­Implenia – “One company, one goal, one spirit”

6,043 (5,172)

Order book, CHF m

174 (166)

EBITDA, CHF m

3,859 (3,267)

Revenue, CHF m

103 (114)1

EBIT excl. PPA, CHF m

163 (28)

Free cash flow, CHF m

35% (33%)

ROIC



1   Restated, see page 232, note 5

Good second half-year

After a challenging start to 2017, Implenia put in a strong performance in the second six months and achieved a good result overall. EBITDA, the most important benchmark for operational performance, reached a new record high. Business Unit EBIT (excl. PPA) exceeded our forecast made at mid-year. All segments made a positive contribution to profit, with Swiss business and the Segments Development and Infrastructure doing particularly well. The order backlog remains at a record level. Due to good positioning, broad-based technical and organisational capabilities, an improved market position in Germany and robust markets, Implenia is optimistic about the future.

­Implenia – “One company, one goal, one spirit”

6,043 (5,172)

Order book, CHF m

174 (166)

EBITDA, CHF m

3,859 (3,267)

Revenue, CHF m

103 (114)1

EBIT excl. PPA, CHF m

163 (28)

Free cash flow, CHF m

35% (33%)

ROIC



1   Restated, see page 232, note 5

 

Swiss construction sector remains dynamic

The Swiss construction sector proved robust, with the industry benefiting from sound fundamentals. Despite a weak first half-year, the Swiss economy has grown, financing conditions remain positive and demand from institutional investors is staying high because of the lack of investment alternatives.

Consolidated key figures

 

2017

2016

Δ

Δ
like for like2

 

CHF 1,000

CHF 1,000

 

 

Consolidated revenue

3,859,478

3,266,986

18.1%

17.3%

EBIT Business Units excl. PPA1

103,195

114,111

(9.6%)

(9.2%)

EBIT Business Units1

65,474

102,282

(36.0%)

(34.9%)

Operating income

63,591

97,907

(35.0%)

(33.9%)

Consolidated profit excl. PPA

65,438

72,733

(10.0%)

(9.3%)

Consolidated profit

39,033

64,453

(39.4%)

(37.8%)

EBITDA

173,835

166,184

4.6%

4.6%

in % of consolidated revenue

4.5%

5.1%

 

 

Free cash flow

162,535

27,942

481.7%

483.5%

Net cash position (as at 31.12.)

488,513

376,297

29.8%

25.8%

Equity (as at 31.12.)

654,909

665,506

(1.6%)

(2.6%)

Order book (as at 31.12.)

6,043,261

5,171,795

16.9%

13.3%

Production output

3,926,727

3,320,418

18.3%

17.3%

Workforce (FTE; as at 31.12.)

9,342

7,976

17.1%

 

1   Prior year restated, see page 232, note 5

2   Foreign currency adjusted

Residential construction benefited from the continuing low interest rate environment and attractive yields on property. For the first time since 2013, more than 50,000 planning applications were submitted last year. However, immigration went down and vacancy rates, especially in peripheral areas, went up. A slight recovery began in the market for office and commercial space.

The FABI fund (the Swiss government’s fund for financing and developing rail infrastructure) already started to have an effect in 2017, but the impact of the National Road Building and Urban Transport Fund (NAF) will only be felt from 2018. Over coming years, both of these funds will boost the civil works and infrastructure construction sectors in Switzerland.

Key balance sheet figures

 

31.12.2017

31.12.2016

Δ

 

CHF 1,000

CHF 1,000

 

Cash and cash equivalents

985,443

791,703

24.5%

Real estate transactions

158,055

185,631

(14.9%)

Other current assets

1,043,616

1,087,291

(4.0%)

Non-current assets

709,880

564,552

25.7%

Total assets

2,896,994

2,629,177

10.2%

       

Financial liabilities

496,930

415,406

19.6%

Other liabilities

1,745,155

1,548,265

12.7%

Equity

654,909

665,506

(1.6%)

Total equity and liabilities

2,896,994

2,629,177

10.2%

Net cash position

488,513

376,297

29.8%

Investments in real estate transactions

39,802

49,016

(18.8%)

Investments in fixed assets

70,050

61,243

14.4%

Equity ratio

22.6%

25.3%

 

Strong performance in non-Swiss home markets

The German economy continued to grow in 2017, with metropolitan areas positively booming. Despite increasing construction activity, there continues to be a demand overhang for housing. The office and commercial property sector is also benefiting from the general economic growth.

Several factors have contributed to the good performance of the infrastructure construction sector in Germany. On the other hand the financial situation of individual municipalities has improved; on the other hand is that the increase in government funds at federal level is allowing greater investment in transport infrastructure. Investment also increased in Austria, especially in the transport infrastructure sector, following a year of practically no growth in 2016. Pent-up demand remains as high as ever in Sweden. Investments made as part of the 2014 Transport Infrastructure Plan explain much of the substantial growth in infrastructure projects. Investment levels also continued to rise in Norway. The market is benefiting from the political will to expand and renew the country’s transport routes.

  • For third subsequent year and beyond
  • For second subsequent year
  • For subsequent year

Order book

31.12.2017

31.12.2016

Δ

CHF 1,000

CHF 1,000

Switzerland

2,956,197

2,637,186

12.1%

Infrastructure

1,340,700

1,524,423

(12.1%)

International1

1,746,364

1,010,186

72.9%

Total order book

6,043,261

5,171,795

16.9%

Production output

2017

2016

Δ

CHF 1,000

CHF 1,000

Development

140,254

156,946

(10.6%)

Switzerland

2,356,438

2,412,223

(2.3%)

Infrastructure

615,444

516,057

19.3%

International1

1,308,761

719,812

81.8%

Miscellaneous / elimination of intra-group services1

(494,170)

(484,620)

(2.0%)

Total production output

3,926,727

3,320,418

18.3%

1   Prior year restated, see page 232, note 5

Revenue up thanks to international activity

Implenia posted consolidated revenue of CHF 3,859 million in 2017 (2016: CHF 3,267 million). The main factor behind this growth of around 18 percent was the first-time consolidation of Implenia Hochbau Deutschland. Implenia Group’s organic growth came to 3 percent, with a currency impact of 1 percent. Consolidated production output for the year came to CHF 3,927 million (2016: CHF 3,320 million). As expected, the Group recorded a stable performance in the Swiss market, while the Segments International and Infrastructure also contributed to growth.

  • Business Unit EBIT excl. PPA
  • * Restated, see page 232, note 5

Focus on margins pays off

Implenia has clearly improved its profitability on a like-for-like basis (excluding PPA and project adjustments). EBITDA, the most important benchmark of the Group’s operational performance, rose to a new record figure of CHF 173.8 million compared to CHF 166.2 million in 2016. This gave a margin relative to revenue of 4.5 percent. Excluding the adjustments made in the first half-year, Implenia would have achieved EBITDA of CHF 210 million, which would put the margin at 5.4 percent – already within the target range of 5.25 to 5.75 percent for the medium term.

Business Unit EBIT (excl. PPA) came to CHF 103.2 million (2016 restated: CHF 114.1 million). This is higher than the Group’s forecast and better than market expectations. Excluding adjustments made in the first half-year to the Norwegian project portfolio, claims relating to the ongoing Letzigrund Stadium court case, and accelerated optimisation measures in Road Construction and Civil Works in German-speaking Switzerland, the Group achieved EBIT of approximately CHF 140 million.

All segments made a positive year-on-year contribution to earnings, espacially thanks to a strong second-half performance. The Segment Development achieved another outstanding result, underlining the quality of its project pipeline. It has reported a new record high for the third year in a row. The Segments Switzerland and Infrastructure recorded very good results. A disciplined approach to order acquisition paid off in Switzerland, ensuring an order book of robust quality. Infrastructure beat expectations and confirmed the effectiveness of the internationalisation strategy. The segment’s growth has broad underpinning from projects in six different countries. The Segment International’s overall results met expectations. Its development was affected by the first-time consolidation of the former Bilfinger Hochbau in Germany. Even after deducting all acquisition and integration costs, this unit made a positive contribution.

Implenia posted consolidated profit for 2017 of CHF 39.0 million (2016: CHF 64.5 million). Adjusted for the PPA, the Group would have achieved consolidated profit of around CHF 65 million.

  • Consolidated profit excl. PPA

Excellent cash flow confirms good operational performance

Implenia reported an excellent free cash flow situation. Thanks to strong growth in cash flow from operating activities, a significant decrease in current assets, and a more or less unchanged level of investment, free cash flow came to CHF 162.5 million, up from CHF 27.9 million in the previous year. This record figure reinforces the healthy state of Implenia’s underlying operational business.

Return on invested capital came to 35.4 percent (2016: 33.3 percent), significantly more than the average cost of capital of 9.5 percent.

  • Invested capital (in CHF million)

Invested capital

31.12.2017

31.12.2016

Δ

CHF 1,000

CHF 1,000

Current assets excl. cash and cash equivalents

1,201,671

1 272 922

(5.6%)

Non-current assets (excl. pension assets)

704,135

558,116

26.2%

Less debt capital (excl. financial liabilities and pension liabilities)

(1,726,075)

(1,537,045)

(12.3%)

Total invested capital

179,731

293,993

(38.9%)

Operating income

2017

2016

Δ

CHF 1,000

CHF 1,000

Development

39,241

36,983

6.1%

Switzerland

43,626

56,334

(22.6%)

Infrastructure

14,419

8,340

72.9%

International1

(31,812)

625

 

Miscellaneous / Holding1

(1,883)

(4,375)

57.0%

Total operating income

63,591

97,907

(35.0%)

1   Prior year restated, see page 232, note 5

Equity position remains strong

At the end of 2017, total assets stood at CHF 2,897 million (2016: CHF 2,629 million). The acquisition of Bilfinger Hochbau accounted for around CHF 250 million of this. Equity remained more or less the same as in the previous year at CHF 654.9 million. Owing to the increase in total assets, the equity ratio decreased to 22.6 percent (2016: 25.3%). Implenia’s business rests on solid financial foundations.

Positive outlook for all home markets

Forecasts for construction investment in Switzerland are positive. No sudden changes in the market situation are expected. Increasing investment in road and rail construction, and growing momentum in non-residential construction are supporting the market. The picture for Swiss residential construction, meanwhile, varies from region to region. Demand will remain high in the urban centres, but rising interest rates may well put the brakes on growth in the home-building sector.

Continuing growth in Germany

Overall, the outlook for infrastructure construction in Germany for the coming year is positive. The EUR 270 billion Federal Transport Infrastructure Plan, launched in Germany in 2016 (2016–2030), will shore up the German transport sector (road, rail and water) for the medium term. The plan’s main priorities are to maintain transport networks and alleviate congestion on major routes. Federal government takes sole control of building and running Germany’s motorways from 2020. Owing to last year’s elections and the delay in forming a new government, however, no firm budget figures are available yet. Implenia expects further growth in building construction thanks to sustained new-build activity. There is still a clear demand overhang, especially in Germany’s cities. In addition, non-residential construction should benefit from the positive economic trend in Germany. Prospects are positive in Austria too. The country’s 2017–2022 framework plan, part of the “Zielnetz 2025+” rail expansion strategy, is boosting the market.

Infrastructure expansion in Norway and Sweden

The outlook for infrastructure markets in Norway and Sweden remains good. Despite the slump in the oil price, Norway continues to invest in infrastructure construction. The state infrastructure plan for the 2013–2023 period is worth more than NOK 500 billion and includes investments particularly in transport infrastructure (rail and road), as well as in energy and water supply. Alongside its ongoing SEK 522 billion transport plan for 2014–2025, the Swedish government has approved additional funding worth more than SEK 1.3 billion up to 2018 for railway maintenance. This reflects its willingness to keep investing in rail transport.

Record-high, good quality order backlog

At CHF 6,043 million, the order backlog at Group level is 17 percent higher than in the previous year. In addition to the impact of acquiring Bilfinger Hochbau (over 10%), the Group posted organic growth (3%) in orders. Meanwhile, the devaluation of the Swiss franc, particularly against the euro, delivered a positive currency effect of around 4 percent on the Group order book. The Segments Switzerland and International enjoyed particularly good momentum.

At the end of 2017, Implenia employed 9,710 people, compared with 8,239 at the end of 2016. More than a thousand of these employees joined the Group as a result of the Bilfinger Hochbau acquisition.