Koninklijke Heijmans N.v. · EURONEXT:HEIJM
Koninklijke Heijmans — FY2007 Earnings Presentation
43 slides from Koninklijke Heijmans's earnings presentation, Feb 21, 2008
Slide 1: Full-Year Figures for 2007
Full-Year Figures for 2007 Guus Hoefsloot (CEO)/ Dick van der Kroft (CFO)
Slide 2: Disclaimer
Disclaimer • This presentation contains forward-looking statements. By their nature these involve risks and uncertainty. Forward-looking statements represent the company’s judgement regarding future events, and are based on currently available information. Consequently the company cannot guarantee t
Slide 3: Heijmans proud of projects
Heijmans proud of projects A2: reconstruction and widening of Eindhoven ring road • From 2x2 to 4x2 lanes • Replacement of 17 kilometres of road surface and approximately 70 structures • Renewal of sound barriers, Dynamic Traffic Management portals, lighting • Construction time reduced by 1 year on
Slide 4: 2008 Netherlands building production grows, but 3% less than in 2007
2008 Netherlands building production grows, but 3% less than in 2007 Forecasted 2008 NL building production growth: 3% 6 2008 4 UK Residential +0.5% 2 Construction 0 Belgium +2.1% -2 Germany Infra +3.5% -4 -6 2003 2004 2005 2006 2007 2008f Source: Euroconstruct November 2007/ For the Netherlands CBS
Slide 5: 2007 A year of setbacks as well as successes
2007 A year of setbacks as well as successes • Building NL provisions adequate, many measures implemented • Infrastructure NL low margin on asphalt operations. Specialised areas performing well. • In spite of lower number of homes sold (- 5%), Property Development NL maintains high profit levels • R
Slide 6: Development of Heijmans' financial results
Development of Heijmans’ financial results In € millions 2007 2006 Variance Revenues 3,732 2,942 27% Operating profit 88 117 -25% Financial income/exp. -10 -5 Tax -22 -29 Profit after tax 56 83 -33% Operating cash flow 255 -30 Order book 3,248 3,196 2% 21 February 2008 Full-year figures 2007 6
Slide 7: Growth in Netherlands, Germany and UK due to acquisitions
Growth in Netherlands (Technical Services), Germany and UK due to acquisitions Technical Germany 11% Services 5% Property Development UK 10% Infrastructure 29% Belgium 38% 9% Netherlands 70% Building 28% 2007 Revenues 2007 Revenues by Business Segment by Country Revenues rose from € 2,942 million to
Slide 8: Decrease operating profit due to Building (NL)
Decrease operating profit due to Building (NL) In € millions 2007 2006 Variance Property Development 82 80 +2 Building -53 6 -59 Infrastructure 22 25 -3 Technical Services 5 - +5 Netherlands 56 111 -55 International 29 20 +9 Total operations 85 131 -46 Elimination / other 3 -14 +17 Operating profit
Slide 9: Property Development (NL): results at high level
Property Development (NL): results at high level In € millions 2007 2006 Variance Revenues 1,015 866 17% Operating profit 82 80 3% Operating margin 8.1% 9.2% Order book 786 915 -14% 2007 operating margin, adjusted for turnover and the results of the sale of unsold remaining commercial real estate, i
Slide 10: Property Development (NL): lower sales, higher selling prices
Property Development (NL): lower sales, higher selling prices • Decrease in number of newly built homes sold in market (-13%) • Number of homes sold by Property Development decreased to 3,421 in 2007 (-5%) • Successful continued development of Waterwoningen (Living on Water), Wenswonen® (Tailor made
Slide 11: Building (NL): large losses on 2005 projects
Building (NL): large losses on 2005 projects In € millions 2007 2006 Variance Revenues 806 845 -5% Operating profit -53 6 Operating margin -6.6% 0.7% Order book 882 1,000 -12% 21 February 2008 Full-year figures 2007 11
Slide 12: Building (NL): drastic turnaround
Building (NL): drastic turnaround • Strengthening of management, organisation and operating processes • Problem projects under control • Selective contracting policy • Turnover growth from building teams • Order book margin positive, but low due to high cost of procurement 21 February 2008 Full-year
Slide 13: Infrastructure (NL): decrease in profits due to pressure on prices and margins
Infrastructure (NL): decrease in profits due to pressure on prices and margins In € millions 2007 2006 Variance Revenues 911 791 15% Operating profit 22 25 -12% Operating margin 2.4% 3.2% Order book 855 977 -12% 21 February 2008 Full-year figures 2007 13
Slide 14: Infrastructure (NL): contribution from large projects still too low
Infrastructure (NL): contribution from large projects still too low • In spite of market growth, continued pressure on prices, particularly in asphalt operations • Meager results from road building; specialised works yield good results • As yet limited contribution by large projects insufficient to
Slide 15: Positive contribution from Burgers Ergon acquisition
Positive contribution from Burgers Ergon acquisition In € millions 2007 Revenues 229 EBITA 7 Amortisation -2 Operating profit 5 Operating margin 2.2% EBITA margin 3.1% Order book 292 21 February 2008 Full-year figures 2007 15
Slide 16: Technical Services (NL): positive contribution to profit
Technical Services (NL): positive contribution to profit • The operating profit includes an amortisation of intangible assets in the amount of €2.3 million • Burgers Ergon growth in care sector and management and maintenance activities • Synergy with building activities is increasing • High quality
Slide 17: International: growth in contribution to profits
International: growth in contribution to profits In € millions 2007 2006 Variance Revenues 1,138 687 66% United Kingdom 378 264 43% Belgium 348 288 21% Germany 412 135 205% Operating profit 29 20 45% Operating margin 2.5% 2.9% Order book 834 720 16% 21 February 2008 Full-year figures 2007 17
Slide 18: Favourable market conditions in UK and Germany
Favourable market conditions in UK and Germany • UK: strong growth in subsidised housing resulting in improved margins • Germany: improving infrastructure market, positive contribution by Oevermann, Franki and Heitkamp • Belgium: infrastructure activities performing well; building results lagging 21
Slide 19: Significant reduction in net debt
Significant reduction in net debt • Operating cash flow € 255 million 500 Due to working capital improvement 450 programmes and sale of unsold 400 remaining real estate 350 • Return on average capital invested 300 down from 12.3% to 9.2% 250 • Net debt of € 497 million to € 366 million 200 150 100 5
Slide 20: Key financing ratios: Leverage Ratio < 3.5
Key financing ratios : Leverage Ratio < 3.5 Adjusted Net debt 31/12/07 Adjusted EBITDA 2007 ( in € millions) (in € millions) Gross debt 600 Profit before tax 78 Less: Preference shares -66 Add: Net interest charge +26 Less: Non-recourse PFI debt -60 Less: Revaluation pension assets -5 Add: Depreciat
Slide 21: Working to restore margins and margin growth
Working to restore margins and margin growth • Strengthening of operations: • Risk & project management • Centralised procurement • Management of working capital • Being a good employer • Growth in full-service: greater involvement in design and maintenance • Increase in cohesion-related activities:
Slide 22: Noordwijkerduin Noordwijk
Noordwijkerduin Noordwijk • Co-operation Property Development, Building and Infrastructure • Redevelopment Willem van den Bergh care complex • Over 32,000 m2 new development • Heijmans is developing and building 350 private sector homes in the medium and high segment 21 February 2008 Full-year figur
Slide 23: Burgers Ergon & Heijmans Building
Burgers Ergon & Heijmans Building Kempen Campus Veldhoven Gelre hospital Apeldoorn • Construction of three teaching • 32,000 m² new development and buildings, sports hall, gymnastics 30,000 m² renovation hall and playing fields • The hospital remains operational • Combination of Building, during ren
Slide 24: Heijmans & Germany
Heijmans & Germany Franki in co-operation with Heitkamp Rail in co-operation with Heijmans Building Heijmans Rail • Development of new Rabobank • 800 metres rail renovation at head office in the Netherlands Kerkrade (NL) • Franki: piling • Renovation of steel and concrete bridge 21 February 2008 Ful
Slide 25: Property Development remains important source of profit
Property Development remains important source of profit • Slowdown in sales over short term, however growth in number of households and qualitative mismatch between supply and demand persists • Investments in knowledge of integral development projects enlarge success related to competitions/selectio
Slide 26: Property Development - Wenswonen
Property Development - Wenswonen Tabaksteeg Leusden Kop van Oost Groningen • 254 detached, semi-detached, row and • 350 flats according to the water-based homes Wenswonen (tailor made homes) • Choice of tiled or thatched roofs concept • Executed in thirties style • 50 land-based homes 21 February 20
Slide 27: Property Development – Homerus Almere
Property Development – Homerus Almere • Contract won by competition • Future residents contribute to the development phase • 130 homes • Together with Heijmans Building 21 February 2008 Full-year figures 2007 27
Slide 28: Proper Stok – Middengebied Willemspoort
Proper Stok – Middengebied Willemspoort Area development ‘s-Hertogenbosch • Campus model: integration of living, health, care, education and park & ride • 700-900 homes • 25,000 m² social/commercial facililties 21 February 2008 Full-year figures 2007 28
Slide 29: Full-service in other activities as well
Full-service in other activities as well • Building: invest in engineering in order to strengthen role of building teams • Infrastructure: new organization structure to respond to demand for integral projects and long-term maintenance • Technical Services: co-operation with Building in services and
Slide 30: Service and Maintenance contracts
Service and Maintenance contracts Schiphol Rijkswaterstaat Zeeland TNT 21 February 2008 Full-year figures 2007 30
Slide 31: Heijmans & Sustainability
Heijmans & Sustainability Waterweide in The Hague Zuidbroek in Apeldoorn • 26 villas in an ecological zone • 55 homes based on customised • World Wide Fund for Nature (Wenswonen) home development concept inspection certificate • Heat recovery installations for shower • Natural building materials fac
Slide 32: Financial objectives in the first coming years
Financial objectives in the first coming years 2007 Levels Target ROI 9.2% 14% Net Margin 1.5% 3% ROI = Operating profit divided by average invested capital 21 February 2008 Full-year figures 2007 32
Slide 33: 2008 outlook: market
2008 outlook: market • Expected production growth in building and infrastructure market positive for 2008, but at reduced level compared to 2007. Expected growth in technical services market in 2008 equal to 2007 growth. • Slowdown in the sale of new homes • Building: increase in the cost of materia
Slide 34: 2008 outlook: Heijmans
2008 outlook: Heijmans • Division Building once again expects to make an operating profit in 2008 • Heijmans expects improved profits after tax in comparison to 2007 (€56 million) • To be on the safe side, Heijmans is not making any projections concerning the amount of this increase at this point in
Slide 35: Heijmans focused on restoring profitability
Heijmans focused on restoring profitability Margin more important than growth Greater cohesion Full service Shareholders’ Value • Increase in profit per share • Higher return on capital • Predictability Strengthened Healthy financial operations ratios ‘in control’ 21 February 2008 Full-year figures
Slide 36: Helios Leeuwarden
Helios Leeuwarden • Heijmans Property Development and Building • Urban expansion in Leeuwarden • Development and construction of 50 homes and 10 flats surrounding the harbour 21 February 2008 Full-year figures 2007 36
Slide 37: Building - Education
Building - Education Hogeschool Utrecht Hanzehogeschool Groningen • New development and renovation of • New Atrium the Nature and Engineering faculty 21 February 2008 Full-year figures 2007 37
Slide 38: Building - Hospitals
Building - Hospitals Zorghotel St. Franciscus Rotterdam Zorgpassage Hofpoort, Woerden • New development and expansion of • Heijmans Property Development and the care hotel Building • 60 single and 6 double rooms with en • Construction of multifunctional centre for suite facilities care-related marke
Slide 39: Infrastructure – A2 Eindhoven
Infrastructure – A2 Eindhoven • Total section length 17 km • Expansion to 4 x 2 lanes • Work started on construction of viaducts and sound barriers at 20 locations • Dynamic traffic management operational since July 2007 21 February 2008 Full-year figures 2007 39
Slide 40: Burgers Ergon
Burgers Ergon Jeroen Bosch Hospital Amsterdam Library • Technical services • At 28,000 m² the biggest library in the • Management and maintenance: 10 Netherlands years • Theatre, conference rooms, restaurants and media library • Underground parking 21 February 2008 Full-year figures 2007 40
Slide 41: Heijmans Belgium
Heijmans Belgium Military Hospital Oostende Town centre redevelopment in • Construction of 220 lofts, flats municipality of Puurs and land-based homes • Underground parking 21 February 2008 Full-year figures 2007 41
Slide 42: Heijmans United Kingdom
Heijmans United Kingdom Leadbitter Denne Tresham Institute, Kettering London Road • Design & Build new campus • 22 flats and 3 town houses 21 February 2008 Full-year figures 2007 42
Slide 43: 21 February 2008 Full-year figures 2007
21 February 2008 Full-year figures 2007 43