Successful first year in business.
Dietlikon, March 22, 2007. Construction services provider Implenia, which resulted from the merger of Switzerland’s two biggest construction companies, Zschokke and Batigroup, had a successful first year in business. The integration work has been largely accomplished and the operating result (EBIT) reached a gratifying CHF 50.3 million. In spite of one-time, merger-related costs, free cash flow, at CHF 23.8 million, produced a positive net cash position. The CHF 6.1 million Group result was equally positive. Turnover was CHF 2.8 billion, with an end-of-2006 order book valued of CHF 2.3 billion. Thanks to the country’s well-performing economy, job cuts were less than expected. A partial, CHF 0.35, repayment of the CHF 4.85 share par value is to be proposed at the general meeting. Management is satisfied with the Group’s performance so far in the current business year.“We have achieved and even exceeded our objectives for the first year of operations”, commented CEO Christian Bubb. “Our positive results confirm the logic of the merger. Implenia is leader in all our market segments.”
The many one-time merger factors make comparisons with the previous year’s figures difficult. That the IFRS accounting standards do not deal with mergers also affects annual result transparency. Under the circumstances the merger was booked as the acquisition, on March 2, 2006, of Batigroup by Zschokke. Turnover and results for the year under review therefore reflect all of 2006 for former Zschokke, and from March 3 to December 31, 2006, for former Batigroup.
After deduction of CHF 39.9 million in merger costs and depreciation of intangible assets of CHF 5.3 million, the 2006 consolidated EBIT was CHF 19.8 million, with an EBITDA of CHF 57.1 million. The Group result, after deduction of one-time merger costs, reached a proud CHF 6.1 million. Free cash flow at the end of the year under review was CHF 23.8 million and net cash, CHF 10.5 million. The Group’s equity as of December 31, 2006, was valued at CHF 369.5 million, corresponding to 28.7-percent equity financing.
The Group’s order book as of the end of the year under review was worth some CHF 2,304 million (previous year, CHF 3,022 million for Zschokke and Batigroup combined). Some CHF 1,671 million francs thereof is included in the current business year, with the remainder spread over several years, beginning in 2008. The 2006 drop is due mainly to fewer NRLA project orders and the completion of the Lötschberg rail technology total contracting project.
General Contracting Division
2006 turnover of the Group’s General Contracting Division was CHF 1,144 million (previous year, CHF 1,063 million for Zschokke and Batigroup combined), with the operational result (EBIT) at CHF 13.3 million (previous year, CHF 13.5 combined). The order book as per the end of December 2006 was valued at CHF 1,107 million (previous year, CHF 1,436 million combined), of which some CHF 829 million will show in the 2007 figures. The merger of the two general contractors was completed successfully as early as mid-year, and has further boosted market leadership.
Infrastructure Works (Construction)
The two construction divisions achieved a satisfactory 2006 operational result (EBIT) before exceptional costs of CHF 32.3 million (previous year, CHF 27.3 million combined). Turnover totaled CHF 1,607 million (previous year, CHF 1,719 million combined). The order book at the end of December 2006 was valued at CHF 1,076 million (previous year, CHF 1,477 million combined). Of this, some CHF 769 million will appear in the 2007 results. Large parts of the integration have been completed, with the remainder to be accomplished in the course of 2007.
Real Estate Division
New in the year under review, the Real Estate Division specializes in pre- and post-construction.
The end-of-December 2006, combined order book of Reuss Group AG, Robert Aerni Ingenieur AG and Privera AG was valued at CHF 120 million (previous year, CHF 108 million). CHF 73 million of the budgeted CHF 108 million turnover will appear in the 2007 figures. In the year under review turnover totaled CHF 107 million (previous year, CHF 66 million) with an operating result (EBIT) before exceptional costs of CHF 1.8 million (previous year, CHF 1.2 million).
Project development and real estate promotion achieved an operating result (EBIT), before extraordinary costs, of CHF 5.0 million (previous year, CHF 11.7 million). More investments and disinvestments are planned for 2007. In the year under review, disinvestments totaled CHF 76.9 million (previous year, CHF 69.4 million), and investments CHF 42.8 million (previous year, CHF 48.6 million).
Outlook
The last of the merger work will have been completed by late 2007. As budgeted, some CHF 10 million in one-time merger costs will accrue. Group organization is currently being optimized to boost effectiveness. This basically comprises integration in the Real Estate Division of the General Contracting Division (except Privera), creating a corporate center as a holding company and the structure needed for targeted, selective entry into promising foreign markets. Assuming the economy continues to perform as it is currently doing, Group Management expects positive turnover and profit figures for the 2007 business year as well.
Dividend
Based on the good result and the Group’s solid prospects, a motion is to be put before the general meeting for a partial repayment of CHF 0.35 on the share par value of CHF 4.85.
Changes in the Board of Directors
To strengthen the Board in the fields of international project development and public-private partnerships, it intends to put a motion to the general meeting to confirm the appointments of Dr. Ian Goldin, a French and South African national formerly with the World Bank Group, and Jim Cohen, a U.K. national and formerly with leading construction services group Balfour Beatty.
Contact:
Christian Bubb, CEO, Implenia
Phone +41 44 805 45 55, mobile +41 79 219 86 80
christian.bubb@implenia.com
Roger Merlo, CFO, Implenia
Phone +41 22 787 03 17, mobile +41 79 353 78 10
roger.merlo@implenia.com