Koninklijke Heijmans N.v. · EURONEXT:HEIJM
Koninklijke Heijmans — FY2006 Earnings Presentation
37 slides from Koninklijke Heijmans's earnings presentation, Feb 22, 2007
Slide 1: Full-Year Figures for 2006
Full-Year Figures for 2006 Guus Hoefsloot/Dick van der Kroft 22 February 2007
Slide 2: Construction output in the Netherlands growing, prices only from Q3 2006 onwards
Construction output in the Netherlands growing, prices only from Q3 2006 onwards Growth in construction output 5% 6 4 2 0 -2 -4 -6 2003 2004 2005 2006 2007 f 2008 f 22 February 2007 Full-Year Figures for 2006 2 Source: EIB/CBS
Slide 3: 2006 highlights: improved result across the business compensates for setback in Building
2006 highlights: improved result across the business compensates for setback in Building Profit after tax at €82.5 million due to: • Excellent results from owner-occupied homes • Disappointing result in Building • Clear improvement in regular infrastructure activities • Improved results in internati
Slide 4: Strategy: active acquisition policy strengthens portfolio and position as full-service provider
Strategy: active acquisition policy strengthens portfolio and position as full-service provider New activities • Heitkamp: railway construction (February 2006) • Burgers Ergon: installation engineering (January 2007) Strengthening of existing activities • Denne UK: social housing (September 2006) •
Slide 5: Year-on-year results of Heijmans
Year-on-year results of Heijmans In € millions 2006 2005 Variance Revenue 2,942 2,835 4% Operating profit 117 129 -9% Net financial expense -5 -6 Income tax expense -29 -36 Profit after tax 83 87 -5% Operational cash flow -34 109 Order book 3,196 2,559 25% 22 February 2007 Full-Year Figures for 2006
Slide 6: After adjustment for non-recurring items, operating profit up by 3%
After adjustment for non- recurring items, operating profit up by 3% € millions 2006 2005 Operating profit 117 129 Gain on sale of associate -5 -5 Release of participation 0 -6 plan Additional charge in +9 0 construction case After non-recurring items 121 118 Operating margin (excl. 4.1% 4.2% nonrec
Slide 7: Spread of activities mitigates risk profile
Spread of activities mitigates risk profile International International 22% Property 15% Development 27% Property Infrastructure Infrastructure Development 19% 25% 61% Building 26% Building 5% Revenue Operating profit 22 February 2007 Full-Year Figures for 2006 7
Slide 8: Heijmans benefits mainly from good market for owner-occupied homes and improved results outside the Netherlands
Heijmans benefits mainly from good market for owner-occupied homes and improved results of activities outside the Netherlands In € millions 2006 2005 Variance Property 51 37 +14 Building 8 23 -15 Infrastructure 19 24 -5 Netherlands 78 84 -6 International 12 7 +5 Total 90 91 -1 Elimination and -7 -4
Slide 9: Property Development NL: opted for margin over volume
Property Development NL: opted for margin over volume In € millions 2006 2005 Variance Revenue 866 889 -3% Operating profit 80 66 21% Operating margin 9.2% 7.4% Profit after tax 51 37 38% Net margin 5.9% 4.1% Order book 915 798 15% 22 February 2007 Full-Year Figures for 2006 9
Slide 10: Property Development NL: sharp improvement in profit margin
Property Development NL: sharp improvement in profit margin • Improved market conditions • Higher margin also due to new products such as Wenswonen® (“Tailor housing”) • Good results in land business 22 February 2007 Full-Year Figures for 2006 10
Slide 11: Property Development NL: opting for margin over numbers
Property Development NL: opting for margin over numbers 4000 80000 House construction output in the 3500 70000 Netherlands to 75,000 (EIB) 3000 60000 Average price in the 2500 50000 Netherlands + 5.5% to €240,000 2000 40000 3,600 homes sold by Heijmans 1500 30000 1000 20000 Average price achieved by
Slide 12: Heijmans and innovation – Developing concepts
Heijmans and innovation – Developing concepts Wenswonen (“Tailor housing”) Garden planner 22 February 2007 Full-Year Figures for 2006 12
Slide 13: Risk profile lower in (non-residential) property
Risk profile lower in (non-residential) property Sales transactions Breda, Almere Lease transactions including PCM 15,500 m² Full lease of INIT in Amsterdam expected in 2007 Number of unlet m² decreased by 70% Capital invested €138 million m² 2006 2005 Unsold 44,000 51,400 Of which leased 33,300 15,
Slide 14: Property Development NL: development potential basis for growth
Property Development NL: development potential basis for growth • Total potential 45,000 homes: level maintained in 2006 by, among other things: • Proper Stok winning competition, 1,500 homes • Acquiring Reesink Zutphen land, 1,000 homes • Additional 1,000 homes after finalization of acquisition Bou
Slide 15: Property Development – Non-residential property
Property Development – Non-residential property Head office of Statistics Netherlands Leidschenveen De Admirant Eindhoven Init Amsterdam 22 February 2007 Full-Year Figures for 2006 15
Slide 16: Property Development – Competitions / area development
Property Development – Competitions / area development Walburg Zwijndrecht Palenstein Zoetermeer Rijnwoude Castricum 22 February 2007 Full-Year Figures for 2006 16
Slide 17: Building NL: disappointing result in line with forecast trading update
Building NL: disappointing result in line with forecast trading update In € millions 2006 2005 Variance Revenue 845 889 -5% Operating profit 6 30 -80% Operating margin 0.7% 3.4% Profit after tax 8 23 -65% Net margin 0.9% 2.6% Order book 1,000 1,031 -3% 22 February 2007 Full-Year Figures for 2006 17
Slide 18: Measures to prevent reoccurrence of setbacks of 2006 in the future
Measures to prevent reoccurrence of setbacks of 2006 in the future • Causes of setbacks: Order book built up in 2005 (fiercely contested market); excessively tight purchase price buffers Shortcomings in project management on number of major projects • Measures January 2006: tender board/risk managem
Slide 19: Building NL: focus on operational excellence and construction team revenue
Building NL: focus on operational excellence and construction team revenue Turnaround: Strengthening of management Acquisition in construction team Project and risk management Purchasing House construction 42% (2005: 54%) Non-residential construction 46% (2005: 35%) Service facilities construction 1
Slide 20: Construction – Non-residential construction
Construction – Non-residential construction Started Completed Rabobank Utrecht Beeld en Geluid Hilversum (Institute for Image and Sound) 22 February 2007 Full-Year Figures for 2006 20
Slide 21: Infrastructure NL: profit declined as expected
Infrastructure NL: profit declined as expected In € millions 2006 2005 Variance Revenue 791 776 2% Operating profit 25 34 -26% Operating margin 3.2% 4.4% Profit after tax 19 24 -21% Net margin 2.4% 3.1% Order book 977 588 66% 22 February 2007 Full-Year Figures for 2006 21
Slide 22: Infrastructure NL: underlying results show improvement
Infrastructure NL: underlying results show improvement • Selective contracting policy maintained • Later, positive results from major projects • Large clients propagating new contract types • Clear improvement in results of regular activities; as in every year, €400 million yet to be acquired and ex
Slide 23: Infrastructure – Building with maximum traffic circulation
Infrastructure – Building with maximum traffic circulation Building A2 Eindhoven viaduct 22 February 2007 Full-Year Figures for 2006 23
Slide 24: Heijmans and technical innovation
Heijmans and technical innovation Shuttle Buggy Infrastructure laboratory De-icing Schiphol Modislab 22 February 2007 Full-Year Figures for 2006 24
Slide 25: International: improved results in all countries
International: improved results in all countries In € millions 2006 2005 Variance Revenue 688 545 26% United Kingdom 264 227 16% Belgium 288 265 9% Germany 135 53 155% Operating profit 20 13 54% Operating margin 2.9% 2.4% Profit after tax 12 7 71% Net margin 1.7% 1.3% Order book 720 433 +66% 22 Febr
Slide 26: 2006 International Developments
2006 International Developments UK: growing demand for affordable homes Germany: profit from slight growth and more railway maintenance Belgium: profit increases in road building and pipelines 22 February 2007 Full-Year Figures for 2006 26
Slide 27: Healthy financial position for Heijmans
Healthy financial position for Heijmans Operational cash flow - €34 million 600 Infrastructure projects have greater 500 working capital requirements 400 Payment of €30 million in penalties for construction case 300 200 Return on average capital invested 100 from 14.5% to 12.3% 0 2004 2005 2006 Net
Slide 28: Strategic spearheads
Strategic spearheads Growth in front end of property- and building chain: development, design, PPS Growth in back end of chain: service and maintenance, TFM, Burgers Ergon Vertical integration in specific activities Excellent quality of product and process Scale in the Netherlands related to knowled
Slide 29: Heijmans and PPP (heijmans@ventures)
Heijmans and PPP (heijmans@ventures) Ministry of Finance in The Hague Water purification Harnaschpolder 22 February 2007 Full-Year Figures for 2006 29
Slide 30: Strategic targets for 2008
Strategic targets for 2008 Level in Level in 2008 2003* 2006 Target ROI 10.8% 12.3% 14% ROS 2.3% 2.8% 3% Front-end 25% ≈ 35% 35% of chain Back-end 5% ≈ 10% 20% of chain 2003 based on NL GAAP, 2006 and 2008 based on IFRS ROI = Operating profit:average capital invested 22 February 2007 Full-Year Figur
Slide 31: Potential for margin improvement especially in Infrastructure and Building
Potential for margin improvement especially in Infrastructure and Building Operating margin 2005 2006 Usual Realization Realization margin NL Property 7.4% 9.2% 7 to 9% Development NL Building 3.4% 0.7% 3 to 3.5% NL 4.4% 3.2% 3 to 4%* Infrastructure International 2.4% 2.9% 3 to 4%* * Depending on re
Slide 32: Favourable outlook on Heijmans' markets
Favourable outlook on Heijmans’ markets • Netherlands: growth in 2007 in all market segments (4.5%) • Belgium: growth in house construction (4.5%), decline in infrastructure (8.4%) in 2007 after municipal elections in 2006 • Germany: growth of some 2% in infrastructure. Other segments 1 to 1.5%. • U
Slide 33: Market expectations in 2007
Market expectations in 2007 • Increasing prices in raw materials market • Capacity fills itself in tighter labour market • Capacity required for large-scale infrastructure projects and new office buildings • Supply-side selectivity • More scope for construction teams • Price increases of owner-occup
Slide 34: Outlook for 2007
Outlook for 2007 • Property: maintain high profit level • Improvement potential in Building • Projects from 2005 in 2007 revenue at zero profit • First profit improvements expected from measures taken • Improvement potential in Infrastructure • Growth in revenue on basis of order book • Contribution
Slide 35: Outlook for 2007
Outlook for 2007 • Positive contribution from acquisitions taking account of amortization of intangible assets • Higher financing charges, amortization of intangible assets and higher effective tax rate • Expected increase in profit after tax of Heijmans NV to around €90 million in 2007 or approx. €
Slide 36: Innovative in reporting
Innovative in reporting 22 February 2007 Full-Year Figures for 2006 36
Slide 37: 22 February 2007 Full-Year Figures for 2006
22 February 2007 Full-Year Figures for 2006 37