetary policy led to an overall positive mood on the international stock markets in the first half of 2017. The MSCI World Index climbed by 9.4%, while the MSCI Emerging Markets Index rose by as much as 17.2%. In the USA the robust economic performance and the hope of significant tax cuts by the new administration led to sharp stock rises: compared to the end of 2016, the Dow Jones Industrial rose by 8.0%, while the NASDAQ Composite, which is more closely tied to the general economy, shot up by 16.1%.
Gains in Europe were more modest, with the eurozone index EURO STOXX 50 rising by 4.6%. This weaker performance compared to international indices was due to concerns about interest rate rises by the European Central Bank, as well as additional fears of a decline in the strong export industry as the result of the current strength of the euro.
High growth rates were also seen on the Eastern Europe index CECE – it was up by 17.1%. This was caused by the region's excellent economic situation and its high competitiveness.
The Vienna Stock Exchange continued to recover in the first two quarters of 2017; growth in the period under review reached 18.6%. It was the first time since the economic crisis of 2008 that a quarter closed with an index of more than 3,000 points. The market capitalisation of the Vienna Stock Exchange most recently stood at EUR 114.3bn.
The economic backdrop has increasingly brought the shares listed on the Vienna Stock Exchange onto the radar of international investors in recent months. This is reflected in a significant increase in turnover to EUR 35.7bn in the first half of 2017, far exceeding the comparable value of the previous year (EUR 28.9bn).
Following on from a 42.2% price increase in 2016 and a volatile first quarter 2017, the PORR share underwent a sharp price decrease in the second quarter. It started the new year on the stock exchange at EUR 38.27 and reached its half-year high on 20 February at EUR 41.31. A price correction took hold in the second quarter – a counter-reaction to the earlier price rally. The share closed at EUR 27.63 at 30 June 2017. While this was above the comparative value for the previous year (EUR 24.40 on 30 June 2016), it was significantly below the value at year-end 2016. The trading volumes averaged 56,340 per day in the first half-year and thereby doubled against the first half of the previous year. At 30 June 2017 the market capitalisation stood at EUR 665.9m.
Share price and trading volumes of PORR share in the first half of 2017 (index)
■ PORR share ■ ATX – Austrian Traded Index ■ Trading volume PORR share
1 Vienna Stock Exchange 2 ibidem
The largest percentage of outstanding shares, totalling 53.7%, is held by the syndicate consisting of the Strauss Group and the IGO-Ortner Group. According to the analysis carried out at the start of 2017, the other shares have a broad international dispersion. The majority of shares are held by institutional investors; in terms of region, the focal points are Austria (38.3%), the UK (13.7%), Germany (9.5%) and the USA (2.4%).
The goal of investor relations is transparent, timely information, which should allow every stakeholder to make a true and faithful evaluation of the company. In the period under review the management and investor relations team held numerous one-on-one talks with investors and analysts in Europe's largest financial centres and took part in international investment conferences. In addition to these activities, PORR issued comprehensive reports on its business performance as part of the quarterly teleconferences for analysts, institutional investors and banks, as well as at regular press conferences.
The PORR share is currently covered by eight brokers: HSBC, ERSTE Group, Berenberg Bank, Hauck & Aufhäuser, HELVEA Baader Bank, Raiffeisen Centrobank, Kepler Cheuvreux and SRC Research.
| Publication Half Yearly Report 2017 |
|---|
| Interest payment PORR Corporate Bond 2014/1 (senior bond) |
| Interest payment PORR Corporate Bond 2014/2 (hybrid bond) |
| Interest payment PORR Corporate Bond 2013 |
| Publication Interim Report on the 3rd Quarter 2017 |
La Tête
Building construction Düsseldorf . Germany Construction period: 04/2016–10/2017
Power plant construction Graz . Austria Construction period: 01/2017–02/2020
Obervermunt II Pumped Storage Power Plant
Power plant construction Obervermunt . Austria Construction period: 05/2014–08/2018
The upswing in the global economy that has been felt since spring 2016 gathered pace once again in 2017 and has included many emerging economies in South America and Eastern Europe in addition to industrial states.1 Against this backdrop, the IMF has forecast global economic growth of 3.5% for the full year 2017 (IMF, European Commission, OECD).2
Economic growth in the USA accelerated due to rising investments and increased exports. This growth was, however, somewhat offset by a slowdown in consumer spending leading to just a slight expansion in economic output overall. Assuming powerful recovery effects in the second quarter of 2017, GDP growth has been forecast at 2.2% for 2017.3
Preliminary flash estimates by Eurostat suggest that GDP in the eurozone rose by 0.6% in the second quarter of 2017 against the preceding quarter. This development was in line with the expectations of economic observers and significantly exceeded the original forecast of almost 0.3%. Compared to the same quarter in the previous year, seasonally-adjusted GDP rose by 2.1% in the second quarter of 2017 and by 1.9% in the preceding quarter.4
At the start of 2017 the Austrian economy experienced its strongest growth in six years. With a GDP increase of 0.9% in the second quarter, Austria had one of the highest rates of economic growth in the eurozone.5 There are multiple reasons for this performance – with powerful drivers from both home and abroad. Dynamic exports, increased corporate investments and stable consumer spending were the key contributing factors here.
In line with the higher economic growth, the budget deficit will be lower this year than in 2016. The impact of the special effects related to the tax reform is also being felt.6 Economic growth is expected to be positive in the second half of the year and there is also likely to be some relief in the unemployment figures. The good economic performance so far and the ongoing strength of private spending should lead economic growth to reach 2.3% for the full year 2017, a level that exceeds both the European and the American average.7
The recovery of the European economy has also boosted growth in the construction industry. In 2016 construction output grew in Euroconstruct countries by 2.5%, stronger than originally forecast. Growth is expected to reach 2.9% in 2017 and 2.4% in 2018.
In terms of construction sectors, residential construction underwent the sharpest growth in 2016 of 5.0%. Growth is expected to slow somewhat in the coming years with an increase of 3.7% in 2017 and 2.7% in 2018. However, residential construction will remain a growth market due to demographic developments, the increase in household income and low mortgage rates. Following a decrease of 1.8% in 2016, construction output in civil engineering is set to grow by 2.0% this year and by 3.0% in the years 2018 and 2019 respectively. Here the growth rates in Western European countries are around 0.5% below the average, while civil engineering is set to experience strong growth of 10% a year in CEE countries. This is a direct consequence of the new budget framework of the EU Structural Funds.8
As expected, PORR achieved a significant increase in output in the first half of 2017 that was partly caused by organic growth and partly by M&A activities. Production output reached EUR 2,015m, a sharp increase of EUR 352m or 21.2%. More than EUR 150m of the total came from the new Group subsidiaries. Strong growth was recorded on the home markets of Germany, Poland and Switzerland and, despite its already high level, Austria managed to increase its output by around 3.5%. The purchase of the Hinteregger Group closed after the reporting date of 30 June and is therefore not yet included in the half-year results. Output in the Czech Republic slipped back against the comparable period of the previous year.
Broken down by segment, every operating unit achieved a significant increase in output in the first half of 2017. As a result of the takeovers, Business Unit 2 – Germany achieved the highest growth in production output by some margin; it also achieved organic growth through its focus on building construction. The growth in Business Unit 1 – A/CH/CZ was caused by the positive performance in Austria as well as the very good capacity utilisation in Switzerland – especially in
1 WIFO Monthly Report, 2017, 90(7), p. 511-524
2 ÖNB Economic Report / AUSA Berichtsteil_fsr33.pd
3 WIFO Monthly Report, 2017, 90(7), p. 511-524
4 Eurostat, press release Euroindicators, 1 August 2017 6 WIFO Monthly Report, 2017, 90(7), p. 511-524
7 https://www.bankaustria.at/files/Oesterreich-Konjunktur_01-08-17.pdf 8 Press release by Euroconstruct http://www.euroconstruct.org/jart/prj3/wifo/
main.jart?rel=euroconstruct_en&content-id=1496906589254&reserve-mode=active
5 WIFO press release, 9 August 2017
building construction. Business Unit 3 – International also saw growth in almost every unit, with overall growth rising significantly by around 19%. Business Unit 4 – Environmental Engineering, Healthcare & Services benefited from the strong output of PORR Umwelttechnik and ALU-SOMMER.
In the first half of 2017 the five home markets once again accounted for around 86% of production output. Austria was the largest market by some margin, responsible for around 45% of production output. The share of total output accounted for by Germany also grew significantly; in the first half of 2017 it reached more than 26%.
The strong growth in production output was once again coupled with a rise in orders at 30 June 2017. The order backlog climbed to EUR 5,700m, an increase of EUR 219m or 4.0%. The rise in the order intake was even more pronounced. At EUR 2,911m it was up against the previous year by EUR 347m or 13.5%. In contrast to production output, the growth in the order backlog was mainly due to the takeovers.
The largest new order in the first half of the year was a major German industrial project for BMW in Munich-Freimann, which will be realised to state-of-the-art BIM and Lean standards together with the client. Other large-scale orders included the new railway line LK 354 Poznań–Piła in Poland and a section of the U5 metro line in Frankfurt. PORR Deutschland GmbH will realise the underground section from Platz der Republik to Emser Bridge. Another major road project was acquired in Slovakia with the D3 Čadca, while in Norway PORR won the tender for the E18 Varodd Bridge, the E18 Rugtvedt-Dørdal and the Bekkelaget sewage plant project near Oslo. The largest new orders in Austria were the Mur power plant consortium Graz and the Mühlgrundgasse residential complex in Vienna. In Switzerland PORR acquired two additional building construction projects at Zurich Central Station, as well as the tender to overhaul the Zentralschweizer Nationalstraße N4 between Zurich and Altdorf. In addition to a range of projects from the newly acquired Group subsidiaries, acquisitions in Germany included the residential project Stresemann Quartier in Hamburg, the residential project Naumannsche Brauerei in Leipzig, the Talbrücke Rothof Bridge on the A7, the office project Sono West in Frankfurt and an additional lot on the Emscher sewer.
The construction industry traditionally generates lower revenue and consequently lower earnings in the first half of the year due to seasonal factors. The weaker construction output and relatively higher fixed costs in the winter months also have an impact on financial performance.
In the first half of 2017 it was possible to achieve a significant increase in revenue to EUR 1,771.2m, marking a 17.4% rise against the comparable period 2016. While the cost of materials and staff expense rose slightly faster than revenue (18.6%), other related production expenses increased significantly by 19.9%. Expenses for subcontractor services and professionals thereby rose more sharply than expenses related to services rendered by the company's own staff. There was an overall rise of 2.8% in the percentage of revenue accounted for by the cost of materials and other related production services, while staff costs as a percentage of revenue declined slightly (-1.3PP). Projects in Qatar were the main cause of unplanned expenses due to the difficult political situation. Other operating expenses of EUR 160.1m also underwent a disproportionately sharp increase (EUR 24.6m, i.e. up by 18.1% year-on-year). All of the cost items include expenses for Germany, where the rapid expanse in structures has not yet led to adequate output.
This development led to a decline in EBITDA of EUR 11.0m to EUR 56.9m. The increase in depreciation, amortisation and impairment in the first half of 2017 (EUR up by 8.8m to EUR 48.5m) led to a reduction in EBIT as of 30 June 2017 to EUR 8.4m; it was thereby EUR 19.8m below the value of the previous year.
Financing costs were unchanged at EUR 11.4m. At the same time, the higher interest income led to a rise in earnings from current and non-current financial assets of EUR 2.3m to EUR 7.0m, whereby the contribution to earnings from the financing items improved by this EUR 2.3m. Overall, this led to a decline of EUR 17.4m in EBT, which totalled EUR 4.0m, and – with the slight increase in the tax rate of 25.7% (1st half 2016: 24.1%) – to a EUR 13.3m decrease in the profit for the period of EUR 2.9m.
At 30 June 2017 the Group's total assets amounted to EUR 2,596.5m and were thereby EUR 234.5m higher than on the comparable closing date, 31 December 2016.
Non-current assets increased in the first half of 2017 (EUR +175.8m), primarily because of acquisitions and investments in financial assets, and current assets rose by a total of EUR 58.6m against 31 December 2016, as a result of the reduction in the high levels of cash and cash equivalents due to seasonal factors and acquisitions, and the simultaneous decrease in trade receivables for revenue-related reasons. Equity at 30 June 2017 improved significantly against year-end due to the issue of a hybrid bond (EUR +123.8m). There was a contrasting effect from the dividend payout to shareholders and holders of mezzanine capital (EUR -34.7m). At 30 June 2017 equity totalled EUR 537.1m; the equity ratio improved to 20.7% at 30 June 2017 compared to 18.7% at 31 December 2016.
In terms of liabilities, there was an increase in current liabilities in particular, with a rise of EUR 142.2m. This resulted from the expansion of business activities, which led to an increase in both trade payables (EUR +99.6m) and financial liabilities (EUR +99.6m) due to securing short-term financing. The advance payments received have declined (EUR -68.7m) as the result of progress made on construction projects. Non-current liabilities slipped back by EUR -4.0m to EUR 558.7m.
Net debt rose as a result of the reduction in cash and cash equivalents at 30 June 2017 by EUR 428.0m to EUR 374.7m (net cash position at 31 December 2016: EUR 53.3m).
The decrease of EUR -20.8m in operating cash flow, which totalled EUR 28.1m, mainly resulted from the lower earnings for the period in the first half of 2017 as well as the higher, non-cash release of deferred tax provisions. This impact is, however, being partially offset by allocations to current tax provisions in cash flow from operating activities.
Cash flow from operating activities of EUR -338.7m in the first half of 2017 was EUR -152.4m lower than the comparable period in 2016, as more funds were tied up in working capital at 30 June 2017 than on the comparable date of the previous year. Cash flow from investing activities totalled EUR -167.8m and was EUR 117.6m lower than in the same period of the previous year due to the higher cash outflows for acquiring subsidiaries and for current financial investments.
Cash flow from financing activities showed the cash inflow from raising hybrid capital (EUR 123.4m) and taking out credit financing (EUR 98.3m), as well as the outflow from settling loans and borrowings (EUR -15.1m) and dividend payouts (EUR -34.7m).
At 30 June 2017 cash and cash equivalents totalled EUR 143.9m.
In the first half of 2017 no significant investments were made in tangible assets aside from the usual high investments to replace machinery and construction site equipment and buy new equipment. In recent months PORR has modernised its machinery pool significantly and is thereby very wellequipped for the current and future order backlogs.
Risk management focuses on the areas of project management, lending and borrowing management, procurement, liquidity, currency and interest exchange management, as well as monitoring risks related to markets and the general economy. The main priority of the PORR Group's opportunity and risk management is to implement and monitor processes in order to identify opportunities and risks early on so that the requisite countermeasures can be taken swiftly. In the past year the PORR opportunity and risk management system has been bundled organisationally with Corporate Governance and Compliance and developed into a holistic concept.
In the first half of 2017 PORR employed 16,589 people on average – an increase of 2,116 people or 14.6%. Here more than 568 staff members, or around 20% of the change, resulted from the corporate acquisitions in Germany. There was also an increase in staffing levels in Qatar in particular, where the workforce is being expanded as planned on the Slab Track Doha Metro project, and through the expansion of activities in Poland.
PORR is expanding and consistently implementing its strategy of intelligent growth. In line with this strategy, the growth has been achieved both organically and through the recent corporate acquisitions of Franki Grundbau, Heijmans Oevermann and – after the end of the reporting period – the Hinteregger Group.
The acquisitions make it likely that PORR will achieve its goal of opening up the infrastructure market in Central and Northern Germany with our own qualified personnel. Further acquisitions purely for expansion purposes are thereby not in focus, however, opportunities that may arise to complement the Group's knowhow in special areas will still be examined selectively.
With the takeover of one of the largest domestic competitors, the Hinteregger Group, a unique opportunity also presented itself in Austria in the first half of the year. After comprehensive analysis, the Executive Board ruled in favour of the purchase with a view to the company's medium and long-term success. With its knowhow in the permanent civil engineering business and in special areas such as tunnelling, the Hinteregger Group is an ideal complement to PORR's business in Austria and for complex infrastructure projects.
The integration of the new subsidiaries in Germany and Austria will occupy PORR for the entire year 2017 and lead to a significant increase in production output. In addition, the cushion of orders also continues to rise to record levels.
The Executive Board expects that – despite the sharp increase in production output – earnings for the full year will be slightly below the level of the previous year. The main factors behind this decrease are weaker contributions to earnings in Germany and Qatar. Political turbulence in Qatar has led to an increase in costs because of more complex logistics and procurement processes, whereby all projects are progressing as planned. In Germany the rapid expansion to achieve complete coverage and integration has led to higher costs, as well as higher production costs for subcontractors.
| Key data | |||
|---|---|---|---|
| in EUR m | 1–6/2017 | 1–6/2016 | Change |
| Production output | 973 | 887 | 9.6% |
| EBT | 16.3 | 16.3 | – |
| Order backlog | 1,949 | 1,982 | -1.7% |
| Order intake | 1,257 | 1,304 | -3.6% |
| Average staffing levels | 7,333 | 7,179 | 2.1% |
The activities on the permanent markets of Austria, Switzerland and the Czech Republic are included in the segment Business Unit 1 – A/CH/CZ (BU 1). It covers building construction and civil engineering, structural engineering, foundation engineering, the raw materials business on these markets and various shareholdings. The focus is on the fields of residential construction, office building, industrial construction and road construction. This segment additionally covers large-scale building construction projects – also those on international markets.
BU 1 managed to achieve a sharp increase in production output in the first half of 2017, whereby the growth came from Austria and Switzerland, as well as large-scale building construction projects. The Czech Republic was the only country where output lagged behind the previous year. BU 1's production output totalled EUR 973m, an increase of EUR 86m or 9.6%. EBT amounted to EUR 16.3m and was thereby at the same high level as the previous year. The order backlog of BU 1 as at 30 June declined slightly, although it remained at a very strong level and continues to be highly satisfactory. The order backlog totalled EUR 1,949m, a decrease of EUR 33m or 1.7%. The order intake declined to EUR 1,257m, a reduction of EUR 47m or 3.6%. As with other areas, the capacity of all of the units in large-scale building construction is fully utilised and therefore new projects are only being pursued very selectively.
BU 1 remains optimistic about the full year 2017 – despite the challenging backdrop in civil engineering. The strong credit standing of both public and private clients in Austria and Switzerland is the basis for economic growth.
The segment Business Unit 2 – Germany (BU 2) encompasses all of PORR's activities on the home market of Germany – from building construction and civil engineering to foundation and structural engineering – and does justice to the importance of PORR's second largest market. Particular focal points include private building construction, where PORR has established itself as a reliable partner to German industry.
In the first half of 2017, BU 2's development was dominated by the acquisitions concluded, especially those of the pile-engineering specialist Franki Grundbau and the medium-sized company Heijmans Oevermann in Münster. These were complemented by expansion efforts within the business unit itself. BU 2 is set to reach the critical size needed for successful business activities. These developments led the production output of BU 2 to reach EUR 373m in the first half of 2017, an increase of EUR 179m or 92.9%. The rapid expansion to achieve complete coverage, the integration and the higher production costs for subcontractors caused EBT to remain negative; it totalled EUR -11.1m, a reduction of EUR 11.5m. Despite the sharp increase in output, it was also possible to achieve significant growth in the cushion of orders. The order backlog stood at EUR 1,234m, an increase of EUR 439m or 55.2%. The order intake practically tripled to EUR 868m at the end of the reporting period, marking a rise of EUR 569m.
In the coming months PORR will work on consolidating the acquisitions at this high level. Some necessary organisational adjustments will be undertaken here and, on the other hand, the earnings situation will undergo a sustainable improvement.
| Key data | |||
|---|---|---|---|
| in EUR m | 1–6/2017 | 1–6/2016 | Change |
| Production output | 549 | 462 | 18.9% |
| EBT | -5.2 | 3.7 | – |
| Order backlog | 2,314 | 2,467 | -6.2% |
| Order intake | 636 | 732 | -13.1% |
| Average staffing levels | 4,922 | 3,935 | 25.1% |
The segment Business Unit 3 – International (BU 3) is home to the project-based business activities in Poland, the Nordic region, Qatar, Slovakia, Romania, Bulgaria, the UK and other future target countries. Added to this are the competencies in tunnelling, railway construction and bridge construction. In Poland and Romania BU 3 is also responsible for building construction and civil engineering, while PORR is additionally active in foundation engineering in Poland.
A sharp increase in production output was also achieved in BU 3 in the first half of 2017. It reached EUR 549m, a rise of EUR 87m or 18.9%. The growth was split across most of the units of BU 3. EBT reached EUR -5.2m, a decrease of EUR 8.9m. In Qatar, political turbulence led to the aforementioned higher costs resulting from more complex logistics and procurement processes; however, all projects are progressing as planned. Working off numerous large-scale projects led to a decline in the order situation – similar to BU 1, but at a very high level. The order backlog totalled EUR 2,314m, a decrease of EUR 153m or 6.2%. The order intake fell to EUR 636m, a reduction of EUR 96m or 13.1%.
The high order backlog means that nearly all of the capacities of BU 3 are fully utilised; new acquisitions are therefore undertaken very selectively with a view to the margins. Nevertheless, the cushion of orders is still significantly higher than a year's production output. BU 3 has a special focus on risk management in order to counter the fluctuations throughout the year that are a common feature of the large-scale project business.
| Key data | |||
|---|---|---|---|
| in EUR m | 1–6/2017 | 1–6/2016 | Change |
| Production output | 104 | 94 | 11.6% |
| EBT | 1.9 | 0.9 | 20.9% |
| Order backlog | 104 | 147 | -29.1% |
| Order intake | 92 | 159 | -42.3% |
| Average staffing levels | 1,467 | 1,304 | 12.5% |
Business Unit 4 – Environmental Engineering, Healthcare & Services (BU 4) is home to PORR Umwelttechnik GmbH, the equity interests Prajo, TKDZ and PWW, hospitals, PORREAL and StraussPropertyManagement, Thorn, ALU-SOMMER, as well as activities related to PPP.
At 30 June 2017 the production output of BU 4 totalled EUR 104m and was thereby up by EUR 10m or 11.6% against the comparable period of the previous year. Key output drivers included PORR Umwelttechnik and ALU-SOMMER, PORR's facade specialists, in particular. It was also possible to increase EBT, which reached EUR 1.9m, a rise of EUR 1.0m or 20.9%. The order backlog declined as the result of the project-driven business of the PPP unit. There was a strong one-effect in the comparable period of the previous year with the acquisition of the PPP motorway project D4/R7 in Slovakia. A similar oneoff impact also affected the order intake of ALU-SOMMER in the first quarter, although this has now recovered as planned and become positive. The order backlog reached EUR 104m, a decline of EUR 43m or 29.1%. The one-off effects caused the order intake to fall to EUR 92m, a decrease of EUR 67m or 42.3%.
With its competencies in niche sectors, BU 4 has continued with its highly satisfactory performance. This expands the value chain across a structure's entire lifecycle and serves as an ideal complement to PORR's construction services. Niches such as environmental engineering, project development or additional services such as facades or sewage technology will continue to be expanded consistently in order to be able to exploit opportunities in the design-build and general contractor sector in particular.
Today's world is digital. This also holds true for the construction business. Analogue technologies are being replaced by tablet and cloud computing, while the entire value chain – from order intake to production and execution – is being digitalised with multifunctional, complete solutions. With Building Information Modeling (BiM), PORR has set the course for the future. Our specialists today are developing 5D solutions and have integrated the dimensions of time and construction site logistics. The result: a conclusive optimisation of all previously commonplace processes.
| in EUR thousand | 1–6/2017 | 1–6/2016 | 4–6/2017 | 4–6/2016 |
|---|---|---|---|---|
| Revenue | 1,771,215 | 1,509,243 | 1,107,920 | 910,985 |
| Own work capitalised in non-current assets | 1,379 | 332 | 397 | 201 |
| Share of profit/loss of companies accounted for under the equity method | 18,618 | 19,141 | 12,977 | 13,839 |
| Other operating income | 77,087 | 58,964 | 41,219 | 30,886 |
| Cost of materials and other related production services | -1,183,637 | -966,570 | -767,747 | -588,072 |
| Staff expense | -467,631 | -417,673 | -274,556 | -242,246 |
| Other operating expenses | -160,098 | -135,548 | -78,346 | -70,614 |
| EBITDA | 56,933 | 67,889 | 41,864 | 54,979 |
| Depreciation. amortisation and impairment expense | -48,517 | -39,701 | -25,252 | -20,947 |
| EBIT | 8,416 | 28,188 | 16,612 | 34,032 |
| Income from financial investments and other current financial assets | 7,001 | 4,734 | 4,922 | 2,046 |
| Finance costs | -11,447 | -11,499 | -6,543 | -4,658 |
| EBT | 3,970 | 21,423 | 14,991 | 31,420 |
| Income tax expense | -1,019 | -5,157 | -3,905 | -6,963 |
| Profit for the period. total | 2,951 | 16,266 | 11,086 | 24,457 |
| of which attributable to shareholders of the parent | 1,561 | 15,061 | 10,312 | 23,812 |
| of which attributable to holders of profit-participation rights | 1,332 | 1,332 | 666 | 666 |
| of which attributable to non-controlling interests | 58 | -127 | 108 | -21 |
| Basic (diluted) earnings per share, total (in EUR) | 0.05 | 0.53 | 0.35 | 0.85 |
| in EUR thousand Other comprehensive income: Gains/losses from revaluation of property, plant and equipment Remeasurement from defined benefit obligations Income tax expense/income on other comprehensive income Exchange differences Losses/gains from fair value measurement of securities Losses/gains from cash flow hedges in the year under review reclassified into profit or loss |
1–6/2017 | 1–6/2016 | 4–6/2017 | 4–6/2016 | |
|---|---|---|---|---|---|
| Profit for the period | 2,951 | 16,266 | 11,086 | 24,457 | |
| -454 | - | -454 | - | ||
| 4,660 | -11,103 | 4,660 | -11,103 | ||
| -1,160 | 2,863 | -1,160 | 2,863 | ||
| Other comprehensive income which cannot be reclassified to profit or loss (non-recyclable) |
3,046 | -8,240 | 3,046 | -8,240 | |
| -452 | -1,436 | -1,840 | -1,126 | ||
| -101 | -125 | -98 | -153 | ||
| 174 | -813 | 17 | -129 | ||
| - | - | - | - | ||
| Income tax expense/income on other comprehensive income | -18 | 234 | 20 | 70 | |
| Other comprehensive income which can subsequently be reclassified to profit or loss (recyclable) |
-397 | -2,140 | -1,901 | -1,338 | |
| Other comprehensive income | 2,649 | -10,380 | 1,145 | -9,578 | |
| Total comprehensive income | 5,600 | 5,886 | 12,231 | 14,879 | |
| of which attributable to non-controlling interests | -53 | -130 | -37 | -36 | |
| Share attributable to shareholders of the parent and holders of profit participation rights |
5,653 | 6,016 | 12,268 | 14,915 | |
| of which attributable to holders of profit-participation rights | 1,332 | 1,332 | 666 | 666 | |
| Share attributable to shareholders of the parent | 4,321 | 4,684 | 11,602 | 14,249 |
| in EUR thousand | 30.6.2017 | 31.12.2016 |
|---|---|---|
| Assets | ||
| Non-current assets | ||
| Intangible assets | 134,783 | 62,597 |
| Property, plant and equipment | 551,010 | 522,709 |
| Investment property | 60,340 | 43,453 |
| Shareholdings in companies accounted for under the equity method | 50,901 | 43,286 |
| Loans | 24,322 | 23,157 |
| Other financial assets | 90,080 | 89,912 |
| Other non-current financial assets | 52,805 | 7,638 |
| Deferred tax assets | 12,888 | 8,528 |
| 977,129 | 801,280 | |
| Current assets | ||
| Inventories | 87,564 | 73,274 |
| Trade receivables | 1,266,881 | 930,029 |
| Other financial assets | 105,134 | 70,999 |
| Other receivables and current assets | 11,008 | 6,019 |
| Cash and cash equivalents | 143,923 | 476,430 |
| Assets held for sale | 4,869 | 4,024 |
| 1,619,379 | 1,560,775 | |
| Total assets | 2,596,508 | 2,362,055 |
| Equity and liabilities | ||
| Equity | ||
| Share capital | 29,095 | 29,095 |
| Capital reserves | 251,287 | 251,287 |
| Hybrid capital | 152,725 | 25,303 |
| Other reserves | 58,630 | 89,335 |
| Equity attributable to shareholders of parent | 491,737 | 395,020 |
| Equity from profit-participation rights | 41,317 | 42,624 |
| Non-controlling interests | 4,064 | 3,228 |
| 537,118 | 440,872 | |
| Non-current liabilities | ||
| Bonds and Schuldscheindarlehen | 300,969 | 300,662 |
| Provisions | 141,805 | 134,455 |
| Non-current financial liabilities | 74,038 | 78,463 |
| Other non-current financial liabilities | 5,721 | 3,176 |
| Deferred tax liabilities | 36,180 | 45,947 |
| 558,713 | 562,703 | |
| Current liabilities | ||
| Provisions | 125,302 | 120,058 |
| Current financial liabilities | 143,589 | 43,993 |
| Trade payables | 876,386 | 785,630 |
| Other current financial liabilities | 23,167 | 19,232 |
| Other current liabilities | 294,596 | 368,933 |
| Tax payables | 37,637 | 20,634 |
| 1,500,677 | 1,358,480 | |
| Total equity and liabilities | 2,596,508 | 2,362,055 |
| in EUR thousand | 1–6/2017 | 1–6/2016 |
|---|---|---|
| Profit for the period | 2,951 | 16,266 |
| Depreciation, amortisation, impairment and reversals of impairment on fixed assets and financial assets | 48,529 | 39,714 |
| Interest income/expense | 3,756 | 6,335 |
| Income from companies accounted for under the equity method | -7,681 | -2,757 |
| Dividends from companies accounted for under the equity method | 1,146 | 1,741 |
| Losses/profits from the disposal of fixed assets | -5,835 | -6,946 |
| Decrease in long-term provisions | -2,166 | -975 |
| Deferred income tax | -12,617 | -4,465 |
| Operating cash flow | 28,083 | 48,913 |
| Decrease/increase in short-term provisions | -25,464 | 6,382 |
| Increase in tax provisions | 12,790 | 7,765 |
| Increase in inventories | -9,663 | -6,629 |
| Increase in receivables | -303,649 | -145,938 |
| Decrease in payables (excluding banks) | -40,866 | -101,447 |
| Interest received | 9,478 | 7,549 |
| Interest paid | -4,930 | -5,634 |
| Other non-cash transactions | -4,505 | 2,718 |
| Cash flow from operating activities | -338,726 | -186,321 |
| Proceeds from the disposal of intangible assets | 27 | 6 |
| Proceeds from sale of property, plant and equipment and disposal of investment property | 13,738 | 13,870 |
| Proceeds from sale of financial assets | 2 | 387 |
| Proceeds from repayment of loans | 66 | 71 |
| Investments in intangible assets | -5,588 | -1,162 |
| Investments in property, plant and equipment and investment property | -70,723 | -48,113 |
| Investments in financial assets | -129 | -12,636 |
| Investments in loans | -382 | -557 |
| Payouts for financial investments | -45,000 | - |
| Proceeds from the sale of consolidated companies | - | 468 |
| Payouts for the purchase of subsidiaries less cash and cash equ. | -59,827 | -2,566 |
| Cash flow from investing activities | -167,816 | -50,232 |
| Dividends | -34,430 | -45,949 |
| Payouts to non-controlling interests | -293 | -330 |
| Proceeds from scrip dividend | - | 10,230 |
| Capital increase | 123,412 | - |
| Repayment of loans | - | -3,081 |
| Obtaining loans and other financing | 98,342 | 5,766 |
| Repayment of loans and other financing | -15,123 | -38,717 |
| Cash flow from financing activities | 171,908 | -72,081 |
| Cash flow from operating activities | -338,726 | -186,321 |
| Cash flow from investing activities | -167,816 | -50,232 |
| Cash flow from financing activities | 171,908 | -72,081 |
| Change to cash and cash equivalents | -334,634 | -308,634 |
| Cash and cash equivalents at 1 January | 476,430 | 647,243 |
| Currency translation differences | 2,127 | -2,460 |
| Cash and cash equivalents at 30 June | 143,923 | 336,149 |
| Taxes paid | 783 | 1,709 |
| in EUR thousand 1-6/2017 |
BU 1 – A/CH/CZ |
BU 2 – Germany |
BU 3 – International |
BU 4 – Environmental Engineering, Healthcare & Services |
Holding | Group |
|---|---|---|---|---|---|---|
| Production output | ||||||
| (Group) Segment revenue |
972,527 | 373,013 | 549,474 | 104,304 | 15,519 | 2,014,837 |
| (revenue, own work capitalised in non-current assets and other operating income) |
924,546 | 355,154 | 477,515 | 78,574 | 13,892 | 1,849,681 |
| Intersegmental revenue | 14,848 | 5,453 | 7,973 | 5,472 | 63,355 | |
| EBT (EBT (Segment Earnings Before Tax)) |
16,328 | -11,074 | -5,238 | 1,880 | 2,074 | 3,970 |
1 Part of the notes
| Revaluation | Remeasurement from defined |
Currency translation |
|||
|---|---|---|---|---|---|
| in EUR thousand | Share capital | Capital reserves | reserve | benefit obligations | reserve |
| Balance at 1 January 2016 | 29,095 | 249,014 | 13,417 | -25,540 | 3,190 |
| Total profit/loss for the period | - | - | - | - | - |
| Other comprehensive income | - | - | -545 | -8,240 | -1,635 |
| Total comprehensive income | - | - | -545 | -8,240 | -1,635 |
| Dividend payout | - | - | - | - | - |
| Proceeds from dividend-in-kind treasury shares | - | - | - | - | - |
| Income tax on interest for holders of hybrid/ mezzanine capital |
- | - | - | - | - |
| Changes to the consolidated group/acquisition of non-controlling interests |
- | - | - | - | - |
| Balance at 30 June 2016 | 29,095 | 249,014 | 12,872 | -33,780 | 1,555 |
| Balance at 1 January 2017 | 29,095 | 251,287 | 12,767 | -30,767 | 2,156 |
| Total profit/loss for the period | - | - | - | - | - |
| Other comprehensive income | - | - | -336 | 3,499 | -642 |
| Total comprehensive income | - | - | -336 | 3,499 | -642 |
| Dividend payout | - | - | - | - | - |
| Hybrid capital | - | - | - | - | - |
| Income tax on interest for holders of hybrid/ mezzanine capital |
- | - | - | - | - |
| Changes to the consolidated group/acquisition of non-controlling interests |
- | - | - | - | - |
| Balance at 30 June 2017 | 29,095 | 251,287 | 12,431 | -27,268 | 1,514 |
| in EUR thousand | BU 1 – A/CH/CZ |
BU 2 – Germany |
BU 3 – International |
BU 4 – Environmental Engineering, Healthcare & Services |
Holding | Group |
|---|---|---|---|---|---|---|
| 1-6/2016 | ||||||
| Production output (Group) |
887,358 | 193,377 | 462,211 | 93,472 | 26,371 | 1,662,789 |
| Segment revenue (revenue, own work capitalised in non-current assets and other operating income) |
849,431 | 208,586 | 439,553 | 53,105 | 17,864 | 1,568,539 |
| Intersegmental revenue | 32,697 | 7,136 | 5,803 | 8,389 | 73,166 | |
| EBT (EBT (Segment Earnings Before Tax)) |
16,322 | 440 | 3,653 | 851 | 157 | 21,423 |
| -645 -806 25,303 76,080 369,108 43,160 -150 - - 844 14,217 1,332 -127 15,061 -94 -610 - 747 - -3 -10,377 -94 -610 844 14,964 4,684 1,332 -130 - - - -42,749 -3,200 -330 -42,749 - - - 10,230 - - 10,230 - - - 544 - - 544 - - - 53 - -63 53 -739 -1,416 26,147 59,122 341,870 41,292 -673 -272 -655 25,303 106,106 395,020 42,624 3,228 - - 3,613 -2,052 1,332 58 1,561 -76 131 - 184 - -111 2,760 -76 131 3,613 -1,868 4,321 1,332 -53 - - - -31,791 -31,791 -2,639 -293 -34,723 - - 123,809 - - - 123,809 - - - 333 - - 333 - - - 45 - 1,182 45 537,118 |
Total | Non-controlling interests |
Profit participation rights |
Equity attributable to equity holders of the parent |
Retained earnings and non-retained profit |
Hybrid capital | Reserve for cash flow hedges |
Available-for-sale securities reserve: fair value reserve |
|---|---|---|---|---|---|---|---|---|
| 412,118 | ||||||||
| 16,266 | ||||||||
| -10,380 | ||||||||
| 5,886 | ||||||||
| -46,279 | ||||||||
| 10,230 | ||||||||
| 544 | ||||||||
| -10 | ||||||||
| 382,489 | ||||||||
| 440,872 | ||||||||
| 2,951 | ||||||||
| 2,649 | ||||||||
| 5,600 | ||||||||
| 123,809 | ||||||||
| 333 | ||||||||
| 1,227 | ||||||||
| 4,064 | 41,317 | 491,737 | 72,825 | 152,725 | -524 | -348 |
The PORR Group consists of PORR AG and its subsidiaries. PORR AG is a public limited company according to Austrian law and has its registered head office at Absberggasse 47, 1100 Vienna. The company is registered with the commercial court of Vienna under reference number FN 34853f. The Group deals mainly with the planning and execution of all kinds of building and construction work, as well as the management and operations of buildings constructed for the Group's own account.
These interim consolidated financial statements were published according to IAS 34 Interim Financial Reporting, using the standards of the International Accounting Standards Board (IASB), the International Financial Reporting Standards (IFRSs) adopted by the European Union, as well as the interpretations of the International Financial Reporting Interpretations Committee (IFRIC).
In accordance with IAS 34, the interim consolidated financial statements do not contain every comprehensive entry which is obligatory in the annual financial statements and therefore this interim report should be read in conjunction with the annual report of the PORR Group as at 31 December 2016. As per IAS 34, the consolidated results of the interim consolidated financial statements are not necessarily indicative of the annual results.
The reporting currency is the Euro, which is also the functional currency of PORR AG and of the majority of the subsidiaries included in these interim consolidated financial statements.
The following 17 companies were consolidated for the first time in these interim financial statements:
| Because of acquisitions | Date of initial consolidation |
|---|---|
| Franki Group: | |
| Porr Franki GmbH & Co. KG | 17.1.2017 |
| Franki Grundbau Verwaltungs GmbH | 17.1.2017 |
| Franki Grundbau GmbH & Co. KG | 17.1.2017 |
| VIT Verbau- und Injektionstechnik GmbH | 17.1.2017 |
| ISG Ingenieurservice Grundbau GmbH | 17.1.2017 |
| HUT Umwelttechnik GmbH | 17.1.2017 |
| Unterstützungskasse Franki Grundbau GmbH | 17.1.2017 |
| Sabimo Monte Laa Bauplatz 2 GmbH | 24.3.2017 |
| Oevermann Group: | |
| PORR Oevermann GmbH | 21.4.2017 |
| Oevermann Verkehrswegebau GmbH | 21.4.2017 |
| Oevermann Hochbau GmbH | 21.4.2017 |
| Oevermann Ingenieurbau GmbH | 21.4.2017 |
| CMG Gesellschaft für Baulogistik GmbH | 21.4.2017 |
| BB Government Group: | |
| baikap Holding 180812 GmbH | 16.5.2017 |
| BB Government Services GmbH | 16.5.2017 |
| BB GOVERNMENT SERVICES SRL | 16.5.2017 |
| ISHAP Personaldokumentations GmbH | 7.6.2017 |
One company was liquidated; one company was deconsolidated through a Group-internal transfer in the form of a merger. The assets and liabilities over which control was lost are not significant.
The purchase of Sabimo Monte Laa Bauplatz 2 GmbH involves the purchase of a property and its financing, which does not represent a business combination under IFRS 3. This involves a transaction with related parties.
TEUR 7,400 was used to purchase a 100% stake in Porr Franki GmbH & Co. KG and its subsidiaries (Franki Group). The purchase price was provisionally allocated to the Group's liabilities and assets as follows:
| in EUR thousand | 2017 |
|---|---|
| Non-current assets | |
| Intangible assets | 4,971 |
| Property, plant and equipment | 11,732 |
| Interests in associated companies | 375 |
| Loans | 700 |
| Deferred tax assets | 1,004 |
| Current assets | |
| Inventories | 2,724 |
| Trade receivables | 17,976 |
| Other current financial assets | 1,608 |
| Other receivables and assets | 657 |
| Cash and cash equivalents | 1,356 |
| Non-current liabilities | |
| Provisions | -10,900 |
| Deferred tax liabilities | -1,024 |
| Current liabilities | |
| Provisions | -145 |
| Trade payables | -11,488 |
| Other current financial liabilities | -10,691 |
| Other current liabilities | -1,203 |
| Tax payables | -252 |
| Purchase price | 7,400 |
TEUR 60,100 was used to purchase a 100% stake in PORR Oevermann GmbH and its subsidiaries (Oevermann Group). The purchase price was provisionally allocated to the Group's liabilities and assets as follows:
| in EUR thousand | 2017 |
|---|---|
| Non-current assets | |
| Intangible assets | 44,334 |
| Property, plant and equipment | 2,867 |
| Interests in associated companies | 592 |
| Loans | 2 |
| Other financial assets | 186 |
| Deferred tax assets | 4,303 |
| Current assets | |
| Inventories | 1,902 |
| Trade receivables | 45,824 |
| Other current financial assets | 3,424 |
| Other receivables and assets | 622 |
| Cash and cash equivalents | 14,223 |
| Non-current liabilities | |
| Provisions | -1,054 |
| Current liabilities | |
| Provisions | -29,803 |
| Trade payables | -18,590 |
| Other current financial liabilities | -179 |
| Other current liabilities | -4,811 |
| Tax payables | -3,742 |
| Purchase price | 60,100 |
TEUR 13,000 was used to purchase a 100% stake in baikap Holding 180812 GmbH and its subsidiaries (BB Government Group). The purchase price was provisionally allocated to the Group's liabilities and assets as follows:
| in EUR thousand | 2017 |
|---|---|
| Non-current assets | |
| Intangible assets | 13,176 |
| Property, plant and equipment | 64 |
| Loans | 116 |
| Deferred tax assets | 88 |
| Current assets | |
| Trade receivables | 3,686 |
| Other current financial assets | 459 |
| Other receivables and assets | 508 |
| Cash and cash equivalents | 7,359 |
| Non-current liabilities | |
| Provisions | -65 |
| Current liabilities | |
| Provisions | -760 |
| Trade payables | -9,504 |
| Other current financial liabilities | -344 |
| Other current liabilities | -945 |
| Tax payables | -838 |
| Purchase price | 13,000 |
A total of TEUR 2,500 was used to purchase an 80% stake in ISHAP Personaldokumentations GmbH. Furthermore, there is an earn-out clause that is dependent on adhering to the budget over the next five years. In the course of determining the purchase price, this was valued at TEUR 2,500, as the Group assumes that the budget will be adhered to. The earn-out has a maximum cap of TEUR 2,500, a floor of TEUR 0 and is due on 31 January 2022. The purchase price was provisionally allocated to the Group's liabilities and assets as follows:
| in EUR thousand | 2017 |
|---|---|
| Non-current assets | |
| Intangible assets | 7,481 |
| Property, plant and equipment | 110 |
| Interests in associated companies | 220 |
| Other financial assets | 15 |
| Current assets | |
| Trade receivables | 255 |
| Other current financial assets | 15 |
| Cash and cash equivalents | 237 |
| Non-current liabilities | |
| Deferred tax payables | -1,850 |
| Current liabilities | |
| Financial liabilities | -67 |
| Trade payables | -22 |
| Other current financial liabilities | -23 |
| Other current liabilities | -73 |
| Tax payables | -48 |
| Non-controlling interests | -1,250 |
| Purchase price | 5,000 |
The acquisition led to the recognition of goodwill as the purchase price includes the benefits from synergic effects. The initial consolidation of the company contributed TEUR 3,480 to earnings before taxes for the period and TEUR 82,096 to revenue.
Regarding the acquisition of Altlastensanierung und Abraumdeponie Langes Feld Gesellschaft m.b.H. concluded in the 2016 business year, the purchase price allocation was finalised in the current business year, whereby an additional provision and mining rights totalling TEUR 1,591 were identified.
A total of 45 (previous year: 43) domestic and 24 (previous year: 23) foreign associates and joint ventures were valued under the equity method.
The accounting and valuation methods applied in the consolidated financial statements of 31 December 2016, which are presented in the notes to the consolidated annual financial statements, were used, unmodified, in the interim report.
The following standards and interpretations have been published in the period between 31 December 2016 and the preparation of these interim consolidated financial statements and do not yet need to be applied compulsorily nor have they been adopted into EU law:
| Effective date in acc. with IASB | |
|---|---|
| IFRIC 23 | 1.1.2019 |
| IFRS 17 | 1.1.2021 |
The interim consolidated financial statements at 30 June 2017 use the same consolidation methods and basis for currency exchange as were used in the annual financial statements at 31 December 2016.
Producing interim consolidated financial statements in accordance with IFRSs requires management to make estimates and assumptions which affect the amount and disclosure of assets and liabilities in the statement of financial position, income and expense, as well as entries regarding contingent liabilities in the interim report. Actual results may deviate from these estimates.
In comparison to other industry sectors, the construction industry experiences seasonal variations with regard to revenue and profit due to seasonal factors. Revenue and profit are, as a rule, lower in the winter months than in the summer months. As a result of the fixed costs which exist, earnings are lower in the first two quarters than in the final two quarters. These seasonal fluctuations are less pronounced in building construction than in civil engineering and road construction.
| in EUR thousand | 1-6/2017 | 1-6/2016 |
|---|---|---|
| Proportion of deficit/surplus for the period relating to shareholders of parent | 1,561 | 15,061 |
| Weighted average number of issued shares | 28,878,505 | 28,518,326 |
| Basic earnings per share = diluted earnings per share, in EUR | 0.05 | 0.53 |
| Share capital | No. 2017 | EUR 2017 | No. 2016 | EUR 2016 |
|---|---|---|---|---|
| Ordinary bearer shares | 29,095,000 | 29,095,000 | 29,095,000 | 29,095,000 |
| Total share capital | 29,095,000 | 29,095,000 | 29,095,000 | 29,095,000 |
As proposed by the Executive Board and the Supervisory Board, the Annual General Meeting of PORR AG passed a resolution on 24 May 2017 to pay out a dividend of EUR 1.10 per share entitled to dividends as a result of the earnings for the business year 2016.
At the end of the reporting period, there were 216,495 treasury shares; this corresponds to 0.74% of the share capital.
In early February 2017 a hybrid bond of TEUR 125,000 was issued with a coupon of 5.5%. The bond is a perpetual bond, although PORR has right to pay back the bond issue in full after five years. Should the bond not be redeemed, the coupon will increase to the five-year swap rate plus 10.312%. The bond fulfils all of the IFRS conditions to be recognised in equity.
The carrying amount of the financial instruments as per IAS 39 is a reasonable approximation of the fair value, with the exception of bonds subject to fixed interest rates (fair value hierarchy level 1), deposits from banks subject to fixed interest rates (fair value hierarchy level 3), and other financial liabilities subject to fixed interest rates (fair value hierarchy level 3).
| Fair value | |||||||
|---|---|---|---|---|---|---|---|
| Carrying | (Continuing) | other com | Fair value | ||||
| in EUR thousand | Measurement category |
amount at 31 Dec. 2016 |
acquisition costs |
prehensive income |
affecting net income |
Fair value hierarchy |
Fair value at 31 Dec. 2016 |
| Assets | |||||||
| Loans | LaR | 24,404 | 24,404 | ||||
| Other financial assets1 | AfS (at cost) | 4,764 | 4,764 | ||||
| Other financial assets | AfS | 10,738 | 10,738 | Level 1 | 10,738 | ||
| Other financial assets | AfS | 74,578 | 74,578 | Level 3 | 74,578 | ||
| Trade receivables | LaR | 1,266,881 | 1,266,881 | ||||
| Other financial assets | LaR | 152,530 | 152,530 | ||||
| Derivatives (without hedges) | FAHfT | 5,326 | 5,326 | Level 2 | 5,326 | ||
| Cash and cash equivalents | 143,922 | 143,922 | |||||
| Liabilities | |||||||
| Bonds | |||||||
| at fixed interest rates | FLAC | 101,670 | 101,670 | Level 1 | 108,709 | ||
| Schuldscheindarlehen | |||||||
| at fixed interest rates | FLAC | 74,747 | 74,747 | Level 3 | 76,236 | ||
| at variable interest rates | FLAC | 124,552 | 124,552 | ||||
| Deposits from banks | |||||||
| at fixed interest rates | FLAC | 112,243 | 112,243 | Level 3 | 112,741 | ||
| at variable interest rates | FLAC | 23,658 | 23,658 | ||||
| Lease obligations2 | 80,579 | 80,579 | |||||
| Trade payables | FLAC | 876,386 | 876,386 | ||||
| Other financial liabilities | FLAC | 28,888 | 28,888 | ||||
| Derivatives (without hedges) | FLHfT | 77 | 77 | Level 2 | 77 | ||
| Derivatives (with hedges) | 1,070 | 1,070 | Level 2 | 1,070 | |||
| by category: | |||||||
| Loans and receivables | LaR | 1,443,815 | 1,443,815 | ||||
| Cash and cash equivalents | 143,922 | 143,922 | |||||
| Available-for-sale financial assets1 | AfS (at cost) | 4,764 | 4,764 | ||||
| Available-for-sale financial assets | AfS | 85,316 | 85,316 | ||||
| Financial assets held for trading | FAHfT | 5,326 | 5,326 | ||||
| Financial liabilities held for trading | FLHfT | 77 | 77 | ||||
| Derivative liabilities (with hedges) | 1,070 | 1,070 | |||||
| Financial liabilities measured at amor tised cost |
FLAC | 1,342,144 | 1,342,144 |
1 These are related to Group shareholdings, predominantly shares in GmbHs, whose fair value cannot be reliably measured and for which there is no active market so that they are measured at acquisition cost less possible impairment. There are currently no concrete plans to sell.
2 Lease obligations fall under the application of IAS 17 and IFRS 7.
| Fair value | |||||||
|---|---|---|---|---|---|---|---|
| Carrying | (Continuing) | other com | Fair value | ||||
| in EUR thousand | Measurement category |
amount at 31 Dec. 2016 |
acquisition costs |
prehensive income |
affecting net income |
Fair value hierarchy |
Fair value at 31 Dec. 2016 |
| Assets | |||||||
| Loans | LaR | 23,254 | 23,254 | ||||
| Other financial assets1 | AfS (at cost) | 4,495 | 4,495 | ||||
| Other financial assets | AfS | 10,690 | 10,690 | Level 1 | 10,690 | ||
| Other financial assets | AfS | 74,727 | 74,727 | Level 3 | 74,727 | ||
| Trade receivables | LaR | 930,029 | 930,029 | ||||
| Other financial assets | LaR | 78,517 | 78,517 | ||||
| Derivatives (without hedges) | FAHfT | 23 | 23 | Level 2 | 23 | ||
| Cash and cash equivalents | 476,430 | 476,430 | |||||
| Liabilities | |||||||
| Bonds | |||||||
| at fixed interest rates | FLAC | 101,461 | 101,461 | Level 1 | 109,648 | ||
| Schuldscheindarlehen | |||||||
| at fixed interest rates | FLAC | 74,697 | 74,697 | Level 3 | 75,915 | ||
| at variable interest rates | FLAC | 124,504 | 124,504 | ||||
| Deposits from banks | |||||||
| at fixed interest rates | FLAC | 17,250 | 17,250 | Level 3 | 17,611 | ||
| at variable interest rates | FLAC | 21,648 | 21,648 | ||||
| Lease obligations2 | 81,851 | 81,851 | |||||
| Trade payables | FLAC | 785,630 | 785,630 | ||||
| Other financial liabilities | FLAC | 22,408 | 22,408 | ||||
| Derivatives (without hedges) | FLHfT | 463 | 463 | Level 2 | 463 | ||
| Derivatives (with hedges) | 1,244 | 1,244 | Level 2 | 1,244 | |||
| by category: | |||||||
| Loans and receivables | LaR | 1,031,800 | 1,031,800 | ||||
| Cash and cash equivalents | 476,430 | 476,430 | |||||
| Available-for-sale financial assets1 | AfS (at cost) | 4,495 | 4,495 | ||||
| Available-for-sale financial assets | AfS | 85,417 | 85,417 | ||||
| Financial assets held for trading | FAHfT | 23 | 23 | ||||
| Financial liabilities held for trading | FLHfT | 463 | 463 | ||||
| Derivative liabilities (with hedges) | 1,244 | 1,244 | |||||
| Financial liabilities measured at amor tised cost |
FLAC | 1,147,598 | 1,147,598 | ||||
1 These are related to Group shareholdings, predominantly shares in GmbHs, whose fair value cannot be reliably measured and for which there is no active market so that they are measured at acquisition cost less possible impairment. There are currently no concrete plans to sell.
2 Lease obligations fall under the application of IAS 17 and IFRS 7.
For the valuation of the mezzanine capital of TEUR 50,000 and the hybrid capital of TEUR 25,330 for UBM Development AG, the following input factors (pricing criteria) were applied:
The sum of these factors corresponds to the current pricing of the hybrid bond.
As a second step, the current pricing and contractually agreed coupon were compared, thereby determining the necessary surcharges/discounts.
If the current market pricing is higher than the contractually agreed coupon, then a discount is applied to the nominal amount.
If the current market pricing is lower than the contractually agreed coupon, then a surcharge is applied to the nominal amount.
| Mid swap | Credit spread | Hybrid spread | Hybrid coupon in % | |
|---|---|---|---|---|
| Balance at 30 June 2016 | 28 | 375 | 330 | 7.33 |
| in EUR thousand | Hybrid coupon in % | Nominal amount | Change in value | Fair value |
| Mezzanine capital | 6.5 | 50,000 | -415 | 49,585 |
| Hybrid capital | 6.0 | 25,330 | -337 | 24,993 |
The valuation methods applied are subject to fluctuation of the three input factors. Any change in a single factor results in a respective change in value (e.g. if the mid swap increases by 1BP, the receivable decreases in value by 1BP).
Possible interdependencies have not been considered, as it is not possible to assume either a significant negative or a significant positive correlation; therefore any individual change would increase the overall valuation in the respective amount.
There have been no significant changes in relationships between related companies, or any resultant obligations or guarantees, since 31 December 2016.
Transactions in the business year between companies included in the PORR Group's consolidated financial statements and the UBM Group companies primarily relate to construction services. In connection with the development of a property, the main tenant, PORR AG, provided the developer, STRAUSS & PARTNER Development GmbH, with prefinancing of TEUR 45,000 which has a term ending in 2019. Furthermore, interest for the mezzanine capital and hybrid capital of TEUR 4,770 was paid to PORR AG in the business year 2017.
In addition to subsidiaries and associates, related parties include the companies of the IGO-Ortner Group as they or their controlling entity has a significant influence over PORR AG through the shares which they hold, as well as the Strauss Group, as a member of the Executive Board of PORR AG has significant influence over it, as well as the Kapsch Group, as a member of the Executive Board of PORR AG holds a key position at the same time as having significant influence over PORR AG. In addition to people who have a significant influence over PORR AG, related parties also include the members of the Executive and Supervisory Boards of PORR AG as well as their close family members.
These interim financial statements of the PORR Group have neither been audited nor subjected to an audit opinion.
The following event subject to disclosure occurred after the end of the reporting period:
On 21 July 2017 transfer agreements were signed for the takeover of the Hinteregger Group. The provisional purchase price amounts to around TEUR 29,800. Closing of the transaction is subject to further conditions that have not yet been fully met. Closing is therefore likely to take place in the third quarter.
Vienna, 30 August 2017
Karl-Heinz Strauss Christian B. Maier J. Johannes Wenkenbach
To the best of our knowledge, and in accordance with the applicable reporting principles for interim financial reporting, we confirm that the condensed 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 the position of the Group over the first six months of the fiscal year, together with a description of the principal risks and uncertainties associated with the expected development of the Group for the remaining six months of the fiscal year and with regard to related party disclosures.
30 August 2017, Vienna
Karl-Heinz Strauss, MBA Chief Executive Officer
Christian B. Maier Executive Board Member
J. Johannes Wenkenbach Executive Board Member
PORR AG 1100 Vienna, Absberggasse 47 T nat. 050 626-0 T int. +43 50 626-0 [email protected] porr-group.com
PORR AG Corporate Communications be.public Corporate & Financial Communications, Vienna Rosebud
Astrid Knie (Executive Board photos,hand photography), PORR AG (Bekkelaget wastewater treatment plant, Mur power plant, Humber Pipeline, Bałtyk Building, Stellinger Moor waste incineration plant), Florian Sandra (La Tête), Vaclav Jedlicka (Marina Island), SBB Immobilien (Europaallee), ATCOST21/Imagocura (Filder Tunnel), VIW (Obervermunt II pumped storage power plant)
PORR AG Corporate Communications 1100 Vienna, Absberggasse 47 [email protected]
The Half Yearly Report can be obtained free of charge from the company at 1100 Vienna, Absberggasse 47, and may be downloaded from the website, www.porr-group.com/group-reports.
This Half Yearly Report also contains statements relating to the future which are based on estimates and assumptions which are made by managerial staff to the best of their current knowledge. Future-related statements may be identified as such by expressions such as "expected", "target" or similar constructions.
The figures have been rounded off using the compensated summation method. Absolute changes are calculated from the rounded values, relative changes (in percent) from the non-rounded values.
Forecasts related to the future development of the Group take the form of estimates based on information available at the time of the Half Yearly Report going to press. Actual results may differ from the forecast if they are shown to be based on inaccurate assumptions or are subject to unforeseen risks.
All dates expressed in digits conform to European conventions of dd.mm.yyyy.
Every care has been taken to ensure that all information contained in every part of this Half Yearly Report is accurate and complete. We regret that we cannot rule out possible round-off, typesetting and printing errors.
This report is a translation into English of the Half Yearly Report issued in the German language and is provided solely for the convenience of English-speaking users. In the event of a discrepancy or translation error, the German-language version prevails.
Absberggasse 47 1100 Vienna T nat. 050 626-0 T int. +43 50 626-0 porr-group.com
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